Congressional Record, Volume 145 Issue 33 (Wednesday, March 3, 1999)

[Congressional Record Volume 145, Number 33 (Wednesday, March 3, 1999)]
[House]
[Pages H935-H941]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

SURPLUS SHOULD GO TO SOCIAL SECURITY

The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 1999, the gentleman from Oklahoma (Mr. Coburn) is recognized
for 60 minutes.
Mr. COBURN. Mr. Speaker, I found the previous hour very enlightening.
Many of the things that I heard I absolutely agree with.
But the subject I came to talk about today is something that
oftentimes is overlooked by the American public, and that is the fact
that one hears in the press and one hears on this floor all the time
that we have a surplus, that there is a surplus of money in the Federal
Government today. I am here to tell my colleagues that that is not
true. There is not a surplus in the Federal Government today. In fact,
the monies that are shown in surplus actually belong to the Social
Security system, the retirement system.
What I have before me is a graph that shows my colleagues actually
what is happening right now and what is projected to happen with Social
Security monies. This chart, my colleagues will see, is from the Social
Security Trustee's report, and it was issued this last year.
If my colleagues will notice, what they see is somewhere around $70
billion to $75 billion per year actual more money coming in to the
Social Security system than we are paying out. That is, everybody that
is working in this country is paying a FICA tax, and everybody that
they work for is paying a portion of that FICA tax that comes to the
Federal Government. This last year, it was about $480 billion that
everyone who worked in this country paid in.
When you look at this graph, what actually happened is we paid out
somewhat less than that to the seniors who are presently on Social
Security. What we have before us in Washington today is a shell game.
How do we confuse people about what is going on with Social Security?
When I talk to seniors in my district, as a matter of fact, when I talk
to seniors anywhere, I have not found anybody that wants that money
spent for anything except Social Security.
We continue to play a shell game by not being truthful with the
American public. What one will see is, when we get to the year 2013,
this surplus of money that is paid in versus the money that is paid out
on Social Security starts running a deficit.
As we can see, with the baby boomers, of which I am one, by the year
2030, the Federal Government is going to have to come up with some $750
billion a year to fund the Social Security program.
All right. So we have a problem that is coming to us. The first thing
I was taught by my father as a young boy is that a half truth is a
whole lie. The half truth is that there is a surplus. Yeah, there is
more money in Washington than what we are spending out. But

[[Page H936]]

it does not belong to the Congress to spend any way it wants to. It
belongs to the Social Security system.
What is going to happen if we continue with this half truth-whole lie
is that the children that are going to be 30 years of age, that are
going to be born this next year, are going to have a FICA tax rate of
28 percent instead of 12 percent.
That means that if we made $100,000, $28,000, not income tax but
payroll tax, will have to go just to keep even to fund the Social
Security system in this country.
So before we can ever begin to hope to solve the Social Security
problem, we have to be honest about what it really is. What it really
is is the surpluses that were seen last year and the surplus that we
are going to see this year is made up entirely of Social Security
money.
The next diagram shows you what actually happens to Social Security
money. Right now, the Federal Government uses excess Social Security to
pay for more spending or to pay off the debt.
Last year, we did retire some external debt. We borrowed Social
Security money. We gave them a note that bears interest. We used that
money to pay off people outside of our government, outside of our
Nation, who have loaned us money to run at a deficit. We are paying
that off. So we are putting in IOUs, credited to the Trust Fund.
It is important to note that, last year, we took $26 billion of the
Social Security Trust Fund and spent it on nonSocial Security programs,
which stole $26 billion of the seniors' Social Security money and spent
it on other programs.
That is why it is so interesting to hear that we have to spend all
this additional money on education where, in fact, if the Congress
would live up to its obligations that it made in 1973 on IDEA that we
would fund 40 percent of the cost of the special ed in this country, we
would free up billions of dollars in local monies to be spent on
education, and we would not have to have a Federal program to build
schools, because the schools would have the money to build it, because
we have not kept up our end of the bargain.
So what is going to happen in 2013, we are going to spend more money
than what comes in. We are going to have to either go borrow money, or
we are going to raise taxes. It is real simple. Actually, we are going
to do one of three things, and let me show my colleagues what that is.
So how do we solve the Social Security program? How do we solve this
problem so that the money that goes into Social Security is used for
Social Security? How do we solve it so that the people who are working
today can have a retirement benefit that is supposed to be guaranteed
to them?
As they poll young people under 35 and they ask them, ``Do you
believe that you will get Social Security money, or do you believe that
there are UFOs out there,'' more people believe there are UFOs flying
around than believe they will see their Social Security money. That is
a condemnation on Congress that we have let down the American people.
So what are our options? Save the hundred percent of the Social
Security surplus and transition it into some instrument that earns more
money, one. What we can do is repay the money taken by the fund by
raising taxes, and that is exactly what I outlined, that we are going
to have a 28 percent effective FICA tax by the year 2015 to pay to meet
the obligations that we have committed to under Social Security.
Or, finally, we can do all sorts of things to Social Security. We can
back up on our agreement to Social Security. We can raise the age at
which it is available. Nobody wants that. Or we can lessen the
benefits.
Our seniors now can hardly get by on the Social Security money that
they are receiving. So option three is not any good. Option two, all it
does is transfer our lack of physical control, our lack of ability to
do what we were sent up here to do, and sends it to our grandchildren.
As I talked to seniors, three things come to their mind. They do not
want the Social Security money spent on anything but Social Security.
Number two, they want the debt paid down. Number three, they do not
want to saddle their grandchildren with the excesses of our inability
to do what we were sent up here to do.
So let me draw you a comparison.
Mr. SANFORD. Mr. Speaker, will the gentleman yield?
Mr. COBURN. I am happy to yield to the gentleman from South Carolina
(Mr. Sanford).
Mr. SANFORD. Mr. Speaker, before the gentleman goes on, I see this
next chart up on spending, but for one second I would like to go back
to that first chart that he was holding up on the surpluses or lack
thereof themselves. Because what I think is interesting about that
chart is that, while we may not get it in Washington, folks back home
in Oklahoma or folks back home in South Carolina or folks back home
across this country really understand this chart; and that is,
Washington says we are running a surplus. Yet, when I talk to folks
back home, what they tell me is, if we went down the street and there
was someone living on our street that had to borrow against their
pension fund reserves or retirement reserves to put gas in the car or
food on the table or rent money down, we would say that family was not
running a surplus.
In the business world, if we actually borrowed against our pension
fund reserves to pay for the current operations of the company, we
would go to jail based on Federal law.
Mr. COBURN. Mr. Speaker, that is right.
Mr. SANFORD. Mr. Speaker, what I think the gentleman from Oklahoma is
pointing out here is something that really the American public is way
ahead of us on. Unfortunately, he is exactly right in that this is
beginning to show itself in the confidence that people have in
government.
Because I do not know if my colleagues have seen the Roper poll, but
there was a Roper poll. It has been commissioned every single year,
basically, for the last 30 years. In that poll, back in 1963, they
basically said to the American public, ``Do you have confidence that
people in Washington, that your government, will make the right
decision?'' And 73 percent of Americans said, ``Yes, we believe that
Washington, our government, will make that right decision.''
That poll, when it was taken last year, what people found was that 19
percent of Americans thought that Washington would make the right
decision. That is reflected in the UFO poll that the gentleman
mentioned.
I saw some other crazy questions that were asked in a recent poll.
One of the questions was, ``Which of the following is more likely to
happen: You collect all the Social Security money that you are entitled
to, or a pro wrestler is elected President?'' Believe it or not, more
people thought that the pro wrestler would be elected President.
Another one was, ``If you had $1,000 to bet on the Superbowl or
$1,000 to pay into the Social Security system, which one would give you
a better return on your money?'' Again, I think this is horrible, but
more people believed in the Superbowl bet than the Social Security bet.
Mr. COBURN. Mr. Speaker, reclaiming my time, let me interject
something, because the American public does not know this. The actual
rate of return, real dollar rate of return on one's money that one puts
into Social Security over the last 30 years has been less than 1
percent per year. It has been six-tenths of 1 percent. Well, one could
loan the money to one's grandkids at 2 percent and do three times
better than what the Federal Government has done with one's Social
Security money.
Mr. SANFORD. Mr. Speaker, if the gentleman will yield, what I think
is interesting about that is that is not a fault of the designers of
Social Security. In other words, back in 1935, when they created this
system, I mean nobody could have anticipated that a baby boom
generation was coming our way.
So I think that they did create a great system. It did a lot of good
for my mother, for my grandmother. But the question now is, because of
what has been going on here, in other words, because of the way
Washington has been borrowing against these Trust Fund balances, we
have a real problem. The question that the gentleman correctly raises
is, what are we going to do to protect those balances?
Last year, when Washington borrowed $101.3 billion from the Social
Security Trust Fund, they did it without

[[Page H937]]

people making a lot of noise back home. A lot of people did not realize
that, one, the money had been borrowed, or those that did, it did not
feel that real. It did not feel like it was out of their pocket.
But if that same money was housed in individual accounts, and I do
not mean laissez faire, good luck, hope-you-make-it-when-you-retire
kind of accounts, but accounts with a lot of controls, just as all
Federal workers have, for instance, with the Thrift Savings Program, if
we had those controls in place and people got a monthly statement and
they knew to the penny how much was in their Social Security account,
and then Washington came up $100 billion short, and they said, ``Well,
let us see, Mr. Coburn, your pro rata share of that will be $734.53.
Would you mind cutting a check and sending it to Washington?'' people
would go berserk.
So I think that, as Alan Greenspan, chairman of the Federal Reserve,
very correctly pointed out, we need to create a real firewall that
protects basically people, Social Security money from the political
forces in Washington.

{time} 1545

Mr. COBURN. Let me add one other thing. The Social Security System,
as designed, was a good system. We had a lot of people working to pay
for very few people getting benefits.
We have two Members here that are term-limited that are talking about
this issue. We are citizen legislators. We are both in our last term.
We have been here 4 years. These are our last 2 years. One of the
things that has happened is this body, because of politics rather than
because of American spirit, has promised things for votes without
asking the taxpayers to pay for it. So we have seen a lot of expansions
in Social Security, which are not bad, but they did not have the
political courage to say, if we spend more, we have to pay for it. So,
therefore, the system's expenditures went up without a concomitant
increase in the revenues to pay for it.
So now we have two problems: We have, one, the population shift with
the baby boomers; but we also have the lack of true integrity by the
Congress to pay for the things that they pass on as a benefit. So the
way to get reelected is to send the pork back home, tell people that we
are doing something for them, but their grandchildren and their great
grandchildren are going to be hassled, and their standard of living is
going to be markedly decreased because we did not have the courage to
say, if we are going to do something, we have to pay for it.
This gets me to the next slide: why we have to control spending. This
is the Federal budget, excluding Social Security. These are the real
numbers. This is no hokeypokey. There is nothing other than CBO numbers
here and OMB numbers. President Clinton's budget and the actual CBO
projections. What we see here is if we do not restrain spending, then
we are going to continue to spend more and more and more of the Social
Security money on programs that are not related to Social Security.
Now, I happen to believe that this year or early next year we will
run what is called a true surplus. That is, we will have more money
coming into the government than we spend, excluding Social Security.
The CBO budget projects that somewhere between 2000 and 2001. That is
this green line. But if we follow what President Clinton wants to do,
he wants to spend 38 percent, and, actually, it is more than that, it
is about 45 percent in the next 5 years, of the Social Security surplus
on new programs.
Now, I come from a district that is a Democrat district. I am a
Republican, but my district is 75 percent registered Democrats. My
Democrats, my constituents, do not want that money spent. And what will
we see as we do this? What happens to the national debt? The national
debt goes up. What is it that our children are going to have to pay
back? They are going to have to pay back the national debt. Under
President Clinton's program he is going to raise the national debt
hundreds of billions of dollars. The total debt.
Now, sure, he is going to shift some of it, but at the end of this
last year, when we went through, and even though we spent Social
Security money and we paid off some external debt, our national debt
actually increased $22 billion. Now, what is the reason for that? We
passed spending proposals that were off budget. Emergency
supplementals.
Whenever we hear those words, ``emergency supplemental'', what that
means is our grandchildren are getting ready to get it. Because it is
not going to be paid for, except in rare instances. This Congress,
since 1994, has offset two of those, but the vast majority have not
been offset, so they will end up paying for that. And the next year,
that money that was spent comes in to raise the baseline of spending
for that year.
So the reason the national debt went up $22 billion, even though we
retired external debt, is because we borrowed more than what we showed
on the books. There was another $22 billion that was spent that we were
not honest with the American public about who was going to pay for it.
And it is our grandchildren.
I have two little grandchildren, a 3-year-old and a 1-year-old, and
the last thing I want to do is leave them a legacy where they have an
income tax rate of 30 percent and a working tax rate, a FICA tax rate,
of 25 percent, and that their standard of living is going to be
markedly lower than ours.
What is the answer to that? Let me just finish this point. The answer
is the Federal Government is not efficient. I have asked about that
around this country and nobody says, yes, the Federal Government is
efficient. Well, if it is not efficient, why do we not cut spending
within the Federal Government to make it efficient so that we will not
spend Social Security money?
The education dollars that the gentleman from North Carolina (Mr.
Etheridge) wants to spend, and which we need to invest in education, I
do not think we will find anybody that disagrees with that, we can find
that money through the inefficiencies of the Federal Government.
One last example. If this country were to go to war tomorrow, we
would all, as a Nation, hunker down and say, we have an emergency, we
can do things better, we can do things more efficiently, we can do
things in a way that costs less.
We have an emergency right now equal to any world war we would go to,
and that emergency is we are taking away the opportunity, we are taking
away the future of our grandchildren by not having the courage to stand
up and cut the spending where it does not need to be spent and spend
the money where it does need to be spent.
Mr. SANFORD. On that point, I think it is interesting that Economist
magazine, which is certainly well regarded, ran an article in the last
2 weeks called ``Counting Your Chickens Before They're Hatched'', and
what the article talked about are the projected surpluses that are
supposed to one day materialize and yet how maybe that might not
happen. And, therefore, if we commit it to other forms of government
spending, in other words, these projected surpluses, if we commit them
to different forms of spending, we are kind of locked into a situation
that could cause us to leave this place running big massive deficits.
Larry Lindsey, who was a member of the Fed, wrote an interesting
piece about 6 months ago breaking out the revenue stream to the Federal
Government. In other words, the taxes that are sent in by Americans
across this country up to Washington. His argument was that a large
part of this job of balancing the budget has, as the gentleman
correctly pointed out, not been done by folks in Washington by actually
cutting spending but it has really been done on the shoulders of
working Americans.
Because what had happened is the historic average, basically since
the time of World War II, in other words, government's take as a
percentage of all the activity in America, what they call GDP, has been
about 20 percent. We have been basically at or slightly below that
number. Well, right now we are at a post-World War II high in terms of
Washington's take as a percentage of the collective activity of
working Americans. And if we actually really break out the number, what
we see is a large part of that income stream to the Federal Government
is due to capital gains income and it is due to bonus income. It is
tied to this bull market.

[[Page H938]]

Well, most certainly, at some point, this market is going to cool
off. And Mr. Lindsey's argument was that when it does so, all of a
sudden, since it is income tax that is solving the problem rather than
spending cuts, it is going to cause us to run big deficits again. So
the importance of what the gentleman is stressing here, which is
actually keeping a lid on government spending, I do not think can be
overemphasized. Because here we have a member of the Fed saying how
important this is, which is exactly what the gentleman is saying right
now.
Mr. COBURN. I think what is important for everyone to understand is
all of this red in the President's budget comes from social security
taxes. Every bit of it. And what he has said is that we are only going
to spend 38 percent of social security taxes on something else, rather
than we are going to take Social Security and put that money in Social
Security and have the fiscal discipline to control the spending in the
Federal Government.
Mr. SANFORD. And could I add on that point? I do not know if the
gentleman has looked at the analytical perspectives within this year's
budget, but there are assumptions that could make those red numbers,
frankly, a lot bigger. Because one of the assumptions built into the
Social Security plan is that domestic discretionary, which is basically
every other spending outside of Medicare and interest and Social
Security, is going to go dramatically down.
Right now it is about 7 percent of GDP, again, the collective
activity of all working Americans, and what they assume is that it goes
down to 3 percent. Now, they had to assume that, because to keep the
amount of money going into Washington within historic bounds, which is
about this 20 percent number, and given the fact we have 70 million
baby boomers starting to retire around 2012, and we know entitlement
spending is going to go up, to keep it within that realm of
reasonableness, they had to shrink the other number.
I think that is a crazy assumption. Because what it means is if all
of a sudden Congress does not get real tough in this other area of
government spending called domestic discretionary, what that means is a
tax cut down the road, which goes straight back to the gentleman's
grandkids.
Mr. COBURN. Absolutely. There is another thing which is important to
note. And this is not a method to try to beat up on the President's
budget. That is not my point. My point is to draw a contrast. Even
within this, there is $50 billion worth of tax increases, in fees and
licensing fees and tax changes. So that if, in fact, the $50 billion in
tax increases were not added, we would be stealing $75 billion or $80
billion from the Social Security based on the spending.
The Congress agreed with the President in 1997 that we would have 5-
year budget caps that were locked into law. It was an agreement. Last
year the omnibus reconciliation package broke that agreement. The
President signed it, this House signed it. Neither of these two
gentlemen that are talking today agreed with that. We did not vote for
that bill. The point being, as we start the 2000 budget, with the
administration's budget, they break the spending caps by $30 billion.
So we have to get back to this idea that we have to restrain
spending. The fact is there are lots of programs within the Federal
Government that are ineffective, that have not been looked at, that do
not accomplish what they were set out to do, that have not had an
oversight hearing to make sure they do that. The Congress has failed to
do its job for the last 20 years in terms of oversight. There have been
very few programs that have been started that have ended, number one;
and there have been even many more of those that have been started that
we have never looked at to see if they were accomplishing the very goal
we set out to accomplish.
So if, in fact, we can constrain spending, by the year 2001 we will
have a real surplus, and then we can decide what we do with that real
surplus. Do we pay down the debt, as most of the seniors in my district
want us to do? Do we give some money back to people who are working
poor and working? Because they are having trouble making it now. Do we
give some of this money back to them? Do we expand selectively some of
the government programs?
Our goal should be to let us not spend anything until we are in this
stage. We are spending money we do not have now and we are stealing
from the Social Security System.
I see the gentleman from Michigan (Mr. Hoekstra) is here. Would he
like to jump in on this?
Mr. HOEKSTRA. Well, I just wanted to thank my colleagues, number one,
for doing the special order and for, number two, inviting me to
participate in this process.
I am part of the Committee on the Budget, and as we enter the next
couple of weeks the decisions that we make are going to be critical. Do
we stay within the spending caps, the agreed-upon level that a couple
of years ago we said we can live within this; that we can get done what
we want to get done in Washington if we spend at this level?
I know a couple of years ago some of us had a very difficult time
voting for those spending caps because we thought it was too much
money. We said we need to get to a surplus quicker and we ought to rein
that spending in a little. But as part of a bipartisan compromise, the
President coming to the table, our colleagues on the other side coming
to the table, we said, all right, we will give, we will let us have a
little more spending. And now we get to 1999, the economy has been
good, Washington has been collecting more in taxes than what we
expected we would, and the first inclination here in Washington is,
times are good, let us spend it.
Mr. COBURN. Show me the money.
Mr. HOEKSTRA. Show me the money, and out the door it goes. Again, we
have kind of set the priorities in the wrong place, because we have
said the first place the money goes is to us, this generation, this
generation of citizens and this government in Washington. And, really,
what we ought to be doing is we ought to be taking care of the sins of
the Congresses in the 1980s who built up this $5.5 trillion debt. We
ought to take care of those sins and start paying down the debt.
I agree with the gentlemen. In my district people are saying, nobody
is talking about paying down the debt. They say we are talking about
reducing taxes, we are talking about more spending, but nobody is
talking about paying down the debt. We ought to take care of the sins
of the 1980s and start paying down the debt. And when we do that, that
is good for seniors, because we strengthen Social Security; and that is
good for our kids, because it takes this $5.5 trillion debt off their
back.

{time} 1600

Mr. COBURN. I think again, just to reemphasize the point, first, if
we do not put all the Social Security money into Social Security, one,
if we do not address the problems with Social Security, we are going to
see at least $800 billion per year in increased taxes on working
Americans just to pay for Social Security. That does not have factored
into it any inflationary spirals that might be higher than what we
think they are going to be.
So to get $800 billion in 2030, $780 billion in 2029, what do we do?
What that means is the constituents in my district, my grandchildren,
they are not going to get to do anything except barely eat, barely
sleep and have a roof over their head if they want to pay for my
generation's Social Security.
So the hard work has to start now. The hard work has to be associated
with restraining spending, not necessarily new spending on new programs
but paying for it by cutting spending somewhere else that is not
effective, rather than spending more of our grandchildren's money.
Mr. SANFORD. I know that the primary focus of our brief visit this
afternoon is on government expenditure, it is on truth in advertising,
if you want to call it that, because the government has been, I think,
disingenuous with the way it has called this a surplus, because this is
not what folks at home would call a surplus, it is not what business
would call a surplus. But tied to it is this issue of Social Security.
There is one point that I think is worth mentioning, because it frankly
sounds alluring. As you mentioned earlier, which is not related to
reserving the surplus for Social Security but in the

[[Page H939]]

larger context of the Social Security problem, that the trustees, not
what I say, not what you say, not what the gentleman from Michigan says
but what the trustees have said is that if we do nothing to save Social
Security, it is going to have real problems down the line. The choices
are fairly limited as we all know. You can cut current benefits, you
can raise taxes, or you can grow the assets of the trust fund at a
higher rate than they are now growing at.
Mr. COBURN. Let me ask the gentleman a question. If all the money
coming into the Federal Government, real surplus plus Social Security,
was saved, we still will not have enough money to take care of Social
Security, will we?
Mr. SANFORD. Correct.
Mr. COBURN. That is an important point that the President has never
mentioned. No matter what the surpluses are in the future, no matter
how great they are, saving all Social Security money for Social
Security plus all the rest of it will never save enough money to be
able to meet the obligations for the babies born from 1942 on. We will
never get out of the hole. So something has to happen. I think that is
the gentleman's point.
Mr. SANFORD. Of the available choices, I mean, it seems to me that
the most reasonable of those three choices would be growing the assets
of the trust fund at a higher rate. And then the question simply is,
well, do we do that collectively, which is essentially what the
President had proposed with investing a portion of the trust fund in
equities, or do we do that through individual accounts?
I just think it is worth stressing that in my look at this problem,
the idea of an individual account and not a laissez faire, good-luck-
grandmom-hope-you-make-it-when-you-retire kind of account, but the idea
of a controlled personal account with a lot of different safeguards,
just as a janitor here on Capitol Hill would have through the Thrift
Savings Plan.
Mr. COBURN. The whole idea is with a guarantee that nobody would ever
get less than what they are committed to now in terms of Social
Security. There will always be that guarantee there.
Mr. SANFORD. The reason I think that is so important is, more than
anything, and this is again what the chairman of the Federal Reserve,
Alan Greenspan, said, that you have to create a firewall between
political forces in Washington and that money. If there is not a
firewall, most certainly the money will be borrowed against, which is
what has been happening over the last 30 years, to fund other areas of
government. So if you are going to create that firewall, again I come
down on the side of individual accounts, not only because of the
firewall but also because of the way this place works.
It is interesting, it sounds enticing, let us invest collectively, we
will get the higher return and we will take risk out, but by leaving it
there, it leaves Washington's hands in it and that means a couple of
things. It means, one, I do not think you can serve two masters.
Microsoft stock, for instance, last December, not this December but the
December before, between December 18 and December 23 dropped by about
14 percent. It did so when the Justice Department announced that they
were bringing suit against Microsoft. If the Federal Government was
invested in Microsoft through the form of the Social Security trust
fund, then all of a sudden you are going to have AARP calling you up,
their representatives saying, ``Wait, don't bring up that suit because
my trust fund money is in that.'' In other words, it is very difficult
in Washington to serve two masters. I think we ought to think about
that. For that matter it is very difficult in Washington to serve one
master.
The gentleman from California (Mr. Waxman) to his credit cares
passionately about the issue of tobacco smoking. I cannot imagine him
disappearing and not caring what the trust fund was invested in because
he cares about the issue. The gentleman from New Jersey (Mr. Smith)
from the Republican side cares passionately about the issue of
abortion. I cannot imagine him sitting idly by while the trust fund was
invested in a pharmaceutical company that had a pill related to
abortion. In other words, from all sides there would be political
influence in the trust fund. What I think you have to look at in a
trust fund is how are you going to get the highest return so that one
can enjoy the best return.
Mr. COBURN. Let me just summarize, if I can. The whole purpose of
talking to the American public about this is it is called daylight.
Knowledge is powerful. The more Americans know that we are actually
taking Social Security money and spending it on something other than
Social Security, the more reaction that we are going to get to say,
``Don't do it.'' Because we know not to do it, but the tendency in
Washington is to spend money, not conserve your money. The tendency is
to think in the short term, not the long term. I want us thinking about
our grandchildren, and I want us to ensure that we live up to every
commitment that we have made to seniors. We can only do that if we are
honest about the problem that faces us. To be dishonest will compound
the problem for another generation past this one.
Any fix that is going to happen on Social Security cannot be a short-
term fix. It has to be a long-term fix. And it has to recognize the
reality which is the government cannot continue to take 22 percent of
the gross domestic product without holding down growth, holding down
opportunity, holding down job creation and holding down capital
investment.

Mr. HOEKSTRA. If the gentleman will yield, I think the other thing
that we have to take a look at is now is a wonderful window of
opportunity. Much like we did a couple of years ago when we did the
balanced budget agreement, we can and we found common ground, we did it
with welfare and when we found the common ground, we were able to move
forward and 3 years later we are finding out that those programs have
been very successful. When we worked to cut spending, when we worked to
do the budget agreement, we said we can get to a surplus by 2002. Under
those rules, we were there in 1998. Now I think we can apply that same
kind of creativity in a much different environment because we have made
so much progress on spending, we can take that creativity and apply it
to Social Security and I think the values and the principles that the
gentleman was articulating are exactly what we want to do. We want to
make sure that we don't impact seniors' benefits. We want to really
restore the integrity of Social Security for 50 to 75 years. We want to
make real progress on those issues.
The other thing that we know that we can do is that we can make a lot
of other progress. The interesting thing is we get to a surplus, is
that we forget about the $1.6 trillion that we are currently spending
and we naturally assume that all that money is being spent wisely.
Today in the Education Committee we marked up what we call an ed flex
bill which is going to allow the States a much greater degree of
flexibility. Why? Because when they get involved in reporting back to
Washington from a State or a local level every dollar that we collect
in taxes for education, only 65 cents of it reaches a child. And that
if we apply the same kind of creativity to that $1.6 trillion that we
are spending today, we open up all kinds of opportunities to better
educate our kids so that no child will be left behind, that we then
would have room for Social Security, to save Social Security, and then
if we really are serious about taking a look at that $1.6 trillion that
we are spending today, we would also have room for tax cuts, by saying
we can get the same impact for education.
We took, and my colleagues are both familiar with this, on Education
at the Crossroads, 39 different agencies administering something like
700 programs, losing 35 cents of every education dollar to bureaucracy,
not to educating children. Just think about changing that process and
focusing on the kids. We can get 35 percent more Federal money into the
classroom just by taking a look at the process here and saying, it is
not the process that is important, it is not the bureaucracy that is
important, it is our kids that are important and we are going to get
there.
This is really a wonderful era right now that we ought to grasp and
we ought to take a look at every issue. We ought to save Social
Security, but we cannot forget about going back and

[[Page H940]]

taking a look at the $1.6, $1.7 trillion that we spend each and every
year.
Mr. COBURN. I think the other point that the Education at a
Crossroads made to me is not all our problems in education are going to
be solved by money. I have a daughter who is not teaching now, she is
fortunate enough to be able to be home raising her children. But what
she told me was two things about education. One is, is I got to spend
about a third of my time filling out paperwork for the bureaucracy. The
second thing is I do not have the tools to control the discipline in my
classroom.
So it does not matter how much money we spend, if we do not fix those
two problems where teachers can teach, then we are not going to solve
the problem. It is easy to get a vote from a constituent saying I am
spending a lot of money on education. It is very difficult to talk
about what the real problem is, because it requires us to change. It
requires all of us to participate and do something.
I just wanted to make one other thing. I am into my sixth decade. I
proudly have joined an organization called AARP. I did that not because
they necessarily represent all my viewpoints but I wanted to be able to
have input as we say this, I am interested in getting my Social
Security. I am a baby boomer. I have an investment in my retirement.
Since I am not going to have a retirement from Congress, I am going to
want my Social Security money. So to me it is important that we create
the truthful paradigm that we are trying to make sure the American
public knows today about where the Social Security money is, where it
is going and how big the problem is for the future.
Mr. SANFORD. I would follow up with, as we look at ways of doing
that, I think it is very important that we focus on the big problem. At
times in Washington, we get so caught up in actuarial balance of the
trust fund and it will extend it from 2030 to 2035 and 2030 to 2045,
all kinds of strange numbers focused only on the trust fund but not
really focused on the big picture. The big picture to me would be that
Roosevelt when he and others designed this system, the promise was we
will create a system that creates for you a better lifetime in
retirement. In this whole debate, I think we ought to keep focused on
not just actuarial balance of trust funds, because we can do that. We
can do that by cutting benefits a little bit, raising taxes a little
bit. In other words, we can get to actuarial balance in the trust funds
fairly easily. Taxes have been raised almost 50 times or benefits cut
almost 50 times within the system since it was created. But I think we
could do that and still miss the main point. The main point is are we
or are we not keeping Roosevelt's promise of a better lifetime in
retirement?
As you correctly pointed out, there was a recent UCLA study that
showed for a young person born in 1970, they would have to live 110
years just to get their own Social Security taxes back out. Not even a
return on the Social Security but just the taxes themselves back out.
Mr. COBURN. Let us say that in a little plainer words. If you put X
amount of dollars into Social Security and you were born in 1970, what
that says is you would have to live to be 110 years old until you got
that money back. That is not in real dollars, that is in dollars from
1970, which means you would probably have to live to 130 or 140 to get
it back in real dollars, not counting earning any interest on the money
that you had invested.
Mr. SANFORD. So some of these looks at fixing the problem may fix the
trust fund but make it so that somebody has to live 150 years to get
their return. That is not the promise of Social Security. What I am
hearing from constituents back home is Social Security taxes are the
largest tax 73 percent of Americans make. Consequently what they are
telling me is for me, it is the largest investment I will make.
Therefore, you need to make this stuff count. Because some people say,
you need to focus on additional savings outside of the roughly 10
percent of what you earn every day, every week and every month on
Social Security. You need to make additional savings. They are saying,
``Mark, you can only squeeze but so much blood from a turnip. I am
struggling between gas money, rent money, food money, education money.
I don't have any other savings. Therefore, I've got to make Social
Security count.''
So we have got to stay focused not on actuarial balance but on the
promise of Social Security which is to make sure it is not a system
that guarantees somebody a negative rate of return or a 1 percent rate
of return but something higher than that.

{time} 1615

Mr. COBURN. Let me share with my colleagues, as they both know, I
practice medicine on Mondays and sometimes on Fridays and on the
weekends, and I cannot use the patient's name because I would be
breaking a confidence, but I am going to call her Mattie. Mattie, she
has diabetes, she has hypertension, she has congestive heart failure.
She is getting her Social Security. Her husband recently died. There is
no way she can have on today's payment an adequate living to care for
her without her children helping her out.
Mr. Speaker, just to fix Social Security we are going to get back to
that point, let alone meeting the obligations that we really have for
our seniors. So what we are really talking about is getting people back
up in the future to meeting what was originally promised and meeting
that commitment, but it does not solve all our problems with our
seniors.
Mr. Speaker, the government cannot solve all those problems. That is
why family support is so important, and this young lady, she is 86
years old, would not make it if she did not have a family.
Mr. HOEKSTRA. If the gentleman would yield, I think what our
colleague has pointed out is the awesome responsibility you have. As my
colleagues know, at the Federal level, at the State level and at the
local level we are going to working Americans and saying:
The first 40 cents you own of every dollar is ours.
So, Mr. Speaker, we have got an awesome responsibility as to how we
spend that money, how we spend it today, and also the commitments and
the promises that we make. So, as my colleagues know, we are in many
ways making a lot of choices for those people on how their money is
going to be spent because we have taken it from them, and we do not
give them a choice as to whether they are going to use it for
education, for homes, for an investment or for their retirement.
Mr. COBURN. Let me get the gentleman to yield for a minute, if he
would. That to me says we certainly do not want to waste this money and
that we want that in the green so they will have more of that
flexibility. And that is the contrast here. Hundreds of billions of
dollars of additional Social Security being spent on non-Social
Security programs versus no Social Security money being spent on
anything except Social Security, and when we do get to a true surplus,
then deciding what we do with it.
Mr. HOEKSTRA. Mr. Speaker, we have the commitment then not only for
how we spend the current dollars, the 1.6-1.7 trillion, but then we
also have the commitment that our colleague was talking about, the
promises that they inherently believe that we have made. I mean, every
week they are paying 12-13 percent to Social Security and Medicare,
expecting that somewhere along the line they are going to receive a
benefit from that. But we know from all the surveys that most young
people do not believe they will ever see a penny of it, and that means
that we are not really keeping the faith with the people that are
paying those taxes today because they do not believe that they will
ever get it, that we will ever solve, if the gentleman will fetch that
chart back up, as my colleague knows, they do not have a degree of
confidence that we are going to take care of that blue part of the
chart.
Mr. COBURN. So let me ask the gentleman from Michigan a question. Can
we solve the Social Security problem and can we meet the obligations to
seniors in this country and can we do that honestly?
Mr. HOEKSTRA. Absolutely.
Mr. COBURN. Absolutely.
Mr. HOEKSTRA. The opportunity is here today to do that.

[[Page H941]]

Mr. COBURN. And that means we have to be honest about what the
numbers are. We cannot use this as a political tool to win a political
race. We have to be honest. This should be above politics. This should
be above, about keeping our commitment to our seniors, and making sure
we ensure a future for the working people today, and making sure we
ensure the opportunity for our children and grandchildren for tomorrow.
I believe we can do that, but it is going to take political courage. It
is going to take the courage of statesmen, not politicians, to come up
here and do that. The American public is going to have to measure
whether or not we did that or not.
Mr. SANFORD. Mr. Speaker, I would say again, and I do not want to go
off the subject, which again is rightly focused on honesty in
accounting, and that is if we, as my colleagues know, if we have to
borrow money to get to run the surplus that we are running, most folks
would say we are not running a surplus and therefore it is important to
do something about spending. That is the primary thing we are talking
about.
But tied to that again is this issue of Social Security, and I think
it is so important that when we look at security for Social Security,
of the available choices which are cut benefits, raise taxes or grow
the investment at a higher rate than we are growing at, that we simply
take a page out of the Federal book, if my colleagues want to call it
that. Because everybody from a senator to a janitor here on Capitol
Hill has the option of going into basically a 401(k) plan, a savings
plan, and in that plan they have got a limited number of investment
choices. One can have a Treasury fund, a corporate bond fund or an
equities fund; and with all that, nobody can put all their eggs in one
basket, nobody can go out and say, I have got a hot stock tip from my
brother-in-law, and I think I am going to invest my Social Security
money in that or, in this case, their thrift savings money in that.
Nobody can say, I hear the Singapore derivatives are a hot investment
right now; I think I will go into that. It is all very much controlled,
and what is interesting about that, as a result, there are no horror
stories of janitors on Capital Hill losing everything that they have.
So I think it is important that we look at the idea of putting to
work what Einstein called the most powerful force in the universe, and
that was this power of compound interest.
As my colleagues know, there was this woman a couple years back, and
I do not know if my colleagues remember the story, a woman by the name
of Oseola McCarty, and she was from Hattiesburg, Mississippi, and yet
she ended up on the front page of the New York Times, not for axe
murdering a cousin or a nephew, but for a great reason, and that was
she went down to the local university and said, I would like to help
out. And she was a woman of very humble means. She had never made a lot
of money over her lifetime. In fact, she had washed clothes over the
bulk of her lifetime.
So, therefore, the people at the university figured, yes, she is
going to make us a cloth doily or a napkin, maybe something that she
has handmade. Instead, she strokes them a check for about $100,000.
They are flabbergasted, and the reporter there from the New York Times
is asking:
How in the world did you do this?
And she says:
Well, I just put a little bit away over a long period of time.

Mr. Speaker, that power of compound interest is something that we
ought to take advantage of when we look at cures for Social Security.
Mr. HOEKSTRA. If the gentleman would yield, I think, and also as we
take a look at it, I do not think there are any proposals here that are
saying take all of the Social Security money and do that with all of
the Social Security funds. It is most of the proposals, if not all of
them, are very modest proposals to take advantage of the exact benefit
that the gentleman is talking about, and they all have structured in
them protections for the individuals who will be on Social Security so
that they will not get less money than what they get today but will
have the opportunity to earn higher returns and have a higher payout
when they get to be 65 or 67.
Mr. SANFORD. And, most significantly, I think they would keep in
place the safety. The key issue with Social Security is safety of
Social Security. If we were to draw a financial pyramid, the safest
investments ought to be there at the foundation, if my colleagues will,
of the investment, and Social Security is that foundation.
So I think the most important thing is the safety, and I go again
straight back to what Alan Greenspan, Chairman of the Federal Reserve,
said:
If we leave the money in Washington, political forces will probably
find a way to get their hands on that money, which is what has been
happening for the last 30 years.
Mr. HOEKSTRA. If the gentleman would yield, I just want to make one
point that I do every time.
I have had a lot of meetings with seniors in my district because I
wanted to start with seniors because I want to make it very clear to
them that what we are talking about. We are not talking about, if you
are getting a Social Security check today, we are not talking about
changing their system. As my colleagues know, they are not going to
next month or next year get a letter saying, you know, you have got
this money and you have to figure out how to invest it in these kinds
of things. No. If they are on Social Security and they are getting a
check today, we are not messing with that.
What we are doing is we are talking about how we are going to save
Social Security for our kids and for our grandkids, and it will be a
transition process. It is not going to affect you. It is probably not
even going to affect people who are 60 years old today. It is going to
affect the people who are younger than that who are going to have time
to understand any changes, will be a dialogue with them. We will
process through these types of changes, and we will not jeopardize
their Social Security either. But for the people who are getting a
check today, it is not going to change.
Mr. COBURN. We are about to run out of time. I just want to leave the
American public with something that Martin Luther King said in his last
speech at the National Cathedral. He said that cowardice asks the
question, is it expedient? And we have seen a lot of expediency in this
body through the years. And he said vanity asks the question, is it
popular? And we have seen a lot of things done because they are popular
but not necessarily good for the Social Security system or not good for
the future of our children. But he said conscience asks the question,
is it the right thing to do?
The debate this year about the budget and about Social Security
cannot be based on expediency, cannot be based on popularity. It has to
be based on what is right and best for all three generations concerned.
I want to thank the gentlemen for sharing this time with me, and I
hope we can do it again.

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