(WASHINGTON) -- Treasury Secretary Timothy Geithner says he is certain that Congress will raise the debt ceiling, saying leaders are "not going to play around with it" and risk the "catastrophic" consequences of defaulting on the nation's debt obligations.
"I want to make it perfectly clear that Congress will raise the debt ceiling," Geithner said in an interview with ABC News' This Week anchor Christiane Amanpour. When asked if he was sure, Geithner responded, "absolutely," adding that Congressional leaders made clear they understood the importance of the matter when meeting with President Barack Obama at the White House last Wednesday.
"I sat there with them, and they said, we recognize we have to do this. And we're not going to play around with it," Geithner said of the White House meeting. "We know that the risk would be catastrophic."
Geithner also spelled out the dire consequences if the debt ceiling is not raised by June.
"What will happen is that we'd have to stop making payments to our seniors -- Medicare, Medicaid, Social Security. We'd have to stop paying veterans' benefits. We'd have to stop paying all the other payments on all the other things the government does," Geithner said. "And then we would risk default on our debt -- and if we did that, we'd tip the U.S. economy and the world economy back into recession -- depression."
While the debt ceiling debate looms large, Geithner says he does not believe the spending cuts agreed to in last week's budget resolution will damage the current economic recovery, as long as a balanced approach is taken.
The treasury secretary said there has been a fundamental shift in understanding the long-term impact of deficits, even if there are still differences between Democrats and Republicans on how to address them.
"Things are different now. We're just coming out of a deeply damaging financial crisis," Geithner said. "Millions of Americans still feel the scars of that crisis now."
He said the challenge is agreeing on fundamental reforms to improve the deficit outlook, while still maintaining important investments in areas like health care and education.
The Tax Battle Ahead
Geithner accepted that disagreements remain with Republicans on the scope of spending cuts and how to reform the tax code, and that those differences may take longer to resolve.
"We have very big disagreements on what the right balance is," Geithner said. "The things we're going to disagree on for some time, we can take more time to resolve."
Geithner does not believe fundamental deficit reduction can happen without ending the Bush-era tax cuts for the wealthiest Americans, which were extended in a temporary agreement last December, and remain in place in House budget committee chairman Paul Ryan's budget plan passed by the House on Friday.
He does, however, think deficits can be reduced without raising taxes on the middle class, by ending tax loopholes and deductions that primarily go to wealthier Americans who itemize their tax returns.
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