[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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