Treasury chief, a man of many concerns

by William Neikirk and David Lightman

Treasury Secretary Henry Paulson had breakfast with Washington reporters today and showed that he's a man of many concerns.

Here are some of the things he said:

--"There's no quick fix" for the upheaval in financial markets caused by loose "sub-prime" mortgage lending and that he'll be working hard to ensure that companies can still float short-term paper to raise cash. He said that reviving this "commercial paper" market is important, but "there aren't any quick fixes."

--"What we don't need now are tax increases," without specifying what tax increases he meant. There has been a move on to boost taxes on hedge funds in Congress. But also Congress is debating higher taxes on the wealthy.

--"Everything is on the table" in the debate on Social Security reform, and that problem won't be solved without a bipartisan solution. He stopped short of saying the president would drop his idea for personal accounts in such a compromise. He didn't bite on a reporter's question about weather a personal account would be a good thing in such a volatile market today.

--He's concerned about Congress waiting so long to vote a "patch" for the alternative minimum tax (AMT). Without such a patch that would exclude many middle-class people from paying it, more than 20 million people would have to pay it for this taxable year. Though some congressman want to repeal the tax, Paulson indicated this is not the year to do it.

--The administration is working on plans to strengthen and streamline the regulation of financial markets, particularly in the asset-based markets like mortgages.

--The economy will experience lower growth because of the credit crunch, but he indicated that he did not see a recession. One reason for his hope that the U.S. economy will muddle through today's financial problems: "This is the strongest global market I've seen in a lifetime."

--The Senate has been slow to pass legislation to reform government-sponsored agencies like Fannie Mae and Freddie Mac that handle mortgage-backed securities. The House passed a bill in May. But he stopped short of criticizing the Senate Banking Committee's chairman, Sen. Chris Dodd (D-Conn.), a candidate for president. He called Dodd "very knowledgeable," but disagreed with the senator's plan to boost the loan portfolios that both institutions can handle. Dodd had sharply criticized Paulson for opposing a hike in the loan portfolios.

--The Treasury is studying corporate tax relief. For every 1 percent that corporate taxes are cut, there is a corresponding 3 percent increase in investment, which means more jobs, he said.

William Neikirk reports for the Chicago Triubne and David Lightman for the Hartford Courant.