[Congressional Record Volume 145, Number 1 (Wednesday, January 6, 1999)]
[House]
[Page H222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                PRESERVING THE HEALTH OF SOCIAL SECURITY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Royce) is recognized for 5 minutes.
  Mr. ROYCE. Mr. Speaker, the 106th Congress started the day with a 
nationwide consensus that the health of social security is in jeopardy. 
Millions of American seniors have come to depend on social security, 
and it is our responsibility to see that a solution is found to address 
this looming crisis.
  In the early 1980s, social security faced a similar, more immediate 
crisis. At that time projections showed that social security would be 
insolvent by 1983. Within months of that projected insolvency, reforms 
were enacted that provided for the continued health of the program, and 
included in these reforms were tax increases which would result in 
social security receiving more in revenue than it would pay out for 
benefits for several decades.
  The surplus was to be placed in the social security trust fund, where 
it would earn interest and be saved for future retirees. American 
seniors were assured that the system was saved at least temporarily, 
and that the massive reserve account being created would ensure the 
fund's solvency and American seniors' security. It seemed that the 
crisis had been at least avoided temporarily.
  Unfortunately, the surplus that was supposed to be placed in trust, 
ready for American seniors, was spent. Contrary to popular belief, when 
social security was first established in 1935, social security taxes 
were not placed in a trust, but instead, became part of the 
government's operating cash pool. Social security revenues that were 
not used to pay for social security benefits or administering the 
system were used for other government spending. This method of 
financing is commonly referred to as pay-as-you-go.
  In reality, there is no cash in the trust fund, merely IOUs totaling 
the amount of money the government has borrowed and spent on other 
activities. The accumulated amount of IOUs currently stands at $757 
billion. That is three-quarters of a trillion dollars in paper IOUs. 
That is not in dollars.
  This was highlighted in a recent Washington Post article, which noted 
that every month bureaucrats at the Bureau of Public Debt turn on a 
laser printer and ``turn out scores of plain paper certificates that 
represent the retirement security of millions of Americans.'' It goes 
on to say that the entire trust fund ``fits in four ordinary brown 
accordian-style folders that one can easily hold in both hands.'' Only 
in Washington would four brown folders be considered a trust fund 
representing the retirement savings of millions of Americans.
  We are all aware of the projections that show in 2013 social security 
will begin paying out more in benefits than it will take in. Many take 
comfort, noting that although the program will begin running deficits 
at that time, the program will not be completely bankrupt until 2032, 
since hundreds of billions of dollars have been placed in the trust 
fund.
  But as we see, since there is no cash in the fund, it will 
effectively be bankrupt as soon as it pays out more than it takes in. 
That is just 14 years from today that insolvency would hit. At that 
point, benefits will have to be cut or the system will have to be 
funded through reductions in other spending, or tax increases, or 
return to chronic deficit spending.
  That is why today I introduced legislation which honors the 
commitment made to American taxpayers and seniors. H.R. 160, the Social 
Security Strengthening and Protection Act, will pay back the money 
borrowed from social security and create a real trust fund with real 
assets.
  Under my bill, 90 percent of the budget surplus would be used to 
purchase interest-bearing Treasury bonds. These are negotiable bonds. 
As opposed to IOUs, these are the same hard assets held by investors 
throughout the world. The use of 90 percent of the budget surplus in 
this fashion could continue until all IOUs in the trust fund were 
replaced with actual Treasury bonds.
  Essentially, this legislation will create a trust fund in fact, not 
just in name. Social security revenue would no longer be used for 
anything except social security. That is how Americans think of social 
security. That is what they want.
  I will point out that long-term, there are other challenges to be met 
in terms of social security. The facts are that in our parents' 
generation each family had four children, on average. In our 
generation, each family has 2 children, so clearly there has to be 
other fundamental changes made long-term for the solvency of social 
security.
  But we should not compound the problem by taking a three-quarters of 
a trillion dollars in IOUs to social security and not having a trust 
fund there to depend upon. That is why I am sponsoring this legislation 
today, and ask my colleagues to join me in seeing that this commitment 
is met.

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