[Congressional Record Volume 142, Number 7 (Monday, January 22, 1996)]
[Senate]
[Pages S183-S186]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               HYPOCRISY

  Mr. SIMPSON. Mr. President, I rise to call the attention of my 
colleagues today to an item or two that have been in the news of late. 
The theme that unites them loosely is the theme of ``hypocrisy.'' 
``Hypocrisy,'' I have said, may well be the ``original sin'' in 
American political life.
  The first of these subjects has been reported upon in many of this 
Nation's newspapers, but as of yet has been insufficiently remarked 
about among the denizens here in the village of Washington.
  Lately we have been in the midst of one horrific battle over the 
budget, gnashing our teeth, wailing, and howling to the heavens--it 
would be the envy of King Lear--and referring to each other by every 
manner of cruel epithets.
  What are the differences that divide us, to occasion this level of 
hysteria, hype, and hoorah and fingerpointing? Often the differences 
are in reality very minimal, such as a difference of all of the sum of 
$7 as to where Medicare part B premium should be in the year 2002. That 
was the entirety of the difference between the President's first 
position and the Congress' position. That is where we drew the first 
``battle line,'' the first line, the first gauntlet thrown.
  In my view, it would be just as silly to let this difference sink a 
budget agreement as it would be to let the size of the tax cut sink an 
agreement. These are not sufficient causes, in my estimation, to fail 
to meet our obligation to future generations.
  One would know little of the minimal size of this difference from 
watching the evening news, but coincidentally, 7 bucks was the amount 
that part B premium stood to go up next year, from $46 a month to $53 a 
month, regardless of one's net worth or income, really not too 
destructive in society, especially when we do not have any test of 
income or wealth.
  I wonder if all of my colleagues fully realize what has been 
happening out there in the private insurance market while these 
wretched hostilities have been taking place here in Washington. We have 
seen some most remarkable increases in insurance premiums, and one of 
them, ironically enough, comes to our gentle citizens courtesy of the 
American Association of Retired Persons, the AARP. You have heard me 
speak of them before. Yes, I have from time to time gently touched upon 
their activities.
  Now I have in hand an article describing how this determined, 
dedicated and obsessed nonprofit organization is raising its medigap 
insurance premiums for the next 6 months, after which, who knows, they 
might even rise again. This is the same AARP, I remind my colleagues, 
the courageous and dogged defenders of the poor, the downtrodden, and 
the elderly, these are the very same folks who descend upon Washington 
in droves and hordes to tell us if Medicare part B premiums were to go 
up--these being voluntary premiums, please recall, voluntary premiums; 
you do not have to join--but that when this terrible thing happens, 
mind you, going from $46 to $53 next year regardless of your net worth 
or your income--and you were not forced into it and it was not any part 
of an original contract, you got in because it was the best deal in 
town--and if it 

[[Page S184]]
goes up 7 bucks, seniors will be hurled out into the streets in their 
ragamuffin garb. Now, that is bah humbug.

  Meanwhile--hear this--according to this article, a typical medigap 
customer of the AARP will see his or her monthly premiums rise from 
$147 to $178 next year, an increase of $31 a month.
  Now, this was very striking to me. Let  me read from their letter to 
their aggrieved legions of customers: `` * * * because of rising claim 
costs, a rate increase will become necessary as of January 1, 1996. 
Your new rates are guaranteed for six months.''
  Let me be sure that every one of us understands. If there is any 
increase at all in Medicare part B premiums, a voluntary program in 
which 69 percent of the cost is paid by the ordinary, unbenefited 
taxpayer, this is decried as a ``benefit cut'' says the AARP. In their 
own propaganda, pumping their health care program, premiums must 
inevitably skyrocket because of inevitably, unavoidably--choke, gasp, 
sob--``rising costs.'' What unadulterated hypocrisy.
  I do not see anything said here about a ``benefit cut'' to AARP's 
members although they are sticking it to their customers more than 
twice as severely as anything yet contemplated here for Medicare part 
B. No, with Medicare part B, their yowling answer, eternally hurled 
into the heavens, is always, just keep sticking it to the general 
taxpayers, never the beneficiary, regardless of their wealth, net worth 
or income. But when the AARP's own finances are right on the line, 
their customers are simply told curtly they are going to have to ``pay 
up.''
  Yes, Mr. President, health care costs are going up. Who missed that 
in America? Some of that burden has to be shared. Who has missed that? 
With Medicare, most of it will be taken up by taxpayers, but the 
beneficiaries need to pick up some of that burden, too, if this country 
is going to avoid bankruptcy. That is the truth, and everyone in 
Washington knows it.
  It has always been the height of deception for the AARP or the 
National Committee for the Preservation of Social Security and 
Medicare, or all of the similar tub-thumpers or anyone else to claim 
that it is some God-given right for beneficiaries to be held completely 
harmless in this process, or even to pretend that any sharing of 
Medicare cost increases is a ``benefit cut.'' We see so well here from 
the AARP's own actions that they know full well that their own stance 
has been stunningly hypocritical.
  I do now have a sensible proposal for the AARP. If they can find a 
way to bring their own membership's premiums back down to where they 
were before, then only, and only then, can they rightly continue to 
fight so vehemently against all premium increases in Medicare part B. 
If and when the AARP find this presently unknown and occult way to 
avoid all premium increases, perhaps they will share the great secret 
with us and then we can logically do the same and avoid any changes in 
Medicare part B premiums.
  But so long as the AARP continues to rake in hundreds of millions 
annually in tax-exempt insurance income, I trust they will see the 
unseemliness of any further disgustingly patronizing lecture to our 
Government about ``what to do with Medicare.''
  Let me remind my colleagues again that the AARP is getting a huge 
share of the take of this premium increase. They pull in more than $100 
million annually--their current share of the take, their take--from the 
contract with Prudential Insurance. They could, I readily note, give up 
that pile of new cash and return that money right to their membership 
to offset some of the effects of this premium increase. It seems fair. 
It certainly does.
  Does anyone believe that they will? Would any of my colleagues ever 
believe that the AARP will give up its share of the profit from this 
lucrative insurance business and return it to the membership, 3.2 
million of their own members, who are getting stuck with this increase? 
No. For this might make it a little tougher for the AARP to meet the 
annual--you want to hear this one--the annual payments of $17 million 
in rent each year on its palatial building downtown genially dubbed the 
``Taj Mahal,'' or the payment of more than $69 million a year in 
salaries to themselves--many of them in chunks of more than $100,000 
per year per person. There are many on the AARP payroll who make over 
$100,000 a year. And they lease their building for 17 million big ones 
every year on a 20-year lease. Figure that up for $8 a month dues. That 
will run the string for you.

  No, I suspect they will continue to live in splendor here on E Street 
and leave their poor old customers scrambling to pay out the extra 
hundreds of dollars a year which they will have to shell out for this 
premium increase.
  I trust my colleagues will remember this action the next time the 
AARP wanders in here--led by ``Edna the Enforcer''--claiming to 
represent the interests of America's elderly. The bottom line for this 
organization is big business, and big profit, pure, and simple. Believe 
it.
  The other item which I wish to describe for my genial colleagues is 
an excellent editorial by Gerald Eickhoff in Investor's Business Daily, 
entitled ``What About Social Security?''
  I ask unanimous consent this article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  [From the Investor's Business Daily]

                      What About Social Security?

                        (By Gerald E. Eickhoff)

       Labor Secretary Reich's worthy campaign against pension 
     fraud begs a more serious question: Where is he on Social 
     Security?
       The secretary is sounding the alarm on private pension 
     fraud. Yet he has said nary a word about the condition of 
     America's public pension system.
       Reich's current campaign means to help workers ``know what 
     to look for'' so they can ``ask the right questions'' about 
     their pensions.
       Yet he must know that Americans would be well-advised to be 
     at least as concerned with Social Security. After all, as a 
     member of its Board of Trustees, he is well-acquainted with 
     the trouble that lies ahead.
       Fraud in a handful of 401(k) plans deserves attention, but 
     it is trivial next to the potential for Social Security 
     failure. Without reform, Social Security will surely either 
     go bankrupt or bankrupt the nation. And trouble begins in 
     just 10 years.
       In 2005, the Social Security trust fund surpluses are 
     expected to start declining. In other words, the program will 
     begin to spend more than it takes in. Instead of masking the 
     true size of the budget deficit, as it does now, it will 
     begin to add to it.
       By 2012, entitlement costs and interest on the debt 
     together will consume all federal tax revenues.
       By 2013, Social Security's surpluses will turn into 
     deficits. And the overall federal budget deficit will 
     explode.
       The numbers are staggering. By the year 2020, annual Social 
     Security obligations will exceed income from payroll taxes by 
     an estimated $232 billion. That grows to $766 billion by 
     2030.
       The demographic outlook tells why. In 1940, the average 
     American lived to the age of 61, yet today average life 
     expectancy is 76. In the next 35 years the number of 
     Americans over age 70 will double to 48 million. That leaves 
     just 2.2 workers to support one retiree, as opposed to 3.3 
     today and 159 in 1940.
       Part of the problem is the looming retirement of the Baby 
     Boom. But it goes much deeper, to Social Security's pay-as-
     you-go system--less charitably, a Ponzi scheme.
       The private pension funds that so concern Secretary Reich 
     are funded programs. Social Security is a mere promise to 
     pay.
       Yes, that promise is backed up by the full taxation power 
     of the federal government. But because the trust fund is 
     filled with IOUs from the government to the government, it is 
     no more capable of paying future benefits than a dry well is 
     of yielding water.
       The notion of a trust fund, therefore, is at best 
     misleading. At worst, it is accounting gimmickry of the 
     highest order.
       Future retirees have little chance of receiving benefits on 
     a scale anything like those of today. Benefits such as they 
     are will be paid either from borrowed money, from new debt 
     piled onto the existing $5 trillion national debt or from tax 
     receipts.
       Because the federal government's ability to borrow is 
     finite, however, increased taxes will be the inevitable last 
     resort.
       Current projections assume workers will be squeezed by 
     taxes to prop up a failing system. Social Security payroll 
     taxes will have to rise from today's 12.4% of pay to 16.5% in 
     2030. Under less optimistic assumptions, they could run as 
     high as 37%.
       Contrast this with the fact that in 1950, the average 
     family of four paid just 2% of its income to the federal 
     government. That included income and Social Security taxes.
       You'd get hardly an inkling of this from a casual reading 
     of the Social Security Trustee's report. Rather than blowing 
     the whistle on the trust fund illusion, the Trustees 
     confidently report that the fund ``will be able to pay 
     benefits for about 36 years.''
       The picture of Social Security's future is disturbing. But 
     action now can avert a crisis. Lawmakers can prevent Social 
     Security bankruptcy, devastating taxes, job loss and an 
     uncertain retirement for millions. With 

[[Page S185]]
     determination and a clear goal, it is possible to not only save, but to 
     vastly improve Social Security and its ultimate value to 
     Americans.
       No other issue has greater potential for future prosperity 
     or calamity than Social Security reform. We must act now.
       Reich's educational campaign on private pensions is a good 
     place to start. Social Security is where we need to end up.

  Mr. SIMPSON. Mr. Eickhoff notes again the hypocrisy of Washington's 
concern about private pension fraud while, at the same time, ignoring 
the massive problems looming in Social Security. As Mr. Eickhoff notes, 
``the private pension funds that so concern Secretary Reich are funded 
programs. Social Security is a mere promise to pay.'' That is correct--
it is only a promise. The payments promised bear no relation to 
contributions made by past or current workers.
  As the article notes, ``Future retirees will have little chance of 
receiving benefits on a scale anything like those of today. Benefits 
such as they are will be paid either from borrowed money, from new debt 
piled onto the existing $5 trillion national debt or from tax 
receipts.''
  Absolutely. That is the way it will be. And let us not forget the 
projections we currently have, that under current law, if we did 
everything of the hideous programs presented by the majority party, we 
will still be saddled $6.2 trillion in debt by the end of this century. 
We are not doing any heavy lifting of any great import.
  ``Tax receipts,'' that is the phrase. That is what will darned sure 
be sought to pay for the benefits that have been promised--especially 
that pressure to pay it from tax receipts will come from the various 
seniors' lobbies. We will just hike the old payroll tax again, just as 
we did in 1983, and keep hiking it and keep hiking it on up to 30 
percent of payroll by the year 2030, unless we ``do something'' about 
the growth of Social Security and Medicare benefits.
  Everybody knows that, too. And the people who are telling us about 
the demise of Social Security are the trustees of Social Security, one 
of whom is my friend, Robert Reich, whom I enjoy thoroughly. A 
delightful gentleman. He and I do not concur on various philosophical 
items or ideologically. Another one is Donna Shalala, I have a similar 
regard for her, a very able lady. And Robert Rubin, another very 
capable person, even though we disagree heartily.
  Those are the trustees. Those are three of them, telling us about the 
doomsday coming. While the present Commissioner of Social Security does 
nothing, nothing to tell us how do we get out of this box. Quit joshing 
us. What are your recommendations? You are the Commissioner, Shirley 
Chater. You are free of the influence of Congress and the President. 
You are an independent agency, so tell us. And we have nothing coming 
back except resounding speeches, tales, anecdotal material about how 
great Social Security is. ``But it will need some attention in the 
years to come.''
  You betcha it will. It is $360 billion a year and we are not even 
touching it. We have a COLA attached to it that can be between $4 and 
$8 billion a year which goes out to people regardless of their net 
worth or their income. It cannot possibly succeed because it was never 
a pension. It was an income supplement. People are living longer and 
eating it all up. Now, every day, almost 8,000 people, since the 1st of 
January, will become 50 years old and they--not intentionally--will 
destroy the system. And we know it. And they know it. The trustees know 
it.
  At least I hope, again, as we open this session, that my good 
colleagues will take a good look at the bipartisan work of Senator Bob 
Kerrey and myself, eight bills to restore the solvency of Social 
Security in the years to come, starting now. Now--not 10 years from 
now, not 20 years from now--extending the age of retirement over the 
next 30 years so it is an easy step, allowing people to invest 2 
percent of that contribution in a personal investment plan and the 
other 4.5 percent can go into, then, the system.
  ``That means a reduction of benefits.''
  Indeed it does. Doing something with the current ratios with regard 
to retirement, not only for ourselves as Congresspersons but all 
Federal retirees. Doing 30-year budgeting in this particular area. 
Doing something with the Consumer Price Index. This is absurd. This is 
a no-brainer.
  We heard testimony from everyone in the United States, the CPI 
[Consumer Price Index] was overestimated, from the figure of 0.5 to 
2.2. If you just made the change and let it come down minus half a 
percent it comes $157 or $158 billion in the year 2002. But 10 years 
out it is nearly $700 billion in savings.
  These are small items now that will overwhelm us 10 or 15 years from 
now. And no one is doing anything about it.
  I say again, for the life of me I cannot understand what happened to 
the people in society between the ages of 18 and 45. They must be 
totally asleep or numb, or gone, because they will be gone when they 
are my age because there will be nothing there unless we begin to make 
the corrections. And that is the trustees telling us that, not some 
leftover specter of the past, some right-wing cuckoo from 20 years back 
or some left-wing zany. That is the trustees telling us this is what is 
going to happen to Social Security, and we do not even touch it. The 
President does not touch it. Congress does not touch it. And there are 
groups out there dedicated to see that you do not touch it.
  So, I always say to them, ``Do you care about your children and 
grandchildren?"

  They always say, ``Oh, yes, that is the purpose of our existence, 
caring for our children and grandchildren.''
  I say, ``Forget it. I do not want to hear that one anymore. That is 
so much opium smoke. That is a phony.'' They cannot possibly care if 
they will not allow us to make the adjustments, or at least begin to 
make the adjustments now. And we all know what we have to do, all of 
us. And everybody downtown knows it. And the people of America, if they 
cannot figure all this out in the next 10 months, then get into the old 
booth and pull the trigger for the other party and say, ``Well, we have 
had enough of that. I do not know what that great experiment was, but, 
boy, when they touched Medicare, oh, God, I tell you I rose up. I 
showed them. And Medicaid and Federal retirement and Social Security.''
  So, in that scenario, those of the other faith will come into the 
Halls of Congress, take over the majority party, and say, ``Boy, aren't 
we glad we saved you from them because now we are really going to get 
back to where we were before. We are going to let Medicare go up 10.5 
to 12 percent per year. We will show them. Never do that cruel thing 
where we are going to let it go up only 7 percent a year, or 6.4. We 
are going to let Medicare and Medicaid go up 10 percent a year. Those 
were evil people trying to let it go up only 6 percent. We are not 
going to touch Social Security. We are just going to--well, we might--
just add a little payroll tax. That will fall on the people in society 
who are not organized, who are not paying $8 a year dues to some 
organization which is dedicated to seeing how much more they can get 
out of the Treasury.''
  So, that is what is out there and this can all be averted if, as Mr. 
Eickhoff notes, we act now to prevent a crisis. We simply cannot keep 
waiting until after the next election. We cannot keep saying that 
Social Security should be ``off the table.'' We have to adjust to the 
Consumer Price Index, as more and more are beginning to recognize, from 
the bipartisan Senate group to the ``Blue Dog'' Democrats to the 
Washington Post, for Heaven's sake, and we have to phase upward the 
retirement age and make a number of other changes if we are to have any 
chance of repairing this situation.

  So I am very pleased to be working continually with my colleague and 
friend from Nebraska, Bob Kerrey, in this effort. I continue to hold 
very serious hearings on this matter in the Social Security 
Subcommittee which I chair. But I will be having individuals there 
before us between the ages of 18 and 50 coming to testify, rather than 
a continual stream of people over 60 coming to testify. I remind my 
colleagues that Social Security is a promise to them, too. It does not 
exist simply to harvest the votes from today's retirees. That is what 
it has become.
  We all know that even the Washington Post has been noting of late 
that it is folly to say that Social Security is ``off the table.'' A 
$360 billion program headed toward certain bankruptcy is ``off the 
table''? It is absurd. It is stupid. That cannot work. The very least 

[[Page S186]]
we can do now is to fix the CPI. As I say, groups are working to do at 
the present time. Others have lately joined in these suggestions.
  So I do hope my colleagues will read that article and recall that 
everything and all things we are doing right now on this budget is, or 
should be, for the benefit of future generations. I tell people at my 
town meetings; they do not hear it always. I tell it wherever I am. 
Nobody over 60 is going to get dinged at all in this process unless 
they are loaded. And if they are loaded, they might get stuck 20 to 40 
bucks more a month. If they are not loaded, they will not get hit at 
all. People cannot even hear that. We cannot go on to ignore this 
ghastly problem in Social Security and yet ever be able to continue to 
claim that we have done right by them.
  Finally, Mr. President, I wish to call the attention of my colleagues 
to a recent article in the Washington Post regarding the 
recommendations forthcoming from the Social Security Advisory Council. 
This is very important. People are ignoring these things because you 
are not supposed to mention these two detonating words--Social 
Security.
  But that council was unable to agree upon a prescribed solution to 
the impending Social Security solvency crisis, and that is a similar 
experience with which I am very familiar. I served on the President's 
Bipartisan Commission on Entitlement and Tax Reform. We have no 
difficulty defining the problem, and by a vote of 30 to 1 we agreed 
that it certainly existed. I have just shared with you moments ago what 
it is. But when it came time to solve it, only a hardy few were willing 
to give answers--Senator Bob Kerrey, Senator Jack Danforth, Congressman 
Alex McMillan, Congressman Porter Goss, Pete Peterson, and myself, to 
name a few of them--out of a 32-Member commission. So I do know what it 
is like to struggle for a year to get colleagues to confront a most 
serious problem, only to be overcome and overwhelmed by the ponderous 
difficulty of getting a majority to face before us political perils 
inherent in the solution.

  Although the advisory council was unable to develop a consensus 
solution, there is much that is worth noting in the work that they have 
done. My colleagues would do well to study it. I myself again plan to 
have serious hearings on this subject this year in my Finance 
Committee's capacity as the chairman of the Subcommittee on Social 
Security and Family Policy.
  Three plans were voted on by the council. One is called the 
privatization plan, which would take roughly half of the existing 
contributions to Social Security and refund them to taxpayers to be 
invested in IRA's or 401(k)-type accounts which would earn retirement 
income for them while their previous Social Security benefits would be 
cut accordingly.
  A few years ago, you could not even pose a discussion about such a 
plan without someone charging that you were out to destroy Social 
Security. Yet, this plan received five votes from these advisory 
council members. I think that shows a deep recognition of the need for 
fundamental reform of the system.
  Another plan was backed by former Social Security Commissioner Robert 
Ball. He would stick very close to some of the more traditional 
solutions, as Mr. Ball has always done in the past. It would turn to 
increased taxation: imposing existing payroll taxes on State and local 
employees; imposing higher taxes on Social Security benefits, and, of 
course, raising the payroll tax rate. We have heard so much of that 
before.
  But I draw my colleagues' attention to some of their other proposals. 
One is to reform the Consumer Price Index. Bear in mind that this is 
from the old guard, the most traditional defenders of the existing 
Social Security system, the people on this committee, this advisory 
committee, saying now that the CPI needs to be reformed for the sake of 
Social Security solvency. We need to hear that. If we cannot get that 
done at all in our current budget process, we are truly ``missing the 
boat.''

  Here is something else they suggest. Having the Government invest the 
Social Security trust funds in stock market index funds as opposed to 
simply buying Government bonds. That is something which Senator Kerrey 
and I have also proposed here in the Senate. That would have been 
absolute heresy a short time ago. These members of the advisory council 
will not go so far as to set up individual accounts; they would retain 
the pooled nature of the program. But, still, this would represent a 
most significant shift from current practice.
  So I review all of that for my able colleagues so that they will see 
that the entire spectrum and scholars and ``experts'' on this issue 
tell us that fundamental reform is absolutely necessary in order for 
Social Security to survive. At the very least we must reform the CPI 
and get these retirement funds somewhere else other than where they are 
currently are, either into stock funds, or into private retirement 
accounts, if we are ever to generate the return that will be critically 
necessary to fund future benefits.
  I would also note that a third option was described in this article 
as a ``halfway house'' measure. This plan would provide for two 
percentage points of the payroll tax to go into a 401(k) or an IRA-
style plan. And the chairman of the council voted for that one. That 
intrigued me greatly because I had also joined Senator Kerrey in 
offering a plan which had exactly this option as one of its components. 
Here they have described it as a ``halfway house'' measure.
  So I, Mr. President--and you have known me a lifetime--have become, I 
whimsically conjecture, a ``moderate'' now when it comes to Social 
Security reform, which is touching. It is a touching thing. My 
colleague might surely be most intrigued to know that. But this Kerrey-
Simpson-style proposal is now viewed by the advisory council itself as 
a compromise between differing approaches to reform of the system. Who 
would believe it?
  So I trust that my colleagues will give their earnest attention to 
the deliberations of the Social Security Advisory Council, and note 
that all those who study this issue have concluded that fundamental 
reforms need to be made, starting at the very least with reforming the 
Consumer Price Index.
  I look forward to working with my colleagues in the year to come with 
regard to those issues that will come before the subcommittee which I 
chair.
  I thank the Chair. I thank my colleagues.
  I yield the floor.

                          ____________________