[Congressional Record Volume 145, Number 23 (Tuesday, February 9, 1999)]
[House]
[Pages H484-H485]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            THE DEBT AND AMERICA'S CURRENT BUDGET SITUATION

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Washington (Mr. Smith) is 
recognized during morning hour debates for 5 minutes.
  Mr. SMITH of Washington. Mr. Speaker, I rise today to talk also about 
debt and how we can get rid of it, and about our current budget 
situation.
  We are getting better, which is the good news. In 1992 it seemed like 
we would never have anything but rising yearly deficits contributing to 
a larger and larger national debt for the rest of our lives and beyond. 
But we have turned that around.
  We have seen the earlier deficits go down steadily since then and we 
have now even heard talk of actually running a surplus. The gentleman 
who preceded me is absolutely correct, we are not there yet, because we 
are still borrowing money from the social security trust fund and 
counting that as income, but we are getting closer. Even without 
counting social security, the debt this year was $30 billion, which is 
a lot less than it was 5 or 6 years ago. If we maintain the path of 
fiscal discipline we can get to the point where we begin to run 
surpluses.
  What I would like to talk about today is taking that one step 
further, not just begin to run surpluses, but actually begin to pay 
down the debt. That debt is pushing towards $6 trillion, and has a 
devastating effect on our economy. We should get to the point where we 
can start paying down that debt to do a lot of positive things: to 
reduce interest rates and also stop the amount of interest we have to 
pay.
  I have a couple of charts to illustrate this point. The first chart 
talks about how much money we spent on the debt. There are a lot of 
crushing needs that we have in government: defense, education, 
infrastructure, Medicare, social security. But this shows that one of 
the biggest items that every year out of the budget is paid is 
interest. Two hundred forty-three billion dollars, or 14 percent of our 
budget, is paid on interest, which does nothing for us. All it does is 
it meets our obligations on the debt.
  To the extent we can reduce that debt, we can reduce the amount of 
money that we have to spend on interest and free up more money for tax 
cuts or for spending on other programs that are necessary, like 
national defense or Medicare. That is a huge blow to our budget. Every 
$100 million we can spend down on this debt will reduce this crushing 
figure we have to face and pay every year.
  This goes beyond the effect it has on government. Paying down the 
national debt will have a profound effect on the lives of individual 
citizens, as the second chart will show. We have achieved a record 
level of home ownership in this country, and that is great, but it is 
still only about 60 or 65 percent.
  We need to go even higher, and those of us who are homeowners would 
also like to see the monthly payment reduced. If we can pay down the 
debt, the government will not be the single largest borrower in this 
country. We will not be out there gobbling up all the money and driving 
up interest rates. We can actually reduce interest rates. What this 
basically means is that we will save in our mortgages.

[[Page H485]]

  This chart shows an example of an average home price of $115,000, so 
actually in today's market that is probably below average in a lot of 
areas. This shows what you can save on a home mortgage if you have a 
monthly payment of $844 at the 8 percent interest rate.
  If we can reduce that interest rate by just 2 percent we can save as 
much as $155 a month, which is almost $2,000 a year out of our personal 
family budget. All that is by reducing the amount of money that the 
government gobbles up for its own debt. That can help make that money 
more available for people who want to borrow money for home mortgages, 
and also for businesses, for farms, for a variety of other interests. 
We can reduce that debt.
  We face a lot of challenges in the next few years, but this is one of 
the biggest. The economy is strong right now. We have unemployment of 
4.3 percent, we have low inflation, we have relatively low interest 
rates. Now is the time to save the money and pay down the debt, because 
that economy will not always be this robust.
  When the time comes and the economy slows, that is when we might need 
to help the economy, maybe borrow money to help get the economy back 
up.

                              {time}  1245

  While we are in such a strong economic situation is the wrong time to 
be running debt the size of our current debt. There needs to be a 
constituency out there for reducing our Federal debt, help reduce 
interest rates and recognize the amount of money that the government is 
borrowing and also pays on interest each year in the budget.
  As a Democrat, I want to make this a very important issue. I think 
for too long Democrats have been accused of not being fiscally 
responsible. I think we can and should be. And for my part, as a 
Democrat, I am going to argue we need to save some money, begin paying 
down that debt to reduce interest rates and reduce the amount of money 
that government spends on interest every year. It is the fiscally 
responsible and prudent thing to do when the economy is strong. If we 
wait, we are in no position to do it when the economy is weak.
  Now is the time to step up our fiscal responsibility. We can all be 
proud. We can finally see someplace in the future where we will have a 
surplus. But let's take it one step further, let's pay down the debt.

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