The uncertainty surrounding the tax raises and spending cuts set to go into effect next year poses a significant risk, U.S. Treasury Secretary Timothy Geithner said on Wednesday.
A balanced mix of reforms is needed for the United States to dig out of a "fiscal hole," Geithner said during an interview with CNBC at the CNBC Institutional Investor Delivering Alpha conference.
Geithner admitted that the economy is "definitely slower," but said Washington needs to take aggressive action to promote growth.
But Geithner rejected the idea that the economy is headed for another recession.
The U.S. economy is facing $4 trillion worth of expiring tax cuts and automatic government spending reductions, dubbed the "fiscal cliff," and most analysts don't expect Congress to act to soften the blow until after the congressional and presidential elections in November.
"What the economy needs right now is very substantial and well-designed program for support of economic growth," Geithner said.
He said Congress should continue payroll tax cuts for "98 percent" of American workers and make mortgage refinancing more readily available, among other proposals, CNBC reported.
The reference alluded to the administration's goal to keep in place most of the so-called Bush tax cuts that affected most Americans during the past decade, CNBC reported. The White House wants to raise taxes on those earning more than $200,000 individually and couples with incomes greater than $250,000.
Republicans oppose raising taxes when the economy is slowing.
"The basic fiscal realities are going to force compromise ultimately," Geithner said.
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