[Congressional Record Volume 142, Number 108 (Monday, July 22, 1996)]
[House]
[Pages H8084-H8091]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
GETTING OUR FINANCIAL HOUSE IN ORDER
The SPEAKER pro tempore (Mr. Dickey). Under the Speaker's announced
policy of May 12, 1995, the gentleman from Connecticut [Mr. Shays] is
recognized for 60 minutes as the designee of the majority leader.
Mr. SHAYS. Mr. Speaker, it is a privilege to be here tonight to
address this Chamber and to have you be the acting Speaker, and I thank
you for your willingness to take the time to do this.
I was particularly motivated to come tonight because I listened to
the presentation of my colleagues and I would like to give you the
other side of the story.
I would also like to say without any hesitation that I believe when
you tell the American people the truth, they will have you do the right
thing, and I feel very strongly that what this new Republican majority
tried to do last year and what we are trying to do this year will make
our children better off than we, this generation, find ourselves, and
that if we fail, I think they will be worse off. I believe that with
all my heart and soul.
I believe that what we tried to do last year was to get our financial
house in order and balance the Federal budget. I believe we tried to
save our trust
[[Page H8085]]
funds from bankruptcy, particularly Medicare, and I believe we tried
and are still trying to transform our caretaking society into a caring
society, our caretaking social and corporate and agricultural welfare
state into a caring opportunity society, and in the process we are
trying to bring power, money and influence out of this city back to
local communities, back to our local communities, back in some cases to
our State governments, but closer to home. That is what we are trying
to do.
Now, I know that getting our financial house in order and balancing
the Federal budget is not the end all and be all. There is no logic to
saying that just balancing the budget is what we have to do and then we
can walk away. Balancing the budget is what I view as just creating a
strong foundation in which to build the many things that we need to
build, but if we have a weak foundation, everything on top of it just
crumbles away.
I do not know how my colleagues on the other side of the aisle feel
comfortable when we know that we are spending over $233 billion just on
interest on the national debt. It seems to me we would not want to
spend $233 billion interest on the national debt. It would seem to me
we would want to spend it on meaningful programs that help make
individuals more self-sufficient.
But when we balance the Federal budget, we know logical things
happen. We have a strong financial foundation in which to then do
meaningful programs, not a lot, but meaningful programs. But we also
know that interest rates come down. There is no question in anyone's
mind that our interest rates have been high for many years and has
slowed the productivity of this country and that we need to get
interest rates down by balancing our Federal budget and getting our
financial house in order.
{time} 2045
Getting interest rates down does some significant things. It lowers
the mortgages people pay on their houses, it lowers the amounts they
pay on their cars, it lowers student loans. It seems kind of logical
that we would want to do all those things simply by getting our
financial house in order and balancing the Federal budget.
Mr. Speaker, we did that by basically cutting some programs. We cut
Government programs. We made Government smaller. We did not want
Government to keep growing, we wanted it to be smaller, so we
eliminated a plethora of individual commissions and boards that were
created by some Member of Congress so he could go out and have a press
release and tell people that he created this new program that had a
wonderful sounding name.
So what we did was we eliminated a lot of that. I do not know if many
people know that almost 52 percent of all education programs do not
even belong, are not even in the Department of Education. We have a
Department of Education that has 48 percent of all education programs.
Why?
Because there are a whole group of individuals here who wanted to
make sure their committee had jurisdiction over an education program,
so they made sure it came out of their committee. They did not oversee
the Department of Education, so they made sure it came out of HUD or
Labor or Veterans' Affairs or the Defense Department.
We have all these programs with great sounding names that we simply
started to eliminate. We cut discretionary spending, and I know, Mr.
Speaker, that you are on the Committee on Appropriations. When you came
in this year, or last year, we were already halfway into our budget, or
almost halfway. I guess we were about 4 months into our budget. You and
the committee members made a decision to have a rescission package. You
decided to cut $20 billion out of the existing budget. Now, there were
cuts. You cut some programs. You saved $20 billion. That meant that
taxpayers saved $20 billion.
Then this year the President wanted, the year we are in, and we had
Government shutdowns, and we have 13 individual appropriations bills,
and as some bills came out he signed some of them that we wanted that
reduced the amount of Government spending, and he vetoed others. We had
Government shutdowns. Those various parts of the budget, if it was HUD
or Health and Human Services and he vetoed that budget, then we had
Government shutdown. We had no budget.
Ultimately, though, we had an agreement. The agreement was pretty
interesting. He wanted to spend $7 billion more than the previous year,
and we ultimately had an agreement with him that we spent $23 billion
less. So we spent $20 billion in the existing budget, that 1995 budget,
and then we spent $23 billion less in the budget we are in right now.
We have an agreement. We got the President to agree to slow growth by
$23 billion.
He wanted us to spend some of that money differently and we had an
agreement. That was a compromise. That is the way the system should
work. But ultimately, we saved $20 billion last year, $23 billion this
year; $43 billion less in the bottom line of the deficits. Each year
the difference between the spending and the revenue is the deficit, and
it is added to the national debt, so we made that national debt not
grow as high.
So we cut what we call discretionary spending that came out of the
Committee on Appropriations, and we made Government smaller, and it was
what we said we would do before we were elected, and that is exactly
what we did.
When we came to the defense spending, we froze defense spending. We
did not increase it, we did not cut it. We froze it. Some would
probably say, and I am one who would like to have seen a reduction in
defense, and others of my colleagues would have wanted to see an
increase. But what we need to understand is that we are oversubscribed
in defense budgets. We have so many programs, procurement programs for
weapons systems, that funded out, they will be higher than what we even
have in the budget.
So we are going to have significant cuts in defense, even with a
freeze in defense spending, because we are going to have to pare down
some of these programs. So we cut discretionary spending out of
appropriations, we froze defense spending.
Then what we did is we came to entitlements. Entitlements are 50
percent of the budget. What is alarming about entitlements is that they
are growing at 10 percent and 11 percent and 12 percent, so you have
half the budget that is doubling every 5 to 6 to 7 years, and they are
programs like Medicare, a very important program; programs like
Medicaid; programs like our Federal and military retirement; food
stamps; veterans' benefits; AFDC, which is welfare for mothers and
children; the earned income tax credit, which is a program that goes to
the working poor, so instead of their paying taxes, they actually get
money back from the Government. It also includes student loan programs.
What did we do with entitlements? First off, I just want to say when
I came from out of the State government where I voted for 100 percent
of the budget, when I came here I found I only voted on a third of the
budget, and I tried to control spending when I voted on a third of the
budget. I only vote on the 13 budgets that came out of the Committee on
Appropriations. I do not vote on interest on the national debt, about
30 percent of the budget, and I do not vote on 50 percent of the
budget, which are entitlements. I did not have that opportunity. You
fit the title on Medicare, Medicaid, student loan, agricultural
subsidy, you fit the title, you get the money. You get the money. I do
not vote on it.
What did we do with these very important programs, that are all very,
very important programs? What did we do to these programs? We slowed
their growth. Mr. Speaker, Medicare was going to grow at 10 percent a
year. We decided, for instance, that we would allow it to grow at 7
percent a year.
I notice a colleague of mine is here. What I would like to do is just
spend about 5 more minutes; then I would like to ask the gentleman from
Iowa, Mr. Ganske, to respond to the whole issue of health care. What I
heard that preceded this special order just boggled my mind. I think my
colleague can shed some light on it.
But this is what we did with some of these entitlements. We allowed
the earned income tax credit, which is a payment to the poor who are
working, to grow from $19.9 billion to $25 billion. That is an increase
in spending. But in
[[Page H8086]]
this place here, in Washington, in Congress, in the Senate, down here,
people call it a cut. I am hard-pressed to know how going from $19
billion to $25 billion is a cut. In fact the only place I know that is
called a cut is right here, and where the virus is spreading.
The Student Loan Program. I think of the Student Loan Program and I
remember how outraged I was when I saw the President go to a school and
basically tell the students that they would have no Student Loan
Program, or excuse me, School Lunch Program, because Republicans were
going to take it away. When I got back from the weekend, I went to my
colleagues and said, how could we have done something so stupid? And
they said, Chris tell me something; if it goes from $5.2 billion to
$6.8 billion, is that a cut? It is not a cut. ``But the President said
we were cutting, we were going to spend less.''
That is not true. It is simply not true. It is not factually correct.
Our programs, percentagewise, instead of growing at 5.2 percent, we
said it could grow at 4.5 percent a year, and then we said that 20
percent of it could be allocated to the students that really needed it,
because every student in this country is subsidized 13 cents in a
school lunch program. My daughter is subsidized. I make a good salary.
My wife makes a good salary. Why is my daughter's lunch subsidized?
We, under our program, said that we could take that money, the State
could decide to take that money and give it to an urban area that might
want to have a breakfast program or a lunch program or a meal in the
evening for a kid who simply may need that meal.
Then the Student Loan Program, this is the one that really gets me,
it grows from $24 billion to $36 billion. That was our plan last year.
That was referred to as a cut. If it is $24 billion and we are adding
$12 billion more in the seventh year, in the seventh year we are going
to spend $12 billion more than we spend today, and it is $24 billion
more than we spend today, and it is $24 billion, I am hard pressed to
know how that is a cut. It seems to me it is a 15-percent increase in
spending. It is simply not a cut, it is an increase in spending.
Now we get to the health care issues. In the health care, under our
plan last year it was to grow at $89 billion to $127 billion. Again, in
this place, that is called a cut. Back in my home when you spend $89
billion in the last year, and in the seventh year, in the year 2002,
you are going to spend $127 billion on Medicaid, health care for the
poor and nursing care for the elderly who are poor, I call it an
increase in spending. I think most rational people do.
Now we come to Medicare. This is where I would like to really engage
my colleague. We learned from the trustees last year it was going to go
bankrupt, Medicare part B, by the year 2002. Then we learned this year,
as we suspected, because the fund actually started to go insolvent this
last year, so we knew it was going to ultimately become insolvent
totally and completely sooner than they said, and they said at the
beginning of the year 2001, and the beginning of the year 2001 is
really the end of the year 2000, it is going bankrupt.
What did Republicans do? We said that Medicare could grow from $178
billion to $289 billion, a 60-percent increase in the total amount we
spend, and people said, yes, yes, but you have a lot more seniors in
the program. True, we have more. On a per person basis it went from
$4,800 last year to $7,100, a 50-percent increase per beneficiary. We
slowed the growth and saved $240 billion. Yet, we are still allowing
the program to grow from $4,800 to $7,100. That is called a cut? No, it
is called an increase of 60 percent in terms of total dollars, 50
percent per beneficiary in total dollars.
Before I call on my colleague, I would just point out, we did it
without increasing the copayment, without increasing the deductible,
without increasing the premium. Seniors paid last year 31\1/2\ percent
and the taxpayers paid 68.5 percent. We said freeze it. Do not increase
it, do not subtract from it, freeze it.
We were able to save $240 billion for the taxpayers, and in this
program, the reason we were able to save it was we were able to bring
in the private sector, that said if you allow Medicare to grow at 7
percent, we can make money and we can offer a whole host of new
services: eye care, dental care, a rebate and a copayment of the
deductible; maybe even pay the premium, maybe even pay MediGap. We had
some providers who said if you allow it to grow at 7 percent, which is
very generous, we can provide a whole host of programs and we can save
you money, because it does not have to grow at 10 percent a year.
Then the seniors said, what happens if I do not like the program?
Then the gentleman from Iowa [Mr. Ganske], for instance argued they
should be allowed to go back each and every month for the next 24
months. The gentleman from Iowa worked on this program with others, but
he was a leader in this area, and he created a better program and saved
money. I am just really grateful that he is here. I would love to give
him the opportunity to just kind of express his concerns about what we
did.
Mr. Speaker, I yield to the gentleman from Iowa [Mr. Ganske].
Mr. GANSKE. I appreciate the gentleman sharing some of his time with
me, Mr. Speaker, I, too, was watching the previous colleagues who were
having a discussion on some of the important programs, including
Medicare. I felt stimulated to come to the floor, as the gentleman did.
Mr. Speaker, I think that the gentleman hit upon the appropriate
word, and that was ``better.'' The General Accounting Office, the
Inspector General, has looked at the way the current Medicare Program
is working and has found significant areas of fraud and waste and abuse
in the current program, the way it is currently working.
There was recently an editorial in the Washington Post that outlined
some of the abuses that occur in the home health care industry, where,
for instance, care is provided at $125 an hour or a visit. Total care
for home health care is under no competitive bidding. There is no
prospect of a payment system in the current plan. There is no effort to
control abuses in that area like there is in some of the ways Medicare
has worked on preventing abuses in hospital billing.
So there are lots of ways that we can make the Medicare system work
better. I think that is a crucial point, because let me just read a
letter to the editor from the Des Moines Register: ``Congressman Ganske
has voted for increased spending in Medicare.'' This is a letter by
James Winger, president of the Iowa Federation of Labor AFL-CIO on
Friday, July 19: ``Congressman Ganske has voted for increased spending
in Medicare. However, this increase is not enough to provide Medicare
recipients with the same coverage they have today.''
Now, it is the second part of that statement that is incorrect.
Because the assumption is that you cannot do it better than it is being
done today. I think that I just do not accept that. I think we can do
it better. We can devise a system where, in my home State of Iowa,
quite frankly by equalizing funding formulas to make rural areas
comparable to urban areas, we can actually improve benefits for senior
citizens.
Mr. SHAYS. Mr. Speaker, I remember being the chairman of the task
force, on the Committee on the Budget, on Medicare and Medicaid, and I
remember the fact that the gentleman was not going to vote for the plan
unless we realized that urban areas were treated in a much more
beneficial way than a number of your communities. I remember you having
a dialog with me, and more particularly the Speaker, and convincing him
to put more money into the rural areas so they would in fact get more.
Mr. GANSKE. We have a situation, as you mentioned before, where in
some parts of the country senior citizens can sign up for health plans
where they get practically free prescription drugs, eyeglasses, hearing
aids, trips to and from the doctor's office, and even memberships in
health fitness clubs; that is, New York City, Florida, Los Angeles.
But there is nothing like that available for senior citizens in some
of the rural areas, or even in urban areas that have done a very good
job with controlling their utilization. That is not fair. That is the
way the current system is working. It is not fair, because people in
every part of the country are paying the same into Medicare as they are
in other parts of the country.
[[Page H8087]]
So we equalize that. We did not decrease the amount in those areas
that are high now. We simply said you will have to grow at a slower
rate than the areas that are not at such a high average. We will move
those up faster and we will equalize it. We will make it more fair
across the country. That is one way that you can make the system work
better.
But you know, I want to go back to a little broader concept. I think
all of us want to have a cleaner environment. All of us would like to
see education emphasized. We all want to see safe streets. We all want
to see secure borders. All of those items are in what is called the
discretionary part of the budget.
{time} 2100
The other part of the budget is the entitlement part, the
nondiscretionary part. These are things like Medicare, Medicaid,
welfare and interest payments on the debt.
Mr. SHAYS. If the gentleman would just allow me to make the point
that entitlements are 50 percent of the budget, and when we add
interest payments, we are talking about two-thirds of the budget and
the discretionary is only one-third of the budget.
Mr. GANSKE. The gentleman is correct. But in 1965, the discretionary
part of the budget was two-thirds of the budget, that is, things like
education, safe streets, drug prevention, crime prevention,
environmental things. In 1965 that was two-thirds of the budget. Today
it is one-third of the budget. Because in 1965 the entitlements plus
interest were one-third of the budget and today they are two-thirds of
the budget.
So all of those people who, like you and I, are concerned about those
important things, need to be concerned about being able to control the
rate of growth in the entitlements. It is estimated that in 10 years,
the entitlements plus interest will consume all of the revenues from
the Federal Government. That means that there will be nothing else left
for the important things that we need to do.
So what we are talking about in terms of addressing the problem that
Medicare is going to go bankrupt in 5 years is trying to devise a
system that works better than it does now so that we can reduce the
rate of growth and, therefore, allow the Federal budget to function in
the other important areas, like education, the environment, drug
prevention, and securing our borders that we all think are important.
I should point out, the bill that we passed had about a 7-percent
annual rate of growth. That far exceeds the numbers of senior citizens
that are coming in. If we look at the private sector, the amount of
health care inflation has been close to 1 percent or less for the last
several years. What we want to do is we want to learn for the
Government programs how the private sector has been able to make things
work more efficiently. The Government in effect has been growing at
over 10 percent. We need to learn how to be able to offer benefits in a
more efficient way. It is not just in health care, it is also in areas
like welfare and other areas.
Mr. SHAYS. I would love to just illustrate, if the colleague would
allow me, a real-life example of what the gentleman is talking about
with the growth of entitlements. Entitlements are 50 percent of the
budget and doubling every 5 to 6 years, crowding out the discretionary
part of the budget.
I have had constituents who come and say, ``We need to spend more for
this education program,'' or more for this child care program that
comes out of the discretionary budget. I say, ``Yes, we do need to do
that.''
Then they say, ``And, by the way, don't cut Medicare and Medicaid.''
I say, ``Well, I don't want to cut Medicare and Medicaid, but let me
understand something. If we allow Medicare and Medicaid to continue to
grow at 10 percent a year, how will we be able to do all those things
you want?''
It is a concept of opportunity cost. If you spend your money here,
you give up the opportunity to spend it here.
If we can make savings in Medicare and Medicaid, allow it to grow
much faster than any other part of the budget, we then have some
resources to spend on some good programs that come out of what we call
the appropriations side of the budget.
Mr. GANSKE. If I may jump in here, many would criticize our specific
plans, either to balance the budget or to reform and preserve and
protect Medicare. I am sure that there are some things in all of those
areas that the gentleman and I might prefer to see changed in some
respects, too. We cannot have legislation that is this big and agree
with every single thing. But the overall thrust is responsibility.
I would say this: I think the American public feels very strongly
that there should be a sense of fairness. So if the opposition
criticizes our plan to save Medicare in 5 years, and we all know,
everyone agrees that the trust fund will be empty and there will be
insufficient funds to pay the bills in 5 years. We all know that. This
is a given.
Mr. SHAYS. We have wasted a year already.
Mr. GANSKE. If that is a given and the opposition criticizes our
plan, then does the opposition not have a responsibility to offer their
plans? Some of the moderate and conservation Democrats on the other
side of the aisle did offer a plan. The fact of the matter is that we
just passed another budget bill that basically took into consideration
some of the proposals that they had made and the level of savings and,
in fact, what we are currently dealing with today are savings of about
$160 billion. That is very, very close to what the moderate and
conservative Democrats have been for and it is not all that far from
what President Clinton has proposed for savings in Medicare.
Mr. SHAYS. The difference is that when he refers to it, he calls it a
savings. When he refers to ours, he calls it a cut.
But before we leave Medicare, I do not want to leave it without just
summarizing the fact that we allow Medicare to grow from $178 billion
to $289 billion, a 60-percent increase in Government spending on
Medicare. On a per-person basis, we allowed it last year to grow from
$4,800 to $7,100, a 50-percent increase per beneficiary.
Mr. GANSKE. I think we ought to emphasize this: In order to achieve
those savings, we cannot just leave the program exactly as it is,
because in the current program there are areas of waste, fraud, and
abuse that administration, there are a number of areas that we can
improve the plan. If we put the structural changes in there, then we
can effect some savings and yet we can still maintain good quality.
Mr. SHAYS. To illustrate, we did not increase the copayment to the
seniors or the deductible and we kept the premium the same, but what we
allowed them is the opportunity to have what you and I have as Federal
employees, we get choice in health care. We are going to allow seniors
to choose different health care plans. Because of your instance and a
wise one, we allowed seniors to go back, it they did not like that
private plan, and just go back to the traditional fee-for-service
Medicare system that we have had since 1960.
So we left the existing plan in place, but we gave choices. To me,
the choice was the most exciting part. In part of our plan we said if a
senior discovered something that was a waste in the program, we would
allow them to receive some of the benefit if they reported it. It is
even in our health bill that Senator Kennedy is holding up right now by
not allowing for a conference committee between the House and the
Senate.
We passed a health care bill dealing with portability in health care
and allowing people if they have an illness to go to another health
care plan, if they have been in a health care plan, and that is being
held up. But in that bill is the same thing we had in our Medicare
plan, allowing seniors to report programs that they thought were
abused.
I would like to talk about one abuse because I am on a committee that
oversees HCFA, which was the agency that the gentleman from Georgia
[Mr. Gingrich] was referring to when he talked about it withering on
the vine, not Medicare, which our colleagues like to distort.
Mr. GANSKE. If I may interject, am I not correct in that, I believe
it was in 1992, President Clinton, at that time running for office,
made a statement very, very close to Speaker Gingrich, where he
basically said the Health Care Financing Administration, HCFA, the
bureaucracy, not Medicare, not the
[[Page H8088]]
program but the bureaucracy, was not working as good as it should be
and something should be done about that?
Mr. SHAYS. The bottom line is that the bureaucracy was working
terribly. I started to talk about some of the abuses. I sit on a
committee where we see a number of different abuses.
Medicare cannot buy a particular health service, let us say an oxygen
concentrator, and reprice it at the market rate. It has to buy it at
whatever the market cost is on the chart. If they want to reassign the
cost, they have to go through a 2 to 3-year process. So the inspector
general came in and looked at this process and said that Medicare was
overpaying for a lot of goods, like an oxygen concentrator. The oxygen
concentrator for the Veterans Department, if we paid the same price
they paid, in 5 years we would save $4 billion. But we cannot reprice
it without this long, laborious process.
Mr. GANSKE. If the gentleman would yield for a minute, one of the
mechanisms that we had in our reform bill that would help address this
problem of abuse in the system was that we set up a mechanism whereby
if a Medicare recipient identified areas of fraud, waste and abuse,
reported that to the government program and then savings were utilized,
then that recipient would get to keep part of the savings.
This was a real carrot in order to encourage senior citizens to look
carefully at their bills and help the program work better for the
benefit of everybody. But without that type of incentive, then it is
like, ``Well, somebody else is paying for it, and I guess, you know, it
doesn't matter to me.'' So there was a real incentive system built into
our reform bill that would help address some of those areas of abuse
that the gentleman is talking about.
Mr. SHAYS. Exactly. That was one. The other area was that we made
health care fraud a Federal offense in terms of Medicare and Medicaid
so that you would not have to find someone guilty because of wire or
mail fraud but you could find them guilty for the actual offense. We
all know that fraud, waste and abuse in our Medicare system is about 10
percent, if not more. That alone is a $17 billion savings.
Mr. GANSKE. If the gentleman would yield again, we both know that we
can effect savings in that area. We do not want to give, I think, the
inaccurate representation that by addressing that area alone one could
effect enough savings to save the trust fund. But it is one of the many
important steps that we took in the reform bill to make the system work
better.
Mr. SHAYS. Let me ask the gentleman, why would they call it a cut,
our colleagues on the other side of the aisle, when we spend 60 percent
more and 50 percent more per beneficiary? I am trying to understand,
and I have to say I thought President Clinton would do a number of
things. I did not think he would veto our Medicare plan. I honestly did
not think he would do it.
I described it this way to my daughter. I do not have the resources
to give my daughter $20,000, but if I had $20,000 and I said to my
daughter, ``I want you to buy a particular automobile but of course you
can't afford to have leather seats and other nice features in the
automobile. I can't give you more than $20,000 this is what I have. And
so I want you to go buy that automobile.'' And she comes back to me and
she says, ``Dad, I bought that automobile you talked about but I didn't
spend $20,000. By the way, I got leather seats and a sun roof.'' I
said, ``Honey, I told you you could not do that. I only had $20,000.''
She said, ``Dad, I bought it for $18.000'' I would not call that a cut.
I would say she got a better car and she saved $2,000.
Mr. GANSKE. If the gentleman would yield, one of the reforms that we
passed at the beginning of the Congress last year was the issue of
baseline budgeting, and this is what we are talking about.
In Washington if your salary is $20,000 this year but next year it is
$22,000, that could be called a cut because it is not $23,000. This is
the only place in the country where we do budgeting like that.
Let me just give the gentleman an example. I have a little boy who is
almost 8 years old, his name is Carl. Sometimes Carl accompanies me on
some of my meetings around the district. I have a chart. The chart
shows that in the last 7 years, we spent about $925 billion on
Medicare. We voted for a plan where in the next 7 years we would spend
about $1,685 billion. I look at my little 7-year-old boy and I say,
``Carl, which of these is bigger, $1,685 billion or $925 billion? I
tell you, a third-grader knows the difference. If you factor into that
the fact that this is more than twice the rate of inflation, it more
than accounts for new seniors coming into the system, it still provides
excellent benefits, there is no increase in copayments, no increase in
deductibles, seniors would pay the same percentage of their premium as
they have in the past, then I think that it is not accurate to
represent our plan as a cut.
Mr. SHAYS. And they get a choice. They get to choose a plan that
could be better or a number of plans that could be better and in the
end if they did not like those plans they could go back to the
traditional system.
Mr. GANSKE. And for large areas of our country, we would also have an
equalization in the funding that would be very important as well.
Mr. SHAYS. This Republican majority is trying to get our financial
house in order and balance the Federal budget. My colleague knows that
just balancing the budget is not the end all and be all. It is just the
logical realization that we would rather spend our money on real
programs rather than interest on the national debt. We want a strong
foundation in which to build.
The second thing is we are trying to save our trust funds from
bankruptcy, particularly Medicare, and last year when we were trying to
save it, when we did our Medicare plan we saved about $240 billion that
could be used directly to save Medicare part A and Medicare part B. To
save it from bankruptcy we extended the program out from the year 2001
to basically 2010. We are going to have another problem that we are not
going to get into right now, but it is going to be a mammoth issue of
how do we deal with the baby boomers.
{time} 2115
But we did the responsible thing of slowing the growth of programs,
still allowing them to grow 60 percent more total dollars and 50
percent more per beneficiary, but saving about $240 billion that could
be used to then make sure the program was solvent for the next 15
years. And the President vetoed that plan.
Mr. GANSKE. If I may interject, what is the alternatives? I want to
go back to this. If someone does not like our program, then I think
they have a responsibility to offer their own specific plan to save the
program, which will be insolvent in 5 years. That is only fair. It is a
very, very important issue.
We either effect some reductions in the rate of growth or, in order
to keep the system solvent, what is the alternative? The alternative is
the same alternative that we have seen from Congresses for the last 30
years, and that is very simple: A doubling or a tripling of Medicare
taxes.
As both of you and I know, the effect of that would be very
transitory. That could probably extend the life of the trust fund for 3
years, and then what would we do? We would go back there, if we return
to the way that it has been done before, and we would double or triple
those Medicare taxes again. I tell you what, I cannot do that to the
working families in my district.
If we look at an average income working family in 1950, and adjust
the amount of taxes they were paying to the government to 1990 dollars,
so that we are going to compare the same dollars for 1950 in taxes to
the dollars in 1995, an average income family, not the rich and the
wealthy, in 1950 was spending about $7,000 to the government in 1990
dollars. Today the average income family, 1995, is sending about
$21,000 to the Federal Government.
The amounts are not so important, although they are getting so high.
What is important is to recognize the fact that in the last 30 years,
for the average working family, taxes, government taxes have tripled.
What that means today is that couples are no longer afforded the luxury
of one or the other of the spouses staying home with the kids.
It means that in 1950 one of the spouses could work, the other could
take care of the children, if they so chose. Today what it means is
that one is working to put food on the table, to
[[Page H8089]]
pay the expenses for the rest of their family, and the other spouse
is working for the government.
Now, this is not rocket science. If we are going to keep the trust
fund solvent, we are either going to have to reduce the rate of growth
in a responsible way to make the system work better, or else we are
going to have to raise taxes, and raise taxes a lot and raise them
again and again, and I just cannot do that.
I know how hard the working families in my district are working, and
they are pushed. They have been running harder and harder on that
treadmill just to stay in the same spot. So I think it is our
responsibility to address this in the way that we have addressed this,
a responsible way, a way to make the program work better.
But I think maybe it would be useful to turn to another topic. I was
very interested in your comments on the earned income tax credit,
because I think both the gentleman and I would agree that this is a
useful program. It was designed originally and still functions to help
people who are just above the poverty level to have benefits, slowly
work their way out and get a helping hand away from poverty.
The gentleman pointed out that we funded the EITC at $19 billion and
increased it to $25 billion, but what he neglected to mention, and I am
sure that he just did not get to it, was the fact that the General
Accounting Office did a study and showed, or possibly it was the IRS,
the IRS did a study and showed that there was about 30 to 35 percent
abuse, in some cases outright fraud in people taking the earned income
tax credit when they should not.
The program was designed to help families, that is, families with
children, and it was designed to help people that were just above the
poverty level. There were lots of cases, as much as 30 to 35 percent of
abuse, so what did we do? We addressed some corrections in the way the
system is supposed to work. That is what we are supposed to be doing
here in Congress. We are supposed to be helping this Government work
more efficiently and better, and yet when we have a good idea, we will
keep it. I would be happy to yield back.
Mr. SHAYS. I was thinking, as my colleague was talking, that it was
quite difficult during the fall when we started to get this program
through the House and the Senate, present it to the President, when he
called the earned income tax credit a cut when we went from $19 billion
to $25 billion; in the School Lunch Program when we went from $5.2 to
$6.8. The Student Loan Program he is calling a cut when we went from
$24 billion to $36 billion.
I really believe in the earned income tax credit, because this gets
to the third effort. We are trying to balance the budget, get our
financial house in order. The second thing is we are trying to save our
trust funds for future generations, so we are not the only ones that
enjoy the trust funds but they are there for our kids and our kids'
kids. The third thing is we are trying to transform our caretaking
society into a caring society, to transform our caretaking social and
corporate and welfare state--we just do not have welfare for
individuals, we have it for corporations, and we even have it in the
farming communities to some extent as well--and to try and move it into
a caring opportunity society.
We know that one of the better programs is the earned income tax
credit for someone who is at the level of welfare but making money,
working, not getting something from the Government, but really not
enough to survive. They actually get a cash payment of $1,000 or
$2,000, in some cases it could be $3,000. Instead of paying taxes, they
get back $2,000 or $3,000.
But what we found was that some people simply were not reporting
their income. Well, they were reporting it, saying they were not going
to make money when they actually made money. We found that a lot of
single people were able to get some of the benefits when it was not
intended for individuals, it was intended for families.
So we are going to spend lots more, but we just want it to go for the
people it was designed to help. It gets to this whole issue that is
something I have had to wrestle with as what I view as a moderate
Republican. I think I am pretty much down the center in terms of the
political ideology.
I believe that what we have done for too many of our young people,
and we see the result of it, I see too many young kids who are
pregnant, I see too many young children that are selling drugs. I see
too many young children who are literally killing each other. We have
18-year-olds who cannot read their diplomas.
The thing that gets me is when I see a 20-year-old or 22-year-old who
has never had a job, not because jobs do not exist. I would acknowledge
if everyone who wanted a job sought one, there might not be. But we
have too many people who are not answering the opportunity to work
because they say it is a dead-end job.
If I ever said to my dad, ``I do not want that job, it is dead-end,''
my dad would have said to me, ``Son, how many hours are you working
there?'' I would have said 10. He would have said it just doubled to
20. He would have known that so-called dead-end job would have taught
me to get up in the morning, it would have taught me that for that work
I earned something, that I was of service, instead of taking something
from someone else.
That is what welfare does. It is taking something that someone else
earned, and getting it without having to earn it but it was given to
them. There are people who have needs, and we have to make sure their
needs are met, but we do not want the system to be perpetual so that we
now have 30-year-old grandparents who literally, they are on welfare,
their kids are on welfare, and their kids' kid is on welfare, three
generations.
Mr. GANSKE. If the gentleman would yield, we just passed last week I
think really landmark legislation. That was a welfare reform bill that
is a very, very good bill, that emphasizes exactly the direction
that we think our country should move in terms of responsibility and in
terms of opportunities, because it does have strong requirements for
work and it does have strong requirements for responsibility for the
fathers of children who abandon those children and leave those young
mothers to an awfully hard row to hoe.
There were significant corrections in the reform bill in terms of
food stamps. Nutrition is very important. I grew up working in my dad's
grocery store.
Mr. SHAYS. You did not tell your dad you did not want to do it
because it was a dead-end job?
Mr. GANSKE. I think working in that grocery store was one of the best
training periods of my entire life.
Mr. SHAYS. I bet it was.
Mr. GANSKE. You get to meet people from every walk of life, and I
thank my dad every time I see him for that, although at the time as a
younger kid there were times when I probably would have preferred on
those Saturdays to be playing golf or something else.
Mr. SHAYS. Or watching a football game.
Mr. GANSKE. But the point that I wanted to pursue is that even back
when I was working in the store--my dad just recently retired from
managing a grocery store--there is a significant and a growing problem
with abuse in the Food Stamp Program.
It is not that food stamps should not be there for the people who
need them. Both the gentleman and I know that they should. It is that
there has been a growing problem with people abusing the system, and we
know that food stamps have been used as a form of currency for drugs,
to help fund drug abuse, that able-bodied people who should be working
have been getting food stamps.
So what we did in our reform bill was we addressed that. We set up
encouragement for electronic billing to try to cut down on the
technical problems with food stamp waste and fraud.
I just am very optimistic. I believe that there is a role for
government. I happen to believe that government can work a lot better
than we have seen it work. But every time we try to change something,
we run up against special interest groups that have a vested interest
in seeing no change, and it is a real battle.
Mr. SHAYS. No one said it would be easy, did they?
Mr. GANSKE. Nobody ever said it would be easy, and in the political
process, our Founding Fathers devised a system that requires multiple
steps and it requires eternal vigilance. As
[[Page H8090]]
one of our Founding Fathers said, that is the price of democracy.
Mr. SHAYS. I just wanted to emphasize that one of the things that we
are doing with welfare is we are giving it back to the States with
resources. We are not just saying ``It is your responsibility.'' We are
giving significant resources for day care, for the actual payment to
the recipient but also for day care and jobs, because we know that a
caring bill has got to provide someone the opportunity for training and
a place to have your child so that you can get that training and
ultimately get that job.
But what we do know is that a lot of the traditional job training
programs have been basically make-work, not really teaching someone for
a job that exists but just giving them some kind of program that in the
end does not serve any value to them in terms of actually getting a
job. So the day care and job training kind of programs that we are
seeing now are quite significantly different.
Mr. GANSKE. If I may add to that, in the welfare reform bill there
are some significant other items that reinforce the fact that citizens
need to be responsible. When a citizen sponsors an immigrant to come
into the country, they basically are promising that they will help that
new immigrant for 5 years.
Mr. SHAYS. Yes.
Mr. GANSKE. That is current law. However, there has never been any
teeth in that current law, and we even have examples where in Chinese
newspapers from the west coast, Dear Abby columns, you will have
somebody writing in, ``My relative just came, got off the boat. How can
I get them on to SSI?'' I would submit to you that we have hundreds of
millions of people around the world that would love the opportunity to
come to this country to work hard, to achieve the American dream that
are not interested in coming to this country and immediately getting on
welfare, and we have corrected that in this welfare reform bill.
Mr. SHAYS. But see, some people would call that a cut in the program.
That is what is ludicrous about the description. If we save money in
the program, therefore, do not have to spend as much because we
eliminate an abuse like this, it is referred to as a cut, and that is
just simply an inaccurate way to describe what we did.
Mr. GANSKE. But to interject, this goes back to the point that we
have made several times before, and that is that the people who are
always talking about cuts, cutting this, that you are cutting that,
they are the people who, in essence, are arguing not to change
anything. If you are interested in, in education, the environment,
preventing crime, in order to take care of those problems, we have to
change the programs to make them work better than they are working now.
Mr. SHAYS. I was making reference to the fact as a moderate
Republican I voted for a number of programs that I have had to look at
and say in some ways what that has allowed me to do is it has allowed
me to go back to some of my constituents and say, you know I care
because I voted for that program. But as I have seen the program
unfold, some of them, not all of them, I have had to go back and say
you know, really what I have been is a caretaker and I have done
something the exact opposite of what you would do for someone you love.
{time} 2130
What I started to do about 3 years ago is I asked anyone who really
started up in a lower echelon economically who now is a very successful
person, far more successful than I would be, and I would say, what
happened? Why are you so successful? When you were there in a
development, in poverty, happened to have been a minority, so you had
the laws against you and so on, and you had racial prejudice; and yet
you succeeded?
Yet in every instance, in every instance it was, I had someone who
took an interest in me, I had someone who sometimes kicked me in the
butt. I had someone who did not always give me what I wanted. I had
someone who did not let me get away with the excuse I do not want that
because it is a dead-end job. I had someone would taught me to dream.
There were a lot of things they had, but they did not have someone
just giving them something.
When I was growing up, my dad would commute from Darien, CT, for an
hour commute into New York. He would get to read three papers in the
morning and three at night because he had an hour on the train. He
would read, and he would come back, and he would be filled with
information. We would have a wonderful dialog at the dining room table.
He would invariably make some reference to something written in Ann
Landers, and Ann Landers would write something back, and it would be
kind of a crazy story.
I found myself looking at these calendars. I had these calendars with
the thought of the day. I noticed the calendar for April 3. It was a
Wednesday. I looked at it, and it was Ann Landers. And I thought, oh,
my gosh, there is Ann. And I read it. And in a sense I thought this
summarizes a lot about how I think about what we have to do in
government. She wrote, ``In the final analysis it is not what you do
for your children, but what you have taught them to do for themselves
that will make them successful human beings.''
Now, we want our constituents to be successful human beings. We do
not want them just used to handouts. We want them to be basically
creators. We want them to be contributors to society. I was thinking
about the true love that I think our society has shown and the true
caring for making sure that people in our society are truly learning to
do things for themselves, to be independent.
It is really great. I have gone to some programs where welfare
recipients have taken meaningful job training programs, had the day
care they needed, and then they have a mentor who follows them for a
year or so in the job to make sure they do get up in the morning, make
sure when they have an excuse not to go to work, help them sort out
that that excuse will not be very helpful in their job. And what they
do in these graduations a year later is they hold up a check and say:
``You know what I like about my job? I earned this.''
We had to encourage everyone to have that same kind of feeling of
accomplishment and contribution because it is there in the heart of
every American citizen. Every person wants to add and to be of
contribution.
They also then make reference to the fact that not only did they earn
it and how proud they are but how proud their kids are of them because
mom is making a contribution to society and helping to support the
family without having to turn to someone else.
Before yielding to my colleague, if I could say this. I proactively
went out looking for some people to work in my office who, frankly,
were not white, who were maybe Hispanic or black; and I guess I would
call that affirmative action. One person that we ended up hiring was
someone who had gone through a job training program. She is a very
valued member of my office. But I had a program that I was trying to
help people understand how they could buy a home, and she did not want
to come to this program as a staff person on a Saturday, but we needed
her. She was happy to come based on that. And she came. And a month
later I found out that she had just bought a home.
She had gone to this program, learned how she could own a home. She
and her brother and her sister bought this home and live in a beautiful
home in the city of Bridgeport, now realizing all the pluses and
minuses of home ownership. But a few years ago she was on welfare. She
had job training. She had day care.
She had tremendous initiative. She is a very important person in our
office, someone who is making a wonderful contribution and someone who
we receive a lot of compliments on because of the way she treats people
and the way she is able to help people.
To me, it is just a very satisfying thing, and this can be repeated
time and time again. That should be our goal.
I would love to yield to my colleague.
Mr. GANSKE. I appreciate that and agree with what my colleague has
been saying.
I have to smile because when he was talking about his father coming
home and discussing the three or six newspapers that he had read that
day with you and all of the ideas, I remembered that usually my dad and
I discussed the sports page.
[[Page H8091]]
But to return to welfare, I think there are principles in our welfare
reform bill that are very, very important. The first one is the able-
bodied should work. The second one is that there should be time limits.
We do not want to see one generation after another generation, four or
five generations, caught in welfare.
Another idea that is very important is that for those welfare
recipients who are under the age of 18, there should be strong
incentives for them to continue and stay in school. You do not receive
benefits unless you are living with an adult and unless you are in
school because, if you do not stay in school, there is very little
chance that you are ever going to get out of the trap of the welfare
system.
So I think there are a lot of good things that we have been trying to
do. I would like to go to one thing, though, and that relates to what
we are talking about in terms of cuts. An example is the most recent
HHS appropriations bill, where for the Department of Education we
increased funding this year by roughly $2.4 billion. That was somewhere
between a 4- and a 5-percent increase.
Now, within that we shifted some of the funds around. We took it out
of the Washington bureaucracy and we gave it back to the States and the
local areas. That is crucial because, when we talk about education, I
want to see an increased teacher-student ratio, and I want to see a
decreased bureaucrat-teacher or bureaucrat-student ratio. And that is
what we are trying to do here. We are trying to get power back to the
States, to the local areas.
People can do jobs better when government is closest to them. We want
to do it in a responsible way, and I think that I am very optimistic
with the progress we have made.
I will just yield back to the gentleman for a final closing
statement.
Mr. SHAYS. This Republican majority is working to get our financial
house in order and balance the Federal budget. We are looking to save
our trust funds for future generations, and we are also looking to
transform our caretaking social, corporate and agricultural welfare
state into a caring opportunity society. In the process we are looking
to bring power, money and influence out of Washington and bring it back
to local communities.
In the process we are looking to empower people who are in our
communities. So it is an effort that we are working hard at. Very
candidly, we are not looking at the polls. If Abraham Lincoln had
looked at the polls, we would not be one Nation, under God,
indivisible. We would be two nations very much divided. For us the
polls simply do not matter. What matters is our kids.
Mr. Rabin, the former prime minister of Israel, said you and I,
politicians, are elected by adults to represent the children. And
frankly that is what this is all about, representing the children.
Mr. GANSKE. I am happy to join the gentleman I think on some of the
principles that we want to accomplish. We want to accomplish an
opportunity society. We want to help make government smaller and more
responsive to the citizens. And we basically want safer and sounder
families. I am happy to join my colleague in his work.
Mr. SHAYS. I appreciate my colleague for that and thank you, Mr.
Speaker, for taking the time to listen to us. With than we yield back
the balance of our time however short it may be.
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