Transcript: Q&A with Sen. Mark Warner (D-Va.) on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee – Sept. 18, 2013

Partial transcript of Q&A with Sen. Mark Warner (D-Va.) on the economic impact of debt ceiling brinksmanship before the Joint Economic Committee on Sept. 18, 2013:

Sen. Mark Warner (D-Va.):
…I’ve been in business a lot longer than I’ve been in politics, and it is stunning to me that anybody that would claim economic expertise would say that messing with the full faith and credit of the United States of America is a responsible action. I mean, it’s mind boggling. I’m going to make a couple of comments here.

There’s been no major industrial nation that has ever gone through a significant default and recovered. I mean, Argentina did it a decade ago – may not a major industrial nation but depending on the estimates 40% to 60% of net wealth in that country disappeared in a few days, a few weeks.

The analogies back to 2011 when our first absurd actions around here. Yes, perhaps money moved to the T-bills a bit because we looked only slightly less worse off than Europe, and we still had a few remaining bullets of extraordinary actions on monetary policy that had all been spent now.

I mean, the Fed acted today to extend one more time actions that, you know, can only go so long because of our inability to do our basic job. We ought to all get fired if we don’t raise this debt limit.

And again, I respect my colleagues and people on the panel who say we need to control spending. We absolutely do.

And I’ve laid out a series of plans with Republicans and Democrats to make major changes to entitlements. But I find it stunning to me that there are people who think this could be solved on simply one side of the balance sheet without looking at any historical norms on the revenue side as well.

With the aging population and even with the entitlement changes that are needed, any notion that we’re going to be able to drive spending down to 18%, 19% of GDP with an aging population and increase in medical technology is so divorced from reality that it is not a budget that has much merit.

I desperately think the challenge here has been about how we find revenues. I think the New Year’s Eve deal was a bad deal and a huge missed opportunity to do a major economic entitlement transition and changes that need to be made.

And the relatively marginal amount of additional revenue that’s needed to be made – this is the thing that’s so absurd – we took $4.5 trillion out of the revenue stream on the so-called Bush or Obama, because both parties were part of this, tax cuts. Nobody’s talking about putting $4.5 trillion back into the revenue stream.

Simpson-Bowles – roughly about $1.5 [trillion]. Gang of Six – about $1.2 [trillion]. We’re talking about putting about a third of that back in the revenue stream along with entitlement changes. That’s a negotiating point that would be valid, I would argue.

I mean, memo to Congress going forward, I would simply say, when we set up the so-called Budget Control Act, we set up “Let’s think of the stupidest thing we could do” as a default mechanism to make sure that we wouldn’t allow that to happen. It’s called sequestration. And I would ask any of my colleagues of either party to come with me to NIH or come with me to Hampton Roads where we have so many of our military installations and see the cancer that is eating at the insides of the people who are making long-term commitments to public service, our nation’s readiness.

Or from a business prospect, the House budget, which over about a 10 or 11 year plan takes domestic discretionary spending from 16% of spend, when you can’t count tax expenditures, down to about 4%. I spent my career investing in businesses. I would never have invested in a business that spent less than 5% of its revenues on training and equipping its workforce, investing in its plant and equipments, which are our nation’s infrastructure, in a global economy staying ahead of the competition which is R&D [research and development]. And yet, that is our business plan at this moment in time. That is a business plan that I would have never accepted; it is a business plan that candidly Mitt Romney would have never been able to get through Bain Capital.

So I urge and I accept candidly that a lot of folks on my side of the aisle have not been willing as far as we need to go on entitlements, and let’s have that discussion.

But anybody that says on any historic basis, looking at the past 75 years of when those five or six years when we’ve had balanced budgets, when those revenues that ended up between 19.5% and 21% that somehow we’re going to get back to a historic 18% revenue line that is going to be sustainable with anything approaching to what the American people have come to expect is again divorced from reality…

The notion that the greatest nation in the world, with the dislocation in Europe, with China slowing down, with India’s economy almost grinding to about 4% growth, with countries like Turkey and Brazil that we saw as growing with the uncertainty that we see…We got through the debt limit but didn’t crash; we got through so-called Super Committee, we didn’t crash; we got through the stupid fiscal cliff; but I tell you I think this time we’re playing with fire exponentially greater without virtually any other tools to react…

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