'This Week' Transcript: Timothy Geithner
Transcript: Timothy Geithner
WASHINGTON, April 17, 2011 — -- AMANPOUR: This Week, a ticking time bomb. All eyes on theexploding national debt.
(BEGIN VIDEO CLIP) PRESIDENT BARACK OBAMA: Doing nothing on the deficit is just notan option.
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AMANPOUR: And that looming threat which could force the UnitedStates government to default.
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REP. JOHN A. BOEHNER, R-OHIO, HOUSE SPEAKER: There will not bean increase in the debt limit without something really, really bigattached to it.
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AMANPOUR: Tough questions for President Obama's point man on theeconomy, Treasury Secretary Timothy Geithner.
(BEGIN VIDEO CLIP)
GEITHNER: The people who would take this to the edge, to thebrink, they'll own responsibility.
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AMANPOUR: And then the leading edge of the opposition, the TeaParty. Key members join us, 100 days after a revolution swept theminto office. How far are they willing to push the president and theirown party to fulfill their promise to balance America's checkbook?
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DONALD TRUMP: We have to take our country back.
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AMANPOUR: What to make of this surprise Republican frontrunner?Plus, Hillary Clinton warns the Arab spring may melt into a mirage inthe desert. But will it? A special reporter's notebook from TerryMoran at the heart of the revolution that is still unfolding.
Welcome to our viewers here and around the world. PresidentObama hits the road this week on a mission to sell his brand of fiscalresponsibility to the American people. This just days after HouseRepublicans approved their dramatic plan to tackle the debt crisis.At issue: A national debt that has ballooned to more than $14trillion. The United States is now borrowing $2 million a minute.
As for the plans, President Obama wants to end the Bush taxbreaks for the wealthiest Americans, and he's calling for spendingcuts, including at the Pentagon, and cost-cutting reforms to Medicareand Medicaid. Republicans are demanding steep spending cuts, no taxhikes, and a massive restructuring of Medicare and Medicaid that wouldfundamentally transform two pillars of the American safety net.
The plans are worlds apart, and the clock is ticking. In amonth, the United States will reach its borrowing limit. In order toborrow more money to meet obligations, Congress must vote to raise thedebt ceiling, and getting Republicans on board may not be that easy.I spoke with Treasury Secretary Tim Geithner about the showdown andthe stakes.
AMANPOUR: Secretary Geithner, thank you for joining us.
GEITHNER: Nice to see you.
AMANPOUR: The debt ceiling is going to be the next big battle,it is the next big battle. Can you really spell out in plain Englishfor our viewers what is the impact, if it's not raised, for the UnitedStates and for the average American?
GEITHNER: Well, I want to make it perfectly clear that Congresswill raise the debt ceiling.
AMANPOUR: You're sure about that?
GEITHNER: Absolutely. And they recognize it, and they told thepresident that on Wednesday in the White House. And I sat there withthem, and they said, we recognize we have to do this. And we're notgoing to play around with it. Because we know -- we know that therisk would be catastrophic.
And it's -- you know, it's not something you can too close to theedge.
AMANPOUR: So what they say in private is not quite what they sayin public?
GEITHNER: Well, you know, they have said in public, too, thatthey recognize that America has to meet its obligations.
Again, you know, this is just about the basic trust andconfidence in the United States. It's about the basic recognitionthat we made commitments, we have to meet our commitments. There's noalternative, and they recognize that.
AMANPOUR: What if it wasn't raised? What is the doomsdayscenario?
GEITHNER: I'll be very direct about it, and people understandthis. Again, anybody running a business or -- understands this. Whatwill happen is that we'd have to stop making payments to our seniors-- Medicare, Medicaid, Social Security. We'd have to stop payingveterans' benefits. We'd have to stop paying all the other paymentson all the other things the government does. And then we would riskdefault on our interest payments. If we did that, we'd tip the U.S.economy and the world economy back into recession, depression. I think it would make the last crisis look like a tame, modestcrisis. It would be much more dramatic. The cost of borrowing wouldgo up for everybody, and it would have a permanent devastating damageon our credit rating as a country. And that's why there is noresponsible person that would take any risk that we allow the world tostart to fear that the U.S. would court that -- that tragedy.
Again, if you take it too close to the edge, then people willstart to wonder, really, what are we doing, what are we thinking.
AMANPOUR: You seem to be confident. You're saying that theywill vote to raise the debt ceiling. On the other hand, you're alsoleading quite a concerted campaign with Wall Street, with big bankersto try to persuade the Republicans -- those who may be doubting this-- that they have to do this. So you're not sure?
GEITHNER: Well, we're not -- we're not leading that, because thebusiness community is -- wants to make sure that people up thereunderstand. You know, remember, there's a lot of new people up there,and this is a hard vote for people. And you know, there's been alittle bit of a tradition that people play politics with this. So thebusiness community is doing what we'd expect to make sure people upthere don't miscalculate. And again, the people who would take thisto edge, to the brink, they'll own responsibility for calling it toquestion, our credit worthiness, and that would not be a responsiblething to do.
I'll tell you what -- what's the hard thing to do. The hardthing is not to raise the debt limit, because Congress will always dothat, and they recognize that. The hard thing is to try to takeadvantage of this moment, and get Republicans and Democrats to cometogether and lock in some reforms that will reduce our long-termdeficits.
That's -- that's going to be -- that's really important to do,because the world is watching now. And they want to know thatWashington takes these things seriously, and is willing to get aheadof this problem.
You see the Republican leadership say, and you see the presidentof the United States say, and you've seen a bipartisan fiscalcommission say, that we need to try to lock in reforms that will bringabout -- about $4 trillion in deficit reduction over 10 to 12 years.When they all agree that we have to do it, they agree on the basicmagnitude, the basic -- same basic timeframe, then we have a chancenow to get Congress to lock in some concrete targets and concretetimelines. And then enforce them there, just to make sure it happens,and I think we can do that.
AMANPOUR: And yet, this week, when the president made hisspeech, certainly, many Republicans thought that they were sort ofambushed.
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OBAMA: And I don't think there's anything courageous aboutasking for sacrifice from those who can least afford it and don't haveany clout on Capitol Hill.
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AMANPOUR: Is this the right tone, do you think, that willencourage people like Speaker Boehner to actually come together and,as you hope, get this thing passed?
GEITHNER: Look, we recognize, the president recognizes, andRepublicans recognize, this is something we have to do and we have todo it in a bipartisan basis. Neither side has the votes to do this ontheir own, and you have to come together to do it.
AMANPOUR: What can you give to the Republicans ahead of thisvote?
GEITHNER: Well, let me step back for one sec.
You know, we, in the years before this crisis, we were piling ona lot of debt. As a country now, we borrow about 40 cents for everydollar we spend. We're on an unsustainable path. And that -- again,that's why it's so constructive and so encouraging you see Republicansnow and Democrats all saying this is an important commitment, andlaying out the same basic order of magnitude cuts that are going to benecessary.
Now, we have very big disagreements on what the right balance is,but there are things we agree on and we can lock in today. The thingswe're going to disagree on for some time, we can take more time toresolve.
But what we think we can do is lock in some targets for deficitreduction, specific timeframe, ways to make sure those happen, thatthere are credible enforcing mechanisms, and we can agree on that nowand still give us some room to debate and to disagree and to negotiateon composition of tax reform.
AMANPOUR: Now that we're talking about budget cuts and that'sthe whole conversation in Washington, is that going to damage therecovery?
GEITHNER: No, I don't -- I think we can do this -- and that's avery good point, I'm glad you raised it.
One of the reasons why you want to do this in a way that'sbalanced and has a medium-term plan, you know, it locks in changesover several years, is because you need to do this gradually so thatyou protect the recovery, and I think we can do that.
But we can make these changes, if we do it carefully, without, Ithink, hurting the economy, without adding to the burden on the middleclass, and without gutting or eroding investments in things we need tomake sure we do in the future.
AMANPOUR: So the president, also in his speech, talked aboutrevenue raising -- taxes, taxes on the wealthy. GEITHNER: Well, I think it's important for people to recognizethat we cannot afford to extend these tax cuts for the wealthiest 2percent of Americans. We can't afford it and we have to do taxreforms.
AMANPOUR: So Speaker Boehner says that's a non-starter.
GEITHNER: But there's no surprise to that. You know, theybelieve that.
But I think, you know, Chairman Ryan's budget helps explain whythis is going to be essential, because if you want to extend these taxbreaks for the top 2 percent, then either you have to ask me to go outand borrow trillions of dollars from the Chinese or from foreigninvestors or from Americans, from our children, or you have to cut --as he proposes to do -- very, very deeply into basic benefits forseniors, the disabled, the poor. And we don't need to do that inorder to restore balance for our fiscal position.
AMANPOUR: Will raising taxes on the wealthy be enough to reallymake a dent in the deficit? Many economists are saying that you'regoing to have raise taxes on the middle class as well.
GEITHNER: Yes, very important question, and I'm glad you raisedit.
And think about it this way. If you -- it's true we have tobring these deficits down, but if you do it in a balanced way, thatincludes spending savings, reforms to health care and tax reform, thenyou 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 themiddle class.
And the reason why that's true is because a -- we have a hugeamount of spending in the tax code, special tax breaks that godisproportionately to the most fortunate Americans.
So it is possible to do this, the president believes we can dothis, I believe we can do this, without adding to the burden on themiddle class.
AMANPOUR: Where would the specific reforms be? The presidenttalked about closing certain loopholes and certain deductions forpeople. Where would the specifics be?
GEITHNER: Well, the two basic foundations of this we think thatwould be responsible, are, again, to let the tax cuts -- temporary taxcuts put in place under President Bush for the top 2 percent -- letthem expire.
And the second is to reform the tax code by eliminating some ofthese special expenditures, special tax breaks, again, that godisproportionately to the wealthy Americans.
AMANPOUR: Which ones? GEITHNER: Remember, only -- only 30 percent of Americansitemize. And those benefits, even like the mortgage interestdeduction that lets people have two homes, pretty expensive homes,those are things, again, if you target them on the most fortunateAmericans, they can afford to take a little bit larger share of theburden. They can afford to do that.
AMANPOUR: The IMF, and there's the meeting this weekend, hasbasically said that the United States is not doing enough right now toattack its deficit problem, and that dramatic measures, drasticmeasures should be taken.
Are you going to take any more drastic measures? I mean, they'recomplaining.
GEITHNER: We -- I think we all agree, and again, it's importantfor people to recognize, Americans to recognize, that the world iswatching us. They want to see, is America up to this.