Appearing with Senate Democrats Thursday afternoon, Treasury Secretary Tim Geithner repeatedly urged Congress to raise the debt ceiling, the federal government’s statutory authority to borrow money.
“We have no way to give Congress more time to solve this problem, and we are running out of time,” he warned, a pained visage creeping across his face. “The eyes of the world are on us…. We need to send a definitive signal that we are going to take the steps necessary to avoid default.”
The latest request came just hours after Federal Reserve Chairman Ben Bernanke told senators that the massive, speedy cuts in government spending Republicans are demanding be enacted in concert with a debt ceiling hike would stall the economy.
“I only ask … as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery,” Bernanke told a meeting of the Senate Banking Committee.
Bernanke, a Republican appointed by George W. Bush, is siding with Democrats in Congress as the Tea Party-ruled Republican caucus continues to insist on “no tax hikes on job creators” while pushing for cuts that will inevitably hurt economic growth and stall job creation. Bernanke did not miss the opportunity to get in another plea of his own for an increase in the debt ceiling.
“It would be a calamitous outcome,” Bernanke said of failure to do so by August 2, when Geithner has said the U.S. will default. “It would create a very severe financial shock that would have effects not only on the U.S. economy, but the global economy.”
Republicans have backed themselves into a corner on this one; Wall Street, Treasury, Ben Bernanke, and every independent economic forecaster out there is closing in, demanding a dose of rationality before it is too late.