"The hard part about playing chicken is knowin' when to flinch." Capt. Bart Mancuso in the Hunt for Red October.

Treasury Secretary Timothy Geithner has challenged Republicans to a game of fiscal cliff chicken and the GOP appears ready to flinch.

Politico:

Treasury Secretary Tim Geithner said Wednesday that the Obama administration was prepared to dive off the fiscal cliff if Republicans do not agree to raise tax rates on upper income brackets.

Geithner was asked on CNBC: "When it comes to raising taxes on the wealthy, those making more than $250,000 -- if Republicans do not agree to that, is the administration prepared to go over the fiscal cliff?"

"Oh, absolutely," Geithner replied. "There's no prospect in an agreement that doesn't involve the rates going up on the top 2 percent of the wealthiest."

"The size of the problem in some sense is so large it can't be solved without rates going up," Geithner said about the country's fiscal challenges. "I think there's a broad recognition of that reality now."

It's the strongest statement to date from the Obama administration that they're willing to swallow the combination of spending cuts and tax increases that experts say could plunge the country back into recession.

House Republicans and the administration have been at odds over how to undo those tax increases and spending cuts -- with the Obama administration insisting that only the lower and middle income tax brackets should be extended at current levels. Absent any action from Congress, taxes will go up on all taxpayers on January 1st.

Geithner is confident in making that threat because Republicans have already indicated that they have pretty much given up on preventing tax cuts and are now manuevering to get the best deal possible on spending cuts:

Many GOP centrists and some conservatives are calling on House Speaker John A. Boehner (R-Ohio) to concede on rates now, while he still has some leverage to demand something in return. Republicans are eager to win changes to fast-growing safety-net programs, such as raising the eligibility age for Medicare and applying a less-generous measure of inflation to Social Security benefits.

After Dec. 31, tax rates for most Americans, including the wealthy, are set to automatically rise, and this could cost Republicans a key bargaining chip in winning changes to entitlements.

"I and some others are advocating giving the president what he wants," said Rep. Steven C. LaTourette (R-Ohio). But he stressed that this must be part of a package that slows federal borrowing and reduces the debt by $4 trillion to $5 trillion.

"Quite frankly, some people in this 2 percent who call me, they're more worried about the fiscal cliff than about the rates going up a couple points. That has bigger risk for them," said LaTourette, a close Boehner ally who is retiring in January.

Geithner's serenity about the fiscal cliff comes from the notion that the American people will blame the GOP if negotiations fail and are likely to take out their frustration on Republicans in 2014. Holding that prospect over their heads gives the treasury secretary confidence that Boehner and the leadership won't let that happen.

But Obama is in no mood to compromise, nor is he really interested in negotiating a deal. He is interested in scoring a big win over Republicans - just like any rabid liberal partisan sitting in their mama's basement urging the president to smash the GOP into the ground. Obama wants his foot on the neck of Boehner and the GOP at the end of the day, and given what we've heard from Republicans so far, he is likely to get it.