Geithner: Reform Social Security but keep benefits
WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Tuesday the United States needs to shore up its massive pension program without slashing Social Security benefits or subjecting them to the "whims" of the stock market.
A day after the White House unveiled a budget that would reduce the deficit by $1.1 trillion over 10 years, Geithner warned Republicans against cutting spending too quickly, calling for gradual deficit reduction to avoid endangering the economic recovery.
"Cutting services and programs too much, too soon would jeopardize the recovery and destroy tens of thousands of jobs," Geithner told the House of Representatives Ways and Means Committee, which acts as Congress' tax-writing panel.
Republicans, who hold a majority in the House and have pressed for deeper spending cuts, said the budget proposal would raise taxes on small businesses and other companies, stifling hiring when the jobless rate remains uncomfortably high.
"How in heaven's name does the White House believe it will gin up the economy, which is very sluggish, by taxing the manufacturers and job creators most likely to get us out of these tough times?" said Representative Kevin Brady, a Republican from Texas.
Lawmakers also pressed Geithner for more specifics on how the White House planned to reduce the cost of Social Security and Medicare, the two biggest sources of budgetary strain.
The Obama administration will work with Congress to consider ideas to strengthen Social Security -- the pension program for the elderly and disabled, Geithner said.
"However, we will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans' retirement savings to the whims of the stock market," Geithner said.
Geithner added, however, that the United States cannot pretend that budget problems are merely the result of the financial crisis, and said restoring fiscal responsibility will require some "real sacrifice that affects all Americans."
He said he believes that the Obama administration and Congress can find room for compromise, as they did in December in a tax-cut extension deal. The tax legislation was passed by Congress before Republicans took over the House in January and strengthened their minority in the Senate.
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video