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| TIME | SPEAKER | TEXT |
|---|---|---|
| 00:00:20 |
|
(Strikes gavel.) The committee will come to order. The book of Deuteronomy commands you must... |
| 00:08:31 |
|
Chairman Baucus, members of the committee, it's an honor to appear before you today to talk... |
| 00:16:20 |
|
Thank you, Mr. Secretary. And I'd like to turn to Senator Grassley for any opening statement... |
| 00:16:25 |
|
I would apologize to the secretary, because I was speaking on the floor of the Senate. There... |
| 00:28:54 |
|
Thank you, Senator. Mr. Secretary, I want to begin by just complimenting the president... |
| 00:31:36 |
|
Thank you, Mr. Chairman. I just want to begin by emphasizing again how... |
| 00:33:08 |
|
But this is -- you're not -- (inaudible) -- 28 percent limitation. |
| 00:33:11 |
|
Let me just say on that -- this is important to do. That provision will affect 1.2 percent of... |
| 00:33:43 |
|
And the administration's willing to have discussions with Congress on the employee exclusion... |
| 00:33:50 |
|
Of course, we are willing to listen to all ideas that meet these broad principles. |
| 00:33:55 |
|
That's more health-related. It's also very aggressive. And I might say, it's a 200 -- if you... |
| 00:34:09 |
|
One of the principles in the president's budget is, again, to try to preserve our employee-based... |
| 00:34:27 |
|
I appreciate it. My time's up. I just -- it's -- I just urge the administration to dig down... |
| 00:34:42 |
|
Would you skip over me -- |
| 00:34:45 |
|
Sure. |
| 00:34:45 |
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And then take the next Republican -- or just after somebody else has -- |
| 00:34:50 |
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Senator Bingaman, you -- this is -- (inaudible). |
| 00:34:53 |
|
Thank you very much, Mr. Secretary, for your testimony. Let me ask about the issue about... |
| 00:36:13 |
|
Thank you, Senator. Let me just start by underscoring again how important it is to recovery... |
| 00:39:49 |
|
I still have six seconds, so let me ask another question. (Laughter.) |
| 00:39:53 |
|
(Chuckling.) I apologize. I apologize, Senator. |
| 00:39:55 |
|
The assets that you're purchasing -- am I right, though, that we're going to be providing these... |
| 00:40:12 |
|
Yeah. And you understand these questions are hard to answer until you see the details of the... |
| 00:41:18 |
|
Thank you very much. |
| 00:41:20 |
|
Thank you. Senator Grassley. |
| 00:41:20 |
|
Yeah. Mr. Secretary, when we met in my office and when you appeared before this committee as... |
| 00:42:38 |
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Senator, let me say it this way. It is absolutely critical that, as we move to get recovery... |
| 00:43:55 |
|
Okay. New question. As modified by the stimulus bill, Section 1202 of the code, 75 percent of... |
| 00:45:55 |
|
Senator, I just want to begin by saying that thank you for emphasizing the importance of that... |
| 00:46:29 |
|
I'm done, Mr. Chairman. Let me just suggest to him that this is one area where if you want bipartisanship,... |
| 00:46:41 |
|
Thank you, Senator. Senator Bunning. |
| 00:46:44 |
|
Thank you, Mr. Chairman. I listened to your entire testimony before the Ways and Means Committee... |
| 00:47:10 |
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No, Senator -- |
| 00:47:10 |
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Well, you can play both tapes, and you will find out that you misstated. |
| 00:47:10 |
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Senator, what I said is that you had -- that I had disclosed fully to the committee and the... |
| 00:47:22 |
|
No, it was -- the word "approved" came in. |
| 00:47:25 |
|
Not by me, but -- |
| 00:47:25 |
|
Yes, by you. |
| 00:47:28 |
|
Nope. |
| 00:47:28 |
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Well, I mean, we can get the tapes of both committees, and you will find that we didn't approve,... |
| 00:48:20 |
|
Senator, the president believes, as do a large majority of the American people, that it's very... |
| 00:48:43 |
|
Well, we could argue about how we're going to get there. |
| 00:48:46 |
|
True. But I think the important point I want to make is that to do that requires that you change... |
| 00:48:56 |
|
We've been doing that in 2005 and 2007. Both the two energy bills that we passed did exactly... |
| 00:49:03 |
|
Well, we're going to have to do dramatically more in that area, I think, to achieve this broad... |
| 00:49:07 |
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I agree, because all the things are not included. |
| 00:49:10 |
|
Right. And what the president proposed is that we work with Congress, on a comprehensive cap-and-trade... |
| 00:49:42 |
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But then the ability to trade or to auction off emission permits is a way that the less efficient... |
| 00:50:14 |
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Senator, the cap-and-trade system has been applied successfully in our country, in parts of... |
| 00:50:23 |
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Well, but there's a cost involved there, because I live in Kentucky. So I pay the cost. |
| 00:50:29 |
|
Well, Senator, again what this proposal is designed to do is to change the incentives American... |
| 00:50:35 |
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I have one more question. Go ahead. |
| 00:50:38 |
|
So that again we make more progress, in energy independence and improving energy efficiency... |
| 00:50:49 |
|
Okay, thank you. I have one more question and it involves LIFO. This will disadvantage... |
| 00:51:46 |
|
Senator, I've heard a lot of concerns about this specific provision. There are a significant... |
| 00:52:10 |
|
Thank you. |
| 00:52:10 |
|
Thank you, Senator. Senator Wyden. |
| 00:52:14 |
|
Thank you, Mr. Chairman. Mr. Secretary, I strongly support the views Chairman Baucus has expressed... |
| 00:53:31 |
|
Senator, what I personally believe is it is critically important for our country that we come... |
| 00:53:56 |
|
But it's not about looking at my ideas, Mr. Secretary. Economists, senators -- I mean,... |
| 00:54:18 |
|
Well, I think -- |
| 00:54:18 |
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Whether it's Milton Friedman -- |
| 00:54:18 |
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Right. |
| 00:54:18 |
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-- whether it's Bob Greenstein, I mean, literally, across the political spectrum, people agree... |
| 00:54:28 |
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Senator, I agree, there is broad support -- |
| 00:54:28 |
|
Great. |
| 00:54:28 |
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-- among economists for what you laid out -- for what you laid out. I agree with that. I think... |
| 00:54:41 |
|
Very good. Let me ask you a question about taxes. In the last decade, there have been thousands... |
| 00:55:26 |
|
Senator, I do agree with you that there are a wide range of aspects of our tax code that add... |
| 00:56:34 |
|
I hope you will also say with your tax changes, though, that you're really setting the table... |
| 00:57:14 |
|
True. But I think the overall impact of these changes are, again, are good for business. They're... |
| 00:57:35 |
|
Thank you, Mr. Chairman. |
| 00:57:35 |
|
Thank you, Senator, very much. Senator Enzi. |
| 00:57:41 |
|
Thank you, Mr. Chairman. And I, too, want to emphasize how pleased I am that there's health... |
| 00:58:46 |
|
Well, that's a loss avoided or a rise in unemployment avoided by getting growth back on track.... |
| 00:59:14 |
|
But aren't all jobs kind of tenuous at the moment, so all 130 million or however many there... |
| 00:59:23 |
|
Well, I'm not sure I fully understand what we're debating. I think that it is -- you're right,... |
| 00:59:32 |
|
I'm just asking for more emphasis on the created jobs rather than the saved jobs so that we... |
| 00:59:54 |
|
We want to save them, and we want to create more jobs. And we want to make the average American... |
| 01:00:10 |
|
Thank you. I'm just trying to keep the transparency of that. |
| 01:00:12 |
|
(Laughs.) Okay. |
| 01:00:12 |
|
I need to talk to you about a very small part of the budget but on that affects a number of... |
| 01:01:38 |
|
I will take a look at it and come back to you with a response. |
| 01:01:41 |
|
Thank you. And in my remaining few seconds here, I'm going to express some concern for small-business... |
| 01:02:38 |
|
Senator, as I said before, our estimates are that the proposals in the president's budget to... |
| 01:03:58 |
|
Thank you. My time is expired. |
| 01:03:58 |
|
Thank you very much, Senator. Senator Nelson, you're next. |
| 01:04:09 |
|
Mr. Secretary, good morning to you. On the question about folks not paying what they owe in... |
| 01:05:52 |
|
Senator, I share your concern. And I think you're right to point out it's not fair to people... |
| 01:07:20 |
|
That is wonderful news and a refreshing attitude. And Mr. Chairman, this, of course, will be... |
| 01:07:37 |
|
Very important question. I'm very glad frankly this is being addressed more forcefully by this... |
| 01:07:42 |
|
And very forcefully, and I am very appreciative. |
| 01:07:42 |
|
Right. There are lot of ideas. And a lot of them sound good on the surface, but the main point... |
| 01:07:53 |
|
I think the hard thing is, of course, everybody is for closing the tax gap. But when you look... |
| 01:08:08 |
|
Now is the best time to do it. Thank you. |
| 01:08:08 |
|
May I, in my remaining time, Mr. Chairman, just ask one more question? |
| 01:08:15 |
|
Certainly. |
| 01:08:15 |
|
What we have, as I see on the issue of housing, we're having voluntary loan modifications made... |
| 01:09:12 |
|
You're absolutely right that many of the modifications that have been done to date don't fundamentally... |
| 01:10:22 |
|
Quickly. |
| 01:10:22 |
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-- I'm sorry -- that -- and this is very important. A critical (component ?) of the rest of... |
| 01:11:03 |
|
Senator Snowe, you're next. |
| 01:11:06 |
|
Thank you, Mr. Chairman. Mr. Secretary, the president said that in order to have a full recovery... |
| 01:12:38 |
|
Senator, this is critically important, and everything we're trying to do to get the economies... |
| 01:14:39 |
|
Well, are you planning to release the list of all 450 banks that have received assistance under... |
| 01:14:49 |
|
Well, we produced a report -- |
| 01:14:52 |
|
Going retroactively -- |
| 01:14:52 |
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Right. |
| 01:14:54 |
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-- as well as prospectively, all the banks? |
| 01:14:54 |
|
Well, we are putting all the terms of past assistance on the website for people to see it. So... |
| 01:15:50 |
|
Well, and it's going to undermine the value of the stimulus plan -- |
| 01:15:52 |
|
Absolutely. |
| 01:15:52 |
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-- once it's under way. And there have been -- you said yesterday that this will -- this crisis... |
| 01:16:48 |
|
Senator Cantwell. |
| 01:16:48 |
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You're absolutely right. The economic recovery depends on financial recovery. Just one... |
| 01:16:52 |
|
Very briefly. |
| 01:16:52 |
|
The administration's forecast is within the range of estimates that CBO's produced that try... |
| 01:17:25 |
|
Senator Cantwell. |
| 01:17:25 |
|
Thank you, Mr. Chairman. My colleagues have asked so many questions, Secretary Geithner, that... |
| 01:18:08 |
|
Senator, thank you for asking this. AIG got itself in the position, because there was no effective oversight,... |
| 01:18:53 |
|
That's a -- |
| 01:18:53 |
|
Now, the world -- |
| 01:18:53 |
|
That's a -- if you could just clarify more on that -- because you're saying basically it would... |
| 01:19:06 |
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The biggest effects would have been on -- not on the direct counterparties to the affiliate... |
| 01:19:53 |
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Well, Secretary Geithner, with all due respect, I think that is the question of the day: confidence... |
| 01:20:20 |
|
Senator, just again on AIG, because it's very important on AIG -- the world has gotten dramatically... |
| 01:21:19 |
|
I'm not sure that we're getting to the point that I wanted to get to. So I think what I'll do... |
| 01:22:41 |
|
Well, we do propose a lot of changes in the tax code, particularly things that allow people... |
| 01:23:32 |
|
Thank you, Senator. Senator Stabenow? |
| 01:23:34 |
|
Thank you, Mr. Chairman. |
| 01:23:34 |
|
Thank you. |
| 01:23:36 |
|
Thank you very much, Mr. Chairman. And Mr. Secretary, welcome. I would also reiterate what our chairman... |
| 01:26:50 |
|
Senator, thank you for raising that. TALF will help, but it's not going to solve all these problems. I... |
| 01:27:42 |
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I mean, we know that the challenge for them is they have to keep changing their numbers downward,... |
| 01:27:56 |
|
Right. |
| 01:27:56 |
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And you've seen the options. And so the question of whether or not this financing, this new... |
| 01:28:30 |
|
Well, I'll pursue that specific question with my colleagues at the Fed, and have someone get... |
| 01:28:53 |
|
Thank you. Thank you, Mr. Chairman. |
| 01:28:56 |
|
Well, thank you. I'm next, according to the chairman. Mr. Secretary, welcome to the committee.... |
| 01:29:34 |
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Senator, I have not looked at the details of that study, but I don't think it's the right way... |
| 01:29:38 |
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I think you need to look at the details. |
| 01:29:38 |
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Yeah, I will look at the details of it. |
| 01:29:40 |
|
If that's true, why are we going through this? I mean -- |
| 01:29:43 |
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It -- framed that way, it can't be right. |
| 01:29:46 |
|
Well -- |
| 01:29:46 |
|
If we -- if we don't get growth back on track, we will face higher long-term deficits. It's... |
| 01:30:04 |
|
All right. I'll accept that. I'd like you to look at it and like you to answer that for me and... |
| 01:31:42 |
|
Senator, I'd like to get back to you on those specific comparisons and give you a comprehensive... |
| 01:31:45 |
|
Well, see, I think it's one thing to say that, you know, 97 percent are really not going to... |
| 01:31:55 |
|
Right. But I want to just -- |
| 01:31:57 |
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-- do most everything that happens -- (inaudible). |
| 01:31:57 |
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I want to do this carefully, but I do believe -- and I think it's important to point out --... |
| 01:32:23 |
|
No, I agree with that. But I also agree that you're oversimplifying the small business aspect... |
| 01:32:29 |
|
Right. And I'll come back to you on that. I -- |
| 01:32:29 |
|
I think you need to clarify that. Now, one last question, because my time's running out. But... |
| 01:33:49 |
|
Senator, thank you for raising this. Just a couple things. I've said before this -- |
| 01:33:52 |
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These are important things to me. |
| 01:33:52 |
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They -- absolutely. I have said before before this committee and happy to say it again now that... |
| 01:34:02 |
|
Then it's not fair to blame the prior administration for everything. |
| 01:34:05 |
|
And a lot of things contributed to this crisis, and a lot of things not just on the financial... |
| 01:34:29 |
|
You seem to be blaming us up here. |
| 01:34:29 |
|
No, no. No, no -- |
| 01:34:32 |
|
Wait, wait, I think you're right. (Laughs.) |
| 01:34:32 |
|
No, no. |
| 01:34:32 |
|
I think we could have done a better job. |
| 01:34:34 |
|
Well, I think we all could have done a better job and we're going to have to do a better job.... |
| 01:35:00 |
|
Okay. Senator Carper's next, they tell me. |
| 01:35:00 |
|
Right. |
| 01:35:00 |
|
Okay. |
| 01:35:03 |
|
Thank you. |
| 01:35:03 |
|
Thank you very much. |
| 01:35:06 |
|
Thank you, Senator Hatch. Secretary Geithner, welcome. You're a busy man. And I know you have... |
| 01:35:14 |
|
Yeah, I do. Thank you very much. They're very important to me. I see them as much as I can,... |
| 01:35:21 |
|
You'll know you've been away too long when you come home and your children say to you, "Dad,... |
| 01:35:50 |
|
We're making some progress. And we'll -- we hope to come before the committee soon with a full... |
| 01:36:02 |
|
All right. Good. I appreciated the opportunity to be with you last week at the White House... |
| 01:37:27 |
|
Well, as you proposed and as you know, I think you -- there's no solution to this that doesn't... |
| 01:38:12 |
|
Good. I chair a subcommittee on the Homeland Security and Governmental Affairs Committee on... |
| 01:39:57 |
|
Senator, we'll put out the details in the budget, but I just want to state the simple objective,... |
| 01:40:36 |
|
All right. Last question. I met a week or so ago with David Marvin, a very smart guy from our... |
| 01:41:32 |
|
I'd like to think about the latter and get back to you. And on the former, on the uptick rule,... |
| 01:41:56 |
|
Thank you so much, and thank you for your service. |
| 01:41:58 |
|
Thank you, Senator. Senator Roberts, you're next. |
| 01:42:01 |
|
Well, thank you, Mr. Chairman. And thank you, Mr. Secretary. You have given an extremely articulate,... |
| 01:47:19 |
|
Anthills may -- |
| 01:47:21 |
|
And Mr. Secretary, I'll just give you a chance to address those three anthills briefly. |
| 01:47:25 |
|
Okay. On the first two, what we're proposing is, as part of a fiscally responsible package to... |
| 01:48:57 |
|
Senator Cornyn, you're next. (Pause.) Senator Cornyn's next. |
| 01:49:01 |
|
Well, thank you -- |
| 01:49:01 |
|
I was. |
| 01:49:04 |
|
It's Senator -- |
| 01:49:04 |
|
We skipped Cornyn first, but then -- |
| 01:49:06 |
|
I know for sure, Mr. Chairman, that Senator Ensign was here ahead of me, if we're observing... |
| 01:49:10 |
|
He's got -- (off mike) -- speak. |
| 01:49:10 |
|
Okay. |
| 01:49:10 |
|
-- defer to the chairman. |
| 01:49:12 |
|
So you -- I'll -- Senator Ensign looks -- feels like -- looks like he feels like he should be... |
| 01:49:15 |
|
Well, I'll defer to him. |
| 01:49:15 |
|
-- so I'll recognize Senator Ensign. |
| 01:49:15 |
|
No, that'd be -- (off mike). |
| 01:49:18 |
|
No, no, no. |
| 01:49:18 |
|
If he was here first -- |
| 01:49:18 |
|
I (brought ?) questions. |
| 01:49:18 |
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I just thought up questions, so. |
| 01:49:22 |
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No, he (asked ?) his questions -- |
| 01:49:22 |
|
Well, I was here for a while. I -- (off mike) -- |
| 01:49:22 |
|
It's John's turn. |
| 01:49:22 |
|
It's between the two of you. Whatever you want to do. (Laughter.) |
| 01:49:27 |
|
Thank you. |
| 01:49:27 |
|
You work it out. |
| 01:49:27 |
|
Thank you, Mr. Chairman. I had to -- I had to leave for about 15 minutes. I had another meeting.... |
| 01:49:32 |
|
Good. Fine. Fine. Fine. |
| 01:49:32 |
|
Senator Cornyn -- |
| 01:49:32 |
|
Couple of observations. First of all, we have -- all of this spending goes together, whether... |
| 01:51:39 |
|
Senator, I'm nodding, because you're making a fair point. But I want to point out that in the... |
| 01:51:54 |
|
On the discretionary side? |
| 01:51:54 |
|
Yeah. And -- |
| 01:51:54 |
|
What are they? What are they? What are they? And what are the amounts? |
| 01:51:59 |
|
Well, one example is to eliminate the subsidies to middle men in the student loan market. One... |
| 01:52:31 |
|
That's if GDP grows. |
| 01:52:31 |
|
Well, that's true. But you need to measure all these things against the size of the economy.... |
| 01:52:37 |
|
I said, if the projections are correct. |
| 01:52:37 |
|
True, but the long-term projections in there are an economy that's growing at a sustainable... |
| 01:52:56 |
|
Except that CBO and OMB are always wrong. |
| 01:52:56 |
|
Well, forecasts are never what they are. But over time, the economy does tend to return to its... |
| 01:53:30 |
|
I only have a minute left. I want to get one more question and comment in. I just wish you would... |
| 01:54:30 |
|
Mr. Chairman, just very quickly? The president lays out in the budget an expected path for the... |
| 01:54:51 |
|
But we'll be able to hold you to those numbers. If you don't meet those projections -- |
| 01:54:55 |
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No, I'm just saying -- |
| 01:54:55 |
|
-- in GDP, then your stimulus package will have failed. |
| 01:54:59 |
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-- that you can measure the success of the policies we did together design and implement --... |
| 01:55:34 |
|
Senator Cornyn. |
| 01:55:37 |
|
Thank you, Mr. Chairman. Secretary Geithner, let me ask you about two topics in the short time... |
| 01:56:27 |
|
Senator, as you know, and I think it's clear in the proposal, we don't believe it makes sense... |
| 01:57:28 |
|
Do you understand that raising taxes on small and independent energy companies, producers here,... |
| 01:57:50 |
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Senator, what I know for sure is that we start with a deeply unsustainable fiscal position and... |
| 01:58:40 |
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I understand your answer. My view is that higher taxes on small and independent producers here... |
| 01:59:53 |
|
Senator, the president shares your commitment to long-term entitlement reform, because that's... |
| 02:00:41 |
|
Outside of reforming health care, a goal which we all share, is the -- administration have any... |
| 02:00:53 |
|
Well, Senator, as you saw in the agenda for the fiscal summit, there are a comprehensive set... |
| 02:01:05 |
|
And lastly, specifically, you have no proposal to deal with the impending insolvency of Social... |
| 02:01:15 |
|
Senator, the budget does propose a specific set of reforms to Social Security. But you're right... |
| 02:01:38 |
|
Senator -- Senator Menendez. You're next. |
| 02:01:43 |
|
Thanks. Thank you, Mr. Chairman. Mr. Secretary, thank you for your service. On page two... |
| 02:02:54 |
|
I think you're absolutely right that although mortgage rates are lower, the spreads between... |
| 02:03:58 |
|
Those undoubtedly are worthy. |
| 02:03:58 |
|
Yeah. They are -- |
| 02:03:58 |
|
And I support them and have voted for them as well. The question is, how do we stop the free-fall... |
| 02:04:20 |
|
I do think it's very important people understand the most important thing you can do for the... |
| 02:04:35 |
|
Senator Carper asked you about carried interest. I just want to ask one quick question. My understanding... |
| 02:04:52 |
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That's our proposal. |
| 02:04:52 |
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-- if, in fact, that gets passed. Okay. And then finally, you -- and the chairman has worked... |
| 02:05:50 |
|
It's something we're going to take a careful look at. It looks like a very positive step to... |
| 02:06:02 |
|
Well, I look forward to working with the chairman and with you, because it just seems to me... |
| 02:06:12 |
|
We do. |
| 02:06:12 |
|
It seems to me that those who game the system not to pay their fair share and that create a... |
| 02:06:31 |
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I agree. It's necessary for fairness, and it's necessary for fiscal responsibility. |
| 02:06:36 |
|
Thank you, Senator. Senator Lincoln. |
| 02:06:38 |
|
Thank you, Mr. Chairman, and thank you, Secretary Geithner. I'm certainly pleased you could... |
| 02:09:30 |
|
Well, in the revenue provisions of the budget, we -- we included these new proposals for helping... |
| 02:09:44 |
|
Well, somewhat. |
| 02:09:44 |
|
So where we propose revenues to help finance health care reform, we did put those in the budget. |
| 02:09:51 |
|
Okay. The other question I would ask would be similar to what Senator Snowe -- and that is,... |
| 02:10:08 |
|
Some of those projections you're comparing OMB's, CEA's, against -- |
| 02:10:11 |
|
Right. |
| 02:10:11 |
|
-- were done before stimulus. So that accounts for some of the difference. |
| 02:10:14 |
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So you're counting the stimulus in your predictions? |
| 02:10:16 |
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Yes, as every economist ultimately will. But the CBO's new estimates that are done post-Recovery... |
| 02:10:28 |
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Why did you include continued war spending at '08 levels, adjusted for inflation? I mean, surely... |
| 02:10:46 |
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Senator, what matters is what we spend. And as you know, the president has made proposals to... |
| 02:11:09 |
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Just seems a little phantom to me, in terms of gimmicks and what -- how you might do. Last... |
| 02:12:28 |
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Thank you, Senator. Senator Schumer. |
| 02:12:30 |
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Thank you, Mr. Chairman. And thank you, Mr. Secretary. These are not easy... |
| 02:14:25 |
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You're exactly right. And it's happening. It really is happening across the country. |
| 02:14:29 |
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And I think more in the last few months than before. Is that -- |
| 02:14:33 |
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Well, you know, the recession is deepening. |
| 02:14:33 |
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Okay. |
| 02:14:35 |
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And these things feed on themselves. That's why they're so dangerous. (Inaudible.) And you're... |
| 02:14:55 |
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Right. |
| 02:14:55 |
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The necessary thing to do, apart from making sure the recovery act stuff takes effect quickly,... |
| 02:15:24 |
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Will the TALF work in this regard? |
| 02:15:24 |
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The TALF -- this direct lending program I referred to is -- will be, we believe, will be very... |
| 02:16:05 |
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Mr. Secretary, the -- A, banks are pulling back -- |
| 02:16:11 |
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Because -- |
| 02:16:11 |
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-- even with some of these banks -- |
| 02:16:11 |
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Right. |
| 02:16:11 |
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-- I didn't want to give any names. There are some who've received the capital infusions; some... |
| 02:16:17 |
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Right. |
| 02:16:17 |
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But worse, these businesspeople, small- and medium-sized, search for other sources of lending,... |
| 02:16:26 |
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Right. Well, there -- you know, again, banks -- there are banks across the country that were... |
| 02:16:49 |
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Right. |
| 02:16:49 |
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And we will do that on a scale sufficient -- |
| 02:16:52 |
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When will the TALF program be set up for small businesses so that a bank or some -- you know,... |
| 02:17:04 |
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TALF program, we announced the details, scheduled the funding yesterday. |
| 02:17:07 |
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Right. |
| 02:17:07 |
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And you're going to see, within the next few weeks, it up and running. And you'll start to see... |
| 02:17:24 |
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You know, this will raise the unemployment rate and send the economy down. And when it's profitable... |
| 02:17:37 |
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Right, it is scary. And it underscores again why credit is so important to recovery. And in... |
| 02:17:50 |
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Thank you, Mr. Chairman. |
| 02:17:52 |
|
Thank you, Senator. Mr. Geithner, got a question about federal aviation taxes. There's... |
| 02:19:24 |
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Well, Senator, we'll take a careful look at it. I don't think that was the motivation, but we'll... |
| 02:19:33 |
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Well, if that wasn't the motivation, what was? |
| 02:19:36 |
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Well, maybe I should come back to you with a more thoughtful case and so we have a chance to... |
| 02:19:44 |
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I'm just telling you, I don't think it's a good idea, what you're trying to do here. |
| 02:19:50 |
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I hear you. |
| 02:19:50 |
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I was struck with a comment that somebody, I think with some authority, made that puts a little... |
| 02:20:46 |
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They were lending too much. |
| 02:20:46 |
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And that's for credit cards or home equity loans or for homes in the first place. (Inaudible)... |
| 02:21:05 |
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Well, I think, as I tried to say earlier, you're absolutely right that this is a crisis born... |
| 02:21:58 |
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Some things just don't change. I think Benjamin Franklin said, "He who goes a-borrowing goes... |
| 02:23:01 |
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I think you're -- I completely agree. I think the instruments are complicated, but the objective... |
| 02:23:21 |
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Well, I just urge you to try to think this through more in words and terms that the average... |
| 02:23:49 |
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Yeah, I thought they did a very nice job. I agree with you. |
| 02:23:51 |
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Yeah. And if somehow you can just talk about this in more basic sort of simple terms and put... |
| 02:24:13 |
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I have a couple of questions. But before I do that, I'd like to call your attention to something... |
| 02:26:14 |
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Senator, I'd like to spend a little time on this issue, but not enough. I'd like to take a careful... |
| 02:26:29 |
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Well, if there's an intellectual basis for it, I sure don't see it. And I think it's just simply... |
| 02:28:24 |
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Senator, I understand this concern. But I'd just come back to the context. Again, what we did... |
| 02:29:05 |
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Thank you, Mr. Chairman. |
| 02:29:05 |
|
Thank you. Senator Enzi, you're next. |
| 02:29:10 |
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Thank you, Mr. Chairman. And I would like my full statement to be a part of the record. I... |
| 02:30:52 |
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Senator, thank you for raising that. Absolutely not. The estimate in the budget reflects the... |
| 02:31:50 |
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Well, why wouldn't you put the whole 750 billion (dollars) in there, though, instead of just... |
| 02:31:53 |
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Well, only because that what matters in the budgetary context is that, again, under the established... |
| 02:32:09 |
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So if it's just a placeholder that is a reserve until it's needed, who's going to make the determination... |
| 02:32:27 |
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That's what we'll do. But we thought that it was -- we're laying out a, you know, as realistic... |
| 02:33:56 |
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I appreciate that Freudian slip. (Laughter.) I'm sure you were thinking about tax reform. Okay.... |
| 02:34:02 |
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Thank you, Mr. Chairman. I'd like to go back to the deductibility question. I was curious,... |
| 02:34:14 |
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You mean in the president's broad tax proposals? |
| 02:34:17 |
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Yes. |
| 02:34:20 |
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Well, he laid out a set of proposals in the campaign, very clear the American people that he... |
| 02:34:46 |
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So it was just taken from the campaign. I mean, there's -- |
| 02:34:48 |
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It was a commitment he made to the American people in the campaign. |
| 02:34:51 |
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And what do you think, given the limitation on deductions, the tax rate might actually be on... |
| 02:35:01 |
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Well, on deductibility, change the tax treatment of a set of deductions. And what they do is... |
| 02:35:31 |
|
Well, I think -- I mean, these policies that we have, whether it's deductibility for mortgages,... |
| 02:36:01 |
|
Well, again, we're restoring the level of deductibility to a point that's been achieved in the... |
| 02:36:29 |
|
Well, we certainly want to work with you, and I think the committee will, you can see from the... |
| 02:36:56 |
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Well -- fair question, and we'll provide a full range of analysis of that impact as we go through... |
| 02:37:03 |
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Thank you, and thank the chair. |
| 02:37:03 |
|
Thank you, Senator. I want a couple of questions, here, and Senator Grassley has one. When people... |
| 02:37:27 |
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Yes, the economically relevant measure is the net debt held by the public, of the general government. |
| 02:37:37 |
|
So when people talk about total debt, what's the relevance of that to the markets, or to the... |
| 02:37:43 |
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It shouldn't be relevant. Really, the right economically relevant measure is the net debt outstanding... |
| 02:38:04 |
|
It's my understanding, the budget deficits, as a percent of GDP, are roughly costs around 3.2... |
| 02:38:16 |
|
Right. The level of deficit that stabilizes the debt to GDP ratio is roughly in the range of... |
| 02:38:35 |
|
But what's -- maybe you answered it already -- what's an acceptable sustainable rate, that is,... |
| 02:38:48 |
|
Well, 3 percent, is that. You mean the level of debt outstanding to GDP, or the level of debt... |
| 02:38:48 |
|
No, no -- (Cross talk.) |
| 02:38:48 |
|
-- 3 percent is the level that is consistent with this definition of sustainability, which again... |
| 02:39:08 |
|
All right. Now let's look at debt, for a moment, which right now, I think it's around, roughly,... |
| 02:39:24 |
|
That's right. That's right. |
| 02:39:24 |
|
Which raises the question, what is a proper level of debt to GDP, and when do you start getting... |
| 02:39:35 |
|
That is a -- I would say most economists would say -- that is a manageable burden for a country... |
| 02:39:56 |
|
What would some example be? |
| 02:39:56 |
|
Well, when the government makes investments in capital, it provides lending against collateral,... |
| 02:40:22 |
|
Okay. Thank you. Senator Grassley. |
| 02:40:22 |
|
I don't disagree with anything you just said there, but the way I like to tell my constituents... |
| 02:40:56 |
|
That's right. And because of the cost of the crisis, and the -- (Cross talk.) |
| 02:40:59 |
|
Yeah. Then it goes up to 60 (percent). |
| 02:40:59 |
|
That's right. |
| 02:40:59 |
|
But again, I guess I'd say for 40 years, you know, that that level of debt has not been harmful... |
| 02:43:21 |
|
Senator, cap and trade would increase the cost of energy for those types of energy that's particularly... |
| 02:44:32 |
|
You know, this might be hard to argue against changing people's habits, but you are admitting... |
| 02:45:09 |
|
Senator, the way I would say it is that, again, the resources raised by this will be devoted... |
| 02:45:32 |
|
Thank you, Mr. Chairman. Thank you, Mr. Secretary. |
| 02:45:35 |
|
Thank you, Secretary. This has been most productive, and we wish you well. Thank you. |
| 02:45:39 |
|
Thank you, Mr. Chairman. |