WHEN: Today, Monday, October 19
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a CNBC interview with United States Secretary of the Treasury Jacob Lew on CNBC's "Squawk Box" today. Following are links to the video: http://video.cnbc.com/gallery/?video=3000434016, http://video.cnbc.com/gallery/?video=3000434015 and http://video.cnbc.com/gallery/?video=3000434017.
All references must be sourced to CNBC.
LEW ON DEBT LIMIT:
I think it's very important to remember that only Congress can act to raise the debt limit. I will have used all the tools that I have as of November 3rdand then we're operating on cash. Just think about it, we have a government of the United States, a 4 trillion a year enterprise, where swings of a few billion dollars can determine whether or not you have enough cash to pay your bills. It's ridiculous. The debt limit needs to be raised.
LEW ON CASH ON HAND:
LEW: I think the right amount of cash to have on hand is $150 billion that would give us the ability to run a week what business would run without the ability
QUICK: Berkshire Hathaway keeps around more than 30 billion dollars in cash on hand.
LEW: We came below 150 quite some time ago. We went back up on September 15 when we got quarterly tax revenues, but since then it's dropped from just about 150 to 75 and it's falling everyday so we're going to get to $30 billion we believe on the third of November.
LEW ON RATES:
We have conservative projections in our budget that actually if you look over the last few years we've predicted higher interest rates not lower interest rates because that's the conservative thing to do to make sure you don't get surprised by a higher debt service cost. I think our budget projections are sound and we can manage wherever the Fed goes.
LEW ON THE PRIORITIZATION BILL:
I don't believe the government of the United States can pick and choose what bills it pays. Fundamentally, you're going to be in default if you don't pay all your bills. The people who support prioritization say somethings are more important than others, I don't believe that. I think you have to pay social security, you have to pay veterans, you have to keep the lights on in veterans' hospitals, and you have to pay principal on interest.
LEW ON TPP:
When you see the provisions that we have negotiated on currency as part of the conversation on TPP it will be a sidepiece. It is the toughest currency agreement that we ever had in this regards. High standards, its transparency, and it's a mechanism to engage to make sure the countries and TPP keep their word.
LEW ON FED RATE EXPECTATION:
Historically, it's turned out to be very important to have budget assumptions that are conservative, because it's a good thing when you're surprised by good news, it's not so good when you're surprised by bad news.
LEW ON TEN DOLLAR BILL:
I made clear when I announced that we were redesigning the currency in June that we were going to continue to honor Alexander Hamilton and we will continue to honor Alexander Hamilton.
LEW ON FANNIE AND FREDDIE:
The right answer is to get real reform. Housing finance reform where we get to a new system where we've defined the risk that is being taken. Not have this open ended risk, which we have with Fannie and Freddie. Which we still have today. $250 billion of contingent risk because we the taxpayers stand behind Fannie and Freddie. You know, let's just remember that Fannie and Freddie failed, an enormous investment of public money was made, there was huge damage to our economy, and we continue to have a $250 billion contingent liability. So this notion that somehow the slate is clean is just not correct.
LEW ON CHINA CURRENCY:
I think we have to make sure that China understands that it is very important that they keep their commitment to let the Renminbi go up as well as down –
Becky Quick: To this point they have only shown that they will allow it to go down.
Jack Lew: And that's something we're going to see in the medium term. The snapshot today is not the test.
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