The Debt Ceiling

Floor Speech

Mr. DURBIN. Mr. President, if people have been following the debate on the Senate floor this afternoon, they understand it is focused almost exclusively on the Federal budget deficit and what we are going to do about it. It is a legitimate and timely question, because we are now in negotiations at the highest levels--between the President and the leaders in the House and Senate--to try to find some way through our impasse.

The challenge is to find a way to reduce America's deficit and, at the end of the day, to extend our debt ceiling. The debt ceiling has a deadline of August 2. We have never in our history failed to extend our debt ceiling. To fail to do so would be the equivalent of defaulting on a mortgage payment. And, of course, we all know the consequences to any homeowner or family if that occurs. You understand your credit rating is not going to be the best after you have defaulted. The same thing would be true with America. You also may find the next time you need a mortgage that particular bank may not want to lend to you again. The same thing is true with America. It has a negative impact on your lifestyle. All of a sudden you are in a suspect class and it isn't as easy to borrow money to buy a car or to make some other purchase.

That is the risk we are running at the highest possible level when it comes to this debt ceiling vote on August 2. We have never--underline the word never--defaulted on a debt ceiling extension in the history of the United States of America. That is the reason why the securities and bonds and stocks that are sold in this country enjoy a financial reputation better than most of the world. The United States is powerful, big, and trustworthy. We are going to lose that last word--trustworthy--if we default on the debt ceiling. That is what we face on August 2.

There is a group in town here called the Bipartisan Policy Center, and they have kind of spelled out in specific terms what it would mean if we end up in default, and it is pretty grim. I have some charts here that talk about what we would face if we defaulted on the debt ceiling extension on August 2.

The revenues for the month of August if we default will be $12 billion in the United States, and the bills due on August 3 will be $32 billion. The first day we will be $20 billion in the red, which means choices will have to be made if we fail to extend the debt ceiling. And they are hard choices. Let's take a look at some of those choices we would have to face if we didn't have enough money to pay our bills.

Which of these don't get paid if Congress doesn't raise the debt ceiling? Social Security? Medicare/Medicaid? Veterans' benefits? Those firms that are supporting our war in Iraq and Afghanistan? IRS refunds to individuals and businesses? All of these would have to be brought into question, because we cannot pay them all if we fail to extend the debt ceiling.

This bipartisan policy center said, Let's consider one of the options. Let's protect the biggest programs. Let's pay interest on America's debt so we don't have any further default. Let's of course pay Social Security; elderly folks, many of them, have no other source of income. We had better pay Medicare and Medicaid, because hospitals and doctors across America are taking care of sick people who are elderly and poor. We had better pay those defense firms, because if they withdraw their services it can endanger our troops. And we had better pay unemployment compensation, because for these families there is no other source of income. So if we pay those, the ones I just listed, we would be unable to pay the salaries of those in active military service. We would be unable to pay veterans' benefits. We would be unable to keep the courts open or pay the FBI. We couldn't provide the money for education--that would be Pell grants, college student loans--and virtually everything else in government. What would everything else include? Air traffic controllers, the guards at Federal prisons.

If you think what I am describing here is just a scare tactic, it is not. It is the reality of what happens when you default, and it is a reality that is being ignored by many on the other side of the aisle.

In fact, a fringe publication called the Washington Examiner, which is a very conservative Republican publication, today said: Don't worry about it. Default on the debt ceiling. We can figure out a way through this.

Well, I am sorry, but the reality of the choices facing us is that if we choose not to extend the debt ceiling, then we are going to have nothing but terrible choices.

Here is another scenario, if you thought the first one was stark. Let's assume that we want to protect the most vulnerable in America where, in the month of August, we have $170 billion in income and $300 billion in bills. So we pay interest on the debt, Social Security, Medicare/Medicaid, veterans, food stamps, housing for people who are poor, unemployment benefits, and education for the kids. Unpaid would be the defense firms again, those men and women serving in our military, even those in combat, the FBI, the courts, and everything else in government. The options are grim and real.

I have heard my colleagues on the Republican side come to the floor today, and they are upset. They are upset at a speech given by the President yesterday. Well, the President understands the gravity of the decision that is before us. The President has urged Members of Congress to get busy and help to solve the problem. I think he has a right to be upset, to some extent, and impatient.

It was 2 weeks ago that we had a negotiation underway with Vice President Biden, a bipartisan negotiation, Democrats and Republicans from the House and Senate. It fell apart when Congressman Cantor, Eric Cantor, the House Republican leader, walked out and announced publicly, I am no longer part of this conversation. I think we have to stop this negotiation, this bipartisan negotiation. I am handing it over to the Speaker of the House John Boehner. He can talk to the President.

That, to me, was the height of irresponsibility. If you are given a responsibility to sit in those sessions to try to spare the United States from this terrible outcome, picking up your marbles and going home is not a good option, even if you hand it over to your boss, the Speaker of the House. What it did was to break down those bipartisan negotiations. What we thought might lead to a solution has fallen apart when the House Republican leader walked out. Now the President is trying to pick up the pieces and put it back together and move us toward a solution, and if he was impatient about it yesterday, he has a right to be.

One of the very serious problems we face is if we want to deal with this deficit in real terms, make a real impact on it, we have got to have more bipartisan cooperation. That is a cliche around here, but it is a fact.

I was on the President's Deficit Commission, the Bowles-Simpson Commission. I sat there for almost 10 months, and I listened to everything. I tried to learn as best I could what we were facing, and at the end of the day I voted for the Commission report. Eleven out of 18 of us did, a bipartisan report. It was tough and it wasn't easy, and there were parts of it that I hated as a Democrat. Yet I knew that if we were going to solve this problem, there was no other way to do it. We had to say to those on the Republican side of the aisle, you have to step up with us and find ways to bring revenue to our government.

Today we are bringing in 14 percent of our gross domestic product in Federal revenue, Federal tax receipts. Gross domestic product is the sum total of our economy, all the production of goods and services; 14 percent of it comes in in Federal revenue, 24 percent goes out in Federal payments, spending. That 10-percent difference equals the annual deficit.

Ten years ago, we were in balance. When President William Jefferson Clinton left office, the Federal budget was balanced, 10 years ago. At that moment in time, the net national debt of the United States of America, from George Washington through William Jefferson Clinton's 8 years, was $5 trillion.

Eight years later, when President George W. Bush left office, the national debt had grown from $5 trillion to $11 trillion, more than doubled in an 8-year period of time. You ask yourself, how could that happen in 8 years that we would fall so deeply into debt? There are three basic reasons it happened:

We fought two wars and we didn't pay for them. So the expense of those wars was added directly to our national debt. The President's economic theory was: The best way to move the economy was for us to give tax breaks to the wealthiest people in America, and he did it in the midst of a war, something no President had ever done, which directly added to the debt, and he signed into law programs that weren't paid for, expensive programs. So we ended up with an $11 trillion debt facing the new President, then President Obama, being sworn in and a failed economic policy with hundreds of thousands of Americans out of work and losing jobs by the day. That is what the President inherited.

He has tried to right the ship and move us forward, and it has been hard and it has been slow and it has been frustrating. I think he has done his best, and I think he has done a good job at it.

First, he put in a stimulus package of about $800 billion. As the Presiding Officer here knows, 40 percent of that was tax cuts, tax cuts to the families across America to help them out of the recession. Another 25 percent of it went to building roads and bridges and highways and high-speed rail, infrastructure that will serve America for generations. The remainder of that went into helping State and local governments get through difficult times. We sent extra money to States because we knew a lot of people were out of work. They would need unemployment checks, they would need help to pay their hospital bills. We put that money into a stimulus package to stop what was a hemorrhaging in this economy, and I think it worked to slow down the decline. It did not turn it around as quickly as we liked.

Then last December the President said, on a bipartisan basis I will agree with the Republicans to extend all tax cuts for everybody, highest income to lowest income, and extend unemployment benefit payments. We passed that as well.

The President has tried, and we are coming forward out of the recession ever so slowly. Now we run the very risk of not extending the debt ceiling and plunging ourselves back into a recession even worse than where we started. So is the President impatient? You bet he is. Impatient to the point where he invited Congress to maybe come to work next week.

Many of us had felt we could spend a few days back home. I was going to spend the time after the 4th of July traveling around my State. It is a big State; but I guess it is clear now that my job is to be here, and I will be, along with other Members.

The House will be in session. We are in a strange period of time here where the House of Representatives comes and goes even when the Senate is in session, so we kind of see each other in passing. Well, we will both be together next week, and I hope we will stay here and get this job done. The House is scheduled to go into another recess July 17 to 23, and I certainly hope they don't do that. They had better stay in town. Let's get this done before August 2.

We have a serious problem facing us with job creation in this country. There is no question about it. I think we can move forward as long as we understand some basics.

The key to creating jobs in America is an expanding positive economy. It is a feeling by people in this country and around the world that we are moving forward. And, sadly, people are not going to get that feeling unless we get our act together in Washington. It means Democrats and Republicans working together.

I have tried for about 5 or 6 months now with a bipartisan group of Senators to come up with a way to do this; and, unfortunately, one of the Republican Senators from Oklahoma walked away from that conversation as well. But we still have a job ahead of us, and it is one that we ought to face.

I sincerely believe that the Bowles-Simpson Commission is the right paradigm, the right direction for us in terms of where our Nation and our budget should go. It calls for some changes many Democrats will find painful and changes Republicans will have to struggle to accept as well, but those are the changes that will be needed.

If we fail to include revenue in this discussion about reducing the debt, if it is just spending cuts, it can only go so far. If we include revenue, we can talk about a much bigger package of deficit reduction, much more credible, with a more positive impact.

During the course of the last 2 days, we have tried to identify on the floor some parts of the Tax Code that can be changed to save money for our economy. Each year, our Tax Code, that body of laws relating to taxes in America, provides deductions and credits and exclusions and special treatment that spares individuals and companies from paying $1.1 trillion in taxes each year. It includes such things as the employers exclusion of health insurance premiums, mortgage interest deductions, charitable deductions, State and local tax payments. All of these things and many others are included in that Tax Code. It is rare that we open that Tax Code and ask the question, Is this needed?

In the last few days we have come to the floor and talked to the tax subsidies and tax breaks that aren't needed that, frankly, have to be sacrificed in order to get this economy back on its feet. We talked about one that is incredible. In the first quarter of this year, ExxonMobil declared profits of $10 billion, one of the most profitable quarters in the history of American business, and we as taxpayers continue to subsidize ExxonMobil. Why? They are doing quite well. And remember the last time you filled your tank with gas? It doesn't look as though they are sparing us when it comes to raising the price of a gallon of gas. So I think that subsidy should go. Subsidies to the oil and gas companies at this moment in history are unacceptable. We have a thriving profitable industry that does not need a Federal tax crutch.

Take a look at some of the others we have talked about as well. Do you know we provide tax subsidies for American businesses that want to ship their jobs overseas? We call it deferral of income. It is one of the most expensive parts of the Tax Code. It says if you want to move your business overseas and produce overseas and generate a profit, you can hang on to that money. You don't have to pay taxes on it. We defer the payment of taxes. There is a tax break for a company that has decided to pick up and leave America and go someplace else. Why? Why would we create a tax incentive to do that? If a company decides that is the way to make a profit, so be it. I am sorry they would be leaving America, but for goodness sake, they shouldn't expect us and we shouldn't volunteer to subsidize that decision that costs good-paying jobs in our country.

There are a variety of other smaller tax subsidies, those we have to raise questions about. That is for sure. Tax subsidies for people who are lucky enough to own a yacht? We want to give them a tax subsidy? Or people who are lucky enough to own a jet plane? People who are lucky enough to have thoroughbred horses? Most of the winners who stand at the winner's circle of these race don't look like regular working stiffs. They look like folks who are doing pretty well in life. Why is the Tax Code subsidizing that particular industry? I think it is a valuable and important question.

Why don't we put these things on the table? Why don't we ask ourselves whether, at a time of deficit, when we need to not only reduce spending but come up with revenue, that there are some things we can no longer afford under our Tax Code?

Bowles-Simpson went a step further and said, If you start making substantial changes and reducing the tax expenditures, deductions, and credits, you can actually reduce marginal income tax rates for individuals and businesses. I think that is a valuable thing to look at. We don't have to eliminate everything in the Tax Code, but making substantial changes could result in a fairer, more comprehensive tax system.

Let me say one other thing that I think is guiding me in this debate and I think you as well. I think about an America, a nation of values that has always said we have got to care for the most vulnerable people in our country. Some of these people, through no fault of their own, were born with physical and mental shortcomings and limitations. Some of them are dealing with illnesses that we wouldn't wish on anyone. Many come from an impoverished background and are struggling to make do with the basics in life. I feel, at the end of the day, we can make this economy move forward, and we can do it in a sensible and humane way. We can protect the basic safety net.

One of the elements in that safety net is Medicaid.

Yesterday, I had a meeting with some people I respect very much. They came in to see me. They represented the heads of children's hospitals from all over the United States, even from your State. My family has relied on those children's hospitals in Washington, DC, and in Chicago and other places, and thank goodness they are there. I do not know of a more caring, competent profession in America.

More than most hospitals, children's hospitals bring in patients on Medicaid. These are patients who are not from families who are wealthy, they are not from families who have private health insurance policies--no, by and large, they are the poorest families.

One-third of the children in America are covered by Medicaid. That is where they get their health care. If we talk about cutting back on Medicaid, this program for low-income and disabled people, those children will be unfortunate victims in that budget discussion. Also, a large part of Medicaid goes for elderly people who have spent their life savings and are living their last years in nursing homes and convalescent centers. Medicaid pays that. Cutbacks in Medicaid run the real risk of pushing those people out of quality care into lower quality care or the streets.

Is that what America is all about? Would we preserve a tax break for a person who owns thoroughbred horses and then say that unfortunately that elderly lady has to leave the nursing home she has been in? Would we preserve a tax break for someone who owns a yacht and say that unfortunately we will not be able to cover the cost of a needed surgery for a poor child at a children's hospital in Chicago.

If that sounds like an exaggeration, it is not. That is what this debate comes to--whether we want to defend tax breaks for the well-off people in America at the expense of the most vulnerable. We are better than that, and most well-off people whom I know--and I have friends who are doing very well in life--would not be afraid to pay a little bit more in taxes to make sure America continues to move forward. They feel blessed to be part of this country and blessed to be successful in this country, and they do not resent the suggestion that they need to pay a little more when times are difficult. They are certainly prepared to sacrifice.

Some come to the floor here and think it is an outrage to ask oil companies not to take a subsidy in their most profitable year. They think it is an outrage to ask the most wealthy people in America to give up a tax break on a jet they happen to own and use for personal purposes or business purposes. I don't think that is what America is about, and I don't think that is what we should be about.

Let's come together in a bipartisan fashion and make the spending cuts which need to be made, both on the defense side and the nondefense side, and then deal with revenue sources, either making certain that those in the highest income categories are paying their fair share of taxes or at least do not receive the current tax subsidies that are going their way, and let's deal with the reality of this budget deficit.

Time is a-wasting. If we wait until August 1 to get this done, it may be too late. At some point, if we are not careful, 30 bond dealers somewhere in the United States or some other country may start this ball rolling before we do. If they do, questioning the credit reputation of the United States of America, interest rates will start moving up and we will not be able to move fast enough to stop it. That is why the President was impatient yesterday. That is why we should be in session this next week. And that is why we need to start rolling up our sleeves and stop walking out of meetings on budget negotiations and stay in the room until we get the job done.

I suggest the absence of a quorum.

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