–Crisis In Europe Affecting Confidence In US, Worldwide
–To Lay Out Detail Of Corporate Tax Reform Proposals ‘Relatively Soon’

By Brai Odion-Esene

WASHINGTON (MNI) – U.S. Treasury Secretary Timothy Geithner Monday
said the United States has a huge economic and financial stake in
helping European authorities tackle the ongoing sovereign debt crisis.

“It is not in the interest of the United States for Europe to be
weakened by a protracted economic and financial crisis,” he told
reporters during a briefing at the White House.

Europe is obviously under pressure and is facing a lot of
challenges, Geithner said. “It is affecting us. It’s affecting
confidence here and around the world.”

“So we are working very closely with them and being very supportive
as they try to craft a more effective strategy,” he added.

Geithner reiterated his belief that there is the political will
among Eurozone leaders to tackle the bloc’s problems. “It’s not a
question of the financial resources, the economic resources ,” he said.
“This is within their capacity to solve.”

Geithner predicted European authorities will come through and
reassure the world that they possess the political will and not just the
economic capacity to manage their challenges.

On the domestic front, President Obama unveiled Monday morning a
revamped fiscal plan that identifies more than $3 trillion in budget
savings over a decade and urged Congress’ new deficit reduction panel to
consider this plan as an important step to “finish what we started this
summer” during the debt ceiling negotiations.

Obama’s plan seeks $3 trillion in 10-year budget savings, about
$1.5 trillion of which would come additional revenues. The President’s
plan would also claim more than $1.1 trillion in savings by winding down
the wars in Iraq and Afghanistan.

The Obama package will also include about $580 billion in
entitlement savings. Of these savings, about $248 billion will come from
Medicare reforms and $72 billion from Medicaid adjustments.

On the matter of corporate tax reform, Geithner said the
administration will release its White Paper “soon, not sure quite when.
Sometime before the end of the year.”

“I expect you’ll see us lay out relatively soon the detailed
proposals,” he added.

Asked what sort of reaction Obama’s plan would garner from rating
agencies, Geithner said the proposal meets the “critical test” of
restoring financial soundness to the United States.

It would bring deficits down to a level below 3% of GDP, he said,
one that is sustainable over the long run and allows the federal debt
burden to stabilize and begin to fall as a share of the economy.

“It’ll meet that critical test for financial prudence, for
financial soundness,” Geithner said.

Both sides agree that the U.S. has a long-term deficit problem,
“and we have to bring that down to earth,” Geithner said.

He said there is general agreement over the basic magnitude of the
cuts that are needed over time, which is roughly $4 trillion over a
decade. “That’s what you need to bring the deficits down to a level we
can sustain over time,” Geithner said, “the debate we are having is how
best to do that.”

“What the president laid out is a balanced package of reforms, on
all parts of government, combined with some modest reforms to our tax
system designed to make our country more competitive and make the sure
the most fortunate Americans are paying a greater share of their income
in taxes,” Geithner said.

Geithner said the administration is not going to submit a detailed
tax reform proposal to Congress right now because “there are lots of
different ways to do that.”

However, he said closing tax loopholes for the rich must be a basic
principle of tax reform, “and we’re going to fight to make sure that’s a
part of what Congress considers and ultimately considers.”

Geithner said the best strategy for the country is to reform the
overall tax system so rates are lowered were possible, wasteful
subsidies are eliminated, and contribute to deficit reduction while
making the economy more competitive in the long run.

“We think it’s better than the alternatives,” he said.

** Market News International Washington Bureau: 202-371-2121 **

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