[Congressional Record Volume 167, Number 83 (Thursday, May 13, 2021)]
[House]
[Pages H2309-H2311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ECONOMICS
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 4, 2021, the Chair recognizes the gentleman from Arizona (Mr.
Schweikert) for 30 minutes.
Mr. SCHWEIKERT. Mr. Speaker, tonight, I am going to actually try to
do something that is a little tricky, but I am going to first sort of
explain the theme, and then I am going to sort of walk through some of
the backup material.
We understand right now, our brothers and sisters on the left have,
what, another $4\1/2\ trillion of spending--maybe it is 5--in the
pipeline, a couple major multi-spending of that, let's call it that
$4\1/2\ trillion over the next 10 years. They claim to have about $3
trillion in tax increases coming to pay for it. The reality--and
hopefully I will be able to do this over the next couple of weeks as we
try to get more details and work through it line by line--it also
requires that you hit every mark on the revenue raised, that all sorts
of programs expire, which is really unlikely around here, and also
certain spending expires.
It is just not real. So our top-of-the-napkin math right now is at
best over the 10 years it is a couple trillion dollars in new revenues.
Well, one of the sets of revenues that is being discussed is, well,
let's tax the wealthy. Okay. Except when you walk through the math
there, let's raise capital gains tax, let's raise basis, let's raise
individuals' income tax, and also then you add in let's raise taxes on
corporations, fine, but we are already starting to see the data coming
in saying that just going to the 28 percent on the corporate tax rate
is 1 million jobs over the next 24 months.
Okay, so the Democratic Party wipes out 1 million jobs and takes, oh,
I think it was a little less, like $119 billion or something off just
the GDP from those 2 years, and you start to lay out--that is just the
corporate income tax. Now start to do the capital gains which the
beauty of capital gains is it is risk-taking. It is the type of
investment that makes the working poor less poor. It is the type of
investment that takes risks that makes us more productive, because, Mr.
Speaker, you all remember your high school economics class.
What are the two ways a worker gets paid more?
Inflation, which means you got paid for more but it didn't get you
anything, or productivity. Without that risk capital, Mr. Speaker, you
lose that productivity investment.
So, if the Democrats really intend to spend that much money and
really intend to keep driving up the debt and deficits the way they
are, then I want to make a modest proposal of where they can find some
offsets. I am shocked this isn't discussed more around here. Instead of
marching in and saying that we are going to tax rich people, even
though much of that money actually goes to create jobs, investment,
economic growth, and productivity growth for our brothers and sisters
who are in the hardworking class, why don't we stop subsidizing the
rich?
I am going to show a number of boards here today on how this
government takes some of the very, very, very wealthiest in this
country and on one hand says: Pay the taxes and, oh, by the way, we are
going to hand you back the cash.
Mr. Speaker, I am going to show you one board where individuals with
multi, multi, multi-million dollar houses on the beach then get
dramatically subsidized flood insurance from the Federal general fund
and over and over and over.
If this is the path the Democrats intend to go, could they consider
cutting spending?
Because cutting that spending would be much less distortionary--that
is an actual word---distorting the economy because the taxes being
discussed right now are going to hurt the economy. They are going to
hurt working people, and they are going to really hurt the working
poor.
So, if you need this much revenue--and our back-of-the-napkin math
right now is about $1,400,000,000,000 over the 10 years in subsidies
that could be cut for that very top fraction of income earners and
wealth holders in the United States. So there is a place to get your
revenue without creating the economic distortion being discussed right
now.
So let's first talk about the reality of where we are at as a people,
as a society, and as a country.
How many actually right now know the latest numbers from CBO on how
much trouble we are in just on Medicare?
The 30-year window right now on Medicare is a $71 trillion shortfall
just in Medicare.
{time} 1915
Remember, in Medicare only, it has the A, B, C, D. But part A, which
is the hospital portion, is the only part we collect as part of your
FICA tax. Everything else, ultimately, comes out of the general fund.
We always talk about part B and part D because part C is the managed
care portion. But if you look at the actual outlays of the program and
then look at the interest costs and remove part A, the hospital
portion, it is $71 trillion, and it is just Medicare.
I am just stunned more Members of Congress don't understand this or
are willing to tell their constituents the truth. That Medicare number
represents 67 percent of the deficit debt shortfall over that 30 years.
Once again, the Medicare shortfall is 67 percent of the debt we are
going to be in, in 30 years.
So, we take that. Now, let's add in Social Security. Social Security
is in better shape. It functionally has only about a $28 trillion
shortfall over the next 30 years because you reach in and you take the
portion of the trust fund.
Here is the trust fund portion. You see the green sliver?
Then, the rest are what we predict as incoming payroll taxes. Here
are the programs' outlays, and then the interest on the shortfall.
Work with me. If Medicare is $71 trillion, Social Security is $28
trillion, right there, you are at--what?--$99 trillion of the debt is
driven by just Social Security and Medicare.
Well, the good news is--if it is that--the rest of the budget over
that 30-year window is only about $3 trillion short. So, in a perverse
way, the rest of the budget is out of balance by only $3 trillion. It
is pretty close to being in balance, in the type of numbers we are
using here in Washington today.
There should be just a fixation, if this body cared about retirement
security, cared about the future, cared about everyone from my 5-year-
old daughter, who is going to be paying these taxes, to, hopefully,
myself, who will be receiving some of these benefits. If we actually
cared, there should be an absolute fixation on these numbers.
Instead, there is a fixation here on spending more money and spending
money that we can show you is going to shrink the economy and unemploy
a lot more Americans.
I am trying to speak as an economist with some passion. If you look
at post-tax reform, post-some of the regulatory rationalizations, and
maybe with some good luck, if you look at 2018-2019, that should be the
goal, to get back to what was happening in the economy in those years.
Because if you take a look, after the tax reform, workers were
receiving a substantially larger portion of the value of that tax
reform. It was substantially a miracle.
[[Page H2310]]
But I want to show you one of my favorite slides here. If you look at
the number of Americans in 2018, 2019, who were in poverty, do you
realize we had a couple of the lowest years--actually, the lowest years
in history of our brothers and sisters, our fellow Americans, in
poverty. You look at the lines for African Americans, Hispanics,
Anglos, this is supposed to be the goal.
You do understand we had a couple of years where income inequality
dramatically shrank, and it didn't shrink because rich people were
getting less rich. It shrank because poor people, particularly the
working poor, were getting less poor, and fairly dramatically less
poor.
Here is maybe a perverse reason the left is fixated on wanting, on
one hand, to raise the taxes on the wealthy and, on the other hand,
hand them a bunch of subsidies. Well, there is also a very ugly
political reason. When you hand people subsidies, maybe they help your
campaign, maybe they pay attention to you.
But if you take a look at 2013 to 2016, see the orange bar here? That
was the gain of wealth of the wealthy. The blue was the poorest portion
of Americans.
The income inequality gap under those Obama years actually grew
dramatically. The rich did get richer. The poor did get poorer.
When Republicans provided tax reform, when we cleaned up much of the
regulatory system, you know what happened? The value of working
people's labor went up fairly dramatically. Our brothers and sisters
who we refer to often as blue collar, the working poor, they got
substantially wealthier. Their income--their labor became much more
valuable.
The rich didn't even keep close. It was like three times the
differential.
When someone tells you during the last administration, well, the rich
were getting richer and the poorer were getting poorer, they are lying
to you. They are just not looking at the math.
It turns out tax reform--regulatory reform, actually--made the poor
much less poor. It didn't shrink the pie. It actually made prosperity
across the country.
Then, we hit this damn virus.
So, we look at the brilliance of what we have done in this last year,
and you start to realize the economic violence we are committing on the
poor.
Actually, before we do this board, what are some of the things you
can do to really crush the working poor in your country? Open up the
borders, and make those who may not have finished high school--what
they sell is their talents and their labor. They may not have high
skill sets, and for so long, that skill set didn't have enough value in
this economy. Then, in 2018 and 2019, we saw the working poor get
dramatically less poor because their labor became much more valuable.
When you open up the border, you flood the marketplace with those who
compete with them with similar skill sets.
We have lots of data. A couple of weeks ago, I showed some charts
that showed one of the most vicious things, the economic violence you
can commit on the working poor with having an open border.
What is the number two thing? It is what we have been hearing about
the last couple of days. When you see this type of inflation on
gasoline, on commodity foods, on being able to put a roof over your
head, the middle class, it hurts. The upper classes, they make money
because they hold lots of assets. They are getting richer now.
But if are you part of that working poor, that blue-collar working
class that did so well in the previous couple of years, they are
getting their heads kicked in right now because we have pumped in so
many dollars chasing so few goods. We are kicking the poor in their
heads, and it is the policies coming out of this place that are doing
it to them.
Yet, the third leg of how you make the poor less poor is work, that
attachment to the value of their labor that businesses, concerns,
others that need them, that help them raise their skill sets, that help
them build their seniority.
Yet, we have a system right now where, as you can see in this chart,
in much of the country, we are paying people more money to stay home
than take the employment.
You do realize right now you may be a hero if you are a Member of
Congress and you have been voting to do enhanced unemployment benefits.
But in the future, when those things start to run out, and they have
lost a year to 2 years of skills, of seniority, of moving up in the
organization they are employed by, you explain to them why their
lifetime wages have been crushed.
Some of this is also driven by the teachers' unions playing games of
not opening up.
Do we understand the level of economic dislocation that these
policies are going to give us, not this year, not next year, but maybe
for the coming decade?
Let's go back to my previous theme. We see that economic robustness,
vitality, opportunity, economic growth is moral. If this place truly
cares and claims they care about workers and the working poor--now, we
are about to do the next round of economic kick-in-the-head. We are
going to call it taxing the wealthy, but we are also going to remove
the very capital out of the markets that go to the investments that
make us more productive, that make it so we can hire and pay people.
You already saw the one study--I have it right over here on the
chair--that says that just the corporate tax hike will unemploy 1
million Americans in the first 24 months.
Let's walk through and see how bold and economically literate the
left is around here. Here is the National Flood Insurance Program. It
turns out that if you look at the chart over here, where much of the
subsidized spending is coming from the general fund, it is for the
folks who are 165 percent of the mean income and up.
We were trying to work out another chart that showed it was some of
the top 1, 2, 3 percent of income earners and wealth holders in the
entire country who were actually getting the substantial portion of the
subsidized flood insurance.
If you need more money to keep spending, maybe cut some of the
spending where you are subsidizing the very people you are threatening
to tax. It is a really creative, simple idea: Cut some spending. And
you can cut the spending on the very people who you vilify so much.
Look, a couple of these are uncomfortable, but it is still the math.
If you look at some of the top wealth households in the Nation, and you
take a look at how much money will go to those individuals in
everything from Social Security, Medicare, other types of programs--you
really need to understand. Does it make sense to play this shell game
of saying Democrats are going to raise taxes on the rich? Okay, but we
are going to turn around and hand you all these benefits and hand you
all these subsidies through the other hand. It is an irrational sort of
washing machine of the money.
Another one I will give you is, you take a number of the subsidies
that go to agriculture, and take the sliver who are the wealthiest
holders of those agribusinesses. Guess where the substantial portion of
the subsidies go?
So, on one hand, you are saying we are going to tax you more, but we
are going to turn around and hand you back the commodity subsidies. It
is an irrational plan, once again, devoid of basic math and basic
economics that the Democrats are proposing.
Who knows, maybe it is great politics, saying we are going to tax the
rich. I mean, we see the polling. Many in the Republican base aren't
particularly thrilled. We know the Democrat base vilifies it, even
though that is where much of the left actually gets their money. But it
is just bad economics.
Do we want to step back into the days when, for great politics, we
did things that truly crushed the workers, the working poor, in this
country by making the economy smaller than it should be, slowing down
economic growth but slowing down also those investments that make us
more productive, that make it so we can pay our brothers and sisters
more?
My challenge to the left is: We have been working up the numbers now
for a couple of weeks. Brian Riedel, of the Manhattan Institute, has a
great article that is about to be published walking through lots of
these numbers. Take it for your consideration.
Brian's number is about $1 trillion of subsidies that go to the rich.
Our number is about $1.4 trillion over the 10 years that go to the
rich. We have
[[Page H2311]]
added in flood insurance and a couple of other programs that we have
thought about.
But the last part of this thought experiment, you are telling me it
is absolutely ethical that saying, on one hand, I want to tax these
folks more. But, oh, by the way, here is your subsidy to buy your
electric car. Here is your subsidy to buy the solar panels. Here is
your subsidy to have a multimillion-dollar house in a flood zone. Here
is your subsidy.
This is irrational economics. It is irrational policy. And the only
reason a political party would continue to support it is they
understand it is the shiny objects that get used for additional
political support. That is a cynical, dark thing for our friends on the
left to continue to do.
So that is my thought experiment for this evening. We are going to
try to add some more detail on these numbers over the coming weeks.
Mr. Speaker, I yield back the balance of my time.
____________________