Schweikert talks panel, Medicare
Rep. David Schweikert recently won a tough reelection campaign and is now the fourth-highest-ranking member of arguably the most powerful committee in the U.S. House of Representatives.
The House Ways and Means Committee, among other responsibilities, oversees entitlement programs, such as Medicare and Social Security, as well as the tax code.
Schweikert, R-Ariz., is chair of the Ways and Means oversight subcommittee. He discussed his vision for the panel and his take, as a certified public accountant, on the upcoming debt ceiling in an interview with The Arizona Republic in his Washington, D.C., congressional office.
What’s next for the Ways and Means oversight subcommittee?
Schweikert said he believes there is room for bipartisanship.
“First principle is try to do it well,” Schweikert said when talking about his priorities for the oversight subcommittee. “Oversight on many other committees becomes sort of hyper-gotcha. You know, go after the administration . ... In Ways and Means, you have such vast jurisdiction that’s critical to delivering services to the economy. We’re going to try to address it, very professional-like.”
“We need to understand what was the scale of the fraud that happened in the pandemic relief, the enhanced unemployment,” he continued. “But then we have other things, other things in the tax code that aren’t working or are working that we need to understand. Are there things in Medicare fraud? And it turns out I don’t believe any of those need to be a partisan war.”
Another goal for Schweikert’s subcommittee is to “find bad acts, expose them and fix them to find optimistic changes.”
He cited as example the issue over hiring new IRS agents, with Republicans skeptical of that action.
“If the goal is simplification and tax compliance, there may be a much more elegant technology solution,” Schweikert said. “How do you both do the research, do the hearings, bring in the experts, and then see if there’s potentially a bipartisan understanding of what the goal is? That’s an example of until we raise the information level on the debate, you’re not going to get to a solution. And oversight allows you to do that.”
As an example of a technological solution, Schweikert cited public and commercial information already available that can inform you about whether an organization is complying by the tax code.
Where does Schweikert stand on Social Security?
“Social Security is actually one of my areas of fascination,” Schweikert said, motioning to a recent Congressional Budget Office update on the Social Security actuary report.
Schweikert, who is on the Social Security subcommittee on Ways and Means, says the challenges facing the programs are great. The trust fund will be “substantially exhausted” in a decade, with a larger percentage of the U.S. population retiring and fewer younger people working.
“I’ve been the senior Republican over Social Security for the last year. I’ve never had a single, single person ever talk to me about cutting Social Security. The panic is the cut is automatic. In 10 years, you’re going to double senior poverty. How do you fix it?” he said. “It turns out complex problems actually require complex solutions . ... People so often say, well, just raise the age limit and raise this tax. Turns out those things actually don’t work on the long run.”
Examples of possible solutions are voluntary options for workers to work longer that would be rewarded through an incentive system. Another is raising the base salary for maximum taxable income, which this year is $160,200, and having the highest earners get a smaller percentage of their contributions for future Social Security checks.
Schweikert said proposals have to be carefully considered and analyzed for the future, which lawmakers have little political incentive to do.
“This is not something you do off the top of your head. You functionally end up having to run every idea through actuaries,” Schweikert said. “You look at Social Security over a 75-year time horizon, and this place spends its time looking at tomorrow’s headline. Our modern political system doesn’t reward you for fixing things into the future, but it’s now absolutely necessary because all policy here will be affected by the structural deficit.”
Medicare financially worse than Social Security, Schweikert says
While Social Security’s fiscal health gets a lot of attention, Medicare is financially in worse shape, he said. “Medicare is actually a three times bigger problem than Social Security,” Schweikert said, explaining that roughly 75% of our borrowing over the next three decades will be to pay for Medicare.
“The solution is not cutting Medicare. The solution is a revolution: the cost of delivering health care services,” he said. “It’s a very different way to look at it. So much of this place wants to talk about the financing.”
Schweikert explained that the Affordable Care Act, sometimes referred to as “Obamacare,” and the 2017 Republican alternative to replace it did not address lowering the cost of health care.
“They just move around who gets to pay, so the solution is much more disruptive. It’s can you promote and legalize the technologies that disrupt the price of delivering health care?” Schweikert said. “And that’s real. It’s not utopian. It’s out there.”
He cited as an example a breath biopsy, available in some countries, that can be kept at home and will tell you immediately if you have the flu. The technology is illegal in the U.S. because of issues with state licensures, reimbursement rules on the federal level, and health and safety regulations.
“And so instead of people running around saying they’re going to cut this, how about if you allow technology to be part of your choice?” Schweikert said.
Curing chronic diseases like diabetes, he said, would be important in lowering health care expenditures. The vast majority of health care spending, nearly 90%, is spent on chronic diseases.
Dramatically decreasing America’s health expenditures is a crucial component of addressing the country’s debt, according to Schweikert, because it will make up most of the next 30 years of debt.
What to do about the debt ceiling?
Schweikert argued that the looming debt ceiling has been an impetus for Congress to think about future spending. The U.S. is not going to “default” on its debt, he said. “If you look at Congress’s ability to do things, you need a stressor. The fact of the matter is this debt ceiling is a stressor that’s forcing an actual conversation of the structural deficit, the demographic problem we have as a country, with 10,000 Americans turning 65 daily,” he said.
“Remember, we have a $2 trillion structural deficit in 10 years. One trillion’s interest, the other trillion is functionally Medicare . ... Your interest payment is what the market tells you it is. And demographics, health care, earned benefits to senior populations. We can’t cut those. Those are structural.
“So the folks that run around say, we’ll balance in 10 years, I can do it. But the math is brutal and it’s not practical,” he added.
Neither the left’s wanting to raise taxes nor the right’s preference to eliminate foreign aid would fundamentally address the deficit, Schweikert said.
“There’s a lack of understanding of the scale for the debt ceiling,” he said. “You can go to a 70% marginal tax rate and you still can’t get anywhere near covering the structural deficit or Republicans saying we’ll get rid of foreign aid or waste and fraud . ... Every dime of foreign aid covers only about two weeks of borrowing.”
Schweikert explained that the U.S. is not going to “default” on its debt, which is a technical term for when you do not have enough money to pay for your bonds. “We have with plenty of cash flow to cover our bonds, to cover our earned entitlement payments. It’s the other part of discretionary spending where you may have a breach,” he said, explaining that the government may not able to pay for contracted work, like bridge construction, if an agreement to raise the debt ceiling is not reached.
“That’s not a default. You can argue saying that’s a technical default when you’re not following through with your contract. It’s not a default the markets care about,” he said. “Even interest rates on U.S. sovereign (debt) have actually stayed very level because the markets aren’t playing the theatrical games of Washington.
“The theatrical class here uses the term default. Actually, in some ways, they care more about the politics than saving the country,” Schweikert added.
The debt ceiling will force Congress, particularly Democrats, he said, to “deal with reality” about how to pay for big ticket legislation, citing President Joe Biden’s COVID-19 stimulus of March 2021.