Treasury Secretary Timothy Geithner appealed to Republicans on Tuesday to join a bipartisan bid to wrestle down soaring deficits that he blamed largely on the former Bush administration.
On the day that President (Barack) Obama took office, the budget deficit stood at $1.3 trillion -- 9.2 percent of GDP -- and the projected 10-year deficits for the following 10 years were $8 trillion, Geithner said in prepared testimony for delivery to the Senate finance committee.
These huge deficits are the result of the prior administration's decision to enact large tax cuts and a prescription drug bill without paying for them, he said as Congress began consideration of the administration's proposed $3.8 trillion budget for fiscal 2011.
Geithner said the impact of the Bush administration's policies was magnified because of the recession that it also left for the Obama administration.
The economy has strengthened but it will take a bipartisan effort to get it back to a sound recovery that encourages the private sector to create jobs, he added.
We cannot afford an economic expansion like that of the past decade when....jobs grew more slowly than during any previous recovery...and much of our growth was built on the sands of a real estate and financial boom, Geithner said.
He said current deficit trends, which will see the deficit hit 10.6 percent of gross domestic product this year, were not sustainable but said they need to be dealt with gradually.
When recovery is firmly in place and the economy is back on its feet, we need to begin the process of bringing down deficits that Washington has been accumulating for almost a decade, Geithner said.
He said the Obama administration supports setting up a bipartisan fiscal commission to explore ways to tackle oversize deficits, an idea that Republicans already have spurned.
(Reporting by Glenn Somerville; Editing by Theodore d'Afflisio)