Timothy Geithner Says Economy Is On The Mend With Plenty Of Challenges Ahead

Treasury Secretary Timothy Geithner said on Thursday that the US economy is showing signs of early expansion although it still faces tough challenges towards improvement.

Speaking at the Economic Club of New York Geithner said the economy is now more productive than it was before the financial crisis of 2007-2009, although confidence still remains fragile.

According to Geithner:

“That is why it is so important that policy makers continue to work to get the economy growing faster in the short term and not shift prematurely to fiscal restraint.

“We can’t cut our way to growth. Severe austerity now would be very damaging.”

Geithner goes on to note that at the end of 2012 several important tax cuts will expire and across the board spending cuts are expected to account for five percent of the country’s GDP. Geithern believes however that lawmakers will reach some sort of compromise to prevent those cuts from occurring and ultimately slowing growth.

According to Timothy the Obama administration will soon offer a package of measures that includes tax increases for wealthy Americans, a measure that is greatly opposed by Republican lawmakers.

Geithner notes:

“If you do not raise revenues through tax reform, then you have to find another 1 percent of GDP or roughly 1.5 trillion dollars over 10 years in additional savings from defense, Social Security, Medicare, education or low income programs.”

Speaking about the competitiveness of American company’s Geithner admits that emerging markets in Mexico, China and Brazil are likely to create more competition and therefore take away from American jobs.

In the meantime Geither calls the corporate tax system in America:

“A complex and unfair mess of subsidies…with a very high statutory rate” of tax that varies across industries.

Do you think Timothy Geithner is correct in his statements about the US economy and future issues facing American businesses and US workers?