Geithner Warns Republicans Against Politicizing the Fed

U.S. Treasury Secretary Timothy F. Geithner said the Obama administration will oppose any attempt to strip the Federal Reserve of its mandate to pursue full employment and Republicans warned against politicizing the central bank.

"It is very important to keep politics out of monetary policy," Geithner said in an interview airing on "Political Capital with Al Hunt" At Television this weekend. "You want to be very careful not to take actions that hurt our credibility."

The Republican leadership of Congress, including John Boehner, who was nominated as the next chairman of the House, criticized the Fed's plan to buy $ 600 billion in assets, saying that fuel inflation and asset bubbles. Sen. Bob Corker, a Tennessee Republican who serves on the Banking Committee, said he is in favor of limiting the Fed's mandate to promote price stability.

Geithner, 49, refused to say which endanger the Obama administration would be willing to consider extending the tax cuts of the Bush era, while ruling made permanent the reductions for the wealthiest Americans.

"It's not responsible, and I could not recommend to the president in good conscience, to go out and borrow $ 700 billion for tax cuts permanent high-end," said Geithner.

Did not think that tax cuts for the middle class are allowed to expire in December, or that all tax cuts, including the rich, will be extended permanently.

General Motors

General Motors Co., Geithner said the government would get back "a very substantial part" of their investment and all the government money Obama spent to rescue the automaker. The taxpayers are about 13.4 billion U.S. dollars in GM's former president George W. Bush, and 36.1 billion U.S. dollars with Obama.

GM, which was in bankruptcy last year after nearly a century in the New York Stock Exchange, raising more than $ 20 million in an initial public offering on November 18.

Asked by Europe, Geithner said a bailout of Ireland could mark the end of the crisis on the continent of sovereign debt. Officials of the European Union, International Monetary Fund and European Central Bank spent a second day in Dublin the night discussing a possible rescue of the Irish banks.

"I think it is going to make, because this government, Ireland has shown they are willing to do something very, very difficult, very, very difficult to dig things out of this mess," said Geithner. "And the leaders of Europe have taken some very difficult political decisions."

China Currency

He said that China is allowing its currency to strengthen, and that "we want to ensure that sustain that."

Fed easing, which Chinese officials have said that weakened the dollar, has hurt U.S. efforts to convince China to allow the yuan to rise, Geithner said. The yuan has gained about 2.6 percent against the dollar since Sept. 1.

Fed chairman, Ben S. Bernanke defended the monetary stimulus in a speech in Frankfurt yesterday and a meeting with U.S. senators 17 November.

The best way to support the dollar and the global recovery support is through policies that lead to the resumption of robust growth in an environment of price stability in the United States, "Bernanke said in his speech.

Purchases of assets will be used in a manner that is "measured and sensitive to economic conditions," Bernanke said. Fed officials are "unwavering commitment to price stability" and not looking for inflation higher than the level of "2 percent or slightly less" than most politicians to be consistent with the legislative mandate of the Fed he said.

Letter to Bernanke

Also this week, 23 people, including former Republican government officials and economists, Bernanke called for an end to stimuli. Among those who signed the letter, Douglas Holtz-Eakin, former director of the Congressional Budget Office, Weekly Standard, William Kristol, editor and professor at Stanford University John Taylor, creator of a formula of monetary policy on rates interest used by the Federal Reserve.

Republican attacks on the Fed have been one of the toughest since the central bank rushed to rescue the financial system with the support of Bear Stearns Cos. and American International Group Inc., during the financial crisis.

"It is very important to respect and honor what Congress did when it created our independent central bank with a mandate to keep prices low and stable over time and make sure that" promote "sustainable economic growth," said Geithner , who was president of the Federal Reserve Bank of New York before becoming Treasury secretary last year.