U.S. Treasury Secretary Timothy Geithner said on Tuesday President Barack Obama will work with Congress to determine the appropriate size and shape of future financial stability efforts as conditions develop.
The figure would theoretically allow the Treasury to purchase $750 billion in financial sector assets.
Rather as events warrant, the president will work with Congress to determine the appropriate size and shape of such efforts, and as more information becomes available the administration will estimate potential cost, Geithner said in prepared remarks.
Geithner said the Obama budget plan addresses deep challenges for an economy that is shrinking and caused the administration to inherit a $1.3 trillion budget deficit.
The contraction in credit is causing more job losses and further declines in business activity, which, in turn is adding more pressure on the financial system, he said.
Geithner also said it was important to bring deficits down in four years to around 3 percent of gross domestic product, keeping the national debt from growing faster than the economy itself.
Failure to reduce deficits to this level would result in higher interest rates as government borrowing crowds out private investment, leading to slower growth and lower living standards for Americans, he added.
(Reporting by David Lawder; Editing by Chizu Nomiyama)