Treasury’s Jack Lew warns against brinkmanship over debt ceiling

Treasury Secretary Jack Lew on Sunday called on Congress to “do its job” and avoid what could be a bruising budgetary standoff this fall, arguing Washington cannot afford a repeat of the type of “self-inflicted wounds” inflicted on the U.S. economy in the damaging showdown over the debt ceiling in 2011.

In a slate of interviews on Sunday, Mr. Lew defended President Obama’s efforts to boost the nation’s struggling economy and decried political brinkmanship that could lead to a government shutdown or default on its debts when the fiscal year ends Sept. 30.

“Congress shouldn’t wait until the last minute, they should just raise the debt limit and take away any cloud of uncertainty about the ability of the United States to pay its bills,” Mr. Lew told CNN’s “State of the Union.”

But the administration is girding for a fight with conservatives on Capitol Hill who want to retain spending cuts and secure other top goals, such as weakening the embattled Internal Revenue Service and dismantling Mr. Obama’s signature health care law.

The fight over a short-term spending plan, or “continuing resolution,” this September has both the White House and congressional Republicans concerned about who will take the political blame for fiscal upheaval that could further damage Washington’s reputation. But it’s unclear if either side will back down, and if the debt limit or other priorities will be caught in the middle as ransom.

“It sure doesn’t look good,” former Michigan Gov. John Engler, now head of the Business Roundtable, told NBC’s “Meet the Press,” noting the White House and congressional Republicans appear to be “far, far apart.”

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Mr. Obama began a series of speeches on the economy last week as he tries to shift the political narrative from the scandals that have sidetracked his second-term agenda. Most of his proposals aren’t new, such as calls for more spending on education and infrastructure projects, and for raising the federal minimum wage.

Mr. Lew said that now is not the time to turn to austerity, as the Obama administration pitches its strategy for the federal government to invest in the American economy, infrastructure and programs to aid the middle class.

“I have worked in Washington for quite a few decades. I don’t know a lot of people on either side of the aisle who don’t believe in infrastructure,” Mr. Lew told Fox News on Sunday. “And I don’t know a lot of people on either side of aisle who don’t believe in educating the next generation.”

But Sen. Mike Lee, Utah Republican, said he “begs to differ” with Mr. Obama’s spending priorities.

“This is the same, tired old message that we have been hearing from this president and his administration from Day One,” he told Fox. “And the fact is, it hasn’t worked. The fact is, that if you want to help the middle class, the best you can do is limit the federal government’s profile, not expand it.”

Also Sunday, Mr. Lew defended the Treasury’s handling of the scandal over suspected political targeting of conservative groups by the IRS, which is part of the Treasury Department. He said the use of inappropriate criteria to vet groups looking for tax-exempt status was “unacceptable.”

But he argued there has been no evidence of political motives and that progressive groups seeking tax-exempt status were targeted along with conservative groups.

“The bad judgment was equal opportunity,” he told Fox.

The Treasury secretary also said no plans were in the works for a federal bailout to aid Detroit, which became the largest city in U.S. history July 18 to declare bankruptcy.

While Mr. Obama supported bailouts of Detroit’s carmakers and of major banks in his first term, Mr. Lew said the administration would offer the city technical advice and support to deal with blighted properties.

Detroit’s financial situation is “unique,” Mr. Lew said, and one the city “is going to have to work out with its creditors.”