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UPDATE 1-US Rep Paul gloomy on deficit outlook, sees crisis
January 27, 2011 / 9:38 PM / 7 years ago

UPDATE 1-US Rep Paul gloomy on deficit outlook, sees crisis

* Expects wide support for “audit the Fed” bill

* “Undecided” on another bid for White House (Adds Paul comments, background, byline)

By Kevin Drawbaugh

WASHINGTON, Jan 27 (Reuters) - A world currency crisis awaits if the U.S. Congress and the White House do not balance the federal budget soon and that appears unlikely, Representative Ron Paul said in an interview on Thursday.

The iconoclastic Texas Republican also told Reuters he expects wide support for a bill he has reintroduced in the U.S. House of Representatives to allow greatly expanded scrutiny of the Federal Reserve by Congress’ investigative wing.

Paul was recently named chairman of the House domestic monetary policy subcommittee that oversees that issue.

He said President Barack Obama’s remarks on the deficit, expected to hit $1.48 trillion this year, in his State of the Union speech “was a lot of the same old stuff.”

As for his fellow Republicans and the deficit problem, Paul said, “They had their chance and didn’t do much.”

“I think the deficit is going to continue to grow,” Paul said. “I am anticipating that we will have a dollar currency crisis that’s going to be worldwide and the world will be forced to have monetary reform, and we’re getting closer to that all the time.”

He said he was “undecided” on whether he will run again for president, an office he has twice sought unsuccessfully. Rand Paul, Paul’s son, was elected to the Senate last year from Kentucky. Both father and son are prominent figures in the conservative Tea Party movement.

Paul cuts an unusual figure in U.S. politics. The 75-year-old obstetrician is a libertarian with strong views about monetary policy, the gold standard and the Federal Reserve. He collides often with Democrats and Republicans.

SENATE RUN?

He told The Dallas Morning News this week that he was considering running for the Senate.

He has reintroduced legislation in the House calling for a full audit by Congress’ Government Accountability Office of the Federal Reserve to be reported to Congress by the end of 2012. Rand Paul has introduced a companion bill in the Senate.

The House version has 55 co-sponsors, mostly Republicans but also some Democrats. No Republican leaders have signed on, but House Financial Services Committee Chairman Spencer Bachus has, and Paul said that is a promising sign.

He said he expects the measure to appeal to newly elected House Republicans swept into office by the Tea Party movement.

“We should get a lot of them on. It’s hard to beat what we did last year because we had every single Republican in the House and a bunch of Democrats. I think the momentum is still there. People want transparency,” he said.

He said he assumes the bill, with Bachus’ support, will come to a vote at the full financial services committee level. Approval would send it to the House floor. “It will always have more trouble in the Senate,” he said.

On the deficit, he said, “It’s just going to get worse because some things are just out of control. Republicans won’t touch the military and the other side can’t stand the idea of any welfare being cut ... Interest rates will be going up.”

He acknowledged that bond markets, with yields low and demand still strong for U.S. Treasuries, show little or no sign of worrying about a global economic disaster.

”That is true,“ he said. ”One reason is other countries have it as bad if not worse.

”We are the reserve currency. That gives us a special status. We’re still the military power of the world and that has been known to convey confidence in a currency when it’s undeserving. Things could change rather quickly.

“That’s why the odds are about 99 percent that we’ll have a currency crisis before we come to our senses. Then we’ll have to do something. We’ll have to have monetary reform.”

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