[Congressional Record Volume 148, Number 104 (Friday, July 26, 2002)]
[Senate]
[Pages S7414-S7417]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY
Mr. CORZINE. Mr. President, I bring up a subject that I have been
speaking about frequently. That is our Social Security system, one that
I believe the American people deserve to have a debate about before the
election in November.
There have been many attempts to put off this debate until after the
election so we can decide policy that will truly impact the American
people for many, many years and decades to come. It is extremely
disappointing we have had a hard time engaging in that debate. This
week we actually made some progress, at least with regard to debate,
not necessarily with regard to the content of the debate.
I express my great disappointment and, frankly, my utter amazement
[[Page S7415]]
about comments made this past week by the President's press secretary,
Mr. Ari Fleischer, with respect to the privatization of Social
Security. I will read the beginning of an article from the Washington
Post on Thursday on the press secretary's remarks, and I will ask
unanimous consent to have this article printed in the Record.
The article is titled: ``Bush Continues to Back Privatized Social
Security.''
It reads:
The White House yesterday stood firmly behind President
Bush's plan for workers to divert some of their social
security payroll taxes into the stock market, despite the
dramatic drops suffered in recent months.
Basically, for the past 2\1/2\ years.
White House Press Secretary Ari Fleischer took a swing at
the existing Social Security Program, calling it
``dangerous'' to let the people pay a lifetime of high taxes
for a Social Security benefit that under current projections
they'll never receive.
Let me repeat:
. . . calling it ``dangerous`` to let people pay a lifetime
of high taxes for a Social Security benefit that under
current projections they'll never receive.
Often we hear people talking about trying to scare seniors and all
kinds of hyperbolic commentary about Social Security, but this tops it.
Yesterday, the Congress, under your leadership, took the leadership
with regard to corporate reform to help make sure corporate America,
the Nation's accounting profession, those who are responsible for
managing corporate America, are more responsible. But after reading Mr.
Fleischer's remarks, I think we should consider a similar initiative to
make the administration's statements on Social Security equally
responsible.
It is inconceivable that we would be talking to the American people
in terms that, under current projections, they will never receive their
benefits.
Let me take a moment to review where things stand on this issue of
Social Security, which I do believe truly needs a full debate--maybe
not in context that Mr. Fleischer is talking about, but we do need a
debate in front of the election.
Last December, President Bush's Social Security Commission proposed
plans to privatize Social Security that would require deep cuts in
guaranteed benefits--not eliminate, deep cuts. For workers now in their
twenties, those cuts would exceed 25 percent. From younger workers and
future generations, those cuts could be much deeper, up to and beyond
45 percent.
Unfairly, and in my view inappropriately, these cuts would apply to
everyone, even those who choose not to risk their Social Security
benefits in privatized accounts. For those who do participate in
privatized accounts, the cuts in their guaranteed benefits would even
be larger than those I just mentioned.
Incredibly, for the disabled and for surviving children and family
members, the cuts in their benefits would be especially disastrous,
more extreme than the numbers that are cited for retirees.
These deep cuts would undermine the fundamental purpose of Social
Security, which is about providing a basic level of security to those
who have worked hard, contributed to our Nation, paid into the Social
Security system, and they did it in good faith that the system would be
available, and those resources would be available for their retirement.
Social Security promises Americans a basic level of security on which
they can count. It is the bedrock of a social insurance program that
our Nation overwhelmingly supports, has for generations--70 years--and
that retirees can depend on for a rock solid guarantee regardless of
what the stock market does or what asset markets of all kinds do,
regardless of inflation and regardless of one's lifespan. Social
Security will be there and that fundamental guarantee is what the
program is all about.
By contrast, privatizing Social Security would shred, would break
that guarantee, and in my view we must not let that happen. It is one
of the most important issues our Nation should be debating as we face
this election this fall. The lines are very clearly drawn. Mr.
Fleischer suggested they stand firm in their belief that the
privatization of Social Security is the direction we should take.
The huge volatility in the stock market over the past several months
should make clear to all Americans that equity investments by their
nature cannot offer the same security that Social Security provides.
Being an old market hand, markets go up, they go down, they go
sideways. They are volatile through time. Sometimes they have serious
erosions in value.
In the past 2\1/2\ years, stocks have lost nearly $8 trillion in
value. The S&P index has declined by about 45 percent. This year alone,
stocks have lost close to $3 trillion. That translates to real
undermining of retirement security for those who were dependent on it,
primarily focused on a 401(k) in the stock market. Many of those losses
have been suffered in our pension systems. They have been suffered in
IRAs, 401(k)s, personal savings accounts. Those have truly undermined
the security that one might draw from them.
But through all of that, Social Security stands firm. The guaranteed
benefits are in place. One doesn't have to wonder whether those
resources for one's retirement security are going to be available.
Basic, critical benefits will be there for the beneficiaries,
regardless of the state of the stock market.
In light of that dramatic volatility, I had hoped that President Bush
would reconsider his support for privatizing Social Security. As I
said, Mr. Fleischer was crystal clear. The President's position had not
changed.
For me, this is extremely disappointing, and I certainly call on the
President to rethink his position. On these matters of great national
import--whether it was the corporate reform activity that we had a
debate about for 3 or 4 months, leading up to yesterday's successful
passage of corporate reform; whether it is with regard to the fiscal
policy that has seen us move from substantial surpluses, 3 years of
surpluses into substantial deficit; and now, on Social Security--we see
this continual sense of inflexibility.
Leadership is about thoughtful respect for the facts, changing
realities that might require a change in one's position. I hope the
President will consider that in the context of Social Security, taking
into account the kind of market volatility we have seen, taking into
consideration the kind of risk that might be brought to bear on those
who have had their investments in the stock market over long periods of
time.
Having said that, my concern about Mr. Fleischer's statement
Wednesday goes beyond his reaffirmation of this administration's
continuing support for privatizing Social Security. He went much
further. Let me just read again from the story I cited from the
Washington Post. Mr. Fleischer claimed that Social Security was ``going
bankrupt,'' and that it was dangerous to:
. . . let people pay a lifetime of high taxes for a Social
Security benefit that under current projections they'll never
receive.
``Going bankrupt,'' if that is not scare language, I can't imagine
how one could otherwise categorize it.
This statement is simply outrageous. It is simply outrageous to
suggest that people now paying into the system will never receive a
Social Security benefit. It is not just misleading, it is absolutely
factually wrong. I am afraid it is part of a concerted effort by those
advocates of privatization to scare Americans, especially younger
Americans, into believing that the only way they are ever going to get
a retirement benefit out of Social Security is to invest it in personal
accounts, to invest it in privatized accounts, to invest it in the
stock market.
I am not against investing private funds beyond Social Security in
all kinds of assets. But we are talking about a guaranteed benefit for
all of Americans. In the 1930s, before we had Social Security, or
before 1930, almost 50 percent of senior Americans lived in poverty.
Because of the benefit of Social Security, now we are down to about 10
percent. It is a fundamental, solid program. People know that our
Government has created a situation where they can have security in
their retirement. It is a sacred trust with the American people. It is
based on a promise that if you work hard and contribute to your
country, you will enjoy a very basic level of security in retirement.
By the way, this is not exactly a princely sum that people get out of
Social Security. I wish we could make it better.
Last year, the average retiree benefit was about $10,000--not exactly
what
[[Page S7416]]
some of the salaries of big corporate executives are about--and about
$9,000 for women. That is not exactly a princely sum, as I suggested,
in my part of the country. In New Jersey, the average rental payment
for an individual is about $1,200 a month. I don't think $10,000
matches up with what you even have to pay for rent in many parts of the
country. It is not exactly as if our Social Security system is
providing excessive amounts of resources for individuals in their
retirement. But it does provide that bedrock safety.
Unfortunately, I guess there are those who seem to think $10,000 is
too much. They want to break Social Security's promise to seniors in
the future by cutting those benefits by 25 percent, or 45 percent.
Those are big numbers. That is hard to put together against the cost of
retirement for most Americans.
One way they justify such claims is by arguing that the current
system will leave today's workers high and dry. We heard Mr.
Fleischer's remarks. They seem to be hoping that will be a self-
fulfilling prophecy, that somehow or another they can scare people into
believing we ought to undermine Social Security. I stand here today
quite confident that folks on this side of the aisle, if we have
anything to say on the matter, are not going to let that happen.
That is why we need to have this debate about Social Security
privatization before people go to the polls this November. It is one of
those defining issues for the American people to express themselves
about. It is very clear: Do you want privatization of Social Security
that puts the responsibility and the risk on the shoulders of Americans
or do you want a guaranteed system that provides benefits if you have
paid into that system when you retire? It is very clear, it is not a
complicated concept--guaranteed benefits versus risk.
For those concerned about the future of Social Security, let me
remind my colleagues that Social Security benefits are established in
the United States Code and represent a legal commitment--I think we
call it an entitlement--by the Federal Government and with the full
faith and credit of the United States.
Unlike many other programs, Social Security is not subject to a
yearly appropriations process. The entitlement and benefit is not
dependent on future congressional action. Mr. Fleischer is just flat
out wrong.
As a purely legal matter, this entitlement would remain a binding
obligation of the Government even if Congress were to allow the Social
Security trust fund to become insolvent. However, as a practical
matter, the point is moot. First, the nonpartisan actuaries at the
Social Security Administration project that the trust fund will be
fully solvent for 40 years; that is, 2041. After that, there still
would be enough funding for three-quarters of the benefits to the
actuarial life on which they are making the calculations.
But there is nothing in the law to prohibit Congress from
replenishing the funds or changing some of the terms and conditions. We
can do a number of things to establish the security of that trust fund.
We ought to start by balancing our budget so we are not spending the
Social Security trust fund on everything under the Sun other than for
what it is intended. But we could take actions here on the floor of the
Senate with the Congress and the President working together to flush
that up. As a matter of fact, we have a legal obligation to do that.
I think it is absolutely essential that Mr. Fleischer review the
context in which he says we are going to have a bankruptcy because we
have written into law that that is not going to happen. I am confident
that long before 2041, the Congress and the White House will come
together in a bipartisan way, as they have in history in different
periods of time, move beyond privatization proposals which would
actually worsen the Social Security financial system, and work together
to solve the program's long-term funding needs. It can be done. It is
not beyond the realm of a lot of reasonable people. We ought to talk to
the American public about that.
But the reality is that privatization is not the direction that is
going to provide the kind of security that I think most Americans are
looking for in their retirement.
I think we ought to get away from giving blatantly false and
misleading arguments and scaring people about the solvency of Social
Security, as Mr. Fleischer did on Wednesday. I think we need to stop
the scare tactics for young people and talk about real solutions for a
real problem, that I think can be addressed if we are thoughtful, in
the way we have addressed a number of issues in the Senate.
I conclude by again urging the Bush administration to reconsider
their position on privatization, particularly in light of the dramatic
events of recent weeks. Just as September 11 led to fundamental changes
in Americans' perceptions about the risks of terrorism, I think the
recent volatility of this market has captured the reality of what
markets can provide as far as undermining security is concerned, and we
have developed a much greater appreciation as a nation about the
uncertainties of the market. I hope the Bush administration will face
up to that reality and readjust its attitude and its views on its
policies accordingly.
Mr. President, I ask unanimous consent the article to which I
referred be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, July 25, 2002]
Bush Continues to Back Privatized Social Security
(By Amy Goldstein)
The White House yesterday stood firmly behind President
Bush's plan for workers to divert some of their Social
Security payroll taxes into the stock market, despite the
dramatic drops Wall Street has suffered in recent months.
White House press secretary Ari Fleischer took a swing at
the existing Social Security program, calling it
``dangerous'' to ``let people pay a lifetime of high taxes
for a Social Security benefit that under current projections
they'll never receive.''
Fleischer made clear that Bush continues to favor
permitting Americans to take a portion of the taxes they
ordinarily contribute to Social Security trust fund and
invest it on their own. ``That would include markets,''
Fleischer said. ``Nothing has changed his views about
allowing younger workers to have those options.''
However, Fleischer recalibrated his sale pitch for private
retirement accounts, deemphasizing earlier arguments that
such investments would generate more retirement savings
through higher rates of return. Instead, he said that the
current system is ``going bankrupt'' and that the government
should grant people more control over their money. He used
the word ``options'' a dozen times.
The White House's reminder that Bush wants to overhaul
Social Security comes as the administration is redoubling its
efforts to draw attention to strong points in the economy.
The remarks about the retirement system, on a day when the
stock market rose after nine weeks of historic declines,
typify an administration that has prized consistency in its
policy positions, rather than shifting with changed
circumstances.
Bush's position on Social Security was a major tenet of his
2000 campaign. Last year, he assigned a commission to
recommend such a system, and the panel responded in December
with three proposals. Each would require at least $2 trillion
to convert to the new approach, the commission found. It also
concluded that the program, destined to face enormous
economic strains by the middle of the next decade as the baby
boom generation retires, will require reductions in benefits,
money from elsewhere in the federal budget--or both.
For now, the White House essentially is speaking into a
legislative vacuum. Republicans, fearing that the volatile
issue could prove damaging in the elections this fall,
persuaded Bush last winter that Congress should not consider
any Social Security reforms until 2003. Now some in the party
are suggesting that debate should be deferred until after the
2004 presidential election.
House Republicans have distanced themselves from Bush's
ideas--at least rhetorically--by passing a bill that promised
not to ``privatize'' the retirement system, although many in
the party still favor what they now call ``individual
investments.'' House Democrats are trying to force a vote on
the president's proposal, believing that a debate may prove
politically advantageous during a season of investment losses
and corporate scandals.
In the absence of legislation, the most ardent proponents
of individual accounts continue to press their cause. This
week, the Cato Institute, a libertarian think tank, issued a
poll it sponsored suggesting that two-thirds of voters
support that arrangement. Andrew Biggs, who works on Social
Security at Cato and was a staff member of the White House
commission, said the findings are striking because the survey
was conducted during an interval earlier this month
[[Page S7417]]
when the stock market fell 700 points. ``Nobody can claim we
had the environment stacked in our favor,' he said.
A Washington Post-ABC News poll this month found that about
half the public supports investing some of their Social
Security contributions in the stock market, significantly
less than two years ago, but about the same proportion as
last year.
Democrats and other opponents of the change have been
raising the issue particularly in congressional campaigns.
``There is a link between the rising crisis of confidence in
corporate America and the scheme to privatize Social Security
and cut Social Security benefits as Republicans are still
seeking to do,'' House Minority Leader Richard A. Gephardt
(D-Mo.) said this month.
Mr. CORZINE. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SARBANES. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Corzine). Without objection, it is so
ordered.
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