[Congressional Record Volume 146, Number 3 (Wednesday, January 26, 2000)]
[Senate]
[Pages S104-S105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      SOCIAL SECURITY INVESTMENTS

  Mr. GRAMS. Mr. President, for over six decades people have come to 
rely, expect, and depend on investments made into the Social Security 
system. However, the very financial structure created with the program 
in 1935 is about to face some very significant strains placed on it by 
changes in demographics and also by poor fiscal management by 
Washington. Basically, we are at a crossroads. Do we let the system 
wither on the vine or do we work to save Social Security?
  At the crux of this discussion is how best to serve our Nation's 
retirees. How can we offer them the most financial security in their 
retirement? I have some ideas I have shared with Minnesotans and also 
with the Senate. They are aimed at saving the Social Security system. 
It is a package of proposals, the Grams Plan for Retirement Security, 
that encompasses what we expect to do to protect and preserve the 
existing system, as well as what other steps we might take to offer 
retirees more security in their elder years.
  There are several main elements in my package. On Monday, I 
introduced the Social Security and Medicare Surplus Protection Act 
which would trigger an automatic across-the-board cut if the Government 
would happen to spend any of the surpluses, either Social Security or 
Medicare.
  In effect, this creates a retroactive lockbox to protect Social 
Security and Medicare surpluses. Even those in Washington who are 
fiscally conscious of the commitments made to our Nation's retirees 
were surprised that last year was the first in over 60 to not dip into 
the Social Security trust fund to pay for other Washington programs.
  This all-too-common practice necessitates a retroactive lockbox. My 
legislation contains the lockbox enforcement mechanism that triggers an 
automatic reduction in Government discretionary spending, including 
congressional Members' pay, if any of the Social Security or Medicare 
surplus is spent on other Government programs, thereby restoring the 
Social Security and Medicare trust funds. This would lock up the trust 
funds in case budget forecasts were inaccurate--and surpluses were 
spent.
  The Grams lockbox saves Social Security and Medicare from 
Washington's big spenders and reaffirms our commitment to our Nation's 
retirees.
  I have also introduced the Personal Security and Wealth in Retirement 
Act. It creates personal retirement accounts and offers every American 
the opportunity to achieve personal wealth, and also the dignity, 
freedom, and security that it affords in their retirement years. It 
also protects seniors by guaranteeing that their benefits won't be cut. 
The retirement age and taxes will not be raised if they decide to stay 
within the Social Security system as we know it today.
  At the heart of the Personal Security Wealth in Retirement Act is the 
personal retirement account, or a PRA. A PRA allows the option to 
invest dollars into the market that taxpayers are now forced to 
surrender to the Federal Government in their withholding for the FICA 
taxes. Workers would now have the freedom to design their own 
retirement plans, investing in stocks, in equities, bonds or T-bills, 
or any combination of these, or any other financial instruments with 
approved investment firms and approved financial institutions. 
Taxpayers can invest funds into traditional savings accounts if that is 
what they want. The result would be maximum freedom to control their 
resources for their own retirement security.

  There is no doubt that a market-based retirement system and the power 
of compounded interest would generate much better returns than under 
the traditional Social Security system we have to date. Under today's 
Social Security program, the average annual retirement benefit for a 
family with two working spouses is about $33,000 a year. Under the 
Personal Security and Wealth in Retirement Act, families could receive 
an annual benefit of more than $200,000 a year by investing the same 
dollars in a PRA rather than in the current system. Low-income families 
also would do better under this plan. Where Social Security now 
provides an annual benefit of about $18,000 a year, my proposal would 
produce benefits as high as $100,000 a year.
  Despite the obvious benefits of a PRA, if one chooses to stay within 
the traditional Social Security system, that is their right, and the 
Government would guarantee the promised benefits that would not be cut 
and that Washington could not increase the retirement age and 
Washington could not increase taxes.
  Special protections have been built in to keep the PRA safe. 
Government-approved private investment companies would manage those 
PRAs to ensure, to guarantee a return higher than what Social Security 
pays today. Social Security, by the way, today pays them less than a 2-
percent return, and in the near future it will be less than 1 percent. 
That is not the kind of investment most people would make if they could 
walk up to a window. I don't think they would invest in an account that 
pays less than 1 percent. That is what happens. Many taxpayers in the 
future will have a negative rate of return, meaning it is better to put 
money under your mattress or bury it in a tin can in the backyard than 
invest in Social Security.
  Rules similar to those applying to individual retirement accounts 
would apply to the new personal retirement accounts. If a worker 
happened to fall short of accumulating the minimum retirement benefits, 
this is where the Federal Government would step in to make up that 
difference--in other words, to fill the glass full; to assure a minimum 
retirement benefit so no one will retire into poverty, so you will not 
lose if you choose a PRA.
  The Personal Security and Wealth in Retirement Act also offers 
features not found in Social Security because you can choose when you 
want to retire. Right now the Government tells you how much you pay 
into Social Security, when you can retire, and what your benefits are 
going to be. But under our Personal Retirement Account plans, you make 
those decisions, you choose when you want to retire. As long as you 
have accumulated the minimum benefits necessary for your lifetime, you 
are free to retire whenever you want. PRAs could be established early 
on in life, even before a child is out of diapers. The idea is, when a 
child was born and given a Social Security number, his or her parents 
or grandparents will be able to begin putting money into that child's 
retirement account.
  As an example, if you put $1,000 into an account for a newborn baby, 
that account would grow to nearly $250,000 by the time that child would 
be ready to retire. From $1,000 seed money to $250,000 by the time that 
child would retire--not a bad start.
  The Personal Security and Wealth in Retirement Act ensures that your 
PRA remains your private property and that you have a right to pass it 
on. When you die, the remaining funds that are in your account will be 
transferred, under your estate, to your heirs free of taxes. Right now, 
as you know, when you die there is no residual Social Security. That is 
it. So all the money you have paid in you do not get back. The Personal 
Security and Wealth in Retirement Act confidently answers the question 
of whether prosperity in retirement can best be achieved by the 
Government or by you, the individual. Given the tools and the freedom 
to put them to work, every American will discover that a successful and 
secure future is just a PRA away.

  These proposals are at the heart of the Grams Plan for Retirement 
Security. In addition to these bills, there are several others in the 
Grams Plan for Retirement Security. I have introduced the Social 
Security Benefit Guarantee Act which would create a legal right to 
Social Security benefits, including an accurate cost-of-living 
increase. I have also introduced the Fair COLA for Seniors Act, 
legislation to ensure that older Americans receive accurate cost-of-
living adjustments based on their consumption patterns so

[[Page S105]]

they can better achieve retirement security, and the Social Security 
Information Act, to ensure that hard-working Americans receive adequate 
information on which they can begin to plan for their retirement, such 
as the rate of return on their Social Security investment. As I have 
mentioned, I think if people today would get information on what the 
return was going to be on their investment, it would play a big part in 
their decision to have that or turn to a private retirement account.
  I have introduced the Medicare Ensuring Prescription Drugs Act--that 
is legislation to ensure seniors do not have to choose between their 
medicines and their food--and the Tax Relief for Seniors Act, 
legislation to repeal taxes on our seniors' Social Security incomes. 
That is unfair, again--that tax on our seniors.
  These are all components of the Grams Plan for Retirement Security, 
legislation aimed at helping hard-working Americans receive retirement 
security. As I close, and as we enter this new session of the 106th 
Congress, we need to have an honest discussion, not about how best to 
extend the life of a Government program or how to alter numbers so we 
might technically fit within spending limits at the expense of our 
Nation's retirees; instead, we should debate and discuss how to offer 
hard-working Americans the retirement security they deserve.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent to be 
recognized to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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