Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. Will the majority leader yield me 30 seconds to make a point?

Mr. SARBANES. In terms of hitting the mark with respect to the growth figures; is that not correct?

Mr. SARBANES. And furthermore, the CBO projections have been notably short in recent times----

Mr. SARBANES. Let me ask the leader one other question on these estimate figures. Is the leader aware that the blue chip consensus, which is derived from a monthly survey of 50 private sector forecasters, disagrees with CBO and, in fact, agrees with OMB on the forecast? So the private sector forecasters, in effect, do not validate the CBO projections; they agree with the OMB projections. Is the leader aware of that?

Mr. SARBANES. And that examination should take place in a circumstance in which a gun is not being held at the head of the people conducting the examination by virtue of closing down the Government and terminating all these services. This is a coercive measure which has no place----

Mr. SARBANES. That is the package under which that examination takes place; is that correct?

Mr. SARBANES. As I understand the leader's position, the examination of the rooms within this house--the education room, the Medicare room, Medicaid room, so forth--should take place in the course of considering the reconciliation.

Mr. SARBANES. Will the Senator yield?

Mr. SARBANES. Would the Senator yield?

Mr. SARBANES. That is right. I am finished. I ask unanimous consent that the articles to which I referred be printed in the Record.

Mr. SARBANES. Mr. President, is the Senator familiar with the articles which appeared in today's Post and today's Baltimore Sun, one headed ``Underlying Gingrich's Stance Is His Pique About President,'' and the other one, [[Page S 17116]] ``Gingrich links stalemate to perceived Clinton snub.'' This is an absolute tragedy. You have 800,000 employees out of work, services cut down at great expense, and it is all because the Speaker has had a fit of pique about this matter. Mr. President, I ask unanimous consent that those articles be printed in the Record as well, along with a column by Lars-Erik Nelson, of the New York Daily News, headed ``Crisis reveals Newt depths of pettiness.'' This is incredible. The Speaker himself at a breakfast in effect conceded that this provoked him into taking this action.

Mr. SARBANES. Mr. President, I ask unanimous consent that article be printed in the Record.

Mr. SARBANES. Is the article to which the Senator was referring the one from the New York Daily News that starts out ``House Speaker Newt Gingrich admitted yesterday that he provoked the government shutdown in a fit of pique over how President Clinton treated him on last week's trip to Israel''? Later on it says, ``And so, Gingrich's wounded pride fueled the shutdown that forced the furlough of 800,000 Federal workers and closed nonessential services--costing taxpayers hundreds of millions of dollars.'' Is that the article?

Mr. SARBANES. That is absolutely right. So the response to the question put from the Senator from Pennsylvania is contrary to his assertion. The Michel rule never reached the matter we are confronting with all the zeroing out of these very important programs, including the Low-Income Home Energy Assistance Program, which the Senator from North Dakota made reference to earlier.

Mr. SARBANES. The Michel rule never applied to a set of facts in which you were zeroing out programs.

Mr. SARBANES. Will the Senator yield for a question on that point?

Mr. SARBANES

Mr. SARBANES. Who controls the time, Madam President?

Mr. SARBANES. I am now quoting from the article: ``The unusual statement by the Standard & Poor's Corporation, the rating agency, said that it was not reducing the United States' triple A credit rating, the highest grade--and one granted to only about a dozen countries. But it clearly left open that possibility.'' And they went on later: ``The President of Standard & Poor's * * * said''--and this is a quote of his--``if this were any other country than the United States that we were talking about, we would have put them on credit watch.'' That is the fire that is being played with here. Later, on their own credit line release, Standard & Poor's questioned the Government's willingness to make timely debt service. I ask unanimous consent that the article be printed in the Record at the conclusion of my remarks.

Mr. SARBANES. As one of the Federal employees who had been furloughed said in the morning paper, ``It is stupid.''

Mr. SARBANES. Let me just quote: Standard & Poor's triple A rating of the U.S. Government is predicated on the dual components of the Government's overwhelming capacity and unquestioned willingness to honor its debt obligations. The U.S. Government's financial capacity to meet its debt obligations remains a worldwide standard based on the size and strength of the U.S. economy. However, the current budget dispute between the President and Congress has raised issues regarding the Government's willingness to make timely debt service. This is what is at risk regarding the game that is being played here. Most of the appropriations bills have not been sent to the President. Of the 13 appropriations bills, as of yesterday, only 4 had been sent to the President. He signed three of them. Now we are starting to send the remaining appropriations bills to the President. And I approve of that process. I hope we will get the bills down to the President. Not only have the Republicans failed to pass the appropriations bills, but they have also failed to pass the reconciliation bill. The reconciliation measure is not even out of conference. The conference report has not yet passed the House and Senate. It is not even out of conference.

Mr. SARBANES. Madam President, I am prompted to rise because of the comments made by the chairman of the Appropriations Committee with respect to passing appropriations bills and sending them to the President. It is very important to understand how we find ourselves in this outrageous impasse with the Federal Government closing down and with the ability of the United States to honor its debts cast in jeopardy. The fact of the matter is that, as of this morning, only 3 of the 13 appropriations bills have been signed into law. Only four have been sent to the President. He vetoed the legislative appropriations bill, and that has come back to us, and it will have to be resubmitted. I hear all of these protestations from my colleagues from across the aisle. But the fact is they have not moved the appropriations process forward. Now they want to hold the President hostage and engage in legislative terrorism. That is exactly what is happening here, and 800,000 Federal employees are furloughed as a consequence of this terrorism. How are people who live from paycheck to paycheck going to meet their mortgage payments or tuition payments for their kids who are in school? A budget reconciliation package has not even been passed in the Congress. It is not even out of the conference committee. So the President has not had a chance to act on the budget. He has not had a chance to act on most of the appropriations bills--10 out of 13 as of last night. A couple will be sent to him shortly--hopefully this one that is now before us and a couple of others that we be considered shortly. So the fact is that the Congress has not done its work in sending the appropriations bills to the President for him either to sign or to return to the Congress with his veto. What is underway is a tremendous coercive tactic to try to force the President to accede to the priorities that are being set by my Republican colleagues with respect to the budget, and that essential priority that is contained therein is deep cuts in Medicare in order to give tax breaks to wealthy people. That is essentially the driving force behind the budget proposal of my Republican colleagues. Of course, the President has indicated he will not agree to that, and now they are trying to use every tactic in the book in order to compel him to do so. It is an outrage that they have closed down the Federal Government. Clearly, what should have been done is we should have had short-term extensions of the appropriations measures and an extension of the debt ceiling until the remainder of the appropriations bills and the reconciliation measure could be sent to the President. That was not done, and the Republicans are now trying to coerce the President into accepting a set of priorities with which he does not agree. I oppose that set of priorities and continue to do so. But I must say that my colleagues on the other side of the aisle, you are playing with fire. Standard & Poor's this week issued a strongly worded warning to the Government saying the faith of investors has to some degree been diminished by the threat of imminent default on its debt. I ask unanimous consent that the article be printed in the Record at the conclusion of my remarks.

Mr. SARBANES. Reserving the right to object, can one assume that we will have morning business between now and 10 of 3?

Mr. SARBANES. Certainly.

Mr. SARBANES. He said it is stupid. It is stupid. It is stupid, and it ought to stop. Mr. President, he is right. Exhibit 1 [From the New York Times, Nov. 11, 1995] S. & P. Strongly Warns Government of Threat of Default (By David E. Sanger) Washington, November 10.--One of the world's leading credit-rating agencies issued a strongly worded warning today to the United States Government, saying that the faith of investors ``has, to some degree, been diminished'' by the threats of imminent default on its debt. The unusual statement by the Standard & Poor's Corporation, the rating agency, said that it was not reducing the United States' triple-A credit rating, the highest grade--and one granted to only about a dozen countries. But it clearly left open that possibility if the country failed to meet any of its payments on United States Treasury obligations because of the budget impasse. In an interview this evening, the president of Standard & Poor's, Leo C. O'Neill, said that ``if this were any other country than the U.S. that we were talking about, we would have put them on credit watch,'' the formal warning the firm issues when a government or company is at risk of having its credit rating lowered. Mr. O'Neill said that a committee within his firm debated today's statement for nearly two days after it became clear that Congress and the White House were headed toward a showdown. While the warning, which was issued late in the afternoon, itself may rattle the markets early next week, Mr. O'Neill said that he thought it was important that Government officials understand the implications of a default on the country's solid gold credit rating. He said that he fully expected that the United States would make full payment on its debts. But the willingness of American officials to talk about the possibility of default has already done lasting harm to the United States' international image as a country willing to pay back what it borrows, he said. ``Even if the issue is resolved in the 11th hour and 59th minute, in some respects the damage has been done,'' Mr. O'Neill said. The growing uncertainty in Washington over the budget and the prospect of shutting down the Government and defaulting on the national debt is already rippling through Wall Street. Bond prices fell and the broad stock market indexes slumped as the Democratic White House and the Republican Senate headed into the weekend playing an old fashioned game of chicken. And the price of gold, a traditional haven in times of uncertainty, surged $3.10, to $390.50. The price of the 30-year bond fell as the yield, which moves in the opposite direction, rose to 6.33 percent. The Dow Jones industrial average managed to inch 6.14 points higher, to a record 4,870.37. But the S. & P. 500-stock index slipped 0.54 point, to 592.72, and the broader Nasdaq index fell almost 2 points. For decades the United States has been the gold standard in the world of investing. Long considered the safest of all investments, Government debt is the yardstick by which the risk of lending funds to other nations or corporations is regularly measured. If Standard & Poor's lowered the nation's rating the result would almost certainly be an increase in interest rates, in order to attract investors to take a marginally higher risk of not being paid back on time. That, in turn, would affect a raft of other rates, including variable-rate mortgages held by millions of American homeowners. Those mortgages are usually based on the interest rate of Treasury obligations. Politically, the rating agency's action today plays into the hands of President Clinton and Treasury Secretary Robert E. Rubin. Both have warned that Congress was threatening America's creditworthiness around the world by linking an increase in the national debt limit to a number of other Republican budget priorities. But many Republicans and some on Wall Street have dismissed that view, contending that investors see the current threats of default as a political sideshow that has little to do with the United States' ability to pay its debts. It is still unlikely that the United States is heading for default and any imminent action is doubtful. Mr. Rubin has been extraordinarily cagey in recent days when asked how long the United States can continue to meet its obligations without increasing the $4.9 trillion ceiling on Federal borrowing. He has authority--which Congress is trying to strip away-- to draw on Federal trust funds that keep their money in Treasury securities. That, in turn, would allow the United States to borrow more to meet its operating expenses and to repay investors. The first big hurdle comes on Wednesday, when the Government must pay $25 billion in interest to bondholders; another $44 billion is due the next day. Standard & Poor's argued today that even without a default, America's reputation among investors was hurting. ``Even assuming a debt ceiling agreement is enacted in time to forestall default,'' the firm said in its statement, ``the global capital market's unquestioned faith in the United States Government's willingness to honor its financial obligations has, to some degree, been diminished by the failure of the Government to act in a timely fashion. As a result, the reduced level of market certainty may require some time to overcome, well after the immediate fiscal dispute is resolved.'' That wording almost exactly parallels warnings issued recently by Mr. Rubin, who has said the United States will pay for a default ``for years and years to come.'' Mr. O'Neill said that he had had no contact with Treasury officials concerning his firm's rating of American debt, or about today's statement. This is the first time Standard & Poor's has issued such a warning. In past debt limit battles, Mr. O'Neill said, ``we didn't really believe there was a real threat of default; now, we are concerned that the debate isn't being resolved.'' When Republicans and Democrats can bicker over who is at fault, only Standard & Poor's and its competitor, Moody's Investors Service Inc., have the power to issue ratings that are followed by investors around the world. They are viewed as politically neutral, interested only in the question of risk, not the wisdom of various budget-cutting policies. Moody's issued a less dire warning on Wednesday. It said then that while the odds of a default were low, they were already higher than in 1989, when the United States last faced an impasse over the debt limit. The effects on the United States Government of a lower rating are clear: some institutions in the world will only invest their funds in triple-A securities. But the effects would also be much larger. Many cities and towns issue debt that is linked to United States securities, and others offer those securities as collateral. Standard and Poor's also warned that ``a disruption in U.S. Government debt payments also would have major implications for the liquidity of various financial institutions, money market funds and Government bond funds.'' Exhibit 2 S&P Highlights Broad Implic of US Gvt Dbt Limit Debate New York.--Standard & Poor's CreditWire 11/10/95--Standard & Poor's, while maintaining its triple--``A'' rating on the United States government, is increasingly concerned about the global financial market ramifications of the current U.S. budget impasse. Even a short-lived default on the U.S. government's direct debt obligations would profoundly impact a broad range of securities and financial market participants. Even assuming a debt ceiling agreement is enacted in time to forestall default, the global capital market's unquestioned faith in the United States government's willingness to honor its financial obligations has, to some degree, been diminished by the failure of the government to act in a timely fashion. As a result, the reduced level of market certainty may require some time to overcome, well after the immediate fiscal dispute is resolved. Standard & Poor's triple--``A'' rating of the U.S. government is predicated on the dual components of the government's overwhelming capacity and unquestioned willingness to honor its debt obligations. The U.S. government's financial capacity to meet its debt obligations remains a worldwide standard based on the size and strength of the U.S. economy. However, the current budget dispute between the President and Congress has raised issues regarding the government's willingness to make timely debt service. Standard & Poor's continues to regard that fundamental willingness as consistent with the highest credit rating category, but in the midst of the current budget struggle, the threat of delayed U.S. debt service payments has become a highly charged political tactic. While the current debate in Washington has focused substantially on the government's ability to honor its debt obligations in the absence of an agreement to raise the existing ceiling about $4.9 trillion, there are numerous, ancillary debt issues that would also be negatively affected by the failure to reach an agreement. Corollary credit ramifications of a U.S. government default would affect; corporate and municipal agency debt linked to U.S. securities, pre-refunded municipal bonds amounting to $400 billion, collateralized by U.S. obligations. A disruption of U.S. government debt payments also would have major implications for the liquidity of various financial institutions, money-market funds, and government bonds funds. Mr. CRAIG addressed the Chair.

Mr. SARBANES

Mr. SARBANES. Mr. President, today marks the 30th anniversary of the enactment of the Higher Education Act of 1965 and I am pleased to take this opportunity to comment on what is, in my view, a truly landmark piece of legislation in this country. Every nation puts a premium on education in order to develop the skills and talents of its people in order to succeed in a modern, complex economic society. That is true whether the country is governed as a democracy or a dictatorship or somewhere in between--each is concerned with enhancing the skills of its people in the workplace. Improving the skills of the American worker and providing education opportunities for all are goals which epitomize the spirit of what it [[Page S 16816]] means to be an American. They are worthwhile, honorable goals that have always been a priority of this Senator. The Higher Education Act, enacted in 1965 to provide disadvantaged students with greater educational opportunities, recognized the shared benefit of providing every American a chance to maximize his or her potential. As a result of the passage of this legislation, doors have been opened to millions of citizens who otherwise would not have had the access or the resources to obtain a higher education. Although the act has been amended over the years through the reauthorization process, the central purposes of the legislation has remained the same--to ensure access, choice and opportunity in higher education. In light of the tremendous success of this legislation, I am disturbed by the draconian budget cuts being advanced by the current congressional leadership which would effectively undermine the directives of the Higher Education Act. It is particularly distressing when you realize that those who are now seeking to draw back from the American commitment to education through the cuts included in budget reconciliation are, at the same time, propounding the necessity for America to compete more successfully in the world's economy. In my view, they are asserting a basic contradiction. Our success as a competitor in the world's economy rests upon educating our future generations. Republican budget proposals would dramatically decrease educational opportunity in order to finance tax cuts for the wealthy and to meet arbitrary deficit reduction targets. In my view, Republican budget proposals clearly renege on our historical commitment to improving access to higher education by placing an undue burden on students and their families over the next 7 years. It makes little sense to cut investments in programs which give people the skills to function in a modern, complex society. It makes even less sense to do so in a document which is repeatedly purported to be a budget for our Nation's future. As you know, the Senate was successful in eliminating several of the more onerous provisions in the education portion of the budget reconciliation--including the .85 percent tax on colleges and universities on their Federal student loan volume, the 6-month post graduation interest-free grace period on student loans, and the interest increase on PLUS loans. However, I remain concerned about what will be contained in the final package. I also regret that efforts to retain current law with respect to the Federal direct lending program were unsuccessful. The Republican budget plan severely curtails the Federal direct lending program by placing a 20 percent cap on loan volumes. The Department of Education estimates that by the close of the current academic year, direct lending will represent between 35-40 percent of this year's student loan volume. Should this provision become law, nearly half of the students involved in the direct loan program will have their financial aid disrupted, subjecting them to additional conversion fees and the tremendous anxiety involved in having your financial aid in question. I have heard from students and educators from across Maryland who have expressed their deep concern about proposed modifications to the direct lending program. One of the first campuses to offer direct lending to its students is in my hometown of Salisbury. The president of Salisbury State University, as well as the chancellor of the University of Maryland System--which enrolls more than 130,000 students, strongly support the direct lending program as beneficial to both students and university administrators. Mr. President, education in this country has always provided an essential ladder of opportunity for our people and the Higher Education Act has been and continues to be a critical rung in this ladder. In a nation which believes that a person's merit and talent should take them as far as they can go, we must continue to foster a path which allows them to maximize this potential. Many of us here today have benefited from this philosophy and have achieved certain levels of success as a direct result of the opportunities afforded by such principles. It is ironic, at best, that many of those who have utilized these opportunities to advance themselves are now trying to severely limit them for others through draconian budget measures. As we commemorate the enactment of the Higher Education Act of 1965, it is important to understand that the value of programs authorized by this bill cannot be measured simply in terms of dollars spent. Without Federal support, millions of Americans would not have been able to attend college or receive the advanced training required to make them contributing, productive members of society. If this Nation is to continue to thrive in an ever-evolving global economy, we must not underestimate the value of the Federal Government's commitment to higher education. The celebration of the passage of this bill affords us the opportunity to reaffirm the Federal role in making certain that education remains a top national priority.