Transcript: Q&A with Rep. Sean Duffy on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee – Sept. 18, 2013

Partial transcript of Q&A with Rep. Sean Duffy (R-Wis.) on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee on Sept. 18, 2013:

Rep. Sean Duffy (R-Wis.):
…You know, I didn’t necessarily run for Congress in 2010 to come here and raise the debt ceiling. I came here to reform the way we spend, reform the way our government works.

But I gotta tell you, I’m willing to raise the debt ceiling, I’m willing to take that vote and get some trouble back at home as long as we engage in a reform of the way we spend.

I’m willing to vote if we reform our entitlement program. But for the panel or my friends across the aisle to say, “Listen, we just want a straight debt ceiling increase with no real reform”, I think you are going to be hard press to find colleagues on my side of the aisle to actually vote for that.

So when we talk about brinksmanship, we all have to the center. And my good friend, Sen. [Amy] Klobuchar might say, “Well, listen, we’re not going to give up on Obamacare, whether de-funding it or delaying it. But we’ll come to the table and we’ll actually look at our entitlement system. We’ll look at the way we spend.”

But we have to engage in some form of a dialogue where we can meet in the middle.

And I think brinksmanship is one where one side – the President says, “Hey, I’ll negotiate with Syria or the Russians but I won’t negotiate with Republicans on the debt limit.” That’s brinksmanship.

In 1990…as you guys recall, Democrats held the Bush administration hostage over the debt ceiling. Same goals. Different tools were used but same goals.

Just to look back, you guys are well aware of a quote from March 16, 2006 from a famous Senator, he had a floor speech where he said, “Increasing America’s debt weakens us domestically and internationally. Leadership means the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. America deserves better. Therefore, I intend to oppose this effort to increase America’s debt limit.” You guys all know who gave that famous speech, right? President Barack Obama.

And so, when we talk about brinksmanship, I’m not in favor of that. But I’m also in favor of a group of men and women from both parties and both chambers coming together to find solutions to this problem.

And so I guess Mr. Zandi and Mr. Marron…do you think this is a one-size issue – are you telling – are you here testifying today that we should just increase the debt limit without any negotiation on reforming how we’re spending? That’s not your position is it?

Dr. Mark Zandi, Chief Economist, Moody’s Analytics:
Well, what I’m here to say is that you need to raise the debt limit. I mean, there’s no options. Otherwise, it’s disastrous and counter-productive to your own goals because it’s going to result in a recession, bigger deficits, and raise the debt.

You know, my sense is that both Democrats and Republicans have negotiated and debated the debt limit since the debt limit’s been around since 1962 or whenever it was put in place. So it’s been used by both sides. But that doesn’t make it right. You can only put the gun to your head so many times before someone’s going to make a mistake and pull the trigger, and it’s to everyone’s detriment.

So, you know, maybe this is the best time to say, “Look, this is just not the way to run a railroad.”

Rep. Sean Duffy (R-Wis.):
And to this point, I think the panel all agree that we have to reform the way we spend. There are long-term consequences for the fiscal course that we’re on. I don’t think anyone’s disagreed with that.

One of the problems is our entitlement system and the long-term issues that that brings 10 and 15 years down the road. My question is where is the plan coming from the President that says, “I may not like Paul Ryan. I don’t like the House budget. But let me tell you my plan to reform entitlements that’s going to bring us on this pathway to sustainability. Or reform spending that brings America on this pathway to sustainability”? …I haven’t seen that plan yet.

I mean, the budgets that come out, they never balance. They never ever ever balance – the President’s budget doesn’t. I don’t know if they’re political documents.

But at some point if we’re going to negotiate, outside of the debt limit, we need to be able to have an honest conversation. And if you can’t get people to come to the table and honestly talk about these problems, I don’t know how we come to resolution unless you get a debt limit that says we’re all going to come to the table or there’s going to be big problems.

Does anyone disagree with that?

David Malpass, President of Encima Global LLC:
No, I agree and I think there’s not enough emphasis on the upside. There’s been a lot of talk about how the brinksmanship or the idea of going up to the end. But in reality, I think it’s going to come up to voters that there ought to be a presentation from members of ideas about how to restrain spending and involve a national debate that begins to make progress on this.

We got a gigantic spending problem in the federal government, and it’s time today to start down this path. You know, it’s been going on year after year where you guys say, “Well, next year we’re going to deal with some kind of way to restrain spending.”

I think right now is as good a time. Markets are in healthy condition and so it’s a good time to have this debate.

Dr. Daniel J. Mitchell, Senior Fellow, Cato Institute:
Congressman, if I could add one thing. The President’s never proposed a plan that balances but one thing that concerns me is that he did say that the value-added tax was something that “has worked for other countries” which makes me worry that he sees Europe as a role model to follow when certainly the events that we’re seeing with the welfare states collapsing in many European countries should be a warning sign to all of us that we can’t allow government spending – it’s already climbed since the end of the Clinton years from about – total government spending in the U.S. – from about 32% of GDP to now about 37%, 38% of GDP. If we allow it to climb to European levels – 45%, 50% of GDP –

Rep. Sean Duffy (R-Wis.):
And before I gavel down, which I am right now, I think you make a good point with regard to some countries that are going through fiscal problems today. 15 years ago, I bet they do wish they had a debt limit and people held them accountable to get that reform done.

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