Debt and National Security

Floor Speech

Mr. THUNE. Madam President, I rise to talk about our Nation's security and what the Chairman of the Joint Chiefs of Staff, ADM Mike Mullen, recently said is the greatest threat to America's future. He mentioned not too long ago that the greatest threat to America's national security is our national debt, not al-Qaida or the Iranian nuclear threat or instability in the Middle East or Russian spies but our national debt.

That is a stunning statement, but I think it is backed up by the numbers. We are more than $14 trillion in debt.

It took 220 years of American history, up to the beginning of 2009 and with 43 American Presidents, to pile up $6.3 trillion in publicly held debt. Under the Obama administration's latest budget, we will double that in another 2 years and triple it in 10. That budget calls for a sizable annual deficit every single year for the next 10 years. The smallest budget deficit we would face would be $607 billion in the year 2015, and then our deficits would start rising again.

That is what the White House calls a balanced budget. I would call it a joke, but it is no laughing matter. We just learned China holds even more of our debt than the Treasury had previously thought--26 percent of total U.S. debt held by foreigners. The President's budget inevitably would add to that.

That crushing debt burden we are imposing on future generations will seriously limit their ability to live the American dream. For generations in this country, parents have sacrificed so their children could have a better life, but today we are standing that tradition on its head. Excessive spending and debt threaten to make the next generation the first in our history to have a lower standard of living than the one that came before. That was not what my parents did. My father fought in World War II. He worked hard as a teacher, a coach, he drove the schoolbus, ran a motel in my hometown, and basically did any job he could and made whatever sacrifices he needed to make in order to keep our family fed, clothed, and sheltered. His father before him, my grandfather, traveled to this country from Norway and worked doing hard labor laying the railroad across the Plains. He started his own hardware store and ran it through the Depression and war until he couldn't work anymore. He knew what it meant to sacrifice to take care of his family.

But today, Washington seems to be saying the generations to follow us will have to sacrifice so we will not have to make the tough choices. We don't want to do the hard work of living within our means, so our children and our grandchildren will just have to get by on less. Every one of us in this Congress should be ashamed of that prospect.

But more than shame for what we are doing to future generations, we should be alarmed about what we are doing to our economy today. That skyrocketing debt means a burden of uncertainty on our businesses, small and large alike. When businesses and people are uncertain if there will be a fiscal crisis, they limit their investment. Added to the stifling amount of overregulation coming out of Congress and the administration these past 2 years, it means businesses have one more reason to worry about whether they can afford to add another person to the payroll. That means fewer jobs.

One influential study, endorsed by none other than Treasury Secretary Geithner, found that countries with very high debt burdens suffer from lower economic growth rates. Median growth rates for countries with public debt above roughly the 90 percent of GDP threshold are about 1 percent lower than otherwise. The reasons for this are simple: Government borrowing crowds out private investment. The less productive public sector takes resources that could and would be better used by the more productive private sector.

We have already crossed the dangerous 90 percent threshold--gross debt was 93 percent of GDP at the end of last fiscal year and will top the 100 percent barrier by the end of this fiscal year. Under the President's budget, the debt will continue to grow rapidly, eventually reaching 107 percent of GDP--and that is even with the gimmicks and questionable assumptions the White House budget proposal contains, including what I believe are very unrealistic economic growth assumptions.

President Obama's own economic advisers have estimated that a 1-percent increase in GDP translates into 1 million more jobs. Many more people would have jobs today if it weren't for this crushing debt burden.

We did finally have some good news last Friday about private sector job creation. Nobody was happier than I to see that. But the fact remains that the labor force participation rate in the latest unemployment figures was unchanged at 64.2 percent, the lowest level it has been since the early 1980s. A lot of workers have been so discouraged with the lack of jobs they have simply stopped looking.

Let us not forget our recovery so far has lagged far behind past recessions. At this point after the 1981-1982 recession, the economy had already expanded to 10 percent. But the current recovery has only expanded the economy by .14 percent. That is not good enough. We all know if we don't act soon to get control of Federal spending and our soaring debt, any good news will be short-lived.

For 2 years, the Pied Pipers of big government told us they could spend their way out of financial troubles; that the money was free and it would lead to jobs, jobs, jobs. Well, they were wrong, and 2 years of their policies have left us dramatically worse off. It is simple: Too much government spending means too much government debt. That means a weaker economy and fewer jobs.

I think we are finally at the point where most people, even here in Washington, are willing to concede we need to get a handle on our spending. Even the Obama administration--the biggest spending White House in history--has finally come around to the realization that just maybe we should let the credit card cool off a bit.

There is no better time in America's history to change course regarding Federal spending. We are at a moment when we are about to get hit by a succession of three budgetary waves. First, the end of the 2-week continuing resolution on March 18. Then we will have to address the debt limit sometime this spring. After we have dealt with those two matters, we need to take up the budget for fiscal year 2012 because the new fiscal year is only 6 months away.

None of those is a mystery. None of them snuck up on us. We have seen them all coming. We have had plenty of warning. We have no excuse for being unprepared. I am confident we can come together and solve all three of those issues. We showed we can do it with the 2-week CR, finding $4 billion of spending that we could agree was not our most important national priority right now and could be cut. Thanks to the great work of our friend and colleague, Dr. Coburn, the GAO has confirmed there are hundreds of billions of dollars in waste and duplication we can begin to scrub out of our Federal budget.

That is our short-term situation--those three challenges. But there has also been talk of a balanced budget amendment, and I am a cosponsor of two balanced budget amendments. That is not a short-term fix. That is a long-term issue. So that is the short term and the long term.

In the midterm, we need to come up with additional solutions to get us off what I call Federal fiscal irresponsibility, budgetary brinksmanship, and deficits as far as the eye can see. We need to get back on the path of prosperity, and that path cannot be built on borrowed money and reckless spending. Getting back on the right path will require us to fix our broken budget process.

To that end, I am proud to reintroduce a bill I introduced last year that would establish commonsense reforms to improve transparency and efficiency in our budgeting process. I am proud Senators CHAMBLISS, CRAPO, INHOFE, JOHANNS, KIRK, PORTMAN, and WICKER have joined me in cosponsoring S. 439, the Deficit Reduction and Budget Reform Act of 2011.

If we don't do something to fix this broken system and soon, we are going to keep getting hit by these budget waves, and sooner or later they are going to sink us.

My proposal has three main parts. The first is budget reforms. I propose we start by reforming pay-go rules to prevent the double-counting gimmicks that too often are used around here, particularly with regard to our trust funds. We saw that double counting occur during the health care debate last year, when hundreds of billions of dollars were doubled counted--essentially spent twice--during the health care debate.

My proposal would make the Federal budget a binding joint resolution signed into law by the President. Today, it is a nonbinding resolution and routinely gets waived.

My proposal calls for a biannual budget timeline. There is more time for oversight and to see what is working doing a budget every other year--during the odd-numbered years--and then during the even-numbered years doing oversight. So instead of looking for ways to spend taxpayer dollars, we look for ways to save taxpayer dollars.

My proposal also calls for a legislative line-item veto. Governors have it; the President should too.

My proposal would prevent the abuse of emergency spending designations, which, again, have become all too routine and all too frequent around here, to get around spending caps.

My proposal calls for the creation of a new CLASS Act trigger, if that new entitlement program is not solvent over a 75-year timeframe.

I would also modify the Medicare cost containment trigger to have honest accounting with respect to revenues and savings in the new health care bill.

My proposal also would update the Credit Reform Act to score the purchases of debt, stock, equity, and capital using a discount rate that incorporates market risk rather than the procedure that has been used in the past which, in my view, completely understates the cost of many of these programs.

I call for a new standing joint committee of Congress for budget deficit reduction. If you can believe this, there are 26 committees or subcommittees that spend tax dollars and not one that saves tax dollars. That joint committee would be responsible for producing a bill to cut the deficit by at least 10 percent every budget cycle without raising taxes. This bill would get expedited consideration in both Chambers of Congress and use only spending reductions, not tax increases. Tax increases would be off the table. A standing committee--not just issuing one report and closing up shop--its recommendations would get an up-or-down vote in Congress.

There is a precedent for doing this. I see the Senator from West Virginia on the floor. Back in the 1940s, there was a Senator from West Virginia named Harry Byrd. As they were debating whether to raise taxes to fund World War II, he came up with an idea and said: Before we do that, we ought to look at savings we can find in our Federal budget. So he proposed a joint committee called the Joint Committee on the Reduction of Nonessential Federal Expenditures. They went about the process of scrubbing the Federal budget to see if there might be savings that could be achieved that would prevent having to raise taxes to fund the war effort. In the process of doing that, that committee achieved a great many things. It was in existence for about 30 years.

What this would do is draw on that precedent and create a joint standing committee in the Congress that would be bicameral--10 House Members, 10 Senate Members--bipartisan--10 Republicans and 10 Democrats--and would have a statutory requirement each budget cycle for coming up with a specified amount of savings in deficit reductions through spending reductions.

What would we do in the short term? This proposal would freeze and cap spending. It would propose a 10-year spending freeze at 2008 levels adjusted for inflation. After all, nondefense discretionary spending has increased at an alarming rate since 2008--a 22-percent increase, when inflation has been roughly 2 percent. In other words, nondefense discretionary spending has grown in the last 2 years at 10 times the rate of inflation.

As I said, this is not a quick fix. No plan is going to solve our problems overnight, and I hope we do not take seriously anyone who claims to have a plan that will. But just the same, I do not think we should take seriously any plan that claims that an annual deficit of $607 billion is the same as a balanced budget. It is not the same, and it is not good enough. The only thing that is good enough for our children and for the future prosperity of this great country is for us to get our fiscal house in order and to embrace responsible budgeting. We cannot continue to spend money we do not have. We have to learn. Like the American people have learned to live within their means, we have to learn how to tighten our belts.

I wish to close with a couple of statements.

I mentioned earlier the statement by the Chairman of the Joint Chiefs of Staff, ADM Mike Mullen, with regard to the greatest threat to our national security being our national debt, but I also want to quote what Secretary of State Hillary Clinton called the unexpected $1.3 trillion U.S. deficit. She referred to it as a ``message of weakness internationally,'' and she went on to say:

It poses a national security threat in two ways: it undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable.

That is Secretary of State Hillary Clinton with regard to these year-over-year massive deficits we continue to run.

Just today, we heard that PIMCO, one of the largest mutual funds in the country, has decided to dump government debt--its government debt. In that story that came out today that was discussing that particular move on their part, there was a quote from a gentleman, Jim Rogers, who is the cofounder of the Quantum Fund. He said:

U.S. Government bonds are not a safe haven. I cannot conceive of lending money to the U.S. Government for 30 years.

Think about that--the United States of America is being viewed increasingly as an unsafe investment because of this massive debt we are running and what it could mean to the future with regard to inflation and interest rates and the health of our economy and its attractiveness to people not only here at home but around the world as a place for investment.

We have a major problem. These are serious times. These are serious problems. These are serious challenges. They require serious solutions and serious leadership. I hope here in the Senate we are up to that.

As I said before, it starts on several levels. In the near term, we need to get the spending under control. We are trying to do that with the discretionary spending bill that is in front of us. We need to deal with the longer term issue. I hope we can pass a balanced budget amendment. We have had votes on that in the past here in Congress, unsuccessfully, narrowly. But we need to put in place what so many States have that require them on an annual basis to balance their budgets. Then we need to put in place budget process reforms that, in my view, will put more of a straitjacket on the Congress and force us to make more of these hard decisions.

I think, frankly, because we do this every year, this budget every year, we get very occupied with 12 appropriations bills in the budget--although last year we did not even pass a budget, nor did we pass a single appropriations bill, which is a major failure of this Congress when you are running a $3.7 trillion enterprise called the Federal Government. But in our annual schedule, we need to provide time to do oversight, time to look at what we can be doing not to spend more money but to save money.

If we had a biennial budget process where we are spending money in odd-numbered years and doing the appropriations bills in those years, and then in the even-numbered years, when people go home to run for election, instead of looking for ways to spend money, we are actually looking for ways to save money, I think these reforms are long overdue.

I hope my colleagues will take seriously this issue of budget process reform. I know it is not glamorous subject. In fact, most people's eyes glaze over when we talk about budget process reform. But, in my view, there is not anything we could do that would more fundamentally change the way Washington works than reforming this budget process because it drives everything else. If we do not start there, we are never going to get this issue of spending and debt under control in the long term.

I thank my colleagues who have cosponsored this bill. I hope there will be more colleagues who will join on this bill--if not this one, something like it--that will once and for all change the way Washington works by undertaking reforms in our budget process that will lead us to greater fiscal responsibility and greater prosperity for future generations.

I yield the floor.

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