WASHINGTON (AP) — It may be just a bluff or a bargaining ploy, but the White House is signaling that President Barack Obama is willing to let the country go over the "fiscal cliff," a hard-line negotiating strategy aimed at winning concessions from Republicans on taxes.
If Washington really does fail to avert the looming series of tax hikes and spending cuts, the White House will portray Republicans as the culprits for insisting on protecting tax cuts for the wealthy, an effort the administration is laying the groundwork for now.
"This is a choice of the Republican Party," said Dan Pfeiffer, White House communications director. "If they are willing to do higher rates on the wealthy, there's a lot we can talk about. And if they are not, then they'll push us over the cliff."
But going over the cliff also would be full of risk for a president fresh off re-election and facing at least two more years of divided government.
Ending the year without a deal could roil financial markets and dent consumer confidence just as the economy is strengthening. It could make it harder for Obama to get Republican help on his second-term priorities like overhauling the immigration system and the nation's tax code, or in getting potential Cabinet replacements confirmed.
And it would signal to the country that the president's campaign prediction that the GOP "fever" would break following his re-election was a pipe dream.
House Speaker John Boehner says Obama is playing a risky game. "If the president really wants to avoid sending the economy over the fiscal cliff, he has done nothing to demonstrate it," the speaker said.
But Treasury Secretary Timothy Geithner appeared to signal that the administration might do just that — go past the cliff if necessary.
In an interview Wednesday with CNBC, Geithner was asked if the administration was prepared to go over the fiscal cliff if taxes do not increase on the wealthy. "Oh, absolutely," he said.
"There's no prospect in an agreement that doesn't involve those rates going up on the top 2 percent of the wealthiest of Americans," Geithner added.
He also said the administration was also prepared to walk away from a deal that did not include raising the debt ceiling.
"We are not prepared to have the American economy held hostage to periodic threats ... to default on our obligations," Geithner said.
White House advisers say the president wants to avoid going into next year without a tax and spending deal, a scenario they say would hurt the economy. Obama, addressing business leaders Wednesday, said the White House and Republicans could reach an agreement "in about a week" if the GOP drops its opposition to raising taxes on families making more than $250,000 a year.
"If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, than the numbers actually aren't that far apart," Obama said.
But with few public signs that Republicans are close to taking that step, administration officials are hardening their warning that Obama willing to risk going over the cliff.