The Debt Ceiling

Floor Speech

Mr. DURBIN. Mr. President, this is a historic weekend in Washington, and I think those who are visiting the Capitol and following the proceedings understand the gravity of the decisions that lie before us.

On August 2, our debt ceiling expires. That has never happened in our history. One time there was a technical period of 1 or 2 days, but there has never been a long period of time when the United States of America basically defaulted on its debt. And it is a very serious matter. It is one that affects our Nation, our debt, and literally every family and business that lives within our boundaries.

Here is the reason why it is so important. In 1939, we created this law which said that a President could come to Congress periodically and ask for the authority to borrow money to pay for the things Congress has already appropriated. So, as an example, when Members of the House and Senate say to the President of the United States: We want you to continue to wage war in Afghanistan, at the cost of $10 billion a month, this President knows he will have to borrow about $4 billion a month to meet that congressional appropriation. You see, we borrow about 40 cents for every dollar we spend.

Similarly, when it comes to the payments we make to our veterans who are disabled, we have promised them: We will pay you because you served our country and you lost a limb or you were injured, and we will compensate you for that loss for the rest of your life. We understand in making that commitment we are also making a commitment to borrow the money necessary to do it.

So periodically a President will come to Congress and say: I understand our obligations which you have sent to me and I have approved, and now I ask you to extend my authority to borrow the money to meet those obligations. That has happened 89 times since 1939. Since we passed this law, Presidents of both parties have come to Congress and asked for that authority. As I mentioned, not one time did Congress say no except that one technical period in I believe 1979--89 times, 55 times by Republican Presidents and 34 times by Democratic Presidents.

When you look at the Presidents who have requested extensions of the debt ceiling I have just described, the President who holds the record for the most requests is President Ronald Reagan, who, in an 8-year period of time, asked to have the debt ceiling of the United States extended 18 times, more than twice a year. During the Ronald Reagan Presidency, the debt of the United States tripled. That is why he came to Congress so often.

The President who ranks second in terms of increasing our national debt during his 8 years is President George W. Bush. The debt of America virtually doubled during his Presidency because we waged two wars we didn't pay for; we did something we had never done in our history: cut taxes particularly for the rich in the midst of a war; and we had many programs unpaid for.

So President after President has used this statutory authority to come to Congress and ask for approval to extend the debt ceiling. President Obama has done the same. As of August 2, his authority to ask to borrow money will expire. That is a serious moment if we default on the debt. It will be the first time it has happened in our history.

What will it mean to the United States of America to default on our debt and fail to extend the debt ceiling? Well, imagine if you decided as a homeowner to stop making your mortgage payments. Within a period of time, you would receive a phone call from your creditor saying: Did you forget your check this month? And if you say: No, I am just not going to pay it, you understand the consequences--your credit status is going to be affected.

The credit status of the United States is the best in the world. We have a AAA bond rating--the highest of any nation--and because we have that high bond rating, we have the lowest interest rates that we pay to borrow money.

Well, go back to the homeowner. If you have just defaulted on your mortgage, your credit report is going to look pretty bad. The likelihood that you could turn around and borrow money the next month is in doubt, and if someone will loan you money at that point, it will be at the highest interest rate because you are a risk now; you failed to make your mortgage payment. Similarly, if the United States fails to extend the debt ceiling, our credit rating will go down from AAA, the interest rate charged the U.S. Government will increase, and what has been considered the rock-solid, best economy in the world will be jeopardized by this action.

What does it mean for the interest rate on the debt of the United States to go up? This calculation has been made by many, and I believe it is accurate. For every 1 percent increase in the interest rate the United States pays on its debt, we will add $130 billion a year to our debt--$1.3 trillion, roughly, over a 10-year period of time. So the failure to extend the debt ceiling, the default of the United States, and higher interest rates will make our debt worse. That is why what we are facing this week in Washington is so terrible, because what we are dealing with here is a politically manufactured crisis. We are dealing with a self-inflicted wound.

Because the House Republicans under Speaker Boehner refuse to extend the President's request for the debt ceiling when our current authority expires August 2, we could find ourselves paying higher interest rates and even deeper in debt. And it gets worse because when the interest rates paid by the U.S. Government go up, interest rates across our economy go up. What it means is that a lot of innocent people who are borrowing money to buy a car or a home or to pay for college loans or to pay off their credit card are going to pay more. It is like imposing a tax on every family and business in America at the worst possible time. We are recovering from a recession. Too many people are out of work. Businesses need to expand and borrow money. Raising interest rates stops that. This doesn't have to happen. This self-inflicted wound by the House Republicans and Speaker Boehner does not have to happen.

In fairness to Speaker Boehner, his goal is to reduce America's debt. I accept that challenge. In fact, for the last year and a half, I have engaged personally on a bipartisan basis to meet that challenge, first as a member of President Obama's deficit commission, the Bowles-Simpson fiscal commission. We sat for months and listened to testimony, and finally 11 out of 18 of us voted for the report issued. What it came up with was a 10-year plan to reduce our debt by $4 trillion--not easy. It sounds as though it would be easy when you look at all the money we spend, but when you get into the specifics, it is politically painful. But what we agreed to do was to put everything on the table. And I want to tell you, I did that with some reservation.

I am concerned about many things in our country but two things in particular. I am concerned about the most vulnerable people in America, those who are aged, poor, and sick. I want to make certain that at the end of the day, America still has a safety net, that this good and caring Nation is doing everything it can to help these people.

What programs do they rely on? Well, they rely on the earned-income tax credit under our Tax Code, the childcare tax credit, Medicaid, the health insurance that covers one-third of the children in America and many elderly people in nursing homes. So when we talk about cuts in these programs, I was very sensitive to them and determined to make sure we didn't cut any more than necessary to reach our goal.

We also put revenue on the table. We have to do that. How can we ask working families in America to pay more on their children's college student loans and be prepared to sacrifice and how can we ask the seniors in America to be willing to sacrifice when it comes to their Medicare Program and not turn to the wealthiest people in our country and ask them to join in this sacrifice? That has become the major stumbling block in this negotiation. You see, Republican Speaker Boehner has said: I will not accept any--underline the word ``any''--tax increases on the wealthiest people in America. I will agree, he said, to cut everything else, every other benefit for every other person, but not one penny more in taxes from the wealthiest people in America. That doesn't strike me as fair or just or reasonable, but that is where we are.

We also put spending cuts in this program, substantial spending cuts so that every single program in America would be closely inspected, reduced in spending, and move us toward a deficit-reduction goal.

Then I went a step further. I joined with five of my colleagues--three Republicans and three of us on the Democratic side--and we sat down for 6 months and worked on something called the Gang of 6 and came up with a specific plan of how to do this.

Well, Mr. President, you know we had a meeting a couple weeks ago, and we invited most of the Members of the Senate to come and listen to what we had proposed. Forty-nine Senators showed up, Democrats and Republicans, in a room not far from here and listened as we laid out what we considered a bipartisan plan to deal with the deficit. We then went back to those Senators and said: How many of you will put your name on the line to join us in a bipartisan effort to reduce the deficit? And we are now up to 36 Senators who have done that. Over one-third of the Senators have signed on to a bipartisan effort to reduce the deficit.

What a sharp contrast that is from what is going on in the House of Representatives, where right now the Speaker of the House, the Republican Speaker, is negotiating only with Republican Members to pass a plan. I don't think that is what the American people sent us here to do. I don't think they said to Democrats, come to Washington but don't speak to Republicans, or to Republicans, come to Washington but don't speak to Democrats. The bottom line is that, Democrats and Republicans notwithstanding, we are all Americans, and we all have a responsibility.

So here we are today at this impasse, and Speaker Boehner announced Monday night, when he had a press conference at the same time as the President's announcement to the Nation, that he had a plan--he called it a bipartisan plan--that he would pass in the House of Representatives. We expected that to happen Tuesday, and it didn't; and then Wednesday, and it didn't; and then yesterday, and he failed to pass it then, too. We waited all night until 11:00--when we finally adjourned--for the Speaker to pass what he considered to be a good plan and for us to react to it. Now we hear the Speaker may be able to get to it later in the afternoon or in the early evening hours. Mr. President, this is unacceptable.

The ACTING PRESIDENT pro tempore. The Senator has used 10 minutes.

Mr. DURBIN. I ask unanimous consent for 5 additional minutes.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. DURBIN. Mr. President, that is unacceptable. By my calculation, we have 4 days before we default on our debt, 4 days before the American economy suffers this mortal blow, 4 days before we default on America's full faith and credit for the first time in our history, 4 days while businesses across America are withholding agreements and negotiations that create jobs, 4 days where America people have to worry that if we default on our debt, the government will have to pick and choose those who will receive government checks in August.

The Senator from Pennsylvania came to the floor for the last 2 days and said: Oh, if we default on the debt, we can manage that. Really? If we default on the debt, we will have $172 billion to spend and $306 billion in obligations.

He said: Well, of course we have to pay interest on the other debts. We don't want to default on everything. OK.

He said: Of course we have to pay everybody under Social Security. Yes.

He said: Of course we have to pay our soldiers who are in combat. Agreed. All good ideas.

Then he said: And then we will work the others out.

Whom did he leave off the list? He left every Federal employee off the list. That would be all of the people working at the Central Intelligence Agency monitoring terrorists to stop them from attacking the United States. That would be the air traffic controllers in our airline system across America. That would be the Federal prison guards working the Federal correctional facilities. That would be all of our veterans receiving disability checks.

Easily managed? Not so fast. It wouldn't be easily managed. There would be losers in that process, and many of them are innocent people who would be lost to the frustration of this political process.

There is a way through this, but the only way through it is if Members of both parties come together and do it quickly. I don't think it is going to happen in the House. The House has decided they are going to do an all-Republican, all-day approach. That isn't going to solve the problem in the House or the problem on Capitol Hill.

This morning, the majority leader, Harry Reid, standing at this desk, turned to Senator McConnell from Kentucky, the Republican leader, and said: Now it is our turn. Now we have to step up. Now we have to come up with a bipartisan approach and show leadership.

Senator Reid is right. Senator McConnell has demonstrated in the past that he has been willing to do that and now more than ever he should. I think the 36 Senators who have stepped up, joined me and others in saying we can find a bipartisan way to deal with this must be heard. Our voices must be heard but, more importantly, the spirit of compromise must be heard. That is what the American people expect of us. They didn't send each of us here to win every battle under our own terms and not give. They sent us here to govern and to respect this great country.

I would sincerely hope we will approach the next 72 hours with the spirit of humility--humility to understand that so many innocent people across America, families and businesses, are waiting on us and counting on us. We cannot fail them. No one will care at the end of the day who has the great political headline, but we will all be judged--Democrats and Republicans, House and Senate--as to whether we met our constitutional obligation to this Nation and the people who live here.

I yield the floor.

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