Today, before the U.S. Senate Committee on Finance, Senator Tim Scott (R-S.C.) pressed Treasury Secretary Janet Yellen on the White House’s massive budget request that includes over $5 trillion in tax hikes and balloons the national debt by nearly $20 trillion over the next ten years. The Senator, who serves as Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, also demanded answers from the Secretary on the White House’s spending that created an inflationary environment and rising interest rates which led to the failure of Silicon Valley Bank.
Ranking Member Scott’s remarks as delivered:
Thank you, Chairman and Secretary Yellen, thank you for being here this morning, and thank you also for the conversation we had on Monday. We may not always see eye to eye on a number of the issues, but your availability was helpful and understanding and appreciating the actions of the administration. So, thank you for that part.
I’m sure you’ve seen – and maybe even had a big hand in proposing some of the President’s budget request. I could honestly spend hours talking about the President’s budget and how much I dislike it. I think it’s bad for the economy, I think it’s bad for the American people. We certainly see five trillion dollars worth of tax increases, seven trillion dollars in spending, the highest tax rate on individuals in this country in the last forty years, and a new corporate tax rate higher than the tax rate imposed the Chinese Communist Party on their own businesses. More and more policies that undermine our nation’s energy independence and energy security.
This isn’t a budget that unifies the country. This budget only seeks to isolate and divide us. This budget, simply said, taxes too much and spends too much. In the midst of all this budget talk, however, we are once again having to exercise important oversight over the federal regulators and agencies that are responsible for ensuring they’re doing the job that Congress gave them the tools to do. As such, I want to spend some time discussing Silicon Valley Bank. While there are many questions that must be answered, I do know a few things for sure.
First, the bank failed because of its management and because of its board. I know that the failure of SVB also was contributed to by a lax regulatory environment. I believe that the state and federal regulators failed to appropriately use the tools they have to supervise and regulate the failed institutions, and, finally, that Biden’s handling of the economy contributed to these banking failures. The President’s budget is further evidence of reckless taxing and spending that will only exacerbate the highest inflation we’ve seen in forty years. This impact will be felt by everyone and everything, from grocery bills to financial institutions. It appears that the San Francisco Fed was asleep at the wheel and failed to meet their basic, not enhanced, but basic supervisory responsibilities, therefore, missed their opportunity to use enhanced supervisory tools, if necessary. Instead of taking accountability for this blatant failure, regulators are now forecasting that they plan to increase regulations on the rest of the banking industry. In other words, the banks that made responsible business decisions and have not failed. The failure to supervise is inexcusable, and I plan to hold the regulators accountable. This administration’s tax and spending policies fueled inflation and will only further lead to unmanageable inflation and high and higher interest rates. Secretary Yellen, will this administration acknowledge that their reckless taxes spending contributed to not only the challenges that we not only see in everyday households but also to the challenges that we’re facing today with SVB?
Thank you, I don’t want to cut you off, but I only have a minute left, and I want to just say there’s no doubt that the pandemic was in the rearview mirror we saw the COVID relief response in January of 2021 that spent $1.9 trillion dollars. The only thing missing in that COVID relief bill was COVID relief. We had 1% for COVID vaccines, under 10% for related health, and a lot of liberal policies embedded in the $2 trillion dollars of spending which then led and accelerated inflation to a 9.1% or a forty year high. The Fed’s response to the high level of inflation was to have 8 rate increases leading to a liquidity challenge that we are now seeing the results of.
Thank you very much.