Official Congressional Record
Mr. Speaker, let's try something I have never done before, but I also need to sort of lock something down. Mr. Speaker, if there is anyone from your staff watching--and we said we would make it public-- my team and myself were made a promise today that when we get back we are going to sit down with a couple of the committee chairs and some of my joint economic economists because we have been sitting on pieces of legislation for over a year to cut spending and borrowing, without removing services. There will be lobbyists who will yell and scream. There will be activists who make their money. Mr. Speaker pro tempore, over and over and over around here, we spent the last few months--as a matter of fact, I came behind this microphone probably half a dozen times talking about waste and fraud and walking through all the things we found. How many bills have we moved through here that actually take those things on? Turns out it is harder than you think because the fraud, as it turns out, it is fairly easy to identify. It is a little hard to stop. Often, it is money that has already gone out the door, so we have to hunt someone down, try to collect the money, and put someone in jail. When you hear the term ``waste,'' it is often our fault. We designed a program that has leakage, or certain companies have found ways to take advantage of it, certain bureaucracies. I will give you a simple example. This is going to make sense in a moment. In New York City, in the last 5 years the number one job creator turns out to be a Medicaid program for home visiting. Think of that. The number one job creator for half a decade in New York City is a Medicaid program. Even when the leftist Democrat Governor of New York says, yeah, it is fraud, maybe we could do something together. We have worked over and over and over to try to write bills. Many of them are very uncomfortable because they are complex. They require changing things in what we call entitlements. They are moral, and they are necessary. I hope I am not a fool. One year ago, when we actually did part of the One Big Beautiful Bill Act, the Family Tax Cut Act, yes, we had an obligation to extend the tax policy and do some of the pro-growth things. When we came back, many of us thought we had negotiated an agreement that when we did the second reconciliation bill, we were going to start to save the future of this country, save the future of the economy, convince the bond market we weren't going to continue to borrow ourselves into oblivion. It turns out--and this isn't solely the Speaker's fault--it was really hard to convince a lot of our Members how difficult it is to go home and tell the truth about math. Mr. Speaker, if your staff is out there listening, I expect you and this institution to keep your promise to our team, that we are going to take these bills seriously, we are going to bring in the leadership from the committees, and we are going to pound it out how we move them forward. There is a reason--I am sorry, I don't mean to sound like a melodramatic jerk. How many of you get our daily debt? The Joint Economic Committee actually built a system where every single day, every workday, we reach into the Treasury's management system where they have these charts and graphs, and we capture what was borrowed today, what was brought to market today, and what was sold today. Who in this room, the handful of us who are here and hopefully the thousand televisions we are on, understand over the last 12 months--if I do the last 12 months average, $93,763 is what we are borrowing every second. Every second, we are borrowing over $93,000. I understand some of these numbers bounce up and down because we also had some refunding issues after the last debt ceiling issue a year ago, but in the last 12 months, we, as a government, have borrowed $2.948 trillion if you just want to do this fiscal year. Here is the publicly sold debt, and over here is the money we borrow from the trust funds, which we do pay interest back. We have to intellectually be honest: It is borrowing. Often we quote what we borrowed from the public because that is in the public bond market, but when we borrow from the trust funds--Social Security, Medicare, railroad, retirement, everything else. We pay an interest. We owe it back. We are now at $2.022 trillion in borrowing this fiscal year. This total year, the original projections were $1.6 trillion, $1.7 trillion. We are heading to borrowing $2.3 trillion. I know it is hard to see 12 zeros. I know no one cares, but just understand, this is really crappy. Maybe we all understand this number. At the current rate of total borrowing--remember, net borrowing is borrowing from the public. Gross borrowing is borrowing from the public and from the trust funds. Anyone want to take a guess how many days it takes us to borrow another trillion dollars? It is 123 days. Every 123 days, we are ticking off another trillion dollars. Total U.S. debt as of today is $39.660 trillion. By the end of this summer work period, whatever we want to call it, we are going to be at $40 trillion. Doesn't this make anyone pucker up, or is the joke that is often said here, never near a microphone because we would be an idiot to say in front of a microphone, no one ever gets unelected by spending too much money because the public wants it. In 6 years, when you are on Social Security and you are getting a 22 to 24 percent cut in your check, and we double poverty of seniors, 7 years from now when we double the number of baby boomers who live on the street, maybe some of this will make sense, that we should have done something much sooner, but math is math. Mr. Speaker, one of the reasons I am a little exercised this week-- and you have been in conference with those things. I accept I have been a bit of a jerk. I am just trying to find some way to be heard. I have been doing the same damn thing behind this microphone for 15 years, and it has only gotten worse. Something is wrong when--I am number four in Ways and Means. I chair Oversight in Ways and Means. I chair the Joint Economic Committee. We have a handful of Ph.D. economists who are just smart, yet I walk into a room of my brothers and sisters, Democrats, even Republicans, with my charts and almost get booed because we don't want to hear it. We are going to bring down this Republic, and it is not going to be some mob coming over the border. It is going to be our own fiscal insanity. Remember, in about 25, 26 months, the majority of our spending, not tax collection, spending, will go to our brothers and sisters who are 65 and up. We are functionally an insurance company with an Army. Last year, for every dollar we took in taxes, we spent $1.43. If you do the basic math, and forgive me, I did this off the top of my head. If I make a mistake, send me an angry text like everyone else. I think right now, so far this fiscal year, for every dollar we are taking in, we are spending $1.47. I am sorry the staff has to sit here and hear an idiot like me constantly coming back up behind this microphone and saying the same thing week after week, but what do we do to cut through? I am going to show a couple boards here. If you are the public and run into a Member of Congress or someone running for Congress, look at them and don't say, what more are you going to give me? I want more money. Ask them, how are you going to save the country? Because about a week ago, our team met with, I think it was the Penn Wharton Budget Model, and the paperwork and the discussion I had with them after, I walked out of the room and my stomach hurt. They had numbers where in 14 years we hit a wall. They had numbers saying 12 to 14 years--I am going to show you that I have it even sooner on some of our data--interest is the number one expense of this government. It surpasses Social Security. There was a discussion if we go with current policy--and we are going to talk about that, current policy, not current law, because this is the scam we keep doing here. We keep extending our spending and extending these things. The current policy in 14 years, the United States actually can't sell any more bonds. We have hit the wall. We hit a debt spiral. I have been here 16 years. All right. Let's do this. Let's run through these boards. Everyone has seen this over and over because, traditionally, I start with this one. This is just the pie chart. If you see what is in blue, that is what I, as a Member of Congress, typically get to vote on. Do you see the red? That is actually on autopilot. I need you to understand Social Security is the number one spend. Interest is the number two spend. Medicare is the number three spend. Medicaid and the ObamaCare subsidies are the number four spend. Defense is number five. How many times do we get liberals saying if we just cut defense, we will balance everything? No. Interest will be bigger than all of defense this year. It is not that hard. When we talk about these reconciliation bills, and now we are talking about possibly doing a fourth one, and that is what I am banking my sanity on is most of this red--now, you don't get to do anything on interest. Interest we owe. Remember, this is net interest. Gross interest is actually closer to like--sorry. We will be close to $1.280 trillion because we owe the interest back to the trust funds. The other parts here are what we call mandatory. We owe Medicare. We made a deal. We owe Social Security. We made a deal. Does that mean we can't do things to revolutionize the cost of healthcare and Medicare and make it more accessible, more efficient, more price effective? When we think, we actually will spend $350 billion over the next 10 years in duplicative MRI scans, X-rays, ultrasounds, CTs. How about this crazy idea of: Hey, I got a scan. Put it on your phone so when you go to your next doctor, they hit the button and it is there on the screen. There will be an army of lobbyists who work for companies that make money on the duplicative scans, and they will fight us and embarrass us. Maybe they will hire social media stars. I tried do a reform and a fix on some of the things we saw from the MedPAC report where it was costing us hundreds of billions of dollars of waste, not fraud. The Department of Justice may actually have an opinion on this one. It was on Medicare part C. We call it Medicare Advantage. The next day, some marketing firm defending one of the insurance companies was hiring social media stars to beat the crap out of me for talking about trying to fix the bleeding of Medicare Advantage. That is one of the reasons we get so cowed around here. We are trying to explain why we are trying to save these systems, and there is so much money in that waste. Part of that money goes to beat the crap out of us to stop us from reforming government. Let's actually walk through something, just a simple concept. A week or two ago, I did a presentation here showing you the academic literature and the things that our economists have worked on showing that government borrowing has made your mortgage one point higher. Today, when you go out and try to get a new 30-year loan and it is, what, 6.7 today, it would be 5.7 if we weren't grabbing so damn much money out of the marketplace. We are partially responsible, if not substantially responsible, for affordability in America. But when we go home and do a townhall or meetings, it is person after person that wants more money from us. Maybe Congress is just basically representing the interests of the public. They don't care about the bankruptcy, the stress, those things. Technically, governments don't go bankrupt, but basically what we are going to have to do is monetize this debt. Don't laugh at me. My wife and I are the same age. We have a 4-year- old boy. He was here a couple of weeks ago, cute as can be, just turned 4. For his fourth birthday, he wanted to go to work with Daddy. We need 104 percent of his lifetime earnings, every dime he will ever make in his life, plus another 4 percent, just to pay for Federal Government pensions: Social Security, Medicare, military. That is 104 percent. This is what we have done to our kids. Now, part of it is because we have so few children and so many of us that have gray hair. It is called baby boomers. It is just math. So I'm trying to explain a simple concept. We do more borrowing and spending, but we also have this thing called leakage. That is where we have misdesigned programs, and outsiders, businesses, insurance companies, bureaucracies have figured out how to bleed those programs because we screwed up on their design and haven't been willing to go back and turn around and fix them. We end up having to borrow more money. When we borrow more money, we push up interest rates. When we push up interest rates, we have just made everything less affordable. We have created this doom loop. The only way to break it is to convince those markets we are not just going to keep borrowing like crazy. Then we have these charts, and I keep trying to explain this. There is this concept--it is a big word--interest fragility. Interest goes up, and it beats the ever living crap out of us. Think about what has happened today. Today, I believe the 10-year bond closed at 4.65, 4.67. It is functioning at pretty close to the highest it has been in a year and some of the highest it has been in many years. Let's play a game here. Let's assume that it is 60 basis points, 70 basis points higher than the average we were having before. Remember, you are going to keep having people say: Well, the reason the interest rates are up is because of the war in Iran. They were ticking up before that because of the worldwide battle for capital. Other countries are also bingeing on debt. We have data centers and other things coming to market bingeing on debt. We are all competing with each other. Because when you borrow money, you are borrowing from the world's pool of savings. It could be your savings account, your pension, a family in China. We all put our moneys into our banks and savings institutions and investment institutions. That is what is referred to as the world's savings pool. Ray Dalio talks about this repeatedly. The problem is our need for the savings or the need for the borrowing is now starting to outstrip the world's excess capital. When that happens, interest rates go up. When you take a look at what we are doing right now, for the fun of it, let's just say it is only 60 basis points and it is over the next 10 years. Just that bond interest rate we have had recently over the last couple of months, it is $2 trillion of additional interest over the 10 years. It is called interest fragility, little bits of interest increases, and you are basically borrowing $40 trillion. That little bit kicks us in the head, and that is how you start to head toward that interest debt spiral. Let's actually dig into this: 30-year Treasury yields are approaching their longest stretch above 5 percent since 2007. It is here. It is not some theory of mine. You know, Schweikert is an idiot. He is going to talk about interest fragility. No one cares. Ta-da, it is here. I can show you some interest rate future contracts out there. Jamie Dimon, I think it was yesterday--and I am reading a third-party article--is basically saying he would not buy long-term U.S. debt, the tens, twenties, thirties. Should that tell us something? Because expectation is interest rates are going to go up, because when interest rates go up, the existing bond crashes in value. You have got to understand. It is here. It has begun. If we as a body don't start to convince the bond market that we are starting to get control of our ravenous borrowing, that bond market is going to run this country. Because--what was it--Carville basically said in the nineties, talked about how the bond market basically shaped policy. Our debt is dramatically bigger today, and our competition for borrowing--how do I put this? Mr. Speaker, how many of us believe the United States is the most creditworthy country in the world? We have the most liquidity in the markets. We are the reserve currency, though we are starting to lose that because of the way we treat our currency and the way we borrow. When Greece, Spain, and these sorts of countries can sell a 10-year bond cheaper than the United States--Greece can sell it substantially less expensive. So can Spain. When Italy can sell a 10-year bond cheaper than the United States, should we start to worry? Last I looked on one of my industrialized countries list we were like number 13 on the credit stack. You have got to understand what is going on here. This is one of the ones that just stresses me out. Maybe I shouldn't drink so much coffee, and maybe I should double up on my hypertension medicine. But outside of that, let's take a look here: Gross interest will surpass Social Security in 2037. This is 10 budget years from now. Our math is now saying--now, when we say gross interest, that is the interest we are paying back to Social Security, Medicare, all of the trust funds, and what we have to sell to the public. This is baseline policy, not current law, baseline policies. We have been doing it. I need you to think about something. This is with no wars. This is with no pandemics. This is with no disasters. In functionally 10 years interest is our number one expense of the United States Government. Someone out there help me have the language to move people's hearts and their intellects. This is terrifying. I know we are not supposed to tell our voters this because we are supposed to happy-talk about how much more we are going to give them. In 6 years and 2 months, the Medicare trust fund is gone. If you are in healthcare, your hospital is getting a 12 percent cut. How many are going to get to see their doctor at that hospital? During that time, the spend on Medicare goes from $1 trillion to $2 trillion. It is demographics. One or two more boards and then you will be rid of me. More than 30 percent of the Federal revenues will go towards interest in 9 budget years. We have actually done a stressor on this. So the math right now--and this is sort of baseline policy--in 9 budget years, you pay a dollar of taxes, and 31 cents of that--so this is all taxes. This isn't just income tax. It is not just tariffs. It is all taxes, and 31 cents of that dollar--and in my model because I had a couple of other stressors and slightly higher interest rates built in, but this was using the CBO baseline interest rates, which were already above, it was 33 percent. Are you ready in 9 budget years to have 30 to 33 cents out of every dollar just paying interest? This isn't crazy. This is actually already in our numbers. It is just that no one dives into them and digs through and goes, oh, dear Heaven, how could this be our country? We are going to avoid actually having the conversation until we get back and the Speaker will keep his promise to our team that have been working on this for a couple of years now of optionality. Yes, it will drive the lobbyists insane. It will drive some of the groups insane and some of the bureaucracies insane because they don't give a damn about the future of this country. What they care about is their current paycheck. I am going to save the future of this country, or at least give it one more shot before I leave here. These two are really, really important and absolutely dystopian, and I know it is hard to read. Interest costs are projected to eventually consume more than half of all revenues. Not tax revenues, not income tax. All revenues. But here is the punch line. I know this chart is a little hard to read, so I don't know if the camera can pick it up. When we are saying the 50 percent, it is just the red baseline. If interest rates were to go up to 5.2 percent--Mr. Speaker, what is the 30-year bond at right now? It is pretty much at 5.2 percent. I know that is not our blended rate, but you see the elevation. At current interest rate models, which is actually at 4.2 percent-- which I believe we are now well above because the 2-year is at 4.2 percent. Functionally, let's take a look here, and it looks like by about 2041, which sounds like a long time--it is about to become the 2027 budget year. It is not that long from here--it is half of all revenue. If interest rates go up, this is actually the collapse of your Republic because you will owe more interest than every tax receipt, every tariff, every corporate tax that everything we sell can produce. The interest load takes us over. It is called the death spiral, and we are not that far away. Some of this starts to hit where you are hitting 80 percent, 90 percent in 14 years from now. You have to understand that those higher interest rates actually just brutalize us as a country. Mr. Speaker, and to the team, last board. I do wish you were allowed to applause and be happy for these things. This is Federal interest costs under various interest rate scenarios. Look, this is a little more the way--if you and I were playing economists, we actually don't do dollar amounts. We do percentages of GDP because the GDP can grow. But often it is inflation so when we actually start to look at the actual numbers, we actually, right now, estimate this year's borrowing--now, think of this. The Treasury Secretary, the Budget Director, our own budget team, we all said that we are going to--actually, hundreds of us, I think, actually cosponsored a piece of legislation. We are going to only borrow 3 percent of GDP because we are going to grow at 3 percent of GDP, except we have a problem. As of today, interest is at 3.1 percent to 3.2 percent of GDP--not borrowing. Interest is already over that target. Does anyone pay attention to the actual math, or do we just tell each other stories? But when you start to see the gradual interest rates, we are actually starting to hit a world where I am believing a model where a decade from now, we could be having 11 percent of the entire economy just be interest. Remember, CBO's numbers from the beginning of the year--and the numbers are worse today--had us, in 9 budget years, total borrowing in 2036 being $3.1 trillion, $2.1 trillion of that just being interest, and the math is worse today. We are not going to pay it off, but we can stabilize it. By stabilizing it, the growth of the economy, those things, we have to get through the baby boomers. It is just math. It is not personal. I am not saying something to hurt someone's feelings. It is math, and I know Congress and much of our politics now are a math-free, fact-free zone. The bond market will live in facts, and, eventually, it is going to kick us in the head unless we can do some tough things to convince it that we are creditworthy. Mr. Speaker, I am yielding back because I think I used my half hour. I apologize if I hurt someone's feelings. Please send me a note. I already have prewritten apology notes. Mr. Speaker, I yield back the balance of my time.
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