On Sunday shows, Treasury secretary warns of default

Posted by Anita Kumar on October 6, 2013 

Treasury Secretary Jack Lew looks on during a event in the State Dining Room of the White House June 10, 2013 in Washington, D.C.


Treasury Secretary Jack Lew appeared on five major talk shows Sunday morning to try to press House Republicans on the next fiscal debate -- raising the debt ceiling before an Oct. 17 deadline when the nation is expected to exhaust its borrowing authority.

"It would be like somebody saying I ran up my credit card and I decided not to pay it. You can't do that," Lew said on CNN's State of the Union. "The United States is just too important to the world. Our currency is the world's reserve currency."

If Congress fails to act before mid-October, the United States government would default for the first time in history.

After Oct. 17, the government would be left with about $30 billion -- an amount Lew says "won't last long."

CNN's Candy Crowley repeatedly asked Lew what wold happen on the 18th.

"I can't tell you," he said. "We've never gotten to this point. We've never gotten to the point where the United States government has operated without the ability to borrow. It's very dangerous. It's reckless, because the reality is, there are no good choices if we run out of borrowing capacity and we run out of cash."

Lew reiterated that President Barack Obama does not have the authority to raise the debt ceiling -- eve though some Democratic lawmakers have called for him to act unilaterally.

"There is a desire here for there to be some kind of a magic solution," he said on CNN. "There is an easy solution. A majority in Congress would do the right thing if given a chance to vote to open the government. A majority in Congress would do the right thing if given a chance to let us pay our bills. Congress needs to work, they need to do their job, but the majority needs to be given a chance."

Last week, Lew released a six-page report on the dangers of default, part of a campaign to pressure House Republicans to vote to raise the debt ceiling before the Oct. 17 deadline.

"The United States has never defaulted on its obligations, and the U S. dollar and Treasury securities are at the center of the international financial system," according to the report. "A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse."

The report says that even the possibility of a default could roil financial markets and damage the economy with sharp declines in household wealth, increases in the cost of financing for businesses and households and a fall in private-sector confidence. It says that if the government shutdown drags on, it could make the U.S. economy even more susceptible to the adverse effects from a debt ceiling impasse than it was prior to the shutdown.

In 2011, according to the senior Treasury officials, just the possibility of potential default led to substantial effects on the U.S. economy.

On FOX News Sunday with Chris Wallace, Lew said the government shutdown, now in its sixth day, was causing "real damage to the American people."

The partial shutdown of the federal government for the first time in nearly two decades has furloughed 800,000 employees, shuttered monuments and parks and cut off some services.

"They need to do their job,'" Lew said on FOX. "They need to open the government."

Lew said Obama wants to negotiate with House Republicans, but reiterated what the president has said all week -- that he will not do that until after they re-open the government at current spending levels. "The president wants to negotiate," he said.

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