ALEXANDER Says we must meet two “urgent” goals: reducing our debt, and meeting our financial obligat Alexander: “We Can’t Go From Being the Most Creditworthy Nation in the World to Being a Nation that Pays Its Bills Out of a Cigar Box”
Security not being paid?” I said, “I think it will be paid. It might be two or three days, but the telephone calls would come in and Congress will fix it and it will get paid.”
He said, “It better not be five minutes.”
So we might want to pay all of our Social Security benefits, but the President might say or the Secretary of Treasury might say, “Well, we will pay grandma her Social Security, but we won't pay the wife of the soldier at Fort Campbell who is in Afghanistan on his third tour.”
That is not such a good idea. So maybe we won't pay the veteran's benefit. We will pay the wife. That doesn't sound so good, either.
What about those 12 million, 15 million students who are headed off to college in the next few weeks with a student grant or a student loan from the government? Should we pay just those going to public colleges and let the private colleges take care of their own – just the for-profits, not the nonprofits?
We see what could happen if we have a country that – especially a country such as the United States -- instead of paying all of its obligations on time, whether it is to China or Japan or to grandma or to the veteran, begins to selectively pay those bills when we have the money. I think I know what would happen. Instead of being able to borrow money for 10 years at 3 percent, we might have to pay a little more for it. Let's say it just went from 3 percent to 4 percent. What would that mean to us? It would mean, according to the Congressional Budget Office, the taxpayers would have to pay $1.3 trillion more in interest over 10 years. So if it goes up two percentage points to 5 percent, it is twice that. That is what happens when we pay our bills out of the cigar box.
It is not just the taxpayers. My son said to me the other day, “Dad, my mortgage loan resets in October. If you all don't work this out, it means my interest rate might go up.”
Let's say he has a $100,000 house loan, and it goes up 1 percent. That gets to be some money for him. So if it is a credit card loan, if it is a home loan – whatever loan it is, it would begin to go up. Paying our bills out of a cigar box would raise our costs.
There is a second obvious reason not to do this. In 2008, we were smacked in the face with a world economic crisis. We didn't expect it. Most of us didn't cause it, but we had to deal with it. Here in the Congress, we had to do some very unpopular things: We had to bail out banks, even some industries. The American people hated that, even though most of the money has