Geithner sees progress on agreement to cut deficits

Treasury Secretary Timothy F Geithner said he’s confident US political leaders will bridge their differences and move toward a long-term plan to narrow record budget deficits and reduce the debt.

“We have an opportunity now over the next two months to make some real progress,” Geithner said in an interview on Bloomberg Television today. “What we agree on is putting in place strong targets for savings, deficit reduction over a specific time frame with enforceable limits,” he said.

Geithner also said he “absolutely” didn’t have to reassure overseas buyers of US debt after Standard & Poor’s lowered the outlook on the nation’s AAA rating to “negative” yesterday. President Barack Obama today begins a tour promoting his proposal to cut long-term budget deficits as Democrats and Republicans use the S&P decision to bolster their competing arguments on the best way to reduce deficits.

The yield on the benchmark 10-year Treasury note was little changed at 3.37 per cent at 10:26 am in New York today. The yield is down from 3.80 per cent a year ago and below the average of 5.21 per cent over the last two decades, even with the US projected to post a deficit in excess of $1 trillion for a third consecutive year.

“There’s a lot of confidence in the capacity of this economy to grow, to make sure that we can meet our commitments or obligations,” Geithner said. “You can see that in the price at which we borrow every day.” In a separate interview with Fox Business Network today, he said the US will “absolutely” keep its AAA credit rating.

Top Rating
S&P said the government risks losing its top rating unless policy makers agree on a plan by 2013 to reduce deficits and the national debt. The company maintained the rating on US long- term debt while lowering its outlook for the first time.

Geithner also said today that so-called entitlement programs “have to be” part of the discussion on deficit reduction.

“The only way to do this in a way that’s responsible is to do a balanced, comprehensive package,” he said.

The administration and Congress need to work together in coming months to agree on a framework for cutting deficits, he said.