Congress must adopt a “balanced strategy” to address the country’s long-term fiscal health and avert the looming crisis over the national debt limit, said U.S. Treasury Secretary Timothy F. Geithner at an event hosted by the Joan Shorenstein Center on the Press, Politics and Public Policy.
Geithner’s remarks came as part of a wide-ranging session moderated by Shorenstein Center Director Alex S. Jones at The Harvard Club of New York City. The forum, titled “A Conversation on the Economy and our Fiscal Challenge,” took place before a room of reporters and guests, including family members of Walter H. Shorenstein, in whose memory the event was dedicated.
With Congress now debating the highly contentious issue of raising the nation’s debt limit, Secretary Geithner reiterated his view that Congress needs to act by Aug. 2, or else risk defaulting on outstanding obligations. “It’s not the kind of thing you want to take to the edge,” he said, noting that markets could begin to react negatively if brinksmanship brings the government close to that deadline. “That itself has the same dynamics as default.”
Many fiscal conservatives in Congress are asking for deep spending cuts before signing off on any deal to raise the debt limit. On Monday, the government officially hit the debt ceiling and began borrowing from federal pension plans and using other emergency measures to continue making payments on outstanding debt.
Given that global investors are closely watching the U.S. debt negotiations, Geithner said, “It makes no sense to wait until they force action upon us.” Echoing a theme that guided the Obama administration’s policies during the financial crisis and rescue package, he stated: “Confidence is much more expensive to recover than to keep.”
Watch the video of the conversation with Secretary Geithner