Geithner Says Economy Faces Risk From Europe Crisis, Iran
“We still face some risks ahead,” Geithner said to the Portland City Club today. “We still live in a dangerous and uncertain world, with Europe confronting a severe and protracted crisis. The world is engaged in a critical struggle with Iran, which has added to upward pressure on oil prices.”
Geithner’s comments in Oregon come as Federal Reserve Chairman Ben S. Bernanke said today that he remains prepared to do more to stimulate growth if needed. Federal Reserve policy makers said they expect growth to gradually accelerate, while refraining from new actions to lower borrowing costs.
Crude oil for June delivery rose 57 cents to $104.12 a barrel on the New York Mercantile Exchange, a one-week high. Prices have advanced 1.8 percent in the past four days, the longest rally since the period ended Feb. 24.
Geithner said the economy is “gradually getting stronger” while having a way to go to repair the damage of the financial crisis. He warned that at year-end, the economy will face a “fiscal cliff.”
“At the end of the year, we face a so-called fiscal ’cliff’ -- the simultaneous expiration of tax cuts and large across-the-board cuts in spending,” Geithner said. “That cliff presents a risk, but it also provides an opportunity for bipartisan agreement on reforms to restore fiscal sustainability.”
Geithner criticized Republican budget and tax plans, saying any tax reforms must be combined with spending savings.
“If you try to restore fiscal balance without a penny of additional revenue, then you have to cut deeply -- too deeply -- into critical functions of government,” Geithner said.
On Europe, Geithner said it is in a much stronger shape than it was months ago.
“Europe is doing a better job of managing their crisis,” Geithner said in a CNBC interview. While growth is weak and “they’ve got a really tough, long, hard road ahead of them, they’ve done a much better job of providing a measure of calm and stability.”
Geithner said the “competitive playing field” with China is shifting in the U.S. direction. Geithner dismissed a comment by Republican presidential candidate Mitt Romney that if he were president he would label China a “currency manipulator.”
“By just calling them a name? Like you can solve problems in the world, a very complicated world we live in, by calling people names?” Geithner said.
Geithner also responded “no” when asked at the Portland City Club if he would become president of Dartmouth College, his alma mater. Geithner has said he won’t remain Treasury secretary after the end of President Barack Obama’s first term.
To contact the reporters on this story: Cheyenne Hopkins at Chopkins19@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at firstname.lastname@example.org