WASHINGTON — Treasury Secretary Timothy F. Geithner said Wednesday that Republicans have been unwilling to put aside politics to agree on a budget and change the tax system.

“A growth strategy for the American economy requires more than promises to cut taxes and spending,” Geithner said in a speech to the Economic Club of Chicago. “We have to be willing to do things, not just cut things.”

Geithner said Republicans have been unwilling to embrace significant revenue even through tax reforms and he hopes the “collision of expiring tax cuts” will give an incentive for politicians to come together.

House Republicans on March 29 endorsed a budget that would require eliminating $4.6 trillion in tax breaks over the next decade. Democrats have been urging Republicans to be more specific about their proposals, particularly on what tax breaks would be eliminated. In a speech Tuesday, President Barack Obama said there is “no way” Republicans can reach their target without affecting middle-class tax breaks for retirement, health care and homeownership.

“There is no economic or financial case for using the fear of future deficits to cut as deeply into core functions of the government, to weaken the safety net or fundamentally alter Medicare benefits as do the Republican proposals,” Geithner said.

The Treasury secretary reiterated the U.S. view that China “still has an undervalued currency.” He said that China’s policy is “designed to slow the pace in which market forces are still allowed to push the exchange rate higher.”

In the United States, “the biggest source of unfinished business” in the financial reform effort is in housing, and the country is “much further behind” in setting out the path of housing reform, according to the Treasury secretary.

Geithner said the challenges to the American economy are about barriers to economic opportunity, economic security and political constraints, while “Europe and oil still present risks.”

“The balance sheet of the business sector is exceptionally strong, and the economy as a whole is more productive than before the crisis,” Geithner said. “These are promising developments, but we still face some very tough challenges.”

The Federal Reserve said it would refrain from increasing monetary accommodation unless the economic expansion falters or prices rise at a rate slower than its 2 percent target, according to minutes of the March 13 policy meeting released yesterday.

Geithner said Europe has made “a huge amount of progress in the last six months or so.” He said the recent European firewall changes are so important to give governments time to put in place reforms and get traction.

“They’ve got a new firewall they announced last week. Those are promising very important steps toward calming financial tensions and reducing the risk,” Geithner said. “They have a long way to go. It is going to be a very fragile and uncertain process.”

Euro-area finance ministers decided March 30 that $656 billion in fresh money would go along with 300 billion euros already committed to create an 800 billion-euro defense against the two-year-old turmoil.

Augusta and Waterville news

Get news and events from your towns in your inbox every Friday.


  • This field is for validation purposes and should be left unchanged.