WASHINGTON (Reuters) — Congress does not have enough time to revamp the tax code as part of its effort to find at least $1.2 trillion in budget savings by year end, U.S. Treasury Secretary Timothy Geithner said on Tuesday.
Geithner told a Senate panel that the U.S. tax code was riddled with special preferences, but he argued that comprehensive reform was too big a task for a special deficit-cutting committee to tackle, given its tight deadline.
"We are not going to do fundamental tax reform in two months," he told the Senate Small Business Committee.
Instead, Geithner said lawmakers should focus on putting in place tax-related elements of the Obama administration's $447 billion jobs program. Those include an extension of an expiring payroll tax cut and letting companies deduct the value of their new investments from their tax obligations.
"This is a bridge to fundamental tax reform, not a substitute," he said.
Senate Republicans have already blocked the overall jobs bill, forcing the administration and Senate Democrats to consider pushing just parts of the proposal through Congress.
Throughout the two-hour hearing, Geithner urged Congress to support specific provisions of Obama's plan. He said that small businesses still face a very tough economy and are experiencing more challenges than larger businesses after the recession.
CAN'T RELY ON TAX REFORM ALONE
In response to repeated requests from Republican Senator Olympia Snowe of Maine to move forward now with broad tax reform, Geithner said that alone would not get the economy growing fast enough.
President Barack Obama, who faces re-election in November 2012, is under pressure to revive the U.S. economy and create jobs. The U.S. unemployment rate has been stuck above 9 percent for five straight months.
The administration's push on its jobs package comes as the congressional deficit-reduction panel races to reach an agreement to curb federal spending by November 23. Congress then has until December 23 to approve the deal.
If lawmakers fail to do so, automatic budget cuts will be triggered starting in 2013 that would cut funding across the board and hit defense hard.
Geithner told Republicans that any reform of the tax code had to put a greater burden on the richest Americans to bring the U.S. budget into better balance.
"If you don't, through tax reform, figure out ways to get modest amounts of additional revenue from the most fortunate Americans, than you're going to consign us to unsustainable deficits for a long period of time, which will hurt growth," he said.
At the hearing, lawmakers expressed frustration that the administration's small business lending fund had only provided about $4 billion to 332 community banks across the country. The $30 billion program was aimed at encouraging small banks to increase lending to small businesses in the hopes of creating more jobs.