The U.S. Treasury Department does not have the authority to delay the tax increases that will take effect at the end of the year if the White House and Congress are unable to stave off the fiscal cliff, Treasury Secretary Timothy Geithner said on Friday.
The law does not give me the authority to give them, to let them avoid making some decisions on rates and policy, Geithner said on Bloomberg TV's Political Capital with Al Hunt, when asked whether he could freeze the income tax withholding rates if Washington was close to averting the year-end fiscal crisis.
Some $600 billion in spending cuts and tax hikes will start taking effect Dec. 31 – a combination of austerity measures known as the fiscal cliff that could tip the country into recession if lawmakers fail to act.
Some analysts believe the Treasury has discretion to hold back issuing new tax withholding tables if it believes a deal stopping tax changes is in the offing. But Geithner said: Don't look to that as a solution to this problem. Two years ago, the nation was gripped by a similar situation, with a down-to-the-wire congressional fight over extension of the Bush-era tax rates for the wealthy. A deal was not reached until mid-December.
The Obama administration has just over six weeks to broker a deal with Congress to avoid the fiscal cliff and is pushing Republican lawmakers to allow the tax cuts for the wealthiest to expire.
Earlier on Friday, Geithner and President Barack Obama started negotiations with Congressional leaders on what appeared to be a promising note.
You heard each of the leaders say coming out that it was a very constructive meeting, said Geithner.
They said what you'd hope for them to say at this point, which is that 'this is something we can do, we're committed to do it, we want to do it as soon as we can, we know the stakes are very high,' he said.
As part of the negotiations, the administration is using its most recent budget proposal as its deficit reduction plan, which includes raising more than $1.5 trillion in new revenue over the next 10 years.
The massive spending cuts and tax hikes will coincide with when the country is expected to hit the debt ceiling, or the legal amount it is allowed to borrow.
Geithner is expected to remain as Obama's Treasury chief through