[Congressional Record Volume 141, Number 199 (Thursday, December 14, 1995)]
[House]
[Pages H14906-H14908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       NO FUNDS FOR THE TREASURY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas [Mr. Bentsen] is recognized for 5 minutes.
  Mr. BENTSEN. Mr. Speaker, earlier today the House debated H.R. 2621, 
a bill which would, in my opinion, force a default of the U.S. Treasury 
on U.S. debt and forestall payment, not only of principal and interest 
on U.S. debt for 

[[Page H14907]]
the first time in our history, but also forestall payments on Social 
Security, Federal and military pensions. In fact, this bill was 
advertised as one which would protect Social Security and Federal and 
military pensions, but in fact, the end result would be causing a 
default and leaving the Treasury with no funds whatsoever to pay those 
payments to the beneficiaries who have paid into those systems.
  During the debate, I referred to a speech which Speaker Newt Gingrich 
made before the Public Securities Association on September 21, 1995, 
just earlier this year. In this speech is where the Speaker plainly and 
clearly advocated defaulting on U.S. debt in order to force the 
President and the Nation to accept his budget and no other budget.
  My assertion was called into question by my colleague and friend from 
Michigan, and therefore, I submit for the Record and ask unanimous 
consent to include the following article from the New York Times as 
printed on September 22, 1995 entitled ``Gingrich Threatens U.S. 
Default if Clinton Won't Bend on Budget.''
  Mr. Speaker, let me quote a couple of excerpts from this article. The 
article starts out:

       House Speaker Newt Gingrich threatened today to send the 
     United States into default on its debt for the first time in 
     the Nation's history to force the Clinton administration to 
     balance the budget on Republican terms.

  The article goes on to say:

       Clearly, part of Mr. Gingrich's autumn end-game strategy is 
     to force the White House to accept much of this agenda, many 
     parts of which President Clinton has vowed to veto, by 
     holding an increase in the Federal debt limit hostage. 
     Without an increase in the Federal debt, the government will 
     be unable to meet many of the payments due in November for 
     Social Security, military pay, and interest on the Federal 
     Government's $4.9 trillion debt.
       Such confrontational techniques have been used in the past, 
     but it has been highly unusual for a high government official 
     or high government leader to suggest, as Mr. Gingrich did 
     today, that default on government payments was not beyond the 
     pale.

  Let me quote directly from the Speaker. As we would say, the Speaker 
speaks. ``I don't care what the price is,'' he said in his speech. ``I 
don't care if we have no executive offices and no bonds for 60 days, 
not this time.''
  What that means, Mr. Speaker, is if we had a default and we had no 
bonds and we were not able to roll over the debt, that would mean that 
the Government would run out of money, and what that would mean is when 
Social Security checks need to be sent out, the Government would not 
have any money and the Government would not be able to take the 
Treasury securities, which Social Security invested in, and reinvest 
those into the market to raise capital. So in effect we would be high 
and dry; and unfortunately, the millions and millions of Americans who 
have paid into Social Security and count on that money to come every 
month would be high and dry, too.
   Mr. Speaker, quite frankly, it is appalling, I believe, for this 
House to play with a time bomb such as the U.S. creditworthiness. We 
have a triple-A rating, and yet we have this revolutionary new Congress 
which believes it would be revolutionary to hold the country hostage 
and throw the Nation into default, to do away with our triple-A rating, 
to raise interest rates for all Americans, and to withhold the Social 
Security checks, the Medicare checks, the military checks, the pension 
checks to Americans who deserve those because they paid into them.
  Let me remind my fellow colleagues of the House of the last 
revolutionary movement which decided to not stand up and pay its debts. 
It was the Bolshevik movement after the Russian Revolution in 1917, 
which refused to honor the Czar's bonds because, they said, ``We have a 
new leadership here and we are not going to honor those.'' Even today, 
people throughout the world hold those bonds and they are worthless. 
Even today, the Soviet Union, having broken the bounds of communism, 
has trouble entering the markets because of what happened back in 1917.
  We do not want that to happen to the United States we do not want to 
see what happens to the United States, what we debated earlier this 
year with respect to Mexico. We are the greatest nation on the face of 
the Earth. We are the leader of the free world. We are the strongest 
economy in the world.
  The U.S. Treasury bond is the gold standard for the world. All other 
interest rates are tied off of it, and yet the Speaker threatens a 
default and threatens to destroy the creditworthiness of the United 
States.
   Mr. Speaker, I submit the following article for the Record, that was 
the Speaker's position, and I hope he will renounce it.

               [From the New York Times, Sept. 22, 1995]

    Gingrich Threatens U.S. Default If Clinton Won't Bend on Budget

                          (By David E. Sanger)

       Washington.--House Speaker Newt Gingrich threatened today 
     to send the United States into default on its debt for the 
     first time in the nation's history, to force the Clinton 
     Administration to balance the budget on Republican terms.
       His comments, a more extreme version of the hardball stance 
     frequently used in past budget showdowns, raised the specter 
     that the looming standoff may begin to rattle financial 
     markets around the world. Mr. Gingrich's remarks came in the 
     middle of a day in which the dollar plunged as much as 5 
     percent against major currencies before recovering slightly, 
     sending interest rates up sharply. [Page D13.] The Speaker's 
     statement appeared to be one of several factors that added to 
     the markets' unsettled condition.
       More broadly, Mr. Gingrich's speech to the Public 
     Securities Association, which represents traders in 
     Government debt, underscored the growing agitation and sense 
     of imminent collision in official Washington as both 
     Democrats and Republicans move toward a confrontation that 
     could shut the Government down this fall.
       Throughout the capital, there was a sense that the current 
     had quickened and the rumble of a great waterfall could be 
     heard close ahead. Angry disputes broke out on wildly varying 
     issues. Republicans threatened to block sending American 
     ground troops to enforce the Bosnia peace plan, agreed to 
     vast reductions in the protection for endangered species and 
     Federal lands, and pushed ahead with plans for radical 
     changes in Medicare and Medicaid. Democrats fumed and vowed 
     to do what they could to slow the legislation's breakneck 
     pace.
       Clearly part of Mr. Gingrich's autumn end-game strategy is 
     to force the White House to accept much of this agenda--many 
     parts of which President Clinton has vowed to veto--by 
     holding an increase in Federal debt limit hostage. Without an 
     increase in the limit, the Government will be unable to meet 
     many of the payments due in November for Social Security, 
     military pay and interest on the Federal Government's $4.9 
     trillion in debt.
       Such confrontational techniques have been used in the past. 
     But is was highly unusual for a high Government leader to 
     suggest, as Mr. Gingrich did today, that default on 
     Government payments was not beyond the pale.
       ``I don't care what the price is,'' he said in his speech. 
     ``I don't care if we have no executive offices and no bonds 
     for 60 days--not this time.''
       Without concessions from the White House across the board, 
     he said, there will not be any increase in the debt ceiling. 
     ``And we'll see how long they will last,'' he added.
       Administration officials were still trying tonight to 
     figure out how seriously to take Mr. Gingrich's comments. A 
     few months ago, the Speaker was forced to back away from his 
     off-the-cuff suggestions that the United States should 
     recognize Taiwan as an independent country, a step that would 
     lead to a breach with China.
       But Congress has little direct influence over foreign 
     policy. By contrast, its control of the Government's purse 
     strings gave added force to Mr. Gingrich's remarks. Indeed, 
     the Speaker's comments drew a quick and harshly worded 
     response from Treasury Secretary Robert E. Rubin. ``The 
     President won't be blackmailed by the use of the debt limit 
     as a negotiating lever,'' he said in a telephone interview 
     from Miami, where he was giving a speech tonight.
       ``It would be unprecedented and unwise for anyone in a 
     position of authority to dismiss the consequences of default 
     on the debt of the United States of America for the first 
     time in our history,'' he added. ``Even the appearance of a 
     risk of default can have adverse consequences, and a default 
     itself would increase the cost of debt for the United States 
     Government for many, many years to come. A sovereign 
     country's credit-worthiness is a precious asset not be 
     sacrificed under any circumstances.
       Mr. Rubin said he did not expect the United States to 
     default on any debt payment, a step that he has repeatedly 
     called ``unthinkable.'' But even a serious threat of a 
     disruption in payments can move the markets, and may send 
     borrowing costs soaring for the United States.
       The Treasury Department estimates that every increase of 
     one percentage point in interest rates would swell the budget 
     deficit by $4.9 billion this year. Republicans, however, 
     argued that interest rates should decline if the ultimate 
     outcome of the dispute between the parties is a big cut in 
     spending.
       Aside from all the Sturm und Drange in Washington, the debt 
     limit debate has not yet had much effect, traders said. ``The 
     markets have not yet focused on it,'' said David M. Jones, 
     vice chairman of Aubrey G. Lanston & Company, which trades 
     Government bonds. ``One of the risks is that foreign 
     investors will not understand what is happening here. And if 
     they get nervous, they will just flee until it all sorts 
     out.''
     
[[Page H14908]]

       The issue will take on added urgency in the first five days 
     of November, when the Government must pay $50 billion in 
     Social Security benefits, Medicare and pay for active-duty 
     members of the military. On Nov. 15, about $25 billion of 
     interest payments are due.
       As Treasury officials concede, a number of financial tricks 
     are available to keep the Government afloat even if the 
     ceiling on debt is not raised. There are temporary debt 
     limits, emergency ``cash management sales'' to keep money 
     flowing in the coffers as short-term loans, and borrowing 
     against other Government reserves. But all of the steps come 
     with a cost, and none can go on for too long. Though the 
     overall Government debt is $4.9 trillion, the Treasury sells 
     about $2 trillion of debt securities every year because so 
     much of the Government's borrowings are ``rolled over'' into 
     new bonds.
       The debt limit exists as an institution in Washington 
     because the Constitution mandates that only Congress can 
     authorize borrowings. Before World War I every bond issued by 
     the United States required separate Congressional approval. 
     Today, the raising of the debt ceiling essentially permits 
     the Treasury Secretary to make the day-to-day decisions 
     required to meet the Government's obligations.

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