[Congressional Record Volume 146, Number 134 (Tuesday, October 24, 2000)]
[Senate]
[Pages S10903-S10906]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY
Mr. CRAIG. Mr. President, my colleague from North Dakota has just
left the floor. I was off the floor for a few moments, but I know he
talked about the Presidential campaign and the proposal by the Governor
from Texas to reform Social Security, especially for the young people
of our country as it relates to their future participation in it and
the amount of money they will ultimately pay into it versus that which
they get out.
I thought I would come to the floor for a few moments to share with
the Senate several experiences I have had over the last couple of years
dealing with Social Security. About a year ago, I did a series of town
meetings across my State called senior-to-senior. I invited high school
seniors and senior citizens to come together in the same place to talk
about Social Security.
Every time you go to a high school, one of the top two or three
questions asked is about Social Security. Now, my guess is that the
average American would not believe a senior in high school would be
that interested in Social Security. But they have probably heard their
mom or dad saying you really ought to not plan on Social Security; it
is certainly not going to be there when you get to be your
grandparents' age. That has been a fairly standard refrain across
America for the last decade. Why? Why would parents of today suggest to
their young people not to expect to get a Social Security
benefit? Largely because they have been told it would go bankrupt, that
it would create so much liability that it could never pay for itself.
What I think they failed to recognize is that since the Social
Security reforms of the mid-1980s, Social Security has been building a
reserve trust fund and we are taking in more than we are paying out.
But sometime in the near future--sometime in the future of the Senator
from Idaho and the Senator from North Dakota--when we get to be Social
Security age along with other baby boomers, there is going to be a peak
of Social Security liability, or Social Security obligation. It will be
some $7 trillion-plus. That is a fact. We know that.
But we also know that the seniors of today and immediately tomorrow,
at least for the next decade or two, are well protected because of the
reforms we made in that system in the mid-1980s and the very dramatic
tax increases that workers and employers have paid since that time.
Social Security is strong today. But we didn't do it by cutting
benefits very much, we did it by dramatically raising taxes on the
working men and women of this country.
If you want to keep this cycle up, if you do not want to make it
self-supporting, and if you do not want it to yield what the other
annuities and private annuities are yielding, then you keep it up and
you say to the young people: You are going to pay in hundreds of
thousands of dollars of your wages in taxes, and for every dollar you
put in during your lifetime, you are going to get only three quarters
back.
Is that being very honest with the young people of America today?
They are going to work all of their lives and put all of their money
in, and they are going to be taxed at an even higher rate. And in
return, even the likelihood of getting back a 5-, 4-, or 3-percent
return just isn't going to be there.
Yet you can say to them: If you invest in private investment funds,
the average return over the last 100 years invested in the industry of
this country is about a 10-percent analyzed rate.
Young people aren't dumb. They are pretty darned bright. With today's
Internet and their ability to calculate, to communicate, and to invest
independently, they pretty well understand that what their parents are
telling them has some truth, makes some sense.
Social Security may be there. But it is not a very good investment
unless you are paying for your parents' retirement--or, should I say
``enhanced income,'' because your parents paid for your grandparents.
The only problem is that every senior in high school today can expect a
20-percent increase in their taxes over what their parents are paying
today, when they get to be their parents' age, to fund the current
Social Security system.
That is why Social Security has become a debate issue in this
Presidential campaign. And it darned well should be. No responsible
Presidential candidate is going to stand out there and say all is well.
It is well for the immediate future--for the next decade or two. But
for young people today to invest in this system without significant
reform in it is not only bad policy, it is bad politics.
But I hope we reside on the side of good policy and ultimately good
politics. It tends to go hand in hand.
It has been fascinating for me to watch the debate between Governor
Bush and Vice President Gore, with Gore saying Bush is going to
bankrupt Social Security and Bush suggesting that what Gore might do
would simply increase the system's liability and increase the debt
burden on future citizens. Where does the balance lie?
I really believe it is time for this Senate and this Government to
investigate the opportunity to take a small piece of Social Security
taxes and allow taxpayers to invest them in what we call personal
savings accounts.
I always notice when the Senator from North Dakota or others talk
about this issue, they only talk about investments in the stock market.
But that is not Governor Bush's proposal. It was Bill Clinton who said
invest it in the stock market.
What Governor Bush has consistently said for the last month is
personal accounts invested somewhat like the Federal retirees have--
like the Senator from North Dakota and the Senator from Idaho have,
which means they don't invest their individual accounts in individual
stocks. They have categories of investment that are high risk, moderate
risk, and low risk. Yes, some of that money is invested in the stock
market, because that is where you invest money--you invest it in the
economy of this country--but some is also invested in private and
government bonds and other less risky investments.
We all know the demographics. We will soon have a record number of
seniors in this country. What we are suggesting is that, as we shift
back and forth, as older people get older and younger people move into
the system, that over the next few decades we transform the system; we
adjust it. Over that period of time, we can create less dependency on
the American taxpayer and as future retirees--if we adjust it
properly--increasingly rely on their individualized account. That makes
awfully good sense.
[[Page S10904]]
Here is what doesn't make good sense to me. When Vice President began
to talk about his Social Security proposals--increasing benefits for
widows, and increasing benefits for stay-at-home parents by attributing
earnings to them while they stay at home--oh, did that sound like good
politics in an election year. My guess is it is pretty good politics in
an election year. But the question is, Is it good policy for the Social
Security system? Does it keep Social Security stable? Does it keep it
well funded? Or down the road does Mr. Gore--if he becomes President
and long after he has left--create such a liability that the person who
will be serving here from Idaho long after I am gone has to say to the
young people and wage earners of this country that we are either going
to have to cut your benefits or raise your taxes? My guess is that is
exactly what is going to happen. Let me for a few moments suggest why.
Everybody wants to help moms and widows, especially during election
years. But, Mr. President, let me suggest to you that Social Security
is the wrong tool for that job.
The Gore Social Security surplus scheme would fail to provide
meaningful assistance to the people they are targeting to aid. Worse,
it would increase the Social Security's unfunded liability by almost a
third; reduce Social Security trust fund balances by hundreds of
billions of dollars; and simply accelerate the cash-flow problem in
which Social Security will find itself in the near decades if we don't
make reasonable reforms.
Social Security is one of the few Federal programs that already takes
stay-at-home parents into account. In the current system, married
spouses generally receive about the same Social Security benefits
regardless of whether they worked full time, part time, or took a break
in child rearing and did not work at all.
For example, in 1996, women who received Social Security benefits
based upon their own work record received an average of $675 in
benefits while women whose benefits were based on their husbands' work
record received $569. What I am saying is women who stayed at home
received almost the same benefit.
Let's remember that Social Security is not designed to be the sole
source of retirement income. It was designed to be supplemental income,
and it should be understood to be just that. Nevertheless, for many
seniors, Social Security is their sole source of income. For those
seniors, our first priority should be to ensure we don't further
endanger the program by adding additional obligations on top of the
ones we already cannot afford.
If the Vice President wants to help mothers, why didn't he embrace
the tax relief the Senate Marriage Tax Relief Act would have provided?
That would have been immediate relief. Instead, his proposal takes a
program already under financial stress, and it would put it, in my
estimation, at substantially greater financial risk.
What does it cost? Everybody has seen what the Vice President has
proposed for Social Security. And yet, while the short-term cost of
Governor Bush's proposal has been discussed--there has been a trillion
dollar figure floated around--Nobody wants to talk about what the Vice
President's plan will cost.
This is what we believe and this is what others believe the Vice
President's plan will cost. The Vice President said it would just cost
a few billion over the next 10 years. While the Social Security
Administration has not estimated the motherhood proposal, economist
Henry Aaron offered a seat-of-your-pants estimate in Slate Magazine of
about 0.25 percent of taxable wages. That is about $150 billion over
the next 10 years. Meanwhile, Vice President's Gore's proposal to
increase widow's benefits would constitute about 0.32 percent of
taxable wages, according to the report of the 1994 through 1996
Advisory Council on Social Security, Volume 1: ``Findings and
Recommendations.'' That translated into about $166 billion over the
next 10 years.
Now the Vice President has put a limit on his benefits so it would
cost maybe a little bit less than that. The bottom line is, if you
spread this concept out over the lifetime of the beneficiary, we truly
are talking about these proposals costing trillions of dollars. He
doesn't propose to raise taxes. He proposes a finance scheme which
simply advances the liability and expands the liability into future
generations.
If you are going to raise benefits in Social Security, at least have
the political integrity to propose a tax increase to offset the
benefits so you don't stress out the trust funds beyond where they
currently are and you don't create outyear liabilities.
But then again, how could you be all things to all people and propose
this great benefit, if on the backside you looked the worker in the eye
and said, ``And now you are going to have to pay for it''?
So, once again, it is a Ponzi scheme. We shift a little around and we
move a little over here. Now, the Governor from Texas has different
approach. He clearly recognizes that by setting aside a couple of
percentage points and allowing them to be invested within a fixed
universe of investments, that we begin to build for the future of
Social Security by compounding our investment income instead of
compounding our liabilities and our debts by adding to the benefit
structure.
If we are going to improve the condition of widows and spouses, let's
do it in a way that is realistic and honest. If we want to use Social
Security as that vehicle, then at least provide a revenue flow that
effectively justifies those benefits in the outyears, the several
hundreds of billions of dollars that ultimately the motherhood proposal
and the proposal that relates to widow's benefits would cost. That is
what we ought to be talking about. That is the fair way to do it.
The amount of new liabilities required under the Vice President's
proposal is truly staggering. Some economists have suggested it is in
the trillions of dollars. A trillion here, a trillion there adds up to
be real money. In the past, those involved in public policy--and, more
importantly, those involved in the electorial process--said that Social
Security is off limits unless you are willing to increase benefits.
Don't talk about new taxes, only add to the benefit structure.
Thank goodness, a few years ago Congress stopped that. We reformed
Social Security, and we said we are going to leave it alone.
As a result, we stabilized it. We made the tough votes in the mid-
1980s. We raised the taxes dramatically on the working men and women of
this country--but we stabilized the system. So today, I say don't add
benefits to that system unless you are clearly willing to offset those
benefits by revenue flows.
The Governor is talking about an idea, a concept that he would work
with the Congress of the United States. Recognizing we are in historic
surpluses at this moment, there is a unique opportunity to reform the
Social Security system so we can go to the young men and women entering
the workforce in this country and say, in your lifetime, your Social
Security annuity will amount to something very significant instead of
getting back just three quarters for every $1 you pay in.
For my parents, Social Security has been a tremendous benefit. For
their parents, it was a windfall. For me, it will be about a break even
for the amount of money I have invested my lifetime. For my children,
unless we reform it as the Governor from Texas has proposed, it will be
one very bad investment. I don't want to ask that of my children.
Certainly the Senator from North Dakota and I are better thinkers than
that. We ought to be able to come together to devise a system that
doesn't create outyear liabilities of the kind the Vice President is
proposing.
Those are the real issues. Sure, it is worthy of a Presidential
debate. That is where it ought to be debated. Clearly, the facts and
figures ought to be well established. At the same time, I am pleased
there is a candidate out there who isn't willing to live in the shell
of the past and the concept of a system that was crafted way back in
the 1930s, under a Bismarckian plan that simply said it is going to
work because you will never live out its benefit cycle. Thank goodness
my parents will live it out. People are living longer.
Because of the demographics of this country today, it is critically
important that the Congress develop the political will to reform Social
Security,
[[Page S10905]]
to establish personal savings accounts underneath a governing body to
ensure sound investments and the security of the system. That makes
good sense to me. And it sounds, by the numbers out there, it is making
even better sense to Americans.
I want my children to have a strong Social Security supplemental
income system for them so they receive a healthy return instead of a
three quarters for the dollar. That makes good sense. They can do it in
the private sector. Why aren't we smart enough to design a plan so we
can do it in the public sector?
I yield the floor.
Mr. DORGAN. Mr. President, this, I think, is the debate we ought to
have in this country on the subject of Social Security. I am pleased to
hear the Senator from Idaho describe the plan proposed by Governor Bush
and describe the proposal by Vice President Gore on the issue of Social
Security.
If you read history, you will find there are people for the last
nearly 70 years who have predicted that Social Security won't work,
will go broke, and won't be there when they retire. Decade after
decade, people predicted that in every community around this country,
especially the small towns of North Dakota.
There are people living better lives because the Social Security
Program provided them something called ``security.'' Does it provide
for all their needs? No. But it is a bedrock security for their
retirement years. They invested in it when they were working and now
they have Social Security in their retirement years. The word
``security'' in Social Security is not some accident. People understood
that the purpose of Social security is just that--security. It is the
economic baseline of retirement, the one means of financial support
that Americans can count on.
As I indicated, there are people who, every decade, have said the sky
is falling with respect to this program. There are some who never
supported this program in the first place. They wouldn't have supported
Social Security because philosophically they didn't believe Government
ought to do anything, and they didn't support Medicare because
philosophically they thought the Government shouldn't do anything.
What would America be like today if we had an aging population
without Medicare or Social Security? This country would not be as good
a country as it is without those two important programs.
People are living longer and better lives. That has placed some
stress on both Social Security and Medicare, but do not let anybody
tell anybody else that the problem is that these programs do not work.
These programs work and work well. People are growing older and living
better lives in this country. This is a problem born of success.
Mr. CRAIG. Will the Senator yield?
Mr. DORGAN. I will be happy to yield, of course.
Mr. CRAIG. I know proper procedure, Mr. President, is to ask the
question, but it is important to suggest this Senator did not say
Social Security does not work. Quite the opposite. I believe it has
worked.
What I talked about today is who pays for it because what the Senator
from North Dakota is suggesting, I think--and I agree with him, the
tremendous benefit that has come, but he has also seen the doubling and
the quadrupling of taxes on the working people to pay for that benefit.
I suggest this to the Senator from North Dakota. I think it is
important. CBO has just scored the Gore transfers within his plan. They
have suggested those transfers are around $40 trillion over the next 54
years. If that is true, 40 trillion bucks would have to flow out of
other sources, such as the general fund, because we know the Vice
President is not talking about a tax increase. The question is, How do
you handle it? Do you create higher Government debt? Do you do direct
investments? The Senate voted 99-0 against Government investments.
So the legitimate question in this debate is not whether Social
Security has successfully benefitted current and past retirees. The
Senator from North Dakota and I just flat agree that it has. Senator
Dorgan and I know of too many cases of individual citizens who find
that Social Security is almost their sole source of income. Thank
goodness it is there. I am talking about is the growing tax burden on
our children. We are imposing a 20-percent payroll tax liability on the
young working men and women in this country and we have to be extremely
cautious.
Mr. DORGAN. Mr. President, I reclaim my time.
Mr. CRAIG. Mr. President, $40 trillion in 54 years. Where do we get
it, and how do we handle it?
Mr. DORGAN. I reclaim my time. Mr. President, $40 trillion --I do not
know how big the school of the Senator from Idaho was. I assume he did
not study a trillion, nor did I. There ought to be rules when one
starts talking about trillions of dollars. If you extend it for two
centuries, you can probably come up with hundreds and hundreds of
trillions of dollars, but it is largely irrelevant.
The issue is this: We have a Social Security program and a Medicare
program. Both of them have some funding challenges in the outyears--not
next year, not in the next 10 years. For Social Security, it is well
beyond the next three decades, but there are challenges.
Why do we have these challenges? This is good news. Let's not grit
our teeth and wring our hands and wipe our brow over good news. People
are living longer and better lives. Good for them and good for us. This
is good news. This is born of success.
If you want to solve the Social Security problem and Medicare
problem, go back to the old mortality rates. At the turn of the last
century in 1900, if you lived in this country, you were expected to
live on average to age 48. Now people are going to live 30 years longer
on average. That is good news. Good for us. That causes some
difficulties in Social Security and Medicare. This is not a big
problem. We can solve this problem.
Let me describe something the Senator from Idaho needs to know. The
Senator from Idaho never did address the question of the $1 trillion
hole. He sort of went over it like: ``Well, people say a trillion
dollars but'' and then went on.
If you are going to take money out of the current revenue base for
Social Security and say to young people who are now working--you can
use it for private accounts, then what happens to the estimated $1
trillion over 10 years you took from over here which was to be used to
pay benefits for current beneficiaries of Social Security?
I have served in this Congress with my colleague from Idaho and
others. Over the years, we have put in place $100 billion a year in
incentives for private savings and private investments. We have SEPs.
We have traditional and Roth IRAs and 401(k)s. We have them all, and
more. We say to people: If you put some money away in savings under
certain conditions, you will have a tax benefit, a tax credit, a tax
deduction. We spend $100 billion a year in reduced taxes by providing
incentives for people to create and open private accounts, to invest in
the stock market, and to invest in other things. We do that. I support
it. I think it makes good sense for this country. But that is not the
same as Social Security.
The word ``security'' ought to mean something. That is the bedrock,
the foundation of retirement funds that we do as a country. The Senator
from Idaho asks the question--I want to answer it--he asks the question
about the issues that the Vice President has raised on the widow's
benefit to surviving spouses and also of the issue of the motherhood
penalty.
The Vice President proposes to solve those, which I think makes some
sense. I assume the Senator from Idaho will agree that the issue of the
widow's benefit, to increase the widow's benefit to 75 percent of the
couple's previously combined Social Security benefit, makes sense. He
knows and I know all kinds of retired women around this country living
by themselves who are struggling mightily to make ends meet with a
pittance in their assistance check, and we need to do better than that.
The Vice President proposes we do better than that.
The Senator from Idaho asks: Where does he get the money? I will tell
him where he gets the money. Then I will ask where does George Bush get
the $1 trillion because I would like to hear an answer to that.
Where does Vice President Gore get the money? He does not propose a
massive $1.5 trillion in tax breaks, most of which goes to upper income
folks. He
[[Page S10906]]
proposes a smaller tax cut to working families and uses the difference
to reduce the Federal debt. When we reduce the Federal debt every year,
we have a surplus and will get to the point when we wipe out the
indebtedness. When we wipe out the Federal debt, the third largest
expenditure in the Federal budget, which is interest on the debt, will
no longer exist. And that money which we now pay for interest on the
Federal debt, the Vice President proposes be put into the Social
Security system to help pay for the two issues the Senator from Idaho
just described and provide increased solvency for the Social Security
system. The answer is very simple. The Senator asks where does the
money come from? It comes from reducing the Federal debt, eliminating
interest on the debt as cost to the Federal budget, plowing that back
into the Social Security system to help mothers, widows, and to
increase and promote solvency in the system. That is the answer. It is
a very simple answer.
Mr. CRAIG. Will the Senator yield?
The PRESIDING OFFICER. The Senator's time has expired.
Mr. DORGAN. Mr. President, I ask unanimous consent for 5 additional
minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, I appreciate the indulgence of the Senator
from Iowa. I will try to finish before 5 minutes. I want to finish this
point. The Senator from Iowa is on the floor and I know wants to speak.
Let me finish this point because I think it is so important.
The difference in priorities here is a priority. I am not saying one
candidate is a bad person and the other candidate is a good person.
Those who aspire to be President of this country have different
priorities. Governor Bush says he supports a very large tax cut right
up front even before we have the surpluses. We have all these
economists telling us we are going to have 10 years of surpluses. Most
cannot remember their telephone numbers, and they are telling us what
is going to happen in this country 8 years down the road. Nonsense.
We would be very smart to be more conservative than that. What we
ought to do, as Vice President Gore suggests, is use a substantial
portion of that estimated surplus to pay down indebtedness. If during
tough times you run up the Federal debt, during good times you ought to
pay it down. One of the advantages of doing that is you reduce the
third largest item in the Federal budget--that is interest on the
debt--and use that for another purpose. That is exactly the answer to
the question the Senator raises.
Mr. CRAIG. Will the Senator yield?
Mr. DORGAN. I want to make one additional point. What brought me to
the floor today was this discussion of $1 trillion that is proposed to
be taken from the trust funds of Social Security that is now used to
pay benefits to those who are now retired and to be used instead for
private accounts for working men and women. My point is this: We
already spend $100 billion a year to incentivize private investment
accounts. I am all for that.
In fact, as far as I am concerned, we can increase that and probably
will. Vice President Gore suggests Social Security-plus to keep Social
Security, do not threaten the base of Social Security at all, do not
take money and divert it, but then on top of Social Security say we are
going to provide even more incentives for those who want to invest in
private savings accounts.
My point is this, very simple: When the issue of credibility is
raised about all of these claims and counterclaims, there is a serious
credibility issue of taking $1 trillion out of the current trust fund
over the next 10 years, $1 trillion that would otherwise go into the
trust funds to pay current benefits to those who are retired, and
saying at the same time: It is available for private accounts for other
people. As I said before, when you take bookkeeping in high school or
college, they do not teach you ``double entry'' means you can use the
same money twice. Yet that is exactly what has happened with this
proposal.
Mr. CRAIG. Will the Senator yield?
Mr. DORGAN. I will yield just for a moment.
Mr. CRAIG. For 1 minute only.
The Vice President starts the benefit, accrues the debt into the
trust fund, and then you have an increased debt over in the trust fund
of Social Security. An increased debt because the new benefits are
going out.
On the other hand, I believe Governor Bush is proposing the
following: He will take $1 trillion out of a $2.4 trillion surplus to
create these personal accounts. It is not current money to pay for
current programs. No. No. The Senator from North Dakota and I agree
that under current law, and under current benefit rates, Social
Security is building a trust fund surplus that will peak at $2.4
trillion.
Therein lies the difference. Those are the facts. The Gore plan is a
Ponzi scheme, Mr. President. It is a Ponzi scheme.
Mr. DORGAN. Let me reclaim my time. I am generous to yield and always
yield when asked to yield. But this notion of a Ponzi scheme--the
definition of ``Ponzi,'' it seems to me, is a description that says:
The surplus that is going to go into the Social Security system each
year, for a while, is somehow available for some other purpose.
We have a deliberate surplus going into Social Security. Why? Because
it is needed, as the Senator from Idaho knows, to meet the day when
baby boomers retire. We are going to need that money.
What is going to happen is, if you follow his proposal, or the
Governor's proposal, and you take that money out, when you need it
later, it is not going to be there.
So I do not want anybody to stand up on the floor and say: Oh, yes,
there is a surplus right now. By the way, that is unobligated. Somebody
can come and grab that, and it will not matter. That surplus is
delivered.
I happened to be on the Ways and Means Committee in the House when we
passed the Social Security reform plan. We did it to deliberately
create a surplus to meet the needs when the baby boomers retire.
When the Second World War ended, the folks came back from fighting
for this country's liberty and freedom, and they created the largest
baby crop in the history of our country. They are called ``war
babies.'' There was this outpouring of love and affection, I guess, and
we had the largest baby crop in American history.
When that largest baby crop in American history retires, we are going
to have a substantial need for all of the surplus we have designed to
put into that trust fund now.
My point is, if you take that out now, by saying it is not obligated,
that we do not need it, I just say you are wrong. You can stand up and
holler ``Ponzi'' all you want.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. DORGAN. But you are wrong if you take that position.
Mr. President, I yield the floor.
Mr. HARKIN. Mr. President, I ask unanimous consent to be recognized
for up to 10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. I want to add to what the Senator from North Dakota is
saying. I am sorry the Senator from Idaho has left.
Basically, the Senator from Idaho said Vice President Gore's
proposals would--I do not know if he used the word ``bankrupt,'' but
they would destroy the Social Security surplus, et cetera.
I say to the Senator from North Dakota, the actuaries of the Social
Security Administration did a study. They said the Gore plan that would
apply the interest savings, improve the widow's benefits, and end the
motherhood penalty, would, in total--when you take the total package--
extend the Social Security trust fund solvency to over 50 years. That
is from the actuaries themselves.
So if my friend from Idaho were here, I would make sure he heard
that. Maybe he did.
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