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Thompson: Failure to Enact Spending Reforms Threatens U.S. Credit Rating

June 2, 2011

Washington, D.C. – On Thursday morning, Representative Glenn ‘GT’ Thompson delivered the following speech on the House floor regarding the necessity of enacting serious budgetary and spending reforms, in order to restore confidence in our economy and preserve America’s AAA credit rating. Within hours of Thompson’s speech, an announcement was made by Moody’s Investors Services that America’s credit rating will “depend on the outcome of the negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody’s to change its outlook to negative.”

Earlier this week, fifteen of Pennsylvania’s nineteen-member Congressional delegation, including Thompson, voted to oppose a request from President Obama to raise the nation’s debt ceiling without any spending cuts or budget reforms. The measure, H.R. 1954, failed to pass the House by a vote of 318-97. Thompson joined Republican colleagues yesterday at the White House for a meeting with President Obama in regard to the budget negotiations.

Remarks as prepared for delivery:

Thank you, Mr. Speaker.

This week, the US House sent a clear message to the White House that it’s time to address our nation’s growing debt crisis and get serious will real budgetary reforms so that America can meet its budget and credit obligations at home and around the world.

There’s good reason why the dollar is still the world’s Gold Standard when it comes to credit ratings and that the US is seen as a wise investment around the world.

A first-rate credit rating — which the United States currently has — means there is nothing for lenders to worry about. It lets investors know how likely a borrower can pay back a loan and that they will receive a good return on their investment. That’s why I can’t emphasize enough the importance of our nation’s credit rating.

A downgraded credit rating would erode confidence in our economy and reduce certainty for businesses and investors at home and abroad. We must work to ensure this never happens by reforming spending and fixing our debt problem – make it so that there is not one doubt when it comes to the creditworthiness of the United States.

In April, Standard & Poor's lowered the outlook on the United States' credit to "negative." S&P’s rationale: the U.S. has a large debt and deficit compared with other highly rated nations, and unlike with those other nations "the path to addressing [the debt and deficit] is not clear to us."

To be clear, the warning from S&P was not over the debt limit debate – but because Washington has no plan to tackle its massive debt.

Since 1975 there have been at least 9 examples when clean debt limit bills have failed to pass in either the House or Senate. And, remember, in 2006, then- U.S. Senator Obama voted against a clean increase of $781 billion. And in each case, days, weeks, or months later, a debt limit was ultimately enacted.

So, again, it’s not about the debate – we’ve seen this discussion many times over the last several decades. But it is about would markets losing confidence in our ability to implement these needed reforms and address our growing 14 trillion dollar debt.

Over the past two years, we’ve seen the largest budget deficits in the history of the U.S. This, along with our structural deficits due to insolvent entitlement programs and the rising cost of health care, is the reason we face serious issues regarding the confidence in our ability to make good on our commitments.

In April, the United States kept its AAA rating; unfortunately, as S&P warned, if we fail to act on these reforms, this could happen.

Raising the debt ceiling without significant structural spending reforms would send a signal to the world that America lacks the political will to restore fiscal sanity and meet our obligations.

Unfortunately, many of my Democrat colleagues have continued to ask for a clean up or down vote on raising the debt limit, including most recently when more than 100 Democrats signed a letter to the House leadership requesting an up or down vote on the issue.

Earlier this week, that request was granted, and the legislation’s failure demonstrates that any plan to raise the debt limit without dramatic steps to reduce spending and reform the budget process is unacceptable to the American people.

With any hope, we sent a clear message that it’s time to stop with the political pandering and get serious about bringing about real budgetary reforms.

It’s unfortunate, however, Mr. Speaker. The problem has been identified. While tough decision must be made, the solution is in our reach. What we lack is the political will to lead and to take action.

Mr. Speaker, if we don’t act boldly now, the markets will act for us very soon.

The world is watching and we can no longer afford to kick the can down the road.

Our nation’s debt crisis offers us the political will to act, for the greatest threat to our economy and our children’s future is doing nothing.

Thank you. I yield back.

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