Debt Default

Floor Speech

Madam President, I came to the floor this afternoon because the United States Government is now less than 1 week away from defaulting on its obligations for the first time in our history. As we have heard from economists and business leaders across the country, a default could result in hundreds of thousands of lost jobs and in higher interest rates for every American, yet we are still debating whether we should avoid default. It is a very dangerous game, and we are risking permanent harm to the American economy.

I want to examine one consequence of default for a minute. All three credit rating agencies--S&P, Moody's, and Fitch--have said a default would automatically result in a lower credit rating for the U.S. Government. I think we all understand the principle of credit rating. It is like the credit scores on record for most of us in our personal lives. The better we have been about paying our debts in the past, the better our credit score. When we go to buy a house or a car, when we ask for a loan, the bank looks at that credit score and decides how much interest to charge us. The worse we have been at paying our debts in the past, the lower our score and the more money we pay in interest.

The credit rating agencies are keeping a credit score on the U.S. Government. So far, it has been perfect. The United States has never failed to pay its debts. That is why we have the lowest interest rates in the world, and loaning money to the U.S. Government is considered the world's safest investment. With a default, that would all change. And here is the key: It would change in just minutes, and that change would last for generations. If we default, the credit rating agencies will lower our credit rating immediately.

I recently had a conversation with Martin Regalia, the chief economist of the U.S. Chamber of Commerce. In that conversation he said the market reaction to default would take ``nanoseconds.'' Once we have defaulted, we can never unring that bell. Our special status as the world's safest investment may never return. We will have increased our interest rates for decades to come and maybe even longer. JPMorgan Chase said this week that a lower credit rating could cost our government $100 billion a year in interest.

This is the worst kind of wasteful spending because that money wouldn't be going to investments in our economy or to secure a better future for our children. It would go to nothing. It would do nothing. It would be money down the drain.

We have a path forward. It is the plan that has recently been proposed by Senator Reid. There are a lot of things about this plan I don't like. I am concerned because I don't think it takes a balanced approach toward deficit reduction that I have long called for, and I am disappointed that it lacks the $4 trillion in deficit reduction we need. But I am ready to support it. And because all the cuts in this bill are cuts that Republicans have already supported, they should be prepared to support this plan too.

The Reid plan would cut at least $2.2 trillion of our debt while allowing us to avoid default through the end of next year. These two elements are crucial to avoiding the lower credit rating we have been hearing raised as a concern. We need to provide the markets with some long-term certainty that will avoid default, and some proof we can deal seriously with our long-term deficits and debt.

A short-term, 6-month increase, as proposed in the House, would kick the can down the road. It won't prevent a lower credit rating. We need to end this constant threat of default which is paralyzing our government and our economy. The Reid plan achieves this through a combination of cuts to our domestic spending, reduced spending on the wars in Afghanistan and Iraq, and through targeted cuts to mandatory spending. It doesn't raise taxes, and it doesn't touch Medicare, Medicaid, or Social Security.

Again, this is not a perfect plan. I have been on the floor many times in favor of a balanced package that includes cuts to spending--domestic, defense, and mandatory--but also includes increased revenues. The Reid plan doesn't achieve those goals, but I do have hope that we will get there eventually.

This is not a proposal I would have written, but I am 1 of 100 Members of the Senate and 1 of 535 Members of Congress, so I don't get everything I want. None of us here in Congress get everything we want. That is the nature of compromise. That is the nature of democracy. That is why the Framers of the Constitution created checks and balances in government. That is why they created two Chambers in Congress and three branches of government. When you are a leader in government, you don't have the luxury of drawing a line in the sand and walking away. You have to be prepared to stay at the table and to give up something.

I have just laid out what I and I believe many of my colleagues are willing to give up in this proposal--our demand for a comprehensive balanced plan to reduce the deficit. In exchange, I am willing to accept a plan that includes more cuts than any other plan on the table. These are cuts that 40 of our colleagues on the other side of the aisle have already supported. This is a plan that I think neither side is going to love but both sides should be able to accept. It is a plan that gets the job done.

We here in the Senate and in Congress have to get the job done, so I urge that we come to the table, we adopt a compromise, and we put this debt ceiling vote behind us.

Madam President, I yield the floor.

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