U.S. Senator Richard Shelby (R-Ala.), ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, today delivered a statement on the floor of the Senate regarding his opposition to the so-called economic stimulus legislation.
“I fear this is a day that we will come to regret, not only because I believe this stimulus bill will not work, but because it will mark the day when our generation decided that we were not capable of enduring the consequences of our own actions, and therefore future generations must shoulder the burden that we could not find the courage to bear ourselves.”
Senator Shelby’s prepared remarks are as follows:
“Mr. President, during the last eighteen months, our economy has been crippled by an unprecedented financial crisis. What began simply as rising defaults on sub-prime mortgages has rapidly evolved into the greatest economic storm since the Great Depression. Shackled by mounting losses on mortgage-backed securities and falling home prices, our banking system has retracted from normal lending. Starved of financing, our economy is rapidly deteriorating, while millions of Americans face unemployment.
“Unfortunately, we have watched two succeeding Administrations propose plans to revitalize our economy that have failed to live up to expectations. We are now told that the solution to the current crisis lies in this stimulus bill. Proponents claim that this bill will jump-start the economy and reinvigorate private commercial activity. I disagree. This bill has been poorly conceived and hastily crafted.
“First, the immediate impact of this bill is far too small. According to the Congressional Budget Office, only 12 percent of the discretionary spending in this bill will take place in 2009. Second, this bill is not targeted to maximize its impact. It simply funds a wish-list of government programs, rather than focusing on creating jobs and bolstering the incomes of all Americans. Finally, I fear that the supporters of this bill have been resting far too heavily on their Keynesian ideological crutch, rather than devising good policy.
“We are told that Keynes said that government spending was the key to restoring long-term economic growth. We need to remember that Keynes’ views evolved a great deal over time. He was continually changing his opinions when confronted with new facts and circumstances. His famed General Theory of Employment, Interest, and Money was born of his concern that the old policy prescriptions were not working. Because his thinking was always changing, Keynes was often criticized for being inconsistent. He famously replied that ‘When the facts change, I change my mind. What do you do?’
“I believe we need a solution that fits the facts and circumstances of our time, just as Keynes sought to provide a solution to address those of his time. Our solution needs to focus on restoring our banking system. Unless our banking system is nurtured back to health, our economy will remain crippled and much of what is in this stimulus bill will have been wasted. It is worth remembering that the first thing that Franklin Roosevelt did upon becoming President was address the nation’s banking crisis, long before he embarked on the New Deal.
“Another example we should keep in mind is the experience of Japan during their so-called ‘Lost Decade.’ During the 1990's, the Japanese experienced a banking crisis as well. Rather than deal with their zombie banks, Japanese policymakers enacted numerous stimulus bills. Despite those spending sprees, the Japanese economy continued to stagnate as they increased Japan’s debt-to-GDP ratio from 60 percent to a staggering 180 percent today.
“Mr. President, I ask unanimous consent that a list of economists, including several Noble Prize winners, be made a part of the record. They all agree that government spending is not the way to improve economic performance. Over the past year, I have repeatedly called for an extensive examination of the origins of this economic crisis and of the potential solutions. So far, the majority has refused. Instead, in the absence of any analysis or detailed information, they have chosen, time and again, to solve the crisis by throwing money at it. I believe this is laying the groundwork for a much greater economic catastrophe.
“Mr. President, it took until 1982 for our publicly held debt to cross the one trillion dollar mark. In the twenty-five short years since then, we’ve amassed a debt in excess of ten times that amount. Now, we are about to vote on a measure that will – in a single year – add to the national debt what it took nearly 200 years to accumulate. I fear this is a day that we will come to regret, not only because I believe this stimulus bill will not work, but because it will mark the day when our generation decided that we were not capable of enduring the consequences of our own actions, and therefore future generations must shoulder the burden that we could not find the courage to bear ourselves.
“I yield the floor.”