[Congressional Record Volume 164, Number 10 (Wednesday, January 17, 2018)]
[House]
[Pages H469-H471]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX REFORM
The SPEAKER pro tempore (Mr. Comer). Under the Speaker's announced
policy of January 3, 2017, the Chair recognizes the gentleman from
Arizona (Mr. Schweikert) for 30 minutes.
Mr. SCHWEIKERT. Mr. Speaker, tonight, I wanted to do, actually, two
or three things. Some of this has been bouncing in my head since we
were on this floor a few weeks ago doing the tax reform discussion
debate, and the number of things that were said that just sort of drive
you a little crazy because the math was wrong, or there was sort of
make-believe.
For those who have been, shall we say, sleep deprived enough to stay
up and watch some of my presentations, which I do every couple of
weeks, you know I have a theme that Congress is often a math-free zone.
So I thought this evening we would actually do a little math history
and also talk about some really great things that are happening.
This is important. Think about the economy right now and what was
happening in the anticipation of tax reform and now that tax reform is
passed. During the tax reform debate, we would hear arguments, often
coming from our brothers and sisters on the left, talking about income
inequality.
So a couple of weeks ago, we did a presentation here on the floor
demonstrating that if you live in the world of the last decade, where
you are only growing about 1.8 percent GDP, and that joint tax and
CBO--the people who are our scorekeepers--are saying, ``Hey, for the
next 30 years, you are only growing about 1.8 percent GDP growth,''
that crushes people.
If you care about income inequality in our society, the way you solve
it is growth. And there are lots and lots of data from leftwing groups,
rightwing groups, and academic groups that say that growth is the
greatest cure to a society that has actually started to move apart
where the haves have more and the have-nots have less. It turns out
that occurs when you have a stagnant growth society. It is obvious.
Think about the last 10 years. Think about the projections of going the
next decade at 1.8 percent GDP growth.
One of the things I wanted to talk about is: if I came to you right
now and said, ``Let's just drop our partisan hats; you are not right;
you are not left;'' are you joyful that we are seeing data right now,
today, where folks with felony convictions are finding jobs at a rate
that has not been seen in decades?
How would you feel when you see other populations that have actually
had a really rough decade finding jobs?
Isn't that what we all come here and stand behind these microphones
and talk about?
Well, guess what, it is happening. If you look at some of the
unemployment data, populations that have actually gone the last decade
in a really rough position are finding employment, and there are some
amazing indicators.
Early last year, we came here and did a series of presentations on
what was happening to the Social Security Disability Insurance Trust
Fund. It was collapsing.
About a month ago, we had a meeting with the Social Security
disability actuaries. Guess what. All of a sudden we went from the
trust fund is gone in about 2 years to, hey, they just added an
additional 4 years on it.
It turns out that parts of our society, which would have been heading
towards disability payments and, therefore, leaving the labor force,
were finding employment that actually worked with their difficulties.
This is great. These are good things. I know in this town of
Washington it is just a partisan knife fight all of the time. I
understand many of our brothers and sisters on the left believe rage is
a way to politically communicate.
I would actually like the math. And what we are seeing happen in our
communities and our society for the populations we both care about,
good things are happening.
So how do we build policy around here that keeps it going?
The chart I have right here is sort of talking about what the
projections were as of October 2017--so fairly recent data--of what was
going to happen over the next couple of decades in the amount of our
society that would be in the workforce, and you see these lines just
crashing and crashing.
And all of a sudden--do you see the little dotted line--that is what
we were projecting in 2016.
Then, all of a sudden--do you see the solid line--it is up
substantially. And that was the 2017.
What was happening between those 2 years--2016 to 2017--that, all of
a sudden, we start to see a substantial hopeful increase in people
saying there are going to be opportunities in the labor force?
It was a combination of what this body has been doing in 2017,
whether it be a rational regulatory model heading towards the optimism
of tax reform.
{time} 2015
If you love and care about people, providing opportunities to have
your income grow, the ability to save for yourself, your family, your
kids' education, good things are happening. How do we keep it going?
So I want to walk through a couple examples out there if you follow
the press in our communities. I came across this story just last week
in one of our counties in the southern part of Arizona, beautiful area.
All of a sudden, there is such a labor demand that our local
correctional facility is actually now having demand to do skills
training and, actually, employment for
[[Page H470]]
folks that, if it were just a year or two ago, were often being
discarded.
Look for these stories, find joy in them, because this is what we
care about: someone having an opportunity, saying they may have had a
bad act in their life, but now that they are going to find employment,
maybe they have a future.
This is true, also, for many of our urban populations, for our low-
skill populations, for populations that may not have graduated high
school. We have story after story after story of employers now having
the resources that they are actually providing the training for skill
sets for employment.
Isn't this what so many of us have gotten behind these microphones
over and over and over and talked about, saying there is a way for
everyone to participate in this growing economy and have a joyous,
hopeful future and economic stability?
So I want to actually take this a bit further. Some of this is
additional discussion on the debate that happened here last month and
talking about revenues. Let's see if this makes sense.
My grandfather used to have a saying. He said: It doesn't matter how
you play the game; it is who keeps score.
I know; it is an adjustment on an old colloquialism.
It turns out around here, we were having these discussions about
previous tax reforms, previous tax cuts, and we would hear things, and
you would go back and look it up, and the numbers were just made up.
They were not what was actually done. So we are going to actually
correct some of that record today.
But the other thing we are going to finish on, the final two boards
here, we are going to actually sort of set the benchmark, the goal line
of what the tax reform is expected to produce, what the tax reform
should be judged by so we never experience what we had last month where
people just make math up for their own argument, but we will actually
know, saying: This is the goal line. Judge us by what we call the
baseline.
So the slide right next to me right now was sort of talking about
what we expected revenues to be. This is the history going back to
1967. You will actually see in here, from 1967 to 2016, the mean was
17.4 percent of the GDP came in as Federal revenues, and we had
actually expected it to move up to about 18.4 percent.
I am sorry for this, but it gives you an idea.
And you are going to see this on the next couple boards. In times
when we have raised taxes, when we have lowered taxes, when we have
done all sorts of things, that line of the amount of the economy that
comes in in Federal taxes actually stays within a very, very tight
band, which lets you know maybe the fixation isn't on the tax rate but
the fixation needs to be on a tax policy that maximizes economic
expansion; because, if you are going to be always in there about that
17.4 to 18 percent of GDP, have a bigger GDP, have a bigger economy if
you believe we need the additional revenues, which we do.
So on this, I want you to sort of take a look, because, overall, you
can look at times where we have had recessions and you see the revenues
go down; but you will see these dotted lines here, and these are some
of the different, we will call them, tax cuts, tax relief. If you look
on every location, there is the 2003, and then look a year or so later,
revenues spike up.
In 2010, part of the Obama administration and this Congress, there
was a tax change that actually gave back more revenues to workers and
those who were creating employment, and revenues actually went up.
So it is on the chart. You cannot pretend that there hasn't been
societal and economic expansions during these times.
So to actually drill this point down a bit more, in a lot of the
debate we had here last month, we had Member after Member from the left
come behind the microphones and say there is no such thing as a tax
reform tax cut paying for itself. That is just absolutely not true.
Now, there are lots of tax cuts over the history that didn't, but there
are lots of them that have.
So let's actually walk through the actual data.
This is one of those occasions where, if you know what the baseline
was, saying this is what the projections were of revenues before the
change in policy, you can't keep moving the goal line after the policy
is done to get your own argument to sound like it is competent.
So, in this case, we are going to actually look at when we did the
capital gains cuts back in, I think that was, 2003. A handful of
Members here on the other side came behind the microphones and talked
about how much money it lost. It turns out that is not true.
So, if you actually look at the blue, that is what CBO and Joint Tax
actually calculated that the revenues were going to be before those tax
changes. Remember, the 2003 was functionally just a capital gains tax
with a couple other things. The red was actual revenues.
Now, this isn't the debt, this isn't spending, because, you
understand, when you actually look at a deficit number, there are
multiple parts. There is the revenue and then there is the spending
around here. And this body loves to conflate that argument, saying,
well, the debt went up to this. It is because we kept spending.
Look at the revenues in isolation and see what happened in that
trend. Well, if you look at this chart here, you actually see the red.
Now, this is capital gains taxes. There were lots of predictions that
said capital gains taxes, you are cutting them, obviously we are going
to take in a lot less revenue. It turns out it didn't work that way.
Let's walk through a couple more of these to just sort of demonstrate
what that calculation is.
Also, as we discussed, the previous slide was actual hard revenues.
This one has its percentage of GDP, and you even notice even on a
calculation the size of the economy, there were more revenues coming in
after the capital gains tax cut of 2003. Many of you actually will
refer to it as the Bush tax cuts. I believe they expired in 2008.
Either way you try to judge it, whether it be on hard revenues or as
a percentage of GDP, guess what. It not only paid for itself, it made
money; and yet we have Member after Member after Member who will come
behind these microphones and tell you it didn't.
So let's actually look at what the actual math was.
Prior to the 2003 to 2008 capital gains tax cut--sorry, I know
sometimes these are big numbers and you are going sort of as fast as
you can--we expected about $13 billion in revenues from those capital
gains. Excuse me. It is $13 trillion over that time.
If you take a look at that $13 trillion number, that is what the
baseline was before the 2003 capital gains tax cuts.
At the time it was modeled, CBO, Joint Tax came in and said: Guess
what. You are going to go from the $13 trillion to only $12 trillion,
$12.9 trillion.
Turns out, though, from 2003 to 2008, when you actually calculated
the actual revenues from those capital gains tax cuts, what happened?
How much money did we lose? Turns out we made $77 billion more than the
projection of revenues before the tax policy change.
This is really, really important to get our heads around.
So when someone comes behind these microphones and says, well, there
is no such thing as a tax cut paying for itself, sure there is, because
here is the goalpost. The goalpost was set--or goal line was set before
the tax policy change. That is what the projection was over those
coming years. Then when the tax policy changed, it was projected to be
down here. You have got to look at the data from 2003 to 2008; and when
2008 added up, it turns out the capital gains revenue was $77 billion
higher than the policy before those tax cuts.
So just understand, this place loves to tell stories, but they often
don't demonstrate the actual math.
So let's actually talk about what is going on right now. We heard
predictions of everything from the end of the world to the end of the
world in regards to tax reform. As you know, there is functionally a
$1.5 trillion placeholder for the tax cuts and reforms that we did in
December that are now in effect.
So let's actually lay this out. This is actually what the projection
was going back to June. So this is fair and honest, saying this is what
we call the
[[Page H471]]
baseline. The baseline is what we should be judged by. Every year,
whether I am here or another Member is here, I am hoping someone will
come up here and say: Okay, here is what we took in. Did we exceed what
the baseline was? Did we get less?
Well, over the next couple years, we will probably get less than that
June baseline. But what also happened to the projections, the curve,
the size of the economy? Remember, at the beginning of this discussion,
we talked about some really neat things happening in our society.
When we started to work on the actual drafting of the tax reform bill
at the beginning of the year, we were living in a world that was only
going to grow in the United States about 1.8 percent GDP growth, and
today we are over 3. Now, some of that is anticipatory effects. Some of
that is a little excitement. There is a lot of confluence. But
understand what that means in revenues and opportunities and just good
things for everyone in our society.
So we are going to go to the next board just because this one is
really hard to read.
So here is what I am asking everyone to do. If you be on the left, if
you be on the right, if you happen to be in the media, understand that
the June number was that, over the 2017 baseline, for functionally the
next 10 years, was $43 trillion of revenue. That is fair. Judge us on
that.
So 10 years from now, maybe someone will remember this and look back
and say: Did we take in more revenues or less revenues in that time?
Because, if you consider what was said by the left, it was the end of
the world.
So that is the baseline number. We have on the previous chart sort of
what was projected each year for the next 10 years.
So, if I am blessed to be here a year from now, I will come back
January 2019, stand behind this microphone, and we will look at the
revenues that came in in the 2018 fiscal year compared to what we
projected months before the tax reform became real. Judge us by that,
but don't come behind these microphones and make up Armageddon and then
make up stories about what has taken place in the past.
This is important, because if you care about people, if you care
about opportunity, we have some real difficulties coming towards us.
In lots of the data and lots of the charts, in about a decade and a
half, 18 years or so, we hit a debt crisis, and your options are really
simple. You have to do substantial reductions to the dollars flowing
out that are substantially in entitlements because, remember, three-
quarters of this government's money rolls out in entitlements.
{time} 2030
Only about 15 percent of our spending is actually defense, and
another 13 or so is everything else you think of government. Three-
quarters of it is Social Security, Medicare, Medicaid--all the things
that are just formula.
And where we are right now, the peak of the baby boom is 60 years old
today. So economist after economist after economist, particularly those
on the left, have told us you can't grow more than 1.8 percent GDP. You
are heading towards a debt crisis. You are heading towards this
Armageddon.
So why wouldn't you stand up here, work to reform regulatory codes,
the Tax Code, the immigration codes, these things, and maximize the
things that will create growth and opportunity? I think that is just
what, at least on the Republican side, we have been doing.
So the reason I put up this chart is more to lay a marker. I used the
term ``goal line'' before. Understand that is the number before the tax
reform, and I believe a lot of it is anticipatory effects on the
economy. Hold us by that.
Now, who knows who will still be around here 10 years from now, but
will revenue exceed $43 trillion? That is the benchmark. You can't say:
Well, the debt went to this, our spending went to this, because they
operate outside the revenues. That is policy decisions made here on
what to spend, our disasters--God forbid--military action.
But the revenue number is what we should be judged by. And when you
see what is happening right now in our communities, in our society, the
number of organizations that have started to pay their employees more,
the number of organizations that are bringing back billions of dollars
to invest here in our country, the research, the development, maybe a
lot of the Malthusian economists out there--and for those of you who
don't get that, go look it up--who basically said the next three
decades of our life are basically constrained, dear God, I hope they
are wrong.
We as a body need to continue this optimistic opportunity of coming
and saying: Okay. How do we get more of our brothers and sisters to
actually be in the labor force?
We know today we have about 6 million jobs that are going
unfulfilled, lack of skills. We also know from recent publications,
because of the tax reform, businesses are taking some of those
resources and putting them into job training and taking populations
that were often being left on the sidelines and they are being drawn
in. This is wonderful.
How do you actually turn to others and say: Should turning 65 or 67
be hitting a wall? How do we actually provide you the opportunity, if
you so wish and so desire, to actually stay in the labor force and
continue to help to grow this country? Because work, we know, is often
good for the soul and the individual, but it is also really good for
our tax revenues and really good for the size of our economy.
Remember, the bigger the economy gets, the less that cliff, that
wall, that debt crisis that is about a decade and a half away, the more
that gets pushed off into the future and the demographic curve that is
those of us who are baby boomers, maybe that doesn't create a debt
crisis. Maybe it actually turns into an opportunity for this economy,
for this society to continue to grow and be happy and healthy and
prosperous.
This is one of those times I get behind the microphone and I am
actually excited from what I am seeing out there in the data. I ask
this body, even with the partisan rancor, let's continue to adopt those
policies that grow, that bring people, provide opportunities to be part
of the labor force, to be part of the American Dream; and by doing
that, the thing the left tells us they care about, income inequality,
actually closes. The things so many of us care about of not hitting
that debt crisis maybe get postponed, maybe never happen.
There is a path here, but it has to be everything. It has to be the
tax reform. We just accomplished that. It has to be rationalizing our
regulatory system. We are working on that. It has to be an immigration
system that focuses on maximizing economic expansion. It has to be the
adoption of technology. We are working on it. I think we can get there.
This is just fun having a chance to get behind this microphone and
actually be positive and optimistic after the last few years of where
things were quite dour.
Mr. Speaker, I yield back the balance of my time.
____________________