Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman delivered a speech on the Senate floor discussing the important issues facing the Congress today. The text of the speech follows:

Mr. President: We have three separate issues facing the Congress.

First, the authority of the Treasury Department to borrow to meet the nation's obligations will be reached on Tuesday. In order for borrowing to continue after Tuesday, Congress needs to raise the debt ceiling.

The second issue we face is the need to help our economy become prosperous again. Unfortunately the debate here in Congress has totally lost sight of this issue -- how can we grow the economy and create jobs?

The third issue is the need to put in place a long term plan to reduce the deficit and the debt.

Two other issues -- raising the debt ceiling and reducing the long term deficit and debt -- have come to be seen by many here in Congress as a single issue.

I want to urge all my colleagues to take a step back and recognize that, first, these issues are separate, and second, that failure to responsibly deal with the first of these issues now, i.e. failure to raise the debt limit, will greatly hamper our ability to deal with the other two issues.

Failure to raise the debt limit will not return our economy to prosperity—it will postpone the day when that prosperity returns.

Failure to raise the debt limit will not help reduce our debt and deficit, it will add to the debt and deficit by raising interest rates for the government and for all Americans.

Let's review how we got here.

Since the beginning of this Congress nearly seven months ago the Republican majority in the House has had a laser focus on cutting spending.

To achieve that objective, the first strategy adopted by the Republican leadership in the House was to threaten a shutdown of the government unless sufficient spending cuts were agreed to. Spending cuts were agreed to, and at the final hour Republicans agreed to pass the bill needed to fund the government for the balance of the fiscal year—September 30, 2011.

As soon as that crisis was averted, and the threat to close down the government was behind us, at least for a few months, the effort shifted to a new strategy.

This strategy was to threaten a first-in-history default by the government on its financial obligations if enough additional spending cuts were not agreed to.

The device for bringing about that default was refusal to extend the debt ceiling when the government's borrowing authority was reached.

We should remind ourselves of what an artificial device this is that is being used for leverage.

Congress passes the laws that determine how much revenue the federal government collects and Congress passes the laws that determine how much we obligate the government to spend.

And when the revenue we collect is less than the amount we are committed to spend the Secretary of Treasury has no alternative but to borrow money to meet the obligations Congress has taken on.

So, in a period like today when the government is receiving in revenues much less than it requires to meet its obligations there are two logical actions for Congress to take:

• Raise more revenue, and
• Reduce the obligations of the government

But in refusing to allow the Secretary of Treasury to borrow, we are taking neither of those logical steps.

Instead, we are telling him to default on the obligations which this, and previous Congresses, have already taken on on behalf of the American people.

We are told by the Treasury Secretary that unless Congress acts, he will be forced to default, or renege on our obligations beginning next week, August 2.

The refusal to raise the debt ceiling and the threatening of default on our obligations has achieved much of what Republicans set out to achieve in this Congress. It has precipitated a crisis and in order to avoid that crisis Democrats have acceded to the primary demands Republicans have made. What are those demands.

• The first of those demands was that all the deficit reduction be accomplished with cuts in spending.
• • No revenue could be raised from the wealthiest in our society to help close this gap between revenues and spending. No loopholes could be closed or subsidies eliminated in the tax code.
  • Democrats have agreed that the deficit reduction would not be accomplished with a balanced package of spending cuts and revenue increases as all previous deficit reduction packages have been under President Reagan, President George H. W. Bush, and President Clinton. This deficit reduction would be done with spending cuts only.
• A second demand of the Republican leadership was the totally arbitrary demand that the size of the increase in the debt ceiling not exceed the amount of spending cuts projected in the federal budget over the next ten years. That is a demand totally lacking any logical justification, but, again, Democrats have agreed in order to achieve a solution.

In order to avoid the threatened default on our obligations Senator Reid has put forward a proposal that would lock in $2.2 trillion of deficit reductions over ten years with cuts in both discretionary spending and mandatory spending. The Treasury Secretary would be given authority to borrow to meet the obligations Congress has undertaken for approximately another eighteen months.

The proposal also puts in place a bipartisan and bicameral committee with responsibility to present Congress with a bill to further reduce the deficit.

Unfortunately, it appears that this proposal will be opposed by many on the Republican side.

• Some say the cuts are not sufficiently deep and they would rather push the country into default than agree to a mere $2.2 trillion in spending cuts.
• Some say they want to extend the debt ceiling for a shorter period so we can have another showdown with another threatened government default six or seven months from now.
• Some say that causing the federal government to default will not have the adverse consequences the Secretary of Treasury has predicted—and that, in fact, it will have a real effect on both our economy and our politics.

I strongly disagree with all of those views.

I believe that a refusal to honor our obligations will have major adverse consequences for our economy.

I believe that Congress should act now to raise the debt limit in order to avoid those adverse consequences.

Although the proposal that Senator Reid has brought forward fails the test of balance between spending cuts and revenue increases, which I would prefer, it is a plan which I am willing to support in order to head off a default on the nation's obligations.

I understand that additional deficit reduction will be required in the months ahead, but clearly the responsible course is to do what can be done today—adopt the Reid plan.

Only by doing so can we once again be able to focus on the steps we can take to return our economy to prosperity. That is the first priority for most Americans today, and it should be our first priority as well.