GOP Policies Would Undermine Economic Recovery

Interview

Today Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee, discussed Chairman Bernanke's testimony before the House Budget Committee on Reuters' TV. Full text of the interview is below, and you can watch the video here:

DAN BURNS, REUTERS: Federal Reserve Chairman Ben Bernanke says the Fed's programs are helping to restore U.S. economic growth and are not stoking inflation, at least not quite yet. Congressman Chris Van Hollen is a Maryland Democrat and is Ranking Member of the House Budget Committee, where the Central Banking Chief offered those assessments today, and he joins us now from Capitol Hill. So Congressman do you agree with Bernanke's statements that QE2 is a significant engine of the current resurgent in U.S. economic growth?

VAN HOLLEN: I do, and the Chairman gave our Committee members the figures, which, by their estimate, QE2 has helped create or save about 600,000 -- 700,000 jobs, and in a time when we've got millions of people in this country unemployed -- unemployment is stubbornly stuck around 9 percent -- I find it astonishing that a lot of our Republican colleagues are pushing this idea that we should get rid of the Fed's dual mandate, and that they shouldn't be paying attention to employment.

BURNS: Sticking with inflation for a minute, what about his continued assertion that the inflation situation in the United States remains pretty benign? Do you buy into that? Aren't you hearing from constituents about the rising gas prices and supermarket prices?

VAN HOLLEN: Well, his point was very clear. He thought that the rise in those prices, the commodity prices, was driven primarily by the growth in the emerging markets and was not linked to the Fed's policy of quantitative easing. And, so, he made it very clear that he's keeping a very close eye on inflation. But look people -- some of our Republican colleagues -- talked about inflation overseas. And the fact of the matter is the job of the Chairman of the Federal Reserve is to look after the United States's economy and make sure that we keep inflation contained here and that we also try and get our economy growing. So it was surprising to hear a lot of our colleagues more concerned about inflation overseas than jobs here at home.

BURNS: Do you think Bernanke was sufficiently convincing on the risk posed by the GOP threat, perhaps, to not lift the debt ceiling?

VAN HOLLEN: I do. I thought he was very emphatic that it would be quote "catastrophic' to the United States' economy and financial markets if the United States were not to come through on its full faith in credit. I think he emphasized that again today, as he had at the Press Club. What was interesting was the number of our Republican colleagues who keep pushing this notion that we should take care of a lot of our foreign creditors, the Chinese and other foreign governments, before we meet our obligations to American businesses, American contractors, senior citizens in the form of Medicare and Social Security, and our servicemen and women. I was really surprised to hear so many people continue to push that idea and I think the Chairman laid out the risks of going down that road very clearly.

BURNS: What's your sense of where we are on the debt ceiling debate in Congress? I mean, we're already north of 14 trillion on the debt, that the ceiling is just south of $14.3 trillion. We could get there within six to eight weeks. Do you think that it's going to get sorted out or are we going to face a revisitation of the showdown that we had in the mid-90s?

VAN HOLLEN: Well let's be clear. We absolutely have to put together a plan in the very short term to get our deficit and debt under control. And the Chairman emphasized that point, but he also emphasized the point that it would be just foolish to play politics with the debt ceiling because of the terrible consequences it would have for jobs and the economy. So, I hope that our Republican colleagues, including a lot of new members of the Congress, don't threaten to take the country's economy over a cliff. Because the Chairman of the Federal Reserve was very clear about what the consequences were, and as he said, they'd be "catastrophic.' So I hope that cooler heads prevail and that people don't hold that hostage to other issues as they relate to the economy.

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