Portions of David Muir’s exclusive interview with Secretary Geithner aired Monday, September 26, 2011 on “World News with Diane Sawyer.”
DAVID MUIR, ANCHOR: Well, first of all, Mr. Secretary, thank you for doing this. We appreciate it.
TIMOTHY GEITHNER, SECRETARY OF THE TREASURY: Good to see you, David.
MUIR: I wanted to start with with…
MUIR: — since you spent a lot of the weekend talking about it. We’re in the eleventh hour watching Greece and I’m curious, what did you tell European leaders this weekend about how important it is that they contain this?
GEITHNER: You know, we’ve been working really closely with them for the last weeks and months, actually, starting going back to even February of 2010 and our basic message has been, from the beginning is that you need to try to get ahead of this, to make sure you’re doing everything you can to reassure people you have the intention and the capacity to hold
it together. And I think this weekend, what you heard is, they heard from everybody around the world.
This was really hurting — starting to hurt growth everywhere, in countries as far away as China, Brazil and India, Korea and they heard the same message from us they heard from everybody else, which is it’s time to move.
And you heard them start to foreshadow now — and this is very important — you heard them foreshadow in the meetings and in public that they had recognized that. They recognized the need to escalate. They’re going to have to put a much more powerful financial framework behind this.
And I — I really believe that you’re going to see them do that, but we wanted to make sure they do it as quickly as they can and as definitively as they can.
MUIR: And time is ticking. And we saw in the last week what the average American investor lost…
MUIR: — in large part due to anxiety over Greece, $7,000 for the average 401(k), now up to $109,000. That’s a huge loss.
GEITHNER: Exactly right. And, you know, last summer, growth slowed, in part, because of the same thing. You saw stock prices fall here and around the world because of concern about Europe. It’s happening this summer, too, happening now, right now. And, you know, it hurts us not just because it means that growth around the world will be slower and we’ll export less, but it hurts people very directly and very quickly when stock prices fall and the value of their pensions fall. It makes people more tentative. And that’s why it’s so important to us that they move.
MUIR: A lot of Americans will look at Greece, though, and say look at their spending through the years — retirement in their ’50s — how on earth did they ever think they were going to be able to pay for this all?
GEITHNER: Well, I think across Europe — not everywhere in Europe, but in lots of parts of Europe, not just in Greece, you saw people — governments take advantage of lower interest rates that came with monetary union and they borrowed a lot. And they spent too much. And the governments got very big. Benefits got very generous.
And it’s going to take them years and years and years to put in place the reforms they need to dig their way out of that. But those reforms won’t work unless they’re reinforced and backed by a credible financial commitment.
You know, in the United States, you saw us move in 2008-2009, late 2008, 2009 and do extraordinary things you would never want to do to try to make sure we put out these financial fires. And we used enormous financial force. We were very creative in doing it.
It was very difficult politically for us to do. But we demonstrated what — what we all know, which is that if you do it quickly and forcefully, it’s much less expensive and you get growth moving much more quickly than you would have thought. And we’d like to see them take those basic lessons and move — more more quickly now.
MUIR: I wanted to talk about our economy, if I could. The last time we were in recession, it was a good year into it before many acknowledged that we were in one.
MUIR: As you sit across from me today, can you assure us that we’re not in another recession already?
GEITHNER: Well, I think for most Americans, they feel like we still — we’ve been in a recession the entire time. It still feels very, very hard. And this is still a really, really tough economy, because we’re facing these two things together — an economy still healing from crisis, you know, working through the housing problems. People want to bring down debt, so they have — they’re saving more as income. And that makes growth slower. But we still have the huge scars of the crisis that we’re working through.
But we’ve also had these new pressures — higher oil prices earlier in the year, Japan’s crisis, Europe’s financial pressures. And those are hurting time at a time when growth was not that strong.
And so the economy now has definitely slowed. And the, really, the most important thing we should be worrying about as policymakers is how to get the economy moving more quickly, how can we get it growing more rapidly? And that’s why the president is trying to get Congress to pass this American Jobs Act.
MUIR: But as you sit here today, can you assure me that we’re not in a double dip recession already?
GEITHNER: I don’t — I think everybody would say — and I heard this this morning, not just from UPS, but from the businesspeople I met with this morning, a mix of global companies and small businesses. And what they would say, I think the numbers show now, which is the economy is still growing. It’s just not growing fast enough.
And, again, the right thing for Washington to worry about is how to get the economy growing more rapidly.
MUIR: The president’s jobs plan, one Harvard economist crunched the numbers and said of the nearly $450 billion spent, if you break down the numbers, that every job created would cost the American taxpayer $200,000. That’s a lot of money for a relatively few number of jobs.
GEITHNER: I think that’s the wrong way to look at it. Right now, I can — we can borrow money for 10 years as the government of the United States because people have confidence in this country at less than 2 percent. Unemployment is 9 percent. Growth is too slow. The overwhelming imperative for policy in Washington is to do things now to get the economy stronger. And part of that, and what this Jobs Act does, is it reduces taxes for the average American. It gives businesses incentives to hire. It proposes some very smart, sensible ways to get infrastructure to rebuild the country.
Those things are very good investments, not just to make growth stronger in the short-term, but they’ll have lasting benefits to an economy that we need to be more competitive, over time. It’s very smart to do that. Think — think about the alternative. If people in Washington just sit there and do nothing, then the economy will be much weaker. Unemployment will be higher. The average American will feel much more pressure.
This is very smart, very good policy and Congress should go do it.
MUIR: Even if every job costs $200,000?
GEITHNER: Again, you’ve got to think about the costs of the alternatives. If government does nothing, it does nothing now because they’re scared by politics or they want to debate what’s perfect, then there will be fewer Americans back to work, the economy will be weaker, we’ll be much more vulnerable to what we’re seeing in Europe right now.
It’s not the responsible path for people in government. The responsible path now is to take advantage of the unique position we’re in as a country. People have a lot of confidence in us. Let’s take advantage of that now to do things that help growth in the short-term.
MUIR: But is there even a chance that this Jobs Act is going to be passed?
GEITHNER: Oh, yes. There’s a very good chance. I mean if you listen carefully, beneath all the political rhetoric, I think you see very broad support for the tax measures the president proposed. You know, they go to the average working family, not just to businesses, to help them encourage investment and hiring. But we’re talking about reforms to unemployment insurance to make it more likely that people get back to work, ways to get teachers in the classroom, help state and local governments do more to help at the local level. These are sensible, smart things. There’s no reason not to do them. They’ve been bipartisan in the past. There’s no reason not to do them except for politics.
MUIR: Well, you’ve got a dozen Democratic senators who have said they’re not even interested.
GEITHNER: Well, I think they have to — you have to ask them the following question, what are you for?
What — you have a country still in a very tough economy. Again, growth too slow to get more Americans back to work.
What’s your plan? What’s the alternative plan? And if the alternative plan is for Washington to do nothing, that’s
unacceptable. If the alternative plan is to sit there and say we’re going to cut our way out of this by just cutting spending, that would make the economy weaker. Or — or we’re going to sit here and just complain about regulation. Will that make the economy strong? That will not do anything to help the average family now still
suffering so much from the crisis.
MUIR: We’ve been reporting on ‘Made In America’ for almost a year now. Have you seen any of it?
GEITHNER: I’ve heard about it and I like what you’re doing. Again, one of the most important things we can do is to make it more likely that more companies come to this country to create and build things and more of the demand for the U.S. products we see around the world comes from people making more things in this country.
MUIR: But let me ask you about the bridge from San Francisco to Oakland. We reported on it just the last few days, the $7 billion bridge, the contract going to China. I had a viewer who Tweeted me this morning knowing I was going to do this interview…
GEITHNER: It’s not a — not a federal government choice, right?
MUIR: It’s — it’s a state contract.
GEITHNER: A state choice, right?
MUIR: But it’s still a contract going to China.
MUIR: One viewer Tweeted this morning saying: “The contract going to China? Come on.” That seems like a logical question to ask for Americans who wonder where are the jobs? How can these bridges be made by China when we have workers so willing right here?
GEITHNER: I — I can’t speak to the merits of that particular choice. I mean I don’t know what they were thinking. But I will tell you this, it is very important that we are doing everything we can to make it more likely that people are building and creating things in this country. And that’s exactly what the president is trying to do. That’s why infrastructure spending is so important. That’s why education is so important. That’s why reforms to financial system are so important. All those things matter. They make a big difference over time.
Now, of course, we’ve got to make sure China is playing by the same rules that we are. And we’re pushing China very, very hard to let their currency rise to reflect market forces and they’re providing more American exports. And U.S. exports to China and around the world are growing, really, very rapidly now. And we want to see that continue.
MUIR: Some of the numbers are astounding. After World War II, nine out of every 10 products we bought in this country were made in America. Today, we buy more than half in foreign goods. How do we get at least some of that back and quickly?
GEITHNER: Well, if you — if you listen carefully now, if you talk to companies around the country like I do, you’ll see that something — something very promising is starting to happen right now. And I heard it this morning even. Companies are starting to relook at where they produce, American companies, companies that moved things to Mexico and China decades and years ago are starting to rethink it.
And because costs are rising so much more rapidly in China now as they’ve let their currency move and for a host of other reasons, including that this is still the greatest country on the planet, they are bringing jobs back to this country now. And we want to work with the grain of that and reinforce that. We need to see it on a much larger scale to be successful. But it’s a very important way to think about policy and what should guide policy.
MUIR: For people watching tonight, the 14 million looking for work in the last month along, where are those companies that you speak of coming back?
GEITHNER: Well, there — there have — it’s happening in manufacturing, not just high tech but in all — all across manufacturing, because, again, the average American company looks at the world today and they see costs rising more rapidly outside of the United States than in the United States. And even with all our challenges as a country, most companies that have the opportunity to produce or to compete around the world, they’ll still say it’s better to be in a
company headquartered in America and we still have the strongest fundamentals.
Now, we’ve got a lot of work to do to heal that and that’s our job, is to — is to reinforce that. But the best thing for the country right now, for those people still looking for work, is to get growth stronger. And for that to happen,
Congress has to move.
MUIR: Mr. Secretary, can you give me an example of one of the companies that have come back, though?
GEITHNER: Well, I don’t — I want to be a little careful not to call out individual companies. The company that said this morning was a company that’s in the manufacturing business that makes appliances, something you don’t normally think about as people making in the United States on a substantial scale. But even — even in appliances, it’s starting to happen. And if it’s happening there, you can see why it’s happening across other manufacturing sectors.
But, you know, that’s the beginning of a trend. But I think that’s going to happen — going to continue. It’s going to get stronger, again, because these companies, they look at the challenges of doing business outside of the United States, they see costs rising, they know how strong the American worker is, how productive he is, and I think you’re going to see more of that.
MUIR: We heard it from the president in just the last couple of weeks, saying that the three words he wants stamped are “Made in America.” It would seem so easy to encourage people if they just — if people just bought a little more made in America. Economists across the board saying all things being equal, we could create jobs.
GEITHNER: That’s good and I would encourage that. But what we want also trying to do is to make it more likely companies build that next plant here, they make that next product here, and that foreign investors around the country — around the world come and they build their next plant here, too. And to do that, we need to have better incentives for investment, better infrastructure and a competitive workforce. Those things are going to take time to do, but we can do a lot now in the short-term to make a difference.
MUIR: We see those images from Wall Street, the protesters being arrested in the last 24 or 48 hours. People still upset over the bank bailouts, saying why now are we talking about jobs and infrastructure, we should have been talking about that…
GEITHNER: But — but — but we did and we did. And the president fought, in the first few months of his administration, to pass a Recovery Act that had very substantial investments in infrastructure, help for state and local governments and tax cuts to help encourage job creation.
And then he fought again for it in 2009, the early stage in 2009. But he needs Republicans, not just Democrats, to pass these kind of things. And he’s going to keep fighting for them. But those were at the heart of what he pushed for at the very beginning and they’re going to continue to be at the heart of what he pushes for going forward.
MUIR: You know we’re in another presidential election campaign cycle. As you sit here today, you can tell me you believe this Jobs Act will be passed?
GEITHNER: I — I certainly hope it will. There’s no reason for it not to be passed. And I think you’re going to see a very substantial mix of these things work their way through the Congress, because, again, think about the alternative.
Why is it tenable for those politicians in Washington to sit there and say we’re going to spend a long time debating what’s optimal or we’re going to let politics get in the way of the economy?
MUIR: And — and — and one more question about Greece and your meetings this weekend. Do you think this is the eleventh hour for Greece? Is it on the precipice?
GEITHNER: Generally, I think if you’re a — if you live in policy or markets, what you know is markets move very very quickly. And the European leaders know and you’ve heard them say publicly, they know they’ve been behind the curve. And if you wait too long, it’s much harder to fix these kind of problems, because they get too much momentum. We learned that painfully in 2008 and 2009. Look how damaging it was, not just for us, but for the world, that it took Washington a while to move in 2008.
So they’re looking at that now and I think you’re going to see them move with more speed and more force.
MUIR: Do you believe time is running out?
GEITHNER: I think they have some time, but not very much time. And they just — they’ve got to keep at it. They’ve got to keep moving. And, again, if you listen carefully to what they said this weekend, not just to us in private, but what they said publicly, they’re foreshadowing now the escalation that’s going to come. And we’d like them to get on with it.
MUIR: You know you have critics around the world…
GEITHNER: Right. I do.
MUIR: — who say why should we take advice from the U.S., look what’s going on with your economy?
GEITHNER: And I’m very careful. I want you to know I’m very careful. I always say to them, we have tremendous challenges as a country. And we have terrible politics in our country. It’s not just in Europe, terrible politics in our country. And we have a lot of work to do still to deal with our problems.
But we are — we are working very hard at fixing our challenges. And we are very careful to come to those discussions with the humility that any American should have given the damage caused by a crisis and our — and our problems. But still, we have an interest in Europe working through this. When they ask for our advice, we give it to them. We have no interest as a country in seeing Europe go – be weakened by a protracted crisis.
And look what we did in 2009. Just think about it. This president came in, the worst crisis in a generation in the United States. And as we were fixing and — and laying that foundation for growth here, we worked very carefully to make sure the rest of the world had the resources they need for trade to restart — growth to restart.
We were — we moved with great force and care to cooperate with – at that time. And so we’re coming with not just some lessons we’ve experienced, but a lot of humility, but a strong interest as a country in getting them to move.
MUIR: You celebrated UPS here today. You talked about bridges right here in Louisville, Kentucky. How can we be sure that’s not going to be another $7 billion bridge like the one in California, where the contract goes to China?
GEITHNER: Well, the infrastructure imperative, this Rebuild America, you know, it’s not just about roads and bridges and airports and railways, it’s about the next generation of air traffic control, it’s about satellites that do a better job predicting weather, not just to help farmers, but people in the global business community, as well.
It — you know, these are the things that matter for the long run. It’s about the smart criticism that we use energy more efficiently. These things matter. They matter to how competitive we are as a country. And, you know, the government is never going to be perfect in these areas. But we’ve got to make sure we’re getting better results and smart investments like this across the country, not just at the federal level, but at the state and local level, too.
MUIR: But there — that’s supposed to be — there must be some sort of a solution to make it easier to get American workers on a bridge than Chinese workers.
GEITHNER: They — at the minute — at the federal level, we are very, very careful to make sure that the benefits of these projects don’t just make business more competitive, but they help jobs. And, you know, it makes sense. I mean, you know, some people say about 20 percent of construction workers are still out of work because the housing markets are still so terrible, construction is very weak. Infrastructure is a very good way — one of the most effective ways we
know, to get more people back to work.
MUIR: Mr. Secretary, thank you very much.
GEITHNER: Nice to see you.
This transcript was edited for brevity and clarity