[Congressional Record Volume 144, Number 21 (Thursday, March 5, 1998)]
[House]
[Pages H890-H891]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. LaHood). Under a previous order of the 
House, the gentleman from South Carolina (Mr. Sanford) is recognized 
for 5 minutes.
  Mr. SANFORD. Mr. Speaker, I rise today because it was just a few 
weeks ago that the President of the United States in this very chamber 
said that we ought to reserve every dollar, every penny of a budgetary 
surplus and put it into Social Security. What was interesting about 
that to me is that basically what he was talking about, what he was 
outlining was the larger question of how we are going to save Social 
Security. In other words, if we take every penny of surplus and put 
that money where it belongs, which is in the Social Security Trust 
Fund, rather than borrowing from it, what we have done is we have taken 
a first step towards saving Social Security. But what that does, 
because of the way the budget works in Washington, D.C., what that 
would actually mean would be a pay-down of the national debt, which 
would be very good for Social Security, but again only a first step. To 
me what it raises is that larger question of how in fact do we save 
Social Security.
  Some people have said, yes, it is a good first step to put every 
dollar of Social Security tax into the Social Security Trust Fund, but 
the larger question is, since that does not affect the 70 million baby-
boomers that begin retiring in 2012, and since that is ultimately what 
we have to deal with, what we ought to do is look at cutting current 
benefits for current retirees.
  I do not think that that is at all a realistic option. When I talk to 
seniors along the coast of Myrtle Beach, along the coast of South 
Carolina, what they say to me is the idea of cutting current benefits 
is crazy, that Social Security is very important to each of their 
lives, and that that is not the way you are going to save Social 
Security.
  Other people have said, do you know what you ought to do is, you 
ought to raise payroll taxes on young people. And yet overwhelmingly 
what I hear from people across my district at home in South Carolina is 
that that is not a realistic idea, that you can only squeeze but so 
much blood from a turnip. And what they are saying is that they are 
squeezed. They are struggling to make a mortgage payment, to make a car 
payment, to provide for dollars for kids' education, and that the idea 
raising the payroll tax just is not the way to do it.
  Other people say the way we ought to look at saving Social Security 
is by freezing it. In other words, we ought to just fossilize it, leave 
it alone. We do not touch it. We leave it in a corner. Well, that would 
be nice. It is something I wish we could do. But the fact, again, is 
that we have got 70 million baby-boomers that start to retire in 2012. 
That is no fault of the designers of Social Security. It is no fault of 
anybody in the past, but is something that is coming our way, and we 
ought to, rather than simply freezing and looking at the problem coming 
in our direction, do something about it, which is what the President of 
the United States had said in the first step being let us reserve every 
dollar surplus towards Social Security.
  I think the bigger question, if we are not going to cut current 
benefits,

[[Page H891]]

which is not an option, if we are not going to raise payroll taxes, 
which is not an option, and if we are not going to freeze, standing in 
the corner, sort of fossilizing it the way the dinosaurs went, that 
only leaves one other option for saving Social Security. This other 
option I think ties straight back to what Senator Bob Kerrey, over on 
the Senate side, a Democrat, is talking about. He says, you have got to 
have a real rate of return, a real return on assets, if we are going to 
save Social Security over the next 50 years.
  We cannot save Social Security by having it offered to young people 
today at a suboptimal return. If it is only going to return to them a 
negative rate of return or a 1 percent rate of return over the course 
of their lives, we can be assured that Social Security as we know it 
will disappear over the next 150 years because the consensus in America 
is not going to be for a sustained rate of return of zero or 1 percent. 
So I think that the only option in saving Social Security is letting 
one earn more on their Social Security investment.
  The trustees have said, if we do nothing, Social Security begins to 
run shortfalls in 2012, it begins to run, basically run out of money in 
2029; that the average rate of return for everybody working and paying 
into the system is about 1.9 percent; and that for people born after 
1940, the rate of return is actually negative. Now, if you earn a 
negative rate of return, or if you earn a 1 percent rate of return, you 
do not end up with a whole lot at the end of the one's working 
lifetime.
  This idea of rate of return is very, very powerful in people's lives. 
If you take two 20,000-per-year workers, in other words, one fellow 
earns 20,000 and another fellow earns 20,000, they both go to work at 
exactly the same age, say they begin work at age 25, and they work 
until they are 65. If one earns 1.9 percent on your rate of return 
based on present Social Security taxes, you end up with $175,000 in the 
bank.

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