[Congressional Record Volume 143, Number 24 (Friday, February 28, 1997)]
[Senate]
[Pages S1791-S1792]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. GREGG. Mr. President, I want to also speak on another subject 
which is of equal importance. It is of importance, however, to the next 
generation in a different way. It is of importance in the area of 
fiscal policy, and that is the question of Social Security.

[[Page S1792]]

  There is an atmosphere, of course, which has pervaded American 
politics, and especially politics in Washington, that discussing 
substantive reform to Social Security laws of our country is to commit 
political hari-kari; that any discussion of Social Security must be 
done in the most passive and benign way or else a person in public 
office will suffer great consequence.
  But we can no longer afford to take this head-in-the-sand approach to 
this absolutely critical and core issue of public policy. We know that 
the Social Security system is fundamentally broken and that it is 
headed toward an enormous bankruptcy. We know that if we take no 
action, purely as a function of demographics, we will see a collapse of 
the Social Security system in the early part of the next century, and 
with it probably a collapse of our Nation's finances, as we will simply 
be unable to bear the load of paying for the system.
  This is not a result of having a failed system for the last 40 years. 
We have had an extraordinary system for the last 40 or 50 years. It is 
a result simply of the fact that the Social Security system was not 
structured to deal with the generational demographics which we are 
headed toward. The post-war baby-boom generation is going to turn the 
tables of productivity upside down and the tables of who gets and who 
gives relative to the Social Security system.

  Today, approximately 3.1 people pay into the system for every 1 
person who takes out. By the time the post-war baby-boom generation is 
fully taking down its share of Social Security, we will only have two 
people paying into the system for every one person taking out. That 
means that by the year 2020, the Social Security system will be running 
approximately a $216 billion deficit which will be escalating in a 
geometric progression.
  This deficit will essentially absorb all the discretionary dollars of 
the U.S. Government, and we simply will be unable to fund the operation 
of Government, beyond either paying for Social Security or choosing 
some other course. What will happen is, we will have to create a 
massive economic disruption to address the issue, probably a national 
inflation on the order of what happened in the German Weimar Republic 
after World War I.
  So this issue must be addressed. It is like that television ad for an 
oil filter that says, ``You can pay me now or pay me later.'' By paying 
now, by doing something now, we can alleviate the problem for the next 
generation or reduce it dramatically at a low cost, but if we wait 
until later, the cost to the next generation will be astronomical, and 
we will not have fulfilled our obligation as passers of the torch.
  So I have proposed a piece of legislation which addresses this issue. 
I recognize that stepping into this water maybe doesn't make political 
good sense, but I happen to believe that if we do not step into this 
water, or if somebody doesn't begin to step into this water, nothing 
will happen. So I put on the table a proposal on Social Security, which 
I introduced last week, which addresses the underlying problems of the 
system.
  It has four basic elements, and, as a practical matter, it addresses 
the next generation--my generation--and younger people's generations as 
to how they will be impacted. It has very little significant impact on 
the people who are presently receiving benefits from the Social 
Security system.
  The first element of it, and probably the most magic, unique--I won't 
use magic, that will be too egotistical a term--the most unique is I am 
suggesting we take now what is presently the surplus in the system, 
which surplus we expect to run through the year 2010, and we refund 
that surplus to the wage earners.
  Today, $20 billion more is paid into the system than is paid out of 
the system for benefits. That means the wage earners in this country 
are paying $29 billion more in taxes than they need to pay under Social 
Security to support the Social Security system.
  My suggestion is that we refund that by reducing the payroll tax by 
that 1 percent, from 7.5 percent to 6.5 percent, which works out to 
about 12 percent actually, but a 1-percent reduction. And we allow the 
wage earner to take that 1-percent savings and put it into a savings 
account, into a savings vehicle like an IRA or some other personal 
savings vehicle and invest it for their future. This would allow us to 
begin to prefund the liability of a system which is now subject to 
contingent funding.
  We now have a pay-as-you-go system. There is no account which is set 
up for anybody who is on Social Security. What is paid in today is paid 
out today. This would allow us to begin to prefund that liability and 
to give working Americans who are under the age of 50 an opportunity to 
start to save for their retirement. And it would do it without 
impacting at all--at all--the present benefit structure of senior 
citizens.
  In addition, we must acknowledge that our society is living longer 
and being more productive. When the Social Security system was 
officially created, the average life of an American male was 61, and 
the retirement age was set at 65. Franklin Roosevelt was no fool. 
Today, the average life expectancy of an American male is 72 and is 
moving toward 78. Retirement age remains 65.
  My proposal, for people who are under the age of 45, would scale up 
the retirement age and give them lead time to anticipate that. Again, 
it would affect nobody who is on the system or about to come on the 
system.
  In addition, I do something which is called changing the bench 
points, which is essentially affluence testing, not for people who are 
on the system today but people who are under the age of 45.
  These are some changes that would bring about a solvent system. They 
are different, but they are proposals that need to be put on the table 
and discussed. Mr. President, I thank the indulgence of the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Iowa.
  Mr. GRASSLEY. Thank you, Mr. President.

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