[Congressional Record Volume 155, Number 71 (Monday, May 11, 2009)]
[Senate]
[Pages S5309-S5311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              FEDERAL DEBT

  Mr. KYL. Mr. President, we are soon going to be debating a bill that 
would place limits on the interest rate increases that credit card 
companies can levy on their debtholders. I look forward to debating the 
effects this bill will have on American families.
  But before we do that, I wish to consider the debt that the Federal 
Government is accruing--via the budget and stimulus spending--on the 
Nation's credit card. That is the debt that all American families will 
be responsible for repaying because, as it turns out, the comparisons 
between what you owe on your own credit card--the kind of bills you run 
up on your family credit card--are actually not very different from the 
debt we are running up on the Federal credit card, except, of course, 
that the Federal debt is much bigger.

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But the reality is that you owe both: your family credit card debt and 
your portion of the national debt.
  President Obama's budget puts us on a course to acquire debt that 
will reach 82.4 percent of the gross domestic product by the year 2019. 
What does that mean? The first point is that the debt is not interest 
free. There is debt interest charged on that just the same as on our 
personal credit cards. In fact, from Sunday's Washington Post, there is 
an article called ``The President's Budget'' and in it the Post says 
the following:

       The budget relies on so much borrowing that it will cost 
     taxpayers more than $4 trillion just to cover interest 
     payments for the next 10 years--more than twice what the 
     federal government will spend on education, energy, homeland 
     security, and veterans combined.

  Mr. President, $4 trillion in interest on this debt--just for the 
next 10 years.
  The Government will begin--as a result of the need to pay this back, 
starting in 2013 we will be paying more than $1 billion per day on 
finance charges to the people who hold this Federal debt.
  Imagine a billion dollars a day in interest payments. I meant U.S. 
debt. A billion dollars a day in interest payments equates to $3.3 
million a day for every American. Think about that--$3.3 million a day 
to finance the debt for every American citizen.
  Can a family play by these same rules and get away with debt that 
would creep up to 84.2 percent of their total income? Let's use a 
specific, typical example. A family in my State of Arizona earns an 
average income of $47,215 a year. Following the example of the 
President's budget, this family would accrue nearly $38,000 in credit 
card debt to pay for the things it wants. Again, that is a $47,000 
income and $38,000 in credit card debt. That is the same percentage of 
the family's income that the Federal Government is acquiring as a 
percent of the Federal income, our national income.
  What would that family's situation be like? First, let's focus on 
these hefty interest payments that I talked about. Say that the 
family's credit card has a typical annual rate of 10 percent, which 
would cost $3,800 a year or $316 a month. If the family misses a 
payment or two, the interest rate can shoot up to 20 or 30 percent a 
year. That means the family could be spending as much as $11,200 a year 
just on interest. That is nearly a third of its total debt and nearly a 
quarter of its total income--just on interest alone. That is owed in 
addition to the monthly minimum payments for the principal borrowed. 
Just as the Government has to, the family probably would need to borrow 
more to get by, and the downward spiral would get worse and worse.
  Needless to say, this kind of debt is not sustainable--not for the 
family or the Federal Government. It would rapidly lower the family's 
standard of living. In most cases, it would bankrupt them. Beginning to 
chip away at that kind of debt would require real sacrifice--not just 
giving up nonessential spending, such as going to the movies or going 
out to dinner or going to the zoo but fundamental choices that would 
significantly lower the family's standard of living.
  A family with such massive debt would also be considered a big risk 
for other lenders, so it would be very difficult to go out and get more 
credit or a loan. This is the situation we are getting into with China, 
which currently holds almost 10 percent of our Nation's debt. The 
Chinese are saying to us: We are not sure you are a good credit risk in 
the future or that we want to lend you any more money. We are relying 
on the Chinese to continue buying that debt. But in mid-March, Chinese 
Premier Wen Jiabao voiced concerns about U.S. Government bond holdings. 
He said:

       We have lent huge amounts of money to the United States. Of 
     course we are concerned about the safety of our assets. To be 
     honest, I am a little bit worried, and I would like to . . . 
     call on the United States to honor its word and remain a 
     credible nation and ensure the safety of Chinese assets.

  Of course, this is exactly how credit works. Borrow massive amounts 
of money, and you are in over your head. A huge chunk of your income is 
reserved for debt repayments and interest, leaving you with little 
money to get by or for discretionary spending. You continue to borrow 
more, and your creditors probably get very nervous. Pretty soon, they 
may cease lending to you or hike up your interest rates to hedge their 
additional risk. The only way to get back on track is to stop 
spending--and that is if you can afford to get back on track by just 
stopping spending and not having to borrow more or taking bankruptcy.
  That is a choice the U.S. Government doesn't have. Yet there are no 
plans in Washington to halt the out-of-control spending. The massive 
amount of debt we are accumulating in entitlement obligations alone is 
more than can be sustained. These are things such as Social Security, 
Medicaid, and Medicare. We say that is an obligation we cannot default 
on. Yet we also know we cannot continue to fund that obligation. As the 
President's head of the Office of Management and Budget has said, 
continued debts of the kind we are talking about are unsustainable. 
There have been some minor reductions in spending noted in the budget. 
Some are in the area of defense, which is perhaps not the best area to 
cut back. But the minor amount of spending reduction doesn't go nearly 
far enough when we are talking about multiple trillions of dollars in 
spending and debt--$4 trillion just in debt service in the next 10 
years alone.
  The overwhelming majority of American families, of course, don't 
engage in this kind of reckless borrowing and spending. They cannot. 
They have to make hard decisions to determine what they can afford to 
do.
  Washington needs to do the same. These are hard choices. We need to 
make hard choices. The editorial in the Washington Post from last 
Sunday made the same point. Again, the title was: ``The President's 
budget, Leaving the hard choices for the next one.'' It notes that when 
the President was campaigning, he said:

       ``We can no longer afford to leave the hard choices for the 
     next budget, the next administration, or the next 
     generation,'' declared President Barack Obama last week as he 
     unveiled his budget.

  As the Post notes:

       We, yes, but that is exactly what he does.

  They conclude that:

       We just hope that it is only until the next budget rather 
     than the next administration.

  The bottom line is, the budget sent to us by the President doesn't 
tackle the big issues, it doesn't reduce spending, it doesn't even cut 
existing programs substantially, with the net result that we are going 
to be taking on debt that will require financing of $4 trillion over 
the next 10 years. As was noted, that is not sustainable. We cannot pay 
for that, just as a family who makes $47,000 a year cannot afford to 
take on $38,000 in debt. That is the relative proportion.
  One more time, the amount of debt we are taking on compared to our 
national income is the same ratio as a family making $47,000 taking on 
$38,000 of debt on their credit card. I am not talking about a 30-year 
mortgage on the house but something that has to be paid back at the end 
of the month. And if you don't pay it, your interest rate goes up to 25 
or 30 percent. That is simply not sustainable.
  I hope that by putting this into the context of a real family budget, 
it is clear to people this isn't some hypothetical, unrealistic 
comparison. When we take on this much debt at the Federal Government 
level, there are real consequences. When you talk about $3.3 million a 
day for each citizen of the United States to repay in interest alone, 
you see the magnitude of what we are taking on. We have never done this 
before in the history of the country. There is no experience of how we 
would possibly deal with this. This one budget, during this one 10-year 
window, accumulates more debt than all the debt in the United States in 
our entire history, from George Washington all the way through George 
W. Bush. In that 220-year history, we have less debt than is 
represented in this one budget. That is unsustainable.
  The American people cannot make enough money to repay that amount of 
money. Our standard of living will be diminished substantially. The 
only way out of it is to reduce the amount of spending in the future. 
We can start with that right now. We don't have to start after next 
year. We can actually start with it this year.
  I ask my colleagues, as we talk about the budget the President has 
announced, as we start working on the appropriations bills that will be 
coming from the Appropriations Committee, that we stop and think about

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the amount of debt we are imposing on ourselves, our kids, and our 
grandkids. That debt will come due more quickly than we think. The 
consequences could be dire.
  Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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