Transcript: Sen. Amy Klobuchar’s remarks on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee – Sept. 18, 2013

Partial transcript of remarks by Sen. Amy Klobuchar on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee on Sept. 18, 2013:

…In the summer of 2011, the United States experienced some of the costs of a protracted debt ceiling showdown. As Congress struggled to raise the debt ceiling, the Dow Jones Industrial Average dropped more than 2,000 points and Standard & Poor’s downgraded the U.S. credit rating. Consumer confidence also fell sharply.

During that debate, I heard from nearly 20 CEOs of major companies from my state urging Congress to set partisan divisions aside and reach an agreement to raise the debt ceiling.

The delay in raising the debt ceiling and the resulting uncertainty meant that the Treasury had to pay higher yields than otherwise would have been necessary, costing taxpayers $1.3 billion.

After the 2011 debt ceiling showdown, Federal Reserve Chairman Ben Bernanke told this committee in a very blunt language that it is no way to run a railroad. He’s right.

We now find ourselves in a similar situation of the federal government effectively reached its borrowing limit on May 19, 2013. The Treasury Department has taken extraordinary measures since then to postpone default for several months.

Last month, Treasury Secretary [Jack] Lew informed Congress that those extraordinary measures would run out in mid-October. In other words, we have about a month left to take action that will allow the U.S. government to pay our bills while we are at the same time, of course, facing with the continuing resolution issue of potential government shutdown.

We should learn from our experience in 2011 and not repeat it. We have seen this show before and it reminds me of like a bad re-run of Three’s Company. We don’t have to have this happen. We can actually get this done.

There is broad agreement that a default would cause significant harm to the economy. It would disrupt financial markets, limit access to credit, and raise financing costs. It would also trigger a run on money market funds and force the federal government to renege on commitments to individuals, businesses, and governments.

For consumers, higher credit costs would mean less borrowing for purchases of homes, cars or other durable goods. Businesses could face difficulties accessing short-term financing.

A default would also require the federal government to suspend payment to creditors, program beneficiaries, and others. Delays in Social Security checks, veterans’ benefits and other programs would have a direct impact on millions of Americans and would negatively affect the economy by depressing consumer spending.

Because a default would cause significant harm to the economy – even the mere prospect – as we learned from the past, even the mere prospect of a default can affect the decision-making of households and businesses and slow economic growth.

As discussed in the report that I released this morning on the cost of debt ceiling brinksmanship, Congress has raised the debt ceiling more than 70 times since 1962 and voted on the debt limit 12 times since 2002. This is part of our responsibility.

It’s also clear that Democrats and Republicans need to come together on a long-term budget plan and focus on smart balanced solutions to reducing our debt. We’ve had many discussions about this right here in this committee.

I’m in the group of Senators that wants to go big, that believes we need to take the principles from the debt commission report as well as the Rivlin-Domenici report and take those and put those into action. But the place to do that is not at the last minute on the debt ceiling issue.

The Senate and the House have each passed a budget. The President has been reaching out to Democrats and Republicans about the need to move forward on a budget deal.

Many of my colleagues, including Sen. [John] McCain and Sen. [Susan] Collins, have joined Democrats to say we need to go to conference and agree on a budget that will allow us to address our fiscal challenges in a bipartisan way.

Well, we have to do more to move the nation forward toward fiscal responsibility. It is important to note that Congress has already taken steps to reduce deficits by at least $2.4 trillion over the next 10 years. But the vast majority of the savings to date come from spending cuts. If sequestration continues, the ratio of spending cuts to revenue increases will be 4 to 1, which is not the ratio even suggested by the National Commission on Fiscal Responsibility and Reform.

The Senate-passed budget also called for a roughly even split between additional spending cuts and revenue increases.

In addition to addressing the budget and raising the debt ceiling, there are a number of actions Congress should take to make sure that our economy continues to grow.

One of them, I will tell you, is passing the immigration bill – $160 billion in debt reduction over 10 years, around $700 billion in 20 years.

You look at the Farm Bill – $24 billion reducing the debt over the last farm bill.

You can go through a number of things that I think would make a difference for the economy and make things positive for the economy. Brinksmanship on the debt ceiling is not one of them. It will move us backwards and not forward.


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One Comment on “Transcript: Sen. Amy Klobuchar’s remarks on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee – Sept. 18, 2013

  1. Pingback: Spotlight: Debt Limit 2013 | What The Folly?!

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