Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Chairman, I thank the gentleman for yielding time to me. Mr. Chairman, I think it is important that we have this debate. As the gentleman from Oklahoma mentioned, the President and his team spent literally $1 million putting their budget together. I think it deserves careful consideration by the Members of this body. First of all, I want to point out a chart we have used all day, and I think it is important because there are clear distinctions and differences between our plan and the President's plan. We believe that every penny of Social Security taxes should go only for Social Security. There is a difference there between us and the President. If my colleagues look at the difference in the plan, and again these are not our numbers, these are from the Congressional Budget Office, we secure $1.8 trillion for Medicare and Social Security over the next 10 years. The President is somewhere in the neighborhood of $1.65 trillion. I want to give some credit to the gentleman from South Carolina (Mr. Spratt), the Democrats and the Blue Dog budget. In fact, in some respects, we should feel honored because, in many respects, their budget looks a lot more like our budget than it does the President's budget. But one of the biggest differences between the various budget plans that are being offered here today is we believe that, once we have saved Social Security, once we have said that every penny of Social Security taxes will only go for Social Security, and then, secondly, we say we are going to live by the spending caps that we and the White House agreed to. I was there for the bill signing, and I think the gentleman from South Carolina (Mr. Spratt) was there as well. It was a glorious day out on the White House lawn. We said we are going to live by these spending caps, and we are going to keep our word even if the President does not. The President has in his budget exceeded the spending caps by about $30 billion. Again, to the credit of the gentleman from South Carolina (Mr. Spratt) and the Blue Dogs, I think they do a better job of living by those spending caps. But I think the biggest difference between our budget, the Blue Dog budget, and more importantly the President's budget is the President imposes about $45.8 billion, depending on whose scoring we use, but over the next 5 years, we are looking somewhere in the neighborhood of $46 billion in new taxes.

Mr. GUTKNECHT. Mr. Chairman, I thank the gentleman from Connecticut for yielding this time to me. As my colleagues know, somebody once said, and it may have been the Vice President, that everyone is entitled to their own opinions, but they are not entitled to their own facts, and I want to talk about the facts because we heard earlier today, and there is some revisionist history that it was the, quote, minimal tax hikes of 1993 that brought about the balanced budget that we have today. Mr. Chairman, I am not making up the facts. This is according to the Congressional Budget Office. This is the direction we were headed in 1995. The deficit was at about $200 billion. They were predicting that by 2009 we would have deficits approaching $600 billion, and worse, that included the Social Security surpluses. Now where are we today? Mr. Chairman, thanks to some of the fiscal discipline demonstrated by this Congress since 1994, we are headed in the right direction. Again, these are not our numbers. This is according to the Congressional Budget Office. Now one of the things that we are debating here today is whether or not there should be tax relief for the average American family. Now somebody said earlier, and it is true, and this is according to the Tax Foundation, that Americans now pay the highest tax burden since 1944. Now our budget does not specifically call for tax cuts, but it does begin to make room for tax cuts because we believe Americans are overtaxed. Mr. Chairman, the average American family, and again not according to us, according to the Tax Foundation, a nonpartisan group, the average family today spends more in taxes than they do for food, clothing, shelter and transportation combined. Now we happen to believe that is wrong, and we may have a difference of opinion with our friends on the left, but that is the way we see it. Now it has also been mentioned that our Democratic friends really do not want to talk about the President's budget, and I suspect this article, again not something that we said, this is according to the Investors Business Daily; what they said was balancing the books on the backs of the poor. But this is what Investors Business Daily said, and again the source of the Tax Foundation, that under the President's budget plan he increases taxes over the next 5 years by about $45.8 billion. Now that is bad enough, but what is worse, almost 40 percent of those new taxes will be paid by families that earn less than $25,000 a year. Now it is no wonder then that our Democratic friends do not want to talk about the President's budget. In sum, our budget does four things: First of all, Mr. Chairman, we say that every penny of Social Security taxes ought to go only for Social Security. Second, we say that we are going to keep faith with the spending caps that we agreed to with the President in the Balanced Budget Act of 1997. Third, we begin the process of actually paying down some of that debt. We will begin to pay off some of the debt that is owed to the public. Finally, we make room for tax relief. Now I know that does not sit well with some of our friends on the left, Mr. Chairman, but we believe that is important. In sum, what this budget really does is that it ensures lower interest rates and a stronger economy well into the next century.

Mr. GUTKNECHT

Mr. GUTKNECHT. Exactly. Mr. Speaker, that is a lot of money even around here.

Mr. GUTKNECHT. Mr. Speaker, I would just point out a couple of charts, because there is going to be, I suspect, a rather heated debate tomorrow and for the next several weeks about who is doing a better job of saving Medicare and Social Security. I think the numbers do speak for themselves. This is a chart, and again, these are not our numbers. These numbers actually are generated by the Congressional Budget Office. But it shows that over the next 10 years we are going to save $1.8 trillion for Medicare. The Clinton plan, which is rather complicated and difficult to explain, will save about $1.65 trillion over that period. There is a big difference.

Mr. GUTKNECHT. Mr. Speaker, I just want to make it clear, we look at this as a possibility in the future of allowing people to invest for themselves, where on the other side the administration is saying, ``Well, we will invest it for you.'' With that we see all the political pressures and really the tremendous number of potential conflicts of interest. I mean what would the government do if they were one of the largest investors in Microsoft, for example? Could they pursue the antitrust suit that they are doing right now, or any antitrust suit? In fact, it is estimated that if we went ahead with the scheme that the President was talking about, that within 10 years the Federal Government could own as much as 25 percent of all the stocks on the New York Stock Exchange, and we become more than the 800-pound gorilla. It is more like the 5,000-pound gorilla on Wall Street.

Mr. GUTKNECHT. But first, Mr. Speaker, I think we have to establish that our priorities are very clear in our budget. First and foremost, we need to solve that problem. If the gentleman will put that chart up with the blue and the red bars which demonstrates where we are headed with the Social Security Trust Fund, it demonstrates why it is so important that we begin as soon as we can to say that every penny of Social Security taxes will go only for Social Security. We are going to do that this year. That is the most important thing. Now if we find out come later in the year that there is more revenue available, then we should allow some of the families to keep some of what they earn. I happen to believe that if we do start talking about tax relief as this process goes forward, I believe that the first and foremost tax we ought to solve is this marriage penalty tax. Every year about 21 million American families pay a penalty for being married. They pay extra taxes to the tune of an average of about $1,200 per family just because they are married. That is my own personal opinion. That has nothing to do with the rich versus the poor. That has nothing to do, in my opinion, with right versus wrong. But the gentleman asked about Social Security and Medicare. I might just point out we were talking earlier, and the gentleman from South Carolina I think will appreciate this particular chart and this quote. One of the things we believe long-term, I believe, is allowing individuals to take at least a portion of their FICA taxes and be able to invest for themselves in personalized retirement accounts and take advantage of what Einstein described as the most powerful force on earth, the magic of compound interest. But I want to make it clear, the President has a slightly different scheme. What he wants to do is take taxpayer money and invest it directly in the stock market. One of the people who has probably had more influence on fiscal policy, at least as it relates to the Federal Reserve and interest rates and all the things that have helped keep this economy strong, is a gentleman by the name of Alan Greenspan. I want to just read this quote and what he said about the President's scheme of investing taxpayer money without the permission of retirees directly in the stock market. He said, and I quote, ``Investing a portion of the Social Security Trust Fund assets in equities, as the administration and others have proposed, would arguably put at risk the efficiency of our capital markets and thus our economy. Even with Herculean efforts, I doubt if it would be feasible to insulate the trust funds from the political pressures.'' That is what Alan Greenspan said.

Mr. GUTKNECHT. No, Mr. Speaker.

Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for yielding. I just want to read a couple of quotes. In his 1998 State of the Union Address, President Clinton said, ``Tonight I propose that we reserve 100 percent of the surplus, every penny of any surplus, until we have taken all the necessary measures to strengthen social security for the 21st century.'' This year the President lowered the bar. This year he said, ``I propose that we commit 62 percent of the budget surplus for the next 15 years to social security.'' We took the President at his word. In the budget that we will debate tomorrow, the House Republican-passed budget will take 100 percent. That means that every single penny, for the first time I think perhaps in my lifetime, every penny of social security taxes will only go for social security. What we will do with money that is not needed to pay those benefits is we will actually pay off some of the debt that is owed to the public. The debt will still probably go up slightly.

Mr. GUTKNECHT. I do not feel quite so young any more, but I will tell my colleagues it is important because we are the peak of the baby boomers, and both my parents are still living, they are both on Social Security, they are both on Medicare, and the last thing I want to do is pull the rug out from under them. But I also have three kids, and I worry about what kind of a country we are going to pass on to them, what kind of a standard of living are they going to enjoy. And I want to get our colleague from South Carolina involved in this because something else the gentleman mentioned about using what Einstein called the most powerful force on earth, the magic of compound interest long term to allow individuals to save and invest for their own future. I have been told, and there are different numbers floating around, and it depends on which years you use, but, as my colleagues know, often we hear that Americans do not save enough for the future. But my colleague mentioned before that the average American between what they pay and what their employer pays into Social Security, they are saving about 12\1/2\ percent of their annual income. Now the problem is not that Americans do not save enough. The problem is that we get such a lousy rate of return, and the number that I worked with usually and the average that I have seen provided by the Congressional Budget Office is for the last 30 or 40 years the average rate of return was 1.89 percent. Now not many Americans would invest 12\1/2\ percent of their income into an IRA, or a 401(k), or even a savings account; can only earn 1.9 percent.

Mr. GUTKNECHT. The gentleman is correct. I mean that in the end of this debate sometimes we get so caught up with numbers and statistics, we all have charts now, and we can use percentages, and we can talk about dollars and so forth. But in the end the gentleman is absolutely right. What this debate is about is about generational fairness, and I think we have got to be fair to our parents, and I always talk about in my town hall meetings the fact that I was born in 1951.

Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for having this special order. I think we need to put this in some historical context though of where we were just a few years ago when the gentleman, and I and the gentleman from South Carolina who is going to be joining us in a minute, when we were first sent here to Washington after the 1994 elections. The Congressional Budget Office then told us that we were looking at $200 billion deficits growing to nearly $600 billion by the year 2009, and that was using the Social Security surplus to make those deficits look even smaller. So in reality, using honest accounting, honest bookkeeping, those deficits were probably between 350 and over a trillion dollars that we are looking at in annual deficits. That is where we were just a few years ago, and I think it is important to note how far we have come just in the last several years in part because we have had the fiscal discipline. We have eliminated 400 programs, we have cut the rate in growth in Federal spending by more than half, and that coupled with lowered interest rates that helped bring about and the welfare reform, more people going back to work, a stronger economy; all of that has made it easier for us to get to what will be, I believe this year, the first real balanced budget; in other words, not using the Social Security surplus, the first real balanced budget I think this country has seen in many, many years.

Mr. GUTKNECHT. Mr. Speaker, let me point out, though, what some of the Congressional Budget Office people and what the Office of Management and Budget also said. They did not actually use the term ``irresponsible''. I want to show this article which appeared in the Washington Post last week, and they were both very, very critical of the Clinton plan. Basically, they described it as sort of a smoke and mirrors type plan. Frankly, even the chairman and many of the Democrats who either served on or were very involved in the Medicare Commission essentially came to the same conclusion, that what the President was really proposing was nothing. He was proposing taking more general fund revenues to try and supplement Medicare, when really what we need with Medicare is not necessarily just more money. We need real reforms. We need to get under the hood, as Ross Perot used to say, and really fix this thing. By doing what the President was doing, it was called irresponsible because it really, in some respects, only makes the problem worse over the long-term. So I think we are going to have a good and healthy and heated debate about Medicare, but it is important to see what some experts have said. It is not just us. As I say, it is the Congressional Budget Office. It is OMB. It is columnist David Broder. He wrote a column last week. It appeared in Sunday's Washington Post. The headline was ``Medicare: Another Clinton failure?'' As we look through his plan, and it is described in detail here, and if people would like a copy, we can certainly make certain they can get a copy of it, but there have been many people who have studied the Clinton plan and they say this is a joke, and unfortunately it is kind of a sad joke for American seniors.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, in some respects I am delighted this debate is going to be on C-SPAN today and the American people can see it. In other respects, though, this is almost an embarrassment. Earlier, the gentleman from Texas (Mr. Stenholm) offered an amendment to make the rescissions across-the-board to pay for this special bill. I voted for it, but there were only about 75 of us that joined with that amendment, and I would say to the gentleman from Wisconsin (Mr. Obey) that I am glad he joined. But in listening to this debate I became more and more frustrated just watching in my office, because what we hear from everybody is, well, I would like to have offsets too, but do not touch this program. We cannot touch PL-480. I like PL-480. There are lots of programs I like. What this debate really is all about, if we stop and step back for a minute, is we are being asked to fund a little over a billion dollar bill which essentially is about 90 percent foreign aid, and yet we are not willing to make the tough decisions. Now, a lot of talk has been made here on the floor about what is happening to farmers out there. And let me tell my colleagues it is tough out in farm country. Every farmer, every farmer, whether they are in Florida or they are in Iowa or whether in Kansas, they are trying to figure out how they are going to tighten their belts to get through the next year. To put that in context right now, we are looking at a Federal budget of about $1,700 billion. I hear the debate here on the floor today that we cannot find a billion dollars worth of offsets. Now, I am not good in math, but that is something like one-tenth of 1 percent. Now, maybe there are Members in this room who believe that we cannot find one-tenth of 1 percent worth of offsets. Maybe there are Members in the room who really believe that, but I got news for them, there are a lot of people outside of this room, a lot of people outside of this beltway who believe that is ridiculous. We can find the offsets and we should find the offsets. Let me explain why. Because we are going to have a budget on the floor later this week, and we are going to say for the first time to the American people and for the first time to the senior citizens in the United States that we are going to save every single penny of Social Security taxes for Social Security. Now, I think that is a very important statement. That is a giant step forward, in my opinion. And while it is only a small step, it seems to me if we do not find the offsets today, whether it is PL-480 or other foreign aid programs, whether it be offsets from the reduction in the callable capital, whatever it happens to be, if we cannot find those offsets today, it seems like we are taking a very small step in the wrong direction. As I say, I think a lot of my colleagues in this room believe we cannot find those offsets, but I have news for them, a lot of people outside this room believe we can and believe we should.

Mr. GUTKNECHT. I yield to the gentleman from Wisconsin.

Mr. GUTKNECHT. I thank the gentleman for the arithmetic.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, President Lincoln said, ``You may fool all the people some of the time; you can even fool some of the people all the time; but you can't fool all of the people all the time.'' That observation is still true today. As complicated as our Federal budget is, most Americans know that the budget is not truly balanced until we take all of those extra Social Security taxes and no longer use them to make the deficit look smaller. The Republican budget which we will announce tomorrow and debate on this floor stops the practice of cooking the books with Social Security money and it does a lot more. I would like to present some of the highlights: First, our budget blueprint ensures that every penny of Social Security taxes will be spent only for Social Security. For years, the conventional wisdom in Washington was that Social Security money in excess of current benefit payments could be used to finance deficit spending. So, while the baby boomers inched closer to retirement, folks in Washington were spending dollars borrowed from Social Security on other programs. And, worse, they were still running up big deficits, even counting Social Security money. This has to stop. Under the Republican budget plan, it would. The President has promised to reserve 62 percent of the surplus for Social Security. This means that for a time, Social Security money would be spent on things other than Social Security. For example, the President's 30 new programs. In contrast, the Republican budget seals away every bit of the Social Security surplus. Second, our budget blueprint keeps faith with the spending caps set in the Balanced Budget Agreement of 1997. When I came to Congress, forecasters were predicting $200 billion deficits growing to $600 billion by the year 2009. Now, strong economic growth and spending discipline mandated by the Balanced Budget Act of 1997 are projected to create ever-increasing surpluses, at least under the old way of keeping the books. But this is no time to let up. We must protect those surpluses by restraining the growth of Washington spending. The administration has been talking lately about a new virtuous cycle of surpluses and declining interest rates. There is no quicker way to return to a vicious cycle of deficit spending and higher interest rates than to abandon the hard-won spending caps from 1997. The Republican budget maintains our commitment to fiscal restraint. Third, our budget blueprint begins the process of actually paying down the debt we are passing on to our children. Everyone would agree that we have a moral obligation to take care of our children. Part of this obligation is relieving our kids of the nearly $6 trillion Federal debt. This is what I call generational fairness. The Republican budget plan would maintain our commitment to generational fairness by continuing the start we made last year on paying down some of the debt. How would this work? Under our plan, Social Security taxes would be collected and locked away until a reform plan was enacted that would actually preserve the Social Security system. Until a specific fix is worked out, those excess funds would be used to pay off bonds owned by the public. This means it would be easier to meet future obligations to Social Security. And, Alan Greenspan tells us, it means lower interest rates. Fourth, our budget blueprint makes possible reductions in the tax burden on American families as additional revenues become available. Americans are overtaxed. The average American family pays more in taxes than they do for food, clothing, shelter and transportation combined. That is wrong. The Republican budget plan makes strengthening Social Security our first priority. Then, as more surplus dollars become available, we believe Americans should start getting some of their excess taxes back. They should be given back as an overpayment, because that is what they are. Our plan recognizes that extra taxes left in Washington will get spent on new government programs that most folks neither want nor need. When we allowed Washington to start taking taxes out of our paycheck, we never said to Washington, ``You can keep the change.'' In sum, our budget plan reflects the priorities of the American people. It safeguards 100 percent of the Social Security money, unlike the President's plan, and keeps faith with our Nation's seniors. Then, by preserving fiscal discipline, paying down debt and offering tax relief, this budget ensures lower interest rates and a stronger economy well into the 21st century. This keeps faith with our children. It is a budget I am proud to support.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I am being generous then.

Mr. GUTKNECHT. Exactly. Now, what the President has proposed, though, is about $30 billion a year of additional spending above and beyond the spending caps that he agreed to. Now, one other point that needs to be made about those two charts. If we abide by those spending caps, it will mean we will have lower interest rates, because the government will not be borrowing so much. And as a matter of fact, we will begin to pay down some of that debt, so we will have lower interest rates. That means that we will have a stronger economy, and a stronger economy is good for everybody.

Mr. GUTKNECHT. If the gentleman will yield. In effect, the top chart is essentially what the congressional leadership budget plan has been agreed to; that we will abide by the spending agreement that we made with the President back in 1997. Even if the President will not, we will abide by the spending caps.

Mr. GUTKNECHT. Mr. Speaker, if the gentleman will yield for one second, remember, this is a low yield on 12.4 percent of one's income.

Mr. GUTKNECHT. Mr. Speaker, the average American does not understand that. Not only do we take 6.2 percent of their income, but their employer matches that to a total of 12.4 percent. What is worse, because a lot of people think of this in terms of a pension plan, if the average American knew what their rate of return was on these funds, they would be outraged. I think our colleague from South Carolina (Mr. Sanford) is joining us. But the numbers that I have seen for the average American today, the average rate of return in fact we hear often, and I talk to a lot of groups, I say, ``How many of you heard the expressions Americans do not save enough?'' Most of them raise their hands. The truth is Americans save a lot when we take that 12.4 percent that they and their employer put in Social Security. We are saving an enormous amount of the average worker's income. The problem is we get such a lousy rate of return. The number that I have seen is 1.9 percent on average. It varies depending on one's age and when one started putting it in. But the rate of return is terrible on Social Security.

Mr. GUTKNECHT. Mr. Speaker, the answer obviously is no.

Mr. GUTKNECHT. If the gentleman will yield, both gentlemen have made a couple of very important points. To a lot of average Americans, the language of Washington is very difficult to understand. We heard about these draconian cuts in education programs, in student loans, when in fact student loans were going up at greater than the inflation rate, but we were slowing the rate of growth. In Washington a lot of people talk about cuts in spending, when all we are really talking about is slowing the rate of growth in spending. I think one of the greatest Washingtonspeak expressions that was created many years ago is this comment or term ``trust Fund.'' It has a nice ring to it. In fact, if we talk to our constituents and use the term ``trust fund,'' they think, trust, fund, that there must be a fund there somewhere. What they do not understand, and particularly with social security, and perhaps we need to do a better job ourselves of explaining it to our colleagues, because I think when they think of social security, they think of a pension fund. Frankly, it is not a pension fund in the classic sense, it is a pay-as-you-go system. I think, Dr. Coburn, you have talked earlier about when it was first started we had 41 people working for every person who was retired. In 1950 we had 16 workers for every person who was retired. Today that number is slightly over 3 people working for every person who is retired. When the baby-boomers start to retire, that number is going to drop to two workers for every person retired. It is a pay-as-you-go system. In fact, rather than think of it as a pension fund or even as a trust fund, in some respects I think we need to think of it as a checking account, and that right now there is more money coming into the checking account than is being paid out in benefits. But in 2013 that is going to change. One last thought. When I graduated from college, I happen to remember who the speaker at our commencement address was. He was Director of the United States Census. I was born in 1951. He told us something interesting that day, that there were more babies born in 1951 than any other single year. We represented the peak of the baby boom. When we start to retire at about 2012, 2013, that is when we begin to draw so deeply on that ``trust fund.'' That is the real issue that is confronting us. It is demographics because of this huge bulge of 81 million baby boomers that start to retire in the year 2010.

Mr. GUTKNECHT. Mr. Speaker, if the gentleman will yield, and it is important to talk about these numbers, because if we add social security, which is about $100 billion a year, we are looking at deficits of $350, $450, $500 billion a year. Those are just numbers. Most of us do not know what $1 million is, let alone $1 billion. It is hard to imagine what $450 billion is. But let us put that in very simple terms. What does that mean to the average American family? What it means is that we are virtually guaranteed that our children will have a lower standard of living than we have enjoyed. We can put this in any kind of terms we want, but I think every one of us recognizes that one of the cornerstones of the American dream is leaving our kids a legacy so they can expect to have a better standard of living than we had. That has been part of the American dream I think since the first Pilgrims came to this country, that they wanted to build a better future for their kids. Unfortunately, because of the deficit spending, because of profligate spending of previous Congresses, because of the basic attitude that deficits do not matter, we had literally begun a process that guaranteed the next generation that they would have a lower standard of living. That is the thing that had to stop. It is not just about numbers, because I think sometimes when we talk of numbers, I think all of our eyes start to glaze over. We can look at our children and say, do we really want to leave our kids a lower standard of living than we have enjoyed? I think the answer for every American parent is a resounding no.

Mr. GUTKNECHT. By that time, Mr. Speaker, they would be paying a tax rate of upwards of 82 percent just to meet the ongoing needs of the Federal Government and the obligations to Social Security. Now, that is the situation we confronted in 1995. The American people said, that is unacceptable, we said it is unacceptable. We started about eliminating needless waste. We eliminated 400 programs, we reformed the welfare system, we tackled the entitlements, and we have made enormous progress since then.