[Congressional Record Volume 144, Number 19 (Tuesday, March 3, 1998)]
[House]
[Pages H724-H730]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE FEDERAL BUDGET
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 7, 1997, the gentleman from Wisconsin (Mr. Neumann) is
recognized for 60 minutes as the designee of the majority leader.
Mr. NEUMANN. Mr. Speaker, today CBO or the Congressional Budget
Office, the agency that is responsible for tracking revenues and
expenditures of the United States Government on behalf of the House of
Representatives and the Senate, released a new set of estimates. And it
does verify that for the first time since 1969, we are going to have a
surplus in fiscal year 1998. This is great news for America. The first
time since 1969, I was a sophomore in high school, the United States
Government spent less money than what they had in their checkbook.
To me when I came here 3 years ago, this was deemed an impossible
dream. When we said we were going to balance the budget by the year
2002, people looked at us, yawned and basically said, we do not believe
you, because they had made so many broken promises in the past. Today
we stand here with final documentation and verification that in fact
the budget is not only balanced, but we are running a surplus.
CBO, the scoring agency or the agency responsible for making
predictions here in Washington, is suggesting that we have about a 5,
maybe a $10 billion surplus. I would like to go a step further than
that. I believe the surplus is much more significant than that. I
believe that we will run a surplus in fiscal year 1998 in excess of $25
billion.
I think it is worth talking about where we are from a budgetary point
of view, where we are going to and especially how Social Security fits
into this overall picture because I have just
[[Page H725]]
spent days in Wisconsin where we were in about eight or nine different
cities, and everyplace I went, the Social Security issue came up.
So I would like to begin with where we are today and how we got here.
Then I would like to look at what we can do in the near future, and
then I would like to look at the bigger picture of where we are going
to.
I would like to start today by just taking a look at how fast and how
rapidly the Federal debt facing our Nation has grown. What I have in
this chart is I have a picture of the growing debt facing the United
States of America. It can be seen that before 1980, the growth in this
debt was pretty minimal. As a matter of fact, it is not quite a flat
line, but it did not grow very much between 1960 and 1980. But from
1980 forward, the growth of the Federal debt is very, very substantial.
As a matter of fact, when I left the private sector, I had never been
in office before, when I left the private sector, we were about here on
this chart. I realized that if this growth pattern of Federal debt was
not stopped, that our children did not have a very bright future in
this great country we live in. So that is really the primary reason for
leaving the private sector and coming in, was to change this picture.
Here today, if we had said a while ago that this was going to flatten
out and it was going to steady out here and actually start coming back
down because we are running a surplus, people would not have believed
us. As recently as 3 years ago, when we looked at 1980, at the point at
which the debt started growing dramatically in this country, all the
Democrats blamed Ronald Reagan and all the Republicans blamed the
Democrats for not being able to control spending.
Again, I would like to point out that the fact of matter is that we
are here on this chart. It is not a Republican problem. It is not a
Democrat problem. It is an American problem. The only way we can solve
this problem is if we as Americans step forward and put forth solutions
to the problems. That is what our last 3 years here in Washington have
been all about.
For Members that have not seen how large this debt is, I would like
to point out the number. We are $5.5 trillion in debt today.
Translation: If we divide the debt by the number of people in the
United States of America, the United States Government has literally
borrowed $20,400 on behalf of every man, woman and child in the United
States of America, or for a family of five like mine the United States
Government has borrowed $102,000.
The real kicker in this picture is down here on the bottom line. This
is real debt. Just like any other debt in the United States of America,
interest is being paid on this debt. In fact, for a family of five like
mine, I have got three kids and a wife at home, for a family of five
like mine, we are paying $580 a month every month to do absolutely
nothing but pay interest on the Federal debt.
When we think about a family earning $40,000 to $50,000 a year from
Wisconsin or anywhere else in the great country that we live, when we
think about that family being required to send in 580 bucks a month, an
average family of five, to do absolutely nothing but pay interest on
the Federal debt, it is a pretty staggering number. The amazing thing
is people do not even realize they are paying all this money in. One
dollar out of every six that the United States Government does
absolutely nothing but pay interest on this Federal debt. One dollar
out of every six the United States Government spends does nothing but
pay interest on this debt.
When a family does something as simple as buy a pair of shoes for the
kids and the family, they go into that store and they buy the pair of
shoes. The store owner makes a profit on the sale of that pair of shoes
to the kids, and when the store owner makes a profit on the sale of
that pair of shoes, part of that profit gets sent to Washington, and of
course what it does is nothing but pay interest on the Federal debt.
I emphasize that one dollar out of every six that the United States
Government spends today goes to pay interest on the Federal debt. Let
me put that a different way so it makes a little more sense. One dollar
out of every six that the United States Government collects in tax
revenue from our working families all across America, one dollar out of
every six does absolutely nothing but pay interest on that Federal
debt.
I think the question begs asking, how in the world did we get to this
kind of a situation, where we are $5.5 trillion in debt, $20,400 for
every man, woman and child and to a point where a family of five in
America pays $580 a month to do nothing but pay interest on the Federal
debt?
When we look back at this picture how we got here, I have a picture
here of the Gramm-Rudman-Hollings Act, and most folks remember either
the Gramm-Rudman-Hollings of 1985 or maybe the one of 1987, or maybe
they remember the 1990 budget deal. When we look back in the past and
how we got into this mess, time after time the people that were in
Washington promised they were going to get to a balanced budget. This
blue line on the chart shows the Gramm-Rudman-Hollings promise of 1987,
but the one for 1985 is the same thing. They had a blue line that said
they were going to balance the budget. 1987 is the one I have shown.
The 1990 budget deal. They are all the same. This red line shows you
what actually happened to the deficit.
The American people got very cynical looking at this picture time and
time and time and time again. They had been promised a balanced budget,
and it was not delivered by Washington, D.C. and by our government. So
in 1994, the people looked at this picture and they said, we are really
fed up with these broken promises. We need a change in Washington, D.C.
1993 was the year we had the biggest tax increase in American history.
It was the year they looked at this picture and said, the only way we
can solve this big deficit that remains out there, in 1993-1994, it was
still $350 billion of deficit, that is, the government was spending
$350 billion more than it took in, they looked at this picture and
said, we know how to solve that. Let us go to the American worker. Let
us take more money out of their pocket. That way we can maintain
Washington spending, and while we maintain Washington spending, of
course we will just collect more tax dollars from the American people.
That was the 1993 solution. So it was the broken promises that led to
1993. That was the 1993 solution of raising taxes to solve this
problem.
What we found out in 1993, what I knew all along because I was in the
private sector working our tail end off, when we were in the private
sector we did not want government to take more money from the people to
balance the budget. That is not what we wanted. What we wanted was
government to control their own appetite for spending, to reduce the
size of Washington and lead us to a balanced budget, not by higher
taxes, but by less Washington spending.
So in 1993, the people saw this picture. They survived the tax
increase, 4.3 cents a gallon for gasoline. It was not even spent to
build roads. It was put into social welfare programs, Social Security
tax increase, marginal tax bracket increases. The taxes went up on
virtually every American citizen in that 1993 tax increase.
So what did the American people do? This is America and a great
country. The people in this country had the opportunity to change that,
and they did in the 1994 elections. In the 1994 elections they saw
their way clear to put Republicans in charge of the House of
Representatives and the Senate for the first time in a long, long time,
40 years to be exact. Now we are 3 years into this changed group of
people in charge of Washington or our government.
I think the American people ought to be asking the question, is there
really any difference, or are these people the same, and are they
breaking their promises like before? I would like to answer that
question. When we got here in 1995, we laid out a plan again to balance
the budget. We said we were going to get there by the year 2002. I have
to be honest with my colleagues, what the people said, they yawned and
they said, yes, sure. We will believe it when we see it. The time has
come to believe it. We not only got the job done by 2002 as promised,
we have actually hit our first balanced budget since 1969, 4 years
ahead of schedule. We not only got the job done, I think it is very
important in the picture form to see that
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the red line is now below the blue line; that is, we are outperforming
what we said we would do as opposed to what happened before we got
here.
It is a very, very different picture in Washington, D.C. Let me
emphasize this once more. For the first time since 1969, for the last
12 months running, the United States Government spent less money than
they had in their checkbook. This is a monumental accomplishment, and
it has been done in 3 short years, well ahead of schedule, of what was
initially promised in 1995 when we got here.
An interesting thing happens, when I am out in Wisconsin at a town
hall meeting talking to our constituents about this. What happens is
they go, hey, Mark, the economy is so strong, you politicians are
taking credit and you couldn't have messed it up if you tried. The
facts are the economy is very strong. Lots of extra revenue is coming
into the United States Government because hard-working American
families are busting their tail ends and being successful out there in
the private sector, and of course the more income that they earn for
their family, they send extra tax revenue to Washington. That is true,
there is no question about it.
But that is not the end of the story, because between 1969 and today,
there have been other time periods in this government where the economy
was strong and extra revenue came in. And every time in the past when
Washington got their hands on more revenue, they figured out exactly
what to do. They spent it. And that is the difference.
I brought a picture here to help see that a little easier and
clearer. In the past, every time the economy got strong and extra
revenues started coming in, in the past every time that happened,
Washington just spent more money so that we still did not balance the
budget. That is why the budget has not been balanced since 1969.
This government was different. The people that came here and were put
in charge in 1995 were different. Newt Gingrich, John Kasich, some of
the others that were here deserve a lot of credit for this picture; Bob
Livingston, to mention another name. Before we got here, growth in
spending and this red column shows you how fast spending was going up
before we got here in 1995. In the face of this very strong economy
with extra revenue coming in, the spending growth rate was reduced to
3.2 percent in our first 3 years. So you see in the face of this strong
economy sending extra revenue to Washington, instead of increasing the
growth rate of spending, this government saw fit to decrease the growth
rate of spending.
It is a combination of the strong economy coupled with the reduced
growth rate of Washington spending that has put us in the position
where we have actually balanced the budget for the first time in 30
years. And we have done its 4 years ahead of schedule.
{time} 1545
It is this distance from here to here that has put us in this
wonderful position where the budget is, in fact, balanced for the first
time in 30 years and a tax cut has been provided for the first time in
16 years.
And I would just mention that a lot of folks say, well, we should not
want to be cutting taxes until we get the debt paid off. We should not
be cutting taxes, but then they put in a ``because.'' I want to point
out that the tax cut came about because instead of this blue column
being way up here, the spending growth rate being the same as it was
before we got here, by bringing that growth rate down to here, it
provided money available to reduce taxes on working families all across
America.
And does a tax cut matter? Sometimes I get out there and people start
complaining that the tax code is so complicated they do not even
understand the tax cut. Let me just walk through a couple of things
that are very real to the folks in my district and to the folks all
across America.
Let me start with the $400 per child. And, remember, when we talk
about this $400 per child, it is less Washington, as seen in this
picture. This distance from where this red column was, down to here, is
less Washington, so these families can keep more of their own money in
their own home.
A family with three kids, three kids under the age of 17 from
Wisconsin, earning $50,000 a year in that family. Sounds like a lot of
money? Well, $50,000 a year and three kids is not a lot of money. It
goes very fast. That family, under the tax cut package that was passed
last year, will keep $1,200 more in their own home instead of sending
it out to Washington. Twelve hundred dollars is $400 per child more in
the home instead of being sent to Washington.
I always ask the question out there, too, and I show this kind of
chart and I say, look, we could have done more here in Washington. We
could have spent more money and kept this blue column up here even with
the red column so the spending growing was the same as it was before we
got here. We could have done more in Washington. We chose instead to
let families keep more of their own money. Then I ask if we had spent
more in Washington, instead of doing the tax cut package for the
families, 550,000 in Wisconsin alone get to keep more of their own
money, if we spent more in Washington, would we do a better job in
Washington of spending those families' money than the families would
themselves? There is not a single person anywhere we have seen so far
that would be willing to stand up and say the United States Government
in Washington can do a better job spending those families' money than
the families can.
I will give another example of a family from Wisconsin we had at a
town hall meeting. They have one in college, a freshman in college, and
they have two kids under the age of 17 still at home. For that family,
under the tax cut package, and they are a middle-income family; they
did not tell me exactly, but between 40,000 and 60,000 a year. That
family with three kids at home, one in college, a freshman, and two
kids under the age of 17 still at home, when they get a $400 credit on
the bottom line for each of the kids still at home, that is $800 for
the two kids.
And they get a $1,500 assist for the college tuition. Because in a
middle-income family in America today, sending a child off to college
is very, very expensive. So the tax cut package contained a provision
that if a family has a child that is a freshman or sophomore in
college, they can subtract $1,500 off of what they would have sent to
Washington and keep it in their own home to help pay that college
tuition.
So for this family of five that we are talking about, two kids at
home under the age of 17, and a freshman in college, this family of
five is going to keep $2,300 more in their home this year rather than
send it to Washington. And again, when we ask a family like this do
they really think Washington could have spent that money better than
they can; do they think Washington could make better decisions on how
to spend that money or do they think they can make those decisions
themselves, we have not found anybody in Wisconsin that is willing to
stand up and say send the money to Washington; we do not think we pay
enough taxes, and Washington knows best how to spend it better than we
do. That just does not make sense in Wisconsin, and I do not believe it
does anywhere in this country.
So I am happy to be here to talk about the things we have
accomplished. When we look to the past and see the broken promises of
Gramm-Rudman-Hollings, promises repeatedly of a balanced budget that
did not occur, and then we look to the past where they raised taxes to
try to solve this problem, like in 1993, and then we compare that to
the present, where for the first time in 30 years we are actually
spending less money than we have in our checkbook, this is really great
news. The first time in 16 years taxes are coming down.
Capital gains we did not mention before, but for those people
investing in stocks and bonds and mutual funds all over America, and by
the way I hope they make a profit, because that is what investment is
all about. It is not evil and rotten to invest in a stock or a bond or
a mutual fund and make a profit. That is not bad, that is good. And
when they make the profit, the capital gains tax rate has been reduced
from 28 down to 20. And if they are in the lower income bracket, the
rate has been reduced from 15 down to 10.
So this idea of looking into the past and seeing the broken promises
and the
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higher taxes and understanding something different is going on in
Washington today, I think that is a very important idea as we look at
the changes that have occurred out here since 1995.
So we have what is called a balanced budget. We have taxes coming
down. I think we have to ask ourselves what next. And I think to answer
that question we need to describe, and this is not going to be quite as
positive from here on out, I think we need to keep it in perspective.
This is very positive thus far, and actually balancing the budget 4
years ahead of schedule by Washington definition, that is good. And the
definition they are using here in Washington is the same as it was all
the way back to 1969. But we still have some problems, and as we look
to the future we will have to address those problems.
To explain this, I want to start by defining exactly what is meant by
a balanced budget in Washington, D.C. Let me preface this by saying I
am a home builder and we had a home building company. And we had
employees working with us in that company. And my definition of a
balanced budget in my home building company would be very different
than Washington's definition of a balanced budget.
But having said that, let me define what Washington calls a balanced
budget. Washington says their budget is balanced when the dollars
collected in taxes equal the dollars sent out in checks. So if we look
at all the dollars coming into Washington, the dollars in equals the
dollars out. That is Washington, or the government's, definition of a
balanced budget.
Now, on the surface that makes a pretty good amount of sense, but I
want to get beneath the surface and look at what is actually going on
when we talk about this balanced budget. And let this not take any
credit away from reaching this point after 3 short years, but let us
recognize we still have a very serious problem facing our country.
The reason it is important to understand that is because Social
Security plays into this picture dramatically. In the Social Security
system, which is part of those dollars in and it is part of those
dollars out, what is going on in Social Security today is the Social
Security system is collecting $480 billion out of the paychecks of
workers all across America.
So when we look at our pay stubs and see there has been money taken
out for Social Security, if we add up all the money coming in for
Social Security, it is $480 billion. If we look at the money being paid
back out to senior citizens in benefits, so we have 480 coming in, the
amount going back out to senior citizens in benefits is $382 billion.
The difference, the surplus, is $98 billion if we are looking at just
the Social Security system. And again this is very important. It is
pretty easy to understand. If this was our checkbook at home and we are
sitting down to do our bills, and we had $480 in our checkbook and we
wrote out a check for $382, we would in fact have $98 left in our
checkbook. That is Social Security today. It is collecting $480
billion, paying $382 out, and there is $98 billion left.
Now, just as many people out there in America might be saving this
$98 or $98 billion, in the case of the Social Security trust fund, for
when they reach retirement, so that when they do not have enough money
coming in they can go to that account that they have been building and
saving over a period of time and get money out in order to still pay
their bills, that is how American families do this all across our
country. Social Security is supposed to work the same way.
We know in the not too distant future that, when the baby boom
generation gets to retirement, this number of dollars coming in as
compared to the number of dollars going out is going to turn around and
the dollars coming in is not going to be enough to pay the dollars
going out. That is when the problem hits in Social Security.
Now, in Washington and in many government agencies, they have misled
our seniors into believing this does not happen until the year 2029.
That is absolutely not true. The amount of dollars coming in versus the
number of dollars going out turns around in the year 2012 and perhaps
sooner. So what we are really saying here is that the shortfall occurs
in Social Security in the year 2012.
Now, the reason they talk about 2029 as opposed to 2012 is they
assume between 2012 and 2029 that they can get their hands on this
money that is supposed to be in the savings account. Just like in our
families when we run short, we go to the savings account, get the money
and put it into our checkbook and make good on our checks.
So once more through this. Today there is 480 coming in, there is 382
going out, there is 98 supposed to go into a savings account. Between
now and 2012 these two numbers turn around and there is not enough
money coming in, too much going out, and we have to be able to get our
hands on that money in the savings account.
Now, I find when I am out in my district and I ask the next question,
with $98 billion extra coming into Social Security, what do you suppose
the United States Government does with that $98 billion? I find that
the people in my district generally say they spend it. And the people
in my district are absolutely correct.
The $98 billion that has been taken in for Social Security goes into,
think of this as the big government checkbook or the general fund. They
then spend all the money out of the general fund and, at the end of the
year, we have actually been running deficits since 1969. So after that
$98 billion comes in and they write all the checks out of the general
fund, there is no money left to put down here in the Social Security
trust fund. So what they do is put an IOU in the Social Security trust
fund instead.
Now, it is important to understand that when Washington says they are
balancing the budget, what they mean is that this circle right here is
balanced. They mean that after the $98 billion has been put into the
checkbook and then all the checks have been written out, that the
remaining balance is zero. That is a balanced budget in Washington. The
problem with that is there is still no money being put into the Social
Security trust fund.
Now, in my business, in the home building business, if this would
have been the pension fund, we absolutely could not have gotten away
with this. It would have been illegal and we would have been arrested
for doing this. But in Washington that is the way this program is set
up.
I want to be specific on this, and please do not shoot the messenger.
We are trying to solve this problem. In some groups I am with in
Wisconsin, I almost feel like I am going to get shot when I tell them
about what is going on. It is important to understand that what is
going on down here is an IOU. It is a nonnegotiable, nonmarketable
Treasury bond.
The significance of nonnegotiable-nonmarketable is that when those
two numbers that we just had up here turn around and there is not
enough money coming in for Social Security, we cannot take what is in
this account and sell it and get the money we need, or we cannot go to
our savings account and get the money out.
Now, in this town it is great. People run around and they say those
IOUs are backed by the full faith and credit of the United States
Government, so why should I question the value of those IOUs in the
Social Security trust fund. I always ask the next question. They are
backed by the full faith and credit of the United States Government, so
when we need the money in 2012 or sooner, where is the United States
Government going to get that money from to make good on those IOUs?
That is when the lights begin to dawn and they see how serious the
problem is, because when we need that money in 2012 and perhaps sooner,
and the United States Government has to make good on those IOUs, there
is only a very limited number of things that can happen. One is they
could raise taxes on our children and our grandchildren. I do not find
that very inviting. I think the tax rate is too high as it stands.
The second thing they could do is put off the date when those IOUs
come due. And of course that could be done by changing benefits to our
senior citizens. I do not find that very desirable.
So if we do not raise taxes and we do not put off the date the IOUs
come due, what is the other option? The other option really is to go
into the private sector and start borrowing money out.
[[Page H728]]
And when we start talking about that picture, we are right back to
this chart I started with.
I do not know of any American citizen that is going to suggest that
the right solution to the Social Security problem is to recreate this
climbing debt chart that has been given to us over the last 15 to
20 years. I do not know of any American citizen that would contend that
this is the right thing to do as we look to the future of this great
Nation.
So the question should be asked: What are we doing about it? In our
office we have introduced a piece of legislation, it is called the
Social Security Preservation Act. It is bill number H.R. 857. And this
may seem pretty obvious to most people in America. I notice when I am
in Wisconsin, it seems to be an obvious solution. We simply take that
$98 billion that is coming in extra for Social Security and we put it
immediately into the Social Security trust fund. We do that by buying
Treasury bonds, the same kind of thing that any senior citizen could
buy at any bank in the United States of America.
The advantage of doing it this way: Number one, we start reporting
honestly what is going on in the budget process, because the money now
does not get into the big government checkbook, or the general fund.
And number two, when those numbers turn around and there is not enough
money coming in and we have to make good on those IOUs, we will now
have an asset in this trust fund, much like a savings account, that
could simply be sold to generate the money we need to make good on the
Social Security payments to seniors.
So, again, the solution to this problem, and I am happy to say there
are Democrats and Republicans both supporting this bill, it is H.R.
857, it is called the Social Security Preservation Act. I would
encourage my colleagues that have not joined with us yet to join us on
this bill as soon as possible so that we get the support necessary to
bring this bill to the floor of the House.
If this bill is passed, Social Security becomes solvent for our
senior citizens all the way to the year 2029. Now, I might say after
2029 there is still a problem, but at least between now and 2029,
Social Security would once again be solvent for our senior citizens.
{time} 1600
As we look at this picture, then, I think it is reasonable to ask, we
have got this balanced budget, at least on balance by the definition
that has been used by the government over the last 30 years, where are
we at and where are we going as a Nation in the future?
I think the first thing we need to recognize and do to solve the
Social Security problem is our bill, H.R. 857, the Social Security
Preservation Act. But there are other problems still facing our
country.
One of the problems as I see it is taxes are too high. I have been
having fun with this in Wisconsin. I ask the question repeatedly, ``Is
there anyone in the room who thinks taxes are too low?'' To their
credit, no one has raised their hand and said, ``Yes, I think taxes are
too low. Raise taxes, please.''
So I think when we look at the problems that are still facing us as a
Nation, taxes are too high, the Social Security Trust Fund needs to be
restored, and we still have that $5.5 trillion debt hanging out there
over our heads. To solve these problems we have introduced a second
piece of legislation. It is called the National Debt Repayment Act.
As it relates to Social Security, let us remember that even if we
start putting away the cash from this year, we still have this $700
billion that is supposed to be in this, counted already, that is IOUs.
So when we start talking about this $5.5 trillion debt, part of it is
that money that has been taken out of Social Security over the last 15
to 20 years.
In the National Debt Repayment Act, what we do is look at any
surpluses coming into the United States Government. We allocate two-
thirds of those surpluses to debt repayment, specifically restoring the
Social Security Trust Fund. So two-thirds of it goes to debt repayment,
including Social Security and prioritizing Social Security. The other
one-third is dedicated to reducing taxes on working families all across
America.
We are here in the present now, we have our first balanced budget in
nearly 30 years. As we look down the road and think about these
problems that are still staring us in the face, a $5.5 trillion debt,
the Social Security Trust Fund, taxes are too high, it seems to me to
make sense that what we do is dedicate two-thirds of our surpluses to
debt repayment, prioritizing Social Security, so we pay off the Social
Security notes, that is $700 billion that belongs there, and we
dedicate the other one-third to the tax rate.
Let me just say on the tax rate, because I think this is very
important, today we have a 37 percent tax burden on our working
families. If you take all the taxes paid in in this country, take the
State taxes, the property taxes, the local taxes, the sales taxes and
the government taxes, Washington government taxes, the tax burden on
our families today is 37 percent. Back in 1955 it was about 25 percent.
The outcome of that is seen all through our society. Because the tax
rates are so much higher than they used to be, we find that our
families that would like to make decisions to allow one parent to stay
at home or one of the spouses to stay at home and raise the children
are forced into the workplace because the tax rate is so high, and they
wind up actually working just to pay more taxes. I understand that in a
lot of families both spouses want to work for whatever reason. They may
want to work because they want a better life-style, and that is fine.
But what is wrong with that picture is that when they start doing it
simply so they can pay the extra tax burden so the government can get
bigger and bigger and bigger, that is what is wrong with the picture.
As we look ahead to the future, the concept of reducing the tax
burden, as I know Speaker Gingrich has called for, from the 37 percent
back to a 25 percent, I would like to again lay this out as part of our
vision for the future as we look forward in this country. Would it not
be great if we could get to a point where the tax burden on families
was again reduced to 25 percent or maybe even lower? Would it not be
great if we could have a one-third reduction in the tax burden?
What we are really saying here is that in the future the government
might do less and we might leave more money in the pockets of people,
and then if the people still want some of those extra services, they
can make the decision that with the extra money in their pocket, they
go out and buy it. But the concept is that government is less involved
in the lives of the American people and the people get to keep more of
the money that they have earned.
I might add that that is just one of the problems that we face here
in Washington. It seems to me sometimes we forget that the money we are
talking about out here, it is not our money here in Washington. That
money belongs to the hardworking Americans who have earned that money,
and it ought to be treated in that way and with that respect.
I would like to just address a little bit more on the tax cut package
that has already been passed. I know I am kind of jumping out of this
vision for the future and back into the present, but I would like to do
this because I find in Wisconsin that when I talk with folks, a lot of
them do not understand that a tax bill has been passed. I would just
like to run through just a few of the provisions that are in this tax
cut package because folks generally do not understand that this bill is
already passed.
What happens, I find when I am there, is they kind of look at me
almost as a politician, and that scares me because I am a home builder
and a math teacher and not a politician. They start looking like, ``You
are making us these promises, but are you really going to do any of
this?''
The fact is the tax cut package is passed into law, it is done, it is
on the books and it should be reflected in your current taxable income.
Let me just start with the $400 per child tax credit. I described this
briefly before. Starting this year, for every child under the age of 17
with certain income limits, for moderate-income Americans, for every
child under the age of 17, when you figure out your taxes next year and
you get down to the bottom line, how much you would have sent to the
United States Government, you subtract $400 off the bottom line.
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If you have got a college student, a freshman or a sophomore, again
you figure out how much you would have sent to Washington, but if that
freshman or sophomore has spent more than $2,000 on room, board, books
and tuition, you subtract $1,500 off the bottom line. For juniors,
seniors, grad students, et cetera, you subtract $1,000 or up to $1,000
off the bottom line.
For homeowners in America, and this is a very dramatic change in the
Tax Code, if you have lived in your house for 2 years or more and you
sell it, there are no Federal taxes due. When we think about our senior
citizens and the benefit to our senior citizens of this Tax Code
change, it is very, very dramatic.
Many seniors took the old one-time 55 exclusion, sold the bigger home
that they raised their children in, bought a smaller home and are now
ready for whatever reason to go to some sort of different home, either
a nursing home or some sort of skilled care facility. They are now
selling this home, and they took that one-time exclusion back when they
were 55 and there would be a gain, at least I hope there is a gain on
the house they have owned in the interim period. There are no longer
any Federal taxes due on the sale of that home.
Medicare, another dramatic change under the Tax Code and the
revisions that were written last year for senior citizens. When I took
office in 1995, Medicare was headed to bankruptcy. The fix for Medicare
in the past was always to go out to the American people and raise
taxes. Our government in their wisdom was treating senior citizens in
exactly the wrong way in solving the problem of Medicare by simply
throwing more money at it. What we needed to do is what has been done
in the last 3 years: sit down, look at the situation and see if there
was not maybe a better way to do the same thing.
Let me give one example of how this improvement took place. Diabetes
is a major problem for seniors. What the government did in their wisdom
is, they waited until some sort of a complication developed in
diabetes. They would not pay for screening. What they did is waited
until something dramatic happened to a senior, whether it was a heart
problem or an amputation or eye problems or any of the other negative
outcomes from diabetes. Many of these things were treatable if they
were caught earlier.
What the government was doing in Medicare was saying, we are not
going to pay for screening diabetes that is destroying your life, but
if you get good and sick and you need a good and expensive procedure,
then we will help you pay for it through Medicare. It is not only the
right thing to do for the health and the well-being of our senior
citizens, to do the advanced screening, it is also much more cost
effective to find the problem early and treat it early so the senior
citizen can live a healthier life. Of course that eliminates the high
cost burden on the Medicare system.
So instead of just throwing more money at Medicare and leaving the
system the way it was, we looked at what was going on and looked for
better ways to spend the same money that was being spent. In the
diabetes situation alone they are saying as much as $14 billion a year
will be saved, and again, let us not transform this into Medicare cuts.
By providing our seniors with the opportunity to live a healthier life
by this advanced screening for diabetes alone, we are talking about a
$14 billion a year change in the cost of Medicare to the United States
Government.
That is not all, though. There are also things like screening for
breast cancer, colon cancer, a wide variety of other preventive care
was very similar to what I just described with diabetes. That was
changed in Medicare. Rather than just looking at Medicare and saying,
okay, we are going to raise taxes on the people and throw more money at
Medicare, we looked at how the same dollars could be spent in a better
manner. That is very, very different than the people that were here in
control in the past. It is a very different model for solving solutions
as we go forward.
The other dramatic change in Medicare is, in the past the United
States Government in their wisdom said we here in Washington know what
is best for all our senior citizens, so we are going to develop this
plan called Medicare and our seniors get the plan, like it or not. What
has happened in Medicare is that now if our seniors do not like the
government-run plan, they have the opportunity to take the same money
the government was spending on their behalf in the government plan and
use it to purchase private insurance of their choosing. We not only
revise the plan to make it much more effective providing preventive
care to seniors, we also put what type of insurance and what type of
medical coverage they would like back in their hands where it belongs.
I think what it says is really a statement of respect that we have
for the senior citizens in the United States. Many of these senior
citizens are the same people that fought in World War II, that
preserved this country and got it to where it is today, and those
people deserve to be treated with that respect.
While I am on Medicare, and it does not directly relate to the
changes of last year, there are a lot of nasty rumors going on out
there about what has happened in Medicare: that if a citizen, for
example, would like a second mammogram in a year, and Medicare says you
only can have one that is covered but a citizen would like a second
one, there is a lot of rumors going around out there that if a citizen
wants to buy additional coverage for some procedure that is not covered
under Medicare, that somehow if the doctor provides that coverage and
charges the patient, that the doctor is kicked out of the Medicare
program for 2 years.
Let me just say definitively that that is absolutely not true. There
are a lot of different groups putting this information out. It is
absolutely not true.
Let me give this in a specific example. Let us just say someone had a
mammogram, and for whatever reason 3 months later they decided they
would like a second one. Medicare says I am not going to cover the
second mammogram. And the patient says, well, I want it done anyway and
I will pay the doctor for doing it, and the doctor says, okay, I will
do it. That is perfectly legal. It is permitted. There are no
repercussions back against the doctor. The doctor makes that decision
to do it if the patient decides they would like to pay for it outside
of Medicare.
So specifically on things that are not covered under the Medicare
program, if a doctor provides those services, there are absolutely no
ramifications back against the doctor. I just mention that as it
relates to Medicare because we have heard so many different stories
when I have been out there in public.
So I am going back now to the Tax Code change and just a few other
details in it. One other one that is very important to me, I had
mentioned capital gains before but I did not mention the adoption tax
credit. I think this really says something about where we are going as
a Nation.
I have got a lot of charts and graphs here, and they talk about
numbers, and they are showing lines and different things that happened,
but that is not really what this government is about. This government
is about people. It is about values. It is about where we are going as
a Nation, what kind of a country we are going to have. It is about how
much government is going to be involved. I think when we look at that,
we need to understand that the government does, in fact, have a heart,
and that we understand that there are tough situations out there in a
lot of places in this country.
We also should understand that when we changed this Tax Code, we
looked at the possibility of adoptions in this country. What we found
is that to have an adoption in America it costs roughly $10,000. So if
we have got a middle-income family, say they are earning $40,000 or
$50,000 a year, and for whatever reason that family finds out they
cannot have their own children, $10,000 might have been insurmountable
in terms of adopting a child.
So what we did in the Tax Code is we changed the Tax Code. There is
now a $5,000 tax credit to assist that middle-income family with the
process of adoption and paying the bills that are involved in the
adoption.
So this Tax Code change, it is not all about numbers, and it is not
all about these charts I have here. There is a large degree of feeling
involved in these. And we recognize that things
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like the $400 per child, leaving that money in the family's home as
opposed to having it out here in Washington, it is not just about
numbers. It is about people. It is about the impact that this money in
the family will have on these families.
Another example on the $400 per child, I was in with a group of
people who had many of their children enrolled in parochial schools. I
talked to them about the potential of government providing them some
sort of tax assistance for parochial schools. And right away, they
reacted no, no, no, no, we do not want any government support for our
school. Because they are afraid with government support come government
rules and regulations that may not match up with what our parochial
schools are teaching, my own kids included that go to a parochial
school.
So I explained to them how the $400-per-child tax credit allowed them
to make the decision on what they were going to use their own $400 for.
If they choose to use that $400 to help pay tuition at a parochial
school, well, so be it. That is money that would have been sent to
Washington that is now in their home, and they can then choose to make
the decision to send their kids to a parochial school if they so
desire. But it is not Washington telling them what to do with the
money, and it is not Washington telling their parochial school what to
teach in their school, but, rather, it is now the parents in their own
home making the decision as to how to spend their own money.
I would like to wrap up my time here on the floor today with kind of
just a brief summary of some of the things we have talked about. We
have looked at the past, and we have looked at how in the past we had a
series of broken promises to balance the budget.
Before 1994, we had Gramm-Rudman-Hollings, the budget deal of 1990.
We looked at how, in 1993, they reached the conclusion on how to solve
this problem. Rather than control Washington spending, the conclusion
was to reach into the pockets of American citizens. I know for all the
people out there, it was not the first time. I know it was part of the
1990 deal. I know it was part of the 1993 deal. But I also know that
every time they reached in the pockets and took more money out here to
Washington, all it did was allow them to spend more out here in
Washington, and that is not what the people wanted.
That path of broken promises of the balanced budget and the path of
higher taxes, that is over. It ended in 1994 when the American people
stepped up to the plate and said enough is enough, it is going to stop.
They put a new group in charge out here in Washington.
We are now 3 years into that new group. The new group has brought us
a balanced budget, not in 2002 as promised, but 4 years ahead of
schedule. The announcement today, great news, CBO, from the
organization that watches budgeting out here: We are, in fact, running
a surplus for fiscal year 1998. The first time since 1969, we are going
to have a budget surplus.
{time} 1615
Great news. Three years into this thing, we have done it by
controlling the growth of Washington spending. We have been effective
enough at slowing the growth rate of Washington spending, that we have
not only gotten to a balanced budget 4 years ahead of schedule, we have
been able to provide the American people with a tax cut.
When I say ``we provide,'' shoot, it is the American people that earn
that money. All we are doing out here in Washington is saying keep more
of your own money. It is yours to start with, just do not send it out
here to Washington. The present, the present has a balanced budget for
the first time since 1969; The present, the present is lower taxes for
the first time in 16 years; the present, the present is a restored
Medicare, and done the right way, with feeling and understanding for
our senior citizens.
The future. As we look forward to this, we have 3 major problems
remaining. The first is we still have a $5.5 trillion debt staring us
in the face; the second is the Social Security money that needs to be
put aside for Social Security; and the third is taxes are still too
high.
So as we look down the road to the future in this great nation, the
National Debt Repayment Act which we have introduced in our office,
bill number H.R. 2191, takes two-thirds of any surpluses that develop
and it uses it to pay off the debt. Prioritizing, repayment to the
Social Security Trust Fund for our senior citizens.
The good news under this bill is that by the year 2026, and maybe
sooner, we will have repaid the entire Federal debt that will restore
the Social Security trust fund for our senior citizens and it will
allow us as a generation to pass this country on to our children debt-
free.
I can think of no higher goal that we might have in this government
today than to work to a point where we repay the Federal debt so our
children can inherit a Nation that is absolutely debt-free. In doing
so, we also restore the Social Security trust fund for our seniors.
The other one-third of the surpluses that are developing, let us use
those to lower taxes, and let us set our vision for the future that we
get the tax rate from 37 back to 25 percent. Would it not be great if
one-third of all taxes paid by all Americans at every level of
government was reduced, and those American citizens could keep it in
their own pocket to decide what they would like to do with it, whether
it be to help their children, whether it be to put their kids through
college, whether it be to provide their kids with a private school, if
that is what they would like to do, if they in their own wisdom think
that is better for their children. But the bottom line is to leave that
money in the hands of the people that earned it in the first place.
Would that not be a great vision for America? Paid off debts, so our
children get a debt-free nation; a restored Social Security trust fund
for our senior citizens; and lower taxes, a one-third reduction in the
overall tax rate all across America?
Lest anybody think we cannot do it, I just remind the American people
of what was said in 1995 when we were first elected. They said you
cannot balance the budget and lower tax. Here we are, three years into
it, four years ahead of schedule, with the budget balanced, taxes
coming down and Medicare restored. It can be done, if it is the will of
the people, and if the people get actively involved in making sure that
this government does what they want this government to do.
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