ABC NEWS, THIS WEEK WITH GEORGE STEPHANOPOULOS INTERVIEW WITH SECRETARY OF THE TREASURY TIMOTHY GEITHNER
STEPHANOPOULOS: Tim Geithner, a lot of good news out there this week. But, the bad news is the consumers are still real scared. Even though their income went way up, their spending went way down. What more can the Administration do if anything to encourage spending to go back up?
GEITHNER: George you are right, there are signs the recession is easing. And if you think about where we were last at the end of last year, we were on the verge of freefall, a financial system on the verge of collapse, and the actions this Administration has taken have been very effective in helping stabilize conditions, help repair the financial system, bring down the cost of credit.
STEPHANOPOULOS: Have you created a bottom?
GEITHNER: But I think we have a ways to go,. I want to emphasize the basic reality still that unemployment is very high in this country. We need to make Americans more confident about their future.
STEPHANOPOULOS: How do you do that though?
GEITHNER: I think you need to do it through by just making people understand we’re going to do what’s necessary to get growth back on track. We’re going to stick with this until Americans are more confident about their future. Businesses have access to credit. Families are going to put their kids through college. That’s going to be the ultimate test and the policies the Administration put in place working with “Congress were designed to provide very substantial support to make sure we get through this.
STEPHANOPOULOS: You mention the big problem of unemployment, and we’re still nowhere near the kind of growth it would take to create jobs. More than 2 and half percent growth to start to create jobs. I know the Administration has that that’s not going to come until next year. But some private economists now say it could happen in the second or third quarter of this year. They look at these numbers and see that. Do you have any reason to believe they’re right?
GEITHNER: I think you’re right to say the broad consensus of private forecasters is that you are going to see positive growth in the second half of this year and expect that to continue.
STEPHANOPOULOS: Above that two and a half percent level?
GEITHNER: Not clear yet. But you need growth before you get business to start creating jobs again and that’s what we’re going to be very focused on doing that.
STEPHANOPOULOS: Should Americans expect that more jobs are going to be created this year or not?
GEITHNER: What I think you are going to see first is growth turn positive. And then you are going to see the pace of job losses slow materially, they’ve already slowed significantly as you’ve said. They’re going to slow materially further. Again most private forecasters, let’s use their judgment, suggest you’re going to see unemployment start to come down maybe beginning in the second half of next year.
STEPHANOPOULOS: And what about the flip side. What are the chances we’re going to see a second dip later this year?
GEITHNER: That’s something we’re very focused on, again. We need recovery to be built on private demand, private spending. Businesses taking a chance again on the American economy. Putting investments to work. Starting to rebuild their employment base. That’s the ultimate test for recovery. And a very important thing for us is to make sure we’re sticking with this until we’re very confident we have a strong private sector led recovery in place.
STEPHANOPOULOS: And what are you looking at that would give you some cause for concern that we could slip back. GEITHNER: Well, I don’t think you can see that risk now, again. In the stimulus program and what we’ve done in the financial sector are designed to have sustained impact. Again, the damage we had done to our economy was so great that it was just going to take a long sustained effort.
STEPHANOPOULOS: And that means unemployment will remain high for the rest of this year. At the same time we’re seeing reports that up to 1 and a half million people could be losing their unemployment benefits by the end of this year. Does that mean that the Administration is going to have to look at extending unemployment benefits again?
GEITHNER: I think that is something that the Administration and Congress are going to look very carefully at as we get closer to the end of this year. And that’s going to be one important thing to look at
STEPHANOPOULOS: We already know that a million and half people are going to lose their benefits don’t we?
GEITHNER: Again the most important thing we need people to understand is working with the Congress we’re going to make sure we do enough to bring this economy back. But you know our job is not just to repair the damage done to this economy, bring growth back. We need to make sure that we are making the kind of investments that will build a more productive economy, gains of growth more broadly shared. And that’s why it’s so important as we focus on recovery that we’re making investments in health care reform, in education, in infrastructure, fixing our financial system. The kind of things we’re working on right now.
STEPHANOPOULOS: I do want to want to get to that and as we pull out of the recession the other big worry going forward is deficits. You heard that from the Chinese this week. You hear that this week and our next guest Alan Greenspan has warned of this as well, and Senator Charles Grassley, the Republican ranking member of the Finance Committee cited CBO estimates, Congressional Budget Office estimates, that your budget will add 9 trillion dollars to the national debt over the next decade.