Bob Kerrey: “First of all, Exon-Grassley cuts need to be preserved at all costs. I have heard some say that it is a too large a cut.…”

“First of all, Exon-Grassley cuts need to be preserved at all costs. I have heard some say that it is a too large a cut. I have heard some say it is too small a cut. The fact of the matter is what this does is it sends a signal to the market that we continue to be serious about deficit reduction. Though it may not result in immediate reduction of interest rates, I believe it sends a signal to the Federal Reserve that will allow for the Federal Reserve to keep the pressure off of additional raises in interest rates. I believe it is a market-oriented approach. It says to the market that we understand that our vote last August, our action last August, was treated favorably by the market with lower interest rates. The bonds were bid up as the consequence of that action. The stock market went up as well. Today the market does not expect us to do deficit reduction, and indeed the Exon-Grassley amendment by lowering the caps is raising the markets, and I think it needs to be retained.”