Gregg warns US on way to fiscal calamity

Gregg spoke at a breakfast gathering of the New England Council, a group that represents the region’s businesses and academic and health institutions and promotes economic growth.

He said President Obama’s proposed $3.8 trillion budget will result in the next generation having a lower standard of living than the current one and that the nation is on its way to bankruptcy.

The Republican senator from New Hampshire, who a year ago announced he will not seek reelection, has been particularly critical of the president’s plan to use up to $30 billion from the $700 billion bank bailout program to invest in community banks to encourage them to lend to small businesses. He pointed out that the law requires funds repaid by the banks to be used to reduce the national deficit.

“The threat is that five to seven years from now we’re going to have to substantively devalue the dollar, creating an inflationary event which would be a horrific event for the American people . . . or, alternatively, we will have to raise taxes so dramatically to catch our tail here on the spending side that we will basically crush productivity,’’ he said.

Congress recently rejected Gregg’s proposal for a bipartisan task force to come up with a plan to curb the spiraling budget deficit, which grew to $1.4 trillion last year. The 18-member panel would have studied the issue and, if at least 14 members agreed, presented a deficit reduction blueprint after the November elections to be voted on before Congress convenes next year.

The Senate laid aside the legislation after some Republican supporters changed their minds once Obama endorsed the plan. Obama has said he will create a bipartisan commission by presidential order instead, and Gregg said he hopes his plan will be considered again.

“I do believe if we were to pass something like that, we actually could make very significant progress,’’ he said. “We wouldn’t close this gap, but we would do enough so the American people and, equally important, the world community would know we stepped up to the issue.’’

Taking questions from the audience, Gregg was asked whether the partisan atmosphere in Congress influenced his decision to not seek reelection this year. Earlier this week, Senator Evan Bayh, the two-term Democrat of Indiana, said he will not seek reelection because there’s “just too much brain-dead partisanship.’’

Gregg said that a 24-hour news cycle that rewards those who shout the loudest has made it difficult to have thoughtful policy discussions, but he insisted that a significant amount of collegiality still exists in the Senate.

“You don’t see it, because it’s member to member and it’s not the leadership,’’ he said. “I’m not as down on the Senate as some people are.’’

Gregg, who served as New Hampshire governor and in the US House before being elected to the Senate in 1992, said his decision to leave politics was based mostly on his family and his desire to move on.