Perdue, Abrams, and the Federal Debt Concern in Georgia

• Senator David Perdue and Republican members of the Georgia congressional delegation are sounding the alarm about the federal debt, despite a muted response at present from most in Washington.
• The University of Georgia, Selig Center for Economic Growth lists large federal deficits as a leading threat to Georgia’s economy.

Only a rare few are talking about the national debt right now. It’s sort of spooky how silent federal lawmakers are on the subject that dominated the news for the last decade. The national debt wasn’t mentioned in either President Trump’s State of the Union or in the official Democratic response given by Stacey Abrams, who is expected to run for Senate in 2020. But while Abrams skipped on a debt discussion, Abrams’s would-be competitor Senator David Perdue (R-Ga) is ramping up to cast himself as a “deficit hawk.” On Tuesday, Senator Perdue announced a resolution calling for the national debt to be labeled a national security threat. Senator Perdue will also speak at CPAC Saturday on a two-person panel titled Deficit Hawks: An Endangered Species? Tackle the Debt Before it Tackles You.

And the resolution is not the first time this year members of Georgia’s congressional delegation have expressed concern about the rising national debt, which currently totals over $22 trillion, and federal budget deficits, which is estimated to be $900 billion in 2019. On January 30^th, 2019, Congressman Barry Loudermilk (R-Ga) re-introduced a joint resolution calling for a balanced budget amendment, a sweeping measure to rein in deficits, in the House of Representatives which is co-sponsored by Jody Hice (R-Ga) and Doug Collins (R-Ga). Senator Perdue and the Georgia delegations’ posturing comes as national attention might soon return to the national debt. A congressional debate on the debt could occur as a vote on whether to increase the debt ceiling again at the end of the summer coincides with a new budget deal that must be reached by the end of September. Politicians who have been silent on the debt might then appear obtuse and caught off guard as the national debate looms.

And the continued large federal deficits can have major ramifications on the peach state’s economy. According to the University of Georgia, Selig Center for Economic Growth (Selig Center), the federal debt and the accompanying spending restructuring is a primary factor that could hamper future economic upswings. The Selig Center zeroes in on two government financing areas at risk for restructurings, federal employment and transfer payments, like Social Security and Medicaid. Required changes to both or either federal spending area could be particularly impactful in Georgia cities like Macon and Albany.

Transfer payments make up a gigantic percentage of consumer buying power in Georgia. The Selig Center estimates transfer payments comprise over 17.4% of personal income in Georgia, following the national average, and include retirement, Social Security, disability insurance, Medicare, Medicaid, unemployment insurance, food stamps, military medical insurance, and veterans’ benefits. And transfer payments significantly exceed the state average in cities like Albany, Rome, and Macon. The Selig Center states that despite these programs improving the economy, an aging of the population “assures that these sums will continue to rise, which has implications for government finances at all levels.” Further, the Selig Center asserts uncertainty about federal funding for mandated programs, especially Medicaid, is the biggest challenge for state governments. The Selig Center report states “mandatory spending on Medicaid is crowding out spending on education (K-12 through college) and infrastructure, areas essential to boosting Georgia’s competitiveness, productivity, and culture for innovation.”

Federal employment is significant in Georgia, supplying a larger percentage of jobs and earnings than the national average. Per the Selig Center, federal employment provides 3.2% of nonfarm jobs and 5.4% of nonfarm earnings in Georgia, outpacing the national average of 2.6% of nonfarm jobs and 4.1% of nonfarm earnings. In cities like Macon and Augusta, the leading high wage industry is federal employment. In Albany, Marine Corps Logistics Base is the area’s top employer. Locations with major military bases make up huge amounts of their earnings from the federal government (e.g., Brunswick, Augusta, Valdosta, Columbus, Warner Robins, and Hinesville). The Selig Center expects military spending and the number of military personals to increase, due in part to rising international tensions, over the short term. However, the Selig Center is less optimistic about federal civilian employees working for agencies besides the Department of Defense (DoD). Selig Center projects non-DoD federal employees’ encompass 57% of federal civilian employment in Georgia and will probably drop in the coming years.

However, the Selig Center found not all areas of Georgia as impacted by federal debt. Atlanta is particularly immune to public-sector restructuring partially because the only large federal employer in the Atlanta area is the Center for Disease and Control, which employs 9,200 individuals. Additionally, the federal earnings from jobs in the Atlanta area are below both the national and state averages for nonfarm jobs. Athens is another Selig Center example of a city with relatively little federal employment.