Geithner Confident Congress Will Raise Debt Ceiling Despite Critics


1208_judywoodruff.jpgTreasury Secretary Tim Geithner expressed confidence Wednesday that Congress will vote to raise the ceiling on the national debt.

Members of Congress know it is “unthinkable,” he told a town hall meeting sponsored by Atlantic Magazine and Microsoft, that the United States could default on its debt obligation. As a result, he predicted that despite the opposition of conservative Republicans, Congress will vote by the March deadline to raise the debt limit to avoid any calamitous outcome.

The last time Congress reached an impasse over the debt ceiling, in 1994, President Bill Clinton shut down the government, leading to sweeping negative reaction from the American public, who mostly blamed Republicans for taking the issue to the brink.

Geithner was the first newsmaker participant in the gathering, and he told me in an interview that while he expects there to be vigorous debate around the issue, “there’s always a little political theatre around this,” he also expects the proposal to prevail.

The Treasury Department has warned that the current debt limit of $ 14.3 trillion, must be lifted soon in order to give the government the legal ability to keep borrowing. Geithner pointed out that the question is over how to pay for “things congress has authorized us to do in the past,” not about making room for new, future expenditures.

Despite his argument, many Republicans, and especially Tea Party followers, have insisted that they will draw the line, and will not vote to raise the limit above where it is now.

The Treasury secretary also spelled out the fundamental disagreement between the Obama administration and most Republicans over the need for the federal government to put money into education, innovation and infrastructure, which he described as essential to create the jobs of the future.

He described the budget cuts advocated by Rep. Paul Ryan, the chairman of the House Budget Committee, in a response to the president’s State of the Union address, as “too dark a vision of our future.” Forecasting a “great debate” about spending, Geithner added, “the test should be… not the simple question of who can be more austere, who can go deeper; the question… should be who is going to be smarter, more pragmatic, in a deficit reduction plan that… we can be more confident is going to help us grow more rapidly in the future. “

On a handful of other economy-related topics, Geithner commented that:

  • Manufacturing in the U.S. “is quite strong” and agriculture is the “strongest it’s been in decades.” He stated there are “good jobs, high paying jobs” in technology, manufacturing and agriculture.
  • Housing and construction are both “very weak.” He said the 9 percent unemployment number that came out last Friday probably “overstated the near-term strength” of the economy. But he said the 39,000 jobs added in January, “understated the strength” of the economy.
  • “It’s important we remember we have a long way to go to dig out of this hole, a long way to give those people a chance to get back to work and to be more secure and confident in their basic economic future.”
  • He agreed with some critics that current statistics about the economy – the monthly unemployment rate, the Dow Jones Industrial average – don’t tell the whole story. He added, “the great obligation we have here in Washington is to make sure that we recognize that even though things are getting better, the economy is getting stronger, that we got a lot of work to do, a long way to go.”

Throughout the session, he took questions from college students, from the University of North Carolina at Chapel Hill, and from Miami University of Ohio, some of whom said they are still looking for a job. He opened with a theme he returned to several times, that America’s young people can look ahead now and see a growing economy – both those with a college degree and those with only a high school diploma. But he said it is “self-evident that there’s a good economic case for trying to make sure that people have a little bit of help in affording a college education – very, very high return for the economy in making sure people have that chance to go to college.”

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