WASHINGTON – US Treasury Secretary Timothy Geithner said on Sunday that congress must reach a debt deal to lift the threat of a US default for the next 18 months until after the November 2012 elections, while Republicans and Democrats are unable to agree with nine days of deadline for raising the ceiling on the debt.
“We must get this question from the political arena,” said Geithner on U.S. television network CNN, referring to the campaign for the presidential election in November 2012.
“It’s just unthinkable,” Geithner said. “We never do that. It’s not going to happen.”
Geithner said that in the negotiations still open between President Democrat Barack Obama and Republican speaker of the House of Representatives John Boehner, as well as other parliamentary leaders, the idea of a two-step process was studied.
This would raise the debt ceiling at first, relatively short-term, with the first cuts, before agreeing to a second time on a plan to reform social programs and tax revenues .
Geithner said two types of plans are being discussed: One is a “comprehensive, balanced” plan including spending cuts and “tax reform that would generate revenues,” which President Barack Obama is still negotiating with House Speaker John Boehner. The other, proposed by Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid, would put in place “some up-front savings, but then establish a special committee with exceptional powers that could legislate quickly.
If Congress does not fall by 2 August the ceiling of the debt of the United States, currently set at 14,300 billion (9960 billion), federal services will no longer be funded. Investors remain confident that an agreement will be reached on time but the concern is gaining the markets, a U.S. default on their debt is likely to trigger a global economic shock.