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Thursday
Jan062011

Geithner Predicts ‘Catastrophic Damage’ Should Debt Limit Not be Raised

Photo Courtesy - Getty Images(WASHINGTON) -- Treasury Secretary Timothy Geithner issued a dire warning Thursday should Congress vote against raising the nation’s $14.3-trillion debt limit.

In a letter to House Speaker John Boehner, Geithner said such a vote would mean the Treasury “would be prevented by law from borrowing in order to pay obligations the Nation is legally required to pay,” and would cause “catastrophic damage to the economy.”

Geithner has asked that Congress act quickly to raise the ceiling.

“Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs," Geithner wrote. “Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.”

Saying that Congress needs to tread carefully, Boehner issued a response to President Obama’s request to raise the limit.

“The American people will not stand for such an increase unless it is accompanied by meaningful action by the President and Congress to cut spending and end the job-killing spending binge in Washington,” Boehner said. “While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole, and mortgage the future of our children and grandchildren.”

Boehner urged a bipartisan cooperation in addressing the budget process in the New Year.

Copyright 2011 ABC News Radio

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