The National Debtby Senator Daniel Coats
Posted on 2013-01-24
COATS. Mr. President, I appreciate the remarks of my colleague
from Texas. I want to add my thoughts to much the same issue. I rise,
once again, to address what I believe and what many believe is the most
important issue that faces this Congress and faces the Nation as a
whole; that issue is, the out-of-control Federal Government spending
that continues to pile up unsustainable debt and threaten our economic
Both Republicans and Democrats and conservatives and liberals have acknowledged that unless we get the debt under control, we will eventually reach a tipping point where investors either stop buying our debt or insist on higher interest rates to account for their greater risk. This can trigger a crisis of confidence, a crisis that would likely happen if we do not take action, and take action soon to address this problem.
We have witnessed what happens in a number of European nations. Greece comes to mind, of course. That country is in chaos based on promises made that cannot be kept, based on spending that could not be covered, based on a country that defied the math and the laws of economics. But it is not just Greece. I just heard earlier this morning the latest numbers on unemployment in Spain: over 25 percent and rising among all workers, and for those under the age of 25--those coming out of universities and colleges and the educational system looking to start their lives and begin their roles as breadwinners, the providers for their families and holding down a job so they can participate in life as people capable of paying their bills, buying a house, getting married, raising their children, and providing for their education-- that number for those young people is over 55 percent. More than one of every two young people in Spain is without employment--on the streets, nothing to do, no job to go to every day.
We see the austerity measures having to be imposed in the United Kingdom. Italy is in and out of the news in terms of its' financial status. There are questions about France, questions about other countries. Germany is struggling along with very little growth, even though it is seen as an economic provider and dynamo, at a level of growth which is so anemic there are questions raised as to whether and how much it can do to help the European situation. But even aside from the potentially catastrophic debt bomb that continues to tick away, if we fail to get spending under control in the short term, our economy will remain in the doldrums because of this cloud of economic uncertainty it creates among businesses, investors, and consumers-- created by our inability to grasp the fiscal plight of our excessive and reckless spending.
The fact is that we are not going to be able to get our economy out of the rut we have been in unless we tackle the Federal Government's spending addiction. Washington's reckless spending and failure to produce even a budget plan over the last 4 years undermines confidence in our economic prospects and causes investors, businesses, and consumers to sit on the sidelines rather than take risks with their money. As my colleagues know very well, our spending addiction in Washington has at long last led us to the point where we now face the process of record deficits as far as the eye can see into the future, a spiraling Federal debt that is now nearly $16.5 trillion, and a possible further downgrading of the credit rating of the United States.
Were interest rates not being held at historically, artificially low levels by the Fed we might already be facing our day of reckoning. According to the nonpartisan Congressional Budget Office, even a 1 percentage point increase in interest rates would add $1.3 trillion to our debt over a period of 10 years. If borrowing costs return to their 20-year [[Page S238]] average, which certainly they will at some point, deficits over the next 10 years will increase by $4.9 trillion. If interest rates were to rise to the level of the 1980s, the total U.S. debt in 2021 would be $5.3 trillion greater. That is $5.3 trillion in new debt that would occur without any changes in spending or taxes. Interest rates would simply drive our debt out of control.
Make no mistake that this is a spending problem and not a revenue problem. The President campaigned on the false narrative that taking more from the top earners would alleviate the economic burdens we face. As a result of winning the election, he was able to get higher taxes on Americans at the higher end of the income scale. But no one is fooled and math does not lie. Increasing taxes on higher income earners is not going to make much of a dent in our $1 trillion deficits.
The fact is, even if the President had received all of the revenue from the expiration of all of the 2001 and 2003 tax cuts in tax rates, Federal revenue would have come in at this historical average of just over 18 percent of GDP, but spending continues to rise, on average, 23 percent of GDP over the same period of time--more than 2 points ahead of its historical average. Thus, the problem: the fact that we are spending more than we can afford. We are spending more than we receive.
Actions speak louder than words. President Obama may talk about the need to rein in spending--although lately he has even rejected that-- but his administration refuses to act. Instead, the President started off his second term doubling down on--what? The need for more taxes. Are not the American people being taxed to death? It is not just the Federal income tax, it is the State tax added to that, it is the sales tax, it is the excise tax, it is the car tax, it is the alcohol tax--it is any number of things that add up to a burden of taxation on the American people that is severely hampering our ability to grow and our economy to provide the necessary employment and the necessary jobs for people so desperately in need of and looking for that work.
While the President has not truly recognized that spending is the problem, the business community has. A recent survey of chief executives said they are considerably less optimistic about the short- term growth process for their companies than they were just a year ago. The reason is uncertainty. The business community does not have confidence in the growth prospects for our country because there is little confidence that Washington can get its act together and deal with the spending crisis that is dragging down this economy.
In an atmosphere of uncertainty, investors, businesses, and consumers proceed with caution. They hold back in making significant investments or expenditures. Also, they don't hire people, and they will not until they get more clarity about the future and our ability to address our problems.
As I traveled across Indiana and talked to business owners' large, small, and in between, as well as farmers, to owners of restaurants, to CEOs of major companies, they all said the same thing. They all said the lack of certainty and the prospects for the future--unless we get control of our spending--are such that they have no choice but to just sit on their hands and hold back.
The big credit agencies are saying the same thing. They know that without significant spending reform and spending cuts the United States will be unable to pay its bills at some point. Refusing to make the tough choices now just hastens the day of reckoning when markets decide the United States has become a bad credit risk. Standard & Poor's, Moody's, and Fitch Ratings all have a negative outlook on the United States' prospects and are threatening a further downgrade of our credit rating unless we get our fiscal house in order. Other downgrades would follow in short order: Fannie Mae and Freddie Mac, as well as many State governments. As a result, this would irreparably damage many State and local pension funds. They are all at risk.
It is a nightmare scenario that is not far away from happening if we don't start getting a handle on our reckless, runaway spending. We need to get a handle on it now not later. There is no more reason for excuses. We have done all we can on the revenue side. The President got what he wanted. He got his taxes, but now is the time when we need to focus on the real problem, which is runaway spending. Big spending and small, everything from the need to reform our mandatory entitlement spending to the smaller, duplicative, wasteful, yet important, spending that Washington specializes in and is not necessary particularly at a time of austerity.
I intend to get into some more detail about spending reforms in future speeches, but the overall point is undeniable: Unless we get our spending under control, we are going to continue to stagger forward with a weak economy, high unemployment, and draw ever closer to the day when our investors and creditors lose faith in our ability to pay our debts.
The next time I come to the floor--and I am not sure when since it depends on what our schedule might be--I want to talk not about what Dan Coats is saying, not what the Senator from Indiana is saying; I want to talk about what others are saying. I want to hear from those who are not saying it from a political perspective or trying to reflect their party's position but from those who spend their time analyzing our current situation. I want to hear from those who understand the map of where we are and what the implications and consequences are for our country. I don't just want to hear statements by those of us here but statements made by others and the importance and need for us to address this most serious of problems and challenges.
With that, I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Utah.