Default Prevention Act
Floor Speech
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Mr. McCLINTOCK. I thank the gentlewoman.
Mr. Speaker, this bill simply guarantees that the sovereign debt of the United States will be paid in full and on time--period. How could that possibly be controversial? Yet in today's political environment, it is.
The sovereign debt of the United States is what makes it possible for us to pay all of our other obligations in this era of chronic deficit spending that we are now in. This bill provides an absolute guarantee of that credit.
Although the Constitution explicitly commands that the public debt of the United States is not to be questioned, it provides no practical mechanism to achieve this aim. This bill provides that mechanism. It says that, whenever we reach the debt limit, the Treasury Secretary can continue to borrow to pay interest and principal on the debt.
It amazes me that many of our friends on the other side of the aisle support loan guarantees to foreign corporations and to special interest groups, but they are unwilling to guarantee the loans to our own government.
Mr. Speaker, the national debt is now larger than the entire economy. It has doubled in the last decade. The interest on that debt is the fastest growing component of the Federal budget. It threatens to exceed our entire defense budget in just 8 years.
If there is ever any doubt over the security and reliability of the debt owed by this government, the rates we pay to service our debt would quickly rise and sink our country in a tidal wave of red ink.
Now, this is not a substitute for raising the debt limit. We all recognize that in this era of chronic deficit spending under this administration that is going to have to happen. We have a responsibility to raise the debt limit, but we also have a responsibility to review the policies that are driving that debt.
The Default Prevention Act says loudly and clearly to the world that, no matter how much we may differ and quarrel here in Washington, the sovereign debt of this Nation is guaranteed and that their loans to it are absolutely safe.
We hear the charge that this would pay debts owed to foreign governments before paying our own troops. Actually, more than half of our debt is held by Americans, often in American pension funds. China holds just 7 percent. But whether our loans come from China or from Charleston, without the Nation's credit, we cannot pay our troops or meet all of our other obligations.
Opponents charge that this is an excuse not to pay our other debts. Well, what nonsense. This maintains the credit that is necessary to pay our other debts.
Most States guarantee that their sovereign debt will be secure and they have done so for generations. Do our friends actually suggest that any of these States has ever used these guarantees as an excuse not to pay their other bills? On the contrary, by protecting their credit first, they actually support and maintain their ability to pay for all of their other obligations.
The President contends that this is tantamount to a family saying it would make its house payment, but not its car payment. I sure hope he is getting better economic advice than that.
But let's continue the analogy. If the family is living on its credit cards, as we are as a Nation, it had better make the minimum payment on its credit card first or it won't be able to pay all the rest of its bills.
And when that family has to increase its credit limit because it is not spending within its means, it had better have a serious conversation about what is driving its debt and what to do about it.
Principled disputes over how the debt limit is addressed are going to happen from time to time. Just a few years ago then-Senator Barack Obama vigorously opposed an increase in the debt limit sought by the Bush administration.
When these controversies erupt, as they inevitably do in a free society, it is imperative that credit markets are supremely confident that their loans to the United States are secure.
Providing such a guarantee would prevent a future debt crisis and give Congress the calm it needs to negotiate the changes that must be made to bring our debt under control as we authorize still more debt.
The voices in opposition to this bill are the same voices that have cheered the most profligate spending and borrowing binge in the history of this Nation. It is time that we managed our affairs responsibly, and guaranteeing our debt is an important step in doing so.
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Mr. McCLINTOCK. Madam Speaker, we are asked: Why don't you just raise the debt limit?
Let me again make this very clear.
As long as we spend more than we take in, we have a responsibility to raise the debt limit. Republicans acknowledge that responsibility. Democrats acknowledge that responsibility.
Yet, with that responsibility comes a concomitant duty to review the policies that are driving that debt. The Republicans acknowledge this responsibility. The Democrats do not. That is the fine point of the matter.
That is a policy debate, and it is controversial, but that controversy should not roil credit markets and threaten to increase the cost of our borrowing.
Given the size of the debt that we are carrying--and this administration has nearly doubled it by its policies--even a small increase in interest rates could mean a catastrophic increase in interest payments, and those increased interest payments in the tens--possibly, hundreds--of billions of dollars would come at the cost of every other program that the Democrats cherish.
We keep hearing about the S&P downgrading our credit rating in 2011. Let me remind them that, for months prior to that downgrade, the S&P demanded that we reduce our 10-year projected deficit by at least $4 trillion or they would downgrade our sovereign debt. We ultimately only reduced it by $1.2 trillion because of the voices that we now hear raised against this bill, and the S&P followed through on that threat.
My Democratic colleagues are right, a threat not to pay interest and principal on our debt is the biggest threat to our credit. That is precisely the threat this bill takes off the table by guaranteeing our sovereign debt.
My friends are correct that failure to pay our other bills would be a very bad thing, and it is much to be avoided. There is no dispute in that.
As long as the debt limit has to be increased, there is going to be controversy; and that controversy, whether during Republican or Democratic Congresses or Republican or Democratic administrations, must not be allowed to provoke an increase in borrowing costs because we have frightened credit markets.
This is not a threat to default. It is a promise not to default on the sovereign debt that we use to fund everything else that we do. My friends on the left make no distinction between sovereign debt and our other obligations. That may explain some of the reasons we are in the mess we are in.
The fact is our sovereign debt is what makes it possible to pay for our other obligations as long as we continue to spend beyond our means. This measure guarantees the sovereign debt.
The policies advocated by the opponents of this motion are precisely the policies that have caused our country to wander now through 7 years down a dark road of debt, doubt, despair, and economic malaise.
It is time for a new morning in America, and that begins with guaranteeing the sovereign debt of this Nation. I ask for your support for this bill.
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Mr. McCLINTOCK. Madam Speaker, I know that this great Hall has become a national gallery for hyperbole, but I think the opponents of this measure have taken it to a whole new level. Pay China first, what xenophobic nonsense.
China holds about 7 percent of our debt. Most of our debt is owed to Americans, much of it in pension funds and debts to Social Security pensioners.
If we don't maintain our credit, we can't meet any of our other obligations, including our troops in the field. And if there is even a suggestion that our sovereign debt is not absolutely secure, we could see a spike in interest costs that will take money away from the very programs that the Democrats say they are trying to defend. That is the reality of it.
This is a question over whether we should guarantee the sovereign debt of the United States, and I would ask again: Why is it and how is it that my friends on the Democratic side of the aisle can get wildly enthusiastic about taxpayers being forced to guarantee loans to foreign corporations, foreign governments, or domestic special interests and yet not be willing to guarantee the full faith and credit of the United States simply by allowing the Treasury Secretary to continue to borrow to meet our interest and principal payments if we should ever reach a point where the debt limit has been reached?
It is the debate over the debt limit that tends to roil markets. We are going to meet our debt obligations, but that debate that is required to review the policies that are driving our debt is what roils those markets.
This calms that debate. This assures everyone who makes loans to the Federal Government that their loans are secure. This keeps our interest costs down, and it guarantees the credit of the United States that is necessary to meet all of our other obligations.
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