Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. You understand that, I understand that, and I think everybody on the other side of the aisle understands that, yet there has been an awful lot of disinformation and misinformation spread in the last several months.

Mr. GUTKNECHT. Into the trust fund?

Mr. GUTKNECHT. So with the lockbox, we are not using any funds for the Medicare savings and reform, we are not using that for the tax cut?

Mr. GUTKNECHT. These are college students. We are talking about changing the rules slightly, so some may have to pay $7 more, but over a net basis they could be spending over the life of the loan over $2,200 less, just because we balance the budget?

Mr. GUTKNECHT. That's $2,200 less if we balance the budget?

Mr. GUTKNECHT. Back in my district, it is fairly heavily agricultural, and those who do not actually live on farms are not far removed from living on the farm, and they understand this, that historically what Americans wanted to do was to pay off the mortgage and leave their kids the farm. But what we have been doing as a society and what we have been doing as a government, what this Congress has been doing for the last 40 years, is we have been selling the farm and leaving our kids the mortgage. I think we all know, deep down in our bones, that there is something fundamentally immoral about that. For the first time in 25 years, as we approach this reconciliation, we are going to do something about that. I think it is a very historic moment. Frankly, the people who should be the most enthusiastic about this are young people, because it is their future that has been mortgaged. I think it is important, that step we are going to take. Mr. Speaker, I yield to the gentleman from the great State of Pennsylvania [Mr. Fox].

Mr. GUTKNECHT. Mr. Speaker, I am delighted to be here tonight with my colleague, the gentleman from the Keystone State of Pennsylvania [Mr. Jon Fox], to talk a little bit about this reconciliation bill that we are going to vote on here in the next couple of days. The debate will begin tomorrow. It really is a historic time in American history. I note that some of my colleagues from the other side of the aisle have had pictures of children with them tonight to show. When we were sworn in as new Members of this body, we were given essentially two things. One is this nice little card case that included our voting card, and which some have said is the most expensive credit card in the world, because on this credit card our predecessors have run up something like $4.9 trillion worth of debt on our children and grandchildren. I put into my little card case three of the most important people in my life, and they are my three kids. They are all teenagers, and some people would say that teenagers are difficult, and all the things about teenagers you have heard. Some of it is true, but in truth, they are really the inspiration to me about what this is about and what our real responsibilities are. I carry those picture of my kids with me, because I think when we talk about reconciliation, we talk about the budget, we talk about balancing the budget, we really are talking about what are we going to do for future generations of Americans, what are we going to do on behalf of our kids. I would like to, before we really get into this, and I want to yield to my colleague, the gentleman from Pennsylvania, remind my colleagues and some of the folks who may be watching this special order on C-SPAN of a quote, and we have heard a lot about children, but one of my favorite quotes is from one of our colleagues over in the Senate, representative Phil Gramm from the great State of Texas. He has said many times that we will hear, especially in the next several days, that this is a debate about children. It is a debate about how much we are going to spend on education and how much we are going to spend on nutrition, how much we are going to spend on medical care. The truth of the matter, Mr. Speaker, this is not a debate about how much we are going to spend on children or how much we are going to spend on education or how much we are going to spend on health care. This is a debate about who is going to do the spending. We know government bureaucracies and we know families. Some of us on this side of the aisle, at least, know the difference. So the debate is about who is going to do the spending. We are talking about balancing the budget for the first time in 25 years, and really, it is about future generations, because historically, and I do not know, you probably do not represent as many farmers as I do, I would say to the gentleman from Pennsylvania [Mr. Fox]----

Mr. GUTKNECHT. I think I have that quote. That was a week ago tonight down in Texas. He said, ``I think I raised your taxes too much,'' and, you know, that said it all. We agree. There are two questions we talk about taxes that I think are so critically important that do not get asked very much in this town. The first question is: Whose money is it in the first place? The second question, more importantly: Who can spend it more efficiently? I think the average American family knows the greatest health and welfare system ever created is the American family, and what we are really trying to do is strengthen families, improve the economy, create more jobs, so more people can be self- reliant. The real answer is not more welfare checks. The real answer is more payroll checks. That is what we want. I am delighted to have the gentleman from Arizona [Mr. Shadegg], a fellow freshman of mine, to join us, and I yield to the gentleman. We are talking about budget reconciliation, balancing the budget and related matters.

Mr. GUTKNECHT. It is $1,000 to them. It is not a $1,000 deduction. This is a credit.

Mr. GUTKNECHT. And it is going to take some courage, because some of our friends on the other side are going to argue if you change welfare you are going to hurt people. I think some of us should argue unless we change welfare we are going to destroy even more human beings. I want to yield to our colleague, the gentleman from California [Mr. Riggs]. I am delighted to have him join us tonight for this special order. We are talking a little bit about reconciliation, balancing the budget, some of the things that it is going to take, some of the tough votes it is going to take in the next several days if we are really serious about balancing the budget. I yield to the gentleman from California [Mr. Riggs].

Mr. GUTKNECHT. But what we do not need is a bureaucratically centralized system that is centered here in Washington, DC. We need to get it out to the local communities where they understand the problems and they can help. But I think also an important point when you talked about welfare reform and you talked about the goals, we have got to emphasize work, we have got to emphasize families, and we have got to emphasize personal responsibility. Because the system that we have today tends to consume the participants. You do not have to go very far from this building to see the results of spending over $5 trillion over the last 30 years on the war on poverty. We know right here in Washington, DC, for example, with the federally run housing projects. I learned this just last week. I am on the Washington, DC, Oversight Subcommittee. Eighty percent of violent crime in the city of Washington, DC, is committed within two blocks of a Federal housing project. You can see it every day. You can see it in the hopelessness, the despair, the dependency that we have created with the Federal programs; and we have got to decentralize it, not just because it saves money. This is not just an exercise. This is not about saving money as it is about changing the system to help save people. The system we have today is wrong, it is destroying the participants, and it needs to be changed. If we really care about those people, then we will have the courage to reform the system we have now.

Mr. GUTKNECHT. The people who care about this, I think it is important in the next week or two that they contact their Members of Congress, and tell them, ``We've heard one excuse after the other. The time has come, we've got to stand up and say, enough is enough, it's time to balance the budget, let's keep your promises.'' If it means you have to limit the growth in entitlements, then so be it. If it means you have to put a flexible freeze on defense spending, then so be it. If it means that you have to make some changes in the way Congress has done business over the years, then so be it. But you cannot use all of these, ``Well, I would balance the budget except.'' The yes, buts. I think that has to change. I think that is what the American people want, that is what they tell us. Frankly I hope they will call, I hope they will write and let their Members know that the time has come to bite the bullet. We have met the enemy, the enemy is us, let us balance the budget and let us do it now.

Mr. GUTKNECHT. Absolutely. When they talk about the tax cut for the rich, many times they are talking about the capital gains tax. But the truth of the matter is, and they know this, this is according to the House Budget Office, 44 percent of the people who get stuck paying a capital gains tax in the United States are rich for 1 day, the day they sell their farm, the day they sell their business or the day they sell some other investment that they have, in many cases, been paying taxes on for many years. So, in many cases, this is ridiculous. And I think every economist that I have read in the last several months agrees that the United States has among the highest taxes on capital and on investment of any industrialized country in the world. If we are going to compete in the world marketplace, we have got to reduce our cost to capital. You can argue, that, yes, the rich will benefit because they pay lower capital gains tax; but the real benefactors are those people out there looking for jobs. Because we hope, as people invest more, we are going to create more capital, more business, more production, more jobs. So the real issue is, how do you create more jobs, a world-class economy as we go into the 21st century? I think lowering the cost of capital gains is a very important tax cut. We are now joined by our colleague from the great State of Georgia, Mr. Kingston, and I would be happy to yield to him a few minutes.

Mr. GUTKNECHT. Could I talk just a little bit about the capital gains taxes. [[Page H 10707]]

Mr. GUTKNECHT. Well, the whole key of service networks, provider service networks, PPO's, HMO's and the other forms of managed care has been to put some kind of a manager in place to help control these costs so that we do not have the waste, fraud and abuse, and frankly, we do not have the unneeded tests and services that are out there. Right now we have a system, and I think most people who participate in the system, including many senior citizens, understand that there is an awful lot of waste, an awful lot of fraud and abuse. We have had 33 town meetings on the subject, and again, I am surprised sometimes that our colleagues on the other side of the aisle say, we have not had enough meetings. We have literally had thousands of meetings with all kinds of people. We have talked to providers and insurance companies; we have had meetings with seniors. Most of us have had anywhere from 10 to 40 town meetings. I have had 33, [[Page H 10706]] and at one, the whole issue of waste, fraud and abuse comes up. However, the problem has been with the old system and the way it exists today, it was like it was nobody's money, and if a senior complains and says, wait a minute, I did not get this particular treatment or service or whatever, the attitude was, what are you complaining about? It is not your money. It has sort of been that attitude that I think has become almost a cancer on the entire Medicare system. If we can begin to change those attitudes and if we can make people more responsible, if we can put managers in place to help control costs, we can save the system, we can reduce costs dramatically. As a matter of fact, if anything, I think we are being entirely too timid in the total budget targets that we are looking at for the next 7 years. Even assuming that only 25 percent of the seniors get involved in various forms of managed care, and that is what the CBO estimates, we can save the system, not just for the next 7 years, in my opinion, but we can save it for long into the 21st century.

Mr. GUTKNECHT

Mr. GUTKNECHT. I would like to tell a story that happened in one of my town meetings where a truck driver got up. He said, I am going to retire here in a couple years and, as I understand it, he said, as soon as I retire, I am going to have to leave the insurance plan that I have right now. And he had heard some of the numbers. And he said, I think actually my insurance plan, which I am very satisfied with, is cheaper than what I hear the average cost of Medicare. Why is it that I cannot just stay where I am? And I said, that is a very good question. And so one of the things we are going to try and do is make it possible for people, when they retire, to stay right where they are. If they are with the firefighters, perhaps stay with the firefighters health care plan. I they are a teacher, they can stay in the teachers' plan. But the key to all of this is to create markets and competition, because I think the real answer long term to controlling cost is to use the marketplace. I carry with me a little chip that is actually developed and manufactured in my district. Depending on which electronics company you are talking to, we believe that this is the most powerful desktop chip ever built. It is the power PCAS IBM AS-400 64-byte risk. This will do essentially the same work that a computer which would have weighed something like 2,000 pounds would have done about 12 years ago. Now this will do that same work in, it is like taking the difference between a 2,000-pound computer that you would carry on your back and now all that computing capacity will be in a wristwatch. And the interesting thing is the cost has come down geometrically. Part of the reason that that has happened is because market forces and competition have forced the free enterprise system to find smarter, better, and cheaper ways to produce these. This is what is happening in the private sector everyday, whether we are talking about automobiles, encyclopedias, or computers. Obviously, electronics is perhaps the most exaggerated example of that, but that is what is happening. What we have got to do is figure out ways to help create markets to create competition, so that if your mother or my parents are not particularly satisfied with the plan that they have now, they ought to have the option to shop around a little bit. It ought to be simple and easy to understand English so that they understand what they are getting from that particular program.

Mr. GUTKNECHT. We have got to close here. I just want to say it has been my pleasure to participate in this special order. I do believe, as John Adams said, facts are stubborn things. I do think more of the American people, the more they get to know the facts, whether we are talking about welfare reform, tax relief for families, saving Medicare, I think the American people will understand. I think they do understand that this is what they sent us here to do. They do not want politics as usual. They want to save Medicare, not just to get through the next election but they want to save Medicare for the next generation. I think if we are permitted to pursue these reforms we are talking about, if we do not lose hope and faith in the American people, they will not lose faith in us. I thank you for allowing me to participate, I say to the gentlewoman from California [Mrs. Seastrand].

Mr. GUTKNECHT. One last point about tax relief. This is something not well understood, and sometimes it gets lost in the whole discussion: The tax cuts we are talking about have been paid for. I mean, we have made, by the time we finish with reconciliation, with the rescission bill which we passed earlier in the session and the appropriations bills which are working their way through the House now, we will have cut over $44 billion in discretionary domestic spending. We paid for the tax cuts irrespective of what we are doing with Medicare or anything else in the budget. We are paying for the tax cut by cutting Federal spending. That is critically important because I think that is what many of the money markets are out there looking towards, and that is why we are going to get greater economic growth, and that is why we are going to get lower inflation, lower interest rates down the road if we follow through with this plan.

Mr. GUTKNECHT. And the tax relief, if I could just say and the gentleman from Georgia [Mr. Kingston] has said it so well. Whose money is it? It is not Washington's money. We did not earn it. They earned it. They work hard every day. We are saying you ought to be able to keep a little of it. The second and more important point is who can spend it more efficiently. Are there any people in America who really believe--in fact, let us play a little mental game with this. Let us envision that you won a big lottery and all of a sudden you became a very wealthy person and you wanted to help humanity. What is the first thing you would do? I do not think the first thing that you would do is give the money to the Federal Government. Because I do not care what your circumstances, I do not think anybody really believes the most efficient way to distribute funds or the most efficient way to buy things is through the Federal Government. We know what the most efficient unit is. It is called the family. That is why that family tax credit is so important. Those families know how to spend that money efficiently. They will get real value for the money and they will plow it back into the economy and frankly I think long- term we will see overall revenues to the Federal Government go up because of the increased activity. The second point that needs to be made, and this is where some of our friends on the left get so upset. It is about this capital gains tax cut really which I think is so important. Really what we want to do is stimulate economic growth in this country so we have more jobs and more opportunity. It is about converting this society from a welfare state to an opportunity society. This is what we promised last November. We were serious about it. We want to change that. But even capital gains where I think we have to say, it may well be that some wealthy people will take more advantage of that tax break that other people. This is true. But let me give a very important fact. Again I think facts are our friends. Forty-four percent of the people who pay a capital gains tax in the United States are wealthy for one day. The day they sell their businesses, the day they sell their farm, the day they sell some other investment which in many cases they have been paying taxes on for a long period of time. Again whose money is it? The Federal Government did not help create that wealth. The Federal Government did not help create that wealth. The Federal Government is not really helping to create those jobs that usually go with those capital gains. I think what we need to do, we promised we would give tax relief and unlike some of the other people who have been elected, the old politics as usual, we made a promise last November that we were going to lower taxes on families and we were going to make it easier for people to invest and save. We were serious then, we are serious now and we are going to come through with that tax relief. You are right, it has absolutely nothing to do with saving Medicare. The Medicare fund would be going bankrupt whether we gave tax relief to American families and encouraged jobs and investment or whether we did not. Let me just finally say about the tax cut, all we are really doing is giving back a little bit of what was taken away in the big tax increase a few years ago. This is just starting to give back to the people what they had before the big tax increase. I think it is a great idea, it is long overdue, I think once the American people begin to understand the facts there will be overwhelming support for this.

Mr. GUTKNECHT. I think any of us who have had town meetings, at virtually all of them we have heard examples. I remember one example, I believe in Lake City, MN, where a senior stood up and said she had been billed $232 for a toothbrush. I think that is repeated so often and, as the gentleman from Georgia [Mr. Kingston] said, many times these are caught but many times they are not. I think sometimes there is an attitude with some people that it is not our money. I think part of this whole thing using medical savings accounts and encouraging seniors to review their bills, I think is a way of saying we all have to take responsibility. Because I think one of the analogies I like about this, or even the national debt and the deficit and all the other problems we have in the national budget, is we are all in the same boat and you cannot sink half a boat. I think we all know now and I think everyone has now finally come to the conclusion that the Medicare boat especially is heading for the rocks. What we are saying is we have to drastically change course. If we stay on, keep doing what we have been doing, the boat is going to hit the rocks and we are all going to go down together. It is going to hurt seniors, us, our children. It is going to hurt everybody. We do not have to make drastic changes to the system but we do have to change course. We cannot keep doing what we have been doing. My grandmother says it best. She says if you always do what you have always done, you will always get what you have always got. We need to begin making some of those changes, again taking the best ideas from the private sector, giving seniors choices, making markets, helping to create markets so that we have competitive forces out there. I am actually convinced that we are going to save a lot more than we think. As I understand it, the CBO is now scoring our legislation, saying they are only estimating that about 25 percent of seniors will get involved in some of these various new options we are talking about with managed care, medical savings accounts, and the like. My sense is long-term you will see much larger percentages than that, and I think you will see those inflation rates dropping precipitously so that we will save the system. We will simplify it, make it easier for consumers and for seniors, and we can save the system not only for the seniors who are there today but for the baby boomers when we start to retire in 2011.

Mr. GUTKNECHT. When we fly home every weekend, for those of us who fly a lot it is a scary thought, maybe I should not warn Americans about this, but the air traffic control system relies heavily on vacuum tube technology. We are the largest buyer of vacuum tubes in the world. We have to buy them from Czechoslovakia. They are no longer made here in the United States. They are no longer made in North America. But we are the largest buyer. The rest of the world, the free enterprise system is using this. And this is the equivalent of, I think, something like 9 million, this little chip does the work of 9 million vacuum tubes. That is what is happening in the private sector. The vacuum tube is what is happening in the public sector.

Mr. GUTKNECHT. I think they ought to have that choice, and they ought to be able to stay right where they are. I think more seniors ought to have the options that are available now in the private sector. Let me talk a little bit about a study that came out this weekend, funded by the Minnesota State Legislature and done by the Minnesota Health Data Institute. In that study, they interviewed over 17,000, to be exact, they interviewed 17,591 Minnesotans. This is the largest study of its kind ever done. And what they really wanted to find out is how satisfied the people of the State of Minnesota are with their various health plans. We in Minnesota have probably a larger penetration of managed care programs of various colors, and there is a wide variety of different programs that are available in the State of Minnesota, but I think it is interesting to note, the HMO's and the managed care programs have not penetrated the Medicare population as well as they would like to because of some of the regulations that the Health Care Finance Agency puts on it. But in the study, obviously this print is too small to be read on the television screen, but I do want to talk about one particular chart, because I think it is very instructive. The argument that seniors despise managed care, at least in the State of Minnesota, is simply not true. In fact, they asked all Medicare recipients whether or not they were satisfied with the health care that they are getting. And when you asked just all Medicare recipients, about 77 percent are very or extremely satisfied; 17 percent are somewhat satisfied; but about 6 percent are dissatisfied. Now, when you take the group who are members of various managed care programs and ask them the same question, their overall satisfaction, what you find is about 88 percent of them are very or extremely satisfied; only 11 percent are somewhat satisfied; and 1 percent on the largest plan that is available in the State of Minnesota, only 1 percent are dissatisfied or extremely dissatisfied. The point here is that the level of satisfaction among members who are participating in managed care programs in the State of Minnesota, and it goes down for all the various managed care programs, people are actually more satisfied with the care they are getting in managed care programs than they are with regular fee-for-service Medicare. The system does work. And if we allowed more of these programs to develop and evolve in a more competitive market-oriented system, I think seniors are going to get better care. And they are going to be more satisfied with the system that they will have than under the system that they have today.

Mr. GUTKNECHT. I want to get back and talk about Medicare, but in terms of this one particular organization it is hard, I think, it is a long stretch of the imagination to say that an organization can receive less than 4 percent of its gross revenues from nongovernment sources and not be almost an arm of the Federal Government. And then to be actively involved in the activities that at least we believe and have been alleged that they have been involved with, I think raises serious questions. As I say, I am willing to give the Attorney General the benefit of the doubt. I assume that they are investigating. We believes that they should investigate. I agree with you, if that is true, it is illegal and it should be stopped. But it clearly is not clear in terms of the law today, and we want to see it stopped. I think all Americans want to see it stopped, because I think it is a heresy to think that taxpayers' dollars can be used to lobby for more taxpayers' dollars. And particularly when some of the ideas that are being brought forward are at least in the view of many of us far from honest. They are not bound by the facts, at least as we see them and as most people would see them.

Mr. GUTKNECHT. If I could interject, I think facts are our friends. I think the more people get to know the facts, and the editorial boards around the country, and you recited some of them, most of them are not exactly Republican propaganda organs, but the more they have had a chance to look at the plan, the more they like it. One of the arguments we hear from some of the folks is that seniors are going to be forced into managed care, as if that is a terrible thing, and that managed care is like the devil you do not know. First of all, I think we need to make it very clear, no one is going to be forced into any program. And you mentioned your mother. I think that a lot of, particularly the more fragile senior citizens, I think they are going to stay right where they are.

Mr. GUTKNECHT. Mr. Speaker, I want to join in on this particular discussion. We do not know, as a matter of fact, whether or not any Federal laws have been violated and I would give the administration the benefit of the doubt. But if in fact, the facts that we do know to be true, that they did in fact give over $400,000 to political candidates, if in fact their tax returns were correct, which we have now seen and they have received over 96 percent of their funding from Federal taxpayers, then in fact I think, yes, they probably were in violation of Federal law. They should be investigated. There ought to be some prosecution of those people. That is the kind of thing that either the law is not clear enough, which is why the Istook amendment is here to try to clarify that, or the enforcement is lax. But, clearly, what the taxpayers do not want to have to do is to watch groups receiving large amounts of Federal tax money turning around and using that money either to directly lobby the United States Congress or to otherwise try to affect events, buying advertising to affect what is happening in the public arena. All we do know is that they received a huge amount of Federal money and they are in fact actively out there lobbying, and they have actually set up a PAC and contributed over $400,000 to Congressional candidates.