Saturday 16th of January 2021

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Treasury Secretary Defends Steps To Aid U.S. Economy

The U.S. government needed to take “deeply offensive” measures to help the nation overcome a crippling financial emergency, U.S. Treasury Secretary Timothy Geithner conceded Tuesday on ABC’s “Good Morning America.”

“A year ago we really were on the verge of a full-scale run” on financial institutions, much like that seen in the Great Depression, Geithner said. “The biggest fear now, the biggest challenge, is to make sure we change the rules of the game so it doesn’t happen again,” the secretary said.

Although the situation is much better than it was this time last year, he said, “I would say there’s no recovery yet.” For example, Geithner said Congress “very likely” will need to extend jobless benefits. “We define recovery … as people back to work, people able to get a job again, businesses investing again,” he said, “and we’re not at that point.”

The secretary said the United States needs to “get our fiscal house in order” and reaffirmed the president is strongly against an income tax increase for people who make less than $250,000 a year. The secretary noted Obama made a campaign promise against an increase and he continues to be “very committed” to it. He added: “We can go back, as a country, to the point where we’re living within our means without violating that basic commitment.”

There are some forecasts that the U.S. deficit will reach $1.6 trillion. Add to that the increasing debt obligations the nation has to other countries. While the White House can’t ensure there will be financial stability, Geithner says, “what we have an obligation to do is to put that in place here and around the world.”

He told ABC, “I think Americans understand we have an unsustainable fiscal position. We have to bring these deficits down over time.”

The government has not decided if it will extend past the end of the year any new investments under the $700 billion bailout funds program, Geithner said. It will study a “range of programs” backed by economic stimulus funds for limited extensions, including a first-time homebuyer tax credit. “We’re going to do what it takes to get this economy going again,” he said.

Another topic was the government’s intervention in the private markets, which hasn’t been popular with a many Americans. “The government had to do some deeply offensive things to undo the damage,” Geithner said. “But we’re going to get out of this as soon as possible.”

However, the government’s partnership with the auto industry could take additional time before there is consideration of selling investments in General Motors and Chrysler. Asked if the government would cut its ties to the auto industry by next year, Geithner said, “I think it’s going to take longer than that just to be honest and realistic.”

He said, “We’re not going to keep a penny in the financial system or in the U.S. economy longer than we think is absolutely necessary.”