This vote was on an amendment by Max Baucus, D-Mont., that would require an annual report on the risks posed by foreign holdings of U.S. debt, and on the risks of the debt itself. The amendment was offered to a bill that would extend several expired tax provisions, unemployment insurance benefits, Medicaid assistance to states, Medicaid doctor payment increases and other items.
Baucus’ amendment was offered as an alternative to a separate amendment offered by John Cornyn, R-Texas. Cornyn’s amendment would have ordered annual reviews of national security and economic hazards posed by the national debt, and also quarterly risk assessments of the same factors, but focused on foreign holdings of U.S. debt. If the risk was found to be too high, the president would have to implement a plan to cut that risk “in a way that reduces federal spending” (see vote 183).
In contrast, Baucus’ amendment orders a study of the risks posed by foreign holdings of debt and the debt itself. If the president determined the risk to be unacceptable, then the president would have to provide an “action plan” to Congress.
“I support the transparency and deficit reduction goals of the Cornyn-Kyl amendment. But that amendment is unworkable. Why? Because it requires Treasury to speculate about the intent behind foreign purchases of U.S. Treasuries. How in the world is Treasury going to be able to know the intent behind foreign purchases of U.S. treasuries?” Baucus said. “[It] also sends the wrong message that the United States is deeply suspicious of foreign holders of U.S. debt, and it potentially could chill foreign purchases of U.S. Treasury bonds. I do not think we want to do that now.”
Cornyn said Baucus’ amendment isn’t strong enough.
“The reason why we require, in my amendment, the President of the United States to make the report on the risks to our national security and our financial system is because only the President can command all of the resources of the U.S. Government, including that of our intelligence services, which may have something to say about the national security risks associated with countries such as China owning so much of our debt,” Cornyn said. “The Senator from Montana also says we should not rock the boat. We ought to go steady as she goes. The problem is our boat is going to sink and go to the bottom of an ocean of debt if we do not change our ways. This is a first step to try to provide additional transparency to let the American people assess for themselves whether they think this is a good idea or whether their elected representatives in Congress should do something about rising debt and runaway spending.”
By a vote of 58-41, the amendment was adopted. Though more voted yes than no, this particular type of vote requires 60 in order to be considered approved. Every Democrat present voted for the amendment. Every Republican present voted against the amendment. The end result is that the measure went forward with language that would order an annual report on the risks posed by foreign holdings of U.S. debt, along with an action plan if the president determined the risk was too high.