[Congressional Record Volume 144, Number 123 (Wednesday, September 16, 1998)]
[House]
[Pages H7890-H7895]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PRESERVING SOCIAL SECURITY
The SPEAKER pro tempore. 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 discuss the need to
strengthen Social Security for the long term. I just wanted to say that
I think a lot of people are not aware of how successful the Social
Security program has been.
Of course it was created by Franklin Roosevelt quite a long time ago
in the wake of the Great Depression, but it has been our most
successful domestic program in the Nation's history.
Just to give some examples, Social Security has kept millions of
retired seniors from living in poverty by providing a guaranteed cash
benefit with a lifetime protection against inflation. For about two-
thirds of beneficiaries, Social Security provides about half of their
annual income; and, for 30 percent of beneficiaries, Social Security
provides 90 percent of their annual income.
Social Security is the only source of income for one in every six
older Americans. And in large part, Social Security relieves today's
workers of the economic burden of supporting their aging parents.
In addition, the comprehensive benefits provided by Social Security
saves millions of families from financial disaster in the event a
worker's death or disability. Finally, 39 percent of all Social
Security benefits are paid to workers who become disabled, survivors of
deceased workers, and spouses and children of retired and disabled
workers. So this, again, is our most successful program in the Nation's
history.
That is why I think that it is so important that all Americans be
aware of what the Republican leadership wants to do with the projected
Federal surplus. They are supposed to vote on this in the House
Committee on Ways and Means as early as tomorrow. I think that young
people and seniors alike should be concerned with the Republicans'
intention to use budget surpluses for tax cuts, instead of saving that
money until we have developed a way to protect Social Security for the
long term.
What we are hearing from the Republican Leaders that is going to be
voted on in committee tomorrow is a tax cut plan that would cost $80
billion. That sum is so large that it could not be financed without
dipping into the budget surplus, which incidentally we do not even
have. We have not seen it yet.
We talk about, and the media talks about a budget surplus, but we do
not really know exactly what it consists of or whether it is real. The
CBO, the Congressional Budget Office, in fact estimates that were it
not for a surplus in the Social Security trust fund, the total Federal
budget for this year would indeed be in a deficit.
So what we really know is that without the application of the trust
fund, the money from the Social Security trust fund, in fact, there
would be no surplus at all. That is why we need to guard against what
the Republicans are proposing to do tomorrow. I will explain it a
little more, and I have the gentleman from Texas (Mr. Green), who is
going to join me as well.
Mr. Speaker, as many people are aware, and I hear this a lot at town
hall meetings and the senior forums that I have in my own district,
particularly during the August recess, the Federal Government uses the
surplus in the Social Security trust fund to fund other government
programs. In effect, the government borrows from Social Security. So if
there is excess money or surplus in the Social Security trust fund, it
is essentially lent to the Federal Government and the Federal
Government uses it for other purposes.
Now, it seems only logical then that when the Federal budget realizes
a true surplus, in other words when the general revenues are in
surplus, that that surplus be used to pay back what has been borrowed
from Social Security. That is what Democrats have been saying ever
since we realized that the Federal Government may have a surplus sooner
that was expected.
Let me say again in a few more words that when we passed the Balanced
Budget Act last year, we did not anticipate that there was going to be
a surplus for some time. But because the economy has been good this
year on an annual basis, we understand that there may in fact be a
surplus. But that is only in general revenues. That has nothing to do
with the Social Security money that people pay, wage earners pay in
their taxes on a regular basis when they earn a certain income.
So even though there may be a slight surplus in general revenues at
the end of this year, we have borrowed so much money from the Social
Security trust in the past, and we will continue to do so this year,
that that little surplus in general revenue does not make up for the
money that we have borrowed from the Social Security trust fund.
So what we are saying is that if we add that money borrowed from
Social Security, in effect we have no surplus since we have to pay that
money back. Whatever money is generated annually through general
revenues should be applied ultimately to pay back what is owed to
Social Security.
Back in January, the President said in his State of the Union address
that he believed that Congress should not touch whatever surplus and
revenues are generated this year until lawmakers come up with a plan to
shore
[[Page H7891]]
up Social Security for the long-term. We know that 20 years from now,
there is not going to be enough money in the Social Security trust to
pay the beneficiaries at that time because a lot more younger people,
the baby boom generation, will be retiring at that point and we will
need more money in the Social Security trust fund. In addition to that
money, that has to be paid back. The President believes, as I do, that
protecting Social Security should be a bipartisan goal and he recently
made a radio address stating that Republicans and Democrats alike must
maintain fiscal discipline, setting aside the surplus until we save
Social Security.
Let us talk a little bit about this bill. A number of my colleagues
and I, going back to February after the President's State of the Union
address, a number of our Democratic colleagues back then in February
introduced H.R. 3027. This establishes a fund called the ``Save Social
Security First'' reserve fund to hold all Federal budget surpluses.
{time} 2030
It literally says the funds shall be used to save budget surpluses
pending Social Security reform.
This is a very simple bill that was introduced by a lot of the Ways
and Means members back in February. And if the Republican leadership
would just bring this bill up on the floor tomorrow, which they could
do, then we could easily pass it, it could be signed into law, and we
would know for sure that any action that was taken in terms of taxes or
spending would, in effect, require first that the surplus go into
Social Security.
Obviously, the Republicans are not bringing up that bill and,
instead, what we are hearing is that they are going to bring up this
tax cut that is going to cost the surplus $80 billion. And that, of
course, will really have an impact on the Social Security Trust Fund
because it will mean that we have $80 billion less that we can apply
towards Social Security.
I would like at this time, there is a lot more that I could say on
this, but I will at this time yield to my colleague, the gentleman from
Texas (Mr. Green), who has expressed concern about this issue before on
the floor, and who is here with me tonight, so we can try to get a
little more light on this subject to the American people and our
colleagues.
Mr. GREEN. Mr. Speaker, I want to thank my colleagues from New Jersey
for requesting this time tonight. I know it is 8:30 on the East Coast,
but it is 7:30 in Texas and our folks are just getting up from the
dinner table, so we can let them know what is happening in Congress. I
heard some of my colleagues in earlier 5-minute special orders, and I
agree that truth and righteousness should have the first place in our
society and our halls of Congress and our government. But what I am
concerned about is all the smoke and the fire on what is happening with
the President's problems may be masking what may be happening over the
next week or 2 here with this tax cut bill that comes up.
I am glad the gentleman pointed out that there really is no budget
surplus; that until we pass legislation to remove the receipts of
Social Security from the unified Federal budget, that we will not have
a surplus because Social Security receipts, those that are paid in by
employees and employers, are part of the general revenue, supposedly,
of the Federal Government, even though it cannot be used for our other
programs. So it is masking the deficit.
Sure, we have a balanced budget using funny numbers. Or we have a
surplus this year, at the end of this month, using funny numbers, but
the American people ought to deserve the truth. We talk about truth
from the President, let us tell them the truth here.
In fact, I remember when our Republican colleagues were not in the
majority that there was a bill that they were talking about that would
remove the Social Security Trust Fund from the budget. I agree with
that. In fact, why do they not bring that bill up tomorrow? They could
do it without committee meetings or committee hearings. They have done
that so often this year with bills anyway. We can bring a bill up that
removes the Social Security receipts from the Federal budget and we
will have actual honest budgeting.
That would be a great bill, and I would hope that we would have a
majority on each side to pass it, and the Senate, and send it on to the
President. Maybe that is the honesty we need to have on ourselves and
to say let us be honest with the American people about the real Federal
budget deficit, or the Federal debt.
We talk about a surplus this year. The economy is good. More people
are paying taxes, welfare rolls are down, and that is great, but it is
masking the Federal deficit for this year because of Social Security
receipts. It is not honest budgeting and we ought to fix it. I am
saying that as a minority member because I cannot bring up a bill on
the floor of the House, but my Republican colleagues can, and so they
ought to do that.
I have town hall meetings, like everybody else does, and I have heard
even my Republican colleagues and leadership about how they want to
safeguard Social Security first and to pay down the debt. I agree with
that. Why do we not do that? Why do we not give a tax cut? They say,
well, we are going to give two-thirds to Social Security. That is not
the case. That is smoke and mirrors, because that money, until we
actually have an honest Federal budget, that money is Social Security.
That money is Social Security receipts that is being paid for by
employees and employers so they will have a retirement income. Maybe
not enough to buy them a Cadillac but maybe enough to buy them a used
Chevy when they retire.
Social Security was established 60 years ago after our Great
Depression to combat poverty and, most importantly, to protect the
elderly. Today, two-thirds of our elderly rely on Social Security to
keep them out of poverty when they retire. It is estimated that 44
million workers and their families across the country receive Social
Security benefits. Knowing the vital role it plays in our lives and
many Americans, how can we even consider risking its future?
We have this surplus, the first one on an annual basis since 1969,
although, again, it is masked. In 1969, we did not include Social
Security receipts into the Federal budget. Sometime in the seventies,
Congress did that to mask the Federal deficit. And now, because we have
that, that is the first step we ought to make instead of giving tax
cuts, even with smoke and mirrors by saying two-thirds is going to the
Social Security, because it is not. Every penny we take out is taking
away from the Social Security Trust Fund.
In 1993, we recognized that the financial solvency of Social Security
would be a major challenge. And that is when we were in the majority,
by the way. We also recognized that in order to protect its financial
security we had to balance the budget. Fortunately, today, we are
closer to that balanced budget and are, hopefully, heading in the right
direction. But to say that we have a surplus and so let us go shopping
is really outrageous.
And that is, I think, the truth and honesty that we are worried about
in our country. We need to have truth and honesty on the floor of this
House and when we are talking to our constituents and the American
people about what is being done with their tax dollars and these budget
gimmicks that we are living with today.
According to my Republican colleagues, we have a surplus. Does that
mean we can then provide tax cuts while at the same time continuing to
borrow from Social Security, which is what we are doing? I am not a
mathematician, but I know that if we borrow money, it is because we do
not have that money left over to pay our bills. So we are continuing to
borrow from Social Security.
In my district, the average income is a little over $20,000 a year.
Few of them will benefit from the proposed tax cuts, but many of them
would be devastated if they lost their retirement income in Social
Security. Let us not kid these people. Let us not say that we are
safeguarding Social Security with two-thirds of this imaginary surplus,
because every penny of that is Social Security money masked and it is
hidden. Again, I think we need to have some truth in taxation, truth in
tax cutting, and we have a responsibility to save Social Security
first.
[[Page H7892]]
We have a responsibility to continue our efforts for a balanced
budget. We have no right to risk the retirement future not only of my
father, who is 83 years old, but also of the generation who are 50, and
40 today, or the generation of individuals who are 30 and 40 who are
paying into Social Security not only for their parents and their
grandparents but also for their income so they will not be destitute
when they retire. This means putting 100 percent of this surplus into
the Social Security Trust Fund.
I remember my colleagues on the other side agreeing that their first
priority, again, was to save Social Security. Well, now we hear, and we
do not know what the bill may say until the bill comes out of the
Committee on Ways and Means, but now they are saying, well, it is our
first priority, that two-thirds of this will go to Social Security. It
is not two-thirds of it. All of it should go to Social Security because
it is Social Security receipts that they are giving back as tax cuts.
Again, what worries me is that in the year 2020 or 2029, when we say
we will run out of money, we may have to reduce Social Security
payments in 2020. I wonder how many people will look back at 1998 and
say if the Republican Members of Congress had made some financially
correct decisions, then we would not be in the shape we are today. I do
not want to wait until 2020, because I may not be here, and neither
will the gentleman from New Jersey, and, frankly, most Members of
Congress may not be.
We need to make some reasonable decisions today and this week and
before October. And again I call on my colleagues, instead of worrying
about tax cuts, and I would like to have a tax cut, I would like to get
my constituents a tax cut. That would be great. There are some things
in that bill, I have heard, that actually is a bill that I introduced
to give tax reductions for people who pay their insurance premiums when
their employer may or may not provide insurance, may not provide their
whole insurance premium. I would like to see that happen, but I would
like to see it without jeopardizing Social Security, and that is what I
worry that my colleagues on the Republican side are doing. They are
willing to take the money and run and mask this deficit in smoke and
mirrors, and that is what I worry about.
If we see that they are committed to putting Social Security at risk,
they are playing with the lives of those individuals who have already
paid into the system. Americans pay into the program and they have the
right to rely on that for their retirement. Our first priority should
be to strengthen Social Security and protect its solvency. We cannot do
this without a real balanced budget. And I say a real one, not one that
is using Social Security receipts to mask the budget deficit.
I am proud that this year, for the first time since the 1970s, we
actually will have a balanced budget. But, again, it is not a balanced
budget. There is no surplus until we not consider Social Security
receipts. Again, I ask where that bill is.
I saw a poll that was mentioned today in Congress Daily that said 41
percent of the people surveyed would prefer to put all surplus funds
into the Social Security Trust Fund. Another 28 percent would pay off
the Federal debt. So 41 and 28, and only 23 percent favored using the
money for tax cuts. But, again, when we ask another question and say,
okay, wait a minute, if we have a surplus and two-thirds of the surplus
goes to Social Security do you support it then? That question was badly
worded because they did not say it is not real surplus, it is Social
Security receipts that is causing that surplus and it is not honest
budgeting.
So this poll our colleagues may be relying on may get a surprise when
they see ``the rest of the story'', as Paul Harvey says; that over 70
percent of the American people want Social Security saved first and
then pay down the deficit.
We have a $5 trillion debt that has been built up over the last 50
years, and yet we are not going to pay any part of that on the deficit.
Again, we can only provide our own experiences in the real world,
whether it is the gentleman's own personal life or the business that I
help run. If we had a good year, we tried to pay off some of our
equipment that we had borrowed on. Same thing. If we have a real
surplus, let us safeguard Social Security first and then let us start
paying down that $5 trillion plus debt that exploded in the 1980s when
Congress gave tax cuts and increased spending at the same time. Bad
fiscal management.
Let us do not make that same mistake in 1998 and try to have our cake
and icing before we actually take care of the meat and potatoes of
people's security in their retirement.
With that, I thank my colleague. I see my colleague from the Midwest
is here, and I know it is good tonight to be able to talk about this,
but I will be glad to thank my colleague for yielding the time to me.
Mr. PALLONE. Let me first thank the gentleman from Texas for the
comments that he made. I would like to yield to the gentleman from
Wisconsin, but let me, if I can, comment briefly on what the gentleman
from Texas said, because I think it is so important.
The gentleman stressed how we were so successful and it took so long
to get to the Balanced Budget Act, which was passed last year, and I
think it is, in part, because of that and because we are not creating
more deficits that our economy continues to be strong. Because I
believe very strongly, I do not know what economists I can cite for it,
but I am sure there is a lot of commentary to suggest that as we
continued to build these deficits in the last 10 or 20 years, it had a
negative impact on the economy. I think that a good part of the reason
why the economy is doing well is because the Balanced Budget Act was
passed and we are not creating more deficits.
But we have to go further with this because the bottom line is that
we still have this money that is owed to the Social Security Trust
Fund. And when that has to be paid back, and it has to be paid back
with interest, the money has to come from somewhere, and I am
concerned. And the gentleman talked about a good economy. We have to
deal with this problem about how to pay back this money over the long
term, which really has not been addressed yet.
In fact, if the economy gets worse, future generations may have to
pass a tax increase to make sure they are paying the money back to the
Social Security Trust Fund for the benefits to be there in 10, 20, 30
years when the need arises. What are the consequences if we do not have
the money to pay back? And there may not be the will to pass a tax
increase to pay for that in a few years. Then what happens to the
benefits? They may not be there. They may cut back on the benefits as
an alternative.
So this is really crucial in terms of where this Social Security
program goes. We need to put that surplus in there to make sure that we
are paying back this borrowed money, otherwise it may not be there for
future generations.
I think the gentleman made the point well when he said that this is
the time to think about it, when the economy is good, and not to just
go head over hog in dealing with some tax relief program that puts us
further into debt and does not solve the Social Security problem. So I
just wanted to thank the gentleman again for that input.
I would like to yield now to the gentleman from Wisconsin (Mr. Kind).
{time} 2045
Mr. KIND. Mr. Speaker, I thank my friend from New Jersey for
yielding.
I want to commend both of my colleagues here tonight for staying this
evening and talking about an issue that is incredibly important for the
future of the country. We are at a pivotal moment as far as fiscal
policy is concerned as a Nation. This time of year when it comes down
to budget crunch time and the passing of the 13 appropriations bills,
some crazy things happen. Although I am a new Member, I have had a
chance to live through one budget cycle already and it is very
discouraging to hear some of the comment, some of the talk that is
happening, especially what might occur tomorrow in the Committee on
Ways and Means, the tax-writing committee in this House, in regards to
the tax cut and how that tax cut is going to be paid for.
When I was running for Congress and wanted to serve and represent the
people in western Wisconsin, I made a
[[Page H7893]]
promise to them then that I was going to be a fiscal watchdog, that I
was going to keep an eye on their tax dollars and try to make fiscally
responsible decisions. One of the proudest moments I have had so far as
a freshman in this 105th Congress was the hard work that all of us put
in, a lot of Members on both sides of the aisle, in negotiating a good
bipartisan balanced budget agreement that we were finally able to come
to agreement on last year that set a good blueprint for the next five
years on fiscal decisions and tax policy in this country. It amazes me
as a new Member that no sooner is the ink dry on those type of
agreements that there are proposals out there that would virtually
violate all the hard work and all the effort that went into reaching
that agreement. That is what is coming up right now with this tax cut
proposal. I think it could be incredibly harmful for the country.
Mr. Speaker, let me just amplify a few important points that the
gentleman from New Jersey and the gentleman from Texas (Mr. Green) were
talking about earlier. First of all, and the American people get this.
The people back home on the main streets in Wisconsin, they get this.
There is no budget surplus, not unless we are going to continue with
the fraud and the tricky accounting procedure that has been perpetrated
on the American people over the past few years about robbing from the
Social Security trust fund in order to finance other government
operations or tax cuts within the budget. They understand that. That is
why they get a kick when I am back home talking about fiscal issues,
they get a kick about all this talk about budget surpluses for the next
10, 15 years or so. They all know that there is this robbery going on
with the Social Security trust fund. We need to take that off-budget,
we need to set that money aside to anticipate the baby boomer
generation that is going to start retiring early next century and we
need to stop these budget accounting games that are going on right now.
They find it funny that there is all this talk about a surplus. They
are very supportive of protecting that trust fund in order to bolster
and shore up the Social Security system.
It is amazing that the proponents, the advocates of this $80 billion
or so tax cut that is going to work its way through the Committee on
Ways and Means are admitting that what they are going to do is finance
at least part of that tax cut by continuing to rob from the Social
Security trust fund. That is just plain wrong. It is misguided policy.
But at least they are acknowledging the fact that they are going to do
that. They are up-front with the American people. I guess that is what
elections are all about, surrounding issues such as this.
Another point that the gentleman from New Jersey already raised, that
is, that the Social Security trust fund is there, not only to protect
that and if we can move it off-budget, that is great, but by moving it
off-budget, what we would in essence be doing, starting to pay back the
$5.5 trillion national debt that has been accumulated throughout the
many years of this republic. There is a golden opportunity that we face
right now in order to do that, in order to get the trust fund off-
budget and start going to work on paying off that $5.5 trillion
national debt. It is an amazing price tag that we pay every year on
just interest payments on that national debt. It is the third largest
spending program in the Federal budget of roughly $250, $260 billion
every year going to pay the interest payments on our national credit
card for this $5.5 trillion in debt.
We face a great opportunity to do right with our senior citizens in
the country, by protecting the Social Security system, but also by
doing right for our children and grandchildren and future generations
by starting to tackle this $5.5 trillion national debt, rather than
trying to pass some election year tax cut gimmick. Because everyone
knows that in an election year, people love to hear about tax cuts. But
hopefully the American people are going to see through this, I am
confident they are, because they already get the budget gimmick that is
going on with the trust fund already and they are going to say no. They
are going to agree with the President in his State of the Union address
and what he has said consistently from day one on this issue, that is,
not a new nickel, not a new dime for any new programs or any new tax
cuts until we first shore up the Social Security system. I think that
is a very wise and prudent policy.
Finally, the third point I want to raise, and again the gentleman
from New Jersey touched on this, is that there is no guarantee that we
are even going to see this surplus materialize over the next five or 10
or 15 years as CBO is attempting to calculate right now. It is very
hard to calculate with any accurate projection what the fiscal numbers
are going to look like a couple of months from now, let alone five or
10 years. When you wake up, America, and start taking a look around us
and the international financial crisis that we are facing right now, I
think that this highlights the concern that many economists have in
this country that things can slow down dramatically as far as economic
growth and productivity in this country because of the impact of the
financial crisis in Asia and in Russia and in eastern Europe and the
domino effect that that might have. We are seeing some very disturbing
signs now in Latin America and in South America. All this is going to
have an impact on the U.S. domestic economy as well. One-third of the
growth that we have experienced over the past few years in this country
has been export-related. If those markets dry up because of the
financial crisis in those countries, that is going to have a tremendous
slowing effect. The revenue projections are going to get thrown way
off. But if we this year in an attempt to please voters in an election
year try to pass this tax cut gimmick, then we are locked in on that.
Everyone knows it is going to be virtually impossible to have to
increase revenues at some later date to make up for a shortfall. We may
have a repeat of what happened during the early 1980s. Our memory is
young enough to remember what happened then when the Reagan
administration came in and promised huge tax cuts that did pass in the
first year of his administration, but the problem with that economic
package was those tax cuts were not offset in the Federal budget. In
fact, spending increased, primarily in defense-related projects. When
you have a shortfall in revenues because of the tax cuts and an
increase in spending, that led to the annual structural deficits that
happened throughout the 1980s, early 1990s and now fortunately in this
administration we have had six consecutive years of deficit reduction,
we are heading in the right direction, we are starting to make the
corner when it comes to true fiscal responsibility and doing right with
the Social Security program, having a chance to pay back the national
debt.
I read the other day that roughly 83 percent of the entire national
Federal debt that we have today, the $5.5 trillion, roughly 83 percent
of that was accumulated during the 1980s and early 1990s. This is a
relatively new phenomenon in our Nation's history that we are laden
with this very heavy national debt, we are paying this exorbitant
national interest rate every year in the Federal budget, $250 billion
every year in the budget to help finance the national debt. If we go
down this road again, if we are going to be willing to take our chances
with the economy with so-called surpluses and projected surpluses over
the next five and 10 years, we could very easily find ourselves
slipping back into those annual structural deficits again. That would
be disastrous.
Two of the most credible voices when it comes to monetary and fiscal
policy in this country today, Secretary Rubin of the Treasury
Department and Alan Greenspan, Chairman Greenspan of the Federal
Reserve, are in agreement on this issue. Both of them are on record.
Chairman Greenspan and Secretary Rubin were just on Capitol Hill again
today but both of them are on record as saying we need to be extremely
cautious in how we deal with this so-called budget surplus. Obviously
Secretary Rubin is in agreement with the President when he says no new
tax cuts, no new spending coming out of the surplus until we first
protect the Social Security program. Chairman Greenspan has reiterated
time and time again when asked by Members of Congress in the Senate and
the House what would be the best use of the surplus, and he said, ``Let
me tell you what you shouldn't do.'' This was about a month and a half
[[Page H7894]]
ago when he was testifying on Capitol Hill. ``What you shouldn't do is
start spending the so-called surplus on any new programs or any new tax
cuts before that surplus materializes.'' That was a point he has
emphasized again and again and again. In fact, he is on record as
saying the best use of any surplus, if you call it a surplus, is to
start paying down this $5.5 trillion national debt, because of the
economic activity that it is going to generate, the increased
investment in capital, the increased production we are going to get out
of the American workers by investment activity because it is going to
lead, he said, to a lowering of long-term interest rates by the Federal
Reserve. That ultimately is the big tax cut that everyone is going to
benefit from. If we can maintain fiscal discipline, if we can continue
reducing the deficit and move the trust fund off-budget, start paying
back the $5.5 trillion national debt, that is going to give confidence
in our financial markets, it is going to give confidence in the Federal
Reserve Board to lead them to reduce long-term interest rates even
further which is going to be a boon to the economy with increased
investment and productivity, but also any American that has a credit
card, that has to make house payments or car payments, are going to
realize savings because of reduced interest rates. That is really where
we should be going with our fiscal policy in this body, not
jeopardizing the future of the Social Security program and the future
of our children by hoping these surpluses are going to materialize.
That would be disastrous.
Finally, let me just comment on some feedback that I received from
the constituents in western Wisconsin who are very fiscally
conservative. That is why I have so much fun representing them, because
I come from the same cloth, I come from the tradition of Senator Bill
Proxmire who was a fiscal hawk in the Senate for decades before that
term was in vogue, before anyone was real concerned about deficits and
Federal spending. I did a survey earlier this year asking my
constituents what they think would be a wise use of the so-called
budget surplus. The response was overwhelming, over 4,000 people
responding on this simple survey back in the district. Over 80 percent
of them, of my constituents said before we spend a nickel on a new
program, before we have a nickel go to a tax cut, let us first shore up
Social Security and start paying down the national debt. That was a
very loud, a very resounding statement that the people at least in
Wisconsin were sending to this representative in this body. I would
hope that Members now pushing for this tax cut wake up and finally get
that message from the rest of the American people because I do not
think Wisconsin is all that different from what the average working
person in this country is thinking in regards to these so-called
surpluses.
Mr. PALLONE. Let me say to the gentleman that what he said about
Wisconsin is certainly true in New Jersey. I had over 20 town meetings,
forums during the August break. Particularly senior citizens are very
much aware of the fact that we do not have a surplus because we are
borrowing from Social Security and feel the same way, along the same
lines that you have articulated. The other thing I wanted to say and I
think is very important that you raised which really has not come up
from what I have heard from the Committee on Ways and Means, certainly
not from the Republicans who are pushing for this tax cut, is that we
not only have to worry about the Social Security money that has to be
paid back but we also have this huge national debt that was accumulated
over the years. A lot of people are not aware of the fact that it is
only in this one year that we are balancing the budget. We still have
to pay back this debt with interest for all those years. So even for
those who feel that we should not spend this surplus on a tax cut
because of what is owed to Social Security, there might be just as many
hopefully that think that we should not be spending it because we have
to pay back the national debt. Both of those are very legitimate
reasons that you have pointed out.
Mr. KIND. Just another point in regards to the Social Security
program. What we are going to hear is that we are just borrowing a
little bit from the Social Security trust fund, that roughly 10 percent
of the $80 billion tax cut would be financed from the Social Security
trust fund. What that means is basically we are going to be collecting
payroll taxes from hard-working men and women throughout the country.
We are going to be taking those payroll taxes from them and
redistributing it into the pockets of selected Americans through this
tax cut. It just seems ridiculous to have a tax cut package that will
do this. Even if we were to take the entire Social Security trust fund
off-budget and not touch any of that money and could stop borrowing
from it, it is still not going to solve the long-term challenge that we
face with the Social Security program. So even a 10 percent drain from
the trust fund is going to make it even more difficult to preserve
Social Security well into the future. It is making our job all the
harder when we take on the almost daunting challenges that we are going
to be facing in the very near future and, that is, trying to find some
long-term fixes to preserve the Social Security program. That is
another reason why I think this tax cut is misguided. Even though it is
just a little bit coming out of the trust fund, even a little bit is
going to make it a lot more difficult for us to do right with the
Social Security program, again to do right with the seniors in this
country and future generations who would like to see that program still
existing when they become eligible.
Mr. PALLONE. I would like to just develop a little of what you just
said. That is, the way that we pay for Social Security, which is really
not a progressive tax. I mean, it is basically a tax that wage earners
pay at a certain rate. If you have to rely on that as a means of
raising this revenue, we know that a few years ago, I think it was in
the 1970s that the FICA, which is the tax that you pay on your earnings
that pays for Social Security, was actually increased in order to
generate more money that would be needed because it was estimated that
we need more money for future beneficiaries. If we five or 10 years
from now have to raise that FICA tax again in order to correct the
problem that this money has not been paid back, not only would we be
raising taxes again in order to have enough money for Social Security,
but again it is not a progressive way of financing the program, as you
say, paid for really on the backs of working people, strictly working
people. That is not really a fair way to go about it.
I think it is also true that we are hearing all these proposals now
about not having the Social Security COLA, raising the age before you
get benefits. The effort to try to do those kinds of things will be
increased. The pressure will be increased because the money will not be
there.
{time} 2100
We have not figured out a way to pay this money back. This possible
surplus that is being generated now is really the only thing that is on
the table that has a real possibility of paying some of this money back
that has been borrowed. All the other alternatives that I can think of
are not very desirable.
So I appreciate your bringing that up as well.
I think that we probably talked enough about this tonight, but I know
we are going to be talking about it a lot more over the next few days,
and I am just hopeful that we can get not only most, if not all, the
Democrats to support this idea of Social Security first and not
implementing this tax cut until the Social Security Trust Fund has been
paid back, but maybe get some Republicans as well.
Mr. KIND. If the gentleman would yield, let me just raise final
concern on this subject is that there has been a lot of talk here in
the halls of Congress lately that the $80 billion tax cut is only the
beginning, that early next year they are going to come back and take a
look at it, and instead of just taking 10 percent of the Social
Security Trust Fund, it is going to a hundred percent of the Social
Security Trust Fund with a massive tax cut. And if we go that route and
suddenly there is a slowdown in the economy and those surpluses do not
materialize, we are looking at massive Federal deficits for many years
to come, and that would be a tragedy.
Mr. PALLONE. Because I think that if we do not get our point across
now that this is a problem and this passes, then what is to stop it,
you know, if the lesson is not learned?
[[Page H7895]]
Mr. NEUMANN. Mr. Speaker, will the gentleman yield?
Mr. PALLONE. I yield to the gentleman from Wisconsin.
Mr. NEUMANN. My only fear listening to this, most of what you said I
agree with wholeheartedly, as you well know, is that this becomes very
partisan, and Social Security is too important to become partisan. Many
of us Republicans also feel that it is inappropriate to use Social
Security money for tax cuts, and I think it is important rather than
get into a partisan bickering situation that we, you know, instead of
me taking the next hour and coming back and bashing Democrats, this is
not about Democrats and Republicans, it is about what is happening in
Social Security in our country.
Many of us on our side of the aisle feel that it is inappropriate to
use Social Security money. We support tax cuts, and I suspect that if
we ask you if we could lower taxes by reducing wasteful government
spending or by utilizing a portion of the surpluses from the general
fund, not Social Security, as we are also paying down the debt, that
that probably might be something that we on both sides of the aisle
might find to be acceptable. Many of the Republicans do feel very
strongly, as you are suggesting here tonight, that it is inappropriate
to use Social Security surpluses for tax cuts, and I think you will see
that unfold.
Mr. PALLONE. No, I appreciate the gentleman.
If I could just reclaim my time briefly?
I wanted to make it clear, emphatically clear, that this proposal
that is before the Committee on Ways and Means is essentially coming
from the Republican leadership, and I know that there are many
Republicans, and I heard you speak this morning on this subject, that
share the viewpoint that we have been expressing here that we should
not have this tax cut until the Social Security money is paid back and
until and that the really is not a surplus.
So I appreciate your comments.
I yield to the gentleman from Wisconsin (Mr. Kind).
Mr. KIND. I do not want to leave tonight leaving the impression that
we are against tax cuts per se. I mean we are for responsible tax cuts
that could be offset within the Federal budget. That seems to be a more
fiscally responsible way of doing it.
Tax cuts are great. I am a believer in providing tax relief in this
country so long as we can pay for it and find some offsets in some
other areas in the budget in order to pay for it so that we have some
fiscal honesty as we move forward here on up, and I appreciate my
friend's remarks from Wisconsin and the position he has taken in
regards to the Social Security Trust Fund as well, and it should not be
a partisan issue. It really should not, and hopefully it will not be
because when you take on Social Security, both parties are going to
need to lock arms together on this if we are going to have any progress
and do right by the American people, and that is an extremely important
point, and I appreciate my friend's comments in that regard.
Mr. PALLONE. I honestly believe, and I will say this now, that I
think that the opportunity does exist over the next few days to get a
number of our Republican colleagues to join us on this and to defeat
this effort to try to spend the alleged surplus. But of course I have
to say that it is true that the idea is coming from the Republican
leadership, and that is why so many of us on the Democratic side are
speaking out against it.
Mr. NEUMANN. If the gentleman would yield, I would hope that we would
also lock arms to prevent additional spending in the same way we are
talking about the tax cuts here because, as I understand it, we also
have a proposal coming at us to do what is called emergency spending,
and emergency spending means effectively we are going outside the
spending caps and just starting new programs.
So I would hope that we are equally committed to controlling
emergency or spending beyond the caps so that if we do have true
emergencies out there, as I know exists in some areas of the ag in
particular, the ag industry, I would hope that we would find other
programs that are less important that we eliminate so that we can pay
for or re-prioritize the dollars to these other programs rather than
just going and spending more money because that new spending also is
Social Security money. If we just go and spend more money, that comes
out of Social Security too.
So I hope we have the equal commitment here to both hold the line on
spending and hold the line on using Social Security money for tax cuts.
Mr. PALLONE. I appreciate the gentleman's comments, and if I could
say, and out of no disrespect, that we are going to yield back the
balance of our time and you can start your hour so we can go home.
____________________