[Congressional Record Volume 157, Number 8 (Thursday, January 20, 2011)]
[House]
[Pages H380-H386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
GOVERNMENT OVERSPENDING
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 5, 2011, the gentleman from Missouri (Mr. Akin) is recognized
for 60 minutes as the designee of the majority leader.
Mr. AKIN. Mr. Speaker, it is a treat to be able to join you and my
colleagues today, and at the beginning of a new year, take on a subject
that we have been aware of and increasingly conscious of, the problems
relative to our economy, to jobs, but particularly to the Federal
Government and its voracious appetite to overspend.
I'm joined by a number of distinguished colleagues today. I think it
should be an interesting discussion. We're going to try to keep it
simple and look at the big picture and look at the choices that America
faces.
Along those lines, here is a sort of a by-the-numbers projection for
this year, 2011. And you see sort of a bar graph, these tubes here.
This top one is $3.834 trillion, that's $3.8 trillion, and that's what
it's expected that the Federal Government is going to spend, $3.8
trillion. The problem here is this other little thing here. This is the
income projection. And that's $2.6, if you round a trillion. So 2.6
versus 3.8, which, you can tell by the length of them that we are
spending more money than we are taking in. People that have tried to
run a budget at home understand that's a very easy thing to have
happen, to spend more money than what you have coming in. And the
Federal Government has that problem, and it has it big-time. In this
case, the difference between the two is more than $1 trillion.
And so that's what we're going to take a look at. And what can we do
about it isn't so much a matter if you are a liberal or a conservative
really, the fact is it's mathematics. We're spending a whole lot more
than we're taking in. And so that is the problem we're going to take a
look at. When you do that year after year, spend more than you take in,
you start to develop a debt. In our case, we've got a $14 trillion
debt. So you have a deficit of $1.6 trillion, but you keep adding these
things every year, and pretty soon you build this debt up. And the
problem with the debt is that you have to pay interest on the money
that you borrowed. And so that also makes things worse. And so now you
take a look at the fact that not only are we spending about one-third
more than what we have, but we've been doing a bad job of controlling
our spending.
In the past, we have also cranked up this debt. The effect of that is
that one of the things that comes as far as spending is your cost of
the debt service, so the more that you borrow, the more you have to pay
interest on your debt, and therefore it just compounds the situation,
making it worse. So that's the lineup.
So let's take a look at, well, where are we spending all this money?
And one of the things that people that are looking at numbers take a
look at is three fairly big what are called entitlements. Entitlements
mean that somewhere along the line, the Congress passed a law, and the
law works like a little machine. It just spits money out. And anybody
who meets certain parameters, the machine will just give them some
money. And that's called an entitlement. And so depending on what the
entitlement is, it just spends money. And Congress doesn't have to do
anything. The money just gets spent. And it is called an entitlement.
The three big ones, of course, are Medicaid, Medicare, and Social
Security. And if you project over time how much money those
entitlements are going to spend, you find that they are growing. They
are growing because of people such as myself, a baby boomer. The baby
boomers are getting older, and there's a whole lot of them, and there
are not as many people working to pay into the system. And so the cost
of these entitlements go up.
And as you see in this chart right here, this is the typical revenue
that we get from taxes coming in. It is running at 18 percent. You can
see it goes up and down as we have more or less taxes depending on who
is in charge of the White House and the Congress. But it averages now,
over since 1965, it's averaging about 18 percent. And you see this
point out here at 2052 where these three entitlements are going to use
up the entire budget. There won't be any money for anything else other
than just these three things.
Unfortunately, this chart is optimistic because this is only
including these three entitlements. We have other entitlements also.
And in fact, at this point we have come really pretty close to it even
today.
So our entitlement spending, when you look at the big bar chart up
here, pretty much, of our income--about $2.5 trillion, pretty much that
income is spent today on various entitlements. It's not just Medicare,
Medicaid, and Social Security. But there are two other categories,
miscellaneous entitlements, that would be things like food stamps and
public housing, stuff like that, but also debt service, because you
have to keep paying the interest on debt. You put that all together,
and that's just about what we've got for income. So we've got ourselves
some challenges.
And I'm glad that I don't have to solve all this problem, but we have
got some very smart people that are going to join and talk a little bit
about this, what are our alternatives and what should we be doing.
The first is a freshman who is already distinguishing himself in the
Congress, Bill Johnson. He is from Ohio. We are thankful that Ohio sent
one of their great sons here, somebody who first of all has a
background as a chief information officer in a global manufacturing
company. ``Information officer'' means people that deal with the
transfer of data and information, but also the data processing side of
a company, which is really the communications and lifeblood of a
company. He is also somebody who served our country faithfully as an
officer in the United States Air Force.
Bill Johnson, it's a treat to have you on the floor. We're glad you
got elected. You've heard the opening here. We've got a bit of a
problem. In fact, we've got a problem that's so big that a lot of
people are kind of--in Missouri we have an expression, hunker down like
a toad in a hailstorm. A lot of people look at this and they go, oh, my
goodness, what are we going to do?
So let's talk about that for a minute.
Mr. JOHNSON of Ohio. Well, Mr. Speaker, and to my distinguished
colleague from Missouri, thank you so very much for the opportunity to
be here. You're exactly right, and you've pointed it out so well. We
have a disease here in Washington, and that disease is called
``overspending.'' And it is, by and large, what has brought us
economically to where we are today. And the debt that we see is the
symptom of that disease.
It's amazing to me how many in D.C., how many in the administration
and in the previous Congress, really believe that we can borrow, tax,
and spend our way back to prosperity. As a businessman, as a graduate
from a business school--I have a minor in business administration--I
don't think that there is a business theory in place that says that you
can prosper that way.
{time} 1220
Mr. AKIN. Let me just stop you. I want to cut in on you.
What you are saying is most businessmen, if you tell them we are
having trouble with overspending so what we are going to do is spend
some more, they are going to laugh you out of the shop; is that
basically what it boils down to?
Mr. JOHNSON of Ohio. That's right. You know, that kind of thinking
has never been good for families. It has never been good for
businesses, and it certainly is not good for America. We see where that
has left us. Your charts point out that we are on the path to a train
wreck here. Yet we see policies
[[Page H381]]
consistently coming out of the administration and out of the previous
Congress that continue to punish the job creators.
Take Ohio for example. Since the giant stimulus bill was passed in
the previous session of Congress, only three States have lost more jobs
than the State I come from, from the great State of Ohio. Unemployment
in the district that I represent is another symptom of that disease. We
cannot continue down this track of spending and borrowing and punishing
job creators and expect America to pull through this economic crisis
that we find ourselves in.
Mr. AKIN. Bill, once again you are right on track and right on topic.
This is so important because down here in Washington, DC, there are
really two very different schools of thought on this; aren't there?
There are some people, and I think they are people probably who come
from your background as executives in companies, people who had
responsibility and had your own small business, and you understand what
it takes to make a small business work. And the mind-set of those
people when you get into trouble over spending is that you have to
either increase your revenue somehow or you are going to have to cut
back your spending.
But there is a whole other school of thought down here which to me is
kind of weird because I come from the business world, too, and the
theory is that somehow you can get the economy going by spending a ton
of money, and that is what the ``stimulus'' bill that we passed 2 years
ago, it was supposed to create I don't know how many hundreds of
thousands of jobs. The projections in terms of the numbers of jobs it
was going to produce, it actually lost more than what they projected it
was going to do.
At the time, I stood on the floor with a bunch of other people who
came here with a business background and said, Hey, this thing isn't
going to work. Don't spend this money.
It was at least theoretically excused under the Keynesian sort of
idea that if the government spends a lot of money, it ``stimulates''
the economy and everything will be okay. It is like grabbing your belt
loops of your boots and lifting up and flying around the Chamber here.
It is a bizarre idea. And it was tried by that guy Henry Morgenthau who
worked for FDR. They tried it for 8 years, spending money like mad. He
appeared before the House Ways and Means Committee and said: It just
doesn't work. Now, that was 1938 he told Congress it doesn't work to
spend money like that.
So that is one possible way that the Democrats propose, and that is
spend lots and lots of money. But we see we are spending so much money,
the question is--it isn't working because it created unemployment big
time.
Of course you in Ohio with your manufacturing background, we are just
killing jobs. Somehow there is this disconnect. You can punish
companies and then you are surprised there are no jobs. It is sort of
bizarre.
I yield again, Bill.
Mr. JOHNSON of Ohio. Thanks.
You hit the nail on the head. We are punishing the job creators. I
mentioned in Ohio, only three States have lost more jobs since that
stimulus bill went into effect. Now, I don't know the exact number
today, but in November, around election time, Ohio had lost over
400,000 jobs.
Mr. AKIN. Are a lot of those manufacturing, Bill?
Mr. JOHNSON of Ohio. Absolutely. Absolutely.
And here is what puzzles me: I don't understand why more don't
realize that when you let families and businesses keep more of their
hard-earned money, that builds economic confidence. That builds buying
power. They invest. They spend more. That's what gets an economy going.
They begin to become innovative.
Let me give you an example. Ohio borders on a State that has no sales
tax on clothing. One of the first things I saw when I started looking
at how I could help the State of Ohio was: How can we keep that sales
tax revenue in the State of Ohio? So we started doing the research. We
found out that 17 States have sales tax holiday programs.
So I built a grassroots effort to put a sales tax holiday program in
place in Ohio. Without going into excruciating detail, having a sales
tax holiday around back-to-school time and a sales tax holiday around
Christmastime promised to bring upwards of $250 million in additional
sales tax revenue into the State coffer, keep retail jobs, and let Ohio
families keep more of their money. It was amazing what that program
would do. Yet we could not get those on the other side of the aisle in
Ohio to understand that and to buy into that concept. It is a simple
economic concept.
Mr. AKIN. Just interrupting again, what you're really saying is that
you can get more revenue in a State if you back off on taxes?
Mr. JOHNSON of Ohio. Absolutely.
Mr. AKIN. That is an interesting concept, and I would like to pick
that theme up. That is something we really need to understand.
I assume you were a member of the Ohio Legislature at one time?
Mr. JOHNSON of Ohio. No, I was not. I built a grassroots effort to
try to address that problem. We were successful in getting a bill
introduced into the Ohio State Legislature to put those sales tax
programs in place, but it never made it through the system.
Mr. AKIN. Oh, boy.
Well, we have another gentleman here, coming a little farther from
the west, Congressman Bishop, who is joining us. He is also a guy who
has had some experience in the business world, and also as a teacher
and a leader here on the floor. He has represented his district on some
armed services kinds of issues and is somebody who has really earned
the respect of his colleagues and has done a great job in setting up
some of the new rules that have been established for this Congress.
Congressman Bishop, I would be delighted to have you join us. You
have heard what we are talking about. We have a problem. We are
spending too much money, and the question is what should we do about
it.
Mr. BISHOP of Utah. I thank the gentleman from Missouri for allowing
me to have some time here, and I appreciate the comments of the
gentleman from Ohio illustrating what happens in the States. I think
oftentimes we should be looking to the States as an example of what
does and what does not work, and we can emulate those concepts here in
Washington.
You are right, as you initially said, we have a severe budget
problem. There are really only two ways of trying to reconcile that
budget problem: We can either raise taxes or we can cut spending.
I think it is interesting to look at some other States. Cal Thomas
had a wonderful article this morning--maybe it was last night--that
talked about comparing what other States have done. So we see the State
of Illinois, another midwestern State whose solution to their problem
was to raise the personal income tax 67 percent and their corporate tax
rate by over 46 percent.
Mr. AKIN. May I interrupt. You said raise the personal income tax in
Illinois. Was it by 6 percent?
Mr. BISHOP of Utah. Sixty-seven is what I heard, and 46 percent on
corporate taxes. And let's face it, corporate taxes are paid by
consumers anyway. So you get hit with it coming or going.
You can compare that with what other States have done, like the
neighboring State of Indiana or Wisconsin, Virginia, New Jersey, my
home State of Utah, which decided to solve their problem simply by
reducing their spending. I am told that Indiana, since 2004, reduced
spending by 40 percent.
Mr. AKIN. Whoa, 40 percent. That is a number.
Mr. BISHOP of Utah. And it will be interesting to see if the Illinois
experience will replicate what happened in Indiana and those other
States I listed, and my gut guess is it probably will not.
But when we instituted income tax for the first time in this country,
the statute that did that would cap the maximum rate of income tax at 2
percent, even though we only applied a 0.5 percent income tax. I think
if people would look at their paychecks today, they would see it
slightly different from that original time.
Mr. AKIN. As I recall, gentleman, at that time, weren't there people
who said that income tax could possibly get
[[Page H382]]
as high as 5 percent and they were laughed off the floor of the
Congress, that income taxes could get as high as 5 percent? Am I right
on that?
{time} 1230
Mr. BISHOP of Utah. It is alarming, but that is actually accurate. As
we found out in that experience, the best tax is, obviously, something
paid by somebody else. It was estimated when that original income tax
was in place that 80 percent of it would actually come from only four
States. Apparently, four States were fighting it, and the rest of the
States kind of liked it.
Unfortunately, there was--and I'm not impugning anybody here--a
Representative from Missouri at the time who actually did say that a
new dawn has broken with this new income tax and that, actually, the
government would be more careful with people's money now that we are
taking it directly from them than in the past when we simply ran
government by taxes coming from tariffs or land sales.
Mr. AKIN. We're not proud of everybody from Missouri, gentleman.
Mr. BISHOP of Utah. That certainly does not represent your thinking
anyway.
Mr. AKIN. No.
Mr. BISHOP of Utah. What happened is, within a short period of time,
using World War I as the excuse, that top rate was not at 2 percent or
at 5. It was at 75 percent. Now, what we found out is the actual amount
of money coming into the country was in a decline, not in an incline.
So, when President Coolidge came into power and initiated the first
tax cuts by reducing the rates across the board, the amount of revenue
coming into the country actually increased. The same thing happened
when President Kennedy tried it, President Reagan, and President Bush,
because what we found out was that people with money are not stupid.
They had money for a reason and that it was not that they were avoiding
their taxes. They had just found an alternative way of investing--in
the case of World War I, it was a lot of municipal funds that were
going in there that were not taxed--or they simply did not invest their
money. They sat on it until such time as they actually had control of
their money again.
So the bottom line here is, if we look at the tax pot, or proposal,
as a way of solving our problem, all we do when we allow taxes to
increase is allow Congress to actually spend more.
It's like going on a diet, which I desperately need. I may change my
diet to my only eating good food; but if I eat a whole lot more of good
food, it's not going to really solve the problem. There is another
problem, too, that goes onto the spending side, which is I can actually
be full and malnourished at the same time. If I only eat potatoes as a
diet, I may be full; but I'm not helping my body.
When we look at the spending side, which is really the only option
that we have, and when we don't look at it in a way of looking at how
we are spending, all we're doing is malnourishing us. All the CRs we
passed last year, without actually doing a real budget or a real
appropriations act, may have flat-lined our spending, but it didn't
help us out. It was like eating potatoes all the time, which in
moderation are good; but if that's the only consumption you have, we
are making serious problems.
Mr. AKIN. I think what I'm hearing you say, gentleman, is that
America has been getting high on junk food. At least you have an
economic analogy.
Is that where you're going?
Mr. BISHOP of Utah. Well, so am I, and I have to admit I love potato
chips; but, yes, that's where we're going.
What we need to do is, I think, what this Congress is looking at,
which is to try and readjust what we are doing and look at our spending
levels, which is why 2008 spending will be a starting point to adjust
and look at what we are doing. We have to look at our spending in
prioritization so we're not just spending everything. We have to look
at what our responsibility as a government is, and we have to look at
the spending side seriously.
As the gentleman from Ohio stated and you stated with your charts, if
we do not take the spending side seriously as the solution to our
problem, we will never find a solution to our problem; and the end
result will be disastrous for this country.
Mr. AKIN. I appreciate your thoughts and particularly the direction
that you're taking, because my argument would be the problem that we've
pointed out with overspending cannot be solved with increasing taxes,
and I'd like to talk about that for a minute.
My good friend from Ohio, just hold for a second. I'd like to try to
illustrate something.
When I first came here a couple of years back, people talked about
the Laffer curve and the idea that you could have the government take
more money in by reducing taxes.
Now, I'm an engineer by training, and to me that seemed
counterintuitive. How in the world can the government lower tax rates
and take in more revenue? It seemed like such an odd thing. Then I
started sort of puzzling it in my mind a little bit.
I thought, Let's say that someone were to appoint you to be king for
a year, but the only thing you can tax is a loaf of bread. So you start
thinking, Huh, how do I get the most revenue for my country out of a
loaf of bread?--because I'm a political guy, and I have to pay the
bills of the Federal Government.
So you start thinking. You say, Well, I think I'll put a one penny
tax on every loaf of bread that people eat. No one will notice the
penny, and I'll take in a certain amount of money. Then you start
scratching your head and saying, What if I went the other way? Let's
say I taxed a loaf of bread at $10 a loaf. Boy, then I'd get a lot more
money in that way. Yeah, but the trouble is nobody would buy any bread.
Common sense would say somewhere between a penny and $10 there is
some point in there at which you're going to get the maximum tax you
can get on a loaf of bread; and as soon as you go beyond it, your
revenue is actually going to fall off because people will stop buying
it, and there just won't be any more bread market going on.
So the point of the matter is that there is an optimum level that you
can tax. When you go beyond it, you stall the economy and destroy the
Federal revenues. Now, that may seem like a theory, but, in fact, it's
true. It is what happened.
I'd like to just run through a couple of charts here.
This happened in 2003. In the second quarter of 2003, in May, we
passed a big tax decrease in capital gains, dividends and the death
tax. What that did was it freed up a lot of money for, Bill, who you've
been talking about--the people who own businesses. The death tax ties
up a whole lot of money because, you know, somebody dies, and you just
hammer him and put a small business or farm out of business. Capital
gains and dividends, they're all money that was being tied up because
of our Tax Code. So when we reduced those taxes--this is what happened
on this black line. I've got three charts here. This black line is when
we cut capital gains, dividends and death taxes.
The first thing: look at the gross domestic product of our country.
You can see it's spotty in here. We were in a recession. The amount of
money we were taking in was not good in these early years.
Here is what happens when we do the tax cut:
You see that there is a jump from 1.1 percent GDP to 3.5, so GDP goes
up when we cut taxes. That tells us, hey, the economy is going. It's
doing better.
What else happens? Let's take a look at the chart. It's the same
thing.
This is May of 2003. This is job losses. Everything below the line is
a job loss. We're losing jobs like mad, and we've got some problems
with unemployment. Here are a couple of times where we gained some jobs
just for a quarter, but these are by the quarter. We're losing jobs.
Then--boom--we put this tax cut in place, and look what happens in
terms of job creation. We created 168,000 jobs, and here we've lost
100,000. So, first of all, GDP goes up. Job creation goes up, so people
go back to work.
Here is the key point: look what happens here to Federal revenues. We
have cut taxes here, and Federal revenues are shooting up. Now, that
seems like you're defying the law of gravity, but what happened was
those taxes were stalling our economy.
So when you've got a recession and when you've got unemployment the
way we do, what you've got to do, this would suggest, is you have got
to cut taxes, give the money back to the people you're talking about,
Bill, who
[[Page H383]]
own those companies. Let them invest--build additional wings on a
building, new products, new technology--and when that happens, you pull
out of the recession, and it helps you with your revenues.
The bottom line is, when you take a look, going back to our original
question of how do we get out of the problem that we are spending too
much money, the answer is, if you start taxing, you're going to drive
us further into a recession, making the problem worse. So, really, tax
increases do not work to fix the problem that we've got going here.
I wanted to jump over, Bill, and allow you to piggyback some.
Bill Johnson, from Ohio, is a great freshman Member. Congratulations
to those in the State of Ohio for sending us some good people down
here.
Bill, please jump in.
Mr. JOHNSON of Ohio. Well, you've made so many points there.
I'm a businessman. After my military career, I founded two small
businesses. Before I came to Congress, I was the chief information
officer for a business, a global manufacturing company; and I sat at
the table with our executive leadership team, and we talked about how
do we increase the value to our shareholders; how do we make our
company more profitable; how do we put ourselves in a position to be
able to invest and grow.
There are two sides to that formula.
On one side, you've got spending. On the other side, you've got
revenue. There is a balancing act. Controlling spending, we've talked
about. We've got to stop the out-of-control spending here in
Washington, and we're going to address that in this Congress.
{time} 1240
But how do we increase the revenue? That is what you've been talking
about here for the last few minutes. And you're exactly right, it does
not come through tax increases; it comes through letting Americans and
businesses keep more of their money because that builds economic buying
power, that builds confidence. They invest; they spend.
Now when we did our research on the sales tax holiday back in 2009,
what we learned is there were 17 States that had already implemented a
sales tax holiday which validated the concept that you just referred
to. Take one State, for example, implemented their sales tax holiday in
the very first year. In the month that they implemented that sales tax
holiday they saw an overall--now there were adversaries that said you
can't take that sales tax revenue out of the coffer at a time when we
are struggling to meet the State budget. Fortunately, sound minds
prevailed and they were able to get the bill through. And in the month
that they passed that bill and they had that sales tax holiday, their
overall sales tax revenues did not decline; they went up nearly 5
percent.
Mr. AKIN. So what happened--let me see if I understand this. The
sales tax holiday was not a total cutting of all the sales tax; it just
reduced it much lower.
Mr. JOHNSON of Ohio. That's right.
Mr. AKIN. And by reducing the tax, their revenue increased.
Mr. JOHNSON of Ohio. Well, what it was, it eliminated sales tax on
certain items like back-to-school items, things that people had to have
to get their kids back in school, to put them in college and those
kinds of things--clothing, school supplies, computers. For example,
many States included computers in those sales tax holidays.
Over the next year, they saw another nearly 5 percent increase in the
overall sales tax revenues. By the third year, they saw a nearly 8
percent increase in sales tax revenues. And over a 3-year period, they
were looking at close to 20 percent overall sales tax revenue increases
over that 3-year period.
Mr. AKIN. By cutting taxes.
Mr. JOHNSON of Ohio. Because what happened was when people got a tax
break on things that they had to have, they would channel those savings
into buying things that they wanted to have and that they had been
saving up for with their families. And other States started coming
across the border to take advantage of that holiday. It's a simple
concept that we need others to understand: when you let families and
businesses keep more of their money and you put the decision about how
they spend that money in their hands, America prospers.
Mr. AKIN. Well, I really appreciate that. That's a real-life example,
something that you worked on looking at different States. And it was
the same principle of what we've seen.
Now, the idea of cutting taxes in a recession and cutting Federal
spending is not new. JFK understood that principle. He cut taxes when
he was President during a recession and put us back on a good economic
footing. Ronald Reagan had the biggest tax cut just about in the
history of the country until Bush came along, and the same thing.
People made fun of him, that it was trickle-down economics and all that
kind of stuff; but the fact of the matter was the economy became
strong, and he had to have a strong economy to face the threats of
Communism in the Soviet Union.
And ultimately he bankrupted the USSR because of the fact that our
economy was strong enough that they couldn't keep up with us in the
arms race, and he basically got them to the point of ``tear down this
wall.'' But it was based on this same principle of the fact that he had
tremendously cut the taxes which allowed the American economy to surge
and allow free enterprise and the businessmen to start making some
money.
We're doing the exact opposite. At the Federal level, our income tax
is the second highest income tax in the whole world. That doesn't make
a whole lot of sense.
Now, I want to go to this problem a little different angle from it,
and that is, we've talked about we're spending too much money. We've
talked about, really, that raising taxes is not the solution, which
means then, by definition, you've got to cut spending.
Well, what are we spending money on? I think that's something we need
to take a look at here. And I've got a chart. Before I had the chart
that showed Medicare, Medicaid, and Social Security. And these things
people call entitlements because we passed a law a long time ago, and
it just spits money out, more and more money out over time. This chart
suggests if you keep your taxes at 18 percent, at a certain point, at
2052, these things get so big, they squeeze the rest of the budget out.
The trouble is this chart is optimistic. The problem with the chart is
it doesn't include all of the entitlements. There are a lot of
entitlements that are not on that chart.
But here, take a look at this, what has happened since 1965. I think
this also adds perspective to what's going on in terms of our spending.
In 1965, entitlements were 2.5 percent of gross domestic product. It
starts here. The red line goes up to the point now that in 2010 the
entitlements have gone from 2.5 to 9.9 percent. That's a four-times
increase to 2010. The trouble is that's just Medicare, Medicaid, and
Social Security.
The additional entitlements would go up even further. This is
probably saying that since '65, we've had probably about a five-times
increase in entitlements. And what's happened in return to national
security and defense? The U.S. Constitution says the most basic
function for the Federal Government is to provide for the national
defense. It may say that we're supposed to promote general welfare, but
it specifically--because the only government that we have that can
defend our country is the Federal Government. It is the primary
function of the Federal Government, in our preamble to the United
States, ``provide for the national defense.''
We were spending 7.4 percent of GNP in '65, which has now dropped
down to not quite 5 percent of GNP. And we have the problem now with
the two wars, with all of our equipment aging. So we're having a whole
lot of trouble trying to stay competitive, particularly with China and
a lot of their new developments, with national defense because the
entitlements are just going nuts.
And so the problem is that we're going to have to take a look at
entitlements, not just Social Security, Medicare and Medicaid, but
there are other ones too. You've got food stamps, you've got public
housing, and you also have the debt service. All of this, when you put
it together, is using almost all of the money coming in in a given
year. That says we had better get serious about doing some cutting.
And once again, I will come back do you, Congressman Johnson, if you
[[Page H384]]
would like to comment on that aspect of where we are.
Mr. JOHNSON of Ohio. Well, you hit the nail on the head again.
National defense is our number one priority; it has to be. In fact, the
oath of office that you and I took on January 5, virtually the same
oath of office that the President takes, it says that we swore or
affirmed to support and defend the Constitution of the United States
against all enemies foreign and domestic. That requirement to provide
for the national defense is the number one most important thing that we
in the Congress, in the administration are required to do, keep America
safe, keep America free, protect Americans and American interests
around the world.
There is no question that we must invest in those programs that are
going to support our troops in the field. And I agree with you that we
must look at the proper balance between defense spending and other
spending to make sure that we achieve what we have been charged by the
American people to do.
Mr. AKIN. As a good Air Force man, I knew you would come up with the
right answer. The point of the matter is if you don't have national
security, you don't have any other kind of security.
Mr. JOHNSON of Ohio. Well, I often ask my constituents, what is our
number one job? What is the President's number one job? Is it to keep
us safe, or is it to keep us free? And of course you get a number of
different hands being raised. In my opinion, based on the Constitution,
the Declaration of Independence, the President's--and therefore the
Congress'--number one responsibility is to keep us free, because if we
are not free, we will never be truly safe.
{time} 1250
And safety is obviously pretty close on the same level. And they play
into one another. But our national defense, flowing down from our
national security strategy, our national strategy, that's paramount.
Mr. AKIN. I very much appreciate your perspective.
We're joined by another great freshman coming from pretty near by
Missouri, from the great State of Kansas, Congressman Yoder. It's a
treat to have you on the floor. And as you've heard, we've been
pontificating here a little bit about how are we going to deal with
this. You know, the Federal Government is spending a whole lot more
than we take in. So we've got to deal with that problem. We've been
talking about the fact that taxing isn't a good solution because if you
raise taxes, you drive your revenues down. It means we're going to have
to do some cutting. So that's a tough subject.
But I appreciate a little bit of common sense from the great State of
Kansas.
Congressman Yoder.
Mr. YODER. I appreciate the congressman from Missouri's indulgence
for a little time here.
I've been watching this conversation you've been having on the floor,
the gentleman has, along with the gentleman, and it seems like we're in
the middle of an ideological battle in this country. On the one hand,
you have folks on the left that argue that government is the solution
to all the problems our country is facing. Unemployment, their argument
is that we need to create more government jobs, that Washington can
solve these problems.
And out in Kansas we know that it is the private sector. It's the
individual that creates jobs in this country. We know that it's hard
work and determination. And you can't substitute that with government
bureaucrats or government mandates. You can't mandate or regulate
someone into prosperity. It just doesn't happen. And that's a real
battle that's happening in this country right now, and I think this is
a challenge that we've really got to face in this Congress
On the one hand we have more entitlement spending, greater deficits,
higher taxes. And the other hand you've got free enterprise, economic
freedom, prosperity. And to me, that's the real essence of this
challenge: Are we going to create a free enterprise country or are we
going to be an entitlement society?
Mr. AKIN. In a way, I think you've really framed things. I appreciate
your perspective because you're getting a little bit off at a distance
and saying look, there's two choices and the two parties really are
very, very different in this. One seems to be the party that wants
entitlements. They want food stamps, and they have unemployment. And
the other party is saying we want jobs and paychecks. And that's kind
of the choice. And if you want jobs and paychecks, you've got to have a
free enterprise economy.
If you want the government to just subsidize you and live off of
welfare, that's a different perspective.
So what we're seeing is this growth in entitlements, this number is
low on this chart because it doesn't have food stamps, it doesn't have
public housing, and it doesn't have the debt service. When you put that
all together, we're right at the point where the money coming in is
just barely paying for all of these entitlements and the debt service.
You put that together, that's not a good picture.
And the solution I think most Americans--I bet you that's what your
election was about, the fact that we want to have jobs, and we want to
see a strong America. We want to see an America that's free. We want to
see a Federal Government that doesn't enslave us, doesn't tame us, put
us in velvet chains of a welfare state, but rather that allows us to
rise the way Americans have always risen to the challenges that each
one of us, the dreams we have in our heart to make those happen, to
have a chance to fail or to succeed. And that's what made America such
an incredible place.
And I appreciate, Congressman Yoder, your standing up for those basic
American principles and values. And I think what that means is we're
going to have to deal with this level of spending.
Congressman Johnson, back to Ohio.
Mr. JOHNSON of Ohio. I wanted to comment on what you said and what
the gentleman here said about what makes America great.
When people stop to consider that this little sapling of a Nation in
terms of age, 230-plus years old, virtually--and we're a baby compared
to many of the other nations in the world--yet every modern
convenience, virtually every modern convenience known to mankind was
birthed right here in this country. And why was that? It was because of
that system of free enterprise based on individual freedom. The ability
to pursue our dreams, the ability to innovate that created this free
enterprise system that we've come to know.
It did not come about in the Halls of Congress. It was not discovered
in the deliberation rooms of courtrooms.
It was discovered around the campfires and around the dining room
tables, the kitchen tables, the fields, the factories. As America came
along, we learned when individuals are allowed to pursue their dreams
in an environment of freedom without an oppressive Federal Government
taxing them into oblivion, everybody wins. America wins, our allies
win, everybody wins.
Mr. AKIN. You know, just even hearing you talk about that, somehow
that gets me excited.
You know, I think about it. God made all of these different people,
and all of us are different. And from the day that you grow up as a
little kid you start thinking about stuff that you'd like to do,
whether you want to be a fireman or a doctor or an Indian chief, you
know, people kind of talk about that.
And you never really know for most people, they don't really know
where their life is going to go, what they're going to achieve or
accomplish. But there's something inside human nature that has this
idea once you start to get the idea that you can dream and do something
cool.
So people have these crazy ideas. And America was full of these crazy
people and all of these crazy ideas. They didn't know the ideas were
impossible, and they kept trying and trying, and finally the idea
becomes maybe vaguely possible and then pretty soon, it actually
happens.
You take the crazy guy who built lightbulbs. What'd he build, a
hundred, two or three hundred lightbulbs? And somebody said, Boy,
you've got to be discouraged, Thomas Edison. He said, No, I've got a
couple hundred ways not to make lightbulbs. So I'm even closer to the
right solution. You've got to be a little bit pretty entrepreneurial to
have that perspective.
So America, if you think about it, this great country was built one
dream
[[Page H385]]
at a time by all these people. And one of the great things, Congressman
Yoder, that you do and Congressman Johnson, is you have a chance to
serve your people.
What's going to happen--because you're both freshmen--what you're
going to find is that through the years, all these people from your
district, you'll run into them, and you'll see some sort of a little
warehouse somewhere and all of a sudden you realize that thing is a
thundering success. Some guy's dream just happened there. And we have a
chance to see all of these people around us that have experienced that
American dream. And it is cool. But it doesn't happen by a whole lot of
redtape and taxes.
Congressman Yoder, please jump in.
Mr. YODER. I think what the gentleman is speaking about is the
American dream. It's the American free enterprise system. It's the
essence of what makes America what it is. And to watch and to see it
under threat here in Washington, it angers and it frustrates Americans.
And that's what we saw this last year, Americans coming out to town
hall meetings and expressing themselves. They don't feel like their
voices are being heard on the floor of the United States House of
Representatives. They want people to stand up and to explain that
greater spending and greater deficits, that's not the road to
prosperity.
The road to prosperity is built brick by brick by hardworking
Americans out in Kansas and out in Ohio and out in Missouri and all
across this country as they work to put a little of their own money in
and build a business or to take care of their family. They work hard.
Sweat equity. That's what built this country.
And when they see the folks in Washington believe that that money
isn't the people's money, it's Washington's money--and in fact, the
folks in Washington, they don't even spend the money they're given;
they spend as much as they want, regardless of how much money we have.
So part of this job situation, this American prosperity situation, it
comes back to spending. And what we do here on the floor of the United
States House of Representatives and how we advocate and stand up for
those people that sometimes aren't always heard, that's what we have to
do here.
Mr. AKIN. I'm glad that you're joining us in that. In fact, there is
a Congressman Jordan from the great State of Ohio who was, I believe,
holding a press conference not so long ago talking about what are some
of the things that we're going to cut, because people ask us, you know,
what are you going to cut?
Well, one of the things is we're going to reduce the nondefense
discretionary spending to 2008 levels. Well, what's that worth? Well,
that's a lot of money that you can save that way. We're going to reduce
the budget office of every congressman. That was our first week. Your
first week here. We cut the congressional budget offices by 5 percent.
That's just to let people know we're serious.
Then we read the U.S. Constitution on the floor of the House to say
any bill you introduce now has got to be consistent with the
Constitution.
But we've got another whole series of things that we're going to do
to try to reduce spending, some of them--there is $25 billion in unused
Federal property. So what are we going to do with that? Why not sell
some real estate? Let's get rid of it. $123 billion is allocated to
programs to which government auditors can find no evidence of success.
The one that I find amusing is, the Department of Energy was designed
so we wouldn't be dependent on foreign oil. And the department's grown
like mad, and we're more dependent on foreign oil than we ever were.
{time} 1300
That needs a good question. Eliminate duplicative programs, among
which we have got 342 economic development programs. Do we really need
342 of them? 130 programs serving the disabled, 130 programs serving
at-risk youth. Program, program, program. Do we need that many? Maybe
we need a couple of good ones, but certainly we don't need that many of
them. So these are all things that are on the table.
So the proposal that's being made by the study committee has been,
instead of having the graph of the discretionary spending going this
way, nondefense, they are going to try to flatline that at about 400.
So there are a lot of things going on. It's an exciting time. We
realize we are going to have to get efficient in government, and we
have to basically go back to where we started.
The government was to be the servant of the people. It wasn't
supposed to be the master. We didn't expect the government to pay for
everything for us and keep us as little dependents. We simply wanted it
to get out of the way. We wanted it to defend our right to life and
liberty and the pursuit of happiness, and, beyond that, to leave us
alone. Don't bury us with redtape and government regulations and taxes
and uncertainties, which we have seen, which have created all the
unemployment.
I appreciate two great patriots joining me on the floor today kicking
around where we are.
I am very encouraged by our first week or two. First week or two we
started by cutting congressional budgets. We read the Constitution on
the floor. We put together a rule that says every single bill has to be
proven to be constitutional or else it doesn't even get out of the
hopper. And then, of course, we took a look at one of the biggest jumps
in entitlement spending that America could ever take, which was
ObamaCare. And we voted just yesterday to repeal the whole thing.
I will tell you, gentlemen, I know that you were involved back in
your own States because you were worried about the fact: If the Federal
Government can't manage Medicare and Medicaid without it breaking the
budget, what's going to happen if they take over all of health care?
I think what people understand in America intuitively is the fact
that if you look at American health care, the front end of it's good.
If you get sick, where do you want to get sick? In America, if you have
to. The trouble with health care is: How do we pay for it? That part's
broken. So the point isn't to scrap the whole thing and turn it over to
the government, which is what ObamaCare did. Instead, we're going to
fix the things that are broken, but leave the free enterprise part up
front, which gives us the best health care in the world.
You guys were here voting for that. And for those of us that were
fighting that the last 2 years, I tell you it felt so good to stick
your little credit card in the machine and push that you wanted to
repeal it. It was something we were all really looking forward to. And
you were part of that historic event. And that's just in the first
couple of weeks.
I'm looking forward to both of you gentlemen in the months ahead
really charting that course back to the American Dream.
If you would like to add--I think we are pretty close on time. If you
would like to conclude, a couple of comments, either one.
Mr. JOHNSON of Ohio. I will just sum up with this, because I think
you have hit the nail on the head. We can cure this disease. It's
called stopping the out-of-control spending. And at every opportunity,
we should seek ways to allow American families and American businesses
to keep more of their hard-earned money. That's going to result in
economic confidence. That's going to result in investment. That's going
to result in increased consumer confidence, and it's going to increase
and create jobs, and we know that.
I urge my colleagues--I thank you for this time, and I urge my
colleagues to join with me in supporting the legislation and those
policies that are going to accomplish those goals: cutting the
spending, letting Americans keep more of their hard-earned money, and
ultimately creating jobs and putting America back to work. And I want
to thank you for the opportunity today.
Mr. AKIN. Boy, that's a fantastic, straightforward approach to where
we have to go. You take a look at it.
Unfortunately, the gentleman who was here from Utah before, those of
us who are in the ``over 60'' category recognize, when it comes to
weight, there's two problems: It's either what you eat or how much
exercise you get. And you can't really change that very much. The
Federal budget problem is the same way. It's either how much
[[Page H386]]
you're going to spend or how much you can tax. And what's happened is
we just can't tax anymore, and we're going to have to deal with the
spending.
These are some of the items in the proposal that was being made in
the press conference today. $80 billion, this is nonsecurity. That
means not the defense discretionary spending. We're going to cut that
back to the 2008 level. That's just going back a couple years to knock
that back. That saves $80 billion. $45 billion, that's a repeal of
unspent stimulus funds. That stimulus bill that created all of the
unemployment that did not work. There is some of that money still left.
We take 45 there.
Two, almost 3 trillion, that's the nondefense discretionary spending
to 2006 levels. And also to eliminate the automatic inflation increases
now and for the next 10 years. So that saves a whole lot of money
there. Sixteen billion dollars, that's return the Medicaid FMAP
spending to 2008 levels. And then $30 billion, end the Federal control
of Freddie and Fannie Mac. That's also another area that we have got.
We have not dealt with that. That created the economic crisis we are
in. We have not dealt with the cause of the problem.
You put this all together, you are at about $2.46 trillion for 10
years, which the result of that comes out at flatlining some of the
nondefense discretionary. Does that solve the problem? No, it really
doesn't. It helps, but still the bottom line is we're going to have to
deal with those entitlements that are totally out of control.
You guys have got a lot on your plates. It's a big job. It's going to
be an exciting couple years. And I would recognize Congressman Yoder,
if you would like to make a couple of closing comments. I think we have
got about another 5 minutes or so.
Mr. YODER. I thank the gentleman.
And I think what the Congressman from Missouri is discussing, these
specific points of how we could reduce spending and how we could bring
the Federal budget back towards a balanced budget, which is what
Americans want us to do, we've all seen across this country, Americans
have, what happens in Washington. They spend as much as they want,
regardless of how much money they have, and that has to stop.
This is an opportunity this year, with a new Congress and new energy
and new enthusiasm on behalf of the American people, it's a chance to
stand up and say, We're tired of the overspending. We're tired of
trillions of dollars being spent on programs for which some of which we
can't find real tangible results. We're tired of duplication of
programs. We're tired of endless bureaucracy and red tape.
Americans want to see action and they want to see bold proposals,
such as what you are outlining there, to show that we can actually,
truly cut spending. We have heard folks on this floor say we can't cut
spending, that it will hurt too much. Well, what hurts is this $14
trillion debt, this legacy we are leaving to our children and our
grandchildren. This is an immoral legacy that we're passing along to
the next generation.
And I think what the gentleman from Ohio is standing up for, and the
gentleman from Missouri, is that this is the time to say enough is
enough. It's time to stand up and to start cutting spending and reining
in this out-of-control government.
Mr. AKIN. You know, the thing that's exciting to me and encouraging
to me, it's not just you gentlemen, but the fact that you came here
because America was waking up. America is saying it's time to take back
America. We're tired of being bullied by our own government. And we're
tired of the idea that what you should do is to be paid for not doing
something, and that an existence in America is sitting around and not
having a job. What we want is we want Americans to be able to follow
the dreams that are in their heart, you know. And the mentality of the
fact that anybody looks like they're having fun, we want to tax them,
that just doesn't make any sense at all.
And sometimes it seems like it's such a gloomy perspective to think
of America as a country which is nothing but the government's going to
take care of you. You know, the Soviet Union years and years ago, they
had this basic idea the government's going to provide you with a home;
it's going to provide you with food; it's going to provide you with
medical care; it's going to provide you with an education; the
government's going to provide you with a job. That was their formula,
and it didn't work worth a hoot. And the Soviet Union collapsed. It's
in the dustbin of history.
And here what are we doing? We're trying to look at the government to
provide you food and a home and an education. The government's going to
provide you health care and the government's going to provide you a
job, or if you don't have a job, they'll pay you anyway. That's a
formula that didn't work. There's no point in going down that blind
alley again.
So what we are coming back to again is the thing that's just so
exciting about our country. It's a country of exceptionalism. It's a
country that's led the world. It's a country that is a source of hope
for people all around the world as they take a look at our country.
{time} 1310
It was interesting, during the days of Ronald Reagan, that he got a
message out of some of the concentration camps up in Siberia and gulag
and different places that were really rough. And the people were
thirsty for news of what was happening with America and they were
praying for us, because they realized that we were a source of hope and
inspiration to the rest of the world.
There was a group of our Founders, came over on a boat, it was called
the Lion. It was 1630--it was some of the Puritans under Winthrop--and
they wrote something called ``The Model of Christian Charity.'' It was
a long, sort of a long Puritan-type document. But it said something
about we must consider that we should be a city on a hill, a light to
the people around the world.
And that was where Reagan picked that up in his speeches. Of course,
it came out of the Bible that we should be a city on a hill, a light to
people of the world, a good example and an inspiration so that they
would think of also being free from the influence of excessive
government.
So that's the challenge that you as freshmen, that all of us, all
Americans are facing. I think people are starting to understand this is
going to mean some changes. There are going be changes in our
behavioral pattern and the fact that we have just got to start cutting
back on government and we just can't continue to let the thing run the
way we have.
The bottom line, as we get back to it, I want to restate the problem,
and the problem is this, that when you put those entitlement programs
with the debt service together, we are spending almost the same amount
of money as what we take in in revenue. That's not a penny for defense
or discretionary spending at all. That's where we are. That's pretty
sobering.
That's why the challenge is significant. We are not going to get
there overnight. We are not going to balance the budget in 1 year.
I don't even think the most conservative guy in Congress would think
that we could do that, that there is any probability that America could
adjust that rapidly.
But we can balance a budget and we must. The fact is we have to take
steady steps, one at a time, and move forward on this because of the
fact that we are protecting that most precious idea that America has
been that hope and that bright light on a hill for people all around
the world.
The aspect of America and the American Dream, there is something that
I talked about sometimes when I was doing some campaigning. I like to
throw into the mix there the concept that in following the dream that's
in your heart, it takes a certain amount of courage. Those people like
Thomas Edison, the people that came by the Statue of Liberty with the
shirt on their back and a little change in their pocket, it took guts
to do that. It's going to take guts to go where we have to go. But with
courage and God's blessing we can do it, gentlemen.
God bless you all.
____________________