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A Project of The Annenberg Public Policy Center

Lew Distorts Facts on Jobs, Debt Ceiling

Treasury Secretary Jack Lew twisted the facts during discussions about job growth and the debt ceiling on “Meet the Press.

  • Lew claimed the U.S. is “seeing growth in manufacturing jobs,” when, in fact, there has been a decline in such jobs for four straight months.
  • He also falsely claimed “we never had a debate about whether or not the United States should pay its bills until 2011.” Presidents Bill Clinton and George W. Bush both battled Congress over spending and debt limits, and both administrations had to take emergency measures to pay the bills.

Lew appeared on several Sunday talk shows at a time when President Obama has once again pivoted to the economy in anticipation of negotiations this fall with Congress over federal spending and the debt limit.

Manufacturing Job Growth?

On “Meet the Press,” host David Gregory read an excerpt of a Wall Street Journal editorial that was critical of the president’s economic record. Lew took exception, pointing to job growth in the manufacturing sector.

Lew, July 28: The job creation has actually been a little bit more impressive than what you described. We’re seeing growth in manufacturing jobs, more new manufacturing jobs than in most recent periods.

It depends on the definition of “most recent periods,” but the fact is that manufacturing jobs were down in June for the fourth consecutive month, according to the Bureau of Labor statistics. The U.S. had 11,988,000 manufacturing jobs in February. But after declines in March, April, May and June, there are now 11,964,000 such jobs — a loss of 24,000 manufacturing jobs in four months.

So the U.S. is not “seeing growth in manufacturing jobs” right now, even though overall the U.S. economy has added 731,000 jobs during that same four-month period.

What’s Lew talking about? He’s cherry-picking jobs data and reviving an old talking point from the 2012 campaign, when there was a bit of a boomlet in manufacturing jobs. Vice President Joe Biden, for example, said at a campaign rally in March 2012 that the U.S. had created “430,000 new manufacturing jobs just since 2010.” As we wrote at the time, that statement was accurate — but incomplete. It ignored the massive loss of manufacturing jobs during Obama’s first year in office.

Overall, the U.S. has lost 592,000 manufacturing jobs from January 2009, when Obama took office, through June 2013, BLS data show.

Lew, like Biden, is referring to job growth since 2010. But at least Biden was speaking at a time when the economy was adding manufacturing jobs. That is no longer the case, making Lew’s boast of “seeing growth in manufacturing jobs” not only incomplete but wrong.

Hitting the Ceiling

There was also a discussion on “Meet the Press” of a looming fight between Congress and the administration over raising the nation’s debt limit.

In May, Lew notified Congress that he would begin taking emergency measures to prevent the Treasury Department from exceeding its borrowing limit. In June, the nonpartisan Congressional Budget Office estimated that Treasury could pay its bills through October or November before Congress must act to raise the debt ceiling, which currently stands at $16.7 trillion.

In 2011, Congress and the Obama administration had a prolonged fight over raising the limit, forcing Treasury to use “extraordinary measures” to avoid exceeding the ceiling, then-Treasury Secretary Timothy Geithner said. At the time, Republicans insisted on budget cuts in exchange for raising the debt ceiling. After months of partisan wrangling and political brinksmanship, the president in August of that year signed the Budget Control Act, which raised the debt limit but also placed caps on discretionary spending and included a trigger for automatic, across-the-board spending cuts.

The administration wanted a “clean” bill in 2011 that would have raised the limit without conditions. It argued that the debt ceiling should not be held “hostage” to spending cuts that should be addressed in appropriations bills. On “Meet the Press,” Lew warned that he did not want a repeat of the 2011 debate — but he wrongly called it unprecedented.

Lew, July 28: In 237 years, we never had a debate about whether or not the United States should pay its bills until 2011. We cannot have that debate again.

But, as we wrote in 2011, there was the “1995-1996 debt ceiling crisis,” as described by the then-General Accounting Office. During that crisis, Treasury used various accounting steps to put off a default until Congress and the president finally agreed to raise the limit. That stalemate — which resulted in a partial shutdown of the federal government — was precipitated by Republicans, led by House Speaker Newt Gingrich, who insisted on the passage of a seven-year balanced budget plan in exchange for raising the debt ceiling.

Balancing Act: Washington’s Troubled Path to a Balanced Budget,” a 1998 book by George Hager and Eric Pianin, recalls how Clinton, like Obama, insisted on a “clean” debt-ceiling bill without conditions.

“Balancing Act,” 1998: The White House wanted another no-conditions extension [of the continuing budget resolution] to allow more time for the two sides to come to terms; the administration was also demanding a conditions-free extension of the limit on the federal debt, vital fiscal housekeeping that would let the Treasury go on borrowing money to meet government obligations. But Gingrich warned Clinton that rank-and-file members were spoiling for a showdown and unlikely to let the White House off without demanding conditions. It was time for Clinton to stop posturing and agree to negotiate a seven-year balanced-budget plan.

The president was polite but far from compliant. He said there was no way he would sign anything but clean, unconditional extensions of the CR [continuing resolution] and the debt ceiling. He would not be “blackmailed” by the Republicans.

Sound familiar?

George W. Bush, too, repeatedly battled with Congress over raising the debt limit. In 2002, the House passed a debt ceiling bill by a single vote just as the government was reaching its borrowing limit. The Washington Post quoted Democratic Rep. Charles W. Stenholm of Texas as saying, “We’re not willing to provide a blank check for borrowing money without a plan to curb the deficit.”

In 2004, Treasurer John Snow delayed some federal pension contributions to keep the government from exceeding its borrowing limit. Congress failed to raise the debt ceiling that year until after the November 2004 election. The Post quoted Standard & Poor’s chief economist as saying the failure to act on time was making some on Wall Street “a little nervous.” The paper also reported that the GOP-controlled House rejected a Democratic motion to reimpose a “pay as you go” budget rule for spending increases. The House then agreed to raise the debt limit by a narrow 208-204 vote, with all 208 votes coming from Republicans.

“Debt limit increases in 2005, 2006, and 2007 took a less dramatic path than those in President Bush’s first term,” according to a May 2013 report on the history of debt limit increases by the nonpartisan Congressional Research Service.

Still, there was a debate and significant opposition in the Senate to raising the debt limit in 2006. The Senate bill barely passed, 52-48, and among those voting “no” was then-Sen. Barack Obama.

During the debate, Obama called the need to raise the limit “a sign of leadership failure,” blaming the Bush tax cuts for driving up the nation’s debt.

Obama, March 16, 2006: The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. … Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.

Republican Sen. Chuck Grassley followed Obama to the Senate floor and sounded much like Lew and other administration officials who now want to pay the bills without conditions or delay. “Refusing to raise the debt limit is like refusing to pay your credit card bill — after you’ve used your credit card,” Grassley said. “The time to control the deficits and debt is when we are voting on the spending bills and the tax bills that create it.”

Some years are more dramatic than others, and the 2011 debate was one of the more contentious. But it’s wrong to say that Congress has “never had a debate” over paying the bills.

— Eugene Kiely