The risk the economy will slip back into recession is lower now than at any time in the past year, Treasury Secretary Timothy Geithner said on Sunday, while conceding that recovery will be slow and uneven.
In an interview on ABC News' This Week, Geithner dismissed concerns that rising U.S. indebtedness might put pressure on the United States' prized triple-A credit rating.
Credit ratings agency Moody's last week warned that anemic U.S. growth, on top of already stretched government finances, could put pressure on the country triple-A status.
Absolutely not, Geithner said when the interviewer suggested rising debt levels could put pressure on the top-notch rating. That will never happen to this country.
The U.S. economy expanded at an annual rate of nearly 6 percent in the fourth quarter of 2009 and Geithner said it was definitely healing after the financial crisis that drove it into recession in late 2007.
This is going to take a while and it's going to be uneven, Geithner said in an interview taped before leaving for the Canadian Arctic on Friday to attend a meeting of Group of Seven rich nations' finance ministers and central bankers in Iqaluit, capital of the vast Inuit territory of Nunavut.
ABC released portions of the Geithner transcript on Friday.
Geithner claimed there were even some encouraging signs in Friday's report on unemployment for January, which showed another 20,000 jobs lost but a dip in the unemployment rate to 9.7 percent from 10 percent in December.
He said the Obama administration is doing everything it can to enhance recovery prospects and played down chances that growth might stall and push the United States back into recession.
I think we have much, much lower risk of that today than at any time over the last 12 months or so, Geithner said.
BORROWING MONEY TO FUND DEFICIT
The Treasury is heavily reliant on borrowed money to fund the government's day-to-day operations, which it raises by selling Treasury notes and bonds throughout the world in rising volumes to fund budget deficits that are forecast to hit $1.6 trillion in fiscal 2011.
Geithner said there was no sign that investor interest was waning in U.S. debt, adding that, to the contrary, it was sought out because of trust in the U.S. ability to repay.
If you step back and look at what has happened throughout this crisis, when people were most worried about the stability of the world, they still found safety in (U.S.) Treasuries and the dollar, he said. You're still seeing that every time.
Former Federal Reserve Chairman Alan Greenspan said the ability by the U.S. to borrow money would become more difficult because throughout history we have always maintained a capital cushion, a cushion between our borrowing capacity on the one hand and the level of debt on the other. That is beginning to shrink.
He said history had also shown that when great economic powers faced significant fiscal problems, they ceased to be great powers, noting that such a development would have implications for the U.S. dollar as the world's dominant reserve currency.
Former Treasury Secretary Hank Paulson told NBC's Meet the Press that reducing the federal budget deficit posed the most serious long-term challenge to the United States. He also said he realized as Treasury secretary it was tough to convince lawmakers to tackle controversial issues without a crisis.
(Additional reporting by Lesley Wroughton in Washington)