[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.

                          ____________________