Treasury moves to allay fears over US debt pile
Us Treasury Secretary Timothy Geithner has reassured investors that the White House and Republican politicians will reach a deal to control finances, downplaying a warning the government risks losing its coveted debt rating if it fails.
Mr Geithner said he disagreed with Standard -amp; Poor's decision to lower its long-term outlook for the federal government's fiscal health. The credit agency yesterday warned it 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 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 $1.5trn deficit ($1trn) this year.
Mr Obama and Republicans in Congress have proposed cutting $4trn (£2.5trn) from 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 want to reduce the deficit by overhauling Medicare and cutting spending elsewhere.
Mr Geithner said Republicans have privately assured the Obama administration that Congress will raise the $14.3trn (£8.8trn) debt limit in time to prevent an unprecedented default.
But Paul Ryan, 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.