Ben Bernanke, Chairman of the Federal Reserve (L) and US Treasury Secretary, Timothy Geithner prepare for the start of talks at the G7 Finance Ministers Meeting in Iqaluit, Nunavut, Canada, February 6, 2010. AFP PHOTO/GEOFF ROBINS/STR

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Asked by ABC television if investors would begin to snub US Treasury bonds, Geithner retorted that "that will never happen to this country."

"If you step back and look at what has happened throughout this crisis, when people were most worried about the stability of the world, they still found safety in Treasuries and the dollar," he said.

"That is a very, very important sign of basic confidence in our capacity as a country to work together to fix these problems."

Geithner said the Obama administration would take measures to reduce the country's deficit, projected in the current 2010 fiscal year budget to hit a record 1.556 trillion dollars.

And he vowed the administration would seek to bring down the deficit to below 4.0 percent of the gross national product within four years.

He was speaking after Moody's Investors Service said the United States needed to take tough action to get its finances in order to avert problems in the coming years that would "pressure" its top credit rating.

The financial rating firm said President Barack Obama's proposed budget last week "was a small start to the big task of returning to a sustainable debt trajectory, but further measures will be necessary if that task is to be accomplished."

Moody's said the government is "constrained for the time being by the high unemployment rate" and that "a big fiscal adjustment right now would be politically difficult and could slow the economic recovery."

But Hess noted that "the debt trajectory is clearly continuously upward if further measures are not implemented."

But total US debt is on track to hit the current debt ceiling of 12.4 trillion dollars by the end of February, the Treasury has said.

The White House has predicted that US debt levels will reach 77 percent of GDP by 2020, compared to 64 percent at the current budget.

Debt repayments will also double to 17.8 percent compared to 8.7 percent, which would be equivalent to the levels seen in the 1980s.

chr/jkb/mk

© 1994-2009 Agence France-Presse

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