Obama admin lied to public during debt ceiling crisis
Formerly secret Federal Reserve documents prove that during the 2011 and 2013 debt ceiling crisis showdowns with the GOP, the Obama administration flat-out lied to the public. At issue was the administration’s insistence that default on the national debt was in prospect, when in fact it was perfectly feasible to prioritize existing cash flow and meet all debt obligations and Social Security payments without extending the limits on the national debt.
Richard Pollock of the Daily Caller News Foundation has received an advance copy of a new report by the House Financial Services Committee, to be made public tomorrow. The committee will hold hearings on that date.
The long article should be read in its entirety, but the nut of it is this:
An internal e-mail from an official in the New York Fed’s Financial Institution Supervision Group states that regardless of the congressional outcome, “Treasury is adamant they will make [Principal and Interest] payments. Not considering possibility of missing debt payments.” The P&I payments are made to Treasury bond holders.
“At the same time that Treasury was insisting to Congress and the American people that prioritization is unworkable, Treasury and New York Fed officials were working behind the scenes on a prioritization plan,” the report charges.
In private, Federal Reserve Board Federal Reserve Bank of New York officials vigorously denounced the administration’s secrecy over its contingency planning, one calling it “crazy, counter-productive, and add[ing] risk to an already risky situation.”
Federal Reserve Governor Jerome H. Powell, for example, complained that the administration tactics were part of political brinkmanship. “Treasury wants to maximize pressure on Congress by limiting communications on contingency planning,” he said in an email.
The report noted that both the Federal Reserve Board of Governors and the Federal Bank of New York had “grave concerns with Treasury’s political decision not to inform the public of the administration’s debt ceiling contingency plans.”
The Federal Reserve Board staff “strongly encouraged Treasury to reveal its plan in advance” so that the private sector could prepare properly for a debt ceiling event but Treasury officials were “very reluctant to do so,” according to the report.
Treasury Secretary Jack Lew comes off as a craven liar, a political hatchet man.
The Democrats will denounce the report as a partisan document. But the Federal Reserve documents are not partisan, and they show who lied.
Read the whole thing.
Hat tip: Lauri Regan