Treasury Secretary: $30 Billion 'Not A Responsible Amount of Cash to Run the Government On'

October 7, 2013 - 6:02 AM

Jacob Lew

In this Sunday, Oct. 6, 2013, photo provided by CBS News U.S. Treasury Jacob Lew speaks on CBS's "Face the Nation" in Washington. (AP Photo/CBS News, Chris Usher)

(CNSNews.com) - On October 17, the United States Treasury will no longer be able to borrow money to pay its bills, and although it will still have $30 billion in cash on hand, that $30 billion "is not a responsible amount of cash" with which to run a $4-trillion enterprise, Treasury Secretary Jacob Lew said on the Sunday talk shows.

Lew said he's running out of the "extraordinary measures" he's been using to continue borrowing since May: "I have no more. That means that on October 17th, we'll run out of the ability to borrow. We'll be left with some cash on hand. And I've told Congress it'll be roughly $30 billion. And $30 billion is a lot of money. But when you think about the cash flow of the government of the United States, we have individual days when our negative or positive cash flow is $50 (billion) or $60 billion. So $30 billion is not a responsible amount of cash to run the government on. It won't last very long," Lew told CNN's "State of the Union with Candy Crowley."

Speaking to NBC's "Meet the Press," Lew said the U.S government is a $4 trillion enterprise, which means $30 billion "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."

"On the other hand, the Fed continues to pump money into the economy," Fox News's Chris Wallace told Lew. "Given that, what's the likelihood that a default would be catastrophic?" Wallace asked.

"Chris, I am telling you that I know the direction. I know the direction is bad. There are a range of how bad; it is not responsible; it is -- it is irresponsible and it is reckless to take that chance, which is why Congress needs to act," Lew said.

Lew told CNN's Crowley he can't say what would happen on Oct. 18: "We've never gotten to this point, Candy, you know? We've never gotten to the point where the United States government has operated without the ability to borrow. It's very dangerous. It's reckless because the reality is there are no good choices if we run out of borrowing capacity and we run out of cash. There -- it will mean that the United States for the first time since 1789 will be not paying its bills, hurting the full faith and credit, because of a political decision."

Asked if the government can avoid default by paying the interest on the debt while the situation is worked out, Lew said by not paying its bills, the government will be in default, period.

"You know, Candy, I got to tell you that anyone who thinks that the United States government not paying its bills is anything less than default hasn't thought about it very clearly because -- let me ask you a question. Let me ask you, what happens if we're not able to pay Social Security on time? What happens if we can't pay disability and veterans payments on time? What happens if we can't pay -- What happens if we can't pay Medicare and Medicaid? In each of these cases, it means that families, businesses, institutions that are important won't be getting what they rely on from the federal government."

Lew did not say that the U.S. government will stop paying Social Security and other benefits on Oct. 18, but he did warn that "we have a very, very short window of time before those scenarios start to be played out."

According to Lew, "If the United States government for the first time in its history chooses not to pay its bills on time, we will be in default. There is no option that prevents us from being in default if we don't have enough cash to pay our bills."

NBC's Savannah Guthrie was among the Sunday hosts pressing Lew on why -- if the consequences of "default" are so dire -- President Obama refuses to negotiate with Congress. Lew made it clear that there will be no negotiations until Congress funds the government and raises the debt limit.

"Congress needs to do its job and then we need to negotiate," Lew told both NBC and Fox News.

Chris Wallace, not getting an answer to his repeated question, finally told Lew, "I just want to say -- I take away from this conversation that even though Republicans are willing to talk about a debt deal or a short-term extension, the president -- it's the president who is putting his -- digging his feet into the ground and saying, no negotiations.

"Chris, that is not what I said," Lew responded. "What I said is Congress -- Congress needs -- Congress needs to do its job.

"Yes, but what are you saying? It sounds like you want an unconditional surrender and nothing else, sir," Wallace responded.

"You know, we've just spent the last several months with Congress creating this ridiculous choice where either you repeal the Affordable Care Act or you shut down the government or default on the United States. That is not the way we should do business. We need to -- they need to do their job, they need to open the government.
They need to fund our ability to pay our bills. These are old bills, Chris. These aren't new bills.

"I understand that, sir," Wallace said.

"And then we are open to negotiation. The president has been, is and will always be open to reasonable discussion."