CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2007--Continued
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Mr. KERRY. Mr. President, about 16 months ago, we debated an $800 billion increase in the debt limit. At the time, this was the Bush administration's third request to increase the debt limit for a grand total of $2.2 trillion. During this debate, I discussed how in less than four-years, a 20-year $5.6 trillion budget surplus was turned into a $2.4 trillion deficit. I thought at the time the fiscal outlook could not get much worse and the budget situation would have to improve.
Unfortunately, I was wrong. Since the last debate on increasing the debt ceiling, the administration has not submitted budgets that would put us on a path towards deficit reduction. As part of last year's budget resolution, Congress passed legislation that would reduce spending by almost $40 billion. Many of these cuts will impact those that have the least. Now Congress is in the process of wrapping up a $70 billion tax bill. When you combine the spending and the tax bill, the numbers do not add up to put us on a path towards deficit reduction. The combined total increases the deficit and increases the debt.
The Bush administration's budget for fiscal year 2007 includes more of the same and the fiscal situation even gets worse. The administration estimates that the deficit for 2006 will be $423 billion, the largest in history. The projected surplus of $5.6 trillion that this administration inherited will now turn into a $3.3 trillion deficit, a reversal of $8.9 trillion.
The repeated pattern of deficits and irresponsible budgets necessitate another increase in the debt limit. Today we have before us an increase of $781 billion, which will bring the total to $3 trillion under this administration's watch. If the President's budget is adopted, the debt is expected to reach $8.6 trillion at the end of this year. Under this budget, with alternative minimum tax reform and ongoing war costs added in, the debt will explode to $12 trillion by 2011.
We cannot continue on this unsustainable path. Yesterday, Senator Conrad offered an amendment to the budget resolution to restore the original pay-as-you-go-rule that led us on a path to a balanced budget, projected surpluses, and expectations of paying down the debt. These pay-go rules simply require new mandatory spending and new tax cuts to be offset. The current pay-go rule has a glaring loophole. Tax and spending increases that are provided in the budget resolution are exempted. This rule does not promote fiscal responsibility. A prime example of this is the tax and spending reconciliation instructions included in last year's budget resolution. These bills will increase the deficit by $30 billion.
Repeatedly, efforts to restore pay-go have been defeated and these efforts were defeated once again yesterday. In the context of today's debate, I do not know how anyone could oppose an amendment to restore these rules. Without strong pay-go rules, we will be back here in a year debating another increase in the debt limit.
We have a fundamental obligation to restore fiscal responsibility rather than merely voting to raise the debt limit as if there was an endless credit card at the expense of the American people. Americans struggle every day to balance their own budgets. Across this country, I have heard how families struggle to keep up with the rising costs of health care, tuition, and gasoline. Median household income has declined by $1,669 or 3.6 percent after inflation. Americans are sitting around their kitchen tables trying to figure out how to pay their bills. They do not have a magic credit card with no limit. Congress should play by the same rules.
We need to be responsible and think about future generations. We made tough choices during the 1990s in order to dig ourselves out of a hole, and now we are back in an even deeper hole. We need to face the consequences. The interest payments on the debt alone are staggering and depriving of us choices that we need to make for the long term investment of our country. This debt will affect our children and grandchildren. Each individual's share of the public debt is over $16,000 and a family of four's share is a staggering $64,533.
The interest on the debt for this year alone is over $220 billion and according to the administration's budget it will grow to $322 billion in 2011. Just think of how this money could be put to better use. It could be used to help uninsured Americans with the rising cost of health care. We cannot afford expensive interest payments and ever-increasing debt with the retirement of the baby boomers on the horizon.
Not only is the amount of debt a problem, I am also concerned about the amount of debt that is foreign held, almost $2.2 trillion. Japan holds the most, $685 billion. China holds $258 billion. Even the Caribbean banking centers hold $111 billion. Over 51 percent of the public debt is held by foreign investors.
Sixty percent of the foreign debt is held by official foreign investors. It is dangerous for our Government and our standard of living to be dependent on foreign capital. If foreign investors decided to stop financing our borrowing habits, it could have a spiraling impact on our economy. If those investors began to withdraw their capital, our financial markets would plummet and interest rates would climb. This would filter down to American families. Homes, education, and cars would become more expensive.
Debt is more than a financial liability it--weakens our security, our diplomacy, and our trade policy. The negligence of our borrow and spend policies leaves us vulnerable to the priorities of foreign creditors. How do you go to a country that holds so much of your debt while your economy is closely linked to theirs and make an argument about nuclear proliferation, human rights, democratization, or other issues that are of importance and great consequence to our country?
We need to make economic opportunity and fiscal responsibility a common goal. We need to live by rules that give the debt limit meaning. I will not support a borrow and spend economic policy that has no limits. There are better alternatives.