[Romans:] Good morning, Washington, D.C. Right now, the weather is fair, 82 degrees. Later, it will be much warmer, mostly sunny and 97. Before the break, we talked to Democratic Senator Sherrod Brown about the political fight over raising the limit on the national debt. We want to get the Republican perspective now. Joining me from Washington live is Alabama Senator Jeff Sessions. He's the ranking member of the Budget Committee. Senator, thank you for joining us here today.
[Sen. Jeff Sessions, R-texas:] Thank you.
[Romans:] You're not very optimistic that you're going to make progress on a deal with the vice president and his group today, are you?
[Sessions:] You know, I'm just I don't think we can count on it. Those groups haven't been so effective. I believe we should go through the regular order process for budgeting in the Budget Committee. But Jon Kyl and some of the members that are part of that are good people. So we can hope that something good will come out of it.
[Romans:] You know, the bond market, when you look at the markets, the markets are telling us that they think that the debt ceiling is going to be raised. The question is the process of how do you get to that. What kind of cuts do you need to see? Do you think we'll be able to raise that debt ceiling and it will buy us time through the end of next year?
[Sessions:] Well, I think the bond market would be awfully disappointed if the debt limit were raised and we did not reduce spending and get a change that trajectory of debt that we're on, which is clearly unsustainable. Last week's economic numbers were really troubling, with unemployment up, manufacturing down. The fed reported just yesterday that a number of their regions had negative growth compared to the last couple of months.
[Romans:] Now, you see now you're saying
[Sessions:] is our situation.
[Romans:] Your friends across the aisle though will use those same statistics to say this is why we can't be cutting too deeply and too indiscriminately because if you cut now, you cut too deeply now, you hurt the economy in the near term and longer term that hurts your chances of deficit reduction, getting the debt under control.
[Sessions:] Christine, this is a key question you just raised and we need to talk about. What we know is for the last 2-12 years we've borrowed and we've spent money we did not have
[Romans:] To recover from a huge, huge financial crisis that nearly took down the American economy.
[Sessions:] We borrowed money we did not have in large amounts from the future to spend today to artificially stimulate this economy and it has not worked. We've had the lowest bounce back we've ever had if a major recession. It's very, very dangerous. We cannot continue to borrow and spend. This is what is threatening the American growth and the economic studies of Rogoff and Reinhart are when you reach 90 percent of your GDP, your economy, the debt equaling that, then you lose one percent of economic growth
[Romans:] Yes You're quote a Ken Rogoff and Carmen Reinhart wrote the fabulous book, "This Time is Different."
[Sessions:] Yes.
[Romans:] They've studied all of these financial crises. But even debt hawks
[Sessions:] But what I'm saying to you so don't you think that that means that we have no choice but to figure a way to have stability in our economy and not continue to run up debt?
[Romans:] So let's talk about the jobs that we've been creating some 50,000 jobs this last time around. The reason why there weren't more created is because, frankly, you have state budgets in crisis, local budgets in cries, stimulus money running out and they are slashing public sector jobs. For each one of those public sector jobs, according to Moody's Analytics, Senator, there's another 1.3 private sector jobs. Can we afford to keep seeing all of these jobs disappear, and will the private sector magically just recover around it to absorb them?
[Sessions:] If we get this economy on a sound footing, the private sector will recover. Mr. Bernanke says we have to have 2.5 percent economic growth to stay level with jobs. Last quarter was 1.8 percent economic growth. The borrowing and spending, the idea of Keynesian stimulation of the economy is not working. We've already spent far too much. This debt will be a burden on us for generations to come and that's why all the economists are telling us you've got to get off this path.
[Romans:] Yes. You know, somehow I knew you'd go back to the Keynesian argument. Why did I know you would go there?
[Sessions:] Well, I mean, it's really a national debate, isn't it, Christine?
[Romans:] It is.
[Sessions:] We're talking about that. Can we artificially, by borrowing money from the future, spending it today, generate growth? Well, maybe sometime you can make a dent with it, but as a systemic policy it's disastrous and it'll put us in a position that we can't the debt becomes so large it begins to pull our growth down, which is happening today.
[Romans:] Yes. And even the budget hawks, I will say, the people who are concerned about budgets and for years who've been saying we've got to get this under control, it's easier to get it under control in good times, isn't it? But when it's really bad times like it is in an economy that's weakening, even now they're concerned about too much slashing indiscriminately and not in a smart way, could be dangerous to the recovery going forward. And what they're worry about, I'll be honest with you, the number crunchers, what they worry about is that politicians are not very good money managers. That's why we have been had to raise this thing over and over and over again and now just happens to be really tricky time, Senator.
[Sessions:] Well, you're right. Politicians are not very good at spending money and we need to send them less and they need to contain our spending and spend less. That's for sure. I think if we do that you know, the International Monetary Fund told the Brits, don't change your policy. There were protests that you shouldn't cut spending as much as they're doing today. But the International Monetary Fund says, no, stay the course. You'll be this is the sound way to get your economy under control.
[Romans:] Yes.
[Sessions:] We increase spending in the last two years, nondefense discretionary spending 25 percent and that does not
[Romans:] And over the past 10 years we've given a lot of money back to people in tax cuts. The 10-year anniversary of the first Bush tax cuts, too. So you'll have your colleagues on the other side of the aisle arguing about how that, you know, how that given we didn't have the money to do that, too. So, we have to leave it there.
[Sessions:] OK.
[Romans:] Senator Sessions, I appreciate it.
[Sessions:] Thank you.
[Romans:] Come back because there's going to be so much more to talk to talk about as we had to August 2nd. Thank you, sir.
[Sessions:] There's a lot to do. Thank you.
[Romans:] There sure is.
[Chetry:] Still ahead, a nationwide fury. Delta hands returning soldiers a $2,800 bill for baggage. They're backpedalling today after a YouTube video goes viral.
[Romans:] Oh, yes. That's a great story. Also, Nasdaq you can tell I'm a business reporter.
[Chetry:] Oh, wait! It is Nascar!
[Romans:] Nascar! It's Nascar! Can you tell I've spent too much time on Wall Street? Nascar goes tailgating. Next hour Nascar royalty Kyle Petty drops by. Forty-nine minutes after the hour.