Kelly King: Economy needs a new Congress

Come spring the economy will be much improved, but only if next month’s midterm elections produce a change in Congress, BB&T Corp. Chairman and CEO Kelly King said today.

Speaking at the inaugural Knoxville Economics Forum breakfast, King said he doesn’t care if voters choose Republicans or Democrats but the “fundamentally socialist” attitude that now controls Congress must be changed.

Gridlock would be preferable to the status quo, King told about 100 Knoxville area bankers, accountants, real estate agents, developers and others.

A change in Congress would bring an immediate “boost of confidence” for businesses who are uncertain about the future and still feeling the pain of recession, said King, who also is a director of the Federal Reserve Bank of Richmond.

King said he is confident voters will deliver a change in leadership that will be good for the economy.

In 30-minute talk followed by a few questions from the audience, King discussed a wide range of economic issues.

Highlights include:

— Deflation won’t be the problem that some predict, but two years from now the talk will be about inflation and higher interest rates.

— The federal deficit is way too high and “will bankrupt the country” unless it is signficantly reduced. Lowering the deficit means cutting government spending, which means reduced government services.

— A flat rate tax of 20 percent should replace the current tax system, but benefits such as Social Security and Medicare should be taxed.

— The Trouble Asset Relief Program was the right thing to do to ease public concern about the financial system, but most of the banks really didn’t want to take the monmey.

— The economy is fundamentally sound, but growth is too slow.