Treasury Secretary Jacob J. Lew warned Congress against waiting to increase the debt ceiling and said the administration wouldn’t accept an agreement that defunds or delays President Barack Obama’s health-care law.
“Trying to time a debt-limit increase to the last minute could be very dangerous,” Lew said today a speech to the Economic Club of Washington D.C. “If Congress does not act and the U.S. suddenly cannot pay its bills, the repercussions could be serious.”
Lew told Congress last month in a letter that lawmakers need to raise the $16.7 trillion debt ceiling by the middle of October, when he expects that the Treasury Department will have about $50 billion left to fund the government.
Lew said the idea of “prioritization,” paying some bills and not others, was “unworkable.”
“We should never be put in a position where we have to pick which commitments our nation should meet,” Lew said. “How can the United States choose whether to send Social Security checks to seniors or pay benefits to our veterans?”
With two weeks left before government funding expires at the end of this month, congressional Republicans are setting up a confrontation with Obama over a provision in the health-care law that allows individuals to sign up for insurance exchanges starting Oct. 1.
Lew, 58, declined to discuss Obama’s decision-making process on choosing a successor to Federal Reserve Chairman Ben S. Bernanke.
“I have kept my advice on the Fed where it belongs, in the Oval Office,” Lew said in response to a question after his prepared remarks.
Janet Yellen is overwhelmingly seen as likely to be nominated as Fed chairman, according to a Bloomberg survey of economists.
Fifty-six of 65 economists in the survey, or 86 percent, said Obama is likely to pick Yellen, the Fed’s vice chairman. The survey was taken yesterday and today, after former Treasury Secretary Lawrence Summers withdrew from contention. A Sept. 6 poll showed that 49 percent of economists expected Summers to be Obama’s pick, compared with 38 percent for Yellen.
In his remarks, which focused on the debt limit, Lew said lawmakers are “misguided” if they think they can “keep us from failing to pay our nation’s bills by simply raising the debt ceiling right before the moment our cash balance is depleted.” It’s impossible for the Treasury to know “with precision when that moment will be because outgoing payments and incoming receipts vary significantly each day,” he said.
Lew said Obama won’t negotiate over the debt ceiling, though “the president is willing to negotiate over the future direction of fiscal policy.” Congress should work with Obama “to replace the senseless across-the-board spending cuts known as sequestration with balanced policies that reduce the deficit and strengthen our economy,” he said.
Lew also reiterated that he has told financial regulators that the “major components” of the Dodd-Frank financial overhaul law, including the Volcker rule ban on proprietary trading, must be completed by the end of the year.