[Congressional Record Volume 146, Number 124 (Friday, October 6, 2000)]
[House]
[Pages H9455-H9456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  VICE PRESIDENT GORE'S SOCIAL SECURITY PROPOSAL WILL INCREASE FUTURE 
                             PAYROLL TAXES

  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, I am very concerned about what it 
looks like might happen to the FICA taxes, the payroll taxes, if we 
move ahead with Vice-President Gore's proposal for Social Security.
  This first chart reflects what the FICA taxes are now, 15.3 percent 
of what a worker makes. Then what is going to happen in terms of when 
we start running out of money? There is not enough money in the 
Medicare surplus as early as 2006. Then if we continue with the same 
program without doing anything else, without getting a better return on 
some of this money that is coming into the system in Social Security 
Trust Fund and the Medicare Trust Fund, then to keep the same benefits 
that we have promised continuing we are going to, the taxes would have 
to go up. Either taxes would have to go up or benefits drastically 
reduced. We are not going to reduce those benefits.
  But, also, let us make some changes now so that we do not have to let 
the taxes go up, as we see on this chart, to 22.41 percent versus 27.96 
percent.
  If Vice President Gore's Medicare prescription drug program goes into 
effect, then those taxes will have to go up to 47 percent of what one 
makes. Look, it is some time ahead, so one can say somebody else could 
worry about it. But these are our kids; these are our grandkids that 
are going to have to pay that kind of tax. Let us make these kinds of 
changes now.
  Let me just reemphasize how serious this tax is today on the payroll 
deduction tax. Seventy-eight percent, 78 percent of American workers 
now pay more in the FICA tax for Social Security and Medicare than they 
do their income tax. We cannot allow these taxes to go up. We cannot 
simply say, look, we have got to put Social Security first or Medicare 
first and say, look, we are going to add these benefits. That is what 
the Vice President does.
  Somehow the American people have got to look seriously at the 
consequences of simply the attractiveness of saying we are going to 
increase benefits without making some changes in the program to get a 
better return on the money.
  The better return, as suggested by Governor Bush, is to start 
investing some of that money. Right now, the average return for one's 
Social Security money that is paid in in taxes is a real return of 2 
percent. That is 7 percent less than the average return on equities. 
Let us balance it. Let us not do all equities. It is going to be 
limited stock investments. There is going to be safe investments that a 
person can invest. But it is going to be in their name, their account. 
If they die, instead of losing everything, their heirs get it.
  Let me show my colleagues this third chart. It simply says, no new 
taxes. Let us not force ourselves into a situation where the payroll 
deduction has to go up and we have to increase taxes. We have got to 
have a strong resolution that we are simply not going to cavalierly do 
what is politically attractive today to get votes today and leave the 
problem and an increased obligation of higher taxes to our kids and our 
grandkids.
  Again, if we do nothing, if we go with a Gore plan, the 15.3 percent 
that we

[[Page H9456]]

are paying in payroll deductions go up to the high of 27.96 percent. If 
we go with their prescription drug program that says, look, here is 
prescription drugs that taxpayers are somehow, some way, some time are 
going to have to pay for, then we end up with a payroll tax that goes 
as high as 47 percent.
  Let us look at a program where one gets better investment from some 
of that money going in, where government cannot mess around with those 
benefits by letting at least part of that payroll tax equivalent go 
into personal investments. Let us not mess around with the trust fund. 
Let us keep the trust fund growing.
  But let us take some of this surplus on-budget money and use it to 
make this kind of transition that is going to keep probably America's 
most successful, maybe America's most important, program continuing and 
keep it solvent.

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