[Congressional Record Volume 151, Number 26 (Tuesday, March 8, 2005)]
[House]
[Pages H992-H993]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  NO PLAN FOR SOCIAL SECURITY SOLVENCY

  The SPEAKER pro tempore (Mr. Pence). Pursuant to the order of the 
House of January 4, 2005, the gentleman from Oregon (Mr. DeFazio) is 
recognized during morning hour debates for 5 minutes.
  Mr. DeFAZIO. Mr. Speaker, the President of the United States, despite 
confusion in the press, does not have a plan to ensure the long-term 
financial solvency of Social Security. His privatization plan would 
actually reduce Social Security's income and accelerate

[[Page H993]]

its financial problems. His privatization commission, which met a few 
years ago, did have some solutions to the financial solvency of Social 
Security. Generally, their preferred solution was to dramatically 
reduce future benefits, to change from wage indexing to price indexing, 
which means a young person who retires in 40 years would see generally 
a Social Security benefit reduced by 40 percent, far in excess of the 
predicted possible shortfalls that Social Security might have if we did 
nothing.
  Now the President says he has not recommended that. He has not 
recommended dramatic reductions in benefits; it is just on the table. 
He has also said increasing the retirement age is on the table, and it 
is already programmed to go up to 67 by 2020. We are going to have 
people 70 years old logging in the Oregon forests and working other 
back-breaking jobs across America. But he says that is just on the 
table. He has not recommended that yet.
  He did, in an encouraging manner, leave open the door a tiny bit to a 
fair solution, which would be lifting the cap on wages. Only people who 
earn less than $90,000 a year pay Social Security taxes on all their 
income. He left that door open.
  In fact, I have introduced a plan in the last 30 Congresses which 
would fully ensure the future of Social Security by lifting the cap, 
reducing taxes for those who earn less than $94,000, and people who 
earn more than $94,000 pay more in taxes. But that door was promptly 
slammed by the Republican leaders in Congress. No, they are not going 
to do that. That would benefit working people too much.
  So we are back to the point where the Republicans do not have a plan 
to ensure the financial security of Social Security. They do have a 
plan to make it worse, to carve out resources, to redirect income from 
Social Security into a privatization plan.
  Some people get excited when they hear privatization. They think: It 
is my money; I can do what I want with it. No. Here are the details. 
They are detailed in this proposal, very detailed. Wage earners can 
divert 4 percent, two-thirds of their contribution. They can divert it 
into government-chosen conservative, as the President says, index funds 
that will be managed by a company chosen by the government. You could 
not touch your money, could not borrow against it, like people in 
401(k)s, or withdraw it early. The government would control the money 
until retirement, and then the government would compute a bill, and the 
bill would be how much your taxes would have earned in the Social 
Security trust fund plus inflation plus management fees, and they give 
you that bill.
  If investments did not do well, the wage earners might end up writing 
a check to the Federal Government when they retired. No privatization 
account for them. Other people who did pretty well will see they have 
to pay that money back to the government, and then the government will 
say your Social Security benefits are really low. This is the 
President's so-called privatization plan. The government would force, 
force people retiring to buy an annuity, to bring their Social Security 
benefit for their predicted lifetime up to the predicted poverty level. 
It would force people to do that. What a boon for the private insurance 
industry. Of course, these would not be guaranteed by anybody. You buy 
one of those plans. That insurance company goes broke. Sorry, you just 
lost everything.
  So instead of an assured benefit under Social Security, taxpayers 
would be purchasing a very expensive annuity that does not have 
survivor's benefits, is not indexed for inflation, unlike Social 
Security, but then very few people maybe, according to a Wall Street 
Journal article a couple of weeks ago, none of the people in all 
probability, but maybe a few would do even better, and they could keep 
that extra money.
  So we would undermine the guaranteed benefit indexed for cost of 
living with survivor's and disabilities benefits for all working 
Americans so maybe a few could do better, but the insurance companies 
could do a lot better. The brokers who manage the accounts could do a 
lot better, but other people would be left in the cold.
  And what about survivor and disabilities benefits? They cannot talk 
about that, because it is impossible. You are 18 years old. You go into 
the so-called optional account. You save every penny you are allowed to 
invest. At 24, you are tragically hurt in an accident. You are not 
capable of working for the rest of your life, and you can withdraw your 
$8,000 in your Social Security private account and live on that. No, 
you cannot.
  We need to deal with disability benefits, survivor's benefits and 
financial problems of Social Security, and the President has not done 
that with his so-called privatization plan.

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