Treasury Secretary Lew Refuses to Assure the Markets on Debt Ceiling; Punts Decision to the President
October 10, 2013 - 10:16 am
Treasury Secretary Jack Lew and Sen. Pat Toomey (R- PA) got into a heated exchange today during testimony regarding the debt ceiling. Toomey asked Lew to assure “the millions of Americans who are investors in U.S. Treasury securities and the entire American economy, that under no circumstances will you permit a missed payment on a U.S. Treasury securities obligation?”
Lew responded: “Senator, the only way to make sure we pay all of our obligation is for Congress to act and raise the debt limit. No president has ever had to decide whether to pay some bills and not others –“
Toomey said that Lew had answered a “different question,” prompting Lew to fail to clarify what his boss, President Obama, would do if Congress declines the raise the debt ceiling by October 17.
“The law is complicated and I am not the one who makes that decision as you know,” Lew said. “I think — it’s not my decision. It is something that the president would have to decide. And I’m telling you that it would be, put us into default if we went to a place where we could pay one bill and not others. What would you say to people on Social Security?”
As things stand, the government takes in enough to pay both the interest on the nation’s debt and make Social Security payments even if the debt ceiling is not raised. Social Security is supposed to make its payments out of fund that working Americans pay into during their working lives, but Washington has repeatedly raided those funds for decades.
Toomey replied to Lew, acknowledging that declining to raise the debt limit would be “very disruptive,” before asking “So are you telling me that the president would decide to ensure that we would not miss a payment on Treasury securities?”
Lew refused to offer any assurances, and prodded Congress to “do its job and act.”
Toomey replied, “I certainly hope that the president will work with us so that we can avoid this but, frankly, I’m shocked that the secretary of the Treasury will not assure the financial markets, American investors, and savers and millions of people who hold Treasuries that they don’t have to worry about the security of the Treasuries. I’m extremely disappointed.”
Lew has been a sharply partisan, and dishonest, defender of Obama in the past. Jonathan Tobin wrote in February about Lew’s 2010 testimony defending President Obama’s budget proposal that year, a proposal that Obama claimed would not add to the deficit even as he offered a laundry list of new spending proposals.
A new poll by Rasmussen shows that a majority of Americans do not want the debt ceiling raised without “major spending cuts” as part of the deal. President Obama, however, is demanding a debt ceiling hike without negotiations and with no strings attached. He took a diametrically opposite stance as a senator in 2006, when he spoke forcefully that raising the debt ceiling was a “failure of leadership.”
During the current round of budget talks, the president has repeatedly made comments designed to rattle the markets, as a tactic to put pressure on Republicans to give him everything that he wants.
Watch video of Lew’s exchange with Toomey here.