By Andrea Salazar
Treasury Secretary Timothy Geithner defended President Obama’s jobs plan before a Senate panel Tuesday, warning that failing to act could hurt the already shaky economy.
“If Congress does not act on these measures, then taxes will go up for virtually all working Americans,” Geithner said. “Taxes will rise for most businesses, businesses large and small. Unemployment rates will rise not fall. There will be fewer jobs for veterans and the long-term unemployed. The housing market will be weaker. Our damaged infrastructure will leave America’s businesses with growing costs, and cities and states will have to cut back further on critical services.”
Sen. Olympia Snowe (R-Maine), in response, warned that businesses need “clarity and certainty,” something she said those businesses are not getting with the administration’s tax and regulation policies.
“Uncertainty has a huge price tag and that price tag is being borne right now by the Americans unemployed, and that’s what we have to correct,” Snowe said. “I’m not here to find blame. I’m here to get the job done for the American people.”
Although agreeing that tax reform is necessary, Geithner said lack of demand was more of a contributor to the challenges facing small businesses today than government regulaton.
Snowe also emphasized that temporary tax incentives are not the solution to the country’s economic problems saying businesses “don’t dare make a move because after 1 year, then what?”.
Geithner, however, said tax reform could take too long to work out, while temporary tax incentives could be “very powerful” in getting the economy growing faster now.
“In a situation like this, where growth is weaker, why you need to extend temporary tax measures is because if you don’t, the economy will be weaker,” Geithner said. “They’re not a substitute for long-term tax reform, but they’re a necessary complement.”