[Congressional Record Volume 168, Number 177 (Wednesday, November 16, 2022)]
[House]
[Pages H8536-H8539]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE MATH ALWAYS WINS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2021, the Chair recognizes the gentleman from Arizona (Mr. 
Sckweikert) for 30 minutes.
  Mr. SCHWEIKERT. Madam Speaker, Ron is one of the good guys. For those 
of us who are blessed to be on the Ways and Means Committee, many times 
it is one of those committees where you have to do adult stuff that 
affects not only this country but the world. Having people that you can 
talk to and work it through with is important. Ron is going to be 
missed. I thank him for being one of the good guys.
  Madam Speaker, this is going to be sort of a two-parter. I am going 
to come back in 2 weeks and provide solutions, but right now I need to 
define the problem.
  As you know, right now around the Capitol complex, we have dozens and 
dozens of brand-new Members and hundreds of potentially new staffers. 
They are all trying to find their office and which way is up and where 
the bathrooms are; I mean, all the things we go through when we are 
brand-new around here.
  My fear is no one is telling these Members that are new--and even 
talking to the Members who have been here a while--the truth. The truth 
is the math, and the math always wins.
  We are in real trouble. What scares me is with some of the things 
going on in the economy right now, with where interest rates look like 
they are going, with inflation now becoming structural, it is 
potentially just devastating to the individuals out there, our brothers 
and sisters in the country, just the affordability, being able to 
afford a house, food, but you have got to understand what it also means 
to the stability of this country.
  Let's actually walk through it. Some of this is big-boy math, it is 
going to be complex, but there are a couple punch lines in here I want 
to be remembered.
  I am not going to take you back to 1965, but let's do last year. This 
is last year's budget cycle. Understand, over 71 percent of all of our 
spending is on autopilot. The fact of the matter is this is what we 
call mandatory. Only 13 percent was defense, 16 percent was 
discretionary, what we functionally debate here which we really fight 
over.
  But this mandatory here, you see red, your government functionally is 
an insurance company with an army. This is health, Medicare, Social 
Security, other benefits, pensions for military, for government 
workers, those sorts of things. This is mandatory. And it is on 
autopilot.
  I don't think there is a Member here who has ever ultimately voted on 
this red portion. It is a formula. You turn 65, you get certain 
benefits. You serve in the military a certain amount of time, you get 
certain benefits. It is autopilot.
  Defense, well, that we debate, we work through, but the fact of the 
matter is defense sort of stays within a certain mean of the GDP.
  And then domestic. The crazy thing, domestic, actually, as a 
percentage of GDP, at the end of a decade will be flat.
  So where is all this debt coming from? Where is all this growth 
coming from?
  I am going to give you an answer, and it is going to make people 
really unhappy. You need to understand, when we talk about just last 
year's borrowing, does anyone out there understand how big it was?

[[Page H8537]]

  Okay. So we borrowed, functionally, $1.375 trillion.
  How much is that?
  It is $114 billion a month.
  It is $26 billion a week.
  It is $3.7 billion a day.
  It is $159 million an hour.
  It is $2.6 million a minute.
  We are told with big numbers, how do you get it so it is 
understandable? If I came to you right now and said to you, how much 
last year did your government borrow every second? Anyone in this body 
able to answer that? It turns out it was $43,600 a second. We borrowed 
$43,600 every second last year.
  Does anyone see a problem? Or is it one of those things that as long 
as we are handing out goodies and subsidizing the folks who will vote 
for us or contribute to us, the world is good?
  Where is all this debt coming from? Brian Riedl, Manhattan Institute, 
basically just put out a series of slides where they take the 
Congressional Budget Office, the OMB office from the administration, 
and sort of look at it and say, what is driving the debt?
  Today we hold $31 trillion of total debt. That is borrowing from 
trust funds and everything, but that is the total debt.
  But from today for the next 30 years, based on a previous interest 
rate calculation--so we haven't even plugged in the new higher interest 
rates that we are borrowing money on--anyone want to guess what the 
borrowing is from today to the future, how much money? We are going to 
borrow, functionally, $114 trillion. There is a $114 trillion 
shortfall.
  Now, the interesting thing--remember on that previous slide, I was 
saying, here is mandatory, here is discretionary. Well, it turns out 
the discretionary military we calculate today to actually have about a 
$1.9 trillion surplus over the next 30 years.
  So where is $114 trillion of borrowing coming from? This is really 
uncomfortable. I will tell you, I believe the Democrats did something 
actually really crappy during the election, but it is a knife fight. I 
accept the knives come out, it is all about winning.
  But when you had campaigns out there--``They are going to cut your 
Medicare''--you can't even have an honest conversation here what is 
going on.
  The shortfall in Medicare, when you add in the interest cost, is $80 
trillion. The shortfall in Social Security is $35.8 trillion. The 
entire borrowing over the next 30 years is Social Security and 
Medicare.
  We got old. The fact of the matter is this place didn't pay any 
attention. There was this thing called baby boomers.

  You get the clown show around here that says, well, we will do 
Medicare for All. That is a financing bill. It had nothing to do with 
what we pay. ObamaCare, that is a financing bill; who gets subsidized, 
who has to pay. The Republican alternative was ultimately a financing 
bill. You need a revolution in what we pay, not who pays it.
  But that is actually more uncomfortable here than actually having a 
debate over raising taxes or doing entitlement reform, an actual 
discussion of should we legalize technology, should we legalize the 
things that actually create disruptions in providing our brothers and 
sisters the healthcare that we as a society made a deal? We are going 
to keep our promise on Social Security and Medicare. Well, I think we 
are.
  I mean, the fact of the matter is, what is it now? In a decade, 
because of the new COLA increase, we just shortened the lifespan of the 
Social Security trust fund by, what?, almost a year. So you have a 
little bit over a decade, and our brothers and sisters who live on 
Social Security are heading toward a 25 percent cut.
  What is this place going to do?
  Medicare is just unsustainable. The stunning amount to finance our 
brothers and sisters, our promise for those who turn 65 and get 
Medicare, to finance it, basically consumes every dollar of this 
government.
  It is math. It is the reality.
  How many of you during this last campaign had an honest debate, 
honest conversation, anyone who was even willing to talk about this? 
Really dangerous because the other side will run nasty ads about you to 
scare people, yet by not dealing with it, you are sentencing our 
seniors to misery because at some point this hits the wall.
  So what is going on? Why am I even more dour right now than I was 
several months ago?
  It is inflation, it is the cost of everything. It is the 
affordability in our society. But you are crushing people. We are going 
to walk through a little bit of that. But you have got to understand--I 
am sorry, I am going to geek out on interest rates for a moment, but 
then I am going to try to show what it actually means to everyone in 
this country. What we are doing to you and so many of our brothers and 
sisters out there, you don't understand how--oh, I am sorry, it is a 
sort of high-level, technical, economic term--how screwed you are.
  Let's sort of walk through this. We were building budgets a year ago 
on an assumption that U.S. sovereign debt when you did the 2-year, the 
5-year, the 10-year, the 20-year, the 30-year, the blended interest 
rate, the weighted daily average, it was all these fun calculations. 
Actually really interesting stuff.
  We were originally about 1.78 we thought would be our mean interest 
rate. Then last--what was it, was this March or May?--March we 
recalculated because of this thing called inflation. Oh, we are going 
to be up to 2.10. Then the reality of it is that we ended up at a 
recalculation of, hey, the U.S. mean now is heading toward 2.85. That 
is on the 10-year.
  We have some economists around us who are starting to say, it is 
going higher; it is going higher. I am going to show you a couple 
things here of what happens to us as a country if the way the Federal 
Reserve has to stop inflation is raising, raising, raising interest 
rates, breaking the labor market because you understand within there, 
even though there is this delay effect, that also means what you and I 
have to pay the interest back on all the borrowing, and the biggest 
part of the borrowing cycle has not even hit us yet because we are just 
now starting to absorb and get ready for the huge spike in costs 
because of our demographics.
  Remember, baby boomers, the final tail end of the baby boomers is 
moving into their retirement benefits, and as they get slightly older 
and a little bit older, a little bit older, the Medicare costs start to 
really go up, and we haven't even hit that financing cycle. It is 
coming. What happens if we have to finance that at the higher interest 
rates?
  You start looking at some of this. Three months T-bill back in March 
was 0.2. That was our Biden administration estimate for the 3-year. The 
actual 3-year right now is 1.75.
  Let's see, what is the difference between a 0.2 and a 1.75? Can 
anyone say ``a whole lot''?
  This may not mean much to you, but this is money your taxes are going 
to be paying back.

                              {time}  1615

  Here is the punch line. I am going to make it really simple. What if 
this inflationary cycle stuck with us? What if instead of that, what 
was it, 1.78 or even the 2.3 percent interest rate on U.S. sovereign 
debt, what if it were 2 points higher, just 2 percent higher?
  Fifteen years ago, that is where we were at. Remember, we actually 
had a reprieve, a completely fake economic reprieve for a decade with 
artificially low interest rates. We were borrowing, and the Federal 
Reserve kept interest rates lower, particularly since 2008. Now, we are 
about to pay the cost of it.
  What would happen if we paid that 2 percent higher? Functionally--and 
my math is a little bit less--the end of 30 years, 100 percent of all 
tax receipts, of all taxes, all tariffs, all everything that comes into 
the government, 100 percent goes just to pay interest.
  You have to understand how sensitive we are as a government, as a 
society, as a country, how fragile we have made ourselves because we 
structurally are going to borrow another $1 trillion to $1.3 trillion--
there is one estimate of $1.4 trillion--this year. We are never paying 
off anything.
  It gets worse and worse because of our demographics as we get older, 
unless we crash the price of healthcare. Two weeks from now, we are 
going to talk about things we can do to accomplish that.
  Are you prepared to live in a country that if our mean interest rate 
goes up 2 percent and stays there, all tax receipts go just to cover 
our interest?

[[Page H8538]]

There is no more government. There is no more military. There are no 
more benefits. There is no more Social Security. There is no more 
Medicare.
  That is why it is so crucial around here to have an honest 
conversation where people put batteries in their calculators. Instead, 
this place is living on theater. Oh, modern monetary policy--we can 
spend all the money we want, and look, nothing happens. Oh, got it. 
Didn't work.
  I can show you right now the largest tax increase in modern history 
has happened in the last year. If you live in my Phoenix-Scottsdale 
area and are a working person, you are a hardworking taxpayer, and you 
have not had a pay hike, do you realize you have lost 6 weeks, maybe 
more, of your labor? We are still at 12.1 percent inflation in my 
community. You have lost 6 weeks of your labor.
  If I had walked in and told you that I was going to take a month and 
a half of your salary, that that is going to be my new tax hike, you 
would have lost your mind. But if we do it through this thing called 
inflation, where we strip the affordability of your groceries and your 
gasoline and everything else in your life, did you notice it? Well, you 
know there is a problem. You know life has gotten much harder. You know 
sometimes you get to the checkout stand and are taking things back 
because the price just doesn't work on your budget.
  The perverse thing, you are going to see a chart here, my next one, 
where actually there is going to be this little drop in sort of the 
debt-to-GDP and those things. That is because that inflation actually 
has been a tax. We lowered the value of your income. We lowered the 
value of your savings. At the same time, we lowered the value of all 
this debt because we are going to pay it back with what we call 
inflated dollars, which is wonderful up until the next year or 2 when 
we have to refinance the debt and refinance the new spending at the 
higher interest rates. Then that little benefit of taxing you through 
inflation goes away, and we are off to the races, and it becomes hell.
  Remember, this has brought down other countries for hundreds of 
years, and it is right in front of us. No one seems to come behind 
these microphones--they talk about it, educate about it, and for the 
last couple years I have come here behind these microphones and tried 
to show solutions, and then it drives the lobbyists out of their minds.
  Let's take a look at this. Let's see if I can make this work. These 
are deficits during the Biden administration fiscal year 2023 budget 
baseline versus a 1 percent rise in interest. Do we all agree that we 
have had at least a 1 percent rise in interest rates? Yes. Do you see 
this one little bit of a fall right there? This orange is what happens 
when you tack on the additional interest. That little fall is, 
functionally, the fact that we devalued your dollar. That is our little 
benefit from taxing you in a way you didn't know.
  But then, boom. Functionally, the budget cycle we are about to work 
on is the 2024 budget cycle. You are basically going to have a budget 
deficit of $1.4 trillion, and then, boom, it is $1.5 trillion. You get 
out a couple more years, you are heading toward $1.75 trillion. In less 
than a decade, you are well over $2 trillion a year in just borrowing. 
This chart explodes if we go beyond that 1 percent rise in interest 
rates.
  Structurally, even if I say we are going to go back to living in that 
world of that fantasy artificially low interest rate, we are still 
heading toward $2 trillion a year borrowing. It just takes 10 years. 
This is insane.
  Right in here, interest will be just the basic borrowing. All of 
defense, a whole bunch of discretionary, and other things will all live 
on borrowed money.
  Most people have no idea what the concept of debt-to-GDP is. It is 
the concept of: Here is the size of my economy, and, yes, we are 
borrowing all this money, but look how big my economy is, and that 
economy's ability to finance--just like your income finances your 
credit cards. As long as your income keeps going up faster than the 
debt on your credit cards, you can live. You are going to be okay. What 
happens when your economy isn't growing, when your income isn't growing 
as fast as you are borrowing on those credit cards? At a certain point, 
it comes to an end.
  We are heading toward a time where if we add--this is our baseline. 
If we start adding a little bit of higher interest rates because we 
have to finance the debt, we have to sell our bonds, the bond markets 
are expecting higher interest rates because of inflation--you start 
seeing the chart where you are hitting a world where at the end--now, I 
know these are 30-year projections, but remember, we are selling 30-
year bonds. The baseline number is 185 percent of debt-to-GDP. That 
means the debt will be 85 percent bigger than the entire economy. If we 
had 3 percent higher interest rates, the debt is, functionally, 245 
percent bigger than the entire economy.

  Do you think we ever get anywhere--because this is what we are doing 
to ourselves. This is already baked in the cake if these interest rates 
go up. But this down here, the base CBO assumption--remember, we are 
already over 100 percent. Right now, our borrowing is already 
substantially bigger than the entire size of our economy.
  It is why growth is moral but is also necessary. If we don't start 
growing this economy and we are continuing just the borrowing--
remember, what was the primary driver of our borrowing? Medicare and 
Social Security. We got old. It is demographics. Getting old is not 
Republican or Democrat; it is just who we are. That is driving most of 
our borrowing. We are not adopting policies that maximize growth at 
every opportunity.
  We are destroying the future. I need my brothers and sisters on the 
left to at least embrace some basic truths.
  The very end of 2017, we did tax reform. Some people go, oh, it was 
tax cuts, except the rich actually pay a higher percentage of Federal 
income taxes today than they did under the old tax system. But, 2022, 
tax receipts, the highest in U.S. history by far, and this is under the 
new tax system. If you are going to demagogue us for doing tax reform, 
trying to bring businesses back to the United States and get them to 
domicile and manufacture and do things here in this country, you can at 
least pull out a chart and show me where the revenues disappeared 
because they didn't. They are right here.
  We brought in $4.8 trillion in tax receipts last year, and we are 
still borrowing $1.3 trillion. The spending has just exploded around 
here, and now we hit our structural deficits because of our 
demographics. It gets uglier and uglier, and we have made ourselves 
incredibly fragile.
  God forbid we ever have a failed bond auction or an undersubscribed 
one, and interest rates start to spike. Do you understand what happens 
to the entire world, let alone your savings?
  We don't need to do this to ourselves. There are solutions, but this 
body is incapable of having that debate.
  Dear God, please, with a Republican majority, no matter how thin it 
is, maybe we will actually try to do something honest and adult with 
the calculators.
  You keep looking at the charts, and there are charts out there. It is 
not revenues. There is this whole line of thought out there that has 
been worked on by the left and the right that we raise taxes, somehow 
we stay within a certain mean of the size of the economy. When we have 
lowered taxes, somehow the revenues come back up. Taxes always seem to 
come in just right about here. If this is 20 percent of GDP, you raise 
the taxes, the economy seems to shrink, the growth shrinks, we fall 
back to the mean. You lower taxes, the economy grows, the revenues come 
back. You have decades and decades of data. You look at the charts, and 
it is pretty darn clear. We are going to take in 19.1 to 20 percent. 
Sometimes we fall down to 18 percent of the economy in revenues, in 
receipts, in taxes.
  The art here is to design a tax code, design a regulatory code, adopt 
embracing of technology and other things that maximize growth. The 
ultimate solution is grow, grow, grow, and then adopt disruptive 
technologies that lower prices, so affordability.
  Imagine if you had a society once again that was growing, your wages 
were going up, but inflation wasn't; where your healthcare costs were 
actually going down; where your savings, your investments, your 
planning for retirement, your ability to help your

[[Page H8539]]

kids go to college got better. We can do that. We did that in 2017, 
2018, 2019, even the first quarter of 2020 before the pandemic. There 
is a model to do it.
  All that progress, all that closing income inequality, making the 
poor less poor, the hardworking, tax-paying middle class, making them 
more prosperous, it is all gone. The Democrats succeeded, in 18 months, 
in crushing the people of this country by really crappy policy--great 
virtue signaling, just incredibly good virtue signaling, really crappy 
policy.
  Once again, I need my brothers and sisters on the left to buy a 
calculator and understand if you came in and said I am going to take 
every dime, you make small businesses, rich people, high-income 
earners, if I take every dime--if you make $500,000, the next dollar we 
just take everything. You have heard this, oh, rich people aren't 
paying enough, take every dime. You, functionally, don't get anywhere.
  This is assuming that they continue to work as hard, that they make 
the same amount of money so they don't change their behavior at all. It 
is a math experiment, and you get about 5.1 percent of GDP in taxes.
  The problem is our borrowing is already about to hit 6 percent, and 
in a couple more decades, we are over 12 percent. It is a fantasy.
  Look, the Republicans have their sin, too. We will often say, well, 
waste and fraud, foreign aid, that is just almost a rounding error. 
Remember a little while ago, $40,000-plus a second in borrowing?

                              {time}  1630

  The scale of the problems ahead of us is terrifying, and it is no 
longer getting postponed to the future.
  I have gotten in front of audiences, and, A, they will boo when you 
try to explain to them the truth of the math. They say, Well, I was 
told this 10 years ago.
  Yes, but we had 10 years of artificially low interest rates that 
allowed Congress to engage in really crappy policies.
  What is that saying, ``the chickens are coming home to roost''? I am 
not particularly good at colloquialisms. But it is time. It is here.
  Will this new Congress with a divided government step up, tell the 
public the truth, tell our new freshman class the truth, and actually 
take on a really tough decision?
  Madam Speaker, do you want a society and a country that is 
prosperous, innovative, and disruptive but we are growing so fast and 
so healthy that you can imagine a world where healthcare prices aren't 
going up twice as fast as inflation, where your wages go up faster than 
inflation, and where affordability when you go to the grocery store or 
your gasoline station doesn't take your breath away?
  We can do that. At least I think we can do it.
  I just want to know: Are we going to have partners on the other side 
to do what is honorable?
  Because growth is moral.
  Are we going to do the right thing for our society, for our brothers 
and sisters out there, or are we going to continue with virtue 
signaling?
  Because virtue signaling may be brilliant politics, but it is really 
crappy economics.
  Madam Speaker, I yield back the balance of my time.

                          ____________________