[Congressional Record Volume 144, Number 122 (Tuesday, September 15, 1998)]
[House]
[Pages H7793-H7796]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY REFORM
The SPEAKER pro tempore (Mr. Bass). Under the Speaker's announced
policy of January 7, 1997, the gentleman from New Jersey (Mr. Pallone)
is recognized for 60 minutes as the designee of the minority leader.
Mr. PALLONE. Mr. Speaker, tonight I want to talk about Social
Security reform. I am going to be joined by the gentleman from
Washington (Mr. Smith), who is here also to talk about the same issue.
We may be joined by other Democrats this evening.
This is an extremely important and controversial issue and it
deserves more attention than the majority, the Republicans, have been
willing to give it in the 105th Congress. I am increasingly concerned
about the neglect of Social Security for a number of reasons. For one,
Mr. Speaker, there is a lot of disinformation about the Social Security
program and its connection to the budget surplus flying around these
days and I intend to spend some time talking about that tonight.
While I am concerned about it, I think we can get the truth out there
through education. What concerns me far more is the willingness by
Republicans to dip into the surplus before we have strengthened the
Social Security trust fund. We hear that on Thursday, this Thursday,
the Committee on Ways and Means is going to be reporting out a bill by
the gentleman from Texas (Mr. Archer), the chairman of the committee,
that will basically be providing some kind of tax cuts, if you will.
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The alleged basis for this is because we have a large surplus and
will continue to have a large surplus over the next few years and
therefore we can afford to have this tax cut. But what in reality is
happening, Mr. Speaker, is that we are taking the money from
essentially an unreal surplus, or money that could and should be
devoted to make sure that the Social Security trust fund is sound.
In order to explain why what the Republicans want to do is a bad idea
for Social Security, I first need to explain the connection between the
surplus and the Social Security trust fund.
Mr. Speaker, the Social Security trust fund is funded through payroll
taxes and the overwhelming majority of the money collected from payroll
taxes goes into a fund called the Old Age Survivors and Disability
Trust Fund. The fund also generates money through interest and other
methods, including that from taxes on Social Security benefits
themselves. But this fund in turn holds all money that is not used to
pay benefits and administer the program itself. Federal law, from what
I can tell going back to Franklin Roosevelt when Social Security was
started, the Federal law requires that this remaining money, or the
surplus or extra money, if you will, in the Social Security trust be
invested in U.S. treasury securities.
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So what this all means is that there is currently a surplus in the
Social Security trust fund but the Federal Government uses this surplus
to fund other portions of the Federal budget. In fact, if it were not
for the surplus in the Social Security trust fund, there would be no
budget surplus at all. This is what so many Democrats are saying now,
that the true budget surplus is not a surplus at all. It is simply the
money that has been borrowed, if you will, from Social Security and
that has to be paid back with interest.
Let me just give you an example. The budget numbers for the current
fiscal year basically bear this assertion out. According to the
Congressional Budget Office, the Social Security trust fund will take
in a $101 billion surplus in fiscal year 1998. But the CBO also
projects that the total budget surplus for this fiscal year will be $8
billion. So if you take away the $101 billion going into the Social
Security trust fund, the Federal budget would actually be in deficit
for the year to the tune of $93 billion.
To say it succinctly, Mr. Speaker, were it not for a surplus in the
Social Security trust fund, the total Federal budget surplus that
everyone talks about here in Congress would not exist. Because that
money in effect belongs to Social Security, Congress should not be
talking about using a budget surplus for anything else but Social
Security at this time. Until such time as this Federal budget can be in
surplus without touching the Social Security trust fund surplus,
Congress should not spend one penny on anything else.
Now, what we are hearing is that the Republicans want to do and they
want to use that money for tax cuts before we preserve Social Security
for the long term. That is simply not right. It basically is pulling
the wool over the eyes, if you will, of the American people.
It is very important for me to add that Democrats do not just want to
stop using the Social Security trust fund to fund the rest of the
Federal budget, we want to ensure that the Social Security trust fund
is strengthened for the long term. So we want to make sure that when
the baby boomers, the generation that we call the baby boomers, are
over 65 and are eligible for Social Security that there is enough money
in the Social Security trust fund, or in the program to pay out those
benefits. We believe this can be done fairly easily if the Congress
remains committed to this goal as well.
Right now the Social Security trust fund is currently projected to
take in more than it pays out until about the year 2029. The depletion
of the trust fund's solvency is expected to begin around 2012 when the
baby boom generation starts to retire. By 2019 it will still be taking
in more than it pays out, but by 2029 the annual revenue coming into
the trust fund will begin to experience a shortfall. So if nothing is
done to correct it, in 2029 the Federal Government will only be able to
meet about 75 percent of the benefits it currently pays out to Social
Security recipients.
I want to emphasize again that this shortfall, Mr. Speaker, I think a
lot of people are under the impression that the trust fund would be
depleted at this time, and that is not the case. It would be a
shortfall, but we have time to correct it. Over the long term, the
system would be in balance but we still could fix it.
What we basically are saying is that even though it may not be a
while before we face a real crisis in Social Security, that whatever
surplus we generate now as a result of general revenues should be used
and held, if you will, to pay back what is owed to Social Security,
what has been borrowed, if you will, from the trust fund.
I guess basically what we are saying, Mr. Speaker, is that when this
Ways and Means bill comes out on Wednesday and when it is reported out,
we need to put in some language, if you will, it will be a Democratic
substitute, that essentially says that none of these tax provisions
click in until the time when there is enough money coming in from the
so-called surplus to pay back what is owed to Social Security. That is
why I think it is very important right now that we not rush into a
situation where we give these tax cuts knowing full well that we still
owe a lot of this money back to the Social Security trust fund.
I know it gets a little complicated and I am not trying to succeed in
doing that, but I think when I had my town meetings during the August
break and I had a few senior town meetings and also others where senior
citizens came, they all understood that Social Security, the trust fund
in essence was being borrowed by the Federal Government to pay other
expenses and that a lot of money was owed back, and they clearly
understood that there was not a real surplus that could be spent on tax
programs or other budget priorities. We all like to spend money, we all
like to give tax breaks if we can because we know that there is a need
out there for a lot of things by the American people, but the most
important thing, I think, is to shore up the Social Security trust fund
so that people at least know that when they are paying into it and they
expect that when they retire that they are going to have the Social
Security benefits, that it will be available to them.
We could go into this a lot more tonight and I know we will be going
into it a lot more over the next few days. I would like to yield now to
my colleague from Washington who basically started this debate on the
floor this morning and I thought gave an excellent explanation about
why we should not move ahead with what the Republican leadership wants
to do.
Mr. ADAM SMITH of Washington. I thank the gentleman from New Jersey
(Mr. Pallone) for yielding, and I appreciate his kind words.
I think the important thing to remember in this discussion is there
are two things at issue. One is certainly protecting Social Security,
but the other is Fiscal responsibility. The two are linked and I think
there are two things that we should stand up for and defend in this
House, is both Social Security and fiscal responsibility.
In this whole debate that is going to brew in the next month before
the end of the session is an excellent argument for taking Social
Security off-budget. Let me explain what I mean by that because I think
that gets to the heart of the debate. As the gentleman from New Jersey
(Mr. Pallone) explained very well, the way we do our budget right now
is any surplus from the Social Security is simply thrown into the pot
like it is income. It is counted against our overall deficit or surplus
equation. To take it off-budget would basically recognize that we
should hold Social Security separate. So if we have $100 billion in the
Social Security trust fund and an $80 billion deficit in the overall
budget, they are separate and you can look at a sheet and say, ``Okay,
we've got $100 billion over here but we're still $80 billion in debt
over here.'' That is why I have been a strong advocate as have many
others in the House of taking Social Security off-budget so we can have
an honest look at the numbers.
It is very, very important to look at these numbers honestly, because
with the Social Security budget, the thing to remember is, is it income
or is it borrowed money? The way we budget makes it look like income,
but it is very clear that it is not. It is very clear because we have
to pay it back. That is sort of the way you tell. If someone gives you
$10,000 and they give it to you, you can feel free to go out and spend
it because you do not have to pay it back. But if they loan it to you,
and in fact in this case loan it to you and say, ``Plus you will agree
to pay 6 percent interest,'' if you go out and spend the money, you are
going to be in trouble because eventually that person is going to want
it back. In essence that is what we do with Social Security. If we take
the surplus and spend it, we are going to have to pay it back and the
money is not going to be there. This is particularly troublesome
because we are talking about Social Security. We are talking about
something of critical importance that needs to be preserved. So let us
take it off-budget and have an honest debate.
I would like to look at this for just a moment in the context of the
overall debate. You hear a lot of talk about a surplus and the deficit,
but you lose track of the overall debt which is basically the debt that
we have accumulated over the last 30 years. That stands at around $5.4
trillion. To truly understand that, one needs to understand that in
this year, fiscal year 1998, when we are claiming to have a surplus, we
have an interesting situation that arises. One would think if we have
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a surplus this year, that should mean that the overall debt is going
down. That makes perfect sense. If you have got an extra $20 billion,
an extra $80 billion, well, the overall debt will go down because you
can apply that to that debt. But what happens this year? The overall
debt goes up. How is that possible? That is possible because again we
are borrowing the money from Social Security and that is debt, that is
money we have to pay back. We have to keep that in mind. But, and this
is a particularly important point, my colleagues on the other side of
the aisle know this. I know that they know this because they are the
first ones that started making this argument.
In the late '80s and in the early '90s when they were complaining
about the size of the debt, correctly, they bitterly accused the
Democratic majority of masking the true size of that debt by borrowing
from Social Security. This was just awful. I remember listening to that
argument, this was back before I was in Congress or even in the State
legislature, and I was very troubled by that argument as a Democrat. I
was troubled because they were right. They were right on point. But now
I am very disappointed that the Republicans have come into the majority
and they have forgotten their own argument and are saying, no, this is
a surplus, we can spend it on tax cuts or spend it wherever. It is not
a surplus and they know that.
So I guess what I am asking for as a starting point is an honest
debate. We have a lot of tough policy choices to make. Just today I had
three different groups come into my office and ask for tax cut
proposals, none of which are in the Republican proposal, by the way,
that sounded like they made sense, sounded like I wanted to do it. I
also had three different groups that came in with spending proposals
that made a great deal of sense as well, and we want to do this. You
want to try to help people. But you have got to be mindful of the
future and fiscal responsibility. To spend all the money now is a
disservice to future generations. We did it throughout the '80s and
into the '90s and it was wrong. Now we are in a position finally,
headed in the right direction and yet we want to snatch defeat from the
jaws of victory by going back to the old ways. Everybody here knows
that.
Let us have an honest debate. Let us stop talking about a surplus. I
would urge the American public, any politician that comes up to you and
says, ``I'm going to do this, that or the other thing with the
surplus,'' stop them right there and say, ``You don't have a surplus,''
which means what you are really saying is you are going to do one of a
couple of things: Either, one, you are going to continue to spend us
into debt. I guess you could say that makes sense, that it makes sense
to borrow money. I do not agree with it, but they can make that
argument honestly. Or, two, you are going to have to get the money
someplace else. Basically that breaks down into two choices. Either a
revenue increase or a spending decrease. That is what they have to do.
So do not let politicians get away with saying, ``Well, yeah, that
program's really important and I don't want to have to find it
someplace else, so I'll get it from the surplus.'' The surplus does not
exist. I would urge everybody on this floor to do that as this debate
unfolds over the course of the next month. Let us be honest about the
numbers. I really feel that those are critical issues. We have very
tough choices to make.
I guess I would close by saying a word to my Democratic colleagues. I
think this is an issue of critical importance for Democrats, because we
are the ones that believe at times government can have a positive
effect on people's lives, in places like Social Security and Medicare
and education and protecting the environment and defense and a number
of other areas. If we are to be able to go back to the American public
and say, we need some of your hard-earned tax dollars to pay for these,
we are going to have to show them that government can at least be
honest about the numbers. If they cannot look at our budget and truly
know how we stand, if we stand up before them and create this mythical
surplus to try to make them feel better, then I think in the long run
the cynicism will increase about government's ability to be honest and
be straightforward. We as Democrats have not always done a wonderful
job of this.
I urge us to start right now to do the job that we should do, explain
to people honestly how the budget works. I think that will help get
confidence back because there are some critical programs we need to
fund. The biggest one, and I will end on this point, is Social Security
which is what the gentleman from New Jersey (Mr. Pallone) started off
talking about in the first place. We need that program. It is vital to
this country. Let us show people that we can manage it intelligently.
Let us stop borrowing money from the Social Security trust fund and
using it to mask the true size of the deficit. An honest debate would
go a long way towards helping this Chamber and this country in many
ways.
Mr. PALLONE. I just wanted to, if I could, take a few minutes to
develop three points that I thought that the gentleman made that were
really excellent. I want to commend him first for what he said because
I think he states very succinctly what the problem is that we face with
this Republican bill that we are going to have, this tax cut or tax
proposal that is going to come up on Thursday.
There were three things that I wanted to follow up on. One is it is,
of course, true, I would think, and I ask you this, that if we have
this tax cut and it were to pass and it was not linked to some
requirement that it would not be triggered until there is a true
surplus, the whole point of this money having been borrowed from the
Social Security trust, if you will, to pay for current expenses means
that we have to pay it back. In other words, the way the Federal law
was set up with Social Security, we have to pay it back with interest.
So the reality is that if that money is not there, when it has to be
paid out in a few years, we would probably have to do a tax increase.
Mr. ADAM SMITH of Washington. That is particularly critical to me.
The way Social Security works, I will first be eligible to receive
Social Security in the year 2032 which is coincidentally the precise
year in which they currently estimate there will be no money.
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So I have a personal interest and my constituents have an interest in
it as well. Yes, I mean you will have to find the money somewhere, and
that is not fair to future generations.
Mr. PALLONE. So the likely result is then of course, the other thing
that I was going to say is that, and again following up on your point,
is that the economy is good now. It is the best it has been for a
while. If it were to turn around and not be so good, it would be even
more difficult, it seems to me, to raise the revenue. You would have to
have either higher tax increases to make up for this loss. So to me it
makes no sense now when the economy is good and we are actually in a
position to be generating a little bit of extra money. This is the time
to put it back.
Mr. ADAM SMITH of Washington. Absolutely, and let us make one thing
clear. It is not the Democrats who are opposed to tax cuts. You know
the majority of Democrats in this body voted last year to cut taxes by
nearly a hundred billion dollars. It needed to be done, and with the
right proposal, with the right offsets, and that is the key point if we
wish to cut taxes, if we have a couple of key areas where taxes need to
be cut, and I think there are a couple, find some place to offset the
money either through changing the revenue so that you have eliminating
the deduction or cutting spending somewhere.
But as I see the debate unfold, in the month that we were back in our
districts, you know this $80 billion is apparently supposed to just
fall out of the sky, and where it is falling from is not the sky, it is
falling from the Social Security Trust Fund.
So when anyone makes an argument in here, I am going to give you a
tax cut, and you say, well, where is the money going to come from, they
say it is going to come from the surplus; that is not true, and I hope
we can hold people up to that truth and say where the money is really
coming from.
Mr. PALLONE. The second point that you made that I wanted to just
develop a little as you talk, and this comes out of my town meetings
all the time. As
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you know, our constituents are pretty intelligent, they understand a
lot of these things, and one of the things that constantly came up
during the August break at my town meetings was the fact that people
are aware that we have this huge debt out there that keeps collecting
interest. You brushed upon that. I mean we have been mainly talking
about why this Republican tax proposal is wrong because of Social
Security, but you could also look at it from the other point of view,
which is that we still have this huge debt that we are paying back.
When we are told by whatever that there is a surplus this year, that is
only a surplus for general revenues for this fiscal year. There is
still all this money that we owe from previous years that has to be
paid back. So you could use that argument as well to justify why there
should not be a tax, why this tax proposal should not go forward.
Mr. ADAM SMITH of Washington. Or, I will emphasize this, or any
dramatic increases in spending, because there are certainly a lot of
programs; you know, Head Start, a variety of other ideas out there. But
if the revenue is not made up somewhere, we should be very cautious
about doing that as well, because that too will contribute to the debt.
And right now the interest that we pay on the debt is 14 percent of our
budget. That means 14 percent of the money that we are spending is
simply going to service the debt, it is not going to provide health
care for seniors or children in poverty, it is not going to give middle
class children access to education, it is not going to protect the
environment, it is not going to give us a stronger defense. It is going
straight into pay our debt.
And so as that number keeps going up, that 14 percent number keeps
going up as well, and that basically puts us in a real bind.
Mr. PALLONE. Sure. And then the last thing I wanted to say, and I
think is sort of the true irony, is that the Republicans, of course,
during this balanced budget debate over the last few years posed
themselves as the conservatives. And the bottom line is that the two of
us and others that have taken the position we are talking tonight are
the true conservatives from a fiscal point of view.
In reality what the Republican tax proposal is essentially, you know,
I do not want to use the term ``liberal,'' but it is just basically
fiscally irresponsible. And if you are really concerned about fiscal
responsibility and you really are conservative, you take the point of
view that you are taking tonight. I think that is ironic, but I have to
say it because it is true.
Mr. ADAM SMITH of Washington. Well, I had a friend of mine in college
who was a Republican, but he used to say, you know, Democrats are tax
and spend, Republicans are just spend. And I think the truth in what I
see the Democrat Party becoming and why I am so proud that we supported
the balanced budget agreement from last year is spend responsibly. I
mean, that is what it is about. There are things in this country that
people want done. We want to make sure that our seniors have an
adequate pension, that they have adequate health care, that our young
people have access to education. Well, let us do it in a responsible
manner. Let us make the programs as efficient as possible, and let us
pay for them. Let us not just run up a debt to please people in the
moment at the expense of the future. And that is really what it is
about is just, okay, well, gosh, I make this person happy right now,
and you know maybe I will even be out of Congress by the time we have
to pay that bill so I will not have to worry about it. But that is a
disservice to the country.
And you are right. Part of being conservative to my mind is a pay-as-
you-go philosophy, is being fiscally conservative, and I am still
optimistic that enough colleagues on the other side of the aisle,
having made this same argument that we are talking about here so
repeatedly in the past, will rise up to the challenge, make it again in
the future even if we are 7 weeks from an election and will make the
responsible choice for the future.
Mr. PALLONE. Well, I think you are pointing out another point as well
tonight, and I appreciate your bringing it up, and that is that to some
extent, I think to a large extent, this is just being done by the
Republicans for political purposes because the election is a few weeks
away. Because I think we have already heard pretty much from the other
body, from the Senate, that they are not going to take this up. And so
this is not a proposal that is likely to go anywhere, it is just going
to be passed in the House so that Republicans can go back and say, oh,
they did this and somehow benefit from it on election day.
Mr. ADAM SMITH of Washington. And I will tell you what my experience
has been with my constituents, and we get into this all the time as we
come up towards the election. We want to give stuff away. We think that
is what is going to make people happy. We will give them a new spending
program, we will give them a new tax cut, we will basically, you know,
pretend like it is Christmas and pass all kinds of stuff out.
What I found with my constituents is what makes them happy is if we
are making sound decisions up here, if we are spending the money
wisely, paying as we go, being fiscally conservative and responsible.
So I do not even think the tactic of passing out the goodies, as it
were, I do not think it works. I think the people are fed up with, you
know, record high deficits and record high debt, will want to get back
to an age of responsibility, and, like I said, I am optimistic that
ultimately that philosophy will win out.
Mr. PALLONE. I think you are right, and I think that we are going to
hear more about this over the next few days, but I am glad that we are
able to spend some time tonight on it because this is going to be a
major part of the debate over the next few days and the next few weeks
here.
So thanks again.
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