* Geithner warns on cutting spending too much, too fast
* Republicans focus criticism on tax increases
* Geithner says a rate in high 20 percent good goal
(Adds tax comments)
By Rachelle Younglai and Kim Dixon
WASHINGTON, Feb 15 U.S. Treasury Secretary
Timothy Geithner said on Tuesday that the United States needs
to cut the corporate tax rate substantially with a goal in the
high 20 percent range, down from the current 35 percent
A day after the White House unveiled a budget that seeks to
trim the country's massive deficit, Geithner reiterated that
the Obama administration and Congress had to work together to
overhaul the tax code, starting with corporate taxes.
"We are very serious... in trying to build consensus now on
a set of fundamental changes to the corporate tax system that
would improve incentives for investment," Geithner told a House
"The average rate of our major trading partners now is in
the high 20s and... to make it meaningful you want to get it
down substantially towards that level," he said.
The comments may mark the first time the Obama
administration has publicly put a figure on a rate to work
toward in cutting the statutory rate, among the highest in the
industrialized world, analysts said.
(For a comparison across countries, see: [nN14142480])
The White House is in the midst of talks with corporations
and others to gather ideas for tax reform, though many believe
it will be a process that takes several years. Some were
disappointed Obama's budget did not take on the issue more
Obama's own fiscal deficit commission recommended cutting
the top corporate rate to between 23 and 29 percent, while
trimming business tax breaks.
The president did propose squashing some of these breaks in
his 2012 budget, but the ideas have failed to garner support in
Congress for several years.
A big stumbling block is that Obama wants to overhaul
corporate taxes without adding to the deficit, expected to top
$1.5 trillion this year. That will create inevitable winners
and losers in the business community, dragging out the
FISHING FOR IDEAS ON SOCIAL SECURITY REFORM
At the hearing to examine the administration's $3.729
trillion budget proposal for fiscal 2012, Geithner said 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.
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 U.S. House of Representatives Ways and Means
Committee, which acts as Congress' tax-writing panel.
Republicans, who hold a majority in the House and are
pressing for deeper spending cuts, said the budget 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 Republican Representative Kevin
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.
(Additional reporting by David Lawder, Dave Clarke, Lesley
Wroughton and Pedro da Costa; Writing by Emily Kaiser and
Rachelle Younglai; Editing by James Dalgleish)