Obama aide says premature to say if U.S. will prioritize debt

Reuters News
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Posted: Jul 28, 2011 5:34 PM
Obama aide says premature to say if U.S. will prioritize debt

WASHINGTON (Reuters) - Senior White House adviser Valerie Jarrett said it was too early to say if the government would prioritize debt payments if Congress cannot meet an August 2 deadline to lift the debt limit.

Jarrett told Reuters Insider that Treasury Secretary Timothy Geithner was studying the options and would disclose his plans closer to August 2.

"It's premature," she said. "I know that he's going through an analysis now with his team. As it gets closer to the date, he will announce what he will be doing. But let's hope it never comes to that because it's an untenable position to be in," she said.

Jarrett said that the Treasury secretary would face very difficult decisions if the deadline is not met.

"Do we say to our servicemen and women serving abroad that we're not going to pay them and support their families? Do we say to the 70 million, 80 million people who receive Social Security that we're not going to pay them?" she said. "Or small businesses who are vendors of the United States government?"

Jarrett and White House chief of staff have been in close contact over the past several days with business people to keep them informed of the state of play in the debt negotiations.

"Today they are very nervous. My phone was ringing off the hook all day long," Jarrett said, adding that she had to cancel several meetings to field some of the calls.

(Writing by Caren Bohan; Editing by Anthony Boadle)