[Congressional Record Volume 143, Number 13 (Wednesday, February 5, 1997)]
[House]
[Page H300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               A PROPOSAL TO KEEP SOCIAL SECURITY SOLVENT

  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, in the week of February 27, we 
are expected to take up the issue of the balanced budget amendment. 
There has been a lot of talk about Social Security. How this amendment 
is going to affect Social Security and how changes in that amendment 
that might better portray what is really happening at the Federal 
Government.
  I wanted to talk a few minutes about what the problem is in Social 
Security. That problem with Social Security is not having enough money 
coming in to pay the benefits of retirees as we operate on, if you 
will, a pay-as-you-go system, where existing workers pay the benefits 
of existing retirees. That is the way it started in 1935 when we passed 
the Social Security bill. That is the way it has always been, and that 
is the way it is today.
  If we look at the problems of the birth rate going down while the 
number of retired people increase--and they are increasing because they 
are living longer--we see what happens to the deficits of Social 
Security. Some suggest, such as Dorcas Hardy, the previous Social 
Security commissioner, that we are going to be short of Social Security 
funds as early as 2005. It presents a serious problem to this Congress.
  Every retiree should be concerned about what might happen to those 
benefits if we delay some solution. Every worker in America, especially 
those under 45 years old, had better be going to the candidates that 
run for Congress and say, look, take your heads out of the sand and do 
something to protect Social Security.
  This chart in front of me shows the kind of deficits we are going to 
have; in other words, the amount of money by which benefit payments 
will exceed revenues that have to borrow or shift from the general 
fund.
  As I go around to my town hall meetings and into high school and 
college government classes, one statistic that I give them is the price 
that Social Security is costing a minute today. That price is $600,000 
a minute. But in 2030, it is going to be $5,700,000 a minute. So the 
number of retirees increases because they are living longer. When we 
started Social Security, the average age of death was 63. Now if you 
are lucky enough to hit 65, the estimate is that you are going to live 
to be 86 years old. This represents the decrease in the number of 
workers that pay in their taxes to support each retiree.
  In 1945, there were about 42 people working, paying in taxes to 
support each retiree. By 1950, that was down to 17 people working. By 
today, there are only three people working. The estimate is by 2030 
there are only going to be two people working.
  I have developed a Social Security proposal that has been scored by 
the Social Security Administration that keeps Social Security solvent. 
It does this in several ways. No. 1, it keeps the Government from 
reaching into the surpluses in the Social Security fund and spending 
those for other Government purposes. It allows a very modest investment 
in private savings accounts. The reason we do that is because Treasury 
is now paying a return, a real interest rate return, of 2.3 percent. If 
we compare that to the 9-percent the private sector has been getting 
over the last 80 years, we see the Social Security system is losing 
out.

                              {time}  1315

  So every proposal that came out of the President's advisory council 
included some kind of private investment. What we also do is increase 
the retirement age by 1 year. That brings in additional revenues. The 
amount of those additional revenues can be eligible for private 
investments. We do not affect current retirees in this bill because 
they, after all, made their plans based on existing law; but gradually 
over the next 25 years, we make these changes.
  Look, we have just got to, make an aggressive, conscientious effort 
to deal with these kinds of entitlement spending, whether it is 
Medicare, or whether it is Social Security, because the fact is, we are 
going broke. If we do not make changes now, those changes in the future 
are going to have to be much more drastic. It is going to interrupt our 
economy. It is going to interrupt the well-being of retirees. So let's 
act now.

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