Floor Statements

Thank you, Mr. Speaker.

We are going to talk for a little while here this afternoon about a subject that is on, I think, everybody's minds regardless of their political affiliations. The more we look at it, the more significant it seems to be--in fact, the more frightening it seems to be. It is the simple situation with our economy and the level of what the government is doing in the ``spending money'' department. This, of course, ties into the job situation in America. The many people who are looking for work, some of the businesses that are struggling as well as the families who are struggling, all of it is tied together in the economy. It is also, of course, tied to the Federal Government and its spending.

What I'm going to try to do is paint a picture in simple terms. Sometimes economists make things seem a little bit too complicated. This doesn't have to be so complicated. In fact, the less complicated it is, the less frightening it becomes. So, first of all, I'd like to talk about some words that we use in Washington that we maybe aren't familiar with here, particularly our freshman Members. The first word is ``entitlements.''

I'm an engineer by training, so ``entitlements'' you could think of as a machine. In fact, it's a little bit like those machines in bathrooms, and when you put your hands in front of them, they spit out those brown paper towels you see. In fact, the entitlements we're talking about here spit out dollar bills. What happened is a legislator or a legislature maybe 30 years ago created some bill which automatically gives money to certain people who come and put their hands in front of the machine. Of these entitlements, the biggest ones are Social Security, Medicare and Medicaid. These are programs that have been around for quite a while, but they're a little bit like that, if you think of them as things that spend money automatically. So those of us here on the floor of the Congress talk about whether we're going to fund this or fund that or how we're going to run the government. These things were created a long time ago, and they just keep on running and spending money. Those are called ``entitlements.''

There is another thing that is like the entitlements, and it is the interest on our debt. When the U.S. Government issues a Treasury bill, the Treasury bill is supposed to pay some interest. It's a little bit like that machine in that it spits out some dollar bills. It, like an entitlement, is something that's spending money.

Now, here is the thing that I think is frightening, and I think you'll think it's frightening as you give this a little bit of thought, and this isn't sometime way out in the future but, rather, just this year. If you add up the Social Security, the Medicare, the Medicaid, and the other entitlements--there are some other smaller entitlements-- and if you put those together with the interest on our debt, it comes to $2.2 trillion. I don't know what $2.2 trillion is in terms of trying to visualize the money, but it's very easy to visualize this. $2.2 trillion is also the total revenue that the Federal Government brings in in taxes, so that makes it easier to see. In other words, these entitlements and the interest on the debt, $2.2 trillion, is the same thing as the revenue that we get in from taxes.

Now, why is that frightening?

It's because it doesn't include two other things: the defense budget and what's called non-defense discretionary.

So what are these two things over here?

The defense budget is pretty obvious. Obviously, it's tanks and airplanes and ships. It's men with rifles, and it's our national security. That's a piece of that, and you can see that it's almost $700 billion. Then non-defense would be things like the building that we're in. It would be the Capitol building. It would be the Federal parks. It would be the Federal prisons. It would be the Department of Energy or Commerce or

Justice or Education. All those different government things that we spend money on are in this non-defense.

In other words, if you want to balance the budget today, what do you have to do?

What you'd have to do would be to cut defense to zero: not one soldier, not one rifle left, not one uniform. You cut that to zero, but that's not enough. Then you'd cut the rest of the stuff the government is spending money on. You'd close this building down, the Capitol. You'd close the Senate and the House down. You'd close down the Federal parks. You'd close down all of those different departments, those of Commerce, Justice, Education, Energy, and all those things. You'd close them all down. When those are all zero, you will have a balanced budget.

How is that going to work? Not very well.

That's why I say what we're dealing with is a far bigger problem than, I believe, most Americans are aware of. If you think about that, you ask: How in the world can our government and how can America continue when we're doing this?

As I've said, I'm a conservative Republican. These aren't Republican or Democrat numbers. These are just the numbers. This is just our country. This is a country that we inherited. This is really our country, and these are what the numbers look like. So this is pretty frightening. What that means is we're going into debt, deeper and deeper into debt at an incredible rate right now, trying to do something that mechanically, economically, mathematically just will not work. That's the nature of the problem.

So, if anybody has a little bit of sense of intuition, if anybody has a good American spirit, one of the first things you ask when you see a good problem is: Oh, how can we fix the problem? Because this is something all of us have to deal with. Let's take a look at what the possibilities are.

The real possibilities remind me a little bit of all of these kinds of funny weight-watching programs that are out there. I always think it's sort of interesting when people say they're going to go on a low- carb diet or this diet or that diet or something. When you come to be a little bit older, such as I am, you're really faced with two realities. You either get more exercise or you don't eat so much. It's about that simple. You don't have to have a lot of fancy dietary programs.

This situation suggests that it's kind of simple. It's either don't spend as much money or tax everybody a whole lot more. The trouble is, in this situation, the ``tax everybody a whole lot more'' doesn't really work. Let me explain why it doesn't. We'll take a look at another chart.

What happens to our economy is that we have these different taxes that we run. In spite of all the different taxes--sometimes we raise them and sometimes we lower them--what the experience of the Federal Government has been is that our revenue kind of comes in at this 18 percent average. So you say, Well, look. We've got way too much spending and not enough revenue coming in, and we need an extra $1.5 trillion in revenue, so we're going to just raise taxes about 30 percent. The trouble is, if you do raise the taxes, you don't get more revenue coming in. That's sort of a weird thing, isn't it? Let's talk about that for just a minute.

Why would it be that if you raise taxes the government wouldn't get more revenue?

The reason is, if you tax the economy to a certain degree, then you start to collapse the jobs and the economy. The economy goes south. When it does, it stalls, and you don't get as much tax revenue. Think about it this way. I'd like to explain it by just having you picture yourself, if you will, as being king for a year and that your job is to try to raise some tax revenue for your kingdom.

And the only thing you can do is to tax a loaf of bread. And so you start thinking in your mind about this. You say, well let's see, in my kingdom they eat a lot of bread. So I could just tax a loaf of bread for just 1 penny a loaf.

Or you could say to yourself, ha, I know how to get a lot of taxes. I am going to put a $10 tax on every loaf of bread. But you think, yeah, but I bet nobody would buy any bread if we did that.

So your common sense would say somewhere between a penny and $10 for that loaf of bread, there is going to be an optimum tax. If you raise it or lower it either way, you won't get as much money raised in taxes, and that's what's going on here.

You can raise the tax rate, but what happens is people find out ways to avoid it. The economy stalls and so, in fact, your revenue starts to fall off, and you don't get any more money in. Of course, the problem is your spending is still going like mad.

So the solution to this problem isn't even as easy as trying to lose weight. You really don't have two alternatives. What you have is really one alternative, and that alternative is you have got to get these entitlements under control.

Now, the fact of the matter is that even if you look at a snapshot of this year, you have to get the entitlements under control, but particularly this graph shows that the entitlements here, these are just three of them, the big ones, Medicaid, Medicare, Social Security, that these entitlements are growing rapidly over time.

So even if we went to the scenario up here, and we got rid of defense and nondefense spending, and we balance the budget with the government spending nothing, except just entitlements, even if we did that, in a couple of years these entitlements are going to eat our lunch.

The problem is you can't fix it by getting more revenue in. And so what's your alternative?

The alternative is the uncomfortable fact that America cannot continue to afford these entitlements.

Now, of course, that's radioactive to say that politically. I am surprised I haven't been hit by lightning yet. But that is, unfortunately, the pure mathematics of it. Now, there are some people in politics, they like to sugarcoat things and may not tell you absolutely all the truth, but those are the facts. That's where we are.

Now, how are you going to deal with these things? None of us really know. We have a bunch of ideas. We are struggling with how you are going to do it, but there are a lot of people that are dependent on these entitlements. Yet, the money is not going to be there.

We can't keep borrowing money from the Chinese to pay for these things because sooner or later what's going to happen, the interest rates will go up on that money, and the whole Nation will be bankrupt.

And I don't quite know what that would look like. What does it look like if you picture, you get up one morning and you find out that the dollar bill doesn't work any more? You go to your grocery store and it seems like everything stopped moving. The trucks aren't moving and you can't get food for the shelves because the trucks don't have gas. The whole thing just kind of comes to a stop because the dollar bill, the whole country has gone bankrupt.

I don't know what that looks like. I don't think it's particularly pretty, but that's going to be the picture if we don't deal with this problem.

What I am suggesting is that, first off, what we have to do, every one of us as Americans, we have to educate ourselves on the simple facts. You don't have to be a wizard on the budget or economics; all you have to realize is that the entitlements are using up all of the tax revenues. That's a problem. Plus the entitlements are also growing, and you don't really have flexibility to raise the taxes too much more.

Let's take a look at the problem a little bit more closely. This is a picture of what's going on relative to the national defense. I am on the Armed Services Committee. We have spent 10 years, all kinds of hearings, listening to what the Russians do, what the Chinese are doing, what the different threats are, and also understanding the logic of why America has a strong national defense, why that buys us a great deal.

You might ask yourself why in the world do we have nuclear aircraft carriers. What exactly do they do, because other countries that are allies of ours, they don't have ships like that. Why would we? Well, the reason is because if you think about America and the globe you find that America is sitting there a little bit to a degree by itself, a little bit of an island. And our two main

trading partners, which is Europe and all the way around to China and Japan and India, those trading partners are a considerable distance around the world.

And it is in our interest because of all of the things that we buy that are traded that we protect those trade routes from some hegemon that might want to cause trouble. So we have things like our Navy and our nuclear-powered aircraft carriers so that we can go to the other side of the world and conduct operations and not to worry about fueling these things up. That's the reason why we have a lot of national defense. This started a long time ago, and you can see this blue line here talks about our defense and what's going on with defense spending, and then what's going on with entitlements.

You see entitlements back here in 1965, this is just Medicare, Medicaid, and Social Security. This chart says it's 2.5 percent of GDP. You see defense is much, much higher, it's jumped up to above 9 here.

But then over time these entitlements are going up. That 9.9 percent is low because it doesn't add all of the entitlements. That's just three of the big entitlements, and defense spending is going down. So people that say, well, aren't you open-minded, shouldn't we be cutting defense and cutting other things as well?

The answer is no, not really. Because you see any freedom that you enjoy in this country isn't worth anything if we are being attacked by an enemy and there are bombs falling and there is chaos all around us. Our national defense provides us with what we enjoy in a peaceful and decent world to live in.

As you see, the defense budget is going down and yet the entitlements are going up. So this gives you a sense, again, that you can't fix this by cutting defense. You could cut defense to zero and you still are not going to deal with the problem here.

Here is another way of saying that you can't really fix the problem by raising taxes. This is a curve of the very highest marginal income rate, back here in 1960. If you were very well-to-do, your tax rate is 90 percent. So if you earn $1, you give 90 cents to the government.

Well, you can imagine the people that are making a whole, whole lot of money aren't dumb enough to give 90 cents out of a dollar away. So what they find a way to do is move to another country, or they find different tax shelters and things to avoid paying this. But, anyway, you have this very high tax rate here on the people that are very well- to-do.

These lines show how much revenue comes into the Federal Government. You see, as this highest tax rate is decreased, that's the red line, what you see is that actually the revenue that the government is collecting goes up. This is reflecting that same idea that we talked about, the loaf of bread.

If the loaf of bread is overtaxed, people won't buy much of it, and you won't get that much tax. If you put a thousand-dollar tax on a loaf of bread, nobody would buy any. Golly, you have got nice, high taxes. Should you have a lot of money coming in? No, because it doesn't make sense. That's what this chart is showing: That as the taxes actually come down, you actually get more revenue with the government.

Has this actually been proven to happen? Yes, historically it has. There are several times when it did.

And those times were, first of all, when JFK inherited not a very good economy, I mention this because JFK was obviously a Democrat, a Democrat President. He understood these principles, and when the economy was bad, what JFK did was he decided to cut taxes.

Now, doesn't that seem like an odd thing? The economy is bad. The government needs more money, and yet he cuts taxes. What an odd thing to do. Yet it certainly worked. It worked beautifully.

So how did it work?

Well, over a period of time by putting more money back in the economy, the people that were small business owners took the money, invested in their businesses, and they built warehouses, new machines, new technology, new research to develop better products.

As their businesses grew, they hired more people. And as they hired more people the government got more tax revenue. The economy got better and better, and as the economy got better they made more money. So the result was, by actually cutting taxes, particularly cutting taxes in certain ways, that is you cut taxes on the people that own the businesses, when you do that, you can actually pick an economy up and get it going so you get more revenue coming in.

What we're getting at is the part of the solution to the problem that we talked about in the very beginning. And the solution is two-fold. The first is fairly obvious: We have to cut spending. And particularly we must cut these entitlements in some way. The second thing, though, is that you don't have to cut them entirely. What you can do probably is also to some degree grow your way out of the problem.

In May of 2003--George Bush had been elected in 2001, the same time I was elected--and when we came in, there was a recession going on. You can see that reflected in some of these graphs. This is the time period of 2001 on up to about 2006. This chart is a little bit old, but it makes an interesting point. And so this is the gross domestic product before and after tax relief. The tax relief is this vertical line right here. This was not a particularly popular tax. It was a tax relief to get rid of capital gains, dividends and get rid of the death tax.

People say, well, those are taxes that favor the rich. Well, the problem is, if you want jobs, you've got to have employers. If you tax small business into the dirt, you won't have as many jobs. And so you can't have it both ways. If you want to allow small business owners to keep enough money that they can invest in their business, you can't tax them very, very heavily.

And so the deal was here, you change capital gains, dividends and death taxes. That freed money up for small businesses to invest. Now look what happened. This is the GDP, or the growth of our economy. Here's the tax cut. These average about 1.1 percent of GDP. And then here after that tax cut, this thing averages 3.5 percent. This, then, is the result of generating a lot more money for the Federal Government.

So when business is doing well and when people are being employed, when people have good job markets and the economy is strong, not only do individual citizens prosper, the Federal Government prospers. It gets more money. So let's take a look at this question. And we're going to look at this exact same graph. This is May of 2003 when those tax cuts went into place; they were called the Bush tax cuts, as you recall.

Here's the chart on employment, job creation, before and after tax relief. You see here, these lines, anything going down means we lost jobs, and so you're seeing we're losing a lot of jobs in the front end when we were in the recession. Then as we did some tax cuts in here, it helped a little bit. But still when we do this tax cut, take a look at how things turn around; and this is the average loss of 100,000 jobs per month, this is a gain of 168,000 jobs a month after this tax cut goes into place.

So, you can see where I'm going. I'm starting to get to a solution to this problem, and there are really two pieces of solution. And so let's take a look at the final chart here. This is government revenues. Again, May of 2003: Capital gains, dividends and death tax. So this tax goes into place.

This is the Federal revenues coming down here from 2 trillion down to 1.9 down to 1.8. Revenues are going down. The country is in a recession. We do the tax cuts. And take a look at government revenue. Government revenue takes off. Because the economy is starting to strengthen now, so are the revenues for the Federal Government, 4 straight years of increases right after the tax cut. What an odd thing. You might not have expected that.

What does that say then about our problem overall? Coming back to our first chart here then, the problem is that the entitlements are eating our lunch. Entitlements are taking everything that the Federal Government has.

And so the solution is what? Well, it's two-fold. First of all, we're going to have to reduce the amount of spending here, reduce spending anywhere we can, for that matter, particularly in this sector, because a lot of the spending over here creates a tremendous

amount of red tape and regulations for businesses. If we can reduce the red tape and regulations on businesses, if we can also cut taxes on businesses in certain specific ways, you can start to get this economy growing again.

And if you do that, then what starts to happen is instead of having 2.2 trillion in terms of receipts from the Federal Government, they will start to go up. We will get more tax revenues so we have less debt, and so we both reduce here, but we also grow our way out of the problem.

And so that's the general strategy that I think most any economist would say that you're going to have to do faced with the problems. Now, of course, there's a whole lot of politics, as you can imagine, that's involved in these questions and these issues.

The politics are, the main political questions would be, first of all, what should the Federal Government do? Is it really the job of the Federal Government to get involved in education per se? Or is that something that should be done at the local level? Is it really the Federal Government's job to get involved in flood insurance? Is the Federal Government to be involved in providing loans to people? Is that really the job of the Federal Government? What really is the job of the Federal Government? That is the biggest political question here and what we argue about quite a lot, and with good reason, because that is the big question.

As you recall, there was a nation that believed that the job of their federal government was to provide you with a good education, to provide you with health care, to provide you with a home and some food, provide you with a job and a future. It was the federal government's job to do those things. And that particular nation went into the dustbin of history.

And we thought, as the Soviet Union collapsed, oh, that will never work. That's communism. Communism doesn't work very well. Socialism doesn't work very well. And yet, here, years later, in America, we're thinking the Federal Government should be providing health care, the Federal Government should be providing housing, the Federal Government should be providing food, the Federal Government should make sure that you have a job, the Federal Government should be doing this and that and the other thing. And so we're wondering why we're starting to get in trouble.

Now that's a debate. What should the Federal Government be doing? Should it be doing all these entitlements? Well, if you go to the U.S. Constitution, you would find out, well, no, in fact, a lot of these things are unconstitutional. The Constitution says that the only things the Federal Government can do are the things which are specifically enumerated. Well, what's one of the main ones enumerated? Well, you don't have to read past the, not only the first page, it's in the first paragraph, it's in the Preamble. As a Federal Government, we're supposed to provide for the common defense. First of all, the job of the Federal Government is to protect our country. Any other rights you have mean nothing if you're being bombed and people are attacking your shorelines.

The main job of the Federal Government is to provide for the national defense. A lot of these other things, they might be nice. They're probably, even though they've been around for generations, not constitutional because they're not specifically enumerated powers of the Federal Government. And what we're seeing happening, what was a safety net has become a way of life for huge blocks of our citizens.

And we're getting to the point where, in fact, we are and have arrived at the point where the numbers don't work. America's solvency, everything you and I think of as America, is up for grabs. This is a very, very sober moment for our country.

I would ask you to, if you will, just pretend in your mind, pretend that you were a Congressman or a Senator in the year 1850. In the year 1850, you might recall, there was this 10,000-pound gorilla in the tent. People politically didn't quite know what to do with it. It was called the issue of slavery. And the way politics was working, you had the Southern guys and the Northern guys, and so the power was somewhat divided, and the people that were Congressmen and Senators didn't know what to do with this huge gorilla which we call slavery. They didn't know what to do with the issue, so they sort of tried to step around it the best they could politically. And they said, well, we'll let one State come into the Union, and it will be a free State, and then we'll let another one come in, and it will be a slave State. They tried to make a compromise instead of dealing head-on with a massive problem that they had.

In 1852, there was a book, ``Uncle Tom's Cabin,'' and it increased the rhetoric and the tension of the slavery issue. So the issue of the gorilla was now glowing, and he is there and he is threatening. By 1857, the terrible decision from the Supreme Court, the Supreme Court again decided to act like legislators. Instead of just interpreting the law, they decided to create law. They decided in Dred Scott that Dred Scott was not really a person, he had to go back to slavery, et cetera, he was property. They made other decisions that the Congress couldn't decide whether new States coming in were slave or free. So now this whole great big slavery gorilla was really ready to storm out and cause trouble.

President Lincoln, the first Republican President, is elected. The South knows he is against slavery. He gets on the train, and he hasn't even gotten here to Washington, D.C., and the Southern States start to secede. America, like a train going off a cliff, starts in the Civil War. After 4 years, Abraham Lincoln writes his second inaugural address, and he references the fact this war is more miserable, there has been more suffering, and it has been much, much worse than anybody imagined it would be.

So what's the point? The point was that there is this gorilla in the room that the leadership failed to deal with, and the results were absolutely horrible. Statistics don't touch your heart, but statistics also are helpful to know. Six hundred thousand Americans died in the battles of the Civil War. That is more than all of the Americans killed in all the wars of our past other than the Civil War.

But the stories that come from that war are even more compelling. I recall one that every time I think of it, it puts a face on the Civil War. There was a Northern unit that was trying to take a position occupied on some higher ground by a Southern unit. The Northern unit seemed like they had the South just wavering. They were about to be able to take the hill, and there was a young officer at the top of the hill who would reappear, almost not worried about his own safety. He would reposition his Southern troops, and they would settle down and fight the North back. They fought back and forth a number of times until the officer of the Northern unit remembered he had an older man who was an excellent shot with a rifle. He said: There is a young officer up there that is really the one who is holding this hill, and I want you to use your great marksmanship ability, and I want you to take that officer out.

So the next time that young officer showed himself, this crack marksman shot him. And the young officer, the Southern officer, dropped dead on the spot. The Northern troops moved up and by the time they took the position, the marksman went over to see who he shot. He realized he had shot his own son. He was so distraught that he just stood up and ran across the field where the Southern army was shooting, and he was killed by rifle fire.

That is a little personal tragedy. The Civil War was full of those. But they are full of them because there was a leadership failure to deal with the crisis that America had to deal with, and they didn't do it, for whatever reason.

Today, we also have a crisis that is right here in front of us. And as Americans start to understand where we are with the budget, we also have to deal with this thing. The face on our entire economic system collapsing could be very ugly indeed.

And so my point of being here on the floor today is not to be particularly partisan, but simply to acknowledge that the numbers don't work. Now I have to be somewhat partisan because our President submitted the 2012 budget. The 2012 budget is irresponsible because it refuses to deal with these mathematics. It pretends that it is a budget but it never deals with entitlements, for whatever particular reason,

and tries to kick the can down the road, pretending that the gorilla is not there. That we cannot do.

The fact is that we are overspending. We are overspending at a horrendous rate, and something has to be done. So America now faces a great challenge in the next couple of years as to how are we going to deal with this problem.

As I said before, the solutions are not simple. In fact, the solutions are simple, they are just not easy. I think Ronald Reagan said that. The solution is simple, but it is not easy. The simple part is we have to cut the spending. The simple part is we need to grow the revenues of the government by getting the economy and the jobs going. We know how to do that. We have to cut the redtape. We have to cut taxes on small business owners, and we have to try to make sure that the liquidity is available to small business owners through the banks. And then we have to stop the era of uncertainty so the businessman feels like the economy has settled down and they can actually make some investments. Those are the things you do to get jobs going. We know it is fairly simple what it takes to get jobs because we know employers make jobs, and that means businesses have to be healthy and we have to do the things so they are not red-taped out of existence. We have to allow them to be competitive with businesses overseas. I would stack up Americans competition-wise with any foreign country as long as we don't burden them down with too many taxes and redtape and uncertainties and things, and scare all the jobs overseas. So it is simple, but it is not easy.

Also, cutting the tremendous level of entitlement spending. You can see you have to do it. You just can't not do it. But how do you do it? That is not easy. That is where we are. But we cannot continue to ignore the gorilla that is in the tent. If we do that, we threaten all kinds of very serious problems in our economy.

The other different pieces that have to go into place--we have to stop all of the regulations that make it so we can't drill for oil. We have a Federal Government now that ever since the oil spill has shut down drilling for oil. I guess they have got one well working. You have chaos in the Middle East, and we are dependent on foreign oil, which we shouldn't be because we have a lot of oil in America. We have great natural gas resources that we just discovered, all kinds of coal to last us for hundreds of years. We have the resources in America, but we are not developing them. We don't have drilling rigs going out and drilling where we know there is oil. Those drilling rigs are silent. Why? Well, because there is an environmental lawsuit on almost every promising well--the big, heavy wells that could really bring in oil. Or, if it's not that, there are regulations that say you can't drill. There is an area in Alaska called ANWR. It is basically like Oklahoma only frozen. It is very flat and cold. The idea would be you could bring drilling rigs when it is frozen solid, drill down there and pull them out before it is thawed. You have a pipe, and you would pump the oil out of that area. And you could pull the pipes out later after the oil is tapped out. Why are we not drilling?

Why is it, on our Continental Shelf, foreign nations are coming onto our Continental Shelf and drilling for oil and we are not? That just doesn't make sense.

So there are some policies that kind of come over in this area where America can do some things to get our economy back in shape. We can cut a lot of the ridiculous regulations that come from places like the EPA.

There was an award that we presented last week here on the floor. I think was called the Golden Turkey Award for the fact that the EPA decided that milk, because it contained oil or fat or whatever it was, had to be treated like an oil spill. And so farmers had to put containment around their dairy barns instead of having a few cats to lick up the milk that was spilt. I guess it is a sort of cry over spilt milk type situation. But talk about overregulation, my goodness.

Another part of EPA was a decision now that we cannot, if you are a farmer, have any rogue dust. Well, what would rogue dust be? That would be if you are plowing a field, if any dust comes off your field, that would be terrible. So the EPA is very concerned about rogue dust. They haven't been to my good State of Missouri and seen, when you are harvesting corn in the fall and that stuff has got all kinds of dust that the rain has deposited on it. And, boy, when that machine goes by, it is a cloud of dust. Still the corn is good, and it feeds a lot of cattle. What would you do with all of that rogue dust? Somehow that just seems a little absurd to me. So we have to get rid of all this redtape and ridiculous kinds of things and let good old American innovation go.

On the subject of innovation, that is what free enterprise is all about. That is what we are pretty good at. There is guy in my district that I am just so proud of. His name is Kent Schien. He has a company called Innoventor. One of the things that he started playing with is something that some of us who grew up a little closer to town try to avoid at all cost. We try to avoid it at a distance. It is called pig manure.

It has its own special smell. Some people can take it and some people have trouble with it. He thought, well, maybe if we could find something good to do with this pig manure, we'd really have something. As you can tell, he's a guy with a lot of imagination.

So what did he do? Well, he gets this pig manure. He puts it in a big kettle. He puts it under pressure and temperature and works something like a petroleum cracking process until he breaks the stuff down into sort of a primitive asphalt. They've then taken the asphalt, mixed it with gravel and used it to asphalt some roads. You may think, that must be a smelly road, but it's not. It doesn't have the smell anymore because of the temperature and the changes chemically. So now they're testing out a section of highway that's been made with pig manure. He has this thing designed so that it's not that big a unit so you could put different ones of these units in areas where there are pig farms and they could bring over their pig manure and get paid for it and still make a profit on selling the asphalt.

That's the kind of thing that makes America. That's the kind of thing that has made America such a special place. It's called freedom. It's called free enterprise. It's called innovation. It's talking about somebody that has a dream in their heart, and they're willing to take a risk and to try to do something that no one's ever done before. They hear people say, you can't do that and you can't do that, and the American in them comes out and the American says, ``Ain't no such word as `I can't.' '' And so they go forward.

America has been built that way. This great nation was built that way, by all these people that had some crazy dream that became a vague possibility, and then a possibility, and then it actually happened. America was built one dream at a time. A beautiful country. But a country now that because of government irresponsibility is in a crisis state and something that we all have to deal with.

Some of us that hold elective office, we travel around. We talk to our constituents. We talk to people in different States, but our own particularly, and there's a perception out there that we can solve this problem by taking out a line in the budget that's called waste, fraud and abuse. Now, we've never found that line. It's like a fat marbleized in meat. It's all over the place. We try to get at that and get rid of waste, fraud and abuse. But you're not going to fix this problem by fixing waste, fraud and abuse. You're not going to fix this problem by more efficiency. You're not going to fix this problem by saying we're not going to send any more money to foreign countries. You're not going to fix this problem by trimming a little bit here and there. This is a massive problem, and it's going to require a rework of the entire way that we're spending money in the Federal Government. That doesn't mean that it can't be fixed.

I recall Ronald Reagan. It seemed like things were kind of in rough shape when he took over as President. But he had that can-do attitude, his little twinkling sets of wit. He would kind of cheer America along and he put us on the right path, got the economy going and basically won the Cold War. He was a great man, a great leader, that God brought to our Nation at a critical time.

I think we need to be praying now for great leaders in America, people who understand the problem, are not going to turn their tail and run away from it; they're not going to pretend it doesn't exist but take it straight on, because I believe the American public, when they understand the nature of what we're dealing with here, I think they're willing to roll their sleeves up and say, Let's do what Americans have always done so well. Let's just move forward and solve this problem. Let's figure out what each of us has to do, what's reasonable, and let's move forward and get this thing done.

It was my father's generation. My father served with General Patton, and there was that phrase, everybody did their bit. That was kind of the speak of the day. We, likewise, are challenged now that we have to do our bit. We have to be making the wise decisions to put our business and industry back in place.

Now, that's very controversial. You might be surprised here on the floor of the U.S. Congress--you wouldn't be surprised if I said Republicans and Democrats are pretty polarized on the abortion issue, and they are. But you might be surprised to know that in terms of voting, Republicans and Democrats are more polarized on the energy issue than they are on the abortion issue. But I believe that the fact that the foreign oil is starting to become very expensive and more scarce is going to tip the balance of that argument. And I believe that America is going to start developing our own supplies of energy, and I think that's the way we have to go. I think we have to get rid of the redtape and the ridiculous regulations like rogue dust and spilled milk in the dairy barn and things like that that just don't make any sense. There's a Clean Water Act, also, that has incredible kinds of regulations and things that don't make any sense at all from an engineering point of view.

We have to look at those things. We're going to have to trim out some of those things in this budget in order to create that environment, a good, strong environment for business. But we're going to also have to look at this spending. We're going to have to figure out ways to reduce that spending.

As a member of the Armed Services Committee, and actually I'm a chairman of the subcommittee that deals with the Navy, the Marine Corps and projection forces--that would be things like bombers and long range--we realize that there is not a whole lot we dare to cut here because of the various other nations and the rate that they're spending on defense and the threat they could be to our country. This money is not always spent as wisely as it should be, but, again, the Navy right now, the American Navy, has the same number of ships as we had in the year 1916. That's not enough ships to do what we need to do in order to try to create a peaceful and free trade area where we can trade back and forth across the oceans of the world.

And so there's not going to be a lot here to be able to solve this problem. We can spend this money more efficiently probably, but we're not going to be able to cut a whole lot there. The solution to this is, once again, pretty straightforward: We have to cut particularly the amount of spending we're doing on entitlements, and particularly we have to reduce the growth where the entitlements, as the years go out, are going to become more difficult. This growth is induced because of the fact that the population is getting older and the older people are taking up more of these entitlement programs, so it becomes more expensive.

So people like me, I'm a baby boomer, as the baby boomers get older, then they're going to get onto these programs. It's going to cost a lot more, and there's not as many younger workers to be able to pay. That's part of why this gets high. We have to be able to bring that curve down, and we have to cut the level of spending in that area.

So we have to do the cutting on the one hand, and the other thing is we have to grow the economy. We know how to do it. It's been done by other Presidents. We understand the economics of it. But it's just a big challenge. The sooner that Americans across the board understand what we're dealing with, say, ``Okay, let's roll up our sleeves. Let's get to work on this thing,'' I have tremendous confidence. Americans in the past have always rolled up into challenges. They've done well, and we've gotten through many things.

I think the way we'll get through them, also, is something we can learn from the past. That was what the Pilgrims did when the Pilgrims first landed. They had a dream of creating a nation that was designed in an entirely different way than the European countries. They arrived here, and in the first couple of months half of them died. The Mayflower, in the time spring came around, up anchor, was headed back to England. The captain said, Come back to England with me, but 50 Pilgrims said--52 or 53--said, No, we felt like God called us to this country to do something new and different and unique, and they stayed, and that dream started the great American Dream.

Later on, 160-some years later, there was a general by the name of General Washington at Valley Forge. He also was forced to his knees looking to God for help in America's time of crisis. He saw the answer to his prayers. In fact, there was this old guy with bifocal spectacles when the first Constitution was going to be ratified that talked about those days when George Washington ran the army. He rose to speak because the politicians were disagreeing with each other at the Constitutional Convention, and old Ben Franklin with his glasses down on his nose, 80-something years old, which of course was very old in those days, stood to address George Washington.

He said: I have lived through a long time, and the longer I have lived, the more convincing proofs I see of this truth, that God governs in the affairs of men. And if it's possible that a sparrow cannot fall to the ground without His notice, is it probable that a nation can rise without His aid?

Then he goes on to say that in the recent war we saw frequent instances of God's superintending Providence. And he closed by saying: We need to be in prayer as a Constitutional Congress here as we look at adopting the new U.S. Constitution.

Well, Washington called the first day of Thanksgiving as America adopted the U.S. Constitution, but that tradition that when we got in a jam that we looked to God continued. General Eisenhower, recognizing that trend, decided to add it to our Pledge of Allegiance. And so it was that he added words that came from Lincoln, from his Gettysburg address, the words ``one nation under God.''

And so Eisenhower, on just the front steps behind me of this Capitol, recited for the first time the new pledge, which included ``one nation under God, indivisible.''

And so as we approach this crisis in our history, I have faith, faith in the American people that we will take a look at the problem, that we will solve it, we will do the right thing, and that we will recognize that the problem is bigger than we are, and that we will have the wisdom to also ask God's blessing on our efforts, and that by His help we will be able to overcome and put America back on a more solid fiscal footing.

I thank you for allowing me to do, I suppose you'd call it, a 30,000- foot view of the budget, not a lot of details, but the big picture, a very sober, a very serious big picture, one that we all have to think about, we all have to become engaged in and take part in.

Mr. Speaker, I thank you for your indulgence. I thank you for your attention and the attention of my colleagues and friends. God bless you all and God bless America.

Mr. Speaker, it is a treat to be able to join you tonight, my colleagues and friends, and to talk about a great crisis that our Nation is facing. It is becoming increasingly apparent to Americans not only that we have a problem with unemployment and jobs, but we have a problem with the Federal budget and the deficit and the spending and the taxing--all of those things that go into an economy.

These problems are far more significant than I think many Americans are aware. I would like to talk about that tonight and to keep it fairly simple, and to let people know, as President Reagan said, while the solution is simple, it is not easy. It requires a great deal of courage.

I am going to start tonight in perhaps an odd way. I am going to ask you, please, to picture that you are either a Senator or a Congressman in 1850 in America. In 1850, you would have noted that there was increasing discussion as the new territories became available, whether they would be allowed to come into our Nation either as a free State or a slave State. It created a lot of political tension between the different Representatives representing different points of view on that subject.

By 1852, the book ``Uncle Tom's Cabin'' was written. It became a very popular book, and it tended to further inflame the issue, the great question of the day. The question was slavery; what would America do with that question.

By 1857, the Supreme Court, deciding to legislate from the bench, which has always turned out to be a bad idea and beyond their constitutional authority, came up with a decision that came from my State, the State of Missouri. It was called the Dred Scott decision. It said essentially that black people were not people; they were property. But beyond that, it also said to the Congress and to the Senate that they could not make any kinds of deals as to which State would be slave or free because each State could do whatever they wanted.

And so the stage was set as the tensions grew for Abraham Lincoln to be elected to be President. And as he was on the train approaching the capital, leaving Illinois, a number of Southern States seceded from the Union. And almost as though in slow motion, a great locomotive drove off the edge of the cliff pulling the train with it, and America was immersed in a terrible, terrible Civil War. It was a war that was ultimately to claim 600,000 lives. That is more than all the people who are Americans who have been killed in all of the rest of the wars we have fought in our Nation's history. Of course, a statistic like 600,000 may seem to make your eyes glaze over, but then you start to hear the individual and personal stories of people who were horribly touched and families that were destroyed by the horror of the war, and you recall the words of the second inaugural address of Abraham Lincoln and he talked about the fact that the war had been far, far worse than anybody had ever imagined was possible.

That great tragedy, that terrible cost that was paid by our Nation, was a result of a failure of leadership, a failure to deal with a massive fundamental question that everybody knew was there all through the 1850s--the question of slavery. And the failure was not just in the Congress, in the Senate, but it was in the people of the States for being too disengaged and unwilling to take that question head on.

The parallel today, I think, is a little bit frighteningly similar. Today, just as there was in 1850, there is a gorilla in our tent, and that is the problem with the Federal Government spending too much money. So what I want to do is put that in very simple terms not so your eyes will glaze over, but so we get some sort of a sense of balance as to what is going on; because my proposition is that we are spending too much money, the government is spending too much money, and it is unsustainable.

Now, this is something that many thoughtful liberals, as well as conservatives, agree is true. There is disagreement as to what to do about it. But the numbers are the numbers. There is something about mathematics that is

that way. And that is what we are going to talk about: the simple view of what the numbers are today and why. This is a crisis that we must address. We cannot ignore the gorilla in the tent. This is something that all Americans must become aware of and must be participants in solving the problem.

As we do that, the jobs will return. America will hold her head high again; and almost, as a ship with a big wave breaking across the deck, the ship will shake loose the water that threatens to push it to the bottom and lift its bow in pride and sail further on.

So what I am going to do is just take a look at some stuff that sometimes politicians talk about in gobbledygook-speak and try to make it simple.

We have here a picture of all the things that the Federal Government is spending money on. It's your old classic pie chart. And I have over here Social Security, Medicare and Medicaid. You can see that's a pretty big piece of the chart. These things are called entitlements by politicians. An entitlement--I'm an unfortunate engineer that ended up in politics--is sort of like a little machine that's created by law. The machine might have been created 30 years ago and it's a little bit like the machine in the bathroom which you put your hand in front of it and it spits out paper towels, except this machine spits out dollar bills. The entitlement is like a little machine. It's put on a track and off it goes spitting out dollar bills. So anybody who qualifies gets money. These programs--Social Security, Medicare, Medicaid--if you qualify, you just get money.

There are other entitlements as well. In addition to other entitlements, there is something that acts an awful lot like an entitlement and that's the interest on our debt. When we sell a Treasury bill, the person that bought it expects to be paid interest, and so the Treasury bill acts like a little machine. It spits out dollar bills at the appropriate intervals.

The point is that if you add these entitlements here, the other entitlements, and you take the net interest on our debt and you put that together, it comes up to $2.2 trillion. What does that mean, anyway? $2.2 trillion is bigger than I can understand, but we can compare it to something else, and that is the revenue of the Federal Government. That is, when everybody in America pays their taxes, the money comes into Washington, D.C., that's our revenue. The revenue is $2.2 trillion. So the entitlements and debt service at $2.2 trillion is the same thing as our revenue.

Well, what's left over to pay for national defense? And what's left over to pay for the rest of the running of the government? This other non-defense discretionary would be things like the Congress and the Senate buildings, would be the Federal prisons, the Federal parks, Departments of Energy and Commerce and Justice and Education, all those different things. Those are this non-defense.

In other words, what I'm saying is this. If you zero out defense, so there's not a soldier left, not a rifle, not a ship, not a plane left and zero out everything else in the Federal Government, when you zero those out, you now have a balanced budget. Because entitlements and debt service are taking every last penny we get in revenue. That is a serious problem.

I am joined by a very good friend of mine from Louisiana, a man who is growing in stature and feared, loved and respected, my good friend Steve Scalise from the great State of Louisiana.

Please join us, Steve.

The feared is because of the people who want to whitewash what was going on with that big oil spill and the fact that you got on it and told people the truth; and I respect that. Thank you, sir.

Let me interrupt for just a second, gentleman, because you're bringing up a whole lot of additional facts and things. Let me try and put this in perspective.

In 1974, we came up with a budget act, and every year since 1974, there was a budget here in this House. You might have liked it, you might not have liked it, but there was a budget, anyway, for what's going to go on in terms of Federal spending. Last year, under Speaker Pelosi, there was just no budget. None. And so what a lot of people see us dealing with now, and I think you're getting to this point, and that is the fact that we're doing what you do in the Federal Government when you don't have a budget and it's called a continuing resolution. I think maybe you were going down that direction.

I yield to my friend.

If I could piggy-back in and jump to what you're saying.

A couple of weeks ago, we had basically a budget on the floor of the House. But the budget, interestingly enough, is what's called the discretionary side. So the budget was for this green, the defense, and this--what is that?--tomato soup. Maybe it's Campbell's tomato soup. This is the non-defense discretionary. So the budget only dealt with this section and we were making cuts to that section.

What, of course, you have to ask yourself is, how about all this other stuff? Of course, this wasn't touched.

So proceed, please, because I think it's a good story. People need to understand what we're working on was the first thing we had to work on which was the fact there wasn't any budget that we're running on, and so we're trying to put a budget together for between now and October 1, if I recall, sir.

Why do you think it was that they didn't want to take a look at the bill? They could have brought a bill up the same way. They could have gone through it and said, Well, we don't think they should have cut this much. They should have done this or this or this. They could have made changes on it and gone back and forth, and then we would have a budget for between now and October 1 and we could get on with what should be done this year instead of what should have been done last fall, or actually last year before the fall.

Proceed, please.

You're getting this down to the place where we really need to be talking this evening, and that's about jobs, because Americans are wanting to know: Hey, where are the jobs? So let's take this thing straight head on.

The fact of the matter is, first of all, if you allow this monkey business to go on here, this is just silly. There is no way you can excuse kicking the can down the street and ignoring this huge problem, and this huge problem really is connected to jobs. Specifically, there are things you do to kill jobs. We had a forum back in my district of St. Charles, Missouri. We had a whole bunch of businessmen come in, and we asked them: What do you have to do to create jobs, and what do you have to do to kill jobs? The thing that you do to kill jobs is exactly what we're doing.

So what are those things?

First of all, we're going to tax the owners of businesses--that's the first thing--because if you tax the owners of businesses, they can't expand their businesses, and they can't invest in their businesses, so the businesses just sit there. In fact, as you tax them more, they take money out of the businesses to pay the taxes, and they start laying people off because they can't run their businesses. So the first thing is: If you want to kill jobs, raise the taxes on the people who own businesses.

The second thing you do is bury the business in redtape. Now, we've got an EPA that feels like they can run redtape without Congress even passing a bill, so they're going to try and pass cap-and-tax and all these kinds of ridiculous regulations that cost a whole lot of money. It's not like a tax, but it ends up costing people business.

One of those very interesting actions on the part of the EPA, just to illustrate redtape, is the idea of requiring cleanup in case you spill milk. Usually, on farms, the cats lick up the milk.

We have with us a genuine hero in the U.S. Congress, Congresswoman Black from Tennessee, who won a coveted award just earlier this day. It's the Golden Turkey Award. It's for the silliest, dumbest regulation that you could find. Now, I know the competition is going to be fierce in this category, but Congresswoman Black won it by plenty of extra as she got her award. We're going to recognize her tonight for this award that she got, which ties right into our subject of jobs, and that is: If you want to kill jobs, raise taxes on business owners, and bury them in redtape.

Congresswoman Black from Tennessee.

The EPA.

Now, if you had some cats around in a cage and could open the cage, do you think that would work or do you think the EPA is going to want something more expensive than that?

How many millions of dollars do you think it's going to take to get this tremendous hazard of spilled milk under control? I'm glad that our Federal Government is really dealing with tough issues like this.

I have to wonder, particularly of the people out in my State of Missouri, what they'll be thinking when they find out that $3 million of their money is being used to come up with a program to take care of spilled milk.

I don't know how you found this treasure out. I heard there was another one that was similar. I think it was an EPA requirement that you couldn't have rogue dust. So, if you're a farmer, you can't farm with rogue dust, which is dust that comes off your property and goes over onto somebody else's property.

It makes me think that whoever is writing these regulations lives in one of these office buildings downtown here. If there happens to be anybody who is working on the rogue dust program, I'm sure that's another $3 million wonder--or maybe worse--just to go out on a combine in the good old State of Missouri and just run down a couple of rows of corn and see what happens when that old, dusty corn hits the combine and how they're supposed to keep all that dust right over their own properties. So that's another one of these examples.

I think Ronald Reagan talked about the fact that we're buying too much government, and that's what we've been doing these last number of months.

The point of the matter is, when you start cutting a lot of this government trash, you're going to create jobs in a couple of ways. The first thing is: You don't put us in debt so much, but you start cutting that redtape, which is overhead that our businesspeople have; and if they're not having to pay for all that overhead, they can hire people and get the economy going.

Hats off to Congresswoman Black from Tennessee for winning this prestigious Golden Turkey Award. Actually, I suppose the one who technically won it was the EPA; is that right?

Isn't there actually like a bowling trophy with a big golden turkey on the top of it or something?

Who says we can't have fun in cutting the wasteful spending out of the government and at least do it with a little twinkle in our eyes?

It is noteworthy that a freshman Congresswoman could walk away with this kind of a prize. Certainly, there will be competition to have that Golden Turkey passed around.

I appreciate you joining us tonight.

We have some other distinguished guests. My good friend, Congressman Walberg, I'm going to ask if you'd like to join us. We're talking a little bit, first of all, a big picture about how much money there is in the entitlements, the trouble with trying to balance a budget. And also we've talked about jobs and how much jobs relate to a government that's out of control, has forgotten they're supposed to be servants and are just running mad, making redtape, which again is excess overhead for the businesses and kills jobs. But please join us with your unique perspective.

You know, I really appreciate your example. And that's the trouble with these things. It's not that maybe there shouldn't be some workplace safety rules, but these things have just gone beyond the realm of what even makes sense.

I have even greater respect for you now. I also worked in a steel mill. And the noisy place at our steel mill was the pipe shop where they're loading the pipe. And you take a whole big bundle of pipe and drop it or hit it against something, and boy does it make a racket. So they always had ear protection and things in the pipe mill there. And certainly businesses know that that's necessary to do that. But when you start loading that kind of extreme redtape and regulations on a business, the business has to use their money to pay for all that, and they can't hire employees. So taxes, redtape, those are job killers.

As I recall, I think there was a gentleman last week that shared, somebody that had a drycleaning facility, and they found something like a spoonful of some water underneath a concrete slab that had a small amount of cleaning fluid--I guess carbon tetrachloride--in the water or something. They had to do like a $60,000 remediation, which for a simple dry cleaner just about took every penny that the owners had out of their bank, because of one teaspoonful of some water that had a little bit of the cleaning fluid they use on people's clothes. And that's what we're talking about. This is just bizarre kinds of stuff.

We have Dr. Boustany from Louisiana here, and I think he was going to share with us for a minute. And Congressman Walberg, we'll come back to you. Congressman Walberg is from Michigan and a great Member of the caucus. And doctor, please.

Now wait just a minute. Just on the surface of what you're saying, if somebody were really to listen to what you're saying, it sounds like insanity. Because here's what my thinking would be: You're saying that we've got all this unrest in the Middle East, which threatens the oil production there, which increases the cost of Middle Eastern oil. So we pay even more to countries that don't like us and use the money for advancing terrorist kinds of causes----

And we have oil right under our feet and we're saying no, you can't drill for that stuff. And gasoline is $3-something a gallon, and we're not even drilling for the silly oil that we've got.

Now let me add one thing that gets me even more fired up, and that is, you go north, north of Louisiana where it's cold--we're talking out in the ocean outside Alaska. You've got foreign countries that are drilling on what is basically our coastal plain and they're drilling for oil. And here we are paying $3-something, and we're not drilling for any of this stuff. I mean, isn't this weird?

So here we are again. Because I started just a little while ago, we talked about if you want to kill jobs, first of all tax small businesses, tax them so much they can't run their business, or at least chase people out of them so there goes the jobs. The second thing you do is bury them in redtape. Now we're coming back to what you're saying--the very people we should want to be working and drilling for oil for us, we're going to tax them out of existence. Isn't that ridiculous?

The very jobs that we should be encouraging because we're so dependent on foreign oil.

Maybe I could just stop. I want to hit you with a ``gee- whiz'' statistic because I'm kind of an old geezer. I've been here for a while, and I've watched voting patterns, and here's something that might be interesting to you. And I tell this to some of my constituents back home.

If I were to say that the Republicans and Democrats in the House are divided on the abortion issue, people would go, Well, no big surprise. What I think's interesting is if you look back over the years, at least the 10 years I've been here, the two parties are more divided on developing American energy than they are on the abortion subject. And I find that just amazing to me because it seems so obvious that we're still using gasoline in cars. Until we get away from that, we need to be trying to produce our own gasoline.

We have very large reserves of oil that we could be drilling. And my understanding is on many, many of those locations where we could drill and hope to find oil, there are environmental lawsuits blocking drilling in all of these different locations where we could legally drill--not mentioning ANWR, which is off bounds to us right now--and now the regulations in the gulf which, again, I don't have any problem with people wanting to say, hey, we need to see what went wrong with the oil spill. How do we make sure that we get a very deep high- pressure situation, that we've got the proper devices to stop that up if we need to. But just to basically shut down and then tax everybody, this is just bizarre.

Manufactured with?

Now, you haven't even mentioned the massive new supplies of natural gas they're finding, particularly under Pennsylvania. That's an incredible find.

Well, I think what you're getting into, Doctor, is something that I wanted to talk to a little bit tonight. And that is the assumption that you can just go taxing and taxing and always talk about the rich guy and, oh, we're going to talk about the rich guy and think you can get away with that without consequences.

Because it seems to me that there is a disconnect with the current administration and the Democrats as well policywise because they talk about the fact they want jobs, but then they destroy the companies that create the jobs. And you can't kill the company if you want jobs because the company is the one that hires people. And they seem to miss that connection there.

I'd like to go back to my good friend from Michigan--I had to check to make sure, Congressman Walberg--and I wanted to give you a chance to jump in to our discussion.

But I'd like to start going--talk a little bit in the direction about taxes, what happens with taxes and how it is that we can deal with some of the tough problems budgetwise here, and at least one piece of that is the proper tax policy.

Now, let's not get personal about age here now.

Let me just ask you whether this gets under your skin, because I'm on the Budget Committee. But I hear all the time that my Democrat colleagues are saying the recovery is fragile; therefore, don't you go cutting any of this government spending. And I'm just thinking, wow. I totally don't see it that way at all.

When you have a government that's busy spending money trying to regulate a milk spill in a barn, you have a government that's wanting to talk about rogue dust that comes off of a farm when you're basically running a combine through a row of corn, and you've got a government with duplication after duplication--and we're talking about let's cut just some of the edge of this stuff--and they're saying, careful, don't destroy a fragile economy, hey, the economy is fragile because they're doing everything wrong to it.

And the main thing that's wrong is, as Ronald Reagan said, we're buying too much government.

Please, go ahead.

Let's take a look at you just talked about an example from the great State of Michigan. And just hearing you talk about it just made me feel good. It's America on the move again. It's individual citizens taking risks, going out there working hard, making a good living; and then because of the things they've done, other people get better jobs and they make a better living, and everybody does better.

I mean, you cannot ignore the fact that the standard of living that we enjoy in America is because a whole lot of people could be free, free to succeed or free to fail.

But it's called free enterprise. Now, let me give you another example that occurred when I was a Congressman here, and I think the beginning of when you were, and that was that the second Bush, G.W. Bush, copied the example of JFK and Ronald Reagan. And both of those Presidents understood that when the government cuts taxes in the right way, it actually gets the economy going. In fact, what happens when you cut taxes the right way, the government actually gets more revenue.

Now, that sounds weird. Let me just try and explain. I have done this a couple times before, but tell me if you think it makes sense. How is it that the government can cut taxes and get more revenue in? Well, think about it. Let's say you're king for a whole year. And the only thing you can tax is a loaf of bread, and so you start thinking if I put a penny tax on that loaf of bread, I can figure out how much bread people are eating and figure out how much to get for tax revenue. Then you think, hey, how about I put $10 tax on every loaf of bread. Then you think maybe people wouldn't buy any bread. So you start to think there is probably an optimum point where you can put some tax on the bread, people will still be eating bread, but you will get your most revenue. That's what goes on.

Here is an example. May of 2003, were you here then, Congressman?

Okay. You were thinking about it, though, perhaps.

Good for you. Anyway, May of 2003 we cut three taxes, not popular, because everybody, oh, the Democrats, that's all rich-guy stuff. It was capital gains, dividends, and death tax. Now, I don't know if you're a rich guy if you're dead, but anyway we're going to tax death. We tax everything else, so why not that.

So we cut capital gains, dividends, and death taxes at this time right here. Now, I have got three charts that show what happened. This is job creation before and after the tax relief. This is some of the taxes we extended into this year. Okay. The lines that go down are job loss by month and the lines that go up are job gain.

And so what you have right here is that's the tax relief goes into effect. And take a look at the jobs, the more lines coming up over here. I mean, that's really pretty substantial and pretty interesting, whereas these you are losing. So this tax appears to have had a good effect. Let's check it on not just job creation, let's check it against----

The tax cuts, yeah.

So the tax cuts go into effect same place here, this line, this is the GDP, this is actually losing GDP or gaining; you can see the average here is about 1.1 percent; but after those tax cuts, it jumps to 3.5. You can see these are a lot stronger economy. So the economy seems to do better when you allow business people to take the money, put it in their business, create jobs. There is more people working, more tax revenue comes in.

Well, wait a minute. You cut taxes, that means your revenue's going to go down? Well, let's see what happened to revenue. Here's the story. Here's the tax cut right here. The revenue has been going down. They cut the taxes, and 4 straight years of increase in revenue. So what's happening there is that actually if you do the right kind of tax cut, just as you say you get the free enterprise system working, and you can turn the economy around. JFK understood that. He did it. It worked for him. Ronald Reagan did it. They said, oh, trickle down economics and all this kind of stuff, but it worked.

In fact, here is another chart. This is the tax rate on the most wealthy people. This is this red line. It started at 90 percent; it's come down. You notice as the tax on the wealthy people comes down, the amount of Federal revenues goes up. Now, that's weird. Why would that be? It's the same principle. You can overtax and basically run the economy into the dirt.

Yeah, you are absolutely right.

And we started out tonight talking about the overall fiscal problem we have in America, and the fact that it's really unique. This is a pretty scary situation that America's in. And the solution, as Ronald Reagan said, the solution is simple, but it's not easy. And the solution really comes in two sides. The first is we have to be cutting all of what the government is spending. We have to do some cuts. But on the other hand, what we have to do is to selectively do the tax cuts to allow the economy to really get back in a strong recovery.

The one thing I agree with that the Democrats are saying is that the recovery is fragile. I think they picked that up from Bernanke, the Secretary. But I think it is. I think it's fragile because of the fact we've still got the problem of excessive taxes, excessive red tape, and a whole lot of uncertainty in the markets.

If we can do those, that's going to help. So the first thing is we've got to cut taxes, but we tremendously have to cut the overhead. And the thing here, and I think the public is becoming aware of this fact, we can't make it by cutting defense and non-defense discretionary. That was the budget we were doing 2 weeks ago on the floor. We cut $100 billion out of that. If you know what the real problem is, as we talked about earlier, the total of these entitlements plus debt service is $2.2 trillion. The Federal revenue is $2.2 trillion. You can zero this and this out, and you just barely have a balanced budget; and that's not talking about the out-years, when it gets worse.

So these areas must be dealt with. Now, supposedly if you talk about changing anything with Social Security, Medicare, or Medicaid, lightning will fall and you'll be struck dead politically. But the fact of the matter is we must deal with these. How we deal with them is one of those things that we need to have a conversation on it.

But to do what the President did and submit the 2012 budget and not deal with these at all is being disingenuous. It's kicking the can down the road and ignoring this massive problem, which is a little bit like that gorilla in the tent.

I started, my dear friend from Michigan, I started by talking about-- and it's sort of sometimes I think about this: What would it be like to be in the year 1850 and be a Congressman or Senator and you have this huge issue of slavery and we didn't deal with it? We just ignored it, and then we got slammed by the Civil War.

And my question is, are we as Americans going to deal with the fact that our entitlements and debt service is using up the entire revenue of the country? I mean, that's not just a little bit of a budget problem; that says we have a fiscal crisis on our hands and we're responsible. And our American citizens that elected us here expect us to deal with this problem. And the first way to deal with it is to at least acknowledge that we got the problem.

That's exactly the point.

You see the point of the matter is is there are people who are dependent upon these programs, older people. They are going to be in trouble if the wheels fall off this thing. So what we need to do is craft a solution that allows the older people that are on these programs to stay there, and as people become younger, give them alternatives and to have a transition so that you can get these costs under control.

That is the way to manage a solution. Everybody has got to suffer a little bit. But at least we are not allowing the whole thing literally to crash like some sort of a train off the edge of a cliff.

You know, and I think that is a thing that's so exciting, because I don't think you are being a Pollyanna by saying what you just said.

The reason I say that is because we have been through, as Americans, a lot of dicey situations.

Our own parents, known as the Greatest Generation, as they would say it, did their bit. My father was with Patton in Europe, and they fought World War II. And then there were the days when Ronald Reagan came to a discouraged Nation, and he said America's got brighter days ahead. With that twinkle in his eye, and he had such a way of putting it, you know the solution is simple but it's not easy.

We have come to another one of those pivotal times in history where it is our responsibility to deal with a massive problem and not to ignore and try to pretend it doesn't exist and just try to lie to people and let the government run a little longer until we are gone, and then everything comes down in a big heap. That's not what the American public wanted of their leadership.

As long as you and I are kicking, my friend, we are going to stay here. We are going to talk about this. We are going to talk about the great days ahead for America and some of the things that could possibly be.

You know, we take a look at some of these medical costs. They are really, really busting the budget. Maybe one of the things we need to do is to say, hey--I think it was 1950, somebody calculated the cost of polio that had cost us a trillion dollars a year in America today, the polio costs.

They forgot something. We figured out a cure for polio. Maybe it's time for us to target the most expensive diseases, things like diabetes or Alzheimer's, things that are very, very big-ticket items. Maybe that's part of that American exceptionalism to leave the world a better place, to leave our kids freer, not taxed into the dirt, to leave our economy the strongest of any in the world, that America could be a shining city on the hill, a light to the people around the world.

That was the vision of our forefathers. Why don't we grab ahold of that have and say, hey, we have got way too much government that we could afford. Let's turn loose the American people and let's not trust so much in government. I think that's the big question coming up. Do we really want more government, more taxes, more spending, more debt, and less freedom, or do we want more freedom and a whole lot less government, and the government that's there to really be a servant to the people and not have the attitude that they know better than everybody else. Don't you think that's where we are?

Congressman Walberg, with you and the other great people at work down here and the American public, I believe we can do it. It's time for us to roll up our sleeves. Let's get busy cutting, let's do things the right way. Design programs that work and not threaten people, and let's move forward, because there are brighter days ahead.

Thank you, Mr. Chairman.

Mr. Chairman, the goal of this colloquy is to clarify language associated with funds provided for the Expeditionary Fighting Vehicle, or EFV, in the Research, Development, Test and Evaluation, Navy section of the bill. It is my understanding that the accompanying table states that $145 million of the funds provided for the EFV termination liability may be released only for use in system development and demonstration activities upon certification by the Secretary.

Mr. Chairman, is that the language included in the report accompanying this bill?

Mr. Chairman, my concern is that the Department of Defense may interpret this language as direction from Congress to terminate EFV in this year, regardless of any recommendations made by Congress during debate on the fiscal year 2012 budget.

No matter how this issue is resolved by Congress in fiscal year 2012, orderly conclusion of the fiscal year 2011 SDD activities that are already under contract and well underway is essential for the Nation to get a usable product for its $3 billion investment. My reading of this language is that it provides sufficient flexibility for the Department to continue through SDD, and we encourage the Department to do just that.

Mr. Chairman, is it the intent of the committee to provide sufficient flexibility for the Department to continue SDD activities related to the EFV?

Chairman Young, I would appreciate a commitment from you to work together on the issue, the Appropriations Committee and the Armed Services Committee, as we consider the fiscal 2012 defense budget. The Congress must ensure that marines have the equipment they need to successfully accomplish the missions they are asked to perform, and that includes amphibious assault.

I appreciate your willingness to work on this. I think that what we're doing is we've got $3 billion already invested. As you say, it doesn't make sense to waste that investment, especially when you're talking about a very small amount of money to finish up. It leaves the flexibility to take a really good look at how do we accomplish that critical mission of moving marines from the ocean to the shore.

So I appreciate your working on this colloquy and agreeing to where we're going.

Mr. Chairman, I move to strike the last word.

I was intending to offer amendment No. 181, Mr. Chairman, but I decided to withdraw the amendment, and was going to simply speak on the subject.

Mr. Chairman, I move to strike the last word.

Mr. Chairman, the amendment that I was thinking I was going to offer, and actually we can't, is on the Energy Independence and Security Act of 2007. It's an interesting topic because we're going back again once more to the subject of mercury; but, really, we're going to a more basic subject than mercury, and that is the subject of freedom because this Energy Independence and Security Act of 2007 is a de facto ban on the plain old lightbulb that Americans have known a long time. It's the incandescent bulb.

And this de facto ban essentially says that all the new lightbulbs have to be these mercury vapor fluorescent lightbulbs. And so the question that comes to my mind is, aside from the benefits of one type of lightbulb over another--and you could argue the benefits, the mercury vapor lightbulb is a little more expensive but it saves energy, but the incandescent lightbulb

burns more energy. But it doesn't have any mercury you're bringing into your living room.

But the point, though, is don't we trust our constituents to pick the kind of lightbulb that they want? I'm just wondering if there's anybody in this Chamber who wants to stand up and vote and say, I'm going to tell my constituents what kind of lightbulb they ought to buy. I mean, lightbulbs are used in a lot of different contexts, a lot of different situations; and if people want one of those mercury vapor bulbs that's got good efficiency, fine, let them buy one. But don't tell them they can't buy another kind of bulb that may meet their circumstances.

And I think that's the kind of arrogance that the public is really fed up with out of Congress is when we have this arrogant attitude that we're going to tell people even what kind of lightbulb to buy. And so what my amendment was going to do was, of course, to strike this piece of legislation. Technically, we can't do that on this appropriations bill so we have to wait for a different venue in order to do it.

But I would conclude with the observation that for decade after decade in America the symbol of innovation and bright ideas was always the lightbulb, and unfortunately this bill is a bulb that just seems to barely get dim.

Amendment No. 204 Offered by Mr. Scalise

Mr. Chairman, I move to strike the last word.

Mr. Chairman, this is a debate and a discussion that has been going on for some period of time. As has been noted before, there are many of us who serve on the Armed Services Committee who have a little different view than does the Pentagon on this subject.

So what are the benefits of the second engine? Several of those have been mentioned.

First of all, it is the sense of security. You've got basically an aircraft now that is going to be serving the Marine Corps, the Navy, and the Air Force. All of our services will be dependent on this one aircraft, which is the Joint Strike Fighter. That particular Joint Strike Fighter has one engine. Obviously, if you want it to work well, the engine has to run right.

The Armed Services Committees have taken a look at this, and those with a few more whiskers here understand the problem that came along on the F-16, where we had an engine manufacturer that couldn't get the engine done, and the whole airframe was at risk. In this case, you have the airframe for the Marine Corps, the Navy, and the Air Force, so this Congress wisely decided that we're going to have two engines.

First of all, from a security point of view, what this allows us to do is to make sure that we have an engine that is on time and on delivery. Certainly, the competition is another good point. You save a lot of money. If you've got two different contractors bidding against each other, we're going to get a good price on the engines, and that's going to be important, particularly year in and year out.

Now, there are a couple of other things that have not been mentioned that I've heard this evening. One of them is that the second engine also has 10 to 15 percent more thrust. What does that mean?

Well, it's interesting. If you happen to be a Marine Corps guy, the marine version of this is called a STOVL. It has to take off from just sitting on a deck, and it takes off straight up. That takes a lot of thrust. The first engine is absolutely maxed out, and what we see over time is we want to put more stuff in our airplanes. When you do that, it gets heavier, and you need more thrust. The second engine offers that 10 to 15 percent more thrust.

I don't know if there is a financial consideration to define what that is worth, but that extra 10 or 15 percent could make the difference of a stable aircraft that could carry some particular additional piece of equipment that we may need in the future.

The other point that I've not heard made and is actually kind of new to us is that these engines are big suckers. They are very, very big turbines, and they have a tremendous amount of power that they're generating.

Now, if we've got this one turbine that works for the Marine Corps, for the Navy and the Air Force, what would happen if we were to use that turbine in other applications? You'd get all the more benefit of having fewer parts and having interchangeability. These engines are bolt-for-bolt interchangeable.

So what happens when we start to look at the design for a future deep strike bomber? One of the questions on that will be: How many engines do you need? Is it going to be a four-engine bomber or a two-engine? Four is a lot more expensive.

What happens if you could get the power of two engines into one and make it a two-engine bomber and use the same engines that are going into JSFs? So now you've got a universal engine working for a number of platforms. There is a whole lot of simplicity and cost savings for that type of thing.

If we're going to put our eggs in one basket, we want to make sure we've

got at least two people and that we have the competition, the capability of using this engine in other ways, and the additional thrust for the second engine.

I would recommend a ``no'' vote on this amendment.

Mr. Chairman, I yield back the balance of my time.

Offered By: Mr. Akin

Amendment No. 507: At the end of the bill (before the short

title), insert the following:

Mr. Speaker, it is a treat to be able to join my colleagues here this evening and to consider this great discussion and debate that is taking place over the past months, but particularly during this week as we approach the question about what are we going to do with funding the remainder of this year. There, of course, was no budget decided on last year, and so they do a thing called a continuing resolution. So there's a lot of discussion as to how much can we be affording to spend of the taxpayers' dollar.

And I thought that it might be appropriate this evening to take a look at that, not so much in a lot of minuscule detail, but at the magnitude of the overall question that's before us and how the math just doesn't work. I will also try, as we have a chance to get into a discussion this evening, to connect it to the problem of unemployment, because all of these things are connected, and still I think it's helpful to look from an overall perspective.

So what I have here is one of those--we always have these pie charts. I particularly like pie. And this particular pie chart here shows some different areas of the Federal budget. Now, this is the total of Federal spending here and the pieces of pie are roughly proportional.

What I would like to start with this evening, so we have a big picture of how serious the excessive spending in the Federal Government is, is to start by making a distinction between a couple of types of spending. The first kind of spending--and maybe to some people this sounds like sort of Washington, D.C., talk but they call it mandatory spending or entitlements. And mandatory spending may be not necessarily mandatory, but what that means is that legislators, maybe as much as 50 years ago, passed a series of laws, and those laws then automatically spit out dollar bills out of the Treasury. So anytime somebody who happens to be the right person waves their hand in front of the little machine, out pops a dollar bill.

And so we have these things, and they're called entitlements or mandatory spending. So these are places where the Federal Government just is automatically spending money, and there are some of them that are very familiar with most people: Social Security here, Medicare, and Medicaid. Those are the three big, as they call it, entitlements or mandatory spending.

There are other entitlements that are smaller, and that's in this category over here, the other quote, mandatory spending. So these are not Medicare or Medicaid, Social Security, but they are the other mandatory.

And then there's another thing that acts just about like mandatory spending, and that is the interest on our debt. When the Treasury decides to sell a Treasury bill, the reason people buy a Treasury bill is because it is going to pay some interest to them. So we have to pay the interest on our debt, and in that sense, when we decide to spend money that we don't have, we are creating what is, in essence, like a little machine that spits out dollar bills.

Let's say that you take all of this mandatory spending, or entitlement spending, and add it to the interest on the debt, how much does that add up to? It adds up to about $2.3 trillion for this year. Now what in the world does $2.3 trillion mean? Most of us don't have a good sense of perspective. Well, $2.3 trillion happens to be the revenue that the Federal Government collects this year. In other words, what we're saying is, if you take this purple and this aqua color and this gold color and light and dark blue here, you add this

all together, this is equal to the revenue that comes in for the Federal Government.

What, then, does that leave out? Well, it leaves out these two other pieces of pie. One is defense, and one is non-defense. They're called discretionary because each year we decide how much money you're going to spend in those categories. So what we're saying is--and I think this is really chilling--it sounds maybe a little boring to explain it. But just think about this a little bit: The entitlements and the debt service equals our revenue. That means if we want to balance the budget this year, what we would have to do would be to get rid of all of defense. Not one soldier, not one plane, not one tank, not one ship, nothing. There would be nothing in defense. And nothing in the non- defense discretionary. No Department of Energy, no Department of Commerce, no Department of Education. There would be no Park Service. There would be no prisons. There would be no Homeland Security. There are all kinds of things that the Federal Government does that we fund every year which would be gone. So there would be no defense and no non-defense discretionary. Well, the country wouldn't survive very well under those conditions. So that's the problem. These entitlements have grown so much that they have eaten up the whole budget.

Now this week, we're going to be debating how we're going to cut this non-defense discretionary, cutting a little bit from defense but mostly non-defense discretionary; and we're talking about $100 billion. Is that a lot of money? Sure, it's a lot of money. Is it a lot of money compared to the fact that we're about $1.3 trillion or $1.5 trillion over? Not so much then when you compare $100 billion to about $1.5 trillion.

I am joined tonight by a good friend of mine, a freshman congressman from Arizona, Paul Gosar. We had a chance to talk about this a little bit last week, and I invite you to jump in because what I hope that people are starting to understand here is that we have got a big financial problem down here. Our entitlements and debt service is equal to how much revenue we take in, and that's assuming you have zero for defense and zero for this other, non-defense discretionary. I mean, there is no money to run the government with. That is a fairly significant problem. Let's talk about it, my friend.

In other words, I think your point is, Paul, that in our debate this week, first of all, almost all of the discussion is centered right over in this--it looks like Campbell's tomato soup on my chart here--it's in this section, and it's ignoring all of this which is equal to the entire revenue of the Federal Government. So you can see that you could cut this to zero, and you still aren't going to fix the problem. On the other hand, it doesn't mean we shouldn't be looking for savings and cutting everything we can.

But you are putting in perspective this whole week. I think that's tremendously helpful, Paul, to do that. And I think, as I recall, there is about $16 billion being taken out of defense which is not as deep a cut as what the non-defense discretionary is getting; is that correct?

What you are seeing is a very serious attempt to get into reducing the size of the government. I mean, we are stepping on all kinds of political toes just to say, hey, it may be a nice program, but we're in trouble. I was asked by a reporter--I believe it was earlier today--whether or not the position that I was taking on these cuts and everything was like a Tea Party position. I said, You know, I guess we all reflect, to a degree, our training. I was trained as an engineer; and to me, this is just plain math. It isn't liberal math. It isn't conservative math. It's just flat-out, this is how much money these entitlements are taking, and this is how much money is coming in. The two are equal, and we don't have any money for these things. I don't know if this is politically liberal or conservative or anything else. It's just the reality of the political deficit.

Now the one thing we haven't added here--this is just this year--we haven't added the perspective of time. I think it's helpful if we take a look at what time does to this in several regards. The first is, one of the things that is happening to those little pieces of the pie is, they're growing. This has got Medicare, Medicaid, Social Security. And it shows over time what's going on without the other entitlements and without the debt service. You see that those of us--I hate to admit my age--but some of us baby boomers, as we get older, we are going to be leaning on Social Security, Medicare, and Medicaid more. There are more people there, so that's going to make these numbers go up. What we've seen is that the revenue the Federal Government collects hovers in here at 18 percent. There are times, historically, when we've raised the tax rate tremendously, and yet it seems like it's still 18 percent of GDP. So if this 18 percent is not that flexible, whether you raise or lower taxes, then when you get down to this problem, you say, uh-oh. Because before you could say, our revenue was equal to all of these entitlements. Well, raise taxes. No problem. Yes, there is a problem. Because as you raise it, you won't collect any more money. You crash the economy, and the entitlements are still growing. Over time these entitlements are still growing. So this picture here, as scary as it is, is not as scary as it really is because it doesn't take into effect that the entitlement pieces are growing rapidly.

Here is the other piece from a time point of view. And that is, this red line is the growth of entitlements. This is 1965. And we're going over here to 2010. You notice the entitlements are 2.5 percent in 1965. This is just Medicare, Medicaid, and Social Security. It's up to 9.9 percent. But really, when you add the other entitlements and debt service, you are getting up closer to 18 percent. So what's happened is, the entitlements are going out of control. Even if you assume that the other entitlements are roughly 12 percent or something, you're at 500 percent growth in entitlements. And yet here is defense spending. It's 7.4 percent here. It goes up as high as over 9 percent here and drops all the way down to 4.9. So defense spending is going down; entitlements are going up. And now we get to the point where you could cut defense to zero and still could not compensate with this incredible growth in entitlements.

I want to let you jump in, Paul, because I think that people now can start to see what it is and why it is a whole lot of Americans--not just Republicans or Democrats--but just plain old Americans are saying, Hey, we have got to pay attention to what's going on because these numbers are very scary.

So what you're saying is, one of the things that is affecting this is just the condition of our economy. And I was planning to get into this a little bit with you. When we started, I wanted to talk and work in the problem of unemployment and how do we

deal with the level of unemployment in our economy today.

We've got the government saying it's 9-point-something percent unemployment. And that's an optimistic number, because if you've been unemployed more than a year, they drop your name off the list. You may still be looking for a job. So the real level of unemployment people are saying is well beyond 10 percent.

So one of the ways you can--I guess this may be a backwards way of looking at it. What are the things that are creating that unemployment?

And I went to, believe it or not, to a Main Street in my district, and I got a whole bunch of businesses there and I said, Now, what is it that's causing this unemployment? And I asked all these different people, and I was encouraged because they told me the very same things that my common sense told me and everybody else is saying. Anybody who has run a business knows what makes the unemployment. The first thing is when you start taxing the owners of small businesses heavily, they can't put money back into their business because they're busy paying taxes.

I believe, gentleman, is it true that you were a doctor?

And did you have a clinic of your own?

And so if you got taxed a whole, whole lot, are you going to put money into new equipment and expanding your clinic, or is it going to have to go to pay your taxes?

Now you're getting to the second point. You're already ahead of them.

The first point is, if you want to kill jobs, take the money away from the owners of small businesses. You could say, Hey, that guy's making over 250,000, obviously having too much fun. We're going to tax him into the dirt, make sure he doesn't have a better time than we do.

The only trouble is, if you want jobs, you can't destroy businesses. And that's the connection it seems like this administration, the Democrats, keep missing; and that is, if you keep talking about pounding rich people and those bad corporations, if you pound them into the dirt, there are not going to be any jobs. And that's where we seem to have this disconnect going on.

So first thing is you do not want to tax those people a whole lot because you want them putting the money back into their business. The second point you're making, though, is all these regulations and redtape, it may not be a tax, but it has the same effect, doesn't it?

Did you have to fill out a lot of paperwork in your business?

Do you have to hire people to fill that paperwork out all the time?

So, in a way, it's creating a job for people to deal with government redtape, but it doesn't really create any wealth, does it?

So, in effect, what it's doing to the economy is the government is making you less efficient as a business, and that redtape then adds to your cost of doing business, which then tends to dry up jobs.

Particularly in manufacturing, if you do that too much in manufacturing, it makes it so expensive to make something in this country, the guy who owns the business says, Hey, I've got an idea. I'll take this machine that makes good product and I'll send it to a foreign country where they don't have all that silly redtape and they don't have all those taxes, and I'll make the product over there. And so the jobs just disappear from us because of taxes and redtape.

Now, there's another one that the people on Main Street in St. Charles talked about, too, and that is a little bit less tangible. It's the sense of unknown. It's the sense of fear because the government's doing one dumb thing after the next, and they're afraid to make a decision because of the instability. The economy is down. It's hard to get loans, and they're not sure what we're going to do. For instance, the big health care bill was pending, and so what are you going to do?

Well, because you don't know the environment, you tend not to make a decision, don't take risks because it's a very tumultuous type of time. There's too much of a storm brewing, and you don't want to be out too far from shore when there's a big storm brewing up. And so people hunker down and they don't hire people. And so that's another thing. And we're doing all those things wrong. Even now we're doing those things wrong, and we wonder why we have unemployment.

And, of course, the big one is government spending, and boy, are we doing that. You've got these entitlements that are out of control, and who's going to pay this tab?

And so, you put all of these things together and you have almost a perfect storm on business. And people wonder, Gosh, why do we have over 10 percent unemployment? Well, it's because we're doing all the things to create unemployment.

Please jump in, Paul.

Oh, you're going to do the bailout drill. We're going to bail this one out but that one you don't get bailed out.

Paul, I don't believe it. It's just like I'm stepping back in time to that Main Street in St. Charles, because you're bringing up that fifth point that they always talked about. It is sort of an ironic thing, because you've got Bernanke at the Federal level. The Chairman is creating all this liquidity. He's doing QE2, which sounds like a science fiction, and I think it may be science fiction economics. But anyway, he's creating all this money. They used to call it printing money. But he's created a whole lot of money at the top, and yet somehow or other the funnel got pinched off and the money's not coming down to Main Street. And part of the reason it's not is because all of these regulators are all over the banks second-guessing the loan. So if the businessman isn't fearful enough as it is, and if he does actually want to get a loan, he's finding that the banker is being awfully tough.

And I think they're typically 5- or 7-year loans, is that right, gentleman?

Is that what you're talking about, basically the banking regulators, the Federal regulators, are kind of looking over the shoulder of the small banks all the time?

Thirty-nine percent liquidity; isn't that very, very high?

Well, now the question is, if the banker is a businessman and he's taking risks and he wants to make a loan and when he makes a loan he gets some interest, and as long as the loan's

good, then he makes money that way as a banker; now, if he wants to do that, why do we have a bureaucrat looking over his shoulder all the time, particularly as long as he's got a sufficient amount of liquidity to cover potential losses? Why is it that the regulators are deciding to regulate every aspect of our free enterprise?

You get into this whole thing, and if you looked at what we have talked about tonight, you kind of start tearing your hair out and wanting to go buy some real estate on a desert island somewhere to get away from this huge problem. But there are solutions to this. But you have to realize where the solutions are.

The first thing is you have to realize that we're not going to deal with the economic problems of our country until we can reduce the rate and the number of entitlements we've got. Now, somebody could object and say, Wait just a minute Congressman Akin, because couldn't you deal with these entitlements if you just got your taxes up higher? If you could get these taxes here that are running 18 percent, if we could double that, why don't we make it a 40 percent tax rate? Oh, that would take care of this, at least for a while. Let the entitlements grow and tax everybody at 40 percent. The problem is it doesn't work. And I think that's something that we ought to warn people about here.

There's something here, this is sometimes now known as the Laffer curve, and what I have shown here is the top marginal income tax rate.

Now, that doesn't mean that in 1960 everybody was paying 90 percent tax. These are the most well-to-do people. But this is what happened to the top tax bracket over time. We started to reduce the taxes on some of the very top income people, bringing them down more into this 30 percent range. Take a look at what happens to the Federal tax receipts.

This is an example of the fact that you can actually reduce taxes and grow the revenue of the Federal Government. The reason that works is just what you were talking about. Because you are a businessman, you understand this stuff. And that is, what is happening is when a small businessman can invest in his own business, he creates jobs. With those jobs, people are paying taxes. That means more revenue for the government. So when you get the economy going, we take in much more revenue.

So the first thing you can do is, actually, by reducing taxes, you can create more revenue, get the economy going, and that will help some. But it's not enough to deal with this entitlement problem.

So really, you have a couple tracks you have to take on. One, you have got to cut the entitlements down. But you also likewise have got to keep working this advantage of getting your taxes in line to create a strong economy.

Here is an example. When I was here in Congress, in the third quarter of 2003, we cut three taxes: Capital gains, dividends, and death tax. We cut all three. And this picture right here, this black line, is when the tax was cut, and this is the GDP. These are the GDPs from 2001 to 2003. And you can see, some of them we actually lost GDP. We got up to 2\3/4\ GDP. And then here, we do the tax cut, and take a look at what happens afterwards. The average GDP is 3.5 versus 1.1. So GDP jumps.

So now we have cut taxes. And you'd think, well, maybe that's good, because now GDP is going. It gets the companies going, gets the pump primed. What else goes on at the same time? We've got this next chart. This is employment. This is before the same tax cut in May of 2003. You see, all these lines going down means loss of jobs. That means we lost jobs overall in the economy. The lines that go up were the months where we gained jobs. Take a look after the tax cut. Look at what happens. You get a whole lot more jobs being created.

So if you have got better GDP, more jobs being created, you know what the final chart is going to show, and that is, quite simply, by cutting taxes we actually grew the Federal revenues. That's a good thing to be able to grow. It was down here at 1.7 trillion, jumped up to 2.5 trillion just by cutting taxes. What we did was, we cut taxes, and we ended up with increase in revenue.

So there's two pieces to this equation. One, what we have got to do is adjust tax policy and create an environment in terms of redtape, in terms of Federal spending, in terms of tax policy, and in terms of allowing liquidity to be flowing through the banks. We have got to create something that's pro-business there.

Why in the world would we be in the mess we're in now and have the highest corporate tax rates in the world? I just can't understand that. What is your take on that? Why would we do that?

I think you are right. I think in a way the cuts that we are going to be talking about this week, while they are not going to fix the overall problem of the fact that entitlements are out of control, I think that there are some things that they will do. And I think that what they will do is to maybe deal with some of that redtape. Because if you cut some of these agencies that are producing all that load of bureaucracy and redtape and all kinds of extra overhead, as you start to reduce that, it is like taking weight off of a runner; they are going to run faster. The economy will run better. And some of those cuts are probably Draconian in many people's eyes, and probably some of them are counterproductive. But, overall, you know you have got to trim up.

So that is what we're going to be talking about doing. We are going to be kind of working it from both ways. We are going to have to cut the Federal spending, but we're also going to have to create an overall policy in terms of policies, that is redtape, and limit the amount of redtape, and the tax cuts to basically create a pro-business environment. When you do that, the revenue is going to grow, the size of the government is going to shrink, and you will start to see the shift come back to normal and America will start moving forward again.

Well, that's a great way to end things up tonight. Thanks so much for joining us. I know the people of Arizona are tickled to see that their new Congressman is already earning his keep down here. And goodnight to you, and goodnight to my many colleagues and the people across America.

We're looking forward to a brighter day, but we have some tough decisions to make, and we're getting ready to make those even this week. God bless you all.

Offered By: Mr. Akin

Amendment No. 178: Page 33, line 22, insert before the

period at the end the following:

: Provided further, That, of the funds appropriated in this

paragraph, $222,265,000 is only for the Expeditionary

Fighting Vehicle program for the following system development

and demonstration activities during fiscal year 2011: such

activities that do not increase the price or materially

change the scope of existing contracts; such activities that

finish fiscal year 2011 test and demonstration events that

are currently on-contract; and such activities that provide

test data and information to the Department of Defense to

support any future amphibious assault vehicle acquisitions

for the Marine Corps

Offered By: Mr. Akin

Amendment No. 179: Page 33, line 22, insert before the

period at the end the following:

: Provided further, That, of the funds appropriated in this

paragraph, $222,265,000 is only for system development and

demonstration of the Expeditionary Fighting Vehicle

Offered By: Mr. Akin

Amendment No. 180: Page 326, line 4, after the dollar

amount, insert ``(reduced by $32,020,000)''.

Page 359, line 20, after the dollar amount, insert

``(increased by $32,020,000)''.

Offered By: Mr. Akin

Amendment No. 181: At the end of the bill, after the short

title, insert the following new section:

Sec. 4002. None of the funds made available by this Act

may be used for carrying out the programs authorized by the

amendments made to the Energy Policy and Conservation Act by

subtitle B of title III of the Energy Independence and

Security Act of 2007.

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?

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.

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.

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.

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.

Mr. Speaker, it is a treat to be able to join you and my colleagues today, and at the beginning of a new year, take on a subject that we have been aware of and increasingly conscious of, the problems relative to our economy, to jobs, but particularly to the Federal Government and its voracious appetite to overspend.

I'm joined by a number of distinguished colleagues today. I think it should be an interesting discussion. We're going to try to keep it simple and look at the big picture and look at the choices that America faces.

Along those lines, here is a sort of a by-the-numbers projection for this year, 2011. And you see sort of a bar graph, these tubes here. This top one is $3.834 trillion, that's $3.8 trillion, and that's what it's expected that the Federal Government is going to spend, $3.8 trillion. The problem here is this other little thing here. This is the income projection. And that's $2.6, if you round a trillion. So 2.6 versus 3.8, which, you can tell by the length of them that we are spending more money than we are taking in. People that have tried to run a budget at home understand that's a very easy thing to have happen, to spend more money than what you have coming in. And the Federal Government has that problem, and it has it big-time. In this case, the difference between the two is more than $1 trillion.

And so that's what we're going to take a look at. And what can we do about it isn't so much a matter if you are a liberal or a conservative really, the fact is it's mathematics. We're spending a whole lot more than we're taking in. And so that is the problem we're going to take a look at. When you do that year after year, spend more than you take in, you start to develop a debt. In our case, we've got a $14 trillion debt. So you have a deficit of $1.6 trillion, but you keep adding these things every year, and pretty soon you build this debt up. And the problem with the debt is that you have to pay interest on the money that you borrowed. And so that also makes things worse. And so now you take a look at the fact that not only are we spending about one-third more than what we have, but we've been doing a bad job of controlling our spending.

In the past, we have also cranked up this debt. The effect of that is that one of the things that comes as far as spending is your cost of the debt service, so the more that you borrow, the more you have to pay interest on your debt, and therefore it just compounds the situation, making it worse. So that's the lineup.

So let's take a look at, well, where are we spending all this money? And one of the things that people that are looking at numbers take a look at is three fairly big what are called entitlements. Entitlements mean that somewhere along the line, the Congress passed a law, and the law works like a little machine. It just spits money out. And anybody who meets certain parameters, the machine will just give them some money. And that's called an entitlement. And so depending on what the entitlement is, it just spends money. And Congress doesn't have to do anything. The money just gets spent. And it is called an entitlement.

The three big ones, of course, are Medicaid, Medicare, and Social Security. And if you project over time how much money those entitlements are going to spend, you find that they are growing. They are growing because of people such as myself, a baby boomer. The baby boomers are getting older, and there's a whole lot of them, and there are not as many people working to pay into the system. And so the cost of these entitlements go up.

And as you see in this chart right here, this is the typical revenue that we get from taxes coming in. It is running at 18 percent. You can see it goes up and down as we have more or less taxes depending on who is in charge of the White House and the Congress. But it averages now, over since 1965, it's averaging about 18 percent. And you see this point out here at 2052 where these three entitlements are going to use up the entire budget. There won't be any money for anything else other than just these three things.

Unfortunately, this chart is optimistic because this is only including these three entitlements. We have other entitlements also. And in fact, at this point we have come really pretty close to it even today.

So our entitlement spending, when you look at the big bar chart up here, pretty much, of our income--about $2.5 trillion, pretty much that income is spent today on various entitlements. It's not just Medicare, Medicaid, and Social Security. But there are two other categories, miscellaneous entitlements, that would be things like food stamps and public housing, stuff like that, but also debt service, because you have to keep paying the interest on debt. You put that all together, and that's just about what we've got for income. So we've got ourselves some challenges.

And I'm glad that I don't have to solve all this problem, but we have got some very smart people that are going to join and talk a little bit about this, what are our alternatives and what should we be doing.

The first is a freshman who is already distinguishing himself in the Congress, Bill Johnson. He is from Ohio. We are thankful that Ohio sent one of their great sons here, somebody who first of all has a background as a chief information officer in a global manufacturing company. ``Information officer'' means people that deal with the transfer of data and information, but also the data processing side of a company, which is really the communications and lifeblood of a company. He is also somebody who served our country faithfully as an officer in the United States Air Force.

Bill Johnson, it's a treat to have you on the floor. We're glad you got elected. You've heard the opening here. We've got a bit of a problem. In fact, we've got a problem that's so big that a lot of people are kind of--in Missouri we have an expression, hunker down like a toad in a hailstorm. A lot of people look at this and they go, oh, my goodness, what are we going to do?

So let's talk about that for a minute.

Let me just stop you. I want to cut in on you.

What you are saying is most businessmen, if you tell them we are having trouble with overspending so what we are going to do is spend some more, they are going to laugh you out of the shop; is that basically what it boils down to?

Bill, once again you are right on track and right on topic. This is so important because down here in Washington, DC, there are really two very different schools of thought on this; aren't there? There are some people, and I think they are people probably who come from your background as executives in companies, people who had responsibility and had your own small business, and you understand what it takes to make a small business work. And the mind-set of those people when you get into trouble over spending is that you have to either increase your revenue somehow or you are going to have to cut back your spending.

But there is a whole other school of thought down here which to me is kind of weird because I come from the business world, too, and the theory is that somehow you can get the economy going by spending a ton of money, and that is what the ``stimulus'' bill that we passed 2 years ago, it was supposed to create I don't know how many hundreds of thousands of jobs. The projections in terms of the numbers of jobs it was going to produce, it actually lost more than what they projected it was going to do.

At the time, I stood on the floor with a bunch of other people who came here with a business background and said, Hey, this thing isn't going to work. Don't spend this money.

It was at least theoretically excused under the Keynesian sort of idea that if the government spends a lot of money, it ``stimulates'' the economy and everything will be okay. It is like grabbing your belt loops of your boots and lifting up and flying around the Chamber here. It is a bizarre idea. And it was tried by that guy Henry Morgenthau who worked for FDR. They tried it for 8 years, spending money like mad. He appeared before the House Ways and Means Committee and said: It just doesn't work. Now, that was 1938 he told Congress it doesn't work to spend money like that.

So that is one possible way that the Democrats propose, and that is spend lots and lots of money. But we see we are spending so much money, the question is--it isn't working because it created unemployment big time.

Of course you in Ohio with your manufacturing background, we are just killing jobs. Somehow there is this disconnect. You can punish companies and then you are surprised there are no jobs. It is sort of bizarre.

I yield again, Bill.

Are a lot of those manufacturing, Bill?

Just interrupting again, what you're really saying is that you can get more revenue in a State if you back off on taxes?

That is an interesting concept, and I would like to pick that theme up. That is something we really need to understand.

I assume you were a member of the Ohio Legislature at one time?

Oh, boy.

Well, we have another gentleman here, coming a little farther from the west, Congressman Bishop, who is joining us. He is also a guy who has had some experience in the business world, and also as a teacher and a leader here on the floor. He has represented his district on some armed services kinds of issues and is somebody who has really earned the respect of his colleagues and has done a great job in setting up some of the new rules that have been established for this Congress.

Congressman Bishop, I would be delighted to have you join us. You have heard what we are talking about. We have a problem. We are spending too much money, and the question is what should we do about it.

May I interrupt. You said raise the personal income tax in Illinois. Was it by 6 percent?

Whoa, 40 percent. That is a number.

As I recall, gentleman, at that time, weren't there people who said that income tax could possibly get

as high as 5 percent and they were laughed off the floor of the Congress, that income taxes could get as high as 5 percent? Am I right on that?

We're not proud of everybody from Missouri, gentleman.

No.

I think what I'm hearing you say, gentleman, is that America has been getting high on junk food. At least you have an economic analogy.

Is that where you're going?

I appreciate your thoughts and particularly the direction that you're taking, because my argument would be the problem that we've pointed out with overspending cannot be solved with increasing taxes, and I'd like to talk about that for a minute.

My good friend from Ohio, just hold for a second. I'd like to try to illustrate something.

When I first came here a couple of years back, people talked about the Laffer curve and the idea that you could have the government take more money in by reducing taxes.

Now, I'm an engineer by training, and to me that seemed counterintuitive. How in the world can the government lower tax rates and take in more revenue? It seemed like such an odd thing. Then I started sort of puzzling it in my mind a little bit.

I thought, Let's say that someone were to appoint you to be king for a year, but the only thing you can tax is a loaf of bread. So you start thinking, Huh, how do I get the most revenue for my country out of a loaf of bread?--because I'm a political guy, and I have to pay the bills of the Federal Government.

So you start thinking. You say, Well, I think I'll put a one penny tax on every loaf of bread that people eat. No one will notice the penny, and I'll take in a certain amount of money. Then you start scratching your head and saying, What if I went the other way? Let's say I taxed a loaf of bread at $10 a loaf. Boy, then I'd get a lot more money in that way. Yeah, but the trouble is nobody would buy any bread.

Common sense would say somewhere between a penny and $10 there is some point in there at which you're going to get the maximum tax you can get on a loaf of bread; and as soon as you go beyond it, your revenue is actually going to fall off because people will stop buying it, and there just won't be any more bread market going on.

So the point of the matter is that there is an optimum level that you can tax. When you go beyond it, you stall the economy and destroy the Federal revenues. Now, that may seem like a theory, but, in fact, it's true. It is what happened.

I'd like to just run through a couple of charts here.

This happened in 2003. In the second quarter of 2003, in May, we passed a big tax decrease in capital gains, dividends and the death tax. What that did was it freed up a lot of money for, Bill, who you've been talking about--the people who own businesses. The death tax ties up a whole lot of money because, you know, somebody dies, and you just hammer him and put a small business or farm out of business. Capital gains and dividends, they're all money that was being tied up because of our Tax Code. So when we reduced those taxes--this is what happened on this black line. I've got three charts here. This black line is when we cut capital gains, dividends and death taxes.

The first thing: look at the gross domestic product of our country. You can see it's spotty in here. We were in a recession. The amount of money we were taking in was not good in these early years.

Here is what happens when we do the tax cut:

You see that there is a jump from 1.1 percent GDP to 3.5, so GDP goes up when we cut taxes. That tells us, hey, the economy is going. It's doing better.

What else happens? Let's take a look at the chart. It's the same thing.

This is May of 2003. This is job losses. Everything below the line is a job loss. We're losing jobs like mad, and we've got some problems with unemployment. Here are a couple of times where we gained some jobs just for a quarter, but these are by the quarter. We're losing jobs. Then--boom--we put this tax cut in place, and look what happens in terms of job creation. We created 168,000 jobs, and here we've lost 100,000. So, first of all, GDP goes up. Job creation goes up, so people go back to work.

Here is the key point: look what happens here to Federal revenues. We have cut taxes here, and Federal revenues are shooting up. Now, that seems like you're defying the law of gravity, but what happened was those taxes were stalling our economy.

So when you've got a recession and when you've got unemployment the way we do, what you've got to do, this would suggest, is you have got to cut taxes, give the money back to the people you're talking about, Bill, who

own those companies. Let them invest--build additional wings on a building, new products, new technology--and when that happens, you pull out of the recession, and it helps you with your revenues.

The bottom line is, when you take a look, going back to our original question of how do we get out of the problem that we are spending too much money, the answer is, if you start taxing, you're going to drive us further into a recession, making the problem worse. So, really, tax increases do not work to fix the problem that we've got going here.

I wanted to jump over, Bill, and allow you to piggyback some.

Bill Johnson, from Ohio, is a great freshman Member. Congratulations to those in the State of Ohio for sending us some good people down here.

Bill, please jump in.

So what happened--let me see if I understand this. The sales tax holiday was not a total cutting of all the sales tax; it just reduced it much lower.

And by reducing the tax, their revenue increased.

By cutting taxes.

Well, I really appreciate that. That's a real-life example, something that you worked on looking at different States. And it was the same principle of what we've seen.

Now, the idea of cutting taxes in a recession and cutting Federal spending is not new. JFK understood that principle. He cut taxes when he was President during a recession and put us back on a good economic footing. Ronald Reagan had the biggest tax cut just about in the history of the country until Bush came along, and the same thing. People made fun of him, that it was trickle-down economics and all that kind of stuff; but the fact of the matter was the economy became strong, and he had to have a strong economy to face the threats of Communism in the Soviet Union.

And ultimately he bankrupted the USSR because of the fact that our economy was strong enough that they couldn't keep up with us in the arms race, and he basically got them to the point of ``tear down this wall.'' But it was based on this same principle of the fact that he had tremendously cut the taxes which allowed the American economy to surge and allow free enterprise and the businessmen to start making some money.

We're doing the exact opposite. At the Federal level, our income tax is the second highest income tax in the whole world. That doesn't make a whole lot of sense.

Now, I want to go to this problem a little different angle from it, and that is, we've talked about we're spending too much money. We've talked about, really, that raising taxes is not the solution, which means then, by definition, you've got to cut spending.

Well, what are we spending money on? I think that's something we need to take a look at here. And I've got a chart. Before I had the chart that showed Medicare, Medicaid, and Social Security. And these things people call entitlements because we passed a law a long time ago, and it just spits money out, more and more money out over time. This chart suggests if you keep your taxes at 18 percent, at a certain point, at 2052, these things get so big, they squeeze the rest of the budget out. The trouble is this chart is optimistic. The problem with the chart is it doesn't include all of the entitlements. There are a lot of entitlements that are not on that chart.

But here, take a look at this, what has happened since 1965. I think this also adds perspective to what's going on in terms of our spending. In 1965, entitlements were 2.5 percent of gross domestic product. It starts here. The red line goes up to the point now that in 2010 the entitlements have gone from 2.5 to 9.9 percent. That's a four-times increase to 2010. The trouble is that's just Medicare, Medicaid, and Social Security.

The additional entitlements would go up even further. This is probably saying that since '65, we've had probably about a five-times increase in entitlements. And what's happened in return to national security and defense? The U.S. Constitution says the most basic function for the Federal Government is to provide for the national defense. It may say that we're supposed to promote general welfare, but it specifically--because the only government that we have that can defend our country is the Federal Government. It is the primary function of the Federal Government, in our preamble to the United States, ``provide for the national defense.''

We were spending 7.4 percent of GNP in '65, which has now dropped down to not quite 5 percent of GNP. And we have the problem now with the two wars, with all of our equipment aging. So we're having a whole lot of trouble trying to stay competitive, particularly with China and a lot of their new developments, with national defense because the entitlements are just going nuts.

And so the problem is that we're going to have to take a look at entitlements, not just Social Security, Medicare and Medicaid, but there are other ones too. You've got food stamps, you've got public housing, and you also have the debt service. All of this, when you put it together, is using almost all of the money coming in in a given year. That says we had better get serious about doing some cutting.

And once again, I will come back do you, Congressman Johnson, if you

would like to comment on that aspect of where we are.

As a good Air Force man, I knew you would come up with the right answer. The point of the matter is if you don't have national security, you don't have any other kind of security.

I very much appreciate your perspective.

We're joined by another great freshman coming from pretty near by Missouri, from the great State of Kansas, Congressman Yoder. It's a treat to have you on the floor. And as you've heard, we've been pontificating here a little bit about how are we going to deal with this. You know, the Federal Government is spending a whole lot more than we take in. So we've got to deal with that problem. We've been talking about the fact that taxing isn't a good solution because if you raise taxes, you drive your revenues down. It means we're going to have to do some cutting. So that's a tough subject.

But I appreciate a little bit of common sense from the great State of Kansas.

Congressman Yoder.

In a way, I think you've really framed things. I appreciate your perspective because you're getting a little bit off at a distance and saying look, there's two choices and the two parties really are very, very different in this. One seems to be the party that wants entitlements. They want food stamps, and they have unemployment. And the other party is saying we want jobs and paychecks. And that's kind of the choice. And if you want jobs and paychecks, you've got to have a free enterprise economy.

If you want the government to just subsidize you and live off of welfare, that's a different perspective.

So what we're seeing is this growth in entitlements, this number is low on this chart because it doesn't have food stamps, it doesn't have public housing, and it doesn't have the debt service. When you put that all together, we're right at the point where the money coming in is just barely paying for all of these entitlements and the debt service. You put that together, that's not a good picture.

And the solution I think most Americans--I bet you that's what your election was about, the fact that we want to have jobs, and we want to see a strong America. We want to see an America that's free. We want to see a Federal Government that doesn't enslave us, doesn't tame us, put us in velvet chains of a welfare state, but rather that allows us to rise the way Americans have always risen to the challenges that each one of us, the dreams we have in our heart to make those happen, to have a chance to fail or to succeed. And that's what made America such an incredible place.

And I appreciate, Congressman Yoder, your standing up for those basic American principles and values. And I think what that means is we're going to have to deal with this level of spending.

Congressman Johnson, back to Ohio.

You know, just even hearing you talk about that, somehow that gets me excited.

You know, I think about it. God made all of these different people, and all of us are different. And from the day that you grow up as a little kid you start thinking about stuff that you'd like to do, whether you want to be a fireman or a doctor or an Indian chief, you know, people kind of talk about that.

And you never really know for most people, they don't really know where their life is going to go, what they're going to achieve or accomplish. But there's something inside human nature that has this idea once you start to get the idea that you can dream and do something cool.

So people have these crazy ideas. And America was full of these crazy people and all of these crazy ideas. They didn't know the ideas were impossible, and they kept trying and trying, and finally the idea becomes maybe vaguely possible and then pretty soon, it actually happens.

You take the crazy guy who built lightbulbs. What'd he build, a hundred, two or three hundred lightbulbs? And somebody said, Boy, you've got to be discouraged, Thomas Edison. He said, No, I've got a couple hundred ways not to make lightbulbs. So I'm even closer to the right solution. You've got to be a little bit pretty entrepreneurial to have that perspective.

So America, if you think about it, this great country was built one dream

at a time by all these people. And one of the great things, Congressman Yoder, that you do and Congressman Johnson, is you have a chance to serve your people.

What's going to happen--because you're both freshmen--what you're going to find is that through the years, all these people from your district, you'll run into them, and you'll see some sort of a little warehouse somewhere and all of a sudden you realize that thing is a thundering success. Some guy's dream just happened there. And we have a chance to see all of these people around us that have experienced that American dream. And it is cool. But it doesn't happen by a whole lot of redtape and taxes.

Congressman Yoder, please jump in.

I'm glad that you're joining us in that. In fact, there is a Congressman Jordan from the great State of Ohio who was, I believe, holding a press conference not so long ago talking about what are some of the things that we're going to cut, because people ask us, you know, what are you going to cut?

Well, one of the things is we're going to reduce the nondefense discretionary spending to 2008 levels. Well, what's that worth? Well, that's a lot of money that you can save that way. We're going to reduce the budget office of every congressman. That was our first week. Your first week here. We cut the congressional budget offices by 5 percent. That's just to let people know we're serious.

Then we read the U.S. Constitution on the floor of the House to say any bill you introduce now has got to be consistent with the Constitution.

But we've got another whole series of things that we're going to do to try to reduce spending, some of them--there is $25 billion in unused Federal property. So what are we going to do with that? Why not sell some real estate? Let's get rid of it. $123 billion is allocated to programs to which government auditors can find no evidence of success.

The one that I find amusing is, the Department of Energy was designed so we wouldn't be dependent on foreign oil. And the department's grown like mad, and we're more dependent on foreign oil than we ever were.

That needs a good question. Eliminate duplicative programs, among which we have got 342 economic development programs. Do we really need 342 of them? 130 programs serving the disabled, 130 programs serving at-risk youth. Program, program, program. Do we need that many? Maybe we need a couple of good ones, but certainly we don't need that many of them. So these are all things that are on the table.

So the proposal that's being made by the study committee has been, instead of having the graph of the discretionary spending going this way, nondefense, they are going to try to flatline that at about 400.

So there are a lot of things going on. It's an exciting time. We realize we are going to have to get efficient in government, and we have to basically go back to where we started.

The government was to be the servant of the people. It wasn't supposed to be the master. We didn't expect the government to pay for everything for us and keep us as little dependents. We simply wanted it to get out of the way. We wanted it to defend our right to life and liberty and the pursuit of happiness, and, beyond that, to leave us alone. Don't bury us with redtape and government regulations and taxes and uncertainties, which we have seen, which have created all the unemployment.

I appreciate two great patriots joining me on the floor today kicking around where we are.

I am very encouraged by our first week or two. First week or two we started by cutting congressional budgets. We read the Constitution on the floor. We put together a rule that says every single bill has to be proven to be constitutional or else it doesn't even get out of the hopper. And then, of course, we took a look at one of the biggest jumps in entitlement spending that America could ever take, which was ObamaCare. And we voted just yesterday to repeal the whole thing.

I will tell you, gentlemen, I know that you were involved back in your own States because you were worried about the fact: If the Federal Government can't manage Medicare and Medicaid without it breaking the budget, what's going to happen if they take over all of health care?

I think what people understand in America intuitively is the fact that if you look at American health care, the front end of it's good. If you get sick, where do you want to get sick? In America, if you have to. The trouble with health care is: How do we pay for it? That part's broken. So the point isn't to scrap the whole thing and turn it over to the government, which is what ObamaCare did. Instead, we're going to fix the things that are broken, but leave the free enterprise part up front, which gives us the best health care in the world.

You guys were here voting for that. And for those of us that were fighting that the last 2 years, I tell you it felt so good to stick your little credit card in the machine and push that you wanted to repeal it. It was something we were all really looking forward to. And you were part of that historic event. And that's just in the first couple of weeks.

I'm looking forward to both of you gentlemen in the months ahead really charting that course back to the American Dream.

If you would like to add--I think we are pretty close on time. If you would like to conclude, a couple of comments, either one.

Boy, that's a fantastic, straightforward approach to where we have to go. You take a look at it.

Unfortunately, the gentleman who was here from Utah before, those of us who are in the ``over 60'' category recognize, when it comes to weight, there's two problems: It's either what you eat or how much exercise you get. And you can't really change that very much. The Federal budget problem is the same way. It's either how much

you're going to spend or how much you can tax. And what's happened is we just can't tax anymore, and we're going to have to deal with the spending.

These are some of the items in the proposal that was being made in the press conference today. $80 billion, this is nonsecurity. That means not the defense discretionary spending. We're going to cut that back to the 2008 level. That's just going back a couple years to knock that back. That saves $80 billion. $45 billion, that's a repeal of unspent stimulus funds. That stimulus bill that created all of the unemployment that did not work. There is some of that money still left. We take 45 there.

Two, almost 3 trillion, that's the nondefense discretionary spending to 2006 levels. And also to eliminate the automatic inflation increases now and for the next 10 years. So that saves a whole lot of money there. Sixteen billion dollars, that's return the Medicaid FMAP spending to 2008 levels. And then $30 billion, end the Federal control of Freddie and Fannie Mac. That's also another area that we have got. We have not dealt with that. That created the economic crisis we are in. We have not dealt with the cause of the problem.

You put this all together, you are at about $2.46 trillion for 10 years, which the result of that comes out at flatlining some of the nondefense discretionary. Does that solve the problem? No, it really doesn't. It helps, but still the bottom line is we're going to have to deal with those entitlements that are totally out of control.

You guys have got a lot on your plates. It's a big job. It's going to be an exciting couple years. And I would recognize Congressman Yoder, if you would like to make a couple of closing comments. I think we have got about another 5 minutes or so.

You know, the thing that's exciting to me and encouraging to me, it's not just you gentlemen, but the fact that you came here because America was waking up. America is saying it's time to take back America. We're tired of being bullied by our own government. And we're tired of the idea that what you should do is to be paid for not doing something, and that an existence in America is sitting around and not having a job. What we want is we want Americans to be able to follow the dreams that are in their heart, you know. And the mentality of the fact that anybody looks like they're having fun, we want to tax them, that just doesn't make any sense at all.

And sometimes it seems like it's such a gloomy perspective to think of America as a country which is nothing but the government's going to take care of you. You know, the Soviet Union years and years ago, they had this basic idea the government's going to provide you with a home; it's going to provide you with food; it's going to provide you with medical care; it's going to provide you with an education; the government's going to provide you with a job. That was their formula, and it didn't work worth a hoot. And the Soviet Union collapsed. It's in the dustbin of history.

And here what are we doing? We're trying to look at the government to provide you food and a home and an education. The government's going to provide you health care and the government's going to provide you a job, or if you don't have a job, they'll pay you anyway. That's a formula that didn't work. There's no point in going down that blind alley again.

So what we are coming back to again is the thing that's just so exciting about our country. It's a country of exceptionalism. It's a country that's led the world. It's a country that is a source of hope for people all around the world as they take a look at our country.

It was interesting, during the days of Ronald Reagan, that he got a message out of some of the concentration camps up in Siberia and gulag and different places that were really rough. And the people were thirsty for news of what was happening with America and they were praying for us, because they realized that we were a source of hope and inspiration to the rest of the world.

There was a group of our Founders, came over on a boat, it was called the Lion. It was 1630--it was some of the Puritans under Winthrop--and they wrote something called ``The Model of Christian Charity.'' It was a long, sort of a long Puritan-type document. But it said something about we must consider that we should be a city on a hill, a light to the people around the world.

And that was where Reagan picked that up in his speeches. Of course, it came out of the Bible that we should be a city on a hill, a light to people of the world, a good example and an inspiration so that they would think of also being free from the influence of excessive government.

So that's the challenge that you as freshmen, that all of us, all Americans are facing. I think people are starting to understand this is going to mean some changes. There are going be changes in our behavioral pattern and the fact that we have just got to start cutting back on government and we just can't continue to let the thing run the way we have.

The bottom line, as we get back to it, I want to restate the problem, and the problem is this, that when you put those entitlement programs with the debt service together, we are spending almost the same amount of money as what we take in in revenue. That's not a penny for defense or discretionary spending at all. That's where we are. That's pretty sobering.

That's why the challenge is significant. We are not going to get there overnight. We are not going to balance the budget in 1 year.

I don't even think the most conservative guy in Congress would think that we could do that, that there is any probability that America could adjust that rapidly.

But we can balance a budget and we must. The fact is we have to take steady steps, one at a time, and move forward on this because of the fact that we are protecting that most precious idea that America has been that hope and that bright light on a hill for people all around the world.

The aspect of America and the American Dream, there is something that I talked about sometimes when I was doing some campaigning. I like to throw into the mix there the concept that in following the dream that's in your heart, it takes a certain amount of courage. Those people like Thomas Edison, the people that came by the Statue of Liberty with the shirt on their back and a little change in their pocket, it took guts to do that. It's going to take guts to go where we have to go. But with courage and God's blessing we can do it, gentlemen.

God bless you all.

Madam Speaker, I appreciate an opportunity to talk about a subject that I think has been on a lot of Americans' minds over particularly the last couple of years, and it's the subject of spending cuts in the Federal Government.

Now, unless people are perhaps tuned in to some other planet, they realize that the Federal Government is spending more money than we take in, and so we're running all of these deficits. Therefore, the idea is that we need to do some spending cuts. So that's what we wanted to talk about here for a little while, and I'm joined by some good friends and some very trusted Congressmen on this subject.

Just to try to frame what we're talking about a little bit--and I usually have some charts to go along with this, but the charts haven't been printed yet--if you take a look, these are pretty simple numbers. If you take a look at the spending projection for 2011, it's $3.834 trillion, and the income projection is $2.567 trillion. The two numbers aren't the same, as you notice, and basically we're spending more than a trillion, close to a trillion, trillion and a half dollars that we don't have. And that suggests, for most Americans that have some level of common sense, that we're going to have to make some cuts in spending. So that's the overall subject, and I think it's one that gets everybody's attention and that we need to give some thought to.

Now, obviously, right off the beginning of the bat, the new party, the Republicans, are running the House, and we're trying to start off setting a good note in being fiscally responsible. There's a fund that's allocated to each Congressman for them to run their office, to make their airplane flights, to pay phone bills, and things like that. We cut that 5 percent just as, in the sense, an indication of the fact that we're serious about doing this spending cut. That certainly doesn't get us to where we have to go, but at least it's a start.

There are a number of different ways we can approach this subject, but one of the other things that we'll be voting on this week, aside from the 5 percent cut in congressional budgets, is the fact that we want to get rid of this tremendously expensive government takeover of the health care in America. It's known as ObamaCare, I suppose. And I'm joined by good friend who has joined me on the floor many times in the past 2 years, a medical doctor from Georgia, Dr. Gingrey, and he is somebody who knows, inside and out, not only the medical profession but this bill which has the government taking over all of health care.

Now, as you can imagine, that would be expensive. It would be expensive to American citizens. It would be expensive to businesses and expensive to the Federal Government. So, one place we can start talking about spending cuts is what we'll be voting on before too long, which is to get rid of this government takeover of health care, and for that reason, I would like to recognize my good friend, Dr.--Congressman-- Gingrey from Georgia.

So let's say that we get what you've been working for, and let's just say by some great miracle that we were able to stop that ObamaCare. Now that would save a whole, whole lot of money, wouldn't it, in terms of--

I call it socialized medicine. That's easier, but go ahead.

Well, I appreciate your medical expertise and your overview. Obviously, if the Federal Government isn't jumping into taking over all of health care, there is going to be a lot more in the private sector. We will maybe get into that a little bit about what really should the Federal Government be doing, and what should we allow States to do, and what should we allow the free market economy to do.

It seems like the way things are working today, we've got Georgia very well represented. And Congressman Tom Graves from Georgia has joined us before on the floor. You always have an interesting and articulate perspective. This is kind of a pet topic for a lot of us that think that government isn't a servant anymore, but it's the master. So if you say, Hey, let's start cutting government, that's kind of an interesting topic. I would like you to join us, please, Tom.

Oh, wait. And $110 billion a month. That used to be the deficit in a whole year.

Wow, we are setting all kinds of records in the wrong direction.

We're glad to have you back again, and we thank the good people of Georgia for making a good decision there.

That's good. Now, let's get on to this just a little bit more. Let's try to get into the details in terms of procedurally. Okay, now you've got a new Congress. Republicans are in the majority, and we've got the problem. When you take a look at the numbers and we're spending a third more than what we're taking in, we know we've got to do some cutting. But yet one of the things that people want to pin us down on, okay, you guys are such big mouths about cutting spending, what are you not going to fund? Because there is going to be some group that is going to get mad at you. So how are you going to it approach it?

And one thing that I know in State governments they do sometimes is they say, Well, what we've got to do is, we're 10 percent over budget, so we need to cut 10 percent off of everything. That makes it seem to be fair. And that would be one way you might approach what we've got going on.

Congressman Graves, let me lay out two ways you could approach it. If you've got just a little bit you've got to cut, you could maybe take a little bit from everything. But there's another way you could take a look at it when you've got to cut one-third. One way you could do it would be to say, What are the essential functions that the Federal Government has to do, and what are things that we really don't have to do because a State could do it or the private sector could do it?

I yield to the Chair.

Swearing in of Members

So we were just talking about now you've got the situation with the Federal Government spending a third more than it takes in. So we've got to figure out some way of how we're going to skin this cat.

And one way is to just try to take a certain 10 percent or whatever the percentage is. Actually, it would be 33 percent off of everything or whatever. Or what you could say would be, what are the things that we have to do, and what are the things that maybe are nice but we can't afford it, and what are the things that may be actually unconstitutional. And I suspect when you're one-third over budget, it's going to be hard to just do a set percentage across the board. I suspect we're going to get into, I think, some very interesting questions about what's really constitutional and does the Federal Government really have to do that function? Maybe it's an important thing to get done, but maybe the Federal Government shouldn't do it. So I just wondered if you wanted to jump in on that subject.

Well, those are some great recommendations here. To reinforce what you've said, I didn't have time to get some of the charts that we normally have printed, but here's some examples.

We've got 342 economic development programs. Do you think we really need 342 of them? Talk about duplicative. That seems to make your point.

10 percent or whatever. 130 programs serving the disabled. Do we need 130? Maybe it would be better to consolidate, just do a couple of good ones.

And then 130 programs serving at-risk youth. And so these are all of these things where you say it doesn't even make common sense. We have to really start getting into analyzing, first of all, should we even be doing it, and then, if we should, do we need hundreds of programs doing something that should be done with one or two.

I see that Dr. Gingrey is back at it again. He just couldn't sit still when we talk about cutting things. So just welcome to the discussion.

Hey, Doctor, it's a treat to have you on the floor. And I'm going to run over to, moving a little bit from Georgia to the West, to the great State of Utah, and Congressman Bishop, you've joined us on the floor a number of times. And one of the questions that--let's say that you were on the Budget Committee or something, and you're trying to prioritize, how are you going to--guns and butter, how are you going to prioritize defense versus endowment for the arts or whatever it is?

How do we crack this nut about trying to reduce Federal spending? I would appreciate your perspective.

To meet the mandates. You know, interestingly, and I can't help but piggy back just a little bit on your point, gentleman, it used to be a very boring place to be a Congressman down here because there were almost no laws on the books. Do you know the Federal laws, to begin with, in terms of laws about right and wrong, were, one of them was a law against piracy on the high seas. Another one was against counterfeiting. Another one was a law against espionage. Those three laws were the main laws on the books federally. And what did they have in common? Well, just exactly your point. Piracy, counterfeiting and espionage against our country were against the general welfare. They were laws that affected everything. So laws against murder and rape and stealing and all that kind of stuff were all State laws because the States made all those laws. So you had a very limited jurisdiction federally.

And now, as you say, we've got all of these different sorts of creeping red tape which keep costing. In an insidious way, everybody's cost of living keeps slipping up, but you don't really know why, who's nibbling all the money out of your wallet. But it's because of a lot of those things that you're talking about. And I appreciate that perspective you shared with us.

I promised my good friend from Louisiana, Congressman Scalise, he has become, this last year or two, an expert on oil rigs and oil spills and everything, but good on many other topics as well. And when we start talking about government, I've got to let you have a piece of the action, my friend.

I can't help but just jump in a little bit.

It just keeps coming back to my mind, as you talk about the particular situation of the job-killing mandates that are coming from the administration, I keep thinking an awful lot of Americans must be starting to feel the same way I do: that the government is not a servant anymore; that it's a fearful master.

We were warned by the forefathers that if you let your government, your Federal Government get out of control, it will become a fearful master. It seems to me that that's kind of what is starting to happen. And I think the last election was an understanding across the whole country that this government needs to be put back in its proper place, being a servant of the people and doing programs that are constitutional instead of things that people just think of, wow, it would be a great idea if we mandate this or mandate that.

And here you have an example of an area that's already had a tough hit from the oil spill, and we are going to take businesses that have done nothing wrong and we're going to basically shut them down because of some mandate. Somehow or another, I just don't see that as being government of the servant. Do you?

Congressman, you have talked about Louisiana, and I appreciate that perspective, and that's the specifics.

If we sort of back up a little bit from what you have said and take a look, and the subject here that we are talking about today is cutting government. If you take a look at the Department of Energy, the Department of Energy was founded years and years ago with the purpose of making sure that we were not dependent on foreign oil.

Now, that department has grown with more and more and more buildings and bureaucrats and people in it I'm sure with well-meaning intention. But as the Department has grown, we have become more dependent on foreign oil. Now, there is something in that equation that's fundamentally nuts, so we have to take a really good look at this subject.

I am interested, too, and sometimes I point out to my constituents, I think

people don't understand this, but our opinions in this Chamber are pretty divided. If I were to say to some of my constituents that there is a big difference between Republicans and Democrats on the abortion issue, they would go, Gee, whiz, no big surprise. But they may be surprised to know that if you look at voting records, there is a bigger difference on development of American energy between Republicans and Democrats than there is on the abortion issue. So there is a difference of opinion as to whether or not we need to become energy independent in this country.

And I'm glad you've got the common sense to say we need to be energy independent; we need to develop all of our resources for energy. And the fact that you have taken a strong stand on that, Steve, I think you are doing a great job for Louisiana, and it's a treat to have you joining us here today and bringing that expertise.

I am going to run back over to Georgia in a little bit and jump over here to Representative Graves. Jump in, please.

That is such a good point. I don't think it does any harm to repeat that. Let's go back to it again. We are talking about the preamble to the U.S. Constitution, it sets the whole framework for what this country rests on, and you've got two words that are loaded with meaning. The first one is the general defense. That's national security. The general defense is general. It's security for every State, for every American, rich or poor, black or white, male or female. When Americans are secure, Americans are secure; and we use Federal money to do something that is general. And it's not to encourage it; it's to provide for that defense.

Now I think there were Federalist papers that were written to help make that point and to define the fact that to promote general welfare is not a clause big enough to run tanks through and say that anything that seems like a nice thing to do for somebody is constitutional.

Now who was it who said that? Was that Ronald Reagan?

So there's a big difference between Senate and Presidency apparently.

And the interesting thing is that if you take George Bush's biggest deficit year, which was when Speaker Pelosi was here in Congress, 2009, his biggest deficit was one-third of the first Obama, which was $1.4 trillion. So what is the connection between the quote and the action? I think what we need to do is to take a very, very good look at what really is constitutional.

A failure of leadership. His own words.

Thank you, Congressman. It has been a treat to have you joining us here this afternoon.

I want to run back over to Utah to my good friend, Congressman Bishop.

It is interesting that you talk about, there was a great little short book, and I don't remember the title of it, gentleman, that came out with some of the very facts that you just mentioned, and it was a study of how the government in the 1800s got involved in the six major industries in America because the assumption was that the Federal Government has to get involved in these big industries to make us competitive in an industrial world. They got involved in the oil industry, the steamship industry, the steel industry; of course the railroad industry.

The example you're talking about, again the government created this incentive that you're paid by the mile. So among other things they did, they used cheap steel rails which wore out right away and wooden ties that were not treated, and also they wouldn't blast which was expensive to go up a steep grade but they would make these long grades back and forth. The result was the company that used all the government money had a rail line that you couldn't maintain it. And, as you said, the northern route was done totally with private money. They had to scrimp and borrow. They built a little piece at a time. At the end of what they could built, they would form a little town and they would give them free shipping to encourage the trade and they built the railroad in pieces that way using the cash that they had. And that, like the other industries, the steamship, steel and the oil industries, the same pattern occurred where the Federal Government got involved, the businesses that were using Federal money all went bankrupt.

So there was an example where again you think the government's got to get involved. The answer was every time the government got involved, the companies went bankrupt. That's a good principle.

Let's get over, though, to take a look at this big picture of how in the world do we deal with the budget. One of the big things that everybody has been taking a look at, and I know you know this, gentleman, and that is that we have this new category that are called entitlements. That is, we passed some law; the law then runs like a machine and spits out money to people. If you get enough of those machines going spending money, pretty soon you've spent a lot of money. We've gotten to the point now where Medicare and Medicaid, Social Security, are spending almost half of the revenue that the government is taking in.

So when you deal with that, as we take a look at overspending, people have projected that if you let Social Security, Medicare and Medicaid continue as they are, there will come a time when there will be no money for anything else in the budget at all. These are some of the hard choices that we have to face.

It seems to me, gentleman, as we have made an emphasis on the Constitution; in fact, in the rules package that was passed yesterday, we have created a new mandate that every bill that comes to this floor has to have a constitutional justification. I think that's the start of where we really have to get at this problem, and that is, what really is the job of the Federal Government and can we afford to be all things to all people.

I just wanted to let you piggyback on that.

I need to stop and interrupt just a minute here, because you will never say this, but, Congressman Bishop, you were one of the main people that helped put that rule in place and I think the whole country needs to say a big ``thank you'' to you, because what you are doing is trying to make Congress just a little more efficient and do a few commonsense things.

A lot of people might not say this thinking outside the box, but the box is small down here sometimes, and you have provided us with the idea that we are actually going to get into some of these questions and we are going to approach them in a systematic kind of way. We are going to take time and not have votes running all day long so people can't focus on their work, and say now, systematically, what do we have to do to deal this problem?

I congratulate you on the first step, and also the rules package that says you have got to have a constitutional justification for everything you bring to the floor. I think we are starting on the right spot.

Well, I think that Ronald Reagan, you know, he had a way of

putting complicated things in simple words. He said we are buying more government than we can afford. That is not a bad summary of the situation. And it hasn't gotten better since Ronald Reagan was here--we are buying more government than we can afford.

I appreciate your historic examples. Of course, there is no way Congress can do the example of the postal roads that you made out when we are trying to basically do everything under the sun, be all things to all people. We are going to have to make some decisions saying this is a nice thing to do, but it could be done by a State government or it could be done by the private sector.

We are going to have to make some of those choices and just say, look, there are some things that the private sector and the States cannot do and we better fund that first. Certainly, providing for the common defense is one that has to be up at the front end, because the other governments can't do that, and the individual citizens can't do that. Whereas when it comes to some of the other kinds of things, such as in the energy areas or education or insurance or a lot of those things, they could be done by other governments.

When we start to get into this, hey, let's start to do something that feels good about this subject and turn it over to a bunch of administration bureaucrats, we have really lost control of where we are, and I appreciate your bringing us back to ground zero.

Now, there have been some shifts. Here is one that is kind of interesting, and it is the tradeoff. They always talk about the tradeoff between guns and butter, between defense and basically welfare programs.

If you go back to 1965, the entitlement spending was 2.5 percent of GDP of the overall budget, 2.5 percent in 1965 was entitlement. Defense was 7.4 percent. Now we have shifted to 2010, the estimate is 4.9 percent is national defense. We have gone from 7.4 down to 4.9 percent, while entitlements has gone from 2.5 percent to 9.9 percent in entitlements.

That is getting to that area where if the entitlements continue to climb, if you just look at demographics, there will be no money for defense or anything else and the budget will be dominated by just simply Medicare, Medicaid and Social Security.

So we are going to have to ask ourselves what are the top priorities. We are going to have to fund those and do a good job at those. That is what I was getting at. I don't think we can have the mentality of just saying we are going to take 10 percent out of everything or 30 percent out of everything. I think we are going to have to make some decisions. Some we may not want to cut, we just want to make them more efficient and leave that amount of money in it, and other ones we may say it is not a matter of cutting it, we don't even need the thing at all. Let's just get rid of that entire functional area. That is where we have to be going.

But, again, where we started today is the right place, with the U.S. Constitution, and making the key distinctions that the Constitution makes so clear. There is a difference for providing for defense and then basically encouraging general welfare.

I appreciate your very specific historic examples. If you remember the name of the book, there was a book, I don't know if it was the same one you were quoting from, but it had examples of those six industries. All of them where the government was in subsidizing the corporations, there was all kinds of corruption and the companies all failed, and the ones that stayed away from government funding were the ones that stayed in business. Just a fascinating study.

It's just a treat, Congressman Bishop, to have you here with us today talking about a very important subject, something that is on the front of the minds, I think, of many Americans, understanding that we are buying way too much government than we can afford. Certainly, the guiding compass and the guiding light for us has got to be the U.S. Constitution. And the fact is that we had hundreds of years of history, or at least a hundred of years of history, where the Constitution has stood us in very good stead. And when we get away from our foundational documents and principles, that's when we really start to get into trouble.

The principle on defense that was just made--I have to underscore, I'm on the Armed Services Committee. We deal with defense issues day in and day out. And the problem in defense is that the things that are on the drawing board today won't be fielded for probably 10 years in the future. So decisions that we're making today are going to have their effect a long way out. And that's why we have to be particularly careful. The situation in defense is one that, as you take a look around the world, we are rapidly being challenged by China and Russia, and we are not keeping up in those arms situations where we do not have the capability diplomatically to have options that were otherwise available before when we had put enough funding into defense.

And so as we see entitlements increasing way, way, way up and defense being cut down as a percentage of GDP, we are risking not doing the most fundamental principle in the preamble of the U.S. Constitution, which is providing for the national defense. And our objective, of course, is not parity. We're not trying to be equal with other nations. Our objective is to be overwhelmingly superior. That's why we don't have wars, because of the fact that people say, We don't want to take on the United States. And it's why we can be a great Nation of peacekeeping, because of the fact that we have been strong and successful and set a good example for other nations.

So what we have before us is a very difficult question. It is the question of politics in America. If you take a look at all of the fights, the debates, the discussions that go on in politics in America, most of it revolves around this question, and that is: What should the Federal Government be doing? Should it be spending more or less? Should it be doing that at all? Or, are we doing a good enough job? That's what the discussion and debate is about. And until we get back to the Constitution, until we start asking the question, ``Is it necessary for the Federal Government to do this function?'' we will never solve this problem of overspending.

The current Congress--and this is my opinion, but one that I think other Congressmen that I have discussed this with share, and that is we have another problem, and that is the House and the Congress is a product of a lot of time. There are various fiefdoms and ways that we have gotten accustomed to doing things which may not be very logical or practical.

I've been here 10 years. I have learned about authorization and appropriations and about the Budget Committee and the way we do things. But if we're going to seriously get at this problem, other than shaving a few percent here or there, if we're going to seriously get at the problem of having to radically reduce our appetite for spending, it's going to require changes in the structure of this Congress. And that will be one of the things that you can see we've already started on and are continuing and pledging to continue to do--to take a look at our rules and how the organization is set up so that we can make those hard choices and decisions.

There has been a commitment that those decisions will be made in a transparent way; in a way that everybody who is elected to be a Congressman, so that every district in this country will have somebody that can stand up and have an opportunity to weigh in and have an opinion. You won't see, as we had in the last Congress, bills that are being written in the Speaker's office and brought to the floor and rammed through in the dead of night. You're going to hear open debate, a lot of discussion, and a lot of ideas being discussed. I think that's a good thing and a proper thing. But, ultimately, we have to deal with the question: What are the essential functions that must happen in Federal Government?

Now, I've just heard that there are going to be some very significant cuts in defense. That's very concerning to me. Why would we be taking the Defense Department and doing major cuts there and no other department in government is being looked at? This is something that some of us will probably react to some because we believe we have to control spending, but why do you single out the Department of Defense? We're fighting two wars. Why are you going to whack that budget when you have all these other budgets that have never been touched whatsoever? And so we have to take a look at those percentages. When you see entitlements going very, very high, defense budget going low, that signals that we've got to be careful about the choices we're making, because the choices we make today, 10 years from now, your sons or daughters or my grandsons and my granddaughters may be affected by those choices.

So we start out a new Congress, I think, on the right foot. Emphasis on the U.S. Constitution; emphasis on the fact that we have to be responsible; emphasis on the fact that everybody in every congressional district is going to have a piece of the action; and the fact that we're going to have to be responsible, we're going to have to be cutting Federal spending. You cannot run, as we have in the first 2 years of the Obama administration, with $1.4 trillion deficit. And that will stop.

Madam Speaker, I yield 2 minutes to the gentleman from Virginia (Mr. Wittman).

Madam Speaker, I yield 2 minutes to the gentleman from Maryland (Mr. Bartlett), who has been the ranking member on this committee a number of times.

Madam Speaker, before I get into my comments, I think there are a couple of people that we, as a Congress, and even we, as a people, as Americans, need to be thankful for. And the first is Chairman Taylor, who I've had a chance to work with now a couple of years as the minority leader on the Seapower Committee. I don't know of anybody in our country who is more committed to the Navy or to making sure that we use our money wisely, and to the overall security of our country than Chairman Taylor.

And so I want to extend my personal thanks for the fact that what you don't see here just for a few minutes' discussion on the floor was hours and hours of tours through shipyards, all kinds of details, talking to all kinds of people and trying to make sure that a program that was a little difficult as it started out got on track, and now is not only on track, but represents a significant opportunity for us to invest in the security of our country.

And so hats off to Chairman Taylor. And I agree completely that we're going to certainly miss your expertise and your hard work, Mr. Chairman.

I yield to the gentleman from Maryland.

Thank you for those most appropriate comments, Roscoe.

The second gentleman that I think we need to recognize, Under Secretary Stackley, has really helped tremendously with his level of detailed knowledge about how you work these contracts. And he got the contracts, as Chairman Taylor mentioned, reorganized to some degree a couple of years ago, and now we have two excellent bids before us.

Now, one of the things that people know that have been around Congress a little bit is Congress has trouble making decisions rapidly or even wisely sometimes. I don't think that's the case today. Today, Secretary Stackley came to a number of us and said, look, there's two different ways we could go, the way we were planning to go, which is we down select, buy 10 ships, and then we resubmit bids to a number of different vendors.

He said the other alternative, which is very interesting, is that we just go with both contractors and buy the 20 ships right off the bat. And so as we had a chance to ask some questions, though not to the degree that many of us would have felt comfortable with, it became apparent that we would save money for the Navy and we could project more seapower more rapidly by going with both contractors, buy 10 from each side.

Now, the ships are different, as has been mentioned this morning. Certainly, an aluminum trimaran is a lot different than a monohull. It has its difficulties in anchoring in certain places or docking in certain places because it is so wide. But each has their place overall in the Navy.

Now, these ships, to try to put them in perspective, there may be some people who are not immersed in the detail here, we're not allowed to talk about the price that's been bid, but, generally speaking, you're looking at, you could buy five of these for the cost of one nuclear-powered submarine. So what we're talking about is a ship that is inexpensive enough, and we have enough of them that it allows America to project its seapower to little corners of the world where otherwise we don't have a presence that we need to have.

About a year or so ago, there was a lot of talk about pirates, and everybody got their best pirate voice out and talked about the pirates that were seizing commercial shipping. Some of that was allowed because of the fact that we didn't have as many ships as we might like in certain areas. This would be just one example of where these ships might become useful. They would become useful in hunting submarines and for all kinds and varieties of other missions.

And so this proposal that's before us is a result of some very good work by both Under Secretary Stackley, his coming to us and saying, look, there is a better way to do this but, Congress, you have to be able to respond and be agile on your feet.

Fortunately, there is a uniform agreement across the people that have been working these projects that, in fact Secretary Stackley is right and this is what we should do. So hats off to Secretary Stackley and particularly to Chairman Taylor for the good work that's been done.

I'm obviously speaking in favor of the proposal before us here. And there was some sense of frustration early on in trying to get the numbers and to get through the details that we had to in order to make a decision here; but I am very comfortable that what we're doing is the right thing.

The opportunity before us to pass this piece of legislation allows us to prove that it's wrong once in a while that Congress can't be agile and make wise decisions.

We will look to the Navy and to Secretary Stackley to help to continue to manage this program and make sure that the bids come in as we expect, that the Navy gets a good buy, and that we work to where we should be with enough ships to secure and give Americans the security that we believe is necessary and to provide a safe and peaceful world.

Madam Speaker, I yield back the balance of my time.

Mr. Speaker, some years ago, actually quite a number of years ago, I had an opportunity to witness a total solar eclipse. That's one of those things that happens very, very rarely, and it was quite interesting.

Today, we are looking at another eclipse of reason that happens very rarely. For the first time in 48 or 50 years, the Congress has not passed a defense bill. Now, that's pretty serious. First time in 48 years, no defense bill passed by Congress? And what are we here today debating? Well, we're debating the idea of an imposition of somebody's social agenda that they want to impose on the military.

Now, it would seem to me that, at a minimum, we would want to get down a defense bill before we got into this particular topic. But no. No. Instead, we are going to try to impose something when we are fighting two wars.

Now, the fact of the matter is that, in spite of a survey that tried to be biased, you have got the leadership of the Air Force under General Schwartz, leadership of the Army under General Casey, and the Marine Corps leadership under General Amos all opposing making these changes on this instantaneous basis, imposing this social agenda. So we are kind of experiencing something like a solar eclipse, except it's an eclipse of reason, an eclipse of common sense.

I have three sons that have served in the Marine Corps, two who are currently in the Marines. Let me tell you, even with the somewhat biased survey, 60 percent of the marines said, This is a lousy idea. So why are we, at the end of the year, when we have no defense bill at all, going to get into some of these social agendas? I don't think this is what the American public expects Congress to be doing. I don't think we need an eclipse of reason.