Scott sticks to shrinking spending as solution to debt crisisby Dara Kam | July 30th, 2011
With the nation on the brink of a financial crisis, Gov. Rick Scott is holding fast to his objection to raising the federal debt ceiling, maintaining that the federal government needs to tighten its belt.
“They’re not talking about the problem. The problem is we have to control our spending. You can’t be spending almost 50 percent more than we take in. you can’t do it in your household. We’re not doing it in the state. They shouldn’t be doing it in the federal government,” the first-term governor told reporters after a ceremonial bill signing at the mansion Saturday afternoon. “What they’re not thinking about is this is about spending. That’s our problem. We’ve got to get spending under control.”
Pointing to the state’s projected $1 billion in savings, Scott appeared unconcerned about what might happen in Florida if federal lawmakers fail to reach a deal before Aug. 2, when the government runs out of borrowing authority and may be unable to pay some of its bills. A default may impact spending on Social Security, military salaries and college and university loans and could ultimately have a negative effect on municipal bond ratings.
“They haven’t said exactly if they don’t raise the debt ceiling what things they’re not going to pay. You would think they would continue to pay the things that people are relying on, Social Security, make sure our military’s being paid, things like that,” Scott said. “But the nice thing is our state, we have a balanced budget. We are going to have over $1 billion surplus this year, we’re on track to have over a $1 billion surplus and the fact that we’re not borrowing more money.”
The former health-care executive and investor, whose holdings are now in a blind trust, said he was less concerned with what might happen to the value of the U.S. dollar than the long-term threat of continued borrowing.
“I’m worried about spending. If you look at the long-term, if we don’t control our spending, we are going to have an increase in interest rates. That’s what happens to companies. That’s what happens to you. In your own personal life, if you just keep borrowing money eventually no one wants to lend you money unless they want to lend you money at a higher and higher rate,” Scott said.
Some analysts have predicted that the Congressional gridlock over the debt ceiling could cause rating agencies to downgrade the U.S. and municipal markets even if an agreement is reached before Tuesday.
“No one knows because we’ve never done this before, right? We don’t know exactly what raising or not raising the debt ceiling (will do)…But we do know, we do know that if you keep spending more than you take in, it will, long-term, have an impact on interest rates,” Scott said.