The Debt Limit

Floor Speech

By:  Judy Chu
Date: July 20, 2011
Location: Washington, DC

Ms. CHU. In less than 2 weeks, on August 2, we must raise the debt limit or the American Government will go into financial default. If we don't, it will be a disaster for the economy, and real American families will pay the price.

That's why for almost 95 years we have kept our promises and paid our bills. Congress has voted to avoid economic default nearly 100 times since 1917 because it was the right thing to do. The debt limit was raised 17 times under Ronald Reagan, four times under Bill Clinton and seven times under George W. Bush; but now Republicans are shying away from their duty, spreading misinformation about the serious threat we are facing, saying there will be no impact on the average American and that it will not hurt our economy.

But that's not true. Let me tell you why.

If we default on our bills, the interest on all our loans would skyrocket just as your interest rate would go up if you missed a credit card payment. This means disaster for all American families. The median 30-year home loan would increase by almost $20,000, or 10 percent. This would hurt an already struggling housing market, pushing home sale prices down and potentially leaving more borrowers underwater.

If we default on our bills, the stock market could plunge, and Americans in their fifties would lose almost $9,000 immediately from the typical 401(k). The S&P 500 could lose 6.3 percent in value in just 3 short months. These losses would affect millions of Americans, who would have fewer savings for their retirements, their supposed golden years.

If we default on our bills, prices for gas, electronics, clothes, and other imported goods could dramatically increase. A U.S. default would create economic chaos, forcing the value of our dollar to decrease, making many products we use every day more expensive at a time when our household dollars are already stretched thin.

We cannot let this happen, but Republican leaders in Washington are playing political games with our economic security. With 2 weeks left and the clock ticking, the time for playing childish political games should be over. Republicans should come back to the table and work with Democrats on a compromise that will avert economic catastrophe, and they should work on a compromise that doesn't hurt the most vulnerable amongst us.

Seniors earn an average of only $19,000 a year. Contrast that to millionaires, who, because of the Bush-era votes, are getting almost $140,000 in tax breaks from the government every year. There is no reason that our seniors and the neediest amongst us should struggle to pay their hospital and electric bills just so we can subsidize a millionaire's yacht.

Yet Republicans want to gut the programs that benefit seniors most--Social Security, Medicaid and Medicare--in exchange for their votes on the debt limit. They actually want to hold your senior years hostage just so they can make a political statement on the debt limit. We cannot balance the budget on the backs of seniors.

For those who believe that the potential for default is not real, let me quote a famous President who said 25 years ago: "Congress consistently brings the government on the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veteran benefits. Interest rates would skyrocket; instability would incur in financial markets, and the Federal deficit would soar.'' That President was Ronald Reagan, making his plea to Congress.

Today, the American people are calling again on this body to do what's right.

I know that, if we can move past all the political posturing, we can reach a bipartisan agreement that protects Social Security, Medicaid and Medicare, that reduces the debt, and that saves our economy from the disaster of default. We must do it now.