NEW YORK — US Treasury Secretary Timothy Geithner said Tuesday that sparking faster growth in the global economy should be the priority of all developed countries to combat unemployment.
Geithner told the Clinton Global Initiative conference that slashing government spending at this point is counter-productive, even if countries need to cut their fiscal deficits.
“Right now, and it is true in the United States, it’s true in Europe, it’s true in Japan, I think it is true around the world, the dominant economic challenge is finding a way to get economies growing faster because unemployment is high,” he said.
“This is fundamentally a challenge of demand.”
“Spending cuts hurt growth,” he added.
Geithner conceded that deficits carried by the US and troubled European countries are unsustainable over the medium to long term.
But in the meantime, he argued, governments can afford to borrow at low rates to try to get growth going in their economies to generate jobs.
“We are paying 1.75 percent to borrow at ten years now,” he said.
“If it was in a different era and our interest rates were six percent or seven percent and unemployment was five percent, the balance would be different.”