February 7, 2020 - Issue: Vol. 166, No. 26 — Daily Edition116th Congress (2019 - 2020) - 2nd Session
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MODERNIZING ENTITLEMENTS; Congressional Record Vol. 166, No. 26
(House of Representatives - February 07, 2020)
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[Pages H972-H975] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] MODERNIZING ENTITLEMENTS The SPEAKER pro tempore. Under the Speaker's announced policy of January 3, 2019, the Chair recognizes the gentleman from Arizona (Mr. Schweikert) for 30 minutes. Mr. SCHWEIKERT. Mr. Speaker, my family accuses me of being incapable of speaking without moving my hands or without displays, so we are going to see if we can do a little bit of both that we are good at. Mr. Speaker, about every week, I try to take a block of time and come here to walk through both what I see happening math-wise and what I see happening demographic-wise. I know as soon as I use those words, most anyone who is watching this is now falling asleep. But the math is important. I put this board up because I am a believer that there is a way to save the country from being buried in debt. There is a way that the next 30, 40 years can be incredibly prosperous, but we need to invest in this magic device, which is called a calculator, because much of what we do here is rhetorical. We do policy by feelings, and we engage in just absolute absurdity in our unwillingness to talk about the reality of what is going on. So, first, a bit of premise, and then we will do a little bit of what happened in today's job report to demonstrate there is a path, but that path doesn't exist until we start to be honest with each other. So just a top-line understanding, the next 5 years, just the growth in Social Security and Medicare--it is mostly Medicare--and healthcare entitlements, just the growth equals the entire Defense Department. Mr. Speaker, you have to understand what is happening. It is not Republican or Democrat. It is demographics. There are 74 million of us who are baby boomers, and we are moving into our retirement years. We have earned benefits, and there is no money in the bank. It is all going to be borrowed. So think of that: Over the next 10 years, just the growth of Social Security, Medicare, and healthcare entitlements is the entire discretionary budget. Everything else is on autopilot. Yet how many of our brothers and sisters who are elected, and who have this incredible opportunity and responsibility to come tell the truth, are comfortable coming behind this microphone and saying: Hey, it turns out that we are getting old very fast as a society. We have stunning numbers of promises that we have an obligation to keep. And we are unwilling to have the honesty of the discussion of what we are about to do to our kids in crushing them. I have a 4-year-old daughter. Doesn't she deserve to have the same opportunities we all have had? It turns out there is a path, but we need to stop delusional thinking. Forgive me when my brothers and sisters on the Republican side say, ``Well, if we just got rid of waste and fraud,'' it is a rounding error. It is important, and we need to do it. ``We just have to tax rich people more.'' It is delusional. It is fractions of a percent, and you could take all their wealth, Mr. Speaker. We don't seem to have our heads around the scale of this math and the number of zeros that go with it. Let's sort of walk through this. In the last couple of years, we have been trying to pitch a concept. You can't just do one thing, Mr. Speaker. You can't just change entitlements and think you are going to accomplish anything. You can't just tax people more and think you are going to get anywhere. You have to do everything. It is sort of the wholistic--I prefer the term ``unified''--theory that we have to get the economics working. We have to maximize economic growth, and we have to maximize labor force participation. We need to adopt revolutionary and disruptive technology to crash the price of healthcare because, as I was just sharing with you, Mr. Speaker, healthcare is what drives the deficit. I was here last week, and I was showing slides that 90 percent of the future debt is substantially Social Security but mostly Medicare, yet the only calls I get when I show that slide is I get people angry: Stop telling us that. That doesn't fit the folklore I bathe in. But the fact of the matter is, there are technology disruptions coming right now that could crash the price of healthcare and be amazing in changing our debt curve. The problem is a bunch of that technology is actually illegal because it uses algorithms, sensors, and things that our current legal framework and reimbursement framework isn't ready for. We need to modernize. {time} 1400 Employment, we are going to talk about some of the remarkable things that came out in today's unemployment numbers that should be incredibly hopeful to both those on the left and the right of what is happening, where our brothers and sisters--what we refer to as marginally detached--are coming back into the labor force. This is a good thing. It makes remarkable differences. You are going to start to see: Do we add incentives in the earned and even unearned benefits? Remember, in our society, the vast majority of our spending, 70-plus percent, is on autopilot. It is what we call entitlements. You earned your Social Security. You earned your Medicare. You earned your VA. You earned these things. There are other benefits you get because you fell below a certain income. You are part of a certain Tribal population--those things. These are treaty obligations. They are societal obligations we have made decisions on. Are there things we can do to add a spiff? Saying: Yes, you may be 70 years old, you have your earned entitlement, but could we give you a little spiff? Are you healthy? Do you want to continue to work? Do you want to stay in the labor force? Because it turns out to be really good for society. It turns out to be really important. We still have a problem with millennial men, which is a different speech, and one day, we will figure out why they are underparticipating. Population stability, a really uncomfortable part of the conversation to have, but the math is the math. Our birthrates have collapsed. We are looking at data right now that says half of millennials, more than 50 percent of millennials, will never marry. It doesn't mean they won't be in long-term committed relationships, but are there incentives we can produce as a government, as a society, that those stable relationships bring another generation? Because it is an honest math problem. We are collapsing population-wise. Immigration, how do you design an immigration system that is open, welcoming, but is talent-based? Because the reality of it is, we are about to hit such a demographic headwind if we do not have brothers and sisters becoming Americans who have certain skill sets. In many ways, it is a more elegant system. I don't care about your race, your religion, who you cuddle with, all of these things. I do care that you add velocity to our society, to our economy. Then, there are other things: tax policies, regulatory policy, smart technology, things we can do to maximize economic growth. Look, our pitch is: If we can make these things work--and you can't do one or two of them; you have to do all of them--we have a model that says, at the peak of the baby boom, so about 15 years from now, or less than that, we kiss up to 95 percent of debt-to-GDP, but we can hold it. Then, it fades back to something normal. If we don't do this, there are charts out there that show a couple hundred percent of debt-to-GDP. We blow up the [[Page H973]] society. We basically become anemic, slow-growth. We raise taxes like crazy on young people to make them pay our benefits. We become a country that has crushed any excitement and hope. Let's talk about the good things, because there is starting to be some proof that when you get tax policy correct, regulatory policy correct, some of these incentives, good things happen. I know in today's rage-based politics, we sit there and attack everything, but there are good things happening. How do we figure out what makes them happen and do more of it? And the things that aren't working, let's do less of them. It is not that complicated. Look, today, we got the jobs report. The jobs report we get about January is really important because they also give us a sense--it is not the final number but the sense of what was happening in 2019 and those last 4 months. Every smart economist we work with--I am the senior Republican on the House side on something called the Joint Economic Committee. It is basically for all the kids in your high school who were president of your math club. If you love the data--and I happen to be blessed to have a couple of economists who work for me in that capacity--we were all expecting revisions and some ugly numbers. Turns out, a few hours ago, we found out that there were 55,000 added in November and December, the ending parts of last year. The economy turns out to have been healthier. The employment opportunities were healthier. You all saw the number for January, 225,000 jobs, far beyond even the most optimistic predictions. There should have been joy in this room. Those are people who are working, who are coming back in the labor force, who are changing their lives. But this place is incapable of joy anymore. These are really, really good things. But there is something even more remarkable underlying in that data, and it is important. I know it is not exciting, but it is really important if you care about people. First, we work on the premise that growth is moral. You are going to see some numbers here where our brothers and sisters who had basically quit, they had stopped trying to find employment. They had dropped out. We called them the marginally detached. Those people who might have a small part-time job, but they are unhappy. They are basically the working poor. All of a sudden, we are seeing, in the last 24 months, remarkable movement in their wages and even more remarkable movement in their job opportunities. There is something working out there. Remember, the first slide we were talking about how we have a healthy enough economy, a healthy enough economics in our society so we can keep our promises. This is one of the charts that is really important. If you all remember your high school economics class, what are the two components that make wages go up, the two things we focus on? Well, one is productivity, and the other is inflation. When your wages go up, well, inflation is up, so we are going to pay you more, even though you have no improvement in your purchasing power. And inflation-driven wage growth, you are typically falling behind. The other side--and that is what this chart talks about--is productivity. The company invested in a new piece of equipment, new software, new methodologies, or new supply chains, but it requires capital investments. But we have gotten more productive, meaning we can pay our workers more. We were panic-stricken, functionally, at the end of 2016. Productivity had collapsed. Lots of the smart people were saying: Well, you have had the tax reform. People did their investing, this and that. It is going away. Turns out, they were absolutely wrong. Look at the last bar. That is 2019. We have had a spike. Now, I still don't think it is enough, but we are up to what we call 1.7 productivity growth. For an economy our size, that is remarkable. We can do better, but it is going the right way. If we are going to pay our brothers and sisters more, if the working poor are going to have an opportunity, this is crucial. Can we fixate on the things that are working in our economy? Because there is something working now, so how do we do more of it? This next chart is impossible to read, but it is really important. You have three layers in here. These are for wages, so those folks who are at the low end of the scale, middle end of the scale, and those folks who are making lots of money. The remarkable thing that has happened since tax reform--I know this is really hard to see. It turns out, it is the working poor, that lowest quartile, that is having the most growth in their wages, that bottom 10 percent of our brothers and sisters that we were writing off as a society. I have been on the Joint Economic Committee now for years, and just 3 or 4 years ago, we brought in these fancy, very well-credentialed, really smart economists who basically said that Americans who didn't finish high school, Americans with moderate skills, they are part of the permanent underclass. Start thinking of ways to provide them subsidies, welfare, housing, because they are going to stay there. The velocity, the concept that you can start out poor today, learn a skill, work hard, and move up, they basically said was over. They are wrong. And this isn't Republican or Democrat. This is hope. This is what America is supposed to be about, that those folks come back. You may not have had the opportunity to have great skill training. Maybe something horrible happened in your life, you dropped out of high school. Three years ago, we were writing you off. Today, you have double, more than double, the wage growth of everyone else and the mean in this society. I know this is geeky, but it is really important. These numbers are millions and millions and millions of our brothers and sisters out there who had a really crappy decade. All of a sudden, something is happening out there where their wages are growing. The job stability, the value of their labor, it may be the most elegant way to say it--and some of this is complex. And this is an uncomfortable part of the conversation. Forgive me if I am not as eloquent on this as I would like to be. For low-skilled populations, it is a combination of a robust enough economy to have a need for those skills or lack of skills. But there is a need for that labor. The other side is, you are not flooding your society with a type of immigration that puts so much low-skilled population in the society that you crush the working poor. So think of a little bit of a seesaw. You have to do both to get the value of that working poor population, to make their labor valuable. It is happening. That should be joyful. Now, we should figure out how to do more of it, how to keep this going, because it is working. Now, here is the one where I may take us a little bit to a level of complexity in the thinking, but it is really important. When we did tax reform a couple of years ago, the Joint Committee on Taxation folks-- they are all freaky smart. There is like 50 of them. A number have Ph.D.'s in econometrics and all these things. They came to us and said: David, there are two fragilities in tax reform for the economy to grow. It is capital stock, available cash to be lent for businesses, for organizations, for things to grow, to buy that new piece of equipment for that labor productivity. The other thing was labor itself. We are getting old very fast as a society. There are some charts out there that say, within the decade, we functionally have two workers for one person in retirement. It is not Republican or Democrat. It is those of us who are baby boomers. It is what it is. Something has started to happen in the last 2 years, and we saw a pop of it in this January data. Think about this. This over here is sort of that 2008, 2009, and we were at 67 percent labor force participation. Now, labor force participation basically means everyone in society less those people who are under 16. So those who are eligible to work, up and to, I believe, being much older. Now, this number was always supposed to crash because we are getting older as a society. But it was supposed to continue to just dive down because we are only halfway through the retirement of the baby boomers. All a sudden, in the last couple years, we have broken the trendline. All of a sudden, today, we saw we are up to 63.4 percent labor force participation. Most people glaze over and go: What the hell does that mean? [[Page H974]] Well, it means it is a number that those smart economists a couple years ago were telling us we would never get to, but somehow it has happened. We are functionally living in a time when we are going to be rewriting textbooks. But what is also remarkable--and you are going to see this in one of the other charts here--is those who are coming back, they are starting to look for unemployment. So how do you have this weird number today? There are 225,000 people who moved into the labor force, or took jobs in January, but unemployment actually ticked up one-tenth of a point. But the labor force participation, the number in the labor force, also goes up two- tenths of a point. That is actually wonderful. What it means is that people who had given up, who weren't looking, hadn't looked in the last 4 weeks, in the last year, they had functionally given up, almost a couple hundred thousand, maybe 170,000 or so, came back and started looking, coming back into our society's labor force. This is really important because there is just that societal concept of you are less likely to be using bad things if you are working. You are more likely to be able to start having a functioning family, maybe even family formation, if you are working. Your future, your optimism, your health are better if you are working. All of a sudden, we are starting to see populations that those fancy economists were writing off just a couple years ago. They are coming back. {time} 1415 This is moral, but it is also really good. Why does it become partisan, saying: Well, it is not as good as it should be? It is a remarkable break of every trend line we had. You would think we would have this honorable conversation, saying: Let's understand what is working and do more of it because, if we can do this for a few more years, another decade, that economic trend line starts to change remarkably. And I will try to make that make sense. So last August, CBO did debt projections. We just got another one last week. Did anyone come behind these microphones--well, I did--and say: Hey, did anyone notice that the 10-year window of debt actually went down $705 billion? It turns out, if you dive into that, some of that was payrolls. There are a lot more people working. They are paying a lot more payroll tax. That is wonderful. There is another thing that is actually a little more complex to get your head around: interest rates. We expect the cost of financing the deficits of the U.S. Government to also came down about $400 billion. But there is an argument that the tax reform--remember how we said what were the two fragilities, labor and capital stock? It turns out that thing called capital stock is remarkably better than anyone had modeled. We did something in the tax reform to stop businesses from moving their domiciles overseas, taking their profits and booking them overseas, keeping that capital overseas. We changed that. We have had a remarkable amount of that, billions and billions, I mean, a few hundred billion dollars come crashing back to the United States, where they have to pay some taxes here on it, but that cash is now in our society. It turns out also savings rates have turned out to be much better than we modeled. So just that and the fact that more people are working is about a $705 billion reduction in the deficit. In that one period between August and last week when we got the CBO report--and remember, the cost of tax reform we thought would be about $1.4 trillion. We just covered about half of it. So it is just an interesting thought on what is going on. This is the remarkable chart. This is the one we need to get our heads around. So think about this. It is January 2009, January 2010. How many of you remember people getting behind microphones and talking about the real unemployment rate? Do you remember the real unemployment rate? It is not these people who are out looking. It is all the people. It is the worn-out workers. Those people have quit. We had numbers where it was approaching 17.6, 17.5 percent of our Nation was part of the real unemployment. Take a look at what has happened. This is remarkable. We are now starting to see numbers that were 6.7 percent of the--this is people who are looking, not looking, who have worn out, who have given up. It has been cut substantially, more than half. And we are at this point where we have been having this amazing academic debate, conversation: What is real unemployment? Not only that, what is full employment? How much--and I was told never to use this word behind the microphone--but this concept of elasticity. How many of our brothers and sisters are actually available to come back into the labor force? It turns out there is a miracle happening out there. Every month, we will tell you: Oh, 150,000 or, in this case, 225,000 took jobs, because it is not part of the way they calculate. We are not telling you: Hey, there may have been another couple hundred thousand who moved back into the labor force who weren't even looking, so we don't count them. They deserve to be counted, and they are counted in this data here. They are what they call the U-6 unemployment. If we could keep this going for a few more years, we are already breaking the rules in almost every textbook, but this becomes remarkably important. For my brothers and sisters on the left, my brothers and sisters on the right, we get elected to do our best to make people's lives better and protect the Constitution, defend the Constitution. If you don't see this as making Americans' lives better, you don't understand, you don't own a calculator, or you don't have a heart. I get behind here and I talk about the math, but this math is people. It is families. It is folks who are being crushed in the last decade who now actually have hope. Why isn't there some joy? Why do we have to live in a time where rage is the commodity of politics and not joy for the success we are having for so many people who are part of the working poor that now have hope, now have futures? It is working. And the other thing that is also somewhat joyful, you see the red bar, that is real GDP. You have got to understand, if we were going back to around `16, even when we calculated the year `17, how much of our GDP was also being dragged along, helped, assisted by the rest of the world? Now, when you look at what is going on, we have had a remarkable level of stability, but we are dragging the rest of the world with us because the rest of the world is basically an anemic mess right now. And, yes, next month I expect some ugly things in some of the numbers because of the virus and what it has done to trade. There may be an upside in an odd way where many manufacturers, businesses, will consider moving their supply chains, making them less fragile, less concentrated, which will be great for us as a country because we have just now had USMCA, the NAFTA replacement, pass, so now, all of a sudden will you think about moving part of your manufacturing back to North America. But this is actually a really interesting chart to understand. Even in a time where the rest of the world's economic growth has been collapsing, we are still doing remarkably well. And I was going to come up here and show you the formulas of, hey, a point of GDP in the EU means this much to us. But just understand, we had some help 3 or 4 years ago. Now we are the ones helping the rest of the world. Now, back to that being remarkable, and this is sort of the closing on the concept that growth is moral. But there also should be joy. Those who come behind these microphones and say, ``We care about people,'' ``We care about the workers,'' ``We care about the working poor,'' ``We want society to continue to expand and be healthy,'' take a look at the chart on my side. If you see blue, it is the previous 8 years. If you see the red, it is a function of the last 3 years. Do you know which bar is the highest and has the biggest separation? Who has had the biggest growth in earnings on this chart? Turns out it is the bottom workers in our country. If you care about our brothers and sisters who have been struggling for so [[Page H975]] many years, this should be joyful, because something amazing is happening out there. Now everyone is doing better--well, except high-wage managers. They are basically static. If you come over here and actually look at the top income, they are doing fine, but the bottom is the remarkable change. This is really important, because for so many years, I would listen to my friends on the left come behind these microphones and talk about income inequality. It is a real thing. But what happens when you have made more progress, particularly in the last 12 months, of closing that gap of income inequality not because you have crushed those with high skills, those with high wages, but because you have brought up so much of our society, you have grown their wages remarkably? This needs to be our goal. Our goal as a society must be to lift everyone up, not figure out that one quartile you have identified as the enemy and go out and decide you are going to crush them. That is what our modern politics has become. Back to the first slide again. Over the next 30 years, if you look at the math of what is coming at us, if you actually strip Social Security and Medicare out of the next 30 years and say, ``What do we look like 30 years from now?''--so my little girl, when she is 34 years old, what does the Federal budget look like as we see it today? It is about $23 trillion. If we don't add Social Security and Medicare into the number, it is about $23 trillion cash in the bank. Now, that is not inflation adjusted, but $23 trillion cash in the bank. If we put Social Security and Medicare back into that 30-year window, my little girl and every other young person, every other person who thinks they are still going to be around in 30 years, we are $103 trillion in debt. It doesn't have to be that way, but we have got to crush the price of healthcare with technology. We have got to have people in the economy who are helping it grow. We need the productivity. We can have a remarkable future. But the intellectual capacity of the debates we are having around here, we have functionally gone a year and done nothing, nothing that actually helps America, but we have done some great messaging bills and great politics and great grandstanding and pretty good speeches. We can do better, and there is a path. Mr. Speaker, thank you for your patience. I yield back the balance of my time. ____________________
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