Geithner aims to reassure investors

US Treasury Secretary Timothy Geithner today reassured investors that the White House and Republican politicians will reach a deal to control finances, downplaying a warning that the government risks losing its coveted debt rating if it fails.

Mr Geithner said he disagreed with Standard & Poor’s decision to lower its long-term outlook for the federal government’s fiscal health. The credit agency on yesterday warned the government could lose its top credit rating in the next two years if it fails to come up with a long-term plan to bring down the federal deficit.

“We are not going to get behind this problem; we’re going to get ahead of it,” Mr Geithner said on CNBC.

The US government is projected to run a record 1.5 trillion dollar deficit this year, marking the third straight year that the deficit topped a trillion dollars.

Mr Obama and Republicans in Congress have proposed cutting 4 trillion dollars from future deficits over the next 10 to 12 years. However, they disagree on how to do it. The White House wants to cut the deficit by ending tax cuts for the wealthy. Republicans reject that approach. Instead, they want to reduce the deficit largely by overhauling Medicare and cutting spending elsewhere.

The clash over how to cut future deficits has put a critical decision – whether to raise the nation’s borrowing ability – in limbo.

Mr Geithner on Sunday said Republican leaders have privately assured the Obama administration that Congress will raise the government’s 14.3 trillion dollar debt limit in time to prevent an unprecedented default.

But Paul Ryan, the chairman of the House Budget Committee, said there was no guarantee Republicans would agree to increase the debt ceiling without further limits on federal spending.