Cut, Cap, and Balance Act of 2011-Motion to Proceed-Continued

Floor Speech

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Mr. CORNYN. Mr. President, I would like to speak on the cut, cap, and balance legislation. I plan to vote yes on Saturday morning to proceed to this bill, and I urge my colleagues to do likewise. I would also like to explain why I think that is important.

Most of us understand what this bill does. It cuts spending next year by more than $100 billion. These are real savings and not smoke-and-mirrors. It caps total Federal spending as a percentage of the economy, and it puts us on a path to keep spending at 19.9 percent of our gross domestic product. Right now, our Federal spending is at 25 percent of the gross domestic product.

Our revenues are at roughly 15 percent, so there we have a 10-percent deficit totaling $1.5 trillion this year alone. Of course, those cumulative annual deficits make up our debt, which is now approximately $14.4 trillion.

This piece of legislation also links an increase in the debt ceiling to passage of a joint resolution to balance the budget, and this is an important amendment to the Constitution that is being proposed. I believe we have amended the Constitution 27 times so far. This is a process the Framers of our Constitution embodied in the original document to allow Congress and the American people to amend the Constitution as circumstances change. Clearly, it is obvious to anyone who will look and pay attention that Congress has shown itself unable to constrain its spending and live within our means and to spend only the money we have as opposed to money we borrow from future generations. As important, this constitutional amendment--this balanced budget amendment to the Constitution--is not an extraordinary thing. It may be for the Federal Government, but 49 different States operate under a balanced budget requirement.

I support the cut, cap, and balance legislation because it meets the three primary criteria I am using to evaluate proposals related to the debt ceiling. The first of those three criteria is, No. 1, we must not default. That is not an option. Also, we must not lose the Federal Government's AAA credit rating. No. 2, we must not increase the tax burden on job creators during a fragile economic recovery. This is not just my position; this was the President's position last December when the expiring tax provisions were extended for 2 more years. No. 3, we cannot resort to smoke and mirrors in the hopes of somehow fooling either the credit rating agencies or the American people that we are serious about the spending problem Washington clearly has.

Cut, cap, and balance earned bipartisan support in the House of Representatives, and I applaud the courage of those who crossed the aisle to support this legislation in the House. I hope we see a similar demonstration of bipartisan support for this proposal in the Senate.

I know some of our colleagues on the other side are dismissive of this piece of legislation. I believe the previous speaker--I wasn't here for most of his comments, but I did see his chart--is fairly dismissive of this proposal. For those colleagues who are critical of this proposal, my question for them is this: Where is your plan? Where is your plan? To criticize what responsible Members of Congress are trying to propose as a solution to a problem when they have no plan of their own is irresponsible, in my opinion.

The House of Representatives passed a budget earlier this year but, unfortunately, it has been more than 800 days since the Senate has adopted a budget--800 days. That is approaching 3 years. When asked, the majority leader, Senator Reid, said it would be foolish for the Senate to pass a budget. I think he was saying that not because he believes it is foolish to have a budget, but perhaps he thought by attacking the House plan, while having nothing to propose on his behalf, gained some marginal political advantage.

President Obama has ignored his own debt commission for months and the debt problem. We know last December his fiscal commission, the Simpson-Bowles commission, rendered a very important report documenting in sobering detail the debt problem the Federal Government has--unfunded entitlements, as well as our tax system, which makes very little sense and makes us noncompetitive globally. It is our corporate tax system which encourages--because it makes economic sense--businesses here in the United States to create jobs overseas where it is more efficient, it is cheaper to do so, and where it affects their bottom line in a positive way. Why wouldn't we want to encourage job creators to create jobs here at home by reducing the disincentives and providing an incentive for job creation here in the United States? Until recently, the President has shown very little interest in that recommendation of his own deficit commission.

We know when the President proposed his own budget in February--this is a budget never taken up by a Democratically controlled Senate either in the Budget Committee on which I serve or here on the floor--the President's own budget proposed in February would actually make our debt problem worse, not better. That is why, when we had a vote on the President's proposed budget a few weeks ago--not because our Democratic friends proposed it and brought it up for a vote but because our side of the aisle asked for a vote on it--it failed 97 to 0. None of our Democratic colleagues saw fit to vote for the President's budget proposal because they know it makes the problem worse, not better.

The President finally got engaged a few weeks ago. But the problem we still have is we don't know what the detail of the President's proposed solution to the plan is. He will not say publicly in detail what his plan is. Unfortunately--and this is sort of the nature of the beast--all the negotiations so far that apparently are still continuing are behind closed doors. If there were a grand bargain to be, I am confident what would happen is it would be rolled out on the floor of the Senate or in the House at the last minute, without adequate time to review it or to debate it or for the American people to read it and see how it affects them and to give us feedback. We are representatives of a constituency, and the 25 million people I represent in Texas would like to have a chance to read it and then tell me what they think about it.

We know so far the American people are in the dark about the negotiations, and that is not a good way to do business. That does not help gain public confidence in what Congress is trying to do in dealing with a very serious problem.

Last week, I believe it was the Press Secretary at the White House who actually said that ``leadership is not proposing a plan for the sake of having it voted up or down.''

I think that is a bizarre statement. A person offers a plan because they believe it offers a solution to a problem, not because of some fear of having it voted up or down. That is, in fact, how our system works. The majority rules. But, unfortunately, the President's leadership style is captured perfectly in that statement, and I think it sums up what is wrong with what is happening here in Washington.

I wish to remind my colleagues of the challenge before us, and it is not the debt ceiling; it is the debt. I think those who think it is not real are just whistling past our fiscal graveyard.

Here is what one of the credit agencies, Standard & Poor's, said just this morning, according to Reuters. They said:

If an agreement is reached to raise the debt ceiling but nothing meaningful is done in terms of deficit reduction, the U.S. would likely have its rating cut to the AA category.

Such a downgrade would have an immediate effect on other securities, as Standard & Poor's said:

We would downgrade the debt of Fannie Mae and Freddie Mac ..... the AAA rated Federal Home Loan Banks, and the AAA rated Federal Farm Credit System Banks, to correspond with the U.S. sovereign rating. We would also lower the ratings on AAA rated U.S. insurance groups, as per our criteria that correlates insurers' and sovereigns' ratings.

What would be the impact if these credit rating agencies--which seem to have an oversized influence on our lives but they are what they are--what would be the impact of them downgrading the quality rating of our national debt? We know it would yield higher interest rates for American families, for small businesses, and for the U.S. Government. In fact, we know interest rates are at a historic low now because of Federal Reserve policy, primarily. Those low interest rates we may think are a good thing and they have provided some glimmer of hope for our struggling economy. But if they were as a result of a downgrading of our debt by these credit rating agencies or by a default which, to me, is unthinkable--just a 1-percent increase on the cost of credit we would have to pay to people who buy our debt--just a 1-percent increase over current rates would mean $1.3 trillion over 10 years.

So the results of cuts in the billions of dollars are chicken feed compared to what the credit rating agencies could wipe out almost immediately by downgrading our debt. This is what we are risking by not dealing with this problem. This is what we are risking by political gamesmanship rather than trying to work together in a bipartisan basis to solve this threat to our country and to our future.

As the economist Larry Lindsey wrote in the Wall Street Journal last month:

If interest rates rose to their historical average over the next 2 decades of 5.7 percent, our cost of borrowing would be $4.9 trillion higher over the next 10 years.

So we are left with the obvious question: How can we stop this economic calamity? We can pass this cut, cap, and balance plan or the President or our friends across the aisle could propose something they consider just as serious and just as credible, but we have to do it quickly. So this deadline of August 2 is one we should not flirt with, we should not play with, we should not ignore. We have to deal with it, and we can't just deal with it by raising the debt ceiling because as we have seen from the credit rating agencies, that doesn't solve the fundamental problem. We need to solve the fundamental problem of unsustainable debt or our economic future will not be one of hope and optimism, as the Senator from Iowa was saying earlier; it will be bleak indeed, and it will be our fault.

I see my colleague from Kansas, and I yield the floor.

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