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Solving Our Fiscal Problems

Floor Speech

Location: Washington, DC

Mr. RIBBLE. Mr. Speaker, I come tonight to talk a little bit about our Nation's fiscal problems and work that the supercommittee is going to be doing, and I want to challenge them to think big, go big and try to solve our problems.

Over the next decade, the Federal Government is projected to spend more than $43 trillion. If the supercommittee only cuts $1.2 trillion, as required by the Budget Control Act, we reduce Federal spending by only 2.7 percent. If the supercommittee would go big and agree to cut $4 trillion over 10 years, we are still only cutting the Federal budget by 9.1 percent.

Mr. Speaker, we can do better, and we must do better. We cannot continue to spend our Nation's future away. My children, my grandchildren deserve so much better and so much more.

I'm proud tonight to stand here with one of my colleagues, the gentleman from Oregon, to have a discussion tonight about this very issue. Republicans and Democrats alike, we believe that we must do more, be more and be better for the next generation of Americans.

With that, I would like to yield some time to my colleague from Oregon.

Mr. SCHRADER. Thank you very much. I really appreciate the opportunity to be here on the floor doing a colloquy with a Republican colleague of mine. That's not common these days. Perhaps in the not-too-distant past it was more common, but I think it shows that there's an opportunity for actually good big-picture agreements on what we need to do in general, although we may disagree on some of the particulars.

I'd like to point out some of the real problems that my colleague from Wisconsin alluded to. First and foremost, I have got a chart here that talks about the amount of money we're actually borrowing to make our payments in this country. He's right, we're spending way too much. We're spending almost $3.6 trillion. Our revenue's only about $2.2 trillion. We're borrowing almost 40 percent of what we spend.

You can't do that in your household, folks. You can't do that in your small business, and we shouldn't be doing that and can't do that as the greatest Nation on Earth and keep our fiscal balance sheets in play. Right now our debt is almost up to $15 trillion, and our deficit has been stuck at $1.3 trillion for the last 3 years.

The projections are even worse. I would like to show a chart that shows the long-term projections, given the current rate of spending at our level of revenues, which are quite low at this point in time.

It's a little bit busy, but there's a grayer portion down below you can see that talks about the actual current law budget. That's the stuff that my friend in Wisconsin and I have to budget to that the Congressional Budget Office puts out.

But the real budget is what the Committee for a Responsible Federal Budget talks about. That's the real long-term debt that we're dealing with. That assumes, unlike the current law budget, that we're not going to eliminate all the tax breaks to middle class Americans, different corporations. It assumes that we're not going to have docs have to pony up a 30 percent cut in their wages to make ends meet, and it also assumes that we're going to do something to keep the alternative minimum tax from affecting middle class Americans.

I would also like to point out that this is not a good picture. You look at what's happened historically, we're in a really bad situation at this point in time and there are some pretty big historical drivers to this.

I'd like to switch to a different chart. This chart shows historically where our revenues and our spending have been. The top line here is our spending; this lacquer line down below is our revenues. They have been a little out of whack forever.

Only during the years when we had a Democrat President and a Republican Congress were they back in good shape. That was just 15 years ago.

But you can see that we historically have had our revenues probably in the 18 to 18.5 percent range and our expenditures in the 20 percent range, not great, but we're worse now. We're at 25 percent and spending and only 14 or 15 percent in revenues, to emphasize the point my colleague from Wisconsin made. So we've got to really work at getting this stuff back under control, or we're not going to be where we need to be.

I'd point out real quick that to that point, we're actually giving away almost a trillion dollars in tax breaks. And I think my colleague has some good points he's going to make in a moment on that. And we've got to get this Tax Code under control.

As a small businessman, you can't possibly do your own tax; you can't even come close. When I started my veterinary business way back when--I'm not going to say how old I was, my friend--but I could actually do my own taxes. That's impossible these days. That's impossible, and it shouldn't be that Byzantine.

The other piece of the problem here is the entitlement system. People don't want to admit this, particularly people on my side of the aisle, but we're going broke here in the Medicare system. The bottom blue is Social Security. Medicaid and other health expenditures is the green. And Medicare is up at the top there.

And here's our revenue line. We're busting through with Medicare. That's not because of malfeasance. Yeah, there's some waste, fraud and abuse that we have got to get under control, and I'm sure we can get it under control.

But there are some simple economics here. In 1960, there were five workers for every one beneficiary.
Right now there are only three workers for every beneficiary; and in 2035, there will be two workers for every beneficiary--less money in to take care of more folks. Back in 1975, we had about 25 million beneficiaries, I believe. Now it is almost 89 million beneficiaries. And the cost per Medicare recipient has gone through the roof. We are living longer, hopefully living healthier lives. In 1975, we spent about $2,000 per Medicare enrollee. That's hard to believe in this day and age. Now it's $18,000.

So more people, more expensive care, which is good quality care, and frankly fewer workers to provide for the benefits adds up to this huge growth in spending that will be facing us over the next few years unless we get our act together at this point in time.

Mr. RIBBLE. I thank the gentleman, and I appreciate the slides and the discussion. Our country is facing a demographics problem. Right now our birth rate is getting close to replacement levels, and the circumstance that my colleague just showed with Medicare and Social Security spending outstripping our ability to pay is in part because of this: we have a declining population and will have.

I have a grandson who is 8 years old today; and when he reaches age 65, nearly 47 percent of the U.S. population will be age 65 or older. And so this problem if we don't address it soon will simply get worse. And so the sooner we get at it, the better.

We need to take a look at all areas of spending, and we also need to take a look at revenue. My colleague just mentioned the need for tax reform, and I couldn't agree more. Our tax system is notoriously complex, forcing families and employers to spend over 6 billion hours and over $160 billion a year trying to negotiate our Tax Code. Comparatively, the U.S. spends $50 billion to $60 billion per year on pharmaceutical R&D which has the potential to save lives.

I'd like to show the American people this is what our Tax Code looks like. It is over 9,000 pages long of fine print, and no one can really understand it. I want to compare it to something else because I think this is salient. This is the United States Constitution. When our Founders founded our country, they were able to print this on about 30 pages right here. And yet today, our Tax Code is almost 10,000 pages. And inside this document are myriad ways that businesses and individuals can find loopholes, places to hide, and places to basically kind of dictate how they can apply their taxes and how taxes are applied to them. We need to simplify the Tax Code for sure.

I would challenge the committee as they look at ways to consider removing loopholes, removing tax deductions, and simplifying this Tax Code so that we can have a Tax Code that is fairer, simpler, and easier for the American people, the idea that we are spending billions of hours to do tax returns.

Take, for instance, my own small business. During my career, I had C corporations and S corporations and LLC corporations, but I chose to operate those corporations as pass-throughs. We would pass the profits of those corporations through to me as the shareholder and through to our employees, and we would pay those taxes at a personal level. And so it's easy to say, well, let's just change the Tax Code for businesses. But if we don't change the Tax Code for every American to make it fairer, simpler and easier to comply with, we really don't get at the problem.

I also want to talk a little bit about identifying the problem correctly, because I think sometimes here in Washington, D.C. we might connect the dots, but we don't often connect the right dots. Let me show you a slide that talks about consumer spending. I think the idea is if we discuss consumer spending, most Americans would say that consumer spending goes down during recessions and therefore we should come up with some type of tax reform, give a $200 tax credit or 2 percent tax credit so we can boost consumer spending to get our economy going again.

But if we look at it historically, each of the dark lines here represents recessions that our country has faced. In the very last recession, we had a very modest drop in consumer spending, but if we feel that we have identified the problem in consumer spending, this chart shows that consumer spending is not the problem. It's not the problem. Now, did it drop a little bit? Sure. It dropped back a year and a half or 2 years' time, but it didn't drop much. So if we just try to fix that--in fact, consumer spending today is up higher than it was during the recession. So if we continually tell ourselves that consumer spending is the problem and we try to fix it, we are not really identifying what the real problem is.

We need to remember what put us into this mess, and it was really a housing crisis. And, in fact, housing has not come back at all. Anything that we look at as far as trying to fix our economy, spurring job growth, I believe we need to take a look at our Tax Code. We need to take a look at the regulatory environment. We need to take a look at energy policy. We need to take a look at home construction.

Those types of things will help spur economic growth. Those are the types of things that we need to focus on that will actually begin to change the dynamics of the U.S. economy again.

I'll turn it back to my colleague.

Mr. SCHRADER. I thank you. Yes, we need to get this economy going again. The bottom line, while everyone is looking for a magic wand from Washington, DC, private enterprise is the real engine of economic growth. My colleague has talked about that and has a chart that will demonstrate that.

The point being here that it's going to take a huge lift and a huge push by this committee to go way beyond what anyone has ever considered in the past. I mean, I would like to remind America we already passed this Budget Control Act in August that set some targets for our domestic and defense discretionary spending, but that's only a third of our budget. Two-thirds of our budget is the mandatory payments, some of the entitlement programs that I pointed out a minute ago, as well as ag payments and other income stream payments for special groups. We've got to get our mandatory payments under control to make sure that we get on a trajectory that's going to make a difference.

A lot of people say let's just cut defense or get rid of the Department of Education. I'm not sure that I agree with all of those ideas out there. Certainly we could reduce in both of those Departments; that's a good idea. But what I have to point out is our current deficit is $1.3 trillion. That's more than the combined budget of the defense and domestic discretionary programs. So you have to get at the long-term programs and the revenue issues that my colleague and I are talking about to actually put this country on a different trajectory.

How do you get that business to start investing? How do you get private enterprise to be part of the engine of economic growth? Well, we may agree or disagree on the floor here. There are a lot of different ways; you've seen that in Congress this past year. But I would point out to my colleagues that at the end of the day, it was Republicans and Democrats that passed the CR, the continuing resolution, for 2011. It was Democrats and Republicans that voted to put the Budget Control Act in place, and it was Democrats and Republicans that voted to make sure that the 2012 budget came out the way it was.

So while I think the rest of the world thanks the media and looks at us as huge failures, and certainly we could do better, at the end of the day when the chips are down, maybe at the last minute, we seem to be delivering. And it's up to the supercommittee to do the same.

Right now they're charged with only coming up with another--``only,'' I say, relative terms--as a small business man, I can't believe I'm saying this, Reid, but only $1.2 trillion or $1.5 trillion. That's a hunk of money. But to solve this problem, according to the credit agencies, top economists in this country, think tanks and working groups from Simpson-Bowles, Rivlin-Domenici, Congressman Ryan's work, they've all indicated we have to do much more than that to change the trajectory of our country's financial future; and that's getting close to a $4 trillion change overall.

We made a down payment. The committee is charged for doing only 1.2 or 1.5, but that's not enough. They have to double up their charge to get to at least $4 trillion or more in savings and revenues to close that gap.

Right now we can argue--we probably have different opinions about where we want to be as far as how much debt we should hold, what's the right amount of deficit on an annual basis, but a lot of folks think if we get our debt down to 60 percent of GDP in the near term, going more later on without harming the recovery is the main question there, and also get our deficits down to 3 percent of GDP on an annual basis, that we will be in a much better spot, a spot where we will not get our credit downgraded by Moody's and Standard & Poor's and all these guys.

So we have a lot of work to do, I think. And this committee is going to have to really go way beyond the natural divisions. This is not a simple exercise. Everybody's cut is someone else's sacred program. If I had a big defense base in my district, I would probably look at the Department of Defense a little bit differently. But I do think there's some opportunities in contracting and weapons procurement. I want to protect the men and women on the ground just like my colleague from Wisconsin does. But this is not enough. We have to look at the bigger cost drivers. And that's in our revenue system that's terribly broken.

I'd point out another idea that's out there that I happen to subscribe to--it seems to get some horsepower in my town halls--is the Bowles-Simpson approach to tax reform. What they do is talk about changing the tax rates and the tax breaks. They get rid of all the tax breaks. That's a scary thought. We'd have a lot of people with lifetime employment trying to get those back, wouldn't we? Get rid of all those tax breaks and reduce everyone's tax rates. We give away so much in revenue that we can reduce the tax rates for every single income bracket and still put money on the table to pay down on our debt and maybe keep a couple of programs alive.

Their proposal reduces on average the low-income tax rates from about 15 to 8 percent; the middle class from about 22 down to about 15 or so percent; and the higher income and corporate income taxes from about 36 to 39 percent down to about 28, somewhere in that range. If we went to a territorial tax system along with the individual changes--because I agree with my colleague you have to do individual and corporate together or it doesn't work for the reasons he talked about with an S corporation. I'm a small businessman, too, and I got taxed on stuff that I was paying principal on, that I was investing in. I didn't see it at my dinner table or in my personal bank account.

So we've got to really fix the system. That's a great way to go. I guess I wouldn't advocate getting rid of all the tax breaks you probably had some defined amount in. But not a trillion dollars. Maybe something that goes away after 10 years. We pick things that actually make America more competitive, put us on an economic trend where we need to grow, and actually can grow, businesses and get businesses to make that investment that they're holding off on at this stage of the game.

Mr. RIBBLE. Let's talk a little bit about that investment. I think the idea here is we often think that the investment has to come from Washington, DC. But the key to reducing unemployment is restoring private investment, as this chart shows. Every single time that private investment goes down, unemployment rises. Private investment goes down, unemployment rises. And there is a key linchpin to our economy, and it's related to private investment. Companies like mine and like my colleague from Oregon, his company.

If we don't modify the tax code, if we don't fix the regulatory environment where there's so much uncertainty, if we don't address these things, then businesses are afraid and fearful to invest. And right now that's exactly what we're seeing in the U.S. economy. There's more money sitting on the sidelines than ever. We hear about it every single day. And that fear factor is keeping our economy from moving forward. And without private investment, it's difficult to drive unemployment levels lower. And we need to drive unemployment levels lower as quickly and as in fast order as we possibly can to put Americans back to work.

I agree also with your comments about the spending habits and how we have to address the key drivers of our debt, which include both the mandatory spending in entitlements like Medicare and Social Security as well as the large discretionary spending in defense. It isn't an either/or. It must be a both/and. Unfortunately, for some reason it's difficult for us to get there because every single Member represents a different district. The makeup of their districts are different. I come from a district that's very agricultural. So farm subsidies and discussions about agriculture, whether it's meat production, whether it's dairy and cheese production, or whether it's corn production, play into our Nation's deficit and debt.

And we know that the pie has to get smaller. And at some point we have to be honest with the American people, Mr. Speaker, that we must begin to reduce the size. And that means Federal largesse has to go down, and we must encourage private investment to spur economic growth and get this country moving again. But there are things that are also obstructing it, and that is the idea that sometimes we end up demonizing really great ideas, really good ideas, or even we demonize ideas that aren't so good. And I'll tell you, the way we speak to one another not just in this Chamber but in the media, how we talk to each other in our campaign commercials and what have you, I think destroys confidence. I think it hurts the system. I think it damages debate. I think it keeps good men and women from possibly running for an office like the one that I hold here. And we have to somehow, some way, find a way to begin to speak to each other like adults. The things that we teach our children when they go to kindergarten, we could learn here.

We have to learn to be able to listen with open ears and see each other in a different light, and begin to actually have solid debate about ideas without criticizing the person, without demonizing the individual, and without demonizing the idea. Let's instead open our debate, open our ears, open our eyes, and find solutions so that our children and grandchildren can have a brighter and more prosperous tomorrow.

It's part of the reason that my friend and colleague from Oregon and I came to the Chamber tonight, so that we could have the conversation and demonstrate to the American people that it is possible to treat each other with respect even when we have some disagreement. And I think we're trying to demonstrate that tonight.

Mr. SCHRADER. Will the gentleman yield?

Mr. RIBBLE. I yield to the gentleman from Oregon.

Mr. SCHRADER. I totally agree with the gentleman from Wisconsin. Far too often maybe I haven't done my duty and come down to the floor and spoke up with friends and colleagues across the aisle like we're doing here tonight. It gives the American people that watch C-SPAN or CNN or you name the show the idea that everyone is out here just for political gain and scoring their points. I think Wisconsin and Oregon folks can smell what is really honest discussion and what is just the talking points off the latest poll that you or I did last week. I think we've got to get past that.

When I go back home, people are more concerned about, just get along. They're past the point almost, except for the extremes, in criticizing me or the work here. They just want us to start to get along and do what the gentleman from Wisconsin is talking about--and that's work together and recognize that you're not going to get all your way, I'm not going to get all my way. Your ideas are as valid as mine, and me talking to you for another 20 days on the floor isn't going to convince you that your ideas are all worthless. And I've got to get over that. I've got to recognize the fact this is a big country. What's good in Wisconsin may not be perfect for Oregon or Texas or Miami or San Francisco or New York, but it has a valid point.

I think at this point in time it's ``put up or shut up'' time. This country is in a world of hurt not like I have ever seen in my lifetime. I hope never to see this again in my lifetime. I have got two young boys at home; one is out of a job, the other is trying to get a job. Just got out of college. I'm lucky my other kids actually have jobs right now. I thank the lucky stars.

But it's a tough, tough environment out there. We don't want to end up like Greece. I guess that's the poster child for America to look at in a negative way. Greece, right now their debt is 150 percent of GDP. That's 150 percent, folks. That country is imploding as we speak. The European Union is trying to help bail them out. Well, what is going on? Actually, right now, Greece is scaling back its pensions dramatically, increasing property taxes significantly, and cutting income tax exemptions by 40 percent. That should have happened a while ago.

Well, here's what they did a while ago. They already increased tax rates, raised excise taxes, and already had a reduction of 15 percent in public wages. This is going to be our country's future if we don't take the little steps now. They seem harsh, they seem tough. But as my colleague spoke very, very eloquently about, we've got to do some little things now. Everybody's ox has to be gored a little bit to be fair, but not so much that you end up throwing people out on the streets.

We can make our Medicare and Social Security programs stronger. We can have a tax code that's more friendly to small business and makes us more competitive internationally going forward. We just have to have the courage to step up and do that.

I, for one, am going to stand with my colleague from Wisconsin behind this supercommittee if they go big. If they just kick the can down the road by doing the $1.2 trillion minimal, what I need to do to get out of Dodge thing, I'm going to be critical. But if they actually are big and broad-thinking, realize their kids and their grandkids have a stake in this, and that the future of our country--we will end up a second-tier country. And that's not a dramatic statement. It is a fact. If we do not come up with a $4 trillion comprehensive approach overall, including the $900 billion we already put down, we will be downgraded significantly, I think, by every single major rating agency.

China's currency will look a lot more attractive potentially than the U.S. dollar. If it looks like America is headed the way of the European Union, businessmen and -women are not going to be wanting to invest in America. They're going to invest anywhere else--India, China, Brazil, maybe even Russia. That's not a prospect that I want for my kids' future or my country's future.

We have a lot at stake at this point in time. Failure is not an option. Failure is clearly not an option. I think we need to put aside partisanship, look at the big picture, and not poke each other in the eye.

Look at the Senate the other day; right? Do you remember that? Here the Senate, we're coming back from our work period, and the Senate has two interesting votes. On the surface, both pieces have merit. One was--in my opinion anyway--let's do a deal where we help schoolkids have teachers, make sure we have first responders, but the way they pay for that is they poke the other party in the eye by saying, well, we're going to have this millionaires' tax. That is political rhetoric, folks.

The next vote is a 3 percent withholding vote, which is part of the President's program to, frankly, get the onus of this potential tax off of businesses and contractors so they get back to working without having to pay the government money they don't have right now. But that's paid for with a 20 percent cut in domestic discretionary spending--poking the Democrats in the eye.

That's not what this country should be about. That's an example of how to do it wrong, scoring political points.

I'd like to think this next election--and, frankly, the future of this country--relies on people like my friend over here from Wisconsin that's willing to put that partisanship aside, look at the big picture, do what's right for the country, take the hits.

I'm getting hit back home on my discussions, the stuff we're talking about, but I'm explaining to folks--and maybe I'm lucky, coming from Oregon. Folks are actually willing to listen a little bit. But I think most Americans are willing to listen if you have smart people like my colleague from Wisconsin willing to lay it out for you where it just makes sense.

I thank my colleague.

Mr. RIBBLE. We have just a few minutes left. I want you to know that my colleague Mr. Schrader and I, together with Representative Rooney, sent a letter to the supercommittee, and I'd like to just read it to the American people:

``We write to you as a bipartisan group of Representatives from across the political spectrum in the belief that the success of your committee is vital to our country's future. We know that many in Washington and around the country do not believe we in Congress and those within your committee can successfully meet this challenge. We believe that we can and we must. To succeed, all options for mandatory discretionary spending and revenues must be on the table.

``In addition, we know from other bipartisan frameworks that have targeted some $4 trillion in deficit reduction is necessary to stabilize our debt as a share of the economy and to assure America's fiscal well-being.

``Our country needs our honest, bipartisan judgment and our political courage. Your committee has been given a unique opportunity and authority to act. We are prepared to support you in this effort.''

My colleague and I have backed and encouraged the supercommittee to go big, to look at $4 trillion of deficit reduction, 9.1 percent. We know we can do that. It does not necessarily have to be draconian, and I know that we can get there.

And for the last minute or so, my colleague from Oregon, any last comments?

Mr. SCHRADER. I just want to say it's a pleasure to be on the floor of the House of Representatives in the United States Congress with a friend and a colleague that's willing to put country first. And I think this is hopefully the beginning of a good relationship in this body and brings our country out of its worst fiscal crisis since the Great Depression.

Mr. RIBBLE. Mr. Speaker, I yield back the balance of my time.

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