A Focus On The Federal Budget
Republican Sen. David Perdue talks fiscal responsibility, the economy and being an outsider in Washington.
Georgia's Junior Senator: David Perdue
Sen. David Perdue, a conservative Republican and political newcomer, came from a strong business background to win the first office he ever ran for, that of U.S. senator. He approached his 2014 campaign as an outsider, promising to bring his executive suite experience – as CEO of Dollar General and Reebok – to Washington.
Perdue, a Georgia Tech alum who lives in Glynn County, sits on the Senate’s budget, judiciary, agriculture and foreign relations committees as well as a Special Committee on Aging. As he settled into the second year of his term, the senator talked to Georgia Trend’s Susan Percy from his office in Washington, D.C. Following are edited highlights from the interview.
GT: Tell us about your first year in office.
Perdue: This was all new to me. It was interesting, frustrating at times. I see the dysfunction here very vividly. But on the good side, Republican leadership took over the Senate this year for the first time in quite a while and got back to regular order. We passed a budget that took $7 billion out of the president’s budget. We put several bills on the president’s desk that he vetoed. The Keystone Pipeline – he vetoed that – was clearly a jobs bill. Later in the year, we repealed Obamacare. He vetoed that as well.
GT: You didn’t waste any time introducing some bills of your own.
Perdue: I come from a business point where you have to operate with a sense of urgency to survive. The first week up here, I put in a bill that would require the federal government to develop a balanced budget. I put a FairTax bill in. And maybe most importantly, I put a bill in that would put term limits in the Senate and the House. You can imagine the response that got.
GT: Why is a balanced budget so important?
Perdue: I saw the total dysfunction of the budget process. We pass the budget and still have an authorization process and an appropriation process that did not work last year and pushed us into a year-end grand bargain where all appropriation bills get put together. I voted against that authorization because it added to the debt. This year we’ve got to begin to work diligently to reinvent the budget process so that it begins to work and gives us a way to solve this debt crisis.
GT: Sounds daunting.
Perdue: It is daunting. But the reason you have to go after the budget – we have two crises. One is this global security crisis, and interrelated with that is the debt. The debt crisis has gotten so serious it is jeopardizing our ability to fund our military and defend our country. To get to this debt, one of the first things we have to do is change the budget process, because that is contributory to this buildup of this $19 trillion of debt today – and over $100 trillion of future unfunded liabilities. Fundamentally, it’s $1 million for every family in America.
This quarter point of interest – the interest increase that the Fed [Federal Reserve Bank] put up back in December – equates to almost $50 billion of new interest every single year. If interest rates go back to their 50-year average of just over 5 percent, we’d be paying almost a trillion dollars of interest. That’s just not manageable.
I feel like the budget process needed to get attention. Yes, it’s daunting, but the Budget Act of 1974 created the budget we have today. It’s only worked four times in the last 40 years. While it may be daunting, it’s absolutely necessary to solve that crisis.
GT: What about spending?
Perdue: We have to cut spending. We have several hundred billion dollars of redundant agencies up here. I believe we’ve got to save Social Security and Medicare. Those are the 800-pound gorillas in the room, because those costs explode over the next 10 years.
The Congressional Budget Office just put out their biannual report on the state of the economy. They project we will grow from $19 trillion in debt today to almost $30 trillion over the next 10 years. That’s not manageable. The interest on that alone if we were at a 50-year average is almost $1.5 trillion. It’s unconscionable that we’ve gotten ourselves in this situation.
GT: Those numbers can be hard to grasp. How do you get people to relate?
Perdue: It’s $1 million for every family in America – like your credit card bill that the government has given every single family. When interest rates were zero, nobody was paying attention. If interest rates start growing it will be a front-page conversation, and it won’t go away. If interest rates go up any at all, we won’t be able to pay the interest.
The first six years of this [Obama] administration, we borrowed almost 40 percent of every dollar spent by the federal government. The mandatory expenditures are over 70 percent of total spending.
GT: Can you elaborate?
Perdue: What that means is every dime we spend on the military, every dime we spend on food stamps, every dime we spend on foreign aid – every dime is borrowed. We raised $3.4 trillion in tax revenue last year. I don’t believe we’ve got a revenue problem, I believe we’ve got a spending problem.
GT: Is that coming from your business perspective?
Perdue: Four words we had in business, we’d hear it all the time: We cannot afford it. I haven’t heard that one time in Washington. Those are four words I’m trying to inject into the vocabulary in Washington.
GT: You’ve said our debt affects national security. Would you explain?
Perdue: As a member of the Foreign Relations Committee, I traveled internationally extensively last year. I met privately with many heads of states. I had a private one-on-one with Prime Minister Netanyahu in Israel. I talked with many of our military leaders in Afghanistan, Iraq, Asia and the Pacific. These are the conclusions: We have been in a war for almost 14 years. We have used and abused our equipment. We’re about to have, because of cutbacks under this administration, the smallest Army since World War II, the smallest Navy since World War I and the smallest Air Force ever. When you look at our ability to recapitalize and rebuild, there is no money in the budget to do that. Money in the budget right now just basically maintains the status quo. It doesn’t replace a lot of this stuff that’s been used up. We’re also using up our soldiers, with longer assignments, longer offshore duty. I’m really, really concerned about that.
GT: And you see that tied in directly with the debt situation?
Perdue: If you look at what we’re spending on our military today – about $200 million a year less than our average over the last 30 years – that’s significant. The Congressional Budget Office talks about our debt growing to $30 trillion over the next 10 years, assuming further reductions in spending.
Our threats have grown dramatically over the last decade on three levels: China and Russia, and now we have ISIS growing from Indonesia to Algeria. You’ve got this proliferation of nuclear weapon potential in Iran and North Korea that is very concerning.
GT: You campaigned as an outsider. Do you still see yourself that way?
Perdue: By definition, I am an outsider. I’ve committed to only two terms here – I put that term limit bill in. By definition I will always be an outsider in this political process.
GT: Why do you say that?
Perdue: I’m a business guy. My approach is that of a businessperson. I look at what’s the sense of urgency, what are the priorities and what are the results we are trying to get. Washington’s dysfunction is centered around a lack of accountability, a low sense of urgency and really [being] focused more on the process and not on the results. That outside perspective is unusual here, and because of that, on a committee I am able to add value at an early stage with a perspective that is new and different. We only have a handful of people that ever ran a business and only one Fortune 500 CEO in all Congress – and he happens to be from Georgia.
GT: Let’s talk about the economy.
Perdue: To solve the debt crisis, we have to grow the economy. That’s what I hear more than anything else in Georgia. We have a significant number of people who are hurting in Georgia because of the way this administration has taken for granted our free enterprise system. Our tax structure, our regulatory system, is sucking the very life out of our free enterprise system and really damaging our competitiveness around the world.
GT: What do you propose?
Perdue: These are the priorities I see. Our tax structure is archaic. It is manipulated and creates an unbalanced playing field with the rest of the world. Our corporate tax rate is [one of] the highest in the world. We still [have] this ridiculous repatriation tax. [Editor’s Note: a tax imposed on assets held in a foreign country when they are brought back to the U.S.] Fixing those two things immediately and over time talking about how we fund things, changing the way we fund our government. I put a FairTax bill in, and I believe that’s the best way to go. That takes time. Meantime, we need to change our corporate tax rate and eliminate our repatriation tax.
GT: You have been critical of the regulatory environment.
Perdue: Somebody said, “David, what would you go after first?” It doesn’t matter – just pick an acronym up here in Washington and go after it – EPA, NLRB, IRS, CFPB. We have a God-given boom in energy, and yet because of government regulation we are not able to take advantage of that. There’s an energy bill before us now. We passed one last year. There are some encouraging signs; we’re heading in the right direction.
GT: You were on the Georgia Ports Authority board before you ran for the Senate. Would you talk about the Savannah harbor deepening and what it means for the state’s economy?
Perdue: I’m excited to talk about that. The port deepening is the best example I’ve found up here of the dysfunction of the bureaucracy of the federal government. It took 17 years to get the approval to deepen that port five feet. We’re not talking about 25 feet; we’re talking about five feet. That funding has been authorized. The last governor and this governor have set money aside, with the legislature, to take care of that. They are moving forward. It’ll have a dramatic economic impact not only on Georgia, but the entire country because it’s one of the fastest-growing ports in the country and the only port in the country [that] regularly exports more than it imports.
GT: You’ve talked about some big problems that you see. Do you see solutions? Are you optimistic?
Perdue: There’s no question we can solve them. I’m an optimist. Americans have never failed to step up to a crisis in our history. But we’re not always the first to acknowledge that we’re in a crisis. My mission in life is that I’m trying to influence the debate up here in Congress and in the presidential election to get people to talk about these two areas of crisis. The global security and the national security crisis – people get that. But the connecting issues of this debt crisis [and] the ability to defend ourselves is not immediately clear. That’s my role right now, being an outsider and having a business background.
I’m optimistic. I’m sobered by the responsibility, but daunting as it is, we don’t have a choice. We have to solve [them].
GT: One final question: You blocked the appointment of a conservative Georgia Republican, DeKalb County’s Judge Dax Lopez, a former member of the Georgia Association of Latino Elected Officials, whom President Obama had nominated for a federal judgeship. Why?
Perdue: We’ve considered many nominees to the judiciary in the last year. It’s one of the most important things I do on the Judiciary Committee. In this instance, I looked at the information that was supplied to us by the White House and Department of Justice, and I had interviewed this candidate. I was not confident that this [his appointment] was the right thing to do. I have to protect the process and have to protect the Constitution relative to the people we put on the bench in a lifetime appointment. I think Judge Lopez has done a great job as a judge in the state. I have nothing negative to say about that. In our meeting, and in looking at the record, I still had several concerns [and] could not support naming him to a lifetime position on the federal bench.
THE PERDUE FILE
Current Info: U.S. Senator
Education: Georgia Tech
+ BS in Industrial Engineering
+ Master’s in Operations Research
+ CEO of Reebok
+ CEO of Dollar General
+ Born: Macon
+ Resides: Sea Island
+ Married 43 years to Bonnie
+ 2 sons, 3 grandchildren
+ Cousin of former Gov. Sonny Perdue