Rep. Mike Honda On Debt Limit Increase

Robert Treder · Post by **Robert Treder** » 2004-12-04 04:16am

US Congressman Mike Honda (D - CA 15th Dist) sent me this e-mail a couple of days ago. I thought it was pretty interesting.

Mike Honda wrote:Dear Robert,

On October 14th, Treasury Secretary John Snow informed the Congress that the federal government had reached its statutory debt limit. For political purposes, the Bush Administration resorted to "extraordinary measures" to avoid breaching the limit while meeting the cash obligations of the government until after the November elections. With little remaining financial flexibility, the Treasury Department has indicated that Congress needs to raise the debt limit by today, November 18th. Accordingly, the House will consider S. 2986, legislation to increase the public debt limit by $800 billion--the third such increase in the past three years. With this increase, the Republican-led Congress will have raised the debt limit by $2.2 trillion since President Bush took office.

There should no confusion--Republican mismanagement of our nation's finances is to blame for the rising national debt. At the direction of President Bush, Republicans in Congress have approved sweeping tax cuts for the wealthy, while spending without restraint. When President Bush was inaugurated in January 2001, there was a projected 10-year surplus of $5.6 trillion. Now, there is a projected 10-year deficit of more than $3 trillion. That is the worst fiscal reversal in history. America's growing debt will ensure that our children and grandchildren are overtaxed for the rest of their lives. Their taxes will pay for the interest on our debt instead of improving education, strengthening social security, expanding health care, and protecting our homeland.

Today, I will vote against increasing the debt limit, because the Republican legislation providing this increase fails to include budgetary rules that require the Congress to practice fiscal discipline. Our country must return to the days of fiscal responsibility. Using the pay-as-you-go rules, the Clinton Administration was successful in turning a $290 billion budget deficit in 1992 into budget surpluses in 1998, 1999 and 2000. As a result, the Clinton Administration was successful in paying down $362 billion in publicly held debt. And yet in 2002, the GOP Congress let the pay-as-you-go rules expire. Their inaction has led us back to an era of endless budget deficits and a skyrocketing national debt.

HONDA STATEMENT ON S. 2986

Republican Mismanagement! That is why the US Treasury can't meet its cash obligations without an increase in the public debt limit, and that is why my support for an increase is contingent upon inclusion of sensible budgetary rules that require fiscal discipline.

Make no mistake: the Republican White House and Republican Congress are the stewards of this budgetary mess. Eschewing the budgetary discipline of the 1990s, they have overseen the most dramatic financial turnaround in our nation's history. Reckless tax cuts for the wealthy and unrestrained spending have turned projected surpluses of $5.6 trillion four years ago into projected deficits of $3.5 trillion today.

So, for the third time in the last three years, Republicans need to rescue America from their own policies by saddling this and future generations with even more debt. Since President Bush took office, we have raised the debt limit to over $7 trillion--that's an increase of $2.2 trillion just in the last three years. The national debt is now rising at the rate of $900,000 a minute!

We have little choice. We must increase the debt limit to protect America's worldwide financial standing, but that increase should be accompanied by common-sense rules that require budgetary discipline. Democrats support reinstatement of the pay-go rules in which both tax cuts and spending increases must be paid for. The Republicans have rejected this prudent approach, and so I must reject their cavalier approach to management of our nation's finances. I urge my colleagues to oppose S.2986.

WHAT IS THE DEBT LIMIT

Budget deficits increase the federal debt by requiring the federal government to borrow additional funds to fulfill its commitments. The amount of money the federal government is allowed to borrow generally is subject to a statutory limit. When necessary, Congress must adopt legislation to raise this limit. If the Treasury Department cannot issue new debt due to the statutory limit, the government may be unable to obtain the cash needed to pay its bills. In this instance, the US Treasury Department is in a bind. It is required by law to continue meeting the government's legal obligations, but the debt limit may prevent it from issuing the debt that would allow it to do so. A failure to increase the debt limit would imperil the hard-earned high standing of US Treasury securities in the world's financial markets.

WHAT IS THE CURRENT BUDGET DEFICIT AND NATIONAL DEBT?

The 2004 deficit will be $413 billion, the largest in history and $36 billion higher than 2003. However, if you remove the Social Security Trust Fund surplus, the 2004 deficit is actually $564 billion, or more than 5 percent of GDP.

IF WE DON'T INCREASE THE DEBT LIMIT, WILL THE GOVERNMENT DEFAULT ON ITS FINANCIAL OBLIGATIONS?

My Democratic colleagues and I understand that the debt limit must be increased. But we cannot sit by and allow the Republicans to continue racking up our national debt without standing up for fiscal responsibility. Democrats balanced the budget during the Clinton Administration. We did it through responsible budget rules that forced the government to pay for what it spends - just like American families do every single day. I believe that we should not increase the debt limit without putting these basic fiscal controls in place.

We had bipartisan support for pay-as-you-go rules when they were first put in place. If President Bush withdrew his opposition and the House Republican leadership allowed us to have an up or down vote on these measures, I am convinced they would pass on a bipartisan basis this week.

Sincerely,

Mike Honda

Some interesting stuff, and I think it's cool that he sends letters to his constituents.

Post by **Sea Skimmer** » 2004-12-04 05:18am

Yes, the much vaunted 'projected surplus' strikes again, Never mind that it could only exist only if the economy continued to boom at its late 1990's rate, a delusional bubble for all involved. And one which burst well before Bush was elected.

Stofsk · Post by **Stofsk** » 2004-12-04 07:32am

A politician actually writing to his constituents? What the fuck happened to the world?

SirNitram · Post by **SirNitram** » 2004-12-04 11:19am

Those damn tax-and-spend liberals and their irresponsible fiscal policies!

More seriously, I'm mostly just surprised this is from a politician to his constitutents. What, did you give the guy head or something?

And of course, we get into 'The surplus didn't really exist!' straight away. Of course it was imaginary(That's sort of implicit in the 'projected' qualifier, folks). What people miss is the entire goddamn economic setup of the modern world is mostly imaginary. The dollar is down. Why? Because people imagine it's not good to trade in it. The whole concept of the price being what the market can 'bear' is based on convincing people to beleive it's worth that much. And paper money? Entirely based on people beleiving a peice of paper is really worth something.

Was the bubble of the 90s going to burst? Of course. Was it going to spiral into this? Not necessarily. But hey. That doesn't matter. Just.. One thing to think about. Remember that the value of the American Economy is partly based on what outsiders think of it. If the image of America as a debtor who just keeps increasing his debts continues to take hold, what do you suppose that will do for the value of the dollar.. IE, the illusion that the dollar is a good currency to work with? Alot of other illusionary currencies are out there too.

Robert Treder · Post by **Robert Treder** » 2004-12-05 01:31am

SirNitram wrote:More seriously, I'm mostly just surprised this is from a politician to his constitutents. What, did you give the guy head or something?

Not quite. I sent him an e-mail one time a while ago. He asked me if I would be interested in receiving periodic updates, and I said yes.

He also personally responds to any correspondence sent to him, which is cool.

tharkûn · Post by **tharkûn** » 2004-12-05 01:34am

Was the bubble of the 90s going to burst? Of course. Was it going to spiral into this? Not necessarily.

Yes. "This" happens to be better than the 30 year average for most economic indices. Given that you can bluntly pay a Chinese individual a fraction of the cost to create essentially the same bloody as an American ... losing manufacturing jobs, higher unemployment, and aftershocks are inevitable. If anything America is getting off light. You simply can't expect for the market to remain unresponsive when somebody else can do the job for a fraction of the cost.