Geithner: US economy growing despite headwinds

Associated Press Modified: October 11, 2012 at 5:45 am •  Published: October 11, 2012

"Mortgage credit in the United States is tighter than it needs to be," Geithner said.

Progress made in getting the economy back on track could be undone, economists have warned, if Washington fails to deal effectively with the so-called "fiscal cliff."

Christine Lagarde, managing director of the International Monetary Fund, urged that the U.S. take "decisive action" on the issue.

Geithner acknowledged the urgency of the problem, saying the Obama administration intends to try to resolve its standoff with the Republican-controlled Congress over spending limits by the end of the year. The aim is to draw up a set of reforms that could be phased in over time.

If the impasse is not resolved by 2013, tax increases and deep spending cuts amounting to up to 4 percent of GDP will take effect, walloping the U.S. economy. The IMF has urged the U.S. to raise the ceiling on the level of debt the government can issue, which is capped by law and avoid a showdown similar to that in August 2011, when a similar impasse went unresolved until the U.S. almost defaulted on its debt.

Deferring the problem is not a "responsible strategy," Geithner said.

"It might feel like an easy path at the moment but it will still leave a set of big questions hanging over the country. I don't think that will help."

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