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Jobs, the Deficit, and Federal Spending

Floor Speech

Location: Washington, DC

The SPEAKER pro tempore (Mr. Gowdy). Under the Speaker's announced policy of January 5, 2011, the gentleman from Missouri (Mr. Akin) is recognized for 18 minutes as the designee of the majority leader.

Mr. AKIN. Mr. Speaker, congratulations. You look good up in the Chair there.

We are going to have a chance to talk for just a few minutes about an interesting topic. It is something on the minds of Americans everywhere, and that is about jobs, about the deficit and about Federal spending and what we have to do in those areas.

I think sometimes it is helpful, you hear so much detail that you need to step back at the 30,000-foot view and say what is the big picture of what is going on. So I have here one of those traditional pie-type charts, and it has an overview of the total spending of the Federal Government in the year 2010. So what I want to do is just take a look at that and then talk about what that means relative to the problems we have in overspending in the Federal Government.

Also, this connects to unemployment in this sense, that when the Federal Government spends too much money and is too intrusive and takes too much in taxes, all of those things destroy the jobs created by small businesses.

So let's just be completely clear. We have heard stories about unemployment and these ``heartless Republicans.'' The problem is that if you destroy businesses, you don't have any businesses, you don't have any jobs. And that is what we have been doing. How is it we destroy businesses? One, we overtax them; two, we overregulate them with red tape; three, we make it hard from a liquidity point of view to get loans from banks, because the Federal officers are looking over the bankers' shoulders second-guessing the loans; fourth, we create an era of uncertainty because we don't know what the silly government is going to do next; and, last of all, we spend money like mad, which then makes the economy that much harder for our businesses to compete in a world competitive environment.

But let's take a look at this pie chart here, and there is something here that when you start to think about it is really a little bit on the frightening side. Let's take a look at some of the big chunks of money.

The bottom one down here is defense. The Constitution of the United States says that the Congress will provide for the national defense. It is the one main thing that Congress is supposed to do. States can't do it; locales can't do it. It is something that has to be done by the Federal Government. That is why our U.S. Constitution says even in the preamble to provide for the national defense. That is $692 billion here in the 2010 budget. So there is defense.

This over here is the non-defense, what is called discretionary. These are the funds that Congress spends every year, and that is $666 billion. This includes things like the Education Department, the Energy Department, the Department of Commerce. It would be jails and prisons, things like that. All of those, the Park Service, would all be in this non-defense discretionary area. So these two, kind of similar size, running in there about a little bit under $1.5 trillion in total.

Now, the other one that I want to call to your attention, though, is all the rest of these. This is Social Security, this is Medicare, this is Medicaid. And so what these things are, a lot of times people call them mandatory spending. What does that mean?

Well, what it means is that sometime a long time ago a Congress came along, passed these laws, and the law works like a little machine and the machine spits out dollar bills whenever anybody meets certain criteria. So we call it an entitlement. These little machines are spitting out, printing out, dollars; and the Congress doesn't have to do anything at all and the Federal Government is spending lots of money. How much money? Well, Social Security, there is $700 billion, there is another $519 billion in Medicare, and Medicaid, $273 billion.

Another thing that works a little bit like an entitlement is the debt. So if we sell a Treasury bill, we have to pay the interest on it; and when we do that, we get this interest. And then there is these other mandatory things which are really other kinds of entitlements. So it is not just Social Security, Medicare and Medicaid. You have got SCHIP, you have got food stamps and things like that that are additional entitlements.

So these things here, when you put all of these together, this is kind of a spooky number. These things come out not too far away from a little over $2 trillion, maybe $2.3 trillion. And what does that mean, $2.3 trillion? What that is, that also is the amount of revenue in a given year for the Federal Government.

So what has happened is all these entitlements now plus the interests on the debt have gotten to the point that they are chewing up all the money that the Federal Government takes in in taxes in a given year. So then the question is, well, how about defense? How about non-defense discretionary? How about these things? Do we have any money? No.

The point of the matter is you can zero this out, zero these out, and these together are using all of the money that the Federal Government is taking in in revenue in a given year. Now, that is kind of scary. What that says is that we are starting to run deficits of over $1 trillion.

In fact, the Obama deficits for the last 2 years have been about $1.5 trillion. That is a lot of money. That is three times a bigger deficit than President Bush's worst budget deficit. So you take his worst budget deficit, which is about $450 billion, and we are talking the last 2 years we are running at a $1.5 trillion deficit. So this is what is going on.

So let's take a look. If you are like an awful lot of Americans, you want to solve a problem. We have got a problem here. We are apparently spending too much money. So you say, well, what are our alternatives? How do we approach this?

I am thankful this evening also that we have got one of our very bright young freshmen Congressmen from the State of Colorado. Scott is here to join us, Scott Tipton. Scott, I just want to make sure you knew, any time you want to jump in here, we could talk a little bit about this.

What is your reaction here? You are a little bit newer here to D.C. But you take a look the size of this entitlement that is the same size as what we take in for a whole year, isn't that a little bit of a spooky thing to be walking down here and run into this as a problem?

Mr. TIPTON. You know, it really is. We just finished a tour of the Third Congressional District of Colorado. Our district is about the size of the State of Florida, the fifth largest congressional district in the United States which is not an entire State, a massive land area, a lot of diversity in terms of the economies.

Incredibly interesting to me as we traveled throughout that Third Congressional District over this past week, we put on probably a little better than 1,500 miles.

Better than 30-plus meetings throughout that district. The frustration level of the American people, the people in my district, their understanding of the challenges that we face as a nation is truly remarkable. The American people get it. And what they want to see out of Washington is that Washington truly gets it.

As we're looking at your chart right now and we go to the revenues that are coming in, the spending which is going out, we're looking at a $1.5 trillion deficit that we are facing. That's going to be going on top of a debt in this country of $14.3 trillion, an unsustainable glide path that is going to take us to economic ruin.

As I traveled through my district, we found people that understood that it's important to be able to build for the future. We challenged them, and they rose to that challenge when we brought it down to taking a picture out of their own wallet and looking at their child or their grandchild. Many of us, myself and perhaps you as well, were raised with that concept of the American Dream. We always believed that we would have it better than our parents and our grandparents before them. The challenge which lies before us is to deliver that American Dream to our children and to our grandchildren.

I was in a conversation with a man from Craig, Colorado, born in 1924. In this conversation he recounted his life. He talked about living through the Great Depression; obviously, World War II. And we were talking about the economic circumstances of our time. And he said, Scott, this is the challenge of your generation. The question yet to be answered is: Will we rise to meet that challenge?

We've seen the government--and I think none of us can question the intent has always been good. And I would challenge anyone who will demonize others for their intent, because I think no matter whatever program, there was a thought behind it. But the problem is, as Americans, when we pull that checkbook out of our hip pocket, we know there's only so much money. And if we exceed that amount, there are going to be consequences that have to be paid. That's the reality that the American people expect us to truly deal with here in Washington. And they know that there are going to be some sacrifices. But those sacrifices are going to be from the standpoint that we have overspent. We're going to have to cut back. We have to be looking to the future. We have to be standing for our children, for our grandchildren, to deliver that dream that we have always believed as the American promise.

Mr. AKIN. Scott, when I heard you talking, it just kind of reminded me, a few years back I spent a fair amount of time with the Boy Scouts because I had four kids that went through the Boy Scouts program. They got to be Eagle Scouts and all. One of the things we always used to say, and to me, at least, it paints kind of a picture. You move in with the Boy Scouts to a camping area, and some of them a little wet behind the ears, but they somehow get the tents all assembled and they'd have a little bit of fun spraying some hairspray into the fire and things that little kids do; yet when it came time to clean up, we had this one rule, and that is you're going to leave the campsite better than you found it.

Our forefathers, my immediate parents, dad fought in World War II, and he had the attitude that we've got a job to get done and we're going to go over and get the job done. And they came back with the attitude that they wanted to give you and me a better life and better opportunities than what they had. And we've always wanted to pass that down.

Now I've got some kids of my own and I want to pass to them a better America, and yet what we're doing is we're passing them this tremendous debt. And we're the first generation that's really passing a worse America off to our kids than what we had before. And I think that's why your constituents elected you to come down here and get this thing straightened out.

Mr. TIPTON. It truly is. I believe that I grew up with--and perhaps you did, too. My parents raised me with phrases like ``Yankee ingenuity,'' ``American know-how.'' And I think that when we look at the entire mesh of what's been coming out of Washington, frankly, over the course of the last 10 years, we have seen an overreach of government, which has stifled American creativity.

I'm a small business man, not a career politician. I've actually gotten my hands dirty. I've created a business from the ground up. I have risked. We've had to work hard. But one thing I've learned being a small business man is you have to be nimble. You have to be creative in terms of addressing the problems.

One of the real challenges that we face is there seems to be a mentality in Washington, D.C., that once a program starts, it never ends. We will build on it. We will expand it. We will create redundancies, and we will build out that bureaucracy.

In the private sector, we do things a little bit differently. Periodically, we audit. We take a look to see what we are doing and is it achieving the goals that we are trying to achieve. If not, we eliminate it. We start to approach it from a different fashion to be able to make it work. I think it's that sort of creativity, that sort of nimbleness, which Washington lacks, and it's what the American people are truly crying for. They want to see us be innovative. If it isn't working, don't do it.

Ronald Reagan made the comment, he said the nearest thing to eternal life on Earth is a government program. Nothing has ever been said that is probably more true here on Earth.

Mr. AKIN. Let's take a look at this problem because you've got all these entitlements. And this represents all the money that comes in in a year. Then things here are beyond. And yet we're thinking that you've got to do defense and you've got to have the park open or you've got to have a prison open. So how are you going to deal with this problem?

Let's take a look at the next chart. This is an optimistic way of saying it. This is Medicaid, Medicare, Social Security, and it shows over time--this is 1965--and over time, these things are getting bigger because some of us baby boomers are coming along and putting more demand on the system. But this is an optimistic chart because the problem with it is you don't have the other entitlements in here or the debt service.

So what the problem is, if you put those other things in, what we're saying with this first pie chart is that, as you take a look at our revenue from taxes, it's averaging about 18 percent. So here comes the revenue along at an average of 18 percent, and here we are at 2011, somewhere in here, and you put these other things in and it comes all the way up to here. We can zero defense. We can take every soldier off the field, every ship out at sea, every plane out of here. We can zero defense to zero and all the other discretionary spending and, boom, here we are. Our entitlements have eaten up everything that the government takes.

One of the things that I find amusing and I've had to struggle with a little bit, too, is the idea of how you lose weight. You get older. I used to eat the double pecan pie ala mode, no problem, up to my mid-forties. But as you get a little older, you've got to watch that carrot cake or cheesecake or whatever. There's all of these ways of packaging weight loss programs, but the hard facts are there's just two variables: one is how much exercise you get, and how much food you eat. And, unfortunately, all of these supposedly complicated budget things come down to two things: how much money you're going to spend and how much revenue you've got coming in.

And the problem is here, this 18 percent. I'd like to talk to this in a couple of minutes. I don't think we can increase the amount of Federal revenue that much. Maybe we can do some things to get that to improve. But you can raise taxes, but the trouble is you raise taxes, you do just what you're saying: You crash the economy; the businesses close; there aren't jobs; you aren't picking up tax revenue.

So you can raise taxes, but it doesn't actually get you more money. And yet we've got all this spending going on, which says it's a little bit like if you can't do any more exercise, you're going to have to stop eating. We're going to have to stop spending on all these things.

Jump in, Scott.

Mr. TIPTON. I think that, first of all, just to set the plate, and I know that you will join with me on this, we have an obligation to our senior citizens that are receiving Social Security, to those who are about to receive it. And we also have another obligation, again, to our children and our grandchildren. And we need to be able to have that conversation in terms of how are we going to make sure that their opportunities are going to be the equivalent or even better than what our current senior citizens are receiving.

You show a pattern right now in terms of average revenues in relation to expenditures, particularly as baby boomers come on line. That is going to be something that we are going to have to deal with as a Congress, and I think it's something certainly that they're expecting leadership out of Washington. We are compassionate people. We will stand up for our senior citizens. It's a pledge that I made that I will keep for our senior citizens that are receiving Social Security. But I'm also making a pledge to our children and our grandchildren. We are going to be looking at ways to be able to address this so that their future can be as bright and they're going to be looking at a better America as well.

Mr. AKIN. Right. I think a lot of ways that you hear people talking about how do you get into this kind of problem, some people who are already very senior and dependent on some of these things, you're probably not going to touch their things at all. But it may be that the people who were not--maybe people in their thirties or forties, you put a different kind of program together and may give them some alternatives: Choose this, this, or this.

Those are the kinds of ideas we've got to look at, but we have to be honest with ourselves. I wasn't really aware of how bad these numbers were, even though I've been here for a while, until a few months ago. These entitlements are totally absorbing, even now, all of our revenues here. So really this is a little bit like the guy who's overweight. He's got a choice. You know, you're either going to have to reduce the spending here or you're going to have to somehow get in more revenue. The interesting fact on this is that there is evidence to suggest that, when you drop taxes, you actually get more revenue.

As a business guy, you probably understand that to some degree, Scott.

So here is an example of this top marginal tax rate. Back here in 1960, it was up at 90 percent for the guys making the most money. As this thing was brought down--Ronald Reagan brought it down a lot--what happened, as you see, is that the total Federal tax receipts actually increased. A lot of times, it seems like: How in the world can you drop taxes and get more revenue from the government?

Scott, say you were sort of king for a day and you had to put a tax on a loaf of bread, not for a day but for a year, and that you've got to get the maximum revenue for your little kingdom by taxing bread. You think, Huh, I'll put a penny tax on it. Then you think, No, $10. Then you think, Well, if I do $10, not enough people will buy the bread. So you come up, and at a certain point, you've got an optimum tax. If you raise it, you lose revenue. If you reduce it, you don't. So there is an optimum point.

What this thing called a Laffer curve shows us is that, as we drop taxes, we actually get more revenue into the Federal Government. So, to a degree, we can use growth of the revenue to deal with some of the problem. The trouble is that it's not anywhere near going to deal with all of it, which means, no matter what you do, you're going to have to cut spending, particularly that entitlement spending. So we have to do that sensitively and carefully. It's going to be politically controversial, but we've got to do something.

The SPEAKER pro tempore. The gentleman's time has expired.

Mr. AKIN. I thank you, Mr. Speaker. You've done an admiral job.

Thank you very much, Scott Tipton, from Colorado--a great new Congressman--and the very top of the evening to the rest of my colleagues.

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