In this part of the interview, Rep. Bob Goodlatte (R-VA06), discusses the impact of the federal stimulus bill on the state, as well as the private sector. We also discuss how Republicans would address solving the issues of the economy and energy, and we talk about the balanced budget amendment:
Jim: Do you feel that this one-time infusion in cash will be enough for the commonwealth or will you be encouraging some state legislators to watch spending and cut taxes?
Rep. Goodlatte: Yea. I think a lot of state legislators would like to do that. Quite a few states are actually contemplating not taking some of the money, which is an interesting alternative – but most states are going to wind up taking the money because they see that as an attractive solution to some very deep-seeded problems that they have with their budgets. The problem is it’s not sustainable.
If you take the money, and it solves your problem today, where are you going to get the money to solve it tomorrow – where the problem is even bigger and you don’t have the ability, and the federal government doesn’t have the ability, to put more good money after bad?
Jim: Where do we go from here if we are in an energy crisis, credit crisis, etc.? How do we solve these problems, at least from a Republican perspective?
Rep: Goodlatte: Well, Republicans, as I indicated, would take a very different approach than the government has chosen to take here and that would include providing real safety nets: making sure unemployment insurance is working (people who are really hurting because they are out of work they obviously need to have help under these circumstances). But in every other place the government should be looking to achieve efficiencies in the government.
Just like what state government is doing, although some of that is deferred because of what the federal government has provided them. Local governments are having to do it, but some that is also deferred because of what is being provided for them.. And then of course the people who are completely forgotten in this process: families, small business, and large businesses – unless you’re on the short-list of favored industries that are receiving bailout money – you’re pretty much on your own on this. But, quite frankly, they will do just fine because they will find the efficiencies that they need to make it through this process. Then when this economy starts to grow again those will be the business and families that enjoy the greatest success.
Every government that puts off the obligation to dig deep – to call for sacrifice by government workers and those who participate in government programs – I think is making a mistake that could prolong the problem – that’s just in the near term.
In the intermediate term, you’re looking at the fact that the government is going to have to go into the market place to borrow trillions of dollars – the estimates are that it is in excess of two trillion dollars in the next year or so – and when we do that there are fewer and fewer places in the world where you can go and borrow money and more and more people who are seeking to borrow it. This has to mean that interest rates will rise – could rise significantly – and that in turn will bring about inflation in a time with low economic growth (which in the late ’70s under Jimmy Carter we called stagflation – we’re at risk of that happening again).
We’re also at risk that projects that otherwise would have happened (where business, families, and local governments could have gotten money at five percent interest, but may not be able to as interest rates creep higher because the federal government is in there soaking up so much of the available capital), will be postponed. All of that will mean that there will be a backlash to whatever benefit was derived from this initial surge of spending (which, by the way, isn’t really much of a surge; a majority of this money won’t even be spent this year)
Finally, the long term picture is the one that’s the most bleak of all: We’ve just added another two trillion dollars for young people to look after for the rest of their lives, and this runs a great risk as to whether they will enjoy the same type of prosperity Americans enjoy today.
Government must turn around, take responsibility and start to really downscale the size of government – and make the kind of long-term budgetary commitments that are necessary to bring this problem under control.
The state of Virginia has these kinds of problems every year – they’ve got a particularly bad one this year – but that’s nothing compared to the federal government. The reason [the problem is not as great] is the state of Virginia is required by its constitution to balance the budget each year. So, they have big fights in Richmond about cutting spending, raising taxes , and we see the governor forced to make some tough decisions about state government spending –and that’s a good thing. If the federal government had [a balanced budget amendment] year-in and year-out, we wouldn’t be in as deep a hole as we are; we’d be more able to handle this problem and I don’t think this problem would be as severe.
I don’t think trying to solve a problem originally created by massive government spending and debt by adding more massive government spending and debt makes sense to most people.
Jim: Do you think we might see the balanced budget amendment from the “Contract with America” dusted off again?
Rep. Goodlatte: Yea…we’ve dusted it off, but we’ve got to get it passed.
You know, back when we took up the “Contract with America” we came within an eyelash of passing [the balanced budget amendment]. It passed the House easily – very strong bipartisan support – it came within two votes of getting the two-thirds majority needed in the Senate.
Can you imagine just two more votes?
It then would have gone to the state legislatures – where I believe that three-quarters of the states would have ratified it.
We would have had [the amendment] in play not only today but probably for much, if not all, of the Bush administration, where that same discipline would have been equally well-applied to Republican majorities in the Congress and a Republican president, as they should be applied to the Democrats who are making the same mistakes today.