Increasing the Public Debt Limit - Continued

CONGRESSIONAL RECORD
SENATE
Nov. 17, 2004

INCREASING THE PUBLIC DEBT LIMIT-CONTINUED

Mr. LEVIN. Mr. President, I cannot support raising the limit on our national debt to $8.184 trillion without taking other steps to restore fiscal responsibility. The fact that this is the third debt increase in three years highlights the irresponsibility of the fiscal policies of this administration. These policies have taken the nation from two years of record surplus-when we were paying down our debt-to this administration's record deficits and debt. A crippling burden is being passed to our children and grandchildren, and the economic security of our nation is threatened as a result.

The three recent increases in the debt limit reflect an astounding increase of more than $2.2 trillion. And unless we make a significant change in our fiscal policies, the outlook for avoiding future increases doesn't look any brighter. The Congressional Budget Office, CBO, forecasts that our gross Federal debt, which includes debt the Government owes to the public plus funds owed to federal trust funds like Social Security and Medicare, will climb from its 2003 level of $6.8 trillion to $13.3 trillion in 2014. And this shocking estimate doesn't even include the costs of continued military operations in Iraq and Afghanistan that we all know are coming. Nor does it take into account the substantial cost of continuing to provide relief for middle-class families from the alternative minimum tax, which, when applied to them, produces totally unfair results.

The fiscal burden such massive debt puts on us and our children is stupendous. By 2014, each American citizen's share of the debt will be $42,903. Paying off a debt of this size will require either extraordinary tax increases or significant cuts in critical government programs like homeland security and education. Furthermore, we will have to spend an increasing amount of our precious dollars on interest payments. Even under the CBO's conservative estimates, net interest payments on the public debt will rise from $159 billion in 2004 to $348 billion in 2014. Every family who has worked to balance its own budget knows that making interest payments diverts scarce resources from other priorities. Making these interest payments means fewer resources are available for many of our national priorities, including shoring up the Social Security and Medicare trust funds at a time when those programs' costs are about to skyrocket as members of the baby boom generation begin relying on payments from those Funds to support their retirement.

Our rampant borrowing also threatens the economic security of our Nation as we are forced to go deeper into debt to foreign countries. Since January 2001, the share of U.S. Treasury debt held by foreigners has risen to 42 percent from 30 percent, and 90 percent of the new debt has been purchased by foreigners. This large amount of foreign debt leaves our nation vulnerable to the priorities of foreign creditors. For example, if foreign investors ever decide, for economic or political reasons, to stop financing our debt, U.S. and international markets could be thrown into turmoil. This provides other countries with leverage during trade or other negotiations with us.

Our economic security is also threatened by the prospect that a larger debt will lead to higher long-term interest rates. This means it will be more expensive to buy a house, pay for college or pay off credit card debt. This threat is made more serious by the recent increase in indebtedness of American households. Since the beginning of 2001, mortgage debt has increased by 44 percent and now stands at $7 trillion. Home equity loans have jumped by 54 percent and installment debt, including credit card debt, has risen 17 percent. Americans have taken on these new debts largely in an attempt to maintain their living standards in a struggling economy. Since much of this private debt is set at variable rates, any increase in interest rates will have a severe and immediate impact on these families.

So before we raise the debt limit today, we should commit to pursuing more responsible fiscal policies to prevent the need for future increases. We should reinstate pay-as-you-go rules to require that in addition to paying for all spending, we pay for all tax cuts as well. This concept is common sense for most families, who work to live within their means by balancing what goes out with what comes in.

We should also revisit this administration's irresponsible and unfair tax cuts that have driven us so deep into this deficit ditch. It is reckless and irresponsible that the top five percent of households in our country, whose average income is over $250,000 a year, received almost half of these tax cuts. Restoring responsibility and accountability is essential to the economic and fiscal health of our nation. Simply raising the debt limit without taking other steps to restore fiscal responsibility won't lead to that result.