In an interview with Candy Crowley on CNN's State of the Union, Geithner claimed that the Obama Administration proposal, which includes various spending provisions intended as economic stimulus, had "huge support in the business community" and that it would be "good for the economy."
The Congressional Budget Office's analysis of the fiscal cliff projected that up to 300,000 jobs could be lost over the next two years if top tax rates were to rise.
"There's not going to be an agreement without rates going up... If they are going to force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans, then, I mean that's the choice they're going to have to make."
The Congressional Budget Office's analysis of the fiscal cliff strongly advised against tax rate hikes and recommended that the best way to raise tax revenue is through deduction reform [pdf], not through rate hikes.
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Increases in marginal tax rates on labor would tend to reduce the amount of labor supplied to the economy, whereas increases in revenues of a similar magnitude from broadening the tax base would probably have a smaller negative impact or even a positive impact in the supply in labor.
What Geithner and the Obama Administration are pushing for will hurt the economy far more than the approach that Speaker John Boehner has advocated. To be fair, Republicans have not been specific enough in their deductions reform proposals, but the Obama Administration's ideological inflexibility when it comes to tax rates makes it nearly impossible to deal with them.
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