Balancing
cautious celebration with sober warnings, Treasury Secretary Timothy
Geithner told the Detroit Economic Club the Obama administration will
exit from its 2009 investments to rescue General Motors and Chrysler
even if it doesn’t recoup every taxpayer dollar.
“We didn’t do
this to maximize our return. We did this to save jobs,” said Geithner,
who said the U.S. auto industry has added nearly 90,000 jobs since GM
and Chrysler’s government-back bankruptcies nearly two years ago.
On a day when the government announced that the U.S. economy
grew at a slower-than-expected 1.8% in the first quarter, Geithner
acknowledged “this is still a very tough economy for millions of
Americans — including so many families here in Michigan.”
“Millions of Americans are still looking for work and at risk
of losing their homes. Higher gas prices are putting more pressure on
the average working family. And the damage is much more severe than the
national averages capture in so many communities across the country.”
Immediately prior to his Economic Club talk at the Westin Book
Cadillac hotel, Geithner met privately with about two dozen local
business leaders and congressional representatives to gather first-hand
accounts of what Detroit-area companies are experiencing.
Earlier in the day, he toured Chrysler’s Jefferson North
assembly plant and met with Chrysler CEO Sergio Marchionne. Chrysler
said it intends to raise enough money to fully repay the $5.8 billion
it borrowed from the Treasury’s Troubled Asset Relief Program in 2009.
Geithner trumpeted that the nation’s economy has generated
almost 2 million jobs over the last 13 months, more than 51,000 in
Michigan, where the state unemployment rate has fallen to 10.4% in
March from 14.1% a year earlier.
But he said loose ends remain in the administration’s efforts
to reform the financial system to protect consumers and investors from
the reckless speculation that triggered the 2008 financial crisis.
Finally, he addressed the need to reduce the nation’s
potentially crippling deficit that now requires the federal government
to borrow 40 cents of every dollar it borrows.
“Reducing the deficit is a war of necessity. There is no alternative,”
he said.
Still he called for a balance between spending cuts across all critical
functions - including defense and entitlements — and reforming what he
called “an unfair and broken tax system.”
He emphasized that President Barack Obama’s recent budget
proposed $3 in spending and interest rate cuts for every $1 in
increased tax revenue.
Asked what the economic consequences would be if Congress votes
against raising the nation’s debt limit — a vote that could happen next
month — Geithner said a majority in both the House of Representatives
and Senate will approve an increase.
If Congress rejects raising the debt ceiling, “it would make
the crisis we just been through seem like a simple problem,” Geithner
said.
Contact Greg Gardner: 313-222-8762 or ggardner99@freepress.com