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Raise the debt limit, Treasury chief says

The Associated Press

WASHINGTON -- Congress needs to raise the debt limit and take away the "cloud of uncertainty" about the nation's ability to pay its bills, Treasury Secretary Jack Lew said in an interview broadcast yesterday.

"The fight over the debt limit in 2011 hurt the economy, even though, in the end, we saw an extension of the debt limit. We saw confidence fall, and it hurt the economy," Lew said on NBC's "Meet The Press." "Congress needs to do its job. It needs to finish its work on appropriation bills. It needs to pass a debt limit."

Senior lawmakers are trying to come up with legislation to keep federal agencies running after Sept. 30 and prevent the possibility of a government shutdown. At issue is a plug-the-gap measure to fund the government for a few weeks or months until a deal can be worked out on appropriations bills giving agencies their operating budgets for the full 2014 fiscal year, which begins Oct. 1.

Some Democrats don't want to vote to continue to fund the government at new, lower levels mandated by the automatic, across-the-board spending cuts known as sequestration.

And some conservatives are making a last stand against President Barack Obama's new health care law. In addition, Senate Democrats are resistant to a $20 billion spending cut sought by many Republicans.

The issue has divided Republicans between those who think it's appropriate to use the threat of a government shutdown to negotiate, and those who don't.

Rep. Peter King (R-Seaford) said Republicans should be searching for ways to defund or repeal the Obama health care law. But he called threatening to shut down the government "terror politics" and said the strategy wouldn't work. Others have worried that the gamesmanship could cost Republicans control of the House.

"We should not be closing down the government under any circumstances," King said on CNN's "State of the Union."

Separately, Lew said no federal bailout is in the works for the city of Detroit, which has filed for bankruptcy protection.

Pressed as to why the government chose to bail out big banks, the auto industry and others, but isn't assisting the city, Lew said on "State of the Union" that the situation during the financial crisis that warranted the other bailouts was "unique." But the current problems facing Detroit, "it's going to have to work out with its creditors," he said.

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