July 26, 2011

ON THE DEBT CEILING

We need a credible plan to deal with the deficit. It cannot be what the Republicans want, or what the Democrats want, but we all must work together.
 
We are seven days away from the August 2 deadline. We have two goals. Goal number one is to raise the debt limit so we don't default on America's obligations. We've already incurred this debt. This is not about increasing America's spending. This is paying for spending that has already occurred. Now we have to pay our bills. 
 
The cost of default to the American people is unimaginable. We'll pay more as taxpayers because the cost of government borrowing will go up. We know that. It's not speculation. The cost of home mortgages will go up; credit card costs will go up; student loan costs will go up. All of the borrowing costs will go up, and it will also hurt our economy. It will cost us jobs. It makes no sense whatsoever to be here without raising the debt limit. 
 
Senator Reid's proposal does that through 2012. It gets the job done. Speaker Boehner's proposal does not get it done. It’s another short-term extension. We should listen to the experts in the market. Christian Cooper, who is a currency expert and trader said, ‘from the market's point of view, a two-stage plan is a nonstarter. There are significant risks of downgrade with a deal that ties further cuts to another vote only a few months down the road. Given the significant resistance to do the right thing now.’ So Speaker Boehner's proposal just kicks the can down the road for a couple more months without resolving the problem. 
 
Goal number two is having a credible plan to get our debt under control. The president was right, as he explained how we got here last night. He went through how, under the Bush administration, we took a surplus to a deficit, cutting taxes not once but twice, two wars that were not paid for, by spending programs that were not paid for. Now we're in the situation where we have a nonsustainable deficit. 
 
It is our responsibility to make sure that we have a credible plan to deal with the deficit. Leader Reid's proposal gives us that glide path. I think all of us would like to see a grand deal, a grand bargain. That's not going to be achieved by August 2. Senator Reid's proposal gives us the glide path for a responsible, credible plan to bring our debt under control. Speaker Boehner's proposal does not do that. It just basically says we'll deal with it at a later time. Look at the down payment. Leader Reid gives us $2.7 trillion of deficit reduction now that we can enact by August 2. Well, Speaker Boehner gives you $1.2 trillion. It's clear that $2.7 trillion really gets us much closer to the $4 trillion goal that we all know that we need to achieve. But it also gives us a game plan to be able to achieve the $4 trillion of deficit reductions that we all know that we need to do.
 
You and I are in agreement how we can get that done now. We know that. We have a plan. The problem is we can't get that done by August 2 because we can't get the Republicans in the House to move on a balanced plan. 
The Reid proposal preserves all options. It gives us a way to get to the $4 trillion of deficit reduction that is clearly needed. It allows the use of a joint committee that will use a balanced approach. We have models they can look at like the Bowles-Simpson Commission, which is a balanced, credible approach to deal with the deficit. The Gang of Six gives us a balanced approach in order to deal with our deficits. So we have models before us to help get it done. 

 

Let me tell you why I think Leader Reid’s proposal is the best way to proceed seven days before the August 2 deadline. It gives the Republicans basically what they've asked for. We can't do this with Democrats alone. We need Democrats and Republicans working together. The Reid proposal represents the views of the members of the Senate on both sides of the aisle. Why I do say that? From the beginning the Republicans have been saying that we have to have a dollar-for-dollar reduction in debt for a dollar increase in the debt ceiling. Now, there's no relationship between our current spending and what the debt ceiling represents because, as I said earlier, it represents what we've already spent. But, okay ... that has been what the Republicans said we had to do. Leader Reid’s proposal does it -- a $2.7 trillion reduction in the deficit, a $2.7 trillion increase in the debt ceiling. 

 

The second thing the Republicans have asked for is that we can't consider revenues in the package. Now, I disagree with that. I don't believe you can have a credible plan to deal with the deficit unless you include revenues, like getting rid of the tax loopholes and getting rid of tax shelters. We could do it without increasing rates. But the Reid proposal -- what we would vote on by August 2 that accomplishes our goal -- would do it without additional revenues. It preserves the right of revenues in order to have a credible plan to reach the $4 trillion target. But we get our $2.7 trillion without any revenues, which is something that the majority of the Republicans have been asking for. 

 

The third point, with $2.7 trillion in cuts that the Majority Leader put on the table, represents the cuts that have been negotiated between the Republicans and Democrats. It was included with Vice President Biden, the $1 trillion in cuts in regards to our overseas operations was included in our line budget and the list goes on. These are cuts that are achievable that have been already negotiated or agreed to between Democrats and Republicans. 

 

I applaud Senator Reid. I think Senator Reid understands the seriousness of us moving forward. It allows us to increase the debt ceiling and preserve our rights to negotiate and get the grand bargain done and has a fallback mechanism with a joint committee that would have required votes on the floor to make sure we all have a right to vote up-or-down. It allows America to move forward and allows us to concentrate on job growth and security, which should be our focus as we rebound our economy for the future of our nation. For all those reasons, I hope my colleagues will support the effort of Senator Reid to bring us together to avoid the unspeakable default that could occur one week from today. 

 

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