Congress may have avoided default when the House voted to raise the debt ceiling last night, but Sec. Tim Geithner said the chaotic negotiating process hurt our economy and the U.S. may still be downgraded.
“I think confidence here was absolutely very damaged by this spectacle they’ve seen in Washington of a significant number of elected officials in this country threatening default,” the Treasury Secretary told me.
I asked him if the way the debate unfolded made a credit downgrade from AAA rating likely?
“I don't know. It's hard to tell. I think this is a good result, but a terrible process,” Geithner said. “And again– again, I think as the world watched Congress step up to the edge of the abyss, it made them really wonder whether this place can work.”
But the deal won’t hurt our recovery or lead to a double dip recession, the secretary told me. He said he’s pleased that it implements modest cuts now with more significant cuts later.
“You know, I think the basic reality we live with and, you know, part of governing is recognize we live with– we don't have unlimited resources, and we inherited and are left with unsustainable deficits long term,” he said.
The deal, the secretary said, won’t cost jobs – but it won’t create any either.
“No, this agreement itself, on its own, doesn't create jobs,” he said. “What it does is it avoids doing more damage in the short term, because the president refused to accept the types of deep spending cuts that many in congress wanted.”
So now the Democrats will pivot hard towards extending the payroll tax – something Obama couldn’t get in this deal but Geithner says they can still push through.
“I'm very confident that's going to happen. You know, again, I've been part of all these discussions,” he said.
“I think it's going to be very hard for Republicans to prevent that from happening. I think it's very hard for them to stand up and say that they're going to try to block the extension of that tax cut that's worth about $1,000 a year for the average American family. Untenable for them to block that,” he said.
And what does the secretary think about Apple having more cash than the U.S. Government?
“[I] wouldn't look at it that way. We– our strength as a country is the basic strength of the economy long term. We're a very rich and strong country, a very resilient country long term,” he said.
Ultimately, of course, what you need is congress making sure that they can demonstrate, they can come together and solve some of the problems we face and that's what the president's working so hard to do.”
Congress eventually did come together to make a deal – and previous reports said that Geithner was considering leaving the Treasury once the debt ceiling was raised. True?
“I've been a little busy. I haven't had a ton of time to think about that,” he said.
“I haven’t made that decision yet. And you know, we've got a lot of challenges, president's got a lot of challenges, and, you know, I got other pressures on me, too. But– but I'll– I'll make that decision at the right moment,” he told me.
Click here to read the full transcript of my interview.