[Congressional Record (Bound Edition), Volume 157 (2011), Part 1]
[House]
[Pages 540-547]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        GOVERNMENT OVERSPENDING

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Missouri (Mr. Akin) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. AKIN. Mr. Speaker, it is a treat to be able to join you and my 
colleagues today, and at the beginning of a new year, take on a subject 
that we have been aware of and increasingly conscious of, the problems 
relative to our economy, to jobs, but particularly to the Federal 
Government and its voracious appetite to overspend.
  I'm joined by a number of distinguished colleagues today. I think it 
should be an interesting discussion. We're going to try to keep it 
simple and look at the big picture and look at the choices that America 
faces.
  Along those lines, here is a sort of a by-the-numbers projection for 
this year, 2011. And you see sort of a bar graph, these tubes here. 
This top one is $3.834 trillion, that's $3.8 trillion, and that's what 
it's expected that the Federal Government is going to spend, $3.8 
trillion. The problem here is this other little thing here. This is the 
income projection. And that's $2.6, if you round a trillion. So 2.6 
versus 3.8, which, you can tell by the length of them that we are 
spending more money than we are taking in. People that have tried to 
run a budget at home understand that's a very easy thing to have 
happen, to spend more money than what you have coming in. And the 
Federal Government has that problem, and it has it big-time. In this 
case, the difference between the two is more than $1 trillion.
  And so that's what we're going to take a look at. And what can we do 
about it isn't so much a matter if you are a liberal or a conservative 
really, the fact is it's mathematics. We're spending a whole lot more 
than we're taking in. And so that is the problem we're going to take a 
look at. When you do that year after year, spend more than you take in, 
you start to develop a debt. In our case, we've got a $14 trillion 
debt. So you have a deficit of $1.6 trillion, but you keep adding these 
things every year, and pretty soon you build this debt up. And the

[[Page 541]]

problem with the debt is that you have to pay interest on the money 
that you borrowed. And so that also makes things worse. And so now you 
take a look at the fact that not only are we spending about one-third 
more than what we have, but we've been doing a bad job of controlling 
our spending.
  In the past, we have also cranked up this debt. The effect of that is 
that one of the things that comes as far as spending is your cost of 
the debt service, so the more that you borrow, the more you have to pay 
interest on your debt, and therefore it just compounds the situation, 
making it worse. So that's the lineup.
  So let's take a look at, well, where are we spending all this money? 
And one of the things that people that are looking at numbers take a 
look at is three fairly big what are called entitlements. Entitlements 
mean that somewhere along the line, the Congress passed a law, and the 
law works like a little machine. It just spits money out. And anybody 
who meets certain parameters, the machine will just give them some 
money. And that's called an entitlement. And so depending on what the 
entitlement is, it just spends money. And Congress doesn't have to do 
anything. The money just gets spent. And it is called an entitlement.
  The three big ones, of course, are Medicaid, Medicare, and Social 
Security. And if you project over time how much money those 
entitlements are going to spend, you find that they are growing. They 
are growing because of people such as myself, a baby boomer. The baby 
boomers are getting older, and there's a whole lot of them, and there 
are not as many people working to pay into the system. And so the cost 
of these entitlements go up.
  And as you see in this chart right here, this is the typical revenue 
that we get from taxes coming in. It is running at 18 percent. You can 
see it goes up and down as we have more or less taxes depending on who 
is in charge of the White House and the Congress. But it averages now, 
over since 1965, it's averaging about 18 percent. And you see this 
point out here at 2052 where these three entitlements are going to use 
up the entire budget. There won't be any money for anything else other 
than just these three things.
  Unfortunately, this chart is optimistic because this is only 
including these three entitlements. We have other entitlements also. 
And in fact, at this point we have come really pretty close to it even 
today.
  So our entitlement spending, when you look at the big bar chart up 
here, pretty much, of our income--about $2.5 trillion, pretty much that 
income is spent today on various entitlements. It's not just Medicare, 
Medicaid, and Social Security. But there are two other categories, 
miscellaneous entitlements, that would be things like food stamps and 
public housing, stuff like that, but also debt service, because you 
have to keep paying the interest on debt. You put that all together, 
and that's just about what we've got for income. So we've got ourselves 
some challenges.
  And I'm glad that I don't have to solve all this problem, but we have 
got some very smart people that are going to join and talk a little bit 
about this, what are our alternatives and what should we be doing.
  The first is a freshman who is already distinguishing himself in the 
Congress, Bill Johnson. He is from Ohio. We are thankful that Ohio sent 
one of their great sons here, somebody who first of all has a 
background as a chief information officer in a global manufacturing 
company. ``Information officer'' means people that deal with the 
transfer of data and information, but also the data processing side of 
a company, which is really the communications and lifeblood of a 
company. He is also somebody who served our country faithfully as an 
officer in the United States Air Force.
  Bill Johnson, it's a treat to have you on the floor. We're glad you 
got elected. You've heard the opening here. We've got a bit of a 
problem. In fact, we've got a problem that's so big that a lot of 
people are kind of--in Missouri we have an expression, hunker down like 
a toad in a hailstorm. A lot of people look at this and they go, oh, my 
goodness, what are we going to do?
  So let's talk about that for a minute.
  Mr. JOHNSON of Ohio. Well, Mr. Speaker, and to my distinguished 
colleague from Missouri, thank you so very much for the opportunity to 
be here. You're exactly right, and you've pointed it out so well. We 
have a disease here in Washington, and that disease is called 
``overspending.'' And it is, by and large, what has brought us 
economically to where we are today. And the debt that we see is the 
symptom of that disease.
  It's amazing to me how many in D.C., how many in the administration 
and in the previous Congress, really believe that we can borrow, tax, 
and spend our way back to prosperity. As a businessman, as a graduate 
from a business school--I have a minor in business administration--I 
don't think that there is a business theory in place that says that you 
can prosper that way.

                              {time}  1220

  Mr. AKIN. Let me just stop you. I want to cut in on you.
  What you are saying is most businessmen, if you tell them we are 
having trouble with overspending so what we are going to do is spend 
some more, they are going to laugh you out of the shop; is that 
basically what it boils down to?
  Mr. JOHNSON of Ohio. That's right. You know, that kind of thinking 
has never been good for families. It has never been good for 
businesses, and it certainly is not good for America. We see where that 
has left us. Your charts point out that we are on the path to a train 
wreck here. Yet we see policies consistently coming out of the 
administration and out of the previous Congress that continue to punish 
the job creators.
  Take Ohio for example. Since the giant stimulus bill was passed in 
the previous session of Congress, only three States have lost more jobs 
than the State I come from, from the great State of Ohio. Unemployment 
in the district that I represent is another symptom of that disease. We 
cannot continue down this track of spending and borrowing and punishing 
job creators and expect America to pull through this economic crisis 
that we find ourselves in.
  Mr. AKIN. Bill, once again you are right on track and right on topic. 
This is so important because down here in Washington, DC, there are 
really two very different schools of thought on this; aren't there? 
There are some people, and I think they are people probably who come 
from your background as executives in companies, people who had 
responsibility and had your own small business, and you understand what 
it takes to make a small business work. And the mind-set of those 
people when you get into trouble over spending is that you have to 
either increase your revenue somehow or you are going to have to cut 
back your spending.
  But there is a whole other school of thought down here which to me is 
kind of weird because I come from the business world, too, and the 
theory is that somehow you can get the economy going by spending a ton 
of money, and that is what the ``stimulus'' bill that we passed 2 years 
ago, it was supposed to create I don't know how many hundreds of 
thousands of jobs. The projections in terms of the numbers of jobs it 
was going to produce, it actually lost more than what they projected it 
was going to do.
  At the time, I stood on the floor with a bunch of other people who 
came here with a business background and said, Hey, this thing isn't 
going to work. Don't spend this money.
  It was at least theoretically excused under the Keynesian sort of 
idea that if the government spends a lot of money, it ``stimulates'' 
the economy and everything will be okay. It is like grabbing your belt 
loops of your boots and lifting up and flying around the Chamber here. 
It is a bizarre idea. And it was tried by that guy Henry Morgenthau who 
worked for FDR. They tried it for 8 years, spending money like mad. He 
appeared before the House Ways and Means Committee and said: It just 
doesn't work. Now, that was 1938 he told Congress it doesn't work to 
spend money like that.

[[Page 542]]

  So that is one possible way that the Democrats propose, and that is 
spend lots and lots of money. But we see we are spending so much money, 
the question is--it isn't working because it created unemployment big 
time.
  Of course you in Ohio with your manufacturing background, we are just 
killing jobs. Somehow there is this disconnect. You can punish 
companies and then you are surprised there are no jobs. It is sort of 
bizarre.
  I yield again, Bill.
  Mr. JOHNSON of Ohio. Thanks.
  You hit the nail on the head. We are punishing the job creators. I 
mentioned in Ohio, only three States have lost more jobs since that 
stimulus bill went into effect. Now, I don't know the exact number 
today, but in November, around election time, Ohio had lost over 
400,000 jobs.
  Mr. AKIN. Are a lot of those manufacturing, Bill?
  Mr. JOHNSON of Ohio. Absolutely. Absolutely.
  And here is what puzzles me: I don't understand why more don't 
realize that when you let families and businesses keep more of their 
hard-earned money, that builds economic confidence. That builds buying 
power. They invest. They spend more. That's what gets an economy going. 
They begin to become innovative.
  Let me give you an example. Ohio borders on a State that has no sales 
tax on clothing. One of the first things I saw when I started looking 
at how I could help the State of Ohio was: How can we keep that sales 
tax revenue in the State of Ohio? So we started doing the research. We 
found out that 17 States have sales tax holiday programs.
  So I built a grassroots effort to put a sales tax holiday program in 
place in Ohio. Without going into excruciating detail, having a sales 
tax holiday around back-to-school time and a sales tax holiday around 
Christmastime promised to bring upwards of $250 million in additional 
sales tax revenue into the State coffer, keep retail jobs, and let Ohio 
families keep more of their money. It was amazing what that program 
would do. Yet we could not get those on the other side of the aisle in 
Ohio to understand that and to buy into that concept. It is a simple 
economic concept.
  Mr. AKIN. Just interrupting again, what you're really saying is that 
you can get more revenue in a State if you back off on taxes?
  Mr. JOHNSON of Ohio. Absolutely.
  Mr. AKIN. That is an interesting concept, and I would like to pick 
that theme up. That is something we really need to understand.
  I assume you were a member of the Ohio Legislature at one time?
  Mr. JOHNSON of Ohio. No, I was not. I built a grassroots effort to 
try to address that problem. We were successful in getting a bill 
introduced into the Ohio State Legislature to put those sales tax 
programs in place, but it never made it through the system.
  Mr. AKIN. Oh, boy.
  Well, we have another gentleman here, coming a little farther from 
the west, Congressman Bishop, who is joining us. He is also a guy who 
has had some experience in the business world, and also as a teacher 
and a leader here on the floor. He has represented his district on some 
armed services kinds of issues and is somebody who has really earned 
the respect of his colleagues and has done a great job in setting up 
some of the new rules that have been established for this Congress.
  Congressman Bishop, I would be delighted to have you join us. You 
have heard what we are talking about. We have a problem. We are 
spending too much money, and the question is what should we do about 
it.
  Mr. BISHOP of Utah. I thank the gentleman from Missouri for allowing 
me to have some time here, and I appreciate the comments of the 
gentleman from Ohio illustrating what happens in the States. I think 
oftentimes we should be looking to the States as an example of what 
does and what does not work, and we can emulate those concepts here in 
Washington.
  You are right, as you initially said, we have a severe budget 
problem. There are really only two ways of trying to reconcile that 
budget problem: We can either raise taxes or we can cut spending.
  I think it is interesting to look at some other States. Cal Thomas 
had a wonderful article this morning--maybe it was last night--that 
talked about comparing what other States have done. So we see the State 
of Illinois, another midwestern State whose solution to their problem 
was to raise the personal income tax 67 percent and their corporate tax 
rate by over 46 percent.
  Mr. AKIN. May I interrupt. You said raise the personal income tax in 
Illinois. Was it by 6 percent?
  Mr. BISHOP of Utah. Sixty-seven is what I heard, and 46 percent on 
corporate taxes. And let's face it, corporate taxes are paid by 
consumers anyway. So you get hit with it coming or going.
  You can compare that with what other States have done, like the 
neighboring State of Indiana or Wisconsin, Virginia, New Jersey, my 
home State of Utah, which decided to solve their problem simply by 
reducing their spending. I am told that Indiana, since 2004, reduced 
spending by 40 percent.
  Mr. AKIN. Whoa, 40 percent. That is a number.
  Mr. BISHOP of Utah. And it will be interesting to see if the Illinois 
experience will replicate what happened in Indiana and those other 
States I listed, and my gut guess is it probably will not.
  But when we instituted income tax for the first time in this country, 
the statute that did that would cap the maximum rate of income tax at 2 
percent, even though we only applied a 0.5 percent income tax. I think 
if people would look at their paychecks today, they would see it 
slightly different from that original time.
  Mr. AKIN. As I recall, gentleman, at that time, weren't there people 
who said that income tax could possibly get as high as 5 percent and 
they were laughed off the floor of the Congress, that income taxes 
could get as high as 5 percent? Am I right on that?

                              {time}  1230

  Mr. BISHOP of Utah. It is alarming, but that is actually accurate. As 
we found out in that experience, the best tax is, obviously, something 
paid by somebody else. It was estimated when that original income tax 
was in place that 80 percent of it would actually come from only four 
States. Apparently, four States were fighting it, and the rest of the 
States kind of liked it.
  Unfortunately, there was--and I'm not impugning anybody here--a 
Representative from Missouri at the time who actually did say that a 
new dawn has broken with this new income tax and that, actually, the 
government would be more careful with people's money now that we are 
taking it directly from them than in the past when we simply ran 
government by taxes coming from tariffs or land sales.
  Mr. AKIN. We're not proud of everybody from Missouri, gentleman.
  Mr. BISHOP of Utah. That certainly does not represent your thinking 
anyway.
  Mr. AKIN. No.
  Mr. BISHOP of Utah. What happened is, within a short period of time, 
using World War I as the excuse, that top rate was not at 2 percent or 
at 5. It was at 75 percent. Now, what we found out is the actual amount 
of money coming into the country was in a decline, not in an incline.
  So, when President Coolidge came into power and initiated the first 
tax cuts by reducing the rates across the board, the amount of revenue 
coming into the country actually increased. The same thing happened 
when President Kennedy tried it, President Reagan, and President Bush, 
because what we found out was that people with money are not stupid. 
They had money for a reason and that it was not that they were avoiding 
their taxes. They had just found an alternative way of investing--in 
the case of World War I, it was a lot of municipal funds that were 
going in there that were not taxed--or they simply did not invest their 
money. They sat on it until such time as they actually had control of 
their money again.

[[Page 543]]

  So the bottom line here is, if we look at the tax pot, or proposal, 
as a way of solving our problem, all we do when we allow taxes to 
increase is allow Congress to actually spend more.
  It's like going on a diet, which I desperately need. I may change my 
diet to my only eating good food; but if I eat a whole lot more of good 
food, it's not going to really solve the problem. There is another 
problem, too, that goes onto the spending side, which is I can actually 
be full and malnourished at the same time. If I only eat potatoes as a 
diet, I may be full; but I'm not helping my body.
  When we look at the spending side, which is really the only option 
that we have, and when we don't look at it in a way of looking at how 
we are spending, all we're doing is malnourishing us. All the CRs we 
passed last year, without actually doing a real budget or a real 
appropriations act, may have flat-lined our spending, but it didn't 
help us out. It was like eating potatoes all the time, which in 
moderation are good; but if that's the only consumption you have, we 
are making serious problems.
  Mr. AKIN. I think what I'm hearing you say, gentleman, is that 
America has been getting high on junk food. At least you have an 
economic analogy.
  Is that where you're going?
  Mr. BISHOP of Utah. Well, so am I, and I have to admit I love potato 
chips; but, yes, that's where we're going.
  What we need to do is, I think, what this Congress is looking at, 
which is to try and readjust what we are doing and look at our spending 
levels, which is why 2008 spending will be a starting point to adjust 
and look at what we are doing. We have to look at our spending in 
prioritization so we're not just spending everything. We have to look 
at what our responsibility as a government is, and we have to look at 
the spending side seriously.
  As the gentleman from Ohio stated and you stated with your charts, if 
we do not take the spending side seriously as the solution to our 
problem, we will never find a solution to our problem; and the end 
result will be disastrous for this country.
  Mr. AKIN. I appreciate your thoughts and particularly the direction 
that you're taking, because my argument would be the problem that we've 
pointed out with overspending cannot be solved with increasing taxes, 
and I'd like to talk about that for a minute.
  My good friend from Ohio, just hold for a second. I'd like to try to 
illustrate something.
  When I first came here a couple of years back, people talked about 
the Laffer curve and the idea that you could have the government take 
more money in by reducing taxes.
  Now, I'm an engineer by training, and to me that seemed 
counterintuitive. How in the world can the government lower tax rates 
and take in more revenue? It seemed like such an odd thing. Then I 
started sort of puzzling it in my mind a little bit.
  I thought, Let's say that someone were to appoint you to be king for 
a year, but the only thing you can tax is a loaf of bread. So you start 
thinking, Huh, how do I get the most revenue for my country out of a 
loaf of bread?--because I'm a political guy, and I have to pay the 
bills of the Federal Government.
  So you start thinking. You say, Well, I think I'll put a one penny 
tax on every loaf of bread that people eat. No one will notice the 
penny, and I'll take in a certain amount of money. Then you start 
scratching your head and saying, What if I went the other way? Let's 
say I taxed a loaf of bread at $10 a loaf. Boy, then I'd get a lot more 
money in that way. Yeah, but the trouble is nobody would buy any bread.
  Common sense would say somewhere between a penny and $10 there is 
some point in there at which you're going to get the maximum tax you 
can get on a loaf of bread; and as soon as you go beyond it, your 
revenue is actually going to fall off because people will stop buying 
it, and there just won't be any more bread market going on.
  So the point of the matter is that there is an optimum level that you 
can tax. When you go beyond it, you stall the economy and destroy the 
Federal revenues. Now, that may seem like a theory, but, in fact, it's 
true. It is what happened.
  I'd like to just run through a couple of charts here.
  This happened in 2003. In the second quarter of 2003, in May, we 
passed a big tax decrease in capital gains, dividends and the death 
tax. What that did was it freed up a lot of money for, Bill, who you've 
been talking about--the people who own businesses. The death tax ties 
up a whole lot of money because, you know, somebody dies, and you just 
hammer him and put a small business or farm out of business. Capital 
gains and dividends, they're all money that was being tied up because 
of our Tax Code. So when we reduced those taxes--this is what happened 
on this black line. I've got three charts here. This black line is when 
we cut capital gains, dividends and death taxes.
  The first thing: look at the gross domestic product of our country. 
You can see it's spotty in here. We were in a recession. The amount of 
money we were taking in was not good in these early years.
  Here is what happens when we do the tax cut:
  You see that there is a jump from 1.1 percent GDP to 3.5, so GDP goes 
up when we cut taxes. That tells us, hey, the economy is going. It's 
doing better.
  What else happens? Let's take a look at the chart. It's the same 
thing.
  This is May of 2003. This is job losses. Everything below the line is 
a job loss. We're losing jobs like mad, and we've got some problems 
with unemployment. Here are a couple of times where we gained some jobs 
just for a quarter, but these are by the quarter. We're losing jobs. 
Then--boom--we put this tax cut in place, and look what happens in 
terms of job creation. We created 168,000 jobs, and here we've lost 
100,000. So, first of all, GDP goes up. Job creation goes up, so people 
go back to work.
  Here is the key point: look what happens here to Federal revenues. We 
have cut taxes here, and Federal revenues are shooting up. Now, that 
seems like you're defying the law of gravity, but what happened was 
those taxes were stalling our economy.
  So when you've got a recession and when you've got unemployment the 
way we do, what you've got to do, this would suggest, is you have got 
to cut taxes, give the money back to the people you're talking about, 
Bill, who own those companies. Let them invest--build additional wings 
on a building, new products, new technology--and when that happens, you 
pull out of the recession, and it helps you with your revenues.
  The bottom line is, when you take a look, going back to our original 
question of how do we get out of the problem that we are spending too 
much money, the answer is, if you start taxing, you're going to drive 
us further into a recession, making the problem worse. So, really, tax 
increases do not work to fix the problem that we've got going here.
  I wanted to jump over, Bill, and allow you to piggyback some.
  Bill Johnson, from Ohio, is a great freshman Member. Congratulations 
to those in the State of Ohio for sending us some good people down 
here.
  Bill, please jump in.
  Mr. JOHNSON of Ohio. Well, you've made so many points there.
  I'm a businessman. After my military career, I founded two small 
businesses. Before I came to Congress, I was the chief information 
officer for a business, a global manufacturing company; and I sat at 
the table with our executive leadership team, and we talked about how 
do we increase the value to our shareholders; how do we make our 
company more profitable; how do we put ourselves in a position to be 
able to invest and grow.
  There are two sides to that formula.
  On one side, you've got spending. On the other side, you've got 
revenue. There is a balancing act. Controlling spending, we've talked 
about. We've got to stop the out-of-control spending here in 
Washington, and we're going to address that in this Congress.

                              {time}  1240

  But how do we increase the revenue? That is what you've been talking 
about here for the last few minutes. And

[[Page 544]]

you're exactly right, it does not come through tax increases; it comes 
through letting Americans and businesses keep more of their money 
because that builds economic buying power, that builds confidence. They 
invest; they spend.
  Now when we did our research on the sales tax holiday back in 2009, 
what we learned is there were 17 States that had already implemented a 
sales tax holiday which validated the concept that you just referred 
to. Take one State, for example, implemented their sales tax holiday in 
the very first year. In the month that they implemented that sales tax 
holiday they saw an overall--now there were adversaries that said you 
can't take that sales tax revenue out of the coffer at a time when we 
are struggling to meet the State budget. Fortunately, sound minds 
prevailed and they were able to get the bill through. And in the month 
that they passed that bill and they had that sales tax holiday, their 
overall sales tax revenues did not decline; they went up nearly 5 
percent.
  Mr. AKIN. So what happened--let me see if I understand this. The 
sales tax holiday was not a total cutting of all the sales tax; it just 
reduced it much lower.
  Mr. JOHNSON of Ohio. That's right.
  Mr. AKIN. And by reducing the tax, their revenue increased.
  Mr. JOHNSON of Ohio. Well, what it was, it eliminated sales tax on 
certain items like back-to-school items, things that people had to have 
to get their kids back in school, to put them in college and those 
kinds of things--clothing, school supplies, computers. For example, 
many States included computers in those sales tax holidays.
  Over the next year, they saw another nearly 5 percent increase in the 
overall sales tax revenues. By the third year, they saw a nearly 8 
percent increase in sales tax revenues. And over a 3-year period, they 
were looking at close to 20 percent overall sales tax revenue increases 
over that 3-year period.
  Mr. AKIN. By cutting taxes.
  Mr. JOHNSON of Ohio. Because what happened was when people got a tax 
break on things that they had to have, they would channel those savings 
into buying things that they wanted to have and that they had been 
saving up for with their families. And other States started coming 
across the border to take advantage of that holiday. It's a simple 
concept that we need others to understand: when you let families and 
businesses keep more of their money and you put the decision about how 
they spend that money in their hands, America prospers.
  Mr. AKIN. Well, I really appreciate that. That's a real-life example, 
something that you worked on looking at different States. And it was 
the same principle of what we've seen.
  Now, the idea of cutting taxes in a recession and cutting Federal 
spending is not new. JFK understood that principle. He cut taxes when 
he was President during a recession and put us back on a good economic 
footing. Ronald Reagan had the biggest tax cut just about in the 
history of the country until Bush came along, and the same thing. 
People made fun of him, that it was trickle-down economics and all that 
kind of stuff; but the fact of the matter was the economy became 
strong, and he had to have a strong economy to face the threats of 
Communism in the Soviet Union.
  And ultimately he bankrupted the USSR because of the fact that our 
economy was strong enough that they couldn't keep up with us in the 
arms race, and he basically got them to the point of ``tear down this 
wall.'' But it was based on this same principle of the fact that he had 
tremendously cut the taxes which allowed the American economy to surge 
and allow free enterprise and the businessmen to start making some 
money.
  We're doing the exact opposite. At the Federal level, our income tax 
is the second highest income tax in the whole world. That doesn't make 
a whole lot of sense.
  Now, I want to go to this problem a little different angle from it, 
and that is, we've talked about we're spending too much money. We've 
talked about, really, that raising taxes is not the solution, which 
means then, by definition, you've got to cut spending.
  Well, what are we spending money on? I think that's something we need 
to take a look at here. And I've got a chart. Before I had the chart 
that showed Medicare, Medicaid, and Social Security. And these things 
people call entitlements because we passed a law a long time ago, and 
it just spits money out, more and more money out over time. This chart 
suggests if you keep your taxes at 18 percent, at a certain point, at 
2052, these things get so big, they squeeze the rest of the budget out. 
The trouble is this chart is optimistic. The problem with the chart is 
it doesn't include all of the entitlements. There are a lot of 
entitlements that are not on that chart.
  But here, take a look at this, what has happened since 1965. I think 
this also adds perspective to what's going on in terms of our spending. 
In 1965, entitlements were 2.5 percent of gross domestic product. It 
starts here. The red line goes up to the point now that in 2010 the 
entitlements have gone from 2.5 to 9.9 percent. That's a four-times 
increase to 2010. The trouble is that's just Medicare, Medicaid, and 
Social Security.
  The additional entitlements would go up even further. This is 
probably saying that since '65, we've had probably about a five-times 
increase in entitlements. And what's happened in return to national 
security and defense? The U.S. Constitution says the most basic 
function for the Federal Government is to provide for the national 
defense. It may say that we're supposed to promote general welfare, but 
it specifically--because the only government that we have that can 
defend our country is the Federal Government. It is the primary 
function of the Federal Government, in our preamble to the United 
States, ``provide for the national defense.''
  We were spending 7.4 percent of GNP in '65, which has now dropped 
down to not quite 5 percent of GNP. And we have the problem now with 
the two wars, with all of our equipment aging. So we're having a whole 
lot of trouble trying to stay competitive, particularly with China and 
a lot of their new developments, with national defense because the 
entitlements are just going nuts.
  And so the problem is that we're going to have to take a look at 
entitlements, not just Social Security, Medicare and Medicaid, but 
there are other ones too. You've got food stamps, you've got public 
housing, and you also have the debt service. All of this, when you put 
it together, is using almost all of the money coming in in a given 
year. That says we had better get serious about doing some cutting.
  And once again, I will come back do you, Congressman Johnson, if you 
would like to comment on that aspect of where we are.
  Mr. JOHNSON of Ohio. Well, you hit the nail on the head again. 
National defense is our number one priority; it has to be. In fact, the 
oath of office that you and I took on January 5, virtually the same 
oath of office that the President takes, it says that we swore or 
affirmed to support and defend the Constitution of the United States 
against all enemies foreign and domestic. That requirement to provide 
for the national defense is the number one most important thing that we 
in the Congress, in the administration are required to do, keep America 
safe, keep America free, protect Americans and American interests 
around the world.
  There is no question that we must invest in those programs that are 
going to support our troops in the field. And I agree with you that we 
must look at the proper balance between defense spending and other 
spending to make sure that we achieve what we have been charged by the 
American people to do.
  Mr. AKIN. As a good Air Force man, I knew you would come up with the 
right answer. The point of the matter is if you don't have national 
security, you don't have any other kind of security.
  Mr. JOHNSON of Ohio. Well, I often ask my constituents, what is our 
number one job? What is the President's number one job? Is it to keep 
us safe, or is it to keep us free? And of course you get a number of 
different hands

[[Page 545]]

being raised. In my opinion, based on the Constitution, the Declaration 
of Independence, the President's--and therefore the Congress'--number 
one responsibility is to keep us free, because if we are not free, we 
will never be truly safe.

                              {time}  1250

  And safety is obviously pretty close on the same level. And they play 
into one another. But our national defense, flowing down from our 
national security strategy, our national strategy, that's paramount.
  Mr. AKIN. I very much appreciate your perspective.
  We're joined by another great freshman coming from pretty near by 
Missouri, from the great State of Kansas, Congressman Yoder. It's a 
treat to have you on the floor. And as you've heard, we've been 
pontificating here a little bit about how are we going to deal with 
this. You know, the Federal Government is spending a whole lot more 
than we take in. So we've got to deal with that problem. We've been 
talking about the fact that taxing isn't a good solution because if you 
raise taxes, you drive your revenues down. It means we're going to have 
to do some cutting. So that's a tough subject.
  But I appreciate a little bit of common sense from the great State of 
Kansas.
  Congressman Yoder.
  Mr. YODER. I appreciate the congressman from Missouri's indulgence 
for a little time here.
  I've been watching this conversation you've been having on the floor, 
the gentleman has, along with the gentleman, and it seems like we're in 
the middle of an ideological battle in this country. On the one hand, 
you have folks on the left that argue that government is the solution 
to all the problems our country is facing. Unemployment, their argument 
is that we need to create more government jobs, that Washington can 
solve these problems.
  And out in Kansas we know that it is the private sector. It's the 
individual that creates jobs in this country. We know that it's hard 
work and determination. And you can't substitute that with government 
bureaucrats or government mandates. You can't mandate or regulate 
someone into prosperity. It just doesn't happen. And that's a real 
battle that's happening in this country right now, and I think this is 
a challenge that we've really got to face in this Congress
  On the one hand we have more entitlement spending, greater deficits, 
higher taxes. On the other hand you've got free enterprise, economic 
freedom, prosperity. And to me, that's the real essence of this 
challenge: Are we going to create a free enterprise country or are we 
going to be an entitlement society?
  Mr. AKIN. In a way, I think you've really framed things. I appreciate 
your perspective because you're getting a little bit off at a distance 
and saying look, there's two choices and the two parties really are 
very, very different in this. One seems to be the party that wants 
entitlements. They want food stamps, and they have unemployment. And 
the other party is saying we want jobs and paychecks. And that's kind 
of the choice. And if you want jobs and paychecks, you've got to have a 
free enterprise economy.
  If you want the government to just subsidize you and live off of 
welfare, that's a different perspective.
  So what we're seeing is this growth in entitlements, this number is 
low on this chart because it doesn't have food stamps, it doesn't have 
public housing, and it doesn't have the debt service. When you put that 
all together, we're right at the point where the money coming in is 
just barely paying for all of these entitlements and the debt service. 
You put that together, that's not a good picture.
  And the solution I think most Americans--I bet you that's what your 
election was about, the fact that we want to have jobs, and we want to 
see a strong America. We want to see an America that's free. We want to 
see a Federal Government that doesn't enslave us, doesn't tame us, put 
us in velvet chains of a welfare state, but rather that allows us to 
rise the way Americans have always risen to the challenges that each 
one of us, the dreams we have in our heart to make those happen, to 
have a chance to fail or to succeed. And that's what made America such 
an incredible place.
  And I appreciate, Congressman Yoder, your standing up for those basic 
American principles and values. And I think what that means is we're 
going to have to deal with this level of spending.
  Congressman Johnson, back to Ohio.
  Mr. JOHNSON of Ohio. I wanted to comment on what you said and what 
the gentleman here said about what makes America great.
  When people stop to consider that this little sapling of a Nation in 
terms of age, 230-plus years old, virtually--and we're a baby compared 
to many of the other nations in the world--yet every modern 
convenience, virtually every modern convenience known to mankind was 
birthed right here in this country. And why was that? It was because of 
that system of free enterprise based on individual freedom. The ability 
to pursue our dreams, the ability to innovate that created this free 
enterprise system that we've come to know.
  It did not come about in the Halls of Congress. It was not discovered 
in the deliberation rooms of courtrooms.
  It was discovered around the campfires and around the dining room 
tables, the kitchen tables, the fields, the factories. As America came 
along, we learned when individuals are allowed to pursue their dreams 
in an environment of freedom without an oppressive Federal Government 
taxing them into oblivion, everybody wins. America wins, our allies 
win, everybody wins.
  Mr. AKIN. You know, just even hearing you talk about that, somehow 
that gets me excited.
  You know, I think about it. God made all of these different people, 
and all of us are different. And from the day that you grow up as a 
little kid you start thinking about stuff that you'd like to do, 
whether you want to be a fireman or a doctor or an Indian chief, you 
know, people kind of talk about that.
  And you never really know for most people, they don't really know 
where their life is going to go, what they're going to achieve or 
accomplish. But there's something inside human nature that has this 
idea once you start to get the idea that you can dream and do something 
cool.
  So people have these crazy ideas. And America was full of these crazy 
people and all of these crazy ideas. They didn't know the ideas were 
impossible, and they kept trying and trying, and finally the idea 
becomes maybe vaguely possible and then pretty soon, it actually 
happens.
  You take the crazy guy who built lightbulbs. What'd he build, a 
hundred, two or three hundred lightbulbs? And somebody said, Boy, 
you've got to be discouraged, Thomas Edison. He said, No, I've got a 
couple hundred ways not to make lightbulbs. So I'm even closer to the 
right solution. You've got to be a little bit pretty entrepreneurial to 
have that perspective.
  So America, if you think about it, this great country was built one 
dream at a time by all these people. And one of the great things, 
Congressman Yoder, that you do and Congressman Johnson, is you have a 
chance to serve your people.
  What's going to happen--because you're both freshmen--what you're 
going to find is that through the years, all these people from your 
district, you'll run into them, and you'll see some sort of a little 
warehouse somewhere and all of a sudden you realize that thing is a 
thundering success. Some guy's dream just happened there. And we have a 
chance to see all of these people around us that have experienced that 
American dream. And it is cool. But it doesn't happen by a whole lot of 
redtape and taxes.
  Congressman Yoder, please jump in.
  Mr. YODER. I think what the gentleman is speaking about is the 
American dream. It's the American free enterprise system. It's the 
essence of what makes America what it is. And to watch and to see it 
under threat here in Washington, it angers and it frustrates Americans.
  And that's what we saw this last year, Americans coming out to town

[[Page 546]]

hall meetings and expressing themselves. They don't feel like their 
voices are being heard on the floor of the United States House of 
Representatives. They want people to stand up and to explain that 
greater spending and greater deficits, that's not the road to 
prosperity.
  The road to prosperity is built brick by brick by hardworking 
Americans out in Kansas and out in Ohio and out in Missouri and all 
across this country as they work to put a little of their own money in 
and build a business or to take care of their family. They work hard. 
Sweat equity. That's what built this country.
  And when they see the folks in Washington believe that that money 
isn't the people's money, it's Washington's money--and in fact, the 
folks in Washington, they don't even spend the money they're given; 
they spend as much as they want, regardless of how much money we have.
  So part of this job situation, this American prosperity situation, it 
comes back to spending. And what we do here on the floor of the United 
States House of Representatives and how we advocate and stand up for 
those people that sometimes aren't always heard, that's what we have to 
do here.
  Mr. AKIN. I'm glad that you're joining us in that. In fact, there is 
a Congressman Jordan from the great State of Ohio who was, I believe, 
holding a press conference not so long ago talking about what are some 
of the things that we're going to cut, because people ask us, you know, 
what are you going to cut?
  Well, one of the things is we're going to reduce the nondefense 
discretionary spending to 2008 levels. Well, what's that worth? Well, 
that's a lot of money that you can save that way. We're going to reduce 
the budget office of every congressman. That was our first week. Your 
first week here. We cut the congressional budget offices by 5 percent. 
That's just to let people know we're serious.
  Then we read the U.S. Constitution on the floor of the House to say 
any bill you introduce now has got to be consistent with the 
Constitution.
  But we've got another whole series of things that we're going to do 
to try to reduce spending, some of them--there is $25 billion in unused 
Federal property. So what are we going to do with that? Why not sell 
some real estate? Let's get rid of it. $123 billion is allocated to 
programs to which government auditors can find no evidence of success.
  The one that I find amusing is, the Department of Energy was designed 
so we wouldn't be dependent on foreign oil. And the department's grown 
like mad, and we're more dependent on foreign oil than we ever were.

                              {time}  1300

  That needs a good question. Eliminate duplicative programs, among 
which we have got 342 economic development programs. Do we really need 
342 of them? 130 programs serving the disabled, 130 programs serving 
at-risk youth. Program, program, program. Do we need that many? Maybe 
we need a couple of good ones, but certainly we don't need that many of 
them. So these are all things that are on the table.
  So the proposal that's being made by the study committee has been, 
instead of having the graph of the discretionary spending going this 
way, nondefense, they are going to try to flatline that at about 400.
  So there are a lot of things going on. It's an exciting time. We 
realize we are going to have to get efficient in government, and we 
have to basically go back to where we started.
  The government was to be the servant of the people. It wasn't 
supposed to be the master. We didn't expect the government to pay for 
everything for us and keep us as little dependents. We simply wanted it 
to get out of the way. We wanted it to defend our right to life and 
liberty and the pursuit of happiness, and, beyond that, to leave us 
alone. Don't bury us with redtape and government regulations and taxes 
and uncertainties, which we have seen, which have created all the 
unemployment.
  I appreciate two great patriots joining me on the floor today kicking 
around where we are.
  I am very encouraged by our first week or two. First week or two we 
started by cutting congressional budgets. We read the Constitution on 
the floor. We put together a rule that says every single bill has to be 
proven to be constitutional or else it doesn't even get out of the 
hopper. And then, of course, we took a look at one of the biggest jumps 
in entitlement spending that America could ever take, which was 
ObamaCare. And we voted just yesterday to repeal the whole thing.
  I will tell you, gentlemen, I know that you were involved back in 
your own States because you were worried about the fact: If the Federal 
Government can't manage Medicare and Medicaid without it breaking the 
budget, what's going to happen if they take over all of health care?
  I think what people understand in America intuitively is the fact 
that if you look at American health care, the front end of it's good. 
If you get sick, where do you want to get sick? In America, if you have 
to. The trouble with health care is: How do we pay for it? That part's 
broken. So the point isn't to scrap the whole thing and turn it over to 
the government, which is what ObamaCare did. Instead, we're going to 
fix the things that are broken, but leave the free enterprise part up 
front, which gives us the best health care in the world.
  You guys were here voting for that. And for those of us that were 
fighting that the last 2 years, I tell you it felt so good to stick 
your little credit card in the machine and push that you wanted to 
repeal it. It was something we were all really looking forward to. And 
you were part of that historic event. And that's just in the first 
couple of weeks.
  I'm looking forward to both of you gentlemen in the months ahead 
really charting that course back to the American Dream.
  If you would like to add--I think we are pretty close on time. If you 
would like to conclude, a couple of comments, either one.
  Mr. JOHNSON of Ohio. I will just sum up with this, because I think 
you have hit the nail on the head. We can cure this disease. It's 
called stopping the out-of-control spending. And at every opportunity, 
we should seek ways to allow American families and American businesses 
to keep more of their hard-earned money. That's going to result in 
economic confidence. That's going to result in investment. That's going 
to result in increased consumer confidence, and it's going to increase 
and create jobs, and we know that.
  I urge my colleagues--I thank you for this time, and I urge my 
colleagues to join with me in supporting the legislation and those 
policies that are going to accomplish those goals: cutting the 
spending, letting Americans keep more of their hard-earned money, and 
ultimately creating jobs and putting America back to work. And I want 
to thank you for the opportunity today.
  Mr. AKIN. Boy, that's a fantastic, straightforward approach to where 
we have to go. You take a look at it.
  Unfortunately, the gentleman who was here from Utah before, those of 
us who are in the ``over 60'' category recognize, when it comes to 
weight, there's two problems: It's either what you eat or how much 
exercise you get. And you can't really change that very much. The 
Federal budget problem is the same way. It's either how much you're 
going to spend or how much you can tax. And what's happened is we just 
can't tax anymore, and we're going to have to deal with the spending.
  These are some of the items in the proposal that was being made in 
the press conference today. $80 billion, this is nonsecurity. That 
means not the defense discretionary spending. We're going to cut that 
back to the 2008 level. That's just going back a couple years to knock 
that back. That saves $80 billion. $45 billion, that's a repeal of 
unspent stimulus funds. That stimulus bill that created all of the 
unemployment that did not work. There is some of that money still left. 
We take 45 there.
  Two, almost 3 trillion, that's the nondefense discretionary spending 
to 2006 levels. And also to eliminate the

[[Page 547]]

automatic inflation increases now and for the next 10 years. So that 
saves a whole lot of money there. Sixteen billion dollars, that's 
return the Medicaid FMAP spending to 2008 levels. And then $30 billion, 
end the Federal control of Freddie and Fannie Mac. That's also another 
area that we have got. We have not dealt with that. That created the 
economic crisis we are in. We have not dealt with the cause of the 
problem.
  You put this all together, you are at about $2.46 trillion for 10 
years, which the result of that comes out at flatlining some of the 
nondefense discretionary. Does that solve the problem? No, it really 
doesn't. It helps, but still the bottom line is we're going to have to 
deal with those entitlements that are totally out of control.
  You guys have got a lot on your plates. It's a big job. It's going to 
be an exciting couple years. And I would recognize Congressman Yoder, 
if you would like to make a couple of closing comments. I think we have 
got about another 5 minutes or so.
  Mr. YODER. I thank the gentleman.
  And I think what the Congressman from Missouri is discussing, these 
specific points of how we could reduce spending and how we could bring 
the Federal budget back towards a balanced budget, which is what 
Americans want us to do, we've all seen across this country, Americans 
have, what happens in Washington. They spend as much as they want, 
regardless of how much money they have, and that has to stop.
  This is an opportunity this year, with a new Congress and new energy 
and new enthusiasm on behalf of the American people, it's a chance to 
stand up and say, We're tired of the overspending. We're tired of 
trillions of dollars being spent on programs for which some of which we 
can't find real tangible results. We're tired of duplication of 
programs. We're tired of endless bureaucracy and red tape.
  Americans want to see action and they want to see bold proposals, 
such as what you are outlining there, to show that we can actually, 
truly cut spending. We have heard folks on this floor say we can't cut 
spending, that it will hurt too much. Well, what hurts is this $14 
trillion debt, this legacy we are leaving to our children and our 
grandchildren. This is an immoral legacy that we're passing along to 
the next generation.
  And I think what the gentleman from Ohio is standing up for, and the 
gentleman from Missouri, is that this is the time to say enough is 
enough. It's time to stand up and to start cutting spending and reining 
in this out-of-control government.
  Mr. AKIN. You know, the thing that's exciting to me and encouraging 
to me, it's not just you gentlemen, but the fact that you came here 
because America was waking up. America is saying it's time to take back 
America. We're tired of being bullied by our own government. And we're 
tired of the idea that what you should do is to be paid for not doing 
something, and that an existence in America is sitting around and not 
having a job. What we want is we want Americans to be able to follow 
the dreams that are in their heart, you know. And the mentality of the 
fact that anybody looks like they're having fun, we want to tax them, 
that just doesn't make any sense at all.
  And sometimes it seems like it's such a gloomy perspective to think 
of America as a country which is nothing but the government's going to 
take care of you. You know, the Soviet Union years and years ago, they 
had this basic idea the government's going to provide you with a home; 
it's going to provide you with food; it's going to provide you with 
medical care; it's going to provide you with an education; the 
government's going to provide you with a job. That was their formula, 
and it didn't work worth a hoot. And the Soviet Union collapsed. It's 
in the dustbin of history.
  And here what are we doing? We're trying to look at the government to 
provide you food and a home and an education. The government's going to 
provide you health care and the government's going to provide you a 
job, or if you don't have a job, they'll pay you anyway. That's a 
formula that didn't work. There's no point in going down that blind 
alley again.
  So what we are coming back to again is the thing that's just so 
exciting about our country. It's a country of exceptionalism. It's a 
country that's led the world. It's a country that is a source of hope 
for people all around the world as they take a look at our country.

                              {time}  1310

  It was interesting, during the days of Ronald Reagan, that he got a 
message out of some of the concentration camps up in Siberia and gulag 
and different places that were really rough. And the people were 
thirsty for news of what was happening with America and they were 
praying for us, because they realized that we were a source of hope and 
inspiration to the rest of the world.
  There was a group of our Founders, came over on a boat, it was called 
the Lion. It was 1630--it was some of the Puritans under Winthrop--and 
they wrote something called ``The Model of Christian Charity.'' It was 
a long, sort of a long Puritan-type document. But it said something 
about we must consider that we should be a city on a hill, a light to 
the people around the world.
  And that was where Reagan picked that up in his speeches. Of course, 
it came out of the Bible that we should be a city on a hill, a light to 
people of the world, a good example and an inspiration so that they 
would think of also being free from the influence of excessive 
government.
  So that's the challenge that you as freshmen, that all of us, all 
Americans are facing. I think people are starting to understand this is 
going to mean some changes. There are going be changes in our 
behavioral pattern and the fact that we have just got to start cutting 
back on government and we just can't continue to let the thing run the 
way we have.
  The bottom line, as we get back to it, I want to restate the problem, 
and the problem is this, that when you put those entitlement programs 
with the debt service together, we are spending almost the same amount 
of money as what we take in in revenue. That's not a penny for defense 
or discretionary spending at all. That's where we are. That's pretty 
sobering.
  That's why the challenge is significant. We are not going to get 
there overnight. We are not going to balance the budget in 1 year.
  I don't even think the most conservative guy in Congress would think 
that we could do that, that there is any probability that America could 
adjust that rapidly.
  But we can balance a budget and we must. The fact is we have to take 
steady steps, one at a time, and move forward on this because of the 
fact that we are protecting that most precious idea that America has 
been that hope and that bright light on a hill for people all around 
the world.
  The aspect of America and the American Dream, there is something that 
I talked about sometimes when I was doing some campaigning. I like to 
throw into the mix there the concept that in following the dream that's 
in your heart, it takes a certain amount of courage. Those people like 
Thomas Edison, the people that came by the Statue of Liberty with the 
shirt on their back and a little change in their pocket, it took guts 
to do that. It's going to take guts to go where we have to go. But with 
courage and God's blessing we can do it, gentlemen.
  God bless you all.

                          ____________________