The nation’s economic future will get “darker before it gets brighter,” U.S. Sen. Bob Corker, R-Tenn., told the Blount County Economic Development Board Tuesday.
Corker addressed a retreat meeting of the board at the Dancing Bear Lodge in Townsend and indicated that the tight credit market is the prime factor in the current economic and banking crisis that began in the U.S. but has spread to other nations with significant financial markets.
He said the Congress’ initial action of committing $700 billion to rescue troubled financial institutions was “the right thing,” adding that the crisis “about shut the credit system down, almost crushing people here in Blount County who work every day and do the right thing.”
He noted that the rescue plan – which some have called a bailout for big business – was “very unpopular.” Corker said phone calls to his office ran 40-1 against the plan.
“I’ve never seen such anger over a bill,” he said.
Most of the $700 billion, which he said amounts to 4 percent of the nation’s gross domestic product, will be used to buy non-voting stock in banking institutions “to create liquidity.”
Corker expects “100 percent of the money to come back” along with some profits which will be used to pay down the nation’s debt.
The senator downplayed the importance of earmarks, appropriations for local projects that are popular in the community but can weigh down unrelated legislation as they are attached in the hundreds.
Earmarks, he said, amount to $15 billion-$18 billion a year and are a popular target for criticism for presidential candidates in election years. But, Corker said that when compared to “$86 trillion in unfunded liabilities in Medicare and Social Security -- nobody talks about that” the earmarks are not such a large concern.
Concern for earmarks, he said, means candidates and the public are “focused on the paper clips” and not on the overall well-being of the enterprise.
The mortgage giants Fannie Mae and Freddie Mac, which Corker said had the “implied backing of the federal government” as they helped provide the benefits of home ownership to millions of Americans, have been run terribly.
Both have now been taken over by the government.
He said the two bureaus had been pushed by Congress to “make loans where that shouldn’t have been made.”
He hopes that their balance sheets can begin to show improvement over the course of the next year and within a decade can be privatized.
Corker also said he sees energy as having an integral connection to the nation’s foreign relations that will get even tighter in coming years.
He gave as an example what he called “Europe’s muted response” to the recent conflict between Russia and the breakaway nation of Georgia.
Europe’s soft response, he said, was due to Europe’s reliance on Russia for its oil supplies.
“Energy,” Corker said, “will play out geopolitically in the future.”
Domestically, he said, oil demand will soon outstrip supply, and for that reason he supports a greater emphasis on new nuclear power as well as research on coal-to-liquid transportation fuels, conservation and other alternatives.
He added that Tennessee is in a position to “play a lead role” in that arena.
“Neither party wants to pass an energy bill,” he said, adding that both the Democrats and Republicans thought it to their advantage not to pass any such legislation until after the election.
But with the current financial crisis out front on the political scene, “energy is not even on the charts.”