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Posted at 03:12 PM ET, 05/15/2012

Geithner warns Boehner, GOP on end-of-year debt limit showdown


Treasury Secretary Timothy Geithner testifying at a Senate Appropriations Subcommittee hearing in April. (Brendan Hoffman - Bloomberg)
Treasury Secretary Timothy Geithner cautioned Republicans on Tuesday not to raise questions about whether the United States will once again raise its legal debt limit late this year, saying the economy is already starting to feel the effects of the potential fiscal cliff confronting Congress at the end of the year.

Geithner’s comments came as the White House and Democrats on Capitol Hill began reacting to a new ultimatum from House Speaker John A. Boehner (R-Ohio), who told an annual conference hosted by the Peter G. Peterson Foundation later Tuesday that Republicans will insist again this year that any increase in the debt limit be matched dollar-for-dollar with equal spending cuts.

Republicans made the same demand in the negotiations that led to an economy-rattling partisan showdown over the nation’s last debt ceiling hike last summer.

Senate Minority Leader Mitch McConnell (R-Ky.) said he agreed with Boehner’s framework for requiring cuts equal to any debt ceiling increase.

“A request of the president to ask us to raise the debt ceiling ought to generate a significant response to deal with the problem of deficit and debt,” he said.

But White House spokesman Jay Carney responded that a “charade” like last summer’s fight over the issue would hurt the economy.

“It can’t possibly be the case that the right prescription for what we need to do right now is to engage in the kind of political brinksmanship that, unfortunately, congressional Republicans engaged in last year,” he said.

Boehner told the group that the dollar-for-dollar match is necessary to force Washington to embark on the kind of fiscal restraint and entitlement reform that will slash deficits over time and stabilize the economy. The prepared remarks call the debt ceiling vote an “action-forcing event” that will require Washington to tackle its tough choices.

But speaking to the same group, Geithner warned Tuesday that it is not “responsible” to call into question whether the nation will pay back money it has already borrowed by raising the debt limit.

“This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment that you can never call into question or violate,” he said.

He said he hopes Congress can find a way to raise the debt ceiling next time without “the drama and the pain and the damage they caused the country last July.”

Congress will face a debt ceiling decision at the same time it faces a dramatic number of other major spending and taxing conundrums, including the expiration of the Bush-era tax cuts, the end of a temporary decreases in the payroll tax and implementation of painful automatic spending cuts that were included in the July deal to raise the debt ceiling.

Geithner said the county is now “close enough” to that crunch for its consequences “to matter a lot” already.

On Capitol Hill, House Minority Whip Steny Hoyer (D-Md.) said it was Boehner’s insistence that the debt ceiling had to be matched with spending cuts that led Congress to a deal that will result in $1.2 trillion in automatic reductions to defense and domestic programs in January. Republicans are working to reconfigure those cuts, arguing that they will hurt the Pentagon.

“While it sounds good, the execution of that principle does not seem very disciplined,” Hoyer said.

Hoyer called Boehner’s approach a “simplistic characterization” of what’s needed to fix the country’s fiscal problems that could impede a “big, bold, balanced” deal on taxes and spending to avert the end-of-year fiscal cliff, which he characterized as steeper than any he has seen in his more than 30 years in office.

Sen. Chuck Schumer (D-N.Y.) said it was “pretty galling for Speaker Boehner to be laying down demands for another debt ceiling agreement when he won’t even abide by the last one.”

“The last thing the country needs is a rerun of last summer’s debacle that nearly brought down our economy,” he said.

Related stories:

Taxmageddon sparks rising anxiety

Opinion: Is “fiscal cliff” just a myth?

This post has been updated since it was first published.

By  |  03:12 PM ET, 05/15/2012

 
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