U.S. economy bruised by fiscal fight: Treasury Secretary

WASHINGTON Sun Oct 20, 2013 10:14am EDT

U.S. Treasury Secretary Jack Lew testifies before the Senate Finance Committee on the U.S. government debt limit in Washington October 10, 2013. REUTERS/Gary Cameron

U.S. Treasury Secretary Jack Lew testifies before the Senate Finance Committee on the U.S. government debt limit in Washington October 10, 2013.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - The U.S. economy has been hurt by a recent budget standoff in Washington and it is important that the nation does not go through another around of brinkmanship, Treasury Secretary Jack Lew said on Sunday.

Speaking on NBC's "Meet the Press" program, Lew said he was confident the economy, which he described as resilient, would recover from the 16-day partial shutdown of the federal government.

He described events leading to the shutdown, which eroded both business and consumer confidence, as a political crisis rather than an economic one.

"We know that from the shutdown, there was a loss of economic activity," Lew said. "We need to make sure that government does not go through another round of brinkmanship. This can never happen again."

A last minute deal in Congress pulled the country from the edge of an unprecedented debt default. It restored government funding through January 15 and extended its borrowing authority through February 7, though the Treasury Department might be able to stave off a default for several weeks past that point.

There are worries that Wednesday's deal may have set the stage for another standoff in the future.

Lew, the administration's front man during the stalemate over increasing the country's borrowing limit, has attempted to separate the debt ceiling from other policy conditions.

"I think the message that we have to send going forward is that there was a turning point on Wednesday night and this won't happen again. It can't happen again," he said.

Similar sentiments were echoed by Republican John McCain, who told the NBC's "Meet the Press" program that the shutdown hurt his party. McCain said there would be no second shutdown.

"Those involved in it went on a fool's errand, that's just a fact," McCain said. "This has harmed the lives of millions of people and thousands of people in my state ... I have an obligation to them to try to prevent that from happening."

Lew did not quantify the damage to the economy.

Economists estimate the shutdown shaved as much a half a percentage point from fourth-quarter gross domestic product growth, with much of the direct hit through the loss of output from the federal government.

"It took an economy that is fighting hard to get good economic growth going, to create jobs for the American people, and it took it in the wrong direction," Lew said. "This one was a little bit scary because it got so close to the edge."

There's a need to shift the focus away from fiscal policy, Lew said, arguing that the budget deficit as a share of the economy has been reduced significantly.

"Fiscal policy is very important. But there's a lot we need to do to build and grow this economy," Lew said. "We need some infrastructure. The farm bill needs to pass. The immigration bill is hugely important to the economy."

(Reporting Lucia Mutikani and Margaret Chadbourn, additional reporting by Jackie Frank; Editing by Stacey Joyce)

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Comments (34)
Delaware2 wrote:
Jack – The economy was “bruised” long before the shutdown! What Clowns…

Oct 20, 2013 10:24am EDT  --  Report as abuse
TulsaDavid wrote:
>>> It took an economy that is fighting hard to get good economic growth going.

This definitely is the koolaid speaking. $634 million for a healthcare.gov website disaster, messiahbama telling the people to “call in” on their phones to subscribe, $17 trillion debt, and a mathematical disaster called deathcare ramrodded into law. Yeah, you’re fighting real hard for a good economy. You’re honesty meter would at least go from -100 to -99 if you simply adopt the motto of hillary, the dem mascot: “What does it matter?”

Oct 20, 2013 10:27am EDT  --  Report as abuse
jabberwolf wrote:
Im laughing because they are going off an S&P report about 24 billion lost. Its like saying someone went to Mcdonalds for lunch but they were closed so instead, they decided not to eat any lunch. Almost no money was lost because people simply spent their money elsewhere on alternatives. There was/is no way to measure that INCREASE only the loss by federal closures.

Also the fiscal fight did not bruise anything – if anything its disappointing to see that the USA does nothing about its debt… or can pay its bills. Paying its bills is NOT the same as borrowing from one credit card to pay for another – which is exactly what Obama is doing. If I were another country, THAT would worry more than anything. The fact that there is a group TRYING to cut spending and confronting Obama would actually be a good thing.

Oct 20, 2013 10:45am EDT  --  Report as abuse
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