Mr. Speaker, I thank the gentleman from Oklahoma (Mr. Cole), my good friend, for yielding me the customary 30 minutes, and I yield myself such time as I may consume. Mr. Speaker, let's begin. We are…
Mr. Speaker, I thank the gentleman from Oklahoma (Mr. Cole), my good friend, for yielding me the customary 30 minutes, and I yield myself such time as I may consume.
Mr. Speaker, let's begin. We are dealing with this default on America bill. It is a doozy, even by the measurements that we judge this current majority in Congress. How did we get here?
I will tell you how we got here. The process is lousy. It stinks. We heard promise after promise after promise about how great Republicans would be when they were in charge; about how open and transparent and fair things would be here. It is clear now that it was all a bunch of talk, all phony. They never meant any of it.
There was no hearing, no markup, no amendments, no nothing. The CBO score came out 5 minutes before the hearing started. The manager's amendment released at 12:45 a.m. The Rules Committee met for 6 hours and then we adjourned until 11:30 p.m. Democrats sat waiting in an empty room for 45 minutes.
We were told to come back at 1:45 in the morning.
In the midnight seance that the Republicans conducted in the chairman's office, out comes this new language that is supposed to satisfy the extreme rightwing of the extreme rightwing.
Basically, some of my Republican colleagues had an objection that the bill didn't screw people fast enough. Get this, after all their talk about how horrible the Inflation Reduction Act was, we find out that some of their Members actually love parts of the Inflation Reduction Act and demanded that we protect it, even if it meant changing the bill at 2 a.m. in the morning.
Let me tell everyone else, in case you missed it--because some people go to sleep before 2 a.m.--this all happened at 2 a.m. Shhh. Secret.
Speaker McCarthy said himself that you just can't throw something on the floor. Those were his words. But here we are and this bill is being thrown on the floor.
Mr. Speaker, 25 of the 32 rules this Congress has done have been completely closed. The Rules Committee has allowed to the floor only 91 amendments so far. When I was in charge, at this point we had allowed to the floor 199 amendments.
Mr. Speaker, 92 percent of all Democratic amendments have not been allowed to be debated. Republican Whip Tom Emmer told us yesterday that the bill was closed. It is not getting changed, he said. And then what did they do just a few hours later? They changed it.
Mr. Speaker, I asked Chairman Smith last night in the Rules Committee if he liked the way this bill was being brought up. You know what he said to me?
I am not in charge.
Well, it is his committee. Who is in charge of whether or not they hold a hearing or a markup?
Just as a lesson for our new Members who demanded more regular order, this is not it. I would like a single Republican to come down here and defend the process that was used here. I bet they won't because they cannot.
Here we are debating this bill, the default on America act. We are happy to have a conversation on our spending priorities. Absolutely. We welcome that conversation. This isn't a conversation. They handed us a ransom note.
They say that in order to agree to pay our bills for 1 year, we have to make 10 years of deep cuts that will hurt our constituents. This is a ransom note. Then what happens a year from now? What is next? Do you want our first-born children in exchange for paying the bills on time?
Republicans have said that unless we screw regular people, working people, veterans, the environment--I could go right down the list-- unless we do that, Republicans are going to push this economy off a cliff, damaging our credit rating, crashing Wall Street, resulting in all kinds of job loss, and putting us into a recession. That is the choice they are giving us here today.
Here is the deal, and this is what is really galling. Republicans are telling us that in order to get our fiscal house in order so we can pay our bills, not a single dollar can be saved at the Pentagon, that billionaires can't pay another cent in taxes. To get our fiscal house in order, we need to nickel-and-dime moms and dads, workers and veterans, and regular people.
Billionaires and CEOs received trillions in tax cuts when Republicans were in charge. Trillions. They want to screw the people that I came to Congress to represent--it takes my breath away, Mr. Speaker--regular people, working people, the farmers, and the veterans. They want to kick people off healthcare. They want to cut funding to stop drugs from coming into America. They want to fire teachers, and they want to take food away from women, infants, and children. What is wrong with them, Mr. Speaker?
I know my friend, Chairman Cole--and he is my friend--cares deeply about programs like Head Start. In his own State, this bill would cut 3,300 children off of Head Start. These are real kids for God's sake. Don't take my word for it. The National Head Start program says:
Make no mistake, the current debt limit and budget
legislation under consideration in the House of
Representatives will cause irreparable damage to Head Start.
It is not mathematically possible to make the cuts that they are talking about without hurting our own constituents. All this so that we can appease the extreme MAGA wing of the Republican Party.
The contempt that so many on the other side of the aisle have for people who are poor, who are struggling, who are working hard but having trouble making ends meet because the other side won't even raise the minimum wage, it is stunning.
Mr. Speaker, we have a bill loaded up with all these new work requirements and hurdles for people to jump through. It will result in people losing SNAP, losing Meals on Wheels benefits, losing assistance to pay for infants and children. Yet, there has not been a single hearing on this topic. Not one.
Mr. Speaker, I asked: Who are these people in real life that you claim don't work who are on SNAP? Who are the people you are talking about?
The chairman of the Ways and Means Committee and the chairman of the Budget Committee gave me a blank stare. I asked: What is the average SNAP benefit? That is a pretty basic question if you feel strongly about this program. They had no idea. Not a clue. Not even a guess.
Mr. Speaker, I asked: What is the average length that someone is on SNAP? They had no idea. This is not about substance or reality, Mr. Speaker.
By the way, the average SNAP benefit per person per meal is about $2. The average time somebody is on the benefit is less than a year. This is not about substance or reality.
The bottom line is if this is what the American people want, as the Republicans say--many of them kept saying it over and over in the Rules Committee, which I could not believe because I think most people in this country are horrified about what they are trying to do here--if they think that is what the American people want, then they should win the White House and win the Senate.
They were supposed to win the House by a huge margin, but that red wave turned into a pink splash. I don't think you are going to be around in the leadership here much longer, quite frankly.
Enough is enough, Mr. Speaker. America pays our bills. This is a ransom note.
Republicans want to default on America, and all Democrats are asking for is that you listen to Trump. You know him. He is the guy you are all afraid of. He said: ``I can't imagine anybody ever even thinking of using the debt ceiling as a negotiation wedge. . . . That is a very, very sacred thing. . . . We could never play with it.''
That is the guy whom you are all afraid of. That is what he said.
Listen to Speaker McCarthy in 2015: ``When the United States makes promises, it keeps them, which is why the House voted today to avoid the threat of a debt default.''
That was Speaker McCarthy. I guess he forgot.
This is a simple, routine part of doing our job, something all of us should be able to get behind.
If you want to have a conversation about spending priorities, that is the
appropriations process or the budget process, but it is not holding our Nation hostage. It is not a ransom note.
Don't default on America, Speaker McCarthy. Do your job. Do what you said we would do: keep America's promises. Don't mess around with the full faith and credit of the United States of America.
Mr. Speaker, I urge a ``no'' vote on this rule and a ``no'' vote on the underlying legislation, and I reserve the balance of my time.
Mr. Speaker, I include in the Record a report by The Balance titled: ``President Trump's Impact on the National Debt.''
[From the balance, Jan. 26, 2022]
President Trump's Impact on the National Debt
(By Kimberly Amadeo)
The national debt increased by almost 36 percent during
Trump's tenure.
Republican candidate Donald Trump promised during the 2016
presidential campaign that he would eliminate the nation's
debt in eight years.
Instead, his budget estimates showed that he would actually
add at least $8.3 trillion, increasing the U.S. debt to $28.5
trillion by 2025. But the national debt reached that figure
much sooner. The national debt stood at $19.9 trillion when
President Trump took office in January 2017, and it reached a
high of $27 trillion in October 2020.
The national debt reached another high of $28 trillion less
than two months after President Trump left office. In
December 2021, Congress then increased the debt limit by $2.5
trillion, to almost $31.4 trillion, as debt rose again under
President Joe Biden.
How Did the National Debt Increase?
At first it seemed that Trump was lowering the debt. It
fell $102 billion in the first six months after he took
office. The debt was $19.9 trillion on Jan. 20, the day Trump
was inaugurated. It was $19.8 trillion on July 30, thanks to
the federal debt ceiling.
Trump signed a bill increasing the debt ceiling on Sept. 8,
2017. The debt exceeded $20 trillion for the first time in
U.S. history later that day. Trump signed a bill on Feb. 9,
2018, suspending the debt ceiling until March 1, 2019. The
total national debt was at $22 trillion by February 2019.
Trump again suspended the debt ceiling in July 2019 until
after the 2020 presidential election.
The debt hit a record $27 trillion on Oct. 1, 2020 before
reaching further peaks in 2021 that caused Congress to act
again to raise the debt limit in December.
Trump oversaw the fastest increase in the debt of any
president, almost 36 percent from 2017 to 2020.
Did President Trump Reduce the National Debt?
Trump promised two strategies to reduce U.S. debt before
taking office: He would increase growth by 4 percent to 6
percent, and he would eliminate wasteful federal spending.
Increasing Growth
Trump promised while on the campaign trail to grow the
economy by 4 percent to 6 percent annuallv to increase tax
revenues. Once in office, he lowered his growth estimates to
between 2 percent and 3 percent. These more realistic
projections are within the 2 percent to 3 percent healthy
growth rate.
President Trump also promised to achieve between 2 percent
and 4 percent growth with tax cuts. The Tax Cuts and Jobs Act
cut the corporate tax rate from 35 percent to 21 percent
beginning in 2018. The top individual income tax rate dropped
to 37 percent. The TCJA doubled the standard deduction and
eliminated personal exemptions. The corporate cuts are
permanent, but the individual changes expire at the end of
2025.
According to the Laffer curve, tax cuts only stimulate the
economy enough to make up for lost revenue when the rates are
above 50 percent . It worked during the Reagan administration
because the highest tax rate was 70 percent at that time.
Eliminating Wasteful Federal Spending
Trump's second strategy was to eliminate waste and
redundancy in federal spending. He demonstrated this cost-
consciousness during his campaign when he used his Twitter
account and rallies instead of expensive television ads.
Trump was right that there is waste in federal spending.
The problem isn't finding it. The problem is in cutting it.
Each program has a constituency that lobbies Congress.
Eliminating these benefits may lose voters and contributors.
Congressional representatives may agree to cut spending in
someone else's district, but they resist doing so on their
own.
More than two-thirds of government spending goes to
mandatory obligations made by previous acts of Congress.
Social Security benefits cost $1.2 trillion in Fiscal Year
2021. Medicare cost $722 billion, and Medicaid cost $448
billion. The interest on the debt was $378 billion.
Military spending must also be cut to lower the debt
because it's such a large portion of the budget. But Trump
increased military spending in Fiscal Year (FY) 2021 to $933
billion. That includes three components:
$636 billion base budget for the Department of Defense
$69 billion in overseas contingency operations for DoD to
fight the Islamic State group
$229 billion to fund the other agencies that protect our
nation, including the Department of Veterans Affairs ($105
billion), Homeland Security ($50 billion), the
State Department ($44 billion), the National Nuclear
Security Administration in the Department of Energy ($20
billion), and the FBI and Cybersecurity for the
eDepartment of Justice ($10 billion)
Only $595 billion was left to pay for everything else
budgeted for FY 2021 after mandatory and military spending.
That includes agencies that process Social Security and other
benefits. It also includes the necessary functions performed
by the Department of Justice and the Internal Revenue
Service. We'd have to eliminate it all to make a dent in the
$966 billion deficit.
You can't reduce the deficit or debt without major cuts to
defense and mandated benefits programs. Cutting waste isn't
enough.
Did Trump's Business Debt Affect His Approach to U.S. Debt?
Trump said in an interview with CNBC during his 2016
campaign that he would ``borrow, knowing that if the economy
crashed, you could make a deal.'' But sovereign debt is
different from personal debt. It can't be handled the same
way.
A 2016 Fortune magazine analysis revealed Trump's business
was $1.11 billion in debt. That includes $846 million owed on
five properties. These include Trump Tower, 40 Wall Street,
and 1290 Avenue of the Americas in New York. It also includes
the Trump Hotel in Washington, D.C., and 555 California
Street in San Francisco. But the income generated by these
properties easily pays their annual interest payment. Trump's
debt is reasonable in the business world.
The U.S. debt-to-GDP ratio was 129 percent at the end of
2020. That's the $27.8 trillion U.S. debt as of December
2020, divided by the $21.5 trillion nominal GDP at the end of
the second quarter this year.
The World Bank compares countries based on their total
debt-to-gross domestic product ratio. It considers a country
to be in trouble if that ratio is greater than 77 percent.
The high U.S. debt-to-GDP ratio didn't discourage
investors. America is one of the safest economies in the
world and its currency is the world's reserve currency.
Investors purchase U.S. Treasurys in a flight to safety even
during a U.S. economic crisis. That's one reason why interest
rates plunged to historical lows in March 2020 after the
coronavirus outbreak. Those falling interest rates meant that
America's debt could increase, but interest payments remain
stable.
The U.S. also has a massive fixed pension expense and
health insurance costs. A business can renege on these
benefits, ask for bankruptcy, and weather the resulting
lawsuits, but a president and Congress can't cut back those
costs without losing their jobs at the next election. As
such, Trump's experience in handling business debt did not
transfer to managing the U.S. debt.
How the National Debt Affects You
The national debt doesn't affect you directly until it
reaches the tipping point. It slows economic growth once the
debt-to-GDP ratio exceeds 77 percent, for an extended period
of time. Every percentage point of debt above this level
costs the country 0.017 percentage points in economic growth,
according to a World Bank analysis.
The first sign of trouble is when interest rates start to
rise significantly. Investors need a higher return to offset
the greater perceived risk. They start to doubt that the debt
can be paid off.
The second sign is that the U.S. dollar loses value. You
will notice that as inflation rises, imported goods cost
more. Gas and grocery prices rise. Travel to other countries
also becomes much more expensive.
The cost of providing benefits and paying the interest on
the debt will skyrocket as interest rates and inflation rise.
That leaves less money for other services. The government
will be forced to cut services or raise taxes at that point.
This will further slow economic growth. Continued deficit
spending will no longer work at that point.
Mr. Speaker, talk about spending. The national debt increased by almost 36 percent from 2017 to 2020 during Trump's tenure.
I say to the gentleman who just spoke--a lot of yelling here. The last time I heard that kind of tone was when he was yelling about the need to have more regular order here. I guess he has forgotten about that. Just because the gentleman yells doesn't mean he is right.
Mr. Speaker, I yield 1 minute to the gentlewoman from the State of Washington (Ms. Jayapal).
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to debunk this talking point that I hear over and over again from my friends. I just heard it right now when we were talking about spending.
Let's remember a couple of things.
First, when Donald Trump was in charge, $8 trillion was added to the national debt. That is a 39-percent increase. It is one-quarter of the entire debt from all of American history. So, please, give me a break.
Second, let's be clear: Inflation is a global problem. Mr. Speaker, if you think that the American Rescue Plan drove up prices in Italy or the U.K., then I have news for you. If you think emergency rescue checks are responsible for inflation in Brazil and Australia, maybe you got your economics
degree from Trump University. That is not how things work. Don't take my word for it. Look at the numbers. Actually, look at the research.
Mr. Speaker, I include in the Record a letter from the Social Security Administration, which states that Republican spending cuts would eliminate field offices, drive up wait times for initial disability and retirement claims processing, lengthen phone wait times, and create backlogs across the board.
Social Security Administration,
The Commissioner,
Baltimore, MD, March 17, 2023.
Hon. Rosa L. DeLauro,
Committee on Appropriations, House of Representatives,
Washington, DC.
Dear Ranking Member DeLauro: Thank you for your January 19,
2023 letter asking for information to help Members of
Congress understand the impacts of capping fiscal year (FY)
2024 discretionary spending at the FY 2022 enacted level,
which would be approximately a six percent cut from our FY
2023 enacted funding. Returning SSA to the FY 2022 funding
level or, more drastically, cutting funds by 22 percent from
the 2023 enacted level, would greatly harm our ability to
serve the public as we are already struggling to recover from
the effects of the pandemic.
We are actively using the funding increase we received in
FY 2023 to support our hiring efforts to increase staffing as
we work to restore sufficient staffing from our lowest
staffing levels in over 25 years, particularly in our field
offices, teleservice centers, processing centers, and State
disability determination services (DDS). Hiring new staff is
necessary to improve major workload challenges that affect
the public we serve, including people waiting far too long
for a disability decision. Funding cuts of the magnitude
described above would take us backwards and hurt our
customers.
If we return to FY 2022 funding levels in FY 2024, we
would:
Close field offices and shorten hours we are open to the
public, cutting off vital access to face-to-face service
delivery.
Increase the amount of time individuals wait for a decision
on their initial disability claim, leading to an average wait
time of 9 months, or up to 30 percent longer than today.
Implement a hiring freeze for the agency and the DDS, which
means a reduction of over 5,000 employees who are essential
to processing retirement claims, making disability decisions,
answering the National 800 Number, and issuing new and
replacement Social Security cards.
Furlough staff for over 4 weeks and lay off approximately
6,000 employees--producing even longer wait times than
customers experience today on our National 800 Number and in
our field offices, causing delays to decisions on retirement
claims and delays in processing Social Security cards and
verification of Social Security Numbers for individuals
seeking employment.
Eliminate overtime pay, reducing our ability to keep pace
with claims and other service requests.
As noted above, a cut to FY 2022 levels (a six percent cut
below current funding) would significantly affect our ability
to serve the public and undermine our core mission--producing
longer wait times for benefits and to reach SSA
representatives, as well as reduced access to in-person
service.
Congress expressed an expectation for continued
modernization of our IT by providing dedicated funding for
this purpose. A six percent reduction would support IT
funding only for basic operational requirements and would
halt our efforts to improve the customer experience, expand
our online services, and enhance our systems to improve
employee efficiency. We would have to drastically cut IT at a
time when we need it to help mitigate other cuts like office
hour reductions, a hiring freeze, and layoffs.
The impacts would be even more significant with deeper
cuts. If we are faced with a cut of more than six percent, it
would be catastrophic for the agency and for the people
depending on Social Security programs supporting their daily
needs. For every $100 million below the 6 percent reduction,
we would have to lay off an additional 1,000 people, further
undermining services to the public. Every 1,000 staff lay off
is the equivalent of closing over 40 field offices.
Cuts on this scale would dramatically undermine our ability
to function effectively. It would cut in-person access to our
field offices, drive up wait times for initial disability and
retirement claims processing, lengthen phone wait times,
prohibit development of online tools to compensate for the
difficulties to reach us by phone and in-person, and create
backlogs across the board. It would take years to recover and
restore services to levels the public expects.
Millions of Americans depend on Social Security programs to
provide income support essential to meeting daily needs, and
significant budget cuts prohibit us from providing people
with access to vital support. The payments and benefits our
programs provide are integral to the economic fabric of our
Nation. We appreciate the opportunity to explain the harm a
return to FY 2022 funding levels or less would cause for the
public we serve, as well as our employees.
Sincerely,
Kilolo Kijakazi, Ph.D., M.S.W.,
Acting Commissioner.
Republicans are trying to make it harder for seniors to access the benefits that they have earned.
Mr. Speaker, I urge that we defeat the previous question. If we do, then I will offer an amendment to the rule to provide for consideration of a resolution that allows the House to state unequivocally that it is our responsibility to defend and preserve Social Security and Medicare for generations to come and reject any cuts to these vital programs.
By the way, these two programs have come under attack by Republican after Republican.
Mr. Speaker, I ask unanimous consent to insert the text of the amendment in the Record, along with extraneous material, immediately prior to the vote on the previous question.
Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from New Mexico (Ms. Stansbury).
Mr. Speaker, I yield myself such time as I may consume. I am a little confused after the last speech.
Mr. Speaker, with the way the gentleman from Oklahoma (Mr. Cole), my friend, has been talking, you might think that President Biden caused inflation all on his own. That is just simply not the case, and everybody here knows that.
Mr. Speaker, I include in the Record an article from the nonpartisan, nonprofit Economic Policy Institute titled: ``Rising Inflation is a Global Problem, U.S. Policy Choices Are Not to Blame.''
[From the Economic Policy Institute, Aug. 4, 2022]
Rising Inflation is a Global Problem. U.S. Policy Choices Are Not to
Blame
(By Josh Bivens, Asha Banerjee, And Mariia Dzholos)
key takeaways
An international comparison among OECD countries shows that
rising inflation is a global phenomenon, not unique to the
United States.
This fact argues strongly that high inflation in the U.S.
has not been driven by any unique American policy--not the
American Rescue Plan and other generous fiscal relief during
the pandemic recession and recovery nor anything else U.S.-
centric.
Some have argued that the global rise of inflation means
that many countries--including the U.S.--overstimulated their
economies and generated excess aggregate demand. But this
explanation is not supported by the data. The countries with
larger declines in unemployment over the past 18 months have
not seen larger inflation spikes.
Consumer price data for June 2022 showed another month of
rapid inflation, with overall inflation rising 9.1 percent
year-over-year and core inflation (which doesn't include
volatile energy and food prices) rising by 5.9 percent. This
level of inflation has obviously become a major political
issue this year. But however this issue resonates
politically, as an economic matter a common narrative that
blames the Biden administration and its policy choices for
causing the inflation is deeply misleading.
This is not simply a case for exonerating the Biden
administration's choices--how the recent inflationary
outbreak is interpreted will have huge consequences for how
policymakers respond. A loud chorus of economic analysts and
influential policymakers continue highlighting the need for
the Federal Reserve to continue raising interest rates
sharply to slow growth to ``rein in'' inflation. This
approach risks terrible consequences and threatens to cast
aside the amazing policy achievement of a full jobs recovery
from the pandemic recession. In the COVID-19 recession, the
economy lost over 22 million jobs. But by June 2022 (after 28
months), the level of employment in the U.S. matched the last
month pre-pandemic (February 2020). Compare this with job
growth after the Great Recession of 2008-09, when it took
more than six years (75 months) to regain the just under 9
million jobs lost and match pre-recession employment levels.
The far faster recovery from the COVID-19 recession was
significantly driven by a much more aggressive fiscal policy
response.
This more aggressive fiscal response is often blamed for
the inflation outbreak over the past 18 months. The most
persuasive evidence casting doubt on this interpretation is a
comparison of inflation between the U.S. and a large set of
other rich countries that undertook a wide array of fiscal
responses. Despite the different fiscal responses,
essentially all of these countries have experienced a rapid
acceleration of core inflation. This means that today's
inflation is not a uniquely U.S. problem, and therefore not
connected to the necessary and effective economic policies
that spearheaded the rapid economic recovery we see today.
In Figure A, we focus on core inflation (stripping out the
prices of energy and food) because that is widely considered
a better target for basing decisions about macroeconomic
stabilization. Energy and food prices are not just volatile,
they are also set on global markets, meaning that their price
changes carry very little information about whether the U.S.
economy specifically is currently experiencing macroeconomic
imbalances. It's also useful to highlight core inflation
because much commentary has claimed that inflation in other
advanced economies is overwhelmingly about energy and food
prices, and far less about core prices. This claim is not
supported by the data in Figure A.
As Figure A shows, all but one Organization for Economic
Co-operation and Development (OECD) country saw an
acceleration in core inflation. More significantly, this
international comparison tells us that the U.S. is not an
outlier in its experience with accelerating core inflation
(the one obvious outlier in this data--Turkey--is currently
experiencing inflation over 40 percent and is not included in
the figure). The U.S. is on the higher side of inflation
experiences, but far from the top and not that far above the
average (or even the median) for all other OECD countries.
The upshot of the figure is clear: A global phenomenon--
accelerating inflation--demands a global explanation, and
``Biden policies'' obviously do not provide that.
Some have argued that the global rise in inflation is
actually just evidence that the excess demand growth they see
as driving inflation is also global. Of course, even this
perspective provides some small bit of exoneration for
American policymakers: if every advanced country in the
entire world made similar policy decisions, then it seems
hard to argue that the American approach was an avoidable
mistake. But, another cut at the international data casts
doubt on a simple story of macroeconomic imbalances driving
the global inflation surge. Specifically, countries with
larger declines in unemployment over the past 18 months have
not seen larger inflation spikes.
In Figure B below, the vertical axis is the acceleration of
core inflation relative to pre-pandemic trend that we showed
previously in Figure A. On the horizontal axis, we subtract
the average unemployment rate of March-May 2022 from the
average unemployment rate that prevailed in 2018-2019. This
can be taken as an indicator of how much unemployment has
improved in a country in the
recent period relative to pre-pandemic conditions. The higher
the number on the horizontal axis, the lower is current
unemployment relative to pre-pandemic averages. If one
interprets unemployment that is lower today than pre-pandemic
times as evidence of strong demand growth, one would expect
to see a positive relationship between the improvement in
unemployment (horizontal axis) and the acceleration of
inflation (vertical axis). But there is no such significant
relationship (in fact, there is a weak relationship the other
way, with countries with higher unemployment relative to pre-
pandemic times seeing higher inflation).
This finding should further complicate the claim that the
``macroeconomic overheating'' argument should simply be
applied globally. And if there is not strong evidence that
today's global inflation is simply driven by excess global
demand, the payoff to strongly reining in demand could be
quite small, and the damage caused by this quite large.
Rather than the specific policies of the Biden
administration driving inflation, the roots of today's
inflation are a more complicated cocktail of other forces:
from the spike in raw material, energy, and commodities
prices due in large part to the Russian invasion of Ukraine,
to lingering supply chain disruptions and distorted consumer
demand patterns stemming from the pandemic. These shocks and
their unexpectedly large ripple effects are the global
explanation for rising inflation.
Again, this is not an academic exercise or simply providing
political cover for any particular policymaker. Instead,
there is real economic danger from misdiagnosing the
inflation problem. An engineered, unnecessary recession will
only cause more economic pain to those still just recovering
from the COVID-19 recession, and will undercut the strong
economic recovery underway.
Mr. Speaker, I include in the Record an article by Mark Zandi of Moody's Analytics which states that Speaker McCarthy's radical cuts would meaningfully increase the likelihood of a recession and result in 780,000 fewer jobs by the end of 2024 compared with a clean bill to avoid a default.
[From Moody's Analytics]
The Debt Limit Drama Heats Up
(By Mark Zandi and Bernard Yaros)
The political drama over the Treasury debt limit is
suddenly heating up. With April tax receipts coming in weaker
than expected, at least so far, it appears that the X-date,
when the Treasury will run out of the cash needed to pay the
government's bills on time, may hit as soon as early June.
House Speaker Kevin McCarthy's recent unveiling of proposed
legislation to increase the limit is thus none too soon. In
exchange for increasing the debt limit just enough so that it
will not be a problem again until about this time next year,
the Speaker wants to significantly cut discretionary spending
over the next decade, impose stricter work requirements on
healthcare, food and other assistance for low-income
households, and roll back much of the Biden's
administration's agenda on climate change and student
lending. In this note, we assess the macroeconomic
consequences of the Speaker's debt limit legislation.
The X-date
The Treasury debt limit--the maximum amount of debt that
the Treasury can issue to the public or to other federal
agencies--was hit on January 19, and since then the Treasury
has been using ``extraordinary measures'' to come up with the
additional cash needed to pay the government's bills. Nailing
down precisely when these extraordinary measures will be
exhausted, and Treasury will run out of cash and thus be
unable to pay everyone on time--the so-called X-date--is
difficult. It depends on the timing of highly uncertain tax
receipts and government expenditures.
Since Moody's Analytics began estimating the X-date early
this year, we have thought it to be in mid-August. But April
tax receipts are running 35 percent below last year's pace,
which is meaningfully weaker than anticipated. And despite
weaker tax refunds than anticipated, it appears that the X-
date may come as soon as early June. If not, and Treasury is
able to squeak by with enough cash, then the X-date looks
more likely to be in late July. That is because Treasury will
get a cash infusion from non-withheld tax payments around the
June 15 estimated tax deadline, and then another tranche of
extraordinary measures will become available, providing
Treasury with a few more weeks of cash.
Investors take notice
Regardless, time is running out for lawmakers to act and
increase or suspend the debt limit, and global investors are
suddenly focusing on the risks posed if they do not act in
time. Credit default swaps on Treasury securities--the cost
of buying insurance in case Treasury fails to pay its debt on
time--have jumped in recent weeks. At close to 100 basis
points, CDS spreads on six-month and one-year Treasury
securities are already substantially more than in 2011 when
that debt limit drama was so unnerving it caused rating
agency Standard & Poor's to strip the U.S. of its AAA rating.
This may overstate investors' angst as the CDS market for
buying insurance in the case of a Treasury default is not
actively traded, and it does not take much trading to push up
the cost of insurance. A few hedge funds speculating on the
CDS could drive up the cost since they are purchasing
something akin to a lottery ticket. Moreover, the current
spread remains far from signaling that investors are
attaching much of a probability on a default. For context,
during the European debt crisis in 2011, the CDS spread on
the sovereign debt of stressed countries in the periphery of
the euro zone, including Greece, topped out at 1,400 basis
points. Even the CDS for core euro zone countries such as
Germany and France were more than 200 basis points at the
time.
That said, the run up in Treasury CDS should not be
dismissed out of hand. The recent sharp decline in one-month
Treasury bill yields also signals mounting investor angst. As
it has become clear in recent days that April tax receipts
were coming in weak and the X-date may be just a few weeks
away, investors have piled into the safety of one-month
Treasury securities. Yields have plummeted, from 4.75 percent
at the start of April to less than 3.4 percent currently. At
the same time, yields on three-month Treasury bills have
continued to rise. The difference between one- and three-
month Treasury bill yields has never been as wide. Global
investors thus appear to be attaching non-zero odds that the
debt limit drama will end with a default sometime in June or
July.
House Republican proposal
It is thus none too soon that House Speaker McCarthy
unveiled the ``Limit, Save, Grow Act of 2023'' on April 19.
House Republicans hope the legislation will put political
pressure on President Biden to negotiate changes in fiscal
policy in exchange for an increase in the debt limit. The
president continues to reject these efforts, arguing for a
so-called clean debt limit increase--an increase in the debt
limit without substantive changes to policy. His position is
that increasing the debt limit is necessary to pay the
government's bills resulting from past fiscal policy
decisions, over which there can be no negotiation.
Speaker McCarthy's proposed legislation would increase the
debt limit by $1.5 trillion or until March 31, 2024,
whichever comes first. In exchange, it would cut government
spending by $4.5 trillion over the next decade and implement
a number of consequential changes to fiscal policy. The most
significant spending cuts would come by setting fiscal 2024
discretionary spending equal to fiscal 2022 spending levels.
Annual spending growth would then be capped at 1 percent for
the next decade. While not stipulated in the legislation,
Republicans would likely work to exclude discretionary
spending on defense and veterans' benefits from the cuts,
putting the burden of the cuts on nondefense, non-VA
discretionary programs. If nondefense discretionary outlays
were to bear the full brunt of the proposed budget cuts, they
would fall to 2 percent of GDP by fiscal 2033, the lowest
since at least the early 1960s.
The Speaker's debt limit legislation also works to roll
back a number of President Biden's policy initiatives. On
energy policy, the legislation would focus on increasing
fossil fuel supplies through the enactment of House
Republicans' energy package, which aims to boost oil and gas
production and mining by cutting down on the time it takes to
greenlight energy projects. It would also end tax breaks for
clean-energy projects and qualifying electric vehicles
included in the Inflation Reduction Act.
On student lending, the legislation would prevent a couple
of key executive orders by the Biden administration,
including the White House's plan to provide up to $20,000 in
student loan forgiveness for some borrowers. That hit a
roadblock last year when it was met with several legal
challenges, and the Supreme Court is expected to decide its
fate later this year. An income-driven repayment plan rolled
out by the Education Department earlier this year is also in
the crosshairs.
The Speaker's legislation also imposes restrictions on
income support programs, including work requirements on
Medicaid recipients who do not have children, an increase in
the age limit for work rules under Supplemental Nutrition
Assistance Program (food assistance), and a requirement that
states report on work outcomes under the Temporary Assistance
for Needy Families program. It eliminates much of the
additional funding provided to the IRS last year to help
increase tax enforcement efforts and improve taxpayer
services, and it rescinds unspent COVID-19 relief funds. And
the legislation would also require congressional approval
before major regulations could take effect.
macroeconomic impacts
The Limit, Save, Grow Act of 2023 would cut into near-term
economic growth if passed into law. Compared with a scenario
that includes a clean debt limit increase and no other
significant changes to fiscal policy under current law, real
GDP in the year ending in the fourth quarter of 2024 would be
0.65 percentage point lower. That is, in the Clean Debt Limit
scenario, real GDP is expected to grow 2.25 percent in the
year compared with 1.6 percent if Speaker McCarthy's
legislation becomes law.
While the economy skirts recession in both scenarios,
recession risks are uncomfortably high, with a consensus of
economists and many investors and business executives
expecting a downturn beginning late this year or early next.
The timing of the government spending cuts in the Limit,
Save, Grow Act
is thus especially inopportune as it would meaningfully
increase the likelihood of such a downturn. Indeed, under the
legislation, GDP growth is so weak that employment declines
in the first three quarter of 2024, and the unemployment rate
rises by more than a percentage point to 4.6 percent by the
fourth quarter of 2024. Compared with the Clean Debt Limit
scenario, by year-end 2024, employment is 780,000 jobs lower,
and the unemployment rate is 0.36 percentage point higher.
The significant government spending cuts in the Limit,
Save, Grow Act are substantial headwinds to near-term
economic growth. The cuts reduce nondefense outlays by $120
billion in fiscal 2024 compared with the Clean Debt Limit
scenario, equal to about half a percentage point of GDP. The
multipliers on this spending--the change in GDP a year after
a change in spending--are estimated to be just over 1, as the
programs suffering budget cuts are essential government
services and tend to benefit lower-income households that
quickly spend any support they receive from the government.
Adding to the economic headwinds created by the legislation
is the considerable uncertainty created by having to address
the debt limit again a year from now. Given that 2024 is a
presidential election year, that future debt limit drama may
well be even more heated than the current one. This is sure
to weigh on investor, business and consumer confidence and
thus economic activity.
Mr. Speaker, I yield 1 minute to the distinguished gentleman from Pennsylvania (Mr. Deluzio).
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I say to the gentleman, extortion is not a negotiation. President Biden actually has a budget that will reduce the deficit. It would be better if the Republicans actually came up with a budget, and we could talk about that. We are willing to have a conversation, but we are not willing to be extorted here.
Mr. Speaker, there is no doubt about the fact that this bill could monumentally hurt our Nation's heroes.
Mr. Speaker, I include in the Record a letter from the Paralyzed Veterans of America and a letter from the Veterans of Foreign Wars in opposition to this bill.
[From the Paralyzed Veterans of America, Apr. 25, 2023]
Congress, Protect All Services and Programs Needed by Paralyzed
Veterans and Their Families
Washington, D.C.--Today, Paralyzed Veterans of America
Executive Director Carl Blake issued a statement in light of
the House' consideration later today of the debt limit
package (Limit, Save, Grow Act of 2023).
``Right now the House of Representatives is preparing to
take action on legislation that would couple raising the debt
limit with significant cuts in federal spending. PVA has
received assurances from some Republican leaders that
veterans' funding will not be a target of these cuts, and we
appreciate these assurances! But the pending legislation
provides no specific protections for veterans with
catastrophic disabilities, specifically the services and
supports they and their families depend on. Efforts to
address the federal deficit must provide concrete protections
for veterans, their families, and caregivers, which means
explicit direction that the Department of Veterans Affairs'
budget will not suffer significant cuts.
Although ensuring the VA will have the funding needed to
meet its fiscal year 2024 needs is our foremost concern, we
urge Congress to remember that veterans with significant
disabilities depend upon many other Federal services and
supports outside of the VA that protect their disability
civil rights, employment support, affordable accessible
housing, as well as provide benefits that help their families
and caregivers. Our responsibility as a nation is to ensure
that those who have already sacrificed so much for our way of
life are not forced to do so again.''
Mr. Speaker, it is clear our veterans are against this bill.
Mr. Speaker, I yield 2 minutes to the gentlewoman from Pennsylvania (Ms. Scanlon), a distinguished member of the Rules Committee.
Madam Speaker, I yield 2\1/2\ minutes to the gentlewoman from New Mexico (Ms. Leger Fernandez), a distinguished member of the Rules Committee.
Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, my good friend from Oklahoma said that we are engaged in theatrics. Well, let me put that to rest. I mean, we are dealing with real numbers.
Last night in the Rules Committee, I asked the chairman of Ways and Means and the chairman of the Budget Committee some basic questions about the SNAP program. They had no clue.
People who don't have a clue shouldn't be writing legislation to determine policy. They should do the hearings and learn about what the facts are.
Madam Speaker, I include in the Record the following:
A letter from the Department of Energy, which states that reductions of this magnitude in this bill would have significant setbacks on U.S. competitiveness to adversarial nations like Russia and China;
A letter from the Department of Labor which states that these cuts in this bill would prevent more than 4,000 veterans experiencing or at risk of homelessness from receiving critical employment care;
A letter from the Department of Education, which states that under these radical cuts, funding for more than 100,000 teaching jobs nationwide would be eliminated, and it would reduce aid for more than 6.6 million Pell Grant recipients;
A letter from the Small Business Administration, which states that Republican spending cuts would mean that almost 300,000 fewer small businesses would be able to participate in their entrepreneurial development program;
A letter from the Department of Housing and Urban Development, which states that 286,000 families will lose rental assistance under the Republicans' proposed budget cuts and thousands more would be at risk for homelessness;
A letter from the Department of Homeland Security, which states that the proposed cuts could lead to more illegal drugs entering our country, including 350,000 grams of fentanyl. That is over 200 million fatal doses of fentanyl that Republicans will be responsible for letting into our country.
Madam Speaker, I also include in the Record a letter from the Department of Agriculture detailing how these radical Republican budget cuts would lead to more than a million new mothers losing WIC assistance.
The Secretary of Energy,
Washington, DC, March 17, 2023.
Hon. Rosa L. DeLauro,
Ranking Member, Committee on Appropriations, House of
Representatives, Washington, DC.
Dear Representative DeLauro: I share the concern expressed
in your letter dated January 19, 2023, about potential
impacts of proposals that would cap fiscal year (FY) 2024
discretionary spending at the FY 2022 enacted levels. While
Congressional Republicans have not released a specific plan,
cuts on this scale would have very real and damaging impacts
on our families, our communities, our economy, and our
competitiveness--undermining a broad range of critical
services the American people rely on in their everyday lives.
President Biden's FY 2024 Budget, which he released on
March 9, details his plans to invest in America, continue to
lower costs for families, protect and strengthen Social
Security and Medicare, and reduce the deficit. Meanwhile,
Congressional Republicans have reportedly proposed
unprecedented cuts in FY 2024 funding for key services,
programs, and protections such as education, public safety,
research, nutrition and more. Such action would have serious
consequences for Department of Energy programs and
initiatives at the Federal, state, Tribal, and local levels,
and would jeopardize recent bipartisan gains targeted at
improving the lives of everyday Americans.
Impacts would be felt across the country and could rise to
the level of jeopardizing the Department's ability to do its
part in protecting national security interests from energy
security and nuclear security threats.
Capping funding at this level would also hamper our ability
to cut energy costs for families and businesses across the
country, reduce the number of everyday Americans that can
access tax breaks for clean energy, and reduce the impact of
the Bipartisan Infrastructure Law.
Specific examples of potential impacts are listed below.
Scenario l. Across-the-board cap on FY 2024 discretionary
spending at FY 2022 levels. Example impacts are listed below:
A reduction to FY 2022 funding levels would delay all
National Nuclear Security Administration (NNSA) major
construction projects of at least one year, increasing
operational risks and the likelihood of cost increases. The
FY 2022 funding level represents a \1/3\ reduction from
planned execution in FY 2024.
The W93 and W87-1 warhead modernization programs would be
delayed at least 1-2 years, with significant risks for the
aging U.S. stockpile, DoD plans for delivery system
modernization, and U.S. support for the United Kingdom's
Replacement Warhead.
Hundreds of Energy Efficiency and Renewable Energy research
projects and 2-3 large infrastructure projects at national
labs would be cancelled or paused, resulting in up to one
thousand (1,000) layoffs within the labs, partner
organizations, and the local construction and support
workforce across the country. This would negatively impact
the ability of the national laboratories to continue to
advance cutting edge research.
Scenario 2. Across-the-board 22 percent reduction to
current enacted funding levels (FY 2023) for FY 2024. Example
impacts of this scenario are listed below. Scenario 1 impacts
would also be intensified:
At a minimum, research at Office of Science national
laboratories and universities would be reduced by about $700
million, resulting in substantial reduction of nearly 5,200
scientists, students, and technical staff.
Many of the Administration research priorities would
receive significantly less funding resulting in curtailed
research efforts in the areas of Climate Change; Artificial
Intelligence; High Performance Computing; emerging
technologies in Quantum Information Science,
Microelectronics, and Biotechnology; Fusion Energy; and
Isotope Production.
At a minimum, Office of Science facility operations funding
would be reduced, resulting in only 68 percent of operational
funding and a substantial reduction of over 6,000 users of
the over 38,000 annual users at the 28 scientific user
facilities across the national laboratories.
All facilities would have a significant reduction in force
of personnel, with loss of critical expertise. A review would
be required to determine which facilities to close to
maintain adequate operations at the remaining user
facilities. Facilities cannot operate safely at this funding
level. This action would result in major economic impact to
the United States, both in the short-term and in the long-
term as the U.S. will be subject to loss of scientific talent
and leadership.
At a minimum, thousands of low-income households (anywhere
from 4,400-8,800) would be deferred from weatherization
services, and reductions in state energy programs more
broadly would limit efforts to cut energy costs for families
and businesses, disproportionately affecting smaller states
and US territories.
Reductions of this magnitude would have significant
setbacks of U.S. geopolitical competitiveness to adversarial
nations like Russia and China.
This would include the reduction of the Idaho National
Laboratory operational status to the minimal allowable for
safe and secure support of DOE and national security programs
and research.
It would also include elimination of all efforts to support
the deployment of American nuclear energy technologies as the
preferred alternative to Russian and Chinese technologies in
countries looking to implement large scale power sources.
These are a few examples of the serious impacts of these
scenarios on ongoing efforts by the Department in the areas
of national security, safety of critical infrastructure,
threats to the Nation's competitive edge, and impacts on
consumers and industry.
Sincerely,
Jennifer M. Granholm.
These are actual numbers. These are real statistics compiled by real experts. When we talk about the fact that no one needs to worry about what is being debated here, this is why we are worried.
This is the impact of what they are trying to do. What they are trying to do will hurt regular people, will hurt veterans, will hurt people who are struggling to put food on the table, will hurt teachers, will hurt the people that we represent. It will hurt children.
This is unconscionable, what is going on here. We cannot just sit by while everybody on the other side says: Oh, don't worry, be happy. It will all just work out. No, it won't.
We don't share these values of these cuts. We have a separate set of values if my friends think that it is okay to cut these programs and hurt these people.
Madam Speaker, I reserve the balance of my time.
Madam Speaker, may I inquire as to how much time is remaining?
Madam Speaker, I yield myself the balance of my time.
Madam Speaker, what we have heard on the floor today is incredible, astounding, unbelievable, unconscionable contempt for the people that we are supposed to be here to fight for.
When people tell me that both parties are the same, that both parties are equally bad or believe the same things, watch this debate and then tell me what you think.
Democrats have different values than Republicans. They have no problem racking up $2 trillion in debt when it comes to tax giveaways for Wall Street and CEOs.
Nobody on the other side is talking about having billionaires pay one cent toward reducing our deficit. Maybe that is why Speaker McCarthy went to Wall Street to announce his plans essentially to screw Main Street.
Now they want to demand--and I say demand because this is a ransom note--demand 10 years of cuts unless we stick it to our own constituents, unless we take away food from hungry people, unless we kick people off of healthcare.
They didn't win the Senate, they didn't win the White House, and they didn't win a big majority as they wanted in the House.
To get what they want, they want to default on America so they can push through their radical MAGA agenda.
I have to be honest with you. I was disgusted by the debate in the Rules Committee last night and even what has been said here on the floor today.
This is unconscionably bad. This is not who we are. If you want to have a discussion on the debt, let's have that discussion, but this is an extortion.
You are saying if we don't agree to all these draconian cuts that are going to hurt people that we fight for every day on this side of the aisle, if we don't do that, you are going to run this economy off a cliff.
That is just an all-time high in recklessness and stupidity, Madam Speaker. We cannot accept that. The people we represent are the people who will be impacted by these cuts that I just mentioned by including in the Record all of the letters from the various agencies in our government. Those are our people.
Billionaires don't need us, but regular people do. People who are struggling to put food on the table are counting on us to be on their side, not to be making their life more complicated or more difficult.
Yet, this represents kind of the antithesis of everything that I believe is right. This is so wrong. It is so wrong.
I am not going to sit back and say, oh, well, let the process work its will, and maybe it won't be so bad at the end of the day.
This is bad. This is unconscionable. This is not deserving of a vote on the House floor today. People should reject it.
I urge my Republican colleagues on the other side of the aisle: Reject this. You represent these same people too. They deserve to have you on their side, not working against them.
Wall Street, they have enough support. They have enough people rooting for them to succeed. Regular people, people who are struggling in poverty, they need us. They are counting on us.
I urge my colleagues to vote ``no'' on this rule, ``no'' on the previous question, and ``no'' on the underlying resolution. We have to do better than this. This is beneath the dignity of this institution.
Madam Speaker, I yield back the balance of my time.
Madam Speaker, on that I demand the yeas and nays.
