Sessions Remarks On President’s Stimulus Plan And Discredited Keynesian Predictions
“Now, in the grips of crisis, we are told the president has a new plan to revive the economy. We received a proposal on Monday, with no fiscal details, that just offers more of the same. It calls for a sudden increase in the deficit with a promise to pay for it at a later date… Why should we continue to trust the ‘masters of the universe’ who tell us that we can spend and borrow our way to prosperity? They’ve been wrong from the beginning… Indeed, [committee witness] Dr. Zandi, who has been one of the most prominent advocates of spending and borrowing as the way to boost the economy, and who has been a close advisor to the Democratic Senate majority, has seen his projections prove to be dramatically inaccurate…”
WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following opening statement today at a Committee hearing on policy prescriptions to address the state of the economy. It was the first Senate Budget Committee hearing in 182 days, following the protracted controversy over the decision of the Democrat-led Senate not to present a budget plan of any kind.
Sessions’ remarks, as prepared, follow:
“Chairman Conrad, thank you for hosting this hearing today to discuss our nation’s economic crisis. Thanks also to Dr. Stone, Dr. Zandi, and Dr. Hassett for joining us. I look forward to a robust discussion.
I only wish this hearing had occurred sooner. It’s been 182 days since our committee has last held a hearing. And it’s been 869 days since the Democrat-led Senate last adopted a budget. Majority Leader Reid even said that it would ‘foolish’ to do so.
The fact that our nation continues to operate without a budget plan lies at the heart of our current economic crisis. America desperately needs the confidence and predictably that only a concrete fiscal plan can provide. The budget process isn’t broken—Washington has simply abandoned it.
Ultimate responsibility lies with our nation’s Chief Executive. President Obama has consistently refused to put a serious, long-term fiscal plan on paper. Since taking office he has surged the debt nearly $5 trillion. During that time, unemployment has remained above 8 percent every single month.
Now, in the grips of crisis, we are told the president has a new plan to revive the economy. We received a proposal on Monday, with no fiscal details, that just offers more of the same. It calls for a sudden increase in the deficit with a promise to pay for it at a later date. In other words: more spending, taxing, and borrowing.
President Obama still doesn’t get it: the debt is destroying jobs today. Increasing it only digs us into a deeper hole.
We may have raised our legal debt limit but we have breached our economic debt limit. America’s $14.5 trillion gross debt is now 100 percent of GDP. A prominent study from economists Rogoff and Reinhart—praised by Treasury Secretary Geithner as ‘excellent’—shows that when a nation’s gross debt reaches 90 percent of GDP it loses, on average, a percentage point or more in GDP growth each year. Our debt is depressing growth to unexpected levels and costing us millions of jobs.
Keynesian elites in Washington continue to insist what common sense denies. They tell us that even more spending and borrowing is the answer. But when you’ve reached 100 percent of GDP, to try this failed experiment yet again is to put the whole country at risk. We’ve seen where this road leads and it leads the way of Greece.
Why should we continue to trust the ‘masters of the universe’ who tell us that we can spend and borrow our way to prosperity? They’ve been wrong from the beginning.
In 2009, the Administration claimed its stimulus would prevent unemployment from rising above 8 percent. After the bill became law, however, unemployment rose to 10 percent and remains at 9.1 percent today.
One of our witnesses today, Dr. Zandi, in testimony before this committee about one year ago, stated, ‘The next six to twelve months will be uncomfortable as the economy struggles to gain traction, but a full-fledged expansion should take hold by this time next year.’
In January of this year, CBO projected economic growth for 2011 would be 3.1 percent. In February, OMB projected 2011 growth would be 2.3 percent.
Yet the economy experienced just .4 percent growth in the first quarter of this year, followed by 1 percent growth in the second quarter.
Indeed, Dr. Zandi, who has been one of the most prominent advocates of spending and borrowing as the way to boost the economy, and who has been a close advisor to the Democratic Senate majority, has seen his projections prove to be dramatically inaccurate. His Moody’s Analytics in January of this year predicted we would have an astonishing 3.9 percent growth for this year, but have this month drastically lowered their growth estimates to 1.6 percent. Forgive me if those grim numbers do not give me confidence that the newly proposed stimulus plan will produce the results promised.
More taxing, spending, and borrowing is not the way forward. We need policies that improve conditions for job creation and that stop adding to the debt.
We must take advantage of our vast, untapped energy reserves. Energy policy isn’t simply a matter of national security, it’s a matter of economic security. If the government would simply permit access to our own natural resources, it would lead to the creation of millions of jobs and billions of dollars in new federal revenues.
We should also agree to immediately eliminate all regulations that have no real benefit but impose very real economic costs. Unfortunately, the Administration has gone in the opposite direction. For example, in fiscal year 2010 the Administration issued 66 major rules, 74 percent higher than the average number under Presidents Clinton and Bush.
Permanent, structural reform of the tax code is another area where we can spur economic growth without adding to the debt. Such reform would also provide the economic certainty and predictability that is so badly needed. But the goal of tax reform must be to increase opportunity for American workers and businesses—not to bail out Washington’s big spenders at taxpayer expense.
In a time of crisis, confusion, and fear, we should return to basic, core principles—the tried and true. Pay your debts. Spend within your means. Live according to a budget. Remove the barriers of ineffective bureaucracy. Allow the private sector to flourish.
If we take these steps—if we rely on the good sense and wisdom of the American people—we will see a resurgence of growth, jobs, and opportunity. There is no quick fix or gimmick that will get us there. The road ahead is not easy. But through diligence and common sense, we can put the country on a sound, prosperous path and build a better future for Americans today and for our children tomorrow.”