[Congressional Record Volume 145, Number 38 (Wednesday, March 10, 1999)]
[House]
[Pages H1154-H1160]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HONEST SPENDING, HONEST BUDGETING
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 find it very interesting that the issue of
education and the issue of Social Security, not wanting to spend Social
Security money for anything other than Social Security, is described as
trivial.
What we are going to talk about tonight is one of the most important
aspects of the future of this country, and that is called honest
budgeting, honest numbers, so that the American public actually knows
what is going on in Washington. So what we hope to describe for you
tonight are the issues surrounding the Social Security Trust Fund, the
problems associated with it, how the real problem has been covered up
by the Washington habit of spending more money when we do not have it.
I have with me tonight, and I would like to recognize, the gentleman
from Michigan (Mr. Hoekstra) and the gentleman from Minnesota (Mr.
Gutknecht), and the gentleman from Minnesota is going to spend a few
minutes talking about where we have been, where we are today, and where
we are going.
Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for yielding.
I think it is important to note that for too long in Washington, the
name of the game was how can we spend more of the public's money. In
fact, the unwritten rule of Washington always was, no good deed goes
unpunished. There was no real reward for trying to save money, because
back in the 1960s, in order to cover the cost of the Vietnam War, they
created a whole new system of counting here in Washington. What they
did was they took in all of these 66 different trust funds we have,
they put them all in the same category, and it made it look like the
deficit was smaller than it was.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman from Oklahoma will yield,
if we are talking about history, the one thing I appreciate is taking a
reference point of 1995, which is when the two of you joined us here in
Washington. As my colleagues may remember, I came in 1993, and if my
colleagues think the picture was ugly in 1995, they should have been
here in 1993, because in 1993 when we came and when I came here with
110 new freshmen and we had a new President, the mentality of
Washington was, let us increase spending. Remember, that is when some
of my colleagues were maybe motivated to run for Congress, because the
message was the economy may be going into a downturn or whatever, when
actually the economy was recovering because of what President Bush had
done early in the 1990s. But it was like government spending is going
to stimulate the economy.
We did not, or the powers that be at that time did not care about the
deficits. The deficits were $200 billion per year, as far as the eye
could see, and growing. The belief was that to attack some of these
issues, it was not to return money back to the American people, but was
to take more of their money and to increase taxes. So in 1993, we had
deficits as far as the eye could see, growing deficits as far as the
eye could see; $200 billion deficits, increasing taxes, increasing
spending, saying, that is the new model for this new presidency.
The good thing about it was that that agenda I think spurred many of
my colleagues to say, wait a minute, that is the wrong model, so my
colleagues came and got elected in 1994, and in 1995 really set a very,
very different tone.
So my colleagues recognize what we have done since 1995. I go back
two years previous to that and say, boy, if my colleagues had not come
here in 1995, we would have continued that trend of 1993 of more
spending and higher taxes. I think my colleagues are going to lay out
how ugly the picture was in 1995, but it was much worse in 1993, and a
very different solution to the problem in what my colleagues helped
introduce and helped pass in 1995.
Mr. GUTKNECHT. Mr. Speaker, if the gentleman from Oklahoma will
yield, the gentleman from Michigan is absolutely correct. Obviously, we
would certainly like to take some credit for what has happened since
1995. But the truth of the matter is, what the American people finally
said was, enough is enough. I mean, higher taxes were the answer to
every one of our problems, and the American people understood that
higher taxes were not the problem. They certainly were not the
solution. The problem was too much spending.
[[Page H1155]]
I remember when the gentleman from Oklahoma (Mr. Coburn) and I came
as freshmen and we looked at what the President proposed, and this is
not according to the House Republican Conference, this is according to
the Congressional Budget Office. We should have this on a bigger chart,
but I think the chart, if people at home or in their offices can see
this, can recognize that what was happening was the deficit was bad,
but worse, it was going to get worse every single year, and we were
looking at potential deficits by the year 2009. This is using the old
accounting standard. We are going to talk about the differences and
what we really think the next step ought to be. But we were looking at
deficits by the year 2009 approaching $600 billion a year.
The Congressional Budget Office came out shortly after we came to
Washington in 1995, and the American people said, enough is enough, and
they sent 73 new Republican freshmen, including the two of us, to
Congress. But they understood, the American people understood that that
was not the answer. The Congressional Budget Office told us that if we
did not do something about controlling the rate of growth in Federal
spending, about eliminating some of the needless duplicative
bureaucracy here in Washington, the real problem was that by the time
our children reached middle age, and I hate to admit it, but I am
approaching that age myself.
Mr. COBURN. Mr. Speaker, I am well past it.
Mr. GUTKNECHT. By that time, Mr. Speaker, they would be paying a tax
rate of upwards of 82 percent just to meet the ongoing needs of the
Federal Government and the obligations to Social Security.
Now, that is the situation we confronted in 1995. The American people
said, that is unacceptable, we said it is unacceptable. We started
about eliminating needless waste. We eliminated 400 programs, we
reformed the welfare system, we tackled the entitlements, and we have
made enormous progress since then.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman from Oklahoma (Mr.
Coburn) will yield, just to put this in reference, because we are
talking about 1998, we are going to be talking about performance of
1999 and performance of 2000.
Mr. COBURN. Mr. Speaker, CBO is the accounting estimating firm that
is part of the Congress that is bipartisan that studies these numbers
and makes an estimate.
{time} 2145
Mr. HOEKSTRA. Mr. Speaker, I thank my colleague for clarifying that.
In 1998 the Congressional Budget Office projected a deficit of
somewhere in the neighborhood of $225 billion, the President's plan. In
1999, that number would have been about $250 billion. In the year 2000,
it would be about $290 billion. This is a year. We would be in debt
$290 billion more.
Mr. COBURN. Mr. Speaker, it is important for everybody to understand
when we hear those numbers that that includes spending social security
trust fund money to offset even further a worse situation, to the tune
of anywhere from $80 billion to $100 billion. So if we had been
protecting our seniors' money and protecting our grandchildren's
future, in those years the deficit would have been at least $100
billion higher.
Mr. HOEKSTRA. Yes. That brings us to 1999. If we would have treated
social security honestly, and we are going to be talking about that
later tonight, that number would have been $350 billions of deficit,
and for spending of about $1.7 trillion we would have had a deficit of
$350 billion.
In the year 2000, we would have been approaching $400 billion. If we
would have put in the social security numbers, roughly 20 to 25 percent
of our spending would have been deficit-financed, would have been new
debt that we would have stacked onto our children, which would have
jeopardized the future of social security, either in terms of benefits
or eligibility or increasing taxes.
In 1995 the President said that that was good enough. He said, that
is where I am going to lead the country. That is when people like the
gentlemen here came in and said, wait a minute, that is maybe good
enough for this administration, but it is not good enough for the
American people, and financing our spending with 20 to 25 percent of
debt is just plain wrong. In 1995 we changed the course of this town.
Mr. GUTKNECHT. Mr. Speaker, if the gentleman will yield, and it is
important to talk about these numbers, because if we add social
security, which is about $100 billion a year, we are looking at
deficits of $350, $450, $500 billion a year.
Those are just numbers. Most of us do not know what $1 million is,
let alone $1 billion. It is hard to imagine what $450 billion is. But
let us put that in very simple terms. What does that mean to the
average American family? What it means is that we are virtually
guaranteed that our children will have a lower standard of living than
we have enjoyed.
We can put this in any kind of terms we want, but I think every one
of us recognizes that one of the cornerstones of the American dream is
leaving our kids a legacy so they can expect to have a better standard
of living than we had. That has been part of the American dream I think
since the first Pilgrims came to this country, that they wanted to
build a better future for their kids.
Unfortunately, because of the deficit spending, because of profligate
spending of previous Congresses, because of the basic attitude that
deficits do not matter, we had literally begun a process that
guaranteed the next generation that they would have a lower standard of
living. That is the thing that had to stop.
It is not just about numbers, because I think sometimes when we talk
of numbers, I think all of our eyes start to glaze over. We can look at
our children and say, do we really want to leave our kids a lower
standard of living than we have enjoyed? I think the answer for every
American parent is a resounding no.
Mr. COBURN. Let us move in a little bit and just have a discussion
about where we really stand on social security, because too many people
I find do not have a realistic expectation of how big the problem is;
and number two, unfortunately, the Congress in past years has not been
honest with the American public about the problem, so part of our goal
tonight is to really kind of dive into that.
Each year this government takes in billions and billions of dollars
of social security money. Last year it was about $580 billion. We paid
out about $480 billion to people who were on social security, receiving
social security as a benefit. What that means is that we paid in an
excess amount of actually about $86 billion last year that were excess
payments of social security.
As we look at this chart here on the left, and notice what the source
of this, this is not a Republican or a Democrat chart, this is the
Social Security Administration's numbers, what we saw in this area, and
we continue to see until the year 2013, more payments coming into
social security than are going to be paid out. But in 2013 something
big is going to happen. We are going to pay out more money in social
security than is coming in.
The purpose of this exercise is to get everybody to realize the size
of the problem, because when we start paying out more money for social
security than we take in, what will happen is one of three or four
things. We will talk about that in a minute.
The fact is, people who are working every day are paying money in for
a social security benefit that the Congress is then taking and spending
on something besides social security. So as we see past the year 2013,
what happens is the area in blue is the amount of tax revenue that
either has to come from the general budget or increased taxes, just to
meet the obligations.
If we have a 5-year-old at home this year, when they are 35, that
deficit is going to be almost $800 billion per year, one and one-half
times the total that we take in.
The problem is big. How does the social security trust fund work now?
How is it supposed to work, and what is really happening? What is
really happening now is the money comes in, comes in, a paper IOU goes
in, the government takes the money and uses it for a multiple of other
things.
Last year we did take $69 billion worth of social security money and
buy off external debt, so we did lower the
[[Page H1156]]
external debt, but it is not a true lowering of the debt, because we
still have an interest obligation and we still have to pay the money
back. So we did not lower the debt any. What we did was take social
security money out of the trust fund and use it for something other
than what it was intended for.
What is going to happen in the year 2013? The money is going to come
in, but we are not going to have enough money to pay. So we are going
to do one of three or four things. Most likely, somebody's taxes are
going to get raised to be able to meet that.
How do we stop doing that? The first way we stop doing that is to be
honest about what the numbers are, be honest about what the situation
is with social security, and get our hands off of the social security
money. Not any portion of it should go to be spent for anything other
than for social security. We should not grow the government with new
entitlement programs, new programs. I have not found anybody in this
country who can tell me that they actually believe that this government
runs efficiently.
If we need to increase spending in one area, there are more than
enough areas for us to decrease spending in areas that are inefficient.
We eliminated 400 programs in 1995 and 1996. There are another 400
programs that need to be eliminated that do not accomplish what they
were intended to, that spend more than what they were intended to
spend, and have never been measured to see if they are effective. Yet,
the Congress has not been able to do that because of this disguised
budgetary problem. They have not seen the essence of it.
Mr. HOEKSTRA. If the gentleman will yield, Mr. Speaker, I think what
we really want to reinforce tonight is that we are going through
various stages of addressing these issues because of the magnitude of
the problems we are facing.
In 1993, when I came here, getting to a surplus was a critical issue.
In 1995, when these two gentlemen joined us here, we were actually able
to move to a surplus. We talked a lot about getting to a surplus. That
was only a step in a series of steps that we needed to take.
We reached that last year where we got a surplus, but we used the
social security surplus to help us get there. Now we are talking about
taking the next step, which is, all right, now let us strive for a
genuine surplus, or what some of us would describe as a more genuine
surplus by taking social security off-budget and walling that money
off.
Mr. COBURN. Mr. Speaker, let me say to the gentleman, I am a doctor
by trade. I practice on the weekends. I delivered 97 babies last year.
I fly home every weekend.
But my first degree was in accounting. There is no such thing as a
genuine surplus. There is either a surplus or a deficit, and one of the
things we have to do is to be clear to the American public that we have
not had a surplus in this country, we do not have a surplus, and we
will not have a surplus unless we quit spending more money. That
message has to go out.
One of the main reasons that we are coming to this problem to start
addressing it is because America is working, and Americans are paying a
ton of tax right now. Through their hard efforts and their work, we
have government revenues that are rising.
We did cut $70 billion the first year we were here in spending that
would have been spent. That has been extrapolated each year. That is
probably worth about $150 billion that would have been spent this year
that we cut, so we have done the cutting part that we could do. We need
to do more to be able to get there.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, just like
there is only a surplus or not, not a genuine and a phony, there is
either a real surplus or not a real surplus, the other thing is there
is either a real cut or not a real cut.
I think we have to be very clear that when we talk about cuts in
Federal spending, that I do not believe in any year since the gentleman
has been here, since 1995, that our spending in any year, say for 1996,
even though we cut spending, we are not spending less than what we
spent in 1995.
Mr. COBURN. That is a great point. The government still grew.
Mr. HOEKSTRA. There is only one cut, and that is when the number goes
down. What we have done is we have slowed the growth. The government is
still growing, it is still getting bigger. We are spending more money
on a number of different issues which this Congress and the President
have identified as priorities. In no given year, however, can we go
through and say that government is smaller in 1996 than it was in 1995.
This is why I think it is so upsetting when so often we go out and
hear about all of those cuts in Congress, that Congress has made on
government spending, and we sit there and say, no, we are spending more
than what we did last year. The only thing is we have slowed the growth
and tried to demonstrate some restraint, because of the issues we were
dealing with. We were looking at $300 billion deficits.
It is a great thing that somebody finally came here and exercised
some restraint so we can get to a surplus, or that we will get to a
surplus, and all we did was slow the growth. We did not cut. Sure, we
eliminated some programs, but we are spending more than what we did.
Mr. COBURN. Let me just jump in here for one second. I want to make
sure the American people understand. We do not really care who gets the
credit. Right now what we are concerned about is our grandchildren,
because if we steal social security money and we allow the government
to grow in terms of new programs, our children, our grandchildren have
very limited futures.
So it does not matter. We did our job and we worked hard to try to
slow the growth, but I want the American public to know that we do not
have to have credit for it. The thing we want credit for is for our
children a generation from now to be able to have an opportunity to
have a standard of living at least to the level of the average standard
of living in this country today.
Mr. GUTKNECHT. If the gentleman will yield, both gentlemen have made
a couple of very important points. To a lot of average Americans, the
language of Washington is very difficult to understand.
We heard about these draconian cuts in education programs, in student
loans, when in fact student loans were going up at greater than the
inflation rate, but we were slowing the rate of growth. In Washington a
lot of people talk about cuts in spending, when all we are really
talking about is slowing the rate of growth in spending.
I think one of the greatest Washingtonspeak expressions that was
created many years ago is this comment or term ``trust Fund.'' It has a
nice ring to it. In fact, if we talk to our constituents and use the
term ``trust fund,'' they think, trust, fund, that there must be a fund
there somewhere.
What they do not understand, and particularly with social security,
and perhaps we need to do a better job ourselves of explaining it to
our colleagues, because I think when they think of social security,
they think of a pension fund. Frankly, it is not a pension fund in the
classic sense, it is a pay-as-you-go system.
I think, Dr. Coburn, you have talked earlier about when it was first
started we had 41 people working for every person who was retired. In
1950 we had 16 workers for every person who was retired. Today that
number is slightly over 3 people working for every person who is
retired. When the baby-boomers start to retire, that number is going to
drop to two workers for every person retired. It is a pay-as-you-go
system.
In fact, rather than think of it as a pension fund or even as a trust
fund, in some respects I think we need to think of it as a checking
account, and that right now there is more money coming into the
checking account than is being paid out in benefits. But in 2013 that
is going to change.
One last thought. When I graduated from college, I happen to remember
who the speaker at our commencement address was. He was Director of the
United States Census. I was born in 1951. He told us something
interesting that day, that there were more babies born in 1951 than any
other single year. We represented the peak of the baby boom.
{time} 2200
When we start to retire at about 2012, 2013, that is when we begin to
draw so
[[Page H1157]]
deeply on that ``trust fund.'' That is the real issue that is
confronting us. It is demographics because of this huge bulge of 81
million baby boomers that start to retire in the year 2010.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, I was going
to say, I think that if you take a look at two charts, we will outline
how critical it was that we made the types of decisions that we made in
1995.
When you combine the chart of deficit outlooks, which the gentleman
from Minnesota (Mr. Gutknecht) showed us earlier, here is the dynamics
that were going on in 1995 when he came here. The deficit was going
down. By 2009, the deficit was going to be $600 billion per year. All
right. So that is one. Think of it. We are going to spend $600 billion
more than what we are going to collect in revenues.
Look at the trend line. The trend line is that this number is going
down. So by 2013, we are probably going to be at $700 billion with the
accelerating rate.
If we combine that with what was going to happen in Social Security,
because right here, 2013, this was going to become a negative. So we
have got the deficit on the general fund being a huge number. Then we
are going to compound it with this flow from Social Security. There
were people saying that is good enough. We take a look at it and say
there is no way we can survive.
Now we have taken care of the one chart, which is just the deficit
numbers. We have got that under control.
Mr. COBURN. Mr. Speaker, reclaiming my time, by the way, that is the
false deficit.
Mr. HOEKSTRA. The false deficit. Mr. Speaker, that is right. But we
still are facing this crisis. So we, with the plan now to wall off the
Social Security dollars, say, number one, we are getting a handle on
it. But it does not take care of these deficits yet. We are going to
have to come up with a plan to reform Social Security. I think that
leads into your options.
Mr. COBURN. Absolutely.
Mr. HOEKSTRA. Mr. Speaker, we still have this issue to deal with over
the next couple of years.
Mr. COBURN. Mr. Speaker, so what are our options? Three are listed
here, but there is four. The first is we can save 100 percent of
seniors' money. Remember, when we do that, when we save 100 percent of
seniors' money, we are doing two things. We are following the
obligation that we really have to the American public because they are
paying Social Security taxes for their Social Security. But, number
two, we are relieving a tremendous burden on their grandchildren.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, I mean that
is the one thing, the point that I missed on these two charts. The
gentleman from Oklahoma brings it out at exactly the right time.
When the deficit is increasing, and we have got that liability coming
up on Social Security. The Federal Government going out and borrowing
huge sums of money means potentially increased taxes for our kids and
our grandkids. It means that the government is going out and borrowing
probably billions, hundreds of billions of dollars per year.
As we went through the Committee on the Budget, Alan Greenspan came
in and said, ``If you get to a surplus budget or close to a surplus
budget, I expect interest rates to drop by 2 percent.'' Do my
colleagues know what? He was absolutely right in 1995. That is not a
cost. That is a direct benefit to the American people.
The biggest tax cut that we have given American families is to get
close to surplus, because that has kept interest rates down on
mortgages, on cars, on student loans and all kinds of things.
Mr. COBURN. Mr. Speaker, what we can do is we can save 100 percent of
the money and start working on a program that allows some flexibility
in the options for the younger generation. We can do that by never
threatening and never putting at risk any seniors' Social Security or
any near seniors' Social Security. So we can meet the obligations that
we have. We can devise a plan where we can work our way out of the
Social Security quagmire that we have.
I want to make one other point before I go to option two. Why are we
in the problem we are in? It is not all just demographics. This body
has the habit of doing things that are politically pleasing but not
asking people to pay for them. So we vote increased benefits and
programs but say it is not ever going to cost.
What that is, it is a half truth. A half truth, my daddy always told
me, was a whole lie, because all these increased benefits are going to
be paid for by my grandchildren and my colleagues' grandchildren. All
these benefits that have been passed and increased without accounting
for a way to pay for them was an untruthful thing to do to the next two
generations.
It got a lot of people reelected because reelection was more
important than being truthful with the American public. That is what
this debate is all about, absolutely making sure they understand where
we are on Social Security.
Second option, we can repay the money taken from the Trust Fund, and
we can raise everybody's income taxes. In 2013, the graph that you have
up there, something is going to have to happen.
Number three, we can decrease the benefits. We can delay the
retirement age. We can raise the payroll taxes. The estimate is, if we
do not do something, that the payroll taxes are going to be near 30
percent, just the payroll taxes, counting the employer's contribution
in 2015 to account for this large, large deficit in the Social Security
system.
Then of course there is the fourth option.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, maybe the
gentleman from Minnesota (Mr. Gutknecht) can help us out here. But when
we take a look at the FICA taxes or the Social Security taxes when an
employee at the end of the year gets their W-2 which shows how much
income they have made, and it shows how much they have paid in tax, is
the full Social Security tax displayed on their W-2 form?
Mr. GUTKNECHT. Mr. Speaker, the answer obviously is no.
Mr. HOEKSTRA. Mr. Speaker, what does the gentleman mean
``obviously?'' It is all the money that they have made. It is all the
money that is excluded that is taken out of their check by taxes. Would
not it all be covered?
Mr. GUTKNECHT. Mr. Speaker, the average American does not understand
that. Not only do we take 6.2 percent of their income, but their
employer matches that to a total of 12.4 percent.
What is worse, because a lot of people think of this in terms of a
pension plan, if the average American knew what their rate of return
was on these funds, they would be outraged.
I think our colleague from South Carolina (Mr. Sanford) is joining
us. But the numbers that I have seen for the average American today,
the average rate of return in fact we hear often, and I talk to a lot
of groups, I say, ``How many of you heard the expressions Americans do
not save enough?'' Most of them raise their hands. The truth is
Americans save a lot when we take that 12.4 percent that they and their
employer put in Social Security. We are saving an enormous amount of
the average worker's income.
The problem is we get such a lousy rate of return. The number that I
have seen is 1.9 percent on average. It varies depending on one's age
and when one started putting it in. But the rate of return is terrible
on Social Security.
Mr. COBURN. Mr. Speaker, actually the Social Security Administration,
since 1955, gives a real rate of return of 0.6 percent.
Mr. GUTKNECHT. Mr. Speaker, I am being generous then.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield for just a
second, because I think it is going to be a bill that I think I am
going to introduce tomorrow. What I do encourage each and every person
to do is to take a look at their W-2, to take a look at their FICA
number, which is their Social Security tax, and remember that that
number, whatever it is, is matched by what their employer paid to the
Federal Government. That could have been used for salaries or whatever,
but that is money that is coming to the Federal Government. So it is
not 6.2. It is 12.4.
Tomorrow I believe we are going to introduce a bill. It say that is
the employer, I know we do not like mandates, but that the employer on
their W-2, on an employee's W-2 has to put in the employer's share of
the tax that they have paid to the Federal Government so that the
employee sees that,
[[Page H1158]]
when they are working, their employer not only pays their salary and
their taxes, but there is a hidden 6.2 percent tax that is going to the
Federal Government based on the salary that they are making. It is full
disclosure. It is truth in budgeting.
Mr. COBURN. Mr. Speaker, reclaiming my time, let me reemphasize
first, if I can, four options. One, save the money. Do not spend any of
the seniors' Social Security money by growing the government. Number
two, raise taxes. Number three, cut benefits. Number four, and that is
do nothing. That is what the politically expedient would say, do not do
anything with Social Security because one cannot get reelected if one
does it.
The fact is we have an obligation to save Social Security. We have an
obligation to save 100 percent of the money that is going into it now
for Social Security. Then we have an obligation to fix the system for
the generations to come.
Mr. Speaker, I yield to the gentleman from South Carolina (Mr.
Sanford).
Mr. SANFORD. Mr. Speaker, just following up on the comments of the
gentleman from Minnesota (Mr. Gutknecht) on rate of return, because I
have heard the same 1.9 percent rate of return. I saw a UCLA study that
showed that, for a person born in 1970, earning $30,000, they would
have to live 110 years just to get their own money back, not a return
on the money, but just to get their own money back.
So the bottom line is it is a low rate. What is interesting is, in
contrast, I jotted down some numbers here.
Mr. GUTKNECHT. Mr. Speaker, if the gentleman will yield for one
second, remember, this is a low yield on 12.4 percent of one's income.
Mr. SANFORD. Mr. Speaker, which one earns every week, which one earns
every month, and which one earns every year. What is interesting is, in
contrast, last year, the Fidelity Contra Fund, for instance, which is a
huge mutual fund, earned 32 percent. The Van Camp and Capital B Fund,
which is the oldest mutual fund in the United States, it was actually
started in 1945, earned 28 percent. The T. Rowe Price Tech Fund earned
9 percent. CDs earned 6.5 percent. Even a checking account earned 2
percent.
The point that I am making here is, one thing I think we need to be
watchful for as policy folks in Washington is we do not have two
different retirement plans, one retirement plan for wealthy people that
is earning 30 percent or 28 percent, and clearly these are not
sustainable numbers, those numbers will go down, but the point is one
group is earning a lot on their retirement plan, and then this other
group, because Social Security taxes are the largest tax that 73
percent of Americans pay and consequently the largest investment that
basically 73 percent of Americans make, and another group earning a
negative number or 1 percent number, and that really creates a problem
in our society that I think needs to be addressed in the Social
Security issue.
Mr. COBURN. Mr. Speaker, reclaiming my time, let me jump in here,
because one of the solutions to the problem, the first solution is to
restrain our spending. I have a graph up here that I want my colleagues
to compare.
It is, if we restrain spending, what that means is if we live within
the caps this we agreed to with the President in 1997, what my
colleagues will see in terms of real numbers, not hokey numbers, not
supposed surplus, but real surplus and deficit, what my colleagues see
is, in the year 2001, that under the CBO estimated numbers right now,
we come to a real surplus just by living to the agreement that we made
with the President in 1997.
In contrast to that, and my colleagues also will note over here in
the green that these are real surplus dollars, dollars that we can in
turn turn back towards Social Security, turn back towards Medicare,
turn back towards education if we get there.
There is no absolute guarantee that those numbers are going to be
right because we have had the longest nonwar peacetime expansion that
we have had since World War II. These are estimates. So if we have a
system that is going broke, we dare not trust just estimates. What we
dare do is restrain our spending.
Now I want to contrast that with what the President has proposed in
his budget. These numbers come from his budget numbers. What my
colleagues will see is, under his plan, all this red is new spending.
Under his plan, with the same revenue projections, we do not come to a
true surplus until 2004.
So if we restrain spending between now and 2004 by living up to the
agreement that we had with the President in 1997, all of this becomes
all of this.
Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, all the stuff
below the line on the President's proposal is new debt for our
children.
Mr. COBURN. Mr. Speaker, reclaiming my time, it is stealing money
from Social Security is what it is. We are taking money that is Social
Security money and spending it for new programs which will be paid back
by my grandchildren and my colleagues' grandchildren at a much higher
rate and at a tax rate higher than what we are experiencing today.
Going to the first point of the gentleman from Minnesota (Mr.
Gutknecht) is one of all the desires of the seniors in my district is
to make sure their children have at least the same standard of living
as they have had, not worse, and hopefully the opportunity.
What stealing Social Security does and what running a deficit does is
takes opportunity away from our children. We are stealing their
opportunity. We have to be honest that, with this plan, we are going to
be taking money out of the Social Security, we are going to be
borrowing that money, and spending it on new programs to be paid back
by our children and grandchildren.
{time} 2215
Mr. HOEKSTRA. If the gentleman will continue to yield, we can take a
look at those two charts, and the chart on the top is what happens if
we wall off the Social Security dollars. If we protect the Social
Security dollars, it says that by 2001 we will be able to sustain some
type of change in economic conditions. The further out we get, if we
have an economic downturn or if we have some emergency spending
requirements, that we have some room in there that we could still have
a real surplus, even with some difficulties in the budget.
The bottom one says that under the best of circumstances, by 2004 we
will have a small surplus.
Mr. COBURN. It will look just like that. We will be back to those
original numbers.
Mr. GUTKNECHT. If the gentleman will yield. In effect, the top chart
is essentially what the congressional leadership budget plan has been
agreed to; that we will abide by the spending agreement that we made
with the President back in 1997. Even if the President will not, we
will abide by the spending caps.
Mr. COBURN. This is what the President agreed to in 1997.
Mr. GUTKNECHT. Exactly. Now, what the President has proposed, though,
is about $30 billion a year of additional spending above and beyond the
spending caps that he agreed to.
Now, one other point that needs to be made about those two charts. If
we abide by those spending caps, it will mean we will have lower
interest rates, because the government will not be borrowing so much.
And as a matter of fact, we will begin to pay down some of that debt,
so we will have lower interest rates. That means that we will have a
stronger economy, and a stronger economy is good for everybody.
Mr. COBURN. I would just like to make a correction to make sure we
understand. If we borrow the money from Social Security and we buy off
treasury bills, we really do not lower our debt. We still pay the same
amount of interest, we are just paying it to ourselves, but our
children are still going to have to pay it back. So the floated public
debt actually does decline, but the amount of money and the lost
opportunity for our grandchildren goes up.
It is important the American public knows that, because we do want to
pay off the debt. We would like to leave our children debt free, but we
also want to leave them debt free with opportunity.
Mr. HOEKSTRA. What the top chart enables us to do, if we stick to the
spending caps and we pass our budget, is to really focus on what our
colleague here has been working on, which is to seriously take a look
at Social Security reform.
[[Page H1159]]
Because we have to be honest here, we do not save Social Security.
What we do is we position ourselves to save Social Security for our
kids and for our grandkids. But that is the next step, again. We get to
a surplus, then we get to a point where we have sufficient surpluses to
save Social Security but we still have to do a Social Security reform
proposal.
Mr. SANFORD. I agree, but I think, if the gentleman will yield, what
is interesting is that before we can get to any Social Security plan,
and the gentleman is right, I have been a big proponent of a number of
different things on that front, we ultimately have to have trust in
government.
Mr. COBURN. Absolutely.
Mr. SANFORD. That begins with straightforward and honest accounting,
which is what the gentleman from Oklahoma (Mr. Coburn) is getting at.
Looking at the numbers, by any family definition, if we had somebody
living on our street that had to borrow from their retirement reserves
to put gas in the car or food on the table, we would say that family
was not running a surplus. Similarly, in the business world, if a
businessman borrowed against his retirement reserves to pay for the
current operations of the company, he would go to jail, based on
Federal law. Yet that is what the Federal Government has been doing.
So what is being talked about here is a first step of restoring
confidence so that people will trust government and they will listen
when we propose to them things about Social Security.
Mr. COBURN. One of the things we want people to understand about this
is this concept of surplus. I have a little history for us and a little
proposal for what we have today. It makes sense, if we have a surplus,
that the national debt should not go up; correct?
Mr. HOEKSTRA. Right.
Mr. COBURN. Now, supposedly we had a surplus, yesterday. That is what
the politicians in Washington are saying. We had a surplus. Why, then,
did the debt go up $120 billion for our children and grandchildren to
repay if we had a surplus?
The American public should know this. If they want to know if we have
a surplus, we will have a surplus the first time the actual debt goes
down. And we will not have a surplus until the American people hear
that. So if anybody says we have a surplus, people should ask them at
the same time, does that mean a surplus with the debt rising or a
surplus with the debt going down. Because the only way we can measure
if we have a surplus is if the debt goes down.
We can see in 1997 we had a small deficit, but the debt rose
significantly. In 1998 we claimed, politicians, a $69 billion surplus;
right? What happened to the debt? It rose from $5.330 trillion $5.445
trillion, another $115 billion increase in the national debt. Yet the
politicians in Washington said we had a surplus. We did not have a
surplus. It is totally dishonest to speak of a surplus.
We had more money coming in than we paid out, but we borrowed all
that plus the 44 trust funds that the gentleman from Minnesota (Mr.
Gutknecht) talked about, the airport trust fund that we pay $2 each way
on every ticket; the inland water trust fund. We took money from all
those trust funds, plus Social Security, to run the government, and we
have not been honest in the accounting of it.
So it is important for people to understand the only time that we
have a true surplus is when the debt goes down or taxes go down.
Mr. HOEKSTRA. What the gentleman is pointing out is that with as much
progress as we have made since 1995, there is still a lot of reason to
be cautious. There is still a lot of work to do.
There are people here in Washington who are saying, wow, look, $60
billion surplus going up to $110, let us go spend. Let us spend it on
this program or let us spend it on that program. I think my colleague,
perhaps in his next chart or one of the charts coming up, is going to
talk about when the President came here for his State of the Union
speech and spent most of the surplus that we really do not have.
There is still a lot of work to do to get to a real surplus and to
begin preparing for the deficits that we are going to be facing in 2013
in Social Security. So there is still a lot of reason to show restraint
as it concerns spending here in Washington.
Mr. COBURN. This next chart kind of brings it home. Every man, woman
and child in 1997 owed $19,898. That is the debt divided by the
population. In 1998 it went up to $20,123. This year, under the budget
that we are operating now, the appropriation bills that have been
passed, the debt for every man, woman and child in this country is
going to go up over $500.
The debt is rising, as we speak, $275 million a day. A day. We are
adding $275 million. We are taking $275 million worth of lost
opportunity for our children and grandchildren each day that we
continue to run under a dishonest accounting system. I think that is
something that the American public can relate to.
So a surplus is only a surplus if an individual's portion of the debt
is going down. It is only a surplus if the debt is going down.
Mr. HOEKSTRA. If we really think about it, a debt of $20,000 per
person, and I am a family of five, meaning that my share of the
national debt is greater than my mortgage.
Mr. COBURN. Correct.
Mr. HOEKSTRA. There are five of us, so our share of the national debt
is $100,000, and next year it is going to be $103,000. It is going the
wrong way.
Mr. COBURN. The three babies I delivered this weekend owed $20,000 at
the time I spanked their bottom to get them to start breathing. That is
a heck of a legacy for us to leave those children. They are born, they
come into this world, and we are going to strap them with a $20,000
debt.
I have here a little chart based on what is happening right now under
the budget we are under and under the proposal of President Clinton. I
want to carefully choose my words here as we go through this. I think
the American public can understand.
The excess payments in Social Security last year, this year, are
expected to be $127 billion. More comes into the trust fund than will
be paid out. If we had kept the 1997 spending caps and not, with a gun
at our heads, passed an omnibus reconciliation package last year, we
would have had a deficit this year of $1 billion. From $220 billion,
$350 billion, to $1 billion. But we did not, we gave up $15 billion
above the caps in October-November last year.
Then we have the proposal from the President to spend a billion
dollars for the disaster in South and Central America, which had no
recommendation that we pay for it. That money has to come from
somewhere. So we will borrow it from the Social Security Trust Fund. So
what is happening right now is, already this year $17 billion of the
excess has already been stolen for 1999, leaving $110 billion.
But that is not the important point of this. We can fix that, if we
will restrain spending this year and move that $15 billion back up in
this next year. But look at what the estimates are from the bipartisan,
that is Democrat and Republican, Congressional Budget Office. We are
going to get $138 billion in excess payments in the year 2000. That is
what they are estimating right now. The Congressional Budget Office
estimates right now that the Congress is going to spend $5 billion of
that, just on the track that they are on right now with the 1997
agreements. If we add the new programs that President Clinton has in
his budget, we steal another $20 billion. Then, if we take what the
President said, which is even technically misleading, that he wants to
reserve 62 percent, and we spend the rest on the programs that he wants
to spend, what we actually do is spend all but 59 percent of the Social
Security money.
So the important thing is that, if we look at the green here, we went
from $110 billion of savings in Social Security, and now we are looking
at a, quote, politician's surplus. And what is happening to it? It is
getting spent. So the politician's surplus is going to decline to $81
billion. It is not a real surplus, just how it is measured in
Washington.
So not restraining spending means that $57 billion of our seniors'
money, of our grandchildren's futures are going to be spent this year
in new programs, growing the government and stealing opportunity from
our children.
Mr. SANFORD. If the gentleman will yield, I think what is important
about that point is that people remember, and, in fact, we all have
heard that one simple fact about real estate, where
[[Page H1160]]
the equation is location, location, location. Well, in Washington the
equation is politics, politics, politics. That is not a bad thing; that
is not a good thing, but that is certainly the way this city works.
Therefore, I think the real issue to be thought about here is that it
is the squeaky wheels that get greased in politics. It is important for
people to speak out at town meetings across the country, in writing
their Congressmen, in writing their Senators, to say if they are given
the choice between spending their children's inheritance or not which
one they want done. People really need to be making noise about this,
because otherwise the immediate is what gets taken care of in
Washington and the money gets spent.
Mr. HOEKSTRA. I think that is exactly right. That is the problem that
we are facing. We have had the debate within our own conference, where
we talk about debt reduction and getting our fiscal house in order, and
people say, well, that does not sell.
{time} 2230
In reality, I think when you lay out some of the charts that we laid
out earlier that talk about the burden that we are facing, that we are
placing on our children, I think when you go back to the chart that the
gentleman from Oklahoma (Mr. Coburn) has up there and you start saying,
wait a minute, we had $138 billion within our grasp, and in one year we
took it away from Social Security and we pile it back on to new debt
for our kids, I think the American people would embrace saying, ``Wait
a minute, let's restrain the spending. We see this bubble coming up on
Social Security. Now is the time to act.'' They understand these kinds
of issues. They understand the crisis that we can face with the baby
boomers. I think they look very positively at starting to set some of
this money aside and getting our fiscal house in order. Again, this is
$57 billion of new spending. This is not to get to $138 billion, you
are going to cut spending by $57 billion. This is $57 billion of growth
beyond what we already are planning on growing the Federal Government.
This is brand new growth, brand new growth, brand new spending.
Mr. COBURN. Above the spending caps agreed to in 1997. I would like
to make a point. Our country is rightly worried about education. We are
going to have a lot of debates on this House floor on how we do that.
But to assume that we cannot reprioritize the spending of the Federal
Government to direct more money to education by eliminating waste,
eliminating duplication, by doing the oversight to make sure that the
programs that are out there are working means that we are lazy and we
are not willing to do our job. Nobody feels that this government is
efficient. It is not efficient by any standard. We can exact more
efficiency from this government. If we had a crisis today in this
country, if we were to go to war or some other, we would come in here
and we would make the cuts that we need to make to still offer the
services but we would ensure that it was done efficiently. That is what
we have to do. We have to restrain spending. We can direct more money
to education, but that money should not be stolen from Social Security.
It should come from the wasteful programs that this government funds
today. For us to do something less than that means that we violate the
very oath for the reason that we came up here.
Mr. SANFORD. We were talking a little bit earlier, and I want to go
back for just one second, on possible cures for Social Security. One of
the things that the President proposed in his plan was to invest about
a fifth of the, quote, trust fund in equities. While that sounds very
alluring, I think it is a very dangerous thing, because as Chairman
Greenspan pointed out, you need to create a firewall between Social
Security money and political forces in Washington.
Mr. COBURN. That is exactly what we are trying to do. We are trying
to say, it is time to be honest, it is time to be straight, it is time
to get the hands off the Social Security money that is there and start
working on a solvable solution for it but not use it to expand the
government and compound the problem associated with Social Security for
the future. Remember, in 2013 we are going to be coming back, somebody
is going to be coming back--I am not--to the American public and if we
have not done our job in this Congress about walling off the Social
Security money, we are going to be asking people to cough up a ton more
money, regardless of what the economic conditions are. We are going to
have to do it to meet the commitments to the seniors that are out there
at that time. So we have to start. We have to start today. We have to
start this year, this session of this Congress and not let anybody
steal the first penny from Social Security for any program.
Mr. HOEKSTRA. The gentleman just brought up education. As he well
knows over the last 2 years we have had the opportunity to go to 17
different States and take a look at the Department of Education, 760
education programs, 39 different agencies. For every dollar we spend on
education, 30 to 35 cents of it stays in Washington, never gets to a
child, never gets to a classroom, never gets to the local level where a
parent, a school board, a teacher can say, ``Let's spend this money in
this way to help our kids achieve academic excellence, to get them to
be able to do reading and writing and math.'' The problem is not that
we do not have enough money here in Washington for education. The
problem is that we are keeping too much of that money here in
Washington. We debated a bill today that just said we are going to give
some level of flexibility to local school boards, to State governments,
to take this money to get rid of red tape, to get rid of the abuse and
to make this system more efficient so that rather than throwing more
dollars into an inefficient system, let us make the system efficient so
we can get 95 cents of every dollar into the classroom rather than the
current 65 to 70 cents.
Mr. COBURN. Let me just summarize. We have about 30 seconds left. A
surplus is a surplus is a surplus if it reduces the debt, reduces the
debt, reduces the debt. We need to not allow anyone to spend the first
dollar of Social Security on anything other than Social Security. I
hope the American public can understand what we are trying to do here
is to get truth-in-government back in terms of the budgeting process,
so that we can start the process of saving Social Security. We will
never start that process until we make the firewall and get our hands
off the money that is coming in today.
Does the gentleman from South Carolina have any closing comments?
Mr. SANFORD. No, but I will see the gentleman back on the floor
tomorrow morning.
Mr. HOEKSTRA. I thank the gentleman for taking the time to do this
and look forward to continuing this dialogue.
Mr. COBURN. I appreciate the gentleman's help.
____________________