Secretary of the Treasury Jack Lew called on Congress Thursday to “raise the debt ceiling as soon as members get back to Washington after summer recess.”
Lew delivered a strident, partisan speech, repeating familiar arguments from the 2012 presidential campaign.
Many of Lew’s remarks were, in fact, repetitions of remarks he had given on May 7 at the City Club of Cleveland. Compare the following paragraphs (emphasis added on verbatim repetitions):
Cleveland, May 7:
Just over four years ago, when President Obama first took office, economic conditions were the worst our nation has seen since the Great Depression. Our economy was contracting at a 5.3 percent annual rate. More than 700,000 jobs were disappearing every month. Homes were being foreclosed. Businesses were shutting their doors. Saving accounts were decimated. And the auto industry–a cornerstone of Ohio’s economy–was unraveling.
The President moved quickly to respond to the financial crisis, reignite economic growth, and revive auto manufacturers. And thanks to the President’s decisive and quick actions–along with steps by the previous administration, the Congress, and the Federal Reserve–our economy is growing, and there are signs of steady improvement.
Silicon Valley, Aug. 22:
Four and a half years ago, when President Obama first took office, America was in the grips of the worst recession of our lifetimes.
Our economy was shrinking at a 5.4 percent annual rate. We were losing more than 700,000 jobs every month. Homes were being foreclosed. Businesses were shutting their doors. Savings accounts were hemorrhaging. Credit markets were frozen. And the American automobile was in deep trouble.
The President took swift and decisive action to steer our economy out of the recession. Right away, he moved to put out the financial fires, stabilize U.S. automakers, and jumpstart growth.
Cleveland, May 7:
Two months ago we saw another one of these manufactured crises come to the surface when Congress let a series of harsh, indiscriminate spending cuts known as “sequestration” go into effect. Nearly every part of the federal government is coping with an onslaught of these sudden, reckless, across-the-board cuts, and its impact is being felt in communities across our country.
Silicon Valley, Aug. 22:
Several months ago, we saw one of those manufactured crises become reality when Congress let a series of harsh, indiscriminate spending cuts, known as sequestration, go into effect. Nearly every part of the federal government is coping with an onslaught of these reckless, across-the board reductions. These cuts are harming the middle class, hampering growth, and hindering job creation in communities, like this one, all across the country.
As he has done before, Lew claimed credit on behalf of the Obama administration for improvements in the economy since President Barack Obama took office. He also warned that those advances would be placed at risk by a debate over raising the debt ceiling.
“The full consequences of a default…by the United States are impossible to predict and awesome to contemplate,” Lew said, quoting then-President Ronald Reagan in 1983.
Lew did not mention then-Sen. Obama’s speech against raising the debt limit in 2006: “Increasing America’s debt weakens us domestically and internationally….America has a debt problem and a failure of leadership. Americans deserve better.”
Lew had been in the San Francisco Bay area to “discuss the state of the U.S. economy and the Administration’s focus on accelerating growth, increasing job creation and strengthening the middle class,” according to a press release issued by the Commonwealth Club, a Silicon Valley civic organization that sponsored the event. On his trip, he had also visited the AT&T Foundry, an innovation hub in Palo Alto.
In his address, Lew touted efforts at immigration reform, a cause that has been taken up by leading Silicon Valley executives, including Mark Zuckerberg of Facebook. President Obama’s economic plan, Lew said, would succeed “by doing the right thing and reforming our broken immigration system.”
The setting of Lew’s talk, in the Computer History Museum, was timely–or unfortunate, given that a computer glitch at the high-tech-heavy NASDAQ stock exchange had halted trading for two hours just before the Treasury Secretary was due to begin his remarks.
Lew did not mention the NASDAQ crisis in his speech, but said in question-and-answer session that followed that he had been kept informed about the problem through the day and that the crisis was “over,” adding that he was confident the government regulation agencies were managing such risks.
Asked by moderator Adam Lashinsky of Fortune magazine to explain what the government had achieved through new regulations under Dodd-Frank, many of which had been delayed, Lew cited additional mortgage protections for homeowners as well as increased capital requirements for banks, claiming that the U.S. had better standards than many other nations.
Lew also promised progress on the Volcker Rule, which prevents banks from speculative investment that is not meant to benefit its clients directly. He did not, however, agree with a revival of the Glass-Steagall Act’s restrictions on investments by commercial banks.
Lew also provided several examples of damage caused by the budget sequester to the U.S. economy, saying the budget needed “sensible, medium to long-term deficit balance and reductions” instead.
“But I understand that you were a chief architect of the concept,” Lashinsky said, to audience laughter.
Lew admitted being involved, but said that the sequester was a better idea than default, blaming Republicans for creating an even worse consequence for default in debt ceiling negotiations in 2011.
Following Lashinsky’s initial questions, Lew answered questions from the audience and the press–all of which were pre-screened. In answers, Lew backed a strong dollar, but refused to speculate on future inflation, stating only that economic growth in the future might see prices rise moderately. He said that China would continue to move toward a more market-oriented system, with possible political consequences. He declined to answer a question about his preference for the next chair of the Federal Reserve.