Timothy Geithner: Obama will look at changing tax code next year
At a Monitor-sponsored breakfast for reporters Thursday, Treasury Secretary Timothy Geithner gave praise for Elizabeth Warren and discussed Obama administration plans for the estate tax and housing reform.
Elizabeth Warren may have received some important support from the Secretary of the Treasury Tim Geithner to run the new Consumer Financial Protection Bureau – an appointment that would be sure to be opposed by many Republicans.
In a Monitor sponsored breakfast for reporters, Mr. Geithner said the Harvard law professor, who was also an early and harsh critic of the financial institutions, would be “an enormously effective” leader of the institution which is part of the financial reform bill President Obama signed into law on Wednesday. He said Ms. Warren would bring “enormous credibility” as a critic of the credit boom that lead to the bailout of the banks.
“She pointed out the extent of things happening in the mortgage market and consumer credit markets that ultimately helped bring the economy to the edge of collapse,” said Geithner.
However, the Treasury Secretary pointed out, the decision is up to President Obama and he said he had heard two other names – people who are very well qualified, he added – mentioned by his colleagues in the White House. And, he added, “I’ve heard others,” but he declined to name them except to say “they’re good.”
In his wide-ranging discussion with reporters, Geithner said the administration would take a look at corporate taxes next year, again a move that would likely be opposed by many Republicans if it involves raising taxes.
“We are likely to have to take a broader look at corporate tax reform next year,” said Geithner, adding it was likely to be one of the areas the fiscal commission, appointed by Obama to make recommendations on deficit reduction, will have to look at and provide a view on.
The Obama administration may also press Congress to restore the estate tax, which lapsed this year. “The president’s position is that we should restore the estate tax and extend it at its ’09 rates going forward,” said Geithner, whose purview also includes the IRS.
After one reporter asked if the Steinbrenner family should voluntarily pay estate taxes for the good of the nation, Geithner replied, “It is an excellent question.”
Looking ahead, the Treasury chief said the Obama administration’s legislative priorities for 2011 include reform of “broader housing finance,” not just Fannie Mae and Freddie Mac, by the beginning of next year. Both Fannie and Freddie, formerly quasi-government organizations that buy mortgages from banks, are now under the purview of the government which is providing them with capital.
“We are going to begin the process of public outreach and consultation on the Hill quite soon,” said Geithner.
Geithner said he found it “inconceivable” that the Republicans could repeal the financial reform bill if they retake the House of Representatives in the fall. Minority leader John Boehner has called for such an effort.
“The reason this bill became law was because Republicans decided they could not block it, that it was untenable for them to block it because they did not want to be in the position of saying that they looked at a system which produced this level of disaster for the American economy, with a system that did not work, did not serve the interests of corporate America, of businesses across the country they did not want to leave them in the position of blocking change,” said Geithner.
Immediately after the formal meeting, Geithner also signaled the Administration might be willing to try to get Congress to help states and cities facing large budget gaps. “What the states need is more direct aid,” he said. But he noted the municipal bond markets are much healthier now, allowing states to borrow relatively easily.
On Wednesday, Ben Bernanke, the chairman of the Federal Reserve, roiled the financial markets after he said the economy faced “unusually uncertain” prospects. However, Geithner, saying he and Bernanke were on the same page about the economy, said he thought it was still suffering from the financial crisis.
“We are still living with scars caused by the crisis, not just what you see in higher rates of unemployment, not just what you see in the trauma in the housing market but you see it in confidence from businesses and consumers across the country,” said Geithner.
On a different topic, the Treasury chief said he had not heard of any plans to seize assets of BP, which has now shelled out over $4 billion for Gulf coast oil spill recovery and cleanup efforts. “I have not been exposed to any concern in that direction,” he said.