[Congressional Record Volume 141, Number 57 (Tuesday, March 28, 1995)]
[Senate]
[Pages S4741-S4742]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                SOCIAL SECURITY FUNDS NOT IMMUNE FOREVER

 Mr. SIMON. Mr. President, one of the interests of all Members 
of the House and Senate, I am sure, is to preserve Social Security. We 
may differ on the avenue to achieve that, but we share that concern.
  What should be clear to anyone who looks at the Social Security 
matter with any serious concern is that the national debt is the threat 
to Social Security.
  I have just finished reading an editorial column in Congressional 
Quarterly written by David S. Cloud, titled ``Social Security Funds Not 
Immune Forever.''
  In that article he says what is the simple reality: ``The longer 
Congress and the White House delay dealing with the deficit, the 
greater the threat to Social Security's long-term existence.''
  No one can seriously question the validity of that statement.
  I hope that sometime between now and the time this Congress adjourns, 
we can get one more vote for the balanced budget amendment.
  At this point, I ask unanimous consent to print the complete David 
Cloud editorial column in the Record.
  The column follows:
 [[Page S4742]] CQ Roundtable--Social Security Funds Not Immune Forever

                          (By David S. Cloud)

       If Republicans and Democrats in Congress are as dedicated 
     to eliminating the federal deficit as they profess, someday 
     soon they will have to answer serious questions about the 
     future of Social Security. Otherwise, neither party's promise 
     to preserve Social Security--or to balance the budget--can be 
     considered altogether credible.
        Congressional debates about Social Security center almost 
     entirely on charges that one party or the other is plotting 
     to deny benefits to retirees or is looting the trust funds of 
     payroll tax revenue. While deep cuts in Social Security are 
     certainly possible in coming years, it won't happen because 
     of some secret desire by elected officials; it will happen 
     because Congress is left with no other choice.
       The relationship between Social Security and the deficit is 
     not obvious. Thanks to big payroll tax increases enacted in 
     1977 and 1983, Social Security recovered from near-bankruptcy 
     and is now taking in more revenue from workers' paychecks 
     than it pays out in benefits every year. The result is a 
     growing trust fund balance, expected to be about $900 billion 
     by 2000, that many view as a nest egg to pay benefits for 
     baby boomer retirees next century. The surplus is often used 
     as justification for leaving Social Security alone.
       There are indeed good reasons to view Social Security as 
     unique. No other program has such a broad base or such a 
     strongly implied contract: Workers sacrifice now in the form 
     of payroll deductions for the security of benefits after they 
     retire. And the program has an uncontested record of sharply 
     reducing poverty among the elderly.
       But defending Social Security in isolation from the rest of 
     the federal budget is as misleading as it is enticing. 
     Politicians are especially prone to try.
       House Speaker Newt Gingrich, R-Ga., has singled out Social 
     Security as the only program immune from cuts as Republicans 
     work to balance the budget by 2002. Senate Democrats recently 
     killed the constitutional amendment to require a balanced 
     budget after they failed to win special protections for 
     Social Security.
       But all this ignores a central fact: It is unlikely that 
     the budget can be balanced without affecting a program that 
     now constitutes more than a fifth of federal spending.
       Why can't Social Security be left alone as long as it is 
     self-financing? For openers, a program of Social Security's 
     immenity--$330 billion in fiscal 1994--consumes tax revenue 
     that could otherwise go toward reducing the deficit, if 
     Congress didn't have to keep payroll taxes at such high 
     levels to finance the Social Security system. Some of those 
     benefits are going to retirees who, by any definition, are 
     well-off. In 1990, families with income above $100,000 
     received more than $8 billion in Social Security benefits.
       The logic of capturing some of that money for deficit 
     reduction proved inescapable in 1993, when Congress raised 
     taxes on some upper-income retirees by taxing more of their 
     Social Security benefits. (House Republicans now want to 
     repeal that tax increase.) There seems to be no appetite for 
     undertaking a bolder attempt at scaling back Social Security 
     benefits among recipients further down the income scale. The 
     other option--increasing payroll taxes--does not seem likely.
       Yet the longer Congress and the White House delay dealing 
     with the deficit, the greater the threat to Social Security's 
     long-term existence.
       The reason rests with what is happening to all those 
     surplus dollars Social Security is now accumulating. The 
     trust funds are being invested in U.S. Treasury bonds, with 
     the promise that the money plus interest will be paid back 
     next century. In other words, the government is borrowing 
     from the Social Security trust funds and eventually will have 
     to repay those funds.
       But continuation of massive borrowing from now until then 
     will only make it harder to repay the obligations when the 
     baby boomers retire.
       When will this demongraphic crunch hit? Baby boomers will 
     begin to retire around 2010. According to the 1994 Social 
     Security Board of Trustees report, the trust funds will not 
     run dry until 2036, absent further congressional action. But 
     the fiscal strain will actually arrive much sooner--beginning 
     around 2013, when the Social Security system starts drawing 
     heavily on interest payments from the Treasury to pay for 
     benefits.
       If the federal government is still running a deficit, 
     making those interest payments to the Social Security trust 
     funds will necessitate a massive addition to government 
     borrowing, or a big income tax increase.
       All of the choices will be unappetizing--a mountain of 
     additional debt, angry workers asked to more heavily 
     subsidize retirees, or sharp cuts in Social Security 
     benefits. And any effort by today's politicians to segregate 
     Social Security from the rest of the budget will matter not a 
     whit.
     

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