'This Week' Transcript: Timothy Geithner

Mar. 29, 2009 — -- ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS"

MARCH 29, 2009

SPEAKERS: GEORGE STEPHANOPOULOS, HOST

SECRETARY OF THE TREASURY TIMOTHY F. GEITHNER

[*] STEPHANOPOULOS: Good morning and welcome to "This Week."

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: We put in place a comprehensive strategydesigned to attack this crisis on all fronts.

(END VIDEO CLIP)

STEPHANOPOULOS: Our headliner this morning, the man behindObama's plan.

(BEGIN VIDEO CLIP)

GEITHNER: We made some significant progress.

We have a moment of opportunity now.

We believe we have to provide very substantial forms offinancing.

(UNKNOWN): Today we love Geithner. Two weeks ago, we didn'tlike him. We thought he was nothing. Today we like him. He's agenius.

(END VIDEO CLIP)

STEPHANOPOULOS: In his first Sunday interview, the secretary ofthe Treasury, Tim Geithner.

Plus, Geithner's most prominent critic.

(BEGIN VIDEO CLIP)

PAUL KRUGMAN, NEW YORK TIMES: It's a plan to rearrange the deckchairs and hope that that keeps us from hitting the iceberg.

(END VIDEO CLIP)

STEPHANOPOULOS: Nobel Prize winner Paul Krugman joins ourroundtable, with George Will, Cokie Roberts and Matthew Dowd.

And as always, the Sunday funnies.

(BEGIN VIDEO CLIP)

(UNKNOWN): Michelle Obama's planting a vegetable garden on theWhite House lawn. You know the economy is bad when the Obamas areafraid of running out of food.

(END VIDEO CLIP)

STEPHANOPOULOS: Hello again. Last week, he was under fire; thisweek, he was everywhere, rolling out new proposals to shore upAmerica's finances. And today, Treasury Secretary Tim Geithner joinsus for his first Sunday morning interview. Welcome to "This Week."

GEITHNER: Thanks, George. Good to be here.

STEPHANOPOULOS: So you lay out the first phrase of the bank planback in February. The Dow drops 382 points. This week, you laid outthe new phase of the bank plan, 500-point rise over the course of theweek. Do you feel like the comeback kid?

GEITHNER: George, we're facing still a lot of challenges. Can'tjudge a plan on the reaction one day one week. But we've done a lotin these eight weeks. You know, the president's housing plan hasalready helped bring down interest rates. Millions of Americans noware going to be able to take advantage of lower interest rates. Ifyou take a typical family living in a $180,000 home, the ratereductions we've already seen could save them as much as $2,000 ayear.

STEPHANOPOULOS: And we did see a lot of encouraging signs in theeconomy this week. New home sales were up. Mortgage refinances, asyou pointed out, were up. Even durable goods orders were up, andinventories went down. And of course, a 20-percent rise in the stockmarket over the last couple of weeks. What does this tell you? Whatshould Americans know right now about where the economy is and whetherrecover is in sight?

GEITHNER: Well, these are encouraging signs, and it's good whenyou see the new surprise on the upside, rather than the other way.

STEPHANOPOULOS: So you were surprised?

GEITHNER: Well, I think these are, again, they came in aboveexpectations, much (inaudible) -- that's a very good sign. But it'svery important for people to understand that, you know, it took us along time to get into this mess. It's going to take us a while to getout of this. Progress is not going to be even. It's not going to besteady. The really important thing is that the administration isgoing to do what is necessary working with the Congress to making surewe're putting in place very powerful programs to get Americans back towork.

STEPHANOPOULOS: So you're barraged by economic statistics everyday. I'm sure there are a bunch of screens in your office. What isthe single most important statistic that you are looking at, thatyou're tracking to say, when this turns, we're out of the woods?

GEITHNER: There is no single number you have to look at. Youneed to look at what people are doing with the income and the savingsthey have. Are they spending? Are businesses expanding? Are theyhiring more people? Are interest rates coming down? Is creditstarting to flow again? You have to look at that broad suite ofthings. There's no single number that gives you the health -- themeasure of the health of the economy.

STEPHANOPOULOS: What is the next shoe to drop? In talking tobusiness leaders over the last couple of weeks, I hear a lot ofconcern about the commercial real estate market. And from bankersespecially, they're concerned that as unemployment rises, their creditcard defaults could really go through the roof?

GEITHNER: There's no doubt there's more losses ahead for thefinancial system, but George, we've had a lot of adjustment already.One of the things about the American economy is, change happens herewith brutal force, much more quickly than it happens around the world.And we've already had -- you know, we're 18 months into this, andwe've had...

STEPHANOPOULOS: It's a long recession.

GEITHNER: It is a long recession, and it's a -- it's beendramatic and painful and brutal in some ways, in part becauseadjustments happen here so quickly. But that's a good thing too,because that means more of that adjustment process is behind us.

Now, the important thing, though, is that we keep at it. Youknow, the big mistake governments make in recessions is they put thebrakes on too early.

STEPHANOPOULOS: Is that what happened during the depression? Isthat what Franklin Roosevelt did?

GEITHNER: That's one thing that happened in the depression.It's happened in Japan, too. It's happened in a lot of countries inthe world. They see that first glimmer of light, and the impetus topolicy fades and people are putting on the brakes, and we're not goingto do that.

STEPHANOPOULOS: But I wonder about, as you look in the long term-- and you believe we're obviously going to come out of this at somepoint. You believe the recovery will start, what, the end of thisyear?

GEITHNER: Most private economists believe you're going to find amore durable bottom in the second half of this year and then havegrowth come back.

STEPHANOPOULOS: But even if we come out of that, a lot ofeconomists worry that this recovery is going to feel like a recession,that we're going to have a jobless recovery. Very -- I see younodding your head. You believe that?

GEITHNER: I think a lot -- people worry about this. You have arecession like this, which is born out of a period where peopleborrowed too much, and we let our financial system take on too muchrisk. The risk in that conduct is you have a longer, slower, moregradual process of adjustment and recovery.

STEPHANOPOULOS: And some experts believe that we're reallyentering a brand new world. I was struck by a piece of research I sawfrom a branch of Citigroup. This was -- and I'm going to share itwith our viewers. They're saying, "Don't be in a state of denial, weare really entering a brand new economic world even after therecovery, because for so long the U.S. has been acting like aleveraged hedge fund."

And they go on to say: "Not only is the lifestyle and wealthcreation likely to be unsustainable going forward, but if you believe,as we do, that we've been operating in a leveraged economy, then thenew normal in terms of economic data, profitability of companies, etcetera, may be a shadow of the past."

So do Americans have to get used to the idea that the boom timesreally aren't coming back?

GEITHNER: Well, we're going to emerge out of this stronger. Andwe're going to do that because the president and the Congress aregoing to make sure that we have the government doing a better job ofthings it needs to do.

So we have a more productive economy in the future, bettereducation outcomes, better health care system, better energy policies,stronger infrastructure.

STEPHANOPOULOS: Stronger, but as affluent as we were in thepast?