[Congressional Record Volume 151, Number 7 (Monday, January 31, 2005)]
[Senate]
[Pages S624-S626]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. HARKIN. Mr. President, I am going to make some remarks today 
regarding the now unfolding debate regarding the future of Social 
Security in our country. I don't intend that my remarks will be the end 
of what I have to say about it, but only the beginning. I envision this 
to be a long and serious and involved discussion over the next weeks 
and months regarding Social Security, the future of Social Security, 
what we are going to do about it as a country, and what the President 
might be proposing also.
  At the outset, let me say that Social Security is the most enduring 
and popular and successful Government program in our Nation's history. 
When Social Security was created in 1935, nearly 50 percent of seniors 
lived below the poverty line. Americans did not look forward to 
retirement; they feared it. But today, thanks to Social Security, the 
number of seniors living in poverty has been reduced to 10 percent, and 
most Americans are able to look forward to their retirement as their 
golden years--years to be spent enjoying their grandkids, their 
community, traveling, and having better health. It is an extraordinary 
achievement for this country to have achieved just since World War II.
  Now, to understand the success of Social Security, we have to be 
clear about what Social Security is not. It is not a welfare program. 
Only those who work and pay into Social Security are eligible for its 
benefits. Likewise, Social Security is not an investment program. For 
that, we have IRAs, 401(k)s, individual development accounts, IDAs, and 
a vast range of private saving and investment accounts.
  So if Social Security is not welfare and if it is not a retirement 
investment program, then what is it? Well, simply put, it is an 
insurance program. That is why it is called Social Security insurance. 
It was established in 1935 to provide benefits to workers and their 
family members--yes, upon retirement, disability, or death. In fact, 
the original name for Social Security was the Old Age Survivors and 
Disability Insurance Program, or OASDI, as we have come to know it.
  Social Security is a social insurance program that embraces almost 
the entire American family. It is the highest expression of our 
connection and commitment to one another. It reflects our core values, 
our compassion, our decency, our bedrock belief that no senior, no 
orphan, no survivor, no person with a disability, no member of our 
American family will be left behind.
  I talk about it in terms of our American family because I make the 
analogy with our own private individual families. In good times, in 
normal times, the individuals in our own families are independent, 
self-sustaining, going their separate ways, building their individual 
good futures. But in our own families in times of misfortune, financial 
crisis, old age, or death that is when individuals in the family pull 
together. We come together, sacrificing, if necessary, to give aid, 
comfort, and support to the family member who is in need.
  As Americans, we all value the benefits of the free marketplace. We 
all believe in individual responsibility. However, we also know that 
sometimes markets fail. We also know sometimes people fall on hard 
times, through no fault of their own. Sometimes people become disabled. 
That is exactly why we have a social security insurance program, to 
provide a basic safety net for the elderly, for survivors, and for 
Americans with disabilities.
  Social Security has a deep meaning for me and my family, and it is a 
story I will be telling a little bit today, and I will be enlarging 
upon it later, but it has to do with my family when I was young, but as 
it relates to a lot of families today.
  I was born in 1939. My father was 54 years old when I was born. My 
mother was 44. When I was 10, my mother died. My father had three kids 
under the age of 18. My father had only an eighth grade education. He 
worked most of his life in the coal mines in Iowa. Not too many people 
know we had coal mines in Iowa. During the Depression, he worked on WPA 
programs. In fact, on the wall of my office I still have his WPA card 
to remind me from where I come.
  Then during World War II, when my father was in his fifties--the coal 
mines pretty much shut down--he was able to work in an ordnance plant 
and had paid in the requisite quarters to qualify for Social Security.
  So when my father reached the age of 65, which was in 1951--and I was 
now 11 years old--he was in bad health. He suffered from what we called 
miner's lung in those days. We did not call it black lung; we called it 
miner's lung. Basically, the most he could do was to work odd jobs, 
painting houses, fixing things up, and other jobs such as that.
  His total Social Security check at that time was about $120 a month. 
That was the sole source of income for our family. We had no outside 
income. He had no savings. We owned no land. We owned no stocks. We 
owned no bonds. We owned nothing except the little house we had. So 
that $120 a month was our total family income. We lived on that.
  I relate that story because when we were young and growing up, Social 
Security was the only thing standing between us and welfare. We all 
worked as kids, even at 12, 13, 14, 15. We all had jobs, whether it was 
working on farms or whatever it might have been. But the fact that my 
father was able to get Social Security when he was 65 and he was unable 
to work--most people in those days were unable to work because they 
worked pretty hard all their lives--was what kept us together as a 
family.
  One might say that was then and today is different. Things have not 
changed all that much since the 1950s. Today one out of every five 
seniors, 20 percent, rely on Social Security for 100 percent of their 
income. For two-thirds of our seniors, Social Security is the major 
source of income. There may be a little bit of something else. In fact, 
according to the publication of the Social Security Administration, in 
the year 2000, nearly 48 percent of American seniors would have fallen 
below the poverty line if they had not received Social Security. In 
other words, take away Social Security and we are right back to where 
we were in the 1940s or 1950s with nearly half of America's seniors 
living in poverty.

  I understand that we have long term problems to deal with in the 
Social Security program. However, the good news is that Social Security 
is financially strong and will remain strong for decades to come. This 
year Social Security will run a surplus in the neighborhood of $150 
billion. The cumulative Social Security surplus now stands in excess of 
$1.6 trillion. And guess what. Every single one of those dollars is 
invested in rock solid Treasury securities backed by the full faith and 
credit of the U.S. Government.
  What is more, according to the 2004 Social Security Trustees Report, 
in the year 2003, surpluses in the Social Security trust fund earned an 
average interest rate of 6 percent. By contrast, over the 5 years 
ending with 2004, money invested in a stock fund tracking the Standard 
& Poor's 500 Index would have lost an average of 2.4 percent per year.
  Many people say that money you put into Social Security is gone; it 
is not there; the Government used it. When they devised Social Security 
they said: Yes, Social Security money has to be invested in Government 
securities. Why? Because Government securities are backed by the full 
faith and credit of the U.S. Government.
  I have been hearing this nonsense for the more than 25 years I have 
been in public life: Oh, Social Security will not be there for me. More 
young people today believe in UFOs than they believe that Social 
Security will be there for them when they retire. Every time I have a 
town meeting someone gets up

[[Page S625]]

and says: We have to change Social Security; it will not be there for 
me when I retire.
  I say: Let me ask you this. Do you believe the U.S. Government, the 
United States of America will still exist when you retire? Of course, 
everybody says yes. Of course, the United States of America is going to 
exist for a long time.
  Well, then, I say your Social Security is going to be secure, too, 
because it is backed by the full faith and credit of the U.S. 
Government. The United States has never defaulted on a bond, and we 
never will.
  So to those who say that somehow Social Security will not be there, 
the Government is going to default and not pay the bonds, right now 
China is buying U.S. bonds, loaning us money every year to finance our 
deficit. Are we telling them, Hey, guess what, China, those bonds may 
not be any good; we may default on those?
  Do we tell the private sector that is buying a lot of Government 
bonds for their portfolios, Hey, guess what, it might not be there? The 
reason Government bonds are so good is because it is backed by the U.S. 
Government. That is why Social Security will be there. That is the 
truth that those who want to privatize Social Security are not telling 
us.
  Does Social Security face a challenge nearly half a century from now? 
Yes, it does. According to the Congressional Budget Office, in the year 
2052 the huge surpluses in the Social Security trust fund will have 
been used up. But payroll taxes will continue to roll in, allowing 
about 73 percent of scheduled benefits to be paid indefinitely. 
Clearly, the 27-percent shortfall will be a challenge. That is about 45 
to 47 years from now, and for that reason I welcome the current 
discussion of ways to address the current challenge. Now, since I have 
been in Congress--and that has been now 30 years--we have adjusted 
Social Security twice. Since 1935, we have adjusted it several times. 
With changing times and circumstances, as we look ahead we make 
changes, and we are going to have to make some changes now, but not as 
drastic as some people are saying.
  I am interested in hearing the details of the President's plan in his 
State of the Union speech on Wednesday. Reportedly, at least from what 
I read in the papers, he will propose a partial privatization of Social 
Security. Guess how it is going to be financed. By up to $2 trillion in 
new borrowing over the next decade. Where are we going to borrow that 
money? We will have to float bonds.
  Who is going to buy the bonds? Well, right now the biggest buyer of 
our bonds is China and Japan. Are we going to tell them we may default 
on those bonds? No. We are telling them that those bonds are good.
  According to other reports, the President plans to follow the advice 
of his 2001 Commission on Privatization, which recommended that future 
Social Security benefits be cut by 40 to 50 percent. Well, with good 
reason Senators from both parties have been very skeptical and critical 
of these approaches. As even conservatives acknowledge, private 
accounts have nothing to do with ensuring the long-term financial 
health of Social Security. One person even described private accounts 
as ``a solution in search of a problem.''
  What is more, the proposal to cut benefits by 40 to 50 percent is not 
just Draconian, it is totally unnecessary. It feeds the suspicion that 
the President's real aim is not to save Social Security but to 
drastically shrink it as the first step toward eventually ending it, 
like Grover Norquist wants to do.
  I will focus the remainder of my remarks today on one part of Social 
Security that is not being talked about. I have one big overriding 
concern. I am concerned that those who want to privatize Social 
Security have almost totally ignored the fate of some 6.2 million 
Americans with disabilities, people who in many cases desperately 
depend on Social Security disability benefits.
  President Bush says he has no current plans to cut disability 
benefits, but unfortunately the President seems not to understand that 
in our Social Security system both the retirement and disability 
programs are closely linked.
  They use the same formula for determining benefits. In an interview 
with The Washington Post published on January 16, the President 
acknowledged that:

       Frankly, our discussions in terms of reform have not 
     centered on the survivor/disability aspect of Social 
     Security.

  Meanwhile, the President's Commission on Social Security devoted a 
mere two pages out of its 256-page report on the fate of people with 
disabilities. Many advocates of privatization simply assume that 
disability benefits will be treated the same as retirement benefits. 
Certainly this was the working assumption of the President's 
Commission.
  The Associated Press reported on January 18 that in the Commission 
report, disability benefits get reduced along with retiree benefits, in 
some cases up to 46 percent. The cuts were used to make the plan's 
finances add up in a report.
  Disability benefits get reduced in some cases up to 46 percent. Let 
me quote from the Privatization Commission's report, page 149, if 
anyone is looking it up:

       In the absence of fully developed proposals, the 
     calculations carried out for the Commission and included in 
     the report assume that defined benefits will be changed in 
     similar ways for [both retirement and disability] programs.

  The Commission says it is not necessarily recommending this, but the 
proof is in the numbers. All of the Commission's calculations assume 
that disability benefits will be cut the same as retirement benefits. 
Without those cuts, the Commission's numbers simply do not add up.
  There is at least one other proposal on the table for dealing with 
the 6.2 million Americans who now receive disability benefits. Some 
advocates of privatization have suggested that these people be thrown 
into the Supplemental Security Income Program, SSI. The callousness of 
these proposals is deeply disturbing.
  I will state what ought to be obvious to Senators on both sides of 
this discussion. It is outrageous to treat Americans with disabilities 
as a mere afterthought in this momentous debate. It is unacceptable to 
leave them as collateral damage when the smoke clears and the 
casualties are counted.
  Here is the crux of the problem: The President's Commission has 
proposed dramatic cuts in Social Security by calculating future 
benefits based on changes in the Consumer Price Index. This approach 
poses huge risks to recipients of Social Security disability benefits 
and also to widows and orphans who receive survivor benefits. Bear in 
mind that Social Security currently uses basically the same benefit 
formula for all categories of beneficiaries. So if retirement benefits 
are slashed by nearly half, disability benefits will also be slashed in 
the same across-the-board fashion with catastrophic 
consequences. Everyone appreciates that the Social Security payroll tax 
purchases a very good defined benefit upon retirement. What is not 
fully appreciated is that the payroll tax also purchases an excellent 
disability insurance policy, one that would be difficult, if not 
impossible, to purchase on the private market.

  I am going to repeat that. What is not appreciated is that our 
payroll taxes buy an excellent disability insurance policy, which would 
be difficult, if not impossible, for you to buy in the private market.
  Here are the facts. For the average wage earner with a family, Social 
Security benefits are equivalent to a $322,000 life insurance policy or 
a $233,000 disability insurance policy. I had my staff look into how 
much it would cost to replace those benefits in the private market. The 
cost of the life insurance alone could be substantial. For instance, 
the cost of a modest $100,000 term life insurance policy--that is just 
a term policy--varies from $140 a year for a healthy 25-year-old to 
$3,815 a year for a not-so-healthy 45-year-old.
  The more shocking news is that you cannot accurately price a policy 
that would make up for disability. The vast majority of currently 
available disability policies are group policies. Right now, the only 
people who buy personal disability insurance are members of small, 
self-selected groups of people who are at a lower risk of becoming 
disabled, and these group policies are not stand-alone policies; they 
are supplemental policies. They just

[[Page S626]]

replace a percentage of income beyond what Social Security disability 
pays. So any change that lowers Social Security disability payments 
would actually raise the price of private disability insurance, because 
there would be a larger gap to make up between what people get from 
Social Security and a minimum replacement level.
  More to the point, this kind of disability policy would not be 
available to just anyone. For instance, according to Patricia Owen, the 
former Associate Commissioner of the Social Security Administration:

       Private insurance generally will not cover the blue-collar 
     occupations. And long-term disability insurance for workers 
     is the least offered. With Social Security disability 
     insurance, all are covered. I would guess that the price of 
     private long-term disability insurance would be at least 4 to 
     5 times higher than the percent of FICA that goes to 
     disability insurance.

  Young people better start thinking about this. They better start 
thinking about what this privatization means in terms of disability.
  Any one of us on the floor today, anyone watching us--an accident 
could happen tomorrow and you could be disabled. I am concerned that in 
the rush to privatize Social Security we are failing to consider 
unintended consequences. Americans with disabilities are at risk under 
the privatization plans now being discussed. I think what we have here 
is a crisis of mass destruction. Before we went into Iraq we had the 
weapons of mass destruction. We found out they didn't exist. The 
President now says there is a crisis in Social Security that justifies 
slashing benefits by up to 50 percent, that justifies borrowing up to 
$2 trillion to partially privatize Social Security.
  Just as there were no weapons of mass destruction in Iraq, there is 
no crisis in Social Security. But if we go down this path of 
privatizing Social Security, cutting benefits, making it harder to get 
disability coverage, we will have mass destruction all right, we will 
have mass destruction of the American family, our American family, 
pulling together, helping each other in time of need by putting us all 
in this great big pool called Social Security insurance.
  If the President and Mr. Norquist and those privatizers get their 
way, we will have mass destruction all right, here in our country--to 
our way of life, to our American family. We will have mass destruction 
to a future that people can look forward to knowing that if, they 
become disabled, they are going to have a safety net to look forward 
to. If the major breadwinner in the family, he or she, gets killed, 
dies unexpectedly, that the survivors will have a safety net to get 
them through school; looking forward to a future when you retire you 
will have some golden years and you will know that your future 
retirement years don't depend on whether the stock market goes up or 
the stock market goes down, that it only depends on one thing, the 
survival of the United States of America. That is what Social Security 
is.

  I can tell you that in recent weeks my office has been flooded with 
letters and e-mails from my fellow Iowans who are deeply worried about 
the reports they are reading. They read about the President's 2001 
privatization commission. Many of them know that the calculations 
assume disability benefits will be slashed. They have heard the 
proposals that we will just take people with disabilities and put them 
into SSI. This is deeply disturbing for people with disabilities who 
rely on Social Security, not just for income but for their dignity.
  Social Security disability insurance has been a lifesaver for 
countless Americans. I think of Steven Cook, a former truckdriver from 
Iowa City, IA. After a lifetime of working hard, playing by the rules, 
he found himself unemployed, sleeping in his car, and diagnosed with 
renal failure. After qualifying for Social Security disability 
insurance and corollary health benefits, he was able to receive a 
kidney transplant and begin to put his life back together.
  I don't want to add to the worries and fears of people with 
disabilities, people such as Steven Cook who rely on Social Security, 
but we have an obligation to raise these issues now, to discuss them, 
and to find out what those unintended consequences might be of the 
privatization of Social Security. As I said, the calculations and 
projections of the President's Commission on Privatization assume that 
disability benefits will be cut along with retirement benefits. The 
Commission recommended that ``the President address the disability 
insurance program through a separate policy development process.''
  That recommendation was made 3 full years ago, but, to my knowledge, 
there has been no such effort to develop any policy to safeguard the 
disability insurance program. In the absence of any reassurance from 
the administration, Americans with disabilities--widows and their 
survivors and orphans--have been left with the worst: Their benefits 
are going to be slashed in a draconian fashion. This is not compassion, 
and it is not acceptable.
  I have come to the Senate floor today to raise these profound issues. 
It is time to talk about the fate of millions of Americans with 
disabilities who rely on Social Security benefits. Is the 
administration developing a plan to protect these people? Does the 
administration intend to take its cue from the Privatization Commission 
and propose steep cuts in disability benefits? Americans need answers. 
More than 6 million Americans who rely on disability benefits need 
answers, as we all do. Any one of us could become disabled and face a 
dire need of this safety net.
  I urge the President to consider this issue. If the plan is to 
privatize Social Security on the backs of our most vulnerable people, 
that is profoundly a moral mistake. Such a plan I hope will be 
unacceptable to Members of this body. I urge the President and his 
advisers to give very careful consideration to this issue.
  Yes, we need to address long-term challenges to Social Security. 
However, Social Security is sound. It is as sound as the United States 
of America. Will it need changes 50 years from now? Yes. Minor changes 
can fix it. Does it need to be privatized? No. Do we need to protect 
the social insurance program for people with disabilities or for people 
like you and me who are not right now disabled but may be tomorrow? The 
answer is yes. We can only do it if we have one national social 
insurance program. It has served us well.
  Not all old things are bad. The older I get, the more I think about 
that. Not all old things are bad. Sometimes I see people wanting to 
change this or change that. For what reason? They say: Well, it is old. 
So what? The Ten Commandments are pretty old. I don't think they need 
to be changed.
  Social Security insurance has served us well. It will serve these 
young people here today well. It will serve all young Americans well as 
long as we think about it in terms of the American family. We are all 
in this together. We will all go our separate ways and do our separate 
things in life, but if trouble falls, if one person becomes disabled, 
if one person dies and the widow or widower and the kids need help, we 
are there. We are there as part of a family. You will not get that if 
you privatize Social Security.
  We will fix the long term balance sheet on Social Security. But we 
should always keep in mind that Social Security is as strong and as 
sound as the United States of America. If you do not believe in 
America, you don't believe in Social Security. If you do not believe in 
the future of our country, you don't believe in the future of Social 
Security. But if you believe in America and if you believe in the 
future of our country, you believe we can come together to truly 
protect Social Security.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak in 
morning business for such time as I may require.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ALEXANDER. Thank you, Mr. President.

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