Sequestrationby Senator Richard J. Durbin
Posted on 2013-02-28
DURBIN. We will have a vote on the floor of the Senate. It is an
important vote because tomorrow is the day of sequestration. The
American people are learning new terminology. The fiscal cliff meant
nothing to most Americans 6 months ago, but by New Year's Eve many
understood that something serious was about to occur. Laws had been
passed which meant that taxes would go up on virtually every taxpaying
American on January 1 if Congress failed to act. That was the fiscal
We reached a last-minute agreement on ways to avert that from happening and to make sure any tax increases on the income tax side were going to be exclusively applied to those in the highest income categories. Well, the Americans breathed a sigh of relief and said thank goodness that emergency is over.
We are good in Washington at manufacturing crises, and now we are in a new crisis of our own creation. This is not some act of God, some natural event, some occurrence we have no control over. We created this. We created something called sequestration, and here is what it was all about.
The President sat down with the leaders in Congress--this goes back over a year now--and said: Listen, we need to do something about our deficit, but let's do it in a bipartisan way and a balanced way. Let's put together a supercommittee--an equal number of Democrats and Republicans--and let's reach an agreement once and for all. Stop bickering and reach an agreement. Let's reduce the deficit as a result of that agreement. But, he said, to make sure you take it seriously, if you don't reach an agreement, then as of this year, 2013, we are going to have automatic spending cuts called sequestration, and the sequestration cuts are not going to be very kind. They are going to be across-the-board cuts by each line item of the budget. So to avoid that, do the right thing and reach a bipartisan agreement in the supercommittee.
We failed. We failed when the Republicans of the committee said no revenue, no taxes. Sorry. We will just talk about spending cuts and cutting Medicare. That is all we are interested in talking about.
End of story; end of supercommittee; welcome to the world of sequestration. The threat that was supposed to make the supercommittee act is now about to become the reality. The reality means that in the remainder of this year--we do fiscal years, not calendar years--between now and September 30, we need to cut $85 billion in spending. Half of it will be on the defense side, and half of it will be on the nondefense side. Some might say: Come on, this is a big government and this is a big budget, and you are telling me $85 billion is a big problem? I happen to agree with the Senator from Missouri--Republican Senator Blunt who was here a moment ago--that there are plenty of areas to save in the Federal Government. I will speak to a few in a moment. We don't create an opportunity for that kind of thoughtful discussion and decisionmaking. Instead, it is automatic. It just happens.
What is wrong with cutting every line of the budget by a certain percentage? Well, let's take it home. Let's talk about an American family. Let's assume that family has just learned that next year, due to circumstances beyond their control, they are going to be making $500 less each month; somebody lost a job in the family or something like that. They look at the family budget and they say: We are going to have to tighten things up and make some hard choices. Someone else at the family table says: Wait a minute, We don't have to do it that way. What we should do since $500 is maybe 5 percent of what we take home in pay, let's cut everything we spend by 5 percent. If we do that, we will be able to reach that $500 mark.
When they stop and think about it for a minute, they realize that doesn't make any sense at all. We are going to cut our mortgage payment by 5 percent? We cannot do that; we will default on our mortgage, and we will lose our home. We will cut our utility payment by 5 percent? They will cut off the lights. We cannot cut the prescription drugs by 5 percent. We need that medicine to keep our children healthy. No, we have to look at a more thoughtful way. Let's look at parts where we spend money that we can afford to cut.
That is how families budget, that is how the government should budget, but sequestration doesn't cut budgets that way. It cuts it by each line item--the mortgage, the utility bill, the prescription drugs are all cut the same. That is what we face starting tomorrow. Well, there are ways to avoid that. The most important opportunity will come tomorrow afternoon. President Obama is bringing the congressional leaders--the House and Senate, Democrats and Republicans, all four-- together for a meeting in the White House. Let's hope cooler heads prevail. Once again, we are at the deadline. Once again, the American people are looking to us and wondering what is going to happen.
What is at stake here? There are several things at stake. One of the things that is at stake is that the cuts for many agencies are going to be unreasonable. It will be unreasonable because they have to be done in a matter of 5 or 6 months. I am now chair of the Defense Appropriations Subcommittee. It means that most of the civilian employees who work for the Department of Defense are going to lose 1 day's pay [[Page S968]] each week. It will result in a 20-percent cut in pay between now and the end of the year and will be a hardship on some families.
Don't believe these are fat-cat Federal employees. Many of them are struggling families doing jobs in our Department of Defense which are critical for our Nation's security. They range across the board from some of the most sophisticated decisionmaking to keep us safe as a Nation to the very basics of keeping the lights on in the buildings where these decisions are made. They are going to see this kind of furlough, reduction in pay and, unfortunately, reduction in productivity because of it. That is not good.
Other things are going to happen because of it. When workers are laid off at a depot where they repair a ship, it means the ship that was in for repairs has to stay there longer. It cannot go out and protect America.
Last week I was in a place called Bahrain. Bahrain, an island in the Persian Gulf, is a critical front in America's national defense. The 5th Fleet is there. What a magnificent group of individuals. ADM John Miller took me around on the ships and introduced me to the men and women in uniform. I could not have been prouder as an American to say hello to these people who are literally giving and risking their lives for our country. How are they protected while they are out there? Well, we have a great aircraft carrier out there. It is there if needed. I hope it is never needed. It is only one of two carriers that is supposed to be there.
The USS Truman was supposed to join the other carrier to protect our troops and our interests in the Persian Gulf, but it will not be there. Why? Because the Navy had to hold the Truman in reserve to save money. This is just one example of how you can't contain the effects of sequestration. And our sailors--our men and women in uniform--are out in the Persian Gulf, literally in a much riskier situation because of it. When we talk about how easy it is to cut spending in the government, it can be easy if we do it in a thoughtful way.
The second point I wish to make is that it is not just a matter of where we cut or how we cut, it is a matter of this process. We have been told by the people who give a credit rating to the United States of America that what has been happening for the last 2 years has not gone unnoticed. Think about your own family situation again. If a family is late in paying bills, what happens? Their credit rating goes down, and then when they turn around to borrow some money--whether it is an installment loan for a car or a home--they look at their credit rating, don't they? They say: You are not the most reliable person in paying your bills. Your credit rating is lower; therefore, the interest rate you pay will be higher.
The same thing applies to the government. Over the last 2 years this strategy that has been hitting us and says we have to lurch from one threatened government shutdown, to a shutdown of the economy over the debt ceiling, to the fiscal cliff, to the sequestration, is taking a toll on America's credit rating. So the ratings agencies are saying: Don't get me wrong, it is a great Nation and a great economy, but there are not a great bunch of politicians in Washington when it comes to making decisions; therefore, we are going to have an uptick in the interest rate paid by America to borrow money. What that means is we will be paying more of the taxpayers' dollars in interest to those who loan us money, such as China, and less in goods and services to serve America.
Now they are telling us again: If you go to sequestration and you get into another hopeless political tangle, as you have over the last 2 years, you run the risk that America's credit rating is going to be downgraded, interest rates are going to go up, and your kids are going to owe more on the national debt. That is what is at stake here.
What are we going to do about it? This afternoon we will make a proposal that not a single Republican will vote for. I will make that prediction on the floor. It is a proposal where we take a look at one of the most wasteful areas of spending and eliminate it. It applies to my State of Illinois, and here is what it is: direct payments to farmers. I don't know why we did this, but in the last farm bill we said we will give direct support payments to farmers whether they make money or lose money. Sometimes we will give them the direct payments whether they grow a crop or don't grow it. Does that make sense? I don't think it does.
We said for a long time, 70-years plus, the U.S. Government will be there when the farmers need it--when they need a helping hand. I understand that. Farming is a risky business, but direct support payments don't work on that principle. They make a payment regardless.
When Senator Stabenow of Michigan wrote the new farm bill, she said: I am eliminating direct payments. It saves $25 billion over 5 years. We had 64 Senators, which is about a dozen Republicans, to join us in passing the farm bill. They agreed and the farm groups agreed that they could no longer defend direct support payments. They could not defend it in a time when we have so many deficits.
The farm bill could not pass in the House. They were unable to pass a farm bill. I don't know why, but they couldn't. So what we will do this afternoon is take that savings from the direct support payments and use that to defer some of the cuts that would otherwise occur in sequestration. I think it is pretty sensible.
We will find out that not a single Republican will vote for it. They can come to the floor and list where they will save money, and they will have a chance on the floor this afternoon to actually save $25 billion on something the farmers agree with and farm organization support--and many of them voted for--but not one will vote for it. Not one. It is a sad situation.
Let me tell one other thing they ought to think about: for-profit schools. Does anyone know what they are? Well, if you have a child--a son or daughter in high school--you will know them soon because they are inundating your son or daughter with invitations to come join their university. Let me give some of the biggest names of the for-profit school industry: University of Phoenix. Ever heard of it? The combined enrollment of the University of Phoenix is more than the combined enrollment of the Big Ten. The second largest one, I believe, is DeVry, which is out of Chicago, and then Kaplan, which is a career education corporation. These are private companies that purportedly educate students. Some do, most don't.
If anyone wants to know about the for-profit colleges in America, they should remember three numbers. The first number is 12; 12 percent of all the high school graduates in America go to for-profit schools, such as the ones I mentioned, and others. The next number, 25; 25 percent of all the Federal aid to education goes to these schools. So they have 12 percent of the students and 25 percent of the Federal aid to education. Well, how much is that? About $32 billion a year goes to these schools, and it is Federal taxpayer dollars.
If we took the $32 billion that is going to for-profit schools and translated it into a Federal agency, it would be the ninth largest Federal agency in Washington--$32 billion to these schools. Hang on for the third number. The third number is 47--12, 25, 47. Forty-seven percent of all the student loan defaults occur among students who are going to these for-profit schools.
What does that tell you? They are getting too deeply in debt, they cannot finish school, and they cannot find a job. What a waste. They end up with debt and nothing to show for it. The schools end up with the money; the students and their families end up with the debt.
Let me recite one of these stories. I have invited students to tell me their stories at my Web site, and many of them have. Tabitha Hewitt, who is a first-generation college student, was aggressively recruited by for-profit colleges. They promised her a great future with a paying job. What she ended up with was a student debt of $162,000. She attended the International Academy of Design and Technology, which is a for-profit college owned by Career Education Corporation.
Tabitha is a veteran of the Air Force. She thought her education would give her the skills she needed to be successful in the civilian workplace. It turns out she does the same job as her colleagues who didn't attend any of these [[Page S969]] for-profit schools. She didn't pick up any advantage; she just picked up a debt. The GI bill didn't cover the tuition because it was too high, so she took out student loans.
Paying her loans is a daily struggle. For Tabitha, it consumes her life. She sometimes has to walk away from other bills just to pay her student loans. She is constantly in battle with the lenders, trying to negotiate a reasonable payment plan, and they refuse. She says she can't save for anything. She can't pay for her own health insurance. She probably can't get married and have children. She just can't afford it. She wants to go back to a real school for a real education, but guess what. This deeply in debt, she can't borrow any money to go to school--to a real college instead of a for-profit school.
For-profit colleges prey on veterans such as Tabitha. They use deceptive marketing and aggressive tactics. They tell the veterans everything is going to be great and everything is going to be paid for. It is simply not true.
The 90-10 rule permits for-profit colleges to receive up to 90 percent of their total revenue from the Federal Government. These for- profit colleges are 10 percent away from being Federal agencies. But here is the thing: The 90 percent only includes Federal student aid programs such as Pell grants or student loans. GI and Department of Defense tuition assistance are counted as private revenue, giving the schools a huge incentive to recruit and target servicemembers and veterans such as Tabitha. Veterans and servicemembers help the schools meet the 90-10 rule and then end up with a worthless education.
Congress needs to stop this bloated industry from continuing to prey on veterans such as Tabitha Hewitt. Congress needs to make sure servicemembers and veterans have all the information they need about a school before they choose to enroll. We need to also make sure these schools are providing servicemembers the skills they need to succeed in the workforce. Schools with awful outcomes should not be participating in the Department of Defense Tuition Assistance Program and they should not be eligible for the GI bill.
Do my colleagues want to know where to save money without going into a sequestration that lays off a lot of important people across America and, in some ways, compromises our national security and the protection of our men and women overseas? Start with the for-profit schools. These folks have tapped into the Federal Treasury to the tune of $32 billion a year.
People say to themselves: Why do we let them get away with it? They have friends in high places. They are participants in our political processes. They can be found at many of the great parties and receptions across the city of Washington and around the country. They are doing what they can legally do as citizens. They are finding friends in high places and protecting the $32 billion a year that goes to these worthless schools, many of which are a complete waste of time and money for the students who end up there.
It would be bad enough if it was just a bad education or a waste of time. Tabitha is stuck with a $162,000 student debt.
There is one last kicker. The student debt is different than the other debt a person has. If a person borrows money for a home or a car or a boat or to buy a washer and dryer and they go broke and go to bankruptcy court, those debts are going to be swept away--not student loans. Student loans are not dischargeable in bankruptcy. Tabitha, the bad news is this is a debt that will be with you for a lifetime. Student debt is not dischargeable in bankruptcy. That is where we are today.
So when my friends come to the floor and talk about all the ways to save money in Federal spending, I will give them two to start with, one they can vote for this afternoon: end the direct payments in agriculture and save $25 billion. Secondly, reform this for-profit school scam that costs us $32 billion a year. They are easy places to start, perhaps even on a bipartisan basis.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant clerk proceeded to call the roll.