Jack Lew Is Still Surprisingly Vague About How He’ll Deal With a Debt Ceiling Breach


From Jack Lew’s congressional testimony this morning:

In testimony before the committee, Mr. Lew stressed that the Treasury Department would run out of “extraordinary measures” to free up cash in a matter of days. At that point, the country’s bills might overwhelm its cash on hand plus any receipts from taxes or other sources, leading to an unprecedented default. Mr. Lew said that Treasury had no workarounds to avoid breaching the debt ceiling. “There is no plan other than raising the debt limit,” he said. “The legal issues, even regarding interest and principal on the debt, are complicated.”

He also said prioritizing payments to bondholders or others might not be workable, adding that the Treasury would face significant technical issues in trying to rejigger its complicated automated payment systems to pay certain bills but not others. “Our systems were not designed to not pay our bills,” he said.

Some market participants have suggested that Treasury might simply pull the plug on one or more of its payments systems to prevent money from going out, perhaps telling the recipients of that money that it would pay them when possible. But “I don’t believe there is a way to pick and choose,” except on a broad basis, Mr. Lew said.

I just don’t get this. Maybe this is the best Lew can do, but given all the time he’s had to study this, and the fact that we’re only a week or two away from D-Day, how is it that he doesn’t know (a) how close we are to running out of money, (b) whether prioritization is possible, and (c) if Treasury’s computer systems allow it to choose which bills to pay.

I’m not a nutball Republican denier, but even I don’t believe this. It’s October 10. This is our second go-around with a debt ceiling crisis. We’ve been planning for this one for more than six months. Is it really plausible that Lew still doesn’t know if prioritization is possible? Is it really plausible that there’s still no plan in place? Is there some reason he isn’t telling Congress what that is?

Something doesn’t add up here.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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