[Congressional Record Volume 142, Number 104 (Tuesday, July 16, 1996)]
[House]
[Page H7643]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       SOCIAL SECURITY PREDICAMENT: FEWER WORKERS, MORE RETIREES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Michigan [Mr. Smith] is recognized for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, I want to talk about one of the 
better kept secrets in Washington, and that is the fact that the Social 
Security trust fund has no money in it. There is a lot of current 
retirees that would like to expect that the promises on Social Security 
are going to stay there for the rest of their life. There is a lot of 
individuals that are going to be retiring in the next several years, 
and certainly young workers today that hope that there is some way that 
Social Security that they are now paying for will have something to 
offer them when they retire.
  The predicament is that Social Security is going broke. The recent 
Social Security Administration estimate that they are going to be out 
of money earlier than they expected should be a red flag, should alert, 
Mr. Speaker, not only the Members of this body, but certainly the 
American people that we need to deal with Social Security. No longer 
can we put our heads in the sand and pretend that this very serious 
problem does not exist.

  I introduced a bill last week, H.R. 3758, that deals with the problem 
of Social Security solvency. This bill is the only bill that has been 
introduced in the House that has been scored by the Social Security 
Administration, and it has been scored in a way that Social Security 
will continue to exist at least for the next 75 years, and the way it 
is written, Mr. Speaker, Social Security will continue to survive.
  Now let me first say what the predicament is that is causing the 
problem in Social Security. In the early 1940's there were 42 people 
working and paying for the retirement benefits of every one Social 
Security retiree. In 1950 there were 17 people working and paying in 
their Social Security tax to support each one retiree. today Mr. 
Speaker, here is the problem: There is only three people working, 
supporting, paying in for each retiree, and when the baby-boomers 
retire, there is only going to be two working people in this country 
supporting that retiree.
  You know what we have done? With the fewer number of workers for the 
larger number of retirees, we have continued to increase their taxes. 
Since 1970 we have increased taxes on those workers 34 times. So we 
continue to increase the tax on a fewer and fewer number of those 
working, and in terms of the demographic problems, we have an aging 
population. When we started Social Security, the average age of 
mortality, the average life expectancy, was 63 years old. Today it is 
72 for a man and 76 for women. If you are lucky enough to reach age 65, 
you can expect to live until you are 84.
  So we have an aging population on the one hand, fewer people working, 
and, you know, there is no trust fund, there is no reserve, it is a 
pay-as-you-go program where the workers today pay their money in and 
immediately when the Social Security Administration gets that money, 
they pay it out to existing retirees. If there is anything left, the 
Federal Government grabs the rest of that money for general fund 
spending.
  Some people would like to believe that, look, as long as government 
has got those IOU's in the trust fund that somehow government can come 
up with the money to pay that trust fund back. I do not know how they 
are going to do that. How would they do that? They do it either by 
increasing taxes on those working to increase the burden on those 
individuals, and, Mr. Speaker, do you know, do the American people 
realize, that 70 percent of the American people today pay more in the 
FICA tax than they do in the income tax?
  And so I say tax increases are out, so I have gradually increased the 
retirement age 2 years beyond the existing 67, gradually decreased the 
benefits for those higher income people, and what it has done is 
increase the solvency of Social Security to the extent that we allow 
those surpluses to be invested by each individual worker. So that 
individual worker now can take some of that FICA tax, they can take 
that dollar; it is going to be their own dollars, it is not going to be 
somebody else's dollars, and they can say, look, I am investing this in 
my fund, in my passbook savings account so I am assured of that money. 
And when you consider the fact that Treasury has had a real return of 
2.3 percent on every dollar that the Treasury has taken from Social 
Security, and when you consider that the average equity investment is 9 
percent, we end up with a bill that is going to give today's workers 
even greater benefits in their retirement than they would have under 
the existing system, plus it keeps it solvent.
  Let us take our head out of the sands. Let us start dealing with the 
problem of Social Security.

                          ____________________