[Congressional Record Volume 140, Number 141 (Monday, October 3, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[Congressional Record: October 3, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           ENTITLEMENT REFORM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
February 11, 1994, and June 10, 1994, the gentleman from Utah [Mr. 
Orton] is recognized for 60 minutes as the designee of the majority 
leader.
  Mr. ORTON. Mr. Speaker, I have asked for time to address my 
colleagues and the American people this afternoon or this evening on a 
very important issue. It is the issue of entitlement reform.

                              {time}  2110

  Earlier this year, there was a great deal made in the press and in 
this body about the bill that was known as the A to Z spending cuts 
bill. A to Z proposed that there would be time set aside within the 
House, in the House legislative calendar, to propose cuts to 
discretionary spending programs. However, it only dealt with fiscal 
year 1994 and, in fact, proposed under the rule a specific amount of 
time, 1 week, during which Members could come to the floor of the House 
and present specific spending cuts. Again, this only would deal with 
discretionary spending cuts for 1994.
  There was an argument that the rule could, in fact, be expanded to 
cuts of entitlements, but there is question whether that would be the 
case either. The main point is, this coming to the floor, very late in 
the session, late in the fiscal year 1994, and dealing with only fiscal 
year 1994, the practical reality is there would be very little impact 
on the Federal budget deficit through such a period of time here of 
proposing those specific cuts.
  Several of us in the House who were sponsors of the original A to Z 
bill, rather than discharging the petitions, signing the discharge 
petition to bring that particular bill to the floor, which would only 
cut spending in 1994, 1994 was 11 months past, the actual spending cuts 
would be very minimal at best, if passed, we sought a way to actually 
accomplish the goals espoused by those of us who sponsored the bill, 
but doing so through a slightly different approach.
  So we met with the leadership of the House. And rather than 
discharging this bill, bringing it to the floor for a 1-week debate, we 
reached an agreement wherein we could accomplish really three things:
  First of all, the appropriation bills for fiscal year 1995, a year 
which has not yet begun, a year, if we cut spending from 1995, will 
actually result in lowered spending, that all of those appropriation 
bills would come to the floor under an open rule; thereby, any 
discretionary program under those appropriation bills would be eligible 
for any Member of the House to stand up and propose a cut.
  Second, we would have several specific budget reform measures brought 
to the floor of the House for a vote.
  And third, we would have time to come to the floor to debate specific 
entitlement reform so that we could in fact try to put this country 
back on track of fiscal responsibility.

  We have accomplished much through that agreement. In fact, the 
appropriation bills did come to the floor under an open rule. There 
were 74 amendments proposed. Many of them passed, cutting billions and 
billions of dollars out of the 1995 fiscal year appropriations. It is 
also interesting to note that the prime sponsors of the A to Z bill did 
not come forward and propose one amendment out of any of those 
appropriation bills.
  We also brought to this floor and debated and passed through this 
body four specific items which will have a direct impact on cutting the 
deficit: first of all, the enhanced rescission bill; second, the 
elimination of baseline budgeting; third, a limit on emergency spending 
so that you cannot just tack on nonrelated pork barrel spending bills 
and then pass an emergency bill not subject to the spending limits; and 
fourth, a cap on entitlement spending.
  Each of those four bills came to this body. We voted on them. We 
passed them. If the other body would act on those before leaving this 
session, I believe that we could have very significant reduction in the 
deficit over the coming years.
  The fifth budget reform that we have asked for that has not yet been 
voted on in the House, which I would urge the leadership to bring to 
the floor of the House this week before leaving, is what was called the 
lock box mechanism. What that was designed to do is say that when we 
vote here on the floor of the House to cut spending that that spending 
would actually have to reduce the deficit, rather than be freed up and 
be eligible to spend on some other program. So spending cuts voted here 
would actually reduce the deficit.
  I favor all of those, voted in favor of all of those and would favor 
the lock box.
  The final, third and final thing in the agreement with the leadership 
is to have an opportunity to debate entitlement reform. That is what we 
are going to be doing this week, most likely on Wednesday. A resolution 
which I have filed, House Concurrent Resolution 301, will be presented 
for debate. We will also present three specific amendments in that 
resolution.
  The basic resolution is a generic statement about the need to deal 
with entitlement reform. Then the three specific amendments, which will 
be presented, would deal with means testing of entitlements, increase 
of the retirement age and reform of cost of living adjustments.

  I want to take a little time this evening and explain the need for 
thorough debate on entitlements and the need for some action and what 
it is that we are attempting to accomplish.
  This debate is not about cutting entitlements to beneficiaries. This 
debate is about ensuring that into the future those entitlement 
programs will be financially sound. They will be financially viable. 
There will be money to pay benefits to future beneficiaries.
  That is what this debate is all about. And so I would like to explain 
House Concurrent Resolution 301 and the three specific amendments that 
we are going to propose to this resolution.
  The basic resolution is fairly simple. I would like to read it to 
you:

       Resolved by the House of Representatives, the Senate 
     concurring, that it is the sense of the Congress that current 
     trends in entitlement spending are not sustainable and 
     Congress must act to resolve the long-term imbalance of the 
     entitlement promises and available funds to ensure that day's 
     debt does not fall unfairly on a American's children.

  That is the principal resolution, which generically states that we 
must do something about entitlements.
  The whole discussion and debate about the budget deficit or the 
national debt is not just a technical or an academic exercise. Every 
citizen in America has a personal stake in our Nation's national debt.
  I have several charts here which the Entitlement Commission, known as 
the Cary Commission, has prepared. I would like to thank them for the 
opportunity of using these charts. But these charts show graphically 
what is happening with the Federal debt, the national debt, and how it 
applies to each individual American.
  ``The National Debt is a Large and Growing Obligation for All 
Americans.'' This shows the net national debt in thousands of 1993 
dollars. These are constant dollars, not inflated into the future, per 
individual, for every man, woman, and child in this country.
  In 1970, each man, woman, and child owed about $25,000 toward the 
national debt; in 1980, it had not changed much. By 1990, it had 
doubled. By the year 2000, it goes up to approximately twelve and a 
half thousand. By the way this is astounding.

                             {time}   2120

  In 1990, it is astounding that every man, woman and child would owe 
proportionately $10,000 towards the national debt. Look what happens by 
the year 2030, just 35 years from now. Every man, woman, and child in 
America, their portion of the national debt will be almost $65,000 in 
1993 dollars. That is absolutely astounding.
  Mr. Speaker, we must do something.
  We have been making progress, by the way, Mr. Speaker. Through hard 
work, the deficit has been falling. In 1992, fiscal year 1992, the 
deficit was $292 billion. In 1993 it dropped to $255 billion. In 1994 
it dropped to $202 billion. In 1995, the coming fiscal year, the CBO 
projects it will be $162 billion.
  This is an amazing 40 percent cut in the deficit in a period of three 
fiscal years. We are making a difference. We are having an impact. 
However, the problem is all of those reductions are a result of 
discretionary spending cuts.
  The budget is divided, really, into three different sections. One 
section we call interest on the debt. That is the amount of money we 
owe to ourselves, by the way, who have loaned the Government money 
through our savings, through buying savings bonds, certificates, et 
cetera. That amount of the debt, or the budget, is about 13 cents to 14 
cents out of every dollar.
  The rest of the budget is divided into mandatory spending, called 
entitlements. Those are things that we in Congress do not have any 
control over. They go up automatically year by year, because the 
benefit is based upon eligible criteria. If an individual meets the 
statutory requirements, they are eligible to receive the payment. That 
is mandatory spending.
  The rest of the budget, Mr. Speaker, is discretionary spending. Right 
now it is sitting at only about 35 cents on the dollar that we in this 
body can control how much that spending is. The progress that we have 
made these past three years, Mr. Speaker, is coming from discretionary 
spending and increased revenues through the tax increase in the Clinton 
budget reconciliation bill of a year ago.
  The reality, Mr. Speaker, is depicted by this chart that shows the 
growth the mandatory spending within the Federal budget in just four 
decades.
  If we go to 1963, discretionary spending was 70.4 percent of the 
budget. Interest was 6.9 percent. Entitlements were 22.7 percent.
  Look at what happened in ten years. Entitlements rose from 22 percent 
to 38 percent. In another ten years, they rose from 38 percent to 45 
percent. In another ten years, they rose to 47 percent.
  Mr. Speaker, by fiscal year 2003, just eight or nine years from now, 
entitlements will be 58.2 percent, interest at 13.8, and it gives us 
only 28 cents out of every dollar on discretionary spending, so we can 
see graphically what is happening with entitlement growth as a portion 
of our spending.
  Mr. Speaker, the present trend of entitlement growth is not 
sustainable. This graph depicts revenue as the green line. By the way, 
it is interesting to note, revenues in 1970 were a little over 19 
percent of the gross domestic product.
  In 1981 and again in 1986, we lowered taxes, lowered revenues to the 
Government, and indexed those revenues to inflation, so that as the 
economy grows, revenues are indexed, taxes, deductions, et cetera, are 
indexed. Therefore, revenues are going to remain fairly constant, at 
around 18.5 to 19 percent of the gross domestic product.
  Mr. Speaker, however, look at what has happened since 1970. Mandatory 
entitlement spending is there in red. Interest is the area in blue. 
Discretionary spending is the area in gray.
  In 1970, we had just a very small deficit. By 1980, by 1990, by the 
year 2000, however, look what happens by the year 2020, or actually by 
the year 2010, just 15 years from now. Virtually all of our revenues 
will be used in mandatory entitlement spending and interest on the 
debt; nothing left for discretionary spending.
  If we are to balance the budget, and 271 Members of this body have 
voted to balance the budget, if we are to balance the budget, that 
means if we do nothing about the increase in spending, right there we 
have no money to spend on discretionary programs. Right here we have 
gone into default. Our country is bankrupt and in default, because it 
could not pay even interest on its own obligation.
  By 2030, Mr. Speaker, just entitlement spending consumes more than 
all of the revenue the Government brings in.
  In conclusion, therefore, Mr. Speaker, I would like to quote the 
first line of the basic text of House Concurrent Resolution 301: ``It 
is the sense of Congress that the current trends in entitlement 
spending are not sustainable.'' I think it is clear that in fact that 
is the case.
  Why do we need to act? Unlike discretionary spending, entitlement 
spending is not based upon action by this body. In order for us to 
increase defense spending, in order for us to increase spending on 
highways, or increase spending on crime enforcement, education, in 
order for us to increase that spending, we have to come into this body 
and affirmatively vote to increase the spending through the 
appropriation bills.
  We do not do that on the entitlement provisions. They automatically 
increase, based upon the number of people eligible to receive the 
benefit and the formula defining the benefit. They go up automatically.
  Mr. Speaker, we have taken several strides in the Committee on the 
Budget and in Congress to try to slow or reduce that growth of the 
deficit. Some of them are working, by the way.
  In 1986 or 1987, I was not here, this body passed the Gramm-Rudman-
Hollings bill which required that we would get to a balanced budget. 
However, it only required that we would project a balanced budget, 
because there is no enforcement mechanism which would come back and 
test us to see if we made it. There was nothing that said what we had 
to do if we did not make it.

  For the first couple of years under Gramm-Rudman, Congress projected 
that deficits would go down and that eventually, at the end of the 5-
year period, we would have a balanced budget. Unfortunately, there was 
a vast difference between what was projected to be the deficit and what 
actually turned out to be the deficit. At the end of the 5-year period, 
deficits were higher than they were at the beginning of the 5-year 
period.
  Therefore, this body in its wisdom determined that they had to do 
something in addition. They had to take real steps which would actually 
bring down the debt. What were they? Something called pay-as-you-go, a 
very novel idea to the Government, which most people in this country 
already have to live by.
  You can only spend the money that comes in. If you want to increase 
your spending, you have to increase your revenues. You can do that 
either by raising taxes or cutting spending from some other source, 
just like you do in your household. If you want to go out and buy 
something else, you have to either lower spending on some other program 
or issue, or find additional revenue.
  What we have been doing, Mr. Speaker, is going out and borrowing, 
borrowing from our children and grandchildren, into the future. That is 
what has created this debt.
  Mr. Speaker, however, pay-as-you-go, while it has injected discipline 
into our process, only affects or applies to discretionary spending. It 
does not apply to mandatory entitlement spending.
  We have taken other action to bring down the debt, action which, as I 
mentioned, is being successful. We are lowering it by 40 percent over 3 
years.
  However, those things, the 5-year freeze on discretionary spending, 
which I advocated--and we were successful in the Committee on the 
Budget and on the floor of the House and the Senate, we now have a 5-
year hard freeze on discretionary spending. We cannot spend more in 
fiscal years 1994, 1995, 1996, 1997, and 1998 than we did in 1993.

                              {time}  2130

  But again it only applies to discretionary spending.
  Enhanced rescission, baseline budgeting, emergency spending. All of 
these things that we have passed in the House again only apply to 
discretionary spending. They do not apply to entitlements.
  Other effort in attempting to limit entitlement spending has met with 
very limited success. For instance, in August I along with my 
colleagues the gentleman from Texas [Mr. Stenholm], the gentleman from 
Minnesota [Mr. Penny], and the gentleman from Ohio [Mr. Kasich] from 
the other side of the aisle proposed an entitlement cap. It would be a 
cap, a hard cap on the growth of entitlement spending. What it said was 
that over the next 5 years, entitlement spending could not increase 
greater than the increase in the inflation factor, the CPI, plus the 
increase in the population of the country, plus 1 percent in addition 
to the growth in the population and the increase in the CPI. It seemed 
like a reasonable amendment. It would have saved $150 billion over the 
next 5 years. Thirty-seven brave souls voted for that amendment.
  Also the entitlement commission, the Kerry Commission that provided 
these charts, is finding it very difficult to identify specifically how 
to actually change or lower entitlement spending.
  I submit that the budget deficit cannot be addressed without 
addressing entitlement spending. It is a simple exercise in math. Two 
hundred and seventy-one Members of this body voted for a balanced 
budget amendment. If you are not in budget, in balance, that means that 
you are spending more money than you are bringing in. There are only 
two ways to balance the budget. You either have to increase money 
coming in or you have to increase money going out. Let us look at the 
possibilities and the options.
  Increase the money coming in. How do you do that? You do that by 
raising taxes. There is very little appetite in this body or around 
this country for raising taxes. That is not a feasible option.
  Second, interest on the debt. Out of every dollar, 14 cents goes to 
pay interest on the national debt and it is growing. We cannot default 
on that, or the country is in technical bankruptcy, its assets are 
subject to foreclosure, the economy fails, you have hyperinflation. You 
cannot default on the debt. You have to pay the national debt.
  What about defense? I along with I think a majority of my colleagues 
believe that we have cut defense about as far as you possibly can cut 
it. In fact, many believe that defense should be increased. So we are 
not going to get more out of defense.
  If you do not look at entitlements, if you say, ``We're going to do 
this without entitlement cuts,'' you would have to cut--we have got 
roughly a $160 to a $230 billion deficit over the next 5 years--you 
would have to cut $200 billion out of nondefense discretionary 
spending, which is under $300 billion. That means you would have to 
take virtually every other program, every other spending that this 
nation spends, and cut it by two-thirds. That is the Justice 
Department, that is the Department of Transportation, that is the 
Department of Education. You would literally decimate that spending. 
You would bring the Government to a close.
  Without raising taxes, without cutting defense, and without cutting 
entitlements, I defy anyone to show how they can balance the budget. It 
cannot be done.
  There is also another question, the question of some of the 
entitlement programs and the solvency. There is a serious concern about 
Social Security and Medicare. In the 1970's, there were programmatic 
changes made to Social Security in order to make it economically 
viable, safe and sound, for the next 75 years. The projections showed 
that by the huge tax increases, and, in fact, now many Americans, many 
working-class American citizens, pay more in Social Security taxes than 
they do in income taxes, or any other type of tax. If you do not 
believe it, go home and look at your pay stub. Pull it out, compare the 
amount going to State or Federal or other type of taxes and the amount 
going to Social Security. That now is the highest tax that we pay for 
many Americans, and it is a flat tax. It is a tax on the lowest amount 
of earned income, by the way.

  The changes, the increases, when we radically increased in the 1970's 
and early 1980's those taxes, it was supposed to put it safe for 75 
years, the trustees of Stoical Security now say that Social Security 
will run out of money in the next century. It is projected to be 
bankrupt within 35 years. Therefore, if we do nothing, we will not have 
the revenues to even pay Social Security benefits.
  We must take definitive action. Therefore, the second part of House 
Concurrent Resolution 301 states, ``Congress must act to resolve the 
long-term imbalance of the entitlement promises and available funds to 
ensure that today's debt does not fall unfairly on America's 
children.''
  Entitlements are popular programs. Almost all of these programs are 
Social Security and health care. More than 75 percent of entitlement 
programs are Social Security, Medicare, Medicaid, and Federal 
retirement. In dollar figures, these are all of the entitlement 
programs. If we say we have got to do something about it, we have got 
to cut entitlements, where do you cut?
  Here are entitlement programs: $300 plus billion per year being spent 
on Social Security, $125 plus billion on Medicare, $75 plus billion on 
Medicaid, and approximately $40 billion on Federal retirement benefits. 
Those are the majority.
  When you get down to unemployment compensation, food stamps, 
Supplemental Social Security, veterans, AFDC--those are welfare 
payments--agricultural price supports, earned income tax refunds, 
railroad retirement, child nutrition programs like the food programs in 
schools, then you get down to other, it is almost nothing compared to 
the bulk of the retirement programs.
  Therefore, these popular programs of Social Security, Medicare, 
Medicaid, and Federal retirement are very difficult to cut. They are 
the programs that most Americans who receive entitlements are relying 
upon. But I have heard my colleagues in this body as well as my 
constituents at home say, ``Yes, cut entitlements--don't cut my 
programs--cut entitlements, and do it by cutting welfare and food 
stamps. That is where you can cut entitlements. That is where you can 
eliminate the deficit.''
  Folks, here is welfare. Welfare is only $10 billion to $12 billion to 
$21 billion a year. You can completely eliminate welfare, food stamps, 
unemployment, everything else. You do not solve this problem without 
dealing with the popular programs of Social Security, Medicare, 
Medicaid, and Federal retirement programs.
  Let us look at the growth of entitlement programs. People say, ``Ah. 
Well, if you could just stop the growth of welfare, of food stamps, of 
agricultural price supports, that would solve the problems.''
  Where is the real growth of entitlements coming? From 1993 to 1999, 
in billions of 1993 dollars, here is where entitlement are growing or 
failing.

                              {time}  2140

  Social Security growing by an additional $40 billion per year. 
Medicare and Medicaid, $70 billion for Medicare, Medicaid by another 
$50-plus billion, Federal retirement only growing by $6 billion or $7. 
Look what is happening in unemployment compensation, it is actually 
dropping. Food stamps almost no growth whatsoever. SSI, that is the 
disability income, some growth. Veterans, dropping. AFDC, those are 
welfare payments, almost no growth at all. Agricultural price supports 
dropping. Earned income tax refunds, growing at a fairly low growth. 
Railroad retirement dropping. Child nutrition growing very slightly. 
Other entitlements dropping.
  The growth over the next 6 years, the growth that is spurring this 
problem, the growth is coming in those popular programs, Social 
Security Medicare, Medicaid.
  In summation or in conclusion there are several reasons for acting on 
entitlements. Deficit spending raises interest rates and threatens 
economic growth. Deficit spending places a huge burden on future 
generations of Americans. Deficit spending puts at risk the long-term 
solvency of Social Security and Medicare.
  What this debate is really about is by making tough decisions, but 
reasonable reductions in entitlements today we can forestall massive 
cuts in the future years. If we are not willing to deal with it today, 
what would we propose we do by the year 2030 when we do not even have 
enough revenue to pay for those entitlement programs, let alone 
anything else? How would we cut that then if we do not look today at 
how to cut that?
  Therefore, we will be proposing three very specific additional 
amendments to add to this concurrent resolution. First, we will propose 
an amendment which says it is the sense of the Congress that payments 
through Federal Government entitlement programs, except for benefits 
from programs into which an individual contribution has been made by 
the recipients, should be means tested so that benefits would be 
reduced or eliminated dependent upon the income of the recipient.
  I want to explain for my colleagues and the American people what this 
amendment would or would not do. First of all, it is not specific as to 
how we would means test those programs, which programs which would be 
means tested, over what period of time we would means test them, at 
what income levels these things would be means tested, would they be 
means tested by reducing program benefits or by taxing benefits that 
are coming? All of those things. And by the way, what we did in trying 
to identify the three specific areas that we would present as specific 
amendment areas is we looked to the Congressional Budget Office. They 
put out a book every year on options of how to cut the national debt, 
the deficit. We looked at those options dealing with entitlements and 
we picked the three areas that has the most options and would generate 
the greatest savings over the period of 5 years.
  Those three options are means testing, increasing the retirement age 
and changing COLA formulas. Those are the methods that can be used.
  What we are attempting to do in this debate is take the temperature 
of Congress, the sense of the Congress. Do we want to, first of all in 
the general resolution, do we want to do something about entitlement 
spending? If yes, then we want to ask does Congress want to move on any 
of these three areas, general areas which the CBO has indicated there 
are a vast variety of options and it generates hundreds of billions of 
dollars of cuts.
  In this area alone, means testing, the CBO indicated a list of over 
57 different specific types of means testing which would save from a 
few billion to hundreds of billions of dollars over that 5-year period. 
None of those specific plans are in here, but if Congress says yes to 
this resolution, we want to look at means testing.
  Then we can come back, specifically identifying which types of means 
testing Congress wants to adopt, which programs, who would it apply to, 
at what income level, how would we adopt it, would it be reducing 
benefits, taxing benefits, some other way, over what time period would 
it be phased in. All of those things would be yet to be determined if 
in fact this body says yes, it wants to move forward.
  So essentially what means testing is it is very simple. It says that 
the amount of benefit received through the entitlement program would be 
reduced or eliminated dependent upon the income level of the recipient. 
If the recipient is very wealthy, the recipient who receive these will 
be taxed at a higher rate on those benefits. That is means testing.
  However, there is an exclusion which I want to explain very 
carefully. Federal Government entitlement programs would be means 
tested except for those programs in which the individual receiving the 
benefit has made a contribution into the program. There are a number of 
reasons why this exception is in there. It is basically an equity 
issue. Benefits that are received are linked to contributions that are 
made, not simply the age of the individual, not simply the fact that 
the individual is alive at this age and, therefore, they are eligible 
for the benefit, but linked directly to the contribution made. To 
ensure economic viability of those programs, and there are essentially 
two, two major programs in which an individual contributes money, first 
Social Security and the second is Federal retirement benefits, the 
amount that I receive from Social Security or Federal retirement is 
dependent upon the length of time I worked, the amount of money I paid 
into the benefits.
  The basic question of fairness comes into play. Is it fair to have 
someone pay into a program and then not get a benefit back that they 
have paid into to ensure viability of these programs? And if Social 
Security is in fact as the trustees said within 35 years no longer 
economically viable and would be bankrupt, then it is incumbent upon us 
to make programmatic changes to that particular program, Social 
Security, so it is no longer inviable, so it is no longer going 
bankrupt.
  I do not believe the way to do it is through a general means testing 
of specific benefit. That does mean that Social Security would not be 
subject to increase in retirement age or COLA reform, but the basic 
benefits themselves under this amendment, Social Security and Federal 
retirement benefits would be exempt from means testing the basic 
benefit because the individual has contributed into that and the money 
they receive is based upon their contributions into it.
  I do believe that we should have a separate program budget, and I 
have voted to make Social Security a separate agency. I have a budget 
reform bill that I have submitted which would take Social Security off 
Federal budget, would have a separate Social Security budget. That 
budget would have to be in balance. The revenues generated would have 
to pay for the Social Security benefits.
  But Social Security is currently actuarially sound into the 2000's, 
for another 30 years or so. There are several ways to deal with it if 
it becomes unsound and if in fact the projections are true. We could 
look at it by adjusting the retirement age, by changing the cost-of-
living adjustments or means testing the cost-of-living adjustments, by 
adjusting the benefit formula. That is not unheard of. We have adjusted 
it twice in the 1970's and the 1980's.
  Also, we could adjust the current means testing of Social Security. 
And by the way, for anyone who believes that Social Security is not 
means tested and should not be means tested, they need to look closely 
at the program, because we currently have two ways of means testing 
Social Security right now. One is an earned income test. If you are 
between 62 and 67, I believe, there is an earned income test where your 
Social Security benefits are reduced for the amount of income you earn.

                              {time}  2150

  Second, there is a taxation-of-benefits test that if you earn over a 
certain level of income those benefits, Social Security benefits, are 
taxed to you and, therefore, you pay back some of the Social Security 
that you had received, so they are currently means-tested.
  We could take a look at those formulas, and I believe, for example, 
that I think is very unfair that we look to an individual 65 years old 
receiving Social Security, unable to make it; they may still have 
children in school that they are helping in college, they are no longer 
receiving a full-time work salary, they are on Social Security, and we 
are going to penalize them if they go out and work. If they go out and 
earn a dollar, we are going to take a third of it back if it is earned 
income, but unearned income is not penalized.
  If you have go an individual, a multimillionaire who sits back and 
generates interest income from their savings or clips coupons in order 
to generate their income, they are still getting Social Security, and 
we do not reduce the amount of Social Security for unearned income, but 
we do for earned income. I think that is blatantly unfair. Also, we 
ought to be taking a look at how we generate Social Security tax, how 
we generate the revenue. Right now we are taxing the first $60,000 of 
income that a person earns, not unearned income. If you do not have to 
work for a living, if you are living off of mom and dad or your uncle's 
trust fund account, you can sit there and earn millions of dollars a 
year in interest and dividends, and you do not have to pay one dime to 
Social Security. But if you are a working guy out there or woman who 
has to go out and work for a living, the first $60,000 we are going to 
tax for Social Security. Everything over that, we do not tax at all.
  So if you are earning $200,000, $300,000, $400,000, $500,000 a year, 
you only have to pay tax on the first $60,000. If you are earning 
$40,000 a year, a family of four or five kids, you are having a hard 
time putting everyone through school and putting food on the table, you 
pay on every penny that you earn. Yes, there are ways we could look to 
programmatic changes to Social Security to make it more fair, to make 
it more economically viable into the future to be sure those Social 
Security benefits are there available when we retire, when we need 
those benefits.

  But I believe those changes we should make looking directly into the 
Social Security program, not doing it through a generic means-testing 
and, therefore, our amendment would exempt essentially Social Security 
and Federal retirement benefits from that means-testing of the basic 
benefit.
  Let me just make a couple of other points on means-testing. CBO 
recently released their report ``Reducing Entitlement Spending'' which 
outlines ways to cut entitlements. It points out that there are only 
two ways to do it. The most direct way is to limit spending on 
individual programs, by cutting the amount of benefits or the number of 
beneficiaries eligible to receive the benefit. That is a very direct 
cut of individual benefits to members receiving the benefit.
  The other way of reducing this is a more generic way through some 
form of means-testing either by reducing the benefit for higher-income 
individuals across various programs, not program by program, but across 
programs, or including those benefits in taxable income, thereby taking 
some of the benefit back from the very wealthy and then you place the 
level of income at which you are going to tax the person at the level 
you want to means-test.
  The first way of cutting these programs is extremely difficult. As 
you have seen by this chart, entitlement spending on Social Security, 
Medicare, Medicaid, 75 percent of it is on retirement programs and 
health care. The growth of programs, you can see, the growth is in 
Social Security, Medicare, Medicaid. This is shown in one other chart. 
The dark blue amount is increases in Medicaid outlays which are means-
tested. Medicaid is a means-tested benefit, and you can see Medicaid is 
going up dramatically from 1963, 1973, 1983, 1993, into 1999; it does 
go up dramatically. It is means-tested.
  The light blue are all other means-tested entitlements including 
welfare, AFDC, food stamps; it includes unemployment. Well, 
unemployment is not means-tested. But it includes the other means-
tested entitlements is the light blue. You can see they are going up, 
but not as rapidly.
  The burgundy are non-means-tested entitlements. From 1963, 1973, 
1983, 1993, to 2003, increasing outlays in billions, we are clear up 
over $800 billion by 1999. This is where the growth is coming is in 
non-means-tested entitlements.
  If we are going to do anything about entitlements, it is in non-
means-tested programs. One way to deal with it is by means-testing, but 
it is difficult to do it, as I have mentioned. It is difficult to make 
direct cuts, for example, in Social Security. We spent $320 billion in 
1993. We will spend $408 billion in 1994.
  Obviously there are many reasons why cuts in Social Security are 
unlikely. First, the system is currently self-sufficient. It is 
generating more revenue than it is spending right now. It does not make 
sense to cut back in basic benefits.
  Second, it is a question of fairness. People have paid into it. They 
expect to get money back to them. Many seniors rely on Social Security 
to make ends meet, and referring back to the Stenholm-Orton-Penny 
amendment on entitlement caps, we can see demagogery on the issue of 
Social Security. Social Security in this town is viewed as the third 
rail. Touch it and you die politically, period. No one wants to touch 
it.
  Across-the-board cuts in Social Security are extremely problematic. I 
do not support them personally. I have suggested ways that we could 
look to change the Social Security program, but not through this type 
of means-testing.
  Next, Medicare and Medicaid, 1993, we spent $219 billion. By 1999, we 
spend $415 billion. That is almost a doubling in 6 years. Are we going 
to do anything about Medicare-Medicaid in this Congress or the next?
  I would submit to you, if you think we are, take a look at what 
happened to the health care debate. We are going nowhere with health 
care reform. Even the health care proposals that were out there said, 
``We will exclude Medicare-Medicaid.'' At best, if we get health care 
reform, at best, it would be budget-neutral. I have not seen any of the 
health care reform proposals that actually reduce spending in those 
areas. So it is not likely that we can look to Medicare and Medicaid 
cuts. If you think that you can cut it through cutting food stamps, 
AFDC, etc., I mean, look, here is welfare, here are food stamps, here 
is unemployment going down. If you think we are going to balance this 
growth by cutting, and I agree that we need to amend welfare; I have a 
welfare reform proposal based upon a program operating in Utah right 
now which, in fact, has lowered costs of grants to the recipients by 25 
percent. It is a self-sufficiency plan, over a period of 2 years or 
less these individuals working on self-sufficiency go out and get jobs, 
into the work force. It is working. We need to reform welfare. I am in 
agreement with that.
  But if you look at the welfare reform proposals, you will find that 
very few of them cut money even in the long term, let alone in the 
short term. Most of them cost money in the short term. So that is 
likely not to change much. If we eliminated the entire thing, it would 
not make a dent on the other growth.
  Therefore, I think this little exercise demonstrates that direct cuts 
in entitlement spending are very, very difficult. There is no big 
surprise. You are not going to cut it out of Social Security or 
Medicare. You cannot politically even change health care. At best, we 
would have a balance and would not increase the deficit as a result of 
health care reform or welfare reform.
  Therefore, we have to look at other ways. Means-testing, I believe, 
is a realistic and fairer method which I have already explained the 
concept. There are several methods of means-testing that come really in 
three basic ways. You can eliminate the benefit. You can set a level of 
income and say anyone receiving over this amount of income, for 
instance, if you receive over $100,000 of income in the year, you are 
not eligible for means-tested entitlement programs, payments. That is 
one way. Another way is to tax entitlement benefits; simply say if you 
are over a certain level of income, these entitlement benefits become 
taxable to you. The third way is a more gradual approach which sets an 
income level and then gradually phases down those entitlement benefits 
as the income level goes up.

                              {time}  2200

  That is an approach which most people have supported. In fact, some 
groups have even spoken out on this. For example, CBO recently cited 
the proposal by the Concord Coalition, which is a bipartisan group 
created by former Senators Rudman and Tsongas, Republican and Democrat. 
They propose to cut up to 85 percent of benefits for individuals with 
annual income over $40,000. This, by the way, would cut spending by 
$200 billion over the next 5 years. That might be too severe. I do not 
know that this body, I do not know that I would vote for that 
particular level of means testing.
  But, in summation, we must do something. If we vote against this 
amendment, if we vote ``no, we should not look at means testing,'' we 
are essentially saying that no matter how wealthy the individual is, 
they should receive unlimited Federal entitlement benefits coming out 
of the general treasury, which is causing what we have just pointed 
out. Therefore I think it is necessary to direct the Congress to look 
at methods of means testing to lower entitlements.
  Application by programs: The following programs are currently means 
tested: Medicaid, Aid to Families with Dependent Children or welfare, 
income maintenance programs such as food stamps SSI, income tax 
credits--all currently means tested. The following are not: social 
security, Medicare, agricultural subsidies, unemployment compensation, 
civilian and military retirement benefits and some veterans benefits.
  The overwhelming majority of entitlement spending comes from these 
non-means tested programs.
  Means testing is not a novel concept or idea. We already means test 
social security, as I have already pointed out. If you are over 65, 
between the ages of 65 and 69, and you earn income in addition to 
social security, you lose $1 in $3 for every dollar you earn over 
$11,160; you lose a dollar of it. We also tax individuals. Seniors: 85 
percent of their social security benefits are taxable for individuals 
earning over $25,000 or couples also earning over $34,000. This is 
arbitrary, it does not deal with investment income, only earned income.
  I mentioned why I think we need to look at those areas. Medicare, for 
example, just to show you another area where there are proposals also 
for means testing: The Mitchell health care bill and several of the 
Republican proposals, in fact, the Penny-Kasich budget, and I think the 
Solomon budget, voted on last spring for this fiscal year proposed 
means testing of Medicare. It would tax benefits under part B for 
individuals making over $90,000 and couples over $115,000.

  So this is something which we need to look at and over the lifetime 
of an individual the average payments on social security and Medicare 
average upwards of $500,000 that the Federal Government is paying per 
beneficiary over the lifetime of that beneficiary.
  We need to take a look at means testing. That is the first amendment.
  The other two amendments are much shorter and will not take a great 
deal of time to describe. Let me just read the next one: It is the 
sense of the Congress that the age of qualification for age-dependent 
Federal benefits should be increased.
  This simply says that the retirement age, if you are receiving a 
benefit that is dependent upon age, that program and the age level 
should be increased. It does not say at what level. It does not say 
which program specifically. It does not say how high it should be 
raised or over what period of time or how it would be phased in. No one 
here is in favor of going out and just saying to someone, ``Sorry, you 
are 65, we are going to raise the age to 70 and you have got to wait 
another 5 years to get your social security,'' or other benefits and so 
on.
  What it does say is that if we are going to have a balance, if in 
fact we are going to have enough revenue coming in to pay for the 
program, if the equation is going to be balanced, you have to look to 3 
things:
  You have to look at the formula under which the amount of the 
benefits are paid, you have to look at the period or the life 
expectancy that they are going to be paid and any increases such as 
cost-of-living increases, COLAs. Those three things.
  Now, the formula determining the benefit, how long we are going to 
pay it and COLA, you determine how much money is going to be paid out.
  The problem is if we are paying out more than we bring in, then that 
particular program is not financially stable. It is going bankrupt. It 
cannot be sustained in the long term.
  Actuarial tables or the viability of that program look to the amount 
of contribution coming in multiplied by a return factor; that is, what 
can you get on that investing that into the market or whatever? And you 
equalize that with the amount of benefits paid times the period plus 
the cost-of-living adjustment.
  Then you are in balance.
  If anything in that formula is out of balance, if you missed on the 
actual formula for benefits or the life expectancy of the individual or 
the COLA, if you are out of balance, eventually you bankrupt the fund.
  The social security trustees estimate the program will be insolvent 
in 35 years. Over the next 75 years the social security expenditures 
are projected to exceed its income by 16 percent. So even social 
security is not solvent.
  Therefore, what do we do? By the way, this chart graphically depicts 
the problem. In 1935, right here, where social security was created, 
the average life expectancy of a male was about 59 years old. The 
average life expectancy of a female was 63 years old.
  At what age do you receive social security benefits? 65 years old. 
Very few people would live to be 65 to receive the benefit. Those who 
did live to be 65 would not live much beyond that.
  That was the life expectancy then.
  Look what has happened to that life expectancy over the last 50 
years. From 1935 to 1985, the life expectancy of that male has gone up 
from 59 years to 72 years. If the formula under which we determine the 
benefits that this individual is going to get or the length of time 
this individual is going to get those benefits, if that formula is out 
of whack, you go bankrupt. This is why social security, again, even 
though we just radically raised taxes, that is why these programs are 
going bankrupt.
  Therefore, and just to show you one more graphic illustration: In 
1950 we had 7.5 working individuals for every retired individual 
receiving these benefits, social security, retirement, Federal retiree 
benefits.
  Right now, in 1994, we have about 4-\3/4\ workers for every 1 retired 
worker receiving benefits.
  By the year 2030, we will have 2-\1/2\ working individuals for every 
1 retired beneficiary.
  If we do not do something about these two charts, we cannot sustain 
the economic viability of the programs which we have paid into which we 
care about and from which we want to receive benefits.

  Lastly, and finally, this amendment that we will be proposing is that 
it is the sense of the Congress that payments of annual cost-of-living 
adjustments, COLAS, should be reduced or deferred except for 
beneficiaries with annual income below 200 percent of the poverty 
level. There is a difference between a benefit payment and a cost-of-
living adjustment. Cost-of-living adjustments were created, by the way, 
in the 1970's. That is, the COLAS, the cost-of-living adjustments, were 
not paid, they were not in the law. Social Security did not envision an 
annual cost-of-living adjustment. What was happening is every year at 
election time this body would pass an arbitrary increase in the 
benefit. You go home, you pat your voters on the back, you say, ``Look 
what I did for you,'' you get reelected. It was costing a fortune.

                              {time}  2210

  So, in the 1970's, Mr. Speaker, Congress in its wisdom said, ``So we 
don't have those uncontrolled, unchecked, continued increases in these 
programs, we will create a standard cost-of-living adjustment based 
upon the consumer price index.'' This was designed to save money.
  Let me then just close with this last point; essentially it simply 
says that those individuals who are at or below the 200 percent of the 
poverty level would not have COLA adjustments. COLAs were designed to 
protect those individuals and protect their buying power so that they 
would not find themselves in destitution and poverty, which these 
programs were designed to help them avoid.
  Mr. Speaker, I urge each Member to come and participate in this 
debate, and vote for or against the resolution, but we have to do 
something.