'This Week' Transcript: Treasury Secretary Timothy Geithner

STEPHANOPOULOS: And when you talk about limiting the deductions, there have been proposals from Governor Romney during the presidential campaigns, from other Republicans, to also limit deductions to maybe $25,000 cap on deductions. When you talk about those limitations on deductions, do you include the charitable deduction and the home mortgage deduction?

GEITHNER: Well, I think you're right to point out the essential problem in this, which is that if you try to limit deductions like you say with a $25,000 cap, what you do is you end up hitting millions and millions -- actually 17 million middle-class Americans. A huge part of the revenue comes that basic fact, which we do not prefer to do. It completely eliminates the incentives for relatively wealthy Americans to give to charities. We don't think that makes sense. And if you protect charitable contributions, you lose a huge amount of additional revenue. So those proposals, they may be worth considering, but if you design them carefully, they don't raise anything close to the type of revenue you need to get us back to a fiscally responsible position.

STEPHANOPOULOS: So you mentioned charitable -- are you saying now the charitable deductions should be off the table?

GEITHNER: What we propose -- and we think it's a better way to do it -- which is we propose a percentage limit on the value of all deductions and exclusions for 2 percent of Americans. And what that does is, it preserves a very significant economic incentive, financial incentives for Americans to give to charities. And of course that's very important to all universities across America, all hospitals, and millions and millions of nonprofit entities across the country that depend on those giving, and we think that's a better way to do it. That slightly reduces the marginal benefit of the deduction, but it preserves a substantial incentive to give to charity. We think that's a better way to do it.

STEPHANOPOULOS: I think one of the things that Republicans want to know if the president is still behind ideas that he has seemed to back in the past, for example gradually raising the eligibility age for Medicare, this adjustment in Social Security payments and so-called chained CPI, which would adjust the cost of living adjustments over time for people on Social Security. Is the president still behind those ideas?

GEITHNER: There is a lot of ideas out there, George, from Democrats and Republicans about things we can do to help strengthen Medicare and strengthen Social Security. And what I can do is to tell you the merits of the specific things we proposed, which, again, are very substantial savings over ten years, $600 billion, billions of dollars. And when Republicans come to us and say, we would like to do something different or beyond that, we'll take a look at how to do that. If it meets our basic values and our test, then we'll give it serious consideration.

STEPHANOPOULOS: So you're even willing to consider new restrictions on Social Security, because people like --

GEITHNER: No. I didn't say that. Let me clarify that. Thank you for asking me that.

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