[Congressional Record Volume 159, Number 137 (Saturday, October 5, 2013)]
[Senate]
[Pages S7237-S7242]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONTINUING APPROPRIATIONS
Mr. MURPHY. Mr. President, let me thank my great friend from
Louisiana for her remarks and for all the work she has done to stand up
for her constituents, but also for small businesses. I think she makes
a great point, that right now there are thousands of small businesses
throughout my State, the northeast, throughout the Presiding Officer's
State as well, that are waiting for loans from the SBA that cannot get
them because right now the SBA is essentially out of business. That
right now is having a detrimental effect on our economy.
I thank her for her great advocacy on behalf of the small businesses
throughout Louisiana and across the country.
There is a lot of truth to the fact that there can be mutual blame
thrown around this place very often when it comes to the reasons why we
have not solved a lot of our most vexing problems as a nation. The
deficit, for instance, did not get to be the size it is without both
parties playing a role in the fact that we still sit back without the
will to try to take on that enormous problem and burden we are leaving
to our kids. That is due to both Republican and Democratic
intransigence.
There are a lot of things that happen here in which you can very
accurately and appropriately assess that both sides of the aisle have
been part of the blame. This is not one of them. This is not one of
them. When it comes to trying to figure out the reasons why our
government is shut down, it is pretty simple to explain how we got
here.
Yet I have heard a lot of my friends on the other side blame the
majority leader and blame the President for the shutdown. I have even
heard some newscasts try to suggest that it is just sort of good old-
fashioned generic gridlock here in Washington that has led to this
shutdown.
Mostly the American public gets it. I think mostly the American
public understands that this is essentially a shutdown of the Federal
Government caused by a small band of ideological conservatives in the
House of Representatives called the tea party. I have sort of tried to
struggle with how to explain this to the handful of people back in
Connecticut who still do not understand what is going on, although
there is no way to create an analogy that works.
I mean this shutdown is so ridiculous, it is so unique that there is
no metaphor that works. I have tried this one. Imagine that there is a
couple. They live in Boston, let's say. The wife loves living in
Boston, but the husband has sort of been fed up with Boston for a
little while. He wants to move to the west coast, let's say to San
Francisco. But they have been living in Boston for a long time. They
have this disagreement as to what to do next. They have been having it
for a while. They have not sorted it out. But they chose to live in
Boston, so that is where they continue to be.
Well, one day the husband comes home and says to his wife: You know
what. I have had enough. I have had enough. I want to move to San
Francisco. If you do not agree, I am going to call up some contractors
and have them come over and take the roof off our house.
She says: What are you talking about? Take the roof off our house? I
[[Page S7238]]
never talked about the roof coming off our house. The roof is
important. It keeps us warm. It keeps us dry. You are kidding, right?
You are not going to take the roof off the house.
He said: Listen, I am going to give you 3 days. If you do not agree
to move to San Francisco, then I am going to call someone and take the
roof off of our house.
She says: Well, of course, I am not going to do that. Of course I am
not going to move to a place that I do not want to move to. We should
talk about that. We should come up with a compromise. We should discuss
this. Certainly I am not going to agree to move to San Francisco if you
are threatening to take the roof off the house.
Three days go by. She goes to work. She comes home, and the roof is
gone. He took it off. She cannot believe it. She cannot believe it.
Rain is coming in. It is the middle of winter. It is freezing cold. It
is miserable.
He shows up to work on the second day, and says to his coworkers: You
cannot believe what my wife did. She took the roof off our house.
The coworkers say: Well, what do you mean?
I told her we had to move to San Francisco. And when she did not
agree, I told her I was going to take the roof off the house. I did,
but it was her decision. She would not move to where I wanted to move.
So I had to go through with it. I had to take the roof off the house.
If you were that coworker and listened to that story, you would know
exactly what was going on. You would know exactly who to blame. You
would associate yourself with the decision the wife made and say:
Forget it, I am not moving somewhere with that threat hanging over my
head. You would back her up when she said: Put the roof back on the
house before we start discussing about where we are going to live next.
That is essentially what has happened here. We had always assumed
that the operation of the Federal Government was not something we
negotiated over, just like the woman in my analogy assumed that the
roof being on the house was not something that she had to worry about
disappearing.
Yet here we are. The government is shut down simply because of the
demands of a small group of tea party Republicans in the House of
Representatives. Their demand in this case is they want the health care
law repealed, despite the fact that it was passed by two legislative
bodies, signed by the President, upheld by the Supreme Court, verified
in an election in which a President who said he would implement it was
reelected by a huge margin. Every single Senator in the Senate who
supported it and ran for reelection was reelected.
That is their demand in this case. As the Senator from Louisiana
said, we should react as we would expect that woman to react. We want
the government back up and operating, and then we will talk. I want the
roof back on my house before we discuss where we are going to live.
This isn't about politics any longer. This isn't about inconvenience.
We are now going into the second week of this shutdown. It has
started to ruin lives, such as Melanie Rhodes' from Bridgeport, CT. A
few years ago Melanie was homeless, living out on the streets. Things
were very tough for Melanie. Melanie became pregnant and had a little
boy, a wonderful little boy about 2 months premature, a wonderful
little boy named Malachi. Malachi had some developmental issues right
off the bat, but she knew her life had changed and she had to do
everything possible for her little boy. She placed him into the Birth
to Three System, our early screening program. They identified the
problems he had. He was connected with a Head Start Program in which he
was enrolled at about 9 months old.
Malachi is still behind his peers at 3 years old, but he is doing a
lot better. He is beginning to finally communicate with a handful of
signs. Every day he has been in that Head Start Program his life and
her life have become better. Even though she has been struggling
through the worst recession of her life, of my life, of most of our
lives, she started to turn the corner very well. She applied everywhere
over the last 3 years. She did everything we would have asked of her to
try to find a job. She applied with Walmart, Walgreens, and McDonald's.
Finally, in the past few weeks she got a job as a busdriver. She had
completed her training, was waiting for her background check to come
through, and was to start her job in a matter of days. She stayed up
all night last Monday night, past midnight, watching CNN, watching the
news, to see if the government was going to be up and operating. She
knew the Bridgeport Head Start Program runs on a budget that expired at
the end of September. That was one of the handful of programs that
would shut down immediately upon the shutdown of the government.
She woke up on Tuesday morning and hoped against all hope by calling
Head Start to see if they were going to be up and operating, and they
weren't. They had shut down. Bridgeport told 1,000 families across
southwestern Connecticut that they couldn't show up for preschool that
day. Their families had to scramble to find some kind of coverage for
childcare.
For Melanie it was a double disaster because she has a child with
developmental disabilities. She can't have just anybody take care of
him, and she is having a hard time finding someone. She is now going to
be faced with not only inappropriate care for her child, perhaps
setting him back developmentally, but she also probably can't start
that job she was waiting for.
If we take this situation and multiply it times 1,000 in only one
city in Connecticut, then look at the fact that that problem could be
multiplied 18,000 times over the course of next week as more Head Start
Programs shut down, we see this shutdown is not about politics. It is
not about inconvenience. It is about people's lives falling apart.
What about the 1,500 workers at Sikorsky Aircraft, the majority of
whom are in Connecticut. They have 43 employees from the Federal
Government who inspect the helicopters as they go down the assembly
line. But because those helicopter assembly lines are making Black Hawk
helicopters for the U.S. military and they move pretty fast, if they
don't have those inspectors for a handful of days, they can't continue
to move the assembly line.
On Friday, 1,500 workers were furloughed from Sikorsky Aircraft, let
go until those inspectors are back on the job--43 inspectors equal
1,500 private sector layoffs.
When you are laid off from a job, sometimes if you can see it coming,
you can try to make arrangements. If you are on a paycheck-to-paycheck
basis, where everything that comes in goes right back out again to pay
your food bills, mortgage, student loans, whatever it may be--if you
can see the layoff coming, then you might be able to scramble to find a
part-time job or save a little bit more for the final few months of
your employment. But when you get a notice in 2 days you are going to
be laid off for an indeterminate amount of time, there is no way for
the people who are living paycheck-to-paycheck to put their lives
together.
As Senator Landrieu said, that results in mortgage payments being
missed, in credit ratings going into the tank, and lives being ruined
off of a purely political crisis caused by a handful of rightwing
Republicans in the House of Representatives.
I hear my friends on the other side of the aisle and Speaker Boehner
say, yes, but if the Democrats would only negotiate, would compromise,
we could get this thing done. Before I yield the floor to my friend
from Rhode Island, I wish to say two things about that insistence from
Republicans that the problem is not their demands that the health care
law be repealed before we open the government but it is that Democrats
will not sit down and negotiate.
I think the Senator from Louisiana said it best: It makes no sense to
negotiate with a gun to our head. Open the government and we will sit
down and talk about anything the other side wishes to talk about.
Let us also discuss what the positions of the two parties are.
Republicans want the most important achievement of President Obama's
first term repealed. We want the government to continue to be
operational. Republicans want a law taken off the books that will
ensure 30 million more people with health care. We want the government
to continue to pay its bills.
What I am trying to say is that we don't actually have demands. All
we
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want is what our constituents have always expected to happen to
continue to happen. All we have asked for in this crisis created by tea
party Republicans is for the government to be open and for the
government to continue to pay its bills.
We could make a bunch of our own demands. I think it is ridiculous
that we don't have background checks on the purchase of firearms in
this country, but I am not saying I am going to shut down the
government unless I get my way on background checks. All I want is the
government to be open and for us to pay our bills.
Second, normally one negotiates when we don't have consensus.
Normally, we sit down and compromise when 50 percent of the Senate and
50 percent of the House doesn't agree to the exact same thing. That is
why we have to sit down and talk--because we do not have consensus.
We do. We have a bill, which is the clean continuing resolution--and
otherwise just keep the government open and operating for another 6
weeks on the same rules it used to be operating under. We had, I think,
54 votes in the Senate. It is publicly supported by a majority of the
House of Representatives.
Why would we negotiate when we already have a bill that is supported
by the majority of the Senate and the majority of the House? The only
thing that has to happen in order for the government to get back and on
its feet is for Speaker Boehner to call a vote on that bill. It makes
no sense that Speaker Boehner says sit down and negotiate, when there
is already a proposal pending before the House that has the support of
the majority of both bodies.
We don't have a lot to negotiate over because all we want is the
government to open and for us to pay our bills. We don't need to
negotiate because we already have a proposal that enjoys the support of
the majority of this body and the majority of that body.
Tea party Republicans should stop holding this country hostage to
their ideological demands. Speaker Boehner should call a vote on this
bill tonight and this totally self-created crisis could come to an end
today.
I yield the floor.
The PRESIDING OFFICER (Mr. Murphy). The Senator from Rhode Island.
Mr. REED. I ask unanimous consent to speak up to 20 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REED. Mr. President, we are 5 days into the government shutdown,
but unfortunately there has been no progress in resolving this issue. I
disagree with some policies championed by my colleagues on the other
side of the aisle, and indeed I sometimes disagree with the President
and Members of my own party on specific policy prescriptions. Case in
point: raising the student loan interest rate and the so-called JOBS
Act. In both cases I tried to make my best argument on the merits of
the issue, and then we voted, moved on, and I am still working to try
to improve both laws. I haven't given up, but I have not shut the
government down because my views didn't prevail.
So I say to my colleagues on the other side, the way to change laws
you do not like is not to shut down the government at the expense of
your fellow Americans and at the expense of our economy; it is to try
to build consensus and persuade a broad swath of the American people
that there is a better way of doing things and making concrete
proposals.
It has been pointed out many times before that the House of
Representatives has attempted to repeal the Affordable Care Act 45
times at last count, I believe, but I have yet to hear any credible
plan put forth to replace it or strengthen it or make it work better.
And the American people want our constructive efforts to succeed. They
would like it modified if it needs modification. But the attitude of
some of our colleagues has been to just strip away the whole book of
significant legislation--and replace it with what? We don't know. That
is irresponsible.
This Senate and this Congress is a great institution. Our Founding
Fathers, in their wisdom, set up a system with plenty of room for
debate, different points of view, and checks and balances. But checks
and balances are not what is happening today. The government has been
shut down not because Congress can't agree on levels of funding. We
agree. We have actually agreed with the House on their level. The real
reason is that some on the other side of the aisle--and I do think it
is just a small cadre--have a very different vision about the
government itself. And this is not hyperbole. We can all recall that
during the Republican Presidential primaries we had candidates seeing
who could out-promise whom in terms of eliminating aspects of the
Federal Government. They proposed getting rid of the EPA, the Commerce
Department, the Department of Education, FEMA, and the Department of
Energy--not reforming these agencies, not changing their missions, not
making them more efficient or more effective, but just doing away with
them--and that spirit is animated in the House today, unfortunately.
I am particularly glad that view did not prevail in the last election
because these agencies are vital to all Americans. Looking back at
Rhode Island, we were victims of serious historic flooding over the
last several years. If FEMA had not been there to step in and help us,
we would still be trying to pull ourselves together. As a small State,
like Connecticut and other States, we do not have the resources to do
it. We saw the same thing with Hurricane Sandy. They were there helping
efficiently and effectively. And that is one of the agencies my
colleagues are not allowing to operate today.
Many small business men and women in my community, manufacturers, et
cetera, have been aided immensely by the Department of Commerce. That
is something else that was on the hit list during the Presidential
primaries by Republican candidates.
Those of us who enjoy clean water, fresh air, and the importance of a
healthy environment--i.e., every American--even if they do not notice
it or admit it, their health and the health of their children would be
jeopardized severely if EPA was eliminated. There are calls repeatedly
to make it more efficient, more effective, make it more businesslike,
and those calls have to be recognized and heeded. But the notion that
we would just wipe it away and the private markets or private self-
interests would ensure that our air is clean, that our water is clean,
and that our health is protected is not something that is either
realistic or, indeed, even something that is arguable.
There is room in this country for a range of views, and I recognize
that many of my colleagues, who consider themselves members of the tea
party, are simply doing their best to represent the views of those who
sent them here. But I would hope everyone who has been entrusted with
the responsibility of government could work together to at least make
the government function--i.e., to stay open. That is a basic
responsibility our constituents entrusted us with when they sent us to
Washington.
There is nothing patriotic about shutting down the government,
putting hundreds of thousands of people out of work, and potentially
forcing our country into default. And the hundreds of thousands out of
work are not just government employees. As my colleague from
Connecticut pointed out, now defense contractors are beginning to
furlough. These industries are the heart and soul of so many
communities. When these jobs are lost, there is a multiplier effect,
which affects the entire community. And this cascading series of
economic problems will get worse each day we keep this government
closed.
Both sides need to work together, but we have already significantly
compromised on our side. Again, as the Senator from Connecticut pointed
out, we are voting for a continuing resolution at the House level, not
our level--a multibillion-dollar gap. We have accepted that. At least
for the interim period, the 6 weeks or so of this continuing
resolution, we accept the House's position. And of course, for many of
us who have been arguing vociferously to end this sequestration, to
increase investment, this was a significant compromise. We are not
seeing that reciprocated on the other side; it is ``my way or the
highway,''--stop ObamaCare or nothing gets done, Government doesn't
work, and we will default on our credit.
That is reckless, irresponsible, and does not serve the interest of
those who sent us here.
It is time for those who are proposing the wild plans of shutting
down the
[[Page S7240]]
government if they don't get exactly what they want to grasp the
reality of the situation. We cannot keep this government closed. This
closure will last as long as Speaker Boehner wants it to. He can, under
the rules of the House, call up this bill within hours--perhaps less--
or Republicans can join Democrats and sign a discharge petition to
bring it to the floor regardless of the Speaker's position. Those are
two paths that should be taken immediately to open this government.
We all have a shared responsibility for the government. As I sense
it, one of the basic rationales of this government is to keep the
lights on, keep people working. Let's get to the difficult negotiations
on how we improve efficiency, how we improve operations, but we have a
responsibility to keep our government open--to open it and then keep it
open--and the longer this shutdown drags on, the more people will be
affected. Cancer patients, young mothers, scientific researchers,
Federal employees, people who take prescription drugs all are being
negatively impacted. Government contractors are being laid off.
Let's work together and reopen the government for business. Let's
continue to debate the issues. We have many issues we can debate but
not under the sword of Damocles--of a government that is closed and an
economy that is beginning to lose more and more of its momentum and
strength. That harms the American people irresponsibly and recklessly
for a very narrow self-interested principle.
There is another aspect here too. It is not just the government
shutdown, but we are coming perilously close to a potential default on
the debt of the United States. The government closure is affecting our
economy dramatically, but a default on our debt could be catastrophic.
There is a growing risk that this brinkmanship on the part of the
Republican Party could force us to default. We are only 12 days away
from a potential default because the tea party Republicans would rather
play their games over the Affordable Care Act, ObamaCare, than choose
to do what we have always done--pay our bills.
This is not about borrowing more money to spend more. This is about
paying for those things we agreed on--Republicans and Democrats--
through congressional appropriations, through legislation creating
programs such as Medicare and Medicaid and Social Security.
These are obligations we have incurred, and we won't be able to pay
all of them. Indeed, on October 17, unless my Republican colleagues end
their obstruction, the Nation will not be able to pay its bills,
causing dire consequences for American workers and our economy.
Many commentators have pointed out a default will destabilize the
national and global economy. It could cause another financial crisis
and over the span of a month cause an estimated $106 billion shortfall
of Federal spending that would cause a severe economic contraction.
If we can't pay our debts, then we will contract federal activity.
That contraction will be multiplied in the economy. Our economic growth
will slow. In fact, not only decelerate, it could collapse. Ironically,
one aspect of that is it will almost overnight increase our deficit as
less economic activity produces less revenue, there are more people who
are laid off and eligible for unemployment insurance. It is a downward
spiral.
Economists on both sides agree that it is just the specter of default
that has serious economic consequences. In fact, we have already seen
the 1-month interest rate of Treasurys jump over the 6-month and the
year-long rates. The markets are already voting. They are nervous. They
are nervous that the Republicans will carry out these threats, and you
can see it in what they are demanding in order to buy the short-term
paper of the United States versus the longer term paper.
=========================== NOTE ===========================
On page S7240, October 5, 2013, in the second column, the
following language appears: . . . Treasuries . . .
The Record has been corrected to read: . . . Treasurys
========================= END NOTE =========================
We just have to look back at August 2011 to know there will be
consequences. Back then, Republicans pushed us perilously close to
defaulting on the debt, and that manufactured crisis set back job
growth and the economy. The Government Accountability Office estimated
that the 2011 debt ceiling crisis cost taxpayers $1.3 billion in that
fiscal year. It also rattled American households and created economic
uncertainty. From June to August 2011, consumer confidence fell 22
percent. And I suspect that if this debate--particularly with respect
to the debt ceiling--continues to pick up over the next few days,
American consumers will become more and more nervous.
It took several months after August 2011 for the recovery of consumer
confidence, for people to come back into the marketplace to begin to
participate. The S&P index of equity prices fell about 17 percent in
that period surrounding the 2011 debt ceiling crisis, and it did not
recover to its average over the first half of the year until 2012. So
we are going to see a market effect. We know that. That was August
2011, and indeed I am concerned that this crisis is even more perilous
because the opposition seems to be more intransigent. Those people are
saying there won't be any consequences to default or repeal of
ObamaCare is more important than anything else, even the economic well-
being of the United States.
Roughly half of U.S. households own stock either directly or
indirectly through mutual funds or 401(k) accounts. So this fall in
equity markets, which we saw in 2011, will cut across a wide swath of
the American public. We saw in 2011, the result of the approaching
deadline and debate over whether or not to pass the debt ceiling, wiped
out about $2.4 trillion of household wealth. This decline in wealth
leads to a decline in consumption, and consumer spending accounts for
roughly 70 percent of our gross domestic product. So put the links
together: People are nervous. They pull back. The economy pulls back.
Growth begins to decelerate, in fact reaching zero--or worse. That is
demonstrably the effect in some degree from what happened in August
2011, and would likely happen again--in fact, this time, perhaps worse.
Already we are starting to see some of the warning signs. We are
seeing banking institutions prepare for the worst. According to the
Financial Times, on October 3, 2013:
One senior executive said his bank was delivering 20-30
percent more cash than usual in case panicked customers tried
to withdraw funds en masse. The move to source extra cash is
a precaution to deal with an unnecessary upturn in demand,
banks said. . . . Banks are also holding daily emergency
meetings to discuss other steps, including possible free
overdrafts for customers reliant on social security payments
from the government.
But this potential consumer dash for cash is only the tip of the
iceberg when it comes to entirely avoidable self-inflicted economic
wounds if we get close to--and certainly if we do not raise the debt
ceiling, and default.
According to The Economist, the noted British magazine, Treasurys are
``more than 30 percent of the collateral that financial institutions
such as investor banks use to borrow in the $2 trillion triparty repo
market.'' That is the source of overnight funding for most large
financial institutions and many other institutions. ``A default could
trigger demands by lenders for more or different collateral. That might
cause a financial heart attack, like the one prompted by the collapse
of Lehman Brothers in 2008.''
=========================== NOTE ===========================
On page S7240, October 5, 2013, in the third column, the
following language appears twice: . . . Treasuries . . .
The Record has been corrected to read: . . . Treasurys
========================= END NOTE =========================
We are just barely understanding the inner relationships of all these
different financial instruments and financial markets. But this is not
the only financial instrument that could be affected. Money market
funds are a prime source of investment by thousands of Americans--both
institutions and individuals. According to the Federal Reserve's
September 25, 2013 Statistical Release on the Financial Accounts of the
United States, money market funds in the second quarter of 2013 hold
$449 billion of U.S. Treasurys.
=========================== NOTE ===========================
On page S7240, October 5, 2013, in the third column, the
following language appears twice: . . . Treasuries . . .
The Record has been corrected to read: . . . Treasurys
========================= END NOTE =========================
Back in 2011, Matthew E. Zames, the chief operating officer for
JPMorgan Chase and the chair of the Treasury Borrowing Advisory
Committee--which offers observations to the Treasury Department on the
overall strength of the U.S. economy as well as providing
recommendations on a variety of technical debt management issues--wrote
to at that time Secretary Geithner and expressed concern of:
. . . a run on money market funds, as was the case in
September 2008 after the Lehman failure. In the event of a
Treasury default, I think it is likely that at least one fund
would be forced to halt redemptions or conceivably break the
buck. Since money funds investors are primarily focused on
overnight liquidity, even a single fund halting redemptions
would likely cause a broader run on money funds.
=========================== NOTE ===========================
On page S7240, October 5, 2013, in the third column, the
following language appears: . . . break the bruck . . .
The Record has been corrected to read: . . . break the buck . .
.
========================= END NOTE =========================
[[Page S7241]]
And from the same 2011 treasury borrowing advisory committee letter:
Because Treasuries have historically been viewed as the
world's safest asset, they are the most widely-used
collateral in the world and underpin large parts of the
markets. A default could trigger a wave of margin calls and a
widening of haircuts on collateral, which in turn could lead
to deleveraging and a sharp drop in lending.
What this is saying, essentially--not just in the United States but
worldwide--this could have a huge, immediate, unpredictable global
effect on markets, causing deleveraging, causing a sharp drop in
lending, causing confusion and uncertainty. One thing we should
recognize, particularly after the events of 2008, is markets do not
like uncertainty. And when things are uncertain, they pull back. If the
expectation is a declining market, there is a premium to the
institution or individual that can get out first. When they start
getting out, people notice, and then you have a stampede to the door.
The consequences that are possible are staggering, and yet we hear so
many of our colleagues glibly sort of saying that, if they don't get
our way on certain aspects of this bill or that bill, they are going to
default on the debt of the United States. I think that approach is
very, very dangerous.
We are seeing already some indications from financial markets that
these factors are beginning to affect economic behavior. Again from the
Financial Times, October 3:
Money market funds dumped October Treasury bills on
Thursday, in the first sign of investor unease that
Washington may not raise the federal debt ceiling in the
coming weeks and risk triggering a technical default by the
US Treasury on its debt.
From the Institute of International Finance this month, a well-
respected organization:
Just when the global economy is showing signs of
stabilization, with Europe emerging from recession, and
geopolitical risks in the Middle East seem to be subsiding,
consumer and investor confidence could be tested by a range
of political and policy uncertainties . . . What is truly
unprecedented is a possible, but still unlikely--
And I hope that is the case, unlikely--
combination of government shutdown and failure to lift the
current $16.7 trillion debt ceiling by October 17. The impact
of such a failure of political leadership on business,
consumer and investor confidence is difficult to say and
could lead to further downgrades of the U.S. sovereign debt.
Reflecting rising credit risks, 5-year CDS spreads for the
U.S. have risen by 45 percent in the past 3 weeks to 33 basis
points and could test, or exceed, the previous high of 62
basis points reached during the previous threat of default in
2011.
That is an indication the market is getting very nervous about what
we are doing. These rising rates are not good for the United States.
They mean the market is beginning to look at the default as possible
and the risk is being written into the instruments that they are
providing in terms of insurance, if you will, on U.S. Treasurys and
other securities.
On October 17, the extraordinary security measures the Department of
Treasury has had to employ since May 19 will be exhausted. The Treasury
Secretary told us that. On that date, Treasury will have approximately,
in their view, $30 billion on hand to meet the government's daily
expenditures which can be as high as $60 billion. That $60 billion
represents payments for the Nation's bills on things such as Social
Security, Medicare, national defense, and education.
However, some tea party Republicans have decided to dismiss this
issue and say they are planning to limit the fallout. That they should
not be blamed for it because they have a plan in case of default. They
call for, what they argue is prioritization, where some of the U.S.
bills are paid and others are not. But their plan for prioritization is
just another version of default. Indeed, the House passed legislation
that would prioritize payments. However, in a letter to Speaker
Boehner, the Department of Treasury made clear prioritizing payments
``would not protect the full faith and credit of the United States''
and that prioritization is ``simply default by another name.''
It is shocking to witness the lengths some of my colleagues on the
other side of the aisle are willing to go in order to win political
points and gain negotiating leverage. They are threatening the economic
well-being of every American by refusing to do something, at least at
this point, as essential as paying the Nation's bills. Paying the
Nation's bills should be a routine matter. There is no alternative.
Congress has always done so. Since 1960, Congress has acted to prevent
a default on the debt 78 times, 49 of which were under Republican
Presidents.
Indeed, President Reagan said in 1983 that ``the full consequences of
default--or even the serious prospect of default--by the United States
are impossible to predict and awesome to contemplate.''
Regrettably, because of some colleagues, particularly colleagues in
the House of Representatives, there is a serious prospect of default,
something President Reagan warned us against.
He also, I think quite rightly, pointed out the consequences are
impossible to predict. The markets, frankly, are much more complicated,
much more interrelated, much more driven by technology today than in
1983. Automated computerized trading was not a common feature of
markets in 1983. Today it is. Today, algorithms have programs that look
for declines in products and then begin to sell it's not an individual
broker who says: Listen, I know this is going to be worked out in a
couple of hours. It is a machine and we have seen these machines go
haywire. There is a real possibility that initial reaction to a
technical default on the debt could trigger some of this trading in a
way that even the people who built these elaborate algorithms do not
fully understand.
This is very serious, more serious today than in 1983. But President
Reagan's words were prescient then and decisive then and right then and
they are the same today.
This should not be a negotiating chip. Speaker Boehner's threat to
default in order to extract dollar-for-dollar cuts to programs, to make
changes in this program or that program, is risking the economic
viability of the United States and indeed the world's financial
condition.
Also, the Speaker suggested we have always done it this way. He said
every major effort to deal with the deficit in the past years has been
tied with the debt limit. That is not supported by the facts. Over the
past 30 years, 77 percent of laws passed by Congress to pay for
spending already accrued were not statutorily linked to deficit
reductions or budget reforms; 77 percent were simply done because we
have to extend the debt ceiling. We will do it. We always have.
Furthermore, several of the deficit reduction measures identified by
Speaker Boehner as tied to paying our Nation's bills included
significant new revenue. According to U.S. Treasury estimates, the
Omnibus Budget Reconciliation Act of 1990 raised $126.6 billion over 4
years and the Omnibus Budget Reconciliation Act of 1993 raised $188
billion in new revenue over 4 years.
I do not see the Speaker coming up and saying we have a plan. We are
going to make adjustments here on the spending side and on the revenue
side and then we are going to tie it to the debt ceiling. No. In fact,
this discussion of revenue increases or revenue positions, spending
cuts, all of this is not appropriate to the debt ceiling discussion. It
is appropriate for the conference on the budget. We have had a budget
in the Senate since March and we have been prevented from going to
conference with the House Republicans by Republican Members in the
Senate.
There is a bipartisan demand, many of my colleagues on the Republican
side have asked, suggested we go to conference. That is the appropriate
way to deal with this--not threaten the world and the American people
with default on our debts but doing a budget in regular order, taking
up the budget, talking about revenues, talking about changes to
programs, talking about continued efforts to reduce our deficit,
talking about growing the economy. That ultimately is the best way to
reduce the deficit.
You cannot expect, as the Speaker implied by citing budget reforms
tied to the debt ceiling, which contained revenue, that Republicans are
serious. That is not going to be the case from what I sense from the
other side.
We have a real challenge before us. The challenge is that there seems
to be this blase attitude in some respects, particularly in the House,
among certain of their Members that: So what if
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we default. Other countries have defaulted. We saw something like it in
Greece.
But Greece, for example--it is very difficult to compare the two
economies. I do not want to suggest that our experience will mimic
their experience. It is a much smaller economy. It does not have an
independent currency. It is tied to the euro. But their debt in 2012
was basically challenged. While the intent of restructuring was to
avoid default that would require payment of credit default swaps on
Greek debt, the International Swaps and Derivatives Association in 2012
determined that they had technically defaulted on their sovereign debt.
This would trigger credit default swaps being called. One estimate of
the net notional value of the Greek credit default swap outstanding at
the time was about $3.2 billion, but in that economy it was a
significant number and according to a Forbes article on March 9, 2012:
While no one expects the Greek settlement to have systemic
implications, it does set the precedent for any subsequent
restructurings, which could take on added importance if big,
troubled peripherals like Spain or Italy take a turn for the
worse.
The Greek situation is not identical to ours. In fact, because of the
size of our economy, because of the ubiquity of U.S. Treasurys across
the globe, in so many different instruments, in so many different
institutions, a default could be much worse. But the Greek example does
demonstrate there are consequences to default.
The Wall Street Journal on September 7 2013 pointed out:
. . . since tipping into recession in 2008, Greece's
economy has shrunk more than 20 percent from its peak while
successive waves of austerity measures since the start of the
Greek debt crisis in 2009 have helped push tens of thousands
of businesses into bankruptcy and sent unemployment to a
record of around 27 percent.
The Pew Center reports that unemployment among young Greeks under 25
years old skyrocketed to 62 percent in June, 2013.
Austerity in some respects is another word for contracting government
spending--contracting government engagement in the economy. This
shutdown is essentially a miniausterity program for the last 5 days
because we have contracted government contributions to the economy.
Hundreds of thousands of Federal workers furloughed, additional private
sector contractees furloughed, extraordinary measures taken to shut
down the government. These measures will lead inevitably to the
contraction we have seen in other places. Holding the full faith and
credit of the United States hostage to appease a handful of
irresponsible and reckless House members who are fighting battles that
have been lost several times is not what our democracy is about.
I urge immediate action to get our government up and running again
and our bills paid. Then we can focus on a more pressing need--creating
jobs, opportunity, and prosperity for families in my State of Rhode
Island and across this Nation.
With that, I yield the floor.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Mr. President, I am grateful to the senior Senator from
Rhode Island for his statement. I listened to every word of it from my
office. He is such a great asset to the State of Rhode Island and our
country with his military background and his experience in the Banking
Committee and Armed Services. Very few people have the wisdom he has.
I would also note that the Presiding Officer's presentation was also
remarkably good.
Mr. President, in closing today I want to read a very brief statement
from a Nevada publication. The headline is:
Nevada Residents Are Calling Their Obamacare Hotline In
Tears, Desperate For Health Coverage.
Uninsured Americans in Nevada are so desperate to get
health coverage under Obamacare that many are calling the
state's new insurance marketplace ``in tears.''
Kevin Walsh, a senior Xerox official who heads the department that is
helping some states maintain their online Obamacare marketplaces and
call centers, told Bloomberg Businessweek that many people had
contacted Nevada's Obamacare hotline with ``just raw emotion'' within
the first hour that the marketplace opened on Tuesday. Nevada has an
adult uninsurance rate of 27 percent--the fifth highest in the country.
``They were calling and saying, `Can I get my coverage
today so I can see my doctor this afternoon?' '' said Walsh.
That is in one sense moving but also frustrating because,
sure, you can sign up--but the coverage can't be effective
until January 1st.
Uninsured Americans and those with costly or skimpy health
plans have been rushing to sign up for health coverage under
the law, although technical glitches have delayed the
enrollment process for some of them. Those who have
successfully enrolled say that they are pleased with the new
coverage they will be getting beginning in January.
Even some ardent Republicans and ObamaCare skeptics who
signed up for coverage are admitting that the law will be a
financial boon to them and give them peace of mind. Butch
Matthews, a lifelong Republican and initial proponent of
repealing the law, told ThinkProgress that it would end up
saving him $13,000 per year on medical costs. ``I still am a
very strong Republican, but this . . . I'm so happy this came
along.''
Mr. President, it has been this way all across America this week. I
learned personally from the man who started Google that they had
problems when that first started. They didn't believe that many people
were interested in the information they could give. There were about 9
million people this week who have gotten online to find out about
ObamaCare.
This has been very successful.
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