Chuck Grassley: “I rise in support of S. 2986, a bill to increase the Federal debt limit. I support this increase because it is necessary…”

“I rise in support of S. 2986, a bill to increase the Federal debt limit. I support this increase because it is necessary to preserve the full faith and credit of the U.S. Government. Without an increase in the debt limit, our Government will face a choice between breaking the law by exceeding the statutory debt limit, or breaking faith with the public by defaulting on our debt. Neither choice is acceptable. To understand why we are here today seeking to increase the debt limit, it is necessary to explain a few things about the Federal debt. Under current law, there is a statutory limit on the amount of debt that can be issued by the Federal Government. This limit which now stands at $7.384 trillion applies to virtually all of the debt issued by the U.S. Government. There is only one debt limit, but there are two types of debt--debt held by the public and debt held by the various Government trust funds. The amount of Federal debt held by the public is determined by the Government's annual cash-flow. When total spending exceeds total taxes, the Government has a budget deficit. To finance this deficit, the Government borrows from the public by selling debt, such as Treasury bills, notes, and bonds. We will hear a lot of criticism that President Bush's tax cuts are responsible for our rising public debt. But the facts show otherwise. When President Bush took office in 2001, the Federal debt limit was $5.95 trillion.”