 Uploaded on March 9, 2009, by Tom Campbell 2010, © All rights reserved. | SAN FRANCISCO (01/20/10, 6:00 PM)-- At a speech before the Commonwealth Club of California, U.S. Senate candidate Tom Campbell made the following remarks specifying exactly how he would cut the federal budget deficit: BEGIN CAMPBELL REMARKS: America’s national debt is an economic burden, a moral failing, and a foreign policy vulnerability. It’s the single most important problem we face, and that’s why I’m running for the US Senate. The sheer dimension of the federal budget deficit, and debt, is almost beyond comprehension. We owe 12 trillion dollars. |
Every child born in our country inherits a $40,000 obligation to pay back money her or his parents borrowed. That’s the moral issue. Parents should save to give something to their children. The federal government, however, has done the opposite. It has borrowed from our children, to buy favor with current voters. That’s immoral.
The economic issue is that we have created conditions that will inevitably lead to inflation. Here’s why. We haven’t just borrowed money from foreign countries; we’ve printed it , too! You can’t print money without it showing up as inflation. Liberal economists argue that printed money can “prime the pump” causing real economic growth. But we’ve increased the money supply more than it’s ever been increased in modern history: more than 33% in a single year. No one believes we’ll have 33% economic growth. The difference has to show up as increased prices. If you don’t think so, just do the following mental experiment. Suppose the Federal Reserve tomorrow announced that it would hand out new twenty dollar bills for every old ten dollar bill you brought in; and a new hundred for every old fifty, etc. What would happen to the price level? If you said it would double, you’d be right.
Indeed, Federal Reserve Chief Ben Bernanke realizes this; he promises to take the extra cash out of the US economy at just the right moment, to prevent inflation. I’m totally unconvinced. The only way to take the money out of the system is to increase interest rates, and tell banks NOT to lend—exactly the opposite of what we’re doing now to stimulate an economic recovery.
The foreign policy implication stems from borrowing so much from other countries. Last year, for the first time in America’s modern economic history, we borrowed more from foreigners than from Americans. Indeed, we borrowed mostly from foreign governments; and from China more than from any other country. When a foreign country holds a lot of the US national debt, it has diplomatic leverage over us because it can threaten to dump those bonds on the market all at once, causing US interest rates to shoot through the roof.
The usual response to that concern is that a foreign country would lose money by selling all its US government bonds at once. Any good dumped on the market in large amounts will depress the price. That’s certainly true. But it’s not true that countries put immediate economic concerns ahead of other national objectives. If, for instance, Taiwan were to declare its independence, and the US proposed to recognize a separate country of Taiwan, I don’t doubt for a moment that China would use this economic weapon on us, whatever the cost to China’s balance sheet. We gave this weapon to China; we should not be surprised if they use it.
So, with terrible moral, economic, and foreign policy consequences from our federal government’s over-spending, what can we do now?
First, stop making it worse. Bring back the only law that actually caused Congress to cut its spending habit: Gramm Rudman Hollings. The federal Gramm Rudman law applied until the year 2000, then it lapsed. Under Gramm Rudman Hollings, if Congress did not reduce the deficit every year, across-the-board spending cuts went into effect. Because of the threat of Gramm Rudman, we actually balanced the federal budget in the year 2000. If the people of California send me to represent them in the US Senate, I propose as the country’s top fiscal priority the re-enactment of Gramm Rudman Hollings.
Second, identify federal programs we don’t need and cut them. Here, the contrast between my record over nine years in the US House and Congresswoman, then Senator, Barbara Boxer’s record is the most compelling argument I have that I should replace her.
You can check any of the neutral, non-partisan organizations devoted to cutting the federal deficit, and see the stark comparison: the Concord Coalition, Citizens Against Government Waste, the National Taxpayers’ Union Foundation (NTUF). Perhaps the most telling is that, according to NTUF, I was actually the single most frugal Member of the House according to the net cost of bills I introduced and co-sponsored to spend or to cut: in both the 102nd Congress, and the 106th Congress. By the same measure, when I was number 1, then-Congresswoman Barbara Boxer was number 412 in the House; and later, when I was again number 1 in the House, Senator Barbara Boxer was number 95 out of 100 Senators, in being willing to cut spending. You don’t get better contrasts in politics than that!
In my campaign, I’m starting a system to take suggestions from individual Californians of what we can do to cut federal government spending. Let’s eliminate what we don’t need the federal government to spend. Here’s my starting list: I invite tons of other suggestions at my website, Campbell.org.
TARP: As 700 billion is returned from the banks, retire 700 billion worth of US Debt. President Obama has proposed spending the money for new purposes. No! That’s a breach of faith with the premise used to ask Congress for the money in the first place. It wasn’t a slush fund for Presidential projects, or pork by the Democrats’ leaders in Congress. It was for a specific purpose, which is now no longer needed. Give it back.
STIMULUS MONEY: 789 billion was appropriated for “stimulus,” and there’s talk of another “stimulus” bill. About 90 billion actually went to infrastructure projects that could be considered beneficial to the nation’s economic recovery. Another 400 billion went to states to help with their unemployment benefits, and health care costs for the larger number of people whose falling income qualified them for help. The rest was for boondoggle projects, favored by powerful Senators and Members of Congress. Give it back.
WELFARE SPENDING: Federal spending in the Department of Health and Human Services has been growing faster than the population and inflation for many years. On an annualized basis, we could save 30 billion just by limiting growth to population and inflation.
DEPARTMENT OF EDUCATION: Under both Republican and Democratic Presidents, the temptation to expand the federal role in education proved too much to resist. The result has been an alarming shift in policy-making from local school boards and each state’s education department, to the federal government. Let’s restore the balance, and keep the federal spending to projects that work: Head Start, one of the few successful federal programs, impact aid (for districts next to US military bases and the like), Title 1, for low income school districts, college scholarships for low income students, and school breakfast and lunch programs (actually funded out of the Department of Agriculture). Annualized savings would total at least 5.3 billion, the increase proposed for FY 10 in the Department’s 66.5 billion dollar budget.
AMTRAK: We subsidize commuter rail transport for the East Coast, to the amount of over a billion dollars a year. If rail transport doesn’t pass the test of the market, it shouldn’t be carried on the backs of taxpayers. Savings: 1.25 billion, every year.
CORN ETHANOL SUBSIDIES: We all know this is a boondoggle, kept in the budget by powerful Midwestern States. Stop the dole: save 3 billion a year.
FANNIE MAE and FREDDIE MAC: Congress appropriated 280 billion last year to encourage these two entities, now having been taken over by the federal government, to continue to insure home mortgages that were not commercially viable. This is how we got into the problem in the first place! There’s a private market for reinsurance of home mortgages; there’s no good from having a federal entity competing with that private market, and much harm. The harm comes from the market’s assumption that mortgages underwritten by Fannie or Freddie actually are low credit risks. Those mortgages were bundled into mortgage-backed securities, and bought by AIG, Lehman Brothers, Bear Stearns, the Central Bank of Iceland, and all the other financial institutions whose collapse brought us to the brink last year. Savings: We may not be able to get the 280 billion back; but by ending this implicit government guarantee, and avoiding another 2008, the savings would be astronomical!
Do you have other good ideas for where the federal government could save? Please send them to Campbell.org, and I’ll promote them in my campaign, and in the US Senate.
Thank you.
Campbell for US Senate 20 Park Road | Suite E | Burlingame, CA 94010 Contact the Campaign |
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