[Congressional Record Volume 170, Number 184 (Wednesday, December 11, 2024)]
[House]
[Pages H7107-H7110]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EVERY DIME A MEMBER OF CONGRESS VOTES ON IS BORROWED
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 have half an hour, so consider that a
mercy for everyone who has had to deal with some of these
presentations.
The original goal tonight was actually to do some things that were a
bit more optimistic, some things that we have identified where you
could actually modernize and cut the cost of this government and
actually do the job that we are supposed to do here, but I need to
clear up a couple of things.
First, I owe everyone--because apparently last week when I was
speaking, I was speaking so fast that I didn't explain this particular
chart, so I am making up for myself last week.
The point I was trying to make is, in the last fiscal year, our
borrowing represented about 6.4 percent of the entire economy. When you
have individuals around here saying we have these parts of our 2017 tax
reform that expire at the end of next year, if we just extend those and
don't pay for them, that is what drives us to almost 9.2 percent of the
entire economy 9 budget years from now.
If we actually find a way to pay for them and still extend those tax
reforms, we actually get some economic growth. If you just let
everyone's taxes go up, you end up in about 9 years a little under 7
percent of the entire economy borrowed.
It is a little geeky, but the passion I have tried to show here is, I
believe the moral thing to do is we don't let the portions on the
middle class, their taxes, go up next year, but we also step up and
find a way to pay for it. The CBO and the joint economic economists
last week--and it is going to be one of the boards here--actually
showed if you paid for the tax extensions at the end of the decade, the
economy has gotten bigger and it will make sense.
You haven't taken, functionally, what would be $4.6 trillion out of
the economy and used it for borrowing, you have left it there so the
small business, the big business, your family, there is money that you
can borrow to grow and at the same time your taxes haven't gone up.
It is just hard for us to do because if we do modernization, if we
find things to cut, there is an army of lobbyists just outside this
door coming to scream at us. Some of those lobbyists aren't the types
of people walking around with Guccis, they are the people they fly in
from our home districts saying, David, we want that spending and then
you explain to them: Every dime--I will say this three or four times
because for some reason, I can't get this to burn in. Every dime a
Member of Congress votes on is borrowed. Every dime of Defense is
borrowed. Every dime in nondefense discretionary is borrowed. When you
hear us all talk about the mandatory spending, and that is like three-
quarters of all spending, believe it or not, there may be $300 billion
or $400 billion of that that is borrowed money also.
I will apologize to everyone. When I was showing the 9.2 percent of
GDP in 9 budget years, that is if we basically take these tax
expirations and just ignore them and just continue current policy, we
blow ourselves up.
There are a couple of other things I want to walk through.
Apparently, yesterday, the President got up and was trying to tell
everyone that this is the best economy ever. That is an interesting
statement.
The economy is actually not bad. Now, there is some argument to be
made about the amount of cash the Democrats did in their Inflation
Reduction Act and other things that they have been, functionally,
subsidizing and then borrowing.
Here is the reality: If the President is looking at you in the camera
and telling you it is the best economy ever, well, that is not factual,
but why don't you feel it? It is because much of America is poorer
today than the day President Biden took office.
If you live in the Phoenix-Scottsdale area, my home, if you don't
make almost 27 percent more today than the day President Biden took
office, you are poorer.
So having someone tell you the economy is great, yet you are having
trouble paying for things--the reason we made this board is,
functionally, for you to maintain your purchasing power, are you
making, if you are an average person in average America--in my
district, these numbers are substantially higher because I am from a
district with some of the highest inflation in America, but if you are
not making $1,115 more a month because that is what you would have to
be having from 4 years ago, your purchasing power, you are poorer.
I actually think that is the reason that voters turned and said, I
see these Democrats running lots of ads, saying crazy things, but yet
it turns out the voters are actually really smart. They would look at
their checking account, they would look at the cost of their kids'
clothes, they would look at the grocery store and try to figure out why
in the last week of the month they were losing their minds under
stress.
There are a lot of folks here that say things that, just from an
economist standpoint, are insane. But your wages, policies that we
engage in that don't make you wealthier--because prosperity is moral.
It is moral for the poor person to be less poor. It is moral for the
working person to be less stressed. To not understand the average
American in 4-some years, unless you are making about $13,000 more, you
are poorer.
In my district, I think that number is closer to $18,000, $19,000
because I have one of the higher income districts in America, but also
one with the highest inflation, and I think that is the disconnect. I
think that understanding of, it's not enough to run around and tell
people the economy is great, look at all the money we have handed out
to big businesses, aren't you happy how much we subsidized of the
economy, while so many Americans are just trying to survive.
Apparently, I did a horrible job trying to explain--and somewhere
here in early January, I will do a whole presentation on this--one of
the fixations of the left is, we need to tax corporations more.
Do you remember your elementary school economics class? I am being
sarcastic.
Do you remember your high school economics class?
A corporation taxes you. Who pays it? Seriously, you don't think that
doesn't pop up in the wages you pay your workers and the prices you pay
as a consumer.
In many ways, corporations are nothing more than pass-through
entities. When we did the tax reform at the end of 2017, there was data
that was coming out in the next couple of years that
[[Page H7108]]
showed about 67 percent of those corporate tax cuts actually worked
their way into wages.
Remember, before the pandemic we had some of the most robust growth
of wages in American history where the poorer got less poor. The
wealthy did well. Now, there is a whole discussion of--one day I am
going to do a whole thing of what this government, the Federal Reserve
did to inflate assets and that is actually where much of the wealth
came from was monetary policy, not tax policy, but for the folks around
here that don't do economics that is a different discussion.
What happens in a world where you can show we lowered taxes?
It actually turns out we did something more complicated than that.
You do realize what we call the TCJA, in 2017, there was $7 trillion
over 10 years of tax cuts. You know there was like $5 trillion, $5.5
trillion of tax hikes.
Because the idea was to modernize. It had been 30-some years since
the United States had updated its tax code, and much of the rest of the
world was kicking our heads in.
Do you remember the stories that President Obama said over and over
and over, he talked about these companies are leaving America? They are
moving their intellectual property to Ireland and these things.
We fixed that. We made it so you wanted to be domiciled in the United
States. That is why we had the miracle of job growth, but also the wage
growth.
Before the pandemic, we had the fastest closure of income inequality
in modern history in America. I would argue that is moral. When you get
economic policy, when you get tax policy, when you get regulatory
policy right, it is moral. People are less poor. Yet, so often I watch
these people come behind these microphones and they say things that
aren't true.
I was trying to point out in last week's presentation, just if you
look at expenditures on growth and growing businesses and investments,
when we did TCJA, you can actually see--the G7, without the United
States in it, they were growing about the same. They were investing
about the same. We exploded in growth.
So back to your high school economics class.
What are the two ways you pay people more? Your wages go up. So you
are out there in the private sector, not government because we are a
distortion.
What are the two ways your wages go up?
Come on. You all showed up for your high school economics class.
With inflation, your wages go up. But that just means you are
treading water. You got paid more because everything costs more.
It is productivity. Things in the tax code, in the regulatory code
that get a business to buy the new piece of equipment that is better,
faster, cheaper. Those investments in capital equipment, you are able
to make more of whatever you do. Your employer is able to pay you more.
It is how you create wage growth.
Some of the idiot class here say we are just going to tax businesses
more.
You do realize every economic model says when I raise corporate
taxes, it is the workers that ultimately pay for it because your wage
growth flattens out, but it is great politics. It is crap economics.
I did this earlier in the year. I brought all these charts trying to
show that much of the wealth of this country, thank heaven, before the
insanity of the pandemic, we had had the tax reform, the regulatory
reform, and a robust economic growth.
Could you imagine if this country was at an anemic growth rate when
that happened, what our lives would have been like?
It is also one of the reasons we exploded out and we spent too damn
much money. There was too much fear, a number of stupid policies that,
hopefully, we will put into the history books that no one else will
repeat.
The fact that we had modernized the tax code is what has given us a
fight. When President Biden, yesterday was taking credit for a great
economy, I sure hope he looked in the camera and said, thank you
Republicans, for modernizing our tax code so we maximized economic
expansion and had corporate stability.
Because much of the wealth that this country, much of the
opportunity, much of the employment base, and the way we can afford
that is because we have a competitive tax code now where the rest of
the world stops stealing our jobs.
{time} 1800
One other thing I want to help people try to understand--because
every time I go near this subject I get people--because their brains
are sort of caught--I don't mean to say this in a mean way. I am not
trying to be mean.
All right, let me walk through a concept. Mr. Speaker, you are from a
State that produces hydrocarbons, oil, things of that nature. Back in
the 1970s and 1980s, do you remember the posters, ``No war for oil''?
The world competed with each other for hydrocarbons.
I had a professor back when I was a younger student who was famous
for writing these papers about peak oil, the world is going to run out
of hydrocarbons. Well, it turns out that was completely wrong because
he didn't understand the ingenuity that God gave us as humans and how
we found technology to get to those hydrocarbons that in a previous
decade were impossible.
The point where I am going on this rambling, in the 1970s, 1980s, the
world basically fought for hydrocarbons. Last decade, in many ways, we
positioned ourselves for rare earths because that was the future
economic of the world economy.
Really, really smart economists right now are saying this decade, the
next decade, and the decade after that, do you know what the world is
going to compete over? Smart people. The entire industrialized world is
starting to, if not collapse, dramatically fall.
You see the things going on in South Korea, Taiwan, and much of
Europe. The numbers are happening all around us. The United States, if
you look at some of the Census Bureau data--and I said this last week--
it could be as early as 11 years from now the United States will start
having more deaths than births.
What would happen to you if I came to you and said, let's have an
honest conversation--which is almost impossible around here--about the
border and immigration, but we are going to talk about it like
economists? Not our hearts, not our passions, not our anger.
Economists.
What President Biden has allowed at the border, when you bring
millions of people into the country with very moderate skill sets, what
did you do to your domestic working poor? I have done a whole
presentation here showing that that family, that young man, that young
woman, they dropped out of high school. They sell their willingness to
work. They are out hanging drywall; they are out doing this. What
happens to their wage growth? You remember a moment ago we were talking
about wage growth. What happens to their wage growth in a society when
you have added millions and millions and millions of people with
similar skill sets? You crush the working poor.
This is actually why, if you look a couple decades ago, it was the
Democrats, back when they gave a darn about working people, that
actually cared about locking down the border, about taking on low-
skilled immigration.
Those of us from border States, you see the chaos we have had to deal
with. It drives us insane. A bus showed up in New York or Chicago, and
they lose their minds, and you look at some of the Members of Congress
from those States, you look at them and you say, you have been doing
this to us for years, and now you figured out what we go through every
single day?
But back to the economists.
The morality of when you flood a country with a certain level of
skill set, you just made your working poor poorer. There is an economic
model out there that says it will be 10 years before the domestic
working poor in America start to really see their wages go up outside
inflation, and it is just because of population dynamics: How many
other people are willing to sell their labor cheaper than they are
willing?
Flip side--and President Trump actually hit this and hit this
brilliantly--we are insane. We bring in smart people from all over the
world to our universities, and we educate them. We
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teach them our engineering, we teach them our biology, we teach them
things, and then we send them home to compete against us.
In a time where you need the society to become more productive--
remember, back to our high school education. As society becomes more
productive, our wages go up. When wages go up, we actually take in more
tax receipts, but that is a side benefit. Wages go up in a productive
society, and then there is a cascade event. You may not be the person
with the Ph.D. in synthetic biology, but your wages go up when that
person down the street is making a hell of a lot of money and changing
the society and the economy for the future and the better.
It turns out this last summer we unleashed some of my Joint Economic
economists to just try to do some of the math. Here is what I was
talking about with low-skilled immigration. Asylum seekers, those, they
consume hundreds of thousands of dollars of social services. That is
the nature of our country. If you can't afford it, you get healthcare.
If you can't afford it, you get these other type of benefits. If you
can't afford it, we will get you housing. Our education system is based
off the tax system.
High skill, we actually make millions--well, in this case $800,000,
$900,000--in the tax receipts and those things over a full career. Now,
the fact of the matter is, I have some much fancier graphs that also
show the age spectrum. You have got to say a young worker compared to
an older worker, the number of years they are able to participate in
the economy at a higher wage level. Bingo.
That is actually why Canada, Australia, New Zealand, Great Britain,
the rest of the world we compete with have all gone to a point talent-
based system. We are functionally the last country, last industrial
country in the world that does a familial system.
I promise you, I will get some very angry things coming into my
office, but I am being honest. Our immigration system is essentially
based on who your family is: My cousin moved in, they are sponsoring
me. It is a family chain migration system.
The rest of the world has figured out that as birth rates have
collapsed around the world, people, we are desperate for people. I am
going to show you some charts coming where, as a country, that our
birthrate started to roll over in 1990. We need people.
Part of my job with the Joint Economic Committee, part of my job on
Ways and Means is how do I finance all the things that people show up
here wanting?
I know it is not something you hear a lot of Republicans talk about
because so many people don't understand the demographics of our
country. We are going to have to have an honest discussion that one of
the most powerful things we can do for economic growth is actually
modernizing our immigration system, not sending home people that we
educate to compete with us.
There are models out there that say it would make our entire society
more prosperous. It is worth thinking about.
Actually, can I give you just a thought experiment? I was trying to
explain this to a reporter earlier today. One of the things that is
expiring from our 2017 tax reform is research and development
expensing. You go, huh? If you are a business and you are researching a
new way to make something, a new piece of technology, a new type of
biology, a new cure for a disease, in 2017 what we did was we made it
so you could expense it right then.
In today's tax code, you basically depreciate it. It says, okay, you
spend a million dollars trying to build a new tool, and you get to
amortize that research over the next 7 years.
Think about this. If I expense it in one day or do it over 7 years,
the government basically gets the same money, right? It is just the
timing. If you have the ability to say, I spent the money, I expensed
it immediately, what happens? You get this virtual cycle of, oh, I have
a new tool that is better, faster, cheaper, and then you jump onto the
next one, and jump onto the next one, and you get that productivity
curve.
You get back to productivity again. How do you pay people more money?
One of the complaints we were getting after 2017 is that all this
money was going into research and development to make a society more
prosperous, more modern--you know, better, faster ways to cure people--
and we had a shortage of people with skill sets.
One of our economists is trying to model what would happen if you
said we are going to do expensing of research and development, because
we know that pops economic growth, but you also did talent-based
immigration at the same time. You may get a multiplier effect. This is
thinking like an economist. This is what we have to do to get ourselves
out of this hole.
Remember, functionally, the first 2 months of what we call this
fiscal year, we are borrowing about $10 billion a day. If you do the
whole 12 months and be a little more honest about what you are doing,
because here is the April tax cycle, we are still borrowing about
$74,000, $75,000 a second. It just gets worse, and it gets worse
because of demographics.
I am going to show this twice, but I have to say it again. Close to
100 percent of the debt for the next 10 years is interest and
healthcare. It is people like me. It is baby boomers. It is not
Republican or Democrat. It is math, except it is also the type of math
we are not allowed to really talk about here.
Look, I am going to race through a couple of these boards just to
make a point. For every dollar we take in in tax receipts, we spend
$1.39. Does that give you a sense--when I have someone who comes to me
and says, David, there is a continuing resolution coming.
Now, we actually, probably as Republicans, would want to move that
continuing resolution when we have President Trump so we have unified
Republican government so maybe we could do some of the policy changes,
but how about the debt ceiling?
We are also going to do a slide here on talking about, do you
understand when you say: David, I don't want you to borrow a dime.
Great. I take in a dollar, I spend $1.39, but all I get to vote on is
about 25 percent of the spending.
How much of Medicare, how much Social Security, how much pension
benefits, how much of VA benefits do you want us to cut?
I have done these entire presentations at home where you show the
chart, and people raise their hand. I get these suggestions. I will
give you an example, I had one last night, a good friend sends me a
thing: David, if you would stop funding the U.N., that would take care
of our problems. Okay, we spend about $18 billion on the U.N. The
economic effect, it is believed, it probably brings in about $9 billion
a year, but let's just use the entire $18 billion. If we are borrowing
close to $7 billion a day, getting rid of all the U.N. covers 2\2/3\ of
a day worth of borrowing.
There is the problem. People don't understand the scale. Every dime a
Member of Congress votes on--all defense, all nondefense
discretionary--is on borrowed money plus a chunk of mandatory. You have
got to see. When we do that presentation in our home district and you
have people give their suggestions, we get up to maybe 3 weeks of cuts.
Then you start to say: Okay, are you ready to get rid of all the
Defense Department? Are you ready to get rid of the State Department?
Are you ready to get rid of the FBI? Are you ready to get rid of this,
ready to get rid of that? You just see the eyes on people because they
really do believe, if we get rid of foreign aid we can balance the
budget. Then you show them that all foreign aid is about 9 days of
borrowing.
I beg of the public, the way you influence Members of Congress is
know your math and know the scale of how upside down we are.
Just trying to make that point once again, here is another chart. If
we are spending $1.39 for every $1 we take in, this little dot line is
the break-even point. That basically means every dime of
discretionary--that is defense, too, and you have got to pay interest.
If you don't pay your interest, you blow up the world and you blow us
up because we have the bonds out there, so functionally we are so
upside down, even part of what we call entitlements, mandatory, earned
benefits is on borrowed money.
Mr. Speaker, may I ask how many minutes I have remaining?
The SPEAKER pro tempore. The gentleman from Arizona has 2\1/2\
minutes remaining.
[[Page H7110]]
Mr. SCHWEIKERT. All right, I am going to talk faster. Sorry about
that. Oh, the poor people who try to take our words down. It is a
punishment, I am sorry.
I have some other boards here, so I am just going to try to do two
more boards in this 2 minutes.
Tax policy, you go back to functionally 1950, when we have had very
high marginal tax rates, we get about 17, 18 percent of the economy in
tax receipts. When we have had very low marginal tax rates, we get
about 17, 18 percent of the economy in tax receipts.
The fact of the matter is, for some reason, the American economy for
the last 75 years, we fall back into this mean, so you have Democrats
running around here saying, we need much higher marginal tax rates.
However, when we have done that, we still just get the same percentage
of the economy. The secret, once again, is that productivity, have a
bigger economy.
{time} 1815
Our structural crisis now is if we are getting 17, 18 percent of the
economy in tax receipts, we are spending about 24 percent of the
economy year after year.
Back to the point, this is the pie chart. Every dime of nondefense is
borrowed. Every dime of defense is borrowed. You have to pay your
interest. Remember, interest is now our second-biggest expense in
government. It is number two now. Part of this red here is also on
borrowed money.
There are ways to make the math work--the willingness to modernize
this government, the willingness to use technology to crash the price
of this government, crash the price of healthcare, but make us a
healthier society. There is a way.
I sometimes just feel like an idiot. I come behind this microphone
every week. I do charts. I show these things, here are the ways. Last
week, I showed I think $100 billion, $200 billion of savings we could
have in government by just modernization. There is hope, but I only
think we have maybe 3 or 4 more years to start to understand how
upside-down we are.
Mr. Speaker, I know I am out of time. I thank you for your patience.
There is hope, but there is only hope if the American people start to
hear these words and start to push those of us in Congress to do the
right thing.
Mr. Speaker, I yield back the balance of my time.
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