Geithner Gets Gruesome

SUBHEAD: The plan needs to be in place today and the debt limit process must start tomorrow.  

By Ian Katz on 24 July 2011 for Bloomberg News -  

Image above: Illustration of Tim Geithner by Keith Taylor and modified by Juan Wilson.

U.S. Treasury Secretary Timothy F. Geithner said he hopes lawmakers can agree on the framework of a debt-limit agreement today because the House of Representatives must start deliberations tomorrow to meet the Aug. 2 deadline.

“They need to get this process moving in the House by Monday night,” Geithner said today on ABC’s “This Week” program. “To achieve that deadline, they need to have a framework that they know with complete confidence will pass both houses of Congress that is acceptable to the president. That should happen today.” When asked if he thinks a deal will be reached today, Geithner said, “I hope so.”

Geithner said two types of plans are being discussed: One is a “comprehensive, balanced” plan including spending cuts and “tax reform that would generate revenues,” which President Barack Obama is still negotiating with House Speaker John Boehner. The other, proposed by Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid, would put in place “some up-front savings, but then establish a special committee with exceptional powers that could legislate quickly.”

Republicans yesterday challenged a presidential veto threat by preparing for a short-term extension of the $14.3 trillion debt limit, hardening partisan differences in the face of warnings that a stalemate risks roiling financial markets as soon as tonight.
Reid’s Reaction

Reid, a Nevada Democrat, declared himself “deeply disappointed” with a Republican stance that’s “pushing us to the brink of a default.” Michael Steel, Boehner’s spokesman, said a short-term extension, which would mean another vote on the nation’s borrowing authority before the 2012 elections, is “inevitable.”

Geithner, during a separate appearance today on CNN’s “State of the Union,” said a deal that doesn’t go through the 2012 elections wouldn’t get to Obama to sign because “it will not make its way through the Senate. So that’s not a viable option. Now there’s nothing wrong with doing this in stages, but what we can’t do is leave the threat of default hanging over the American economy. That’s like a tax on all Americans. It’s deeply irresponsible.” Geithner also appeared today on “Fox News Sunday.”

Geithner told congressional leaders at a White House meeting yesterday with Obama that delaying a deal risked an adverse reaction from credit-rating companies and financial markets. He noted Asian markets open tonight, said an official familiar with the meeting.
Market Reaction

“You can’t tell,” if investors would react negatively tonight if a deal isn’t reached, Geithner said on CNN today. “You can never know.”

Geithner also said Obama “absolutely” remains involved in the talks and said it’s “not true” that Obama and Boehner are no longer negotiating.

Geithner said the Obama administration and Boehner had never agreed on a deal to raise $800 billion in revenue.

“The president and the speaker got very close,” Geithner told ABC. “But there was a whole range of things yet to be resolved at that point when the speaker pulled out on Friday.”

Geithner said using the 14th Amendment to avoid default is “not a workable option.” He said the administration has “looked at his very carefully.”
14th Amendment

Some Democrats in Congress have discussed the idea of claiming presidential authority to continue borrowing without congressional approval based on an interpretation of the Constitution’s 14th Amendment.

“This is a critical test for the American political system,” Geithner said. “It’s a critical test for Congress and for the Republican leaders in Congress, because the eyes of the world are on us.”

The Treasury secretary reiterated his view that Republican leaders understand that the U.S. can’t allow a default.

“If you listen to them carefully, Speaker Boehner, Senator McConnell have said unequivocally that this country will not default, we will meet our obligations,” he said. “The problem is, they have a vocal, loud, frankly irresponsible minority.”

Geithner declined to discuss any possible contingency plans if the debt limit isn’t raised.

“We will do everything we can to mitigate the damage,” Geithner said on the “Fox News Sunday” program. “We do not have the ability, only Congress has the ability, to make sure that people get their payments on time.”

“We write 80 million checks a month,” Geithner said. “There are millions and millions of Americans that depend on those checks coming on time. Not just people that supply our military, but people who get Social Security benefits, Medicare, Medicaid benefits. And we cannot put those payments at risk, and we do not have the ability to limit the damage on them, if Congress fails to act in time.”

See also:
Ea O Ka Aina: Bring it on! 7/17/11 .

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