Unanimous Consent Request--S. Res. 136

Floor Speech

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Mr. BRAUN. Madam President, I rise here today, and I have been in the Senate a little over 2\1/2\ years, and I never imagined that I would have to drift back to my days at Wabash College, as I migrated from a biology major to a political science major and, thank goodness, to an economics major.

In that time, I never in my wildest dreams thought I would be able to talk about macroeconomics because back then there were a couple of points of view. You had Milton Friedman, who was a disciple of monetary theory--that if you get too much out there circulating, your currency devalues and you get inflation. And then there was Keynes, who was a big disciple of the government, either through tax policy or spending. And, my goodness, how either one of them would react to what we are contending with today, I think it would give them some pause in terms of where we are at.

This has nothing to do with the underlying policy goals. I am someone that comes from a State legislature in Indiana where we tackle things like infrastructure, defined there and then as roads and bridges. We came together. We actually paid for it through user fees, which we haven't done here since 1993. That is fuel taxes, which generally would be at least one thing you would look at when you want to spend a lot of money on infrastructure.

So here we are today. We had a hearing a couple of weeks ago, and I will cite him in a moment. Robert Reich was in there, and I threw that question at him: How could we have come so far from Keynes' economics and Milton Friedman, which has controlled the dynamic of this country, its monetary policy, and its fiscal policy, until just recently?

Then comes along the Modern Monetary Theory, a new approach to macroeconomics. This theory proposes that governments can spend however much they want, go into debt as much as they want, and have these structural trillion-dollar deficits that would work nowhere else. It only works now because we are the only reserve currency. Being the only reserve currency, people come to us with their currencies, and that keeps our interest rates down. That doesn't acknowledge that there are places like China, which will be a larger economy than ours and lends us money currently.

In places like China and most other places across the world--unless you were Greece, Italy, maybe Spain and Portugal, which kept the euro from being a prominent currency because they lived beyond their means-- you cannot, just because you can get by with it in the short run, continue to do things into the mid and long term without consequences.

This fanciful theory has found its way out of the faculty lounge and into the halls of Congress. Considering that President Biden has proposed another $4 trillion in spending. There is $1.9 trillion that we have recently done--a done deal--borrowing every penny of it. We have not raised taxes. That is a false argument too. With the amount of taxes that you could raise, you wouldn't even cover part of our day-to- day trillion-dollar deficit. It adds to our debt.

When I got here, I think it was around $20 trillion. Soon it is going to be over $30 trillion. And listen to this: World War II was the highest debt we ever had as a country. We were savers and investors then. Now we are consumers and spenders. They paid that off. We had basically no debt until the wars came along that we financed by borrowing, not paying for it. Then, 2008 and 2009 came along, and that looks like chump change compared to what we are doing now.

Now we had an approach to one of the biggest challenges we have ever had as a country, navigating through COVID, and of course we did things that basically needed some new idea how to justify it--Modern Monetary Theory. It is a recipe for hyperinflation and continued higher deficits. By the way, the trillion-dollar deficit without any COVID, just in its own momentum forward, is going to be $1.5 trillion in 4 to 5 years.

I am not surprised the big spenders in DC have latched on to a theory that tells them it is OK to spend irresponsibly and hike taxes. They may not acknowledge that pre-COVID we were in a pretty good place. We were raising wages. Senator Sanders and I would share that. We need to raise wages in places, but you can't do it through the government. That is not the productive economy. Everything that the government gets comes from the productive economy.

I am surprised there has not been more pushback because it is a flawed economic theory. When I asked Robert Reich about it, he dismissed it: Well, it is too new. It is too novel. I can't really talk about it.

That shouldn't be the foundation upon which you are having your spending plans laid out currently.

What it is, in my opinion, is a bunch of malarkey that is embraced because we want to spend like drunken sailors. Coming through a crisis, we can't do that. We have already done that. What we did in a bipartisan fashion in 2020 probably made sense. Continuing that forward, you can't base it upon this new idea that debt, deficits don't make any difference. It is kind of like a kid coming up with a modern dietary theory that says it is OK to eat cookies for every meal. It wouldn't work.

Many noted economists from across the political spectrum have warned that the implementation of the Modern Monetary Theory will pose a danger to the economy, and this wouldn't be center and right economists. Let's listen to a few of them.

The Secretary of the Treasury and Director of the National Economic Council, Lawrence Summers, back in the Clinton years, and Federal Reserve Chair Jerome Powell, who has been OK with accommodating some of it--he said that is not a new theory that you can rely upon. Even Paul Krugman, whom we know that generally he would be eating this up, he has reservations, and not to mention a host of others. I just told you what Robert Reich said when he dismissed it as something too new to comment on.

Now, Secretary Janet Yellen discussed Modern Monetary Theory's idea that interest rate payments can be handled by the central bank buying the debt back in 2019, calling it ``a very wrong-minded theory because that's how you get hyper-inflation.''

Joel Griffith, a research fellow at the Heritage Foundation, summed it up well when he wrote:

There is no free lunch. We will pay either through the visible burden of direct taxation, the hidden tax of inflation, or higher borrowing costs.

I said earlier that we are the only reserve currency. Interest rates are starting to go up. The Chinese could do things that could knock interest rates up two to three points quickly if they decided to take a different point of view. There is a lot of danger in living in the moment because you don't feel any of the pain that will inevitably come in the future, and it is not far out

The acceptance of Modern Monetary Theory would lead to higher deficits and higher inflation. The underlying policy in terms of higher wages, trying to do things to improve the lot of Americans, that is fair game for discussion. Just don't mislead them, putting all that debt on our kids and our grandkids. That would be like running a business, running it into the ditch, going to your banker, and thinking that you could get a loan. You would be laughed out of the office if you tried to do it 2 years in a row. That is now standard operating procedure with trillion-dollar deficits built into the system, not to mention this.

The Senate must abandon this fundamentally flawed, irresponsible economic model in favor of mainstream fiscal and monetary frameworks that work everywhere else. The European Union, a recent example, headed to be a reserve currency, and even Greece, Spain, Portugal and Italy have found that they can't do that and get by with it.

Madam President, as if in legislative session, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be discharged from further consideration and the Senate now proceed to S. Res. 136. I further ask that the resolution be agreed to, the preamble be agreed to, and that the motions to reconsider be considered made and laid upon the table.

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Mr. BRAUN. Madam President.

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Mr. BRAUN. So I don't disagree with what Senator Sanders said in terms of policy that needs to be debated, but a classic tactic when you are focusing on how you are going to pay for something is to change the subject. And whatever you think about what happened over in the House of Representatives, whatever you think about the other issues, this is about being honest with future generations and where has that worked and been a good end result.

When it comes to some of the taxation part of it, that is a smokescreen because even if you raise all the revenue they are talking about with those taxes--and I am a believer that corporations should pay their fair share. Multinationals that flatten their tax rate, that is different from many C corps, many corporations. But the dishonesty in that argument is that you couldn't cover even 20 percent of our existing structural deficit. So you need to be honest.

If you want to do this, ask your kids, ask your grandkids if they are willing to put that burden on them. And there is no theory out there, other than this which is being used as a current rationalization, that would make that ever have a pleasant outcome.

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Mr. BRAUN. Madam President.

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Mr. BRAUN. I know we have a vote coming up, and I won't belabor it.

I think the basis for maybe a good conversation, because we are not going to solve it today, is when it comes to the tax package that was put through in the Tax Cuts and Jobs Act of 2017--and I would have some authority on this, Senator Sanders. I spent 37 years in the trenches running a small business that ended up being a larger company. Three of my kids run it with a good young executive team--the American dream. And my observation was that we had kind of hit the sweet spot.

And the CBO, which actually put that original cost of $1.5 trillion-- $150 billion per year, over 10 years--said that we were actually generating record revenues pre-COVID and that they could have revised, and still might, that trajectory.

I think if we are going to go forward, you have to realize that there is a limit to anything you can do through government. And when you try to raise taxes, you have to be honest about it. Over 50 years, regardless of what the tax rate has been, the economy has generated about 17 percent of our GDP with tax revenues because when they are high, there is less economic activity. You actually find a sweet spot, like we did with the Tax Cuts and Jobs Act of 2017, and the economy was proving it pre-COVID.

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