Failed leadership

Jeff Sessions is a common sense senator from Alabama who speaks with reason and caution about most subjects.  Here he makes an opening statement at a Senate hearing on financial matters, and he speaks without a forked tongue:

Ben Bernanke testified before the Senate Budget Committee today. As is the usual practice, ranking Republican Jeff Sessions delivered an opening statement. It provided an excellent summary of the history that has brought us to the current budgetary crisis. It was a challenge to Barack Obama and the Democrats to come up with a credible budget plan, which for three years they have refused to do. And it was about as eloquent as you can be, talking about the federal budget. Here is Sessions’ statement, in its entirety:

Good morning, Chairman Bernanke, and thank you for joining us today. I am eager to hear your thoughts on our financial situation.

The Congressional Budget Office’s new outlook confirms that our deficit will top $1 trillion for the fourth straight year. And the deficits we face in the outyears, the next decade, are even more relentless and systemic.

In just three years, we have accumulated almost $5 trillion in new gross debt – during which time the total number of Americans working has decreased by 1.2 million. We have even fewer Americans working today than more than 11 years ago.

Federal spending, in real dollars, has increased 53 percent in ten years, while real wages for the average American have declined 7 percent.

The government is getting bigger and the middle class is getting smaller.

Yet some in Washington and Wall Street tell us we should delay needed reforms. So the problem I have, the concern I am wrestling with, is that even our financial experts are often very wrong as to the danger facing the American people and our economy.

For example, Secretary of the Treasury Geithner’s comments at Federal Reserve meetings in 2006 indicate that we cannot always be sure that those in positions of leadership see the problem clearly. As America verged on a massive housing meltdown Geithner, then President of the New York Federal Reserve, told his colleagues that “we just don’t see troubling signs yet of collateral damage, and we are not expecting much.” Two months later, he was announcing that “the fundamentals of the expansion going forward still look good.”

Janet Yellin, President of the San Francisco Reserve Bank was perhaps even more enthusiastic. When Chairman Greenspan left, she beamed: “It’s fitting for Chairman Greenspan to leave office with the economy in such solid shape. The situation you’re handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot.”

In 2001, Chairman Greenspan testifying before this committee said that we were looking at more than a decade of surpluses and he wrestled with the question of what we would do after we have paid down our debt.

They were wrong. The minutes show you were also wrong during key periods.

Common sense tells us that more spending, more borrowing, and more debt make us weaker – not stronger. As the last financial crisis proves, the future is hard to predict. But while we can’t predict the day a debt crisis will erupt – or what unknown event might set it off – we do know we are on a collision course. The longer we wait to change that course, to develop a plan for a sensible financial future, the graver the danger becomes.

Yet Majority Leader Reid has closed the ship’s bridge and locked the wheel. He says the Democrat Senate will decline to offer a budget resolution for the third straight year. Not once has this occurred since the Congressional Budget Act was passed in 1974.

I am glad Chairman Conrad will be marking-up a budget in committee. But the mark-up will be a doomed exercise if your own majority leader decrees that the budget process will be shut down. Majority Leader Reid has effectively declared both a Senate Democrat budget – and the President’s budget – dead on arrival.

If they do not take on a different approach then the majority party is failing in the fundamental requirement of leadership. They have basically asked that their Senate leadership be taken away.

The President’s budget submission on Monday will also be a defining test. Either the President will rise to the occasion or he will again shirk his duties and accelerate our dangerous course. The choice is his.

I find it beyond imagining that the President, at this critical time in our nation’s economic life, will not lay out a serious budget plan for our future that will get us off this unsustainable debt path – a path to decline. But he did not even mention in his third State of the Union address the danger of our debt – what his Chairman of the Joint Chiefs, Admiral Mullen – called the greatest threat to our national security. Alice Rivlin, in Kiplingers magazine, was recently very critical of the President’s lack of leadership. Real change will not occur without the leadership of the President and he has not only not led, but has attacked those like the brilliant Congressman Paul Ryan, who has. We must hope the President’s official proposed budget will, at this late date, change our unsustainable debt course. Based on history, I am not optimistic.

The common sense Senator -- Jeff Sessions

Jeff Sessions made the following comments on the floor of the US Senate yesterday:  we would do well to remember them when the dust settles on this disgraceful budget debate charade/fiasco:

First, I would like to address the myth that the president has a $4 trillion deficit-reduction plan. The only plan the White House has ever put on paper is his February budget, which doubles our national debt.

The president has never put a single spending cut plan on paper and he has no proposal to slash the deficit. If he does, it’s a closely guarded secret. And if such a secret plan does exist it should be made public this very afternoon. I’d like to see it. I’m sure millions of Americans feel the same.

We also have no debt plan from Senate Democrats. In fact, they haven’t even passed a budget in 813 days.

As of now, there is only one debt limit plan on paper. Only one plan available for public scrutiny and review. That’s the plan we are debating today: cut, cap, and balance. It cuts spending immediately, it caps it so it doesn’t go up, and it requires the passage of a balanced budget amendment to ensure Washington ends the deficit spending once and for all. The American people do not trust Washington to pass some grand budget deal with tax hikes that never go away and spending cuts that never materialize. …

Another myth I’d like to address is the idea that our current budget crisis is the result of two wars and a tax cut. Let’s consider that claim. The total cost of the wars in Afghanistan and Iraq, over the entire last decade, is $1.3 trillion. Again, that’s over the last decade. This year alone the deficit is expected to be $1.4 trillion dollars. War costs represent only 4 percent of total outlays over the last ten years. The total amount of money spent since the president took office is $8.5 trillion dollars. By the end of his first three years in office we will have added $5 trillion to our gross federal debt. We are borrowing almost half of what we’re spending every single day. In the last two years, non-defense discretionary spending has soared 24 percent. The stimulus package alone—enacted into law in a single day in 2009—cost more than the entire war in Iraq. Annual spending when President Bush took office was less than $2 trillion. Today, it’s almost $4 trillion. It will be almost $6 trillion by the end of the decade.

There is only one honest answer to the question over why our debt is rising so fast: out-of-control domestic spending.

Another myth that’s circulating which I’d like to address concerns the budget summary from the Gang of Six. The authors of the summary claim that their approach would reduce the deficit by $3.7 trillion. But my staff on the Budget Committee can only find $1.2 trillion in reduced spending, along with a tax increase of $1 trillion. Where does the other $1.5 trillion in deficit reduction come from? Chairman Conrad, one of the members of the Gang of Six, even says the outline has a $1.5 trillion tax cut. But this is compared against a baseline that assumes a $3.5 trillion tax increase. It’s just an accounting gimmick. The real cost of the tax changes could be an increase as large as $2 trillion.

This is why we need more than a handout—we need legislative text.

The last myth that I’d like to address is perhaps the most important of all. This is the myth that we only need about $2 trillion in spending cuts over the next ten years.

Democrats have said—although no plan has ever been made public—that they could get behind a budget deal that reduces the deficit $4 trillion over the next ten years, half of it comprised of spending cuts. I’m skeptical that even this minimal level of spending cuts would occur. But even if it did, it’s not even close to what is needed to ultimately balance our budget. We are projected to spend $46 trillion over the next ten years. A $2 trillion cut is only about a four percent reduction in spending that is set to increase almost sixty percent.