"The United States should not be put in a position of making such perilous choices for our economy and our citizens," the secretary said. "There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets."
The game of Washington chicken over increasing the debt limit — required so Treasury can borrow more money to pay the government's bills in full and on time — already has sent the stock market south, spiked the interest rate for one-month Treasury bills and prompted Fidelity Investments, the nation's largest manager of money market mutual funds, to sell federal debt that comes due around the time the nation could hit its borrowing limit.
At the Finance committee hearing, Lew met a buzz saw of incredulity from Republicans, who said the bigger problem was the soaring costs of benefit programs like Social Security and Medicare and the long-term budget deficits the country faces. Many expressed doubt about Lew's description of the consequences of default.
The senior Republican on the panel, Sen. Orrin Hatch of Utah, accused the Obama administration of "an apparent effort to whip up uncertainty in the markets." And veteran Sen. Mike Enzi, R-Wyoming, said, "I think this is 11th time I've been through this discussion about the sky is falling and the earth will erupt. Wyoming families aren't buying these arguments."
Replied Lew, "After they run up their credit card, they don't get to ignore it."
Lew also rejected GOP suggestions that in the event federal borrowing authority expires, the government could use the dwindling cash it has to make payments to debt holders and other high priority needs. He said federal payment systems are not designed to prioritize and said he didn't believe such an approach was technically possible.