Politicians on Capitol Hill understand the problems facing the country on the deficit and will find a way to deal with cutting it, according to Treasury Secretary Tim Geithner.
In a CNBC interview following S&P’s decision to lower its outlook on US debt, Geithner said there is broad consensus on cutting the deficit and the challenge now is to lock in an agreement on how to achieve it.
“If you listen carefully people are saying the necessary thing which is the right thing for the economy now (which) is to put in place reforms that put these deficits on the right path,” he said.
“We disagree on how to do that and we are not going to resolve on those disagreements in the next few months, but what we can do is lock in some clear targets for deficit reductions with a credible enforcement mechanism that will force Washington to live within its means,” he said.
Geithner said investors around the world need to understand that the US can gets its house in order without hitting the middle-class and seniors.
“We have a younger country, which is important, and the size of our commitments to our citizens are much lower than other major economies,” he said.
The debt ceiling will not be rejected by Congress, according to Geithner, who believes that Capitol Hill can put in place medium-term, multi-year fiscal targets that will see the debt burden drop.
“For that to work you have to do it in a way that will boost future growth prospects," he said.