Treasury Secretary Jack Lew: We’ve 'Already Done a Lot of Deficit Reduction'

July 29, 2013 - 4:24 PM

(CNSNews.com) - Treasury Secretary Jack Lew said Sunday that the federal government has "already done a lot of deficit reduction" when asked about the prospects of a long term, “grand bargain” budget deal with Congress this fall.

jack lew

Treasury Sec. Jack Lew (AP)

Congress begins its August recess at the end of this week, but will have to deal with the federal budget and the deficit when current funding of the federal government is slated to run out by September 30th, prompting speculation about the possibility of a government shutdown if the president and Congress cannot agree on a must-pass continuing resolution.

"We cannot cut our way to prosperity. We have already done a lot of deficit reduction. We are on a path right now where, just recently, the IMF (International Monetary Fund) said we're doing too much too quickly. We should do more in the long term and less in the short term," Lew said in an interview with NBC's David Gregory on the "Meet the Press."

The White House said July 9 that they had revised the yearly budget deficit outlook to $759 billion, $200 billion less than three months prior. However, the overall national debt continues to increase.

The latest available data from the U.S. Treasury puts the current national debt at $16,738,125,957,131.00 – or $38.7 billion higher than the $16,699,396,000,000.00 it was on July 12th and 56 consecutive days before that.

Lew argued that Congress needs to raise the debt limit to remove “the cloud of uncertainty” over whether the U.S. is able to pay its bills.

The Treasury secretary also said that cutting federal spending is "not good" for the nation's economy. "I think that we have a composition question. The across-the-board cuts are not good for the economy. They're not good for the American middle class. It's not good for national defense."

"We need to be debating the things that the American people are focusing on and in the course of it, we need to solve all of these Washington responsibilities. But we can't let the Washington box score be the issue."

The 63-page IMF report Lew cited, released Friday, said that the combination of tax increases and budget cuts known as the sequester has been too swift for a smooth economic recovery. It estimates the U.S. economy will remain stagnant in 2013 with a growth rate of 1.7 percent before rising to 2.7 percent in 2014.

"The general government is projected to subtract between 1½ and 1¾ percentage points from growth this year, in part due to the continuing implementation of automatic spending cuts and tax increases," it said.

The IMF report also said that any recent drops in the unemployment rate can be tracked to fewer Americans participating in the workforce because they have stopped looking for work. It also noted that "long-term unemployment remains close to 40 percent of total unemployment, about twice the level before the crisis."

Reiterating what President Obama has said in speeches about the economy in the past week, Lew said, "I think that the American economy has shown its resilience. The core of the American economy is strong. We have grown for 40 months in a row. We have added 2.4 million jobs."

However, the U.S. employment rate has remained  above 7.5 percent for the past 54 months. In addition, The Wall Street Journal reported on July 21 that some economists believe that the economy only grew at an annualized rate of 1.5% in the second quarter of 2013.