[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[House]
[Pages 883-884]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          PAYING DOWN THE DEBT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Michigan (Mr. Smith) is recognized for 5 minutes.
  Mr. SMITH of Michigan. Madam Speaker, we have heard a lot about the 
talk on paying down the debt, and I think it is very important that 
American citizens understand some of the terminology that is used here 
in Washington.
  This chart represents what would happen to the total public debt. The 
total public debt of this country right now is $5.7 trillion. That 
includes the debt that we owe the Social Security Trust Fund and the 
debt that we owe Wall Street or the debt held by the public, plus the 
debt held by the other trust funds. I think this represents the 
potential good news of paying down that debt if we were to stick with 
the caps, the budget caps that we set in 1997, but that is not going to 
happen.
  Yesterday in the Committee on the Budget, we heard the director of 
OMB say that those caps are unrealistic and presented the President's 
budget. The President's budget, by the way, increases taxes and fees 
over the next 10 years by something around $250 billion. Next year 
alone, his tax increase is $9 billion. So he is expanding spending for 
a lot of people and a lot of programs with approximately 80 new 
programs and a considerable extension and expansion of another 155 
programs.
  So those increased taxes and fees are what is paying for a 
significant increase in the size of the Federal Government. He is able 
to say that he is going to pay down what he calls the debt of this 
country. But I think what we should be very careful in understanding is 
that what he is talking about paying down is the debt held by the 
public.
  The bottom portion of this chart represents the debt held by the 
public, starting now in the year 2000, and what is going to happen over 
the next 10 years. The middle portion is approximately 112 trust funds 
that we borrow

[[Page 884]]

from in addition to Social Security. That is the Medicare trust fund, 
the Medicaid trust fund, the transportation, highways and all of the 
other trust funds. The top trust fund, of course, is what we have been 
concentrating on, and that is the Social Security Trust Fund.
  So when it is suggested that we pay down the debt of this country, 
what we are talking about is that portion of the total Federal debt, 
approximately $3.6 trillion; but the way we pay it down is when the 
cash dollars come in from the Social Security tax, there is more money 
coming in right now from that withholding tax than is needed to pay out 
current benefits.
  So what is being suggested is we use those dollars, we take the cash 
dollars from Social Security, we borrow it, we write an IOU, and we use 
those dollars to pay down the debt by the public.
  However, what happens to the total Federal debt of this country is 
the debt continues to increase. So we are looking at down the road in 
the next 10 to 15 years of having the current debt go way over $6 
trillion, even if we were to stick with the caps.
  Here is why I think it is so very important. It is not just the debt 
and it is not just paying down the debt but it is the structure of our 
entitlement programs that are going to be very, very difficult for our 
kids and our grandkids to pay off.
  Right now the FICA tax, the withholding tax on payroll is 15 percent 
of taxable wages. Right now, approximately 75 percent of the workers in 
this country pay more in that FICA tax, that payroll withholding tax, 
than they do in the income tax. If we do nothing, within the next 
foreseeable future, our payroll tax will have to go to 40 percent of 
payroll if we do not fix these programs of Social Security and 
Medicare, 40 percent of payroll. Then we add income taxes on that for 
all of the rest of the Federal programs, we add another 20 percent of 
pay that goes to State and local government; enormous taxes are there, 
and the potential is a huge disadvantage for the ability of this 
country to stay competitive with the rest of the world.
  Some people say well, can this happen. All we have to do is look at 
Europe, look at Japan. Already many of those countries are 40 percent. 
In France, the effective payroll withholding in France is now 70 
percent. I mean it is no wonder they have a tough time competing. If we 
do not do anything in America, we are headed down that same road. That 
is why looking at entitlement, that is why I am disappointed that Steve 
Forbes has withdrawn from the race, because he is one of the few 
candidates that laid out a precise, exact solution of what he thought 
was the way to go to keep Social Security solvent, to keep Medicare 
solvent and still have the choice of doctors.
  Madam Speaker, I think as we move ahead this year, and moving ahead 
with this budget, I think we need to challenge ourselves very 
aggressively to looking at the problems of entitlements, because that 
is going to be the huge challenge of America and this government in the 
future.

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