Policy: Entitlements

Treasury Secretary Jack Lew takes to Sunday shows to warn debt ceiling could hold up Social Security, Medicare payments

By |
Treasury,Debt Ceiling,Medicare and Medicaid,Social Security,Entitlements,PennAve,Joseph Lawler,Economy,Jack Lew

Treasury Secretary Jack Lew took to the Sunday morning talk shows to step up his warnings about the approaching debt limit deadline and dodge accusations that he was using scare tactics to put political pressure on Republicans.

Appearing on "Fox News Sunday," Lew said that "I don't think there are serious people who think the consequences" of being forced by the debt ceiling to miss a payment on the government's obligations "would be minimal."

Lew warned that missing any payment could cause economic disruptions, and mentioned one negative effect of a debt ceiling delay that up until now the administration has shied away from, namely the possibility that the government could fail to pay the bills of its most popular entitlement programs.

"What happens if you don't pay millions of people on Social Security? What happens if you don't pay hospitals and health care providers across the country?" Lew asked.

"It is reckless to take that chance," he said, placing blame on House Republicans for not voting to raise the debt ceiling without conditions.

On CNN's "State of the Union," Lew added the possibility that going past October 17th -- the last day he has said he'll have available measures to create headroom under the debt ceiling -- could mean delays in disability and veterans payments.

When challenged by Fox's Chris Wallace that the Obama administration has been "trying to panic the market" to put pressure on congressional Republicans to act, Lew sidestepped the charge, saying that "my job is to strengthen the economy."

Last week, Lew's Treasury Department released a brief report on the possible repercussions of a default that warned that the outcome could be a recession worse than any since the Great Depression.

In an interview with CNBC on Wednesday, Obama told investors not to be complacent about another debt ceiling showdown. “I think this time's different,” he said, telling Wall Street that it “should be concerned.”

Previously, Lew has said that markets' confidence that the impasse will be resolved painlessly is “greater than it should be” and that he personally is “cautious and anxious" about the approaching deadline.

And late last week White House economic adviser Jason Furman also said that "it's not obvious to us that this time is business as usual. ... We think that's something that people need to understand and appreciate."

At least one Republican has cried foul over the administration's doomsaying. Sen. Orrin Hatch of Utah has called the Obama team's rhetoric "irresponsible" and claimed that it "threatens to create needless panic" in a press release last week.

On NBC's "Meet the Press," Lew explained to host Savannah Guthrie that the October 17th deadline was not a drop-dead date for a government default, but instead a point beyond which there were no guarantees about the security of the nation's debt or spending programs.

Lew noted that the government hit the $16.7 trillion debt ceiling in May, and since then he has been using "extraordinary measures" to extend the Treasury's ability to issue debt without breaching the limit. On October 17th, however, those measures will be used up and "we're left with the cash on hand," Lew said.

That amounts roughly $30 billion, which Lew noted could be insufficient to pay the government's bills, which can be as high as $50 or $60 billion on any given day. "Thirty billion dollars is a dangerously low level of cash, and we're on the verge of going into a place we've never been: not having cash to pay our bills," Lew concluded. Beyond October 17th, "everyone is speculating on what happens if the unthinkable happens."

Lew was scheduled to appear on all five major Sunday morning talk shows.

View article comments Leave a comment