Below is the full transcript.
STEPHANOPOULOS: Mr. Secretary, thanks for doing this.
GEITHNER: Happy to do it.
STEPHANOPOULOS: Are we in recovery?
GEITHNER: Economy's growing, getting better, getting stronger, and I think most people would say that actually the economy is strengthening going into the end of the year, accelerating now. But the key thing is, when do we get job growth back?
STEPHANOPOULOS: Well, that's what I was going to ask you, but you say it's accelerating. We saw the job loss slow down a lot in November, only 11,000 jobs lost. Are jobs going to be created in December?
GEITHNER: I don't think so. I think it's likely — most economists would say that, by the spring, we'll have positive job growth.
STEPHANOPOULOS: And you'd…
GEITHNER: Maybe before that, but by then, I think.
STEPHANOPOULOS: Maybe before that, though?
GEITHNER: Maybe. Maybe. It's possible.
STEPHANOPOULOS: Yet, you know, most of the country is still not feeling it. We have — saw a new poll out today that shows that fewer than 1 in 3 Americans believe your administration's policies will
actually help them. What do you say to that?
GEITHNER: Well, you know, it's — it's very hard still out there. It's still a very tough economy. The crisis just caused a huge amount of damage to people's basic confidence in their economic future. You see that in business confidence, consumer confidence, too.
But confidence is improving. Gradually you see in what people say about how they feel about their future…
STEPHANOPOULOS: Is that the key?
GEITHNER: It's — it's very important to it. And — and it's going to get — it'll get progressively better over time. But the policies that the president put in place, they are doing what they had to do, what they're supposed to do, and we have an economy that's growing again at a rate faster than we would have thought, earlier than we would have thought. That has to come before you start to see job growth coming.
But even on the jobs front, you see some of the early signs that that's getting closer, because you see…
STEPHANOPOULOS: You said you expect it in — in the beginning of next year.
GEITHNER: By — by the spring.
STEPHANOPOULOS: By the spring. Is it going to be steady? Are we going to see job creation all year? Do you think it's going to go up and down?
GEITHNER: Well, you know, again, it's hard to know. You don't — you don't — you can't be sure you're going to have a straight, steady path, because, again, this was a — a real mess and just a huge amount
of damage was done, and it's going to take some time still to get out of this.
But I think most economists would show more optimism today about how strong the economy is in 2010, and that optimism is growing.
STEPHANOPOULOS: We asked your former Fed colleague, Alan Blinder, to grade the administration on the last year. Gave you an A for restoring the financial system, B for job creation, a C on home foreclosures. Is that fair?
GEITHNER: I don't think so. I'd say it this way. What the president did on housing was to bring interest rates down in ways that had hugely powerful effects on home prices and stability. He also put
in place a program to help people who could afford to stay in their homes stay in their homes, and that program has already put 750,000 Americans into loan modifications that reduce their monthly payments
Average homeowner under this program has $500 a month more in their pockets today because of this program, $6,000 a year. That is a very substantial real benefit for people who can afford to stay in their homes. But there is still a lot of people across this country who are going to lose their homes.
STEPHANOPOULOS: Well, foreclosures topped a million…
GEITHNER: They — they are.
STEPHANOPOULOS: Just right now. And, you know, we're seeing some of the banks say, for Christmas, they're going to hold off on foreclosing, but do they need to be forced to do more?
GEITHNER: You know, I think it's very important banks work very hard to start to rebuild trust and confidence of the American people in their institutions in the financial system. They did a huge amount of damage to the country, lost a huge amount of trust and confidence. They need to work very hard to restore that. One of the ways to do that…
STEPHANOPOULOS: Do you think they get that?
GEITHNER: I don't think they get it. I think some banks do; I don't think all banks get it yet.
STEPHANOPOULOS: What do they need to do to show that they get it?
GEITHNER: I think they need to make sure they're doing everything they can to help people who can afford to stay in their homes stay in their homes, help make sure they are lending in communities that need access to credit, they're working very hard to make sure that viable businesses that face some increased demand for orders now for their products now can get the credit they need.
They need to show some restraint and care in how they pay their people, and they need to be supportive of the kind of reforms we need to create a more stable system in the future.
STEPHANOPOULOS: That's all encouragement. Where's the stick?
GEITHNER: The stick is through what Congress is going to have to legitimate through reforms. You know, we're not going to run a strategy to protect the country from future financial crises that rests on the hope that banks in the future behave more wisely and more nobly. We're going to run a strategy that requires reforms that are going to — going to restrain risk-taking, provide better protections for consumers.
STEPHANOPOULOS: Let's talk about health care. I was talking to Howard Dean last week, and he told me that the Senate bill is just a bonanza for the health insurance industry. He said it was the biggest bailout since AIG. And — and investors seem to agree. As it became clear the Senate bill would pass, health insurance stock hit a 52-week high. So does that show that this Senate bill is a bonanza for the
health insurance industry?
GEITHNER: I don't think so. I think this is a very strong package of reforms that will be very good for the American economy and very good at trying to offer the prospect of improving care, expanding access, and lowering future cost.
If you look at the best, nonpartisan, independent analysis of what this bill will do, it supports that proposition. Lower costs over time, better care, broader access. It's a very strong bill.
STEPHANOPOULOS: So you don't think it's a bonanza for the health care industry?
GEITHNER: I don't. No, I don't.
STEPHANOPOULOS: You talk about lowering costs over time. A key to that is this tax on high-priced health ins
urance plans that is in the Senate bill, but that's also a big difference. The Senate bill has that
tax. The House bill has the surtax on wealthy Americans. You can't get the cost control the president insists on without that tax, can you?
GEITHNER: That is one way to bring down growth in long-term costs. That's only one way.
STEPHANOPOULOS: But it's essential, isn't it?
GEITHNER: It's very important to it. But, you know, there are differences in these bills remaining which they're going to have to work through, and they're committed to work out those differences, but those differences are relatively modest still, and I think the president is very confident that they're going to work those differences on terms that will, again, preserve this key outcome, which is significant changes in quality, access to care, and lower rate of growth in costs in the future.
STEPHANOPOULOS: So that means preserving this tax on the high-priced health insurance plans?
GEITHNER: Again, that's — our view is that's important. It'll be very helpful. But there are a range of other things in both those bills that will also be important to bringing down costs in the future.
STEPHANOPOULOS: Right, but let me just push you on this a little more. If that goes away, if the 170 House Democrats who are opposed to it get their way, you lose the cost control, don't you?
GEITHNER: Let me say it this way. Very important that the ultimate bill — and we're very confident that it will — changes incentives to help reduce growth in cost in the future and provide this package of
better care, more affordable care, expanded access on terms that are fiscally responsible, don't add to the deficit, bring down long-term deficits.
STEPHANOPOULOS: Sounds like a dog whistle to those House Democrats, they're not going to get what they want.
GEITHNER: Well, again, I would say that we're in a great position today, and these are strong bills. There are some differences to be worked out, but there's a strong commitment on both sides to work out those differences.
STEPHANOPOULOS: Meanwhile, we saw a whole bunch of deal-making in these final hours on the Senate bill. Mitch McConnell, the Senate Republican leader, said the bill is just chockfull of cheap deals. And, you know, you see in Nebraska Senator Ben Nelson demands a permanent federal commitment to his Medicaid expenses, even as Republican Senate colleagues from Nebraska says it's not right for Nebraska to get something that the other states don't get. How can you justify it?
GEITHNER: Again, I would say, George, just to step back and say look at what these bills would do, again, this is the most important set of reforms to one of the hardest problems facing the American economy and facing the American people that you've seen in decades, and it offers the prospect of, in a very short period of time, having substantial expansion, access to affordable care, better incentives for how we use health care in a way that is fiscally responsible, what we pay for brings down — brings down long-term deficits. That's the important thing to focus on.
STEPHANOPOULOS: But do you think this is the right way to do business?
GEITHNER: I do. Well, I think, you know, the legislative process works in mysterious ways in our country, but you have to focus on what the outcomes are, and this is a good — a strong package of reforms, better than I think many people would have thought was possible a month ago, three months ago, six months ago, nine months ago.
STEPHANOPOULOS: And what do you say to someone in New York when they seen Nebraska getting this sweet deal?
GEITHNER: Well, I would say that you have to look at the outcome and what it does for the country as a whole. That's what I would say.
STEPHANOPOULOS: Ticking time bomb, debt, deficits. And it's a global problem right now. You know, the man in charge of Standard and Poor's, they rate companies and countries, as well, he says that the United States is going to have to pare back on stimulus spending, cut back on spending, raise revenues, and eventually also curb entitlements like Social Security. I see you nodding your head. He's right, isn't he?
GEITHNER: Well, here's how I would say it. We started this year with very large deficits near term and long term, completely unsustainable deficits. But the critical priority for the country then and still is now is making sure we do everything that is sensible and practical and effective to try to make sure we are reinforcing growth, we bring forward the day that which the economy is creating jobs again. That is very, very important.
STEPHANOPOULOS: So you have to address the jobs situation first…
GEITHNER: You do.
STEPHANOPOULOS: … before you get…
GEITHNER: And nothing is possible. It will not help long-term deficits to cut spending, cut deficits sharply in the midst of an — in an economy that's still at such an early stage of recovery. That would not be fiscally responsible to do.
But the president understands and we understand that for this economy to grow over time, people need to understand we will have to bring those deficits down. And we will start to do that once recovery is firmly established and we're confident the private sector can — can carry this forward and start to invest and create jobs.
STEPHANOPOULOS: So jobs first. Does that mean the president wants to sign a new jobs bill, $100 billion to $200 billion, before the State of the Union?
GEITHNER: Well, you've seen the president say is he's prepared to support and thinks it would be important for the country for the Congress to support a series of targeted initiatives to help spark recovery and private investment and help get jobs growth back as quickly as possible. He outlined several weeks ago a set of measures that might help do that, and he's going to work with Congress to try and achieve that. And we can afford to do that as a country. We want to do it carefully. There are limits to what the government can do, but we think there's a good case for modest, targeted set of measures now.
STEPHANOPOULOS: So you do the stimulus now. I know you don't want to call it a stimulus. You do the jobs bill now, and then the president's budget comes out. Does he have to freeze spending?
GEITHNER: Well, what he has to do is lay out a path and explain why it's so important that, again, as we get the economy back on track, get people back to work, and we bring down those deficits, and for the United States, we're going to have to bring them down quite substantially over time.
So over the next three to five years, we're going to have to bring them down quite substantially, but we can do that as a country.
STEPHANOPOULOS: But that's going to require real change…
GEITHNER: It's going to require change. But (inaudible) understand that, as a — as a country, we're actually in a relatively strong position compared to what many, many other countries face around the
world today, because our demographical problem, meaning the share of our population that is aging, going to retire, is much less dramatic and acute than it is for other major economies.
Our underlying growth rates are stronger than other major economies. And we started with a lower debt burden relative to the share of our economy than other major economies. So this is going to be
a challenge for us, but this is something we can do. And in many ways, we're in a better position to manage through these things than is true for other major — and you see that in how investors are treating the United States today, because you see relative confidence really very high, despite the challenges we face.
STEPHANOPOULOS: You know, but I was talking to one of your predecessors recently who said you just don't know at what point you reach this psychological tipping point where the confidence of those
investors starts to drain away because they're worried about debt.
GEITHNER: That's right. And so — so no one is going to care more about this than the president and me. We both understand deeply how important it is that Americans understand, investors understand around the world that we will have the will as a country to bring those deficits down when the economy is on a self-sustaining recovery.
STEPHANOPOULOS: What are the three most important things the country has to do to get that done?
GEITHNER: You mean to get recovery back?
STEPHANOPOULOS: No, to get — to get the long-term debt and deficits under control.
GEITHNER: Oh, it's — the simplest way to say it is you have to bring our resources and — our resources and our commitments more into balance. And you need to bring them down quite substantially.
For an economy like the United States, over time, we can't have deficits that are higher than roughly 3 percent of GDP. So we're now substantially above that. As the economy recovers, tax revenues will go
up, we'll spend less on unemployment insurance, things like that. That'll help bring the deficit down quite — quite dramatically, but we'll have to do more things than just wait for recovery.
STEPHANOPOULOS: So it's going to mean less spending, more taxes?
GEITHNER: It'll have to bring, as I say, the resources and our commitments more into balance.
STEPHANOPOULOS: Let's talk about your last year. You took some shots at the beginning of the year during your confirmation process. The market tanked when you first rolled out the bank plan. And you faced some pretty harsh criticism in Congress. How much of it was deserved?
GEITHNER: Oh, you know, this is — I knew from the beginning that this was going to be very hard and tough. And the things that we thought were necessary to do were going to be deeply unpopular on both sides of the aisle. It would be just unfair and unjust to many parts of the American — of the country, Republican and Democrats. Many Republicans wanted us to do very little, let the fire burn itself out. Many Americans thought it would be unfair to actually do things to help a financial system that got us into this mess.
STEPHANOPOULOS: The bailout bill.
GEITHNER: Yeah, so I knew this was going to be very tough and difficult, but, you know, our job is to do what we think is necessary to help get the economy back on track. And what we did to help break the back of this financial panic was hugely effective at much lower cost than anybody expected.
If you just think about it, over the last month, we've had $90 billion come back from banks. Banks are repaying with interest.
STEPHANOPOULOS: To the TARP you'
re talking about?
GEITHNER: Yeah, and — and that's just one measure of how quickly we've been able to get stability back. And the fact that we've been able to do it so quickly at much lower cost means not just the economy is growing more earlier than we thought, people are not — are — are more confident about their financial future. You see the value of 401(k)s, cost of credit much better than it was before, but at much lower cost, and that means we have more resources to meet these other long-term challenges facing the country.
STEPHANOPOULOS: You know, but one of the things we're seeing is that, as the banks pay back this money, they're raising a lot of stock — money in the capital markets, and they're actually paying themselves. As they do that, a column in the New York Times this morning quoted one of the bankers saying, "Thank you, Mr. Geithner."
GEITHNER: Yeah, I saw that. I saw that. But overwhelmingly what's happening…
STEPHANOPOULOS: What did you think when you saw it?
GEITHNER: Well, again, most of what's happening, Americans can take some comfort in, because, again, relative to what almost anyone thought going back 11 months ago, we've been able to repair the most damaged parts of our financial system much more quickly at much lower cost to the taxpayer, and banks are repaying with interest. Just on the bank piece of this program, we've got $50 billion, $15 billion in profits already. That is a real powerful economic gain for the country, and we're in a much better position today because the president was willing to do unpopular things quickly and early with very substantial force to fix this.
STEPHANOPOULOS: You said earlier that some of the banks get it. Which ones don't?
GEITHNER: That's not a judgment for me to make or I want to share you — share…
STEPHANOPOULOS: Well, you're going to make it. You're just not going to share it.
GEITHNER: However, I don't think I'll share that with you, no.
STEPHANOPOULOS: Let me just ask one final question. It's just about Christmas. Beyond a few days off, what is your real wish this Christmas?
GEITHNER: Oh, I think Americans should go into the holidays and into next year with more hope, with more hope about the future, because they can now — and you see it in how they're behaving and acting. You can see now the beginnings of that process of healing, confidence gradually improving, and that's something we want to work very hard to reinforce.
STEPHANOPOULOS: Mr. Secretary, thanks very much.
GEITHNER: Thank you. Nice to see you.
This transcript has been edited for clarity.