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Reading the worried mind of Tim Geithner

By David Frum, CNN Contributor
U.S. Treasury Secretary Timothy Geithner testifies before the Senate Finance Committee on Capitol Hill in June.
U.S. Treasury Secretary Timothy Geithner testifies before the Senate Finance Committee on Capitol Hill in June.
STORY HIGHLIGHTS
  • David Frum: If you could read Geithner's mind, you might find he's praying for time
  • Frum says time is needed for consumers to pay off debt, for businesses to start hiring
  • He says it may already be too late for Democrats to avoid a shellacking in the midterms
  • Geithner has to be wishing for a break that will get the economy growing fast, he says
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Editor's note: David Frum writes a weekly column for CNN.com. A special assistant to President George W. Bush in 2001-02, he is the author of six books, including "Comeback: Conservatism That Can Win Again," and is the editor of FrumForum.

(CNN) -- William Safire used to write a column in which he'd try to read the mind of some world leader and imagine what Mikhail Gorbachev or Anwar Sadat really thought, as opposed to the diplomatic niceties they were obliged to utter aloud.

In homage to the master, let me try an imitation: reading Treasury Secretary Timothy Geithner's mind.

"Everybody asks me what the next plan is. There is no plan! We have broken our leg and we have to wait for the leg to heal. It's just a matter of time. And most of the bright ideas to heal faster will only make things worse.

"The banks need time. They are all broke. We have them on life support, lending them money at 0 percent and then allowing them to buy Treasury bonds at 2 percent. It's basically welfare to help them reduce their debts.

"Consumers need time. We can sprinkle money at them, but they aren't going to spend it. They borrowed and borrowed during the real estate bubble. Now they are paying off their credit cards, paying down their home equity lines. Don't look to them to start buying again until they feel more confidence they won't be laid off tomorrow.

"Employers need time. They won't resume hiring until business revives, and business won't revive until consumers have paid off their debts. Paul Krugman keeps telling me that the U.S. government should play the role of consumers: Borrow another trillion dollars and start buying something, anything. Easy for him to say -- he won't get the 2 a.m. margin call from the central bank of China.

"Homeowners need time. We've got 9 million of them who carry more mortgage debt than their house is worth. Since house prices probably will not rise anytime soon, we need to bring that debt down -- which means we need them to build equity by continuing to pay their monthly mortgage coupon, even if that coupon represents a bad deal for most of them.

"The president's stimulus bill was supposed to buy time. We figured $800 billion would lower the unemployment rate by a couple of points for a couple of years. Get us through the worst of it, deliver some results in time for the 2010 elections. Real recovery would follow in 2011 and 2012.

"It has not worked. My economists tell me that the money bought something -- probably things would have been even worse otherwise. Maybe they're right, who knows. But 'we beat the spread' doesn't impress members of Congress -- or voters. Whatever time we bought, we long ago used up.

"So now we're facing Armageddon in November. House looks gone for sure, maybe the Senate too. Worst part will be sitting in front of congressional committees, taking questions from those clowns, and never once being allowed to answer the way I want to answer: 'Hey, it was your team that trashed the U.S. economy. We're just the cleaning staff.' Better keep my mouth shut or they'll impeach the president.

"Look on the bright side. They don't take office until January. And then ... it's a long ride to 2012. Anything could happen over the next 24 months. The recovery could show up. The price of oil could drop. The Chinese could start buying U.S. goods.

"Or else ... maybe somebody on Wall Street will want to hire a former treasury secretary?"

The opinions expressed in this commentary are solely those of David Frum.