Transcript: Rep. Kevin Brady’s remarks on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee – Sept. 18, 2013

Partial transcript of remarks by Rep. Kevin Brady (R-Texas) on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee on Sept. 18, 2013:

…Vice Chairman Klobuchar and I agree that political brinksmanship over raising the debt ceiling is costly to our economy. I just wish President Obama felt as we do. His declaration this past weekend, “What I haven’t been willing to negotiate and I will not negotiate is on the debt ceiling”, represents the inflexible brinksmanship that the American people deplore.

Despite the recent decline in the federal budget deficit, future projections are troubling. Add to that an ever growing national debt, Medicare whose main trust fund runs empty within 12 years, and Social Security that had to borrow nearly $150 billion last year from foreign investors and the Feds simply to make payments to our seniors.

As Dr. [Mark] Zandi noted in his testimony, the long-term fiscal outlook remains disconcerting.

This bleak outlook hurts middle-class families and the 20 million Americans who can’t find a full-time job today in the weakest recovery since World War II.

That’s why House Republicans have reasonably and prudently passed a bill to take default off the table and invite the President to sit down together today to find a bipartisan solution that puts Washington on a responsible fiscal path through pro-growth tax reform, ending wasteful spending, and taking substantive steps to extend the lives of Medicare and Social Security.

Children born today in America owe nearly $50,000 as their share of the national debt. In other words, they owe a Lexus to Uncle Sam. If Washington doesn’t change its spending ways, by the time they reach 13-years-old, they’ll owe another Lexus. And when they graduate from college or ready to begin their career, they’ll owe yet a third.

Of course, young people don’t buy luxury sedans from Uncle Sam. Instead, they pay the price for this generation’s spending addiction through a sluggish economy with higher taxes and higher interest rates. So if they are able to find a job, they’ll have lower wages and keep less of their paycheck to pursue their American dream.

For the first time in our history, we can’t be confident that the next generation of Americans would be better off than the current one. That’s unacceptable.

Admittedly, the debt ceiling is an imperfect vehicle to control the growth of federal spending. I’d prefer the Congress legislate an amendment to the Constitution to limit the growth of federal spending and require a balanced budget except during wars or emergencies.

However, the debt ceiling remains an effective tool for Congress and the President to reach bipartisan consensus on measures to limit the growth of federal spending and reform entitlements.

Both parties – Democrats and Republicans – have used the debt ceiling as a responsible means to shore up America’s financial house. The Omnibus Budget Reconciliation Act of 1990 came about through debt ceiling negotiations through congressional Democrats and President Bush. And the Budget Control Act in 2011 came about through debt ceiling negotiations between House Republicans and President Obama.

It is irresponsible to give the White House another blank check. Instead, it’s responsible to limit the growth of federal spending and secure the future of the entitlement programs in exchange for raising the debt ceiling. If now isn’t the time to tackle Washington’s spending addiction, when is?

Perhaps brinksmanship is just another word for long overdue intervention.

One of today’s witnesses, Dr. [Daniel] Mitchell summarized the fiscal policy in a simple golden rule: private output should grow faster than government spending. In other words, main street should grow faster than Washington. I agree.

Some advocates of big government claimed that modest savings from the recent sequester are decimating government services and threatening economic growth. Reality is that since the recession ended real federal consumption and investment spending has grown faster than real GDP – 6.4% compared with 4.6%.

The sequester is merely asking this 500 pound federal government to lose 10 pounds. What ails our economy is not too little government but too much.

Therefore, I’ll soon re-introduce the Maximize America’s Prosperity or the MAP Act to limit the growth of federal spending through new innovative spending cap, non-interest spending as a percentage of potential GDP. Using non-interest outlays as a enumerator of the spending cap forces Congress to limit what it can control – program spending – through appropriations bills and changes to entitlement legislation but not what it can’t – interest outlays that are determined by past spending decisions and the Fed’s monetary policy. Using potential GDP as a denominator eliminates the boom and bust sequality and spending caps tied to GDP, the growth of GDP fluctuates with the business cycle, allowing blow-outs and spending and boom years and forcing deep cuts during recession. Using potential GDP provides a more stable, solid path for federal spending over time.

Vice Chairman Klobuchar and I might not agree on what’s the right level for spending cap, but we should be able to agree on the right methods. And non-interest spending as a potential of GDP is that right metric.

I look forward to the testimonies of today’s witnesses.


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