[Congressional Record Volume 151, Number 13 (Wednesday, February 9, 2005)]
[Senate]
[Pages S1154-S1155]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  Mr. ALLARD. Mr. President, I want to take a moment to talk about 
Social Security and the challenges that face this Congress in order to 
save Social Security for future generations.
  When Franklin Delano Roosevelt signed the Social Security Act into 
law, the United States of America was a very different place than it is 
now. By looking at this chart, which shows an example of a family in 
1935 and an example of a family in the year 2005, you can see that a 
lot has changed.
  Now, I ask my colleagues to keep this picture in mind, taken 70 years 
ago, as we go through the debate on how to save Social Security.
  A lot has changed since 1935. Social Security was a great deal for 
the Government in 1935. Workers would pay the Government a portion of 
every paycheck. The Government would keep these funds and could use 
them to pay other Government liabilities. It was unlikely that many of 
the beneficiaries would reach retirement age.
  From the employees' standpoint, in 1935, Social Security was a big 
gamble. Employees would be required to participate in the program, 
contributing a percentage of their income for their entire adult 
working life. This program would be a retirement safety net, but would 
only yield a small percentage rate of return.
  The employee could not access it or use it for any other reason. If 
they happened to die prior to receiving the benefits, their family 
could not inherit the account. And even if they were diagnosed with an 
expensive terminal illness, they could not draw on the Social Security 
account to cover the costs.
  Times have changed in ways far beyond the hair style, the fashion, 
and the entertainment that is reflected on this chart. Demographics 
have radically shifted, necessitating that we update and modernize the 
system to save Social Security for the 21st century.
  Life expectancy has changed dramatically over the past 70 years. In 
1935 the average person lived to be 63 versus 77 years of age in 2004. 
This difference becomes even more dramatic when we look at the 
differences between men as compared to women. Looking through the 
Social Security lens in 1935, this was excellent for the system's 
financial stability. Men paid into the system but because of life 
expectancy generally did not live long enough to receive benefits. 
While women generally lived longer than men, in 1935 the few women who 
did participate in the workforce still did not generally receive many 
benefits based on life expectancy.
  As this next chart shows, an American who turns 65 can expect to live 
longer now than they did in the past.
  Instead of living an additional decade, seniors can now expect to 
live about 17 more years. In 2040, when Social Security is nearly 
bankrupt, senior citizens can expect to live even more additional 
years. For example, a woman who turns 65 in that year is expected to 
live another 21 years. Without permanent reform, this woman will not be 
able to depend on Social Security for her retirement. We need to update 
and modernize the system to save Social Security so she can have that 
security for the remaining years of her life.
  This chart further shows how elderly Americans are rapidly becoming a 
larger percentage of the country. As Americans are living longer, they 
are increasing in number and rapidly becoming a larger percentage of 
the population. For example, in 1950, less than 10 percent of Americans 
were age 65 and older. Within a decade, seniors will make up 15 percent 
of the population, and in 25 years, seniors will comprise more than 20 
percent of the population. We can expect that percentage to continue to 
grow.
  In 1935, when the Social Security system was created, the Government 
did not need to prepare for the possibility of a depleted system. 
Seniors made up a very small percentage of the population because most 
people who were owed benefits simply never reached retirement age. As 
seniors become a larger portion of our population, we need to update 
and modernize the system to save Social Security for the 21st century.
  Workforce distribution, as you can imagine, has also changed 
dramatically over the past 70 years. One of the more remarkable 
characteristics in the past century was the increase of women in the 
workplace. In 1935, approximately 24 percent of women worked outside 
the home and generally in a very limited number of professions, such as 
nursing and teaching or domestic service. Today, slightly less than 60 
percent of women work outside the home in a variety of professions. 
Women make up 46.5 percent of the workforce today versus approximately 
23 percent in 1935.
  In 1935, when women did not usually work outside the home, they also 
did not pay into the Social Security system as men did. Even though 
there are now more people paying into the system as they retire, there 
will be a greater number of people drawing on the system a longer 
period of time.
  As it was structured in 1935, the Social Security system was not 
designed to support elderly people for a long retirement such as we 
enjoy today. As female workforce participants continue to retire and 
draw benefits, we need to update and modernize the system in order to 
save Social Security for the 21st century.
  As we all know, Social Security is a pay-as-you-go system, meaning 
current retiree benefits are paid with existing employee payroll taxes. 
As times change, the payroll tax rate has been increased a number of 
times in an effort to keep up with the demographic changes. Referring 
to this next chart, you can see that payroll taxes have increased 
dramatically over the past 70 years. They were a lot less when the 
Social Security system was enacted. Workers were taxed only 2 percent, 
and that was only on the first $3,000 of their income; whereas today 
workers are taxed 12.4 percent, and on the first $90,000 of income for 
Social Security. Americans pay a significant amount of their money 
toward Social Security. This amount is still not enough to compensate 
for an aging population

[[Page S1155]]

that may spend more than 15 or 20 years in retirement drawing benefits 
from a system that was never designed to support them for that length 
of time.
  Unless we plan to continue the payroll tax hikes of the past, which 
is not a prospect I would support, we need to update and modernize the 
system to save Social Security for the 21st century.
  As I mentioned, Social Security is a pay-as-you-go system, with 
current workers paying taxes to support current benefits for retirees. 
This means there must be enough workers paying taxes to provide for 
retirees. The ratio of workers to retirees has been steadily declining, 
and this is possibly the most telling comparison showing the need for 
reform.
  As this next chart shows, in 1945, there were 42 workers paying taxes 
for every single person receiving benefits. In 2005, 3.3 workers pay 
for each beneficiary, and soon there will be two workers paying for 
every single person receiving benefits.
  As the baby boomers retire, the workforce cannot support the aging 
population. Since we have such a large number of retired citizens, the 
Social Security system will be depleted in the not so distant future. 
We need to update and modernize the system to save Social Security for 
the 21st century.
  Realities have changed in many different ways since Social Security 
was created in 1935. People live longer. Seniors make up a larger 
percentage of the population. Women make up more of the workforce, and 
the worker-to-beneficiary ratio is falling. Unless Congress faces up to 
these realities, the long-term outlook for Social Security is very 
bleak.
  In conclusion, let me point to my last chart, which shows that in 
2018, Social Security costs will permanently exceed revenues, as the 
lines cross at this point. My colleagues on the other side of the aisle 
would like us to believe that doing nothing is the best course of 
action. I happen to believe differently. I stress to my colleagues that 
the cost of doing nothing is a serious detriment to the Social Security 
system for future generations. Time is running out. This problem will 
not go away. This Congress, this year, we must update and modernize the 
system to save Social Security for the 21st century.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina.

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