Madam President, thank you very much for this time to speak. Before Dr. Coburn leaves the floor, I thank him for the kind things he just said. As to Tom Coburn and I--a lot of people say: Well, that is an unlikely duo who would end up…
Madam President, thank you very much for this time to speak.
Before Dr. Coburn leaves the floor, I thank him for the kind things he just said. As to Tom Coburn and I--a lot of people say: Well, that is an unlikely duo who would end up working together as much as we have and actually having the sense of trust and friendship. There are things people certainly find in me not to like, and the same is true of all of us. But I would say, there is nobody in the Senate who cares more about getting our deficits under control. He and Dick Durbin have shown terrific courage and leadership, along with others in this so-called Gang of 6, and also as members of the deficit commission, in trying to get us to a comprehensive, bipartisan solution as to how we rein in the budget deficit without destroying our economy, making sure we do not pierce the debt ceiling and have our financial world begin to crumble around us. So I very much appreciate what he said today. I heard most of it, not all of it. I have had a chance to work with him in a number of areas.
What we try to do, and Senator McCaskill--who is presiding at this moment--what she tries to do, along with others of us who serve on the Homeland Security and Governmental Affairs Committee, is we try to look in every nook and cranny of the Federal Government. Whether it is defense spending, entitlement spending, domestic spending, we look at the so-called tax expenditures, tax breaks, and so forth, and we look at all of them and ask this question: How can we get a better result? Whether it is health care, education, transportation, defense, how can we get a better result for less money or how can we get a better result for not much more money?
We need to do that across our government. We need to change, if you will, the culture in the Federal Government from sort of a culture of spendthrift--which a lot of people think we operate under--we have to change it to a culture of thrift and not just for a couple
weeks or a couple months or a couple years; I mean for as far as the eye can see, until these pages who are sitting in front of me--who are rising juniors in high school--until they are rising juniors in college and out of school and off into the world and well beyond that. That is what we need to do. That is part of our obligation.
One of the recommendations--I am going to go back to over 1 year ago when we voted on whether to create a deficit commission that would have a number of members who would be responsible--some elected, some not-- they would have a responsibility to look across the Federal Government and to come back to us at a date certain with ways to rein in the Federal deficit to get us back on a more fiscally sustainable and responsible track.
We voted in the Senate. Our Presiding Officer will recall not all the folks who were cosponsors of the legislation that created the deficit commission actually ended up voting for it. In fact, seven of them who were cosponsors--as I recall, I do not believe any of them were on this side of the aisle; I think they were on the other side of the aisle-- ended up voting against it, and we did not actually have the votes to create the deficit commission.
With that happening, a number of us encouraged the President to use his Executive powers to create one by Executive order. He did that. Last year, the deficit commission was created, and there were 18 people named to it. Madam President, 12 were elected, 6 were not, and he named 2 cochairs. One was Erskine Bowles.
Erskine Bowles, who is he? He used to be, in the second term of President Clinton's administration, Chief of Staff for President Clinton. Erskine was asked by President Clinton to negotiate the deficit reduction package with the Republican House and Senate. At that time, during those years, Republicans were in the majority in the House and Senate. President Clinton said: Erskine, go out and negotiate a deficit reduction deal, where some of the deficit reduction comes on the revenue side and some comes on the spending side, so we can follow up on, actually, an earlier deficit reduction package adopted in 1993 with only Democratic votes. But he said: Let's see if we can't actually balance our budget. We had not done that since 1968.
God bless Erskine Bowles and the folks he negotiated with too. He went to work in 1997 and came up with a deficit reduction package with 50 percent revenues, 50 percent spending that had everything on the table. A long story short, we ended up with a balanced budget--not 1, not 2, I think at least 3 years in a row at the end of the Clinton administration and handed off to a new administration balanced budget surpluses as for as the eye could see.
I remember Alan Greenspan testifying, I think, before the Banking Committee, when Alan Greenspan was the Federal Reserve Chairman. He said he was concerned at the time we were going to pay down our debt too soon, too fast. I mentioned to him later that concern was misplaced because we certainly did not pay down our deficit too fast. About starting 10 years ago, we turned black ink surpluses as far as the eye could see to red ink, to deficits as far as the eye could see.
A lot of people like to reinvent history. They say we did not do much to reduce deficits in the years from, say, 1993 to 2000. Actually, we had two big votes, one in 1993, with all Democrats--and I am not saying this in a partisan way--and one in 1997, where the Republicans in the House and the Senate actually negotiated in good faith with a Democratic President. With those two packages together, with a strong, robust economy, we balanced the budget not once, not twice, three times, created something like 21 million new jobs, and ended up for the decade ending in the year 2000 among the nations with a balanced budget and the most productive workforce on the face of the Earth. Those were halcyon days for our country. We need to get back to that.
So President Obama, naming the cochairs of the deficit commission, goes back to an earlier President and taps the same guy, Erskine Bowles, to be a coleader of the deficit commission.
On the Republican side, the President asked a guy a lot of people remember, Alan Simpson, a Republican Senator from Wyoming, here for a number of years, as maybe the funniest person who ever served in the Senate. He is also one of the most insightful, commonsense deficit hawks, and a great guy to be a partner with Erskine. They went together.
We had 12 Members of the House and Senate--6 Democrats, 6 Republicans--and some other folks from civilian life. Dave Cote, who is chairman and CEO of Honeywell, was among the private sector participants. But they worked for months and gathered input from all kinds of sources and came up with a broad-based plan that was recommended, adopted, endorsed by, if you will, 11 out of the 18 Commissioners. That was not the magic threshold of 14 before it actually would be the official recommendation of the Commission, but it was a majority, and it included 3 Republican Senators: Judd Gregg, who was then a Senator from New Hampshire, Tom Coburn, and Mike Crapo. I thought they were courageous, those Republican Senators.
On our side, among them included Kent Conrad and Dick Durbin, and I want to say Mark Warner, but I may be mistaken. Mark has been all over this stuff. I think he has been a real leader, but I am not sure if he was the third Democrat. Yes, the third Democrat was John Spratt, Democrat from South Carolina, chairman of the House Budget Committee. But anyway, those three Democrats and three Republicans basically agreed to a package and said: Let's reduce the deficit over the next 10 years by $4 trillion. Let's do it mostly on the spending side--two- thirds to three-quarters on the spending side--but let's have revenues as well.
They did not propose raising the rates. What they actually proposed was to reduce the rates for business, put us more in line with other advanced countries, bring us down from about 35 percent to somewhere roughly between 25 percent and 29 percent on the corporate income side, to reduce personal income tax rates for middle- to low-income families to as low as 8 percent, and to actually reduce the upper income rate from somewhere in the mid thirties to the high twenties. But at the same time we would bring down the rates. We would eliminate not all but a lot of the so-called tax expenditures.
The tax expenditures--what are tax expenditures? They are tax breaks. Some folks call them loopholes. Actually, a lot of them are meritorious: the mortgage deduction, deductions that will encourage people to make charitable donations, stuff that a lot of us will say: We don't want to change that. We don't want to get rid of that. But if you add all those tax expenditures over the next 10 years, do you know what that adds up to? Madam President, $15 trillion. Think about that. Add all the tax expenditures for the next 10 years, and it is $15 trillion. If we only were able to somehow reduce that by 8 or 9 percent, we would come up with the revenues that were called for in the Bowles-Simpson deficit commission to be part of a $4 trillion package.
In order to be able to bring the rates down, to lower the rates, broaden the base--in order to do that--we are going to have to take more than 8 or 9 percent out of tax expenditures. They may have to be reduced by as much as 50 percent.
I would argue, at the end of the day, we should preserve the deduction for interest we pay on mortgages, especially for our primary home. Also, to encourage charitable donations, I think we ought to preserve the deduction for charitable donations. There are others as well. But those are a couple of the good ones. But that was sort of the sum and substance they came up with.
Among the things the Bowles-Simpson commission also said we ought to have on the table for deficit reduction is entitlement programs.
What are entitlement programs? Things that we are entitled to by virtue of our age, our station in life. If we are 65 years of age and we have paid into Social Security and Medicare, we may be eligible--we will be eligible, in all likelihood, for Medicare. If we are disabled and totally unable to work, we will be eligible for Medicare even before age 65.
If we paid into Social Security for a number of years, we would be eligible for early retirement for Social Security at age 62. If we want to take it later, we can take it at age 67 for full
retirement benefits, which I think are roughly about $2,000 per month max, something like that.
Medicare and Medicaid, Social Security are entitlement programs. They said they should all be on the table. They did not propose using Social Security to balance the budget. But they did say: We have a long-term problem in Social Security with an imbalance between now, the amount of money that is coming into Social Security, and the amount of money that is going out.
As the baby boomers are starting to retire--my generation--we are paying out now, for the first time in a long time, more in Social Security benefits than we are raising. The reason is, for today it is roughly, for every one person receiving Social Security benefits there are about 2\1/2\ people working. Before long it will be for every one person receiving Social Security benefits, it will be two people working and paying into Social Security. The mismatch of inflow into the Social Security trust fund versus the outflow is going to get worse not better.
Sometime, a couple of decades down the road, we are going to start running out of money to pay 100 percent of Social Security benefits. We will not have to stop them all together, but we will have to get them a pretty serious haircut. I was a freshman Congressman, sworn in on January 3, 1983. The day I was sworn in at the other end of the Capitol, they told all of my freshman class: We are going to run out of money in Social Security. That is what they said.
We said: Well, when? In a couple of decades or when?
They said: No. This year. This year.
We said: Are we going to provide a haircut, reduce Social Security payments?
They said: No, we are going to stop making them because we are running out of money in the Social Security trust fund.
That was where we were on January 3, 1983. Thanks to the good work of the commission led by Alan Greenspan and others, but the good work they did then, they handed off to us not just a problem but a solution. Their solution was a combination of new sources of revenue for Social Security and some reductions in benefits, gradually raising the full retirement age over a period of 25 years from 65 to 67; requiring what people pay into Social Security, State and local employees, among others. A balanced plan.
Ronald Reagan, then President, provided political cover to Democrats to vote for that. Tip O'Neill, then Democratic Speaker of the House, provided cover for the Republicans to vote for that. Almost everybody, House and Senate, Democrat and Republican, drank the Kool-Aid and voted to preserve Social Security. It preserved it for another 25 years. We did not have to stop paying Social Security benefits that year or the next year or the next year after that. We had a significant surplus that has gone up in the Social Security trust fund.
But now it is beginning to be paid down. But the fund is going to be going in the wrong direction in the years to come. Over time the outflow will increase as my generation retires. The question is, Do we wait until the 2020s or 2030s to do something about it? I do not think we should. I swore, 28 years ago, I did not want to hand off to the next generation the problems we should solve today.
We have an opportunity not to use Social Security to balance the budget, but actually under the plan that has been now sort of reworked from the Bowles-Simpson deficit commission, the opportunity to secure Social Security for the next 75 years, and to do it in a way that involves a number of, I think, relatively modest changes, some new revenues, and to gradually increasing the full retirement age from 67 to 68 by 2050, and from 68 to 69 by 2075.
Remember, when Social Security was first introduced, signed into law by FDR back in the 1930s, a person had to be 65 years of age in order to receive Social Security benefits. The average life expectancy then was just over age 60. Think about that. Back then a person had to live to 65 to draw benefits. The life expectancy for most people under 65 was between 60 and 65.
We are talking today about a life expectancy closer to 80. People still get early benefits for early retirement benefits under Social Security at age 62, but to gradually increase the full retirement age and make a couple of other changes as well that on the surface do not seem to be major changes--in fact, I think they are relatively modest. But when we put them all together over many years, it is a lot of dollars and a lot of people.
We can put Social Security on a safe footing for another 75 years. The idea is to actually kind of wall that off from the rest of the problems so we are basically preserving Social Security for a lot longer, for my lifespan and the lifespan of these young pages who are about 16 years of age, throughout their lifetimes as well.
On Medicare--let me talk about Medicare, health care for people 65 and over, people who are totally disabled under the age of 65 and are unable to work. We will spend this year about $550 billion in Medicare--about $550 billion. The amount of fraud in Medicare--Eric Holder, our Attorney General, tells us that fraud each year from Medicare is about $60 billion. That is roughly 10 percent of the amount of money we spend in Medicare--$60 billion. Roughly 10 percent.
GAO keeps track of something else that is called improper payments. One of the things GAO does is tell us every year how much we are making in improper payments in our Federal Government across the board. They said last year improper payments were about $125 billion. That is different from fraud. That is just overpayments, accounting mistakes, that sort of thing--$48 billion in improper payments for Medicare, and another $60 billion, according to Eric Holder, just from fraud.
If those numbers are true, $60 billion out of $550 billion in Medicare payments, that is actually more than 10 percent. Well, let's just say it is only 10 percent or close to 10 percent.
How are they doing over in the private sector? How are they doing in the private sector in terms of controlling their fraud? Well, their fraud costs are not 10 percent of their costs. That is probably not a surprise. They are not 9 percent. They are not 8 percent. They are not 7 percent. On balance, they are probably closer to 5 percent, and in some cases less than 5 percent. Roughly half, their fraud cost, over Medicare. Maybe they are doing something over in the private sector to control fraud in ways that we can learn from in the Federal Government. If we can learn those lessons, maybe we can provide better rules for less money in Medicare.
Let me give you a couple of examples. Improper payments. Last year Medicare had $48 billion in overpayments, mistakes, that kind of thing--$48 billion--separate from fraud. The President said we are going to cut it in half by the end of next year, from roughly $50 to $25 billion. If we do that for 10 years, 10 years times $25 billion, what does that add up to? $250 billion. That is real money around here, one-quarter of a trillion dollars.
If Eric Holder, our Attorney General, is right on the fraud side, we actually have $60 billion in fraud losses for Medicare in a year, if we could cut that in half--and we put in the health care law, the new health care law, all kinds of tools to do that kind of thing. If we can cut that in half, that would be a savings of $30 billion a year. Over 10 years that is $300 billion--$300 billion in potential fraud savings, $250 billion in potential savings by cutting in half improper payments for Medicare. That is $550 billion. That is over $\1/2\ trillion.
For those who say we have to savage Medicare and Medicaid in order to reduce outlays in them and achieve savings in Medicare and Medicaid, that is not correct. That is not true. Let me give you a sense for where some of the money is being lost in fraud.
I have learned a new term this last week called the ``death master file.'' Maybe you have heard that term before but did not remember it.
But we are trying to keep track of the folks who are dying so that we--when people die who are getting Social Security, we do not continue to send out Social Security checks forever for people who are dead. The same thing with folks who are eligible for other benefits, whether they are benefits for--whether they happen to be educational benefits or health benefits. We do not want to pay benefits for folks who, frankly, are not with us anymore.
By the same token, we want to make sure that when doctors die, we do not face the possibility that someone steals their provider ID number, their Medicare provider ID number, or their Medicaid provider ID number, if they have one, and write prescriptions for, among other things, controlled substances. What we have today are crooks, criminals, stealing provider ID numbers from dead doctors and using those to write prescriptions for controlled substances, which then feed the drug trade and provide profits to criminal groups.
The inspector general tells us in the most recent report in terms of buying advanced wheelchairs, we spent almost $200 million a few years ago. Over half of the payments did not meet the Medicare reimbursement rules for the wheelchairs.
We have to be smarter than that. Over in Japan--I have my friend from Florida sitting here waiting for me. He is cooling his jets, but he will not do it for long, so I will close with this: As he knows, we served together on the Finance Committee, and we used to serve together in the House. He is an old friend and a good one. But as we wrestled with health care reform legislation a year or two ago, one of the things we heard in our hearings was, over in Japan--we compete against Japan, friendly competition, but they are our competitor in a lot of ways: electronics, cars, any number of products, we compete against them. They spend about 8 percent of GDP for health care. We spend 16 percent. They get better results: longer life, longevity, less infant mortality. They get better results. They spend half as much, they get better results. They cover everybody. They cover everybody.
I would like to say, they cannot be that smart. As smart as they are in Japan, they cannot be that smart, and we cannot be that dumb. There are any number of ways that we can actually save money that does not reduce benefits in Medicare or Medicaid. We can learn from some of the things they are doing to uncover fraud and reduce improper payments in the private sector and just navigate some of those ideas over to the public sector, and find out what works.
I like to say--this was Alan Blinder's. Alan Blinder testified before us a couple of months ago, a month or two ago, as the Senator will remember.
Alan Blinder said: In terms of reducing the deficit, especially on health care costs, he said: I am not an expert on this thing, but here is my advice to you. Find out what works. Do more of that.
Think of that. Find out what works, do more of that. The converse of that would be, find out what does not work, do less of that. If we do that sort of thing, if we do it not just once or twice or for a couple of weeks or a couple of years, but we just make that a cultural change going forward, we will get us back on the right track. That is our challenge.
It is not just Democrats, it is not just Republicans, it is not just the Congress, we are in this with the President. We are all in this together.
In closing, that is a good thing for us to remember. We are all in this together. We do not have all of the smart ideas on this side, neither do the Republicans. It has to be a combination of spending and revenue. If we are smart about it, we will come out of this at the end of the day just fine.
I yield the floor to my friend from Florida.