Geithner warns Boehner not to play with next deal to increase the debt ceiling

Geithner warns Boehner not to play with next deal to increase the debt ceiling

Treasury Secretary Timothy Geithner on Tuesday warned Speaker John BoehnerJohn BoehnerNunes rebuffs calls for recusal Wounded Ryan faces new battle Bottom Line MORE (R-Ohio) against playing with the U.S. debt ceiling.

“This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment that you can never call into question or violate,” Geithner said Tuesday in an address to the Peterson Foundation. 

Geithner's comments were a reaction to remarks BoehnerJohn BoehnerNunes rebuffs calls for recusal Wounded Ryan faces new battle Bottom Line MORE is scheduled to deliver later on Tuesday to the same group. 

Boehner will say that the debt ceiling, set to be breached early next year, should not be raised unless greater spending cuts and reforms are enacted, according to prepared remarks released by the Speaker's office.

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“When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt-limit increase. This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance,” Boehner will tell the Peter G. Peterson Foundation's 2012 fiscal summit.

“Just so we’re clear, I’m talking about real cuts and reforms — not these tricks and gimmicks that have given Washington a pass on grappling with its spending problem," he will add.

Geithner warned Boehner should not put into doubt that the United States will raise the debt ceiling.

“You can’t put that into question, you can’t put that into doubt, you can’t threaten to put that into service … of the partisan political agenda of any side of the American political spectrum. It is not responsible to do that,” Geithner said.

Boehner's demand that the debt-ceiling increase be offset by spending cuts led to a standoff with the White House on the debt ceiling last year. Although the standoff was resolved, the wrangling led to a first-ever downgrade of the U.S. bond rating by Standard & Poor’s. A compromise solution created a supercommittee to find more cuts, but that panel failed to yield deeper spending cuts and has been a disappointment to conservatives.

S&P urged lawmakers to find a long-term fiscal solution, which Boehner said he is seeking. The ratings company also said the fighting indicated the political system might be unable to handle the task. The GOP argues that U.S. credit rating is ultimately about reducing the debt and the debt ceiling is the best tool to fix it. 

Asked about Boehner's speech on Tuesday, White House press secretary Jay Carney said he wanted to avoid a repeat of last summer's standoff and that "we must avoid a similar charade this year.

"We cannot hold to one party's political agenda," he said.

"We can't engage in the kind of political brinksmanship Republicans engaged in last year," he said, adding that it "wouldn't be good for our economy.

Instead, Carney urged Congress to pass Obama's "to-do" list, which will have a "tangible direct effect" on the economy.

"Congress needs to do that and not start talking about playing political brinksmanship again," he said.

Carney said Obama would be meeting with congressional leaders about the economy on Wednesday at the White House.

In his speech, Geithner sought to blame Congress for the fallout from the debt-ceiling debacle, which was followed by steep declines in equity markets.

“We hope they do it without the drama and the pain and the damage they caused the country last July,” he said.

The end of the 2013 will see automatic tax increases and spending cuts triggered by the failure of the supercommittee as well as the need to raise the debt ceiling.

Geithner said that the prospect of reaching this fiscal cliff is having an effect on the economy.

“We're close enough now for this to matter a lot,” he said.

Geithner once again called for a mix of tax increases through tax reform and spending cuts to address the fiscal challenge.

He said, perhaps more plainly than before, that the end result will resemble the results of the Obama deficit commission, headed by Alan Simpson and Erskine Bowles, which Obama failed to embrace last year.

“I think it is very likely that this debate will end on terms very similar,” he said.

He said Obama was not comfortable with the defense cuts or Social Security cuts in the Simpson-Bowles plan, but that broadly, Obama’s ideas are closer to that plan than the ideas of the GOP.

Geithner said that the U.S. economy is gradually improving, but that Congress needs to pass a five-point stimulus plan being pushed by Obama to better weather external shocks such as the European debt crisis. 

— This story was posted at 9:46 a.m. and last updated at 1:18 p.m.

Amie Parnes contributed to this story.