Geithner warns U.S. to hit debt ceiling by May 16

[Bad_Daddy 2,209]

http://news.yahoo.com/s/nm/us_usa_budget_debt

WASHINGTON (Reuters) – The United States will hit the legal limit on its ability to borrow no later than May 16, Treasury Secretary Timothy Geithner said on Monday, ramping up pressure on Congress to act to avoid a debt default.

"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 in a letter to congressional leaders.

"Default by the United States is unthinkable."

Previously, the Treasury had forecast that the $14.3 trillion statutory debt limit would be reached between April 15 and May 31. As of Friday, Treasury borrowing stood just $95 billion from the ceiling.

Some Republican lawmakers have sought to use the need to raise the debt limit as a lever to pressure the Obama administration into agreeing on large-scale budget cuts.

The debt-limit showdown comes as Congress struggles to complete a spending package that would keep the government operating beyond Friday.

Republicans are seeking to use that bill to enact deep spending cuts and lawmakers are focusing on a proposal to trim this year's budget by $33 billion, a relatively small amount compared with a projected $1.4 trillion deficit.

Geithner said a failure to raise the debt ceiling in a timely way would push interest rates higher and spark "a financial crisis potentially more severe than the crisis from which we are only starting to recover."

Both Geithner and Federal Reserve Chairman Ben Bernanke have said a failure to raise the ceiling could have "catastrophic consequences."

BUYING TIME

As the government nears the debt ceiling, the Treasury has authority to take certain extraordinary measures to postpone the date the United States would default on its obligations.

However, those actions would be exhausted after about eight weeks and there would be "no headroom" to borrow after July 8, Geithner said.

Some lawmakers have called for legislation to force the Treasury to first pay interest on U.S. bonds before other obligations, such as unemployment benefits and Social Security and Medicare payments, as a way to stave off a debt default.

They have also asked Treasury whether financial assets such as the country's gold reserves or the government's portfolio of student loans could be sold to avoid raising the debt ceiling.

Treasury has rejected the proposals as unworkable.

"To attempt a fire sale of financial assets in an effort to buy time for Congress to act would be damaging to financial markets and the economy and would undermine confidence in the United States," Geithner said.

Based on estimates last year from the International Monetary Fund, U.S. debt as measured against the size of the economy is higher than in France, Canada and Germany, but less than in Italy and Japan.

Geithner said that while the debt ceiling projections could change, the Obama administration does not believe they could change in a way that would give Congress more time to raise the debt ceiling. He said Treasury would provide updated projections in early May.

[I AM NOT THAT GUY 5,715]

I thought the deadline was this Friday. Obama and Boehner will be so relieved to hear that.

[Bad_Daddy 2,209]

I thought the deadline was this Friday. Obama and Boehner will be so relieved to hear that.

I can understand making some radical cuts, but I never hear any of the politicians talk about getting out of the 2.5 wars we are in atm. I'm thinking that would save some major $$$$$.

[Obama 2012 1,714]

I can understand making some radical cuts, but I never hear any of the politicians talk about getting out of the 2.5 wars we are in atm. I'm thinking that would save some major $$$$$.

it would also send the unemployment rate up though at the same time. We'd be paying for them regardless. Not as much mind you, but we'd still be paying for it.

You have to think of all the members of the military, weapons manufacturers, private corporate security companies, etc. that are all being paid for because we are over there.

While spending would be slashed by getting out, yes. There would be devastation to the economy at the same time for us pulling out as well.

It truly is a lose/lose situation.

[웃 910]

it would also send the unemployment rate up though at the same time. We'd be paying for them regardless. Not as much mind you, but we'd still be paying for it.

You have to think of all the members of the military, weapons manufacturers, private corporate security companies, etc. that are all being paid for because we are over there.

While spending would be slashed by getting out, yes. There would be devastation to the economy at the same time for us pulling out as well.

It truly is a lose/lose situation.

Who is paying the members of the military, weapons manufacturers, private corporate security companies, etc.?

Can't we give them a job somewhere else like maybe building a border fence? I'm sure we can find something that they can do

[Obama 2012 1,714]

Who is paying the members of the military, weapons manufacturers, private corporate security companies, etc.?

Can't we give them a job somewhere else like maybe building a border fence? I'm sure we can find something that they can do

this would assume the politicians want to protect our borders.

[Mr. Big Dog 10,747]

it would also send the unemployment rate up though at the same time. We'd be paying for them regardless. Not as much mind you, but we'd still be paying for it.

You have to think of all the members of the military, weapons manufacturers, private corporate security companies, etc. that are all being paid for because we are over there.

While spending would be slashed by getting out, yes. There would be devastation to the economy at the same time for us pulling out as well.

It truly is a lose/lose situation.

Again, Paul, there's no value add in these adventures. It's cheaper to keep paying all these folks - those that are getting paid now for being engaged in these wars in one way or another - for doing nothing at all. At least we'd save the hazard pay they are currently getting. More seriously, though, remember Boehner - if the cuts cost [presumably non-productive] jobs, so be it. You can't seriously consider keeping this charade going for the sake of fcuking Blackwater employees, weapons manufacturers etc. while at the same time lambasting the out-of-control federal spending. If you want to cut, you'd want to look at opportunities to cut first where we spend money for no added value. Afghanistan and Iraq would be - hands down - the first targets for cuts. Then you'd look at all those subsidies that nobody needs - oil, farming, etc. But, of course, that's a non issue since them lobbies have bought enough influence to keep things just the way they are.

Edited April 6, 2011 by Mr. Big Dog