WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Wednesday that it was essential for the country to lock in a set of fiscal reforms to put the nation’s budget on a sustainable path.
“I don’t believe this is something we can defer,” Geithner told the Senate Finance Committee at a hearing on the Obama administration’s budget plan.
On Monday, the White House proposed a $3.7 trillion budget that offered $1.1 trillion in deficit reductions over 10 years. But Republicans on the panel said the budget cutting did not go far enough and chided the administration for not taking bolder steps.
“I would like to see you go down in history as a good secretary,” Senator Orrin Hatch, the top Republican on the committee, told Geithner.
“The president left it up to Congress ... You can’t make any changes without presidential leadership,” Hatch said.
The Obama administration has forecast that the budget deficit would reach a record $1.65 trillion this fiscal year, or 10.9 percent of the U.S. gross domestic product.
When asked if it was safe to run trillion dollar deficits, Geithner said it was “absolutely critical for us to find a way to lock in a set of fiscal reforms.”
“Unless we put in place a multiyear commitment to bring down the deficit, we will put at risk future growth and expansion,” he said.
Geithner again put in a pitch for corporate tax reforms that would reduce tax rates but eliminate special tax deductions and credits that distort investment decisions. He said this could be accomplished before reforming the system for personal income taxes but that process should start now -- in part to show the United States’ commitment to fiscal discipline.
The administration’s budget plan would freeze non-security discretionary spending for five years, but Republicans want outright cuts and have criticized proposed tax hikes for the wealthiest Americans.
Geithner said it was not possible to bring deficits down to sustainable levels with a strategy that relies only on discretionary spending cuts. “That requires us to look at revenues,” he said, indicating that some tax hikes will be necessary.
Reporting by David Lawder and Rachelle Younglai; Editing by Chizu Nomiyama