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JACK LEW, SECRETARY OF THE TREASURY: Good to be with you, Chris.
WALLACE: This week, both you and the president seemed to be trying to panic the markets about both raising the debt ceiling and the government shutdown, saying that they should be more concerned. Here's the president.
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PRESIDENT BARACK OBAMA: I think this time's different. I think they should be concerned. When you have a situation in which a faction is willing potentially to default on U.S. government obligations, then we are in trouble.
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WALLACE: But so far, the markets are shrugging it off. The Dow Jones dropped just 1.2 percent this week. Nasdaq was actually up more than half a point.
Aren't your efforts failing to try to use the markets to put pressure on Republicans to cave?
LEW: You know, Chris, it's my job to try to make sure we strengthen the economy, and I spend every day trying to do that. That's why it's so important for Congress to act to open up the government, to make sure we can pay our bills.
There's no question but that if we were to have the unthinkable happen and have the United States default, it would cause real problems. The only question is how serious the problems would be, and there's a kind of range of how bad the consequences are.
But why would anyone want to do that to the American economy at a time when the American people are showing their resilience, recovering from the worst recession since the Great Depression?
You know, and this is not a new issue.
I'm going to quote to you from something President Reagan wrote to Congress or said to the country back in 1983, "The full consequences of a default or even the serious prospect of a default by the United States are impossible to predict and awesome to contemplate."
"Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets."
That was President Reagan. Congress needs to act.
WALLACE: Well, let me -- let me -- let me quote you to you, because the Treasury Department issued a report late this week that said a possible default would be, quote, "catastrophic."
Here's what your own Treasury Department report said, "Credit markets could freeze. The value of the dollar could plummet. U.S. interest rates could skyrocket, and there might be a financial crisis and recession that could echo the events of 2008 or worse."
On the other hand, the Fed continues to pump money into the economy.
Given that, what's the likelihood that a default would be catastrophic?
LEW: Look, Chris, the good news is, there's a majority in Congress that's ready to do the right thing, that's ready to vote to reopen the government --
WALLACE: I'm asking an economic question, not a political question.
LEW: -- and that's ready to avoid the kind of unthinkable problems that happen if the United States for the first time since 1789 willfully defaults on the good full faith and credit of the United States. I don't think there are serious people who think that the consequence is minimal.
I mean, people say you can pay some bills and not other bills, but let me ask you a question, Chris.
If you pay one bill -- let's just say you pay interest and principal on debt. I'm not saying that you can.
What happens if you don't pay millions of people on Social Security?
What happens if you don't pay hospitals and health care providers across the country?
The consequences are immediate, and they're very bad. Congress needs to act.
WALLACE: I asked you an economic question.
Would it be catastrophic?
LEW: Chris, I am telling you that I know the direction. I know the direction is bad. There are a range of how bad. It is not responsible, it is irresponsible, and it is reckless to take that chance, which is why Congress needs to act.
WALLACE: All right.
LEW: It's only Congress that can act to raise the debt limit. It's Congress' authority and responsibility.
WALLACE: All right. You say the consequences would be bad. It would be irresponsible not to act. Despite these stakes, the president -- the president refuses to negotiate, saying what Republicans are demanding has never happened before. Take a look.
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OBAMA: You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt ceiling being used to extort a president or a governing party and trying to force issues that have nothing to do with the budget and have nothing to do with the debt.
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WALLACE: But, Mr. Secretary, that is just not true. Congress has voted to raise the debt ceiling 53 times since 1978. More than half -- 27 times -- it's been linked to something else. And among those items it's been linked to: campaign finance reform, school prayer and busing and a nuclear freeze.
What's unprecedented is not Congress tying strings. What's unprecedented is the president refusing to negotiate.
LEW: You know, Chris, let me be clear. The president has always been looking for a way to negotiate, find that reasonable middle ground with a bipartisan, you know, group of members and senators to do the right thing for the American people. He was -- he has -- he put out a budget that actually took an enormous step to do that.
So the president is open to negotiation. The question about the debt limit is different.
And, frankly, I think your history is wrong. If you look at the cases where the debt limit was involved, there were many other things attached to the debt limit, but the question of threatening to cause a default of the United States, not until 2011 did it become a positive agenda.
WALLACE: Mr. Secretary, your history -- with all due respect, your history is wrong.
In 1973, Democrats in the Senate, including Ted Kennedy and Walter Mondale, wanted to attach campaign finance reform under Richard Nixon during Watergate to raising the debt limit. They -- it ended up being a filibuster.
Republicans had to filibuster to defeat it and take it out. This has happened over and over again, and presidents have negotiated, and this president -- what's unprecedented is he's refusing to negotiate.
LEW: You know, Chris, I lived through the budget debates of the 1980s, the 1990s, the early 2000s. I know that there were many occasions when the debt limit was tacked on to other things. I actually remember when the debt limit was used as a deadline, an action-forcing event.
It was different in 2011. In 2011, you had 50 to 100 members of the House who said, if we don't get our way, we would rather see the default of the United States, and that was different. It was different. And I think what the president is saying is, Congress has to do its job. It has to open the government. It has to make it so we could pay our bills.
WALLACE: But you're moving the goal line.
LEW: And then we need to sit down and we need to negotiate.
WALLACE: John Boehner said he doesn't want to default, sir.
So why not sit down with him and talk?
You're the one who's saying that they're ready to take the economy down. They say they don't want to take the economy down. You agree. In 1997, you were deputy director of OMB when the debt limit was tied to measures to balance the budget. If it was good enough for Bill Clinton to sit down and negotiate with the House speaker, why isn't it good enough...
LEW: So --
WALLACE: -- for Barack Obama?
LEW: -- Chris, in 1997, I sat through every meeting in the balanced budget negotiations. No one once raised the issue of threatening default...
WALLACE: -- neither is John Boehner.
LEW: -- now, John Boehner -- I know John Boehner. We have a good relationship. I've talked to John Boehner. I know he doesn't want to default. He also didn't want to shut the government down.
And here we are with a government shutdown.
There's a majority in Congress that would vote to do the right thing. The majority needs to be given a chance to work its will.
WALLACE: All right, let me just -- look, first of all, John Boehner is not threatening to default. He's saying he doesn't want to default.
Republicans are talking right now about a down payment on the debt. They're willing to ease the sequester, automatic spending cuts, in return for long-term spending cuts through entitlement reform.
Will the president negotiate on that as part of a deal to deal with the debt limit and the shutdown?
LEW: Chris, we need to separate the issues. Congress --
LEW: -- Congress needs to open the government --
WALLACE: Why (INAUDIBLE) separated for --
LEW: Congress needs to --
WALLACE: -- years.
LEW: -- open the government. We're now going into the second week of a government shutdown. It's causing real damage to the American people. Every day, people who thought it was OK to shut the government down, every day they're discovering why it's a problem. You can't fix this by discovering a problem here and there.
Congress needs to do its job.
WALLACE: So you -- you're saying --
LEW: It's Congress' job --
WALLACE: -- refused to --
LEW: -- sole...
WALLACE: -- negotiate over a --
LEW: -- solely Congress'
WALLACE: -- debt solution?
LEW: Chris, it's solely Congress's job to pass a budget. They have to pass a budget. They have...
WALLACE: I just want to ask a question.
LEW: If Congress
WALLACE: Are you refusing
LEW: -- needs to
WALLACE: -- are you saying the president
LEW: -- make it possible for
WALLACE: -- is refusing to negotiate
LEW: -- us to pay our bills.
WALLACE: -- sir?
LEW: I'm saying the president wants to negotiate. He wants to negotiate...
WALLACE: Negotiate on the debt limit?
LEW: And -- and -- Chris, we need -- Congress needs to do its job and we then need to negotiate. The president has taken many steps over the last several years to show his willingness to negotiate. He's done it with Democrats saying he's too eager to negotiate.
Now, Republicans have not come forward and made comparable movement. If we were in a place a year ago or two years ago, where everything was on the table, where entitlement reform and tax reform were equally on the table as part of a solution, we wouldn't be where we are now. We came forward; we were willing to do entitlement reform.
LEW: -- the Republicans
WALLACE: Since you say
LEW: -- need to come forward, as well.
WALLACE: -- that the -- the possible results could be so, in the words of your report, catastrophic, will the president accept a short-term extension to fund the government and raise the debt limit so you can have talks about the debt?
LEW: Look, Congress will have to make a decision what they do. I can tell you that the American economy would be well-served by getting some stability and some certainty. These manufactured crises that -- and this brinksmanship over and over again, is bad for the economy. It's hurt -- you know, we -- we're the world leader. We are the strongest, deepest economy in the world. Our currency is the world's reserve currency. Since 1789, people have depended on the United States for that kind of stability.
Congress should act now. I think they should act to take this burden off of the economy. It's a self-inflicted wound.
But we'll have to see what Congress does.
WALLACE: I -- I just want to say, I take away from this conversation that even though Republicans are willing to talk about a debt deal or a short-term extension, the president -- it's the president who is putting his -- digging his feet into the ground and saying no negotiations?
LEW: Chris, that is not what I said.
What I said is Congress
WALLACE: Well then just
LEW: -- Congress
WALLACE: -- well, what are you saying?
LEW: Congress needs...
WALLACE: -- want unconditional
LEW: Congress needs
WALLACE: -- or nothing else, sir?
LEW: -- to do its job. You know, we've just spent the last several months with Congress creating this ridiculous choice where either you repeal the Affordable Care Act or you shut down the government or default on the United States. That is not the way we should do business. We need to -- they need to do their job. They need to open the government. They need to fund our ability to pay our bills. These are old bills, Chris. These aren't new bills.
WALLACE: I -- I understand that, sir.
LEW: And then we -- we're open to negotiation. The president has been, is and will always be open to reasonable discussions.
WALLACE: I want to ask you about ObamaCare. You brought it up, that's what -- what a lot of this is about. The public exchanges in ObamaCare opened this week. And I think it's fair to say that the government Web site was a mess. In fact -- and you can look at it right here -- the page to sign up to enroll for ObamaCare has been taken down for repairs during off-peak hours this weekend.
A question, sir. You have had three years to prepare for this week.
If I already had doubts -- somebody already had doubts about the government's ability to oversee a sixth of the economy, shouldn't this just add to my doubts?
LEW: You know, Chris, the -- I actually think that is not what's happened this week. What happened this week is we saw seven million people rush to go onto the Web page to find out what are their choices in this new marketplace to buy affordable health care.
WALLACE: How many actually signed up, sir?
LEW: You know, they have six months to sign up. This is a big decision. We never expected --
WALLACE: How many signed up?
LEW: -- I -- I don't have the exact number. But the question isn't --
WALLACE: Do you have any number --
LEW: The question --
WALLACE: -- because the government has refused to --
LEW: -- it's the wrong question.
WALLACE: -- tell us how many.
LEW: It's the wrong question.
WALLACE: No, it isn't.
WALLACE: In the end, looking --
LEW: The right question --
WALLACE: -- I can look and I may have no interest and, in fact --
WALLACE: -- I'm not going to need ObamaCare --
LEW: We know --
WALLACE: -- the question is, how many --
LEW: Chris, we --
WALLACE: -- people have --
LEW: -- we know --
WALLACE: -- actually signed up?
LEW: We know that people take time to make important decisions like this. They go on. They compare their options. The fact that so many millions of people rushed to get information is a very good sign.
And then to your question about the Web site, I don't know about you, but, um, you know, I sign on and I get updates on my software and I often get corrections that I have to re, uh, re-update my -- my software from major companies.
It is not unique that when you have a very large new software program come out, that people work to clean it up. I usually wait until it's .3 or .4 before I sign up.
So many millions of people rushed to get in, because that shows how much interest there is in -- in getting health care.
WALLACE: I'm going to ask one last time, because, forgive me, sir, you haven't answered it.
Do you not know how many people have signed up?
Which should seem to indicate another major software glitch?
Or is it that the number is embarrassingly small?
LEW: Chris, I -- our metric for this week was could people get online, get the information they need...
WALLACE: The answer is they couldn't --
LEW: -- to make an enforce -- and informed decision. They have been getting that information. We are confident that they're going to make the decision as we expected. They have six months to make the decision.
WALLACE: So you don't -- the -- do they -- do you not know or is it that the number is small?
LEW: Well, it's obviously not my primary area of responsibility, so my knowing or not knowing is not -- is not going to be indicative...
WALLACE: But then nobody --
WALLACE: -- in the government --
LEW: -- the -- the important issue -- the important issue here is that millions of Americans want to get affordable health care. They came online. They're getting the information.
And do you know what they're learning?
They're learning they can get affordable health care, they can save money, they can avoid having a situation where they have pre-existing conditions but no health care or they have children who have no health care.
This is a very important development.
WALLACE: They just can't sign up for it at this point?
LEW: Well, I think they are going to be signing up.
LEW: They have six months to sign up.
WALLACE: But technically, they can't.
LEW: Well --
WALLACE: Secretary Lew, thank you.
Thanks for coming in today.
We'll stay on top of all this, the shutdown, the default and the problems with ObamaCare.
Thank you very much, sir.
LEW: Great to be with you, Chris.
WALLACE: With no negotiations at this point between the White House and Congressional Republicans, where is the government headed?
George Will joins our Sunday group for the first time. And we'll ask them, next.
WALLACE: Will the president negotiate on that as part of a deal to deal with the debt limit and the shutdown?
LEW: Chris, we need to separate the issues. Congress --
LEW: Congress --
WALLACE: Why --
LEW: -- needs to open the government...
WALLACE: -- for years.
LEW: -- Congress needs to open the government. We're now going through the second week of a government shutdown. It's causing real damage to the American people.
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WALLACE: Treasury Secretary Jack Lew earlier this morning on the president's refusal to negotiate with Republicans.
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