[Congressional Record Volume 148, Number 66 (Tuesday, May 21, 2002)]
[Senate]
[Pages S4577-S4579]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. CORZINE. Mr. President, I rise today to talk about an issue that 
I have spoken about a number of times

[[Page S4578]]

in this Chamber--one that is of great importance to the people of the 
State of New Jersey, but, even more importantly, to the people of the 
country; that is, Social Security, and the arguments that will be made 
about the privatization of Social Security, and those proposals 
developed by the Bush Social Security Commission.
  As I have repeatedly explained when I talked about this issue, those 
proposals include deep cuts in guaranteed Social Security benefits, and 
that would force many Americans to extend the period of time before 
they retire.
  Again, as I have repeatedly said, I think this is an issue that needs 
to be debated in front of the American people before we go to the polls 
this November. It is not one of those issues that should be decided by 
discussions between policy wonks and politicians. It needs to be 
understood by the American people, and they should have the right to 
express their opinions by those they have chosen to represent them.
  Three weeks ago, I had the honor of representing the Democrats on our 
Saturday morning radio address, and I tried to make the case that 
benefit cuts proposed by the Bush Commission was a serious mistake in 
policy direction. Afterwards, the Cato Institute--one of the leading 
organizations pushing for privatization--issued a long treatise 
criticizing my statement.
  Today, the Cato Institute is going to have another policy forum on 
privatization, particularly as it impacts minorities, and specifically 
Hispanics. So I thought it would be appropriate for me to deal with 
some of the arguments that have been made in response to my radio 
address. That is what I would like to do this morning.

  In that radio address, I pointed out that President Bush's Social 
Security Commission developed privatization plans that would require 
drastic cuts in Social Security benefits that could exceed 25 percent 
for many people working today and more than 45 percent in the longer 
term.
  Cato responded by claiming:

       Charges of ``cuts'' are simply false.

  In fact, it is the Cato Institute claim that is false. The truth is 
that the cuts I cited are based on the estimates of the independent, 
nonpartisan Social Security actuaries and are published in the Bush 
Commission's own report. I invite my colleagues, and certainly the 
academics at Cato, to take a look at page 75 in the report where those 
specific numbers are cited. These cuts apply to all Social Security 
beneficiaries, including retirees, the disabled, and survivors.
  Moreover--this is an important point--the cuts would apply even to 
those who choose not to contribute to private accounts. Those people 
who choose to contribute to private accounts would get more serious 
cuts, but even those who continue to choose to be in Social Security 
would experience serious cuts as well.
  Having argued the Bush Commission is not cutting benefits, the Cato 
Institute at another point backed off and said only that benefit cuts 
would not affect ``current and near-retirees.''
  That is one of those discussions we will definitely have in the 
political debate this fall. But even this narrower claim is also false. 
Cato refers to the Bush Commission's ``Plan 2,'' which explicitly calls 
for cuts in guaranteed benefits for all beneficiaries who retire 
beginning in 2009. This may create the impression that those who retire 
in the next 7 years are protected from benefit cuts. But, frankly, that 
is just not true.
  First, to the extent that individuals contribute to private accounts, 
these contributions would trigger cuts in guaranteed benefits under the 
Commission's so-called ``clawback'' provisions. In other words, on the 
one hand the Bush Commission is offering up the promise of private 
accounts, with another they are cutting Social Security benefits for 
every dollar contributed to those accounts. That is what the clawback 
is all about; that amounts to playing, as far as I am concerned, bait 
and switch with America's retirees, and particularly the ones who are 
in near-term progress towards retirement.
  I note that the cuts in guaranteed benefits would apply even if the 
value of a private account collapsed. Markets do go up and down. We 
have seen the value of the stock market decline as much as 30 or 50 
percent in periods of time. Some may believe that the stock market only 
goes up. I am here to tell you, from my experiences in life, that is 
just not true. I certainly know that people are empathetic with what 
Enron employees have experienced. The fact is, markets move around, up 
and down. If the Bush Commission's proposals are adopted, those unlucky 
enough to lose money in their private accounts would have fewer Social 
Security benefits on which to fall back.

  Keep in mind the average level of Social Security benefits today, for 
the average retiree, is less than $10,000--about $9,000 on average. And 
it is about $7,500 for women, which is an issue we talked about last 
week. That is before the ``clawback.'' And I promise you, $7,500 or 
$10,000 is not enough in my home State of New Jersey to have a 
satisfactory and safe environment in your retirement. It is just 
inadequate to support even a basic standard of living in most parts of 
the country.
  It is also important to emphasize that the Bush Commission avoids 
calling directly for deeper and more immediate cuts in guaranteed 
benefits only--only--by assuming general revenue subsidies of the 
Social Security trust fund worth up to $6.5 trillion in today's 
dollars. Yet now that the Bush tax cut has been enacted--and we have 
had a recession, and some other events have impacted Government--we are 
again running very serious deficits.
  Just yesterday, the Treasury announced we are at $66 billion in 
deficit this fiscal year. It is highly unlikely, in a period of serious 
fiscal deficit that we are going to be able to come up with $6.5 
trillion to subsidize the general account of Social Security.
  Without those subsidies, the Bush Commission would force the Social 
Security trust fund into a negative cashflow by 2010--not 2017, 2010--
and the trust fund would be insolvent in 2025--not the 2041 that is now 
projected by the actuaries of the Social Security trust fund. At that 
time, many of today's middle-aged and older Americans will be retired, 
and many of those people will be dependent on Social Security.
  In other words, current and near-term retirees are not protected 
under the Bush plan, notwithstanding the Cato claims to the contrary. 
Even the deep cuts proposed by the Bush Commission for all 
beneficiaries assume general fund subsidies that are unlikely to 
materialize. In fact, actual cuts are likely to be even greater.
  Mr. President, let me turn to another related claim by the Cato 
Institute.
  As I explained in my radio address, plans to privatize Social 
Security would take trillions of dollars from the Social Security trust 
fund. But Cato disputes that. They argue that personal accounts should 
be considered as part of Social Security. Taking the money out, giving 
it to the individual to manage, they are going to call that a part of 
the Social Security fund. They would go even further and say that is 
going to build the assets of the fund because they are going to presume 
that markets always go up.
  It is ironic to hear advocates of privatization argue that private 
accounts should be considered a part of Social Security, considering 
that the arguments they make repeatedly emphasize such accounts would 
be owned and controlled by individuals. There is a failure of logic 
involved.
  Beyond this apparent inconsistency, the more fundamental point is 
that private accounts would not guarantee the basic benefits that 
Social Security is designed to provide. It would only provide those 
benefits they would be able to purchase with the provision of those 
accounts. So those guaranteed benefits that are funded from the Social 
Security trust fund today would be challenged because that money is 
withdrawn. The Bush Commission undeniably would drain the trust fund of 
trillions of dollars that are needed to pay those guaranteed benefits.

  The trust fund already has a $3.7 trillion shortfall, according to 
the actuaries, over its adjusted life. Taking money out of the trust 
fund only makes that shortfall worse.
  I think it is highly misleading to argue that general fund subsidies 
will ``build the system's assets.'' It just does not jibe with common 
sense. These general revenues are not budgeted for and may never 
materialize. We have to do that each year as we go along. If they do, 
they can be used to avoid the deep cuts, of course, but there is no 
guarantee that is going to

[[Page S4579]]

happen, and there is no certainty that the level of Social Security 
benefits will be maintained the same if those revenues are not 
appropriated.
  I will not take the time of my colleagues to respond to each of 
Cato's claims--I am putting out a written statement today that deals 
with each of the points they have made in a sort of 15-, 16-page 
report--which they put out in a 5-minute morning radio address.
  When you cut through all the misleading arguments, there are a few 
simple truths to keep in mind about the privatization of Social 
Security as proposed by the Bush Commission. It would cut guaranteed 
benefits by 25 percent for current workers and up to 45 percent for 
many workers in the future. Those cuts would apply to everyone, even 
those who choose not to take on the responsibility of private accounts. 
And the cuts would force many Americans to delay their retirement to 
make sure they had adequate resources in their retirement years.
  For these reasons, I believe the Bush Commission's plans to privatize 
Social Security would be a mistake for our country. Notwithstanding 
attacks from folks at the Cato Institute and other privatization 
advocates, I intend to continue to make this argument over and over so 
that we can raise this issue and have a real debate about the direction 
for Social Security before this year's election. We really need to have 
that.
  This is a fundamental shift in American policy. We Democrats, and 
most Americans, are very secure with the idea that Social Security 
provides one of those three legs to the retirement of every individual. 
It is one of those initiatives that has worked. Americans feel very 
comfortable knowing that there is a baseline to their retirement 
security.
  I hope we can have a real debate demonstrating that changing its 
nature, therefore, would undermine people's retirement security in the 
years ahead. So that is why it is important to speak on this issue over 
and over, to engage this as a debate the American people need to hear.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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