Treasury Secretary Timothy Geithner's statements on Sunday that Congress will raise the U.S. debt ceiling in the coming months are in line with separate recently-proposed long-term plans by the Democratic and Republican leadership in Congress and the White House to increase the debt by trillions of dollars in the next decade.
Geithner said Sunday that Congress has and will continue to raise the U.S. debt ceiling, which is currently at $14.3 trillion.
The hard thing is not to raise the debt limit, because Congress will always do that, and they recognize that, Geithner said on ABC's This Week.
Both Obama and Republicans have proposed reducing the size of future deficits, but neither foresees the size of the U.S. debt declining in the next 10 years.
In their proposed budgets for 2012, Republicans and Democrats see the debt held by the public growing to $16 trillion and $19 trillion respectively by 2021. Republicans and Obama have proposed $4.4 trillion, and $4 trillion deficit cuts in 10 years and 12 years respectively.
The hard thing is to try to take advantage of this moment, and get Republicans and Democrats to come together and lock in some reforms that will reduce our long-term deficits.
Geithner told U.S. Senate Majority Leader Harry Reid in a later dated April 4, that the U.S. will reach its legal debt limit by May 16 and that the Treasury could take extraordinary measures to keep paying obligations within the limit until July 8.
The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations, Geithner said.
Some Republicans, including U.S. House Speaker John Boehner, have said they will use the upcoming debt vote as leverage to extract large concessions from the Obama administration on reducing spending in the years to come.
The upcoming debate in Congress over the 2012 budget will center on how to reduce deficits, not lower the debt. Obama wants higher taxes for more affluent Americans and smaller spending cuts, while Republicans want much sharper cuts to spending.
The U.S. debt-to-GDP ratio, which compares debt to the size of the economy, rose past 9 percent in the most recent financial crisis as Congress authorized the Treasury to invest hundreds of billions of dollars in banks and other financial institutions, and the Federal Reserve Bank boosted the money supply by trillions of dollars after banks and investors pulled back sharply on investments and lending.
The European union has set a 3 percent debt-to-GDP ratio as a manageable ratio for its member governments.
The Obama plan foresees the debt-to-GDP ratio decreasing to 3.1 percent by 2021, while Republicans anticipate that the figure will fall to 1.6 percent by the same time period.
Congress is going to have to raise the debt limit. They understand that. That's absolutely essential to preserve the creditworthiness of the United States of America. You know, we're a country that meets its obligations, and we have to meet our obligations, and they recognize that, Geithner also said on NBC's Meet the Press on Sunday.