[Congressional Record Volume 169, Number 69 (Tuesday, April 25, 2023)]
[House]
[Pages H1941-H1944]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            AMERICANS ARE POORER THAN THEY WERE 2 YEARS AGO

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 9, 2023, the Chair recognizes the gentleman from Arizona (Mr. 
Schweikert) for 30 minutes.
  Mr. SCHWEIKERT. Mr. Speaker, we are going to do a couple different 
things tonight. I am going to spend some time talking about growth. I 
am one of those who believes growth is moral. If you listen to my 
brothers and sisters on the left or many of us on the right, we are 
talking about how much poorer America is today.
  The fact of the matter is, working men and women in this country 
today are poorer than they were 2 years ago. From the day Joe Biden was 
elected to today, if you are in my district--I have one of the highest, 
if not the highest, inflation in America. I have the Phoenix-Scottsdale 
area--you are about 6 percent poorer because inflation has been this 
high, your wage growth is here.
  It is always amusing to me when our brothers and sisters on the left 
talk about income inequality, working men and women, and then the very 
policies that are advocated basically make us poorer.
  Another thing I have to say is--and I have to say this over and over 
and over--in 2011, Standard and Poor's put out a paper and they 
downgraded the United States' debt, and their downgrade was a tick. We 
were AAA, and we went to AA+, but if anyone would bother to read it--
because if I hear one more person from the press go, well, in 2011 when 
they had the debt ceiling fight, they got downgraded. That isn't what 
S&P said. Read the damn thing.
  It is very simple: We got downgraded as a country because we were not 
doing anything about debt. It makes it very clear. I went over this a 
couple of weeks ago here on the floor, I read part of it. It basically 
says the United States Congress is not taking the debt seriously. It 
was not about the debt fight. It was about the solution that came to 
negotiate to raise the debt ceiling, didn't actually have enough teeth 
and mechanisms.
  Mr. Speaker, I must tell you, the demographics are dramatically worse 
today than they were in 2011. I have been here multiple times to the 
floor with different economic boards, but the Democrats' Orwellian-
named Inflation Reduction Act, if you actually look at the spending, 
there were $271 billion of functionally grant handouts to clean energy 
companies.
  Even the latest CBO score that we just got because of the 
negotiations, the mechanisms, the piece of legislation put together to 
raise the debt ceiling and cut out many of these things, actually came 
back and said, well, we may have missed the number by about $300 
billion. In other words, our own Congressional Budget Office basically 
missed it by 100 percent.
  Now, Goldman Sachs said it was 1.2 trillion in spending, but CBO, at 
least, now has updated their numbers. This is the sort of thing that if 
you think about those levels of spending and then you call something 
the Inflation Reduction Act and then you wonder why inflation continues 
and one of the really disturbing things even on last month's numbers is 
the core number. The core inflation in the United States is staying 
pretty solid.
  The danger in that is, everyone gets a little bit giddy, fuel prices, 
food prices go down, but they also go up. Those are actually numbers 
that move up and down an awful lot, but the problem is the core gets 
built into everything and the effect that it is going to have on your 
pension, on your family's ability to ever buy a house, on the Social 
Security pension system.
  You do realize we lost an entire year of actuarial soundness. Now, 
the Social Security Trust Fund is functionally gone in about 9 years, 
8\1/2\ years. At that moment, if you are on Social Security, you will 
be taking a 23 percent reduction if we do not find a way to fix it.
  Almost every bit of that loss of a whole year from the previous 
actuary report was the inflation COLA. We must understand how 
devastating the policies of this place were when the Democrats 
controlled the House, the Senate, the White House what they have done 
to you and your family.

[[Page H1942]]

  


                              {time}  2045

  I don't care if you don't love Republicans, but do understand that 
your country is poorer today than it was a couple of years ago.
  One of the other things we need to talk about is the Congressional 
Budget Office--they did this about 3 weeks ago--basically has been 
updating economic growth projections.
  For 2024, we were at 1.6. That was our projection. That is what we 
were building the budget on. That is what we were projecting for future 
revenues. This will make sense here in a moment.
  They came back and said, no, we don't even think we are going to hit 
1.6. Now, understand, there was a time 1.6 would have been 
embarrassing. Long-run GDP growth in the United States in the last 50 
years--about 3 percent. So, we have halved that, and now, we have 
actually got it down to 1.2.
  Do understand, when you have this level of anemic growth, how much it 
hurts, how much it hurts you, how much it hurts tax receipts, how much 
it hurts your ability to retire, for your kids to have a future.
  This is the world we have been handed. This is substantially because 
of losses of productivity, the amounts of debt. Remember, the United 
States is consuming so much of the capital of the world just to finance 
our debt. This is a real problem.
  What would you do if I came to you and said, ``Growth is moral''? We 
saw through the 2017 tax reform the economic growth. Income inequality 
shrank more than it had at any time in modern history. Food insecurity 
shrank more than at any time in modern history.
  The populations that had just years of brutality and trying to get 
some economic momentum shot up, and then COVID hit--actually, thank 
heaven we had that economic vitality going into COVID. Could you 
imagine if we had this sort of GDP when COVID happened? How miserable.
  Remember, the United States still came out of it much faster, much 
stronger than almost any other place in the industrialized world.
  As we start to talk about what we do, what is moral but what also 
produces some growth--I have spent the last few months coming here 
every week and walking through how devastatingly ugly the demographics 
and the debt. Last week, I did demographics. I don't know if anyone was 
crazy enough to watch it, but it is important.
  In 18 years, the United States has more deaths than births. Half the 
States in America today have more deaths than births. That is not 
Republican. That is not Democrat. That is just fertility.
  You have to understand, if you are going to have a vital country, if 
there is going to be another American century, you need growth.
  What policies are we getting from the left? Just piling on 
dramatically more debt and then saying to just keep raising the limit 
on the credit card.
  Let's walk through a couple of things we could do immediately. I have 
been complaining about the debt, demographics, and some of the bad 
decisions, so let's just do some of the things we know that have 
worked.
  If I came to you right now--and part of this is going to get me in 
trouble because I am going to say things that don't really fit the pop 
culture of this place.
  The fourth quarter of 2017, tax reform--there was this thing called 
expensing, this concept of you are a business and you buy a piece of 
capital equipment so you can make more stuff, make it better, faster, 
cheaper.
  Remember your high school economics class? There are functionally two 
things that drive up wages. Inflation--but when your wages go up 
because of inflation, do you really get anything? Your purchasing 
power, you are often behind. It is not just getting back up to even.
  The second thing that raises wages is productivity. You get 
wealthier. The country gets wealthier. Society gets healthier when we 
get more productive.
  It turns out that in the 2017 tax reform--and you can actually sort 
of see some of it because most people don't realize the tax reform 
kicked in in 2018, but we actually had a backward looking for anyone 
that made those capital expenditures in that fourth quarter of 2017.
  You can see it right on the chart. All of a sudden, these capital 
expenditures--businesses, organizations going out and saying they are 
going to buy that new piece of equipment. They are going to buy those 
new trucks so they have more capacity.
  You can actually see it, and that did this remarkable thing--growing 
the economy.
  Now, here is where I am going to get myself in trouble, but the math 
is the math, and the math always wins.
  If you actually look at the 100 percent bonus depreciation that we 
did and compare it to the individual tax cuts--we all love our 
individual tax cuts.
  Remember, the tax reform for 2017, something I over and over tried to 
share with my friends on the left because they have this crazy folklore 
that it was a giveaway to the rich--except the 2017 tax reform was more 
progressive, meaning the wealthier were paying a higher percentage of 
the Federal income tax burden than the previous one.
  Remember, under the tax reform, half of society doesn't pay Federal 
income taxes. They pay FICA, Social Security, Medicare, unemployment, 
but income taxes, half of society doesn't pay.
  The tax reform became more progressive but with lower rates and the 
ability for businesses to become productive. A crazy thing we found in 
the data set--and this is just a chart trying to say for every billion 
in your immediate lost revenues and the tax reform, if you do it on 
individuals, you get about 0.1 percent, a little over that, in GDP 
growth.
  When you do it in expensing--and there is a punch line coming here--
you actually get over 0.6 percent growth, which in an economy our size 
is massive.
  It turns out that if you actually really think about this--and this 
is one that is going to be a little hard, and so this is the moment, 
anyone watching, if you don't like accounting, please, you may want to 
go find something on Netflix.

  If you buy that piece of capital equipment so you can be more 
productive, and because you have gotten more productive and your 
efficiencies, you can pay your workers more, and your workers actually 
are doing better in life.
  You have this thing called depreciation. I am going to take that over 
7 years, and each year I get to take a little bit of it.
  If you actually read how the tax code works--I am going to show you 
some slides--you end up paying taxes on revenues you haven't produced 
yet because of the way depreciation works.
  If you get to take it all at one time, you speed up the capital 
cycle, meaning I bought this piece of equipment, and we got this much 
more productive. It is 3 years later, and I can buy the next one and 
expense it then and get that much more productive. You could actually 
see what they call the productivity cycle.
  The tax receipts are a timing effect, so you get this depreciation--
well, it actually would look more like a curve going this way, over 7 
years, or you take it in 1 year. The basic depreciation you get is the 
same. It is a timing effect.
  The reason you will see the CBO score says that this costs money is 
because we are always doing things in a 10-year window. Then, you often 
don't get the dynamic score. What happens when you have that 
productivity step up, and what does that produce in tax receipts, and 
then the new one and the new one.
  This is always very hard, particularly for those of us who get 
elected. Everybody loves their individual tax cuts, but if you want to 
grow the economy, ideas like expensing, that immediate depreciation to 
make society more productive, that is where you get your bang for your 
buck.
  This was my attempt--and we sort of stole this from--I am not even 
sure where we got this slide, but this is sort of walking through the 
depreciation cycle. If you had $100, you get to depreciate $88 of it. 
There is $11 of that piece of capital equipment that you don't get to 
depreciate.
  By the time it is done, you actually are paying more taxes because of 
the timing effect and that portion of it you didn't get to depreciate. 
You don't actually get the full value of the depreciation the way the 
tax code is written.

[[Page H1943]]

  So, the basic argument I am making here is, as we are starting to 
think about what things we could do, where I am hoping the White House, 
the folks down the Hall we call the Senate, and maybe even the 
Democrats on this side, what are the things they could do if they 
actually really cared about the fact that Americans are poorer today?
  What I need is wage growth going up faster than inflation. We know, 
over and over, permanent 100 percent bonus depreciation, which that is 
expensing, is the fastest way to step up that productivity because it 
is instant. It is particularly important during a time of inflation.
  I am going to bear with everyone because I have never actually tried 
explaining this behind a microphone. It has always been in my head, but 
I am going to try to explain this.
  A piece of equipment costs $100 today. You go, and it is a piece of 
equipment that you have to depreciate because the tax code now says you 
have to depreciate it over time. You get ready to buy it, and tomorrow 
it is no longer $100. It is $120.
  The fact matter of is, as it goes up, the value of that depreciation 
over time, compared to the productivity you get from it, is lost. In 
expensing, if inflation goes up, if it is $100, $120, you get to take 
100 percent of it immediately.
  The argument is, what is happening right now, in this year, because 
in part of the tax reform from 2017, today, you no longer get to take 
100 percent. You get to take 80 percent of it and expense it. Next 
year, it will be 60 percent and expense it.
  You see what is happening. As you can only take less and less of the 
cost of that piece of equipment, the price is moving up, the gap 
expands, and all of a sudden now, I have to cover that bigger gap 
because of inflation.
  If I have to depreciate it, it is much harder to get your value back. 
If it is expensing, even with inflation, you at least get the value 
back immediately.
  There is an argument from a bunch of the tax experts that basically 
says if you want growth in the economy without inflation, if you want 
wage growth in the economy without inflation, going back to 100 percent 
expensing is the most powerful tool we have.
  I know that may be a little geeky, but it is worth thinking about 
because the fact of the matter is, things like expensing, you go, oh, 
that is a Republican thing. I think Barack Obama was one of the biggest 
advocates for it.
  Understand, it is just good economics. Look, I have all sorts of 
charts that actually talk about the baseline effect, what happens when 
you have inflation. The fact of the matter is, in a time of inflation, 
it is one of the most efficient things you can do to get growth without 
inflation.
  The fact of the matter is, if you had 4 percent baseline inflation 
and you went back and had 100 percent expensing, it is like 94,000 
additional jobs in this society, which is actually part of the wage 
pressure, raising wages.
  Part of my argument here is, if you wanted something that is very 
simple, that Congress could do almost immediately, we would fix the 
fact that, under current tax law, that ability to take that bonus 
depreciation is fading away. We would fix that right now.
  We know full expensing, in the long run, has a substantial effect on 
longer run economic growth, a thing we call capital stock.
  In a country where, functionally, we borrow $45,000 a second, and it 
is going to double, functionally, in 10 years, you need policies that 
grow in a way where the capital stock, when the available capital to 
basically be loaned for businesses, for people to start ventures, to 
take risk--we actually also see just the expensing, the immediate 
depreciation. Even in the basic scores we get from CBO and the Tax 
Foundation, it grows wages.

                              {time}  2100

  Now, if I have got 1.2 percent growth in wages from this--I am going 
to show a couple boards here that you get about a point-and-a-half from 
R&D expensing and what it does in the economy. You can almost start to 
make up, with just the clean-up of a couple of the tax provisions, the 
amount of lost wages Americans have because inflation has been higher 
than wage growth. We can fix much of the damage that the left has done 
to this economy by just cleaning up some things in the tax code.
  I know this is thick, but it is important. This is just good 
economics, and it is simple. I often come here and talk about things, 
like if we would adopt certain policies and bring in new technologies. 
This is stuff we could do in an afternoon. This is just cleaning up 
some of the tax code.
  If I come to you right now, did you realize that in 2022, last year, 
if your business is a drug company, an engineering company, a biotech 
company, a chip manufacturer, whatever it is, and you have been 
spending money on research and development, now you have to amortize 
that research and development. That cost you cannot take immediately; 
you have to amortize it out. This is a real problem.
  Last week, I came and walked some folks through this. Part of it was 
from an article from The Economist last week, if anyone wants to geek 
out. It talks about the United States is still the most dynamic, big 
economy in the world. We have almost double the wages of people in 
Western Europe. I think we are like 20 or 25 percent higher than Japan. 
A lot of that was because of this velocity in the economy, the risk-
taking, research and development, and bringing in new products.
  What happens when that research and development really slows up 
because it doesn't make sense to make those capital expenditures 
because now you have spent all this money, now you have got to 
depreciate it out?
  All of a sudden you are functionally paying taxes today on money you 
don't have. That is what is happening.
  Well, you start to take a look at the stuff, and you start to realize 
that in the United States now, it is not like it was back in the 1970s 
where government was the primary funder of research and development. It 
hasn't been that way in like 40 years.
  You look where we are today. This orange line is business, and you 
start to see the cycle over here. We were doing amazing things with the 
breakthroughs that were coming.
  We are actually starting to track now that this is starting flatline 
because the tax code has changed. Fix it. Research and development, 
make it 100 percent expensing instead of what has fallen back. We have 
gone back to the old, old tax code. We have lost the expensing.
  Research and development. You say you want a dynamic economy. To my 
friends on the left who keep wanting to talk about clean energy, bless 
you. How would you like to actually keep having the research that 
actually creates the next breakthrough, the next super battery, or for 
those of us who have an absolute fixation that one of most moral things 
we can do in society is curing diseases?
  I am going to circle back. Yes, I am going to talk a little bit about 
diabetes and research and development expensing. They do tie together. 
The single most expensive thing in our society right now is diabetes. 
Thirty-three percent of all healthcare is diabetes. Thirty-one percent 
of all Medicare is diabetes.
  What would happen if you could actually disrupt prediabetic 
populations?
  Heaven forbid, in the future--because we know it is in phase 1 right 
now--we have an actual cure.
  Those are things that good tax policy brings venture capital in to 
help finance. It is moral. It would be one of the most powerful things 
you could do to close income inequality and crash the debt. But we seem 
to not be able to think out of a paper bag.
  You look at the gain. If you actually look, business R&D grew faster 
after the Tax Cuts and Jobs Act because you turned it substantially 
into 100 percent expensing. You take a look at these huge step-ups 
where the United States was the innovator in the world, bringing on new 
products faster, better, and you could actually see this in wage 
growth.
  There are certain things you and I can do in the tax code that in 
many ways are minimally expensive and incredibly productive in wages 
and growing the size of the economy.
  Remember the first slide? We are living in a country where the CBO is 
telling us next year we are down to 1.2 percent economic growth. We 
have got to find a way to grow.
  If you actually look at what is happening right now, the private R&D 
investment was growing and growing and

[[Page H1944]]

growing, and now it has begun to flatline out. This is a real problem.
  If you want to live in a country that is dynamic, that is providing 
opportunity, that is curing the disease a family member has, the new 
piece of technology that changes our lives, that makes our living so 
much better and healthier, believe it or not, the path to that is 
fixing parts of the tax code.
  Mr. Speaker, the only argument I am trying to make here is, I often 
come behind this microphone with absolutely dour, nightmarish 
discussions. The one I have gotten the most complaints about is I have 
been bringing the charts the last couple of months showing in 9 budget 
years, in 9 years, you can get rid of every dime of defense and all of 
what we call discretionary spending--no FBI, no Park Service, no FDA, 
no Congress, no White House, no Supreme Court--it is all gone, and you 
still have to borrow a couple hundred billion dollars. It may actually 
be worse than that because I haven't bothered to calculate in the fact 
that the Social Security trust fund is gone a year earlier. But we know 
if you backfill the Social Security trust fund, it is not a couple 
hundred billion; it is like $700 billion and there is no government.
  We are functionally an insurance company with an Army. I say that 
over and over because that seems to click in some people's heads. If I 
get one more individual who has functionally been lied to over the 
decades by the political class: We can get rid of waste and fraud or by 
taxing the rich people more or if we got rid of foreign aid, we will be 
fine.

  I have one woman who insists on texting me that if we should just get 
rid of Members of Congress' pensions and salaries. I did the math for 
her while she was on the phone with me. I took an entire year of 
borrowing and added up every dime that goes into Members of Congress 
and the Senate, their salaries and pensions, and I think we came up 
with 18 minutes' worth of borrowing for an entire year.
  Come on, people. Buy a calculator. Stop living in a fantasy world. 
There are solutions here. We just need to embrace them and move 
forward.
  Mr. Speaker, I yield back the balance of my time.

                          ____________________