Video: Opening Statement by Ranking Member Paul Ryan (WI), House Budget Committee http://www.youtube.com/watch?v=0-CoU-e4UyM 6/9/10 - Full Committee Hearing with Federal Reserve Chairman Ben Bernanke (Text of Remarks)
Stem the stimulus
A Wisconsin State Journal editorial | Posted: Saturday, June 12, 2010 9:00 pm
America's debt used to be dismissed as "money we owe to ourselves."
As U.S. Rep. Paul Ryan of Wisconsin stressed Wednesday during a meeting with House Budget Committee members and Federal Reserve Chairman Ben Bernanke, foreigners now own roughly half of U.S. publicly-held debt.
Moreover, our nation's IOUs to all lenders just topped $13 trillion, with interest payments expected to triple over the coming decade, the Congressional Budget Office suggests.
It's time to get serious about controlling federal spending now that the economy is slowly improving.
"There is a need for policymakers to reassure credit markets that the U.S. is engaged in charting a clear course back to sustainable deficit and debt levels soon," Ryan told Bernanke last week.
Yet Bernanke suggested a measured approach for now.
"This very moment is not the time to radically reduce our spending or raise our taxes because the economy is still in a recovery mode and needs that support," Bernanke said at Wednesday's hearing.
But just as important is for President Barack Obama and both major political parties in Congress to cooperate on what Bernanke dubbed "a fiscal exit strategy" for the next three to five years. The soaring annual budget deficit, expected to reach a record $1.6 trillion next year, needs to fall back toward Earth.
"The Federal Reserve has a strategy for exiting from our monetary policy" that includes record-low interest rates, Bernanke noted. The president and Congress need "to have a strategy for exiting from your fiscal policy," Bernanke told lawmakers.
America still has a lot going for it. Our economy is large and flexible, Bernanke noted, and our financial markets are deep and liquid. U.S. Treasury securities continue to be viewed as a safe haven for money.
But the recent financial bailout of Greece and its ripple effects across Europe should serve as a warning on this side of the Atlantic. Ryan was especially and appropriately blunt on this point:
"Americans are left to wonder: Could we one day find ourselves at the epicenter of such a crisis? Could a European-style debt crisis one day happen right here in the U.S.? The answer is undoubtedly 'yes.' And the sad truth is that inaction by policymakers to change our fiscal course is hastening this day of reckoning."
It's time for everyone in Washington to get serious about fiscal discipline because, as Bernanke said, the federal budget "appears to be on an unsustainable path."
Wisconsin's congressional delegation should be skeptical of new stimulus spending. Remember that Obama's $787 billion stimulus from last year is still playing out.
As for the long term, Obama's bipartisan debt commission - chaired by former Clinton White House Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson - appears to be the nation's best hope.
The commission is charged with crafting a plan to reduce the budget deficit to 3 percent of gross domestic product by 2015. Thecurrent budget deficit is almost 10 percent of GDP.
That means any proposal from the debt commission will include some painful yet necessary actions. As the economy improves, so must America's bottom line.