|
|
|
Sen. Gregg Criticizes 'Banana
Republic' Budget Proposal
Sen. Judd Gregg, R-N.H., and Senate Minority Leader Mitch McConnell, R-Ky.,
offer a grim assessment of President Obama's $3.6 trillion proposal
following a report over the weekend that found the budget plan would
produce $9.3 trillion in deficits over the next decade.
FOXNews.March 23, 2009. The ranking Republican on the Senate Budget
Committee warned on Monday that President Obama's budget proposal will
lead to unsustainable debt levels and send the country on a fiscal path
resembling that of a "banana republic."
Sen. Judd Gregg, R-N.H., and Senate Minority Leader Mitch McConnell, R-Ky.,
offered a grim assessment of the $3.6 trillion proposal following a
report over the weekend that found the budget plan would produce $9.3
trillion in deficits over the next decade.
"The president's budget spends too much, taxes too much, and borrows too
much. ... I don't think I've witnessed this level of unease about a
budget certainly in the time that I've been here," McConnell said,
calling the plan a "tough sell" for centrist Democrats.
"We can't afford this," Gregg said.
He called the deficit estimates attached to the budget plan
"staggering," and he warned that such deficits would trigger a national
debt that amounts to "running your country into the ground."
"What's being proposed here is a massive increase in taxes in order to
massively increase the size of the government and have virtually no
fiscal discipline on the side of borrowing," Gregg said.
The Congressional Budget Office on Friday estimated that the budget
proposal would produce $9.3 trillion in deficits over the next decade --
or $2.3 trillion more than the White House had estimated.
The report predicted that such deficits would double the country's
public debt to 82 percent of its gross domestic product by 2019.
Gregg, who was nominated by Obama to be commerce secretary, but withdrew
his name from consideration, has emerged as a top critic of the budget
plan, and escalated his criticism in light of the deficit projections.
"The effect of it will be that it will pass on to our children a debt
ratio which is not sustainable ... a public debt of about 80 percent of
GDP, which basically is the type of debt ratio you see in banana
republics," he told FOX News. "And it stays at that level for as far as
the eye can see, along with deficits that are about 4 percent to 5
percent of GDP. Those aren't sustainable numbers, so we've got to take
another look at this, and figure out a way to close down the gap."
White House spokesman Robert Gibbs said Friday that the new projections
won't stop Obama from achieving his goals or keeping his promise to cut
the country's red ink in half within four years.
The administration is a bit more optimistic about the nation's economic
growth over the long term than congressional analysts, Gibbs said.
The Associated Press contributed
to this report.
PEOPLE WHO READ THIS...
Also read these...
China to Continue Buying
U.S. Debt, Official Says
China will continue buying U.S. government debt while paying close
attention to possible fluctuations in the value of those assets, a
Chinese official said Monday.
AP. March 23, 2009. BEIJING -- China will continue buying U.S.
government debt while paying close attention to possible fluctuations in
the value of those assets, a vice governor of Beijing's central bank
said Monday.
Investing in U.S. Treasury bills is "an important component part of
China's foreign currency reserve investments," People's Bank of China
Vice Governor Hu Xiaolian said at a news conference on Monday.
"So as an important component we are naturally relatively concerned with
the safety and profitability of U.S. government bonds," Hu said -- a
statement apparently aimed at concerns that rising debt to fund
Washington's stimulus package could spur inflation and weaken the
dollar.
China is Washington's biggest foreign creditor, holding an estimated $1
trillion in U.S. government debt. A weaker dollar would erode the value
of those assets.
Hu's comments follow remarks earlier this month from Chinese Premier Wen
Jiabao that he was "a little bit worried" about China's holdings of U.S.
government debt. Wen called on the U.S. to honor its commitments, remain
credit-worthy, and ensure the safety of Chinese assets.
China's investments are likely to be a major topic of discussion when
Chinese President Hu Jintao meets with President Barack Obama on the
sidelines of an April 2 summit in London of the Group of 20 major
economies called to discuss remedies for the global financial crisis.
The meeting will be the first face-to-face encounter between the two
men, and a top Chinese diplomat appearing alongside Hu Xiaolian sought
to set a positive tone for the talks.
China-U.S. relations have gotten off to an "excellent start" under
Obama, Vice Foreign Minister He Yafei said, appearing to rule out any
lasting damage from a confrontation earlier this month between Chinese
boats and an unarmed U.S. Navy surveillance ship off China's
southeastern coast.
China accused the USNS Impeccable ship of operating illegally within its
exclusive economic zone, while the U.S. said the Chinese boats had acted
dangerously in blocking its passage and later assigned a destroyer to
escort the ship.
He said Hu and Obama planned to discuss the global economic crisis,
bilateral ties, and regional and global issues such as plans by North
Korea to launch missile and Iran's nuclear program.
Despite its massive holding of U.S. government debt, China has given no
indication of any preferred changes to Washington's policies, and Hu,
the central bank's vice governor -- who is not related to the president
-- said China considered U.S. debt a good credit risk, even if market
values fluctuate.
Analysts estimate China keeps nearly half of its $2 trillion in foreign
currency reserves in U.S. Treasuries and notes issued by other
government-affiliated agencies. That has sparked questions within China
as to whether the government should continue to buy Treasuries, as well
as debate on how Beijing might leverage that to boost its influence over
the global financial system.
China's continued purchase of Treasuries helps fund U.S. deficit
spending aimed at averting a lengthy recession and helps keeps interest
rates low to permit U.S. banks to continue lending.
At April's London summit, leaders are expected to press for an overhaul
of international financial institutions to help ward off future crises.
That could include doubling the International Monetary Fund's budget to
US$500 billion and giving more say to China.
Hu said China supports efforts by the IMF to come up with new ways of
raising capital, possibly including the sale of bonds. If bonds were
issued, China would "actively consider" buying them, Hu said.
|
|