In his first major Sunday show appearances, Timothy Geithner laid out the policy arguments for the administration's toxic-asset plan, detailed the long-term approach to economic recovery and refused to say that Americans would regain the level of affluence they once held.
Seeming calmer and more assured under the camera lights, the Treasury Secretary tried to sound at once cogent and sympathetic. On his plan for removing toxic assets from the banks, he framed his proposal as the best way to inject capital into those troubled institutions quickly, without having the U.S. taxpayer take over the entire burden.
"To get out of this we need banks to take a chance on businesses, to take risks again," he declared.
Aware that Congress is losing patience (and the political will) for funding on the banking industry, Geithner seemed confident that he had enough TARP resources left -- $135 billion, he revealed to ABC's George Stephanopoulos -- to get through the year.
"We have substantial resources and we're going to use them quickly, as quickly as we can, to make sure they're devoted to things that are going to get credit flowing again," he said.
Geithner's focus on money meant for the banks was matched by his focus on the money currently in the pockets of the American people. Twice, the Treasury chief was asked whether the United States would get back to the level of "affluence we saw across the board" in 1990s. While declaring that the inequality of income "should go down," he largely avoided directly answering the question.
"We want to have sustainable growth," he said. "We don't want to have a recovery which is going to be artificial and short-lived...We want to have a durable recovery based on the stronger foundation that has a stronger, more productive economy where the gains are more broadly shared across the economy as a whole."
And among all the serious threats currently facing the American economy -- the banking crisis, the credit crisis, the recession, the auto bailout, the bonus furor, and so on -- Geithner said the most important thing he's learned in recent months is not to let up.
The risk is not that the government does too much, he said. Instead, Geithner argued, it's the risk that the government does too little to try to help solve the financial problems.
Perhaps his one major slip-up came, ironically, on the topic on which the administration has had the most time to prepare: the issue of AIG's controversial issuing of bonuses. Geithner denied that because he had worked around (though not on) Wall Street for so long, he somehow had a "blind spot" on the issue of executive compensation. From there, however, he added that "I don't think our choices would have changed" when it came to handling the situation differently.
"We had no good choices," he said. "These contracts were set before Ed Liddy became CEO. We're a nation of laws. We cannot run this country, expect our economy to work, businesses to function, if there is an ongoing fear the government will come in and retroactively change the terms of existing contracts in that context. So we had no good choices but we moved very, very quickly to make sure we would get them to renegotiate future payments."
Legally, indeed, the administration may have felt restricted from voiding labor contracts. But the notion of taxing these bonuses as a means of recovering them is not unique to the post-AIG-mess time period. The administration and Congress had the option before the issue became a scandal. Sens. Ron Wyden and Olympia Snowe had submitted an amendment to the stimulus that would have taxed the bonuses over $100,000. It was taken out during the conference committee.
Here's video of Geithner's performances on ABC's This Week and NBC's Meet The Press:
Geithner explains the banking plan:
Geithner responds to Krugman:
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