[Congressional Record (Bound Edition), Volume 150 (2004), Part 17]
[Senate]
[Pages 23686-23706]
[From the U.S. Government Publishing Office, www.gpo.gov]




              INCREASING THE PUBLIC DEBT LIMIT--Continued

  The ACTING PRESIDENT pro tempore. Who yields time?
  The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I rise to discuss the extension of the 
debt limit. First of all, I thank my colleague from Montana for his 
great courtesy in allowing me to go first, because we have a hearing in 
the Indian Affairs Committee, so I thank my colleague from Montana for 
this courtesy.
  Before us is a proposal to extend the debt limit by $800 billion. I 
will oppose that expansion of the debt limit because there is no plan 
to reduce the deficits and the increase in the debt we are now facing.
  I think it is a mistake for this body to extend the debt limit by 
$800 billion without a plan to get the deficits under control, to get 
the debt under control. Instead, what we are doing here is writing 
another blank check and saying to this administration: Go ahead, 
continue to run record budget deficits. Continue to increase the 
national debt. Do not worry about a plan to reduce this increasing 
dependency on foreign governments, on foreign citizens. Forget about 
fiscal responsibility.
  An $800 billion increase in the debt. Now, make no mistake, we need 
to extend the debt limit. We have to pay the bills of the United 
States. So there is no question that we need to extend the debt limit. 
The question is, by how much. The question is, should we not only do it 
with a plan to reduce this dependency on borrowing.
  I believe the answer to those questions is absolutely. We ought to 
insist that there is a plan to get the deficit under control. We ought 
to insist there is a plan to reduce the buildup of debt. We ought to 
insist that this administration and this Congress face up to the 
mounting challenges facing this Nation.
  To review the dramatic change in our fiscal condition, in January of 
2001, we were told we could expect over the next 10 years nearly $6 
trillion in surpluses. Now we are told, just 3 years later, nearly 4 
years later, instead of trillions of dollars of surpluses, we can 
expect trillions of dollars of deficits, over $3 trillion deficits. 
That is a change in our fiscal condition in 4 years of $9 trillion. If 
that does not cry out for a response, if that does not cry out for this 
Congress and this administration to come up with a plan to address 
these burgeoning deficits and debt, I do not know what would require a 
response.
  If we look at the last 4 years, we can see that in 2001 the Federal 
Government ran a surplus of $127 billion. In 2002, that had turned to a 
$158 billion deficit. In 2003, that deficit had exploded to $377 
billion--the biggest deficit in dollar terms in our Nation's history--
and now in 2004, another record deficit, a deficit of $413 billion--
record red ink and no plan to address it.
  The President has told us, told us repeatedly, that he has a plan to 
cut the deficit in half over the next 5 years. Do not believe it. Do 
not believe it any more than the claims the President made that there 
would be no deficit if we adopted his fiscal plan. The President told 
us--in fact, the President assured us--that we could count on a record 
paydown of the debt if we adopted his fiscal plan. Well, we did, and he 
was wrong because not only have we not had record paydown of the debt; 
what we have had is a dramatic increase in the debt. As we look ahead, 
here is what we see the deficit looking like over the next 10 years. I 
do not see any cutting of the deficit in half. The only way the 
President gets to his claim that he is going to cut the deficit in half 
is he leaves out things. He leaves out war costs. He leaves out the 
need to address the alternative minimum tax. He leaves out the effect 
of his own tax proposals.
  If we take all of those into account--making the tax cut permanent, 
which the President has recommended; his defense buildup; the 
alternative minimum tax reform; and ongoing war costs--this is what we 
see, as the deficits going forward, in the amount that is actually 
going to get added to the debt every year. This is an ocean of red ink 
facing this country. Part of the reason, as I have indicated, is that 
the President, I am afraid, hid from the American people the true 
effects of his policies.
  One way he has hidden it is he has changed from 10-year budgeting to 
5-year budgeting. Here is why I believe he did that. This shows the 
cost of extending the tax cuts as the President has proposed. This 
dotted line on this chart shows the end of 5 years. But beyond the 5 
years, the effect of the President's tax proposals explode in cost. 
That is the nature of the President's tax proposal. The cost explodes 
outside the 5-year budget window, just beyond the view of those who are 
responsible for making budgets for this country. The result is that the 
red ink the President has promised to reduce will explode right beyond 
the 5-year budget window.
  It is not just with respect to the tax cut proposal, but we see the 
exact same

[[Page 23687]]

pattern with the alternative minimum tax. The alternative minimum tax 
is the old millionaire's tax, which is now affecting 3 million 
taxpayers. In the next 10 years, it will affect 30 to 40 million 
taxpayers. It has to be dealt with. The President only provides funding 
to address this crisis for 1 year.
  But look at the pattern of cost. Again, right beyond the 5-year 
budget window, right beyond this dotted line, which represents the next 
5 years, the cost of fixing the alternative minimum tax absolutely 
explodes, at a cost of over $600 billion. The President does not have 
that in his budget.
  Nor does he have the true cost of the war effort. We have had $25 
billion put in a contingent reserve for fiscal year 2005, but we know 
that is a fraction of the cost. The Congressional Budget Office tells 
us that the true ongoing cost of war is over $315 billion. None of it 
is in the budget, other than the $25 billion. None of this $315 
billion, other than the $25 billion down payment, is reflected in these 
numbers in which the President assures us he is going to cut the 
deficit in half.
  I am told the Pentagon is about to propose, the administration is 
about to propose an additional $70 to $75 billion in a war cost 
supplemental some time early next year.
  I think this hiding of the true financial condition of the country is 
wrong, and I think it is reckless.
  The President told us when we adopted his fiscal plan: I can fully 
protect Social Security. I won't be taking Social Security money and 
using it for other purposes. Wrong again. The President is taking every 
dime that is available to take from Social Security over the next 
decade--$2.4 trillion--and using it to pay for other things. Mr. 
President, $2.4 trillion, every dime of which has to be repaid, and the 
President has no plan to do so.
  It is not just there that we see the problem. We also see that the 
President has a plan to privatize parts of Social Security. Most of the 
estimates are they would cost some $2 trillion in transition costs. 
Again, the President has no plan to pay for it other than to borrow the 
money to do it. More borrowing, more deficits, more debt: no plan to 
address the issue. These decisions have real consequences.
  We can see all of this is happening at the worst possible time, right 
before the baby boomers start to retire. The baby boom generation is 
out there. It is not a projection. They have been born. They are alive 
today. They are going to retire. They are going to be eligible for 
Social Security and Medicare.
  This is what it looks like when you plot the increase on a graph of 
those who are going to be eligible for Federal benefits. Right now, we 
have around 40 million people who are eligible, but over these next 
years the number is going to double. This is the dramatic demographic 
timebomb that is out there with the baby boom generation.
  When we look at the long-term implications--this is not a projection 
by this Senator or a projection by the Democrats; this is a projection 
by the Congressional Budget Office--the long-term budget outlook in 
terms of the effect on deficits, what they show is some improvement 
over the next couple of years but then an explosion of deficits and 
debt if the President's proposals are adopted.
  We have record deficits now, the biggest in dollar terms in our 
history, and they pale in comparison as to what is to come if the 
President's proposals are adopted. There is no response. There is no 
response from the Congress of the United States. There is no response 
by this administration to these growing deficits and debt. It is just 
more of the same, business as usual, steady as she goes. That is a 
risky course for this country.
  We remember so well the President telling us there would be maximum 
paydown of the debt if we adopted his fiscal plan. Instead of maximum 
paydown of the debt, we see the debt exploding.
  The gross debt of the United States was less than $6 trillion when he 
took office. We now see, by 2014, that debt will approach $15 
trillion--a stunning reversal in the fiscal condition of the country. 
In just these 3 years, there is an increase in the debt limit of $2.2 
trillion under President Bush; an increase, in 2002, of the debt limit 
of $450 billion; in 2003, of $984 billion; and now another $800 
billion. Mr. President, $2.2 trillion, after we had, from 1998 to 2001, 
no increase in the debt limit, none.
  Now, the President describes these policies as compassionate 
conservatism. I do not know where the conservatism comes in. I do not 
know what is conservative about exploding the debt of the Nation. I do 
not know what is conservative about running up record deficits--and not 
just at a time of economic slowdown but even now, as the economy is 
recovering, deficits as far as the eye can see.
  The result of these policies, the result of this increase in deficit 
and debt is soaring Federal interest costs. From the estimate in 
January of 2001 that the interest cost over the next 10 years would be 
some $600 billion, now estimates are that the interest cost to the 
Federal Government over that same period will be $2.4 trillion, from an 
interest cost projection of $600 billion to $2.4 trillion. That 
interest does not build a bridge, does not construct a highway, does 
not finance an aircraft carrier or a tank. That is money just to 
service the debt.
  These massive increases in deficits have enormous implications, not 
only for our finances but for our economic strength. Deficits and debt 
will ultimately slow economic growth. This is a quote from the CBO 
Director, Douglas Holtz-Eakin, before the Senate Budget Committee last 
year.
  Mr. Holtz-Eakin is an appointee of the Republican majority in the 
Congress. He came from the President's own economic advisory staff. He 
said this:

       To the extent that going forward we run large sustained 
     deficits in the face of full employment, it will in fact 
     crowd out capital accumulation and otherwise slow economic 
     growth.

  Mr. President, that is why these decisions matter. This is not just 
numbers on a page. This isn't just graphs. This is not just pictures on 
a chartboard. These decisions have a real impact on the economic health 
of this Nation, on the creation of jobs, on the development of economic 
opportunity, on the future economic prospects of our Nation and, 
fundamentally, of the economic strength of America.
  I don't believe we can be militarily strong if we are financially 
weak. This President has us on a course to financial weakness. Make no 
mistake about it, these higher interest rates will burden families. For 
the typical American family, a 1-percent increase in interest rates 
will raise the payment on a 30-year home mortgage of $150,000 by $1,200 
per year. When the Federal Government has to borrow more money, that 
puts it in competition with the private sector for borrowed funds. When 
that happens, that forces up the cost of borrowing. The more demand for 
money, the more interest costs have to go up. That is true especially 
at a time of economic recovery.
  Mr. President, these decisions have real consequences in the lives of 
real people. I believe paying down debt is also a moral values issue. 
The President said himself in 2001:

       Future generations shouldn't be forced to pay back money 
     that we have borrowed. We owe this kind of responsibility to 
     our children and grandchildren.

  On this issue, the President was right. We should not pass on these 
debts to future generations. But that is now precisely what the 
President is doing--again, not at a time just of economic slowdown; we 
have now got a resumption of economic growth. Yet the President 
proposes more and more deficit, more and more debt. I think it is a 
mistake. I think it is a mistake for this body to extend the debt limit 
in an almost unlimited way, by $800 billion, without any requirement 
for a plan to address these burgeoning deficits and debt.
  The deficits we are running are not just budget deficits, they are 
also trade deficits--approaching over $650 billion in the most recent 
year. Not only are we running a budget deficit of over $400 billion, we 
are also running a trade deficit of over $650 billion, or in that 
range.

[[Page 23688]]

  Where is the money coming from in these massive deficits? Well, we 
are borrowing the money, as I indicated, from the Social Security trust 
fund--some $2.4 trillion over the next 10 years. We are also borrowing 
from countries all around the world. We have borrowed over $700 billion 
from Japan. We have borrowed over $170 billion from China. We have 
borrowed $100 billion from the so-called Caribbean banking centers. I 
think many in America would wonder what is going on here. We are 
borrowing money from Caribbean banking centers? We have borrowed over 
$60 billion from South Korea. Who would have believed it? Growing up in 
North Dakota, I would never have believed we would be out with a tin 
cup borrowing money from countries such as South Korea.
  Mr. President, here is what has happened under this President in 
terms of foreign holdings of our debt. They have increased by 83 
percent in just less than 4 years of this administration. Prior to this 
administration, total foreign holdings of U.S. debt were just over a 
trillion dollars. In less than 4 years, that has now increased by over 
80 percent. We are now approaching $2 trillion of foreign-held debt.
  Mr. President, who cares? What difference does it make? I have had a 
chance to go and teach classes in my home State at the universities and 
colleges. I have asked them what difference does it make if we are 
deeper and deeper in debt to other countries? Well, the response of 
those students has been overwhelming and clear. They have said: Of 
course, it makes a difference. How does it change any relationship if 
you are borrowing money from people? It makes you dependent on those 
people. It means you are less able to challenge them on unfair trade 
practices. It means you are less able to confront them if we are faced 
with a military confrontation.
  I noticed with great interest a New York Times article of Tuesday, 
October 19, headlined, ``Private Investors Abroad Cut Their Investments 
in the U.S.'' It indicated that ``Asian central banks bail out America, 
a nation of spenders rather than savers.''
  The U.S. economy is now increasingly dependent on a handful of 
foreign central banks for our economic stability and security. This is 
a vulnerability for our country. To more and more owe money to foreign 
nations and foreign central banks puts them in a stronger position with 
respect to America's economic future and puts us in a weaker position.
  In that article, it indicated:

       New data accentuated how dependent the United States has 
     become on purchases of dollar securities by the Chinese and 
     other Asian governments with links to the dollar. ``Foreign 
     central banks saved the dollar from disaster,'' said Akhraf 
     Laidi, chief currency analyst of the MG financial group. He 
     said, ``The stability of the bond market is at the mercy of 
     the Asian purchases of U.S. treasuries.''

  We are at the mercy of foreign central banks, of Asian central banks. 
I don't think that is where we want to be. I don't think that is where 
we want to be as a nation, dependent on foreign central banks. In that 
same article, the New York Times indicated that a large amount of 
foreign-held debt could lead to economic turmoil. Here is what it said:

       A disorderly situation would occur if foreign money dried 
     up suddenly when the United States still needed it.

  Let's think about where we are headed here.

       Then, the adjustment in the American savings might happen 
     involuntarily. Interest rates would rise sharply, and the 
     dollar could fall abruptly. This could induce a sharp 
     economic contraction, even stagnation.

  Mr. President, what are we doing here? There is absolutely no 
response from this Congress or this administration to this gathering 
financial threat. No response. The only response is: Let's go borrow 
more money. Let's increase the debt more.
  This article appeared in the Wall Street Journal on November 8, 
headlined, ``Dollar Lacks Backers as Deficit Worries Dominate.''
  This article asks the question:

       What is going to prop up the sliding dollar?

  It went on to say:

       Despite unexpectedly strong job creation and another jump 
     in the stock market, the dollar dropped against key 
     currencies . . . breaking through the record low against the 
     euro set nine months ago.
       Currency strategists say the dollar's inability to 
     capitalize on news of 337,000 jobs created in October reveals 
     the market's skepticism about whether a second term for 
     President Bush will reverse deficit spending and a reported 
     current-account deficit--

  That is our trade deficit--

     the broadest gauge of the nation's balance of payments.

  We are here, steady as she goes, headed right for a potential fiscal 
crisis, and there is no response.
  Here is what happened to the value of the dollar against the Euro 
since 2002: The dollar has dropped 30 percent against the Euro in that 
time. This is a warning. This is a warning, I say to my friends. People 
are losing confidence in the fiscal policy of the United States. This 
has potentially ominous consequences that I think we all understand.
  The CBO Director believes deficits can no longer be blamed on just a 
weak economy. He said:

       Policy choices will determine where we go. We will not grow 
     our way out of this. It is no longer the case that we can 
     blame everything on the economy.

  I talked about the budget deficit. Here is the U.S. trade deficit. 
Same pattern: explosive growth in our deficits, both budget and trade, 
requiring more and more foreign borrowing, making us more and more 
dependent on the decisions of foreigners as to our economic stability 
and strength.
  Today in the Washington Post, Robert Samuelson, an economist, wrote 
an article headlined, ``The Dangerous Dollar.'' He points out the risks 
to our country of what could happen if there was continuing flight from 
the dollar and a collapse in its value. He points out the risk to this 
country and says:

       No one knows what will happen. The massive U.S. payments 
     deficits could continue for years, with foreigners investing 
     surplus dollars in American stocks and bonds. Gradual shifts 
     in currency values might reduce the world's addiction to 
     exporting to the United States. Or something might cause a 
     dollar crash tomorrow. In that case, massive intervention by 
     government central banks . . . might avert a calamity. Or it 
     might not. We're in uncharted waters. If we hit a shoal, it 
     will be bad for everyone.

  The warning is clear. The risks are there. The question is: Do we 
just stay on this current course, or do we respond to this growing 
threat? I think it is inappropriate to extend the debt of the United 
States by $800 billion without a plan to reduce this dependency on 
foreign capital.
  I thank the Chair and yield the floor.
  Again, I thank my colleague, Senator Baucus, the ranking member of 
the Finance Committee, for his courtesy in allowing me to speak first 
so that I may make a hearing going on in the Capitol complex.
  The PRESIDENT pro tempore. The Senator from Montana.
  Mr. BAUCUS. Mr. President, the Senate is here today to respond to the 
administration's request once again to increase the statutory limit on 
the Federal debt. More fundamentally, we are here in response to a 
warning. Like a proximity alert on an aircraft, the debt limit warns 
the Government is headed for a crash. We need to change course.
  Unless we change course, the administration's fiscal policy will 
consign American families to a lower standard of living. Unless we 
change course, American workers will have lower incomes than they would 
otherwise have, and the dollars they earn will be worth less than they 
otherwise would have been worth.
  Unless we change course, millions of Americans will live poorer 
lives. That is what we are really debating today when we debate the 
debt limit, and that is why I shall vote against the bill, to signal 
that we must change course.
  Narrowly speaking today, we are considering the ceiling on Federal 
debt, the cap that the law places on borrowing by the Federal 
Government. The legislation before us would raise the debt ceiling to 
$8.184 trillion. It would increase the debt ceiling by $800 billion.
  As this chart to my left shows, it will be the third largest increase 
in the history of the country. This chart indicates debt limit 
increases since 1982,

[[Page 23689]]

and in roughly 1990, it was $915 billion, and then the highest was $984 
billion, and this $800 billion is the third highest increase in the 
debt ceiling. Unfortunately, this large debt ceiling increase, and 
particularly the recent increases, are becoming all too common.
  Just last year we were forced to raise the debt ceiling by a record 
$984 billion. Almost $1 trillion in additional Federal borrowing, that 
limit was raised in 1 year. In just the year before that, the debt 
ceiling had to be increased by $450 billion. That is more than $2.2 
trillion in debt in just 3 years. In contrast, prior to those 3 years, 
there had been no increase in the debt ceiling for 5 years.
  An increase of $800 billion of debt that is requested in this 
legislation before us means $2,700 more debt for every man, woman, and 
child in America, and a total of $8 trillion in total debt means about 
$25,000 of debt for every man, woman, and child. That is a $25,000 
burden on each of us, our children, and our grandchildren.
  I believe that each of us who runs for public office and serves has a 
moral obligation, and that obligation is to leave this place in as good 
a shape or better shape than we found it. It is that simple. As this 
President and this Congress keeps piling up more and more debt, clearly 
we are leaving this place in worse shape than we found it. We are 
putting a huge additional obligation and burden on our successors and 
upon, more importantly, the people we represent and, even more 
importantly, those who follow the people we represent. That is not the 
moral, correct thing to do. My judgment is that it is not only not 
responsible, it is irresponsible.
  This chart shows per capita total Federal debt outstanding. This is 
per capita, on a per person basis in America. It has steadily been 
rising from 1997 from close to $20,000 to more than double, to $25,000 
being asked for today.
  Today's increase also will not be the end of large increases in the 
debt ceiling. It will not be the end because before the next year runs 
out, we will need to raise the debt ceiling once again.
  The reason for these record increases in the debt ceiling is the 
record Federal budget deficits that our Government is running.
  To clarify for those who may be unsure about the terminology here, 
the term ``deficits'' obviously means annual deficits that this 
Government runs, and the term ``debt'' means the accumulation of all 
the deficits. That is why the deficits sound a little less. It is some 
$400 billion, whereas the total publicly held debt is over $8 trillion.
  I must add to this, I don't want to lay the blame totally in the 
hands of the President, but the President submits budgets to the 
Congress. Congress tends to work with the budgets that the President 
submits. Every year the President submits a budget and Congress does 
work around the edges, maybe add a little, subtract a little, but it is 
Presidents, not Congress, in the main, who actually determine the 
amount of either surplus or the amount of deficits that are actually 
enacted. It is primarily the Presidents.
  Since the current administration took office, there have been record 
annual surpluses that have turned into record annual deficits. In the 
fiscal year 2001--that is the transition year between the two 
administrations--the Federal Government ran a surplus of $127 billion, 
a surplus. We actually ran a surplus of $127 billion in fiscal year 
2001. For the next year, 2002, the first full fiscal year in the 
current administration, the Government ran a deficit--not a surplus but 
a deficit--of $158 billion. In the next fiscal year, the Federal 
Government ran a record deficit of $377 billion. Last year, in fiscal 
year 2004, there was yet another record deficit of $413 billion.
  This chart basically outlines what I just said; namely, we start with 
a reduction in Federal debt. That is the total. Beginning about 2001 it 
starts skyrocketing back up again.
  These record deficits are even more painful when they are compared 
with the record annual budget surpluses that preceded them. In fiscal 
year 1998, the Government ran a surplus of $69 billion. This was a 
record budget surplus at the time and the first budget surplus since 
fiscal year 1969.
  In fiscal year 1999, this was another record surplus, $126 billion. 
That was followed by yet a third record surplus of $236 billion in 
fiscal year 2000. So we had 3 years of growing surpluses. So in just 4 
years, the Government has moved from a record surplus of $236 billion 
to a record deficit of $413 billion, which is quite a dramatic swing of 
about $650 billion in our annual Federal budget outcome just over a 4-
year period of time.
  That is why we are here today. That is why we have to, in a technical 
level, raise the debt ceiling. It is because we are running record 
budget deficits. It is that simple.
  In contrast, when we were running budget surpluses, the Government 
was doing what it should do. It was beginning to pay off the debt held 
by the public. That is what took place the second half of the previous 
administration. So between 1998 and 2001, our Government paid off about 
$450 billion worth of debt. Indeed, when the current administration 
took office, there was serious talk that all debt held by the public 
would be paid off within about 10 years or so. I think we all remember 
that. Gosh, if we totally pay off our national debt--is that possible? 
People were saying it would be bad if we paid off our total national 
debt. But we were on the glidepath at that time, a few years ago, to 
pay off the national debt, and there was very serious talk about what 
would we do when we got down to zero national debt. How soon we forget.
  What a sad turnaround we experienced. The turnaround can clearly be 
seen in this chart here which outlines the dramatic change. Our 
national debt was steadily coming down as we had annual deficits and we 
were using the deficits to pay off the national debt. That is what 
happened in 2001. Then in 2002 and 2003 and beyond it is just the 
opposite.
  Is this going to continue, this trend? Unfortunately, if we are 
objective about this, I think the answer is yes. The President claims 
he will cut the deficit in half in 5 years. Indeed, Senator Kerry 
campaigned for the Presidency and said he would cut the deficit in half 
in 5 years. But I must say, to be totally candid, those estimates are a 
little rosy. That is not going to happen.
  For example, the independent nonpartisan Concord Coalition projects a 
deficit of about $450 billion 5 years from now. That will be higher 
than last year's record. Don't forget the Concord Coalition is known by 
most Members of Congress as being a fair, objective, nonpartisan 
organization looking at these matters very closely and very fairly and 
accurately.
  Ten years from now the Concord Coalition projects the deficit will be 
an astronomical $734 billion. The Concord Coalition says it is going to 
get worse, much worse, with each passing year and the total deficit, 
they say, for the next 10 years will be almost $5 trillion. That means 
the Federal borrowing for the public will be $5 trillion in 10 years, 
and the debt ceiling will have to be raised by $5 trillion as well just 
to accommodate that increase.
  Some may ask, Does it matter if Federal Government borrowing 
increases by $5 trillion? Does it really matter? Mr. President, it 
does. It really matters.
  When the Federal Government borrows money from the public, it 
threatens two bad results. First, the Federal borrowing could compete 
with borrowing by businesses and consumers. What does that mean? That 
means that interest rates would go up. They have to go up. They are 
competing for the supply of money. Borrowing by businesses for new 
investments would have to go down. Borrowing would have to go down, all 
things being equal, and with fewer business investments, economic 
growth would, therefore, decline relative to what it could be.
  High interest rates are killers. High interest rates, more than 
almost anything else, are a drag on the economy. It really slows the 
economy down and could deepen any recession that might occur.

[[Page 23690]]

  Conversely, very low interest rates help businesses borrow, help 
homeowners buy homes, et cetera. It is very good for economic growth. 
In addition, because of this crowding out effect, our future standard 
of living could be lower than otherwise it would be.
  Moreover, the rise in interest rates caused by increased Federal 
borrowing would make household purchases by credit more expensive. The 
increased costs would cause households to have less purchasing power 
and, therefore, would have to buy less. You may have to postpone or 
maybe not be at all able to buy that new refrigerator, to buy that new 
stove, that TV set, whether it is a plasma TV or regular TV, whatever 
it might be. The increased cost would cause households to have much 
less purchasing power.
  For example, an increase in mortgage rates of just 2 percentage 
points would increase home buyers' annual payments on a $200,000 home 
by about $1,700. Potential home buyers would decide whether to buy 
these homes or, in the alternative, reduce other purchases. In either 
case, the home buyer's standard of living would be lower.
  The second bad outcome that the additional Federal borrowing could 
cause is that Americans would owe more to foreigners. Foreigners would 
increase their holdings of U.S. assets. What does this mean? This would 
lower our future standard of living, as the earnings from American 
assets would have to go to foreigners, not to Americans. Thus, when the 
Federal Government borrows more, the standard of living of the American 
families suffers. It is zero sum, axiomatic; it by definition has to 
happen.
  There is another danger from added Federal borrowing as well. If 
foreigners, especially foreign central banks--that is the governments, 
foreign governments--buy a significant portion of our debt, our U.S. 
economy will be subject to serious jolts, particularly if these lenders 
decided to sell off that debt precipitously. At the very least, they 
will have a little hold on us as they increase their holdings of 
American Treasurys, American securities--which is what they buy mostly 
these days, partly because it is more liquid, which means they could 
get rid of them much more easily, more quickly. But they have a little 
hold on us, a little leverage on us in any trade negotiation, any 
political negotiation, any foreign policy negotiation with these 
countries. Whether it is China or Japan or wherever, there would be a 
little edge because this country might hint that, gee, maybe we might 
start pulling out our purchases, sell the U.S. Treasurys we have unless 
you Americans go along with something we want. I am not saying it will 
be a huge factor. It may be a huge factor. I am saying it will be a 
factor we would not want to have to deal with.
  Suppose the U.S. dollar declines further. It has come down about 30 
percent in the last couple of years against the Euro. When the Euro was 
first announced, the dollar was fairly strong compared to the Euro. Now 
it has fallen about 30 percent. As Federal debt and interest payments 
from our national debt are denominated in U.S. dollars, what happens? 
The value of those assets starts to drop. That is what is happening. 
The U.S. dollar, compared with other currencies, is starting to fall 
significantly.
  What happens then? Foreigners, including foreign central banks, might 
be afraid the dollar will go further. That is the trend. It is going 
down. Why is it going down? Because of the huge deficits and debts. A 
little less confidence in America. The more it goes down, then central 
banks in other countries will ask, do they want their dollar-
denominated assets, as U.S. Treasury, to decline further? Probably not. 
So what are they going to do about that? Sell. Sell before they fall. 
Once they start to sell, what happens? The fall is greater.
  That is the danger we are facing. I am not saying this is actually 
going to happen. Nobody knows if this is going to happen. There is a 
school of thought that there is so much savings in the world this will 
not happen. But we all know it is getting more and more risky and more 
likely this will happen.
  If we exercise a little common sense as we run our household, we know 
there comes a point we cannot continue to borrow. There comes a point 
when the bank says no. There comes a point when we have to be more 
responsible as a household. The same is true here. There comes a point 
when the bank says--in this case it is foreign banks, or in this case 
the taxpayers--Enough is enough.
  We do not know there will be a huge, precipitous decline. We do not 
want there to be a precipitous, huge decline. If there is, we do not 
want to know when it is because we do not want it to happen, but we do 
know if we are irresponsible and turn a blind eye to all of this, it is 
much more likely to happen and we will pay the consequences and rue the 
day when we, at an earlier date, did not take the necessary steps to 
correct this.
  There is a real danger that foreign banks, as they look at their hole 
card, may sell off some of the Federal debt they now hold. Half of the 
foreign holdings are held by central banks. That would cause a spike in 
interest rates. Why? Because as they begin to sell, what does the U.S. 
Government have to do? It has to raise interest rates to keep the 
companies in America securities. Raise interest rates, and we will have 
all the other consequences I mentioned earlier--higher mortgage 
interest rates, consumer interest rates go up, companies cannot borrow 
as much because the banks are charging them much more. This is not some 
fringe possibility; this is real.
  Why do I say it is real? Why am I very concerned about this? Let me 
quote the former Chairman of the Federal Reserve, Paul Volcker. He said 
quite recently he thought there is a 75-percent chance of a currency 
crisis in the United States within 5 years. Those are odds we do not 
want to have to deal with.
  One of the hardest things to do is managing economic affairs early 
before you get in real trouble. It is so easy to postpone and put off. 
It is a bit of an abstraction right now. We do not know what will 
happen. It does not hit Americans right in the gut. It is not like 
raising taxes or lowering taxes which people feel immediately in their 
household budgets. I can guarantee if these problems do occur, and all 
the evidence indicates it is very likely to occur unless we take some 
very serious steps today, it is going to hit Americans so hard in the 
gut, it will have such an impact on Americans that this country is 
going to have a very serious problem.
  Something else we should consider is the international 
competitiveness we Americans face with other countries worldwide, 
irrespective of our current deficits and trade deficit--which is 
humongous, which we will have to pay for sooner rather than later--with 
other countries. Take China, for example. We graduate in the United 
States of America about 65,000 engineers a year. Engineers can build 
new products and help make America strong. Guess how many engineers 
China graduates each year. Over 300,000 yearly. Are they brighter or 
dumber than our engineers? No, they are smart, progressive young men 
and women. And they are hungry. For those who have been to China 
recently, it is stunning to see the degree to which the Chinese people 
are hungry. They are going to compete very aggressively on the world 
market.
  We are in a sense almost fiddling while Rome is burning. That is, not 
only not paying attention to our fiscal problems but also not paying 
attention to the competitiveness we have around the world; that is, not 
making sure we have more trained engineers who can do better worldwide. 
We will find ourselves not too many years from now in a real pickle. I 
am saying, right now, start taking measures so we do not have huge 
problems we otherwise would have.
  I mentioned earlier central banks, if this trend continues, might 
decide to change their holdings and Federal debt for political reasons. 
Not only economic, but also for political reasons. For example, a 
foreign government might be involved in a trade dispute with the United 
States. This foreign government would know it could roil markets for 
the U.S. Federal debt and U.S. economy if a central bank sold a

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large portion of its holdings of U.S. Federal debt. It knows that. So 
what does it do? That government or country might hint around or might 
threaten to sell off, roil international markets, with an adverse 
effect on U.S. currencies, undercutting the United States' position in 
that trade dispute.
  At the end of September this year, foreigners held about $1.9 
trillion of our debt, close to $2 trillion of the total. Japan alone 
held $720 billion. China was next with $174 billion. Moreover, of $1.9 
trillion of total debt held by foreigners, foreign central banks held 
$1.1 trillion. That is significantly more than half owned and 
controlled by central government banks. That is the government banks in 
those countries which, therefore, are in a great position of control. 
Those total amounts are nearly double the totals of 3 years ago. This 
has accelerated dramatically, almost double, over the last 3 years. 
Total debt held by foreigners is now 43 percent of all debt held by the 
public. Pretty close to half of all our national debt is held by 
foreigners--not by Americans, but by foreigners--and foreign central 
banks hold a full 30 percent of all such debt, one-third.
  That is significant. Before I got in the Government, I worked for the 
Securities and Exchange Commission and I can remember back then the 
controlling interest was 10 percent. We are talking about 30 percent 
here. That is much more than a controlling interest in an entity's 
financial position.
  The forecast for future Federal deficits and borrowing does not look 
good. I must add, this is not the worst of it. It gets worse. President 
Bush, for example, has made it clear he wants to pursue a plan for 
partial privatization of Social Security. Under that plan, part of a 
worker's and employer's Social Security payroll taxes we divert into 
new private savings accounts for the workers. That sounds good, but 
what does that mean? That means there would be less revenue left in the 
Federal budget for other spending. The Federal Government would have to 
borrow more money to cover the difference. That adds even greater 
pressure on the Federal debt and greater upward pressure on interest 
rates.
  For many of the various partial privatization plans being proposed, 
these revenue losses would not be small. They would be more than 
significant, between $150 and $200 billion a year in each of the next 
10 years. The losses would be even larger in subsequent years. These 
revenue losses, these additional revenue losses, and the associated 
increases in interest costs on top of that, would raise annual deficits 
to previously unimaginable heights. For example, the annual deficit 
projected by the Concord Coalition for 10 years from now would rise to 
over $1 trillion. That is in addition. Federal debt would rise by an 
additional $2 to $3 trillion in the next 10 years to a total of about 
$7 to $8 trillion of new borrowing during that period. That is on top--
that is in addition--$8 trillion today, double in 10 years.
  So we should take two lessons from this dismal picture. The first is 
we need to exercise true fiscal discipline. That is just common sense. 
Americans sit around that kitchen table very often--maybe it is weekly, 
maybe it is monthly--trying to make ends meet. Some cannot keep 
spending more than they take in each year. Most cannot. No one can 
continue that indefinitely because at some point the banks just won't 
lend people any more money. They will insist that existing loans be 
paid off.
  We have bankruptcies. We have chapter 11. We have chapter 7. The 
point of all that is to stop the hemorrhaging, to pay off creditors to 
try to get the economic houses of Americans and companies back in 
order. I am not saying we have to declare bankruptcy. That would be 
something else, wouldn't it, if the United States of America declared 
chapter 11 and tried to reorder all the creditors. It is unimaginable, 
but if that were to happen, just think what would happen to the value 
of the dollar, what the value of the U.S. dollar would be then.
  In the world of borrowing China and Japan now play the role of the 
banks. They are our bankers. They hold 30 percent of our debt and 
foreign individuals own another, what, roughly 23 percent of our debt. 
All of this will force the United States at some point to begin to live 
within its means--at some point. And it could happen suddenly.
  Remember not too many years ago when the financial markets just 
collapsed. The first was in 1987, I remember, and the stock market just 
went whoosh. Back in the Asian currency crisis not too many years ago 
things went haywire immediately. The deck of cards totally collapsed. 
It doesn't take much, and it is usually unforeseeable. It is usually 
some little event which is not predictable but which happens which 
triggers this selloff and collapse.
  We do not want that to happen, and it will not happen, it is less 
likely to happen if we today begin constructing a path where we do live 
within our means. This increase in the national debt today obviously 
signals just the opposite. There is no plan at this point.
  So I say we would be far better if we were to eliminate our annual 
deficits on our own rather than having foreigners force us to that 
point. We can take concrete steps to reduce our Federal budget 
deficits. We can enact tough but reasonable caps in spending, renewed 
each year, and we can institute a requirement that all new tax cuts and 
new permanent spending be fully paid for. We can do that if we have the 
common sense and if we have the moral courage to do so as we are 
expected to do by the people who elect us. We could do all this without 
resorting to gimmicks.
  This town, this country, this Government has been full of too many 
gimmicks--the lockbox for Social Security. There are a lot of gimmicks 
this President has proposed. We have almost reached the end of our 
string of gimmicks. We have reached the point of reality. We have to do 
what is right. We can enact a tough requirement that new tax cuts and 
new permanent spending be fully paid for. That was in place actually, 
as you recall, from 1990 until the spring of 2003. This requirement 
helped the budget turn from deficit into surplus. We should restore 
that. We should restore that quickly.
  The second lesson we need to learn is that we should not enact the 
partial privatization of Social Security. There are a number of 
important reasons to stay clear of this. For example, these plans would 
likely cut total retirement income for many beneficiaries, have the 
effect of cutting income, not increasing it. Even this lowered income 
would be subject to great risk in the private market. Social Security, 
it may not pay hugely but it is stable. It is there. You can count on 
it.
  I know a lot of young people say it won't be there. I disagree with 
that. I say it is going to be there. Why do I say that? I say that 
because with each passing year there are more and more voters who are 
seniors. There are more and more people who are age 55 up to 60 who 
really care about Social Security. I have forgotten the exact date. I 
saw one estimate that by about the year 2030 half of all voters will be 
age 60 or over. I do not know if that estimate is true. It was made by 
a reputable person--I won't mention his name today but it is someone we 
all know who is quite reputable.
  But in addition to that, partial privatization would dramatically 
increase Federal borrowing. It would increase annual Federal budget 
deficits and it would increase the Federal debt. This would further 
lower both our current and our future standard of living. It would also 
make the U.S. economy even more vulnerable to recession and it could 
put the U.S. Government in a vulnerable position, even more so in its 
relationships with foreign governments. These fiscal dangers alone are 
sufficient reason to reject the partial privatization of Social 
Security.
  Clearly, we should look for new vehicles to increase savings. We 
should look for more ways to assure that our seniors are more secure in 
their retirement. We could bolster Social Security. We could find more 
private savings vehicles. We could help our pension system. But the 
partial privatization of Social Security will have the effect of 
lowering the benefits to those currently 50, 60, 62, or 63, unless 
there

[[Page 23692]]

is a massive enough additional borrowing by the Federal Government. And 
that is the low estimate, $1 trillion over 10 years, and the higher 
estimate is $2 trillion. That is in addition.
  I ask from where is that money going to come? Can we really borrow 
that much more compared to what we have already borrowed? We cannot.
  So we need to respond to the debt limit. I started out saying really 
technically this is an increase in the debt limit, which is required by 
statute, but more fundamentally the issue being raised today is how 
much more can this Government go into hock? That is really the 
question. And how quickly can we get ourselves out of it?
  We need to respond to the warning of the debt limit increase. We need 
to change course. We need to prevent that crash. We still have time. We 
should heed Paul Volcker's warning of a 75-percent chance of a currency 
crisis in the United States in 5 years. I think I know what he is 
talking about. He may not be right, but if Paul Volcker says that, we 
should listen. We should take his warning very seriously. We should, 
obviously, act with a sense of urgency and do what we can to avoid that 
dangerous result. We should change course now. We should wait no 
longer. With next year's budget, we have an opportunity.
  The President, in his submission to Congress this January, February, 
whenever it is, in working with the Congress, can begin to chart a 
proper course, begin to chart a course or begin to actually honestly 
get our Federal budget deficit under control. We have that opportunity. 
We have that obligation. The time is now. The time is January when the 
President submits his budget and the next months when the Congress 
works with the President as we begin to get our Federal fiscal house in 
order.
  We have to change course so American families can hope for a better 
standard of living in the future, so American workers can have good 
jobs with good incomes and we have a strong dollar with real value in 
the international trade. We need to change course to make all that 
happen so future generations of Americans lead richer lives.
  I will end with the statement I mentioned in the beginning. We have a 
moral obligation to leave this place in as good shape or better than we 
found it. It is an obligation we have--I assert whether environmental 
matters, whether Federal budget--to inspire confidence and togetherness 
in our people. I urge us very much to take the course of action that we 
well know is correct.
  Mr. President, I now yield 10 minutes to the Senator from Wisconsin, 
Mr. Feingold, who is a real leader in the fight for fiscal 
responsibility.
  The PRESIDING OFFICER (Mr. Chafee). The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, I thank the Senator from Montana not 
only for his leadership in the body but for his words about the fiscal 
situation our country faces. I particularly thank him for his emphasis 
on the need to return to those important fiscal budget rules, the pay-
go rules that guided us so well for so many years. I hope and trust 
this will be the first of many times he will address the body about the 
need to get back to that discipline. I intend to do the same here 
today. I think very few things are more important to our country than 
to return to the fiscal discipline we actually accomplished on a 
bipartisan basis during the 1990s after the very reckless policies of 
the 1980s.
  Today we are again forced to consider legislation to raise the 
Nation's debt limit. It is obvious to anyone but those who refuse to 
see that we are here because of the grossly reckless fiscal policies 
that have been advanced by the administration and Congress over the 
past 4 years.
  The last 4 years have seen a dramatic deterioration in the 
Government's ability to perform one of its most important and 
fundamental jobs, and that I do not need to tell the Presiding Officer 
about because he is a stalwart on this issue; and that is, the 
balancing of the Nation's fiscal books.
  We are all familiar with the history. In January of 2001, the 
Congressional Budget Office projected that in the 10 years thereafter, 
the Government would run a unified budget surplus--surplus--of more 
than $5 trillion. Almost 4 years later, we are staring at almost a 
mirror image of that estimate--a 10-year, $5 trillion surplus--except 
that instead of healthy surpluses, under any reasonable set of 
assumptions, we are now facing immense deficits.
  We absolutely cannot afford to continue to run up these massive 
deficits. Doing so causes the Government to use the surpluses of the 
Social Security trust fund, and use them for other Government purposes, 
rather than to pay down the debt and to help our Nation prepare for the 
coming retirement of the baby-boom generation.
  Every dollar we add to the Federal debt is another dollar we are 
forcing our children to pay back in higher taxes or fewer Government 
benefits. So today's vote to raise the debt limit basically ratifies 
the actions taken by the administration and the Congress to stick 
future generations with an immense credit card bill.
  That is what we are doing when the Government, in this generation, 
chooses to spend on current consumption and to accumulate debt for our 
children's generation to pay. It does nothing less than rob our 
children of their own choices. We make our choices to spend on our 
wants, but we saddle them with the debts they must pay from their tax 
dollars and their hard work.
  Obviously that is not right. This has to stop. We have to rein in the 
fiscal policies that have forced today's vote. That means making some 
tough spending cuts. It means putting a stop to the inexcusably 
reckless tax policies of the past 4 years. And it means putting some 
meaningful, tough, and sustainable budget enforcement mechanisms in 
place that return us to what the Senator from Montana was talking about 
and what I mentioned at the beginning of my remarks.
  Earlier this year a bipartisan majority in this body supported just 
such a mechanism. The amendment I offered during the Senate's 
consideration of the budget resolution would have reinstated the pay-
as-you-go rule for taxes and mandatory spending that served our Nation 
so well during the 1990s. It was adopted by a bipartisan majority. I 
salute the Presiding Officer for his courage in siding with me and 
others across party lines to try to institute--actually reinstitute--
those pay-as-you-go rules that we had a pretty good bipartisan 
consensus about during the 1990s.
  I actually believe it would have passed the other body but for some 
heavyhanded maneuvers by House leadership. Instead, the 
administration's election year agenda steamrolled over efforts to 
return some fiscal sanity to our budget process.
  I also believe there are many in this body who did not support my 
amendment but who know, in their heart of hearts, that reinstating the 
pay-go rule is simply the right thing to do. They know how essential it 
is to impose some self-restraint on congressional appetites. I suspect 
we would have gotten an even bigger majority vote if not for the 
exertion of some of the strong pressure on Members that is more common 
more often in the other body.
  We need a strong budget process. We need to exert fiscal discipline. 
This Congress failed to do so, and left the Nation worse off for their 
failure.
  When we look at this fiscal mess, it boils down to a lack of 
restraint and a lack of judgment. Wisconsin families face tough choices 
about their budgets every day, and they shoulder tough financial 
burdens. But they do not throw up their hands and keep spending. They 
have to make the choices that need to be made; and they do it. They do 
not do it because it is easy. They do it because they have to. They 
have to; and so do we.
  We have to get our house in order, like so many Americans do every 
day. Reinstating pay-go and adopting some other strong budget reforms 
should be among the highest priorities of the next Congress. We should 
return to the rules by which Congress played for the decade of the 
1990s. We should eliminate the loopholes carved in the pay-go rule as 
part of the budget resolution adopted in 2003. Those loopholes only

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facilitated more damage to the Federal budget bottom line.
  Reinstating the pay-go rule by itself will not balance the books. But 
it will make it harder for this body to make the deficit worse. It does 
not make it impossible, it just makes it harder, and that is exactly as 
it should be.
  Given our current budget position, we ought to make it harder to make 
the deficit worse. We ought to require 60 votes if we are to pursue tax 
policies or new mandatory spending that is not fully paid for. I do not 
think that is too much to ask. And those rules worked well just a few 
years back.
  We know this debt limit bill is going to pass. It was made necessary 
by irresponsible budget policies that were pushed by the administration 
and aided and abetted by Congress. This ought to be the last debt limit 
bill we ever consider, but unless we change things, it won't be. We 
have to change things on this pay-go rule and beyond or we will simply 
be in the same position time and time again.
  Mr. President, I thank my colleagues and I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, we all owe a debt of gratitude to the 
Senator from Wisconsin for his long-time concern about budget deficits. 
I can think of no one in the Senate who has been a more articulate 
advocate of getting our house in order.
  Mr. President, I yield 5 minutes to the Senator from South Dakota.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. Mr. President, I ask unanimous consent to speak as in 
morning business for the 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Johnson are printed in today's Record under 
``Morning Business.'')
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. There is not a lot of time left on the debt limit for 
debate. I urge Senators who want to speak to come over now because, 
otherwise, I will yield back the remainder of our time.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. I see the Senator from Florida on the floor. I yield 5 
minutes to him.
  The PRESIDING OFFICER. The Senator from Florida is recognized.
  Mr. NELSON of Florida. Mr. President, I thank the distinguished 
former chairman, now ranking member, of the Finance Committee, my 
friend, the Senator from Montana, for the time.
  I wanted to share with the Senate that, for the third time in as many 
years, I find myself wondering how in the world can we continue to be 
in such a fiscal posture that we find ourselves in. We are constantly 
reminded by the administration how rosy our economic outlook is, and 
there are some economic indicators that say that. On the other hand, we 
hear from the Department of the Treasury that if the debt ceiling is 
not raised, the Government is in danger of defaulting on our loans.
  By the way, where are a number of those loans? A huge amount of those 
loans to the U.S. Government are from the banks of Japan and China, of 
all places. In the 108th Congress alone, we have had to increase the 
statutory maximum debt the Government can carry by over $2.2 trillion.
  The last time we engaged in this exercise a year or year and a half 
ago, in May of 2003, we needed the single largest increase to the debt 
limit in U.S. history. That was almost a trillion dollars--$945 
billion. That lasted us only until today. Now the Treasury is 
explaining that they have resorted to ``extraordinary measures'' just 
so they can meet their current obligations.
  So here we go again. Three times we have done this in 3 years. Let me 
put it in context. From 1996 to 2001, the debt limit was increased by a 
total of only $400 billion, in relative terms. Today, we are asking 
that be doubled in the increase of the debt limit.
  There certainly are new expenses we are now facing, such as terrorism 
and the war in Iraq, which have put a tremendous strain on our budget. 
But these are not new expenses. We ought to be doing a better job of 
anticipating those needs and budgeting accordingly and not digging 
ourselves deeper into debt.
  Instead, the huge budget deficits year after year have put us on a 
reckless fiscal path that will take us decades to undo. And guess who 
is going to pay off that debt we keep adding to the tune of half a 
trillion dollars a year. It is going to be our children and our 
grandchildren who are going to have to pay off that debt.
  I keep hearing a lot of folks here who want this to happen. They keep 
claiming they have a conservative fiscal record, but I think the truth 
is that the ``tax cuts and spend'' mantra is not fiscally conservative. 
It is fiscally reckless.
  There will undoubtedly be more expenses that we face--emergencies 
from natural disasters, such as the four hurricanes that hit my State, 
and the floods in the Midwest. That is part of the reason for having a 
Federal Government, to respond to those emergencies. There are going to 
be necessities, such as the imminent retirement of the baby boomers, 
the unstable situation in trying to stabilize Iraq, and the terrorist 
threats all across the globe. We cannot continue to ignore those needs 
on our balance sheet.
  Today's debt limit increase is something I have a great problem with 
simply because of the way of the fiscal policy that has been thrust 
into the running of our Government. I do not want to see this as an 
annual exercise.
  Mr. President, I yield the floor.
  Mr. BAUCUS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I yield to the distinguished Senator from 
Delaware, Mr. Carper, such time as he might consume.
  Mr. CARPER. Mr. President, I thank my friend from Montana for 
yielding.
  There was a lot of talk before the election about potential October 
surprises. Perhaps there should have been more talk about potential 
November surprises, for that is what we are presented with this 
afternoon.
  There was a great deal of rhetoric during the campaign about cutting 
our Nation's budget deficit in half. There was too little straight 
talk, however, about the reality that our debt continues to rise.
  We have heard a good deal of talk since the election about mandates, 
voters' mandates and fulfilling campaign promises. If the majority in 
Congress is seeking a mandate for its economic policies, they would not 
have withheld the results of those policies until after the election.
  As far as campaign promises go, I do not recall anyone promising in 
this year's campaign that Congress's first act after the election would 
be to approve an increase in our Nation's indebtedness to more than $8 
trillion. That is exactly what Congress is about to do this afternoon 
before the sun sets in Washington, DC.
  As the most profligate Presidential term and the most profligate 
session of Congress in our Nation's history draw to a close, the bills, 
meanwhile, are coming due. Bills, like facts, are very stubborn things. 
No amount of rhetoric can make them go away. While it was inappropriate 
to hide from the public the true extent of our Nation's growing 
indebtedness until after the election, it is somehow fitting this vote 
would come today. There is a symbolism in the fact that one of the last 
acts of the 108th Congress will be to place this country deeper in hock 
to our creditors

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around the world. There is also significance in the fact that this act 
will be undertaken just a day before the opening of the Clinton 
Presidential Library in Arkansas.
  The opening of the Clinton Library reminds us that when Bill Clinton 
left office 4 years ago, America had a budget surplus. That surplus was 
sufficient to secure the future solvency of Social Security and 
Medicare and to put our country on course to be completely debt-free 
for the first time in any living person's memory.
  That is the legacy of President Clinton. I am sorry to say the legacy 
of the 108th and the 109th Congresses will be one of undoing in 4 short 
years the decade of work and sacrifice that went into balancing our 
Nation's books and strengthening our Nation's finances for the 21st 
century.
  Let me say, credit for the budget surpluses that we were beginning to 
generate as a country 4 years ago is not entirely due to one President 
or to one party. But the fact is that he did provide a strong measure 
of the leadership that helped get us to the place we were just 4 short 
years ago.
  As a result of that rapid unraveling of fiscal restraint, our 
financial position is far more precarious than it was just 4 years ago. 
With a large and growing budget deficit, we are stretched thin in our 
capacity to meet the great challenges that inevitably confront us as a 
great people. New terms and new Congresses are times for new 
beginnings--and for those of you who know me, I am an eternal optimist. 
I have no desire to dwell on the past. I, like most of us, am 
determined to look forward. My hope is that given the opportunity for a 
new beginning, we will chart a new course in the new year to come.
  In truth, we have no other choice, at least no other good choice. 
Sustaining a protracted global war on terrorism requires discipline. 
Keeping the promise of Social Security and Medicare entails 
responsibility. Ensuring that these challenges do not exhaust our 
capacity so that we are still in a position to improve our schools and 
invest in our children and their future demands sacrifice. Discipline, 
responsibility, sacrifice--these are values that are familiar to 
families in small towns across Delaware and across America and, 
frankly, in big towns, too. They are the values by which our families 
live each and every day, or at least attempt to. Our State and local 
governments share the values of our people when it comes to handling 
their people's money because, unlike the Congress, our State and local 
governments are required to share those values. Our State and local 
governments are required to live by two simple rules: Live within your 
means and pay as you go. We used to live by those rules here in 
Congress, but we have literally let those rules expire.
  In hindsight, it is clear that by letting these simple rules expire, 
and with them the values of discipline, responsibility and sacrifice, 
we have unleashed a frenzy of spending and borrowing. It is equally 
clear that this laxity in Congress now threatens America's economic 
vitality and even our national security.
  Personally, I do not believe pundits who say fiscal recklessness is 
inevitable. Nor do I believe those who say bitter and polarizing 
partisanship is inevitable. They may be inevitable, but I don't believe 
it. I am ready to meet in the middle with anyone from the other side 
who is interested in bringing responsibility and discipline to the 
Halls of Congress and the part of America outside the Congress that is 
within this beltway. I am interested in working with any and all of my 
colleagues who want to work to reform and to improve the budget process 
in a way by going back to the future, going back to some of those 
values and some of the practices that got us to a place where we had a 
balanced budget, including the notion that if a Senator wants to 
increase spending, he has to come up with an offset--lower spending 
someplace or to raise revenues someplace.
  If we want to cut the revenues from the Treasury, we have to come up 
with an offset. Either raise revenues someplace else or cut spending to 
offset the loss to our Treasury from our tax cuts. Surely we can find a 
common cause and make sure the decisions we make in Congress truly 
represent the values by which those we represent live their lives. We 
can do this. We should begin by restoring the old rules that require us 
to live within our means and, as I said earlier, pay as we go.
  If we do that, perhaps we can save ourselves the embarrassment we 
feel today. Perhaps we can save ourselves from standing once again on 
the precipice of adding another billion, another hundred billion, or 
another trillion dollars to the debt we are loading on the backs of our 
children and on future generations of Americans.
  Sitting here before me today are young people. They are pages. They 
come here to this Capitol when they are juniors in high school. They 
are the same as our oldest son. Someday somebody is going to have to 
pay for the debt we, the Congress, are accumulating at the request of 
the administration, the debt load whose ceiling we will raise later 
today. We do not just print money when we run deficits around here, we 
borrow money. We don't just borrow money from people who buy savings 
bonds, we don't just borrow money from people who buy Treasury 
securities, notes and bonds, we borrow money from people all over the 
world.
  We have become a huge debtor to some unlikely nations: China, Japan, 
South Korea, and a number of others. I am not talking about deficits of 
a couple of billion dollars or even tens of billions of dollars, but 
hundreds of billions of dollars. They expect to be paid interest on 
that debt. We have to pay interest on that debt or default. Eventually 
they are going to want to be repaid the principal of the money they 
have loaned to us.
  My friends, if we are not careful, we are going to reach a tipping 
point where the amount of our indebtedness becomes so great, so 
significant, so alarming to other nations around the world they are 
going to be reluctant to loan us more money unless we show some ability 
to better manage our finances.
  When they see the threat to our ability to repay our debt go up and 
we become a riskier investment, those other countries around the world 
are going to ask us, if we want to be able to get credit, to pay more 
interest on our debt and to raise the interest rates. If we don't want 
to do that, we are not going to be able to roll over--renew--our debt.
  On the other hand, if we pay the higher interest rates which we are 
going to be inevitably faced with, that has a dampening effect on our 
economic recovery.
  Someday these young pages, along with my children and their 
generation, are going to have to repay these debts. It is not fair to 
them.
  I will close with this. Does anybody in the Chamber have an idea of 
what the interest payment on our national debt is today? About $1 
billion. Just 1 day--not 1 week, 1 month--just 1 day. It is not 
principal, it is just interest. And we have to pay it today, tomorrow, 
and the day after that. In raising our debt ceiling today, that $1 
billion interest payment is not going to go down, it is going to go up.
  We can do better than this. Beginning in January we have to. With 
that having been said, I yield my time and thank my colleague from 
Montana for yielding to me.
  The PRESIDING OFFICER (Mr. Cornyn). The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield 10 minutes to the distinguished 
Senator from New Jersey.
  Mr. LAUTENBERG. I thank the Senator. I thank the Senator from Montana 
for the opportunity to use a few minutes to describe what I see as the 
latest in a series that is rather discouraging for America. It is fair 
to say, using that expression that has been coined around the country 
over a number of years: Mr. President, there we go again. For the third 
time in 3 years, President Bush has gone over the limit on our Nation's 
credit card. So now the President is asking Congress to raise his 
limit. That is often an expression used at gaming tables in Las Vegas 
and Atlantic City and other casino establishments. I don't know whether 
that is

[[Page 23695]]

what we have here. Is this a casino where we are willing to bet table 
stakes, everything that we have, because we are out of control?
  I want to say to President Bush that this solution may work for you, 
but everyday Americans don't have the luxury of simply saying: You know 
what, give me a little more credit so I can continue to deal with this 
so irresponsibly. Banks simply will not agree to increase people's 
credit limits when they rack up dollars and debt on their card. That is 
what President Bush is asking members to do today. We are the bank's 
chief lending officers and he wants us to raise his credit limit.
  Simply put, what we are seeing in this administration is credit card 
economics. It is totally irresponsible and among the most reckless 
administrations in the history of this country with their fiscal 
management.
  Why are we in this mess? Because President Bush and the Republican 
majority in the Congress decided they wanted to give the wealthiest in 
America a big tax cut. A portion of the President's tax cut goes to 
people like myself who are in the highest percentage of wage earners.
  I had a successful business career. I was lucky I did what I did in 
the computer industry many years ago when America presented all kinds 
of opportunities for me to work and create something of lasting value.
  The top 1 percent of the wage earners are receiving this tax cut that 
equals $100 billion every single year. That is almost a third of the 
total cost of operating. The worst part about this mountain of debt we 
are being asked to authorize is it is going to be on the backs of our 
children and grandchildren. Who among us would say, I want to live high 
on the hog, so here, kids, here grandchildren, you pay the bill while 
we go ahead on this spending kick?
  President Bush simply wants to leave this debt burden to future 
generations. I don't want to do it.
  If colleagues vote to raise this debt limit, they are voting to 
saddle every child in this country with an immediate debt burden of 
$27,764.
  I look at the wonderful young people we have, known as pages, who get 
a taste of government from their experience here, spending a term in 
their high school years. Each page will owe $27,000 as a result of what 
we are doing here today. It raises the debt limit above $8 trillion for 
the first time ever in our history.
  It is sometimes hard to get a grasp on numbers like that, so let me 
try to put that in perspective. I cannot imagine what $8 trillion is 
like. We are not talking about stacks of $1 bills. It is two-thirds of 
the value of the entire New York Stock Exchange. That is how much we 
are in debt. If we want to pay it off right now, we have to hand over 
two-thirds of our stock market. It is irresponsible. It is impossible 
to comprehend.
  The deficit is a real problem that affects our lives and our Nation's 
economy. When President Bush took over and got a resounding endorsement 
from people across the country for his second term, we were in a 
position of surplus. I was on the Budget Committee. I was fairly senior 
on the Budget Committee on the Democratic side. We struggled and we 
pushed and President Clinton encouraged us and he twisted arms of both 
parties--not just the Democrats, but the Republicans--and we got a 
balanced budget in place. We had over $200 billion in surplus in the 
year 2002.
  Now we are looking at a debt just for this year that could be 
somewhere in the $600 billion range; $488 billion. But including the 
cost for the extra borrowing, it will be somewhere around $600 billion 
in debt. When President Bush took over we had an almost $300 billion 
surplus. That is quite a change.
  Tomorrow, there is an official dedication ceremony for the Clinton 
Presidential Center. What a difference between the economic policies of 
those days and current times. President Clinton understood the 
importance of fiscal discipline. Right now, there is no concept of it 
whatever. What we have now is a deficit attention disorder. We look at 
this credit card and we see what has been asked: Through November of 
2004, $7.384 trillion.
  I was the ranking member of the Senate Budget Committee in 1997 when 
we negotiated the historic Balanced Budget Act that produced surpluses 
for the first time in three decades. What we were looking for was a $5 
to $7 trillion surplus in 10 years.
  There is no fiscal discipline. We are running the biggest deficit in 
history. Because of the 1997 balanced budget agreement, the surpluses 
it produced, we were able to pay down $600 billion in debt. We were on 
a path to pay off public debt by the year 2008. Now, because of the 
reckless tax cuts that President Bush and the Republican controlled 
Congress have pushed through, instead of being debt free, we are going 
to be at least $10 trillion in debt by 2008. No one on the other side 
can seriously argue that we will be better off $10 trillion in debt.
  The Republican plan is to borrow and spend, saddle future generations 
with the responsibility for paying the bills. That is a terrible abuse 
of the financial future of our country. I don't think responsibility of 
our children should be just a Democrat or Republican value. It should 
be an American value. We cannot abandon it.
  We all know in our homes and families, if we spend more than we take 
in, if we spend more than our salaries, we have to be able to borrow to 
keep our families afloat. That is what the United States of America is 
doing right now, borrowing to keep us afloat, putting us ever deeper in 
debt, and transferring that obligation from ourselves to future 
generations. My children, my grandchildren, and other people's children 
and grandchildren will have to shoulder part of that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, elections obviously are an extraordinary 
opportunity to listen to the American people, to learn, to debate, and 
to test ourselves and our ideas. This election was no different. It was 
an honor to live out a great debate in our country in which we talked 
about the kind of nation we want to live in and what our 
responsibilities are to each other and, of course, to future 
generations.
  Whatever lessons you learn about a campaign--and there were many--at 
the core, obviously, are issues. Those issues did not go away on 
November 3 no matter the results.
  We are here in the Congress with fundamental responsibilities to 
continue the fight for those things Americans care about and that 
matter to the long-term health and welfare of our Nation. I intend to 
continue to fight on those issues as hard as I did in crisscrossing 
this great country of ours.
  At the heart of every issue I heard about from Oregon to Florida, 
Iowa to Ohio, and every State in between, whether it was affordable 
health care or good jobs or taxes or energy independence or America's 
role in the world and her respect, above all, Americans continually 
expressed their understanding that our ability to meet all of those 
needs rises and falls with our economy, with the strength of our 
economy, the quality of the jobs that we create in America, the kind of 
investments we make in the lives of our children, and the quality of 
the jobs of the future. All of those choices ride on the fiscal choices 
we make as a government.
  Those are lessons we have learned the hard way over the course of the 
last century or more. That is why I believe, as do others who have 
spoken in this Chamber during the course of the day, we need to deal 
candidly and immediately with some sense of urgency with the debt and 
the debt limit of the United States. We have a fundamental 
responsibility to restore fiscal responsibility rather than merely 
voting again to raise the debt limit as if there is an endless credit 
card at the expense of the American people.
  Americans struggle to balance their budget. I heard about those 
struggles all across this country, people who can barely afford to pay 
their bills, people who have seen their health care go up 64 percent, 
their tuition go up 35 percent, gasoline prices go up, cost of 
purchasing drugs go up, and their wages are down. The American people 
are

[[Page 23696]]

struggling to be able to pay their bills. Congress is not exhibiting 
the similar kind of struggle or even effort. The American people sit 
down at their kitchen tables and they try to play by the rules every 
single day. Congress seems ready to write new rules whenever it wants. 
We used to understand the responsibility to future generations. In the 
1980s, Washington dug an enormous hole, a deficit hole, and it became 
apparent to all on Wall Street and all of the corridors of fiscal 
responsibility and power in America that we needed to make a better set 
of choices. So we made tough choices in the 1990s to dig ourselves out 
of that hole. And now here we are again, in 2004, back again with a new 
hole, deeper, with more grave consequences than at any time in American 
history. Neither Congress nor the administration has been willing to 
face up to that reality, even as the consequences grow and stare us in 
the face.
  Let me put that in perspective. In less than 4 years, a 10-year $5.6 
billion budget surplus was turned into a $2.4 trillion debt. That is 
the worst fiscal turnaround in our Nation's entire history. Since 
raising the debt limit last year, the Government has run up more debt 
than all of the Presidents from George Washington through Ronald 
Reagan. In fact, almost three-quarters of the entire debt of the United 
States of America in our 228-year history has been run up during the 
course of the last three Republican administrations. Taxpayers have 
been left with a record deficit in both of the past 2 years, up to a 
record $413 billion for 2004. According to the Congressional Budget 
Office, we are going to run $300 billion deficits every single year for 
the next decade, and that is without including one of the President's 
new proposals made in the course of the last year of the campaign. So 
the United States is operating a borrow-and-spend Government, 
continuously stretched by demands for more tax cuts and by more 
spending. When there is not enough money to pay for those choices, 
which are voluntary choices, they simply go into debt and put the tab 
on the national credit card and they send the bill to our kids. It is 
an economic policy of borrow and spend, and it simply cannot be 
sustained. After the new debt limit passes this week, and it will, the 
administration will have added $2.1 trillion to the debt limit in less 
than 4 years. That amounts to more than $7,200 for every man, woman, 
and child in the United States, and all of that money must eventually 
be paid back, or at least partially paid back in significant amounts 
with interest.
  The interest payments alone are staggering and depriving us of 
choices that we ought to be making for long-term investment in our 
country itself. The Government may spend it today, but Americans 
ultimately will pay the bill. That means a child born today is going to 
enter the world owing more than $17,000 when our last and expected debt 
is totaled up. As everybody knows, our children grow up with a set of 
expectations about their future that are now impacted extraordinarily 
by the choices we are making on their behalf, and whether it is a 
choice to buy a car or home or save for their own families or save for 
college, all of those are going to be impacted negatively by the 
unwillingness of Congress to be responsible at that moment. Their 
ability to save will be eaten away by their share of what this 
Government is going to have already spent in debt. This could be called 
a birth tax, a birth tax that is dumped on the back of every American 
child unwillingly.
  I think, and I think most persons believe, to saddle our children 
with this debt is wrong. As Republican Pete Peterson said, the ultimate 
test of a moral society is the kind of world it leaves to its children. 
And I think about that concept as we are about to slip our own kids and 
grandkids a check for our free lunch. I say we are failing the moral 
test. That is Republican Pete Peterson speaking.
  And it is not just the mountain of debt that is the problem. It is 
also where the money comes from. To pay our bills, America now goes cup 
in hand to nations such as China, Korea, Taiwan, and the Caribbean 
banking centers. China now holds $172 billion of our Nation's debt. 
Korea holds $63 billion, Taiwan holds $56 billion, and the Caribbean 
banking centers hold more than $191 billion. Since 2001 alone, the 
share of U.S. Treasury debt held by foreigners has risen to 42 percent 
from 30 percent. It is increasingly dangerous for so much of our 
Government and our standard of living to be dependent on foreign 
capital. If foreign investors were to suddenly decide to stop financing 
our borrowing habits or to see weakness in the American economy, it 
could have a spiraling impact on our own economy, international 
currency markets would be shaken, and our economy would quickly follow. 
If those investors began to withdraw their capital, our financial 
markets would plummet and interest rates would climb. That will make 
everything American families need, from a home, to a car, to 
appliances, to education, all of it, more expensive. It will make it 
harder for businesses, and especially small businesses, to raise 
capital and invest in jobs and economic growth.
  What is more, with so much of our debt owned by other nations, U.S. 
diplomatic and trade negotiators face increased difficulty in making 
demands of major creditor nations. How do you go to a country that 
holds so much of your debt while your economy is closely linked to 
theirs and start to make the powerful argument about nuclear 
proliferation or human rights, democratization, and other issues that 
are of importance and great consequence to our country?
  It is only a matter of time before America learns the hard way that 
debt is more than a financial liability, it weakens America's security, 
and it weakens our diplomacy and our trade. Our budget mismanagement, 
the negligence of borrow-and-spend policies, leaves us vulnerable to 
the priorities of foreign creditors. And that is unhealthy and 
irresponsible.
  So what do we do about that? Well, we can argue over the cause of the 
problem, of what made this borrow-and-spend institutionalized approach 
the reality it is today. But I think it is more important for us now to 
try to find a solution; that is, to work to find economic policies that 
are going to create opportunity and demand responsibility.
  When I first came to the Senate in 1985, the Federal deficit was 
soaring, out of control, just like it is today. And in the 1980s, the 
National Debt Clock in New York City became a symbol for a Federal 
deficit and a debt that were out of control. Back then, many Democrats 
thought we could continue to spend and to spend without having to pay 
the bill. And back then most Republicans claimed that if you gave huge 
tax cuts to the wealthy, they were somehow going to pay for themselves.
  At the same time, we were lucky to have leadership from a group of 
reformers on both sides of the aisle, people such as Republican 
Senators Warren Rudman and Phil Gramm, and Senator Fritz Hollings on 
the Democratic side. They pushed for a deficit reduction plan that had 
real teeth in it. They continued that fight until it was finally won.
  The choice was tough. Fiscal sanity was won by exactly one vote in 
both Houses of Congress. But finally, in 1997, we finished the job by 
passing a historic bipartisan balanced budget agreement. It not only 
balanced the budget for the first time since 1969, but it extended the 
life of Medicare, it expanded health care for children, and it cut 
taxes for middle class Americans.
  Four years ago, the numbers on the National Debt Clock were spinning 
backwards. Today, in New York, the National Debt Clock has now been 
turned back on, and the numbers are rising faster than you and I can 
follow. As Senator Hollings retires from the Senate, I think we need 
more of that kind of effort that was offered in the 1980s and 1990s in 
order to find the common ground that he and Senator Rudman brought to 
this debate almost 20 years ago. It is time again to follow that 
example.
  There are a lot of ideas out there. We can end tax cuts that do not 
create jobs but do create enormous debt. We can find incremental 
savings by

[[Page 23697]]

streamlining Government itself. We can reduce or eliminate programs 
that we simply cannot afford. We could establish a commission to 
independently evaluate and eliminate corporate subsidies. But more 
important than any individual proposal is that the White House and 
Congress make a fundamental commitment to end this policy of borrow-
and-spend economics.
  We need to make economic opportunity and fiscal responsibility a 
common goal. And we have to live by some rules, rules such as a budget 
that requires us to pay for what we spend, rules that give the debt 
limit meaning. Today the debt limit is fanciful. It is just a number on 
a piece of paper, and Congress raises it any time it wishes. It is no 
limit at all. I believe we can do these other things. We could make 
these other choices if we set clear national priorities, if we make the 
tough decisions, not just about the programs of others but about our 
own proposals.
  We have to do this because it is critical to any credible economic 
plan and to the creation of new, good-paying jobs. An America that 
ignores our national debt and the deficit will be an America that 
invites inflation and recession. An America that pays for new 
initiatives and follows real budget rules will be an America that 
creates a new era of prosperity and opportunity for all Americans. We 
know how to do this. We did it in the 1990s. Now it is time to return 
our Government to that fiscal responsibility and to invest in the 
future and to create new jobs in America that pay more than the jobs we 
are losing overseas, and to raise the standard of living for American 
workers.
  I will not vote for a borrow-and-spend economic policy when there are 
better alternatives.
  Over the last year, in the cities and towns that I was privileged to 
travel in all across our Nation, I have been reminded again and again 
of the hopes of the American people and of families that play by the 
rules and do what is right for their kids and try to do what is right 
for aging parents and for a Social Security system and a Medicare 
system that are under increasing pressure and strain.
  Those Americans are faced with tough choices every day. They expect 
us, similarly, to make tough choices. I think Washington ought to live 
by the same rules they do. None of these choices are about numbers and 
about dollars and statistics alone. They are really about the 
responsibility we have as one generation to another and, most 
importantly, the responsibility we have vested in us as Members of the 
Congress and the need to try to work together and find the unity, as we 
did in the 1990s, to come up with a solution that acts in the interests 
of Americans and that does not avoid that fundamental responsibility.
  Mr. President, I ask unanimous consent that we reserve whatever time 
there is for the leadership. I do not know if the Senator from Michigan 
wants to speak now.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. Mr. President, I ask unanimous consent that I be 
allowed to proceed for up to 15 minutes from the time under the control 
of the Democratic manager.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. STABENOW. Thank you very much.
  Mr. President, I rise to join my colleagues and I appreciate the 
eloquence of the Senator from Massachusetts in speaking about the 
serious challenges that face our country. And I rise today to oppose 
the legislation in front of us that would raise the debt limit.
  This bill will enable this Congress to incur the largest national 
debt in the history of our country. I remember in 1997 coming to the 
U.S. House of Representatives. I was in my first term, and I had the 
opportunity, within 6 months of being elected, to vote on balancing the 
budget for the first time in 30 years. That was one of my proudest 
votes as a Member of the House and remains one of my proudest votes as 
a Member of Congress.
  When it comes to fiscal irresponsibility, though, at this time, this 
administration has broken all records and turned the clock back from 
that historic moment in 1997 when we balanced the budget for the first 
time in 30 years. They have rolled back the clock now to a huge fiscal 
mess with redtape and red ink as far as the eye can see.
  Despite inheriting the largest 10-year surplus in the history of our 
country, this administration turned a $5.6 trillion surplus into a $3.5 
trillion deficit. That is a lot of money. This $9.1 trillion turnaround 
is the largest we have ever seen. It is absolutely historic and 
extremely disturbing to all of us.
  Also, in fiscal year 2004, this administration was responsible for 
the largest deficit in the history of the country--$413 billion, the 
largest deficit in the history of the country.
  To make matters worse, the President is proposing even more debt over 
the next 10 years. So we have in front of us an effort to raise the 
debt ceiling instead of efforts to, in fact, lower the debt. And there 
are proposals on the horizon that will increase the debt even more. 
Proposals to make tax breaks for the privileged few permanent will add 
approximately $1.2 trillion more to the debt.
  The administration's Social Security privatization scheme would cost 
somewhere between $1 trillion and $2 trillion more.
  We need to take heed and the administration needs to take heed of the 
old saying that when you are in a hole, the first thing you need to do 
to get out of it is to stop digging.
  We are in the middle of a war in Afghanistan and in Iraq. We must 
provide our troops with whatever they need. Unfortunately, every time 
Congress has considered proposals to pay for these war costs, the 
leadership and the administration has pulled out all the stops to 
defeat them, preferring not to budget for the war, still incurring the 
costs; and we have the resulting deficit, rather than planning and 
budgeting to make sure our troops have what they need.
  Congress now has no budget discipline requirement. There has been a 
bipartisan proposal pending in Congress, which I support, to enact the 
pay-as-you-go system of budget discipline. This passed earlier this 
year as an amendment to the Senate budget resolution. It was dropped 
then in conference committee and, as a result, this Congress never 
passed a final budget resolution. Therefore, Congress can go on cutting 
revenue, having spending increases that are not budgeted, with no 
discipline whatsoever.
  These massive deficits are pushing interest rates higher. This means 
that American families will have to pay more for mortgage payments and 
car payments and student loans. Talk about a hidden tax. Every time we 
see increases in interest rates, we are taking more money out of the 
pockets of our middle-income taxpayers, working families, those who are 
trying to have the American dream, to have a home for their families, 
send kids to college, buy a new automobile, and pay for other costs 
that involve borrowing. Those interest rates are a direct tax on our 
families, and particularly hit hard are those in middle America.
  If we don't have the fiscal discipline to be able to bring this 
deficit down and bring this budget back into balance, as we did in 
1997, we will continue to see the hidden tax of interest rates hitting 
our families and our businesses.
  Worst of all, fiscal recklessness means that, as adults, our children 
will be hit with the needed tax increase to pay our bills. In fact, 
every child born in America today effectively has over a $20,000 bill 
handed to them to pay for the country's national debt. Our national 
debt really ought to be called a birth tax on our children and 
grandchildren.
  These large deficits are bad for our economy and they do not 
represent real American values. American families know they need to pay 
their bills. We need to pay our bills. We all do. We sit down with our 
families to figure out how to pay the bills. They cannot pass an 
increase in their own personal debt limit every time they want to spend 
more, which is what the Senate is doing today.

[[Page 23698]]

  Families have to live within a budget. They must make tough choices 
every month. They often must decide between things such as new school 
clothes for the children, saving for a college education, or buying the 
medicine they desperately need for their families. Parents are 
responsible for their household budgets. They pay mortgages and tuition 
either by working another job or doing without something. In other 
words, families must borrow responsibly, live within their means. In 
other words, they must play by the rules. We should be doing the same.
  Unfortunately, the Republican majority does not think the Congress 
should have to play by the same rules as families. This is dead wrong. 
I believe it is hypocritical for us to talk about families needing to 
make tough choices in balancing their budgets if we are not willing to 
balance our own.
  An increasing national debt also violates one of our most important 
values--that we want our children to be better off than we were. We 
want to leave them a better country than we inherited. Parents all over 
America care about this and do this every day. They work hard to pay 
for their children's college so they can be successful, to build a 
business so they can pass it on to their children; they build a little 
nest egg so that when they pass on, their children will get a small 
inheritance to help raise their own children and be able to have the 
American dream.
  These are true American values. They are our responsibility, playing 
by the rules, thinking about others other than yourself.
  Instead of making life better for our children, we are doing just the 
opposite by focusing on raising the debt limit rather than paying down 
the debt. We are leaving them a country that is worse off financially, 
and we are saddling them with a debt that will have consequences for 
them throughout their lifetimes. Again, they will have to pay our 
bills. That is not the way it should be in the greatest country in the 
world.
  Our President talks about an ownership society, where Americans are 
financially independent and responsible. We need this same principle 
applied to this administration's fiscal policies.
  Unfortunately, what the President's ownership society really means is 
that our children will own all of the national debt. This is immoral, I 
believe. I believe it does not reflect our values as Americans. I urge 
my colleagues to oppose this legislation. You know, it is kind of like 
a ``get out of jail free'' card for a fiscally irresponsible situation 
here, led by our colleagues on the other side of the aisle and this 
administration.
  I believe we need to stay and take whatever time it takes in order to 
make the tough decisions to deal with the budget and spending 
priorities. We need to focus on the real values and real priorities of 
the people we represent, the families who are out there trying to 
balance their budgets and make ends meet and provide for their families 
every single day. They are making tough choices. They are making even 
tougher choices because of the decisions that are made here. I believe 
that continuing a situation that will only raise interest rates on 
families and on businesses, which is really a tax, is not what we ought 
to be doing in the Senate.
  I yield the floor.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mrs. CLINTON. Mr. President, last year, I stood with several 
of my colleagues in the Senate and voiced concerns that the effort to 
increase the debt limit by nearly $1 trillion was the wrong fiscal 
course to take this Nation. Indeed, I did not oppose the debt limit 
increase because of any ideological opposition to doing so. In fact, 
during my husband's administration, we raised the debt limit 
permanently on two separate occasions.
  But what was different then was that we had a solid plan to balance 
the budget, and thereby begin paying down our Nation's debt. That plan 
worked. We had the largest budget surpluses in the history of this 
Nation and we retired nearly half a trillion dollars of our Nation's 
debt while creating jobs, growing our economy and lifting millions of 
Americans out of poverty.
  With the current administration's agenda, there is no plan for 
restraint or moderation, nor is there any solid framework for paying 
down our Nation's debt. During these next four years, we know we will 
be making a huge investment for the war in Iraq and Afghanistan and we 
know that we will continue to make significant and increased 
investments in homeland security, education and health care. Faced with 
these growing budgetary pressures, I am amazed that the same passion 
used to champion and implement this administration's agenda over the 
last four years has been entirely muted when it comes to fiscal 
restraint or responsible choices to balance the budget or pay down our 
national debt.
  This certainly wasn't the case during the 90's when, even though we 
were making solid progress in reducing the deficit and the national 
debt, we were warned that our national debt would ``threaten future 
generations, threaten the future of our children, threaten our Social 
Security system and threaten our ability to lead the way in the global 
economy of the 21st century.''
  Last year, when I opposed the last debt limit increase, I said that 
absent any plan from this administration to address the growing deficit 
and exploding debt, we would be here again. Here we are one year later, 
about to pass the third increase in 4 years, having permanently 
increased the debt ceiling by over $2.2 trillion or $8,100 for every 
man, woman and child in the United States. However nothing from the 
administration in terms of a plan to reduce the debt or making 
responsible choices has changed. Indeed, the only thing that has 
changed since the last debt increase is that our budget deficit has 
deteriorated by $50 billion.
  Given the reckless fiscal course taken over the last several years, 
and little evidence to indicate a shift from that course, I cannot, in 
good conscience support another step that passes along the burdens of 
this generation to the next because of our failure to address these 
problems today. Raising this debt limit while embracing policies that 
further exacerbate the deficit is in essence a ``children's tax,'' a 
burden borne not by this administration or this Congress, but by our 
sons, our daughters, and our grandchildren.
  Mr. GRASSLEY. Mr. President, I rise in support of S. 2986, a bill to 
increase the Federal debt limit.
  I support this increase because it is necessary to preserve the full 
faith and credit of the U.S. Government.
  Without an increase in the debt limit, our Government will face a 
choice between breaking the law by exceeding the statutory debt limit, 
or breaking faith with the public by defaulting on our debt. Neither 
choice is acceptable.
  To understand why we are here today seeking to increase the debt 
limit, it is necessary to explain a few things about the Federal debt.
  Under current law, there is a statutory limit on the amount of debt 
that can be issued by the Federal Government. This limit which now 
stands at $7.384 trillion applies to virtually all of the debt issued 
by the U.S. Government.
  There is only one debt limit, but there are two types of debt--debt 
held by the public and debt held by the various Government trust funds.
  The amount of Federal debt held by the public is determined by the 
Government's annual cash-flow. When total spending exceeds total taxes, 
the Government has a budget deficit.
  To finance this deficit, the Government borrows from the public by 
selling debt, such as Treasury bills, notes, and bonds.
  We will hear a lot of criticism that President Bush's tax cuts are 
responsible for our rising public debt. But the facts show otherwise.
  When President Bush took office in 2001, the Federal debt limit was 
$5.95 trillion.
  The debt limit was increased to $6.4 trillion in 2002 and to $7.384 
trillion in 2003.
  Assuming we increase the debt limit again today, it will be $8.184 
trillion.

[[Page 23699]]

  Thus, the Federal debt limit will have increased $2.234 trillion 
since President Bush took office in 2001.
  However, the tax cuts that have been enacted since 2001 total less 
than $700 billion through the end of the most recent fiscal year, and 
that includes the interest cost as well.
  Thus, the President's tax cuts account for less than 30 percent of 
the increase in the Federal debt limit.
  The rest of the increase in public debt is due to the recession, the 
war in Iraq, and homeland security.
  In addition to the debt held by the public, the Federal debt limit 
also applies to the debt held by various Government trust funds--such 
as Social Security and Medicare.
  Whenever a trust fund program collects more than it spends, the 
surplus is invested in special issue Treasury securities. These special 
securities count toward the debt limit.
  However, it is important to understand the amount of debt held by the 
trust funds does not reflect the Government's unfunded obligations.
  For example, the Treasury Department reports that the total amount of 
Federal debt held by all of the trust fund programs is just over $3 
trillion.
  However, the Social Security and Medicare trustees report that the 
unfunded obligation of Social Security and Medicare is more than $72 
trillion.
  Given these facts, it should be obvious to everyone that the Federal 
debt limit provides a misleading and inaccurate picture of the 
Government's future liabilities.
  Efforts to use the statutory debt limit to control Government debt 
and deficits cannot succeed because it ignores the long-term budget 
problem.
  Indeed, even Federal Reserve Chairman Alan Greenspan has suggested 
the debt limit has outlived its usefulness and should be replaced with 
a more accurate and useful alternative.
  I would welcome the opportunity to work with my colleagues to develop 
such an alternative.
  However, pending the outcome of such an effort, I would strongly urge 
every Senator to support this bill.
  Testimony of Chairman Alan Greenspan in the Federal Reserve Board's 
semiannual monetary policy report to the Congress before the Committee 
on Banking, Housing, and Urban Affairs, U.S. Senate, February 11, 2003:

       In the Congress's review of the mechanisms governing the 
     budget process, you may want to reconsider whether the 
     statutory limit on the public debt is a useful device. As a 
     matter of arithmetic, the debt ceiling is either redundant or 
     inconsistent with the paths of revenues and outlays you 
     specify when you legislate a budget.

  Mrs. FEINSTEIN. Mr. President, I cannot in good conscience support 
this request to raise the national debt limit to $8.1 trillion. Rather 
than raising the debt limit by $800 billion, we should be taking 
concrete steps to lower our budget deficit and reduce our national 
debt.
  If today's increase is adopted, President Bush will have raised the 
Nation's debt limit by more than $2 trillion. In other words, just 4 
years into the job he has raised the debt limit more than any President 
in U.S. history.
  The Federal budget deficit reached a record $422 billion for fiscal 
year 2004, according to the latest estimate by the Congressional Budget 
Office.
  Over the next 10 years the President's budget will create $2.3 
trillion in additional debt for our Nation. This is a stunning 
turnaround from 4 years ago, when the budget showed: a $127 billion 
budget surplus, and a projected 10-year surplus of $5.7 trillion.
  This is a mind-numbing $8.0 trillion turnaround in just 4 years.
  Given these numbers, it is not surprising that the debt limit has 
been raised twice in the past 2 years--by $450 billion in 2002 and by 
$984 billion in 2003.
  At the same time he is raising the debt limit, President Bush is 
promising to ``cut the deficit in half over the next five years.'' But 
his numbers don't add up and he has provided no clear path to achieve 
this goal.
  In contrast, in 1998, following nearly 30 years of deficits and a 17-
fold increase in Federal debt from $365.8 billion to $6.4 trillion, we 
paid off $448 billion of the Nation's publicly held debt.
  For the first time in more than a generation, some of the funds which 
would have gone to pay interest on the debt were instead spent actually 
paying down the debt.
  I see no similar path being offered by President Bush and now 
deficits and interest costs are growing once again. Net interest 
payments on the Federal debt will increase sharply, from $159 billion 
in 2004 to nearly $350 billion by 2014.
  Not surprisingly, when this Nation runs a budget deficit, the 
government must borrow money from other sources to balance its books.
  What would surprise many, however, is that we largely borrow this 
money from foreign countries--like China and South Korea. And the 
degree to which this administration has borrowed from foreign nations 
is shocking.
  Over the past 4 years, the U.S. has increased its borrowing from 
Japan to the tune of $700 billion; by $167 billion from China, $130 
billion from Great Britain, and $60 billion from South Korea.
  When President Bush came to office we owed $1 trillion to foreign 
countries. We now owe more than $1.8 trillion. We are ceding control of 
our Nation's destiny for a quick payoff to wealthy taxpayers and this 
debt limit increase bill simply enables that disturbing behavior.
  The Committee for Economic Development, an independent, nonpartisan 
organization of 250 business and education leaders, estimates that if 
we stay on our current course, the deficit will rise from 3.5 percent 
of GDP today to: 6.2 percent of GDP in 2020, and 21.1 percent of GDP in 
2040.
  Deficit growth of this nature would absolutely crush any hope this 
Nation has of addressing so many of our pressing problems, like better 
homeland security, shoring up Social Security, and fully funding No 
Child Left Behind. Deficits do matter, and unless we face up to them, 
they could seriously harm our Nation's economy. Here is why first, 
deficits mean increased spending on interest instead of priorities.
  In the short term, deficits can help stimulate the economy or pay for 
emergency spending. But in the long term, they limit our Nation's 
ability to fund much needed priorities. This means less money for 
education, less money for environmental protection, and less money for 
health care.
  Second, deficits lead to interest rate increases. We have been 
fortunate in recent years: interest rates and inflation have remained 
low. But as we have seen in the past few months, as the economy picks 
up, the downward pressure on interest rates are being relieved and the 
impact of deficits are starting to be felt. This is adding huge 
expenses to variable home mortgages and auto loans.
  An increase of just 1 percent adds $2,000 per year to the cost of a 
$200,000 home mortgage. This is more than the majority of American 
taxpayers received from the President's latest tax cut.
  Third, deficits prevent us from addressing the looming Social 
Security and Medicare crises. This is an issue that we can not continue 
to avoid. The retirement of the baby boomers will place a tremendous 
strain on our social safety net. In fact, if we do not address the 
problem, the Medicare trust fund will go broke by the year 2019, and 
the Social Security trust fund by 2052.
  Our Nation was poised to deal with these crises at the end of the 
Clinton administration.
  Not only have we failed to shore up the Social Security and Medicare 
trust funds, but we are also tapping the Social Security trust fund to 
pay our bills--to the tune of $164 billion last year alone.
  So what do we do? One possibility is to simply continue along our 
current path and pass our problems on to our children and 
grandchildren. In fact, the debt limit increase that we are debating 
today enables the President to borrow from future generations and sends 
the message that we are unable to muster the political will necessary 
to pay today's obligations today.
  So I strongly believe that the time has come to chart a different 
course, and make the tough choices that the President and this budget 
resolution avoid making.

[[Page 23700]]

  We must adopt a balanced approach to both taxes and spending and 
return to a program of fiscal sanity.
  This is what we did when I first came to the Senate over a decade 
ago. At that time, a small, bipartisan group of Senators came together 
to get our fiscal house in order: Democrats worked to bring spending 
under control; and Republicans pledged not to push for additional tax 
cuts.
  Today, we must come together again to address the deficit and restore 
our Nation's economic security.
  On taxes, I believe that we must move to make our Tax Code more 
equitable, not make the President's tax cuts permanent. To make the 
President's cuts permanent at a time when the Nation is running 
historically high budget deficits represents the height of fiscal 
irresponsibility.
  The Tax Policy Institute estimates the cost of making these tax cuts 
permanent would cost $1.8 trillion over 10 years--$1.8 trillion at just 
the time that baby boomers will start retiring and Social Security and 
Medicare need to be stabilized.
  The tragedy of our current circumstance is that, given the surpluses 
he inherited, President Bush should have the resources available to 
devote additional spending to healthcare, education, and the 
environment. But the wrong policies, at the wrong time, combined with 
the war on terror, escalating the 2001 tax cuts, and then extending 
many of them, have contributed toward the largest budget deficit and 
largest national debt in the country's history. And now, the fact of 
the matter is that we are going to need to tighten our belts and bring 
spending under control.
  I have no problem holding the line on spending, but believe that it 
must be done in the context of a more responsible approach to tax 
policy.
  Finally, we need to take a good, hard look at Social Security and 
Medicare, and start addressing some of the deeper structural problems 
with these programs now--before they fall into crisis.
  These are not easy answers. But holding off on additional tax cuts, 
bringing spending under control, and dealing with Social Security and 
Medicare is the only path to long term fiscal order, a balanced budget, 
and a healthy and vibrant economy.
  Mr. KENNEDY. Mr. President, the fact that we are being asked to raise 
the debt ceiling to $8.0 trillion is further proof of the nation's 
bankrupt economic policy. It will be the third increase in the last 2 
years, collectively raising the debt limit by more than $2.2 trillion. 
There is still no credible plan in place to bring the mushrooming 
deficits under control.
  President Bush's massive tax cuts for the wealthy have helped to turn 
the record surpluses he inherited into record deficits. The $5 trillion 
surplus projected 4 years ago has turned into a $3 trillion projected 
deficit. If we continue to follow the administration's misguided 
economic course, the federal debt could rise to more than $14 trillion 
in the next 10 years, and there will be large annual deficits as far as 
the eye can see.
  Over the long term, deficits that large will cripple the ability of 
the private sector to obtain the capital needed for companies to grow 
and create new jobs. They will also cripple the federal government's 
ability to make the needed investments in education, health care, and 
scientific research which are crucial to the nation's long-term 
wellbeing.
  These projected deficits do not even tell the whole story because 
they do not focus on borrowing from Social Security. The proposed Bush 
budget would raid the Social Security Trust Fund for nearly $2.5 
trillion over the next 10 years. These are dollars which workers pay 
each year in payroll taxes to finance their retirement. It is wrong to 
take that money out of Social Security and use it to finance the daily 
operations of government. In essence, Social Security is being used to 
fill a piece of the huge revenue gap left by the administration's 
excessive and unaffordable tax cuts.
  Mortgaging the future in this irresponsible manner has not even 
brought American families a temporary prosperity. On the contrary, it 
has increased the financial burden on them. Their jobs are less secure. 
In fact, 2.5 million manufacturing workers have already seen their jobs 
disappear over the last 4 years.
  The cost of health insurance has soared more than 50 percent; and, as 
a result, 5 million fewer workers receive health coverage.
  Tuition at public colleges has risen by 28 percent, pushing higher 
education beyond the reach of more and more students.
  Workers wages have grown at the slowest rate in more than 2 decades, 
and minimum wage workers have not had any increase at all in 7 long 
years.
  As a result of the disastrous economic policies of this 
administration, 4.3 million more Americans are living in poverty, and 
the household debt of the average family has increased by one-third.
  What is the Bush administration's response? How does the President 
propose to remedy these very serious problems? More tax breaks for the 
same wealthy people who were the primary beneficiaries of his earlier 
cuts; transferring a larger share of the tax burden from those who live 
off their accumulated wealth to those who live from paycheck to 
paycheck. If the tax proposals in the President's budget are enacted 
into law, they would add more than $2.0 trillion more in debt over the 
next 10 years.
  American families cannot afford more of the same. The financial 
squeeze is getting steadily tighter. Working men and women are the ones 
paying the price for Washington's economic mistakes.
  Hopefully, in the new Congress, we will start to seriously address 
these critical issues with members from both sides of the aisle and the 
administration working together to get our economic ship of state on a 
better course before it hits the rocks.
  Mr. SARBANES. Mr. President, I am deeply troubled by the pending 
legislation, which would raise the federal debt limit by $800 billion. 
The fact that we are considering this legislation illustrates how 
deeply the policies of this administration have plunged us into 
deficits and debt, and yet, the President continues to push for more of 
the same: tax cuts for the wealthiest Americans, which are not paid for 
and which will continue to run up deficits and debt as far as the eye 
can see. I am very concerned that if the President continues to pursue 
this reckless fiscal policy, our Nation's long-term economic strength 
will be seriously compromised.
  Despite the fact that the President signed into law the largest debt 
limit increase in our country's history only 18 months ago, the 
Treasury Department has now informed us that it will need to borrow 
even more to keep the government functioning. The legislation we are 
considering today would allow federal debt to grow to $8.184 trillion, 
truly a staggering sum.
  When President Bush took office, he promised that his fiscal policies 
would include ``maximum possible debt retirement.'' At that time, the 
Congressional Budget Office was projecting that our net debt to the 
public would decline to $36 billion by 2008, when this President leaves 
office. Now, instead of achieving ``maximum possible debt retirement,'' 
the President is asking for historically high debt increases. In fact, 
the CBO is now projecting that publicly-held debt will rise to $5.6 
trillion in 2008--almost 40 percent of our GDP. Gross Federal debt, 
which includes our commitments to Social Security and Medicare, will be 
almost $10 trillion by the time this President leaves office.
  These figures demonstrate how seriously our economic situation has 
deteriorated under this administration. Let me just emphasize that 
point with one further example. When the president took office, he 
inherited a 10-year surplus estimated at $5.6 trillion. Now, when you 
factor in some of the costs we know are coming, such as the continuing 
costs of the war in Iraq and the cost of reforming the alternative 
minimum tax, plus the cost of some of the President's proposals, such 
as making his tax cuts permanent and continuing his defense buildup, 
the projections are

[[Page 23701]]

for a $3.5 trillion deficit over that same period, a reversal of $9.1 
trillion. That is a seismic shift in our position.
  Much of this shift is a direct result of the fiscal policies pursued 
by the President during his first term. For example, consider this 
year's budget deficit. When President Bush took office, the CBO was 
projecting a surplus for 2004 of $397 billion. Instead, we have a 
deficit this year of $413 billion--a shift of $810 billion. More than 
one-third--37 percent--of this reversal is directly attributable to the 
tax cuts this President has enacted, tax cuts that primarily benefitted 
the wealthiest Americans. And the President is seeking to increase our 
debt burden by permanently extending many of these tax cuts, utterly 
ignoring the fact that these massive tax cuts for the rich have led to 
budget deficits so large that they could jeopardize our future economic 
strength.
  In part, my concern for our economic future stems from a change in 
the United States' international economic position. Two decades ago, 
the United States was a creditor nation internationally, by about 10 
percent of our GDP. Now, because of the deterioration of our position 
over those intervening two decades, we are a debtor nation, to the tune 
of about 22 percent percent of our GDP. Our status as a debtor nation 
has worsened considerably since President Bush took office: between 
January 2001 and July 2004, foreign holdings of U.S. Treasury debt 
increased by 79 percent. The large budget deficits that have appeared 
during the last 4 years have made us inordinately dependent on the 
influx of capital from abroad in order to sustain ourselves.
  What will happen to the United States if foreign buyers of our debt 
decide to make their investments elsewhere? As the Washington Post 
explained in an article on October 19, 2004:

       Foreign governments and individuals hold about half of the 
     $3.7 trillion in outstanding U.S. Treasury bonds, for 
     example, and the government has been heavily dependent on 
     continued overseas bond purchases to finance the roughly $1 
     billion a day it has to borrow to pay its bills. Foreign 
     lending and investment are also needed to finance the 
     country's roughly $50 billion monthly trade deficit, while 
     foreign capital has been a key prop to U.S. stock prices. A 
     turn in overseas attitudes toward the United States could 
     ripple deeply through the economy, depressing the market, 
     raising interest rates and pushing down the value of the 
     dollar.

  There are already signs that this is beginning to happen. The 
Treasury Department reported in October that net monthly capital flow 
from the rest of the world into the United States fell in August, for 
the sixth time this year. As reported last week by the Wall Street 
Journal,

       Since Election Day, the dollar has fallen 1.4 percent to an 
     all-time low against the euro. . . . The catalyst for its 
     most recent decline was President George W. Bush's re-
     election last Tuesday. Investors perceive his policies as 
     likely to aggravate the steep U.S. budget deficit.

  What is more, if it were not for the currency manipulation that many 
of our Asian trading partners are engaged in, the dollar would be 
significantly lower than it already is against those currencies as 
well. If this trend continues, the United States could be in for a 
period of significant economic contraction.
  As I said 18 months ago, during the debate on the last debt limit 
increase, the United States' international financial position reminds 
me of Tennessee Williams's Blanche DuBois in ``A Streetcar Named 
Desire,'' who said: ``I have always depended on the kindness of 
strangers.'' That is what has happened to the United States in the 
international economic scene. We have deteriorated into a debtor status 
so that we are now dependent upon the kindness of strangers. That is 
not where the world's leading power should find itself.
  This dramatic change in our economic situation comes at a time when 
the United States is facing a demographic tidal wave as the baby boom 
generation approaches retirement. When President Bush first took 
office, that retirement was almost a decade away. But time has run out. 
The first of the baby boomers will begin to retire in 2008, on this 
President's watch. Unfortunately, rather than prepare for the 
obligations we know are coming, this President has squandered every 
opportunity to save for the future.
  Moreover, his policy of deficit-financed tax cuts makes us less able 
to make needed investments today. Every increase in the government's 
debt means we are siphoning off resources that could be used for other 
purposes simply to pay the interest on that debt. Net interest payments 
on our debt are expected to consume more than $1 trillion over the next 
5 years. Instead of making investments in education, in health care, in 
transportation, we are paying billions of dollars in interest costs 
that would not have existed in the absence of the reckless fiscal 
policy of the last 4 years.
  Not only do these policies jeopardize our current and future economic 
strength, they place a tremendous burden on our children and 
grandchildren who will have to pay off this debt. By cutting taxes for 
the wealthiest, the President is really raising taxes on everyone, 
including our children and grandchildren, by leaving them with the 
responsibility for paying off this enormous debt.
  It is unfortunate that this Administration has demonstrated such a 
single-minded focus on cutting taxes, regardless of the very serious 
change in our economic situation and our country's current and future 
needs. The fact that the President is calling for still more tax cuts 
at the same time the Congress is being asked to add $800 billion to the 
Federal debt ceiling is beyond reckless--it places in jeopardy our 
future economic strength and the economic security of all Americans.
  Mr. LEVIN. Mr. President, I cannot support raising the limit on our 
national debt to $8.184 trillion without taking other steps to restore 
fiscal responsibility. The fact that this is the third debt increase in 
three years highlights the irresponsibility of the fiscal policies of 
this administration. These policies have taken the nation from two 
years of record surplus--when we were paying down our debt--to this 
administration's record deficits and debt. A crippling burden is being 
passed to our children and grandchildren, and the economic security of 
our nation is threatened as a result.
  The three recent increases in the debt limit reflect an astounding 
increase of more than $2.2 trillion. And unless we make a significant 
change in our fiscal policies, the outlook for avoiding future 
increases doesn't look any brighter. The Congressional Budget Office, 
CBO, forecasts that our gross Federal debt, which includes debt the 
Government owes to the public plus funds owed to federal trust funds 
like Social Security and Medicare, will climb from its 2003 level of 
$6.8 trillion to $13.3 trillion in 2014. And this shocking estimate 
doesn't even include the costs of continued military operations in Iraq 
and Afghanistan that we all know are coming. Nor does it take into 
account the substantial cost of continuing to provide relief for 
middle-class families from the alternative minimum tax, which, when 
applied to them, produces totally unfair results.
  The fiscal burden such massive debt puts on us and our children is 
stupendous. By 2014, each American citizen's share of the debt will be 
$42,903. Paying off a debt of this size will require either 
extraordinary tax increases or significant cuts in critical government 
programs like homeland security and education. Furthermore, we will 
have to spend an increasing amount of our precious dollars on interest 
payments. Even under the CBO's conservative estimates, net interest 
payments on the public debt will rise from $159 billion in 2004 to $348 
billion in 2014. Every family who has worked to balance its own budget 
knows that making interest payments diverts scarce resources from other 
priorities. Making these interest payments means fewer resources are 
available for many of our national priorities, including shoring up the 
Social Security and Medicare trust funds at a time when those programs' 
costs are about to skyrocket as members of the baby boom generation 
begin relying on payments from those Funds to support their retirement.

[[Page 23702]]

  Our rampant borrowing also threatens the economic security of our 
Nation as we are forced to go deeper into debt to foreign countries. 
Since January 2001, the share of U.S. Treasury debt held by foreigners 
has risen to 42 percent from 30 percent, and 90 percent of the new debt 
has been purchased by foreigners. This large amount of foreign debt 
leaves our nation vulnerable to the priorities of foreign creditors. 
For example, if foreign investors ever decide, for economic or 
political reasons, to stop financing our debt, U.S. and international 
markets could be thrown into turmoil. This provides other countries 
with leverage during trade or other negotiations with us.
  Our economic security is also threatened by the prospect that a 
larger debt will lead to higher long-term interest rates. This means it 
will be more expensive to buy a house, pay for college or pay off 
credit card debt. This threat is made more serious by the recent 
increase in indebtedness of American households. Since the beginning of 
2001, mortgage debt has increased by 44 percent and now stands at $7 
trillion. Home equity loans have jumped by 54 percent and installment 
debt, including credit card debt, has risen 17 percent. Americans have 
taken on these new debts largely in an attempt to maintain their living 
standards in a struggling economy. Since much of this private debt is 
set at variable rates, any increase in interest rates will have a 
severe and immediate impact on these families.
  So before we raise the debt limit today, we should commit to pursuing 
more responsible fiscal policies to prevent the need for future 
increases. We should reinstate pay-as-you-go rules to require that in 
addition to paying for all spending, we pay for all tax cuts as well. 
This concept is common sense for most families, who work to live within 
their means by balancing what goes out with what comes in.
  We should also revisit this administration's irresponsible and unfair 
tax cuts that have driven us so deep into this deficit ditch. It is 
reckless and irresponsible that the top five percent of households in 
our country, whose average income is over $250,000 a year, received 
almost half of these tax cuts. Restoring responsibility and 
accountability is essential to the economic and fiscal health of our 
nation. Simply raising the debt limit without taking other steps to 
restore fiscal responsibility won't lead to that result.
  Mr. BAUCUS. Mr. President, I see the Senator from Iowa on the floor. 
Does he wish to speak now?
  Mr. HARKIN. As long as the floor is open, I might as well speak now.
  Mr. BAUCUS. Mr. President, I yield 10 minutes to the Senator from 
Iowa.
  Mr. HARKIN. Mr. President, I thank my friend from Montana. I will not 
take a lot of time. I wanted to talk a little bit about the measure in 
front of us, raising the debt limit yet one more time on the American 
people.
  I liken it really to this right here. I will take it out of my 
billfold. It is a credit card. You see, what the Republicans have done 
is they have put America on a credit card. What they are doing is sort 
of like: spend and pay later, feel good. There was an advertisement 
once for a credit card company that said you can have it all. That is 
what the Republicans are telling us: You can have it all. We are going 
to put America on a credit card society. We can have tax cuts for the 
wealthy and the most privileged and we will put it on a credit card. We 
can continue the war in Iraq, brought on by exaggerations and 
misinformation to the tune of about $6 billion a month now. That is 
what we are spending in Iraq. I think it will $200 billion by the end 
of this fiscal year. Put it on a credit card. Put it on the credit 
card. And, boy, does it feel good. We can have everything. We can have 
it all. That is what Republicans are telling us. All you have to do is 
go in debt, put it on the credit card, put it on the country's credit 
card. We all know what is going to happen. When you are running up the 
credit card, boy, it feels good.
  Who is getting all the advantages of this credit card, though? The 
wealthiest among us who got all these big tax cuts, and they are now 
shopping at Neiman Marcus. Check it out. High-end stores, the high-end 
catalogs are doing very well. People are buying expensive trinkets, 
expensive watches, yachts, and everything else. They made out.
  Guess where it is coming from. It is on your credit card, America. It 
is on your credit card. And who will be paying? Working families. And 
now they want us to extend the credit card limit one more time.
  You see, they bumped against the limit on the credit card, so now 
they are saying we have to extend the limit. That is what all this is 
about. You have to put it in real-life terms. This is a real-life 
credit card. You know what your limit is, you know what your income is, 
and you know what happens if you exceed your credit card limit and you 
cannot pay it. What happens? What happens when you cannot meet the 
payments? You either declare bankruptcy and go to bankruptcy court, or 
your creditors come after you. They restructure you. They deny you 
certain things so that you can start to pay off your credit card debt.
  Guess who is now taking our credit card debt. The top countries 
holding our credit card debt are Japan, China, South Korea, Taiwan, 
Germany, Hong Kong, Switzerland, OPEC--the oil producing and exporting 
countries have a lot of our debt--China. I do not mean to castigate 
China. I happen to like the Chinese people. I think we ought to trade 
with China, although in a more balanced way. But what happens when they 
become a big creditor and we are their debtor? What happens to trade 
deals down the road?
  Put yourself and your family in this position. What happens when you 
are the debtor and you have a creditor? Who tells whom what to do? Does 
the debtor tell the creditor what to do? Your creditor tells you what 
you have to do to get out of debt.
  So what is going to happen a few years from now when we are having a 
trade deal with China, when we are trying to hammer it out and the 
Chinese do not like exactly how we are dealing? What happens when they 
are keeping the value of their currency artificially low? The debtor 
tends to pull their punch when dealing with the creditor. And we have 
been pulling our punches in this situation.
  This is not some fancy kind of thing. I have heard some speeches on 
the floor today about the debt limit. Look, this is family. This is the 
American family we are talking about, and the Republicans are selling 
us out to creditors around the world. And now that we have bumped up 
against the limit on our credit card, they say we are going to raise 
the limit one more time. We can put more debt on our credit card: $800 
billion more. Think of it as another $11,000 for a family of four.
  Two things are happening. First is you have to pay interest, right? 
When you have debt on your credit card, you pay interest on that credit 
card debt. You pay it every month or you start paying interest on the 
interest. Guess what. You will have to pay it. That is what is 
happening to our national debt. We raise the limit on our credit card, 
and every month we have to pay interest or what it build and build.
  How much interest? Every man, woman, and child in America will, by 
2009, be paying $1,000 a year in taxes just to pay the interest on the 
national debt; $4,000 for a family of four, every year, just to pay the 
interest on the debt. And, Mr. President, that is not one tax that can 
be cut. You cannot cut that tax. That has to be paid. The interest has 
to be paid on the debt--$4,000 a year for a family of four.
  I have heard a lot of talk around here this year and in previous 
years--and now I hear the President of the United States talking about 
it again--about the death tax, otherwise known as the estate tax, which 
is if you have a big estate, over $1.5 million dollars, before you pass 
it on, you have to pay taxes on the amount over that sum. They got to 
calling it this fancy death tax, like you are taxed because you die. 
You are not taxed because you die, you are taxed because you have large 
holdings that have built up, a lot of which you have not paid taxes on, 
that you can pass on to other generations in your family. They call it 
a death tax.
  I think we ought to start talking about the birth tax. That is what 
is

[[Page 23703]]

happening on the floor today. Increasing our national debt is putting a 
birth tax on every child born in America.
  Think about it. For a child born in America 5 years hence, during 
that child's first year of life, his or her share of the interest 
payment on the publicly held debt will be $1,000. No one is talking 
about it. We ought to be talking about it because that is what it is--a 
birth tax on every child born in America. You have to pay $1,000 a year 
interest on the national debt to pay for the tax cuts.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HARKIN. Mr. President, I ask unanimous consent for 5 more 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. That is what it is. It is a birth tax. Every child born 
has to pay $1,000 in interest on the debt that first year.
  Where did the money go? Lots went to the wealthiest in our society 
who are now shopping at Neiman Marcus and buying fancy cars. Trickle-
down economics. All you have to do is give more to the wealthiest in 
our society, and it will trickle down. Nonsense. What is trickling down 
is the interest on the debt that our families have to pay. That is all 
that is trickling down.
  Here it is right here on this chart, the debt each American owes, per 
capita, Federal debt outstanding. This year, $25,398 each American owes 
on the Federal debt outstanding, and now we are asking one more time to 
raise the credit card ceiling. One more time we will raise it, putting 
American families more in hock to the Chinese, the Japanese, the United 
Kingdom, the Caribbean banking centers, South Korea, Taiwan, Germany, 
Switzerland, and the oil producing and exporting countries, the top 10 
countries holding our national debt.
  This is not rocket science. All it is, pure and simple, is giving 
more to those who already have a lot in our society. It is spending, as 
I said, on a needless war in Iraq to the tune of $6 billion a month, 
not counting the tragic loss in American lives and innocent Iraqi 
lives. Yet, with all of that we do not even have enough money to fund 
education. We are putting to bed, so to speak, our education 
appropriations bill. Guess what. In the Omnibus Appropriations bill we 
will consider on the floor of the Senate this week, funding for Title I 
spending, for the poorest schools, is $8 billion short of the 
authorized level. We have had to cut title I spending for the poorest 
schools, for the kids in the lowest income areas of America today.
  So we do not have enough money for kids and education, for poor 
schools. We don't have enough money to make sure we have a decent 
health care plan for the poorest in our country and our children. Our 
middle-class kids graduate from college with debt up to their eyeballs 
because they can't afford to go to college. Our environment is being 
ravaged, our transportation system is falling apart--drive down any 
highway, thank you--yet we are asked to raise the national debt one 
more time on this credit card so the most privileged in our society can 
continue their spending spree. It is time to get us off the credit 
card.
  A simple fact, simple truth: Republicans can't be trusted with your 
money. That is the simple fact. It happens every time. They simply 
think all you have to do is run up that credit card, give tax cuts to 
the wealthy, and everybody will be fine.
  Someone said earlier today the responsible thing to do was to vote to 
increase the debt limit. I am sorry. I am sorry. That is not the 
responsible thing. That is one more irresponsible action.
  I wouldn't mind voting to raise the debt limit if it were coupled 
with a bill that was true tax reform, that made the wealthiest in our 
society pay their fair share, that provided for good education and 
health care for our people. Then you could say we had a fair deal. This 
is not a fair deal. We are raising the debt so the most privileged in 
our society can have more. We are raising the debt limit so countries 
like China can have a noose around our neck.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. HARKIN. I ask for 60 more seconds and I will conclude.
  Mr. BAUCUS. I yield the Senator 60 more seconds.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. It is a shame we have come to this. It is time to rip up 
the credit card. It is time to take the credit card away from the 
Republican majority here and from the President of the United States. 
It is time that we have a fair deal for the people of this country and 
not impose a new birth tax on every child born in America to pay this 
interest on the national debt. It is unfair. We ought to turn it down 
and come back with a fair deal for the American people.
  The PRESIDING OFFICER (Mr. Allen). The Senator from Montana.
  Mr. BAUCUS. I yield 5 minutes to the Senator from North Dakota.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. I thank my colleague from Montana and my colleague from 
Iowa. I listened carefully to his comments.
  We are here debating the proposition of increasing the debt limit by 
$800 billion. We have come through a time in the 1990s when we were 
actually running budget surpluses. We were paying down the debt. Now we 
are stacking debt on top of debt on top of debt. This is the most 
reckless fiscal policy I have ever seen. I didn't vote for it. I don't 
feel responsible for things I didn't vote for.
  Let me say that if this Senate passes an increase in the debt limit 
and does nothing about the underlying fiscal policy that has created 
it, then this Senate ill serves the American people.
  The President says: You know, we have had an economic slowdown, a 
recession, war, and terrorism. Yes. So have other Presidents. That is 
all true. But it seems to me it probably would have augured well for 
this administration, then, to recognize that things have changed and 
therefore fiscal policy must change. We are spending $5 billion a month 
every month in Iraq and Afghanistan--$4 billion in Iraq, $1 billion in 
Afghanistan. We are not paying for one penny of it. It is all being 
charged.
  This administration says we are fighting a war. Yes, we are fighting 
a war and guess what, this administration doesn't ask anyone to pay for 
it. They say we want to give big tax cuts mostly to people at the upper 
income level. What kind of fiscal policy is that?
  Part of this increase in the debt limit, I suppose, is to accommodate 
something that was done last year on the floor of the Senate. It says, 
you know what we have to do now? We have to reconstruct the country of 
Iraq. We want the American people to ante up $20 billion to reconstruct 
the country of Iraq. I offered an amendment. I said: I don't think we 
ought to do that. Iraq has the second largest oil reserves in the 
world. I had soldiers tell me they stood in indentations in the sand 
and got oil on their boots. I think the Iraqi people ought to pump oil 
and sell it at $45 a barrel. They will have more money than they know 
what to do with. But this administration believes the American taxpayer 
should pay for the reconstruction of Iraq and the Senate should raise 
the debt limit to make this happen. It is just one domino in this line, 
but it is a hood ornament of failure.
  The question is, When will this place and when will this 
administration come to its senses? I am not saying one side is all 
right and the other side is all wrong. But I am saying this: This 
fiscal policy was constructed at the White House at a time when they 
said we have so much surplus we don't know what to do with it. Let's 
start giving it back. Some of us stood on the floor of the Senate and 
said we ought to be a bit conservative. What if something happens we 
did not anticipate and things change? A war? A terrorist attack? An 
economic slowdown?
  The President says, no, don't worry about that. The future is bright.
  So we put in place tax cut after tax cut after tax cut and we are now 
choking on red ink and the President doesn't seem to care much at all. 
He

[[Page 23704]]

doesn't address it, talk about it, or think about it. I think it's true 
to the admonition in Bob Woodward's books about the President saying I 
don't want second guessers around me. Once we decide to do something, 
that is what we do, and I don't want to talk about it. It seems to me 
when you have a fiscal policy that created an avalanche of debt for 
this country, the thing you ought to do--it is like the old southern 
saying about the law of holes. When you find yourself in a hole, stop 
digging. Maybe we ought to stop digging. Maybe this administration 
ought to describe the fiscal policy that stops making this hole deeper. 
But that is not what this is about today and I regret that.
  There is so much to talk about. We are talking about the budget 
deficits and the accumulated debt. By the way, every penny of the 
Social Security surplus is being spent.
  This administration makes the case that what matters is debt held by 
the public.
  No, no, that is not what matters. It is not just debt held by the 
public. It is debt held by the public and debt instruments that exist 
in the Social Security accounts which we are going to have to repay. 
All of that represents an obligation that this country must meet and it 
is growing and mushrooming in a way that is dangerous for the future of 
this country. Everybody knows it except the President, apparently, and 
those in this Chamber who have decided this President's fiscal plan is 
moving us in the right direction.
  You know the old saying in the western movies: Are you going to 
believe me or your lying eyes?
  The fact is, we understand what is happening here. We see it. Only in 
this town, where we make an industry out of creating euphemisms, can we 
have enough sugar to sugarcoat this nonsense. This is awful. This 
fiscal policy is injuring this country in a very dramatic way. We ought 
to take a step right now on this debt ceiling limit and decide we are 
going to tell this administration we demand a change in fiscal policy.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. DORGAN. Let me ask for two additional minutes, if the Senator 
from Montana has it.
  Mr. BAUCUS. I yield 2 minutes to the Senator from North Dakota.
  Mr. DORGAN. I am happy to yield.
  Mr. HARKIN. I thank the Senator from North Dakota for his great 
statement. He is very perceptive.
  One thing I did not mention, but as he alerted the Senate, we are now 
being told we will not be able to meet our obligations under Social 
Security if we continue down this path. Therefore, what we need to do 
is somehow privatize Social Security and put it out on the stock 
market, like Enron stock, for future beneficiaries.
  I ask my friend from North Dakota to address that further. He touched 
on it. Now we are going into debt further and further and we have huge 
tax breaks for the wealthy, for the most privileged among us, and we 
are being told we will not have enough money to pay our obligations 
under Social Security.
  Is that what is happening now, I ask my friend from North Dakota?
  Mr. DORGAN. The response to that is this administration is spending 
every single penny that comes into the Social Security trust fund. They 
want to fight the war and do all these things and no one has to pay for 
it. Don't worry. Be happy. Dance down the sidewalk and be oblivious to 
what is happening.
  We have the largest budget deficit in the history of this country and 
one that, incidentally, all the experts say you cannot grow out of. But 
we have our colleagues saying, we will just hang around, thumb our 
suspenders, and grow out of this. I guarantee we will grow out of it, 
they huff and puff.
  Nonsense. And they know it is nonsense.
  In addition to the biggest budget deficit in the history of this 
country, we have the biggest trade deficit in the history of this 
country, as well. I worry that one of these days the currency traders 
are going to look at this and say, as an electronic herd, we are moving 
elsewhere. When they do, the collapse of this dollar will have enormous 
consequences.
  I ask this President to provide some leadership in a fiscal policy 
that moves us in a constructive direction.
  I yield the floor.
  Mr. BAUCUS. I appreciate the discussion with the Senator from Iowa 
and the Senator from North Dakota.
  I ask unanimous consent 20 minutes be reserved for the use of Senator 
Byrd when he is able to come to the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. I suggest the absence of a quorum, not charged to the 
minority side but charged to the majority side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BYRD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from West Virginia.
  Mr. BYRD. Mr. President, how much time do I have under the order?
  The PRESIDING OFFICER. The Senator is entitled to 20 minutes.
  Mr. BYRD. I thank the Chair. I will try to do my speech in less than 
20; not much, perhaps, but at least less.
  Mr. President, as I begin my remarks today, I am reminded of the 
brutally candid statement by David Stockman, President Reagan's Budget 
Director in December 1981, when it became clear that the Reagan tax 
cuts would cause massive deficits in the Federal budget. In response to 
a reporter's queries, Mr. Stockman quipped that ``None of us really 
understands what is going on with all of these numbers.''
  I wonder how many of us today understand what is going on with all of 
these numbers. We certainly do not act as though we do. This 
administration has plunged the Federal Government deeply into debt, 
deeply into debt, Mr. President, deeply into debt, which, unless 
policies change, will mean deficits at historically high levels for the 
foreseeable future. Former congressional deficit hawks, many of the 
very same people who for years decried deficit spending, seem perfectly 
content to go along for the ride.
  This week, the Senate is poised to vote to increase the statutory 
debt limit--it will take place within the hour--for the third time in 
just 3 years. The $800 billion increase that we consider today follows 
a record $984 billion increase signed by President Bush in May 2003 and 
a $450 billion increase signed by President Bush in June 2002. In less 
than 3 years, under the Bush regime, the debt limit will have soared to 
the alarming level of $8.2 trillion, with no end in sight to the 
spending and borrowing.
  How long would it take to count a trillion dollars, Mr. President, at 
the rate of $1 per second? It would take 32,000 years. If you want to 
know what a trillion dollars sounds like and is, that is it. To count a 
trillion dollars, at the rate of $1 per second, would take 32,000 
years.
  Since January 2001, the gross Federal debt has increased $1.2 billion 
per day. It has increased $50 million every hour of every day. Today, 
every man, woman, and child in the United States owes $25,206.29 on the 
debt. In fiscal year 2004, U.S. taxpayers owed $322 billion in 
interest--in interest? Yes, in interest on the publicly held debt. 
These are interest payments that do not educate one child, that don't 
buy one tank, that don't provide health care for one senior citizen. 
Skyrocketing budget deficits and an ever-increasing, destructive 
national debt have become not merely facts of life in America today but 
a way of life for tomorrow and tomorrow and tomorrow, and for the years 
to come.
  Lawmakers may faithfully tout the Bush administration's line that the 
White House is serious about cutting the Federal deficit, but the 
American people have yet to see anything that would give them reason to 
take such claims seriously. Irresponsible spending does not reflect the 
values of most Americans who must struggle with their own family budget 
and foot big Federal bills by paying taxes. Oh, how sweet the sound--
taxes.

[[Page 23705]]

  For the last 4 years, we have been operating under Bush budgets. We 
have been operating under Bush tax cuts. We have been operating under 
Bush spending bills. The result has been a Bush deficit of $413 billion 
for the fiscal year 2004.
  How much is a billion dollars? We are talking about $413 billion. We 
are talking about $413 for every minute since Jesus Christ was born. 
Think of that. We have the largest deficit in U.S. history and an 
estimated $2.3 trillion in accumulated deficits over the next decade.
  The White House will try to blame deficits on the war on terror. 
There happens to be two wars going on, I remind my colleagues, not just 
one--one in Afghanistan and the Bush war in Iraq.
  Let's look at the whole picture. President Bush reportedly will 
request an additional $75 billion early next year for the war in Iraq. 
That is the Bush war. That request follows $203 billion already 
appropriated for Iraq and Afghanistan, bringing our total commitment to 
$278 billion for Iraq and Afghanistan. The corporate tax bill that the 
President signed into law in October will cost $18 billion in the 
coming 3 years to pay for special interest tax breaks, further 
increasing budget deficits in the short run.
  The White House's own budget office is leaking word that the budget 
deficit will increase, not decrease, next year when the President 
submits his budget to the Congress.
  The President's Social Security privatization proposal is projected 
to cost a trillion dollars in the coming decade, and the President's 
tax and spending proposals will likely add hundreds of billions of 
dollars more to our Nation's budget deficits. That is to say nothing of 
our mounting trade deficits that have cost an untold number of American 
workers their jobs, or the multitrillion-dollar deficits in the Social 
Security and Medicare Programs that threaten senior citizens and their 
retirement and health benefits.
  The Bush administration and the Congress have not had the courage to 
address this mounting debt, and to debate policy changes which might 
help to bring these deficits under control.
  It is hard to believe that only 2 weeks after an intense Presidential 
election campaign in which both sides, Republican and Democrat, pledged 
to reduce the size of the deficit, the Senate's first order of business 
upon returning is to completely ignore those campaign promises and pass 
this debt limit increase, without a debate, really, about the ways to 
reduce our Nation's huge deficit.
  In his victory speech, George Bush pledged to work with Democrats to 
unite the country, didn't he? Well, I can think of no better way to 
demonstrate the commitment behind that pledge than drawing on both 
parties' avowed aversion to these budget deficits and initiating a 
constructive, bipartisan effort to move to eliminate them. We know how 
to do it. We have done it before. We have done it in a bipartisan 
manner. We have done it successfully, without budget gimmicks, without 
constitutional amendments. For Heaven's sake, let's don't start down 
that road of constitutional amendments to balance the budget. We can do 
it without constitutional amendments, without granting imperious 
Presidential powers--just using plain common sense.
  In 1990, President George Herbert Walker Bush and the 101st Congress 
negotiated budget enforcement tools and demonstrated the courage to 
implement them. Every budget guru in Washington, from Federal Reserve 
Chairman Alan Greenspan to Comptroller General David Walker to former 
Directors of the Congressional Budget Office, agreed that those tools 
worked extraordinarily well in bringing our Nation's deficits under 
control.
  Both Republicans and Democrats voted this year to restore pay-as-you-
go rules, requiring new mandatory spending and new tax cuts to be 
offset. Hallelujah. President Bush endorsed those budget enforcement 
mechanisms in his fiscal year 2004 budget. Hallelujah. But he has now 
flip-flopped and wants to exclude tax cuts from the requirement that 
they be paid for.
  But here we stand in the midst of renewed pledges by both parties to 
work together to address our Nation's challenges, and on this issue 
where so much common ground exists we are unable to muster the 
political courage to talk about the wolf at our doorstep.
  So we will pass this statutory debt increase and then put it out of 
our minds until we are forced to raise it again. We all should know the 
folly of this tactic, and as the chickens come home to roost in the 
years ahead, the American people will surely remind us of it. It is 
morally reprehensible to deceive the voter by claiming that deficits 
don't matter.
  These destructive debt figures represent a threat--yes, a threat--to 
the Social Security system--and don't you forget it--a threat to 
affordable health care for working Americans, a threat to the promise 
of a college education for our Nation's youth, a threat to the 
financial underpinnings of our economy, what one editorial in the 
Washington Post described as ``the cold-hearted actuaries of doom.''
  Economists across the political spectrum are growing increasingly 
concerned about the effect of these mounting budget deficits on our 
economy. The U.S. dollar continues to lose value against the Japanese 
yen, the European Euro, and the Canadian dollar. Investors may soon 
rather hold the currencies of other nations than our own, and this 
spells great trouble in boxcar letters, trouble for our country in 
foreign policy as well as domestic responsibility. Republicans and 
Democrats increasingly view our Nation as becoming too dependent--too 
dependent--on foreign investment and with good reason.
  According to the Treasury Department, foreign holdings--get that, 
foreign holdings--foreign holdings comprise half of our Nation's 
privately held public debt, with much of that debt owed to countries 
such as China and Korea and entities such as OPEC and the Caribbean 
banking centers. To these foreign holders, American taxpayers paid $322 
billion in interest payments last fiscal year on money borrowed to 
finance our Government's operations.
  Please understand, it is hard to scold China about its human rights 
policies when we are in debt up to our eyeballs to such foreign 
entities. With a $413 billion deficit last year, the administration 
must borrow the equivalent of the entire budget for the Department of 
Defense, from where? From foreign countries. That means that the Bush 
administration cannot pay our soldiers in Iraq who are fighting the 
Bush war, and Afghanistan where a war is going on that I support fully, 
without having to go hat in hand--hat in hand--to other countries for a 
loan and handing the U.S. taxpayer a hefty interest premium to boot.
  It is great political rhetoric to claim that America does not have to 
ask the permission of other nations to defend itself or do anything 
else for that matter, but when we rely so heavily on other nations to 
help pay our way in the world, our haughty claims of independence are 
just so much bluff. Unfortunately, the rest of the world knows what we 
will not admit; that is, we are beholden to foreigners to pay our way.
  Make no mistake about it, the threat of budget deficits to our 
economy is real, and we cannot afford to ignore it any longer.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 3\1/2\ minutes remaining.
  Mr. BYRD. I thank the Chair. I yield back that time. Perhaps I do not 
have it to yield back, but I shall not use it. I yield the floor.
  Mr. THOMAS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I ask that all time be yielded back on 
both sides.

[[Page 23706]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I ask for the vote and ask for the yeas 
and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is on the passage of the bill. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. REID. Mr. President, on this vote, I have a live pair with the 
Senator from New York, Mrs. Clinton. If she were present and voting, 
she would vote ``nay.'' If I were permitted to vote, I would vote 
``yea.'' I, therefore, withhold my vote.
  I announce that the Senator from Vermont (Mr. Leahy) is necessarily 
absent.
  I also announce that the Senator from Delaware (Mr. Biden) is absent 
attending a funeral.
  On this vote, the Senator from Nevada (Mr. Reid) is paired with the 
Senator from New York (Mrs. Clinton).
  If present and voting, the Senator from New York would vote nay and 
the Senator from Nevada would vote aye. I therefore withhold my vote.
  I further announce that, if present and voting the Senator from 
Delaware (Mr. Biden) and the Senator from Vermont (Mr. Leahy) would 
each vote no.
  The PRESIDING OFFICER (Mr. Sununu). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 52, nays 44, as follows:

                      [Rollcall Vote No. 213 Leg.]

                                YEAS--52

     Alexander
     Allard
     Allen
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Chambliss
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeWine
     Dole
     Domenici
     Enzi
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner

                                NAYS--44

     Akaka
     Baucus
     Bayh
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Ensign
     Feingold
     Feinstein
     Graham (FL)
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wyden

                   PRESENT AND GIVING A LIVE PAIR--1

       
      Reid
       

                             NOT VOTING--3

     Biden
     Clinton
     Leahy
  The bill (S. 2986) was passed, as follows:

                                S. 2986

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INCREASE IN PUBLIC DEBT LIMIT.

       Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by striking ``$7,384,000,000,000'' and 
     inserting ``$8,184,000,000,000''.
  Mr. McCONNELL. I move to reconsider the vote.
  Mr. LOTT. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mr. BIDEN. Mr. President, I was not able to participate in 
today's debate and vote on the extension of the national debt limit. I 
was attending the funeral of a great civil rights leader in Delaware, 
Jane E. Mitchell. Had I been here to vote, Mr. President, I would have 
cast a symbolic vote against an extension of the debt limit. Today's 
fiscal mess, the transformation of historic surpluses into record 
deficits, is not an accident. It is the inevitable outcome of policies 
that consistently ignored evidence and experience.
  When we launched out on a course of tax cutting, with expanding 
domestic and international obligations and responsibilities, many of us 
in Congress argued that we could not afford to do everything, that we 
needed a fiscal policy that matched our revenues with our expenditures. 
Some tax cuts, especially for the middle class, were needed, tax cuts 
that could have revived job growth and aided economic recovery. 
Instead, we have a policy that calls for permanent tax cuts that 
overwhelmingly favor those who are already well off. When twice the 
administration asked us to appropriate funds for our military actions 
in Iraq and Afghanistan, I stood here on the Senate floor and said that 
we should pay for those obligations with smaller tax cuts for our 
wealthiest taxpayers, and not just pass the bill on to all our 
children.
  We are here today because that advice was ignored, those hard choices 
were ducked, and the bill for our decisions will be sent to our 
children and grandchildren, in the form of the additional debt we will 
authorize today. It did not have to be this way, Mr. President. In the 
next Congress, the threat of massive deficits, which have made us 
increasingly dependent of foreign lenders to stay afloat, will still be 
with us. My symbolic vote against raising the debt limit would have 
been a protest of the policies that have brought us to this point, and 
a demand that we change course.
  Mr. McCONNELL. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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