Debt Ceiling Increase

Floor Speech

Ms. WATERS. Mr. Speaker, I rise today to discuss the irresponsibility of the Republican Party in holding hostage the full faith and credit of the United States.

As hundreds of thousands of Federal workers go without pay, as home buying slows to an eventual halt, and as Federal agencies remain unable to complete the important work of implementing the Wall Street Reform Act, Republicans are threatening another crisis that could have significant impacts on our financial markets and the economic security of all Americans. They do this in pursuit of an ideological agenda. The result is continued instability and uncertainty for our economy and fragile recovery.

We should not default on our obligations. The ramifications of doing so would be serious. The underpinnings of the entire financial system could be affected, with the possibility of triggering a financial crisis reminiscent of the days following the failure of Lehman Brothers--only this time, it would be far worse.

If the U.S. defaults on its debt, lending--the lifeblood of our economy--would dry up. The dollar's value could drop, and we could see dramatic increases in interest rates on everything from mortgages and auto loans to credit cards. Not only that, but every U.S. corporation and municipality would likely see their borrowing costs climb as well. Unemployment rates would rise precipitously just as we're beginning to recover.

If Congress cannot do its job in a timely manner, in the future, the government's ability to pay its debts will be looked upon with uncertainty by investors and markets, leading to higher borrowing costs in the future and, in turn, an increase in our Nation's deficit. Worst of all, we could see another dramatic loss of wealth for working Americans.

History tells us that even the threat of default can send shock waves through our financial system. In 2011, just the prospect of defaulting on our debt caused a drop in consumer and business confidence, a 17 percent decline in the S&P 500 index of equity prices, and increased volatility in the stock market; and, of course, we received a downgrade in the U.S. Government debt.

The drop in equity caused by the 2011 debt ceiling fight had serious consequences for American families. The months following saw a $2.4 trillion decline in household wealth and an $800 billion drop in retirement assets. The cost of homeownership also increased, as risk-averse lenders increased the cost of borrowing to purchase a home. The 2011 debate showed us the very serious consequences of even debating whether we should pay bills already incurred.

But no one knows with certainty the full extent of the damage to the economy should the U.S. actually default on its debts. We have heard speculation ranging from bad to the catastrophic. I, for one, do not want to find out.

What I do know is that everyone from Wall Street CEOs, the U.S. Chamber of Commerce, to small business owners, and prominent conservative economists are concerned with the significant damage that could result from a debt ceiling standoff. Warren Buffett, Ben Bernanke, Hank Paulson, and the heads of the Nation's largest financial institutions have been outspoken about the need to end this hostage crisis now.

Mr. Speaker, the American people have been through enough. We remain in the midst of a government shutdown with no end in sight. It is hurting real people and damaging our economic recovery. At this tenuous time, defaulting on our Nation's debt could create the perfect storm that may roil financial markets and undermine the credibility of the United States; but, most importantly, it could be devastating for American families who are already suffering in the aftermath of a major recession, foreclosure crisis, and now a government shutdown.

So I urge my colleagues to stop using the debt ceiling to push extremist ideology and vote now on a clean debt limit increase.

The gentlewoman from Tennessee said she doesn't know what we mean when we talk about a ``clean debt limit increase.'' I think she knows. She knows that they should not try to do away with the ACA--that is, the Affordable Care Act, known as ObamaCare--and hold us hostage because they don't like it.

The ObamaCare legislation was passed. It is in law. President Obama was absolutely supported by the citizens of this country when they voted the President to be reelected once again. The Supreme Court supported it. If they wish to do away with ObamaCare, they should go through the legislative process and repeal it; but no, they are holding us hostage on the budget.

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