[Congressional Record Volume 142, Number 13 (Wednesday, January 31, 1996)]
[House]
[Page H1077]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      WHAT WOULD HAPPEN IF THE UNITED STATES OF AMERICA DEFAULTED?

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from the District of Columbia [Ms. Norton] is recognized 
for 5 minutes.
  Ms. NORTON. Mr. Speaker, the D.C. appropriation has just passed this 
House after 4 very arduous months. The concern that I have had all 
along relates to the financial condition of the District.
  As I have seen what has happened to this city, I have not been able 
to keep from analyzing the situation of the District to the situation 
that the United States of America could find itself. The District, Mr. 
Speaker, courted default as it was running out of money. It did not 
know what to do or could not do what had to be done, and so a financial 
authority was appointed, and that authority was necessary in order for 
the District to be able to borrow.
  As one contemplates the problems facing this body with a debt limit, 
one wonders what would happen if the United States of America got close 
to default.
  I can say this to you, Mr. Speaker, there would not be any higher 
authority to take over the United States of America. We are the 
ultimate authority, and so I would hope that we all try to figure out 
how to make sure that we do not get any closer to the threat of 
default.
  I wanted to talk about the threat of default for a moment. The 
District, for example, has heard in the last couple of days from the 
bond ratings that they still do not believe that the District will rise 
again, and they are considering lowering the District's bond rating yet 
again. What trembles and shakes that has sent through the District of 
Columbia. In effect, Moody's did the same thing to the United States of 
America this very week when it threatened to downgrade our credit, the 
best credit in the world for over 200 years.
  I want, therefore, to ask this body to consider not default but what 
the threat of default can do to interest rates, to confidence, how it 
can ripple through our country and through the world.

                              {time}  2030

  I want, therefore, to ask this body to consider not default, but what 
the threat of default can do to interest rates, to confidence, and how 
it can ripple through our country and the world.
  I recognize the United States of America and the District of Columbia 
are different. Yet the fact is that there have been only a few large 
jurisdictions that have ever been threatened with default, and, for all 
of those, the results have been catastrophic.
  So I would ask this body in the next few weeks to try to consider 
what is at stake. History will remember us for how we handle the first 
threat of default in the history of the United States. The threat of 
default is as bad in a very real sense as default itself. Who can 
forget what led to the budget agreement under which we now operate? 
What led to that agreement, of course, was a crash on Wall Street that 
came one day, absolutely unexpected, that came one day without warning. 
It is the possibility that the credit of the United States could be 
affected without warning that I hope this body will take into account 
in deciding what to do with the debt limit.
  I am asking this body to respect the long record of the United States 
and to pass a clean debt limit bill. We must not allow the shutdown 
experience to be born again in the debt limit bill. The only way to 
respond to the experience we have had in the last couple of months with 
the shutdown experience is to make sure we do not repeat bad history. 
If we are ever to repeat that history, we certainly should not repeat 
it with the full faith and credit of the United States.
  I know what it is to lose your credit. I am from the District of 
Columbia, which today does not have credit. I ask my country then to 
look at its Capital City and to make sure that its credit in no way 
resembles that of its fallen city. I appreciate that there is a great 
difference. I hope that difference will continue to be great, and I 
hope that we will return to this body, not to have 4 days of haggling 
about what to do about the debt limit or what to attach to the debt 
limit, but that we will march forward together in a bipartisan way and 
pass, finally, one clean debt limit bill.

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