[Congressional Record Volume 149, Number 127 (Tuesday, September 16, 2003)]
[House]
[Pages H8223-H8224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       FUTURE OF SOCIAL SECURITY

  Mr. SMITH of Michigan. Mr. Speaker, in 5 minutes I am going to give a 
short tutorial on the bleak future of Social Security. A proposal that 
I just introduced, H.R. 3055 tries to make sure that we keep Social 
Security solvent. Social Security is one of the most successful 
programs in assuring that retirees continue to have some real social 
security.
  After the Great Depression, Franklin Delano Roosevelt said what we 
should have is a program of forced savings during one's working years, 
to set aside to make sure that people have some money in retirement.
  Well, as it turned out, the law that was passed provided that nothing 
was set aside in an individual's name. Existing workers paid in the 
Social Security tax and that was immediately sent out to current 
retirees. It was sort of a pay-as-you-go program.
  It is, if you will, Mr. Speaker, like a chain letter. Uncle Sam says, 
look, here is a list of names; put your name at the bottom of the list 
and send a check to all those people above you. And when your name gets 
to the top when you retire, all of the people below you at that time 
will send you a check.
  The problem is there will be fewer people to send you a check. There 
are two colliding forces, not only in the United States but across the 
world where the age of death is higher. We are living longer. And at 
the same time, the birth rate is going down.
  In Europe, France now has a payroll tax of 51 percent. You make a 
dollar and have to give 51 percent to the government to take care of 
the seniors in that country. That is because a pay-as-you-go program 
with such a large senior population and a reducing birth rate means 
fewer number of workers to pay in, which means each individual workers 
has to pay out more in taxes.
  Let us not let the United States come to that predicament because it 
will mean one of two things: a company either charges, more for this 
products to pay for the extra cost of that tax or you pay workers less. 
Either way, it is bad for the future of our economy and our ability to 
compete with other countries.
  Mr. Speaker, let me describe H.R. 3055: The trust fund continues in 
our bill. The Retirement Security Act would allow workers to create on 
a voluntary basis accounts funded from their payroll taxes. The 
accounts would start at 2.5 percent of income and would reach 8 percent 
by 2075, a slow process as you shift away from the pay-as-you-go. 
Workers would own the money in their accounts. Investments would be 
limited and widely diversified, and investment proceeds would be 
subject to government oversight.
  The government would supplement the accounts of low-income workers 
making less than $35,000 a year to ensure they build up a significant 
savings. What is important in those early years is the magic of 
compound interest, starting with a small amount of dollars and letting 
it grow. Again, it is an optional program.
  People choosing to participate in the voluntary account program would 
continue to receive benefits directly from the government, and those 
benefits would be offset based on the amount of money going in. But 
they would be guaranteed so that the person that opts in to a personal 
retirement savings account would be guaranteed that they would be at 
least as well off as those that did not take that option.

[[Page H8224]]

  Worker accounts: all worker accounts would be owned by the worker and 
invested through pools supervised by the government. Regulations would 
be instituted to prevent people from taking undue risk. Until an 
account balance reaches $2,500, a worker would be limited on the kind 
of index investments they could make; and after the balance reaches 
$2,500, they would have more flexibility but only investing in safe 
accounts as determined by the Secretary of the Treasury.
  The fairness to women's provision that we put in this bill: for 
married couples, account contributions would be pooled and then divided 
equally between the husband and wife. So whatever the husband and wife 
would be eligible to invest would be added together and divided by two 
so each spouse would have the same in their individual account. Second, 
it would increase surviving spouse benefits to 110 percent of the 
higher-earning spouse's benefits. Third, stay-at-home mothers with kids 
under 5 would receive retirement credit. In other words, we are saying 
for a spouse that stays home with those young kids, they can have those 
years credited at the average for the other years.
  In conclusion, Social Security solvency, the Retirement Security Act 
has been scored by the Social Security Administration actuaries to keep 
the program solvent. There would be no increases in the retirement age, 
changes in benefits for seniors or near-seniors, or changes in the 
Social Security COLA.
  Mr. Speaker, there are only 24 Members in the House and Senate that 
have ever signed onto a bill. We need to move ahead and save this 
program.

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