[Congressional Record Volume 165, Number 17 (Monday, January 28, 2019)]
[House]
[Pages H1236-H1239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               CBO REPORT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2019, the gentleman from Arizona (Mr. Schweikert) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SCHWEIKERT. Mr. Speaker, I am going to try to do a couple of 
things tonight, and some of this is actually to answer some 
correspondence we had into our office when we did part of our, we will 
call it, unified theory presentation a couple weeks ago on what we see 
happening.
  I have two key points I really want to try to drill home tonight. I 
am going to say them over and over, and I am going to use a number of 
different slides to talk about them.
  Mr. Speaker, one is, it is obvious. You see what is happening in our 
mandatory spending, but that mandatory spending is substantially driven 
by our demographics. We are getting older as a society, and we need to 
just deal with that. That is not Republican or Democratic; it is 
basically math.
  Those of us from the baby boom--there are 74 million of us--the peak 
of the baby boom, I believe, right now, is about 63 years old. A lot of 
the reforms should have happened a decade ago. Now it is almost too 
late.
  So how do we deal with the fact of the matter? We are going to see a 
number of slides of what is about to happen in our mandatory spending 
curve and what that means to the financial impact of our debt and our 
economic growth in our society, because much of the debate you will see 
behind these microphones, I believe, is actually missing the point.
  We joke in our office that D.C. is substantially a math-free zone. We 
are going to try to actually do some math.
  The reason we put up this slide is very, very simple: just to 
visualize it. It is about a year old.
  This new CBO report update came out today. We are grinding through 
it. We have a couple slides here from that.
  But just to visualize, this is 1965, and that is 2018.
  Mr. Speaker, do you see the red area on the 2018? That is to give you 
a sense that we don't vote on that. That is on autopilot. The blue area 
is actually the defense spending; that is about 15 percent. The green 
is basically everything else.
  So remember, 70 to 75 percent of all of the spending around here is 
on autopilot. I am going to show you, Mr. Speaker, in a number of these 
slides how much of that is actually really based on our demographics.
  This slide is very powerful--and I am going to bend it just a bit to 
try to understand.
  Now, this is done by the Manhattan Institute. It was done about a 
year ago. So we are going to try to get the numbers updated.
  Now, this is not adjusted for inflation. So when it says what is 
causing an $84 trillion deficit, functionally, over the next 29, 30 
years, you can take off about one-third if you want to do the inflation 
adjustment in your head.
  But when you look at it, the point is up here. You see the first bar; 
that is Social Security. The middle bar there is Medicare, and the 
third bar is everything else.
  Mr. Speaker, you will notice everything else over the 30 years is 
actually positive in its impact on revenues, but Social Security and 
Medicare are the

[[Page H1237]]

vast, functionally, almost all of that $84 trillion of debt.
  It is demographics, it is math, and we need to deal with it, because 
as a society and as a government, we have an obligation to keep our 
promises. These are earned benefits. But how do we do it?
  We are going to talk about how we keep our promises in the last part 
of these slides.
  But, once again, I am trying to make the point that the scale of the 
problem, if you have a political person, an academician--anyone--and 
they are talking about the future of this country, if they are not 
talking about what is happening to us demographically and our 
entitlement promises, then they are not telling you the truth, Mr. 
Speaker, because this is going to drive all policy around it.
  Now, I will have lots of conversations with folks back home in 
Arizona--which is just beautiful; I think it was 74 degrees today in 
Scottsdale--and I will get: Well, I paid into the program.
  And you did, and we have a social contract with you on those 
benefits, but we do need to understand some of the actual math.

                              {time}  1945

  This is sort of the average person who will be moving into retirement 
over this decade. For Social Security, you will have paid in about 
$540,000 in Social Security taxes. You are going to get about $616,000 
back out.
  Those two are fairly in balance, even though all that money that went 
to the trust fund then is loaned to the Federal Government, and then 
the Federal Government--actually, Treasury--puts special T-notes. The 
last time I checked, they were paying like 3 percent, so they had a 
reasonable rate of return.
  But the one that causes most of the deficit over the next decade, two 
decades, three decades, you look at Medicare. The average person will 
have paid about $140,000 in Medicare taxes. They are going to get 
$422,000. So 140 in, 422 out.
  When you see that number, it is an understanding that we need to do 
the things that would bring price disruption to the delivery of those 
health services. If not, think of this: 74 million baby boomers--74 
million baby boomers--and, on average, we will have put in $140,000 in 
Medicare taxes, and we are going to get $400-some thousand in benefits 
back out. The math is just devastating for our economic future.
  This is a brand-new slide. This is in today's CBO report. The reason 
I had this one printed is to understand, in 9 years, according to 
today's CBO report--9 years--50 percent of all Federal spending, not 
counting interest, just 50 percent of all Federal spending, will be to 
seniors.
  Just understand what that means. I believe, in the early 1970s, for 
every dollar that went to seniors, $4 to $5 went to our children. It 
has, obviously, more than doubled in the other direction.
  It is just demographics. We are getting older. Birth rates have 
substantially collapsed in the country.
  But this is in today's CBO report, just to get our heads around it. 
The dark brown you see on top, that is those who are 65 and older. What 
is more of a rust color, those are 20 to 64, just to give you an idea 
of the population differences. Yet, the brown part, in 9 years, is 50 
percent of all Federal spending. We need to understand that it is 
demographics.
  Another slide, just to sort of make the point here, if you were to go 
from 2008 to 2028, take those years, 91 percent--91 percent--of the 
increased spending of the Federal Government is, functionally, 
interest, Social Security, and the healthcare--we will call it 
healthcare entitlements, healthcare delivery. That can be Social 
Security. It can be Medicare. It could be Indian Health Service.
  Think of that. Ninety-one percent of all the spending growth from 
2008 to 2028, over those 20 years: Social Security, interest, 
healthcare entitlements. Ninety-one percent. It gives you a sense of 
where the spending is.
  Yet, we will have hours and hours of debate on this floor over this 
coming year on trivial issues, because this is really difficult. This 
is hard. No one really wants to talk about it because the math is 
difficult. There are lots of zeroes.
  The elements of it mean some very difficult things for someone like 
me who believes one of the greatest issues of our time is retirement 
security. Yet, 91 percent of the increased spending from this Federal 
Government over that 20-year period: Social Security, interest, 
healthcare entitlements.
  Now, this is a brand-new slide. We are going to, over the next couple 
weeks, come back and do some more analysis on the CBO report today, the 
Congressional Budget Office report, and what it is telling us.
  This is a little awkward. We have never printed one this direction. I 
hope it works. This is directly from today's information, the budgetary 
policy release.
  See those lines? The only reason I put that up is to understand, 
whether it be what you all think of as the Social Security trust fund, 
the Social Security disability trust fund, or the Medicare trust fund, 
you will notice, in the next couple years, all of them go below zero.
  We need to understand the impacts, that demographics spending 
promises have now caught up with us, and we are emptying out those 
trust funds.
  This one is a good one. If you are like I am--and I know I am blessed 
to have some folks who correspond with me after we do these 
presentations. They have a fixation on: Well, what is the spending as a 
percentage of the size of the economy?
  In many ways, when you have someone throw out a debt number, the 
number that is most important to most economists, actually, is: How 
much is that dollar amount as a percentage of the size of the economy? 
That is why there is this fixation for many of us here that we have to 
grow the size of this economy, because that is how we can digest the 
amounts of debt that are, demographically, about to come to us.
  Do you see this number out here, that 15.1? Understand that is, 
functionally, 9 budget years from now. That is saying, 15.1--and this 
is from, I believe, today's CBO report. It is saying, in 9 years, 15.1 
percent of the entire economy will be Federal Government mandatory 
spending and 5 percent will be discretionary. Remember, discretionary 
is things like the military, parks, healthcare research.
  All those things will be 5 percent, and 3 percent of the entire 
economy's value will be what we are spending just to cover interest. 
Add those together, and you start to understand: In 9 years, Federal 
spending, we are over 23 percent of the entire GDP.
  What should blow off this page to you: In 9 years, over 15 percent of 
the entire Nation's economy is just covering the mandatory spending 
here. That is under today's policies.
  Now, in the next couple weeks, we will do more of this, and I am 
going to find a way to print some boards that become more digestible, 
because I will get calls that will say: Well, David, just do this. Lift 
the caps on Social Security.
  Well, let's look at some of those numbers. If we come over here and 
start to say to eliminate FICA caps from the 15 percent payroll tax, so 
just lift the caps, you have to understand that it covers 0.78 percent 
of the 6-plus percent of GDP shortfall.

  These are all the pop solutions that I hear often from my friends on 
the left. You start to add them up, and they cover only fractions of 
the avalanche of debt and spending that are coming at us.
  We will do some more breakdowns on these over the next couple weeks, 
just to understand where the real math is, because we have a classic 
problem around here. Our rhetoric doesn't actually fit our calculators.
  Let's walk through some of the other things that are going on. I have 
repeatedly come behind this microphone and talked about something we in 
our office refer to as the unified theory. I believe there are, 
functionally, five things out there we have to do to sustain the future 
and survive, those of us who are baby boomers, and our earned promises, 
our entitlements.
  The first one we talk about is: What are you going to do to maximize 
economic growth? What are you going to do to keep people in the labor 
force?
  This one here that I put up, this is a chart of what we call labor 
force participation.
  We were all joyful when we found out in December that we crossed over 
63

[[Page H1238]]

percent participation. But, remember, it was only like a decade ago 
that we were close to 67 percent of our population participating in the 
labor force, working.
  There is a great article today, if you have a chance to look at it, 
in the Wall Street Journal, talking about, in this incredibly robust 
job market we have today, where we have, functionally, hundreds of 
thousands--millions, if you actually do the average out--of positions 
looking for workers, that we are starting to see something that is 
really good for society. Those who have had a rough time are moving 
into the labor force. Those who have designations of having handicaps, 
maybe on Social Security disability, others, are moving into the labor 
force.
  I am fixated on this particular slide because we have to do better. I 
ask every policymaker, whether you are on the left or the right, to 
think about how we design these programs that are meant to be our 
safety net. How do we design them to encourage work, to encourage that 
participation in the labor force? We have to have that on this end, if 
we are going to have the resources on the other end to keep our 
promises.
  We are going to go through all five things that I believe, 
optimistically, can get us there.
  This one I put up just because it is from Arizona. A bit of trivia: 
You saw the numbers a few months ago talking about the collapse, 
functionally, in U.S. birthrates, you know, down to 1.67. Do you know 
what State had the largest fall of birthrates? It was actually my home 
State of Arizona.
  You start to see this and understand the scale we are at. We are 
substantially below replacement rate right now.
  When you see this slide, you immediately should start thinking about 
what we can do as incentives in our society for family formation with 
children, but also what are the levers within immigration that would 
help us move to certain types of population stability.
  Before we go to the next slide--let's hold off on that one--let's 
walk through sort of an optimistic vision of what we can do. It is big; 
it is complicated; and it is going to require a lot of us to explain 
really difficult things to constituencies that have heard politicians 
for decades now saying: Well, if we just take care of waste and fraud.
  You understand, there are problems out there. It needs to be fixed. I 
believe there are technology solutions to stop the waste and fraud. It 
is a fraction of a percent of what is actually happening out there.
  So let's walk through our five.
  We have to grow our economy. That is why we did tax reform. That is 
why we also now have to fix our trade situation. That also is why we 
have to continue the proper types of education in our society.
  There is a series of things you do as a society to maximize economic 
expansion, because we are talking more than just this year, next year, 
the next decade. We really need to have a window that goes out at least 
30 years.
  Remember our baby boom population of 74 million with the peak being 
63 years old? We need to be thinking at least 30 years out of what we 
do to maximize economic expansion over that time.
  A lot of it is going to be tax, regulatory, education, trade, those 
types of things that we have the levers on that can maximize that 
expansion.
  The next thing we were just talking about is labor force 
participation. Let's fixate on that.
  As we start to go through these, what do you also do within the 
incentives?
  You are 65. You are healthy. What could we do as incentives within 
Medicare, Social Security, certain of our tax rules, to encourage 
someone to stay in the labor force?
  If you have an interest in this, read some of the articles about 
things Japan has been doing to try to create some labor force 
participation stability, even though their population is aging out 
very, very quickly.
  The next slide I want to go to is one of my favorites, just 
conceptually. That is, much of the explosion in the costs, you see, is 
in the Medicare area. The debates that happen on this floor about 
healthcare, if you take a step backward and can strip your mind a 
little bit from being a Democrat or a Republican, you do understand 
that much of the debate around here is not about what changes the cost, 
but it is about who gets to pay.

                              {time}  2000

  The ACA created a world where we are saying: Okay. We are going to 
create all these government subsidies; we will move it this way.
  But it didn't remove any costs. Then we will actually do things that 
are saying: Well, we believe this will actually get more participation 
in the marketplace, and that will actually create actuarial stability.
  But, ultimately, if you actually take a step backwards and think 
about, in society, what do any of these do to actually remove costs? 
And I want to argue there is a technology disruption revolution about 
to hit in healthcare.
  The poster next to me actually is a handheld ultrasound. Think about 
an ultrasound that is the size of your phone. You take it, you actually 
plug it into your phone, and you have an ultrasound; something that, 
just a few years ago, was really expensive, you can have in your 
pocket.
  It is under a couple of thousand dollars, and, apparently, the prices 
are crashing because there are now multiple competitors in this 
technology because of the development of new types of sensors. Think 
about a world where it is much more than you are wearing a smartwatch 
that helps you with your heart arrhythmia, but think about something 
where you can blow into it, and it tells you if you have the flu and 
automatically could order your antivirals. Well, it turns out that is 
actually in testing right now.
  How many of you went to Blockbuster video last weekend? Of course 
not. There was a technology revolution--feels like it happened 
overnight--where we used to go stand in line, get a little box with a 
little disc in it, get movie recommendations from the person behind the 
counter. Today, we go home, we hit a button, and it is HBO Go, it is 
Netflix, Hulu, whatever you ultimately watch. We were quite willing to 
accept that technology in our homes almost overnight.
  I am going to continue to ask Congress, the regulators, the people in 
our society, think about what we could do to disrupt the costs of the 
delivery of healthcare, and I will argue with you that it is 
technology. There is an experiment going on in Arizona right now where 
I think they are up to five little clinics that are substantially 
autonomous. It is a powerful thought experiment.
  You will hear people; Members of Congress talk about telemedicine. I 
will argue with you, some of the research we have been doing out of our 
office, telemedicine now is already out of date. There is now 
algorithmic, where it can read these sensors that you wear on your 
body. It can actually read with the thing you blow into, and the 
algorithm is amazingly accurate.
  Would that concept help us in our issues in rural healthcare, but 
also in our ability to have the cost collapse that technology 
potentially brings? And I know it is uncomfortable because we are used 
to the system we have, but we can't afford the system we have. You have 
seen it in the chart. You see what is coming at us.
  Then the last thing of the five is we are going to have to have an 
honest conversation about the way Medicare, the way Social Security, 
the way many of these programs are designed. Do we need to look out 
into the future and build a shock absorber into them that has to do 
with life expectancy? What would happen tomorrow if we were blessed to 
have a cure to Alzheimer's and life expectancy suddenly--what is the 
term? Like a punctuated equilibrium, we had a sudden pop of a few years 
in life expectancy, what would that mean to actuarial tables?
  Do we need to start designing in shock absorbers policy-wise today, 
the incentives to actually stay and work so we have the labor force 
participation, but, also, can we build some spiffs, some incentives?
  So if you start to look at everything from fixating on the growing of 
the economy, fixating on participation in the labor force, fixating on 
the adoption of technology as a price disrupter, and then the actual 
structure we use on the delivery of entitlements, and we understand the 
scale and how fast this is coming at us, I will argue with you, it is 
something we need to do almost immediately.

[[Page H1239]]

  My goal is, over the next few months, every week, every other week to 
come behind this podium, and we are going to start to get more granular 
in how the policies would work and what drives them.
  So my point, once again, is understanding it is mandatory spending. 
It is substantially, remember, 91 percent, delivered by our 
demographics, and demographics isn't political. It is just what we are 
as a society. So what do we do?
  Last bit, because I skipped it, and I want to come back to it. 
Immigration; designing an immigration system that substantially 
promotes a talent-based model. Why? If everything we do policy-wise has 
a fixation on economic expansion, on economic growth, so we actually 
have the resources to keep our promise as a society, you actually have 
to think about, even immigration, and a model within that both looks at 
population stability--because you saw what was happening to our birth 
rates--but a talent-based system so you get the maximum multiplier 
effect of economic growth.
  When we do the math in our office, we see a way to stabilize the 
debt. It doesn't go away. It keeps growing, but the economy grows so 
that percentage of debt to GDP actually keeps us so our interest rates 
don't explode off the charts because no one will take the risk on our 
debt, but think of the number of policy decisions I am asking this body 
to make.
  There is a path. It is going to be hard. We are going to have to 
explain a lot of very difficult mechanics of why we need to do what we 
are going to do, but it is the path that saves our country.
  I have a 3-year-old little girl, best little girl ever. I want her to 
have the same opportunities I have had. And the way our demographics 
pile up our debt over the next 30 years, she won't have the same 
opportunities I have had, and that just isn't fair. That is not fair to 
anyone. We have got to find a way to keep our promises and have the 
next couple of generations also have the same opportunities.

  Mr. Speaker, I yield back the balance of my time.

                          ____________________