[Congressional Record Volume 145, Number 34 (Thursday, March 4, 1999)]
[Extensions of Remarks]
[Page E346]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E346]]
              SOCIAL SECURITY INVESTMENT FUND ACT OF 1999

                                 ______
                                 

                        HON. ROSCOE G. BARTLETT

                              of maryland

                    in the house of representatives

                        Thursday, March 4, 1999

  Mr. BARTLETT of Maryland. Mr. Speaker, today Mr. Markey and I 
introduced the ``Social Security Investment Fund Act of 1999'' with Mr. 
Pomeroy, Mr. Duncan, and Mr. Matsui. This bill gives legislative form 
to the need to provide workers with a reasonable return on their Social 
Security payroll taxes while maintaining the guaranteed benefit 
foundation of the current Social Security system. It would authorize 
the investment of a portion of the Social Security surplus in the 
private sector--a diversification strategy used by nearly every other 
public pension fund in America. It would restrict this discretion, 
however, to a very conservative form of investment called ``index 
funds.'' Management would be passive, not active, and the return on 
investment would mirror the return of the market as a whole, not 
individual stocks. In this way, the system would benefit from a higher 
rate-of-return while protecting the system against the shock of market 
downturns.
  The main features include:
  An addition of 6 years of solvency to the Social Security System 
without resort to benefit cuts, payroll tax increases or government 
borrowing.
  The locking-up of Social Security surpluses for Social Security only.
  Assumption by the government of the risks of ups and downs in the 
market so that retirement benefits remain guaranteed.
  The structure of the investment program is as follows:
  1. Independence. We establish the Investment Board as an independent 
agency. Its activity is self-funded, and its authorization explicitly 
forbids muddying the pursuit of its fiduciary duty with social, 
political or religious objectives.
  2. Limited Risk. The amount to be invested in stocks would remain far 
less than the amounts already invested in the market by public pension 
funds--a small fraction of the market as a whole.
  3. Professionalism. The Board hires fund managers already engaged in 
managing money in the financial markets for private investors.
  4. Conservatism. Each fund manager invests only in equity index funds 
that mirror the market broadly (e.g. the Wilshire 5000) so that the 
government is at no time engaged in the business of picking winners and 
losers.
  5. Diversification. The total amount allocated to each fund manager 
is limited so that no one controls a disproportionate share of the 
overall activity of any single company.
  6. Neutrality. In proxy battles, the fund managers would not decide 
how to vote the shares. The shares would instead be voted automatically 
through ``mirror voting'', where the fund's votes are cast in the same 
proportion as the votes cast by all other shareholders.

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