Build Robust Economy to Keep Promises

Floor Speech

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Mr. SCHWEIKERT. Madam Speaker, this is one of those moments where, in listening to my friend, Mr. Green, we are friends. We, I think, always voted against each other on most everything, but we were always civil to each other. That is sometimes hard to communicate with a lot of our brothers and sisters, our folks at home, that you can sometimes have very contentious issues that we absolutely disagree on, but it doesn't mean that we have to be jerks to each other.

We have a family motto--I don't know if it works for someone on the left--``conservative but not a jerk about it.'' And we try very hard.

Let's see if we can actually do something that actually is interesting and real on the math. Because our other saying is: It is about the math, and the math always, ultimately, wins.

The reason we often start these presentations with this board up is if you look at our future, instead of the chaos that this place seems to be bathing in so far this year, and care about what is happening to the country, care about people like my little 4-year-old daughter, who turned 4 last week, best little girl ever--what is her future going to be like?

When you look at the CBO data, there are some really important data points that are not Republican, not Democratic. They are math.

In the next 5 years, just the growth of Social Security, Medicare, and healthcare entitlements, just the growth, every 5 years, equals the Defense Department spending. That means, every 10 years, two full Defense Departments is just the spending growth.

We expect, over the next 10 years, 91 percent of the spending growth for your Federal Government will be Social Security, Medicare, and healthcare entitlements.

Over the next 30 years, if you remove Social Security and Medicare, we have $23 trillion in the bank. If you roll Social Security and Medicare back in, we are $83 trillion in debt. That is not inflation- adjusted. If you inflation adjust it, it is somewhere in the 50s.

The point I am making is: Could this body ever engage, in this environment, on the real headwind that is up against our society and against all of us? We have a moral obligation to keep our commitments on those earned benefits, those earned entitlements, whatever you want to call it. But how do you build a robust enough economy, a vibrant enough economy, to keep our promises?

That is why we put up this slide. We have been working on this for years. We try to make an argument that if you do certain economic policies--tax policies, trade policies, immigration policies, regulatory policies--the adoption of fairly aggressive changes in technology to crash the price of healthcare--incentives for labor force participation, incentives for someone who is older--if they are healthy and choose to stay in the labor force, there are all sorts of things to do here, even down to being honest about the demographics of the country on how fast we are getting older, the fact our birthrates have, in many ways, collapsed.

Now you have incentives for family formation and population stability. It is complex. It seems to offend everyone when you start saying: ``We have a complex problem.'' Guess what? There is not a simple, trite solution. It is complex.

Let's talk a little bit about the good news, the proof that tax policy, particularly, can have pretty substantial effects on the society.

Last Friday, the Treasury posted up its numbers. You don't call them revenues; you call them receipts. I was corrected on my first day on the Ways and Means Committee.

Guess what happened post-tax reform? Do you remember the apocalypse that was coming? Right here, at this microphone over here, we were told of the apocalypse that was going to happen financially to the country with the tax reform. The highest revenues in U.S. history, we had 4 percent growth in true revenues, true receipts. Inflation-adjusted, it is the second highest in U.S. history.

We had a really interesting year in 2015. There was a number of anomalies, but a very high spike in revenues. It is the second highest, inflation-adjusted, in U.S. history, 4 percent growth in receipts.

The problem is that we had about a 7-plus percent growth in spending, and you do that gap year after year after year. Now, to be honest, of that growth in spending, I believe over half of it was on autopilot. It was the population growth of our brothers and sisters who are baby boomers, the 74 million of us who started to move into our benefit years.

Back to my first comments, it is happening. It is just demographics.

The other part was spending decisions here where one side wanted to fix underinvestment in the military. Well, for every dollar there, you had to do certain types of social entitlement spending.

But what is interesting is if you look at the growth of the economy, particularly in 2018, almost every social program, whether it be Social Security disability, which has some other complications, and there were some policy changes, to TANF, food stamps, they are all down, which should be almost joyous.

But, once again, the chart I am showing here, I don't know why there is not more talking about this because just a couple years ago when we did tax reform, we were told this couldn't happen. We had lots of experts come and testify, lots of folks writing apocalyptic articles, and lots of testimony and debate here on the floor.

So for those of us who took a beating over our math--which turned out to be right--do we ever get an apology?

Or is it just another occasion where the lunacy is allowed to engage in the rage machine and yet when we actually see the math, feelings are more valuable than the truth?

It breaks my heart, because how do you do good things for society if you are not allowed to have honest conversation about the math?

So, once again, let's go back to the basics.

Do you see the red?

The first pie chart is 1960, and you see about 34 percent of our spending is what you would call being on autopilot. Today, actually now, over 70 percent of our spending is functionally formulaic. So we come to the floor, and we vote on appropriations bills. But we actually don't vote on that red, because those are benefits you get, Madam Speaker, when you turn a certain age, when you fall under a certain income, things that are automated.

But yet look at what is happening. Take a look. If you remove Defense, think about that, so if you remove the 15 percent that is Defense, and you start to realize that mandatory spending, the 15 percent of the budget is Defense, there is only another 15 percent that is all the rest of government: health research, the FBI, the CIA, the agencies, the Forest Service, and everything else, are actually only about 15 percent of our spending. Your government is functionally an insurance company with an army. I know that sounds a little trite, but it is sort of a little bit funny and actually quite true.

So how do you deal with the reality?

Well, the reality of it is back to that very first board. There is a path. It will require Democrats and Republicans to actually understand a calculator, understand the benefits of growth, and growth being moral, but growth also doing stunningly good things for Americans, and also that growth gives us a fighting chance not to break the 95 percent debt-to-GDP ratio that we are heading towards very, very soon, so understanding where this debt is coming from.

Now, why this is important is, all day long Members of Congress come behind these microphones, and we talk about all the things we want to do.

But what happens when you can't do the things because the current promises are consuming everything?

So remember our earlier comment, if you remove Social Security, remove Medicare, and look at the 30-year window, you will have about $23 trillion in the bank. When you move Social Security and Medicare back in, then you start to see where we are at, Madam Speaker.

The goal here is to keep our promises, produce enough economic expansion, and engage in a number of technology and healthcare disruptions to make the math work.

Is that Republican or Democrat? It is neither. It is actually what is really good for our society. But it is the reality.

So let's actually touch on just a couple of these things. I am sorry, this is the best slide I have on this subject area. It is a little noisy, but a Democrat Member and I have been working on this, trying to actually promote continued investment in things like diabetes. It turns out that if you can follow this noisy chart, we are modeling that the projected costs of Medicare, about 30 percent of it is diabetes.

What would happen if we could actually have either a technology breakthrough on everything, helping our brothers and sisters with obesity issues to being able to grow pancreatic cells and reactivate somebody's pancreas so it is producing insulin?

Those investments are worthwhile because they have such a dramatic multiplier effect. We are actually right now in our office trying to do the research of Alzheimer's.

What would happen if we had a successful treatment for even some of the categories of dementia or even the postponement of Alzheimer's and what it actually means?

So these are occasions where trying to build a formula, saying, okay, we already know tax policy is working in expanding the economy--and at the end we are going to talk about all the good things happening there--we already know that these trade deals, like USMCA, our model right now says it is half a point of GDP growth. You would think this body would just be giddy to get that passed, because growth is moral, Madam Speaker. It also really helps us have the resources to keep our promises.

How about many of the other things we work on, where if you are going to build an immigration system, do you design an immigration system that maximizes economic expansion for our society?

That is why there are so many economic modelers who are talking about moving, like the rest of the world is, toward talent-based immigration systems. The beauty of it is, obviously, you don't care about somebody's religion or color or whom they cuddle with or all these other things, you care about the talents they bring to our society to help us grow, because we have trillions and trillions and trillions of dollars of promises. We need the economic expansion to keep our promises.

Do you see, Madam Speaker, it is a broken record that needs to play over and over, because we live in a world of distractions and almost rage around here right now, and yet these are the types of issues that are critical. These are the types of issues we should all run on. So that is an example there.

So let's actually talk about a little bit of creativity. Last week we had something called H.R. 3 in the Ways and Means Committee. It is referred to by some people in the vernacular as reference pricing. Take a handful of European countries, find their statistical mean, give it a variance of from 100 to 130, and you have to price within there. If you price outside that range, then you get a 95 percent tax, if you are the pharmaceutical manufacturer or seller.

Okay, Madam Speaker, except within just a couple moments, a number of smart people in the room were laying out saying, okay, you could scam it this way, you could actually do a rebate over here, you could actually backdoor--so raise the price on these pharmaceuticals, lower the price on these, so the country of France, when they are buying, their mean cost is the same. And there was no willingness in the room by the majority Democrats to have a conversation of, this doesn't actually accomplish what you want, and CBO has already come and modeled to us that there will be a substantial falloff in new drugs that are the disruption that we are trying to get.

Madam Speaker, do you remember how in the previous slide we were just talking about the miracle, if you had a cure for diabetes? What would happen if you had Alzheimer's?

What about some of the ones we know are here already? There is the single-shot cure that cures hemophilia, one of the most expensive for an individual medical condition in our society. It can be up to around $600,000 a year, a single-shot cure is here.

We should actually have been having a discussion of how you finance it, so every one of the 8,600--that is the best number I have right now--of our brothers and sisters who have hemophilia A, we can cure them, not over years, but over months.

It turns out for our brothers and sisters who are in the chronic population--5 percent of the population is the majority of our healthcare spending.

So what about the concept of a disruption like we were talking, a healthcare disruption, where you start curing individuals who have these chronic conditions and they are no longer part of the chronic population that is the majority of our healthcare spending?

Instead of having the absurd debate we have had in this body for 10 years, the Democrats' version, the ACA, on who should get subsidized and who should have to pay. And then, of course, the Republican alternative, which was not on who gets subsidized and who should have to pay, but who should pay and who should get subsidized.

We have been debating the financing of healthcare, not the disruption of things we can do technology-wise and incentive-wise to crash the price. You have already seen the charts. Medicare is three-quarters of the unfunded liabilities. I just showed you that almost 30 percent of it is just diabetes coverage.

How do you get this body to focus on the reality of the math and move toward solutions that actually solve these problems?

So if you are going to try to be creative around here, what you find out is by the time you make your first sentence of: Here is an idea, you already have folks on the other side shutting it down saying: I am not comfortable with that.

So I am just going to put up another board, just as a simple thought experiment. So work with me here.

Fifty percent of the pharmaceuticals that will be picked up at pharmacies today, the experts tell us, will not be used or will not be used properly.

One more time. Half the pharmaceuticals that will be picked up today will not be used or will not be used properly. Think of that. If we could actually have some impact on that, if you want to do something on drug prices, Madam Speaker, that is one.

Do we argue about that?

We don't argue on that fact. It just doesn't fit into the narrative. So we have the technology today where we know when the pill bottle is opened. We actually have the machines that if your mom or your grandmom needs this pill at 8 a.m. and this pill at 12 noon, there is a little machine that does, not only dispense it, but will talk to her and actually also do a cellphone notification, and if the little cup holding the pill isn't moved, it will actually even send you a text message as a family member.

Think about that. That is a technology over here that has almost nothing to do with actually being part of pharma, but actually would help us on that portion of that 50 percent that is not being used properly.

How about the other portion of that 50 percent that just isn't used at all?

We have actually been trying to do the math, saying: How about for high-value pharmaceuticals, put them in sterile packaging. Put them in single-use packaging and let them be returnable for the high-value ones. Because on one hand, we will get testimony of folks who are outraged that these small molecule pharmaceuticals are ending up in the water supply and in other places being flushed down the toilets. Just this weekend we had prescription drug take-back day in so many of our communities.

But the fact of the matter is, how many pharmaceuticals that are perfectly good, that if they had been packaged properly, could have been returned?

So as a body we support recycling for everything else, but I had a Democrat Member come up to me and say: Oh, I am just not comfortable with that.

How about if it had a genuine, substantial price index?

How about if it became a way to help our brothers and sisters who don't have access to some of these pharmaceuticals, a price-efficient way to get them?

How about if it was just good for the environment?

It turns out the technology exists. There are a number of organizations out there that are already experimenting with cartridges that stay absolutely sterile, so that those that are unused are returnable. It is a type of multilayer blister pack that stays absolutely sterile that makes them returnable; liquid type of pharmaceuticals that are in single-shot doses, meaning, the other ones are returnable. It is a thought experiment.

But because it didn't fit the narrative of let's beat the crap out of the pharmaceutical companies--and, look, I am not saying they are saints--but it didn't fit the narrative to have something that was creative. It was like talking to a blank wall. That is a problem around here. I am willing to listen.

Can I get my brothers and sisters who claim we want to do good things for society? ``We want to lower pharmaceutical prices. We are going to put every creative idea on the table, except for the ones that aren't theirs.'' It doesn't work that way.

So last bit, in the previous couple of weeks, we have come to the floor here--and we chose not to bring all the boards--but it is something that I personally struggle with. If I had come to this body a couple of years ago and said--and I hate this term, but it is the proper term--our brothers and sisters in the quartiles where they didn't finish high school, or a single individual without a college education, we would have meetings in the Joint Economic Committee where they were doing modeling, and we were functionally writing them off in society, saying these populations are going to be part of--I don't have a better term--the permanent underclass.

What has happened the last 2 years? It turns out those lowest quartiles, those three or four lowest quartiles, are the fastest-rising incomes in our society--single women, no partner at home, 2018, a 7.6 percent growth in income.

If I had stood behind this microphone a couple of years ago and said this is what is going to be happening in our society, I would have gotten crazy calls saying I had lost my mind. But it happened.

For those who live in Arizona, I believe, in the last five quarters, we have had a couple of quarters where we have had the fastest-growing income in the entire country, and it is not the folks at the top.

What happens when you have a country that has more jobs than available workers? For those who follow numbers, if I had come to this room a couple of years ago and said we are going to blast beyond 63 percent labor force participation when all the models said we would be a couple of points below that and continue to fall--there are amazing things happening out there.

You would think there would be a little joy for a body that claims we care about working men and women, for a body that claims we care about those who have had a really rough previous decade. You would think there would be joy in this body.

Look at the math. Look at the fascinating things when--okay, we will get the unemployment numbers--what?--this coming Friday. Look at something that is called the U-6 data, and then start to see these fascinating numbers out there, when you get some of the really broad data on how many of our friends and neighbors who have developmental issues, handicaps that have been barriers for them to participate in the workforce. They are moving into the workforce because businesses are so desperate for workers that they are making accommodations. You would think that creates a little bit of joy.

Is that Republican or Democratic? It is American. We should be joyful.

When we see the numbers of Hispanics, African Americans, women, these other populations, all of these subgroups that we love to break up our math into, all of them are record highs, tied for record highs. Why isn't there joy?

When you look at what has happened to wages, why isn't there joy?

The reality is that the economic expansion that is helping so many of the working men and women in this country also means your government has had the highest receipts--income--in U.S. history, blowing the wheels off of all the predictions, proving the sort of Malthusian, malcontents were wrong. Something is working out there.

Why isn't this body fixated on figuring out what is working and doing more of it? Instead, Congress has now become a place where we do public policy by feelings instead of a calculator.

As my father used to say--and I am terrified I am quoting my father-- my father used to say, ``The math always wins.'' Madam Speaker, the math always wins.

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

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