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Public Statements

National Debt

Floor Speech

Location: Washington, DC


Mr. CORKER. Mr. President, I wish to talk about our Nation's indebtedness. I know very few people watch these presentations. But to my friends on the other side, before they turn their monitors off, this is not a partisan presentation. Hopefully, it is a presentation to cause us, together, to look at our Nation's indebtedness from a different viewpoint and, hopefully, when we get to real business in January, we will focus on this in a way that brings us together and does not separate us.

I wish to start by looking at where our country is today as it relates to debt to our gross domestic product. Most countries in the world look at the amount of debt they have as a country in relation to the gross domestic product the country has. That is the sum of all the output.

For a lot of businesspeople who may be tuned in today, it is not unlike a company that looks at its revenues and compares the amount of debt the company has to those revenues or gross profits. So, today, our country's debt-to-GDP is at 62 percent debt to gross domestic product.

I think most of us understand the problem we have as a country today is that we are very rapidly moving to 146 percent of debt to GDP within the next 20 years. I would like to point out the reason this dot is here. That is where Greece was when the European Union had to come in and bail it out. It was at 120 percent of GDP. I do not wish to compare our country to Greece. Greece is very different. I was just there visiting with the Prime Minister, their Finance Minister, and several bankers. There is much about their economy that is very different than ours.

But I do think it is important to look at the fact that they were at 120 percent of debt to GDP when they had to be bailed out by European Union members. We are quickly moving beyond that over the next 20 years.

This is a slide I hope everybody who may be tuned in will focus on and remember. There are three important components. It begins by looking at the revenues, which is the blue line. The spending is the red line. There are three elements of this that I would like for people to focus on, if they would.

For those people who think Republicans and Democrats cannot work together, I do wish to point out a period of time when we had a Democratic President and a Republican Congress, and the line actually passed. We had revenues that were higher than our expenditures. I do want to say that the fiscal issues during that time were far different than the ones we have today.

Where we are today, in 2010, is far different. We have a huge gap between spending and revenues. People might say: Well, during a recession, maybe there are some extraordinary things that may occur. Maybe the spending rises tremendously, maybe revenues drop. Here is the problem. Here is the part of the slide I hope almost everybody will focus on into the future; that is, that gap never goes away.

Where we are today is at 1.47 more in spending than we have in revenue. The problem is, where we are as a country is that this gap never goes away. In 2020, we still are spending $1.25 trillion more than we are taking in.

In Tennessee, the average household, in most recent data, earned about $43,000 a year. If they used the kind of logic we are using today in Washington, the average Tennessee household would spend $74,000. In other words, the average Tennessee household would borrow 40 cents for every $1 they spend. Fortunately, that is not what is happening in Tennessee, or at least not with most families.

I think when you look at a problem, you need to sort of look at trends that have taken place. If you look back at 1970, 62 percent of what we spent as a country was on what is called discretionary spending, things such as defense, highways, and education. Only 31 percent of what we spent at that time was on mandatory spending, things such as Medicare, Social Security, Medicaid and only 7 percent on interest.

But if we fast forward to today, obviously that pie chart has changed dramatically. Today, we are spending, in 2010, 56 percent of what we take in on Medicare, Medicaid, and Social Security. Only 38 percent is going to discretionary spending: defense, highways, and education and, again, 6 percent in interest payments.

However, if you fast forward on the present trend, you see mandatory spending actually becomes crowded out.

It is 49 percent of what we expend in 2035. By that time, because of the large amount of borrowing that is taking place, 25 percent of what our budget will be made up of is interest payments, something that has absolutely nothing to do with making our country stronger. As you can see, only 26 percent of our spending would then be on things such as defense, highways, education, things entitled ``discretionary spending.''

This year we spent $187 billion on interest payments, which greatly dwarfs what we spent in the area of transportation, $69 billion; homeland security, $49 billion; Department of Education, $45 billion. The problem is, if you fast forward to 10 years, this is a timeframe that is not way out into the future. This is something most Americans can focus on; that is, a decade from now. In 10 years, $916 billion will be going out of the Federal coffers to pay interest; again, hugely dwarfing the expenditures on transportation, on homeland security, and education.

I used to borrow a lot of money in my business. I built and owned buildings around our country. It was always important to know whom I was borrowing money from and to have a proper relationship with them. It is also interesting to look at our country and where we are borrowing the money we are spending. If you go back and look at 1960, Americans loaned the American Government money.

Our parents--maybe some of you in the audience--loaned the money to the Federal Government by buying Treasury bonds. As a matter of fact, back in 1960, only 5 percent of the money we borrowed in this country came from foreign holders. But if you look at today, the picture is very different. As a matter of fact, today, 47 percent of the public debt we borrow is held by foreign holders.

Look, I understand about international trade and global transactions and certainly support that. I have been a part of that in the past. The reason I point this out is that, again, a big part of what we are borrowing is from others. China holds almost 10 percent of our debt.

I think most of you saw recently where they slightly depressed the amount of holdings they had in the United States, dropping it from about $870 billion to $844.

I do wish to point out something that former Treasury Secretary Paulson talked about in a book he recently wrote about the crisis. I used to talk with him sometimes on the weekends. Obviously, he was working 7 days a week, as do I and most of us in this body. I talked to him for a great deal of time.

I remember him telling me during the time of the crisis that he was concerned about China. He was concerned about China. In the book, he talks about feeling that there was a scheme that Russia was trying to get China to engage in, to get them to stop buying our securities, during the period of time that we were most destabilized, in order to put greater pressure on our country during a time of great turmoil.

Obviously, that did not happen. But all of us say, I think it is important, when you are moving into a range of having more indebtedness than you can handle, it is very important to know and understand you are borrowing money from people who may not have the same interests that we as a country have.

This is something you do not see often in this body, but I hope everybody will focus on this slide. The fact is, there is plenty of blame to go around. We do a great job in this body, especially a few weeks before an election, of pointing fingers at each other, talking about whose fault it is that our country is in the situation it is in. But as it relates to our country's indebtedness, I can assure you there is plenty of blame to go around.

What I learned in my business, where I spent most of my life, whenever we had an ox in the ditch, it did not do a lot of good to try to point fingers at how we got there. It was better to try to focus on how we solve that problem. I certainly knew that as mayor of the city of Chattanooga.

I can tell you, in this body, as soon as we begin devolving into pointing fingers, we quickly move away from solving some of the major problems we have as a country.

I think as we look at trying to deal with this issue, it is good to look at the way things have been. Over the last 50 years, our government has spent about 20.3 percent of our GDP. Over that same period, the revenues into the Federal Government have been about 18 percent. There are economists on both sides of the aisle who say as long as the economy is growing, we can continue that in perpetuity. Coming from the background I come from, this is not a comfortable situation. I would rather see us take in the same amount of money we expend, but certainly there are academicians and economists on both sides who have different points of view.

What is the right amount of spending? I think everybody is aware that President Obama has put together a deficit reduction commission. It is chaired by two individuals. One of those is Erskine Bowles, chief of staff to Bill Clinton. He is a Democrat. He ran for the Senate from North Carolina. I talk to him extensively on the phone. He certainly has a lot of sound ideas. The other is Alan Simpson, former Senator from Wyoming. They are chairing a deficit reduction commission the President has put together.

A great breakthrough occurred recently when Erskine Bowles said he believes the Federal Government ought to spend about 21 percent of our country's GDP. Our average over the last 50 years has been 20.3 percent. Our revenues over the same period have been 18 percent.

Bob Corker, because he is more conservative on that front, or would like to see balance--a balance a lot of people on both sides would like to see--my number might be 18 percent. Erskine Bowles has thrown out the number of 21. But to me, somewhere between 18 and 21, there is a deal. I want to say to everybody that I am open to negotiation. I would love for us to agree as a country as to what percentage of our gross domestic product we all agree is the right number for us in Washington to be spending. If we can focus on this first, page 1, we can move away from many of the issues that separate us.

This is something on which I hope everybody who may be tuned in will focus. The fact is, I don't think we have thought about this deficit issue as something that is anything more than academic. We have thought about it as something that will affect a Congress down the road, maybe our neighbor, but not us. In order to get to Bob Corker's number over the next decade, which is a period on which most of us can focus, we would have to cut spending by $6.7 trillion. That is a lot of money. To get to the number Erskine Bowles has thrown out--for which I am open to negotiation--over the next decade we would have to cut $3.4 trillion in spending. To get where we have been over the last 50 years over the next decade, we would have to cut $4.5 trillion in spending.

The reason I point this out is, this is a huge number. Even by Federal Government standards, these numbers are draconian.

I realize this is something that is probably not attainable. To get $6.7 trillion in cuts we would have to cut $670 billion a year over the next 10 years. To put that in perspective so people can digest it, this is more money than we spend each year on Medicare. This is more money than we spend each year on defense with two wars. The type of cuts it would take to get to where we have been as a country for the last 50 years, those cuts are draconian. I don't think we as a Congress have quite come to terms with that.

What we need to do is fundamentally change the way we do business in Washington. I don't care what side of the aisle one may sit on or what gimmicks each side of the aisle may put forth to look at trying to constrain spending. All of us know we have absolutely no construct to contain spending. We are operating this year without a budget. We have had problems with spending for decades. There is nothing here that causes us to focus on it in the right way. Again, both sides have had great problems in this regard.

What we need to do as a body, as a Senate, is to create a construct that forces us to cap spending and incentivize growth. I plan on offering legislation later this year. I realize this is a political season and nothing serious will be taken up. What I want to do as a body is to focus on the amount of spending we deal with in Washington as a percentage of our gross domestic product, as I have been discussing, and to develop a construct that causes us over time to move to that cap. I realize we will not be able to do it overnight, but it seems to me if we can adopt that kind of thinking where we look at governmental spending as a percentage of GDP--Erskine Bowles, who is working right now as head of the deficit reduction commission, has made a major contribution by throwing out a number, and I am open for negotiation--to me, if we can focus on that kind of construct, then it is in everybody's interest to hope the gross domestic product grows.

As the gross domestic product grows, as our economy grows, and the types of issues we face as they relate to cutting spending are less difficult to deal with, we would be unified toward getting to a point that is appropriate as it relates to spending so our indebtedness does not put us in the same kind of situation in which Greece found itself. But at the same time, after we have done that, then we could agree on policies that actually incentivize growth because as the economy grows, it is easier to deal with this issue.

I will come to my conclusion. The fact is, this is becoming a cliche. I realize it is said over and over again, but we are, in fact, the first generation of Americans in a situation where we likely, if we don't change our course of action, will leave the country in lesser good shape than we found it. As a matter of fact, we will leave the country in worse shape.

The ACTING PRESIDENT pro tempore. The Senator has 2 minutes remaining.

Mr. CORKER. I appreciate the cue.

The fact is, I don't think there is anybody in this body who would consciously wake up and spend every day of their life taking lavish vacations, going to nice hotels, eating out at night, running that up on a credit card, and then leaving that for their heirs to pay. There is nobody in this body who would consider doing that. But that is exactly what we are doing right now in Washington because of the way we are handling our fiscal affairs. We are running up a tab that our grandchildren, some of the children in this audience who have come in as students, will be left to pay.

I believe in American exceptionalism. I think we are, in fact, the greatest country that ever existed and ever will. I think the role we play in this world creates all kinds of gains as it relates to citizens' ways of life throughout the world. I would hate to see us as a country end up so diminished not only because of the tremendous impact it would have on our citizens--we have seen what has happened with this financial crisis and the distortions it has created throughout the economy, the hardships it has created for so many Americans--but I would hate for us to be so diminished because of our indebtedness, so diminished so that we had to talk to lenders about those austerity measures we had to take as a country for them to continue to loan us money, for us to be so diminished that we did not continue to play the exceptional role we play in the world, the exceptional role we play in continuing to raise up Americans' dreams and wishes and continue to allow them to actually pursue.

I plan on offering legislation. I have a nine-page bill. I know there are no bills around here that get seriously considered that are nine pages. Others, I know, will weigh in. But I sure hope to work with people on both sides of the aisle. I plan on offering legislation later this year or the first of the next Congress. I hope we as a Congress will deal with this issue in an appropriate way. I am looking to work with people on both sides of the aisle.

I yield the floor.


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