[Congressional Record Volume 146, Number 132 (Thursday, October 19, 2000)]
[House]
[Pages H10464-H10468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Pease). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Michigan (Mr. Smith) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SMITH of Michigan. Mr. Speaker, we are having an election, and 
the election is important for many reasons. Regarding the discussion of 
appointing Supreme Court Justices, I would hope that whatever President 
we elect does not have a litmus test for those judges; that they should 
be some of the smartest, some of the most well-read literary law judges 
that we can find in the country. We have tried to help assure that by 
having the advice and consent of the Senate. What they do is interpret 
the Constitution, and I hope that is the kind of judges that we will 
have.
  I rise tonight, Mr. Speaker, to talk about another issue that is sort 
of in this campaign and is being talked about by the Vice President and 
Governor Bush, and that is Social Security. Social Security is an issue 
that I have been studying since I came to Congress in 1993.
  I introduced my first bill in 1993 on Social Security and my second 
bill in 1995. It is a 2-year session, so every session I have 
introduced a bill. The last four bills have been scored by the Social 
Security Administration to keep Social Security solvent, and we have 
done that without any tax increases, without any reduction in benefits 
for retirees or near-term retirees.
  I was appointed chairman of a bipartisan Social Security task force 
where we studied for many months and had witnesses, expert witnesses 
from all around this country and, in fact, all around the world, 
talking about this situation with Social Security. I suspect it is sort 
of like an automobile mechanic. The more he understands how an internal 
combustion engine works, for example, the more he is concerned about 
keeping it lubricated and reducing the friction. So probably mechanics 
are pretty diligent in terms of greasing and lubrication. So, too, I 
have become sort of a mechanic with Social Security, knowing its 
internal operations, how it works, and some of the friction points that 
can develop. So I guess my colleagues can consider my presentation 
tonight sort of like they might consider the mechanic: they should take 
out what they think is pertinent but get a second opinion.
  Social Security is probably America's most important program. We have 
almost a third of our retirees that depend on the Social Security check 
for 90 percent or more of their total retirement income.
  Mr. Speaker, I would like to introduce Erika Ball. Erika is a page, 
and she is from Arizona. Sarah, come up in the limelight. You might as 
well, too, as long as you ladies are helping me. A little closer so we 
get you right in the picture. How many pages do we have?
  Sarah Schleck is from the great State of Minnesota. Ladies, thank you 
for helping me with the charts tonight.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. The gentleman will suspend.
  Mr. SMITH of Michigan. That is not proper; is that right?
  The SPEAKER pro tempore. Members are to address their remarks to the 
Chair and are reminded that only Members are allowed to address the 
Chamber.
  Mr. SMITH of Michigan. Mr. Speaker, I considered myself an 
interpreter. I apologize for any infraction.
  Let me start out with these charts. Social Security Benefit Guaranty 
Act. When Franklin Delano Roosevelt created the Social Security program 
over 6 decades ago, he wanted it to feature a personal investment 
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.
  In fact, researching the archives, it is interesting that in the 
debate in 1935 in the Senate, the Senate on two occasions voted to have 
it optional to have a personal retirement savings account. So 
individuals owned accounts. Even in that case they could only be used 
for retirement, but there would be some individual ownership. When they 
went to conference, the House and the Senate ended up having government 
do the whole thing.
  It was made from the very beginning as a pay-as-you-go program, where 
existing workers paid in their Social Security tax and almost 
immediately those dollars were sent out to beneficiaries. So it was a 
pay-as-you-go program with existing workers paying in their taxes to 
pay for existing current retirees.
  The system is really stretched to its limits, and the actuaries are 
concerned. They say that Social Security is insolvent. We just changed 
it in 1983, reduced benefits and increased taxes. Yet already they are 
predicting that it is going to run out of money if we continue the same 
structure. So we have

[[Page H10465]]

to make changes. We have to do it without reducing any benefits to 
existing or near-term retirees. We have to do it by making sure that we 
do not increase taxes on workers, and that means we have to get a 
better return on some of those tax dollars coming in.
  Seventy-eight million baby boomers begin retiring in 2008. That means 
these high-income workers go out of the paying-in mode. In a sense what 
they pay in is related to how much they are making. They are at the top 
of the scale in terms of how much they are paying in taxes. Then they 
retire, and because the benefits are directly related to what they paid 
in in taxes, how much they were earning, so there is a relationship to 
benefits, they draw out more than maybe the average is drawing out. So 
a huge predicament, demographic problem.
  Social Security trust funds go broke in 2037, although the crisis is 
going to arrive when there is less tax revenues coming in than for 
retirement purposes.
  I will go through these slides rather quickly, but I just urge 
everybody, Mr. Speaker, to look and do a little studying and a little 
learning of the Social Security problem because it is probably one of 
the most significant financial challenges that Washington, that this 
House and the Senate and the President face.
  Insolvency is certain. It is not some kind of a far-flung estimate. 
It is an absolute. We know how many people there are, and we know when 
they are going to retire. We know that people will live longer in 
retirement, and we know how much they will pay in and how much they are 
going to take out.

                              {time}  2100

  Payroll taxes will not cover benefits starting in 2015. And the 
shortfalls will add up to $120 trillion over the next 75 years, or 
actually when we run out of tax dollars covering benefits. So starting 
in 2015 to 2075, $120 trillion is going to be needed over and above 
what we are going to take in in Social Security taxes. And just to put 
that in some kind of perspective, since most of us do not know what a 
trillion dollars is, our annual budget is about $1.9 trillion for all 
expenditures of the Federal Government.
  The coming Social Security crisis, our pay-as-you-go retirement 
system, will not meet the challenge of demographic change. I started 
talking about that. This is the number of workers per retiree. And 
since the number of workers contribute their taxes and it is combined 
to pay retirement benefits, it makes a difference. This represents what 
is happening as we reduce the number of workers for each retiree they 
are supporting.
  In 1940, there were 38 retirees paying in their taxes to support each 
retiree. There were 34 workers supporting each retiree. So they could 
divide that retiree's benefits by 38 and that is what they were paying 
in. Today, there are three workers. So whatever a retiree gets on the 
average, you divide it by three and that is what the workers are paying 
in. By 2025 there are going to be two workers.
  So together, if the retirement benefit is $1,200 a month, they are 
each one going to have to tribute $600 out of their paycheck to pay 
that retirement benefit. So the demographics are the serious problem, 
what is giving us a big bleak future that is represented on this chart 
by the red. And in 1983, we substantially increased the Social Security 
tax. So we went up to 12.4 percent and the 12.4 percent is now on most 
of the income you get. I have got a chart on that.
  But that high tax increase in 1983 has resulted to more coming in in 
Social Security taxes that are needed for benefits, a surplus if you 
will. But the blue area up here, that surplus, only lasts until 2015. 
And then the bleak future is demonstrated in the red part of the graph. 
And this is where we are going to be $120 trillion short of what is 
needed to pay benefits over and above what is coming in in the Social 
Security tax, a huge challenge, a huge problem.
  As I have studied this over the last 6 or 7 years, one of the things 
that has become very clear is we have got to get a better return on 
investment.
  Economic growth will not fix Social Security. And so many people now 
are saying, well, look at this great economic growth. That is going to 
take care of Social Security. Since benefits are directly related to 
how much money you are making and if you have a job and start paying 
Social Security taxes, in the early years, the Social Security 
Administration is going to bring in more money, but since there is the 
direct relationship, when you retire, you are going to take out more 
money.
  So, in the long-run, economic growth is not going to fix Social 
Security. Again, Social Security benefits are indexed to wage growth. 
When the economy grows, workers pay more in taxes but also will earn 
more in benefits when they retire.
  Growth makes the numbers look better now but leaves a larger hole to 
fill later. And what concerns me is the administration has used these 
short-term advantages as an excuse to do nothing. I would suggest to 
you that we have missed a real opportunity in the last 8 years to fix 
Social Security.
  When I introduced my first Social Security bill, that was scored to 
keep Social Security solvent until 1995, you did not have to be as 
aggressive in making changes to keep Social Security solvent for the 
next 100 years but you had to make a few more changes. And in fact, I 
ended up borrowing some money from the general fund in this last bill 
to keep Social Security solvent in a way to pay for the transition of 
some of those investments as we start getting real return on some of 
those investments.
  My point is that the longer we wait, the more drastic the changes are 
going to have to be. And if you just review what this country has done, 
every time we have run into problems we have reduced benefits and 
increased taxes, one or the other, or both.
  In 1978, that is what we did. In 1983, under the Greenspan 
Commission, that is what we did. In fact, this is when we reduced 
benefits by saying, look, we are going to add 2 years to the 
retirement, so, starting next year, we are gradually going raise it to 
making the maximum retirement eligibility age 67 rather than 66. But at 
the same time, that is when they jumped these taxes to account for the 
surpluses that we are having now.
  There is no Social Security account with your name on it. These trust 
fund balances are available to finance future benefit payments and 
other trust fund expenditures but only in a bookkeeping sense. They 
are claims on the Treasury that when redeemed will have to be financed 
by raising taxes, borrowing from the public, or reducing benefits or 
reducing some other expenditures. And the source is President Clinton's 
Office of Management and Budget.

  So we have a trust fund. They say, well, if somehow the Government 
pays back the trust fund, then we really will not run out of money 
until 2035. The argument is maybe complicated to make. But maybe think 
of it this way maybe: What would we do if we had no trust fund and then 
versus we have a trust fund? If we had no trust fund but wanted to meet 
our obligations of Social Security, which I think this House is going 
to do, we are either going to have to reduce benefits or increase 
taxes, like we did in 1983 and 1977, or we are going to have to reduce 
other expenditures. And that is the exact same three steps you take if 
you have a trust fund.
  So the challenge for us is how do we come up with the money when we 
need the money.
  Now getting a little bit into politics and the election trying to 
analyze Governor Bush's proposal and analyze Vice President Gore's 
proposal. The Vice President says our current debt that we owe the 
public is $3.4 trillion. That is the Treasury debt. It does not include 
what we owe Social Security trust fund or the other trust fund. It is 
the debt that is owed to the public.
  The Vice President is suggesting that by paying off this $3.4 
trillion debt we can somehow accommodate the $46.6 trillion that is 
unfunded that is going to be what we are going to need over and before 
taxes up until the year 2057. So somehow this public debt at $3.4 
trillion is going to somehow accommodate paying off what we need in 
extra money the $46.6 trillion.
  I did another graph to sort of try to depict these same statistics 
trying to show that it is not going to work. But adding mother giant 
IOU to the trust fund does not help.
  The actuaries and Alan Greenspan estimate that the unfunded liability 
of Social Security right now is $9 trillion.

[[Page H10466]]

 In other words, to come up with $120 trillion over the next 75 years, 
you would need $9 trillion today with interest income on top of it 
earning something like 6\1/2\ to 7 percent real return to come up with 
$120 trillion you need over the next 75 years.
  The bottom blue represents the $260 billion a year that we are paying 
in interest right now on the debt held by the public. So you have got 
$260 billion a year that we would save. And so maybe there is some 
rationale to say, well, let us use Social Security trust fund surpluses 
and use those Social Security trust fund dollars, write Social Security 
an IOU, use those dollars to pay down the public debt and then we will 
add an additional bonus to help cover Social Security by saying that we 
are going to use that savings every year for the next 57 years to help 
pay the Social Security bill.
  But again, as you see, it does not do it. The $260 billion a year 
still leaves a $35 trillion shortfall just until 1957. And this is up 
until 1957 is when the Vice President says that his plan will keep 
Social Security solvent. The key, the challenge is coming up when you 
need the money, not writing giant IOUs to the trust fund.
  The biggest risk I really think is doing nothing at all. Social 
Security, as I mentioned, has a total unfunded liability of over $9 
trillion. The Social Security trust funds contain nothing but IOUs. 
There is a box down in Maryland where every time there is more money 
coming in than what is needed to pay out benefits, the Government 
writes an IOU and puts it in this steel box. And here again their IOUs, 
their bills, their notes from the U.S. Treasury I think they are going 
to be covered somehow. But the question is how do you cover them?
  The economists say that if we were to borrow that $120 trillion from 
the public over the next 75 years, it would almost totally disrupt this 
economy with Government borrowing that much money. Some have suggested, 
well, we could cut down on some of the other spending.
  I am sure, Mr. Speaker, people that have observed how spending is 
going up and the propensity of Congress to spend doubt whether we are 
going to take the whole Federal budget and do nothing with it except 
use it for Social Security.
  That is why we have got to start investing this money and that is why 
the magic of compound interest can help us get out of the problem we 
are in. To keep paying promised Social Security benefits, the payroll 
tax will have to be increased by nearly 50 percent or benefits will 
have to be cut by 30 percent. And I say that is a no. We cannot do 
that. We are already increasing the taxes way too much on the American 
workers.
  We have heard a lot of talk about the Social Security lockbox. It may 
be a little gimmicky, but it has accomplished a lot for us. When 
Republicans took the majority in 1995, we got together and here was a 
group of Republicans that had not been in the majority for almost 40 
years in the House and we decided one thing we were going to do is work 
to balance the budget and part of that was not using the Social 
Security trust fund surplus for other Government spending.

  The problem with this chamber, of course, once you start spending 
more money, if you spend it on a particular program for maybe 2 years, 
those recipients start hiring lobbyists to say, boy, this program is 
really important. We have got to continue this spending. So even the 
emergency spending has become routine spending and we continue to 
expand spending.
  So one of the important things that it seems to me that we have got 
to do is have the discipline, have the intestinal fortitude to hold 
back on the growth of Government because it leaves that much more 
obligation to our kids and to our grandkids on top of the Social 
Security problem.
  Vice President Gore has talked about the lockbox, but I would simply 
say that this chamber has passed the lockbox legislation. It is over in 
the Senate and right now there is, as I understand it, a problem, a 
filibuster. If Vice President Gore would urge his Senate colleagues on 
his side of the aisle to pass the lockbox, there is no question in my 
mind that it would pass through the Senate and we would send it to the 
President and I think the President would sign it.
  Let me talk about the diminishing returns of your Social Security 
investment. On average, the average retiree today receives back a real 
return of 1.9 percent on the taxes that they and their employer put in, 
or if they are self-employed, all their taxes that they have put in.
  This is what the middle light purple shows is the average of 1.9 
percent. You see, some do not even break even. Some have a negative 
return. That is minorities. A young black worker, for example, on 
average is going to live 62\1/2\ years. That means they can work all 
their life but they die before they are eligible for benefits and they 
get nothing but a burial expense of something like $250.

                              {time}  2115

  So it is especially unfair to those particular groups that have a 
shorter lifespan right now.
  The market for the last 100 years has been almost a return of 7 
percent real return, and we will get into those figures a little bit. 
My grandson, well, I will wait until I get to the picture of my 
grandson, but it is the future generation at risk.
  If we do not do something, I can see a generational warfare where the 
young workers of this country, if they are asked to pay 47 percent 
payroll tax without any changes, without adding prescription drugs or 
any extra benefits to Social Security, and the vice president also adds 
increased benefits on Social Security, but with doing no more adding of 
benefits the prediction is that to cover Medicare, medicaid and Social 
Security within the next 35 years we are going to have to have a 
payroll tax that is about 47 percent of what you make. Right now the 
payroll tax is 15 percent.
  Under the current Social Security program, this is how many years you 
are going to have to live after retirement to break even with what you 
and your employer put into Social Security taxes, and this does not 
include that part of the Social Security tax that goes for insurance, 
goes for disability insurance. So that is taken out of the calculation. 
Nobody is touching that. Nobody is suggesting we do anything with that 
portion, that you are really buying insurance in case you become 
disabled or something. That stays in place and that is never touched as 
far as anything but an absolute insurance policy for disability.
  If you were lucky enough to retire in 1940, it took 2 months to get 
everything back that you and your employer put in. Two years, 1960; 4 
years 1980. If you retired in 1995, you are going to have to live 16 
years after you retire to get everything back. If you retire in 2005, 
you are going to have to live 23 years. If you retire in 2015, 26 
years.
  Now our medical technology is doing great things. We have the nano 
technology. We have the new gene cataloging. Maybe it is possible to 
develop the kind of medical techniques that is going to allow you to 
live long enough after you retire to break even and get back everything 
you and your employer put in, but I will guarantee everybody, Mr. 
Speaker, that they also better do some extra saving now to account for 
the other two legs of that three-legged stool if they want to live in 
any kind of decent conditions if they are going to live that long.
  Anyway, my point here is that it is a bad investment. It is a bad 
investment on Social Security and we are going to get into that.
  These are my grandkids getting ready for Halloween. Bonnie and I have 
nine grandkids now so there are a few missing here, and I blew this 
picture up. I have the picture on my wall as I go out my door to make 
votes. Let me sort of, I think, brag a little bit. I have never taken 
any special interest PAC money because I sort of always have wanted the 
independence. So I make my decision looking at this picture and 
deciding what is going to be best for these kids and your kids, your 
grandkids 20, 30, 40 years from now. Sometimes you cannot tell for sure 
but at least you put that as sort of a criteria and you try to say, 
look, is this decision going to make America stronger; is it going to 
keep our economy going?
  Well, that is Selena and James and Henry and George, he is a tiger, 
Emily, Clair, Francis and my grandson Nick Smith. My name is Nick Smith 
so it is

[[Page H10467]]

sort of maybe that is my immortality, but even Nick at 13 years old is 
going to have to live that 26, 28 years after retirement to break even. 
That is under the existing program and that is assuming that somehow we 
are going to come up with the money, but if we do not get a better 
return on the investment of some of the money going in, then he may 
very well be asked to go up to 47 percent of what he makes on a payroll 
tax to cover medicaid and Social Security and Medicare. If he does 
that, then he is probably going to have to live 60 years after he 
retires.
  Anyway, I put the picture up just to make every grandparent think 
that as they look at the possibility of somebody that might promise 
them more benefits, every grandparent has to also think, what is going 
to be the implication on their grandkids, and it is going to be huge if 
we continue to increase benefits, and that starts, of course, when the 
baby-boomers start retiring in 2008, 2009. This is what we have done on 
tax increases.
  Just look at this a minute, Mr. Speaker. In 1940, we had a 2 percent 
rate. The employee paid 1 percent. The employer paid 1 percent. The 
base was on the first $3,000 so $30 for the employee, $30 for the 
employer for not more than $60 a year. 1960 upped it to 6 percent, the 
base was $4,800. The base was also raised. That meant $288 a year 
combined employer/employee; 1980, 10.16 percent, raised the base again 
to $25,900. That means employee/employer together paid $2,631 and 
today, of course, it is 12.4 percent of the first $76,200. That is a 
total of $9,449. A huge challenge of what I think happens down here at 
the bottom of this chart, if we continue to go like we have been, with 
politicians seeking rewards and getting on the front pages of the 
papers, they take home pork barrel projects and make promises of more 
benefits, but it all comes from somebody and the somebody is the 
American people that are paying taxes. So, again, I just urge our 
presidential candidates to move ahead.

  Vice President Gore was at several meetings I was at at the White 
House and I thought we were close a couple of years ago to moving ahead 
with the Social Security problem, but you can understand that it is 
easy to demagog. With all the seniors that get Social Security and so 
many that are so dependent on Social Security, it is easy to scare 
people. The tendency somehow in this political bickering is to try to 
put the other person down somewhat.
  This pie chart, back to how high taxes have gone, right now 78 
percent of families pay more in payroll taxes than they pay in income 
taxes. Seventy-eight percent of American workers pay more in the Social 
Security tax than they do in the income tax, and I think that is a huge 
problem that should reinforce our determination not to yet again 
increase taxes.
  Here are Governor Bush's six principles. They also happen to be my 
six principles. They also happen to be the principles of the gentleman 
from Arizona (Mr. Kolbe) and the gentleman from Texas (Mr. Stenholm). 
They also happen to be Senator Rod Grams' principles from Minnesota. I 
borrowed some of the Senator's charts here. Protect the current and 
future beneficiaries; allow freedom of choice; preserve the safety net; 
make Americans better off, not worse off. Let me stop here a minute. On 
the personal investments, several suggestions. One suggestion, the way 
it worked out was that for every $3 you made in your private 
investments and they have to be safe investments, most of the bills, 
and my bill, call for indexed investments, and it is arranged that for 
every $3 you make on the stock market you would lose $2 of fixed Social 
Security benefits but still everybody would have a choice whether to go 
into the personal savings retirement program, where they own that 
particular retirement fund. It would become optional. But the point is, 
is that whether you lose $4 of Social Security benefits for every $5 
you make in your investments or, in my case, you would lose Social 
Security with an assumption that you could make at least 4-point-some 
percent return on your investments. So almost in every case of every 
projection, individuals are better off and we will get to that with 
actual figures on some of the counties in America that had the option 
of going in to personal retirement accounts rather than going into the 
government's Social Security. No tax increases is pretty much an 
absolute what we have developed into all of these programs.
  Personal retirement accounts, they do not come out of Social 
Security. So I have heard the vice president say, well, Governor Bush 
is taking the money out of Social Security but it sort of substitutes 
for Social Security. It stays within the Social Security system. It can 
only be used for retirement and it is limited to safe investments. Most 
of those, what I do is index stocks, index bonds and index global funds 
and other safe investments as determined by the Secretary of the 
Treasury would be the option, sort of like a 401(k), sort of like if 
you work in government the thrift savings accounts.
  They become part of your Social Security retirement benefits. You own 
them. I think it is good to mention here that the Supreme Court on two 
occasions now has ruled that there is no entitlement, there is no 
connection between the Social Security taxes you pay in and your right 
to have any benefits. One is strictly a tax and the other is a benefit 
that is determined by Congress and the President. Likewise, if you 
happen to die before you reach retirement age, if it is money in your 
own account it goes into your estate, to your kids and your grandkids. 
It is limited to safe investments that will earn more than the 1.9 
percent paid by Social Security.
  I made this big because on my stump it has been used against me in my 
campaigns; well, the Congressman just wants to take away benefits or he 
wants to increase taxes, but all of these plans, no tax increases, no 
benefit cuts for retirees or near-term retirees. So it would be the 
younger worker that would have the option of the personal retirement 
investment accounts.
  Personal retirement accounts offer more retirement security. If John 
Doe makes an average of $36,000 a year, he can expect monthly payments 
in a PRSA, a personal retirement account, of $6,514 from his personal 
retirement account as opposed to $1,280 from Social Security. This is 
just trying to demonstrate the magic of compound interest.

  Choosing personal accounts, Galveston County, Texas, when we did the 
program in 1935 counties had the option of whether or not they wanted 
to put it into their personal retirement accounts or whether they 
wanted to put it into Social Security. Listen to this. Death benefits 
in Galveston, $75,000 death benefits under their personal investment 
accounts; Social Security $253. Disability benefits per month, Social 
Security $1,280; the Galveston plan, $2,749. Social Security $1,280, 
the same as the disability; but the retirement is $4,790 a month.
  This is a statement by a young lady whose husband died, and she said 
thank God that some wise men privatized Social Security here. If I had 
regular Social Security, I would be broke. And after her husband died, 
Wendy Colehill used her death benefit check of $126,000 to pay for his 
funeral and enter college. Under Social Security she would have 
received a mere $255.
  San Diego has the personal retirement accounts as opposed to Social 
Security and a 30-year-old employee who earns a salary of $30,000 for 
35 years, $30,000 for 35 years and contributes 6 percent to his PRA 
would receive $3,000 per month in retirement and that compares to 
$1,077 in Social Security. The difference between San Diego's system of 
PRAs and Social Security is more than the difference in a check. It is 
also the difference between ownership and dependence on a bunch of 
politicians sometime to maybe make a decision like they did in 1977 and 
1983 to cut benefits again.

                              {time}  2130

  I got this from Senator Rod Grams. This is a letter from Senator 
Boxer, Barbara Boxer, Senator Feinstein and Senator Ted Kennedy to 
President Clinton on April 22, 1999, in support of allowing San Diego 
to keep with their PRA system rather than go into Social Security.
  They said in this letter, ``Millions of our constituents will receive 
higher retirement benefits from their current public pensions than they 
would under Social Security.'' They are going to do better. So even 
these people have said, look, that private investment is better. Let 
San Diego keep their system.

[[Page H10468]]

  The United States trails many other countries in the world in terms 
of making this change. In the 18 years since Chile offered PRAs, 95 
percent of the Chilean workers have created accounts. Their average 
rate of return has been 11.3 percent per year.
  Among others, I visited Australia, Britain and Switzerland. They 
offer workers PRAs. I represented the United States in an international 
meeting where we all talked about our public pension retirement 
systems, and I was so impressed with what these other countries had 
done. Europe, for example, ended up with a 10 percent return on their 
second tier investments, and two out of three British workers enrolled 
in the second tier social security system chose to enroll in PRAs.
  Here we have a socialist country, but they are saying, look, allow us 
at least in part to invest some of our money in our own accounts, in 
personal retirement accounts. British workers have enjoyed a 10 percent 
return on their pension investment over the past few years. The pool of 
PRAs in Britain exceeds nearly $1.4 trillion, and it is larger than 
their entire economy and larger than the private pensions of all other 
European countries combined. Very successful.
  I sort of stuck this little chart on, and I do not know, Mr. Speaker, 
if the camera picks this up, but based on the family income of $58,475, 
the return on a PRA is even better. So without looking at this for a 
minute, if it is in there, the light blue is 2 percent of your income, 
and I will call it a pinkish-purple is if you invested 6 percent, and 
the dark purple is if you invested 10 percent of your income.
  If you leave it in for 40 years, then 10 percent of the $58,000 a 
year would end up in 40 years worth $1,389,000. That means with 5 
percent interest on that, you would not even have to touch the 
principal; you could get almost $70,000 a year just from interest at 5 
percent.
  Okay, if we can look at this little chart, and I will sort of explain 
it as we finish off here, the question is, what about a downturn in the 
stock market? You can invest in the stock market, but what if you have 
a crash? What if you have a crash like we did in 1917 or 1929 or 1978? 
What if the stock market really goes down?
  This shows what has happened over the last 100 years in stock 
investments in the United States. You see a few dips, but it has never 
gone down below 3 percent. So at the very worse, over any 30-year 
average, any 30 years on average, it has never gone down to what the 
1.9 percent return is on Social Security right now.
  The average, if you take any 30-year period, and likewise, a 20-year 
period, you have never lost money, even putting that 20 years around 
the worst times in this country. If you put the 20 years or the 30 
years any place around the Great Depression, you still have a positive 
return on that investment. The average return for any 30-year period 
for the last 120 years has been a return of 6.7 percent.
  So, sometimes we get nervous and take our money out of the stock 
market, but the key to these kind of PRAs is it only can be used for 
retirement, so it tends to be long range.
  Individuals would have the choice. So Governor Bush is saying, look, 
leave some choice for individuals, such as our thrift savings account. 
Do you want it a little more in stocks and a little less in bonds, or 
vice versa, and where do you want to put some of that money as an 
individual? So some people will end up better off than others.
  I will finish up on my last chart by putting up a bunch of kids 
getting ready for Halloween. Their future is in our hands, Mr. Speaker, 
and I would hope that all of us would give some conviction.
  We have done a fairly good job the last several years reducing 
spending. In 1993 we saw the largest tax increase in history. We 
decided 2 years later when the Republicans took the majority not to 
spend that tax increase and to hold government spending down. That has 
ended up in a surplus, along with just this tremendous system that we 
have got in this country, where those that work and save and try and 
invest end up better off than those that do not.
  Like I say, we have used maybe some suggestions like the lockbox that 
kept us from spending the Social Security surplus. What we did last 
month as a Republican Conference is we decided, look, our line in the 
sand this year is going to take 90 percent of the surplus and use that 
to pay down the debt held by the public, and take the other 10 percent, 
and that is what we have been arguing about for the last month, what to 
do with that other 10 percent. But I think we have the President 
convinced now, because the public supports it, is using 90 percent of 
the surplus to pay down the public debt, and we have come a long ways.
  That is what we are doing. But for my grandkids, for your kids and 
your grandkids and your great grandkids, please help us move ahead in 
dealing with Social Security and not continuing to put it off.

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