[Congressional Record (Bound Edition), Volume 157 (2011), Part 8]
[Senate]
[Pages 11344-11347]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              DEBT CRISIS

  Mr. REED. Mr. President, I rise today to talk about the regrettable 
and avoidable looming debt crisis if we don't take appropriate and 
timely steps beginning today and continuing over the next few days.
  As we continue to work to get our economy out from under a protracted 
and painful recession and on a more robust path of growth and job 
creation, not having an agreement to pay our country's bills has severe 
consequences. Defaulting could mean not only a potential stoppage of 
Social Security and veterans' benefits checks, but even more worrying 
than what could happen to bondholders and the middle class is the 
question of whether this could push us back into not only a severe 
recession but a worldwide economic catastrophe.
  We can look across at European governments struggling with sovereign 
debt crises. Also, one of the lessons we should have learned from the 
events of 2008, and particularly that fall, is that a lack of 
confidence and a vulnerability in one part of the world's financial 
systems can be magnified dramatically because of connections and 
interrelationships and could potentially produce a worldwide crisis.
  So this is an issue we have to address. A failure to act would 
cripple our government almost immediately. In August, if there is not a 
solution, it is estimated that spending in the economy could contract 
immediately from 40 to 50 percent. That means the U.S. economy would be 
hit with a loss of about $134 billion or about 10 percent of GDP for 
the month of August if we fail to find a solution. A 10-percent loss to 
August's GDP could bring our credit markets to a standstill and could 
lead to the loss of millions of additional jobs.
  One of the ironies of this debate is that the proposal by some on the 
other side to simply not pass debt limit legislation would be 
tolerable. In fact, it would be catastrophic. It would be catastrophic 
in terms of the very objective they are urging--controlling the 
deficit. As people drop out of the labor force, they require more 
benefits. They are not able legally or in a position to pay the taxes 
they were paying while working. In addition to that, it has been 
estimated that for every 1 percent increase in interest rates--and if 
we default, interest rates will go up on U.S. Treasuries--we will over 
10 years accumulate $1.3 trillion in additional deficit. So in one fell 
swoop, the deficit hawks who are screaming so loudly today could put us 
on an even worse deficit trajectory.
  We all know the job of bringing this budget into alignment is not 
going to be easy. It involves many tradeoffs, some of which are likely 
to be very unpopular. It started in 1990, when Republicans joined us in 
a balanced approach. Along with my colleagues who served here in the 
1990s under President Clinton, we then took some tough votes with not 
one Republican vote in support of us in 1993 when the process of 
balancing the budget continued. It takes time. It takes difficult 
votes. It was done in the 1990s.
  As we all know, when President George W. Bush assumed office, we were 
looking not at massive deficits, we were looking at a potential surplus

[[Page 11345]]

of trillions of dollars over a 10-year period. But with the programs 
that President Bush, together with his Republican colleagues, embraced, 
of significant tax cuts, an expansion of entitlements, such as Part D 
Medicare which was not paid for, which was put on the credit card, and 
two unfunded wars, we are sitting today with this huge deficit.
  Frankly, this proposal to raise the debt limit is very simply paying 
for what President Bush and Republican Congresses did several years 
ago. Yet we find my colleagues on the other side saying: Oh, we cannot 
do that. We cannot do that without significant reductions in programs 
that are vital to Americans.
  We have already demonstrated--we did that in a continuing resolution 
that is covering this year's funding--we can and will make difficult 
cuts. We can reduce spending. But we have to do it in a measured way. 
The other thing we have to do is recognize that any solution, just as 
it was in the 1990s, will require revenues as well as expenditures. 
That is the only way the arithmetic will work.
  I find it sometimes ironic when I go around and talk and they say: 
Oh, if we don't solve this problem, you are putting all this burden on 
our grandchildren. Where was that spirit when the President cut taxes 
and began to eliminate a surplus that would have benefited our 
grandchildren? Where was that spirit when the President decided to 
engage in two major wars but not pay for them? Where was that spirit 
when the President decided he was going to expand entitlements and not 
pay for them? There were very few of my colleagues on the other side 
worrying about grandchildren then.
  Well, we do have to worry about our grandchildren. That means we have 
to start taking the tough steps today. We have to start making the 
sacrifices that will get our budget in order. Those sacrifices are not 
simply in cutting programs that are so vital not only to so many 
Americans but are so vital to our continuing economic growth.
  I am sure everyone here will say they have important highway projects 
in their States, they have important infrastructure projects in their 
States. Do we sacrifice those projects? If we do, then we sacrifice our 
economic efficiency, we sacrifice our productivity, and we give the 
results to our grandchildren: a decrepit infrastructure, with the 
inability to be competitive in a very competitive global economy.
  We have to move forward. We have to move forward to avoid a 
catastrophe to the economy if the debt ceiling is not raised. Also, we 
have to move forward to begin to balance our budget in the way it has 
been done in the past and, frankly, in the way it only can be done; 
that is, we have to start, beginning today, to make the sacrifices and 
make the tough choices that will provide a better future for our 
grandchildren.
  We have done it in the past. In 1990 and 1993 we took tough steps, as 
I mentioned before, to begin to balance the budget. And in 1997, with a 
Republican Congress and a Democratic President, we took additional 
steps. We can do it, and we must do it.
  The idea that we are going to default is difficult to imagine, but, 
still, there are those out there on the other side who are saying they 
will not vote for raising the credit limit in any way, shape, or form. 
I think that is irresponsible. I think we have to be responsible. We 
have stood up before. We have taken tough votes. We have to do it 
again.
  Failing to do that puts a huge burden on the middle class. The 
wealthiest amongst us may be able to negotiate through the vagaries of 
what might happen after a credit default by the United States, but for 
Social Security recipients, for military retirees, for those people who 
are looking for the basic services of government--transit to get to 
work, the ability to get on a plane--who is going to be manning the TSA 
posts if the government cannot essentially pay its debts? All these 
issues have to be considered.
  We have to, as I said, talk about revenues too. It is astounding that 
people would literally be suggesting we cut back Social Security 
benefits, that we cut back retirement benefits, that we do all these 
things at the same time we are providing about $4 billion in annual tax 
incentives to the oil industry, when the price of oil is at record 
levels, their profits are at record levels. These are a host of tax 
provisions that do not make us anymore productive. In fact, one might 
argue they do not even encourage employment here in the United States. 
One could make the suggestion, at least the way we set up the system, 
that it might encourage employment overseas, and then we repatriate the 
profits here. Well, that might be fine for the big companies and the 
executives, but what about Americans who are looking for jobs? What 
about Americans who are looking just to get by?
  We also have to recognize that some of the proposals we have made--in 
fact, all of them the President has talked about with respect to 
revenues--would not be effective immediately because we are still in a 
period of very fragile economic growth. They would be effective in 
2013. But they would go to that long-term goal of deficit reduction, 
which we can achieve, but it will take time, just as it took time in 
the 1990s.
  But even these proposals to close loopholes, which are, in my view, 
very difficult to defend--and to do so not immediately but several 
years from now--even these proposals are being resisted by Republicans. 
That does not make sense to me. I also do not think it makes sense to a 
growing number of Americans across this country. They want us to be 
responsible. They want us to be able to pay our debts. Then they want 
us to get our debts under control. They recognize that requires not 
just good will and good wishes, it requires real, difficult choices and 
sacrifices.
  We are seeing now an economy that is racking up huge profits for 
industry. The nonfinancial members of the S&P 500 index are sitting on 
about $1.1 trillion in cash. The Federal Reserve indicated similarly 
that nonfinancial businesses have about $1.9 trillion in cash defined 
as liquid assets.
  Record profits are being accumulated by corporations. All of this is 
good, but it is much better if those cash resources and profits are put 
back into the American economy in terms of creating jobs. That should 
be part of our effort too, not simply reducing the deficit, but 
reducing it in a way where we grow jobs here in the United States. That 
is also at the heart of what the President is talking about in terms of 
his efforts.
  We are on the verge of tough votes and tough choices, and I hope we 
make those tough choices and tough votes. We do have to pay our debts, 
but then we have to get our debt under control. We have done it. We did 
it in the 1990s. I would argue without some of the policies that were 
enthusiastically embraced by many who are here today, who are talking 
about sacrifice for the middle class but no sacrifice for the very 
wealthy, we would not be in the same position we are in today.
  I believe we are at a very critical moment. We have to resolve this 
issue by August 2. I hope we can do that. I hope it will turn on the 
same kind of sensible, balanced approach that we adopted previously in 
the 1990s. We have to go ahead and think in terms of restoring our 
financial house and then getting our American people back to work. If 
we do that, I think we will fulfill not only the best hopes and wishes 
of the American people but their strong desires.
  With that, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DURBIN. 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. DURBIN. Mr. President, are we in morning business at this time?
  The PRESIDING OFFICER. We are.
  Mr. DURBIN. I thank the Chair.
  Mr. President, we know as Members of the Senate we are facing a 
deadline of August 2 for the extension of our debt ceiling. What is it?
  The debt ceiling is the authority Congress gives to the President to 
borrow money. You say to yourself: Well, please stop borrowing. We are 
already

[[Page 11346]]

deep in debt. But what the President is borrowing money to pay for what 
we have already spent money on, commitments we have already made.
  Let me give you an example. Voting to continue the war in Afghanistan 
costs $10 billion a month. We do not have that money--not enough. We 
have to borrow 40 cents for every $1 we spend. So when Members of 
Congress say: Continue the war in Afghanistan at $10 billion a month, 
they are saying we are prepared to borrow $4 billion every single month 
to keep that promise.
  The President comes to us about once a year and says: I need more 
authority to continue to borrow money to pay for the things you have 
asked us to do. That is what it comes down to.
  Nobody likes to vote for the debt ceiling because it is so widely 
misunderstood. Most people basically say: I don't want to be associated 
with it. I have been guilty of that in my political career. But the 
fact is, most of us look over our shoulders at the final vote and say: 
We better pass this darn thing because if we don't, we will default on 
our debt.
  The full faith and credit of the United States of America is like our 
credit score. Guess what. We have the best in the world. Of all 
governments in the world, we have the best: triple A. It does not get 
any better, and it has always been there, and that has helped us. It 
has helped us not only to borrow money at lower interest costs, but the 
fact that our economy is looked on as so reliable attracts more 
businesses to our country.
  So if on August 2 we default on our debt for the first time in our 
history, our credit score is going to suffer. The people who loan us 
money are going to say: We never dreamed the United States of America 
would fail to make a debt payment. If they are going to fail to make a 
debt payment, then we are going to have to raise the interest rates 
because they are riskier than we thought they were.
  What happens when you raise the interest rates on the United States 
of America borrowing money? Every percentage point--every 1 percentage 
point--adds $130 billion a year to our national debt; and over 10 
years, 10 times that amount: $1.3 trillion every 10 years for every 
single percentage point.
  So is it important to extend the debt ceiling? You bet it is; 
otherwise, our debt goes up, our credit rating goes down.
  There is another unfortunate consequence. As the debt of America 
requires a higher interest payment because we have defaulted, interest 
rates go up all across America--in Montana, in Illinois, in every 
State. People who are borrowing money to run a farm, such as our 
Presiding Officer, to buy a car or buy a house will pay more in 
interest.
  Is that is a good thing? Of course not, particularly in a weak and 
recovering economy, with 9 million people out of work, maybe 14 million 
if you add those who are only partially employed. With 14 million 
people out of work and interest rates going up, businesses do not 
expand as they should, people do not buy. They put it off because 
interest rate costs are that much higher. That is what this is about. 
That is what the August 2 deadline is about.
  But it is about something more. It is about the debt of this Nation, 
which is a serious issue. We are now in a position where, as I 
mentioned earlier, we borrow 40 cents for every $1 we spend. We borrow 
it from Americans who buy our Treasuries and securities, and we borrow 
it from countries around the world who buy our debt.
  The leading creditor of the United States of America is China. The 
leading competitor of the United States of America is China. Put those 
two things together and realize our vulnerability as our debt grows 
larger and our indebtedness to countries such as China grows larger. 
That is not good.
  Plus, my son, daughter, my grandchildren, and yours will end up 
paying this debt. They will pay in their lives for what we are spending 
today. Some of those will benefit them, but some won't. What we will 
consume, they will pay for. That is not fair.
  If we are going to deal with this debt, there is only one rational 
way to do it. About a year and a half ago, Harry Reid appointed me to 
the Bowles-Simpson debt commission. We met for 10 months and came up 
with a conclusion--18 members--and 11 voted for it. We said that if we 
are going to reduce this debt in a meaningful way over the next 10 
years, we need to put everything on the table--everything. That is 
painful. It means putting on the table what I have fought for as a 
Member of the House and Senate, and believe in, and I still do, but we 
have to look at them.
  Is there a way to save money, to economize, to spread the burden of 
responsibility and sacrifice so that it is fair in America? Some say: 
No, we are not going to put everything on the table.
  Our talks have broken down recently with the Republican leadership 
over whether, under any circumstances--and I underline the word 
``any''--the wealthiest in America should pay more in taxes. They say: 
No, not a penny.
  I don't think that is right. I think if we are going to deal with our 
debt and deficit in a meaningful way, those who are well off and 
comfortable in this great Nation should help us. They need to sacrifice 
if we are asking the same of working families and everyone else across 
the board. So this notion of no revenue, no tax increase is, in my 
mind, shortsighted and won't lead us to where we need to be.
  We also have to put entitlements on the table. That is when we start 
getting nervous on the Democratic side. We know what the House budget 
does to Medicare. Frankly, I voted against that, and I would vote 
against it anytime it is brought before us.
  What it does is dramatically change Medicare as we know it. For about 
40 million Americans, that is their only health insurance. They are 
folks who are over 65, many with medical conditions, and they are 
uninsurable or certainly they cannot be insured at a premium rate they 
can afford. Medicare is there for them, and it has been for over 50 
years. So the notion in the House Republican budget that we would 
double the out-of-pocket expenses for Medicare recipients and 
beneficiaries up to $6,000 a year is just something most people can't 
do. You know, if you are wealthy in your retirement, that is one thing. 
Most people are just living paycheck to paycheck on Social Security, 
with meager savings. The notion of spending $6,000 a year out of pocket 
for Medicare is beyond them. I reject that House Republican budget.
  Are there ways to save money in Medicare? Yes. We created a Medicare 
prescription drug program and said that finally we are going to help 
pay for the prescription drugs of seniors because if they get their 
medicine and they take it, they are well, they don't go to the 
hospital, and then their lives are better and our costs are lower. So 
it is better to give them the medicine they need and help them pay for 
it. We created the plan with private health insurance companies right 
in the coverage for this prescription drug benefit under Medicare.
  What many of us thought we should do is allow the Medicare system 
itself to offer a prescription drug benefit. We should model it after 
the Veterans' Administration, where the VA buys prescription drugs in 
bulk at a discount so that their veterans can get the benefit of those 
bulk purchases. We can do the same on Medicare and leave it up to 
individuals across America to pick the plan they want. If you want to 
go with the private health insurance when it comes to prescription drug 
benefits, that is your choice. If you want to go with the Medicare 
benefit, that is your choice. That choice could save us $100 billion a 
year. That is a lot of money. We can end up with savings there, helping 
to reduce the deficit, and not compromise the basic promise of Medicare 
prescription drugs.
  The same is true with Social Security. This is where it gets very 
tricky, and a lot of people start heading for the exits. Here is the 
reality. Social Security as currently written, with no changes 
whatsoever, will make every promised payment to every beneficiary for 
25 years, with an annual cost-of-living increase. You can't say that 
about anything else in government. But what

[[Page 11347]]

happens at the end of 25 years? Unless something intervenes, at that 
point the Social Security benefits drop 22 percent. That is a big hit 
for folks living on Social Security.
  So what can we do today, 25 years in advance--a small thing--to 
Social Security that will build up the solvency and life of Social 
Security for even more years?
  I think that is an honest challenge. We should view it as an honest 
challenge not to eliminate Social Security but to say to the generation 
of younger workers in America that it is going to be there, and you 
will be lucky that it is there because a lot of seniors today can tell 
you the story of their lives. They paid into Social Security, and they 
now receive the benefits, but what happened to their other plans for 
retirement? Well, that little 401(k) or IRA or SEP plan took a hit a 
few years ago, and they lost about 30 percent of their value. Many 
Americans with the pension plans--some of their companies went out of 
business, and they walked away from those plans.
  Social Security is still there, and we want it to be there in the 
future. We can strengthen Social Security and give it a longer life. We 
can find ways to strengthen Medicare and give it a longer life and 
still be committed to the basic mission of these entitlement programs. 
That has to be part of this conversation.
  I have spent the last few months following up on the Bowles-Simpson 
deficit commission, meeting with a number of my Senate colleagues, 
three on the Democratic side and three Republicans. We have tried to 
take the Bowles-Simpson proposal and put it into language that works, 
make it work. So we have been at it for a long time. We have had our 
ups and downs. One of our members left, then came back. It is a tough 
assignment. It is not easy. Sometimes emotions run high because there 
are things of great value and importance that are being discussed.
  Something happened this morning that was perhaps historic. We took 
our plan, which still is short of completion, and we invited every 
Member of the Senate--Democrats and Republicans--to come listen to a 
description of the plan. If I am not mistaken--and Senator Warner is 
here--it was 49 Senators who came. There were no fistfights and no 
swearing. Instead, Democratic and Republican Senators sat in that 
room--49 of them--and listened to the outline of this proposal from 
this group of 6 and came out with a positive feeling--not all of them. 
I am not suggesting they all signed up. I would not expect that to 
happen. But it is significant at this moment in our history that so 
many felt positive toward what we were doing. I hope we can take it to 
another level.
  In the meantime, we have an important responsibility. We need to 
extend the debt ceiling. We cannot compromise the whole faith and 
credit score of the United States. We cannot let interest rates go up 
and raise our debt. We cannot let interest rates go up and kill the 
recovery that is taking place in this economy by killing jobs. We need 
to do our part here and solve this problem on a bipartisan basis. I 
hope we can fold into that, as a critical element, a plan to move 
forward in dealing with our debt.
  Senator Reid, the Democratic majority leader, and Senator McConnell, 
the Republican minority leader, are working together. America should 
take heart that they are trying to find a way through a difficult 
political challenge. The clock is running, and we have to get it done.
  Today, we have a largely empty Chamber, as we prepare for a debate on 
a Republican alternative, which I will oppose and speak against, and I 
will tell you why. It is not going to pass. We know that. But we have 
said to Republicans: We will give you your chance to make your case. 
That is all any of us can ask in the Senate. My plea to the Republican 
side of the aisle is, let's do this in a time-efficient manner. Let's 
not waste time. Let's try to get to a good, healthy debate and a vote 
and move to extend the debt ceiling on a bipartisan basis. If we don't 
and if the rating agencies which downgraded us last week come back and 
hit us again, it will hurt this economy and the families and businesses 
that count on us to make the right and important decisions on a timely 
basis.
  I urge my colleagues on the Republican side, wage a spirited debate 
on what you believe in, and we will too, but let's not draw this out 
for days and weeks. We have to get down to business.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Webb). The junior Senator from Virginia is 
recognized.
  Mr. WARNER. Mr. President, I commend my colleague, the Senator from 
Illinois, for his comments. I affirm his sentiments.
  We have two problems in front of us right now--one intermediate 
problem: raising the debt ceiling. If we have a downgrade in our debt, 
there will be a tax increase on every American family, every American 
business, in the cost of higher interest rates. We have to get that 
raised, which is something I have been advocating for over a year.
  We have to take a second step--to put into place the long-term 
deficit reduction plan. The Senator from Illinois and I and others have 
been working on this. The Senator from Georgia and I started this over 
a year ago. We had I believe virtually half of the Senate who came and 
said it is not perfect, but this makes sense as a way to move forward. 
We have to do our jobs.
  I particularly thank the Senator from Illinois, who has worked so 
hard on preserving the safety net in these discussions.
  Some of my colleagues on the Republican side have recognized that we 
have to sort through a way to reform our Tax Code in a meaningful way. 
These are acts of political courage, and I commend them both.
  With that, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SANDERS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________