BUSINESS
02/21/2011 12:31 pm ET | Updated May 25, 2011

Geithner: GOP Spending Cuts Could Cost Jobs

Treasury secretary Timothy Geithner isn't happy with the latest round of Republican budget cut proposals.

Geithner, speaking at a press conference after a G20 meeting, said the House of Representatives' $60 billion package of spending cuts, passed on Saturday, would cost jobs.

"In our judgment, the continuing opposition...in the House would undermine and damage our capacity to create jobs and expand the economy," Geithner said during the press conference on Saturday, Reuters reported.

The U.S. has been pilloried around the world for huge budget deficits, which the Obama Administration responded to by promising to halve deficits by 2013. According to Reuters, Geithner told the G20 that the 2012 budget would meet that goal.

The budget also forecasted slower growth and higher unemployment for the next two years. In prior budgets, the administration had projected robust growth and a lower unemployment rate for 2011 and 2012.

In its latest spending plan, the White House revised GDP growth forecasts: from 3.8 percent in last year's budget, to 2.7 percent this year. Unemployment is expected to stay above 9 percent through 2011, and fall 8 percent through 2012.

The jobless rate is not expected to return to a "natural rate" of 5.3 percent until 2016, according to the Congressional Budget Office. In a recent paper, the Federal Reserve Bank of San Francisco concluded that employment won't recover to pre-crisis levels instead falling to a new baseline rate of 6.7 percent.

The Republican spending measures passed on Saturday were proposed in opposition to White House budget plans released last week, spurring fears that there would be no compromise before temporary measures funding the government run out on March 4. Without a budget solution, the U.S. government could shut down.

Geithner said it would not come do that, adding he was "very confident Democrats and Republicans are going to be able to come together on a program to not just reduce spending but reduce our long-term deficits," the Wall Street Journal reported.

Last week, the White House presented a budget focused on reducing the deficit and spurring growth. President Barack Obama proposed a plan that cuts funding to a variety of programs that assist the working poor, and help the needy heat their homes.

In response, early on Saturday morning following an all-night session, the House of Representatives voted 235-189, to pass legislation that would slash $60 billion in government spending between now and the end of September, setting up a showdown. The President has vowed to veto the plans.

The measures, which were passed without a single Democratic vote, are aimed primarily at domestic social spending but also have policy goals -- going after the Environmental Protection Agency, the Securities and Exchange Commission, the Consumer Financial Protection Bureau and the Commodity Futures Trading Commission.