[Congressional Record Volume 142, Number 100 (Tuesday, July 9, 1996)]
[Extensions of Remarks]
[Page E1231]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE SOCIAL SECURITY TRUST FUNDS NEED OUR HELP NOW

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                    in the house of representatives

                         Tuesday, July 9, 1996

  Mr. THOMAS. Mr. Speaker, with the recent issuance of the 1996 annual 
report of the Board of Trustees of the Federal Old-Age, Survivors, and 
Disability Insurance [OASDI] Trust Funds, it is time to heed the 
warning that this report provides. The funds will be fully depleted by 
2029. In addition to the loss of the trust funds that year, the 2029 
annual Social Security tax revenues will only be adequate to cover 
three-quarters of the amount necessary to pay the OASDI benefits for 
that year.
  If we don't act now, our retirement system that employers and 
employees have paid into since 1937 may become extinct. Today's young 
workers already have little faith that they will ever be able to 
collect Social Security benefits. In fact, in a recent survey, workers 
indicated that they believe they have a better chance of seeing a UFO 
than collecting Social Security benefits.
  The number of covered workers receiving benefits has grown 
dramatically but the number of workers paying into the funds to cover 
each retired worker is shrinking dramatically as well. In 1945, the 
system had over 1 million recipients with approximately 41.9 workers 
paying into the fund for each retired worker receiving benefits. In 
1995, there were over 43 million recipients with 3.3 beneficiaries 
supporting each retired worker. By 2070, there will be over 96 million 
recipients and only 1.8 current workers per each recipient.
  Let's look at it from another perspective. In 1945, 2 out of every 
100 covered workers were actually Social Security recipients. In 1995, 
there were 31 recipients for every 100 workers and in 2070, with the 
baby boomers, it will top off at 55 recipients out of every 100 covered 
workers. In 75 years, more covered workers will be retired than 
working. Please keep in mind that 41 years earlier, the fund was 
depleted and payments to recipients will be coming directly out of 
Social Security taxes paid in that year with the shortfall being made 
up with other taxpayer funds. If these funds are covering the Social 
Security shortfall, that means that less dollars are available for 
other entitlement spending--including Medicare and Medicaid--and 
discretionary spending.
  The same time that the trust funds are gone and the shortfall is 
being made up with Federal dollars, Americans are living longer. 
Retirees will be collecting Social Security benefits for a greater 
length of time. In 1940, the average male did not even live long enough 
to collect Social Security benefits--average life expectancy 61.4 
years; and females did not collect it for very long--average life 
expectancy 65.7 years. By 2070, the average man will live 78.4 years 
and the average women 84.1 years. They will start collecting Social 
Security retirement at age 67.
  Changes to the system need to be made now. Of course, the trustees 
look for solutions in America's checkbook and tell us that the system 
can be saved if we increase Social Security taxes approximately 2 
percent during 1996.
  There is a better approach. My Social Security IRA bill, H.R. 2971, 
is a modern plan. It incorporates the best of the present Social 
Security system and also provides the worker with a role in personal 
retirement planning. The worker's portion of the Social Security tax is 
placed in a federal insured depository institution of the worker's 
choice.
  If today's average salaried worker pays into the Social Security IRA 
account for 45 years, upon reaching the future retirement age of 67 
years, the worker will have accumulated approximately $172,000 in the 
account--converted to present dollars and computed using a 3 percent 
annual rate of return. If these funds are rolled over upon retirement, 
into an annuity program, the monthly annuity payment to the retiree 
will be $854. At retirement, the worker will also receive a reduced 
Social Security monthly annuity. Please note that the present monthly 
Social Security benefit for the average worker is $886.
  The time is ripe for change. The OASDI trust funds are in trouble. 
Let's not wait until it's too late. We need to make a change now if we 
want to save the Social Security system. Social Security IRA offers an 
alternative.