Saving Social Security and Medicare

Floor Speech

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Mr. SCHWEIKERT. Madam Speaker, I appreciate you and the staff's patience as I am racing up the elevator.

We are going to do something that is new to me today. And please wave at me if I start machine gun speaking.

And I have gotten teased about it a bit, so this week, I got to become the ranking member for the Republicans, that is sort of the senior Republican over Social Security in the Ways and Means Committee. And it is an area I have had a fascination with since I got here because, you know, it is $1 trillion a year, and it is running out of money.

So, the last few times I have come behind these microphones, I have turned to my brothers and sisters on the left and begged them to stop doing what they are doing because we have showed board after board after board after board of how many people they are hurting, the working poor, the poor, the working middle class. It is just being destroyed by Democrat policies.

And I appreciate the virtue signaling. I understand maybe for many of them they didn't understand the most basic economics of what inflation was going to do and crushing people.

But now, all of a sudden, I have the responsibility--I take this really seriously. How do you save Medicare? How do you save Social Security?

And it is not a game, and it is not just little adjustments here. You talk to groups, even fellow Members, and they somehow think a little adjustment here, waste and fraud. A little adjustment here. We are talking trillions.

Remember, our best math right now is functionally, over the next 30 years, just Social Security and just Medicare, when you add them together, and then the financing costs, are close to $120 trillion short. So functionally, every dime of future debt is the shortfall of Medicare and Social Security.

It is demographics. We got old. At the end of this decade, 22 percent of us are 65 and older. A country like Japan, it is 30 percent. Japan has dramatically higher savings rates.

At the end of this decade, 22 percent of our neighbors will be 65 or older. And we functionally have nothing set aside for that.

Medicare is moving to being 100 percent general fund. The Medicare trust fund, the part A, the hospital portion, we got a good number a couple of days ago, so now it is gone in about 5 years. And we have no idea how we replace that because the model right now, as it is written in statute, is hey, just stop paying doctors and hospitals. That is going to work really well, isn't it?

And we will see here, the actuarial report for Social Security got extended out a bit. But functionally, in a decade, our parents, our grandma and grandpa, the model is at this moment, 27 percent cut. And that isn't the true story. It is much, much, much darker.

And I am going to do my very best here. And look, I have got to be honest; I am only partially through starting to dig through the numbers that Keith handed me, and we are trying to understand the Medicare actuaries and the Social Security actuaries. They just published their report, but it is based on data that may be as much as a year out of date. They have missed much of the inflation cycle so--one of the benchmarks was February this year. Well, think about what has happened to inflation since then.

And I am going to do my best right now to present the cruelty, just the cruelty of what the left has done to the poor, but particularly to the elderly poor.

And once again, I will give them credit. I don't think it was meant, but there is a misunderstanding here of what inflation does, because it is not just today. It is not just this year.

We are trying to build a model here of how many of our brothers and sisters who are older at the end of this decade are going to be living in poverty because of what this place did this last year.

So my best model right now is about 22 percent of our brothers and sisters who are 65 and over are living in poverty today. And it is a back of the napkin math, and I may be wrong. God, I hope I am wrong.

But if inflation stays substantially above the mean for a few more years, it is going to be a third of our retirees who are going to be living in poverty. This is what they did.

And so, in past weeks I have come behind the mike and said, here are ideas to knock down inflation. If inflation is too many dollars chasing too few goods, let's make more goods.

Right now, it is the passive approach. We had Janet Yellen in front of the Ways and Means Committee yesterday, and it is basically: Well, we are going to let the Federal Reserve jack up interest rates, put a bunch of people out of work. We are just going to raise the misery, but it is their problem. It has nothing to do with the crappy economic policies that have been pushed through this body.

How about some things the left and the right could agree upon? Instead of just spending trillions and trillions of dollars, how about incentives and mechanisms to create productivity because when you make more stuff, that is the most elegant way to knock down inflation. Of course, that would mean for our brothers and sisters on the Democrat side to accept something called supply-side economics.

First, we need a little bit of a reference here. These numbers are almost 2 years out of date because we haven't gotten a CBO updated number yet, which I believe should have already happened. Projected 2051, so that is basically 29 years from now.

Outlays as a percentage of GDP--this is policy. This should be driving every bit of policy around here. We chase shiny objects all day long, but we are basically saying, hey, Social Security and Medicare, the dedicated revenues, the revenues we expect to be getting in over that 29 years are going to be about 6 percent of GDP. Outlays will almost be 21 percent of GDP. The rest of the budget, revenues actually exceed outlays.

Once again, we have to get this through our heads. Medicare, Social Security, the baseline from a couple of years ago was $112 trillion. My math says it is about $120 trillion of borrowing. The rest of the budget is in balance.

Why isn't this what we talk about every single day? Don't we care about the 22 percent of our brothers and sisters who are going to be 65 or older by the end of this decade? Do we have not a moral, an ethical, an economic obligation to fix a system that is collapsing and has been collapsing for years?

You have all heard the saying that it is the third rail. I have been teased by some of my colleagues here. ``Schweikert, you are an idiot,'' which may be absolutely true. ``Your willingness to take on Social Security, have you decided to end your political career?''

You can't get in front of microphones and tell people the truth about the math. They don't want to hear that. They have been lied to for decades, and they believe the lies because the lies are comfortable. You can't show them the slides of what is actually about to happen.

Yet, how do you fix something unless you admit there is a problem? This place is like an alcoholic who is unwilling to take that first step at their 12-step meeting, admit they have a problem. If this board doesn't tell you the problem, I don't know what will.

This board is 2 years old. Once again, I don't have an updated number from CBO. This shows $112 trillion of borrowing solely from Social Security and Medicare. Obviously, Medicare is functionally three- quarters of the problem. Social Security is a quarter of the problem. But that is $112 trillion, 2-year-old number, my current number, $120 trillion of borrowing in today's dollars, so inflation baseline dollars. The inflation that has exploded in the last year because of Democrat fiscal policies makes these numbers much uglier.

Just as a reference to understand why I am so concerned and why I am mad this place isn't on fire with almost a level of panic over these numbers, when you see this scale of debt, in a couple of decades, if the mean borrowing cost is 2 points higher, in about 20, 25 years, every dime of tax revenues, tax receipts, every dime is just the interest cost.

Do you get that? Do you realize the level of fragility we have given to this country? Do you care about people, care about kids? Do you care about seniors? Then this should be the fixation because this is real math. Unless somehow the Democrats have come up with a way to repeal the laws of mathematics, this is what we are up against.

Yes, you will be booed when you get up in front of an audience and say: ``Hey, do you realize with Social Security, in about a decade, you will get about a 27 percent cut? That is not even calculating the dramatic increase in your Medicare portion of your premiums that for many seniors will eat up every dime of their Social Security check.''

This is real. It is the biggest thing going on in our country at this moment, but it is like a slow-moving avalanche coming at us. It is going to wipe us out, but it is not here yet, so let's worry about something else.

Just to emphasize a little bit, Medicare faces a $78 trillion cash shortfall over the next--and this is now 29 years, and the number is worse now. Once again, I just haven't gotten an update because these are `21 numbers. We should already be starting to project the `22 and `23 numbers. But do you see that?

We have about $20 trillion coming in in payroll taxes and almost $98 trillion in projected expenditures, and this is before the inflation cycle. Medical inflation, baseline inflation, is going to drive these numbers up dramatically.

Maybe this is too much of a current snapshot, but you are starting to see it. Everyone just got--if you are on Medicare, you just saw it, or you just got it. Functionally, your healthcare costs just bounced up for part B $250 a person, $500 a couple. The dirty number is that that is not even close to what is coming. That is what you just got. You are going, whoa, it went up $500. But functionally, 2 years from now, we may get as much as an 8 percent COLA because, remember, the COLA adjustment on Social Security is about 24 months behind. It takes that long to get the calculations.

A community like mine--I represent the Phoenix-Scottsdale area--has the highest inflation in the Nation. My area is over 11 percent inflation. But they will do a national mean, which will probably be closer to 8-something, and you are not going to get that for a couple of years. You are going to get 3-plus, 3\1/2\-plus this year. You are going to get to live poorer, substantially poorer, for the next couple of years, and the COLA is not going to keep up.

The basket that is used to calculate doesn't keep up, and it has already begun. The eating up of how you survive in retirement has already begun. The money is disappearing. We are working on this. This is a work in progress.

This is a dangerous speech for me to be giving because I am going to anger a number of people who don't want to know the truth. I am going to anger a bunch of my brother and sister Members here who are terrified their voters find out.

The fact of the matter is, I will be back in a couple of weeks revising these numbers, but this is from some of the best literature we found when I found out I was going to be taking on the responsibility over Social Security.

What this board is basically saying is this is your cost. If you are 65 years old today, and you are stepping into retirement, we expect your out-of-pocket to have gone up about $85,000. It is an assumption that healthcare inflation remains at 1.5 percent over the Consumer Price Index for 2 years. This is the change you get if it is 2 years.

The problem is my Joint Economic Committee is saying the structure of inflation may be with us for a decade. Now, it may not be running at like my neighborhood, 11 percent, or your neighborhood, probably 8 percent, for another 7 to 10 years, but it is going to be higher than normal. We are having to rebuild all of our models.

What does this mean, though, if it is just for 2 years? If you are 45 years old, the change in your cost when you hit retirement that you are going to have to be contributing to the healthcare portion--so you get your Social Security check, the portion that is put off for the healthcare, for Medicare. You are 45 years old; just these 2 years of the above inflation. It is a quarter million dollars, and that is out of your pocket.

We keep talking about, well, here are your fuel prices today. Fine. Be outraged about that. You should be. But understand the cascade effect, that we are going to drive so many people into poverty through the rest of this decade and at the end of this decade, and this place is silent.

We are just silent on the damage we are doing to people's survival because the shiny object is what is at the gas pump right now. You should be enraged. The economic devastation, the misery the left has foisted on this country--and I am sorry. I am being a bit of a jerk, but they did it, and they were warned.

They were warned by my kind. Well, they were warned by my kind, but they were warned by their own economists. Yes, they have about a dozen economists that said, go ahead and spend the trillions. It won't make a difference. Please stop listening to them.

But you did have a number of your leftist economists who said: Don't do this. You are going to hurt people. But it buys us votes, and they did it. Congratulations.

This is your future, and this is only if the increased inflation lasts for 2 years. What if my model is correct, and it lasts throughout the decade?

This isn't my math. This is some literature we are finding out there. We haven't had time to break it down and do our best vetting, but these all came from big boy researchers, well respected. This is a little hard to get our heads around, but we are going to do our best here.

Short-term healthcare inflation can have devastating retirement consequences. What they are saying is with the spike today in healthcare costs, you turn 65, you start getting your Medicare, you start getting your Social Security, the change in cost you have for the next 20 years is in these numbers.

They are basically trying to say, what happens if you are 65, you have 1 year of the current medical inflation, and this is underestimating it. The latest number I had as of this week was in the high 16s for healthcare inflation. This one is 15.8.

But just the increase in your healthcare cash; this isn't your Medicare payment. This is cash coming out of your Social Security check, out of your bank account. So, you are 65. It is going to be an additional $72,000.

But if you are 45 today, and this increased inflation is only for 2 years, it is $434,000 of additional spending you need to be prepared for in your retirement. This is the math.

Just a little bit of healthcare inflation today. So if the baseline is 8.3--that is my prediction for tomorrow's May number. We will see how accurate I am. Healthcare is almost double the baseline inflation.

If it ran at that for 2 years and then went back to the mean, and you are 45 years old today, so you retire 20 some years from now, the change in the baseline of your future cost is now approaching a half million dollars. Well, in this case, $434,000. Let's be a little more accurate.

Is anyone here talking about this? How many people, with the savings you have right now, with just trying to survive buying that tank of gas today, are going to be able to save enough money for future expenses? That Social Security check you have basically disappears, shrinks away, because you are now having to deal with the inflationary costs.

That is why my back of the napkin math or back of the envelope math, if I can use the colloquialism, is starting to say, oh, my God, I hope my math is wrong. But where this is going right now, I think we are heading toward about a third of our retirees being in poverty in a decade.

Remember, Social Security was an antipoverty program. But, once again, crappy public policy here by the left, and this is the decades and decades of future misery they brought to us. Does anyone on the other side own a calculator or actually showed up at their economics class?

Social Security income functionally gets erased by rising healthcare costs. Now, this is what brought me to do this on the floor. This last weekend, I had inklings I was going to get the responsibility over Social Security for the Republicans, and so I don't sleep well. The only way I fall asleep often is I sit up and read, and I try to read stuff that is actually important to this job.

I came across this article that didn't have good math in it, but it was functionally alluding that the healthcare inflation--and this is beyond just all the other inflation of just trying to buy food and pay for your rent and everything else, just healthcare inflation--was going to destroy, was going to consume many, many, many seniors' entire Social Security check.

I don't get credit for this. My staff actually found this. But let's actually go back to our 45-year-old, this bottom line. This is for a couple--because they found this on someone else's literature, so I can't take credit for the math. A couple, they are going to get about $1.153 million, $1,153,000 in Social Security benefits when that 45- year-old couple basically enters their Social Security benefits.

Okay. But with the inflation that has been built in--and this is, I think, only a couple years of inflation, but the calculation over 20 years, with the change of inflation, so they are going to get $1,153,000 of Social Security benefits, but they are going to spend functionally out of their pocket $1,543,000 in healthcare costs, and that is with Medicare.

Does anyone see a problem?

So you start looking at the lifetime retirement healthcare costs when it is 1.8. Based on cost projection, two years of inflation cost projection, functionally their healthcare costs in this model are 156 percent. So every dime of their Social Security check, plus another 56 percent that they are going to have to find other resources to pay for, just to cover their healthcare because of inflation.

The couple that turns 65 today--or actually a month or so ago when this calculation was done. Remember, this calculation under calculates inflation. This was done almost back in February with those numbers, and inflation turned out to be much worse. That couple, as a mean across the country, is going to get about $968,000 in Social Security benefits over what we calculate as the average mortality numbers lifetime. Seventy-one percent of their Social Security income is going to healthcare costs driven by, substantially driven by this increase in inflation.

So if anyone is listening right now, God, I hope I am wrong. Start saving every dime you can because this government's Democrat policies from this last 2 years have absolutely screwed you over. We are going to spend the rest of the decade fixing the damage that was done in the last 15 months. The math is the math.

If I am being hyperbolic, I am doing it because it is important. I don't want to live in a country where a third of my seniors are in poverty because of a decision they made a year ago.

This is the actuarial report on Social Security and Medicare when the trust funds are gone, and there is a problem with their math, and that is it was done on February's baseline. Inflation is dramatically higher than what we thought the February baseline was. Now, the economists are saying it is going to last much longer, meaning these dates are going to erode.

But functionally, you are 66 months, according to the actuary report, and Medicare part A, the hospital portion, is gone. So functionally, you go into your hospital, and your doctor doesn't get paid to see you. How is that going to work out? Seriously, who is going to pay?

The new number is about 150 months for Social Security. I think that is wildly optimistic in this inflationary time. But the baseline model, how are you going to do it? Do you plan to live for another 10 years? Okay. Whether in those 10 years you are on Social Security or you are heading into retirement, are you prepared to have not 25, but 27 percent of your Social Security check disappear? At the same time, I am showing you charts saying, hey, you are 65 today. Because of medical inflation--if it lasts where we are at, 2 years--76 percent of your Social Security money is going to healthcare costs, and we are also then going to reach over and reduce your Social Security check by 27 percent.

Does anyone else see a problem coming?

This place doesn't own a calculator, and yet as I used to get teased when I was a child, the math always wins. But this place will avoid the math because it is hard. It is the sort of thing that gets you unelected. It is the sort of thing that makes your voters mad.

It is your absolute moral obligation to fix these programs without lying.

In a future presentation, I am going to come back here, and I am going to also overlay the private pension systems, the multi-employer pension systems, all the other shortfalls, and if any Member here uses the words ``retirement security'' and isn't bathing in fixing these numbers, they should be ashamed of themselves.

Madam Speaker, I apologize for the amount of caffeine I have had today, but I am not here to be hyperbolic. I am here to beg of this place to stop chasing the daily shiny object that may get us some press, get us a few minutes on cable television. This is the hard work we are elected to fix, and it is also our moral obligation to save the future.

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

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