[Congressional Record Volume 144, Number 119 (Thursday, September 10, 1998)]
[House]
[Pages H7567-H7574]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY, TAXES, AND WHERE WE ARE GOING AS A NATION
The SPEAKER pro tempore (Mr. Snowbarger). 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.
Health Care in America
Mr. NEUMANN. Mr. Speaker, I rise tonight to first address just
briefly what my colleagues have been talking to me about, or have been
talking about here on the floor in advance of me, and that is health
care in America.
We hear so much about HMOs that are not doing their job for their
patients, and we think about what kind of solutions we could come up
with. There is a very naturally tendency in Washington, D.C. to say
Washington needs to solve the problems. One thing Washington might
consider doing is empowering the people in this country to have a
choice of which HMO they go to and which health care coverage they
would like.
Today that is not possible, because if you work at the General Motors
plant in Janesville, Wisconsin, General Motors offers you as an
employee one of several health care plans. But if you choose not to
take the one offered by General Motors in Janesville, Wisconsin, and
you instead go and buy some other health care plan, you first lose the
benefit through your place of employment, and second, you have to take
after tax dollars and go and purchase that other coverage.
One thing I think we should be thinking about as it relates to health
care coverage is empowering all Americans to have the option of
choosing the health care coverage that they want.
If General Motors could simply say to the employees in Janesville,
Wisconsin, where I am from, ``Here is the money that is available for
your health care package, now you choose which health care coverage you
would like,'' what would happen is the HMOs that are no good, some of
those we have been hearing about here from my colleagues as I sat and
listened here tonight, those HMOs that are no good and that are
treating their patients wrongly and poorly, they would go out of
business, because people would choose not to go to those HMOs because
of the poor quality of the health care and their coverage.
At the same time, some of the good health care plans, some of the
good HMOs, or maybe people do not want HMOs, maybe they want a policy
like some of the medical savings accounts, where they take a large
deductible and save some of that extra money for themselves, but at any
rate, it would be their choice because they would have the choice of
where they are going to go for their health care, and we would
certainly expect the good health care plans to thrive and provide good
coverage. Just like when I was in the homebuilding business, service to
our customers was our top priority, because I knew my customers were
going to talk to other people about the homes we built for them.
Similarly, if people have choices in health care programs, if people
can go anywhere they want for those health care programs, service to
the customer becomes the top priority, because if they do not do a
decent job people are going elsewhere for their health care coverage.
When we think about that as a solution, as opposed to here in
Washington somehow knowing what is best for everybody all across
America, I sure like the idea of empowering the people as opposed to
making us more in control of more parts of the people's lives.
That is not really what I rose to talk about tonight, but I listened
to the gentleman before me and I thought we should throw out another
suggestion as to how to move America forward as it relates to health
care.
I want to say tonight that it is a very solemn mood here in
Washington, D.C., to the folks that are watching from all around the
country, Mr. Speaker. They should know that the mood here in
Washington, D.C. is a very solemn situation. We here in the House take
our responsibility that we have been given very, very, very seriously.
It is not about Republicans or Democrats at all out here. We understand
that we are at an important time in America's history.
What happens over the next few months as it relates to the matter
that is currently before us is certainly going to take up the news, but
there is something else that is real important here. As the Starr
report is being discussed, and as the potential impeachment proceedings
go forward and all that stuff dominates the news out there, the normal
business of Congress is still going on behind the scenes.
There are some very, very significant things happening right here in
Washington right now behind the scenes and below the level of the news
because of the Starr report and what is happening there that are going
to affect things that are as important to Americans as Social Security
and taxes, and whether or not we stay in balance and pay down our debt.
Things that are extremely important to the future of this country are
still going on over the next 4 or 5 months in addition to the other
very serious responsibility that we, as all Americans, have.
For that reason I rise tonight to talk about, in particular, Social
Security and taxes and where we are going as a Nation, a little bit
about how far we have come, but where we are at right now.
If we look at numbers today, for the first 11 months of our fiscal
year we are running a surplus that is very, very substantial for the
first time since 1969. It is not a little, tiny surplus, it is almost
$100 billion a year. We have been projecting between $80 and $106 in my
office for quite some time. It appears now that the numbers will come
in someplace in between there.
Let me put that in perspective so it makes more sense, because out
here in Washington we talk about these billions all the time. It does
not always make sense to all my colleagues and all the people all
across America.
A $100 billion surplus means that the United States government has
collected $400 for every man, woman, and child in the United States of
America more than what it needed in taxes. Let me say that again. A
$100 billion surplus is approximately $400 for every man, woman, and
child in the United States of America. We are talking about a huge
amount of money.
I want to just talk about how that surplus relates back to debt, to
deficit, to Social Security, and to tax cuts as we move forward,
because there is a very significant debate going on right now as to how
that surplus should be used. It relates specifically to the Social
Security issue.
First, let me start by pointing out that we still have a very serious
problem facing this country. This debt chart, and I notice tonight it
is actually worn out, because I think I start most every presentation
by showing this debt chart. It shows the growing debt facing America.
If we start down here, we can see from 1960 to 1980 there was very
little growth in the debt, but from 1980 forward, this thing has just
grown right off the wall. When I am out in public and I point out 1980
as where it really started growing, or 1978, 1979, I can see all the
Democrats in the audience nodding their heads, going, ``That was Ronald
Reagan,'' and I can see all the Republicans nodding their heads and
saying, ``That was that Democrat Congress.'' The point is, whether we
were Democrat or Republican, it did change in 1980 or thereabouts. We
are about up
[[Page H7568]]
here in this chart right now. It is a very, very serious problem facing
our country.
Since 1969, every year our government has borrowed and added to this
debt. It was in 1980 they started borrowing lots and adding to that
debt. For the folks who have not seen this number and how big it is, we
are currently $5.5 trillion in debt.
Again, let me translate that into something that makes a little more
sense. If we divide the debt by the number of people in the United
States of America, our government has borrowed $20,400 on behalf of
every man, woman, and child in the United States of America. Put into
perspective for a family of five like mine, our government has
literally borrowed $102,000, basically, over the last 15 years.
{time} 1930
The real kicker in this thing is down here. A lot of people think,
well, that is kind of Washington jargon. That is Washington talk. And
$5.5 trillion, what does that really mean?
Let me translate it into what it actually means to an average family
of five in the United States of America. We are paying, an average
family of five pays $580 a month every month to do absolutely nothing
but interest on this Federal debt. See, even though the number is too
big and it is Washington jargon, the facts are it is real debt. And
since it is real debt, we are paying interest on it. That interest for
an average family of five, or any group of five people in America, is
580 bucks a month.
Mr. Speaker, for anyone who thinks they are not paying $580 a month,
I suggest they think about walking into a store and doing something as
simple as buying a pair of shoes. The store owner makes a profit on
selling that pair of shoes and part of that profit gets paid to the
United States Government in the form of taxes. When the government gets
it, one dollar out of every six that this government spends does
absolutely nothing but is used to pay interest on the Federal debt. I
think it is reasonable to ask how in the world did we get to this
point?
I see my good friend, the gentleman from Michigan (Mr. Hoekstra) has
joined me. I am sure he has seen this portion before, but trust me, I
have some additional charts that are a little bit new out here tonight.
Mr. Speaker, how did we get to this point? I think it is important
that we remember Gramm-Rudman-Hollings. If my colleagues are like me,
in 1985, Gramm-Rudman-Hollings came out and our government told us that
they were going to balance the budget and stop spending our kids'
money, and I cheered and I said, yes, our government is going to do the
right thing at last and quit spending our kids' money.
Well, 2 years went by and it was 1987. They said, that promise we
made back in 1985, we cannot really keep that promise, but here is a
new promise. They gave us Gramm-Rudman-Hollings of 1987. Three years
went by, and they said we cannot keep that 1987 promise, but here is a
new one; and in 1990 they raised our taxes. And then it got to 1993,
and of course we all remember the huge tax increase of 1993.
Mr. Speaker, I brought just one of those along. I brought Gramm-
Rudman-Hollings of 1987, but all four of those broken promises are
really the same. This blue line shows how we were supposed to get to a
balanced budget and how the deficit was supposed to get to zero and
they were supposed to quit spending our kids' money by 1993. The red
line shows what actually happened out here. The deficit exploded
instead of going to zero.
Well, things have changed. I am happy to say that. We got to 1993,
this year, and the deficit was still very, very large. The people that
were in Washington at that point made a very bad decision. This needs
to be said. It passed without a single, solitary Republican vote, but
in 1993 what they did is they decided that the only answer to this
problem, this debt and deficit problem----
Mr. HOEKSTRA. Mr. Speaker, would the gentleman yield?
Mr. NEUMANN. Mr. Speaker, I would be happy to yield to the gentleman
from Michigan.
Mr. HOEKSTRA. Mr. Speaker, I believe the gentleman said it passed by
a single solitary Republican vote.
Mr. NEUMANN. I apologize. It passed without a single, solitary
Republican vote. Thank you. I stand corrected, if that slipped. It
passed without a single, solitary Republican vote.
I am sure the gentleman from Michigan remembers what I am talking
about here. It is the biggest tax increase in American history. The
gentleman might want to explain parts of it.
Mr. HOEKSTRA. Mr. Speaker, I think the gentleman is absolutely
correct. I came here in 1993, and getting to the chart that the
gentleman is going to be talking about next is the one that we were
shooting for. We wanted to get to a balance, or more appropriately a
surplus budget, and we wanted to get there as soon as possible.
In 1993, and we face these choices each and every year and we have
been facing them every year since then, are we going to get to a
surplus budget? Are we going to match revenues with expenses by
increasing revenues with higher taxes or by reducing or actually just
slowing down the growth of spending? In 1993, we made the very serious
mistake, because we said we are not taking in enough money from the
American people. We have some things that we would like to do here. And
Congress passed a huge tax increase.
At the same time, it was looking at significant new spending
programs. We were going to nationalize health care. Government was
going to stimulate the economy. We were going to go on a $15 billion
stimulus package. So in 1993, the framework was very clearly set that
we are going to increase revenues by increasing taxes, and at the same
time we are going to increase spending and we are going to promise the
American people that we are going to balance the budget.
We tried that formula in the past and it did not work. In 1995, the
gentleman from Wisconsin (Mr. Neumann) came with, I think, 72 other new
freshmen on the Republican side of the aisle, and we broke the old mold
and we created a new mold.
Mr. NEUMANN. Mr. Speaker, I think it is real important to understand
that the tax increase of 1993 did not lead to a balanced budget. In
fact, higher taxes simply means more Washington spending.
I brought a chart with me to help show that tonight. In 1993, they
had gotten down to a growth rate of government spending of 2 percent.
What is a growth rate of government spending? If we spend $100 one year
and spend $102 the next year, that is a 2 percent growth rate of
government spending. They had gotten it down in 1993 to a 2 percent
growth rate of government spending.
When they raised taxes in 1993, what happened immediately is,
government spending went up. We can see that so clearly in this chart.
We had a 2 percent growth rate of government spending in 1993. They
raised taxes and what happened is immediately higher spending in 1994.
That is really what led to the new elections in 1994, the new people
that came out here in 1994, because in 1993 they got the wrong answer.
They just did not get it. The American people did not want higher
taxes.
Mr. Speaker, the American people wanted less wasteful Washington
spending. They expected us to get this job done, but not by raising
taxes and raising government spending. They expected us to get this job
done by controlling wasteful government spending.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I believe
this is one of the gentleman's new charts.
Mr. NEUMANN. This is one of my new charts, yes.
Mr. HOEKSTRA. Mr. Speaker, the gentleman from Wisconsin has been
working during our recess. But the gentleman is exactly right. Some of
us came in 1993 and really believed that we had to control the growth
in spending. Actually, the gentleman has other charts, probably back in
the office, but they show that if we would have just for a number of
years controlled the growth of Federal spending, kept it down to the 2
percent level, grown it at the rate of inflation, we probably would
have reached a surplus budget a long time ago. But the people in
Washington just could not control their desire to spend. So we went
back up to 3.5, 4 percent and there we go.
We are working off a big number. When we are talking about increasing
spending by 3.5 to 4 percent we are talking not about $100; we are
talking
[[Page H7569]]
about increasing a number that is $1.6 trillion. So the difference
between a 2 percent growth rate and a 4 percent growth rate is real
money.
Mr. NEUMANN. Mr. Speaker, reclaiming my time, I just had town hall
meetings all over the State of Wisconsin, and one question I asked in
Wisconsin was how many in this room think government spending should
increase faster than the rate of inflation? We didn't get anybody who
thought that. But look at what was going on out here, government
spending going up at twice the rate of inflation.
When we came in 1995, and we became the majority at that point, we
had one idea. The idea was that instead of raising taxes on people we
were going to get government spending under control. We were going to
go after wasteful programs. Just one example my colleague from
Michigan, I know, is very familiar with. We were spending $35 million
of the taxpayers' money to Russia to launch monkeys into space to do
research on the monkeys. We get here and find these sorts of programs,
hundreds and hundreds of these sorts of programs, that were going on
out here.
We understood that if we could get to that waste and get government
spending under control that we would both be able to balance the budget
and lower taxes. That was the theory we came with. We came with the
understanding that the 1993 solution of higher taxes was the wrong
idea. We understood that the people did not want higher taxes; they
wanted less wasteful government spending.
Now we are 3 years into this, and my colleague can see from this
chart that the growth rate of government spending since we took over in
1995-1996 is the first fiscal year budget we worked with, the growth
rate of government spending is on the way down.
I think it is reasonable to ask what has happened over these 3 years
and what has that led to in our budgetary process? When we got here,
just like they had a blue line what they were supposed to do, we got
here in 1995 and laid out a plan to get to a balanced budget. This blue
line shows how the deficit was supposed to go to zero by the year 2002.
And virtually all Americans will remember the promise we are going to
balance the budget by 2002. I remember it because when I said that
groups that we were going to balance the budget by 2002, they all
snickered. After all, the promise had been broken in 1985 and in 1987
and in 1990 and in 1993, so they were looking at us like, ``Why would
we believe that you are any different than the last group?''
Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I actually
had an interesting case in my district last year. I visited a number of
plants in my district, and I remember the date because it was the date
we started the Teamsters investigation. Talk about waste. That is $20
million that the taxpayers paid to run the Teamsters election in the
U.S. and in Canada. The taxpayers paid for it.
I was at a plant the day that that election got thrown out, and I was
taking them through some of the numbers and explaining to them that by
2002 we were going to reach balance or surplus. It was a small plant
and one of the guys just started laughing and said, ``Sure.''
Well, I went back. I went back the first week of September of this
year and told them that by the end of the month, by September 30 when
we close our fiscal year, he was right. He should have laughed in 1997,
because we did not balance it in 2002; we are actually going to get
there in 20 days. In 20 days, we will reach that point where we cross
the line, and we are probably past that point already.
Mr. NEUMANN. We are actually well past it. The facts are here is our
plan and here has what actually happened. We are not only on track; we
are significantly ahead of schedule. For the first time since 1969 for
the last 12 months running, this government spent less money than they
had in their checkbook. That is just a monumental change in the way
things have been done. I should say it again because it is that
significant. For the first time since 1969, this government spent less
money than they had in their checkbook for the last 12 months running.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I do not
think we can lose sight of how important that is. I mean, we hear, and
I was just reading one of the newspapers, it is kind of like it is a
do-nothing Congress. Have not gotten anything done. If we would have
told people 2, 3, 4 years ago that by 1998 we were going to reach
surplus, they laughed, they said no way. And this Congress has already
will have done something that no Congress has done for 30 years.
Not only that, and the gentleman may have some other charts that will
get to that later on, but I believe we are at the threshold of creating
a generation of surpluses that actually enable us to move, that this
will not be a blip. But if we keep on track and go after wasteful
spending, restructure and work on Social Security and other entitlement
programs, we will have a generation of surpluses that will enable us to
pay down the debt and reduce taxes and get a government that actually
works better and more effectively and is more efficient at serving our
constituents.
So we have fundamentally changed the debate here in Washington in the
last 24 months. We have moved from a debate about how we are going to
get to balance to a debate about how we are going to pay down the debt,
how we are going to lower taxes, how we are going to free up more money
for investments in jobs for our generation and the next generation.
We have fundamentally changed the debate and the outlook for America.
Huge strides. But they are saying, it is like ``What have you done for
me lately?'' What we have done for them lately is we have balanced the
budget.
Mr. NEUMANN. Mr. Speaker, I would like to translate this into what it
means for an average American out there. When I look at this chart and
I see the spending growth rate going down, this distance from here to
here not only means a balanced budget. It means something in families
all across America. Because since we did not spend this money in the
government, we were able to take that extra money and lower taxes with
it.
For a family out there in America today if they are a middle-income
family with kids under the age of 17, next year when they do their tax
return they are going to get a $400 tax refund for each child under the
age of 17. If they have a college student, they are going to get up to
$1,500 in a tax refund.
This is not a tax deduction. This is not fiction. This is not a
political promise. This has been passed into law. They are going to get
$400 per child in a tax refund in a check back from the United States
Government and up to 1,500 to help pay for college tuition.
It does not stop there. Stocks and bonds. If Americans bought
investments, and the stock market has gone up dramatically. Even with
the recent decline, we are still significantly ahead are where we were
3 years ago. If they sell some of that stock and make a profit, they
used to pay 28 cents on the dollar to the government. Now they pay 20;
that reduction of capital gains is very significant for all kinds of
folks.
A lot of times I talk to groups, and seniors in the group go, ``What
did you do for us?'' I go, well, stop and think about this. Most
seniors own a home. In Wisconsin, at least it is in the 70 percent
range.
{time} 1945
We eliminated all tax on the sale of all homes in America for all
intents and purposes. Unless your home is a very, very large mansion
type, worth $500,000 or more, there is no tax when you sell your house
anymore. What a significant change.
A senior citizen who took the one-time age 55 deduction or exclusion
bought another house and now sells that other house, there is no taxes
on it anymore. That is what this is about.
This chart, it is a nice chart to show the red to the blue and then
down, but it really needs to be translated into what that really means
for Americans all across this country.
I want to jump from there into another very important discussion and
that is Social Security.
Mr. HOEKSTRA. Mr. Speaker, will the gentleman yield?
Mr. NEUMANN. I am happy to yield to the gentleman.
Mr. HOEKSTRA. Mr. Speaker, if you take a look at spending growth, I
just want to point out we are still, I think, growing faster than what
you and I might think is necessary.
[[Page H7570]]
Mr. NEUMANN. And faster than the rate of inflation.
Mr. HOEKSTRA. Still faster than the rate of inflation. Let me give
you just a couple of examples. We are going to vote on a bill tomorrow,
I believe, on dollars to the classroom, our colleague from
Pennsylvania. And for the last 18 months, we have been taking a look at
Federal education, our role and the impact that we in Washington are
having on K through 12 education.
We are taking a look at what happens when a dollar comes from the
local level, goes to Washington, and since it is about educating kids,
the kids are back at the local level, we have got to get the money back
there. We are taking a look and saying, when we get a dollar from the
local level, what actually happens to it.
We find out that it goes through 39 different agencies, hundreds of
different programs, and we find out that we lose about 30 to 40 cents
of every dollar. We lose it because of the bureaucracy here in
Washington. We lose it because we get the money, so then we have to
communicate back to a school district that we have got these programs
available. They then have to apply for it. We then have to review the
applications and decide who gets the money and who does not.
Mr. NEUMANN. Mr. Speaker, reclaiming my time for just a minute on
this discussion, help me understand why it is that, as a taxpayer sends
their money to Washington, and Washington decides how to best provide
education for those kids back home, what exactly is it in the water out
here or what is out here that makes us smarter than the local parents
and teachers and community? Why would we think that anybody in
Washington knows better how to educate our kids in our home communities
than the people in those communities do? Is it something out here that
makes people brighter or able to better provide the education? Why
would parents not be best prepared and best able to make decisions for
the education for their own children? Why are we taking those dollars
in the first place is the question?
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, you know the
process that we have gone through. We have held hearings here in
Washington to outline, figure out this process.
The other thing we did was we went to the local level. We have held
hearings in 16 different States. We asked that basic question. We asked
them, what value is Washington adding to your educating your kids
locally? The answer came back, we like your money, but other than that,
you are not doing much for us. As a matter of fact, in some cases, you
are hurting us because what is happening is you are sending us some
money that we need, and we are spending it the way you are telling us
to.
But if we really looked at the kids in our classroom, if we looked at
the kids in our community and identified what we really wanted to do
with that money, we might spend it on something else.
So what we are going to do tomorrow with dollars in the classroom is
two things. We are going to not increase Washington spending, but what
we are proposing is saying, instead of 60 to 70 cents of every dollar
getting back to the classroom, let us get that to 95 cents of every
dollar getting back to the classroom. That is a 25 percent increase in
Federal spending without us spending anymore because we are just being
more effective and more efficient in how we get that money down there.
Mr. NEUMANN. Reclaiming my time, I just want to bring out one story
on this because it is so important. I was in Augusta, Wisconsin, and
the superintendent of schools came to one of the meetings we were at
there. Obviously the person was extremely interested in education and
working very hard to provide a good quality education for the people
and for their kids there.
He said to me, Mark, how can I get Washington to free up this money
that is supposed to get to our school system? And immediately a light
bulb went on inside my head. I am thinking here is a person who is
genuinely interested in the education of his kids in his community, and
he is at this meeting talking to me about how he can get Washington out
of his hair so he can just do his job.
Why should this superintendent in schools be worried about a fight in
Washington as opposed to being able to dedicate himself full time to
the education of those kids. If we can get 95 cents of every dollar
back to the classroom, and, by the way, I would prefer dollar for
dollar, but if we even get 95 that means a dramatic reduction in the
bureaucracy.
It means almost $9,000 per school is going out there in the form of a
check, and instead of a superintendent like this one having to fight
with Washington for the money, since we have no longer the bureaucracy
to tell them exactly what to do with the money and fill out the papers
and so on, they are going to have to make the decisions themselves in
their own local community as to how to best spend their money.
It is $9,000 more per school, every school on average just by
eliminating this bureaucracy on the bill we are going to pass tomorrow.
I think it is a tremendous bill.
Mr. HOEKSTRA. If the gentleman will yield, because the other
destructive thing, you have touched on it, the other destructive thing
that happens when we send this money to the local school district, we
send it with all the strings attached. We now get school boards,
superintendants, and school administrators who serve two masters. They
serve the master in Washington who tells them what to do, who does not
know where Augusta, Wisconsin does not know whether it is near Green
Bay or near Madison or whatever.
Mr. NEUMANN. Eau Claire, near Eau Claire.
Mr. HOEKSTRA. So they are serving two masters. Really the school
administrators should be not serving a master but should be working
with the parents and the community leaders and their community
designing school programs that are most appropriate for the specific
needs and the special challenges and the special opportunities for kids
in their community.
They do not need to be looking to Washington or trying to figure out,
you know, this is what Washington wants me to do, but I know this is
what we want to do in this community. How do I reconcile these things.
They ought to be solely focused on building their schools with their
local community leaders and their local parents.
Mr. NEUMANN. Reclaiming my time again, I would like to ask my friend
from Michigan that all important question, have you seen anything in
your years here in Washington that would lead you to believe that
somehow because we are here in Washington we know better for that
school system out in Wisconsin what is best for their kids and how to
best education their kids?
Is there any good reason that we should ask these people to spend
their time filling out requests for money and grant proposals as
opposed to just simply sending it to them and saying, okay, gang, it is
your kids, it is your community, it is your parents, why do you not all
make the decision in what is best for your kids.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, that is the
reason we have went around the country. We have been in L.A. We have
been in Phoenix. We have been in Chicago. We had the hearing in
Milwaukee. We have been in Cleveland. We have been in Milledgeville,
Georgia, a small, little town. We have just been in Tennessee.
What you find, we do not know anything about what needs to happen in
those schools compared to the parents and the teachers and the
administrators who have come in and have testified. And they are
passionate about their kids.
We have seen success stories. All of the success stories, all the
great things that are happening in these kinds of schools are where the
focus is on the kids. And the focus effort is between the school
administrators and the parents and other people in that community and
the business leaders all taking a look at their community and
understanding what is going on in their community and putting together
a program for their community.
They kind of scratch their heads, and they ask the same question that
you asked, why are you in Washington trying to tell us what to do in
our community? We know our kids. We know our population. We know the
special needs that we have. We know the opportunities that we have. Why
do we have to try to fit, you know, our peg into your round hole when
there is a disconnect.
[[Page H7571]]
Because in Washington what do we try to do, I will give us credit. It
is not good credit. But I mean we recognize that there are different
means out there. So we have created 760 different programs.
Mr. NEUMANN. With 760 different bureaucracies to run the 760
programs.
Mr. HOEKSTRA. That is right.
Mr. NEUMANN. All of them getting money that should be in the
classroom helping the kids.
Mr. HOEKSTRA. That is right. That is why there is a tremendous
opportunity to increase spending or to increase the effectiveness of
our current spending without spending any more money.
The issue here for so many of our programs, I want to give you one
example, you will love this one. Today we had a hearing on the labor
department, a program called trend setters. Remember that word. This is
trend setters. This was where the labor department was trying to
identify apparel companies that were meeting certain criteria and these
types of things.
We questioned whether the labor department actually had the authority
to put together this type of trend setter list. Well, to be a trend
setter or to make sure that the labor department was a trend setter in
how they communicated this information to the public, they created a
web page. All right. So they are on the net.
They stopped the program, they said, because of some criticism. They
stopped the program in March of 1997. The program went dormant 1997. We
had a copy of their web page from March of 1998, and we ran off their
web page this morning. This is a program that was dormant. So
supposedly they had done no work from March of 1997 until today. They
had done nothing to update or modify this list.
Now, I was looking at the list. There was the web page from March of
1998, a year after they stopped the program, to September, and the list
of trend setting companies had changed. I asked the question, I said,
can you explain to me, if you have done nothing to this program, how
the list of companies has changed from March of this year to September
of this year.
They said, well, you know, maybe it took us that long to update our
list. And it is kind of like, excuse me, you are on the net. You are in
the information age. You have a trend setter list. You have trend
setting companies. The last time you updated your list was March of
1997, and it took you at least 12, and it maybe took you 15 months to
update your web page.
Mr. NEUMANN. With all due respect.
Mr. HOEKSTRA. And we are paying for this.
Mr. NEUMANN. With all due respect, it only took 15 months? Is that a
new accomplishment?
Mr. HOEKSTRA. It only took them 15 months to update the web page of
trend setter companies. I just want to know how much money we are
spending on a program like that. The gentleman and I both know there
are tremendous opportunities here in Washington to find additional
savings to build up a surplus, increase efficiency, and move on to what
you want to talk about, which is saving Social Security.
Mr. NEUMANN. Right. Again, I think we have to go back to this
understanding that, when people out here talk about cutting spending,
they do not actually mean they are cutting spending. They mean, instead
of letting the growth rate be double the rate of inflation, they are
cutting it back to just the rate of inflation. Again, when I talk to
folks out there in America, I cannot find people that think government
should grow faster than the rate of inflation.
Mr. Speaker, I do want to move on to Social Security.
Mr. HOEKSTRA. Mr. Speaker, one minute. The reason they do not believe
that government should grow at the rate of inflation is that, when they
get their paycheck at the end of every week, they find that 40 percent
of it is going to government at one level or another, and if we are
growing it faster than inflation, it means that that number is going to
keep going up. They want that number to go down.
Mr. NEUMANN. Right.
Mr. HOEKSTRA. They want it to go down significantly. We can make it
happen just by making government more efficient.
Mr. NEUMANN. Let me jump from there into Social Security. You mention
their paychecks. At the end of each week, people do get a paycheck.
Part of that money goes into Social Security. I would like to just talk
through what is happening in Social Security so we understand how this
relates to that overall picture we start talking about, which is
surpluses and a balanced budget.
Social Security this year is going to collect $480 billion out of the
paychecks of workers all across America. It is paying back out to
senior citizens and benefits $382 billion.
If you think about this for a minute and think about your own
checkbook, forget about the billions for just a minute, if you have got
480 bucks in your own checkbook, and you write out a check for 382
bucks, your checkbook is fine. If you have $480, and you write out a
$382 check, as a matter of fact, you have got $98 billion left over.
That is exactly what is happening in Social Security right now. It is
collecting $480 billion. It is paying $382 billion back out to seniors
in benefits, and that in fact leaves a Social Security surplus of $98
billion.
It is funny, when I am out of town in meetings, I say, does anybody
want to take a shot in the dark of what our government has seen fit to
do with that $98 billion? They all just start laughing around the room,
and then somebody will say it. They spent it.
The reality is that we have been, the government, before we got here,
had been collecting this extra money for years. In fact they have been
spending it on other government programs and putting IOUs, technically
they are called nonnegotiable Treasury bonds, into that trust fund
instead of real money.
Let me be very specific on how this works. That $98 billion extra
that is collected for Social Security, they put it into, and think of
this middle circle as the big government checkbook. So take the $98
billion and put it into the big government checkbook.
Now, remember, since 1969, they have been overdrawing that big
government checkbook every year. So $98 billion goes into the
checkbook. At the end of the year, there is no money left in the
checkbook. So since there is no money left in the checkbook, they
cannot really put real money in Social Security, so, instead, they
simply write an IOU down here to the Social Security Trust Fund. It is
technically called a nonnegotiable Treasury bond. Nonnegotiable means
cannot be marketed, cannot be sold.
Now the problem with this occurs, of course, if we look back at that
other chart with those numbers on it, today we have got more money
coming in than what we have going back out to seniors in benefits. But
people like my friends from Michigan and I, the baby boom generation,
we are getting old fast, and there are lots of us. As we age, what
happens is there is not enough money coming in and too much money going
out.
{time} 2000
When we get to that point where there is not enough money coming in
and too much money going out, and we look down here to our trust fund,
that is the savings account, and if we think about our own checkbooks
again, if we have been saving money in the savings account for a period
of years, then all of a sudden we get to this point where we are
writing more checks than what we have coming in, that is we overdraw
our checkbook, when we get to that point, we might go to our savings
account and get our money.
The problem with having IOUs down in the Social Security trust fund
is when we get to the point where there is not enough money coming in
and too much money going out, where is the government going to get the
money to pay back those IOUs? That is a question we need to be asking.
Because this turnaround in the income, that is the time when there is
more money going out and not enough coming in, that is going to occur
in the next 15-year period of time. And it will affect young people,
because one choice to solve that problem is to raise taxes. It is going
to affect senior citizens, because another choice will be to lower
benefits so the IOUs do not come due.
The bottom line is it is a problem we need to be addressing now. So
in our office we wrote a bill called the Social Security Preservation
Act. This may
[[Page H7572]]
not seem like a genius bill to most people watching and most of my
colleagues out there tonight, but the Social Security Preservation Act
simply says that the $98 billion coming in from Social Security ought
to go into the Social Security trust fund in real money.
Now, how do we do that? We put it down there in something called a
negotiable treasury bond, something any person in America can go to
their local bank and buy. I did this myself personally because I wanted
to be able to stand in front of groups and say here is how we are going
to make this thing work. So I went to the bank, and they took a
thousand bucks out of my checkbook and gave me a treasury bond. Now,
when I overdraw my checkbook, I will give them back the treasury bond,
they will give me back the thousand dollars, and I will put it in my
checkbook and everything is going to work. That is how we want Social
Security to work, and that is exactly how we wrote the Social Security
Preservation Act.
We wrote the Social Security Preservation Act that we put real money,
negotiable, marketable, salable treasury bonds, so when the numbers
turn around and there is not enough money coming in and too much going
out, we go down here to our savings account and we get the money. We
cash in those bonds, or sell those bonds, we get the money and we make
good on Social Security. That is how the Social Security Preservation
Act would work. It is bill number H.R. 851.
Now, I brought something extra along here tonight to help understand
the difference between surpluses in Social Security and other general
fund government surpluses.
I would be happy to yield to my friend from Michigan.
Mr. HOEKSTRA. Before I leave, I would just like to thank the
gentleman for leading this discussion tonight. We really now are at the
threshold of putting in place a real plan to ensure that future
generations will not have to increase taxes to maintain the Social
Security benefit levels, and we will not have to reduce benefits for
seniors.
As we are getting the surplus and getting to balance, we really have
the opportunity to start addressing this, and I think this Congress has
laid the framework for it and we are going to move forward on this
debate and I think come up with some real positive solutions.
The gentleman has been instrumental in doing two things: Instrumental
in getting us a surplus and instrumental in getting us and keeping us
focused on what we need to do to ensure the long-term life of Social
Security. I thank the gentleman for the time that he has shared with me
tonight.
Mr. NEUMANN. I thank the gentleman for joining us.
As we return to this chart we had up here before, when we talked
about the Social Security money actually going into the Social Security
trust fund, I have added a line in this chart, a black line. And what
that does is wall off this Social Security money and forces it to go
into Social Security instead of into the general fund.
So, now, let us talk through these surpluses one more time that
everybody keeps hearing about in America today. Part of those surpluses
is this Social Security surplus, but there is another fund, it is
called the general fund. Think about it again as the big government
checkbook. This general fund is now going into surplus as well. So when
we get done writing checks at the end of the year, if we have money
left over in that general fund, we need to start asking the question
what gets done with that portion of the surplus.
First, the Social Security surplus actually goes into Social
Security. That should not be touched. There are proposals out here,
right now, today, as I speak, and this is why I said it is so important
to understand that even as the rest of this is going on in Washington,
the Starr report and the potential impeachment of a President, those
are very, very significant issues for the United States of America, but
there are also other things happening simultaneously with that and it
is important that we do not so focus on one that we forget something
else that has happened and, in fact, wind up getting Social Security
money spent on new government spending.
Today I had a proposal laid in my hands that was going to spend $16
billion of this Social Security money on new spending. And they have a
very unique method of getting around the spending caps to spend this
new money. And I had another proposal laid in my hands that effectively
went into the Social Security money and said, okay, we are going to use
the Social Security surpluses to cut taxes. Neither one of those are
okay. The Social Security money belongs in the Social Security trust
fund, period.
But when we get to a surplus in the general fund, this other account,
we should be asking ourselves, what are we going to do when we are in
surplus in the general fund. I have two suggestions: First, I think it
is important that we make payments on the Federal debt. After all, our
generation has run this debt up primarily over the last 15 years, and
it seems reasonable to me that we should make payments on the Federal
debt and pay it off, much like we would pay off a home mortgage, so
that we can give America to our children debt free.
Just think about this as a goal for a generation. Would it not be
nice if we could pay off the debt so we could give our Nation to our
children absolutely debt free? There is a significant benefit of paying
off that debt. As that debt is paid off, this money that is left over
from the big government checkbook, some of it goes down here to Social
Security, because part of that debt is the Social Security IOUs. So as
we make payments from the surplus, from the general fund, part of the
money goes directly back into Social Security.
I want to say that again, because that is so important. Social
Security money is set aside. When we reach surplus in the general fund,
part of the surplus should be used to repay the Federal debt. Part of
the Federal debt is the Social Security IOUs. So as we start paying
down the debt, those IOUs in the Social Security trust fund get traded
in for real money and Social Security becomes solvent at least to the
year 2030.
What about the rest of that surplus over there? Well, I think it is
clear to most Americans that the tax rate is still too high. I think we
should be talking seriously about significant real tax cuts. We have
laid a proposal on the table that assumes revenue keeps going at
approximately the rate it has been growing, maybe a little slower, and
assumes we hold spending in line. If we do that, we can be looking at
repaying all of the IOUs in the Social Security trust fund over the
next 10 years and reducing taxes by as much as $1.5 trillion. That is
$1,500 billion. It is a huge sum of money available for tax cuts.
Now, as we talk about these tax cuts, again funded out of surpluses
from the general fund that accumulate because we have spending under
control, let us just talk about some things we might do. Let me start
for seniors.
I think we should be looking at eliminating the earnings limit. What
happens under the earnings limit is, if a senior citizen voluntarily
decides to stay working, after they have earned $15,500 the government
starts decreasing their Social Security by $1 for every $3 that they
earn over $15,500. I think we should immediately raise that earnings
limit that seniors are not penalized for voluntarily staying in the
work force.
Secondly, and again for seniors, as most people know, in 1993 the
taxes on Social Security benefits were raised from paying taxes on 50
percent to 85 percent. I would like to go a couple of steps here.
First, I would like to roll back the 1993 tax increase on seniors, and
then I would like to get rid of paying taxes on Social Security
benefits all together. After all, people have paid into this account
for all of these years. Why, now that they are getting this money back
out, should they be paying taxes on the amount they get back out?
If this does not seem reasonable, think about the Roth IRA. The Roth
IRA is set up exactly that way, that we put our money in now, and when
we take that money back out later on, we pay no taxes on it. So why can
we not provide that same benefit for senior citizens today? And as we
start looking at these surpluses materialize because we have controlled
government spending, roll back that tax on Social Security all
together.
Let us talk about another one that I think is extremely important.
This one
[[Page H7573]]
is not as much for seniors as it is for some of our younger folks. In
America today, if four people work at exactly the same job and earn
exactly the same money, and two of them are married to each other and
two of them are living together, and without passing any social
judgments, which we might do, but without doing that it seems totally
unfair that the two that are married to each other pay more taxes than
the two that are living together. It almost seems backwards in the
society we live in today.
So I think we should end the marriage tax penalty. It does not seem
reasonable in our society today that we should penalize people for
being married. Instead, we should maybe think about doing just the
opposite. But certainly we should eliminate the marriage tax penalty.
Let us talk about another one. We have a hard working friend. They
have worked hard all their life, they have saved money and, as a matter
of fact, they have made investments and the investments have done well.
This is America. And by the way, there are lots of folks out there like
that, and I sincerely hope that those opportunities remain available in
this country. I hope that is what our service to this country is all
about, that those sorts of opportunities remain available.
So they have gone all through their life, they have saved money, and
they have this nice estate. Today, when they pass away, that estate is
passed on, a significant portion is passed on to the United States
Government. Why exactly should people work hard all their lives, save
up money, and pass a good portion of their estate on to the United
States Government instead of to their children? That does not make any
sense.
So as we start looking at additional tax reductions as we go forward,
let us roll back that estate tax so that if somebody does work hard all
their life and accumulate assets, that they can pass those assets on to
their children or heirs instead of giving them to the United States
Government.
Let us talk about one more, and I think this is perhaps the most
important of all. Why do we not look at across-the-board lowering the
overall tax rate on American people. The government is collecting more
money today than what it is actually spending out of its checkbook, so
why can we not roll back the excessive tax burden that is out there?
About a generation ago, when I was just born, or a year or two old,
the tax rate on Americans was about 25 cents out of every dollar they
earned. This included State, Federal, local, the whole shooting match.
It was about 25 cents. Today, that number is in the range of 37 cents,
maybe as high as 40 cents. So what exactly is it that government is
doing today that they did not do a generation ago? Just think about
this for a second.
We had defense a generation ago. We had education a generation ago.
We were concerned about our environment a generation ago. We had many
of these programs. We had Social Security a generation ago. What
exactly is it that government is doing today that we want government
taking an extra 12 cents out of every dollar that we earn for what
government does? Why can we not roll back that tax burden and at least
get it back to where it was a generation ago so our government does not
collect more than 25 cents out of anyone's pocket for taxes? Why can we
not get these sorts of things to happen as we keep this government
spending under control?
It comes back to that one central theme. When we were first elected
in 1995, and we looked at that 1993 tax increase, we all understood
that raising taxes was the wrong answer. We understood the American
people did not want a bigger government that spent more and more of
their money and took more and more out of their pockets. We understood
that the American people wanted us to get that government spending
under control, go after wasteful government spending and get rid of it
and get this government back to a point where it allowed the American
people to keep more of their own money in their own homes to decide how
they are going to spend it on their families. And that is what has
really been going on here.
That is probably a good way to sum up my hour this evening. It is so
important, as we look forward to the next generation, first, that we
make sure Social Security is safe and secure for our senior citizens.
Every senior should be allowed to get up in the morning knowing that
their Social Security is safe.
Second, as we look for another goal for a generation, pay off this
debt so we get to a point where our children could inherit a debt-free
America instead of being saddled with the burden of a $5.5 trillion
debt and $580 a month interest payments on that debt. So as we look at
this goal, let us pay down the Federal debt much like we would pay off
a home mortgage and give America to our children debt free.
And, third, on the economic side here of our goals as we look
forward, let us do everything we can to get the waste out of government
so that we do not need the money from the pockets, the hard-earned
money from our workers out there across America. Let us get that tax
burden back down to where it was a generation ago.
That is really what I think we should be working on and where we
should be going, even in the face of what we are dealing with right
now. We need to keep in mind these central goals: Social Security, pay
down the debt, lower the tax burden on Americans, and at the same time
as that, we will, in a very solemn way, do what is the responsible
thing to do, do what is right for the future of this country as we take
great pains to do it properly, as we review the Starr report over the
next few days. But we cannot let that dominate us to a point where we
lose track of all of these other things that are so important to so
many Americans over the course of the next few days and the next few
months.
Mr. Speaker, I yield to the gentleman from Florida.
Mr. WELDON of Florida. Mr. Speaker, I just wanted to commend the
gentleman for the leadership he has provided in the House ever since we
came to Washington together. We were elected in 1994, a part of that
freshman class that turned the majority over to the Republican Party.
And as a member of our class, I think the gentleman has been one of the
most articulate and outspoken Members on the critical issues of cutting
wasteful spending, restoring honest budgeting to our government and,
most importantly, protecting and preserving Social Security.
{time} 2015
And the reason why that last issue is an issue that is of tremendous
interest to me is, I represent a district in Florida, it is the east
central coast of Florida, and I have a lot of senior citizens in my
district, many of whom are dependent on their Social Security check;
and I think it is critical as we approach the close of this fiscal year
that we look at the proposals that my colleague has on the table. And I
am a cosponsor of the Social Security Preservation Act that my
colleague have introduced.
And I just wanted to ask the gentleman from Wisconsin (Mr. Neumann) a
couple of questions if time allows. This process of taking the money
that is in the surplus and how that is borrowed out as a non-negotiable
Treasury note, was that the way the original Social Security Act was
written under FDR back in the 1930s?
Mr. NEUMANN. Mr. Speaker, reclaiming my time, the laws changed in
1983. In 1983 they increased the amount of money that was withheld from
workers' paychecks because they knew the baby-boom generation was going
to get to retirement. And the idea was, by increasing the amount
withheld in 1983, they would start accumulating these things.
But in answer to the question of how they do this, they were doing it
the same way since the beginning, or since 1983 at least, but it was
not until the early 1990s that the surpluses started to get very large.
And see, that is where the real problem has come in is that the
surpluses are now in the range of $100 billion a year. We are now in
that part of the bubble, so to speak, where we are supposed to be
putting lots of money aside into the savings account so that when we
get to 2012 or 2014 and there is not enough money coming in, that we
can go and get that money out of our savings account.
So what kind of bonds they put in before 1983, I cannot tell my
colleague. I can tell him that since 1983 they have been putting in
these non-negotiable
[[Page H7574]]
Treasury bonds. And had they not taken the money, had they put real
money in there instead of IOUs, there would be about $750 or $800
billion in Social Security right now today.
Mr. WELDON of Florida. Mr. Speaker, if the gentleman would yield
again, in addition to speaking out in support of preserving the Social
Security program and establishing honest budgeting and I think taking
the Social Security Trust Fund off budget and stopping the process of
borrowing the money out each year is part of what I consider honest
budgeting, I think my colleague's speaking out in support of reducing
the tax burden on working families and middle-class families is very
important.
And one of the items that my colleague mentioned I think is a
particularly important issue, and that is getting rid of the death tax,
the so-called death tax or inheritance tax.
And another issue in my district is, I represent the east central
coast of Florida, and I have a lot of suburban communities along the
coast, but I have a lot of ranchlands, and I have a lot of these orange
groves and citrus planters and cattle ranchers; and they are having a
terrible time when they want to pass essentially the family farm, in
Florida we call it the family grove or the family ranch on to the kids,
the tax burden sometimes is so prohibitively bad that they literally
have to sell the farm in order to be able to pay the tax bill because
it frequently gobbles up a third of the land or a third of the
valuation of the land.
And this is just wrong. This is not the way our American tax code is
supposed to work, where we are forcing family businesses to have to
sell to pay a tax bill, a family ranch to have to be sold off or farm
or orange grove or grapefruit grove.
And I thoroughly support, and I was very pleased to hear my colleague
bring up this issue of getting rid of the death tax, along with some of
the other things he mentioned, the marriage penalty. And again, I just
want to commend him.
I was sitting in my office doing some paperwork, and I was listening
to what my colleague was saying about Social Security, and I wanted to
come down and personally commend him for the leadership and the
direction that he has provided not only our class, the class of 1994
but, as well, the whole Republican Conference.
My colleague has had an impact on these issues, in my opinion, far
above any of the other Members, and I congratulate him for that.
Mr. NEUMANN. Mr. Speaker, reclaiming my time, I want to make sure
this is clear. This is not about me and it is not me that did this. We
did this. A lot of new Members that came in in 1994 feel very strongly
about this and we have done this together.
But it is not even us that is doing it. It is the American people
that understood in 1993 the idea of raising taxes was wrong. They
understood that the problem here was not that government was not
getting enough money out of their pockets. They understood that
government spending was growing out of control on all sorts of wasteful
programs.
It was really the American people that made a decision to make that
change that led to people like my colleague and I being here that has
resulted in these changes that are now just starting to take hold and
really brought about this change for America. So I do not think it is
us. I think it is the American people that deserve the credit for this.
____________________