October 30, 2013
“Fellow citizens, we cannot escape history. We of this Congress and the administration will be remembered in spite of ourselves.’ Those are the words of Abraham Lincoln in a message to Congress on December 1st, 1862, almost exactly 150 years ago.
“I want to emphasize, and think the comments this morning have been wonderful, and put them together and you've got the essence of a solution, but I want to emphasize that this is a historic opportunity and responsibility. The other day after a hearing I ran into an old history professor of mine I hadn't seen in 45 years – an American history professor – and I said, ‘Professor Smith, have we ever had a moment in American history with this level of un-functionality and chaos in our governmental system?’
“He said, ‘Of course,’ and I was surprised he said that so quickly. I said, ‘When was that?’
“He said, ‘The Articles of Confederation.’ The period before the Constitution, which provoked the Framers to write the Constitution, was a period when government didn't work – and we're in a similar period. And that's why what we're doing here today is such an important and very heavy responsibility – the importance of doing something.
“The best thing we can do for the economy is show the American people that we can do it, that we can work together, that we can find a solution. Two thirds of the American economy is driven by consumer spending, and consumer spending is driven by confidence, and confidence is instilled by the government being at least modestly functional, which is hasn't been recently. It doesn't have to be a comprehensive solution, as Chairman Ryan and Chairman Murray both said – but it does need to be real, it does need to be significant, it at least needs to take us through September 30th, 2014.
“My second point is that the fiscal situation is serious. While presiding the other day – I know that we're not supposed to do our own work, we learned that yesterday from the Parliamentarian – but I couldn't help doodling a bit about what would happen is interest rates went from 2 percent to 4 percent, which isn't at all unexpected in terms of our public debt. If that's the case at a 17 trillion dollar debt, 4 percent would be 680 billion dollars a year, which exceeds both the Defense budget and the Intelligence budget combined. That is a dead hand that buys us nothing: no schools, no Head Start slots, no jet airplanes, no defense, no nothing.
“Interest on the debt exceeding the Defense and Intelligence budget combined. It crowds out everyone's priorities. Conservatives and liberals alike, it crowds out everyone's priorities. And in addition, of course, it's an immoral burden on our children. But I do want to relay one additional thought on that front.
“When I was Governor one of the rituals was to go to New York every year and genuflect to the rating agencies, kiss their ring, and hope for a good bond rating for your state. I was doing that one year and talking about how prudent we were in Maine and how we didn't spend much, we had low per capita debt, and our debt was paid off in ten years and we were really careful with our expenditures. And one of the analysts stopped me and said, ‘Governor, I want to remind you that not fixing your infrastructure is debt. It's debt just the same as debt that's on the books. And if you're stinting on maintaining your infrastructure, you are building up a debt for your children and grandchildren just as if you are borrowing the money.’ I think that's an important item to remember.
“The other thing is that we've seen all these charts today that have shown exploding federal expenditures: it's all health care expenditures. That's what's driving the debt. It's not Head Start. It's not Pell grants. It's not the Department of Defense. It's not the CIA. It's health care expenditures in Medicare, Medicaid, Federal pensions, veterans' health benefits – that's what's driving the deficit. That's what we really need to be talking about. And we're making a grave mistake if we cut those kinds of programs, whether it's on the defense side or the domestic side, because health care, like the interest on the debt, is going to crowd everything else out.
“So what do we have to do? We have to deal with this debt problem, which I've acknowledged is very important, but we have to do it in a way that doesn't compromise the economy. We have to do it in a way that is gradual and thoughtful and credible – but not all at once. We have a saying in Maine that the path out of the woods is usually as long as the path in. It's taken us about 15 or 20 years to get into this hole. We're not going to get out of it in the next two or three years, and so we have to have a credible plan that doesn't compromise the economy and the economic growth that everybody has talked about as the very best way to solve this problem. It will build confidence; it will lower deficits, and make the necessary investments.
“I'm not going to talk about tax expenditures, except to say that they are expenditures. Both sides agree. In both budgets we mine the tax expenditures. The only question is: what do we do with the revenues produced? In the House budget they're used to lower tax rates. In the Senate budget they're used to lower deficits. I think there's a compromise to be found there. The Rubicon of getting new money from tax expenditures has been crossed by all parties. Let's just talk about how those revenues are allocated.
“Finally I'll go back to President Lincoln. December 1st, 1862, he talked about how to deal with change; how to deal with difficult problems, and how we have to clear our minds and think creatively. It's the best phrase I've ever encountered about how to deal with change, and here's what he said: ‘The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and therefore we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country."
