David Schweikert

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Chairman, I was just listening to my friend from New York, and I would like just sort of a little consistency. At one point we talk about job growth and the desperate need for more job growth, but then how many have come behind the microphones today and talked about a little technical problem we have. We are shedding-- closing--more small businesses than we are opening, and this has been going on for years now. So those of us who were involved in the JOBS Act a few years ago--and remember, it was a bipartisan discussion saying we desperately need to find ways to move capital to the little businesses that are just trying to find some cash, some way to grow, some way to expand. And then you look at a piece of legislation like this, and let's be brutally honest with each other, these are little tiny things that do good, but this isn't necessarily a revolution of Dodd-Frank. It is not a revolution of the capital markets. These are silly--excuse me, these are simple-- simple--logical, obvious steps. Let's take a look at some of the small offerings. If I am reaching out to people who know me, know my business, it is limited to, what, 35? That is somehow a risk to the financial stability of the country that I am a small entrepreneur and I may be able to reach out to people who know me and my business and ask them to invest in my capital formation so I can grow and create those jobs and expand the business as I desperately need? How about cleaning up what we all agreed to, what, 4 or 5 years ago in regards to reg D offerings of how it mechanically was going to work? Remember, we sat there over and over for weeks discussing how reg Ds were going to work, and then the SEC decides they are going to change what we all thought the understanding was. How is that a danger to capital markets, fixing where we already thought we were?

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, I thank the chairman. To my friend from Connecticut (Mr. Himes), look, I know you to be one of the, actually, smartest people here on these sort of subjects. So I am going to take a slightly different approach and see if what I am actually reading in this legislation is a little different than some of the nature of the conversation here. The way I am reading this legislation, it functionally says that U.S.-chartered institutions will not act as the clearers, clearinghouses, for FX, for dollar-denominated trade. So, as we walk through those mechanics--if we all remember when we sat down, both in the isolated area, reading the nuclear agreement, what was in that agreement that said we are obligated to hand over the infrastructure of our U.S. financial system, our banking system, our foreign exchange clearing system, and we have an obligation to provide that infrastructure that we have built and hand that to the Islamic Republic of Iran? There is nothing in the agreement that says we have an obligation to provide our financial infrastructure to help them. Now, we have already heard Chairman Royce and others walk through all of the bad acts and how this money is often killing people around the world and taking their lives and threatening our allies. That may be the meat of it, but the actual legislation functionally denies the use of clearing U.S. currency, U.S. dollars from U.S.-chartered institutions. My understanding is that, if they wanted to, they could probably go to the Bank of Singapore and clear their dollars there into gold and wash money for other bad actors and send it to murderers in Lebanon. But at least those institutions that we hold dear, that we regulate, that we talk about here, that our taxpayers guarantee deposits in, why would we hand Iran our infrastructure to clear their dollars when so many of their resources are going for bad acts? I know we keep having this conversation of, ``The nuclear deal is bad, many of us voted against it,'' others saying, ``Oh, it is a great achievement, we want to support it.'' Fine. There is nothing in the agreement that says, great, you now get to use the U.S. infrastructure to finance yourselves, move money around, and actually ultimately wash money to do evil in the world. So if we are going to have this conversation, let's be intellectually honest of what the language in the legislation actually says.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, on July 11 through 13th, 2016 youth leaders and families from Decoding Dyslexia will be hosting and participating in programs on Capitol Hill to raise awareness, encouraging our nation to #SayDyslexia. Congress extends a warm welcome.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Chairman, we had a technical issue earlier, and we had reached out to my friend's office. I congratulate your staff. They understood the mechanical issue. It was a procurement timing. It has been taken care of with the amendment to the amendment, and so I want to make sure anyone that is listening, that the concerns that were being brought up from my office have been dealt with. We now are fully in support of the gentleman's amendment.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, there is a crisis right now in our country, and the fact of the matter is, we have more business concerns closing, going out of business, than being started. If you are concerned about economic growth, if you are concerned about growing payrolls, people being able to survive financially, you should be fixated on the fact that we have more businesses closing than opening. Being someone who was here and spent a year of his life working on the JOBS Act, the individual bills, who was almost giddy that we had a bipartisan piece of success that so many of us were incredibly optimistic that was going to create some economic growth, and to be here today 4 years later dealing with something, I am sorry, that is almost absurd in the discussion: that the SEC has made it more restrictive today than it was before the JOBS Act. Think about this: your university, your community college, your group brings together a number of little businesses that are trying to raise capital, and now under the interpretation that is coming at us, you are going to have to have security at the door to interview people, look at their financials. I mean, this is crazy. Is the caterer going to have to get certified? How about the security person at the door, are they going to have to get secure? Think about what this means and the absurdity that little businesses that were trying to capitalize can't even tell their story without making sure that the people in the room hearing it have met some sort of definition that the SEC has imposed after we all thought we did a piece of legislation that opened up this type of communication.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, it is a fairly simple argument. If you want a competitive, robust financial market in our banking world, where institutions have the ability to survive because of the crushing costs that Dodd-Frank has created. This is a simple, simple bill. It is just a chip off the iceberg that is Dodd-Frank. Think about it in a way that this is the first step to try to create more competition to those big banks that I hear the left rail on day after day. This is a good piece of legislation.

Mr. SCHWEIKERT. Mr. Speaker, I thank the chairman and, also, my good friend Congresswoman Love. She actually has become a very valuable member of the Financial Services Committee. I appreciate this bill. We have to talk through something because there is something here that is just bordering on--you know, we are passing each other in the night here. That makes absolutely no sense. Dodd-Frank: I accept some folks bathe in love for it, but it has made the big, money-center banks bigger. So a bill comes along that says there is this concentration--if you believe it is a concentration of risk--because these banks are growing bigger and bigger and bigger. And one of the big reasons they are growing bigger is because they can amortize the regulatory risk over a much bigger book of business. The money-center banks are $2 trillion institutions. We are talking about a $5 billion step-up here. The small banks, which we are losing one a day, cannot cover these costs. Their regulatory costs on a much smaller book of business is putting them out of that business. So if you want to make the big banks smaller, you can try to regulate them more. But they have demonstrated that actually is their competitive edge in the world right now. What you need to do is compete them out of their hugeness, if that is a word. If you care about competition, if you want to stay with your rhetoric that, hey, we need to deal with these big banks and we need to keep regulating them, then create a market where other banks can start to take parts of their market share because the big banks have a different cost of money. They have this ability to take this huge regulatory environment-- sometimes five different agencies that have some level of prudential coverage--and amortize it over a book that is $2 trillion. How about giving smaller institutions a chance to start taking some of their market share? That is what Mrs. Love's bill does. It starts to say--and we are still talking something that is tiny in the banking world--let these holding companies get up to $5 billion. Let them actually start having a fighting chance to take some of this regulatory burden that has been shoved down their throats and start to amortize it over a little bit larger book. Because if you leave it at the smaller institutions, they cannot compete. If you want to make the big banks smaller, create an environment where they face competition. This is a classic argument around here. Do you believe that you make the world safer by layer and layer and layer of regulation? Well, that worked great in 2008, didn't it? We are going to file our paperwork and maybe next quarter some regulator will look at it and maybe the next 6 months someone will write a letter about it. Or do you want an environment where there is so much competition out there that there is lots of optionality in the financial markets? That is what we are looking for here.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, I rise today to celebrate the retirement of Mr. Ken Osborn. During his 45 years at the Paradise Valley Country Club, Ken has provided joy and excellent service to the Paradise Valley community as the Valet Parking Supervisor. I am incredibly proud of the work and leadership Ken demonstrated over the past 45 years and I wish him the best of luck in his future endeavors.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. We were talking about earlier that my calculations are that, as of right now today, it is a little under $2.8 trillion of special Treasury notes that have been given from the Treasury to the Social Security trust fund because that cash has been moved over here. And the revenues that go into Social Security are a combination of the FICA taxes. And would you believe we pay ourselves 3.1 percent interest?

Mr. SCHWEIKERT. And what happened between last August and now that all of a sudden--remember, last year, the deficit was about $150 billion lower than this, than we are going to run this year. Multiple things happened: We didn't come close to the economic growth we had built and modeled. The movement of our citizens into certain programs has been greater than expected, and fewer velocity. We say unemployment is this, but when we actually look at the actual tax revenues coming from it, there is a disconnect. There is something horribly wrong there. So there is something wrong in economic growth. And then we blew up many of the sequestration caps last year. Well, ultimately, we went from, I think we had a $420 billion, $430 billion deficit last year, which was still stunning, and now we are going to be $545 billion. Look, these are big numbers. It makes your brain hurt. They are uncomfortable. But what you have to appreciate, it is stunning, and it gets dramatically worse in 20 months. We hit what was called the inflection. I remember reading about this a decade or two decades ago. It is when the baby boom population has been moved in to retirement. And the spiking years are moving in, and they are starting to receive their earned benefits. Then we start adding a couple of hundred billion dollars every year in new borrowing, and it blows off the chart. Mr. Speaker, I yield back the balance of my time.

Mr. SCHWEIKERT. It is coming. This goes back to what my friend from Pennsylvania was commenting on. What do we look like in the year we are in right now? Functionally, we are going to be borrowing about $545 billion this year. This was supposed to be one of the good years. Understand that the inflection doesn't happen until 2018, when the debt starts to explode. This was one of the good years. Do you understand what $545 billion is? No one does. That is a lot of zeroes. It is $1.493 billion a day. It is $62 million a hour. But, think of this. My favorite one is that it is $1 million a minute. It is $17,000 a second. And understand this goes up in 9 years. It basically triples. This triples in 9 years. So, we are borrowing $17,000 a second, and that number triples in 9 years. I threw these together because I figured we would have a little bit of fun here. So, we are holding a townhall. We get some of the groups that come in and fuss at us and say: Well, I saw somewhere on some news article that said you should get rid of subsidies for fossil fuels. First off, it is depreciation, just like every business has, but let's say you took away that depreciation from the production of natural gas and oil. You took it all away. If we are borrowing, functionally, $1.5 billion every single day, and you took it all away, it would buy you 12 minutes and 41 seconds of borrowing coverage a day. There are 1,440 minutes in a day, and you just came up with a way to cover 13 minutes. It shows you how fake many of these rhetorical things are that we hear from the political class, particularly the left. Let's actually take the next step. What about green energy? Did you know green energy has three times the subsidies of fossil fuels? Let's say you took every dime of the $36.7 million day that green energy gets. That buys you almost 35 minutes a day. There are 1,440 minutes in a day. We took care of 12 minutes by getting rid of the tax deductions and depreciation for fossil fuels. You got rid of 35 minutes and 24 seconds if you got rid of it all for renewables. My point is, much of the rhetorical things we hear from the President, from our friends on the left, are completely frauds, mathematically. We have to understand something very, very simple. We are borrowing more than half a trillion dollars this year. In 20 months, the debt starts to explode. Mr. Mulvaney, when you have actually been in front of some of your audiences in South Carolina, have you ever shown them the chart that this year and next year were supposed to be the good years? It was supposed to be fairly flat, and then it explodes.

Mr. SCHWEIKERT. If you really want to get geeky, it is getting shorter because they are going shorter on what they call the weighted daily average.

Mr. SCHWEIKERT. Mr. Mulvaney, would you agree that the cheap money, the artificial liquidity, has kept Congress from doing what it knew it had to do in reforming the entitlement programs?

Mr. SCHWEIKERT. Mr. Mulvaney and I have been having a running conversation about how we put together a budget for this coming year. One of the discussions that we have been trying to calculate is, okay, they blew up some of the spending caps last year. It is what it is. But if they had paid for that increased spending with reforms in entitlements, that is something that goes on and on and on and multiplies out into the future. Actually, it does a little bit to help our future and save the entitlements. It has sort of a multiplier effect because it lives in perpetuity. It is fascinating, because some of us are trying to pitch that idea of give us a few things that we know actually have a multiplier effect in the future as a way to start to deal with these numbers. I put this chart up. This is last year. We are going to do this real quickly. I will have it on the Web site, and I will ask both of you if you are willing to do it, too. You are at your town hall. You have a group walking into your office demanding more money. You have got to understand that happens all day long. Every 15 minutes, there is another meeting of another group that wants more money. I will get groups that will come in and say: We want more money. If you would just get rid of foreign aid, we will be just fine. Then you pull this board out and say, Okay, you see the little red line there? That is every dime of the State Department's budget. That is military foreign aid, foreign aid to Israel, humanitarian foreign aid, food aid, and all the embassies and their staff, and this and that. It doesn't do anything. It is great rhetoric. It is a shiny object. It does not do anything, unless you are talking about Social Security, Medicare, Medicaid, other welfare programs, ObamaCare, interest on the debt. Understand that we are incredibly lucky. Interest on the debt this year was supposed to be somewhere in the $600 billion range. Our projection for the 2016 budget is maybe about $260 billion. We have been really lucky.

Mr. SCHWEIKERT. It has got to enrage us that if you really cared about the country, you would have the two conversations we are demanding: one, your willingness to change the Tax Code and the regulatory code--the things that help grow the economy--and; two, how are you going to deal with the mandatory spending--the entitlements-- that are blowing off the charts?

Mr. SCHWEIKERT. So the one thing that was holding us back on discretionary spending is gone, but under the law, it actually comes back in 2018. So that little tiny differential you see on that chart between the red and the green is sequestration.

Mr. SCHWEIKERT. Basically, let's look at 2016 and 2017. There is no sequestration. We increased our spending. We blew up the sequestration caps this last fall and last year.

Mr. SCHWEIKERT. Let's actually run through these. Let's use our last 12 minutes and get exactly to your point of where we are at and what has been going on. I put this one up specially for my friends who had fussed and wailed and complained about this thing called sequestration and how it was the end of the world. Basically, western civilization was going to be collapsed to its knees. What you see is that the red is sequestration and the green is discretionary spending without sequestration. If you see the blue bars there, that is mandatory spending. That is Social Security, Medicare, Medicaid, the new healthcare law, interest on the debt, and other transfer programs. It explodes off the charts. If our friends who complained about sequestration so much cared, they would have talked about mandatory spending: the entitlements. But if you look at the differential between that red and green, it is tiny. The fact of the matter is, this year and next year it is actually gone.

Mr. SCHWEIKERT. You no longer can say 20 years or a couple of decades. It is 14 years now. I am the proud father of an infant. If you do the calculations, when she reaches her peak earning years, her tax rates will be double what I pay. And that is already done. We have already done that to our children. You have got to understand the scale of what we have done. Doesn't she have the right to participate in some of the same earned benefits that we should have earned and hopefully will be there because we are going to find a way to fix them? It is not like the left gets behind television cameras and screams at us or puts up television commercials of a Paul Ryan look-alike pushing grandma off the cliff. That is political rhetoric. They are basically pulling a scam on you. This is math. I know we get folks in--I don't you know if you have ever had them at your townhalls--saying: It doesn't feel right. But I don't have a feelings button on my calculator. I have said that over and over to try to make the point that if you want us to protect your retirement future, you have got to demand that we step up and do it. It can be done by a series of little things. The reality is that Social Security is easy to fix. You can create a little smorgasbord of policy. Some might be aged, some might be folks with certain assets and opting out. There are a whole series of creative things to do. You give some optionality to young people. Because those who now are going to live in sort of the ``gig'' economy have the ability to put in 50 cents every time they have a transaction or by using the technology of these supercomputers we all carry in our pocket.

Mr. SCHWEIKERT. In some ways, it is actually more complicated, which I wasn't going to go there, but let's do it for the fun of it. The Social Security revenues will be subject to the whims of the economy. So you might have 1 month where you are able to pay out more and the next month you are paying out less because of the whims. You also no longer have the interest revenue. If I handed you $2.8 trillion today and paid you 3.1 percent, that is what is going into the trust fund today. That is all gone. The interest revenues are gone. This is a double whammy we are talking about. That is why you never, ever, ever want to get anywhere near these numbers. You fix it long before. Because every day we wait, it gets harder to deal with. Remember, my calculations are that in about 22 months we start to move into principal balance. We start eating our seed corn. And then, every day, the calculations get more difficult.

Mr. SCHWEIKERT. Can you see that date on this particular slide? I know you have eagle eyes from flying those helicopters. Our number is 2030, 2031. Right in there the Social Security trust fund is gone.

Mr. SCHWEIKERT. I think it is zero. And I have actually had this experience and I think Mr. Perry, my friend from Pennsylvania, had this experience where we have held budget townhalls and we have held well over a hundred in our district over the last couple years. We walk through the numbers and then have a discussion about it. I have had an individual go to the microphone and basically use a curse word and then say: I don't care about my grandkids. I want every dime. Part of the audience laughed. Part of the audience was terrified. Maybe that was a more interesting discussion when it really was about your great-grandkids or your grandkids or your kids. You have to understand that the erosion of these numbers, substantially because of the growth of participation, utilization of the benefits, and the horrible economic growth, is no longer future generations. This is us, particularly you. I didn't realize you were so old.

Mr. SCHWEIKERT. Oh, it is amazing.

Mr. SCHWEIKERT. Yeah. I am not going there. Sorry to the Speaker. We don't mean to be teasing you. Well, actually, we do. We are just afraid of it. But this is really important. So if there is someone out there, whether you are on the right or the left, and you actually care about getting your earned benefits, you need to start demanding your elected officials to take it seriously. Number one is: What are you going to do to get this economy to grow? Because that becomes the most powerful thing to fix these numbers. These numbers are rotten and horrible because now we are projecting long-term GDP around 2.2, 2.5. When you start looking at numbers in there, it doesn't work. The math just doesn't work for us.

Mr. SCHWEIKERT

Mr. SCHWEIKERT. Mr. Speaker, I move that the House do now adjourn.