Geithner: ‘No doubt’ US will avoid default

Treasury Secretary Timothy Geithner signaled Tuesday that the high-level talks on the debt ceiling might have to put off detailed discussions on issues like entitlement and tax reform.

Geithner also stressed that there is “no doubt” the U.S. will avoid a default crisis this summer, saying he was confident that Washington officials would reach agreement on a bipartisan framework for reducing deficits. He called it “unthinkable” that the country would default on its debts.

But Geithner also indicated that, with the $14.3 trillion debt ceiling needing to be raised on Aug. 2, the talks led by Vice President Biden might not have time to drill down on everything.

“We don’t see a realistic path to solving all of this at once in the next few weeks,” Geithner said at a business-executive event sponsored by The Wall Street Journal. “It’s just not possible.”

{mosads}He later added he thought policymakers would have to deal with the big fiscal issues in stages over the next several months, saying it would take more time to figure out what reforms to Medicare and Medicaid should look like, not to mention a tax reform plan.

Geithner also said that policy issues that could be riders in the budget — such as funding for the Environmental Protection Agency and the healthcare overhaul — would likely need to be examined within the regular congressional appropriations process. 

“Our job is to figure out, given that reality, how we can do enough to make sure we can give people more confidence that this country is going to be able to live within our means over time,” Geithner said. 

The Treasury secretary also said that the group was looking for something of a two-tiered plan, with around $4 trillion to $5 trillion in deficit reduction over the next decade and some sort of mechanism — a cap or trigger — to force reductions in the deficit, if need be.

The Biden talks are set to start up again Tuesday, and to meet at least two more times this week. Geithner said those discussions have so far been very pragmatic and focused on finding a deal.

But Geithner also said that it was not feasible for a long-term fiscal deal not to reckon with revenues, even as top Republicans have said they will not go along with any agreement that has tax increases. 

{mosads}Still, the Treasury secretary did not specify what sort of discussions about revenue there should be, and also said that he believes the push for corporate tax reform would largely have to wait until after the debt-ceiling discussions are over.  

And with concerns bubbling up about the time pressures the Biden group is under, Geithner said the group needed to take some steps forward in its upcoming meetings.

“We’re getting closer, but we need to make some progress this week to give everybody more confidence that there’s a framework that has the votes,” he said. “Ultimately, what matters is how do we get the votes to pass it in the House and the Senate.”