[Congressional Record Volume 144, Number 83 (Tuesday, June 23, 1998)]
[House]
[Pages H5044-H5052]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
UNITED STATES ECONOMY
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, I rise tonight to encourage my colleagues
to take a deep breath and slow down, because things are happening very,
very fast out here. When things start happening very, very fast in
Washington, D.C., what happens is we lose track and we lose sight of
what is going on; and the next thing you know, the taxpayers' money
starts disappearing like it has done for a generation out here, and it
starts disappearing very, very fast.
When this gets out of control, when spending gets out of control in
this city, when we forget what had happened before 1995, we quickly get
to a point where the idea of reducing taxes or paying off debt or
restoring Social Security become impossibilities.
So I rise tonight, and I have not done this presentation in quite
some time, but I think it is important, I think it is very important
that we remember where it is we are at in this Nation; and that, even
though we have come a long way, we have still got some problems facing
our country.
This first chart that I brought with me tonight shows that the debt
from 1960 to 1980 did not grow very much. But from 1980 forward, this
debt has grown right off the wall. Although we made some good progress
on it, now we need to remember that, even when we get to a balanced
budget, we are here in this picture, and it is still a very, very, very
serious problem facing our Nation. When we start talking about spending
bills in this community, we cannot let ourselves lose sight of the fact
that we are still deeply in debt.
For those that have not seen the number, we are currently $5\1/2\
trillion in debt. The number looks like this. It is 5,500, and then it
has three, six, nine more zeros after that. It is a huge, huge number.
I used to teach math, and I tried to translate this number so it
would mean something to an average person watching this presentation
and to my colleagues. If you take that number, 5\1/2\ trillion, and you
divide it by the number of people in the United States of America, if
every, man, woman, and child in the United States were going to pay off
just their share of this debt, it would be $20,400 for every man,
woman, and child in the United States of America.
For a family of five like mine, I have got three kids, and of course
my wife at home, they have literally borrowed $102,000 and again
basically over the last 15 years.
Let me put that another way. In this community, they have made the
decision to spend $102,000 for every family of five more than they
collected in taxes basically over the last 15 years.
The kicker is this bottom number down here, because, you see, this is
not just funny money in Washington, D.C. They have to pay interest on
this money. The average family of five in the United States of America
today is paying $580 a month every month to do absolutely nothing but
pay the interest on this Federal debt.
When we think about the mess that we have been given or what has
happened in this country, in this legacy that we are about to pass on
to the next generation, it is this idea that we are paying this $580 a
month; that money belongs out there in the families. It should be the
American people's money. When somebody goes to work to earn that money,
it is their money. We should not be using it to pay interest on this
debt that has been run up.
A lot of people go, well, shoot, that is not me. I do not have to
worry about it. I do not have to pay $580 a month in taxes, so it is
not me. The reality of this is that, when you look at what you do in
society, when you go in the store and buy a loaf of bread, when you buy
your kids a pair of shoes, the store owner makes a profit selling the
pair of shoes or selling that loaf of bread; or at least we hope they
do, because if they do not, they are going out of business.
When they make a profit selling that loaf of bread or selling that
pair of shoes, part of that profit gets sent out here to Washington
D.C. in taxes. In fact, every group of five people in the United States
of America, every family of five or every group of five is in fact
paying $580 a month one way or another to allow the interest on this
debt to be paid.
When I came out here in 1995, when I was first elected, I came out of
the private sector. I came out to this office, the first office I ever
held of public office. In the private sector, I was a home builder. I
started as a math teacher, and then we started a business in the
basement of our home. We wound up building 120 homes a year, providing
about 250 job opportunities here in America. It is really what our
country is all about.
When I came out here, I came out here with an idea. I came out here
with the idea, if we could get government spending under control, we
could fix this problem. That idea was very different than the people
that were here before.
What I brought with me is a chart that shows the old Gramm-Rudman-
[[Page H5045]]
Hollings and the promises that were made. The only reason I got elected
in the first place is because all of these problems that were made;
1985, Gramm-Rudman-Hollings the first time. In 1987, when they could
not make it in the 1985 bill, they fixed it. In 1990, they promised the
American people a balanced budget again. They promised the balanced
budget, and promised it and promised it and promised it, and they did
not do it.
{time} 1830
This is just one picture. This is the Gramm-Rudman bill of 1987. This
blue line shows what they said they were going to do. The red line
shows where the deficit went. They kept making these promises and
breaking these promises and the American people got more and more and
more upset with what was happening in this institution. Finally they
got to 1993. They realized that this problem had to be fixed. So the
decision that was made out here in this community looking at this chart
is that the right solution was to raise the taxes on the American
people.
Just think about this. We got to 1993, they had broken the Gramm-
Rudman-Hollings promise of 1985, of 1987, the budget deal of 1990, now
they were going to promise a balanced budget by reaching into the
pockets of the American taxpayers and getting more money out here to
Washington D.C.
What did they do? Well, they raised the gasoline tax. They raised the
tax on senior citizens on their Social Security benefits. They raised
taxes. The American people rejected that vision. And in 1995 they sent
a new group of people out here. They said, ``We don't want this done by
raising taxes. We want this done by controlling spending.'' We laid a
plan into place out here in 1995 to get to a balanced budget, also.
This blue line shows what we were going to do. We promised a balanced
budget by the year 2002. Well, the American people looked at that and
said, ``Yeah, sure, I'll believe it when I see it.'' Frankly I do not
blame them a bit. If it was me, I would have had the same reaction. But
the reality is that we are now 3 years into that plan. Not only are we
on track but notice where the red line is in the bottom picture versus
the red line in the top picture. We are not only on track to balancing
the budget but in fact we are going to run a surplus for the first time
since 1969 in 1998. It is the first time in a generation, nearly 30
years, that the United States Government has actually taken in more
money than what it wrote out in checks in a given year.
That is good news on the surface. But I think as we go further in
this, we need to understand what it is that has led us to this point
and what the pressures are that are causing us to go away from it as we
fight back day after day in this city the urge to spend more money.
The reason we have reached this point is shown in this picture. We
have had good economies between 1969 and today. When we have had good
economies, that means more money flows into Washington because people
make higher profit and higher salaries, and, of course, then they pay
more taxes. Every time we have had a good economy between 1969 and
today, Washington simply spent the extra money. But this Congress has
been different. Spending was growing at 5.2 percent per year when we
got here. But in the face of this strong economy, instead of having
spending grow at a faster rate, we got our arms around spending and we
slowed the growth rate of Washington spending to a point where it was
only going up at 3.2. In fact, we have actually done better this year.
It only went up by 2.6 this year, the first year in a long time that we
have actually seen spending growth in Washington under the rate of
inflation.
So what is really going on out here? It is not draconian cuts that
people have been told about, but what has happened is that instead of
Washington spending going up at twice the rate of inflation, this
Congress has got their arms around it and simply slowed the growth rate
of Washington spending to the rate of inflation. It is that slowing of
the growth rate of Washington spending, it is this distance between
here and here, that has both got us to a balanced budget and put us in
a position to cut taxes for the first time in 16 years.
Let me just go through a couple of the tax cuts so it is clear what
has happened. Again it is very, very important that my colleagues slow
down in this community, take a deep breath, and remember that if we
just keep the lid on spending, we can keep doing the good things like
balancing the budget, starting to pay down debt, restoring the Social
Security system, and, of course, lowering the tax burden on the
American people.
The tax cuts that have been passed, last year we reduced capital
gains from 28 to 20 percent. If you are a family with children under
the age of 17, for each child in that family under the age of 17, you
are now able to keep $400 per child more in your own home to spend as
you see fit instead of sending it here. If you have got a college
student, it is up to a $1,500 tax credit. Let me slow down and
translate that into what that really means.
We have some friends back home in Janesville, Wisconsin. They have
two kids at home and one is a freshman in college. They are a middle-
income family, about a $50,000 a year family. For the two kids at home,
next year they will reduce their taxes by $400 and $400 or $800 total;
and for their freshman in college they will get a college tuition
credit of $1,500. That family of five literally gets to keep $2,300 in
their home instead of sending it to Washington, D.C. I think that is a
significant move forward for our country. That is all pretty good
stuff.
I would like to talk about some of the problems that we still have
really staring us in the face. I would like to bring the Social
Security issue to the forefront because there has been a lot of
discussion on Social Security and how it impacts the budget and is
there really a surplus or are we using the Social Security money to
make the surplus. There has been a lot of this discussion going on. I
would like to make it as clear as possible as we look at the Social
Security system.
This year if you look at your paycheck, Social Security is going to
be paid to Washington, D.C. Washington is collecting about $480 billion
out of the taxpayers' paychecks. They are bringing that $480 billion
out here to Washington. They are writing out checks to our senior
citizens of about $382 billion. If you think about this for a second,
if you have $480 in your checkbook and you write out a check for $382,
you would have $98 left over. That is Social Security. They have $480
billion coming in, $382 billion going out, and they have got $98
billion then left over.
The idea is this. It is not any different than it would be in
virtually any home across America. This extra money coming in is
supposed to go into a savings account. We all know the baby boom
generation is rapidly heading toward retirement. There are a lot of us.
Since there are so many people in the baby boom generation, there will
not be enough money coming in to make good on the Social Security
payments. Again if we look at this chart, the money in is 480, the
money out is 382. When the baby boom generation gets there, those two
numbers turn around and there would be more money going out and not
enough money coming in. The idea is that this extra money coming in
today is supposed to be in a savings account, and then when the numbers
turn around, you go to the savings account, get the money and make good
on Social Security.
It is funny that when I am in town hall meetings and I ask the
question, ``Now, Washington has this extra $98 billion. What do you
suppose Washington is doing with the $98 billion?'' Everybody in the
town hall meeting says, ``They're spending it.'' In fact, that is
exactly right.
Washington takes that money, if you think of this center circle as a
big government checkbook, they take that $98 billion, they put it in
the big government checkbook, they spend everything out of the big
government checkbook, and, of course, since there is nothing left they
cannot write a check out to the pension fund, to the Social Security
fund, so at the end of the year they simply write an IOU so they do not
have to write a check out of their checkbook. That is wrong. That
practice needs to be stopped.
It is important to understand that when people in Washington are
talking about a surplus, they are talking about this circle over here.
The $98 billion is in the checkbook and when they write out all the
checks but not a check to the Social Security trust fund, if there
[[Page H5046]]
is some money left they call that a surplus. The good news is that we
are currently in surplus in an amount that it is actually more than
enough to write the check down here to the Social Security trust fund.
That is the first time in a generation.
We have introduced legislation out here, it is called the Social
Security Preservation Act, it is H.R. 857. It is pretty
straightforward. I think it is pretty commonsense stuff. It simply says
that the money collected for Social Security, that $98 billion surplus,
it goes directly into the Social Security trust fund. If that does not
seem like Einstein kind of stuff to any of my colleagues or any of the
folks that might be watching this tonight, it really is not, because in
the private sector where I come from, if I would have bought a new car
instead of putting the money in the pension fund and then wrote an IOU
to the pension fund for my employees, they would have arrested me for
doing it. Any executive of any company in America that is responsible
for a pension fund cannot spend the money to buy a new executive car
and then write an IOU to the pension fund. You have to put real money
in the pension fund in any company in America, and certainly any hard-
working American would expect that the pension fund actually has money
in it. This legislation is called the Social Security Preservation Act.
It is very straightforward. It simply says put the money down and into
the Social Security trust fund.
Let us talk about tax cuts for a minute. Let us talk about the
opportunity to have additional tax cuts for American people. Because
there has been a lot of discussion that some people want to use this
Social Security surplus for either tax cuts or new Washington spending.
That is unacceptable. The Social Security trust fund money belongs in
the Social Security trust fund. What if, however, in the general fund,
without the Social Security money, there was some money left in the big
government checkbook? If there is money left in the general fund,
independent of Social Security, or if Washington could find some
wasteful government spending that they could get rid of, certainly that
is where the opportunity to reduce taxes further comes.
I would like to go to that issue, because what is really at the heart
of this thing is if we can find wasteful Washington spending, we can
eliminate the wasteful Washington spending and simply return that money
to the hard-working people that earn the tax dollars before they send
them out to Washington. That is how you get the tax cuts.
Could you do $100 billion of tax cuts? Yes. Could you do $200 billion
of tax cuts or even more? Yes. The trick to this thing is understanding
that there are two separate accounts here. One is the big government
checkbook and one is the Social Security. Government ought to leave
their hands off the Social Security money. But if we have got a surplus
up here in the general fund, that ought to either be returned to the
American people or used to pay off debt.
A lot of people say, ``Well, look, you guys, you have been out there
for 3 years, all of the government waste is gone and certainly you
can't still find some wasteful government spending.'' I am going to go
into that by entering into a little discussion on our audit.
Mr. Speaker, I see the gentleman from Michigan (Mr. Hoekstra) has
joined me. I would be happy to yield to him.
Mr. HOEKSTRA. I thank the gentleman for yielding. As an introduction
to I think where you are headed and what you want to talk about is a
GAO report.
Just to give a little bit of background, I think you know that we
have been working on a project which we call the American Worker at a
Crossroads. It parallels an activity that we have which is Education at
a Crossroads. For the last 6 to 8 months, we have had a special group
of people taking a look at what is going on in the American workplace
and taking a look at the appropriateness of American labor law. Another
thing that we asked the staff to do is we said, ``Take a look at our
spending in the Labor Department.''
The Labor Department gets about 29 to $30 billion a year, of which
about $12 billion is discretionary, meaning that you and I every year
have to vote on where that money is going to be spent and approve it on
an annual basis. The staff got together. They met with the different
departments within the Labor Department. They had staff interviews.
They went to a number of different agencies to get a handle on where
this $12 billion goes.
After a period of time we were reviewing this, and they said, ``Pete,
we've got a problem. We've taken a look at the $12 billion of spending,
we've met with the Labor Department, we've talked to a lot of different
people, and we can only account for about 75 to 80 percent. Nobody can
tell us where 100 percent of this money goes.''
It is kind of like, ``Whoa.'' This is 3 to $4 billion a year that
nobody really knows where it goes. This is not talking about
effectiveness or efficiency or anything like that. ``They just cannot
tell us, Mr. Hoekstra, this money goes to this department for this
agency to do this thing, and these are the people who receive the
money.''
So we said, ``Let's call the General Accounting Office.'' We called
the General Accounting Office. They came over, because I thought maybe
I got the wrong staff. I mean, how can you not know where 3 or $4
billion goes?
Mr. NEUMANN. How much is 3 or $4 billion? It is $300,000,000,000.
This is a big number.
Mr. HOEKSTRA. The company I used to work for, it was always the fifth
year of our annual plan, we would be a billion-dollar company. They
finally reached it a couple of years after I left there. But a billion-
dollar company makes the Fortune 500 list. There are probably about
270, 280 on the Fortune 500 list. A billion-dollar company employs, at
least in the industry that I was in, employs somewhere in the
neighborhood of 5 to 6, 7,000 people, not counting the people who
distributed the products, not counting the people who supplied to our
company. A billion dollars is a big number.
Mr. NEUMANN. Would it be fair to say when we look at the Labor
Department, they are missing $3 billion, and if we could cut out that
part where they cannot find any, we could apply that $3 billion to tax
reductions to the American people?
Mr. HOEKSTRA. I think that is right. I think this leads to where you
are going. We then called in the General Accounting Office. I had my
staff there. I said, ``We've got a problem. I think we have a problem.
We've taken a look at the Labor Department. We've taken a look at their
discretionary spending. We have met with the Labor Department. We can't
account for about 3 to $4 billion.''
The response from GAO was, ``Yeah.''
It is kind of like, ``What do you mean, yeah?"
It is kind of like, ``Well, what's the problem?"
``Well, we can't find 3 to $4 billion. They can't tell us where it
went. We'd like to know who got the money, what they were going to do
with it, and whether they actually accomplished the goal and the
objectives that we had set here from Congress.''
They said, ``Well, we're actually completing a report, and we're not
surprised that you can't find 3 to $4 billion. We can't find it,
either.''
It is kind of like, ``Oh?"
They said, ``This is not just a Labor Department problem. When our
report gets issued, you will find that this problem crosses all the
different Cabinet posts here in Washington.''
{time} 1845
Mr. NEUMANN. Reclaiming my time, I want to show you why that is,
because again I come from the private sector, and having run a
business, I really thought when I got out here that I was going to
find, and these are each account numbers in the government. The
national defense, for example, is 050, and international affairs is
150. I really thought what I was going to find is somebody responsible
for the money being spent in the national Defense Department, so I
thought what we would do is go talk to the folks that were responsible
for the money in the 050 category, the national defense committee, and
they would actually be responsible for spending that money. So I
expected a chart to look kind of like this where we had a category and
then somebody actually responsible for spending the money.
[[Page H5047]]
Well, I took some time and I put together what it actually looks like
out here. Here is what it actually looks like. There is no account that
has a particular responsibility across. The lines are all crisscrossing
all over the place, and since there are so many different lines for
this thing to go to, nobody really knows where the money is going to,
and of course that is exactly what led to the GAO report that you got
in your hands.
Mr. HOEKSTRA. If the gentleman would yield, I think when we have been
out here before, because we are also, we are going to be issuing a
report in July that was initiated before we started the Labor
Department, because I have also got oversight responsibility for the
education department. And I think you may remember over the last year,
you know, your spaghetti chart that shows all these lines
crisscrossing.
We came up with the same thing in education because we wanted to take
a look and say who really has responsibility for helping kids in
Washington and helping kids get a good education. That is, I am not
debating the point whether we can actually do that in Washington. I am
just saying, who in Washington believes that it is their
responsibility? Where is this coordinated? We asked the Executive
Branch.
We said, ``How many education programs are there?'' Tabulated them
up, we went to GAO, we went to the Congressional Research Service.
About 760 different education programs.
Mr. NEUMANN. Just for a second, when you have got 760 different
education programs run by the United States Government.
Mr. HOEKSTRA. That is right.
Mr. NEUMANN. Along with every one of those 760 is a huge bureaucracy
to run the program, and what is happening is the bureaucrats are
getting the money that is supposed to be in the schools helping our
kids.
Mr. HOEKSTRA. That is right.
Mr. NEUMANN. And how much would you say out of every dollar?
Mr. HOEKSTRA. Well, we have calculated that because the other, you
know, the train of thought is 760, and the first thing is hallelujah,
that is why we got an education department, so that we can take these
programs and run them through one place, because that is what I would
think: Education; education programs. Put them in one place.
Thirty-nine different agencies. Many were programs that sound very,
very similar.
So, as we have taken a look at it, as the gentleman has asked, as we
have gone around and we have taken a look, where does the money really
make a difference? The money makes a difference when it is in the hands
of a teacher in a classroom directly benefiting a child. The
bureaucrats do not help the child one bit.
So when a dollar comes from Wisconsin or a dollar comes from Michigan
for education and goes to Washington, we are estimating that about 60
to 70 cents gets back to a child, gets back to a teacher, gets back to
a classroom. Thirty to 40 cents gets eaten up in this, you know,
bureaucracy maze here, and we know that the dollar has to get to the
child if it is going to make a difference.
So I mean when we talk about reforming education, and we are going to
talk about some other things, we can get lots more dollars to the child
in the classroom without spending any more money in Washington. All we
have to say is we are going to do it different, we are going to take
the money, we are not going to feed a bureaucratic machine. We are
going to get the money to a teacher and to a child and to a classroom,
and the money is going to be there, and we are going to have some
proposals, we are making them up tomorrow in committee, to start doing
that. It is only $3 billion, only $3 billion.
Mr. NEUMANN. I was just going to object.
Mr. HOEKSTRA. Yes, only $3 billion out of, you know, the $40 to $50
billion that the Education Department spends every year, but, you know,
we are starting, and we are going to take it and we are going to put it
into opportunity grants, which says we are going to get the money to a
child and we are not going to give it to a bureaucrat.
Mr. NEUMANN. Just reclaiming my time, I cannot help but point out
that the great State of Wisconsin is out in front of the country again
on this issue, as they were with welfare reform under Governor Tommy
Thompson. They are now out in front in terms of having parents have the
opportunity to choose where their children go to school, what they are
taught and how it is taught.
Wisconsin just passed school choice, and of course it is going to be
run much like a Pell grant system. I know even in some of the parochial
schools there is a lot of concern with the school choice topic, but
when we stop and think about it, the United States Government already
gives college scholarships called Pell grants even to students that are
attending teacher and pastor training schools in a Christian education
center.
So the idea that the government could possibly give these
scholarships, like Pell grants, without attaching strings is something
we are already doing at the college level, and it is now just a matter
of expanding that program down so it applies to secondary and
eventually K-12 education.
I look forward to it. I think it is a good move forward for
Wisconsin. And you know the survey that we just looked at, there were
12,000 teenagers looked at, and they found the single most important
thing for crime, for teen smoking, teen pregnancy, for drug use and for
education, most important for education, parental involvement with
their student. Parental involvement with that teenager is the single
most important thing that we can possibly do to bring our kids and
bring our education level back up in this country, and I sincerely hope
that we figure out how at the national level to allow some of the same
things to happen that have happened in Wisconsin.
I do want to jump to a couple of these others because this audit is
something the American people should hear about.
Mr. HOEKSTRA. If the gentleman could yield for just a second.
Mr. NEUMANN. Go ahead.
Mr. HOEKSTRA. And, as we go through this audit, I just want to let
the gentleman from Wisconsin know that for the last year and a half we
have gone through this process at the education department, we have
gone through this process at the Labor Department, we have gone through
this process at the Corporation for National Service where we have
audited them or we, you know, found out. We have done this for the
National Endowment for the Arts, and it is very, very consistent. The
money does not get to the places that it is intended to go, that we are
not making the difference.
So anybody who believes, even if we agreed with every mission that
the Federal Government has taken on, and I think you and I probably do
not necessarily agree that everything the Federal Government is doing
is something that the Federal Government ought to be doing, but even if
you agreed with every mission that Washington has assumed today, there
is no doubt in my mind that there is a lot of waste, fraud and abuse in
the system, that we could deliver better results with the money that we
have today and at the same time deliver a tax cut back to the American
people. We can do it in the Education Department, we can do it in the
Labor Department, we can do it in the Corporation for National Service,
and I think the gentleman is going to share some other examples with
me.
But we have done this work here on the House side. We have got the
background and the data that backs up exactly what this GAO study is
going to show.
Mr. NEUMANN. And I think that is the point of this whole discussion.
We can do tax cuts without touching the Social Security money. There is
absolutely no reason in the world that this government should take the
money coming in from Social Security and use it for tax cuts or
anything else. That money belongs in the Social Security Trust Fund,
but that does not mean we cannot do tax cuts. There is so much waste,
fraud and abuse to go out.
I want to again slow down a little bit and just make sure everybody
understands what an audit is.
Again, I come out of the private sector. We ran our company, and I
will never forget the first time that we wanted to borrow money in a
bank, and the bank said you have to have an audit first. And I went:
``What's an audit?''
[[Page H5048]]
And they said, ``Well, an accountant has got to come in, and they got
to look at your books, and they got to actually make sure that the
money you say you're spending to build that house is actually being
spent on, the money, on the house that you say you are building. And
not only that, they would like to know that the revenue that you say
you're getting from the sale of that house is actually enough to cover
the money that you spent on that house.''
So what happens is an accountant comes in and he looks at all your
home sales over the course of the year, and he pulls out one or two, or
she pulls out one or two or three of them. So if you are selling 120
homes a year, they pull out maybe a half dozen total, and they really
go through them with a fine-toothed comb to actually make sure that the
drywall check that went out for $3,200 actually went to the drywall
company and not my rich uncle someplace or whatever.
They actually double check to see that what you say happened in your
books actually happened, and that when you get to the bottom line the
money in and the money out is actually what you reported on your taxes,
and hopefully if the bank is going to lend you money, it made a profit,
because if you do not make a profit you are going bankrupt.
Mr. HOEKSTRA. If the gentleman would yield for just a second, it is
no different than what happens to an individual when they go apply for
a mortgage.
Mr. NEUMANN. Exactly.
Mr. HOEKSTRA. The bank will go and they will verify, they will want
to be able to verify your income, they will want to verify the balances
on the other loans that you have outstanding, they will want to verify
that what you want to buy is actually worth the amount that you want to
borrow, and they will audit your records.
Mr. NEUMANN. The difference between a personal audit, though, and a
company audit or between a personal audit and this government audit is,
in a personal audit when you going to buy a house they verify virtually
everything. And I just like to make the point that when they went
through this government audit, they pulled out a random sampling to do
these lookings. So these examples that I have got here of what they
found in the audit, it is not like they audited the entire Navy and
looked for every ship the Navy had. They pulled out a limited number.
As a matter of fact, this first one I got a picture of here, they
pulled out 79 ships. They could not find 21 out of 79 ships that were
supposed to be available. Just think about this for a minute. The Navy
says these ships are there and they are waiting to be used. They are
called inactive status at this point. Seventy-nine of these ships are
supposed to be there. They went looking for these things. They could
not find 21.
I mean we are not talking about a rubber ducky here in a bathtub. We
are talking about a naval ship that they could not find. Think about
what that means if there were ever a serious conflict in this Nation.
That is just one. Let me keep going a little bit.
The Air Force reported that they had this C-130 transport plane, and
this is important to understand what this is, and I want to emphasize
that this is a statement of concern for the well-being of our young men
and women in uniform because just think about this for a minute:
If we were to enter into some sort of military conflict and this C-
130 is supposed to be out there, and a C-130 is what they use to move
troops around. So you now have these troops in a conflict situation,
and we are supposed to take this C-130, and we are supposed to haul
more troops up there so that they can be reinforced and not get overrun
and literally injured, hurt or injured or killed.
Well, they went looking for this C-130, and it turns out it was
destroyed back in 1994. It is almost inconceivable to me that you have
a C-130, a transport plane for moving troops around, on your records as
available, and you go looking for the thing and you cannot find it.
There is more. This one is really scary.
We are supposed to have a missile launcher, and if you do not
recognize what this is, this is what you launch a series of missiles
off of. They could not find the missile launcher.
Now since they think they have found it, but we have not verified at
this point that they found the right one, and again it is so important
to understand how significant this is to the safety and well-being of
our men and women in uniform.
But it was not just the military, and I want to make that very clear.
This is the Department of Energy, and what you see here is a Hewitt
Packard 3000 corporate business server, weighs 825 pounds, 825 pounds.
The thing is 5 feet 2\1/2\ inches wide, 3 feet deep. I mean this is a
huge piece of equipment. So they went looking for this $141,000
computer, and they could not find the computer either.
It did not stop there. We dug into this audit, and again coming from
the private sector, I took some time to really start going through, and
this caught my attention obviously. And you know this whole concept
that there is no waste in the government and there is no more room for
improvement in this government, that is ridiculous. We have got a long
ways to go to get this place straightened out, but when I started
digging into this some more, I would just like to read a few excerpts.
We had the GAO prepare a special report for my audit. This is what
they said about Medicare. Now think about this number, and then think
about the Medicare attacks last year. This is what they say on Medicare
regarding improper payments: $23 billion, for reasons ranging from
inadvertent mistakes to outright fraud and abuse, $23 billion missing
out of one agency.
Let me translate into English.
Mr. HOEKSTRA. If the gentleman would yield for just a second, of
course the way we calculate here in Washington, I am sure that is $23
billion over 5 years.
Mr. NEUMANN. No, sir, that is $23 billion in a single year. That is
almost $100 for every man, woman and child in the whole United States
of America, to put this in perspective. You know we throw these
billions around like basically speaking that $1 billion is $4 per
person. This is nearly $100 for every man, woman and child in the
United States of America that is gone, for reasons ranging from
inadvertent mistakes to outright fraud and abuse in one single agency.
But listen to this one. If anybody out there is not concerned with
these pictures, listen to this. This is what the Air Force Logistics
System found, and again now I am quoting word for word from the report
that they sent back to my office. Three databases included in the Air
Force's central logistics system contained discrepancies on the
equipment, on the number of assets on hand, including ground-launched
and air-launched cruise missiles, aircraft and helicopters.
Let me translate that into English. They went into the Pentagon, they
looked at their central logistics system to try and figure out how many
of these missiles they were supposed to have. When they went out in the
field to find them, the number they found versus the number they were
supposed to have was different numbers.
Let me read this one again, because of all of these things, this one
scares the living daylights out of me.
Three databases included in the Air Force's central logistics system
contained discrepancies on equipment, on the number of assets on hand,
including ground-launched and air-launched cruise missiles.
{time} 1900
When you really go looking for this stuff, they cannot even find the
air-launched and ground-launched Cruise Missiles.
Let me give you one more, and I know the gentleman from Michigan
would like to jump in on this. The Forest Service, and again we have
talked about the Air Force, we have talked about the Navy, we have
talked about the Energy Department, we have talked about Medicare and
the Air Force again. Let me give you another one. Here is Forest
Service. The Forest Service could not determine for what purposes it
spent $215 million.
When we look at this government and we look at the tax rate on the
American people, and then we go into this sort of thing and we find out
what
[[Page H5049]]
a mixed-up state of affairs we have out here, it is very, very clear to
me that if they get their act together to a point where they actually
know what they have and know where the money is going to, we can
clearly find enough ways to reduce the tax burden on the American
worker and accomplish all three of our goals, and that is leaving the
government's hands off of Social Security, reduced taxes, and start
paying down the Federal debt. But the way you do that is you go after
these wasteful government programs.
Mr. HOEKSTRA. I think the gentleman is exactly right. When we have
taken a look at the Education Department and when we have taken a look
at the Labor Department, they cannot find or tell us where all the
money went, and then we come back and we ask them specifically on
program-by-program, give us some indication as to whether we are
achieving the kind of results, the kind of effectiveness that we would
like to have, and there are no benchmarks. We cannot go in and say this
is what we are trying to do and these are the kinds of results that we
are getting, so that the money we are actually spending is actually
making a difference.
So you are identifying, I think, some pretty scary stuff, because you
are again identifying, we could not know where the money is going, so
that is almost an immediate savings that you could identify that says
if we do not know where the money is going, we cannot be getting a
whole lot of results for it.
Then the second thing is you can overlay that even when we know where
the money is being spent, we do not know the kind of results that we
are getting. So if you put that in the context of the Labor Department,
we do not know where 25 percent of the money goes, and for 75 percent
we do not know whether we are getting the kind of results we want to
have.
In education we are spending $100 billion a year. We know that a good
portion of that money stays with bureaucrats and bureaucracies, so that
we know that that is not helping kids. And then you take a look the
money that is actually filtering down with the strings that are
attached to it. And, again, it may be a barrier to a local school, a
teacher doing what they feel they need to do in their classroom,
because the money comes and tells them what to do. So, again, we do not
have an idea as to how effective those dollars are.
Mr. NEUMANN. I think it is very important in this discussion that we
point out there is something being done about this. I would just like
to walk you through what has happened so far, since we found this, and
where we are going next with this thing.
I have to tell you, if this was my home building company and the
person responsible for building 79 homes walked in my office and said,
``Mark, I have good news for you; I found all but 21 of the 79 homes we
built last year,'' I have to tell you, I would not have the patience
for what we are proposing in this legislation.
But when I proposed the legislation and we had our first hearing, we
start hearing people concerned that we have gone too far here.
So let me say what has already been done. We brought a resolution to
the floor stating this should have consequences to each one of the 24
agencies. That was relatively easy, because when you say
``consequence,'' nobody is hurt because nobody knows what consequences
are.
We have gone the next step and I have written a piece of legislation,
and here is what it does. It says in each one of the 234 agencies, we
are going to identify the group of people responsible for knowing where
the money is coming from and knowing where the money is going to and
knowing where the equipment is. So we are going to identify the people
who are actually responsible for the information contained in these
audits.
We are going to give them 12 months. At the end of 12 months, if they
cannot pass an audit, that group of people is going to have to find
something else to do with their lives other than work for the United
States Government. Also the agency will at that point lose 5 percent of
their funding.
Now, the idea behind this proposal is twofold. First, we would like
to identify the people responsible and actually place responsibility on
someone, instead of saying it is that agency over there with no face
attached to it. We with like to point out specifically who it is with
responsibility for it.
We would like to also empower those people to have the people at the
agency work with them to solve the problem. So we want to go at this,
and, understand, they have already had four years in this whole thing.
The bill started four years ago. So they have had four years already to
bring the thing up to speed.
So when we say 12 months, what we are really saying is, we do not
want to be heartless about this and go, you are fired tomorrow,
although maybe that is what I would do in my own company. You have 12
months to get your act together. You specifically have the
responsibility for it, and, if you are not successful, not only are you
going to have consequences, but the agency itself should expect to have
5 percent of their funding withheld.
Now, what that should do is get the employees and the agency to work
with the people responsible for straightening this mess out to a point
where we actually can track the money that is going through, and not
only track the money going through, but also track the assets of a
particular agency.
Mr. HOEKSTRA. If the gentleman will yield, we are doing some of the
same types of things in the whole area of education. You start with a
resolution, kind of like what you said, there will be consequences. In
the education area we set a goal.
We said that as a Republican Conference, or as a House, we passed a
resolution here saying we want 95 cents of every education dollar to
reach the classroom.
Tomorrow in committee, we are going to be working on a dollars-to-
the-classroom piece of legislation, which is going to take a number of
programs and put them into opportunity grants so that the dollars now
flow to the classroom, flow to the child, rather than flowing through
bureaucracy.
So we are making progress in moving along, in getting at these
issues. So it is not just an issue of hey, look, it is broke. It is
broke. We are working at constructively going after these problems,
identifying why they have come up, how we can fix them, and now we are
going through the legislative process of actually making a difference
and changing the way things work in Washington.
Mr. NEUMANN. I just want to keep coming back to that point. The key
here is as we eliminate this waste, it provides us with the dollars
necessary to reduce the tax burden on the American people, while, at
the same time, leaving our hands off of Social Security, which is what
the Social Security Preservation Act does, and, at the same time,
starting to make some payments on the Federal debt.
This is the bright optimistic vision for the future, a debt-free
America for our children, Social Security restored for our senior
citizens, and a lower tax burden on the American people.
I see that my good friend Mr. Kingston has joined us.
Mr. KINGSTON. I thank the gentleman for yielding. I have been
listening with much interest on what you two have been doing on this,
and I know you have been at it for many years and making progress. One
of the things we have come across on the Committee on Appropriations,
as you know, is plain out inefficiency, which is what this is, and the
biggest example that we hear the most complaints about is the IRS.
One of the examples that was testified is the IRS went into a
restaurant in New York, asked the patrons to leave, put down their
forks and knives, leave, because the restaurant was behind in their
payroll taxes. A month later it was proven that it was a mistake.
So what does the IRS do? They say gee, whiz, we are sorry. Think
about that in the private sector, if you had somebody in charge of
enforcing a law, a rule or whatever, in your company, and they blew it,
just completely blew it.
We are on the verge of passing a bill in on the IRS which is similar
to the legislation you are working on for an intangible efficiency, if
you will, but of saying that if you are dragged before the IRS, you are
innocent until proven guilty, and it will do the same thing
[[Page H5050]]
that your legislation does and what you are trying to do in education.
It makes the individual frontline employee a little more careful to
make sure he or she knows exactly what the goal is, what the rules are,
and who the victim is. They put their rights out there and makes folks
think twice.
As you know, another interesting thing about the IRS is they could
not be audited, because their books were in such disarray no one knew
where the head of the snake was. But we are taking steps to change
that.
Mr. NEUMANN. Reclaiming my time, I would just like to bring you a
personal experience from the private sector, because I have had one of
these IRS experiences. It is almost like an out-of-body experience when
you are done with it, because it is so bad.
When I first started in business, they assigned us two separate
Federal tax ID numbers. Now if you want an absolute nightmare, get two
Federal tax ID numbers. Because what would happen is we would file the
appropriate tax forms under the appropriate tax ID number, but since we
had a second tax ID number, the IRS came after us for not filing the
forms that we had just filed.
So then we would then refile the forms under the new tax ID number,
and, of course, then they would immediately come back after us for the
old tax ID number that they still had assigned to my company.
This went on for months. I would pay taxes and they would send me a
bill, and I would pay taxes and they would send me another bill. I
would look at the bill and say I know I do not owe that money, but it
is easier to pay them $600 that they are asking for than to fight with
the people. So you would send them another check for $600, and then
they would send you another bill a few months later on the other tax ID
number.
This went only for a period of I do not remember how long, until
finally we got sick of paying them the double tax rate and said we are
not going to pay you anymore. We, of course, would pay them the one
under one number, but we would not pay under both numbers anymore. It
was going to bankrupt us, for crying out loud.
So we finally said we were not going to pay it anymore, and it got
within two weeks of them posting a tax notice on my door saying you had
not paid your taxes.
Finally, that was back long before I ever thought of Congress, I
called the Congressional person, and the Congressional person actually
made the IRS people actually sit down and look at the records and how
much taxes we paid, and, if my recollection is right, they did send us
some of the overpayment back. But it was an absolute nightmare from
start to finish.
If you are a small business owner, you cannot afford the time to go
fight with the IRS. You got enough to do to keep your head above water
and keep from going bankrupt in the first place. This is our early
days. We were just out of our basement. We had started a business in
the basement of our home and we were in our first office struggling to
make it. I will never forget the hassle we went through as they gave us
these two separate ID numbers. So I have some personal experience with
it.
Mr. HOEKSTRA. If the gentleman will yield, what we are talking about
here is putting accountability into government. I will give you an
example. The gentleman from Georgia (Mr. Kingston) and I came here in
1993, and one of the first pieces of legislation that came out of the
committee that I serve on was called Education and Labor, was the
Corporation for National Service, AmeriCorp, a brand new agency.
In 1995, I got responsibility for oversight for the Corporation for
National Service. A brand new agency. It filtered in a couple of
smaller agencies. In 1997 we did oversight. Because the President
promised us this organization would be set up like the best in the
private sector, I voted for this bill.
1997, none of their books were auditable, meaning that you could not
take in an outside auditor and say that the money that came in from the
American people and went to the Corporation for National Service was
spent the way that it was intended to be spent. They could not tell us
where the money went. It also set aside money for the scholarships that
these kids earn for college. That was not auditable. It did not have
integrity.
What is the response you get? If you say we want to put
accountability in, it is like you are against AmeriCorp. It is kind of
like, no, we want to know where the American taxpayer money went. We
are doing what you had to do in the private sector, what I had to do in
the private sector; we had to put accountability into our
organizations, and we had to put integrity into the financial
structure, because if you do not have accountability and if you do not
have integrity, you are out of business. And in Washington, these
programs just run on forever.
Mr. NEUMANN. As we talk about this, and I mentioned it earlier in the
hour, I do think it is very, very important to keep this in
perspective. When we came here three years ago, when all of a sudden it
was a different group of people in control the House of
Representatives, we had to first stop the bleeding.
We had a deficit of $200 billion a year, plus they were stealing the
money out of the Social Security trust fund. We had to stop the
bleeding before we could go and look at the next step and start getting
into some of these older problems that had to be dealt with.
It is only because we have stopped the bleeding that we have gotten
to a balanced budget, we have slowed the growth rate of Washington
spending. It is only because we have slowed that bleeding, so-to-speak,
or at least dramatically slowed it down, that we are able to now go to
the next level and start solving some of the internal injuries, if you
like, in this thing.
You first have to get spending under control to get to a point where
you can take a look at the next level here, and that is what has been
accomplished in three years.
The only reservation I have in this discussion, clearly all of this
is wrong, but I think it is very, very important that we keep in
perspective how far we have come in three short years, and then how far
we still have yet to go.
{time} 1915
The gentleman will remember, when our class came here 3 years ago,
one of the projects was to sell a building, and we all worked very hard
on that. The gentleman from Michigan I know remembers our group who
came 2 years before, we were 100 percent there. But as I recall, we
were told that in this massive $1.7 trillion Federal Government, that
there were no buildings that they could spare to sell.
I do not remember what actually happened to that. I remember there
was a tremendous fight to try to sell one building in the name of
symbolism. Did one actually transfer, does the gentleman remember?
Mr. NEUMANN. Mr. Speaker, all I know is in the appropriations process
right now we have made the decision to go forward with building more
buildings.
In the debate we have had here in the 3 years since I have been here
about the draconian cuts imposed on America by the Republican Party,
what people have failed to mention is that in fact, spending has kept
going up faster than the rate of inflation.
What they actually meant by ``draconian cuts'' is that instead of
letting spending go up at twice the rate of inflation, we were going to
stop the growth rate and at least hold it to the rate of inflation.
When the gentleman talks about selling a building or building new
buildings and so on, we need to understand that government spending is
still going up at the rate of inflation. That is why they are
struggling to sell off a building.
If we actually got to a point where we went after this waste and
fraud and abuse in this government so we actually could reduce spending
in real dollars, so that it was no longer going up as fast as
inflation, which is what I think all 3 of us standing here would like
to see, that is when we can actually do some tax reduction for the
American people that is real, and we can also start doing things like
eliminating some of the government property that we no longer need.
Mr. HOEKSTRA. If the gentleman will yield, Mr. Speaker, I just want
to really thank the gentleman for putting it in perspective, what our
priorities are: saving Social Security, paying down the debt, and
reducing the tax burden.
[[Page H5051]]
Then when we take a look at not discussing the role or the mission of
the Federal Government, because that is another debate, but just saying
if we collectively decide that we are going to do everything that the
government does today, but we are committed to do it more effectively
and more efficiently, we can do those three objectives. We can save
Social Security, we can pay down the debt, and we can lower taxes, just
by saying we are going to be more effective and more efficient.
Then if we decide that certain of these things no longer need to be
done by the Federal Government, we can even go faster towards those
objectives.
Mr. NEUMANN. I get excited when we get to this point, because all of
a sudden we begin to understand that we are no longer in 1993, whining
and crying that we cannot do anything other than raise taxes on the
American people to solve government problems.
All of a sudden, we understand that if we just get spending under
control, we get our arms around some of this stuff and get it stopped,
we can actually have this vision for the next generation, that the best
days of America can be out in front of us instead of behind us.
If we can start looking, if we think about this for a minute, at
controlling spending to the point where we can start paying down the
debt, when we pay down the debt, $1 out of every $6 this government
spends does nothing but pay interest on the debt. As we pay down the
debt, it is easier to put the money aside for Social Security that
should be put away for Social Security, and all of a sudden Social
Security is safe for our senior citizens.
Of course, as we pay down the debt and the interest goes down all of
a sudden, and we do not need that $1 out of $6, we can reduce the tax
burden. Think about this vision for the next generation. We pay off the
debt and give this Nation to our children debt-free. We stop stealing
the Social Security money and in fact put the money back in that has
been taken out. Social Security is safe and secure for our senior
citizens.
We can reduce the tax burden, so when we look at a family, we do not
have to have two people working two jobs each in order to make ends
meet, when all of a sudden they do not have to be at that second and
third jobs in order to pay their bills because the tax burden is so
high.
I get going on this, but it is so important to remember, a generation
ago the government, in all the different forms, only took $25 out of
every $100 a person earned. Today they take $37 out. That extra $12
they are taking forces people to get a second and a third job, and when
they get a second and third job, they spend less time with their kids.
It leads me right back to the education problem the gentleman has
been talking about. When parents spend less time with their kids, the
outcome is a poorer education, the outcome is more crime problems, more
drug problems, more teen pregnancy, more teen smoking. All of the
things wrong with our society happen when the folks have to take the
second and third job, instead of having at least the opportunity to
spend more time with their kids.
Again, I am not naive enough to think that if we simply reduce taxes
all of the problems are going to go away. That is not going to happen.
If we reduce taxes, at least parents will have the opportunity to make
the decision to spend more time with their kids. In education, we need
to empower the parents to have a role in the process of deciding what
their kids are taught, where it is taught, and how it is taught.
As with we empower parents to make those decisions, they become more
involved with their kids' lives, and we should expect a reduction in
crime rate, a reduction in teen pregnancy, a reduction in drug use and
teen smoking. That is the vision for the next generation we are talking
about here.
Mr. HOEKSTRA. If the gentleman will yield, Mr. Speaker, even with the
small tax cuts we did last year, the family that the gentleman talked
about earlier, it is $2,300 per year that they are going to save. It is
$2,300 after taxes.
Mr. NEUMANN. Yes, sir.
Mr. HOEKSTRA. That is about $40 to $50 a week that this family is
going to have in increased disposable income. Somebody can say, maybe I
will work a few less hours, but it is a choice they can now make that
they did not have before.
Mr. NEUMANN. Let me put this in very real terms. That family of 5 I
am talking about, they are a $50,000 a year kind of family. When
Christmas comes they want to buy presents for their kids, but they are
living paycheck to paycheck as they go along. All of a sudden when they
get to Christmastime, what happens? The mother takes a second job so
they can buy Christmas presents for the kids.
If we get the tax down, they have already the $2,300, we hope to go
further, the taxes are down $2,300, she may still take the job and put
the money in retirement, but the bottom line is, it is now her choice.
It is not done out of necessity to be able to buy the Christmas
presents, it is now being done out of choice as opposed to necessity.
We have empowered that mother to make the decision at Christmastime to
not go out and get a second job so she can pay for the Christmas
presents.
How have we done that? We have simply let them keep more of their own
money that they earned anyhow, instead of government spending it.
Mr. HOEKSTRA. The gentleman has just said it, not as much for
Washington.
Mr. NEUMANN. Exactly.
Mr. KINGSTON. If the gentleman will yield, let us take that a step
further. That is what I find so offensive and so absurd about what to
do with the surplus. Both Members have outlined, and I am in 100
percent, there is really not a surplus. We have just taken the excess
collected for Social Security, mixed it in the general revenues, to
hide the deficit that is in the general revenues.
Mr. NEUMANN. Reclaiming my time momentarily, I have good news. I did
not bring this out as clearly as I should have. We are now in surplus
in both the general fund and in the Social Security fund. There is such
good news on the economic front here. We now have a surplus in both
funds, both general and Social Security. It is good news.
Mr. KINGSTON. That is excellent news. Let us take the Social Security
completely out and do what the gentleman is proposing in his
legislation, build a wall around it.
The point I am really getting to, if you are walking down the street
and you find a wallet with $100 in it, you do not immediately start
thinking, how am I going to spend this? You think about, who does this
belong to? How do I get it back to them? That is what we in Washington
should be doing with any surplus, saying, whose money is this? How do
we get it back to them?
That should be our number one question in the context of let us pay
off debt, money we have borrowed; but mostly, let us figure out whose
money it is, which is not a hard question to answer, and how do we get
it back to them, instead of what new programs should we start and what
new buildings, airplanes should we buy, particularly when we are losing
objects, large objects, like the gentleman has outlined.
Mr. NEUMANN. Is this not an exciting conversation, especially when we
put it in the perspective of where we were 3 or 4 short years ago,
where it was the wringing of our hands, and how are we going to get
more money out of the pockets of the American taxpayer to give us
enough to spend out here?
Now, here we are, standing here having this debate about, well, we
are going to be able to put the Social Security money aside. This will
be the first year, by the way. This will be the first year that we are
actually able to put the Social Security money aside the way it is
supposed to be, and it now appears that there is a surplus in the
general fund besides. That is the $100 the gentleman is talking about,
that surplus in the general fund, not the Social Security fund. That is
the money that ought to be used for both tax reduction and restoring
the Social Security, paying down the debt as we move forward.
What a wonderful generational objective or goal here, if we could pay
off the debt, give the kids a debt-free Nation, restore Social Security
so it is safe for today's seniors and the baby boomers, and also lower
the tax burden on working Americans. Is that not really--does that not
make our congressional service here worth it, if we
[[Page H5052]]
can bring the country back in that direction, especially when put in
the perspective of where we got it 3 or 4 short years ago?
Mr. HOEKSTRA. I thank the gentleman.
____________________