The US 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.
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 Jan. 15 and extended its borrowing authority through Feb. 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.