Published August 06, 2011
Standard & Poor’s decision late Friday to lower the nation’s credit rating to AA-plus is an embarrassment for Geithner who insisted in April that there was no possibility that the U.S. debt would be downgraded despite a warning from the credit agency.
“No risk,” Geithner told Fox Business at the time. When asked whether S&P was wrong and that the U.S. would keep its top credit rating, Geithner said, “Absolutely”
But Geithner changed his tune on Tuesday after Washington reached a last-minute deal to extend the nation’s $14.3 trillion debt limit in exchange for more than $2 trillion in federal spending cuts. S&P, one of the world’s three major credit agencies, said at least $4 trillion of federal spending needed to be slashed.
Geithner told ABC News that he wasn’t sure whether the deal was enough to avoid a downgrade.
“It’s not my judgment to make and they have to make that judgment,” he said. He added, “This is in some ways a judgment on the capacity of Congress to act and what this deal does is put us in a much better position to make those tough choices.”
Sen. Jim DeMint, R-S.C. said the president should “demand” that Geithner resign “and immediately replace him with someone who will help Washington focus on balancing our budget and allowing the private sector to create jobs.”
“For months he opposed all efforts to reduce the debt in return for a debt ceiling increase,” DeMint said. “His opposition to serious spending and debt reforms has been reckless and now the American people will pay the price.”
Sen. Rand Paul, R-Ky., said Geithner should go due to his "gross mismanagement of federal economic policy" as president of the New York Federal Reserve and secretary of the Treasury Department, citing his "direct role in the failure of the Fed to diagnose and act on the housing crisis."
"He presided over bank bailouts, auto bailouts and failed trillion-dollar stimulus plans," he said. "Last year, he announced to the American people 'welcome to the recovery,' when in fact our economic crisis has continued. He has contributed not only to the first-ever debt downgrade, but is on record as clearly disputing it could ever happen."
Rep. Marsha Blackburn, R-Tenn., said the Obama administration “must get on board with Republican efforts to cut up the credit cards and put our economy back on the path to prosperity.”
“The first step necessary in this process is for Treasury Secretary Tim Geithner to resign immediately,” she said. “It’s time for new fiscal leadership in Washington.”
Geithner has faced calls to resign before. Republican lawmakers wanted him to leave in 2009 for what they deemed as a poor response to the deep recession following the 2008 financial crisis. He faced more calls last year amid a congressional investigation into the AIG bailout for decisions he made in his previous position as head of the New York Federal Reserve that may have led to banks getting billions more than necessary.
But this time Geithner might not mind the resignation calls so much since he’s been trying to leave in recent weeks.
Geithner, who’s been with the Obama administration from the beginning, told the White House earlier this summer that he was considering resigning after the debt crisis was resolved so he could join his family in moving to New York. But Obama and senior aides have been urging Geithner to stay until the end of the president’s term next year for continuity’s sake. Geithner has yet to make a final decision.
The White House on Saturday blamed the bruising months-long battle in Congress to raise the debt ceiling for the downgrade. But administration officials also dispute the S&P analysis, saying it overstated U.S. debt by $2 trillion.
“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesman said.