Treasury Secretary Timothy F. Geithner said Sunday the Obama administration’s evolving economic-stimulus strategy will rely more upon the private sector to create jobs and will likely eliminate Bush-era tax cuts for wealthier Americans, despite opposition from fellow Democrats.
“We have to make this transition to an economy led by private business,” he said on NBC’s “Meet the Press.”
Mr. Geithner defended the administration against criticism that it failed to cut unemployment, saying job growth has been “pretty good” in the past six months, but businesses are reluctant to hire, despite now having cash, because they have been “scarred” by the deep recession. However, he took responsibility for the jobless rate remaining at 9.5 percent.
“We want [job growth] to happen at a faster pace,” Mr. Geithner said. “It’s taking time, but we’re making progress.”
Critics have also pointed out that the private sector — which is the major engine of the U.S. economy — was not a big part of job growth in recent months. The latter was largely the result of hirings for public-works projects through the administration’s multibillion-dollar stimulus plan, and then the temporary hiring of census workers.
Mr. Geithner also defended the Democrat-controlled Congress’ passing the $34 billion unemployment-insurance package as emergency spending, not as budget item that would have required cuts in others programs, as Republicans demanded.
“In a crisis that was this bad … it’s appropriate to treat these things as emergencies,” he said on ABC’s “This Week.”
The larger issue, though, is whether the Bush administration’s 2001 and 2003 tax cuts will be allowed to expire as scheduled at the end of year.
Mr. Geithner said the administration wants the tax cuts to end for just that percentage of workers who make at least $200,000 annually.
“I do not believe that will have a negative effect on growth,” he said. “The president and I believe the right thing, the fair thing, the responsible thing for the country now is to leave in place and preserve tax cuts to [the other] 95 percent of working Americans.”
Congress has already began to discuss whether to let the cuts expire, which has some Democrats concerned about a tax increase on consumers in a struggling economy, especially during an election year already marked by voter dissatisfaction about how their party has run Congress and the White House.
“The general rule of thumb would be you’d not want to do tax changes, tax increases … until the recovery is on more solid ground,” Sen. Kent Conrad, North Dakota Democrat and a member of the Senate Finance Committee, said last week.
Reps. Gerald E. Connolly of Virginia and Bobby Bright of Alabama also have stated publicly their opposition to letting the Bush tax cuts expire. Separately, Mr. Bright sent President Obama a letter — signed by five other House Democrats and two House Republicans — asking him to extend all the Bush-era tax cuts as part of his fiscal 2011 budget request.
“We look forward to working with you to … reduce the deficit in a way that allows our economy to fully recover from this difficult economic period,” the letter said in part.
In addition, a group of six congressional Democrats from New York has proposed modifying the cuts.
However, House Speaker Nancy Pelosi has said she favors ending the tax cuts to the country’s highest wage earners.
Rep. Mike Pence, Indiana Republican, said over the weekend the tax issues facing Congress could result in increases for every American family, particularly if the child tax credit is reduced.
“After 18 months of runaway spending, bailouts and takeovers, Washington Democrats are poised to allow the largest tax increase in American history to take effect next year,” he said during this week’s Republican radio address. “The American people deserve to know every income bracket will increase … every single one.”
Mr. Geithner thinks Congress will act on the issue before the November elections and that ending the tax cuts will prove to the world that the United States in serious about reducing its long-term budget deficit. He also said he supports allowing the top tax-bracket for capital gains to revert from 15 percent to 20 percent.
Though Mr. Geithner called upon the private sector to help create jobs, he said the administration will continue with its recovery plans, including the release of unspent stimulus money, helping states keep teachers in classrooms as well as tax breaks and other incentives for small businesses.
• Joseph Weber can be reached at jweber@washingtontimes.com.old.
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