America's Real Debt Shocker: $100 Trillion Owed in Unfunded Liabilities
Before he made his first million, before he did business on six continents, and before he became a Fortune 500 CEO, David Perdue got his start picking peaches for about 40 cents an hour while growing up in Macon, Georgia.
There his father taught him always “to add value,” Perdue says while recalling the stifling summer work from his air-conditioned office in Washington, D.C.
“He told me years ago, ‘David, don’t ever worry about the job ahead of you; just take care of the one you’ve got now.’”
And now as the junior U.S. senator from Georgia, Perdue, 66, says the job has changed but the principle remains the same. In the Senate, he’s trying to leverage his private sector expertise to solve the public sector’s financial problems.
After a year and a half in office, the veteran businessman turned freshman senator is confident he can diagnose the ills facing Washington. He’s confident he can add value.
“We owe $19 trillion, we’re in a debt crisis,” Perdue says matter-of-factly in an interview with The Daily Signal. Then after some quick arithmetic, he notes that the national debt combined with future unfunded liabilities amounts to “about a million dollars per household.”
Still, the debt doesn’t worry Perdue as much as the interest liability does. Should those rates rise—and Perdue is confident they will—he predicts the country won’t be able to make the minimum interest payments.
For the past seven years, the Federal Reserve has targeted rates at an artificially low level, around 0.25 percent, in hopes of easing America’s climb out of the subprime downturn. But in December, and for the first time in almost a decade, the Fed raised interest rates a quarter of a point, to 0.5 percent.
In Perdue’s estimation, that uptick amounts to $50 billion annually.
If those rates go higher—and Federal Reserve Chairwoman Janet Yellen hasindicated already that the Fed soon may increase them—he predicts the country could have another “lost decade” like the 1970s, when interest rates peaked near 20 percent.
But those numbers and that history lesson hasn’t convinced all of Perdue’s colleagues.
Sen. Ed Markey—who sits next to him on the Foreign Relations Committee—in April said the “debt that we have is not actually right now a threat to our country.” The Massachusetts Democrat added there is a “more realistic and honorable way of talking to the American people about it.”
Still, Perdue says he’ll keep raising the alarm because, he insists, the national debt is the biggest threat facing the United States.“This merry-go-round is going [to] stop,” the Georgia businessman warns, “and when it does, we will end up in a very bad place unless we find a way to control it.”
But while he will admit that the challenges are daunting, Perdue won’t say they’re insurmountable.
The son of two schoolteachers, Perdue excelled academically, earning an industrial engineering degree from Georgia Institute of Technology in 1972 before returning to the university to earn a master’s degree in operations research three years later.
Met with economic stagnation at graduation, Perdue redesigned his engineering education to land a job as a business consultant. That career would take Perdue jet setting around the globe, to live and work in places like Singapore, Hong Kong, and Paris.
Starting in the late 1990s, Perdue earned a reputation on Wall Street as a turnaround technician when, as CEO of Reebok and Dollar General, he piloted both back from the brink of financial disaster.
He’s certain the United States can do the same.
“The problems that we have here aren’t that complicated,” Perdue says. “The budget of the United States government is just over a trillion dollars a year.”
For comparison, he points to retail giant Wal-Mart, which he says runs on about half of that number. “They get their budget done on time, they manage to run a surplus, and they do it without all the drama.”
Ask Perdue what steps he’d take if given control of the nation’s balance books and he seems to come alive:
“If I was coming in as CEO, I’d call all hands on deck, full stop,” he says, straightening up in his chair with sudden energy. Motioning at his staff in the room, he doles out imaginary duties: “You go fix Social Security! You go fix Medicare! Bring me back a solution in a week! Then we will garner all our energy and resources toward those life-threatening issues.”
But the businessman has learned that the Senate lacks the initiative and sense of urgency found in most boardrooms.