United States' Fiscal Situation

Floor Speech

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Mr. SCHWEIKERT. Mr. Speaker, we are going to try to consolidate some of this for some efficiency.

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Mr. SCHWEIKERT. Mr. Speaker, I thank the gentleman.

Mr. Speaker, the gentleman is an incredible leader and passionate on this, and it is absurd that something that America desperately wants has been this difficult for the Democrats, particularly in the Senate.

How many Democrats, when we passed it out of the House before, voted with us?

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Mr. SCHWEIKERT. Let's save America. Let's protect our elections.

I will give you one last concept, being someone from Arizona. How do you protect a republic if your citizens don't trust the institutions and don't trust elections? So even if you are uncomfortable with the legislation, which I have no idea why you would be, defend the institution by passing a piece of legislation that actually raises the level of faith and trust in our elections. How can it not be amazingly good for this Republic?

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Mr. SCHWEIKERT. Thanks, Chip. I know you have to get out of here.

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Mr. SCHWEIKERT. Mr. Speaker, I am going to try to do this somewhat quickly because they are a couple of fairly simple concepts.

Almost every week when we are in session, for a decade, I have come behind this microphone and tried to help people understand the fiscal situation in the United States.

Some of the math is both hopeful and incredibly frustrating. So think about this: Our tax collections are up almost 10 percent--almost 10 percent. Tax collections are up in the last 12 months. Yet, over the last 12 months, we have borrowed $2.34 trillion. We are borrowing right now, if you take over the last 12 months, $74,000 every second.

You go: But how can that possibly be? Tax receipts are up.

Our problem is fairly simple. Refinancing the debt, we have to bring about $10 trillion to $11 trillion to market over this 12-month period, and much of that is debt that was sold a few years ago, when interest rates were very, very low. So it is getting refinanced at today's rates.

The other thing that I talk about constantly, because it is my intense frustration around here, is the Democrats and--I am sorry--many of my Republican colleagues have turned healthcare into financial engineering instead of: What does it cost to provide services? What does it cost to help our brothers and sisters be healthy? We are actually seeing that we had some projections from CBO and others of about a 5 percent growth in spending on healthcare. I am going to show you some of this.

We are seeing some numbers coming in that are closer to 8 percent or 9 percent growth in that spending, so interest and healthcare.

Mr. Speaker, much of it is demographics. Remember, in less than approximately 3 years, over half of the Federal spending will go to those who are 65 and up. It is substantial because of a couple of things.

We got older as a population. We have gone 30 to 40 years with falling fertility rates. Remember, we are well below replacement rates in the number of children we have. There is math that, last year and this year, there was pretty much flat population growth.

Then there is this. I'm trying to help folks understand the reality of what your Federal Government is.

Do you see the blue area? This is defense and nondefense. In a couple of days, we are actually going to get an update, and my team actually thinks that this number will go from 26 percent of being, what we call, discretionary to maybe down to 25 percent. That is one quarter.

Every dime of this is borrowed, and that is all Members of Congress actually vote on. The rest of this, whether it be interest, Social Security, Medicare, Medicaid, or other mandatory spending, all of that red is on autopilot. It is a formula.

If you add this up, basically it is under $2 trillion. I just told you we have borrowed over $2.3 trillion in the last 12 months, meaning every dime of this is borrowed, and a chunk of mandatory is borrowed.

That is our reality. Your government is basically an insurance company with an army paying out a lot of annuities. It is demographics. Yet much of the craziness you hear behind these microphones is anything they can say to keep you from focusing on the fiscal reality of what is going on in our country.

We have been trying to figure out how to express some of this, so I am going to do it in a couple of different ways.

Over the last 12 months, receipts have grown 10 percent. Spending is up 4 percent. You say: Shouldn't we be closing the gap? Except the problem is the spending last year was over $7 trillion, where tax receipts were $5 trillion. Do the 4 percent growth over here on spending, the 10 percent growth on taxes, you still have--closing the gap--maybe $250 billion. That is wonderful. If you are heading toward $7.4 trillion spending, that is less than 1 month of borrowing.

You have got to understand. We just finished the fourth month of this new fiscal year, and we have already borrowed--we have borrowed since October 1 $926,724,000. Meaning in the next couple of weeks, depending on how much cash the Treasury decides to keep on the balance sheets, we are going to hit a trillion dollars. This was supposed to be a year where we would start seeing the debt starting to go down.

I blessed. I chair the Joint Economic Committee, I am number four on Ways and Means, and I chair the Oversight there. My job is to get the math right.

We always said we thought this would be a $2 trillion borrow year. Tax receipts are up, but spending is up substantially, once again, because of the financing of $38.5 trillion of U.S. sovereigns, $10 trillion of it having to be refinanced this year, $2 trillion virgin, meaning it is new borrowing, and healthcare costs.

When we bring these charts in, it is one of the classic problems of when you do this thing, look at this. Tax receipts are way up; but the tax receipts and spending are upside down. One is based on $7-plus trillion, the other is based on $5 trillion, meaning that gap is not nearly as tight as you think it is.

I am going to pass through some of these.

Part of the great battle is--and Chip was basically teasing for the 14 people that watch C-SPAN. Sometimes I am worried there is not even 14--if you ever have a curiosity, if you really care about saving the Republic, I would argue what takes us down is potentially the bond market. If we keep borrowing like this, the bond market is going to start running this country.

Go to the Joint Economic Committee Republicans' website. We put out some amazing data, and we are trying to make it easier to absorb. We are doing better with charts and graphs, but another thing we do is every workday we send out a text message. We call it the Daily Debt, Schweikert's Daily Debt, and it basically does this math for you. It tells you here is what we borrowed over the last 12 months, and here is what we have borrowed this fiscal year.

The beauty of this is you can say: Over the last 12 months, we are borrowing $74,400 every second. So far this fiscal year, so 4 months in, we are borrowing $85,000 every second.

Start telling the truth about the math and understand so often the theatrics you see here in Congress are so we can give you a dopamine hit, but we don't have to deal with these numbers because these numbers are difficult, complex, and really hard to explain. The armies of lobbyists and people in our hallways here, Mr. Speaker, what do they do when they get to our office? They don't walk in the door and say: We really want you to save the future generation. Spend less money. Everyone is at our door either wanting money or wanting us to regulate their competition. That is bureaucracies. That is businesses. That is private groups, charities. Give us more money, or create a barrier to entry so I don't have to compete with someone else with better, faster, cheaper technology. That is particularly true in healthcare.

We have done presentation after presentation here showing how you could crash the price of healthcare legalizing technology. Even today, I had a little bit of a verbal kerfuffle--love that word--with a Member who is a doctor, and he is my friend. He despised the concept, but I was showing him part of the paper that says if you have this sort of data coming off your body, whether this be the Oura ring, whether the WHOOP, the Apple Watch, the things you can wear, the data from it using the latest AI packages is statistically more accurate than a human. Why wouldn't you legalize that to help people keep healthy?

Well, it turns out when you tell a medical professional that, they get a little cranky at you because it is always about the money here.

This chart you can find on the Joint Economic Committee website, but I am trying to actually show what is happening. As we are refinancing our debt, we are having to spend a lot more money. We calculate that just interest this year, Mr. Speaker, will be probably about $1.2 trillion.

Think about this hierarchy. Let's do this together: Social Security, $1.5 trillion; interest, $1.2 trillion; Medicare, maybe $1.1 trillion; Medicaid and Obama subsidies, almost another $900 billion. Defense is actually the fifth in our hierarchy of spending. The thing that is actually in the Constitution now is number five.

When you get these folks that walk in the door saying: Just stop spending money, balance the budget tomorrow. I can do it, except you would have to get rid of every bit of government, every bit of defense, and then you tell me about the $600 billion you want me to remove from Medicare, Social Security, military pensions. What do you want to do?

That is the reality. Just interest this year will be 3 percent, maybe even higher, of GDP. When you see us talk about we want to get the debt down to just 3 percent of GDP, that just covers our interest carry.

I have a couple of these other charts I sort of want to walk through.

Mr. Speaker, may I inquire how much time I have remaining.

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Mr. SCHWEIKERT. Excellent. If I do this quickly--and I apologize for talking so fast. I have had a lot of coffee today. I am trying to detox.

Something almost no one around here pays attention to, but it is my job on Ways and Means and my job with the Joint Economic Committee to talk about the financing. How do you have a country that if we are going to burn $2-plus trillion this year, that means you are bringing at least a quarter trillion dollars to market every month. Yesterday and the day before that and the day before that, we had to borrow about $7.3 billion that day; $7 billion a day, that is so far this fiscal year. If you do it over the last 12 months, it is almost $6.5 billion a day is what we borrow.

You don't need to actually pay real detailed attention to this, but what I am trying to show is the average maturities on our bonds and that they have to be refinanced. Every quarter, this is what is coming to market and the fact that we are moving away from much lower interest rates to much higher interest rates, but there are other things going on.

Do you remember how often--and, Mr. Speaker, you have probably had this experience. You are at a townhall, and someone says: How much do foreigners own of our debt?

And now you try to explain that China is actually, I think, down from $1.2 trillion down to $700 billion and is maybe now third. Japan is number one, but there were certain things that happened. When Central Banks were buying U.S. debt, there was a level of stability that came with it. This is an interesting concept, and some of the bond market folks are starting to write about this. They held it because they needed an offset for the currency. They needed it for trade. They wanted just stability.

As foreign governments and foreign central banks are getting rid of U.S. debt, bond markets, hedge funds, and others are the ones buying it. Okay. Wonderful. We have people buying our debt.

But do you see the problem? These are traders. If there is a carry trade, if there is an opportunity to make a spread, if there is an arbitrage, they sell it. You are starting to see, if you actually look--there is actually a thing called a bond VIX, a volatility index. We are starting to see much more volatility in U.S. debt. That actually scares me.

You want stability. You want the markets to believe in us. You want the markets to understand we are going to get our act together, that we are creditworthy. Yet Greece today can sell a 10-year bond cheaper than the United States. I can think of 12, 13 countries that today, if they offer a 10-year bond, that 10-year bond goes at a lower interest rates than the United States. Does that bother anyone? Does that tell anyone anything? Is anyone listening?

Look, I have chart after chart after chart.

There are ways we can communicate to the bond markets that we are taking our debt seriously. There are ways we can protect Medicare and Social Security, but we have got to tell the truth about them.

Right now, the Social Security trust fund is empty in 6.5 years. That means 7 years from now, if you are on Social Security, if we follow the law as it is today and Congress continues to fail to act, you get a 24 percent cut. Our model says we double senior poverty in 7 years. We will double the number of baby boomers who live on the street.

In 6.5 years, the Medicare trust fund is empty, and your hospital, others, get an 11 percent cut. That is our model right now.

You start to say: How do we preserve these programs?

Well, maybe we can actually take on the things we know are going on.

Next week, Mr. Speaker, I am going to try something that is probably politically crazy, but we are going to walk through the financing of Medicare next week. I am going to walk through how it actually works, because some people think the magic trust fund pays for everything. The general fund, which is all borrowed here, pays for about 40 percent of it.

In conversations, even with my brothers and sisters here, and even with some of the staff, they are not understanding the complexity.

Once again, the Social Security trust fund is empty in 6.5 years, and the Medicare trust fund is empty in 6.5 years. We go from $1 trillion last year in Medicare spending to $2 trillion in 7 years.

It is demographics. It is baby boomers. Hell, I am one of them. I am just on the younger side.

Look, I am crazy. I am 63, my wife is 63, and we have a 3-year-old and a 10-year-old we have adopted. That is being optimistic about the future.

We need a society to get this to work. We have a paper in our office that was written by a bunch of freaky smart economists out of Cambridge and Boston saying if you use a 6 percent generational discount rate-- and I said this last week, but I am trying to get it to burn into people's psyches--for a baby born today, you need 104 percent of that child's lifetime income just to pay government pensions--Federal Government, not State, just Federal Government.

Does anyone see the immorality, the craziness that is going on? We are all terrified to tell the truth about this because we make our voters mad because partially the political class has lied to the voters for so many years about our finances.

We are going to come back and start to walk through the math of--you have seen of some of the proposals on Medicare Advantage. The White House is coming back and saying they are going to just cap the growth. You saw many of these Medicare Advantage companies' stocks just crater.

We believe we have a much more elegant solution, and actually may come in at a much bigger savings, is to realign the incentives. I love the Medicare Advantage. Mr. Speaker, 55 percent of our brothers and sisters who are on Medicare use Medicare Advantage.

But the incentive for the insurance company that is managing it should be not trying to constantly build risk models to raise the cost to get in more cash. How about we do this: Get rid of the risk adjustment, get rid of the star rating, and just do something very simple: Give us a bid, and you make money by helping those you are insuring be healthier.

It is a crazy concept, but the basic concept of a capitated model was, hey, these insurers will profit by doing their job well. You have got to put in protections so it is not denial of services and not denial of access to pharmaceuticals. But if you fix those things, there are models around the country that have worked amazingly well.

Sometimes you have to have discussions that--it may have to be more than 1 year; you may have to have 3 years with opt-outs if you don't like your insurer--so they will invest in you to be healthier, maybe even buy you the technology, buy you the things to do that, and make a profit.

We are right now going to have to make a decision as a body. Are we going into the command and control and try to starve the beast, or are we going to build a model that incentivizes doing it better, faster, cheaper, and in this case, much, much healthier.

We are looking at right now over $2.5 trillion over the next 10 years of just Medicare being financed with debt, just debt. Now, add in what is left in the trust fund, add in what is coming out of your payroll taxes--I know it is political suicide around here to tell the truth about programs like this. But if you want it to survive, we just get the math right. I can make it work. It is not going to make some people completely happy. We can make the math work, but you first have to accept the fact that there is a problem. We have got a big problem.

Next week, Mr. Speaker, I am going to come back, and we are just going to walk through the opportunity of how we preserve these programs using a calculator. I know Congress is often a math-free zone, but let's give it a try.

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