In an interview at a CNBC conference, Treasury Secretary Timothy Geithner blamed Europe for America's economic slowdown.
"The economy is definitely slower, Geithner said to host Larry Kudlow, according to a rush transcript. "Lower than it was the end of last year. Why is it slower? It's slower mostly because of the trauma from Europe, the after effects of the rise in oil prices earlier this year, and because government spending is actually falling now quite significantly. Those three things are a pretty significant drag on a recovery."
Geithner warned that political dysfunction that could result in even less government spending and the continued crisis in Europe could make things worse.
"We have these two big risks still," said Geithner. "I think we talked about them last year: One is the trauma, the crisis in Europe. The second is this deep sense of political dysfunction, part of which is the looming effects of the tax increase and the spending cuts. Those two things are the dominant risk to the expansion in the United States."
Geithner later suggests that as money from the stimulus ran out, this resulted in an economic slowdown. "[T]he actions we took, the president took and Congress authorized, on the fiscal side, were absolutely essential and they were enormously powerful. As they started to fade, growth started to slow."
Kudlow responds: "Which is what the criticism is: These temporary efforts don't work."