Our Borrowing is Terrifying

Floor Speech

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Mr. SCHWEIKERT. Mr. Speaker, and to the room, I apologize. I was doing a tour for a former firefighter, who actually was paralyzed in the scope of his duties, but we were close.

Mr. Speaker, I am going to take 1 or 2 seconds here to try to straighten this out just a little bit.

The presentation tonight is going to be a little bit technical. Sorry about that. If you don't like math, if you don't like demographics, if you don't actually want to deal with the math I am going to give you, now would be a good time to go find something on Netflix.

I have been trying to make a point over and over around here that our borrowing is terrifying, and it is much worse than almost anyone is willing to talk about.

We actually had some of the Joint Economic economists meet with some of the Penn Wharton modelers over the last couple of days. When they used their population statistics, some of the coming years are even uglier than we get from CBO, what we get from OMB, and actually what we get from some of the other scorers.

Let's actually just sort of start this and put this in perspective and then understand there are solutions. You don't pay off the debt, but you can stabilize it.

What is the number one driver of U.S. sovereign debt? It is shocking how many of even our brothers and sisters here in this building get the math wrong. It is demographics, and it is the one thing we are really not supposed to tell the truth about.

Next year, there is a model that says we will have fewer under 18 than we had 20 years ago, but we will have almost double 65 and up than we had 20-plus years ago. It is baby boomers, and we have gone decade and decade without enough children. It is just math. Is that Republican or Democrat? It is just math.

Once again, all right, let's do this. For those of you who have actually paid attention over the years, you have noticed that over the time we talked about discretionary outlays. Today, it is down to about 25 percent. What is blue here is what you remember that Congress actually gets to vote on. What is red here is almost all formulaic, and that is part of the problem.

As Members of Congress today, we could all hold hands, sing kumbaya, love each other, get rid of every dime that is discretionary--now, that is nondefense and defense, but it is what we vote on--and you still couldn't balance the budget.

Remember, last year, for every dollar we took in, we spent $1.43. So far this year--and, look, I am hoping it bends back down, but this year, the number is even worse.

Interest this year, our model--just interest, total interest, so the interest we have to pay back the trust funds, the interest we have to pay the people who are willing to buy U.S. bonds, it is the second biggest expense in the Federal Government, so Social Security, interest, Medicare, Medicaid and ObamaCare subsidies, defense--once again, remember, defense, the thing that is in the Constitution, is actually number five.

That interest may come in close to $1.3 trillion this year. That is about 20 percent. One of my charts is going to say 19, but my math is closer to 20 percent of all tax receipts go just to pay interest.

I am going to say this two or three times in different ways. In 9 budget years, we have a model that says 30 to 33 percent of all the tax receipts will go just to interest. So you pay a dollar. In 9 years, what happens if a third of that money's function is just covering the interest on the debt pileup?

It is important to understand this chart and why I show it. I start with it all the time.

All right. Let's keep doing this.

Net interest as a percentage of total revenues would approach 30 percent, and understand, we have a model that actually is over 30. It is actually as high as 33 percent.

Here we are. Right now, we are in this slot here, so 19 to 20 percent of all of our tax receipts is going to interest in 9 budget years.

This should terrify you. How many bridges, how much helping people get healthy, how many benefits is the interest paying? No. I mean, it does benefit those who buy the bonds, and there is the Ray Dalio theory that it is still money circulating back into the economy, but it is money that does not go to meet the mission of the Federal Government. It is basically paying for past spending.

The ethical question here is: Is borrowing a tax hike? Now, for some of the antitax groups--I love them. I would cut spending dramatically. I voted that way, and I am in a tough district.

Let's be honest, what is the running joke here, Mr. Speaker? No one ever got unelected by spending too much money.

It is sort of perverse, but the bond market will basically be running the Federal Government in the next few years because of the influence it will have and the damage it can do to us.

That is a percentage to understand.

Let's actually dig in a little bit more. The boards, because I started late, are all upside down. So forgive me, I am going to be bouncing these around.

The rising national debt will lower wages. This is something we have been looking at over and over. We keep talking about affordability. Two weeks ago, I brought an academic paper and showed some charts that basically said if mortgage rates--a 30-year home loan rate today is what? Today, it is running 6.5, 6.7. If we weren't borrowing as much money as we are today, it would be 5.5, a full percentage point lower. I was showing how that is several thousand dollars a year on the average home price in America.

The next time someone is talking about we need to do stuff on home affordability, we absolutely do. One of the most powerful things we could do is actually convince the bond markets that the borrowing isn't going to keep going up and going up, that actually the Federal Government--and, remember, it is federal governments all over the world just bingeing because of their demographics. They now have their retirement populations. They need to finance those benefits, and almost everything we are doing now is on borrowed money.

Just to understand, there is a principle out there, whether it be your home loan being actually over a full point higher in interest rates because of Federal Government borrowing, but we are also suppressing your wages. Because that capital, when it is in the market, helps a business, plant and equipment, keep investing in more productivity. Higher productivity actually means you can pay people more.

Remember your old high school economics class? The two ways you raise wages: inflation--well, that doesn't get you anything; it just means your wages go up, but your purchasing power has gone down--or productivity. You are making more whatever you did because you invested in plant and equipment or better processes or better technology. That technology can't be financed because the Federal Government pushed up interest rates and consumed the capital.

All right, that hopefully is making sense.

Let's do this. Remember I was trying to talk about housing affordability? This is also another chart to just sort of understand what this means. On an average-priced home in my marketplace, which is the Phoenix, Scottsdale, Tempe sort of area, a home is just a little under $500,000 with no downpayment, so we just mortgage the whole thing. What if you could get what our model says, if we weren't borrowing so much, and get a 5.5 percent rate in today's market?

If you actually look at what we have done to mortgage rates, that differential costs homeowners several thousand dollars over that year, just to understand what this does.

Let's have a little more fun here. Now, I did this one because I am going to do a whole section here on labor force participation. You go, who cares?

It is a big deal, and we are seeing some really funky numbers out there in some of that, and some of it is because we are getting older. Some of it is younger people are entering the labor force later, but there is some hope on that side of the ledger.

But there is some difficulty here. So I decided I would actually grab a couple of slides from Arizona just to sort of demonstrate labor force participation rates in Arizona. You see this red line here? So the blue is America.

Why has Arizona crashed? Well, we actually had some problems. Arizona, particularly the Phoenix and Tucson area, had become sort of the back office, the call centers, the back-office accounting centers of America. Much of this type of job has now become automated, and now we are starting to see it in our job numbers and the number of people who are actually choosing to leave the labor force because they are older and they actually have given up looking.

But take a look at this chart, and you start to understand what we are seeing, and this number is actually fairly recent. This is as of May 2026, so this is old data.

We always think of Arizona as being this remarkable growth center. The reality right now: We have stumbled, and we are going to have to really do some things to actually start to deal with the reality of what is going on in our labor market.

As you actually take a look at it even further--just because I love my State and I care--this is the national unemployment rate. You see this spiking here? This is basically us right now, particularly what has been happening over the last several months. Our employment rates are actually really starting to spike up more; we are starting to see a real differential in Arizona compared to the rest of the country. This is what happens when you don't fixate on bringing the next generation of employment into your marketplace.

All right? So let's geek out a little bit more. I am going to show you this chart because it is absurd. It is a chart that makes me-- Social Security actuaries basically published a report, what, 3 weeks ago, and, yes, I have a tabbed copy, and I meant to bring it up here, but we were out doing the tour.

I want you to see something. You tell me how the Social Security actuaries came up with this number. So right here, this is actually the U.S. population and they have it falling and falling and falling. So a little beyond--so call it 2027, and then, suddenly, they have the U.S. population coming back up.

We don't see this on Census Bureau data. We don't see this in some of the university data. We don't see this on some of the population statistics groups. Somehow the actuaries for Social Security actually say that we are going to get several years down. The population is going to--you know, birthrates are going to continue to fall. Fertility rates are going to continue to fall, but then, suddenly, magically, they are going to come back.

And that is why so many of us are so concerned about the long-run numbers they have published, because this growth rate in fertility population, I don't think matches reality.

When you have people talking about in 6 years to 6 years and 3 months, the Social Security actuaries have the trust fund being empty, but don't worry, because the long-run rate is we are in real trouble. But it actually has, we believe, completely unsupportable population statistics in it.

All right. So that was my attempt to mock the Social Security actuarial report.

I am sorry for me going fast, but I only have about 20 more minutes to try to do this.

This chart is really, really important, and it is new to us.

So net entries into the labor force. If the Social Security trust fund is empty in 6 years and 3 months, if the Medicare trust fund is empty pretty much at the same time, the model says that if we follow the law, those of us on Social Security will take a 22 percent to 24 percent cut. That means the doubling of senior poverty in 6\1/2\ years to 7 years from now.

The Medicare trust fund will be empty. One of our problems in the Medicare healthcare spending is that we refuse to have a conversation of how to lower healthcare prices. We keep having discussions of how to manipulate and do financial engineering on healthcare. So we have turned healthcare into a financing issue instead of the adoption of technology, where you can functionally wear your own medical lab, you can use technology to actually refer yourself, those things. Because we are terrified to actually explain to the armies in our hallways who are here lobbying us that in less than 7 years, Medicare spending will double.

It will go from $1 trillion last year to some 6 years to 7 years from now, $2 trillion, and, at that time, the trust fund is empty. If you are a hospital, you are taking at least a 12 percent cut.

This is what is happening in the numbers. Why this is important is that: One of the ways you grow an economy is either with a stable or growing population, and particularly if that population has risen in skill sets. That is why so many countries around the industrialized world fight like hell for talent-based immigration.

You don't bring mass poverty across the border. You go out and recruit really smart people, because they pay a hell of a lot of taxes. This chart is basically saying that in just a few years, our labor force actually starts to decrease, and that is 2.8 million in 2030. That is how many years from now, Mr. Speaker? It is 2026. So think of this. In 4 years, the data says that the U.S. available labor population actually starts to shrink by over 2.8 million people.

Now, you tell me. How am I supposed to make the money, the math, the data, and the finances work for these programs? You have to do the unified theory of--whether it be a talent-based immigration system, the adoption of technology, the redesigning of incentives, you are going to have to do dozens and dozens of things, and we are not willing to do that yet.

All right. Look, this is a complicated board. It doesn't work on television. It doesn't really work on a floor speech, but I just need you to understand that what we are looking at is because we are aging as a population without enough young people, that our percentages of who are available to us--this is 2026. This is 1977. It would basically explain that when I was a kid in the 1970s, for every dollar we spent on seniors, we spent almost $7 on people who were functionally young.

Today, that number has flipped, and it has just flipped because the demographics have flipped. It is the same thing as what happened here with who is available to be in the labor force.

Much of our labor force population now is much older. The jobs available for the young are half what we had when I was young. It is just baby boomers.

We knew people were going to turn 65 for how many years? I mean, this place, in some ways, is so incredibly absurd in its unwillingness to basically do basic math. I remember sitting in a statistics class in around 1981, and the professor then was talking about what baby boomers meant to the economy. Here I am, a Member of Congress all these years later, and it is like we are just now discovering it.

All right. Here is actually something--it is hopeful, but the next slide will actually take the wind out of your sails.

So prime-age labor force participation, so the people we consider sort of in their prime working years, actually, we are doing really well here. Some of the growth in the economy, some of the investment in the economy, for prime age, we have 84 percent. But here is my problem: Labor force participation of those 55 and up has been crashing.

There are lots of reasons to debate this and discuss this. Is this skill sets? Is it the adoption of technology? Is it the wealth effects of as asset prices have gone up so much, we have people who are able to retire early? It is a combination of everything, but these workers are often our most productive.

So just understand that prime working-aged people are actually doing really well working and being in the labor force. Those of us who are older, we have been disappearing like crazy, and we actually see that in our productivity numbers.

All right. Mr. Speaker, I warned you this was going to be a little geeky.

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

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Mr. SCHWEIKERT. Excellent. I am probably going to use every one of them. No, I will try to go as fast as I can here.

The U.S. population age 65 and up, and I go back to 2011: 41 million. This year, I have 63 million.

Okay. Wonderful. I am one of these. I am basically 64. Now, understand, my wife and I are both 64, and I have a 4-year-old and a 10-year-old, so we are very optimistic about the future, or we are out of our minds, but we all knew this was happening.

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Mr. SCHWEIKERT. We did what to shore up the trust funds? We did what to basically incentivize our brothers and sisters to stay in the labor force if they wanted to?

We had dozens of things--I have been here 16 years, and I have spent most of that time trying to get this place to actually deal with the reality of let's save Social Security. Let's actually save Medicare. Let's do those things that help us grow. Let's adopt the technology so we can crash the price of healthcare.

I have had some success on the edges, but I lose to the armies of lobbyists that are in the hallways here that lose their minds because we may change their business models.

Mr. Speaker, we are now borrowing about $90,000 every second. Today, we will borrow about $7 billion. The current burn rate so far this fiscal year, just this fiscal year, we are going come in close to $2.2 to $2.3 trillion of borrowing, and yet, we have higher interest rates.

How long is the bond market going to keep saying we are going to finance you because how much of the benefits that our brothers and sisters who are older have earned we are actually borrowing the money?

Seniors per hundred workers--and actually, here is just the simple math. How many of us grew up always hearing you have got 23 people per retiree, and that is how we finance Social Security? I have shown some charts here where in the end of a decade from now, you have about 2.3, and it is this: In 2011, we had 21.9 working-age folks per senior. Today, actually, that number has eroded 47 percent increase in that change. It is almost a 50 percent change in that time, and it actually steepens. Part of the steepening isn't because we have more seniors. It is also because we have substantially fewer young people.

All right. Mr. Speaker, 65 will continue to grow as a share of the population. In 9 budget years, 21.4 percent of the population will be in their benefit ages. Our system wasn't prepared for this. In 25 or 26 months from now, I should have double checked the math, over half of the Federal spending will go to those of us 65 and up. That is not half of the tax receipts.

Remember, if we are borrowing $2.3 trillion on top--but think about that. Our government functionally is an insurance company with an Army.

All right. This is actually one of my intense frustrations. Let's take a look. The trustee's report projects this significantly more optimistically than the other sources. Remember I showed you a chart there, and I was somewhat mocking the trustee's report, basically saying they have this magic thing where fertility rates crash and crash and crash, and that is within the next 9 years, and then suddenly, magically it explodes upward. No one else has that.

Here is the Medicare and Social Security actuary's trustees saying, oh, well, we are going to go along, but magically when we get to 2030, they are going to start to go up. This has created a distortion. That is actually why you see groups like my Joint Economic Committee, Penn Wharton, so many of the others, saying the trustees are missing it. The debt the United States is in is dramatically more devastating.

Mr. Speaker, 2030, 2035 isn't that far away.

I am sure we are all going to get together and decide we are going to do a debt deficit commission. I am sure we are all going get together and lay out the incentives of how we actually manage this crisis. I am sure we are going to do those things to convince the bond markets that we are creditworthy because here is part of the frustration.

Greece, today, can sell a 10-year bond cheaper than the United States. Greece today has a better forward credit rating than the United States. We are now 13 or 14 on the credit stack where other countries can actually sell a 10-year bond cheaper than we can.

And I keep wondering. I have been coming behind this microphone for almost a decade and a half. We have been introducing pieces of legislation that could revolutionize the costs of healthcare, could actually make government dramatically more efficient, and I almost can't get a single Member of Congress to consponsor any of this legislation because you have to go to war with all the lobbyists because it means changing the bureaucracies or the business models out there. It is like they basically have this attitude: Screw the society. Screw my kids. Screw your retirement, as long as I don't have to tell the truth about the math.

Today, your government borrowed about $90,000 a second. Yesterday, we borrowed about $90,000 a second. Tomorrow, we are going to borrow--that is like $7 billion today. We will argue for hours here on the floor for millions.

I need you to see a chart. If this is a billion dollars, if this is a trillion dollars, millions is basically this tiny little--the lack of calculators here is a destruction of this Republic.

There are those who actually tell me, David, it is waste and fraud. It is this and that. I have done presentations to show you our best calculations of waste and fraud. It is a problem, but it is a sliver because the majority of what we call waste and fraud is actually the waste. It is the way we have designed programs.

Mr. Speaker, I don't believe my brothers and sisters here are actually willing to do the hard things and tell the truth about the math and then redesign these programs because it means getting the crap kicked out of you by the lobbying and the business models out there. That means creating a revolution of taking on the debt and deficits.

We will pay a remarkable price for the fact that the Penn Wharton models within a decade had us actually already approaching the no-go numbers of being able to sell our U.S. debt. At that point the bonds explode, and the bond market runs this country.

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