Treasury Secretary Timothy Geithner on Wednesday strongly pitched increased bipartisan cooperation among lawmakers as vital for building business and market confidence in the economy's growth.
Days ahead of a new budget that the Obama administration hopes will mollify some Republican anger over spending, Geithner told a forum sponsored by The Atlantic magazine that Congress needs to pull together to build confidence.
The job of government is to create the conditions for businesses to expand and to thrive and what we need to do in Washington is make sure we're creating a better environment for business to act with a little more confidence about the future, he said.
A deal between Republicans and Democrats at the end of last year to extend tax cuts helped spark more confidence among firms, he said.
The Obama administration will unveil its fiscal 2012 budget plan Monday amid wrangling between Democrats and Republicans over raising a legally set $14.3 trillion debt ceiling -- necessary to avoid a potential historic default by the United States.
Geithner said the budget will not include a detailed plan to overhaul corporate taxes. He added that the Obama administration won't consider giving corporations a tax holiday on repatriated profits unless it is part of a comprehensive reform effort on taxes.
Proponents of such a tax holiday argue that it would encourage American firms to bring home hundreds of billions of dollars earned overseas that could fuel domestic growth. Companies now can defer repatriation of foreign profits to avoid paying earnings taxes of up to 35 percent.
Geithner said he is now working to shape consensus among key players in Congress and the business community on corporate tax reforms that are revenue-neutral.
Our basic principles are we want something that lowers rates, broadens the base and improves investment incentives, he added
SOME SPENDING CUTS IN BUDGET
Republicans have used a rapidly approaching deadline for bumping up against the debt limit -- estimated to happen between April 5 and May 31 -- to highlight what they say is profligate spending.
You are going to see the president lay out in his budget next week very detailed proposals for where we can reduce spending, where we need to preserve some important investments, and how to do that in a way that brings down the deficit over time, Geithner said.
The U.S. Treasury chief said the economy was doing relatively well after going through a financial crisis and severe recession but cautioned that high levels of joblessness will come down only slowly.
Many businesses were panicked by the financial crisis and, as a result, he said, they cut very, very deeply into the muscle of the American economy by slashing jobs and pay.
Now they're at a point where as the economy starts to grow, they're not going to be able to meet the growing demand for their products without bringing more people back to work.
The current unemployment rate remains at 9 percent and only 36,000 new jobs were created in January.
Geithner took questions from callers on a web feed, one of whom questioned the safety of investments in U.S. Treasury securities as national indebtedness keeps swelling because of borrowing from abroad to meet government's day-to-day needs.
Absolutely they're the risk-free asset around the world, Geithner responded. Everybody relies on them as that basic store of value and liquidity. When the world was at the edge of depression, at the edge of financial panic, people sought the basic safety of Treasuries, of U.S. financial assets.
He called it unthinkable that the United States could default by failing to meet its debt obligations. Geithner and Federal Reserve Chairman Ben Bernanke have both said such an event would be catastrophic for the U.S. economy and urged a hike in the debt limit to ward off the risk.
The markets understand, and I can say this with complete confidence, that the U.S. will meet its obligations, that Congress will act as it always has to make sure we meet those obligations, Geithner said.
(Additional reporting by Tim Ahmann, David Lawder and Rachelle Younglai; Editing by James Dalgleish)