GRASSLEY: When the Senate goes to Ben Bernanke's nomination tomorrow morning, after five votes that's going to end the debate on the -- on the debt limit -- Ben Bernanke's going to be up for his second term for Fed chairman -- I'll vote no because of concerns about inflation and the pattern of resistance to accountability.
The Fed has to unwind its massive balance sheet and remove the excessive funds created to paper over the financial sector's unacknowledged losses without stoking the flames of inflation.
We need a chairman focused on a strong dollar and low inflation. The current chairman has been behind the scenes with a policy of easy money, inflating our way out of a stock market bubble to a housing bubble. Now we face the inevitable result, and it seems like we're in a situation to repeat the mistakes of the past with the kind of hyperinflation we had in '79 and '80.
The second reason is the Fed's resistance to transparency. It may have been defensible when the Fed was focused on monetary policy, and still is legitimate in that particular case, but during the last two years, the Fed routinely exercised extraordinary emergency powers to subsidize financial firms, far above what Congress authorized through legislation, putting taxpayers at risk in unprecedented ways.
Congress approved the $700 billion under TARP. And then, when the Fed has come along and added up to $3.4 trillion, yet the Fed resists scrutiny, citing provisions of law intended to maintain independence of monetary policy, which I have no argument with. But transparency in everything else ought to be -- ought to be the public's business.
Under circumstances like this, this kind of stonewalling is a violation of the public trust, and I cannot condone it with a second term.
Questions?
Joe Morton?
QUESTION: Yes, Senator, what about, I guess, the fear that, if Bernanke, you know, doesn't get confirmed and we don't have a Fed chairman, it, you know, might spook the markets?
GRASSLEY: Listen, they can't spook it any more than what the president did last week by 400 or 500 points, by talking about banks being too big, splitting up banks, too-big-to-fail, taxes, all those sorts of things. And I'm not a purist on any of those, but the Fed takes action once a month; that influences the stock market, and -- and we're still going to have a Fed chairman, and so what's the big deal?
WHO, Brad?
QUESTION: Yes, good morning, Senator. Quick question: State of the Union address tonight with Obama -- what do you think he's going to say and what would you like him to say?
GRASSLEY: Well, there's word he's going to have a freeze across the board, but you've got to do more than that. But that's a -- quite a dramatic change of direction.
I want to know what he's going to do to carry out the plan to get jobs, and particularly doing that to -- help for small business and not being afraid of his own (inaudible) so that he can promote trade and exports.
QUESTION: Great. Thank you, sir.
GRASSLEY: Tom Beaumont?
QUESTION: Do you have any idea whether your vote on Bernanke is part of a -- what could be that 41 votes that could kill the nomination?
GRASSLEY: No, I don't know. And we'll know tomorrow about -- according to what I got off my BlackBerry, we have five votes tomorrow ending up the debate on the debt limit.
Then we have one hour of debate on Bernanke. And that will be subject to 60 votes. And that is on the issue of cloture. If they get 60 votes, then I assume he's got 51 votes to be approved. And if he doesn't have 60 votes, then I think that's the end of it.
But I don't know where I fit into it. And I -- in other words, I have not seen an account. But I had told our whip very recently that I was -- that I was going to vote no.
Tim Rohwer?
Kathie Obradovich?
OK. Anybody else?
(CROSSTALK)
GRASSLEY: Kathie? Kathie?
QUESTION: Yes, this is Kathie.
Back on the State of the Union for a second, you said that he's got to do -- the president's got to do a lot more than freeze across the board. Is -- would you support that, though, as a first step...
(CROSSTALK)
GRASSLEY: Oh, yes. I'm going to -- I'm going to support an across-the-board freeze. Now, it probably will be kind of flexible. I would imagine -- I heard over the radio this morning that there's going to be some increase in education.
So that means, if you're going to have a freeze on discretionary spending, a total amount of money for, let's say, 20 percent of the budget, then something's going to receive less. And, of course, I'll have to go through those.
But I think that -- here's -- here's the context of where I say a freeze is a step in the right direction. And if you don't see it in the context, a freeze might not seem significant. But I'm saying that it's -- there's got to be more done, and I don't -- whether that's in the way of -- of -- cutting things or just turning back the TARP money, as an example. That's $200 billion right there.
But, anyway, remember that the Bush budget for five months of 2009 was 3 percent increases. The new team comes in; they increase it to 9 percent for the remaining seven months. And then, for the 12 months we're in right now, there's a 12 percent increase.
So this is a dramatic -- if the president follows through on this and Congress backs him up and -- or he stiffens Congress's backbone by vetoing legislation that does more than a freeze, then this is a dramatic change of direction and a responsible change of direction to what was not just
irresponsible but totally deplorable increases of 9 percent and 12 percent, at a time when we were in recession, at a time where we were stimulating the economy in the wrong way because we weren't doing enough for small business.
And also, maybe another -- backing up, but when he said a freeze might not be enough, remember the plateau includes the stimulus spending of last year. That's built in.
That was Kathie.
I think I've gone through my list. If anybody wasn't added or nobody has a follow-up?
OK. Thank you all very much.
END