Corker speaks on national debt
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U.S. Sen. Bob Corker, R-Tenn., spoke to leaders of McNairy County business and government at the University of Tennessee-Martin’s Selmer Center Friday.
The topic of his address was the federal deficit and the national debt.
The deficit is when revenues are less than expenditures in any year. The national debt is the sum of all past deficits minus any surpluses. The national debt is financed by government bonds.
The deficit for fiscal year 2011, which began last October, was estimated by the Office of Management and Budget (OMB) to be about $1.5 trillion.
The national debt currently sits at about $14.3 trillion.
Corker promoted the Commitment to American Prosperity (CAP) Act, legislation he has proposed, along with Claire McCaskill, D-Mo., to address the problem by putting a cap on federal spending.
Corker said that many Americans do not understand how big the debt issue is.
He accused Washington of being afraid to deal with all spending, rather than the 12 percent that excludes Medicare, Medicaid, Social Security and defense spending, called discretionary non-defense spending.
Only this portion of the budget was cut by the budget agreement passed by Congress and signed by President Obama last month.
“If we don’t deal with entitlements (Social Security, Medicare and Medicaid) there’s no way to solve this problem,” he said.
Corker explained that the two sides were only $8 billion apart, but nearly shut down the government over this difference.
He did say, however, that “we are spending $4.1 billion a day we do not have.”
Corker said government spending is nearly one-fourth of the entire national economy. It has not been this large a proportion since the end of World War II in 1945, he said.
He noted we are borrowing 40 cents of every dollar we spend. He also pointed out that about half of U.S. debt is owned by foreigners. This money could quickly leave our country, causing interest rates to rise, he said.
Corker presented a chart showing, that if present trends continue, the deficit would be $2.8 trillion by 2025.
“We will eat our seed corn,” he said.
Another of Corker’s charts showed that the interest on the debt would be greater than either Medicare, Medicaid or defense spending by 2021.
“It is a seminal moment,” he said.
Corker noted that Standard and Poor’s gave the United States a “negative outlook.”
“They feel the political class in Washington does not have the courage or discipline to deal with this issue. I wake up every day trying to prove Standard and Poor’s wrong,” Corker said.
The next step in this process is raising the debt ceiling, he said.
The senator noted that the United States is one of the few countries in the world that votes on raising the debt ceiling.
Corker believes our country will run up against this ceiling at about the beginning of July.
He said it would be “irresponsible” not to deal with spending and the debt before raising the debt ceiling.
Corker’s plan would cap every type of spending and reduce it to one-fifth of the national economy over ten years.
This would save $7.6 trillion dollars over this period, according to Corker.
Under this legislation, there would be automatic spending cuts by the OMB, according to a formula, he said.
Corker said he “is not a messaging senator” or one who postures and stays ideologically pure rather than trying to get something done to solve problems.
“I have crafted this bill to get bipartisan support,” he said.
Democratic Sen. McCaskill, of Missouri, is one co-sponsor, as is Independent Sen. Joe Lieberman, of Connecticut.
In the House of Representatives, Republican Jimmy Duncan and Democrat Jim Cooper are co-sponsors.
However, Corker noted, “There are a lot of people opposing this. The White House is making calls.”
Under this approach, government spending would still grow, but at a rate slower than the economy.
Corker contrasted his plan with that of Treasury Secretary Tim Geithner, who supports “deficit caps.”
The senator characterized this approach as raising taxes to catch up with spending.
Corker acknowledged that he does not have “a monopoly of wisdom” and there are other solutions to the problem.
He said, however, that to have bipartisan support is the only solution.
Corker also took questions from the audience.
In response to a question on energy, he said, “We need to go ahead and open up more, in my opinion, to exploration.”
In response to a question by Tom Hendrix on how to protect the value of the dollar, Corker said, the Federal Reserve’s (the Fed) current mandate of “maximum employment and price stability is a bipolar mandate.”
Corker proposed that the Fed’s mandate be only price stability, keeping inflation lower than 2 percent.
He noted that this is the mandate of the Bank of England and the European Central Bank.
On the Social Security issue, Corker said two things were being discussed that would not affect current recipients.
One would be to raise the retirement age, and another would give wealthier Americans a smaller cost of living adjustment to compensate for inflation.
“These are things that are not going to be hurting lower income citizens,” Corker said.
“The CAP Act forces us to look at everything and it forces us to do it next year,” he said.
On the Medicare issue, Corker said that House Budget Committee Chairman Paul Ryan’s approach was not to change the program for anyone above 55 years old.
For those below that age, Ryan’s plan would give Medicare recipients “the same exact healthcare plan as United States Senators have.”
“For people that are in a low income bracket, they would get far greater support for that. With these vouchers, they would go to the insurance company, for whichever one (plan) they choose, they would have a choice of 5 or 6. For medium income, they would get a little less. For upper income, you get a little bit less,” he said.
“There’s nothing about it designed to make it hurt the people who need it the most. It may not be the right solution, but I am willing to do it. I am willing to go to the house if voters don’t like it,” he concluded.
Corker predicted, “We are going to have a calamity in this country one way or another if we don’t deal with this.”
“I’d rather deal with these tough issues now,” he said. “The quicker you deal with it, the easier it is.”
In response to a question from Selmer Mayor David Robinson on “how stiff are your spines to use the debt ceiling as leverage,” Corker responded, “stiff.”
“I want us to do something and raise the debt ceiling,” he said, adding that “I will not vote for an increase in the debt ceiling if we do not change the trajectory on spending.”
However, Corker said that if the debt ceiling were not raised, we would still be able to make interest payments on our bonds.
“We will not default on our bonds,” he said.
Corker also predicted that “the President will still send out Social Security payments” if the debt ceiling is not raised.
“I am sitting down with every Democratic Senator” to talk about the CAP Act, Corker said.
He is telling them, “Don’t say no,” he said.
You can read the CAP Act at corker.senate.gov.
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