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Telling Our Constituents the Truth

Floor Speech


Mr. SCHWEIKERT. Mr. Speaker, my colleague from Arizona who actually has an amazing district and was actually an amazing leader when we lost 19 of our firefighters this time last year, I appreciate him putting that into the Record for all of those in Arizona.

I wanted to do something a little different tonight. A few months ago, we came to the floor here and sort of walked through what was really going on in the math. One of the things that sort of enrages me is so much of the debate we have here in Congress is the noise. We talk about this issue or that issue when we have the 10,000 pound gorilla in front of us, and that is what is happening to us fiscally.

Right now, and I am going to be using a lot of numbers tonight, and we
are going to try to put up as many of these on our Facebook page and on our Web site so folks can actually see these charts. First off, if this were 1 year ago, we were having discussions of what was the fiscal year 2014 deficit going to be, and we had some folks making these optimistic projections that we were only going to be in the $400-some billion shortfall that year.

It is still a stunning amount of money. It has only gotten worse though. Remember, we were supposed to be on the way out. Employment was getting better; income was getting better. Taxes are up dramatically in this country. Remember, we have just hit the alltime high revenues ever for the United States.

So what could possibly be wrong? Because then, this last April, the projection of the deficit for this fiscal year was $492 billion, then in May, it was $648 billion; and with today's news that the first quarter GDP was down--was negative, went down--our growth and our economy went down 2.9 percent, that is a stunning amount of GDP to lose.

We were going to be giddy if we were over 2 percent, and we had a negative GDP in the first quarter of 2.9 percent.

I am going to make you a projection and a prediction that, when we end the 2014 fiscal year, we are not going to be much different than we were last year. So all these discussions of, well, it is getting better, and the spending and with all these new taxes, the future fiscal burden we are about to dump on our kids and our grandkids is going to get better--it is not in the math. It is not showing up.

This is important. I wanted to actually walk through a little reality check here and to show you how disappointed I am on so much of the discussion that you will hear here in Washington.

You see the chart next to me. If I came to you right now and said: tell me what you think the debt and unfunded liabilities are for the country--now, we can all go to these Web sites where it is the debt clock, and if you look at it right now, it is going to say: well, the unfunded liabilities and the debt for the United States are about $127 trillion.

Well, there was a study done--it was done over at George Mason's Mercatus Center, and it was done at the beginning of the year. The number is $205 trillion that we are about to dump on the heads of our kids and our grandkids.

What should terrify you about this number--well, let's find a way to talk about this. If I said our unfunded liabilities--our debt and the promises we have made in this government--are at $205 trillion, go on a search engine right now and search for: What is the entire wealth of the world?

Mr. Speaker, you are going to pull up estimates that it could be $167 trillion. I saw one that was $180 trillion.

So process this: what we have promised in benefits, promised in spending, what we have already borrowed is greater than the wealth of the world today. Process that. If you, right now, grabbed every penny of the wealth of the world, it would not put enough money in the bank to cover the promises we have already made as a government.

You have got to understand this. This should be the discussion of our times, and yet it is uncomfortable. Look, I am in my second term, and let's have a moment of brutal honesty here: What do most elected officials--what do we often focus on? Being reelected.

When you stand up in front of a room, the pollsters and the political consultants often tell us: well, happy talk or talk about something that is easy because big numbers scare people and, besides that, they are so negative, you would lose votes.

If you talk about what is happening in the entitlements, if you talk about $205 trillion being the debt and unfunded liabilities of your country, Schweikert, you are likely to get unelected.

We have got to step up and start telling the public, telling our voters, telling our constituents the truth: the single biggest issue facing your government is the debt and the explosion of the entitlements.

I am going to spend a little time here talking about what is really driving this. Just how do you get to this? Part of this is this is what it would look like if you used honest GAAP accounting.

Now, what is GAAP accounting? So let's put this in perspective. If I came to you right now, today, and said: all right, the country, we already know if you go on the debt clocks on the Web, you will see we are about $17.5 trillion of borrowed money.

About $4 trillion to $5 trillion of that, we borrowed from ourselves, which we steal out of Social Security, we steal it out of Medicare, but the $17.5 trillion--but then I come to you, and let's do something that is simple math.

The Social Security trust fund, with the benefits we have promised right now, is about $23 trillion underfunded. Okay. So my $17.5 trillion of hard debt right now and the $23 trillion we owe--and if we were doing GAAP accounting, if we were doing honest mathematical accounting--like we all learned in, hopefully, accounting classes--you are looking at $40 trillion that you would put onto this number because that would be honest.

That $23 trillion that we owe to Social Security beneficiaries, that we do not have the money, we just pretend, yeah, we owe it, but we are not going to tell the public about it because it will make them nervous.

That is the GAAP accounting, so when we start doing the honest accounting--like every business, every charity would have to do--that is how you get to real numbers and understand the real situation that the government, that the people, the beneficiaries, and those in Congress should be dealing with today.

Mr. Speaker, why is this not working? Why the problem? Let's actually go to the next chart, and maybe this will sort of help because we have had so many discussions.

Do you remember all the rhetoric that was around this place before the 2012 Presidential race and the election, the discussion of how much better everything was getting, how much better the job situation was about to get, these debts and deficits will start becoming under control?

Well, it just wasn't true. The political class, probably for reelection--heaven knows the President did--we misled the people. We didn't tell them the truth about basic math.

So what is wrong here? We are going to walk through what is really going on in these charts, but think about just the last year or two. What has happened out there when even we have succeeded at getting good legislation--bipartisan legislation--passed through the House, getting our brothers and sisters in the Senate to actually work with us, and getting the President's signature? Something like the JOBS Act, passed it 3 years ago.

Think about this: little things that were going to help the individual entrepreneur, like crowdfunding, the reg A, some of the mechanics in there where we were just trying to help capital formation for the little guys, for the startup businesses--what happened? They got lost in the bureaucracy.

Some activists on the left said: oh, we are scared of this, and we took away the optionality for everyone out there to grow that business out of their house, out of their garage.

It breaks my heart--something as simple as crowdfunding has now had so many rules and regs, and it still is in reg writing, even though we were supposed to have the rules 2 years ago.

Think about it. Even when Congress has gotten it right, this President and the bureaucracies he controls--he is appointed to--continue to destroy the optionality that we were trying to give to the American people to get this government out of their way and start growing this economy.

Let's take a quick look at this chart--and I am sorry, I know how hard it is for those folks who might be watching on television or sitting in the back row or galleries, these are hard to read--but what is important about this is the blue line here was our projection a year ago.

We were actually projecting that the deficits and debt were actually going to get better. Then when we actually had to start doing our recalculations and realizing the economy is not growing, it is not producing the economic expansion, the economic wealth that we need in this country to cover the promises we have made, that became the red line.

Now, we need to do the next part of the discussion of what really goes on in government math. You do realize that government math, the budget projections, the debt projections that are put out--I am going to be fairly harsh here--border on fraud.

Here is simply why: this red line is based on current law. Well, you do realize in current law--something we call the SGR, you will often hear it as the doc fix--that in about 10-12 years, we expect doctors to accept 73 percent less to see a Medicare patient. That is the current law, so that is why this line goes this direction--because we have these things in law where we expect these fantasies to take place.

Now, the reality of it is: How many of you think a doctor is going to see a Medicare patient for 73 percent less? It is just not happening.

So we will run here to the floor and say: oh, heavens, we have got to make sure that our seniors have access to their doctors, we have got to make sure doctors are at least covering their costs, and we will come in here, and we will raise that doc fix, that SGR, another year.

One of the reasons it does not happen around this place for the 10 years out or the 20 years--our permanent fix--is because, all of a sudden, the math changes again, so we get the benefit of fake math. We know we made the promise that there is going to be this health care within Medicare.

We put out these fancy charts, and I see some of my brothers and sisters speechifying with the numbers they are handed. When you start to grind into what is underlying underneath those numbers we are often given by the Congressional Budget Office, you start to realize: well, they say this is based on current law.

You have got to understand, inside that current law are things that are implausible. Actually, go look at the Medicare actuaries report and go to the very last 2 or 3 pages, and even the head Medicare actuary makes it very clear that the projections in the report--because the projections in the report are based on current law--are implausible.

The head actuary actually uses the word--year after year, when they do their Medicare actuary report--that it is ``implausible.'' Why is that not the headline? Is it because it comes with big numbers?

Here is what happens. There is something also that our Congressional Budget Office does, which is referred to as the alternative scenario, when you actually take out the things that are in current law and put them into what actually is more likely to happen: we will do doc fix and other things that are current law that hit the wall that are unfunded in the future, and we will step up because of the political pressure and adjust them and raise that spending.

Well, what happens when we do that? You get a curve, this green line. I know it is hard to see, but just understand that what this means is, if we hit this alternative scenario, in about 14 years--actually, slightly less--your country hits 100 percent of debt to GDP.

Okay. That is debt to GDP where, actually, that is just what we are booking. Remember, we started the conversation with we tell everyone here is the money we are borrowing, so here is our debt to GDP.

This would not even have--that 100 percent to GDP in 14 years would not actually have GAAP accounting. It would not have the real numbers because you do understand, that number we did before, saying if you just take Social Security and our current debt, add those together, it is approaching $40 trillion, you do realize that is double your country's GDP right now.

We are already not at 100 percent of GDP. If we actually had honest accounting--just those two are 200 percent of GDP, yet how often do you hear us talk about it?

This is the issue of our time. If we don't step up and start dealing with it, I have no idea, I have no idea what happens in the future when we hit the wall--and we will hit the wall.

Oh, by the way, understand, if you just add up the debt we have and the unfunded liability in Social Security, we are far beyond where Greece is. I think Greece was $1.7 trillion, so 100 percent debt to GDP. If you just add up those, we are at 200.

We need to have some folks actually start to learn some calculus, and that was actually one of my running jokes for my first year here. I started to realize many of my constituents thought the problem in D.C. was Republicans versus Democrats, and I have grown to believe it is those that own calculators and those that don't.

A question I will actually give--and we have had this discussion with a lot of Members both on the right and the left--is: Why do we seem to fight so much? Seriously. Why do we seem to fuss with each other so much? And I am going to make you the argument it is about the money.

In the next couple of charts, I am going to try to walk through what is really happening with the money so you understand if you are tired with Congress fighting with each other about the money, it isn't going away. It is about to get--and will continue to get--dramatically worse.

Another chart, probably almost unreadable from a distance, but understand here is what you are looking at. Do you see the red lines there? The red lines are what we call discretionary. That is what I get to come to the floor and debate over and work on these appropriations bills where we are trying to move money here, take it away from here, try to save here. That red line is discretionary. That red line is your military. It is your parks. It is the FBI. It is things that are not mandatory spending, things that are not entitlements.

Here is where we are right now. We used 2013.

In 9 fiscal years--2024--do you notice something in the pattern on this chart? Do you notice that what we vote on here in Congress, the discretionary, is pretty much the same? Nine years from now, 10 years from now, it is basically the same.

But what we call mandatory, which is mostly entitlements--and I will get phone calls tomorrow from folks that are enraged that I used the word ``entitlements.'' That is what it is. It is an earned entitlement, but it is still a promise. It is a social contract we made as a government with our people. We just forgot to tell them we didn't have the money to pay it.

So understand from here, from 2013 to 2014, that increase, we will now be sitting at a $2.29 trillion increase on mandatory spending--and that is in 9 fiscal years. They are huge numbers, but you have just got to follow the chart.

Let's say you are someone who is passionate about drug research, passionate about the national parks, passionate about securing our borders, passionate about the military. That is in this red line. It is being consumed by mandatory spending.

So understand, the simplest way I can phrase this is your government is very quickly becoming a health insurer and an entitlement provider with a shrinking army.

Process that for a moment. That is where we are at. That is what is going on around us in our lives.

We will have these charts up hopefully in the next couple of days on our Facebook page and our Web site so you can vet them yourselves. It is important. If you want to understand public policy in the United States, if you want to understand public policy that is happening here in Congress, everything is about the mandatory spending.

Do you remember the first board we put up where I was showing you the $205 trillion of unfunded liability and debt? It is important to understand that half that is Medicare. Medicare right now represents close to $100 trillion of promises we as a government have made, and there isn't money to pay for it. And those are in today's dollars.

We are going to come back and forth to a couple of these so that we better understand them.

This is actually the 2013. You will notice the red. That is what we all come here and we debate over and we fight over and work through and come up with ideas. That is the discretionary. It is 32 percent of all of our spending.

We have Social Security and Medicare. We don't have the Obama subsidies in here yet, but that is one of our newest entitlements. Remember, we were almost promised that this ultimately was going to be a savings. It wasn't the truth.

Medicare, income security. These are food stamps and other types of programs that are entitlements because of where you sit income-wise--veterans' benefits, other mandatory certain pensions, certain other requirements we have to meet, mostly on the retirement side, and interest on the debt.

I want you to pay attention if you can see this. Six percent of what we spent in 2013 was interest.

I am going to be rotating back and forth so this is going to get a little awkward with these boards, but it is important to see.

So where will we be in 9 fiscal years? Now, this is important. Remember, you just saw discretionary spending. This is your military. This is your drug research. This is the FBI. This is the border. It is 32 percent of all our spending. In 9 fiscal years, it is 22 percent of all of our fiscal spending. Social Security becomes 24 percent of all of our spending. Medicare becomes 17 percent of our spending. Best guess--and this becomes a moving target right now--the ObamaCare subsidies in about 9 years will be about 2 percent of our Federal spending. A little different than we were told a couple of years ago; right? Medicaid, 9 percent of your entire Federal budget; income security, 8 percent; veterans, 3 percent; other mandatory, 1 percent.

And this is the most dangerous part of this chart. Do you see interest?

Remember, in the previous chart we were saying interest is 6 percent in 2013. How many of you believe today's interest rates are normal, are real? What happens when we go back to normal interest rates? Well, this projection is that 9 years from now we will be back in normal interest rates. At that point, 14 percent of your entire Federal Government spending is interest.

Understand how fragile that makes all future discretionary spending if we had an interest rate spike. What happens if we were in the early eighties, late seventies type of interest rates? This number explodes, and it would consume what is sitting in the discretionary budget. As we continue to borrow, as we continue to add to programs and make promises and not set aside money for them, we are squandering our future.

On occasion, I get to sit down with an audience where I will see parents and grandparents and the grandkids and you will turn to them and say to the parents, ``How many of you love your kids?'' and most of the hands go up. And then you will turn to the grandparents and say, ``How many of you love your grandkids?'' and all the hands go up. Then you start to show them these charts, and you turn to the parents and the grandparents and say, ``Do you understand what you have done to your children, what we have done to our grandchildren, and what we have done to a generation that is not even born yet?''

The math right now, just to cover the promises that are already done--this is baked in the cake; this is done--your kids, your grandkids, your unborn children are going to have a 60 percent mean tax rate. And that is not for those with a high income; that is everyone.

Sixty percent of your income will have to go just to cover this spending. And that is not your State, your local, and your FICA; that is just 60 percent of your income. You will have a of 60 percent income tax just to cover the promises that are already made. And that doesn't pay anything off. That just maintains where we are, because you start to have externalities like the net interest that you have got to pay. And what happens when interest rates move again?

So for those of you, once again, who care a lot about the military, care a lot about protecting the border, care about drug research, care about education, care about all these things, if you really do care, every time you speak to an elected official, every time you speak to someone with election ambitions, every time you speak to a policymaker, every time you speak to someone from the press, please ask the question: What are you willing to do about mandatory spending, because the mandatory spending, the entitlements, are consuming us as a people. And they are consuming your Republic's future.

One more time. Basically, this is 9 fiscal years from now. So take a look. Here is what actual was for 2013. These are the actual numbers. We had 32 percent of our budget go to discretionary. That means not Social Security, Medicare, Medicaid, ObamaCare. Those are the mandatories. This actually crashes to 22 percent. This is in 9 fiscal years.

So what is the solution? The solution actually is pretty obvious, and it is really tough. We need the American people to understand maybe not the math but what it means.

It is hard to get in front of an audience and say a trillion this and trillion that. How many folks even understand what a trillion is, the thousand billion and a million. So many of our brothers and sisters do not understand what these numbers mean, but they need to understand what it means to their future and that what we are doing today isn't working.

These numbers continue to get worse and worse month by month because we have policy from this administration and we have policy coming from the U.S. Senate where they won't take the pieces of legislation that we put out of this House that would actually help us to start to grow the GDP.

So let me give you how simple and how tough the solution is.

Number one, we are going to have to step up and tell the truth and do something about mandatory spending.

How many politicians, how many consultants out there will say: If you talk about Medicare, you are going to get unelected? Wouldn't it be amazing if the public started to understand this and say: If you don't talk about Medicare, you get unelected?

The other thing is you have two things that potentially start to really grow our economy. The energy renaissance--let me walk through this because this is sort of a stream of consciousness, but it is really important.

If I had come to you a decade ago, when you would pick up the newspaper, when you would pick up the magazine, when you would go online, whatever you read, there was this term called ``peak oil''? Do you all remember that 10, 12 years ago? It is very simple. The next incremental barrel of oil was going to be less than we had the day before. The world was running out of energy.

How many of you out there can tell me what is wrong with that? Seriously.

The fact is that it was absolutely wrong. We are not running out of energy. As a matter of fact, as of today, we have more known fossil fuels than any known time in history. We have been blessed, substantially through technology. And be prepared, there is another wave of technology coming, particularly for natural gas, between now and the end of the decade that may even make it better and more accessible and, hopefully, even cheaper. You have an energy renaissance happening in your country.

How do I keep Congress, the bureaucrats, the control freaks here in Washington from destroying this energy renaissance?

The second thing that is happening is even more complicated to talk about. I have grown to believe there is an economic renaissance around us, but it is unlike anything we have ever experienced. Let me see if I can find a way to make this work.

I believe we are entering the age of the hyperefficient economy. Who here has ever used a ride-sharing service? I guess the big ones are the things like Sidecar. How many of you have ever used something like Uber? Okay. You have this little computer in your hand that, on occasion, works as a phone. What about the other things that it is doing in business? If I came to you right now and said, ``In the country, who is the largest pet groomer in the United States? I think it is PetSmart. Who is the second largest one in the United States?'' It is an app on your phone, where you hit it, and that is how you access your pet groomer. Think about that. Then at the rate of growth, in a couple of years, it becomes the biggest. If I came to you right now and if you were a policymaker in New York City or were a hotel owner, would you consider something like Airbnb an existential threat to your business? Remember the discussions coming out of New York about what it is doing to the bed tax.

So, when you start to worry about incumbents coming to their politicians and saying, ``You need to stop this new economy,'' the incumbents aren't always the businesses. It is also the tax system that is built on the way it is, not on the way it is becoming.

We had a presentation from one company. I think it was out of Michigan. It had this idea--I think it was 1000 Tools--where you could go online, and instead of going down to your favorite hardware store and buying the $1,200 compound miter saw with laser sighting--and if my wife is listening, that is actually what I want for my birthday--you now hit the button on your phone, and you rent it from your neighbor. Think about that. That is a change in the economy. The sale no longer happened at the hardware store, and the manufacturer didn't get to sell a new compound miter saw with laser sighting, but you as the consumer--you, as the renter of this equipment--now probably have, not the $1,200 you would have spent, but the $1,140--because you spent $60 on the rent--still in your pocket. Do you go and spend it on other things? Do you spend it on investments? Do you spend it on your family?

There is this rotation happening all around us of things that you and I have not even thought of. Will the bureaucracies and will the incumbent businesses show up in legislative bodies and courts around the country and do everything they can to stop that new hyperefficient, highly optional economy that is around us right now? Will they try to put the Ubers out of business? Will they try to put the Airbnbs out of business? Will they try to put the 1000 Tools--and who knows what else is out there?--out of business? Every day, entrepreneurs in this country are coming up with ideas, but those ideas are restructuring the economy, so let's walk through some of the options we have.

We have an energy renaissance. Every week in our office, we have people coming to us, saying, ``Oh, David, we really want you to regulate hydraulic fracturing because--oh, yeah--we worry about it, but it is also ruining our investments because we invested in alternative energies, and when there is $4.50 long-term futures in natural gas, it is screwing up our investments over here.'' Remember the family rule: money, power, vanity. It is about the money. You would be shocked to know how much of the public policy that so many Americans think is Republican and Democrat is about the money.

Will this Congress do everything in its power to maximize this future of the energy renaissance and the revenues that it produces--both inbound, outbound? Will it be like some of the discussions we even saw earlier tonight of: let's come up with ways to regulate or let's come up with ways to minimize what we are able to sell when we are bringing in revenues from both our own country and from around the world?

Be prepared and think it through.

It is so often about: well, the people who support it are I and my political party, who are invested on the other side, so we need to stop this because it is hurting their investments. Then remember the number one thing most elected officials care about--their reelections. Forgive me. I know I am trying to be brutally honest here.

The second half is, today, here in D.C., the taxicab industry spent an hour blocking the roads and honking. My understanding is a substantial portion of that was the disdain for the competition from rideshare applications, from things like Uber--another optionality. It is a changing economy. There is going to be displacement in it, but with that also comes opportunity, and with that comes the new efficiencies that give us a chance to grow this economy.

Remember the first board here. We are $205 trillion upside down. If we don't get amazing growth, we are never going to provide the promises that we have made to 76 million baby boomers who now have begun to retire. As just a bit of trivia, why is that so important? Average baby boomers--my math may be about a year out of date--will have put about $100,000 into Medicare. My understanding is they are going to take out about $320,000 to $330,000. If you take that shortfall and multiply it times 76 million of our brothers and sisters who are baby boomers, then just in that one program, you start to see some of the demographic and math problems we have.

How do we start to grow the economy?

The last part of this is the regulatory zeal that has come from this administration.

Please, President Obama, turn to your folks. It is time to rethink this. How many more bad GDP numbers do you need? How many more misses do you need on the projections of: ``Oh, the economy is getting better. No, it is crashing the other way. Oh, we are going to be this much better in our deficit. Oh, dear heaven. We are a year later, and it is still the same even with all of these new, higher taxes''? Regulatory overreach on

things like waters of the U.S. and on so many other programs out there that are coming out of the bureaucracy are crushing the expansion of this economy.

My closing is pretty simple here. If you have someone out there who is asking for your vote or if you really care about the future, have the conversation, and be willing to open your mind up and understand the math--even though it is uncomfortable--that the mandatory spending is consuming everything in its path. If we don't deal with that and, at the same time, if we don't do everything we can to grow this economy absolutely vigorously, it could be a very dark day in the future. Yet I am incredibly optimistic that, if we embrace the new hyperefficient economy, if we embrace the energy renaissance, if we start to understand the regulatory crushing that has been going on right in front of us--if we deal with those and deal with them honestly--I think we actually have an amazing future, and we are going to make it through this.

With that, I yield back the balance of my time.