Press Releases

Remarks of U.S. Treasury Secretary Jacob J. Lew before the Commonwealth Club of California

(Archived Content)

As prepared for delivery

MOUNTAIN VIEW, CA - I want to thank Steve for that kind introduction, and thank the Commonwealth Club for hosting this event.   

It is great to be here at the Computer History Museum, and it is so good to be in California. 

I want to talk a little today about setting a course for long term economic growth and the challenges we face as a nation to secure our economic future.  I also would like to take some time answering your questions.

Let me start with a few observations.

Four and a half years ago, when President Obama first took office, America was in the grips of the worst recession of our lifetimes.
Our economy was shrinking at a 5.4 percent annual rate.  We were losing more than 700,000 jobs every month.  Homes were being foreclosed.  Businesses were shutting their doors.  Savings accounts were hemorrhaging.  Credit markets were frozen.  And the American automobile industry was in deep trouble. 

The President took swift and decisive action to steer our economy out of the recession.  Right away, he moved to put out the financial fires, stabilize U.S. automakers, and jumpstart growth. 

But while that was critical, it was not enough.  So he also focused on laying a foundation for future economic growth. 

We are talking about investments in education and infrastructure.  Fixing a broken health care system.  Putting in place new rules so our financial system would work better for consumers and investors.  Locking in lower taxes for 98 percent of all Americans.  And lifting obstacles so that it was easier for entrepreneurs and businesses to innovate, grow, and hire.

Thanks to these actions and the determination of America's businesses and workers, we are headed in the right direction. We must remember that four years ago, it seemed nearly impossible that we would be where we are today.  But the American people are resilient, and the American economy is resilient.  Together, we have taken steps to put our economy on sounder footing.  

Since 2009, our economy has been steadily expanding.  Private employers have added more than 7 million jobs over the past 41 months, and nearly one and a half million private sector jobs have been added so far this year.  The housing market continues to improve, posting clear gains in sales, prices, and residential building. Housing affordability is near a historically high level.  

Families continue to repair their balance sheets, and household debt as a share of personal income is now near a 10-year low.  Credit is expanding, and business investment has been solid.  Health care costs are growing at the slowest rate in 40 years.  We sell more American made goods to the rest of the world than we ever have before.  We produce more natural gas than at any time in history.  And we are reducing our deficit at the fastest rate since the demobilization after World War II. 

Now, even though the outlook ahead is brighter, there is more to do.  Unemployment remains stubbornly high, while too many people are still struggling to re-enter the workforce.  You see, our long term prosperity depends on an expanding, vibrant middle class.  But as we know, trends at work in our economy for a while now have been undercutting what it means to be middle class.  These shifts—from companies moving production overseas to technological advancements that have made some jobs obsolete—did not begin with the financial crisis.  They did not begin with the recession.  If anything, the crisis and recession lifted the veil on what was happening.  And now we are at a point where we have to focus our attention on reversing these trends.   

Taking steps to restore middle class security is the foundation of the President's plan to move our country forward.  This is a plan that will create more middle class jobs by improving our infrastructure, increasing our exports, and enlarging our manufacturing base.  It is a plan that will expand the availability of a high quality education by making college more affordable and helping workers get the skills they need for today's technology-rich job market.  It is a plan that will make homeownership more secure by fixing our housing finance system and giving responsible Americans the chance to refinance their mortgages.  It is a plan that will let more Americans retire with dignity by unlocking new ways for workers to save for the future.  And, it is a plan that, by doing the right thing and reforming our broken immigration system, will strengthen Social Security. 

Earlier today, I was at the AT&T Foundry in Palo Alto where developers from around the world are working side by side to create new products quickly.  It is a strong example of how bringing bright, driven minds together can fuel innovation.  And I want to point out that spurring this kind of innovation and entrepreneurship is a core part of the President's strategy to build a better future for the middle class.  In addition to immigration reform and worker training, his strategy includes the creation of 45 manufacturing innovation centers across the country.  These innovation hubs connect businesses, colleges, and federal agencies to help develop world-leading manufacturing technologies.  

Last year, we started our first manufacturing innovation center in Youngstown, Ohio.  What was once a defunct warehouse is now an advanced lab where new workers are mastering 3-D printing technologies.  High tech centers like this one have enormous potential.  And we believe these advances in manufacturing should happen right here in the United States.  We believe more products should be made here in America. 

At the same time, the President is proposing critical investments in American energy technology.  We are generating more renewable energy than ever before, and we want to help establish new energy sources so that we can develop more industries here at home and lower energy costs for households and businesses.  We also want to help foster technologies that will increase natural gas production and protect our air and water.  

Finally, it is time to make the Research and Experimentation tax credit permanent.  There is no reason to keep putting this off.  This tax credit propels private investment in research and technology, and it helps unleash innovations in our country that lead to new industries, new jobs, and new breakthroughs in production and engineering. 

Now, even as we work to set the President's economic plan into motion, we face obstacles.  One of those obstacles is coming from Washington, where instead of creating jobs, some political leaders continue to create one manufactured crisis after the next.  Several months ago, we saw one of those manufactured crises become reality when Congress let a series of harsh, indiscriminate spending cuts, known as sequestration, go into effect. Nearly every part of the federal government is coping with an onslaught of these reckless, across-the-board reductions.  These cuts are harming the middle class, hampering growth, and hindering job creation in communities, like this one, all across the country.  That is why the President has called on Congress replace these cuts with sensible, balanced deficit reduction.

But even as we work to repair the damage wrought by sequestration, Congress must act to prevent yet another manufactured crisis from hurting our economy.  

In just a few weeks, we will find ourselves once again perilously close to breaching the debt ceiling if Congress fails to act.  As you know, the Constitution reserves certain responsibilities for Congress, and Congress alone, including appropriating funds, raising or lowering taxes, and setting the maximum amount of borrowing authority through what is called the debt ceiling.  In our history, the U.S. has never defaulted on a payment.  Congress has always upheld its responsibility to protect the full faith and credit of our nation.  

It is important to note that the debt limit has nothing to do with new spending.  It has to do with spending that Congress has already approved and bills that have already been incurred.  Failing to raise the debt limit would not make these bills go away.  It would, though, have disastrous effects for our nation. 

Even a delay of a necessary increase in the debt limit can bring harmful consequences.  Keep in mind, the receipt of tax revenues and the outflow of expenditures are inherently unpredictable.  So it is not possible for us to estimate with exact precision when Treasury will have to depend exclusively on cash on hand to meet our country's commitments – or how long it will take before that cash runs out.  If cash on hand were to be depleted, all payments across the government -- including Social Security and payments to our military and veterans -- would be at risk.
Many of you may remember what happened two years ago when some in Congress used the credit worthiness of the United States as a political weapon.  There was a prolonged and protracted debate about raising the debt limit.  The nation and the world watched with growing anxiety as Congress withheld action on extending the debt limit until the last minute.  And while that standoff was eventually resolved, the cloud of doubt that took hold and the high-stakes drama that took place harmed the economy.  The drawn-out dispute over the debt ceiling caused business uncertainty to jump, consumer confidence to drop, financial markets to fall, and economic growth to falter. 

We cannot afford a repeat of what happened in 2011.  We cannot afford for Congress to wait until some unknowable last minute to resolve this matter on the eve of a deadline.  We cannot afford another unnecessary self-inflicted wound.

As a widely respected leader from California once put it: "This country now possesses the strongest credit in the world.  The full consequences of a default—or even the serious prospect of default—by the United States are impossible to predict and awesome to contemplate."

Those words came from President Ronald Reagan nearly 30 years ago.  And it is for the reasons he laid out back then that I am calling on Congress today to raise the debt ceiling as soon as members get back to Washington after their summer recess.

Before I close, I just want to say that, sadly, confrontations in Washington over issues like the debt limit shake people's trust in government.  It leaves Americans with a little less faith that we can meet the tests of our time.

But the truth is, we can overcome our challenges.  Being here in California is a reminder of that.  It is a reminder that this is the greatest, most resilient nation on earth. A nation with an endless capacity for renewal and a constant drive to push beyond the last frontier.  An indomitable belief in a better tomorrow.  And a real determination to work alongside each other to improve the lives of all Americans.
There is no doubt that we can head down the path of economic prosperity that awaits us.  Let us work together to get this done.

Thank you, everybody, and I look forward to answering your questions.


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