“Things are gradually improving,” Geithner said at a town hall event in Washington. He said businesses are becoming more confident and starting to invest and add jobs.
Geithner predicted that “the unemployment rate’s going to come down gradually over the next several years,” given current growth rates and private-sector forecasts. He said last month’s drop in joblessness to 9 percent from 9.4 percent in December “probably overstated” labor-market strength, while separate figures on hiring “probably understated” current conditions.
The decrease in unemployment from 9.8 percent in November is the biggest two-month drop since 1958, according to Labor Department data released last week. Employers added 36,000 workers last month, short of the 146,000 median gain projected by economists in a Bloomberg News survey.
To create conditions for more hiring, the Obama administration wants to spend more on infrastructure and other investment incentives. In a blog post on the Treasury’s web site today, Geithner invoked the economic potential of manufacturing, shipping and technology companies.
For example, efforts to upgrade the U.S. air traffic control system will help companies in a broad swath of the economy, he said. Honeywell Inc., Boeing Co. and General Electric Co. are all involved in the Federal Aviation Administration’s NextGen upgrade plan, and other firms like FedEx Corp. and United Parcel Service Inc. will benefit from transportation improvements.
Geithner said the U.S. will press ahead with efforts to improve the U.S. tax code. He said the administration would not consider proposals for a “tax holiday” for profits held by U.S. companies overseas unless a broader overhaul was under way.
“We are not going to look at a repatriation holiday outside the context of comprehensive reform,” Geithner said. He repeated his call for a “fiscally responsible” plan that lowers rates while also broadening the tax base and offering incentives for investment.
“We’re not going to ask Americans to pay higher taxes so we can lower taxes on businesses,” Geithner said.
Cutting the Deficit
Geithner said the Obama administration soon will release “very detailed” programs for curbing future deficits and encouraging economic growth. Republicans in Congress are calling for big spending cuts to rein in record budget deficits that have topped $1 trillion for two years in a row.
Geithner today said the U.S. fiscal outlook is “fundamentally manageable” and that interest rates on Treasury debt are “exceptionally low,” reflecting investor confidence that the U.S. will bring its deficits down gradually without hurting growth. He also predicted that Congress would raise the $14.29 trillion debt limit, which the Treasury predicts could be breached by the end of May, in time to avoid market disruptions.
“The U.S. will meet its obligations and Congress will act as it always has to make sure we meet those obligations,” he said.
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