Van Hollen: Speaker is Out There Again Creating a Self-Inflicted Wound on the Economy

Washington, DC – Today Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee, appeared on Bloomberg Television to discuss Speaker Boehner’s threat to hold the debt ceiling hostage to spending cuts that will threaten our economic recovery. Video of the interview is available here and the transcript is below.

BLOOMBERG’S PETER COOK: We are joined by Congressman Chris Van Hollen, who is the top Democrat on the Budget Committee. You were there at the Peterson Foundation event yesterday.  Maybe you saw the Speaker’s comments. Your reaction to the ultimatum that he has put down?

REP. CHRIS VAN HOLLEN:  Well it is a very reckless step to take – reckless for our economy. There is no dispute that we need to reduce our long-term deficits. The issue has been how. Republicans have rejected the balanced approach that every bipartisan group has proposed, and now the Speaker of the House is out there again creating a self-inflicted wound on the economy. This is a manufactured crisis, just like it was last August, but it is not harmless. It creates greater uncertainty in the marketplace and hurts the economy, and so those kinds of reckless statements should be simply out of bounds. To suggest that the United States is not going to pay its bills, to threaten that we will not abide by the full faith and credit of the United States, is not fiscally responsible. It is fiscally reckless and irresponsible. I would also point out –

COOK: Well let me just ask you this – there are certainly some viewers who might look at what John Boehner is talking about, see the size of the federal deficit, and say, is it unreasonable to match spending cuts with an increase in the debt ceiling? What is wrong with the Boehner principle, in principle?

VAN HOLLEN: Well there are two issues. Number one, they have rejected the balanced approach to deficit reduction that combines cuts, which we have to make, with cuts to a lot of the tax loopholes. So he said we are only going to do this one way, and not in a balanced way, in a lopsided way.

Number two, if you look at the House Republican budget, which they passed and the Speaker supports, it requires that you raise the debt ceiling by $5.2  trillion over the next 10 years. So the House Republican budget violates the rule – the principle – that was laid down by the Speaker of the House yesterday. You can’t have it both ways. That is totally hypocritical. Beyond that, it is reckless in terms of creating uncertainties and laying down these lines when, in fact, what we need to be doing is coming together to find a way to deal with the issue.

COOK: We are short on time. We have got this fiscal cliff coming at the end of the year. This debt ceiling is just part of that discussion. For our viewers, for investors out there worried about what’s going to happen, are we headed for gridlock?

VAN HOLLEN:  Well, what I think all of us hope is that all these events will in fact force a productive solution. In other words, these are action-forcing events. By law, all the 2001, 2003 tax cuts expire. By law, the sequester will take place. By law, we have to deal with the debt ceiling issue. So the convergence of these events, I hope, will produce a focusing of the minds that leads to a productive result. The danger is it is a combustible cocktail, and you get something very bad – a kind of train wreck. But I am very hopeful that we will work together to avoid those issues. But in order to do that, we cannot be making these ultimatums. And number two, people have to be prepared to take a balanced approach to deficit reduction.