Geithner defends cuts, hints at tax reform

WASHINGTON, Feb. 14 (UPI) -- U.S. Treasury Secretary Timothy Geithner says significant budget cuts necessary to reduce the deficit will be phased in gradually to protect economic recovery.

Geithner defended President Obama's budget plan Tuesday in testimony before the Senate Finance Committee. He said cutting spending too deeply or too soon "would damage the economy in the short-term, impede our ability to make necessary investments for long-term growth, and achieve deficit reduction at the expense of the most vulnerable Americans, including seniors and the poor."

Geithner said a corporate tax reform plan that will be unveiled this month will reduce the large number of loopholes and special interest carve-outs that allow some corporations to avoid paying their fair share of income taxes.

"This creates problems beyond forgone revenue: It forces some businesses to carry a larger share of the tax burden than they would under a more equitable system, and it also hurts overall economic growth by distorting incentives for investment and job creation," he said.

The framework for reforming the corporate tax system will lower the maximum statutory rate and limit the ability of firms to shift profits to low-tax jurisdictions. "In short, it will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth."