, and rolling back policy democrats have promoted and achieved over the last two decades? how important are the riders on the budget proposals as opposed to the numbers? >> i think it is likely we will do this in two stages over the next few months. those questions go to how policy issues go into the budget process. those things will probably be resolved in the classic appropriations process later this fall. where we are negotiating the broader framework, we do not have the time or ability to get into that level of detail. we should not try at this stage. we will have to two step that. there are big things that divide the party is now. that is not going to change in the next several weeks. our challenge is to find a way

to lock in forms. reforms that allow us to make a substantial down payment on fiscal consolidation overtime in a growth-friendly way that helps us set up a mechanism to confront the broader things before we fall too far behind the broader curve. >> you are describing the situation in the talks that is foreign to us. you are describing a constructive, non-accusatory environment. that is what you have experience. >> in the room, you love people focused on the overwhelming pragmatic imperative of legislating a comprehensive, long-term fiscal consolidation program that allows us to live

within our means recognizing we will not be able to agree in the next few weeks about we will have to do to make things more sustainable, what reforms will be necessary, or the precise shape of tax reform. that is not feasible. our job is to figure out how we can do enough given that reality to make sure we can give people more confidence that this country will be able to live within our means overtime. this is a very important long- term problem for the country. people are saying the right things about recognizing the imperative in deficit reduction. the composition matters a lot. it will determine the phasing in of the debt reduction and the

comprehensive changes on tax reform and spending. that will determine whether it will be good for the long term growth of this country and good for the short-term challenges of trying to dig out of the crisis definitively. >> other questions? >> what is the role of immigration reform in fixing the challenges you are describing? >> one of the great strengths of this country is that we remain a compelling place for people to come and build a business. i think is very important for us to make sure we preserve the

fundamental strength. that is to make this the most open place for people to come. if we do that well, we have an economy that will grow at a rate that will be substantially faster than other major economies. the underlying potential growth rate for us will be between 50% and twice the rate of others growth. that is because we have a greater tradition of openness and greater formations for capital formation. those are things that matter for long-term strength. >> do you see changes on the immigration from? >> i am not close enough to the politics of that. i recognize how daunting it is. you are probably in a better position to speak to the feasibility of that now. >> other questions? hang on. let's get a microphone to you.

>> mr. secretary, can you identify what actions the administration has taken to support a strong u.s. dollar? >> excellent question. you are familiar with my view because i have been saying it for years and years. i hope that people in my job say it forever. a strong dollar will always be in the interest of the united states. ultimately what matters to confidence in the united states is making sure we're focused on strengthening the fundamentals of the economy. that means not just repairing the damage caused by the crisis and try to make sure we get our long-term fiscal house in order, but that we continue to focus on doing things that will make the underlying fundamentals of the economy stronger over time. if we get those things right, we will continue to preserve a

substantial amount of confidence that this is a place to invest long term. if you would it help people price relative credibility across markets, there is credibility to act as fronts. we cannot count on that indefinitely. it requires demonstrating that politicians in washington can come together to solve long-term problems. >> we have time for another question. any questions from members of the cfo network? we will get to you. >> we certainly have opportunities of the federal level. many states are also in prices. would you see as the likelihood of a state default? what these see the federal role in that? >> it is important to remind people the states are under

pressure. in some ways that is diminishing. the pressures will be more manageable than they have been over the last few years. there is still a lot of pressure on them. it will take a long time for them to work through it. if you look at what is happening to the american economy as we did out of the mess, as you have seen in the last six months, the broader market was pulling back in panic over concern about the greater economy. the government stepped in and fill the gap. the cleaned up the mess and fill the gap. state governments have been a significant drag on the economy as a whole. that has brought down the growth rate a bit. overall as the government is receding, you are seeing the

private sector stepping up. you are seeing a strong rate of growth in private investment. those things are important as you look to rebalance the economy in the long run. >> we have a microphone right here. >> i am from bank of america. you spoke about trade agreements and the possibility of progress there. in a time of high unemployment, some portions of the economy desire protectionism. trading with important partners is key to growth. could you comment on the prospects for progress there? >> we are in the last stage of trade agreements with korea, columbia, and panama. that is important to make sure we do not lose market share in

those countries. the bigger importance is to make sure we have the capacity to negotiate broader trade agreements with asia, the fastest-growing parts of the world. that will be very important to sustaining the healthy growth in exports we have seen early on. growth was too dependent on housing for a long time. it was then an unsustainable levels of consumption. we're in the process of shifting how we grow as the country going forward. the future growth will have to be more investment-driven, more export-driven. that is what we have seen in the first 18 months of the recovery so far. i think that is very encouraging. it is still a difficult economy. any companies caught up in the parts of the company most affected by the crisis,

construction, real estate, housing, any businesses who are most exposed to the fact that individuals are winless in trying to reduce debt, those parts of the economy are weak. it will take time. it will take several more years to dig out of that problem. if you look at the rest of the american economy and businesses in general, exports, productivity, innovation, agriculture, manufacturing, there are classic signs of the basic resilience of this country. there are encouraging signs. we want to make sure we reinforce that. growing exports is part of that. >> you think all three trade agreements will be ratified? >> i do. >> final question right there. >> as we try to improve the

state of the economy and you work on these important issues, i am concerned about the balance between what you are doing and some of the offsetting things happening elsewhere in washington. there are some regulatory things that are not pro-business that are perhaps forcing some of us to look offshore and do things elsewhere. how do you balance those? >> can you give an example? >> the whistle-blower laws and rules, some of the regulatory rules related to energy, those kinds of things. >> let me tell you what the president's view is and it is mine as well. ultimately it is about balance. their parts of the economy where a regulations substantially relaxed behind the basic obligations of protection. the financial sector is the

classic example. you have all lived with the consequences of foreign countries get that wrong. there are incredibly damaging consequences to growth and basic business help when you get that regulation wrong. there's a whole other range of public safety things with the risks will expose our citizens to. we have to get the balance better. we have to be careful not to overdo it, that we do not add to much too quickly, and too much of the burden on an economy that is still trying to dig out of the deep hole. we're trying to get the balance better. part of that is to make sure the people designing the regulations bring a comprehensive approach of looking at the burden, benefit, and submitting themselves to a right mix of the

cost and benefit. i understand why you are concerned. we're trying to make sure we get the balance right. >> secretary geithner, thank you very much. [applause] >> we're very lucky to have the chairman of the ways and means committee and a congressman from michigan, david camp. i will ask him some leading questions. i hope you will be thinking of some. we heard this morning from tim geithner who sounded pretty optimistic about getting a deal on the debt ceiling and deficit reduction before august 2. i am sure you have heard the line he is using about how it will work. could you give us a sense of how this looks from your point of view? is progress being made?

and we going to avoid defaults? is this the year we get a framework for deficit reduction? >> we need to. we cannot default. if you get close to the day without a deal, knowledgeable people are concerned you could have market reaction. we have to do it before. this is an important week in those discussions. they had three meetings last week. they got into the detail. this is an important week to really make some progress. i think the discussion has been continuing. they do not have a deal yet. we need to conclude that. >> what are the components of the deal that you need to feel comfortable? >> the speaker laid out the marker's we need to see.

that is at least the same amount of spending reductions you see as debt increase. then there are structural reforms so we do not get into the problem again. those are the two benchmarks. >> what kind of numbers are we talking about? >> the only market that has really been put out is more than two. there is talk now that there could be a short-term extension. discussions continue. i think that is not a good idea. it does not give you the certainty. ideally you would like to get that settled and not have anit continually be a hanging issue. >> i have heard everywhere. there is a down payment now, an agreement on a target, and an understanding that there are some things that cannot be

resolved before the 2012 election and we will fill the holes later. is that your understanding? >> there is only so much can do on the discretionary side. you have to do things that will take place over time. many of those things are in mandatory areas. it will take a series of years to get to the target numbers. trillion is the overarching number, but there will be steps to that. >> will there be legislative language to tell us how we will get to the savings over years? >> will have to have a down payment, but it is a 10-year budget window. >> will we have legislation that says this is how we will cut medicare and medicaid? >> that part is not completely determined. you will not be able to have

every detail completed in time for august 2. that is why there is talk of a short-term extension. how they deal with that issue, will the committees to some of the work? will that happen? this is going to take some time to do. you may see that. about the revenues under your jurisdiction. the white house says you cannot get the deficit down to a sustainable level without increasing revenues. republicans say they are not interested in increasing the debt. how do we come to a compromise? >> eric cantor has started talking about health care when they start talking about revenues. the problem is not that we have not taxed enough. the problem is spending. we need to get that under

control. if you raise revenues, it will take the pressure off of the spending side. reno spending has increased dramatically. under the president's proposal, we never get to balance. we never get rid of the debt. we never give balance. there really is a spending side issue on that. the president even assumes -- part of the argument is because we have lower than historical revenues now. the president's budget assumes a much higher than historical revenues even without additional revenues. how much of the revenue that should go to the federal budget is an important issue. >> do you think we can get spending equal to revenues? can we do that without increasing taxes in some way? >> house budget does that. >> do you think it can get

through the senate and be signed by the president? >> this is where we have a proposal and a plan. you do not see a plan on the other side to do that. we do offer a path to do that. >> what is your priority? would you rather see it reaching 3% even if your records revenue increases customer would you rather hold the line on revenues and settle for a higher deficit? >> we want to not have higher revenues. the issue is who will pay them. their idea is always rich people who make over $250,000. half of that is small business income. that is where we need to see growth. that is the real problem. it would be counterproductive, particularly when we are not seeing job growth. it is regulatory burdens, uncertainty on health care, there are all of these decisions that employers are trying to

understand and go with. they do not know the path ahead on many of them. on the revenue side, we have uncertainty with the expiring provisions this year and next year. now introduced a new facet of uncertainty on the personal side. you have expiring provisions again at the end of 2012. a few years ago, there were about 50 of these. now we're up to 200. we have an uncertain code. >> i am for fundamental tax reform. i want to see is too fundamental tax reform and deal with tax policy outside of that. >> your idea is to broaden the base, lower the rates, and in the with the same revenue -- end up with the same revenue we would have under the current law. >> i call it the high school physics scoring system.

they assume if you have a simpler or better code, you will not see economic growth. we want to see economic growth. we believe that will occur if you use the house budget press the fundamental tax reform. independent economists say 1 million jobs in the first year. >> if you are looking at the world from china, it looks like foo fighting. at some point, you will have to compromise with democrats to get this done. i do not understand how we get that if this is more than just a negotiating position on revenue. >> we would like overspending then they want. there will have to be compromise there. the fact the economy is not recovering and we're not seeing

unemployment godown, to raise revenue of small-business owners is a big mistake. >> where would be the least damaging place to raise revenues? >> i cannot think of the least damaging place. i think the approach they're looking at is not just on what the call high income. they also want to pluck out various provisions of the tax code without an eye of what this means to our competitiveness and ability to do business in the global economy. that is dangerous. we need to do fundamental tax reform on both levels. >> i am sure people in the rumor interested in them. what would you change? >> i like to see how low we can

get the rates. where is the political consensus on how many tax provisions, loopholes, expenditures -- how many of those can we change to a more constant rate? we also need to move to a territorial tax system to compete and around the world. that is on the business side. on the individual side, and elected to the same thing. most businesses file as individuals del. you get at the business side. not at what is driving the economy. it is not where many people are organizing their businesses and filing. >> what are you talking about? what would you give up to get the rate? >> we have had a lot of global companies come before the committee.

we have had a lot of hearings and testimony. we're having employers and job creators tell us what they think we ought to do. we have had a lot of good testimony. the uncertainty has caused large businesses to discount that in terms of what they're going to do. they would rather have a lower rate. the repatriation issue is not one we need to fix one time. we need to fix it going forward. >> what about r&d tax credit? >> that could be. again, how low can we get the rates? if this is a priority, the rate will probably be a little higher. it may be a priority at the end of the day. >> are you going to put down a bill or wait for the administration? >> i am not sure.

we're still in the building blocks phase of having testimony and hearings. we're doing joint work with the senate as well. >> how would you characterize businesses when they come to you? are they saying there would like to see a lower rate and do away with tax breaks? would they like lower rates and not this particular tax break for the good of the country? >> you get a lot of different views. depending on the industry or what their business model looks like. there is a desire to be competitive. i want to see these companies that do business around the world headquartered in the u.s.. i want to see them investing and growing jobs here. the headquarters jobs are the best jobs in any committee. those a the people that leave the community in terms of income and good jobs.

they're the ones who have the united way campaigns and chair the boy scouts. they are the ones to make sure we have the best schools. i want to see those jobs in the u.s. and for us to have the ability to compete around the world. even with businesses that do well in our system of tax provisions, they would like to see simpler, more competitive code. one business said they had 30 iris agents that lived in their business. it seems there is a way we could fund the government in a less complex way. on the individual level, the complexity issue resonates strongly. >> what is the timetable? >> it is like any other thing in congress. we're trying to do the work so that we're ready if the factors come together. i think they might.

the economy is not doing what it should do. the president is facing reelection. i do not know that he wants to go into 2012 with a narrative that if we do nothing taxes will go up. i worked hard on welfare reform in 1996. people said clinton would not sign it. facing reelection, he did that. we are facing competition from around the world. we're hamstrung in our ability. i am relating to you what business people tell me. we do not add up compared to other countries. we have the ability to, but it is all these things i have mentioned in terms of statutory rates, complexity, and regulatory burdens and uncertainty. that makes it more difficult for the managers who decide if they

are making a long-term investment in the united states or if they are going somewhere else. we know there are jurisdictions around the world promising 20- year certainty on tax policy. i cannot get that for six months in the united states. we want to make a more certain code. that is a positive goal. >> what the odds we will give corporate tax reform -- get corporate tax reform soon? >> the odds now would be different from next summer. now it looks like a long-term project. you do not know that for sure. i am treating it as one that may not be done until the next congress or next year. i am trying to get business leaders to be engaged, to testify and make sure that we

understand how these policy changes may affect them and their employees. >> how do you increase the odds that you do something? congress seems to like the r&d tax cut that expires every once in awhile. that generates a lot of campaign contributions. congress does not want to take anything as settled. what is the mechanism for getting a tax code that might look like the tax code in three or four years? >> many of these provisions come in as a way to lower rates for sectors and industries. why not lower rates for everybody? give everybody the same shot at the rate. this comes in in criminally.