Geithner Unleashed: Sends Letter To Boehner, Warns Even Brief Default Would Be "Terribly Damaging", Channels Reagan

Tyler Durden's picture

Following up on today's relentless debt ceiling propaganda, which started with the Politico report that more than half of republicans are willing to push the US into a "temporary" default, going through Obama's "We are not a deadbeat nation", but one whose president apparently will not debate the debt ceiling (the same president who as a Senator was against rising the debt ceiling) and closing with Boehner's rebuttal to Obama, saying the GOP would raise the debt ceiling but in exchange for spending cuts, sure enough it was time to unleash the Treasury Secretary in his last days on the job, toting the party line ("extending borrowing authority does not increase government spending; it simply allows the Treasury to pay for expenditures Congress has previously approved") making it "abundantly clear" that "Even a temporary default with a brief interruption in payments that Congress subsequently restores would be terribly damaging, calling into question the willingness of Congress to uphold America’s longstanding commitment to meet the obligations of the nation in full and on time.  It should also be noted that default would increase our borrowing costs and damage economic growth and therefore add to future budget deficits, not decrease them." The unleashed Geithner then proceeds to threaten: "Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom." Finally, Geithner also made it clear that the CNBC "RISE ABOVE THE DEBT CEILING" campaign is now at T-30 to T-45: "Treasury currently expects to exhaust these extraordinary measures between mid-February and early March of this year" which however should not be news to anyone.

And yes, Tim Geithner just channeled Ronald Reagan:

In an address to the nation in 1987, President Reagan said, “Unfortunately, Congress consistently brings us to the edge of default before facing its responsibility.  This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits.  Interest rates would skyrocket.  Instability would occur in financial markets and the federal deficit would soar.  The United States has a special responsibility to itself and the world to meet its obligations.  It means we have a well-earned reputation for reliability and credibility – two things that set us apart in much of the world.”

From the Treasury

January 14, 2013

 

The Honorable John A. Boehner

Speaker

U.S. House of Representatives
Washington, DC  20515

 

 

Dear Mr. Speaker:

 

I am writing to provide additional information regarding the extraordinary measures Treasury has undertaken in order to avoid default on the nation’s obligations.

 

Treasury currently expects to exhaust these extraordinary measures between mid-February and early March of this year.  We will provide a more narrow range with a more targeted estimate at a later date.  Any estimate, however, will be subject to a significant amount of uncertainty because we are entering the tax filing season, when the amounts and timing of tax payments and refunds are unpredictable.  For this reason, Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments.

 

If the extraordinary measures were allowed to expire without an increase in borrowing authority, Treasury would be left to fund the government solely with the cash we have on hand on any given day.  As you know, cash would not be adequate to meet existing obligations for any meaningful length of time because the government is currently operating at a deficit.

 

The U.S. government makes approximately 80 million separate payments per month.  These include payments for Social Security; Supplemental Security Income; Medicare; Medicaid; national security needs, including military salaries, military retirement, veterans’ benefits, and defense contractors; income tax refunds; federal employee salaries and retirement; law enforcement and operation of the justice system; unemployment insurance; disaster relief; goods and services sold to the government under contracts with small and large businesses; and many others.  If Congress does not act to extend borrowing authority, all of these payments would be at risk.  This would impose severe economic hardship on millions of individuals and businesses across the country.

 

It is important to point out that extending borrowing authority does not increase government spending; it simply allows the Treasury to pay for expenditures Congress has previously approved.  Failure to meet those obligations would cause irreparable harm to the American economy and to the livelihoods of all Americans.  Even a temporary default with a brief interruption in payments that Congress subsequently restores would be terribly damaging, calling into question the willingness of Congress to uphold America’s longstanding commitment to meet the obligations of the nation in full and on time.  It should also be noted that default would increase our borrowing costs and damage economic growth and therefore add to future budget deficits, not decrease them.  This is why no President or Secretary of the Treasury of either party has ever countenanced even the suggestion of default on any legal obligation of the United States.

 

Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority.  No Congress has ever failed to meet that responsibility.  It must be understood that the nation’s creditworthiness is not a bargaining chip or a hostage that can be taken to advance any political agenda; it is an essential underpinning of our strength as a nation.  Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom.

 

In an address to the nation in 1987, President Reagan said, “Unfortunately, Congress consistently brings us to the edge of default before facing its responsibility.  This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits.  Interest rates would skyrocket.  Instability would occur in financial markets and the federal deficit would soar.  The United States has a special responsibility to itself and the world to meet its obligations.  It means we have a well-earned reputation for reliability and credibility – two things that set us apart in much of the world.”

 

President Obama has put forth detailed proposals to restore fiscal responsibility to the federal budget, and he strongly believes Democrats and Republicans should join together to reduce our deficits.  In the meantime we must protect America’s creditworthiness by ensuring that our government can pay the bills it has already incurred.  Therefore, I respectfully urge Congress to meet its responsibility to the country by extending normal borrowing authority well before the risk of default becomes imminent.

 

Sincerely,

 

Timothy F. Geithner

pdf link here

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Zap Powerz's picture

I am fucking tired of this bullshit.

THX 1178's picture

Terribly damaging to a bad thing is... good...

HoofHearted's picture

Holy shit, just capture Geithner and make that little bastard give us the pot of gold he hides at the end of the rainbow. Debt. ceiling. solved.

Kitler's picture

Obama: "We are not a deadbeat nation"

It’s like that old saying in the Soviet Union: Nothing can be confirmed until it’s officially denied.

Big Slick's picture

"Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom."

Tell me the Little Timmy Tax Cheat did not just say that.

Snakeeyes's picture

Dear John, the Administration and Congress are out of control on spending and debts. But don't turn on the lights and end the drunken orgy of spending and debt. Yours, Tiny Tom

http://confoundedinterest.wordpress.com/2013/01/12/debt-star-federal-deb...

Manthong's picture

It should also be noted that default would increase our borrowing costs”

Oh yeah, like the Fed will stop creating bogus money and buying Treasury debt or raise interest rates.

Why don’t you admit “there is NO CHANCE” of that, Timmy?

giggler123's picture

ZH knows why it won't happen?  Algorithm's.   Computers never lie, just the people who control them do.

The Alarmist's picture

No worries ... Turbo Treasury 2.0 will handle it for you!

Bicycle Repairman's picture

Boner to Geithner: Timmy, if I go along with "the plan" my speakership and the Republican party are finished.  We all recognize how helpful the two party illusion is.  Please provide some cover.

Geithner to Boner:  You really are a sniveler, Boner.  Well I suppose I could mention martial law, cats sleeping with dogs and other biblical plagues.  I suppose if we saved Hastaert we might as well save your worthless, sniveling ass.  I have one request.

Boner to Geithner: Anything, Timmy.

Geithner to Boner: Squirt me some tears, punk.

economics9698's picture

Liberty bonds, 1934, FDR, default.  Repeat as needed.

knukles's picture

Waaaaaaaaaaaait...

Sumptin's wrong.  Why would Timmah send Boner a letter when Harry Reid already said he was too stooopid to be able to read?

I don't get it....

DaveyJones's picture

"the same president who as a Senator was against rising the debt ceiling"

is it just me or did he object to everything he now supports and vice versa?

nmewn's picture

lol...about right.

But I will say this, he's forcing the House and Senate members to reveal themselves as fucking pigs for larding up the Sandy Relief Bill with pork...he broke up the bill into bits...not a bad strategy.

• $33.2 million for eight projects in the state of Senate Energy and Water Appropriations Subcommittee Ranking Member Harry Reid (D-Nev.), including: $25 million for rural Nevada; $1.5 million for Truckee Meadows; and $725,000 for Tahoe Regional Planning

• $16.8 million for seven projects in the state of Senate Energy and Water Appropriations Subcommittee member Robert Byrd (D-W.Va.), including: $2.5 million for the Greenbrier River Basin; $325,000 for the Parkersburg and Vienna Riverfront Park; and $150,000 for Island Creek at Logan

• $12.9 million for 11 projects in the state of Senate Energy and Water Appropriations Subcommittee Chairman Pete Domenici (R-N.M.), including: $5 million for central New Mexico; $250,000 for Santa Fe; and $180,000 for the Southwest Valley, Albuquerque

http://www.thefiscaltimes.com/Articles/2012/12/19/Congress-Piles-the-Pork-into-Hurricane-Sandy-Relief.aspx#4dRL8QoVOiaPVc6W.99

Encroaching Darkness's picture

Slight error in attribution; the original article is comparing pork in the Sandy relief bill with the Katrina relief bill (which, apparently, Byrd (now dead, the only way to get rid of incumbent Senators in some states) and Domenici (now retired) had a hand in crafting.

Yes, Senator Robert Byrd is still dead (along with Generalissimo Francisco Franco, and numerous other enemies of the sentient).

nmewn's picture

The point was AND is...they never let a crisis go to waste, in order to get their pet projects stuffed through where they otherwise WOULD NOT in the bright light of day.

The original Sandy Relief Bill that everyone freaked becase it was not passed included...

$2 million to repair roof damage at Smithsonian buildings in Washington, D.C.

$336 million for Amtrak-related expenses.

$8 million to buy new cars for federal agencies.

$150 million for fisheries in Mississippi and Alaska.

$4 million for repairs at the Kennedy Space Center.

The storm hit the NE by the way.

At a debt accumulation rate of 150 million dollars an hour you want to talk to me about dead senators? 

nmewn's picture

His King of Pork legacy lives on...veiled in the Constitutionality of it all, of course ;-)

DaveyJones's picture

He is dead but they take him out every now and then if they need a really good filibuster

I am more equal than others's picture

Cue Wagner....

http://www.youtube.com/watch?v=Gz3Cc7wlfkI

I love the smell of napam....it smell like victory....

Burnin down the house.. you talking head

http://www.youtube.com/watch?v=u06DpcFXc4U

I am more equal than others's picture

classic...da roof da roof da roof is on fire.....

boogerbently's picture

WHY will it be considered the GOPs fault?

They agreed to taxes, the dems agreed to spending cuts later.

The dems are just better BSers, with media backing.

The Alarmist's picture

Ah, that's simple ... It's always the GOP's fault.  Everything is the GOP's fault.  We would be eating lotus fruit in Nirvanna if the GOP had simply crawled away and died four decades ago after Tricky Dick was jettisoned.

nmewn's picture

Tonight on Piss-Ant Morgan:

Why is the House standing in the way of increasing the credit card limit of the nation? Well, obviously conservatives & libertarians are crazy gun nuts (so logically it flows) they want everyone to die either by starvation or a bullet. 

We'll discuss these neanderthals in absentia & more tonight with Nobel Prize winning economist Paul Krugman, James Carville, Tim Geithner, Robert Rubin and Sheila Jackson Lee.

Riveting TV.

Kayman's picture

nmewn

I can't even watch that pompous ass.

K

nmewn's picture

I never have outside of clips on the web...here's a good one of Ben Shapiro eating his lunch right out of the gate (using Morgan's own tactics).

He didn't take it so well...lol.

http://www.youtube.com/watch?v=LJdhAm_oUUs

Whats obvious is the host/moderator gets to set the timing (go to commercial break) and as a "guest" one is supposed to show deference to the host in terms of making a point.

My only regret is Ben didn't say "Piss-ant, would it have been better for society in general if the Mom in Georgia who shot the intruder while protecting her twins in a closet, had a Bushmaster with a 30 round mag or just the six shot revolver she used and he survived?" ;-)

Vashta Nerada's picture

"Give me money to buy dope.  If you don't give me the money, I will steal it, and thus be both a drug addict and a thief, and it will be 100% your fault."

Manthong's picture

"no more legitimate than any other common demand for ransom"

Then how about as legitimate a demand for a budget from the irresponsible Democrat Administration and  Senate which has broken the law and not produced one for three years?

nmewn's picture

Whaaa?

Debate a budget? In broad daylight!

Why, I might have to affix my name to the printing of debt money to study the mating habits of monkeys in Bolivia and pig farts in Georgia.

I've got an election coming up to win! We can't do this out in the open!

moroots's picture

How about actually undermining the rule of law, as Timmah and his boss have done countless times over the past 4 years?  How damaging is that?

Slightly Insane's picture

Rule of law  (it is absent in the USA) ..... Rule of Law .... Ha, HA,Ha

Encroaching Darkness's picture

GE bondholders; Chrysler bondholders; Fast & Furious; NBPP bullying at polling places; John Corzine; Eric Holder (multiple counts); Lisa Jackson / Richard Windsor email accounts; anything Janet Napolitano has done so far; Salazar's Interior Department (all of it); SEC; CME; the Federal Reserve (in its entirety); Immigration waivers for certain folks (esp. BHO relatives); in-process violations of the Second Amendment; NDAA; ........

 

What rule of law still exists, Timmah?

ImReady's picture

Shouldn't he have said "Only 53% of our nation aren't deadbeats."? 

knukles's picture

One in every state!

Sounds like a campaign pledge to me!

rfaze's picture

If you have to say your not "Dead beat nation" guess what........

yogibear's picture

Obama should know deadbeats.

Wasn't Illinois, Obama's home a deadbeat state. Always being late by months for payment?

Illinois is broke. 

THX 1178's picture

We don't want to solve the debt cieling, we want to destroy the system.

ZackLo's picture

BUT, BUT, BUT, I thought social security didn't add to the debt or deficit....or was "deficit nuetral" , what a crock of shit. Pull the ripcord and end the charade already so we can move on.

pan-the-ist's picture

Does it really matter if they raise the debt ceiling?  Really?  How many trillion are we in debt? Does another trillion really matter?

nmewn's picture

Why don't we make it a six or a ten trillion dollar rise and cut everyone a check for the difference?

Does it really matter?

////////////

I'll take that as a no?...lol.

WTFUD's picture

Thumbs Up to pan-the-ist for at least throwing a new direction to the flow of traffic " yawn" regular spinning out the "tired" cliches. Too busy trashing "small cheese " minor differences/ prejudices and falling head first for the oldest trick in the book; blindsidded, gagged then shafted;

Been a trying year for me ( and probably 90% of the world ), and my greatest fear is that we should continue along in limbo ;
An unfortunate wedding couple were married for only 18 minutes yesterday when the drone hit some suss guys gathered in an adjoining building (flat3b) next to the wedding ceremony downtown Yemaan;
Look at that big fat shiny social security free dollars cashable at any micky mouse soup market liquor diner blood bank pawnshop pick n mix food stamp bounty.
Farm boys gotta gun run. We know All the gun guys are plumb crazy and gonna start shootin an' a humping an' havin a good ol' time . dont give me all that liberty bollocks yooz gun folks wanna shoot me while i'm collecting all my food stamp booty.

To end
There will be bankers out there, food stamp refugees, gubby workers, farmers, chemists, lawyers, killers, taxi drivers, shop owners, pornstars, barmen, eco communists, vagrants, piano teachers, and maybe one or two law makers who cry every day and night not to become Zombies like thpse of Japan.

Slightly Insane's picture

THX 1178

I want those that profited from this system to be included in the destruction of the system. 

Slightly Insane's picture

THX 1178

I want those that profited from this system to be included in the destruction of the system. 

kliguy38's picture

"Timmy unleashed".....now there's a picture I can't get out of my head. Where is Billy Banzai when you need him? I picture this little mutt chewing at my pant's leg.....get away you little bastard......

SilverIsKing's picture

Be careful, he may just decide to lift one of his hind legs.

Go Tribe's picture

Is that the sound of a million Chinese MBA students rolling on the floor laughing their asses off?

The Gooch's picture

You are not alone.

comments on threads EVERYWHERE are reflecting this.

 

JLee2027's picture

What an attitude change since the summer of 2011. The public wants spending cuts. Ron Paul has killed them all.