[Congressional Record Volume 170, Number 95 (Tuesday, June 4, 2024)]
[House]
[Pages H3641-H3646]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
UPCOMING CHANGES IN THE ECONOMY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 9, 2023, the gentleman from Arizona (Mr. Schweikert) is
recognized for 60 minutes as the designee of the majority leader.
Mr. SCHWEIKERT. Forgive me, Madam Speaker, as we get our boards all
lined up.
Madam Speaker, I am going to try something a little different than
starting with the debt pie. We are going to actually sort of walk
through some of the chaos that is coming next year. For those of you
who always hear the saying, hey, the next election is the most
important election ever, what I am going to walk you through is going
to show, yeah, it probably is, but let's walk through why.
How many of you understand that in December 2017 there was a tax
reform bill? It was the first time in 30-plus years that the United
States had updated its tax code. Now, within that, one of the basic
principles is what could you do to maximize economic growth and what
could you do to make the United States competitive again?
Do you remember before 2017 the number of organizations, corporations
that were chartered in the United States that were saying, bye, we are
going to Ireland, we are going to other parts of the world because the
way we taxed international business and those things. We found a way to
make ourselves competitive, and I believe since then we haven't had a
major organization, major corporation leave the United States.
Could you imagine having gone into the pandemic if we hadn't done the
tax reform in December 2017? Also, I have tried in previous
presentations to come here and talk about the morality of 2018, 2019,
even 2020. We had the biggest movement of closing income inequality in
America. It was actually some of the fastest in modern history of wages
going up without inflation.
If you love and care for people, particularly working people,
particularly those who, as is common, have the lowest quartiles of
income, go back to 2018, go back to 2019, go back to the beginning of
2020, and understand the morality of having a revised tax code work.
Here we are. There is something coming next year we need to
understand.
[[Page H3642]]
Parts of the tax code changes will expire. The reason is the way the
tax reform had to be done because our brothers and sisters on the left
were not going to help us, and you had this 1974 Budget Control Act
that said, hey, you can go around the Senate 60-vote rule if it reduces
spending within a certain set of rules.
It is called reconciliation. It is a little bit geeky. Even people
here, we all have to sit down with the Parliamentarians and work out
the rules. What that meant is there was a budget box built in 2017, and
we filled into that box, but to make that box work, because it is a 10-
year number, we had some things that would expire.
Guess what happens next year? A whole number of those provisions
begin to expire.
Let's actually start to work on what is actually coming for us next
year. These are the expiring tax provisions next year. This is going to
make sense in a little bit. Let's say right now you make $20,550 to
$83,000, today your current income tax rate--not your social security,
not your FICA tax, those things, your current tax rate is 12 percent of
your income. It is going up to 15 percent. The next bracket goes from
22 percent to 25 percent, then 24 percent to 28 percent, 32 percent to
33 percent. We are going back to the personal income tax rates from
2017 and earlier. The crazy thing is these rates actually are less
progressive than the current updated tax reform.
Most people don't realize, when the Republicans did tax reform, we
lowered rates, we broadened the base, we did all these sorts of things,
but it actually was slightly more progressive than the old tax code--
which our Democrat friends, it drives them insane when you mention
that, so I always enjoy doing that.
{time} 1715
This is coming. This is current law. This isn't a proposal. This
isn't some sort of magic bait-and-switch discussion.
This is the current law. This is going to be part of the great battle
next year doing policy here. I am going to show you three or four
boards of what is changing in the tax code for all of us next year.
Understand, that math over 10 years is about 4.2 trillion. The first
year it is, like, 380 billion. Let's just call it $400 billion because
that makes the math easy to do in our head.
Let's walk through some other things that are changing next year.
Expiring 2025 tax provisions. The child tax credit.
Yes. In 2017, Republicans, without a single Democrat vote, doubled
the child tax credit to $2,000. In 2026 when you get ready to pay your
taxes, that provision will have expired. Instead of getting $2,000 per
child, it goes back to $1,000.
Here is one of the big differences when you can think about the
inflation we have had since President Biden took office.
If you live in the Scottsdale/Phoenix area that I represent, if you
don't make more than 26 percent more today than you did the day Biden
became President, you are poorer. Think about that.
These provisions aren't adjusted for that inflation. Right now, it
phases out at 400,000. You lose this child tax credit doubling.
Next year, when this starts to expire, if you make over $110,000, it
begins to expire and phase out on you. Just be prepared.
The other thing is under current law, you get a $500 deduction per
dependent. Next year, when you pay your 2026 taxes, it is gone.
Understand these are taxes on working people. This is already the
current law. This is coming at you.
Let's do a little more here. Expiring 2025 tax provisions. Current
status. If you are single, you get a standard deduction.
One of the ways the tax code works, the way you create sort of this
progressivity is you say, hey, the first block of your income
functionally has no tax, and then the rates go up as you get higher in
the income bracket.
Right now, if you are single, the first $14,600, you functionally
have almost no tax. If you are single when the provisions expire, that
number gets functionally cut in half. It becomes $8,300.
If you are married today, it is $29,200. This is the standard
deduction. It will go back down to $16,600 so no inflation adjustments.
Your taxes are going up next year.
Understand, this is the law. Understand, what we are starting to
discuss here is what does Congress look like next year? What does the
Presidency look like next year? What is the need of the economy? What
is the need of the debt and deficits? This actually becomes really
interesting debate at the same time you are borrowing.
We are going to walk through, actually in a little bit, some good
news on the economy, some stabilizing news in the debt and deficits,
but for a lot of Americans, they are already just stressed out of their
mind.
Once again, there has been 26 percent inflation for my community in
functionally the last 3, 3\1/2\ years. What happens in that same
environment when your taxes go up?
Let's walk through a little bit more here. I know talking about tax
provisions is so exciting, but when you pay them, you understand why we
wanted to get ahead of the curve and explain to our brothers and
sisters in America this is the current law. This isn't a proposal. This
is the law as it is.
Another 2025 expiring tax provision. Currently, 100 percent of first-
year bonus depreciation. Now, this has been starting to phase down.
You have a small business. You buy a piece of equipment. I have done
entire presentations on this. When we talk about research and
development or expensing, you buy that piece of equipment so you can be
better, faster, cheaper, and become more productive.
What are the two ways you pay workers more in America? Actually, in
all economics? Inflation? I raise your salary because of inflation.
That bought you what? Nothing. Productivity. You are making more stuff
better, faster, cheaper. Your wages go up. That is real gain.
The idea behind the depreciation on both research and development and
expensing was if I can get that business to buy a piece of equipment
where they are more productive, they can pay their workers more.
In the coming weeks, I am going to come here and show some of the tax
cuts that were given to businesses after 2017, the vast majority of
that actually went to wages. It was wage growth. When you raise those
taxes, you have to accept you will flatten out wage growth over the
coming decade.
This is one of our biggest frustrations right now because this has
been phasing down 20 percent each year for 5 years.
What is depreciation? You bought that piece of equipment. The
government gets what in tax receipts? If you depreciate it over 7
years, 5 years, you get to depreciate it off your taxes, right? If you
depreciate it in 1 year, you get to depreciate it off your taxes. It is
a timing effect.
The government still gets functionally the same taxes. The difference
is when you have to do it over time.
You, the businessowner, had to find a way to finance that piece of
equipment over those years until you got the tax benefit, and you could
use that tax benefit.
That is one of the reasons productivity has become stale in America.
It is because this isn't really a tax cut. I would argue it is timing.
There is also some really interesting economic data that the
expensing and the research and development expensing may have
represented almost half of the economic growth after the tax reform.
Think about that, because it created a productivity capital cycle. In
a world right now where we are 7 years later after TCJA, the tax
reform, where you now have AI, now you have robotics, other things,
there is an argument that that productivity cycle by being able to
invest in capital equipment could even be steeper, meaning your wages
go up.
We actually passed a short-term, couple-year extension of this. We
got it through the House. It was even bipartisan. It has been sitting
in the Senate for months.
It shows you how perverse this thing is around here when even the
things that grow the economy and grow your wages and functionally have
almost no cost to tax receipts we can't even get through here.
Let's actually walk through what these tax provisions expiring mean
to
[[Page H3643]]
the people of my community. Let's do some math.
Here is the first one. Sorry. Some of the phrasing over here is a
little awkward. It should almost reverse. Expiring tax provisions in
2025.
Right now, per child, when you get the tax credit per child, that is
about $753. That is going away. Remember, it is getting cut in half, so
you are going to lose that.
Let's do the next one. Expiring 2025 tax provisions. What does this
mean to someone that lives in my Congressional District?
Before we do this, I think I need to have a moment of honesty. I
represent a fairly prosperous district. I represent an incredibly well-
educated district.
I represent Phoenix, Scottsdale, Fountain Hills, Carefree, Cave
Creek, town of Paradise Valley, north central Phoenix.
If you live in my district, you likely have a college degree or you
work your heart out. It is an aspirational district.
I have to accept I am going to have higher numbers than a lot of the
other districts in the Southwest.
Think about this, just the income tax provision.
We are not talking about all the other credits that are expiring,
just the income tax increase for the average family, and, typically, we
model this as a family of four. Your taxes are going up $2,541.
If you live in the Phoenix/Scottsdale Congressional District 1 in
Arizona, are you ready for $2,541? The punch line even gets uglier.
That is just on the income tax portion, not the tax credit portion.
We added it up and figured out if we remove all the tax credits and
everything else that are expiring in the 2025 year, here is our grand
total.
The average tax increase in Arizona's Congressional District 1--once
again, I need to admit mine may be almost double some districts around
the United States because it is a more prosperous district--is $5,921.
Congratulations. This is what is coming at you next year. Top this on
the 26 percent inflation that has been in my community.
You are getting your head kicked in next year. Start thinking about
that is what this election is just in prosperity, just in opportunity,
just in your ability to save for your retirement.
Someone like myself, I have young kids. Don't laugh at me. My wife is
the same age as I am. We are incredibly blessed, and we have done okay
in life.
We freak out on just trying to figure out how we set aside money for
my retirement and their education. This isn't going to help. This is
the current law. This is what is coming at you. Understand what is at
stake.
I need you to see here is almost $400 billion just after the
expirations in new taxes coming in, over $4.2 trillion over the 10
years.
In the same time, I have a society that is getting older very fast. I
have a government that is basically buying love from what the Democrats
did here in the first 2 years of the Biden administration where they
bought and were subsidizing businesses and all those things to a couple
trillion dollars.
You stack that on top of each other, and you start to understand: How
do we do this? What do we have to do policy wise so your taxes do not
go up?
You keep the economy growing, and you don't grow the debt anymore.
You see the puzzle that I am throwing at you?
We are going to make an argument, and I have been doing this slowly
on the floor, trying to roll out this concept.
If you are going to think about the tax cut expirations, if you are
going to think about it as binary, just think, well, just extend them.
Well, that is about a $400 billion hit on projected borrowing. Come
over here. Do you raise corporate taxes, because C corporations, their
tax cuts are locked into the code. Well, you just slowed down the
economy.
How about we do some other things? Instead of making it sort of
binary about the tax code, why not change government? Why not make
government dramatically less expensive?
We have done multiple presentations. I am going to do more in the
coming weeks on revolutions you could have by adopting technology to
reduce the cost of healthcare.
In the Joint Economic Committee, our economists on the Republican
side are going to issue a report in the next couple weeks.
I am probably going to get my head kicked in, but we are going to
walk through a series of things you can do to dramatically reduce the
cost of healthcare.
Be prepared to see a number. We are not done with the final vetting
on it. These are the things that are uncomfortable to talk about.
If diabetes is 33 percent of all healthcare spend and 31 percent of
all Medicare spend, we have a country where our brothers and sisters
are dying. This may be the fifth year in a row where prime age males
have a shorter life.
Maybe the solution here is not only looking at the tax code but
changing government, adopting technology so that government is smaller,
changing healthcare where healthcare becomes about being healthy and
dramatically reducing its cost substantially by legalizing technology.
Then think about the tax code in a much more productive way.
{time} 1730
How do you design a tax code? Do we have to do base broadening? Do we
have to lower certain rates? Do we have to spread it out so you
maximize economic growth? It is sort of the old Laffer Curve concept,
but I need you to think about it on a grand scale.
Instead of this just being binary about taxes, I want you to demand
that the Members of Congress think about this in a fashion of what
policies are you willing to do to lower the cost of government, so we
have the ability to extend these tax cuts without raising the debt and
deficits. That is the great puzzle that is coming. You have got to
decide when you go vote how your vote is going to manage that.
Let's actually talk through some things that are worrisome right now.
You have these tax expirations already coming. It is the law. Remember
how the Biden administration has been touting: Look at this great
economy. We spent all this money. We bought prosperity. They basically
bought corporate America by handing out cash. Let's be honest.
It turns out we got the math wrong. It turns out when you look at the
Bureau of Labor Statistics, we got another revision. I think it was
yesterday or the day before. Turns out that real GDP growth for Nowcast
wasn't 3 percent. It is down to 1.8. We are seeing a crashing back to
where our expectation was of 1.8, 1.7 GDP growth.
You have got to understand that when the debt grows dramatically
faster than the growth of your economy, that ratio of debt to the size
of the economy starts to spread and it makes buying U.S. debt riskier,
meaning we have to pay a premium. The United States is now number 14 on
the credit stack, meaning there are 13 countries that have better
credit. When they go sell a 10-year bond, their bonds are sold cheaper
than ours. Greece today has a better credit stack than the United
States. Part of that is governance. Part of it is all the other things
that go into how the Moody's and the S&P's and those do.
Understand, until we can also demonstrate to the bond markets--you
ask: Why is he talking about the bond markets? I think we borrowed like
$57 billion last week.
There is some good news. Our estimate that we would borrow $2.8
trillion this fiscal year may be down to $2.5 trillion. That is still
almost double what we were predicting a year ago or a year-and-a-half
ago.
Now, when you see the size of the economy starting to flatten out, is
anyone other than myself getting nervous?
Let's dive into this. I would suggest to anyone who wants to geek out
with me, there is an app. Go grab your phone. The Atlanta Fed has
something called GDPNow. Others have Nowcast. They all model it
differently. One looks at expected; one looks at actual data.
This is from the Atlanta Fed. I want you to notice something. The
Atlanta Fed was way up here at 4 percent. You had the White House and
you had the Democrats saying: Keynesian economics works. You can buy
prosperity by borrowing stunning amounts of money.
Boom. That number is falling off the cliff. It turns out, at a
certain point, the sugar high of spending--this is just
[[Page H3644]]
because I care about this, even if no one wants to hear it.
There is sort of this allocation theory. This is one of the splits
between Republicans and Democrats. Every once in a while, you will hear
Democrats say: Well, they believe in supply side. Understand what that
means. If you give someone a tax break, the benefits of that go to
where it gets the highest yield, the most productivity.
If you engage in the arrogance of saying: We are really smart. We are
going to choose businesses which we are going to invest in, so we are
going to invest in this solar technology even though 3 weeks later
there is another breakthrough that doesn't get financed. The
arrogance--oh, by the way, because we hand out checks, these people
become friends with us politically. They even show up at the White
House for nice cocktail parties and fundraisers.
This is what the Democrats did. They had the arrogance of deciding
who would get the money on their Inflation Reduction Act, the most
Orwellian-named bill in modern history, to things like the CHIPS and
Science Act. It was sort of a designation of where the cash goes.
If you wake up the next day and there is a technology breakthrough,
with that allocation theory--if you had done some of those same dollars
in tax reform, the money goes to where it maximizes productivity, wage
growth, and it becomes part of the base of the economy where it is the
new cornerstone of the next generation of economic growth. This one
buys you lots of political power. This one actually buys you the
morality of prosperity.
You are starting to see it. Mark my word, watch the data coming in on
GDP and the size of the economy. I am not terrified yet. I am not that
worried yet, but the fact of the matter is, when you start to see
numbers predicting--we went from 4 to almost 1.8 in a matter of weeks.
Something's wrong out there.
What happens to that debt and deficit when we roll over economically?
What would happen if we hit even a short-term recession?
This is one of the other great frauds around here. In my time here, I
have never seen revisions in the economic data like we have been seeing
these last several months, revisions where you get this great headline
and everybody applauds: Keynesian economics managed the economy.
Industrial planning, it works, you see here.
Then they don't mention that 6 weeks later those numbers are being
revised way down because you have got your political pop already.
Some of the revisions of the fourth-quarter wage and salaries, we had
to revise down again another $73 billion. Some of this is from sampling
errors, actually some there were complications. This isn't a
conspiracy. It just turns out the economy is different today than it
was before the pandemic, a number of people work at home, this and
that, the way we sample. We have to modernize our data.
It turns out, this may explain why tax receipts aren't where the size
of the economy should be. At the same time, we are trying to figure out
the growth of the debt and deficits when we keep being told how great
the economy is. Now that it starts to roll over on us, we start to
understand.
Just a couple of other geeky things. Over the past four quarters, the
total public debt has grown by more than twice the growth of GDP. This
is a weird slide. Let me explain.
Do not get it in your head that you can borrow at the rate of the
growth of your economy. It doesn't work that way. If the economy grew
$1, you only get about 17 to 18 cents in tax receipts. This is
historic. When we have had high marginal tax rates or low marginal tax
rates, the United States gets about 17 to 18 percent of the economy.
The secret is to grow the economy, grow the economy, grow the economy.
What happens when you know you are only going to get about 17 to 18
percent of that GDP growth in tax receipts when the debt grows twice as
fast as size of the economy?
You hear the discussions of what happens when you are at 100 percent
of debt to GDP. Understand, the way the Europeans do their
calculations, it is all debt. The United States, if you do our gross
debt, the borrowing from our trust funds, which we have to pay interest
on and we have to pay it back, we are over 120 percent of debt to GDP.
In one calculation, we are at 140 percent of debt to GDP.
If you do just borrowing from the public, which subjects you to the
bond market being in charge of your government, we are just shy of 100
percent of debt to GDP. This number tells you it is moving away from us
fast.
A bit of trivia. Mr. Perry, you want to play?
You can just yell from there. I know it is a break of decorum, but we
will have some fun.
If I came to you and said: What is the second biggest spend in
government, what is it? The second biggest spend this fiscal year?
Mr. Perry said the military. He is a general. Of course he is going
to say that.
Turns out it is interest.
Remember, it is unfair to use Social Security, because Social
Security operates on its own trust fund. It has its own tax stream and
trust fund. As we saw in the Social Security actuary report, in about 9
or 10 years, the trust fund is empty and everyone gets a 21 percent
cut, depending on if the economy is good or maybe larger.
Now, they have interest at $1.144 trillion this fiscal year. My math
is a little higher. I come in just around $1.2 trillion.
Defense and Medicare are moving back and forth between who gets to be
number three and who gets to be number four.
My friend from Texas, tell me you like this number. Isn't this
terrifying?
Mr. ROY. Will the gentleman yield? Just making the Parliamentarian
happy.
Mr. SCHWEIKERT. Mr. Speaker, I yield to the gentleman from Texas (Mr.
Roy) for the purposes of a colloquy.
Mr. ROY. Mr. Speaker, for everybody watching at home, Social Security
is predominantly on autopilot, mandatory accounts.
Mr. SCHWEIKERT. Correct. You and I don't get to vote on it.
Mr. ROY. Interest is effectively on autopilot.
Mr. SCHWEIKERT. You pay your obligations.
Mr. ROY. You don't want to default.
Now, you put defense over here as discretionary, although there are
some issues in there in terms of some social spending. Call that
discretionary. You have got Medicare, which is effectively mandatory.
What you don't have on that chart is that obviously Medicare is growing
and exploding, correct?
Mr. SCHWEIKERT. Medicare spending, when I checked about 6 weeks ago,
was already up 10 percent in spending this fiscal year.
Mr. ROY. Right, and it is going up in perpetuity.
Mr. SCHWEIKERT. Part of that is demographics.
Mr. ROY. We have got a bubble that is going to----
Mr. SCHWEIKERT. Yes.
Mr. ROY. Also not on there are significant other mandatory things.
For example, we have veteran spending. We just voted on MILCON-VA. We
have veteran spending based on burn pits and stuff that is about a $500
million or $600 million mandatory account.
We have what we do with food stamps on the farm bill and other things
that we categorize as mandatory but are a little bit more
discretionary.
My point is--and I don't want to take the gentleman's time; I will
yield back--that you are putting up there stuff that we pretty much
have to pay.
Mr. Speaker, I yield back to the gentleman from Arizona.
Mr. SCHWEIKERT. Mr. Speaker, the gentleman from Texas is my buddy. In
some ways he is much more elegant with language. He has the misfortune
of being a lawyer.
I show up at townhalls and things like that and they say it is
defense spending. Then they don't believe you when you say, no, defense
is either third or fourth. Actually, defense spending is what is in the
Constitution.
We have to deal with the reality. This coming fiscal year, I
calculate Social Security will be at $1.480 trillion. The shortfall,
just this fiscal year, is about $340 billion in the Social Security tax
that comes in and the spending is out the door. That is why you see
them every month having to cash in their special Social Security
Treasury bills. Let's just call it that.
Now, they get paid interest. Believe it or not, about 6 percent of
the Social
[[Page H3645]]
Security budget is actually interest paid by the general fund. In some
ways, over here we are borrowing money to pay back the interest on the
borrowed money. You have got to see this weird washing machine that is
going on.
Mr. ROY. Will the gentlemen yield for one quick question?
Mr. SCHWEIKERT. Mr. Speaker, I yield to the gentleman from Texas (Mr.
Roy) for the purposes of a colloquy.
Mr. ROY. Do our revenues for this year, FY24, cover what is on that
chart?
Mr. SCHWEIKERT. No.
Now, it is a little more complicated than that because Social
Security is on the FICA side. Interest is general fund. Defense is
general fund. Medicare is a little tricky, because it is about--I have
a chart here I wasn't going to use. Most people think Medicare is off
the FICA tax. Only about a third of it is. That is the Medicare part A.
That is the hospital portion. The other part comes out of some fees,
and then the majority of it is right out of the general fund.
Mr. ROY. Mr. Speaker, my main point for the average user is that the
revenues we bring in from general taxes, corporate taxes, FICA taxes,
the chart that the gentleman was just showing, does not cover even all
of what the gentleman just put forward, much less the remainder of the
government, the remainder of the Department of Justice, the Department
of Homeland Security, the FBI.
{time} 1745
Mr. SCHWEIKERT. You said this, and I actually stole it from you
months ago, Mr. Roy. Every dime we as Members of Congress vote on is
borrowed money.
Every dime we vote on is borrowed money, and if you actually sort of
work it out on the annual, all defense is borrowed, all nondefense
discretionary is borrowed, and about one-third of Medicare is on
borrowed money.
Most people can't get their heads around the fact that everything we
vote on is borrowed money, and over here, it is on autopilot.
I have been trying to make the moral argument of what is doable. I
believe we could crash the price of healthcare. I believe we could
dramatically shrink government.
We had a hearing on artificial intelligence over in the Senate with
the Joint Economic Committee. We had a couple of experts saying: You
realize you could get rid of all these employees and do all this stuff
with crowdsourcing and this and that. You could revolutionize the size
and cost of this government tomorrow if we would legalize the
technology and use it.
You have to deal with the army of lobbyists and the army of people
from bureaucracies who will knife us for just actually saying that.
Mr. ROY. I don't want to take up the gentleman's time, although I
have time on the back end, and we are happy to bleed them together, but
I would just add to the gentleman's point.
We have to address the drivers that the gentleman comes down and
talks about every week for the most part and comes down with regularity
that get to the heart of those numbers.
We look at it like some monolithic amount that we can't address when,
in fact, if you drive the price of healthcare down through the
innovations the gentleman talks about, through cures, competition, and
the things that we know we could do, you could massively reduce that
Medicare burden, reduce interest, and deal with a lot of the expenses.
Then, as we grow our economy, we get ourselves into a good place.
Does the gentleman agree?
Mr. SCHWEIKERT. The running joke in our office, and this is one of
our tests for the interns--you are going to be tested on this later:
What is your government? In one sentence, describe it. It is an
insurance company with an army.
Mr. ROY. Correct.
Mr. SCHWEIKERT. It really is the vast majority of the money.
Now, it is earned benefits. You earned it. We just don't have the
money for it. I am going to light myself on fire. I am going to go out
of order.
Mr. PERRY. If the gentleman would yield?
Mr. SCHWEIKERT. The gentleman may want to leave before I do this
chart because this chart really upsets people.
Mr. PERRY. I don't know if you talked about disability, where we have
gotten the money for the increase in disability, how we are making up
for that, what the growth of that number looks like, and what the plan
for the future is.
Mr. SCHWEIKERT. It is more complicated, and I have to do about a
half-hour presentation to talk about it because it is more than just
the disability payments that are part of Social Security and SSI.
Mr. PERRY. Where do we get that money?
Mr. SCHWEIKERT. That is coming out of part of the FICA tax, but it is
the labor force participation. When you create incentives in society
not to be part of society, then you lose all sorts of things.
Let's do this slightly out of order. I was going to do this slide to
talk about the scale of what you and I have to deal with.
What happens in society when you functionally finance people being
sick?
Let's be brutal. We should do some fairly revolutionary things in the
farm bill because we give people money to buy onion rings. I would say
that is immoral when obesity is almost one-half of healthcare costs.
I have a slide that shows the Milken Institute study from a couple of
years ago. It is 40 percent of all healthcare spending in the country.
We are dying.
Then, we have this other issue that we are not having children. This
last year, fertility rates in the United States collapsed to 1.62,
meaning France has more children than we do.
You tell me how we finance things like Social Security, Medicare, and
these things, which are pay-as-you-go. Today's taxpayers are sort of
paying the benefits of today's retirees, which is the way it was
designed because we always expect population stability.
In 15 years, this country has more deaths than births. We are having
the fifth year in a row where prime-age males are dying younger. A
child born today, particularly a male child born today, is estimated to
have a shorter life expectancy than you and I.
There is something incredibly immoral happening, and I would say it
is our own policies. We have incentivized leaving the workforce. We
have financed unhealthy living. We do a number of things where we have
indemnified being alive, healthy, and part of society.
It is immoral what we have done under policy, and most of the
policies have been brought to us by that side. We make the sin of
continuing it.
Here is the punch line. This punch line is really uncomfortable, and
you may want to run away from me because I am an idiot willing to tell
the truth.
The average family is going to get back Social Security money and
about a $72,000 spiff for the average couple, which is a crack rate of
return. Most people don't realize that your Social Security payment is
actually progressive. If you were at the lower end, you get a decent
rate of return. If you are at the higher end, you actually get a
substantially negative rate of return.
For every dollar you paid when you paid your FICA taxes for Medicare,
we now calculate you get $5 to $6 back. This right here and the
financing costs to that is the primary driver of U.S. debt.
I have been booed. I have had someone throw something at me. I have
had a woman stand on her chair and scream at me that she wants every
dime. It is fine. It is an earned benefit. You earned it.
My argument is that we need to think more like revolutionaries.
Legalize the technology. Do the financing of the cures, the very things
where we could crash the price of healthcare and have a healthier and
more moral society, maybe with family formation, maybe where young
working men aren't dying younger, maybe where obesity isn't killing off
substantial portions of society.
It is moral, and I need us to think much more because complex
problems, the terrible things, often require complex solutions, and I
don't know if this place is capable of thinking of complexities.
Mr. ROY. Will the gentleman yield?
Mr. SCHWEIKERT. Madam Speaker, I yield to the gentleman from Texas.
[[Page H3646]]
Mr. ROY. Would the gentleman agree that the fundamental obstacle to
achieving what the gentleman just outlined is that it has a lot of
complexities in it?
Mr. SCHWEIKERT. Yes, but we have a plan. We have a plan.
Mr. ROY. We will go through committees, figure out the work. It is
tough work. We will do it.
Would the gentleman agree the primary obstacle to that is, and I am
going to use this term broadly, the buildup--the gentleman referenced K
Street and the army of lobbyists--the sort of corporatization of all
things that we do, meaning healthcare is driven predominantly by the
massive corporations--pharmaceutical, hospitals, pharma. My life got
saved by great innovation in pharmaceuticals when I had cancer. I am
for it.
But the corporatization, the corporate cronyism, the extent you have
these massive entities, including, by the way, those that are driving
our food supply, all the regulations prohibiting small farms and small
meatpacking plants to ship the stuff to have local produce and local
foods so that you can eat healthy. It is the massive corporate
interests that come here lobbying for benefits and tax breaks that, by
the way, are going to be front and center among Republicans when
everyone says that we must go back and put in place all the tax
benefits, which some are good, as I was talking about earlier.
Does the gentleman agree that some of these are part of the problem?
Mr. SCHWEIKERT. This is probably going to be the first time you have
ever heard this, Chip. I don't think you are cynical enough. That is
actually very funny for those of us who know Chip.
We have actually created a motto in our office: Money, power, vanity,
but most of the time, it is about the money.
I would argue that Congress has become substantially a protection
racket. We protect incumbent bureaucracies and incumbent business
models. When someone comes to us and says: Hey, I have this thing you
can blow into and, boom, it will tell you that you have the flu, and it
can bounce off your medical records and order your antivirals that Lyft
can drop off in 2 hours. That technology exists. We will find a way to
make that illegal. We will make it so you can't be reimbursed. It will
be illegal for an algorithm to write a prescription--those sorts of
things.
There is a revolution of technology around us where we can make our
lives so much easier. You and your family can have more time, and we
can crash the debt and deficit, and young people don't have to live
poorer than their parents because that is what the math says.
This will be the first generation coming up right now that will be
economically more disadvantaged than their parents. That is immoral,
and we can stop it, but we have to think disruptively.
Maybe I am a little bit of a utopian on some of this stuff. The
Democrats, all their taxes, you get about 1.5 percent of GDP when you
do economic effects. I have offered some pretty brutal amendments here,
which are never going to pass, on cutting spending and nondefense
discretionary. If you let me have everything, I can get 1 percent of
nondefense discretionary, 2\1/2\ percent.
The runway rate this year, I think it is going to go down near the
ending of the last quarter of this year, but we are burning 8, 9
percent of GDP in borrowing.
Here is my problem: If you are borrowing about 8 percent of GDP and
everyone's proposal, because this is our campaign talking points, is
down here, we have to revolutionize policy.
There is our problem because there will be an army of people in the
hallways here really cranky at us because we are forcing them to
compete, have a vibrant economy, and bring technology, disruption, and
productivity to market.
It means they have to change their business models. The bureaucracies
have to actually be, in many ways, replaced with technology.
Mr. PERRY. Will the gentleman yield?
Mr. SCHWEIKERT. Madam Speaker, I yield to the gentleman from
Pennsylvania.
Mr. PERRY. Are you talking about, to be clear, crashing the cost of
healthcare?
Mr. SCHWEIKERT. And government.
Mr. PERRY. You are talking about bringing down substantially, almost
cataclysmically----
Mr. SCHWEIKERT. No, no, no. Don't use a word like that. Just morally.
Morally.
Mr. PERRY. That is fine, but substantially, the magnitude. That money
is going somewhere right now.
Mr. SCHWEIKERT. Yes.
Mr. PERRY. Wherever that is going, those folks want that money.
Mr. SCHWEIKERT. Of course. How much of that is on borrowed money
right now?
Mr. PERRY. It is all borrowed money.
So who is going to be unhappy if we do that?
Mr. SCHWEIKERT. Oddly enough, I get this crazy thing where I will get
business models that are built on today's way of healthcare
reimbursement, which need sick people to exist. They will come in and
say: Okay, I am wearing two hats. For my business, I need to stop you,
Schweikert.
It is like the fights we had here on telehealth and digital medicine,
those things. They fought like crazy to stop that, and then, in the
next sentence as they are walking out the door, they are saying: But we
want it for our family. We want the technology. We want the time. We
want to be healthier. We want this.
That is actually why I am hoping at some point the morality of what
people would want for themselves and their families, they will see
actually it is good business, moral, and really important for the
future survival of this Republic.
Mr. PERRY. I am not going to hold my breath.
Mr. SCHWEIKERT. You have to keep trying. My argument is that there is
a path.
Madam Speaker, I appreciate you tolerating us, but there is a path
where you can make this math work. The problem is it is going to be
hard. There are going to be people who are upset because you are making
them rethink how they do their business. You are going to make
bureaucrats either rebuild their bureaucratic model or actually go find
a job in the private sector, but we don't have a choice.
Be prepared. There is a way to save us. One of our economists has
played some math games, and the theory is depending on where interest
rates are at, because functionally the bond market is getting close to
running this country, depending on where interest rates are, you may
have 3, 5 years, could be longer, where a movement in the bond market
starts to consume all your variability.
At that point, it is almost too late to do major policy. At that
point, you are doing policy to pacify those whom you are trying to sell
your debt to.
{time} 1800
Mr. SCHWEIKERT. This election you just saw, you have the prosperity
of your family and the tax code, but you have an opportunity to use
that stressor.
Mr. Roy, this is actually where my punch line at the end was going to
be: Are we nimble enough to use the stressor of the expiring tax
provisions to get us to think about things we could do to change the
cost of government because it is like the debt ceiling around here and
other things? Without those and without a stressor on this place, this
place will not do anything that is hard.
Let's think creatively. Let's do quality math. Let's be hopeful, but
let's demand that the public understand the scale of the problem and
that there is hope. It just is that hope isn't perpetual. We may only
have a few more years, and then the revolution is too late to be able
to make the difference.
Madam Speaker, I yield back the balance of my time.
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