[Congressional Record Volume 144, Number 34 (Tuesday, March 24, 1998)]
[House]
[Pages H1384-H1385]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Hefley). 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 would like to spend a couple of 
minutes talking about the future of Social Security. Last Saturday 
there was a National town hall type discussion among citizens in 10 
cities of the country linked by interactive television. The purpose was 
to discuss the problems of Social Security, and possible solutions. I 
compliment the Pew Foundation for starting this kind of discussion that 
I think is so vital in deciding how we make Social Security more 
secure. The first step is to understand what the problems are and 
understand the seriousness of the problems in terms of keeping Social 
Security solvent.
  I was asked to participate with President Clinton, with both of us 
making statements and listening to suggestions. Speaking at Cobo Hall 
in Detroit I said there were certain guidelines that need to be adhered 
to as we move ahead on solving Social Security. Number one, that it be 
bipartisan; number two, that we need to keep all solutions on the table 
in our discussions over the next several months in looking at the best 
possible ways to keep Social Security solvent; number three, that we do 
not reduce the benefits for existing retirees or near-term retirees; 
number four, that we have a system where our kids and our grandkids, 
and their children can have retirement incomes that will last them 
through their expected longer life span, and; number five, that we stop 
government using Social Security Trust Fund money in exchange for non 
marketable I.O.Us. Finely, that we have a system that is not going to 
be privitized, but rather a system that allows forced saving and 
investment in retirement accounts owned by the worker.
  Let me very briefly describe some of the problems in Social Security. 
Right now, because it is a pay-as-you-go program, where existing 
taxpayers pay in their Social Security tax and immediately that tax is 
used to pay out benefits, to existing retirees. It is sort of a pay-as-
you-go system, in effect a Ponzi scheme. When we started this program 
in 1935, it was easy to keep the system going because actually at that 
time the average age of death at birth was 61 years old. That means 
most people never reached the age where they would draw any benefits. 
They would give up what money they and their employers had put into the 
system. Over the years since 1935, every time there

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was a little more money coming in than was necessary to pay out 
benefits, politicians in this city made popular decisions to expand the 
benefits. Every time there was less tax money coming in than required 
to pay out those expanded benefits, Congress and the President would 
increase the Social Security tax on working Americans. Actually since 
1971, Social Security, taxes on these working Americans, has been 
increased 36 times. More often than once a year since 1971 we have 
increased the rate or the base on the Social Security taxes. We started 
out taxing 1.5 percent on the first $3,500. Now it is 12.4 percent on 
the first $68,000.
  I would like to suggest as I conclude this, Mr. Speaker, that Social 
Security in its current configuration is not a good investment. The 
National Tax Foundation estimates that anybody that retires after the 
year 2000 will receive back between a negative \1/2\ percent and a 
negative 1\1/2\ percent on the money they and their employers put into 
Social Security. So if you could take some of this money and allow as 
an option some of the younger workers to invest in any return that is 
going to be greater than that kind of negative return in Social 
Security, then we are much better off.
  I suggest, Mr. Speaker, that it is so vitally important to preserve 
Social Security that we forget the rhetoric and get down to business. 
We get down to the nitty-gritty of the alternatives of how we are going 
to make it work. I mentioned when we started the program in 1935 the 
average age of death was 61. Today the average age of death at birth is 
74 years old for a male, 76 years old for a female. But if you are 
lucky enough to reach the retirement age, then on the average you are 
going to live another 20 years. There are fewer and fewer workers 
supporting more and more retirees. Hopefully voters, Mr. Speaker, will 
demand of the people running for office this fall that they have 
suggestions on how to proceed with this very serious problem of keeping 
Social Security solvent.

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