Valley News - James M. Patterson
Geithner says worst is over for economy
HANOVER – President Obama’s top economic adviser said Friday at Dartmouth College there is reason to be optimistic about the national economy, even as the recovery shows uneven progress three years out from the economic crisis and negotiations over the federal-debt ceiling bog down.
Treasury Secretary Timothy Geithner, speaking at his alma mater, said that despite the partisanship on display publicly in Washington, there’s broad agreement about the long-term goals for the nation’s economy, if not the means for achieving them.
“The hard thing is the debate we’re having now,” he said. “How are we going to do this in a way that’s going to be broadly acceptable.”
Geithner said that even with persistent unemployment and a housing market that is still faltering, the national economy is better situated than it was in the run-up to the crisis and its immediate aftermath.
“Most of what feels bad and dark about the American economy today is the aftershock of the crisis,” Geithner said.
He pointed to rising exports and improvement in sectors such as manufacturing, technology and agriculture as signs of growing strength.
Geithner also stressed that it will be years, however, before the U.S. can achieve the type of budget equilibrium achieved in the second half of the 1990s, when the federal government ran modest surpluses.
“It’s not going to be possible for the next decade,” he said. “We lost that chance.”
Geithner said the combination of tax cuts and expanded government programs during the first decade of the new millennium have left the United States with few options except to grind its way toward deficit reduction and, eventually, a stabilized debt.
“Anything we do now is going to be subject to a much more constrained set of choices,” he said.
Geithner was the second speaker in the college’s Leading Voice in Politics and Policy lecture series. He followed Thursday’s address by former Sen. Judd Gregg, R-N.H., who touched on many of the same economic issues, though Gregg’s comments were devoid of the praise for President Obama’s policies that peppered the Treasury secretary’s answers to questions from the moderator and the audience.
Geithner said at the height of the crisis, with the economy on the verge of collapse, Obama made difficult, and sometimes distasteful, decisions that came at a great political cost, and offered the statement he has made before: “We saved the financial system, but we lost the country doing it.”
He noted that Federal Reserve Chairman Ben Bernanke and his predecessor Alan Greenspan both have said the economy actually suffered a harder blow this time around than the panic that led to the Great Depression.
Geithner also said that despite all the exotic Wall Street investments and mortgages that are often pointed to as causes of the financial crisis, the underlying reality was less complex: banks and investors, governments and individuals all failed to properly take into account the risk the economy could sour and were unprepared when it did.
“It’s not a fancy, complicated mistake,” he said.
In response to a question from an audience member, Geithner also made a pitch for a tax code with lower rates for individuals and corporations but fewer loopholes. He called the present system “unfair in the structure and the burden.”
Earlier in the day, Geithner spoke to a group of small business owners in Manchester.
“The most important things we can do for the economy now are the following: expand exports, improve incentives for investment in the United States, make education and training better ... improve infrastructure, renew manufacturing and, of course, we have to put in place a balanced, comprehensive long-term deficit reduction plan that makes Washington live within our means,” he told them.
Jim Roche, president of the Business and Industry Association, which was involved in the meeting with Geithner, said it was a productive exchange.
“Many of our members are adding jobs in New Hampshire and it’s no secret that manufacturing has led this economy and continues to do reasonably well, but there’s just a lot of nervousness about what’s happening at the federal level,” Roche said.
Some of that nervousness involves negotiations over the debt ceiling.
At Dartmouth, Geithner praised the negotiations between Vice President Joe Biden and congressional leaders in which he had participated.
“There’s been a lot of pragmatism, real openness to compromise,” he said.
Those talks were designed to trim about $2 trillion from long-term deficits, but they abruptly stalled this week, leading Obama to step in Friday and summon the top Senate leaders to the White House.
On Monday morning, Obama plans to meet with Senate Majority Leader Harry Reid, D-Nev., and in the early evening Obama will sit down with Senate Republican leader Mitch McConnell of Kentucky. McConnell and House Speaker John Boehner have repeatedly said that no deal can include tax hikes.
Geithner said Friday that budget cuts couldn’t stand alone as a long-term budget fix.
“It’s going to have to come from revenue too,” he said.
The Leading Voices lecture series continues next month with talks by Dartmouth President Jim Yong Kim, GOP presidential candidate John Huntsman Jr. and Joel Klein, former chancellor of New York City public schools.
It concludes in August with appearances by Robert Reich, former secretary of the U.S. Department of Labor, Henry Paulson, who preceded Geithner as Treasury secretary, GE CEO Jeffrey Immelt and Frank Newport, editor-in-chief of Gallup, the polling and research firm.
Material from the Associated Press contributed to this report. Matt Clary can be reached at email@example.com or 603-727-3248.