(CNSNews.com) – House Majority Leader Steny Hoyer (D-Md.) said that he is concerned about the fact that much of the money that will be used for the $800-billion-plus stimulus bill under consideration in Congress must be borrowed from foreign sources, including the Peoples Republic of China.
But another top Democrat, House Financial Services Committee Chairman Barney Frank (D-Mass.), told CNSNews.com that he doesn’t see “a problem” in the U.S. borrowing money from China for the stimulus.
Speaking at his weekly press briefing, Hoyer said that he was not comfortable with having to borrow so much for the nation’s economic recovery from the Chinese.
“No, I am not comfortable with that,” Hoyer told CNSNews.com. “Steny Hoyer has been a vocal opponent of the fiscal irresponsibility we have pursued, of buying a lot of stuff and not paying for much of it, which was the Republican pursuit.”
He added: “Absolutely I’m concerned about it.”
Hoyer said that eventually the nation will have to get back to fiscal responsibility, and that he had been in talks with the Obama administration about bringing the nation’s budget back into balance.
“I’ve talked to all the administration officials -- from the president, Mr. (Rahm) Emanuel (White House chief of staff), (Treasury) Secretary Geithner, (Office of Management and Budget chief) Peter Orszag, (Obama’s economic counselor) Larry Summers, and engaged them all in conversations which have indicated that we need to get, long-term, a policy of balance and fiscal responsibility,” Hoyer said.
The number-two Democrat in the House said that over the short term, massive spending was necessary to aid the economy, despite any concerns about who we borrow from.
“In the short term, there is no alternative in my opinion, to borrowing money to infuse it in the economy to get out economy going,” Hoyer said.
As of November 2008, the People’s Republic of China was the largest single holder of U.S. debt at $681.9 billion, according to figures released by the U.S. Treasury Department. China, in fact, holds 10.8 percent of all publicly held federal debt.
The communist nation has increased its share of U.S. federal debt by $223 billion since November 2007 and by $95 billion since September of 2008.
If China loaned the U.S. 10 percent of the money for the stimulus bill, the U.S. debt it held would climb another $80 billion to $90 billion, depending on the size of the final bill.
This does not trouble House Financial Services Committee Chairman Barney Frank (D-Mass.), however, who said he was comfortable borrowing more money from China and that he didn’t see why people were concerned.
“I don’t understand what the problem would be,” Frank told CNSNews.com. “I don’t think it would give them any undue influence over us. If they want to lend us money, that’s a good thing.”
Frank agreed with Hoyer that spending was out of proportion when compared to tax revenue, but said that the spending cuts should come from the military.
“I’m not indifferent to the question of spending,” he said, “I wish that the people who are concerned about this would join with me in trying to rein-in some of the excessive military spending.”
Frank dismissed the concerns of deficit hawks who say that excessive government borrowing will make it harder to borrow in the future and might exert inflationary pressure on an already shaky dollar.
“There are two fears -- one is that they will stop buying our stuff. That’s just very unlikely, we’re the safest place in the world. Where else are they going to put it? Are they going to put it in Kuwait?
“The second question is inflationary. The Federal Reserve has been injecting liquidity into the system and they have every capacity to take that liquidity back out,” Frank explained. “So I do not think that that (foreign-financed debt) is becoming a problem.”