ACTING SECRETARY OF THE TREASURY ON THE PRESIDENT’S ECONOMIC PRIORITIES
The Honorable Neal S. Wolin
, Acting Secretary and Deputy Secretary, US Department of the Treasury
Summary by Richard C. Longworth
Acting Treasury Secretary Neal S. Wolin, robustly seconded by Mayor Rahm Emanuel, told The Chicago Council Monday that the sequestration battle in Washington “makes no sense” and could “throw sand in the gears” of the economic gains made since President Obama took office.
Emanuel put it more bluntly. “This is nuts,” he said in his introduction of Wolin, a former White House colleague from the Clinton Administration. If the sequestration takes effect, the mayor said, “it will have a devastating impact on the economy.”
Wolin is Deputy Secretary of the Treasury but is acting secretary in the hiatus between the resignation of former Secretary Tim Geithner and the Senate’s confirmation of his designated successor, Jacob Lew.
His speech to The Chicago Council audience of about 140 persons at the Chicago Club stuck closely to the points laid out in the president’s State of the Union message two weeks earlier.
He painted a picture of economic progress in the United States since Obama took office at the start of the recession, with economic growth of 7.5 percent since then, the creation of 6.1 million jobs, the reshoring of jobs by such companies as Apple and Caterpillar, the increase in personal savings, and the shrinking of the federal budget deficit as a percentage of gross domestic product.
“We expect this progress to continue,” he said, “but the ongoing brinkmanship in Washington... should give us pause.” The possibility of a budget sequestration later in the week, with drastic and mandatory budget cuts across the board, would “throw sand in the gears of our recovery.”
Wolin put the sequestration battle into the larger context of a debate in Washington on the nature of government, but left no question where he stood.
“Should we skinny down government?” he asked. “Should we not invest in our kids?”
“As the mayor said, it (sequestration) makes no sense,” he said. “We’re going from one crisis to another. These political standoffs must end.”
Emanuel said the budget cuts would hit Chicago’s airports and its city colleges. Especially, he said, it would hit early childhood education – a priority for the mayor, who used the introduction to announce the extension of all-day classes for all Chicago kindergarten students.
Wolin said the sequester could cost the state of Illinois $334 million in education funding alone, not to mention other cuts in areas such as job assistance and infrastructure.
Wolin, a native of suburban Evanston, summarized Obama’s budget goal to cut spending while investing in areas, such as infrastructure and research, to “make the United States a magnet for new jobs and manufacturing.”
In response to a question about the austerity programs adopted by EU nations, Wolin indicated that the Europeans are more focused on cutting deficits than on making “prudent investments.”
“We have to live within our means, but still invest prudently,” he said, implying that the Europeans will pay for their austerity programs with slower growth.
Wolin, while agreeing with the need to close tax loopholes, urged Congress to make permanent one tax break – the Research and Experimentation Tax Credit. The business tax credit applies to companies that do R and D spending in the United States. First introduced in 1981 as a temporary measure, it has been renewed 13 times over the years, but expired a year ago.
Wolin was asked about the plans by 11 EU nations to introduce a so-called Tobin Tax, a tax on most financial transactions that, while miniscule, could potentially raise huge sums while dampening market speculation. The acting secretary said the Obama Administration opposes such a “retail” tax on transactions, but supports a Financial Crisis Responsibility Fee which would be collected from large banks and other financial firms that owe money loaned under the TARP bail-out program.
This fee, he said, is more fair, “considering the taxpayer support to these firms.”
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