Geithner: Republicans Cede Debt Lever

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Secretary of Treasury Timothy Geithner arrives at the Capitol for meeting with congressional leaders on Nov. 29, 2012.

This is Treasury Secretary Tim Geithner’s last day at work, and he is leaving with an exit interview snared by Politico in which the veteran warrior of the fiscal cliff wars suggests Republicans have ceded the debt ceiling as a political weapon. And this, he says, is a good thing.

Geithner also rules out any idea of him succeeding Federal Reserve Chairman Ben Bernanke, serving his final year.

The move by House Republicans that cleared the House this week with a waiver until May of the federal debt ceiling points to fiscal negotiations less fraught with economic danger, the departing secretary tells Politico’s Ben White and Mike Allen.

“It certainly looks like they decided that it’s not effective leverage, because you can’t threaten the unthinkable and expect to get any leverage,” Geithner said. “So, I think that’s encouraging. But to be fair, I don’t think it’s clear what their next step is on this issue.”
Geithner “firmly ruled out ever serving as chairman of the Federal Reserve, something that has been mentioned by people close to the outgoing secretary as a possibility down the road,” Politico reports.

“Not a chance,” he said. “I have great respect for the institution, but that will be someone else’s privilege.”

Geithner suggests that additional stimulus spending — something unlikely to clear the House — coupled with long-term deficit reduction would be the best prescription for boosting economic growth and cutting unemployment.

“I’m a big supporter of the value of a very substantial long-term infrastructure financing plan, very good economics to that,” he said. “And of course over time it would be good for the country, better for confidence, to put in place a carefully designed balanced set of long-term fiscal reforms, tax reforms, that’s good for growth.”

It’s “important people remember that we still have some ways to go to repair the damage” from the 2008 financial crisis, he said.

“We’re at this unique moment in the sense that the world has a lot of confidence in the United States,” he said. “And the world is going to be willing to, for some time, not indefinitely, but for some time [be] willing to lend us a substantial amount of money at relatively low interest rates and we should make sure we can take advantage of that particular privilege right now to invest in things that make the country stronger in the future.”

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