Morning. They said this is not about paying the japanese, not about paying the chinese, youre not going to get your Social Security check, doctors arent going to get paid. Ive been waiting for them to do this. That is devastating from even the most rock solid rightwing politician. But you cant go against socsack. The Interest Rate can go up and the japanese may not be paid. Boy, they got rid of that. Thats the jpmorgan argument, the bankers. No, its now retailers. Ling congressmen are going to be targeted. You cant get against Social Security. Its sacrosanct. And secretary lew said do you want to pay veterans or Social Security . You decide. This is expected to go for maybe another half an hour. Lets go back to capitol hill and secretary lew. The fact is that we have not dealt and in that compromise we dealt with Discretionary Spending almost entirely. We have not dealt with entitlements, which the administration seems to say are off the table and now weve got yet even more demands for greater tax hikes. And thats what the negotiations we want to engage in are about. Senator, the president has engaged on multiple occasions. Ive been part of those negotiations. We very much believe that a balanced approach where you do entitlement reform and tax reform would be good for the country. We tried in 2011, we tried in 2012. Were ready to try again. The president said when we take away the threat of economic disaster, hes ready to engage. If i heard him correctly in his press conference the other day, he said hed pay for dinner. So hes willing to talk, wants to talk, but it cant be that its with the u. S. Economy being threatened if one small part of congress doesnt get its way. So we need another trillion dollars or more of debt authorized before we can even discuss whether to start reforming entitlements, whether to start reforming the tax code . Senator, what we believe is the government needs to open, Congress Needs to open the government and Congress Needs to make it possible to pay our bills and we need to engage and were ready to do that. Well, just to conclude my questioning then, back to the issue of our longterm debt and the threat that it poses to our economy, are you telling me those fears have now been allayed . Senator, what i tried to say, and i hope i wasnt confusing, theres a challenge to deal with in the medium and the long term. It is not the same as a crisis, which is what happens if you fail to act on the debt limit in the next short period of time. I would very much like to do it sooner rather than later. I think its better for the country. It would have been better for the country if we had been able to complete the negotiation where the president and the speaker were very close until House Republicans said they wouldnt vote for it. And we would love to be in a place where we were talking about a sensible alternative to these mindless acrosstheboard cuts. Weve been very clear about that. But it cant be with the threat that the government is shut down and were going to default on our bills. That is not the way to engage in the kind of bipartisan negotiations that need to happen. Senator cantwell. Secretary lew, thank you for your testimony about how you think that serious prospects and uncertainty to the market are right now. I guess thats my question to you because everybodys talking about default as if thats the triggering point. I think your testimony lays out that this moment could happen at any time. And i guess the reason i brought this chart, if youre not involved in the financial market, havent been in the business community, theyre some mysterious thing. But this chart shows that treasuries are held not only in the u. S. By businesses but in europe and china and theres significant its a network. Its as complicated and complex as just about anything thats around when it comes to all the individuals that are around. Its not, as one of our colleagues said, picking up the phone and calling wall street and telling them to settle down. So my question is i just went on the web and said what about treasuries . You just google treasuries and all of a sudden comes up the most important market indicator, way more important than the dow and s p, how important a number it is as a number in the economy because of the Interest Rate being pegged off of its Interest Rate. And so here we are now basically almost talking the Interest Rate up with the talk in d. C. And in the last 48 hours i wish i could print out this chart because we have seen a spike, a dramatic spike from. 03 to. 07 , more than a doubling in almost 48 hours. My question is if the Interest Rate on treasuries doubles in the next 48 hours again, arent we already to that Tipping Point . Senator, i have been trying to be very careful and just report whats happened. Im not going to predict what markets will do. I do think if you look from last week to this week, a tripling of Interest Rates on shortterm bills is not a good thing. Weve seen stability in the longterm bond market. Markets are a delicate thing. I dont know how markets will translate one days news, one days action into discomfort. What i do know is that every week we roll over 100 billion of treasury bills and that relies on the market being open and willing to function. And i just think everyone has to remember that its not just the interest, it is also the principal. The markets have to keep working. I think the thing is miss hearing in the d. C. Is that everybody is at risk in the u. S. Economy. Its not just what you explained but everybody at home. Last time we had this discussion about whether we were going going to default or not, the stock market dropped 20 . So we could have this same discussion and then by friday or monday, you could see, in fact one of my constituents who is an analyst said you could see as much as a 25 drop in the stock market just triggered off of treasury. We dont have to go to default. Just the talk of default is causing the level of uncertainty were all trying to avoid. Senator, thats what we saw in 2011. We had an 11th hour agreement and we avoided seeing what happens when you cross the line. But we had the damage. We had the drop in the market, we had the higher Interest Rate costs. We also saw for the first time a downgrade in the u. S. Credit rating. So that is what happened when we didnt cross the line. I dont think anyone should want to test what happens when we cross the line. Were seeing with the Government Shutdown that every day new things are coming out that are really bad. People who thought it was okay to shut down the government are now rushing open up one piece or another at a time. It would be reckless to see what happens when you cross the line and dont pay americas bills. I think what were doing right now is reckless so i hope well come together. Thank you, mr. Chairman. Thank you, chairman. Senator roberts. Thank you. Pardon me. Thank you, mr. Chairman. I dont think we have a blindfold on and walking toward a cliff. I think were walking toward a cliff with our eyes wide open and thats the problem. All this talk about selfinflicted wounds, it was not a selfinflicted wound when we raised the debt limit well take a quick break here as we listen to some of the q a. Were a business channel, jim, not a politics channel. There are a lot of crossovers here. Business leaders saying they feel theyve lost touch with at least the right part of the gop. Everyones writing about a fall. Is that what youre seeing today . I think the pressures on. One of the things ive just been amazed about, who really gets hurt about this . Wheres target . Wheres walmart . Why arent they saying anything . Main street is recognizing this is going to affect us. This is no longer just about interest payments. Thats the pressure on the gop. The paul ryan article yesterday in the wall street journal was major. He said lets get away from without a mention of obama care, which we thought was the original holy cow. That was the key to say if youre the president to lets start talking. Its very difficult to go from hatred to love. Theres usually an interlude where you say maybe we shouldnt go back together, lets have one more type fooit. Its typical for someone to come out and say the president is in transition, im still not going to negotiate and sunday on meet the press, i hate you, i hate you, but theres something going on, carl. This market has correctly anticipated almost every move. I do sense that the pressure from the Business World is not bankers. This is not coming from lloyd blankfein. Grover norquist talking smack about ted cruz today in the Washington Post. This is the big movement. Chris matthews on last night, you mentioned right at the beginning this is not our kind of story. But Chris Matthews on, hes got a terrific book about tip and the gipper, where we used to get together right and left. He said this is the beginning, youll hear a senator, there will be a senator who emerges on tuesday with a deal. After the holiday. After the holiday. Of course theres a chance they cant get it done in time. But now lew says were just not going to send out any checks. You may think the 17th, the 18th is a phony deadline. Were not sending checks. Were going to talk more about what the trade is as a result of all these political moves in a few moments when the q a ends. In the meantime, futures still looking pretty good. The market trying to anticipate annd game, even if it is a shortterm raise to the ceilings. Were up triple digits in implied open and italy yeartoday high. Two years ago, the greatest trade in the world. Well take a break and come back with more q a in just a moment. Your own path . Who can build you a plan, not just a pie chart . Who can help keep your investments on course, whatever lies ahead . That someone is a Morgan Stanley financial advisor. And were ready to work for you. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Extremely negative effects that the Government Shutdown and the threat of default have on our Foreign Policy and our national security. Both now and in years to come. You know, the shutdown and the default affected some of americas nearterm Foreign Policy priorities such as the president not being able to go to the asian economic summit. And his absence, although certainly appropriate due to the crisis, feeds into existing fears having traveled to the region, that are rebalanced to asia as more rhetoric than reality. And who showed up and was more than willing to fill the void . China. And in doing so, americas loss is chinas gain. This is an opportunity about opening markets for u. S. Businesses to sell product and services. This is an opportunity to promote economic and security questions and i think our allies are going to wonder is the United States capable of meeting its promises, whether about economic initiatives or security initiatives . And perhaps the most damaging, i think, and difficult thing to reverse is the impact this has on americas reputation in the world and the economic consequences that flow from that. The entire Global Financial system depends in large measure on the faith that the United States government can and always will pay its debt. And america enjoys the unique privilege of having its currency act as the worlds reserve currency. So it seems to me by playing games, we give power to other emerging economies like china and brazil to rely less on the dollar and there are consequences. It puts our role in question with allies. I know in your role as secretary of the treasury did you give the committee a sense of the consequences, i know there are kwonss at home but there are kwonss abroad that affect us at home. I think it would be impossible to overstate the importance of the u. S. Playing the role in the world that we do in terms of the stability we provide. The world actually counts on us being responsible and making the kinds of decisions that they can continue to look to washington for that kind of stability. Up know, we have finance minister from around the world gathering in washington this week and yesterday i met with finance minister from africa and finance minister from latin america, and its challenging when they look at you and they ask whats going on in washington . It makes them nervous about their economies and we need them to have growing demand because thats good for our economy. On this question of World Reserve currency, its no secret that there are discusses around the world where others would like there to be a basket of currencies that might be used as an alternative to the dollar. I have to ask when our role in the world is so important to the United States security and well being and to the stability in the world, why would this kind of a manufactured crisis be seen as something that is necessary to pursue when it undermines that . I think the questions youre asking are quite significant. Let me ask you, there are those that suggest, oh, thats not a real issue because the rest of the world has no place to go. You know, im not going to speculate on whether someone else will emerge as an alternative, but, you know, we are in a place right now where its important for the United States and the world for us to maintain our position, and we have the capacity to do that. We have the economic ability to do that. Its only a matter of political will. And theres no reason to risk that possibility of continuing to find out whether or not theres some other universe of currency of which people to look to and theres no reason to risk having the potential Economic Impacts we can have globally that provide domestic opportunities for growth and jobs and opportunity. I certainly think theres no reason. I would go a little further and say that it is against our interest to invite that kind of discussion. Thank you. Senator ramsey. Thank you, mr. Chairman. Mr. Secretary. I think this is the 11th time ive been through this discussion about the sky is falling and the earth will erupt. Wyoming families arent buying these arguments. Theyre saying you cant spend more than you take in. You definitely cant doing it forever and ever and ever. Ive got a person that interned for me several years ago quick comment here as we listen to some of the q a. A lot of stocks moving in the premarket. Obviously were watching fixed income today and what the 10year is doing, back above 2. 7. The banks are rallying. The bank stocks had come down in anticipation in perhaps there was going to be a cataclysm. I think people are taking cataclysm off the table for now. Is that a wise strategy . Theres so much peace talk that people dont want to be short the financials into the earnings. Maybe the companies say, hey, you know what, things are okay, now that weve got peace, buy our stocks in. Not to mention jpmorgan but i dont expect good numbers. If you cover ahead of the numbers, thats todays action. Well talk about what claims did about an hour ago, well talk about the extent to which retailers still report samestore sales. Well take a quick break and be back with a lot more and the opening bell in just a moment. We take you back to capitol hill. Mike enzi of wyoming this time. Senator, those wyoming families know after they run up their credit card, they dont get to ignore it. They have to pay the bill. The debt limit is just paying our bills. You and i have talked. You know i would very much like to be in a conversation about longterm sensible tax reform to give the stability Going Forward that this country needs. This cant be done by saying we wont pay our bills next week. Thats whats wrong with engaging right now. The president wants to negotiate. We keep saying that this terrible thing is going to happen and this is just paying our bills. How many times can we say this is just paying our bills . The American Public doesnt get that same option. They dont think we ought to get the same option. The time to reduce what we need to borrow is when we make the decisions on what were spending, not after. If Congress Appropriates money and Congress Puts laws in place where people are entitled to benefits, if congress commits military resources, once those commitments are made, you cant tell a contractor who is doing work im not going to pay you because we changed our mind. Which takes me back that we should have been doing the budgets one at a time in a piecemeal fashion im not disagreeing with that. Mr. Secretary, its getting close to 9 35. There are many senators who have questions. The senators have been very good about sticking to the limits. Im hoping you can stay a little longer. Theyll shorten their questions so that you can stay. Its going to be very difficult to go more than five minutes over. Lets see what we can do. Senator carper. Mr. Secretary, thanks for joining us. I just stepped out of the room for a few minutes. I was watching the hearing on television in an adjoining room. And i must say people watching this on tv must be frustrated, disappointed with us. Some of the finest people who serve in the senate serve on this committee. Thats why i wanted to be on this committee, thoughtful democrats and republicans, pragmatic, find the middle, reasonable, principled compromise. Theyre doing our best to take a live mix of democrats and republicans because viewers want parody on that front, jim. Do they want us in a hush golf voice in ooh, looks like netflix we have to pay some bills and we want to do them before the opening bell in about four minutes. Well take a quick break and get you that bell in just a moment. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Fl