Default Prevention Act of 2013
Floor Speech
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Mrs. SHAHEEN. Mr. President, I am pleased to join my colleague from Hawaii Senator Schatz and share his points. I think most of the American people share his perspective this is an awful mess and it is way past time that we fix it.
I am hearing from people in New Hampshire every day who are affected by the negative consequences of this shutdown. I heard from some employees at the Berlin prison. This is a medium-security facility in the northern part of New Hampshire. It has not even been fully staffed. It does not have all of the inmates there. Several of the employees have emailed me talking about what their situation is.
One woman says:
We are expected to work and not get paid for the time being. But it's going to be tough when both working members of the household are government employees who aren't getting paid. I am expected to make my Federal student loan payments on time as well as my private student loans. How is one supposed to do that when the government is not paying them? They expect payment. Well, so do we.
I also heard from a gentleman whose family is back in New York because he is still getting settled in Berlin. He has a child who is ill. He says he was told last week that any sick or annual leave could be used, but it would be considered as a nonpaid day during this shutdown. He says:
I have been dealing for the past 3 months with my youngest child who's been having kidney problems and had surgery recently. My wife has been having kidney difficulty and had surgery. So now I cannot respond to my family's aid because I would be concerned about whether or not I am going to be able to get paid for these sick days. We are hearing from people across New Hampshire. Hundreds of Federal workers have been furloughed in the State. New Small Business Administration loans have been stopped. Federal Housing Administration and VA loans have been slowed. Facilities in the White Mountain National Forest have been closed.
This is the peak weekend for foliage in the White Mountains of New Hampshire. Yet because of the shutdown, facilities, bathrooms in the White Mountain National Forest are closed, campgrounds are closed, the small businesses that depend on those for the rest of their season are taking a huge hit. So many of the manufacturing businesses in New Hampshire are being affected.
I heard from a company called Nanocomp, which is a real innovative, small New Hampshire company producing next-generation carbon nanotube technology. They have a number of Federal contracts. They have already been hit by sequestration. So this is a double whammy. Their CEO said to me:
We would burn through our very thin cash reserves as a result of this shutdown, and when that money is burned, it is not able to be replaced. So our basic financial viability can be irrevocably damaged, even after the crisis passes.
For this company, the consequences of this shutdown could be irreversible. I heard from another small business owner with a company called GlobaFone. He called because he is so frustrated because again his government contracts are not being paid. He does not know what that is going to mean. Their cashflow is uncertain. He is not sure if his line of credit with the bank is going to continue.
There are very real consequences from this government shutdown.
Then of course, on SBA loans, according to the Granite State Development Corporation, which is one of the largest SBA lenders in New Hampshire, about 20 loans have been put on hold with the Granite State Development Corporation because of this shutdown.
Then, we have heard from some of our community banks that provide for SBA loans that those loans are being held up. There is no doubt this is having a huge impact in New Hampshire on families, on small businesses. But it is having an impact across this country.
That is affecting activity. As the Presiding Officer said so well in his comments, this is having a huge impact on how the economy of this country is doing. As we think about the concerns we have heard expressed about the debt and the deficit, one of the improvements to reducing the deficit and the debt as this economy recovers is the recovery itself. It has improved economic activity. It is making sure businesses can do better. They can hire more workers, people get back to work, and they can pay their taxes.
Yet that very economic recovery is what is being threatened right now by this shutdown. We know that as bad as this shutdown is--and we are in the 13th day--that 4 days from now we have an even more disastrous potential impact to this country and to our economy looming. Economists across the ideological spectrum have warned that if the Federal Government defaults on paying our bills, if we reach that debt ceiling and we do not continue to pay our bills, we could see businesses stop hiring, retirement accounts and families nest eggs could lose much of their value overnight. Interest rates would rise, which means higher costs for consumers, small businesses, and the Federal Government. Consumer confidence, which is so important for small businesses, would drop sharply. We are seeing that already. In the last few weeks we have seen the sharpest drop in consumer confidence since the fall of Lehman Brothers back in 2008.
We have heard from some people who are debt deniers, debt ceiling deniers, that these are just scare tactics, that these terrible consequences would not happen. But, in fact, we saw that in 2011; when we were having this debate again about whether we should raise the debt ceiling, there were dire consequences to that debate. In late July and early August, leading up to the debt deal of 2011, the Dow Jones Industrial Average dropped 2,000 points. As a result of that drop, average Americans with retirement accounts saw their household wealth plummet by $2.4 trillion.
Our credit rating was downgraded for the first time in America's history, and the crisis resulted in an additional $1.3 billion in borrowing costs for the Federal Government. As the Presiding Officer said so well: If you care about the debt and the deficits facing this country, why would we inflict that kind of burden again on the economy by saying we are not going to raise the debt ceiling.
The potential consequences, if we refuse to raise the debt ceiling, on November 1 we have already heard from Treasury Secretary Lew that Social Security and Medicare, which have not been affected by the shutdown, would clearly be affected by a default. It could delay or disrupt Social Security checks, Medicare, Medicaid, veterans' benefits, military salaries.
According to the Treasury, delayed or disrupted payments would prevent 57.5 million Americans from receiving Social Security benefits in a timely manner. This could put the most vulnerable people in America in jeopardy and prevent them from receiving the benefits they have earned and the benefits they need to live on.
My former colleague and fellow Senator, Judd Gregg, a Republican--he and I don't always agree on everything, but we certainly agreed on the negative consequences of our failure to act to increase the ability of this country to pay its bills.
In an op-ed that was published by The Hill newspaper, Senator Gregg said the brinkmanship on default is: The political equivalent of playing Russian roulette with all of the chambers of the gun loaded. It is the ultimate no-win strategy. A default would lead to some level of chaos in the debt markets, which would lead to a significant contraction in economic activity, which would lead to job losses, higher spending by the Federal Government, and lower tax revenues, which would lead to more debt.
That sums it up very well. Senator Gregg understands, as I think most of us do in the House and Senate, that for us to refuse to raise this debt ceiling, to allow the country to pay its bills, to allow the country to default, would be shortsighted, irresponsible, and reckless. I hope that we are all going to come together to get this done in the next couple of days and save this country from even more disastrous consequences.
I yield the floor.
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