Default Prevention Act of 2013--Motion to Proceed--Continued

Floor Speech

BREAK IN TRANSCRIPT

Mr. WARNER. Madam President, I first of all want to thank my colleague, the Senator from Vermont, for his comments and his relentless voicing of the concerns of folks who are not often heard in the halls of this institution. I thank him for his work and for letting everyone know who continues to be hurt by this absurd government shutdown.

I really think we are almost in a kind of era of the theater of the absurd at this point. We have a government shutdown for 11-plus days and are 4 days, 5 days from a default. What I keep wondering is--we hear about some of the least fortunate who are being hurt--how much of our economy is being hurt all across the board.

I received a call 2 nights ago from the chairman of a company from Northern Virginia with 5,500 employees. This company has been built by this first generation of Americans. He is extraordinarily proud of what he has done for his company, for his employees. His company serves our government as a so-called government contractor. A lot of these companies are not only in Virginia, in Maryland, but across this region and across this country.

When the shutdown started, 30 percent of his 5,500 employees were told they are not essential. So the company has been trying to make ends meet keeping these folks furloughed but not firing them, trying to pay them a little something during this period. The remarkable thing is that 70 percent of the employees that were deemed essential are not getting paid either--even though the government says they are going to pay them--because the folks who process the checks are furloughed.

Anybody who operates a business on a cashflow basis knows that when the money runs out, even if you have a potential IOU, if you can't go to the bank and borrow money, you shut down. This company, 25 years in the building, this CEO, this chairman, said if this goes on 1 or 2 more weeks, his life's work and--more importantly than his life's work, he said--the 5,500 people who depend upon this company's existence may very well disappear.

That is just part of the government shutdown.

Today we are going to vote on an issue that I never thought in my time in the public sector or the private sector we would be seriously considering; that is, the default of the United States of America. I have spent more time in the private sector than I have in the public sector, but I never thought I would see the headline I saw this week in the Financial Times, an international financial newspaper, where the headline was that Japan and China and Russia Say: America, pay your bills. America, pay your bills. America, the largest economy in the world, the country that, because of our exemplary behavior for decades, has been granted the status of the reserve currency.

What does reserve currency mean? It means that every American business does a little bit better than every other business around the world because the dollar is the currency everybody else goes to when times are tough.

There are countries--not all of them friendly to us--that are saying that maybe the dollar shouldn't be the reserve currency anymore, and if we lose that status, it doesn't come back overnight. It is not where the tea party crowd can say: Maybe we made a mistake; we want to roll that back. Once it is gone, it could take literally decades to get it back.

Since the beginning of the 21st century, there has only been one industrialized country in the world that has defaulted since the year 2000--Argentina. America is not Argentina, but back in December 2001 Argentina defaulted. Prior to that time, Argentina--per capita income--was the richest country in South America, way ahead of Chile, Brazil, and other nations in that region. Once Argentina defaulted, the value of its currency fell by 75 percent, inflation hit over 100 percent a year, and every Argentinean family lost over half of their net worth. Today, 12 years after Argentina defaulted, on an annual average income basis, it falls way below most of the countries of South America.

America is not Argentina. It may not be that catastrophic, but why would anyone take the chance? Why would anyone decide in this unchartered area to potentially threaten default? That is like playing Russian roulette with one bullet and only two chambers. No responsible nation would do that.

We have heard from some on the other side: Here is what we ought to do. Maybe we will kind of default, but we will pay our bonds and we will pay Social Security, pay our military, and then everything else will be put on hold.

That, to me, shows a remarkable, fundamental lack of understanding of how government or economics works. No government has ever tried that. But for the sake of argument, let's suppose that somehow that ``prioritization'' scheme might stave off America defaulting for 1 or 2 weeks.

Here is the other half of the story they don't acknowledge. Even if America pays its debt, on that list of prioritization does not appear Medicaid, education, transportation, law enforcement, and those dollars don't stay spent at the Federal level, they are spent at the State government level and the local government level.

I had the great honor of being Governor of Virginia before I came to the Senate. We worked really hard to keep a triple-A bond rating. The Commonwealth of Virginia, the State of Maryland, Louisiana--every one of these States, at least one-third of their State budgets are dollars that pass from the Federal Government down to the State level. We could see within a week or maybe even less every State government and every local government in America either have a budget crisis or default. What is happening in Detroit could happen across every community in America--not because of mistakes made at the local level or the State level but because of the irresponsibility of a group of folks up here who don't understand the economics that you don't mess with the full faith and credit of America.

What other costs are we playing with? Many of the folks who have been most adamant about keeping the government shut--which, by the way, will cost the taxpayers more and will not save us a dime. Federal employees will be paid, but starting and stopping all these government contracts will hurt the economy, decrease tax revenues, and actually cost taxpayers more.

But what may be even more jeopardizing than those actions with this kind of irresponsible testing of the markets or brinkmanship is that we could see interest rates rise. Every 1 point of increased interest payment on our debt accounts for $110 billion of additional Federal Government payments every year. A 1-percent interest in the debt increase over a 10-year basis is an extra $1 trillion of government spending that has a priority over any other aspect of Federal Government spending. Talk about a tax hike that gets America nothing from a group who says: We don't want to increase taxes at any cost--well, playing with the debt ceiling, 1 percent interest, a $110 billion tax hike on every American family and every American business, and again, you can't say a few days later ``oops'' and the market would then take back down our interest rates.

I know other colleagues are here and want to speak as well. In my business life, in my time as Governor, in my time as Senator, I have never seen an action nearly as irresponsible as the actions taken--and I don't think this is the majority of the colleagues on the other side--by a small cohort of ideologues who are willing to do whatever, including burn down the house, to try to achieve their goals.

We will have a chance here in the Senate in about 20 minutes to decide whether we will take off the threat of America defaulting. The Asian markets open within 40 hours. The world is going to see whether America is going to maintain its position as reserve currency, the world's largest economy, and the most stable financial basis. I hope we will take a step today to at least remove the threat of default, to encourage our friends on the House side to do that as well as reopen this government, and then, yes, let's get our fiscal house in order. But putting America's fiscal reputation and putting companies in jeopardy with the shutdown is not the kind of governance America needs at this point.

I yield the floor.

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