U.S. Treasury Secretary Timothy Geithner recently suggested the Simpson-Bowles deficit reduction framework is the way forward in terms of balancing the federal budget.
“This debate about what’s the right path to fiscal sustainability—it really began with Bowles-Simpson and that’s where it’s going to end,” Geithner said during an interview with Andrea Mitchell of MSNBC at the Council on Foreign Relations Wednesday. “The framework the president laid out is very close to that basic design.”
Simpson-Bowles, named for its bipartisan creators—former President Bill Clinton’s White House chief-of-staff Erskine Bowles and former Sen. Alan Simpson of Wyoming, co-chairmen of Obama's deficit commission—included a combination of tax increases and spending cuts to balance the budget. Earlier this year the House shot down a Simpson-Bowles-like plan. Yet, there continues to be rumblings that portions of the plan will resurface in future legislation.
Geithner, echoing the Obama administration’s stance, called for Washington to work together to restore confidence in government.
“We need to take advantage of the incentive created by the sequester and these expiring tax cuts to force this town to confront and take on the things that divide us now in these long-term fiscal reforms so we can go ahead and govern,” he said. “This is a place where people spend a lot of time worrying whether Washington can work again and for Washington to say, ‘We’re going to defer,’ I don’t see how that would be helpful to confidence.”
In clarifying President Obama's much dissected - and apologized for - remark that the "private sector is doing fine," the Treasury secretary said: "It's a very tough economy still - [there's a] huge amount of damage left over, long way to go to repair that damage, growth is not as strong as we'd like."
In the wide-ranging interview with Mitchell, Geithner also praised JPMorgan for being "direct and clear and crisp in admitting the scale of the error" it recently made in a multibillion-dollar trading loss and suggested that European leaders were ready to do "whatever is necessary to hold it together."
"We can't make these choices for them," he added.