[Congressional Record Volume 146, Number 123 (Thursday, October 5, 2000)]
[House]
[Pages H8894-H8895]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        SOCIAL SECURITY SOLVENCY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Michigan (Mr. Smith) is recognized for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, this is good news, I think, for 
people that are concerned with Social Security. Social Security is one 
of America's most important programs. I think we have missed a great 
opportunity in the last 8 years not to develop the kind of policy 
changes in Social Security that will for sure keep it solvent. Now it 
is part of the great debate, and I think it is important that we all 
understand a little better how the Social Security program works. 
Social Security benefits are a guaranteed act; and the fact is, is that 
there is going not to be enough money coming in from the payroll tax to 
pay benefits without some changes. The big change is a better return on 
the investments.
  When Franklin Roosevelt created the Social Security program over 6 
decades ago, he wanted it to feature a private sector component to 
build retirement income. Social Security was supposed to be one leg of 
a three-legged stool to support retirees. It was supposed to go hand in 
hand with personal savings and private pension plans. Of course, when 
it passed through the Senate, it is interesting. The Senate on two 
votes back in 1935 said that it had to be optional investments so 
individuals could invest their own money. Provisions were put into that 
law so that certain States and counties would be allowed to have 
alternative private investment plans, and now we are seeing counties in 
Texas and around the country that opted out of Social Security getting 
four or five, six, 10 times as much benefits from their pension 
retirement plans that they own as opposed to what Social Security would 
pay.

[[Page H8895]]

  The biggest risk is doing nothing at all in Social Security. One 
thing I am concerned about is President Clinton and Vice President Gore 
have suggested that we simply add huge, giant IOUs to the Social 
Security trust fund. The problem with that is that the full faith and 
credit of this country is good, but the way we pay back Treasury notes 
now is simply to borrow more money. If we are going to borrow $20 
trillion, it is going to tremendously change the economics of this 
country.

                              {time}  1315

  Social Security has a total unfunded liability of over $20 trillion. 
The Social Security trust fund contains nothing but IOUs. That means 
you have to either borrow the money to pay it back, increase taxes to 
pay it back, or you have to reduce benefits. We have to have two things 
very clear: No increase in taxes, and no reduction in benefits for 
existing or near-term retirees.
  To keep paying the promised Social Security benefits, the payroll tax 
will have to be increased at least 50 percent of total income or 
benefits will have to be cut by one-third. Neither of those options are 
good.
  In conclusion, this is the demonstrated problem of Social Security. 
We are in a short range up to for the next 12 to 15 years of a little 
more money coming in in the Social Security payroll tax than is needed 
to pay benefits. But then look what happens in the out years. Twenty 
trillion, in today's dollars, but in those dollars that are going to 
have to be paid out over and above what is coming in from the Social 
Security tax 50 or 60 years from now, it is going to be 120 trillion of 
those inflated future year dollars. Huge problems. It needs to be dealt 
with now. We have to get a better return on the investment.
  The six principles of saving Social Security that I and Senator Rod 
Grams have come up with are: Protect the current and future 
beneficiaries; allow freedom of choice; preserve the safety net; make 
Americans better off, not worse off; create a fully funded system; and 
no increase in taxes.
  Right now the average American worker pays more in the payroll FICA 
tax than in the income tax. Seventy-eight percent of American workers 
pay more in the FICA tax than they do the income tax. Let us not 
increase taxes on them again. Let us do something now, so we do not 
pass this burden on to our kids and grandkids.

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