'This Week' Transcript: Timothy Geithner

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GEITHNER: But there's no surprise to that. You know, they believe that.

But I think, you know, Chairman Ryan's budget helps explain why this is going to be essential, because if you want to extend these tax breaks for the top 2 percent, then either you have to ask me to go out and borrow trillions of dollars from the Chinese or from foreign investors or from Americans, from our children, or you have to cut -- as he proposes to do -- very, very deeply into basic benefits for seniors, the disabled, the poor. And we don't need to do that in order to restore balance for our fiscal position.

AMANPOUR: Will raising taxes on the wealthy be enough to really make a dent in the deficit? Many economists are saying that you're going to have raise taxes on the middle class as well.

GEITHNER: Yes, very important question, and I'm glad you raised it.

And think about it this way. If you -- it's true we have to bring these deficits down, but if you do it in a balanced way, that includes spending savings, reforms to health care and tax reform, then you can do it in a way that has acceptable costs for the economy, preserves our capacity to invest, and doesn't add to the burden of the middle class.

And the reason why that's true is because a -- we have a huge amount of spending in the tax code, special tax breaks that go disproportionately to the most fortunate Americans.

So it is possible to do this, the president believes we can do this, I believe we can do this, without adding to the burden on the middle class.

AMANPOUR: Where would the specific reforms be? The president talked about closing certain loopholes and certain deductions for people. Where would the specifics be?

GEITHNER: Well, the two basic foundations of this we think that would be responsible, are, again, to let the tax cuts -- temporary tax cuts put in place under President Bush for the top 2 percent -- let them expire.

And the second is to reform the tax code by eliminating some of these special expenditures, special tax breaks, again, that go disproportionately to the wealthy Americans.

AMANPOUR: Which ones? GEITHNER: Remember, only -- only 30 percent of Americans itemize. And those benefits, even like the mortgage interest deduction that lets people have two homes, pretty expensive homes, those are things, again, if you target them on the most fortunate Americans, they can afford to take a little bit larger share of the burden. They can afford to do that.

AMANPOUR: The IMF, and there's the meeting this weekend, has basically said that the United States is not doing enough right now to attack its deficit problem, and that dramatic measures, drastic measures should be taken.

Are you going to take any more drastic measures? I mean, they're complaining.

GEITHNER: We -- I think we all agree, and again, it's important for people to recognize, Americans to recognize, that the world is watching us. They want to see, is America up to this.

Of course we're up to this. We can handle this challenge. But it does require that we act. We can't just keep putting this off. We can't get behind this risk. Because then if we do, then the world will lose confidence in us and you'll see growth weaker and Americans will pay more to have to borrow, and more of our savings will have to go to foreign countries. So we have to do this.

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