–Treasury Secretary Signals Admin Will Offer Corp Plan Later This Year
–Long-Term Deficit Cuts Are ‘Political Challenge’
–China Has ‘Reached Judgement’ to Allow Currency to Rise
–May ‘Go Further’ in Lengthening Tsy Maturities

By John Shaw

WASHINGTON (MNI) – Treasury Secretary Tim Geithner said Wednesday
the Obama administration is likely to offer a proposal later this year
on overhauling the corporate tax structure, adding that he is now
working to “build consensus” on the kind of reforms that can be
achieved.

In testimony before the Senate Finance Committee, Geithner was
asked by a number of senators to explain the administration’s stance
toward corporate tax reform.

He said repeatedly that he would like to see the corporate tax rate
be lowered and the tax base expanded.

“Revenue neutrality will be a necessary test for us,” he said. “We
have to begin the process now,” but he added that he “suspects” the
administration will offer at least a reform outline later in the year.

Geithner said the administration wants to “lock in” a “multiyear”
deficit reduction plan, adding that a bipartisan agreement with Congress
is needed for this to go forward.

“It’s fundamentally a political challenge,” he said.

Geithner repeated his call for Congress to increase the statutory
debt ceiling in a timely way this spring.

Asked if he would consider the wide range of cash management tools
that have been used in the past to delay hitting the deadline, he said
the given the size of the budget deficits these steps “don’t buy us that
much time.”

Apparently referring to the aggressive cash management steps that
former Treasury secretary Robert Rubin took during the 1995-96 debt
limit fight, Geithner said these steps would now only push back the hard
deadline to boost the debt ceiling by six to eight weeks.

Asked about China’s currency, Geithner said he is encouraged by the
recent rise in the value. “It is moving very gradually,” he said, adding
that he believes Chinese leaders have “reached the judgement” that the
currency should rise.

Asked by Sen. Chuck Schumer if the New York Stock Exchange should
retain its name following its proposed merger between Deutsche Boerse
and NYSE Euronext, Geithner said he believes there is a “good chance”
that it will.

Pressed further by Schumer, Geithner said it would be inappropriate
for him to speak more directly on the subject, but he called the NYSE
“the world’s iconic stock exchange.”

Geithner defended the administration’s economic assumptions in its
fiscal year 2012 budget.

“We are trying to be realistic and conservative,” he said.

Asked if Treasury is likely to continue to lengthen the maturities
of its debt instruments, Geithner said Treasury “has an opportunity to
go further” in this direction.

** Market News International Washington Bureau: (202) 371-2121 **

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