Debt Crises

Floor Speech

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 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 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.

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