Next, treasury secretary jack lew. With reporters on the domestic and global economies and his Upcoming Trip to the g7 summit. The event was hosted by the Washington Bureau of the Christian Science monitor. Its 50 minutes. Tv reporter from boston. Good to see you. Just retired this year. [ room noise ] youre going to be right here, sir. Were going to start right on time this morning. Im dave cook from the monitor. Thanks for coming. Our guest is treasury secretary jacob lew. His last visit was in july 2015 and we appreciate his coming back before his trip next week to anchorage and then the g7 Foreign Ministers meeting in japan. Our guest flirted with a journalism career while he was editor of the Forest Hills High School beacon. He evidently thought better of it and while in college caught the washington bug, working for representative bella abzug and joe moakley, earned a bachelor degree at hafshtd and a law degree at jpmorgantown. Between 79 and 87 he learned politics from a master in his role as Principal Deputy policy adviser to House Speaker tip oneill. As a special assistant to president clinton in 93 and 94 our guest played a key role in helping design americorps. He was later Deputy Director and then director of omb between 98 and 2001 when he led the clinton budget team. The United States government posted a surplus for three consecutive years. He was chief operating officer of New York University and then chief operating officer for two different citigroup business units. Before joining the Obama Administration in 2009. Deputy secretary of state for management and resources. He became omb director in november 2010. White house chief of staff in january 2012. And treasury secretary in february of 2013. Thus ended the biographical portion of the program. Now on to the riveting mechanical details. As always were on the record here. Police, no live blogging or tweeting. No short no, filing of any kind while the breakfast is under way to give us time to actually listen to what our guest says. The embargo ends when our guest stops speaking. To allow you to file before the market opening, well stop at 9 20. To help you curb that relentless selfie urge well email several pictures of the session to all the reporters here as soon as the breakfast ends. And as regular attendees know if youd like to ask a question please do the traditional thing and send me a subtle nonthreatening signal and ill happily call on as many reporters as we can goat to in the time we have this morning with secretary lew. Were going to start off by offering our guest the opportunity to make some opening comments and then well move to questions around the table. Thanks for doing this, sir. Appreciate it. Thanks for having me this morning. I feel like im 90 years old after hearing that biography. I wanted to touch on two things at the top and then go to questions. Ill start with the domestic and then goat g7. Domestically what i want to talk about is puerto rico. Weve been working very hard to try to address the growing crisis in puerto rico. Its not a crisis of the future. Its a crisis of the present. I was there on monday, and i saw firsthand with some of you what is going on right now for the 3. 5 million americans who live in puerto rico. I mean, there are childrens units where twoweekold babies are waiting for dialysis because has to be ordered cash on delivery with wire transfers on a daily basis to keep supplies in the hospital. Its not a future crisis. Its a current crisis. We saw schools start out in terrible condition where deferred maintenance is raising questions about basic safety. There is a solution. The solution is that Puerto Rico Needs to restructure its debt. Puerto rico doesnt have the ability to do that without legislative action. And weve been working on a bipartisan basis, trying to Reach Agreement so that puerto rico can get the tools it needs to get its fiscal house in order, to have an Oversight Authority that makes sure that puerto rico stays on a fiscally sustainable path. Time is very short. The conversations have been making progress. But they need to go from making progress to crossing the finish line, and that means that there needs to be a restructuring and it has to be a restructuring that works. It cant be something thats just called a restructuring. Let me shift, if i can, to the international and talk a bit about the meetings were going to be having next week in japan. It seems like every time we approach these meetings, its the right time for finance ministers around the world to be getting together. I think right now, it is particularly so given the tremendous need to make sure that we all stay focused on growing global demand, using all the policy tools that we have to accomplish that. And equally, to refrain from the kinds of things that could be harmful to the Global Economy, things Like Exchange rate policies that are getting the world into a place where you go from marketdetermined Exchange Rates to competitive devaluation. We had a strong agreement in shanghai where the g20 countries agreed to refrain from competitive devaluation. Its very important that that be reiterated at the meeting we have with g7 finance ministers. A number of important and timely issues, ranging from the vote in the United Kingdom on brexit, to resolution of the greek debt problems, terrorist financing, Cyber Security, and financial regulation. I look forward to another productive set of meetings, but as i say, i think its an important moment for finance ministers to check in with each other personally. Why dont i stop there, and happy to go to questions. Let me do two quick once and well go around the table. I have a list of folks ill read as soon as i do mine. You made your trip to puerto rico this year, and youve spoken about it very strongly this morning. Do you have any news to share with us this morning in terms of progress in terms of getting something before congress before the july 1 deadline for their 2 billion payment . Look, i think there is progress being made. I think the discussions continue to go forward. You have democrats and republicans in congress trying to Reach Agreement. But you have a lot of forces on the process that make it challenging. There are a lot of individual interests that are making their views very clearly known. And i keep stressing to all the decisions makers that this is only going to work as a solution if its a solution in the public interest. If its in the interest of 3. 5 million americans who live in puerto rico. If its in the interest of having a stable financial outcome. I believe that thats possible. I dont want to say that were 100 there because obviously the talks are still under way. Our team has provided an enormous amount of technical input. And the leaders particularly in the house on both sides are engaged. I do believe its a good faith conversation. I do believe there is an understanding that theres a crisis in puerto rico. And i hope that that is successful. What i know is the only way to solve this problem is for congress to act. So the time is now, and the stakes are quite high. Let me ask you one other. This wont surprise you it will veer into trump land. You said the finance ministers should refrain from the kind of things that could be harmful. How much have you heard from your fellow minister s and or how much do you expect to hear about comments regarding renegotiating the u. S. Debt in an economic downturn, holding down the value of the dollar or printingll dollars to avoid defaulting on the debt . Im not going to comment on the political debate. One of the attributes of being treasury secretary is you dont engage in politics. One of the things you do as treasury secretary is spend a lot of time making sure we have the deepest and most liquid markets in the world, that our treasuries are the definition of safety. And that is something ive devoted the last threeplus years of my time to doing. Its what i will continue to do. I think the rush to safety when you see it in markets goes to dollars. Dollars are the definition of safety. Weve spent hundreds of years building that reputation, and its an important element of our economic and national security. Were going to go now to sam mosen of bloomberg, sam flemg of the financial times, kevin mcclatchey, Jackie Needham of the hill, zack corn blatt of politico, john zapel of bbc, john businessy from news max, don lee from the l. A. Times and Laura Baron Lopez of huff post to start. Selena. Hi. You are heading to china next month for the Strategic Dialogue for the economic relationship, and id like to ask against the backdrop of slowing global growth, chinas increasing clout, and the u. S. s slight pivot toward a harder line toward china what are the challenges you think that the u. S. Faces in regard to this relationship over the course of the next year . I think that the u. S. China relationship, ill limit myself to discussing the economic relationship. The u. S. China economic relationship is one of the most important economic relationships in the world. We have two largest economies in the world. The Global Economy will do well. If we do well, it will do well. It will suffer if we suffer. We have made clear in our dealings with china that they have to take steps that are good for china but also good for the economy that theres also a responsibility that comes with being one of the two largest economies in the world. I think weve made progress in the economic discussions, but we have a lot more progress to make. I believe that the chinese Economic Policy makers understand quite clearly what they need to do to have a strong economic path for the future. I think their challenges not surprisingly are political, not analytic. They know that having excess capacity that is distorting both chinese and Global Markets is not a sustainable economic path. On the other hand, they also have the challenge of how do you reduce that capacity and manage the human consequence of millions of jobs being lost . I am encouraged by the fact that the Economic Policy experts there arent doing it because they think we want them to do it. Theyre pushing it because they believe its in chinas economic interest. I dont take enough comfort to stop pressing because i think these are hard chinas in the middle of one of the most difficult economic transitions any country has ever gone through to stay on the course of reform, to stay on the course of opening to market pressures both in terms of Exchange Rates and goods and services is going to be very hard. I think that we have to continue to press as we meet at the strategic and economic dialogue and in other settings. Weve made progress and we will continue to make more. But its going to require ongoing engagement. Were going to go to sam fleming from the financial times. Good morning. Couple of questions. Lets start with one until we get around for a followup maybe. Go ahead. One interpretation being put on Donald Trumps comments about the dollar is that he no longer believes in a strong dollar policy and hed move to a more competitive approach on currency. Would that be the wrong path . And does that make it harder for you in your dialogue with other ministers when you have a president ial candidate making these kinds of comments . I speak for the administration based on the policy of this administration echoing policies that have been consistent u. S. Policies for quite a long time. You know, i think that we have watched over the last couple of years where the u. S. Economys relative strength compared to other economies has led to a stronger dollar. The answer is for other economies to strengthen. Its for regions like europe, countries like china and japan to take the steps they need to take to have their economies producing enough demand and enough Economic Activity so that the Exchange Rates naturally equilibrate through market mechanisms. We have urged and urged is a soft word. We have exhorted countries to adhere to the commitments weve made to the g7 and the g20 because if other countries start moving toward competitive devaluation it will start a Chain Reaction and if country a does it, country b will do it, country c will do it, and pretty soon youre in a battle over shares of a shrinking global pie. That will not help the Global Economy. It will not help the u. S. Economy. I believe that message has been very much embraced at the g7 and the g20. Really since 2013 we have had strong agreements and weve seen countries keep their agreements. Weve also been very clear that if we see countries deviate from the agreements it will be a very damaging thing and its something that would do real harm to the Global Economy and to relations. So thats the position we have taken. Its the position we are taking. And as i said earlier, im not going to comment on any political statements. Do you want to do a followup before we go to the next . If i would. That would be great. It was actually more specifically on japan, if thats possible, and currency policies. Clearly you gave a very strong signal to the japanese at the imf spring meetings that markets were orderly and it was not an appropriate time for them to be intervening. Do you think that message has been heard . And what will your message be at the g7 meetings on the same topic of the yendollar situation . You know, i addressed the issue just a knew weeks ago. My view hasnt changed. I think that the challenge in japan is a much deeper economic challenge. Japan needs to bring all of its policy tools to bear. Theyve had a long period of economic challenge, either negative growth or flat growth. And part of the problem is they have not brought to bear all the tools. Fiscal policy, monetary policy, and structural reform. Theyve used the tools, but they havent done them in a coordinated way. We have urged japan over the years to try to bring those efforts together. I think it is reflected in the policies that Prime Minister abe has announced in the three arrows. Weve seen alternately more emphasis on one arrow than another. But an awful lot of emphasis has been on the monetary arrow. Fiscal policy. You know, they have real challenges. They have a deficit a debt of roughly 200 of gdp. On the other hand, if they put the brakes on fiscal policy too soon, it will have a very negative impact and they need to have a medium and longterm approach to bringing their debt under control but not to bring on shortterm economic decline. Structural reform is an area that has been very slow to make progress. One of the major elements of structural reform is really contained in the tpp, the pacific partnership, where they would undertake reform of their Agriculture Sector as part of their tpp commitments. I think its one of the reasons why its so important to maintain our unity in pressing forward on having the implementation of the agreement. But japan needs to do it for its own sake. They cant just rely on one of the levers. They need to use all of them. My view on japan has remained the same. Kevin hall from mcclatchy. [ inaudible ]. Twoprong question about Panama Papers and what keeps you up at night separate from that. On the Panama Papers why did you choose, or more broadly Beneficial Ownership, why did you choose not to support the existing legislation on the hill thats there, that goes most people think goes deeper than what yours does . Who is going to carry your water on the hill in whos going to push this new obama proposal on the hill . And then on what keeps you up at night front page of the New York Times today talks about swift second breach of the swift code. The swift system, rather. Were you aware of this . How concerning is it . And Hedge Fund Losses are also piling up. How much does that trouble you . Thats three. Three represelated questions. So let me start with the question of Beneficial Ownership. We have i believe been one of the leaders in the world in making strides in transparency and tax and Beneficial Ownership issues. We passed fatka with congress and created a standard globally for the sharing of Tax Information so we could get at the question of tax evasion that is associated with the concern over Beneficial Ownership. Countries around the world are adopting that standard. We actually need more legislation in the United States to be able to Exchange Information fully. Weve gone from being the leader to now taking steps to make sure we can take the meaningful next step to make that regime most effective. On Beneficial Ownership we issued rules last week which, using the authorities we have under existing law, do a great deal to give us the ability to get more information on who the ultimate owners of various things are. On the legislative front its not a new proposal. Weve been proposing legislation for some time. We very much want to work with congress to come up with an approach that will have bipartisan support and enact it because theres limits to what we can do using administrative authority. And i hope that the focus on this issue, which is not new for treasury and its not new for the administration but is som