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Treasury Secretary Lew on Congress ‘coming to terms’ with the debt limit

The bipartisan budget deal passed by the House is the product of negotiations between Congressional leaders and the White House. Treasury Secretary Jack Lew sits down with Gwen Ifill to discuss how Congress achieved its moment of breakthrough, plus a rundown of some of the budget nuts and bolts.

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  • GWEN IFILL:

    Earlier this afternoon, I sat down with Treasury Secretary Jack Lew.

    Secretary of Treasury Jack Lew, thank you for joining us.

    JACK LEW, Secretary of the Treasury: Great to be with you, Gwen.

  • GWEN IFILL:

    As we speak this afternoon, it looks like a vote is imminent on the budget deal and on budget deal that would also allow the debt limit to go up.

    After kicking this can down the road repeatedly with Congress, what changed this time to allow a two-year deal to be on the verge of approval?

  • JACK LEW:

    Well, I think a lot of things came together.

    Obviously, the fact that the debt limit is going to be reached on Tuesday of next week, and they have to act before then, focused their minds on the debt limit in a very real way. I have been communicating with Congress on a very regular basis. It's been getting closer and closer. And I think it's a good thing that they have reached an agreement, so that it certainly seems to be on track for the debt limit being raised in time to avoid that unnecessary self-inflicted wound.

    On the budget side, there have been conversations going on for many years, but intensely for many weeks, to try and figure out how to resolve this year's funding bills. The approach is one that we have supported for a long time, which is to relieve the across-the-board cuts in sequestration by replacing the savings with a balanced mix of tax and spending items.

    The breakthrough in the last week has enabled us to reach an agreement, where we have achieved that goal, and providing $80 billion of relief is going to give Congress the ability to write appropriations bills to meet our domestic needs and our defense needs. This means that they will be able to invest in research and education and also in our national defense.

    I think that's what Americans want Congress to do. It shouldn't be so hard to get to these moments where these agreements can be reached. And I hope this passes in a way that's uneventful and enables Congress to get on with its work.

  • GWEN IFILL:

    Could you have reached this moment if it had not been for the resignation of Speaker Boehner?

  • JACK LEW:

    You know, the conversations were going on before that. And I think he clearly approached it with an intensity that deadlines create in these last couple of weeks.

    I think Congress coming to terms on the debt limit helps that they understand there is real deadline. The two are separate. We negotiated over the budget. On the debt limit, we made clear from the beginning, they just have to approve the debt limit. It's not something that they can kind of extract concessions.

  • GWEN IFILL:

    We heard incoming speaker Paul Ryan say the process stinks, even though he's voting for the final deal. Does that signal to you there might be problems going into this next round of negotiations, whenever that might be, with the new speaker?

  • JACK LEW:

    Well, to be clear, this is going to give the Congress a total amount of money to spend for the next two years in the appropriations process. They now have to produce bills by December 11 to fund the government for next year, because that's when the short-term funding bill expires.

    I hope that they approach that with the same kind of spirit of compromise and reaching mutually acceptable outcomes, and that it doesn't become an occasion for the extraneous issues that cause unnecessary conflict to be introduced.

  • GWEN IFILL:

    Have you spoken with speaker-elect Ryan yet about this process?

  • JACK LEW:

    You know, I have had a working relationship with him over the course of the last number of years from multiple different seats. I was the OMB director when he was the Budget Committee chair. I worked with him when I was chief of staff at the White House. I have worked with him as treasury secretary.

    And we have always been able to talk about issues. And it won't come as a surprise we have very different policy views on many things, but we have always been able to talk in a respectful way and to look for areas where we can work together. I hope that relationship continues.

  • GWEN IFILL:

    I want to talk to you about some of the nuts and bolts in this budget agreement.

    One of them has had to do with Medicare Part B, the part of Medicare which pays for outpatient services, doctors' visits. There was a risk that that was going to rise, that those premiums would rise by 30 percent. Now it's been pushed back to 15 percent.

    But some people say there were some gimmicks used to do this, the kinds of gimmicks the president vetoed or spoke out against in the defense policy bill.

  • JACK LEW:

    On the Medicare premiums, because we had no cost of living increase this year, because inflation didn't hit the minimum level to trigger an adjustment, there is a group of roughly 30 percent of Medicare beneficiaries who were going to actually see almost a 50 percent increase in their Medicare premium.

    There was a bipartisan interest in stretching that out over a period of time and having the impact not be as immediate and as severe. And I think that's what was worked out in the bill. It is the kind of thing that we should be able to work together on a bipartisan basis, and everything that is in this bill is paid for in one — with one offset or another.

  • GWEN IFILL:

    Not a gimmick to borrow from Treasury to do it?

  • JACK LEW:

    Well, I think if you look at the savings in the bill overall, there are both spending reductions and some tax enforcement measures.

  • GWEN IFILL:

    There are no taxes included in this deal, as the president said there would have to be.

  • JACK LEW:

    Well, there will be revenue that comes from our enforcing the existing tax laws more effectively.

    On the spending side, there are quite a number of real savings provisions. As in any budget agreement, you know, nobody likes all of the offsets in a budget agreement. So there will be some criticism over the coming days. I think that we will focus not so much on whether or not they're real, but with some who say, why did you get the savings here?

  • GWEN IFILL:

    Is cutting benefits to providers a backdoor way of decreasing advantages for a patient?

  • JACK LEW:

    There are no beneficiary cuts in this package. You know, sensible provider reforms that have reimbursements on a basis that reflects best practice, best understanding of what costs are, that's a good thing.

    So I think that what we have put together in this package is a fair and balanced approach. In terms of the Medicare provisions, I think it's a good thing that we're going to avoid something that would have been very hard to explain to people, their Medicare premium going up 50 percent because inflation didn't go up.

  • GWEN IFILL:

    Is it fiscally sound to raise, what, $6.5 billion by releasing oil from the Strategic Petroleum Reserve?

  • JACK LEW:

    Well, the Strategic Petroleum Reserve is an important national asset. But it's an old asset. It's an asset that was put in place decades ago, and it actually needs several million dollars of improvements for it to be as useful and usable as it should be.

    Part of this agreement will modernize the Strategic Petroleum Reserve, so that we can get access to it when we need it in a more reliable way. And we produce quite a lot more domestic energy today than when we filled the Strategic Petroleum Reserve in the first place.

    And I think if you look at this provision in light of our national security needs, it's a very important step forward.

  • GWEN IFILL:

    Short-term, you have avoided another debt ceiling crisis and another government shutdown crisis. Long-term, without significantly reforming entitlements or somehow some — cutting spending on that, are we going to be back at the same place again?

  • JACK LEW:

    You know, Gwen, the debt limit is sometimes thought of as spending money.

    The debt limit actually doesn't spend a penny. All it does is, it gives us the ability to pay for the bills that have been committed to by prior acts of Congress. So the idea that the debt limit would be used as a way to control spending is just fundamentally wrong. You have to make those decisions way before you hit the debt limit.

    And we clearly have challenges over the horizon, but for the next 10 years, we're looking at a budget where the deficit as a percentage of GDP has been brought under control. It's been brought down to roughly 2.5 percent of our economy. It was at roughly 10 percent of our economy.

    There is more work to do as we get into the long-term, into the retirement of the baby boom and other things that we know are over the horizon in terms of full impact, but there is not an immediate crisis.

    Right now, if you ask me, the immediate crisis in our country is our failure to invest enough today. And that's why I think this budget agreement is so important. It doesn't do everything we need to do. So, I hope Congress can do some more things, the Export-Import Bank, finishing work on infrastructure.

    But this is an important foundation. Self-inflicted wounds are the thing we ought to be able to assure the country that we avoid. That's a very important accomplishment, because the alternative would have been real harm.

  • GWEN IFILL:

    Treasury Secretary Jack Lew, thank you very much.

  • JACK LEW:

    Great to be with you, Gwen.

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