Geithner proposed a two-step process to achieve about $1.6 trillion in new revenue. Geithner's fiscal cliff offer

Treasury Secretary Timothy Geithner’s fiscal cliff proposal to Republicans Thursday was rejected out of hand, but offered a window into President Barack Obama’s priorities in the fast-evolving budget talks.

In the plan, sources said, Geithner proposed a two-step process to ultimately achieve about $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 — presumably next year — reaching the administration’s $1.6 trillion goal.

The administration also pressed for a patch of the alternative minimum tax and the extension of targeted business tax breaks at a cost of $236 billion.

The proposal is sure to encounter criticism from at least some Democrats. One provision would return the estate tax to its 2009 levels, when a 45 percent rate was imposed on inheritances worth more than $3.5 million.

Democrats from large, rural states where farms count toward the value of an estate often reject such efforts. Sens. Mary Landrieu of Louisiana and Mark Pryor of Arkansas fought efforts by fellow Democrats to expand the estate tax earlier this year.

Senate Finance Committee Chairman Max Baucus (D-Mont.) told the Great Falls Tribune this week that he wants to see the estate tax stay where it is today, with a 35 percent rate on inheritances worth more than $5 million.

With the White House’s preferred deficit reduction accomplished through tax hikes — and unspecified savings from non-entitlement mandatory spending programs — Geithner proposed deferring the scheduled $109 billion sequester.

He proposed appropriating an additional $25 billion in stimulus spending, above the current baseline, for six years, with $50 billion in fiscal 2013 alone. Along with that, the Treasury secretary called for an extension of expanded funding for unemployment benefits totaling $30 billion, and another $25 billion for the so-called doc fix.

In addition, Geithner proposed a government mortgage refinancing plan, though details remain unclear.

Geithner also took the unusual step of proposing an end to congressional approval of debt ceiling increases. Under his plan, according to a senior Senate GOP aide, 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.

This article first appeared on POLITICO Pro at 9:41 p.m. on November 29, 2012.