David Schweikert

Mr. SCHWEIKERT

Mr. SCHWEIKERT. So we are actually paying ourselves a SPIF, and we are still burning through our cash. That is why this board is up, to show you how devastatingly different the number is from just this last August, how fast the numbers have moved. But even if we go back to 2011, when we were doing these floor presentations, we thought we were talking 2038. You would have been 65- plus for a few years.

Mr. SCHWEIKERT. No. No. Technically, we are paying ourselves. So that is part of the revenue into Social Security right now and the Medicare trust fund and all the three big trust funds. We are paying ourselves 3.1 percent, which is actually greater than a 10-year T-bill substantially.

Mr. SCHWEIKERT. It took us a while to find that number.

Mr. SCHWEIKERT. Our official military expert. It was helicopters, wasn't it?

Mr. SCHWEIKERT. Actually, General Perry and I were talking about that. You don't mind me calling you that, do you?

Mr. SCHWEIKERT. In 2011, this was the chart. I just want you to look. What is the direction? The trust fund was supposed to grow and grow and grow up until 2021. There was going to be more money there every year. This is what we were telling ourselves, telling the public, telling the financial markets just 5 years ago. Now take a look when we look at the new budget projection. And understand we went from saying these trust funds are going to grow. So when you and I first got here, I think the Social Security trust fund was supposed to survive to 2038, and now we have taken 8 or 9 years off that. This is the new number that just came out in the report, that, in 22 months, it starts to go negative and we start to dip into the principal balance. In 14 years--and you will see that in the next chart because in the next one I take it beyond the 10-year projection because we had to do our own calculations for the final 4 because they only give you 10 years when they do the projections--in 14 years, the trust fund is gone. Look, I know you have talked about how the trust fund works.

Mr. SCHWEIKERT. No, I haven't. I may let you do that. Let me just pitch what this one means. In 2011, when I first got here and I started this project in our office, we actually set up a little team in our office we call the ideas shop. We actually grind out these numbers all the time, and we watch them like a hawk. We actually do something fun. When the trustee reports come out, we sit there with our yellow highlighters and read them as a group. The amazing thing is I have almost no staff turnover, which I can't figure out why they stay. I hear some of my staff laughing in the background.

Mr. SCHWEIKERT. And then you try to have the conversation with our friends from the left saying: You don't think the regulatory state affects us? You don't think raising taxes has slowed down the economy? There is some actual great literature--and we are working on it for a future presentation--that says, for the tax hikes that the President demanded a couple years ago that this body did, for every dollar of new revenues that came in, a dollar was lost in economic growth. It got us nothing. It basically slowed down our economic growth into the future, ultimately costing us billions. In a couple of these programs, if you really lay it out over 30 years, it could be in the trillions.

Mr. SCHWEIKERT. Yes.

Mr. SCHWEIKERT. It is stunning to think, in 9 years, Social Security disability----

Mr. SCHWEIKERT. So now let's talk about the other trust fund that was in the Congressional Budget Office report, something we shored up this last fall. You remember how we did it? We reached over and grabbed $114 billion out of Social Security, old-age survivors, and moved it over to Social Security disability. In the discussions around here, people were happy. They were applauding. I thought we had fixed it for years. Remember there were going to be some reforms and some of these things? Well, these numbers are with the reforms and with the money, and it is gone in 58 months. Mick, I am going to make you stand up again because you were one of the most articulate in talking about the scale of reforms we had. Both were just, in the modern economy, were there ways we could help our brothers and sisters who are on Social Security disability move back into at least some economic participation and not have them hit a cliff where all of a sudden their benefits are cut off. It might cost us a little bit for a couple years, but in the future it would become more sustainable. We didn't do it. Now we are back on the treadmill again.

Mr. SCHWEIKERT. Look at this. If you plan to be around 9 years from now, Medicare part A, what covers your hospital, those types of section in Medicare, it is gone. The trust fund is gone. So all of a sudden now are we willing to do what Speaker Ryan has talked about for years, premium support, some way to reform the way we price and cost and the benefits we receive and how we allocate them and price theory, you know, sort of thinking like an economist, but things that make sure you get your earned benefit, but we also make it sustainable? It is no longer a theoretical conversation for decades from now. It is in 9 years. So if you plan to live for 9 more years, understand, Medicare part A, the trust fund, is gone. In our calculations in our office, it could be 30 percent cut in what is able to be paid out. How many medical professionals are willing to see you when you come in and say that you need your cataract done, you need a heart valve, you need this and, oh, by the way, the hospital is only going to be paid 30 percent less what it gets today? Are they still going to see you? Do you understand the wall we are going to be putting our seniors in? This happens in 9 years. How many Presidential candidates have you seen or heard talk about this?

Mr. SCHWEIKERT. Mr. Speaker, I am not going there. Let's walk through a couple of the other trust funds because I know this is really exciting, but this is important. This is the 10,000-pound gorilla in the room. So often those of us, as Members of Congress, we get behind these microphones and we do the shiny object type of discussion. This is it. This is going to decide what our military capability is because it is what we can afford. This is going to decide what money we have for medical research and education. This is it. These numbers are incredibly important. If this doesn't drive us this year to start moving forward on tax reform, on regulatory reform, things that will start to kick-start economic growth, these numbers are devastating. Let's do a little quick discussion about Medicare part A. If I came to you right now and said: ``Hey, what was so devastating in this Congressional Budget Office report? What should have scared you out of your mind?'', in here it basically for the very first time said one of the major trust funds is out of money in the 10-year window.

Mr. SCHWEIKERT. You will be happy to know that my math is Social Security will have been emptied out 2 years before you retire. I mean, it is 14 years from now. So these are just critical. I yield to the gentleman from South Carolina.

Mr. SCHWEIKERT. How do you and I and Mr. Perry help the public understand these numbers in the background are driving much of our policy here, much of the fussing here, but yet it is not part of the Presidential campaign, and this is no longer about your grandkids? This no longer about your kids. It is about you retire--you turn 65 in what year? I yield to the gentleman from South Carolina.

Mr. SCHWEIKERT. Correct.

Mr. SCHWEIKERT. Mr. Speaker, the gentleman from South Carolina and I have talked about these charts before, and the reality of this should terrify people how fast these numbers are eroding. Where is the conversation? Why isn't it a headline? Why isn't it on business news every night? If I came to you and said you just lost 4 years of actuarial soundness on a trust fund that today is $2.8 trillion, you have got to understand the scale we are talking about. I yield to the gentleman from South Carolina.

Mr. SCHWEIKERT. It is a combination of economy, growth rate, reaching over and taking $114 billion out to shore up Social Security disability, and our recalculation of what future GDP is. Just for the fun of it, can I talk my friend from South Carolina into joining us, A, because it is always entertaining when you get behind a microphone, and, B, you have no hesitation to correct me when I get math wrong. I yield to the gentleman from South Carolina.

Mr. SCHWEIKERT. Right. Right now. My calculations are we shortened the life of Social Security's trust fund by about 13 months when we did that. I don't think you voted for it. I don't think I did. I know I didn't. Now we have to deal with the realities of what that meant. As we were looking before, what happens when you are not achieving the economic growth that is required? All of a sudden, you see numbers like this. And this is stunning. When you are talking about a huge trust fund, this should not be happening. This is to give you a sense of how dramatic the problem is out there in this economy. I know we are happy talking. It is an election year and President Obama needs to sort of tell a story of how wonderful it is, but it isn't showing up on the map. So this last August, the trustees of Medicare, Medicaid, Social Security--they all do their individual reports. The Social Security trustee said interest income and tax revenues would cover the payments going out the door on Social Security until 2022, except for the small problem of, somehow between August and 3 weeks ago when we got this new updated report, it is down to 2018. Now, all of a sudden, Social Security goes negative, meaning it doesn't have enough revenues to cover its obligations. So the way we were doing the math is, in 20 to 22 months, Social Security is going to have to start reaching over and cash in some of its bonds. We pay ourselves 3.1 percent interest in the washing machine where the general fund has reached over to the Social Security trust fund, taken the money, and loaned it to our debt. This is devastating. If any of you have ever been in business or finance, when you start to use up principal, you are in real trouble. I yield to the gentleman from Pennsylvania.

Mr. SCHWEIKERT. As you know, the first quarter of this budget year-- because budget years aren't the same as calendar years--came in at 0.7. So we didn't even make a full percentage point of gross domestic product growth. Once again, this is geeky and people's eyes are glazing over. Why this is important is because that economic growth is what helps create the jobs and the trade and the velocity in the economy, and that velocity ends up creating the tax revenues and the revenues that get paid into Medicare, get paid into Social Security, help us pay and cover our promises. What happens if you keep saying the check is out the door but you don't have the revenues? That is why it is important to pay attention to what we do in tax policy over this coming year, what we do in regulatory policy over this coming year, when we start to take on those factors that grow the economy. I would think this would be both our friends from the left, who thought somehow we could regulate ourselves into prosperity, would see the folly of their policies and see it in the numbers and be willing to come our direction. Because do they care about saving Social Security? Do they care about saving Medicare? Do they care about saving Social Security disability? If they truly care, we have got to do something about economic growth. I want to switch up a couple of the boards and just sort of walk through some of the different numbers here and have this make more sense. Do you have the table that actually shows the change from 2022 to 2018? Remember, the last board I was showing you that was talking about, hey, here is what happens when we miss all these GDP numbers? This is why, on occasion, I desperately wish more of our brothers and sisters around this body would grab a CBO like this and actually read it and highlight it and pull out their calculators and look at it again. Yes, you are going to fall asleep two or three times when you do it, but you will understand how incredibly important some of the policy sets are we are making here. This was just from when the trust funds' actuaries did their report this last summer. We will just go down to the bottom line because that is the punch line. I yield to the gentleman from Pennsylvania.

Mr. SCHWEIKERT. Mr. Speaker, those of us on the right who are more conservative--we have our folks who are guilty of this, and, heaven knows, I see it from our friends on the left--where we hold up a shiny object and pretend like this would take care of this fiscal cliff that is no longer very far in the future. It is here. We say, oh, if we would just adjust this on foreign aid, we would be fine. Anyone who says something like that, they don't own a calculator. So the slide next to us right now--and the gentleman and I were working on this earlier today. I thank the gentleman and his staff for their willingness to sit there and, shall we say, geek out with calculators, budgets, and actuarial tables. One of the things that has happened--about every 3 months, I do one of these presentations. If someone were ever to go back a few years when we did the very first one, parts of these numbers have actually gotten much worse. Even though we are supposedly out of the recession and we are supposed to be in a healthier economy, as we keep being told from the other side, the fiscal, the financial shape of the country is worse. How is that possible? Mr. Speaker, I am going to make the argument that when we do examine what we were telling folks our financial situation was in the future, it is actually much worse. In 2011 we said, hey, when we finally get to that year 2016, we are going to have 3.3 percent GDP. Then we had a couple of crazy ones that said, in 2012 and '13, you are going to be at 4\1/2\ or 4.4 percent GDP growth. You are going to be blowing the wheels off. Then in 2014, it started to come down. Well, you are going to be at 3.4 percent GDP growth. The problem is that the latest update on our numbers, we are down to 2.3 percent GDP growth. So we are half of what we were telling the public we were going to have just a couple of years ago. I yield to the gentleman from Pennsylvania.

Mr. SCHWEIKERT. You are incredibly fit. Understand, I am going to show you some slides under the new projections by the CBO, the Congressional Budget Office, that came out 3 weeks ago. Mr. Speaker, Social Security, the trust fund has about 14 years, but Medicare part A is gone in about 9 years. You are going to see Social Security disability may have only about 58 months, and that trust fund is gone again. So understand how fast these things are eroding. Look, we are going through a lot of data and a lot of slides. I know you and I and a couple of other Members, we are going to be putting this deck of slides on our Web sites. For anyone that is actually interested in the fiscal sanity and health of this country, this is the ability to take a look at them, analyze them, give us suggestions, and give us creativity. This one right here, so, in 2026, think of this: only 22 percent of the spending will be in what you and I get to vote on. Half of that is going to be defense; half of that is going to be nondefense. Oh, and by the way, the one good thing I can tell you about we are getting from the slow-growth economy right now is we have reprojected our interest rate. Because if I had shown this slide a few months ago, we were expecting trillion-dollars-plus interest. Now, we only expect a much lower mean interest rate 9 years from now. So only 12 percent of our spending will be interest coverage. Think of that. Interest will be greater than defense in 9 years. Interest will be greater than all discretionary spending in 9 years-- and substantially so. So the growth you are going to see here is functionally in Social Security, Medicare, Medicaid, interest on the debt, and some of the other programs. This is where we are at. You try having a conversation with our constituents and say these are big numbers, they are huge programs. You have got to move away from some of the political folklore. We should actually, as we go through these--because I have a couple of spots. How many times have you been at your townhall meeting and someone raises their hand? Some of the suggestions they have to save money are wonderful, but they are tiny. I yield to the gentleman from Pennsylvania.

Mr. SCHWEIKERT. Oh, we are going to get to that slide. Do you plan to live more than 9 years?

Mr. SCHWEIKERT. Yes. There are a number of times you and I have folks who come to our offices or to our townhalls who have great ideas, and they desperately want some more resources for this research project or for this activity or for this infrastructure or for this and that. You try to explain-- okay--this board here talks about the next 9 years; so from this budget year--where we are right now working on the 2017 budget--for the next 9 years. I know that seems like a long time, but the average over that time--76 percent of all of the spending, three-quarters of all of the spending--is going to be in those mandatory: the formula, the entitlements, the earned benefits. Only 24 percent of the spending is going to be in the military or in other activities of government. As we go back to make that circle again, why do we fuss with each other around here? It is about the money when you have someone standing in front of you and he is not talking about the need to do two things. Now, they are big things. One is to dramatically adopt policy that grows the economy. We are not going to make it under this current growth rate. This Obama economy is just killing us. Number two, we are going to have to be honest about the benefits that we provide and the formulas underlying them. There may be some creative things we can do, but as the political class, we have got to stop being terrified to talk about it.

Mr. SCHWEIKERT. Formula and--we have to be brutally honest-- demographics.