Treasury Secretary Timothy Geithner issued a stern warning to Congress on Sunday, telling Members they must vote to raise the debt ceiling before Aug. 2 to avoid an economic catastrophe.
“There is no credible way to give Congress more time. ... They have to act by the 2nd,” he said on NBC’s “Meet the Press.”
Geithner predicted the country’s credit rating would be lowered and interest rates would spike if the government begins defaulting on its loans, which the Treasury Department has estimated will happen Aug. 2 if lawmakers do not raise the debt ceiling.
He said President Barack Obama would not agree to a debt ceiling deal that adversely affects the middle class, which Geithner noted is reeling from the lagging effects of the recession.
“Why is it fair to ask elderly Americans, middle-class families, to take more of the burden if those savings are going to go to sustain special interest tax breaks ... the lowest tax rates for the most fortunate Americans we’ve seen in 50 years? Why is that fair?” he asked.
Geithner acknowledged the political difficulty for both sides in the debate, underscoring the divisions between Republicans who do not want to increase taxes and Democrats who refuse to cut Medicare and Social Security benefits.
But Geithner still said that “this is a great moment for the country.” He added that Obama prefers to push ahead with a broad deal that seeks to cut $4 trillion from the deficit over 10 years and raises the debt ceiling beyond the 2012 elections. Such a proposal, however, unraveled Saturday night when Speaker John Boehner withdrew his support for the idea. In a statement issued less than 24 hours before a bicameral meeting set for Sunday evening at the White House, the Ohio Republican said the deal includes tax revenues that would not pass muster with House Republicans.
Asked about Boehner’s announcement, Geithner said, “We know this is very hard to do, but they should not walk away now from trying to do something good for the country.”
During a separate interview on CBS’ “Face the Nation,” Geithner backed off doing a short-term deal.
“Small deals are difficult too. Small deals involve a lot of pain as well. So it’s not clear that it’s easier to do less,” he said. “Like I said, the president is going to try to do the largest possible deal we can.”
The Treasury secretary left the door open to making changes to entitlement programs, saying on NBC that “there are things we can do responsibly to save money in those programs” in addition to making other spending cuts in areas such as defense. But Geithner added that the GOP will have to bend on the issue of revenues out of political necessity.
“Republicans have told us in the beginning they can’t pass a debt limit increase. They passed a budget deal just with Republican votes,” he said. “They need Democratic votes. It’s going to take Democrats and Republicans in both houses to do something.”
The House canceled its recess for the week of July 18, anticipating a deal will not be finalized before then, and Congressional staff members were working through the weekend as talks continue.
The White House meeting with House and Senate leaders Sunday night follows a Thursday session from which leaders emerged without an agreement. “There is no agreement in private or in public,” Boehner told reporters Friday, adding, “It’s not like there’s some imminent deal that’s about to happen.”
The negotiations have been punctuated by Friday’s jobs report, which revealed a 9.2 percent unemployment rate. Asked about the economic recovery during his NBC interview, Geithner said, “I think it’s going to take a long time still.
“This is a very tough economy,” he added. “And I think for a lot of people [it’s] going to feel very hard, harder than anything they’ve experienced in their lifetime now for some time to come.”
Responding to rumors that he will leave his post in September, the one-time president of the New York Federal Reserve would only say that he will continue serving in the administration “for the foreseeable future.”
“I got a lot on my plate, and I got a lot ahead of me,” Geithner said. “And I’m going to be doing this for the foreseeable future.”