October 10, 2013

Crapo: Approaching Debt Limit Shows Need To Enact Further Fiscal Reforms

Federal debt has risen $6 trillion in four years

"Secretary Lew said, 'We've made progress on our overall debt crisis in the past few years, and I think that we can continue to work on those kinds of steps if you will simply pass this clean debt ceiling' and do so in a way that involves no negotiations from the president in any way.  I reminded him that a major part of the progress we have made in the last couple of years was made when we met the debt ceiling two years ago.  It was the Budget Control Act that put into statute over $2 trillion of reductions in our spending path, and that was attached to the debt ceiling bill in 2011. It was literally a debt ceiling negotiation that generated the only significant spending controls that this congress and this country have seen for years and years.  And yet the president refuses to take another step now that wehave met the debt ceiling again and negotiate for furtherreforms."

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Idaho Senator Mike Crapo, following a Senate Finance Committee and Senate Banking hearings that received testimony on the debt limit and the damages a default would have on the financial markets, spoke on the Senate floor about the need to deal with the country's long-term debt crisis.  In January 2009, the total federal debt stood at $10.6 trillion. This week, it hit $16.7 trillion - an increase of 57 percent.   Crapo said the debt ceiling presents a prime opportunity to enact significant fiscal reforms-including entitlement and tax reforms-just as was done in 2011.  Crapo also addressed the government shutdown that is impacting numerous Idahoans.

"We're not asking to shut down the government for the purposes of simply making a point.  We are trying to get to negotiations.  We want to see the government reopened.  We are not seeking to have the debt ceiling expire.  We want to have negotiations to be able to put together the kinds of fiscal reforms that should always accompany extensions of the debt ceiling."

While its projections are not exactly the same, both the Treasury Department and the Congressional Budget Office project that the ability to use extraordinary measures to prevent the country from breaching the debt ceiling will run out within weeks.

A transcript of Crapo's remarks can be found below.

"Mr. Crapo: Thank you, Madam President.

I rise today to discuss the multiple issues that have now presented themselves to us here in the Senate and to the United States Congress and, frankly, the American people.  I've been in several hearings this morning.   The first was with Secretary of Treasury Jack Lew, where the Finance Committee discussed with him the pending expiration of our debt ceiling and what his understanding is ofhow that will impact the country.   He raised a lot of serious concerns, very legitimate serious concerns that others are raising.   We then followed that up with a hearing in the Banking Committee where we had representatives from a number of the various industries in the United States also discussing what is going to happen in the United States if the country does not increase the debt ceiling.   And there are serious consequences that will happen if we don't do this. 

But what I tried to do inboth of those hearings -- and I'll refer to my conversation with Secretary Lew -- was to focus us back on the broader, bigger threat. Secretary Lew basically said that we have a manufactured crisis here in the United States because of our unwillingness at this point to face the debt ceiling and simply extend the debt ceiling without any kinds of conditions or negotiations.  I reminded him that the crisis we face- the big crisis we face-is the debt crisis.  And it's very real. And I guess in a sense it has been manufactured over the last 20 or 30 years by Congresses and presidents who have refused to control spending and have put us into tremendous debt. Our debt ceiling that we are negotiating about right now, or I think wishing we could negotiate about now is $16.7 trillion.  It's grown by trillions of dollars over the last five or six years and what the president has asked us to do is toonce again increase the debt ceiling by another $1 trillion or more with no reforms, no fiscal changes in our policies to deal with the mounting spending crisis that we face.

The president's position is you give me this trillion dollars or more of new debt authority and I will then talk to you about reforming our fiscal policy. The problem is that we've been trying to negotiate over fiscal policy and trying to get reforms put into place for years, and we have not been able to get there. When I asked Secretary Lew about this, he basically said we've made progress on our overall debt crisis in the past few years, and I think that we can continue to work on those kinds of steps if you will simply pass this clean debt ceiling and do so in a way that involves no negotiations from the president in any way. I reminded him that a major part of the progress that we have made in the last couple of years was made when we met the debt ceiling two years ago ago, in 2011. 

It was the Budget Control Act that put into statute over $2 trillion of reductions in our spending path, and that was attached to the debt ceiling as we moved forward.  And it was literally a debt ceiling negotiation that generated the only significant spending controls that this Congress and that this country has seen for years and years.  And yet the president refuses to take another step now that we have met the debt ceiling again and negotiate for further reforms.

By the way, there is another reason that we have made some progress in the past few years, and that is that we have implemented massive new taxes on the American people.  The Obamacare legislation itself contains nearly a trillion dollars of new taxes, and they are now, although they were delayed for a few years, beginning to fully hit the Americanpeople.  Last January, the president was able to win argument and succeed in getting the top income tax brackets raised.  An impact on our tax code that I think was harmful rather than helpful and clearly was damaging to the creation of jobs and to businesses across the United States, but nevertheless another $500 billion to $600 billion of tax revenue was put into the mix there.

So what have we done? We've made a plan to control discretionary spending over the next ten years and reduce it by about $2 trillion.  If we stick to that, we'll get $2 trillion worth of spending reductions.  We have raised taxes by at least $1.6 trillion over the next ten years, all of which I believe has been harmful to our economy but has generated revenue to try to help reduce the debt cycle. But we have not addressed the two critical parts of reform that we must address in this country if we are ever to get controlof our spending excesses and stop the out-of-control spiral toward insolvency that we see, and that is reforming our entitlement system and reforming our broken tax code. What have we seen there? Virtually minimal, if any at all, reforms of entitlements. They seem to be off the table, yet they are the part of our spending problem that is the biggest and the most out of control. And on tax reform, we've seen no reform of the tax code.

We have a taxcode that is the most unfair, the most complicated, the most expensive to comply with and the most anticompetitive code we probably could have created if we did it on purpose.   Yet we have no reforms of the code and instead what we have done is add to the code another $1.6 trillion of new taxes on the American people.  What we are asking is whether we can move forwardin trying to deal with our fiscal problems in this country by negotiating over entitlement reform and tax reform. I frankly believe that we ought to be at the negotiating table talking about that, but what we have been told is no, as soon as you will raise the debt ceiling by the amount that we are hearing somewhere in the neighborhood of a trillion dollars, as soon as you will raise the debt ceiling, then we can talk further about other negotiations.  Then we can get engaged on trying to deal with our debt crisis. I pointed out, as I said, to Secretary Lew that the last major progress we made on spending reform happened in negotiations relating to our debt ceiling.  Why can't we negotiate now and make significant fiscal reform in addition to dealing with our debt ceiling? It's that debt crisis that is the biggest problem.

I was on the Simpson-Bowles Commission, the president's own commission that he put together some years back, two or three years now, and wespent a full year studying the impacts on our economy of America's fiscal excesses and what we needed to do, and the Simpson-Bowles commission came up with a plan. It was a proposal. We concluded that we needed to -- and this was two or three years back, but we needed to reduce our spending path, our debts path in the United States by at least $4 trillion.  We concluded that we had to deal with that by reforming ourentitlement system, and we had to deal with it by controlling discretionary spending, and we agreed to having some of that tax revenue that the president was demanding, and we also agreed that in the -- in the overall mix that we would have about a 3-1 ratio of spending cuts to revenue.  The president did not accept that recommendation and many of us tried for months and months and months afterward to get that recommendation to the floor for avote, but it has not made it to the floor for a vote. My point is, negotiations have been under way for years and years and significant plans have been developed that would help us move forward. We know what to do. We need to have the will to do it, and so far the only reforms that we have been able to get in the last few years as a result of the debt crisis that we face have come when we have met these pressure points dealing withour debt ceiling.

We're not asking to shut down the government for the purposes of simply making a point.  We are trying to get to negotiations. We want to see the government reopened. We are not seeking to have the debt ceiling expire.  We want to have negotiations to be able to put together the kinds of fiscal reforms that should always accompany extensions of the debt ceiling.  I believe the reason that Congress put statutory debt ceilings in place in the first place was because they wanted togive America a gut check every so often about the spending problems that we have.  We have put almost half of the entire spending system of the government on autopilot, and we don't even have the opportunities to vote on it here in congress.

Madam President, ultimately we have to deal with the debt ceiling and ultimately we have to deal with the funding to keep our government operational. Let's not just move forward andaccomplish those objectives, leaving in place the unrestrained fiscal crisis that we are dealing with in this country. Let's use this opportunity to put together the kinds of fiscal reforms that should accompany decisions to allow our country to increase its debt. And with that, Madam President, I yield my time."