During a House Ways and Means Committee hearing on Saturday, Rep. David Schweikert (R-AZ) questioned Stanford Professor of Finance Dr. Joshua Rauh about tax reform.
00:00Thank you, Mr. Chairman. Professor, you and I are going to run through some math. So everyone that hates math, please, you know, you can tune out. Also, for the fun of it, for those of you who actually have the Wall Street Journal app, as of this morning, skip the story that says Democrats are at the 35-year low in favorability, go to the article that's very detailed, simple graphs to look at on distributional effects of this tax cut.
00:30And you'll actually see, once again, the wealthy are paying substantially more. The middle class actually gets a higher percentage of the benefit than the upper income. So instead of the political class trying to spin all of you, actually, just go look at the actual math.
00:48Professor, and I know, you know, I'm a fan of a lot of your work, and the Joint Economic Committee has quoted some of your work over the years.
00:59One thing that I believe your team has actually worked on is the morality and actually future economic vitality of populations that participate in the economy.
01:11It's really a University of Chicago study a few years ago for leading PhD economists did the report that saying, if you don't have work requirements, they're poorer at the end of 10 years.
01:23If you do have requests to participate in the economy at the end of 10 years, they're wealthier.
01:30Do you find that in your own literature?
01:31Well, absolutely. And I've actually been somewhat shocked today at the exaggerations of the supposed catastrophes that are going to happen if we, given that we are now including work requirements for Medicaid.
01:50You know, the CBO projections of how many people are going to, they use the word, lose health insurance, they don't consider the fact that a lot of people will voluntarily, will voluntarily move off of Medicaid onto private health insurance, which is actually, which is actually the point.
02:10And so, no, that's right. I also would like, I also, I also just want to, you want to, in some numbers, Medicaid rolls have increased since 2019 by 7 million people.
02:20And, Professor, and look, for anyone who says it's a cut, it's not. It's a slowdown in the growth.
02:26We also have to deal with some math reality, and it's not Republican or Democrat, it's demographics.
02:32In seven years, Medicare doubles in spend. It doubles in spend.
02:37And one of the straight sins we do as a committee, Republicans and Democrats, is we somehow think healthcare is the subsidy.
02:45Think about every word you've heard from the Democrats here in the discussion of healthcare is the subsidy.
02:53Sorry, ACA is a finance bill.
02:56Republican Alternative was a finance bill.
02:58Medicare for All is a finance bill.
03:00When will we actually unleash the technology, the healthcare revolution, to change what we pay, not how we finance and ask for subsidies?
03:08Professor, and I think it's actually something your colleague did, which showed that the inflation we had the previous four or five years was actually the biggest punch in the gut to income inequality in America.
03:27Because those of us with assets, we get wealthier, the other populations get poorer, and the only choice we have is to build a tax system, regulatory system, incentive system for productivity.
03:46Productivity is the only answer for us to get out of the situation that we're in.
03:51Let's just talk about the medical systems for a moment, okay?
03:55Federal government, you know, it spends about a third of the total expenditures on Medicare and Medicaid.
04:03And these have gone up so much.
04:04The federal government in 2019 spent $409 billion on Medicaid.
04:08In 2025, they spent $655 billion on Medicaid.
04:10And people are crying about cuts, okay?
04:13We need to get much more efficient, efficient with these programs and unleash productivity improvements in the programs.
04:21And in nine years, it's well over 800.
04:23Yeah, yeah.
04:24And it's going forward, going forward.
04:26It's only going to increase unless we can incentivize productivity improvements.
04:31It's just simply unsustainable.
04:32The money is not there.
04:33Mr. Speaker, or excuse me, Mr. Chairman, Professor, and I know we only have seconds, but also in your written testimony, you do something that I really hope we do some future hearings on, is what policies can we adopt that now go hand in glove with, now we have expensing research and development expenses.
04:57We have the incentives to invest in that productivity.
05:00How do we get the alignment of now our laws, our regs, our statutes to actually make them work so we maximize that GDP growth and therefore maximize prosperity for every American?
05:14I think you have to look at, as I mentioned in my testimony, more that you can do in order to contribute to the deregulation of the economy in ways, in ways that enhances productivity, particularly in medicine.
05:28You know, things like telehealth, things like the use of AI in medicine.
05:34Some who benefit from the current system actually are against that.
05:38But I believe that's the only way, the only way that we're going to be able to get out of the fiscal problems that we are in because these medical programs, the spending on the medical programs has exploded, will keep exploding, and is eating up increasing shares of our budget.
05:53We're not going to be able to afford the military, we're not going to be able to, our interest payments are already over 20% of our debt, of our revenues rather.
06:02Interest payments are over 20% of our revenues.
06:04If you take Social Security payroll tax off the table, there are over 25% of our revenues excluding the Social Security payroll tax.
06:12And we just don't, the money is just not going to be there.
06:15We need these productivity improvements.
06:17I don't want to try the chairman's patience, but thank you for your tolerance.
