[Congressional Record Volume 146, Number 73 (Tuesday, June 13, 2000)]
[Senate]
[Pages S4978-S4980]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. SANTORUM. Mr. President, I rise today to address the issue of 
Social Security. Last week I got up toward the end of our time and did 
not have a chance to talk about the issue, but I briefly mentioned my 
strong admiration and support for Gov. George W. Bush's courageous and 
bold proposal in offering to the American public an opportunity to meet 
the Social Security crisis head on and deal with it in a responsible 
way through investment as a way to try to bridge the gap that now 
exists in the Social Security system--``the gap'' meaning not enough 
money coming in to pay benefits down the road once the baby boom 
generation begins to retire.
  I have been out for the past 4 years talking about this issue and 
have talked in front of every conceivable group you can imagine. 
Yesterday I was in Harrisburg, PA, talking to the State AARP about 
Social Security and the importance of having politicians face up to the 
issue and explain to the American public how we are going to fix the 
problem.
  The problem is very simple. Right now, there are about 3.3 people 
working for every retiree on Social Security. Social Security is a pay-
as-you-go system. So those 3.3 working people have to pay enough in 
Social Security tax to pay for the benefits to that 1 retiree.
  Just to give you a comparison, back in 1950 we had 17 workers paying 
into the system for every 1 retiree. That is why, in 1950, we had a 
payroll tax of 2 percent on the first $3,000 you earned, because there 
were 17 people paying and you could pay a relatively low rate of 
taxation to pay for the benefits. Now you pay 12.4 percent of every 
dollar you earn, up to, I believe it is, $72,000.
  So it is a dramatic increase in taxes that has occurred because we 
went from 17 workers to every 1 retiree to 3.3 workers to every 1 
retiree. In the next 20 years, we will go from 3.3 workers to every 1 
retiree, to around 2 workers or maybe even a little less than 2 workers 
to every 1 retiree.
  It is pretty obvious what is going to have to happen. We are going to 
have to make a change in the system because the current flow of revenue 
from 3.3 workers to support 1 retiree will be dramatically reduced when 
you only have 2 workers. You cannot keep the current rate of taxation 
and support that 1 retiree.
  So the question is, What do we do about it? Do we wait, knowing it is 
going to happen? Everybody who is going to be working 20 years from now 
has been born, and everybody who is going to retire in 20 years from 
now has been born. So we know what the demographics are going to look 
like. The question is, What are we going to do about it?
  There are three things you can do to fix the Social Security problem 
and only three things. There are only three things you can do.
  No. 1, you can do what we have done 20-some times in the past; that 
is, increase taxes, from what started out as 2 percent on the first 
$3,000 to now 12.4 percent on up to $70,000 of income. So you can 
increase taxes.
  The second thing you can do is reduce benefits. We have done that in 
the past, too. We raised the retirement age. We adjusted some of the 
benefit numbers. You can reduce benefits.
  How much would we have to do of either raising taxes or cutting 
benefits? According to the Social Security trustees, the actuaries 
there, we are looking at a payroll tax increase, if we wait 15

[[Page S4979]]

or 20 years--which is what some here at the national level, the Vice 
President, for example, and some on the other side of the aisle have 
suggested; that if we wait, everything is going to be fine, that there 
will be no problem for another 30 or 35 years. Just wait. What if we 
wait? If we wait 20 years to fix this problem, we are looking at a 
payroll tax increase of roughly 40 percent, going from 12.4 to about an 
18- or 19-percent payroll tax for the next generation.
  So if you are a politician today and you do not plan on being around 
20 years from now, I guess the answer of waiting is a pretty good 
option: Put it on to the next group of politicians and the next 
generation of people, and let them pay those taxes. They may say: ``As 
for me, I would rather just get elected and not make any tough 
decisions and not have to tell anybody about what pain is going to be 
in the future because under my watch there will not be any.'' That is 
the kind of leadership we do not need in America, in my opinion. But 
that is an option.
  The first option is to increase taxes dramatically down the road. The 
second option is to cut benefits. By the year 2035, I think it is, 
Social Security taxes coming in will cover about 70 percent of what is 
needed to be paid out in benefits. So what does that tell you? We will 
have to cut benefits by about a third; that if we do not increase 
taxes, then we will have to cut benefits by a third. I suspect you will 
not find one vote in the Senate to do that today. And I do not believe 
you will find any votes in 20 years to do that. So that option is 
pretty much off the table, I suspect.

  So those are the two options that are available, unless you take the 
third option. This is where Governor Bush has come out. I give him a 
lot of credit for doing so. The third option is investment, increase 
the rate of return on the money that is actually going into the system 
now to make up the shortfall in the long run. This is not a view that 
is a partisan viewpoint; this has broad bipartisan support in the 
Senate.
  Many on the other side of the aisle believe in personal retirement 
accounts. Even more Members on the other side of the aisle and the 
President agree with investment where the Government actually takes the 
money and invests it.
  So there are two kinds of investments. We can do it two different 
ways. The way I suggest and Governor Bush suggests is that every 
individual get a portion of their payroll tax to be put in a personal 
retirement account, which they own, they control, they invest, but they 
cannot touch until they retire. That is how I suggest the investment be 
done: The individual owning it, the individual investing it, the 
individual controlling it.
  The President's suggestion, in two of his budgets in this current 
term of office, is that, yes, a portion of Social Security trust funds 
can be invested, but the Government invests it. There would be no 
individual ownership. It would be Government ownership. The Government 
would invest a portion of the Social Security trust funds in stocks and 
corporate bonds. Why? The President pretty much gave the same speech I 
am giving where he said there are three options: You can increase 
taxes, cut benefits, or invest; and the President chose investment.
  The President, in his budget, chose investment. But the investment he 
chose was the Government ownership of that investment. We choose 
investment and say the individual should own the investment, and the 
individual should benefit from the investment; that the Government 
should not ``benefit'' from the investment.
  There are a whole host of reasons the Government should not own 
corporations or stocks. We already regulate corporations. We tax 
corporations. Now we have gotten in the business of suing corporations. 
We should not also own them. That is the Government owning the means of 
production. For those of you who have not been in your political 
science class recently, the Government owning the means of production 
comes right out of the books of Karl Marx. We do not need the 
Government of the United States owning corporations.
  By the way, I think most Americans believe very strongly about that, 
that Government ownership of stocks and bonds is not something that is 
particularly desirable, but the idea of investment is desirable.
  The biggest criticism I hear from the Vice President, and the critics 
of Governor Bush's idea, is that this is a ``risky scheme.'' Contrast 
that with what their proposal is. Their proposal has, I would agree, 
less risk and more certainty. I would agree with that. There is less 
risk and more certainty. The certainty, though, is not a particularly 
desirable one. The certainty is we will have to raise taxes or cut 
benefits.
  So you can argue that the Gore plan is less risky, is much more 
certain. We will have to raise taxes or we will have to cut benefits, 
or do a little of both. So in that respect there is certainty. But it 
is not certainty that I think the American public is looking for.
  He suggested the Bush plan is risky because it involves investment. I 
did not hear that criticism of the President's plan to invest in the 
equities market. He did not criticize his own President's plan when he 
suggested that money from Social Security should be invested in the 
equities market. I guess some believe it is not risky if the Government 
invests it, but it is risky if you do. I am not too sure that holds a 
lot of water. Either investment in the market is risky or it is not 
risky.
  Sure, obviously, there are risks in investment in the market. But 
every other retirement system in America is financed through 
investment. The people who are doing basically pretty well in America 
have 401(k) plans and IRAs and Keogh plans and other plans where they 
take money that they are earning. Here in the Federal Government, 
Federal employees have a thrift savings plan, all of which is invested 
in stocks and bonds. And we use the miracle of compound interest, over 
time, to be able to then afford to pay the benefits for those retirees 
once they hit retirement. Every person who is doing pretty well in 
America has one of those plans at their disposal. It is the folks who 
are not doing so well who don't get a piece of the American pie. What 
the Vice President is saying is: For you folks who have these plans, 
that is OK; we think that is a good idea.

  In fact, you will find the Vice President and others who are opposing 
personal retirement accounts for Social Security are at the same time 
encouraging people to go out and develop 401(k)s and invest and save 
for retirement; that it is a good idea. ``So if you have your own money 
and you make enough money, we encourage you to invest it. But if you 
are low income and you can't put money aside, we don't want you to have 
a piece of this. We don't want you to have your own personal retirement 
account within Social Security. We are just going to reserve that for 
people who have enough money to do it on their own. We will allow you 
to participate in the growth of the American economy, in the increase 
in the markets and economy, in the dynamism of the American dream that 
is going on in our capital markets today. If you have money, you go 
ahead and participate, and we will encourage you. We will provide tax 
incentives for you to do that. But if you are lower income and you are 
making ends meet and all you have for your retirement is Social 
Security, sorry, we will not allow you. It is too risky for you to do 
this.'' How paternal; how discriminatory.
  What we support is to give every working American a very small piece 
at first. Maybe in years to come it will be larger, but at first a very 
small piece of the American pie, 2 percent, 3 percent of every dollar 
they earn for low and middle-income people to be put in a personal 
retirement account for them to invest; so as America grows and 
prospers, they won't be sitting on the sideline watching the rich get 
richer while they do not prosper from the growth in America. That is 
cruel.
  We have an opportunity to reach out to moderate and low-income 
individuals and allow them to participate in the American dream of 
ownership, of investment, of participating in the growth of America, 
not just their own growth with respect to their wages. I think it is a 
tremendous opportunity. It is the first and biggest chance to bridge 
what I see as one of the biggest problems facing America today, which 
is the growing gap between the rich and the poor in this country.
  I will never forget back in 1992, then-candidate Clinton would talk 
about the

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decade of greed of the 1980s, how the rich got richer and the poor 
didn't get it. ``The 1980s, under Reagan, was the decade of greed.'' We 
don't hear President Clinton talking about that now. Does anybody ever 
wonder why he doesn't talk about that anymore? The reason he doesn't 
talk about it anymore is because during the 1990s, the rich got far 
richer than they did in the 1980s, and the poor didn't do that much 
better than they did in the 1980s. In fact, the gap between the rich 
and the poor widened more in the 1990s than it did in the 1980s. If the 
1980s was the decade of greed, the 1990s, under the Clinton-Gore 
administration, was the decade of supergreed.
  Why did that happen? It is pretty obvious why it happened. It 
happened because those who were wealthy, who owned and invested as the 
markets went up, as the value of assets went up, their income went up. 
Their wealth went up. If you are a worker who doesn't have wealth, 
doesn't have savings, doesn't have investment, then your wealth only 
goes up by the wage increase you get, which is 3 or 4 percent. So while 
the NASDAQ goes up or the Dow Jones goes up 10, 15, 20 percent or 
higher, your wages go up here at the bottom 2 or 3 percent, the gap 
grows.
  One-third of all income in this country comes from investment. Yet 
the average person in America, someone right in the middle, has a total 
savings of $1,385. Half of America or more is left behind.
  What we want to do with personal retirement accounts for Social 
Security is say to those Americans: Welcome to the American economy; 
participate in the American dream of growth and ownership of 
investment. With that, we will not only fix Social Security, but we 
will begin to do something that is fundamental, which is to bridge the 
wealth gap in America.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WARNER. Mr. President, will the Chair advise the Senate with 
regard to the standing order?
  The PRESIDING OFFICER. There are 4 minutes remaining in morning 
business.

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