CBO Report

Mr. CONRAD. Madam President, first of all, I wish to thank Senator Whitehouse for his contributions to this Chamber. He has been an outstanding Member. He serves on the Budget Committee with me. He has developed a special expertise on health care which is so badly needed.

I wish to comment very briefly on the CBO report we received today in the Budget Committee hearing on the fiscal outlook. It is truly jaw-dropping. There is a $1.2 trillion deficit for this year, before any economic recovery package is passed. Add to the debt even higher: $1.6 trillion will be added to the debt of the country, and, again, that is before any cost of an economic recovery plan.

If one factors in an economic recovery plan, we could be looking at an increase in the debt of $2 trillion this year alone. To put that in context, we have a gross debt of the United States of $10.6 trillion roughly today.

So I think it is imperative that while we put together an economic recovery plan, which we must, we also are cognizant of the very serious long-term fiscal condition we face as a nation.

There is a front-page story in the New York Times today indicating that the Chinese, the biggest financers of our debt, have a reduced appetite for
American dollar-denominated debt because they have their own economic issues, their own need for the use of capital at home. This could have enormous consequences for us going forward in terms of interest rates and what it will take to attract foreign capital to float this economic boat.

One final point. Last year, of the new debt financing for this country, 68 percent of it came from abroad. Madam President, 68 percent of our new debt financing came from abroad. The fact that the Chinese, who have been the most significant contributors to financing that debt, are expressing a reluctance to take on more of our debt, do more of our debt financing, should send a warning signal to all of us as we fashion long-term fiscal and economic policy.

I yield the floor.

The PRESIDING OFFICER. The Senator from Rhode Island.

Mr. WHITEHOUSE. Madam President, I wish to ask, through the Chair, a question of the distinguished chairman of the Budget Committee with respect to the $10 trillion debt the country is now carrying.

At the time the current administration that is leaving office came into office 8 years ago, my understanding is the situation in America was rather different. It is my understanding that at that time we were actually looking at surpluses in our country, and the $10 trillion deficit is largely the responsibility of the policies that have been followed over the past 8 years.

Mr. CONRAD. The Senator is exactly right. The debt of the country at the beginning of the last administration was about $5 trillion. They have approximately doubled the debt of the country on their watch, dramatically more than doubled foreign holdings of U.S. debt. So the current administration, the outgoing administration, has left the incoming administration in a very deep hole, not to mention the economic difficulties and the extreme need for an economic recovery plan to give lift to this economy.

Mr. WHITEHOUSE. So through the good times, we could have been laying money aside so that when this situation came, we would be in a strong economic condition. Instead, by squandering all those years, we have put the incoming administration in a very challenging position.

Mr. CONRAD. Yes, not only the incoming administration, the whole country because our ability to cope with an economic downturn, the flexibility is substantially limited by what has already been done to dramatically increase the debt, as the Senator described, in good economic times. Unfortunately, that is the reality we now confront.

Today's news by the Congressional Budget Office of not only the $1.2 trillion deficit this year but massive deficits as far as the eye can see should sober us all.

Mr. WHITEHOUSE. I thank the very distinguished chairman of the Budget Committee for being willing to engage in this colloquy with me.

Mr. CONRAD. I thank the Senator from Rhode Island and look forward to working with him on the Budget Committee as we attempt to come up with a plan to deal with these multiple challenges.

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