Geithner confident Congress to raise debt limit

A last-minute deal last month between the White House and Republicans avoided a government shut down on a budget running through September. But Republicans are seeking additional savings in the budget for next year, and say that unless they get them, they won't support raising the debt ceiling.

In an interview with The Associated Press on Friday, Obama predicted that Congress would raise the debt ceiling, but he acknowledged that he would have to offer more spending cuts in the budget to get a deal. Later, Obama's spokesman said a debt ceiling vote could not be contingent on upcoming negotiations over the budget.

If the debt ceiling is not raised, Obama told the AP that it would undermine the solvency of the government, roil financial markets and potentially “plunge the world economy back into a recession.”

Former Federal Reserve Chairman Alan Greenspan said the country's financial crisis is “so imminent and so difficult that I think we have to allow the so-called Bush tax cuts all to expire.”

The House budget blueprint would extend those tax cuts at all income levels.

“I think that what we have to become aware of is that if we allow taxes to fill in the holes here, we are going to find that we are getting ever closer to the type of economies that exist in Europe, which are very heavily laden and not rapidly growing the ways ours can,” Greenspan said on NBC.

Assessing the current economic state, he said “there's a lot of headwinds that are hitting the economy now and slowing it down, and we are in a soft patch.”

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