WASHINGTON - SEPTEMBER 23: U.S. Sen. Kay Bailey Hutchison (R-TX) testifies on Capitol Hill about the Gulf Coast's recovery from Hurricanes Gustav and Ike on September 23, 2008 in Washington, DC. Officials from the Gulf area are requesting lawmakers for federal funding to aid in recovery efforts for over $14 billion worth of damage after the two recent hurricanes devastated the region. (Photo by Brendan Hoffman/Getty Images)
The Republican senator told a group of business and civic leaders in Dallas that said the economy is at the top of her list of major Washington issues. Hutchison said the nearly $1.6 trillion stimulus-induced debt -- which she predicted might go as high as $10 trillion in 10 years -- can't be sustained.
"The debt that we are looking at is unconscionable," said Hutchison, who is challenging Gov. Rick Perry in the Republican primary for the 2010 governor's race. "It is the scariest thing that I've seen since I was elected to the United States Senate 15 years ago."
She said she fears the economy is "going to collapse" if changes aren't made in the budget, and that foreign buyers of the U.S. debt will become skittish and raise interest rates.
Federal Reserve Chairman Ben Bernanke said last week the economy appeared to be "leveling out," and was likely to begin growing again soon. Obama appointed Bernanke to another four-year term Tuesday.
Hutchison also called Obama's health care proposal "wrong-headed" and said it should be scrapped so Congress could start anew.
She said polls show that 85 percent of people are happy with their health care. Instead of "tearing down" the existing system, "we ought to be fixing the 15 percent," she said.
The senator said she also takes issue with the administration's handling of energy issues, including its plan to limit greenhouse gases with a controversial cap-and-trade approach.
A recent poll showed that a narrow margin of Americans back a cap-and-trade system that would set a ceiling for greenhouse gas emissions and allow companies to buy and sell permits to emit the gases. But Hutchison said it has problems.
"If health care reform isn't the biggest job killer in our country today, cap-and-trade will be," she said.
Hutchison added that cap-and-trade will tax the only stable source of energy the U.S. has -- oil and gas -- and will send jobs overseas.
Supporters of a cap-and-trade system say it would create millions of "green jobs" as the nation starts relying more on renewable energy sources, such as wind and solar, and development of more fuel efficient vehicles.