The Default Crisis and Its Effects on American Jobs

Floor Speech

Ms. SCHAKOWSKY. Mr. Speaker, I rise today as a member of the Progressive Caucus to draw attention to the devastating effects that could be caused if the United States were to default on its debt. First, let's be clear that raising the debt ceiling will have no effect whatsoever on any new spending that the Congress might do. It's simply giving the government authority to pay its bills, to pay its bills for obligations that the Congress has already authorized.

Second, while Republicans have attempted time and time again to pin the current deficit on President Obama, the facts cannot be denied: It was the policies of the Bush years that got us here. It was just a decade ago that President Clinton left office not with just a balanced budget but a surplus, and the Congressional Budget Office declared in 2001, ``The outlook for the Federal budget over the next decade continues to be bright.'' That quote, of course, came before the 2001 Bush tax cuts were signed into law; two wars that weren't paid for, put on the credit card; two tax cuts that weren't paid for and that mainly benefited the wealthy; and a devastating recession that may have been prevented, had government regulators not turned a blind eye to Wall Street greed. The Bush policies ran up the bills. Those are the bills that our country is committed to pay, and those are the bills that need to be paid if the full faith and credit of the United States is to be protected.

So now this Republican-manufactured crisis could be solved in 5 minutes if we simply passed a clean debt ceiling increase, like we did seven, eight times during the Bush administration, 18 times under Ronald Reagan, and then turned our attention immediately to ways to put our fiscal house in order, focusing on the real crisis, which is the jobs crisis. Instead, Republicans are choosing to hold our Nation's financial standing hostage, with potentially devastating consequences.

Allowing a default on the debt would essentially be a tax on every American family. Interest rates on everything, from mortgages and auto loans to credit cards and small business loans, would immediately soar. A conservative estimate suggests that the effect of an increase in interest rates could cost a homeowner with a 30-year mortgage of $172,000 an additional $19,100 more over the life of the loan. A drop in the stock market would hit the savings and retirement accounts of middle class Americans, less available credit for small businesses and consumers, and lower economic growth that could cost hundreds of thousands of jobs.

In addition, if the country can't pay its bills, an unthinkable scenario becomes a reality, having to choose between what aspects of the government to fund and what bills to pay.

Seventy million checks are due to go out next Wednesday. Those include Social Security and veterans and our military families, and these checks are threatened. That is the threat the Republicans are willing to make, holding the full faith and credit of the United States hostage in order to push for extreme policies that would gut Social Security and Medicare and Medicaid and devastate the economy and the middle class in order to protect hedge fund managers and corporations that ship our jobs overseas. That is what the Republicans are advocating, but they are not willing to ask for one penny more for millionaires and billionaires.

We need to deal with our fiscal challenges, and I have offered proposals for how to do that in a way that protects the social safety net and what is now the disappearing middle class.

First, we need to create jobs. Putting people back to work will raise revenues and bring down the deficit as a proportion of the economy.

Second, we need to eliminate spending we don't need, such as billions of dollars in waste spent by the Pentagon. But we need to protect spending on vital programs like Social Security, Medicare, and Medicaid.

And finally, we need to raise revenues in a fair way.

I've introduced the Fairness in Taxation Act, H.R. 1124, which would create new tax brackets beginning at 45 percent for income over $1 million a year and rising to 49 percent for income at $1 billion a year; and yes, there are Americans who make that. And according to an estimate by Citizens for Tax Justice, my legislation could raise as much as $800 billion over the next 10 years. Those are the types of proposals that should be considered so that we can achieve fiscal responsibility in a way that protects seniors and children and the middle class and all those who aspire to it.

Right now the American Dream itself is at stake. It is slipping through the hands of people that used to be middle class. We cannot tolerate that. We need to raise the debt ceiling.

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