Editorial Corner
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Who Said This
Mr. President, I rise today to talk about America's debt problem.
The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.
Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is "trillion'' with a "T.'' That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President's budget will increase the debt by almost another $3.5 trillion.
Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we'll spend on Medicaid and the State Children's Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.
And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like
bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America's priorities. Instead, interest payments are a significant tax on all Americans — a debt tax that Washington doesn't want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies.
But we are not doing that. Despite repeated efforts by Senators Conrad and Feingold, the Senate continues to reject a return to the commonsense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts. The Senate had to abide by the commonsense budgeting principle of balancing expenses and revenues. Unfortunately, the principle was abandoned, and now the demands of budget discipline apply only to spending. As a result, tax breaks have not been paid for by reductions in Federal spending, and thus the only way to pay for them has been to increase our deficit to historically high levels and borrow more and more money. Now we have to pay for those tax breaks plus the cost of borrowing for them. Instead of reducing the deficit, as some people claimed, the fiscal policies of this administration and its allies in Congress will add more than $600 million in debt for each of the next 5 years. That is why I will once again cosponsor the Pay-go amendment and continue to hope that my colleagues will return to a smart rule that has worked in the past and can work again.
Our debt also matters internationally. My friend, the ranking member of the Senate Budget Committee, likes to remind us that it took 42 Presidents 224 years to run up only $1 trillion of foreign-held debt. This administration did more than that in just 5 years. Now, there is nothing wrong with borrowing from foreign countries. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.
Increasing America's debt weakens us domestically and internationally. Leadership means that "the buck stops here.'' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
I therefore intend to oppose the effort to increase America's debt limit.
Sources:
Congressional Record. "Remarks by Sen. Barack Obama."
16 March 2006.
How The Democrats Caused the Current Financial Mess
Don’t believe me? These are not my words but those of a respected financial reporter and analyst. I am gong to summarize it briefly then provide a link to his much more detailed explanation if you are so inclined.
The problems started in the housing market. Fannie Mae and Freddie Mac are abbreviations for two quasi public institutions that basically provide the funding for the mortgage market in the US. How? They purchase bundles of mortgages that have been issued by banks and other mortgage institutions. These purchases allow money to flow back to the institutions so they can loan money to other borrowers and thus create still other new mortgages. This process worked fine as long as housing values continued to increase. That is because the mortgages purchased by Fannie and Freddie were backed by the ever increasing value of the houses they financed. However, if the housing market ever tanked Fannie and Freddie would be seriously under- capitalized and at risk. Why is that a problem? Because both institutions were only quasi public as both were backed by the full faith and credit of the US government (in other words, you and I).
On their editorial page, The Wall Street Journal has been issuing warnings about risky practices (under capitalization, poor accounting, fraudulent interpretation of accounting rules, etc.) at Fannie and Freddie for years (I can remember for sure of warnings since at least 2002). Also, in 2002, George W. Bush (our President, a Republican) proposed legislation that would have reigned in the worst of these abusive and risky practices. The Republicans controlled congress at the that time so you would think that getting the legislation passed would be a no brainer. However, in the Senate, one Senator can block any piece of legislation. That Senator can be over ruled if at least 60 Senators vote to do so (a process called cloture). The legislation died because one Senator (Chris Dodd - Democrat, of Connecticut) blocked it and the remaining Democrats prevented the 60 vote over ride. There have been other attempts to over haul the rules that regulate Fannie and Freddie. Senator McCain (correct, the one who is now the Republican nominee for President) introduced legislation in 2006 that would have stopped the worst of the abusive practices. But, starting in January of 2007 the Democrats controlled congress. Guess what, McCain’s bill did not get out of committee. And now the housing market has tanked and we know the rest of the story.
That is pretty much an overview of what went wrong. Now for some interesting facts. There is a web site that summarizes political contributions by politician and by donor. An institution like Freddie or Fannie can not contribute money directly to a politician. However, their executives can. Over the long haul, the one politician who has received the largest total contributions from executives at Freddie and Fannie is.... Chris Dodd. In second place is John Kerry (Democrat, Massachusetts). In third place is Barack Obama (Democrat, Illinois). That one is surprising because he has only been in the Senate for four years. Yet over those four years he has amassed more total contributions than any Senator except Dodd and Kerry. And Dodd and Kerry have been in the senate for years. I will let you draw your own conclusions but when Obama goes on camera and lays the blame for the current financial melt down on Republicans and George W. Bush he is not telling the truth and he knows it. If the main stream media were doing its job this stuff would be all over the front pages. But of course (other than for the Wall Street Journal) its not doing its job.
This is a very quick summary of events leading up to the current financial crisis. Check out these websites if you want a lot more detail. Of the four below, the first one, the NY Times is the most damning because it is an article written in June of 1999 that predicts the outcome of actions taken by the Clinton Administration.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0