Congressional Record, Volume 144 Issue 16 (Thursday, February 26, 1998)

[Congressional Record Volume 144, Number 16 (Thursday, February 26, 1998)]
[House]
[Pages H662-H670]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

AMERICA'S MOST IMPORTANT ISSUE: SOCIAL SECURITY

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 as the designee of the majority leader.
Mr. NEUMANN. Mr. Speaker, first I would like to address the
discussion that has been going on here on the floor so far. I think as
we see the floods all across America and the ice storm certainly that
hit up in Maine, I know the folks in our district are willing to lend a
hand, as well as in a lot of the other parts of the country.
But as we begin this debate about a supplemental spending bill, that
is spending outside the normal spending in Washington, I think it is
very important that we do not just go and blow in the taxpayers' money;
that we do not spend money without thinking where it is coming from.
Mr. Speaker, I would encourage my colleagues who are involved in this
conversation that they find other areas of government that are less
important and in order to provide the funds, the very needed funds
there in Maine and in some of these other places across the country, I
would like to encourage my colleagues to find other parts of the budget
that are less important. And Lord knows, there is plenty of wasteful
spending in this budget.
Find some of that wasteful spending, knock out the wasteful spending,
and let us redirect those savings, the dollars we do not spend, into
the programs that are necessary to help some of these people around the
country. But for goodness sakes, let us not just go spend more money
without knowing where it is coming from.
The only thing many folks like myself would ask is that we
reprioritize our spending to take care of some of these areas that are
in need of help in view of some of the floods that have occurred,
whether it be California or Florida, or the ice storm up in Maine. Let
us do what they need, but certainly let us find other programs where we
do not have to spend the money in order to make up for it, as opposed
to just going out and spending more of the taxpayers' money.
Mr. Speaker, I would like to turn our attention to what I think is
the most important issue facing America today, or at least one of the
most important issues, and that is Social Security. I would like to
dedicate a good portion of this hour to Social Security, how it fits
into the big budget, and where we might be going to solve some of these
problems facing our Nation today as it relates to Social Security.

{time} 1330

First off, I think it is important that we understand the Social
Security system and what is going on. For anybody out there in America
or my colleagues, they are all paying taxes into the Social Security
system. I think it is important that we understand how many dollars are
coming into the Social Security system each year.
What I brought is a chart that shows the total revenues in the Social
Security system this year is $480 billion. The total amount that we are
sending back out to our seniors in benefits is $382 billion.
If you think about this like your checkbook and just for a second
forget the billions on the end, if you have $480 billion in your
checkbook and you only spend $382 billion or $382, that works out
pretty well. In fact, you still have money left in your checkbook.
The Social Security system today is working; that is, it is
collecting more money than what it is actually paying back out to our
senior citizens in benefits. The idea in this system is that

[[Page H663]]

they collect this extra $98 billion. They put it into a savings
account. They put that savings account money aside, and it grows and
grows and grows, because, eventually, and it is not very far down the
road, the baby boom generation gets to retirement.
When the baby boom generation gets to retirement, this top number,
the revenues becomes smaller than the bottom number, the expenses. When
the expenses are greater than the revenues, the idea was we were
supposed to be able to go to this savings account, get the money out
and make good on our promises to pay Social Security to our senior
citizens. That is how the system is set up, and that is how it is
supposed to work.
Every year since 1983, the situation has been much like this one,
where there is more money being collected out of the taxpayers'
paychecks than what is being paid out to our senior citizens in
benefits. As a matter of fact, since 1983, we were supposed to
accumulate this kitty or this savings account of about $700 billion.
That is how much is supposed to be in that trust fund right now, today.
When I am out in Wisconsin and I ask the question does anybody want
to take a shot in the dark what Washington has done with the $98
billion, I always get a snicker in the audience. It does not seem to be
any big surprise when we talk about what is going on here in this city.
That $98 billion that is supposed to be going into a savings account
to preserve and protect the Social Security system here is what is
actually going on. They take the $98 billion; they put it into the
government's general fund. You can think of that like the big
government checkbook that they pay all their bills out of it.
So they take the $98 billion. They put it in the big government
checkbook. Then they write checks out of the big government checkbook,
and there is no money left at the end of the year. As a matter of fact,
until this year, every year they overdrew even this checkbook. That is
what you have been hearing about, is the deficit.
It is important to understand that when Washington says they are
going to balance the budget, that that $98 billion that has been put in
here from Social Security has been spent out of that checkbook.
So the facts are the government is taking the $98 billion, putting it
in the big government checkbook, spending all the money out of the big
government checkbook. Of course, that means that at the end of the year
there is no money left to go down here into the Social Security Trust
Fund.
As a result, what Washington does is they simply write an IOU to the
Social Security Trust Fund. When you hear Washington talking about
whether or not the budget is balanced, that is this circle out here,
and it is using that Social Security money that is supposed to be down
here in the Trust Fund.
In the private sector, if anybody tried to do this with pension
funds, if anybody was running a pension where $98 billion or $9,800 was
supposed to go into the pension fund but, instead, they put it into
their regular checkbook, they would be arrested. This would be illegal
in the private sector. In Washington, D.C., this is a practice that
absolutely must be stopped.
Before we are too hard on the people out here, let us understand that
this idea of balancing the budget in this circle, even though it uses
the Social Security money, even that has not been done since 1969.
So what has happened in the last 3 years is a good step forward. At
least they have got that part balanced. But it absolutely does not
solve the problem as it relates to Social Security.
Now, some have been hearing the President's State of the Union and
some of the things that have been said since the State of the Union
where they are now saying that that they are going to take all of these
surpluses and dedicate those surpluses to Social Security. It is
important to understand exactly what they are saying and what they
mean.
First off, the surplus is whatever happens to be left over in this
checkbook at the end of the year. We will put $98 billion of Social
Security money in there, and they call it a surplus if there is
anything left over at the end of that 12-month period of time.
What they are saying is that leftover is going to be used to preserve
Social Security. In and of itself, that does not sound bad. It sounds
like a good step at least in the right direction, albeit not what we
ought to be doing.
The problem is they are not even doing that. You see, this Social
Security debt, this $700 billion of IOUs that are down here in the
Social Security Trust Fund, that is part of the much larger debt, the
$5.5 trillion debt that has been run up for our Nation. $5.5 trillion
is about $5,500 billion. Seven hundred of that billion dollars belongs
here.
But when you actually look at what is being proposed, they are not
actually saying they are going to pay off some of these IOUs and put
real money down in the trust fund. What they are actually saying is
they are going to pay off some of that other outstanding debt. In fact,
not even the surplus gets down here to the Social Security Trust Fund.
So the fallacy that somehow the surpluses are going to solve the
Social Security Trust Fund problem is just baloney at this point in
time. It is just plain baloney. I cannot think of any better way to
describe it.
Again, what is going on today, there is more money coming in than
what is going back out to seniors in benefits. $98 billion is being put
in the big government checkbook. All the money is being spent out of
the big government checkbook, and they are simply putting IOUs down
here in the Social Security Trust Fund.
Now, lest anybody think that nobody in Washington is paying any
attention, some of us are. We introduced legislation in our office. It
is called the Social Security Preservation Act. It is H.R. 857.
Here is what it does. It is very, very simple.
It simply takes the $98 billion and directs it straight to the Social
Security Trust Fund. It prevents it from going into the general fund.
It prevents it, then, from being computed in the overall budget
computations. It simply takes the pension money and puts it in the
pension fund.

When I am out in Wisconsin and say how many people think this is a
good idea, I have not found a single audience anywhere where every
single hand does not go up.
You see, when we are working with the young people, like, for
example, my son, who is 15 years old and mowed lawns last year, he
earned $2,000 mowing lawns. He paid $300, roughly, into the Social
Security system out of his $2,000 of earnings.
Now, for a 15-year-old to be paying $300 into Social Security, that
is pretty tough; and a lot of people think we ought to be doing
something about that. But my point would be, until we actually get some
real dollars down here in the Social Security Trust Fund so that our
present seniors are safe and secure and the people that are in their
forties and fifties get to a point where they can actually count on the
money being there in Social Security, I do not think you can make the
other changes in the system that many people out here in this city
think are necessary and logical.
I think most Americans would agree that it does not make a lot of
sense for a 15-year-old to be required to pay $300 into the Social
Security Trust Fund. But the problem with making that change today is
it puts seniors in jeopardy because there is no money currently in the
Social Security Trust Fund.
So where are we going with this Social Security issue and what do we
really need to do to solve it?
The first thing we need to do is pass the Social Security
Preservation Act. The Social Security Preservation Act would take the
surplus funds that are coming in this year and put those funds
correctly into the Social Security Trust Fund.
I want to be a little bit technical for my colleagues as to exactly
how this would happen. Today, those IOUs are nonnegotiable,
nonmarketable Treasury bonds; and all we are suggesting is that,
instead of buying nonnegotiable, nonmarketable Treasury bonds, we
simply buy negotiable Treasury bonds, the same thing that any American
citizen can walk into the bank and buy.
Why would you do it that way as opposed to any other way? Well, a
Treasury bond is a safe, secure investment.

[[Page H664]]

When the shortfall occurs, when those numbers we looked at on the
other chart turn around and there is not enough money coming in and too
much money going out, when that shortfall occurs, we need to be able to
sell the assets. A negotiable Treasury bond can be sold at any bank in
America.
So the idea is you put a negotiable Treasury bond into the Social
Security Trust Fund. Now you have real assets in there so today's
seniors are safe and secure. Then we can begin the discussion of the
young people in this great Nation having some other options if they so
desire.
Again, I point to my 15-year-old who went out and worked his tail
off, earned $2,000 and found out he owed $300 to the Social Security
Trust Fund.
But first we need to make sure that we have real assets in that
account so today's seniors are safe and secure.
The bill, again, that I have introduced is the Social Security
Preservation Act. It is H.R. 857. I would strongly urge my colleagues
to join us in this. It is something that people from all over the
country have called and talked to us about, and I am sure that is going
to continue as we move forward. We have got about 90 cosponsors on it
right now, and we would hope to see that number grow as this debate
goes forward.
I have one other chart here that, again, illustrates the President's
discussion and what we are starting to hear out here. I encourage my
colleagues not to be misled by the smoke and mirrors that has been put
out of this city for years.
Out of this city, for years, we have been telling people there is a
Social Security Trust Fund. That is wrong. Day one when I got here, I
knew that was wrong; and we started fighting to end this practice.
Today the new smoke and mirrors game has put the $98 billion into the
general fund. Spend all the money you want to out of the general fund,
and whatever is left over they say is going to Social Security. But,
remember, it is not coming into the Trust Fund. It is really simply
going to pay additional revenues.
I would just like to point out that, even under this system, any
spending that goes out of this account effectively reduces the amount
of money that is left over for Social Security. The reason I point that
out is because, when we look at the proposal that is coming forward,
and I am now talking about the President's budget, but let us make no
mistake, this is not like it is a partisan thing that obviously one
side proposes new spending. Any new Washington spending program
effectively reduces the availability of funds for Social Security.
I have a list here of new spending that is being proposed currently
in Washington, D.C. These all happen to be in the President's plan, but
I guarantee you will see people from both sides of the aisle supporting
this new spending: their new child care program, $12.2 billion; new
schools, $6 billion; new teachers, $5.1 billion.
I know a lot of folks out there are going, hey, Mark, those things
look like good things: new schools, more teachers, child care for
working families. I mean, gosh, those are all good things. Do we not
want to do those things in this country?
We need to understand what is being proposed. What is really being
proposed, and let us just take the new schools. That is a classic
example. What is really being proposed is that Washington, the United
States Government, reaches into the taxpayers' pockets. They bring the
money out here to Washington, and then the people here in Washington
decide where it is that we should build new schools in America.
Would it not be better if, instead of Washington getting that money
out here, spending 40 cents on the dollar in the bureaucracy, and then
Washington making the decision of which school district is going to get
help, would it not make a lot more sense to leave the money out there
in the hands of the people in the first place so they get a dollar's
worth of new schools for the dollar that they are paying in taxes?
If a community needs a new school, then the parents and the teachers
and the school board and the folks in the area ought to get together
and build a new school.
I know in the district that I am from that a lot of our school
districts have done exactly that. In our home district, Janesville, I
know they just built a new middle school. Burlington built a new
school. The folks in our district care about education, and so do I.
What I do not want to see happen is Washington, the government,
reaching into the pockets of people, bringing the money out here to
Washington and spending 40 cents on the dollar in the bureaucracy and
then Washington making the decision as to who is going to get help and
who is not going to get help. That is not the way it ought to work. It
ought to be that the people make those decisions for themselves and the
people in their local communities make a decision as to how many
teachers they wanted or how many new schools they want.

Let us just look at child care. Let us look at another way to deal
with the child care issue.
Would it not be much better if, instead of Washington taxing people
and getting the money to Washington, that instead of that, getting that
money out here and spending 40 cents on the dollar in the bureaucracy,
would it not be a whole lot better if Washington just said we are going
to tax all of our families less? The government says we are going to
tax our families less, leaving more money in their homes.
In fact, that is exactly what happened last year. Last year, in the
tax cut package, the decision was made that, rather than develop some
new program called Washington-run child care, that we would, instead,
leave $400 per child under the age of 17 out there in the homes and in
the families.
So instead of Washington collecting the money, spending it on a
bureaucracy and deciding where it should go back to, Washington simply
said to the working families, for every child under the age of 17, keep
$400 out there, and you decide whether that $400 is best spent for new
shoes or whether it is best spent for child care.
Instead of Washington making the decision after losing lots of the
money in the bureaucracy, the people are making the decision. The
families are making the decision. Is that not a much better way? I
guess it all depends on who you believe is best prepared to spend the
people's money, the people here in this city or the people out there in
America.
With that, I am going to switch. I want to stay focused just a little
bit on what Washington means by a balanced budget, because that is
absolutely essential in terms of understanding the problems that we
have here in this city as it relates especially to Social Security.
Washington's definition of a balanced budget is that the total
dollars being collected from the taxpayers is equal to the total
dollars that Washington spends. Remember, some of those dollars we are
collecting from the taxpayers are for things like building roads.
So when you fill your gasoline tank up and you pay a Federal tax on
that gas tank, part of that money is dollars coming into Washington.
Those dollars aren't even being spent to build roads. Part of that
money is Social Security money.
So when they add up all the dollars coming in and they look at all
the dollars going out, if those two numbers are equal that is called a
balanced budget in Washington.
Now, as this relates specifically to Social Security, remember that
part of those dollars in is $98 billion extra coming in for Social
Security. So we need to be very concerned that we do not get confused
of what we mean by a balanced budget or a surplus.
I, again, am going to show the President's numbers since the other
budgets have not been produced this year, but the other budgets are
basically the same.
The President's budget says in the next fiscal year that we are going
to have revenue of $1,743 billion, and we are going to have expenses of
$1,733 billion. That, of course, leaves a $10 billion surplus.
But I want to show you the fallacy in talking to the American people
this way. The fallacy is that, if you take Social Security out of the
picture, the revenues are now $1,241 billion; and, remember, the
difference in these two pictures is that we have set Social Security
aside.

[[Page H665]]

{time} 1345

When we take Social Security out, the revenues are $1241 billion, the
expenses are $1337 billion, and instead of talking about a surplus, we
actually have a shortfall of about $96 billion. The facts are that
today when we talk about dollars in equal dollars out, that is the
Washington definition of a balanced budget and before we are too hard
on them, remember they have not even balanced the budget that way since
1969, but let us also remember that we have a long ways to go before we
start accepting this concept of new Washington spending programs. Let
us remember that whenever there is a new Washington spending program
initiated, that it is simply going to make that bottom line worse. We
have a long ways to go in this great country of ours.
I have brought with me a few more pictures here. I always believe a
picture is worth a thousand words. Whenever I am out in Wisconsin, they
would much rather have a picture than a thousand words. Most people do
not want to listen to a politician give them a thousand words. These
pictures help us understand some of the seriousness and severity facing
our country. When I talk about this next chart I get very serious about
it because this is a serious problem facing America. What I have on
this next chart is how the debt facing our Nation has grown from 1960
through 2000, including the projections through 2000. One can see,
looking at this, from 1960 to 1980 that the debt facing our country did
not grow very fast. But from 1980 forward it has grown off the wall. If
we hope to have a future in this great Nation that we live in, if we
even hope to have a future in this country, we have got to stop this
growing debt. We are here on this chart right now today. It is a very
serious problem facing our country.
Now, I said 1980. I know all the Democrats out there are going,
``Sure, that was the year Ronald Reagan, the Republican, took office
and it is the Republicans' fault.'' I know all the Republicans out
there are going, ``Those Democrats spent like crazy in the 1980s. And
because they spent so much money it is the Democrats' fault that we
have this picture to look at.'' I would like to point out that it does
not matter whose fault it is at this point and whether you are Democrat
or Republican, I think it is our responsibility as Americans to solve
these kinds of problems facing this country if we hope to preserve this
Nation for future generations.
Looking at this picture, knowing that we are way up here on this
chart, should encourage us to do the right thing as we look at the
budgetary matters going forward. I also wanted people to see the actual
number that is involved because it is a pretty staggering number. The
United States government is now $5.5 trillion in debt. That is, they
have spent $5.5 trillion more than what they were willing to collect
from the American taxpayers in taxes, basically over the last 15 years.
Let me translate that number, since that number is so big, into
something that makes a little more sense. If we take that $5.5 trillion
and divide by the people in the United States, we would find that every
single American, man, woman and child, is now responsible for $20,400
of debt. For a family of 5 like mine, I have 3 kids and a wife at home,
for a family of 5 like mine the United States Government has borrowed
$102,000. Again, basically this has all occurred over the last 15
years. It is a staggering, staggering sum of money. The kicker in this
whole picture is that we are paying real interest on this money. The
real interest that we are paying amounts to $580 a month for every
group of 5 people. It is being paid. It is being paid by collecting
taxes from the American people. Every month every group of 5 people in
America pays $580 to do nothing but pay interest on the Federal debt.
It is an absolutely staggering number when we think about it. A lot of
people do not think they pay that much in taxes. But the fact is every
time you walk in the store and do something as simple as buy a pair of
shoes, every time you do something as buy a pair of shoes for your
kids, the store owner makes a profit on that pair of shoes and part of
that money actually gets sent to Washington, D.C. in taxes. One dollar
out of every $6 that Washington spends does absolutely nothing but pay
the interest on this debt.
It is interesting to look at and to think about how it is that we got
to this particular situation. When we look back on the past, most
Americans remember the Gramm-Rudman-Hollings Act of 1985 and the Gramm-
Rudman-Hollings revision of 1987 and folks remember the budget deal of
1990. They remember hearing all these different promises, how
Washington was finally going to balance the Federal budget. Every time
they heard the promise, their hopes got up. Then they found out
Washington, the Government, did not balance the budget. They got
another promise and their hopes went up again. They got another
promise, their hopes went up again. They kept getting this demoralizing
news that in fact Washington, our Government, had not done what it
promised to do.
I have a picture here of one of them. This is the Gramm-Rudman-
Hollings Act of 1987. But they were all the same. The 1985 one, the
1990 deal. They were all the same. This shows where the deficit was
going to go to zero. In this particular bill the promise was by 1993.
The red line shows what actually happened to the deficit. These
promises were broken and broken and broken and the American people got
very cynical, myself included. One of the reasons I ran for office in
1994 is because of this picture. But this is not all of the picture.
The folks looked at this picture and they saw that gap out there, that
deficit of $200 billion, and the people in Washington said, ``We have
got to solve this problem. This problem is serious.'' The only way they
knew how to solve the problem was reach in the pockets of the American
people and raise taxes. That is what they did in 1993. Some people
remember Social Security taxes went up. The money was not even put in
Social Security. Gasoline taxes went up by 4.3 cents a gallon. The
money was not even spent on building roads. The bottom line is they
reached into the pockets of the American people and they brought more
money out here to Washington with the idea that if they just got more
money out here in Washington, they could maintain the Washington
spending programs and still balance the budget.
What happened in 1993? The American people, got very, very upset in
this country. They said, ``We did not want you to raise our taxes to
balance the budget. What we wanted you to do is get spending under
control in Washington, D.C.'' So in 1995, they elected a new group of
people.
In fact, at that point for the first time in a long time, we have
Republicans controlling the House of Representatives, Republicans
controlling the Senate, and a Democrat President. That is the situation
we had in 1995, the first time in 40 years that we had that situation.
The problem was, this stuff in the past with all these broken promises
that made the people so upset, the problem was convincing the folks in
Washington, D.C. that the right thing to do was control Washington
spending as opposed to reaching into the taxpayers' pocket and taking
out more money. So we laid out a plan. The plan was to control
Washington spending and get us to a balanced budget. We laid out a blue
line like they had done before saying we are going to get to a balanced
budget in 2002. We made our promise. What did the American people do
when they made that promise? They yawned. They said, ``It can't happen.
We've been promised before. Why should we believe this group is any
different?'' We are now in our third year of that plan, completed the
third and into the fourth year.

The facts are that we have not only hit our targets and projections,
but we are far ahead of schedule. For the last 12 months running, the
United States Government for the first time since 1969 did not spend as
much as money as it had in its checkbook. Think about this. The first
time since 1969. It is in the books. For the last 12 months running,
our government did not spend more money than it had in its checkbook.
What an amazing accomplishment, 3 short years in, and, I would point
out, 4 years ahead of what was promised to the American people.
There is a significant change in Washington, D.C. I know there are
problems with Social Security that we talked about earlier. There are
bad problems and they need to be solved. But to not recognize the
difference in these two pictures using the same definitions, using the
same Social Security

[[Page H666]]

money, to not recognize how much this city has changed in 3 short years
would be a mistake. This is a monumental accomplishment to be at a
point where we have actually reached a balanced budget and are running
a small surplus. Albeit under a definition that I do not like very
well, the point is it is still the first time since 1969 that this has
been accomplished. I know that out there in America, every time I say
this, I have all kinds of people say to me in our town hall meetings,
you politicians are taking credit for our hard work. In fact, the
economy is doing so good and it is doing good because we are out here
busting our tails. As we bust our tails, we make more money, which is
good, that is the American way, that is good. We make more money. Then
we pay more taxes and with Washington having all that extra revenue how
could you have possibly messed it up? Partly that is true. In fact,
people are working very hard out there. They are being more successful.
I am happy to say there are stories all across this country where
people have lived the American dream and they are being successful.
When they are successful they do pay more taxes and revenues are up in
Washington, D.C.
So a lot of the credit for this is because people have done the right
thing, worked very hard, and in fact are paying more taxes, more
revenue to Washington, D.C., which is why we can also reduce taxes, I
might add. But there is another side to this picture that I think is
important. Between 1969 and today there have been strong economies
before. Every time there was a strong economy and extra revenues came
into Washington, Washington very simply spent the money. They did not
balance the budget. They have had this opportunity before. We have had
strong economies between 1969 and today. And every single time we had a
strong economy, Washington simply raised the spending to match up with
the extra revenues. That is where this Congress should deserve some of
the credit for changing that. This red column shows how fast
Washington, or government spending was growing before we got here in
1995. This blue column shows how fast Washington spending is growing
today. In fact, the growth rate of Washington spending has been slowed
from a 5.2 percent to a 3.2 percent. Let me even go one step further.
When we look at the growth rate of Washington spending last year, for
the first time in eons, with one exception, Washington spending grew at
a slower rate than the rate of inflation. Translation. Washington
actually got smaller in real dollars. Last year the growth rate of
Washington, or government spending was lower than the growth rate of
inflation. That is not the picture we had before we got here.
What we really have going on right now today is we have two things
happening simultaneously. We have a very, very strong economy, which
generates additional revenues to Washington, D.C., that is the American
people and they deserve the credit for it, coupled with a Washington, a
government that has understood that what the American people want us to
do is control Washington spending. We are bringing Washington spending
under control in the face of this extra revenue.
I want to challenge each one of my colleagues today to do something.
I would like them to look back in our 1995 budget plan and I would like
them to look at the projection as to how much money we were going to
spend in fiscal year 1997. I always do this in a fun way out at my town
hall meetings. I ask the folks which one do you think is most likely to
happen. Do you think it is more likely for a Martian spaceship to land
in your backyard, they come in, have coffee and head back to Mars, or
Washington got $100 billion of unexpected revenue and did not spend a
nickel of it? What happens is a lot of our folks go to the coffee pots
to welcome the Martians because they do not think it is possible.
But if my colleagues would take the time to look back at our budget
plan that we laid out in 1995, we laid out our projected spending for
fiscal year 1997, we actually underspent that number by over $20
billion. At the same time the revenues that we expected were up by $104
billion. So Washington got more than $100 billion of expected revenue
and reduced spending from the plan by $20 billion.
It is a minor miracle what has happened in this city. Where does that
really leave us? It seems to me that leaves us with 3 very significant
problems facing our Nation today. After we get the budget balanced,
taxes are still too high. I find very, very few people out in
Wisconsin, and I see my colleague from South Dakota has joined me. I do
not know what he finds in South Dakota. Does the gentleman find there
are a lot of people that think taxes are not too high out in South
Dakota?
Mr. THUNE. That is not what I have heard lately. I want to credit the
gentleman from Wisconsin for the lead that he has taken on this
important issue. Because clearly in this country, and we have seen the
statistics of late that the tax burden in America is higher as a total
than it ever has been since 1945, and secondly, each individual family
pays higher taxes today than they ever have. To suggest for a moment
that Washington has gotten spending habits under control would be a
misnomer. We have some huge problems looming out there in the future. I
think the approach that the gentleman from Wisconsin (Mr. Neumann) and
his legislation has taken on that is an important step forward in
addressing not only the $5.5 trillion debt that we have already piled
up out there and what is going to happen when the Social Security bills
start coming due.
Mr. NEUMANN. Those are the other two issues we have here. The 3
problems we have, and the gentleman just mentioned the other 2, the 3
problems we have left are taxes are too high. We still have a $5.5
trillion debt staring us in the face and the Social Security issue
which we discussed in great detail earlier here in the hour.
We have two pieces of legislation, and I know he is a cosponsor on
these bills. The first is the Social Security Preservation Act, which I
spent a lot of time earlier in the hour, that simply says that the
money coming in for Social Security gets put into the Social Security
trust fund. It is very much a common sense approach.
The second one, I know the gentleman is a cosponsor on this. Why do I
not let him take it a little on the second. Go ahead.
Mr. THUNE. I just happen to believe the approach the gentleman has
outlined in his legislation is one that will give us the discipline,
require us to have the discipline that is necessary, because frankly if
we do not do something in the area of addressing the $5.5 trillion of
debt, it is going to accumulate.
As the gentleman mentioned earlier, we continue to borrow from the
Social Security trust fund, which is a significant problem. Another
issue which his first piece of legislation addresses, that we ought to
keep those funds separate. That the dollars that come in ought to pay
for future benefits and we continue to borrow against that and add to
this already growing national debt, which means that every year as we
go through the appropriations process, before we pay for anything else
we have to write the check for interest, which is $250 billion a year.
I might add if we sat down and figured that out, that is every personal
income tax dollar collected west of the Mississippi River and then
some. This is a huge problem. What he has done in his legislation is I
think taking a very systematic approach, not only to addressing the
$5.5 trillion of debt by saying that each year government cannot spend
more than 99 percent of what it takes in, I think that is critical and
based on current economic assumptions by 2026, we would have wiped out
the debt, but also, secondly, to address the issue of Social Security
and how are we going to, long term, deal with that important issue.
The other thing that I think is very attractive about his plan is it
puts two-thirds aside for those purposes, but then after having said
that, it also allows that any dollars that are left over ought to in
fact go back to the taxpayers. Of course, I have some ideas about how
best to do that. But I want to credit him for the work that he has done
in fashioning an approach which in a very systematic, deliberate way
addresses the long-term problems that this country faces, because I
think far too often we here in Washington deal with the short term,
which is politically expedient, to the detriment of our children's
future.

[[Page H667]]

{time} 1400

And frankly we just cannot afford to wait any longer, and so I think
your approach is the correct one and one which I hope we can debate
here in the Congress and continue to build support in favor of.
Mr. NEUMANN. Especially as it relates to Social Security. You know
this is becoming a short-term problem as opposed to a long-term
problem. We know that the numbers in social security, the dollars
coming in versus the dollars going back out to seniors turn around by
not later than the year 2012. So we know sometime between now and 2012
there is a cash shortfall in the Social Security Trust Fund, and I see
all the people in this city, and it has got to be shocking to you, too,
as a first-termer here like it was to me last time, these people run
around the city beating their chests saying those IOUs are backed by
the full faith and credit of the United States Government, and it is
absolutely fascinating to me that when they say that, it like
dumbfounds them when you ask the next question because the next
question that Americans would ask is where is the United States
Government going to get the money to make good on those IOUs when the
shortfall occurs?
And there is no good answer for that question. The only answers that
I can see is one of three choices. One is they could raise taxes, and I
do not know how you feel, but I know how I feel. Why do you not tell me
how you feel about raising taxes?
Mr. THUNE. Well, again as you have noted, there are some solutions,
none of which is very attractive and very palatable, and raising taxes
is not going to be the solution to this because that is the solution
that we have gone to in the past as a fall back, and what it has gotten
us is bigger and bigger government here in Washington and less focus on
the real problems that are out there. But we do. There is no question
about the fact that actuarially this program just has to be dealt with
because each year we start borrowing more and more from the trust fund.
We fill it with IOUs and at some point the IOUs are going to have to
come and, you know, have to be paid back, and the natural question for
any average person is going to be, well, where do you get that? And the
answer is we borrow more money from your future.
Mr. NEUMANN. That is a second possibility, but if we borrow more
money, that just keeps making our debt bigger and bigger, and if the
debt keeps getting bigger and bigger, the interest payment keeps going
up higher and higher, and what we are passing on is a legacy to our
children and our grandchildren that is more and more taxes that they
have to send to Washington to do nothing but pay interest on the
Federal debt.
So I sure do not like the idea of higher taxes, and I sure do not
like the idea of borrowing more money, and the idea that somehow in
Washington we are going to miraculously reduce spending elsewhere so
that we do not have to raise taxes or borrow more money, that is just
not going to happen.
So when the Social Security IOUs come due, if we have not taken the
action, and again let me make it very clear that if we do enact the
Social Security Preservation Act, the Social Security Preservation Act
puts real dollars into the Social Security Trust Fund so when the
shortfall occurs, you go to the Social Security Trust Fund much as you
would go to a savings account and get the assets out. You cannot do
that today because they are IOUs, they are nonnegotiable, nonmarketable
bonds.
So the Social Security Preservation Act puts real money there so that
instead of raising taxes or borrowing more money, I cannot hardly get
that out of my mouth, it is so scary and so detrimental to our
children's future that instead we have a different alternative. We have
a logical planned approach to put money away in a savings account so
when this occurs, and we know it is going to occur, that we are
prepared for the occurrence instead of dealing with crisis management
where we have to either raise taxes or reduce benefits to seniors, I
guess, is another possibility. I will not do that either.
Mr. THUNE. And if the gentleman would yield, that is the traditional
Washington solution. It is again a view to the short term rather than
the long term.
Mr. NEUMANN. Right.
Mr. THUNE. And we just have, we do not have any alternative, I think,
at this point in time other than to say that we are going to enact the
type of discipline that is necessary to ensure that when, in fact,
these liabilities, responsibilities that we have, come due that we are
prepared to cope with that, and I think that, again, the notion of
building the fire wall between the Social Security Trust Fund and
getting away from the timeworn Washington practice of trying to conceal
and emasculate the total size of the deficit and the debt and
everything else that we are dealing with here is something that is long
overdue and certainly something I want to be a part of, and of course,
at some point, too, I believe that, and your plan calls for having done
that to the extent that we realize additional revenues, that it should
not go into more Washington spending.
And I think that is a false alternative that is being created by
folks out there, including those at the White House that somehow this
is about cutting taxes or saving Social Security. I think what we are
saying is a matter of policy, that we agree that Social Security, the
debt has to be paid back, but then to the extent that those additional
revenues are generated because the economy is growing that we ought to
give those back to the taxpayers, whose they are in the first place and
who ought to have first claim to them, and I have already today been on
the floor and talking about a proposal that I have that I think would
do that in a fair, evenhanded way and one that is getting great
interest back in my State of South Dakota.
The taxpayers are paying attention, and I think the opportunity to
get out there and do something, these are a few things that ran in the
newspapers back home, and the Investors Business Daily as well wrote
something here talking about real tax relief, tax relief that is broad-
based, not targeted, where Washington picks winners and losers and also
leads us toward the goal of a new Tax Code for a new century, which
should be our goal in a way that will simplify rather than complicate
this enormous burden that we have placed on the taxpayers in this
country, both individuals and families and businesses as well.
But I appreciate the hard work that you are doing and look forward to
working with you toward that goal.
Mr. NEUMANN. You know we should, and I know we want to jump to my
colleague from Michigan. I just want to wrap this part up by saying
very specifically that the Social Security Preservation Act would
require the Social Security dollars coming in this year be put into the
Social Security Trust Fund. The National Debt Repayment Act, as it
relates to Social Security, would look at the dollars that have been
taken out of the Social Security Trust Fund over the past 15 years, and
as we repay the Federal debt, it would also repay the dollars that have
been taken out of the Social Security Trust Fund.
So there are two separate pieces of legislation here. They are both
needed. The Social Security Preservation deals with this year's Social
Security money. The National Debt Repayment Act pays off the entire
debt so that we can pass this Nation on to our children debt free. In
doing so, it puts the money back in Social Security that has been taken
out over the last 15 years, and like you mentioned in the National Debt
Repayment Act, we take two-thirds of the surplus and dedicate it to
debt repayment, including Social Security as a priority. The other one-
third is returned to the taxpayers.

Mr. THUNE. That is commonsense legislation, and that is probably the
problem with it in this city. But in any case I hope that these bills
move forward.
Mr. NEUMANN. I would like to yield to my friend and colleague from
Michigan.
Mr. HOEKSTRA. I thank my colleague for yielding. I cannot tell you
the excitement that I feel to see first term Member, a second term
Member, and it is my third term, and just reflecting back on when I
came to Washington in 1993, if we had projected in 1993 that we would
be approaching the point where we would be talking about what to do
with the surplus and that we would be there by 1998 or 1999 people
would have said you are crazy, because if you remember back.

[[Page H668]]

Mr. NEUMANN. I just need you to stop for just 1 minute. I would just
like to point out for my other colleague that makes him a senior
Member.
Mr. HOEKSTRA. That makes me senior, that is right.
But you know we came here in 1993, and within, I think, you know, the
first 6, 8 months, the deficits were projected to be $200-$250 billion
per year as far as the eye could see. The only way that we were going
to stimulate the economy was by increasing Washington spending, and the
only way to even try to get the surplus would not be by putting a
discipline into Washington spending, but by increasing taxes because
obviously Washington would know how to spend your money better than
what you would. And now 5 years later, I mean, you know, Mr. Neumann
came in and helped us take the majority.
You are helping us and setting us on a new agenda or implementing
this agenda where we are now close to being at surplus, and now what we
need to do is we need to put the discipline in place and make it an
institutional criteria that every year we will have a surplus and every
year we will work on paying down our debt, reforming entitlements and
reducing the scope and the influence of Washington government.
But we, you know, made a major step on a problem in 1993. We thought
we could not solve, $250 billion deficit, spending of about 1.6
trillion per year, and people said you cannot get there from here or
you got to have a 10 or a 15-year plan.
Mr. NEUMANN. If the gentleman would yield for just a minute, you will
recall that back in 1994, when we first got here, early 1995, and I
know you worked with us on it, we did put a plan on the floor that said
we can get there from here, and as a matter of fact, many of the things
that were in that plan only got 89 votes that year, but many of the
things in that plan have come to reality, and they are fact as of right
now today.
Mr. HOEKSTRA. And I would propose that the same kind of focus and
enthusiasm and energy that we have put behind the problem in 1995 of
addressing this deficit and addressing the debt, we have come a long
way and we got a long way to go, but we are on the right road, is the
same kind of energy, enthusiasm and commitment that we need to put
behind education.
In 1993, the early 1990's, the deficit was identified and the debt
was identified as critical long-term problems that if we did not
address them we were going to give our children an America that was not
going to be as good as the one that we got from our parents.
Mr. NEUMANN. So does that mean we want more Washington programs or
government run from Washington programs for education?
Mr. HOEKSTRA. Well, I do not think so. We, you know, what I have been
involved in and almost all of 1997, I think we have had 22 different
hearings around the country. We have been in 14 different States taking
a look at what works and what does not work in education. We have also
taken a look at how our children are scoring on international tests. A
study came out again this week. I think out of 21 countries we are near
or at the bottom in a number of different categories.
That is unacceptable. We cannot expect to compete on an international
basis in a number of global industries if our kids are continuing to
score at the lowest levels of any kids in the world.
Mr. NEUMANN. I have got a question for the gentleman. You may not
know this answer; I did not talk to you about this ahead of time. I
apologize if you do not. But when that study came out, you said we
scored it near the bottom in many categories in this 21-country study
in education. Was there information regarding how much money is spent
on education in America by comparison to the other countries?
Mr. HOEKSTRA. I do not know if that study identifies how much money
is spent per student in each of these countries. That was a question
that we had asked, and we are going to go back and try to get that
information because the question that we asked, is it an issue of
money? You know, that if America just spends an extra $500 or $1,000
per child, we will see better results.
I can tell you as we have gone around the country, it is not an issue
of spending more money. We have gone, and the best example is taking a
look at what is going on outside of this building in this city where we
in Congress really have control over the school system. We spend on
average about $10,000 per student.
Now I come out of west Michigan. We spend about 56, $5,700 per
student. It varies throughout my district, but in that neighborhood.
Here in Washington, D.C. we spend about $10,000 per student. And you
say, wow, we must have some of the best schools, the best technology,
the best buildings, the best teachers, and we ought to be getting great
results in this school system here in D.C.
It is not what is happening. We are getting terrible results. We are
failing 60 to 80,000 children each and every year who are getting
substandard education, and they are not going to be prepared to go out
and compete. It is a huge problem.
Mr. NEUMANN. So you are telling me then that the system that the
Congress has the most influence over is one of the most high priced in
terms of dollars per student and is producing some of the worst
results. Would the logical conclusion be that maybe Congress should not
have as much influence and that maybe education should be returned to
the parents and control of education returned to the parents and the
community and the teachers and the school boards out there locally,
take the control out of Washington and put it back in the hands of
parents where it belongs?
Mr. HOEKSTRA. Well, let me give you another couple of statistics, and
we can maybe reach a conclusion today. That was a question that we
asked earlier in the process. We went out and we went to local schools
and we talked to parents, we talked to teachers and we talked to
administrators, and they said tell us what is working in your schools.
And there are some phenomenal success stories around the country that
schools are working well, teachers are doing a great job, classrooms
are being effective.
So you ask them why is your school working, and they give us great
reasons: parental involvement, technology, and the answers vary from
one school district to another because the needs in one school district
and the students coming in are very different from one school district
to the other.
The interesting thing was nobody ever said this Federal program, and
you would think that when you have 760 different education programs
coming out of Washington, and you know that is maybe one reason you and
I would say, hallelujah, it is a good thing we have got an education
department so that we have got one place that coordinates all 760
programs.

{time} 1415

You take a look and say, whoa, no, that was the vision of the
Education Department when it came out, that it would be the focal point
of education in the Federal Government. But with 760 programs, they go
through 39 different agencies, and they spend $100 billion per year out
of Washington.
This system also ensures that when your parents from Wisconsin send a
dollar here to Washington, they would like to get it back. So to get it
back, we develop all these programs and forums, and we send the
programs back to Wisconsin. And guess what the people in Wisconsin have
to do?
Mr. NEUMANN. Fill out some papers.
Mr. HOEKSTRA. They have to fill out some papers. So they send fill
out papers, and send them where?
Mr. NEUMANN. Back to Washington.
Mr. HOEKSTRA. Back to Washington. We go through them and say whoa,
you might have been lucky and got it all through the first time. We
say, it looks like Wisconsin is qualified to get X amount of dollars,
so we send the dollars back to you and you can do what you want with
them, right?
Mr. NEUMANN. No, that is not right. Does it not cost money to have
somebody fill out all these papers, first off, and to have Washington
send them back to Wisconsin? Out of the tax dollar we are collecting
and sending to Wisconsin, all you are describing so far is not doing
anything to help the students back in Wisconsin.
Mr. HOEKSTRA. I do not think the gentleman needs to worry about that,
because we are fairly efficient here in

[[Page H669]]

Washington, because when you send that dollar to Washington and we
figure out how to send it back to you, remember, also when you get the
money, we do not let you just spend it. You have to send back to us a
report on how you spent it.
Mr. NEUMANN. Does that not cost money too?
Mr. HOEKSTRA. That costs money. We know you are probably not going to
tell us the truth, so that means we have to send auditors into
Wisconsin.
Mr. NEUMANN. Does that cost money?
Mr. HOEKSTRA. It costs money, but it is not that much. Really, we
have taken a look at it. When you sends a dollar and we send it back,
for every dollar you send us, we only take 30 to 40 cents, to make sure
you spend the 60 cents left in the way we want you to spend it.
Mr. NEUMANN. In order to have a Washington-run education program, we
are going to tax the people in Wisconsin one dollar, and, assuming they
get a dollar back, they are only going to get 60 cents to help the kids
in the classroom. The rest of that money is going to be spent on all of
this paperwork that first applies for it, that gets reviewed by
Washington, that gets corrected in the application. The money gets sent
out, then they send a report verifying how they spent the money,
Washington reviews that report and sends out some sort of administrator
to enforce the report. That is costing 40 cents. It does not sound like
this helps my kids at all. So the other 60 cents might get to the
classroom.
Mr. HOEKSTRA. Does the gentleman have a problem with that? I will
yield.
Mr. NEUMANN. I have a big problem with that. I know my colleague does
too.
Mr. HOEKSTRA. Yes.
Mr. NEUMANN. It sure is frustrating to be in a system where we
recognize that those tax dollars that are so important that they get to
our kids to help them with the most advanced technology, to get the
computers in the classrooms, to do what the President talked about
doing, getting more teachers available in the classrooms, it is so
important to get those dollars out there to help the kids. Why is
Washington wasting them on all this bureaucracy? Why not leave the
money in Wisconsin and let them decide how to handle it, so they get a
dollar back for a dollar spent?
Mr. HOEKSTRA. If the gentleman will yield, the reason we do not is
because we believe that bureaucrats here, and you and I had this
discussion a couple of years ago when Wisconsin took the lead on
reforming welfare, where in Wisconsin the legislature and the Governor
said this is what we want to do, and people in Health and Human
Services who had never seen a cheesehead said--
Mr. NEUMANN. Hey, be careful with that.
Mr. HOEKSTRA. I know, but the Lions are going to get you next year.
But they said no, you cannot do that. And the people in Wisconsin are
saying, wait a minute. If our Governor and State legislature want to do
that, why are people in Health and Human Services saying no?
We have the same problem with education. You have things you are
experimenting with, trying to help the kids in Milwaukee and in your
district, trying to get money into the classroom, and, like I said,
when we have gone around the country, that is where the focal point is.
That is where the rubber hits the road.
You have got to get the money into the classroom to help the teacher,
to get the technology there, to get the textbooks there. But that is
the critical link. All of this other stuff, of the paper flying back
and forth, has not helped one child one bit, and that is why I think
the gentleman is supporting this, and that is why we passed the
resolution last year.
That is a step in the right direction. It does not get us where we
need to be, but it was the Pitts Resolution that said we have to strive
to get 90 of 95 cents of every Federal education dollar into the
classroom, helping the teacher improve the skills of the child in that
classroom.
Mr. NEUMANN. Does that mean there will have to be less paperwork and
less bureaucracy and less forms and less time spent on those forms and
the paperwork and bureaucracy?
Mr. HOEKSTRA. Absolutely. What we want is we want parents and
teachers and local administrators deciding what they are going to do
for their children and their school, based on their needs, and that is
a very different vision than the vision that our President has of
education. The President believes that the responsibilities for these
types of programs need to be moved to Washington. This president wants
to build our schools, and he want to build them according to Federal
regulations, which means we cannot really get competitive bidding, so
the price of construction goes up by 10 to 15 percent. He wants to
certify our teachers.
Mr. NEUMANN. Would the gentleman yield? We talked a little earlier in
the hour about building schools. The price does go up by 10 to 15
percent. Remember, when Washington collects these dollars, 40 cents on
the dollar is lost just on the bureaucracy.
That 10 to 15 percent is the cost of construction going up. So you
not only have to collect extra dollars to pay the bureaucracy, you also
have a higher cost in construction because of the Federal Government
regulation red tape. We could be talking almost a 50 percent increase
in cost before you are done.
Mr. HOEKSTRA. That is right. For education, we know that the Federal
Government has to be defining the standards for our schools and our
local districts, because we have never built a school before, right?
Mr. NEUMANN. Right.
Mr. HOEKSTRA. How crazy that we would do that, and we would do it
here in Washington and set the standards from Washington, when we have
been building schools for years at the local level, and that is what we
need to do.
Mr. NEUMANN. What is also interesting in this school discussion, we
have got school districts in our district that have just built new
schools. So are we going to go into the taxpayers' pockets in
Janesville, that just built a new middle school, get those dollars out
of the Janesville taxpayers', even though they just built their own
school pockets, get them out here in Washington, and spend 40 cents on
the dollar on the bureaucracy?
I can guarantee you Washington is not going to make the decision to
return that money back to Janesville, because, after all, Janesville
just built a new school.
So what we are really saying is in those communities that have
already taken the responsibility for education very seriously, like my
hometown of Janesville, Wisconsin, those communities are now going to
be punished for making the decision they made, building the new school
because that was right for education in their community. Because
Washington is still going to collect tax dollars from those people,
even in the communities where they built the new school, and then
Washington is going to make its decision where to send the dollars. I
guarantee you, it is not going to be back to them.
So they are paying for a new school because they know how important
education is. We did in our town, and we believe in education. So we
are already paying higher taxes to pay for that school.
Now, is it fair that we are also asked to send money to Washington,
of which only 40 percent is going to bureaucracy and 60 percent to some
other school district? That just does not seem reasonable to me, that
we would be willing to do such a thing.
Mr. HOEKSTRA. That is why so often we are viewed as being
controversial, that we cannot see the logic in this system. I drive
through my district, and I have seen lots of new schools opening up. I
am saying these people are taking the lead, and they will be punished
for taking the lead. Next time they will be better off not solving the
problem and waiting for Washington to come in.
Mr. NEUMANN. I know we are getting very near the ends of the hour. If
we started through a list of things that you and I think are wrong and
we cannot understand the logic of, because we live out in the Midwest
in Michigan and Wisconsin, and I know there are other states across the
country with the same kind of common sense, but not here inside the
Beltway, it seems, we could be here for the rest of the week, much less
the rest of the hour.
Would the gentleman like to close?
Mr. HOEKSTRA. We do know what works in education. We do know that if

[[Page H670]]

we move responsibility back to parents, to the local level, the
teachers and local administrators, we can make it work. Now we need to
start implementing the steps to make that happen.
I thank the gentleman for sharing his time with me today.
Mr. NEUMANN. I appreciate the gentleman joining me for the hour.
Just to wrap-up what we have talked about this hour, we have talked
about Social Security and how much more money is coming into the system
today than we are paying back out to seniors in benefits; and we have
talked about how that money is supposed to be in a savings account, but
in fact today is being spent as parts of the overall budget process.
We talked about the Social Security Preservation Act, which would
force our government to actually put the Social Security money aside in
a separate fund, much like any pension plan in the United States of
America.
We have also talked about the problems remaining after we reach a
balanced budget, the problems of taxes being too high, the problems of
Social Security being repaid; because even when we start putting the
money aside today, there is still the $700 billion that has been taken
out over the last 15 years.
We talked about the problem of the $5.5 trillion debt, and a second
piece of legislation, H.R. 2191, called the National Debt Repayment
Act, that literally repays our Federal debt, much like you repay a home
loan.
That bill addresses all three of the problems. It takes two-thirds of
any surpluses that develop, and dedicates it toward debt repayment,
prioritizing the money that has come from the Social Security Trust
Fund. By doing this, we can restore the Social Security Trust Fund, we
can pay off the Federal debt, much like you may off a home mortgage,
and give this country to our children debt free. It takes the other
one-third of the surplus and dedicates it to tax reductions, hopefully
across the board. Hopefully we end the marriage tax penalty.
But the bottom line in this thing is for our children, they get a
debt-free Nation; for the workers, they get lower taxes; and for our
seniors, they get the Social Security Trust Fund restored. That is bill
number H.R. 2191, the National Debt Repayment Act.
I would like to close today just by encouraging my colleagues to join
us on each one of these bills so we can get them passed out of here and
do what I think is common sense for the future of this great country we
live in.

____________________