[Congressional Record Volume 166, Number 26 (Friday, February 7, 2020)]
[House]
[Pages H972-H975]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MODERNIZING ENTITLEMENTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2019, the Chair recognizes the gentleman from Arizona (Mr. 
Schweikert) for 30 minutes.
  Mr. SCHWEIKERT. Mr. Speaker, my family accuses me of being incapable 
of speaking without moving my hands or without displays, so we are 
going to see if we can do a little bit of both that we are good at.
  Mr. Speaker, about every week, I try to take a block of time and come 
here to walk through both what I see happening math-wise and what I see 
happening demographic-wise. I know as soon as I use those words, most 
anyone who is watching this is now falling asleep. But the math is 
important.
  I put this board up because I am a believer that there is a way to 
save the country from being buried in debt. There is a way that the 
next 30, 40 years can be incredibly prosperous, but we need to invest 
in this magic device, which is called a calculator, because much of 
what we do here is rhetorical.
  We do policy by feelings, and we engage in just absolute absurdity in 
our unwillingness to talk about the reality of what is going on.
  So, first, a bit of premise, and then we will do a little bit of what 
happened in today's job report to demonstrate there is a path, but that 
path doesn't exist until we start to be honest with each other.
  So just a top-line understanding, the next 5 years, just the growth 
in Social Security and Medicare--it is mostly Medicare--and healthcare 
entitlements, just the growth equals the entire Defense Department.
  Mr. Speaker, you have to understand what is happening. It is not 
Republican or Democrat. It is demographics. There are 74 million of us 
who are baby boomers, and we are moving into our retirement years. We 
have earned benefits, and there is no money in the bank. It is all 
going to be borrowed.
  So think of that: Over the next 10 years, just the growth of Social 
Security, Medicare, and healthcare entitlements is the entire 
discretionary budget. Everything else is on autopilot.
  Yet how many of our brothers and sisters who are elected, and who 
have this incredible opportunity and responsibility to come tell the 
truth, are comfortable coming behind this microphone and saying: Hey, 
it turns out that we are getting old very fast as a society. We have 
stunning numbers of promises that we have an obligation to keep. And we 
are unwilling to have the honesty of the discussion of what we are 
about to do to our kids in crushing them.
  I have a 4-year-old daughter. Doesn't she deserve to have the same 
opportunities we all have had?
  It turns out there is a path, but we need to stop delusional 
thinking. Forgive me when my brothers and sisters on the Republican 
side say, ``Well, if we just got rid of waste and fraud,'' it is a 
rounding error. It is important, and we need to do it.
  ``We just have to tax rich people more.'' It is delusional. It is 
fractions of a percent, and you could take all their wealth, Mr. 
Speaker.
  We don't seem to have our heads around the scale of this math and the 
number of zeros that go with it.
  Let's sort of walk through this. In the last couple of years, we have 
been trying to pitch a concept. You can't just do one thing, Mr. 
Speaker. You can't just change entitlements and think you are going to 
accomplish anything. You can't just tax people more and think you are 
going to get anywhere. You have to do everything.
  It is sort of the wholistic--I prefer the term ``unified''--theory 
that we have to get the economics working. We have to maximize economic 
growth, and we have to maximize labor force participation. We need to 
adopt revolutionary and disruptive technology to crash the price of 
healthcare because, as I was just sharing with you, Mr. Speaker, 
healthcare is what drives the deficit.
  I was here last week, and I was showing slides that 90 percent of the 
future debt is substantially Social Security but mostly Medicare, yet 
the only calls I get when I show that slide is I get people angry: Stop 
telling us that. That doesn't fit the folklore I bathe in.
  But the fact of the matter is, there are technology disruptions 
coming right now that could crash the price of healthcare and be 
amazing in changing our debt curve. The problem is a bunch of that 
technology is actually illegal because it uses algorithms, sensors, and 
things that our current legal framework and reimbursement framework 
isn't ready for. We need to modernize.

                              {time}  1400

  Employment, we are going to talk about some of the remarkable things 
that came out in today's unemployment numbers that should be incredibly 
hopeful to both those on the left and the right of what is happening, 
where our brothers and sisters--what we refer to as marginally 
detached--are coming back into the labor force. This is a good thing. 
It makes remarkable differences.
  You are going to start to see: Do we add incentives in the earned and 
even unearned benefits? Remember, in our society, the vast majority of 
our spending, 70-plus percent, is on autopilot. It is what we call 
entitlements.
  You earned your Social Security. You earned your Medicare. You earned 
your VA. You earned these things. There are other benefits you get 
because you fell below a certain income. You are part of a certain 
Tribal population--those things. These are treaty obligations. They are 
societal obligations we have made decisions on.
  Are there things we can do to add a spiff? Saying: Yes, you may be 70 
years old, you have your earned entitlement, but could we give you a 
little spiff? Are you healthy? Do you want to continue to work? Do you 
want to stay in the labor force?
  Because it turns out to be really good for society. It turns out to 
be really important.
  We still have a problem with millennial men, which is a different 
speech, and one day, we will figure out why they are 
underparticipating.
  Population stability, a really uncomfortable part of the conversation 
to have, but the math is the math. Our birthrates have collapsed. We 
are looking at data right now that says half of millennials, more than 
50 percent of millennials, will never marry. It doesn't mean they won't 
be in long-term committed relationships, but are there incentives we 
can produce as a government, as a society, that those stable 
relationships bring another generation? Because it is an honest math 
problem. We are collapsing population-wise.
  Immigration, how do you design an immigration system that is open, 
welcoming, but is talent-based? Because the reality of it is, we are 
about to hit such a demographic headwind if we do not have brothers and 
sisters becoming Americans who have certain skill sets.
  In many ways, it is a more elegant system. I don't care about your 
race, your religion, who you cuddle with, all of these things. I do 
care that you add velocity to our society, to our economy.
  Then, there are other things: tax policies, regulatory policy, smart 
technology, things we can do to maximize economic growth.
  Look, our pitch is: If we can make these things work--and you can't 
do one or two of them; you have to do all of them--we have a model that 
says, at the peak of the baby boom, so about 15 years from now, or less 
than that, we kiss up to 95 percent of debt-to-GDP, but we can hold it. 
Then, it fades back to something normal.
  If we don't do this, there are charts out there that show a couple 
hundred percent of debt-to-GDP. We blow up the

[[Page H973]]

society. We basically become anemic, slow-growth. We raise taxes like 
crazy on young people to make them pay our benefits. We become a 
country that has crushed any excitement and hope.
  Let's talk about the good things, because there is starting to be 
some proof that when you get tax policy correct, regulatory policy 
correct, some of these incentives, good things happen. I know in 
today's rage-based politics, we sit there and attack everything, but 
there are good things happening.
  How do we figure out what makes them happen and do more of it? And 
the things that aren't working, let's do less of them. It is not that 
complicated.
  Look, today, we got the jobs report. The jobs report we get about 
January is really important because they also give us a sense--it is 
not the final number but the sense of what was happening in 2019 and 
those last 4 months.
  Every smart economist we work with--I am the senior Republican on the 
House side on something called the Joint Economic Committee. It is 
basically for all the kids in your high school who were president of 
your math club. If you love the data--and I happen to be blessed to 
have a couple of economists who work for me in that capacity--we were 
all expecting revisions and some ugly numbers.
  Turns out, a few hours ago, we found out that there were 55,000 added 
in November and December, the ending parts of last year. The economy 
turns out to have been healthier. The employment opportunities were 
healthier.
  You all saw the number for January, 225,000 jobs, far beyond even the 
most optimistic predictions. There should have been joy in this room. 
Those are people who are working, who are coming back in the labor 
force, who are changing their lives. But this place is incapable of joy 
anymore.
  These are really, really good things. But there is something even 
more remarkable underlying in that data, and it is important. I know it 
is not exciting, but it is really important if you care about people.
  First, we work on the premise that growth is moral. You are going to 
see some numbers here where our brothers and sisters who had basically 
quit, they had stopped trying to find employment. They had dropped out. 
We called them the marginally detached. Those people who might have a 
small part-time job, but they are unhappy. They are basically the 
working poor.
  All of a sudden, we are seeing, in the last 24 months, remarkable 
movement in their wages and even more remarkable movement in their job 
opportunities. There is something working out there.
  Remember, the first slide we were talking about how we have a healthy 
enough economy, a healthy enough economics in our society so we can 
keep our promises. This is one of the charts that is really important.
  If you all remember your high school economics class, what are the 
two components that make wages go up, the two things we focus on? Well, 
one is productivity, and the other is inflation.
  When your wages go up, well, inflation is up, so we are going to pay 
you more, even though you have no improvement in your purchasing power. 
And inflation-driven wage growth, you are typically falling behind.

  The other side--and that is what this chart talks about--is 
productivity. The company invested in a new piece of equipment, new 
software, new methodologies, or new supply chains, but it requires 
capital investments. But we have gotten more productive, meaning we can 
pay our workers more.
  We were panic-stricken, functionally, at the end of 2016. 
Productivity had collapsed. Lots of the smart people were saying: Well, 
you have had the tax reform. People did their investing, this and that. 
It is going away.
  Turns out, they were absolutely wrong. Look at the last bar. That is 
2019. We have had a spike. Now, I still don't think it is enough, but 
we are up to what we call 1.7 productivity growth. For an economy our 
size, that is remarkable. We can do better, but it is going the right 
way.
  If we are going to pay our brothers and sisters more, if the working 
poor are going to have an opportunity, this is crucial. Can we fixate 
on the things that are working in our economy? Because there is 
something working now, so how do we do more of it?
  This next chart is impossible to read, but it is really important. 
You have three layers in here. These are for wages, so those folks who 
are at the low end of the scale, middle end of the scale, and those 
folks who are making lots of money.
  The remarkable thing that has happened since tax reform--I know this 
is really hard to see. It turns out, it is the working poor, that 
lowest quartile, that is having the most growth in their wages, that 
bottom 10 percent of our brothers and sisters that we were writing off 
as a society.
  I have been on the Joint Economic Committee now for years, and just 3 
or 4 years ago, we brought in these fancy, very well-credentialed, 
really smart economists who basically said that Americans who didn't 
finish high school, Americans with moderate skills, they are part of 
the permanent underclass. Start thinking of ways to provide them 
subsidies, welfare, housing, because they are going to stay there.
  The velocity, the concept that you can start out poor today, learn a 
skill, work hard, and move up, they basically said was over. They are 
wrong. And this isn't Republican or Democrat. This is hope. This is 
what America is supposed to be about, that those folks come back.
  You may not have had the opportunity to have great skill training. 
Maybe something horrible happened in your life, you dropped out of high 
school. Three years ago, we were writing you off. Today, you have 
double, more than double, the wage growth of everyone else and the mean 
in this society.
  I know this is geeky, but it is really important. These numbers are 
millions and millions and millions of our brothers and sisters out 
there who had a really crappy decade. All of a sudden, something is 
happening out there where their wages are growing. The job stability, 
the value of their labor, it may be the most elegant way to say it--and 
some of this is complex. And this is an uncomfortable part of the 
conversation. Forgive me if I am not as eloquent on this as I would 
like to be.
  For low-skilled populations, it is a combination of a robust enough 
economy to have a need for those skills or lack of skills. But there is 
a need for that labor. The other side is, you are not flooding your 
society with a type of immigration that puts so much low-skilled 
population in the society that you crush the working poor.
  So think of a little bit of a seesaw. You have to do both to get the 
value of that working poor population, to make their labor valuable. It 
is happening. That should be joyful. Now, we should figure out how to 
do more of it, how to keep this going, because it is working.
  Now, here is the one where I may take us a little bit to a level of 
complexity in the thinking, but it is really important. When we did tax 
reform a couple of years ago, the Joint Committee on Taxation folks--
they are all freaky smart. There is like 50 of them. A number have 
Ph.D.'s in econometrics and all these things.
  They came to us and said: David, there are two fragilities in tax 
reform for the economy to grow. It is capital stock, available cash to 
be lent for businesses, for organizations, for things to grow, to buy 
that new piece of equipment for that labor productivity. The other 
thing was labor itself.
  We are getting old very fast as a society. There are some charts out 
there that say, within the decade, we functionally have two workers for 
one person in retirement. It is not Republican or Democrat. It is those 
of us who are baby boomers. It is what it is.

  Something has started to happen in the last 2 years, and we saw a pop 
of it in this January data. Think about this. This over here is sort of 
that 2008, 2009, and we were at 67 percent labor force participation. 
Now, labor force participation basically means everyone in society less 
those people who are under 16. So those who are eligible to work, up 
and to, I believe, being much older.
  Now, this number was always supposed to crash because we are getting 
older as a society. But it was supposed to continue to just dive down 
because we are only halfway through the retirement of the baby boomers.
  All a sudden, in the last couple years, we have broken the trendline. 
All of a sudden, today, we saw we are up to 63.4 percent labor force 
participation. Most people glaze over and go: What the hell does that 
mean?

[[Page H974]]

  Well, it means it is a number that those smart economists a couple 
years ago were telling us we would never get to, but somehow it has 
happened. We are functionally living in a time when we are going to be 
rewriting textbooks.
  But what is also remarkable--and you are going to see this in one of 
the other charts here--is those who are coming back, they are starting 
to look for unemployment.
  So how do you have this weird number today? There are 225,000 people 
who moved into the labor force, or took jobs in January, but 
unemployment actually ticked up one-tenth of a point. But the labor 
force participation, the number in the labor force, also goes up two-
tenths of a point. That is actually wonderful.
  What it means is that people who had given up, who weren't looking, 
hadn't looked in the last 4 weeks, in the last year, they had 
functionally given up, almost a couple hundred thousand, maybe 170,000 
or so, came back and started looking, coming back into our society's 
labor force.
  This is really important because there is just that societal concept 
of you are less likely to be using bad things if you are working. You 
are more likely to be able to start having a functioning family, maybe 
even family formation, if you are working. Your future, your optimism, 
your health are better if you are working.
  All of a sudden, we are starting to see populations that those fancy 
economists were writing off just a couple years ago. They are coming 
back.

                              {time}  1415

  This is moral, but it is also really good. Why does it become 
partisan, saying: Well, it is not as good as it should be? It is a 
remarkable break of every trend line we had.
  You would think we would have this honorable conversation, saying: 
Let's understand what is working and do more of it because, if we can 
do this for a few more years, another decade, that economic trend line 
starts to change remarkably.
  And I will try to make that make sense.
  So last August, CBO did debt projections. We just got another one 
last week. Did anyone come behind these microphones--well, I did--and 
say: Hey, did anyone notice that the 10-year window of debt actually 
went down $705 billion?
  It turns out, if you dive into that, some of that was payrolls. There 
are a lot more people working. They are paying a lot more payroll tax. 
That is wonderful.
  There is another thing that is actually a little more complex to get 
your head around: interest rates. We expect the cost of financing the 
deficits of the U.S. Government to also came down about $400 billion.
  But there is an argument that the tax reform--remember how we said 
what were the two fragilities, labor and capital stock? It turns out 
that thing called capital stock is remarkably better than anyone had 
modeled.
  We did something in the tax reform to stop businesses from moving 
their domiciles overseas, taking their profits and booking them 
overseas, keeping that capital overseas. We changed that.
  We have had a remarkable amount of that, billions and billions, I 
mean, a few hundred billion dollars come crashing back to the United 
States, where they have to pay some taxes here on it, but that cash is 
now in our society.
  It turns out also savings rates have turned out to be much better 
than we modeled.
  So just that and the fact that more people are working is about a 
$705 billion reduction in the deficit. In that one period between 
August and last week when we got the CBO report--and remember, the cost 
of tax reform we thought would be about $1.4 trillion. We just covered 
about half of it. So it is just an interesting thought on what is going 
on.
  This is the remarkable chart. This is the one we need to get our 
heads around. So think about this.
  It is January 2009, January 2010. How many of you remember people 
getting behind microphones and talking about the real unemployment 
rate? Do you remember the real unemployment rate? It is not these 
people who are out looking. It is all the people. It is the worn-out 
workers. Those people have quit. We had numbers where it was 
approaching 17.6, 17.5 percent of our Nation was part of the real 
unemployment.
  Take a look at what has happened. This is remarkable. We are now 
starting to see numbers that were 6.7 percent of the--this is people 
who are looking, not looking, who have worn out, who have given up. It 
has been cut substantially, more than half.
  And we are at this point where we have been having this amazing 
academic debate, conversation: What is real unemployment? Not only 
that, what is full employment? How much--and I was told never to use 
this word behind the microphone--but this concept of elasticity. How 
many of our brothers and sisters are actually available to come back 
into the labor force?
  It turns out there is a miracle happening out there. Every month, we 
will tell you: Oh, 150,000 or, in this case, 225,000 took jobs, because 
it is not part of the way they calculate. We are not telling you: Hey, 
there may have been another couple hundred thousand who moved back into 
the labor force who weren't even looking, so we don't count them.
  They deserve to be counted, and they are counted in this data here. 
They are what they call the U-6 unemployment.
  If we could keep this going for a few more years, we are already 
breaking the rules in almost every textbook, but this becomes 
remarkably important.
  For my brothers and sisters on the left, my brothers and sisters on 
the right, we get elected to do our best to make people's lives better 
and protect the Constitution, defend the Constitution. If you don't see 
this as making Americans' lives better, you don't understand, you don't 
own a calculator, or you don't have a heart.
  I get behind here and I talk about the math, but this math is people. 
It is families. It is folks who are being crushed in the last decade 
who now actually have hope.
  Why isn't there some joy? Why do we have to live in a time where rage 
is the commodity of politics and not joy for the success we are having 
for so many people who are part of the working poor that now have hope, 
now have futures? It is working.
  And the other thing that is also somewhat joyful, you see the red 
bar, that is real GDP.
  You have got to understand, if we were going back to around `16, even 
when we calculated the year `17, how much of our GDP was also being 
dragged along, helped, assisted by the rest of the world? Now, when you 
look at what is going on, we have had a remarkable level of stability, 
but we are dragging the rest of the world with us because the rest of 
the world is basically an anemic mess right now.
  And, yes, next month I expect some ugly things in some of the numbers 
because of the virus and what it has done to trade. There may be an 
upside in an odd way where many manufacturers, businesses, will 
consider moving their supply chains, making them less fragile, less 
concentrated, which will be great for us as a country because we have 
just now had USMCA, the NAFTA replacement, pass, so now, all of a 
sudden will you think about moving part of your manufacturing back to 
North America.
  But this is actually a really interesting chart to understand. Even 
in a time where the rest of the world's economic growth has been 
collapsing, we are still doing remarkably well.

  And I was going to come up here and show you the formulas of, hey, a 
point of GDP in the EU means this much to us. But just understand, we 
had some help 3 or 4 years ago. Now we are the ones helping the rest of 
the world.
  Now, back to that being remarkable, and this is sort of the closing 
on the concept that growth is moral. But there also should be joy.
  Those who come behind these microphones and say, ``We care about 
people,'' ``We care about the workers,'' ``We care about the working 
poor,'' ``We want society to continue to expand and be healthy,'' take 
a look at the chart on my side. If you see blue, it is the previous 8 
years. If you see the red, it is a function of the last 3 years.
  Do you know which bar is the highest and has the biggest separation? 
Who has had the biggest growth in earnings on this chart? Turns out it 
is the bottom workers in our country.
  If you care about our brothers and sisters who have been struggling 
for so

[[Page H975]]

many years, this should be joyful, because something amazing is 
happening out there.
  Now everyone is doing better--well, except high-wage managers. They 
are basically static. If you come over here and actually look at the 
top income, they are doing fine, but the bottom is the remarkable 
change.
  This is really important, because for so many years, I would listen 
to my friends on the left come behind these microphones and talk about 
income inequality. It is a real thing. But what happens when you have 
made more progress, particularly in the last 12 months, of closing that 
gap of income inequality not because you have crushed those with high 
skills, those with high wages, but because you have brought up so much 
of our society, you have grown their wages remarkably?
  This needs to be our goal. Our goal as a society must be to lift 
everyone up, not figure out that one quartile you have identified as 
the enemy and go out and decide you are going to crush them. That is 
what our modern politics has become.
  Back to the first slide again.
  Over the next 30 years, if you look at the math of what is coming at 
us, if you actually strip Social Security and Medicare out of the next 
30 years and say, ``What do we look like 30 years from now?''--so my 
little girl, when she is 34 years old, what does the Federal budget 
look like as we see it today? It is about $23 trillion. If we don't add 
Social Security and Medicare into the number, it is about $23 trillion 
cash in the bank. Now, that is not inflation adjusted, but $23 trillion 
cash in the bank.
  If we put Social Security and Medicare back into that 30-year window, 
my little girl and every other young person, every other person who 
thinks they are still going to be around in 30 years, we are $103 
trillion in debt.
  It doesn't have to be that way, but we have got to crush the price of 
healthcare with technology. We have got to have people in the economy 
who are helping it grow. We need the productivity. We can have a 
remarkable future.
  But the intellectual capacity of the debates we are having around 
here, we have functionally gone a year and done nothing, nothing that 
actually helps America, but we have done some great messaging bills and 
great politics and great grandstanding and pretty good speeches.
  We can do better, and there is a path.
  Mr. Speaker, thank you for your patience. I yield back the balance of 
my time.

                          ____________________