Geithner Confident Congress Will Reach Debt Deal
This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.
Hi, I'm Chloe Cho and you're watching "Asia Market Daily".
U.S. Treasury Secretary Timothy Geithner has defended the American economy - assuring investors political infighting will not keep Congress from raising the debt ceiling.
In a first on CNBC interview with Steve Liesman, Geithner added lawmakers are closing in on a deal to pare down the deficit.
Timothy Geithner, U.S. Treasury Secretary:
I think things are better than they've been if you want to think about the prospects for improving our long-term fiscal position. I think if you listen very carefully now to what's happening in Washington you see people on both sides, Democrats and Republicans, agree with the President that we have to put in place some reforms now to bring down our long-term deficits. That's very important for the economy. Now is the right time to begin that process. If you listen carefully again, people, there's broad consensus emerging on how much we have to do. Roughly $4 trillion over 10 to 12 years. Rough consensus on the time frame on which we have to do that. Our challenge now is to lock that in, in terms of reforms that Congress passes so people around the world will look at the United States and know that we're not going to get behind this problem. We're going to get ahead of it.
Steve Liesman, CNBC:
I just want to say, from a report that Goldman Sachs put out this morning that the U.S. compares unfavorably to other AAA nations. Is that a fair assessment?
No, again I disagree. If you look at the U.S. economy now, our underlying growth rates are substantially stronger than any of the other major economies. We have a younger country, which is very important in this context. The size of our commitments to our citizens, in terms of pensions, health care are much, much lower than those made by any other major economies. So I think we're in a much stronger position to manage these challenges and I'm sure we can do that. Again, people look at the United States and they want to make sure Washington recognizes the magnitude of the problem and they want to know that the leadership here is going to come together and start this process, resurrection. Again I think if you listen carefully the prospects of that are better today than they have been in a long period of time. Because people are saying this is important for the economy and we have to start now.
Mr Secretary, can you talk about a little bit more in the near term, what kind of agreement do you expect between Democrats and Republicans between the House and Senate on the issue of the debt ceiling?
I think what we can try to do, what is realistic is to lock in some concrete targets for deficit reduction and savings with a clear time frame for putting those into place with a credible enforcement mechanism. Where we can agree on specifics, we should do that too. But we don't have to agree on everything to start that process. Again, if we do that, then the world can look at the United States and look at Washington and say these guys aren't going to get behind the problem.
I want to ask you to be a little more clear on that, when you say credible targets, are you saying that when they agree to the debt ceiling, there should also be what? Multiyear sort of out year agreements on bringing down the deficit as part of that debt ceiling agreement?
Well, Congress is going to pass an increase in the debt ceiling. They recognize that. They know they have to do. They have always done that. That's not really the issue. The real challenge is to make sure we put in place, as you said it right, multiyear targets that put the deficit on a path that declines over time so that the debt burden starts to decline as a share of the economy. That's the economic imperative. That's the important thing to do. Of course, how you do that is very important. For that to work, you have to do that in a way that will strengthen future growth whether you're investing in things like education, infrastructure, things that are very important to how we grow in the future. So it's not just locking in those kind of paths for deficit reduction, it's the composition of the reforms that will matter ultimately to the strength of the economy.
That wraps up the latest "Asia Market Daily". I'm Chloe Cho from CNBC, thanks for watching.
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