On Thursday, Treasury Secretary Timothy Geithner met with Republican Congressional leaders and proposed a two-step process to raise $1.6 trillion in new revenue. The first step would net $960 billion immediately by allowing the Bush-era tax cuts to expire on top earners along with raising rates on dividends and capital gains. Another $600 billion would come from overhauling the tax code next year to reach the $1.6 trillion goal. Geithner also pressed for a patch of the alternative minimum tax and the extension of targeted business tax breaks at a cost of $236 billion.
Under Geithner’s proposal, the estate tax would return to its 2009 levels, when a 45 percent rate was imposed on inheritances worth more than $3.5 million.
Geithner also proposed deferring the scheduled $109 billion sequestration cuts. He proposed appropriating an additional $25 billion in stimulus spending, above the current baseline, for six years, with $50 billion in fiscal 2013 alone. He also called for an extension of expanded funding for unemployment benefits totaling $30 billion, and another $25 billion for the Medicare reimbursement rate. Geithner also took the unusual step of proposing an end to congressional approval of debt ceiling increases. Under Geithner’s plan, the president would have the authority to unilaterally raise the debt ceiling at any time. Congress could pass a resolution of disapproval, but it would require a two-thirds vote of both chambers to pass, and could still be vetoed. Following the meeting, Congressional Republican leaders Speaker John Boehner and Senate Minority Leader Mitch McConnell announced they were rejecting Geithner’s proposal and would continue negotiations with the White House next week.