Geithner: Growth Too Slow, but on Right Track
CNBC.com Senior Writer
Treasury Secretary Timothy Geithner said the economy is "definitely slower," but defended the Obama administration's actions and said Washington needs to take aggressive action to promote growth.
Speaking at the "Delivering Alpha" conference presented by CNBC and Institutional Investor, Geithner rejected the idea that the economy is headed for another recession .
"What the economy needs right now is very substantial and well-designed program for support of economic growth," Geithner said in a live interview.
He said Congress ought to continue payroll tax cuts for "98 percent" of American workers and make mortgage refinancing more readily available, among other proposals.
The reference alluded to the administration's goal to keep in place most of the so-called Bush tax cuts that affected most Americans over the past decade. The White House wants to raise taxes on those earning more than $200,000 individually and couples with incomes greater than $250,000.
Republicans oppose raising taxes at a time when the economy is slowing.
Both sides, though, face a looming fiscal catastrophe at the end of the year when a series of tax increases and spending cuts kick in if Congress cannot reach deficit-reduction goals.
"The basic fiscal realities are going to force compromise ultimately," Geithner said.
The Treasury secretary, who also appeared at the first "Delivering Alpha" conference in 2011, spoke as the economyremains mired in a lumbering recovery that has come only in fits and starts.
While housing and manufacturing have showed signs of improving, consumers continue to feel weakness from 8.2 percent unemployment, something that has manifested itself in three consecutive months of declines in retail sales.
Though the administration often has been criticized for being unfriendly to business, Geithner sought to strike a conciliatory tone for those attending the "Seeking Alpha" conference.
"It's important to remember that the fortunes of people in this room as tied to the fortunes of all Americans," he said.
After a series of early missteps when taking the position in 2009, Geithner found himself under intense pressure as calls grew for President Barack Obamato ditch his Treasury secretary in favor of a more experienced hand.
Since weathering that storm, though, he has been the front man for the administration's fiscal practices, which have included a $1.2 trillion budget deficit and a debt that has soared past $15 trillion this year.
Geithner, though, is not expected to stay on for a second term should President Obama gain re-election this year.
He defended the administration's actions taken to address the financial crisis that took root in 2008. Washington enacted a series of programs to bail out Wall Street and inject liquidity back into the frozen credit markets.
"Growth has been slower than anyone would like. Why it has been slower is because we were digging out of a huge mix of imbalances," Geithner said.
The secretary recently has found himself under fire for his actions when he headed the New York Federal Reserve in 2008, when allegations first arose that banks were manipulating the London Interbank Offered Rate, known as Libor , which influences lending rates.
Critics say the New York Fed did not make a strong enough effort to ensure concerns were addressed. Barclays has faced enforcement measures, and other banks could get hit, as well.
"We did the right and necessary thing," Geithner said. "We did it early. We were forceful from the beginning."
Europe has other problems besides the interest-rate scandal.
There also remains the sovereign debtcrisis, which threatens to throw not just the continent but the global economy into recession.
Geithner repeated the confidence he expressed last year that the euro would survive as a currency, but he said policy makes need to become more aggressive in addressing the debt problems plaguing the region's peripheral countries.
"They're not satisfied and they should not be satisfied because they have not pulled back far enough from the edge yet," he said. "We have a huge stake in them successfully navigating a huge set of problems."