Senate Proceeding on May 11th, 2009 :: 0:42:05 to 0:54:10
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0:41:59 to 0:42:19( Edit History Discussion )

Jon Kyl: quorum call: the presiding officer: the senator from arizona. mr. kyl: thank you. i ask unanimous consent further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. kyl: mr. president, we're soon going to be debating a bill that would place limits on the interest rate increases that credit card companies can levy on their debt holders. i look forward to debating the

0:42:05 to 0:54:10( Edit History Discussion )
Speech By: Jon Kyl

0:42:20 to 0:42:41( Edit History Discussion )

Jon Kyl: effects that this bill will have on american families. but before we do that, i'd like to consider the debt that the federal government is accruing via the budget and the stimulus spending on the nation's credit card. that is, the debt tha american families will be responsible for repaying

0:42:42 to 0:43:02( Edit History Discussion )

Jon Kyl: because, as it turns out, the comparisons between what y on your own credit card and the kind of bills you run up on your family credit card is actually not very different from that debt that we're running up on the federal credit card except, of course, that the federal debt is much, much bigger. but the reality is that you owe both: your family credit card

0:43:03 to 0:43:24( Edit History Discussion )

Jon Kyl: debt and your portion of the national debt. president on a course to acquire debt will reach 82.4% of the gross domestic proct by the 2019. what does that mean? the first point is that the debt is not interest free. there's debt interest charge odd

0:43:25 to 0:43:47( Edit History Discussion )

Jon Kyl: that just like on our persona personal -- charge odd that, just like our personal credit cards. in fact, from today's "washington post" -- excuse me, sunday's "washington post," there's an article called, "the president's budget." and in it, the "post" says the following. "the budget relies on so much borrowing that it will cost

0:43:48 to 0:44:10( Edit History Discussion )

Jon Kyl: taxpayers more than $4 trilon just to cover interest payments for the next ten than twice what the federal government will spend on education, security, and veterans combined." $4 trillion in interest on this debt just for the next ten years.

0:44:11 to 0:44:31( Edit History Discussion )

Jon Kyl: the government will begin -- as a result of the needo nay back starting in 201 paying more than a billion dollars per day on finance charges to the people that hold this federal debt imag in interest payments -- i said date. i meant u.s. debt.

0:44:32 to 0:44:54( Edit History Discussion )

Jon Kyl: a billion dollars a day in interest payment equates to $3.3 million a day for every american. think about that. $3.3 million a day the debt for every american citizen. can a family play by these same rules and get away with debt

0:44:55 to 0:45:15( Edit History Discussion )

Jon Kyl: that would creep up to their total ince and we will use a specific, typical example, typical family in my home state of arizona earns an income of $47,215 a year. following the example of the president's budget, this

0:45:16 to 0:45:37( Edit History Discussion )

Jon Kyl: would accrue nearly $38,000 credit card debt to pay for the again, $47,000 income and $38,000 credit card debt. that's the same percentage of the families income that the federal government is acquiring as a percent of the federal income of

0:45:38 to 0:45:59( Edit History Discussion )

Jon Kyl: well, what would the family situation be like? first, let's focus on these hefty interest payments i just talked about. say that the family's credit card has a typical annual of 10% which would cost about $3,800 a year or about $316 a month. if the family misses a payment or two the interest rate can

0:46:00 to 0:46:20( Edit History Discussion )

Jon Kyl: shoot up to 20% or 25% or 30% a year. that means the family could be spending $11,200 a year just on interest. that's nearly a third of its total debt and nearly a quarter of its total income just on interest alone. this is owed in addition to the

0:46:21 to 0:46:42( Edit History Discussion )

Jon Kyl: monthly minimum payments for the just as the government has to the family probably would need to borrow more just to get by. and the downward spiral would get worse and worse. needless to say this kind of debt is not sustainable. not for the family; not for the federal government. it would rapidly lower the family's standard of living.

0:46:43 to 0:47:04( Edit History Discussion )

Jon Kyl: in fact, in most bankrupt those families. beginning to chip away at that kind of debt would require real sacrifice. not just giving up nonessential spen movies or going out to dinner or going out to fundamental choices that significantly lower the family's standard of living.

0:47:05 to 0:47:25( Edit History Discussion )

Jon Kyl: a family with such massive debt would be considered a big risk for other lenders. so it would be very difficult to go out and get more credit or to get a loan. and this is the situation that we're getting into with china which currently holds almost 10% of our nation's debt. the chinese we're not sure that you are a

0:47:26 to 0:47:48( Edit History Discussion )

Jon Kyl: good credit risk in the dispiewt that we want to lend you anymore money. we're relying on the chinese to continue buying that debt but in mid-march the chinese premiere voiced concerns about u.s. government bond holdings. here's what he said: "we have length huge amounts of money to the united states. of course we are concerned about the safety of our assets.

0:47:49 to 0:48:09( Edit History Discussion )

Jon Kyl: to be honest, i'm a little bit borrowed and i would like to call on the united states to honor credible nation and ensure the safety of chinese assets." and of course this is exactly how credit works. borrow massive amounts of money and you are in over your head. a huge chunk of your income is

0:48:10 to 0:48:30( Edit History Discussion )

Jon Kyl: reserved for debt repayments and interest leaving you wh little money to get by or for discretionary spending. you continue to borrow more. your creditors get very nervous. pretty soon they lending you or hike up your interest rates to hedge against the additional risk. the only way to get back on track is to stop spending.

0:48:31 to 0:48:52( Edit History Discussion )

Jon Kyl: and that's if you c get back on track by just stopping spending and not having to borrow even more or taking bankruptcy. now that's a choice that a government, the united states government, does not have. and yet there are no plans here in washington to halt out-of-control spending. the massive amounts of debt that

0:48:53 to 0:49:16( Edit History Discussion )

Jon Kyl: we are accumulating in entitlement obligations alone are more than can be sustained. these are things like social security, medicaid and medicare. we say that is an obligation that we cannot default on. and yet we also know that we can't continue to fund that

0:49:17 to 0:49:38( Edit History Discussion )

Jon Kyl: obligation as the president's manager of office and budget has said, continued kind we are talking about are unsustainable. there are minor reductions in spending noted in the budget. some of these are in the area of defense. perhaps not the bes back. but the minor amount of spending

0:49:39 to 0:49:59( Edit History Discussion )

Jon Kyl: reduction does not go nearly far enough when we're talking a multiple trillions of dollars in spending and debt -- $4 trillion in debt service over the next 10 years alone. the overwhelming majority of american families, of course, don't engage in this kind of they can't. they have to make hard decisions to determine what they can

0:50:00 to 0:50:21( Edit History Discussion )

Jon Kyl: afford to mr. president, to do the same. these are hard choices. we need to make hard choices. the editorial in the "washington post same point. the title is "the president's budget leaving the charred choices for the -- leaving the

0:50:22 to 0:50:42( Edit History Discussion )

Jon Kyl: hard choices for the next one." when the president was campaigning, he said we can't afford to leave the hard choices for the next budget, the next administration, or the next generation. excuse me that when he unveiled the budget but as "the washington post" notes that's exactly what it does and they finally conclude we hope that it is only until the next budget rather than the next

0:50:43 to 0:51:04( Edit History Discussion )

Jon Kyl: administration. but the bottom line here, mr. president, is that the budget that has been sent to us by the president does not tackle the big issues, it does not reduce spending, it does not even cut existing programs substantially. with the net result that we going to be taking on debt which will requi financing of

0:51:05 to 0:51:26( Edit History Discussion )

Jon Kyl: trillion over the next 10 years. and as was noted, that's not sustainable. we can't pay for that. just as the famil that would take on that makes $47,000 a year, can't afford to take on $38,000 of debt. that's the relative proportion. let me say it one more time: the amount of debt on compared to our

0:51:27 to 0:51:47( Edit History Discussion )

Jon Kyl: income is the same ratio as a family of $47,000 taking on $38,000 debt on its credit card. i'm not talking about a mortgage on a house. i'm talking about something that has to be paid back at the end of the month. if you don't pay it back at the end of the month your interest rate goes up to maybe 25% or

0:51:48 to 0:52:08( Edit History Discussion )

Jon Kyl: and that's simply not sustainable. i hope by putting this context of a real family's budget it is clear to this some hypothetical, unrealistic comparison. when we take on this much debt at the federal government level, there are real consequences.

0:52:09 to 0:52:29( Edit History Discussion )

Jon Kyl: when you talk about a day for each citizen of the united states to repay in interest alone, you see the magnitude of what we're taking on. we've never done this the history of the country. there is no experience of how we would possibly deal with this. this one budget, during this

0:52:30 to 0:52:52( Edit History Discussion )

Jon Kyl: 110-year window, more debt than all of the debt in the united states in our entire history from george washington all the way through george w. bush. in that 220-year history, we have less debt than is represented in this o that is unsustainable.

0:52:53 to 0:53:13( Edit History Discussion )

Jon Kyl: the american people cannot make enough money to repay that amount of money. our standard of livg will be diminished substantially. the only way out of it is to reduce the amount of spending in the future. we can start with now. we don't next year. we can actually start with it

0:53:14 to 0:53:34( Edit History Discussion )

Jon Kyl: th so, mr. president, i ask my colleagues, as we talk about the budget just working on the appropriations bills that will be coming from the appropriations committee, that we stop and amendment of debt we are imposing on ourselves, our kids, and our grandkids.

0:53:35 to 0:53:54( Edit History Discussion )

Jon Kyl: that debt is going to come due more quickly than we think. and the consequences could be dire. mr. absence of a quorum. the presiding officer: the clerk will call the roll.