Treasury Secretary Timothy F. Geithner warned Sunday that a debt-reduction deal that doesn’t result in raising the nation’s borrowing limit through the 2012 elections remains unacceptable to the White House and cannot win enough Democratic votes in Congress to ensure passage.
His comments came as congressional leaders worked to draw up a two-step plan to increase the debt limit, now set at $14.3 trillion, before Aug. 2, when the nation would default on its spending obligations.
“There’s nothing wrong with doing this in stages,” he said on CNN’s “State of the Union.” “But what it cannot do is leave the threat of default hanging over the economy.”
Further raising tensions at the start of a critical day of negotiations, House Speaker John A. Boehner (R-Ohio) indicated Sunday that Republicans could push forward with a plan this week, even without Democratic support.
Under proposals floated by Republicans on Saturday, Congress would cut agency spending by as much as $1 trillion over the next 10 years and raise the debt ceiling by an equal amount. That would give the government the borrowing authority to pay its bills, but only through the end of this year.
The deal would then require Congress to work to reduce the debt by as much as $3 trillion by reforming the tax code and entitlement spending.
Geithner said such a two-step process could be acceptable — but not if it requires a second vote by Congress to lift the debt ceiling in the coming months.
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