Sen. David Perdue, R-Ga., is a Georgia native who became the CEO of Reebok Brand and Dollar General. He won a Senate seat in 2014, and came to Washington to push for major conservative reforms.
Those include term limits, reducing spending and doing something about the $18.8 trillion national debt.
In his first year, Perdue has gotten a glimpse of the debt’s impact on U.S. policy from the Budget and Foreign Relations committees. Perdue spoke with the Washington Examiner about why he came to Washington, his five ideas for reducing the debt and what might happen if nothing is done.
Washington Examiner: You’ve said the rising debt is what inspired you to run for office. Why is it so important to fix this problem?
Perdue: It’s really what pulled me into this process. I had never been in politics; I had a 40-year business career. But I’ve been watching the budget, and I’ve been getting the executive summaries of the president’s budget for a few years, and it’s what pulled me in.
And it affects everybody. It underpins the two big crises we have. One is a global security crisis, the other is this debt crisis. This $18 trillion in debt combined with all the future unfunded liabilities is about $1 million for every family.
We are way past the tipping point. If interest rates alone were to rise just a few points, to their 30-year average of 5 percent, we’d be paying almost $1 trillion in interest on the current debt. That’s unmanageable.
The debt, honestly, and this is no embellishment, the debt I believe is the greatest threat to our national security and even our very way of life.
Examiner: How can it be turned around?
Perdue: I came here to try to effect some solutions. So I’ve got just five areas that have worked their way into solving this.
One, we’ve got to fix this budget process. It’s broken. It’s only worked four times in the last 40 years, and even looking at what Washington is doing now with the grand bargain and the omnibus here in the 11th hour, this is no way to fund the federal government.
I believe you’ve got to go to a zero-based budgeting process where you fund your priorities first. Military, Social Security, those things that you have to budget.
Examiner: Are you talking about ideas like forcing the passage of budgets, and getting back to what they call regular order, considering all the appropriations bills?
Perdue: Absolutely, but here’s the problem. We’ve gotten back to regular order, but we still have gridlock.
The budget is not a law. It’s a resolution. So with 51 votes, the majority can cram down the throat of the minority a budget.
Then there’s the authorization and appropriations process. These are laws that have to be passed with 60 votes. And there’s the conflict. So all of a sudden, the minority can keep the Senate from getting on the bill if they don’t pass cloture.
So that’s the gridlock I’m talking about. I believe, personally, that the budget has got to be a law.
The second bucket is cutting spending. In the year 2000, we spent $2.4 trillion, and in 2015, we spent $3.8 trillion. That’s all inflation-adjusted. And only a little over $150 billion of that increase was defense spending. So the rest of it is entitlement spending and discretionary spending. The [Government Accountability Office] put out a report that we have a couple hundred billion dollars of redundant programs. It’s a target-rich environment, both in the military and discretionary, and mandatory spending.
Examiner: How important is it to make sure that cutting is across-the-board? Because the fight we’ve seen here is Republicans protecting defense, and Democrats protecting social spending.
Perdue: I believe we need to take a holistic approach to this thing. We have to get away from the gridlock — one side wants spending cuts, the other side wants tax increases — and the other dimension: One side wants discretionary spending for social programs, and the other side wants military spending.
There are always conflicting priorities, but at the end of the day, if the budget was a law, then we would have to grapple with that.
The third bucket is, you’re not going to solve the debt crisis without growing the economy, and there are some ideas we have right at our fingertips.
For one, we have to change the way we fund the federal government. The United States has the highest corporate tax rate in the world.
We’re one of the last countries that have a repatriation tax. Both of these put us at a tremendous competitive disadvantage.
Another is regulation. The economy is not moving. The reason is, in my opinion, the tax environment and also the regulatory environment. The president has created the fourth arm of government, the regulators. And they are sucking the very life out of the free enterprise system.
Fourth, Social Security and Medicare have to be saved. Medicare runs out of money, their trust fund goes to zero in 2030, Social Security retirement goes to zero in 2034, Social Security disability runs out of money next year.
So these are totally dependent on line items of the budget, and quite frankly, the way Social Security goes up geometrically in the next 20 years, there’s no way that we can fund that.
Examiner: What’s the best way to save Social Security and Medicare? Is stronger economic growth the best way to keep those buckets filled?
Perdue: Certainly you’ve got to do a combination of all of the above. There are potential ways to cut spending, there are potential improvements in the budget process, and we can certainly grow the economy better than we’re doing right now.
This is ridiculous. This economy is waiting to bust out. We have $6 trillion on the sidelines, $2 trillion trapped overseas because of our archaic, repatriation tax law, $2 trillion on the balance sheets of banks because of Dodd-Frank, and then $2 trillion on the balance sheets of the Russell 1000 … because of the uncertainty coming out of Washington.
And finally, the fifth bucket is the underlying cost inflators in healthcare have to be addressed. Obamacare never gave it a thought; it never addressed the fundamental rising cost of healthcare.
We’ve seen premiums go up, we’ve seen deductibles go up, but the inflator of core costs of healthcare have to be addressed, given the aging nature of our population.
Examiner: Some say the debt is our biggest national security problem. Have you seen evidence of that in your first year in the Senate?
Perdue: This global security crisis is real, on three levels. You’ve got the rise of traditional powers, China and Russia. You’ve got nuclear proliferation in North Korea and Iran, and you’ve got the rise of [the Islamic State] and all the integrated networks of terrorists around the world.
I traveled outside the country this year, and I’ve met many heads of state, their ambassadors and so forth. Foreign leaders really are now questioning whether the U.S. can even meet its obligations.
One of the first things that happened after the Iran deal was finished was the leaders in Egypt, Jordan and Iran all went to Moscow. That is not lost on me. Part of the reason is that they want to know whether or not we’re going to live up to our obligation.
Examiner: You’re on one of the Senate committees that would hear that. Do you hear that directly in hearings or in your various meetings?
Perdue: Yes sir. And not only that, in one-on-one meetings. I’ve had private meetings with at least seven heads of state around the world, and I can tell you first-hand that that is always brought up.
It’s not a question we ask, it is always exclusively brought up by these leaders.
I’m very afraid of that. This administration has created a power vacuum, both with the fiscal catastrophe we have right now, but also in this global security situation. It’s a real crisis right now.
Examiner: Having come from the business world, what do you think about this level of debt? Where do you see the sustainability starting to hit us? Can we get to $22 trillion? $25 trillion? Is it a number that depends on other factors?
Perdue: No, I think we’re already past that number and let me tell you why. It goes back to a very simplistic businessperson’s view of this.
We are living in a false world today of low interest rates. It’s the only way this hasn’t already become headline news. We need a new sense of urgency. There are alternatives, but we’ve got to set smart priorities and build consensus. This is not a partisan issue.
If we had a foreign power at one of our coasts and they were sending cruise missiles into one of our major cities, this wouldn’t be a Democratic and Republican issue. We’d be shoulder-to-shoulder trying to figure out how to defend our country. And I believe this debt crisis is just as serious, if not more so, than that type of crisis.
