Madam President, I come to the floor this evening--I have been talking about this subject for nearly the 3\1/2\ years I have been a Senator. And I will tell you why I think it is important. We have grown the Federal Government to a level…
Madam President, I come to the floor this evening--I have been talking about this subject for nearly the 3\1/2\ years I have been a Senator. And I will tell you why I think it is important.
We have grown the Federal Government to a level where all the people who look to it, where they are dependent upon it, try to work with it, need to know honestly where this all ends up if we do not change the trajectory.
I think the easiest way to understand how we have gotten to where we are now is to look to what we used to do in the past.
The country was never founded upon the principles that you borrow money to consume it. Any household, any local or State government knows you can't be successful doing that.
Money should only be borrowed if you are going to invest it or get a tangible return on it; even maybe an intangible one, when you look at investing in education or something like that.
But there has been no system that has ever worked that ends up borrowing money from the future, from its kids and grandkids, to where that is a good business plan. You get immediately derailed in the real world. Imagine in a household, if you take in money and you spend 20 percent more than whatever that is, you will go to a financial counselor. They may get you out of trouble. You keep doing it, you end up in bankruptcy court.
Businesses have the rigor of competition in addition to earning revenues, balancing their own budgets, and being able to invest into the future.
If you follow principles that work everywhere else, it can work here, too, and we owe it to the American public. Like I said earlier, so many look to this place to be their partner in some fashion, and it ought to be one that is going to be there in the future.
Let's look where we have come.
From the founding of the country, we raise revenues, generally, on the basis of need. You would go into debt; you would pay it off.
If you look at 1920, World War I--it is way over here--you borrowed money, defend the country, save others, and you paid it off.
Look what happened during the Great Depression, World War II. That is the deepest we have ever been in debt until we just eclipsed it recently. That is generally measured by how much debt you have as a percentage of your GDP--Great Depression; World War II.
Look where we went after that.
We were savers. We were investors then. We weren't consumers and spenders by nature, and we especially didn't do it through the Federal Government. We kept our debt in check. Even through the great recession, which occurred 2008, 2009, you were starting to see problems crop up. That happened when we put two wars on a credit card.
Like the other side of the aisle said: Well, if you are going to do that, there are a lot of needs in our own country, and certainly there are, from healthcare, education, across the spectrum--Social Security, Medicare.
Look what has happened since then. We have gone from being in relatively good shape pre-Gulf war, Afghanistan. We borrowed that money and then ran into the great recession and spent what
seems like very little compared to how significant that was--$800 to $900 billion.
And from that time to the present, I think we just said: We are borrowing money, and we might as well do more. And then you start doing it for things that don't make sense.
I got here 3\1/2\ years ago, 18 trillion in debt. We were just approaching the percentage coming out of World War II. Here. We have now passed that and doubling down and going way beyond that.
We are now, here, after the pandemic, where we spent close to $4 trillion in 2020--a lot of it out of uncertainty. We didn't know much about it. We should have treated that with respect. We now know a lot about it, and we probably didn't need to shut the economy down, which cost us a lot, but we are through it. We certainly shouldn't have doubled down and spent another 3 trillion in 2021.
I am not going to go over--you hear it on the news, you see it. We have got inflation embedded in the economy currently. The last time this occurred, back in the late seventies and the early eighties, when inflation peaked around 10 or 11 percent, it took 5 years to get it back to 2 percent, where we were pre-COVID. We can expect probably something similar. We don't know.
The big difference between now and then is we have got a lot more debt, especially in government, so it is going to be trickier.
So how do we get out of it?
Well, unless we turn the tide, unless we start doing things differently, Medicare, which isn't even being addressed here, has completely depleted its trust fund in about 4\1/2\ or 5 years-- automatic benefit cuts when that occurs.
Social Security, which has been around since the Depression paying into it, that is depleted in about 10 years.
Those are two large trust funds that will have no balance in them, and then you would have to borrow even more money to pay the benefits.
Let's show a comparison of where we stack up now with other major economies.
Look at that. We have known for a long time Japan, which is the third largest economy, has struggled to figure out how it is going to grow, how it is going to do for future generations what it has done since World War II. It has taken debt to where it is a stranglehold on its economy. Its debt is 237 percent of its GDP.
Now look who is in second place, and this isn't something you want to be in second place on--United States. Our debt currently is 107 percent of our GDP.
India, Germany, China--China, our main geopolitical competitor, under half of the sovereign debt as a percentage of its GDP. That is not a good place to be. They are our geopolitical competitor, and I sense they know that you need to be savers and investors if you are going to be successful in the future, if you are going to give your people what they are going to need out of a government.
Financially, we are going to be up against them, and they, to me, look like they are doing a lot of things that someday pivot to where we are caught by surprise, and then you don't have the options. We start increasing to be more indebted than what we are, it will be even harder to compete with somebody like them.
We now have a 9.1-percent inflation rate. That is a pay cut for everyone. We now know, I think, what caused it. We need to just quit digging the hole deeper. Let's get out of it. Let's go back to what we know was working, at least financially, pre-COVID. We had no inflation, nominal that is built into what is considered zero inflation, wages rising in the toughest places, and a growth rate that was better than what we had before, close to 3 percent.
We need to start spending less through government, return the productive capacity back to the private sector, and then look at--once we get the ship righted here--what we do better policywise. I am a believer. We need to fix healthcare; it is a broken system. It drives our structural deficits more than anything. Medicare each year--like Warren Buffett says, healthcare in general is a tapeworm on the economy.
What I want to do is face reality. Regardless of the tax rate, over 50 years, we average about 17\1/2\ percent of our GDP in Federal Government revenues. If that is all you can get, regardless if you have high tax rates that gives you a lower economic growth or lower tax rates that maybe gives you a percent or more in economic growth, we need to acknowledge it.
My plan does two simple things: acknowledges what our revenue has been over 50 years--17\1/2\ percent of our GDP--tapers what we spend into it, takes what we have done here as a maneuver to escape budgeting and appropriating by putting spending on mandatory versus discretionary, which is nothing other than saying: I don't want to budget. I don't want to allocate resources. We are just going to do more each year.
If we keep doing it, we are not going to be able to fund the programs that we all consider important.
So it acknowledges a reasonable revenue level. It moves 375 billion that used to be discretionary that is now mandatory back to discretionary. And then it is going to be up to all of us, as stewards of the Federal Government, to see how we are going to make the right decisions to take that amount and get it down to where we cut it out of the budget.
That would put us, in 10 years, in primary balance, meaning that the only thing that contributes to our deficit is our interest. It would clearly show, too, how the big drivers of our current deficit-- Medicare, Social Security, Medicaid, other mandatory spending features--are driving it.
And, yes, if we want to get to a real balanced budget that covers your interest, you would have to actually find ways to do the same things with less money.
Defense is always a topic on my side of the aisle. This spends on defense--arguably the most important thing we need to do as a Federal Government. I think there is a lot of bipartisan interest in defending our country and financing it accordingly. This spends on defense above the CBO line and gets its numbers from the Senate Armed Services Committee, plugs it in.
It is going to be more robust there than what the CBO has by a little bit because I am a believer that what has driven this issue over the long run is what I call the unholy alliance. Folks on my side, whatever it takes, will spend it on defense. I said it is the most important thing we do. Medicare, Social Security, Medicaid--those are important too. They are going broke over time. So we need to work on all of that to rein it in. But defense, the most important thing, is going to be at a level that keeps us secure.
If we don't exercise fiscal restraint, if we don't make the tough decisions that everybody does in running their own budgets, whether it is in a business, a local or State government or even a household, it is going to be a hard landing someday that none of us will like.
A lot of what is about running anything successfully is having a good plan. I don't think our plan makes sense for the future.
But the other component--and I will never forget the first budget meeting I was in here. One of the Senators said: Mike, the reason this keeps coming back and back is we do not have political will.
And whether it is political will that you need to make things work here, whether it is determination, whatever you want to call it--it is the marketplace when you run a business, it is a balanced budget amendment in statute when you have got a State government--there has got to be more discipline.
Let's put that last chart up here.
And I want to re-emphasize, because I got some on my side that think we are not being robust enough on defense. We just looked at that chart where it is the most robust. But I want to go back to this one again. This one says it all. Look at where we have come from where the ``greatest generation'' left us. Remember, they paid off the debt from World War II and built the Interstate Highway System--to where we are now in literally 40 years.
That is shameful.
All I am saying is, my budget makes it to where we have got 10 years. We don't even have to cover the interest, but we need to bring it back into what is called primary balance.
I would hope we have some friends on the other side of the aisle that see that this makes sense, because we will need it for their priorities. All I can tell you
is, if we have to remediate this by running the system into the ditch, it will be a lot harder of a proposition to get it back to where it was when the greatest generation left us in good shape.
I yield the floor.