–Will Have Bipartisan, Comprehensive Long-Term Fiscal Agreement
By Brai Odion-Esene
WASHINGTON (MNI) – U.S. lawmakers will agree to a timely increase
in the debt ceiling and are aware they must not delay the decision until
the United States is at risk of defaulting on its obligations, Treasury
Secretary Timothy Geithner said Tuesday.
“We are going to avoid a default crisis, no doubt about that,”
Geithner said at the Wall Street Journal’s CFO Network Meeting.
“It’s unthinkable that people would contemplate that as a viable
strategy for the country. It’s not going to happen,” he said, adding,
“we are making a lot of progress.”
Leaders from both sides of the aisle have made it clear they want
to get a deal on the debt ceiling done, Geithner said. “They don’t want
to take it too close to the edge … they recognize the damage it would
cause the country.”
Geithner also assured the gathering that at the end of ongoing
budget talks between the White House and lawmakers, the result will be a
“bipartisan, comprehensive long-term deficit reduction framework.”
Geithner said the administration is working to ensure the agreed
framework is one that is good for economic growth in both the short- and
long-term. This means the framework must “restore reality” to the
long-term U.S. fiscal position and lock-in savings over time.
However, any savings made must not come at the expense of near-term
growth, he added.
Describing the mood of the budget negotiations led by Vice
President Joe Biden, Geithner said “there is a very pragmatic, a very
realistic, very constructive spirit and we hope that results in some
compromises, the kind of compromises you need to make a broad deal
It is very likely that administration and Hill leadership will
agree to a two-tiered approach to the U.S. fiscal situation, with a
downpayment on the debt initially, followed by a longer-term agreement.
“We don’t see a realistic path to solving all this at once in the
next few weeks, it’s just not possible,” Geithner said. “What we are
trying is to do a framework where there is a substantial downpayment of
spending reform … and then a framework of constraints — we call it a
debt ‘failsafe’ — where we set up targets and triggers that would force
the remaining deficit reduction to happen soon enough so we do not fall
behind the curve.”
So whatever does not get covered by the downpayment, authorities
will have to do over the next couple of years, he added.
Geithner stressed again that any deficit reduction framework must
be balanced. “To try and do that only on spending cuts in parts of the
budget would be irresponsible and really not achievable politically.”
He said what is needed is a plan that has “modest” revenue
increases through tax reform, as well as some near-terms savings in
spending and long-term health reforms.
There have been calls for lawmakers to overhaul the U.S. tax code
as part of the fiscal reform, but Geithner made clear that the
administration wants to complete ongoing budget talks before the matter
of tax reform is taken up.
The U.S. will ultimately have to undergo broad-based tax reform,
Geithner said, and Treasury already has put together a “good, sensible”
The focus of the package will not just be on corporate tax
overhaul, he said, and will include other measures that strengthen
investment in the United States.
** Market News International Washington Bureau: 202-371-2121 **