[Congressional Record Volume 141, Number 46 (Monday, March 13, 1995)]
[Senate]
[Pages S3825-S3826]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MORNING BUSINESS

  The PRESIDING OFFICER. Under the previous order, there will now be a 
period for morning business not to extend beyond 30 minutes with 
Senators permitted to speak therein.
  Mr. DOMENICI. Mr. President, last week during the debate on the 
balanced budget amendment, there was more than a little debate about 
the use of Social Security funds in calculating our annual Federal 
deficit. The fact is that much of the discussion was misleading, and 
some of it was just not true. But in all our discussions of the issue, 
few explain the truth of what this Government is doing more succinctly 
than columnist Charles Krauthammer did in his op-ed page in the 
Washington Post last Friday.
  Mr. President, I ask unanimous consent that that column, entitled 
``Social Security `Trust Fund' Whopper,'' be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Mar. 10, 1995]

                 Social Security ``Trust Fund'' Whopper

                        (By Charles Krauthammer)

       Last week, Sens. Kent Conrad and Byron Dorgan management to 
     (1) kill the balanced budget amendment, (2) deal Republicans 
     their first big defeat since November and (3) make Democrats 
     the heroes of Social Security. A hat trick. How did they do 
     it? By demanding that any balanced budget amendment ``take 
     Social Security off the table''--i.e., not count the current 
     Social Security surplus in calculating the deficit--and thus 
     stop ``looting'' the Social Security trust fund.
       In my 17 years in Washington, this is the single most 
     fraudulent argument I have heard. I don't mean politically 
     fraudulent, which is routine in Washington and a judgment 
     call anyway. I mean logically, demonstrably, mathematically 
     fraudulent, a condition rare even in Washington and not a 
     judgment call at all. Consider:
       In 1994 Smith runs up a credit card bill of $100,000. 
     Worried about his retirement, however, he puts his $25,000 
     salary into a retirement account.
       Come Dec. 31, Smith has two choices: (a) He can borrow 
     $75,000 from the bank and ``loot'' his retirement account to 
     pay off the rest--which Conrad-Dorgan say is unconscionable. 
     Or (b) he can borrow the full $100,000 to pay off his credit 
     card bill and keep the $25,000 retirement account 
     sacrosanct--which Conrad-Dorgan say is just swell and 
     maintains a sacred trust and staves off the wolves and would 
     have let them vote for the balanced budget amendment if only 
     those senior-bashing Republicans had just done it their way.
       But a child can see that courses (a) and (b) are identical. 
     Either way, Smith is net $75,000 in debt. The trust money in 
     (b) is a fiction: It consists of 25,000 additionally borrowed 
     dollars. His retirement is exactly as insecure one way or the 
     other. Either way, if he wants to pay himself a pension when 
     he retires, he is going to have to borrow the money.
       According to Conrad-Dorgan, however, unless he declared his 
     debt to be $100,000 rather than $75,000, he has looted his 
     retirement account. But it matters not a whit what Smith 
     declares his debt to be. It is not his declaration that is 
     looting his retirement. It is his borrowing (and 
     overspending).
       Similarly for the federal government. In fiscal 1994, 
     President Clinton crowed that he had reduced the federal 
     deficit to $200 billion. In fact, what Conrad calls the 
     ``operating budget'' was about $250 billion in deficit, but 
     the Treasury counted the year's roughly $50 billion Social 
     Security surplus to make its books read $200 billion. 
     According to Conrad-Dorgan logic, President Clinton 
     ``looted'' the Social Security trust fund to the tune of $50 
     billion.
       Did he? Of course not. If Clinton had declared the deficit 
     to be $250 billion and not ``borrowed'' $50 billion Social 
     Security surplus--which is nothing more than the federal 
     government moving money from its left pocket to its right--
     would that have made an iota of difference to the status of 
     our debt or of Social Security?
       Whether or not you figure Social Security in calculating 
     the federal deficit is merely an accounting device. 
     Government cannot stash the Social Security surplus in a 
     sock. As long as the federal deficit exceeds the Social 
     Security surplus--that is, for the foreseeable forever--we 
     are increasing our net debt and making it harder to pay out 
     Social Security (and everything else government does) in the 
     future.
       Why? Because the Social Security trust fund--like Smith's 
     retirement account--is a fiction. The Social Security system 
     is pay-as-you-go. The benefits going to old folks today do 
     not come out of a huge vault stuffed with dollar bills on 
     some South Pacific island. Current retirees get paid from the 
     payroll taxes of current workers.
       With so many boomers working today, pay-as-you-go produces 
     a cash surplus. That cash does not go into a Pacific island 
     vault either. In a government that runs a deficit, it cannot 
     be saved at all--any more than Smith can really ``save'' his 
     $25,000 when he is running a $100,000 deficit. The surplus 
     necessarily is used to help pay for current government 
     operations.
       And pay-as-you-go will be true around the year 2015, when 
     we boomers begin to retire. The chances of our Social 
     Security benefits 
     [[Page S3826]] being paid out then will depend on the 
     productivity of the economy at the time, which in turn will 
     depend heavily on the drag on the economy exerted by the next 
     net that we will have accumulated by then.
       The best guarantee, in other words, that there will be 
     Social Security benefits available then is to reduce the 
     deficit now. Yet by killing the balanced budget amendment, 
     Conrad-Dorgan destroyed the very mechanism that would force 
     that to happen. The one real effect, therefore, that Conrad-
     Dorgan will have on Social Security is to jeopardize the 
     government's capacity to keep paying it.
       Having done that, Conrad-Dorgan are now posing as the 
     saviors of Social Security from Republican looters. A neat 
     trick. A complete fraud.

  Mr. DOMENICI. Mr. President, this distinguished columnist, who has a 
knack for exposing attempts at political deception and making difficult 
things simple, points out the deceit in the arguments that we heard on 
the floor last week.
  I encourage all who participated in the balanced budget amendment 
debate to read this column. I am asking that it be made part of the 
Record so everyone will have an opportunity to do that. Because, if 
nothing else, Mr. Krauthammer's essay brushes aside the political 
rhetoric and emphasizes that, no matter how you add it up, where you 
put the numbers, or, as he says, which pocket you put it in, an 
obligation of the Federal Government remains just that--an obligation 
of the Federal Government. And we or our children and grandchildren 
have to pay it.
  Mr. President, it just seems to this Senator that the balanced budget 
amendment should have been adopted. I repeat for those who are worried 
about the Social Security trust fund or, more precisely, where will the 
money be, where will it come from to pay Social Security recipients 20, 
25, 30 years from now, I submit that the best thing we could have done 
was to get the unified budget of the United States in balance in 7 
years. Because I believe that would have more to do with what Social 
Security of the future needs than anything else.
  Simply put, as Mr. Krauthammer later in his article alludes to, the 
best thing for Social Security in the future is a vibrant, growing 
American economy with low inflation. If we can have that for periods of 
4 or 5 years at a time, with mild downturns, then I believe we will be 
in a position as a nation to take care of our seniors.
  Frankly, Mr. President, if we cannot do that, we will not be in a 
position to take care of them no matter what rhetoric is offered on the 
floor that seemed to say, in the 7-year balanced budget that was before 
us, even though we would have to cut or reduce Government about $1.2 
trillion, essentially those who argued against it, at least from the 
Social Security standpoint, were saying that is not enough; you have to 
do more. And frankly, we have never come close to even that. I would 
have thought that would have been a fantastic effort on behalf of 
senior Social Security citizens and on behalf of a prospering American 
economy.
  I hope everyone will get a chance to read this very basic approach 
that this excellent columnist talks to us about with reference to the 
Social Security trust fund.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. THOMAS. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Hutchison). Without objection, it is so 
ordered.

                          ____________________