Text: Geithner Testimony to Senate Appropriations Committee – Treasury’s Priorities & Financial System Update
Chairman Durbin, Ranking Member Collins, members of the Subcommittee, I appreciate the opportunity to testify before you for the first time as Treasury Secretary on the President’s Fiscal Year 2010 Budget request for the Department of the Treasury.
While we see some initial signs of economic improvement and the financial system is beginning to heal, our country faces very substantial economic and financial challenges.
President Obama and his Administration are working to meet these challenges by getting Americans back to work and getting our economy to grow again; by restoring fiscal discipline to ensure a sustained recovery, and by making the long-neglected investments in health care, energy and education needed to enhance America’s global competitiveness and produce more balanced, sustainable growth over the long-term.
Treasury’s Key Priorities
To achieve these goals, we are repairing and reforming our financial system so that it works for, not against, a recovery that serves all Americans.
To restore growth and meet our fiscal goals, we are redesigning and bolstering enforcement of our tax code so that it is both fairer and more efficient.
To advance our interests globally, we are working with other nations to promote economic recovery and financial repair, and to ensure more open markets for U.S. business.
(Source: Board of Governors of the Federal Reserve)
Current economic and financial conditions and the federal budget
Before the Committee on the Budget, U.S. House of Representatives, Washington, D.C.
June 3, 2009
Chairman Spratt, Ranking Member Ryan, and other members of the Committee, I am pleased to have this opportunity to offer my views on current economic and financial conditions and on issues pertaining to the federal budget.
Economic Developments and Outlook
The U.S. economy has contracted sharply since last fall, with real gross domestic product (GDP) having dropped at an average annual rate of about 6 percent during the fourth quarter of 2008 and the first quarter of this year. Among the enormous costs of the downturn is the loss of nearly 6 million jobs since the beginning of 2008. The most recent information on the labor market–the number of new and continuing claims for unemployment insurance through late May–suggests that sizable job losses and further increases in unemployment are likely over the next few months.
From the Associated Press:
With the U.S. economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing 50 cents for every dollar it spends this year.
The deficit for the current budget year will rise by $89 billion to above $1.8 trillion — about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall Street bailout, the cost of President Barack Obama’s economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.
As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.
For the current year, the government would borrow almost half the money it takes to run the government under the administration’s plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.
U.S. Representatives John Boehner and Mike Pence put out some BS marketing document last week regarding the Republican budget alternative. Rep. Paul Ryan, R-WI, is the ranking minority member of the House Budget Committee. All along he’s been working on a serious proposal. It’s serious in that it has numbers. It’s not serious in that it doesn’t deliver the change in policy we voted Obama in to deliver. At any rate, if you want both sided of this issue go to this page for all the info on Ryan’s alternative. Click the pdf below for the summary.
(Source: NBC News’ Meet the Press)
MR. GREGORY: Senator McCain, welcome back to MEET THE PRESS.
SEN. JOHN McCAIN (R-AZ): Thanks, David.
MR. GREGORY: Very, very nice to have you here.
SEN. McCAIN: Nice to be back.
MR. GREGORY: You just heard Secretary Geithner. What’s your level of confidence in him?
SEN. McCAIN: Well, I have some confidence in him. I think he’s very smart. And I hope that this new plan–which, by the way, I thought was well-described…
MR. GREGORY: Good.
SEN. McCAIN: …earlier–will work. My preference would have been to go in and, you know, with stress testing these banks and go ahead and sell off the–take the toxic assets and sell them off, and then let the good asset banks continue. But this proposal, I hope it works. We all want it to work. But what I’m most worried about is laying a debt on future generations of Americans. The, the multitrillion-dollar debts, unprecedented debts that we are–we are committing generational theft. I’m confident that the economy will recover. The question is after it recovers, what kind of a debt are we going to carry which will cause us to print money, inflation, and go through a worse wringing out than we went in the late 1970s and early ’80s?
Congressman Mike Pence, R-IN, was becoming known as the great hope of fiscal conservatives during the last Congress and with the last president.
A budget alternative released today by House Republicans, and reportedly primarily authored by Pence, shows just how little the once formidable GOP has to offer in the public policy arena – and how even once thoughtful conservatives such as Pence are flailing about, adrift.
The major Republican problem is that the current slate of emergencies facing the country – financial crisis, recession, Iraq, Afghanistan – is of their doing. Granted, the financial crisis finds its roots in Clinton era permissiveness regarding Wall Street and the traditional roles of bankers, insurers and brokers. But let’s not forget the greatest Republican icon of the once booming economy, Alan Greenspan. Let’s not also forget that for several years, as Wall Street piled excess upon excess, Republicans controlled both houses of Congress and the White House.
Recent polling shows Americans still put these problems at the feet of Republicans. What’s more, the Wall Street Journal-NBC News poll from March 3, shows most Americans believe Republican efforts against President Barack Obama’s agenda are more for political gain than for standing on principle. Today’s Republican plan, released this morning, became a blueprint by the end of the day. Why? Because it doesn’t even answer the basics, like where will the deficit be down the road.
Glenn Thrush over at Politico has a great post today about the Republican infighting over the budget and Pence and Minority Leader John Boehner’s rush to make a political statement rather than offer a real alternative. In their rush, they seem to have stepped all over fellow Republican leaders Eric Cantor’s and Paul Ryan’s efforts to build a real alternative plan.
If this sort of thing keeps up, I predict a fractured Republican Conference and changes in leadership before there’s ever a substantive change in the makeup of the House of Representatives.