analogy is if you are skidding you turn into this kid. at the the 97-98 economic crisis, larry summers essentially worried that global growth would plummet and the u.s. economy had to keep chugging away and keep the rest of the world moving. thus, the era of very low interest rates was not to keep america going but to keep the rest of the world moving. when you create the climate, have you created and new set of vested interests that are hard to turn out of that skid? are we in a system where we become too addicted to in the a narcotic of cheaper rates that is fundamentally unhealthy? >> having interest rates where they are is a symptom of nothing

normal. it reflects the bill -- difficulties we have had and it is an extreme shock to the economy which comes along pretty rarely. let me go back to the asian crisis -- i was observing these things but i was not in office. i was a little bit involved in the asian countries at the time who were trying to adjust. we had been for the mexican crisis. put a lot of money into mexico to ride that out. >> the exchange stabilization fund. >> i used to run that fun but did not know they have that kind of money. and i sense it was successful and mexico had a good recovery but there is a lot of political

criticism over the money involved and why we had to get so deeply involved. then the asian crisis comes along and as i observed, the first reaction of the u.s. government was to stay away they said was an asian problem and don't want to get involved in every crisis in the world. thailand is a small country and that's all right and we don't need to jump in pare. indonesia is a much bigger country and the imf got involved and not as much as that might have. we did not like the japanese get involved because that was our business to get involved in and got pretty bad. then career happened and we had a bigger country. korea got in trouble and that was going too far so we jumped in.

and health marshall the banks together to support korea and ameliorate the crisis. that was a good example of a relatively small country getting in trouble but that country getting in trouble with a sharp fluctuations in the exchange rate, its neighbors got in trouble. at the end of the day, it was necessary, quite correctly, to say that the united states needed to become more active in this deal and move to stabilize the situation. suppose korea went into default? what other countries would have?

these judgments are not easy but i don't question at all -- if i question what happened then, maybe they should have gone an earlier. >> let's have two questions very quickly and we will move immediately into the next session. two quick questions -- >> there has been a lot of quantitative easing and a lot of purchasing of debt. how do you see this unraveling? >> unraveling? >> all the debt that has been issued, all the money that has been printed to basically purchase the debt and removed it? >> you're talking about the federal reserve. >> let me get the next question. >> you said something to the fact that any initial innovation does not do too much

good for economic growth. what role does financial innovation contribute to the widening income gap in this country? >> we're not gonna solve the income gap in this country and our budget problems by financial innovation. we got into trouble by thinking that financial innovation can solve real problems. it cannot. it is not going to reduce the amount of consumption or increase savings. let's forget about financial innovations. [laughter] we have had enough of financial innovations. [applause] on the question of the federal reserve -- this is a very

unusual situation. the federal reserve has done things that were unimaginable a few years ago, a much bigger balance sheet and all sorts of things. but they do not present a technical problem. as the economy grows, they have the capacity to reverse, in an orderly way, what otherwise would be excesses'. the problem will be the everlasting problem of central bankers. do you begin tightening up soon enough when the economy is launching itself on an expansion? it is always unpopular. whoever wants to tighten up all when unemployment is whatever it is. leave it alone.

you begin tightening moves however mildly and they're likely not to be widely welcomed in the political environment. that is what central banks have to do so i the -- i think it is such a central bank policy problem. >> one last question -- in my digging around in your work, you are deeply concerned about the state of public administration, those that are tasked with storage of responsibilities and the government and in the next robust phase of your life, can you have committed yourself to do something about it and trying to change the quality and support for those people who are serving in government. i would like to share with the audience or have you share with

the audience something on that subject. >> is a concern of mine had to improve public management and public administration. part of, the ideological problem we have on both sides his that government is terrible and causes the problems, neither is true. what we need is an efficient government that will be widely supported and trusted. government needs to be effective and widely trusted. that is not what we have. there's a great survey that is taken every year and they asked the same question every year, literally for decades. one of these questions is -- do you trust your government to do the right thing most of the time? that does not seem like the most

strict test you could imagine. do you trust your government to do the right thing most of the time? recently, the answer to that question is about 20%. i think the most recent survey actually shows below that. you will not have, in my opinion, a very healthy democracy if 80% of the people don't trust the government to do the right thing most of the time. there -- a certain degree of skepticism is a good idea and should be skeptical about politicians and bureaucrats but we cannot be skeptical of that we don't think the government can do anything right or we cannot trust them. you will be suspicious of anything they do. i don't think the government is totally incompetent or anything else but i think there are areas where it is not very competent and has not done a very good job and we need to concentrate on those areas and do a better job and help restore trust in government. let me give you two obvious

examples of recent events. hurricane katrina, we spent a lot of money at the office of emergency management which was considered a total flop in responding to a hurricane that was predicted. with good reason, i think. then a few years later, we have this oil spill in the gulf of mexico. i didn't know anything about it and i did not know we had an agency and whose purpose is to protect the safety and reliability, of offshore drilling but we have such an agency it obviously had not been doing the job impact these are two very technical problems. nobody will argue that it makes sense to protect against oil spills. nobody will argue that we don't need a capacity for emergency assistance.

of't we do that kind function more reliably than the have been? that is what this is all about? getting also don't have much more time. >> chairman volcker -- [applause] we invited you here today to talk about stuff we wanted but when you're institute is set up which would like you back to talk about that. thank you, again, chairman volcker. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> in a few moments, treasury secretary timothy gardner's speech last night to the economic club of new york. "washington journal" is live at 7:00 eastern. the center for american progress host a forum on the end

of the iraq war and national security. we will show you that at 10:00 eastern but after a short pro forma session of the house of representatives and after 1:00 p.m. eastern, president obama has a campaign fund-raiser in chicago. >> the strong support we have with this -- and where this movement originated, gives an excellent base to go forward on november 5 and we will go forward in the beginning with at least 107 electoral votes that comprise the states of the south and when you couple that with a few other states of the union, you have 270 of the electoral votes necessary to win the presidency ban as kennedy's campaign for president this year, we look back at 49 iran for the office and lost.

go to our website c-span.org/the contenders to see video of the contenders who had a lasting impact on american politics. >> there has been honest contention, spirited disagreements, and i believe considerable hot arguments. , let anybody be misled by that. you have given here in this hall a moving and dramatic proof of how americans who honestly differ close ranks and move forward for the nation's well- being shoulder to shoulder. . >> c-span.org/the contenders. >> secretary of the treasury tim geithner says the economy is more productive now than before the financial crisis but still faces significant challenges. he spoke last night to the economic club of new york for 45 minutes.

[no audio] >> ladies and gentlemen, the secretary of the u.s. treasury, timid tim geithner, and chairman of the economic club of new york, andrew tisch. [applause] >> good evening. i want to welcome you to the 419th meeting of the economic club of new york. now in its 150 year. the economic club of new york is the nation's leading non- partisan forum for economic policy. when -- more than 1000 biggest have appeared in more than a century. , establishing a strong tradition of excellence and importance.

this tradition has been supported by the contributions from 158 members of the club's centennial society. their names are listed in the program and i thank you. tonight, we are pleased to welcome back to the club, secretary of the treasury tim geithner. secretary tim geithner last spoke to the club in june of 2008 when he was a club trustee and more importantly he was president of the federal reserve bank of new york. secretary gunnar was sworn in as the seven defense secretary of the united states treasury on june 26, 2009. he previously had served in the treasury department under three administrations. before coming to the federal reserve, he was at the imf. earlier in his career, he worked for kissinger and associates. he graduated from dartmouth college and from the johns hopkins school of advanced international studies.

we are pleased to have secretary of the treasury tim geithner deliver his remarks which we -- which will be followed by a question and answer period. please welcome secretary of the treasury tim geithner. [applause] >> thank you and it is great to be back here at a time when we face some fundamental important choices about politics and economics. it is nice to see so many former colleagues here. i can see some of you and i want to pay tribute to my former colleagues at the new york fed who are eager somewhere. i know some of them are here. they are an exceptionally talented corps of the public servants, brave and creative in a crisis and it was my great privilege to work with them.

as you know, i left new york for washington in november, 2008 at a particularly dark moment in american history. my timing was not good. [laughter] the u.s. economy was contracting at an annual rate of 9%. growth around the world was collapsing. the actions taken by treasury secretary henry paulson, the federal reserve, the fdic authorized by the congress earlier that fall were essential to stemming the worst of the financial panic but the economy was deteriorating at an alarming pace. you will remember that our banks and financial markets were in a state of financial shock, something more oxygen out of the economy and pushing the world into the worst crisis since the great depression. businesses were failing at an alarming rate, those able to survive or living of -- laying

off hundreds of thousands of workers in house prices were falling rapidly and in the early 2009, there were projected to fall another 30%. as the president prepared to take office in january of 2009, it was clear that the situation was very grave. the president understood that additional actions were urgently needed. he did not sit around hoping the crisis would burn itself out. he was not paralyzed by the complexity of the choices or the terrible politics of the potential solutions. he decided to act early and forcefully and his strategy to stabilize the financial system combined with $800 billion of tax cuts and emergency spending and recovery act, the restructuring of the u.s. automobile industry, the actions of the federal reserve, and a coordinated global rescue he led in the g-20, were very

effective in restoring economic growth. you may recall, from the political storms of those early months in 2009, how should i put it -- people were not fully confident van that our strategy would work. i remember when i got my first letter of concern and sympathy from a friend in february or march and his friend quoted the famous teddy roosevelt line in the arena. it goes -- it is not the credit that counts, credit belongs to is marredose face by dustin blood. i was touched and moved by that letter but then i got five more of them. [laughter] and i thought they seem to be worried about me. [laughter]

but i believe, at that time, that we had a very good plan and that plan worked better than any of us hoped. within three months of taking office, the pace of declining growth began to slow. by the summer of 2009, the american economy was growing a again. in about six months, the economy went from contracting an annual rate of about 9% to expanding at an annual rate of about 2%, a swing of almost 11 percentage points in a remarkably short period time. a're not just able to avert second great depression but begin the long and fragile process of repairing the damage and laying a stronger foundation for economic growth. house -- how has the economy performed since the early stars? by any measure, the

president's policies are making the economy stronger. since the summer of 2009, the economy has expanded at an average annual rate of 2.5%. over the last two years, the economy has added 3.9 million private sector jobs. growth has been very broad based with strength in agriculture, energy, manufacturing, services, and high-tech and growth has been led by business investment in equipment and software which has risen by more than 30% over those 2.5 years by exports which have grown about 25% in real terms. productivity has risen. households have made significant progress in reducing excessive burdens of debt, bringing the savings rate upper. leverage in the financial sector has changed significantly. our current account deficit which rest -- measures how much we're borrowing from the rest of the world has fallen to about

half of pre-crisis levels. the total amount of income and output of this american economy is now above the pre-crisis peacoat. millions of americans now have health care with better coverage because of the affordable care act and health care costs are rising less rapidly. we are becoming much more efficient and how we use energy, more reliant on clean energy sources and less dependent on foreign sources of energy and in communities across the country, we are seeing promising reforms in education to improve the quality of teaching in science and math and to improve access to higher education. the early shape of the expansion we shall find encouraging for the future trajectory of the economy. growth is led by private demand with strong gains in investment and exports. we have made real progress in eliminating the economic

imbalances with too much debt on individuals and to much leverage in the financial sector, too much construction in residential and commercial real estate. these are the imbalances that created the unsustainable growth before the crisis. the balance sheet of the business sector is in remarkably exceptionally strong shape and the economy as a whole is more productive than before the crisis. these are promising developments. we feel we still have a tough economy and still face some very tough challenges ahead unemployment, of course, is still very high and improving more gradually than any of us would like. while we are seeing some welcomed signs of stabilization the housing market, we have a long way to go there. pension values have recovered much of losses from the crisis but house prices are still very low parapet these are the tragic legacy of that financial crisis. in addition to these legacies, we still face a dangerous and

uncertain world as the recent rise in oil prices demonstrates. americans can feel the effect of higher gas prices and there is no quick and easy fix for that problem but it reinforces the importance of more progress to develop additional sources of energy on all fronts. if you look at this expansion and historical comparison, this recovery is faster than the recovery that followed the last two recessions but it is somewhat slower than previous recoveries from deep recessions. what accounts for this? recoveries that follow financial crises are slower and more protracted -- are more protracted. they are slower and longer and harder because the causes of crime financial crises like a long rise in borrowing by households and the financial sector and to much investment in real estate act to hold down growth as they are unwound.

as people bring down their debt burden and raise their savings, they spend less and as banks are forced to reduce risk and restore more prudent lending standards, they lend less. these forces work against the impact of lower interest rates dampening the otherwise potentially powerful effects of monetary policy. there's a paradox in this in that the changes that are necessary to online the cause of the crisis and lead a more lasting foundation for growth in the future, those changes necessarily slow the pace of expansion. the president inherited a very large fiscal deficits well into levels well beyond any experienced since world war two. the dramatic erosion of our fiscal position between 2001- 2008 and the size of those projected future deficit made the american people and their elected representatives uneasy about stimulus.

state and local governments have had to make severe cuts in employment and services and raise taxes of seven parts of this substantial stimulus for the economy provided that the federal level. in addition, in 2010 and 2011, we were hit by a series of very substantial blows to grow around outside the united states, the european debt crisis, the oil shock. these shots took about 1% growth often in the beginning of 2011. remember this -- the fear of national default provoked by the debt limit crisis in july and august of last year did terrible damage to business and consumer confidence. the fall in confidence at that time was quick and brutal, as large as the declines in

confidence you typically see in recessions. these are the most important reasons why the pace of expansion slowed after those first few quarters of recovery. without those challenges, without those forces, without those factors, the recovery would have been stronger. looking forward, what is the right economic strategy for the united states? what is the right mix of investments and reforms and policies that will make grew stronger and economic opportunity broader in the future? the three most important imperatives we face today are to support economic growth now, to make the right investments in -- and reforms and make our economy more competitive over time, and to restore fiscal sustainability. these imperatives will require that we resolve the fundamental divide in this country that exist today over the appropriate

role of the government in the economy. it is important to remain focused on this. we have to stay relentlessly focused on strengthening the economy in the short term. even though growth is gradually getting stronger, we have a long way to go to repair the damage caused by the crisis. we face the additional challenges of europe facing a severe and very protracted crisis and the world engaged in a critical struggle with iran adding to pressure. for these reasons, we think there is a compelling need for additional action by the congress to strengthen growth and help get more americans back to work more quickly. we would like congress to act on the president's proposals to rebuild our nation's infrastructure, to help small businesses, and to prevent more layoffs of cops and firemen. we need to continue to repair the damage to homeowners in the

housing market by of the americans refinance their mortgages and put more vacant homes into the rental market and help families to stay in their homes or to transition to more affordable options. the president will continue to use his executive authority to help by streamlining approvals for new infrastructure projects or streamlining regulations whose costs are large relative to their benefits. these measures cannot substitute for action by the congress. again, recoveries that flow of financial crisis are necessarily more tentative, more uneven and more protracted and this will take years to fully repair the damage caused by this crisis and this is why it is so important still the policy makers continue to work to get the economy growing faster in the short term and not shipped prematurely to excess of fiscal restraint or shift the focus of policy entirely to reforms with

only long-term payoffs. the second economic imperative we face is to build a foundation for a stronger future growth. this crisis came on top of a set of economic challenges that took a long time to build up to and had been building up for years. among those challenges are a long-term erosion in the relative quality of education for many americans, a long period of stagnation in real median incomes, diminished confidence in the ability of americans to exceed the economic success of their parents, a substantial ongoing shift in the rest and cost of health care and pension security away from employs care and peny away from employers to employees. part a rates were much higher in those that prevail in any economy out -- poverty rates were much higher.

these are relatively new and unfamiliar challenges for this country if you look back over history because we were remarkably successful as a country for very long time in achieving much better economic outcomes than we saw in most countries around the world because we have leaders who put government policy to work in providing health care and retirement security for retiring americans, universal primary and secondary public education, the gi bill, the great public infrastructure projects of the eisenhower and others in the last century, large investments in scientific research, and sensible safeguards over the financial system. these long-term challenges for us as a country are more difficult in part because other nations around the world like china or brazil are getting better, making their economies grow and develop and their success, though it brings huge opportunities for our country, has put a huge amount of pressure on large parts of the

american work force are engaged in making things that other countries are getting better at making. the president's strategy, we think the best strategy for meeting these sets of challenges is to focus on reforms in education, investment to support innovation, to encourage public and private investment, and to expand exports. these challenges are not challenges that private markets can solve on their own. in education, the president is working to make it more affordable for people to go to college working to improve the quality of teachers and improve training opportunities across industries where we are sure to people with necessary skills. these investments in education reform need to be matched by a greater investment and innovation. the economic case for government support for scientific research rests on the reality that private innovators, private

investors, cannot always capture the full benefit of research and development so they tend to under-invest. these investments entail risk and the need to be very carefully designed to focus primarily on research and maximize the role of the market and determine which technolog ies ultimately prevail and this program supporting innovation should be combined with longer- term programs for promoting public and private investment. infrastructure investment is one of the most efficient means we have to create employment, to improve the overall productivity of the economy over the long run. alongside a strong multi-year program in public infrastructure, we need to improve the incentives for private investment, modernize the framework of institutions and incentives that help allocate those resources more efficiently and this requires

fundamental reform of our business tax system. that tax system, as you know it today, is a complex and unfair mess of subsidies temporary and permanent with a very high tax rate and huge differences in the effective tax rate across companies in different industries. the president has proposed to reduce the overall rate to a more competitive level by reducing or eliminating the corporate subsidies in the tax code and strengthen the incentives for creating and building things in the united states. we want a system in which businesses compete on the quality of the products and services they provide, not on the creativity of their tax engineers or their lobbyists. along with these tax reforms, we need to restore what were the great strengths of the american financial system -- the highest standards for consumer and investor confidence in the world and the most creative and

efficient model available for channeling savings to finance investment innovation. in our judgment, as a result of the reforms the president has put in place, our financial system is a much stronger shape today with much larger cushions of capital against risk, greater transparency over firms and markets and is now in a much stronger position to be a source of credit for an expanding economy. we need to work to expand trade and exports. we have been aggressive in using the safeguards would in u.s. trade law to protect u.s. companies from unfair trade practices. we want to see the market share of u.s. companies and expand overseas and we want to see a large part of a growing demand in the emerging market economies and that by things that we create and build here in this country. this economic strategy which is focused on education,

innovation, investment, and exports, is, in our judgment, the most promising paths available to us as americans to create broader economic opportunities and stronger future growth. of course, these reforms, if they're going to be effective, have to be combined with long- term reforms to restore fiscal balance. without more substantial steps to bring down and our future fiscal deficits and over the long run, the incomes of americans will grow more slowly and future economic growth will be weaker. these fiscal reforms are essential to ensure that we have the room for the investments we need to improve growth and opportunity in the future like in education. in this era of more limited resources, we have to be able to target those resources to investments with the highest return. we have to make sure where to meet our changing national security needs any more

dangerous, still dangerous, and uncertain world and we have to agree on reforms to make more sustainable and more affordable our commitments to protect health care and retirement security for the millions and millions of americans retiring in the next two decades. this debate about how to restore fiscal stability began with the bulls since and recommendation for a balanced mix of tax increases and reductions and this debate will likely end of their. the debate when it concludes will result in legislation that has roughly the same overall dimensions of those spots proposals like bowls simpson. that is because the case for a balanced mix of tax reforms and spending and savings should be obvious. it should reduce our deficits to a more sustainable level and we need roughly $4 trillion in

settings are the next decade, about $3 trillion on top of the cuts we had last summer. to do this, we propose and over olmecs, an overall balance of roughly $2.50 of spending cuts for every dollar of revenue increases. the president's plan like any credible plan will force savings across the government in programs we cannot afford so we have room for investments in things we need that will force savings and military spending, reallocating funding to meet future threats. it will reduce the rate of growth in health-care spending while preserving and protecting our commitments to retirement and health care security. it proposes, as does every bi- partisan plan, even as endorsed by the business roundtable two weeks ago, the president's plan proposes a modest increase in revenues from the most fortunate americans. asyou don't raise revenues

part of the plan to restore fiscal balance, you have to find another 1% of gdp or roughly $1.50 trillion over 10 years from defense or social security or medicare benefits or education or low-income programs. as each of the bipartisan commission's have looked at this question and as they have concluded, this is very hard to do without sacrificing things that are fundamentally important to very large majorities of americans in both parties. the republican budget proposals introduced last year show quite vividly what it takes to restore fiscal stability if you decide not to raise any revenue. in their budget, in order to preserve what are at present historical effectively low tax rates to the top 2% of

americans, in order to sustain higher levels of defense spending, then the secretary in of defense and joint chiefs of staff believe we need this -- in order to achieve those two objectives, those budgets proposed by republicans, proposed cuts that would dramatically reduce the level of future medicare benefit, cut even more deeply into the safety net for low-income americans and cause further damage to programs that fund education and infrastructure and other investments, reducing the total size of what we call discretionary spending programs to 1.6% of gdp within 10 years which is a level more characteristic of pakistan or sub-saharan africa. some republicans have proposed capping overall government spending at a fixed rate of gdp like 20%, some said 16%.

remember this -- if you try to do that with 25 million americans becoming eligible for medicare and social security over the next 10 years, to achieve thatcap would require you to effectively end the decades test form a bipartisan commitment to maintaining a guaranteed health care and pension benefit for retiring americans or would leave as unprepared to defend the nation much less offer americans a better education. remember these realities when you consider the competing proposals for restoring fiscal balance. as the politics of this election year prevent us from addressing this before the election, both parties will have to work together very quickly after the election to make some tough decisions because at the end of

2012, we face the simultaneous expiration of large tax cuts and a large across the board cut in spending together which amount to 5% of gpa. that should provide washington with a very strong incentive to agree on a balanced package of fiscal reforms. we, of course, have a tough set of challenges ahead as a nation and yet, as tough as they are, but they are manageable for the united states. i would prefer these challenges to those of any comment anywhere in the world. we can afford the investments that will be important for future growth and we can adjust to the changes that will keep the compelled by the need to bring down our future deficit, and thanks to the actions of the president alongside the fed, we're in a much stronger position today to meet those challenges than we were three years ago.

but gave my wife some unwelcome attention a couple of weeks ago when i was writing to express concern about in asia and about the financial crisis. -- about any set and about the financial crisis. remember how terrible the crisis was. remember that some americans are still living with the scars from the damage of the crisis. remember when you listen to the debate about taxes and medicare and medicaid, remember that even before this crisis, almost 20% of children in the united states were living in poverty and 40% of children born were born to parents covered by medicaid. remember that the fortunes of children born in america today, the quality of the public schools they attend, the quality of health care they get, the chance they have to go to college - depends still in this

country today, still depends significantly on the wealth of their parents or on the color of their skin. remember,too, that we're a country of great strength and resilience. we have successfully navigated the most dangerous phase of the worst economic crisis in generations. we need to bring that same creativity and force and sense of national purpose to the many challenges we face ahead and. that will require better results from our political system. no economy can bistro -- stronger overtime than the ability of its political leaders to come together and make some tough decisions. thank you very much. [applause]

>> thank you very much, mr. secretary. as you know, you don't get off that easily so we will have a couple of our members join you can serve as questioners. the first is alan blinder, prof. of economics and public affairs at princeton and has served as vice chairman of the federal reserve board. the second is john lexi who is the distinguished visiting scholar -- john lipsky. he is at johns hopkins university and recently left the imf as the acting managing director. if you have any questions that you might want to lob in here, you can e-mail them to janhopkins@questiona@

econclub.org. gentlemen? [laughter] >> who is first? >> i am. mr. secretary, thank you very much for being here tonight. one of my favorite tim geithner quotes -" we saved the economy but lost the public doing it."icku i'm wondering whether it's possible to get the public backs. . >> people saw their lives depended by a set of choices mostly they did not make.

they saw the world burning around them, a broad run -- the first time in memory that people face a risk of losing their savings or the steps of loss in wealth and employment. then they saw the government forced to act to rescue the people they thought were responsible fairly or unfairly. they were angry, understandably angry and scared and frustrated. i don't think there was any path through this that would have made it easy to do the things we needed to do to solve the crisis and at the same time win at that time broader public support. if you look back at the history of financial crises, the reason governments normally screw up and they normally wait too long to act and the reason why they are some tentative at the beginning is because they sit

there and stare at the political outcome and a delay acted in bad as what causes financial crisis to be worse than they need to be. it is that fear a political consequences that normally causes governments to be too tentative at the beginning. we were lucky as a country because we had people who were willing to do the tough things early at a relatively early stage in a crisis and do it with really overwhelming force and it was necessary and it worked much more than we thought if you wonder about that, you just need to look at history of the path of financial crises. from the great depression on or look at your today and look at the consequences of trying to adopt a more tentative than gradual slower approach.

if you are president, you want someone who was president was willing to say i it will put the politics aside and do what i think is necessary to fix it because ultimately, i should be judged by our ability to make a better. i think the only thing about what brings people back is for people to see the evidence of sustained gradual progress and to have a chance to assess the alternative choices offered by competing politicians. i always like to say that life is an alternative. you see two very stark choices in the country today about what makes sense for the country in the future. that helps a little bit because when people are confronted by alternative, it is easier for them to assess relative merits.

time will help. having people think more clearly three alternatives, that should help, too. >> thank you. this will sound like a three part question but it is really only one question. it comes back to what you're talking about in the long run budget deficit problem and in particular, you mentioned bowels-simpson. can we realistically expect to solve the long run deficit problem without significantly higher taxes? i think you answered that. >> no. >> can result without huge reductions in the future cost of health care and then can we realistically expect republicans to accept the first and democrats to accept the second? [laughter] >> as i said, you need the

combination of modest revenue is tied to reforms. if you look at the underlying drivers of those costs, you can achieve the huge benefits instability and pushing out solvency with what are modest changes in the trajectory of health care spending. a lot of people look at the numbers today and they say that looks beyond our capacity to contemplate. it seems too hard politically but i think that is mistaken. for the next 10 years, we're talking about finding agreement on 2% of gdp, half in taxes and half in savings. those are very manageable adjustments for a country like united states, its easier than we have some countries around the world do in a very short period time.

it is absolute possible and necessary to do it and the sooner we do it the better. it is understandable why they have to have been together because most americans know they will bear a greater burden on the tax front and want to be confident that those increased revenues go to a plan that is reducing deficit, not unsustainable and most people be confronted with accepting lower growth in benefits. they want to believe that there is a bed of burden sharing across the american economy in that context. there is a compelling political reality and a fairness reality that those two things go together. it is hard to imagine either happening without them have been together. people will be reluctant to see their taxes rise, they are always understandably reluctant, unless they think

they are buying meaningful improvements. people will be reluctant to have their benefits, unless they think as benefit cuts will not sustain tax rate we cannot afford. they go together. there is no alternative. it will have to happen and it should happen -- it will be better for us if that happens sooner and with design than it happens too late without the opportunity to give people time to adjust. >> i would like to turn to the international side of events for a moment. as you are probably aware, the international monetary fund recently cut back its forecast for global growth this year and next year reflected in the expectation of much slower growth expectations this year in europe. how do you assess the ephors the

european authorities have put in place and their chances of success? what feelings you have about expanding the global financial safety net to protect in case of an adverse outcome? >> if you look back to where the world was in october, the europeans are making some progress. the combined effect of new government's in italy are pretty creative in the ecb, a strong strategy to get the financials in order -- the combined effects of those actions have substantially calmed the really acute financial tensions of the last 18 months and that is important because they have made more convincing that they want to take the risk of a strike -- catastrophic outcome out of the market. that is reflected the lower interest in countries in europe

and that is important and very promising even though you can have a long period of weak economic growth in parts of europe. i think that means that relative to last fall, although it is a tough and uncertain world, i think the downside risks to growth around the world are significantly less than they were. for that to be sustained, you have to keep a close eye on oil and iran and gas prices but you have to make sure that europe keeps moving to sustain this progress and that will require them building a stronger financial system which i think they recognize. our view about the imf is that if you're willing to put financial muscle behind this, we think it would be easier

inappropriate for the imf to raise more resources so they can demonstrate that it is necessary for the imf to play a larger role in europe. they need to help the broader membership. i think you will see the imf try to reinforce that. >> thank you, taking a broader look -- it is obvious from growth figures that the relative balance in the global economy continues to shift toward the dynamic emerging market economies and that will be the case for some time to come. in that context in the medium term, what you see as the role of the u.s. economy, the u.s. dollar, and the u.s. financial system? >> i think the u.s. will be enormous beneficiary in that long boom of growth ahead. those countries on average will be growing 5, 6, 7% for

prolonged periods of time. europe and japan, much slower growth potential. , much worse demographics than we have and we will lie somewhere between those two. we are lucky as an economy because we're more broad based and more resilient than productive that we are in a very good position to benefit enormously from the growth ahead. you have seen an important change in the basic growth strategies of china in particular because they recognize that as the growth to be so large, they cannot rely on export-dominant growth strategy as much as they had in the past and will have to shift to more domestic sources of growth. for that to happen, there will have to continue to let their exchange rates move toward more market-rate system and shift th. that will be a necessary part of that transition mostly promising for this country and if you look

at really any major american company or industry today, you see them better positioned than their peers in many countries to take advantage of that huge wave of growth. >> i will cut you off here. my apologies because dinner is about to be served. i want to thank you again, secretary guide numband. secretary of the treasury tim geithner. on april 11, the club is hosting a dinner for the first chief executive of hongkong. on april 23, the club is hosting a lawn -- a lunch for the president appealed bundesbank. again, mr. secretary, thank you for your insight and we appreciate you being here.

[applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> enjoy your dinner. >> georgetown university this morning is hosting a discussion on democracy and religious freedom in the middle east. you can see that on c-span 3 at 10:15 a.m. eastern. in a few moments, today's comments and your calls live on "washington journal." the center for american progress host a forum on the end of the iraq war and we will show that to you at 10:00 eastern after a short pro forma session of the house of representatives. after 1:00 p.m. eastern, president of, as a campaign fund-raiser in chicago, one of several campaign events today. in about 45 minutes, you can call in with your questions about foreign polic