Treasury Secretary Timothy Geithner on Thursday said it was vital to get US budget deficits down in order to spur private-sector growth that creates jobs and predicted it will begin happening in 2011. But first the financial system must be stabilised.
"You cannot address those long-term deficits, you cannot put the government of the United States in a position that we can go back to living within our means, unless you repair the damage done to this economy and to its revenue base," he said on CNBC television.
The budget deficit hit a record $1.4 trillion in fiscal 2009 that ended September 30 and is forecast to be in the same range next year, fostering doubt in global markets about the dollar's value because of huge US borrowing needs. Geithner said it was "important" for the United States to maintain a strong dollar and said he takes seriously its key position as a global reserve currency.
He said the United States needs to persuade the world it will be more fiscally responsible in future. "If we can be credible and make sure the American people understand and the world understand that we're going to bring down these deficits once growth is established, we will have more ability now to do what we need to do to get jobs created, get investment going now," he said.
"Sometime in 2011 we'll begin the process of getting those deficits down," Geithner added. He said current deficits were "unsustainably high" but said the Obama administration inherited them when it took office in January. Geithner, who is participating in a White House conference on job creation on Thursday, said the US economy was much healthier now despite some continuing problems with tight credit availability and strained housing markets.
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