Cut, Cap, Balance Act-Floor Speech

Press Release

Mr. President, I stand before you today to discuss a problem that's of concern to 300 million Americans. It relates to our national debt, a debt that will soon cross the $15 trillion threshold.

We've been asked to raise the debt limit, extend the nation's credit one more time. This we have the power to do, but we have to ask ourselves the question, "Should we exercise that power, should we incur additional debt yet again without any plan moving forward to change fundamentally the way that we spend money in Washington, DC?

Our current law requiring us to raise the debt limit periodically every time our existing line of credit dries up dates back to 1982. We've raised the debt limit since 1982 nearly 40 times. I fear that if we do it again, this time without any permanent, binding plan in place, legal restrictions, changing the way that spends money, it will be right back to the same trough, just a few months later.

That's a problem because as we do this over time, we inevitably put pressure on our financial system; pressure that will soon cause our economy dire circumstances; pressure that will in time result in excessive job losses, skyrocketing interest rates, and lots of other economic conditions that would be, to say the least, unpleasant.

It's for this reason that 100 senators from around the country have canceled their plans that they had previously made to spend time with their constituents in their respective home states this week. That had been our plan, to spend time in our home states. We canceled those plans so that we could come back here and have serious, earnest debate and discussion surrounding the best path forward toward moving in the direction of a balanced budget, toward figuring out what conditions, if any, would satisfy the American people, who are understandably concerned about the prospect of yet another near-jerk reflective debt limit increase.

The American people understand the fact that if we choose to do nothing more than say, well, if we're going to raise the debt limit by more than $2 trillion, let's make sure that we cut $2 trillion from our anticipated spending, they understand that that kind of promise is one that isn't binding on the Congress.

If those spending cuts are stretched out over the course of 10 or 15 years or more, as has been discussed -- we here in this Congress cannot bind the Congress that will be sworn into power in January of 2013 or January of 2015 or January of 2017. We can't bind a future Congress. We can make suggestions that they can follow, but we can't bind them.

Unless of course we choose to do that which has been done only 27 times in our nation's history, which is amend the Constitution. That will then bind a future Congress in order to make sure we're not headed back to the same trough just a few months from now to do exactly the same thing, leading us closer and closer to the dire situation that I described a few minutes ago.

While we've been here this week convening during the week that was previously scheduled for a recess, we as a group of senate Republicans have come together and offered a real meaningful solution. We have offered to raise the debt limit, and introduced legislation today with 21 republican cosponsors in the senate in a piece of legislation that we're calling the "Cut, Cap, and Balance act".

It says we'll raise the debt limit. We'll do so only under three circumstances, only after three conditions have been met.

The first two relate to immediate spending cuts to discretionary spending and statutory spending caps making sure that we start putting ourselves right now on a statutorily mandated glide path toward a balanced budget.

The third step which is by far the most important involves passage out of both houses of Congress by the requisite two-thirds margin a Balanced Budget Amendment to the Constitution, one that would cap spending as a percentage of GDP and one that would require a two-thirds supermajority in order to raise taxes.

Upon each of those conditions being met, then the debt limit would raise, but only then. We would not raise it without those conditions having been met, because if we don't meet those conditions, we won't be able to look our constituents in the eye and say, we've done what needs to be done in order to make sure that we get to where we need to be, in order to get to the point at which we will no longer be in a position of having to go back to the same trough every few months, to go through the ceremony of raising the debt limit yet again.

We have to remember that every time we [raise the debt limit], we run an increased risk that we'll start having to pay higher and higher yields on our treasury instruments. Every time that happens, we incur more expenses that relate to our ability to remain current on our debt interest payments. Every time interest rates yields on those debt instruments go up by one percentage point, we have to spend an additional $150 billion a year just in interest, once our debt instruments catch up with the increased rate. That's a lot of money.

Let's say if interest rates were to go up 3%, we could soon find ourselves in a position in which we might be spending as much as $700 billion a year on interest. We're spent currently paying about $250 billion. $700 billion a year is roughly what we spend on national defense. It's roughly what we spend on Social Security in an entire year. It's close to what we pay in Medicare and Medicaid combined at the federal level in an entire year.

So where's the difference going to come from when interest rates start to creep up? Even if they go up three percentage points, they'd still be below their historical average.

That money has to come from somewhere and it will. It'll end up coming from the various programs that Americans are most concerned about. so whether you're a Conservative and you might be concerned about the money coming from the defense budget, or on the other hand you're liberal and most concerned about it coming from entitlements, you ought to be concerned about our practice of perpetually raising the debt limit and engaging in perpetual debt spending especially when it is in excess of $1.5 trillion every single year. This threatens every federal program out there.

It also interferes with the ability of each American to find the prosperity that he or she seeks; the ability of each American to live his or her life in the way he or she chooses. That's distressing. It interferes with the liberty of the individual, which is what we've been elected to protect.

I'm very proud to be part of this 21-Senator coalition, a group of Senators who are concerned enough about this issue that they're willing to say, we understand that we can't just not raise the debt limit. There are enough people who are concerned enough in this country about not raising it, the abrupt halt to this spending could create chaos.

So recognizing that reality, we've taken the bull by the horns and we're willing to do the difficult thing. We're saying in order for us to raise the debt limit we have to be willing to set things in motion in such a way that will solve the underlying problem, will create permanent structural reform within the United States Congress.

I want to close by responding to an argument made by Timothy Geithner, the Secretary of the United States treasury. The argument he made was that, as I understand it, Section 4 authorizes the Executive branch, perhaps the Treasury secretary, perhaps just the President, to somehow raise the debt limit without consulting Congress, without an act of Congress in place. That argument is not accurate. that argument is based on an improper reading of the 14th amendment.

The language to which he refers reads in part as follows, "the validity of the public debt of the united states authorized by law shall not be questioned." Adopted in the immediate aftermath of the Civil War, this provision simply acknowledges the fact that we can't ignore our debt obligations, that when interest or principle come due on our national debt, those things have to be honored.

You notice in the middle of it, set off by commas, is a phrase that says, "authorized by law." To create law in this country, you have to move something through Congress. That "something' has to be presented to the President for signature or veto.

You can't make a law in the United States government without Congress. Article 1, Section, clause 2, makes that point clear by giving the authority to Congress to incur debt in the name of the United States. So necessarily, by definition, by operation of the plain text of the Constitution, you cannot raise the debt limit without an act of Congress.

If anything, Section 4 of the 14th amendment simply makes clear that which I wish Secretary Geithner would acknowledge, and I hereby call upon him to acknowledge, which is that he has a legal and a moral obligation to make sure that if the debt limit is not increased during whatever time that it remains in limbo, during whatever time that we face a debt limit induced shortfall, it is his obligation as the Secretary of the Treasury to use the first tax revenues coming in the door to pay our debt obligations, to pay the interest that's being accrued on our national debt.

It's his obligation not only as a fiduciary, or a quasi-fiduciary, but also under the very provision of the Constitution, Section 4 of the 14th amendment, the same provision that he cites binds his hands and requires him to make sure that that interest gets paid, prohibits him from bringing about a default on our national debt, which is what he's been threatening on many occasions.

There is a way forward. The circumstances in which we now find ourselves are, to be sure, threatening. They are intimidating. They are daunting. And they bring about substantial disagreement within this body and within the body that meets just down the hall from us. But there are answers, there are solutions so which we can agree. I believe that the "Cut, Cap, and Blance" Act provides the proper solution and it's a solution that can appeal to liberals and conservatives alike, to democrats and republicans alike, and I call upon all within the sound of my voice to take a careful look at this legislation and to jump onboard and become supporters.

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