Lew says budget deal with Congress can be reached

Lew objected to Hatch's characterization that the cost-of-living proposal was minor concession.

"It is a red line that a lot of Democrats never wanted us to cross," he said, adding that Obama had offered the proposal during negotiations with Speaker John Boehner in December. By including it in the budget, the administration hoped to demonstrate its commitment to reaching a deal.

But Lew made clear in both hearings that Obama will back cuts in entitlement programs only as part of a bigger deal that includes tax increases.

Lew declined to say when the government might face a default on the national debt if it does not raise the borrowing limit later this year. In January, Congress suspended the borrowing limit until May 18.

Lew can employ a series of bookkeeping moves to allow the government to keep paying its bills a little longer. Most economists expect Lew can delay a default until around August.

Some Republicans have suggested that Lew pay interest on the national debt and other priorities such as monthly Social Security benefits, but delay other payments to buy more time to resolve the debt issue. Lew rejected that suggestion.

"To introduce the notion that there are some bills we will pay and some bills we will not pay would be a mistake," Lew said. He said such an effort would put into jeopardy America's standing as a solid credit risk.

Lew told lawmakers that Obama wants a deal on the budget. He mentioned that he first testified before the Ways and Means Committee in 1973 and that over the past four decades he can recall a number of bipartisan agreements reached on critical issues.

"The debate we are engaged in is very important," Lew told lawmakers. "I believe we can find common ground."