[Congressional Record Volume 141, Number 26 (Thursday, February 9, 1995)]
[Senate]
[Pages S2355-S2357]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  REID AMENDMENT TO THE BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  Mr. CONRAD. Mr. President, I rise today in strong support of the 
amendment to the balanced budget amendment to the Constitution that has 
been offered by the senior Senator from Nevada, Senator Reid, and 
others of us. The purpose of the amendment is to protect the Social 
Security trust fund from being looted as part of an effort to balance 
the budget.
  Mr. President, I think it is important for people to ask when we are 
considering a balanced budget amendment to the Constitution: What 
budget is being balanced? That is what this first chart asks. What 
budget is being balanced?
  In order to answer that question, I think it is helpful to go to the 
actual language of the balanced budget amendment that is before us. And 
if you look at the language, it says very clearly:

       Total receipts shall include all receipts of the United 
     States Government except those derived from borrowing. Total 
     outlays shall include all outlays of the United States 
     Government except for those for repayment of debt principal.

  So, Mr. President, it is very clear that what we are dealing with 
with respect to the balanced budget amendment to the Constitution is 
that all of the moneys coming into Federal coffers are being 
jackpotted. They are all being put in the same pot. Whether they are 
trust funds or not trust funds, it is all being put in the same pot. 
And then we are going to look at those total receipts and compare it to 
total outlays.
  I prepared this chart. This is kind of the teapot of the Federal 
Government budget. It shows the revenue that goes into the pot, and the 
revenues are the individual income taxes that are raised. That provides 
about 45 percent of the revenue of the Federal Government. All social 
insurance taxes go into this pot, including the revenue that is taken 
out of people's paychecks every month that is supposed to be for Social 
Security. All of that money is going into the pot. Social insurance 
taxes are about 37 percent of the revenue of the Federal Government. 
Corporate income taxes go into the pot. That is about 10 percent of the 
revenue of our Government. All other taxes are 8 percent.
  And then we look on the other end of the ledger. We look at what 
comes out of the spending spout of the Federal Government. And here is 
the spending breakdown. About 22 percent of the outlays of the Federal 
Government go for Social Security, 16 percent is interest on the debt, 
16 percent for defense, 14 percent for Medicare, 7 percent for 
Medicaid, and other, 25 percent.
  So one can see in the balanced budget amendment that is before us 
what goes into the pot is all of the revenue and what goes out the 
spending spout are all of the outlays.
  The problem with this balanced budget amendment is that in using all 
of the Social Security income in counting whether or not you are 
balancing the budget, Social Security is not contributing to the 
deficit. Social Security is in surplus. And Social Security is in 
surplus for a reason. The reason is to prepare for the time when the 
baby boom generation retires. Because then these Social Security 
surpluses are going to turn to massive deficits. And 
[[Page S2356]]  so the reason for accumulating surpluses is to prepare 
for the time when the baby boomers retire.
  The problem is, the money is not being saved. The problem is, under 
the balanced budget amendment that is before us, we are going to put 
into the Constitution of the United States that those Social Security 
surpluses, instead of being saved, will be looted in order to give us a 
balanced budget or contribute to balancing the budget.
  Mr. President, this chart shows, just over the 7 years that the 
balanced budget amendment is to lead us to a balanced budget, how much 
of the Social Security surplus will be taken each and every year.
  This is the amount of Social Security trust fund money that will be 
looted in order to balance the budget.
  In 1996, $73 billion of Social Security surplus will be taken. We can 
see each and every year those surpluses are mounting. They are 
increasing. Under the terms of the balanced budget amendment that is 
before this body today, unless it is altered by the Reid amendment, 
every one of these dollars is going to be taken. Every one of these 
dollars will be looted in order to contribute to balancing the budget. 
That is profoundly wrong, Mr. President.
  We can see, as I said, $73 billion of surplus from Social Security in 
1996, $78 billion in 1997, $84 billion in 1998, $90 billion in 1999, 
$96 billion surplus in the year 2000, $104 billion of Social Security 
surplus in the year 2001, and $111 billion of surplus in the year 2002.
  Every nickel of that surplus taken, not to have a fund that is 
available when the baby boomers retire; but no, every penny taken in 
order to contribute to balancing the budget.
  Mr. President, let me just say that if any chief executive in this 
country stood up before his board of directors and announced that in 
order to balance the operating budget of the company, he was intending 
to loot the retirement funds that were held in trust for his employees, 
he would be headed for a Federal facility, and it would not be the 
Congress of the United States.
  I said the other day that this amendment, as drafted, the balanced 
budget amendment before Members, as drafted, would make the Rev. Jim 
Bakker proud. Remember Rev. Jim Bakker? He went to a Federal facility, 
the Federal prison. He went to Federal prison for fraud. The fraud he 
was conducting was to raise money for one purpose and to use it for 
another. That is precisely what is being contemplated in the balanced 
budget amendment to the Constitution that is before Members today. That 
is fraud. It is fraudulent to tell people you are raising money for one 
reason, namely, to build a trust fund surplus that is available for 
them when they retire, but on the other hand not to create the surplus 
at all but to loot the fund and to use it for other spending.
  We would be putting in the Constitution of the United States that 
that is what would be done. Mr. President, that is so profoundly wrong 
I cannot even fathom how those who have written this amendment think it 
ought to be included.
  There is not any financial institution in this country that would 
accept for one moment the notion that we should take trust fund moneys 
and use them to balance an operating budget.
  Mr. President, I showed the surpluses, $636 billion, that are 
contemplated under the balanced budget amendment that is before Members 
today to be used to help balance the budget over the next 7 years. That 
is a small part of the story. That is just the next 7 years. The real 
larceny, the real theft, the real fraud, is far in excess of $636 
billion. That is just what will be taken in the next 7 years.
  We know Social Security is going to be running surpluses for much 
longer than the next 7 years. In fact, it will be running surpluses out 
past the year 2020. When we look at the projected size of the Social 
Security trust funds out until the time the baby boomers have retired 
and start to draw down those surpluses, what one sees is simply 
staggering.
  These bars on this chart show the Social Security surplus as it 
accumulates. It shows by the year 2000, there will be almost $1 
trillion of surplus. By the year 2010, $2.1 trillion--not million, not 
billion--trillion. This is real money, 2.1 trillion of surplus; $2.8 
trillion by 2015; $3 trillion of surplus by the year 2020.
  Mr. President, when the baby boomers go to the cupboard to get their 
surplus, their retirement, they will find the money is all gone. It has 
all been used. It has all been looted to help balance the rest of the 
budget of the United States.
  This will create a financial catastrophe for the future. That 
financial catastrophe will be when the baby boomers retire. Having been 
made a promise, they will find no one can keep the promise, because in 
order to pay back this money, the tax increases would have to be so 
draconian, or the cuts in benefits so draconian, that the people of the 
United States would simply revolt.
  Mr. President, this chart shows what has happened in terms of the 
growth of payroll taxes both for Social Security and Medicare from 1940 
out until the present. What one can see is that these regressive taxes 
have been increased very dramatically over this period of time in order 
to make these funds supposedly add up.
  The problem again, of course, is that these increases, these 
increased taxes that have been levied on the American people, have been 
used. And they have been used to balance other parts of the Federal 
budget. Or at least to reduce the deficit of other parts of the Federal 
budget.
  One reason that this is profoundly unfair is because, in essence, 
what has happened is people are being taxed on their payroll, on the 
amount of their wage earnings, and they are having an increasing amount 
taken out. They are being told, ``We are taking this increasing amount 
because we have to run a surplus; we have to get ready for the time 
when those of you who are in the baby boom generation retire.'' That 
makes sense.
  Unfortunately, what we say and what we do are two completely 
different things. We are not running surpluses in order to prepare for 
the time when the baby boomers retire. Instead, we are taking that 
money, we are taking those surpluses, and we are using it to offset 
other spending. So, in effect, what we are doing is levying a 
regressive payroll tax and using part of it, the part that makes up the 
surplus, to fund the other operations of Government.
  In fact, 73 percent of all taxpayers today are paying more in payroll 
taxes than they are paying in income taxes. I think this may come as a 
shock to many people. It is true: 73 percent of all taxpayers are 
paying more Social Security payroll taxes than they are paying in 
income taxes. They are doing it because we have told them the money is 
needed to create surpluses to prepare for the time when the baby 
boomers retire. The fact is that that is not what we are doing. We are 
taking the Social Security surpluses, we are looting them, in order to 
reduce the deficit.
  Now we have a proposal before Members in the balanced budget 
amendment to the Constitution of the United States, the organic law of 
this country, that would take this practice and enshrine it in the 
Constitution of our country. I cannot think of anything more 
inappropriate than to put into the Constitution of the United States 
that we are going to take trust fund surpluses and use them to help 
balance the operating budget of this country.
  Mr. President, I come from a financial background. If anyone, as I 
was being schooled and taught how to properly manage finances, had told 
me, ``You take trust fund money and you use that to balance other parts 
of a budget,'' that person would have been run out of the financial 
institution because everyone understands that that is absolutely 
inappropriate.
  For Members to put into the Constitution of the United States that we 
will take trust fund surpluses and use them to balance the other parts 
of the budget is profoundly wrong. That is the reason the Reid 
amendment is so important, because it gives Members the chance to 
protect Social Security trust funds from being looted for other 
purposes.
  Mr. President, I do not know of anything more basic than this 
concept. I do not know of anything that is more important when we are 
considering a balanced budget amendment to the Constitution than to 
make certain the trust fund moneys, Social Security trust fund 
surpluses, are not looted in 
[[Page S2357]]  order to balance other parts of the budget.
  So, Mr. President, let me just conclude by thanking my colleague, 
Senator Reid from Nevada, for offering this amendment. There are others 
of us who have joined with him in offering this amendment, and I urge 
my colleagues to support it. I thank the Chair and yield the floor.
  Mr. CRAIG. Mr. President, I yield the remainder of my time to the 
Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BURNS. Mr. President, I thank the Senator from Idaho for yielding 
this time. What is the order of business?
  The PRESIDING OFFICER. Morning business under the current order is 
until 10:45.


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