Debt Ceiling

Mr. WELCH. I thank you, Mr. Speaker.

Members of the House, the default clock is ticking. We face a default on August 2 if we do not raise the debt ceiling. Raising the debt ceiling is always a difficult vote. It is difficult because we have to do something that's necessary but not popular.

Now, the question of the debt ceiling is about paying obligations already incurred. It's not about giving this House of Representatives permission to spend more money. But what has happened with this debt ceiling debate is that it is being used as leverage by both sides to try to get its way on a long-term budget resolution, and the reality is that this country needs both. It needs, number one, to have a long-term resolution on its fiscal situation, but, number two--this is the immediate need--it has to pay its bills.

America is a great country. It has always paid its bills, and the debt ceiling is about that and nothing more. Incidentally, those bills are ones that have been incurred by Congresses that many of us were never part of. And it's not a question of whether it's a bill that you would have supported incurring the expense for: the Iraq war, the Afghanistan war, the Medicare prescription part D, the two cuts in taxes during the Bush administration, all of which were on the credit card. I was against those, but those are obligations that we have and we must pay them.

The risk of default is enormous. Every increase in the interest rate of 1 percent will cost the American taxpayers $160 billion. The default clock is ticking.

Now, 2 weeks ago the majority brought to the floor a clean debt ceiling bill for the purpose of defeating it, and immediately upon bringing this bill to the floor and defeating it, with unanimous Republican opposition and many Democrats voting no, Members went back to their offices and called Wall Street and said, Just kidding. We will raise the debt ceiling but we wanted to send a signal.

We are playing with fiscal fire here. You know, it's fine to negotiate, but negotiations cannot lead to default.

Mr. Speaker, if we in this Congress, with the Republican majority now leading the way, fail to honor the Nation's obligations by making good on our responsibility to pay our bills, the bond market will work its will and we will lose our AAA credit rating, and we will do enormous damage to this economy.

This is not about a Democrat or Republican speaking. Let me quote Chairman Bernanke and a few others who commented on the urgency of paying our bills. Chairman Bernanke just yesterday said that failure to raise the debt ceiling would create fundamental doubts about the creditworthiness of the United States and damage the special role that the dollar and the Treasury securities have in the global market. Now, I understand the desire to use the debt limit deadline to force some necessary and difficult fiscal policy adjustments, Mr. Bernanke said, but the debt limit is the wrong tool for that important job.

A few other people commenting on this:

JPMorgan CEO Jamie Dimon: A default would be a moral disaster. It will dwarf Lehman. Every single company with treasuries, every insurance fund, every requirement that--it will start snowballing, automatic, if you don't pay your debt. There will be default by rating agencies. All short-term financing will disappear. That's Jamie Dimon of JPMorgan.

The Chamber of Commerce: Failure to raise the debt ceiling would create uncertainty and fear and threaten the credit rating of the United States.

Moody's Rating Service on downgrading America's rating: Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely.

Fitch Rating Service: Failure to raise the debt ceiling in a timely manner would imply a crisis of governance that could imperil the U.S.'s AAA status.

So we have two problems. We have a long-term problem that requires resolution, a long-term fiscal plan, but we have an immediate problem, and that is to protect the integrity of America's reputation for paying its bills.

If we have a downgrade in our rating, it's going to affect the interest rates that we pay, and that's going to hurt folks in Republican districts. It's going to hurt folks in Democratic districts who have no power to do anything.

We must raise our debt. We must pay our bills.

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