[Congressional Record Volume 169, Number 74 (Tuesday, May 2, 2023)]
[Senate]
[Pages S1468-S1469]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              DEBT CEILING

  Mr. WELCH. Mr. President, I want to speak about the looming debt 
crisis, the fact that within 30 days, there is a real and substantial 
likelihood that America will do something that America has never done; 
and that is fail to pay its bills in full and on time.
  There is a lot of discussion about the debt. It is $31 trillion. 
There is very little discussion about what that debt is, who owns that 
debt, and what the implications are to all of us--the people we 
represent, our State and local governments, our private institutions, 
and our economy--if, in fact, we do the unthinkable and default on the 
debt.
  Of that $31 trillion debt, $8 trillion is held by governmental 
entities; that includes the Federal Reserve, two Social Security trust 
funds, the Medicare insurance trust, and the U.S. military retirement 
plan. Anything we do to jeopardize the value of those Treasury bills--
where 100 cents is what they are worth on the dollar--compromises the 
security that Americans depend on from those trust funds.
  The $24 trillion in treasuries held by the public includes $3 
trillion held by individuals, by households, by for-profit and not-for-
profit entities, and by endowments. If we jeopardize that $1 for $1 
risk-free asset, it means those individuals who own the Treasury bond 
as part of their portfolio lose value.
  And $2.8 trillion is held by money market mutual funds. Every one of 
our constituents knows what those are. Most of our constituents have 
money deposited in a money market account. They absolutely believe that 
they are going to get $1 out for every $1 they put in. We jeopardize 
that Treasury bill by defaulting on our debt. They may get 95 cents or 
90 cents. That is real havoc and real pain for so many Americans.
  And $2 trillion is held by banks. That is the money that they have to 
guarantee the deposits. If we think we have an issue with the run on 
the banks of First Republic and SVB, wait until this happens and there 
is a run on these banks who, because of inaction that this Congress 
took, has a vast and cataclysmic reduction in the value of their 
deposits.
  And $1.5 trillion is held by various State and local governments--
that is the town you live in; that is the town I live in--where that is 
set aside to help their citizens. They lose value on those securities. 
They can do less for water and sewer, for schools, and roads in their 
own communities.
  And $1.1 trillion is held by private pension funds; that is, folks 
who have saved and put into their pension fund for their retirement. If 
that asset, the Treasury bond, declines in value because of the 
default, their retirement is in jeopardy.
  And $7 trillion is held by foreign central banks and foreign 
investors. That helps us because they help us keep our interest rates 
down, and they do that because the dollar in is a dollar, plus 
interest, out. That is jeopardized by this reckless plan to default on 
our debt as a leverage device to get things totally outside of what 
that debt is.
  No. 1, Treasurys are the bedrock of our financial system because they 
are viewed as a safe asset, and they have been safe ever since the 
founding of our country.
  Equally important, Treasury bills are considered risk-free. You put 
that dollar in, you buy a Treasury, you are going to get that dollar 
back absolutely, plus the interest on the coupon.
  Third, Treasurys are the device in our willingness to pay, 
unquestioned, that has made the dollar the reserve currency of the 
world. I go back to what I said earlier--$7 trillion are owned by 
foreign banks. They put their money here because they have total and 
complete confidence that it is safe. If we default on our debt, we lose 
that status, they lose that assurance, and we in this country start 
paying higher interest rates.
  There is real harm to individuals as well, as the economy goes 
through a cataclysm of the first-time default in the history of the 
country.
  Analysts who have looked at this say a typical worker near 
retirement--and I am including folks in Vermont--would see a $20,000 
reduction in what they have available for retirement. The average new 
30-year mortgage would be increased in cost over the life of its 
mortgage by $130,000. Think of what you could do with that to help your 
child with an education. It would become much harder to borrow.
  The national debt--the national debt--would increase by $850 billion. 
So the folks who are advocating default as a way of ``cutting down 
spending'' are doing the single most destructive thing that they could 
do that will result in increasing spending. So this notion of 
defaulting on our debt, we are using that as a tactic to get something 
completely unrelated to what we all know is the obligation to pay our 
bills.
  A confident country always pays its bills. It is a disaster for the 
economy and has long-term devastating implications for everyday 
Americans as well as our reputation and strength as a country.
  This is not a custom. It is embedded in our DNA as a country that we 
pay our bills in full and on time, and it started just after we became 
an independent country. We were broke.
  Alexander Hamilton, as you know, was our first Treasury Secretary. He 
had to make a decision. We had borrowed a lot of money to prosecute our 
revolution. Those bonds that represented that borrowed money were worth 
pennies on the dollar. The question for Alexander Hamilton was, pay 
pennies on the dollar or pay 100 cents on the dollar. Despite the fact 
that this was an incredible hardship, Alexander Hamilton and our 
government then made the decision that those war bonds were going to be 
repaid in full. The benefit of that to us was that we established, as a 
country, that we were safe,

[[Page S1469]]

we were sound, and we were reliable. And no matter what the 
circumstances were, if we owed the money, we paid the money that was 
owed; we paid it in full; and we paid it on time. The benefits to our 
country and to us as individuals over the generations where we have 
kept that commitment have been incalculable.
  So the notion that we should put that in jeopardy and even threaten 
not to pay our bills is something that has never, ever happened before 
in this country and should never happen.
  On this question of negotiation, let me ask the question: Why would 
President Biden--why would any President, Republican or Democrat--
negotiate when the effect of that is to threaten the pension deposits 
of the people we represent? Why would the President--any President--
negotiate when the outcome of that negotiation threatens your money 
market deposits? Why would this President--or any President--negotiate 
when the outcome of that negotiation would weaken our pension funds, 
where that negotiation--if it comes out the way the proponents of 
default as a tactic wish--is going to make it really tough on everyday 
people: our small businesses, our local governments, and our savings 
for our kids' education?
  We pay our bills in full and on time. That is what the United States 
of America has always done. That is what the United States of America 
must always do.
  I yield the floor.

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