[Congressional Record Volume 144, Number 122 (Tuesday, September 15, 1998)]
[Senate]
[Pages S10331-S10332]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     THE SURPLUS IS SOCIAL SECURITY

  Mr. KENNEDY. Mr. President, the proposals by House Republican leaders 
to spend a major portion of the projected budget surplus on tax cuts 
for the wealthiest citizens gives new meaning to the word 
``irresponsible.'' Any such cut would rob Social Security recipients of 
the retirement benefits they have earned and deserve. Yet the House 
Republicans want to spend this ``surplus'' before it even materializes, 
in an election eve vote-buying scheme of massive proportions. Every 
Senator on both sides of the aisle who is serious about preserving 
Social Security for future generations has a duty to reject these 
outrageous proposals.
  Before we spend it, wouldn't it be wise to at least ask where this 
projected surplus comes from? The answer is clear--and shocking in its 
meaning. Ninety-eight percent of the ten-year surplus projected by the 
Congressional Budget Office comes from the Social Security Trust Fund. 
The issue is not whether we should use the surplus to ``save Social 
Security,'' the surplus is Social Security. Using those dollars to pay 
for anything other than retirement benefits for future Social Security 
recipients would be an act of political grand larceny. The victims 
would be those hard-working men and women who are counting on Social 
Security to protect them in their retirement years.
  The term ``surplus,'' as it is used in the budget debate, means only 
that the total amount of revenue received by the Federal Government in 
a particular year exceeds the total amount that the government will 
spend in that year. In the current fiscal year, for the first time 
since 1969, the Federal Government will take in more dollars than it 
spends. But this so-called ``surplus'' does not take into consideration 
any future financial obligations of the Government, such as the 
obligation to pay Social Security benefits to retirees in

[[Page S10332]]

the future. The surplus is not extra money which Congress can spend on 
any worthy cause. It is money which must be set aside to pay those 
future obligations.
  The overall surplus is equal to the surplus in the Social Security 
Trust Fund minus the deficit in the rest of the government. When Social 
Security reserves are removed from the calculation, the surpluses over 
the next seven years evaporate. Budget deficits continue through fiscal 
year 2001, followed by four years of roughly balanced non-Social 
Security budgets. Not until 2006 does any meaningful surplus appear 
without counting Social Security reserves.
  The Congressional Budget Office has projected a surplus of $1.55 
trillion over the next ten years. Of that amount, $1.52 trillion--98%--
is Social Security reserves, which consist of the payroll tax payments 
made by employees and employers during the next decade and interest 
earned on Social Security Trust Fund during that period.
  Every one of those dollars will be needed to honor our commitment to 
future retirees. Only $31 billion of the ten year projected surplus--an 
average of $3 billion a year--is not already committed to meeting 
future Social Security obligations, and that amount could easily 
disappear with only a slight shift in the economy.
  A $520 billion surplus is projected over the next five years, and it 
is composed entirely of Social Security reserves. In fact, if Social 
Security reserves are not included, there would actually be a deficit 
of $137 billion during this period. There is no surplus for Congress to 
spend over the next five years--none at all.
  Despite these facts, House Republican leaders repeatedly call for 
using a major portion of this so-called surplus for tax cuts. 
Originally, they proposed that half the surplus--over $700 billion--be 
spent on tax cuts. These Republicans had the gall to brag that they 
would devote the other half to Social Security. Majority Leader Dick 
Armey boasted that this is ``a big, big step in the direction of saving 
Social Security.'' Nonsense. Congressman Armey's suggestion is the 
equivalent of a banker embezzling half the money he was entrusted with, 
and boasting that he did not steal it all.
  Now we hear from Speaker Gingrich that House Republicans will only 
seek a tax cut of $70 to $80 billion this year, but intend to pass a 
much larger one next spring. He acknowledged that ``virtually all of 
it'' would be paid for with dollars taken from the surplus. The intent 
of these Republican schemes is clear--it is to rob Social Security in 
order to pay for tax cuts going disproportionately to the wealthiest 
citizens.
  Whether the Republicans take one giant bite, or several smaller ones, 
out of the surplus, the result will be the same--a dramatic weakening 
of Social Security. The entire $1.52 trillion belongs to the Social 
Security Trust Fund. It is being raised to pay for retirement 
benefits--and any diversion of any portion of those funds is wrong.
  Congressman Kasich, the House Budget Chairman, offered an interesting 
variation on this Republican theme. He has suggested that the interest 
earned on reserves in the Social Security Trust Fund does not belong to 
Social Security, and should be used to finance tax cuts. That too is 
absurd. ``I only stole the interest'' is hardly a legitimate defense 
for a person charged with embezzlement.
  The interest earned on the reserves is clearly part of the Social 
Security Trust Fund, just as interest earned by a private citizen's 
bank account is part of that account and part of the citizen's income. 
All of the reports issued by the Social Security actuaries on the state 
of Social Security finances reflect these interest earnings. Pension 
funds, bank accounts, and other assets earn interest, and so does the 
Social Security Trust Fund. Using the interest earned on the Social 
Security Trust Funds to finance tax cuts would consume hundreds of 
billions of dollars that otherwise will be used to help restore the 
financial integrity of Social Security over the long term. If the 
interest earnings are removed from the trust fund, Social Security's 
financial problems would become much greater.
  If Social Security reserves are not available for the Trust Fund in 
the future because they have been used to pay for tax cuts, then it is 
clear that benefit cuts or large payroll tax increases will be 
inevitable for Social Security. What we call the ``surplus'' is 
actually dollars raised expressly for the purpose of paying Social 
Security benefits to the men and women of the baby boom generation when 
they retire. Every dollar which we divert today to finance 
irresponsible tax cut schemes will only expand the gap between the 
future retirement benefits owed by Social Security and the resources 
available to meet those obligations.
  Social Security is fundamentally sound. Unless Congress makes the 
current problems worse, harsh benefit cuts will not be necessary to 
insure its long-term solvency. It is essential that the current benefit 
structure be preserved. For two-thirds of our senior citizens, Social 
Security benefits represent more than half of their annual income. 
Social Security has dramatically reduced the poverty rate among older 
Americans. We cannot allow that guaranteed benefit to be undermined. No 
action by Congress would threaten those benefits more than recklessly 
spending a large portion of the Social Security Trust Fund for 
irresponsible tax cuts.
  The surplus belongs to Social Security--all $1.5 trillion of it. We 
are not free to spend it for other purposes. The Republican assault on 
Social Security is unconscionable. We must preserve it for future 
generations, not spend it recklessly on tax cuts now.
  Mrs. FEINSTEIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. Mr. President, I yield myself 10 minutes.
  The PRESIDING OFFICER. The Senator only has 7\1/2\ minutes.
  Mrs. FEINSTEIN. I will try to do it in 7\1/2\ minutes. I thank the 
Chair.

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