[Congressional Record Volume 151, Number 13 (Wednesday, February 9, 2005)]
[House]
[Pages H484-H485]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 EQUAL TAXATION FOR ALL AMERICANS WILL ENSURE SOCIAL SECURITY BENEFITS

  The SPEAKER pro tempore (Mr. Boustany). Under a previous order of the 
House, the gentleman from Oregon (Mr. DeFazio) is recognized for 5 
minutes.
  Mr. DeFAZIO. Mr. Speaker, I had the first of a number of town hall 
meetings in my district last weekend on the issue of Social Security. I 
had an overflow crowd and had to turn people away, because people are 
confused and anxious and they want some facts. So I will try and 
explain a bit tonight what I explained to them there.
  There are two issues. One is the ideological or public policy issue 
of privatization. The other is the financial and fiscal stability of 
Social Security. They are totally separate, as the President admitted 
last week during his round of staged town hall meetings around the 
country.
  For the future stability of Social Security, here is what the concern 
is: conservative projections by the actuaries of Social Security say 
that 40 years from now, we might only have enough income coming into 
Social Security to pay 75 percent of promised benefits. The 
Congressional Budget Office says 50 years from today, 80 percent of 
promised benefits. So there is a problem that is out there. We should 
resolve that.
  I have proposed in the past three Congresses legislation to do that; 
it is done simply, to say that all Americans who work for wages and 
salary should pay the same amount of tax on all of their earnings. 
Millionaires today pay a tiny fraction of their income to Social 
Security because after $90,000, no one pays. Someone who earns $30,000 
a year pays 6 percent of their income. If you lift the cap, you create 
so much income for Social Security, that you could exempt the first 
$4,000 of earnings.
  So under my proposal, everybody who earns less than $90,000 a year 
gets a tax break. The less you earn, the bigger the tax break. So that 
is one way of resolving that.
  The President has a different proposal. He says we should cut 
benefits. He is not sure which way he would choose, but his commission 
chose a method that would reduce benefits 40 years from today by 40 
percent. So the President takes a possible potential reduction in 
benefits 40 years in the future of 25 percent, and he guarantees a 
reduction in benefits today of 40 percent. That is a heck of a way to 
solve a potential possible future problem, by guaranteeing people they 
will get less.
  Then he says he wants to create private accounts. Let me tell my 
colleagues what the President's proposal is for privatizing accounts. 
People would be able to divert some of their FICA tax into an account 
controlled by the government with a limited range of investments; the 
President said they would be very conservative and very limited, 
because he does not trust people to invest conservatively; controlled 
by the government, chosen by the government; and one would not be able 
to borrow against it, unlike Federal employees with their TSP. You 
could not withdraw it early, unlike Federal employees and other people 
with 401(K)s and pay a penalty and withdraw it. And at the end of your 
working life, the government would say to you, this is the President of 
the United States' plan: well, that money you diverted over there, we 
assume if Social Security had kept your money, it would have earned 
inflation plus 3 percent, so we are going to subtract that from what 
you earned with your investments. And if you did not earn more than 
inflation plus 3 percent, the government will actually reduce your 
already-reduced Social Security benefit; and if you manage to beat the 
market and beat that, they will let you have that money only after they 
force you into this so-called plan, let me have my money; the 
President's idea of privatization, the government controls it, the 
government lends it to you, the government borrows the money to lend it 
to you, and then if you beat the market, the government forces you to 
buy an annuity from an insurance company. That is the President's so-
called privatization plan.

[[Page H485]]

  People say to me, I want to control my money, I can do better. I say, 
well, here is what the President is proposing. Nobody is proposing that 
you can opt out of Social Security and just invest on your own. People 
forget that this is one leg of a three-legged stool for retirement, a 
guaranteed insurance plan, Social Security, a defined benefit, 
something that is getting harder and harder to get, not adequate to 
live really comfortably on in retirement, but something that will be 
there for you when you retire; something that will be there for your 
spouse and/or children if you die before you retire; something that 
will be there for you if you are disabled.
  I had people coming to my town halls and talk about their parents 
dying and getting the survivor's benefit; I had people come to my town 
halls and talk about becoming totally disabled and getting that 
lifeline from Social Security. Those things would not be available 
under a privatization plan. You would get what was in your account 
after the government took back the inflation plus 3 percent earnings 
against your private account. That would be all your heirs would get. 
Survivors would get what you would get on disability, plus a minuscule, 
doubly-reduced Social Security benefit.
  This is not well thought out. We need to assure future generations 
Social Security will be there. We can do that by taxing all Americans 
the same for their Social Security benefit. That will more than assure 
the future of the fund. In fact, as I said earlier, my plan gives 
everybody who earns less than $94,000 a tax break. We do not need to 
have people gamble with the government controlling their investments 
and then take money back from them just before they retire.

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