[Congressional Record Volume 144, Number 14 (Tuesday, February 24, 1998)]
[House]
[Pages H506-H507]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Barrett of Nebraska). Under the 
Speaker's announced policy of January 21, 1997, the gentleman from 
Michigan (Mr. Smith) is recognized during morning hour debates for 5 
minutes.
  Mr. SMITH of Michigan. Mr. Speaker, I am going to talk for a few 
minutes about putting Social Security first. The challenge is, what the 
President can do and what Congress might do to give a higher priority 
for saving Social Security.
  For review, this is a pie chart of Federal Government spending for 
this year. As we see, one of the largest pieces of the pie is Social 
Security that takes 22 percent of the total Federal budget. Social 
Security right now, sends out $660,000 a minute in Social Security 
benefit payments. But by 2030, we are going to be spending almost $6 
million a minute for Social Security benefit payments. An 866% 
increase.
  That represents part of the problem. The fact that there are 
relatively fewer workers paying their Social Security taxes to finance 
these increasing benefits represents the other part of the problem. It 
is probably one of the most challenging problems facing Congress and 
the White House. Yet politicians in Washington have avoided dealing 
with this very important issue because of the potential political 
demagoguery. We have to deal with the hard facts of how we are going to 
make Social Security continue for those that are now retired, for those 
that are going to retire in the near future, as well as our kids and 
our grandkids.
  Let me just give my colleagues a quick review. In 1935, the Social 
Security system was devised and passed into law. It has always been a 
pay-as-you-go program. In other words, existing workers pay in their 
taxes and those taxes are immediately sent out in benefit payments to 
existing retirees. So it is sort of a Ponzi game, sort of like a chain 
letter. Early retirees made out very well. Taxes started out as 1.5 
percent of the first $3500 of payroll. Now it is 12.4 percent for the 
employee and the employer's share for the first $65,000. Over the year 
we have continued to increase taxes on workers. In fact these taxes 
have been increased 36 times since 1971.
  This next chart shows the dilemma for Social Security. The red part 
represents how much in debt Social Security is going to be in the 
future. If nothing is done, eventually Congress must provide an 
additional $400 billion a year to cover promised benefit payments. This 
little blue blob on the top left is the short-term surplus that is in 
the Social Security trust fund. Congress supposedly fixed Social 
Security in 1983. What they did is substantially increase taxes on 
workers. But this fix was short-lived. By 2011 there will again be a 
cash shortage. Dorcas Hardy, a former Social Security Administrator, is 
estimating that we are going to run short of money as early as 2005. 
But even in the scenario of 2011, what does Congress do to come up with 
the money to meet their obligations of paying back the $600 billion 
borrowed from the trust fund. Well, Congress can cut spending someplace 
else, they can increase taxes like they have been doing for the last 40 
years every time Social Security was a little shy. They can borrow more 
money from the public and disrupt some of the downward pressures on 
interest rates that we have achieved so far.
  I think it is important, and just for a minute, allow me to say that 
we do not have a balanced budget. We are not going to have a balanced 
budget this year, next year, any year for the next 5 years of the 
President's budget, because every year all the surplus coming into the 
Social Security trust fund is used to balance the budget. So every 
year, the national debt increases between $120 billion and $170 
billion. Every year. That is how much more the national debt is going 
to increase. I think it is interesting to note that one of the dilemmas 
of this Congress is the fact that now 15 percent of the budget is 
required to pay interest on the debt. So if we can pay some of that 
debt back and start paying down that debt, we reduce interest cost. Let 
me just briefly run through these charts.

[[Page H507]]

Because we have increased taxes so often on workers, this chart shows 
how many years you are going to have to live after you retire in order 
to get the money back you and your employer put in. If you retire after 
the year 2006, you have to live 26 years after you retire just to break 
even. It is a serious problem. We need to deal with it.

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