CNBC - Transcript

Interview

CNBC Interview With Rep. Jeb Hensarling

Subjects: Hearing With Federal Reserve Chairman Ben Bernanke, Health

Care Reform Interviewers: Sue Herera, Michelle Caruso-Cabrera

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MS, HERERA: Joining us now straight from that hearing is Congressman Jeb Hensarling, the Republican Congressman from Texas.

Welcome back, sir, it's always a pleasure to have you on "Power Lunch."

REP. HENSARLING: Well, thanks for inviting me back.

MS. HERERA: Monetizing the debt or not monetizing the debt, perhaps better said is one of the things that Mr. Bernanke talked about. What else struck you in terms of his testimony? He talked about unemployment, obviously, a wide ranging session.

REP. HENSARLING: Well, I think, again, that he believes that we are seeing some improvement in the economy, improvement will be slow. But he shows a greater concern today than we've seen before on ultimately what the long-term impact is going to be of the economic plan that's on the table if Congress doesn't get serious about this spending. We are looking at an ocean, an ocean of red ink. We are going to triple the national debt in ten years, create more debt than the previous 200.

Clearly, the Federal Reserve Chairman is concerned about that, and you saw his answer to my question, he says he will not print money. That means that taxes are going to have to increase in the next ten years, 60 percent, 60 percent just to balance the budget. That's an outrage and people can't handle it.

MS. CARUSO-CABRERA: Representative Hensarling, do you think that he made a dent in the thinking of the folks on the other side of the aisle?

REP. HENSARLING: That's a good question. I have high hopes and low expectations. I would certainly want to work with the Democrats on any kind of bipartisan basis, but again, if you have a massive quantity of debt, either one, you're going to turn on the printing presses, which he says he will not or if the Democrats refuse to do anything about controlling spending and we're looking at an explosion of spending with their cap and trade policies, with their rationed health care policies, a sea of red ink coming from all this spending, so either one, you're going to have to tax people, an increase of 60 percent over the next ten years or you're going to look at interest rates that will crowd out private businesses and people won't be able to start businesses, create jobs, buy homes. It will turn America into a second-rate economic power.

MS. HERERA: And you know what, Congressman, that's one of the debates that's really raging on Wall Street right now is what is the market telling us as interest rates move up, as some of those commodity markets move up? Do you think that we are looking at a large inflationary spiral, you know, some time in the near future? Some say that's what Wall Street is telling us.

REP. HENSARLING: Well, if the Fed does their job and if the chairman of the Federal Reserve remains the chairman and keeps his word, then no, we won't be looking at that level of inflation, but when you press in the balloon on one end, it has to pop out somewhere else.

So if we don't have that level of inflation, what we're going to be looking at, again, is a massive tax increase that will just crush the American dream for millions of families, again, in the neighborhood of 60 percent in just the next decade alone.

MR. : If we do recover, tax revenues will come up on their own and if the markets go up, people will feel like they have a little bit more money, but I guess the question is, Representative Hensarling, where would you start specifically? You just talked about this incredible array of things in terms of red flags on the horizon. Where would you start?

REP. HENSARLING: Well, number one, I would level fund the government with the exception of national defense. What the Congress just did was pass a budget that increases federal spending nine percent. This is after the so-called stimulus plan, which many of us believed didn't stimulate the economy, but stimulated the growth of government. You know, when families are having to cut back when people are losing their jobs, it's the family budget that pays for the federal budget, why would you increase the federal budget nine percent? So number one, I would level fund the government and I would do that for at least five years. Second of all, Congressman Wolf of Virginia has been a leader in trying to get a commission, I know some people may roll their eyeballs, but a commission to deal with entitlement spending, Congress hasn't done it, maybe a take it or leave it plan --

MS. CARUSO-CABRERA: But Congressman, how are you going to stop that train? How are you going to stop that health care train? Has the Republican Party come up with -- the Republican team come up with any strategy to deal with what they want to do with health care here? Can that be --

REP. HENSARLING: Well, number one, to be fair, our level of detail in our plan is greater than what the president has put out. Throughout the Republican conference, we've been working on a plan that will ensure that patients have affordable health care, that's portable, that's of high quality, that allows them to make health care decisions. It will be unveiled in great detail in due time, but even today we have more detail than what the president has --

MS. HERERA: But Congressman, late yesterday, the president basically threw down the gauntlet and said if we don't do health care reform right now, it'll never get done. So the pressure is going to mount and it sounds like it's going to mount very quickly on getting health care reform through. Do you think on your side of the aisle that you have the plan put together to counter what the Obama administration wants to put through?

REP. HENSARLING: Oh, absolutely. We will have a good Republican alternative that does exactly what I said it would do, but listen, I want to make it very clear; we have to have health care reform. The system we have today is unsustainable, but the president who claims that his plan will actually save us money, why did he put a half trillion dollar placeholder in there in his budget for his health care plan if he's going to save us money?

MR. : In the end, can't you do nothing about it, right? I mean the only choice really is to try to delay as much as you can to get some seats at the mid-terms, I mean, that's basically, in real terms, all you can hope to get done.

REP. HENSARLING: Well, listen, elections have consequences, but as Margaret Thatcher once said, "First, you win the debate and then you win the vote." I mean if people see that they're going to lose the choice of their health care provider, that government agencies are going to start to ration their health care, that the quality of their health care will decrease, that they lose their choice of health care for their family, I think they will turn away from any big government, government bureaucrat expensive health care plan.

MS. CARUSO-CABRERA: And that would turn the Democrats, in theory, as well.

MS. HERERA: Thank you. If you ever get up into our neck of the woods, come spend time with us.

MS. CARUSO-CABRERA: Yes, here on the set.

MS. HERERA: Appreciate it.

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