[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
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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.
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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
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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
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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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