Treasury Secretary Timothy F. Geithner said the U.S. faces risks from the “severe and protracted crisis” in Europe while the confrontation with Iran has put upward pressure on oil prices.
“We still face some risks ahead,” Geithner said in prepared remarks to the Portland City Club Wednesday. “We still live in a dangerous and uncertain world, with Europe confronting a severe and protracted crisis. The world is engaged in a critical struggle with Iran, which has added to upward pressure on oil prices.”
Geithner’s comments in Oregon came as Federal Reserve Chairman Ben S. Bernanke said that he remains prepared to do more to stimulate growth if needed. Federal Reserve policy makers said they expect growth to gradually accelerate, while refraining from new actions to lower borrowing costs.
Crude oil for June delivery rose 57 cents to $104.12 a barrel on the New York Mercantile Exchange, a one-week high. Prices have advanced 1.8 percent in the past four days, the longest rally since the period ended Feb. 24.
Geithner said the economy is “gradually getting stronger” while having a way to go to repair the damage of the financial crisis. He warned that at the end of the year, the economy faces a “fiscal cliff.”
“At the end of the year, we face a so-called fiscal ’cliff’ — the simultaneous expiration of tax cuts and large across-the-board cuts in spending,” Geithner said. “That cliff presents a risk, but it also provides an opportunity for bipartisan agreement on reforms to restore fiscal sustainability.”
Geithner criticized Republican budget and tax plans. He said any tax reforms must be combined with spending savings.
“If you try to restore fiscal balance without a penny of additional revenue, then you have to cut deeply — too deeply — into critical functions of government,” Geithner said.
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