Treasury Secretary Tim Geithner attacked Republican budget plans on Thursday, accusing GOP lawmakers of trying to reduce government spending to levels “more characteristic of Pakistan or sub-Saharan Africa.”
In a speech at the Economic Club of New York, Geithner said that the U.S. economy is growing, but warned that a premature shift to austerity would be “very damaging.”
Geithner criticised Republicans for ignoring “fiscal realities” and offering “Americans the illusion that tax cuts pay for themselves.”
GOP budget plans, he said, “show quite vividly” what it takes to reduce the deficit without raising revenue.
From his speech:
In their budget, in order to preserve the present, historically low effective tax rate for the top 2 per cent of Americans and in order to sustain higher levels of defence spending than the Secretary of defence and the Joint Chiefs believe we need, the Republicans proposed cuts that would dramatically reduce the level of future Medicare benefits, cut even more deeply into the safety net for low-income Americans, and cause further damage to education, infrastructure, and other investments—reducing the total size of what are called discretionary spending programs to 1.6 per cent of GDP within 10 years, a level more characteristic of Pakistan or Sub-Saharan Africa.
Some Republicans have proposed capping overall government spending at 20 per cent of GDP or lower. Doing so, with 25 million more Americans relying on Medicare and Social Security over the next 15 years, would effectively end the decades-long bipartisan commitment to maintain health care and a basic pension benefit for retiring Americans or leave us unprepared to defend the nation, much less offer Americans a better education.
Geithner acknowledged that election politics could make it difficult to address fiscal issues this year, but warned that both parties are going to have to “work together very quickly after the election.”
He plans to return to leave the Treasury and return to New York next year, regardless of the election outcome.
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