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May 18, 2023

Schweikert: The United States Will Never Default on Its Debt

WASHINGTON, D.C. — Last night, U.S. Representative David Schweikert (AZ-01) delivered a speech on the House Floor to reaffirm that the United States will never default on its debt even as debt ceiling negotiations continue between the White House and Congress. Rep. Schweikert also noted that Congressional Democrats used previous debt ceiling negotiations to extract billions of dollars in additional spending in 2017 and 2019, disproving Democrats’ claims that these debt limit increases were somehow “clean.” Additionally, Rep. Schweikert warned the U.S. risks a credit downgrade if it doesn’t exercise fiscal restraint when raising the debt ceiling.

Excerpts from Rep. Schweikert’s floor speech can be found below:

Click here or on the image above to view Rep. Schweikert’s remarks.

On the accurate definition of a debt default:

[Beginning at 1:05 mark]
“Default is when you do not pay the interest on your bonds. 30% of our spending is borrowed. That basically means [we have] 70% [in] receipts, income tax revenues. We have plenty of cash to cover the interest on our bonds. Now, that doesn’t mean there is not disharmony, unhappiness for that 30% that wants a check. But if I hear one more idiot around here saying we’re going to have a default. That is not the definition of default. As a matter of fact, there used to be a Treasury Secretary under [former U.S. Treasury Secretary Jack Lew], and he and I went around and around on this and we finally came to an agreement that we would clean up our language. [Default would be] not paying interest on your bonds. And we created this magical term called a technical default. That’s when we don’t send the check out to the worker for the agency or that goes out late. But that isn’t default. The financial markets care about U.S. sovereigns having their consistent cash flow because the fact of the matter is that is the basis of much of the world economy. We will never default. Even if you pass the debt ceiling. [We have] to stop making things up around here.”

On Democrats using previous debt ceiling negotiations as leverage to extract billions in additional spending:

[Beginning at 2:52 mark]
“If I get another person from the Left who basically comes up and goes, ‘We should have a clean debt ceiling.’ Really? Okay. Walk us through when you’ve controlled this Body. [And] you controlled the votes in the Senate. Is that what you asked for? Well, the fact of the matter is, if we go back to 2017, when they didn’t actually control the Body, but they had enough votes to sort things in the Senate, they required about $15 billion of additional spending, and they still voted against it. But how about 2019? You remember the Wayback Machine? 2019, way back? Oh no, that was only a couple of years ago. In 2019, Speaker Pelosi [wouldn’t] give President Trump that increase on the debt ceiling without raising the spending caps and a cash spend. So the cash spend was $324 billion, plus another $300 billion on top of that by raising spending caps. That’s a clean debt ceiling? Now understand, what the Democrats wanted was more spending. They always want more spending, and we’re trying to bring some fiscal sanity.”

On the dangers of repeating the same mistakes from 2011 when the U.S. credit rating received a downgrade:

[Beginning at 9:23 mark]
“If we do not telegraph to those debt markets that are choosing to collect capital from your retirement to people from all over the world — if we do not telegraph to them we’re taking our debt seriously, you expect someone to go buy a 30-year U.S. bond [under 4%]? You’re going to buy a U.S. bond under 4% and believe you’re going to get value for 30 years when the debt explodes? Because at the end of 30 years, U.S. sovereign debt is going to be close to $130 trillion. What will inflation be like when you’ve borrowed that much money? The only way we would survive is [we would have to] inflate like crazy. Wipe out the value of all your savings. Wipe out the value of that bond.

“Let’s go on the Wayback Machine. In 2011, U.S. sovereign debt got a one-tick downgrade. Standard and Poor’s came in and said, ‘Nope, you guys are AA+.’ I remember the [Obama] administration just being enraged. How dare you do this? And a number of the folks who wrote about it ran around saying, ‘Well, this is because of the debt ceiling.’ No, it wasn’t. If anyone reads now, it’s not just a letter. It’s an entire report from Standard & Poor’s. But some of the takeaways from it. Because we did not provide a credible path that we were serious about taking on our debt. And the funny thing is, there’s a paragraph in the report — remember, this is 2011 — ‘The political brinksmanship of recent months highlights what we see as America’s governance and policymaking become less stable.’ This is 2011. Do you think we’re better off today? Do you think we’re taking our debt more seriously today? Because do understand — I think at that time, we were like at $9.5 trillion of borrowing. Today, we’re at $31 trillion. Are you telling me things are better today? This is Standard & Poor’s report from 2011. They downgraded United States debt because we did not take our debt seriously. We did not take it seriously how we were going to manage it into the future. Here we are, a decade-plus later, things are dramatically worse. We have now hit the inflection period of baby boomers moving into their benefits cycle, and we have no way to pay for it. We lie constantly because we are terrified to tell the truth.”

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