[Congressional Record Volume 145, Number 55 (Wednesday, April 21, 1999)]
[House]
[Pages H2247-H2253]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  HONESTY IN GOVERNMENT, PRESERVATION OF SOCIAL SECURITY, AND RELATED 
                                 ISSUES

  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 as the designee of the majority leader.
  Mr. COBURN. Mr. Speaker, I am going to have several Members of 
Congress join me today, and we are going to talk about several issues, 
but I wanted to start out on this one, and I want to apologize to the 
people who are seeing this over C-SPAN in that they cannot read it. But 
I think it shows a tremendous disparity in our foreign policy that most 
of us do not understand, and I think we are not very well educated on 
it as a Nation.
  So I want to take some information that is provided by our State 
Department. This is the latest year's report on two separate countries 
that we have dealings with presently. This is the report straight from 
the U.S. State Department's 1998 Human Rights Practices Report.
  Country A: The government's human rights record worsened 
significantly during the last year. There were problems in many areas, 
including extrajudicial killings, disappearances, torture, brutal 
beatings, arbitrary arrests and arbitrary detentions.
  Country B: This government's human rights record deteriorated sharply 
beginning in the final months of 1998 with a crackdown against 
organized political dissent. Abuses included instances of extrajudicial 
killings, torture, and mistreatment of prisoners, forced confessions, 
arbitrary arrests and detention, lengthy incommunicado detention, and 
denial of due process.
  Country A: The government infringes on the citizen's right to 
privacy.
  Country B: The government infringes on the citizen's right to 
privacy.
  Country A: The government severely restricts freedom of speech and of 
the press.
  Country B: The government continued restrictions on freedom of speech 
and of the press.
  Country A: Discrimination and violence against women remained a 
serious problem. Discrimination against religious and ethnic minorities 
worsened during the year.
  Country B: Discrimination against women, minorities and the disabled, 
violence against women, including coercive family planning practices, 
which included forced abortion and forced sterilization, prostitution, 
trafficking in women and children and abuse of children are all 
problems.
  Country A: The government infringed on freedom of worship by minority 
religions and restricted freedom of movement.
  Country B: Serious human rights abuses persisted in minority areas 
where restrictions on religion and other fundamental freedoms 
intensified.
  Country A: Police committed numerous serious and systematic human 
rights abuses.
  Country B: Security police and personnel were responsible for 
numerous human rights abuses.
  Country A is a constitutional republic; country B is an authoritarian 
state.
  Let me describe these two countries. This is Yugoslavia. We are 
presently bombing it as we speak. This is China. We presently give them 
Most Favored Nation's status. The President just spent a week in 
association with trying to establish World Trade Organization status. 
There is something wrong with our foreign policy when we take two 
countries who have equal human rights abuses, one we are trying to make 
a friend and do things for economically; the other we are bombing. 
Very, very difficult for us to understand.
  As we bring about this discussion of the bombing and the war, the 
only reason I want to bring it up is because of how it is going to 
impact what the major topic is that I want to talk about, and that is 
honesty in government and the preservation of the Social Security 
system and the utilization of Social Security funds for Social Security 
and not something else. I would like to yield to my friend from 
Minnesota (Mr. Gutknecht).
  Mr. GUTKNECHT. Mr. Speaker, for the benefit of Members like myself 
who were not listening carefully at the beginning of your presentation, 
it sounded as if you were quoting from some magazine or document. Where 
did the gentleman get the quotes he was talking about?
  Mr. COBURN. This is from the United States Department of State Report 
on Human Rights Practices for 1998. This is our government's own 
evaluation of these two countries.
  Mr. GUTKNECHT. Mr. Speaker, one of the countries was Serbia and the 
other was China?
  Mr. COBURN. Correct.
  Mr. GUTKNECHT. It is hard to tell which was which from the comments?
  Mr. COBURN. One cannot tell which is which from these excerpts from 
the Human Rights Report.
  Mr. GUTKNECHT. This is a nonpartisan group in the State Department?
  Mr. COBURN. This is a nonpartisan group. This does not have anything 
to do with Republicans or Democrats. This has to do with our 
international relations and our assessment of human rights status, and 
we do this on every country that we deal with, it is required by law, 
and here is the assessment for those two countries.

                              {time}  1530

  It blows the mind to think that we have the same evaluation by the 
U.S. State Department, and one country we are trying to befriend and 
economically aid, and the other country we are bombing today.


                               The Budget

  Mr. COBURN. What I really want to talk about today is the budget, the 
money. The U.S. Congress for the last 45 to 50 years has been dishonest 
with the American public about the budget.
  I am in my third and final term as a Member of the House from 
Oklahoma. I am a practicing physician. I have continued to practice 
medicine since I have been in the House. I delivered 97 babies last 
year as a Member of Congress. It is the thing I do that I think keeps 
my perspective the same as those people that I represent.
  I heard in the State of the Union, and I also would tell the Members 
that I am not partisan; my district is mainly Democrats, and I am 
reelected as a Republican because I am seen as nonpartisan.
  But I want to share some of the things that the President said in his 
State of the Union, and then I want to show the Members that the 
government is complicit in being less than honest with the American 
public about where our financial situation is, what the risk of that is 
to us for the future, what the risk is for our children and 
grandchildren, and that we tend to minimize, and we talk out of two 
sets of books.
  The first principle that I want to make sure that we understand is 
the only time the Federal Government really has a surplus is when the 
debt goes down for our children.
  We currently have almost $6 trillion of debt that my grandchildren, 
and I have two of them, they are going to help repay that debt. That is 
because we have used a double accounting standard. We do not speak as a 
body truthfully to the American public about our accounting system or 
our deficits and our surplus, and neither does the executive branch.
  I want to use a couple of points to bring that out, and then I really 
want to try to make sure that the American public knows where we are in 
the social security trust fund, how we solve that problem, and what a 
surplus is and what a surplus is not. Because we continually hear today 
that we are in a

[[Page H2248]]

surplus. We are not in a surplus. We do not have a budget surplus 
associated with this government.
  At the State of the Union speech, I want to give the Members some 
quotes that I heard. I hope that Members will be patient to understand 
why this is important. This is not about Democrats and Republicans, it 
is about returning the people's House to the people by truthfully 
speaking about what our situation is, so they can in fact have 
confidence that we are going to deal properly with it, rather than 
telling a little white lie about what the situation is, and the public 
knowing that we cannot be trusted to deal properly with it.
  President Clinton said this in the State of the Union speech this 
year: For the first time in three decade, the budget is balanced. From 
a deficit of $290 billion in 1992, we had a surplus of $70 billion last 
year.
  That is not true. We actually, and I want to show that, if we had a 
surplus last year in 1998, how come the debt went up $200 billion? How 
come our children owe $200 billion more this year than they did last 
year, if in fact we had a surplus? We did not. We borrowed $200 
billion, almost, in terms to fund and run the Federal Government above 
what we actually took in.
  It is true, some of that we borrowed from the social security trust 
fund, but any time we put an IOU to the social security trust fund, we 
are recognizing a liability that our children are going to have to pay 
back.
  We also are going to have to pay interest, so it is like borrowing 
from our retirement account to pay off the debt, and then saying we do 
not have a debt anymore, because we have a debt. If we allowed public 
companies to raid their retirement programs, we would put the people 
who made that decision in jail, because we have said that they cannot 
touch retirement funds. They are projected and protected for the 
purpose that they will be there in the future.
  If we look at this chart, the politicians in 1997 said we had about a 
$20 billion deficit. But the debt rose from $5,200,000,000,000 to 
$5,325,000,000,000. In 1998, voila, we have a surplus, the first time 
since 1969, but look what happened to the debt. The debt rose. How can 
we have a surplus?
  This is a politician's surplus. This is the difference between what 
we took in in social security and what we paid out and we did not 
spend, of that difference. If we took in $10 and we spent $6, then we 
had a $4 difference and we are calling that a surplus, where we still 
owe the social security system $10.
  So it is important for the American public to understand what a 
surplus is.
  Mr. Speaker, I yield to the gentleman from South Carolina (Mr. 
Sanford).
  Mr. SANFORD. Mr. Speaker, I thank the gentleman for yielding to me.
  If we might, just in comparing our respective charts, because I want 
to show this thing off, staff has been kind enough to put this 
together, it illustrates the exact point that the gentleman is getting 
at, which is the yellow here basically is what we borrow in total from 
each of my three young boys each year. I have a 6-year-old, a 5-year-
old, a 3-year old, and a 6-month-old.
  The yellow number, for instance, back here in 1994, we borrowed $293. 
The deficit was $203. In 1995 it was----
  Mr. COBURN. If I can interrupt the gentleman, the difference between 
what we borrowed and what the deficit was is what we stole from social 
security.
  Mr. SANFORD. That is exactly right.
  Mr. COBURN. The spin on programs other than social security.
  Mr. SANFORD. Yes. So basically $100 billion, to keep the math simple, 
got borrowed here, and 277 versus 164, again a difference of about $100 
billion that was borrowed in 1995. In 1996, $261 was what we borrowed, 
and 107, a little more than that. We could round it out to be in the 
neighborhood of $100 billion.
  Then going back to the number that the gentleman just talked about, 
which I think is interesting, because this is this $70 billion surplus, 
and yet we borrow over $100 billion. So the gentleman is exactly right, 
common sense and regular language and regular accounting back home 
would say what we are running right now is not exactly what the rest of 
America would call a surplus.
  Mr. COBURN. Let us spend a little time and tell why it is important 
that we start being honest with the American public.
  Even with the latest numbers that most people in America have read 
with social security's outflow-inflow changing by 1 year to the year 
2014, what we can see is the bars in black represent more money coming 
into social security than we are paying out.
  We can see until the year 2014 we are going to be doing okay. We are 
going to have more money coming into social security than we are 
actually going to pay out, so there is cash there that the Federal 
Government has.
  It is smart to borrow that and pay off external debt. I do not deny 
that that is a smart thing to do. But it does not lower the total debt 
that our children and grandchildren are going to have to pay back. It 
is an untruthful statement to say that it lowers our debt. It does not. 
It just lowers that portion of the debt that the public holds, that 
Japan holds, that Switzerland holds, that Germany holds. It just lowers 
that percentage and shifts more IOUs to the social security system.

  What is important about fixing social security, and fixing it on the 
basis that we are going to start being truthful about the surplus, we 
are going to be truthful about the surplus in the social security 
account, which is totally different than the surplus for the Federal 
Government, is that look what happens after the year 2014.
  If we take all money that comes from social security, starting in 
2014, plus all this, what we will find is we are going to have to go to 
the taxpayer or to our general revenue. We are going to start having to 
cut a whole lot of other spending to keep a balanced budget, if in fact 
we are going to be able to pay what we owe for my generation, the baby-
boomers.
  I was born in 1948. I am the proverbial baby-boomer. There are going 
to be a whole lot fewer people working when I get ready to draw social 
security than were working when I started paying into it. Consequently, 
we can see out here at the year 2035, $850 billion a year is going to 
be required in additional revenues for us to just meet the payments of 
the baby-boomers, just to meet the needs.
  We have a couple of ways that we can deal with that.
  Mr. SANFORD. As the gentleman is pulling that chart up, Mr. Speaker, 
what I think is interesting about what the gentleman was getting at, 
again, is this whole notion that we have said we are going to have 
surpluses basically as far as the eye can see.
  Last year, as the gentleman mentioned earlier, the surplus was $70 
billion, but we borrowed $100 billion to get there. Next year they are 
talking about a surplus of again around $80 billion, but borrowing $130 
to get there; the year after that, a surplus of about $100 billion, but 
again, borrowing $100 billion to get there.
  Mr. COBURN. The point we are saying is we do not truly have a surplus 
until we quit borrowing money external to the United States. Until our 
debt stops rising we have not achieved a surplus, and it is not proper 
to tell the American people that our books are balanced until we quit 
adding to the debt for our children and grandchildren.
  We have three options when we get to the year 2014 at that time. We 
can, one, save 100 percent of the social security surplus, transition 
to a system with a portion of that in individual accounts, so that what 
we invest in social security we get a decent return on. Right now the 
average over the past 30 years has been about 1.2 percent on our 
investment. We could have had it in a passbook savings and done three 
times better.
  Number two, we can repay the money taken from the trust fund by 
raising everybody's income taxes, and it is important to understand 
what that does. That lowers the standard of living for our children and 
our grandchildren, because the politicians in Washington have not had 
the courage to be honest and not spend money that belongs to the social 
security system. Or we can delay the benefit structure. We can say we 
are going to wait until we are a certain age, or we can cut the 
benefits.
  There are only three things that we can do to fix social security. 
There are not more than three things to do. We have to do one of those 
three things. We can deny, the politicians can deny this as a problem, 
because they are

[[Page H2249]]

really more interested in getting reelected; or they can say, we have a 
problem with social security and it is okay to talk about that, because 
I do not have one senior citizen in my counties, and that is 18 of them 
in Oklahoma, who want their grandchildren to lose an opportunity 
because the politicians in Washington have not done the right thing. 
They would much rather sacrifice dollars for their grandchildren.
  We have an obligation before us. We are at a turning point. The first 
turning point is being honest with the American people about the 
budget, not letting the politicians' lingo, because it sounds better, 
it is easier, and we will not be subject to criticism if we are a 
little bit untruthful. It is the old question about, a half truth is a 
full lie. My daddy taught me that from the time I was 2 years old. And 
a surplus is a half truth. It is a surplus in social security.
  We have to do one of these three things. I notice that the gentleman 
from Michigan (Mr. Hoekstra) has joined us. I wanted to welcome him and 
thank him for being here to discuss this issue with us.
  Mr. Speaker, I yield to the gentleman from Michigan (Mr. Hoekstra).
  Mr. HOEKSTRA. Mr. Speaker, I thank my colleague, the gentleman from 
Oklahoma, for yielding to me.
  The options that the gentleman lays out are probably the range of 
options that we have, although under option one, we probably have a 
number of different alternatives for how we would reform and strengthen 
the foundation for social security.
  I hope that that is the option that this Congress pursues and pursues 
aggressively, because if we begin in 1999 to take a look, a serious 
look at reform, and if we implement reform in this Congress, that gives 
us, then, you know, we have a time window then of 14 or 15 years to get 
ready before we hit that wall in 2014. That is a much better option 
than the number two, which is raising taxes.
  Or we end up cutting a bunch of services in the other area of the 
government, but I do not think that will ever happen, or to change the 
fundamental structure of social security by delaying the retirement age 
or cutting benefits and those types of things.
  So the opportunity, and really, the thing that we have to take a look 
at in this Congress is reforming social security along the lines that 
our colleague is developing a plan on, but that is the mandate that is 
in front of us.
  Mr. COBURN. It is interesting to note, as this deficit, this amount 
of money that we are going to have to take from the general fund comes 
up, what we are going to do is we are either going to raise taxes or we 
are going to raise FICA taxes to take care of this, it is estimated a 
25 percent FICA tax instead of the 12.5 percent FICA tax.
  The other thing to note, so everybody can really understand this idea 
about the debt, is the debt is growing at $275 million a day right now. 
Right now the national debt is growing at $275 million a day.

                              {time}  1545

  That is a number that I cannot comprehend, let alone billions. If we 
divide it up to individuals, look what the individuals now owe. In 1997 
every man, woman, and child in this country was responsible for 
$19,898; 1998, $20,123; 1999, at the end of this fiscal year, they will 
be responsible for $20,693.
  That does not include the interest that is being charged on that 
every year, which is now, I guess, the largest or fast becoming the 
largest component of the Federal budget at about 17 or 18 percent of 
the money that we collectively spend of the tax dollars that come in.
  Mr. GUTKNECHT. Mr. Speaker, if the gentleman will yield, I wonder if 
the gentleman from South Carolina (Mr. Sanford) would put that chart up 
again.
  The gentleman from Michigan (Mr. Hoekstra) did not come in in the 
class of 1994, but the rest of the three of us did. I might just say 
that I almost wish that the gentleman from Oklahoma (Mr. Coburn) had 
not promised to limit himself to three terms, and I believe the 
gentleman from South Carolina (Mr. Sanford) did the same. We 
desperately need people like them in the Congress because they have 
been valuable Members and people who have been willing to take the 
tough votes to make the progress.
  I want to point out I think whenever we are talking about the budget 
or making any kind of long-term plans, we have sort of got to look at 
where we are and where we are going. I think the important thing about 
this chart, it really points out two things.
  First of all, we still have got a problem. But I think it also points 
out that we have made significant progress. I think the voters back in 
1994 said enough is enough and they said let us send a whole new team 
to Washington that really is committed to balancing the budget, fiscal 
responsibility, and what I call generational fairness, because at the 
end of the day what we are talking about is being fair to the next 
generation.
  But I want to point out, though, that at least we are moving in the 
right direction as it relates to the deficits, no matter how we measure 
them, because in 1994 we were looking at deficits of over $200 billion, 
and actually we were talking over $300 billion if we included the 
Social Security Trust Fund money. In fact, the Congressional Budget 
Office told us in the spring of 1995, based on the President's budget 
recommendations, that that deficit was going to grow from about $225 
billion to about $690 billion.
  Some of us said that that is not the direction that the American 
people want to us go. We got busy. We eliminated 400 programs. We have 
cut the rate of growth in Federal spending by more than half. As a 
result, at least we are headed in the right direction.
  But I think the point of this discussion today is there is so much 
more to be done. I do want to say at least a good thing about the 
budget that we recently passed, I think there are four important points 
that need to be made about the budget resolution that just passed this 
House, and in fact passed the House and the Senate in the form of a 
joint budget resolution.
  But first and foremost, every penny of Social Security taxes for the 
first time is going to be reserved for Social Security. Secondly, we 
preserve the spirit of the balanced budget agreement of 1997 in saying 
that we do intend to keep those spending caps. Third, we actually begin 
to pay down some of the debt that is owed to the public.
  We are not talking about the overall debt because we have got this 
big problem with Social Security. Frankly, the only thing that Social 
Security surpluses can go to is buying government bonds. That may be 
something that we want to look at as we go forward.
  But, finally, and I think this is important as well, we make room for 
some tax relief for working families. Americans today are paying the 
highest total tax rate that Americans have paid since World War II.
  So we do believe that if we can exercise the fiscal discipline that 
we need to exercise over the next several years, we can actually begin 
to strengthen Social Security, have honest budget surpluses, and 
provide tax relief for the American families if we are willing to 
continue to apply the kind of fiscal responsibility that we have had 
for the last 4 years.
  Mr. COBURN. Mr. Speaker, let me show my colleagues how that plays 
out. Down here is the President and Vice-President Gore's budget as 
submitted to the House and the Senate. Here is the budget that was 
passed, that passed the House. In terms of the effect, the zero line is 
right here. This is real surplus. This is honest accounting. This is 
not playing games. I would remind people, this is not my opinion, this 
is Congressional Budget Office and OMB numbers. All right, so they are 
not my numbers.
  If we restrain spending, as the gentleman from Minnesota (Mr. 
Gutknecht) just discussed, where we stay within the budget caps that 
were agreed to in 1997 and that we get our hands off Social Security, 
what we see is that somewhere right after the year 2000 we start 
running a real surplus. As a matter of fact, there are people who are 
projecting this year that because the economy is so good, and because 
one is paying so much in taxes and that we have restrained spending, 
that we may have a $6 billion or $7 billion true surplus, real honest 
non-Washington-based surplus this year.
  But if we do not restrain spending, and we increase taxes as the 
President

[[Page H2250]]

has suggested and we increase programs and we increase spending, look 
what happens. Under his plan there is no real surplus till 2004. All 
this in the red below the line and all this in the green below the line 
goes to our children in debt. Everything above the line, the little bit 
of red there and the whole bunch of green there, reduces the debt. So 
we do have a way to take this burden of lack of opportunity for our 
children away from the future, and that is restraining spending.
  Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, I think this 
is a point that I do not think we can drive home often enough. There 
are those back in our districts who talk about cutting spending. We 
have not cut spending.
  Mr. COBURN. That is right.
  Mr. HOEKSTRA. Mr. Speaker, what we have done is we have slowed the 
growth of Federal Government. So my colleagues know spending has not 
been cut. What we have done over the last 3 or 4 years, and what we did 
in the balanced budget agreement of 1997, which we continue in this 
budget agreement that we just passed a couple of weeks ago, is we 
agreed to live within the caps that restrain the growth of new spending 
that we would incorporate here in Washington.
  So we said, government, we are going to allow it to get bigger, we 
are just not going to grow it quite as fast. By just slowing the growth 
of government and sticking to that plan, we achieve real surpluses, and 
we achieve a significant surplus over the years beyond 2000 and allow 
some room for some of that money to go back to the American people.
  Mr. COBURN. Mr. Speaker, let me make a little correction. We hope to 
achieve real surpluses if the tendency of Washington is restrained to 
throw money at everything, and so that is our job.
  We are going to be talking here in a little bit about how what the 
President has put us into in terms of Kosovo is going to affect all 
these numbers. It is important that we have a discussion about that and 
how it is going to impact us.
  The gentleman from South Carolina (Mr. Sanford) actually has a chart 
that shows what has happened.
  Mr. SANFORD. Mr. Speaker, if the gentleman will yield, I just want to 
follow up what the gentleman from Michigan (Mr. Hoekstra) is 
suggesting.
  I have got friends back home that said, ``Mark, are you all a bunch 
of green-eye-shade-covered accountant types in Washington, or are you 
not the guys that are cutting spending in Washington, taking stuff away 
from people?'' Again, as the gentleman from Michigan (Mr. Hoekstra) 
just pointed out, no. In other words, that may be the rap that at times 
people send in this direction, but reality is very, very different.
  That is, if we look at this one-way upward curve, what we are talking 
about is trying to restrain the growth and spending in Washington as 
opposed to cutting. There is not any cutting that is going on here, but 
an attempt to restrain the growth. The reason that I think that is so 
important is well illustrated with the second chart, which shows that 
basically Washington has been getting a lot more of a pay raise than 
folks back home.
  If we look at each year, the purple line is the degree to which 
spending has been going up in Washington versus the orange, I guess 
that is orange, orange line showing the rate at which growth or incomes 
have been going up at home. All we are trying to do is keep the two 
equal. In other words, if Washington is getting a pay raise, it ought 
to be equal with what folks are doing back home, not above that.
  Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield for a minute, 
when we are talking about a Washington pay raise, we are not talking 
about what they pay Members of Congress versus what people back home 
are getting.
  Mr. SANFORD. Mr. Speaker, we are talking about how much goes through 
this place, which is $1.7 trillion.
  Mr. HOEKSTRA. Mr. Speaker, we are talking about the money that 
Washington believes we ought to spend, instead of the American people 
spending, on a variety of programs and services.
  Mr. COBURN. So even with the hard work we have done in trying to 
restrain spending since the three of us came to Congress, the gentleman 
from Minnesota (Mr. Gutknecht), the gentleman from South Carolina (Mr. 
Sanford), and myself, Federal Government spending has still, including 
this budget that we just passed, risen 20 percent. Over $300 billion a 
year, us fighting with all our energy to try to limit spending, it has 
still gone up by that. So it is very important that this concept of 
restraining spending be helped.
  I want to get back to Social Security just for a minute, if we can, 
because the other thing that is important, and we talked about what is 
going to happen, is Social Security taxes. If we just let the tax rate 
rise on one's working wages, remember, this hurts middle income and 
lower income more than it hurts anybody because there is a maximum 
limit at which one pays Social Security taxes on. So what happens is 
the rate is going to go from this 12.5 percent to a rate of almost 20 
percent as we get out into the next millennium, the next century.
  So if we take the fact that right now we are paying 12.5 percent, and 
we are going to take and almost double that rate of taxes on our 
children so that we double the amount of money that is coming out of 
their paycheck every month, we can see very easily what we are going to 
do is lower their standard of living. So it is a real problem. It is a 
problem we have to address.
  One other thing that I think is important is, if we look at the 
demographics of the Social Security system, and if one happens to be 65 
right now, one will have a life expectancy of about 82.5 years. If one 
earned the average wage in 1998, one will have to live 5.1 years past 
one's life expectancy ever to get the money that one puts into Social 
Security back, let alone get any earnings off of it.
  If one is 54 right now, one's average life expectancy is 82.9. One 
will have to live to 99.1 years to just get even with one's money.
  The third age group, 44, one's life expectancy is 83.3 years. One is 
going to have to have to live to 102 to ever get one's money back that 
one put in, let alone any benefit off that money.
  If one happens to be 34 years of age, one is going to have to live an 
extra 16.7 years past one's life expectancy ever to get one's money 
back.
  There is something fundamentally unfair about making our 
grandchildren drop their living standard to pay for their retirement 
when we can do it another way and still provide every benefit that has 
ever been promised to anybody that is on Social Security or who is 
going to be on Social Security.
  So it is not an impossible problem, but it is a problem that the 
politicians use to drive wedges between candidates when our real job up 
here ought to be solving the problems for the American public, not 
trying to make political hype.
  So I think this is one of the most revealing things. It is unfair to 
our children and our grandchildren to ask them to pay into something 
that they know they are never going to get the return back.
  The polling data, which I hate polling data but I like this one, more 
young people believe in UFOs than believe that they are going to get 
their money back out of Social Security. And they are right, because 
they are not going to get their money out of Social Security the way 
the system is set up today.
  Mr. SANFORD. Mr. Speaker, if the gentleman will yield, it is funny 
what those numbers translate into, because I had seen recent numbers 
that showed for a young person born in 1970, making $24,000 a year, 
which is average income, assuming they never made a pay raise, in other 
words they never had an increase in their pay over the course of their 
lives, they kept earning that $24,000 a year, what they could expect to 
get returned to them on their Social Security was 0.4 percent if they 
were male. That is not 1 percent, that is four-tenths of a percent. If 
they are female, it is 0.7, seven-tenths of a percent.
  Mr. COBURN. Mr. Speaker, reclaiming my time, it is important that we 
explain what that means because a lot of people at home may not. That 
means if one had $100, one would get 40 cents for it if one were a 
male. If one had $100 invested and one were a female, one would get 70 
cents for it.
  If one puts it in a CD or even a passbook savings, one gets $3.50 on 
it. So

[[Page H2251]]

one gets four to five to six to even almost nine times, if one is a 
man, more money investing the same amount of money into a passbook 
savings account that is guaranteed by the Federal Government to 
$100,000, than one would by paying one's Social Security money.
  Mr. SANFORD. Mr. Speaker, the same study, if one were black, one 
would actually earn a negative rate of return on the investment because 
of the shorter life expectancy with black males.
  So this translates into real money over a person's retirement, 
because that difference that the gentleman from Oklahoma pointed out, 
the difference between $3.50 or $4 of earnings on $1 versus 70 cents or 
40 cents can make a big difference over time.
  Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield.
  Mr. COBURN. I am happy to yield to the gentleman from Michigan.
  Mr. HOEKSTRA. Mr. Speaker, I think the other thing that is important 
when the gentleman is talking about explaining this, the numbers, when 
one takes a look at one's check stub and it says the FICA and the 
Social Security and one sees the 6.25 percent, recognize that one's 
employer matches that dollar for dollar.
  One of the bills that I have introduced says that at the end of the 
year when one gets one's W-2, that the W-2 ought to state clearly what 
one has paid in FICA taxes and what one's employer has paid in matching 
FICA taxes, because really it is all one's income. That is paid 
specifically on how much one makes. If the employer did not have to be 
paying that in taxes to the Federal Government, that could be a part of 
one's wage.
  It is a hidden tax on each and every American. Again it is one of 
these ways, secret ways that a time back they went to Washington and 
they said how can we get some more money without letting the American 
people know how much we are really taxing them? They said, well, there 
is the employee's share. Let us create a matching employer's share. It 
never gets reported anywhere.

                              {time}  1600

  It never gets reported anywhere, but it clearly is income. It is 
revenue that an employer receives that, if they did not have to pay it 
in taxes to the Federal Government, they could pay it to the employee. 
Then when an individual gets a .004 return on that, he or she is not 
only getting a .004 return on the money that the employee had set 
aside; it is the same return that the money that is being set aside by 
the employer is earning. And that is not right.
  Mr. COBURN. There is an interesting case law on this. There was a 
company, I will not mention their name, that had several thousand 
employees in the State of Colorado who decided to do that on their 
paycheck stubs, and the IRS and the Social Security System took them to 
court and made them stop and they won.
  So the idea that there is some secrecy about this is true. If the 
American public actually recognizes the amount of money withdrawn from 
their paycheck, and paid also additionally by their employer, and that 
that money is really theirs that they cannot have because Washington is 
consuming it, the participation rate and the recognition of the value 
of what they are getting would rise in terms of their acknowledgment of 
it, and we would see much more activity on the part of the regular 
citizen to help us try to change the mindset of spending more of their 
money.
  One final point I would make is that all through this we have shown 
this graph that depicts the rise in spending. And the question that I 
continue to be asked, and the question that I ask to people in my 
district, is how many people believe that the Federal Government is 
efficient? They kind of snicker.
  That is not to say we do not have some great Federal employees, but 
bureaucratic run programs typically are not very efficient. There are 
exceptions to that. But the fact is that we have allowed growth while 
we are sitting here scraping our fingernails against the chalkboard 
trying to hold down growth in the Federal Government. We have still 
allowed a $300 billion increase over the last 5 years in terms of 
budgets. This counts the fact that we have not really squeezed any 
efficiency into this government yet. We have just trimmed some of the 
programs.
  But there are many gains that can be made in efficiency. There is 
over 100,000 IRS employees. How many people in this country are 
spending tons of money having their taxes prepared? How many of them 
understand how to fill out their taxes? There are productive jobs for 
everybody that works at the IRS somewhere else in the economy today. 
And if we take and drop 90,000 or 95,000 people out of the Internal 
Revenue Service and put them into productive jobs elsewhere, and we 
have simplified the Tax Code where we know what we will pay and we do 
not have to have 90,000 additional people to collect the money, we get 
benefits both ways. We save money paying our taxes and the government 
spends less money collecting.
  So there are just hundreds and hundreds of things we can do, but we 
do not have the political power to do it yet and it is because America 
is not awake. They were awake a little bit in 1994, and they fell back 
asleep because they were disappointed because they felt all politicians 
were the same. I am here to tell them that we are not. There are those 
who want to change things. We want Americans to send people here, I 
certainly want them to send people here who are willing to make the 
sacrifices and the political sacrifice to do some of the changes.
  I think the gentleman from South Carolina (Mr. Sanford) had a very 
interesting chart, and this has to do, and I will let him introduce it, 
but I want to give it a little preview.
  Had the politicians done what they said they were going to do 
starting in 1938 with Social Security, what we would find out is the 
amazing principle the gentleman is about to talk about.
  Mr. SANFORD. This just goes back to what we were talking about, which 
is the very poor rate of return that could be projected for future 
retirees in the current system. That is not to say that Social Security 
has not done a lot of good for my mom or my grandmom. It is simply a 
question of the demographics that are coming our way that the gentleman 
outlined earlier.
  That translates to a real squeeze in the system and a real squeeze in 
terms of the rate of return that a young worker can expect to get out 
of the current system.
  One of the things I most frequently hear from folks back home is, 
``You know, Mark, if you all would just keep your hands off my Social 
Security money, I would have been fine.'' And we actually looked into 
that, and it turns out they are right.
  Because if the surpluses that had come along in past years, and again 
we missed the number 1937 in the upper left-hand corner, but in 1937 
there was a surplus of $766 million in the Social Security System. If 
instead of that money being borrowed and spent on other things in 
government, if that had gone into a real account and it had grown and 
compounded over time, and again this is not a hypothetical number, if 
it simply had been invested in the stock market, and I am not saying we 
should put all of Social Security money in the stock market, I am not 
saying anything like that, just using this as an example of the power 
of compound interest, if that money had simply gone into the S&P 500, 
it would today be worth $1.17 trillion.
  If we follow this argument out, in 1938 our surplus was $365 million 
in Social Security. If we had put that in the S&P 500, let it grow and 
compound over time, today that would be worth $485 billion.
  In 1939, our surplus for Social Security was $590 million. If we had 
invested that money in the S&P 500, and simply let it grow and compound 
over time, today that would be worth $680 billion.
  When we add all these up, we are looking, between the years 1938 and 
1942 alone, if Washington had kept its hands off the money, we would 
have $4 trillion in the bank, which would be solving the whole problem 
we are here discussing in the place.
  Again, I am not saying this to suggest that we should put all Social 
Security money in the stock market.
  Mr. COBURN. What the gentleman is saying is, if we had had a 12 
percent rate of return rather than 6/10ths of 1 percent of real rate of 
return, we would not have a problem with Social Security.
  Mr. SANFORD. Right.
  Mr. COBURN. And the other answer to that is, when are we going to 
start?

[[Page H2252]]

 And we have to start now. Now is the opportunity. The American public 
is awake and knows that there is a problem with Social Security. It is 
time to be totally honest about that regardless of what the political 
costs are. We were sent here to solve problems, not to protect 
ourselves politically.
  Mr. SANFORD. That is right.
  Mr. COBURN. And if we start today by preserving what money there is, 
and allowing it to earn a rate of interest that is comparable with 
other investments that we can have in a retirement program, and we can 
do that, and we can do that without putting it in the stock market, 
then we will start on the road to making it healthy again.
  The other point that I would make is that had we done what the 
gentleman suggested just for those 6 years, just those 6 years and not 
done it for any of the rest, we would have $4 trillion earning about 
$300 billion a year, which is more than what we are going to pay out in 
Social Security this year. And we would not be having to pay a penny in 
Social Security taxes. In other words, the power of compound interest, 
had we saved the money instead of spending it, we could lower 
everybody's Social Security taxes now.
  So we have to move to that, and we have to create that opportunity 
for our children.
  The gentleman from Minnesota.
  Mr. GUTKNECHT. I thank the gentleman for yielding. I was not 
listening as carefully as I should to our colleague's presentation 
about the magic of compound interest because I was visiting with our 
former colleague, also a classmate of 1994, Mr. Neumann from Wisconsin, 
who is here with us today. And we are delighted to have him back in 
Washington because he was one of the people who really was a 
trailblazer in terms of balancing the budget, paying down debt, and 
actually becoming honest with the way we account for Social Security.
  I want to come back to a couple of points that the gentleman from 
South Carolina (Mr. Sanford) raised, and I think they are very 
important points, the first of which is, and many Americans do not know 
this, that one of the most brilliant Americans, one of the most 
brilliant people of the 20th century, was, arguably, Albert Einstein. I 
think most people would agree with that. And he was the one who was 
once asked what the most powerful force in the universe was. And he 
said, somewhat in jest, the magic of compound interest. So when we have 
one of the most brilliant men of the 20th century talking about the 
magic of compound interest, it adds even more credibility.
  I have been giving this presentation on Social Security in my town 
hall meetings, and I talk about generational fairness. I have talked to 
seniors, and I give the presentation to high school kids, and I give 
the presentation to baby boomers, rotary clubs, wherever I can get a 
chance to talk about this, because I do think people need to understand 
where we are, where we have been and where we need to go. I think in 
terms of generational fairness we need to talk to all those groups. But 
I always ask them, whatever age group I am speaking with, and it is 
particularly true of the younger people, how many of them would put 
12.5 percent of their income, because that is, in effect, what people 
put into Social Security right now, how many of them would put 12.5 
percent of their income into a retirement plan which, over the last 20 
years, has had an average rate of real rate of return of 1.9 percent.
  None of them. Absolutely none of them. In fact, it is a tribute to 
our American educational system because our kids in high school and 
college today are smart enough to figure out that is not a very good 
rate of return 1.9 percent. And I must apologize to them, because I was 
not quite as familiar with the numbers. Actually, for those younger 
people, people who are in high school and college and younger workers 
perhaps under the age of 30, it is not a 1.9 percent rate of return on 
their money, it is actually a negative rate of return on their money.
  And at some point I think we have to be honest with all those 
generations, and I say it from this perspective. I was born in 1951. 
And, actually, there were more kids born in 1951 than any other year. I 
represent the peak of the baby boomers. My parents are both living. The 
last thing we are ever going to do is pull the rug out from under our 
parents. We cannot do that. Medicare, Social Security, my parents 
depend on it and lots of people's parents depend on Medicare and Social 
Security.
  As a baby boomer, though, I recognize that we represent such a huge 
glut that it is going to take some Herculean efforts on the part of our 
kids to keep this thing afloat. So we are going to have to make some 
adjustments. And I am one who says that baby boomers ought to be able 
and ought to be willing, in order to save the system for our kids, to 
take some modest changes.
  I do not know if any of my colleagues agree with this, but I think, 
on behalf of our generation, I would be willing to work another year, 
maybe another 2 years. I would be willing to adjust the way the cost of 
living adjustments works. I would be willing to make some rather 
significant adjustments, if only, and this is a big if, if I and 
younger generations could have an opportunity to at least take a 
portion of that 12.5 percent tax that we pay on Social Security and be 
able to put that into some kind of a personalized retirement account.
  Because I am nervous about letting the Federal Government invest in 
the stock market. And many seniors that I have talked to are very 
nervous about having the Federal Government invest directly in the 
stock market. Alan Greenspan has argued that. But I do think we ought 
to set up a system that allows individuals to invest a portion of that 
12.5 percent in their own personalized retirement account.
  I hope that is the direction this group and this Congress is going to 
go.
  Mr. SANFORD. If the gentleman will yield, one of the reasons I think 
the gentleman's point is so interesting is the Supreme Court decision 
of 1960, which was Fleming v. Nestor. And, basically, what it said is 
that none of us have any legal claim whatsoever to our own Social 
Security money.
  So this whole issue of private property rights, the issue of owning 
our own account, seeing a monthly statement, knowing to the penny how 
much is there, I think, is very, very important.
  Mr. COBURN. I want to discuss just one more little learning model 
that we can learn from the past. One of the ways Social Security got in 
trouble is called political expediency.
  If I want seniors to vote for me, I give them more benefits. But I do 
not ever tell them that the cost for that benefit is, number one, we 
cannot afford it; and, number two, if we are really going to pay for 
it, it will cost their grandchildren and their children a whole lot of 
money. And what has happened over the past 40 years, as things have 
been added in terms of Social Security, as benefits have changed and 
have been raised, the politicians did not have the courage to say, wait 
a minute, from an extrapolation and a demographics standpoint, this 
does not work. Well, we will ignore that; that can be somebody else's 
problem down the road.
  Well, we are at that point. We are down the road. We have not in the 
past done the responsible thing to make sure Social Security was 
viable. The only thing we can take from that is learn from it and not 
make the same mistakes.
  So the integrity of being honest about the problems in Social 
Security, the commitment to making sure that those that are dependent 
on it today and in the future will have, that are the two principles 
that we have to follow as we try to solve this problem. And the number 
one portion of that is to try to keep the Social Security money out of 
the hands of spending in the U.S. Congress.
  Mr. HOEKSTRA. If the gentleman will yield, I think the reason that we 
are now in the Social Security debate is because of the progress that 
we have made in the last 3 or 4 years, where, relatively speaking, we 
are near or at a surplus. This year we may have an actual surplus, 
disregarding the inflow into the Social Security Trust Fund.

                              {time}  1615

  Now is the time to have that debate. And as we said in our budget, 
the first thing we want to do is to set aside all of the Social 
Security dollars so that we can have a meaningful debate on Social 
Security reform, we can have a meaningful debate on Medicare reform.
  I mean, we see it every day. There are all kinds of suggestions out 
there

[[Page H2253]]

about how we should take this ``surplus'' and how we should spend it. 
And as my colleague from South Carolina has said, what that means is, 
if we got a surplus, there are all kinds of ideas how people are now 
suggesting that this surplus stays here in Washington and we spend it 
rather than securing our future for the next generation or paying down 
the debt or reducing the taxes. It seems like there are a lot of people 
who believe Washington should be first in line and we ought to 
accelerate now that growth in spending, and that is the wrong thing to 
do.
  Mr. COBURN. Mr. Speaker, let me go into one area so that we are 
completely honest with the American public.
  The President has sent the House and the Senate a supplemental bill. 
There is great debate on what the deficit is in terms of the need of 
our military, especially now when we are now exposed on one front and 
potentially exposed on another front. There is no question that we have 
underfunded the requirements to have a readiness capable military. 
There is some debate about the money.
  But the American public needs to make known to this body and to the 
Senate that if in fact they do not want Social Security money used to 
pay for that, they better let their representatives know it, because 
that is exactly what is going to happen.
  The group of gentlemen that are with me have routinely fought to pay 
for everything that we do up here by cutting some program somewhere 
else. I do not believe that is going to happen this time, and it is not 
ever going to happen until we continue to contrast that when we spend 
money, that we are not willing to have the courage to cut spending 
somewhere else.
  Where are we getting the money? We are stealing it from Social 
Security. We should not run from that issue. We should talk about that 
issue. And as we talk about it, I believe the public will demand on the 
body politic in this country to do the sharpening and cut the fat and 
promote the efficiency that we need.
  Mr. SANFORD. Mr. Speaker, if the gentleman would further yield, 
Madeleine Albright came and testified before one of the committees that 
I am on, the Committee on International Relations, today, and she 
testified before the Senate yesterday. And on this very point, I think 
her reply was interesting, because when asked, should we offset the 
proposed supplemental for Kosovo, the answer was no, because if we did 
that it would mean money could come out of USAID, the State Department 
and a host of other priorities, as she put it, here in Washington.
  The simple question the people need to ask back home is, is USAID and 
State Department spending a higher priority for them or is the money 
going to their Social Security a higher priority, is a question that 
needs to be asked.
  Mr. COBURN. Absolutely. And it needs to be raised and continue to be 
talked about so that Washington hears. I know what that answer is in 
the American public. It is the same everywhere. ``Get your hands off my 
Social Security money. Make the hard choices somewhere else.''
  Mr. HOEKSTRA. I think the other interesting question is not only to 
ask is this more important than Social Security, it is if we are 
risking young men and young women's lives in Kosovo, is there no place 
else in the budget that we could find $6 billion? Is the only thing to 
say it is an emergency, not say everything else is as equal of a 
priority?
  I think as we have taken a look at all of this, we spend $1.7 
trillion per year. We all know that there is lots of bureaucracy, there 
is lots of red tape. There are other places where, if we really went 
after it, we could find the dollars to fund this without raiding Social 
Security and be able to do Kosovo and just say for those Members that 
believe it, this mission in Kosovo is so important we are willing to 
reduce spending in some other areas because this is a new priority.
  Mr. GUTKNECHT. Mr. Speaker, I want to follow up on that because I 
think sometimes that does get lost in this whole debate.
  This budget we are talking about this year is $1,700 billion. Even $6 
billion, which I think is a little bit pricey for what we hope to 
achieve in Kosovo, but that is a separate debate, even that, though, 
represents a relatively small percent and about one-half of 1 percent 
of the total Federal budget. So the idea that we cannot find the money 
with offsets somewhere else in the budget, I think outside of this 
Capitol and outside of the circle here in Washington, I think most 
people do not believe that.
  But I want to come back to another point, and really it does come 
back to in terms of our cost for defense in these special supplemental 
appropriations and I think it is an important one. I think the American 
people need to know that over the last 40 years, up until the last 8 
years, the United States had deployed troops around the world 8 times, 
but in the last 8 years, we have deployed troops 33 times. And I think 
sometimes we have to ask, is all of this really that necessary? Is it 
worthwhile? I mean, this is an enormous expense to the taxpayers.
  I think there is another question that needs to be asked before we 
vote on the supplemental, and that is about burden sharing. When 
President Bush decided that we had to stand up to Saddam Hussein, he 
went to our allies and he got them to pony up. And the net was the war 
in the desert actually made money for us. We actually came out ahead on 
the Desert Storm operation.
  I think it is time for us to be brutally honest with our allies in 
Europe, that if they want us to help participate in a war that is 
really much more important to Europe than it is to people of the United 
States, then there ought to be a better cost sharing, a burden sharing.
  Because right now, basically, our obligation to NATO is to pick up 
between 22 and 25 percent of the cost. Some of us believe that is still 
a little bit steep. But right now we are flying 75 percent of the 
sorties, we are delivering 90 percent of the ordnance, and I suspect 
when the accounting is done, we are shouldering about 75 to 90 percent 
of the cost of this operation.
  And those are legitimate questions and I think we, as representatives 
of the people of the United States, have a right to ask those questions 
and demand honest answers.
  Mr. COBURN. Mr. Speaker, I want to close this out. One of my heroes 
is Martin Luther King. And I have said this many times on this floor, 
but I do not think it could be said often enough, his last major speech 
that he made was at the National Cathedral here in Washington; and in 
that speech he said, ``Cowardice asks the question, is it expedient? 
And vanity asks the question, is it popular? But conscience asks the 
question, is it right?''
  It is popular to not talk about the problems we have with Social 
Security. It is politically very expedient not to be honest about the 
budget. But it is not right. And until this body, all sides of the 
body, until the executive branch starts becoming honest and accurate 
with the words they use about our budget and our situation with Social 
Security, we are not going to solve the problems.
  We have to ask the right questions. And the first question we have to 
ask is, ``is it right?''

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