Facing Fiscal Reality

Floor Speech

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Mr. SCHWEIKERT. Mr. Speaker, I have missed all of you. I don't know if you missed me.

We are going to actually try something tonight, and some of what we are going to do this evening is a little bit complex. It is going to be a little bit thick, but we have double-checked and triple-checked the math, which means that a number of our brothers and sisters will turn their ears off almost immediately because, remember, Mr. Speaker, we all work in a math-free zone.

A couple of items of order first. I thank--though I don't know if they were screwing with me or having some fun. I think it is ``Forbes Breaking News'' that took about 12 or 13 hours of these floor speeches and put them up on YouTube. I have actually had a couple of people who obviously don't have lives who have been watching them, and we have been playing this game of: Here is the prediction, Schweikert, you made over the last year. Here is what you have right, and here is what you have wrong.

First, I got wrong my prediction on interest rates. I really thought the 10-year bond would be closer to 5. It is at 4.1. However, things like the U.S. getting downgraded, things like the semaglutides crashing in price by the end of the year, we have actually gotten right.

The one thing I wish I had gotten wrong was the debt and deficit projections. For the trolls out there who immediately say, ``Well, there is all this spending in the tax bill,'' most of that hasn't started yet. If you actually look at the breakdown of what is going on, what the two drivers of U.S. sovereign debt are, they are the very things that we are not allowed to talk about. It is interest and demographics.

We are going to walk through some of the reality of the math because this is how perverse this place has become. The Democrats will blame, and Republicans will blame, and we are going to blame shiny objects, things that actually have almost no actual value to our future, to this Republic, and where we are going.

As we start this, I need everyone to embrace a couple factoids. We have 7 years until the Social Security trust fund is empty. No one stole the money. We just didn't have enough young people to keep the ratios. So, in 7 years, the math right now says a 24 percent cut.

In 7 years, we double senior poverty in America. In 7 years, the math says: You are going to start to see baby boomers doubling homelessness. In 7 years, the Medicare trust fund is empty. Hospitals right now and others who are part of the Medicare part A cash flow take about 11 percent cuts. In 7 years, we double the spending on Medicare. We go from $1 trillion right now to $2 trillion.

It is demographics. Mr. Speaker, I am going to show you some of those charts, but let's first walk through the craziness. I have had some administration folks and other folks talk to me about tax receipts being up, and they are. There is a whole series of things we have done to reduce spending, but none of it appears to be big enough to deal with the cost of the refinancing of debt that is coming off the very low interest rates from a few years ago to the much higher interest rates today, to the medical inflation, to the healthcare utilization, and to just the things that are basic driven by our demographics.

Let's deal with some reality. If anyone has a question about my math, you can look it up online, Mr. Speaker. Go to the Treasury's website. This is important. We are now 51 days, I believe, into the new fiscal year. We are 51 days.

Mr. Speaker, do you realize we have now borrowed $628 billion in the first 51 days of this new fiscal year? Treasury has put more--is holding almost $900 billion in cash, which they typically operate with about $800 billion because of the in and out, but you start to realize, at the current borrowing rate, we crossed $1 trillion this fiscal year before Christmas.

It is not Republican or Democratic. It is demographics and interest, but that isn't a lot of fun because our political consultants need something where we can attack each other. By doing that, we are incapable of an honest conversation of the bleed.

Understand a basic principle, Mr. Speaker: At this rate of borrowing, when you are clicking off $1 trillion in just 4 months, 5 months, then you have decided the bond market, basically, is the most powerful organization in ruling your country. It is not us as policymakers. It is not the White House. It is the bond market because if you do the last 12 months, we have been borrowing about $6.3 billion a day. So far this last 51 days, we are borrowing closer to $12 billion a day.

It is just math, except we are incapable of actually talking about it.

Think about these microphones here, Mr. Speaker. How many people since we got back from the shutdown have you heard, on the left and the right, get behind these things and say, ``Hey, guys, the greatest threat to your Republic is actually the math''?

This group hates something Donald Trump does. Our side doesn't like some of the things they do. Okay, great. The lack of civility is crushing. However, one of my personal theories is the reason you just had a 40-something-day shutdown, Mr. Speaker, is that it is not like the old days, where you could have bought the Senators' votes. Hey, if you vote for us, you get a bridge. We now have to deal with the fact that we don't have cash lying around.

We are going to borrow. You will start to see this. We went from $37 trillion to $38 trillion in 71 days. There were lots of excuses for this. There was, hey, we had the debt ceiling, had to repopulate, pay back the internal borrowing we did, those things. Except the difference is here we are into the new fiscal year after the debt ceiling has been raised, and the burn rate still looks really similar.

I am sure all the committees, all the leadership, all the folks who are helping us watch the bond market and the liquidity and our ability to borrow are all paying attention to the bleed rate, but it is math. It is real.

Mr. Speaker, our debt to GDP when we closed the '25 fiscal year actually got slightly better, but we also rolled some of the borrowing into the next day, which hit a new fiscal year. It happens all the time. You have strike dates of when you can actually pay certain bills, Mr. Speaker, but this one isn't in question. Last year, for every dollar of tax receipts we took in--this is customs duties. This is excise tax, income tax, corporate tax. Everything we took in, we spent $1.43.

This year, for every dollar we take in, our budget says that we are going to also spend $1.43. How long can we do this? How long can we do this?

Mr. Speaker, my 3-year-old--and, yes, I am this age. My wife is my age. We have a 10-year-old and a 3-year-old. There is a dataset out there that basically says that when my 3-year-old is about 22, 23 years old, so 20-some years from now, every tax in America, every tax, needs to be doubled just to maintain baseline spending.

Mr. Speaker, how many people have you had come behind this mike and who have just said: Look, is this moral? Is this really what America is all about? Yes.

I am going to show the slides that show what the Democrats say: We will just tax billionaires and rich people. It doesn't get you anything close. It doesn't close the gap, and you know it.

For our side, we are going to cut spending. Really? It doesn't get you close because we are not ready to have the revolution of how we spend money. That is because adopting the very technologies, the cures, the things we can do, this army of lobbyists outside this door loses their blanking minds because we are requiring them to either change their business models or make the bureaucracy do it differently or maybe come up with the conclusion we shouldn't do it at all.

Once again, for every dollar we take in of tax receipts, we are going to spend $1.43. Why doesn't that almost create a sense of panic, of agita, for the left or the right?

Is it just that we run into the problem of telling the truth to our voters after maybe we have lied to them? It is rich people that we don't tax enough. It is waste and fraud. It is illegals. All of those are real, except, in the scale of the spending, they are just not that much. It is just the insanity of what is going on.

Look, I am trying to help you understand wages.

Let's back up.

Tax receipts are up. Spending is up dramatically more, but most of the tax receipts that we are gaining are almost all capital gains. So, of the increased tax receipts, only about 5.5 percent of it is actually the growth in wages. Almost 65 percent is capital gains because the stock market has been doing well. So, once again, we are back to the world of financial engineering.

Those of us with assets, we are doing great. You keep hearing people talk about the K-shaped economy. What they mean by that is if you are on the lower tier, you don't hold assets, particularly after the years of inflation. Those with assets, the asset is inflated, and they are just fine. If you didn't hold assets, you are poorer today.

For my district in the Phoenix-Scottsdale area, I think our calculation is, after sort of the first year of the Biden administration, if you don't make today at least 28 percent more than you did then, you are poorer today.

Now, there is almost no cycle where magically prices start to come down. The way you deal with this is economic growth, wage growth.

Is prosperity moral? Is it Republican or Democrat? It is just the right thing to have a society where people's lives get better every day.

This is just a board I have used before, but it is just to make a point for anyone that is paying attention. This is the 10-year bond. Right now, the United States isn't at 4 percent. We are about 4.1. Okay. We can sell a 10-year bond today for about 4.1 percent. I need you to look here. Greece can sell a 10-year bond today for about 3.3 percent. When Greece has a better strike, a better--let's call it a credit rating. It is technically not a credit rating, but when Greece can sell a bond cheaper than the United States, should that actually raise the hair on the back of your neck?

Are you thinking about the fact that the United States, for the industrialized countries, is like number 12?

Let's call it the credit stack, the ability to sell a 10-year bond. Why are other countries able to sell a 10-year bond cheaper than the biggest economy in the world, the country with the reserve currency? Does anyone pay attention to this? People say, ``Oh, David, that is not fair. Greece engaged in fiscal consolidation.'' They are actually lowering their debts, where we are now over 100 percent of debt-to-GDP. There are no plans to tell the truth about it. If you tell the truth, you might get unelected. You have a dozen countries that can sell a 10- year bond cheaper than the United States today, Greece being one of them.

Let's get into some of the complications. When I say one of the primary drivers is interest and demographics, remember, if you have $38 trillion--and remember, we play this game. The United States does this. Other countries don't do this.

Here is $30 trillion that we have to go to public markets. People from all over the world, primarily from the United States, buy our bonds. It is in your pension. It is in the bank note you buy. There are another several trillion that are actually borrowed internally. It is not magic money. We still owe the Social Security trust fund money, the Medicare trust fund money. When we borrow the cash out of those trust funds, they are paid interest, so it is still an obligation.

It is one of my great frustrations when you hear some of the government economists say, Well, publicly borrowed money is this. Yes, but the internally borrowed money we still owe interest on, are we not going to pay it back? It is borrowing.

When I come back and say demographics, understand age groups as a share of the population, from 2004 to 2024, so a year-plus ago, we had 1.4 percent of the population was 18 years old. In 2024, 1.3 percent of the population was 18 years old. It is just demographics. The United States, in around 1990 to 1991, started to roll over in the number of children we have.

For the people who are into the natalist policies, we spent lots of time researching this. There is no magic solution. You have a country out there that, when you have your third or fourth child, they buy you a house. It still hasn't increased fertility rates. There is a crazy math set, and I have never vetted it, saying, like, South Korea in 150-something years, there are almost no South Koreans left. It is happening all over the industrialized world.

This is why getting tax policy, regulatory policy things, so correct--because we are going to have to be able to find a way to have productivity grow and grow so we can raise people's wages because so many of our brothers and sisters are poorer today. The way you raise wages is two things: inflation--well, that doesn't get you anywhere--or productivity.

You can't be afraid of AI, synthetic biology, robots. People go, ``Oh, David, you are not supposed to say that,'' but it is true. Next year, the number of 18-year-olds is lower, smaller, than this. The year after that, it is smaller than that. Then, it is smaller than that. America is now running into a situation where we have too many classrooms and too many schoolbuses and not enough senior centers.

This place is doing an amazing job at having an honest conversation about the United States' demographics and where we are going. ``Oh, David, we are not supposed to talk about that.'' How do you make public policy if you can't even be honest about the most basic parts of the math?

The other part of the punch line here is, 20 years ago, 12.3 percent of the population was 65 and up. Mr. Speaker, 20 years later, it is, functionally, 18 percent. It is not double, but it is pretty darn close to double those who are 65 and up.

Look, a weird little factoid: When I was a teenager in the 1970s--and I remember this number. There was, functionally, $7 spent for every young person and $1 spent on seniors. Today, that is flipped. It is just demographics. The baby boomers have moved into their retirement years. We have a societal promise we have to keep. We made a promise, but once again, in 7 years, the Medicare trust fund is gone. In 7 years, the Social Security trust fund is gone. We are going to lie our heinies off around here. If we just tax rich people more--and I will show you the slides. The math doesn't work. Once again, we work in a math-free zone.

Let's have a little more fun with reality, change in population by age. Now, this board is controversial, but the math is accurate. I will see if I can try to describe this in a way where we can all absorb it. In 2004, we had, functionally, 77 million that were 18 or younger. We estimate, in 2035, if we do not have immigration--remember, this year, we expect almost zero population growth, so let's first do those who want no immigration. In 2035, we have only 64 million that are under 18. With immigration, you still have fewer people. That is over 20 years.

Okay, fine. Maybe that is the policy decision of our society. In that case, don't stand in our way when people like me are trying to find ways to actually have productivity, wages grow.

This is something very unique that the United States is up against: massive amounts of debt. Massive amounts of debt. Remember, so far this fiscal year--God, I have to do this math really quick.

I think we are borrowing like $130,000, maybe $131,000 every second. If I take it over the last 12 months, it is like $71,000 a second.

So you have this massive debt, and then a population that is flat, and where we are going right now, it actually could be declining over the next decade. Not by a lot.

Tell me how I make the economy grow. How do I make sure your pension is there? How do I make sure your access to healthcare is there? How do I make sure your wages go up? There are ways we can do it, and I have come up behind these mikes over and over and over and talked about the adoption of technology, about redesigning government.

We have bills that actually would save $3 trillion, and I can't get a single other Member of Congress to sponsor them because they are hard.

I will get lobbyists who will say mean things about me.

So let's keep just doing the shiny objects. Let's just keep doing the petty around here. I think yesterday was the 14th time we have tried to reprimand or censure a fellow Member. Let's just do more of that because it gets great Twitter traffic, and we don't have to talk about the fact that that day we borrowed over another $6 billion. Actually, if it is just this fiscal year, it is closer to $12 billion that day.

So let's take another look.

Change in employment status of native born and foreign born. This is something that is really, really interesting. We are actually taking a look right now for what we believe is sort of this fiscal year's snapshot. We actually have foreign born actually going down. Now, some of this is self-deportation. There are things going on, we don't have enough data to completely understand it, but my problem is: I don't actually have enough folks for the civilian labor force.

Look, something funky happened in this morning's unemployment numbers where there was a good pop in jobs, maybe almost 2, 2\1/2\ times what many of the economists expected, but did you notice unemployment popped up? Now, that is typically saying: Oh, we don't like that.

I need you to think about this. We have been desperate for more of our brothers and sisters to come back into the labor force, but here is my problem: How many of those folks are coming back to the labor force because they can't pay their bills because wages still haven't gone up enough to make up for the years of inflation?

We actually don't know completely yet, but we do know that our brothers and sisters out there are stressed out of their mind when you start to look at credit card delinquencies, car delinquencies. ``Our impairments'' is the better way to phrase it.

We need to get our heads out and start thinking about those policies that get the economy working, a tax code that actually gets investment in the next generation. But are we going to adopt policies?

All right. Let me go jump on a landmine.

Does it make sense to have a government that goes out and owns 10 percent of Intel? So your government is the largest shareholder of Intel.

Okay. I love Intel. But I can actually show you some brilliant economic papers that say that it should be four different or three different companies; here is the fab; here is the engineering; here is this and that.

The concept of creative destruction. Here is how the thought experiment works: If you are old enough to remember Blockbuster Video, should we have slowed down the internet so that Netflix could not have put Blockbuster Video out of business? That is sort of what we are doing today, we are choosing the winners and losers instead of the creative destruction that starts the next cycle of productivity.

We need the creative destruction in our economy to have the rebirths of the newer, better, and faster. Yes, it is always uncomfortable. It is also really great free market economics. And it is as if we have repealed the rules of a free market economy in this country right now.

So let's actually take another look. Now we are going to step onto the next, much bigger landmine. Let's talk about Social Security.

Social Security finances and worker-to-beneficiary ratio. This is how many workers there are compared to our brothers and sisters receiving.

Do you see the red lines here? This is actually the trust fund. You will notice, actually, around 2020, the trust fund had $5 trillion in it.

In 7 years, it is all gone, and no one stole your money. The average couple, it is a crap rate of return. You have to understand. If 20, 25 years ago, you had been allowed to take a little sliver and put it in the markets, you would be dramatically better off moving into retirement, but the left lost its mind on the discussion. The unions lost their minds. AARP lost its mind. But now we can look back. We have 25 years. We can actually do the calculation and tell the truth.

They were wrong. But it is too late to do anything like that today because the population bubble has already moved into their retirement years. So here we are. At 7 years, that trust fund is gone.

What is also interesting--it is a little hard to see in this chart-- as we get into the outer years, you are getting to the point where you have 2.2, 2.3. So you and your spouse or you and your partner functionally will have one retiree, and that is the way the system was designed. They didn't think about, when they designed things like the Social Security trust fund, that we would have a day when the population of young people in the United States actually was declining.

It is demographics. We know the math. We have known for how many years that we had baby boomers and 67 million of them. Yet, this place because it is crap politics to tell the truth about math, we lie. We make up things. Well, we tax billionaires.

I am going to show you boards that every dime of every billionaire in America would only run the government 9 months, and, also, you would put the world into a depression because most of that value is actually in stock. So if you happen to have some stocks in your retirement fund, it is all gone. We are going to crash everything, but it is a thought experiment.

There was someone who had an article out this last week that talked about saying: Well, when the Social Security trust fund is gone, we will just borrow it from the general fund, and the general fund will borrow it from the debt market.

Okay. Let's see. When you start to look at the scale of debt, do you see the red here? That is already where we are going. That is already in the baseline. This line here exploding up, that is as if we took the Social Security trust fund--and I don't believe this even has the Medicare trust fund, which is also empty in 7 years.

If anyone really wants to understand how difficult the policy choices are and, also, how--let's have a brutal moment--the Members here don't tell the truth, particularly my brothers and sisters on the left. We will just tax rich people.

Please go look up Jessica Riedl's calculations from the Manhattan Institute. There are a couple of great articles. They walk you through the math.

Every tax--so do the Bernie Sanders math. We are going to take people over $400,000, $500,000, and we are going to maximize tax. You maximize everything. It is almost a Laffer curve. We are going to tax you to the point that it rolls over. On every tax, you get 1\1/2\ percent of GDP in new taxes.

Okay. It would probably be really helpful.

On the Republican side, the things we talk about cutting, we only get about 1 percent of GDP.

Last year, if you do the internal borrowing, we borrowed about 7.6, 7.4 percent of the entire economy.

We are actually looking that in 2035 we are going to borrow 8.4 percent of the entire economy, and the solution I get from the left covers 1\1/2\ percent. Often, the solution I get on my side is 1 percent.

Does anyone see the math problem? We are all going to go home and talk to our partners and audience and say: If I just cut taxes, or if I just cut things. Maybe we have to do that, but it doesn't get you close.

Once again, 1\1/2\ percent from taxing all the rich people, and 1 percent of GDP in the cuts we have actually articulated. I have 2\1/2\ percent. In 9 budget years, we are borrowing 8.4 percent of the entire economy, and that is assuming interest rates don't go up.

Remember, in 9 years under today's interest rate scheme, 30 percent of tax receipts go to just the interest. If interest rates go up 1 percent, it is 45 percent of all tax receipts of the United States in 9 years would go to just interest.

I will say this, and I have said it how many times behind these microphones and people go, David, that is interesting. Please never say that again because I don't want to actually have to explain this.

If we do the math, take every billionaire in America, get full face value of everything they have. Sell every stock, every yacht, every this, every that, you covered government for 9 months. That is assuming you don't put the world into a depression. You don't crash all the stock markets. You don't crash all the asset markets. It covers 9 months.

Why do we live in this fantasy world where people throw out solutions like this that they know are absolute frauds? Because it is great politics. It is crap math.

Let's actually go on to one of our current debates.

I watched someone come to the floor yesterday on the subsidies on top of the subsidies in the ACA. Let's call it ObamaCare because that is the common vernacular, but it is the ACA. We are having the debate because the Democrats actually did these enhanced subsidies on top of the subsidies and those subsidies expire.

Let me do this one backward, so there is a little more understanding of the line.

How much of the healthcare population in America is actually in the ACA? It is really important. Forty-eight percent is employer sponsored, 7 percent we believe is uninsured, veterans are about 3 percent, Medicare is 18 percent, and Medicaid is 22 percent. Now over the next couple years that flips. Only 7 percent of the healthcare population is actually in the ACA.

That is the entire population that is receiving the enhanced subsidies, so the subsidies on top of the subsidies, is a fraction of that.

Now you have to also take a look at what is wrong in that math. We actually keep looking at these numbers over and over. We have been analyzing them with our joint economic economists, and I have a couple Ph.D.s in healthcare economics. We are trying to understand what the hell is going on with these numbers, but you start looking at it after the COVID subsidies.

Do you know you got 41 percent of the population that is actually supposed to be just receiving government subsidies to make it more affordable and they are paying zero?

Do you understand what they did with the subsidies on top of the subsidies? They took populations 400 percent of poverty and up, and in some areas, you have four or five kids, you have people making $400,000, $500,000 qualifying, except that is a small population of them but they still would qualify.

Why is this important?

Mr. Speaker, if I could have some way to burn this on to people's psyche. What the ACA, Medicare for All--the Republican alternative had better actuarial distribution, but they have tried to turn healthcare into financial engineering.

What you have done is, is financing, is subsidies healthcare. Well, we will tax these people and we will subsidize this population. Listen to the debates here. It is about subsidies on top of subsidies. It is financial engineering. Now, it is healthcare. Why it is healthcare is because it is easy. It makes the lobbyists happy. It makes the people receiving the money happy because no one gets cut. No one has to do a new design. No one has to actually stop new technology. No one has to fixate on our brothers and sisters.

If obesity is 47 percent of U.S. healthcare, none of the money goes to making our brothers and sisters healthier so they live longer and they don't have multichronic conditions because we are just going to subsidize them.

It is perverse.

Could you imagine the $35 or $40 billion that the Democrats are demanding for the subsidy on top of the subsidy for populations that are upper income? If some of that money actually went to lowering the actual cost of healthcare instead of the financial engineering of subsidizing insurance companies because that is what they are talking about.

Let's just go to this one and see if I can make this make sense. This is a bit complicated, but we have been trying to do the analytics of how much the subsidies have screwed up the price of healthcare.

If you walk through it, we can actually chart where the subsidies come in and it actually raises the price of healthcare. The way the insurance companies retain their profits--we have actually built a model that shows, of the stunning amounts of money we are spending, only 34 percent actually goes to the insured and their healthcare. Another 28 percent is disappearing into people that didn't even know they had insurance.

I am sure we all have been reading the articles that a third, 30 percent of those in the enhanced ACA subsidies--so the subsidies on top of the subsidies--didn't even know they had health insurance.

A couple days ago, you saw someone got convicted of or pled guilty to a couple hundred million-dollar fraud scheme where they were signing people up, getting the money, getting the government subsidies, those things, and the people had no idea they had insurance because they really didn't. They were just taking the money.

The system is absolutely screwed up and we have 38 percent disappearing in the insurance malaise.

This is what we have turned healthcare into. It is a financing. I beg of my brothers and sisters here, we have pieces of legislation, dozens of them, that would change the cost of healthcare.

When we think we may have spent $25 to $35 billion last year in duplicative MRIs, X-rays, CTs, ultrasounds, why not a simple piece of legislation that when you get your MRI, it is attached to this thing so it is portable to your next doctor.

Is that that scary? Except the lobbyists show up and say, David, you don't understand. The duplicative scans are part of our profit model. Oh, I am not supposed to say that out loud. We have dozens of things like this.

We have turned healthcare into being about the money instead of our brothers and sisters living better, living healthier. Mr. Speaker, what if some of the money goes to the cures so we don't finance your misery, we finance your freedom from that misery?

I say these things and tomorrow morning there will be an army of lobbyists or an army of groups from my district saying, David, you don't understand. We need the cash. Don't make us do it in a modern fashion.

Mr. Speaker, I am going to make the argument prosperity is moral. Curing people's misery is moral. Using the technology that makes you sovereign, that makes you free so you can help take care of your own health, is moral, and what we do here is absolutely immoral.

We don't tell the truth about the debt. We don't tell the truth about the demographics. We don't tell the truth about the damage we are doing to your retirement, my little kids' future. We don't tell the truth that if we would actually legalize technology--and I am serious about this--legalize it, how much healthier every American could be and we could crash the price of healthcare.

Will this go on deaf ears?

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