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U.S. Rep. Brett Guthrie, R-Bowling Green, said the United States’ credit downgrade from AAA to AA+ by Standard & Poor’s is an embarrassment for a country that has allowed its debt to spiral out of control.
Guthrie sat down with The News-Enterprise on Friday to discuss the debt ceiling agreement and recent stock market fluctuations.
America now holds credit worthiness lower than France, Guthrie said, but the downgrade is more of a failure by the U.S. to meet S&P’s desire to see a larger reduction in the national debt.
The downgrade, among other economic worries, struck the stock market with a vengeance last week as the Dow Jones plummeted 634 points on Monday — the largest single day freefall since 2008.
Guthrie admitted the stock fluctuations leave him uneasy and concerned about its impact on individual families.
“When you lose the kind of wealth we’ve lost over the last few days, it really hurts people,” he said.
Guthrie, the 2nd District U.S. Rep., said it especially can disrupt retirement as employees see their 401(k) plans rocked after months of progress.
That, in turn, can negatively affect a shaky economy as it tries to right size, he said.
Under terms of the agreement approved by Congress in late July to stave off a potential default of the country’s bills, Congress agreed to raise the $14.3 trillion debt limit by $2.1 trillion and cut $2.4 trillion in spending over the next decade. Guthrie said that includes about $917 billion in cuts while a 12-member “super committee” has been formed within Congress to offer a plan to cut an additional $1.2 trillion or more. If a plan is not approved, cuts automatically would kick in by 2013 in areas such as defense, according to The New York Times. Social Security would be excluded from cuts, Guthrie said, and Medicare cuts would be limited and affect providers rather than recipients.
Guthrie believes the agreement should have cut deeper in reducing the nation’s debt, but it is the “first bite of the apple.”
“I think we should have gone further,” he said. “I think the markets (have) shown us we should have gone further.”
But House Speaker John Boehner and Congressional Republicans believed the plan was as far as they could reach with President Barack Obama and Congressional Democrats at this point, Guthrie said.
The 2010 election, he said, was an affirmation by voters that a new tone needed to be set in Washington with leaders who recognize the country is following unsustainable spending trends.
Guthrie is one representative who is lobbying for a Medicare overhaul. He said the plan proposed by Republicans would not affect coverage for those 55 or older and would provide subsidies for those younger on a voucher-like system. It was rejected by the Senate in May.
“If we don’t reform Medicare, it’s not going to be here for anyone,” Guthrie argued.
He also supports a vote by Congress for a Constitutional balanced budget amendment that would be presented to voters.
“I think we need the cuts and the balanced budget amendment,” he said.
Guthrie said he heard the fears and frustrations of constituents as the debt debates dragged closer to the Aug. 2 deadline. Some calls, he said, encouraged him to support the president and raise taxes, but he said raising taxes was the last thing he wanted to do to businesses as job creation is badly needed.
Others pressed for a deal to cut spending more, while some were worried about the fate of Social Security checks and military pay had the country reached an unprecedented default.
Guthrie said he believes there was enough cash on hand to cover Social Security payments and other debt obligations in August, but he said it is unclear what exactly would have happened if Congress had waited longer.
“We know we have to pay our debt, and we know we have to change the way we spend money in Washington,” he said.
Marty Finley can be reached at (270) 505-1762.