[Congressional Record (Bound Edition), Volume 152 (2006), Part 9]
[House]
[Pages 12338-12339]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        THE DEBT AND THE DEFICIT

  Mr. McDERMOTT. Mr. Speaker, I ask unanimous consent to speak out of 
turn.
  The SPEAKER pro tempore. Without objection, the gentleman from 
Washington is recognized for 5 minutes.
  There was no objection.
  Mr. McDERMOTT. Mr. Speaker, today we granted a tax break of nearly 
$800 billion over the next 10 years to the wealthiest among us, and it 
made me think about a quote from children's literature, which I think 
is a good place sometimes to learn what we really ought to know.
  We all know about the morality tale called the ``Lord of the Rings''; 
and one of them is called ``The Return of the King,'' and the main 
character is Gandalf, the magician. The children asked Gandalf what 
they are supposed to do, and he says, ``It is not our part to master 
all the tides of the world, but to do what is in us for the succor of 
those years wherein we are set, uprooting the evil in the fields that 
we know, so that those who live after may have clear earth to till. 
What weather they shall have is not ours to rule.''
  Now, we stand out here on this floor very frequently and talk about 
our children and what kind of a world we are leaving to our children, 
and we are leaving a world of debt to our children. The June 11 issue 
of the New York Times magazine says, ``Debt,'' and the subtitle is, 
``America's Scariest Addiction is Getting Even Scarier.'' Well, we 
added to the debt today.
  Now, the question is, What does it mean when a country goes into 
debt? It means that we do not tax the people sufficiently for what 
services they expect, so we have to borrow the money. This year, we are 
borrowing from the Chinese the entire debt that we are creating in this 
year, some $300-some-odd billion that we did not raise in taxes, that 
we gave away this afternoon. We are going to go to the Chinese tomorrow 
and borrow that money.
  Now, what difference does that make? Well, ultimately you have to 
deal with debt. You all have credit cards. You understand what you have 
to do with a credit card: you either pay it off, which means we have to 
raise taxes, or stop giving it away. Or in the case of a country, we 
can devalue our money.

[[Page 12339]]



                              {time}  1900

  You say, well, why, what difference does that make? Well, if our 
money, if the Chinese borrowed a dollar that was worth this amount, and 
we now drop it down by 50 percent, they have lost 50 percent of what 
they lent us. How do you think they feel when we do something like 
that? Well, the next time we come to lend, they say, give us a higher 
interest rate. Now, lowering the value of the dollar, which happened in 
1983, 1985, some people remember when our money went down, and people 
lost a lot of money. That was a devaluation, and we are heading for 
another devaluation in this country.
  When it happens, we will also have inflation because with the cheaper 
dollar we can buy more, and it is easier to buy foreign goods. So we 
will buy more, and they will buy our goods, and they will demand higher 
interest rates.
  Now, the Feds try to control inflation by driving up interest rates. 
Some may even remember when our interest rates were 22 percent, when 
buying a house was absolutely impossible. Well, then interest rates 
came down because we changed our fiscal policy. We paid our debt. We 
started borrowing. Under Mr. Clinton we actually went into a positive 
state. We no longer were borrowing. We were actually taking in more and 
paying down some of that debt. But in the last years since 2000, we 
have just gone on a wild spree, and we have gotten ourselves deeper and 
deeper in debt. People like me worry about that because my children are 
going to pay for it, not me. In fact, it may be my grandchildren that 
pay for it.
  There are two categories of debt that you have to worry about. One, 
of course, in this country is personal debt. Now, lots of people bought 
houses in the last year, last years, 5, 6 years, and they have been 
buying houses because the interest rates were low. They were buying on 
interest only, or they were buying on ARM, that means adjustable rate 
mortgages, and all of those had a term, an adjustable rate of 4 or 5 
years, and those ARMs are coming due now.
  Because of what is happening in terms of the dollar and in terms of 
inflation, the Feds are raising it every month. Since March of 2004, 
the ARM rate has gone up 59 percent, and it could easily jump 50 
percent when these adjustable rates happen. Some people are going to 
lose their houses. Listen to the children.

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