Transcript: Senate hearing Q&A with Sen. Sherrod Brown & Treasury Secretary Jack Lew on the debt ceiling – Oct. 10, 2013

Partial transcript of Q&A between Sen. Sherrod Brown and Treasury Secretary Jack Lew on the potential impacts of the failure to raise the debt ceiling. The Senate Finance Committee hearing was held on Oct. 10, 2013:

Sen. Sherrod Brown (D-Ohio):
…Heard a lot from the debt limit deniers about how Oct. 17th is not really the day we default. We hear from the debt limit deniers that they are sure that even if we get there, nothing will happen since we can pay China and Wall Street first. But the fact of the matter is on that day – Oct. 17th – as you know well, the day we run out of borrowing capacity is a Thursday which happens to be the day the Treasury holds it weekly auction to roll over $100 billion in debt. Comment for us, if you would, what could happen at that auction if we do not raise the debt limit? What could happen for borrowing costs? Would they substantially increase? What would happen if they did increase on Thursday? What would happen if we were unable to roll over the $100 billion in debt?

Treasury Secretary Jack Lew:
Senator, I’m not going to comment on what markets might do. I think the history is clear that anxiety leading up to 2011 caused a bad market reaction. We’ve seen in the last few days unease certainly with maturity in the period between Oct. 17th and the period immediately after that. I can’t say what the likelihood is of there being a problem.

I could say the consequences of any inability for us to roll over would be quite serious. In terms of a household budget, it’s like instead of having to pay your monthly payment on a mortgage, having to pay a mortgage, and that would be a problem.

Sen. Sherrod Brown (D-Ohio):
…Over the last couple of weeks, I’ve spent a lot of time just calling people in Ohio – community bankers, business executives, entrepreneurs, people running research institutions, hospital executives, small manufacturers…over and over they say the same thing: “Why is this happening? We can’t risk a default.” They don’t understand why the government shut down. They increasingly understand that it’s one faction of one party in one house in one branch of government that’s brought much of this to a halt.

The National Association of Manufacturers, the largest manufacturer association in the country wrote on Monday, “The failure of policymakers to address the debt limit is injecting uncertainty in the U.S. economy, hampering the ability of manufacturers and the broader business community to compete and invest and create new jobs.”

For the last several years, since the health care act, since Dodd-Frank, the criticism I hear more than anything from business in my state is uncertainty…That pall that hangs over our country, our economy. I hear especially from politicians who are critical of many of these programs.

My question is if we agree to a short-term, clean debt limit increase does that provide the certainty that we would need to compete?

Treasury Secretary Jack Lew:
Senator, I try to be clear that I think longer certainty would be very good for the economy, and the shorter the period, the less stability it provides. You know, when you talk about shifting debates to different time periods, retailers are very worried about what happens in November and December if we’re going through what we’re going through now. So I think longer is better. But avoiding a crisis is better than having a crisis. And in no case is the President going to end up in a position where the threat of destroying the American economy is the basis for compromise. He wants to have negotiations to be with the basis of the kind of give and take that honorable compromises come from.

Sen. Sherrod Brown (D-Ohio):
…This is the worst uncertainty and the most precarious uncertainty I’ve ever seen in our economy in my time in public office, and what’s tragic about it is how self-inflicted it is…


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One Comment on “Transcript: Senate hearing Q&A with Sen. Sherrod Brown & Treasury Secretary Jack Lew on the debt ceiling – Oct. 10, 2013

  1. Pingback: Debt Ceiling: Treasury Secretary Jack Lew says government default will hurt seniors the most | What The Folly?!

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