Chairman Baucus, members of the committee, it's

an honor to appear before you today to talk...

I would apologize to the

secretary, because I was speaking on the floor of the Senate.

There...

Thank you, Mr. Chairman.

I just want to begin by emphasizing again how...

Let me just say on that -- this is important to

do. That provision will affect 1.2 percent of...

Of course, we are willing to listen to all ideas

that meet these broad principles.

One of the principles in the president's budget

is, again, to try to preserve our employee-based...

Would you skip over me --

And then take the next Republican -- or just

after somebody else has --

Thank you very much, Mr. Secretary,

for your testimony.

Let me ask about the issue about...

I still have six seconds, so let me ask another

question. (Laughter.)

The assets that you're purchasing -- am I right,

though, that we're going to be providing these...

Thank you very much.

Yeah. Mr. Secretary, when we met

in my office and when you appeared before this committee as...

Okay. New question. As modified by the stimulus

bill, Section 1202 of the code, 75 percent of...

I'm done, Mr. Chairman. Let me just suggest to

him that this is one area where if you want bipartisanship,...

Thank you, Mr. Chairman.

I listened to your entire testimony before the Ways and Means

Committee...

Well, you can play both tapes, and you will find

out that you misstated.

No, it was -- the word "approved" came in.

Yes, by you.

Well, I mean, we can get the tapes of both

committees, and you will find that we didn't approve,...

Well, we could argue about how we're going to get

there.

We've been doing that in 2005 and 2007. Both the

two energy bills that we passed did exactly...

I agree, because all the things are not included.

But then the ability to trade or to auction off

emission permits is a way that the less efficient...

Well, but there's a cost involved there, because I

live in Kentucky. So I pay the cost.

I have one more question.

Go ahead.

Okay, thank you.

I have one more question and it involves LIFO. This will

disadvantage...

Thank you.

Thank you, Mr. Chairman.

Mr. Secretary, I strongly support the views Chairman Baucus has

expressed...

But it's not about looking at my ideas, Mr.

Secretary.

Economists, senators -- I mean,...

Whether it's Milton Friedman --

-- whether it's Bob Greenstein, I mean, literally,

across the political spectrum, people agree...

Great.

Very good. Let me ask you a question about taxes.

In the last decade, there have been thousands...

I hope you will also say with your tax changes,

though, that you're really setting the table...

Thank you, Mr. Chairman.

Thank you, Mr. Chairman.

And I, too, want to emphasize how pleased I am that there's

health...

But aren't all jobs kind of tenuous at the moment, so

all 130 million or however many there...

I'm just asking for more emphasis on the created jobs

rather than the saved jobs so that we...

Thank you. I'm just trying to keep the transparency

of that.

I need to talk to you about a very small part of the

budget but on that affects a number of...

Thank you. And in my remaining few seconds here, I'm

going to express some concern for small-business...

Thank you. My time is expired.

Mr. Secretary, good morning to you. On

the question about folks not paying what they owe in...

That is wonderful news and a refreshing attitude.

And Mr. Chairman, this, of course, will be...

And very forcefully, and I am very appreciative.

I think the hard thing is, of course, everybody

is for closing the tax gap. But when you look...

May I, in my remaining time, Mr. Chairman, just ask

one more question?

What we have, as I see on the issue of housing,

we're having voluntary loan modifications made...

Quickly.

Senator Snowe, you're next.

Senator, this is critically important, and

everything we're trying to do to get the economies...

Well, we produced a report --

Right.

Well, we are putting all the terms of past

assistance on the website for people to see it. So...

Absolutely.

Senator Cantwell.

Very briefly.

Senator Cantwell.

Senator, thank you for asking this.

AIG got itself in the position, because there was no effective

oversight,...

Now, the world --

The biggest effects would have been on -- not on

the direct counterparties to the affiliate...

Senator, just again on AIG, because it's very

important on AIG -- the world has gotten dramatically...

Well, we do propose a lot of changes in the tax

code, particularly things that allow people...

Thank you, Mr. Chairman.

Thank you very much, Mr. Chairman.

And Mr. Secretary, welcome. I would also reiterate what our

chairman...

I mean, we know that the challenge for them is

they have to keep changing their numbers downward,...

And you've seen the options. And so the question

of whether or not this financing, this new...

Thank you.

Thank you, Mr. Chairman.

Senator, I have not looked at the details of that

study, but I don't think it's the right way...

Yeah, I will look at the details of it.

It -- framed that way, it can't be right.

If we -- if we don't get growth back on track, we

will face higher long-term deficits.

It's...

Senator, I'd like to get back to you on those

specific comparisons and give you a comprehensive...

Right. But I want to just --

I want to do this carefully, but I do believe --

and I think it's important to point out --...

Right. And I'll come back to you on that. I --

Senator, thank you for raising this. Just a

couple things. I've said before this --

They -- absolutely. I have said before before

this committee and happy to say it again now that...

And a lot of things contributed to this crisis,

and a lot of things not just on the financial...

No, no. No, no --

No, no.

Well, I think we all could have done a better job

and we're going to have to do a better job....

Right.

Thank you.

Thank you, Senator Hatch.

Secretary Geithner, welcome. You're a busy man. And I know you

have...

You'll know you've been away too long when you come

home and your children say to you, "Dad,...

All right. Good.

I appreciated the opportunity to be with you last week at the

White House...

Good. I chair a subcommittee on the Homeland

Security and Governmental Affairs Committee on...

All right. Last question. I met a week or so ago

with David Marvin, a very smart guy from our...

Thank you so much, and thank you for your service.

Well, thank you, Mr. Chairman.

And thank you, Mr. Secretary. You have given an extremely

articulate,...

And Mr. Secretary, I'll just give you a chance to

address those three anthills briefly.

Senator Cornyn, you're next. (Pause.)

Senator Cornyn's next.

I was.

We skipped Cornyn first, but then --

He's got -- (off mike) -- speak.

-- defer to the chairman.

Well, I'll defer to him.

No, that'd be -- (off mike).

If he was here first --

I just thought up questions, so.

Well, I was here for a while. I -- (off mike) --

It's between the two of you. Whatever you want to

do. (Laughter.)

You work it out.

Good. Fine. Fine. Fine.

Couple of observations. First of all, we have --

all of this spending goes together, whether...

On the discretionary side?

What are they? What are they? What are they? And

what are the amounts?

That's if GDP grows.

I said, if the projections are correct.

Except that CBO and OMB are always wrong.

I only have a minute left. I want to get one more

question and comment in. I just wish you would...

But we'll be able to hold you to those numbers. If

you don't meet those projections --

-- in GDP, then your stimulus package will have

failed.

Senator Cornyn.

Senator, as you know, and I think it's clear in

the proposal, we don't believe it makes sense...

Senator, what I know for sure is that we start

with a deeply unsustainable fiscal position and...

Senator, the president shares your commitment to

long-term entitlement reform, because that's...

Well, Senator, as you saw in the agenda for the

fiscal summit, there are a comprehensive set...

Senator, the budget does propose a specific set

of reforms to Social Security. But you're right...

Thanks. Thank you, Mr. Chairman.

Mr. Secretary, thank you for your service.

On page two...

Those undoubtedly are worthy.

And I support them and have voted for them as

well. The question is, how do we stop the free-fall...

Senator Carper asked you about carried interest.

I just want to ask one quick question. My understanding...

-- if, in fact, that gets passed. Okay.

And then finally, you -- and the chairman has worked...

Well, I look forward to working with the chairman

and with you, because it just seems to me...

It seems to me that those who game the system not

to pay their fair share and that create a...

Thank you, Senator.

Senator Lincoln.

Well, in the revenue provisions of the budget, we

-- we included these new proposals for helping...

So where we propose revenues to help finance

health care reform, we did put those in the budget.

Some of those projections you're comparing OMB's,

CEA's, against --

-- were done before stimulus. So that accounts

for some of the difference.

Yes, as every economist ultimately will. But the

CBO's new estimates that are done post-Recovery...

Senator, what matters is what we spend. And as

you know, the president has made proposals to...

Thank you, Senator.

Senator Schumer.

You're exactly right. And it's happening. It

really is happening across the country.

Well, you know, the recession is deepening.

And these things feed on themselves. That's why

they're so dangerous. (Inaudible.) And you're...

The necessary thing to do, apart from making sure

the recovery act stuff takes effect quickly,...

The TALF -- this direct lending program I

referred to is -- will be, we believe, will be very...

Because --

Right.

Right.

Right. Well, there -- you know, again, banks --

there are banks across the country that were...

And we will do that on a scale sufficient --

TALF program, we announced the details, scheduled

the funding yesterday.

And you're going to see, within the next few

weeks, it up and running. And you'll start to see...

Right, it is scary. And it underscores again why

credit is so important to recovery. And in...

Thank you, Senator.

Mr. Geithner, got a question about federal aviation taxes.

There's...

Well, if that wasn't the motivation, what was?

I'm just telling you, I don't think it's a good

idea, what you're trying to do here.

I was struck with a comment that somebody, I think

with some authority, made that puts a little...

And that's for credit cards or home equity loans or

for homes in the first place. (Inaudible)...

Some things just don't change. I think Benjamin

Franklin said, "He who goes a-borrowing goes...

Well, I just urge you to try to think this through

more in words and terms that the average...

Yeah. And if somehow you can just talk about this

in more basic sort of simple terms and put...

Senator, I'd like to spend a little time on this

issue, but not enough. I'd like to take a careful...

Senator, I understand this concern. But I'd just

come back to the context. Again, what we did...

Thank you.

Senator Enzi, you're next.

Senator, thank you for raising that. Absolutely

not. The estimate in the budget reflects the...

Well, only because that what matters in the

budgetary context is that, again, under the established...

That's what we'll do. But we thought that it was

-- we're laying out a, you know, as realistic...

Thank you, Mr. Chairman.

I'd like to go back to the deductibility question. I was

curious,...

Yes.

So it was just taken from the campaign. I mean,

there's --

And what do you think, given the limitation on

deductions, the tax rate might actually be on...

Well, I think -- I mean, these policies that we

have, whether it's deductibility for mortgages,...

Well, we certainly want to work with you, and I

think the committee will, you can see from the...

Thank you, and thank the chair.

Yes, the economically relevant measure is the net

debt held by the public, of the general government.

It shouldn't be relevant. Really, the right

economically relevant measure is the net debt outstanding...

Right. The level of deficit that stabilizes the

debt to GDP ratio is roughly in the range of...

Well, 3 percent, is that. You mean the level of

debt outstanding to GDP, or the level of debt...

-- 3 percent is the level that is consistent with

this definition of sustainability, which again...

That's right. That's right.

That is a -- I would say most economists would

say -- that is a manageable burden for a country...

Well, when the government makes investments in

capital, it provides lending against collateral,...

I don't disagree with anything you just said

there, but the way I like to tell my constituents...

Yeah. Then it goes up to 60 (percent).

But again, I guess I'd say for 40 years, you

know, that that level of debt has not been harmful...

You know, this might be hard to argue against

changing people's habits, but you are admitting...

Thank you, Mr. Chairman.

Thank you, Mr. Secretary.

Thank you, Mr. Chairman.