[Congressional Record Volume 143, Number 19 (Thursday, February 13, 1997)]
[House]
[Pages H566-H567]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  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, it was interesting in the 
Committee on the Budget this morning that Dr. June O'Neill, the 
Director of the Congressional Budget Office, came with their analysis 
of the President's budget. One of the conclusions of the CBO was that 
the President's budget is not going to be in the surplus by the year 
2002, but under their projections will run a $50 billion deficit in the 
year 2002. So I would ask that we make a humble, respectful request to 
the President to resubmit a budget that balances by the Congressional 
Budget Office scoring.
  Another thing that Dr. O'Neill said was that if we continue spending 
the way we are today, we need an immediate 50-percent increase in 
income tax rates to keep the budget in balance. If we put off any 
decision until the year 2017, we would have to have an 87-percent 
increase in the income tax. That means that families' take-home pay 
would be cut in half, and what they can spend on health care and on 
clothes and on food and on transportation would end up being cut in 
half.
  I want to quickly give a presentation of what is happening in what 
has become the largest spending item, and that is Social Security. As 
you see by this chart, Social Security now takes up 22 percent of the 
Federal budget. And what has happened is Congress, I would suggest, 
made a mistake by requiring everybody to contribute to Social Security, 
and not putting any of that money in savings and investment. Instead, 
since it started in 1935, Social Security has been a pay-as-you-go 
program where existing workers pay in their taxes to support the 
benefits of existing retirees.
  If I get my charts correct, this shows what is going to happen to 
Social Security if we make no changes, and that is that there is going 
to be less money coming in in this pay-as-you-go program. In 2011, 
Dorcas Hardy, a former commissioner, says there is going to be less tax 
money coming into Social Security than is required for the payouts as 
early as 2005. That's not very far in the future. So if we are going to 
preserve Social Security not only for future retirees but for existing 
retirees, we simply got to start taking our heads out of the sand and 
be willing to face this very tough question on what we're going to do 
to preserve Social Security, to preserve Medicare, to preserve some of 
the important programs that Government has developed to help people, 
and not put the burden on future generations and ask them to pay an 87-
percent increase in their taxes.
  Here is the problem on Social Security. It was developed as a pay-as-
you-go system where existing workers pay for existing retirees. But 
what has happened is there are fewer workers paying for the support of 
that retiree.
  In 1950, we had 17 workers earning money, paying their taxes to 
support each retiree. Today, there are three workers. In another 35 
years there are going to be only two workers working

[[Page H567]]

and paying the taxes to support each retiree.
  Now here is what the average retired couple has already gotten back: 
Over four times what they and their employer put into the Social 
Security taxes, plus compound interest. This chart shows that if you 
happened to retire in 1940, it took just 2 months to get everything 
back that you and your employer put into Social Security taxes. If you 
retired in 1960, it took 2 years.
  Look what is going to happen to the workers that are starting to 
retire today, to the workers that are 35 and 45 and 50 years old. They 
are going to have to work 26 years after retirement. They are going to 
have to live 26 years after retirement in order to collect the benefits 
that they and their employer put into Social Security. We have got to 
have a change.
  I have developed a proposal that I think we should run up the 
flagpole in order to start coming up with solutions to save Social 
Security. My proposal allows some private investment, but at the same 
time does not take away benefits from anybody over 58 years old.

                             {time}   1530

  So I think we have to tell people ahead of time what is happening. 
Part of the solution is a private investment. Part of the solution is 
slowing down benefits for the higher income recipients.
  Mr. Speaker, I ask that we deal with these serious problems as soon 
as possible and not put it off for another decade.

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