Business & Tech
Toomey Warns of “Fiscal Train Wreck”
Senator tells Lehigh Valley Chamber that government spending is hurting, not helping, the economy.
If members of the Greater Lehigh Valley Chamber of Commerce were looking for sunny news from the nation’s capital, U.S. Sen. Pat Toomey’s luncheon speech Monday may have caused some indigestion.
Toomey, of Upper Milford Township, offered up grim statistics on the growing federal budget deficit and debt and warned that government spending will dig the country into a deeper hole rather than aiding the economic recovery.
“It is hard to overstate the extent to which we’ve got a fiscal train wreck happening in Washington,” Toomey, a Republican, told the large crowd at the Hotel Bethlehem. “We’ve got to fix this, we’ve got to fix this soon.”
He suggested that he’d need to see budget caps and structural changes in the federal budget process before he’d support raising the federal debt limit, which Congress will be faced with before long.
From 2000 to 2010, federal spending doubled – for which both parties are to blame, Toomey said. In 2007, the federal budget deficit was less than 2 percent of Gross Domestic Product but by last year it was up to 10 percent of GDP, he said.
“We have a government that’s borrowing fully 40 percent of everything it spends,” Toomey said. “Debt is piling up at an absolutely unprecedented rate.”
“It gets worse,” he said. “I would argue that the [Federal Reserve] is disguising the magnitude of the problem through its behavior. The fed is essentially printing money, creating money out of the clear blue sky and using it to buy the very debt that the government is issuing.”
He favors a balanced budget amendment to the U.S. Constitution that over time would require Congress to erase federal deficits.
“The more that government spends… the less that’s available in the private sector, and the private sector tends to invest money much more wisely than politicians do,” Toomey said. “If just growing government would solve our economic problems then I guess Greece would have the best economy in the world and they sure don’t.”
“I think we can have a strong economic recovery but we need to have the right kind of policies,” he said.
That free-enterprise-is-the-answer message was a continuation of his campaign themes from last year’s election when he beat Democratic Congressman Joe Sestak to win the Senate seat of longtime incumbent Arlen Specter, who lost in the Democratic Primary to Sestak.
Toomey, who with his brothers started Rookie’s restaurants in Allentown in the 1990s, served three terms as Lehigh Valley’s congressman before making an unsuccessful bid for Senate. In 2005, he took over as president of the Club for Growth, a Washington, D.C.-based group that advocates for free markets and limited government.
His pro-business message found a receptive audience Monday, with Chamber members giving Toomey two standing ovations – at the start and finish of his speech.
To really stimulate the economy, government should cut the corporate tax rate and capital gains taxes, he said. Congress also needs to curb “over reaching” by federal regulatory agencies such as the Environmental Protection Agency and Food and Drug Administration, he said.
Toomey briefly took questions from reporters afterward and was asked what Congress could do for the school districts that are struggling with funding cuts. He said with the No Child Left Behind law coming up for reauthorization, Congress should consider lifting some of the mandates and regulations that can cost school districts lots of money.
Asked what changes he would favor on entitlement programs such as Medicare and Medicaid, Toomey said he would advocate that Medicaid money be turned into block grants for all the states.
“Let the states devise their own systems and let the 50 governors and legislatures figure out better ways to provide health care to poor people,” he said.
