Hyatt Brown challenges Congress to tackle ‘severe’ GDP-to-debt ratio
DAYTONA BEACH — Billionaire and philanthropist Hyatt Brown thought of the federal government.
Armed with dozens of charts and tables, Brown gave a presentation at Volusia County’s Tiger Bay Club on Thursday, explaining what he sees as a looming economic concern: how much is owed relative to gross domestic product, or debt to- GDP ratio. He cited the figure of 138%, compared to China at around 70%.
Brown, who from 1978 to 1980 served as Speaker of the Florida House but has not stood for re-election since, called it “a serious problem that we have and which sooner or later we will have to deal with.”
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Additionally, Brown said there are ways to do it, but said it would require elected officials — the president, senators and representatives — to take action that might not be politically expedient.
Addressing the issue, he said, comes down to whether those elected officials are representatives or delegates.
“The difference is that the representative always wants to know exactly what the general opinion of the people he represents is,” Brown said. “A delegate is someone who knows they’re going to cast votes that really aren’t very popular with them, but they do it because they know it’s the right thing for the whole thing.”
How to reduce the debt to GDP ratio
After the costly World War II, US debt stood at around 124% of GDP.
Congress raised taxes as a number of other factors came into play – such as population growth – leading to a reduction in the debt-to-GDP ratio to around 24%.
Brown addressed a common refrain to politicians.
“Everyone says cut expenses. Decrease spending. Cut expenses,” he said.
The problem with this is that virtually no one will support federal spending cuts for National Defense, Medicare and Medicaid, and Social Security.
Brown said a former congressman he knew well and helped fund was conservative Republican Ander Crenshaw of Jacksonville, who served from 2001 to 2017. Brown said he asked Crenshaw why he stood was retiring from Congress when he had risen to a position of power as Deputy Majority Whip. and member of the Credit Committee.
Crenshaw said he had worked to cut public spending, but lacked ideas on how to have a major impact.
“We’re down to the bone,” Crenshaw said, according to Brown. “We can’t cut anymore and I’m tired of dragging my fingers. I’m going to go back to Jacksonville and I’m going to enjoy life.”
So the next most likely solution, Brown concluded, is to increase GDP.
One problem with US GDP is the US economy’s reliance on people “buying stuff,” Brown said.
“We buy things more than we sell things. And if we wanted to increase GDP by $900 billion, all you do is turn that negative into flat,” he said. “Buy American.”
There are other ways GDP increases, he said, including:
- Population growth, either in the form of increased births or immigration
- Increased efficiency in the production of goods and services
- A positive export balance
- Increase in public spending
- More private investment
Brown said a “short-term wildcard in the game” is the stock market, which has seen long periods of expansion followed by precipitous declines. Longer term, however, the market is up as it said forward earnings are projected at 19.5, which is better than average.
The United States, he pointed out, has an economy that is the envy of the rest of the world.
“I would say yes, don’t worry about it,” Brown said. “Everything will work.”
During a Q&A, retired Dr. Carl “Rick” Lentz asked Brown about the possibility of moving from cash to digital currency.
“It happens,” Brown said. “The people who hate it are criminals and the black market, where people run businesses for money and as a result they avoid taxes.”
Lentz expressed reservations.
“The problem I have is that everything you spend on everything, you have no secrets,” he said.
Brown replied; “Do you have any secrets? I have no secrets.”
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