If you fail to pay any of your bills, you're in default. ![]() What isn't fine is looking at a deadline where if you don't capitulate, you default. LEW: What happened in 2013 and beyond was Congress, you know, Senator McConnell in particular, found a way to structure it so that the president could make the hard decision about what the debt limit should be, and the president could bear all the political burden, as it were, of making the decision. Like, it didn't feel like it was fully resolved. But then my recollection is it kind of bubbled up again - I mean, in 2015. KHALID: So you mentioned in 2013 it ultimately got resolved. This is really the first major showdown since then. That had to be put to rest, and it got resolved in 2013 and beyond. And that is totally appropriate, but not with the demand of, if I don't get what I'm looking for, we will default. You know, it's one thing to negotiate over fiscal policy. LEW: In 2013, President Obama - I was at Treasury at the time - myself and the economic team made the judgment we could not do that again. KHALID: So let's talk about what happened then a couple of years later in 2013. What changed over time was there was always a negotiation with a must-pass bill until 2011, when, all of a sudden, default was an acceptable outcome to those making demands. I've been involved - I was involved - in showdowns over the debt limit in the 1980s, when I was working for the speaker of the House, in the 1990s, when I was at OMB in the Clinton administration and then again in 2011 and '13 in the Obama administration. ![]() LEW: Well, you know, not to go back to ancient history. KHALID: So it sounds like in 2011 there were concessions, ultimately, the Democrats made - right? - in the sense, after 2011 - was that Democrats can't do this in the future. It was only the best alternative at the moment to default. And in the event that that special committee failed, you know, deep across-the-board cuts in a process called sequestration. LEW: Well, it ultimately got resolved in a combination of lowering the caps on discretionary spending and putting in place a special committee that was supposed to report back on deficit reduction. KHALID: For those who don't remember what happened in 2011, how did it ultimately get resolved? It was right as we were emerging from the great financial crisis. And there were nights when you would check the Asian markets in the middle of the night to make sure the world didn't think that was the day we were going over the line. ![]() I was with the vice president then, and Senator McConnell, on calls. JACK LEW: There were nights when we were negotiating literally through the night, you know, at multiple levels. In 2011, he was director of the Office of Management and Budget. ![]() He helped navigate a few of them during the Obama administration. We spoke with former Treasury Secretary Jack Lew about what lessons were learned from previous debt ceiling crises. came so close to default that Standard & Poor's downgraded the nation's credit rating - among them, Joe Biden, who was then vice president. And many of the same people who have been negotiating on this issue on and off since 2011, when the U.S. At some point, Congress and the White House will have to act together to raise the debt ceiling. The Treasury Department has been taking extraordinary measures to avoid a default on U.S.
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