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Posted at 12:37 PM ET, 02/ 4/2011

Geithner on GOP debt proposal: 'Harmful' and 'unworkable'

By Ariana Eunjung Cha

U.S. Treasury Secretary Timothy Geithner called the Republican debt plan not only "unworkable" but "harmful."

In a letter to Sen. Pat Toomey (R-Pa.) on Feb. 3, Geithner said a proposal to prioritize paying interest on the national debt is not reasonable, likening it to a homeowner paying his mortgage but not his utility bills.

"Although the mortgage would be paid, the damage to that homeowner's creditworthiness would be severe," he said, according to a Dow Jones report.

He said that Treasury officials said the plan "would not achieve your stated objective of improving U.S. creditworthiness."

Republicans have been calling for an immediate and unprecedented reduction in non-defense programs that could take more than $100 billion out of the economy over the next few months, casting their proposal as the best course for a full economic recovery. The Obama administration has not gone that far, instead calling for a five-year freeze in domestic spending, except for "investments" in education, infrastructure and research.

By Ariana Eunjung Cha  | February 4, 2011; 12:37 PM ET
Categories:  U.S. Treasury  
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Next: Economic agenda: Monday, Feb. 7, 2011


"Investments"... Just another word for more spending. Does Obama think we're stupid?

Posted by: Anonymous | February 4, 2011 2:53 PM | Report abuse

If I handled my finances the way Washington handles our country's finances, I'd be arrested and thrown in jail. No creditor in their right mind would continue to give me credit limit increases over and over again. Trying to compare Washington's creditworthiness to an average homeowners creditworthiness is laughable! WE aren't playing by the same set of rules! Mr. Geithner needs to wake up and smell the bankruptcy! Obama's business as usual didn't work before and isn't going to work now. "Investments"? Who is he trying to fool? That's just fancy way of saying more spending, with absolutely NO PLAN for paying it back. I don't get to live my life that way, and neither should Washington. NO MORE NEW SPENDING. Come on, use your head!

Posted by: MaryW331 | February 4, 2011 3:24 PM | Report abuse

Freezing spending after you have raised it 20% will accomplish nothing positive Cut it back to where the governement can only spend less than 20% of our GDP and we may be able to save some semblance of sanity for our children and grandchildren.

Posted by: Anonymous | February 4, 2011 4:30 PM | Report abuse

Refinancing means taking out a new mortgage with a lower interest rate to pay off your existing mortgage, search online for 123 Mortgage Refinance I got 2.831% rate on refinance!

Posted by: evayard | February 5, 2011 3:23 AM | Report abuse

Pat Toomey is not qualified to address economic issues confronting America. He helped to cause the problems that we face today.

In 1999 Congressman Toxic Toomey advocated for S-900, the Gramm-Leach-Bliley Financial Services Modernization Act, that created 'too big to fail' banks and licensed those banks to expend their use of "toxic derivatives" that have caused the long term destruction of American consumer wealth by stealing the values of American home-ownership.

Toomey on the floor of the House on Nov. 4, 1999 promoting repeal of Glass-Steagall and expansion of derivatives.

"The repeal of Glass-Steagall is necessary so that consumers can get the products and services they desire and American financial firms can compete in the global marketplace.

Madam Speaker, I would like to highlight just one small part of this sweeping legislation.

I am particularly pleased that this bill includes an important provision regarding certain derivative transactions, especially credit and equity swaps. These somewhat obscure products are actually very important tools used by businesses, including financial service firms, to manage a variety of risks that they face. This bill reaffirms that swap contracts are legitimate bank products that can be executed and booked in banks and are adequately regulated by and will continue to be regulated by banking supervisors."

Thanks to Toomey's toxic derivatives it will be years before Americans trust the financial system enough to invest in homes because they know that new toxic derivatives can still be written to once again steal the invested value of American home ownership. And they know that Toomey is in the senate to protect the banks that have already done so much damage to the American dream.

Way to destroy America Toxic Toomey!

Posted by: Anonymous | February 10, 2011 3:28 PM | Report abuse

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