[Congressional Record Volume 148, Number 46 (Tuesday, April 23, 2002)]
[House]
[Pages H1492-H1493]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            ADMINISTRATION CONSIDERS LOWER PUBLIC DEBT LIMIT

  The SPEAKER pro tempore. Pursuant to the order of the House of 
January 23, 2002, the gentleman from Michigan (Mr. Smith) is recognized 
during morning hour debates for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, the leadership is currently 
considering a proposal to change the definition of debt subject to the 
debt limit. This proposal would create a new lower limit applying only 
to debt held by the public. This would exclude debt owed to government 
trust funds, principally the Social Security and Medicare trust funds. 
As chairman of the Speaker's debt limit task force in 1995 and 1996, I 
oppose this proposal.
  Ending the inclusion of debt held by government trust funds, what the 
general fund has borrowed from Social Security and Medicare, in the 
statutory debt limit is unwise for good fiscal reasons. I think that 
the proposal of creating two classes of debt will create opportunities 
for the manipulation of government accounts to disguise the true level 
of debt.
  This concern is not wholly theoretical. The Treasury has used some 
accounting gimmicks available in the past. As my debt limit task force 
report documented, the Treasury divested $39.8 billion from the civil 
service trust fund in November of 1995 to avoid bumping up against the 
statutory debt limit. Though the divestment was reversed after an 
increase in the debt limit, it put the retirement benefits of millions 
of government employees at risk while masking the true size of 
government obligations. If we change the debt ceiling to apply only to 
Wall Street debt, the same thing could happen to Social Security and 
Medicare.
  The truth is, however, that there are only a limited number of 
opportunities for this sort of finagling under current law. Creating a 
broad class of accounts outside of the debt limit will increase the 
danger of this sort of manipulation exponentially. Further, it will 
complicate government accounting and make it even more difficult to 
understand the government's true financial situation.
  I have another concern as well. Taking government-held securities out 
of the debt limits comes close to saying that our debts to bondholders 
on Wall Street are more important, or more real, than our debts to the 
Social Security and Medicare trust funds. The change could be portrayed 
as discounting our obligations to Social Security and Medicare while 
protecting Wall Street bondholders. It would be, in fact, a denial of 
the fiscal mess we are in with our entitlement programs. Not only do we 
owe that money in the trust funds that some would like to ignore, we 
have tens of billions of dollars of unfunded liabilities for Social 
Security and Medicare. We have to face up to this challenge and make 
some hard decisions. Instead, the proposed debt ceiling change would 
sweep it under the rug, our future obligations, leaving the problem to 
our children and grandchildren.
  If we are interested in honest accounting and fair depiction of our 
government finances, we would increase

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the debt ceiling dramatically to account for these unfunded 
liabilities, what we have promised in Social Security and Medicare 
which are going to be future debt and future cost, and we would account 
for these in addition to what we have borrowed from the Social Security 
and Medicare trust funds as well as the so-called Wall Street debt.

                              {time}  1245

  Perhaps raising the debt ceiling would wake up those in Congress who 
hope the obligations of the entitlement program will simply go away or 
simply be dealt with with future Congresses, because it is politically 
difficult to acknowledge how and who is going to pay for those future 
obligations. I would just like to say that Chairman Alan Greenspan 
suggests that possibly we should have no statutory debt limit, because 
the true obligation comes from how much Congress spends and legislation 
we pass promising future benefits or future spending. I disagree.
  Though painful, I believe that we should have a full discussion about 
how much debt, including the unfunded liabilities, our country should 
leave to future generations, and how this would best meet our country's 
goals of fiscal discipline and honest government accounting.

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