WASHINGTON (AP) -- Treasury Secretary Tim Geithner predicted Thursday that the White House and Congress will avert a debt crisis, as a leading credit rating agency warned that a partisan impasse could cost the U.S. its sterling creditworthy status.
"I'm confident two things are going to happen this summer," Geithner told reporters after meeting with House freshmen from both parties. "One is we're going to avoid a default crisis, and we're going to reach agreement on our long term fiscal plan."
His optimism was a mystery to many of the 87 Republican freshmen who rode a populist wave to Congress last fall on a promise of smaller, more austere government. Some theorized that Geithner could not afford to say anything else.
"That's what he went in there wanting to come out with," said Rep. Jeff Landry, R-La., who attended the session. "They dream it, so they believe it."
GOP leaders are demanding that President Barack Obama agree to steep spending cuts in return for raising the government's debt ceiling, and there appeared no end to the partisan standoff by the time Geithner left the private meeting.
The government has reached its $14.3 trillion borrowing limit. Geithner has said Congress must extend the cap by Aug. 2 or there could be a first-ever federal default on its obligations.
Freshman Republicans emerging form the meeting said they told Geithner they want Obama to present a specific plan for curbing the government's debt.
Rep. Mo Brooks, R-Ala., left the basement conference room with a shrug.
"Not enlightening," Brooks told reporters. Still, he and others said they were surprised that Geithner firmly reiterated that income should be generated by tax increases on the wealthy.
"He said that taxes were something that needed to be raised" on wealthy Americans, said Rep. Mo Brooks, R-Ala. During the question-and-answer period, he said, Republicans made clear "that tax increases were not an option that our group would consider."
Michigan Rep. Hansen Clarke, one of only 10 Democrats in the freshman class, said Geithner earned some goodwill by acknowledging that the nation borrows too much money.
"They were applauding him for accepting that," Clarke said.
Geithner's meeting with the freshmen, which lasted just under an hour, played out against dark warnings about the nation's fiscal health as it struggles to recover from recession.
The urgency was underscored Thursday as Moody's Investor Service said the government could lose its top-flight credit rating if Congress and the Obama administration don't agree to raise the limit and reduce deficits over the longer term.
Republicans are insisting on spending cuts topping $1 trillion as the price for their vote to increase the debt ceiling.
Earlier Thursday, House Democrats emerged from a meeting with Obama sounding as if they were at loggerheads with the GOP over how to reduce the deficit as the deadline for U.S. creditworthiness approaches.
Democratic leaders talking to reporters outside the White House emphasized the need for new revenues as part of any deficit-cutting deal, which generally means new taxes or fees adamantly opposed by Republicans.
They bashed GOP plans to remake Medicare and simultaneously insisted that compromise would be reached and acknowledged that the hardest work remains to be done.
"This is a thousand-mile journey that we're on here, and we are taking some first steps," Rep. James Clyburn, D-S.C., said.
"It has to be clear: We're not going to default," House Minority Leader Nancy Pelosi, D-Calif., said.
Negotiations on finding spending cuts to meet Republican demands are being led by Vice President Joe Biden, and Democratic leaders involved in the talks said there has been progress. Areas such as farm subsidies and federal pensions have been targeted for cuts. The Biden group next meets June 9.
The White House on Thursday pushed back against calls from Republicans for Obama to show more leadership on the deficit and offer more specifics.
"We are at a point now where we don't need new plans," said presidential spokesman Jay Carney, arguing that Obama has already offered one. "We need to find common ground around the shared goal of significant deficit reduction."
Obama's plan for reducing the deficit by $4 trillion over 12 years relies half on spending cuts but also eliminates tax breaks and loopholes, whereas Republicans say tax increases are off the table and also contend Obama's plan lacks specifics. The argument has been particularly fierce around Medicare, the giant health insurance program for Americans 65 and older. Democrats are gaining politically from public opposition to a GOP proposal to send future beneficiaries shopping for health insurance in the private market.
Republicans contend that they at least have a plan for Medicare. Republicans dismiss as insufficient Obama's proposals aimed at paring back the program, which include empowering an independent board to recommend policies to reduce the growth of Medicare spending.
Associated Press writer Erica Werner contributed to this report.