[Congressional Record Volume 151, Number 22 (Wednesday, March 2, 2005)]
[House]
[Pages H931-H937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DIALOG ON SOCIAL SECURITY
The SPEAKER pro tempore (Mr. Kuhl). Under the Speaker's announced
policy of January 4, 2005, the gentleman from Arizona (Mr. Kolbe) is
recognized for 60 minutes as the designee of the majority leader.
Mr. KOLBE. Mr. Speaker, I take the time this evening to rise on a
subject that we have just heard a great deal about this last hour, and
I certainly invite my colleagues from the Democratic side to stay
around. I would be happy to yield part of my time to them so maybe we
could begin this dialogue that we heard about in the last hour that is
much needed here because I do believe that we do need to have a
dialogue.
I have actually been conducting a dialogue on this for a long time.
10 years ago, 10 years ago this spring, Congressman Charlie Stenholm of
Texas and I formed the Public Pension Reform Caucus in the House of
Representatives to begin to educate members of the House and the
American public and staff here in the House about some of the issues,
the looming issues of Social Security.
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Ten years ago it was as obvious as it is today or perhaps today it is
even more obvious, but it was obvious even then because of the
demographics that we were facing a problem with Social Security. And we
thought that it was time for us to start addressing and to talk about
what ought to be done. So tonight we are here to talk about
strengthening Social Security.
I heard the word ``gutting'' Social Security used by the other side a
few minutes ago. Nothing could be further from the truth. Nothing could
be more like gutting Social Security than to do absolutely nothing.
That truly is the way to hollow out Social Security and say to the next
generation and the generations that follow that there will not be
Social Security. But there is a way that we can strengthen Social
Security, make sure that that benefit is there for the women and
children that we heard about here, for the low-income person, for the
retiree that does not have much else.
We can make sure that it is there. We can do it by coming together,
reasoning together and making some suggestions and ideas, coming up
with ideas about how we can strengthen Social Security, how we can
protect it for the future, how we can protect it for current retirees
and how we can make sure that the next generations of retirees have a
Social Security benefit.
Now, it is not certainly just our side on the aisle that has been
talking about this. We seem to agree on this idea that there is a
problem. And even before we began this discussion this year on this, I
am delighted to see that there are previous high-ranking Democrats that
have been talking about this.
President Clinton in 1998 talked about Social Security and said that,
Of all of these achievements, the economic achievements, and our
increasing social coherence and cohesion, our increasing efforts to
reduce poverty among our younger generation, all of them are threatened
by the looming fiscal crisis in Social Security.
That is 7 years ago. President Clinton identified that there was a
looming fiscal crisis in Social Security. He did not say Social
Security was in danger of going away. He did not say Social Security
was in danger of being gutted. He said there was a fiscal crisis, and
that is exactly what we face today. It was a cash-flow crisis.
Senator Hillary Clinton while she was still first lady, she said that
one of
[[Page H932]]
the most critical challenges of our time is preserving and
strengthening Social Security for future generations.
That is exactly what we are talking about here tonight. We are
talking about how can we make sure that Social Security is preserved
for those who need it today, how can we make sure it is strengthened
for those who will need it in the next generations. That is precisely
what we are talking about.
Now, we will look a little bit at some of the dimensions of the
problem as to why we do have a problem. And by the way, problem,
crisis: there is a lot of talk around here. It is not a crisis. In
fact, we are hearing it is not a problem at all. Obviously, President
Clinton did not agree with that. Obviously, Senator Clinton did not
agree with that. I have never used the term ``crisis,'' but it is a
problem.
You know what happens when you have a problem and you do not do
something about it: it becomes a crisis. If you ignore it, the problem
becomes a crisis. It is not a crisis today, but we can see the crisis
looming in the future. And I can tell you from having introduced the
only bipartisan and the only comprehensive Social Security reform bill
for these last 8 years, that Former Congressman Stenholm and I
introduced and the current Congressman, the gentleman from Florida (Mr.
Boyd), and I have introduced it this year, still a bipartisan bill that
covers every detail of strengthening Social Security. I can tell you
that if you do not work on strengthening and if you do not work on
fixing it now, it becomes more difficult in the future.
Every 2 years when we introduce our bill in the next Congress, we
have to go back, of course, and recalculate the figures for the fact
that 2 years have passed by, the demographics have changed a bit, and
it becomes more difficult. It becomes more expensive. It becomes more
costly. It becomes harder for the next generation, and it becomes
harder for the current generations.
What is the problem? What is the basic problem that we have in Social
Security? It is a problem of demographics, that people are living
longer. We have more people who are retiring. They are living a longer
life. And at the other end we have families that are smaller. They are
being started later. And so we have fewer people coming into the
workforce.
I have heard here this evening the talk about how this is a social
insurance program. It is social insurance. It is social insurance, but
the insurance program, the insurance that we have here is a contract
between generations because Social Security, and let us make no mistake
about this. If we do nothing else this evening, I hope we can convey
one thought: Social Security is a pay-as-you-go program.
Taxes are collected today that are paid out in benefits at the end of
the month. The contract is between generations, that when the next
generation gets ready to retire that there will be somebody there to
pay their benefits.
Let me go through this chart and let me yield to my distinguished
colleague here because this is the fundamental problem that we face.
In 1950, there were 16 workers paying their taxes for every single
person that was receiving Social Security benefits, 16 people working,
for every one receiving their benefits. Today there is only 3, 3\1/3\
people working for every one that is receiving their benefits. When the
younger workers retire in 20 years, that is not so young actually, but
when people start retiring in 20 years, there will only be two workers
that are going to be paying for the taxes for every single beneficiary.
That is two people are going to have to pay their taxes each month to
equal the benefit that is going to one retiree. That is a huge tax that
people are going to have to pay.
The reason is quite simple, as we just said. All the baby boomers
begin retiring in the year 2008, and then we have those people living a
lot longer, and a smaller number of people coming into the workforce to
cover those taxes. That is the essence of the problem that we have got.
That is why working together here, Republicans and Democrats, both
sides of the aisle here, we need to work together to find a way to
strengthen Social Security, to make sure that it is strengthened for
the next generation, that we preserve it for the current retirees, but
that the young people will have some hope that there will be something
there for them.
I know the gentleman from Minnesota (Mr. Kline) has worked very hard
on this issue. I know he has conducted some town halls, which I want to
talk about some that I have done recently; and I would like to yield to
the gentleman from Minnesota (Mr. Kline).
Mr. KLINE. Mr. Speaker, I thank the gentleman for yielding to me.
Before we move further in this discussion, which I am looking forward
to this evening, I just wanted to touch on a couple of subjects that my
distinguished colleague from Arizona has brought up and some of
the things we heard from our colleagues on the other side of the aisle.
First of all, I know that the gentleman from Arizona (Mr. Kolbe) and
all of my colleagues on both sides of the aisle really would like to
see a strong Social Security program. I have been telling folks, in
fact, I was talking to high school students in Minnesota this last week
that it is very important to me that Social Security be in place for my
84-year-old mother, and it will be in place for my 84-year-old mother.
But I want Social Security to be in place, to be strong, to provide the
kind of retirement safety net that our colleagues have been talking
about for my 35-year-old son, my 38-year-old daughter, my 3-year-old
granddaughter.
The demographics that my colleague has just put up there start to
show the problem. And we are going to get into that some more this
evening; but I am disheartened, frankly, I am disheartened to hear some
of the language that we were listening to earlier.
Our colleagues ascribed some motives that I think are out of place.
One of them, for example, said that the President wanted to reward his
buddies with his proposal, and that is simply not true. It is not fair
and it ascribes a motive that is not there. One of our colleagues said
that we want to gut Social Security. That is not true.
I know that the gentleman has been trying year after year after year
to, in fact, strengthen Social Security and make sure that not only do
the current retirees not lose benefits, but that my daughter, my son,
and my grandchildren do not lose benefits either. And I just hope that
my colleagues would all understand that our motives are to strengthen
Social Security. We should be working together in a bipartisan way as
my colleague has been doing to do just that, and I hope that we can
move away from some of the harsh rhetoric that we unfortunately have
heard tonight and I am afraid that we are going to be hearing in the
future.
Mr. KOLBE. Mr. Speaker, I appreciate the comments of the gentleman
here, and I think they are on point. I think the gentleman is
absolutely correct.
It really does not serve anyone very well to have the kind of harsh
rhetoric that we have been hearing about this issue. It is too
important to carry on in that kind of a partisan nature.
I remember sitting on this floor when the President of the United
States, President Bill Clinton, talked about Social Security reform in
1998 and standing and applauding when he had the courage to get up
there and talk about it. In fact, the President then followed up with
only one major effort, out-reach effort that he did, and he happened to
do it in my congressional district.
I flew with him on Air Force One to Tucson in order to talk about
this issue, and I was struck by the amazing grasp of the detail that
President Clinton had about the nature of the problem that we were
facing. It is exactly the things that we have been talking about and
that we will continue to talk about and that President Bush is talking
about today.
We have a problem. We need to find a way to fix it. We need to find a
way to strengthen Social Security so it will be there for the next
generations as well as for current retirees. So we are not talking
about taking it away. These kinds of scare tactics, they are not only
bogus but they are disheartening as the gentleman from Minnesota (Mr.
Kline) said, but they are also very destructive.
They do not help us find a solution. And if ever we needed to have a
bipartisan reach-out to find the solution to this problem, it is on
this issue. The
[[Page H933]]
American people are watching us to see whether Congress really can
reach out to find some way to fix this.
Mr. KLINE. Listening to the debate, the arguments earlier this
evening, it was clear that our colleagues recognize that something
needs to be done. I know that the gentleman from Connecticut, I
believe, said everybody knows that we have got to do something to
strengthen Social Security, and other Members have said everybody knows
we have to do something. And we heard a couple of proposals and
increasing taxes was proposed by the gentleman from California, I
believe; but if we know that something has to be done, we ought to be
able to move forward and engage in the debates and engage in the
discussion about what we are going to actually do to strengthen Social
Security.
But I know that not everyone understands the nature of the problem
and how quickly it is going to arrive, and, unfortunately, if we do not
do something, how quickly it will turn into a crisis. I ask the
gentleman to continue the explanation.
Mr. KOLBE. Mr. Speaker, I thank the gentleman from Minnesota (Mr.
Kline) for his comments, and I hope he will continue to engage in this
discussion here tonight.
I do want to take a few moments to talk about this particular chart
up here because I think it expresses better than anything I could say
verbally what the nature of the problem is that we are facing.
Going back, thinking back to the last chart where we talked about how
the fewer numbers of people are paying the taxes to support the
beneficiaries, the people getting the benefits, this illustrates
exactly what that means in terms of the cash that is coming into the
Social Security trust fund. The reforms, the changes that were made in
1983 went a long way towards fixing Social Security in the short and
the median term; but for the long term, it just kicked the problem down
the road. It did not make a permanent fix to it. It just postponed the
day of reckoning, postponed the day of reckoning because it increased
the taxes. And gradually we are in the process now of raising the
retirement age. It made some other things.
So since the late 1980s and early 1990s, we have been collecting more
in revenues from Social Security tax than we have been paying out in
benefits. That means the Social Security trust fund has been reaping
this windfall, if you will. It has had this extra money which we all
know really is one arm of the Federal Government that is the Social
Security trust fund taking the money and then turning around and
loaning it to the Federal Government for part of the operations of the
Federal Government. It is really paying part of the deficit, if you
will, the operations of the rest of the government.
Now, the trust fund gets some IOUs and some Treasury bills in its
name in there, and those are earning some interest. But here is what we
have got right now. There are more benefits coming in. But as you can
see here this black part up here which is the revenues exceeding the
benefits being paid out, it takes a downturn here in just 3 years.
Now, that is the first critical date we need to focus on, the year
2008. It is in the year 2008 where the revenues start to decline and
the excess revenues start to decline. And so the deficit, instead of
masking more of the deficit each year, it will start masking less and
less of the deficit each year.
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So we will be doing more borrowing in order to cover the rest of the
deficit.
Then, in the year 2018, you can see where these lines cross and the
black turns to red. That is where the benefits being paid out exceed
the revenues; the taxes that are actually being collected. So the
Social Security trust fund has to go back to the Treasury, they have to
go and cash in those IOUs they are holding, which means that the
Federal Government has to give them cash and replace that borrowing
with massive amounts of borrowing over here to cover the deficit.
At that point, they not only have the annual amounts they are
covering for each month to cover the benefits, but they also are going
to have to be covering the replacement of the IOUs. So the deficit
really starts to balloon at that point. And within just a very few
short years, up to 2018, the deficit being caused by the Social
Security Trust Fund cashing in those IOUs is in the hundreds of
billions of dollars a year.
We are going to be faced with a Titanic, a major, a simply major
problem that we are going to have to confront at that point. How much
do we borrow? How can we keep on borrowing those amounts of money, just
to cover the shortfall in Social Security? And this is not saying
anything about the shortfall in Medicare or the other kinds of
entitlement programs that we have.
We are talking just about Social Security. It is going to be a
massive shortfall that we are facing. That is why it behooves us to
start thinking about this now.
Now, the third and last date that is currently projected is the year
2042. That is when the IOUs are gone. They have cashed in all the IOUs.
Somehow we have managed to borrow the money from the Chinese or
Japanese or the Germans, or whoever, to replace that borrowing, and we
have managed to get the cash to pay the benefits. But in 2042, the IOUs
are gone. There is nothing more for the trust fund to go out and use,
except the money that is coming in each month.
At that point, assuming we have done nothing, as some people I have
heard tonight over on this side suggest that we do, do absolutely
nothing, if we do absolutely nothing, at that point the Social Security
benefits would be cut by 27 percent.
Now, is there anybody listening this evening, and my colleague can
answer this for himself, is there anybody that really thinks
politically, with all the retirees we will have in the year 2042, we
could realistically say, gee, your benefits just got cut 27 percent
this month. Take it or leave it. That is it.
Obviously, that cannot happen and will not happen, which is why we
have to think now about how we will fix this so that it is strengthened
for future generations.
Mr. Speaker, I will be happy to yield to the gentleman again.
Mr. KLINE. Mr. Speaker, I thank the gentleman for yielding to me. I
think it is a terrific graph. The problem is clearly outlined with that
big red area that says cash deficits.
I just want to reinforce what the gentleman said about the trust
fund; the trust fund not actually having any money in it, having IOUs,
having bonds that have to be redeemed through the general fund. And the
gentleman, I know, understands full well that it is highly unlikely
without some major change that we could reach that 2042 date when the
IOUs run out. The impact to all of America between 2018 and 2042, if we
do not do something now, would just be catastrophic.
To get back to the gentleman's opening comment about problem or
crisis. Certainly it is a problem today, but clearly a crisis when you
get into that big red area that says cash deficits. That is why it is
so important we should have this debate today; that the American people
understand that we are facing a problem which is going to turn into a
crisis. We need to get this debate engaged and agree on a solution
which will strengthen Social Security.
I know there are many proposals out there. The gentleman has a
bipartisan proposal, the President has put forth an outline of a
proposal. Our colleague, the gentleman from Wisconsin (Mr. Ryan), and
Senator Sununu have a proposal, and others, and that debate, that
discussion is the one we need to have. If there are others who think
that simply the solution is to raise taxes, which was suggested here
tonight, then, fine, let us put that discussion into the debate as
well. But let us recognize that that red area, that sea of cash
deficits is something that is looming.
Now, I am part of that leading edge, or maybe 1 year behind it, of
those baby boomers, and it is a rapidly approaching demographic shift
that we need to address.
Mr. Speaker, I yield back to the gentleman.
Mr. KOLBE. I thank the gentleman again for his comments. The
gentleman is a bit younger than I am. I am afraid I got ahead of the
baby boomers on this.
Mr. KLINE. You are one of the few.
Mr. KOLBE. One of the few left around here.
Mr. Speaker, I agree with what my colleague has just said, and I
think he
[[Page H934]]
is exactly on target. We do need to be thinking about all the different
ways in which we could fix this. Certainly taxes is one of the ways we
can fix this. Certainly we can do some reduction of benefits. But,
really, if you think about it, there are really only three ways you can
have a fix or do something to really reform Social Security.
One is increase the revenues. That is increase the amount of taxes
you collect; whether you increase the amount of wages subject to the
taxation, or whether you raise the rate of taxation, that is the rate
of the Social Security tax we are paying today.
The second, of course, is to make some reductions in the benefits.
You can make the reductions for future retirees, or whatever, what ever
other retirees we are talking about. But you can reduce the benefits.
The third thing is to increase the rate of return on the investment.
And that really gets us to the personal accounts, which I want to talk
about in just a moment.
But before I do, I thought maybe it might be useful for us to talk a
little bit about the town halls that I have been holding, and I know a
number of my colleagues have been holding about Social Security. Of
course, for me, having had a proposal, a complete proposal introduced
in Congress for the last 8 years, and having been talking about this
for at least the last 10 years on the floor of this House and in every
single town hall I have done, we have been talking about this. And I am
talking about in my retirement communities, where everyone who comes to
the town hall is 65 and over, I have been talking about this for a
long, long time.
So I am not fazed by the fact that a handful of people show up at my
most recent town hall and they are, well, let us say fairly vitriolic.
They have a few unkind words to say because they have not been there
before. And I know these people are coming as a result of some e-mails
that were received from different organizations. But by and large, the
vast majority of the people that have come to my town halls during this
last recess that we had were interested in seriously hearing about the
nature of the problem and what kind of fixes we could have.
I think on that score, by the way, the President has won the first
round of this battle. My colleagues on the other side that want to deny
that there is a problem have lost that battle. Because the polls now
show by an overwhelming margin that the American people do think there
is a problem with Social Security, and they think Congress needs to fix
it, and they think it needs to be the highest priority of Congress to
strengthen Social Security. So we have reached over that first hurdle.
Okay, there is a problem. Now, let us get to talking about what are
the solutions. What are the things we might do that could make Social
Security a better program for the future.
Coming back to my town halls, I just wanted to share this one story.
And I do not know if the gentleman from Minnesota has some others that
he might want to share, some of the experiences he has had in talking
about this, but I had a town hall down in Sierra Vista, which is one of
the communities in my district. There is a large military facility down
there and we talked about Social Security for 1 hour of the meeting.
I had two women who came up to me after the town hall was over and
they both said they were Democrats. And they said they had come to the
meeting as a result of an e-mail they had gotten and they had come
opposed to reform and very much opposed to the concept of personal
accounts. But after hearing the facts and the data, and we did have a
real debate because there were plenty of people in the audience that
were trying to dispute the things I was saying, so we had a real
discussion about it. But they said after hearing the facts, the data,
and the reason why reform is essential, they told me they were
supporters of the concept of personal accounts, and that they were
going to go away and explain to their Democratic friends why personal
accounts are necessary and why we really ought to be doing something to
reform Social Security now.
So I say that there is no doubt that if we talk about this issue with
our constituents, with the people we represent at home, I think there
is no doubt that they will understand that there is a need to do
something to strengthen it. I think there is still a lot of uncertainty
about what the reform should be. How should we fix it? How should we
make it better? How should we strengthen it? But I think there is a
growing awareness that we do have a real problem there.
Mr. Speaker, I would be happy to yield again to the gentleman.
Mr. KLINE. I thank the gentleman for yielding once again, and I just
want to underscore the point the gentleman made that increasingly our
constituents understand that something needs to be done.
This sort of anecdote has been put forth many times before, but just
this last week when I was back in my district, I was visiting one of
the high schools. I had a group of students, about three classes, and
we were discussing a large number of subjects, everything from the war
to taxes to education, and one of the subjects was Social Security.
I asked the question, which I am sure many of my colleagues have
asked, to those students. I said, how many of you believe that Social
Security is going to be there when you retire. Just asked the basic
question. Not a hand went up. I thought, well, maybe they are just a
little shy and do not want to raise their hand. So I reversed the
question. I said, how many of you believe that Social Security will be
gone when you retire? And about a third of the hands went in the air.
Now, as the gentleman knows, sometimes when talking to high school
students, or Members of Congress for that matter, not everybody is
paying full attention, but it was clear to me the young people in my
district, and I think across the country, just have no confidence that
the Social Security that their grandparents are using and enjoying is
going to be there for them. And the gentleman has shown us very
graphically what that demographic problem is. I believe that
underscores our purpose here to strengthen Social Security. Not to
destroy it, not to weaken it, and certainly not to gut it.
I know many of the proposals that have been put forward, the
President and many of our colleagues, call for including the personal
accounts, which the gentleman is going to talk about and taking
advantage of the enormous power of compound interest to create a nest
egg which they will have in conjunction with the Social Security
program and that will provide the benefits that we were hearing about
earlier tonight that women particularly require. We want to make sure
that the program is there. We are looking for a way to strengthen it.
Again, I just thank the gentleman for his persistence on this issue
and his continued leadership as we move forward in the debate.
Mr. KOLBE. Again, Mr. Speaker, I thank the gentleman from Minnesota
for his participation in this discussion here tonight.
Just moving forward a little bit, and I do want to respond to what my
colleague said, it reminds me of some experiences I have had. I have
been, as I mentioned, talking about this for a lot of years. And I go
into high school audiences, where there are seniors that are old enough
to kind of understand the issues involved here, or go into college
classes and I ask the same questions every time: How many of you think
Social Security will be there when you get ready to retire? I almost
never have a single hand that goes up. Never a single hand. So they do
sense that there is a problem with it.
And they are exactly right, because the numbers we just ran through,
Social Security will not be there for them in the same way that it is
today. There is no possible way when they get ready to retire that
Social Security will be there in the same form. Something will have
changed about it. Their benefits will have been reduced, taxes will be
increased, or we will come to some other conclusion about a way to
reform Social Security.
So they understand what the issue is. And I think, generally
speaking, the American people are coming to understand that.
Mr. Speaker, I am happy to yield to the gentleman once again.
Mr. KLINE. I believe that is true.
As I said in my remarks just a moment ago, I know that that was an
anecdote that many of our colleagues have expressed, because they have
had the same experience of asking young
[[Page H935]]
people, high school seniors, college students, others, if they think
Social Security is going to be there when they retire. I have never had
a hand, I have had the same experience as the gentleman, I have not
been asking the question for as many years, but never a hand goes up
where they believe it is going to be there.
And what a shame, because they ought to have a system, all Americans
ought to have a system that they can count on and that they believe is
going to be there. And until we do something to really strengthen the
system, they will not have faith that it is there. And they should not,
because without that fix it just will not be there in that manner.
Mr. KOLBE. I appreciate the gentleman's comments, and I think what
his experience illustrates, as a newer Member of the Congress, is that
if you are out there talking about this issue candidly and honestly
with the people you represent, your constituents, they are willing to
listen to what you have to say. They will not reject out of hand what
you are saying.
So I hope we have been able to dispel the notion that there is no
problem out there. I hope we have been able to dispel the idea that we
need to do absolutely nothing. We do need to do something to strengthen
Social Security to make sure it is there for this generation as well as
for the next generation.
So that brings us to the ideas of what can we do to make it work.
{time} 2215
Now, as I mentioned earlier, there are three things or variations on
three things: raise taxes, decrease benefits, or increase the rate of
return on investment that we have in Social Security. I happen to
believe that we ought to do a little bit of all of those. If you are
going to strengthen Social Security, you need to do a little bit of
each of those things.
But the heart of that strengthening is increasing the rate of return
on the investment we have, and that is why personal accounts are so
important. Now, I have heard it said personal accounts do not fix it,
and that is accurate. That is right. I have never said personal
accounts fix it. Personal accounts are your link to the next generation
because you are going to say to the next generation, look, you are
going to have to pay just a little bit more to support this defined
benefit, and you are going to get a little bit less.
And so the younger person is going to say, what is in it for me. So
we can say there is a chance to have a greater return on investment
through a personal account. Even though you are paying a little more
taxes and getting a little less benefit from the defined benefit part
of Social Security, you are going to have a part of it set aside, and
it will grow as the country grows, grows as the economy grows, grows as
the world economy grows; and that will yield a retirement that is
better even with the reductions we are going to have to force. It is
going to be better than what we have today.
So the first principle we have to agree on is we do not do anything
to change the benefits of people today who are retired or near
retirement get. I do not know of a single plan offered by anybody on
this side of the aisle or the plan that I have offered along with that
side, the only bipartisan bill which has been introduced in Congress,
none change it for anybody who is over 55. To everybody that is
watching this, if they are over the age of 55, you can turn the
television set off because this does not affect you. We are not talking
about anything that changes your benefits.
Mr. KLINE. Mr. Speaker, I think that it is critical that all of
America understands what the gentleman said is accurate. I have a table
that my staff keeps updated almost daily as we start to engage in this
debate. I do not know of a single proposal, certainly no serious
proposal, that alters in any way, in any way the Social Security
program for those my age, or 55 and up. It does not change it a bit. It
is the same. You get the same check, the same increases. The program is
exactly the same. My 84-year-old mother is going to continue to get her
checks in exactly the same way she has been getting them for the last
20 years. The program does not change for her.
I think that is a key piece of this overall picture that we are
talking about as we move forward in the debate. There are different
programs, and the gentleman from Arizona (Mr. Kolbe) has a program he
has been working, others have other proposals. Most of those on this
side of the aisle correctly create some sort of a personal account, an
account that our younger workers can own, that grows, that has the
opportunity to give them a greater return than the current system gives
them. It gives them something that they own that they can leave to
their heirs. No proposal affects the benefits of any current senior
whatsoever.
I think it is important that we understand that as we debate the
details of the proposals such as the one that my colleague has, and we
have that basic understanding that we are talking about no changes for
seniors, an opportunity to increase the return, to take advantage of
that interest, increase the rate of return for our younger workers.
That is the position we are starting from, not the position that we
heard earlier in the evening of gutting Social Security, of trying to
do something to help the President's buddies and those other
unfortunate things we heard earlier. This is about making sure the
program is there for our grandkids like it has been there for our
parents.
Mr. KOLBE. Mr. Speaker, the gentleman is exactly correct and on
target. Obviously, when we talk about personal accounts, it has not
always been that Democrats have opposed that. In fact, when President
Clinton in the last 2 years of his term, second term in office, was
talking about Social Security reform, talking about it honestly and
openly, Democrats began to embrace the concept that maybe there ought
to be a greater return on investment; maybe some of the money ought to
go into a personal account.
Senator Reid, now the minority leader in the United States Senate
said, ``Most of us have no problem with taking a small amount of the
Social Security proceeds and putting it into the private sector.'' He
said that on Fox News in 1999. I think the Senator was correct about
that. There are similar kinds of things that have been said by other
leaders.
The ranking Democrat on the Committee on Ways and Means said at a
press conference at the same time, this was the same time the President
was talking about Social Security reform, he said, ``I am one Democrat
who truly believes that Democrats will not benefit by doing nothing on
Social Security.'' So he recognized the problem, and he believed we
should do something.
I say if they do not like the plans that are out there, the plan that
the gentleman from Florida (Mr. Boyd) and I have introduced, or other
plans introduced by the gentleman from Wisconsin (Mr. Ryan) and the
gentleman from Florida (Mr. Shaw) and others, fine, but bring something
to the floor that we can start this dialogue, that we can begin this
debate.
Coming back to the topic of personal accounts, we just heard a few
moments ago the gentlewoman from California talk about how Social
Security is so important for women, and she is absolutely right. Social
Security is important for women, but Social Security is not very good
for women right now. One of the reasons it is not so good, it is
because they tend to drop out of the workforce at a certain point, when
they are raising children, and so they get less from the system when
they get ready to retire.
There are a lot of single women who raised their children. I like to
use the analogy of the 48-year-old single mother. She got her kids
through school and college, worked herself to the bone, and now they
are both over the age of 21, and she drops dead of a heart attack at
the age of 48. What does Social Security provide? Zero. Not one dime,
because her children are over 21. She is not married; there is no
spouse. There is not one dime from Social Security.
Now, if a portion of what she had been paying in those taxes had been
put into a personal account, she would have owned something. She would
have owned something that she could leave to her heirs; and if she
forgot to write that will, it still would have gone to her heirs, which
would have been her children. That is the magic of personal accounts.
They not only provide a
[[Page H936]]
greater retirement benefit, but it is an asset that people own. They
own it. They can manage it and figure out what to do with it. They can
leave it to their heirs. That is the magic of personal accounts.
As I said, it is the link to the next generation because as I said,
personal accounts do not fix the problem. Indeed, if we are going to
take a carve-out as I think we should because to add it on is to say
just a huge new tax on Social Security, a tax to be added as a burden
on the people, if we are going to carve it out of the current amount
being paid in retirement taxes, we are going to have in a sense a
bigger problem, so we have to do something to make it all balance.
Guess what, you can do it, but you have to make some tough choices,
and that is what nobody has been willing to do. Particularly as I
listened over here, I do not hear anybody willing to make some of those
tough choices. What do we do?
Well, the legislation we have introduced does a little bit of
everything. We would make some modest reduction to the Consumer Price
Index on which the annual cost-of-living adjustment is made, and that
is justified by the superlative index which accounts for durable goods
lasting longer today. Alan Greenspan has talked about it. It is a
little complicated economic issue, but basically the Consumer Price
Index today is a little bit out of whack with the reality of where the
inflation rate is actually going.
In our bill, we would increase the amount of income subject to taxes,
not increase the wage rate because we do not want to say to the person
earning $25,000 we are going to increase your Social Security tax, too;
you are going to have less take-home pay. But we are going to say to
the person who currently makes over $100,000, you are going to pay more
tax because we are going to increase the amount of wages subject to
taxation. That is legislation that the gentleman from Florida (Mr.
Boyd) and I have introduced. This is not necessarily the President's
plan or any official plan on this side of the aisle, but I use it only
to illustrate if you make some of these choices, you can fix some of
these things.
We would also accelerate the retirement age so we take out that 10-
year gap from 65 to 67, we take that out so it goes to 67 a little
faster. We do not change the retirement age; we just accelerate the
speed at which it goes.
We would make some changes to the benefit structure for younger
people, people with personal accounts, make some reduction in their
benefits; and you can make Social Security solvent not for 10 years,
not for 20 years, not for 40 years, and not even for 70 years, which is
the only horizon that the Social Security Administration will look at.
But economists have looked at ours and the CBO has looked at ours, and
they say it goes as far as the eye can see as being solvent. So we can
say to younger people, yes, you are going to pay a bit more in taxes,
and, yes, you are going to get a little less benefit; but you are going
to have retirement that nobody else has had up to this time. That is
what personal accounts do, and that is why I think personal accounts
are a critical part of any reform of Social Security.
It is not the be-all, it is not the end-all, it does not answer all
of the problems; but it gives some confidence to younger people that
there is going to be something in it for them when they get ready to
retire. That is why I think the personal accounts are so very
important.
Before we wrap up here, let me outline a couple of other ideas.
Again, we are looking at what President Clinton said in that State of
the Union address in 1998 where he said, ``We are going to hold a White
House conference on Social Security in December, and one year from now
I will convene the leaders of Congress to craft bipartisan legislation
to achieve a landmark for our generation, a Social Security system that
is strong in the 21st century.''
I am sorry to say because of personal things that occurred after
that, we never got around to that. The President's clout here in
Congress was diminished, his clout with the American people was
diminished. He was not able to carry that off. There is no doubt it
takes a great deal of Presidential leadership to carry that out, but
President Clinton knew what the problem was, and he identified it at
that time.
Much more recently, in fact just today, just today in testimony
before the Committee on the Budget, Alan Greenspan, the chairman of the
Federal Reserve Board, said, ``In my view, a retirement system with a
significant personal account component would provide a more credible
means of ensuring that the program actually adds overall saving and in
turn boosts the Nation capital stock.'' That is a little bit of
economic legalese there, but he is basically saying it is a better way
and it adds on the total savings that the United States has if you have
personal accounts.
The thing that is important about personal accounts is they belong to
every individual and they can be tailored. They can change as
circumstances change.
The gentleman from Minnesota (Mr. Kline) knows this. As Members of
Congress, we have exactly what we are talking about doing for Social
Security. It is called the Thrift Savings Plan, and all Federal
employees have it.
{time} 2230
It is a piece of our retirement and it is money that we put in out of
our wages that is matched in part by our employer, which in this case
is the House of Representatives, and it goes into a personal account
that belongs to us and we get a statement every year that tells how
much we have invested and we have some choices about where we invest
that. No, we do not go out and have to ponder every night looking over
the stock pages and deciding which stock to buy because it goes into
index funds. We can choose a stock index fund where it buys every stock
in that index, we can choose a bond index fund where it buys every bond
in that index, or we can choose a Treasury bill.
Want low risk? You have got to assume that Treasury bills are
probably the safest thing. The government is not going bankrupt. I
think we believe that. The government is not going bankrupt. So you can
buy a Treasury bill index fund where it buys all the Treasury bills,
medium, short, long-term Treasury bills. It has a lower rate of return,
but it is absolutely safe. The nice thing is that as you get close to
retirement, you can start to shift that from one account to the other.
That is exactly what I have done with mine. I want less volatility. I
am getting closer to the age of retirement. I want less volatility, so
I moved some of it out of the stock index fund into the Treasury bill
fund. That is the beauty of this is it gives you some choices to plan
for your own retirement. Social Security does not give you that.
Mr. KLINE. If the gentleman will yield, I would like to take this
opportunity to go back to the point that the gentleman made earlier in
his example of the 48-year-old single mother. The gentleman from
Arizona and I are paying in to Social Security. We are in the Social
Security retirement system.
We also have the Thrift Savings Plan that he just described. Should I
die today, I would not be able to leave for my children or my
grandchildren anything out of the money that I have paid for many
years, not quite as many as the gentleman but many years into Social
Security, but I can leave and I will leave the money that is in that
Thrift Savings Plan because I own it. And it underscores the point that
the gentleman made earlier, that one of the terrific benefits about
having a system that strengthens Social Security, that has a personal
account as a component of that is that that money is absolutely yours,
and I believe that in all the proposals that we are going to be
debating put forward by the gentleman that we have talked about
earlier, that account is owned by the individual and they can leave it
to their heirs when they die.
It is a major difference between this proposal and the current
system. While it is providing wonderful paychecks for my mother, she
does not own that. And I want my children and my grandchildren to own
something that is part of their retirement system. Unfortunately, as we
said earlier, for those that are 55 and up, we cannot strengthen that
program for them. Nothing in the system is going to change for them.
Nothing. It is not going to get better. It is not going to get worse.
It is exactly the same. But for my kids and
[[Page H937]]
my grandkids, what a wonderful thing to have as part of their Social
Security an account that they will own like the one that the gentleman
was describing, the Thrift Savings Plan that can be tailored to their
needs and their age and they will own. They can use it in their
retirement or they can leave it to their heirs. I just wanted to step
in at that moment to see if we could not underscore the important
difference between having an account that you own and one that you do
not.
Mr. KOLBE. This discussion about the personal accounts and the kinds
of index funds they might be invested in leads me to the two kind of
final points that I wanted to make here tonight. We heard on the other
side, and the gentleman talked about this a moment ago, the comment
that was made tonight saying this is being done for the President's
buddies on Wall Street. The truth of the matter is, I have been working
at this thing for 8 years with a bill. I have never heard from Wall
Street on this. The reason is simple. There really is not much in it
for Wall Street. Why? Because you are investing in index funds. My
colleague may not know this, and I certainly know that a lot of the
American people do not understand this, but the Thrift Savings Plan,
the one that he and I are a member of, the management fee for that is
two basis points. That is two hundredths of 1 percent. That is what the
Wall Street manager gets, two one-hundredths of 1 percent of the assets
for management of that.
Why is it so low? That is obviously a fraction of what any IRA or any
mutual fund that most people have some kind of an investment in, it is
a fraction of that. Why is it so low? Because it is an index fund. You
are not doing research. You are not making choices about investments.
You are buying every stock in the index fund and so each month when
more money comes into the fund, you simply execute buy orders for the
funds and as you have to sell it for retirement benefits, you execute
sell orders for it. It is very simple in that sense. That is why the
management cost is so very, very low. I know we are going to continue
to hear that bogus argument, but it is absolutely bogus. It is
absolutely false. The one other argument that I wanted to address is
the gentleman said earlier on the other side, made this point, why
introduce risk in the only guarantee that we have. Well, Social
Security has undergone more than 50 changes. I think it is actually a
lot more than that, but I know it is more than 50 changes since we
introduced it in the 1930s. Fifty times Congress has come along and
made changes to it, changed the taxes, changed the benefits. We have
changed it and added disability. We have changed it in one way or the
other.
So if you want to talk about risk in Social Security, then talk about
leaving it in the hands of Congress. That is why the personal savings
account eliminates that risk, because it belongs to you. Congress
cannot take it away. You have ownership of it and we cannot take it
away from you. That is why I think the personal savings accounts are so
very, very important. So if we want to talk about risk and we want to
talk about reducing risk, let us talk about ways in which we can make
sure that people have control over some part and we are only talking
about a very small part of the total amount being paid in Social
Security taxes, because if I have not made this clear this evening, all
the plans we are talking about leave the vast majority of the taxes in
the current system, so that it pays beneficiaries today and is going to
pay beneficiaries in the future the same kinds of defined benefit that
we now get from Social Security.
Mr. Speaker, I appreciate this opportunity this evening to have this
dialogue with my friend from Minnesota. I appreciate his comments and I
appreciate the passion with which he approaches this issue. I think we
both know this is one of the most significant debates I think we will
ever have in our lives in this legislative body, because I think it
says a great deal not just about the future of Social Security, but it
says a great deal about whether we as a Congress are going to have the
will to tackle the really tough problems which face us. Social
Security, believe it or not, is one of the easier ones. We have to get
to Medicare to really look at the very difficult problems that we are
facing. But if we can show we have the will to come together and find
solutions to strengthening and making Social Security a better
retirement system, then I think we can go on to finding ways to
strengthen and make Medicare a better health care system for our senior
citizens. That is why I know the gentleman from Minnesota is down here
tonight, because he believes that and he believes that is exactly what
we must do and I believe it very strongly.
In my heart of hearts, I believe that what we are doing here today is
to help preserve this system for those who are already retired but also
to say to the next generation, we believe that you too should be able
to benefit from a retirement system, a Social Security system that will
be there for you when you get ready to retire. I believe that this
dialogue needs to continue. We have started it this evening, we have
joined this debate, and I hope we can have more discussion of these
issues, not just with Republicans on one side of the aisle, not just
with Democrats on the other side of the aisle but coming together here
to carry on these debates and this discussion together and perhaps we
can find some kinds of ways in which we can have the solution. I thank
the gentleman for his participation.
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