U.S. Treasury Secretary Timothy F. Geithner said high gasoline prices will hamper the U.S. economy as the recovery continues.
Geithner acknowledged that gas prices have risen “quite a lot,” partly in response to tensions in the Middle East and North Africa. He also cited concerns that Japan’s nuclear disaster is calling the future of nuclear power into question.
As fuel prices continue to rise, “there’s a measurable impact on the economy,” Geithner said in an interview with NBC’s “Meet the Press” program broadcast Sunday. He said the higher prices slow the recovery “modestly” and that “it’s an impact we can withstand, we can absorb, because the economy itself is still gradually getting stronger.”
Gasoline rose to a 33-month high as East Coast refinery shutdowns curtailed production and a jump in consumer confidence indicated fuel demand may increase. Gasoline for May delivery rose 5.45 cents, or 1.7 percent, to settle at $3.2892 a gallon on the New York Mercantile Exchange on Friday.
The Obama administration has stressed the importance of maintaining confidence in the U.S. economy, while Democrats and Republicans battle over the budget, the deficit and the $14.29 trillion debt limit. As both parties argue about the best way to cut the deficit over time, the administration is pressing Congress to raise the limit before financial markets begin to penalize U.S. borrowing.
“Those people up there who are telling people that you can take this to the brink, because it gives us some leverage, they’re going to own the responsibility for the risk that creates for the American economy,” Geithner said in the interview.
Speaking on ABC’s “This Week With Christiane Amanpour” program, Geithner reiterated his view that failing to raise the U.S. debt limit “would make the last crisis look like a tame, modest crisis” and would “tip the U.S. economy and the world economy back into recession, depression.”
Congress will raise the debt limit “because there’s no alternative, and they recognize that,” he said.
When asked on NBC whether the debt ceiling showdown raises a new risk of government shutdown, Geithner responded “I don’t think so.” He has previously said the limit will be reached by May 16 and that the Treasury’s toolkit of emergency measures will be exhausted by about July 8.
Geithner was asked to respond to a Bloomberg Businessweek article describing how some companies, including General Electric Co., pay few taxes because of a range of legal loopholes.
The current tax system is “unfair,” Geithner said. “Companies are not paying taxes on the basis of the strength of their business. They’re paying taxes on the basis of you know, how good their lobbyist was.”
President Barack Obama called for a rewrite of business tax rules in his State of the Union address on Jan. 25 and in his fiscal 2012 budget proposal released Feb. 14. Geithner has urged lawmakers to take up the issue and work with the administration to develop a plan.
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