News Releases

Washington, D.C—Today, Chairman Patty Murray (D-WA) and the Senate Budget Committee held a hearing on the Impact of Political Uncertainty on Jobs and the Economy. Witnesses included Dr. Mark Zandi, Chief Economist at Moody’s Analytics; Dr. Chad Stone, Chief Economist at the Center on Budget and Policy; and Dr. Allan H. Meltzer, Professor of Political Economy at the Tepper School of Business at Carnegie Mellon University. At the hearing, Murray examined how manufactured fiscal crises cause uncertainty in the economy, affecting families and businesses across the country.

In her opening statement, Chairman Murray criticized Tea Party Republican threats to shut down the government over Obamacare, and emphasized that Democrats are not going to negotiate over the debt ceiling, “We want to pass a continuing resolution to keep the government running, and then get to work on a long-term budget deal that: puts jobs and the economy first, replaces sequestration fairly and responsibly, makes smart reductions in spending, and asks the wealthiest Americans and biggest corporations to do their fair share towards tackling our debt and deficits. We continue to be ready to work with anyone who will come to the table willing to make tough choices. But, as the President has made clear, we’re not going to negotiate over the debt ceiling, and we’re not going to accept bizarre demands like defunding or delaying the Affordable Care Act. All that would do is create more uncertainty for families across the country, and they have had far more than enough.”

In his testimony, Dr. Mark Zandi, Chief Economist at Moody’s Analytics explained the dangers of a prolonged government shutdown, “…shutting the government down for three or four weeks would do significant economic damage, reducing real GDP by 1.4 percentage points in the fourth quarter. And this likely understates the economic fallout, as it does not fully account for the impact of such a lengthy shutdown on consumer, business and investor psychology. Any interruption much longer than a month would cause GDP to fall over the quarter, and one longer than two months would likely precipitate another recession. For context, the longest government shutdown on record, in late 1995 and early 1996, lasted about three weeks. The economy’s growth slowed sharply as a result.”

Dr. Chad Stone, Chief Economist at the Center on Budget and Policy, explained that Congress should not be using the debt limit as a political game, “First, through accident or miscalculation, games of chicken can sometimes end in a crash, and the costs to the United States of actually defaulting on its financial obligations could be very high. Default means the Treasury says to someone, or as Marron says perhaps millions of someones, “Sorry you aren’t getting paid.” There’s no way to decide who gets paid in a way that does not damage the economy. If prolonged, a situation in which the Treasury is required to match payments to available cash would have an economic effect like sequestration plus the fiscal cliff on steroids and would likely plunge the economy back into recession. The difference between default and a government shutdown, sequestration, or the fiscal cliff is that even if the debt limit were subsequently raised, the damage to U.S. credit rating could not be reversed.”

Key Excerpts From Chairman Murray’s Opening Statement:

“…even though we’ve come a long way, there is still a lot we need to do to ensure American families recover from the impact of the Great Recession, and to ensure strong middle class growth and economic security in the future. Families across the country are focused on these issues.  Here in Congress, we should be focusing on them too.  That’s why what we’ve seen recently from a minority of extreme Republicans is so deeply disappointing and so harmful.”

“Again and again, Tea Party Republicans have chosen gridlock over compromise, brinkmanship over solving problems, and partisan games over our economic recovery. They held the economy hostage over the debt ceiling in 2011 in an effort to, as Speaker Boehner admitted, create enough chaos to force their ideological agenda through Congress.”

“A bipartisan budget conference would have offered an opportunity for us to work together to replace the harmful automatic cuts with more responsible deficit reduction. But rather than coming to the table, Tea Party Republicans stood up and blocked these bipartisan negotiations between the House and Senate each of the 18 times we tried to get them started, even though other Republicans agreed with Democrats that we should at least sit down together and try to get a deal.”

“The bottom line is that when we should be thinking about how to create jobs and encourage growth, Republicans are letting the Tea Party minority push us from one crisis to the next.  And their brinkmanship has had serious consequences.”

“Speaker Boehner and the rest of the Republican leadership need to finally stand up to the Tea Party minority that is committed to constant crises. They need to end the hostage-taking, stop playing political games that threaten our fragile economic recovery, and work with us to ensure the economic security of families and businesses.  And once they do that—then I am confident we can work toward the bipartisan deal the American people expect.”

Full Text of Chairman Murray’s Opening Statement:

“This hearing will now come to order.

“I would like to thank Ranking Member Senator Sessions, and all of my colleagues, for coming today. And I would also like to welcome and thank our witnesses, Dr. Mark Zandi, chief economist at Moody’s Analytics, Dr. Chad Stone, chief economist at the Center on Budget and Policy Priorities, and Dr. Allan Meltzer, professor of political economy at Carnegie Mellon University.

“We are glad to have you all here to discuss the ways that uncertainty in federal policymaking—especially when it comes to the budget—has impacted job creation and economic growth.

“Five years ago this month, our country was in the middle of a growing financial crisis. Lehman Brothers had just filed for bankruptcy protection. Our economy was spiraling downwards, taking along hundreds of thousands of Americans’ jobs and financial security. In September 2008 alone, we lost 459,000 jobs across the country. And the losses only grew from there.

“Over the last few years, thankfully, our economy has begun to rebuild. More people are getting back to work. Crucial sectors of our economy are regaining strength. And, even though long-term fiscal challenges remain, the short term deficit picture has improved significantly. We are now on stronger footing. But as we will discuss today, the recovery is still fragile, and not nearly as widely felt as it should be.

“Although hiring has picked up, far too many Americans are still looking, or stuck in low-paying jobs that offer little short-term or long-term economic security, and even less opportunity to get ahead. 

“New Census data shows that the middle 60 percent of American income earners actually have lost ground since the recession ended.  Real income for this group declined 1.2 percent over the recovery, while the top 5 percent of earners gained 5 percent.

“So even though we’ve come a long way, there is still a lot we need to do to ensure American families recover from the impact of the Great Recession, and to ensure strong middle class growth and economic security in the future.

“Families across the country are focused on these issues.  Here in Congress, we should be focusing on them too.  That’s why what we’ve seen recently from a minority of extreme Republicans is so deeply disappointing and so harmful.

“Again and again, Tea Party Republicans have chosen gridlock over compromise, brinkmanship over solving problems, and partisan games over our economic recovery. They held the economy hostage over the debt ceiling in 2011 in an effort to, as Speaker Boehner admitted, create enough chaos to force their ideological agenda through Congress.

“During that debate, job growth and consumer confidence tanked, the Dow dropped more than 2,000 points, and the debacle ultimately led to sequestration, which—while doing relatively little to improve our long-term fiscal condition—has imposed brutal cuts that slowed growth, weakened our national defense, and slashed crucial programs that families, seniors, and our future economic competitiveness depend on.

“The Congressional Budget Office estimated that ending sequestration through the end of the next fiscal year could add up to 1.6 million jobs. This is one of the many reasons Democrats have been trying to start a bipartisan budget conference for the past six months since the Senate and the House passed our budgets. A bipartisan budget conference would have offered an opportunity for us to work together to replace the harmful automatic cuts with more responsible deficit reduction.

“But rather than coming to the table, Tea Party Republicans stood up and blocked these bipartisan negotiations between the House and Senate each of the 18 times we tried to get them started, even though other Republicans agreed with Democrats that we should at least sit down together and try to get a deal.

“Many of us on both sides of the aisle wanted to get to work before we were up against a deadline. We wanted to avoid the uncertainty and governing-by-crisis that Americans are rightly sick of. But just like in 2011, Tea Party Republicans thought they would have more leverage in a crisis.

“And so now, we are days away from a possible government shutdown, which could affect hundreds of thousands of workers’ jobs and disrupt basic services from Social Security payments to small business loans, all because Tea Party Republicans have decided—once again—to try to defund the Affordable Care Act, a law that has already helped millions of Americans and is on track to help millions more.

“As if that’s not enough those same Republicans are, to quote Speaker Boehner, trying to pick ‘a whale of a fight’ over the debt ceiling, even though economists warn that an unprecedented default on U.S. obligations could throw us back into recession, and devastate the global economy.

“The bottom line is that when we should be thinking about how to create jobs and encourage growth, Republicans are letting the Tea Party minority push us from one crisis to the next.  And their brinkmanship has had serious consequences.

“Uncertainty about government policies has increased in the last two years. In fact, the 2011 debate over raising the debt ceiling created even more uncertainty in the economy than the 2008 collapse of Lehman Brothers.  Economists and experts have been very clear that we can’t afford more of this. Federal Reserve Chairman Ben Bernanke said last week that current federal fiscal policy is, ‘an important restraint on growth.’

“The U.S. Chamber of Commerce, which doesn’t often side with Democrats on fiscal issues, even sent a letter to the House urging them to: end their campaign to defund health care reform, pass a continuing resolution to keep the government running, and raise the debt ceiling in a timely manner.

“Many Republicans are sending the same message to their own party. Senator Burr, for example, has said repeatedly that trying to defund the Affordable Care Act in the continuing resolution is the dumbest idea he has ever heard.  Senator McCain called Republican debt ceiling threats ‘shenanigans.’ Democrats agree.

“We want to pass a continuing resolution to keep the government running, and then get to work on a long-term budget deal that: puts jobs and the economy first, replaces sequestration fairly and responsibly, makes smart reductions in spending, and asks the wealthiest Americans and biggest corporations to do their fair share towards tackling our debt and deficits.

“We continue to be ready to work with anyone who will come to the table willing to make tough choices. But, as the President has made clear, we’re not going to negotiate over the debt ceiling, and we’re not going to accept bizarre demands like defunding or delaying the Affordable Care Act. All that would do is create more uncertainty for families across the country, and they have had far more than enough.

“Americans have been fighting hard these last few years to get back on their feet, to rebuild their retirement savings, find new jobs, and restore their financial security. The last thing they need right now is Tea Party Republicans putting our economic growth, and with it, Americans’ jobs, retirement, and security, at risk.

“It really should go without saying, but instead of making it harder for families to find work, pay off their debts, send their children to school, to do the kinds of things that we know strengthen our economy now and over the long term, we should be doing everything we can to encourage continued and stronger growth.

“Speaker Boehner and the rest of the Republican leadership need to finally stand up to the Tea Party minority that is committed to constant crises. They need to end the hostage-taking, stop playing political games that threaten our fragile economic recovery, and work with us to ensure the economic security of families and businesses.  And once they do that—then I am confident we can work toward the bipartisan deal the American people expect.

“I’m looking forward to discussing the important topic before us today and hearing from our witnesses about what our priorities should be as we look at the needs of the economy and middle class families.

“I’d like to thank our witnesses again for coming, and with that I’ll turn it over to Ranking Member Senator Sessions.”