U.S. headed toward crisis

Aug 20, 2010

Warning that the United States is nearing a crisis situation with its mounting national debt, Sen. Bob Corker urged Cumberland County business leaders to let Washington representatives know they would rather sacrifice a little now to ensure a better economic future.


"We are where we are because politicians want to be elected. They want to give the people what they want and not worry about how to pay for it," Corker said. "I don't think this is the American way.


"When federal officials come to this area, make sure they know you'd rather make a short-term sacrifice to get the country where it needs to go."


Corker spoke at the Crossville-Cumberland County Chamber of Commerce's Business Apprciation Luncheon, which honored local industry, community leaders and community partners.


"The greatest focus in the short term is job creation," Corker said. "We want to get the economy back on track. People across the country are hurting. We have a 10-plus percent unemployment rate. Much of what we're doing in Washington is stifling job creation."


Corker said legislation being passed by Congress is creating uncertainty and many businesses are waiting for a sense of stability before investing. He pointed to health care legislation that has many businesses wondering how new requirements will affect their bottom line and changes to financial regulations that will make less credit available and make available credit more expensive to small businesses.


"My hope is there will be a period of time where we slow down and create predictability," Corker said.


He is worried about a looming wave of debt that could worsen economic woes if government spending is not curtailed. Currently, the public debt is approximately 62 percent of the gross domestic product, the measure of the country's overall official economic output in a year. If spending is not reduced, some projections say that by the year 2030, the public debt will be 146 percent of the GDP.


Corker pointed to Greece, which was faced with a national debt of 120 percent of its GDP.


"Fortunately, they had friendly countries in the European Union that wanted to see them survive and worked with them," Corker said.


The United States, however, has 46 percent of its debt held by foreign countries, with China holding 10 percent.


Corker likened government spending to a Tennessee family earning an average of $43,000 a year while spending $74,000 a year.


And as the public debt grows, so does interest payments. There is also a rise in mandatory spending for programs such as Medicare and Social Security. Today, 52 percent of the federal budget is used in discretionary spending, 42 percent on mandatory programs and 6 percent paying interest on the national debt. Without a change in spending and a change to programs, by 2035, the government will spend 25 percent of its budget on interest payments, 49 percent on mandatory programs and have only 26 percent left for discretionary spending for things like roads and defense.


Corker said, "Both sides are responsible. We have a level of spending unseen before and there have been opportunities to reduce spending missed in the past. We have a national crisis coming and we don't need to point fingers. We need to find a way to solve the problem."


Corker proposes legislation that would restrict federal spending to a percentage of the GDP. He suggests spending no more than 18 percent. Current spending is at 24 percent of the GDP.


Cutting spending to 18 percent of GDP would mean cutting $6.7 billion from the budget. If spending were held to 21 percent of the GDP, it would require a $3.4 billion cut from the budget.


"We need to change the way Washington does business," Corker said. "There is no fiscal discipline. We need to take GDP projections and agree on a percentage of how much we'll spend."


Corker plans to introduce legislation that will figure out a way to cap spending without exacerbating the recession, he said.


As part of the business luncheon, the Chamber recognized local industry, government and community partners for their efforts to grow the local economy.


"I believe the Chamber of Commerce is about vision, cooperation and partnerships," said Jerry Wood, chairman of the Chamber. "It's a great day to be a Tennessean, a Cumberland Countian and a small businessman. Those are the partnerships that have to cooperate in order to have the vision to go to the next level, the future."


James Perry, past chairman, recognized industry leaders in the community and noted the industries represented employed 20,000 pepole in the county.


"Local industry is the driving force of economic development," Perry said. "Thank you for your investment and support."


Government officials and community partners were also honored for their partnerships to provide quality health care and education and affordable housing as well as providing the infrastructure needed for the community to grow. Community partners provide expertise as well as opportunities to draw tourists to the area, provide adequate child care to the work force and market the area to retirement populations.


The luncheon was sponsored by the Crossville Housing Authority, Middle Tennessee Natural Gas, ETHRA Workforce Development and Upper Cumberland Federal Credit Union.


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