[Congressional Record Volume 157, Number 36 (Thursday, March 10, 2011)]
[Senate]
[Pages S1521-S1522]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             FISCAL CRISIS

  Mr. SESSIONS. Mr. President, we had two important votes yesterday on 
what we are going to do about the surging debt this Nation is incurring 
and the dangers that debt poses to the future health of our economy, 
the prosperity of our people, and the employment of our people.
  We had a debt crisis, a financial crisis in 2007, that we still have 
not recovered from. It damaged us. It damaged American individuals. 
There are people unemployed in large numbers because of that. We have 
not yet recovered from it. We have some growth, but we have not yet 
come out of it. We have to deal with it in a serious way.
  So the proposal was, as passed by the House, to reduce the spending 
for the rest of the 7 months in this fiscal year ending September 30 by 
$61 billion. Our colleagues in the Senate basically proposed to do 
nothing, a $4.6 billion reduction in spending over the rest of this 
fiscal year. That is an unacceptable number. Perhaps we can disagree 
over where cuts ought to occur, but it is critically important at this 
time in history, as I will discuss, that we take real action that sends 
a message and actually saves money, not Washington speak about saving 
money, but real savings in money.
  We can do that. Every city, county, and State is doing that all over 
the country, and far bigger reductions in spending than we are 
discussing here. So the House proposal was to reduce discretionary 
spending $61 billion, which is about a 6-percent reduction in the 
planned spending level. That is not going to destroy our country. It is 
still well above the levels we were spending in 2008. But that $61 
billion, when calculated over 10 years because it reduces the baseline 
of our government spending, would calculate a net savings of $862 
billion, counting interest, because it is that $61 billion every year 
plus the interest. We pay interest on the debt we are running up.
  We started out projecting a $1.3 trillion deficit this year, the 
largest in the history of the Republic. But now the scores have gone 
up, and we are looking at over 1.6. We spend $3.8 trillion, but we are 
bringing in only $2.2 trillion. This is why 40 percent of what we are 
spending this year is borrowed.
  We have an opportunity now; this CR is it. We need to reduce spending 
now. People say, well, we can wait. We do not want to reduce spending 
for some of our favorite programs. This is damaging. We hear the old 
speeches that sound like they were given 20 years ago about any 
proposal to cut any spending level is seen as some total disaster, 
suggesting that the Republic will cease to exist. Of course, Americans 
know that is not so. They are not buying that. What world are we in?
  The President submitted a budget that basically does nothing but 
continue the increases in spending. We just had the State Department in 
the Budget Committee. I am ranking Republican on the Budget Committee. 
They are asking for a 10.5-percent increase in the State Department's 
spending. The Department of Education was in last week. They want 11 
percent. The Department of the Interior was in. The President proposes 
a 9.5-percent increase in their spending.
  Increases in 2012, that is their proposal. What world are they in? 
What about Transportation? Do you know how much they proposed 
increasing Transportation? Sixty-two percent. What world are we 
operating in? People say: You are just exaggerating. It is business as 
usual. We do not have to make any changes. We need to make investments, 
Sessions. This country needs to have more investments. The State 
Department had a 33-percent increase in 2 years. The Education 
Department had a 30-percent increase. I mean, when does it stop?
  If we reduce some of the increases that have been obtained, is that a 
real cut or is it just moving back to a more sane level? That is what 
it does. But when we do not have money, we have to make tough 
decisions.
  So, again, the question is, Are we just raising this politically? Are 
we just trying to make a political point or is there really something 
that is happening in America that is dangerous and requires us to take 
this step whether or not we want to take it? Are we required to? Is it 
real? Do we have a crisis that is dangerous for us?
  Mr. Erskine Bowles and Mr. Alan Simpson, Senator Simpson--Mr. Bowles 
was President Clinton's Chief of Staff--were appointed by President 
Obama to cochair the debt commission that did their report. This is 
what they said the day before yesterday, both of them. This was their 
signed joint statement to the Budget Committee the day before 
yesterday:

       We believe that if we do not take decisive action, our 
     Nation faces the most predictable economic crisis in its 
     history.

  Are these extremists? They spent months studying the crisis the 
Nation is in and what it takes to get us out of it. They proposed some 
substantial changes in what we are doing. Just yesterday they said: We 
are facing a crisis, the most predictable the Nation has ever faced in 
its history.
  In other words, we can see it coming. People say: Oh, it will not 
happen to us. Well, they should probably pick up the book, ``This Time 
Is Different,'' by Professor Rogoff at Harvard and Reinhart at 
Maryland, one of our other great universities. And their book proposes 
and shows how governments, sovereigns, get into financial trouble and 
how quickly bad things can happen. The title of it should tell you 
something. The title is, ``This Time Is Different.''
  The title suggests that all of these great financiers in these 
countries that ran up too much debt never thought it was going to 
happen to them, and when people raised questions, they said: Do not 
worry, this time is different.
  Well, is this an extreme book? Is this a dangerous book? They say 
when your debt, based on history and worldwide studies, reaches 90 
percent of your total economy, your total debt equals 90 percent of 
your GDP, your economy, on average, loses 1 percent growth and is at 
risk of a catastrophic adjustment, some sort of crisis.
  Well, what percent of GDP are we now? We have gone over 95 percent. 
The experts tell us by September 30, when this fiscal year ends, we 
will be at 100 percent of GDP. So is this some sort of fearmongering 
talk or are we just dealing with reality? Are we really facing a crisis 
we can see plainly in front of us? I suggest it is.
  Mr. Geithner, President Obama's Secretary of the Treasury--unlike his 
Budget Director who also testified before the Budget Committee, Mr. 
Geithner was more frank when asked: Do you agree with the Rogoff study? 
Is that a sound study? ``Yes, I believe it is.''
  Then he said this, frankly: ``I think it understates the risks.'' 
Understates the risk. And when asked about that, he said, basically, 
there can be systemic, immediate shocks that occur that are 
unpredictable just like in 2007 when all of a sudden we went from a 
boom to a bust, and as things happened in Greece, Ireland, and Iceland 
these things can happen in this modern world with electronic financial 
transfers very quickly.
  I believe we can prevent this. I believe we can prevent it. But we 
have to take action or we are heading in the wrong direction. Did you 
notice the news yesterday? Bill Gross, who runs the world's biggest 
bond fund at Pacific Investment Management, announced they had totally 
eliminated U.S. Government-related debt from their flagship fund, as 
the United States Government projected record deficits.
  So that is a big development, frankly. I mean, he manages more money 
than anybody in the world--I guess in the history of the world. He has 
eliminated government debt from the Total

[[Page S1522]]

Return Fund, and that was just announced.
  So is that something we should be concerned about? I think it is. 
Because who is going to buy our debt? Who will buy our Treasury bonds, 
now 10-year bonds, at 3.5 percent or so interest? People who get 
worried about their debt sell their bonds. Who is going to then buy 
them? Where are we going to get people to buy our bonds without paying 
higher and higher interest rates?
  Well, is our crisis coming upon us? Let me share with you the 
testimony that Mr. Simpson and Mr. Bowles gave to the Budget Committee 
just 2 days ago.
  This is what Mr. Bowles said, Cochairman appointed by President 
Obama. He is very worried.

       This problem is going to happen. It is a problem we're 
     going to have to face up to in maybe 2 years, maybe a little 
     less, maybe a little more.

  He is talking about a crisis. He said it is the most predictable 
crisis the Nation has ever faced. He is pleading with us to get off the 
unsustainable path we are on.
  What about Alan Simpson, the distinguished Senator from Wyoming who 
is so frank and articulate. He is also a delight to hear. He said:

       I think it will come before 2 years . . . I'm just saying 
     at some point, I think within a year, at the end of the year, 
     if they [the people who hold our debt] just thought you're 
     playing with fluff--5, 6, 7 percent of this hole--they're 
     going to say, ``I want some money for my paper.'' And if 
     there is anything money guys love, it's money. And money 
     guys, when they start losing money, panic. And let me tell 
     you, they will. It won't matter what the government does, 
     they'll say, ``I want my money, I've got a better place for 
     it . . . '' Just saying for me, it won't be a year.

  Mr. President, we have a time agreement?
  The PRESIDING OFFICER. The Senator's time expired some time ago. The 
time is limited to 10 minutes.
  Mr. SESSIONS. I thank the Chair. I ask unanimous consent for 2 
additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SESSIONS. This is from the Washington Post, late January:

       In an analysis of the U.S. debt last week, S&P analysts 
     said the unthinkable could occur unless U.S. officials take 
     action.

  They go on to say:

       U.S. officials must act quickly to control government 
     deficits or face slower growth and even more difficult 
     choices in the future, the International Monetary Fund said 
     Thursday in a report criticizing the tepid U.S. response to 
     its rising debt.

  Admiral Mullen, Chairman of Joint Chiefs:

       I believe that our debt is the greatest threat to our 
     national security.

  Secretary Hillary Clinton, Secretary of State:

       Secretary of State Hillary Clinton waded into the nation's 
     fiscal debate Wednesday, calling the expected $1.3 trillion 
     U.S. deficit ``a message of weakness internationally.''

  Clinton says the deficit is a national security threat. It was $1.3 
trillion when she said that in September. The projected deficit now is 
$1.6 trillion-plus. Secretary Geithner said the same.
  We have had a debate. We had 10 Democrats defect from the Democratic 
bill that did nothing, saying we needed to go further. We had two 
Republicans defect. One Independent defected, probably thought it was 
cutting too much. But the majority of Members seemed to be saying we 
need to reduce more.
  I suggest that our leaders get together. If there is a disagreement 
about where the reductions ought to occur, so be it. Let's work that 
out. But we need to reduce spending significantly. The House number is 
a minimal amount. I believe it will send a message to the Bill Grosses 
of the world who move billions of dollars around that this country is 
willing to take action, even tough action, to get off this 
unsustainable path.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  (The remarks of Mr. Sanders pertaining to the introduction of S. 552 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  Mr. SANDERS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Alaska.
  Ms. MURKOWSKI. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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