Give Jack Lew some slack

I am not a big fan of Jack Lew but I disagree with some supporters of the Democratic party who are saying that the treasury secretary hasn’t been direct enough about what they feel are the disastrous consequences of a government shut down on October 17, by speaking of it in less than apocalyptic terms, thus giving those Republicans who think the shut down is no big deal some room to make their case.

I think this is mistaken. It is true that Lew is a political appointee and as such is obliged to pursue the president’s agenda. But the secretary of the treasury cannot afford to be just another political hack involved in the thick of political infighting. He ultimately has to be a steward of the economy and he has a duty to protect it as far as he can. He cannot blithely shut things down on October 17 and go home. He has an obligation to pull out all the stops to avert default.

I am pretty sure that he is exploring ways to delay disaster if October 17 should come round and there is no deal on raising the debt ceiling, and that he will resort to extraordinary measures to try and avert a default as long as he can, though he will not share those plans beforehand.

That does not mean that the October 17 deadline is a lie as some Republicans claim. It just means that he would have to resort to ad hoc measures that are unseemly for the world’s greatest economic power and outside the normal run of doing business. That is bad enough. To ask him to box himself in to a fixed date so that he cannot take measures to delay default even by a few days is unreasonable.

So we should lay off Lew. Let him be vague.


  1. raven says

    I don’t see that anyone knows how failing to raise the debt ceiling will end. We’ve never been there before so it is terra ingognita. FWIW, at least this guy has tried to think it through.

    If it happens, whatever Obama and Lew do will probably end up in the Supreme court. It’s their job to decide what is legal and what isn’t. We can exchange a financial crisis for a constitutional crisis.

    Obama has already ruled out the 14th amendment trick. Although, he could always change his mind.

    MORGAN STANLEY ECONOMIST: If We Breach The Debt Ceiling, Jack Lew Must Decide Which Law To Break
    Source: Business Insider

    If the Treasury is unwilling to stretch the definition of extraordinary measures, on the day that the Federal Reserve predicts that the Treasury will run out of cash in its account and the Treasury is bound by the debt ceiling, it suspends all payments and awaits instructions from the Treasury. As a result, the government’s principal economic officials will face the prospect of violating one of these three laws:

    1. The Second Liberty Bond Act of 1917 that establishes the debt ceiling;

    2. The Federal Reserve Act that prohibits the Fed from lending directly to the Treasury; or,

    3. The 14th Amendment of the Constitution that holds that the debt of the United States government, lawfully issued, will not be questioned.

    They have to break a law. At the end of the day, officials will avoid violating the Constitution by indicating that they have been given inconsistent instructions and are obeying the one with the most important precedent.

    Read more: http:// http://www. businessinsider. com/morgan-stanley-economist-if-we-breach-the-debt-ceiling-jack-lew-must-decide-which-law-to-break-2013-10

  2. eigenperson says

    some supporters of the Democrat party

    That would be “the Democratic party”, please.

    If the concern is that the name “Democratic party” is somehow a self-serving attempt by one party to take up the mantle of democracy, keep in mind that it’s no more self-serving to call the Democratic party “democratic” than it is to call the Republican party “republican.”

  3. OlliP says

    …the disastrous consequences of a government shut down on October 17,…

    Do you mean debt default or liquidity crisis? I think you already have the shut down going on.

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