[Congressional Record Volume 157, Number 113 (Tuesday, July 26, 2011)]
[Senate]
[Pages S4900-S4903]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          ECONOMIC STEWARDSHIP

  Mr. KERRY. Madam President, this is a dangerous time for our country. 
What amazes me, for the time I have been here and privileged to serve 
the citizens of Massachusetts for 27 years now, is that never have I 
seen a moment where the consequences of inaction can have as 
potentially damaging an effect on our country as the consequences may 
if we are downgraded in our debt--just downgraded, not even 
defaulting--yet some of our colleagues in the Congress, particularly on 
the other side of the aisle in the House, are, despite all the 
evidence, all of the judgments made by knowledgeable people--by 
economists, by business people, by outside observers, about the danger 
and inadequacy of what they are proposing--despite that, they are 
insisting, not as a matter of common sense or as a matter of logical 
economic policy but insisting as a matter of politics and ideology on 
holding the entire economy of our country hostage and be damned with 
the risks.
  Notwithstanding what that may mean--for 401(k)s, for families, what 
that may mean for investments that are on the brink because of the 
fragility of the economy, notwithstanding any of the advice of people 
who deal with money on a daily basis in terms of investments, these 
people, many of them who have never served in public life in their 
lives, never been part of a compromise but have come here with one 
ideological purpose--these people are putting the entire Nation at 
risk.
  There are a lot of people here, particularly here in the Senate on 
the other side of the aisle, who know this is dangerous and who know 
the risks we are taking and who know there are better alternatives. But 
because of the politics of the situation they are being locked in, not 
allowed to stand up and exercise--or at least unwilling at this point 
to stand up and exercise their judgment and, frankly, their 
responsibility as sworn to uphold the Constitution of the United States 
of America, to come here and do the business of our country.
  The deadline for default may be just a week away but no one should 
have any illusion that what is happening right now today is already 
hurting the economy of our country. It is already hurting our country. 
This is embarrassing for the Nation. It is embarrassing for the United 
States of America to be having such a dysfunctional display for 
everybody in the world to see that we who run around the world 
promoting democracy are unable to make our own democracy work right 
here at home. The fact is, all you have to do is read today's article 
in the Boston Globe with the headline ``Uncertainty Has Massachusetts 
Firms Wary Of Hiring.''
  That is what is happening right now. This is already having a 
negative impact. Maybe that is what some of the people on the other 
side of the aisle in the House want. Maybe they want the economy to 
come down so they can win politically and point to the President and 
say: Oh, it is his fault we don't have the jobs, even though they are 
weakening the economy with their obstinacy and with their ideological 
rigidity.
  Today's article says:

       Still cautious from the last recession, many business 
     owners worry that government leaders will be unable to reach 
     an agreement, while others are concerned about exactly the 
     opposite: that any agreement will invariably include spending 
     cuts and weaken an already lackluster recovery.

  This is no way to provide economic stewardship. Most important, it is 
no way to run a government. There are countless institutions that rely 
on the United States, for us to go out and help other nations to be 
able to recover economically. I met yesterday with the Finance Minister 
and Deputy Prime Minister of Greece. Greece is taking enormous steps 
right now to try to bring its debt down and all of the euro zone has 
joined in that effort, and Italy and Spain are likewise at risk in 
their economies. But the IMF is a critical component of that recovery 
and the United States is a critical component of the IMF efforts and we 
have a significant amount of our capital at risk in the IMF. What 
happens there is important to what happens here, but this place is not 
behaving as though there is that interconnectedness. Let me tell you 
what I hear from a lot of smart people--smarter than I am--about the 
economics. I can listen to them, and I can tell they are deadly serious 
when they say we are playing with fire with respect to the Greek 
recovery and with respect to Italy and Spain and the rest of Europe. If 
they start to go down, then we have a cascade, and it begins to have a 
greater impact on the United States of America. That is what is at risk 
in this dangerous game of political chicken that is being played by 
people of such ideological rigidity that they are unwilling to even 
compromise.

  I heard an interview yesterday with one Senator and a television 
commentator of one of the cable shows who asked him repeatedly: What 
are you willing to compromise on? In the end, it became clear he was 
not willing to

[[Page S4901]]

compromise on the fundamental notions of how we arrive at an agreement. 
We need to reach out across the aisle--both of us, Democrat, 
Republican--and come together on a deal, on a solution to a critical 
problem that challenges all of us where there is a solution staring us 
in the face. We need to do that before, as a result of the inability of 
people to make that compromise, before those who take that position of 
ideological rigidity do greater harm to our economy and to our 
country's reputation. We need to put an end to the time clocks that are 
running out how long it is before a default which sends an enormous 
message of uncertainty and incompetence, of dysfunctional politics on a 
daily basis. Every tick of that clock drums into people the inadequacy 
of what is happening here right now.
  Back in 1983, President Ronald Reagan, whom many of the people who 
are taking this position of complete obstinacy revere--they ought to 
listen to what he said because President Reagan wrote:

       The denigration of the full faith and credit of the United 
     States would have substantial effects on the domestic 
     financial markets and on the value of the dollar on the 
     exchange markets. The Nation can ill afford to allow such a 
     result.

  Now almost 30 years later some House Republicans have turned their 
back on the legacy of Ronald Reagan. Instead, they continue to play 
this cynical game of chicken with the President, with the Congress, 
with the American people, with our economy, with our reputation, with 
our future, by refusing to negotiate a clearly achievable, clearly 
definable compromise agreement that would extend the debt limit, 
something that happened 17 times under Ronald Reagan. What is their 
negotiating strategy? Don't negotiate. Do what we say no matter what 
the danger or how ill thought-out the consequences may be.
  David Stockman, the former Office and Management Director under 
President Reagan, said the following about the House Republican budget:

       I think the biggest problem is revenues. It is simply 
     unrealistic to say that raising revenue isn't part of the 
     solution. It is a measure of how far off the deep end 
     Republicans have gone with this religious catechism about 
     taxes.

  In taking this extreme approach, the House Republicans have also made 
a dirty word out of a basic tenet of American democracy--compromise. Do 
they know nothing about history? Have they forgotten about the Missouri 
Compromise? Have they forgotten about countless great compromises that 
brought people together to pass some of the great efforts of our Nation 
with respect to the social structure of our country? The House 
Republican Party has taken this approach, even though they know and 
agree with what Ronald Reagan said 30 years ago, and they know it is 
true today.
  Experts are telling us that even a short-term crisis could lead to a 
permanent downgrading or stain, if you will, on the Treasurys of our 
country. It could prove particularly damaging to the willingness of 
foreign investors to buy Treasury. If foreign investors start to shy 
away from Treasurys, then they will become much less liquid. As Lou 
Crandall, who is the chief economist at Wrightson ICAP, said:

       You could never get that liquidity premium back if you 
     create a precedent. That's the thing that would be 
     irreparable. The end result of such a scenario: higher 
     interest rates in the United States.

  I just met a few moments ago with a businessman who is engaged in 
major investments in this country and elsewhere, on an international 
basis, who reinforced to me the danger of what we are facing right now 
in just the downgrade. What he said to me is that nobody can tell us 
what the real impact of that downgrade is going to be. What happens to 
valuations all the way down the economic food chain? What happens to 
credit? What happens to the judgments about interest? What happens to 
the judgments about the auctions and the next market and so forth? 
Nobody knows. He can't tell me, and he does this for a living and has 
very successfully for a lifetime. That is what they are worried about.
  There is a moment--nobody knows when exactly it is--there is a moment 
when as we get close enough and the dysfunctionality becomes the 
overwhelming, dominating feature of this effort, where someone is going 
to cut and say: OK, time to downgrade. Then what happens? What kind of 
downward spiral flows out of that? I don't know, but I know we should 
not be pushing it to the limit and taking that risk.
  Why are people taking that risk? Why are people, despite all the 
commentary that says we ought to be reaching across the aisle, we ought 
to sit down the way we used to around here, why are they doing this? I 
will tell you why. They want only one way of approaching this 
solution--their way. They want to so dramatically cut Federal spending 
and cut entitlements without increasing revenues at all. No matter how 
successful people have been at the upper end of our economy, no matter 
how much money people have made, they say we can't even ask a 
billionaire for $100. We can't even ask a billionaire for $500. 
Nothing, nada, no. That is it. That is the reason they are willing to 
take the country to the brink. They know they do not have enough votes 
to even pass the budget they are screaming about still, but they are 
not running around trying to find the alternative. They are going to 
push it anyway, have a vote on it anyway, send a dramatic, stupid 
message of incompetence to the world and drag the United States of 
America down with it.
  It is stunning what a group of extremists can do who are trying to 
get their unrealistic and impossible budget passed, which even a lot of 
Republicans know they are not going to vote for. The Boehner plan would 
require Draconian entitlement policy changes. To meet the $1.8 trillion 
in cuts over the decade without any increase in revenues, policymakers 
would be forced to cut Social Security and Medicare benefits, and that 
is not a scare tactic. That is an absolute reality of what would have 
to happen if we proceed to do those cuts the way they are structuring 
them, and we would eviscerate the safety net for low-income children, 
for parents, for senior citizens, and for people with disabilities.
  One of the worst and most disturbing components of this plan, the 
Boehner plan--it is incomprehensible to me--they want to do this whole 
thing all over again in 6 months. There is no economic reason we have 
to do it again in 6 months because they purposely left out the money 
that could come from reducing our engagement in the wars in Iraq and 
Afghanistan, which is going to come. They purposely left that money out 
so it wouldn't show the amount of savings that could get us through 
next November. The reason they purposely left it out is so they can 
come back and do this same exercise again next February and make all 
the discussion in America about debt and deficit, when we are perfectly 
prepared to have a serious discussion not about raising the debt on it 
but about solving it, about doing it. We don't need a constitutional 
amendment to do our duty. We don't need a constitutional amendment to 
balance the budget. I know what I am talking about on that because I 
was here when we balanced the budget in the 1990s without a 
constitutional amendment. We balanced the budget five times since World 
War II, and we have done it each time without a constitutional 
amendment.
  Let's not have this phony structured setup that is pure politics. I 
am sure they are raising a lot of money from their base on it every 
single day, but that is not what this ought to be about. This ought to 
be about solving the economic problems of our country. A short-term 
plan is not necessary and it is, most importantly, not wise. If we go 
through this exercise again in 6 months in the same way we have gone 
through it in the last few months, we are going to drive this economy 
right down and down.
  Maybe that is what they want so they can then blame President Obama 
and turn around and blame the Democrats who are responsible in the 
Senate. There is no other rationale for wanting to come back and do 
this in 6 months, when we could do this with the joint committees that 
are in both the Boehner plan and in Senator Reid's plan. We have the 
ability to set up a structure, similar to the BRAC closing commissions, 
where we have to vote, where we are forced to do this on an accelerated 
basis, where we tie ourselves into a process that requires the Senate 
to do its duty and the Congress to do its duty. We can lock that in 
right now. We are not kicking anything

[[Page S4902]]

down the road if we do that and require us not to have a balanced 
budget amendment that goes out all across the country for States to 
have to ratify but, rather, do the job we were sent to do and do it in 
the next few months. That is what we could be doing. If we don't do 
that, then the downgrade that may take place somewhere in the next days 
could drive up interest rates, and that will have a negative drag on 
the economy to boot. A student with a student loan will feel that 
impact. Somebody with a car loan is going to feel that impact. Anybody 
with a credit card is going to feel that impact. People with mortgages 
will feel that impact. That will mean more money out of pocket to make 
up for the dereliction of duty of the Congress.
  These are completely dangerous and uncharted waters we are sailing 
into. I think at a time when the global economy is facing enormous 
problems, any downgrade of our Nation's credit rating could have 
disastrous effects for our financial system in terms of those other 
countries which I have talked about, and I think it is an unacceptable 
risk. It should require us to find the compromise and find it now. I 
might add that the Boehner plan is not even supported on Wall Street.
  Let me quote Christian Cooper, who is the head of the U.S. dollar 
derivatives trading in New York at Jefferies & Company. He said:

       From the markets' point of view, a two-stage plan is a 
     nonstarter because we know it is amateur hour on Capitol Hill 
     and we don't want to be painted into this corner again.

  He went on to say:

       There is significant risk of a downgrade with a deal that 
     ties further cuts to another vote only a few months down the 
     road given the significant resistance to do the right thing 
     now.

  Frankly, I think that is logical. Every American can understand that. 
If a person has some money to invest and they are sitting there 
watching what is happening right now, and then they learn our way of 
dealing with it is going to be to have another vote in 6 months for the 
same reason--to lift the debt ceiling--when everybody knows we don't 
have to do that, would that person say, oh, that is a really good, 
clear climate for investment; let's go put our money into whatever it 
is out there because we know Congress is going to do the right thing? 
No. No way, I say to my colleagues. Everybody knows that.

  The fact is, the President has said he is going to veto the Speaker's 
plan. Senators know he is going to veto it. We know it is a bad plan. 
We ought to stop discussing proposals that are going to go nowhere and 
get the job done on something that can bring everybody together.
  In an effort to forge a bipartisan compromise, Senator Reid has 
reached way beyond what many Members of our caucus really wanted to do 
or think is the appropriate balance. But we are acting responsibly in 
order to try to get the job done. So we are willing to extend the debt 
ceiling through 2012 without revenues at this time, with the 
understanding that we will have the ability to come back to the floor 
with the process of a joint committee providing it is tied to a very 
clear schedule, with very clear requirements about no filibusters, with 
very clear requirements about amendments and voting.
  Madam President, the spending cuts in Senator Reid's proposal are 
only those to which Republicans have previously agreed. So no revenues, 
cuts of $2-some trillion, we go through the year to give certainty to 
the marketplace, and we have cuts in there that the Republicans have 
already agreed to, and, again, a fixed period of time. I think that 
proposal gives our economy the certainty it needs in order to create 
jobs now, not 6 months from now and not maybe sometime next year.
  Everybody understands how anemic America's job creation is now. The 
last the job market needs is this kind of brinkmanship, gamesmanship, 
and cynical effort to hold the entire economy of our country hostage 
when better proposals are actually on the table and in front of us 
which everybody can understand.
  The majority leader's proposal includes the capacity for that joint 
committee to include recommendations and legislative language on tax 
reform. We all know we need tax reform. I believe the Senate and the 
House ought to do their jobs, both of us. Senator Reid's plan actually 
calls on the Senate to live up to its ultimate responsibility. The 
Speaker's plan has no such language--nothing that requires that kind of 
participation.
  The deficit commission was chaired by former Republican Senator Alan 
Simpson. All of that work is being ignored right now. The so-called 
Gang of 6 did an outstanding job, in my judgment, of helping to put 
together a bipartisan plan which actually included revenue and I think 
20-some Republican Senators were prepared to support a thoughtful, 
balanced plan that had both revenues as well as cuts. So we can find 
common ground. We need to find that common ground.
  Over the last year, we have seen a number of bipartisan plans put 
forward on the debt limit. I think the effort of the Gang of 6 
exemplified the best tradition of the Senate, where a group of Members 
reached across the aisle and worked with each other to tackle the tough 
issues. That is how we got a budget deal in 1990. That is how we got a 
budget deal in 1997. We have done this before, and we did it growing 
our economy--creating 23 million new jobs and creating a surplus of 
$5.6 trillion. Had we stayed on that course, we would next year be 
paying down the debt of our Nation completely for the first time since 
Andrew Jackson was President of the United States. Everybody here knows 
why we went off track. I don't mean to go through that again now, but I 
think we will not be able to resolve this current impasse until 
colleagues on both sides of the aisle--and especially in the House 
where there seems to be the greatest ideological resistance to common 
sense right now--decide to put aside their ideology and decide what is 
best for the United States of America.
  We can't be responsible if we don't get serious first. Far too much 
is at stake for the Senate to do anything less than the Senate was 
intended to do at moments such as this. We are called the world's 
greatest deliberative body. There aren't many Americans who would look 
at us right now and give us that appropriate moniker. We have to earn 
it. I think in the next hours we can do that.
  I thank the Chair, and I thank my colleagues for their forbearance.
  The ACTING PRESIDENT pro tempore. The Senator from Tennessee.
  Mr. CORKER. Madam President, may I inquire as to how much time I have 
allotted?
  The ACTING PRESIDENT pro tempore. The Senate is in morning business 
with Senators permitted to speak for up to 10 minutes each.
  Mr. CORKER. I thank the Chair. I doubt I will do this, but if I get 
up to 8 minutes, if the Chair would let me know so I will have 2 
minutes to wrap up.
  The last time I was on the floor was July 14, and I was very 
concerned--maybe upset--about the fact that it appeared where we were 
on this debt ceiling discussion was looking for a political way for 
everybody to raise the debt ceiling without anybody taking ownership. 
Obviously, that wasn't what I came to the Senate to do. I came down and 
had choice words for both sides of the aisle in that regard.
  I actually come here today with a glimmer of hope. The reason I say 
that is, to my knowledge, in this debt ceiling debate we may be--I 
think this is the first time legislation has actually been offered from 
both sides of the aisle to look at spending reductions over the course 
of this next year. To me, that is progress. I think we ought to focus 
on the fact that, finally, here in this body, we are on the right 
subject. We sort of wandered around in the wilderness for several weeks 
as this debt ceiling was coming up and focused on many things that were 
not going to solve the problem. Then, a couple of weeks ago, we focused 
on trying to figure out a way for us to all usurp--get rid of--our 
responsibilities in dealing with this.
  I am kind of uplifted because, as was mentioned, a Democratic Senator 
has a proposal, a Republican House Member has a proposal, and now, 
finally, we are on the topic that matters; that is, we have proposals 
before us that are beginning to look at what we might do to look at 
spending reductions.
  The fact is, the reason this debt ceiling debate is what it is is 
because all of

[[Page S4903]]

us are concerned about future deficits. All of us are concerned about 
where our country is going. All of us are concerned about the fact that 
if we don't deal with this issue responsibly, we are going to end up 
with a downgrade in our debt regardless, even if we make it. If we had 
a clean debt ceiling vote, which, obviously, is not going to occur 
now--if we had a clean debt ceiling vote, we would be right back at the 
table trying to figure out a way to keep from having a downgrade. So 
for what it is worth, I am choosing today to come to the floor and to 
be slightly optimistic because both sides of the aisle are beginning to 
look at ways of reducing that issue.
  As to the rating agencies, actually we don't put a lot of faith in 
them, I know, but smart people who actually buy Treasurys have said the 
order of magnitude that we need to deal with as it relates to deficit 
spending over the next short period of time is a minimum of $4 
trillion, and that $4 trillion has to be real, and that $4 trillion 
needs to be accompanied by entitlement reforms.
  What I would say is, right now, I don't think there is any proposal 
that is being discussed that is strong enough, and I don't say that to 
knock any of the authors. There is nothing out there that I am aware of 
that is being discussed by the media or being discussed in either 
Chamber that really deals with this issue. Most of us have taken 
the position that we want to use the debt ceiling vote to force 
dramatic reductions in deficits, dramatic reductions in spending and, 
fortunately, we have gotten to that place, finally. We have just gotten 
there in the last 24 hours.

  So this is my hope: We know none of the proposals out there now are 
strong enough. None of the proposals out there--I am talking about in 
legislative language. There are a lot of people working in other ways 
to try to come up with a solution, but there is no legislative language 
out there yet that actually forces us to do the things we need to do to 
achieve not being downgraded, if you will, after this debt ceiling vote 
occurs.
  So it appears we are going to be voting on a proposal the majority 
leader has offered. It is very apparent to me it is not going to pass. 
I know there are some activities that may be taking place in the House 
over the next 24 hours, but at least we have both sides of the aisle 
talking about the right topic, finally. It has taken us a while to get 
here.
  I urge us to sit down and figure out a way to make the proposals that 
are being discussed real--make sure they don't have gimmicks--and that 
they force us to do those things we need to do to make sure we don't 
just kick the can down the road and pass something that looks like we 
have actually taken action, but to pass something instead that actually 
will address the issues we have before us.
  So, again, I have a glimmer of hope. Both sides of the aisle have 
offered proposals. No doubt in both cases they are not nearly strong 
enough, but both sides have offered proposals that look at reducing the 
deficits over the next year or so. So I urge people to sit down--as 
Members have done recently on other proposals, let's sit down and 
figure out a way to make some proposal strong enough so we know that 
not only have we moved past this debt ceiling vote, but we have also 
put in place those actions that will cause us to make it through this 
entire next year, in a way that we know we are not going to be 
downgraded by the credit rating agencies and have other issues.
  There is not a proposal before us today that does it, but both sides 
of the aisle are talking about proposals. That, to me, is a sign for a 
degree of optimism. If we need to extend the debt ceiling issue for a 
week while we work out the details or whatever, let's do it. But let's 
don't let this opportunity where we finally have both sides of the 
aisle talking about the right subject, let's don't let this opportunity 
go by. Let's solve this problem while the focus is on it.
  I thank the Chair for allowing me to take to the floor.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Bennet). The majority leader.

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