America's Mandatory and Discretionary Spending
Floor Speech
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Mr. MULVANEY. Well, anything for fun, Mr. Schweikert.
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Mr. MULVANEY. The real frustrating thing about it, Mr. Schweikert, is that the demographic group that you would hope would be engaged in this topic isn't. When you go home and you and I and Mr. Perry talk to our folks back home, who is most interested in Social Security? The folks who are already at or near retirement.
You have got another graph, by the way, that shows who really should be interested in this because you have got the first year outgoing exceeds income, including interest. On another graph, you show when the trust fund goes to zero for Social Security.
The last time I had the CBO run the numbers, it was roughly 2032. In fact, it was July of 2032. Why do I remember this? It is the month that I turn 65 years old. It should be our generation. It should be the people in their thirties, forties, and fifties who are demanding that we make this a topic of conversation, and they don't.
They are not demanding it right now in the Presidential election. They are not demanding it in their congressional elections. They are more concerned about other things that I get the importance, as Mr. Perry does, of national defense and immigration. I get all that.
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Mr. MULVANEY. 2032.
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Mr. MULVANEY. Yet it is not our generation. It is Mr. Buck's generation, the gentleman from Colorado, the older generation, the next generation who is paying closer attention to it.
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Mr. MULVANEY. I have got a question for you. While we are preparing that question, if the young man could put up the previous graph below, that one that shows the status of the Medicare trust fund.
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Mr. MULVANEY. Put them so we can see both of them at the same time, please.
That is stunning. So between 2021 and 2025, we are going to have the Social Security disability fund go broke----
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Mr. MULVANEY. And Medicare part A go broke.
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Mr. MULVANEY. Last time we fixed the Social Security disability--I am making the air quotations when I say fixed disability--by robbing from old-age retirement.
Where are we going to rob from the next time when we have both Medicare and Social Security disability going bust within a couple of months of each other?
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Mr. MULVANEY. What are the assumptions on this, by the way?
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Mr. MULVANEY. How many times, Mr. Schweikert, have we held 4\1/2\ percent growth for, say, a decade?
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Mr. MULVANEY. I think that is a fair assumption.
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Mr. MULVANEY. As this year stands, it looks like now, when they revise the last quarter's numbers, which they will do here shortly, 2015 will be the tenth year in a row without 3 percent growth in the American economy.
If that turns out to be the case and we go 10 years without 3 percent growth during any of that decade, it will be the first time in the history of the Nation that that has happened.
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Mr. MULVANEY. Mr. Schweikert, I see you brought up the graph for the Social Security trust fund. Have you explained what the nature of the trust fund is?
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Mr. MULVANEY. No. That is us, actually.
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Mr. MULVANEY. Yeah. The trust fund is actually fairly simple. A lot of people think that it doesn't exist. They think it is a myth. It is real.
What it represents is the accumulated excess collections that Social Security has made over the years. I tell people that the last time we really had a major overhaul of Social Security was back in the 1980s.
Ever since then, we have taken more money in every month in Social Security taxes, FICA, than we have paid out in benefits.
So if you take $100 in in a particular month and only spend $80, you have $20 left over. That is the money that goes into the trust fund. It is essentially a savings account.
Now, when people say, oh, it doesn't really exist, you have stolen money from it, and it is not there, that is not true. You can't keep $20, real paper money, in an account someplace, in a desk. That would be foolish.
What we do is we invest in the only thing the Social Security Administration is allowed to invest in, which is U.S. treasuries. There is actually in excess of $2 trillion in the trust fund.
The trust fund exists. It is in a drawer in West Virginia in a building named after Senator Byrd, as most of the buildings are in West Virginia. It is full of treasuries.
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Mr. MULVANEY. Wow.
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Mr. MULVANEY. Do we actually pay that or we assume that?
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Mr. MULVANEY. That is a great investment right now. Yeah.
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Mr. MULVANEY. Could have been at Mr. Buck's age.
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Mr. MULVANEY. Mr. Schweikert, there is an ad campaign on television right now that speaks to this. I think it was on during the Super Bowl.
It shows a very dramatic bridge scene and the bridge slowly fades into decay, and it says: This is what will happen to our economy. This is what will happen to our infrastructure because of entitlement spending.
Some folks don't like that term, but we use it here for Medicare, Medicaid, Social Security, and so forth.
It says: Demand of the Presidential candidates what their plan is to solve this problem. Call or write your Member of Congress and demand what their plan is.
I have gotten one call. Have you gotten any?
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Mr. MULVANEY. How many people have called your office to say: Mr. Schweikert, what is your plan for fixing this?
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Mr. MULVANEY. It happens.
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Mr. MULVANEY. And so what happens on that date?
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Mr. MULVANEY. You talked about how every day we wait, it gets harder to do. I remember giving a presentation similar to this at a retirement community in my neighborhood. It was back during one of the first Ryan budgets when we had actually talked about raising the benefit age slowly by a couple of months.
There was a gentleman there who was in his late fifties. He said: Look, I don't want to work another 2 or 3 years. I said: Sir, we are not asking you to do that. He said: What are you asking me? I said: I am asking you to work an extra month. I am asking me to work an extra year. I am asking my triplets to work an extra 2, but I am only asking you to work an extra month. Can't you do that? He said: Of course, I can do that. Will that fix things? I said: That will go a long way towards fixing things.
He got angry that it was that easy and nobody had explained it to him. I said: You are going to get even angrier. If we had done it 20 years ago, it would be a week. If we wait another 20 years, you can never fix it.
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Mr. MULVANEY. Mr. Schweikert, would you like to wager a guess as to the likelihood of that reduction staying in law is?
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Mr. MULVANEY. It is also the benefit of a totally accommodating Federal Reserve, who sets the price of interest through things like quantitative easing, which is nothing more than printing money. They have unnaturally depressed rates.
Depressed interest rates is nothing more than the cost of money. One of the direct beneficiaries of that has been this body. It has been much easier for us to run of these huge deficits--which is the annual debt--and the overall debt, simply because it is essentially been free money for the last 6 or 7 years.
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Mr. MULVANEY. There is no question. At $16 trillion of debt, roughly, which is the public debt now, you are talking about interest rates below 2 percent.
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Mr. MULVANEY. The 40-year rolling average is about 6 percent. That is what money ordinarily costs the United States of America. It is about 6 percent if you look at it over a generational length of time.
If we simply regress to the mean and end up with money costing us about 6 percent, you are talking about more than $1 trillion a year in just interest payments.
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Mr. MULVANEY. Actually, I have been showing them that chart since you and I arrived in 2011 because the number has not changed significantly. When you and I arrived and served on the Budget Committee together in 2011, we could have told people roughly what the deficit would have been this year. The projections have not changed.
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