By Peter Schroeder - 10/18/11 04:41 PM EDT
Senate Republicans took Treasury Secretary Timothy Geithner to the woodshed Tuesday over the White House's handling of the economy.
Appearing before the Senate Small Business Committee, Geithner tried to make the case for President Obama's $447 billion jobs plan, but was met with a round of tough questions from Republicans who said the White House's economic policies have failed.
"Your primary mission is to craft the economic policy of this country, and at this point, it simply isn't working," she told Geithner. "Something's gone terribly wrong, and what I hear over and over again is that there is no tempo, a tempo of urgency."
"I don't know who you're talking to ... but you need to talk to the average person," she said later in a testy back-and-forth with Geithner. "Rome is burning."
Geithner emphasized that while he wholeheartedly supports long-term efforts like fundamental tax reform, there is a need for swift action to help the economy now.
"We are not going to do fundamental tax reform in two months," he said. "As we start to lay the foundation ... we need to be doing some things now to get the economy growing more rapidly."
He also pushed back against arguments he heard from several Republicans, who said regulations are holding back businesses.
"I don't think there's good evidence to support the proposition that it's regulatory burden or uncertainty that's causing the economy to grow more slowly," he said.
The secretary said a lack of demand for products is the biggest problem for businesses.
The ostensible purpose of the hearing was to discuss how a small-business law passed one year ago was faring, in particular the $30 billion lending fund established by Congress to provide funds to small banks for small-business lending.
But the fund closed up shop in September after distributing just over $4 billion to 332 banks, well short of its capacity.
Geithner had to fend off criticisms from both sides of the aisle over how long it took for the lending fund to get up and running — the program didn't dole out any money until nine months after it began.
Snowe said all that time had been "wasted," while Sen. Maria Cantwell (D-Wash.) complained that small banks faced tougher scrutiny to line up funds than some of Wall Street's biggest institutions.
"The big banks, they got access to capital in about 10 seconds," she said.
Defending the program, Geithner identified issues that fell out of the Treasury's control. For one, banks applied for only one-third of the available funds.
"We can't force banks to come," he said.
Furthermore, banking regulators were charged with weighing the strength of the banks applying for the program: half of those applicants did not meet the criteria for the program, limiting its reach.
"We had to be careful to make sure that taxpayers' resources were going to banks that were viable," he said.
Sen. Mary Landrieu (D-La.), who chairs the committee, also defended the program and the challenges it faced.
"I will remind everyone that this was an entirely unique program," she said. "The Treasury did not have a readily available road map, and one took time to develop."
She added in her opening statement that she wanted to develop a second version of the program.