Rep Cmte Financial Services

Witnesses: Debt Harms Economy and Makes U.S. Vulnerable to “Whims of Foreign Governments”

Financial Services Committee holds first in a series of hearings on the impact of the national debt tomorrow at 10 a.m.

Washington, Mar 24 -

America’s rising national debt harms our economy, will lead to higher borrowing costs for families, and makes the U.S. vulnerable to “the whims of foreign governments,” expert witnesses are prepared to tell the House Financial Services Committee at a hearing scheduled for Tuesday. “For those who think this is just a Wall Street problem, look at it this way: When 10 year Treasury notes go to seven percent, and as a result home mortgages go to 10 percent and car loans to 13 percent, families will have fewer dollars,” said David M. Cote, Chairman and CEO of Honeywell, in his testimony. “That’s now a Main Street problem.”

“If you had spent a million dollars per day since Jesus Christ was born 2013 years ago, you still would not have spent a trillion dollars. We will be spending that much every year just for interest,” Cote said. “Unconscionable.”

Tuesday’s hearing is the first in a series that Chairman Jeb Hensarling (R-TX) announced the Financial Services Committee will hold this year on the harm caused by America’s national debt, which currently stands at more than $17 trillion and is rising.

Douglas Holtz-Eakin, President of the American Action Forum and a former director of the Congressional Budget Office, says in his testimony that “the federal budget outlook is quite dire, harms economic growth, and ultimately raises the real threat of a sovereign debt crisis.”

“The severity of the consequences of an eventual crisis, rather than the capacity to predict its exact timing, should induce the urgency to address it, and hearings such as this advance that goal,” Holtz-Eakin added.

Alice Rivlin, another former CBO director who also served as director of the Office of Management and Budget and is now with the Brookings Institution, tells the committee in her testimony that high levels of national debt also increase U.S. vulnerability to “the whims of foreign governments.”

“High levels of debt increase our vulnerability to shifts in investor confidence and the whims of foreign governments. With substantial fractions of U.S. Treasuries held by foreign governments and central banks, this is a serious concern and can limit our foreign policy flexibility,” Rivlin said.

“The debt is the single greatest existential threat facing our nation and it is a disservice to the American people not to put this threat front and center of every debate in Washington,” Chairman Hensarling said. “Yet lately the refrain from many is ‘we’ll deal with that later.’ It reminds me of the lyrics from a popular country song – ‘Everybody wants to go to heaven, but nobody wants to go now.’