Treasury Secretary Jack Lew on 'This Week'

Lew goes one-on-one with George Stephanopoulos on the current state of the economy.
9:14 | 07/28/13

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Transcript for Treasury Secretary Jack Lew on 'This Week'
Now is the time to jump start job creation. An agenda that begins with jobs. It's time to rebuild our economy on a new foundation. So that we've got real and sustained growth. Our focus has to be on the basic economic issues that matter most to you. In white house shorthand, the pivot. President obama did it with big speeches designed to get the country mind him on the economic debates dividing washington, the government shutdown and the prospect of default are looming again. Jack lew and the roundtable here to weigh in on that. First rebecca jarvis looks at where things stand on the economy. Reporter: It's the tale of two economies. What brings you? Looking for a car. Two cars, actually. Reporter: He says business is booming. He's seen a big increase in sales since the start of may. We have a lot more customers, a lot more traffic and real buyers. Reporter: Then there's the other story, 11.8 million americans without work. More than 4 million for six months or longer. On a scale of one to ten, how difficult is it to find a job? I would say right now it's about an eight. Reporter: Yet again triggering a washington blame game. This endless parade of distractions and political posturing and phoney scandals, washington's taken its eye off the ball. Our country has fallen into the new normal of slow growth, high unemployment and stagnant wages. Reporter: There are signs of improvement, stocks at all-time high, corporate america turning out record profits, and home sales up. But unemployment remains stubbornly high, and americans are skeptical about the recovery. 82% say the economy is in fair or poor condition. If washington can't get it together this fall, then what? If they can't raise the debt ceil, fund the government into the next fiscal year, it's a mess. The risks are significant. Go back into recession. Reporter: For "this week." Rebecca jarvis, abc news, new york. Thanks for that. Now to jack lew, thank you so much for joining us. We heard mark zandi say that washington can hurt the recovery if it mishandles the false showdowns. First is over the funding of the government. The president said he's going to veto bills that fail to roll back the sequester. House republicans are going to insist on those spending cuts. Are we heading to a government shutdown? I think it is imperative that washington be part of the solution, not the problem. We can't afford self-inflicted wounds, and have these self-created crisis month after month, year after year. Isn't that where we're headed? We saw how bad it was in 2011. And we hope the congress learned that was not the way to do business. The president said we have to remember what we're here today, we're here to build an economy with opportunity for the american middle class. He's trying to remind washington what the people of america know, this is about their future. We need to roll up sleeves and get the work done. I know that's it, but is he going to insist that any government funding bills roll back the sequester? He's made clear he's not going to sign appropriation bills that fix defense at the expense of domestic priorities. When congress does its work in the fall, he's going to be looking to see building a better future for the american middle class. Those are values shared by the american people, and values shared by a majority in congress, and I think we're going to be able to work through these issues, and I certainly hope that congress isn't looking to create confrontations and false crisis. We saw in 2011 how bad that is for the american economy. You saw the crisis in 2011 and the economic harm it did, there is another standoff. The president says he's not going to negotiate. Speaker boehner says he will together on that? It's important to remember how much we have done since 2011. You know, when we had these debates in 2011, we hadn't enacted the savings or revenue measures we have now put in place. We have on multiple occasions come together in a bipartisan way through the budget control act, we reduced spending, at the beginning of this year, we acted to remove the tax breaks for the veealthy. We need to get the composition right. This is not just about cutting budgets, we have to have the fiscal house in order, it's about building the foundation for a strong economy. I think there's a basis to work together on that. If the debate is just about abstract numbers, frankly, it misses the point. This is about building a better future. I understand those are the president's ideas and you believe strongly in them. But I don't see the kind of basis for building on that that you're talking about. It seems like the sides are dug in right now. You know, george, I have talked to people in congress, both sides, democrats and republicans, talked to leaders, you know, members and senators. There's a majority in congress that wants to replace the across the board cuts with more sensible policies. Our challenge is breaking through the logjam in congress to get that done. That's the question, how are you going to do it? What's the president's done is provided a clear frame with the stakes before the congress and the american people. I think if this is about what we want to accomplish, let's have a debate about what it takes to build an american middle class that's growing and thriving. Not just social policy, it's good economic policy. It's actually improving the economy. But the bottom line is the same, the president is not going to negotiate over the debt limit. If that's the case, aren't we headed for the showdown you fear? You know, I think that a lot of people watched 2011 and learned from it that it was a big mistake. I think that the leaders learned from that, that's not a good way to do business. Congress has to act on this. They're going to have to figure out a path to do it. If that includes spending reductions, the president will sign it? I think the president's made crystal clear he's not going to negotiate over the debt limit. I have to underscore how important that is. The mere fact of negotiating after the debt limit after 2011 would introduce this notion that somehow there's a question about whether or not we're going to pay the bills, protect the full faith and credit of the united states. It's not okay to default. Congress can't let us default. They have to do their work. Will you ask senator reid to pass the clean debt limit first? Congress is going to have to pass a debt limit that can reach bipartisan consensus and the congress and the president can sign it into law. Perhaps the most consequential decision the president it going to make is the decision to replace fed chairman ben bernanke. It seems for the two main candidates, governor janet yellin, and larry summers, the former economic adviser, speaker pelosi and about a third of the senate dmrkemocrats have weighed in on a woman candidate. Which side are you on, you're part of the discussions, and what is the president looking for in a fed chair? I have to start by saying that chairman bernanke is and remains an extraordinary fed chairman. I'm going to keep private any conversations we're having with the president on the question of when and what kind of succession there should be. I think that those conversations are best left in the privacy of the oval office. But it suggests that she will be easier to confirm than larry summers. Is that a factor? I'm not going get into commenting on different candidates potential paths. The conversations should stay where they are. Let me ask about the situation facing detroit, filing for federal bankruptcy last week. The governing board of the flco has weighed in strongly saying that the federal government must step up and provide assistance to detroit. Is that going to be coming? George, detroit's economic problems have been a long time in developing. We stand with detroit trying to work through how it approaches the issues. To the extent there are normal relations between the federal government and state and local government, we have been using those methods. Even in the treasury department, we have a program where we work to help with housing programs. I think when it comes to the questions between detroit and its creditors, that's what detroit is going to have to work out with the creditors. So federal bailout off the table. I think they're going to have to work with their creditors. That's the last word. Secretary lew, thanks very much. More from the roundtable joined

This transcript has been automatically generated and may not be 100% accurate.

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