WASHINGTON, D.C. — Treasury Secretary Timothy Geithner on Tuesday reassured investors that the White House and Republican lawmakers will reach a deal to control the nation’s finances, downplaying an unprecedented warning that the government risks losing its coveted debt rating if it fails to do so.
In an interview on CNBC, Geithner said he disagrees with Standard & Poor’s decision to lower its long-term outlook for the federal government’s fiscal health. The credit agency on Monday warned the government could lose its top credit rating in the next two years if lawmakers fail to come up with a long-term plan to bring down the federal deficit.
“We are not going to get behind this problem; we’re going to get ahead of it,” Geithner said.
The U.S. government is projected to run a record $1.5 trillion deficit this year, marking the third straight year that the deficit topped $1 trillion.
Obama and Republicans in Congress have proposed cutting $4 trillion from future deficits over the next 10 to 12 years. However, they disagree on how to do it. The White House wants to cut the deficit by ending tax cuts for the wealthy. Republicans reject that approach. Instead, they want to reduce the deficit largely by overhauling Medicare and cutting spending elsewhere.
The clash over how to cut future deficits has put a critical decision — whether to raise the nation’s borrowing ability — in limbo.
Geithner on Sunday said Republican leaders have privately assured the Obama administration that Congress will raise the government’s $14.3 trillion debt limit in time to prevent an unprecedented default.
But Paul Ryan, the chairman of the House Budget Committee, said there was no guarantee Republicans would agree to increase the debt ceiling without further limits on federal spending.