[Congressional Record Volume 144, Number 96 (Friday, July 17, 1998)]
[Senate]
[Pages S8447-S8448]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. KERREY. Madam President, the issue of Social Security has been 
given a new bit of attention this week. Senator Judd Gregg of New 
Hampshire and Senator John Breaux of Louisiana announced their intent 
to introduce legislation that effectively takes the recommendations of 
a year-long study and recommends a number of changes.
  I like their proposal, Madam President. Senator Moynihan and I 
earlier introduced legislation that proceeds along similar lines. 
Senator Gramm and Senator Domenici are working on their own proposal. 
The President has suggested that we have a year-long discussion of 
Social Security and that sometime in the latter part of this year/first 
of next, he will call the congressional leadership in and we will try 
to solve this problem in 1999. That will be very difficult to do unless 
these discussions are conducted in an environment where we make a real 
effort to educate the American people about what Social Security is and 
what Social Security isn't.
  There was a recent Town Hall meeting on Social Security in 
Providence, RI. I attended the first meeting in Kansas City, MO. 
Indeed, the President was at Georgetown when he kicked this whole thing 
off earlier this year. When he was introduced at Georgetown, a woman 
who is a student at Georgetown did something quite interesting and 
quite common in the Social Security debate. She said when she took her 
first job, she noted on her paycheck that there was a person called 
FICA. She went home to her mother and said, ``Mom, who is this FICA 
person, and why are they taking so much money from me?'' She had 
discovered the payroll tax, which is the largest tax burden on working 
Americans today.
  I note that there is growing interest in using the surplus, that we 
have to use it to do some kind of a tax cut. I intend to argue that if 
taxes are going to be cut, it ought to be the payroll tax that gets 
cut. FICA is the largest tax for nearly 70 percent of Americans. The 
median family in Nebraska will pay twice as much in FICA taxes--in 
payroll taxes--as in income tax.
  As this young Georgetown woman went on to say, her mother told her 
that FICA is a payment she is making into Social Security that she will 
get back out when she retires. And she hopes, she said to the 
President, that their discussion will lead to the protection of the 
money she has paid in over the years. Relevant to the discussion of 
Social Security, one of the things I hope the President and the Vice 
President will do when they are having a discussion of Social 
Security--is to allow workers to have just that--the ability to use a 
portion of their payroll taxes to create wealth for retirement.
  You hear other people describe Social Security as a program with a 
poor rate of return. As I said, I did not go to the Providence 
discussion, but I sent staff to it and they reported back that numerous 
people expressed the view that Social Security is a savings program, 
that individuals are making a contribution into it, and all they are 
getting back is what they paid in.
  It is not a savings program. You own nothing with Social Security. 
Social Security is a payroll tax, and it is a tax that is imposed upon 
people who are working. The proceeds of that tax come to the Federal 
Government, and are distributed to people who are eligible, based on 
virtue of meeting the test of age, disability, or survivorship of a 
person entitled to Social Security benefits. For retirees, there is an 
early eligibility age of 62, and there is a normal eligibility age of 
65. There are also many people who actually choose to take a later 
eligibility of 70, where they can get a higher level of benefits.
  This is very important. As the President goes forward with the 
discussion on Social Security, he is the principal leader in this 
regard. He has the bully pulpit. I praised him before and I praise him 
again for taking this issue on. It is an extremely important program 
and has benefited Americans enormously. It has changed the face of this 
country. It is a moral commitment that we make. But, it is not a rate 
of return program.
  I urge the President and the Vice President, when they are leading 
these discussions, if there is any confusion, to say to Americans that 
this program is an intergenerational commitment. By maintaining the 
current program, those of us who are working allow ourselves to be 
taxed at a fixed rate, and

[[Page S8448]]

to let the proceeds be transferred in a very progressive fashion. As I 
mentioned earlier, we let the proceeds be distributed to people who are 
eligible, based on virtue of meeting the test of age, disability, or 
survivorship of a person entitled to Social Security benefits.
  If the American people don't understand that, we need to inform 
them--especially retirees. If people over the age of 65 believe that 
all they are getting back is a monthly check that is based upon what 
they contributed, this debate will reach a dead end. I have heard many, 
many elected politicians essentially pander to the audience and lead 
the audience to believe all they are getting back is what they paid in. 
They let them believe that it is their Social Security--they paid it 
into it all their lives. In reality, it is a tax on people who are 
working. That young woman who introduced the President had it half 
right. There is a 12.4 percent tax on wages, which is transferred to 
people who are eligible.
  If anybody right now is struggling under the burden of Social 
Security, it is people who get paid by the hour, particularly low 
income people--people who earn their living as a consequence of their 
work and the wages paid to them. For example, in 1996, the median 
household income was $35,492. A family earning that amount and taking 
standard deductions and exemptions, paid $2,719 in federal income 
taxes, but lost $5,430 in income to the federal payroll tax. What we 
need to be doing is giving some of this payroll tax money back to these 
families so they can participate in the growth of the American 
economy--so that they can accumulate wealth for their retirements. 
Since 1983, the payroll tax has been higher than necessary to pay 
current benefits.
  I come to the floor today to praise Senator Gregg and Senator Breaux 
for their proposal, for their courage, in introducing this piece of 
Social Security reform legislation. Most importantly, I come to the 
floor to urge President Clinton and to urge Vice President Gore, when 
they are having these discussions, to describe this program honesty. 
Describe it as it is. Don't allow individuals, especially people over 
the age of 65, to presume that all they are getting is a monthly check 
that represents what they paid in over the course of their working 
lives. It is a tax, transferred in a progressive fashion, to people who 
are eligible.
  Furthermore, don't allow the notion to lie on the table that the age 
of 65 is a retirement age. It is not a retirement age--people can 
retire at any age they choose. Sixty-five is an eligibility age. There 
is an early eligibility. There is a normal eligibility. There is a late 
eligibility.
  One of the most frustrating things that I suspect Senator Gregg and 
Senator Breaux face, is people saying, ``Senator, you are trying to 
move the retirement age.'' It is eligibility, not retirement. There are 
many people who retire early, they retire later, and as a consequence 
their benefit levels will be adjusted. They understand these 
adjustments, and as a consequence they make choices based on it.
  I hope this debate will continue, but unless it continues in an 
honest fashion, with the program being understood for what it is, it 
will hit a dead end. This is a very easy program to demagogue. It is a 
very easy program to misrepresent. There is a large percentage of 
people who do not understand what this program is. Unless we increase 
the number of people who do understand what the program is and decrease 
the percentage of people who misunderstand it, it is likely this entire 
year's discussion will lead to nothing more than political warfare with 
people misrepresenting the program in order to achieve political 
advantage.
  I yield the floor.
  Mr. D'AMATO. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. D'AMATO. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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