Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. The projection is that these kids today, if we continue to spend like we have been spending, are going to have to pay taxes that amount to over $180,000 during their lifetime just to pay their share of the interest on the national debt. You know, this little card is what Congressmen use to vote with. It is sort of like a credit card, but really the Federal Government, these 435 Members of Congress here, do not have money to give away. They have got to take money away from the citizens all across this country, taxpayers, and we are giving away taxpayers' money. The way you hear some people talk, you would think it is government's money that they are giving away. We are taking away this money from individuals by increasing taxes. I would invite the President to come seriously to the negotiating table, admit that it is right to balance the budget, come legitimately and say, ``Yes, I agree, we should be balancing in 5 years, 7 if necessary, and let us get on with making a better future for our kids.''

Mr. SMITH of Michigan. Mr. Speaker, last night President Clinton unveiled his second budget this year. The first budget actually increased deficit spending by $200 billion each year and grew our national debt from the current $4.9 trillion up to $7 trillion in 5 years. [[Page H5980]] This budget from last night aims to balance the Federal budget in 10 years. Well, we welcome the President to the arena, admitting that we should be balancing this budget. However, 10 years? This means that during the next 10 years, the Federal debt, which is now $5 trillion, will still be growing. It means that we hope that a decade from now when children who are now in the third grade, they will be graduating from high school, the budget will still not be balanced. Remember, the President did not say the debt would be paid off. He said that if all goes well, we will stop adding to the debt a decade from now. That does not count what we are borrowing from social security and everything else. Now, does not this all sound a little ludicrous? Do we really think that Congress will balance the budget 10 years from now, putting it off that long? We just cannot do it today? There are some of us out there who remember the character Wimpy in the Popeye cartoons. Wimpy made the famous line, ``I will gladly pay you Tuesday for a hamburger today.'' Of course, everyone knew Wimpy did not intend to pay for that hamburger. President Clinton is saying, ``We will not pay you back in 10 years, but we will stop getting an advance on those, if you will, hamburgers at that time.'' The President has said that it would be too painful to bring the budget into balance in less than 10 years. Now, remember Thomas Jefferson, while President, introduced a plan to pay back the Federal debt over 16 years and then start paying off that debt and getting it done with. He thought it prudent not just to balance the budget, but to run up a surplus to pay off the debt and have a little extra in reserve.

Mr. SMITH of Michigan. I yield to the gentleman from Georgia.

Mr. SMITH of Michigan. You mean, if everything worked out perfectly for the President and he stayed in the full 8 years that is allowed under law, he still would not have a balanced budget? That is what it means.

Mr. SMITH of Michigan. He did not project. But if the CBO projection, and you really cannot tell whether what he said was a political statement or whether he is serious about balancing the budget, we will not know that until we see the details. But we are looking at a growing budget, and if it is consistent with the spending that he suggested when he gave us his budget in February, that is at least $200 billion a year, times 10, times 10 years. We are looking at a budget that cannot possibly be paid back by our kids and our grandkids. It is going to ruin their chances for a standard of living. I think it is good to mention; he said it is going to be too painful to pay back this debt in just 7 years, but the pain we are talking about is political pain, admitting reality. So we have a problem here. We are spending money we do not have now. We are asking our kids and our grandkids to pick up that bill years from now, and you just cannot do it. I think the President has got to come to this table, and if he expects to have any credibility in terms of input in the best way possible to cut spending and balance the budget, then he has got to come to the table seriously.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. If the gentleman will yield, no, I want to talk about some significance and open the discussion today, Flag Day, and the American flag. I had a brother that was a jet pilot, killed in 1957. I am old enough that I went through World War II, and the American flag is more than a symbol. It is what many Americans really out there on the front lines fought for and died for. So I look forward to the gentleman's comments on Flag Day.

Mr. SMITH of Michigan. I think your point is so important and so good. We do have the greatest Nation on Earth, and we get in our little squabbles, and we look for ways to try to improve it. Both sides of the aisle, Republicans and Democrats, feel very strongly that they want to make the best future possible for the kids. Sometimes we have a difference in philosophy on how to get there, but we have a great country, and the flag of the United States of America is something we all feel very closely to.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, a few minutes ago, roughly 28 minutes ago, the President of the United States made a nationally televised address indicating that he was now convinced that we should have a balanced budget. I wanted to give this 5 minutes tonight because I am delighted to welcome the President aboard, because he now realizes, or the pollsters realize, that a balanced budget is going to be very important if we are going to spur the economic and job development of this country, if we are going to be very important if we are going to spur the economic and job development of this country, if we are going to end up not giving our kids and our grandkids a mortgaged future. Let me just make a couple of comments on how serious the overspending of this Congress is and what is happening to the obligation of future generations. We now have a debt of approximately $4.9 trillion. That means that the interest on that debt this year is going to be $339 billion, the largest expense item of anything else on our budget. But the problem is of jobs and economic development. If we are not able to balance that budget, then we continue to obligate a greater and greater portion of our budget to the interest. But more than that, here is the Federal Government today going out and demanding that they have 42 percent of all of the money lent out in the Untied States this year. That means that extra demand for money is driving up interest rates. Our top banker of this Nation, Chairman Greenspan of the Federal Reserve, estimates that if we are able to balance the budget, we can see interest rates drop between 1\1/2\ and 2 percent. What is that going to do for business? What is that going to do for people that want to go out and buy a new home or a new car or business to expand their operation and to hire more people? It is going to do a great deal. The other problem, or course, is the U.S. needs to have the kind of tax policy that is going to spur economic development. The President tonight said nothing to stimulate the economy through taxes, but he was for those good political things of a middle class tax cut. And so I an concerned that whether or not this was political rhetoric on the part of the President tonight is going to be shown really in his details as he presents those details to the United States Congress. It is good news that we are all going to talk from the same goal of eventually achieving a balanced budget. The President suggests we should wait for 10 years to get that balanced budget. But this is a problem technically, because the problem of compounding interest, the longer we wait to cut some of those expenses, the more drastic those cuts are going to have to be. That is why it is important that we start early, that we try to get this balanced budget in 5 years. The House and the Senate have said, let us take 7 years to do it, but let us do it at least in 7 years and then start paying off the actual debt that we have incurred for future generations. Mr. Speaker, I thank you for this opportunity. Mr. President, welcome aboard in the legitimate budget discussions of having a true balanced budget and saving our future for our kids.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise to discuss the need to change the tax system. Mr. Speaker, James Madison, one of the architects of the Constitution, once warned that we must keep our laws simple. Our freedom is in danger, he explained, when laws become so complicated that no one knows what they mean and change so often that no one can predict what they will be in the future. Our Tax Code in the United States provides an example of what happens when we ignore Madison's warning. Today, thanks to the bold leadership of Chairman Bill Archer, we can now discuss fundamental changes in our Tax Code, including even the elimination of the income tax. As a former chairman of the Senate Finance Committee in Michigan, I had the opportunity to deal with several alternatives to our current tax system. Among these alternatives was a consumption tax, a sales tax with our industrial processing exemption, and a flat-rate income tax. I would like to simply make a few comments about our experience in Michigan. Michigan is the only State in the Nation with a consumption tax. We call it the single business tax. It has been in effect since 1975. A couple of points that come from this experience are, first of all, if a consumption tax is adopted at the national level, it must include a deduction for capital acquisition. That is full expensing of the cost of machinery and buildings. Michigan's capital acquisition deduction has been the most successful element of our consumption task. It increases productivity and encourages business and job expansion. Second, the tax base should be determined using a subtractive method of calculation. Michigan uses the additive method to get the value added, and it has given us some problems. While it is going to yield the same base as the subtractive method, it has created a great deal of confusion among businesses. The tax is viewed as our income tax by many businesses and results in such questions as why can not I deduct wages? Why do I have to pay a tax even though I do not have profit? These types of questions would be eliminated if the tax was calculated using the so-called subtractive method. Third, the primary problem with a consumption tax is that the tax is hidden in the final price of the product. This creates a danger that the government can raise the rate without individual taxpayers being aware of it. This is what has happened oftentimes in Europe. However, our experience in Michigan has been that since the business tax rate has not been increased since 1976, it has not been a problem. In One major problem with a sales tax is that it tends to become a turnover tax. It is important that only the final sales are taxed. For example, we should not tax the sale of rubber sold to Goodyear Tire, for example, and then tax the full value of the tires when they are again sold. This fundamental concept is clear in theory, but there are numerous difficulties in actual implementation that we have pretty much solved in our Michigan system. The problem with services is especially severe. Finally, the flat rate income tax has some important advantages. It is simple, it has the same economic effect as the ideal consumption or sales tax, and the taxpayer, if withholding is eliminated, will be very knowledgeable about the rate. There are two negatives with a flat tax, as I see it. First, it would not allow the repeal of the 16th amendment and dismantling of the Internal Revenue Department, and thus special interests could again come and complicate the existing Tax Code. Second, there are problems with the tax treatment of U.S. exports. While the economic effect of the Armey flat tax is identical to a value-added tax, GATT may preclude us from removing a flat tax on our exports while governments using a VAT could remove the tax on their exports. In summary, each alternative to the current income tax system has strengths and weaknesses, but each method is far superior to our current invasive system that we have today. In ``The Wealth of Nations,'' Adam Smith spoke against the income tax, saying the necessary invasion of privacy to enforce tax would be too much for citizens to bear. Today his words ring true, and we must move forward with this opportunity to replace the current tax system.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think we should remind ourselves what we are after. We are not just after changes in the way the Federal Government keeps its books. Our goal is to make the United States a better place to live and work and raise our families. How do we get there? We get there, No. 1, by increasing savings. That will help us achieve more and better jobs. I would like to suggest that the biggest cost over the next 10 years of the tax decreases is a bill that I have been supporting for the last 2\1/2\ years called neutral cost recovery. What this bill does is to say to businesses that--when they buy new machinery or equipment, they can consider that a business expense and can deduct it from the tax base before you figure out how much taxes you owe. Guess what the economists say is going to happen if you allow businesses to deduct the price of the cost of the machinery and equipment and the facilities that they purchase in the year that they buy it? What is going to happen is, it is going to in effect reduce the price of that equipment by 16 percent and businesses are going to buy more of it. And if we want the great American work force to have better tools, then we are going to have to have some motivation, some incentive to get those tools in the hands of the best work force in the world. And the way we do that is tax policy. We are dealing with a tax increase 2 years ago that was $252 billion. Our conference got together, said, do we want to have an offset to that $250 billion tax increase? The answer was yes. And we said, How do we want to do it? We want to do it in a way that is going to encourage savings and that is going to encourage capital investment. That is what we did in this tax bill. So to have an amendment that says, do away with the incentives that are going to expand business and jobs by putting better tools in the hands of the American workers, I think, is very shortsighted. As we look at the poor people that need help, our goal has got to be offering those people better jobs.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I would like to comment today about the Supreme Court decision limiting the powers of the States to prohibit those States from enacting term limits. Madam Speaker, the majority opinion in U.S. Term Limits versus Thornton, as Justice Thomas points out in dissent, reflects a fundamental misunderstanding of the 10th amendment's reservation of powers to State governments and the people. While the 5 to 4 decision may be a setback for term limits, it is only a temporary one. The closeness of the vote, and the strength of the dissent's argument, means that less harm was done to the term limit movement than is generally believed. The fundamental issue in Thorton is not term limits, but the power of States and citizens to add to the three qualifications that are spelled out in article I for Members of Congress: age, citizenry, and residence. While the majority makes a cogent and correct argument that the Constitution bars Congress from setting additional qualifications, it fails to demonstrate that the States are barred from adding qualifications. The thrust of the majority's argument is that allowing States to set additional qualifications could lead to abuses of the electoral process. The majority said the Founders would have opposed such abuses, and therefore must have meant to bar the states points out, is that the Constitution is silent on the matter. And the 10th amendment could not be more clear: ``The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.'' The plain language of the Constitution says that unless the Constitution prohibits states from adding qualifications about who can represent them in Congress, they should have the ability to do so. Whether a particular qualification, such as not having served more than three terms in the U.S. House, is a good idea or not is irrelevant. If one accepts the majority opinion, then all other state qualifications are unconstitutional. These would include requirements that Congressman must live in the district that they represent, or that they not be a convicted murderer. Justice Thomas points out the absurdity of the situation where states have the right to restrict those who can vote in an election, but not the right to say who can run when he says: ``the people of each state must leave open the possibility that they will trust someone with their vote in Congress even though they do not trust him with a vote in the election for Congress.'' Actually, the Arkansas law would allow Congressmen to serve more than three terms, it just would require them to be a write-in candidate. The majority ruling was that this disadvantages a class of candidates, and holds that an amendment with the purpose of handicapping a class of candidates is in violation of the Qualifications Clauses and cannot stand. As the dissent again points out, this would mean that one could argue that the current congressional campaign finance system disadvantages challengers, and thus is unconstitutional. The same arguments could be raised against any redistricting plans of the various states. It has not been well-reported that the implications of the majority opinion could go well beyond term limits. As other related issues come before a future Supreme Court, it is possible that the U.S. Term Limits versus Thornton decision will be overturned. Of course, this would be well into the future. An interesting question is, where do we go from here? I am committed to term limits, and have directed the House Clerk to take my name off the congressional roll after six terms. I believe a majority of Americans now realize that our government is going to be better led by a citizen legislature than by career politicians. The court decision means that neither Congress nor the States can impose term limits by statute. Unless the decision is overturned, there must be a constitutional amendment to allow for term limits. While term limits supporters are often divided on the exact constitutional language for term limits, I expect them to agree on a form which will be able to gather the necessary two-thirds vote. Despite having a majority in the House in favor of term limits, the vote was 61 short of passing a constitutional amendment in March. Should the people continue to pressure the Congress a constitutional amendment will be enacted. Another option is the use of Article 5 to call for a constitutional convention. While it is true that all 27 constitutional amendments have come through the Congress, mounting a drive for a convention would add to the pressure on Congress to pass a term limit amendment and would keep the movement on the front burner in each of the States. I believe strongly that the citizens of each of our 50 States have the right to choose how to govern themselves. The people of any State should be able to enact and enforce qualifications for their representatives. Term limits address the broader issue of limiting the growth of our leviathan government. As George Mason said during the general debate on the ratifying of the constitution in 1778: ``Nothing so strongly impels a man to regard the interests of his constituents as the certainty of returning to the general mass of the people from whence he was taken.'' Congress must not become a perpetual body. It must be made up of citizen legislators who, in the words of Thomas Jefferson, ``might have in idea that they were at a certain period to return into the mass of people and become the governed instead of the governors.'' Term limits will accomplish this and States deserve to have their 10th amendment rights be recognized.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. If the gentleman would yield on that point, I think, Dick, it is so important that we remind the American people the catastrophe that can happen if we do not do some of the things that you are talking about here today, that we are talking about in our efforts to balance the budget. Let us just remind ourselves that we have got a huge deficit, and we use the words making our children and our grandchildren pay for our overindulgence. But what does that mean? That means that today, with our overspending, we are taking money out of circulation by borrowing. We are borrowing this year 42 percent of all of the money that is borrowed in the United States. Now, what happens when we demand that we have that money, not caring what the interest rate is? We drive up interest rates. By demanding that we have 42 percent of the money that is out there to loan, that pressure on interest rates alone is going to be a depressant. It is going to be a downward pressure on economic expansion and jobs. It is estimated that we can save 1.5 percent reduction in interest rates if we end up balancing the budget. What else do we do? We take the money out of circulation. This year the money that we are overspending could be used for people to go to college, to build homes, maybe, more importantly, to expand their business and their jobs, to have better jobs in this country. If we are going to encourage those businesses to buy the better tools to put in the hands of great American workers to make us more efficient, then the downward pressure on interest rates by balancing the budget is going to do just that by tremendously lowering costs. If we allow businesses to expense the items that they buy, we could reduce the cost of those items by an estimated 16 percent. I think it is important to just note that we are not just doing this for the sake of cutting down government. We are going it because this pressure on the economy of America is going to do what all of the economists suggest, and that is we are going to lose jobs for our kids and our grandkids, in addition to making them pay back the tremendous debt that we have accumulated. Five trillion dollars we have now accumulated in debt, having no idea how we are going to pay back. This effort to look at the different departments and agencies of government is so important, and I compliment you so very much for the tremendous 80- and 90-hour weeks that you have put in.

Mr. SMITH of Michigan. I thank the gentleman very much. I yield to the gentleman from Pennsylvania [Mr. Fox].

Mr. SMITH of Michigan. Mr. Speaker, to continue this discussion of why it is important to downsize Government and how we reach our goal of having fewer taxes and greater responsibility in Government and greater individual responsibility for our citizens, I would call on the esteemed chairman of the task force that led the effort to structure the dismantling of the Department of Commerce, Mr. Dick Chrysler from Michigan.

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman again. It is so important to our future economy. Greenspan, who is the head banker for this country, chairman of the Federal because of the increased interest rates, because of the money that we take out of circulation, because of the overspending, because of the tremendous amount of this budget that it takes to service the debt, pay interest on the public debt, let me just mention as a footnote, the interest this year on the public debt is $339 billion. That represents 25 percent of all revenues coming in from all sources to the U.S. Government. We just cannot continue to dig ourselves deeper in this hole of public debt. Then if we look at Social Security, the unfunded liability of Social Security, the actuary deficit now amounts to an estimated $5 trillion. Medicare, the unfunded liability or the actuary deficit amounts to close to $8 trillion. Depending on future workers to pay the bills for current expenses, whether we are talking about pension benefits or whether we are talking about Social Security or whether we are talking about Medicare or whether we are talking about borrowing from future generations to pay for the overzealous spending of this Congress must stop. I complement Wally Herger for his extraordinary efforts on the Committee on the Budget and as a member, esteemed member of this Congress that is looking for ways to bring about more responsible government.

Mr. SMITH of Michigan. Mr. Speaker, I appreciate the gentleman's bipartisan efforts. I was delighted when the President said that he was going to offer a balanced budget that might take 10 years to balance but such a difference between that and the budget that the President gave Congress here just 6, 7 weeks ago. That budget actually increased deficit spending over the years so that by the year 2002, we would have been borrowing or overspending $314 billion in that year 2002. That is the year that we call it zero with the budget proposal that came out of the budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I move that the House do now adjourn.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I am so proud to be a Member of this Congress. We have turned from a nation at risk to a nation with a hopeful future. How can anybody criticize the Committee on the Budget's budget? it is so reasonable in terms of what this Nation faces. Just briefly, on this chart we see the President's budget would take us to $7.4 trillion public debt by the year 2002. At the bottom line, we see the Neumann-Jerry Solomon budget that takes us to a public debt of $6 trillion 216 billion. In order to decide how serious the situation is, we need to consider where we are on Social Security, Medicare, unfunded liabilities for both the veterans trust fund and the civil servants Federal employees trust fund. That is another $5 trillion added onto the $5 trillion debt that we have today. We have serious problems ahead of us. We should look at this very seriously.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, this budget is not just about the Federal Government's fiscal strategy, the way we keep our books. It is about America's future. It is about creating job growth and opportunities for our kids and our grandkids, about making our communities a better place to live and work and raise our families. Certainly it is about our future prosperity and our future safety. Mr. Chairman, 2 years ago in 1993, this House, this Chamber, passed a large tax increase, approximately $248 billion over the 5 years of the budget. The decision from our conference was, should we give some of that tax increase back, and should we do it in a way that is going to stimulate job growth? We did that. One of the elements was my neutral cost recovery bill, that allows businesses to deduct the cost of the tools and equipment they buy as a business expense. Let me tell Members what economists say is going to result from that kind of Tax Code change. They say the GDP of this country will increase almost $3 trillion, it will increase 3 million jobs with an average salary increase of $3,540. Mr. Chairman, as we look at how we are cutting this budget, everybody is going to realize some pain. I hear so much talk about criticizing the cuts. It is so much easier to tear down a house than it is to build a house. We are trying to build that house in a budget that is going to help future generations. I would hope all Members would contribute in a positive way to how they think we can improve this budget, not simply criticize every element of every cut, Mr. Chairman, as we look at transportation, as we look at the infrastructure we have built over the years.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I will take just a moment to correct the last speaker that suggested that benefits for Medicare would go down. Actually, under these proposals, individual, per person benefits increase from $4,700 per person to $6,300 per person, so I would like to clear that up. I just want to compliment the Committee on Rules on turning out a rule that is going to go down in the history books, if we are successful, in getting on the glide path toward a balanced budget. I was particularly concerned with what we have been living with for the last 16 years, the so-called Gephardt rule that says ``Let us sort of sneakily hide a vote to increase the debt ceiling within the rule IL, that says `When you finally pass a budget resolution, you automatically pass a bill that increases the debt ceiling to accommodate the next fiscal year.''' I think this is a great rule. Let us vote for it. Let us move on toward a balanced budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Yes, that is true. I wonder if this is not good. I mean, probably people do not understand, the other side, when they say this is tax cuts for the rich. But see, what they are saying is by taking a $500 tax credit per child, the person that is making the $50,000 or the $100,000 or the $150,000 is in a higher tax bracket, therefore that $500 tax credit is worth more, therefore these are tax credits for the rich. Everybody should understand where this rhetoric comes from when they say tax breaks for the rich. Some people say well, we are reducing the taxes that corporations pay because we are allowing them to deduct the cost of buying new machinery and equipment to put better tools in the hands of our workers to be more competitive. You can call that tax breaks for the rich but what it is trying to do is encourage capital investment and job formation.

Mr. SMITH of Michigan. The gentleman has as good an answer as I do, so I will let you complete the answer. My part of the answer would be that most economists that appeared before our Committee on the Budget agreed that increasing taxes is not the way to balance the budget if we want to stimulate job growth in this country. And as everybody knows, or should know, 2 years ago in 1993, what this Congress a record $252 billion over the 5 years of that budget. Our conference met and decided that if we wanted to stimulate job growth and savings and cap investment in this country, then we should offset that $252 billion tax increase with some kind of tax decrease. That is what we did. This tax decrease is totally paid for out of spending cuts and it is going to stimulate the economy.

Mr. SMITH of Michigan. Mr. Speaker, just some comments on the debt. You know, we have made a decision in the U.S. Congress to require that the Senate vote, that the House vote, that the President sign, any time that we increase the debt ceiling. Right now we have a debt ceiling of $4.9 trillion. That was done 2 years ago, when this administration came into office. Now, that is good, no more charts. That debt ceiling was increased 2 years ago in 1993 to $4.9 trillion. Today--today our debt, subject to the limit, is $4.77 trillion. We are going to hit the cap of $4.9 trillion in September or October. So this House is going to have to decide, do we want to vote to increase the debt limit again. Several of us, Congressman Chris Shays, myself, about 20 others, are saying look, if we are going to vote to increase the debt limit, should we not have something solid to get us on a glide path to assure that we are going to have a balanced budget sometime in the next 4 to 7 years? And I think the answer is yes. So I think we need to send a strong signal to the President of the United States, look, unless we are on that glide path, unless we have got a law, a reconciliation bill, a balanced budget amendment, or something that can somehow guarantee to the American people that we are not going to pick their pockets any more, we are not going to vote to increase the debt limit. So we are sending that message to the President. We are also sending a letter signed by about 25 of us to the majority leader in the Senate, to the Speaker of the U.S. House, saying look, do not plan on our vote to increase again the debt ceiling of the U.S. Government unless we have got the kind of firm, absolute, tough legislation signed by the President that helps make sure we are going to get there.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. I thank the gentleman very much for yielding. You know, what is so very interesting is that it was 2 years ago that the trustees of the Medicare trust fund came to Congress and said, ``This trust fund is going broke, and it will be out of money by the year 2000.'' This time they came back and said it might last until 2002. But the fact is, it is a political hot potato. For the last 2 years, with the existing majority in Congress and the President, they did not want to deal with it because they knew it left a target. They were politically vulnerable. Republicans met and said, do we want to save Medicare? If we do, are we from the other side of the aisle? ``Oh boy, are you guys cruel and unreasonable.'' The fact is, there is going to be less money coming into the Medicare trust fund in the next 2 years than the payouts. There is a little reserve there in part A that is going to allow us to continue until 2002, and then it is bankrupt.

Mr. SMITH of Michigan. I was just saying on reform, testimony before our Committee on the Budget indicated there was $40 billion of fraud and abuse in the system. So, for a start, last year we had a proposal by the administration that the Federal Government should take over all of the medical health care needs in this country. The fact is that we have seen Medicaid and Medicare grow at the rate of 10 and 12 percent a year. The private practice health care has been 6 and 7 percent. In fact, last year it was about 4 percent, with many parts of the country being zero. The private sector is growing at 4 percent, the public sector, where we have Medicaid and Medicare, where the Government is responsible, has been growing at 10 and 12 percent. To say it is a solution to have the Federal Government take over everything does not jibe. We have got to do something the corporations and the rest of America are doing. We have got to make smart shoppers out of every American, including senior Americans.