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Posted at 01:38 PM ET, 05/23/2011

Domenici: Geithner made a ‘gigantic misstatement’ on debt limit

Former senator Pete Domenici (R-N.M.), the chairman of the Bipartisan Policy Center’s debt-reduction task force and a onetime chairman of the Senate Budget Committee, on Monday criticized Treasury Secretary Timothy Geithner for earlier this month extending the deadline by which Congress must vote to raise the country’s debt limit.

“The secretary of the Treasury has now let Congress catch him in a gigantic misstatement, because he kept saying that we’re going to go into default, we’ve got to extend it, and then he kept finding money,” Domenici said Monday morning after a speech by House Minority Whip Steny Hoyer (D-Md.) at the Bipartisan Policy Center in Washington. “And now we’ve got a group of people arguing with him that they don’t have to extend it, just find money in different places.”

Domenici was referring to an argument put forth by Sen. Pat Toomey (R-Pa.) — and gaining traction among other conservatives — that the United States will not go into default if the borrowing ceiling is not raised by Aug. 2, the deadline Geithner set this month. Previously, Geithner said the deadline would be earlier than that, but this month he said the Treasury Department was able to extend it by taking “extraordinary measures.”

“I don’t know how we’re going to get out of that bind, but I submit that the secretary of the Treasury must sooner or later establish a line to say, ‘This is it.’ . . . It’s clearly a difficult situation that wasn’t there before,” Domenici added.

Hoyer, who in his speech Monday detailed his own proposal for addressing the country’s debt problem — while renewing his criticism of the budget plan put forth by House Budget Committee Chairman Paul Ryan (R-Wis.) — said he believes that any hard-and-fast date is less important than the notion that the debt limit must eventually be raised.

“Frankly, whatever the date is, I think, is not as relevant as the fact that we know that we’re going to have to increase the debt limit,” Hoyer said. “I don’t think there’s anybody that disagrees with that proposition.”

The remarks by Domenici and Hoyer come as leaders of both parties are sparring over the conditions for raising the country’s $14.3 trillion debt limit. Vice President Biden is set to meet Tuesday with six bipartisan, bicameral leaders on the debt ceiling, the group’s third meeting this month.

Hoyer’s speech focused on five areas that he said need to be encompassed in any debt-limit deal.

“A responsible answer to our debt should have five elements: deficit-reducing tax reform; cuts to discretionary spending, both defense and non-defense; action to keep our entitlements strong; a fail-safe mechanism; and fairness for all Americans,” he said.

Hoyer added that he believes Congress and the Obama administration “need to reach agreement” on a deficit-reduction plan in the coming months, “but if we cannot do so, it is not tenable for us to hold credit or ransom the full faith and credit of the United States of America.”

As the 2012 budget blueprint drafted by Ryan and passed by the House last month continues to be a political lightning rod in the debt-limit debate, Hoyer called Ryan an “extraordinarily able” and “courageous” member of the House and praised his move to raise the issue of balancing the budget in the short term, saying it’s “clearly the direction in which we need to go.”

But a few moments later, he harshly criticized the Ryan plan, maintaining that its proposed overhaul of Medicare would have devastating results for seniors.

“Medicare was created because so few private insurers were willing to cover seniors in the first place. . . . That reluctance to cover seniors in the private market still exists,” Hoyer said.

Republicans have countered criticism of their plan by contending that Democrats have not put forth their own proposal to preserve the long-term solvency of Medicare and other expensive entitlement programs.

Hoyer said he is ultimately “hopeful” that the Biden-led group will produce a result in the short term, noting that he originally believed that June 8 would be an ideal target date for a debt-limit deal to be reached. He acknowledged, however, that Congress often acts only when a crisis is looming.

“We tend to procrastinate on difficult decisions until you have to make them,” Hoyer said.

By  |  01:38 PM ET, 05/23/2011

 
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