[Congressional Record Volume 141, Number 154 (Friday, September 29, 1995)]
[Extensions of Remarks]
[Pages E1877-E1878]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    ``GINGRICH AND THE COPPERHEADS''

                                 ______


                            HON. NICK SMITH

                              of michigan

                    in the house of representatives

                       Friday, September 29, 1995

  Mr. SMITH of Michigan. Mr. Speaker, I would like to submit this 
important article by Mr. Stuart Sweet into the Record. I urge my 
colleagues to review it and heed its message. 

[[Page E 1878]]
We must fight for a balanced budget at all costs, yet we must look 
ahead. The article clearly shows that even if we pass a reconciliation 
bill and lower cost appropriation bills which put us on a glide path 
for a balanced budget, we still have great challenges ahead. This 
country's unfunded liabilities are out of control:

                  [From the Investor's Business Daily]

                      Gingrich And The Copperheads

                           (By Stuart Sweet)

       Newt Gingrich, a former history professor, risks being a 
     footnote in history. Even if he leads Congress to victory 
     over President Clinton in the coming battle of the budget, he 
     will accomplish little relative to the size of the country's 
     long-term fiscal problems.
       Gingrich defines the political space in America. All the 
     other major players position themselves a calibrated distance 
     to his left. Sen. Phil Gramm is trying to occupy the same 
     space. Sen. Bob Dole is slightly to their left. Clinton is 
     some distance farther away, and congressional Democrats 
     farther still.
       Unfortunately, Gingrich has flinched from confronting the 
     true crisis in Medicare and the government's other unfunded 
     liabilities.
       According to Medicare's actuaries--career civil servants--
     the hospital portion of Medicare has an unfunded liability of 
     3.37% of taxable payroll. That is, if every worker in the 
     nation paid another 3.37% of his or her gross pay to the 
     government for the next 75 years, America could honor its 
     promises to pay hospitals what it will owe them for treating 
     senior citizens.
       On a net present value basis, this unfunded liability 
     equals $5.4 trillion in 1995 dollars.
       Social Security is in somewhat better shape. It has an 
     unfunded liability of 2.17% of payroll and a negative net 
     worth of $3.5 trillion in 1995 dollars.
       The two add up to $8.9 trillion. And the amount climbs 
     higher every year we delay tackling the problem.
       By my calculations, the GOP budget plan reduces Medicare's 
     unfunded hospital bill liabilities by perhaps $1.5 trillion. 
     That's about one-sixth of what is needed to restore Medicare 
     and Social Security to actuarial balance.
       By comparison, the amount of federal debt held by the 
     public is less than $4 trillion. If Gingrich forces Clinton's 
     surrender on the budget this fall, the debt held by the 
     public will total just under $5 trillion in 2002, when the 
     budget is ``balanced.''
       The GOP is silent about what would come next. But the 
     numbers on Medicare and Social Security tell the story. The 
     budget could stay balanced for another decade. Then, in 2012 
     and beyond, fiscal disaster strikes.
       In other words, the GOP's plan to ``save'' Medicare only 
     postpones fiscal Armageddon, giving Medicare's hospital trust 
     fund five years of breathing room. It will go broke in 2007 
     instead of 2002.
       Then, about 2012, the retirement of the baby boom will hit 
     the government's finances with an impact equivalent to the 
     moon smashing into the earth.
       Our politics only rarely produce major chances for fiscal 
     reform. The last time was 1983, when Social Security's 
     unfunded liability, then 1.82% of taxable payroll, was 
     ``solved.'' Twelve years later, the stakes are more than 
     three times higher.
       To be sure, Gingrich is bolder than Clinton and Democrats 
     in Congress. Clinton's 10-year balanced budget plan would 
     trim Medicare's unfunded liability by a trivial amount. 
     Congressional Democrats pounced on him for even that. And 
     they've launched a million-dollar ad campaign to denounce the 
     plan to ``slash Medicare.''
       This is crass politics, not commitment to Medicare. Cabinet 
     officers and nonpartisan actuaries agree that Medicare 
     benefits would have to be more than cut in half for its 
     hospital fund to balance.
       You have to go back to 1864, when the Peace Democrats and 
     the Democratic Copperheads undermined President Lincoln in 
     the midst of the Civil War, to find equally irresponsible 
     partisanship.
       Lincoln didn't slow the war effort to appease the 
     Copperheads. He did what he thought was right.
       Today, only Gingrich can redefine the political geometry by 
     putting forward a comprehensive plan to return Medicare to 
     long-run financial health and to put Social Security back 
     ``on the table.''
       The right place for this move is the budget reconciliation 
     process, which should conclude no later than this Christmas.
       Nothing is stopping the GOP from attaching more reforms to 
     the reconciliation bill, to control spending after 2002. 
     These could include raising the eligibility age, increasing 
     copayments and deductibles, or privatizing the Social 
     Security System.
       That would be radical and genuinely historic. It might draw 
     support from unlikely sympathizers. The Washington Post, for 
     example, has come out in favor of slowing Social Security 
     spending by raising the retirement age and limiting COLA's.
       If Gingrich is playing to the history books and not the 
     next election, he cannot be too bold on entitlements. Lincoln 
     saved the Union by defying the Copperheads. And Republicans 
     dominated Washington for seven decades because of his 
     resolve.

                          ____________________