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Discussing President Barack Obama's proposed budget before the Senate Finance Committee on Tuesday, Treasury Secretary Timothy Geithner sought to defend the high level of spending by suggesting that immediate budget cuts would damage the fragile economic recovery and make fiscal challenges tougher than they already are.
"The U.S. economy is still in the midst of one of the most challenging periods in our nation's history," Geithner said. "The overall economy grew at an annual rate of 4 percent over the last six months of 2009, but millions of Americans remain out of work and the economic pain of the recession can still be felt throughout our nation."
He added, "This is why we have a lot of work to do together to make sure that as overall economic growth recovers, so does job growth."
"In the short-term that means ensuring that the true engines of job creation, America's businesses, have the right incentives to expand and hire through new targeted measures in 2010 that will speed job creation," Geithner said.
However, Geithner acknowledged that steps must be taken to bring down the deficit and reduce the burden on future generations.
The secretary said that budget cuts must be implemented as soon as the economy has recovered from the 2008 financial crisis.
"Every American knows that the path of our deficits is too high and that if they persist long after this recession ends, they will pose a corrosive threat to our economic future," he said in prepared remarks.
Geithner also said that the country's priority should be to rebuild and regrow the economy and create more and better paying jobs for workers, or else the economy could fall back into recession, harm middle class families and make the country's financial woes even worse.
"We understand, and we know that government needs to be smarter," he said.
He also announced the allocation of $30 billion in Troubled-Asset Relief Program funds for community banks to lend to small businesses and a tax credit to small businesses for hiring new employees.
Geithner went on to say that the government would encourage innovation and research in new technologies to spur the economy and stressed improvements in workforce education.
"Businesses need an educational system" that creates a skilled and efficient workforce, he said.
The secretary also said that the government aims to end TARP at no cost to tax payers.
The $3.834 trillion budget, revealed on Monday by the White House, projects a $1.3 trillion deficit, despite a three-year non-military discretionary spending freeze.
The budget will include a $6 billion investment in clean energy technologies, a $100 billion jobs package, and a $3 billion increase in elementary and secondary education spending.
The plan also calls for higher taxes on families earning more than $250,000 a year through the expiration of tax cuts implemented by former President George W. Bush in 2001 and 2003. The administration projects that ending the tax cuts will save $678 billion over the next decade.
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