By Peter Schroeder - 04/26/12 03:03 PM EDT
Treasury Secretary Timothy Geithner said that the "fiscal cliff" approaching at the end of the year poses a threat to the economy, but also an opportunity.
Speaking to the Portland City Club Wednesday, Geithner said problems in a "dangerous and uncertain world," including struggles in Europe and Iran, continue to weigh on both the global and U.S. economy.
Geithner sought to paint a rosier picture of what that fiscal cliff represents, saying it could be the impetus for oft-divided politicians in Congress and the White House to come together and hammer out a plan for the nation's finances.
"That cliff presents a risk, but it also provides an opportunity for bipartisan agreement on reforms to restore fiscal sustainability," he said, according to prepared remarks.
Federal Reserve Chairman Ben Bernanke has repeatedly called on Congress to tweak the law so that major policy changes — including the expiration of the Bush tax cuts and the payroll tax cut, as well as the beginning of automatic spending cuts — do not all take effect on the same day, Jan. 1, 2013.
Those extreme changes happening all at once could cause a significant economic contraction, he warned, calling for more gradual changes to be put in place instead.
On Wednesday, Bernanke made that case again, warning that if policymakers fail to do something, there is nothing the Fed can do to protect the economy from the resultant harm.
"If no action were to be taken by the fiscal authorities, the size of the fiscal cliff is such that I think there's absolutely no chance that the Fed could or would have any ability to offset, whatsoever, that effect on the economy," he said.