Geithner to GOP: Raise debt limit or ‘lights out’
Treasury Secretary Timothy Geithner made an appeal Thursday to House Republican freshmen, a group of lawmakers skeptical of his warning that a failure by Congress to raise the nation’s borrowing limit would have grim financial and economic consequences.
Geithner came armed with fresh evidence of Wall Street’s increasing pessimism over prospects for a quick resolution to the standoff over government debt. Moody’s Investors Service, the debt-rating agency, said it would consider downgrading the U.S. credit rating if it did not see progress in negotiations by mid-July.
Moody’s had expected “political wrangling” over the issue, the firm said. But it added: “The degree of entrenchment into conflicting positions has exceeded expectations. The heightened polarization over the debt limit has increased the odds of a short-lived default.”
The government reached its borrowing limit of nearly $14.3 trillion May 16. Treasury officials have said they can use a series of maneuvers to continue most government functions until early August but would face a default on federal obligations leading to likely economic upheaval.