Geithner: some bailout funds to help lower debt

WASHINGTON — Treasury Secretary Timothy Geithner said Thursday the government's $700 billion bailout program will end "as soon as we can," and that part of it will be used to lower the soaring federal debt.

During a sometimes contentious Joint Economic Committee hearing that included one lawmaker calling on him to resign, Geithner was pressed to disclose the administration's plan for dealing with the unpopular financial rescue program.

"We are winding it down and will close it as soon as we can," Geithner said of the $700 billion bailout fund, known as the Troubled Assets Relief Program. Congress approved TARP at the height of the financial crisis in October 2008 as a way to supply banks with fresh capital.

Geithner said "substantial resources" remaining in the fund would be used to pay down the national debt, which is being pushed higher by record deficits including a $1.42 billion imbalance for the budget year that ended Sept. 30. Even hundreds of billions of dollars would be a tiny fraction of the $12 trillion debt, but it could lessen political unhappiness if portions of the bailout program are allowed to continue.

While pledging to end TARP as quickly as possible, Geithner also said the administration did not want to repeat the mistake of other countries by ending government support too fast and derailing a fledgling economic recovery.

But Rep. Kevin Brady, R-Texas, said the economy was such a mess that Geithner, as the Obama administration's chief economic spokesman, should resign immediately.

"Mr. Secretary, the public has lost all confidence in your ability to do your job," Brady said.

Geithner, who headed up the New York Federal Reserve Bank before being tapped by Obama to be Treasury secretary, countered that the economy was in significantly better shape today than it was a year ago when Republicans controlled the White House, a view that was supported by a number of Democrats on the committee.

Democratic Sen. Charles Schumer of New York did criticize Geithner for not pressing China forcefully enough to allow its currency to rise in value against the dollar. American manufacturers blame a significant portion of the U.S. trade deficit with China on an undervalued yuan, which makes American products more expensive in China and Chinese goods cheaper in America.

"Today millions of Americans are out of work because the Chinese are manipulating their currency," Schumer said, urging the administration to impose trade sanctions on Chinese products if the Chinese government did not stop controlling the value of the yuan.