Treasury Secretary Timothy Geithner testified before the Senate Finance Committee Tuesday. (Shirley Li/Medill)
WASHINGTON – Treasury Secretary Timothy Geithner fought a budget battle Tuesday, defending and explaining President Barack Obama’s spending plan before the Senate Finance Committee.
From deflecting blunt questioning by Sen. Jon Kyl, R-Ariz., to verbally tussling with ranking member Sen. Orrin Hatch, R-Utah, Geithner faced a slew of Republicans unhappy with the budget’s plan to raise revenue through taxation.
The plan aims to extend the Bush tax cuts enacted early last decade past the expiration date in 2013 for all Americans, except for the wealthiest 2 percent. The tax cuts would end for families making more than $250,000 annually, while new and higher taxes will be imposed on those making more than $1 million a year.
“We need a tax system that is simpler and more efficient, one where businesses and individuals play by the rules and pay their fair share,” Geithner said. “This plan will not solve all the challenges, but will put us in a stronger position.”
The increased tax rate on the rich is a reflection of the “Buffett Rule,” a proposal initially crafted by billionaire Warren Buffett in an op-ed for the New York Times, in which he wrote that he paid a lower tax burden than his staff. This rule states that high-income families “will not face tax rates that are lower than those faced by middle-income families,” Geithner said.
“The most fortunate Americans…must contribute a greater share of their income in order to correct the imbalance in our system,” he said, calling the tax increases “modest.”
Republicans remained unconvinced, despite Geithner’s assertions that these tax increases would raise revenue and minimize spending cuts in areas such as defense programs. Kyl brusquely questioned Geithner repeatedly on whether the “millionaire surtax” affects small business owners as well, and asked him to agree that these small business owners were drove job creation.
“It is…only a slight portion taxing our small businesses,” Geithner responded. “If we don’t do that though, who are we going to ask to carry this burden?”
“Yes or no?” Kyl asked, interrupting Geithner.
“Well, yes, but it’s a small fraction,” Geithner responded, adding that taxes on small businesses have been “significantly reduced” in the past three years.
Meanwhile, Democrats said Congress needed to move fast to carry out the proposals in the Obama budget.
“Why wait?” asked Sen. Chuck Schumer, D-N.Y., who said the administration is “too patient” on taxes. “It’s my view that the Buffett Rule is going to be on the floor of the Senate…we’re going to debate it this year.”
The Treasury Secretary faced his longest round of questioning at the end of the hearing from Hatch. The senator was skeptical of Geithner’s repeated explanation that the Obama tax approach was fair, and would only have an impact on a small fraction of small business owners.
“I don’t believe it one bit,” Hatch said. “I don’t agree with your analysis.”
As the debate continued for half an hour, Geithner shifted in his seat and looked up at Hatch, by then the last member of the committee remaining in the hearing room.
“I’m not a politician, but I’ve never met anybody in public office who ever wants to be in favor of raising any taxes on anybody, but as you know, as you’ve said over and over, we face unsustainable fiscal deficits,” he said. “As you’ve heard us discuss all morning, we don’t see a way to do that…without a modest increase of revenues. We want to make sure those revenues come from the people who are in the best position to bear that burden.”
