[Congressional Record Volume 150, Number 131 (Tuesday, November 16, 2004)]
[House]
[Pages H9706-H9713]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INCREASING THE DEBT LIMIT
The SPEAKER pro tempore (Mrs. Musgrave). Under the Speaker's
announced policy of January 7, 2003, the gentleman from South Carolina
(Mr. Spratt) is recognized for 60 minutes as the designee of the
minority leader.
Mr. SPRATT. Madam Speaker, 4 years ago, the Bush administration was
just getting started. They sent us their first budget, then told us,
based upon a projected $5.6 trillion in surpluses over the next 10
years, that there could be huge tax cuts, between a trillion five and
$2 trillion, huge tax cuts and still a budget surplus, and that they
would not have to even come back to Congress to ask again for an
increase in what we call the debt ceiling until the year 2008, 7 years
later.
The debt ceiling is a statutory limit, a limit that we impose by law
on the total amount of debt that the United States of America can
incur. It currently stands at a level of $7.384 trillion.
We did not buy into this argument. We did not vote for the tax cuts,
and we on this side of the aisle were not surprised, disappointed,
bitterly disappointed, because we had strived mightily to put the
budget in surplus for the first time in 30 years during the 1990s. We
did not vote for it, but we were not surprised when in the year 2002,
not 2008 as predicted, but in the year 2002, the Bush administration
came back to Congress and said that the statutory debt ceiling is about
to be hit. In other words, we have run up so much debt that we are
right at the ceiling of the total amount of debt that the government of
the United States can incur, and, therefore, we need a $450 billion
increase in the debt this year, 2002.
The next year they were back asking for more, and now they are back
asking for still more, this time $800 billion. It is phenomenal when
you consider that the last increase occurred 18 months ago and amounted
to $984 billion. That was the largest increase at any one given time in
the fiscal history of this country. As a matter of fact, $984 billion,
the amount by which the debt ceiling was increased in May of 2003, $984
billion is more than the total indebtedness of the United States when
Ronald Reagan came to office in 1981, and how long has it lasted, this
$984 billion increase in the debt service? Eighteen months.
In fact, right now, this administration, under its fiscal policy of
the budgets passed by the Republican majorities in this House and the
Senate, has
[[Page H9707]]
run up a debt of $1 trillion over the last 18 months. That is a rate at
which we are accumulating debt right now, $1 trillion every 18 months.
If we add together the increases to date since 2001, it was $450
billion in 2002; $984 billion, May 26, 2003; and then a request which
must come to the floor sometime this week in one form or another,
because the Treasury Department tells us they cannot continue to incur
debt or meet their obligations unless we raise the debt ceiling,
allowing them to borrow still more money, $800 billion will have to be
passed some time this week. Those three increases for the last 4 fiscal
years total $2.234 trillion. That is the amount of indebtedness that
has to be accommodated by increases in the debt ceiling in order to
allow room for the Bush budgets over the last 3 fiscal years.
We think at the very least an increase of this magnitude, $800
billion, requires an unambiguous yes or no vote, a straight up and down
vote under a clean bill that only deals with the debt ceiling, with one
exception. We believe that it is unconscionable to continue incurring
debt at this rate, $2.3 trillion over 4 years, without doing something
to stop this juggernaut, this headlong descent into debt.
So we propose that at least we be offered an amendment on the House
floor to amend the debt ceiling increase to reinstate something we call
the pay-as-you-go rule. The pay-as-you-go rule provides, quite simply,
that if you want to increase an entitlement, liberalize an entitlement
payment, you have to identify new revenues to pay for the increase or
decrease another entitlement by a commensurate amount. On the other
hand, if you want to cut taxes, you have to raise revenues elsewhere or
cut an entitlement by the same amount so that the effect is neutral,
has no effect on the bottom line of the deficit.
That rule was in play in this House for at least 12 years during the
1990s, and it accounted for a phenomenal effect upon other measures we
took up and the deficit of the United States.
As this chart shows, when President Clinton came to office in 1993,
the deficit the previous year was $290 billion. We passed a Deficit
Reduction Act here sent to us by the President on February 17, passed
it within 3 months. Every year thereafter the bottom line of the budget
got better, until the year 2000 when we had a surplus of $236 billion.
Four short years ago, we had a surplus of $236 billion.
Every year since the onset of the Bush administration, the bottom
line of the budget has gotten worse and worse, to the point where in
the year 2002 we were back in deficit by $158 billion, and the year
2003 we had a record deficit, $377 billion, and this past year, which
ended September 30, 2004, we booked a deficit of $413 billion in the
Federal budget, $413 billion.
Now, what happened? I mentioned earlier the big tax cuts passed by
the Bush administration passed in 2001. There were more in 2002, still
more in 2003.
{time} 2015
And instead of having a rebounding effect, a sort of supply-side
effect so that the pick-up in the economy resulting from the tax cuts
sort of replenished the lost revenues, instead of that happening, as
projected, this was the curve that was projected, that there would be
barely any loss of revenues, instead taxes have followed this
particular actual curve, dropping from $1.73 trillion back in the year
2001 to $811 billion this year.
Now, there are other sources of the problem. Terrorism is taking its
toll on the budget. The war in Iraq and Afghanistan has cost over $150
billion thus far. No question they have had an effect on the bottom
line. But the tax cuts, based on this miscalculation, have had a
substantial impact, and this is a course that was chosen by those who
voted for it.
Here is where we were in the year 2001 when President Bush came to
office. This was the statutory debt ceiling, the limit on the total
indebtedness the government could incur, $5.950 trillion. It was raised
to $6.4 trillion, then raised again May 2003 to $7.384 trillion. It
will now be raised again to $8.200 trillion, by $800 billion. And,
folks, that is not the end of it. That is the hard part of it. That is
what has happened thus far.
Let me just summarize, though, where we are right now with the debt
ceiling increases that have had to be adopted to accommodate the fiscal
policies of this administration. Here we see it. In the year 2002, $450
billion, the next year $984 billion, now $800 billion, it comes to an
increase, the amount I mentioned just a while ago, $2.234 trillion.
That is the amount in 4 years by which the debt ceiling of the United
States has had to be raised in order to accommodate the budgets and
fiscal policy of this administration.
As I said, the last increase, $985 billion, was the largest in our
history. Not only that, that amount, $984 billion, exceeded the total
indebtedness of the United States in 1980-81, when Ronald Reagan came
to office. The total debt of the United States then was $908 billion.
We had one increase that has lasted 18 months, that is all. We have
already run through $984 billion on the watch and under the policies of
this administration.
As I said, it does not stop here. It would be bad enough if it did,
but it does not stop here. This is what we really have to be concerned
about and why we think at the very least there should be one single
solid step taken in this debt ceiling increase to slow down this head-
long descent into debt. This is the level of the debt ceiling in 2001
when President Bush came to office.
The Congressional Budget Office, at our request on the Committee on
the Budget last year, projected the Bush budget through the year 2014,
from 2005 through 2014, for 10 years, and came back and told us if we
follow this course, by 2014 the United States will have accumulated
$14.545 trillion in debt. This is where the Bush administration
started, this is where they would end in 2014, projecting forward on a
current services basis, the tax cuts and other policies that they have.
Let me make one final observation about this. As serious as it is,
and anyone can look at this and realize the gravity of it, everybody
understands the economics, everybody understands the fiscal effects,
but the real issue here is the moral question. Is this the kind of
legacy we are going to leave our children: $14.545 trillion? Because
that is the course we are on right now.
And let me give one other aspect with this second poster here. One
other aspect of this problem, before turning to my colleagues, that
everybody knows simply cannot be sustained. This lower line, the black
line, is the gross domestic product of the United States from 1980
through 2014, slowly rising, growing every year. That is the GDP. This
is the debt of the United States during the same period of time. And
you can see that the debt of the United States is growing faster than
our income.
Everybody, every household, every business, and every government,
State, Federal, or local, knows that you simply cannot sustain that
kind of increase in your debt over and above your annual income for a
prolonged period of time. But that is the course we are on right now.
Madam Speaker, I wish to recognize at this point the distinguished
gentleman from New York (Mr. Rangel), the ranking Democrat on the
Committee on Ways and Means, who will be our floor person on this issue
when and if the debt ceiling increase comes to the floor.
(Mr. RANGEL asked and was given permission to revise and extend his
remarks.)
Mr. RANGEL. Madam Speaker, let me thank the gentleman from South
Carolina (Mr. Spratt) not for what he does for our party or for the
Congress, but what he does for our great country.
I would like to talk about the question of morality, the
responsibility of government. And some may say, well, what has that got
to do with the debt ceiling? Well, it would seem to me that if people
would look at the responsibility of our government as relates to
spending, to believe that we have a credit card, because that is what
we do, we are borrowing money, and that the head of our household was
borrowing money but not letting anybody know what he was doing, that
would be irresponsible and immoral.
It seems to me that if we had a head of a company that inherited a
$5.6 trillion surplus and then when we went to look at the books found
out that he wasted $9 trillion and had a $2.6 trillion indebtedness,
that that person may not
[[Page H9708]]
be impeached but certainly would be fired from the job.
Some might say that they do not really feel the pain of borrowing.
And I guess irresponsible heads of households really do not feel the
pain of borrowing. Imagine how good it might feel to somebody to be
given a credit card and to be told they do not have a limit on what
they spend; or to feel that they do not have to tell the American
people what they are spending and what they are borrowing; or to be
able to say, well, it does not make any difference, I will hide it in a
bill and they will not ask me any questions; or to believe that the
best way to run the country is to give a $1 trillion or a $2 trillion
decrease in taxes to those people who are in the highest income tax
bracket. Suppose those people knew that in order to do this that you
would have to borrow the money in order to please a small group of
people?
To get back to the questions of moral values, is it morally right to
spend money, to give tax cuts, knowing that the Social Security System,
where we made a moral and political and legal contract with the
American people, promising that if they lived long enough or if they
had disabilities or if they survived a tragedy that that system would
be there for them? Is it fair to leave that system so insecure that
young people now have no idea whether it is going to be there for them,
when that money could have been used to shore up the Social Security
System so that we would be fulfilling a moral promise to these people
rather than fulfilling a political obligation to supporters?
To talk about moral values, if you knew that 45 million Americans,
most of whom work every day and had no health insurance, what would be
more important morally, to provide for the health care of human beings,
Americans, or to give a tax cut?
Let us talk about moral values in terms of education, to make a
person more productive, to make a person have self-esteem, to make a
person want to get married and have a family. Is that not moral values?
Is it more important to give a tax cut and to borrow money to do that
than to make certain that every kid in America has a chance to fulfill
whatever their brains would allow them to do because they had access to
education?
What about our old folks? Getting old is getting to be a problem just
in maintaining one's health because of the cost of prescription drugs.
They let you get to a doctor, but you cannot even afford to do what the
doctor is suggesting that you do. You do not have to be religious to
understand that if you had the money to provide national health care
prescription drugs, the moral thing to do is to help those who have not
got and to say God already blessed the wealthy. Those are moral values,
to be able to do that.
It just seems to me that the most irresponsible thing to do is to
borrow the money and to know that you will never pay for it, to borrow
the money and to know that the interest rates are going to fall on your
children, not you. You will enjoy the benefit of supporting the war and
giving the tax cuts and rewarding all of the lobbyists, but the people
who pay for it are not just today's taxpayers, not just today's
children, but the unborn are born with this debt on their heads. It
will be hard to explain to them what happened in this Congress, what
happened in this Presidency, what happened in this era that caused us
to believe that we knew so much about the economy that we could go into
debt $14 trillion and say, let our kids pay for it. Is that the moral
thing to do?
Madam Speaker, it is not the political thing to do, it is not the
moral thing to do, but that seems to be what is so important. The
President would have us believe that he may not be right all the time,
but we know where he stands. How are we going to know where he stands
if his party does business in the middle of the night? How are we going
to know where he stands if we cannot even find out what the interest on
the debt is going to be?
And let me say this. Every household plans for what they have to
spend, and it is difficult to explain this in terms of trillions of
dollars, but what if you knew as the head of a household that you had
this credit card, that you could buy anything that you wanted on this
credit card and not pay for it? But every month the credit company will
be sending you a bill, and it will show you what the service charge is
going to be, what the penalty is going to be, or in our case what the
interest is going to be.
And what would happen in this household, I ask the gentleman from
South Carolina (Mr. Spratt), if you looked at your bill and you looked
at what you had to pay and you found out that in 10 years the interest
that you are paying on the money that you borrowed exceeded all of your
budgetary responsibility for clothing, for health care, for rent or
mortgage, except for one issue?
And that is where in 10 years this great country of ours will be;
that the interest that we are paying on the debt that grows 50 percent
faster than the economy will reach the point that it would exceed all
of our discretionary expenditures, with the exception of defense.
{time} 2030
Which means what? It means that Republicans and others can say I
supported Social Security, but the money was not there. I wanted to do
more with education, but the money was not there. I want health to be
improved, but the money is not there. And at the end of the day they
may have succeeded in breaking our responsibility as a government for
every social program that we have and the only item that would receive
priority would be defense and supporting the war.
Madam Speaker, I think that this type of thinking really violates our
national security because Americans should know who are we borrowing
the money from, who do we owe this money to, and how mean can we be in
disagreements we have with people whom we owe money to. How angry can
we get with the bank if we know they can foreclose? And the people who
are lending this money are foreigners. It is not as though in the last
4 years we have made a lot of friends with foreigners, but they thought
they were making a lot of money off our interest. And as the interest
goes up, we would like to believe that we can borrow more money from
them.
But, guess what, one of the biggest purchasers of our debt is the
People's Republic of China. A large chunk of the money that we owe to
foreigners is to China. And whom do we have a problem with in terms of
trade? The People's Republic of China. So what do we say as a great
nation and lead organization of the World Trade Organization? We told
China if they do not do what we tell them to do in terms of fairness
and equity as relates to international trade, we will not do business
with them. We want them to reevaluate how they deal with their
currency. We want them to be fair and not dump their goods and have us
lose jobs.
And China would say to us, suppose we do not do any of those things?
What are you going to do? What are you going to do to the bank that you
owe money to? Suppose they unload that debt and let it flow out in the
market, suppose we cannot borrow any more money, then we have to
appease the people that we owe.
Madam Speaker, it would be ironic that because of our hunger and our
thirst to borrow, our irresponsible need to support tax cuts for the
rich, our complete disregard for the health, education and welfare of
our people, who brings us to our feet is the communists, not because of
their guns, weapons and power but because they understood the
capitalist system so well that they defeated the strongest capitalistic
country that God has ever seen.
Madam Speaker, I thank the gentleman from South Carolina (Mr. Spratt)
for just sharing with the American people the economic and fiscal
policy that we are directing. I hope that some of the people who are as
concerned as we are with moral values would recognize that far more
important than just fiscal policy is how do we treat the American
people that have needs. We owe them an education, a place to live,
aspirations and health care, and it would be a shame if we are paying
China more than we are paying for health care.
Madam Speaker, I thank the gentleman from South Carolina (Mr. Spratt)
for giving me this opportunity to say what a moral pleasure it is for
me, with the Committee on Ways and Means, in working with you in trying
[[Page H9709]]
to get the people to understand that we are not trying to beat up on
Republicans. We just want them to tell the American people what they
intend to do, not in the middle of the night, not locked up in some
omnibus bill, but to come here and challenge anything that has been
said tonight. We will not see them, because too many people are
watching. I hate to believe this will follow the pattern where at 2 in
the morning they will have a bill and it will pass by one vote.
Mr. SPRATT. Madam Speaker, I thank the gentleman for eloquently
expressing the moral dimensions of a swelling debt, $8 trillion today,
growing to $14 trillion in just 10 years.
Madam Speaker, I yield to the gentlewoman from New York (Mrs.
Maloney).
Mrs. MALONEY. Madam Speaker, I thank the gentleman from South
Carolina (Mr. Spratt) for yielding me this time and for organizing this
Special Order to highlight the outrageousness of the administration's
demand that Congress raise the debt limit for the third time.
Remember, my colleagues, when President Bush took office, the
administration said that the debt ceiling would not be reached until
2008. But, instead, the majority has led the country so far into debt
that we have had three huge increases in 4 years. The last raise, only
a year ago, of $984 billion was far greater than any in United States
history.
Remember, in February of 2001, the Bush administration was predicting
that the publicly held public debt would be paid down to $1.2 trillion
by 2008. In its latest midsession review this summer, the
administration itself was now projecting that the debt would be $5.5
trillion in 2008. In fact, the $800 billion increase the administration
now demands under threat of default would raise the debt ceiling to
$8.2 trillion and give the administration the greatest increase in debt
of any administration ever. What a terrible distinction. What an
appalling legacy for future generations. And under President Bush's
policies, the CBO and other economists predict that the debt will
continue to rise to at least $14 trillion and as much as $14.5 trillion
in the next 10 years. What have the Republicans done to our economy?
Remember, when President Bush took office, the CBO was projecting a
10-year baseline budget surplus of $5.6 trillion. A surplus. That was
the result of President Clinton's policies that paid down the deficits
and reduced the public debt. But after only 4 years of Republican
leadership CBO is now projecting a cumulative 10-year deficit of $2.3
trillion. That is a swing of almost $8 trillion after only one term.
Dare we ask my colleagues how bad will the next term be?
The budget deficit reached a record 3.5 percent of GDP this year. As
a share of GDP, the deficit is larger than it has been at any time
since 1993. And let us not blame the war on terrorism. This is the
direct product of their fiscal policies, the President's tax cuts that
have left this Nation reeling.
In the private sector, there is a bipartisan consensus that the
deficit is killing the U.S. economy. Last week, the Wall Street Journal
released a November survey of 55 prominent economists on what the top
priorities of the President should be in his new terms. These are
conservative folks, financial leaders in our country. Their top item
was narrowing the budget deficit.
I quote from Peter Hooper, a former economist with the Federal
Reserve Board, ``If we do not get a narrowing of the budget deficit, it
will slow the rate of the growth of the economy.''
It is not just our financial leaders in this country that are
worried. This morning, the Associated Press reported that a pressing
concern of the EU finance ministers at their meeting this week is the
U.S. budget deficit and the resulting weakness of the dollar, which was
at a record low today against the Euro. The ministers called on the
U.S. to reduce its deficit and said that action, not just words, were
what is needed. But what do we get from the administration? An increase
in the debt ceiling, the largest ever in the history of the country.
Secretary Snow responded that the deficit was, ``unwelcome.''
Unwelcome? We are not talking about an unexpected dinner guest but a
monster of this administration's making that our children and our
grandchildren will have to suffer under and will have to pay for.
Where has the administration been as the deficit has continued to
mount? A recent paper by William Gale and Peter Orzag of the Brookings
Institute put the situation very clearly: ``The United States has never
before experienced such large, long-term financial imbalances.
Sustained chronic deficits will gradually reduce national income and
living standards and carry with them the risk of a financial crisis.''
A recent New York Times editorial spelled out what this financial
crisis might be.
This is extremely troubling, and the gentleman from New York (Mr.
Rangel) touched on this very eloquently earlier. Almost all, 92
percent, of the huge increase in publicly held debt that has occurred
in this administration is held by foreign nations, with Japan and
communist China the two largest shareholders. In particular, China has
almost tripled its holdings since Bush took office and now holds almost
$175 billion in United States treasuries.
The Treasury figures which came out this morning show that China is
one of only four nations that is buying significant amounts of U.S.
debt, increasing its holdings by close to $20 billion since the
beginning of this year alone. The Chinese are not buying our debt to
advance freedom and democracy. They are buying it to advance themselves
at a competitive advantage. By maintaining the dollar at an
artificially high rate against the Chinese currency, they keep the
price of their products low in the U.S. In other words, our budget
deficit enables the Chinese to hold down prices of Chinese goods and
makes them more competitive in the U.S., at the expense of U.S.
companies.
In short, the American taxpayer is subsidizing Chinese manufacturers,
and the American worker is paying the salary of a Chinese employee.
But what if the Chinese changed their minds? What if they dumped
those Treasuries? Perhaps because, as the Times suggests, and I quote,
of ``dismay over the United States' long-term fiscal disarray'' or for
whatever reason they feel would advantage them.
That is not an unrealistic scenario. Recent articles note that the
Chinese policy of pegging its currency at a fixed rate to the dollar
has been creating great imbalances in that country's economy and
putting pressure on the Chinese government to let the dollar fall. Then
we would have a crisis. Dumping dollars would almost certainly cause an
abrupt spike in inflation and interest rates.
All I can say is that these economic policies are dangerous. I came
to Congress in 1992 and we had a $290 billion deficit, as the gentleman
from South Carolina (Mr. Spratt) pointed out. In 6 years, we had what
was projected to be a huge surplus. Under this administration, we have
lost that surplus. They have created the largest deficit in history,
and they are now calling to increase the debt ceiling to the largest
amount it has ever been in the history of this country. And who is
buying that debt? China is the prime purchaser of that debt. This is
not a valid policy. It is wrong-headed.
Madam Speaker, I thank the gentleman for his leadership on this
issue.
{time} 2045
Mr. SPRATT. I thank the gentlewoman from New York.
I yield to the gentleman from Virginia.
Mr. SCOTT of Virginia. I thank the gentleman from South Carolina for
yielding, and I thank him for his leadership.
We have heard that we have had to increase the debt limit. This chart
shows why the debt ceiling had to be increased. It shows the deficit
from the Johnson, Nixon, Ford and Carter administrations, the Reagan
and Bush administrations, the deficit changing into a surplus, and then
the massive red ink in this administration. It shows that it may get a
little better for a couple of years, but unless there is a profound
change in direction, it just keeps getting worse.
When you run up this kind of deficit, we talk about increasing the
debt limit, but one thing you have to do is pay interest on all of that
debt. We have heard that the surplus projected
[[Page H9710]]
at the end of the Clinton administration would have virtually paid off
the debt held by the public by 2008. Instead, by 2008 we will have
almost a $300 billion additional interest on the debt that has been run
up. $300 billion increased interest to be paid.
We talk about No Child Left Behind underfunded by $9 billion,
veterans' health care underfunded by a couple of billion dollars. We
have got other things, a couple of billion dollars here and there. We
are squeezing here and there. By 2008, interest on the national debt,
money just down the drain, $300 billion additional because of the
fiscal irresponsibility.
We hear that they want to privatize Social Security. This is the
Social Security cash flow which my colleagues will notice, in 2017,
instead of a surplus, we are going to be starting to run a deficit,
huge deficits approaching, by 2037, $1 trillion. One wonders how could
we ever have paid this surplus and why we should be running up as much
of a surplus as possible now to be able to accommodate this.
This chart shows that if you look at the tax cuts that this
administration has enacted and has in store, the present value of all
of those tax cuts is $14.2 trillion. We could have paid all of the
Social Security benefits without increasing the age of retirement,
without reducing benefits, for $3.7 trillion in present value.
Medicare's deficit, the same kind of chart, $8.2 trillion. $11.9
trillion is what it would have cost to make Social Security and
Medicare both financially solvent for the next 75 years. $14.2 trillion
in tax cuts. We had a choice: Tax cuts or make Social Security and
Medicare solvent for 75 years. We made the wrong choice.
This chart responds to the adage, if you don't change directions, you
might end up where you are headed. This chart shows where we are headed
at our present rate and present policies. This shows that right now we
are borrowing money to pay for some of the green which is Federal
spending. Unfortunately, by 2040, unless there is a profound change in
direction, we will be able to pay interest on the national debt and a
little bit of Social Security and have to borrow the rest of the money
for Social Security. We will have no money for Medicare and Medicaid
and no money for government spending like defense, education,
transportation.
Obviously, there has to be a profound change in direction. Otherwise,
interest on the national debt will start eating up virtually every
penny that we have.
We are going in the wrong direction. We have to change directions
back to the period of time when we made the tough choices, eliminated
the deficit and created the surplus. We can go back to that era if we
make the tough choices, make the right choices, but we are not doing
that now. When we start talking about increasing the debt ceiling, this
is one of the symptoms and one of the consequences of all of this red
ink.
I thank the gentleman from South Carolina for yielding, and I thank
him for his leadership on fiscal responsibility.
Mr. SPRATT. I thank the gentleman from Virginia.
I yield to the gentleman from North Carolina.
Mr. ETHERIDGE. I thank my friend from South Carolina for yielding.
Let me thank the gentleman from South Carolina for his leadership on
this issue because, as the gentleman from Virginia has just shared with
us, this is an issue that deserves more than just an hour Special Order
in the evenings. This is an issue that deserves the attention of every
Member of this Congress, and it deserves the attention of the
administration.
We had a wedding this weekend in our family. Our last child got
married. Come January, we are expecting to be grandparents. I am
looking forward to that with a great deal of anticipation. But after
what we have heard tonight, I am sorry to say that when that child is
born he will inherit the largest debt and his generation of any group
of young people in the history of this country. That is wrong, and this
Congress and this administration has an obligation to do something
about it. That is wrong.
I heard today on the radio, I do not have it in writing, that the
inflation increase that we are just facing, and they announced it
today, is the largest we have seen in 14 years. That means we have to
go back to 1990 to see the inflation increases now being built in the
economy. If this is correct, what this is going to mean is the cost of
that debt is going up, because interest rates will go up with inflation
and it will start to squeeze everything. Sure, it has something to do
with the price of oil, but the price of oil is going to keep going up
if we keep devaluing the dollar. And the dollar gets devalued because
we have a huge debt, and the cycle gets worse and worse.
That is basic economics. You do not need to know a lot. You just need
to understand that we have got to get our house in order to pay our
bills and turn that red back to green. It can be done, but it cannot be
done under current policies.
Let me ask my friend from South Carolina a question, because he knows
an awful lot about this when we are talking about budgets. When we are
spending the dollars for the debt, and we have seen the numbers this
evening, of how that is continuing to expand with no solution in sight,
share with me what this does for our squeeze on the need to invest in
education and in research and development, to grow our economy to get
out of this problem.
Mr. SPRATT. There are certain items in the budget that are
obligatory. Clearly, one of those obligatory items is interest on the
national debt. We have a sovereign responsibility to pay it, and if we
do not pay it or if we ever default in payment of it, the cost of
credit for the United States of America would skyrocket. Consequently,
that comes first, has to be paid, and when it has to be paid, then
other things have to yield to it, education, the environment, the basic
operation of the government. These other things have to yield to the
payment of interest. Obviously, the more debt you stack on top of debt,
the more interest we will have to pay.
Mr. ETHERIDGE. Let me ask this question as if I am sitting at my
kitchen table and I get my credit card. In effect, I am paying only the
interest on that credit card month after month. That is what we are
doing. We are not paying any on the principal. I keep building that
principal larger and larger, so it goes on my credit card from $1,000
to $5,000, to $10,000. It stands to reason my interest is going up.
Mr. SPRATT. Surely. If the principal is going up, your interest is
going up.
Mr. ETHERIDGE. Here is my question. If I keep building this big
enough, pretty soon the bankers are going say to me, ``Mr. Etheridge,
if you can't pay some of the principal, we're going to have to sit down
and work out a plan for you.'' Normally, people do not do that with a
country, but I think earlier the gentleman from New York touched on
this when he was talking about the challenge we face with our
international friends owning our debt. How do we deal with them
diplomatically when we owe them so much money?
Mr. SPRATT. It narrows our options, that is for sure. If we put too
much pressure on them at the WTO, for example, trying to get them to
unpeg their currency so that their exports are much more fairly priced
vis-a-vis our imports, then they could get stroppy. They could simply
retaliate by not buying any more debt and by making it difficult for us
to sell our debt at a higher price.
Let me yield to the gentleman from Tennessee because he is bringing
us back to this whole question of principal accumulation, how much debt
in a short period of time this administration has amassed.
Mr. COOPER. I thank the ranking member for yielding.
It is a shocking amount of debt that the administration has
accumulated in a relatively short period of time. As this chart
illustrates, three times in the last 4 years we have had to increase
our national credit card limit, as the gentleman from North Carolina
pointed out. Three times in the last 4 years. We have increased the
debt limit by a staggering amount. In the year 2002, we increased it by
$450 billion. In the year 2003, by $984 billion. Now we are being asked
to increase it by an estimated $800 billion, for a $2.2 trillion total
just in 3 or 4 years. That is a burden placed on the backs of our
families, on our
[[Page H9711]]
kids and our grandkids, as the gentleman was describing. These are
truly astronomical numbers.
To put them in perspective, look at this chart. What is $984 billion?
That is more than our Nation borrowed from the years 1776 through 1980.
Through all those years of our Nation's history, 200 years, we only
borrowed $908 billion. Here in the last few years, 1 year to be exact,
$984 billion extra. That shows how out of whack our finances have
become.
I thank the gentleman for raising this important question.
Mr. KIND. My colleague from Tennessee has been a real voice of reason
on the committee as well as the ranking member of the Committee on the
Budget for trying to inject a little voice of reason in this whole
fiscal responsibility debate that we need to have in this Congress and
throughout this Nation. Because it is staggering, looking at these
numbers and what the administration is coming back to Congress and
asking for this week, another huge increase in the debt ceiling limit.
There are a lot of ramifications to what the President is requesting
us to do this week in increasing the debt by addressing the symptom but
not addressing the cure that we need to get out of the fiscal mess that
has been created in this Nation over the last few years. It is a mess
that is spiraling out of control. We see the increased costs and what
is happening in Iraq and Afghanistan right now. We are also butting up
against an aging population in this country, the so-called baby boomers
who are about to begin their massive retirement in a few short years,
putting in jeopardy Social Security and Medicare solvency for future
generations. And we are not addressing a cure to the solution, one of
which the ranking member and those of us on the Committee on the Budget
here tonight have been advocating for the last 4 years, and that is
reinstituting the budget tools that were in effect in the 1990s, the
pay-as-you-go rules, so we maintain balance in the budgeting decisions.
If you are advocating a spending increase or a tax cut somewhere, you
have got to find an offset to pay for it to maintain that balance. It
worked well in the nineties. It gave us 4 years of budget surpluses, a
couple of years in which we were not even touching the Social Security
and Medicare trust funds, and all that has been reversed under the
current administration and with the leadership of the current Congress.
One of the more disturbing aspects about this whole debt ceiling
limit and the fiscal irresponsibility is who we owe it to. Right now, a
majority of the debt is owed to foreign interests, Japan being the
largest purchaser of government debt today, soon to be surpassed by
China as the number one purchaser of our debt in this Nation. I do not
believe it is in our best long-term economic interest to be so
dependent on China, to be financing our red ink in this country for
years to come, because it can wreak havoc on the financial markets in
this country if they decide to take their investments somewhere else.
That really has not received the attention I think it deserves, given
the long-term implications of our dependency now on foreign countries
in order to finance the debt that is being accumulated because the
current administration is not willing to make the tough decisions to
maintain fiscal responsibility around here.
It is going to be an important debate we have this week. There is
going to be an increase in the debt ceiling at the end of the day.
Those of us who want to reinstitute these rules do not have the votes
to do it today, but hopefully with the help of the American people,
some who are watching perhaps tonight, we are going to create this
synergy that is necessary in this Congress in order to start making
these tough decisions again that worked very well in the 1990s and gave
us incredible economic prosperity and job growth and an incredible
dynamic to help grow the economy which is being lost now based on the
decisions that we are seeing.
I thank the gentleman for yielding.
Mr. COOPER. I appreciate the gentleman's excellent points.
I think most Americans want to hear a solution to the problem. It is
one thing to know the dimensions of the problem. They want to know an
answer; and pay-as-you-go, as the gentleman described, is not only an
answer that we think will work, it is proven to work. It was in place,
and I think the ranking member of the committee would know better than
I, I think it was in place from 1990 to 2002.
Mr. SPRATT. The Budget Enforcement Act of 1990.
{time} 2100
Mr. COOPER. Madam Speaker, so it was in place while we had Republican
Presidents, the first President Bush, Democratic Presidents, and the
Republican Presidents. It was in place when we had a Democratic
majority in Congress and a Republican majority in Congress. And above
all, it worked. It enabled us to build the surplus that we enjoyed in
the Clinton years. It enabled us to reverse the flood of red ink that
we saw in the Reagan-Bush years, to completely reverse our Nation's
fiscal policy, only, sadly, to have it plunge back into an even deeper
sea of red ink. So pay-as-you-go, the policy of only allowing new
spending or new tax cuts if we can find the savings somewhere else,
that is a proven remedy to our problems; and that is really what we are
asking for.
The Blue Dogs have a policy statement that was issued today
encouraging Members to only vote for the debt ceiling increase if it
contains the essential budget reforms of pay-as-you-go.
So I hope all Americans will watch this debate carefully. Sadly, as
the Members know, this debate is only taking place after the election
when it is too late for many of our fellow citizens to cast their vote
based on these facts, and they will probably have this vote not as a
separate vote but rolled into a larger issue.
Mr. KIND. Madam Speaker, if the gentleman would yield for one final
point.
Mr. SPRATT. I yield to the gentleman from Wisconsin.
Mr. KIND. Madam Speaker, this literally is the ticking time bomb
sitting beneath Social Security and Medicare. They do not want to talk
about it. They do not want to talk about fiscal solvency and fiscal
responsibility that will help shore up Social Security and Medicare for
the next 75 years. But this really gets to the crux of it. And later,
next year perhaps, in the next session of Congress, we are going to
have a serious discussion about Social Security reform. I think the
best reform measures we can start taking today is instilling a little
more fiscal discipline in the budgetary decisions so that this $160
billion annual raid on the Social Security trust fund stops and we have
that ability to deal with the baby boom generation's retirement, which
is about to explode in future years. But, again, it is the lack of
leadership right now that we are seeing from the administration and
here in Congress that is preventing us from really shoring up Social
Security and Medicare as viable programs for many generations to come.
Mr. COOPER. Madam Speaker, if the gentleman would continue to yield,
I agree with the gentleman. It is essential to prepare for the pending
retirement of the baby boom generation and for all of our seniors so
that Social Security and Medicare that they count on will in fact be
there for them.
The gentleman made a point earlier about the Chinese becoming our
largest creditors. That is an amazing situation for the average
American back home to realize because not too long ago we referred to
the Chinese as the Communist Chinese, and I remember a statement made
by a Russian leader years ago, Nikita Khrushchev, who claimed that
Americans would one day sell them the rope by which they would hang us.
That is a pretty tough statement. But right now we are in effect
selling the Chinese the notes by which they could hang us financially
because we are asking them to lend us so much money to finance our
spending habits.
Mr. SPRATT. Madam Speaker, reclaiming my time, let me just wrap up by
saying that this is our concern: $2.2 trillion of additional debt in 3
fiscal years, and what is waiting in the wings is a reform in Social
Security which is likely to propose that a person not on Social
Security can take 2 percentage points or 3 percentage points off his
payroll tax and put it in a private account. If that happens, that will
increase the debt by another trillion dollars over the next 10 years,
and that is
[[Page H9712]]
our great concern that this will be followed with policies that will
actually worsen rather, than improve, this.
Madam Speaker, I yield to the gentleman from Florida (Mr. Davis).
Mr. DAVIS of Florida. Madam Speaker, I thank the gentleman for
yielding to me and appreciate the chance to join my colleagues.
The voters have spoken. They have elected us to return to Washington
to get the job done. And one of the first things we are getting ready
to do is exactly the opposite of what we should be doing. We are
getting ready to charge to future generations this massive expenditure
that we are enjoying the benefits of and ought to be paying for
ourselves.
One of the things I would like to add to what has been discussed here
tonight is folks at home say to me, Jim, what does this mean to me?
These are a lot of numbers. This sounds like a fight about people in
Washington. Where do I fit into this?
And one of the ways, I think, to sum this up is that today, because
of the reckless spending habits and reckless decisions on tax cuts
without regard to the debt and deficit, each American's share of the
Federal debt today is $25,000. $25,000. Every American in this country,
Democrat, Republican, man, woman, child, grandfather, grandchild,
$25,000 each. So instead of facing up to this fact and having a debate
about how we develop a roadmap to pay-as-you-go as the gentleman from
South Carolina (Mr. Spratt) has been advocating with the gentleman from
Tennessee (Mr. Cooper) and the gentleman from Wisconsin (Mr. Kind), we
are going to bury deep in a bill, try to hide from the public, try to
pretend this does not exist. And in my State, Florida, and in the
States we all represent, these historically low interest rates are
going to come to a screeching halt. We have been warned by all the
experts that it is inevitable that interest rates are going to begin to
rise. In my community where people have a mortgage on a home, they are
trying to pay a student loan, they have got credit card debt, this is
going to be taking money out of their pockets, not to mention the
horrific interest payments we are now paying, I think $157 billion in
interest we have paid in the last fiscal year or so, money that we
could be spending for tax cuts to help everybody, money we could be
spending to make sure our troops are better armed in Iraq and we take
care of them and their families when they come home.
So I want to salute my colleagues for calling attention to this
compelling detail. It is our job to make sure that the country knows
that even if someone tries to hide this in a bill, this debt limit is
going up to historic proportions and we need to stop it as soon as we
can.
Madam Speaker, as this body considers another federal debt limit
increase, I rise with a warning for my colleagues and the people we
represent back at home. For the third time since President Bush took
office, Congress is preparing to drive our country further into debt
with no road map to get our nation back on track to balanced budgets.
If Congress doesn't change course, this fiscal recklessness will
begin to eat away at America's economic prosperity and leave a legacy
of financial hardship for future generations.
Madam Speaker, this Congress has talked a lot about family values,
but where I grew up, bankrupting our children and grandchildren's
future doesn't count as a family value.
Today, as parents across our nation are working hard to save money
for their children's college education, the federal government has run
up a $7.4 trillion bill, and they are expecting our kids to pick up the
tab. That's more than $25,000 worth of debt per American resident--a
tremendous burden to place on the backs of future generations.
According to the Congressional Budget Office, if we stay on this
path, the debt held by the public will reach $13 trillion by 2014.
The figure doesn't even take into account the financial troubles we
will face when the first of 77 million baby boomers begin to collect
Social Security in 2011. So while we baby boomers are enjoying our
Social Security benefits, our kids will be paying for our irresponsible
financial choices.
Madam Speaker, my mother taught me at an early age that if you make a
mess, you have to clean it up yourself. Well this federal debt is a
disaster, and I'm not about to tell my kids that they should clean up
their mess when Congress can't even clean up its own.
What kind of example will we be setting for our kids if we don't take
steps to pay down the debt? How can we teach our kids about the
negative consequences of running up a credit card debt and at the same
time ignore the consequences of running up the federal debt?
The truth is Americans are already beginning to see the effects of
their government's poor fiscal policy decisions. Peter Hooper, chief
U.S. economist with Deutsche Bank Securities Inc. notes, ``The bottom
line here is, if we don't get a significant narrowing of the budget
deficit, you're going to have increasing upward pressure on interest
rates. (WSJournal 11/12/04)''
In fact, according to Freddie Mac, just this week the 30-year
mortgage rate came in at 5.76 percent, an increase from 5.7 percent a
week earlier. Rates on 15-year mortgages, meanwhile, climbed to 5.26
percent from 5.08 percent over the same time span. Finally, the one-
year adjustable mortgage rate rose to 4.16 percent this week, up from 4
percent a week ago.
Higher interest rates hurt more than just the economy--they take
money right out of the pockets of young people struggling with student
loan and credit card debt. And for families buying a house, higher
interest rates could add literally thousands of dollars a year to their
mortgage.
Furthermore, the federal debt drains funds away from investment in a
better future, better education, a better environment, or scientific
research. In 2004 alone, U.S. taxpayers wasted $159 billion on interest
payments on the federal debt--thats more than two times the amount the
government provided in financial aid for college students.
The $159 billion in interest payments combined with $163 billion in
interest paid to the Social Security Trust Fund and other government
trust accounts averages out to a staggering $1,100 ``debt tax'' for
each American. For Americans facing lower paying jobs, higher housing
costs, and mounting student loan and credit car debt, federal fiscal
mismanagement just adds to their burdens.
And this problem will only get worse. By 2014, the interest alone on
the public debt will reach $348 billion under current law (that's
$1,081 per person), and will reach $418 billion under the President's
policies.
It is shameful for Congress to even consider increasing this limit
once again without including some sort of plan, such as enacting Pay-
As-You-Go (PAYGO) rules, to ensure a brighter future for our children.
The road to fiscal responsibility is paved with sacrifice and tough
choices, but the reward--a stronger, healthier economy for Americans of
all ages--is well worth the journey.
I urge my colleagues to take up the responsibility thrown off by our
leadership and vote against this debt limit increase.
Mr. COOPER. Madam Speaker, will the gentleman yield?
Mr. SPRATT. I yield to the gentleman from Tennessee.
Mr. COOPER. Madam Speaker, if I could just clarify one of the
gentleman's points, we are not trying to bury this in any other bill.
We are not trying to hide anything. The Democrats would like a clear
up-or-down vote on this issue so that the American people can see what
is at stake. And that is what the Republican majority here is
jeopardizing. We do not know for sure yet, but it is extremely unlikely
that there will be a clear up-or-down vote because really we should
have voted on this before the election, not now.
Mr. MORAN of Virginia. Madam Speaker, the Republicans have once again
squandered opportunities, from international goodwill following the
terrorist attacks on our soil, to managing the federal budget. The
House leadership has compiled an abysmal record in the 108th Congress.
Their fiscal performance, I regret to say, is the worse in recent
memory.
This Republican leadership has presided over an historical reversal
from record surpluses to now record deficits. Their lack of fiscal
discipline has placed our economy in a precarious position and
straight-jacketed future policy options.
The most troubling aspect of this policy is that we are giving the
current generation a free lunch and running up debts that must be paid
for by our children. Each newborn child now inherits $85,000 in debt.
This so-called ``baby-tax'' will rapidly increase unless we restore
some sanity to our budgetary policies and practices.
The lack of a surplus makes it even more difficult to solve the
impending bankruptcy of Social Security and Medicare, or even to enact
a Republican tax reform agenda.
Pattern of Fiscal Mismanagement
Time and time again, this leadership has chosen to disregard its
fiscal responsibilities and ignore signs of impending fiscal crisis in
the hope that the problem will fix itself, or disappear altogether.
Clearly a policy of avoidance doesn't work, and it's certainly not
what the American people expect from its elected leaders. You can't
[[Page H9713]]
simply stick your head in the sand and expect market forces to balance
the national budget. That's the Congress' responsibility. I can cite
example after example illustrating how this leadership does not care
about our nation's fiscal state of affairs.
The pay-as-you-go rule, the budget enforcement mechanism devised to
reign in deficits, worked very effectively in the nineties to bring the
budget into balance and restore surpluses.
Then the 108th Congress is sworn in, PAYGO expires, and the House
leadership makes no serious attempt to restore it. It's no coincidence
that we've seen record high deficits in the last two years.
And now this Congress is backed into a corner and forced to take
action to raise the debt ceiling for the third time, another record.
Worrisome Signs in the International Currency & Debt Markets
The Bush administration and leadership in the House say deficits
don't matter, but in truth they do matter, and we are now staring
crisis in the face. There is near unanimity among economists that our
Nation's fiscal imbalance could put us in real economic peril.
In a study published just 2 weeks ago, well-known economists Maurice
Obstfeld and Kenneth Rogoff warned of what they called ``current
account collapse'' sparked by withdrawal of funds from international
investors. They said that this issue should be ``problem number one on
the President's international financial agenda.''
We must heed these warnings and get our financial house in order or
the delicate house of cards constructed by this administration and
congressional leadership will come tumbling to the ground, and all
Americans will pay a hefty price.
Already there are signs that the dollar's value is declining and
other currencies, primarily the Euro, are slowly replacing the dollar
as the favored currency among international investors. This week, the
dollar reached an all time low against the Euro--one Euro is now worth
$1.30.
Our Nation needs to borrow around $2 billion a day, and 92 percent of
debt sold over the last 4 years has gone to foreign countries. So
obviously we rely heavily on foreign investment. The question is what
happens if those countries abandon the dollar for another currency?
If foreign governments like China decide to divest its U.S. currency
holdings; the consequences would be serious, especially considering the
massive purchases by the Chinese Central Bank over the last few years.
In 2003, the dollar purchases by foreign central banks were $617
billion, compared to $352 billion the year before. Total reserves of
the emerging Asia countries rose by more than $350 billion between
March 2003 and March 2004. Japan and China alone currently hold close
to a trillion dollars of U.S. debt.
Many countries are now beginning to favor the Euro, which puts us in
a major dilemma and raises national security concerns. Foreign
governments are now our largest creditors. We may be the most powerful
nation in the world, but China, as the largest investor, has genuine
financial leverage. This poses a real threat to our national security
because the American economy now depends on the financial decisions of
foreign governments.
Unlike in years past, we cannot assume that no other currency comes
close to rivaling the dollar's strength. The emergence of the Euro
substantially changes the international currency market, because,
despite the relative soundness of the dollar, the Euro has become a
true alternative, backed by reasonably sound monetary policies. So the
largest holders of foreign currencies in Asia could change their
preference purely on the basis of financial, not political
considerations.
This scenario is unraveling right now. Asian countries believe that
our exceedingly high deficits are untenable and threaten the American
economy. They worry that more buying could in turn destabilize their
own economy. Another very real concern is that their financial leverage
could translate into political and diplomatic leverage.
Consequently, we increasingly find ourselves in a precarious
negotiating position. We have to convince these foreign governments
that the dollar is relatively strong and they should continue their
purchasing.
I would conclude by saying that in tonight's special order my
colleagues have discussed issues that need to be addressed in an honest
debate on the floor of the House. The election is over. It's time to
put aside wedge issues and start talking about fiscal problems that
could have a devastating effect on the American economy for years to
come.
The leadership has apparently backed away from its initial plan to
include the debt ceiling increase in an omnibus appropriations bill.
Hiding the debt ceiling increase in a larger bill would be a mistake
because it would undermine the purpose of the statutory requirement--
accountability. Members of Congress should explain their decision to
increase the national debt. The American people deserve to know what's
going on.
We've heard plenty about cultural values in the last few weeks, and I
think we get it now. But Congress cannot continue to simply ignore
mounting fiscal problems, and expect they will go away. Because they
will not. And I promise you that when the ``you know what'' hits the
fan and we're facing a crisis, the American people will put aside their
cultural differences in favor of one overriding value: economic
security.
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