[Congressional Record Volume 147, Number 108 (Monday, July 30, 2001)]
[Senate]
[Pages S8391-S8393]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. DURBIN. This weekend, the New York Times Sunday edition had a 
front

[[Page S8392]]

page story on a proposal by two Members of the House of Representatives 
concerning the future of Social Security. It is an interesting proposal 
because the two, Jim Kolbe of Arizona and Charlie Stenholm of Texas, a 
Republican and Democrat, support the notion of privatizing Social 
Security, giving people an opportunity to invest some part of their 
Social Security payroll deduction into some sort of private account.
  It is interesting that the Kolbe-Stenholm proposal for privatization 
is the first complete package I have seen because in that package they 
have to tell you how they will pay for it. If they want to take 2 
percent of the payroll deduction and put it into a private investment, 
it will have a dramatic impact. Two percent does not sound like much, 
but it turns out to be a substantial portion of the amount that is 
dedicated to Social Security. Since Social Security is a pay-as-you-go 
system, if you are going to dedicate the 2 percent to private 
investment, you run the risk, or at least have the opportunity to take 
a look at a lot of other things that need to be done in order to 
achieve this 2-percent privatization investment.
  When you look at the Kolbe and Stenholm proposal and Social Security, 
a number of things come out very clearly. In order to achieve this 
privatization, they are calling for an increase in the payroll tax for 
Social Security, a reduction in the benefits paid for Social Security, 
an acceleration of the age of 67 years for retirement under Social 
Security, and a variety of other changes, which means that the Social 
Security system as we know it will be dramatically changed.

  Some critics of the Democrats have said even though you are critical 
of this commission on Social Security, you have to accept the reality 
that Social Security is not going to last forever. That is true. Left 
untouched, Social Security is going to run out of funds. There is no 
doubt about it.
  The report that was given by the President's commission suggests that 
Social Security would run out of funds in the year 2016. That is not 
accurate. The right year is 2038. The obvious question is, Should we be 
concerned today about a system that will run out of funds 37 years from 
now? I think the answer is yes. The answer is obvious because there are 
people paying into Social Security today who will need that system 37 
years from now, and we should be making changes that we can 
realistically make, honestly make, that will save Social Security to 
make certain that it has a longer life.
  Each of those changes will involve some pain. There is no doubt about 
it. But to make those changes today in anticipation of 2038 is a lot 
more sensible and I think would be more reasonable in terms of its 
approach. It is painful, too, I might add, politically. But to couple 
those changes to save and prolong Social Security with this idea of 
privatization is what forces my colleagues in the House, Mr. Kolbe and 
Mr. Stenholm, to make some drastic changes. They are, as I said, 
raising the payroll tax on Social Security, reducing the benefits paid, 
saying to people they cannot claim their Social Security benefits until 
they reach the age of 67--at an earlier date, I might add --and 
reducing the cost-of-living adjustment which is given each year under 
Social Security.
  I think what we need to do to go at this honestly is to separate the 
two issues. We should say to the American people: We are going to set a 
goal for the life of Social Security. We want to make certain it is 
adequately funded and solvent for so many years to come. Right now it 
is to the year 2038. The question is, What do we want to prolong it 
to--2057, 2058? What would it be? Pick that date, and then say to both 
the President's commission and those who would come at it from a 
different perspective: Tell us what you think it would take for us to 
make sure that Social Security is solvent that extra 20 years. Maybe 
that is our goal, 20 years beyond its current solvency. Then have each 
side make their proposal of what it would take to reach that.
  Then if some want to come in and add the option of privatization of 
Social Security, let them also explain how they would pay for that. 
Where I think the President has made a mistake is creating a commission 
which is not designed and created to give a longer life to Social 
Security but is designed instead to create an item on the political 
agenda of privatization of Social Security.
  It comes down to this as well. There is a difference of opinion as to 
what Social Security is all about. Some view it much like a retirement 
fund or an investment plan. It certainly has characteristics of that. 
But more than that, it is an insurance policy. It is known as the 
social insurance policy for Americans. That puts it in a different 
perspective. We pay premiums throughout our life for basic insurance. 
If we live to be 65, so long as we are alive, that payment, of course, 
gives us the safety net we need in our retirement. Some, though, think 
it should be viewed as a retirement fund. There have been times when 
you can make more money in the stock market than the Social Security 
fund has made, and in that respect they are asking for the 
privatization of the system. I think we ought to take care.

  As appealing as it may be for us to consider the possibility of 
privatization, you run the very real risk, if the stock market takes a 
downturn at the time you want to retire, that everything you have saved 
for is not there when you need it. So the insurance policy aspect of 
that would be something you would welcome at that moment. Instead, you 
have been caught in a bad investment.
  Many American families, probably most who are listening and following 
this debate, have had in the last year a bad experience in the stock 
market. There was a terrific good-time roll in our economy for about 9 
or 10 years with the creation of 22 million new jobs, new housing 
starts, new businesses, low inflation, a dramatic increase in the Dow 
Jones index, and a great increase in personal savings from people who 
were putting money away for retirement. Then at the beginning of last 
year, a correction started to take place which we are still living 
through. During that correction, the retirement investment of a lot of 
people diminished. So if they were counting on this increase in the 
value of their investment because of the growing stock market, then 
they have had a rude awakening over the last year.
  What if this were all that you had? What if you had made your 
investment in your fund for retirement, the private investment of your 
Social Security funds, and the day came for your retirement and you 
were caught at a bad moment on the stock market, when things were low? 
That sort of thing worries me because this safety net is very basic. It 
is tough for a person to survive just on Social Security. To take even 
a small part of it and to put it into private investment is to run the 
risk that, while it may increase in value, it may decrease as well.
  So I think the President's commission starts with a false assertion 
about the Social Security trust, its funds, and its solvency. But it 
also starts with the premise that you have to privatize it as part of 
giving a longer life to Social Security. My challenge to the commission 
and to those as well who do not agree with privatization, including 
myself, is to come up with a proposal to give a longer life to Social 
Security and put it on the table and say to the American people: This 
is what we need to do to give a longer life to Social Security. Let the 
President's commission do the same thing. Then, for those who want to 
privatize, want to take more money out of Social Security, let them 
then tell you what the add-on cost would be for privatization. Then 
let's make the political judgment.
  Today we are in this swirl of misinformation, some of it coming from 
the commission and some of it coming from outside sources. There are 
some people, of course, who have never liked Social Security. They 
called it socialism when Franklin Roosevelt came up with this idea. But 
I think we would all agree--at least I hope we would--that it has been 
the single most successful social program in America, giving a lot of 
senior citizens an opportunity they would never have otherwise to 
retire with dignity and to have a life with their families, to live for 
a long time without fear they were going to be dependent on their 
children or the Government for some sort of dole or handout. I think 
this generation has to meet its obligation for the future of Social 
Security.

[[Page S8393]]

  I concede changes must be made. The Democrats and Republicans should 
come together to make those changes. I think when we take a look at the 
add-on cost of privatization as Congressman Kolbe and Congressman 
Stenholm say, and find out what it will cost in terms of reducing 
benefits and raising payroll taxes on Social Security, that it will be 
quickly rejected. I hope we will do this in an honest and bipartisan 
fashion and that we address it very quickly. It is never an easy issue 
to address, but it is certainly one we have an obligation to address as 
quickly as possible.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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