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Sec. Geithner Warns Against 'Premature Restraint' During Conflicting Interview


In a somewhat conflicting interview with the Wall Street Journal, Treasury Secretary Timothy Geithner spoke out against the government finding fiscal responsibility too soon, warning that too many countries coming out of financial crises shift to "premature restraint."

"[The] typical error most countries make coming out of a financial crisis is they shift too quickly to premature restraint," he told the WSJ's Deborah Solomon. He then called on the government to do more, such as support the president's new $50 billion infrastructure spending proposal: "If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth."

True to the Keynesian idea of government spending its way out of a recession, he said private individuals cannot be trusted to spur the economy:

He said the U.S. can no longer rely on consumer spending, which has long powered the economy, to be the growth engine that leads the recovery this time around and said Washington needed to plant the seeds for business investment and exports.

But in the same interview, Geithner admitted that government doesn't have "unlimited resources."

That comment came, however, when speaking against Bush-era tax cuts, not when discussing government spending. He calls those cuts "borrowing" from our children and says extending them would be imprudent: "We just don't think it would be responsible for this country, given the size of our future deficits, and given the substantial burden the middle class has been bearing over the past decade in particular ... ."

Absent from the articles account of his statements was any discussion on how government spending contributes to "future deficits."

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