[Congressional Record Volume 145, Number 95 (Wednesday, June 30, 1999)]
[Senate]
[Pages S7852-S7854]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATIONAL DEBT
Mr. FITZGERALD. Mr. President, I will speak for a few moments today
about an issue of great concern to me and many other Members. In the
last few days in Washington, there has been literally a euphoria over
the notion we in Washington are running large budgetary surpluses on an
annual basis. The uncorking of champagne bottles all around town has
taken place on the notion that, because we are running surpluses, we
are somehow paying down the national debt.
Yesterday, the New York Times had an article on page 14 entitled,
``Clinton Sees the Possibility of Zero U.S. Debt by 2015.''
As I will show, this article is dead wrong. The article stated that
the entire national debt, which now stands at over $5.6 trillion, will
be paid down by the year 2015. It went on to state that the debt clock
in New York, which is a daily tally of the Federal national debt, would
be down to zero by the year 2015.
It turns out that is dead, flat wrong. In fact, the national debt is
now rising. It is going to continue to rise every year of the
President's 15-year projections. The total national debt by the year
2015, as listed on that debt clock in New York, will stand at more than
$7 trillion.
How can this be? We have heard from Washington that we are running
large
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annual budget surpluses. The President, 2 days ago, said this year we
will have a $98 billion surplus, and those surpluses are going to rise
each year to the point that in the year 2004 we will have a $253
billion surplus.
Looking at the fine print on the President's midyear report, we find
our total gross Federal debt is still going up. It stood at $5.4
trillion at the end of the last fiscal year. This year, it will rise to
$5.6 trillion. By the year 2004, the total gross Federal debt will have
risen to over $6 trillion.
How can our national debt still be going up if we are running
surpluses in Washington? The answer to that question is, we really do
not have surpluses in Washington. They have a definition of surpluses
in Washington which is far different from the average perception of
what the word surplus would mean to American families or businesses.
One would think when you have surpluses, you would be paying down your
debt, not increasing it. However, in Washington, the debt is still
going up, even as they say they have surpluses.
We know our President chooses his words very carefully. I read his
press statements the other day. He was careful not to say we are paying
down the total Federal debt. He talked instead about one of the
components of the Federal debt. It turns out there are two parts to the
Federal debt. There is debt owed to Government accounts and there is
debt held to the public. Both of those debts have to be paid off. At
some point, we have to come up with the cash to pay down those debts.
What President Clinton chose to do in his statements the other day
was ignore this part of the Federal debt and decide he would only focus
on debt held by the public. It is true he is actually going to start
trying to pay down the debt held by the public. Debt held by the public
stood at $3.7 trillion at the end of last year. By the year 2004, the
President will have paid it down about $700 billion to $2.9 trillion.
It is true by the year 2015 he will have paid this portion of the
national debt down to zero.
How is he going to pay that portion of the debt down to zero? He is
going to borrow more from the Government accounts. He is going to
borrow more from Government accounts. It turns out he will increase the
Government accounts section of the national debt. Not only will he
increase it, he is going to quadruple debt held by these Government
accounts. It will rise from $1.7 trillion at the end of last year to $3
trillion by the year 2004. Guess what. By the year 2015, when the New
York Times said we would have no national debt, it turns out the debt
in this column will be more than $7.5 trillion.
I have to say, if the ordinary family were to pay down their mortgage
by running up their credit card and then realize what they were doing,
I think they probably wouldn't feel it was cause for celebration that
they had just shifted the composition of their debt. Similarly, I don't
think there is cause yet in Washington to uncork the champagne bottles
and pat ourselves on the back that we are paying down a portion of the
Federal debt while we are increasing the other portion and are
increasing the overall debt.
Right now, the average family in America is responsible for $55,000
of that total national debt. Each family's share of the national debt
is going to be going up in each and every year of the President's 15-
year projections. At the end of the 15 years, the total national debt
will be even higher than it is now, and each family's share of that
national debt will be even higher.
This chart shows the direction our national debt is going: It is
continuing to rise. We are digging the hole deeper.
All this talk about surpluses in Washington should be taken with a
grain of salt. The surpluses they are talking about are fictitious
surpluses; they are accounting gimmicks. If any private business man or
woman used the same kind of accounting they use in Washington, they
could potentially wind up behind bars in a Federal penitentiary. We
need to change the accounting system in Washington so the public and
the media cannot be so easily misled.
I am hopeful the press throughout this Nation will point out that the
earlier reports were flatout wrong, that the debt clock in New York
will not stand at zero by the year 2015, even under the President's
projections. Under the President's own projections of our national
debt, it will be higher in the year 2015 than it is now.
I think it is a shame Washington is misleading the American public
about our true financial condition. Is it not high time we end the
hocus-pocus bookkeeping in Washington and speak the plain truth?
I ask unanimous consent to print the New York Times article in the
Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the New York Times, June 29, 1999]
Clinton Sees the Possibility of Zero U.S. Debt by 2015
(By David E. Sanger)
Washington, June 28.--President Clinton today raised the
mind-bending possibility that the giant national debt clock
in midtown Manhattan would soon start running in reverse--and
that by 2015, the Government would owe no money to investors
around the world.
There is little question that Mr. Clinton described the
general direction of the clock correctly. Barring a stock
market disaster or a Japan-like recession, the Federal
Government's $4.5 trillion debt, the figure on the clock,
will begin diminishing in the next few months. That number
includes debt that the Government owes to itself, mostly to
the Social Security system.
The more important figure--debt that the Government owes
individual investors, companies and governments around the
world--has actually been in decline for two years. How much
it can be reduced in 15 years is far more problematic,
dependent on a huge range of economic assumptions--chiefly
the growth rate of the national economy--that, given the
inexact nature of such things, are most likely subject to
major revision.
But even if the United States could pay off all its debt in
the next 15 years, many economists and some Government
officials say that might not be as great as it sounds.
Although huge debts in the 1980's and early 1990's when the
Government ran up huge annual deficits, were a tremendous
drag on the economy, a bit of national debt may be a good
thing.
``It's almost hard to imagine what this country would be
like debt-free,'' said Alan Sinai, the chief economist of
Primark Decision Systems, an economic consulting group. ``But
while no politician would want to admit it, the optimal debt
for the United States is probably not zero. What that optimal
level should be, though--now that's a subject for a real
national debate.''
Without question, reducing the debt creates a host of
advantages for the United States. As the Treasury tames its
appetite for borrowed money, it no longer competes with
homeowners looking for mortgages, for example, or companies
seeking to raise money. As a result, interest rates have more
room to fall.
And as the debt declines--Mr. Clinton's projections show
that it will fall below $3 trillion in 2005, and below $2
trillion in 2009--the amount of interest the Government pays
each year goes down substantially, freeing up even more cash,
while raising the national savings rate. That, in turn, helps
to compensate for the free-spending ways of American
consumers, who in these boom times are barely saving.
``That may be the biggest single advantage,'' one of Mr.
Clinton's senior economic advisers said toady.
But a debt-free United States might create a more complex,
and some say riskier, financial landscape worldwide.
For international investors, there is no safer place to put
money than United States Treasury bonds. When the Asian
economic crisis hit in 1997, and accelerated last year after
the collapse of the Russian economy, investors around the
world put their assets into United States Treasuries. These
investments help make the dollar the world's most popular
``reserve currency,'' the money other governments hold for
economic security in their central banks. And they give the
United States subtle but significant economic clout around
the world.
If the Government stops long/term borrowing, the money that
becomes available may stay in the United States, invested,
say, in mortgages or corporate debt. But if investors do not
have the security of investing in United States Treasuries,
they may be less interested in holding their cash in dollars,
and that could affect the dollar's value on world markets.
Investors could put their money in another country's
treasury bonds--say those issued by the new European Central
Bank or the Bank of Japan. But that requires taking a bet on
the future of European and Japanese currencies, adding a
significant risk to the investment.
Whether any of this happens depends on a series of
assumptions. The chief one is the future of the American
economy. Mr. Clinton's projections, released today, assume
that the American economy will grow between 2.1 percent and
2.6 percent a year for the next 15 years. The Administration
made similar bets for the past seven years, and it was wrong
every time. But the surprise was pleasant: the economy
expanded far faster, and for far longer, than even the most
optimistic Government projections.
The risk is that future errors could be in the opposite
direction. That is what happened to Japan, which assumed that
the successes of the 1980's would extend into the
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1990's. It was the blunder of the decade, and Japan is
mounting a huge debt as it tries to spend its way out of
seven-year recession.
``These are difficult projections to make for even the next
year or two,'' Mr. Sinai said today, ``And even more
difficult for beyond that.'' and the risk is accentuated
because most of the paydown of the debt is to occur between
2010 and 2015, allowing plenty of time for economic and
political miscalculation or happenstance.
On the other hand, the Government is closer to paying off
the debts that really matter than even Mr. Clinton indicated
today. While the debt clock reads $5.6 trillion, the figure
that kicks around the United States Treasury is less than
half that: $2.77 trillion, when the amount of debt held by
the Federal and state governments and the Federal Reserve is
subtracted. Under the President's projections, that debt will
be paid off around 2011.
Mr. FITZGERALD. I yield the floor.
The PRESIDING OFFICER. The Senator from Minnesota.
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