[Congressional Record Volume 157, Number 60 (Thursday, May 5, 2011)]
[Senate]
[Pages S2709-S2712]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE DEBT CEILING
Mr. THUNE. Mr. President, at some time in the not too distant
future--there is some speculation about exactly when--our country will
be dealing with the issue of exceeding our borrowing authority. In
other words, we have maxed out our credit card. That would be the
equivalent for the average family when they can't borrow any more
money.
So what happens in that event is that Congress has to take action.
Congress essentially has to raise the country's borrowing authority. It
is called raising the debt limit. We are coming up on that point in
time. It could happen sometime in the July-August timeframe. There is
some uncertainty as to exactly when that happens, but the point is it
will happen.
The reason it will happen is because we have now accumulated $14.3
trillion in debt, and we have hit the limit, the cap, that exists today
on our borrowing authority.
Now, $14.3 trillion in the abstract is hard for most people to wrap
their heads around because it is such a massive number. If we translate
it into individual terms, it amounts to about $46,000 for every single
person in the United States, which in and of itself is an astonishing
amount.
Our projected deficit this year is $1.425 trillion, which is the
largest ever, in nominal terms. According to CBO, it is the second
largest as a share of the economy, literally, since World War II. That
is as much debt as we ran up from our Nation's founding, going back to
the origin of this country up until 1984 or the equivalent, just in
this one single year that we are going to rack up in terms of the
deficit. The interest on that amounts to about $213 billion every
single year or nearly $700 for every person in the United States. That
is assuming interest rates stay at these historically low levels.
While the deficit spending is, in fact, something that will merely
delay taxes in the future that somebody is going to have to pay, at
some point this is going to have to be paid off, and that burden, in
all likelihood, is going to fall on our children and grandchildren. But
it is not just something we will have to deal with down the road
because the implications today, the real-time implications of this
level of spending and debt, are very real for the economy.
There is a great body of research that has been done. A study done by
economists Reinhart and Rogoff found that countries with a debt-to-GDP
ratio of more than 90 percent grew at 1 percentage point less than they
would have otherwise. That is a body of research that looks at nations
over the last half century. It even goes back further than that but
particularly in the last half century and particularly developed
nations that have gotten up to that level of debt that exceeds 90
percent of GDP. That is where we are today, 93 percent government debt-
to-GDP ratio here in the United States.
If you take that assumption that anytime you reach that debt level
and you sustain it over a long period of time, it costs you a single
percentage point of economic growth every single year, according to the
President's own economic team, that results in the loss of about 1
million jobs. If you think about the real-time implications of this
level of spending and debt, it means we are losing about 1 million jobs
every single year in the economy.
You cannot say this is something down the road, that we can continue
to kick the can down the road. The fact is we are running out of road.
We keep kicking the can, but we are at the end of the road. If we do
not take steps now, not only is it going to put a crushing burden of
debt on future generations and jeopardize the very foundation of our
economy, it is going to have real-time implications today, not just in
the future.
I suggest that as we look at this issue of the debt limit coming up,
it presents a unique opportunity. I hope my colleagues on both sides of
the aisle, Republicans and Democrats, can come together. If we do not
bring this debt-to-GDP ratio back down, we are going to continue to
suffer from these job losses, and the impact of that is really very
clear.
When the government is out there borrowing more money, it crowds out
private investment, so there is less money for private companies and
individuals to invest in companies, equipment, plants, housing,
training, all those sorts of things, and it spends money on government,
on things that are probably less efficient, less necessary, more
duplicative, oftentimes downright wasteful when it comes to the
programs and the projects that end up being funded. It means instead of
investing, having funding for new factories for people to work in, we
have more bureaucrats in places such as the EPA or the National Labor
Relations Board who are coming up with all kinds of new regulations
that are making it more difficult for our small businesses to create
jobs. We have more unnecessary Federal property being underutilized
that the private sector could use more efficiently.
Unfortunately, the risk to our economy that comes from this out-of-
control spending is more than just that, it is more than just the
crowding out of private sector investment and the stifling effects of
government regulation. We are beginning to face the very real
possibility that our country could face a fiscal crisis. Former
Chairman Greenspan has suggested that the risk of this occurring in the
next few years is nearly 50-50--an alarming thought. Likewise, Standard
& Poor's recently warned of a possible downgrade to the U.S. credit
rating in the next 2 to 3 years, when they came out with their
assessment of U.S. credit, and said they have attached a negative
assessment to it. In most cases--at least in a majority of the cases--
within a year's time, that leads to a downgrade of credit rating. That
would be disastrous for a country such as ours which has always taken
great pride and has been the rock out there when it comes to an AAA
credit rating.
It is notoriously difficult to predict ultimately when a debt crisis
might occur, but it would be inexcusable for us to continue to spend at
these elevated levels without assuming there is even the slightest hint
of a risk that this could be very devastating to our country, let alone
that risk could be very high. But if it were to occur, we would need
drastic spending cuts to drag ourselves out of this fiscal crisis,
spending cuts that by today's standards would probably be unimaginable.
But the worst effect of this would be the deep recession it would
throw our economy into. Think about that. If we did have a debt crisis
in this country, what would that mean? For most people, it is going to
mean higher interest rates, it is going to lead to countless job
losses, pay cuts for a lot of people if you have job losses, and
probably significant loss of savings, which would take a terrible toll
on the American people. Those are many of the implications of a debt
crisis and the implications it would have on the economy--starting, as
I said earlier, with higher interest rates. It would make it more
difficult for people to borrow money for a home, for a car, for their
business. All those sorts of things would be impacted.
But that does not have to be the case. The reason it does not is
because most experts have suggested--and it is really true--that this
is the most predictable economic crisis we have ever had. It is not as
though we don't see it coming. You see all the warning signs out there.
You see all the red flags out
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there. It is looking us right in the face. We have an opportunity to do
something about it, but it will require that we have the political
courage to take on this issue of Federal spending.
Next week, we are going to have an opportunity in the Budget
Committee to mark up the 2012 budget, which, incidentally--the budget
year starts in a mere 5 months from now. I hope this budget will focus
primarily on cutting spending because I think that is the primary
driver of our deficits. I am concerned that, instead, it will merely
continue to spend too much, borrow too much, and tax too much.
Of course, last year, even though there was a markup in the Budget
Committee, there was never a budget brought to the floor of the Senate.
The Congress never passed a budget. Nor was there one brought to the
floor of the House of Representatives. There was not even a vote on a
budget in the House or the Senate last year. We have a $3.8 trillion
enterprise called the Federal Government that did not even pass a
budget.
I believe the most fundamental responsibility we have to the
taxpayers of this country is to come up with a plan about how we are
going to responsibly use their tax dollars, to indicate to them that
they can expect a good return from those tax dollars by the way we do
our budget. Frankly, that did not happen last year. I certainly hope it
does this year, but it is going to take some leadership here in the
Congress. In the House of Representatives, the Republicans have the
majority. They did pass a budget out of the House. I hope the Senate
Democrats here will also put a budget on the floor that we will be able
to vote on and amend and have a meaningful discussion about spending
and debt and what we are going to do to get this country back on a path
of fiscal sustainability.
The President, I think you could argue, punted when it comes to the
issue of spending and debt, first by saying: I am going to appoint a
commission to look at this issue. The economists studied it for several
months and came out with some findings and ultimately a report in which
they put forward a series of recommendations for dealing with the
fiscal crisis. The President sort of distanced himself from those
recommendations, chose not to take those or to really engage with that
commission and its recommendations, and then subsequent to that
submitted a budget this year which, ironically, did not do anything to
address the long-term issues of spending and debt but, rather,
increased spending over the next decade, massively increased the debt,
and increased a lot of taxes on small businesses in this country that
are job creators. So you did have this issue: borrowing, spending, and
debt continually being advanced and put forward by this President and
by many of our colleagues on the other side of the aisle here in the
Congress.
The House Republicans put out a proposal that has been criticized by
some, but at least they have put forward a plan. They have engaged the
issue of what we are going to do to rein in out-of-control spending
both in the near term but also in the longer term with the entitlement
programs--Social Security and Medicare and Medicaid--which represent 60
percent of all Federal spending. If we do not rein those programs in or
come up with a way of reforming those programs so they are viable, when
the 80 million baby boomers retire, we are headed for a train wreck. It
is inevitable. You cannot, with the numbers facing us and the kinds of
deficits we are already running, the amount of debt we have already
accumulated, in any way assume we can get out of this crisis absent
taking on these issues and coming up with meaningful reforms for Social
Security, Medicare, and Medicaid. Whether or not you subscribe to or
like the proposals that were put forward by the House Republicans, at
least there is a plan out there.
There are a number of suggestions being bandied around here in the
Senate. There is a gang of 6 that is looking at some recommendations.
As I said, there is going to be a markup we think next week in the
Senate Budget Committee. There is now this new commission the President
has appointed to look at the issue of, as we approach the vote on the
debt limit, what we can do to address spending and debt. But, frankly,
we do not have at this point anything in front of us that does deal
directly or meaningfully with this issue of out-of-control spending or
debt. I hope some of these discussions are fruitful, that they lead to
results, and that they at least put alternatives out there we can
debate and discuss. But as of right now, the only proposal we have in
front of us is the one put forward by the House Republicans. Again,
whether or not you like it, it has created a discussion in this country
about what we are going to do to fix our fiscal problems.
I believe we ought to at a minimum go back to 2008 spending levels
because if we did that, it would take us back to a time before we had
these massive runups or increases in discretionary spending. In the
last 2 years, we have seen discretionary spending increase by well over
20 percent at a time when inflation in the overall economy was a mere 2
percent. So Federal spending was increasing literally 10 times the rate
of inflation over the last 2 years. It makes sense to me that in this
fiscal environment where our deficits are literally about $1.5 trillion
every single year as far as the eye can see, the least we can do is
restrain spending and cut it back to that level we were at in 2008,
before we had this massive runup in spending. I think that is a
starting point.
I believe we also ought to be looking at the entitlement programs,
which, as I said, have trillions of dollars literally of unfunded
liabilities. Medicare alone is a $38 trillion unfunded liability. We
are currently on a path where that will bankrupt the Nation if we do
not make changes.
It strikes me, at least, that you have not only some issues that deal
with the near-term spending issues but also those longer term spending
issues. In the near term, as I said, if we went back to 2008 levels, we
would at least tighten our belts a little bit in a way that I think
most Americans would find to be responsible. But the longer term issue,
these entitlement programs, have to be taken up.
There are a series of proposals that would deal with that, one of
which is a balanced budget amendment to the Constitution. That,
frankly, is something I support. I have supported it since I was in the
House of Representatives; I have been a cosponsor of that. In fact,
when I first got to Congress back in 1997, there was a vote here in the
Senate on a balanced budget amendment which failed by one vote. It
would take 67 votes in the Senate--two-thirds of the Senate--to approve
a balanced budget amendment. It failed by one vote.
I assume, had it passed at that time in the Senate, we would have
been able to pass it in the House of Representatives because we did
have large majorities and we could have sent it on to the States. It
takes 38 States to ratify it, but since most States already have
balanced budget amendments in their constitutions, I suspect they would
like to see their Federal Government operate with the same sort of
fiscal discipline. But it did not pass at that time. I cannot imagine
how different our world would be today had it passed 15 years ago and
how different this fiscal picture would have looked because it would
have put a straitjacket on Washington, DC--something we desperately
need. Congress needs discipline imposed upon it. It has not
demonstrated historically the capability to deal with these fiscal
issues absent some sort of mechanism that puts a straitjacket on the
Congress so it cannot spend money.
The balanced budget amendment is something I think we ought to have a
debate about, and I hope we do. In the lead-up to the vote on this debt
limit, this is one of the proposals we hope to have considered.
As I said before, there are so many States around the country that
have balanced budget amendments to their constitutions. Our State of
South Dakota is a good example. In the State of South Dakota, the
legislature cannot go home until the budget is balanced. That is a
requirement. Many States across the country have that same sort of
requirement. It is an imperative that requires these States every
single year to put their books in order. That is something which is
desperately lacking here in Washington, DC, and I hope, again, we could
enact a balanced budget amendment.
There are several that have been proposed. I am a cosponsor of a
couple of
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different versions of that, but we have 47 Republicans who are on a
balanced budget amendment, and I hope our colleagues on the other side
will join us in at least bringing that to a vote, putting it before the
American people, and engaging them in a debate about how best to solve
our Nation's fiscal problems. I think they would agree that a balanced
budget amendment is a very simple, straightforward way in which to do
that.
I also believe we ought to reform our budget process because it is
clearly broken. We have a dysfunctional budget process when we cannot
pass a budget, when we have a $3.8 trillion enterprise such as the
Federal Government and we do not even pass a budget. In most years,
typically, we have--if there is a budget that passes, the
appropriations bills that follow it are supposed to be completed by the
end of the fiscal year, on September 30. Those deadlines routinely are
missed.
Typically, what happens is we end up with a big so-called omnibus
spending bill at the end of the year that wraps all the various
appropriations bills into one massive spending bill, which I do not
believe serves the taxpayers very well. It certainly does not allow us,
as Members of Congress, to do the appropriate oversight that we should
do on various individual agencies of government.
When we throw it all into one big spending bill, as so often happens
around here, we lose the transparency and the accountability that is
necessary to an effective functioning government. So I believe we ought
to reform the budget process.
One of the ways I would do that is to go to a biennial budget.
Instead of passing a budget every single year, we would do it every
other year. We do it in the odd-numbered years, the years when people
are not running for reelection. Because what happens in a year when
people are running for reelection is they decide the best way to gain
the favor of the voters is to provide more money for this particular
program or this program or this constituency or that constituency. As a
consequence, there is a momentum to spend more and more money. It
strike me that one of the ways we could address that is to do a budget
in the odd-numbered years when Members of Congress are not running for
reelection. Then, in the even-numbered years, when they are, we look at
ways of not how can we spend money but how can we save money. We do
more oversight, which is something that is desperately lacking, because
many of these Federal programs and agencies so often times sort of do
their own thing, absent the appropriate level of oversight. I believe
we have a responsibility, as Members of Congress, with whom the
legislative responsibility, the power of the purse is entrusted by the
Constitution, to do the right types of oversight.
I came across recently a good example when the Government
Accountability Office came out with a report. In that report they
referenced several different programs. In fact, they dealt with about
one-third of all Federal spending. But in examining that one-third of
Federal spending, they concluded that there are all kinds of
duplications and redundancies in Federal spending.
I will just give a couple by way of example. They discovered that
there are 82 programs, spread across 20 different Federal agencies,
that deal with the issue of teacher training, that are designed to
focus on the issue of teacher training.
Well, I suspect it is arguable about whether that is something the
Federal Government ought to be doing in the first place, but it is
certainly--I think any American would agree--absolutely insane to have
82 different programs in 20 different agencies doing the same thing.
Something else they discovered was that there are 56 Federal programs
that are focused on the issue of teaching financial literacy. I have
said this before, and I mean it sincerely, of all places, Washington,
DC, should not be leading or doing instructions on financial literacy.
But that being said, it is 56 programs spread across 10 different
agencies. Do we need that?
That is the kind of thing that gets lost. That is the duplication and
inefficiency and waste we all talk about. Yet, because we do not do the
oversight we need to, many of these things just continue year after
year.
Going to a biennial budget, where every other year we do a budget and
then in the even-numbered years, the election years, we are doing
oversight, we might actually think of ways to save money for the
taxpayers as opposed to spending it.
So a biennial budget, to me, makes sense. I would make the budget
resolution we pass binding because right now it is not. As a
consequence, it often gets waived. I believe we need to have buy-in
from the President. Right now, the budget resolution is passed by the
House and the Senate, but the White House does not engage on that. So
we do not have teeth in this thing that holds everybody accountable
when it comes to spending. Too often that gets waived.
We need to change the way we do things around here with regard to
declaring emergencies. Right now, if we want to spend money outside the
parameters of the budget, everybody says: Well, it is an emergency. So
declaring an emergency has become the norm rather than the exception.
It has become the routine in the Congress. We have all these emergency
designations which allow Congress to spend and spend. Again, there are
not any constraints. It is high time we change that.
So I would make a number of changes in our budget process, which I
think would lead to more transparency, more accountability, a more
efficient, better-run Federal Government.
That being said, it is not the Federal Government that is going to
lead us back to an economic recovery and getting people back to work.
It is the hard-working entrepreneurs, it is the small businesses, it is
the people in this country who roll up their sleeves every day and go
to work trying to make this country stronger and more prosperous.
We are blessed because we have a nation that was founded on some core
principles, one of which is economic freedom. We believe in free
enterprise and free markets. It is a system that has worked
extraordinarily well for this country. Look anywhere else around the
world to try and find a rival to what the hard-working entrepreneurs in
this country and those basic core economic principles have been able to
accomplish. We cannot find one.
It is because of those four principles and the incredible ingenuity,
innovation, creativity, and hard work of the American people that we
have the greatest economy in the world. But that economy, as I said, is
very much in jeopardy if Washington does not get its spending habits
under control. Because we continue to crowd out private investment, we
continue to make it harder for entrepreneurs to create jobs.
As we talk about the whole issue of spending and debt, one final
point I would like to make--because there is this discussion right now
about whether there ought to be tax increases. Everybody says: Well,
revenues are down relative to historical averages. That is true. But
one of the reasons I believe revenues are down is because there are
literally trillions of dollars sitting on the sidelines in this country
that are not invested because of the economic uncertainty based upon
policies coming out of Washington--uncertainty about tax policy,
uncertainty about regulations.
We have this tax and regulatory environment that is paralyzing the
American economy. So businesses out there that have funds they could
deploy, capital they could put to work in this country, are not doing
it because they are worried about what Washington might do next.
We have tax policy that is going to expire at the end of 2012. It is
very hard to make decisions when tax policies are temporary. It is very
hard to make decisions when you do not know what that regulatory agency
is going to do to you next. They have consistently--these regulatory
agencies--come up with more and more ideas about how to make it more
costly, more expensive, more difficult to do business in this country.
I have alluded to a couple. The EPA is a good case in point. It is
one that comes into play a lot in my State of South Dakota because we
are primarily an ag economy and small businesses. Many of those
policies are directed at production agriculture and energy development
and all those sorts of things
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that allow our economy in my State to grow and to prosper.
So I think one of the reasons tax revenues are down, people are not
investing. When they are not investing, they are not turning those
resources over. They are not taking realizations, and they are not
paying taxes. We need to get investment capital put to work. We need to
get people put back to work. The best way to do that is to provide
economic certainty: tax policies, regulatory policies that are
reasonable and that provide incentives, not disincentives, for
investment.
Today, we have tax and regulatory policies that are doing absolutely
the opposite. They are discouraging investment, and, as a consequence,
I think we have a lower level of revenues. But the real problem, the
real problem, is not revenues, it is spending. That is abundantly
clear.
If we look at where we have been for the last 40 years in terms of
what we spend as a percentage of our overall economy, that average is
about 20.6 percent. That is a 40-year average, historical average, we
spend on our Federal Government as a percentage of our entire economy.
This year we will spend 25.3 percent of our entire economy on just the
Federal Government.
That does not include spending on State and local governments. When
we add that up, it is over 40 percent of every $1 we spend in this
country is spent on government. So what we see is the government is
growing relative to our total economy, and the private economy, those
folks out there who are creating the jobs in our private economy, is
shrinking relative to the size of the government. That is a trend we
have to reverse. It starts with getting spending under control. This is
not a revenue problem. This is not a tax problem. As much as many of my
colleagues would like to make it that, we flatly cannot look the facts
in the face and come to any other conclusion but that spending in
Washington is out of control, it has to be reined in.
We have to attack the issue, not only of discretionary spending--the
part we annually appropriate for--but these entitlement programs which
if not addressed are not only going to bankrupt the country but ensure
that there is not a Medicare Program and a Social Security Program
available to future generations of Americans.
These are very tumultuous times. There is a lot of uncertainty. I
think the jobs numbers that came out this morning again point to how
fragile this economic recovery is. It is so dependent upon good, sound
policies coming out of Washington. For better or worse, small
businesses, entrepreneurs now, unfortunately, tend to be partners with
Washington, DC, because there is so much policy coming out of here,
whether it is tax policy, regulatory policy, that impacts their bottom
lines every single day.
We need to get out of the way to keep those taxes low, to get Federal
spending under control, to make sure the regulatory framework in which
our businesses operate represents the minimum level and not the maximum
level that we can do to make it more difficult for small businesses to
grow and to create jobs. If we can do those types of things, address
the issue of spending and debt, take it on in a meaningful way, deal
with this issue of reforming our Tax Code and making sure our tax rates
stay low on businesses in this country and make sure regulations and
regulatory policies coming out of Washington, DC, are not the
impediment they are today to investment and job creation, I think we
can get this country back on track.
But that is where it starts. If we want to create jobs, if we want to
grow this economy, if we want to make it more prosperous and stronger
for future generations, those are the steps, in my view, we have to
take. I hope we get started soon. I do not think we can afford to wait.
A lot of people around here think these are all political exercises
that we will go through the hoops and the motions, and we will wait to
solve this until after the next election. We cannot afford to wait. The
time is now. If we do not do it, we are going to put in great peril
future generations and their ability to enjoy the same standard of
living, the same quality of life we have enjoyed.
That is not fair to them. That is why I believe the time to start is
now and the time to get this budget process--not only the reforms of
the process but the spending restraints in place--is today.
I yield the floor.
The PRESIDING OFFICER (Mrs. McCaskill). The Senator from Ohio.
Mr. BROWN of Ohio. Madam President, I was presiding, before the
senior Senator from Missouri took my place, and was listening to two of
the last three speakers talk about their budget religion, if you will.
I think about this. I think we have to look at a little bit of his
history.
I do not think I need a lecture on balancing a budget. I was in the
House of Representatives in the 1990s when, without one Republican
vote, we passed President Clinton's budget. We had a huge budget
deficit in those days. That budget began us on the path to a balanced
budget.
I supported a balanced budget amendment in the mid-1990s. By 2000,
the year President Clinton left office, we had the biggest budget
surplus in American history. Then, in 2001, at the push of President
Bush and his Republican colleagues in both Houses, this Congress passed
a major tax cut, mostly for the wealthy in 2001; another major tax cut,
mostly for the wealthy in 2003, both of which I voted against.
President Bush, with intelligence that was not especially sound--
being gentle about it--took us into a war with Iraq, did not pay for
it; took us into a war with Afghanistan, did not pay for it. I voted
against the war in Iraq.
In 2003 or 2004, he pushed through Congress by one vote--I remember I
was in the House of Representatives opposing that bill, when they kept
the rollcall open for 2 hours or longer that night. President Bush was
on the phone with recalcitrant members of his party in the House of
Representatives--pushed through a Medicare bill that was a bailout to
the drug and insurance companies in the name of Medicare privatization,
without paying for it.
President Bush leaves office then, leaving the largest budget deficit
in our history--going from the largest budget surplus, written, by and
large, by the Democrats, because Republicans did not play ball with us
during most of the 1990s. Then, after President Bush and the Republican
leadership in many of those years, House-Senate, President Bush left us
with the biggest budget deficit in history.
When I hear this revisionist history on the Senate floor--I was not
even going to talk about this today. But I heard two colleagues, for
whom I have respect, one from Alabama, one from South Dakota, talk
about this budget deficit in a way that simply is historically
inaccurate--in the name of this deficit, and we have to deal with this
deficit.
I know the Presiding Officer is focused on that. A lot of us are
focused on that. We have to deal with this deficit. But you don't do
the same thing over again where you give big tax cuts to the wealthiest
Americans and then privatize Medicare. That is what they are doing.
They are cutting health care, saying it is not sustainable, whatever
that means, and giving major tax cuts to the rich, and we are saying
that is not sustainable.
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