Cynthia Lummis

Mrs. LUMMIS

Mrs. LUMMIS. I have a couple more questions for you. We look at the fact that, in the health care bill, the Senator from Nebraska sought an exemption from the impacts of Medicaid expenditures in his State and at the fact that the Amish sought an exemption because their religious freedom requires them not to be mandated to have a certain health insurance program placed upon them. There were other exemptions. The unions went to the White House recently because they wanted to be exempted from the Cadillac insurance plan tax that was going to help pay for the Senate bill to create socialized medicine. Then there was the citizen who asked: If this is such a great bill, why do so many people need exemptions? Could that be part of the reason, the very simple question: If this is such a great bill, why does everybody want to be exempted from it? Could that have anything to do with tonight's election results in Massachusetts? I yield back.

Mrs. LUMMIS

Mrs. LUMMIS. I applaud the gentleman from New Jersey for his view that we need to have tied to an increase in the national debt a mechanism that will begin to address this problem. One of the mechanisms is one that you mentioned that you support, and that would be legislation that would create a commission to begin to advise us on this structural deficit. And this chart illustrates why this structural deficit is so much worse than it has ever been. One of the points in this chart you brought up in your discussion, and that was a point right here, this is the years when we had the Clinton Presidency and a Republican Congress, and you saw tax revenues increasing over expenditures as a percentage of gross domestic product and creating the very surplus that you discussed. But what's really interesting about this chart is the fact that it runs from the 1970s, actually from the year 1969 to 2009, so it's a 40-year chart that compares spending to gross domestic product, taxes to gross domestic product, and then the deficit to gross domestic product. And the amazing thing is that when you look at gross domestic product, that is, the value of everything we produce in this country every year, and use that as your constant, so we're comparing that over 40 years to the way that Congress has spent money, the way that Congress has taken in taxes, and then to the deficit, what you see is remarkable stability, remarkable stability for 40 years. It has always hovered around a little over 20 percent of gross domestic product in terms of spending, and around 18 percent in terms of taxes. So there has been a structural deficit for all those years of roughly 2.4 percent, meaning for about 40 years we've taken in a little bit less in taxes than we've spent. And so it has created some deficits over time. But even the deficits have hovered within that average of about 2.4 percent. The average then is this dotted line down here, remarkably stable over 40 years. Now, look at what is happening in the future. These are projections. The sources are the Congressional Budget Office and the Office of Management and Budget. So we're talking about government agencies that are projecting this. Here is the line for where we begin the next decade starting in January. Spending and taxes separate dramatically. As you can see, the year 2009, which is illustrated by this tremendous separation right here, this is where we are now, and the reason we've taken in less taxes is because of the recession. But the reason that we've spent so much are all the bills that we discussed from the beginning of this hour. It has just become completely out of the realm of anything we've ever seen in the last 40 years. So it creates a structural deficit, meaning a very, very wide gap going forward between taxes and spending. This gap is projected by CBO to be between 5 and 6 percent. That's more than twice of what it has ever been over the last 40 years. And it goes on and on from there. And so you can see this projected deficit in the decade coming forward, down here, is an enormous gap over what it has been. That is what you were talking about when you said, will we give our children a better country than we received? And there is a real question about that now. And that is why we have to address it. I know you're on a committee where Federal Reserve Chairman Ben Bernanke has come, as am I, and said, you've got to come up with a plan to deal with this problem, this specific problem, the structural deficit. This is the structural deficit. And it is caused by the mismatch between taxes and spending. And while we as partisans get under each others' skin by saying, Democrats, you have spent too much; and the Democrats saying, Republicans, you gave tax cuts at a time when we were at war. Well, we're both right. And now here we are. I yield back.

Mrs. LUMMIS. Thank you, Madam Speaker. This evening's Speaker is a fellow freshman and it is an honor to serve with you, Madam Speaker. Thank you for your time this evening as we proceed into Hanukkah and the Christmas season. We are as freshman Republicans going to spend some time with you reviewing the episodes of the last 12 months: Where are we in terms of America's fiscal house? Where have we been in the last 12 months? And, more importantly, where are we going as we prepare for the new year 2010? I am joined this evening by my colleague, Leonard Lance of New Jersey, and we will be joined by other freshman Republican colleagues throughout the next 60 minutes. We look forward to this opportunity to cover these subjects with you this evening. We began our freshman year by approving a $350 billion TARP extension without accounting for the first half of the TARP. We then moved into a $787 billion stimulus package; $1.1 trillion, if you include interest. And Steve Austria, our colleague, will be discussing this evening how that and other bills were shaped by the fact that they were done without the kind of transparency that we expected to see when we came here and which our new President campaigned on. We then moved into a $410 billion addition to the 2009 budget. We then moved into bills that would take over the financial services industry, the automobile industry, the student loan industry, that created the largest tax increase in history by way of an enormous cap- and-trade bill that places a tax on every single American that consumes energy. And we passed, about a month ago in this House, a health care bill that created an additional roughly trillion dollars in obligations for this Nation, that bill now being debated in the United States Senate. During the course of this year, all of those complicated pieces of legislation which were passed, frequently without the opportunity to read the full bill, created enormous debts for this Nation, and we want to talk about this fiscal picture this evening. Before we do, I want to yield to my colleague, Mr. Austria, to discuss the issues of transparency and the issues of the speed in which some of that comprehensive and complicated, lengthy legislation was brought to the floor. Mr. Austria.

Mrs. LUMMIS. I thank the gentleman from Ohio. And the consequence of what the gentleman from Ohio pointed out is illustrated in this chart. Here is the Federal budget deficit when we began as Members of Congress. The budget when we came in had a $459 billion deficit, or just under half-a-trillion-dollar deficit. But since we've been here, this amount of roughly half a trillion has been increased by almost a trillion, 950 billion in increases from 2008, for a total of over $1.4 trillion in deficits. Now, how did we get there? Three hundred twenty billion dollars of that, roughly, is from lower tax receipts due to the recession. That's the roughly 27 million Americans who are either unemployed or underemployed, and they're paying less in taxes, as are businesses and as are our families. So we're experiencing lower tax receipts because of our recession. In addition, the stimulus bill has added $200 billion to our deficit for this year alone, half in spending and half in lower taxes. Then, an additional $154 billion for bailouts for financial institutions and the auto industry; $91 billion in bailouts for Fannie Mae and Freddie Mac. Those, of course, are the GMAs that do housing programs. Seventy-three million dollars in unemployment benefits due to the recession, again, associated with this loss in tax revenue due to the fact that so many Americans are unemployed and the fact that the stimulus dollars that we spent were not adequately weighted towards infrastructure construction like was the bill that Mr. Austria and Mr. Lance and I cosponsored at the beginning of this year. And then $112 billion in other accumulated bills throughout the course of this year has gotten us to this point, $1.4 trillion in deficit. Now I'd like to yield to the gentleman from New Jersey (Mr. Lance) to talk more about what are the consequences of all this debt.

Mrs. LUMMIS. Will the gentleman yield briefly?

Mrs. LUMMIS. Will the gentleman yield?

Mrs. LUMMIS. Will the gentleman remind us to whom has the so-called Social Security Trust Fund been lent? And I yield back.

Mrs. LUMMIS. Will the gentlemen yield?

Mrs. LUMMIS. Indeed, we are finding that there are changes in our economy that are going to exacerbate some of the problems that we have discussed. Here is another fund chart. I want to point out that some of the things that I am discussing tonight have been influenced by an article that I read in the National Journal by John Maggs, which I commend to your attention. The date was Saturday, November 7, 2009, National Journal. The name of the article, ``The Debt Problem is Worse Than You Think,'' not a very uplifting title, but I think very reflective of the problems that we are in and that we, on a bipartisan basis, need to begin to address after the first of the year. This chart I found to be tremendously interesting. The source, again, is the Congressional Budget Office. Look at how, in the 1970s, which are represented by this quadrant of the chart, then followed by the eighties, nineties, and this first decade of the 21st century, look how much defense accounted for as a percentage of the Federal budget near the end of the Vietnam War, or, I guess, 1969, probably about the height of the Vietnam War. A tremendous amount was spent on defense and very little on medical care for the indigent and the elderly as a percentage of our Federal budget; whereas, Social Security and nondefense discretionary funding--which is, of course, what we spend most of our time talking about here in Congress--have been remarkably stable over that time. Defense has dropped dramatically over time. Here you see the decade that then caused the buildup into the end of the Cold War. And then you see a declining, the ``peace dividend'' as we called it, during the 1990s, which allowed Congress and the President to balance the budget. It has stabilized at a point of about 20 percent, even in this decade that we have just completed. So it's amazing how much defense has declined as a portion of the Federal budget. But what is equally amazing is the amount in which Medicare and Medicaid have risen as a portion of our Federal spending and increasing. This is an ever-increasing line, the red line, because of people like the three of us in this room. We are all baby boomers, and as this massive generation approaches retirement and Medicare, that number is just going to go up and up. So unless we address Medicare in particular as part of this commission that you mentioned, we are not going to get there. I yield to the gentleman from New Jersey.

Mrs. LUMMIS. I thank the gentleman from New Jersey for yielding. The Federal Reserve Bank, in my opinion, is now overleveraged. The Federal Government is overleveraged, meaning we have taken on too much debt both at the Federal Reserve, while they've been trying to help our banking system right itself, and we, in Congress, by not recognizing that in this recession we, too, should be making sure that government isn't growing in an outsized way when it is, in fact, the private sector that creates wealth. We are joined by the gentleman from Colorado, who is on the Small Business Committee. And small businesses in our communities are really hurting, as are community banks. Among the things that we have talked about with the Federal Reserve Chairman is the issue of how community banks sometimes have loans that are performing, that every year the borrower is making the payments, principal and interest. But when bank regulators come in and look at those loans, they are worried that the asset that is backing that borrower might be a little shaky, so they might require the banks to write down that loan even though it's performing. I know that the Federal Reserve Chairman says that should not be happening if the regulator is the Federal Reserve because they've instructed their regulators not to do that, but we also know there are multiple regulators, including the Department of the Treasury, the Comptroller of the Currency, and some of these regulators are still requiring that these loans be written down. That is a tremendous disservice to our community banks and to their borrowers whose loans are performing. I yield to the gentleman from Colorado.

Mrs. LUMMIS. And the consequence of what you're just saying, which is so critical to this discussion, is the chart that appears here. The interest payments on that debt create a checkmark. In other words, this is 2008, the beginning of this chart. And we were seeing a bit of a decline in the interest dollars that we were paying. But here we are, today, right here, the end of 2009, and from here on, because of that accumulated $2 trillion that you discussed over the earlier part of this decade, and then, the additional $1.4 trillion of this year alone, boy, those interest payments just take right off. And it creates this checkmark effect to the point that at the end of this chart, 2019, U.S. net interest payments over $800 billion. My gosh, that is as much as the stimulus bill that we passed at the beginning of this year.

Mrs. LUMMIS. I wish to thank my Republican colleagues this evening, the gentleman from Ohio, the gentleman from New Jersey, and the gentleman from Colorado. We are hoping that in the next year we will see a bipartisan effort to address this problem.

Mrs. LUMMIS. It is the rare man who has a constitutional amendment named after him. The Lance amendment in New Jersey will help right the ship in New Jersey. We compliment you for that work. We are now about to begin to summarize. I would ask the gentleman from Colorado to summarize this evening's discussion.

Mrs. LUMMIS. I would like to ask the gentleman from New Jersey, do you agree with that? Do you think we were wrong?

Mrs. LUMMIS. Are you prepared to say that the Republicans were wrong when they simultaneously passed Medicare part D, the Bush tax cuts, and tried to sustain that during wartime. Are you prepared to say that?

Mrs. LUMMIS. The alarm you expressed is shared by others. I would like to quote one sentence from this article to which I referred earlier by John Maggs in the National Journal, ``The Debt Problem is Worse Than You Think,'' for your reaction. ``Simply put, even alarmists may be underestimating the size of the problem, how quickly it will become unbearable, and how poorly prepared our political system is to deal with it.'' Your reaction?

Mrs. LUMMIS. I thank the gentleman from Colorado for raising that point.

Mrs. LUMMIS. You are telling me that there is going to be a structural deficit in the very health care bill that we passed, in addition to the structural deficit we have been discussing tonight?

Mrs. LUMMIS. And so what happens at the end of 10 years?

Mrs. LUMMIS. Are you saying that, then, 10 years of taxes are going to begin right away under the House health care bill and the benefits are not going to begin to be paid out until year 2013?

Mrs. LUMMIS. Will the gentleman yield?

Mrs. LUMMIS. Is it true that the health care bill that passed the House of Representatives a few weeks ago accumulated about 10 years of taxes and fees to pay 6 or 7 years of benefits? And I yield back.

Mrs. LUMMIS. Will the gentleman yield?

Mrs. LUMMIS. And I yield to the gentleman from Colorado.

Mrs. LUMMIS. Are you telling me that Social Security dollars that Americans paid into a Social Security Trust Fund have been lent to the Federal Government to spend on these programs we've been discussing tonight? And I yield back.