Well, thank you, Congresswoman Lummis. That certainly is the case. I think that smaller banks in the United States are paying for the sins of the larger banks. The Comptroller of the Currency has just come down on these banks and has…
Well, thank you, Congresswoman Lummis.
That certainly is the case. I think that smaller banks in the United States are paying for the sins of the larger banks. The Comptroller of the Currency has just come down on these banks and has mandated a 20 percent increase in their capital requirements, and that forced them, as well, to pull back on lending. And so credit is really the lifeblood of small business, and small business is the economic engine in terms of jobs for this country.
Small businesses in my district and districts across this country are hard hit right now in terms of credit, in terms of their ability to get extensions on their credit lines and their ability to fund capital purchases. All of these things have led to downward pressure in terms of their ability to be that employer, that engine that drives this economy.
Thank you, Congresswoman Lummis.
I think there is a fear of the American people, as well as some of us in Congress that are here tonight discussing this issue, and that is that the health reform bill that has passed the House and they are debating iterations of it over in the United States Senate, that both versions--the one that is being debated in the Senate that we're aware of and that which was passed in the House--plant the seeds for new entitlements. And so I think that the American people are distrustful because they know what government promised in terms of what the impact of Social Security would be. They can remember what the impact of what Medicare would be and how explosive the realities of those are in terms of Federal deficits, and now the rising debt for this country, and how damaging that will be. And so I think there is real concern, and that concern is very legitimate.
So I think that before the Congress of the United States engages in new entitlements, it needs to take care of the ones that we have and get them under control so that they don't totally envelop this country's budget and capacity to borrow.
Yes.
Thank you, Congresswoman Lummis.
Yes, that's accurate. Because what it did is the--I don't think the benefits were effective until 2013, but the taxes started right away. And so it is deceptive in terms of saying that--you have to use some fuzzy math, some new accounting, new age accounting, to be able to say that it's deficit neutral.
Yes.
That's correct.
Well, as in all, it seems, programs that Congress starts, unfortunately, historically they've been financially disingenuous, because at that point in time, clearly we are moving forward into a deficit situation.
Welcome to government accounting, and I think that that's unfortunate.
I would hope that the American people would grow to understand this particular issue and ought to express their concern to their Members of Congress, because we already have deficits and debts that are out of control, and I believe that can very well choke off the ability for this economy to ever recover because of interest rates and inflation that are derived from deficits, prolonged deficit spending. This is merely going to exacerbate the problem.
Congresswoman Lummis, you and I were both State treasurers; you from the State of Wyoming, myself from the State of Colorado.
One thing that we had, I am sure that you had in the State of Wyoming, was a balanced budget requirement that every year we had to balance the budget. It created a sense of fiscal discipline where you had to make tough decisions in terms of tradeoffs. You simply couldn't have everything and drive your State into deficits and further into debt.
What is absolutely essential to have in the Congress of the United States is a balanced budget requirement where the tradeoffs have to be made, where hard decisions have to be made, where there has to be a reference point that at the end of the day, revenues have to equal expenditures. Without that, I really fear for the future of the country, I think, for the first time in my life, when we look at these deficits, when you look at the debt, when we think about the future of the country.
I know that Democrats have pointed to Republicans and said, well, you did it in the past. Now it's our turn.
Well, but, you know, I used to use that with my mother when I was growing up. I used to say all the other kids are doing it. My mother didn't buy it, and the American people aren't buying it today.
The American people aren't buying it, and they realize, I think, that they have unease about what is going on in the Congress of the United States. They have an extraordinary feeling of insecurity about what is happening in this country, not simply because the way the economy is right now, but they understand that the political class in Washington, led by the majority party, is pushing this country over a cliff, and the American people get it.
Well, the tragedy of what I have seen in my first year here in Congress, as one of your fellow freshmen here, is that it is all about the politics of the moment. It is all about the immediacy of how can we placate the American people through spending and not the consequences of what's going to happen to the next generation.
The only thing is that it's done at such a rapid pace right now that it's going to envelop this generation even before it hits the next generation in terms of its adverse effects.
I just think it's extraordinary. Again, I believe that the deficits are such, and I think the American people are beginning to understand, that unless Congress can control its spending, that the ability of this economy to ever fully recover, that the consequences of this level of debt, in terms of higher inflation, in terms of higher interest rates, will choke off this economy's ability to ever fully recover.
In addition, the situation is so bad that internationally the focus is on the United States and the mismanagement of fiscal policy, where you have a country like China, the largest holder of U.S. public debt, foreign holder of U.S. public debt, stating their concern about what America is doing to itself.
They were absolutely wrong. There is no question about it.
As freshmen we went to an orientation where part of it was on the financial crisis which has morphed into an economic crisis. And we had economists from all political stripes brief us. They said, You know, that it was right to do a stimulus, it was right to deficit spend, but it had to be very temporary. It had to end with 2010 because the economy was expected to improve and you didn't want public-sector borrowing colliding with a greater demand for private sector-borrowing.
It also said that it also needed to be timely and that it needed to be fast-acting. Unfortunately, it hasn't been. Also it needed to be targeted, and they differed about what being targeted was. But it was interesting, the fact that they all felt you had to start controlling the deficit by the end of 2010 or you were going to have dramatic effects on the ability of the economy to fully recover.
It seems that when we look at this $787 billion stimulus bill, more money, I think, will be spent in 2011 than has been spent this year. It hasn't been fast-acting. It certainly isn't temporary, and it goes on, and I would argue that it is not targeted, although the economists differed on what was targeted.
One thing they did say: They questioned if you went to the bureaucracy,
if you chose government to be the stimulus, would it be fast enough? Could the government bureaucracy and the Federal Government move the money through fast enough? Clearly we have been able to see that it hasn't been able to get the money out the door to make a difference to the economy.