[Congressional Record Volume 144, Number 34 (Tuesday, March 24, 1998)]
[House]
[Pages H1412-H1413]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      CONGRESS MUST FACE UP TO SERIOUS PROBLEMS IN SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Bob Schaffer of Colorado). Under a 
previous order of the House, the gentleman from Michigan (Mr. Smith) is 
recognized for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, this last Saturday, the Pew 
Foundation, responding to the President's comments in the State of the 
Nation address, had a forum where 10 cities in the United States were 
linked together in interactive television. In each one of those cities 
there were 10 tables. At each table there were 10 participants talking 
about the problems of Social Security and what we might do with Social 
Security.
  One thing that came from almost all the cities was that we should 
stop using the Social Security trust fund money to mask the deficit and 
that we should stop using, taking that money, and in return giving 
nonmarketable IOUs.
  One point I made on Friday night, the Pew Foundation called me and 
said that they understood the President had requested time and asked if 
I would like to also have 12 minutes of time making my comments as far 
as the situation with Social Security. The first thing I said was my 
concern about using Social Security trust fund money to really mask the 
deficit.
  Mr. Speaker, I suggested that we really did not have a surplus in 
this country and that only because this current year we are borrowing 
about $85 billion from the Social Security trust fund, next year we are 
going to be borrowing closer to $100 billion from the Social Security 
trust fund, that borrowing is what is allowing us to say that we have a 
balanced budget.
  I think it is very important that we stop, in effect, hoodwinking the 
American people. Even though it is nice to brag about a balanced 
budget, the fact is that the only reason we are pretending the budget 
is balanced is because we are borrowing all of this money from the 
Social Security trust fund.
  I told the people, I was at Cobo Hall in Detroit in Michigan, and I 
suggested that there has got to be several guidelines as we proceed in 
making sure that Social Security stays solvent. Number one, that it be 
bipartisan. Number two, that all possible solutions be kept on the 
table. Number three, that we do not reduce the benefits for existing 
retirees or near retirees. Number four, that we have some kind of a 
system where our kids and our grandkids and their kids and grandkids 
can expect retirement accounts that are going to last them through what 
is expected to be an even longer life span, and that we have a system 
that is fair and equitable. That we not privatize the system, but 
rather that we have a system that allows forced savings and investments 
in accounts that are owned by the individual workers that can accrue 
dividends throughout their working lifetime.

[[Page H1413]]

  I pointed out an interesting fact from what has been suggested by the 
Tax Foundation, and that relates to the fact that there is unlikely to 
be a positive return on the money that is paid into Social Security by 
the employee and the employer. They estimate that anybody that retires 
after the year 2000 will have a return of between a negative one-half 
percent and a negative 1\1/2\ percent. Another way of saying the 
serious dilemma of Social Security is that if a worker retires after 
the year of 2015, then they are going to have to live 26 years after 
they retire in order to break even and just get back the money they and 
their employer put in.
  Part of the problem is that when we started Social Security as a pay-
as-you-go program where existing workers pay in their tax to pay for 
the benefits of existing retirees, the average age of death in this 
country in 1935 was 61 years old. That meant most people never lived 
long enough to collect anything from Social Security, but simply paid 
in their money.
  Now the average age of death is 74 years old for a male and 76 years 
old for a female. But if Americans are, I will say, lucky enough to 
live to retirement age, age 65, then on the average they are going to 
live another 20 years. At the same time, we have more people living 
longer, we are seeing a larger population that are retired because of 
the decline in the birth rate after the baby boomers of World War II, 
and we have a smaller and smaller number of people working.
  In 1942 we had 40 people working, paying in Social Security tax for 
each retiree. By 1950 it got down to 17 people. Today guess what it is. 
Today, Mr. Speaker, it is three people working, paying in their tax for 
each retiree, and what has happened is that we keep increasing the 
Social Security tax on that fewer number of workers.
  Since 1971 we have increased the Social Security tax 36 times. More 
often than once a year, we have increased the rate or the base.
  Mr. Speaker, in concluding, I suggest that we face up to the very 
serious problem that is facing us, both in Social Security, in 
Medicare, and that we not continue to put off the solutions but start 
talking about the best possible ways to do it, and we do it as quickly 
as possible.

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