The U.S. government would risk damaging its credit worthiness if it doesn't agree to raise the national debt ceiling past $14.3 trillion in the next few months, U.S. Treasury Secretary Timothy Geithner said on Sunday.
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 said on NBC's Meet the Press on Sunday.
Geithner's comments came in response to a question asking if President Barack Obama would agree to tie spending cuts to an agreement to raise the debt ceiling, as Republicans have demanded in recent weeks. Geithner predicted that the U.S. would reach its debt limit by May 16. However he said the Treasury could extend the need to raise it until July before the U.S. would default.
Geithner said raising the debt ceiling and reaching a long term deal on reuducing the federal deficits could happen in parallel, but stopped short of saying there would be a link.
I think you can do these things in parallel, he said.
Geithner says the administration wants Congress reach a deal on certain budget related items by early June.
Before we get too far into June we want Congress to agree on concrete targets, deadlines, timelines, and an enforcement mechanism that will force Congress to live within its means over the next three to five years, Geithner said.
In the past two weeks, Obama and House Republicans have proposed a 2012 budget that expects the U.S. debt held by the public to grow by trillions of dollars over the next decade. Under Obama's plan, it would grow by $7.1 trillion to $19 trillion in 2021. The Republican plan would see the debt grow by $4.65 trillion to $16.068 trillion in 2021.
Obama's plan would reduce the nation's deficits by $4 trillion over the next 12 years, by ending of certain tax breaks for Americans earning over $250,000 per years, reforming the tax code to eliminate some loopholes and wringing more efficiency out of existing healthcare programs for seniors and low income people.
Republicans have proposed restructuring the Medicare and Medicaid programs and cutting spending from federal programs to reduce spending by $5.8 trillion over the next 10 years. Obama's proposal would cut $2 trillion in spending over 12 years.