With time running short, President Barack Obama and lawmakers were struggling for ways to lift the debt ceiling and reduce the deficit as an August 2 deadline to prevent a default draws dangerously close.
“I think it’s not insignificant that all the leaders understand it would be irresponsible to get to August 2 and not extend the ability of the United States to pay its obligations,” Lew said on CNN’s “State of the Union” programme.
Lew, appearing on talk shows to push Obama’s case for sweeping deficit reduction along with the debt ceiling increase, told NBC’s “Meet the Press” programme: “There’s still time to get something big done. The president has made it clear he wants to do something substantial.”
Obama’s call for a $4 trillion (€2.8tn) deficit reduction deal snagged when Republicans in Congress rejected his demand for tax increases on the wealthy.
Congress must raise the $14.3tn limit on US borrowing by August 2 or the government will run out of money, causing turmoil in financial markets and potentially forcing the United States into recession again.
Lew told CNN there has been “activity and progress” in talks among Senate leaders “to make sure that at a minimum Congress has a way to take action and avoid default on the US debt” through a plan offered by Senate Republican leader Mitch McConnell that would allow Democrats to raise the debt ceiling without Republican help.
Obama told congressional leaders that he wanted to hear from them by the weekend about a way forward in the stalled debt talks, but Saturday passed without an announcement of a meeting.
McConnell’s backup plan, which has been cautiously embraced by Senate Democratic leader Harry Reid, may be the solution all sides can accept if a big deal cannot be reached.
The plan could include about $1.5tn in spending cuts and set up a panel to find further savings.