Senator Bob Corker referred back to his role as a father when explaining the significance of his CAP Act legislation that he says will spur economic growth by forcing Congress to control spending.
“One thing undisputable is that spending in this country is out of control,” he said while addressing the Blount Count Chamber of Commerce VIP membership Friday. “Years ago, one of my daughters was not that great at controlling her spending. Because she wasn’t disciplined in her spending, I wasn’t willing to give her more resources.”
Corker said once his daughter understood the problem, she went in the complete opposite direction and got control of every penny in her budget. “She overcame that, and became incredibly anal about keeping up with every penny. So now, candidly, because I know she’s responsible, I’m more willing to talk to her about things like that.”
The senator said his CAP Act legislation would do the same thing.
Corker said the government must makes changes to avoid damaging the country’s “economic security, sovereignty and national security by being unwilling to make the tough decisions we need to make on fiscal issues.”
The senator said the government is moving closer to a “debt ceiling,” and the treasury secretary believes the government will hit that mark by Aug. 2.
In anticipation of that, meetings are going on now in Washington, D.C., at The Blair House. Corker said he is optimistic that long-term fiscal changes could be hammered out. “The point is, we have a wonderful opportunity. The vice president is acting as master of ceremonies. From what I hear, he has been pretty judicious,” Corker said. “They’re negotiating between the president’s point man and Eric Cantor, the Republican from the House of Representatives, and John Kyle, who is representing Senate Republicans.”
Corker said he hopes three steps are taken at Blair House. “The first is dealing with discretionary spending. If we did away with all discretionary spending, which includes defense, you still wouldn’t close the gap in spending. You have to deal with entitlements. There is no choice,” he said.
Corker said one of the first decisions may be to lower the amount Congress has to spend, a figure referred to a “Top line 302-a amount.”
“That will be a short term step to show the American people and the markets we can take short-term steps,” he said.
The third step after limiting discretionary spending and entitlements would be the CAP Act legislation, he said.
Corker said the legislation would act as a default fiscal straitjacket to force Congress to have fiscal discipline. The measure has been a long time in coming, but now may be the best time to enact such a measure, the senator said.
“Whatever you guys think about Washington and how irresponsible we are about spending, I promise you, it is even worse,” he said. “What is happening now is the whole country has become focused on this issue, and I think we have this wonderful opportunity to finally do something that makes sense.”
Corker explained and defended the CAP Act. “It a bill that is a fiscal straitjacket and has bipartisan support in the House and Senate,” he said. “We authored this in our office, and it is gaining moment.”
The senator said the CAP Act creates spending limits. “It means over the next decade, the government will spend $7.6 trillion less. It will change the way we do business and put everyone on a budget,” he said. “If we don’t hit the caps each year, then sequestration would occur. The Office of Management and Budget would take money out of every account of government. That is the teeth. That is the only kind of thing that forces us to act like adults. You have to have that kind of thing in Washington, or it is not going to happen.”
Corker said the negotiations at Blair House have “taken the oxygen out of the room,” elsewhere in Washington, and everyone is focused on what is happening in the discussions. The senator said action on fiscal discipline is necessary to prevent the United States from slipping into a similar predicament as Greece, which is facing austerity measures.
“The interesting thing about Greece is, they aren’t making their own decisions about austerity measures,” he said. “The lenders are telling the country of Greece what it is going to do.”
“Recently Standard and Poors gave a negative outlook on our country because they didn’t believe the political class was going to come together and solve our issues,” he said. “Our public indebtedness relative to economic output is sitting at 64 percent,” he said.
Corker said many think the country’s fiscal problems are because of the slow economy. “That is not case. While there was a big gap last year…spending continues to go through the roof, and revenues are leveling off,” he said.
The senator said that in 2012 there will be a $1.5 trillion deficit. In 2025, it moves to a $2.8 trillion gap, he said.
Corker said that, using data from 2008, the average household earned $43,000 a year. If households managed their budgets as the government does, each household would spend $71,500 annually. “That’s $28,500 more, so, for every dollar we spend, we borrow 40 cents,” he said. “Most of this money is gone when spent. It is not invested in infrastructure.”
The senator said that in 1960, when the federal government was borrowing money, only 5 percent of the federal budget went to repay debt. “Today, 40 percent is for debt and 47 percent of that amount is from foreign countries,” he said. “Our interest payments are $300 billion a year. In 10 years, it will be $844 billion a year.”
Corker said that almost every American realizes something must be done to close this gap and put some kind of fiscal discipline in place that forces Americans and Congress to do the things it needs to do.
“For about 40 years, our country has spent 20.6 percent of economic output on the federal government,” he said. “Today we’re at 24.5 percent, and, under current policy, it will move to 26.8 percent. It is trillions and trillions of dollars.”
Corker said he is hopeful for some type of “straitjacket” on spending, whether it be his bill or a variation of it.
“The president has told me he opposes this. The president knew everything about it, but I still believe that, in spite of that fact, we will end up with some type of fiscal straitjacket,” Corker said. “This type of concept has to be in place.”