The Budget

Floor Speech

Date: Feb. 13, 2012
Location: Washington, DC

Mr. JOHNSON of Wisconsin. Mr. President, I come to the floor this afternoon before the debate on President Obama's just-submitted budget descends into the arguments over the smaller little details that, quite frankly, are not going to have that great of an effect on our whole debt and deficit issue. What I would like to do is take a look and ask the American people to take a look at the larger picture. I would like to do it with a few charts and graphs.

The first chart I would like to put up really describes, from my standpoint, the root cause of the problem. It really is the size, the scope, all of the rules, all of the regulations, all of the government intrusion into our lives and the cost of government. What this graph depicts is that as of last year the Federal Government was 24 percent of the size of our economy. So 24 cents of every dollar our economy generates flows through the Federal Government. When you add on State and local governments, which are about 16 percent, the total take of government at all levels of the United States now--last year was 39.2 percent. Again, 39 cents of every dollar flows through some form of government.

I do not find government particularly effective or efficient at so many things they do. To make this relative, we are watching what is happening to Greece right now. It is in flames because that social experiment is collapsing. But if you compare the United States in terms of its size of government to European-style Socialist nations, you can see that Norway spends 47 percent of its GDP on government; Greece, which we just mentioned, 50 percent; Italy, which hit a mini debt crisis of its own, 52 percent; and France is 55 percent. Unfortunately, America has arrived at the lower limit, the lower level of European-style socialism. That is not a good metric.

The next chart I want to describe--so many people, I understand, want a balanced approach: revenue and spending reform to address the debt and deficit issue. Listen, I want more revenue too, but I think we need to raise revenue the old-fashioned way--by growing our economy. Everything we do in this country, everything we do here in Washington needs to be targeted toward economic growth.

But I think what this chart describes is the fact that we have a spending problem. It is not that we tax Americans too little; it is because we spend way too much. Ten years ago our Federal Government spent $1.9 trillion. Last year we spent $3.6 trillion. We doubled spending in just 10 years. And, of course, the President's budget that he just unveiled today will spend $3.8 trillion in 2013.

In the argument moving forward, nobody is talking about cutting spending. All we are talking about is reducing the rate of growth in spending. You can tell by the chart. According to President Obama's budget, 10 years in the future, in the year 2022, he is proposing spending $5.8 trillion. Last year's House budget would have spent $4.7 trillion. That is what the argument is about--spending $3.6 trillion last year and increasing it to either $5.8 trillion or $4.7 trillion.

Another way of looking at that is taking a look at 10-year spending numbers. In the nineties--a very successful decade--the Federal Government spent $16 trillion over a 10-year period--$16 trillion. Over the last 10 years, we spent $28 trillion. And, again, the debate moving forward is President Obama, in his just-released budget, wants to spent $47 trillion over the next 10 years. The House budget from last year would have spent $40 trillion. By the way, when you hear about that $6 or $7 trillion of Draconian cuts, that is what we are talking about. All we are talking about is reducing the rate of growth in spending in the size of government.

You have seen an awful lot of charts describing the Nation's debt and how it has exploded. I like this chart because we start it on September 30, 1987, when our entire Federal debt stood at $2.3 trillion. It took us 200 years to incur $2.3 trillion worth of debt. Last year, in the Budget Control Act, we gave the President the authority basically--I didn't, I voted against it, but this body gave the President the authority to increase the debt ceiling by $2.1 trillion. We will blow through that debt in around 2 years. Think of that.

So you can see what is happening. In 2001, we were at $5.8 trillion. In 2008, right before President Obama entered office, we were at $10 trillion. Currently we are at about $15.4 trillion, and in the President's just-released budget, he is proposing adding about $10 trillion to our debt over the next 10 years, to come in at a whopping $25.9 trillion. The question is, Will we really be able to borrow that much or are we going to face the day of reckoning, when world investors take a look at the United States and say: You know, I am not going to loan you any more money. What is more likely to happen is they will say: I will loan you some money but at dramatically higher interest rates. That is what we need to be concerned about. That is what a debt crisis is going to be. Take a look at Greece. Take a look at Italy.

One more chart I want to put up shows the extent of the problem of the unfunded liabilities together with the debt. Now, this is actually last year's chart. We have not been

able to get the new one printed yet. But last year the trustees of both Medicare and Social Security published the unfunded liability of those two programs. When you add those unfunded liabilities to the Federal debt and what we owe Federal retirees, the total liability of the United States as reported last year was $99 trillion. The new figure for this year--the accountants in the Federal Government have rejiggered the figures, and now they are claiming it is only $72 trillion. But whichever figure you take, if you compare that to the private net assets of the United States--that is, household assets, small business assets, large business assets--that number is $79 trillion. So the Federal Government has made promises and incurred debts that are equal to or exceed the entire net private asset base of the United States. Now, that is the definition of a problem. That is the definition of a huge problem that unfortunately this President and this town are not grappling with. We are not coming to terms with that.

Let me specifically hone in on one of those entitlement programs--Social Security. In 2010 we went net cash negative in Social Security, which means the amount of taxes collected were $51 billion less than the benefits that were paid out. Last year we were $46 billion in the red. If we take a look at this chart, what we see, without reforming the program, without providing the reforms that would actually save Social Security, within the next 24 years, by the year 2035, we will incur a $6 trillion cash deficit in Social Security. Again, when you take a look at the President's budget this year, is that even being addressed?

The House budget addressed Medicare last year, and people like my Congressman from Wisconsin were demonized for doing it. Here you had an individual who had the courage to first of all acknowledge the problem and then put forward a proposal, and he is demonized. Political demagoguery is not going to solve our problem. A serious budget is what we need to solve the problem.

Because we are not serious about even putting forward a budget--and unfortunately, in this body, the majority leader is saying he will not even bring a budget to the floor for a vote; there is no need to. We are only going to incur $10 trillion more debt in the next 10 years. I want the American people to think about that. I have been involved in business for 33 years. I am an accountant. This is the first time I have been involved with a financial entity--and let's face it, America is the largest financial entity in the world--where I have been working with an entity that does not have a budget. That is a national scandal. We need to correct that.

But let me talk about some of the deficit risks, because we are not serious, we are not even addressing, much less--we are not acknowledging. It starts with what I started talking about earlier in terms of not dealing with the debt and deficit issue dramatically increases our risk of higher interest rates, higher interest expense. The CBO reports that for every 1 percent increase in the interest expense--let's face it--times $15 trillion, times 10 years, that would add $1.5 trillion to our debt--$1.5 trillion. Greece--when they hit their debt crisis, their interest rates spiked by 8 percent. If that happened here, it would cost us $1.2 trillion. It would wipe out all discretionary spending. That is the day of reckoning we need to avoid by putting forward serious proposals.

Another risk we are really not talking about is what happens if we do not grow according to the projections the President lays out in his budget or the CBO projects? Well, again you look to the CBO. For every 1 percent we miss our growth targets by, add $3.1 trillion to our debt and deficit over the next 10 years--$3.1 trillion.

Another risk is the true cost of the health care law. Thirty-seven Republican Senators sent a letter to CBO Director Elmendorf pleading with him to please reassess the very unrealistic estimates the CBO made in terms of the number of employees who will lose their employer-sponsored care.

Their estimate says only 1 million. But we have studies that were conducted that say 30 to 50 percent of employers will drop coverage. When that happens, when the employees who lose their employer-sponsored care and get dumped into the exchanges at highly subsidized rates, the cost of ObamaCare will not be $95 billion a year; it will more likely be $ 1/2 trillion to $1 trillion a year. Multiply that over 10 years and we can see the depth of risk inherent in the health care law. It needs to be repealed.

The last point I wish to make is a key part of President Obama's supposed deficit reduction in his budget is a tax on millionaires, which, by the way, is defined by couples making over $250,000. That is interesting math right there. Two points: I said earlier we should not enact anything in Washington that would harm economic growth. Increasing taxes will do that. That is what CBO says, and that is what the Federal Reserve Chairman Bernanke says. It just makes common sense. I want any American who would think that is a good idea to ask themselves one question: How many jobs will that tax increase create? How will that tax increase actually help us grow our economy? The answer is, it will not.

There is an interesting study just released on Maryland's millionaires' tax they enacted in 2007. When they passed that tax, they estimated it would raise $330 million. The facts are in. That tax increase only generated $120 million--only 36 percent of what they originally estimated. President Obama is hoping to raise $1.5 trillion with the millionaires' tax. Maybe it is only $1 trillion; I have not seen the details. Take that number and multiply it times 36 percent, then look at the harm it will cause economic growth and reduce it even further. It simply will not work. It might feel good, but it will do great harm to our economy. To sum it all up, what this country needs is real leadership. We need the President to lead. We need a serious budget. We need the Senate to pass a complete and serious budget for 2013.

With that, I yield the floor and suggest the absence of a quorum.