The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“TAX REFORM” mentioning the U.S. Dept. of Justice was published in the House of Representatives section on pages H9371-H9374 on Nov. 15, 2017.
The Department is one of the oldest in the US, focused primarily on law enforcement and the federal prison system. Downsizing the Federal Government, a project aimed at lowering taxes and boosting federal efficiency, detailed wasteful expenses such as $16 muffins at conferences and board meetings.
The publication is reproduced in full below:
TAX REFORM
The SPEAKER pro tempore. Under the Speaker's announced policy of January 3, 2017, the Chair recognizes the gentleman from Arizona (Mr. Schweikert) for 30 minutes.
Mr. SCHWEIKERT. Mr. Speaker, I want to do actually two or three things specifically tonight. One is walk through a bunch of data on why the tax reform proposal is actually just sort of crucial to our society and where we are going and, number two, actually walk through some impressions of being one of the new members on Ways and Means.
I have been here in the U.S. House; now I am in my seventh year here. I have only been on the Ways and Means Committee now for a year. It has been one of the most fascinating experiences of my life because of the number of meetings, the diving into data, the ability to sort of make things mesh together and make the math work, with an understanding of how serious this is.
The problem is, in the somewhat toxic partisan environment we are in right now, I know there are some of my friends on the other side who are really uncomfortable with the idea of Republicans having a win.
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I know there are others who are constantly looking for what the partisan wedge is. I am going to ask, at least for just a couple of moments, that we sort of think through something altogether.
We are going to walk through some of these boards. If you see this one right here, this is with the borrowing from all the trust funds. But our country is already 105 percent of debt. If you add up the publicly held debt and that from borrowing from the trust funds, it is over 105 percent of debt to GDP.
Lots and lots of economists get really nervous when you start to say: Hey, in just a few years, the amount of debt issued by this government will be the size of the entire economy. This is issue, not borrowing from trust funds.
Understand that the curve is steepening because the trust fund balances are falling. We are finally hitting that inflection period where demographics are moving our numbers. Remember, the peak of the baby boom is 60 years old today.
We have obligations that we as a society have made to our brothers and sisters who are getting older. We have a real problem. You are going to see in a number of these slides that if we continue to stay as a society, as a country, that is only growing. Remember, the projection right now is 1.8 percent growth over the next 20 years. You mathematically cannot meet your obligations. It is called a debt crisis. It is called an entitlement crisis.
One of the key solutions to being able to meet our obligations, to meet our promises, is we need a society, an economy that is growing. If you love people, if you care about them, if you want them to be able to save and have opportunity and a future, you need a society that is economically expanding.
I accept that this body is often about our next reelection. This is an observation that I learned this year. There are some things that are in the Tax Code that are brilliant politics. They get you reelected. They give you something warm and fuzzy to go talk about at home. They are really bad economics.
It is hard to stand in front of a group and say: Hey, we get to deduct State and local taxes. Yay.
Then you look at the economic expansion modeling of it and there is almost no economic growth for a huge amount of spending.
I know it is a sensitive issue with a lot of my brothers and sisters here on both the right and left who are from high-tax jurisdictions, but understand one of the reasons it has been looked at is that it is a tremendous amount of spending in the Tax Code and there is almost no economic expansion from that spending.
Whereas, if that same spending in the Tax Code is in things that grow businesses, grow job opportunities, grow the ability to save, you can actually see the modeling where the economy gets bigger, where all of us have job opportunities, and over the coming years, you get paid more because the economy is growing.
This is great politics. This is good economics. I don't think those of us on the Republican side know it--and I know so often we get behind these microphones and we all sound like accountants on steroids--but the math is important.
How many times has this body made public policy that felt good, that was good politics, and really crappy economics?
That is how you wake up one day and your society is $20 trillion in debt and the curve is about to blow off the charts.
Remember, a lot of outside groups on the right and left have been doing modeling, saying there will be a debt crisis in about a decade and a half. It is coming, and it is coming very, very fast at us.
To have an understanding of just how difficult these numbers are, on this chart I have up here, do you see the red area?
This is for 2027. But you figure we just finished the 2018 appropriations and budgets, so we are already starting to plan the 2019.
Well, 8 functionally budget years from now, only 11 percent of this Federal Government's spending will be for things that people think of as government. Everything else--defense and entitlements, mandatory spending, both earned entitlements and unearned entitlements--will be everything other than 11 percent of the spending.
Public lands, the FBI, the Justice Department, the Park Service, health research, education, all the things you think of as government will be only 11 percent of our spending. Everything else will be either military--the military will also be only 11 percent--and everything else after that is mandatory. It continues to grow that way.
If you are someone who cares about education, who cares about the environment, who cares about these things, understand that if you do not start to get some dramatic economic growth, you are going to be squeezed out.
The dollars spent on your priorities are disappearing. It is math. We do not have the revenues. It is going to get crushed. It is coming very, very fast. This isn't Republican math or Democrat math. It is math.
What if I came to you right now and asked: What is one of the most powerful things we can do as a society to keep our promises?
My brothers and sisters on the left often talk about our promises to retirees. They are absolutely right. The fact of the matter is, I believe that for someone who retires in the next couple of years, they will have put in about $190,000 for their Medicare. They are going to receive over $600,000. That is in, like, dollars.
Multiply that by 76 million baby boomers in that 18-year period. In just that differential, understand that one of the root causes is demographics. We still made a promise. The way you are able to cover that promise is economic growth.
When you look at this chart, it is fairly new from a Stanford economist. I found this in a book about 2 months ago. Do you see that red line on the left-hand side? Do you see where it lays fairly flat?
That is actually a line that says: ``Entitlement spending to GDP.''
The size of the economy, the entitlement spending in the 1990s, in the late 1980s didn't go down. It was still going up. The difference was the economy got bigger.
So when you hear us talk about debt-to-GDP ratios, start thinking about that denominator.
How do you grow the economy so that if we keep our promises, it doesn't crash the economy and functionally almost bring the world down?
We have some charts that make it very clear that when we have been in times of economic expansion, we have even been able to spend more money on these entitlement programs; yet we bent the debt curve and the amount of that consumption to the size of the economy.
I know this gets a little geeky, but at some point the math is important. I know we just spent a couple of hours talking about peoples' feelings on a 400- or 500-page tax bill, but let's get some of the math correct.
Understand that the chart next to me is sort of the CBO projections. The math is worse than even the CBO projections. If you can look--and I know this is small--but the CBO missed the 2017 number by over $100 billion. The fiscal year we just finished, the 2017 fiscal year, we borrowed $666 billion. This is one of the good years.
So, remember, you have heard people talking about in a static score over the next decade--10 years--this tax bill costs a $1.5 trillion. But we borrowed $666 billion last year, with no tax relief and a government policy that functionally gave us a 1.8 percent GDP.
Take a look at this year. It was supposed to get much better, but now that we know we have the spending for the hurricanes and disasters, we know we are going to blow through that.
If you can see it in about 4 budget years, because of that 1.8 percent economic expansion, we are going to start borrowing $1 trillion a year.
Yes, building a tax bill with $1.5 trillion borrowing over 10 years is something you have to really think about. You need to design it so we get the economic expansion so that the size of the economy gets bigger so there are opportunities to take in new revenues.
But do understand that if you are part of the side that you are just hearing supporting the status quo, the status quo is already a disaster and is just on the cusp of time. The disaster is already here. The disaster is status quo and doing more of the same.
In 4 budget years, you are borrowing $1 trillion a year, and it goes up from that. So doing nothing, continuing the status quo, is the entitlement crisis, is the fiscal cliff, is the debt crisis. We don't have a choice. We must get together and do what is necessary to get this economy growing.
We heard one of the previous speakers--who is one of the people I really like; he is a good guy; a Democrat of Illinois--talk about the Tax Foundation. I sort of forgot this part. This is a quote from the Tax Foundation study. It is $1 trillion in new revenues.
Our static score that we are doing--and the Tax Foundation score is higher in spending--but our model says it is $1.5 trillion of spending in the Tax Code static. That means no economic growth. We are going to talk about what dynamic growth is. They say a new, additional trillion dollars of revenue. That is what we call dynamic scoring.
What is dynamic scoring, you may ask. Dynamic scoring is nothing more than asking: How does this policy affect the size of the economy? And then you loop it back and look for the feedback effects.
If you are a Democrat and you are saying, ``I don't believe in dynamic scoring,'' you really need to think about that position because you believe in dynamic scoring when the left introduced an immigration bill. It was dynamically scored.
Global warming. If you actually look at the scoring, it has feedback effects. Go back to the stimulus.
We all use dynamic scoring around here. We just seem to only want to embrace it when it supports our own political views. Every March, the Congressional Budget Office gives us an update that has economic feedback effect in it. That is called dynamic scoring.
For both my friends on the right and the left, you can't just pretend that public policy has no effect in the size of the economy when it is contrary to your certain political pitch that you are making right now.
Just understand, the Tax Foundation says $1 trillion in new revenues. But the other things that are really important--and this actually starts to give you an understanding of some of the effects--is we have close to $300 billion in new payroll taxes.
Understanding that Social Security and Medicare are pay-as-you-go programs, today's taxpayers are functionally paying today's recipients. That is why I have been behind this microphone over the last year talking about things like demographics and birth rates and the really dangerous effects these low birth rates are having in the society, but that is other stuff.
We will have almost $300 billion in new payroll taxes. So I have $1 trillion in new income taxes and close to $300 billion in new payroll taxes for what we model is a trillion-and-a-half-dollar static score.
You may not like the numbers, but the Tax Foundation is really good at this. They have some of the most advanced models that exist anywhere in this country and it is worth going to and reading their information.
Right now, when you hear us talking, we are giving you just static scores. It is important to know that the freaky smart people are out there modeling, saying what we are doing is expanding the size of the economy as you go into the future.
Why is this so critical?
If you see this chart, this is what is being projected for our future. This is the CBO's estimates over the next, I believe it is, three decades.
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Functionally, a 1.8 percent GDP growth. This is their projection. This is what they see our future looking like.
But if you go back to the 1950s--to 1973, yeah, we had a demographic bubble that was young and moving into the workforce. If you look at the late 1970s, 1990s, we were actually doing an average of 3.3 percent GDP a year.
If you actually are someone like I am where you just are fascinated--
GDPNow, which is the Atlanta Fed's calculator, right now, has our GDP, as of today, at 3.2 percent GDP. That is amazing. The model we have been given says we should be at 1.8. We are substantially above that right now in anticipation of tax reform.
Apparently, a lot of the economy out there is already anticipating a better regulatory market and a better tax regime, and, with that, they are spending, they are investing, and we are already seeing it in the baseline numbers. This is something we can't screw up. It is incredibly important.
So let's try to understand, once again, if you care and love people and want them to have an economic future, why that growth is so incredibly important. If you actually sort of look at the difference--
and this is sort of a difficult chart to understand. But if we are sitting here somewhere between this 1\1/2\ and 2 percent GDP growth, and you wanted to double the size of the economy, you are looking at having to wait over 35 years.
What happens if we were in the very tail end? And look, from my own math, I don't think we get there. We might have some years that touch it. But what would happen if you were at 4 percent GDP growth? You go from over 35 years to a little over 17 years to double the size of the economy. Well, how about if we could beat 3\1/2\ percent GDP? You go from over 35 years to 22 years.
Just understand the size of the economy has almost everything to do with what you are paid, your ability to have a pay raise, your ability to have enough cash flow in your life so you can save for your retirement. I know this seems like an academic lecture, but it is not. These things affect our lives. They also affect our ability to pay our promises. It also affects our ability to protect our Nation. It is not a game.
So another way to sort of look at the same numbers--and I just happen to like this chart, so that is one of the reasons we are putting it up. You can see sort of the bubbles. What would it take to sort of double that GDP per person? You know, okay, so instead of the entire economy, how about you, as an American citizen, the size of the economy as you--
because as a participant in the economy, this has something to do with what you are paid, your ability on your lifestyle, the things you can own, the things you can do for your family.
The difference between the 2 percent--and let's just jump up to 4 percent, and the number of years, you start to realize the difference between 17 years or 35 years. This is about every one of us as an individual in this country that if we can adopt tax policy, that is good for families, good for the middle class, but also makes us competitive in the world again, and we start to grow, good things happen. Do you do a Tax Code that is great politics or really good economics?
Some of the math is hard. We live in a society right now where if you can look at the very far left side of this chart, the top 20 percent of our society, of our income earners--the top 20 percent of income earners are paying 88 percent of the Federal income taxes.
You start to understand. If I came to you right now, just as a simple math problem, and said, ``Hey, I have got 20 percent of very high income earners who are paying 88 percent of all the Federal income taxes, but I really want to make sure that the quartiles of our hardworking middle-income earners are getting a lot of this benefit,'' you can understand why there were such great math problems in making these things work, because 88 percent of all your Federal revenue is sitting out here with 20 percent of the population.
That is actually why we have had to do a lot of the things we have done. And where certain deductions, certain things phase out, it is just a math problem. But remember, you see that red line, and you see where it crosses the blue line? That is where publicly held debt will exceed the size of our economy.
This government will have issued debt to foreign buyers, to your retirement account, to pension funds that will exceed the size of this economy, and it is only a few years away, and that is what the status quo is. That is where we are going.
I will make you the argument, we don't have a choice. We must make a simpler, a fairer, but a dramatic and more progrowth tax system as part of this country's culture.
In being blessed to now be on the Ways and Means Committee, which I am incredibly appreciative--they are some of the smartest people I have ever worked with, are really smart calculators and people--there is something called Joint Tax. If you ever want to know where all the freaky smart people or president of your high school math class are, there is 50 of them in there. I think like more than half may have Ph.D.'s in math and statistics and accounting. They tell us, the testimony to the committee is, 94 percent of the tax paying population will now do their taxes on this. Only 6 percent of taxpayers in the country will need to itemize.
There is actually some really interesting math that also starts to happen when you have made a tax system fairer, simpler, and progrowth. But the simplicity of it makes compliance, makes the ability to pay, makes the ability to participate so much easier and so much more elegant.
I have been proud to be part of the team that has helped build this tax plan. It is not perfect, and it is still going to go through a couple of more changes. That is the way it works. We will get the Senate product; we will sit in conference committee; we will work out the math; but understand the status quo is disastrous for every American, and I actually believe it is disastrous for the world. The tax reform gives us an opportunity to grow and have an incredibly bright future if we do it the right way.
Mr. Speaker, I yield back the balance of my time.
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