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Blue Dog Coalition

By:
Date:
Location: Washington, DC


BLUE DOG COALITION

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Mr. COOPER. Thank you. I thank my good friend from Arkansas, and I appreciate your excellent summary of our fiscal situation.

Because Americans lead busy lives, we were happy to get a little bit of good news last week, or what we thought was good news. The President and the administration certainly built it up as if it was good news. I am glad that the deficit is looking a little smaller than the White House had predicted. That is good news, and I appreciate that.

But it is still very important for Americans to put that in perspective. As my friend from Arkansas points out, it is good news, and it is not the largest deficit in American history; it is only the fourth largest deficit in American history. So that is something to be grateful for.

But it reminded me a little bit of telling somebody, hey, the good news is your cancer is in remission. Well, that is good news. It is good news the cancer is in remission, but the bad news is you still have cancer.

What we are concerned about as Blue Dogs is not a temporary deficit. Sometimes the Nation has to run a temporary deficit. What we are concerned about are permanent structural deficits, deficits that grow beyond our possible ability to repay the debt, deficits that strangle economic growth, that prevent us from building a stronger country for our kids and grandkids.

We are worried about deficits that hurt the middle class, because as my friend from Arkansas mentioned, there is a $28,000 per citizen tax on everyone in America, man, woman or child. That is a lot of money to be born owing the country before you even have a chance to grow up or earn a living.

But I know there are some folks out there who are watching us, and they are saying, well, the Blue Dogs, they are only mentioning absolute deficit dollars. They are not putting it in perspective with gross domestic product. I would agree that is a percent of GDP; we should look at it that way too. You can say, well, this is not a percent of GDP, the largest or even the fourth largest deficit in American history.

But I brought along a document tonight that I hope everyone in the country will pay attention to. I first saw it when it was in the Wall Street Journal a few weeks ago. It is a document not from the Republican Party or the Democratic Party or anybody connected with politics. It is a document from one of the Nation's leading business organizations called Standard & Poor's. Now, they are a Wall Street outfit, but they are supposed to be the neutral judges of all the debt from all the corporations, and all the debt from all the countries, and all the debt from all the States and cities and towns in America and around the world, S&P, it is called, Standard & Poor's.

Well, they issued this document on June 6, 2006. To read this document, you wouldn't dream that any President of the United States could have a press conference a few weeks later championing good news. Because what Standard & Poor's says about America is this, it says that we are in such bad fiscal shape, and getting worse every year, that by the year 2012, which isn't that far away, it is just 5 or 6 years away, that America will lose its AAA credit rating for the first time in our modern history.

Now, American Treasury bonds, bills and notes are considered basically the gold standard of all debt instruments on the planet.

If you need to put your money in a safe and secure place and you want it to earn interest, Treasury bonds are safer than putting it in any bank as a deposit or putting it anywhere else, because they are backed by the full faith and credit of the United States Government.

There is no sounder financial instrument than the U.S. Treasury bond, and we should be proud of that.

But what Standard & Poor's is saying, as a result of the deficits my friend from Arkansas is talking about, in just 5 or 6 years, we will lose our AAA credit rating. Now that is not just like getting, say, an A minus instead of an A in class. What it means is higher interest payments.

It means that every time that America borrows money in the future, possibly forever, we will have to pay more for it. Because the good part about being a solid credit risk is that you pay the lowest possible rate of interest. You are able to borrow money cheap. But by losing our AAA credit rating, our interest rates are going up.

There is another bad part to this S&P report. Again, this is not a political report; this is from one of America's leading business organizations. It says that by the year 2020, which isn't that far away either, that our Treasury bonds will basically be junk bonds, or what they call below investment grade.

Now, that is such a far cry from our current AAA rating, the rating that U.S. bonds have had for all of modern American history; it is a literal tragedy to see America go from AAA ratings down to junk bond ratings in just a few short years as a result of the work of one administration, the current administration.

Because even though the current administration will be out of office in 2008, the impact of their fiscal policies stretches for decades beyond their time in office.

That is why this S&P report is so significant. They state carefully that it is not a prediction. They are hoping, and I suppose praying, that America will change course drastically from what we have seen from the current Republican administration.

But they do say that although it is not a prediction, it is a simulation of what will happen if we don't change course.

So it is a lot like that famous old ship, the Titanic. When they saw the iceberg in the distance, did they change course? No, they hit it head on.

Well, America still has a few short months and years to change course before we hit the iceberg that literally destroys America's credit rating and forces us to borrow money at much higher rates of interest, possibly for the rest of American history. That is permanent structural damage to our economy. Permanent structural deficits caused that damage that hurt the outlook for our kids and grandkids.

So I hope that people will go to the Internet, check out the Standard & Poor's Web site, look for this publication dated June 5, 2006, and check it out for yourself. Some of it is written in fairly technical business language. You will see that a number of nations face the problem that we do in America of an aging population. Some nations face it more severely than we do. But we are in such a fundamental imbalance that it is important to note that one of the primary causes for that imbalance is actually the crowning achievement of the Bush administration domestic policy.

They cite specifically the U.S. position has worsened since 2003 because of the new drug benefit added to Medicare, which increases estimated health care costs by nearly 2 percent of GDP annually by 2050 and accounts for one-quarter of the rise in spending on the elderly.

Now, we all want seniors to have medicine. Medicine needs to be affordable. But the Wall Street Journal pointed out in their editorial that in the Bush legislation that Congress passed and was signed into law that only $1 out of $16 by that bill would only actually buy medicine, only $1 out of every 16 would go for its intended purpose.

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Mr. COOPER. Today's news revealed that that bait-and-switch provision that was in the Medicare drug bill would add $2 billion in additional profits to our drug companies this year.

Two billion, billion with a B as in boy, and that is all as a result of this sleight of hand that was engineered in part by the committee chairman who left public service to go almost immediately to represent special interests, and not just any special interests but the very drug manufacturers for whom he had just passed legislation.

Think of $2 billion extra profits in one year as a result of this technical switch with a lot of seniors from Medicaid to Medicare, from a program that could negotiate for lower prices to a program that cannot, by law, negotiate for better prices. It is outrageous, and some of the money in that horribly expensive bill has gone not to help seniors get more affordable medicine but to line the pockets of major drug companies.

We are all thankful for the life-saving discoveries they make. We are thankful for the research and development, but I am less thankful for the advertisement and TV ads where things like that are not helping create new medicines. They are more trying to make money off people's illnesses, and there has got be a better way.

We live in the greatest country on Earth in the history of the world, and there has got to be a better way to do is this so we can live within our means, so we can treat everybody fairly, so we can build a stronger middle class, so we can be strong so we can be the world's only superpower. We are not living up to that potential today.

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Mr. COOPER. Mr. Speaker, we are, like all Americans, acutely aware of the terrible tragedy that happened on September 11, 2001. That changed the world, but we should not make the mistake of thinking that it gave us all these deficits because that claim, that belief would not be true. It hurt our economy temporarily, but we were already pulling out of a shallow recession, and we have not been in a recession since. So you cannot blame our overall economic condition for that.

What it is the result of, and again, do not take our word for it, read the reports from the Heritage Foundation, a conservative foundation think tank here in Washington; read the reports of the CATO Institute, a libertarian organization, and they will tell you, they will demonstrate to you that the Bush administration is the biggest-spending administration since at least Lyndon Baines Johnson and probably even way before LBJ.

It has nothing to do with defense or homeland security, budget needs that are really set more by our enemies than by ourselves. It has everything to do with a wasteful and mismanaged and sometimes incompetent government like we saw in Hurricane Katrina relief.

That is a waste of taxpayer money. That is a shame for everyone because no one wants to pay more taxes. We are not for more taxes. We want every tax dollar to be spent wisely so the taxpayers think their government is on their side instead of working against them, but we really have not been seeing that and especially with these deficits.

Adding these taxes to our kids and grandkids, a tax that can never be repealed, a debt tax as the gentleman so ably described it a while ago, is limiting our growth in future years. It is crippling America's future potential. As I showed with this S&P report, it is destroying America's credit rating, and yet the administration holds triumphant press conferences as if they are announcing good news.

A lot of folks think maybe we have been cured, but the cancer is still there, and we have got to get at that cancer.

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http://thomas.loc.gov

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