White House: We’re ‘on a Sustainable Fiscal Path’

On Friday’s broadcast of CNBC’s “Squawk on the Street,” White House National Economic Council Director Lael Brainard asserted that we’re “on a sustainable fiscal path” due to the deal brokered between Congress and the White House on spending a few months ago and defended the spending on legislation passed by the Biden administration.

Co-host Sara Eisen asked, “I’m sure politically there’s blame on both sides, but the toll that you talk about, the way I’m hearing it from investors is, it comes after this big standoff over the debt ceiling, the dysfunction and the inability for both sides to be able to work together to tackle our fiscal picture, which is not looking great, is now costing us AAA credit ratings, warnings of potential more downgrades from the rating agencies. Is there a concern, are you concerned that the bond vigilantes could come after U.S. debt, and we could be looking at persistently higher rates as a result of what’s happening or not happening in Washington?”

Brainard responded, “I am concerned that House Republicans don’t seem to understand what they are putting at risk here, and, again, completely unnecessarily. If you think about it, they’re right back at it. It was just three months ago that the president sat down with Speaker McCarthy, House Republicans, House Democrats, Senate Republicans, Senate Democrats, and the president all came together, did a deal, and the deal was very clear on the budget parameters. And yet, here we are, just three months later, rehashing the same issues with even more draconian cuts being put on the table at the threat by House Republicans of shutting the government down. It is an unnecessary risk, and I really hope they’ll take the opportunity they have to act and to avoid it.”

Eisen then asked, “But doesn’t the administration take on some of the blame at least for the fiscal picture and the outlook and the fact that all of this legislation — and a lot of it is good stuff for the investment and for the future of our country — but is costing a lot of money and is going to increase the needs, the borrowing needs next year, the Inflation Reduction Act, the CHIPS Act, the Infrastructure Act, that’s all coming, and that’s all part of it, and it’s all part of what’s been frustrating to Republicans?”

Brainard answered, “So, really, Senate Republicans have come together, joined hands with Senate Democrats, and have put out a path forward for keeping the government open. And have been taking action that’s in line with the agreement that was reached back just three months ago that did put the country on a sustainable fiscal path with $1 trillion in spending cuts. If you look at the economy, we just got those second-quarter GDP numbers yesterday, and a big, important part of that was business investment. Business investment is responding to these great investment incentives to build here in America, employ Americans, to invest in the future of the country, whether it be in semiconductors or in the clean energy transition. So, we’re seeing a lot of really strong, long-term investments as a result of that important certainty that investors are getting in that legislation.”

Follow Ian Hanchett on Twitter @IanHanchett