A bill to amend title 31 of the United States Code to increase the public debt limit.

Mr. President, the Senate is here today to respond to the administration's request once again to increase the statutory limit on the Federal debt. More fundamentally, we are here in response to a warning. Like a proximity alert on an aircraft, the debt limit warns the Government is headed for a crash. We need to change course.

Unless we change course, the administration's fiscal policy will consign American families to a lower standard of living. Unless we change course, American workers will have lower incomes than they would otherwise have, and the dollars they earn will be worth less than they otherwise would have been worth.

Unless we change course, millions of Americans will live poorer lives. That is what we are really debating today when we debate the debt limit, and that is why I shall vote against the bill, to signal that we must change course.

Narrowly speaking today, we are considering the ceiling on Federal debt, the cap that the law places on borrowing by the Federal Government. The legislation before us would raise the debt ceiling to $8.184 trillion. It would increase the debt ceiling by $800 billion.

As this chart to my left shows, it will be the third largest increase in the history of the country. This chart indicates debt limit increases since 1982, and in roughly 1990, it was $915 billion, and then the highest was $984 billion, and this $800 billion is the third highest increase in the debt ceiling. Unfortunately, this large debt ceiling increase, and particularly the recent increases, are becoming all too common.

Just last year we were forced to raise the debt ceiling by a record $984 billion. Almost $1 trillion in additional Federal borrowing, that limit was raised in 1 year. In just the year before that, the debt ceiling had to be increased by $450 billion. That is more than $2.2 trillion in debt in just 3 years. In contrast, prior to those 3 years, there had been no increase in the debt ceiling for 5 years.

An increase of $800 billion of debt that is requested in this legislation before us means $2,700 more debt for every man, woman, and child in America, and a total of $8 trillion in total debt means about $25,000 of debt for every man, woman, and child. That is a $25,000 burden on each of us, our children, and our grandchildren.

I believe that each of us who runs for public office and serves has a moral obligation, and that obligation is to leave this place in as good a shape or better shape than we found it. It is that simple. As this President and this Congress keeps piling up more and more debt, clearly we are leaving this place in worse shape than we found it. We are putting a huge additional obligation and burden on our successors and upon, more importantly, the people we represent and, even more importantly, those who follow the people we represent. That is not the moral, correct thing to do. My judgment is that it is not only not responsible, it is irresponsible.

This chart shows per capita total Federal debt outstanding. This is per capita, on a per person basis in America. It has steadily been rising from 1997 from close to $20,000 to more than double, to $25,000 being asked for today.

Today's increase also will not be the end of large increases in the debt ceiling. It will not be the end because before the next year runs out, we will need to raise the debt ceiling once again.

The reason for these record increases in the debt ceiling is the record Federal budget deficits that our Government is running.

To clarify for those who may be unsure about the terminology here, the term ``deficits'' obviously means annual deficits that this Government runs, and the term ``debt'' means the accumulation of all the deficits. That is why the deficits sound a little less. It is some $400 billion, whereas the total publicly held debt is over $8 trillion.

I must add to this, I don't want to lay the blame totally in the hands of the President, but the President submits budgets to the Congress. Congress tends to work with the budgets that the President submits. Every year the President submits a budget and Congress does work around the edges, maybe add a little, subtract a little, but it is Presidents, not Congress, in the main, who actually determine the amount of either surplus or the amount of deficits that are actually enacted. It is primarily the Presidents.

Since the current administration took office, there have been record annual surpluses that have turned into record annual deficits. In the fiscal year 2001--that is the transition year between the two administrations--the Federal Government ran a surplus of $127 billion, a surplus. We actually ran a surplus of $127 billion in fiscal year 2001. For the next year, 2002, the first full fiscal year in the current administration, the Government ran a deficit--not a surplus but a deficit--of $158 billion. In the next fiscal year, the Federal Government ran a record deficit of $377 billion. Last year, in fiscal year 2004, there was yet another record deficit of $413 billion.

This chart basically outlines what I just said; namely, we start with a reduction in Federal debt. That is the total. Beginning about 2001 it starts skyrocketing back up again.

These record deficits are even more painful when they are compared with the record annual budget surpluses that preceded them. In fiscal year 1998,

the Government ran a surplus of $69 billion. This was a record budget surplus at the time and the first budget surplus since fiscal year 1969.

In fiscal year 1999, this was another record surplus, $126 billion. That was followed by yet a third record surplus of $236 billion in fiscal year 2000. So we had 3 years of growing surpluses. So in just 4 years, the Government has moved from a record surplus of $236 billion to a record deficit of $413 billion, which is quite a dramatic swing of about $650 billion in our annual Federal budget outcome just over a 4- year period of time.

That is why we are here today. That is why we have to, in a technical level, raise the debt ceiling. It is because we are running record budget deficits. It is that simple.

In contrast, when we were running budget surpluses, the Government was doing what it should do. It was beginning to pay off the debt held by the public. That is what took place the second half of the previous administration. So between 1998 and 2001, our Government paid off about $450 billion worth of debt. Indeed, when the current administration took office, there was serious talk that all debt held by the public would be paid off within about 10 years or so. I think we all remember that. Gosh, if we totally pay off our national debt--is that possible? People were saying it would be bad if we paid off our total national debt. But we were on the glidepath at that time, a few years ago, to pay off the national debt, and there was very serious talk about what would we do when we got down to zero national debt. How soon we forget.

What a sad turnaround we experienced. The turnaround can clearly be seen in this chart here which outlines the dramatic change. Our national debt was steadily coming down as we had annual deficits and we were using the deficits to pay off the national debt. That is what happened in 2001. Then in 2002 and 2003 and beyond it is just the opposite.

Is this going to continue, this trend? Unfortunately, if we are objective about this, I think the answer is yes. The President claims he will cut the deficit in half in 5 years. Indeed, Senator Kerry campaigned for the Presidency and said he would cut the deficit in half in 5 years. But I must say, to be totally candid, those estimates are a little rosy. That is not going to happen.

For example, the independent nonpartisan Concord Coalition projects a deficit of about $450 billion 5 years from now. That will be higher than last year's record. Don't forget the Concord Coalition is known by most Members of Congress as being a fair, objective, nonpartisan organization looking at these matters very closely and very fairly and accurately.

Ten years from now the Concord Coalition projects the deficit will be an astronomical $734 billion. The Concord Coalition says it is going to get worse, much worse, with each passing year and the total deficit, they say, for the next 10 years will be almost $5 trillion. That means the Federal borrowing for the public will be $5 trillion in 10 years, and the debt ceiling will have to be raised by $5 trillion as well just to accommodate that increase.

Some may ask, Does it matter if Federal Government borrowing increases by $5 trillion? Does it really matter? Mr. President, it does. It really matters.

When the Federal Government borrows money from the public, it threatens two bad results. First, the Federal borrowing could compete with borrowing by businesses and consumers. What does that mean? That means that interest rates would go up. They have to go up. They are competing for the supply of money. Borrowing by businesses for new investments would have to go down. Borrowing would have to go down, all things being equal, and with fewer business investments, economic growth would, therefore, decline relative to what it could be.

High interest rates are killers. High interest rates, more than almost anything else, are a drag on the economy. It really slows the economy down and could deepen any recession that might occur.

Conversely, very low interest rates help businesses borrow, help homeowners buy homes, et cetera. It is very good for economic growth. In addition, because of this crowding out effect, our future standard of living could be lower than otherwise it would be.

Moreover, the rise in interest rates caused by increased Federal borrowing would make household purchases by credit more expensive. The increased costs would cause households to have less purchasing power and, therefore, would have to buy less. You may have to postpone or maybe not be at all able to buy that new refrigerator, to buy that new stove, that TV set, whether it is a plasma TV or regular TV, whatever it might be. The increased cost would cause households to have much less purchasing power.

For example, an increase in mortgage rates of just 2 percentage points would increase home buyers' annual payments on a $200,000 home by about $1,700. Potential home buyers would decide whether to buy these homes or, in the alternative, reduce other purchases. In either case, the home buyer's standard of living would be lower.

The second bad outcome that the additional Federal borrowing could cause is that Americans would owe more to foreigners. Foreigners would increase their holdings of U.S. assets. What does this mean? This would lower our future standard of living, as the earnings from American assets would have to go to foreigners, not to Americans. Thus, when the Federal Government borrows more, the standard of living of the American families suffers. It is zero sum, axiomatic; it by definition has to happen.

There is another danger from added Federal borrowing as well. If foreigners, especially foreign central banks--that is the governments, foreign governments--buy a significant portion of our debt, our U.S. economy will be subject to serious jolts, particularly if these lenders decided to sell off that debt precipitously. At the very least, they will have a little hold on us as they increase their holdings of American Treasurys, American securities--which is what they buy mostly these days, partly because it is more liquid, which means they could get rid of them much more easily, more quickly. But they have a little hold on us, a little leverage on us in any trade negotiation, any political negotiation, any foreign policy negotiation with these countries. Whether it is China or Japan or wherever, there would be a little edge because this country might hint that, gee, maybe we might start pulling out our purchases, sell the U.S. Treasurys we have unless you Americans go along with something we want. I am not saying it will be a huge factor. It may be a huge factor. I am saying it will be a factor we would not want to have to deal with.

Suppose the U.S. dollar declines further. It has come down about 30 percent in the last couple of years against the Euro. When the Euro was first announced, the dollar was fairly strong compared to the Euro. Now it has fallen about 30 percent. As Federal debt and interest payments from our national debt are denominated in U.S. dollars, what happens? The value of those assets starts to drop. That is what is happening. The U.S. dollar, compared with other currencies, is starting to fall significantly.

What happens then? Foreigners, including foreign central banks, might be afraid the dollar will go further. That is the trend. It is going down. Why is it going down? Because of the huge deficits and debts. A little less confidence in America. The more it goes down, then central banks in other countries will ask, do they want their dollar- denominated assets, as U.S. Treasury, to decline further? Probably not. So what are they going to do about that? Sell. Sell before they fall. Once they start to sell, what happens? The fall is greater.

That is the danger we are facing. I am not saying this is actually going to happen. Nobody knows if this is going to happen. There is a school of thought that there is so much savings in the world this will not happen. But we all know it is getting more and more risky and more likely this will happen.

If we exercise a little common sense as we run our household, we know there comes a point we cannot continue to borrow. There comes a point when the bank says no. There comes a point when we have to be more responsible as a household. The same is true here. There comes a point when the bank says--in this case it is foreign banks, or in this case the taxpayers--Enough is enough.

We do not know there will be a huge, precipitous decline. We do not want there to be a precipitous, huge decline. If there is, we do not want to know when it is because we do not want it to happen, but we do know if we are irresponsible and turn a blind eye to all of this, it is much more likely to happen and we will pay the consequences and rue the day when we, at an earlier date, did not take the necessary steps to correct this.

There is a real danger that foreign banks, as they look at their hole card, may sell off some of the Federal debt they now hold. Half of the foreign holdings are held by central banks. That would cause a spike in interest rates. Why? Because as they begin to sell, what does the U.S. Government have to do? It has to raise interest rates to keep the companies in America securities. Raise interest rates, and we will have all the other consequences I mentioned earlier--higher mortgage interest rates, consumer interest rates go up, companies cannot borrow as much because the banks are charging them much more. This is not some fringe possibility; this is real.

Why do I say it is real? Why am I very concerned about this? Let me quote the former Chairman of the Federal Reserve, Paul Volcker. He said quite recently he thought there is a 75-percent chance of a currency crisis in the United States within 5 years. Those are odds we do not want to have to deal with.

One of the hardest things to do is managing economic affairs early before you get in real trouble. It is so easy to postpone and put off. It is a bit of an abstraction right now. We do not know what will happen. It does not hit Americans right in the gut. It is not like raising taxes or lowering taxes which people feel immediately in their household budgets. I can guarantee if these problems do occur, and all the evidence indicates it is very likely to occur unless we take some very serious steps today, it is going to hit Americans so hard in the gut, it will have such an impact on Americans that this country is going to have a very serious problem.

Something else we should consider is the international competitiveness we Americans face with other countries worldwide, irrespective of our current deficits and trade deficit--which is humongous, which we will have to pay for sooner rather than later--with other countries. Take China, for example. We graduate in the United States of America about 65,000 engineers a year. Engineers can build new products and help make America strong. Guess how many engineers China graduates each year. Over 300,000 yearly. Are they brighter or dumber than our engineers? No, they are smart, progressive young men and women. And they are hungry. For those who have been to China recently, it is stunning to see the degree to which the Chinese people are hungry. They are going to compete very aggressively on the world market.

We are in a sense almost fiddling while Rome is burning. That is, not only not paying attention to our fiscal problems but also not paying attention to the competitiveness we have around the world; that is, not making sure we have more trained engineers who can do better worldwide. We will find ourselves not too many years from now in a real pickle. I am saying, right now, start taking measures so we do not have huge problems we otherwise would have.

I mentioned earlier central banks, if this trend continues, might decide to change their holdings and Federal debt for political reasons. Not only economic, but also for political reasons. For example, a foreign government might be involved in a trade dispute with the United States. This foreign government would know it could roil markets for the U.S. Federal debt and U.S. economy if a central bank sold a large portion of its holdings of U.S. Federal debt. It knows that. So what does it do? That government or country might hint around or might threaten to sell off, roil international markets, with an adverse effect on U.S. currencies, undercutting the United States' position in that trade dispute.

At the end of September this year, foreigners held about $1.9 trillion of our debt, close to $2 trillion of the total. Japan alone held $720 billion. China was next with $174 billion. Moreover, of $1.9 trillion of total debt held by foreigners, foreign central banks held $1.1 trillion. That is significantly more than half owned and controlled by central government banks. That is the government banks in those countries which, therefore, are in a great position of control. Those total amounts are nearly double the totals of 3 years ago. This has accelerated dramatically, almost double, over the last 3 years. Total debt held by foreigners is now 43 percent of all debt held by the public. Pretty close to half of all our national debt is held by foreigners--not by Americans, but by foreigners--and foreign central banks hold a full 30 percent of all such debt, one-third.

That is significant. Before I got in the Government, I worked for the Securities and Exchange Commission and I can remember back then the controlling interest was 10 percent. We are talking about 30 percent here. That is much more than a controlling interest in an entity's financial position.

The forecast for future Federal deficits and borrowing does not look good. I must add, this is not the worst of it. It gets worse. President Bush, for example, has made it clear he wants to pursue a plan for partial privatization of Social Security. Under that plan, part of a worker's and employer's Social Security payroll taxes we divert into new private savings accounts for the workers. That sounds good, but what does that mean? That means there would be less revenue left in the Federal budget for other spending. The Federal Government would have to borrow more money to cover the difference. That adds even greater pressure on the Federal debt and greater upward pressure on interest rates.

For many of the various partial privatization plans being proposed, these revenue losses would not be small. They would be more than significant, between $150 and $200 billion a year in each of the next 10 years. The losses would be even larger in subsequent years. These revenue losses, these additional revenue losses, and the associated increases in interest costs on top of that, would raise annual deficits to previously unimaginable heights. For example, the annual deficit projected by the Concord Coalition for 10 years from now would rise to over $1 trillion. That is in addition. Federal debt would rise by an additional $2 to $3 trillion in the next 10 years to a total of about $7 to $8 trillion of new borrowing during that period. That is on top-- that is in addition--$8 trillion today, double in 10 years.

So we should take two lessons from this dismal picture. The first is we need to exercise true fiscal discipline. That is just common sense. Americans sit around that kitchen table very often--maybe it is weekly, maybe it is monthly--trying to make ends meet. Some cannot keep spending more than they take in each year. Most cannot. No one can continue that indefinitely because at some point the banks just won't lend people any more money. They will insist that existing loans be paid off.

We have bankruptcies. We have chapter 11. We have chapter 7. The point of all that is to stop the hemorrhaging, to pay off creditors to try to get the economic houses of Americans and companies back in order. I am not saying we have to declare bankruptcy. That would be something else, wouldn't it, if the United States of America declared chapter 11 and tried to reorder all the creditors. It is unimaginable, but if that were to happen, just think what would happen to the value of the dollar, what the value of the U.S. dollar would be then.

In the world of borrowing China and Japan now play the role of the banks. They are our bankers. They hold 30 percent of our debt and foreign individuals own another, what, roughly 23 percent of our debt. All of this will force the United States at some point to begin to live within its means--at some point. And it could happen suddenly.

Remember not too many years ago when the financial markets just collapsed. The first was in 1987, I remember, and the stock market just went whoosh. Back in the Asian currency crisis not too many years ago things went haywire immediately. The deck of cards totally collapsed. It doesn't take much, and it is usually unforeseeable. It is usually some little event which is not predictable but which happens which triggers this selloff and collapse.

We do not want that to happen, and it will not happen, it is less likely to

happen if we today begin constructing a path where we do live within our means. This increase in the national debt today obviously signals just the opposite. There is no plan at this point.

So I say we would be far better if we were to eliminate our annual deficits on our own rather than having foreigners force us to that point. We can take concrete steps to reduce our Federal budget deficits. We can enact tough but reasonable caps in spending, renewed each year, and we can institute a requirement that all new tax cuts and new permanent spending be fully paid for. We can do that if we have the common sense and if we have the moral courage to do so as we are expected to do by the people who elect us. We could do all this without resorting to gimmicks.

This town, this country, this Government has been full of too many gimmicks--the lockbox for Social Security. There are a lot of gimmicks this President has proposed. We have almost reached the end of our string of gimmicks. We have reached the point of reality. We have to do what is right. We can enact a tough requirement that new tax cuts and new permanent spending be fully paid for. That was in place actually, as you recall, from 1990 until the spring of 2003. This requirement helped the budget turn from deficit into surplus. We should restore that. We should restore that quickly.

The second lesson we need to learn is that we should not enact the partial privatization of Social Security. There are a number of important reasons to stay clear of this. For example, these plans would likely cut total retirement income for many beneficiaries, have the effect of cutting income, not increasing it. Even this lowered income would be subject to great risk in the private market. Social Security, it may not pay hugely but it is stable. It is there. You can count on it.

I know a lot of young people say it won't be there. I disagree with that. I say it is going to be there. Why do I say that? I say that because with each passing year there are more and more voters who are seniors. There are more and more people who are age 55 up to 60 who really care about Social Security. I have forgotten the exact date. I saw one estimate that by about the year 2030 half of all voters will be age 60 or over. I do not know if that estimate is true. It was made by a reputable person--I won't mention his name today but it is someone we all know who is quite reputable.

But in addition to that, partial privatization would dramatically increase Federal borrowing. It would increase annual Federal budget deficits and it would increase the Federal debt. This would further lower both our current and our future standard of living. It would also make the U.S. economy even more vulnerable to recession and it could put the U.S. Government in a vulnerable position, even more so in its relationships with foreign governments. These fiscal dangers alone are sufficient reason to reject the partial privatization of Social Security.

Clearly, we should look for new vehicles to increase savings. We should look for more ways to assure that our seniors are more secure in their retirement. We could bolster Social Security. We could find more private savings vehicles. We could help our pension system. But the partial privatization of Social Security will have the effect of lowering the benefits to those currently 50, 60, 62, or 63, unless there is a massive enough additional borrowing by the Federal Government. And that is the low estimate, $1 trillion over 10 years, and the higher estimate is $2 trillion. That is in addition.

I ask from where is that money going to come? Can we really borrow that much more compared to what we have already borrowed? We cannot.

So we need to respond to the debt limit. I started out saying really technically this is an increase in the debt limit, which is required by statute, but more fundamentally the issue being raised today is how much more can this Government go into hock? That is really the question. And how quickly can we get ourselves out of it?

We need to respond to the warning of the debt limit increase. We need to change course. We need to prevent that crash. We still have time. We should heed Paul Volcker's warning of a 75-percent chance of a currency crisis in the United States in 5 years. I think I know what he is talking about. He may not be right, but if Paul Volcker says that, we should listen. We should take his warning very seriously. We should, obviously, act with a sense of urgency and do what we can to avoid that dangerous result. We should change course now. We should wait no longer. With next year's budget, we have an opportunity.

The President, in his submission to Congress this January, February, whenever it is, in working with the Congress, can begin to chart a proper course, begin to chart a course or begin to actually honestly get our Federal budget deficit under control. We have that opportunity. We have that obligation. The time is now. The time is January when the President submits his budget and the next months when the Congress works with the President as we begin to get our Federal fiscal house in order.

We have to change course so American families can hope for a better standard of living in the future, so American workers can have good jobs with good incomes and we have a strong dollar with real value in the international trade. We need to change course to make all that happen so future generations of Americans lead richer lives.

I will end with the statement I mentioned in the beginning. We have a moral obligation to leave this place in as good shape or better than we found it. It is an obligation we have--I assert whether environmental matters, whether Federal budget--to inspire confidence and togetherness in our people. I urge us very much to take the course of action that we well know is correct.

Mr. President, I now yield 10 minutes to the Senator from Wisconsin, Mr. Feingold, who is a real leader in the fight for fiscal responsibility.

Mr. President, we all owe a debt of gratitude to the Senator from Wisconsin for his long-time concern about budget deficits. I can think of no one in the Senate who has been a more articulate advocate of getting our house in order.

Mr. President, I yield 5 minutes to the Senator from South Dakota.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

There is not a lot of time left on the debt limit for debate. I urge Senators who want to speak to come over now because, otherwise, I will yield back the remainder of our time.

I suggest the absence of a quorum.

I see the Senator from Florida on the floor. I yield 5 minutes to him.

Mr. President, I yield to the distinguished Senator from Delaware, Mr. Carper, such time as he might consume.

Mr. President, I yield 10 minutes to the distinguished Senator from New Jersey.

Mr. President, I see the Senator from Iowa on the floor. Does he wish to speak now?

Mr. President, I yield 10 minutes to the Senator from Iowa.

I yield the Senator 60 more seconds.

I yield 5 minutes to the Senator from North Dakota.

I yield 2 minutes to the Senator from North Dakota.

I appreciate the discussion with the Senator from Iowa and the Senator from North Dakota.

I ask unanimous consent 20 minutes be reserved for the use of Senator Byrd when he is able to come to the floor.

I suggest the absence of a quorum, not charged to the minority side but charged to the majority side.

Mr. President, I ask that all time be yielded back on both sides.

Mr. President, I ask for the vote and ask for the yeas and nays.

Mr. President, I rise to discuss the extension of the debt limit. First of all, I thank my colleague from Montana for his great courtesy in allowing me to go first, because we have a hearing in the Indian Affairs Committee, so I thank my colleague from Montana for this courtesy.

Before us is a proposal to extend the debt limit by $800 billion. I will oppose that expansion of the debt limit because there is no plan to reduce the deficits and the increase in the debt we are now facing.

I think it is a mistake for this body to extend the debt limit by $800 billion without a plan to get the deficits under control, to get the debt under control. Instead, what we are doing here is writing another blank check and saying to this administration: Go ahead, continue to run record budget deficits. Continue to increase the national debt. Do not worry about a plan to reduce this increasing dependency on foreign governments, on foreign citizens. Forget about fiscal responsibility.

An $800 billion increase in the debt. Now, make no mistake, we need to extend the debt limit. We have to pay the bills of the United States. So there is no question that we need to extend the debt limit. The question is, by how much. The question is, should we not only do it with a plan to reduce this dependency on borrowing.

I believe the answer to those questions is absolutely. We ought to insist that there is a plan to get the deficit under control. We ought to insist there is a plan to reduce the buildup of debt. We ought to insist that this administration and this Congress face up to the mounting challenges facing this Nation.

To review the dramatic change in our fiscal condition, in January of 2001, we were told we could expect over the next 10 years nearly $6 trillion in surpluses. Now we are told, just 3 years later, nearly 4 years later, instead of trillions of dollars of surpluses, we can expect trillions of dollars of deficits, over $3 trillion deficits. That is a change in our fiscal condition in 4 years of $9 trillion. If that does not cry out for a response, if that does not cry out for this Congress and this administration to come up with a plan to address these burgeoning deficits and debt, I do not know what would require a response.

If we look at the last 4 years, we can see that in 2001 the Federal Government ran a surplus of $127 billion. In 2002, that had turned to a $158 billion deficit. In 2003, that deficit had exploded to $377 billion--the biggest deficit in dollar terms in our Nation's history-- and now in 2004, another record deficit, a deficit of $413 billion-- record red ink and no plan to address it.

The President has told us, told us repeatedly, that he has a plan to cut the deficit in half over the next 5 years. Do not believe it. Do not believe it any more than the claims the President made that there would be no deficit if we adopted his fiscal plan. The President told us--in fact, the President assured us--that we could count on a record paydown of the debt if we adopted his fiscal plan. Well, we did, and he was wrong because not only have we not had record paydown of the debt; what we have had is a dramatic increase in the debt. As we look ahead, here is what we see the deficit looking like over the next 10 years. I do not see any cutting of the deficit in half. The only way the President gets to his claim that he is going to cut the deficit in half is he leaves out things. He leaves out war costs. He leaves out the need to address the alternative minimum tax. He leaves out the effect of his own tax proposals.

If we take all of those into account--making the tax cut permanent, which the President has recommended; his defense buildup; the alternative minimum tax reform; and ongoing war costs--this is what we see, as the deficits going forward, in the amount that is actually going to get added to the debt every year. This is an ocean of red ink facing this country. Part of the reason, as I have indicated, is that the President, I am afraid, hid from the American people the true effects of his policies.

One way he has hidden it is he has changed from 10-year budgeting to 5-year budgeting. Here is why I believe he did that. This shows the cost of extending the tax cuts as the President has proposed. This dotted line on this chart shows the end of 5 years. But beyond the 5 years, the effect of the President's tax proposals explode in cost. That is the nature of the President's tax proposal. The cost explodes outside the 5-year budget window, just beyond the view of those who are responsible for making budgets for this country. The result is that the red ink the President has promised to reduce will explode right beyond the 5-year budget window.

It is not just with respect to the tax cut proposal, but we see the exact same pattern with the alternative minimum tax. The alternative minimum tax is the old millionaire's tax, which is now affecting 3 million taxpayers. In the next 10 years, it will affect 30 to 40 million taxpayers. It has to be dealt with. The President only provides funding to address this crisis for 1 year.

But look at the pattern of cost. Again, right beyond the 5-year budget window, right beyond this dotted line, which represents the next 5 years, the cost of fixing the alternative minimum tax absolutely explodes, at a cost of over $600 billion. The President does not have that in his budget.

Nor does he have the true cost of the war effort. We have had $25 billion put in a contingent reserve for fiscal year 2005, but we know that is a fraction of the cost. The Congressional Budget Office tells us that the true ongoing cost of war is over $315 billion. None of it is in the budget, other than the $25 billion. None of this $315 billion, other than the $25 billion down payment, is reflected in these numbers in which the President assures us he is going to cut the deficit in half.

I am told the Pentagon is about to propose, the administration is about to propose an additional $70 to $75 billion in a war cost supplemental some time early next year.

I think this hiding of the true financial condition of the country is wrong, and I think it is reckless.

The President told us when we adopted his fiscal plan: I can fully protect Social Security. I won't be taking Social Security money and using it for other purposes. Wrong again. The President is taking every dime that is available to take from Social Security over the next decade--$2.4 trillion--and using it to pay for other things. Mr. President, $2.4 trillion, every dime of which has to be repaid, and the President has no plan to do so.

It is not just there that we see the problem. We also see that the President has a plan to privatize parts of Social Security. Most of the estimates are they would cost some $2 trillion in transition costs. Again, the President has no plan to pay for it other than to borrow the money to do it. More borrowing, more deficits, more debt: no plan to address the issue. These decisions have real consequences.

We can see all of this is happening at the worst possible time, right before the baby boomers start to retire. The baby boom generation is out there. It is not a projection. They have been born. They are alive today. They are going to retire. They are going to be eligible for Social Security and Medicare.

This is what it looks like when you plot the increase on a graph of those who are going to be eligible for Federal benefits. Right now, we have around 40 million people who are eligible, but over these next years the number is going to double. This is the dramatic demographic timebomb that is out there with the baby boom generation.

When we look at the long-term implications--this is not a projection by this Senator or a projection by the Democrats; this is a projection by the Congressional Budget Office--the long-term budget outlook in terms of the effect on deficits, what they show is some improvement over the next couple of years but then an explosion of deficits and debt if the President's proposals are adopted.

We have record deficits now, the biggest in dollar terms in our history, and they pale in comparison as to what is to come if the President's proposals are adopted. There is no response. There is

no response from the Congress of the United States. There is no response by this administration to these growing deficits and debt. It is just more of the same, business as usual, steady as she goes. That is a risky course for this country.

We remember so well the President telling us there would be maximum paydown of the debt if we adopted his fiscal plan. Instead of maximum paydown of the debt, we see the debt exploding.

The gross debt of the United States was less than $6 trillion when he took office. We now see, by 2014, that debt will approach $15 trillion--a stunning reversal in the fiscal condition of the country. In just these 3 years, there is an increase in the debt limit of $2.2 trillion under President Bush; an increase, in 2002, of the debt limit of $450 billion; in 2003, of $984 billion; and now another $800 billion. Mr. President, $2.2 trillion, after we had, from 1998 to 2001, no increase in the debt limit, none.

Now, the President describes these policies as compassionate conservatism. I do not know where the conservatism comes in. I do not know what is conservative about exploding the debt of the Nation. I do not know what is conservative about running up record deficits--and not just at a time of economic slowdown but even now, as the economy is recovering, deficits as far as the eye can see.

The result of these policies, the result of this increase in deficit and debt is soaring Federal interest costs. From the estimate in January of 2001 that the interest cost over the next 10 years would be some $600 billion, now estimates are that the interest cost to the Federal Government over that same period will be $2.4 trillion, from an interest cost projection of $600 billion to $2.4 trillion. That interest does not build a bridge, does not construct a highway, does not finance an aircraft carrier or a tank. That is money just to service the debt.

These massive increases in deficits have enormous implications, not only for our finances but for our economic strength. Deficits and debt will ultimately slow economic growth. This is a quote from the CBO Director, Douglas Holtz-Eakin, before the Senate Budget Committee last year.

Mr. Holtz-Eakin is an appointee of the Republican majority in the Congress. He came from the President's own economic advisory staff. He said this:

To the extent that going forward we run large sustained

deficits in the face of full employment, it will in fact

crowd out capital accumulation and otherwise slow economic

growth.

Mr. President, that is why these decisions matter. This is not just numbers on a page. This isn't just graphs. This is not just pictures on a chartboard. These decisions have a real impact on the economic health of this Nation, on the creation of jobs, on the development of economic opportunity, on the future economic prospects of our Nation and, fundamentally, of the economic strength of America.

I don't believe we can be militarily strong if we are financially weak. This President has us on a course to financial weakness. Make no mistake about it, these higher interest rates will burden families. For the typical American family, a 1-percent increase in interest rates will raise the payment on a 30-year home mortgage of $150,000 by $1,200 per year. When the Federal Government has to borrow more money, that puts it in competition with the private sector for borrowed funds. When that happens, that forces up the cost of borrowing. The more demand for money, the more interest costs have to go up. That is true especially at a time of economic recovery.

Mr. President, these decisions have real consequences in the lives of real people. I believe paying down debt is also a moral values issue. The President said himself in 2001:

Future generations shouldn't be forced to pay back money

that we have borrowed. We owe this kind of responsibility to

our children and grandchildren.

On this issue, the President was right. We should not pass on these debts to future generations. But that is now precisely what the President is doing--again, not at a time just of economic slowdown; we have now got a resumption of economic growth. Yet the President proposes more and more deficit, more and more debt. I think it is a mistake. I think it is a mistake for this body to extend the debt limit in an almost unlimited way, by $800 billion, without any requirement for a plan to address these burgeoning deficits and debt.

The deficits we are running are not just budget deficits, they are also trade deficits--approaching over $650 billion in the most recent year. Not only are we running a budget deficit of over $400 billion, we are also running a trade deficit of over $650 billion, or in that range.

Where is the money coming from in these massive deficits? Well, we are borrowing the money, as I indicated, from the Social Security trust fund--some $2.4 trillion over the next 10 years. We are also borrowing from countries all around the world. We have borrowed over $700 billion from Japan. We have borrowed over $170 billion from China. We have borrowed $100 billion from the so-called Caribbean banking centers. I think many in America would wonder what is going on here. We are borrowing money from Caribbean banking centers? We have borrowed over $60 billion from South Korea. Who would have believed it? Growing up in North Dakota, I would never have believed we would be out with a tin cup borrowing money from countries such as South Korea.

Mr. President, here is what has happened under this President in terms of foreign holdings of our debt. They have increased by 83 percent in just less than 4 years of this administration. Prior to this administration, total foreign holdings of U.S. debt were just over a trillion dollars. In less than 4 years, that has now increased by over 80 percent. We are now approaching $2 trillion of foreign-held debt.

Mr. President, who cares? What difference does it make? I have had a chance to go and teach classes in my home State at the universities and colleges. I have asked them what difference does it make if we are deeper and deeper in debt to other countries? Well, the response of those students has been overwhelming and clear. They have said: Of course, it makes a difference. How does it change any relationship if you are borrowing money from people? It makes you dependent on those people. It means you are less able to challenge them on unfair trade practices. It means you are less able to confront them if we are faced with a military confrontation.

I noticed with great interest a New York Times article of Tuesday, October 19, headlined, ``Private Investors Abroad Cut Their Investments in the U.S.'' It indicated that ``Asian central banks bail out America, a nation of spenders rather than savers.''

The U.S. economy is now increasingly dependent on a handful of foreign central banks for our economic stability and security. This is a vulnerability for our country. To more and more owe money to foreign nations and foreign central banks puts them in a stronger position with respect to America's economic future and puts us in a weaker position.

In that article, it indicated:

New data accentuated how dependent the United States has

become on purchases of dollar securities by the Chinese and

other Asian governments with links to the dollar. ``Foreign

central banks saved the dollar from disaster,'' said Akhraf

Laidi, chief currency analyst of the MG financial group. He

said, ``The stability of the bond market is at the mercy of

the Asian purchases of U.S. treasuries.''

We are at the mercy of foreign central banks, of Asian central banks. I don't think that is where we want to be. I don't think that is where we want to be as a nation, dependent on foreign central banks. In that same article, the New York Times indicated that a large amount of foreign-held debt could lead to economic turmoil. Here is what it said:

A disorderly situation would occur if foreign money dried

up suddenly when the United States still needed it.

Let's think about where we are headed here.

Then, the adjustment in the American savings might happen

involuntarily. Interest rates would rise sharply, and the

dollar could fall abruptly. This could induce a sharp

economic contraction, even stagnation.

Mr. President, what are we doing here? There is absolutely no response from this Congress or this administration to this gathering financial threat. No response. The only response is: Let's go borrow more money. Let's increase the debt more.

This article appeared in the Wall Street Journal on November 8, headlined, ``Dollar Lacks Backers as Deficit Worries Dominate.''

This article asks the question:

What is going to prop up the sliding dollar?

It went on to say:

Despite unexpectedly strong job creation and another jump

in the stock market, the dollar dropped against key

currencies . . . breaking through the record low against the

euro set nine months ago.

Currency strategists say the dollar's inability to

capitalize on news of 337,000 jobs created in October reveals

the market's skepticism about whether a second term for

President Bush will reverse deficit spending and a reported

current-account deficit--

That is our trade deficit--

the broadest gauge of the nation's balance of payments.

We are here, steady as she goes, headed right for a potential fiscal crisis, and there is no response.

Here is what happened to the value of the dollar against the Euro since 2002: The dollar has dropped 30 percent against the Euro in that time. This is a warning. This is a warning, I say to my friends. People are losing confidence in the fiscal policy of the United States. This has potentially ominous consequences that I think we all understand.

The CBO Director believes deficits can no longer be blamed on just a weak economy. He said:

Policy choices will determine where we go. We will not grow

our way out of this. It is no longer the case that we can

blame everything on the economy.

I talked about the budget deficit. Here is the U.S. trade deficit. Same pattern: explosive growth in our deficits, both budget and trade, requiring more and more foreign borrowing, making us more and more dependent on the decisions of foreigners as to our economic stability and strength.

Today in the Washington Post, Robert Samuelson, an economist, wrote an article headlined, ``The Dangerous Dollar.'' He points out the risks to our country of what could happen if there was continuing flight from the dollar and a collapse in its value. He points out the risk to this country and says:

No one knows what will happen. The massive U.S. payments

deficits could continue for years, with foreigners investing

surplus dollars in American stocks and bonds. Gradual shifts

in currency values might reduce the world's addiction to

exporting to the United States. Or something might cause a

dollar crash tomorrow. In that case, massive intervention by

government central banks . . . might avert a calamity. Or it

might not. We're in uncharted waters. If we hit a shoal, it

will be bad for everyone.

The warning is clear. The risks are there. The question is: Do we just stay on this current course, or do we respond to this growing threat? I think it is inappropriate to extend the debt of the United States by $800 billion without a plan to reduce this dependency on foreign capital.

I thank the Chair and yield the floor.

Again, I thank my colleague, Senator Baucus, the ranking member of the Finance Committee, for his courtesy in allowing me to speak first so that I may make a hearing going on in the Capitol complex.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 856 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), pending which I yield myself such time as I may consume. During consideration of

this resolution, all time yielded is for the purpose of debate only.

(Mr. REYNOLDS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, House Resolution 856 is a closed rule that provides for consideration of S. 2986, a bill to increase the public debt limit. The rule provides one hour of debate, equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means. The rule waives all points of order against consideration of the bill. Finally, the rule provides 1 motion to commit.

Mr. Speaker, the debt limit increase bill that will come before this body is a necessary step in order to avoid a shutdown of our government. The Federal Government has never before defaulted on our obligations, but without our immediate action today we will simply be unable to pay our bills.

Mr. Speaker, the underlying bill increases the statutory debt limit in order to protect the full faith and credit of the United States. It is necessary and not an unusual step to ensure that the Federal Government is able to pay its bills.

It is important to note that the level of debt subject to limit is a function of past decisions made by decades of administrations and Congresses. It is equally important to note that increasing the debt limit does not increase the deficit.

As Robert Rubin, President Clinton's Treasury Secretary noted, ``Passage of the debt ceiling is totally unrelated to deficit reduction.'' And in testimony before the House Committee on Banking and Financial Services, he further noted that ``The debt limit is about meeting obligations already incurred, while future deficits can only be reduced so actions taken in the budget process itself.''

While the publicly-held debt has increased more rapidly in recent years, it is a result of the ongoing war against terrorism, an effort that began after the horrific attacks on our Nation on September 11, 2001.

Without passage of the underlying bill today, vital programs such as Social Security, medicare, unemployment insurance benefits, veterans' care, and military retirement are all put in jeopardy.

We risk not providing food, clothing, ammunition, and other necessary resources to our brave men and women engaged in the war on terror. Highway funding, disaster assistance, the Low-Income Home Energy Assistance Program, all will be at risk.

In addition, if we do not act today, taxpayers will be further burdened with higher interest rates, and we risk the disruption of financial markets at a time when our national economy continues to grow at a strong pace.

Mr. Speaker, this rule and this underlying legislation is necessary to keep the government operating, ensure the continued delivery of vital services for our citizens, and provide the equipment, supplies, and munitions our troops need to continue our fight in the war on terror.

Mr. Speaker, I urge my colleagues to support this rule and the underlying bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I think it is important to just clarify the record that while public debt is held by foreign interests, foreigners invest in the United States because we have a sound economy and we provide a safe place for them due to our low risk of default.

The market for U.S. Treasury securities is the largest, most liquid and transparent financial market in the world.

It is also important for our colleagues to know that our debt limit increase is not an unusual function if we just look at the 21st century, but I think we kind of have to look at the last half of the 20th century.

The level of outstanding debt is subject to a limit and a function that is past decisions made by previous administrations and Congresses over decades, as I mentioned in my opening remarks, as well as current and past levels of economic activity and should not be subject to political gamesmanship.

As we look at the debt limit increase measures, there have been 83 since 1940, Mr. Speaker, seven during the 1940s, six during the 1950s, 13 during the 1960s, 18 during the 1970s, 24 during the 1980s, 13 during the 1990s and two far this decade. So it is not an unusual function or an unprecedented function or a Republican function or a Democratic function. It is a function of keeping the government running.

Mr. Speaker, I yield such time as he may consume to the gentleman from California (Mr. Dreier), the distinguished chairman of the Committee on Rules.

Mr. Speaker, I yield myself such time as I may consume.

I think it is important, after listening to my colleague and fellow member of the Committee on Rules, that we point out that tax relief did not cause the deficit. We would have triple-digit budget deficits today if taxes remained at the historically high levels of 2000. The tax policies that were put in place helped our economy out of a recession that began in the Clinton administration and was in the early Bush years.

Without our tax policies, the economy would not have recovered as quick and as well as it has. More Americans would have lost their jobs. A less robust recovery from recession would have had the adverse effects on revenues and the budget deficit, and healthy revenue growth continues even with tax relief. The recent decline in the deficit is largely a result of revenue increasing faster than anticipated because of strong economic growth.

After 3 years of declining revenue in the wake of September 11, revenue is now growing more robustly than expected. Just since July, we have seen the deficit projections for this year drop by $32 billion. While I cannot predict what the next election will be, I do know the President ran on those tax cuts, as did the majority in this Congress, and both the President will serve another term and in the 109th Congress the Republican majority will continue in being the majority in this body

I yield to the gentleman from Massachusetts.

Mr. Speaker, reclaiming my time, in the time of the last 2 years of this Congress we have had a great debate. A guy from the left that believes that there should not be tax cuts, or to have some kind of message for middle America to feel that they might get a piece of it.

I am a guy that believes if you pay taxes, you ought to get a tax cut. We took that referendum, I guess, to the public, and they have ratified an opportunity for this majority to remain.

Now, I also understand majority/minority politics, and I guess if I look through the years of 1940, 1950, 1960s, 1970s, 1980s, 1990s and 2000 when we would find that Republicans controlled the place or Democrats controlled the place, I am sure that there were a few that made the debt reduction or the aspect of all of that debate at the same time they looked at the debt limit.

But also in my opening remarks we heard from Secretary Rubin who said that the aspect of raising the debt limit was not the aspect of addressing the deficit. It was the budget itself. And I will quote him.

As Robert Rubin, then Treasury Secretary under the President said in November of 1995 in that quote, Passage of the debt ceiling is totally unrelated to deficit reduction. The deficit can only be reduced in the budget process.

He reiterated this truth 1 month later in testimony before the House Committee on Banking and Financial Services when he said, The debt limit is about meeting obligations already

incurred, while future deficits can only be reduced through actions taken in the budget process itself.

Mr. Speaker, reclaiming my time, a couple things.

One, in the finger pointing of this 21st century of deficit and debt limit increases, again, I will put on the record, we had seven during the 1940s, six during the 1950s, 13 during the 1960s, 18 during the 1970s, 24 during the 1980s, 13 during the 1990s and two so far this decade. So we are not into a new venture, and we are not into a Republican venture. We are into a congressional decision of whether we keep the government moving or whether we do not, and there were 83 debt limit measures that have been enacted into law.

I believe the gentleman from Texas will come up and talk about the PAYGO amendment that was offered before the Committee on Rules last night, and I think that it will be important for us to listen to him, and I believe that the issue of PAYGO will have bipartisan support if and when it comes to this floor.

But I also want to caution my colleagues that this is a Senate bill that we are taking up, and further delay once again results in this body jeopardizing our trust funds such as Social Security, Medicare, highways, and we further jeopardize veterans' care and military retirement.

So when we put our military at risk, at not having the necessary resources of food and clothing and ammunition, we also endanger unemployment benefits and disaster assistance, low-income home energy assistance programs.

The debate on PAYGO I believe should happen and will happen. It is not necessarily that it has to happen when we are looking at debt limit for a number of reasons, including the quotes of Robert Rubin of 1995.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

It is true that in 2004, as we consider whether we increase the debt limit, the government is controlled by Republicans, a Republican President, a Republican Congress in both the other body and in this one. But I am reminded of President Bill Clinton's State of the Union address in 1996, and I quote him: ``And on behalf of all Americans, especially those who need their Social Security payments at the beginning of March, I challenge Congress to preserve the full faith and

credit of the United States, to honor the obligations of this great Nation as we have for 220 years, to rise above the partisanship and pass a straightforward extension of the debt limit. Show them that America keeps its word.''

That rang true when a Democratic President spoke to a Republican Congress; it rings true today as we consider the debt limit.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

First of all, I want to correct my colleague from Oregon. I do not think I said I had a mandate on anything. I think I outlined the fact we had a great debate before an election and Republicans continue here.

I also wonder if my colleague ever voted for a debt limit increase in his many terms of service, as we demagogue the issue today. As we come to a vote, it is going to get down to whatever excuse you find if you do not vote for it. But if you do not vote for it, you are actually putting the government in harm's way, which means the people are in harm's way. We have said that in repeated messages on the record today, and that still remains a fact as we look at consideration of the debate on the rule and then the underlying legislation following it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I have listened to a number of my colleagues, and I have been on the record repeated times. First of all, what came before the Committee on Rules last night was a Senate bill. The Committee on Rules made a vote and decision without having any further delay to bring forward the Senate bill for consideration on the rule that we are now in debate on, and later we will have debate on the underlying legislation.

We can demagogue it and put on the record all sorts of messages to feel good or draw political lines or switch from when might have been responsibility for voting for debt limit and now not, and now PAYGO. We have had debate on that. But I want to make sure that we listen to two things when we talk about bipartisanship. Bipartisanship is a two-way street of working together.

I suspect, as I said before my colleague from California entered the Chamber, I expect to see Republican support again for PAYGO. Republicans are looking at it closely. There is certainly support for consideration of that. My colleague from California outlined some of the votes in a bipartisan vote that came for PAYGO, and I addressed that I think, with the gentleman from Texas, that there is support.

The question is, under the terms of the debate, we want it altogether, right now, right here, and that is the position we are carrying. Some of that has been now a Blue Dog position that has been laid out by a number of members of that caucus. But the reality is if we keep screwing around with this thing, we are going to shut the government down. We cannot have it both ways.

Each of us has voted for something that makes the government run and takes credit for it when it is the fall of the election year, making sure that voters knew they were working hard to bring some of that Federal money back home.

Any further delay will result in this body's jeopardizing our trust funds, like Social Security, Medicare and highways. We further jeopardize military care and retirement. We put our military at risk. We endanger unemployment benefits and disaster assistance and low- income home energy assistance programs, programs many of us had in our messages back in our respective States and districts.

We also talk about listening to presentations from 2000. At least twice I put on the record in this hour 83 different times over the last 64 years has the Congress taken upon itself to increase the debt limit.

I also put on the record President Clinton's 1996 State of the Union address where he asked for bipartisan cooperation to ask the Congress to do the right thing and increase the debt limit.

So it is not a new thing, it is not a Republican thing, it is not at Democrat thing, it is a government thing. There will be a consequence if we do not keep the government running because, for the history of our Nation, we have never not made sure that we honored what needed to be done with respect to debt limit.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, in 1996, we heard, as I put on the record, President Clinton's appeal to the Congress. I thought I might share a little bit of the appeal of our colleagues. The two I have come from the Democratic side of the aisle at that time who made the appeal for the debt limit to be rising.

Barbara Kennelly of Connecticut stated, ``Lifting the debt limit should not be a matter of politics, but of governance. Ensuring that it is done should not be a question of partisan leverage, but of leadership.''

The gentlewoman from Texas (Ms. Jackson-Lee), ``If the debt ceiling is not extended or is sent to the President in a form he cannot sign, the repercussions will be devastating. Already, the leaders of our European allies are warning of an international financial crisis should the United States default on its debt payments. Bond rating agencies are raising alarm that our Nation's triple A bond rating is in jeopardy.

``An actual default would cause interest rates on Treasury bonds to rise, making a balanced budget almost impossible to achieve. Home mortgage and business borrowing rates would increase, slowing economic growth.

``In the past, many clean debt limit extensions have been passed in a bipartisan manner by this House. It was the right thing to do then, and it is the right thing to do now.''

I do not always agree with my colleagues on some of their viewpoints of getting government solutions, and I am sure that many do not agree with me on government solutions, but we have certainly had a history of administrations, Democrat and Republican, and 83 times this Congress since 1940 has said let us do it.

Now I understand showmanship. I understand consumption back home. I understand we are still in November, so we have a little election spirit in us. But the reality is if we do not increase this debt limit, we are putting America's people in jeopardy.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, this Congress must honor our commitments and America's priorities. We must stand up today in support of our seniors and veterans and military and all citizens who will be harmed by our inaction. I urge my colleagues to do the right thing and support the rule and the underlying bill.

I also look at the 109th Congress as an opportunity for those who want to look at PAYGO, Republican and Democrat, from those from the left to those on the right to come together in a bipartisan fashion and continue working through the will of the House to see those types of considerations debated in committee and debated on the floor of this great House.

Before I yield back, I would like to quickly thank the gentleman from California (Chairman Dreier) and all of the members of the Committee on Rules and staff as this is most likely the last time I will manage a rule for this industrious panel. I have been honored to serve on the Rules Committee for the past 6 years.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

Mr. Speaker, pursuant to House Resolution 856, I call up the Senate bill (S. 2986) to amend title 31 of the United States Code to increase the public debt limit, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

The issue before us is really America's responsibility to pay its bills, to meet obligations that America and Congress, as our Members, have already incurred.

Before September 11 and the war on terror, the Republican-led Congress paid down nearly half a trillion dollars in public debt, marking the first time since 1969 that Congress had reduced the national debt. Today, America is fighting an elusive and determined enemy abroad, while working to stimulate the economy and help industry still recovering from the 9/11 attacks.

At this extraordinary time, with our Nation's many obligations, the government is nearing the debt limit. If the Treasury cannot issue the debt, the government may be unable to meet many of its obligations, such as the regular investment into the Civil Service Retirement and Disability Fund. Republicans want to do the responsible thing. As a result, Congress is increasing the debt limit to $8.1 trillion.

Holding the line on spending and raising the debt limit are not mutually exclusive, and it is important to remember that. Earlier this year, the House approved a lean, responsible budget that would cut the deficit in half within 5 years, hold the line on spending and guard against Democrats' calls for job-killing tax hikes.

Republicans are committed to reducing America's debt through responsible and restrained spending. Congress must meet America's priorities such as Social Security and Medicare. That is why raising the debt limit is so critical. But, in doing so, we can remain steadfast in our quest to eliminate the waste, the fraud and abuse on behalf of all taxpayers and future generations.

Mr. Speaker, I do have a bipartisan request. Tonight's measure is an appropriate time to discuss spending and deficits and solutions, but as we debate this and as we make our final vote, let us not punish our seniors, let us not punish our elderly, let us not punish our military just to score political points. If the debt ceiling is not increased, America cannot pay its bills. We cannot meet existing obligations. We will not ultimately have the cash on hand to pay Social Security benefits, military retirement, Medicare benefits, unemployment benefits and other trust fund obligations.

As raw as this recent election was, as bitterly contested as it was, with hurt feelings all around, we need to work together as Americans to take responsibility for our bills. Let us not default on our obligations. Let us not stop the checks to our needy who are counting on us. Let us not use our elderly as political pawns in trade for a seven second sound byte back home. They deserve better. We have a responsibility to pay our bills.

Mr. Speaker, I reserve the remaining time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Some people have a short memory around here. I do believe that reducing the debt, restraining spending is a bipartisan effort. We have to work together. But I recall my friends on the Democratic side, when Republicans proposed a Medicare drug plan of around $400 billion, our friends on the Democrat side proposed a plan of $968 billion. We did not spend too little; they wanted to spend more. When we talked about unemployment extensions, they increased it $30 billion over the Republican plan. It was not that we were spending too little; they wanted to spend more. And when we talked about welfare reform and the need to move people to work, they added $52 billion, my Democratic colleagues, so concerned about the debt. It was not that we were spending too little; they wanted to spend more.

And when we are talking about moral obligations, I guess I would ask this: Is it a moral obligation when you trumpet that press release for that new firefighting equipment, for that new road you got, for that new university research, for that farm bill you championed, when you stand for the ribbon-cutting back home, and when you court public approval for spending tax dollars? Do you also have the moral obligation to pay for it?

Today, the issue is are we going to pay the bills of America, pay for the spending that has been incurred and take responsibility for our own actions?

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Like a mortgage payment, like a credit card payment, we are paying for past decisions by this Congress, some of them decades old. In fact, if we are talking about the past 40 years of control by our Democratic friends, we are talking about raiding the Social Security trust fund, increasing the debt, and in more recent years voting against every bill because we did not spend more. Because we did not spend more.

Republicans are standing up for this responsibility. We understand that America took three big hits to our economy on 9/11: the recession President Bush inherited, the attacks of 9/11 that cost us almost 2 million American jobs, and then the technology bubble burst and the scandals from the false economy of the 1990s.

America fought back. Republicans fought back with the simple principle: if we want to create jobs in America, leave the tax dollars in America, in our hometowns, on Main Street in our small businesses. By fighting back from a hit that would have sent most countries stumbling to their knees, we are creating jobs, we are increasing revenue to the Federal Government, and the deficit is dropping.

But today, the question is, for all those Members who have been so eager to trumpet that press release, so eager to take credit for that spending that they brought home, the question is: Are you going to step up and pay the bills that America and Congress has incurred, or are you going to vote to stop our Social Security checks, stop the retirement checks to our military, stop the Medicare payments so important for the elderly?

It is bipartisan, whether you agree or disagree with how we got here. And that is a fair argument. Republicans and Democrats have a different view of this, and that is a healthy one. But regardless of that, if you supported the farm bill, if you supported the road bills, if you supported the water projects, if you supported the road projects, then step up and pay the bill tonight.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from California (Mr. Cox), a long-serving Member with strong leadership on the Select Committee on Homeland Security.

Mr. Speaker, I yield myself such time as I may consume.

``We did not spend a dime around here for the past 10 years. All the spending is yours''?

That is not what you told your constituents. I have seen your press releases. You said you secured the road project. You said you championed university research. You said you got that road project. Here is my question: Who are you not leveling with, the voters back home or the people listening tonight?

I yield to the gentleman from Maryland.

``Mr. Speaker, we did not spend a dime around here for the past 10 years. It is all your spending.'' That was 2 minutes ago.

Today, it is, yeah, we spent a lot, but you spent more. Well, there is a difference. What we spent our deficit on was tax relief for the American people. I readily admit that. When we look at the deficit today, and we do share this, the fact of the matter is 50 percent of our deficit is caused because of this recession and we have to strengthen this economy. We have to get into a stronger economy. Twenty-five percent of it was new spending, spending that you have claimed credit for, not tonight, but you have claimed credit for years and years throughout the districts, in your speeches and in your campaigns. And the rest of that, that small amount left, is for tax relief to get people back to work, to help small businesses create jobs and get this economy strong again.

Mr. Speaker, Republicans are stepping up tonight to accept that responsibility to get the economy going. We are going to pay our bills. We are not going to claim credit for spending, lay the blame on another party, and then try to stop the checks for our Social Security recipients and our Medicare recipients and our military retirees.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 45 seconds.

Mr. Speaker, tell me the moral clarity of going home each week and trumpeting that press release for the firefighter fund or the road project or for

that water project, and then stand up here tonight and tell us we are not going to pay the bill for it. So the seniors who need their Social Security checks, the heck with them. The military retirees who are counting on their retirement, the heck with them. I got my press acclaim, I got my public support, but you, you on the other side of the aisle, you take responsibility for making sure those checks get there. Tell me the moral obligation of that.

Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from Pennsylvania (Ms. Hart).

Mr. Speaker, I yield 1 minute to the gentleman from Indiana (Mr. Burton), chairman of the Committee on Government Reform.

Mr. Speaker, I yield myself 1 minute.

Let us do a quick fact check here. Eighty-eight percent of the debt that we are raising today comes from government transfers, or from past debts before President Bush's administration took office. Eighty-eight percent of that. So we are paying for past decisions, including past Democratic administrations and Democratic holds of this Congress.

Second point. Our deficit and our debt is way too high. I think we all agree on that. I do not know anyone here who thinks otherwise. That truly is bipartisan. Let us keep in perspective that publicly held debt today is 37 percent of the economy. It was as high as 49 percent in 1995 during President Clinton's tenure. The fact of the matter is the debt and the deficit is too high at all levels in America's history, and at some point at the end of this debate after this is all done and we get out and get through with all of our purging of our frustrations on how we got here, we are going to have to work together to balance this budget, to start paying down this debt and find some solutions.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 30 seconds.

I think it is important to keep focus that 88 percent of this debt occurred through intergovernmental transfers or before the Bush administration. It is a shared debt and a shared responsibility. The way we do not tackle it is to cut off the retirement checks for the military mothers and fathers of those serving today. That is exactly the wrong way to do it, the wrong way to duck responsibility. Together we can agree to pay our bills and then work together to reduce the debt.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 30 seconds as a reminder that it is the economy that has caused this deficit; it is additional spending both for homeland security, supporting our troops, and for those press releases Members in this Chamber have so proudly touted back home. Today, and in fact we could have taken away all the tax cuts and we would still be running a deficit in America. It is time to pay our bills. Let us not cut off checks to our Social Security people simply for partisan purposes.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume to close.

Mr. Speaker, let me first, on behalf of this side of the aisle, join with the Minority Leader in praising the service of the gentleman from Texas (Mr. Stenholm). His grandson ought to be proud of his granddad, his service here, both for our country here in Congress and in Texas where, as a fellow Texan, I can tell my colleagues I am very proud of his service and proud to have served with him.

There is something else we share as well. We share a debt in this Nation and we share a responsibility to pay those bills. The debt we face tonight is shared. Eighty-eight percent of this debt occurs from intergovernmental transfers of before the Bush administration. This is debt generated over decades and decades that every Member in this House today had a hand in creating.

The solution in the end, after all of the rhetoric is said and done, is going to be to join together for spending restraint, for abolishing obsolete agencies, to eliminating the billions of dollars of duplication, to getting a backbone to say no to projects. And, in fact, we have the opportunity starting in January, maybe tonight, to have a fresh start about working together, Republicans and Democrats, to again balance this budget and to start paying down that debt.

But, in truth, the question tonight is much simpler than that. The question is, are we going to pay our bills? Are we going to take responsibility for that press release, that project, that water funding, that university research, all of those things that we have championed and ran on back home, are we going to

take responsibility to pay those bills tonight? Or are we going to vote to go into default, to not meet our obligations, to stop our Social Security checks to the elderly or retirement checks and medicare payments?

It is time to gather Republicans and Democrats to pay our bills, to look out for our seniors and to vote yes on this debt ceiling.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise in opposition to the motion.

Mr. Speaker, like many of my colleagues, I agree with much of what our distinguished friend from Texas has said; and, again, he has been a long champion of balancing the budget and reducing this deficit. And he is so right, and we all agree: Deficits do matter. They mattered before we got here. They will always matter.

But jobs matter, too. Jobs matter, too. We did not ask for the attacks of 9/11 that not only struck the heart of our Nation, they struck two million American workers from the payroll. We did not ask for the recession. It was inherited. And we did not ask for the Enrons and the WorldComs and the technology bubble that not only cost so many workers their jobs but really damaged, I think, everyone's hopes for retirement in the future.

How we respond to that challenge, there was a difference, a respected difference. My colleagues on the Democratic side felt that if we kept the money here, if we spend and target different ways, that would move us out of the economy, and that is a fair position.

As Republicans, we felt otherwise. We thought if you want to create jobs

in small business, leave the money in small business. If you want to create jobs on Main Street, leave the money on Main Street. If we want families to be able to recover and to make ends meet, let them keep more of the hard-earned money that they in the past have sent to Washington where, unfortunately, we have squandered with so many I think obsolete agencies and duplicative programs we would all agree with.

But the fact of the matter is leaving the money at home worked. We are creating more jobs, and we need to do more. I think, ultimately, after tonight is over, that is the solution we can agree on: continuing to grow this economy so more people work and they pay taxes and Social Security and Medicare, and then together, working together, identifying all of the wasteful spending, getting the backbone on spending, saying no when it would be easier to say yes, maybe doing without, with one less press release on that project back home, all of which, by the way, we have a responsibility today to pay for those bills and these spending projects.

This motion has nothing to do with PAYGO. And I would respectfully say PAYGO as I have seen it really means higher taxes, unfortunately higher spending, and unfortunately fewer jobs. I just respectfully disagree on that. But the fact of the matter is if we keep the economy going, if we will work together on spending restraint, I know that we can balance the budget. I know we can pay down the deficit. But tonight we have a responsibility to pay our bills, to meet our obligations, to keep the checks going to our Social Security recipients, for our military retirees.

I would respectfully urge this Chamber to vote ``no'' on commit.

Mr. President, elections obviously are an extraordinary opportunity to listen to the American people, to learn, to debate, and to test ourselves and our ideas. This election was

no different. It was an honor to live out a great debate in our country in which we talked about the kind of nation we want to live in and what our responsibilities are to each other and, of course, to future generations.

Whatever lessons you learn about a campaign--and there were many--at the core, obviously, are issues. Those issues did not go away on November 3 no matter the results.

We are here in the Congress with fundamental responsibilities to continue the fight for those things Americans care about and that matter to the long-term health and welfare of our Nation. I intend to continue to fight on those issues as hard as I did in crisscrossing this great country of ours.

At the heart of every issue I heard about from Oregon to Florida, Iowa to Ohio, and every State in between, whether it was affordable health care or good jobs or taxes or energy independence or America's role in the world and her respect, above all, Americans continually expressed their understanding that our ability to meet all of those needs rises and falls with our economy, with the strength of our economy, the quality of the jobs that we create in America, the kind of investments we make in the lives of our children, and the quality of the jobs of the future. All of those choices ride on the fiscal choices we make as a government.

Those are lessons we have learned the hard way over the course of the last century or more. That is why I believe, as do others who have spoken in this Chamber during the course of the day, we need to deal candidly and immediately with some sense of urgency with the debt and the debt limit of the United States. We have a fundamental responsibility to restore fiscal responsibility rather than merely voting again to raise the debt limit as if there is an endless credit card at the expense of the American people.

Americans struggle to balance their budget. I heard about those struggles all across this country, people who can barely afford to pay their bills, people who have seen their health care go up 64 percent, their tuition go up 35 percent, gasoline prices go up, cost of purchasing drugs go up, and their wages are down. The American people are struggling to be able to pay their bills. Congress is not exhibiting the similar kind of struggle or even effort. The American people sit down at their kitchen tables and they try to play by the rules every single day. Congress seems ready to write new rules whenever it wants. We used to understand the responsibility to future generations. In the 1980s, Washington dug an enormous hole, a deficit hole, and it became apparent to all on Wall Street and all of the corridors of fiscal responsibility and power in America that we needed to make a better set of choices. So we made tough choices in the 1990s to dig ourselves out of that hole. And now here we are again, in 2004, back again with a new hole, deeper, with more grave consequences than at any time in American history. Neither Congress nor the administration has been willing to face up to that reality, even as the consequences grow and stare us in the face.

Let me put that in perspective. In less than 4 years, a 10-year $5.6 billion budget surplus was turned into a $2.4 trillion debt. That is the worst fiscal turnaround in our Nation's entire history. Since raising the debt limit last year, the Government has run up more debt than all of the Presidents from George Washington through Ronald Reagan. In fact, almost three-quarters of the entire debt of the United States of America in our 228-year history has been run up during the course of the last three Republican administrations. Taxpayers have been left with a record deficit in both of the past 2 years, up to a record $413 billion for 2004. According to the Congressional Budget Office, we are going to run $300 billion deficits every single year for the next decade, and that is without including one of the President's new proposals made in the course of the last year of the campaign. So the United States is operating a borrow-and-spend Government, continuously stretched by demands for more tax cuts and by more spending. When there is not enough money to pay for those choices, which are voluntary choices, they simply go into debt and put the tab on the national credit card and they send the bill to our kids. It is an economic policy of borrow and spend, and it simply cannot be sustained. After the new debt limit passes this week, and it will, the administration will have added $2.1 trillion to the debt limit in less than 4 years. That amounts to more than $7,200 for every man, woman, and child in the United States, and all of that money must eventually be paid back, or at least partially paid back in significant amounts with interest.

The interest payments alone are staggering and depriving us of choices that we ought to be making for long-term investment in our country itself. The Government may spend it today, but Americans ultimately will pay the bill. That means a child born today is going to enter the world owing more than $17,000 when our last and expected debt is totaled up. As everybody knows, our children grow up with a set of expectations about their future that are now impacted extraordinarily by the choices we are making on their behalf, and whether it is a choice to buy a car or home or save for their own families or save for college, all of those are going to be impacted negatively by the unwillingness of Congress to be responsible at that moment. Their ability to save will be eaten away by their share of what this Government is going to have already spent in debt. This could be called a birth tax, a birth tax that is dumped on the back of every American child unwillingly.

I think, and I think most persons believe, to saddle our children with this debt is wrong. As Republican Pete Peterson said, the ultimate test of a moral society is the kind of world it leaves to its children. And I think about that concept as we are about to slip our own kids and grandkids a check for our free lunch. I say we are failing the moral test. That is Republican Pete Peterson speaking.

And it is not just the mountain of debt that is the problem. It is also where the money comes from. To pay our bills, America now goes cup in hand to nations such as China, Korea, Taiwan, and the Caribbean banking centers. China now holds $172 billion of our Nation's debt. Korea holds $63 billion, Taiwan holds $56 billion, and the Caribbean banking centers hold more than $191 billion. Since 2001 alone, the share of U.S. Treasury debt held by foreigners has risen to 42 percent from 30 percent. It is increasingly dangerous for so much of our Government and our standard of living to be dependent on foreign capital. If foreign investors were to suddenly decide to stop financing our borrowing habits or to see weakness in the American economy, it could have a spiraling impact on our own economy, international currency markets would be shaken, and our economy would quickly follow. If those investors began to withdraw their capital, our financial markets would plummet and interest rates would climb. That will make everything American families need, from a home, to a car, to appliances, to education, all of it, more expensive. It will make it harder for businesses, and especially small businesses, to raise capital and invest in jobs and economic growth.

What is more, with so much of our debt owned by other nations, U.S. diplomatic and trade negotiators face increased difficulty in making demands of major creditor nations. How do you go to a country that holds so much of your debt while your economy is closely linked to theirs and start to make the powerful argument about nuclear proliferation or human rights, democratization, and other issues that are of importance and great consequence to our country?

It is only a matter of time before America learns the hard way that debt is more than a financial liability, it weakens America's security, and it weakens our diplomacy and our trade. Our budget mismanagement, the negligence of borrow-and-spend policies, leaves us vulnerable to the priorities of foreign creditors. And that is unhealthy and irresponsible.

So what do we do about that? Well, we can argue over the cause of the problem, of what made this borrow-and-spend institutionalized approach the reality it is today. But I think it is more important for us now to try to find a solution; that is, to work to find economic policies that are going to create opportunity and demand responsibility.

When I first came to the Senate in 1985, the Federal deficit was soaring,

out of control, just like it is today. And in the 1980s, the National Debt Clock in New York City became a symbol for a Federal deficit and a debt that were out of control. Back then, many Democrats thought we could continue to spend and to spend without having to pay the bill. And back then most Republicans claimed that if you gave huge tax cuts to the wealthy, they were somehow going to pay for themselves.

At the same time, we were lucky to have leadership from a group of reformers on both sides of the aisle, people such as Republican Senators Warren Rudman and Phil Gramm, and Senator Fritz Hollings on the Democratic side. They pushed for a deficit reduction plan that had real teeth in it. They continued that fight until it was finally won.

The choice was tough. Fiscal sanity was won by exactly one vote in both Houses of Congress. But finally, in 1997, we finished the job by passing a historic bipartisan balanced budget agreement. It not only balanced the budget for the first time since 1969, but it extended the life of Medicare, it expanded health care for children, and it cut taxes for middle class Americans.

Four years ago, the numbers on the National Debt Clock were spinning backwards. Today, in New York, the National Debt Clock has now been turned back on, and the numbers are rising faster than you and I can follow. As Senator Hollings retires from the Senate, I think we need more of that kind of effort that was offered in the 1980s and 1990s in order to find the common ground that he and Senator Rudman brought to this debate almost 20 years ago. It is time again to follow that example.

There are a lot of ideas out there. We can end tax cuts that do not create jobs but do create enormous debt. We can find incremental savings by streamlining Government itself. We can reduce or eliminate programs that we simply cannot afford. We could establish a commission to independently evaluate and eliminate corporate subsidies. But more important than any individual proposal is that the White House and Congress make a fundamental commitment to end this policy of borrow- and-spend economics.

We need to make economic opportunity and fiscal responsibility a common goal. And we have to live by some rules, rules such as a budget that requires us to pay for what we spend, rules that give the debt limit meaning. Today the debt limit is fanciful. It is just a number on a piece of paper, and Congress raises it any time it wishes. It is no limit at all. I believe we can do these other things. We could make these other choices if we set clear national priorities, if we make the tough decisions, not just about the programs of others but about our own proposals.

We have to do this because it is critical to any credible economic plan and to the creation of new, good-paying jobs. An America that ignores our national debt and the deficit will be an America that invites inflation and recession. An America that pays for new initiatives and follows real budget rules will be an America that creates a new era of prosperity and opportunity for all Americans. We know how to do this. We did it in the 1990s. Now it is time to return our Government to that fiscal responsibility and to invest in the future and to create new jobs in America that pay more than the jobs we are losing overseas, and to raise the standard of living for American workers.

I will not vote for a borrow-and-spend economic policy when there are better alternatives.

Over the last year, in the cities and towns that I was privileged to travel in all across our Nation, I have been reminded again and again of the hopes of the American people and of families that play by the rules and do what is right for their kids and try to do what is right for aging parents and for a Social Security system and a Medicare system that are under increasing pressure and strain.

Those Americans are faced with tough choices every day. They expect us, similarly, to make tough choices. I think Washington ought to live by the same rules they do. None of these choices are about numbers and about dollars and statistics alone. They are really about the responsibility we have as one generation to another and, most importantly, the responsibility we have vested in us as Members of the Congress and the need to try to work together and find the unity, as we did in the 1990s, to come up with a solution that acts in the interests of Americans and that does not avoid that fundamental responsibility.

Mr. President, I ask unanimous consent that we reserve whatever time there is for the leadership. I do not know if the Senator from Michigan wants to speak now.

I yield the floor.