Math Always Eventually Wins

Floor Speech

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Mr. SCHWEIKERT. Mr. Speaker, thank you for your patience as we get ourselves set up here.

Mr. Speaker, I obviously try to do this every week we are here, and my goal is not to sound like some idiot economics professor. I am trying to point out the biggest thing that is ahead of us, the reason we are here, and the hardest thing we talk about.

I want to start off by saying that, apparently, I hurt some people's feelings in the last two floor speeches when I walked through the math, and I don't care. The math is the math, and the math will win. The math always eventually wins. This is substantially a math-free zone.

Another thing I want to point out for some of the folks who end up watching a video of this and they get cranky that there is no one in the House. That is actually the way it is supposed to be. They are supposed to be off in their committees or other places working.

This is our chance to talk to the body. Please understand that we are on hundreds and hundreds and hundreds of televisions right now talking to staff. The reason I show up with these charts is trying to see if you can breakthrough and understand just the scale of what is going on.

Remember, we have a debt and demographics issue, and that is the thing that just enrages me. If you are on the left, you say we don't tax enough. If you are on the right, we can't cut enough, which I am more on the cut side; however, you still got a mathematical problem.

I will show you in some of the slides that you can get rid of every dime of Defense and every dime of discretionary and you are still borrowing hundreds of billions of dollars.

Last year, we borrowed 8.4 percent of the economy. Ever hear these discussions about having a 2 percent GDP growth? Okay. Fine. That is what long-run projection is. We borrowed 8.4. That is just the borrowing, not the spend. That is what we borrowed.

It is also one of the reasons we have tried now not to talk in percentages of GDP because no one has any idea what the hell you are talking about.

Mr. Speaker, let's actually have some fun here. We are going to actually try to break this up in two or three different presentations over the next couple weeks.

Today, I am just going to relay out the math, see if any of it still sinks through. Then next week, we are going to try something that we haven't done in a few months. We are going to come in with optimism that the breakthroughs in healthcare, the breakthroughs in technologies, the opportunities that are out there will help us bend the debt curve.

Once again, I am going to go back to a sentence I had a couple moments ago, for those who will text my office, call my office, fuss at me when I am in Costco and say, ``David, I want you to balance the budget this year.'' I can do it. You just have to be willing to let me get rid of all of defense, all of discretionary, and $300 or $400 billion of your Medicare. That is how upside-down the numbers are.

Let's walk through some of this. We are two-plus months into this fiscal year, and the number one spend this fiscal year will be Social Security. Now, let's talk about this for a moment.

Social Security is its own trust fund, its own funding mechanism. None of the money is spent in the general fund; it is loaned to the general fund. Social Security gets these special Treasury notes, and then they are paid interest twice a year. If you ever geek out and you are someone who watches U.S. debt and all of a sudden there is this sudden spike, often that is actually because we made our twice-a-year interest payment to Social Security, but it is separate.

You have also got to understand the flip side of that. In 8 or 9 years, when the Social Security trust fund is empty, it doesn't have a claim on the general fund, either.

CBO put out a number of 2033. The Social Security actuaries, which I think are a year behind in their reports, had projected 2034. However, let's use CBO's number. CBO projects that a 25 percent cut in your check is coming in 8\1/2\, 9 years.

For the average couple in America on Social Security, I think that is like a $17,400 cut. We will double poverty in the senior population in America. Okay. It is immoral, and the solution we get is, okay, just raise these taxes, do the cap.

Now, we are still working on the math because it turns out Tax Foundation, the actuaries, and CBO have vastly different modeling numbers. We found a couple interesting nuggets, the Democrat bill does cut benefits, it cuts benefits on high-income earners where they told us they would never cut benefits.

We are starting to realize rhetoric is often different than reality when you are trying to make the math work.

Hopefully, in the next couple of weeks we will actually have nailed down the actual impact, but right now it looks like raising the cap on Social Security, doing these other mechanisms still does not close that $616 billion shortfall. That is a $616 billion shortfall. That is the very first year the Social Security trust fund is gone.

Why this isn't talked about constantly here, when defense is like $830 billion, and just the shortfall in a single year in Social Security is over $600 billion, does anyone see the scale we are talking about?

Understand, if we use the tax solutions, where you say we are just going to raise these taxes, we are going to take everyone over $400,000 or just everyone, and you are going to pay the extra 12.4 percent, and then we are going to tax some of these unrealized capital gains and these things to make up that difference. Okay. If that is the Democrat solution, you have just used up your entire opportunity because there is no more money.

What do you do with the other two-thirds of the borrowing, which is the shortfall in Medicare? You have no more capacity. We are going to walk through that.

Why this board here is so important to understand is: in 2024, Social Security will be $1.450 trillion this year, so $1 trillion, $450 billion. Social Security is our number one spend.

Gross interest, that means the interest we pay to Social Security but also the interest we pay to whoever has been willing to buy one of our bonds, is over a trillion dollars this year. Interest now is number two. Interest is now number two this fiscal year. That wasn't supposed to happen for like 8, 10 years, and it happened.

Number three is Medicare.

Number four on our spend is defense.

When you have someone who runs around saying, Cut defense, that is where all our spending is, they are either willfully ignorant or they are just out of date, they are just so out of date.

Demographics is the driver of our debt, and it is so hard to talk about that because for one thing, it is not Republican or Democrat. Us becoming gray hairs, it is not Republican or Democrat, it is math. The solutions may ultimately be partisan, but what we are as a society isn't.

I am going to be much more gentle because I have someone behind me, so I am not going to throw the boards. That was also one of the complaints.

One more time, the exact thing I just said, but I made it into a bar chart because the bar chart is much easier to see, particularly on the television. This is our Social Security. This is interest.

Now, if you say, David, it is not fair to use gross interest because we are paying ourselves. We are not paying ourselves; we are paying the trust fund. Remember, we just talked about Social Security being its own. If you want to conflate the two, then you are sort of breaking the wall, but God bless you.

If you just go to net interest, it is still right there as the second biggest expense we have in the Federal Government this year, and then you have Medicare, and defense now is number four.

Why does this matter? The number of folks who live in this sort of mathematical fantasy world--and just skip 1965, you can see, but do you see this red here? This is last year's spend. Seventy-three percent of the Federal Government's spending was on autopilot, we don't get to vote on it. You get elected to Congress; you do not vote on 73 percent of all the spending because it is formula.

You worked your 40 quarters; you got Social Security. You hit a certain age and participate; you get your Medicare. You are part of a certain tribal group, you get this. These are things that are formulas. You fall below a certain income, you get these.

Defense was 13 percent of our spending last year. Well, defense is really tricky. Yes, we need modernization. Maybe some of the large weapon platforms need a revolution in technology, those things. That is fine. However, the fighting you hear, the fighting that ultimately removed the Speaker, the things that go on here are over this little green wedge here that is 15 percent, 15 percent.

The punch line you need to just burn into your mind, all of this green is borrowed, all this blue is borrowed, and last year about $400 billion of the red was borrowed. Everything a Member of Congress votes on is borrowed money. Sink that in. Everything we vote on is on borrowed money.

The frustrating thing is we have absolute battles here on the floor and in our committees, trying to save a little here, trying to save a little there. Fine, we should do it. One of the reasons the approps bills are taking so long is we are breaking them down line item by line item, saying, does this make sense? But stop pretending that at the end of 10 years you will even notice those differences. They won't even show up as rounding errors because we are borrowing.

This is really important to me and forgive me if it is slightly narcissistic. I don't mean it to be. We are trying to find some way to communicate math.

We started something in our office a couple of weeks ago where you can go to our official website, and you can sign up. Just give me your name and your cell number, and every day we are going to text you--and I know this is really exciting--what the day's borrowing was and what the day's tax receipts were. We are going to do it two ways, so we are doing it absolutely intellectually honest. We are going to give you a 364-day clock, so no timing effects because you know Treasury, at the end of the fiscal year plays some game where they roll some of the spending into the next year. There are all these timing effects. Following that, we give you the actual fiscal year.

Mr. Speaker, I won't ask you to actually answer this because I am actually not supposed to have the dialogue with you, but it is always fun to point at you.

What would you guess we are borrowing per second, a per second borrow? I think as of yesterday, because we printed this a couple days ago, we were at $78,480 per second.

You can sign up on our website and get this wonderful text message sent to you every day with the actual facts, not the made-up crap that goes on here. The number of times I hear people speaking behind these microphones, and you are pulling out your calculator and wondering, where did they come up with that? They just make things up because these numbers are so difficult.

If you actually do so far this fiscal year--and it will change as tax collections come in--we are over $112,000 per second in borrowing; and of that $78,000 we are borrowing right now per second over the last 364 days, $30,000 to $35,000 of that now is interest.

It gets worse because a lot of the bonds we sold over the last couple years--because we are idiots--we sold short on the curve, so we had incredibly low interest rates, and now those bonds are going to have to be refinanced at these higher interest rates.

I am going to put this chart back. We are just trying to help people understand. Interest is one of our great fragilities. What that means is, what happens when Congress is no longer in charge of the Federal budget, but the bond market is? The bond market gets cranky.

Look, 3 weeks ago we had a 30-year bond auction--I appreciate the chairman of the Ways and Means Committee letting me take my subcommittee, and we brought in some of the bond market experts. The hearing, once again, denigrated back into Republican-Democrat talking points, which frustrated me because we were supposed to have a serious conversation.

Three weeks ago, we had a 30-year bond auction where the broker- dealers, the market makers had to take 24 percent of it. Now, everybody that is listening, you just went, huh?

What happens when there are so few buyers or there is so much inventory that has to be sold that the broker-dealers don't have enough credit line to take it all down?

Does that become a failed bond auction?

Do we start to see stress in the world bond market?

Remember, the entire world uses our bonds as the oil, the liquidity that keeps financial markets working here and around the world, our mortgages, everything else.

Intellectually, I don't think we understand the serious nature of what a chart like this tells you when you start looking at gross interest just marching along, and then this is functionally the last 12 months, so you had some of the lower interest rates in the beginning of 2023. Remember, interest rates didn't really start to move until April last year, and this is showing, just in the last 12 months, we functionally added $923 billion in financing costs on those interest rates. This year it is going to be over a trillion.

Then you come over here, and you start looking at things like net interest. Net interest is ultimately going up, gross interest is starting to--the two lines are meeting. Why?

Because the trust funds are getting smaller and smaller because they are shrinking. Remember, the transportation trust fund is gone in a few years. Medicare part A, the hospital portion, is gone in 7 years, Social Security is gone in 8\1/2\, 9 years. You have got to understand that also has an effect on our borrowing because we can't borrow internally.

I don't think you need to see this board because I have said it like six times, we are borrowing $1 trillion gross interest this year.

This one is important. I feel like an idiot, I feel like I am the only one coming up here and screaming about this. It is like, Schweikert stop telling us things we don't want, there is math involved.

What was the movie, there was a joke, or is it Chevy Chase on ``Saturday Night Live,'' 30 years ago I was promised there would be no math?

This chart is very, very simple. We have done an estimate with the Joint Economic economists that we are going to bring this fiscal year $9.6 trillion to the bond market. About $2 trillion of that will be what we call virgin, that is new borrowing to cover our shortfall because about 30 percent of everything we spend is on borrowed money. The rest is being refinanced.

You go, what do we care, it is refinancing?

We are now refinancing at much higher interest rates. If we are blessed, you know, 10 years, a little over 4, but that thing used to be at 0.6, 0.7. That gap is why we estimate--and so does Treasury, so does OMB--that we are going to spend over a trillion dollars in interest, and now it is our second biggest expense. It just continues.

How do you think about this? We actually had 2 months last year--now, this is timing effects when tax receipts come in and those things-- where we were borrowing to make our interest payments.

Think about that. We were borrowing to be able to pay for our borrowing. Does anyone care? Is it just too complicated? This is the reality.

Yet, if you ever listen to us, and, in particular, my brothers and sisters on the left, they will be behind this microphone saying, if we just tax rich people, we will be fine. Let's keep spending.

These are major components of the 2023 Federal budget. I am not going to walk you through all the line items, but here is the basic point.

If you break it out per household, last year, our spending was over $48,000 a household. Okay. Receipts, that means tax collections, everything, you know, from excise taxes to income taxes, capital gains, all of them.

We spent $48,000 per household last year. We took in $33,800. Anyone see a problem? Structurally, this gets uglier every year, uglier the next year, uglier the next year.

It is not because of mandatory spending. It is not because we are spending more money on foreign aid or spending more money on this and that. It is demographics.

I can show you slides, and I am going to show a couple of these. It is always the ones I get the most angry emails about.

Mr. Speaker, 100 percent of the spending from today through the next 30 years, 100 percent, according to the CBO--and if anyone has ever read the CBO reports--Medicare and its interest for its shortfall.

Remember, its cash shortfall is I think $88 trillion over those 30 years and Social Security, if we choose to backfill it, in 9 years when the trust fund is gone.

It is functionally healthcare and if we choose to backfill Social Security. So Medicare--healthcare, is the primary driver. It is 70-plus percent of all future borrowing.

The brain trust here, we will come behind these microphones, and we talk about financing it. ObamaCare is a financing bill. The ACA is a financing bill, who gets subsidized and who has to pay.

Let's be honest. Our Republican alternative was a financing bill. It is who had to pay and who got subsidized.

Medicare for all is a financing bill. None of it is about the adoption of technology that makes people healthier.

I have come behind this microphone a handful of times this year and showed the data from the Joint Economic Committee, the Republican report, go to Chapter 3, and we did some very difficult things, and they worked very hard.

I vetted this for weeks. We did the thing we hate to talk about, but it is amazing, the numbers. We talked about diabetes and obesity in America.

What would happen if I could come to you right now and say the most powerful thing you could do to roll down U.S. sovereign debt is take on obesity in America? The morality.

It is also one of the most powerful things you can do for income inequality, for my Tribal populations, for the rural poor, for the urban poor.

We actually had some other crazy data talking about the labor force participation that would go up and family formation.

Is that Republican or Democrat? It is just moral. It is a solution. It was a few trillion dollars over the 10 years--the single most powerful thing you could do.

How many people have you had come behind these microphones and want to talk about we need to help our brothers and sisters live? We are about to have a fifth year of life expectancy falling in America. Our brothers and sisters are dying.

If you look at the data, drugs are right up there. Obesity is even higher. Is it just because you are going to get nasty people saying horrible things about you on social media? Well, screw them. Morality is on our side. It is great economics. It is also the right thing to do, and it is really hard around here.

Let's actually talk about one of the other things. If I get one more leftist, well, you guys supported tax reform. Okay. The single biggest movement in closing income inequality, single biggest movement in raising wages without raising inflation because it allocated money.

Smartly designed tax reform actually puts the money where it gets the greatest amount of productive growth.

Remember your basic high school economics class. What are the two ways you get paid more? Inflation. Well, that doesn't get you anything. When your check goes up for inflation, you are just treading water.

Productivity. We had stagnant productivity for a couple decades. We did tax reform at the very end of 2017, and we had 2018, 2019, the first quarter of 2020 before the pandemic, and it was the ultimate Goldilocks because we were growing. Wages were going up. The poor were getting less poor. We didn't set off inflation. Income inequality is shrinking.

The Democrats keep saying, well, the face cost of that was going to be $1.7 trillion. Yes, we were taking in dramatically more tax receipts than we ever expected, and it actually added a whole bunch to the life expectancy of Social Security. Stunning amounts of money came back repatriated from overseas, but it was a tax cut.

The same brain trust on the left who is attacking tax reform forgets in just 20 months, President Biden's initiatives have added $4.8 trillion to the 10-year deficit.

They come at us hard. We did tax reform, and the face value of that was $1.7 trillion, but they have added $4.8 trillion, and it is like they forget.

This also set off--the best economists--I want to be honest on this-- set off half of inflation. Some of it was supply chain. Half of it was the amount of stimulus the Democrats dumped into the economy.

I have done it here on the floor showing that the 30 months of inflation we just had was the single biggest modern tax hike. Whether you know it or not, you have been crushed.

If you live in the Phoenix-Scottsdale market, and you are not making 22, 23 percent more today than you did 30 months ago, you are poorer.

The brilliance of the left's not liking inflation but not screaming about it or trying to crush it because there are things we could have done in this body to help roll down inflation, but it would have required policy, and it would have required them to admit it was crushing the working population, particularly the working poor, and the dirty little secret is it changed the debt to GDP because inflation devalues the existing debt. You get to pay it back with inflated dollars.

Whether you know it or not, you are about 20 percent poorer today than you were 30 months ago. If your paycheck hasn't gone up, if you are in the Phoenix-Scottsdale area, if you haven't gone up about 22 percent, you are poorer today. It is math.

We keep coming back to the understanding of the scale of the drivers of our debt. I am not going to belabor this board. I have done it before.

We can get rid of every dime of discretionary. There is no defense. There is no State Department. There is no Supreme Court. There is no Congress. That might actually be a good thing, but there is nothing. You are still borrowing. Even at the end of 10 years, you are still borrowing.

To help you understand the scale--and this one I have done entire presentations on, and this is the one where I get the most interesting comments from Democrats.

Well, we need to tax people over $400,000 more. Okay. Dirty, fun little secret. If you made $400,000 4 years ago, 3 years ago, today your purchasing power is probably 320, 328.

Part of the scam here is let inflation run a bit. You have heard of bracket creep; same sort of concept. There is a great paper out there. It is on the Manhattan Institute's, Brian Riedl, where he basically took all sorts of studies, leftist studies, OMB studies, CBO studies, and said, Mr. Speaker, what would happen if you basically maximized every tax rate, if you took people over $400,000 and said, I am going to maximize their income tax?

There are formulas now because we have really good modeling for this. We can get them up to this tax rate before it changes their economic effects, and the revenues actually go down.

Maximize their capital gains. Maximize their estate tax. Maximize everything. Adjust for the economic effects.

If you don't believe me, go read the paper. You will get about 1.1 to 2 percent of GDP in new tax receipts. Okay.

Let's split the difference. Let's call it 1.6 of new taxes by maximizing every tax rate of those over 400,000. Okay.

The reality is the majority of the people that make over $400,000 vote for Democrats anyway, so I don't know why we keep trying to say, but the economics are theater.

Back to the point when we began. What did we borrow last year? Anyone listen? We borrowed 8.4 percent of GDP--8.4.

The Democrats' solution covers 1.6 of it. When they do that, the capacity we need to be able to cover the shortfalls in Social Security, Medicare, if there is a disaster, if there is a war--we have no more capacity. This is how fragile we are as a society and intellectually vacuous, the debate here is.

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Mr. SCHWEIKERT. Mr. Speaker, I will try to wrap this up in the next couple boards so the gentleman from Texas can have his time.

This is pretty much the same thing. We actually did the modelling on the permanent deficit, its interest carrying costs. That is what is over here in whatever earth tones that is.

One of the things I have heard the Progressive Caucus talk about, there is some absurd thing called the oligarch's tax where they are going to find really rich people, and the richer they are, they are just going to take portions of their unearned income or their assets. Okay. Fine.

I guess that is where the left's brain is, but you have to stop lying to people about the math. It only covers a tiny fraction of the borrowing.

Part of this even comes from one of the progressive group's own math. It is revenge for people who made a bunch of money, who vote for them and contribute to them, and then they make up the math.

This is such an absurd place. Look. Maybe no one actually cares. I have come here in the past and sort of showed the trajectory we are on to the amount of our economy that will be in debt, and we are already right here.

Remember, this is a chart that if you actually start to do the baseline, and you start to actually do different baseline annual growths--you have to understand, in less than a decade, if our annual growth does not exceed the mean, meaning we only grow at a half a percent over those years, we are already at 125 percent debt to GDP.

Now, because we are the reserve currency, we get a little bit of a SPIF for more capacity, but basically you have to understand the number.

The time for doing something was actually a couple years ago. Every day we wait, the policy options--and this is going to be part of my closing, and I am going to say it two or three times.

The policy options close because there are things you need to do policywise. If you look at all the taxes the left wants to do--I just showed you a slide--it comes in about 1.5, 1.6 percent of GDP. We borrowed 8.4 last year.

The things we can cut. I can get you a couple of points of GDP we can cut, and I am willing to do some very difficult cuts.

Is it rational for us to borrow money on our nondefense discretionary and send it to States and jurisdictions that have their own taxing authority? We are basically playing a game of here is some free money that we are borrowing. Well, that is $300 billion of the discretionary, but that is a fraction of the GDP.

The two ends here, that means the actual structural deficit that is actually from the demographics, you need a revolution in the costs. You can't tax enough, and you can't cut enough. It is math.

Once again, another model out there that shows once you do the actual economic effects of taxing the rich, it gets you only a fraction of the 10-year deficit.

I am going to close on this board because it is the board that enrages most people. It is the one that has been modeled by left groups, right groups, some of the honest universities, back to the point I have made. This board is already a year out of date, meaning when it says over the next 30 years, we will have $116 trillion in borrowed money, we have a model in our office that is approaching $130 trillion with the higher interest rates.

On this one, $77 trillion of that shortfall over the next 30 years is Medicare. It is healthcare costs.

Another one is a $38 trillion shortfall if we backfill Social Security and the shortfall there.

It is immoral what this body is doing by avoiding, and every day that we avoid, you find yourself saying taxes are your only opportunity, though I have just spent the last half an hour trying to explain policy is where the money is at.

Making people healthier is the single-biggest thing you can do to reduce the U.S. debt. Actually, you reduce it but stabilize it because we are going to continue to grow it because we are getting old, and our healthcare costs are going to go up.

Can we use technology? Can we use cures? I could come to you tomorrow and point out the simple fact that 33 percent of all healthcare spending is diabetes. A revolution in our brothers and sisters with diabetes, which we know how to do it now--we actually have pharmaceuticals that are remarkable, and I am not thrilled with talking about pharmaceuticals, but the math is the math. We sometimes have to deal with the reality in front of us.

If we can cut diabetes in half in America--let's see, 15 percent of U.S. healthcare costs is about $700 billion a year. If you cut 33 percent and then get the economic effects of people being able to work and other things, so a trillion dollars a year.

I mean, you start to understand this doesn't have to be dour. It doesn't have to be dystopian. There is hope. It just requires thinking and maybe owning a calculator and reading.

We are too busy saying the same crap to our voters because they applaud for us. Even though it is 20 years out of date, we say the same crap over and over.

I have been here 10 years. When I first got elected, 1 out of 8 was 65. Today, it is like 1 out of 5.8 is now 65. Demographics is our destiny.

Why are we incapable of telling each other the truth?

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