[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Senate]
[Pages 16041-16043]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             NATIONAL DEBT

  Mr. CORKER. Mr. President, I wish to talk about our Nation's 
indebtedness. I know very few people watch these presentations. But to 
my friends on the other side, before they turn their monitors off, this 
is not a partisan presentation. Hopefully, it is a presentation to 
cause us, together, to look at our Nation's indebtedness from a 
different viewpoint and, hopefully, when we get to real business in 
January, we will focus on this in a way that brings us together and 
does not separate us.
  I wish to start by looking at where our country is today as it 
relates to debt to our gross domestic product. Most countries in the 
world look at the amount of debt they have as a country in relation to 
the gross domestic product the country has. That is the sum of all the 
output.
  For a lot of businesspeople who may be tuned in today, it is not 
unlike a company that looks at its revenues and compares the amount of 
debt the company has to those revenues or gross profits. So, today, our 
country's debt-to-GDP is at 62 percent debt to gross domestic product.
  I think most of us understand the problem we have as a country today 
is that we are very rapidly moving to 146 percent of debt to GDP within 
the next 20 years. I would like to point out the reason this dot is 
here. That is where Greece was when the European Union had to come in 
and bail it out. It was at 120 percent of GDP. I do not wish to compare 
our country to Greece. Greece is very different. I was just there 
visiting with the Prime Minister, their Finance Minister, and several 
bankers. There is much about their economy that is very different than 
ours.
  But I do think it is important to look at the fact that they were at 
120 percent of debt to GDP when they had to be bailed out by European 
Union members. We are quickly moving beyond that over the next 20 
years.
  This is a slide I hope everybody who may be tuned in will focus on 
and remember. There are three important components. It begins by 
looking at the revenues, which is the blue line. The spending is the 
red line. There are three elements of this that I would like for people 
to focus on, if they would.
  For those people who think Republicans and Democrats cannot work 
together, I do wish to point out a period of time when we had a 
Democratic President and a Republican Congress, and the line actually 
passed. We had revenues that were higher than our expenditures. I do 
want to say that the fiscal issues during that time were far different 
than the ones we have today.
  Where we are today, in 2010, is far different. We have a huge gap 
between spending and revenues. People might say: Well, during a 
recession, maybe there are some extraordinary things that may occur. 
Maybe the spending rises tremendously, maybe revenues drop. Here is the 
problem. Here is the part of the slide I hope almost everybody will 
focus on into the future; that is, that gap never goes away.
  Where we are today is at 1.47 more in spending than we have in 
revenue. The problem is, where we are as a country is that this gap 
never goes away. In 2020, we still are spending $1.25 trillion more 
than we are taking in.
  In Tennessee, the average household, in most recent data, earned 
about $43,000 a year. If they used the kind of logic we are using today 
in Washington, the average Tennessee household would spend $74,000. In 
other words, the average Tennessee household would borrow 40 cents for 
every $1 they spend. Fortunately, that is not what is happening in 
Tennessee, or at least not with most families.
  I think when you look at a problem, you need to sort of look at 
trends that have taken place. If you look back at 1970, 62 percent of 
what we spent as a country was on what is called discretionary 
spending, things such as defense, highways, and education. Only 31 
percent of what we spent at that time was on mandatory spending, things 
such as Medicare, Social Security, Medicaid and only 7 percent on 
interest.
  But if we fast forward to today, obviously that pie chart has changed 
dramatically. Today, we are spending, in 2010, 56 percent of what we 
take in on Medicare, Medicaid, and Social Security. Only 38 percent is 
going to discretionary spending: defense, highways, and education and, 
again, 6 percent in interest payments.
  However, if you fast forward on the present trend, you see mandatory 
spending actually becomes crowded out. It is 49 percent of what we 
expend in 2035. By that time, because of the large amount of borrowing 
that is taking place, 25 percent of what our budget will be made up of 
is interest payments, something that has absolutely nothing to do with 
making our country stronger. As you can see, only 26 percent of our 
spending would then be on things such as defense, highways, education, 
things entitled ``discretionary spending.''
  This year we spent $187 billion on interest payments, which greatly 
dwarfs what we spent in the area of transportation, $69 billion; 
homeland security, $49 billion; Department of Education, $45 billion. 
The problem is, if you fast forward to 10 years, this is a timeframe 
that is not way out into the future. This is something most Americans 
can focus on; that is, a decade from now. In 10 years, $916 billion 
will be going out of the Federal coffers to pay interest; again, hugely 
dwarfing the expenditures on transportation, on homeland security, and 
education.
  I used to borrow a lot of money in my business. I built and owned 
buildings around our country. It was always important to know whom I 
was borrowing money from and to have a proper relationship with them. 
It is also interesting to look at our country and where we are 
borrowing the money we are spending. If you go back and look

[[Page 16042]]

at 1960, Americans loaned the American Government money.
  Our parents--maybe some of you in the audience--loaned the money to 
the Federal Government by buying Treasury bonds. As a matter of fact, 
back in 1960, only 5 percent of the money we borrowed in this country 
came from foreign holders. But if you look at today, the picture is 
very different. As a matter of fact, today, 47 percent of the public 
debt we borrow is held by foreign holders.
  Look, I understand about international trade and global transactions 
and certainly support that. I have been a part of that in the past. The 
reason I point this out is that, again, a big part of what we are 
borrowing is from others. China holds almost 10 percent of our debt.
  I think most of you saw recently where they slightly depressed the 
amount of holdings they had in the United States, dropping it from 
about $870 billion to $844.
  I do wish to point out something that former Treasury Secretary 
Paulson talked about in a book he recently wrote about the crisis. I 
used to talk with him sometimes on the weekends. Obviously, he was 
working 7 days a week, as do I and most of us in this body. I talked to 
him for a great deal of time.
  I remember him telling me during the time of the crisis that he was 
concerned about China. He was concerned about China. In the book, he 
talks about feeling that there was a scheme that Russia was trying to 
get China to engage in, to get them to stop buying our securities, 
during the period of time that we were most destabilized, in order to 
put greater pressure on our country during a time of great turmoil.
  Obviously, that did not happen. But all of us say, I think it is 
important, when you are moving into a range of having more indebtedness 
than you can handle, it is very important to know and understand you 
are borrowing money from people who may not have the same interests 
that we as a country have.
  This is something you do not see often in this body, but I hope 
everybody will focus on this slide. The fact is, there is plenty of 
blame to go around. We do a great job in this body, especially a few 
weeks before an election, of pointing fingers at each other, talking 
about whose fault it is that our country is in the situation it is in. 
But as it relates to our country's indebtedness, I can assure you there 
is plenty of blame to go around.
  What I learned in my business, where I spent most of my life, 
whenever we had an ox in the ditch, it did not do a lot of good to try 
to point fingers at how we got there. It was better to try to focus on 
how we solve that problem. I certainly knew that as mayor of the city 
of Chattanooga.
  I can tell you, in this body, as soon as we begin devolving into 
pointing fingers, we quickly move away from solving some of the major 
problems we have as a country.
  I think as we look at trying to deal with this issue, it is good to 
look at the way things have been. Over the last 50 years, our 
government has spent about 20.3 percent of our GDP. Over that same 
period, the revenues into the Federal Government have been about 18 
percent. There are economists on both sides of the aisle who say as 
long as the economy is growing, we can continue that in perpetuity. 
Coming from the background I come from, this is not a comfortable 
situation. I would rather see us take in the same amount of money we 
expend, but certainly there are academicians and economists on both 
sides who have different points of view.
  What is the right amount of spending? I think everybody is aware that 
President Obama has put together a deficit reduction commission. It is 
chaired by two individuals. One of those is Erskine Bowles, chief of 
staff to Bill Clinton. He is a Democrat. He ran for the Senate from 
North Carolina. I talk to him extensively on the phone. He certainly 
has a lot of sound ideas. The other is Alan Simpson, former Senator 
from Wyoming. They are chairing a deficit reduction commission the 
President has put together.
  A great breakthrough occurred recently when Erskine Bowles said he 
believes the Federal Government ought to spend about 21 percent of our 
country's GDP. Our average over the last 50 years has been 20.3 
percent. Our revenues over the same period have been 18 percent.
  Bob Corker, because he is more conservative on that front, or would 
like to see balance--a balance a lot of people on both sides would like 
to see--my number might be 18 percent. Erskine Bowles has thrown out 
the number of 21. But to me, somewhere between 18 and 21, there is a 
deal. I want to say to everybody that I am open to negotiation. I would 
love for us to agree as a country as to what percentage of our gross 
domestic product we all agree is the right number for us in Washington 
to be spending. If we can focus on this first, page 1, we can move away 
from many of the issues that separate us.
  This is something on which I hope everybody who may be tuned in will 
focus. The fact is, I don't think we have thought about this deficit 
issue as something that is anything more than academic. We have thought 
about it as something that will affect a Congress down the road, maybe 
our neighbor, but not us. In order to get to Bob Corker's number over 
the next decade, which is a period on which most of us can focus, we 
would have to cut spending by $6.7 trillion. That is a lot of money. To 
get to the number Erskine Bowles has thrown out--for which I am open to 
negotiation--over the next decade we would have to cut $3.4 trillion in 
spending. To get where we have been over the last 50 years over the 
next decade, we would have to cut $4.5 trillion in spending.
  The reason I point this out is, this is a huge number. Even by 
Federal Government standards, these numbers are draconian.
  I realize this is something that is probably not attainable. To get 
$6.7 trillion in cuts we would have to cut $670 billion a year over the 
next 10 years. To put that in perspective so people can digest it, this 
is more money than we spend each year on Medicare. This is more money 
than we spend each year on defense with two wars. The type of cuts it 
would take to get to where we have been as a country for the last 50 
years, those cuts are draconian. I don't think we as a Congress have 
quite come to terms with that.
  What we need to do is fundamentally change the way we do business in 
Washington. I don't care what side of the aisle one may sit on or what 
gimmicks each side of the aisle may put forth to look at trying to 
constrain spending. All of us know we have absolutely no construct to 
contain spending. We are operating this year without a budget. We have 
had problems with spending for decades. There is nothing here that 
causes us to focus on it in the right way. Again, both sides have had 
great problems in this regard.
  What we need to do as a body, as a Senate, is to create a construct 
that forces us to cap spending and incentivize growth. I plan on 
offering legislation later this year. I realize this is a political 
season and nothing serious will be taken up. What I want to do as a 
body is to focus on the amount of spending we deal with in Washington 
as a percentage of our gross domestic product, as I have been 
discussing, and to develop a construct that causes us over time to move 
to that cap. I realize we will not be able to do it overnight, but it 
seems to me if we can adopt that kind of thinking where we look at 
governmental spending as a percentage of GDP--Erskine Bowles, who is 
working right now as head of the deficit reduction commission, has made 
a major contribution by throwing out a number, and I am open for 
negotiation--to me, if we can focus on that kind of construct, then it 
is in everybody's interest to hope the gross domestic product grows.
  As the gross domestic product grows, as our economy grows, and the 
types of issues we face as they relate to cutting spending are less 
difficult to deal with, we would be unified toward getting to a point 
that is appropriate as it relates to spending so our indebtedness does 
not put us in the same kind of situation in which Greece found itself. 
But at the same time, after we have done

[[Page 16043]]

that, then we could agree on policies that actually incentivize growth 
because as the economy grows, it is easier to deal with this issue.
  I will come to my conclusion. The fact is, this is becoming a cliche. 
I realize it is said over and over again, but we are, in fact, the 
first generation of Americans in a situation where we likely, if we 
don't change our course of action, will leave the country in lesser 
good shape than we found it. As a matter of fact, we will leave the 
country in worse shape.
  The ACTING PRESIDENT pro tempore. The Senator has 2 minutes 
remaining.
  Mr. CORKER. I appreciate the cue.
  The fact is, I don't think there is anybody in this body who would 
consciously wake up and spend every day of their life taking lavish 
vacations, going to nice hotels, eating out at night, running that up 
on a credit card, and then leaving that for their heirs to pay. There 
is nobody in this body who would consider doing that. But that is 
exactly what we are doing right now in Washington because of the way we 
are handling our fiscal affairs. We are running up a tab that our 
grandchildren, some of the children in this audience who have come in 
as students, will be left to pay.
  I believe in American exceptionalism. I think we are, in fact, the 
greatest country that ever existed and ever will. I think the role we 
play in this world creates all kinds of gains as it relates to 
citizens' ways of life throughout the world. I would hate to see us as 
a country end up so diminished not only because of the tremendous 
impact it would have on our citizens--we have seen what has happened 
with this financial crisis and the distortions it has created 
throughout the economy, the hardships it has created for so many 
Americans--but I would hate for us to be so diminished because of our 
indebtedness, so diminished so that we had to talk to lenders about 
those austerity measures we had to take as a country for them to 
continue to loan us money, for us to be so diminished that we did not 
continue to play the exceptional role we play in the world, the 
exceptional role we play in continuing to raise up Americans' dreams 
and wishes and continue to allow them to actually pursue.
  I plan on offering legislation. I have a nine-page bill. I know there 
are no bills around here that get seriously considered that are nine 
pages. Others, I know, will weigh in. But I sure hope to work with 
people on both sides of the aisle. I plan on offering legislation later 
this year or the first of the next Congress. I hope we as a Congress 
will deal with this issue in an appropriate way. I am looking to work 
with people on both sides of the aisle.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Maine.

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