Editor’s note: Also watch part two of the interview, Exclusive: Treasury Secretary Tim Geithner Explains the Push for Corporate Tax Reform
HUDSON: The threat of Greece has really been
hanging over this global economy for months if not years now. And today,
U.S. Treasury Secretary Timothy Geithner tells NBR in an exclusive
interview, he thinks Americans can be more confident now that troubles in
Europe won’t be a huge problem here. The treasury secretary spoke with our Darren Gersh in Texas.
GERSH: You’re in the Fort Worth area. You’re at a BNSF railway
facility. And what I’m wondering is can the people here in Fort Worth and
Dallas and across the country, do they no longer have to worry about what
is going on in Europe? Can they believe that the worst of the European
financial crisis is now behind us?
GEITHNER: Well, I think you can say, if you look back over the last
18 months or so, the crisis in Europe did a lot of damage to confidence
around the world. It slowed growth in the United States quite
significantly. It took a little bit of the wind out of what was initially
a pretty strong recovery here.
And around the world people saw the effects on things they can measure
and feel, exports fell, growth was weaker, confidence was hurt. But as I
said, over the last few months, they have done a much better job getting
their arms around this and getting people more confident around the world
that they are going to contain the risk of crisis, and that’s very
And so even if growth in Europe is weaker than any of us like, and
even though it is going to be a really difficult long road for them, I
think people here in the United States and around the world can be more
confident now that Europe is not going to cause a huge amount of damage to
the global economy or to our economy.
GERSH: We don’t have another foreign shock. Has the U.S. economy
really turned a corner right now?
GEITHNER: The U.S. economy is really gradually getting stronger, and
the policies the president put in place are making the economy stronger.
And a lot of risk and uncertainty out there still, and we’ve got some ways
to go to repair the damage caused by the crisis.
But I think we feel more resilient, we look more resilient. A lot is
going to depend, of course, on what happens in Europe and what happens in
the oil markets. But most of the things we can look at that measure
strength, exports, manufacturing, agriculture, and investment, they all
look really pretty encouraging now.
GERSH: What are you seeing right now in the U.S. economy in terms of
the impact from oil prices?
GEITHNER: I think it’s hard to see the impact now. I think people
feel it because they really feel immediately the impact of higher gas
prices right away. And but across the economy as a whole, oil prices now
are mostly a reflection of the fact that growth is getting stronger here
and around the world, at least outside of Europe.
And that combined with the fear of a little saber-rattling around Iran
is what is pushing prices higher. Part of it is growth, part of that is
that broad concern of what is happening in Iran.
GERSH: But are we going to have another one of these years where we
start out really strong at the beginning of the year only to falter in the
GEITHNER: You can’t know, but what is good about the United States,
it’s good to remember this, is that what caused growth to weaken or to slow
in 2010 and ’11, we’re seeing this outside the United States. We’re not
seeing internal to the United States except for the debate about the debt
limit last summer.
That was very, very damaging to confidence. That was a completely
self-inflicted, avoidable shock to confidence in the United States. You
had people across — well, I won’t say, but you had people threatening to
default on the nation’s obligations for a sustained period of time and that
But the main things that caused the economy to slow after the early
stage of recovery were the European crisis, the oil shock last year, and
the tragedy in Japan. As those have eased a little bit, our economy is
showing more strength.
GERSH: The president was talking about oil prices yesterday. And he
seemed to be saying that basically, look, oil is a global commodity and we
don’t very much control over the price of oil. So first of all, is that
right, we don’t have much control over the price of oil? And second, why
is that message so hard for so many people to understand?
GEITHNER: What affects the price fundamentally is in the short term
is the amount of growth and demand there is around the world for oil, and
in the United States as well, that combined with what is happening in Iran,
of course, where we are engaged in a very important broad international
effort to bring a huge amount of pressure on Iran to stop them from
acquiring a nuclear weapon.
GERSH: On Iran, the president said recently that as commander-in-chief
he had to consider the economic costs of a potential attack on Iran. You
are his chief economic adviser. What might those costs be?
GEITHNER: Economic stakes are high but I think you should think about
the broader security stakes for the nation and for the world, as all those
nations are. The reasons why you see countries around the world joining us
in this broader effort is because they feel like we do, why it’s is so
important for their economic interests, for their national security
interests, that we’re able to effectively prevent Iran from pursuing its
GERSH: Tomorrow we’ll hear more from Treasury Secretary Timothy
Geithner on corporate tax reform and keeping the U.S. economy competitive.