[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[Senate]
[Pages 2414-2415]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   INCREASING THE FEDERAL DEBT LIMIT

  Mr. BAUCUS. Mr. President, on December 29 of last year I received a 
letter from the Secretary of the Treasury, John Snow, asking that 
Congress increase the Federal deficit. This is extremely important, 
obviously; that is, whether we should and the degree to which we should 
increase the Federal debt limit. But we don't have any scheduled debate 
on this and I don't think, frankly, the leadership wants to schedule 
debate on whether we should and the degree to which we should increase 
the Federal debt. I think the reason is pretty clear. It is because it 
is embarrassing. It is an embarrassment that our Federal debt is 
growing so much and at a rapid rate.
  I say that in part because the Secretary says the United States will 
hit the limit in the middle of this month. That is not too many days 
away. I hope very much this body exercises its responsibility to do 
what it should do and let's have a discussion on our fiscal situation: 
How great is the debt? What should be done about it? How big is the 
deficit and what should be done about that? Where are we? Where are we 
headed? What are the implications?
  These are very real questions that affect the financial security of 
the United States and which affect very greatly individual Americans. I 
very much hope we have that debate of the points I think we should 
consider. It is our responsibility to address the implications of our 
huge Federal debt and deficits. We have a responsibility to do that. 
That is our job. It is much more our job to address that than it is 
some other things I think we do here in the Senate, and I am going to 
do what I can to urge my colleagues and urge, frankly, anybody 
listening and watching to begin to think about what is going on here 
because this is critical.
  Let's review some of the facts about the debt limit. Currently, our 
Treasury, the U.S. Treasury, is authorized to issue debt totaling over 
$8 trillion. That is the current statute. Last year's budget resolution 
proposed an increase in that authorization of $781 billion. That is an 
increase. That would be the fourth largest debt limit increase in the 
Nation's history.
  If I might briefly indicate in a graphic way literally what that 
means. This basically is a chart showing the amount of Federal debt 
limit increases the Congress has enacted over various years going back 
not too long ago--1986 up to the present.
  The red bars here indicate the amount of the debt increase Congress 
has enacted because our Federal debt was going up so quickly. You can 
see there was a big increase back in 1990. That was the time when, 
frankly, our country was under a little bit of pressure and the debt 
was going up. Between 2000, 2001, we did not have any debt increases. 
But what has happened lately?
  You can see all these huge increases in the last 4 years. In 2002, 
the Congress increased the national debt by $450 billion.
  Here is a whopper. In 2003, Congress increased the Federal debt by 
close to $1 trillion. The next year it increased the Federal debt by 
$800 billion, four-fifths of a trillion dollars in 1 year. Last year it 
did not have to increase the debt because the $800 billion carried us 
over through 2005, but here again we have to increase the Federal debt 
by $781 billion.
  The debate point is that in the last years there have been big 
increases in the Federal debt. Why? Because we have been borrowing so 
much in this country, Congress has authorized and the President has 
proposed very large expenses.
  More striking, though, is that total increase has occurred since the 
year 2002.
  During this administration, America's debt, the total deficit, has 
increased by $3 trillion. You can imagine. Since 2002, if you add up 
all the increases in the Federal debt, our Federal debt has increased 
by $3 trillion. That is not the level now; it is close to $9 trillion 
if it is increased further. But this is the increase--and those 
increases have occurred only in the last 4 years. That is a 40-percent 
increase in the entire Federal debt accrued by our country in its 
entire history. Forty percent of the increase in the Federal debt has 
occurred in the last 4 years.
  Who is lending the Federal Government these funds? Ask yourself that 
question. That is a lot of debt out there. Some of it is internal. The 
U.S. Government borrows from Social Security, and we all know that 
pretty soon those chickens are going to come home to roost. We can't do 
that much longer. We will have to start paying back all that is due to 
Social Security--and that is an awful lot. Much of the borrowing is 
from American citizens and businesses.
  But what is more alarming is the trend where much more of the debt is 
held by foreigners and central banks in foreign countries; that is, the 
amount of debt held by foreign governments is much worse. Five years 
ago foreigners held about $1 trillion of our Federal debt.
  What is that number today? It is double. In over 5 years the amount 
has doubled. The number held by foreigners has now doubled to $2.2 
trillion.
  Today, Japan holds two-thirds of a trillion dollars of our foreign 
debt. China holds a quarter of a trillion dollars. China's reserve is 
scheduled to be about $1 trillion by the end of this year.
  The rate of increase in Federal debt held by foreigners--simply by 
foreign banks, central banks--is alarming. I tend not to be an 
alarmist. In fact, sometimes people say: Max, you are kind of easy 
going, you don't get too upset, and so on. But I am quite concerned 
about these trends. They are worse.

[[Page 2415]]

  I might also add that the debt held by foreigners after World War II 
was extremely high, too. It was. But the composition of that debt--
investments held by foreigners--was just that: investment in 
infrastructure in the United States and capital assets; that is, 
investments foreigners made in the United States after World War II. 
The composition was not much debt. It is securities to finance the 
borrowing by Uncle Sam, and we have to pay back the interest on that 
borrowing.
  The question is, How long can we continue to borrow all of that 
money? That is the basic question.
  What are the implications to our foreign policy as foreigners 
increase their holdings of U.S. debt? What does that mean? What might 
happen?
  Try to be wholly analytical about this. What does that mean? What 
percentage of the American taxes are being used to pay interest on that 
debt? How much are American taxpayers paying to foreigners directly 
through interest on the national debt?
  I think that should be debated. That is something I think is quite 
concerning, particularly with the large numbers.
  These are just some of the issues I think we should debate. We also 
should remember--this is not rocket science--that ordinarily there are 
limits on debt. Ordinarily, credit card companies or businesses or 
banks just do not automatically increase debt, which is happening in 
this country in the last 4 years as I showed in that chart. It has been 
automatic. We have increased the debt.
  Think a little bit about the limits an institution holds on a family 
and what the family wants to borrow. What about a credit card and a 
maximum balance. Most Americans have credit cards. Most Americans know 
there is a maximum balance on that credit card. You can only borrow so 
much. After a certain limit, you can't borrow any more. That is it.
  Wouldn't it be great if each individual could say: We are going to 
ask the credit card company to increase the debt, and do it as the 
Congress is doing right now. We will just increase the debt limit. A 
person can't ask a bank willy-nilly to increase the maximum allowance 
on a credit card. There is a good reason for that. There have to be 
limits. We have to live within our means.
  Take an ordinary business, a bank loan to a business. The bank pays a 
lot of attention to how that business is being run, whether it is being 
run well. It pays a lot of attention.
  One could ask: Is the Treasury or foreigners or someone who holds the 
debt asking how well we are running our business?
  I urge the majority leader to schedule time to hold a thorough debate 
on this issue.
  This is real. This is really real. We all know this cannot continue. 
We really do not know at what point, if we continue to increase the 
debt, there might be some cataclysmic event. We just don't know that. 
But we do know that with every debt limit increase we are accelerating 
the time when something nasty or bad might happen economically.
  Already, some countries are starting to move out of dollars into 
other currencies. China is on the margin of looking at holding 
currencies other than the dollar. Many countries worldwide are becoming 
more self-sufficient. They don't need the United States as much now as 
they once did. They are becoming more independent. They are going more 
in their own direction. They are doing what they think makes sense for 
them economically.
  Clearly, the bottom line is we have to live within our means. Every 
time we increase the debt limit we are not within our means.
  I urge us to have a debate so we can know what we really should be 
doing.
  I thank the Chair.
  The ACTING PRESIDENT pro tempore. The Senator from North Dakota is 
recognized.
  Mr. CONRAD. I thank the Chair and I thank my colleagues.

                          ____________________