[Congressional Record Volume 171, Number 5 (Thursday, January 9, 2025)]
[House]
[Pages H79-H82]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BORROWING PROBLEM
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2025, the gentleman from Arizona (Mr. Schweikert) is
recognized for 60 minutes as the designee of the majority leader.
Mr. SCHWEIKERT. Mr. Speaker, for the gentleman from Pennsylvania, a
bit of reference, in the old days when we were put in the chair,
particularly when we were freshman, it is because we had been annoying
to the Speaker. I don't know if anyone remembers that.
I love the clerk staff, I appreciate them, and I am sorry to say we
are about to do a whole bunch of math and a lot of numbers really fast,
but it is where we are at.
Mr. Speaker, one of the things I am going to try to do today is
basically sell two ideas. One is--and I want to be honest and careful
in this because my goal is not to be sarcastic, not to be a jerk, but
walk through the scale--just the scale--of the borrowing, the debt
problem of our demographics, what is really going on.
{time} 1400
Mr. Speaker, I am going to walk through just a couple of examples of
solutions we get from our wonderful, brilliant constituents and sort of
explain there are probably things we should do, but they are tiny
rounding errors.
People don't understand. Annually, I think we expect to borrow about
$7 billion a day. I think, so far this fiscal year, we are borrowing
about $10 billion a day.
The second thing is incredibly important. If there is a staffer out
there or a freshman Member of Congress, burn what we are going to talk
about into their consciousness. In the United States, what is the
greatest at least economic threat I think we have for this government,
in many ways, for the country? Interest. We are what is called interest
fragile.
I am going to show you some charts where tiny movements on U.S.
sovereign debt become trillions and trillions of dollars. Our model
basically says we are going to refinance almost $10 trillion this year
and add another--what?--$2 trillion, $2-1/3 trillion of virgin or new
borrowing, small bits of interest.
When you hear someone talk about things like the debt ceiling, you
have to understand that you are weaving a needle while jogging because
you have to deal with it in a way where you communicate and do actual
policy that communicates to the world's debt markets that the United
States is taking its debt seriously and understands the scale of the
problem and then also while extending that debt ceiling in a way that
also doesn't blow you up.
Some of my brothers and sisters will go: Just don't raise it. Okay,
great. Do you think you are ever getting a mortgage again? Do you ever
think you are getting a car loan again? Do you understand what would
happen to the world economy going boom and interest rates exploding
when all of a sudden the United States is no longer credit worthy? That
is what it means.
Remember one of my predictions for this year. There are three big
rating agencies, S&P, Fitch, and Moody's. Moody's is the only one that
has not downgraded U.S. debt yet. I predict to you that, before this
year is over, Moody's or all three will have downgraded U.S. sovereign
debt.
My other prediction is, before the spring is over, the United States
will cross over to 5 percent interest. If it holds there, I am going to
show you how devastating that math absolutely is.
The clown show has to come to an end. People need to understand that
if you are a Member of Congress, you are the board of the biggest
economy in the world. You have to start learning your math because, at
the end of the day, the math will always win.
Let's do some basic things. The reason I am doing this is because I
want to make the moral argument of doing the really hard thing in
reconciliation. It is also the best economics. If you give a darn about
your retirement, my 2\1/2\-year-old boy's economic future, the country,
you have to do the hard thing.
CBO and then my Joint Economic Committee economists actually worked
through some math saying what would happen because we have all these
expiring provisions of TCJA, the 2017 tax reform. If you extend them
all--the individual, the passthroughs, the small businesses, the
subchapter S's, the partnerships--if you extend those tax provisions
over 10 years, it is about $4.6 trillion of revenue that would have
come in because of the increased taxes because of the expired
provisions.
What is this body able to do to find policies to offset that
spending? It turns out CBO, and I know this chart is a little hard to
read, but the punch line on it is, if you functionally extend the tax
policy but you pay for it, through the decade, you actually get more
economic growth. The economy actually grows.
People say, oh, but you reached in and pulled money out to pay for
the offset. The idea is, by doing that, you haven't deficit-financed it
where you are paying interest, where you are making the debt markets
more fragile, and you are also pulling $4.6 trillion additional capital
out of the debt markets that could have gone into you buying a new car
or the business buying new plants and equipment.
This is hard because, around here, talking about modernizing how we
deliver healthcare, modernizing public agencies, reduce spending by
doing it better, faster, and cheaper, there is an army of lobbyists
outside in the hallway here who are paid to protect their current
business models.
How many folks do we meet from the agencies and the public employee
unions that get all upset, particularly at me when I am doing these
presentations of, here, we can use technology, we can use AI, these
other things to reduce the size and cost and make government much more
responsive? Then, they send nasty letters and those things into your
district and complain about you. We don't have a choice.
Let's walk through. The facts are on our side. Those folks that run
around here and say we need to extend tax policy, protect the border,
actually do all these things, you can't create an additional fiscal
rathole and expect you are going to throw this back onto the world debt
markets.
The reason I want you to think about this is I am going to show you a
couple of charts in a little while where interest rates were on U.S.
sovereigns way back when. Let's go back to December, a few weeks ago.
Yesterday, the 20-year U.S. bond actually crossed over 5 percent for
a while. If 5 percent--anyone with gray hair, you understand 5 percent
is actually lower than the historical average of the previous few
decades. If we would just go to 5 percent, you are going to see that is
almost just shy of an additional $9 trillion in debt, double of
everything we are talking about doing in reconciliation.
Just do this and communicate to the debt markets that we are serious
about what is going on because the uncomfortable truth is that--and I
am going to show it again, and it seems to hurt people's feelings--
almost 100 percent of the debt for the next 10 years is interest and
Medicare.
We got older. Baby boomers are moving into their earned benefits. We
didn't have enough children to backfill. Starting in 1990, fertility
rates started to roll over. Healthcare got much more expensive. We are
almost terrified to basically say almost every dime of debt from today
through the next 30 years is interest and demographics.
The political class, the press, the dopamine hits on cable
television, this and that, telling true math doesn't make you popular.
It does make you honest.
Let's walk through a couple of examples. Once again, I have to be
careful. These are not meant to be snarky.
[[Page H80]]
They are basically a thought experiment of what you hear Members
walking behind these microphones and saying that things are great,
wonderful, maybe we should do them, but they have tiny effects on the
survival of this Republic.
Let's walk through and explain what I am talking about. Let's walk
through the impact of borrowing where we are using this fiscal year,
what we have been borrowing per day, per hour, per minute, per second.
We are going to walk through, and I am using the clock thing. These are
12-hour clocks. You have to picture two clock faces. I am trying to
make some way where you make things with lots of zeros understandable.
This is one of my favorite ones. Back in December, we did send out
some things, and we got members of our communities to throw back ideas.
One of the favorite ones was to get rid of congressional salaries.
Okay. In my heart of heart, I think we are overpaid for the quality of
our work product. Maybe that is what we should do. Get rid of every
congressional salary--that is, the Senate and here. Just get rid of all
of it. Over a fiscal year, it is about $1.9 billion. That is a lot of
money.
For an entire year's borrowing, for the entire year, it would cover
6.4 hours. Yay, we made a big impact. We covered 6.4 hours of an entire
year's worth of borrowing.
That is sort of silly, but that is one of the key responses we got. I
think it may say more about what they think about me.
Let's do another one that came back to us from our constituent
survey. Emergency services for undocumented migrants, this is basically
ObamaCare subsidies, healthcare spending for those who are here
undocumented. They are illegal. Most of this turns out, we believe, to
be ObamaCare subsidies. You will hear Member after Member and people on
television, the talking hosts, on conservative talk radio, if we just
didn't spend that money. Okay, we actually did this thing called
research where we looked up the actual facts of the math. It is about
$2.7 billion for the entire year. We get rid of it, and we probably
should, but it is 9 hours of borrowing for an entire year. Yet, how
many times will you hear people say this in front of microphones?
Stopping healthcare subsidies for those who are here undocumented, here
illegally, is 9 hours of borrowing for an entire year.
There is our problem. We have people doing theater over honest math.
Let's do another one, one of my particular favorites. Let's get rid
of the Department of Education. Actually, I am a big fan because if you
believe in the 10th Amendment of the Constitution, why is this here at
the Federal Government? A big portion of their 4,500 employees is
actually debt management, but that can be done by other agencies we
have that have high-skilled folks to manage receivables and those
things.
If you got rid of all those 4,500 employees from the Department of
Education, great. It turns out to be about $2.75 billion over an entire
year you just covered. Functionally, that is 9 hours of borrowing.
How many people have you heard come behind these microphones or on
conservative talk radio or other things that are saying that we are
going to get rid of the Department of Education? Great. Then, the
conversation moves on to something else because they act like they have
covered the debt. There is this lack of understanding. We are borrowing
about $70,000 a second.
Let's go on and do another one we can get rid of. Let's get rid of
the U.N. I have done this a couple of times. When I did it before, the
total spend on the United Nations was $18.1 billion, but that was in
the 2023 fiscal year, but that had a bunch of the new construction. For
the 2024 fiscal year, which has ended already, we spent $12.9 billion
on the U.N., or maybe it is in this fiscal year that is what we have
appropriated. $12.9 billion is a lot of money. Let's just get rid of
it.
I am not going to even give you the other chart that shows you how
much all of these foreign diplomats and stuff pay into taxes, into the
things they buy, the rent, those things in New York City. Who cares?
That $12.9 billion gets me 43 hours, so basically a day and three-
quarters of borrowing.
My point, as I am trying to walk through, is that we are probably
going to have to do lots and lots of these things. Start demanding from
the people who are standing up in front of you saying, ``Here is what I
care about, and we are going to take on the debt and deficits,'' have
them understand their math.
How about Ukraine aid? I think this is for this fiscal year. The
appropriation lineup is $21.8 billion. That gets us 3 days of
borrowing. You hear these crazy numbers being thrown out. It turns out
now this is both humanitarian and, I think, actually the other term--it
is things that provide equipment. Often, it is equipment we depreciated
out and we are going to get rid of it. We send it on to them.
{time} 1415
This is both categories in that number of the 21.8, but it is 3 days.
Let's actually even add a little bit. Let's go grander. Let's go much
more bigly. I think that is a pop culture term these days. Let's just
get rid of all foreign aid.
I cannot tell you how many times I run into folks back home who say:
``David, I am so concerned about the debt and deficit. We can balance
everything if we just get rid of foreign aid.''
Okay. Interesting math.
We did the math. Here is the 57.25 that is going to foreign aid. It
is a week of borrowing. Does anyone see the point I am trying to make?
You start to add up all of these, and I think in all of those, we have
got ourselves to what, a week and a half? We added up all the ideas
that came into our office, and I think we got up to 3 weeks of
borrowing.
There seems to be this lack of understanding. Every dime a Member of
Congress votes on is borrowed money. Every dime of defense is borrowed,
every dime of nondefense discretionary, and this year--I am doing this
off the top of my head, which is always dangerous--I think it is $400
billion of what we call earned benefits, mandatory spending, is
borrowed money.
I am trying to just demonstrate--there is this term we do called
``on-budget receipts.'' You get your paycheck. You look at your
paycheck. Here is what went to FICA. That is the Social Security
contribution, a little bit of your Medicare part A contribution, maybe
a little bit of unemployment disability. That is sort of considered
off-budget tax contributions. That is coming from your FICA tax.
The other part is your income tax, capital gains tax, all the other
things. That is this blue here. To give you an idea, this is the net
interest this fiscal year, the interest we pay back to the people who
have been kind enough to buy our bonds.
Remember, China is not the number one owner of bonds. I think now it
is Japan. China has been actually rolling off its bonds for 3 or 4
years. I think they are somewhere now in the $900 billion range of the
$36 trillion in debt we have. Remember, about $28 trillion, $29
trillion of that is what we sell off to the market. The other we borrow
internally. We borrow from the Social Security trust fund, and we
borrow other moneys internally, but we still have to pay interest.
Remember, we are one of the only countries in the world that engages
in this scam of saying it is only the publicly borrowed money. No. You
are not going to pay your interest back to Social Security? Of course
you are.
The point of this chart is trying to say accounting accounts for 24
percent of all those tax receipts we take in that aren't Social
Security, aren't part of those payroll taxes, 24 percent, is just going
to pay interest, and that is this year.
The crazy thing is that these numbers were scored when we thought the
mean interest on U.S. sovereign debt was going to be somewhere around 3
to 3.25 percent.
Have you seen what has happened in the last 3 weeks? Did I mention a
moment ago that the 20-year bond yesterday went over 5 percent?
This number is about to explode on us. It is called interest
fragility. Yet, how many idiots like me have come behind the microphone
and said: Do you understand how dangerous it is if we make the debt
markets nervous because we are incompetent?
[[Page H81]]
Let's do one more of these just to make the point.
This is tax receipts for fiscal year 2024. It is a fixed number. That
is the last fiscal year. The red here, that is the Social Security
taxes, Medicare part A, et cetera. This was everything else. Even in
that case, it is still basically 24 percent of all--it is still 24
here. I just did this chart so you can see, when you hear someone talk
about total tax receipts, this is obligated to earned benefits.
Oddly enough, this number isn't big enough to cover the earned
benefits. That is why every month Social Security has to present its
special T bills to Treasury, cash in. Remember, Social Security does
not add to the debt. Cashing in their special T bills and the Treasury
having to finance it and give the money back to Social Security does
add to the debt. Remember, there are two steps in there.
Back to the oldie but goodie. Everything in red, that is on
autopilot. If you remember, Congress doesn't vote on it. What is in
blue, nondefense and defense, is all borrowed along with a whole wedge
of this over here.
You have to understand the scale. It is hard to see 12 zeros in your
head, but it is just a trillion. We are probably going to borrow $2-\1/
3\ trillion this year.
We have these debates and discussions about we are going to have
reconciliation. Yes, of course we are. We still don't have 60 votes in
the Senate. If we are going to move policy, of course we are.
Understand the fiscal implications. If we don't do it right, do the
debt markets demand a premium? Because you see what is going on around
the world. What happened in Great Britain this summer? What did they do
to the gilt? What happened in France a couple weeks ago? What is
happening in Germany right now? What is happening in Canada? What
happened in South Korea?
All over the world, you see governments falling. One of the primary
reasons they are falling is they actually tried to engage in some
fiscal constraint.
Are we going to be elegant enough to do it in a way where we can
explain to the American people that if we do something smart today, we
do not get crushed tomorrow?
Small movements in interest rates start to consume everything in this
government. Here is an example. I told you the 20-year yesterday went
over 5 percent. If anyone is a real geek, if you take a look at the
futures market on the 10-year sovereign, some of the futures market
between now and through spring actually expect a 5 percent interest
rate. Remember, that is still a point, point and a quarter lower than
the historic average when you get rid of the previous decade, which was
sort of fake interest rates. If we were to go to 5 percent of U.S.
debt, that is actually fairly normal and that gets built in. Remember,
we bring about $10 trillion to refinance.
Let's look at 5 percent. We go from a $13 trillion, almost $14
trillion debt expectation at current interest rates over the next 10
years to $22.7. It is almost $9 trillion additional from where interest
rates were in December to where it looks like interest rates are going
to be this spring. You just added $9 trillion in additional interest.
That is called interest rate fragility. That is double. Just the
interest rate exposure going back to even something that is below a
historic norm is double everything we are talking about doing in tax
reform, of extending the TCJA 2017 tax policy. It is double.
This should be scaring the crap out of people around here. Why am I
the only idiot running around with charts saying: Are you paying
attention to this? Are you watching what is happening in world debt
markets right now? Does this make anybody nervous?
Some of the articles are basically saying bond markets around the
world are getting nervous loaning to sovereigns because they keep
borrowing like crazy. What is going on in China where they are
borrowing like crazy? We are borrowing like crazy. There is only so
much borrowable money in the world, and we are chewing it up.
The point of this one was if we were to ignore the law and just
extend our spending policies we have today, in functionally 9 budget
years, 9.2 percent of the entire economy is just interest.
We expect almost 7 percent of this year to be borrowing, but the
concept of just--let me rephrase it, because I just screwed that up.
9.2 percent of the entire economy will be debt, not interest. It will
be debt.
A couple of our economists basically say we are going to borrow about
7 percent of the entire economy this year. If we don't start to
stabilize that and roll it down, you hit this interest spiral into the
ground.
I am going to show you a couple of charts here, that should scare the
crap out of you, of how much of the taxes we take in from hardworking
people is just paying interest.
Let's make that a little more understandable.
Mr. Speaker, some of us with gray hair remember--as Mr. Green laughs
at me. There is this thing called the seventies, eighties, nineties,
even the 2000s before the Great Recession, and the mean interest rate
on U.S. debt was about 6.
This is just an example of what it means when you are carrying $36
trillion in debt. Understand, we are adding another trillion of debt
about every 125 days. Let me say that again. Every 125 days, we
basically tack on another trillion dollars of borrowing.
If we went to a historic average of 6 percent, it would be 11 percent
of GDP in a decade. What if we went up to 9 percent, which we had back
in the seventies and eighties? You are at 18 percent.
We are playing really dangerous games here. We have almost made the
decision to make the world debt markets the ones in charge of America.
Every second, we are borrowing about $70,000. Do you not think the
retired couple, the foreign government, the big business, the rich
people who are buying U.S. savings bonds--are you pretending they don't
actually care about what we do here and that we are going to make sure
they get their money back, or is it all just magic money?
Understand what that 6 percent--this is sort of the punch line of
what I am trying to communicate here. By 2034, 9 budget years from now,
debt servicing at 6 percent, so back even below the historic average
rates, interest would consume 45 percent of all tax receipts.
Let's do that again. Imagine a world where 45 percent of all tax
receipts that come into the government are just for paying interest.
Take this seriously.
I have a 9-year-old. And my wife and I, who is exactly my age, we
also adopted another little boy from the same birth mom. He is 2\1/2\
years old and the cutest kid you ever met. Our little girl is brilliant
and very loud.
The math basically says my kids and your kids will be part of the
first generation of Americans to actually be poor. To give you an idea
how that math works, when little Matthew, who is 2\1/2\ right now, is
23 or 24, if you wanted to maintain baseline services in America as
they are today, every U.S. tax rate, tariff, corporate, individual,
everything, has to double, a 100 percent increase. It is not pretend.
It is called math.
{time} 1430
These are little things. You punch it, and you can put batteries in
them. Hell, Mr. Speaker, you probably have one in your phone.
It is math, but we are terrified to tell our voters the truth because
people raise their eyebrows and get upset when you say: Look, we got
old as a society. We didn't have as many children, we made lots of
promises, and we never set aside enough money for them. However, we can
disrupt the cost if we are willing to adopt modernization. You can cut
stunning amounts of money from delivery of healthcare not by cutting
services but by adopting technology. Except, once again, the lobbyists
are in the hallway to stop you from doing that because it would make
them change their bureaucracies and the business models.
A number like this should make us all pucker, that if we just went
back to normal interest rates, in 9 years, 45 percent of all of our tax
receipts go into just interest. That is called interest fragility. The
single thing that scares me the most in the society is that we are no
longer in charge. We basically made the decision that the debt markets
are.
So let's actually get a little more dystopian, and part of this is to
make an impact.
[[Page H82]]
What if we went to 9 percent interest?
It has happened.
What would happen?
Mr. Speaker, can anyone read this number?
Eighty-three percent of all tax receipts would go just to interest.
Here is the reality of today: For every dollar we take in in tax
receipts, we spend $1.39.
Yet, what we call discretionary, military has been substantially
flat, all other nondefense discretionary is basically flat, almost all
the growth is two things: in healthcare and in interest.
We can't do anything about interest. The deal is the deal is the deal
when we sell a bond. As far as healthcare, once again, there is an army
of lobbyists, once again, outside these walls, who will beat the
absolutely living blank out of us when we ask them to modernize and
actually use technology.
Even our brothers and sisters here are often defending not the last
decade, but the business models from the decade before that within
healthcare.
We don't have a choice. Open up your brain, Mr. Speaker, hire a
computer brain. Hire some kid who is a data analyst scientist and start
walking through the facts of what is going on. Then we have to do hard
things. We will have to do a revolution.
Have you seen the numbers coming out of Medicare Advantage?
Has anyone taken a look at those Wall Street Journal articles from
last year of the billions and billions and billions that they are
documenting that are functionally fraud and abuse?
Are we going to be honest about it?
There are ways elegantly to fix it without beating the crap out of
everyone. We just need to recognize our own problems.
Once again, for every dollar the United States takes in in tax
receipts, we spend $1.39.
Right now, I need to go back to an oldie but a goodie. I have done
entire floor presentations repeatedly on this. You take all the tax
hike proposals of our brothers and sisters on the left, Mr. Speaker,
and score them for their economic specs, it will produce about 1\1/2\
points of GDP of new tax receipts. You take for our side, Mr. Speaker,
all the cuts we have talked about, almost all of them being in
nondefense discretionary, it is about one point of GDP. Add those two
together and that is what, 2\1/2\. Congratulations.
So everything the talking heads do behind these microphones is 2\1/2\
percent. We are borrowing 7 percent this year of the entire economy,
and here is your crisis: The solutions sound really good in a
television commercial and maybe an interview on cable television, and
they are crap math. They don't get us anywhere close to what is
necessary because it turns out the actual scale of the math is so far
beyond just raising people's taxes and just slash and burn this. You
need a revolution on how we deliver on our commitments.
Why is that harder?
I still can't get my head around why that is harder. Once again, the
single chart that makes people most angry, and it is already 1 year out
of date, the numbers right now are much worse, CBO predicts that
deficits of $115 trillion over 2024 to 2054, Social Security, Medicare,
$124 trillion deficit, the rest of the budget has a $9 trillion
surplus.
Do you see, Mr. Speaker?
The spending and the interest covered, the spending and the interest
covered, remember, Mr. Speaker, Social Security has about 9 more years
and the trust fund is empty.
Are we going to fix it?
Are we allowed to talk about it?
If we talk about it, then the Democrats will run nasty ads about you.
So somehow, they are comfortable with the immorality that in 9 years we
are going to double senior poverty in America, because that is what is
happening. However, Mr. Speaker, you are not allowed to talk about it
because they will attack you.
They spent about a couple of a million dollars beating the crap out
of me because I care about saving Social Security, and I care about not
doubling senior poverty.
Somehow lying about it is the political tactic of this place?
They care so much more about power than saving our brothers and
sisters?
We already have a crisis right now of baby boomers, inflation pushing
them out of their housing. I think it was last year I saw the statistic
on baby boomers' doubling of homelessness, because they are being
priced out of their homes because of inflation. That is the morality of
this place because we do crap economics. It is because we make public
policy by our feelings instead of math.
The reality of it, Mr. Speaker, if you look at the CBO projection,
now this is 1 year, 1\1/2\ years ago, so inflation has trimmed off a
bit from their numbers, interest rates are substantially higher, these
numbers are going to pop when they redo them because of the higher
interest rates.
I was trying to do it, it is dangerous when I try to do these things
off the top of my head, but I was coming in about $133, $136 trillion
of borrowing over 30 years because of the higher interest rates, and it
could be substantially higher if we are actually truly at a five or
six.
The point is, debate after debate after debate after debate, we stand
here and we argue about the nondefense discretionary, which is like 13
percent of the spending, and even in this projection it actually grows
slower than tax receipts.
So we are going to head towards doing reconciliation. We are going to
try to do policy. We have a new President coming in who has a vision of
growth for the country.
Are we, as the board of directors, as the Founding Fathers designed
it, going to step up and do our job and actually save the future?
Are we going to avoid the hardest thing we do, and that is telling
the truth to our voters, and maybe even telling the truth to each
other?
There is still hope.
One of our economists actually has this chart he has been working on
and he has been saying you may only have 3 or 4 more years if interest
rates keep moving up where it is almost too late. You can't work
yourself out of the higher interest rate cycle because the additional
debt, the interest rate, the additional debt, the interest rate--and I
think it was 1 year ago when we actually had a couple of months, 3 or 4
months, where we had to borrow money to cover our borrowing.
Mr. Speaker, there is hope. There is a way to make the math work.
There is a way to do it in a moral fashion. It has been said that when
you have a complex problem, it turns out the solutions are complex.
Is the modern Congress capable of doing complexity?
Mr. Speaker, I yield back the balance of my time.
____________________