Geithner says failure to raise debt ceiling ‘deeply irresponsible,’ would cost ‘millions’ of jobs

Treasury Secretary Tim Geithner sent a cage-rattling letter to congressional leaders Thursday, warning that a failure to raise the debt limit could plunge the nation into an economic crisis more severe than 2008’s and cost millions of jobs.

“Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs,” Geithner said.

“Even a very short-term or limited default would have catastrophic economic consequences that would last for decades. Failure to increase the limit would be deeply irresponsible,” he wrote.

Geithner says the U.S. debt currently stands at $13.95 trillion, $335 billion below the current ceiling of $14.29 trillion. He said that the ceiling could be reached as early as March 31, but asked that Congress “act to increase the limit early this year, well before the threat of default becomes imminent.”

He said that while President Obama “believes strongly in the need to restore balance to our fiscal position,” the consequences of failure to raise the debt ceiling would be “catastrophic,” using the same term as the one mentioned Sunday by Austan Goolsbee, a top White House economic adviser to Obama.

“The Treasury would be forced to default on legal obligations of the United States, causing catastrophic damage to the economy, potentially much more harmful than the effects of the financial crisis of 2008 and 2009,” Geithner said.

He added that a default would be far worse than the government shutdown late 1995 and early 1996, and that it would represent “a substantial tax on all Americans.”

“Because treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs,” he said. “Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale.”

“Any default on the legal debt obligations of the United States is unthinkable and must be avoided,” Geithner added. (Read the full letter below).

Republicans such as Rep. Michele Bachmann of Minnesota have touted petitions against raising the debt ceiling. Sen. Tom Coburn, Oklahoma Republican, has said he would like to see an attempt to avoid the need for an increase by cutting hundreds of billions of dollars.

But the ground has clearly shifted and Republicans are looking to see how many spending cut concessions they can extract from the White House in exchange for an increase.

House Speaker John Boehner, Ohio Republican, responded to the letter by stating that the GOP would require “meaningful action by the president and Congress to cut spending and end the job-killing spending binge in Washington.”

House Budget Committee Chairman Paul Ryan, Wisconsin Republican, also said at a forum Thursday that Republicans are “not interested with just a naked debt ceiling increase.”

“Just refusing to vote for it, I don’t think that’s really a strategy. I don’t want to rubber stamp big government,” Ryan said at an event sponsored by E21, a conservative group. “Do I want to see the government default? No. but I want to make sure we get substantial spending cuts and controls in exchange for raising the debt ceiling.”

Not all Republicans were impressed by Geithner’s warning or by talk among GOP leaders of extracting concessions from the White House.

“I would suspect that if there is some type of agreement in order to get the debt level increased, it probably won’t hold much water,” said Rep. Ron Paul, Texas Republican, on MSNBC. “Besides, they’re not even talking about very much cut. The maximum that’s been mentioned is $100 billion. And when you have a trillion dollars of deficit being accumulated in about seven months, it really doesn’t add up to enough.”

  • http://www.facebook.com/people/Mark-Carney/600744266 Mark Carney

    Actually Geitners simple lack of general Tax accounting is what is costing millions of jobs…

  • ladylove

    oh my the sky is falling, the sky is falling, what shall we do.

  • loudog

    Are Republicans really going to default on our loans while we’re occupying two countries? Not likely. They need China more than China needs us.

    • truebearing

      Loud Dog,

      Barking up a different tree today? First you’re whining about borrowing from China, now you’re making the case we need to keep borrowing from China.

      You couldn’t pee on a fire hydrant and hit it 2 out of three times.

      • ladylove

        you are being generous with 2 out of 3

        and that depends, whether he is aiming for the left, or the RIGHT LOL

        • truebearing

          I don’t think he can lift his right leg. He always goes left. :)

          Gee, you can’t tell it’s Friday, can you? LOL!!!

      • loudog

        Must be you dimwits haven’t figured out that going after $16 million in NPR grants isn’t going to do anything to reduce our debt by march, when we’ll reach our debt ceiling, and the other dimwits in congress will have to raise the ceiling to pay for our wars and unfunded entitlements or default on our war financiers.

        • baal

          No, but it’ll be glorious to shut them down.

        • truebearing

          It’s a start, dogbreath.

  • kingfish

    This scumbag needs to ask his BANKERS for the money. Let it flow THIS way for a change.



    a default is exactly what this country needs…we just published an opposing viewpoint from Ron Paul on MSNBC called, “Ron Paul on The Dylan Ratigan Show On MSNBC: Confronting America’s Massive Credit Card Bill”…


  • riseabove

    God forbid the government shuts down and all these employees have to go home and watch porn all day on their own dime.

    • ladylove

      LMAO, damn this is good.

    • truebearing

      You naughty, naughty girls! Laughing at the government goldbrickers having to pay for their porn.

      Nice shot, Tammy!

      Hi bonbon!

      • ladylove

        truth my dear friend,

        ask my hubby he knows, how naughty I am !!!!!!!!!!!!!!!!!!!

        • theprofessor


          • ladylove

            I know, I know, you being a virgin and all LOL

        • truebearing


          No wonder we get along. My wife uses the word “naughty” to describe me, constantly. The truth is, she likes naughty people, so it all works.

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  • fourleafclover

    If these irresponsible idiots running our government can’t quit spending I’m for defaulting and going forward. I don’t care what I will lose, I’m fed up. What else will make them balance the budget and start paying off the debt? They must cut spending now. Pelosi added over $6 trillion to the deficit in four years and while handing off her gavel announces she and her democrat buddies are all about cutting the deficit. With brainless people like her making the laws I’m for letting the whole goverment collapse. They got us into this mess and can’t figure out how to get us out so the heck with it all. We have most screwed up and corrupt bunch of people making the laws we have ever had. Very few of them are honest and trustworthy. They don’t represent their constituents when they vote. It has all been about the liberalization of America by radical over educated so called elites. I am fed up with them no matter what party they are in. I’m for firing anyone who graduated from an Ivy League school, mainly Harvard, the stronghold of thinkers who can’t do. I want them out.

  • Barb

    How else will we collapse the evil USA if we don’t raise the debt ceiling? What should we do George?