Reid Says Debt Limit Not Urgent After Lew Seeks ActionKathleen Hunter and Richard Rubin
Senate Majority Leader Harry Reid said it’s “not urgent” for Congress to raise the debt limit, though an aide later said Reid is committed to boosting the ceiling well before the U.S. runs out of borrowing authority.
Reid’s initial statement today came just hours after U.S. Treasury Secretary Jacob J. Lew said Congress should act as soon as possible. Lew said the government will run out of so-called extraordinary measures used to stay under the limit as early as the end of February.
Reid, who controls the Senate floor agenda, told reporters at the Capitol that he didn’t expect Congress to vote on a debt-ceiling increase until April or May.
“We keep getting different numbers on that, but we think sometime in May,” said Reid, a Nevada Democrat. “Maybe it’s April, I don’t know, but we’ll deal with it.”
Adam Jentleson, a spokesman for Reid, said in a later telephone interview that the majority leader wasn’t referring to specific guidance he’d received from the White House or Treasury Department. Jentleson said Reid was committed to taking up a debt limit increase before extraordinary measures run out.
Lew said earlier in the day that Congress’s failure to act quickly enough causes damage.
“We get into a kind of Washington parlor sport of trying to figure out the precise moment when is the last minute” to raise or suspend the debt limit, he said today at an event in Washington hosted by the Council on Foreign Relations.
The Congressional Budget Office said in November that there was a chance the extraordinary measures could last until May or June because of receipts that come in when individual tax returns are due April 15.
Lew has resisted that notion and said today that if Congress wants to wait, it should do so until late February rather than March.
The Obama administration and Congress may be headed toward another face-off on the debt ceiling, following showdowns in 2011 and 2013 that took the country to the brink of not being able to pay all its obligations.
The last debate ended Oct. 17, the day Lew had said the U.S. would exhaust its borrowing authority. President Barack Obama signed legislation to suspend the limit until Feb. 7 and end a 16-day partial government shutdown.
Reid reiterated Democrats’ previous position, that he and Obama won’t negotiate on any policy changes as a condition of raising the limit.
The February deadline is a “key date” for the nation’s AAA credit rating, Fitch Ratings said this week. Republicans have yet to determine what they want in exchange for agreeing to raise the limit.
House Speaker John Boehner said today he didn’t yet have a deadline for action on the debt limit.
“All I know is that we should not default on our debt -- we shouldn’t even get close to it,” the Ohio Republican told reporters. “And I would hope that the House and the Senate would act quickly on a bill to increase the debt limit. What that vehicle is and how it’s going to be unveiled, we’ll find out soon enough.”
The U.S.’s shrinking budget deficit is a positive factor for the nation’s credit rating, according to Moody’s Investors Service. A shortfall that’s falling more quickly than the government expected is “a credit positive development,” Steven Hess, Moody’s New York-based lead sovereign analyst for the U.S., wrote today in a report.
Lew said the U.S. is starting the year with economic “tailwinds,” while there’s “more to do” to maintain growth.
“The trend of economic statistics, job statistics, confidence, has been strong, it’s been strong across sectors, and there is potential for more growth in a number of key areas,” he said.
Lew also urged Congress to pass an extension of unemployment benefits. December’s slowdown in job growth doesn’t signal a fundamental change in the direction of the economy, he said. Employment rose in December at the slowest pace in almost three years, in part because bad weather blanketed the U.S.
The Federal Reserve yesterday said “moderate” growth across most of the country last month was buoyed by gains in holiday spending by consumers, an improving labor market and strength in manufacturing.
Retail sales increased more than forecast in December, Commerce Department figures showed this week. Excluding a drop in auto demand that vehicle makers partly attributed to bad weather, sales jumped by the most in almost a year.
Consumers are getting a boost from the stock market. The Standard & Poor’s 500 Index climbed 30 percent last year for its best advance since 1997.
Stocks fell today, with the S&P 500 dropping from a record, as corporate earnings disappointed investors. The S&P 500 lost 0.2 percent to 1,845.37 at 1:25 p.m. in New York.
Lew said the budget accord has removed some of the fiscal drag holding back the economy. The House yesterday passed a $1.1 trillion bipartisan spending bill to fund the government through Sept. 30, a turnaround from the Tea Party-fueled discord that caused the partial government shutdown in October. The Senate is considering the measure today with the goal of sending it to Obama as soon as possible.
The measure didn’t include a proposed $63 billion contribution to the International Monetary Fund’s permanent capital fund.
“It is critically important to the U.S. economic well-being that the IMF be strong,” Lew said today. “We made a full-court press to get it done and got close, but didn’t get it done this past week. We’re continuing to stand by our commitment and we will get it done.”
On China, Lew said he is “pretty confident” that the nation’s new leadership is “intent on the path of economic reform that they describe. At the same time, I am not confident about the time frame or which targets of opportunity will be sequenced early in the queue.”
The U.S. is putting “an awful lot of focus on the need for market-determined exchange rates” in China, he said.
Treasury data released this week showed China’s holdings of U.S. government securities rose in November to a record $1.317 trillion.