Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. And doing part of the talking, but it seems to me when you mention, when you mention having an investment in our children and our grandchildren and in future generations, it seems to me that there is something immoral about the fact that we think our problems today are so great that we are borrowing the money that they have not even earned yet, that somehow we are saying, look, we are going to borrow the money, and our kids and our grandkids are going to have to pay it back, our debt today, like they are not going to have serious problems of their own in the next 20 or 30 years. So, No. 1, I say it is immoral for us to overspend and borrow the money and make our grandkids pay for it; No. 2, I say it is dumb economically because what we are doing now is we have a Federal Government that borrows 41 percent of all the money lent out in the United States. Alan Greenspan, the chairman of the Fed, said, ``Look, if you guys balance the budget, you're going to end up with interest rates that are 2 percent lower. You'll see this economy and jobs go like they have never gone before.'' Yet we, as politicians, find it difficult not to say ``yes'' to everybody.

Mr. SMITH of Michigan. Well, I think, Mr. Abercrombie, what I will do is make one more comment. I feel somewhat guilty using your hour of time----

Mr. SMITH of Michigan. What is its priorities and what should we do, and I think the gentleman would agree, whether we are spending $350 or $340 billion, that defense is an absolute responsibility of the Federal Government.

Mr. SMITH of Michigan. Just as a footnote, my understanding is they are talking about a program that would be closer to $5 billion now, but just for everybody I think we should put it in perspective of what the military budget is in relation to other spending. The military budget, 1 of the 13 appropriation bills, is approximately 15 percent of the total Federal budget. The welfare entitlement programs are approximately 50 percent of the budget. I think we need a discussion in our effort to balance the budget, what should be the obligations of the Federal Government----

Mr. SMITH of Michigan. Do you agree, Mr. Abercrombie, if I might presume to ask you a question, that we should cut spending enough, both discretionary spending and the welfare entitlement spending, enough so that at the end, when we call it a balanced budget, we are no longer borrowing from Social Security.

Mr. SMITH of Michigan. Both budgets depend on those out years to accomplish the final goal. I think that should call to our minds and attention that we should have a gradual sloping line. We should get on that glide path and reduce spending every year for the next 6 years to make sure that we have a balanced budget, not leave it up to future Congresses in case you and I are not here.

Mr. SMITH of Michigan. Would the gentleman permit me to define what I see as the difference in those two budgets? The President's budget says that if it is not going to balance without the changes in the welfare and entitlement spendings, we want automatic spending reductions to come out of discretionary spending in those last 2 years. The Republicans have suggested, in your budget resolution book that you carry, that we are going to start changing those welfare entitlement spending programs. And that is a gradual transition so we start with some minor spending cuts, and those spending cuts, by changes in the legislative language, become greater amounts in the out years. But, yes, both budgets depend on those last 2 or 3 years for a significant part of what is going to end up being called a balanced budget.

Mr. SMITH of Michigan. I do not think we want to pick on the President, but we want to certainly include him in this discussion. Seventy percent of his discretionary cuts come in the last 2 years, that even if he is reelected he is not going to be here either. To pretend that we are going to do these gorgeous things in the last 2 years is not honest and it is not fair. We should have lower spending every year.

Mr. SMITH of Michigan. But I think we should make it clear, this is not Republican or Democrat. It is what everybody has been doing, and so I appreciate the opportunity to make people aware of the serious nature of Social Security. If I just might, 2 weeks ago, one of the former commissioners of Social Security said that she perceived that it would be possible sometime in the year 2005, that part of that year there would be less money coming into Social Security than was required for a payout; in other words, not having enough money. And so when do we start and how do we start paying back the money we own Social Security?

Mr. SMITH of Michigan. That is correct. The gentleman is correct on that. Since 1986, when we started bringing in the greater surpluses from Social Security and some of the other trust funds, such as the Federal retirement trust fund, a law was passed back in the 1980's that says any surplus money automatically goes to the Treasury for borrowing. I think that is wrong. It is an incorrect way to be fiscally responsible for the future of Social Security and the other trust funds.

Mr. SMITH of Michigan. That particular year. So we have now amassed approximately $500 billion that we have borrowed from Social Security and no way to pay it back. But let us not take our eye off of the ball that we are talking about. It seems to me that that ball, in terms of the Federal budget, is cutting spending. We have the ability in Congress to cut discretionary spending. But when you realize that discretionary spending only involves about one-third of the budget and we have got about 20 percent that goes to the interest on the money that we are borrowing and then almost half of the budget is entitlement spending, so I think your example of an illusion that somehow magically the budget is going to be balanced in these out years is exactly that, because will we stick to our guns and balance the budget?

Mr. SMITH of Michigan. Mr. Speaker, I hope we could also carry on a colloquy and make clear to the American people what is happening on this budget. When you speak of the young lady being sawed in half, I always figured that was contortions with one whole person in each half of the box. I think that contortions on the budget is something that Congress has become accustomed to. I appreciate the gentleman from Hawaii suggesting that the budget is not a true balanced budget in terms of the fact that it does not consider whether it is borrowing from the 153 odd trust funds, the large contributor to that lending, of course, is the Social Security trust fund, but still----

Mr. SMITH of Michigan. There are so many loopholes and so many corporate tax breaks that probably should not be there that it justifies a whole new look at our tax system.

Mr. SMITH of Michigan. And I think the people that talk about or advocate a flat tax or a consumption tax or a value added tax or a national sales tax are not saying that, look, this is the golden way to have a successful tax, they are saying, look, the tax system we have now is failing us. We are penalizing investment, we are penalizing savings, we are discouraging businesses from expanding and creating more and better jobs by putting more and better tools and facilities in the hands of the greatest work force in the world, which is the American work force. Somehow, in our look-see to changing our tax system, it has to be an admission, an acknowledgment that what we have now, that has been written many times over by the special interest lobbyists and their huge PAC contributions to candidates for office, has ended up being not what is good for the future of America. So I think it is important that we do exactly what you are suggesting, Mr. Shays, that we have the kind of tax policy changes that encourages savings, that encourages investment.

Mr. SMITH of Michigan. Absolutely. That has to be the first step.

Mr. SMITH of Michigan. It seems to me we need to remind ourselves what made the United States of America so great, and that was the concept that the people that worked hard, that really tried, that invested, that took chances, that got up every morning when they did not feel like it and went to work and produced, were better off than the people that do not. Now we are moving into sort of a gray area where often the individuals on some of the welfare programs are better off than working poor. That cannot be the formula for a successful America. We have to get back to the concept that those who are trying every day, that are working hard, that are striving to make their family and their kids more independent and more successful, by encouraging them when they come home every night, are the people that are going to make the future of America and make it greater. We cannot continue to rely, as an aging industry, on increasing taxes on business and individuals as a way for government to have more funds to make it right for everybody else. We have to have the kind of policy that encourages those individuals to be more responsible for their own destiny.

Mr. SMITH of Michigan. That used to be true. Now, we have passed what is called the Fair Agricultural Act that does away with all of those subsidies. Over the next 7, or 6 years now, it phases out all of those Federal farm program subsidies, so the Federal Government is no longer managing that farm, and individual farmers will have the freedom to decide how much of what crop to plant. I think that is good. I think the Federal subsidy programs have tended to be a disservice to agriculture. We have seen smaller family farms forced out of business because the larger farms had a greater advantage with those Federal programs. So the ag programs are phasing out, but corporate welfare, the lobbyists and the PAC's flow to that Committee on Ways and Means because just a few changes in the words, can make millions of dollars of difference.

Mr. SMITH of Michigan. Good point.

Mr. SMITH of Michigan. And it is sad. We talk about a $5 trillion national debt, but we have spent $5 trillion on the welfare program since they started in 1965, and we have been successful in transferring wealth, but in the process somehow we have taken away the spirit. With a lot of people we have taken away their self-respect by sending them signals that they are often going to be better off not to go to work, not to bust their gut trying to help their community and help other people and pay their fair share of taxes. so they stay on welfare, and we are now in the fourth generation. And we are a humane society. We are a caring society. We want to help people that are down on their luck. But people take advantage of it, and not only stay on it for all of their essential working lives but then we end up with their kids being on and their grandkids being on.

Mr. SMITH of Michigan. Mr. Speaker, a little while ago I was reading at my desk, and in a letter, one of my constituents in Michigan sent me this application. She was asking me is this a legitimate organization; what are they doing? And what that was, it had a big sheet that they were sending all these senior citizens. They probably went to the driver's license bureau or someplace and got this list of names of everybody over 65, and it says there are some people in Washington that are trying to balance the budget on the backs of the health care of senior citizens. Send us your $20 or $40 and we will work to protect your rights. You know, I think that that kind of attitude, that kind of solicitation to take advantage of senior citizens to try to make more money for whoever, is washed up, because I think most senior citizens, as they decide what they want to leave this world with, I think most of them want to leave their kids and their grandkids and their great grandkids the same kind of opportunities they had. They do not want to keep sucking up on financial, to ask the young working people of this country to pay more of their benefits. They are willing to tighten their belts just like everybody else is to make sure that Medicare is solvent, that Social Security is solvent, that this country gets their house in order so we can have a continuing great America with continuing opportunities. That sounds a little like a speech.

Mr. SMITH of Michigan. And if a person wants to stay in exactly the same program they are in, they can do that.

Mr. SMITH of Michigan. You know, somebody asked me last Thursday, look, we do not smoke. Why should we pay more of our taxes, more of our premiums for Medicare to cover the people that do not take care of their own health, that smoke, that do otherwise? My reaction was, look, that is what we are trying to do with one of these options, medical savings accounts, so the people that do take care of themselves can end up sharing some of that savings. I think it would be good if the gentleman mentioned some of the options.

Mr. SMITH of Michigan. Mr. Speaker, I mentioned earlier that Social Security has got very serious problems and that actuary debt or unfunded liability amounts to about $4.5 trillion. But in Medicare, it is even more serious than that. So the promises that past Congresses have made of what they are going to do for health care for senior citizens is now in a great deal of financial problems. If it is not corrected, we could lose Medicare. So I would ask the gentleman from Connecticut just to very briefly repeat some of the fact that there is not much difference between what the President suggested, what the Republicans have suggested. So to use this issue politically by scolding Republicans is not a fair accusation.

Mr. SMITH of Michigan. I do not mean to brag, and I do not mean to make a greater separation between Republicans and Democrats. But still, the reason that the overspending is so low is because Republicans were very aggressive in what is called the rescission bill of reducing the 1994-95 budget, again in the 1995-96 budget with a great deal of frugality of making tough decisions. Everybody should know it is not easy to cut spending. People that have gone to the Federal Government, to the trough, if you will, and become accustomed to having those Federal services do not like those services cut out. So it has been easy for the liberals to demagogue the issue, to say look at these mean-spirited cuts. Mr. Speaker, the bottom line is we now borrow 20 cents out of each dollar the Federal Government spends, and that is too much borrowing. It is not responsible. I think it is immoral for our kids and our grandkids.

Mr. SMITH of Michigan. That was the budget we were already in. We only had 6 months left or 9 months.