ICYMI: Chairman Murray Holds Senate Budget Committee Hearing on the Impact of Political Uncertainty on Jobs and the Economy
Yesterday, Chairman Murray and the Senate Budget Committee held a hearing to examine the ways that uncertainty in federal policymaking has impacted job creation and economic growth. “…Even though we’ve come a long way, there is still a lot we need to do to ensure American families recover from the impact of the Great Recession, and to ensure strong middle class growth and economic security in the future. Families across the country are focused on these issues. Here in Congress, we should be focusing on them too. That’s why what we’ve seen recently from a minority of extreme Republicans is so deeply disappointing and so harmful. Again and again, Tea Party Republicans have chosen gridlock over compromise, brinkmanship over solving problems, and partisan games over our economic recovery,” Chairman Murray said at the hearing.
Murray emphasized that as Americans are getting back on their feet through the recovery, the last thing they need is Tea Party Republicans putting economic growth, and Americans’ jobs, retirement, and security at risk.
“We are days away from a possible government shutdown, which could affect hundreds of thousands of workers’ jobs and disrupt basic services from Social Security payments to small business loans, all because Tea Party Republicans have decided—once again—to try to defund the Affordable Care Act, a law that has already helped millions of Americans and is on track to help millions more. As if that’s not enough those same Republicans are, to quote Speaker Boehner, trying to pick ‘a whale of a fight’ over the debt ceiling, even though economists warn that an unprecedented default on U.S. obligations could throw us back into recession, and devastate the global economy. The bottom line is that when we should be thinking about how to create jobs and encourage growth, Republicans are letting the Tea Party minority push us from one crisis to the next. And their brinkmanship has had serious consequences.”
“We want to pass a continuing resolution to keep the government running, and then get to work on a long-term budget deal that: puts jobs and the economy first, replaces sequestration fairly and responsibly, makes smart reductions in spending, and asks the wealthiest Americans and biggest corporations to do their fair share towards tackling our debt and deficits. We continue to be ready to work with anyone who will come to the table willing to make tough choices. But, as the President has made clear, we’re not going to negotiate over the debt ceiling, and we’re not going to accept bizarre demands like defunding or delaying the Affordable Care Act. All that would do is create more uncertainty for families across the country, and they have had far more than enough.”
“It really should go without saying, but instead of making it harder for families to find work, pay off their debts, send their children to school, to do the kinds of things that we know strengthen our economy now and over the long term, we should be doing everything we can to encourage continued and stronger growth. Speaker Boehner and the rest of the Republican leadership need to finally stand up to the Tea Party minority that is committed to constant crises. They need to end the hostage-taking, stop playing political games that threaten our fragile economic recovery, and work with us to ensure the economic security of families and businesses. And once they do that—then I am confident we can work toward the bipartisan deal the American people expect.”
Witness Dr. Mark Zandi, Chief Economist at Moody’s Analytics, explained in his testimony that threats of fiscal crises are weighing on America’s economic growth and stability.
“Harsh political vitriol, threats of shutting down the government, and the possibility of not fulfilling the government’s financial obligations have weighed heavily on the collective psyche. This has significant economic consequences. Businesses are more reluctant to invest and hire, and entrepreneurs are less likely to attempt startups. Financial institutions are more circumspect about lending and households are more cautious about spending. While many factors are at work here, Washington’s heated budget battles are a significant contributor,” Zandi said in his testimony.
Chairman Murray questioned Zandi on the direct effect a debt default would have on everyday Americans.
“On November 1st, there will be a very large Social Security payment that is due. The government would not have enough cash on hand to make that payment. So, in all likelihood the Treasury will wait for a day, two, three, five, six, seven days, whatever it took to raise the cash sufficient to make the full payment to Social Security recipients. And over time, if this were to continue, the lag between the bills that are coming in and the checks being cut would increase. Well, I think if we got into that kind of situation, I think immediately that it would be panic and bedlam. But if Social Security recipients weren’t going to get their checks, I just think it would be cataclysmic,” Zandi responded.
“What does this mean for the average American? Well, it means that it will be very difficult to get a mortgage because mortgage rates will rise. It will mean businesses, small businesses, big businesses will have trouble raising money to fund their activities and the cost of funding will increase and become much less available. It means house prices will decline, stock prices will decline, and it will very quickly mean layoffs and unemployment will surge. And as I said in my oral remarks, there is no policy response to that. None. As we all realize, the Reserve is at the end of its rope. By definition you all wouldn’t be responding. So it would be an incredibly dark situation and will be on par with the Great Recession and maybe worse depending on how things play out. So, we just can’t go down that path. It is opening an economic Pandora’s Box literally,” Zandi said.
Witness Dr. Chad Stone, Chief Economist at the Center on Budget and Policy Priorities, explained that Congress should not be using the debt ceiling as a “political football”
“First, through accident or miscalculation, games of chicken can sometimes end in a crash, and the costs to the United States of actually defaulting on its financial obligations could be very high. Default means the Treasury says to someone, or as [Urban Institute Fellow, Donald]Marron says perhaps millions of someones, “Sorry you aren’t getting paid.” There’s no way to decide who gets paid in a way that does not damage the economy. If prolonged, a situation in which the Treasury is required to match payments to available cash would have an economic effect like sequestration plus the fiscal cliff on steroids and would likely plunge the economy back into recession. The difference between default and a government shutdown, sequestration, or the fiscal cliff is that even if the debt limit were subsequently raised, the damage to U.S. credit rating could not be reversed, ” Stone said.
Members of the Senate Budget Committee echoed Chairman Murray in highlighting the dangers of governing from crisis to crisis.
Senator Tim Kaine (D-VA) made clear that Democrats have not been pushing us to crisis, and that no member of the Senate or House has advocated a government shutdown, ”I do not know of a single Democratic member of the Senate or House who either wants to shut down government or is advocating or threatening a shutdown of government. I do not know of a single Democratic member of the Senate or House who either wants to default on America’s debt or is advocating or threatening a default on America’s debt. And I don’t know of a single Democratic member of the Senate or House who has blocked us from going to a budget conference which we’ve been trying to go to for six months ago yesterday.”
Senator Tammy Baldwin (D-WI) emphasized that after the Great Recession, her constituents have to work even harder because of manufactured fiscal crises, “So many are working two jobs, so many happy to have gainful employment at all, but it’s not what they were making before the recession hit. It’s incredible grit that I’m seeing. And I wanted to come here and see us in the Congress match that grit with a commitment to get out of these situations, like the one that’s unfolding right now. You know, I think certainty, and predictability, and responsibility, are also American values that we’ve got to return to.”
Senator Sheldon Whitehouse (D- RI) pushed back on claims that the Affordable Care Act is a “train wreck” and needs to be defunded, highlighting how it has already helped many Americans, “I can assure you that if you’re a parent of a child who is coming up on 26 and is able to stay on your healthcare, and not be out there uncovered, that’s no train wreck for you. If you’re a parent of a child who’s got a preexisting condition, and you either couldn’t get insurance for them or you could never move your job, because as soon as you move them become uninsurable, and you would have to make them a ward of the state or spend down to Medicaid in order to do that. For a family like that, this is no train wreck at all. For a senior, who saved on average over a thousand dollars by closing up the donut whole, that’s no train wreck for the seniors.”
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