If all increases in federal spending were eliminated, it would require a one-third reduction in social services and defense spending to balance the federal budget, according to Rep. Bill Orton, D-Utah.
Congress has attempted to adopt a "pay-as-you-go" philosophy in an effort to balance the budget, but so many exemptions are allowed that there really is no reduction in federal spending, he said.Speaking to the Wasatch Front Economic Forum in the Red Lion Hotel, Orton said 20 percent of the federal budget goes to pay for past borrowing. "We need to slow government spending, eliminate the federal deficit and pay back those from whom we have borrowed," the freshman congressman said.
He said the United States "is in fairly deep financial trouble" and Americans cannot look at the world economic market situation without expressing serious concerns about the U.S. situation.
In addition to the other financial problems plaguing the U.S., there is a credit crunch, meaning there isn't enough money for potential borrowers. He said financial institutions have been convinced not to loan money to new businesses because of the chance for loss, expecially in light of what happened to the savings and loan associations.
Orton said the Resolution Trust Corp., the entity crerated to bail out the savings and loans, recently was given some money at the last minute, but the RTC will needed another $50 billion in September.
Couple that with a needed infusion of money for the bankrupt Federal Deposit Insurance Corp., the entity that insures bank accounts against loss, and serious financial decisions must be made, Orton said. In addition to a mechanism to recapitalize the FDIC, many people are pushing for a major banking reform bill that would streamline regulation of banks and allow them into some areas where banks prresently are prohibited, he said.