Standard & Poors’ negative outlook for the economy means the company believes there is a one-in-three chance it will downgrade the U.S. debt rating within the next two years. Treasury secretary Timothy Geithner is betting on better odds, telling Fox Business Network in an interview on Tuesday that there is “no risk” the United States will lose its AAA credit rating.
“If you listen carefully now to the leadership in Washington, the president, the Republican leadership in both houses, the Democrats, [they are] recognizing this is the right thing to do for the economy,” Geithner said. “We have to put in place now reforms that bring down our long-term deficits in ways that will help strengthen future growth. That is an incredibly important recognition by people, and we want to put something in place as soon as we can so we can begin that process.”
When asked again to specifically clarify if he believes S&P is wrong and the United States will keep its AAA rating, he responded “absolutely,” and went on to say that for people across the country, especially those that own small businesses, “Washington is a tough place to read, and it’s hard to get past the political rhetoric to see if the leadership in Washington is going to take the tough steps necessary to get ahead of this problem. But if you listen carefully now, it is incredibly important to realize what’s happened over just the past few weeks.”
He then went on to mention the Simpson-Bowles deficit reduction commission that set out a broad target for deficit reduction. The president, Geithner says, has embraced that basic framework.
“Even House Republicans, after a long period of saying deficits don’t matter, that tax cuts pay for themselves, that we can live within our means indefinitely and that growth will take care of everything, are saying we have to bring our deficits down,” he said. “We have roughly the same target, $4 trillion over 10 to 12 years. So if you listen carefully now, I think the prospects for a bipartisan agreement are better than they’ve been for a long period of time.”
Geithner’s remarks come a day after the White House and Treasury Assistant Secretary Mary Miller criticized the rating’s service for downgrading the U.S. economic outlook.
“We believe S&P’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” Miller said in a statement. “As the President said last week, addressing the current fiscal situation is well within our capacity as a country. He has initiated a bipartisan process that will allow us to make progress on a balanced approach to restoring fiscal responsibility. ”