News / USA

Geithner Warns US 'Running Out of Time' on Debt Issue

Treasury Secretary Timothy Geithner makes remarks after a meeting with Democrats about the debt limit, July 14, 2011
Treasury Secretary Timothy Geithner makes remarks after a meeting with Democrats about the debt limit, July 14, 2011

Top U.S. financial officials are issuing a new round of warnings about the potential catastrophe that awaits if lawmakers fail to raise the country's debt limit by August 2.

Treasury Secretary Timothy Geithner told reporters Thursday the country is "running out of time" to raise the $14.3 trillion borrowing limit.

He said Washington needs to meet its financial obligations and "it's time we move."

Earlier, Federal Reserve Chairman Ben Bernanke told a Senate committee any failure to raise the debt limit would have a "calamitous outcome."  He warned excessive spending cuts could damage the fragile economic recovery.

Talks stalled again

Top lawmakers are scheduled to meet with President Barack Obama later Thursday at the White House as the debt talks enter a fifth day, stalled over sharp disagreements about the need to raise taxes.

The Senate's top Democrat Thursday lashed out at one of the lead Republican negotiators.  Senate Majority Leader Harry Reid called House Majority Leader Eric Cantor "childish" and said he should be excluded from further talks.  On Wednesday, Cantor accused the president of storming out of a negotiating session.  Cantor himself had walked out of earlier talks with Vice President Joe Biden.

The top Republican in the Senate, Minority Leader Mitch McConnell, criticized the president's stance, telling colleagues his party will "not be reduced to being tax collectors for the Obama economy."

If the borrowing limit is not raised by August 2, the U.S. may have to stop payments on some of its obligations.

The Fed chairman said failure to raise the debt ceiling would be a "self-inflicted wound" and would erode global confidence in the United States.

Default consequences

Moody's Investors Service warned Wednesday that the U.S. risks losing its top credit rating if lawmakers fail to reach a deal that increases the debt limit and decreases the deficit.  A downgraded U.S. bond rating would likely lead to higher interest rates for U.S. loans.

Bernanke said a downgrade could lead to a "vicious cycle" in which higher interest rates make the country's debt increasingly difficult to pay down.

There are also growing calls from businesses and banking firms for a solution.  The head of one of the biggest private U.S. financial firms Thursday told reporters it is "imperative that the debt ceiling be fixed."

JP Morgan Chase Chief Executive Jamie Dimon said it would be irresponsible for the country to default on its debt because the result could be catastrophic.

A Chinese credit rating agency said Thursday it has placed U.S. sovereign debt on a negative watch.  Dagong Global Credit Rating Company says it will downgrade U.S. credit ratings "if there is no significant change in its repayment ability within the period of observation."  China is the biggest buyer of U.S. sovereign debt.

Some information for this report was provided by AP, AFP and Reuters.

You May Like

Video Egyptian Journalists Call for Freedom of Press

Despite release of al-Jazeera journalists and others, Egyptian Journalist Syndicate says some remain imprisoned More

Turkey Survey Indicates Traditional Distrusts, Shift to the West

Comprehensive public opinion survey also found a large majority of those interviewed distrust all countries other than country’s neighbor, Azerbaijan More

Pakistan Court Upholds Death Sentence in Blasphemy Killing

Highest court upholds sentence of Mumtaz Qadri convicted of 2011 killing a provincial governor for criticizing country’s controversial blasphemy law More

This forum has been closed.
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Making a Minti
October 07, 2015 4:17 AM
While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Making a Mint

While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Activists Decry Lagos Slum Demolition

Acting on a court order, authorities in Nigeria demolished a slum last month in the commercial capital, Lagos. But human rights activists say the order was illegal, and the community was razed to make way for a government housing project. Chris Stein has more from Lagos.

Video Self-Driving Cars Getting Closer

We are at the dawn of the robotic car age and should start getting used to seeing self-driving cars, at least on highways. Car and truck manufacturers are now running a tight race to see who will be the first to hit the street, while some taxicab companies are already planning to upgrade their fleets. VOA’s George Putic has more.

Video TPP Agreed, But Faces Stiff Opposition

President Barack Obama promoted the Trans-Pacific Partnership on Tuesday, one day after 12 Pacific Rim nations reached the free trade deal in Atlanta. The controversial pact that would involve about 40 percent of global trade still needs approval by lawmakers in respective countries. Zlatica Hoke reports Obama is facing strong opposition to the deal, including from members of his own party.

Video Clinton Seeks to Boost Image Before Upcoming Debate

The five announced Democratic party presidential contenders meet in their first debate next Tuesday in Las Vegas, Nevada. Former secretary of state Hillary Clinton continues to lead the Democratic field, but she is getting a stronger-than-expected challenge from Vermont Senator Bernie Sanders. VOA National correspondent Jim Malone has more from Washington.

Video Music Brings Generations Together

When musicians over the age of 50 headline a rock concert, you expect to see baby boomer fans in the audience. Boomer rock stars have boomer fans. Millennial rock stars have millennial fans. But this isn’t always the case. Take the Lockn’ Music festival which took place in mid-September in rural Arrington, Virginia. Here, Jacquelyn de Phillips discovered two generations of people who are considered quite different in the outside world, spending 4 days together in music-loving harmony.

Video Ukranian Artist Portrays Putin in an Unusual Way

As Russian President Vladimir Putin was addressing the United Nations in New York last month, he was also being featured in an art exhibition in Washington. It’s not a flattering exhibit. It’s done by a Ukrainian artist in a unique medium. And its creator says it’s not only a work of art - it’s a political statement. VOA’s Tetiana Kharchenko has more.

Video South Carolina Reels Under Worst-ever Flooding

South Carolina is reeling from the worst flooding in recorded history that forced residents from their homes and left thousands without drinking water and electricity. Parts of the state, including the capital, Columbia, received about 60 centimeters of rain in just a couple of days. Authorities warn that the end of rain does not mean the end of danger, as it will take days for the water to recede. Zlatica Hoke reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

VOA Blogs