[Congressional Record Volume 140, Number 56 (Tuesday, May 10, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 10, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                THE SOCIAL SECURITY SOLVENCY ACT OF 1994

                                 ______


                         HON. TIMOTHY J. PENNY

                              of minnesota

                    in the house of representatives

                         Tuesday, May 10, 1994

  Mr. PENNY. Mr. Speaker, once again, bankruptcy of the Social Security 
trust fund looms before us. The question is, are we going to act now, 
while there's still time to pursue a reasonable plan of action, or will 
we wait, and be forced to resort to draconian measures sometime in the 
next century to bring the system back into balance? I notice that we're 
bringing up a bill today to balance the disability trust fund, expected 
to be exhausted next year. If we follow the same course and wait until 
the year before the Social Security trust fund is depleted to solve the 
problem, FICA taxes will have to be raised to nearly 20 percent of 
income to make up for the shortfall.
  People from all generations in my district, from college students to 
retirees, have indicated their willingness to sacrifice a little to 
ensure the system is there to provide a secure retirement for everyone. 
I have a fair and equitable plan that would ask every generation to 
contribute to the solvency of the Social Security trust fund.
  My first bill accelerates the increase in the retirement age. Today 
Americans live at least 10 years longer than we did in 1935, when the 
Social Security Act was passed. It only makes sense that we ask 
recipients to work a little longer before drawing from the system. The 
retirement age will reach 67 in the year 2027 under current law. This 
bill raises the retirement age to 67 by the year 2004, and would reach 
age 70 by the year 2013. This provision alone would go two-thirds of 
the way toward balancing the trust fund.
  One of the fairest ways to limit Social Security expenditures, while 
at the same time protecting retirees most in need, is to provide a 
flat-dollar cost-of-living adjustment [COLA]. Because COLA's are based 
on current benefit level, those receiving larger Social Security checks 
also receive a higher dollar annual increase when cost-of-living 
adjustments are made. A flat-rate COLA is a relatively painless way to 
progressively shave just a few dollars off everyone's benefits, while 
protecting those at the lowest benefit level.
  One of the keys to reforming the system is to inform beneficiaries 
how much they've actually received in Social Security benefits relative 
to their contributions. A person who retired 10 years ago recovered 
everything he or she paid into the system, plus interest, in less than 
4 years. It will take a person retiring today, on the other hand, 
approximately 16 years to collect his or her due, meaning most folks 
will just about break even. Many workers believe they will never live 
long enough to recover the money they paid in. For current workers, the 
facts bear this out.
  My third bill would send annual statements to all Americans when they 
start to collect Social Security benefits, comparing lifetime 
contributions to actual benefits received thus far. When people realize 
their grandchildren will pay the price for the extra benefits they're 
receiving today, I believe they will be much more inclined to accept 
necessary reforms to balance the program.
  Today I am introducing the Social Security Solvency Act of 1994. 
These reforms would solve the shortfall problem honestly and equitably, 
without requiring higher payroll taxes on the next generation. We can't 
afford to ignore the early warning signs that Social Security is in 
trouble. We can act now--or pay later.

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