Questions by Sen. Bernie Sanders at the Budget Committee Hearing with Federal Reserve Chairman Ben Bernanke

Chairman Conrad and Ranking Member Gregg, thank you for holding this important hearing.Mr. Bernanke, I dont have to tell you that the views you have on the economy have a major impact on the lives of millions of Americans.There is a great concern in this country that our current economic policies are not working for ordinary Americans. The middle class continues to shrink, poverty is increasing, the gap between the rich and poor is growing wider, we have a record breaking national debt, and a record breaking trade deficit. The personal savings rate is now below zero, which hasnt happened since the Great Depression. While millions of Americans are seeing their wages stagnate, and their pension and health care benefits slashed, the wealthiest people in this country have never had it so good.I personally believe that the time is long overdue for the Bush Administration and Congress to start making fundamental changes in their trickle-down economic policies, so that government begins to represent the needs of all Americans, and not just the wealthy and their lobbyists. If we dont I fear very much that for the first time in the modern history of our country the next generation will have a lower standard of our living than their parents, and that would be a real tragedy. Mr. Bernanke, I would like to ask you two fundamental questions that have a profound impact on the middle class. The first issue deals with the federal budget deficit, the tax breaks that are targeted to the wealthiest one percent, and our record-breaking national debt. The second question deals with our record-breaking trade deficit, the loss of decent paying manufacturing jobs and the outsourcing of information technology jobs. Tax Breaks, the Federal Deficit, and the National Debt: 1. Chairman Bernanke, the President has pledged to make all of his tax cuts permanent, including those to millionaires and billionaires, in the budget that he will be submitting to Congress early next month. Over the next four calendar years, the cost of the tax cuts for the top one percent of households with average incomes of over $1 million will total nearly $350 billion. If the Presidents tax cuts are made permanent, households with annual incomes of more than $1 million a group that comprises the top 3/10ths of one percent of the population would receive approximately $648 billion in tax cuts over the next decade. This group of millionaires would get 20 percent of the total tax-cut benefits. To put this in perspective, the cost of the Presidents tax cuts for the top one percent in 2007 alone will total $63 billion -- more than we are spending on Homeland Security, education, or veterans affairs.Now, the President tells us not to worry. These tax cuts pay for themselves and are fueling record revenues. But, as a recent Washington Post editorial points out, the CBO, Bushs own Treasury Department, and his former chief economic adviser have all disputed the notion that tax cuts pay for themselves. I would ask for Unanimous Consent that this January 7th, 2007 Washington Post editorial, entitled Mr. Bush is oblivious to the Consequences of his tax cut be included in the record.Mr. Bernanke, it is my understanding at a Joint Economic Committee Hearing last year you said I dont think that as a general rule, that tax cuts pay for themselves.Do you still hold this belief?Moving on. As you know, we now have a record-breaking $8.6 trillion national debt. The interest on the national debt alone totaled $227 billion. Today, foreign investors in China, Japan, Saudi Arabia and other countries hold over $2.1 trillion in U.S. Treasury debt nearly 45% of all outstanding public debt which makes our country vulnerable to potential political or economic security from abroad. And, the President is still responsible for the 3 largest federal deficits in U.S. history.Given these facts, from an economic perspective, why shouldnt we immediately rescind the Presidents tax breaks for the wealthiest one percent? Trade Deficit 2. Chairman Bernanke, moving on to trade policy. As you know, our trade deficit is on-track to exceed $800 billion in 2006, and we now have a record-breaking $902 billion current account deficit. Since Bush has been in office, we have lost three million decent-paying manufacturing jobs, a decline of 17%. At 14.3 million, we now have the lowest number of manufacturing jobs since 1950. In my State of Vermont we have lost about 10,000 manufacturing jobs, or about 20% of the total. Now, according to some of the leading experts in the field, we are on the cusp of losing millions of good paying, white collar information technology jobs which are on their way to India, China and elsewhere. While we are losing jobs that provide good wages with decent benefits, many of the new jobs that are being created are low wage with minimal benefits one of the reasons why the middle class is shrinking. Chairman Bernanke, a growing number of Members of Congress and the American people believe that our current trade policies, NAFTA, PNTR with China and other trade agreements have failed, and that we need to fundamentally re-think our positions on trade. In other words, instead of an unfettered free trade policy we need a fair trade policy which protects American workers. My question is: With a $902 billion current account deficit and an $800 billion trade deficit; with the loss of millions of good paying jobs which are being outsourced to China and other low wage countries, do you believe that it is time to overhaul our policies or do you think we should continue in the same failed direction? Is our trade deficit sustainable? More to the point, a few years ago the Bush Administration indicated its belief that outsourcing was a good thing. Do you agree with that?