[Congressional Record Volume 143, Number 22 (Wednesday, February 26, 1997)]
[House]
[Pages H660-H664]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1430
                SOCIAL SECURITY AND THE BALANCED BUDGET

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Wisconsin [Mr. Neumann] is 
recognized for 60 minutes.
  Mr. NEUMANN. Mr. Speaker, at 3:30 this afternoon there is going to be 
a very important announcement made, as I understand, from the Senator 
who holds the deciding vote on perhaps the most important piece of 
legislation that has faced this body for a long time, and that is the 
balanced budget amendment to the Constitution of the United States.
  As we understand the vote totals in the Senate right now, if he 
announces that he is going to vote in favor of the balanced budget 
amendment, there are enough votes in the Senate to pass the balanced 
budget amendment to the Constitution of the United States. And that 
would put us as a Government, provided it can be passed through the 
House of Representatives, in a position where for the first time since 
1969, we would be required to actually balance the Federal budget.
  I have asked for this time today to address my colleagues on the 
issue of balancing the Federal budget, the balanced budget amendment, 
why it is so important and how the issue relates to Social Security and 
other trust funds, and most important of all, how it relates to our 
children and our children's future and the opportunity for our children 
to make a living in this Nation and the opportunity for our children to 
live the American dream, the same kinds of chances and opportunities 
that we have had.
  I would like to begin this discussion today by showing a chart that I 
have been showing now for about 5 years, and it literally shows the 
growth in the debt facing the United States of America. A lot of people 
do not think that the Federal debt has anything to do with them 
personally or with their lives, but the reality is when the U.S. 
Government borrows money it is borrowing money on behalf of the 
American people, and the responsibility to

[[Page H661]]

repay that money will rest with our children. The legacy that we are 
going to leave our children is this ever-growing debt.
  I would point out on this chart that the debt from 1960 to 1980 grew 
very little, but from 1980 forward, the bulk of the debt is fast enough 
and sharp enough that it can bring our Nation to its knees if it is not 
stopped. Our Nation today stands $5.3 trillion in debt. That is 
approximately $20,000 for every man, woman, and child in the United 
States of America, and to all of my colleagues on the Democrat side of 
the aisle who look at 1980 and say, well, that is Ronald Reagan's fault 
and to all of my Republican side of the aisle who look at the Democrats 
and say, it is the Democrat Congress' fault, I think it is time that 
we, not as Republicans or Democrats, but as the American people, face 
up to a very serious problem facing the United States of America, and 
that is an ever-growing debt picture.
  I personally have three teenagers in my house, and when I talk about 
kids I talk about my kids and other kids like them all across America. 
This is the legacy that we are passing on to our children in this 
Nation, and something needs to be done about it and done now.
  I have watched with great interest as some of our Senators on the 
other side of the aisle and some of our House colleagues have talked 
about the balanced budget amendment and say, well, we do not really 
need a balanced budget amendment to the Constitution of the United 
States. Congress can just go ahead and balance the budget all by 
itself, it already has the tools it needs. To those people I would ask 
them simply to look at history. History tells us that since 1969, even 
though Congress did have all of the tools, they have literally every 
single year since 1969 spent more money than what they collected from 
the American people.
  That is why we need a balanced budget amendment. For those who say we 
do not need an amendment to our Constitution, I would simply ask them 
to think of the Gramm-Rudman-Hollings Act passed in the middle 1980's, 
Gramm-Rudman-Hollings II, the budget deal of 1990, the budget deal of 
1992, and our most recent budget deal of 1994, and then I would like 
them to look at the spending levels that occurred after those budget 
deals and say, we do need a balanced budget amendment to the 
Constitution if we are actually going to get this job done.
  It is an important issue, however, that relates to the balanced 
budget amendment that is currently being discussed with a great deal of 
interest on both sides of the aisle and that is the Social Security 
issue. It is important to understand how Social Security relates to the 
balanced budget amendment, and to begin that discussion I would like to 
just point out how much money is coming in to the Social Security 
system and how much is being paid back out to our seniors in benefits.
  This year alone, the Social Security system will collect $418 billion 
out of the taxpayers' paychecks. That is, when you look at your 
paycheck and you see the money being withheld, the total sum of the 
money being withheld is $418 billion. The Government is writing checks 
back out to our senior citizens of $353 billion this year; that leaves 
a surplus.
  The idea is they are supposed to be collecting more money in Social 
Security than what they are paying back out to the senior citizens in 
benefits. That extra money is supposed to be set aside in a kitty. The 
kitty is supposed to be growing bigger and bigger, so why do these two 
numbers change around? That is, there is not enough money coming in to 
make the payments to our senior citizens. They can at that point go to 
the kitty and make good on the checks.
  Well, here is what is happening in our Government today. Remember, we 
are collecting more money than we are paying back out to our seniors in 
benefits. Unfortunately, the Federal Government today is not handling 
that money properly. What is happening today is that $65 billion is 
going directly into the Government's big checkbook. You can think of it 
as a general fund or just like your own personal checkbook.
  They put that $65 billion into the checkbook. We all know we are 
running a deficit. The deficit means they are writing out more in 
checks than what they are collecting. So they are taking the $65 
billion, putting it in their checkbook, overdrawing their checkbook and 
there is no money left. So at the end of the year since there is no 
money left in their checkbook because they have overdrawn it, that is 
the deficit, they simply write an IOU to the Social Security trust 
fund. Make no mistake about this, folks. There is no money in the 
Social Security trust fund. It is a pile of IOU's. This is a practice 
that must be stopped if we wish to preserve Social Security.
  I have introduced legislation, and I am happy to say I have the 
support of 50 of my colleagues at this point in time. Our legislation 
would require the Federal Government to put that $65 billion directly 
into the Social Security trust fund. Why is this issue important? Well, 
everybody talks about Social Security as being safe and secure through 
the year 2029, and then everybody's eyes kind of glaze over. Well, here 
is the facts of the situation.
  If this money is not put into the Social Security trust fund, as I am 
suggesting here, if we continue the practice of doing nothing but 
putting IOU's in the Social Security trust fund, the Social Security 
account is in trouble, the best case scenario in the year 2012 and 
realistically in the year 2005 or 2006.
  Let me put this another way and bring it back to our kids and our 
working families in America today. In the year 2000, 2005, 2006, 
exactly when my kids graduate from college and will be having their own 
families and having their own children, like other kids like them all 
across America, at that point in time the Federal Government is going 
to have two choices since they have not done this. The Federal 
Government is either going to have to go out to senior citizens and say 
I am sorry, there is nothing but IOU's in the trust fund and we cannot 
make good on our payments to you, or they will go out to our families, 
like my kids graduating from college, starting their own families, and 
they will have to say, we need more money out of your paychecks.
  Folks, we are not talking about decades away; we are talking about 
2005, 2006, and in the best case scenario 2012, that we cannot make 
good on our Social Security payments to our senior citizens. The only 
two choices left at that point in time are reduced benefits to our 
seniors or collect more taxes from our working families in America. I, 
for one, am not willing to accept either one of those alternatives.
  This bill that we have introduced, the Social Security Preservation 
Act, it needs to be passed and it needs to be passed in the near future 
so that we start putting real assets down here in the Social Security 
trust fund and, if the shortfall occurs, we will then have a savings 
account to go to to get the money to make good on our payments to our 
senior citizens without asking our working families for more out of 
their paychecks. They work too hard right now to earn the money that 
they earn for this Government to go and demand more out of their 
paychecks.
  How does this whole discussion relate to the balanced budget 
amendment? Well, let me relate it to the balanced budget amendment. 
First, when we report the deficit right now, we simply report the 
amount of money that the Government is spending more than it is taking 
in. It is sort of like your own checkbook. They report the overdrawn 
check part of it. But remember, they are putting the $65 billion into 
their checkbook.
  So when the deficit is reported by our Government today, when 
Washington reports the deficit to the American people, we only report 
$107 billion and we do not tell the American people that in addition to 
that $107 billion we are spending $65 billion more out of the Social 
Security trust fund. So when we talk about our deficits, we only report 
this blue area in the chart.
  When we talk about balancing the Federal budget, here is how it 
works. When we talk about balancing the Federal budget, what we are 
talking about is this blue area. We are talking about getting to a 
point where the Federal Government takes in as much money as they are 
spending out, but at that point will still be spending the Social 
Security trust fund.

[[Page H662]]

  So make no mistake about this. When the people say, when the 
President's budget says he is going to be balanced in the year 2002, 
what the President really means is that he is going to make his budget 
look balanced by going into the Social Security trust fund and taking 
$104 billion out and applying it as a credit toward the deficit.
  Let me say that again so there is no mistaking what is going on in 
this town. When the people in Washington say they are going to balance 
the Federal budget, what they really mean is that they are going to 
make the budget look balanced by going into the Social Security trust 
fund, taking the money that is supposed to be there and applying it 
toward the deficit.
  In the year 2002, when everybody talks about a balanced budget, in 
the year 2002 when everybody says the budget is going to be balanced, 
what they really mean is that they are going to make the budget look 
balanced by taking $104 billion out of the Social Security trust fund 
and applying it to the deficit so that the deficit appears zero. That 
practice is dead wrong, and that practice needs to be stopped if we 
hope to have Social Security in the future.
  I would like to talk a little bit about what has happened over the 
last 1\1/2\, 2 years. I have only been here 2 years, and I would like 
to talk a little bit about what has happened and the positive potential 
for this country and how we can accomplish this without, quote, 
``cutting spending''.

                              {time}  1445

  In the last 2 years since I have been here, for the first time in a 
generation we actually went into one part of the budget and reduced 
spending.
  The budget is divided into 3 parts: interest; mandatory spending, 
which includes Social Security, Medicare and so on; and discretionary 
spending. Discretionary spending is the only part that is actually 
voted on year in and year out here in Washington, DC.
  We went into discretionary spending and we reduced spending by $50 
billion. For those of my colleagues that know the gentleman from 
Louisiana [Bob Livingston], a lot of the credit goes to our chairman of 
the Committee on Appropriations for this effort. They brought down 
spending by $50 billion. That meant that $50 billion remained available 
in the private sector.
  With an additional $50 billion available in the private sector, here 
is what happened. It is no surprise. More money available in the 
private sector meant the interest rate stayed down; more money 
available, a larger supply, lower interest rates. It follows very 
logically.
  With lower interest rates, people were able to afford to buy houses 
and cars. When they bought houses and cars, other people had to go to 
work building the houses and cars. When they went to work building the 
houses and cars, they left the welfare rolls and started paying taxes 
in. It works, folks. The possibility of balancing the Federal budget 
without raising taxes on the American people works. We have got some 
good news. The economy, because of his efforts to reduce government 
spending, leaving more money available in the private sector, the 
economy performed much better than expected.
  The good news that we have is that we can balance the Federal budget 
without using the Social Security trust fund simply by holding spending 
to the levels that were proposed last year. But again, to my 
colleagues, I want them to understand that when we found out the 
economy was doing better than anticipated and there was this extra 
revenue coming in, in this community, in Washington, DC., the first 
thing I saw was people doing this with their hands. I want you all to 
see this, because what they are doing is just wringing their hands, 
waiting to get their hands on that money so they can go and spend it.
  Mr. Speaker, I want the Members to understand when they go and spend 
that money, that is money coming right straight out of the Social 
Security trust fund, and they ought to leave their hands off that 
money. The purpose of passing the Social Security Preservation Act is 
to force the people in Washington to leave their hands off the money 
that belongs in the Social Security trust fund.
  So again, let me make this perfectly clear. Because the economy is 
performing better than anybody expected, we can now put the money away 
in the Social Security trust fund, as we should do, without harming the 
other spending levels as proposed last year.
  So the good news is that if we just live up to what passed through 
Congress last year, we can balance the budget, put the Social Security 
money aside and do what is right for the future of this country, so our 
children have the same sorts of opportunities that we had as we were 
growing up during the last generation.
  I have a couple more charts. I brought these charts with me to show 
the difference in the balanced budget amendment that is being proposed 
with what the American people are being led to believe by our 
colleagues here in the House, versus the reality of what is actually 
happening in the balanced budget amendment.
  This first chart shows what I believe the American people think is 
going on in Washington, DC., and certainly what the people in 
Washington, DC. are trying to lead the American people to believe. That 
is that the deficit is going to continue through the year 2002, but 
after the year 2002, since we have a balanced budget there will be no 
increase in the debt. This is the line that should exist if we had a 
true balanced budget in the year 2002. The debt would not keep 
climbing.
  Let me show Members another chart as to what is actually going to 
happen. Under the balanced budget amendment that is being proposed and 
being discussed out here, and again I have to say it is better than 
where we are today, but under the balanced budget amendment as it is 
currently written, if the Social Security money is not set aside, here 
is what the debt growth looks like. The debt grows now from the year 
2002, and after the year 2002 the debt continues to grow.
  So even though we have reached a balanced budget and the American 
people are being led to believe that means the debt is not going to 
keep growing, if the Social Security money is not set aside, the 
reality is that even under the balanced budget amendment that is being 
passed out here right now, the debt will continue growing after the 
year 2002 if our Social Security Preservation Act is not passed into 
law.
  I cannot say how important this is, not only to senior citizens, but 
to people in their forties and fifties who are expecting to get Social 
Security in the not distant future, and also to the people who are 
under age 40 who will be threatened with higher taxes, and with no 
ability to at some point start setting some of their own money aside, 
instead of paying into the Social Security system. I can't tell Members 
how important it is that we get the Social Security Preservation Act 
passed.
  My colleagues, I know, are hearing from many of the people in their 
districts and their constituents on a very regular basis on this issue. 
I contend that the only way to solve this problem is not through people 
like myself here in Washington, but rather when the American people get 
involved.
  I encourage my colleagues, call our office for a copy of these 
overheads. We will get them to you so you can take them out and show 
the American people exactly what is going on. Then let us get this 
situation solved so that it is fair, and we can hope to have Social 
Security for our senior citizens in the future.

  I would like to kind of go back, before I conclude today, I would 
like to kind of go back and review one more time exactly what the 
situation is with Social Security, so any of my colleagues who are 
watching and missed part of this might pick it up. Again, I am going to 
start with the Social Security system.
  The Social Security system today is collecting $418 billion. It is 
going into the paychecks of our constituents and it is literally taking 
out $418 billion. It is collecting that money in taxes. It is paying 
out in benefits to our senior citizens $353 billion. That leaves a 
surplus of $65 billion.
  That surplus money is supposed to be set aside into a kitty. It is 
supposed to be an ever-growing kitty, so when there is not enough money 
coming in and there is too much money going out, they can go to that 
kitty.
  This is no different, Mr. Speaker, than it is in Members' own savings 
accounts and checkbooks. Now there is

[[Page H663]]

more money coming in than what is going out, so you establish a savings 
account. If you lose your next election, you may have more money going 
out of your checkbook than what you have coming in. You go to your 
savings account, get the money, and make good on your checks.
  That is how Social Security is supposed to be working. They are 
collecting more money than they are paying back in benefits, $65 
billion this year alone. The money is supposed to be set aside in the 
Social Security trust fund. Today what is happening with that money, it 
is going directly into the general fund. They spend all the money out 
of the general fund or the big Government checkbook, and when they are 
done spending the money, there is no money left to put in the Social 
Security trust fund, so they very simply put an IOU down there.
  I have a chart that shows that. That is $65 billion they are 
collecting over and above what they are paying out in benefits that is 
going directly into the general fund, the big Government checkbook. 
They spend all the money out of the big Government checkbook, there is 
nothing left, so they simply put an IOU down here in the Social 
Security trust fund.
  That is what is going on today. We have legislation on the floor 
today that has been proposed that would change that procedure. What our 
legislation would do, and it is called the Social Security Preservation 
Act, it would force that $65 billion to be put directly into the Social 
Security trust fund.
  Why is that important? If there are nothing but IOU's in the Social 
Security trust fund, we will not be able to make our payments to senior 
citizens in Social Security by the year 2012, and I repeat, 2012. That 
is when Social Security is in trouble if this bill is not enacted. In 
all probability, when Washington says 2012, they actually mean 2005, 
2006.
  If this bill is not enacted, we are looking at a situation not very 
far down the road where we are going to have two choices in Washington: 
Charge more taxes of our working families, go out to our young couples 
and ask them to pay more taxes in, or cut benefits to seniors. I do not 
think either one of those are accepted.
  Make no mistake about it, this money today is currently being wasted 
on other Government programs. This whole issue is related very 
directly, it is related very directly to the whole discussion on the 
balanced budget amendment. Here is why.
  In the balanced budget amendment, in the balanced budget amendment, 
the balanced budget amendment talks about the amount of money that the 
Federal Government is spending more than it is taking in. It does not 
mention the fact that this $65 billion, that this is not being included 
in the deficit. As a result, the deficit is actually much higher than 
it appears.
  When we talk about the balanced budget amendment we simply mean we 
are going to get rid of this blue area in the chart. That is the area 
where we have cash flow going out more than coming in. We do not 
mention the fact that even in the year 2002, when everybody in 
Washington is telling the American people that the budget is balanced, 
in the year 2002 when the President says he is going to balance the 
budget, what the President actually means and the rest of the people in 
Washington, what they actually mean is they are going to balance the 
budget by going into the Social Security trust fund, taking the money 
out of the Social Security trust fund, applying it to the deficit, and 
making the budget look balanced because they took the money out of the 
Social Security trust fund.
  This is inexcusable as a Nation that we would allow this to go 
forward. It is absolutely inexcusable to me that we as a Nation would 
say and lead the American people to believe that we are balancing the 
Federal budget when in fact we are taking the money out of the Social 
Security trust fund to make it look balanced.
  How does that impact things? Well, the American people are being led 
to believe that once we hit the year 2002, there will be no more growth 
in the debt. They are being led to believe that the debt will grow 
through the year 2002, but then since the budget is balanced there 
would be no more growth in the debt and it would remain steady at that 
point.
  I have to tell the Members, in our budget plan, the plan that I put 
forward, the debt would start going back down after the year 2002. We 
would actually start paying the debt off, which is something we ought 
to be doing.
  The facts are when the balanced budget amendment is passed, what is 
actually going to happen is the debt is going to keep going up through 
the year 2002, and then, since we are not counting the fact that we are 
borrowing the Social Security trust fund money, the debt is actually 
going to keep rising, even after the year 2002. So instead of the debt 
going down, or at least staying steady so our children can have hopes 
of a bright future, instead of that, the debt will keep going up if our 
Social Security Preservation Act is not passed.
  Again, the emphasis here is on the future of this Nation as we look 
forward. I would just add one more thing as we are looking at this 
chart. It seems to me that not only should we not let the debt keep 
growing, as a Nation, not only should we be responsible as a generation 
to not pass more debt on to our children, but what we should do is get 
to that point of a balanced budget and then start paying the debt down.
  Out here in Washington that is kind of a novel idea. When I go to 
town hall meetings in Delavan and Janesville and Kenosha and Racine, 
Wisconsin, people ask me about the debt. They ask me, hey, Mark, after 
the balanced budget, don't you think you ought to pay that debt down? 
It is going to be $6.7 trillion when you get to a balanced budget. By 
the time we get to a balanced budget in 2002, we are going to be in 
debt $25,000 for every man, woman, and child in the country. Do you not 
think you ought to do something about paying down the debt?
  I agree with my constituents. I agree with those people at the town 
hall meetings. Not only should this thing not be allowed to continue 
the upward pattern that appears in this chart, it should start going 
back down, so we as a generation can look forward to passing our Nation 
on to our children debt-free.
  Everybody in Washington goes, well, we cannot possibly do that. Let 
me lay out for my colleagues exactly how we can in fact pay off the 
debt by the year 2025 and pass this Nation on to our children debt-
free.
  Revenues are growing to the Federal Government for two reasons: They 
grow at the rate of inflation, plus the rate of real growth in the 
economy. So if we think about this, the amount of taxes that the 
Government is collecting, the amount of revenue coming into the 
Government, it gets bigger because of inflation.
  If you get a pay raise next year, when you get that pay raise you may 
pay a little more taxes. That is inflation. In addition to inflation, 
in addition to inflation the Government gets more revenue because the 
economy gets bigger. That is, when the economy is bigger, somebody is 
making a profit over that additional business that is being done, and 
they therefore pay more taxes in, so revenues to the Federal Government 
grow not at the rate of inflation, but rather, at the rate of inflation 
plus real growth in the economy.
  How can we make this line go back down? How can we pay that debt off 
so our children could receive our Nation debt-free? This is how we do 
it. After the year 2002 when we reach a balanced budget, we cap 
spending growth at the Federal level at a rate 1 percent below the rate 
of revenue growth.
  Remember, revenue goes up at the rate of inflation plus real growth 
in the economy. If we simply cap spending increases at a rate 1 percent 
below the revenue growth, we would in fact create a surplus, because we 
were at balance. If revenues go up by 5 percent, spending goes up by 4 
percent, that creates a surplus. That is the surplus that could then be 
used to first put the money back into the Social Security trust fund 
that has already been taken out, but second, to start paying down the 
Federal debt so we would have hopes of passing this Nation on to our 
children debt-free.
  I have to tell my colleagues that in terms of service here in 
Washington, I came here really for two reasons. I came here to get a 
balanced budget and to solve this problem facing the Social Security 
system. To me, it is not about all these charts and it is not about

[[Page H664]]

Perot's charts and graphs, it is not about numbers. It is about the 
opportunities that we hope to have for our children. It is about 
whether or not our children are going to have the opportunity to live 
the American dream in this great Nation of ours.
  Make no mistake about it, we are currently in a situation where a 1 
percent change in the interest rate, just 1 small percent change in the 
interest rate, adds $50 billion to the deficit. Two percent is $100 
billion to the deficit.
  If the deficit starts exploding, the only thing the Government can do 
is print the money. When they print the money, that is more inflation. 
When they have more inflation, we, of course, have higher interest 
rates. Higher interest rates is a higher deficit. So the spiral goes.
  As that goes on, Mr. Speaker, we need to understand that when the 
interest rates go up, our young people, our hardworking families, the 
people that get up every morning and go to work, they cannot afford the 
higher interest rate that would be applied to their home mortgage or to 
their auto loans. As those interest rates go up, people can no longer 
afford to buy houses and they can no longer afford to buy cars. The end 
result is that means we do not need as many people building houses and 
cars.

                              {time}  1500

  When the people are not building the houses and cars, of course, that 
means there are no job opportunities. So what we are really talking 
about here, when we talk about balancing the budget, we are talking 
about the Government staying out of the private sector. We are talking 
about making the Federal Government smaller and less intrusive in our 
lives.
  As the Government quits borrowing that money out of the private 
sector, leaves more money out there in the private sector, that means 
with more money available we can expect the interest rates to stay 
down. When the interests rates stay down, that means people can afford 
to buy houses. They can afford to buy cars.
  And I have to tell you, this is the hope for the future of America. 
Because when they can afford to buy houses and cars, the poor people in 
this country are going to have opportunities to have a job because 
somebody has to build those houses and somebody has to build those 
cars. That is the hope; that is welfare reform.
  Welfare reform is a job opportunity for the people that are not 
currently working. Welfare reform is the Federal Government quitting 
spending more money than it has, leaving the money in the private 
sector so the interest rates stay down so people can afford to buy 
houses and afford to buy cars in this Nation of ours and people go to 
work building those houses and those cars. That is job opportunities. 
That is the welfare reform that we need to talk about in this Nation. 
That is the hope for my children's future.
  When I say ``my children,'' I do not just mean Mark Neumann's 
children, I mean all the kids that are teenagers. The three teenagers 
in my house, yes, they are going to be out of school in 5 years, but 
there are going to be millions of teenagers out of school in 5 years. 
What we are talking is whether those kids are going to have the 
opportunity to start with a job, to get promotions, and then go through 
their lives and to provide a better living for themselves and their 
family as they, too, attempt to achieve the American dream.
  That is what this issue is all about. It is not about numbers. It is 
not about all these charts. It is about our kids. It is about whether 
or not our kids are going to have the same opportunities that we have 
had. It is about our senior citizens who have been promised Social 
Security, and it is about whether or not this Government can make good 
on those promises to our seniors without destroying the opportunities 
for our kids. That is what this whole discussion is about.
  I conclude today by simply encouraging the support of a balanced 
budget amendment to the Constitution and encouraging the support of the 
Social Security Preservation Act so we get both jobs done at the same 
time and make this place much more credible with the American people 
and, again, arrive at a point where our children can achieve the 
American dream.

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