There are lies, darn lies, and Treasury Department pronouncements. The Obama Administration understandably wanted an increase in the debt ceiling but they wanted it on their terms this last time and not Republicans as happened before. They decided to scare the public into pressuring Congress to “do the right thing”, according to newly released subpoenaed records from the Treasury and New York Federal Reserve Bank.
The claims that the Republicans were delusional when they claimed that the government would not default because debt payments would be prioritized including entitlements. Well, the New York Federal Reserve had just those plans ready to go in the event that we hit the debt ceiling. They called Treasury Department orders to keep those secret from Congress “crazy and counter productive”.
Made public for the first time, records turned over to the Committee in response to the subpoena show the Federal Reserve Bank of New York previously made plans to prioritize Social Security, veterans’ benefits, and principal and interest payments on the debt over other government obligations.
The Administration, however, directed the New York Fed to withhold this information from the Committee because “Treasury wants to maximize pressure on Congress by limiting communications about contingency planning,” according to a previously undisclosed internal email of the New York Fed.
Efforts by the Obama Administration to keep its contingency planning a secret were met with objections from officials at the Federal Reserve and the New York Fed, who described the approach in an email as “crazy, counter-productive, and add[ing] risk to an already risky situation.”
The Committee began its investigation of the Obama Administration’s contingency planning in late 2013. The Treasury Department and New York Fed failed to comply with requests for information and stonewalled the investigation, forcing the Committee to issue a subpoena in May 2015. The Committee will discuss the nation’s unsustainable federal spending and the debt limit, in addition to the findings of the report, at an Oversight and Investigations Subcommittee hearing on Feb. 2.
“In light of what the internal New York Fed documents indicate, it is now obvious why Treasury fought so hard to prevent their production to the Committee: Treasury knew that the documents would expose the disingenuousness of its public statements and the political gamesmanship at the heart” of the Administration’s “no-negotiation” strategy on the debt ceiling, the