The Debt Limit

Floor Speech

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First, I wish to thank my good friend and colleague from Maryland for her great words. She comes from the heart of Maryland and the heart of America. Very few people I have met in politics in my many years in this endeavor have an understanding of how average people feel and think and tick than the great Senator from the State of Maryland, and I wish to thank her for her outstanding remarks. If this body on both sides of the aisle would listen to her and her commonsense intelligence, we would be in a lot better shape than we are now. So I thank my colleague from the great State of Maryland, the senior Senator.

I rise to discuss the deadlock we have reached in the debate over raising the Nation's debt ceiling. Two nights ago, the President spoke and put the current stalemate in the context it belongs: The result of a small block within the House Republicans that refuses to compromise even one inch, it is on their shoulders.

We have perhaps 100 Republicans at the extreme right who seem to be leading the Congress and the Nation over a cliff. They don't even care about the idea that we might default. It is appalling. Yet they seem to be calling the shots.

For the last few weeks, the President has met over and over with House Republicans trying to meet them halfway and in some instances more than halfway. He has offered to cut record amounts from our debt and make cuts in programs that would be extremely painful to our side of the aisle. This minority in the House has come to think of ``compromise'' as a dirty word, and it appears as if they can't take yes for an answer. If you don't care about debt reduction, if you don't care about debt ceiling, rather, you can't get something done.

Speaker Boehner, who is a good and reasonable man, wants to do the right thing and compromise, but he is struggling to rein in his caucus. Instead of leading the House, Speaker Boehner is being led by a fringe in his caucus that thinks default is OK. This week, Speaker Boehner offered a two-step plan that simply kicks the can down the road. It resolves the debt ceiling only for the next few months. With the new CBO numbers, it will inevitably resolve it for even a shorter period of time, and that puts us, within a few months, right back at square one, all over again, with the same anxiety, the same gridlock, the same problems we face today. What sense, in the good Lord's name, does that make to just repeat this over and over until we drive off the cliff? It makes no sense.

All we have to do is look at how difficult this crisis has been to resolve after a year of negotiations. Does anyone think it would be a good idea to do this all over again in less than 6 months? The Speaker's approach is not only wrong, it is dangerous. It would leave a cloud of default hanging over our heads for the next several months, undermining confidence in U.S. bonds.

Market analysts have rejected the Speaker's approach, saying it could actually bring some of the same bad consequences as a default itself. It could even cause a credit rating downgrade.

Just yesterday, the CEO of Nasdaq testified before the Judiciary Committee and said:

The longer the deal, the better it is for the markets.

Christian Cooper, a currency trader, was quoted by Bloomberg News this morning saying:

From the markets' point of view, a two-stage plan is a nonstarter because we now know it is amateur hour on Capitol Hill and we don't want to be painted in this corner again. There is significant risk of a downgrade with a deal that ties further cuts to another vote only a few months down the road.

He said it better than any of us could say it, and he is a currency trader.

Mohamed El-Erian, the CEO of PIMCO, one of the most respected investors in the markets--and he invests, as I understand it, hundreds of billions of dollars. Mr. El-Erian expressed concern the other night that ``the political ground is being prepared for a short-term stop-gap compromise.'' He warned this could push stocks down and leave the U.S. debt rating ``extremely exposed to a damaging downgrade.'' Let me again quote Mr. El-Erian, one of the great experts on our credit markets. What he said is, the kind of plan that came over from the House that is attempting to be debated in the House--I don't think it will even make it over, but the kind of plan being debated in the House would ``create an extremely exposed damaging downgrade to our credit, to our Nation's debt rating.''

Even Republicans rejected a short-term increase in the debt ceiling as recently as last month. Dave Camp, Republican chairman of Ways and Means, said:

It doesn't give you certainty. Ideally, you'd like to get that settled and not have to continually have it a continually hanging-over issue.

That is the Republican head of the Ways and Means Committee.

House majority leader Eric Cantor said:

If we can't make the tough decisions now, why would [we] be making those tough decisions later. I don't see how multiple votes on a debt ceiling increase can help get us to where we want to go. It is my preference we do this thing one time. ..... Putting off tough decisions is not what people want in this town.

That is from House Majority Leader Cantor. Yet he is leading the charge to send over the very type of plan he has criticized only a few weeks ago.

Republicans have apparently flip-flopped on this point. They are now saying they want the same kind of short-term debt ceiling increase they opposed on substantive grounds previously. Republicans have flipped-flopped on this point. Make no mistake about it, a short-term deal is still a nonstarter in the Senate and nothing more than a glidepath to a credit downgrade, and we will not allow it.

While Republicans continue pushing for an unproductive plan, Senator Reid's plan, the Senate plan, offers real potential to finally break this impasse. It makes difficult choices. It includes almost $1 trillion in domestic discretionary program cuts, including defense. This is serious belt tightening that will have consequences, good consequences, for years to come.

The plan received a major boost this morning when Congress's official scorekeeper confirmed that the first draft cuts more--a lot more--than the Boehner plan. According to the Congressional Budget Office, the Senate draft bill achieves almost $1.3 trillion more in deficit reduction than the Boehner plan.

The report also affirms that the $1 trillion in savings the Senate planned from the Iraq and Afghanistan wars is real. That is CBO saying it, not some Democrat who is hoping and praying for an easy fix. This completely undercuts the arguments by Republicans who have tried to call these savings a gimmick, even though they included them in their own budget and voted for them a few months ago. If it was OK in their budget, it has to be OK in our budget. You cannot just change your mind based on whose budget it is. Substance should matter to some extent.

Plus, since the CBO only measured the plan's first draft before additional planned savings were incorporated into the bill, the final version of the Senate plan will achieve even deeper savings when it is filed on the Senate floor. As Politico reports this morning:

In the battle of budget scores, the Senate Democratic deficit reduction bill is the clear winner thus far over an alternative by Speaker John Boehner.

Lastly, Senator Reid's proposal allows for a joint committee that has the potential to achieve even deeper savings down the road to get our country back on the path to economic growth. All in all, this is an offer that Republicans cannot refuse. All of the cuts in Senator Reid's proposal have been supported at one point or another by the Republican side. It meets the two main requirements laid out by the House Republicans: First, Speaker Boehner said the amount of the debt ceiling increase must be matched by the amount of spending cuts. Our proposal will do just that.

Second, Speaker Boehner said the tax increases must be off the table. Even though most of us would prefer tax increases, our proposal includes no revenue raisers whatsoever. We don't want tax increases on the middle class; we want tax increases on the wealthy and elimination of corporate loopholes. To not have them is a hard decision to many on our side who know we are going to need to do that for serious debt reduction.

The bottom line: In conclusion, we are getting dangerously close to August 2. Over and over Democrats have shown a willingness to move in the direction of Republicans. It is time for Speaker Boehner to cut off his extreme Republicans who refuse to support even the plan that he crafted to meet their reckless demands. The Reid plan is our best route to a compromise. It is a compromise we need soon before the markets render a truly ominous judgment that will set our economy back for years.

I yield the floor.

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