The transcript of Claman's interview with Geithner, the secretary's first appearance on the Fox Business Network occurred today. Geithner appeared just after the White House jobs forum concluded.
LIZ CLAMAN: Welcome, sir. Thank you for coming on Fox Business.
TIMOTHY GEITHNER, TREASURY SECRETARY: It's good to be here.
CLAMAN: It's been a long day. You were right there in the White House during the jobs summit. I'll make it a very simple question to start.
What is the best idea -- cheap or hopefully free, because we don't have a lot of money right now -- that you heard today that would really create jobs?
GEITHNER: A lot of good ideas. What the president did is he brought together business leaders from across -- across the country -- non-profits, community leaders, labor leaders, academics, some of the best minds in the country -- to look at the best ideas in a whole range of areas.
We talked about infrastructure, how we can meet the long-term infrastructure needs of the country, how we can provide incentives for energy efficiency, retrofitting green jobs, how we can make sure small businesses get tax incentives to encourage business investment, open up credit markets, a range of other ideas like that.
CLAMAN: But did you hear one thing that you hadn't heard before where you said whoa, that could really create thousands and thousands of jobs?
GEITHNER: It's not going to be one thing. It's going to have to take a mix of different approaches. And you're right to say that we have limited resources. And our job, as you heard the president say, is to find ways to maximize the impact of any additional dollar we spend.
So we're looking for things that have a high return for the taxpayer, a high return for the American economy going forward.
But what matters is trying to get businesses investing again, businesses hiring again.
CLAMAN: Businesses investing again, they need to, they want to.
But I have to tell you, I talk to a lot of CEOs. So do you. And in advance, I told them I was going to be talking to you. And they said, look, we don't have a lot of this ability. We don't have clarity on where interest rates are going to be, what energy costs are going to be, what the health care situation is going to be. They would love some of that visibility clarified.
GEITHNER: They want -- businesses want certainty. They need certainty so they can make long-term plans today. And that's why it's so important that Congress gets health care behind us, that we bring financial reform in place so people know what the rules of the game are. And that's a very important thing to do. And that's why we're working so hard to make sure we bring clarity quickly.
CLAMAN: People talk about job creation in a big way and you come up with things like exports. If you were to increase exports -- I heard one stat, up 1 percent, even, that could create something like 250,000 jobs. We have these free trade agreements that are stalled right now with countries like panama, Colombia, South Korea.
Would you get those back on track?
GEITHNER: You're exactly right. Exports is one of the most important things we can do. And one of the strengths you see in the economy today is that exports are starting to grow again because the world is gradually getting stronger. And the president is working very hard to try to build a consensus internationally in how we can get these markets open internationally so that U.S. companies can compete on a level playing field. It's very important.
Now, as you know, it's going to take a lot of work in the United States to rebuild this very fragile consensus in the United States around trade. A lot of opposition to trade...
CLAMAN: Sure. Labor doesn't like it. They get nervous.
GEITHNER: A lot of businesses don't like and fight it, too. And -- but you're right to emphasize it. It's critical to our future. We can get a lot from making sure we can have our businesses compete in those rapidly growing countries around the world.
CLAMAN: Government tax credits to small businesses -- you were part of the small business discussion here at the White House.
Is it really that smart to give tax credits to businesses to hire new people when the products they would be making, the demand isn't quite there for them yet?
GEITHNER: You're exactly right. Some people say that the only thing that's going to get businesses hiring and investing again is confidence that the markets for their products are growing. But there is a pretty good case for looking at targeted tax incentives to encourage both investment and new hiring. And we're going to take a careful look at all those proposals.
But our obligation is to find things that have -- that give us a lot of confidence, for a dollar of taxpayer resources, we're going to get a significant return in higher investment and stronger employment growth.
CLAMAN: This is what I hear from small businesses -- please make it cheaper for me, less expensive to conduct my business.
CLAMAN: Would you have a corporate tax cut?
GEITHNER: Well, you saw the president sign into law, I think two weeks ago, an expansion of The Recovery Act to tap incentives loss carry back. We're looking at extending a bunch of other special tax incentives for -- for small businesses. There are things I think we can look at in this area.
CLAMAN: Would you consider asking the president to not sunset the Bush tax cuts?
This is important because they're up at the end of 2010. And people are hoping -- they feel that, really, if you let people spend their own money again, they would and demand would come back.
GEITHNER: Our judgment is we can and we should let those tax cuts for the -- for the very small number of the most fortune Americans in the country to expire, to extend those that -- that 95 percent -- more than 95 percent of Americans benefit from. We think that's the best approach forward.
CLAMAN: So almost slicing and dicing the Bush tax cuts, saying this part has to revert, this part has to sunset for the more -- for the wealthier people?
GEITHNER: Very few number of Americans who really are at the most fortunate in our country.
CLAMAN: But then keep them for maybe the middle class?
GEITHNER: Yes. Yes, that's what's in the president's budget and we think that's the best course going forward.
CLAMAN: OK. People forget that it was a year ago, September 2008, everything was falling apart. And if you handed them a piece of paper and said, look, write your wish list, on it, they would say we want the markets to stabilize and come back. They have.
They would say we want credit spreads to narrow once again, they're too wide. Those have.
We want to see economic indicators improve. They have.
You guys do get credit for that, certainly. But this deficit is now weighing on the average, mainstream person. It's interesting because in the past they -- they didn't seem to worry too much about it. Now they really do, because it's grown exponentially.
GEITHNER: You're right.
CLAMAN: What is the plan to deal with what will be $700 billion in interest in 2019, for example?
GEITHNER: You're absolutely right. Americans -- they're very worried about employment, they're worried about job security, they're worried about their financial security. But they also understand that these deficits are too high and they're going to have to come down over time. But our biggest challenge right now is to make sure we have a -- a recovery in place, led by the private sector and we get growth going again.
If we do that, then it's going to be easier for us to move, in a year or two, to start to bring down those long-term deficits.
If we don't get growth going again, it's going to be much harder for us to address that.
But I think you're absolutely right and I think Americans understand now -- you know, we went through a long period where people said deficits don't matter. Deficits do matter and if we don't bring those long-term deficits down once growth is established and unemployment has come down, then we're going to face the risk of a weaker recovery and less confidence.
CLAMAN: Don't you wish we'd cut spending more?
I can tell you that people are (INAUDIBLE)...
GEITHNER: Not -- not in a recession.
CLAMAN: Not in a rece...
GEITHNER: I think, again, you know, it's very...
CLAMAN: ...a recession?
GEITHNER: ...it's very important people understand that the deficits we have today are overwhelmingly the result of choices made over the last many years to make permanent tax cuts and very substantial expansions of entitlement without paying for those. Those added trillions of dollars to our debt and the recession added trillions more to our debt.
And we have no choice now, given the basic mess we started with, in acting aggressively to get to fix that mess and get growth going again.
Once we do that and we're confident we have that in place, then we're going to have to shift to bring down those long-term deficits.
CLAMAN: Where do you stand on taxing stock trades? That suddenly has reared its head because there -- there is sort of that populist feeling that, they, that would make Wall Street pay for what we've all gone through. I see that's hard. But then you've got a lot of retirees who really depend on trading their stock portfolio to just live on it.
GEITHNER: I don't think that specific thing is the way to go. But I just -- one thing is very important -- and you see this in the financial reform bills that Congress is now considering. We want to make very sure that in future crises, that taxpayers aren't at risk.
If the government has to take any risk of loss in future crises, we want to make sure that those losses are recouped for the taxpayer in the form of a fee on the financial community, assessed over time.
That's fair and just and I'm quite confident we're going to see that enacted into law.
CLAMAN: The dollar is telegraphing severe stress. We are seeing it go straight down. All we have to do is look at a dollar chart. You know it. It's -- it's a very serious situation.
GEITHNER: I don't -- I don't actually think that's what's happening. Let me describe it a little differently, although I don't talk about markets. And don't view this as a comment about markets today.
What we saw in this financial crisis, when -- when fear was at its most acute, when we were amid panic, the world brought their savings and their Treasuries and into dollars.
CLAMAN: They did.
GEITHNER: And you saw a very large rise in the value of the dollar over that period of time.
Now, as confidence has started to return, as growth has resumed around the world because of the actions we took, you're seeing some of that reversed.
Largely, that's a healthy development. But I think one thing that's very important for Americans to understand, it is very important that people around the world have confidence in our capacity to go back, to live within our means, to fix what's broken in our financial system, to get this economy growing again. That's a very important thing to do.
The dollar plays a critical role in the international financial system and to sustain that role and make sure Americans understand our responsibility to make sure that we are getting our economic house in order.
CLAMAN: But I'm not asking you to comment on markets. I -- I specifically ask about the dollar, because the Treasury secretary -- and every time we talk to the (Obama economic advisers) Jared Bernsteins of the world or the Austan Goolsbees they say that's Tim Geithner, that's Treasury. So I ask you, because other Treasury secretaries have always said we believe in a strong dollar. But would you take that ever a step further and say we want to see the dollar higher than where it is now?
GEITHNER: I'm not going to add to anything I've said past on the dollar, for reasons I think you understand. What our job is to do and what my focus is to do is make sure we are working every day to improve the basic fundamentals of the American economy, to improve confidence in the American economy.
And if you look -- as you just said, if you look back to where we were, not just a year ago -- if you look back 11 months ago, we've seen confidence gradually improve. The financial scene is much more stable.
You're seeing us able to fund these exceptionally high deficits at very low interest rates, strong indications of confidence in our capacity to help fix what was broken in this economy.
But we've got a lot of work to do. This is a very tough economy for many Americans. And that's why the president convened some of the best minds in the country today, to look at new ideas, to make sure we're getting job growth back, to get Americans back to work.
CLAMAN: We are nothing if we don't learn from our mistakes. And one of the biggest mistakes people would argue about back in 2006 and 2007, especially when subprimes started to unwind, was that there wasn't a contingency plan. Granted, the whole globe was taken by surprise.
But going back to the dollar once again -- and all I would say is, is there a contingency plan for a dollar crash...
GEITHNER: I spent...
CLAMAN: ...is something on line?
GEITHNER: I spent most of my professional life in that building over there in the Treasury. And I was responsible for a long period of time for U.S. exchange rate policy. So I have a fair amount of experience in those things. And again, our job -- and we take this obligation very, very seriously -- to make sure we are working every day, to make sure we are improving confidence in America's economic future and doing things to make the overall international financial system more stable.
CLAMAN: TARP -- Bank of America pays -- paying back the money. That's certainly good news. Did we make any money? Did the U.S. taxpayer do well on this?
GEITHNER: Oh, absolutely. The -- we'll put up the numbers in more detail in the next couple of days. But on just that particular investment, the taxpayer got probably more than $2.5 billion, even before we sell our warrants...
CLAMAN: $2.5 billion (INAUDIBLE)...
GEITHNER: $2.5 billion before we sell our warrants.
GEITHNER: But -- and we've already had -- putting aside Bank of America -- more than $70 billion come back into the Treasury since I took office. We've seen dividends and earnings on that of above $12 billion. Banks are repaying with interest. And we're going to be able to solve this financial crisis at dramatically less cost than we initially anticipated. And that's going to allow us to devote substantial resources to meet the very difficult challenges we still face as a country.
CLAMAN: I'm glad you clarified that. People are constantly asking. But December 31st, what isn't used of the TARP money -- and there's a big chunk of it -- goes away unless you notify Congress. Has the letter been crafted to notify Congress that, you know what, as an insurance policy, we're going to hold onto what's left of the TARP money in case, God forbid, there's a double dip?
GEITHNER: You said the important thing, which is that this financial system, although it's in dramatically stronger shape, still has pockets of very tough credit conditions. So small businesses across the country find it hard to get credit, still. Small banks -- some still need capital. Commercial real estate is still a bit of a challenge. The housing market is still overwhelmingly dependent on the government.
So we need to make sure we are working hard still -- and this is going to require more time -- to make sure we're freeing up credit and that will help strengthen the recovery.
CLAMAN: Well, it would -- it would make sense to me then, if I'm hearing you correctly, that you would just say to Congress, yes, we're going to hold onto it, we will extend it.
GEITHNER: Well, what we're -- what we're going to do, because it's the important -- the best thing to do for the country -- is we're going to make sure that we are using these resources very, very carefully to help reinforce this very substantial improvement we've seen in financial markets. And, as I said, the important thing for people to recognize is we were achieve -- be able to achieve a dramatic improvement in the stability of the U.S. financial system at dramatically lower costs than many people anticipated because we adopted a strategy to get prevent capital to come in to our -- to our banking system early and quickly and with force.
CLAMAN: Guys like Warren Buffett think it's great what you did. I mean I -- I test the air, I test the water, I talk about, you know -- and then there are other people, of course -- today, for example, Ben Bernanke is -- is going through what I'm sure is just a lovely process.
And that would be the Senate confirmation hearings. And -- and, you know, you've heard Representative Brady from Texas saying you shouldn't have your position. And then there's DeFazio of Oregon and you shouldn't have your position.
Make it clear to the American people -- clarify because some people look and say even if you remind them that it was Henry Paulson, your predecessor, who shoehorned through TARP, because they don't like TARP, that -- that you were running the New York Fed during what was this buildup. And they say you haven't -- you know, the sheriff was kind of turning a blind eye while the cowboys and Indians were moving up.
Clarify to them why you feel you should continue in this job, because they hear stuff from Congress, you know, people who are, arguably, some, trying to get the headlines.
GEITHNER: Oh, you know, look, this is part of the job. It's part of any job like this. Who have to do consequential things. And there is no way you can make every happy -- everyone happy in these decisions. I mean it's just -- it's part of the nature of life. And we're having a good debate, an important debate about what it's going to take to get this economy back on track and how to make sure we can get the government of the United States doing a better job of things that governments have to do, like helping make sure people can get their kids a good education, put their kids through college, face more affordable health care. Those are the kinds of things we're having a good debate, and that's a good debate to have.
And people are going to disagree. And they'll disagree and they should -- they should take a careful look at all the decisions we've made and -- and you'll never make everyone -- everyone happy.
CLAMAN: That's true. You can't please all the people all the time.
As we finish up here, Mr. Treasury Secretary, pretend you're not talking to Liz from Fox Business News or -- or a high end finance audience, just to the average person out there who is so worried about all of the costs that you just saw. Like, they want to pay for their kids' tuition. They want to not worry that they're -- they get left with very little of a paycheck.
What are you yet to accomplish that you are confident you will that should make people out there more patient?
GEITHNER: Oh, I think the American people need to understand this is getting better. The American economy is healing, but there was a lot of damage done and it's going to take some time. And we are going to do everything we can to make sure we're putting in place a stronger foundation for future growth and give Americans more confidence that they're going to again have financial security in the future, be able to put their kids through college, be able to afford a home and meet their basic needs as -- of their families.
That's what we're going to keep doing. And this is a very strong country. And we're going to be able to get this country back to the point where people have the kind of confidence they deserve.
CLAMAN: Mr. Secretary, thank you very much.
CLAMAN: We hope you'll join us on Fox Business News again.
GEITHNER: Very nice to see you.
CLAMAN: Treasury Secretary Tim Geithner.