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Lew: Obama not negotiating over debt limit

Treasury Secretary Jack Lew challenged Congress on Tuesday to raise the debt limit—telling CNBC that President Barack Obama will not negotiate over the issue.

"What we need in our economy is some certainty. We don't need another self-inflicted wound," Lew said in a "Squawk Box" interview. "Congress should come back and they should act."

He added, "We don't need another crisis at the last minute" because it causes uncertainty in the financial markets.

On Monday, the Obama administration warned Congress that the U.S. could run out of money to pay its bills around mid-October. In a letter to House Speaker John Boehner, R-Ohio, Lew urged lawmakers to swiftly raise the limit on federal government borrowing.

The government has been bumping up against its $16.7 trillion debt ceiling since May.

The president is "not going to be negotiating over the debt limit," Lew told CNBC. "Congress has already authorized funding, committed us to make expenditures. We're now in a place where the only question is, will we pay the bills that the United States has incurred?" Answering his own question, Lew stressed there can be no question about that.

As part their budget-reduction strategy, Republicans have been trying to repeal and defund the president's health-care law. But Lew said the White House won't accept any delay or defunding of Obamacare.

Last week, Boehner took one of the fall budget fights with Democrats off the table—saying he plans to avoid a government shutdown at the end of September. He has urged lawmakers to pass a "short-term" bill that maintains sharp automatic spending cuts, known as the sequester, to keep the government funded for two months past the Oct. 1 deadline.

The president has tried to reach across the aisle in every way on budget issues, Lew asserted, saying the sequester must be replaced with balanced policies to deficit reduction.

As Treasury secretary, Lew said he looks at what will help the core economy, which he observed is growing "in the 2 percent range ... with substantial headwinds from federal policy."

"As we get to the end of the year, we think that without the headwinds of additional federal cuts, the economy should pickup a notch again," he said.

The president is "prepared to do tough things on entitlement programs," Lew said. "But those tough actions ... require balance in terms of revenue, both for fairness and because for economic results."

Lew made it clear the White House wants tax increases as part of the discussion. "We've pressed very hard for the kinds of agreements that would do both spending reform, entitlement reform and tax reform."

On the issue of corporate tax reform, Lew said he sees ideas from Democrats and Republicans that indicate progress can be made.

"[But] on the individual side, it's a little more complicated because it is intrinsically connected to the larger fiscal policy conversation," Lew said. "Without additional revenues, I don't see a path toward comprehensive tax reform."

—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC. CNBC's Chief Washington Correspondent John Harwood and Reuters contributed to this report.

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