Treasury Secretary Timothy Geithner spoke with FOX Business Network’s Peter Barnes about President Obama’s plan for deficit reduction. Geithner said President Obama is trying to engage “comprehensive reform over time” and while it comes as “no surprise these changes both spending reforms and tax reforms are controversial” Geithner challenges the plan’s critics to “apply one test which is do you have a better idea?” He went on to say that “the economy now is still healing” and the “spectacle and the fight over the debt limit in the summer” served as a “big blow to confidence.” Excerpts from the interview can be found below, courtesy of Fox Business Network.
On the President’s speech today:
“He asked congress to legislate comprehensive tax reform. We can’t afford the tax system we have. It gets in the way of growth. What he did today is to say if congress is unable to legislate tax reform, here is a set of proposals for how you could contribute to deficit reduction that we think is reasonably good for the economy over time. But his objective is comprehensive reform over time. We know deficits will hurt growth in long run. The president’s view and strategy is we should do more things to help growth, but do so in a way that makes sure we are returning to living within our means. We are having a big debate about the role of government. It is no surprise these changes both spending reforms and tax reforms are controversial. But you should apply one test which is do you have a better idea?”
On his outlook for the United States economy:
“The economy now is still healing from the incredible damage done by the financial crisis. On top of that, we saw earlier this year oil prices rise a lot, Europe is still distress, Japan had a terrible disaster and that hurt growth. The economy is slow not just here, but around the world because of those things. In addition, you have had a big blow to confidence from the spectacle and the fight over the debt limit in the summer. For the first time you saw Americans in public office; not to be political but Republican leaders, flirting with the possibility of default. That was very damaging to confidence. Because of that growth is slower than anybody would like.”
On whether a better plan exists for deficit reduction:
“Governing about choices, we recognize we don’t have unlimited resources, and we are trying to figure out how to make economy stronger in short term and stronger over the long run. What the President purposed is a way to bring our deficits down over time, that will help make sure we are growing in the future and we preserve some room to invest in things that matter right now like jobs package, infrastructure spending, and generally we are trying to make this a better place to invest. That’s the best growth strategy we know.”
On whether President Obama favors raising the capital gains tax to 20% and whether that would raise capital:
“There is no creditable argument that would have any meaningful effect on investment incentives and no meaningful negative effect on the economy if that were to happen. The president’s preferred option is to do comprehensive reform.”
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