During remarks on the House floor last week, Rep. David Schweikert (R-AZ) spoke about the national debt and deficit spending.
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NewsTranscript
00:00I appreciate. Mr. Speaker Pro Tem, I'm going to try something this evening.
00:10The thesis I'm going to try to sell tonight is that data is substantially a
00:19solution for us. And you go, huh? So I'm going to walk through a number of things
00:26that just came out in the new MedPAC report because, and look I've only just
00:31started reading it, but there's a couple interesting things. I'm going to try to
00:34walk through the reality of what drives debt and deficits like I do every week.
00:39I'm going to try to walk folks through some of the actual math instead of some
00:45of the hysteria that is modern politics where we make crap up because we don't
00:51tell the total details. And let's see if we can actually make any progress here
00:56on sort of the intellectual capital of this place. So just off the top of my
01:01head, Mr. Speaker, you've seen the stories of, you know, the butchering of
01:09federal employees. Okay, let's walk through just some of the math. You got
01:14three million federal employees. If 77,000 have decided to take, you know, the
01:23early retirement offer, let's see, that's, God, I should have, dear heaven, I
01:28should have calculated this before, is 3%, you know, 3% of the federal
01:34population. I have a chart we're working on, did not make my stack, to show the
01:40growth in the number of federal employees in the last decade. It's a
01:46little rich how many folks run around here and they want more spending for
01:52their projects or they don't want this, they don't want that, but at the same
01:57time they're lined up at our doors and want more spending. If I could come to
02:03you and say, guys, we're gonna try to find a way to make the way we deliver
02:09services much more efficient, much more rational. So let's actually sort of walk
02:14through a couple of the boards. This is one we start with a lot, and the number
02:19now is a bit more dour. This board's a year out of date, but I didn't want to
02:23spend the money to reprint it. Do you see the blue portion? Okay, this year, this
02:29fiscal year, it's about 25% of all the spending is in the blue. That's what we
02:34get to vote on. That's military. That's what we call non-defense discretionary.
02:41We borrow about, let's see, last year for every dollar we took in in taxes, we
02:48borrowed, or we spent, $1.39. So functionally, 39 cents this year will be
02:55a little better. We think it'll be only 36 cents for every dollar we take in in
02:59taxes. So what that basically means is everything you and I, as a member of
03:03Congress, vote on is borrowed. But we have this
03:11reconciliation budget. It's the one of the few times where we actually get to
03:16talk a little bit about what's in the red. But we don't get to touch net
03:20interest. You know, interest is interest. And some of the math coming in right now
03:26says interest this year, this fiscal year, could be about $1.1 to $1.2. I actually
03:32am a bit more dour. Trillion dollars, making interest functionally the second
03:38highest expense in the federal government. You know, until this
03:43reconciliation budget makes it through defenses like number four on spending. So
03:49Social Security, interest, functionally Medicare, defense. But when you take a
03:56look at what we're even allowed to talk about in a reconciliation budget, and you
04:01know why we do the reconciliation budget, it's so we can get around this 60-vote
04:06rule in the Senate. So we're doing all this dancing and stuff because of the
04:09Senate rules. But we can't touch net interest and we're not allowed to go
04:13near Social Security. So think about that. That area on that last chart I just
04:17showed you that was red, the majority of it we're not even allowed to talk about.
04:22We can't touch it. We can't do anything about it. So when you see the
04:26authorizations, that's actually why committees like Ways and Means and
04:31Energy and Commerce have such a lift. So what happens if I come to you and start
04:39to say, you have a country that's binging on debt. You know, we're in
04:48extraordinary measures right now, so some of the daily debt calculations are a
04:52little screwed up. But before we went to extraordinary measures, we were in the
04:56sixty, seventy thousand dollars per second. Every day, every second. If my math
05:03is correct and we come in at about 2.2 trillion, maybe 2.3 trillion of
05:08borrowing this year, you got to start thinking about that. So we take in about
05:15five trillion in tax receipts, we're going to spend about seven trillion,
05:20meaning about 7.25 percent of the entire economy is borrowed this year. And if we
05:30don't get our act together in nine budget years, it could be 9.2 percent of
05:34the entire economy is borrowed. And I just wanted to make the point, because I
05:39come here in the past, interest rates have fallen dramatically in the last
05:44couple weeks, which, remember the seesaw? We've talked about the seesaw. When the
05:49economy is really strong, or there's a shortage of capital to borrow, interest
05:54rates go up, meaning the United States, we pay a lot more in debt servicing. When
06:00interest rates go down, that typically means the expectations the economy are
06:04slowing down, meaning our tax receipts fall. So the middle of the seesaw stays
06:10the same. I saw some people getting giddy. Look, interest rates are down. It also
06:16means, actually, some of our modeling in the future quarters of tax receipts also
06:21are starting to fall now. So there's no free option anymore. But you've seen some
06:28of the discussions. Ray Dalio has been out there talking about, you know, the
06:34heart attack of debt, and what happens to other countries, and the history of
06:37that. Going back, you know, I think he's, in his book, he's going back a couple
06:41thousand years. United States, so here's functionally the world borrowing. China's
06:49borrowing about 17 percent of what we call the available capital for sovereign
06:55borrowing. Japan's borrowing about 10 percent. We're borrowing 40 percent. So
07:03we're about 25 percent of the world's GDP, but we're borrowing 40 percent of
07:08the money that goes to sovereigns. You've got to understand the scale, the
07:15binging on debt. And when I get to the very last board, I'm going to show again
07:20that the chart that just seems to upset people, but it's math, over the, from
07:28today through the next 30 years, discretionary spending actually, according
07:33to CBO's 30-year model, actually ends up with sort of, it grows slower than tax
07:38receipts. But it's Social Security and Medicare. It's demographics. It's not
07:43Republicans, not Democrats. It's demographics. Where it becomes partisan is
07:47the unwillingness to tell truth about the math, and then actually the
07:52creativity, the creativity of how we disrupt the cost. So how do you actually
07:58find some of these things? This chart's a little awkward. I would have designed it a
08:03little different, but sometimes you're running around. The point we're trying to
08:06make is, here was the effective interest in 2014 to the United States. Now all of
08:13a sudden, we're up here, and the actual market rate we expect in the future to
08:20actually continue to consume, meaning interest is our great fragility in this
08:25country. I've told the comment many times, at our current rate of borrowing, we've
08:32almost put the bond market in charge of this country, because if you have to
08:38bring hundreds and hundreds and hundreds of billions of dollars to market every
08:42month, you screw with your banker. In many ways, that bond market now is our
08:49banker. For my brothers and sisters on the left, who often want to attack the
08:56tax reform of 2017, attack tax receipts, I've done presentation after
09:02presentation behind this microphone, using the stuff from the Manhattan
09:05Institute, that basically shows if we do all the Democrats tax hikes, and then do
09:11the economic adjustments, often from Democrat groups, you get about one and a
09:15half percent of GDP in new tax receipts. Okay, maybe we're going to be pushed
09:21against the wall and have to do that, but we're borrowing over seven percent of
09:26GDP. So it's like on Social Security, it's common that the refrain is, we'll just
09:33raise the cap. Okay, in 2033, Social Security trust fund is empty. Our brothers and
09:42sisters on Social Security will take 17 to 20 percent cut. We double senior
09:47poverty in America, and when someone says, we'll just raise the cap, our model is in
09:52that next year, 2034, raising the cap only covers about 38 percent of the shortfall,
09:59and you've wiped out the cash and other things you actually need to also save
10:04Medicare, which actually that trust fund runs out like three years later. So one
10:10of the reasons for this chart is trying to demonstrate something very simple,
10:14that back when, before TCJA, the 2017 tax reform, the actual projection of what tax
10:24receipts would be, so before the tax changes, we're right on track. You see the
10:31weird blip there? That was a remarkable amount of spending that happened during
10:35the pandemic. We actually just went back to nominal. So what happens here? What
10:45happens when there's this intense, intense hunger to play this weird blame
10:50game instead of being willing to tell our voters the truth? The vast majority
10:55of debt this decade will be interest and health care costs, mostly Medicare. So
11:05one more. Contributions to the increase in spending from 2024 to 2035. Interest.
11:14So remember, why this chart's important. Let's put it in perspective. Baseline.
11:19This is actually with the taxes going up at the end of this year, you know, just
11:24baseline. So following current law, not the clowns that actually run around
11:28saying, let's just avoid the law and just pretend what we spend, we spend. The law
11:34says we're going to borrow 22 trillion dollars over the next 10 years. Okay,
11:41that's baseline. Here's the mix of that borrowing. 24% of that will be interest
11:47of the additional borrowing. Old-age survivors, Social Security, will be 31%.
11:56Discretionary, 13. Other mandatory, 4%. And Medicare, 28%. Now, the fact
12:03of the matter is, old-age survivor Medicare have their own trust funds
12:06except for the fact that within that 10-year window, at least this trust fund
12:10is now emptied. Are we allowed to talk about it? Are we allowed to do the moral
12:18thing here and maybe stop the doubling of senior poverty? But yet, the fact of
12:25the matter is, maybe I'm an idiot for getting behind the microphone and
12:27actually mentioning the word Social Security because there's someone writing
12:31an attack ad on me right now for trying to save it. It's just the sickness of
12:37this place. So let's actually walk through a little bit. I saw a number of
12:41folks who actually have been attacking Doge and the attempts to use data.
12:48Understand that some of the communication skills are haphazard. But if I came to
12:55you today and said, let's strip any partisanship. We need to find waste,
13:00fraud, abuse, modeling issues where we're doing things the wrong way, where we have
13:05models that are decades, sometimes decades and decades out of date. Would
13:09you hire an army of auditors? An army of lawyers? Or would you hire data
13:17scientists? Turns out, several years ago, Congress started requiring agencies that
13:26send out payments that cover health care costs, that send out checks, these things.
13:30Start telling us your error reports. Okay, so for 2023, we think the
13:40reports come back at $236 billion of improper payments. Okay,
13:47that's a stunning amount of money. But that doesn't mean there's $236 billion of
13:53improper payments have been stolen. There's a bunch of it. It has been. But
13:57it's more complex. And an army of auditors, it would take years to grind
14:03through this. That's why, actually, the miracle of technology right now. Hire
14:08some data scientists. They're really expensive. Most of them, actually, I've
14:13met recently, actually are bathing. That's both funny and shockingly true. I met one
14:21that is an MIT dropout. Apparently, MIT wasn't hard enough for him. But that's
14:28actually what he does. And the failure to access data information. Well, it turns
14:33out, a whole bunch of what we label as improper payments, we lacked data on
14:39understanding. So what happens when it's the data scientists that will help us
14:44grind through? I just grabbed this one because Treasury itself, not just CMS, all
14:49the other agencies, Treasury itself has $21 billion of improper payments. When
14:54you walk through what those were and why they were improper, they didn't verify
14:59household size. They didn't verify the qualifications. They didn't verify these
15:03things. That is basically data. So let's actually have a little more fun here.
15:10Types of improper payments. Okay, we actually estimate of that $236 billion.
15:17And this is for 2024. The other chart was 2023. $135 billion are overpayments. Now
15:27understand, for a lot of those, that may be come through CMS, a Medicare
15:34reimbursement. CMS has the ability, months and months, a year later, to try
15:40to recapture those monies. What we're trying to get the data scientists to
15:45build us models to understand, okay, if there's $135 billion of overpayments, how
15:52much of that comes back to us? And how much is, we'll call it leakage, even
15:57though leakage is where the B is. And then there's, you know, we have $12
16:01billion unknown payments. We know payments went out, but there wasn't
16:03enough data telling us what they were. We had almost $8 billion of underpayments,
16:10where we underpaid people. So you see what I'm trying to provide here is, we
16:16know we have a problem. We've known we've had this problem for decades. For the
16:22last decade, we've been tracking the problem. And it's only been the last
16:26couple months, we're beginning to tackle the problem and try to use technology to
16:36dive into, what are these? What are these categories? And understand, you know,
16:43some of this, you'll notice the huge spike in improper payment amounts. That's
16:47actually mostly from the pandemic, when we're pushing money, shoveling money out
16:52of this place like crazy. But we've been tracking this since 2014. It's taken to
16:58now, to find the technology, to find the talent, to start diving into this math.
17:04And why is this just so important? If you're someone like me, who believes
17:16there's trillions of dollars over the next 10 years, that we can save by just
17:26modernizing the way we deliver services. You first have to identify the outliers,
17:32identify what's going on. But why is this so incredibly important? You've got to
17:38understand what we're up against. Outlays of the largest mandatory programs are
17:44projected to massively increase. So let's be a moment of brutal honesty. This is
17:512025, this is 2034, so functioning nine budget years. Social Security will have a
17:5961% increase in spending. It's just that this is our demographics. I'm going to
18:06try to explain these numbers a little bit more. Medicare will have almost a
18:1178% increase in spending over those next nine budget years. Now there's a
18:20little more for this because this has none of the offset. So I want to try to
18:24provide a level of a brutal honesty. Remember on like Medicare, remember you
18:30on some things you have a portion of co-pay, those things. So but it's still
18:3475% increase, but it goes from two trillion dollars spending to nine budget
18:40years. Medicare itself will be a couple trillion dollars, just the spending on
18:44that. If you do the offset, the payments the senior makes, okay that's about 400
18:50billion. It's still a 75% increase in spending. What would happen if I could
18:58come to you and say if we would use technology, if we'd modernize. So here's
19:05the MedPAC report that came out in the last couple days. Haven't read the whole
19:10thing, read part of it. Here's last year's MedPAC report. We read all of it,
19:15highlighted it, and we actually make our staff read it. What turns out around here
19:22actually reading the actual math and the concepts. So if I came to you right now
19:29and said like in here there's a whole paragraph that's saying there's
19:34something wrong in Medicare Advantage data. Now MedPAC report says Medicare
19:40Advantage really important program. We need to keep it, but we're going to have
19:44to dive in on how to modernize how it works. Because here,
19:53coding intensity, they made the adjustments for coding
19:57intensity, but it basically says translates into a projected 84 billion
20:05or 17% of total payments, meaning Medicare Advantage coming at 84 billion
20:14dollars this year more than fee-for-service. And that's with the
20:19adjustments for you know renal failure and other things. Look, and I'm already
20:27starting to have the MedPAC report fall apart, so if any of you talk to the MedPAC
20:31folks, ask them for better binding on their reports. So what would happen if I
20:35came to you right now and said we can do things to fix these outliers and costs
20:43and never cut a service by changing the incentives. Instead of the incentives
20:50that the MedPAC report talks about of scoring people as sicker and sicker and
20:55taking that additional SPF spending, how about a system that says why don't we
21:01incentivize the providers in this program to help our brothers and sisters
21:05who are seniors be healthier. And that making your population, helping them be
21:11healthier is actually your profit. Is that heresy? I would argue that's just
21:20good design. And we don't have a choice, because last week the Joint Economic
21:29Committee, we published a report. And I chair the Joint Economic Committee and
21:35and I appreciate we have remarkably hard-working economists and we're trying
21:40very hard, but we're willing to go to places that are politically dangerous
21:46but mathematically honest, which is something that rarely happens around
21:49here. But we tried to touch on things like how fragile is US debt to higher
21:59interest rates. In fact, the matter is I did a chart a couple weeks ago that
22:05showed if the United States went back to a 6% handle on US sovereign debt, now
22:11you go well that's a lot higher than we're at today. Yeah, but go back to the
22:15early 2000s we were right up against 6%. You do realize in nine budget years if
22:21you're at 6% it would mean 45% of all US tax collections go just to
22:25interest. We do a chapter here on the effects of obesity to our society, to
22:33spending, to longevity, to family formation. Last year's report came in
22:41over nine trillion dollars. This year we even define it more to understand what
22:46happens when the single biggest spend in our society could actually be mitigated
22:54by helping our brothers and sisters in the country be healthier. Are we allowed
22:58to talk about that or is that just heresy? Because once again, got to tell
23:07the truth, over the next 30 years Social Security and Medicare represent all the
23:16borrowing and it's like a hundred and sixteen trillion dollars of borrowing.
23:22Discretionary, which we talk about a lot because that's where you find some of
23:26the really stupid spending, the shiny objects, is projected to grow slower than
23:31tax receipts. My point is for everyone out there who wants to be enraged by the
23:41White House, enraged by those who are trying to find solutions, bring us ideas.
23:48Bring us actual math. Stop making crap up but if you're going to give us ideas
23:52actually maybe read your subject area first. You'd be amazed how many things we
23:57get, you know, where if we just didn't have foreign aid and we show the chart
24:02that it's a week of borrowing. Understand you have a country that our baseline is
24:06going to be borrowing about six billion dollars a day. How long do you think we
24:12can do that? So first, if we can find ways to do it better, faster, cheaper, read the
24:22actual reports that we've been given for a decade that actually have ideas in
24:27this and be willing now to do the hard work of just using technology and data
24:34and modernizing. And Mr. Speaker, one of the insane things around here, when you
24:43meet many of the folks who are in our hallways demanding more spending,
24:47demanding more regulations, demanding more barriers to entry to protect their
24:52business model or their bureaucracy, they actually hate, they hate the
25:00discussion of modernizing. You're a medical professional, you know what
25:08you're doing. The fact of the matter is there's hope. I don't think there's a lot
25:15of more years we can wait but there's ways to do this. How do we get this body
25:22both our brothers and sisters on the Democrat side that actually if they'd be
25:27willing to work with us on saying let's modernize, let's embrace the technology,
25:32let's do the things we know that if we were actually caring, just maybe not
25:41great politics, but it's really good economics and really good for the future
25:47of this country. And with that, Mr. Speaker, I'm going to yield back.
25:55The gentleman yields.