Jacob Lew on the details and politics of the debt ceiling deal

Marketplace Staff Aug 1, 2011

Jacob Lew on the details and politics of the debt ceiling deal

Marketplace Staff Aug 1, 2011

Kai Ryssdal: There you have the nuts and the bolts, and you have the trigger as well. Now for the process behind the debt deal, we’ve got Jacob Lew on the line. He’s runs the White House Office of Management and Budget. Mr. Lew, good to have you with us.

Jacob Lew: Good to be with you, Kai.

Ryssdal: I don’t mean to impugn the thousands and thousands of staff hours that have gone into the deal that is being voted on, but it does seem to me that after all of this — after the political drama that Washington has put us through — what we’re getting is $92 billion a year over 10 years. That’s the deal.

Lew: With the deadline before us, the question was: how could the parties come together and reach an agreement that would put us on a path toward serious deficit reduction, while also extending the debt limit in time to meet the deadline tomorrow? I think the agreement that Congress is voting on will have very important consequences. It will reduce discretionary spending for both defense and domestic programs by just under $1 trillion over the next 10 years. There is also going to be a special joint committee created in Congress which will be charged with coming up with $1.5 trillion of additional deficit reduction. If this committee fails, and by the end of the year Congress does not take action, then there’s a mechanism put in place that has quite dramatic consequences with very deep cuts. One of the things about this agreement that’s important is it keeps us on a path towards dealing with deficit reduction so that we can address the long-term financial challenges we face.

Ryssdal: Well, let me follow up then with this question, which I ask only a little bit with my tongue in my cheek: Did I miss the part of this agreement that focuses on job creation and economic growth and getting the economy and recovery back on track from where it is now, which is not in a good place?

Lew: Well Kai, when we were in substantive negotiations, one of the things that we had hoped to have in this agreement would have been an extension of a payroll tax cut, an extension of unemployment insurance; things that would have — in a very significant way — extended our efforts to promote an economic recovery. We still have those battles ahead of us; they’re not in this package, and they still need to happen.

Ryssdal: I realize, Mr. Lew, that you are a professional Washington staffer — and I say that in the most positive sense of the word, by which I mean you’re not a politician — but is there anything you can say that will let the American people know that we’re not going to be having this same conversation come the end of the year and come next year?

Lew: I think one of the very important things about this agreement is that it takes the issue of the debt limit off the table for the next 18 months. And I think what we have ahead of us is a very serious debate in this country about what kind of government we want to have and we want our future to look like. This is not just a debate about budgets; if you look at the alternatives that the Republicans put forward in the House, it was a fundamentally different view of the role of government, whether it was voucherizing Medicare or dramatically and drastically assistance to poor people. I think that we have to have that debate. And we can’t have a debate that leaves taxes off the table.

Ryssdal: A last question and then I’ll let you go: How do you have that debate? That legitimate debate about the role of government in society in this country if the Republican Party finds its line, sticks to it and then makes the Democrats come to them? Which is what happened in this debate.

Lew: We were not able to deal with the bigger issues because there is no way without balance that one can deal with the structural questions of how we should make changes in programs like Medicare. We can’t do that in a world where taxes are a forbidden topic. It’s just not fair to talk about having the tax burden for people who make millions of dollars not be something that can be discussed when the Medicare costs for people who retire with $20,000, $30,000, $40,000 and $50,000 are very much being discussed.

Ryssdal: And yet here we are not discussing it. You know?

Lew: Well, I think we set up a process where hopefully by the end of this year, that joint committee will get the work done.

Ryssdal: Jacob Lew, the director of the Office of Management and Budget at the White House. Mr. Lew, thanks so much for your time, sir.

Lew: Great to be with you, Kai.

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