Gov. Haslam blasts Congress on debt ceiling

Gov. Haslam blasts Congress on debt ceiling

July 26th, 2011 by Andy Sher in Business Around the Region

Gov. Haslam

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NASHVILLE -- Tennessee Republican Gov. Bill Haslam on Monday accused Washington politicians of playing an "incredibly serious game of chicken" on the federal debt ceiling extension.

"I think if you talk to any governor, they would say we really need to solve this for the economic health of the country, No. 1," Haslam told reporters. "No. 2, [solve this] for us as states. You've seen where some of the credit rating agencies have said, 'Hey, the fact they don't have a deal puts Tennessee's credit rating in peril' -- which, I mean, that speaks volumes.

"We have a country that's literally waiting to see what will happen. Until Washington shows that we can live within our means and come to a political agreement about how to solve that, you're not going to see banks willing to loan money, you're not going to see people willing to invest their own capital, and so we won't have any job growth until that happens."

Moody's Investors Service has put Tennessee and four other states on a credit watch. If the federal government doesn't reach agreement on the debt limit and defaults by Aug. 2, the ratings group will consider downgrading the states' triple-A ratings, the highest for states.

"Should the U.S. government's rating be downgraded to AA1 or lower, these five states' ratings would likely be downgraded as well," Moody's said in a release.

That would lead to higher borrowing costs for the state when it issues bonds.

Moody's officials say that, among Tennessee's other problems, it is highly dependent on federal spending.

Haslam said the state has the second- or third-lowest debt among states and has sought to downplay the financial impact on state bonds.

Asked later which political party Haslam is blaming for playing chicken, the governor's communications director, Alexia Poe, said he "isn't interested in assigning blame but believes Tennesseans expect our elected officials to tackle tough issues thoughtfully and find solutions. The potential impacts of continued stalemate in Washington cause great concern."

Haslam said he recently spoke to U.S. Sen. Lamar Alexander, R-Tenn., and Sen. Bob Corker, R-Tenn., but that was some 10 days ago.

Haslam's finance commissioner, Mark Emkes, as well as state Treasurer David Lillard and state Comptroller Justin Wilson are trying to make the case to Moody's analysts that they do not belong on the watch list.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.