US Treasury Secretary Timothy Geithner said Wednesday he was confident the US Congress would raise the country's debt limit and avert a potentially catastrophic default. But he also reiterated that there is not much time to overcome political divisions before August 2, when the country's spending commitments will crash head-on into the legal limit on borrowing.
"Congress of course is going to pass an increase of the debt limit in a time for us to avoid default," Geithner said in a speech at a Women in Finance symposium in Washington. "They recognise default is not an option, failure is not an option," he said. Geithner spoke as the White House and Congressional Republican leaders remained at odds over a broader, long-term deal on slashing the country's budget deficit.
Republicans refuse to raise the debt ceiling without a budget deficit deal - but they insist that only spending cuts be considered, and reject the White House's proposals to include tax increases as well. Geithner said the country's feuding political leaders "understand we do not have much time." He called for agreement "by the end of this week, certainly within the next week, so that we have time to legislate and put (an increased debt cap) in place." The months-long impasse has already seen the country bump into the $14.2 trillion ceiling, on May 16. Since then the Treasury has juggled income and payments to keep operating just below it.
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