Charlie Rose interview with Treasury Secretary Timothy Geithner on 3/10/09
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003949930
[CR]
Is there a risk we'll slide into something as severe as a Great Depression?
[TG]
Charlie, we're going to be very aggressive. You've seen this administration work at a pace unlike you've ever seen
before in history, moving very quickly to put in place this very powerful economic recovery act, to lay out a budget
that makes some very powerful investments in things critical to our economic future, things that are going to make
the economy grow more rapidly in the future by improving education, addressing healthcare costs, moving us to a
clean energy economy, all in a framework that's fiscally responsible. We're moving to fix the housing crisis. The
president laid out very quickly a comprehensive strategy to help bring interest rates down. Allow Americans to
refinance, take advantage of lower rates. And again, help millions of Americans stay in their hopes with some
meaningful reduction in monthly payments. We're also moving very quickly to get credit markets flowing again and
help strengthen and save the banking system. And those things are all critically important. You're going to see him
lead an ambitious agenda to try to get the world moving with us so that the global economy is firing on all cylinders,
those four things: getting recovery back on track with aggressive stimulus here, fixing the housing crisis, helping get
credit flowing again, making our financial system work with recovery rather than against recovery. And getting the
world to move with us is necessary and critical -- they have to happen together for them to work.
[CR]
You have said before that the lessons of previous financial crises are that you have to move aggressively and you
have to move fast and you have to make sure you don't come with too little rather than too much.
[TG]
Exactly right, exactly right. If you look at the lessons have history, you can see this in the United States in the '30s in
the Great Depression. You can see it in Japan in the '90s. There are many, many other examples. And what typically
happens is people understate the severity of it. They wait too late to act. When they act, they do too little. And that
makes the crisis deeper, causes more damage, makes fiscal problems worst, deficits larger in the longer term,
causing more damage than necessary, and ultimately, costs more to fix it. So the basic strategy underlying what the
president is doing is to move as quickly, with as much force as comprehensibly as possible.
[CR]
And you have been very critical of [the banks]. Yet you're prepared to give all this money to save them.
[TG]
Right, well, we're doing it to save the American economy from the cost of more failures of viable businesses and
more trauma to the average American family. That's why we're doing it. There is no way we're going to get recovery
established without making sure this system is working -- the financial system is doing a better job of supporting
credit. So everything we do is motivated by the judgment. Now, there are some people, you're right, who say that,
look, we should let this thing burn itself out. And that government should play no role in this context. I am sure that
that would be a catastrophic mistake. We would consign the American economy with that strategy to a deeper, more
protracted recession with more unnecessary damage to the basic portions of America. And, you know, I think the
American people have a deep sense of anger and outrage about how we got to this point. I share that anger and
outrage. It's completely understandable.
[CR]
Do we need one czar regulator? Is that part of the idea that’s under consideration? One person would be in charge of
regulating across the board.
[TG]
You need to have much more focused accountability in one place for the stability of financial systems. The president
said that in the campaign; that will be the core of these reforms. But that’s not enough. You want to make sure, also,
that again, the basic rules of the game that are established for risk-taking induce much more conservativism in future
booms.
CR]
All right, there’s also this. People look at the budget that has been proposed, and they say this is a giant
redistribution -- a redistributionist budget. They look at the fact that -- especially some of the conservatives who are
non-Keynesian look at this and say, you know, this is the direction this country has never gone in. What do you say
to those people who are critical of the budget because of the taxing policies that are built into it?
[TG]
Let’s look at the concrete facts in the budget. What the budget does is propose -- again, once recovery is established,
to restore the tax rates on the most affluent Americans to the level that was prevailing in 2001. Now, most
Americans will see no rise in their taxes, and working Americans, will see a significant reduction in their tax
burdens. That moves us to a fair, more balanced system. But it's a modest change, completely consistent with having
an economy that's going to grow in the future with the gains more broadly shared. Again, we're talking about
restoring the tax rates on the most affluent Americans to a level that prevailed in 2001, and if you look at the decade
of economic performance in the United States, in the decade before then, you saw a period where private investment
was growing very rapidly. Productively gains were outstripping what you saw in any other country around the
world, and again, you saw broad-based, much more broad-based sharing of those gains across the economy as a
whole. So this is a -- not just a fiscally responsible package, but it provides more fairness and balance to our tax
code in a way that I think is in the long term interest of the American people.
[CR]
Why not let [the auto industry] go into bankruptcy?
[TG]
You know, Charlie, again, we’re going through a very challenging period for the American economy as a whole,
and as the president said, and the previous administration said, a disorderly failure of these firms would cause
enormous damage in terms of job loss across a whole range of industries, and, you know, in a recession like this,
you have to be pretty considerate of things you would never consider in a more normal economic environment.
[CR]
Will capitalism be different?
[TG]
I think capitalism will be different, and the financial system will be dramatically different. It’s already dramatically
different. Again, if you look at the scale of adjustment and restructuring in the financial system, it’s already
happened. It’s profound in scope already. So if you just look at the system today relative to what it was through
three years ago in terms of the institutions that existed then, their basic shape has changed dramatically. And there’s
going to be more changes ahead. But I think it will emerge stronger. This will clean out a lot of the excesses and bad
practices, and those that don’t get cleaned out just by experience and knowledge now, better regulation oversight,
better rules to the game, enforced more cleanly, we’ll fix.
[CR]
Final question: Why are you confident that we’re going to come out of this? What is it that makes you, when you see
the numbers that you never imagined seeing, when you see a trillion dollar deficit, when you see General Motors
tottering close to bankruptcy, when you see General Electric having the kinds of problems -- these are icons of
American might -- when you see people going through what they’ve gone through, when you see unemployment
climbing up beyond 8.5 percent, why are you, in the center of this -- who knows everything or knows most of the
stuff, you hear the bad news and the possibilities -- confident?
[TG]
Because this is not about ability; it’s about will. And it’s about the will of government to do what’s necessary to act
to fix this. And I’m confident that this president of this country will have the will to do that, and if you look again at
the experience of other crises across history, the crises become deeper and longer lasting because of failures of
government to act effectively. And if government marshals the resources of this country, as we are doing now to get
people back to work, to stimulate private investment, to fix this financial system, to get credit flowing again, then
this recovery will come. It will come more quickly with a firmer foundation, and that’s what the president’s
committed to do.
LaHood Hits Back Hard Against Charges of “Socialism,” “Obama Recession”
http://www.huffingtonpost.com/2009/03/10/lahood-hits-back-hard-aga_n_173448.html
Secretary of Transportation Ray LaHood hit back hard on Monday to charges from White House critics that
President Barack Obama's economic policies -- focused on leveraging government spending to stimulate demand --
had exacerbated the recession and constituted a form of socialism.
In an interview with the Huffington Post, LaHood, one of the few Republican members of the Obama
administration, scoffed at the recent talking points emanating from the congressional leaders of his own party. His
voice rising at times with emotion, the transportation czar tackled first the notion that the president was a socialist in
disguise.
"I don't agree with it," LaHood said. "If you go out and interview these people working on this road in Maryland...
these people are thrilled. They are thrilled that they are working in March on a good paying job building roads,
which is what they were trained to do. That's going to be happening all over America. So the idea that this is
socialism -- it is not socialism, it is economic development. It is going to provide an economic engine around
communities all over American for jobs; good paying jobs; and help people pay their bills. I don't call that
socialism.... We are the model for the world when it comes to infrastructure. We are the model for the interstate
system. I don't call that socialism. Our $40 billion [for the Department of Transportation]: not socialism. It is good
paying jobs that is going to drive the economies in a lot of states and a lot of communities."
LaHood's comments come amidst a growing chorus of GOP critics claiming that Obama is engineering a
government takeover of the nation's main economic organs. The theme has found its way into mainstream political
dialogue as well. In an interview last week with the New York Times, Obama was asked bluntly whether he is a
socialist. The president initially brushed the question off, then called the reporters back after the interview ended to
supplement his response. "It was hard for me to believe that you were entirely serious about that socialist question,"
Obama told the Times’ scribes. "I did think it might be useful to point out that it wasn't under me that we started
buying a bunch of shares of banks."
Perhaps more importantly, public opinion polls suggest that a large proportion of Americans are open both to
additional stimulus spending as well as government intervention to revamp insolvent banks. Faced with these
numbers, Republican strategists have deployed a separate strategy: portraying the president, with each passing day,
as more and more responsible for the current crisis.
Asked about this line of attack, replete with phrases like the "Obama recession," Secretary LaHood offered a
similarly ardent rebuke. If blame is to be cast, he declared, it can only, at this point, lie with the previous White
House.
"This is not an Obama recession," he said. "He inherited all of this. He inherited a $1 trillion dollar debt. He
inherited the recession. He inherited the lousy stock market. All of this was inherited. The guy has been in office a
little over a month and what he has tried to do is listen to every economist he could listen to. And he put in place
some opportunities to get people to work quickly through the transportation bill portion of it, to help the banks, and
to help the real estate industry. And it is going to take time."