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.
“UNITED STATES ECONOMY” mentioning the U.S. Dept of Labor was published in the House of Representatives section on pages H5044-H5052 on June 23, 1998.
The publication is reproduced in full below:
UNITED STATES ECONOMY
The SPEAKER pro tempore. Under the Speaker's announced policy of January 7, 1997, the gentleman from Wisconsin (Mr. Neumann) is recognized for 60 minutes as the designee of the majority leader.
Mr. NEUMANN. Mr. Speaker, I rise tonight to encourage my colleagues to take a deep breath and slow down, because things are happening very, very fast out here. When things start happening very, very fast in Washington, D.C., what happens is we lose track and we lose sight of what is going on; and the next thing you know, the taxpayers' money starts disappearing like it has done for a generation out here, and it starts disappearing very, very fast.
When this gets out of control, when spending gets out of control in this city, when we forget what had happened before 1995, we quickly get to a point where the idea of reducing taxes or paying off debt or restoring Social Security become impossibilities.
So I rise tonight, and I have not done this presentation in quite some time, but I think it is important, I think it is very important that we remember where it is we are at in this Nation; and that, even though we have come a long way, we have still got some problems facing our country.
This first chart that I brought with me tonight shows that the debt from 1960 to 1980 did not grow very much. But from 1980 forward, this debt has grown right off the wall. Although we made some good progress on it, now we need to remember that, even when we get to a balanced budget, we are here in this picture, and it is still a very, very, very serious problem facing our Nation. When we start talking about spending bills in this community, we cannot let ourselves lose sight of the fact that we are still deeply in debt.
For those that have not seen the number, we are currently $5\1/2\ trillion in debt. The number looks like this. It is 5,500, and then it has three, six, nine more zeros after that. It is a huge, huge number.
I used to teach math, and I tried to translate this number so it would mean something to an average person watching this presentation and to my colleagues. If you take that number, 5\1/2\ trillion, and you divide it by the number of people in the United States of America, if every, man, woman, and child in the United States were going to pay off just their share of this debt, it would be $20,400 for every man, woman, and child in the United States of America.
For a family of five like mine, I have got three kids, and of course my wife at home, they have literally borrowed $102,000 and again basically over the last 15 years.
Let me put that another way. In this community, they have made the decision to spend $102,000 for every family of five more than they collected in taxes basically over the last 15 years.
The kicker is this bottom number down here, because, you see, this is not just funny money in Washington, D.C. They have to pay interest on this money. The average family of five in the United States of America today is paying $580 a month every month to do absolutely nothing but pay the interest on this Federal debt.
When we think about the mess that we have been given or what has happened in this country, in this legacy that we are about to pass on to the next generation, it is this idea that we are paying this $580 a month; that money belongs out there in the families. It should be the American people's money. When somebody goes to work to earn that money, it is their money. We should not be using it to pay interest on this debt that has been run up.
A lot of people go, well, shoot, that is not me. I do not have to worry about it. I do not have to pay $580 a month in taxes, so it is not me. The reality of this is that, when you look at what you do in society, when you go in the store and buy a loaf of bread, when you buy your kids a pair of shoes, the store owner makes a profit selling the pair of shoes or selling that loaf of bread; or at least we hope they do, because if they do not, they are going out of business.
When they make a profit selling that loaf of bread or selling that pair of shoes, part of that profit gets sent out here to Washington D.C. in taxes. In fact, every group of five people in the United States of America, every family of five or every group of five is in fact paying $580 a month one way or another to allow the interest on this debt to be paid.
When I came out here in 1995, when I was first elected, I came out of the private sector. I came out to this office, the first office I ever held of public office. In the private sector, I was a home builder. I started as a math teacher, and then we started a business in the basement of our home. We wound up building 120 homes a year, providing about 250 job opportunities here in America. It is really what our country is all about.
When I came out here, I came out here with an idea. I came out here with the idea, if we could get government spending under control, we could fix this problem. That idea was very different than the people that were here before.
What I brought with me is a chart that shows the old Gramm-Rudman- Hollings and the promises that were made. The only reason I got elected in the first place is because all of these problems that were made; 1985, Gramm-Rudman-Hollings the first time. In 1987, when they could not make it in the 1985 bill, they fixed it. In 1990, they promised the American people a balanced budget again. They promised the balanced budget, and promised it and promised it and promised it, and they did not do it.
{time} 1830
This is just one picture. This is the Gramm-Rudman bill of 1987. This blue line shows what they said they were going to do. The red line shows where the deficit went. They kept making these promises and breaking these promises and the American people got more and more and more upset with what was happening in this institution. Finally they got to 1993. They realized that this problem had to be fixed. So the decision that was made out here in this community looking at this chart is that the right solution was to raise the taxes on the American people.
Just think about this. We got to 1993, they had broken the Gramm-
Rudman-Hollings promise of 1985, of 1987, the budget deal of 1990, now they were going to promise a balanced budget by reaching into the pockets of the American taxpayers and getting more money out here to Washington D.C.
What did they do? Well, they raised the gasoline tax. They raised the tax on senior citizens on their Social Security benefits. They raised taxes. The American people rejected that vision. And in 1995 they sent a new group of people out here. They said, ``We don't want this done by raising taxes. We want this done by controlling spending.'' We laid a plan into place out here in 1995 to get to a balanced budget, also.
This blue line shows what we were going to do. We promised a balanced budget by the year 2002. Well, the American people looked at that and said, ``Yeah, sure, I'll believe it when I see it.'' Frankly I do not blame them a bit. If it was me, I would have had the same reaction. But the reality is that we are now 3 years into that plan. Not only are we on track but notice where the red line is in the bottom picture versus the red line in the top picture. We are not only on track to balancing the budget but in fact we are going to run a surplus for the first time since 1969 in 1998. It is the first time in a generation, nearly 30 years, that the United States Government has actually taken in more money than what it wrote out in checks in a given year.
That is good news on the surface. But I think as we go further in this, we need to understand what it is that has led us to this point and what the pressures are that are causing us to go away from it as we fight back day after day in this city the urge to spend more money.
The reason we have reached this point is shown in this picture. We have had good economies between 1969 and today. When we have had good economies, that means more money flows into Washington because people make higher profit and higher salaries, and, of course, then they pay more taxes. Every time we have had a good economy between 1969 and today, Washington simply spent the extra money. But this Congress has been different. Spending was growing at 5.2 percent per year when we got here. But in the face of this strong economy, instead of having spending grow at a faster rate, we got our arms around spending and we slowed the growth rate of Washington spending to a point where it was only going up at 3.2. In fact, we have actually done better this year. It only went up by 2.6 this year, the first year in a long time that we have actually seen spending growth in Washington under the rate of inflation.
So what is really going on out here? It is not draconian cuts that people have been told about, but what has happened is that instead of Washington spending going up at twice the rate of inflation, this Congress has got their arms around it and simply slowed the growth rate of Washington spending to the rate of inflation. It is that slowing of the growth rate of Washington spending, it is this distance between here and here, that has both got us to a balanced budget and put us in a position to cut taxes for the first time in 16 years.
Let me just go through a couple of the tax cuts so it is clear what has happened. Again it is very, very important that my colleagues slow down in this community, take a deep breath, and remember that if we just keep the lid on spending, we can keep doing the good things like balancing the budget, starting to pay down debt, restoring the Social Security system, and, of course, lowering the tax burden on the American people.
The tax cuts that have been passed, last year we reduced capital gains from 28 to 20 percent. If you are a family with children under the age of 17, for each child in that family under the age of 17, you are now able to keep $400 per child more in your own home to spend as you see fit instead of sending it here. If you have got a college student, it is up to a $1,500 tax credit. Let me slow down and translate that into what that really means.
We have some friends back home in Janesville, Wisconsin. They have two kids at home and one is a freshman in college. They are a middle-
income family, about a $50,000 a year family. For the two kids at home, next year they will reduce their taxes by $400 and $400 or $800 total; and for their freshman in college they will get a college tuition credit of $1,500. That family of five literally gets to keep $2,300 in their home instead of sending it to Washington, D.C. I think that is a significant move forward for our country. That is all pretty good stuff.
I would like to talk about some of the problems that we still have really staring us in the face. I would like to bring the Social Security issue to the forefront because there has been a lot of discussion on Social Security and how it impacts the budget and is there really a surplus or are we using the Social Security money to make the surplus. There has been a lot of this discussion going on. I would like to make it as clear as possible as we look at the Social Security system.
This year if you look at your paycheck, Social Security is going to be paid to Washington, D.C. Washington is collecting about $480 billion out of the taxpayers' paychecks. They are bringing that $480 billion out here to Washington. They are writing out checks to our senior citizens of about $382 billion. If you think about this for a second, if you have $480 in your checkbook and you write out a check for $382, you would have $98 left over. That is Social Security. They have $480 billion coming in, $382 billion going out, and they have got $98 billion then left over.
The idea is this. It is not any different than it would be in virtually any home across America. This extra money coming in is supposed to go into a savings account. We all know the baby boom generation is rapidly heading toward retirement. There are a lot of us. Since there are so many people in the baby boom generation, there will not be enough money coming in to make good on the Social Security payments. Again if we look at this chart, the money in is 480, the money out is 382. When the baby boom generation gets there, those two numbers turn around and there would be more money going out and not enough money coming in. The idea is that this extra money coming in today is supposed to be in a savings account, and then when the numbers turn around, you go to the savings account, get the money and make good on Social Security.
It is funny that when I am in town hall meetings and I ask the question, ``Now, Washington has this extra $98 billion. What do you suppose Washington is doing with the $98 billion?'' Everybody in the town hall meeting says, ``They're spending it.'' In fact, that is exactly right.
Washington takes that money, if you think of this center circle as a big government checkbook, they take that $98 billion, they put it in the big government checkbook, they spend everything out of the big government checkbook, and, of course, since there is nothing left they cannot write a check out to the pension fund, to the Social Security fund, so at the end of the year they simply write an IOU so they do not have to write a check out of their checkbook. That is wrong. That practice needs to be stopped.
It is important to understand that when people in Washington are talking about a surplus, they are talking about this circle over here. The $98 billion is in the checkbook and when they write out all the checks but not a check to the Social Security trust fund, if there is some money left they call that a surplus. The good news is that we are currently in surplus in an amount that it is actually more than enough to write the check down here to the Social Security trust fund. That is the first time in a generation.
We have introduced legislation out here, it is called the Social Security Preservation Act, it is H.R. 857. It is pretty straightforward. I think it is pretty commonsense stuff. It simply says that the money collected for Social Security, that $98 billion surplus, it goes directly into the Social Security trust fund. If that does not seem like Einstein kind of stuff to any of my colleagues or any of the folks that might be watching this tonight, it really is not, because in the private sector where I come from, if I would have bought a new car instead of putting the money in the pension fund and then wrote an IOU to the pension fund for my employees, they would have arrested me for doing it. Any executive of any company in America that is responsible for a pension fund cannot spend the money to buy a new executive car and then write an IOU to the pension fund. You have to put real money in the pension fund in any company in America, and certainly any hard-
working American would expect that the pension fund actually has money in it. This legislation is called the Social Security Preservation Act. It is very straightforward. It simply says put the money down and into the Social Security trust fund.
Let us talk about tax cuts for a minute. Let us talk about the opportunity to have additional tax cuts for American people. Because there has been a lot of discussion that some people want to use this Social Security surplus for either tax cuts or new Washington spending. That is unacceptable. The Social Security trust fund money belongs in the Social Security trust fund. What if, however, in the general fund, without the Social Security money, there was some money left in the big government checkbook? If there is money left in the general fund, independent of Social Security, or if Washington could find some wasteful government spending that they could get rid of, certainly that is where the opportunity to reduce taxes further comes.
I would like to go to that issue, because what is really at the heart of this thing is if we can find wasteful Washington spending, we can eliminate the wasteful Washington spending and simply return that money to the hard-working people that earn the tax dollars before they send them out to Washington. That is how you get the tax cuts.
Could you do $100 billion of tax cuts? Yes. Could you do $200 billion of tax cuts or even more? Yes. The trick to this thing is understanding that there are two separate accounts here. One is the big government checkbook and one is the Social Security. Government ought to leave their hands off the Social Security money. But if we have got a surplus up here in the general fund, that ought to either be returned to the American people or used to pay off debt.
A lot of people say, ``Well, look, you guys, you have been out there for 3 years, all of the government waste is gone and certainly you can't still find some wasteful government spending.'' I am going to go into that by entering into a little discussion on our audit.
Mr. Speaker, I see the gentleman from Michigan (Mr. Hoekstra) has joined me. I would be happy to yield to him.
Mr. HOEKSTRA. I thank the gentleman for yielding. As an introduction to I think where you are headed and what you want to talk about is a GAO report.
Just to give a little bit of background, I think you know that we have been working on a project which we call the American Worker at a Crossroads. It parallels an activity that we have which is Education at a Crossroads. For the last 6 to 8 months, we have had a special group of people taking a look at what is going on in the American workplace and taking a look at the appropriateness of American labor law. Another thing that we asked the staff to do is we said, ``Take a look at our spending in the Labor Department.''
The Labor Department gets about 29 to $30 billion a year, of which about $12 billion is discretionary, meaning that you and I every year have to vote on where that money is going to be spent and approve it on an annual basis. The staff got together. They met with the different departments within the Labor Department. They had staff interviews. They went to a number of different agencies to get a handle on where this $12 billion goes.
After a period of time we were reviewing this, and they said, ``Pete, we've got a problem. We've taken a look at the $12 billion of spending, we've met with the Labor Department, we've talked to a lot of different people, and we can only account for about 75 to 80 percent. Nobody can tell us where 100 percent of this money goes.''
It is kind of like, ``Whoa.'' This is 3 to $4 billion a year that nobody really knows where it goes. This is not talking about effectiveness or efficiency or anything like that. ``They just cannot tell us, Mr. Hoekstra, this money goes to this department for this agency to do this thing, and these are the people who receive the money.''
So we said, ``Let's call the General Accounting Office.'' We called the General Accounting Office. They came over, because I thought maybe I got the wrong staff. I mean, how can you not know where 3 or $4 billion goes?
Mr. NEUMANN. How much is 3 or $4 billion? It is $300,000,000,000. This is a big number.
Mr. HOEKSTRA. The company I used to work for, it was always the fifth year of our annual plan, we would be a billion-dollar company. They finally reached it a couple of years after I left there. But a billion-
dollar company makes the Fortune 500 list. There are probably about 270, 280 on the Fortune 500 list. A billion-dollar company employs, at least in the industry that I was in, employs somewhere in the neighborhood of 5 to 6, 7,000 people, not counting the people who distributed the products, not counting the people who supplied to our company. A billion dollars is a big number.
Mr. NEUMANN. Would it be fair to say when we look at the Labor Department, they are missing $3 billion, and if we could cut out that part where they cannot find any, we could apply that $3 billion to tax reductions to the American people?
Mr. HOEKSTRA. I think that is right. I think this leads to where you are going. We then called in the General Accounting Office. I had my staff there. I said, ``We've got a problem. I think we have a problem. We've taken a look at the Labor Department. We've taken a look at their discretionary spending. We have met with the Labor Department. We can't account for about 3 to $4 billion.''
The response from GAO was, ``Yeah.''
It is kind of like, ``What do you mean, yeah?"
It is kind of like, ``Well, what's the problem?"
``Well, we can't find 3 to $4 billion. They can't tell us where it went. We'd like to know who got the money, what they were going to do with it, and whether they actually accomplished the goal and the objectives that we had set here from Congress.''
They said, ``Well, we're actually completing a report, and we're not surprised that you can't find 3 to $4 billion. We can't find it, either.''
It is kind of like, ``Oh?"
They said, ``This is not just a Labor Department problem. When our report gets issued, you will find that this problem crosses all the different Cabinet posts here in Washington.''
{time} 1845
Mr. NEUMANN. Reclaiming my time, I want to show you why that is, because again I come from the private sector, and having run a business, I really thought when I got out here that I was going to find, and these are each account numbers in the government. The national defense, for example, is 050, and international affairs is 150. I really thought what I was going to find is somebody responsible for the money being spent in the national Defense Department, so I thought what we would do is go talk to the folks that were responsible for the money in the 050 category, the national defense committee, and they would actually be responsible for spending that money. So I expected a chart to look kind of like this where we had a category and then somebody actually responsible for spending the money.
Well, I took some time and I put together what it actually looks like out here. Here is what it actually looks like. There is no account that has a particular responsibility across. The lines are all crisscrossing all over the place, and since there are so many different lines for this thing to go to, nobody really knows where the money is going to, and of course that is exactly what led to the GAO report that you got in your hands.
Mr. HOEKSTRA. If the gentleman would yield, I think when we have been out here before, because we are also, we are going to be issuing a report in July that was initiated before we started the Labor Department, because I have also got oversight responsibility for the education department. And I think you may remember over the last year, you know, your spaghetti chart that shows all these lines crisscrossing.
We came up with the same thing in education because we wanted to take a look and say who really has responsibility for helping kids in Washington and helping kids get a good education. That is, I am not debating the point whether we can actually do that in Washington. I am just saying, who in Washington believes that it is their responsibility? Where is this coordinated? We asked the Executive Branch.
We said, ``How many education programs are there?'' Tabulated them up, we went to GAO, we went to the Congressional Research Service. About 760 different education programs.
Mr. NEUMANN. Just for a second, when you have got 760 different education programs run by the United States Government.
Mr. HOEKSTRA. That is right.
Mr. NEUMANN. Along with every one of those 760 is a huge bureaucracy to run the program, and what is happening is the bureaucrats are getting the money that is supposed to be in the schools helping our kids.
Mr. HOEKSTRA. That is right.
Mr. NEUMANN. And how much would you say out of every dollar?
Mr. HOEKSTRA. Well, we have calculated that because the other, you know, the train of thought is 760, and the first thing is hallelujah, that is why we got an education department, so that we can take these programs and run them through one place, because that is what I would think: Education; education programs. Put them in one place.
Thirty-nine different agencies. Many were programs that sound very, very similar.
So, as we have taken a look at it, as the gentleman has asked, as we have gone around and we have taken a look, where does the money really make a difference? The money makes a difference when it is in the hands of a teacher in a classroom directly benefiting a child. The bureaucrats do not help the child one bit.
So when a dollar comes from Wisconsin or a dollar comes from Michigan for education and goes to Washington, we are estimating that about 60 to 70 cents gets back to a child, gets back to a teacher, gets back to a classroom. Thirty to 40 cents gets eaten up in this, you know, bureaucracy maze here, and we know that the dollar has to get to the child if it is going to make a difference.
So I mean when we talk about reforming education, and we are going to talk about some other things, we can get lots more dollars to the child in the classroom without spending any more money in Washington. All we have to say is we are going to do it different, we are going to take the money, we are not going to feed a bureaucratic machine. We are going to get the money to a teacher and to a child and to a classroom, and the money is going to be there, and we are going to have some proposals, we are making them up tomorrow in committee, to start doing that. It is only $3 billion, only $3 billion.
Mr. NEUMANN. I was just going to object.
Mr. HOEKSTRA. Yes, only $3 billion out of, you know, the $40 to $50 billion that the Education Department spends every year, but, you know, we are starting, and we are going to take it and we are going to put it into opportunity grants, which says we are going to get the money to a child and we are not going to give it to a bureaucrat.
Mr. NEUMANN. Just reclaiming my time, I cannot help but point out that the great State of Wisconsin is out in front of the country again on this issue, as they were with welfare reform under Governor Tommy Thompson. They are now out in front in terms of having parents have the opportunity to choose where their children go to school, what they are taught and how it is taught.
Wisconsin just passed school choice, and of course it is going to be run much like a Pell grant system. I know even in some of the parochial schools there is a lot of concern with the school choice topic, but when we stop and think about it, the United States Government already gives college scholarships called Pell grants even to students that are attending teacher and pastor training schools in a Christian education center.
So the idea that the government could possibly give these scholarships, like Pell grants, without attaching strings is something we are already doing at the college level, and it is now just a matter of expanding that program down so it applies to secondary and eventually K-12 education.
I look forward to it. I think it is a good move forward for Wisconsin. And you know the survey that we just looked at, there were 12,000 teenagers looked at, and they found the single most important thing for crime, for teen smoking, teen pregnancy, for drug use and for education, most important for education, parental involvement with their student. Parental involvement with that teenager is the single most important thing that we can possibly do to bring our kids and bring our education level back up in this country, and I sincerely hope that we figure out how at the national level to allow some of the same things to happen that have happened in Wisconsin.
I do want to jump to a couple of these others because this audit is something the American people should hear about.
Mr. HOEKSTRA. If the gentleman could yield for just a second.
Mr. NEUMANN. Go ahead.
Mr. HOEKSTRA. And, as we go through this audit, I just want to let the gentleman from Wisconsin know that for the last year and a half we have gone through this process at the education department, we have gone through this process at the Labor Department, we have gone through this process at the Corporation for National Service where we have audited them or we, you know, found out. We have done this for the National Endowment for the Arts, and it is very, very consistent. The money does not get to the places that it is intended to go, that we are not making the difference.
So anybody who believes, even if we agreed with every mission that the Federal Government has taken on, and I think you and I probably do not necessarily agree that everything the Federal Government is doing is something that the Federal Government ought to be doing, but even if you agreed with every mission that Washington has assumed today, there is no doubt in my mind that there is a lot of waste, fraud and abuse in the system, that we could deliver better results with the money that we have today and at the same time deliver a tax cut back to the American people. We can do it in the Education Department, we can do it in the Labor Department, we can do it in the Corporation for National Service, and I think the gentleman is going to share some other examples with me.
But we have done this work here on the House side. We have got the background and the data that backs up exactly what this GAO study is going to show.
Mr. NEUMANN. And I think that is the point of this whole discussion. We can do tax cuts without touching the Social Security money. There is absolutely no reason in the world that this government should take the money coming in from Social Security and use it for tax cuts or anything else. That money belongs in the Social Security Trust Fund, but that does not mean we cannot do tax cuts. There is so much waste, fraud and abuse to go out.
I want to again slow down a little bit and just make sure everybody understands what an audit is.
Again, I come out of the private sector. We ran our company, and I will never forget the first time that we wanted to borrow money in a bank, and the bank said you have to have an audit first. And I went:
``What's an audit?''
And they said, ``Well, an accountant has got to come in, and they got to look at your books, and they got to actually make sure that the money you say you're spending to build that house is actually being spent on, the money, on the house that you say you are building. And not only that, they would like to know that the revenue that you say you're getting from the sale of that house is actually enough to cover the money that you spent on that house.''
So what happens is an accountant comes in and he looks at all your home sales over the course of the year, and he pulls out one or two, or she pulls out one or two or three of them. So if you are selling 120 homes a year, they pull out maybe a half dozen total, and they really go through them with a fine-toothed comb to actually make sure that the drywall check that went out for $3,200 actually went to the drywall company and not my rich uncle someplace or whatever.
They actually double check to see that what you say happened in your books actually happened, and that when you get to the bottom line the money in and the money out is actually what you reported on your taxes, and hopefully if the bank is going to lend you money, it made a profit, because if you do not make a profit you are going bankrupt.
Mr. HOEKSTRA. If the gentleman would yield for just a second, it is no different than what happens to an individual when they go apply for a mortgage.
Mr. NEUMANN. Exactly.
Mr. HOEKSTRA. The bank will go and they will verify, they will want to be able to verify your income, they will want to verify the balances on the other loans that you have outstanding, they will want to verify that what you want to buy is actually worth the amount that you want to borrow, and they will audit your records.
Mr. NEUMANN. The difference between a personal audit, though, and a company audit or between a personal audit and this government audit is, in a personal audit when you going to buy a house they verify virtually everything. And I just like to make the point that when they went through this government audit, they pulled out a random sampling to do these lookings. So these examples that I have got here of what they found in the audit, it is not like they audited the entire Navy and looked for every ship the Navy had. They pulled out a limited number.
As a matter of fact, this first one I got a picture of here, they pulled out 79 ships. They could not find 21 out of 79 ships that were supposed to be available. Just think about this for a minute. The Navy says these ships are there and they are waiting to be used. They are called inactive status at this point. Seventy-nine of these ships are supposed to be there. They went looking for these things. They could not find 21.
I mean we are not talking about a rubber ducky here in a bathtub. We are talking about a naval ship that they could not find. Think about what that means if there were ever a serious conflict in this Nation.
That is just one. Let me keep going a little bit.
The Air Force reported that they had this C-130 transport plane, and this is important to understand what this is, and I want to emphasize that this is a statement of concern for the well-being of our young men and women in uniform because just think about this for a minute:
If we were to enter into some sort of military conflict and this C-
130 is supposed to be out there, and a C-130 is what they use to move troops around. So you now have these troops in a conflict situation, and we are supposed to take this C-130, and we are supposed to haul more troops up there so that they can be reinforced and not get overrun and literally injured, hurt or injured or killed.
Well, they went looking for this C-130, and it turns out it was destroyed back in 1994. It is almost inconceivable to me that you have a C-130, a transport plane for moving troops around, on your records as available, and you go looking for the thing and you cannot find it.
There is more. This one is really scary.
We are supposed to have a missile launcher, and if you do not recognize what this is, this is what you launch a series of missiles off of. They could not find the missile launcher.
Now since they think they have found it, but we have not verified at this point that they found the right one, and again it is so important to understand how significant this is to the safety and well-being of our men and women in uniform.
But it was not just the military, and I want to make that very clear.
This is the Department of Energy, and what you see here is a Hewitt Packard 3000 corporate business server, weighs 825 pounds, 825 pounds. The thing is 5 feet 2\1/2\ inches wide, 3 feet deep. I mean this is a huge piece of equipment. So they went looking for this $141,000 computer, and they could not find the computer either.
It did not stop there. We dug into this audit, and again coming from the private sector, I took some time to really start going through, and this caught my attention obviously. And you know this whole concept that there is no waste in the government and there is no more room for improvement in this government, that is ridiculous. We have got a long ways to go to get this place straightened out, but when I started digging into this some more, I would just like to read a few excerpts.
We had the GAO prepare a special report for my audit. This is what they said about Medicare. Now think about this number, and then think about the Medicare attacks last year. This is what they say on Medicare regarding improper payments: $23 billion, for reasons ranging from inadvertent mistakes to outright fraud and abuse, $23 billion missing out of one agency.
Let me translate into English.
Mr. HOEKSTRA. If the gentleman would yield for just a second, of course the way we calculate here in Washington, I am sure that is $23 billion over 5 years.
Mr. NEUMANN. No, sir, that is $23 billion in a single year. That is almost $100 for every man, woman and child in the whole United States of America, to put this in perspective. You know we throw these billions around like basically speaking that $1 billion is $4 per person. This is nearly $100 for every man, woman and child in the United States of America that is gone, for reasons ranging from inadvertent mistakes to outright fraud and abuse in one single agency.
But listen to this one. If anybody out there is not concerned with these pictures, listen to this. This is what the Air Force Logistics System found, and again now I am quoting word for word from the report that they sent back to my office. Three databases included in the Air Force's central logistics system contained discrepancies on the equipment, on the number of assets on hand, including ground-launched and air-launched cruise missiles, aircraft and helicopters.
Let me translate that into English. They went into the Pentagon, they looked at their central logistics system to try and figure out how many of these missiles they were supposed to have. When they went out in the field to find them, the number they found versus the number they were supposed to have was different numbers.
Let me read this one again, because of all of these things, this one scares the living daylights out of me.
Three databases included in the Air Force's central logistics system contained discrepancies on equipment, on the number of assets on hand, including ground-launched and air-launched cruise missiles.
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When you really go looking for this stuff, they cannot even find the air-launched and ground-launched Cruise Missiles.
Let me give you one more, and I know the gentleman from Michigan would like to jump in on this. The Forest Service, and again we have talked about the Air Force, we have talked about the Navy, we have talked about the Energy Department, we have talked about Medicare and the Air Force again. Let me give you another one. Here is Forest Service. The Forest Service could not determine for what purposes it spent $215 million.
When we look at this government and we look at the tax rate on the American people, and then we go into this sort of thing and we find out what a mixed-up state of affairs we have out here, it is very, very clear to me that if they get their act together to a point where they actually know what they have and know where the money is going to, we can clearly find enough ways to reduce the tax burden on the American worker and accomplish all three of our goals, and that is leaving the government's hands off of Social Security, reduced taxes, and start paying down the Federal debt. But the way you do that is you go after these wasteful government programs.
Mr. HOEKSTRA. I think the gentleman is exactly right. When we have taken a look at the Education Department and when we have taken a look at the Labor Department, they cannot find or tell us where all the money went, and then we come back and we ask them specifically on program-by-program, give us some indication as to whether we are achieving the kind of results, the kind of effectiveness that we would like to have, and there are no benchmarks. We cannot go in and say this is what we are trying to do and these are the kinds of results that we are getting, so that the money we are actually spending is actually making a difference.
So you are identifying, I think, some pretty scary stuff, because you are again identifying, we could not know where the money is going, so that is almost an immediate savings that you could identify that says if we do not know where the money is going, we cannot be getting a whole lot of results for it.
Then the second thing is you can overlay that even when we know where the money is being spent, we do not know the kind of results that we are getting. So if you put that in the context of the Labor Department, we do not know where 25 percent of the money goes, and for 75 percent we do not know whether we are getting the kind of results we want to have.
In education we are spending $100 billion a year. We know that a good portion of that money stays with bureaucrats and bureaucracies, so that we know that that is not helping kids. And then you take a look the money that is actually filtering down with the strings that are attached to it. And, again, it may be a barrier to a local school, a teacher doing what they feel they need to do in their classroom, because the money comes and tells them what to do. So, again, we do not have an idea as to how effective those dollars are.
Mr. NEUMANN. I think it is very important in this discussion that we point out there is something being done about this. I would just like to walk you through what has happened so far, since we found this, and where we are going next with this thing.
I have to tell you, if this was my home building company and the person responsible for building 79 homes walked in my office and said,
``Mark, I have good news for you; I found all but 21 of the 79 homes we built last year,'' I have to tell you, I would not have the patience for what we are proposing in this legislation.
But when I proposed the legislation and we had our first hearing, we start hearing people concerned that we have gone too far here.
So let me say what has already been done. We brought a resolution to the floor stating this should have consequences to each one of the 24 agencies. That was relatively easy, because when you say
``consequence,'' nobody is hurt because nobody knows what consequences are.
We have gone the next step and I have written a piece of legislation, and here is what it does. It says in each one of the 234 agencies, we are going to identify the group of people responsible for knowing where the money is coming from and knowing where the money is going to and knowing where the equipment is. So we are going to identify the people who are actually responsible for the information contained in these audits.
We are going to give them 12 months. At the end of 12 months, if they cannot pass an audit, that group of people is going to have to find something else to do with their lives other than work for the United States Government. Also the agency will at that point lose 5 percent of their funding.
Now, the idea behind this proposal is twofold. First, we would like to identify the people responsible and actually place responsibility on someone, instead of saying it is that agency over there with no face attached to it. We with like to point out specifically who it is with responsibility for it.
We would like to also empower those people to have the people at the agency work with them to solve the problem. So we want to go at this, and, understand, they have already had four years in this whole thing. The bill started four years ago. So they have had four years already to bring the thing up to speed.
So when we say 12 months, what we are really saying is, we do not want to be heartless about this and go, you are fired tomorrow, although maybe that is what I would do in my own company. You have 12 months to get your act together. You specifically have the responsibility for it, and, if you are not successful, not only are you going to have consequences, but the agency itself should expect to have 5 percent of their funding withheld.
Now, what that should do is get the employees and the agency to work with the people responsible for straightening this mess out to a point where we actually can track the money that is going through, and not only track the money going through, but also track the assets of a particular agency.
Mr. HOEKSTRA. If the gentleman will yield, we are doing some of the same types of things in the whole area of education. You start with a resolution, kind of like what you said, there will be consequences. In the education area we set a goal.
We said that as a Republican Conference, or as a House, we passed a resolution here saying we want 95 cents of every education dollar to reach the classroom.
Tomorrow in committee, we are going to be working on a dollars-to-
the-classroom piece of legislation, which is going to take a number of programs and put them into opportunity grants so that the dollars now flow to the classroom, flow to the child, rather than flowing through bureaucracy.
So we are making progress in moving along, in getting at these issues. So it is not just an issue of hey, look, it is broke. It is broke. We are working at constructively going after these problems, identifying why they have come up, how we can fix them, and now we are going through the legislative process of actually making a difference and changing the way things work in Washington.
Mr. NEUMANN. I just want to keep coming back to that point. The key here is as we eliminate this waste, it provides us with the dollars necessary to reduce the tax burden on the American people, while, at the same time, leaving our hands off of Social Security, which is what the Social Security Preservation Act does, and, at the same time, starting to make some payments on the Federal debt.
This is the bright optimistic vision for the future, a debt-free America for our children, Social Security restored for our senior citizens, and a lower tax burden on the American people.
I see that my good friend Mr. Kingston has joined us.
Mr. KINGSTON. I thank the gentleman for yielding. I have been listening with much interest on what you two have been doing on this, and I know you have been at it for many years and making progress. One of the things we have come across on the Committee on Appropriations, as you know, is plain out inefficiency, which is what this is, and the biggest example that we hear the most complaints about is the IRS.
One of the examples that was testified is the IRS went into a restaurant in New York, asked the patrons to leave, put down their forks and knives, leave, because the restaurant was behind in their payroll taxes. A month later it was proven that it was a mistake.
So what does the IRS do? They say gee, whiz, we are sorry. Think about that in the private sector, if you had somebody in charge of enforcing a law, a rule or whatever, in your company, and they blew it, just completely blew it.
We are on the verge of passing a bill in on the IRS which is similar to the legislation you are working on for an intangible efficiency, if you will, but of saying that if you are dragged before the IRS, you are innocent until proven guilty, and it will do the same thing that your legislation does and what you are trying to do in education. It makes the individual frontline employee a little more careful to make sure he or she knows exactly what the goal is, what the rules are, and who the victim is. They put their rights out there and makes folks think twice.
As you know, another interesting thing about the IRS is they could not be audited, because their books were in such disarray no one knew where the head of the snake was. But we are taking steps to change that.
Mr. NEUMANN. Reclaiming my time, I would just like to bring you a personal experience from the private sector, because I have had one of these IRS experiences. It is almost like an out-of-body experience when you are done with it, because it is so bad.
When I first started in business, they assigned us two separate Federal tax ID numbers. Now if you want an absolute nightmare, get two Federal tax ID numbers. Because what would happen is we would file the appropriate tax forms under the appropriate tax ID number, but since we had a second tax ID number, the IRS came after us for not filing the forms that we had just filed.
So then we would then refile the forms under the new tax ID number, and, of course, then they would immediately come back after us for the old tax ID number that they still had assigned to my company.
This went on for months. I would pay taxes and they would send me a bill, and I would pay taxes and they would send me another bill. I would look at the bill and say I know I do not owe that money, but it is easier to pay them $600 that they are asking for than to fight with the people. So you would send them another check for $600, and then they would send you another bill a few months later on the other tax ID number.
This went only for a period of I do not remember how long, until finally we got sick of paying them the double tax rate and said we are not going to pay you anymore. We, of course, would pay them the one under one number, but we would not pay under both numbers anymore. It was going to bankrupt us, for crying out loud.
So we finally said we were not going to pay it anymore, and it got within two weeks of them posting a tax notice on my door saying you had not paid your taxes.
Finally, that was back long before I ever thought of Congress, I called the Congressional person, and the Congressional person actually made the IRS people actually sit down and look at the records and how much taxes we paid, and, if my recollection is right, they did send us some of the overpayment back. But it was an absolute nightmare from start to finish.
If you are a small business owner, you cannot afford the time to go fight with the IRS. You got enough to do to keep your head above water and keep from going bankrupt in the first place. This is our early days. We were just out of our basement. We had started a business in the basement of our home and we were in our first office struggling to make it. I will never forget the hassle we went through as they gave us these two separate ID numbers. So I have some personal experience with it.
Mr. HOEKSTRA. If the gentleman will yield, what we are talking about here is putting accountability into government. I will give you an example. The gentleman from Georgia (Mr. Kingston) and I came here in 1993, and one of the first pieces of legislation that came out of the committee that I serve on was called Education and Labor, was the Corporation for National Service, AmeriCorp, a brand new agency.
In 1995, I got responsibility for oversight for the Corporation for National Service. A brand new agency. It filtered in a couple of smaller agencies. In 1997 we did oversight. Because the President promised us this organization would be set up like the best in the private sector, I voted for this bill.
1997, none of their books were auditable, meaning that you could not take in an outside auditor and say that the money that came in from the American people and went to the Corporation for National Service was spent the way that it was intended to be spent. They could not tell us where the money went. It also set aside money for the scholarships that these kids earn for college. That was not auditable. It did not have integrity.
What is the response you get? If you say we want to put accountability in, it is like you are against AmeriCorp. It is kind of like, no, we want to know where the American taxpayer money went. We are doing what you had to do in the private sector, what I had to do in the private sector; we had to put accountability into our organizations, and we had to put integrity into the financial structure, because if you do not have accountability and if you do not have integrity, you are out of business. And in Washington, these programs just run on forever.
Mr. NEUMANN. As we talk about this, and I mentioned it earlier in the hour, I do think it is very, very important to keep this in perspective. When we came here three years ago, when all of a sudden it was a different group of people in control the House of Representatives, we had to first stop the bleeding.
We had a deficit of $200 billion a year, plus they were stealing the money out of the Social Security trust fund. We had to stop the bleeding before we could go and look at the next step and start getting into some of these older problems that had to be dealt with.
It is only because we have stopped the bleeding that we have gotten to a balanced budget, we have slowed the growth rate of Washington spending. It is only because we have slowed that bleeding, so-to-speak, or at least dramatically slowed it down, that we are able to now go to the next level and start solving some of the internal injuries, if you like, in this thing.
You first have to get spending under control to get to a point where you can take a look at the next level here, and that is what has been accomplished in three years.
The only reservation I have in this discussion, clearly all of this is wrong, but I think it is very, very important that we keep in perspective how far we have come in three short years, and then how far we still have yet to go.
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The gentleman will remember, when our class came here 3 years ago, one of the projects was to sell a building, and we all worked very hard on that. The gentleman from Michigan I know remembers our group who came 2 years before, we were 100 percent there. But as I recall, we were told that in this massive $1.7 trillion Federal Government, that there were no buildings that they could spare to sell.
I do not remember what actually happened to that. I remember there was a tremendous fight to try to sell one building in the name of symbolism. Did one actually transfer, does the gentleman remember?
Mr. NEUMANN. Mr. Speaker, all I know is in the appropriations process right now we have made the decision to go forward with building more buildings.
In the debate we have had here in the 3 years since I have been here about the draconian cuts imposed on America by the Republican Party, what people have failed to mention is that in fact, spending has kept going up faster than the rate of inflation.
What they actually meant by ``draconian cuts'' is that instead of letting spending go up at twice the rate of inflation, we were going to stop the growth rate and at least hold it to the rate of inflation. When the gentleman talks about selling a building or building new buildings and so on, we need to understand that government spending is still going up at the rate of inflation. That is why they are struggling to sell off a building.
If we actually got to a point where we went after this waste and fraud and abuse in this government so we actually could reduce spending in real dollars, so that it was no longer going up as fast as inflation, which is what I think all 3 of us standing here would like to see, that is when we can actually do some tax reduction for the American people that is real, and we can also start doing things like eliminating some of the government property that we no longer need.
Mr. HOEKSTRA. If the gentleman will yield, Mr. Speaker, I just want to really thank the gentleman for putting it in perspective, what our priorities are: saving Social Security, paying down the debt, and reducing the tax burden.
Then when we take a look at not discussing the role or the mission of the Federal Government, because that is another debate, but just saying if we collectively decide that we are going to do everything that the government does today, but we are committed to do it more effectively and more efficiently, we can do those three objectives. We can save Social Security, we can pay down the debt, and we can lower taxes, just by saying we are going to be more effective and more efficient.
Then if we decide that certain of these things no longer need to be done by the Federal Government, we can even go faster towards those objectives.
Mr. NEUMANN. I get excited when we get to this point, because all of a sudden we begin to understand that we are no longer in 1993, whining and crying that we cannot do anything other than raise taxes on the American people to solve government problems.
All of a sudden, we understand that if we just get spending under control, we get our arms around some of this stuff and get it stopped, we can actually have this vision for the next generation, that the best days of America can be out in front of us instead of behind us.
If we can start looking, if we think about this for a minute, at controlling spending to the point where we can start paying down the debt, when we pay down the debt, $1 out of every $6 this government spends does nothing but pay interest on the debt. As we pay down the debt, it is easier to put the money aside for Social Security that should be put away for Social Security, and all of a sudden Social Security is safe for our senior citizens.
Of course, as we pay down the debt and the interest goes down all of a sudden, and we do not need that $1 out of $6, we can reduce the tax burden. Think about this vision for the next generation. We pay off the debt and give this Nation to our children debt-free. We stop stealing the Social Security money and in fact put the money back in that has been taken out. Social Security is safe and secure for our senior citizens.
We can reduce the tax burden, so when we look at a family, we do not have to have two people working two jobs each in order to make ends meet, when all of a sudden they do not have to be at that second and third jobs in order to pay their bills because the tax burden is so high.
I get going on this, but it is so important to remember, a generation ago the government, in all the different forms, only took $25 out of every $100 a person earned. Today they take $37 out. That extra $12 they are taking forces people to get a second and a third job, and when they get a second and third job, they spend less time with their kids.
It leads me right back to the education problem the gentleman has been talking about. When parents spend less time with their kids, the outcome is a poorer education, the outcome is more crime problems, more drug problems, more teen pregnancy, more teen smoking. All of the things wrong with our society happen when the folks have to take the second and third job, instead of having at least the opportunity to spend more time with their kids.
Again, I am not naive enough to think that if we simply reduce taxes all of the problems are going to go away. That is not going to happen. If we reduce taxes, at least parents will have the opportunity to make the decision to spend more time with their kids. In education, we need to empower the parents to have a role in the process of deciding what their kids are taught, where it is taught, and how it is taught.
As with we empower parents to make those decisions, they become more involved with their kids' lives, and we should expect a reduction in crime rate, a reduction in teen pregnancy, a reduction in drug use and teen smoking. That is the vision for the next generation we are talking about here.
Mr. HOEKSTRA. If the gentleman will yield, Mr. Speaker, even with the small tax cuts we did last year, the family that the gentleman talked about earlier, it is $2,300 per year that they are going to save. It is
$2,300 after taxes.
Mr. NEUMANN. Yes, sir.
Mr. HOEKSTRA. That is about $40 to $50 a week that this family is going to have in increased disposable income. Somebody can say, maybe I will work a few less hours, but it is a choice they can now make that they did not have before.
Mr. NEUMANN. Let me put this in very real terms. That family of 5 I am talking about, they are a $50,000 a year kind of family. When Christmas comes they want to buy presents for their kids, but they are living paycheck to paycheck as they go along. All of a sudden when they get to Christmastime, what happens? The mother takes a second job so they can buy Christmas presents for the kids.
If we get the tax down, they have already the $2,300, we hope to go further, the taxes are down $2,300, she may still take the job and put the money in retirement, but the bottom line is, it is now her choice. It is not done out of necessity to be able to buy the Christmas presents, it is now being done out of choice as opposed to necessity. We have empowered that mother to make the decision at Christmastime to not go out and get a second job so she can pay for the Christmas presents.
How have we done that? We have simply let them keep more of their own money that they earned anyhow, instead of government spending it.
Mr. HOEKSTRA. The gentleman has just said it, not as much for Washington.
Mr. NEUMANN. Exactly.
Mr. KINGSTON. If the gentleman will yield, let us take that a step further. That is what I find so offensive and so absurd about what to do with the surplus. Both Members have outlined, and I am in 100 percent, there is really not a surplus. We have just taken the excess collected for Social Security, mixed it in the general revenues, to hide the deficit that is in the general revenues.
Mr. NEUMANN. Reclaiming my time momentarily, I have good news. I did not bring this out as clearly as I should have. We are now in surplus in both the general fund and in the Social Security fund. There is such good news on the economic front here. We now have a surplus in both funds, both general and Social Security. It is good news.
Mr. KINGSTON. That is excellent news. Let us take the Social Security completely out and do what the gentleman is proposing in his legislation, build a wall around it.
The point I am really getting to, if you are walking down the street and you find a wallet with $100 in it, you do not immediately start thinking, how am I going to spend this? You think about, who does this belong to? How do I get it back to them? That is what we in Washington should be doing with any surplus, saying, whose money is this? How do we get it back to them?
That should be our number one question in the context of let us pay off debt, money we have borrowed; but mostly, let us figure out whose money it is, which is not a hard question to answer, and how do we get it back to them, instead of what new programs should we start and what new buildings, airplanes should we buy, particularly when we are losing objects, large objects, like the gentleman has outlined.
Mr. NEUMANN. Is this not an exciting conversation, especially when we put it in the perspective of where we were 3 or 4 short years ago, where it was the wringing of our hands, and how are we going to get more money out of the pockets of the American taxpayer to give us enough to spend out here?
Now, here we are, standing here having this debate about, well, we are going to be able to put the Social Security money aside. This will be the first year, by the way. This will be the first year that we are actually able to put the Social Security money aside the way it is supposed to be, and it now appears that there is a surplus in the general fund besides. That is the $100 the gentleman is talking about, that surplus in the general fund, not the Social Security fund. That is the money that ought to be used for both tax reduction and restoring the Social Security, paying down the debt as we move forward.
What a wonderful generational objective or goal here, if we could pay off the debt, give the kids a debt-free Nation, restore Social Security so it is safe for today's seniors and the baby boomers, and also lower the tax burden on working Americans. Is that not really--does that not make our congressional service here worth it, if we can bring the country back in that direction, especially when put in the perspective of where we got it 3 or 4 short years ago?
Mr. HOEKSTRA. I thank the gentleman.
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