Support for Arkansas Week provided by the Arkansas Democrat Gazette, The Arkansas Times and KUARFM 89.
And hello again, everyone.
Thanks very much for joining us.
April tornadoes devastated parts of Central Arkansas and all but destroyed a small E Arkansas city.
Recovery was never expected to be easy, but need it be as difficult as it has been for so many of us?
That's later in this edition.
First, an economic issue on a different scale.
Arkansas, yes, but national, in fact, global.
Once again, it's the US government's debt ceiling and the impending deadline for raising it or not.
The consensus, largely bipartisan, is that a federal default would be little short of catastrophic.
The House Republican majority is demanding spending cuts in exchange for the debt ceiling, while the White House insists on a straight up or down vote and then budget talks.
We're joined now by Congressman Steve Womock.
The Republican of Arkansas's third district, he's chair of the Appropriations Subcommittee on Financial Services and Government.
Congressman, thanks very much for coming in and and being with us.
Steve, always good to be with you.
Well, Secretary Yellen is saying is perhaps as early as June 1.
You're at loggerheads now who's going to blink?
Well, it's, as I said yesterday to a group of media here in DC, This is a kind of a dangerous game of chicken that we're playing right now.
And let's just put the facts on the table.
Yes, we are nearing the D-Day, if you will, for this entire debt ceiling issue around the first part of June.
So we've got about 3 weeks before we have to do something.
Which I think in congressional terms is quite a long time to ponder something because we just wait to the last minute to do everything.
I I don't like that.
But it's just kind of the way things are.
But we've known since the first of the year when we hit the actual debt ceiling, that we needed to hammer out some kind of agreement.
And what House Republicans have said is very simply that we can't keep digging this hole deeper and deeper.
And then I think there is pretty much consensus that we need to lift the debt ceiling so we can continue to fund the government and all of the programs associated with the government.
But if we're going to do that, then we need something in exchange that helps us move toward a better fiscal trajectory.
And so we passed our bill 2 weeks ago that basically says, well, if the debt ceiling for a date certain.
Or a certain amount, whichever comes first.
But we're going to demand that in order not to be having to do this year over year over year, that we start the process of trimming the size and scope of government and then doing things that we think are smart policy matters that have had bipartisan support in the past, like work requirements for people that are able bodied without dependents that are getting government benefits.
Whether it's food stamps or TANF and those sorts of things.
We also believe that clawing back the money that was passed by the former Congress on the expansion of the Internal Revenue Service that that we think that capping spending in the FY24 level back to pre not pre pandemic but at least pre 2023 levels, that is the 22 budget.
Levels we we think that is in order.
That's about $130 billion worth of cuts if you will to what we're currently spending on the discretionary side.
But five months ago we were operating at those levels.
So not a lot has changed since then maybe some inflation.
So we we just think that some common sense ideas advanced by House Republicans is something that the president and Senator Schumer and.
Senate Democrats need to take a look at and come to the table with us and let's talk about this before we just do a clean debt ceiling.
The administration says it's open to a deal and open to discussing spending cuts, but that it it's irresponsible to tie that to the debt ceiling bill if they ought to be.
The problem with that, Steve, is simply this.
Those discussions never happen.
So if you get a clean debt ceiling, then there's no leverage anymore.
We simply believe that if we're going to raise the debt ceiling.
That let's at least have some agreement in this process that we're going to do something not just talk because we know what talk has what has accomplished in the past it has accomplished very little.
We're $32 trillion almost $32 trillion in debt we're we projected deficit well the deficit last year was about a trillion four and we will add more to the credit card this year and even the even the cuts even the the.
The ideas that we've advanced in our bill that lifts the debt ceiling doesn't begin.
I mean it's a it's a good start, but it's not going to fundamentally change the outcomes.
We're going to be back here doing this again next year.
We just want some assurance that that that our friends on the left recognize that it's not a revenue problem facing our country right now.
It's purely a spending problem and that's why.
We've advanced the bill that we've advanced.
Correct me if I'm wrong, Congressman, but I believe in the last October's debates you indicated that you believe default ought to be on on the table.
Not correct me if I'm wrong, but I believe that go ahead then.
I, I, I, I don't think defaulting should ever be on the table.
And both sides need to kind of put their big boy pants on and recognize that defaulting on the full faith and credit of this country.
Is not a good outcome and it has global ramifications, and particularly in a day and time when we've got national security implications, I just don't think that this is a wise course of action for us to be flirting with defaulting.
On, on, on.
On our full faith and credit but but I but I believe in my heart that this is not a a a case of take our bill or take a clean debt ceiling and nothing in between.
This is why you negotiate and This is why the president should have been at the table over the last 100 days or so in working with Kevin McCarthy the House Speaker and trying to forge some kind of agreement because I think there would be bipartisan agreement.
On some of the measures that we've advanced in the bill that we have offered, to what extent Congressman do in the internal politics of the Republican conference in the House enter into this.
The speaker has a very narrow majority on on his side and some of your members are demanding, well, they they're pretty adamant and what they what they expect, what they demand of the Speaker, how does that come into play?
How big a factor is that?
You know it, it can be a factor.
If in fact you're asking House Republicans to carry this entire issue by itself, then obviously what the speaker has to do is he has to appease the, you know, the extreme part of our party.
Because when you've got a a four or three seat majority as we do right now, Steve, I mean, it doesn't take.
You know a a master's degree in math or logic to figure out that you've got to if you got to do things on your own, you're going to have to every one of those people have a a significant input into the into the outcome.
So even the more you know the moderate part of our conference has as equal representation as a House Freedom Caucus on the on the extreme part of our caucus.
But what I'm advocating is I'm advocating bipartisan solutions.
To an American problem, this is not just a Republican problem or challenge.
It's not just a Democrat problem or challenge.
This is an American problem and we need to come together as Americans and fix it.
Which means Republicans are probably not going to get everything that they want that we have already passed in our legislation, but it's and and we'll have to carry it on our own if in fact we're up against nothing more than a clean debt ceiling.
But I think there are Democrats that also believe.
That we are spending at an excessive amount and that there are some reasonable changes that could be advanced in the bill that could get bipartisan support and leave the people that are my way of the highway type politicians, you know, kind of out there separated from the outcome.
So we're up against, Yeah, we're up against the clock, Congressman, I wish we had more time.
Come back soon, if you will.
We'll continue to walk.
We'd love to.
Steve, thank you so much.
Very important discussion.
We'll be right back with more and we are back now with more on the debt ceiling issue.
If it seems a bit abstract, more than a little remote, well, let's bring it home to Arkansas or try anyway.
Dr. Jeremy Horpert all joins us.
From the economics faculty at the University of Central Arkansas.
Jeremy, as always, thanks for joining us.
Thanks for coming back.
Thanks for inviting me, Steve.
I mean, the words, the adjectives, just fly, Adverb, adjectives, adverbs, everything.
Components, speak, pronouns, What?
What are we about to incumb to see here?
What are the stakes?
Yeah, I think another word we might use is unprecedented or unknown.
This is not something we've gone through before.
People might, might remember government shutdowns over not passing a budget.
Well, this is something totally different.
This is the Congress has already passed a budget.
Now we're running into a problem where the Treasury may not be able to actually pay for the things that Congress has authorized because we've hit the debt ceiling.
And we don't know what what will happen.
Treasury, the Treasury apartment has said they they don't really have a way of kind of prioritizing the spending.
So we don't actually know what would happen if if we were to get to the point, which could come in a few weeks when when they can no longer make payments.
Basically what we've done is use a credit card and now the debate is over whether we pay the bill.
There's also, you know, you could think of it about asking your credit card company for an increase in your limit.
That's that's what they're asking for now.
But yeah, so they, you know.
One of the things that they spend money on, of course, is servicing old debt.
But it this, this covers everything that the federal government spends money on.
The Treasury is the the agency that spends the money for Congress.
And so this would be, this would affect not just interest payments but but all payments the federal government makes.
How are in the event of a default, unprecedented.
How are we likely to see it?
I'm feeling man on the street in Arkansas.
So whether it's a default or if Treasury.
Chooses to prioritize debt spending.
So we don't default.
I think that what this would still mean is impacts for everyone on the street.
We're going to see interest rates would go up certainly for for federal debt, which would then affect all of their interest rates.
And we know for buying a home, interest rates are already much higher than they've been in decades.
We could see those go up if they're not making payments to people that either work for the federal government or people that receive payments.
Those people are gonna have less money to spend.
That's going to have effects on the broader economy as there's just less spending happening.
Which could push us closer or into a recession.
Government finance, state, local government, what's what could be even even the threat of default makes makes investors nervous, makes the world markets nervous.
Yeah, the threat of default makes both, you know, bond and stock markets nervous.
I think we're kind of in.
We've been getting some recovery from what happened the stock market last year, but that's kind of been a holding pattern lately.
As we kind of wait to see what happens here, and I think there's always worry about any fiscal problems, but especially when we don't know exactly how it'll play out, I think that that's really Spooks markets as well.
Yeah, economic development, this cannot be helpful.
No, it is not helpful for economic development, for economic growth.
He mentioned state and local governments, state and local governments.
And more and more these days for a lot of their revenue coming from the federal government whether it's for specific things like healthcare or building roads or just general support, this can filter through to all levels of government as well as to over to the private sector.
And we have a great many Arkansas, great many Arkansasans who depend not only on Medicaid, but as you mentioned the Federal Highway funds financing Social Security other.
Yeah, Social Security is, is the biggest thing that on a monthly basis the the Treasury Department is paying out.
But the other healthcare programs, both Medicare and Medicaid, we have a large number of people in this state, a larger number than most other states on things like Medicaid, farm subsidies, things like that.
All these payments would be either stopped or or cut by some, maybe cut to 80% is what they might have to do of what they are currently.
And and also we have no matter what, well, assuming that you are putting away.
Some money anyway in some sort of investment instrument or are you're receiving money from you're already retired and you're taking funds from from an investment account or retirement account.
You're a little wary you're a little nervous.
I mean I guess if we want to see a silver lining, it's that maybe they'll get cheap we can buy more stocks.
But I think that's that's we don't want that temporary cheapness.
We want we want those markets to keep going up both for people saving and people currently retired.
You know with the stock market in the past year still down a little bit.
You know that's that's been one of the not good parts of the economy even though the labor market, things like that have been strong.
Well, give us an economist guest coast, Mr. Walmark said.
Characterized as many people have is a game of chicken that we pay about play about every single often.
Been about a dozen years now executive legislative who's going to blink.
Boy, I mean it's hard to say, but I think that the the White House has said they do not there that default is not even an option.
And I think everyone agrees on that.
But I think that means that when it when push comes to shove, they're going to have to agree to something.
But you know, that's more for for the congressman probably knows better than me what's what's happening in in that area.
But I think these games of chicken are not not helpful to anyone.
I think that and and the most economists think that the debt ceiling doesn't really reduce our longterm debt, it's.
There may be other policies which would do that, but this one is just kind of just kind of in the way taxes and spending.
Jeremy Horpit, all, thanks very much for coming in.
As always, come back soon.
Thank you, Steve.
And we'll be back in a moment.
Back now there were lives lost.
And no, putting a dollar figure on that, and the deaths were, to be certain, the worst of it.
Apart from that.
Still, the spring tornadoes that raked across Central Arkansas and nearly erased the Cross County seat of wind caused damage in the hundreds of millions of dollars, perhaps even more when all the bills are totaled for many Arkansans with residential or commercial losses, The recovery process.
Is proving almost as traumatic as the Tornadoes.
Well, we're joined now by Mayor Jennifer Hobbs of when and by Kelly Erstein.
He's the CEO and executive director of the Independent Insurance Agents of Arkansas.
We think both of you for coming in.
Mayor, let me begin with you, if we may, your community Absolutely to say that it was hard hit.
It's understated the situation.
How is your recovery proceeding?
You know, I've not ever been through it, but from what I understand we're we're moving along as well as could be expected.
We are still trying to, we're in the cleanup stage.
We're trying to get everything, all the debris removed so that people can start rebuilding their homes and moving forward This you are encountering some snags because they're always are an emergency situation just such as this.
What what are the what are the snags that you're experiencing?
Well, we're we had so many homes damaged.
We still have homeowners that don't have a definite answer from their insurance companies whether their home is going to be able to be repaired or they're going to have to demolish it and start all over.
We are still trying to get those homes that we know we're not going to be salvageable demolished and move to the road.
We're still waiting on FEMA to.
Help us with our housing.
They have agreed to take on a direct housing mission for Cross County, but they have not been able to make a decision on where they're going to locate that yet.
So the slow process and in terms of commercial property and commercial losses in terms of the economy of Cross County and when are you seeing some progress in that front in terms of recovery?
We actually are.
We were very pleased to see how many businesses could could relocate.
We've had business partners open up their doors and make room for for additional personnel in their buildings.
We're actually seeing the Domino's pizzas already started reconstruction and that's making great progress.
We still have some that have not made a decision on what they're going to do and where they're going to relocate, but.
We we were pleased to see how many could already be back up working and that's great for our city.
Kelly Erstein of the insurance industry, this is a difficult time for the industry, a lot of work to be done and there is some always is some disappointment on the part of property owners, homeowners or commercial.
Give us your update, your assessment now.
No doubt about it Steve.
I think the mayor would agree with me.
The ramifications, the effects of this storm, the EF3 almost an E F4I think will be felt for months if not years to come.
When you think about claims that are being made now will continue to be made, the restoration of existing property, what's left of that when you think about displacement, relocation of families?
When you think about opening up businesses, this is a very, very long process that we're embarking upon.
There are all, there are complaints as always about the shortfalls and compensation by the answer and the very process itself filing a claim, processing a claim.
Is the industry able to cope with it At this point, I think we are, but I would tell you that there are deficiencies as well.
Were there underinsured dwellings?
Yes, no doubt about it.
So many times, I think that many homeowners don't realize maybe the possibility of there being underinsured until that claim actually happens in a in a catastrophe that occurred both in Cross County when Pulaski County.
The effects of that are not known until the damage is done.
Unfortunately a lot of folks don't understand what is included in their policy.
So there is a rude awakening sometimes when when that is really comes to to grips with that insurer.
Not every homeowners policy is a replacement policy.
It is not.
There are some that are actual and and we.
As independent agents I might add really suggest that it be a full replacement cost to the to the policy but not all are full replacement cost.
Some as you said are actual cash values.
There is a big, big difference there and and then as well I mean you don't know those limits.
When you purchase your policy sometimes unless you really have that conversation with your agent and and to me I think today's conversation is about that clearing call if you will, that insurance need to have that conversation with their agents and it and it needs to go both ways at a minimum.
It's time for review no doubt about it.
I mean if if there's a sliver of a.
A silver lining here.
I think it has caused people to really look back, consult with their agents, be their trusted advisor to their policies, and look to see if they have adequate coverage.
I mean, I live this every day, I live here in Conway, so I was not affected by the storms.
But believe me, I went back and looked at my own policy and it's it's, it's it's something that needs to be done annually, if you will, with your with your insurance advisor.
Let me go back to the mayor if I can.
We have had even before the storms, your honor, we have had problems.
Every business, every enterprise of any kind has had difficulties coping with inflation, supply chains and labor shortages.
I have to imagine that's especially acute given your situation there in Cross County and when it is really a great concern to us because we have so many homes that are going to need to be replaced, we are concerned about.
The supply chain issues, we're concerned about having enough contractors available to do the work in a timely manner, provided they can get the items that they need.
And so we're not to this stage yet that we know exactly what those effects are going to look like for us, but they are definitely major concerns that we have.
This is a situation that's not unusual in in disasters of this night.
We don't know what we don't know and won't for some weeks.
Possibly months, Kelly Erstein.
And you know the the laws of insurance, it's it's, it's spreading the risk if you will And not only do these occurrences, not only do rates that with catastrophes that occurred in Arkansas, rates are really, really affected by overall in the in the US and and what happens regionally.
With losses there, so it it, it has kind of a a, a an effect that folks really don't understand the impact until months down the road.
As you just said, inflation of the sort that we are experiencing now is I'm assuming an especially aggregating factor in compensation, no doubt about it, but you can include that as well in your policy.
You can include a higher limits as far as debris removal, tree removal, things like that.
But when you have those certain types of endorsements, of course it costs the policy the premium to go up.
And so some folks, and I understand this, some folks have to make that decision that maybe they can't have some of those coverages that they really need.
Mayor, where are we now?
I mean what's the next step for wind and cross?
The next step is obviously to work with partner with FEMA to get the direct housing in here.
We are starting to put together our longterm recovery team.
We we want to see what the options are out there that we can do to assist homeowners with moving forward as well as just our community in general moving forward.
We we have to rebuild a high school, we have to rebuild a wastewater treatment facility and as well as assist our our citizens with getting their lives back together.
You you mentioned FEMA, the Federal Emergency Management Agency.
Are you satisfied with the response from the feds thus far?
They've been very good to work with.
Of course they they don't move in the timely manner that I would like to see, but that we're moving a whole government.
So it's it's not the same as our small town.
We don't get the reaction as quickly as we're used to but that they have been a very nice and knowledgeable to work with.
Well we're going to have to end it there because we're simply out of time.
The insurance agencies and insurance agents, thanks very much to you for coming in.
Mayor, Thank you for giving us your time as well, and that does it for us for this week.
As always, we thank you for watching and we'll see you next week.
Support for Arkansas week provided by the Arkansas Democrat Gazette, the Arkansas Times.
And KUARFM 89.