Every Dime A Member of Congress Votes on is Borrowed

Floor Speech

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Mr. SCHWEIKERT. Mr. Speaker, we have half an hour, so consider that a mercy for everyone who has had to deal with some of these presentations.

The original goal tonight was actually to do some things that were a bit more optimistic, some things that we have identified where you could actually modernize and cut the cost of this government and actually do the job that we are supposed to do here, but I need to clear up a couple of things.

First, I owe everyone--because apparently last week when I was speaking, I was speaking so fast that I didn't explain this particular chart, so I am making up for myself last week.

The point I was trying to make is, in the last fiscal year, our borrowing represented about 6.4 percent of the entire economy. When you have individuals around here saying we have these parts of our 2017 tax reform that expire at the end of next year, if we just extend those and don't pay for them, that is what drives us to almost 9.2 percent of the entire economy 9 budget years from now.

If we actually find a way to pay for them and still extend those tax reforms, we actually get some economic growth. If you just let everyone's taxes go up, you end up in about 9 years a little under 7 percent of the entire economy borrowed.

It is a little geeky, but the passion I have tried to show here is, I believe the moral thing to do is we don't let the portions on the middle class, their taxes, go up next year, but we also step up and find a way to pay for it. The CBO and the joint economic economists last week--and it is going to be one of the boards here--actually showed if you paid for the tax extensions at the end of the decade, the economy has gotten bigger and it will make sense.

You haven't taken, functionally, what would be $4.6 trillion out of the economy and used it for borrowing, you have left it there so the small business, the big business, your family, there is money that you can borrow to grow and at the same time your taxes haven't gone up.

It is just hard for us to do because if we do modernization, if we find things to cut, there is an army of lobbyists just outside this door coming to scream at us. Some of those lobbyists aren't the types of people walking around with Guccis, they are the people they fly in from our home districts saying, David, we want that spending and then you explain to them: Every dime--I will say this three or four times because for some reason, I can't get this to burn in. Every dime a Member of Congress votes on is borrowed. Every dime of Defense is borrowed. Every dime in nondefense discretionary is borrowed. When you hear us all talk about the mandatory spending, and that is like three- quarters of all spending, believe it or not, there may be $300 billion or $400 billion of that that is borrowed money also.

I will apologize to everyone. When I was showing the 9.2 percent of GDP in 9 budget years, that is if we basically take these tax expirations and just ignore them and just continue current policy, we blow ourselves up.

There are a couple of other things I want to walk through. Apparently, yesterday, the President got up and was trying to tell everyone that this is the best economy ever. That is an interesting statement.

The economy is actually not bad. Now, there is some argument to be made about the amount of cash the Democrats did in their Inflation Reduction Act and other things that they have been, functionally, subsidizing and then borrowing.

Here is the reality: If the President is looking at you in the camera and telling you it is the best economy ever, well, that is not factual, but why don't you feel it? It is because much of America is poorer today than the day President Biden took office.

If you live in the Phoenix-Scottsdale area, my home, if you don't make almost 27 percent more today than the day President Biden took office, you are poorer.

So having someone tell you the economy is great, yet you are having trouble paying for things--the reason we made this board is, functionally, for you to maintain your purchasing power, are you making, if you are an average person in average America--in my district, these numbers are substantially higher because I am from a district with some of the highest inflation in America, but if you are not making $1,115 more a month because that is what you would have to be having from 4 years ago, your purchasing power, you are poorer.

I actually think that is the reason that voters turned and said, I see these Democrats running lots of ads, saying crazy things, but yet it turns out the voters are actually really smart. They would look at their checking account, they would look at the cost of their kids' clothes, they would look at the grocery store and try to figure out why in the last week of the month they were losing their minds under stress.

There are a lot of folks here that say things that, just from an economist standpoint, are insane. But your wages, policies that we engage in that don't make you wealthier--because prosperity is moral. It is moral for the poor person to be less poor. It is moral for the working person to be less stressed. To not understand the average American in 4-some years, unless you are making about $13,000 more, you are poorer.

In my district, I think that number is closer to $18,000, $19,000 because I have one of the higher income districts in America, but also one with the highest inflation, and I think that is the disconnect. I think that understanding of, it's not enough to run around and tell people the economy is great, look at all the money we have handed out to big businesses, aren't you happy how much we subsidized of the economy, while so many Americans are just trying to survive.

Apparently, I did a horrible job trying to explain--and somewhere here in early January, I will do a whole presentation on this--one of the fixations of the left is, we need to tax corporations more.

Do you remember your elementary school economics class? I am being sarcastic.

Do you remember your high school economics class?

A corporation taxes you. Who pays it? Seriously, you don't think that doesn't pop up in the wages you pay your workers and the prices you pay as a consumer.

In many ways, corporations are nothing more than pass-through entities. When we did the tax reform at the end of 2017, there was data that was coming out in the next couple of years that showed about 67 percent of those corporate tax cuts actually worked their way into wages.

Remember, before the pandemic we had some of the most robust growth of wages in American history where the poorer got less poor. The wealthy did well. Now, there is a whole discussion of--one day I am going to do a whole thing of what this government, the Federal Reserve did to inflate assets and that is actually where much of the wealth came from was monetary policy, not tax policy, but for the folks around here that don't do economics that is a different discussion.

What happens in a world where you can show we lowered taxes?

It actually turns out we did something more complicated than that. You do realize what we call the TCJA, in 2017, there was $7 trillion over 10 years of tax cuts. You know there was like $5 trillion, $5.5 trillion of tax hikes.

Because the idea was to modernize. It had been 30-some years since the United States had updated its tax code, and much of the rest of the world was kicking our heads in.

Do you remember the stories that President Obama said over and over and over, he talked about these companies are leaving America? They are moving their intellectual property to Ireland and these things.

We fixed that. We made it so you wanted to be domiciled in the United States. That is why we had the miracle of job growth, but also the wage growth.

Before the pandemic, we had the fastest closure of income inequality in modern history in America. I would argue that is moral. When you get economic policy, when you get tax policy, when you get regulatory policy right, it is moral. People are less poor. Yet, so often I watch these people come behind these microphones and they say things that aren't true.

I was trying to point out in last week's presentation, just if you look at expenditures on growth and growing businesses and investments, when we did TCJA, you can actually see--the G7, without the United States in it, they were growing about the same. They were investing about the same. We exploded in growth.

So back to your high school economics class.

What are the two ways you pay people more? Your wages go up. So you are out there in the private sector, not government because we are a distortion.

What are the two ways your wages go up?

Come on. You all showed up for your high school economics class.

With inflation, your wages go up. But that just means you are treading water. You got paid more because everything costs more.

It is productivity. Things in the tax code, in the regulatory code that get a business to buy the new piece of equipment that is better, faster, cheaper. Those investments in capital equipment, you are able to make more of whatever you do. Your employer is able to pay you more. It is how you create wage growth.

Some of the idiot class here say we are just going to tax businesses more.

You do realize every economic model says when I raise corporate taxes, it is the workers that ultimately pay for it because your wage growth flattens out, but it is great politics. It is crap economics.

I did this earlier in the year. I brought all these charts trying to show that much of the wealth of this country, thank heaven, before the insanity of the pandemic, we had had the tax reform, the regulatory reform, and a robust economic growth.

Could you imagine if this country was at an anemic growth rate when that happened, what our lives would have been like?

It is also one of the reasons we exploded out and we spent too damn much money. There was too much fear, a number of stupid policies that, hopefully, we will put into the history books that no one else will repeat.

The fact that we had modernized the tax code is what has given us a fight. When President Biden, yesterday was taking credit for a great economy, I sure hope he looked in the camera and said, thank you Republicans, for modernizing our tax code so we maximized economic expansion and had corporate stability.

Because much of the wealth that this country, much of the opportunity, much of the employment base, and the way we can afford that is because we have a competitive tax code now where the rest of the world stops stealing our jobs.

One other thing I want to help people try to understand--because every time I go near this subject I get people--because their brains are sort of caught--I don't mean to say this in a mean way. I am not trying to be mean.

All right, let me walk through a concept. Mr. Speaker, you are from a State that produces hydrocarbons, oil, things of that nature. Back in the 1970s and 1980s, do you remember the posters, ``No war for oil''? The world competed with each other for hydrocarbons.

I had a professor back when I was a younger student who was famous for writing these papers about peak oil, the world is going to run out of hydrocarbons. Well, it turns out that was completely wrong because he didn't understand the ingenuity that God gave us as humans and how we found technology to get to those hydrocarbons that in a previous decade were impossible.

The point where I am going on this rambling, in the 1970s, 1980s, the world basically fought for hydrocarbons. Last decade, in many ways, we positioned ourselves for rare earths because that was the future economic of the world economy.

Really, really smart economists right now are saying this decade, the next decade, and the decade after that, do you know what the world is going to compete over? Smart people. The entire industrialized world is starting to, if not collapse, dramatically fall.

You see the things going on in South Korea, Taiwan, and much of Europe. The numbers are happening all around us. The United States, if you look at some of the Census Bureau data--and I said this last week-- it could be as early as 11 years from now the United States will start having more deaths than births.

What would happen to you if I came to you and said, let's have an honest conversation--which is almost impossible around here--about the border and immigration, but we are going to talk about it like economists? Not our hearts, not our passions, not our anger. Economists.

What President Biden has allowed at the border, when you bring millions of people into the country with very moderate skill sets, what did you do to your domestic working poor? I have done a whole presentation here showing that that family, that young man, that young woman, they dropped out of high school. They sell their willingness to work. They are out hanging drywall; they are out doing this. What happens to their wage growth? You remember a moment ago we were talking about wage growth. What happens to their wage growth in a society when you have added millions and millions and millions of people with similar skill sets? You crush the working poor.

This is actually why, if you look a couple decades ago, it was the Democrats, back when they gave a darn about working people, that actually cared about locking down the border, about taking on low- skilled immigration.

Those of us from border States, you see the chaos we have had to deal with. It drives us insane. A bus showed up in New York or Chicago, and they lose their minds, and you look at some of the Members of Congress from those States, you look at them and you say, you have been doing this to us for years, and now you figured out what we go through every single day?

But back to the economists.

The morality of when you flood a country with a certain level of skill set, you just made your working poor poorer. There is an economic model out there that says it will be 10 years before the domestic working poor in America start to really see their wages go up outside inflation, and it is just because of population dynamics: How many other people are willing to sell their labor cheaper than they are willing?

Flip side--and President Trump actually hit this and hit this brilliantly--we are insane. We bring in smart people from all over the world to our universities, and we educate them. We teach them our engineering, we teach them our biology, we teach them things, and then we send them home to compete against us.

In a time where you need the society to become more productive-- remember, back to our high school education. As society becomes more productive, our wages go up. When wages go up, we actually take in more tax receipts, but that is a side benefit. Wages go up in a productive society, and then there is a cascade event. You may not be the person with the Ph.D. in synthetic biology, but your wages go up when that person down the street is making a hell of a lot of money and changing the society and the economy for the future and the better.

It turns out this last summer we unleashed some of my Joint Economic economists to just try to do some of the math. Here is what I was talking about with low-skilled immigration. Asylum seekers, those, they consume hundreds of thousands of dollars of social services. That is the nature of our country. If you can't afford it, you get healthcare. If you can't afford it, you get these other type of benefits. If you can't afford it, we will get you housing. Our education system is based off the tax system.

High skill, we actually make millions--well, in this case $800,000, $900,000--in the tax receipts and those things over a full career. Now, the fact of the matter is, I have some much fancier graphs that also show the age spectrum. You have got to say a young worker compared to an older worker, the number of years they are able to participate in the economy at a higher wage level. Bingo.

That is actually why Canada, Australia, New Zealand, Great Britain, the rest of the world we compete with have all gone to a point talent- based system. We are functionally the last country, last industrial country in the world that does a familial system.

I promise you, I will get some very angry things coming into my office, but I am being honest. Our immigration system is essentially based on who your family is: My cousin moved in, they are sponsoring me. It is a family chain migration system.

The rest of the world has figured out that as birth rates have collapsed around the world, people, we are desperate for people. I am going to show you some charts coming where, as a country, that our birthrate started to roll over in 1990. We need people.

Part of my job with the Joint Economic Committee, part of my job on Ways and Means is how do I finance all the things that people show up here wanting?

I know it is not something you hear a lot of Republicans talk about because so many people don't understand the demographics of our country. We are going to have to have an honest discussion that one of the most powerful things we can do for economic growth is actually modernizing our immigration system, not sending home people that we educate to compete with us.

There are models out there that say it would make our entire society more prosperous. It is worth thinking about.

Actually, can I give you just a thought experiment? I was trying to explain this to a reporter earlier today. One of the things that is expiring from our 2017 tax reform is research and development expensing. You go, huh? If you are a business and you are researching a new way to make something, a new piece of technology, a new type of biology, a new cure for a disease, in 2017 what we did was we made it so you could expense it right then.

In today's tax code, you basically depreciate it. It says, okay, you spend a million dollars trying to build a new tool, and you get to amortize that research over the next 7 years.

Think about this. If I expense it in one day or do it over 7 years, the government basically gets the same money, right? It is just the timing. If you have the ability to say, I spent the money, I expensed it immediately, what happens? You get this virtual cycle of, oh, I have a new tool that is better, faster, cheaper, and then you jump onto the next one, and jump onto the next one, and you get that productivity curve.

You get back to productivity again. How do you pay people more money?

One of the complaints we were getting after 2017 is that all this money was going into research and development to make a society more prosperous, more modern--you know, better, faster ways to cure people-- and we had a shortage of people with skill sets.

One of our economists is trying to model what would happen if you said we are going to do expensing of research and development, because we know that pops economic growth, but you also did talent-based immigration at the same time. You may get a multiplier effect. This is thinking like an economist. This is what we have to do to get ourselves out of this hole.

Remember, functionally, the first 2 months of what we call this fiscal year, we are borrowing about $10 billion a day. If you do the whole 12 months and be a little more honest about what you are doing, because here is the April tax cycle, we are still borrowing about $74,000, $75,000 a second. It just gets worse, and it gets worse because of demographics.

I am going to show this twice, but I have to say it again. Close to 100 percent of the debt for the next 10 years is interest and healthcare. It is people like me. It is baby boomers. It is not Republican or Democrat. It is math, except it is also the type of math we are not allowed to really talk about here.

Look, I am going to race through a couple of these boards just to make a point. For every dollar we take in in tax receipts, we spend $1.39. Does that give you a sense--when I have someone who comes to me and says, David, there is a continuing resolution coming.

Now, we actually, probably as Republicans, would want to move that continuing resolution when we have President Trump so we have unified Republican government so maybe we could do some of the policy changes, but how about the debt ceiling?

We are also going to do a slide here on talking about, do you understand when you say: David, I don't want you to borrow a dime. Great. I take in a dollar, I spend $1.39, but all I get to vote on is about 25 percent of the spending.

How much of Medicare, how much Social Security, how much pension benefits, how much of VA benefits do you want us to cut?

I have done these entire presentations at home where you show the chart, and people raise their hand. I get these suggestions. I will give you an example, I had one last night, a good friend sends me a thing: David, if you would stop funding the U.N., that would take care of our problems. Okay, we spend about $18 billion on the U.N. The economic effect, it is believed, it probably brings in about $9 billion a year, but let's just use the entire $18 billion. If we are borrowing close to $7 billion a day, getting rid of all the U.N. covers 2\2/3\ of a day worth of borrowing.

There is the problem. People don't understand the scale. Every dime a Member of Congress votes on--all defense, all nondefense discretionary--is on borrowed money plus a chunk of mandatory. You have got to see. When we do that presentation in our home district and you have people give their suggestions, we get up to maybe 3 weeks of cuts.

Then you start to say: Okay, are you ready to get rid of all the Defense Department? Are you ready to get rid of the State Department? Are you ready to get rid of the FBI? Are you ready to get rid of this, ready to get rid of that? You just see the eyes on people because they really do believe, if we get rid of foreign aid we can balance the budget. Then you show them that all foreign aid is about 9 days of borrowing.

I beg of the public, the way you influence Members of Congress is know your math and know the scale of how upside down we are.

Just trying to make that point once again, here is another chart. If we are spending $1.39 for every $1 we take in, this little dot line is the break-even point. That basically means every dime of discretionary--that is defense, too, and you have got to pay interest. If you don't pay your interest, you blow up the world and you blow us up because we have the bonds out there, so functionally we are so upside down, even part of what we call entitlements, mandatory, earned benefits is on borrowed money.

Mr. Speaker, may I ask how many minutes I have remaining?

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Mr. SCHWEIKERT. All right, I am going to talk faster. Sorry about that. Oh, the poor people who try to take our words down. It is a punishment, I am sorry.

I have some other boards here, so I am just going to try to do two more boards in this 2 minutes.

Tax policy, you go back to functionally 1950, when we have had very high marginal tax rates, we get about 17, 18 percent of the economy in tax receipts. When we have had very low marginal tax rates, we get about 17, 18 percent of the economy in tax receipts.

The fact of the matter is, for some reason, the American economy for the last 75 years, we fall back into this mean, so you have Democrats running around here saying, we need much higher marginal tax rates. However, when we have done that, we still just get the same percentage of the economy. The secret, once again, is that productivity, have a bigger economy.

Our structural crisis now is if we are getting 17, 18 percent of the economy in tax receipts, we are spending about 24 percent of the economy year after year.

Back to the point, this is the pie chart. Every dime of nondefense is borrowed. Every dime of defense is borrowed. You have to pay your interest. Remember, interest is now our second-biggest expense in government. It is number two now. Part of this red here is also on borrowed money.

There are ways to make the math work--the willingness to modernize this government, the willingness to use technology to crash the price of this government, crash the price of healthcare, but make us a healthier society. There is a way.

I sometimes just feel like an idiot. I come behind this microphone every week. I do charts. I show these things, here are the ways. Last week, I showed I think $100 billion, $200 billion of savings we could have in government by just modernization. There is hope, but I only think we have maybe 3 or 4 more years to start to understand how upside-down we are.

Mr. Speaker, I know I am out of time. I thank you for your patience. There is hope, but there is only hope if the American people start to hear these words and start to push those of us in Congress to do the right thing.

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