[Congressional Record Volume 143, Number 13 (Wednesday, February 5, 1997)]
[House]
[Pages H313-H321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE BALANCED BUDGET AMENDMENT AND SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Coble). Under the Speaker's announced 
policy of January 7, 1997, the gentleman from Wisconsin [Mr. Neumann] 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. NEUMANN. Mr. Speaker, we are here today really to talk about a 
very important issue. That is the issue of the balanced budget 
amendment and how Social Security relates to that issue.


                    Tribute to the Green Bay Packers

  Mr. Speaker, before I begin on that issue, I would like to take just 
a moment to pay special tribute to my idea of some real American 
heroes, the world champion Green Bay Packers. I would like to express 
our personal thanks to the players, Coach Holmgren, General Manager Ron 
Wolf, President Bob Harlan, and thousands of faithful friends all 
across this country and the Packers as a whole who have now 
reestablished themselves as world champions in the football world.
  There is more to this than just the football world, and I think that 
is important. While winning the Super Bowl is exciting, far more credit 
should be given to the Green Bay players, who serve as role models for 
young people in our communities in Wisconsin. Parents can help their 
children understand the importance of living their values by pointing 
to role models who are also on this Green Bay Packers team, such as 
Reggie White. Reggie's success on the football field has not distorted 
his Judeo-Christian values. The fame he has earned as minister of 
defense has not led him to an immoral lifestyle. Instead, he has used 
his reputation and resources to help those in need. He has set his 
goals high and worked hard to reach them. He has kept his worldly fame 
in perspective, and has used it to share an eternal view.

[[Page H314]]

  I just want to add from a personal perspective, as a parent of three 
teenagers, it is truly a privilege to live in the great State of 
Wisconsin, where we have a world champion football team that also has 
players on it that as a parent we can point to those players and say, 
yes, they are the role models that we would like to see our children 
grow up like.
  When I look at people like Reggie White, it is very easy for me to 
tell my 13-year-old son Matt that we would like to see you express some 
of those same values that Reggie White willingly shows after enduring 
some of the football games.
  Mr. Speaker, as a lifelong fan, I am very proud of the 
accomplishments of the Green Bay Packers this season. I take even more 
pride in the character and integrity of the players and coaches who use 
their lives to set an example for our young people in the great State 
of Wisconsin and elsewhere all across America.
  That having been said, I would like to turn our attention and our 
focus to a very important issue facing our Nation today. We are about 
to begin in the House of Representatives the debate on the balanced 
budget amendment to the Constitution of the United States. I have heard 
a lot of people say, you do not really need an amendment to the 
Constitution, why do you not just balance the budget. Maybe I should 
start there.
  The people who say we do not need an amendment to the Constitution of 
the United States just plain ignore the history around this city of 
Washington, D.C. In the Gramm-Rudman-Hollings Act, Gramm-Rudman-
Hollings Act, II, the budget deal of 1990, and the budget deal of 1992, 
Congresses and Presidents have repeatedly promised the American people 
that we would stop spending our children's money, and all of those 
promises, one right after the next, have fallen way to too much 
spending in Washington, DC. We currently stand $5.3 trillion in debt. 
That translates into $20,000 for every man, woman, and child in the 
United States of America.
  For a family of five like mine, I have three teenagers at home and my 
wife, the Federal Government has literally borrowed $100,000 over 
basically the last 15 years. Families of five like mine are going to 
pay about $600 every month, every month, to do nothing but pay the 
interest on the Federal debt. This is a practice that we as a nation 
must stop if we wish to preserve the future of this great Nation for 
our children. If we wish to preserve the financial integrity of the 
future of this country, we must stop spending more money than we have 
and more money than the Federal Government brings in.
  To that end, the balanced budget amendment is being brought forward 
here in the next 30 days. I rise today to speak in favor of the 
balanced budget amendment, and talk about a very important issue as it 
relates to the balanced budget amendment, and that is Social Security. 
I brought some charts with me here to make sure that this issue is as 
clear as possible here today.
  The first chart I brought with me shows the actual dollars being 
collected out of the paychecks of all Americans and put into the Social 
Security trust fund. Today the Social Security account is literally 
going to collect $418 billion from the taxpayers in the United States 
of America. They are going to write out checks to our senior citizens 
for Social Security in the amount of about $353 billion. They are 
collecting $418, they are writing out checks for $353.

                              {time}  1445

  That leaves a $65 billion surplus in what they are collecting in the 
Social Security system. The idea is we are supposed to establish a big 
kitty of money. This kitty of money is to be used when there is not 
enough money coming in.
  When the babyboom generation gets to retirement, sometime between now 
and the year 2012, the money coming in will be less than the money 
going out. And the idea is that, if we set this $65 billion aside, that 
money will then be there in a savings account so when there is a 
shortfall in the money coming in, we can go to the savings, get the 
money and continue making the payments to our senior citizens. That is 
how the system is supposed to work.
  It has been set up that way since 1983. Collect more money than we 
are paying back out to our seniors in benefits, put it aside into a 
savings. After a period of time the savings account gets large enough 
so when there is a shortfall in the Social Security system, either 
because of a downturn in the economy or we reach the year 2012, 
whichever occurs first, we can then go to the savings account, get the 
money and continue making payments to our senior citizens. 
Unfortunately, that is not quite what we are doing with our Social 
Security money today.
  In fact what we are doing today is we are taking that $65 billion, we 
are putting it into a big Government checkbook; that is to say, we are 
putting it in the Government's general account. We all know the 
Government spends more than what they have in their general account 
each year, so what we are really doing is overdrawing the big 
Government checkbook. So we are taking that $65 billion, putting it 
into the big Government checkbook that is overdrawn.
  Of course at the end of the year there is no money to really put in 
the Social Security trust fund. So what we do instead is simply write 
an IOU to the Social Security trust fund.
  I have proposed legislation out here, that is the reason I am rising 
today. It is called the Social Security Preservation Act, the Social 
Security Preservation Act. Here is what the Social Security 
Preservation Act does. It very simply takes that $65 billion and puts 
it directly down here in the Social Security trust fund. To me this is 
common sense. I come from a business world, not the political world. In 
the business world if we tell people that we have a pension fund that 
we expect to make payments to you in the future and I need to set money 
aside for it, I cannot set aside IOU's. I have to set aside real 
dollars.
  The Social Security Preservation Act would require that the Federal 
Government set aside real dollars as opposed to spending those dollars 
on other government programs and then putting nothing but IOU's into 
the Social Security trust fund. It is very important we do this because 
when there is a shortfall in our ability to pay our checks to our 
senior citizens, when that happens we are going to need a savings 
account to go to in order to keep making the payments to our senior 
citizens.
  So the Social Security Preservation Act is very, very 
straightforward. It simply says that that money that is being collected 
for Social Security be left in the Social Security trust fund as 
opposed to being spent on other Government programs. Make no mistake 
about it. Today, today that surplus Social Security money is being 
spent on other Government programs.
  I said when I started that we were rising to talk about the balanced 
budget amendment and how Social Security relates to it. So let me go 
next to how this picture fits in with balancing the Federal budget.
  When the Federal Government reports the debt each year or, rather, 
the deficit, that is the amount the Government is spending more than it 
is taking in. It is literally reporting the debt after it uses the 
Social Security trust fund money. This is a slightly less than honest 
way of reporting to the American people what is really going on in our 
budget.
  Let me make this perfectly clear: In the year 1996, we reported a 
deficit to the American people of $106 billion. We did not tell the 
American people that, in addition to that $106 billion, we spent $65 
billion out of the Social Security trust fund. So when we report the 
deficit to the American people today, what we are doing is reporting 
the deficit after we take the money out of the Social Security trust 
fund. That is wrong. That practice needs to be stopped, and it is time 
that we the American people demand that Congress act responsibly and 
start reporting an honest deficit to the American people.
  The deficit last year was not really just the blue area which was 
reported to the American people, the blue area in this chart. Rather, 
it was the blue area plus the red area because that money belonged set 
aside in the Social Security trust fund. Let me go to the next step and 
talk about the balanced budget amendment to the Constitution of the 
United States.
  When we pass a balanced budget amendment to the Constitution of the

[[Page H315]]

United States, what we are really saying to the American people is that 
we are going to take that blue area and reduce it to zero. We are still 
going to be using the Social Security trust fund money when we say we 
are reaching a balanced budget. This is wrong. This practice should not 
continue.
  Let us talk about why this is going on in our Nation today. The 
President talked about a budget last night in his State of the Union 
Address. When the President talks about balancing the budget in the 
year 2002, let me make this 100 percent clear, when the President says 
he is going to balance the budget in the year 2002, what he means is he 
is going to balance the budget by taking $104 billion out of the Social 
Security trust fund. If that is your idea of a balanced budget, it 
surely is not my idea of a balanced budget.
  For the last 12 years, since 1983, year in and year out, this 
Congress has been reporting a deficit that uses the Social Security 
surplus money to mask or to reduce the true size or the appearance of 
the deficit. So let me again make it clear that, when the President 
proposes a balanced budget in the year 2002, what he is not telling the 
American people is that he fully intends to use $104 billion out of the 
Social Security trust fund to make the budget appear as if it is 
balanced.
  This is the practice that must be stopped and our Social Security 
Preservation Act is the bill, is the piece of legislation that would 
stop it.
  Let me go a step further. There are two ways that we can correct this 
issue. There are two ways that we can solve this problem. There are two 
ways that we can stop the Federal Government from taking the money that 
is supposed to be set aside for Social Security and spending it on 
other Government programs.
  One way we can do it is to fix the constitutional amendment so that 
when we amend the Constitution, it says to balance the budget but you 
cannot use the Social Security money to do it. That is one way we could 
fix it.
  A second way is not a balanced budget amendment to the Constitution 
but, rather, through the balanced budget amendment to the Constitution, 
but rather do it legislatively. Legislatively it is a very relatively 
simple matter to solve the problem. We simply say that the 
nonnegotiable Treasury bonds or the IOU's that are currently being put 
into the trust fund must be negotiable instruments or negotiable 
Treasury bonds. If we do that, what happens effectively is that we are 
now required to report the true deficit to the people of our Nation. 
And if we report the true deficit to the people in our Nation and then 
we balance the budget, we will at that time balance the budget without 
using the Social Security trust fund money.
  I know there are a lot of viewers out there in America watching this 
today. I have to tell you something. This is not going to change 
because Mark Neumann stands up here and talks about it in Washington, 
DC. This is only going to change if the American people get actively 
involved in this process. What we need the viewers to do is to call 
their Members of Congress and ask them to become cosponsors of the 
Social Security Preservation Act. It is extremely important that you do 
this in the near future. If they do not hear from the American people, 
this will not come about.
  We all need to understand, when this comes about, there is $104 
billion of wasteful Washington spending that must be stopped. So we 
need to understand that this is not the most desirable Washington kind 
of bill that has ever been introduced. But if the American people 
honestly believe that we should not be using the Social Security trust 
fund money to balance the budget, remember when the President proposes 
this, he proposes that we use the $104 billion out of the Social 
Security trust fund. If you all think that is wrong, then you need to 
get in touch with your Members of Congress and let them know that you 
want them to be original cosponsors on the Social Security Preservation 
Act.
  I see my friend from the State of Washington has joined me here 
today.
  Mr. METCALF. Mr. Speaker, will the gentleman yield?
  Mr. NEUMANN. I yield to the gentleman from Washington.
  The SPEAKER pro tempore. (Mr. Coble). The gentleman from Wisconsin is 
reminded to restrict his remarks to the Chair and not address the 
viewing audience.
  The Chair recognizes the gentleman from Washington [Mr. Metcalf].
  Mr. NEUMANN. Mr. Speaker, I apologize.
  Mr. METCALF. Mr. Speaker, I wanted to comment on this specifically 
because I am one of the seniors we are talking about. I know, I know a 
lot about how they feel about this issue. The seniors that understand 
it are irate that their money is not being there collecting interest 
with negotiable instruments but it is being taken out to mask the size 
of the deficit. That is to fool the American people and tell them, let 
them think that the deficit is much smaller than it actually is. In the 
year 2002, when we arrive there, we are still going to be over $100 
billion a year still in a deficit position unless we fix this and a 
couple of other things.
  I think we need to be honest with the seniors. It is their money. 
They paid it in. They trusted the government to have that money there 
when they need it and the sign says it is about honesty. That is 
exactly what it is about.
  We have to be honest with the American people. The problem is the 
Congress has over the years tried to obfuscate and confuse the issue of 
the deficit, and it is time that we stand up and say what it is and be 
honest about it and then we can work toward an equitable solution in 
the long run.
  I say it is absolutely essential to be honest with the seniors and to 
get that money taken off budget so it is there for the seniors when 
they need it. It does not change the ultimate outcome any because when 
we get to the year 2002, we are still going to be two or three years 
beyond that before we can really get the budget balanced under the 
present plan.
  Mr. NEUMANN. If I could just interrupt briefly here, the good news is 
that we can do this without any dramatic changes in the overall budget 
process. I had some people in our conference even say to me, where are 
you going to get that extra money from. The reality is, because the 
economy is doing better than was originally anticipated, if we put the 
exact same budget on the floor of the House of Representatives that 
passed through here last year, it already got enough votes to pass. If 
we put that same bill on the floor, we can at least start setting aside 
the principal in the Social Security trust fund without doing anything 
different than we did before. Why is that? That is because the economy 
is performing better than was anticipated last March. So the difference 
between the March and January, where we are at right now today because 
the economy is doing better, if we pass the same spending levels that 
we had last year, we will in fact be able to put the Social Security 
trust fund aside without doing any additional cuts. What we are really 
saying is that that additional revenue that is being generated because 
the economy is doing better, we just cannot go and spend that money on 
other wasteful Washington spending.
  Mr. METCALF. Mr. Speaker, that is the point. This is something that 
we have an opportunity here, we have an opportunity that is given us. 
And in the past, when we have had these little extra amounts of money, 
they just got spent.
  That is absolutely immoral when we are desperately struggling to 
balance the budget. Here is a chance that we have, and I say that we 
must keep faith with the seniors and we must do this. I very much 
appreciate Congressman Neumann's actions in helping to bring this 
before us.
  Mr. NEUMANN. We are not alone on this. There are a lot of especially 
Members of last year's freshman class that are working very, very hard 
on this issue. I sure appreciate the support. And more importantly, 
this is an issue for the American people.
  The other thing that I would mention is, you mentioned that the 
senior citizens are irate. When senior citizens find out about this 
issue, last year they sent in 60,000 letters in support of this bill. 
When I introduced it the first year in Congress, my first year here in 
1995, when I first introduced it, I was basically a lone voice. When 
people started finding out that in fact this Social Security trust fund 
money was being spent to mask the true size of the deficit and in fact 
that in the President's

[[Page H316]]

budget proposal, in the President's budget proposal he intends to use 
this Social Security surplus money, the $104 billion right straight out 
of the Social Security fund, he intends to use that to make it look 
like the budget is balanced, when the senior citizens across America 
found out what was going on, we received 60,000 letters in 1996. And I 
have already received 25,000 letters of support of this bill from 
across America. I have them in my hands.
  So the senior citizens are very much in support of this legislation. 
I urge my colleagues to join me in support of the Social Security 
Preservation Act.
  I yield to the gentleman from Indiana, [Mr. Souder].
  Mr. SOUDER. Mr. Speaker, I thought this was the Green Bay Packers 
special order.
  Mr. NEUMANN. We did do the Green Bay Packer special order. I would be 
happy to do it again. We do have the world champion Green Bay Packers 
in Wisconsin, and we are very proud of them.
  Mr. SOUDER. The Pack is back, and I appreciate your cheerleading for 
that. When we were over in Israel, you had this special Green Bay 
Packers flag you brought over there. You wanted to get a picture with 
the Prime Minister with it. You have been a Packer enthusiast for so 
long, it is great to see them back.
  Mr. NEUMANN. As I said in my original remarks here today, it is more 
than just about football. It is about people achieving excellence and 
receiving the recognition that goes with achieving that excellence. And 
more importantly than that, it is about having a team with people on it 
that we can, as parents, point to and say, that is the role model I 
would like to have my kids see growing up. We have people like Reggie 
White, who are not afraid to show the Judeo-Christian value system that 
our young people can look to and say, that is how I want to turn out, 
too.
  Mr. SOUDER. Many of the themes that we have in community involvement 
and individual involvement to see a small size city owned by many 
people and the commitment to that in this day and age of transient 
commitments and that type of thing is very refreshing. But I also 
wanted to support your efforts on the Social Security off budget bill 
that you have introduced and continue to work with.
  If I could make a couple of points reiterating the points that you 
have made. That is, I have heard you make a number of these, even 
though I missed some of this presentation, so I assume there is some 
overlap but I want to say amen to what you have been doing and taking 
leadership, along with Congressman David McIntosh of Indiana.

                              {time}  1500

  And that is that a lot of this is a question of integrity. And a lot 
of the reason many of us came to Washington is we were unhappy with the 
way things were being done.
  We still have many attorneys here, some of us are not attorneys, and 
quite proud of that fact. It is a good blend to have in it. You were in 
the housing business, I was in the retail business, and if we take 
something that is supposed to be a pension fund, we have to have it 
funded at more than 100 percent in a bank account or we go to jail.
  Now, Congress has conveniently exempted themselves from that type of 
coverage or we would be in prison, because you have a specific amount 
coming out for FICA. It is called a trust fund. We have passed separate 
bills calling it a trust fund to act like it is there, but it is not. 
We spend it on other things. That is a question of integrity.
  Now, many people stand up here, including our distinguished President 
last night, and challenged us about Social Security and this question. 
But one thing that happens in Washington, I am not saying him or 
anybody in particular, but talk is real cheap. You can go like this 
pretty easily. The question is, What are the actions? What are you 
actually doing?
  You are standing down there in the well. You have introduced this 
bill in the last Congress. It is not something you just invented as a 
tactical maneuver for the balanced budget debate. You presented a 
budget to this Congress that I and 88 others voted for that had Social 
Security off budget, proving that it can be done. We did not just talk, 
we acted.
  A number of us voted against our party's budget last year because we 
were concerned that the additional spending was being spent. Excuse me, 
when they had additional revenue coming in, instead of putting it on 
the deficit, they spent it. So we voted against that budget. We have 
been consistent in trying to hold against that.
  We also got ourselves in a little trouble by coming down with a 1.9-
percent amendment to actually reduce the spending. Many of the people 
who are now saying, oh, let us take this $65 billion this year and take 
it off budget. Where were they? Now, some of them were there from the 
other party as well as our party, but many of them who have been 
talking about this, where were they on these tough decisions?
  We have been there. You have been a leader with this. We are trying 
to do this. This is not something new we invented. This is not even new 
to us. I used to work for U.S. Senator Dan Coats. He introduced in 1980 
in this body a bill to take Social Security off budget. This has been 
our party's initiative. We need to be in the forefront of this. This is 
fundamental principle.
  I commend your leadership. There is no money there. Some people say, 
oh well, this does not replace all the funds and there are different 
ways we can do this. There is a new movie, this Jerry McGuire movie 
says, ``Show me the money. Where is it at?'' There is no money there.
  Whether you are just coming into the system, whether you are a baby 
boomer, or a young person who views UFO's as twice more likely than 
that there will be money there in Social Security, this is a giant scam 
that most American people are working out. Maybe we cannot get the 
whole thing this year, but we want at least to get some steps, and we 
are down here pleading with our leadership, with the other body, to say 
we have an opportunity.
  The President challenged us last night, many of the other party's 
leadership is challenging it. Hey, let us go do it. When they have a 
good idea, let us not argue over partisanship, let us say, hey, great 
idea, let us take Social Security off budget. We have been talking 
about this for years. Amen. Let us get it done.
  So I commend your leadership, and we can continue to talk here and 
work with this, but I will yield back here and see if you want me to 
join at another point.
  Mr. NEUMANN. Mr. Speaker, I see another good friend, my colleague 
from Oklahoma, Mr. Coburn.
  Mr. COBURN. Mr. Speaker, I am glad to be here with you gentlemen. I 
just wanted to add a quote that was made in, I believe 1935, a Senator 
James Wadsworth asked, when they were contemplating the Social Security 
System, he said, ``In what kind of country are our grandchildren going 
to live? Shall it be a free country, or one in which the citizen is 
taught to be dependent upon the Government?''
  We need to ask that question today, but we also need to ask another 
question. How can we continue to meet the current obligations of the 
Social Security system and the current obligations of the Federal 
Government as long as we continue to mask what the real problem is? We 
have to get back to being honest about our problems before we can ever 
hope to solve them.
  The people in my district know we did not have a budget deficit of 
$104 billion last year. We had a budget deficit of $170 billion. We 
said that the entire time. First of all, one of the problems with the 
Congress is a crisis of confidence because we have not spoken the 
truth. The fact is we spent $170 billion more last year than we took 
in.
  Part of that money was revenue that was raised and was supposed to be 
raised so at some point in the future we would be able to make the 
obligations under the Social Security system.
  People in my district believe there should have been a trust fund 
established. Now, whether there was or not, we know there was not a 
trust fund established, but the expectation is that money should have 
been there and it should have been invested wisely. And the corollary, 
along with all the other moneys, had we invested them properly, we 
would not have this problem.
  So the most important thing about your bill is the fact that we 
honestly deal with our problems. We owe it to the people of this 
country who are dependent on Social Security, we owe it

[[Page H317]]

to the children who are not yet born who will be paying into this 
system to not mask our Federal deficit any longer by confusing the 
issue and not accounting for the money that we borrow, sometimes steal, 
that should have been allocated for the Social Security system.
  So I want to encourage you. I think we have to have this as part of 
the solution to the problems on Social Security, but also part of the 
problem in solving the problem with our budget deficit and spending 
more than what we actually have.
  Mr. NEUMANN. Mr. Speaker, I thank the gentleman, and I certainly 
could not agree with his comments more. It is about honesty, it is 
about integrity and being straightforward with the American people, 
certainly telling the American people we have a $107 billion deficit, 
and then going and getting $65 billion more out of the Social Security 
trust fund.
  That is inappropriate behavior and has been going on since 1983, I 
might add. And now it is incumbent upon the Republicans to stop this 
practice from continuing as we go forward. It is our job as Republicans 
not to look the other way from a practice that is clearly wrong and 
just let it go on. It is our job as Republicans to turn this thing 
around and let us start doing it right, let us start setting that money 
aside.
  I might just add that if this had been done right over the last 12 or 
14 years here, there would currently be $550 billion sitting aside in 
the Social Security trust fund today, and the amount would grow by $65 
billion in this year alone. So it would be up over $600 billion in a 
savings account to protect the Social Security system for our senior 
citizens right now, today.
  I would add one more step. I have not forgotten about that $600 
billion. It is not in my bill currently, but we did have legislation on 
the floor last year, and it will be reintroduced, that we would be able 
to pay that $600 billion back to the Social Security trust fund to get 
this fund solvent the way it is supposed to be.
  The way we would do that is pretty straightforward. After we reach a 
balanced budget, we would recommend that we cap spending increases at 
the Federal Government level at a rate 1 percent below the rate of 
revenue growth. So if revenue goes up by 5 percent--remember, revenue 
goes up because of inflation and real growth in the economy--so if 
revenue goes up by 5 percent, we would simply cap Government spending 
increases at 4 percent, probably still faster than the rate of 
inflation.
  Since spending is going up, if you have a balanced budget, spending 
goes up slower than revenue growth, you have created a small surplus. 
And that surplus, of course, grows each year that you follow this 
program. That surplus is the money that we need to put the funds back 
into the trust fund that was supposed to have been put there over the 
last 15 years, and then reassure the solvency of the Social Security 
trust fund.
  Mr. COBURN. One other thing that I think is important that I would 
want the American public to know, is we cannot let chairmen of 
committees not speak truthfully about this problem. It is important 
that they ask the question of their elected representative of the truth 
about whether or not the deficit is really $107 billion or is it more 
than that.
  It is also important that they ask their representative when they go 
to vote on the budget whether or not we took that into consideration as 
we considered that budget, and not allow the politics as usual, the 
careerism, to wave this off and say this is a nonissue. This is at the 
heart of the issue: being honest about what our real problems are so we 
can attack and solve them, not just for us and not just for those 
seniors today, but for the children and the young people who are going 
to be seniors tomorrow.
  Mr. SOUDER. Mr. Speaker, I wanted to ask the gentleman from 
Wisconsin, to draw out a point here, and that is that people who have 
followed this debate understand this, and I assume that it has been 
touched on and we have talked around it here, but the reason there is a 
surplus is because there are more people paying in now, but we are 
headed to a point down the road here where there is not going to be 
enough money and we will have a big shortfall.
  Mr. NEUMANN. Right. Today, there are three people for every one 
person drawing out of the Social Security system. By the year 2010 it 
will be two people for every one person drawing out.
  You can see how that very rapidly reaches a point where you cannot 
take enough money out of that one paycheck, or those two paychecks, to 
pay one person's Social Security. That is the problem. Long term, there 
is a shortfall and we have an inability to pay the amount out in Social 
Security that has been promised to our senior citizens.
  This really brings into the discussion the people that are in their 
40s and 50s. This honesty issue and this reporting it straightforward 
and setting the money aside, it is not only about the senior citizens 
of today, it is about people in their forties and fifties who are today 
putting about $12 out of every $100 they earn into this Social Security 
account with the expectation that when they get there, when they are 
65, 66, 67, that they will then receive their Social Security checks. 
You see, if we do not accumulate this kitty the money will not be there 
to make good on their checks.
  I can give my colleagues some dates on this. By the year 2012, in the 
year 2012 there is no longer enough money coming in to make the 
payments back out, and that assumes a solid economy. That is kind of a 
best case scenario. And we all know in Washington when they give you a 
best case scenario, we are probably looking at the year 2005, 2006.
  This is not a long-term problem but rather it is a very short-term 
problem. And I would just add it could be shorter than that. If we had 
an economic downturn next year, and it was reasonably severe, we could 
hit a shortfall in the Social Security account as early as next year if 
the economy were to go into a recession.
  That is why I am so concerned that this issue get addressed right 
now, today, in this year's budget.
  Mr. SOUDER. There are other things compounding this as well, and 
correct me and add to this if you have additional information, and that 
is that people are living longer than originally projected in Social 
Security.
  Furthermore, the longer you live, and Congressman Coburn, as a 
doctor, knows this, there are more things that go wrong that are very 
expensive. It is one thing to replace your heart once, multiple times, 
other organs, but we have incorporated other programs inside Social 
Security. And so those who just say we can handle this on a cash basis 
are a little naive.
  Other people say, well, if you just bump the age of retirement a 
couple more years, that would fix it. But look at this assumption they 
have. That assumes there is no change in the age that people are dying. 
If you bump the retirement age by 2 years but through health advances 
they die 4 years later, we are actually facing a bigger shortfall than 
we currently have.
  A lot of the things that are trying to be put out to explain away 
this problem are actually good arguments that it could be much worse 
than it actually is.
  Mr. COBURN. Well, thank goodness for our health care system, because 
in fact we have increased longevity to a tremendous amount, and that 
has been a detriment on the Social Security trust fund in terms of how 
they calculated what was going to be needed.
  But we should not get tied up in that issue. The issue is, is it 
ethical to say that our deficit is $107 billion when in fact it is $172 
billion. That is why people lack confidence in this body, is because we 
do not have the courage to oftentimes make the tough decisions because 
we will not face up to the facts.
  The American public needs to know that the deficit is much larger 
than what they have been taught and it is much larger because of moneys 
borrowed from payments into the Social Security system. It needs to 
stop. It needs to stop because we owe that honesty to the American 
public.
  And I thank the gentleman from Wisconsin for allowing me to 
participate.
  Mr. NEUMANN. I had an interesting experience along the honesty and 
integrity line. I was doing an interview, and the person on the other 
end of the phone said to me, ``Is this really true?'' It was like they 
were in disbelief that the President would actually take $104

[[Page H318]]

billion out of the Social Security trust fund to try to make it look 
like his budget was balanced. They were almost in a state of disbelief.
  I brought with me this morning, it is a Washington Times article on 
January 18, 1997. The headline reads ``Clinton Budget to Use Trust 
Funds, Social Security Surplus Added In.'' I mean, there is absolutely 
no question that when the President says he is going to balance the 
budget in the year 2002, that what the President means is he is going 
to balance the budget by taking $140 billion out of the Social Security 
trust fund to make it look like it is balanced.
  If anybody has any doubts on the accuracy of this, this is a very 
good article. His Treasury person was in talking and he says, ``We will 
include it. I think Congress is correct to include it in deficit 
calculations.'' And he just goes on and on about the fact that we 
should be using the Social Security trust fund money.
  I have also noticed something that is very different here in 
Washington versus our townhall meetings back in Wisconsin. When I go 
through this issue back in our townhall meetings back in Wisconsin, 
everybody agrees that the money should be set aside.

                              {time}  1515

  But out here in Washington there are a whole bunch of people who 
believe that Social Security is a pay-as-you-go system, that we do not 
need to set that money aside, that after all we are collecting it this 
year, so why should we not spend it this year.
  Then I ask them, what about 2004, 2005 when there is not enough money 
coming in? What are the choices going to be in 2004 or 2012 in the best 
case scenario? It is going to be to go into our families' paychecks and 
take more tax dollars out so we can continue making those Social 
Security checks. The second choice is to reduce our Social Security 
benefits to our seniors. I personally find both of those choices 
unacceptable. That is why we have got to solve this problem today.
  Mr. SOUDER. I am not sure at what point, perhaps the gentleman would 
know this more, but as I have heard, there is a point out here where 
the FICA tax alone could be around 43 percent, depending on where the 
shortfall is. This is not just a small matter, it is a budget-busting 
matter that we have been able to disguise this and lulled into this 
because of the number of people working versus the people in the 
retirement system. But a day of reckoning is coming. The longer we 
wait, the tougher the reckoning.
  Not only do individuals pay into this but a lot of people may not be 
aware that their employer is matching it. If you are self-employed, you 
know you have to pay both halves, and that one of the things I 
personally think we ought to be doing as a country and individual 
employers ought to be doing is showing what an individual's check would 
be if that match was not going in there.
  So we are not only spending the amount you are putting in, we are 
spending the amount that the employer is putting in. This devastating 
tax would cripple our economic system.
  Some people say, oh, there would be politically an uproar if we tried 
to change benefits and not do it. Quite frankly the baby boomers, I was 
born in 1950, we are going to be the biggest voting block when we are 
there and we do not intend to starve and the people who would have to 
pay our way are our kids and they are not going to intend to pay all of 
this if the Government defaults. The bottom line is we will probably 
bankrupt the country unless we do this because we will be a huge voting 
block, much bigger than the current senior citizens. It is a 
devastating outlook if we do not have the courage to face up to the 
integrity of the problem now.
  Mr. NEUMANN. I think the gentleman is bringing up a good point here. 
This issue is not just an issue for seniors or even just an issue for 
people that are 40 and over hoping to get Social Security.
  Let us talk for a minute about the impact of the Social Security 
Preservation Act on our people that are under the age of 40. Right now 
today with no money in the Social Security trust fund, these 
discussions that they are having about letting them privatize it or 
letting the people keep their own money in their own account, all of 
those discussions are not going to happen. The reason is because no one 
but no one can go to our seniors and say, ``I'm sorry, you don't get 
Social Security anymore.'' That is not going to work.
  Let me paint a different scenario. Suppose the Social Security 
Preservation Act had been in place since 1983 and in this kitty of 
money, this Social Security trust fund, there was now $550 billion, 
real money, and it is actually there. Then we could go to the senior 
citizens and say, ``Look, there is a savings account. Your Social 
Security check is safe.''
  I am going to talk to these people under the age of 40. Some of them 
would like to put their own money into their own Social Security trust 
fund and take some of the responsibility on themselves for their own 
retirement. We are talking about families here that work every day of 
the week, these families who get up in the morning every morning and go 
to work, work hard for a paycheck and they are struggling to make it 
from week to week and paycheck to paycheck.
  What we would be doing is going to those people and saying, look, 
they are already putting $12 and some cents aside out of every $100 you 
earn. Why do you not take some of that money and put it into an account 
to take care of yourself in your own retirement, so it would be money 
that is already coming out of their paychecks, that now could go into a 
savings account on their behalf to build for their own retirement for 
them to take care of themselves when they reach the age of 65.
  We cannot do that today. The reason we cannot even begin that 
discussion today is because that money that is supposed to be here in 
the Social Security trust fund has been spent on other Government 
programs and there is nothing there except for a bunch of IOU's. If the 
Social Security Preservation Act is put into place and we can 
accumulate this kitty of money so we can honestly look our senior 
citizens in the face and say, ``Yes, your Social Security is safe,'' 
then and only then can we begin some of these other conversations that 
are currently going on here in Washington, DC.
  This is not just about seniors. Just think what it would mean for our 
working families if they could take some of that money that is already 
being set aside and they could put it aside in their own behalf to take 
care of themselves in retirement.
  This is a bill that really crosses all age groups. It is in the 
people under 40, it is in the people from 40 to 60 who are hoping to 
get Social Security, and it most certainly is affecting our senior 
citizens of today where if we have an economic downturn there is not 
going to be enough money coming in and there is supposed to be a 
savings account there that is full of IOU's instead of cash. All 
generations here are impacted by this issue.
  Mr. SOUDER. As the gentleman alluded to, it is a very pro-family 
policy to try to be honest about this, because most families in America 
have both parents working. Many of us, including me, have a child in 
college. You are trying to meet all the demands of your kids for this 
and you are working your head off and you do not know how in the world 
you are going to set aside much and we just kind of assume that when we 
get to retirement age, Social Security is going to be there even if we 
have some savings of our own, which many families do not have the 
luxury of doing, particularly the poorer the family the more dependent 
they are on this. The FICA tax comes out, no matter what income you are 
at, we take out the Social Security, and those people who are 
struggling and barely making it and drowning day to day and trying to 
figure out how to pay their car bill, insurance bill and health 
insurance and their housing costs and all this type of thing are 
watching it get drained into a system so it can be used as part of a 
general government program. How is that pro-family?
  What is pro-family is to provide what it is supposed to be, is a 
security net for when you are older so you can try to use your current 
income, the rest of it, on living and trying to get above water. We are 
going to be in a state of shock, those about to come into the system. 
Based on the gentleman's numbers, it could be as early as those in

[[Page H319]]

the late 50's, certainly those of us who are boomers, in the mid 40's 
and down, we are going to be in a state of shock if somebody says, 
``Well, you're only going to have half of it there.'' Then pretty soon 
somebody says, ``None of it there.''
  You are going to say, ``You mean I've worked all my life, and we 
scraped by and watched these dollars be taken out, and I gave up 
certain things and now it isn't there?'' What does the word trust fund 
mean?
  Mr. NEUMANN. It is an improper practice. Both of us came out of the 
business world. If either of us had set up a pension fund and we said 
to our employees, ``You're going to get this pension when you retire,'' 
and then we put IOU's in the pension fund instead of real money, first 
off they would arrest both of us in the private sector for doing it, 
but secondly our employees would revolt back against the policy we were 
establishing.
  That is where we are at on this issue. The American people need to 
understand the issue and then respond to help all of us in Washington 
get the message just how important this issue is.
  Mr. SOUDER. Last year we even had a debate here on the House floor 
because there was a proposal that in the private pension programs from 
business, to lower the percent of, I think it was 145 percent down to 
125 percent. Some of us had grave reservations about that. Yet here 
with zero percent, here we had this huge ruckus on this floor about 
whether businesses could lower the percent beyond 100 that is in 
reserve. In our own program we have zero.
  Mr. NEUMANN. Does the gentleman see the irony in that debate? I know 
they ran ads against both of us saying we had reduced the pension funds 
when in reality what was done is those pension funds were required to 
keep not enough money to pay the pensions but enough money to pay the 
pensions and a 25-percent cushion. That is what that debate was about 
last year. Instead, if they had used those same resources to actually 
solve the Social Security problem, can you imagine how much farther 
ahead we would be as a nation? To honestly solve a real problem that is 
facing this country, not a pension fund that is funded at a level 
necessary to pay the benefits plus a 25-percent cushion, but rather 
they turned their attention and focused on the Social Security issue 
where there are zero dollars in the trust fund, and zero dollars in 
that pension fund, not 100 percent of what they need plus a 25-percent 
cushion but in this case zero, would it not have been great if they had 
used those resources to help us solve this problem instead?
  I think I should maybe walk back through this once more.
  Mr. SOUDER. I think it would be very good for people who came in part 
way through.
  Mr. NEUMANN. We are dealing with the balanced budget amendment and 
how Social Security relates to the balanced budget amendment and a 
couple of ways to correct the problem that exists.
  I just start through that the Social Security system today is 
collecting $418 billion. It is paying out to our senior citizens in 
benefits $353 billion. That is right, it is collecting more than it is 
paying out by $65 billion. That $65 billion is supposed to create a 
savings account, a kitty of money, a growing kitty of money. The reason 
we are doing that of course is because as more people reach retirement 
age you have got fewer dollars coming in and more dollars going out. At 
the time when these two numbers cross, when there is not enough money 
coming in to make good on the Social Security checks, we are supposed 
to have this savings account sitting there that we then go to, get the 
money and make good on the Social Security promises that have been made 
to our senior citizens.
  The idea is that that money is supposed to be set aside. 
Unfortunately what the Federal Government is doing today is taking that 
$65 billion, putting it into the general fund or their big Government 
checkbook. They overdraw that checkbook each year. That is the deficit. 
Since there is no money left at the end of the year, they put IOU's 
down here in the Social Security trust fund instead of putting real 
dollars down in the trust fund.
  The bill that we have introduced called the Social Security 
Preservation Act, again this is not Einstein kind of stuff, I come from 
the business world where you have to learn how to make cash flow work. 
The bill that we are proposing, the Social Security Preservation Act, 
very simply says take that $65 billion and put it down here in the 
trust fund instead of spending it on other Government programs. It is a 
very straightforward bill. Instead of spending the money on other 
Government programs and putting IOU's in the trust fund, put real 
dollars down there in the trust fund so there is something there to 
guarantee and protect our senior citizens.
  How does that relate to the balanced budget amendment? When the 
Federal Government reports to the American people how much more money 
it is spending than what it is taking in, that is, the deficit each 
year, what they are reporting is the amount that they overspend what 
they have in their checkbook but they are not telling the American 
people about the fact that after that, there is another $65 billion 
they have taken out of the Social Security trust fund. So in addition 
to the deficit that is reported to the American people, they are taking 
an additional $65 billion out of the trust fund that they are not 
reporting.

  This is an issue about honesty and integrity and being 
straightforward with the American people. The fact of the matter is 
that when we report a $107 billion deficit, the reality is the deficit 
is $172 billion.
  How does that relate to the balanced budget and the balanced budget 
amendment that is currently under discussion here? Let me start with 
the President's State of the Union Address last night. Let me just make 
it 100 percent clear that when the President talks about balancing the 
budget, he is talking about still using that money from the Social 
Security trust fund, $104 billion in 2002, to reach what he calls a 
balanced budget.
  Let me just say that once more so it is 100 percent clear. When the 
President says he is balancing the budget in the year 2002, what he 
means is he is taking $104 billion out of the Social Security trust 
fund to make the budget look like it is balanced. That practice is 
wrong and it is going to lead to a Social Security system that is just 
basically insolvent as we go forward.
  So what are we doing about this? The Social Security Preservation Act 
that myself and many others in this Congress are introducing would 
require that we balance the budget by actually eliminating all of the 
deficit, including the Social Security deficit.
  A lot of people have said to me, ``Well, Mark, you can't do that.'' 
So our Social Security Preservation Act would require that we actually 
reach a true zero, not just a zero that appears balanced while still 
using the Social Security money as the President has proposed.
  A lot of people have said, ``Well, how are you going to go about 
doing that? Doesn't that mean we have to cut $104 billion more money 
out of the budget?''
  First let me go over the ``cut'' word. Even if we did this exactly as 
I have it laid out here, spending would still increase each and every 
year from now through 2002. Spending would still go up, so there is no, 
quote, cuts in overall Government spending even if this is put into 
place.
  But there is more good news. A lot of people in Washington would tell 
me that we cannot do this because the budget we passed last year was so 
tough that we cannot go any farther on reducing spending. First, I do 
not believe that. I believe there is still a lot of wasteful spending. 
But second, because the economy is doing better than anticipated, we 
have additional revenues coming into the Federal Government that will 
allow us to pass this piece of legislation without doing any spending 
reductions beyond what was already proposed last year. That is to say, 
if we passed the budget that has already passed both the House and the 
Senate, we can at least set aside the surplus money that is coming in 
this year in the Social Security system and also in 2002. That is, if 
we pass the budget that we passed last year again, we will in fact be 
able to put the Social Security money aside in 2002 without doing 
anything different than what has already passed through the House of 
Representatives and the Senate last year.
  This is an exciting time in history. We are about to do something 
that is

[[Page H320]]

clearly right and necessary for the future of this great Nation we live 
in, for our children's future. We have for generations, since 1969, we 
have as a government spent more money than we are taking in. We are on 
the verge of changing our most sacred document as a Nation, the 
Constitution of the United States. This is a very serious matter that 
is being addressed here when you go to change the Constitution of the 
United States of America. Does it need changing? I would only point to 
the fact that as a government we have not been able to restrain 
ourselves since 1969. We as a people, and when we say a government, it 
is really the American people, we have not been able to do what is 
right for the future of this Nation. This problem has been building. We 
have gotten away with it from 1969 until today.
  We need the balanced budget amendment because the track record 
indicates we cannot do it without the balanced budget amendment. When 
it is in our Constitution, when it is in our most sacred document, that 
we must stop spending more money than we are taking in, that we must 
restore the financial stability for the future of this great Nation for 
our children's future, when that happens, we will get the job done by 
2002. And we will not do it the way the President suggested, by taking 
$104 billion out of the Social Security trust fund to try and make it 
look like somehow we have balanced the budget.

                              {time}  1530

  We will not do it that way; we will do it the right way, we will do 
the honest way and the straightforward way for the good of the future 
of this great Nation we live in.
  And I want to just go one step further. I think it is important that 
we talk about what has happened over the last 2 years and how 
significant balancing the budget is to the American people. Sometimes 
this gets lost in kind of Washington jargon that this is all about just 
the future; it is not about today. Well, I would like to point out that 
over the last 2 years we have reduced the deficit to the lowest number 
it has been in a generation. As a matter of fact, for the first time in 
30 years we took $30 billion out of the appropriations process. That 
has not happened in the last 30 years, and that is not Washington mumbo 
jumbo. They actually reduced spending in the appropriations process by 
$30 billion.
  Well, what happened when we reduced spending by $30 billion at the 
Federal Government level? Well, that meant the Federal Government 
borrowed $30 billion less out of the private sector. Still sounds 
Washington-like. Let me go the next step:
  When the Government did not take that money out of the private sector 
there was more money in the private sector. When there is more money 
available, the interest rates stay down. When the rates stayed down 
that is good for the whole economy, in particular for our American 
citizens.
  Anybody who is on a variable rate mortgage understands that when the 
Government did not borrow that $30 billion, it stayed available in the 
private sector and therefore interest rates went lower, that their 
mortgage payment is lower. But it is even further than that. When the 
interest rates stayed down, more people were able to afford to buy 
houses and cars and when people bought more houses and cars, other 
people had to go to work and build the houses and cars, and that really 
is what this is all about. It is really about providing opportunities 
for those people to leave the welfare rolls and go into the work force 
and have an opportunity to live the American dream.
  That is what this is all about. It is about my children's future, and 
if I get excited talking about this issue, it is because when I see 
growing deficits and growing debts that has accumulated to $5.3 
trillion I see the end of America as we know it today. I see economic 
problems that we are passing on to our children that cannot be 
resolved, and then when we start talking about balancing the budget and 
we see this working model where reducing spending has actually led to 
lower interest rates, producing more home sales and car sales, 
producing more job opportunities in the private sector, well, I know 
that is the future of America we are talking about. I know that my 
kids, when--they are all teenager now. If all three of them are 
teenagers, I know that is for my three teenagers to have a job 
opportunity.
  That is what balancing the budget is about. It is about keeping the 
interest rates down so people can afford to buy houses and cars, and 
the people who build those houses and cars have job opportunities, so 
my children have a chance to live the American dream just as my wife 
and I have had during our generation.
  That is what balancing the budget--that is what this issue is really 
all about.
  Mr. SOUDER. In addition, and this is really good straight talk about 
the budget because these issues get so confusing, and from time to time 
we need to have some of this kind of stuff because part of the goal of 
politicians often is to confuse matters, to obscure what is underneath, 
and I think this has been very good straight talk because in addition 
to the interest rate, because to some degree we have had a somewhat 
stable interest rate even with this deficit which has confused matters. 
But there is another way to do it too, and that is to sell off your 
country because of your trade imbalances because we have partly 
disguised and kept interest rates down by bringing in foreign money 
through trade imbalances and then we start selling in the Midwest and 
Indiana and Wisconsin.
  These are huge issues about companies being taken over, about farm 
land being taken over because we have not been in order and responsible 
in our own country and refuse to deal with our deficit. We have become 
foreign dependent, which is not where we want to be as a nation. So it 
not only entails our interest rate, it entails a lot of other issues 
that are relative to the budget and very disconcerting.
  And you raised a very important point now twice that people need to 
understand that we have been through this with CBO and OMB and we spent 
a lot of time in meetings discussing this. But when they take a 
pessimistic or attempt to in the CBO scoring of the growth rate, 
knowing that somewhere along the line there is going to be a recession 
and that they do not project that because they average, I think, a 1.9. 
We update these things three times a year, I think it is, and in that 
process every time the growth rate comes in better we spend the money. 
We do not even keep the seed corn for a recession in this 2002 plan--
really is not realistic because last year we spent more money when the 
growth rate was higher, so what do we do in a year when the growth rate 
is lower?
  Now compound that over time and what you are in effect saying is we 
have had a good boom period, we have this huge thing hanging over our 
head in the Social Security trust fund, we have a national debt that is 
tremendous even without future obligations like Social Security, we are 
worried how we are going to pay Medicare, we are worried how we are 
going to pay the veterans, we are worried how we are going to pay 
railroad retirement, how we are going to meet our Government employees 
things.
  So what do we do when we finally have a good growth period and we 
finally have some money? We spend it. If they would have been using the 
money that we gained in this past year, if not to retire the debt, 
which I believe they should have been doing, then it should have been 
in the Social Security or get the Social Security off. It is not as 
hard as people say, but it is harder if every time you want to run for 
office you want to promise a new program and you have a new idea to 
spend money out of Washington rather than paying the debts that are 
accumulating and the future obligations that are accumulating over your 
head. It is that for campaign season you need a new program, because 
unless you have a new program you are afraid you will not get 
reelected, and it is one of the tough things we are dealing with here 
in Washington because our promises are outrunning our funding.

  Mr. NEUMANN. Mr. Souder, I just concluded a story that: It is a true 
story, where at a basketball game in Delavan, WI where my teenage son 
was playing, and I looked over at my wife and she was holding a baby of 
one of our friends, one of the teachers of the parochial school where 
my son attends, and I looked over at her with that baby on her lap and 
I mean I am supposed to be thinking about the basketball game.

[[Page H321]]

But my mind wanders back out here to Washington, and I could not help 
but think what these issues mean to that baby that was sitting on Sue's 
lap, where we have already borrowed $20,000. We, our generation, has 
borrowed $20,000 that we are going to pass on to that baby.
  That is not right and it is not fair. This issue is not just about 
numbers and budget. It is a moral issue. How can we as a Nation, how 
can we as a generation, possibly justify that we are taking that 
child's money, that poor old baby sitting on my wife's lap, how can we 
justify taking that baby's money and spending it on our programs today, 
and how can we justify saying we are balancing the budget by taking 
$104 billion out of the Social Security Trust Fund knowing full well 
that what that means is that when that baby reaches the work force, 
when it is time for that baby to have the opportunity to live the 
American dream, to have a chance at the American dream, that young 
child--what we are doing is we are saddling them with a situation where 
the Government is going to demand even more in taxes before they get to 
spend money on their children. It is just not an acceptable way to go.
  I just conclude today by urging our colleagues to join us in 
supporting the Social Security Preservation Act. I would reach across 
the aisle, encourage our Democrat colleagues to join us on this bill. 
This is not a partisan issue. Preserving and protecting the Social 
Security system should be something that both Republicans and Democrats 
are very interested in, and I look forward to working with our 
colleagues on both sides of the aisle.

                          ____________________