[Congressional Record Volume 161, Number 183 (Wednesday, December 16, 2015)]
[House]
[Pages H9364-H9367]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1545
                           BUDGETARY CONCERNS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2015, the gentleman from Arizona (Mr. Schweikert) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SCHWEIKERT. Mr. Speaker, as we get ourselves sort of organized, 
you will actually notice a couple of these boards are a little worn. It 
is because it is a, shall we say, the continuation of a theme. But this 
is sort of an auspicious day to actually do some of this, as we are 
getting ready to do the omnibus, the big budgetary bill.
  What is so important here is, I want, everyone, first, to understand 
the $1.1-plus trillion we are talking about is solely what we call the 
discretionary portion of the budget. This is the portion of the budget 
we debate here, we do amendments, we work through; and then, in this 
particular case, because of a series of blocks and frustrations and 
game-playing that happened previously, we get here to the end and we 
are trying to package it all together. But it is not the majority, it 
is not anywhere near close to the majority of our Federal spending.
  So take a look at this board. And this is for 2015. So we are right 
now working on the budget for the 2016 appropriation cycle.
  If you see the blue, the blue is mandatory spending. Those are things 
like Social Security and Medicare and Medicaid and other parts of the 
welfare portion of our budget that are formula-driven, that you hit a 
certain age, you get a benefit; you fall below a certain income, you 
get a certain benefit. It is about 69-plus percent of our spending, and 
this is for last year.
  Only 31 percent of the 2015 budget actually goes through this sort of 
normal appropriation process, and that is really important to 
understand the scale of the spending and how little of it actually is 
debated, because it is a formula. It is also the portion of our 
spending that is exploding.
  So we are going to walk through a couple of these boards today. One 
of my goals is actually to also walk through and talk about what is 
actually happening in some of the mandatory spending, and why, for all 
of us, we are going to have to have that very honest, very difficult, 
very math fact-based conversation.
  In my district, the Scottsdale, Phoenix area, I am incredibly 
blessed. I have an amazing constituency, I have a wonderful area, but 
we have done 100+ of these budget townhalls over the last couple of 
years, and I will get people who will come in and say, but that number 
doesn't feel right. I know it may not feel right.
  Previous politicians on both sides, I think, have underplayed what is 
happening in this country demographically and what it actually means to 
our commitment.
  So if you are someone who really, really, really cares about keeping 
this country safe, you need to be willing to start to understand what 
is happening in these numbers. You need to understand the financial 
pressure that is going to be on your ability to finance the military. 
If you care about health care, you need to understand the financial 
pressure that is going to be coming to deal with those, medical 
research, education.
  So let's first get our head around what is both happening, and then 
we are going to actually walk through some demographic slides. And the 
reason I want to do that is to understand, this isn't the type of 
discussion where you can throw a switch and the solutions are simple.
  The next slide, this is actually sort of walking through the 
projections, and, understand, these projections have actually changed a 
little bit, but I didn't have a chance to finish all the calculations. 
So this is, functionally, four budget cycles from now. So it is the 
2020 budget. We are right now doing the 2016 budget.
  At that point, 76 percent of the spending is Medicare, Medicaid, 
Social Security, interest on the debt, veterans benefits, and other 
transfer programs, welfare programs; 76. Remember, the budget cycle we 
just finished, it was 69. In, functionally, 4 or 5 years, it becomes 76 
percent of all of our spending.
  So if you care about the military, if you care about healthcare 
research, if you care about foreign aid, if you care about any of those 
things, it is shrinking rather dramatically as a percentage of our 
total spending.
  Yet, you have got to understand, from 2015 to that 2020 budget, this 
government is going to go from, I think it is a $3-some trillion budget 
to a $4.1 trillion budget. So in that few years, we are going to 
actually increase by $1 trillion in spending and revenues, and some of 
those revenues come from borrowing. Yet, the ratio continues to explode 
because it is going into that mandatory spending.
  This is demographics. This is reality. And unless you have a solution 
for baby boomers to stop, like me, turning gray, we have to grow up and 
deal with it. I find here in Washington there is pathological avoidance 
of the reality that is upon us.
  I am going to do this without knocking anything down. And I believe 
these are already up on our Web site, the ability to sort of take a 
look and see where is the money actually going; because I can't tell 
you how many times we would do those budget townhalls and someone would 
come in the door and say, Well, David, if you just did this, if you 
would get rid of foreign aid, that would take care of the problem. Then 
you go to this slide and try showing them that the tiny, tiny, tiny 
little sliver right there was foreign aid.
  Well, David, if you would just get rid of this. Well, waste and fraud 
is huge. The reality of it, we know in Medicare and Medicaid and many 
of these things, we have to come up with more dramatically efficient 
ways, the use of technology. We are going to start to talk about that 
at the end of this, that there really are some solutions we need to be 
embracing. But they are little slivers.
  Do you see the blue areas? Social Security, Medicare, Medicaid, 
welfare benefits, interest on the debt? As you saw today, with the Fed 
starting to raise interest rates, we expect, in just a few years, 
interest to be bigger than the defense budget. In about 7 years, 
interest will be approaching $1 trillion a year.
  Understand, this is the reality of the math. This is no more happy 
talk that seems to go around in politics. It is math.
  This portion over here, if you take out the Defense Department--so if 
you look at defense and all this blue, these here are all the agencies. 
It is important to understand these numbers, because I have been 
heartbroken at how often we do townhalls around our State, and there is 
this misunderstanding of where the money is actually being 
appropriated.
  So we are going to talk about a little bit of the demographics of 
what is going on, but also, how much trouble, how much difficulty is 
Social Security in?

[[Page H9365]]

  Remember, they used to say it is the third rail of politics, you are 
not allowed to talk about it or tell the truth about it, but we have a 
moral obligation to explain what is going on. How about Medicare? How 
about some of these others?
  So I wanted you to see this particular slide here, and this just 
gives you a sense of also what is happening with us demographically.

  I can remember many, many years ago, sitting in a statistics class 
over at Arizona State University--I love that school--and this is, I 
think, in the early eighties, and the professor is showing graphs 
saying, you have got to understand, in the 2015-2028 point, you have 
all these baby boomers that move into retirement, so I am sure the 
government, I am sure Washington, D.C., will make sure they have these 
massive amounts of reserves set aside to provide benefits for our 
seniors.
  Well, being one of those ``end of the baby boomer folks,'' and now 
being here in Washington realizing: That money isn't there. So when you 
look at this particular chart--and the only reason it is partially 
here--you see 2018, it is the next to the last bar. And then, all of a 
sudden, the last bar, do you see it is shooting up? We have hit the 
time they have called the inflection point.
  So, in 22 months, we hit the time that we have talked about for 30 
years, that the debt is going to start to explode in this country; 
2018. We are doing the 2016 budget right now. We are already in the 
2016 budget. So 22 months from now, the debt starts to explode.
  So we are going to have a good year this year, though, because of 
some of the budget deal that was done about a month or so ago; and some 
of the other, lifting some of the spending caps of sequestration, we 
are going to end up with a larger deficit this year.
  So I guess the best number I have seen right now is $440 billion, 
$450 billion this year. But come 2018, a couple of years from now, it 
starts to take off, and it takes off for, functionally, the next 40 
years. This is the reality that is facing us. So, if you care about the 
military and education and all these other things, understand what is 
about to happen.
  Here, actually, are some of the slides that start to become more 
difficult to talk about, and I am actually sort of frustrated that we 
don't do more of this.
  This particular chart here--and actually, I think this one I may have 
taken from The Wall Street Journal. And for folks who are actually 
interested in these demographic facts and how they affect your country, 
but also affect the world, The Wall Street Journal actually just 
recently finished a series I think they call ``2050,'' and it actually 
has some of the best narratives, best graphs, best details I have ever 
seen in sort of walking through, that this just isn't an American 
trend.
  Take a look at the numbers you see in China and other places around 
the world, where the aging of the population, compared to the benefits 
that have been promised, compared to the number of workers, and that 
imbalance, and what that means to future economic growth for the world, 
let alone just the United States.
  But do you see this line where it starts to explode off the charts? 
That is, functionally, enrollment in Social Security. So when we were 
at 2008, we had about 41 million folks who were in Social Security. 
Today, I believe now we have crossed 50 million, so 2008-2015, this is 
the reality of how quickly that slope. And it is the what? It is the 
baby boomers.
  Remember, we have about 76 million of our brothers and sisters who 
turn 65 in about an 18-year period. The first one, the first baby 
boomer crossed that threshold, I believe, in late 2008. So we are in 
that demographic inflection.
  You are going to start to see more and more of this reflected in our 
economic growth, in the debt, and the movement of your Federal 
Government resources into retirement programs for those who are over 
65. Whether it be medical, whether it be indigent medical, whether it 
be Social Security and others, it is our commitment. We have made these 
promises. We have also made a promise that we need to find some way to 
pay for them, and that is where this discussion, hopefully, is going to 
take us.
  This slide is a bit more of a concern. We are doing a project in our 
office right now. We have a little, a couple of folks set aside in our 
office called the ``Idea Shop,'' and they try to do sort of detailed 
research outside the day-to-day chaos that is being a Member of 
Congress.
  It is really the bottom point here that I want to pop out at you, and 
that is the number of our brothers and sisters, the number of our 
fellow Americans, that are 55-64, so they are heading towards 
retirement. Nineteen percent of them have no retirement savings at all, 
so they are solely dependent on Social Security and the medical 
benefits that they will receive from Medicare.
  If we bounce up one, 25 percent of those older than 45 have, 
functionally, no money set aside.
  Now, I accept we have just come through a pretty rough economic 
cycle, but the last couple of years it is getting better. It is still 
not great, but this is a point where we are starting to step up and 
understand we need a revolution in this country's Tax Code. We need a 
revolution in how we regulate in this country.
  We all walk around with these supercomputers in our pocket. 
Information is ultimately the greatest regulator in a society, and yet 
we still try and design these command-and-control functions of 
bureaucracies like it was the 1930s.
  We are also going to do a little talking about embracing the new 
economy, the hyper-efficient economy, that will, hopefully, maximize 
economic growth.
  But everything, whether it be from immigration, to Tax Code, to 
regulatory codes, everything, now the first words out of that 
politician's, that policymaker's, that researcher's, and you, as the 
constituent's mouth needs to be, how does this maximize economic growth 
for the country, because I want to keep my commitment to the young and 
our commitments to seniors. When you look at the numbers, it does not 
happen unless we can get this economic expansion, some economic growth 
really working.
  So as we go through these slides--the other thing is also, for 
someone that is also really interested in these, we try to put these up 
on our social media, but these are some of the different projects we 
are working on.
  Now, on this one, this is just to sort of understand, one more time--
and I know I am repeating myself with the different slides, but we did 
a budget deal about, what, 2 months ago? Social Security Disability was 
going broke. Social Security Disability in early, mid-2016 was, 
functionally, the trust fund for that was going to be gone.

                              {time}  1600

  So the solution that Congress supported--I voted ``no,'' but that is 
because we thought we had a more elegant solution. Functionally, the 
political will was not there for the types of reforms we thought were 
appropriate.
  They reached in and took $114 billion out of the big Social Security 
trust fund and moved it over here to the Social Security disability 
fund to shore it up. Okay. That was their solution, but there was 
almost no discussion around this body that it shortened the life of 
Social Security by about another year.
  So when you take a look--the reason we are showing these is--take a 
look at this middle one. If you were to exclude the interest--now, 
understand, the revenues for Social Security come from really two pots, 
the taxes and then the money it has loaned to the government back to 
the general fund.
  So the Federal Government--I know it is just an accounting gimmick 
back and forth because we are paying ourselves interest, but that is 
what we do. We pay ourselves interest, and that is considered one of 
the revenue sources for Social Security.
  So if you were to take taxes and interest, but if you were to look at 
that midline and say, instead of the sort of bookkeeping entry we do 
back and forth, no interest, just the revenues from taxes on FICA, 
Social Security, it went negative in 2010. So more money was going out 
to beneficiaries than what has been coming in in taxes.
  But if you actually put both the interest and the tax stream, it goes 
negative no longer in 2022. It goes negative now in 2021. So if I had a 
big marker, I would walk over there and cross that out. Of course, I 
would also knock over the board in doing it. So, functionally, 5 years, 
60 months from now, Social Security goes negative.

[[Page H9366]]

  Mr. Speaker, this is no longer that theoretical discussion we were 
having saying sometime off in the future, sometime in 2027, sometime in 
2040. It is 5 years. It is less than one U.S. senatorial term that 
Social Security goes negative.
  Mr. Speaker, how much discussion do you see in the political class, 
in the researcher class, the policy class, and in our communities 
saying: ``We need to deal with this today because every day we wait it 
becomes more difficult''?
  If we look at the history of the last couple of decades when those of 
us who care about this deeply have gotten behind microphones and 
started to point out the numbers, we see the television ad the next 
campaign, whether it be pushing Paul Ryan or a look-alike off of a 
cliff and saying that Paul Ryan wants to try to reform your 
entitlements because--the fact of the matter is Medicare is going 
bankrupt. He wants to save the system. But if we can scare you to 
death, it becomes a great political issue.
  I also believe the voters are way ahead of the political class in 
understanding we need to step up and do hard things to fix these. I 
also want to make the argument that these are the biggest issues in 
front of us because, if we don't do it, then everything in the future 
is going to be how do we survive the promises we have made in our 
entitlements. And it is coming fast. Remember, Social Security goes 
negative in about 60 months. That is how fast it is coming at us.
  This was just to sort of reemphasize the fact--do you see that little 
red area? That is what we did in the budget deal a couple months ago. 
We grabbed that $114 billion and pulled it out of Social Security. 
Because of that, we shortened the life. We tried to do this without 
knocking them over. This was just another variation of the same set of 
numbers.
  So now you know the reality. We have some on Medicare. But when you 
start to see some of the charts, we have charts that say that, if there 
is not a substantial economic expansion, Medicare could be 7 years and 
the trust fund is substantially drained.
  Remember, these are supposed to be freestanding trust funds. The way 
the law works is you start to cut benefits. We need to avoid these. So 
how do you do it? How do you avoid these?
  The first argument I want to make is it is next year when we start to 
discuss tax reform, a tax reform that maximizes economic growth, maybe 
not the benefit for the group you belong to or the industry you are in, 
but the tax reform that benefits the entire country to maximize 
economic growth.
  Mr. Speaker, I am also asking for a revolution in the way we look at 
the regulatory state. There are a few people who have written about 
this. There are a few people who have thought about this.
  For a couple of years I sat on the Science, Space, and Technology 
Committee. We would have debates back and forth with the EPA on: ``How 
did you get to this regulation? How did you find this out?''
  They would say: ``We are not going to give you our data sets. It is 
proprietary. We are just doing the command and control.''
  I learned there is this intense frustration. There is this fight out 
there between I believe people who make money off the regulatory state 
and those who functionally pay for it, which is all of us.
  The fact of the matter is the crowdsourcing of information and data. 
Are we actually doing the most efficient methodology to have clean 
water and the most efficient technology to have clean air?
  How about in my financial world? I sit on the Financial Services 
Committee. This is going to get a little geeky. But, in 2008, the bonds 
that were backed by mortgages blew up.
  All of a sudden we found out there were lots and lots and lots of 
mortgages and deeds of trust rolled into these bonds that stopped 
performing. There were lots of debates and discussions of these were 
toxic loans, they were Alt-A that were put into these bonds, whatever 
the reason. How did we not know?
  So we set up a financial system that bundled these mortgages into 
bonds. Are you telling me that, from the regulatory state, if we had 
designed an information-based regulatory system where those of us--when 
I was Maricopa County treasurer and you were looking at buying debt to 
park the cash you had so you would get a rate of return for your 
taxpayers, you would pick up the phone and call Moody's or call S&P or 
call the rating and say: ``Hey, is this a safe bond? Is this A rated? 
Is it AAA?'' or whatever it is. You would get a phone call back. They 
would say: ``Yes. It is fine.'' That was your due diligence.
  How about a system that uses information so the information flows 
saying: ``Hey, the bond you are looking at, you now have 5 percent of 
the loans on it that aren't making their payments,'' ``Hey, do you 
realize this bond has an intense geographic concentration so, if 
something happens in that geography, you are going to have ever greater 
difficulties?''
  All of a sudden the regulators that are built into the system come in 
and bayonet the wounded after the war is lost. Sorry. That was one of 
my father's favorite sayings.
  But the fact of the matter is the way we do much of our regulation is 
after the sins have happened instead of using information to avoid the 
mistake in the beginning. So I am making the argument that that type 
of revolutionary thinking in the way we, as a society, regulate will 
maximize economic growth.

  On immigration, you need to change this immigration system. When you 
realize that two-thirds of the immigration population is familial--and 
I know this sets people's hair on fire.
  But if you are going to take in 1 million, 1.2 million, legal 
immigrants into the country this year, you do realize two-thirds of 
that population functionally gets to come to the United States because 
of a family member, where much of the rest of the world, whether it be 
Australia, New Zealand, Great Britain, Canada, have moved to a system 
that maximizes talent because they figured out they desperately need 
economic growth to keep their commitments.
  But there is a fourth one that is almost never talked about and I can 
actually start to see here in Congress and I see it in our State 
legislatures, and that is actually the new economy.
  I promise sometime when we get back in January we are going to do a 
presentation of how the new economy can both change how the government 
functions, but also, if we can get out of its way, it provides 
opportunity for everyone and, hopefully, maybe some escape velocity 
economically.
  So let me throw you first just a simple concept. How many of you out 
there have ever ridden in a ride share or seen these things they call 
like Zipcar where you hit the button on your phone and you are able to 
just use a car? Why doesn't government do that?
  I think we saw some data that there are 176,000 cars that are either 
owned or leased by the Federal Government. We found one small agency 
that had more vehicles than employees.
  So if I came to you right now and said: ``Let's rethink this. Does 
this agency here belong owning their own little vehicle fleet and this 
agency that is right next door belong owning theirs?''
  Why wouldn't you pool them together and create a simple app that does 
two things? It says the cars belong to everyone in the agency. You hit 
the button and say: ``I need to use one today, and tomorrow I don't 
need one'' and, ``Oh, by the way, the technology says that I am going 
to this community'' and it tells you who else from the bureaucracy is 
also going in the same direction.
  It is already happening in the private sector. Now think of it even 
more expansive. Why is it just the Federal Government? Why wouldn't it 
be your State, your local, your tribal?
  Another example we are working on right now in Arizona and we are 
actually working on with some of my State legislators is this concept 
for capital assets.
  Mr. Speaker, I live in Maricopa County. It is maybe the third or 
fourth most populous county in the country. It is made up of 30-some 
cities and tribal communities.
  How many of those communities own the really expensive earthmovers? 
How many of those earthmovers are used to their max every single day? 
If they are not, why isn't a simple app created to

[[Page H9367]]

share? So do this tribal community, this city, this county, and this 
government each need to own their own? Why aren't they put on sharing 
platforms?
  The concept is real simple. Capital assets need to be maximized. It 
is like the concept of a classroom. At 3:45, when school is out, does 
that classroom become the community college? At 7:30, does it become 
the senior learning class? It is a building. We are paying to heat and 
cool it. It is there. We spent the capital money. How do you maximize 
the utilization of capital assets?
  Mr. Speaker, this is happening in the private world. Much of this 
technology is coming out of Silicon Valley and other hubs of innovation 
in our country. We need to open ourselves up in the government and say: 
``We need to be embracing this technology to move it to ourselves.''
  In the last half of this, I see fights starting to break out on the 
new technology and how it changes how we work. It changes our 
optionality. We need to understand that technology is changing our 
society. But if we can get out of the way, it can actually really 
provide us some opportunities.
  So there are crazy thoughts. We are researching these. Let's say you 
are one of these drivers, whether it be an Uber platform or something 
else and there is this argument saying, well, you are being treated as 
a self-employed 1099 or you are getting direct payments electronically 
or you are doing Airbnb or these sorts of things. How is that going to 
help you fund your Social Security?
  Maybe we need to rethink it. Maybe it really is time to have that 
honest conversation of should you be allowed to have that account that 
is truly yours and set up your technology that every time you have a 
client and you take them and deliver them to a location, every time you 
have guests in your Airbnb, every time you provide a certain service, 
you can use that technology so that a little bit of that money goes to 
your retirement account.
  We have the technology. It would be a very low-cost way to do it. And 
we start to engage in the technology revolution that is happening 
around us to basically embrace it, not be scared of it, and at the same 
time use that technology to shore up what we have just talked about, 
the devastating actuarial math we are running into.
  Mr. Speaker, I know there is a political battle coming in this 
because, for some of my brothers and sisters on the other side, it is 
very much: How do I unionize that population? How do I do this type of 
control? How do I have this?
  For many of those on the more free market side, we are making the 
argument for individuals to be able to use technology and the new 
economy to pursue their optionality, maximizing the value of their 
time. They need to be allowed to do that.
  We are Americans. Being free is part of the basic--it is supposed to 
be part of our DNA. At the same time, use that same creativity, that 
same optionality, to not be afraid of it, but to use that technology to 
actually grow the economy and embrace the empowerment of individuals to 
deal with the very problems we were showing on those slides.
  Mr. Speaker, I yield back the balance of my time.

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