[Congressional Record Volume 141, Number 203 (Monday, December 18, 1995)]
[Senate]
[Pages S18819-S18822]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. NICKLES:
S. 1484. A bill to enforce the public debt limit and to protect the
social security trust funds and other federal trust funds and accounts
invested in public debt obligations; to the Committee on Finance.
the federal trust fund beneficiary protection act
Mr. NICKLES. Mr. President, 4 weeks ago tomorrow, the President
signed a bill into law, the continuing resolution, that stated he would
agree to a balanced budget in 7 years using Congressional Budget Office
figures, which protected his priorities. That bill passed both Houses
of Congress and was signed by the President of the United States.
Unfortunately, that happened 4 weeks ago, but the President has not
complied with the law. He has not done what he said he was going to do.
I find that to be particularly upsetting, and frustrating because the
President has not done what he said he was going to do.
I have been one of the budget negotiators. I sat in on very long
meetings, very unfruitful meetings where we asked time and time again
for the President's representatives to submit a budget that would
comply with the law.
Last Friday, President Clinton's negotiators submitted their fourth
budget of the year, the second since signing the continuing resolution
4 weeks ago. The fourth budget did not come close to balancing using
Congressional Budget Office numbers. As a matter of fact, it has a
deficit in the $100 billion range, as far as the eye can see. Now, that
is not a balanced budget. That is not what the President said he was
going to do.
That bothers me. The President of the United States said in a
statement to a joint session of Congress in January 1993, that he would
use the Congressional Budget Office figures so that we would not be
arguing about baselines and different sets of numbers, so
[[Page S18820]]
we would be comparing apples to apples.
The President said we would do that. Unfortunately, he has not done
what he said he would do. That was in his State of the Union Address
almost 3 years ago, and he has not done what he said he would do a
month ago in signing the continuing resolution. He said he would submit
a balanced budget. He has not done that yet.
Then earlier today, the President vetoed three appropriations bills.
I think he made a mistake. I am looking for the reasons that he gave in
vetoing those bills. I have been on the Appropriations Committee. I am
familiar with all three bills, and I do not think he had any
justification for vetoing those bills. All the employees that work in
the Departments of Commerce, State and Justice, or the Interior
Department, or the Veterans Department, or the Department of Housing--
and we are talking about hundreds of thousands of employees--could have
gone back to work tomorrow if President Clinton had signed those bills.
But, unfortunately, he did not. I will look at his veto message and
review that with my colleagues as soon as we get it, but my guess is he
vetoed those bills because we are not spending enough money. My guess
is he wants to spend more money in all of those bills.
I note, also, Mr. President, that today the stock market is falling
rather significantly--almost a 100-point drop in the Dow Jones market
today. Maybe it is because the markets are starting to question whether
or not Congress will come to a balanced budget. I think the markets are
interpreting it correctly. It is going to be difficult for us to get a
deal together if the President of the United States will not comply
with his commitment to submit a balanced budget in 7 years, using
honest economics. So the market is probably interpreting that
correctly.
What else has happened in the last 4 weeks? Well, the President and
the Secretary of Treasury stated repeatedly that they needed an
increase in the debt limit. They said that Congress has to pass the
debt limit increase or else the United States of America is going to be
defaulting on its obligations for the first time in history. We heard
that time and time again from the President and the Secretary of
Treasury. However, on the deadline of November 15, we did not default.
What happened on November 15 is that the Secretary of Treasury--I am
assuming with the guidance of the President of the United States--began
raiding trust funds, pension funds.
Mr. President, I used to be in the private sector. I used to be
fiduciary and trustee of a private pension plan. Being a fiduciary and
trustee of a private pension plan means you have certain
responsibilities to the employees. You cannot dip into employee pension
funds for other purposes. You cannot raid those pension funds to help
meet other obligations--maybe even unforeseen obligations. You have to
find other sources of income, or you have to cut expenditures, or you
just have to make do. But those pension funds are off limits.
Unfortunately, they have not been off limits to Secretary Rubin and
President Clinton, because they used those trust funds to get around
the debt limit. The debt limit, I might mention to my colleagues, is
statutory; that is a law. It is passed by Congress. Congress has the
power to borrow. That power is not vested in the executive branch. The
President is taking that power upon himself by borrowing from the
pension funds. They have come up with, maybe, very shaky legal guidance
that says they can do it. Granted, a previous administration did it for
a couple of days. But this administration looks like they want to do it
for a year or more, and not just a few billion dollars to get through a
weekend; it looks like maybe it is for months and months. We have a lot
of trust funds, and it appears that this administration is prepared to
raid all of them.
Mr. President, today I am introducing legislation to protect our
Nation's elderly, disabled, poor, and unemployed from recent
unprecedented activities by President Clinton's administration. This
legislation became necessary, Mr. President, when the Secretary of
Treasury, Robert Rubin, undertook an aggressive campaign last month to
deliberately avoid the public debt limit.
The Secretary's actions have endangered some of the Government's most
important programs which provide retirement benefits, health benefits,
separation payments, life and disability insurance benefits, and
dependents and survivors' benefits. Specifically, on November 15, 1995,
Secretary of the Treasury Robert Rubin circumvented the $4.9 trillion
limit on public debt by authorizing the conversion to cash of the
entire $21.5 billion of Federal Employees Thrift Saving Plan, G Fund,
and the disinvestment of $39.8 billion of the $375 billion Civil
Service Retirement and Disability Fund, commonly called CSRDF.
Just last week, Secretary Rubin announced he would further side-step
the limit by withholding a deposit of $14.5 billion in interest
payments to the CSRDF. These unprecedented actions were ordered to
deliberately avoid the legal limit on public debt enacted by Congress.
Through processes known as disinvesting, converting to cash and
underinvesting, this administration is raiding the Federal pension
assets of almost 3 million Federal employees to keep on borrowing,
despite the debt limit. If this type of creative accounting happened in
private business, it could land the employer in jail for up to a year.
That is because, in the real world, raiding your employees' pension
funds is a serious crime.
Where will the trust fund raids stop? Well, as of September 30, 1995,
$1.32 trillion in Federal securities were held by Federal trust funds
or other special accounts, compromising more than one quarter of all
outstanding Federal debt. Almost half of this amount is held by Social
Security and Medicare trust funds--$483 billion by Social Security and
$143 billion by Medicare. The remainder is held by the Federal civil
service and military retirement funds--$375 by the Federal Civil
Service Retirement Fund and $113 by the Military Retirement Fund.
Theoretically, all these funds are in danger of being disinvested by
this administration to fuel more Government spending.
Mr. President, this administration has long tried to have it both
ways when it comes to controlling this deficit spending. A case in
point is the contradictory rhetoric and actions regarding the
disinvestment of Federal employee pension funds and its policy of the
same practice in the private sector. At the same time Secretary Rubin
was disinvesting Federal employee pension funds, Robert Reich,
Secretary of Labor, was warning about the danger of private pension
funds being raided by unscrupulous employers. Here is what Secretary
Reich had to say about private sector pensions:
Labor Department investigators, in recent months, have
discovered a growing number of companies that have been
raiding their employees' 401(k) pension plans. We have reason
to believe that some companies are simply taking
contributions from employees and using the money for their
own purposes. They have regarded this 401(k) pool of money
coming from employees almost like an interest-free loan. Some
of them have every intention of paying the money back, but
are using this for their own purposes to pay bills and pay
other costs of doing business. All of these employers are
acting illegally. I want to send a very clear and unambiguous
message to employers, and my message is: Hands off, this is
not your money. This money belongs to employees.
That warning was given by Labor Secretary Robert Reich in a news
conference on November 27, 1995. These words ought to strike a chord
over at Treasury because the Federal retirement trust funds that
Secretary Rubin has been manipulating are the Federal equivalence of
the private pension plans that Secretary Reich is describing. The
bottom line for private business is that these funds cannot be used for
any other purpose than the benefits for which they are intended. The
civil and criminal penalties for doing so are clear. The tax penalties
include a fine of 5 percent of the amount involved, and up to 100
percent if the plan is not promptly made whole. The labor penalties
include a 20-percent penalty of the amount involved, and a minimum fine
of $5,000, and up to 1 year in jail for a willful violator.
If this is not the height of ``do what I say, not what I do,'' then I
do not know what is.
Mr. President, it is because of the administration's unscrupulous
actions that I am introducing the Federal Trust Fund Beneficiary
Protection Act. My legislation, which is a companion measure to H.R.
2621, introduced by the Ways and Means Chairman Bill
[[Page S18821]]
Archer, which recently passed the House of Representatives, precludes
the Secretary of Treasury and other officials from refraining to
properly credit trust funds and special accounts with securities for
the purpose of avoiding public debt limit. Further, during any period
which the Secretary is unable to issue new debt limit obligations due
to a limitation on public debt, they may not sell or redeem securities
obligations or other assets of these trust funds and special accounts,
except when necessary to provide for the payment of benefits and
administrative expenses of the various cash benefit programs.
Trust funds whose benefit payments are specifically protected
include, first, the Federal old age and survivors insurance trust fund,
Social Security; second, the Federal Disability Insurance Trust Fund;
third, Federal Hospital Insurance Trust Fund; fourth, the Federal
Supplementary Medical Insurance Trust Fund, all of which are Social
Security and Medicare. Fifth, the civil service retirement and
disability fund; sixth, the Government securities and investment fund;
seventh, the Department of Defense military retirement fund; eighth,
the unemployment trust fund; ninth, each of the railroad retirement
funds and accounts; tenth, the Department of Defense education benefits
fund and; eleventh, the black lung disability trust fund.
Finally, my legislation includes conforming amendments which repeal
the authority Secretary Rubin relied upon last month to disinvest Civil
Service retirement and disability funds. Mr. President, I believe it is
critical Congress enact this legislation as soon as possible before
Secretary Rubin further confiscates trust fund assets intended for our
elderly, disabled, poor, and unemployed. I hope that my colleagues will
join me in this initiative.
Mr. President, I cannot imagine the outcry that would happen if we
had a Republican administration raiding Federal employees' trust funds.
In the private sector if you do this you can be fined significantly and
you can be put in jail. Yet the Secretary of the Treasury, under the
guidance and I assume the direction of President Clinton, is raiding
these funds at will and quite possibly plans on doing so for the rest
of the year.
If they can raid the civil service trust fund, evidently they can
raid the Social Security trust fund or the Medicare trust fund. We need
to protect these funds. They were created and paid for by employees. We
need to protect them. I wish that was not necessary. Evidently it seems
to be the case.
Again, Congress has the authority to set the debt limit. This
administration, with the Secretary's actions, is saying they can avoid
the debt limit by raiding these funds. This legislation would stop
that. It would prohibit that. I hope my colleagues would concur.
Similar legislation has already passed the House. It is my hope we will
pass this legislation before we leave. I think it is important to pass
before we leave for Christmas.
Mr. President, as I said, this legislation became necessary when the
Secretary of the Treasury, Robert Rubin, undertook an aggressive
campaign last month to deliberately avoid the public debt limit. The
Secretary's actions have endangered some of the Government's most
important programs which provide retirement benefits, health benefits,
separation payments, life and disability insurance benefits, and
dependent's and survivor's benefits.
Specifically, on November 15, 1995, Secretary of Treasury Robert
Rubin circumvented the $4.9 trillion limit on the public debt by
authorizing the conversion to cash of the entire $21.5 billion Federal
employees' thrift savings plan ``G'' fund and the ``disinvestment'' of
$39.8 billion of the $375 billion Civil Service Retirement and
Disability Fund [CSRDF]. And just last week, Secretary Rubin announced
that he would further sidestep the borrowing limit by withholding the
deposit of a $14.5 billion interest payment to the CSRDF. These
unprecedented actions were ordered to deliberately avoid the legal
limit on the public debt enacted by Congress.
Through processes known as disinvesting, converting to cash, and
underinvesting, this administration is raiding the Federal employee
assets of almost 3 million Federal employees to keep on borrowing
despite the debt limit. If this type of creative accounting happened in
a business, it could land the employer in jail for up to 1 year. That
is, in the real world, raiding your employees' pension funds is a
serious crime.
Where will the trust fund raid stop? Well, as of September 30, 1995,
$1.32 trillion in Federal securities were held by Federal trust funds
or other special accounts, comprising more than one quarter of all
outstanding Federal debt. Almost half of this amount is held by the
Social Security and Medicare trust funds--$483 billion by Social
Security and $143 billion by Medicare. The remainder is held by the
Federal Civil Service and Military Retirement Funds--$374 billion by
the Federal Civil Service Retirement Fund and $113 billion by the
Military Retirement Fund. Theoretically, all of these funds are in
danger being disinvested by this administration to fuel more Government
spending.
Mr. President, this administration has long tried to have it both
ways when it comes to controlling its deficit spending. Case in point
is their contradictory rhetoric and action with regard to its
disinvestment of Federal employee pension funds and its policy on the
same practice in the private sector. At the same time Secretary Rubin
was disinvesting Federal employee pension funds, the Secretary of
Labor, Robert Reich, was warning about the danger to private pension
funds from raids by unscrupulous employers. Here's what Secretary Reich
had to say about private-sector pensions:
Labor Department investigators in recent months have
discovered a growing number of companies that have been
raiding their employees' 401k pension plans. We have reason
to believe that some companies are simply taking
contributions from employees and using the money for their
own purposes. . .[They] have regarded this 401k pool of money
coming from employees almost like an interest-free loan. .
.Some of them have every intention of paying the money back,
but they are using this for their own purposes to pay bills,
to pay other costs of doing business. . .All of these
employers are acting illegally. . . And I want to send a very
clear and unambiguous message to employers. . . And my
message is: hands off. This is not your money. This money
belongs to employees.--Labor Secretary Robert Reich,
transcript from news conference, November 27, 1995.
These words ought to strike a chord over at Treasury, because the
Federal retiree trust funds Secretary Rubin has been manipulating are
the Federal equivalents of the private sector pension plans Secretary
Reich is describing.
The bottom line for private business is that these funds cannot be
used for any other purpose than the benefits for which they are
intended. The civil and criminal penalties for doing so are clear. The
tax penalties include a fine of 5 percent of the amount involved and up
to 100 percent if the plan is not promptly made whole. The labor
penalties include a 20-percent penalty of the amount recovered, a
minimum fine of $5,000, and up to 1 year in jail for a willful
violator.
If this is not the height of ``do what I say and not what I do'' then
I don't know what is.
Mr. President, it is because of the administration's unscrupulous
actions that I am introducing the Federal Trust Fund Beneficiary
Protection Act. My legislation, which is a companion measure to H.R.
2621 introduced by Ways and Means Chairman Bill Archer, precludes the
Secretary of the Treasury and other officials from refraining to
properly credit trust funds and special accounts with securities for
the purpose of avoiding the public debt limit.
Further, during any period in which the Secretary is unable to issue
new debt obligations due to a limitation on the public debt, they may
not sell or redeem securities, obligations, or other assets of these
trust funds and special accounts, except when necessary to provide for
the payment of benefits and administrative expenses of the various cash
benefit programs. Trust funds whose benefit payments are specifically
protected include: The Federal Old-Age and Survivors Insurance Trust
Fund; the Federal Disability Insurance Trust Fund; the Federal Hospital
Insurance Trust Fund; the Federal Supplementary Medical Insurance Trust
Fund; the Civil Service Retirement and
[[Page S18822]]
Disability Fund; the Government Securities Investment Fund; the
Department of Defense Military Retirement Fund; the Unemployment Trust
Fund; each of the railroad retirement funds and accounts; the
Department of Defense Education Benefits Fund and the Post-Vietnam Era
Veterans Education Fund; and the Black Lung Disability Trust Fund.
Finally, my legislation includes conforming amendments which repeal
the authorities Secretary Rubin relied upon last month to disinvest the
Civil Service Retirement and Disability Fund.
Mr. President, I believe it is critical that Congress enact this
legislation as soon as possible, before Secretary Rubin further
confiscates trust fund assets intended to benefit our Nation's elderly,
disabled, poor, and unemployed. I hope my colleagues will join me in
this initiative.
____________________