Impact of National Debt 

by U.S. Senator Chuck Grassley

Friday, February 26, 2010

Politicians don't need to be mind readers these days to keep tabs on the public pulse.  While the U.S. economy inches towards recovery, millions of unemployed workers still search for jobs, households cut back on spending, dip into savings or fall deeper into debt and homeowners watch home prices waver. A measurement of consumer confidence sank again in February indicating Americans feel lingering skepticism about the economy.

Washington recently approved raising the debt ceiling to an unprecedented $14.3 trillion. Foreign investors now own nearly half of the publicly held debt. As every small business owner and family farmer knows, financing debt comes with strings attached, including interest and repayment schedules. Under the President's proposed budget, annual interest payments on the national debt will more than double, from $250 to $516 billion, over the next four years.  That will surpass annual spending for non-security, domestic programs such as education, housing, and medical research. The government's borrowing spree also puts upward pressure on interest rates as Uncle Sam competes with the private sector for available credit.

That's especially bad news for the primary job-creation machine of the U.S. economy.  Small businesses depend on affordable credit to expand and hire new workers.  Last year, U.S. banks had the largest lending decline since 1942. The FDIC says 140 banks failed last year with even more projected to be at risk in 2010.  With banks and the federal budget clinging to the edge of a cliff, it's no small wonder consumers have a death grip on their wallets.

America is one generation away from the federal budget being consumed entirely by entitlement programs and interest on the national debt.  If Washington continues to ride the rails of business-as-usual, spending on just three entitlement programs alone - Social Security, Medicare and Medicaid - will lay claim to every tax dollar collected.

Budget forecasters have long predicted a fiscal apocalypse heading Washington's way.  Historically, our nation's public retirement and health care programs have been financed primarily through payroll taxes, with each generation of workers paying for those who preceded them. But the retirement of the baby boom generation will overwhelm the relatively smaller labor force and their taxable wages.

With one party controlling the two elected branches of the federal government, the President and Congress last year tried to redirect one-sixth of the U.S. economy. The proposed reforms would have essentially nationalized health care, creating a massive new taxpayer-subsidized health care entitlement.  Rising public discontent helped put the brakes on the overhaul.

Choosing to re-launch another attempt at wholesale changes to the health insurance system, the President unveiled in February a job-killing, anti-investment tax to help pay for the vast new public subsidy. After lamenting a deficit of trust in the State of the Union address in January that primarily focused on creating jobs and growing the economy, so it's puzzling the White House is leading another charge up the hill to extend the federal government's reach into America's health care system and your pocketbook.

Taxpayers already are on the hook for a staggering climb up a sky-high mountain of debt. The slippery slope of borrow-and-spend has led us to this national cliffhanger.  Voters now are paying close attention to see whether Washington reins in spending or throws taxpayers under the bus.

As the Ranking Member of the tax-writing Senate Finance Committee, I'll continue my work as a watchdog for taxpayers. Funding new health care entitlement programs with tax hikes that get in the way of job creation and economic growth won't help the next generation scale our legacy of debt or achieve the American Dream.

Feb 26, 2010

He calls the hold up of benefits an abuse of Senate procedure

An estimated 75,000 Iowans will lose federal unemployment benefits Sunday, Feb. 28th

WASHINGTON, D.C. - Senator Tom Harkin (D-IA) today said he intends to fight the hold that has been placed on a Senate effort to extend unemployment insurance to approximately 1 million unemployed workers and other expiring programs.  An estimated 75,000 Iowans will see their federal unemployment benefits expire over the weekend as a result of the hold.  Harkin chairs the Senate Health, Education, Labor and Pensions Committee.

"We need to act quickly to extend the safety net and make sure laid-off workers have access to unemployment benefits through the end of the year, at least," said Harkin. "It is heartbreaking to see political games being played with the lives of hardworking people who are struggling to find a job, particularly when there has been strong bipartisan support in the past to extend unemployment benefits and other vital safety net programs. 

"Unfortunately this is emblematic of the larger issue plaguing the Senate today: abuse of Senate procedure.  We saw it in November as well.  While Senate Republicans play games, families are sitting around their kitchen tables wondering how they will make ends meet. 

"I intend to do everything in my power to fight this and hope other Senators will join me in this effort."

Sen. Jim Bunning (R-KY) is waging a lone battle to block the chamber from voting to extend unemployment benefits and COBRA subsidies for the jobless, highway and transit programs, the compulsory copyright license used by satellite TV providers and the federal flood insurance program for 30 days.  In November, Senate Republicans used a similar delay tactic to filibuster a motion to proceed to a bill to extend unemployment compensation.  After delaying and grinding Senate business to a halt for nearly a month, the bill passed 97-1.

Harkin and other Senators are working on a package that is likely to include a year-long extension of unemployment benefits as well as other supports.

Thursday, February 25, 2010

WASHINGTON - Senator Chuck Grassley today said President Barack Obama declared a major disaster declaration for Iowa, triggering the release of FEMA funds to help Iowa recover from the severe winter storm and snowstorm that occurred on December 23 - 27.  Additional designations may be made at a later date after further evaluation.

"Winter weather hit Iowa extremely hard and caused an enormous amount of damage," Grassley said.  "It's good to see this disaster being addressed by President Obama so Iowans can continue cleaning up the damage."

FEMA will provide assistance to Adair, Audubon, Calhoun, Carroll, Cass, Cherokee, Clay, Crawford, Emmet, Franklin, Fremont, Guthrie, Harrison, Ida, Monona, Page, Pottawattamie, Sac, Shelby, Sioux and Woodbury counties through the Public Assistance program.  The Public Assistance program assists state and local governments and certain private nonprofit organizations for emergency work and the repair or replacement of disaster-damaged facilities.

FEMA will also provide snow assistance for emergency protective measures for a 48-hour period for Cherokee, Clay, Emmet, Fremont, Harrison, Ida, Page, Pottawattamie, Sioux and Woodbury counties.

All Iowa counties are also eligible to apply for assistance through the Hazard Mitigation Grant program.  The Hazard Mitigation Grant program assists state and local governments and certain private non-profit organizations for actions taken to prevent or reduce long-term risk to life and property from natural hazards.

Grassley sent a letter to Obama asking him to grant Governor Chet Culver's request to declare Iowa a major disaster area as a result of the severe winter storm and snowstorm that occurred on December 23 - 27.

A copy of the text of Grassley's letter can be found by clicking here.