Economics 101

Floor Speech

Date: July 27, 2022
Location: Washington, DC


Mr. SCHWEIKERT. Madam Speaker, one of the reasons and one of the focuses for tonight's presentation is I am just frustrated because of the silliness that not only has become this body but even when you listen to the White House, Madam Speaker.

So the White House is terribly concerned that on Thursday we will get the latest statistics from the Bureau of Labor Statistics. I believe it is on second quarter GDP. GDP now is the Atlanta Fed calculator. It is a wonderful app if you want to look at it.

It is basically saying: Hey, we may be negative, and when we were all in high school they said that two consecutive quarters of negative GDP, well, that is a recession. Technically it is not. Yes, there is a committee that decides it. That is what we argue about.

Has this place lost its mind?

So the press cycle becomes: Oh, are we in recession or not?

It is not, technically. If it goes negative it will be a recession. But isn't this horrible that we are talking about this?

Let's just pretend and stop worrying about it and actually let's try something unique.

Could we actually talk about what is happening to people, what is happening to the country, what is happening to the budgets, the debt and the deficits, the actual thing that will either make or break society, which will make people's lives more miserable or more prosperous?

Because right now we are in avoidance of all the big things.

But we do have some great virtue signaling bills. I mean, I had the blessing earlier today of my telehealth bill being stolen from me and handed to another Member because, well, we needed the politics.

Hey, good job, majority.

But I have to give Democrats credit. They have done some amazing things in, what, their 16, 17 months of absolute control, when they won the House back in the 2018 election.

So this is a chart I have had here multiple times. Yes, it is all beaten up. The number is from, functionally, the 2021 CBO numbers. A couple of hours ago we got the updated numbers.

For anyone wanting to know why I am using tape, apparently it is against House rules for me to reach over and use a big marker and write on the boards.

But the number we had been operating with is in, functionally, 29 years we are going to have $112 trillion of debt in today's dollars-- not inflation-adjusted dollars, but in today's dollars--and it is almost all Medicare and Social Security. The rest of the budget is in balance.

A couple hours ago--and I have only made it through the first dozen pages of the new CBO report, and you can get it online, Madam Speaker, it is only 90 pages--we moved from $112 trillion last year to-- congratulations to the Democrats, they got us to $138 trillion--$138 trillion of borrowing in the next 30 years in today's dollars.

Now, the reality, we are never going to get there. We will blow up before that. But this talk, the virtue signaling, the insanity of this place, well the Democrats are getting in; we are going to pay for everything. We are going to do policies that are fiscally sensible.

Well, okay. Congratulations. CBO just actually took us from $112 trillion to $138 trillion on the math. It is just stunning. Does anyone around this place give a damn?

And maybe I am a little on the cranky side. You know, I had a miracle happen about 3 weeks ago. I was at home, and the phone rings, and my little girl's birth mom had a little boy; so now I have a little boy. So my wife and I, we have a 30-day-old baby at home, so there hasn't been a lot of sleep.

And I am holding this little guy, and I am going, he is only 30 years old when this happens. And the economy most likely blows up long before then.

Does anyone here care about the next generation? Does anyone here care about your own retirement?

You have got to understand how fast the numbers are rotting away from us. But at least we are going to have a debate for the next couple of days of are we in recession or not recession.

Well, technically two consecutive quarters are not technically a recession; and the White House cares a lot about that because we know that it is about the message and virtue signaling as the economy around us is burning down.

And I am going to show you some numbers here. Could we try something new? How about let's go back to a type of misery index? How miserable are our constituents? How miserable is America and the public?

And we are going to look at some slides here that show you just how much of people's wages have been stripped from them.

So a simple slide, and this is from the new CBO, from a couple of hours ago. We did our best to put it together, and it is not going to make a lot of sense. But basically, what I am trying to show is, $138 trillion of borrowing in today's dollars. That is a pretty steep curve. Every bit of this steepness here that you see here is Social Security and Medicare.

How many of us here are willing--I am the senior Republican, I am the ranking Republican over Social Security. We are busting our humps to try to come up with a bipartisan way to save the program, in a functionally--in a decade.

If you are on Social Security, you are going to have a quarter of your Social Security check disappear. Let alone, we expect, just because of inflation, your copay on your Medicare is probably going to more than double.

The number of our brothers and sisters who will be seniors at the end of the decade, who will be moved into poverty because of what the Democrats have done this last year and a half; does anyone care about them?

And then, this is the stuff we have been able to start to pull out from the CBO numbers that should start to scare this place half to death. If you start looking at what they call the alternative scenarios, and that is actually when inflation or interest rates have small variances, and the speed that, if you actually go to the baseline scenario, but if you actually start to go to a scenario over there where interest rates are just 2 percent, 3 percent higher than the predicted average, you actually get in a line here in about 20, 25 years, every dime of tax receipts, every dime of tax receipts just pays interest.

There is no more government. There is no more military. There is no more medical research. There is no more education. There is no more Social Security and Medicare.

How many of you are going to spend your August going home and telling townhalls how you are going to protect Social Security and Medicare, but you are not willing to actually talk about the real math?

It is real. This isn't Republican or Democrat; it is math. And this place has basically become a math-free zone.

And look, this is a chart I bring up here all the time because it is nice and simple and graphic. 77 percent in 2001, was mandatory. Okay. This is Social Security and Medicare. These are things we put on formula. We don't vote on any of this.

Well, about 10 percent of our budget is defense; unlike, I had a Democrat just last week saying oh--no, defense is 10 percent of our spending. The entire budget that we, functionally, truly vote on, discretionary is now to 13. And guess what? This is the `21. The new numbers, the mandatory now is about 80 percent of all of our spending.

Discretionary, if you adjust for inflation, has basically been flat for a decade. There is some stuff we vote on substantially because of what Republicans did when we still had control here. We flattened out discretionary spending.

But unless we are going to tell the truth of what is going on here-- we are getting old as a society. Last year was our lowest fertility rate in U.S. history.

And once again, in 10 years, people on Social Security are going to be taking one hell of a cut. How many people here, when the political class is back in the home district this August, will stand up and talk about what they intend to do to save the program?

So now, let's talk about the current misery. This is what the left's policies have brought to people. Earnings lost due to inflation--and let's use the Phoenix/Scottsdale area because that is where I live. That is my home. That is who I am here to protect.

And let's just use the since August 2020 date so it is nice and simple. You, functionally, have just lost 1.9, almost 2 months of your labor. So you are, functionally, almost--in the Phoenix area, inflation has been so high, you are almost working for 2 months, and you are getting no compensation. You, functionally, have had the value of your labor stripped. You have lost a couple of months.

If I make some of the adjustments, you start to realize you will get to work for about 57 days. You get to go 57 days for free.

So instead of me standing in front of you and saying well, the Phoenix has had 12.3 inflation, and if I use CPIW, with the other adjustment which adjusts food and fuel, it is 13.1.

Screw talking about the percentages. Congratulations. Even if you are part of the population that has had wage hikes, if I take the average wage hike in my community, you are, functionally, working at least a month to a month and a half for free, and this has been done to you in less than a year and a half.

Does anyone care about the working people? The people that get up in the morning, the retired couple, the young couple that is trying to put their home together to maybe 1 day be able to afford a house?

I have no idea how people are surviving out there. And does this place--we are going to have a debate on whether we are technically in a recession or not because that is our talking point for the week.

And look here, I am going to give you two boards here, just to try to understand; and we have been trying to adjust, so let's just use something like healthcare support occupation. And this is just the loss of purchasing power just due to fuel prices. And I even rolled the fuel price back down.

You, functionally, lose, every month, 4 days of labor. You start to think about what these costs mean. So let's use that's even bigger.

Let's actually use--this one I love. Does anyone recognize this? This is our congressional calendar. You know, this is the days we are here supposed to be doing the people's work.

Take a look, functionally. Come down here. You will notice a couple of months with Xs on it. Those are days of labor you lose. You may get your paycheck, but it has no new purchasing power. Actually, it has lost purchasing power because of inflation.

Anyone watching C-SPAN today, how many of you heard people come behind these microphones and actually demonstrate they care about you? They care about your savings, your retirement, your future, the future of my kids, your kids.

The average working person in my community--because I represent the community with the highest inflation in America--has lost 40 days of their labor. Their purchasing power has been stripped from them in a year.

And I am going to get a little geeky for a second. Do you know where the value has gone? You do realize inflation, basically, benefits debtors, and crushes workers and savers.

Okay. Who is the biggest debtor in the world? We are. The United States is the biggest debtor in the world. We are basically--one of the wink and nods that are going on, I believe, with the administration and the majority here is oh, inflation is bad, wink, wink, nod, nod.

But it is really reducing the value of the debt in real dollar terms, because inflation is a tax transfer from you to the debt because it devalues the borrowing by deflating the value of your purchasing power.

So we strip purchasing power from you, but by doing that, when we pay back the debt, when we pay back the debt, the debt is paid back by inflated dollars. It is a tax.

So when the left actually promises--when the President promises, we are not going to tax anyone under $400,000; the hell you are not.

And in my community, you, functionally, have just taxed everyone 12.3 percent, new additional tax this year. You stripped that value from them. And the wink, wink, nod, nod, fancy economists, basically realized, hey, but we devalued the debt by that much. So you have got the stealth tax.

And now you start to realize why America is poorer today. So the Democrats get elected. We just went through 2018, 2019, first quarter of 2020, one of the miracle moments of this country. We closed income inequality.

Wages were growing. Inflation was flat. Poor people became less poor. The working poor become more prosperous. The middle class became substantially more prosperous. Wages were up, what, several thousand dollars in real purchasing power. Every dime of that is gone.

And look, I am friends with a couple of the Democrats, and they despise these floor speeches because it is so uncomfortable to hear that their policies have almost been dystopian in destruction. But it is math and at some point the math will win.

And the fact of the matter is, all the progress this economy, this society, the closing income inequality, the reduction of food insecurity, it is all gone. In a year and a half of, functionally, Democrat control, it is all gone.

You are poorer today than you were the day they were elected. And all that progress we made in that '18, '19, the beginning of 2020, from the tax reform, the regulatory reform, it has all been stripped from you.

But yet, we are going to sit here and argue about, oh, are we in recession? Oh, is it two quarters? No, you are not technically.

We will do anything around here to either virtue signal or avoid real issues, while people are getting crushed.

We have got to stop the whining, the small ball around here, and start doing something that makes people's lives better.

And yes, I can go out and snip all of the nice headlines talking about, oh, it is not a recession. Oh, you know, God willing, don't think we are going to go into a recession.

Okay. Fine. Let's pretend God's willing. Let's pretend we are not in a recession. Let's remove that word.

How could we then pretend--could we just pretend--you are willing to virtue signal on everything else. Are you willing to pretend we actually care about people, care about the economy, care about the future, care about the debt and the country collapsing because of the rate we are borrowing?

And there are other things in the data that let us know, if you are a data geek, and you actually sit and watch the financial news channels, and the talking heads, and the spokespeople from the White House, you are not being told the truth.

And how do you make public policy when it is the political theater is the only thing that matters?

It is the spin. We have become an Orwellian body. We should be ashamed of ourselves.

I am the senior Republican for also the Joint Economic Committee, as well as being the ranking member, the senior Republican over Social Security.

We have been holding Joint Economic hearings instead of doing what we used to do, where the left would have their economists; the right would have their economists; we would bring in really professional people, and we would try to understand what was going on and how we could make society healthier, wealthier.

Instead, we are going to bring in people and we are going to talk about the economics of whatever the pop culture--gun violence today, or we are going to talk about--we don't do real stuff anymore. We are basically writing people's campaign brochures now.

This is really important because unless we as a body can get the incentives right to get up labor force participation--I know these are geeky terms but our brothers' and sisters' participation in the economy, I do not believe we can get the productivity back where we have to be to take on inflation, to start to stabilize the economy in the future.

We have a problem here. This should have been the trend line. Something is going on. We have millions of our brothers and sisters who have disappeared.

Of course, you have a great unemployment number. We have great unemployment numbers. They are really low, except we have millions of people who disappeared. They are not participating.

Once again, it is spin through not telling the truth about the math. Now, it gets even darker and more misleading. I am sorry to be geeking out, but you do realize we have multiple agencies, multiple groups that do the calcs of what is unemployment, what is labor force participation, and who is participating in the economy, and there is some crazy divergence going on out there.

There is something called the establishment survey. That is what you get every week, every month on this month's unemployment--we have everyone working. Except at the very same time, there is something called the household survey, and that is showing numbers that have hundreds of thousands of people who have moved into unemployment.

How is that possible? How is it possible that two government surveys in the same sample times are starting to produce such divergence in the numbers?

I would love to tell you that I know, but I haven't had time to dig into this. But there is something going on there. There is some noise within our economy, yet we are all pretending.

This is the talking point the left keeps giving you. Well, we are not in recession. Look at the employment data, except, also, I need you not to look at the household survey because that number is going in the wrong direction.

Remember, how does the Federal Reserve take on inflation? They break the economy. They break the labor markets. They raise interest rates like they did today. And the dirty secret is, oh, I don't think we will drive it into recession--wink, wink, nod, nod.

Of course they will. That is how it works. They need to break the wage-price spiral, which is real and has begun. You all know what the wage-price spiral is, right? Prices go up, so I have to pay my workers more. Well, if I pay my workers more, I have to raise my prices. Well, if I raise my prices, I have to pay my workers more. Well, if I pay my workers more, I have to raise my prices. You end up in this ratcheting effect, and we are in that right now.

A couple of months ago, we would have a debate on the floor with a couple of my more geeky colleagues, and they would still want to try to say, oh, inflation is transitory. No. It is structural now. It is built into everything you are buying.

Fuel prices go up here, but eventually, the distillates from that fuel that are in that mug that holds the milk that you go buy is now in the components of production. It is structural.

That is a real problem because we are trying to do some of the math about what happens, God forbid, if we have substantially higher than normal inflation for a year. God forbid it is 1 year, 2 years, 3 years, even if they start to knock it down, and there you bring the Fed in.

What is the Fed doing right now? They are jacking up interest rates. They are making your life more miserable. They are functionally trying to put you out of work.

They need to raise unemployment. They need to create the elasticity in the employment markets. So, all of a sudden, that wage-price spiral--you are willing to work for less because you need the job. But you already see the data right now of how many of our brothers and sisters are just trying to maintain their life.

Their rent has gone up. They are using their credit cards. Now, their credit cards are going to get substantially more expensive because interest rates are going up. Now, we are actually seeing articles that the Treasury may have to write checks to the Federal Reserve.

One day, I will do a whole Fed presentation on how it actually works. But when they raise interest rates, they are actually raising interest rates on what they are willing to pay on bank deposits. Therefore, they are paying interest on the bank deposits.

The Federal Reserve needs to get cash to pay a rate of return on the bank deposits, and they get that from the Treasury, which is a little crazy, but that is how it works.

You start to think about the math. I know these are just statistics, but they are also people. They are people, and this place has just become cruel.

I guess the virtue signaling here is only done when it is a good line for a brochure, and I know it is half an hour of talking about economic data, but these are people.

We are trying to do a breakdown right now of how seniors survive. You do realize how many of our seniors, even with the Social Security COLA that may be over 8 points, their copay on healthcare--because, remember, some of the healthcare inflation has been double baseline CPI. Many seniors now have to pay 20 percent of that, so they are bleeding.

The COLA for Social Security doesn't keep up with actual inflation, and it is also a lagger. I won't walk through the table, but understand we are trying to do the math here of how many of our seniors basically are moving into poverty, and we are trying to do something latitudinal over a decade. By the end of the decade, what population has just this cycle of inflation done?

On Thursday, when the second quarter GDP number comes out, and the White House and Democrats say, ``Oh, we are not in recession. It is not a technical recession,'' how many of them are going to get behind a microphone and say, ``I don't care whether we are in recession or not. I care about seniors who are about to become poverty-stricken.'' How many are going to say, ``I care about the family that is having trouble surviving.'' Where is the empathy in this place? Does anyone care?

We make public policy by feelings, by virtue signaling, not by a calculator, and I accept I sound like an accountant on steroids. It is my sin. But these are people.

We are going to sit here, and we are going to fuss like crazy over little symbolisms. We are going to fight over the naming of a post office.

At the same time, someone is going to go home and realize they have to figure out whether they can pay the air-conditioning bill or be able to have enough gas to drive down to the food bank. There are ugly things happening out there, and it doesn't need to happen.

We as Republicans have some ideas to stop it. It may not completely stop inflation, but at least it would help. The brain trust on the other side, the idea is, well, let's send them a check. That is what caused the problem.

Please, can you have some folks that actually showed up for their basic economics class be the ones making public policy here? Let's stop hurting people. This isn't partisan. This is our job.

Madam Speaker, I yield back the balance of my time.