Here are my notes, not quotes, from a teleconference I just got off of with Senator Tom Coburn.
Opening remarks: We just saw two amendments defeated that would have paid for the (emergency war funding). We only lost one Republican on each vote, but still lost. If we want to get out of fiscal trouble, we need to start now. Since Feb, we’ve added 200 billion in addition to all the debt that was already projected.
We’re now at 13 trillion dollars in debt. We’re at 97% of gross debt. Should we look at the gross debt or take Social Security and Medicare out?
We should look at the whole thing. We now have a 1% lower growth rate than we otherwise would have because of this debt. When we’re above 90% gross debt, we’re suppressing our economic growth immensely.
Greece is at 115% debt. I think we will be there in 3 years. Will we be in the same situation as Greece?
We will be Greece in four years unless we can convince the world we’re serious. The smart money is leaving Europe and Japan right now. That’s giving us a falsely low interest rate. Too much of our debt is short term. We’ve had a credit crisis, but Greece is having a liquidity crisis. We’re going to have a liquidity crisis, too, if we’re not careful. We need to send a signal that we’re serious or we’re in deep trouble.
If we get into the sort of trouble Greece is in, we can cut spending, we can default, or we can inflate our way out of it.
Question from me: What happens if in 5 years we become Greece and we default?
In five years, we could have more interest costs in total discretionary spending. We’ll have to markedly downsize the federal government. Inflation will boom. When Western Europe fixes their problems — and they will eventually — money flow will move away from us back to Europe. There may not be a Euro in a couple of years, but there will be countries that have their act together. At some point of time, the money will flow out like it’s flowing in now. The world isn’t going to keep investing in us at low interest rates.
Question from me: Do you think what’s happening in Greece should prompt more of a wake up call in this country?
“If everybody in the world knew what I’d seen, the Euro would be over tomorrow.” We are approaching a Greek like abyss and every week we wait is making the problem worse. Absolutely yes, what happens in Greece could happen with us. Whoever becomes the next governor in California will have major problems and I will filibuster until I’m dead before we give California money unless they get their house in order. Now is the time to make the tough choices. The American people are demanding it. I think they’re in the mood to share some of the sacrifice.
Let me tell you, the really smart international economists are really worried about the US. You keep hearing the Keynesian thought: You have to stimulate more. Japan has been doing that since 1990. It hasn’t worked.
Do you think our going off the gold standard caused the problem?
I don’t know. I do know that if we followed Article 1, section 8 of the Constitution would be much better off because 45% of our spending is outside of that.
Obama has been criticized by liberals over this spill. Do you think oil will be the antidote to the Obama Kool-Aid?
Oil producers tell me that the bigger you are, the more you’re allowed to get away with. We’ll find that the government allowed BP to cut corners. So, government regulation will end up being a failure here. It’s the same with Fannie and Freddie. They were regulated. The regulations failed. We need people who will hold the government accountable. We have a career class of politicians making judgments about issues they don’t understand.
Should we be moving away from deep water drilling?
I think this will cause a pause on deep water drilling, but I think we can do this right. They cut corners. The point is: We’re always going to have failures. You have failures when you drive down the highway, but you don’t stop driving. Congress only reacts. They don’t proactively make changes to stop real problems.
Will this help drive drilling to ANWR instead of offshore drilling?
They should have been able to fix this problem. They blew it. If we’re not going to do offshore, then we need to drill onshore. The tendency will be risk avoidance by members of congress. They never want to get criticized, so they do what’s safe.
We’re regulating entrepreneurship out of existence. Are we over regulating?
Yes. Let the government get out of the way and let the market go where it wants. There’s not any problem in front of us that we can’t solve if we put the people up here willing to make the hard choices. Five years ago, I would have gotten 5 votes on any on any of these amendments. Today, I lost, but I got over 40 votes. Think of the signal that would have been sent today if the government chose to pay for this.
In 2020, unless something changes, there will be no discretionary funds. It’ll all be Social Security, Medicare, and interest payments on the debt. The discretionary budget is less than our deficit this year. We need to count this just like you do at your kitchen table. Here’s what’s coming in, here’s what’s going out. We need to have Social Security and Medicare counted since we have to pay it out.