[Congressional Record Volume 167, Number 199 (Tuesday, November 16, 2021)]
[House]
[Pages H6307-H6311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ECONOMIC CRUELTY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 4, 2021, the gentleman from Arizona (Mr. Schweikert) is
recognized for 60 minutes as the designee of the minority leader.
Mr. SCHWEIKERT. Madam Speaker, we are going to do a couple of things
tonight. Most of it is going to be economic heavy. We are going to
actually go over the Democrat's social spending bill and its economic
effects.
First, I wanted to touch on something that I am somewhat hopeful that
the left and the right could embrace. I am thinking of what we have
gone through for almost 2 years now, and that is the pandemic. If I
came to you tomorrow and said: Okay. We have vaccinations, but we are
about to have therapeutics.
Think about this. You have all seen the news that we now have a
second drug company. The Wall Street Journal today has an amazing,
wonderful article on protease inhibitors and their effectiveness. The
fact that Pfizer has publicly said their antiviral medication is up
around 89 percent effective, it is a lot of pills that may need to be
taken with a second pharmaceutical, but isn't this the holy grail?
We have talked about this over and over, saying you now have home
COVID tests. Now you can take your antiviral at home. And you start to
understand the elegance of how this type of antiviral works in sort of
snipping the proteins and making them so they don't grow or they can't
attach to the cell walls.
So if this exists technology-wise, and one of the antivirals is
already in front of the FDA today. I think we saw a news clip this
afternoon that the second one may be presented on Tuesday. The Pfizer
pharmaceutical will be presented to the FDA, but it may take a month or
so.
If we are in a world now where we have multiple vaccines, we actually
now have therapeutics and antiviral home testing kits--you can take the
antiviral at home--it is time, once these are approved, to declare the
pandemic over.
Why is this really important? Think of the societal friction, the
battles we have created by mask mandates, by vaccine mandates. We now
see the data of how, in our labor supply, folks are saying: No, I
believe in body autonomy. I am not taking the vaccine or doing this or
doing that.
The reality of it is, we have been so successful as a country, as a
society, in believing in science. Remember, how many times did we hear
that, believing in science?
If the FDA approves, which we are hopeful maybe it happens in the
next month, the antivirals--and the press releases from the
pharmaceutical companies are that there will be a couple hundred
thousand sets by the end of this year and apparently millions available
starting in the new year--it is time to declare the pandemic over.
Our office has put together a piece of legislation, and we are going
to put it in circulation once we have sort of vetted it in the next
couple of days. I would encourage any of my brothers and sisters on the
left and the right that, if you believe in science and you really want
a solution, it is time to embrace the fact of how far we have come and
the solution is here.
We are going to do a little bit of basic economics and try to tap
some of the discussion that I think has been missed on the left's
social spending bill.
First, let's have an honest conversation on where we are economically
right now and what our world looks like. If any of you are planning on
having a retirement, if any of you have children or grandchildren and
you actually give a darn about them, first understand how much trouble
we are in immediately, right now, today.
The CBO numbers, in 29 years, we are at $112 trillion of borrowed
money. That is inflation adjusted, 112 trillion public dollars. This
isn't borrowing where we take credit for borrowing from trust funds.
This is publicly borrowed, inflation-adjusted. Functionally, in 29
budget years, we are at $112 trillion. That is the CBO estimate.
If you are a young person--and you want to be honest with them--your
economic future is about to be brutalized.
The reality of it is, I have done this on the floor multiple times.
It is fascinating how many on the left, and
[[Page H6308]]
even the right, when you start to walk through what drives U.S.
sovereign debt, it is a very uncomfortable conversation.
The fact of the matter is, Medicare is the primary driver of U.S.
sovereign debt. Social Security is second. The rest of the budget is in
balance.
At the end of the 30-year model, right now, according to the CBO, the
rest of the budget, if you strip Medicare and if you strip Social
Security out, the budget actually has a positive balance.
If you believe it is a moral obligation for us to keep our promises
that Medicare will be there, that Social Security will be there, why
isn't this what we work on every day instead of discussions about how
we can spend a whole bunch more money, take over a whole bunch more of
the economy, slow the economy down and make this Nation poorer?
What we are going to show is the economic models that show the
Democrats' spending bill actually crushes poor people. It actually
makes the working poor poorer. It makes society poor. I don't believe
that is the intention, but it is the economics.
Sometimes, when you get your math wrong, it is a level of cruelty.
A simple thought experiment: What are the two things that you do to
crush the working poor? Inflation.
Well, we are doing a great job on that, aren't we? The fact of the
matter is, what inflation does to the working poor is economic cruelty.
The second thing, you open your borders up, adding millions of
individuals with similar skill sets. Say you are that individual that
didn't finish high school, but you are out there hanging drywall. You
have a family. You are getting good at your profession. You are trying
to learn how to move up. Then you flood the market with people with
similar skill sets.
There are great peer-reviewed papers out there that talk about just
what we have done at the border. A decade from now, you made the
working poor poorer and now overlay what all this spending has done
inflation-wise.
If we, as Members of Congress, give a darn about the working poor,
the economic violence that is being committed right now by the policies
coming out of this Congress, it is time to step up and deal with the
reality.
The problem is, the working poor aren't our contributors. They are
not the ones showing up here lobbying us. They are the individuals we
have a moral obligation to do good things for, and that is not what is
happening.
We are going to walk through some of where we are today. You have to
understand that the national debt right now is projected to leap to 200
percent in 2050, so, functionally, 29 budget cycles from now. If the
Biden proposals--these are the ones that were proposed during the
election, and I have to accept a bunch of that has been trimmed back in
the debate, not as much as you might think. We are going to go over
that.
You go, functionally, from 200 percent of debt to GDP--meaning the
borrowed money will be 200 times bigger than the GDP. If you add it all
up, in 29 budget years, you are over 328 percent of debt to GDP.
If any of you are thinking about having a retirement, if you are
thinking about your kids, your grandkids, this is what wipes us out as
a society. It is terrifying to talk about because it is hard. It
requires lots of levers.
You have to get immigration right. You have to get finance right. You
have to get spending right. You have to get tax policy right. You have
to do everything that maximizes economic expansion. Then the holy
grail: You are going to have to crash the price of healthcare, not
shift around who pays for it.
Remember, the ACA, many of you know it as ObamaCare, the Republican
alternative, Medicare for All, in many ways it is about who pays and
who gets subsidized. It is not about what we pay.
I cannot tell you how many times I have come to this floor and tried
to drill that into the way we think. But instead, the scam here is we
talk about: Well, you are going to get subsidized.
But we did nothing to what we pay. The difference is we just borrow
money--that is, the Federal Government--and pay for it that way.
Even a 100 percent tax rate on small businesses, upper-class
families--so a 100 percent tax rate and you are taking every single
dollar, you can't even come close to balancing the budget and balancing
it long term. The numbers are this ugly.
{time} 1730
When you take a look, it is not that hard. The 2050 number, if you
take every dime even of folks who make $1 million or $500,000, if you
take every dime, you don't get close. The numbers are this ugly. The
share of Federal tax revenue spent on interest in the national debt is
projected to surge.
But here is the number that terrifies me: If we move up 2 points--2
points--functionally at the 2050, 2051 mark, 100 percent of revenues--
100 percent of revenues--in that 30-year budget window, move up 2
points from where we are right now, our baseline, 100 percent of tax
revenues will be just covering the interest costs.
So is anyone familiar with a book that was called ``The Black Swan''?
Okay, Taleb also wrote another book. And I understand, there are
economists out there, Gilder and others, who disagree with parts of the
model. But there was one concept of making yourself fragile. A simple
example is you go to the airport 10 times; you know if you leave at
exactly this moment you can get to the airport exactly as your flight
is getting ready to board; and the first time there is a car accident,
you miss your flight. We are doing that type of thing to our entire
country, to my 6-year-old daughter, and to anyone else out there.
We are living on a razor's edge.
Madam Speaker, you saw that last slide, 2 points moving back to what
would be closer to normality interest-rate wise. In the 30-year budget
window, 100 percent of revenues, receipts if you want to use the
technical term, will go just to cover the interest.
Madam Speaker, do you understand how fragile we have made the
economics of this country?
And then the debate here is how to spend more money. I understand
money gets you reelected, and promising things gets you reelected. It
gets nice contributions, and it is absolutely perverse when you think
about where we are at.
So now let's talk about the budget gimmicks. Many of you are going to
refer to this as the Build Back Better plan. In our office we are
calling it the social spending plan because that is what it is. It is
laced with gimmicks. It is going to be fascinating come Friday to see
how CBO ultimately scores these. I'm a little disappointed on what we
have seen from the Joint Committee on Taxation and some of the others.
I don't think we are getting actual quality, dynamic scoring, but that
is hard. It takes time. You have to lay it out, break it apart, and try
to understand what the economic effects are.
But you walk through the gimmicks, Madam Speaker, and a simple
example is the White House has estimated $400 billion in some of the
Joint Committee on Taxation scores from IRS collecting more money. But
CBO came out and said: No, it is not $400 billion; it is 120.
Then you start to realize, Madam Speaker, the debates you are hearing
on the floor here are completely stacked with absolutely fraudulent
numbers.
I remember how hard--when we did tax reform--we had to work to
justify dynamic scoring and make the math as honest as possible to
work, and it was our brothers and sisters on the left who absolutely
were insistent. Today they would never hold themselves to the same
standard that they demanded from us just a couple of years ago.
So let's walk through an example of one of the absolute frauds that
the left is using. So President Trump had a drug rebate. This is a
little geeky, but it is important to understand. Ultimately, the rebate
was going to be to the consumer. So you are on Medicare, you are in
line at the pharmacy, the rebate that would have gone into the backside
of the provider, the acquirer, think of it as the wholesaler of the
pharmaceutical, that rebate now comes to you at the counter. It means
the consumer would get the value, but it would mean the costs of
pharmaceuticals would go up for government because the government isn't
ultimately getting that value.
So here are sort of the steps of the Trump administration's rebate
rule: it was estimated to cost about $150 billion over 10 years.
Speaker Pelosi said: It will never happen.
[[Page H6309]]
Democratic leadership here said: It will never happen.
Democrat leadership in the Senate said: Unacceptable, it will never
happen.
This was never, ever, ever, ever going to happen.
This was the whole system of how the consumer would have gotten the
benefit of those rebates, but it would have cost the Federal Government
$150 billion over 10 years, but it was never going to happen unless, of
course, you are a Democrat looking for money to spend on their social
entitlement bill, all of a sudden saying: Hey, this is never going to
happen, but we can score it in, so we are going to use it.
It is just another gimmick, it is a con, and it is a fraud. If we
were doing this, we would be ashamed of ourselves and should be. But
this is actually the scam that now is Democrat leadership.
So you take a look at the budget gimmicks that are already built into
here, Madam Speaker, and you start to realize the left's social
spending bill is like a house of cards. Now, they may get some scoring.
Like the last one I was just showing you, Madam Speaker, CBO will give
them that $150 billion. There will be a nice little footnote saying
that this was never really going to become policy but because it was a
proposal and they are canceling the proposal, we are going to give them
the 150 or maybe $145 billion worth of credit.
But the public needs to understand those trillions and trillions and
trillions--$112 trillion in the baseline as it is right now in 29
budget years--that is how you get there.
The left will say: This is paid for.
No. It is not. And they know that. They are not dumb. They are
manipulative, but they are not dumb. When you start to look at just the
games being done, Madam Speaker, and then the spending--and that is the
other thing we are going to work through here is how much of this
spending do they really plan to cancel in year 2?
So, Madam Speaker, you are seeing some spending scoring saying that
we estimate this is $1\3/4\ trillion, wink, wink, nod, nod, but when it
becomes a 10-year instead of disappearing in the second year, you are
4\1/2\ plus trillion dollars of new obligations.
Look up and down the different budget gimmicks. One of the reasons I
did this slide is because it is a little more of an economically
difficult concept. So you actually have in there an adjusted gross
income surcharge on the top income earners.
Madam Speaker, you know the Democrats' proposal is to do a very
similar thing on corporations. The alternative minimum tax that is also
being put on corporations; we are just now starting to model how much
it actually will slow down the economy.
Here is why: You have this thing we call expensing. It was one of the
great economic drivers particularly in 2018 and 2019. Do you remember
we far exceeded revenue projections, Madam Speaker, income inequality
truly shrank, poverty shrank, and food insecurity shrank? The poor got
dramatically less poor. They were 2 amazing years. It is a great model
to demonstrate what supply-side economics really does.
But a lot of the economic expansion was because of something called
expensing. So you buy a piece of equipment, it makes your company more
productive, and you are able to pay people more. It moves technology
and moves business production forward into the next century.
If you do a minimum alternative tax at a corporate level, then you no
longer get the economic value of that expensing. I know this is really
geeky, but it is really important to understand. We are just now
starting to model this thing saying: Oh, heavens, so the Democrats are
doing the wink, wink, nod, nod con of they are not taking away the
expensing which is the primary driver that we saw in productivity from
the last 2 years since tax reform, but by doing this alternative
minimum tax calculation, you don't get the value of that depreciation.
All of a sudden, the investment in capital products--capital goods and
capital equipment--will disappear. It is another example of a really
bad understanding of the most basic economics.
I can understand why the left wants to do this. It is the number of
new IRS agents, the number of agencies that will have potentially
hundreds of thousands of new employees. Remember, one of the models was
80,000 new IRS employees. Well, okay, maybe it makes sense if I was on
the Democrat side or I represented northern Virginia or areas like that
where I have lots of unionized government-working constituents. But we
need to be honest about that, the build back better, the social
spending bill on the left, massively increases the bureaucracy.
You start to look at the hundreds of millions that are being put in
to expand the size of the national bureaucracy. It is not like we are
doing the leap of technology saying that with the investment it is
going to make society more productive. It is like our argument of air
quality and environmental quality, using technology is the way to make
us healthier. Instead, the left designs it in ways where there are new
armies of public employees.
I have to congratulate the left. Madam Speaker, you are going to see
some slides here. We are going to be number one. Yes. The United States
will be absolutely number one in the highest tax rates on income in the
entire industrialized world.
But we are starting to see if you are a resident of California, you
are going to be about 64.7 percent for top income earners and high
income earners. Fine.
If you are in Arizona you are going to be at 55.9.
New York gets the prize. They are going to be over 66 percent for top
income earners when you do the Federal, the surcharges, State, and
local taxes.
Don't we have lots of data already in the economic literature of what
happens when we start to hit these confiscatory levels of tax on
income?
What do people do?
You start to realize saying, okay, I can work and get this tax rate,
or I can take my resources and put them in other types of things--
municipal bonds, other types of things--and reap the rewards from that
because if more than half of the upper income now goes to government,
then we have just created an incentive not to invest and not to take
risks but just take the money, put it in safe places, and don't play
anymore.
I am frustrated because I know the Tax Foundation has been trying to
model the taxes but we don't have good data yet on what does this mean
in future GDP growth.
Back to the very first board we held up: our society is heading
towards a debt cliff. The baseline as it is today from CBO in 29 budget
years, we are at $112 trillion in borrowed money in today's dollars,
and that is where policy is today.
When you start to do this, and economic growth slows, then you
functionally bring the financial apocalypse a lot sooner.
So let's actually also talk through a couple other duplicities that
are in the Democrats' build back better social spending bill. They sure
do like rich people.
Two-thirds of the millionaires get a tax cut under the build back
better, and if we take the folks getting over $1 million, 66 percent of
them actually benefit. And this is one of the things we have come to
the floor now for almost a year talking about instead of raising
taxes--and the rhetoric that we hear over and over from the left where
the rich need to pay their fair share--maybe we should just stop
subsidizing them.
We have come to the floor over and over and shown that almost $1.4
trillion of subsidies go to the very top, top, top income earners. If
you stop the subsidy, Madam Speaker, then you don't create the economic
distortions.
So this is the great scam: Democrats are saying, We are going to
raise the taxes, these surcharges, but then we are going to turn
around, and as long as these rich people do what we ask them to do--
they buy the right type of solar panels, the right type of electric
car--then we are going to turn around and hand them cash.
{time} 1745
Now that is something that the vast majority of Americans will never
be able to afford, but you will be happy to know that the Democrats'
plan is to subsidize the rich. And it gets even darker.
So now the Democrats are going to put in SALT, State and Local Tax
deduction. And the great thing is, if you make $1 million a year, it
looks like you are going to get the vast majority,
[[Page H6310]]
you are going to get the highest amount of this money. But for the
population that is $400,000 and up, they get the majority of the SALT.
It is, once again, the Democrats subsidizing the rich and the really
rich.
And for everyone else who is functionally making $150,000 and less,
you don't get anything. You don't get any value here. How can this be?
I mean, am I living in a parallel universe where the rhetoric from
the left is, tax rich people; wink, wink, nod, nod. Not only do we
subsidize them when they buy the things we want them to buy; but then
we are going to give them additional tax benefits. We are going to make
additional things they spend money on deductible; and the rest of the
population just be screwed.
I grabbed this one, it substantially basically makes some other
points. So think of this: In the Democrats' social spending bill, best
as I can identify it, there is about $100 billion to finance amnesty.
Okay. So it functionally gives a 5-year visa to millions of folks who
are here undocumented illegally.
But you remember our earlier discussion? What are the two things you
do to create economic violence to the working poor? Inflation. Well,
too many--remember our elementary school economics class? Too many
dollars chasing too few goods.
So the left put out lots and lots and lots of money to people's bank
accounts because that is great politics; instead of using those
resources to say we are going to make our society more efficient, more
clean, more productive. And that productivity means you can pay people
more, and you have a society that grows, and then maybe we can take on
our debt problem.
But we did it just backwards. So now you get to see what Keynesian
economics looks like. And are you enjoying the inflation yet? Because
it looks like it is going to continue to pop. And then, flooding
society with lots of other low-skilled workers.
Okay. Well, it will be interesting to see how long it is before the
left actually has to come in here and say we need to do additional
subsidies to the working poor because we stuck it to them.
And look; if anyone has a question, we have multiple papers,
university peer-reviewed papers talking about how the Democrats' plan
actually will make the poor poorer by the end of the decade. University
of Chicago, four Ph.D. economists published a paper a couple of weeks
ago showing that the lowest quartile of income--and I despise the term
quartiles, but that is what economists use--will be poorer at the end
of the decade.
Now, a lot of that is because of the Democrats' unwillingness to
attach the benefits to learning job skills, to actually working. They
have severed those. You would have thought we learned that during the
Clinton years, when you rewarded work, rewarded going and gaining job
skills--we are going back to the bad old days of saying, if you want to
just not work, you will be happy. As long as you vote for the right
party, we are going to send you a check.
Does anyone see the cruelty here?
Now, there are some things in this spending that look--endangered
plants, okay, it is $4.9 million. Desert fish, okay, $4.9 million.
Fresh water mussels, which are actually a real problem, but it is $19
million. And everyone understands the difference between $1 million and
billions.
So $100 billion for amnesty, but $19 million for functionally--we
will call it invasive species and protecting others. It is like the
drop of a bucket in an ocean wave. But it gives you a sense where--so
the Democrats get a nice talking point, but the math is absolutely
perverse.
Ultimately, over the next decade, you have got to deal with this one
way or the other. Either what the left is doing is when--you are going
to see the scoring this Friday of how many programs saying, well, we
are going to spend all this money on a transfer payment, European style
transfer payment, but it is only for 2 years; wink, wink, nod, nod. A
future Congress won't continue it.
You all remember the fraud of the last time we had--Speaker Pelosi a
decade ago--and there were multiple spending bills, where the way they
fit into something called PAYGO is, we are going to spend this much,
this much, but on the fifth year we are going to just pretend the
program no longer spends any money.
Well, this is now the more modern version of that fraud that was
committed financially, budgetarily, is we are going to spend the money
for a year or two, and then we are going to pretend it stops; and that
way we hit certain budget boxes to meet the reconciliation; wink, wink,
nod, nod. Will the voters be paying attention to it?
But let's say they are honest. It is not likely, but let's say that
honestly that is not the scam; that they fully intend to spend all this
money, get themselves through the next election, and then stop the
spending.
Well, in that case, the taxes are permanent because the taxes don't
expire, even though, what we can tell best from the revenues, they
don't come close to covering all the spending.
And if the spending is made permanent, the social entitlement
transfers, over the 10 years, this is trillions and trillions of
dollars out of balance.
I understand--and, look, this is one of my great sins, and I think a
lot of us on the conservative side, we sound like accountants on
steroids.
You know, we come and talk about GDP and workforce, labor force
participation. But the fact of the matter is, if you care for people,
if you believe growth, economic growth is moral; that it provides
opportunities; that that is how you save for retirement; that is how
you help your child go to college; that is how you have a better house,
a better life; it is the opportunities that growth creates. So when you
see someone like me come behind the microphone and talk about GDP and
the benefits it brings, it is a number. It is classical economics. It
is also that poor family that is trying to be less poor.
And the tax foundation has done a bunch of modeling that makes it
pretty darn clear that the left social spending bill is going to make
our entire society poorer. When you start to look at these numbers over
the decade, and at the end of decade, we won't have grown as much.
We are going to be missing--I mean, in a decade, we are missing a
half a trillion dollars of economic growth, of GDP.
You remember our very first board? What is--for my little girl, for
everyone else out there, this is what wipes us out as a society. This
is the thing that this body is terrified to talk about. And this is
already the baseline.
The baseline from CBO already says, in 29 budget years, we are $112
trillion of borrowed money, and that is assuming really stable interest
rates. That is assuming no more wars. It is assuming no more major
recessions.
We were doing one attempt to try to calculate these numbers. So the
Penn Wharton model, that was published actually today, where they were
trying to figure out how much more it would add to the debt. So the
Penn Wharton model said, if the spending is continued, which is the
obvious thing that is going to happen, it adds 24.4 percent to the
debt. Okay. Now we didn't have enough time to break through all their
tables, and we will work through that.
But just off the top of your head, $112 trillion, if you added 24.4
percent on it, that is close to $140 trillion of borrowed money; 139
something.
You have got to understand, this is what the left is leading us to,
instead of coming in and saying, we are going to protect Medicare by
investing in things that cure.
Remember, this Medicare dollar? You know, $77 trillion plus of
borrowing in the next 29 years, just to cover the Medicare portion
shortfall? 31 percent of that is just diabetes.
You could have a connection here between the left and the right
saying, we are going to do an operation warp speed and go at diabetes
because it turns out by curing the misery you also have a major effect
on the debt. That is creativity, that is being rational. Instead of
trying to buy your next election, and pretending to finance it with a
whole bunch of gimmicks that don't really create revenues; that are
going to create borrowed money.
And it is not CBO, it is not me. It is the outside groups that play
it straight. Tell Penn Wharton and others that they are lying, because
they have done the--I think they underscore economic growth on some
things.
[[Page H6311]]
But the fact of the matter is, if the left is about to pass a piece
of legislation at the end of this week that looks like it is likely to
add another 24.4 percent to the debt, does anyone see the level of
immorality in wiping out economic growth and the opportunity?
And we had a couple of years there where it was working. The fact of
the matter is 2018, 2019 were Goldilocks, and it was done because we
invested in the things that create opportunity and growth, instead of
the model right now, where the left is going to invest in things that
functionally slow economic growth down; make individuals dependent on
the Federal Government; disincentivize participating in the economy?
And if any of you have ever read any of your textbooks from what the
world looked like in the 70s, where the last time the left did
something very similar to this, the societal breakdowns, the inflation,
the misery. Once again, we are about to see the financing of misery
instead of investing in the things that actually would create
opportunity and growth. We are better than this.
I know it would take someone on the Democrats' side. They would have
to stand up to their base and explain basic economics. But there is a
path that works. And if you give a darn about the poor, the working
poor, the middle class, ultimately, the data says, at the end of the
decade if the left passes their Build Back Better social entitlement
spending bill, they are going to be poorer. That is what we are about
to do to this country, and this place should be ashamed.
Madam Speaker, I yield back the balance of my time.
____________________