The good news about the U.S. economy is, “we have no inflation,” and the gross domestic product (GDP) has started to expand, U.S. Rep. Ben Chandler told about 80 Madison County business leaders Friday.
The bad news is unemployment is still rising, even if at a slower rate, he said.
Chandler spoke at Arlington House for the Richmond Chamber of Commerce’s monthly luncheon.
While he ended his remarks on a positive note, Chandler spent most of his time talking about the nation’s struggling economy and federal government attempts to revive it.
Although unemployment continues to increase, the rate of increase has slowed, Chandler said.
“Instead of losing 700,000 jobs a month, we’re down to losing 200,000 jobs a month,” he said.
Chandler said he voted against the “Wall Street bailout” proposed by the Bush administration because he thought it “did too much to help the Wall Street folks who caused our economic troubles” and not enough for ordinary Americans.
The stock market has begun to recover, Chandler said, (the Dow Jones index closed Friday at 10,270) but, “the Wall Street bailout has done little to help Main Street,” he said.
Chandler voted for the Obama administration’s economic recovery package, which he said has helped local economies.
“The recovery program wasn’t nearly as much money as the Wall Street bailout, but still a lot of money,” the congressman said.
Without it, unemployment would be much worse, he said, and states such as Kentucky would face even greater budget woes.
The federal economic stimulus program, which the Chamber of Commerce supported, was “absolutely crucial” in getting the GDP to grow again, as well as improving the housing and automobile markets, Chandler said.
When private spending lags, the public sector must increase its spending as was done during the 1930s, he said.
Not all of the stimulus money has been spent, but Chandler said he would like to have seen more federal funds go into “roads, bridges, schools and our energy future.”
Eastern Kentucky University President Doug Whitlock, who introduced Chandler at the luncheon, thanked him for obtaining $1.3 million in federal funds for EKU’s new science building and $4 million for its bio-fuels project.
Asked where the money for the bailout and stimulus “was going to come from,” Chandler said inflation was the biggest danger posed by increasing the federal debt.
“Of course we already had quite a bit of debt before we got into this,” he said, caused by tax cuts and budget deficits in the prosperous year prior to 2008.
With virtually no inflation at present, he said the greater danger to the economy was from private debt.
In addition to households which have run up huge mortgage and credit-card debt, many U.S. corporations borrowed nearly 100 percent of their net values to finance mergers and acquisitions.
Despite the challenges, “We’ll come through this with flying colors,” Chandler said. “I understand you’re starting to get better numbers here in Madison County.”
Most of the questions posed to Chandler focused on the health care bill that recently passed the House of Representatives without his vote.
The United States spends twice as much money on health care as most industrialized counties, he said, but with poorer results.
Several other countries have better longevity and infant mortality rates.
“If you’re spending twice as much money, you should get better results,” Chandler said. “That’s why we need reform.”
He voted against the House bill because he said the Congressional Budget Office estimated that would not reduce the nation’s overall health care costs.
The legislation also would raise, rather than lower, the cost to employers for their workers’ health care, he said.
“We’re paying twice as much as other countries for health care, and most of that is being paid by employers,” he said. “That makes our goods and services less competitive on the global market.”
President Obama’s goal is to broaden health care coverage while lowering costs, the congressman said, not to socialize medical care, Chandler said. Other nations, such as Australia, have hybrid public-private systems after which he said the United States could pattern its reform.
Bill Robinson can be reached at brobinson@richmondregsiter.com or at 6245-6622.
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