[Congressional Record (Bound Edition), Volume 145 (1999), Part 10]
[Senate]
[Pages 14823-14824]
[From the U.S. Government Publishing Office, www.gpo.gov]



                             NATIONAL DEBT

  Mr. FITZGERALD. Mr. President, I will speak for a few moments today 
about an issue of great concern to me and many other Members. In the 
last few days in Washington, there has been literally a euphoria over 
the notion we in Washington are running large budgetary surpluses on an 
annual basis. The uncorking of champagne bottles all around town has 
taken place on the notion that, because we are running surpluses, we 
are somehow paying down the national debt.
  Yesterday, the New York Times had an article on page 14 entitled, 
``Clinton Sees the Possibility of Zero U.S. Debt by 2015.''
  As I will show, this article is dead wrong. The article stated that 
the entire national debt, which now stands at over $5.6 trillion, will 
be paid down by the year 2015. It went on to state that the debt clock 
in New York, which is a daily tally of the Federal national debt, would 
be down to zero by the year 2015.
  It turns out that is dead, flat wrong. In fact, the national debt is 
now rising. It is going to continue to rise every year of the 
President's 15-year projections. The total national debt by the year 
2015, as listed on that debt clock in New York, will stand at more than 
$7 trillion.
  How can this be? We have heard from Washington that we are running 
large annual budget surpluses. The President, 2 days ago, said this 
year we will have a $98 billion surplus, and those surpluses are going 
to rise each year to the point that in the year 2004 we will have a 
$253 billion surplus.
  Looking at the fine print on the President's midyear report, we find 
our total gross Federal debt is still going up. It stood at $5.4 
trillion at the end of the last fiscal year. This year, it will rise to 
$5.6 trillion. By the year 2004, the total gross Federal debt will have 
risen to over $6 trillion.
  How can our national debt still be going up if we are running 
surpluses in Washington? The answer to that question is, we really do 
not have surpluses in Washington. They have a definition of surpluses 
in Washington which is far different from the average perception of 
what the word surplus would mean to American families or businesses. 
One would think when you have surpluses, you would be paying down your 
debt, not increasing it. However, in Washington, the debt is still 
going up, even as they say they have surpluses.
  We know our President chooses his words very carefully. I read his 
press statements the other day. He was careful not to say we are paying 
down the total Federal debt. He talked instead about one of the 
components of the Federal debt. It turns out there are two parts to the 
Federal debt. There is debt owed to Government accounts and there is 
debt held to the public. Both of those debts have to be paid off. At 
some point, we have to come up with the cash to pay down those debts.
  What President Clinton chose to do in his statements the other day 
was ignore this part of the Federal debt and decide he would only focus 
on debt held by the public. It is true he is actually going to start 
trying to pay down the debt held by the public. Debt held by the public 
stood at $3.7 trillion at the end of last year. By the year 2004, the 
President will have paid it down about $700 billion to $2.9 trillion. 
It is true by the year 2015 he will have paid this portion of the 
national debt down to zero.
  How is he going to pay that portion of the debt down to zero? He is 
going to borrow more from the Government accounts. He is going to 
borrow more from Government accounts. It turns out he will increase the 
Government accounts section of the national debt. Not only will he 
increase it, he is going to quadruple debt held by these Government 
accounts. It will rise from $1.7 trillion at the end of last year to $3 
trillion by the year 2004. Guess what. By the year 2015, when the New 
York Times said we would have no national debt, it turns out the debt 
in this column will be more than $7.5 trillion.
  I have to say, if the ordinary family were to pay down their mortgage 
by running up their credit card and then realize what they were doing, 
I think they probably wouldn't feel it was cause for celebration that 
they had just shifted the composition of their debt. Similarly, I don't 
think there is cause yet in Washington to uncork the champagne bottles 
and pat ourselves on the back that we are paying down a portion of the 
Federal debt while we are increasing the other portion and are 
increasing the overall debt.
  Right now, the average family in America is responsible for $55,000 
of that total national debt. Each family's share of the national debt 
is going to be going up in each and every year of the President's 15-
year projections. At the end of the 15 years, the total national debt 
will be even higher than it is now, and each family's share of that 
national debt will be even higher.
  This chart shows the direction our national debt is going: It is 
continuing to rise. We are digging the hole deeper.
  All this talk about surpluses in Washington should be taken with a 
grain of salt. The surpluses they are talking about are fictitious 
surpluses; they are accounting gimmicks. If any private business man or 
woman used the same kind of accounting they use in Washington, they 
could potentially wind up behind bars in a Federal penitentiary. We 
need to change the accounting system in Washington so the public and 
the media cannot be so easily misled.
  I am hopeful the press throughout this Nation will point out that the 
earlier reports were flatout wrong, that the debt clock in New York 
will not stand at zero by the year 2015, even under the President's 
projections. Under the President's own projections of our national 
debt, it will be higher in the year 2015 than it is now.
  I think it is a shame Washington is misleading the American public 
about our true financial condition. Is it not high time we end the 
hocus-pocus bookkeeping in Washington and speak the plain truth?
  I ask unanimous consent to print the New York Times article in the 
Record.

[[Page 14824]]

  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the New York Times, June 29, 1999]

         Clinton Sees the Possibility of Zero U.S. Debt by 2015

                          (By David E. Sanger)

       Washington, June 28.--President Clinton today raised the 
     mind-bending possibility that the giant national debt clock 
     in midtown Manhattan would soon start running in reverse--and 
     that by 2015, the Government would owe no money to investors 
     around the world.
       There is little question that Mr. Clinton described the 
     general direction of the clock correctly. Barring a stock 
     market disaster or a Japan-like recession, the Federal 
     Government's $4.5 trillion debt, the figure on the clock, 
     will begin diminishing in the next few months. That number 
     includes debt that the Government owes to itself, mostly to 
     the Social Security system.
       The more important figure--debt that the Government owes 
     individual investors, companies and governments around the 
     world--has actually been in decline for two years. How much 
     it can be reduced in 15 years is far more problematic, 
     dependent on a huge range of economic assumptions--chiefly 
     the growth rate of the national economy--that, given the 
     inexact nature of such things, are most likely subject to 
     major revision.
       But even if the United States could pay off all its debt in 
     the next 15 years, many economists and some Government 
     officials say that might not be as great as it sounds. 
     Although huge debts in the 1980's and early 1990's when the 
     Government ran up huge annual deficits, were a tremendous 
     drag on the economy, a bit of national debt may be a good 
     thing.
       ``It's almost hard to imagine what this country would be 
     like debt-free,'' said Alan Sinai, the chief economist of 
     Primark Decision Systems, an economic consulting group. ``But 
     while no politician would want to admit it, the optimal debt 
     for the United States is probably not zero. What that optimal 
     level should be, though--now that's a subject for a real 
     national debate.''
       Without question, reducing the debt creates a host of 
     advantages for the United States. As the Treasury tames its 
     appetite for borrowed money, it no longer competes with 
     homeowners looking for mortgages, for example, or companies 
     seeking to raise money. As a result, interest rates have more 
     room to fall.
       And as the debt declines--Mr. Clinton's projections show 
     that it will fall below $3 trillion in 2005, and below $2 
     trillion in 2009--the amount of interest the Government pays 
     each year goes down substantially, freeing up even more cash, 
     while raising the national savings rate. That, in turn, helps 
     to compensate for the free-spending ways of American 
     consumers, who in these boom times are barely saving.
       ``That may be the biggest single advantage,'' one of Mr. 
     Clinton's senior economic advisers said toady.
       But a debt-free United States might create a more complex, 
     and some say riskier, financial landscape worldwide.
       For international investors, there is no safer place to put 
     money than United States Treasury bonds. When the Asian 
     economic crisis hit in 1997, and accelerated last year after 
     the collapse of the Russian economy, investors around the 
     world put their assets into United States Treasuries. These 
     investments help make the dollar the world's most popular 
     ``reserve currency,'' the money other governments hold for 
     economic security in their central banks. And they give the 
     United States subtle but significant economic clout around 
     the world.
       If the Government stops long/term borrowing, the money that 
     becomes available may stay in the United States, invested, 
     say, in mortgages or corporate debt. But if investors do not 
     have the security of investing in United States Treasuries, 
     they may be less interested in holding their cash in dollars, 
     and that could affect the dollar's value on world markets.
       Investors could put their money in another country's 
     treasury bonds--say those issued by the new European Central 
     Bank or the Bank of Japan. But that requires taking a bet on 
     the future of European and Japanese currencies, adding a 
     significant risk to the investment.
       Whether any of this happens depends on a series of 
     assumptions. The chief one is the future of the American 
     economy. Mr. Clinton's projections, released today, assume 
     that the American economy will grow between 2.1 percent and 
     2.6 percent a year for the next 15 years. The Administration 
     made similar bets for the past seven years, and it was wrong 
     every time. But the surprise was pleasant: the economy 
     expanded far faster, and for far longer, than even the most 
     optimistic Government projections.
       The risk is that future errors could be in the opposite 
     direction. That is what happened to Japan, which assumed that 
     the successes of the 1980's would extend into the 1990's. It 
     was the blunder of the decade, and Japan is mounting a huge 
     debt as it tries to spend its way out of seven-year 
     recession.
       ``These are difficult projections to make for even the next 
     year or two,'' Mr. Sinai said today, ``And even more 
     difficult for beyond that.'' and the risk is accentuated 
     because most of the paydown of the debt is to occur between 
     2010 and 2015, allowing plenty of time for economic and 
     political miscalculation or happenstance.
       On the other hand, the Government is closer to paying off 
     the debts that really matter than even Mr. Clinton indicated 
     today. While the debt clock reads $5.6 trillion, the figure 
     that kicks around the United States Treasury is less than 
     half that: $2.77 trillion, when the amount of debt held by 
     the Federal and state governments and the Federal Reserve is 
     subtracted. Under the President's projections, that debt will 
     be paid off around 2011.

  Mr. FITZGERALD. I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.

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