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FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS APPROPRIATIONS

ACT, 1996 (Senate - November 15, 1995)

Mr. SARBANES. Let me just quote:

Standard & Poor's triple A rating of the U.S. Government is predicated on the dual components of the Government's overwhelming capacity and unquestioned willingness to honor its debt obligations. The U.S. Government's financial capacity to meet its debt obligations remains a worldwide standard based on the size and strength of the U.S. economy. However, the current budget dispute between the President and Congress has raised issues regarding the Government's willingness to make timely debt service.

This is what is at risk regarding the game that is being played here. Most of the appropriations bills have not been sent to the President. Of the 13 appropriations bills, as of yesterday, only 4 had been sent to the President. He signed three of them. Now we are starting to send the remaining appropriations bills to the President. And I approve of that process. I hope we will get the bills down to the President.

Not only have the Republicans failed to pass the appropriations bills, but they have also failed to pass the reconciliation bill. The reconciliation measure is not even out of conference. The conference report has not yet passed the House and Senate. It is not even out of conference.

The PRESIDING OFFICER. The Senator's 5 minutes has expired.

Mr. SARBANES. As one of the Federal employees who had been furloughed said in the morning paper, `It is stupid.'

The PRESIDING OFFICER. The Senator's 5 minutes has expired.

Mr. SARBANES. He said it is stupid. It is stupid. It is stupid, and it ought to stop. Mr. President, he is right.

Exhibit 1

From the New York Times, Nov. 11, 1995

[FROM THE NEW YORK TIMES, NOV. 11, 1995]

S. & P. Strongly Warns Government of Threat of Default

(BY DAVID E. SANGER)

Washington, November 10: One of the world's leading credit-rating agencies issued a strongly worded warning today to the United States Government, saying that the faith of investors `has, to some degree, been diminished' by the threats of imminent default on its debt.

The unusual statement by the Standard & Poor's Corporation, the rating agency, said that it was not reducing the United States' triple-A credit rating, the highest grade--and one granted to only about a dozen countries. But it clearly left open that possibility if the country failed to meet any of its payments on United States Treasury obligations because of the budget impasse.

In an interview this evening, the president of Standard & Poor's, Leo C. O'Neill, said that `if this were any other country than the U.S. that we were talking about, we would have put them on credit watch,' the formal warning the firm issues when a government or company is at risk of having its credit rating lowered.

Mr. O'Neill said that a committee within his firm debated today's statement for nearly two days after it became clear that Congress and the White House were headed toward a showdown. While the warning, which was issued late in the afternoon, itself may rattle the markets early next week, Mr. O'Neill said that he thought it was important that Government officials understand the implications of a default on the country's solid gold credit rating.

He said that he fully expected that the United States would make full payment on its debts. But the willingness of American officials to talk about the possibility of default has already done lasting harm to the United States' international image as a country willing to pay back what it borrows, he said.

`Even if the issue is resolved in the 11th hour and 59th minute, in some respects the damage has been done,' Mr. O'Neill said.

The growing uncertainty in Washington over the budget and the prospect of shutting down the Government and defaulting on the national debt is already rippling through Wall Street. Bond prices fell and the broad stock market indexes slumped as the Democratic White House and the Republican Senate headed into the weekend playing an old fashioned game of chicken. And the price of gold, a traditional haven in times of uncertainty, surged $3.10, to $390.50.

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