Kentucky Republican Sen. Rand Paul was threatening to derail the Senate's massive budget deal, pointing to the stock market plunge this week and arguing the bill spends too much money.
Paul said financial markets are "jittery" and demonstrate an "undercurrent of unease" because investors are worried about government debt and inflation. On Thursday the Dow Jones industrial average plunged more than 1,000 points for the second time this week, also marking the second-worst point drop in its history.
Frenzied selling in the market has come with a surge in the widely watched volatility index, with things going haywire last Friday after a report showed wages were growing. While good news for workers, the report sparked fears of inflation, sending stocks into their initial tailspin. The selling continued into this week.
But the government has also scrambled to pass a spending bill that will keep it in business and extend its ability to borrow beyond current limits. A shutdown deadline looms overnight. In the Senate on Thursday, Paul said he was elected to fight reckless government spending regardless of the funding deadline.
"You wonder why the stock market is jittery, one of the reasons is we don't have the capacity to continue funding" the government like this, he said. "We've been funding it with phony interest rates."
Rates have been near historic lows since the financial crisis forced the Federal Reserve to slash them and aggressively buy bonds to support the economy. The Fed is backing off that easy money policy, aiming to raise rates very gradually to more normal levels and reduce the amount of its bond holdings over time. But the Fed's ability to raise rates and the timing of those increases could cool down a growing economy.
"What if rates become real again?" Paul asked in the Senate. "Already, interest rates are ticking up. Stock market is jittery. If you ask the question why, maybe it has something to do with the irresponsibility of Congress spending money we don't have."
He also razzed his colleagues for supporting the spending bill, which will raise the cap on government spending $300 million over two years. The nonpartisan Congressional Budget Office estimated that the bill would cost about $320 billion, much of it in the first year.
"If you were against [President] Obama's deficits and now you're for Republican deficits, isn't that very definition of hypocrisy?"