[Congressional Record (Bound Edition), Volume 150 (2004), Part 17]
[House]
[Pages 23600-23608]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       INCREASING THE DEBT LIMIT

  The SPEAKER pro tempore (Mrs. Musgrave). Under the Speaker's 
announced policy of January 7, 2003, the

[[Page 23601]]

gentleman from South Carolina (Mr. Spratt) is recognized for 60 minutes 
as the designee of the minority leader.
  Mr. SPRATT. Madam Speaker, 4 years ago, the Bush administration was 
just getting started. They sent us their first budget, then told us, 
based upon a projected $5.6 trillion in surpluses over the next 10 
years, that there could be huge tax cuts, between a trillion five and 
$2 trillion, huge tax cuts and still a budget surplus, and that they 
would not have to even come back to Congress to ask again for an 
increase in what we call the debt ceiling until the year 2008, 7 years 
later.
  The debt ceiling is a statutory limit, a limit that we impose by law 
on the total amount of debt that the United States of America can 
incur. It currently stands at a level of $7.384 trillion.
  We did not buy into this argument. We did not vote for the tax cuts, 
and we on this side of the aisle were not surprised, disappointed, 
bitterly disappointed, because we had strived mightily to put the 
budget in surplus for the first time in 30 years during the 1990s. We 
did not vote for it, but we were not surprised when in the year 2002, 
not 2008 as predicted, but in the year 2002, the Bush administration 
came back to Congress and said that the statutory debt ceiling is about 
to be hit. In other words, we have run up so much debt that we are 
right at the ceiling of the total amount of debt that the government of 
the United States can incur, and, therefore, we need a $450 billion 
increase in the debt this year, 2002.
  The next year they were back asking for more, and now they are back 
asking for still more, this time $800 billion. It is phenomenal when 
you consider that the last increase occurred 18 months ago and amounted 
to $984 billion. That was the largest increase at any one given time in 
the fiscal history of this country. As a matter of fact, $984 billion, 
the amount by which the debt ceiling was increased in May of 2003, $984 
billion is more than the total indebtedness of the United States when 
Ronald Reagan came to office in 1981, and how long has it lasted, this 
$984 billion increase in the debt service? Eighteen months.
  In fact, right now, this administration, under its fiscal policy of 
the budgets passed by the Republican majorities in this House and the 
Senate, has run up a debt of $1 trillion over the last 18 months. That 
is a rate at which we are accumulating debt right now, $1 trillion 
every 18 months.
  If we add together the increases to date since 2001, it was $450 
billion in 2002; $984 billion, May 26, 2003; and then a request which 
must come to the floor sometime this week in one form or another, 
because the Treasury Department tells us they cannot continue to incur 
debt or meet their obligations unless we raise the debt ceiling, 
allowing them to borrow still more money, $800 billion will have to be 
passed some time this week. Those three increases for the last 4 fiscal 
years total $2.234 trillion. That is the amount of indebtedness that 
has to be accommodated by increases in the debt ceiling in order to 
allow room for the Bush budgets over the last 3 fiscal years.
  We think at the very least an increase of this magnitude, $800 
billion, requires an unambiguous yes or no vote, a straight up and down 
vote under a clean bill that only deals with the debt ceiling, with one 
exception. We believe that it is unconscionable to continue incurring 
debt at this rate, $2.3 trillion over 4 years, without doing something 
to stop this juggernaut, this headlong descent into debt.
  So we propose that at least we be offered an amendment on the House 
floor to amend the debt ceiling increase to reinstate something we call 
the pay-as-you-go rule. The pay-as-you-go rule provides, quite simply, 
that if you want to increase an entitlement, liberalize an entitlement 
payment, you have to identify new revenues to pay for the increase or 
decrease another entitlement by a commensurate amount. On the other 
hand, if you want to cut taxes, you have to raise revenues elsewhere or 
cut an entitlement by the same amount so that the effect is neutral, 
has no effect on the bottom line of the deficit.
  That rule was in play in this House for at least 12 years during the 
1990s, and it accounted for a phenomenal effect upon other measures we 
took up and the deficit of the United States.
  As this chart shows, when President Clinton came to office in 1993, 
the deficit the previous year was $290 billion. We passed a Deficit 
Reduction Act here sent to us by the President on February 17, passed 
it within 3 months. Every year thereafter the bottom line of the budget 
got better, until the year 2000 when we had a surplus of $236 billion. 
Four short years ago, we had a surplus of $236 billion.
  Every year since the onset of the Bush administration, the bottom 
line of the budget has gotten worse and worse, to the point where in 
the year 2002 we were back in deficit by $158 billion, and the year 
2003 we had a record deficit, $377 billion, and this past year, which 
ended September 30, 2004, we booked a deficit of $413 billion in the 
Federal budget, $413 billion.
  Now, what happened? I mentioned earlier the big tax cuts passed by 
the Bush administration passed in 2001. There were more in 2002, still 
more in 2003.

                              {time}  2015

  And instead of having a rebounding effect, a sort of supply-side 
effect so that the pick-up in the economy resulting from the tax cuts 
sort of replenished the lost revenues, instead of that happening, as 
projected, this was the curve that was projected, that there would be 
barely any loss of revenues, instead taxes have followed this 
particular actual curve, dropping from $1.73 trillion back in the year 
2001 to $811 billion this year.
  Now, there are other sources of the problem. Terrorism is taking its 
toll on the budget. The war in Iraq and Afghanistan has cost over $150 
billion thus far. No question they have had an effect on the bottom 
line. But the tax cuts, based on this miscalculation, have had a 
substantial impact, and this is a course that was chosen by those who 
voted for it.
  Here is where we were in the year 2001 when President Bush came to 
office. This was the statutory debt ceiling, the limit on the total 
indebtedness the government could incur, $5.950 trillion. It was raised 
to $6.4 trillion, then raised again May 2003 to $7.384 trillion. It 
will now be raised again to $8.200 trillion, by $800 billion. And, 
folks, that is not the end of it. That is the hard part of it. That is 
what has happened thus far.
  Let me just summarize, though, where we are right now with the debt 
ceiling increases that have had to be adopted to accommodate the fiscal 
policies of this administration. Here we see it. In the year 2002, $450 
billion, the next year $984 billion, now $800 billion, it comes to an 
increase, the amount I mentioned just a while ago, $2.234 trillion. 
That is the amount in 4 years by which the debt ceiling of the United 
States has had to be raised in order to accommodate the budgets and 
fiscal policy of this administration.
  As I said, the last increase, $985 billion, was the largest in our 
history. Not only that, that amount, $984 billion, exceeded the total 
indebtedness of the United States in 1980-81, when Ronald Reagan came 
to office. The total debt of the United States then was $908 billion. 
We had one increase that has lasted 18 months, that is all. We have 
already run through $984 billion on the watch and under the policies of 
this administration.
  As I said, it does not stop here. It would be bad enough if it did, 
but it does not stop here. This is what we really have to be concerned 
about and why we think at the very least there should be one single 
solid step taken in this debt ceiling increase to slow down this head-
long descent into debt. This is the level of the debt ceiling in 2001 
when President Bush came to office.
  The Congressional Budget Office, at our request on the Committee on 
the Budget last year, projected the Bush budget through the year 2014, 
from 2005 through 2014, for 10 years, and came back and told us if we 
follow this course, by 2014 the United States will have accumulated 
$14.545 trillion in debt. This is where the Bush administration 
started, this is where they

[[Page 23602]]

would end in 2014, projecting forward on a current services basis, the 
tax cuts and other policies that they have.
  Let me make one final observation about this. As serious as it is, 
and anyone can look at this and realize the gravity of it, everybody 
understands the economics, everybody understands the fiscal effects, 
but the real issue here is the moral question. Is this the kind of 
legacy we are going to leave our children: $14.545 trillion? Because 
that is the course we are on right now.
  And let me give one other aspect with this second poster here. One 
other aspect of this problem, before turning to my colleagues, that 
everybody knows simply cannot be sustained. This lower line, the black 
line, is the gross domestic product of the United States from 1980 
through 2014, slowly rising, growing every year. That is the GDP. This 
is the debt of the United States during the same period of time. And 
you can see that the debt of the United States is growing faster than 
our income.
  Everybody, every household, every business, and every government, 
State, Federal, or local, knows that you simply cannot sustain that 
kind of increase in your debt over and above your annual income for a 
prolonged period of time. But that is the course we are on right now.
  Madam Speaker, I wish to recognize at this point the distinguished 
gentleman from New York (Mr. Rangel), the ranking Democrat on the 
Committee on Ways and Means, who will be our floor person on this issue 
when and if the debt ceiling increase comes to the floor.
  Mr. RANGEL. Madam Speaker, let me thank the gentleman from South 
Carolina (Mr. Spratt) not for what he does for our party or for the 
Congress, but what he does for our great country.
  I would like to talk about the question of morality, the 
responsibility of government. And some may say, well, what has that got 
to do with the debt ceiling? Well, it would seem to me that if people 
would look at the responsibility of our government as relates to 
spending, to believe that we have a credit card, because that is what 
we do, we are borrowing money, and that the head of our household was 
borrowing money but not letting anybody know what he was doing, that 
would be irresponsible and immoral.
  It seems to me that if we had a head of a company that inherited a 
$5.6 trillion surplus and then when we went to look at the books found 
out that he wasted $9 trillion and had a $2.6 trillion indebtedness, 
that that person may not be impeached but certainly would be fired from 
the job.
  Some might say that they do not really feel the pain of borrowing. 
And I guess irresponsible heads of households really do not feel the 
pain of borrowing. Imagine how good it might feel to somebody to be 
given a credit card and to be told they do not have a limit on what 
they spend; or to feel that they do not have to tell the American 
people what they are spending and what they are borrowing; or to be 
able to say, well, it does not make any difference, I will hide it in a 
bill and they will not ask me any questions; or to believe that the 
best way to run the country is to give a $1 trillion or a $2 trillion 
decrease in taxes to those people who are in the highest income tax 
bracket. Suppose those people knew that in order to do this that you 
would have to borrow the money in order to please a small group of 
people?
  To get back to the questions of moral values, is it morally right to 
spend money, to give tax cuts, knowing that the Social Security System, 
where we made a moral and political and legal contract with the 
American people, promising that if they lived long enough or if they 
had disabilities or if they survived a tragedy that that system would 
be there for them? Is it fair to leave that system so insecure that 
young people now have no idea whether it is going to be there for them, 
when that money could have been used to shore up the Social Security 
System so that we would be fulfilling a moral promise to these people 
rather than fulfilling a political obligation to supporters?
  To talk about moral values, if you knew that 45 million Americans, 
most of whom work every day and had no health insurance, what would be 
more important morally, to provide for the health care of human beings, 
Americans, or to give a tax cut?
  Let us talk about moral values in terms of education, to make a 
person more productive, to make a person have self-esteem, to make a 
person want to get married and have a family. Is that not moral values? 
Is it more important to give a tax cut and to borrow money to do that 
than to make certain that every kid in America has a chance to fulfill 
whatever their brains would allow them to do because they had access to 
education?
  What about our old folks? Getting old is getting to be a problem just 
in maintaining one's health because of the cost of prescription drugs. 
They let you get to a doctor, but you cannot even afford to do what the 
doctor is suggesting that you do. You do not have to be religious to 
understand that if you had the money to provide national health care 
prescription drugs, the moral thing to do is to help those who have not 
got and to say God already blessed the wealthy. Those are moral values, 
to be able to do that.
  It just seems to me that the most irresponsible thing to do is to 
borrow the money and to know that you will never pay for it, to borrow 
the money and to know that the interest rates are going to fall on your 
children, not you. You will enjoy the benefit of supporting the war and 
giving the tax cuts and rewarding all of the lobbyists, but the people 
who pay for it are not just today's taxpayers, not just today's 
children, but the unborn are born with this debt on their heads. It 
will be hard to explain to them what happened in this Congress, what 
happened in this Presidency, what happened in this era that caused us 
to believe that we knew so much about the economy that we could go into 
debt $14 trillion and say, let our kids pay for it. Is that the moral 
thing to do?
  Madam Speaker, it is not the political thing to do, it is not the 
moral thing to do, but that seems to be what is so important. The 
President would have us believe that he may not be right all the time, 
but we know where he stands. How are we going to know where he stands 
if his party does business in the middle of the night? How are we going 
to know where he stands if we cannot even find out what the interest on 
the debt is going to be?
  And let me say this. Every household plans for what they have to 
spend, and it is difficult to explain this in terms of trillions of 
dollars, but what if you knew as the head of a household that you had 
this credit card, that you could buy anything that you wanted on this 
credit card and not pay for it? But every month the credit company will 
be sending you a bill, and it will show you what the service charge is 
going to be, what the penalty is going to be, or in our case what the 
interest is going to be.
  And what would happen in this household, I ask the gentleman from 
South Carolina (Mr. Spratt), if you looked at your bill and you looked 
at what you had to pay and you found out that in 10 years the interest 
that you are paying on the money that you borrowed exceeded all of your 
budgetary responsibility for clothing, for health care, for rent or 
mortgage, except for one issue?
  And that is where in 10 years this great country of ours will be; 
that the interest that we are paying on the debt that grows 50 percent 
faster than the economy will reach the point that it would exceed all 
of our discretionary expenditures, with the exception of defense.

                              {time}  2030

  Which means what? It means that Republicans and others can say I 
supported Social Security, but the money was not there. I wanted to do 
more with education, but the money was not there. I want health to be 
improved, but the money is not there. And at the end of the day they 
may have succeeded in breaking our responsibility as a government for 
every social program that we have and the only item that would receive 
priority would be defense and supporting the war.

[[Page 23603]]

  Madam Speaker, I think that this type of thinking really violates our 
national security because Americans should know who are we borrowing 
the money from, who do we owe this money to, and how mean can we be in 
disagreements we have with people whom we owe money to. How angry can 
we get with the bank if we know they can foreclose? And the people who 
are lending this money are foreigners. It is not as though in the last 
4 years we have made a lot of friends with foreigners, but they thought 
they were making a lot of money off our interest. And as the interest 
goes up, we would like to believe that we can borrow more money from 
them.
  But, guess what, one of the biggest purchasers of our debt is the 
People's Republic of China. A large chunk of the money that we owe to 
foreigners is to China. And whom do we have a problem with in terms of 
trade? The People's Republic of China. So what do we say as a great 
nation and lead organization of the World Trade Organization? We told 
China if they do not do what we tell them to do in terms of fairness 
and equity as relates to international trade, we will not do business 
with them. We want them to reevaluate how they deal with their 
currency. We want them to be fair and not dump their goods and have us 
lose jobs.
  And China would say to us, suppose we do not do any of those things? 
What are you going to do? What are you going to do to the bank that you 
owe money to? Suppose they unload that debt and let it flow out in the 
market, suppose we cannot borrow any more money, then we have to 
appease the people that we owe.
  Madam Speaker, it would be ironic that because of our hunger and our 
thirst to borrow, our irresponsible need to support tax cuts for the 
rich, our complete disregard for the health, education and welfare of 
our people, who brings us to our feet is the communists, not because of 
their guns, weapons and power but because they understood the 
capitalist system so well that they defeated the strongest capitalistic 
country that God has ever seen.
  Madam Speaker, I thank the gentleman from South Carolina (Mr. Spratt) 
for just sharing with the American people the economic and fiscal 
policy that we are directing. I hope that some of the people who are as 
concerned as we are with moral values would recognize that far more 
important than just fiscal policy is how do we treat the American 
people that have needs. We owe them an education, a place to live, 
aspirations and health care, and it would be a shame if we are paying 
China more than we are paying for health care.
  Madam Speaker, I thank the gentleman from South Carolina (Mr. Spratt) 
for giving me this opportunity to say what a moral pleasure it is for 
me, with the Committee on Ways and Means, in working with you in trying 
to get the people to understand that we are not trying to beat up on 
Republicans. We just want them to tell the American people what they 
intend to do, not in the middle of the night, not locked up in some 
omnibus bill, but to come here and challenge anything that has been 
said tonight. We will not see them, because too many people are 
watching. I hate to believe this will follow the pattern where at 2 in 
the morning they will have a bill and it will pass by one vote.
  Mr. SPRATT. Madam Speaker, I thank the gentleman for eloquently 
expressing the moral dimensions of a swelling debt, $8 trillion today, 
growing to $14 trillion in just 10 years.
  Madam Speaker, I yield to the gentlewoman from New York (Mrs. 
Maloney).
  Mrs. MALONEY. Madam Speaker, I thank the gentleman from South 
Carolina (Mr. Spratt) for yielding me this time and for organizing this 
Special Order to highlight the outrageousness of the administration's 
demand that Congress raise the debt limit for the third time.
  Remember, my colleagues, when President Bush took office, the 
administration said that the debt ceiling would not be reached until 
2008. But, instead, the majority has led the country so far into debt 
that we have had three huge increases in 4 years. The last raise, only 
a year ago, of $984 billion was far greater than any in United States 
history.
  Remember, in February of 2001, the Bush administration was predicting 
that the publicly held public debt would be paid down to $1.2 trillion 
by 2008. In its latest midsession review this summer, the 
administration itself was now projecting that the debt would be $5.5 
trillion in 2008. In fact, the $800 billion increase the administration 
now demands under threat of default would raise the debt ceiling to 
$8.2 trillion and give the administration the greatest increase in debt 
of any administration ever. What a terrible distinction. What an 
appalling legacy for future generations. And under President Bush's 
policies, the CBO and other economists predict that the debt will 
continue to rise to at least $14 trillion and as much as $14.5 trillion 
in the next 10 years. What have the Republicans done to our economy?
  Remember, when President Bush took office, the CBO was projecting a 
10-year baseline budget surplus of $5.6 trillion. A surplus. That was 
the result of President Clinton's policies that paid down the deficits 
and reduced the public debt. But after only 4 years of Republican 
leadership CBO is now projecting a cumulative 10-year deficit of $2.3 
trillion. That is a swing of almost $8 trillion after only one term. 
Dare we ask my colleagues how bad will the next term be?
  The budget deficit reached a record 3.5 percent of GDP this year. As 
a share of GDP, the deficit is larger than it has been at any time 
since 1993. And let us not blame the war on terrorism. This is the 
direct product of their fiscal policies, the President's tax cuts that 
have left this Nation reeling.
  In the private sector, there is a bipartisan consensus that the 
deficit is killing the U.S. economy. Last week, the Wall Street Journal 
released a November survey of 55 prominent economists on what the top 
priorities of the President should be in his new terms. These are 
conservative folks, financial leaders in our country. Their top item 
was narrowing the budget deficit.
  I quote from Peter Hooper, a former economist with the Federal 
Reserve Board, ``If we do not get a narrowing of the budget deficit, it 
will slow the rate of the growth of the economy.''
  It is not just our financial leaders in this country that are 
worried. This morning, the Associated Press reported that a pressing 
concern of the EU finance ministers at their meeting this week is the 
U.S. budget deficit and the resulting weakness of the dollar, which was 
at a record low today against the Euro. The ministers called on the 
U.S. to reduce its deficit and said that action, not just words, were 
what is needed. But what do we get from the administration? An increase 
in the debt ceiling, the largest ever in the history of the country.
  Secretary Snow responded that the deficit was, ``unwelcome.'' 
Unwelcome? We are not talking about an unexpected dinner guest but a 
monster of this administration's making that our children and our 
grandchildren will have to suffer under and will have to pay for.
  Where has the administration been as the deficit has continued to 
mount? A recent paper by William Gale and Peter Orzag of the Brookings 
Institute put the situation very clearly: ``The United States has never 
before experienced such large, long-term financial imbalances. 
Sustained chronic deficits will gradually reduce national income and 
living standards and carry with them the risk of a financial crisis.''
  A recent New York Times editorial spelled out what this financial 
crisis might be.
  This is extremely troubling, and the gentleman from New York (Mr. 
Rangel) touched on this very eloquently earlier. Almost all, 92 
percent, of the huge increase in publicly held debt that has occurred 
in this administration is held by foreign nations, with Japan and 
communist China the two largest shareholders. In particular, China has 
almost tripled its holdings since Bush took office and now holds almost 
$175 billion in United States treasuries.

[[Page 23604]]

  The Treasury figures which came out this morning show that China is 
one of only four nations that is buying significant amounts of U.S. 
debt, increasing its holdings by close to $20 billion since the 
beginning of this year alone. The Chinese are not buying our debt to 
advance freedom and democracy. They are buying it to advance themselves 
at a competitive advantage. By maintaining the dollar at an 
artificially high rate against the Chinese currency, they keep the 
price of their products low in the U.S. In other words, our budget 
deficit enables the Chinese to hold down prices of Chinese goods and 
makes them more competitive in the U.S., at the expense of U.S. 
companies.
  In short, the American taxpayer is subsidizing Chinese manufacturers, 
and the American worker is paying the salary of a Chinese employee.
  But what if the Chinese changed their minds? What if they dumped 
those Treasuries? Perhaps because, as the Times suggests, and I quote, 
of ``dismay over the United States' long-term fiscal disarray'' or for 
whatever reason they feel would advantage them.
  That is not an unrealistic scenario. Recent articles note that the 
Chinese policy of pegging its currency at a fixed rate to the dollar 
has been creating great imbalances in that country's economy and 
putting pressure on the Chinese government to let the dollar fall. Then 
we would have a crisis. Dumping dollars would almost certainly cause an 
abrupt spike in inflation and interest rates.
  All I can say is that these economic policies are dangerous. I came 
to Congress in 1992 and we had a $290 billion deficit, as the gentleman 
from South Carolina (Mr. Spratt) pointed out. In 6 years, we had what 
was projected to be a huge surplus. Under this administration, we have 
lost that surplus. They have created the largest deficit in history, 
and they are now calling to increase the debt ceiling to the largest 
amount it has ever been in the history of this country. And who is 
buying that debt? China is the prime purchaser of that debt. This is 
not a valid policy. It is wrong-headed.
  Madam Speaker, I thank the gentleman for his leadership on this 
issue.

                              {time}  2045

  Mr. SPRATT. I thank the gentlewoman from New York.
  I yield to the gentleman from Virginia.
  Mr. SCOTT of Virginia. I thank the gentleman from South Carolina for 
yielding, and I thank him for his leadership.
  We have heard that we have had to increase the debt limit. This chart 
shows why the debt ceiling had to be increased. It shows the deficit 
from the Johnson, Nixon, Ford and Carter administrations, the Reagan 
and Bush administrations, the deficit changing into a surplus, and then 
the massive red ink in this administration. It shows that it may get a 
little better for a couple of years, but unless there is a profound 
change in direction, it just keeps getting worse.
  When you run up this kind of deficit, we talk about increasing the 
debt limit, but one thing you have to do is pay interest on all of that 
debt. We have heard that the surplus projected at the end of the 
Clinton administration would have virtually paid off the debt held by 
the public by 2008. Instead, by 2008 we will have almost a $300 billion 
additional interest on the debt that has been run up. $300 billion 
increased interest to be paid.
  We talk about No Child Left Behind underfunded by $9 billion, 
veterans' health care underfunded by a couple of billion dollars. We 
have got other things, a couple of billion dollars here and there. We 
are squeezing here and there. By 2008, interest on the national debt, 
money just down the drain, $300 billion additional because of the 
fiscal irresponsibility.
  We hear that they want to privatize Social Security. This is the 
Social Security cash flow which my colleagues will notice, in 2017, 
instead of a surplus, we are going to be starting to run a deficit, 
huge deficits approaching, by 2037, $1 trillion. One wonders how could 
we ever have paid this surplus and why we should be running up as much 
of a surplus as possible now to be able to accommodate this.
  This chart shows that if you look at the tax cuts that this 
administration has enacted and has in store, the present value of all 
of those tax cuts is $14.2 trillion. We could have paid all of the 
Social Security benefits without increasing the age of retirement, 
without reducing benefits, for $3.7 trillion in present value.
  Medicare's deficit, the same kind of chart, $8.2 trillion. $11.9 
trillion is what it would have cost to make Social Security and 
Medicare both financially solvent for the next 75 years. $14.2 trillion 
in tax cuts. We had a choice: Tax cuts or make Social Security and 
Medicare solvent for 75 years. We made the wrong choice.
  This chart responds to the adage, if you don't change directions, you 
might end up where you are headed. This chart shows where we are headed 
at our present rate and present policies. This shows that right now we 
are borrowing money to pay for some of the green which is Federal 
spending. Unfortunately, by 2040, unless there is a profound change in 
direction, we will be able to pay interest on the national debt and a 
little bit of Social Security and have to borrow the rest of the money 
for Social Security. We will have no money for Medicare and Medicaid 
and no money for government spending like defense, education, 
transportation.
  Obviously, there has to be a profound change in direction. Otherwise, 
interest on the national debt will start eating up virtually every 
penny that we have.
  We are going in the wrong direction. We have to change directions 
back to the period of time when we made the tough choices, eliminated 
the deficit and created the surplus. We can go back to that era if we 
make the tough choices, make the right choices, but we are not doing 
that now. When we start talking about increasing the debt ceiling, this 
is one of the symptoms and one of the consequences of all of this red 
ink.
  I thank the gentleman from South Carolina for yielding, and I thank 
him for his leadership on fiscal responsibility.
  Mr. SPRATT. I thank the gentleman from Virginia.
  I yield to the gentleman from North Carolina.
  Mr. ETHERIDGE. I thank my friend from South Carolina for yielding.
  Let me thank the gentleman from South Carolina for his leadership on 
this issue because, as the gentleman from Virginia has just shared with 
us, this is an issue that deserves more than just an hour Special Order 
in the evenings. This is an issue that deserves the attention of every 
Member of this Congress, and it deserves the attention of the 
administration.
  We had a wedding this weekend in our family. Our last child got 
married. Come January, we are expecting to be grandparents. I am 
looking forward to that with a great deal of anticipation. But after 
what we have heard tonight, I am sorry to say that when that child is 
born he will inherit the largest debt and his generation of any group 
of young people in the history of this country. That is wrong, and this 
Congress and this administration has an obligation to do something 
about it. That is wrong.
  I heard today on the radio, I do not have it in writing, that the 
inflation increase that we are just facing, and they announced it 
today, is the largest we have seen in 14 years. That means we have to 
go back to 1990 to see the inflation increases now being built in the 
economy. If this is correct, what this is going to mean is the cost of 
that debt is going up, because interest rates will go up with inflation 
and it will start to squeeze everything. Sure, it has something to do 
with the price of oil, but the price of oil is going to keep going up 
if we keep devaluing the dollar. And the dollar gets devalued because 
we have a huge debt, and the cycle gets worse and worse.
  That is basic economics. You do not need to know a lot. You just need 
to understand that we have got to get our house in order to pay our 
bills and turn that red back to green. It can be done, but it cannot be 
done under current policies.

[[Page 23605]]

  Let me ask my friend from South Carolina a question, because he knows 
an awful lot about this when we are talking about budgets. When we are 
spending the dollars for the debt, and we have seen the numbers this 
evening, of how that is continuing to expand with no solution in sight, 
share with me what this does for our squeeze on the need to invest in 
education and in research and development, to grow our economy to get 
out of this problem.
  Mr. SPRATT. There are certain items in the budget that are 
obligatory. Clearly, one of those obligatory items is interest on the 
national debt. We have a sovereign responsibility to pay it, and if we 
do not pay it or if we ever default in payment of it, the cost of 
credit for the United States of America would skyrocket. Consequently, 
that comes first, has to be paid, and when it has to be paid, then 
other things have to yield to it, education, the environment, the basic 
operation of the government. These other things have to yield to the 
payment of interest. Obviously, the more debt you stack on top of debt, 
the more interest we will have to pay.
  Mr. ETHERIDGE. Let me ask this question as if I am sitting at my 
kitchen table and I get my credit card. In effect, I am paying only the 
interest on that credit card month after month. That is what we are 
doing. We are not paying any on the principal. I keep building that 
principal larger and larger, so it goes on my credit card from $1,000 
to $5,000, to $10,000. It stands to reason my interest is going up.
  Mr. SPRATT. Surely. If the principal is going up, your interest is 
going up.
  Mr. ETHERIDGE. Here is my question. If I keep building this big 
enough, pretty soon the bankers are going say to me, ``Mr. Etheridge, 
if you can't pay some of the principal, we're going to have to sit down 
and work out a plan for you.'' Normally, people do not do that with a 
country, but I think earlier the gentleman from New York touched on 
this when he was talking about the challenge we face with our 
international friends owning our debt. How do we deal with them 
diplomatically when we owe them so much money?
  Mr. SPRATT. It narrows our options, that is for sure. If we put too 
much pressure on them at the WTO, for example, trying to get them to 
unpeg their currency so that their exports are much more fairly priced 
vis-a-vis our imports, then they could get stroppy. They could simply 
retaliate by not buying any more debt and by making it difficult for us 
to sell our debt at a higher price.
  Let me yield to the gentleman from Tennessee because he is bringing 
us back to this whole question of principal accumulation, how much debt 
in a short period of time this administration has amassed.
  Mr. COOPER. I thank the ranking member for yielding.
  It is a shocking amount of debt that the administration has 
accumulated in a relatively short period of time. As this chart 
illustrates, three times in the last 4 years we have had to increase 
our national credit card limit, as the gentleman from North Carolina 
pointed out. Three times in the last 4 years. We have increased the 
debt limit by a staggering amount. In the year 2002, we increased it by 
$450 billion. In the year 2003, by $984 billion. Now we are being asked 
to increase it by an estimated $800 billion, for a $2.2 trillion total 
just in 3 or 4 years. That is a burden placed on the backs of our 
families, on our kids and our grandkids, as the gentleman was 
describing. These are truly astronomical numbers.
  To put them in perspective, look at this chart. What is $984 billion? 
That is more than our Nation borrowed from the years 1776 through 1980. 
Through all those years of our Nation's history, 200 years, we only 
borrowed $908 billion. Here in the last few years, 1 year to be exact, 
$984 billion extra. That shows how out of whack our finances have 
become.
  I thank the gentleman for raising this important question.
  Mr. KIND. My colleague from Tennessee has been a real voice of reason 
on the committee as well as the ranking member of the Committee on the 
Budget for trying to inject a little voice of reason in this whole 
fiscal responsibility debate that we need to have in this Congress and 
throughout this Nation. Because it is staggering, looking at these 
numbers and what the administration is coming back to Congress and 
asking for this week, another huge increase in the debt ceiling limit.
  There are a lot of ramifications to what the President is requesting 
us to do this week in increasing the debt by addressing the symptom but 
not addressing the cure that we need to get out of the fiscal mess that 
has been created in this Nation over the last few years. It is a mess 
that is spiraling out of control. We see the increased costs and what 
is happening in Iraq and Afghanistan right now. We are also butting up 
against an aging population in this country, the so-called baby boomers 
who are about to begin their massive retirement in a few short years, 
putting in jeopardy Social Security and Medicare solvency for future 
generations. And we are not addressing a cure to the solution, one of 
which the ranking member and those of us on the Committee on the Budget 
here tonight have been advocating for the last 4 years, and that is 
reinstituting the budget tools that were in effect in the 1990s, the 
pay-as-you-go rules, so we maintain balance in the budgeting decisions.
  If you are advocating a spending increase or a tax cut somewhere, you 
have got to find an offset to pay for it to maintain that balance. It 
worked well in the nineties. It gave us 4 years of budget surpluses, a 
couple of years in which we were not even touching the Social Security 
and Medicare trust funds, and all that has been reversed under the 
current administration and with the leadership of the current Congress.
  One of the more disturbing aspects about this whole debt ceiling 
limit and the fiscal irresponsibility is who we owe it to. Right now, a 
majority of the debt is owed to foreign interests, Japan being the 
largest purchaser of government debt today, soon to be surpassed by 
China as the number one purchaser of our debt in this Nation. I do not 
believe it is in our best long-term economic interest to be so 
dependent on China, to be financing our red ink in this country for 
years to come, because it can wreak havoc on the financial markets in 
this country if they decide to take their investments somewhere else. 
That really has not received the attention I think it deserves, given 
the long-term implications of our dependency now on foreign countries 
in order to finance the debt that is being accumulated because the 
current administration is not willing to make the tough decisions to 
maintain fiscal responsibility around here.
  It is going to be an important debate we have this week. There is 
going to be an increase in the debt ceiling at the end of the day. 
Those of us who want to reinstitute these rules do not have the votes 
to do it today, but hopefully with the help of the American people, 
some who are watching perhaps tonight, we are going to create this 
synergy that is necessary in this Congress in order to start making 
these tough decisions again that worked very well in the 1990s and gave 
us incredible economic prosperity and job growth and an incredible 
dynamic to help grow the economy which is being lost now based on the 
decisions that we are seeing.
  I thank the gentleman for yielding.
  Mr. COOPER. I appreciate the gentleman's excellent points.
  I think most Americans want to hear a solution to the problem. It is 
one thing to know the dimensions of the problem. They want to know an 
answer; and pay-as-you-go, as the gentleman described, is not only an 
answer that we think will work, it is proven to work. It was in place, 
and I think the ranking member of the committee would know better than 
I, I think it was in place from 1990 to 2002.
  Mr. SPRATT. The Budget Enforcement Act of 1990.

                              {time}  2100

  Mr. COOPER. Madam Speaker, so it was in place while we had Republican 
Presidents, the first President Bush, Democratic Presidents, and the 
Republican Presidents. It was in place when

[[Page 23606]]

we had a Democratic majority in Congress and a Republican majority in 
Congress. And above all, it worked. It enabled us to build the surplus 
that we enjoyed in the Clinton years. It enabled us to reverse the 
flood of red ink that we saw in the Reagan-Bush years, to completely 
reverse our Nation's fiscal policy, only, sadly, to have it plunge back 
into an even deeper sea of red ink. So pay-as-you-go, the policy of 
only allowing new spending or new tax cuts if we can find the savings 
somewhere else, that is a proven remedy to our problems; and that is 
really what we are asking for.
  The Blue Dogs have a policy statement that was issued today 
encouraging Members to only vote for the debt ceiling increase if it 
contains the essential budget reforms of pay-as-you-go.
  So I hope all Americans will watch this debate carefully. Sadly, as 
the Members know, this debate is only taking place after the election 
when it is too late for many of our fellow citizens to cast their vote 
based on these facts, and they will probably have this vote not as a 
separate vote but rolled into a larger issue.
  Mr. KIND. Madam Speaker, if the gentleman would yield for one final 
point.
  Mr. SPRATT. I yield to the gentleman from Wisconsin.
  Mr. KIND. Madam Speaker, this literally is the ticking time bomb 
sitting beneath Social Security and Medicare. They do not want to talk 
about it. They do not want to talk about fiscal solvency and fiscal 
responsibility that will help shore up Social Security and Medicare for 
the next 75 years. But this really gets to the crux of it. And later, 
next year perhaps, in the next session of Congress, we are going to 
have a serious discussion about Social Security reform. I think the 
best reform measures we can start taking today is instilling a little 
more fiscal discipline in the budgetary decisions so that this $160 
billion annual raid on the Social Security trust fund stops and we have 
that ability to deal with the baby boom generation's retirement, which 
is about to explode in future years. But, again, it is the lack of 
leadership right now that we are seeing from the administration and 
here in Congress that is preventing us from really shoring up Social 
Security and Medicare as viable programs for many generations to come.
  Mr. COOPER. Madam Speaker, if the gentleman would continue to yield, 
I agree with the gentleman. It is essential to prepare for the pending 
retirement of the baby boom generation and for all of our seniors so 
that Social Security and Medicare that they count on will in fact be 
there for them.
  The gentleman made a point earlier about the Chinese becoming our 
largest creditors. That is an amazing situation for the average 
American back home to realize because not too long ago we referred to 
the Chinese as the Communist Chinese, and I remember a statement made 
by a Russian leader years ago, Nikita Khrushchev, who claimed that 
Americans would one day sell them the rope by which they would hang us. 
That is a pretty tough statement. But right now we are in effect 
selling the Chinese the notes by which they could hang us financially 
because we are asking them to lend us so much money to finance our 
spending habits.
  Mr. SPRATT. Madam Speaker, reclaiming my time, let me just wrap up by 
saying that this is our concern: $2.2 trillion of additional debt in 3 
fiscal years, and what is waiting in the wings is a reform in Social 
Security which is likely to propose that a person not on Social 
Security can take 2 percentage points or 3 percentage points off his 
payroll tax and put it in a private account. If that happens, that will 
increase the debt by another trillion dollars over the next 10 years, 
and that is our great concern that this will be followed with policies 
that will actually worsen rather, than improve, this.
  Madam Speaker, I yield to the gentleman from Florida (Mr. Davis).
  Mr. DAVIS of Florida. Madam Speaker, I thank the gentleman for 
yielding to me and appreciate the chance to join my colleagues.
  The voters have spoken. They have elected us to return to Washington 
to get the job done. And one of the first things we are getting ready 
to do is exactly the opposite of what we should be doing. We are 
getting ready to charge to future generations this massive expenditure 
that we are enjoying the benefits of and ought to be paying for 
ourselves.
  One of the things I would like to add to what has been discussed here 
tonight is folks at home say to me, Jim, what does this mean to me? 
These are a lot of numbers. This sounds like a fight about people in 
Washington. Where do I fit into this?
  And one of the ways, I think, to sum this up is that today, because 
of the reckless spending habits and reckless decisions on tax cuts 
without regard to the debt and deficit, each American's share of the 
Federal debt today is $25,000. $25,000. Every American in this country, 
Democrat, Republican, man, woman, child, grandfather, grandchild, 
$25,000 each. So instead of facing up to this fact and having a debate 
about how we develop a roadmap to pay-as-you-go as the gentleman from 
South Carolina (Mr. Spratt) has been advocating with the gentleman from 
Tennessee (Mr. Cooper) and the gentleman from Wisconsin (Mr. Kind), we 
are going to bury deep in a bill, try to hide from the public, try to 
pretend this does not exist. And in my State, Florida, and in the 
States we all represent, these historically low interest rates are 
going to come to a screeching halt. We have been warned by all the 
experts that it is inevitable that interest rates are going to begin to 
rise. In my community where people have a mortgage on a home, they are 
trying to pay a student loan, they have got credit card debt, this is 
going to be taking money out of their pockets, not to mention the 
horrific interest payments we are now paying, I think $157 billion in 
interest we have paid in the last fiscal year or so, money that we 
could be spending for tax cuts to help everybody, money we could be 
spending to make sure our troops are better armed in Iraq and we take 
care of them and their families when they come home.
  So I want to salute my colleagues for calling attention to this 
compelling detail. It is our job to make sure that the country knows 
that even if someone tries to hide this in a bill, this debt limit is 
going up to historic proportions and we need to stop it as soon as we 
can.
  Madam Speaker, as this body considers another federal debt limit 
increase, I rise with a warning for my colleagues and the people we 
represent back at home. For the third time since President Bush took 
office, Congress is preparing to drive our country further into debt 
with no road map to get our nation back on track to balanced budgets.
  If Congress doesn't change course, this fiscal recklessness will 
begin to eat away at America's economic prosperity and leave a legacy 
of financial hardship for future generations.
  Madam Speaker, this Congress has talked a lot about family values, 
but where I grew up, bankrupting our children and grandchildren's 
future doesn't count as a family value.
  Today, as parents across our nation are working hard to save money 
for their children's college education, the federal government has run 
up a $7.4 trillion bill, and they are expecting our kids to pick up the 
tab. That's more than $25,000 worth of debt per American resident--a 
tremendous burden to place on the backs of future generations.
  According to the Congressional Budget Office, if we stay on this 
path, the debt held by the public will reach $13 trillion by 2014.
  The figure doesn't even take into account the financial troubles we 
will face when the first of 77 million baby boomers begin to collect 
Social Security in 2011. So while we baby boomers are enjoying our 
Social Security benefits, our kids will be paying for our irresponsible 
financial choices.
  Madam Speaker, my mother taught me at an early age that if you make a 
mess, you have to clean it up yourself. Well this federal debt is a 
disaster, and I'm not about to tell my kids that they should clean up 
their mess when Congress can't even clean up its own.
  What kind of example will we be setting for our kids if we don't take 
steps to pay down the debt? How can we teach our kids about the 
negative consequences of running up a credit card debt and at the same 
time ignore the consequences of running up the federal debt?
  The truth is Americans are already beginning to see the effects of 
their government's

[[Page 23607]]

poor fiscal policy decisions. Peter Hooper, chief U.S. economist with 
Deutsche Bank Securities Inc. notes, ``The bottom line here is, if we 
don't get a significant narrowing of the budget deficit, you're going 
to have increasing upward pressure on interest rates. (WSJournal 11/12/
04)''
  In fact, according to Freddie Mac, just this week the 30-year 
mortgage rate came in at 5.76 percent, an increase from 5.7 percent a 
week earlier. Rates on 15-year mortgages, meanwhile, climbed to 5.26 
percent from 5.08 percent over the same time span. Finally, the one-
year adjustable mortgage rate rose to 4.16 percent this week, up from 4 
percent a week ago.
  Higher interest rates hurt more than just the economy--they take 
money right out of the pockets of young people struggling with student 
loan and credit card debt. And for families buying a house, higher 
interest rates could add literally thousands of dollars a year to their 
mortgage.
  Furthermore, the federal debt drains funds away from investment in a 
better future, better education, a better environment, or scientific 
research. In 2004 alone, U.S. taxpayers wasted $159 billion on interest 
payments on the federal debt--thats more than two times the amount the 
government provided in financial aid for college students.
  The $159 billion in interest payments combined with $163 billion in 
interest paid to the Social Security Trust Fund and other government 
trust accounts averages out to a staggering $1,100 ``debt tax'' for 
each American. For Americans facing lower paying jobs, higher housing 
costs, and mounting student loan and credit car debt, federal fiscal 
mismanagement just adds to their burdens.
  And this problem will only get worse. By 2014, the interest alone on 
the public debt will reach $348 billion under current law (that's 
$1,081 per person), and will reach $418 billion under the President's 
policies.
  It is shameful for Congress to even consider increasing this limit 
once again without including some sort of plan, such as enacting Pay-
As-You-Go (PAYGO) rules, to ensure a brighter future for our children.
  The road to fiscal responsibility is paved with sacrifice and tough 
choices, but the reward--a stronger, healthier economy for Americans of 
all ages--is well worth the journey.
  I urge my colleagues to take up the responsibility thrown off by our 
leadership and vote against this debt limit increase.
  Mr. COOPER. Madam Speaker, will the gentleman yield?
  Mr. SPRATT. I yield to the gentleman from Tennessee.
  Mr. COOPER. Madam Speaker, if I could just clarify one of the 
gentleman's points, we are not trying to bury this in any other bill. 
We are not trying to hide anything. The Democrats would like a clear 
up-or-down vote on this issue so that the American people can see what 
is at stake. And that is what the Republican majority here is 
jeopardizing. We do not know for sure yet, but it is extremely unlikely 
that there will be a clear up-or-down vote because really we should 
have voted on this before the election, not now.
  Mr. MORAN of Virginia. Madam Speaker, the Republicans have once again 
squandered opportunities, from international goodwill following the 
terrorist attacks on our soil, to managing the federal budget. The 
House leadership has compiled an abysmal record in the 108th Congress. 
Their fiscal performance, I regret to say, is the worse in recent 
memory.
  This Republican leadership has presided over an historical reversal 
from record surpluses to now record deficits. Their lack of fiscal 
discipline has placed our economy in a precarious position and 
straight-jacketed future policy options.
  The most troubling aspect of this policy is that we are giving the 
current generation a free lunch and running up debts that must be paid 
for by our children. Each newborn child now inherits $85,000 in debt. 
This so-called ``baby-tax'' will rapidly increase unless we restore 
some sanity to our budgetary policies and practices.
  The lack of a surplus makes it even more difficult to solve the 
impending bankruptcy of Social Security and Medicare, or even to enact 
a Republican tax reform agenda.


                    Pattern of Fiscal Mismanagement

  Time and time again, this leadership has chosen to disregard its 
fiscal responsibilities and ignore signs of impending fiscal crisis in 
the hope that the problem will fix itself, or disappear altogether.
  Clearly a policy of avoidance doesn't work, and it's certainly not 
what the American people expect from its elected leaders. You can't 
simply stick your head in the sand and expect market forces to balance 
the national budget. That's the Congress' responsibility. I can cite 
example after example illustrating how this leadership does not care 
about our nation's fiscal state of affairs.
  The pay-as-you-go rule, the budget enforcement mechanism devised to 
reign in deficits, worked very effectively in the nineties to bring the 
budget into balance and restore surpluses.
  Then the 108th Congress is sworn in, PAYGO expires, and the House 
leadership makes no serious attempt to restore it. It's no coincidence 
that we've seen record high deficits in the last two years.
  And now this Congress is backed into a corner and forced to take 
action to raise the debt ceiling for the third time, another record.


      Worrisome Signs in the International Currency & Debt Markets

  The Bush administration and leadership in the House say deficits 
don't matter, but in truth they do matter, and we are now staring 
crisis in the face. There is near unanimity among economists that our 
Nation's fiscal imbalance could put us in real economic peril.
  In a study published just 2 weeks ago, well-known economists Maurice 
Obstfeld and Kenneth Rogoff warned of what they called ``current 
account collapse'' sparked by withdrawal of funds from international 
investors. They said that this issue should be ``problem number one on 
the President's international financial agenda.''
  We must heed these warnings and get our financial house in order or 
the delicate house of cards constructed by this administration and 
congressional leadership will come tumbling to the ground, and all 
Americans will pay a hefty price.
  Already there are signs that the dollar's value is declining and 
other currencies, primarily the Euro, are slowly replacing the dollar 
as the favored currency among international investors. This week, the 
dollar reached an all time low against the Euro--one Euro is now worth 
$1.30.
  Our Nation needs to borrow around $2 billion a day, and 92 percent of 
debt sold over the last 4 years has gone to foreign countries. So 
obviously we rely heavily on foreign investment. The question is what 
happens if those countries abandon the dollar for another currency?
  If foreign governments like China decide to divest its U.S. currency 
holdings; the consequences would be serious, especially considering the 
massive purchases by the Chinese Central Bank over the last few years. 
In 2003, the dollar purchases by foreign central banks were $617 
billion, compared to $352 billion the year before. Total reserves of 
the emerging Asia countries rose by more than $350 billion between 
March 2003 and March 2004. Japan and China alone currently hold close 
to a trillion dollars of U.S. debt.
  Many countries are now beginning to favor the Euro, which puts us in 
a major dilemma and raises national security concerns. Foreign 
governments are now our largest creditors. We may be the most powerful 
nation in the world, but China, as the largest investor, has genuine 
financial leverage. This poses a real threat to our national security 
because the American economy now depends on the financial decisions of 
foreign governments.
  Unlike in years past, we cannot assume that no other currency comes 
close to rivaling the dollar's strength. The emergence of the Euro 
substantially changes the international currency market, because, 
despite the relative soundness of the dollar, the Euro has become a 
true alternative, backed by reasonably sound monetary policies. So the 
largest holders of foreign currencies in Asia could change their 
preference purely on the basis of financial, not political 
considerations.
  This scenario is unraveling right now. Asian countries believe that 
our exceedingly high deficits are untenable and threaten the American 
economy. They worry that more buying could in turn destabilize their 
own economy. Another very real concern is that their financial leverage 
could translate into political and diplomatic leverage.
  Consequently, we increasingly find ourselves in a precarious 
negotiating position. We have to convince these foreign governments 
that the dollar is relatively strong and they should continue their 
purchasing.
  I would conclude by saying that in tonight's special order my 
colleagues have discussed issues that need to be addressed in an honest 
debate on the floor of the House. The election is over. It's time to 
put aside wedge issues and start talking about fiscal problems that 
could have a devastating effect on the American economy for years to 
come.
  The leadership has apparently backed away from its initial plan to 
include the debt ceiling increase in an omnibus appropriations bill. 
Hiding the debt ceiling increase in a larger bill would be a mistake 
because it would undermine the purpose of the statutory requirement--
accountability. Members of Congress

[[Page 23608]]

should explain their decision to increase the national debt. The 
American people deserve to know what's going on.
  We've heard plenty about cultural values in the last few weeks, and I 
think we get it now. But Congress cannot continue to simply ignore 
mounting fiscal problems, and expect they will go away. Because they 
will not. And I promise you that when the ``you know what'' hits the 
fan and we're facing a crisis, the American people will put aside their 
cultural differences in favor of one overriding value: economic 
security.

                          ____________________