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Payments to Medicare, Medicaid, Social Security and veterans’ benefits would otherwise halt, Geithner said. “We’d have to stop paying all the other payments on all the other things the government does,” he added. “And then we would risk default on our interest payments. If we did that, we’d tip the U.S. economy and the world economy back into recession, depression. I think it would make the last crisis look like a tame, modest crisis. It would be much more dramatic. The cost of borrowing would go up for everybody, and it would have a permanent devastating damage on our credit rating as a country. And that’s why there is no responsible person that would take any risk that we allow the world to start to fear that the U.S. would court that — that tragedy.”
The administration would work with lawmakers on a long-term plan to reduce the deficit in parallel with legislation to raise the debt ceiling, Geithner said on NBC’s “This Week.”
Even though Obama struck a deal in December to extend tax cuts enacted under President George W. Bush, the country cannot continue to extend those cuts for the top 2 percent of earners, Geithner said on “This Week.”
“Chairman Ryan’s budget helps explain why this is going to be essential, because if you want to extend these tax breaks for the top 2 percent, then either you have to ask me to go out and borrow trillions of dollars from the Chinese or from foreign investors or from Americans, from our children, or you have to cut — as he proposes to do — very, very deeply into basic benefits for seniors, the disabled, the poor,” he said. “And we don’t need to do that in order to restore balance for our fiscal position.”
Geithner also proposed altering the tax code to eliminate tax breaks that go disproportionately to the wealthiest Americans.
Although Defense Secretary Robert Gates and Secretary of State Hillary Rodham Clinton have already announced that they do not intend to remain in their posts should Obama be re-elected in 2012, Geithner said he still has much work he would like to do, without specifically saying he would be around for a second term.
“I got a lot on my plate still, and we’ve got a lot of challenges ahead,” he said. “And I want to tell you, this is hard, but I believe in this work and I enjoy these challenges. ... I’m going to keep at trying to fix what’s broken here, make sure we’re helping get the economy growing and help deal with these long-term challenges.”