According to a new congressional report, the Obama administration lied about the federal government’s ability to prioritize spending to avert a potential credit default during the debt limit negotiations in 2011 and 2013, when it claimed such a contingency would be “unworkable.”
The administration warned, during both time windows, that if the debt ceiling were not raised in time, the treasury would not be able to pay Social Security recipients and veterans benefits, and that the United States would have to default to its creditors, destroying the full faith and credit of the federal government.
Republicans countered that the administration could prioritize revenues, which continuously come into the Treasury, to ensure these eventualities did not happen while the two sides reached an agreement. At the time, the GOP charged the administration with seeking to create a crisis in the eyes of the public, in order to force the Republican-controlled House to back down and accept Obama’s spending agenda.
— Derek Draplin (@ddraplin) February 1, 2016
The new report by the House Financial Services Committee validates the GOP claim. According to the Daily Caller, it “states that the Obama administration crafted actual contingency plans to pay for Social Security and veterans benefits, as well as principal and interest on the national debt if the government was temporarily unable to borrow more money. The Committee concludes that over the last two years the Treasury Department has ‘obstructed’ congressional efforts to get to the bottom of the administration’s real-time policy during the two showdowns.”
When negotiations reached a fevered pitch in October 2013, Treasury Secretary Jack Lew appeared before the Senate Finance Committee, where Sen. Pat Toomey, R-Pa., pressed him on the Obama administration’s plans to pay the nation’s creditors until a spending agreement could be reached.
“[A]s the Secretary of the Treasury, are you prepared to assure us, but, more importantly, the millions of Americans who are investors in U.S. Treasury securities and the entire American economy,that under no circumstances will you permit a missed payment on a U.S. Treasury security obligation?” the senator asked.
“Senator, the only way to make sure we could pay all of our obligations is for Congress to act and raise the debt limit. No President has ever had to decide whether to pay some bills and not others,” the secretary responded.
The new congressional report finds: “Treasury has sought to withhold from Congress and the American people information about the Administration’s contingency plans, for the purpose of pressuring Congress to acquiesce to the Administration’s position that any increase in the debt ceiling not be accompanied by spending constraints.”