WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner found himself at ground zero of U.S. economic discontent on Thursday.
He faced tough questions at a Senate hearing on President Barack Obama’s $3.55 trillion budget plan and other big-spending items that will leave America heavily in debt, and he expressed confidence.
“We are a strong and productive country. This is about our will, not about our ability,” he said.
It has been an uneasy transition to Washington for Geithner, the 47-year-old former New York Federal Reserve wunderkind who survived his own tax problems to gain Senate confirmation as treasury secretary.
Stocks dropped sharply last month after Geithner’s bank rescue plan was criticized for lacking details and clarity.
He was parodied last week in a satirical skit on NBC’s “Saturday Night Live” in which a Geithner impersonator offered toll-free hotline callers a $420 billion cash reward if they could come up with a workable plan to fix ailing banks.
He is still working without top deputies, although the White House last weekend put forward several nominees for other senior positions.
In a fresh setback on Thursday, prominent Wall Street lawyer Rodgin Cohen withdrew from consideration to be the No. 2 official, the second person to have done so within a week.
“The president has great confidence in his economic team,” White House spokesman Robert Gibbs told reporters when asked about Geithner’s credibility with some financial market players.
U.S. stock markets have swooned since Obama took office on January 20, but have clawed their way back a bit as the administration has tried to address the discontent and repair public confidence this week.
Geithner was under the spotlight again on Thursday at the Senate Budget Committee.
It was a bipartisan grilling -- both Obama’s Democrats and rival Republicans were tough while praising his and the president’s abilities and acknowledging the difficult situation they find themselves in.
The committee chairman, Democratic Senator Kent Conrad, said his Danish roots compelled him to emphasize the need to keep the debt from spiraling out of control -- “an unsustainable fiscal course,” he said.
The White House has said the U.S. budget deficit is likely to hit a record $1.75 trillion this year.
“Now, maybe part of that is I am Danish. ... I looked at the Danish debt-to-GDP ratio, see it’s the lowest. So maybe I come by this honestly. Maybe it’s genetic,” he said.
Geithner insisted the administration could stick to its goal of cutting the deficit in half by 2013 and gave a strong defense of the administration’s plans, while appealing for patience to let the plans run their course.
When it was his turn to speak, Republican Senator Lamar Alexander was armed with details on how past presidents had cleared the decks to focus on a single, major challenge.
Alexander gave examples: Dwight Eisenhower’s 1952 determination to resolve the Korean War, and Franklin Roosevelt’s focus in 1933 on fixing the banks.
He said that contrasted with Obama’s attempts to tackle several big challenges in addition to the economy, such as healthcare, education and energy.
Alexander wondered aloud whether Obama should say next week that “I will fix the banks. And I will get credit flowing again. And I will make everything else second and subordinate until that job is honorably done. I will put the health summit aside, the fiscal responsibility summit aside, the education challenge, the energy challenge.”
Geithner worked to satisfy both Congress and his boss.
“You’re absolutely right” on the need to focus single-mindedly on resolving the central, most critical priority, he told Alexander.
“But we have a lot of challenges in the country” and “we need to give (the) American people the confidence that we’re going to start to fix these long-term problems that have been neglected, frankly,” he said.
Additional reporting by Jeff Mason; Editing by Peter Cooney