[Congressional Record Volume 147, Number 33 (Tuesday, March 13, 2001)]
[Senate]
[Pages S2169-S2171]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                SOCIAL SECURITY AND MEDICARE TRUST FUNDS

  Mr. CONRAD. Mr. President, I rise this morning to discuss once again 
the amendment that will be voted on after the party caucuses at 2:45. 
The amendment I am offering is to wall off and protect the Social 
Security and Medicare trust funds from being raided, from being used 
for other purposes.
  I think every Member of this body remembers very well the time in 
which, for years, Social Security trust funds were regularly raided for 
other purposes. We only stopped that practice 3 or 4 years ago, and I 
think all of us do not want to go back to those days.

[[Page S2170]]

  The best way to assure that we do not go back to those days is to 
agree to the amendment I have offered today, the amendment that is 
virtually identical to the amendment I offered last year that got 60 
votes in the Senate.
  We call it the Social Security and Medicare lockbox amendment because 
it protects both the Social Security surplus and the Medicare surplus.
  In fact, if we go to the detail of what we are discussing, this 
amendment protects the Social Security surpluses in each and every 
year, takes the Medicare Part A trust fund off budget in the same way 
we have taken the Social Security trust fund off budget, and gives 
Medicare the same protections as Social Security.
  This legislation contains strong enforcement language--budget points 
of order--to assure these funds are not used for some other purpose.
  One of the things that leaves out, for anyone studying the 
President's budget proposal, is unless he uses Medicare trust fund 
money in 2005, he runs an $11 billion deficit in that year.
  That is part of the problem with this budget. It threatens to put us 
back into deficits because the tax cut is so large. Some of us believe 
it is critically important that we protect both the Social Security 
trust fund and the Medicare trust fund so they are not used for other 
spending in the Federal budget.
  Some have argued, well, there really is no surplus in Medicare; that 
there are two trust funds, and there is a surplus in one--that is, Part 
A of Medicare, the hospital coverage part of Medicare, and Part B that 
covers largely doctors' services, which is in deficit.
  I have heard this argument made over and over, but it is just wrong. 
It is not what the law says. It is not what the actuaries say. It is 
not what the detailed financial reports that have been made to the 
Senate say.
  This is the page right out of the budget book from the Congressional 
Budget Office. It says on the table on page 19 ``trust fund 
surpluses.'' The first one is Social Security. It shows year by year 
the surpluses we will have in Social Security. Then it talks about 
Medicare. The first trust fund it discusses is Part A. You can see year 
by year the surpluses that are projected for Medicare Part A.
  Under the Congressional Budget Office scoring, this adds up to over 
$400 billion. In the President's analysis, it is over $500 billion of 
surplus in Part A.
  Then it goes to Part B. While some have argued that Part B is somehow 
in deficit and therefore there are no surpluses in Medicare, that isn't 
what the report shows. The report shows that over the 10-year period 
there is a rough balance in Part B--not a deficit. It is not any big 
surplus.
  Those who have argued that there is no Medicare surplus--I don't know 
what it is based on. But it is not based on the facts, and it is not 
based on the law. Some have tried to argue, well, because Part B is 
funded 25 percent by premiums and 75 percent by general fund revenue, 
therefore Part B is in deficit. Again, that isn't what the law says. 
That isn't what the actuaries say. That isn't what Congress has said. 
Congress made the determination that Part B would be funded 25 percent 
by premiums, and 75 percent by general fund revenue. We made that 
determination. It is not in deficit.
  If one follows the logic, and one says, well, if Part A is in 
surplus, Part B is in balance, therefore it just doesn't matter somehow 
because they are claiming Part B is in deficit because 75 percent of 
its funding is from the general fund, we can just forget about the Part 
A surplus, and we can move it, as the President does to this so-called 
``contingency fund,'' what does that do? That moves up the date of 
insolvency of Medicare by 15 or 16 years. And Medicare will go broke in 
the year 2009 and 2010 instead of the year 2025.

  What kind of a policy is that? What earthly sense does it make to 
raid the Medicare trust fund and use it for other purposes?
  I suggest to my colleagues that it makes no sense. It is precisely 
what we should not do.
  In answer to my amendment, my colleagues on the other side of the 
aisle are offering an amendment. This amendment claims to be a lockbox, 
but the door is wide open. This is what I call the ``leaky lockbox'' 
because there is no lock. There is no box. And it is wide open to abuse 
and to raid.
  There is not a penny that is reserved for Medicare under the 
President's budget. That happens to be the reality. He takes the whole 
$500 billion under his calculation of what is in the surplus and moves 
it to the so-called ``contingency fund'' and goes around the country on 
Air Force One, as he did in my State, and tells people who are 
concerned about his cutting the agriculture budget to not worry about 
that; the money is in the contingency fund.
  Go to the contingency fund. Boy, are people going to be surprised 
when they go to the contingency fund and they find that there is 
nothing there because it is virtually all Medicare trust fund money. 
There is supposed to be some money there. I don't know what the source 
of it is other than maybe he is going to raid the Social Security trust 
fund, too, because there is no money there.
  Add up the President's budget. I will do it in a minute. There is no 
money there. We will get a chart that shows those numbers.
  Let's look at what the Republican amendment says. I must credit and 
give compliment to those who crafted the language on the other side. It 
is very attractive language.
  Here is what it says. They say they have a lockbox for Medicare. But 
then they have this clause which they call ``exception''.
  ``Subparagraph A''--that is the language that gives protection--
``shall not apply to Social Security reform legislation or Medicare 
reform legislation.''
  Who can be against reform? I am certainly not. I have been an 
advocate and have voted for reform--even sometimes unpopular 
legislative proposals--because of the clear and compelling need for 
reform.
  But when you write language such as this, it is a giant trapdoor 
because there is no definition of what constitutes ``reform.'' You can 
do anything and call it reform and use the money. That is what is wrong 
with the amendment on the other side. You could, under the cloak of 
reform, cut taxes. Under the cloak of reform, you could say with 
Medicare that we are going to take that money and pay for prescription 
drug benefits. Some might call that reform. The problem with that is 
that it is classic double counting. That is exactly how we will get in 
trouble around here--if we first say money is attributed to the 
Medicare trust fund for the purposes of keeping the promises already 
made, and then we take a part of it and use it for new promises.
  That is a mistake. That will do nothing but create financial trouble 
for this country. The trouble it will create is if money is diverted 
from the Social Security trust fund or the Medicare trust fund--that 
money which is currently reserved for paying down the publicly held 
debt because it is not needed until a later point in time--it reduces 
the amount of money available to pay down the publicly held debt. That 
means you pay down less debt. That means you have more of a hole to dig 
out of when the baby boomers start to retire.
  I know the occupant of the chair disagrees with this analysis. He and 
I had a long conversation on the bus the other day.
  I think it is undeniable that if you take money that is in the trust 
funds of Medicare and Social Security and divert that money for any 
other purpose, you are reducing what is used to pay down publicly held 
debt. I think it is undeniable. That has real economic consequences.
  I want to go to the question of the President's budget because we 
have heard over and over that there is this contingency fund. I am 
unable to locate the contingency fund as I add up the President's 
numbers.

  First of all, we have the $5.6 trillion projected surplus. Everybody 
agrees that is the projection. I think the first thing we should 
remember is that it is a forecast, and it may or may not come true. In 
fact, the forecasting agency itself has told us there is a 10-percent 
chance that number comes true; there is a 45-percent chance it is 
bigger; there is a 45-percent chance it is smaller.
  There is also agreement on what follows. The Social Security trust 
fund is $2.6 trillion, according to the President's Office of 
Management and Budget. The Medicare trust fund is $500 billion. If we 
set them aside, that leaves

[[Page S2171]]

$2.5 trillion. That is not what the President's budget does because it 
only uses $2 trillion of the Social Security trust fund--he only 
reserves $2 trillion. The other $600 billion is left for, perhaps, 
privatization. I have been told by people close to the administration 
that is their intention.
  As to the Medicare trust fund, they do not reserve it at all. But if 
we were to reserve it, as most of us believe is important, it leaves us 
with an available surplus of $2.5 trillion.
  Then we look at the Bush tax cut, advertised at $1.6 trillion. Part 
of it has now been reestimated by the Joint Tax Committee for action in 
the House, and those two parts that they reestimated increased by $126 
billion. So unless the President changes his proposal, the cost of his 
tax cut is now $1.7 trillion.
  In addition to that, the President's proposal will have a dramatic 
effect on the alternative minimum tax. The alternative minimum tax 
today affects about 2 million taxpayers. The Joint Tax Committee has 
now told us that if the Bush plan passes, it will affect, at the end of 
the 10-year period, over 30 million taxpayers in the United States. 
Over 30 million taxpayers will be affected by the alternative minimum 
tax under the Bush proposal. And to fix it will cost $300 billion. This 
is not part of the President's plan, but it is made more necessary by 
the President's plan. He provides no resources--none, zero--to deal 
with it.
  I do not believe, for one moment, that this Congress is going to 
allow over 30 million people to be caught up in the alternative minimum 
tax. But if we do not provide the resources to fix it, it will happen.
  The third is the interest cost associated with the first two. That is 
another $500 billion.
  Then we have the Bush spending proposals, those proposals that are 
above the so-called baseline of $200 billion. That adds up to $2.7 
trillion. And that is before any defense initiative the President might 
apply or send as a suggestion.
  The result is, we have a package here that simply does not add up. So 
I hope, I say to my colleagues, that before the end of the day we adopt 
this amendment to protect both the Social Security trust fund and the 
Medicare trust fund.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Virginia.

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