Washington, D.C. – Nevada Senator Harry Reid made the following remarks today on the Senate floor regarding the default crisis. Below are his remarks as prepared for delivery:
Today our Republican colleagues in the House planned to vote on a bill to lift the debt ceiling for a few months before plunging this nation and its economy back into a state of uncertainty.
Last night Speaker Boehner pushed back that vote because this legislation doesn’t even have the support of Republicans in his own chamber. But pushing back the vote by a day or rewriting parts of this bill won’t solve the underlying problem: a short-term solution is not an adequate solution for our economy.
Even if the Speaker could get his legislation through the House of Representatives, I can assure you the Senate would not pass it and President Obama would not sign it.
Rather than lifting what economists call the fog of default, this Republican plan would usher in an era of bad economic weather that could last for years.
A few weeks ago, Speaker Boehner said it was a terrible idea to merely postpone a default on the national debt, or to push the problem down the road a few weeks or a few months.
Back then, he was not interested in a short-term solution. Back then he was right.
This is why: Economists, market analysts and rating agencies have said the world economy simply cannot bear this kind of uncertainty any longer.
They have said a short-term solution to the impending default would still result in a loss of the AAA credit rating that has kept interest rates low in this country and saved consumers money for 70 years.
I trust that Speaker Boehner and other reasonable Republicans understand the seriousness of a default crisis. Here is what the Speaker said recently:
“That would be a financial disaster not only for our country, but for the worldwide economy. You can’t create jobs if you default on the federal debt.”
But a short-term fix doesn’t get the job done. It would cause many of the same calamitous results as a technical default, including rising interest rates that would essentially raise taxes on every person in this country.
American families would pay more for their mortgages, car loans, student loans, credit card bills and much, much more.
And higher interest rates wouldn’t just be costly for consumers. They would also cost the federal government more – and would actually increase our deficits and debt.
A less than one percent increase in interest rates – which economists have predicted if U.S. debt is downgraded – would cost our government more than $100 billion every year. I repeat – it would cost the U.S. government $100 billion every single year.
In a decade, that would cost this country as much taxpayer money as Speaker Boehner’s proposal would cut from the deficit. In effect, his short-term plan would yield not a single dime of savings.
Republicans would like the American public to believe Democrats in Congress and the White House are insisting on a long-term deal for political reasons. They say Democrats just want to push this off until after the presidential election.
That’s simply not true. It is not Democrats who have asked for a long-term solution. It is the economy that has demanded it.
If Republicans in Congress are willing to risk our economy by playing politics in July, why wouldn’t they do the same thing in January?
That is why every economist, every market analyst, every rating agency has insisted any legislation to avert a default on the nation’s debt must take us through the end of 2012.
The Senate is considering a measure that would avert default and cut $2.7 trillion from the deficit. It is a reasonable measure, and Republicans have supported every one of its cuts in the past, and it should be able to pass both Houses of Congress with bipartisan support.
It gives each side something it wants: it protects Social Security and Medicare without raising a single penny of revenue. And, most importantly, it is a long-term strategy to safeguard the economy and give the markets the stability they need.
Unlike Speaker Boehner’s legislation, which economists have rejected, it would not put us through this all again in six months, and with even less certainty of achieving compromise.
British Prime Minister David Lloyd George once said, “There is nothing more dangerous than to leap a chasm in two jumps.”
Congress has a duty to do what it takes to avert a national default in one, swift leap.
That will take political courage. I urge my Republican friends to join hands with Democrats. We can take courage from one another, and make the leap together.
Because if we don’t clear this chasm, our nation’s economy will go over the edge with us.