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May 24, 2023

Schweikert Explains Consequences of a “Clean” Debt Ceiling Increase

WASHINGTON, D.C. — Last night, U.S. Representative David Schweikert (AZ-01) delivered a speech on the House Floor to discuss the consequences that would reverberate throughout the U.S. economy if the U.S. credit rating received a downgrade because of a so-called clean debt ceiling increase. Rep. Schweikert also noted several reasonable elements that House Republicans have proposed in a debt ceiling deal that would dial back the national debt and rein in out-of-control spending levels.

Excerpts from Rep. Schweikert’s floor speech can be found below:

Click here or on the image above to view Rep. Schweikert’s remarks.

On Democrats’ pledge not to raise taxes on Americans making less than $400,000:

[Beginning at 0:24 mark]
“So, if I have a world where you can’t raise taxes on people who earn $400,000 or more — the Democrat mantra, it’s part of their platform — no tax hikes for $400,000 or higher income earners. You do realize that’s 98% of taxpayers, meaning there’s only 2% left that make income over $400,000. That’s how they’re going to balance the budget? The math is absurd. So, you actually start to work through how this actually works. So, you could do a 100% tax rate on all those $400,000 and over, and you get nowhere near, I mean, a fraction of a fraction of a fraction of what is required to handle the shortfalls, the requirements for Social Security and Medicare. That’s the plan the Left has given us. It’s great political talking points. It gets you cheers at the neighborhood town hall and you’re lying to them. The math will always win.”

On Democrats’ do-nothing plan to pay off U.S. sovereign debt:

[Beginning at 4:25 mark]
“In 2011, I’ll show you the words from S&P. We were downgraded not because of the debt ceiling fight. We were downgraded because we did not communicate to the world and to the debt markets that we were going to take debt seriously. It’s a decade later, and debt is dramatically worse. The demographic curve now is crushing us. And the proposal from the Left is to spend more money. Don’t worry about it. We’ll tax people over $400,000 even though it’s 2% of the population. You can take every dime they have, and it doesn’t do anything. One more time — if you were to stabilize U.S. sovereign debt at 95-97% of GDP, if you don’t do anything on the spending side, remember, we’re trying to do something on the spending side. So, we do what Democrats have proposed and don’t do anything. You have to go from our current sort of 15% payroll tax — that’s your FICA tax you’re paying into, Social Security, Medicare, unemployment. You have to go to 24%. So that’s the Democrat plan. FICA taxes go up to 24%, and you have to do a national value-added tax on top of everything else. So, everything just went up. Remember how a value-added tax is every step of production you add another 20%. This is not paying off any debt. This is just stabilizing enough cash flow to hold us at about 95-97% of debt to the size of the economy. You need a 20% VAT and a FICA tax that is actually at 24%, and that just provides stability. That does not pay anything off. That’s the plan.”

On clawing back unspent COVID funds in a debt ceiling deal:

[Beginning at 7:31 mark]
“But we’re going to have a fear theater around here talking about the debt ceiling and the Republicans who actually want to bend a little bit of the spending. So we’re scheduled to borrow, what, $21 trillion over the next ten years, and we’re talking about dialing back $4 trillion. And that’s the end of the world. It shows you just how perverse this place is. Between 2020 and 2022, there’s some $362 billion that’s still left in the $5 trillion in stimulus. Remember, we went through that little thing called the pandemic. We basically spent like $5 trillion trying to mitigate its damage, keep the economy stable, fine. There’s about $362 billion that’s unspent. Our really difficult proposal in our debt ceiling that the Democrats are screaming, ‘Oh, how dare you!’ It isn’t after the $362 billion. We’re after [$30 billion] of it. Give us back $30 billion of that. It’s 8% of the money, and it’s the end of the world. Has our politics become that perverse here that we’re willing to lie to the American people about the math, make up things, and destroy my children’s future? Remember, I have a ten month old and a seven year old. Does my child have the right to live as well as we do? Because right now, CBO’s math says in 24 years, U.S. taxes double. If you plan to be working 24 years from now, at that moment, your taxes will be doubled — corporate taxes, tariffs, all types of income taxes.”

On what would happen if the U.S. credit rating received a downgrade:

[Beginning at 13:14 mark]
“Did anyone go and pull up their copy of the 2011 Standard and Poor’s report? I’ve heard multiple folks here refer to it. We got downgraded one tick from AAA to AA+. Read the report. It was not about the debt ceiling fight. It basically clearly says it’s because we provided no vision of what we were going to do about U.S. sovereign debt. We’re a decade later, and the numbers are dramatically worse. And some of that being it’s not Democrat, it’s not Republican. It’s COVID. It’s demographics. It’s the number of missing Americans in the labor force. We have about 3.5 million workers that have just disappeared. But understand there’s a number of us who believe if tomorrow we just had a clean debt ceiling. Yeah, I’ll just keep borrowing money. We get downgraded. It happened in 2011. The rating agency did not believe we were serious, and understand if two rating agencies did this exact same rating. The stress in U.S. sovereign markets is real because all of a sudden, lots of states, lots of governments, lots of bond funds can no longer hold U.S. sovereigns. Because you can have one of the three big rating agencies downgrade you, but you can’t have two.”

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