[Congressional Record Volume 146, Number 65 (Tuesday, May 23, 2000)]
[Senate]
[Pages S4247-S4249]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY
Mrs. BOXER. Mr. President, it is interesting that Senator Grams and
Senator Santorum came to the floor to praise Governor Bush's Social
Security plan. I come here to express my deep alarm over this plan and
to place into the Record the reasons I believe it is very dangerous to
the future of this country, to our senior citizens, and to those who
really depend on Social Security for themselves or for their aging
parents.
I think the first question to ask is, What is Social Security? Why is
it called security?
I used to be a stockbroker. I can tell you that I have seen the
smiles when the market goes up, and I have seen the tears when the
market goes down. At the time I was a broker, there was a very
traumatic period in our history. It was the tragic assassination of our
great President John Kennedy. I will never forget, the market was just
crashing that day. It went down so much that there was a halt in the
trading. Anyone who retired that day, and had an annuity plan, would
have been in the deepest trouble.
I believe in investments in the stock market. I believe in
investments in the bond market. I think it is very important that we
let our people know Social Security is not meant to be your full
retirement. What it is meant to be--and what it has worked so well as--
is a basic foundation, a safety net, not guesswork but a basic return
you can expect every month with a check you will get which will meet
your basic needs.
Let me describe it this way: You have a house. It is very modest, but
it is good. It has a roof. It protects you. It is a place where you can
be comfortable, warm. It works for you.
Maybe you want to add a room to that house. That is wonderful. That
is an amenity. That is something additional you could use--a family
room, an extra bedroom. But you do not mess with the foundation of the
house. You keep that a solid house--that Social Security. Anyone who
challenges this idea is making a huge mistake. I will explain why.
You do not have to go that far to look at the ultimate result if we
just said: People can just have individual accounts and forget Social
Security. Because we know that happened in Texas. I will show you what
happened in Texas when three counties left Social Security and went
into the market and said to their people: We will allow you to deal
with your accounts. This isn't theoretical; it has actually happened in
Texas. Let me tell you about the Texas example where every single
family lost out.
It was the same idea Governor Bush has. He started off talking about
2 percent of your Social Security being diverted. As I understand it,
last week he said he could foresee a time when everybody has private
accounts--100 percent. We know what happened in this experiment. The
source here is the U.S. General Accounting Office, February 1999.
[[Page S4248]]
They did a study of the Texas experiment. This is what happened.
Those counties went off Social Security, instead of saying: We will
have a supplemental plan, like a 401(k). Keep your Social Security.
Let's do a supplemental plan.
By the way, around here, a lot of us have a supplemental plan. We
have our basic Social Security, and then we have what we call thrift
savings, which is added on. That is fine. But we do not mess with
Social Security.
These counties messed with Social Security. They walked away. This is
what happened: The bottom 10 percent of earners, had they stayed in
Social Security, would be getting a monthly benefit of $1,125. But in
their retirement plan--where they just said forget Social Security, we
will have an individual account--they are getting $542 a month. That is
utter poverty. If they are in the median, the moderate income, instead
of getting $1,488 a month from Social Security, they are getting $810 a
month. If they are in the highest income, instead of getting $1,984 a
month, they are getting $1,621 a month.
So when Senator Santorum and Senator Grams come to the floor--I say
to my friend from Illinois, they have been lauding the Bush plan--I
think we have to note that if you took the Bush plan to its ultimate,
which he in fact said he could foresee, abandoning Social Security for
individual accounts, every family lost, regardless of their income
bracket.
I do not want to see this for America's families. I do not want to
see it. I ask the next question: What happens if we go this route, and
people are living in poverty instead of having a social safety net
because of this? Do you think Congress would turn its back on the
families of America? You know we would not. What would we do? We would
say: Oh, my God, we had better bail them out. We have done it before
for the savings and loans. We do not want to see people go destitute.
Then you have to ask yourself a question: If George Bush is President
and he gets this huge tax cut for the wealthy but has used up all the
money for that tax cut, where is he going to find the money to do this
bailout? Are we going to go back to the days of printing money? We just
finally got out of that situation--thank God--where we were running
these deficits; we finally got it under control.
Let me tell you, this election is a watershed election. This is a
risky plan.
The women Democratic Senators held a press conference just a few days
ago. We decided to look at what this plan would do to women in our
Nation. We went to the experts and asked them how they felt about it.
This is what one of them said. I want to put his credentials into the
mix. This is John Mueller, of Lehrman Bell Mueller Cannon, Inc., a
former adviser not to Al Gore, not to Barbara Boxer, not to Dick
Durbin, but an adviser to Representative Jack Kemp, an adviser to
Republican Jack Kemp. This is what John Mueller said:
. . . the largest group of losers from ``privatizing''
Social Security would be women. This is true for women in all
birth-years, all kinds of marital status, all kinds of labor-
market behavior, and all income levels.
Why does he say this? We went into this in the press conference we
women Senators held. I want to try to find that clip so I can share
with you why it is a fact that women will suffer.
First of all, there is no question that private accounts will lead to
the reduction of benefits. Why do I say that? I want to make sure
people understand that, because when you divert money away from Social
Security into private accounts, what happens? The Social Security fund
drops, and we do not have enough money to keep paying those benefits.
So benefits would have to be cut. Women live longer, and they count on
those benefits, so they would lose more; they would suffer more.
Now, here is an irrefutable fact, and the group that analyzed this
was the Center on Budget and Policy Priorities. With just a 2-percent
privatization--in other words, taking 2 percent of your taxes and
putting it into an individual account--the trust fund will go broke in
the year 2023. That may sound like a long way off, but trust me when I
tell you it is not; 20 years is not a lot of time. I remember back to
1980, and it doesn't seem that long ago. Twenty years from now, with
the 2-percent privatization that George Bush is calling for, assuming
he does nothing to cut the benefits--and he won't admit to that--the
trust fund goes broke.
Right now, without doing anything, the trust fund is solvent until
2037, so we make this trust fund go broke by many years. That is 14
years sooner that the trust fund is broke. Al Gore has a plan to take
the interest payments on the debt he is going to save because he is
much more conservative than George Bush in paying down the private
debt, which is the bonds. He is going to absolutely make sure we don't
have to keep issuing more bonds and we will pay down that debt. His
plan keeps the funds solvent until 2050.
So let's take a look at the three scenarios. If you do nothing, the
fund is solvent until 2037. If you follow the Gore plan, the fund is
solvent until 2050. If you do the Bush plan and you don't cut benefits
or raise taxes--which he will not tell us what he is going to do--you
go bust in 2023. This is from a conservative. We know if you carry this
plan to the ultimate extreme and go beyond 2 percent, you essentially
know, from looking at what has happened before, people will suffer. You
set up a real problem and you may have to do an S&L-type bailout. That
is not good.
So the women Democratic Members are very clear on all of this. Let me
say, in closing--and I know my friend, Senator Durbin, is anxious to
address this issue--I think a robust debate over Social Security is
right on target. I think encouraging people to save and put money into
the stock market and have a nest egg there is good because I believe
that is a good idea. But don't mess with Social Security. If you want
to have a supplemental plan, your basic Social Security plus a 401(k),
a thrift savings plan, and IRA, added on to the basic safety net, that
is just fine. I believe in that. I think it is smart and good. But if
you mess with the foundation, you are in a lot of trouble.
Senator Schumer was talking about this earlier today. He made the
point that he is saving for his kids' college education. He decided he
needed to have that money, no ifs, ands, or buts. He took that money
and put it into the safest Government bond-type of investment because
he can't gamble. What happens if on the day he has to start paying
those bills the market goes down? We have seen the volatility of these
markets. He says: My kids have to go to college. I am not going to tell
them they can't go. So, yes, for other types of savings; it is a good
idea to invest in markets; but for your basic retirement, don't gamble
as they did in Texas. Don't gamble as the candidate for President,
George Bush, wants to do. There are a number of us who are sending a
letter--and I hope Senator Durbin will describe it--to Governor Bush
asking him to come clean on the details of his plan.
I ask unanimous consent to have this document on solvency printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Privatizing Social Security: A Riverboat Gamble
Social Security Trust Fund Solvent Until: 2037.
With 2% Privatization, Trust Fund Solvent Until: 2023.
(Source: Center on Budget and Policy Priorities.)
Mrs. BOXER. Mr. President, his plan will take us into the red.
Combined with his risky tax scheme, he won't be able to bail out the
people. So it is a dangerous idea. Stock market investments are good,
but not as a foundation of an insurance plan, which is what Social
Security is.
You will be hearing a lot more from the women Senators on our side of
the aisle on this question because, under the leadership of Senator
Mikulski, we have set up a checklist where we are going to judge every
plan against this checklist that women should be able to count on. We
should be able to count on several things: Preserving the Social
Security guaranteed lifetime inflation and protecting the benefit;
preserving Social Security protections to workers when they are
disabled, as well as when they retire, and for workers, spouses, and
children, and when workers are disabled, retired or die; three, protect
against impoverishment of women by maintaining Social Security's
progressive benefit structure;
[[Page S4249]]
four, strengthen the financing of the Social Security system while
ensuring that women and other economically disadvantaged groups are
protected to the greatest degree possible.
Look at that plan. Does it further reduce poverty among older women?
I told you that his plan does not. We certainly want to see if it
includes retirement savings options. Are these options something that
will work for women? That is where we are.
I will close by repeating a quote from an expert, John Mueller, a
former adviser to Representative Jack Kemp, who said:
The largest group of losers from ``privatizing'' Social
Security would be women. This is true for women in all birth-
years, all kinds of marital status, all kinds of labor-market
behavior, and all income levels.
If you look at this experiment in Texas, everyone lost--all families,
women, everyone. Let's not go down this path. We can't afford to do
that.
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