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WASHINGTON – Congressman Jeb Hensarling (R-Texas) – a leading conservative and chairman of the House Financial Services Committee – joined CNBC’s The Kudlow Report and FNC’s Hannity last night to discuss the Federal Reserve’s monetary policy and President Obama’s harmful sequestration.
Hensarling on the effects of the Federal Reserve’s monetary easing:
(from “The Kudlow Report”)
“I have the greatest amount of respect for Chairman Bernanke. But whether we're on QE-3, QE-33, or QE-Infinity, I feel that the marginal benefit of the policy is almost negligible and the risks are considerable. The risks of incredibly high inflation are possibly bringing us into a next recession. Chairman Bernanke could prove to be Chairman Houdini and unwind this whole chained-in box at exactly the right time, but I have severe doubts. I mean, you know to get a healthy economy, to get economic growth, it's not a monetary policy challenge we have today, it has everything to do with too many taxes, dumb regulation, vilifying success in Washington, and lots of uncertainty about the national debt.
“Why are banks sitting on -- I think it's $1.6 trillion or $1.7 trillion in excess reserves? You look at non-financial corporate balance sheets, and you see a comparable number. I mean, there's over $3 trillion sitting on the sidelines. What is more QE going to do but create an incredible inflationary pressure? And at some point this economy is going to take off, and so there's an incredible inflationary risk here, number one. It could happen tomorrow, it could happen the next day. I don’t know how to time it, but sooner or later we know that if the chairman doesn't unwind this properly, there's going to be a huge problem. And today, you talk to my constituents in East Texas when they're filling up their Ford F-150 pickup trucks, I can assure you they are feeling inflation. Whether or not it's part of the chairman's core inflation, they feel it.”
On the president’s indiscriminate sequestration cuts:
(from “The Kudlow Report”)
“If the president says this isn't the way to go about it—it's well established that it was his idea in the first place. That’s been admitted by his spokesman. So number one, it's his idea in the first place. Second of all, he is the chief executive. He has the ability to manage this to some extent. I mean, is he the commander in chief or is he the scarer in chief? The bottom line is, as Kay pointed out…I would prefer that we not do these indiscriminate cuts, but come on. There are so many families in East Texas that I represent that would trade their challenge for the challenge of trying to get by on 2.5 percent less. Over the last ten years, the federal budget has almost doubled. At some point, you've got to quit spending money you don't have and borrowing 30 to 40 cents on the dollar from the Chinese and sending the bill to our children and grandchildren.
On the president’s plan to replace his sequester:
(from “The Kudlow Report”)
“What the president is trying to do is frankly a shell game. When he talks about a balanced approach, he already has $600 billion in revenue. You know, where's the $3 in budget savings for every $1 in revenue? We haven’t seen that. All he talks about is revenue.”
On our spending-driven debt crisis:
(from “Hannity”)
“I've got a nine-year-old son; my daughter is turning eleven on Thursday. And you’ve nailed it. This is not just an economic question, it's a moral question. It is a question of generational theft. You know, Sean, at what point do you quit spending money you don't have? If we continue on this trajectory – the one that the president and the democrats have put us on – you know, our children are going to be competing for fewer jobs, with shrinking paychecks, living in smaller, older homes, and they're going to be confined to small, timid dreams. We are on the verge of being the first generation in America's history to leave the next generation with less freedom, fewer opportunities, and a lower standard of living, and that's frankly immoral.
“The deficit is the symptom; it is spending that is the disease. I mean, over the last ten years, federal spending has almost doubled and the economy has only increased about 15 to 16 percent, and working families haven’t seen their income increase at all. It is a spending problem, and right now, the president has taken spending from 20 percent of the economy to about 25 percent and it's on its way to 40 percent. I mean, at this spending trajectory, working families are going to have tax rates that will make France's new socialist president blush.”
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