Lankford Questions Janet Yellen to Lead Treasury Department
CLICK HERE to watch Lankford’s Q&A.
WASHINGTON, DC – Senator James Lankford (R-OK) today attended the Committee on Finance hearing to consider the nomination of the Honorable Janet Yellen to serve as Secretary of the Treasury in the Biden Administration. Yellen previously served as the chairwoman of the Federal Reserve from 2014 to 2018. Lankford has engaged extensively with the Treasury Department during his time in Congress and particularly surrounding the coronavirus pandemic. Lankford’s questions today focused on our nation’s debt and deficit and the unsustainable fiscal path that excessive deficit spending can put us on.
Lankford also pushed Yellen to clarify a comment she made in 2018 during an interview saying, the United States’ debt path was “unsustainable” and that if she “had a magic wand,” she “would raise taxes and cut retirement spending.” Instead of limiting unnecessary spending, Yellen would look to raise taxes, impacting American families and businesses.
Lankford has focused on our national debt as a major concern in every volume of his Federal Fumbles: Ways the government dropped the ball. Lankford discussed the need to reform our federal budget and spending process as it relates to deficits and debt in an episode of his podcast, The Breakdown with James Lankford, in November 2018. Lankford’s bill to identify government waste and duplication through the creation of a federal inventory to reduce our national debt and deficit, the Taxpayers Right-to-Know Act, was enacted into law in January 2021, and Lankford has continuously raised the issue of debt and deficit throughout his time in Congress, including speaking about some of his solutions on the Senate floor in March 2020.
Lankford: You made a comment to Senator Thune earlier, saying ‘Eventually we’re going to have to deal with the issue of debt.’ What is kind of the warning sign that you look for, and is there an upper limit to the federal debt that we should be watching for, and in your perspective, what are the key signs? Because if you use the word ‘eventually’ that would tell me that you don’t think it’s infinite. What is that upper limit?
Yellen: Well, I would agree with you. I think there’s no single metric that summarizes our overall fiscal situation, but one metric that I do think is useful to keep in mind is the interest burden of the debt—what share of our economy, of GDP is going to pay interest on the debt. The higher that gets, the more we find we have to use tax revenue just to pay the interest on the debt, and eventually that can lead to having to curtail other services, other spending, or eventually lead to runaway debt accumulation. That would be an unsustainable path…
Lankford: I would submit that we have to find an earlier warning sign because once interest rates start ticking up, in some ways it’s too late because you have so much debt that’s there and the interest rates begin to tick up. If you find that moment when it’s unsustainable, it rapidly gets worse.