reforms. could you discuss some of the kinds of reforms that would allow competitiveness in the greek economy as opposed to just simply reducing spending. >> excellent question. very important to recognize that there's three basic problems. in greece and nm uniquely in greece, they let their government get too big, too enjudgerous, borrowed a huge amount to support that. they and almost the rest face loss of competitiveness. they make it hard to start a business, very hard to use the talent of their country's more carefully and they have financial systems that -- we had a terrible crisis in the united states but their financial systems were much rnlg laler, much more risky than even what happened in the u.s. those three challenges of fiscal reforms over time.

enhancing reforms so it's easier to start a business and financial systems that are brought down to earth. had more gravity in them. those are what's necessary. very tough, very long hard road and it's important for people to recognize as you did that these reforms which can work against growth in the near term have to be supported not just by conditional financial assistance but those countries that are in a position to do more to support growth should do that. that would make the overall rye crisis less risky for them in the world. >> let me talk about two questions the little time i have left. one has to deal with greece again and about the -- how it relates to or the impact it would have on the u.s. economy. if greece was to default. and abandon the euro. secondly, which is a different question, about greece but also italy, give given that i think

the governor of the central bank they no longer believe they need to allow the currency to appreciate. so i was wondering what impact without the artificially low chinese currency have on europe's ability, italy and greece, to be competitive internationally with respect to exports. >> excellent question. greece itself is not large enough to have -- to cause a lot of damage to the united states. greece matters a lot, though, because greece's crisis hurt confidence across europe and tauzed the rest of the continent to fall into recession. if europe can contain the risk of the greek crisis spreading, they have the ability to do that, on the chinese question, chinese currency is up about 14%

in real terms since the summer twof 010. about 40% up against dollar in the last five years but this they have some ways to go. the chinese currency is still undervalued and you are right to rye mind people that by holding their currency too low they are making it harder for other trading partners to grow. >> time of the gentleman has expired. the chairing recognizes the gentleman from new mexico. >> thank you. as i listen to the language, the lingo being used today it sounds vaguely familiar to the time in 2008 when we were moving down the road to bail out fanny and freddy. i remember secretary paulson saying if we insure 100% we'll never have to insure a penny of. now i'm hearing if we insure groce and all europe it's going to be in our best interest.

now europe probably is in the category of too big to fail and the american consumers have to pay the bill. i'm fascinated with the conversation about the imf, not ever having failed and i'm just a couple of weeks ago we had christine, the head of the imf here in this room. she confirmed that maybe we did change the terms of the loans all to prevent defalls in the past. maybe that idea we never soufred a penny lost is a gain but we'll leave it the way it is. basically, i'm just seeing that the american taxpayers, i mean, ireland has bailed out their banking system so now the government owes what the banks lost. back in 2011 you made a comment that fanny and freddy when we give these guarantees it incourages investors to believe that the government is going to bail out bad actions and makes

them take risks maybe they shouldn't be taking. i'm wondering if we're going to bail out all of europe, why they are going to quit taking risks. in the book, in greece it's a birth right not to pay your taxes. why would the american consumer be stuck paying the bill for the country where it's a birth right action not the to pay your taxes. >> we are not going to put the american taxpayer or the american consumer in the position that they are taking risk. >> with the imf, every loan, if they were under the same rules as belongs to the small independent banks in america would they still be called sovereign or put under special watch or would the banks holding those be put on a special category. >> no comparison between those because of the record. remember, the imf, it's not just backed by a lot of gold.

it's backed by the fact that any loan it makes is senior to any other creditor. and with condition nos bank could impose. >> will we've had to change, we put loans in appears, we changed terms. extend fa the turt dates. >> not a penny of loss to the american taxpayer in more than six years through all sorts of -- >> i understand but mr. paulson guaranteed 100% of fanny and freddy that we would never have to pay a single time. that was his karn tee coming into this congress. >> i doubt he said that but the situations are not comparable. >> i know, it's just the american consumer is going to get stuck again. i have a vague belief. >> in this context. >> as we consider people not paying their taxes, there's documented over 100,000 people working for the federal government who haven't paid their taxes.

has the administration done one thing to start collecting that? >> i would be raep to provide in writing to the congress. >> could we get a list of the people who haven't paid. i think the american people would like that information because there is a category who believe they are beyond paying taxes just like in degrees, i think weitz one of the things that people are fed up with. you talked about saudi arabia. and increasing the output. why is the u.s. not increasing its output, in other words, the president's going to my district tomorrow to talk about oil and gas production, in the very three county area where the fish and wildlife overturned an effort to protect the lizard as an endangered species. it has the potential to kill all of the oil and kbas production in that area which drove the surface. we were at a deficit last year. why would the president be

shutting down production in this country when he's asking saudi arabia to increase production. >> u.s. production across the country of oil and kbas is expanding and will continue to do so. that is a good thing for the country. but of course, we have to follow the laws of thend ha and what congress has passed and the requirements that congress has passed to make sure -- >> i'll take my time. i've got about 11 seconds. the science that was used was steadfastly proved even the bom said this is a slap in the face, this is what this other fish and wildlife service did. so happy to continue the conversation on that. >> could i say one thing. it's very important. you raised the concern, congressman, that when the imf or europeans provide assistance to the nations of wurp that it's going to encourage in the future. understandable concern but i would draw your attention how incredibly tough the conditions

are that are coming without assistance. you look at what greece, ireland, portugal have done as a condition for those reforms, if you think of what i hadly and spain are doing, they are very, very tough reforms. i think that helps offset the risk. >> chair now recognizes gentleman from massachusetts, mr. quono. >> i kneeled for a couple of minutes. >> to come to the bush administration there was a comment that secretary paulson when congress accommodated his request after we came to power to give him the power to put the fanny and freddy but guaranteed no taxpayer losses. he never did any such thing. if we passed the legislation it would greatly dminlish that likelihood. it was not able to undue past

mistakes. since 2008 we haven't lost money but that's not what mr. paulson said. he hoped that this would stave off the lawsuits but never gave anything close to such a guarantee. >> reclaim my time. after that eloquent defense of the bush administration which i'm not used to from the ranking member i'm thrown off my game a little. mr. secretary, i thought today's discussion was supposed to be about the international financial system so i'd like to get to that a little bit. i heard from some other members that they think that europe is basically handling their problems better than we are handling our problems. and i guess that's one opinion and that's fine. but i'd like to ask in the european problems they had, major european countries reduce their tax burden in the last three, four, five years? >> i do not believe so and i think most of them are going rapidly in the other direction.

>> i'm under the same impression but i thought i'd ask you. figured you would know better than i. i'd like to offer for the record a table i got from the organization of economic cooperation development. the oecd, a 50-year-old organization and represents 34 countries, mostly 24 of them european, and in that it's a simple table, compares the tax burden as a percentage of gdp. the united states, these 34 countries, ranks 32 of 34. and it shows that one of the countries that allegedly is somehow more competitive, germany, their tax burden is 55% higher than the united states tax burden. that's the oecd, not me. and the united kingdom, another country a few weeks ago this committee was debating they are somehow stealing our ipos, they have a 42% higher tax burden than the united states. greece has a tax burden of 25% higher than the united states.

even turkey's tax burden is higher. the only two countries that have a lower tax burden than ours are chile and mexico on this list. so i'd like to submit that for the record. i ask this mr. secretary because we heard if europe is somehow doing a good job dealing with their issues, and all they are doing is one side of the ledger which is the austerity measure which is fine, am i wrong to think that the u.s. made significant cuts in the last years through budgets? >> yes. congress reached agreement last summer to cut more than $1 trillion in spending over the next 10 years and if you look at what cbo said for example about what the impact of the president's proposed policies they would reduce our deficits dramatic where where the debt would stop going. we're making progress but we want to do it in a way that doesn't hurt growth. >> a balanced approach. goodness, how unique. i'd like to ask as a side note.

those cuts we had, do they exempt the irs from the cuts? are they exempted from cuts? >> congress has been -- has been reducing the resources available to the irs for a customer service and enforcement, thus hurting by all ipd measures the irs capacity to collect taxes. >> so while we're cutting the iistist we are demanding that they collect taxes owed to us which i think is a good thing, in my rm follower life when i thought that making money was a good thing, i was a tax attorney. and i was always happy to see the irs cut because my clients had less concern. and that was fine by me. while we're saying cut the irs we're saying but they should collect more from tax dlelinquet delinquents. has anybody suggested that you know of, any serious suggestion to increase u.s. taxes to the

german model of 55% increase? >> no. we would not support that. no one's proposed that. >> has any one suggested that that you know is a thoughtful and significant person? >> not that i'm aware of. even with the president's proposals on tax reform which as you know would raise the tax burden on the top 2%, the effective tax rates would still be very, very low compared to those that prevail in any country. >> thank you and i'd like to thank the gentleman from the other side who suggested that we should adopt the european model and double our taxes. it's amazing. >> time of the gentleman has expired. the chair recognizes the gentleman from georgia. >> thank you. mr. secretary, thank you for being here. i can't imagine what it's like to get up three or four days a month and know you have to come up to the hill and get grilled. so i do admire you for the courage and the stamina that

you've got. while we're talking about taxes, you said previous that being an american is a privilege. and that wealthy americans should pay more just for being an american. and do you still believe that? >> i believe as does the president that there is no plausible way for us to address the many economic challenges facing the country including our unsustainable fiscal deficits without asking those most fortunate few to pay a modestly higher percentage of their income in taxes. i do believe that. and i think that's very important. i don't see how we make progress on these things without that. >> so you think that anybody that doesn't want to pay taxes or pay more taxes would be more unamerican than -- >> no. >> somebody that's stepping up to volunteer but doesn't pay? >> i wouldn't say. in fact, nobody wants to pay

more taxes, nobody wants to ask them. the the problem we face if we don't do that, then what are we going to do because we can't go borrow $1 trillion to afford the tax cuts. if we ask somebody else that would not be fair. >> but, if you look at being governed i guess or living in this country, half of the people in this country don't really pay any taxes. >> well, that's not really fair because as you know it doesn't capture the taxes they pay for social security and medicare. so when people say that they don't pay it's not true because social security and medicare, all americans pay a portion of their income. to cover the partial cost of those programs. >> but not in regular taxes. >> every ary week their paychecks are deducted as a share of income a tax to cover the cost. >> at the end of the day they

pay no income tax. >> it is true a small fraction of the poorest americans, this congress has decided and there has been a bipartisan consensus for a long period of time. >> so it's not true, you are saying it's not true that half of the americans -- >> not true. the only way it's true is if you say somehow the tax we charge americans against income for social security and medicare does not count. >> i'm not talking about medicare. i'm talking about your federal income tax that you get and file on a 1040. >> i don't think we're really disagreeing. it's true americans pay different types of taxes. they pay an income tax and a tax against income for social security and medicare. and most americans, the vast majority pay both those. >> so the vast majority. so you disagree with the statistic that says that half americans do not pay any income

tax. >> i do because it doesn't count their social security and medicare taxes. >> okay. i think you know, that if you -- but if you don't count those two taxes, do they pay anything? >> why would you not count them? >> because i don't want to count them right now. i'm asking you a question. let's just have a hypothetical question that you don't count those, do they pay any? >> you can count them or not but they pay taxes for those things, those federal programs as a share of income. pay them every two weeks. >> let's go on to something. according to the treasury department chrysler paid their bailout. >> well, we did take a modest loss on the chrysler programs and we'll take a loss on the gm programs too but the auto industry -- >> what do you consider a modest loss? >> i don't recall the actual number in chrysler and in gm it

depends how things thurn turn out over time. both have hired a huge amount of people back to work action they are doing very well. people are buying their cars. >> let's talk about chrysler. what's the modest loss that you think the eventual will be. what you sthi modest. >> it's done and booked. maybe this is a way to think about it. more than fully offset by the more than 20 billion in investment income we earned on the investments in banks. that's one way to think about. >> i don't know if i'm not asking the question right or you just don't want to answer it. but -- what amount does -- is the government going to have as a loss from chrysler? >> i don't want to get the number wrong i would like to give it to you in writing but it's public record. >> is it close to 1.3? >> probably close, maybe higher. >> $1.3 billion. >> that's more than modest to me. i don't want to argue with you

but i do appreciate you coming and you got great experience. >> the time of the gentleman has expired. the chair expired. the chair now recognizes the chairman from texas for five minutes. >> thank you, mr. chairman. thank you, secretary geithner for sharing your testimony today. much of the focus of the media like cnn and bloomberg as well as this congressional body has been on the tremendous debt crisis in europe. however, substantial lack of economic growth and low gdp also looms large over the economic recovery of the euro zone. many the fourth quarter of 2011, the euro zone's economy contracted albeit at a slower

pace than expected. some of those countries had their ratings downgraded because of those big problems. what's your prediction for the duration and the depth of a euro zone recession in 2012 and what sort of drag would a european recession as they have today have on the growth of the united states economy? >> well, if you -- let me start with this, if you think about where things were in the fall of last year when most of the world thought we were living with a real risk, europe wouldn't suffer a catastrophic failure, we're in much better shape today. because they have been successful in calming those financial tensions and people are more confident that they're g necessary to hold the thing together. but even under the most optimistic scenario of the impact of those reforms, this is going to take a very long time

and growth in many of those countries is going to be very weak for a long period of time. and that's why it's so important. if it's weak, it hurts us, it hurts the rest of the world. less than we feared though, six months ago, that's very important. even though they got a long ways to go, we face less risk of damage to the united states into the global economy because of the cumulative impact of the actions they take. you're right to focus on the growth prospects and you know, i think it's -- it's good to, we could hope that now that they have a bit more breathing room because they've taken off the table the risk of a catastrophic financial failure, maybe they have some more time now to focus on things that would improve growth over time. that would be good for us. >> i agree with you that the situation six months ago versus today that we're much better off. but hear your thoughts about any measures

being considered in the euro zone to address the severe unemployment which we understand that they have especially in its young people in countries such as greece and portugal and ireland. how concerned are the ewe row zone leaders about the possible severe effects of social unrest that we see on tv in athens, greece, in london, in italy and portugal and other european countries. thousands. thousands out in the street where they claim that the middle class has shrunk and that the gap between the rich and the poor has expanded. those are concerns that i have. >> and we share those concerns. so do the leaders of those countries. i think it's important to recognize the biggest threat to those people still unemployed at

risk of losing their jobs is a financial crisis europe allowed to burn. and the necessary essential most important action they have to take to reduce the risk of further damage is to do what they've done to cool those financial tensions. thattic maas it much less likely that going to a deep depression. that's not enough, though. and across europe, less so in ireland, which is a very dynamic economy, but certainly in spain, portugal, italy and greece, they have to make it easier just as an example for businesses to be able to start a business andow . that's the most likely way they're going to be able to get more opportunity created for those people still out of work. they have a long way to go in that context. they have to do things to cool the financial pressures. make sure they're supporting growth and demand. alongside the reforms to make the economies work better over the long run and it's going to take year and years. >> obama administration allow us

to increase the number of student visas from these european countries to come to the united states and see the way that we are handling this financial crisis, which has been very, very hard for us. i think education seems to be the solution that works for uses i believe would work for the european countries. >> good question. i'd be happy to have somebody respond to the specific policies of that objective, but it makes sense. >> i just want to note. i appreciate the efficient way you've run this hearing with the secretary's time thing, i just want to note everybody here on the democratic side will be able to be accommodated. i would ask you please recognize those who have stayed here. i just want to advise the members that are five more members and that would be it. i would urge you to recognize those five and we'll be hear in

the 12:30. we'll get everybody here who's been good enough to stay. >> the chair recognizes the representative from missouri. >> thank you mr. geithner for being here today. to follow up on a couple questions with regards to the economy of europe. it seems to me that we have in place a plan and you say the pressures have been released or lessened from what people thought was going to happen. but actually has debt started to decrease at all? >> good question because as many people pointed out when growth weakens because of the shocks of the crisis, then that tends to increase the level of debt relative to gdp. these countries have dramatically reduced the size of their actual deficits and their projected deficits. >> so what they've done is get their budgets under control, but the amount of debt has not started to go down because their economies haven't got to the point yet where they could start paying down, is that an accurate statement? >> some country it's going to

come down. others it's going to take a while for the share of gdp to come down. the deficits coming down is a necessary path to that. >> at least they have a path to get themselves out of this mess. what's the impact of gas prices going to be in europe? because the iranians if i'm not mistaken have said they're going to not sell them any oil so, where do you see that going? >> gas prices in europe when they go up it's not good, but it has much less damaging effect than it has in the united states for a loft odifferent reasons about how they tax gasoline in europe. it's not good. but europe decided on their own to cut off imports of oil from iran they're committed to put pressure on that government. >> with regards to the false credit swaps there. a lot of banks in the country have default credit swaps with european countries and

specifically greece. greece is in default. creditors are being asked to take a haircut on 53% of their bond debt. what's the impact of that going to be to our banks, our financial institutions here in this country? >> no material impact. u.s. financial banks have dramatically ecreased their exposure to europe. they did buy protection against the remaining exposure they have. that's haver very small. any investors around the world that had exposure to greece going into this exchange will be able to or almost all will be able to take advantage of the protection they purchased. >> it's kind of interesting from the standpoint that this situation's been prevalent for at least a couple years that i've been aware of. it seems like we're just now allowing the american public to see what's going on now or they're becoming more aware of it. i'm kind of curious why were we

not being more upfront talking about this over the last couple of years say two years ago? i'm sure your office knew about this and knew the concerns specially after 2008 and knowing the intricatesies of how complicated and how complex the financial world is and how tied together we as the united states and the european financial world is together. how we're being impacted here. to me it looks like we just got down talking about the credit swaps, the imf funding, the credit lines, we're direct trade partners. we're connected to those guys every way expect being a stake of the united states. >> you're exactly right. this started more than two years ago. and we have been intensively engaged with the europeans with the imf with the fed with the u.s. financial system and with countries around the world over those more than two years encouraging them to move more aggressively. they have moved slower than we would have liked. but we brought tremendous attent