Feb. 15 (Bloomberg) -- Treasury Secretary Timothy F. Geithner said the U.S. needs to make sacrifices to fix its fiscal problems, while cutting too much from the federal budget quickly would endanger the economic recovery.
“We cannot pretend that our budget problems are merely the result of the financial crisis, nor can we pretend that we can restore fiscal responsibility without real sacrifice that affects all Americans,” Geithner said today in testimony at a hearing before the House Ways and Means Committee.
President Barack Obama’s budget for the 2012 fiscal year, his first since Republicans took control of the House, aims to reduce deficits by more than $1 trillion in the coming years. The plan includes cuts to energy, transportation, housing and other programs popular with his fellow Democrats. It also would allow income and capital gains taxes to rise after 2012 for individuals earning more than $200,000 annually and married couples making more than $250,000.
“Our deficits are too high and they are unsustainable,” Geithner said. “Left unaddressed, these deficits will hurt economic growth and make us weaker as a nation. We must go back to living within our means.” The Obama budget cuts non- discretionary spending to its lowest level as a share of the economy since the administration of President Dwight Eisenhower, Geithner said.
Dave Camp, the committee’s chairman and a Michigan Republican, called Obama’s budget a “missed opportunity” that would “result in record high deficits while pushing the federal tax burden to over 20 percent of our economy, a level never sustained in our nation’s history.”
Geithner in his opening remarks said cutting many services too quickly “would jeopardize the recovery and destroy tens of thousands of jobs.”
Because changes to the budget can be made from one year to the next, Congress and the Obama administration should “commit to a multiyear plan of fiscal responsibility, phased in over an appropriate time horizon,” Geithner said.
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