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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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Tue, 01/15/2013 - 05:14 | 3153476 Colonial Intent
Colonial Intent's picture

That was a republican idea, therefore it was a GOOD idea.

Remember kids repubs good, democrats baaaad.

Buncha whiney selfish, emasculated, self obsessed, racist, religious white power NRA/KKK eunuchs bitching about shit they have no control over and making impotent threats against the gubbermint over the internet.

Fucking funny, every day i get up wracked by self doubt and insecurity about my place in the world, then i read ZH and i feel superior, intellectually, morally and of course sexually superior.

Thanks ZH posters, your ignorance and stupidity makes me chuckle on a daily basis.

Dont ever stop being perfect ZH.

Mon, 01/14/2013 - 19:29 | 3152514 lemosbrasil
lemosbrasil's picture

the awful chart showing falling flow of hedge fund of the world is enough to see the seize of crash is coming

 

see here: http://pracompraroupravender.blogspot.com.br/2013/01/um-forte-movimento-...

 

 

Mon, 01/14/2013 - 19:32 | 3152521 CharliePrince
CharliePrince's picture

Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law,

 

timmah knows the law  and how to avoid its problems

Mon, 01/14/2013 - 19:57 | 3152571 yogibear
yogibear's picture

"timmah knows the law  and how to avoid its problems"

Sure, when he was a deadbeat tax cheat.

Obama's cabinet is/was full of deadbeats. Eric holder, Turbo Timmy,Larry Summers, etc.


Mon, 01/14/2013 - 19:36 | 3152527 The Alarmist
The Alarmist's picture

I'm sick to death of hearing things from uptight, short-sighted, narrow minded hypocritics

All I want is some truth ... just give me some truth.

Mon, 01/14/2013 - 20:19 | 3152620 bobert
bobert's picture

Everything is under control.

Really, it's the truth.

Mon, 01/14/2013 - 23:41 | 3153118 SmoothCoolSmoke
SmoothCoolSmoke's picture

Here's some truth for ya.  Reagan and Dubya raised the DC 26 times (26!) between them....and the Republicans supported it EVERY SINGLE TIME.  

Mon, 01/14/2013 - 19:44 | 3152532 ebworthen
ebworthen's picture

"It means we have a well-earned reputation for reliability and credibility – two things that set us apart in much of the world.”

Credibility? 

With who? 

Not the American People you asshole.

You and your cronies have sold us out.

Reliability?  Yes, I can rely on you and Ben and CONgress to fuck me and my kids over for the sake of Wall Street and the 1%.

Two things that set us apart?

Not much that sets the U.S.S.A. apart from China or North Korea anymore.

Mon, 01/14/2013 - 20:04 | 3152591 gnomon
gnomon's picture

Just two or three Executive Orders sets us apart from China, Russia, and North Korea.  All of the EOs are ready to go, waiting for the next "crisis" to drop, (or to be dropped on us).

I never could have imagined in my wildest nightmares how ignoble and debasing the usurpation of Liberty is.

The bitter taste of bile never leaves my mouth these days as Obummer and his minions dance on the grave of what was.

Mon, 01/14/2013 - 20:29 | 3152648 stormsailor
stormsailor's picture

this boggles my mind,  i have the taste of puke on the back of my throat nearly 24/7.  only when i sleep am i not in a state of absolute outrage.  all those old testament prophets said the end of time would be like this, where all that is good will be wiped out, and the righteous (no matter what they believe in) will be persecuted.

 

president pot-head, and the merry band of plunderers in the legislation all backed up by the supine court.   i want god to come back and set things right, and if not then i'll try to do it myself.  (prayer does not seem to be working)

Tue, 01/15/2013 - 05:08 | 3153475 Colonial Intent
Colonial Intent's picture

Gods busy killing innocents, you're mumbling replies to the voices in your head, it will get you locked up if you tell anyone about the voices, dont tell anyone, especially the policemen.

Mon, 01/14/2013 - 19:44 | 3152542 Miss Expectations
Miss Expectations's picture

OT

I just have to share this UPSTREAM of an eagles nest.  I've been watching it all day.  There are 2 chicks.  The father eagle has been bringing fish to the nest today, at least 3.  They've re-arranged the nest with grass for night time...and here's the mom trying to stay awake after a long day.  She is on guard.  She makes me proud of the symbolism of the American eagle.

Have a look:

http://www.ustream.tv/SouthwestFloridaEagleCam

(Oh and F*ck Geithner)

Mon, 01/14/2013 - 19:46 | 3152547 rodocostarica
rodocostarica's picture

Mr. Semi- Honorable Timothy Geithner

Secretary of the Treasury of the great United States of America (lame duck)

January 14th, 2013

Dear timmy,

Thank you for your letter of today regarding your take on the affects of any lack of ability to continue your scam payments for bills that the American public never authorized.

You state: ""The U.S. government makes approximately 80 million separate payments per month.""   

Please simply take this list of 80 million payments and DO NOT PAY the first 5 of these payments and pay the rest. This in and of itself will solve the problem and also ensure that small businesses and others that are not at fault will be whole and not suffer.  

In addition we take umbrage with you having the audacity of quoting former president Ronald Reagan. How dare you,  you fucking wimp piece of shit tax dodging asshole.

So anyway have a nice life at Goldman or wherever your slimeself ends up. . But in the meantime shut the fuck up and let your pal Jack Lew take it from here.

Signed,

Sheeple and informed ZHers.

 

 

Mon, 01/14/2013 - 20:02 | 3152581 yogibear
yogibear's picture

Mr. Semi- Honorable Timothy Geithner

Let me fix that....

'Mr. dishonorable deabeat tax Cheat, Timothy Geithner

The Chinese students even laughed at him.

Mon, 01/14/2013 - 19:49 | 3152557 Stuck on Zero
Stuck on Zero's picture

Important, read this: http://www.washingtonpost.com/wp-dyn/content/article/2011/01/06/AR201101...

Why, it's deja vu all over again.  Same words.  Same people. Different dates.

 

Mon, 01/14/2013 - 19:57 | 3152569 The Heart
The Heart's picture

Good news all!

According to Lindsey Williams and his elitist friends, the economy will not crash for another two years.

He also give lots of warnings.:

http://216.240.133.177/archives32/Hodges/2013/01/Hodges_3_011313_230000.mp3

 

Mon, 01/14/2013 - 20:06 | 3152595 arby63
arby63's picture

Collapse is our best defense for a future of freedom. Bring it!

Mon, 01/14/2013 - 20:23 | 3152628 DarthVaderMentor
DarthVaderMentor's picture

Nixon may have been associated with: "I am not a crook"

but

Obama will be known as the "I am not a deadbeat" President!

 

Mon, 01/14/2013 - 20:24 | 3152631 theprofromdover
theprofromdover's picture

Ahh, the mighty Timbo.

A pygmy clerk, anemic functionary.

You would think that one of his final statements would be courageous, honorable, and concise.

Not a chance. Tim shows his hand once again. Instead of saying there is no money, you have to cancel some of your commitments, Tiny Tim says, There are some people who might not notice if you steal their money. I'll look the other way, as long as you promise -pretty please- to put it back when you print some more money.

What a weasel.

Mon, 01/14/2013 - 20:40 | 3152669 bigkahuna
bigkahuna's picture

Go away jeethner.

Mon, 01/14/2013 - 21:30 | 3152674 Bansters-in-my-...
Bansters-in-my- feces's picture

Dear Timmy

Fuck Off you scummy little Weasel,you make me puke.

 

Ps...sorry to all real weasels.....it's not my fault he looks like yous.

Mon, 01/14/2013 - 21:14 | 3152725 lolmao500
lolmao500's picture

How long before Obama orders the arrest of the republicans for economic terrorism if they do not bow to HIS will??

Tue, 01/15/2013 - 05:05 | 3153473 Colonial Intent
Colonial Intent's picture

Yeah, that muslim, socialist, atheist, forener obama.

He has taken control of all govt officials by use of his mind ray and will send them to arrest people orbe killed by his mind ray.

You had some good comments that i up arrowed and yet all you really are is some repub shrill.

I feel somehow empty and cheated, Kinda like you felt when Karl rove took all yo money....and laughed and laughed all the way to the bank.

 

Tue, 01/15/2013 - 08:29 | 3152728 John Law Lives
John Law Lives's picture

The Bernank reportedly advocates abolishing the Federal Debt Ceiling:

 

http://washingtonexaminer.com/bernanke-get-rid-of-the-debt-ceiling-it-ha...

 

Gee, what a surprise it is that this is what he reportedly believes...

FUBAR.

Mon, 01/14/2013 - 21:24 | 3152739 steelhead23
steelhead23's picture

OK, somebody has to say it - even if it makes me want to puke - Geithner is right.  Look, even if I were to agree that the US should balance its budget NOW (I don't but I'll play along) it is absolutely balmy to attempt to force the issue in the debt ceiling.  It is much like the bad dude the cops have surrounded pointing a gun to his own head and threatening "Stand back, or this motherf****er gets it!"  One thing we the people should take away from this mess is that our government/democracy is broken.  Why in the world did the U.S. Congress enact a budget we cannot afford?  Its politics.  Can't tax folks too much, or the wealthy won't give me campaign contributions and the workers won't vote for me.  Can't cut spending or the beneficiaries won't vote for me or give me campaign contributions.  Here is the deal.  If we wish to continue to live in a democratic country AND have responsible politicians (that is - working for you and me) then we must, MUST get money out of politics.  Until we do, we'll get to watch crazy irresponsible people drive us right over the cliff.

Mon, 01/14/2013 - 21:31 | 3152749 Curt W
Curt W's picture

On a msm site this morning a guy said Obama should raise the ceiling with an executive order, and outlaw guns at the same time.

I said you are bypassing the democratic process, and on the verge of a dictatorship.

He said as long as the democrats were in control he had no problem with a dictatorship.

So many clueless morons in this country, it frightens me.

Tue, 01/15/2013 - 05:01 | 3153471 Colonial Intent
Colonial Intent's picture

On a msm site a decade ago Bush said he could raise the ceiling with an executive order, and install 'free speech zones' at all his press conferences at the same time.

I said you are bypassing the democratic process, and on the verge of a dictatorship.

He said as long as the republicans were in control he had no problem with a dictatorship.

So many clueless morons in this country, it frightens me.

 

New boss, same as the old boss?.

Tue, 01/15/2013 - 05:13 | 3153477 Clowns on Acid
Clowns on Acid's picture

Paid troll much?

Tue, 01/15/2013 - 05:39 | 3153487 Colonial Intent
Colonial Intent's picture

I wish, just pointing out that bush was just as bad as obama, both think the patriot act was a great idea, both are shrills for corp interests, but hey if you think repubs shit stinks less than the dems shit......

Its amazing how many of the ZH/NRA/KKK/White power boys became patriotic dissenters once a negro got put in charge yet you all kept shtumm while Bushy's ran up a deficit and passed the patriot act.

"And so we've called upon Congress to set up what's called the American Dream Down Payment Fund, which will provide (taxpayer funded) financial grants to local governments to help first-time home buyers who qualify (self certify) to make the down payment on their home."

http://www.youtube.com/watch?v=kNqQx7sjoS8

Tue, 01/15/2013 - 12:10 | 3154173 AynRandFan
AynRandFan's picture

How about a link to that Bush quote about raising the debt ceiling by executive order?

Mon, 01/14/2013 - 21:34 | 3152752 Michelle
Michelle's picture

Everything seems to hinge as an emergency, that everything is urgent, from gun control reform to immigration reform to the fiscal cliff to the upcoming debt ceiling debacle...enough already! Why are we even allowing these numbskulls to make everything urgent? Knee-jerk reaction policy always ends up with bad policy and numerous revisions. Create the illusion of urgency, or should I say, high pressure salesmanship (CALL NOW BEFORE THE OFFER EXPIRES!) BS.

Mon, 01/14/2013 - 21:36 | 3152758 Sizzurp
Sizzurp's picture

Timmy has one foot out the door.  He's ready to jump ship over to Citi, JPM or the Squid.  A default now would certainly spoil his plans. Not to mention, his skills in the world of irredemable fiat currency would be religated worthless.  Nope Bennie and Timmy work for the banks, and they want to be paid now and forever.  I say screw it, lets default now and get it over with.  We can make a settlement with our foreign creditors, stiff the banks and move on with monetary reform.  None of this will happen without a crisis, so lets give them a good one.  If Timmy and Bennie don't like it, it must be good.

Mon, 01/14/2013 - 22:19 | 3152910 bugs_
bugs_'s picture

"Brief Default" the new scent from Estados Unidos

one whiff and he will be on his knees like a Treasury Secretary begging for TARP

Tue, 01/15/2013 - 12:08 | 3154167 AynRandFan
AynRandFan's picture

Progressives don't beg, they demand.

Mon, 01/14/2013 - 23:46 | 3153132 SmoothCoolSmoke
SmoothCoolSmoke's picture

What a joke the right wing (nuts) are on the DC.  Reagan (their god) and Dubya raised the DC 26 times (26!) between them,  and the Republicans supported it EVERY SINGLE TIME.

Now of course.......they're mortified.

Too funny.

Tue, 01/15/2013 - 04:55 | 3153470 Colonial Intent
Colonial Intent's picture

This time its different, there's a negro in the white house.

Tue, 01/15/2013 - 12:06 | 3154163 AynRandFan
AynRandFan's picture

Yup, funny too that Obammy voted "no".

Tue, 01/15/2013 - 02:16 | 3153376 Barbaric relic
Barbaric relic's picture

Isn't the treasury secretary liable for the debts of the federal gov't on a personal basis in the event of default according to the constitution,  In return he is liable to no taxes on his income while treasury secretary -- if you go back to the early history of the republic, typically the richest men in the country were the only candidates for treasury secretary.  Paulson reputedly saved many millions in taxes due to this archaic loophole that suppoasedly still benefits the TS.  Could Timmy be liable to lose his entire fortune if default occurs?  Is that why he seems so desperate to get the Republicans to up the limits and avoid default? 

Tue, 01/15/2013 - 04:44 | 3153465 billsbest
billsbest's picture

If Republicans are posting themselves as stalwarts to roll back spending in bills sent to Obama for his signature, why haven't they defunded America's wars on foreign nations while eliminating funding of all forms of taxpayer foreign aid?

Tue, 01/15/2013 - 04:55 | 3153467 Colonial Intent
Colonial Intent's picture

Repubs only know how to start wars, they havent got a clue how to pay for them.

Tue, 01/15/2013 - 09:28 | 3153708 Vooter
Vooter's picture

Wow, Timmy sure seems...SCARED. Why is that? It almost sounds as though Timmy's saying that the entire U.S. financial system is really just a gigantic house of cards that could be brought down by the slightest hint of a breeze--surely that can't be the case, now, can it, Tim? Such a "creditworthy" and "reliable" government and financial system can't REALLY be in such incredibly fragile condition, now, can they? LOL...

Tue, 01/15/2013 - 13:27 | 3154421 Nels
Nels's picture

Congress has approved what expenditures?  There hasn't been a budget in quite a while.

Tue, 01/15/2013 - 18:08 | 3155625 loveyajimbo
loveyajimbo's picture

You believe the Sandy stories???

 

http://www.youtube.com/watch?v=eKDT7XwgMMo&sns=em

Do NOT follow this link or you will be banned from the site!