WASHINGTON — Republicans may be inching toward concessions to end the shutdown and to extend the federal borrowing limit.
But the ideological chasm between the GOP and the Democratic Party was in full display Thursday during a Senate hearing over the approaching deadline over the debt ceiling.
Treasury Secretary Jack Lew pushed back against suggestions by Republican Sens. Pat Toomey of Pennsylvania and Mike Enzie of Wyoming that there is nothing unprecedented about Congress using the possibility of a default as leverage to reduce deficits.
Lew repeatedly said that in the past, the debt ceiling was attached to budget agreements after the fact, not used as the driver in negotiations.
Lew said the continuing uncertainty over whether the United States will meet its debt obligations poses grave consequences for Americans. The Treasury would be unable to issue Social Security checks or veterans benefits, the dollar would lose value against other currencies and stock markets will be shaken.
“No Congress in 224 years of American history has allowed our country to default, and it is my sincere hope that this Congress will not be the first,” Lew said.
Sen. Maria Cantwell displayed a map to show that U.S. treasuries are held by lenders around the globe. A default would lower the United States’ credit rating, thus raise borrowing costs for everything from mortgages to business loans.
The standoff in Congress ”is almost talking interest rates up,” Cantwell said.
Cantwell noted that the last debacle over the debt ceiling caused the stock markets to drop by 20 percent. It would well happen again, she said.
But Sen. Mike Crapo of Idaho and other Republicans argued the nation’s $16 trillion-plus debt is a bigger menace than the approaching debt-ceiling limit. He and others argued cuts to Medicare and other entitlement programs would go in hand with raising the debt limit.
A skeptical Toomey said President Obama must have a contingency plan in case of a default.
Lew said there is one, but “the options are all bad.”