Congressional Record, Volume 151 Issue 53 (Wednesday, April 27, 2005)

[Congressional Record Volume 151, Number 53 (Wednesday, April 27, 2005)]
[House]
[Pages H2631-H2638]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

UPDATING SOCIAL SECURITY

The SPEAKER pro tempore. Under the Speaker's announced policy of
January 4, 2005, the gentlewoman from Kentucky (Mrs. Northup) is
recognized for 60 minutes as the designee of the majority leader.

[[Page H2632]]

General Leave

Mrs. NORTHUP. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on my Special Order.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Kentucky?
There was no objection.
Mrs. NORTHUP. Mr. Speaker, I rise today to highlight an important
issue that has become the topic of much discussion across our country:
Social Security.
Republicans in Congress have joined together to form a series of
teams to highlight the important issues facing our Nation today, and I
am proud to serve as the chairman of the Retirement Security Team and
to be joined by a number of my esteemed colleagues for this important
discussion tonight.
Mr. Speaker, we know that it is important that Congress address the
challenges that Social Security stand before us in the coming years. We
know that there is an increased number of retirees and that there are
fewer joining the work force. When Social Security first paid out
benefits in 1950 there were about 16 workers for every retiree. Today
there are 3.3 workers for every retiree, and we are headed towards a
time when there will be only 2 workers in the system for every retiree.
This means that we need a system that can support a Social Security
team program.
When Social Security began, it happened that it paid out benefits
when you were 65, but the life expectancy was at the age of 62. So this
means for the average American they paid into a system where they were
expected to die 3 years before they would be entitled to collect
benefits. To our great benefit and to all Americans' benefit, our lives
are much different now. We know that our life expectancies are much
greater than 65; 79, 80, 81 are becoming the life expectancy. And not
only that, Americans are healthier. They are enjoying vibrant lives
after they retire, and that means we have to have a Social Security
system that can support the hope and opportunities that so many seniors
have come to depend on and look forward to in their years after the age
of 65.
It is an exciting time for Social Security. The Members here in
Congress that are with me tonight are eager to address the challenges
of Social Security so that we can meet our responsibilities and so that
we can live up to the expectations of also our children and
grandchildren who are going to be expected to bear the responsibility
of this program after we ourselves are retired.
This is a good time to embrace this challenge, to put ideas on the
table, to ask our friends across the aisle to join us and to make a
difference for today's seniors that they know they are in a system that
is strong and vital and is there for them as they have always known it.
For those that are about to be retired, that there is a system that
they can expect is going to stay the same and benefit them.
We need to invite seniors today and those that are about to be
seniors to join us in this conversation as seniors in previous
generations have done, to sit down at the table and to help ensure that
this program that means so much to them will be there for their
children and grandchildren.
The seniors in my district are appreciative of the generations before
them that planned for a program that would be sustainable while they
themselves were retired. And I know that they are eager to roll up
their sleeves and to join in this discussion and make sure that the
program for their children and grandchildren will be stainable too.
So tonight let me introduce several of my colleagues as we discuss
what the opportunities are before us with relationship to Social
Security.
First, I would like to introduce my very good friend, the gentleman
from South Bend, Indiana (Mr. Chocola) or Elkhart, Indiana to be exact.
I thank the gentleman for being with us tonight.
Mr. CHOCOLA. Mr. Speaker, I thank the gentlewoman for yielding to me.
I also thank her for her leadership on this issue.
This is not the first time that we have come to the floor and talked
about this important issue that we face as a Nation, and it is really a
test we cannot afford to fail. We need to act responsibly. We need to
find ways to find a bipartisan solution to the challenges, the really
undeniable challenges that we face with Social Security. People like
the Chairman of the Federal Reserve and the Comptroller General of the
United States have said that the sooner we act, the less painful any
solutions will be.
We can talk tonight about important numbers like 2017 when we go into
a negative cash flow. We can talk about 2041 when the trust fund is
exhausted and we can not pay the promised benefits to future retirees.
We can talk about $10.4 trillion unfunded liability that we have as a
Nation today that we must face up to. But I think that this problem is
really even bigger than that. And to that end, I will tell just a quick
story.
I was in a committee hearing not long ago where the Secretary of the
Treasury, John Snowe, was testifying. And our friends on the other side
of the aisle were criticizing the Secretary about any proposed
solutions that had been discussed or offered to address this problem.
And after that criticism I talked to one of my friends on the other
side of the aisle and said, If this is so bad, if our solutions are so
unwelcomed by the American people, why do you not just let us do it
because that would be the quickest way to go back into the majority? If
this is such a bad idea and the American people will like it so little,
they will throw us out of office for trying to solve this problem in a
responsible way.

{time} 2130

I do not think that that offer is going to be taken because I think
that many understand that this is much bigger than Social Security in
itself. This is a bigger test and a challenge that we face as a Nation.
Just stop and think for a second that if we allowed every working
American the opportunity to own a little bit of a growing economy, we
would truly become an ownership society, and think about the fact that
every American could own a piece of this growing Nation, the strongest
economy on Earth, and got the benefit of this and could build a nest
egg and build wealth over the course of their career, they would not
really like things like frivolous lawsuits anymore or excessive
regulation or excessive corporate taxes. We pay the highest corporate
taxes in the industrialized world. People would understand, take
ownership of how we grow the economy, and we all could benefit from
that.
I think the ramifications of that go much beyond Social Security.
They represent an ownership society, and we can use those types of
principles to address even bigger problems like Medicare, Medicaid,
pension reform.
So this is such an important issue that we have to move forward. It
is a test we cannot afford to fail, and we need to find a bipartisan
solution.
Before I turn it back over to the gentlewoman from Kentucky, I just
say that I invite all Members of this body to become part of the
solution. I used to be in the private sector before I was elected to
Congress; and the people I worked with never came and said, boy, we
have got a problem and all your ideas are rotten. What they would do is
say, you know, we have got a problem and here are some ideas that I
have to solve those problems and so we can act responsibly.
Is that not what we are elected to do? Because it is easy to be
against things. It is easy to criticize other people's ideas, but we
are really elected to find solutions to hard problems. If we are not
willing to stand up and offer solutions to tough problems, rather than
just criticizing others for their solutions, I do not think we are
living up to the responsibility that we have as public servants. It is
certainly not why anyone sent us here from home to serve in this body.
So I thank the gentlewoman for her leadership, and I invite every
Member of this body to participate in a constructive discussion to find
a bipartisan solution to an undeniable challenge that we face as a
Nation; and if we do not live up to it, we are not doing what we need
to do to serve future generations and generations that are currently
retired in a responsible way.
Mrs. NORTHUP. Mr. Speaker, I thank the gentleman for his comments,

[[Page H2633]]

and I know that I look forward to discussing some of the directions we
do not go.
We know that raising taxes is not a solution. We know that depending
on a trust fund that does not exist is not a solution; but I do see
that our friend, the gentleman from Georgia (Mr. Gingrey), has joined
us. I welcome him, and I will yield to him for a few minutes.
Mr. GINGREY. Mr. Speaker, I thank the gentlewoman from Kentucky, and
as well my good friend from Indiana; and it is a pleasure to be with my
colleagues tonight to discuss something of such tremendous import to
the country.
I have done about, Mr. Speaker, 10 listening sessions, town hall
meetings on this subject; and it is very, very instructive. If you do
them during the daytime, it is typically going to be senior-dominated;
and many of those individuals, of course, are among the 43 million who
are current Social Security beneficiaries.
One thing that we try to make sure that they understand is in any of
the plans that are out there, and of course, every plan is a work in
progress and nothing is set in stone, but that the concept, first of
all, of holding harmless anyone 55 years or older, that their Social
Security benefits will not change. Their checks will only change when
they get their annual COLA, and they would not, in fact, have the
opportunity to invest in an individual personal account, if that is
part of the final solution.
I do not know, maybe my colleagues have heard this, too. Some of
them, in particular at age 55, they are a little disappointed: Why did
you cut me out? I do not get full retirement until I am 67 years old
because of those changes that occurred under the Reagan administration
in 1983, the last time we were in crisis. They are kind of
disappointed, particularly if they are planning on working and
deferring their benefits until age 70. They would have 15 years of an
opportunity to get the miracle of compound interest.
But these seniors, and I am sure again that my colleagues are hearing
the same thing, they are very concerned. Even when we tell them that
they are secure and we promise them this is our pledge, they are
concerned about their children and grandchildren; and they are there
not so much for themselves, even if their Social Security was at risk,
they are very concerned about their children and grandchildren. That
kind of renews my sense of faith and spirit in our seniors and in the
American way. It is really great to hear that from them.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I am over 55 and many
of my friends are over 55. I hear it more often from people that are
49, that say, now, wait a minute, if you are going to cut off the
people who can benefit from these at 50, I only have a year to go; so
how long is it going to take you to pass this bill so that I can get in
the gate and be one of those that can also grow a personal account
within Social Security to help pay some of the benefits that I will be
entitled to when I retire.
So I have heard that and I agree with my colleague. It is very
heartening to talk to the seniors. They obviously know that they depend
on Social Security. They deserve to be reassured that their benefits
are not going to change.
But many of them remember that the Democrat Congress in 1993 passed a
tax on Social Security. They raised the taxes on Social Security
significantly. They had thought that their Social Security would be
untaxed. Now it is taxed, and they realize that if we can secure Social
Security for the long run, that their current Social Security is even
less likely to incur higher tax rates or a greater percentage of their
Social Security tax. That is reassuring to them and also gives them a
sense that they have helped steer or shepherd Social Security through
sort of this transition so that it will be there for their children.
Mr. CHOCOLA. Mr. Speaker, if the gentlewoman would yield for just a
second, I think it is important to step back for just a second and kind
of review the course of the debate on this issue.
There were a whole bunch of headlines in the paper yesterday and
today about a hearing that occurred over in the other body and which
would lead people, I think, to believe that the discussion about Social
Security has stalled or the President is not being effective in leading
the discussion on meaningful reform on Social Security.
But it was not all that long ago, beginning this year in January,
where I would hold town hall meetings and speak with people in the 2nd
District of Indiana, and there was still a question of whether there
was a problem or not. We would have a discussion: Do we have to act now
or can we wait? Is this a crisis, or is this something that is being
overblown?

But today when I talk to people back in the 2nd District of Indiana,
there is no question whether there is a challenge, an undeniable
challenge that we face in the need to move forward and act.
A very encouraging thing happened to me the other day. I think
seniors do understand their benefits are safe and secure, and they are
concerned about their children and their grandchildren and want to make
sure there is a system in place that can give them the same benefits
they have been able to enjoy.
I visited an eighth grade class in Culver, Indiana, on Liberty Day,
where the local Lions hand out a copy of the Declaration of
Independence and the Constitution, which is a great thing to do for our
young people. I asked a question of the eighth grade class: How many of
you are concerned about Social Security? To my great delight, every
single one of them raised their hands. I said the discussions we are
having in Washington and around the country about Social Security
really is not about your grandparents because their bennies are safe
and secure, but I know they are concerned about you, and our action or
inaction on this issue is really all about you because you are going to
pay for or you are going to enjoy the benefit of whatever we do.
So I was very encouraged to see that the eighth graders in Culver,
Indiana, are paying attention to this and they understand the
consequences to them and their families. I think that the debate is
moving in the right direction. We have gone from do we have a problem
to, sure, we have a problem to, now what do we do about it.
Again, I think it is the only responsible thing we can do for every
Member of this body to participate in the discussion, to offer their
ideas. Personal accounts have been controversial. I think personally
that they need to be part of the discussion, but I know the President
and I am sure that my colleagues here tonight would say if somebody has
a better idea that results in permanent solvency for the Social
Security system and gives future generations the opportunity to have
all of the benefits that their parents and their grandparents have had,
let us hear it, let us talk about it, let us debate it. If it is a good
idea, I am sure we could act on it, and I am sure we would all benefit
from that.
Mrs. NORTHUP. Mr. Speaker, I agree. We are all looking for the best
possible solution.
I think when you ask the question, can we afford to wait, the follow-
up question is, or what we often hear from the other side of the aisle,
we do not have a crisis now because the trust fund will take care of us
until 2017 or 2018.
Let us talk a little bit about why that is not the solution. I do not
know whether the gentleman from Georgia (Mr. Gingrey) would like to
maybe lead that off, why we cannot wait and why the trust fund is not
going to take care of this.
Mr. GINGREY. Mr. Speaker, I thank the gentlewoman because it is such
a good point.
The gentleman from Indiana said in his earlier remarks that we have a
$10 trillion unfunded liability. That is a big number, but the cost of
doing nothing is estimated at $600 billion a year for every year we do
nothing and continue to try to avoid the problem, pretend that it does
not exist, hope that some other Congress, the 110th, the 112th,
whatever, will address that, and we will not have to put our political
careers at risk.
I have heard others say, and I have said many times in my discussions
across my district, that I am more concerned about the next generation
than the next election. We do an interesting thing in our listening
sessions. We have a video clip. Of course, it is a black and

[[Page H2634]]

white movie reel going back to 1935 showing a little clip of President
Roosevelt signing that initial law, and he said very clearly this is
not going to be enough to take care of the average senior's full
retirement. I encourage them because of, and he used a term I hardly
knew what it meant, I had to look it up in the dictionary, the
vicissitudes of life. Things happen, good and bad; and people should
prepare by buying an annuity to cover the vicissitudes of life, but
unfortunately, people, fully a third of our seniors, cannot afford to
invest in an IRA. Maybe they never had an opportunity to participate in
one of these employer-sponsored 401(k) benefit plans for retirement,
where the employer matches the employee, and they certainly did not
have enough money in the paycheck they were earning to buy an annuity.
So where the problem is, and we all know it, nobody is disputing
this, a third of our seniors get to age 62 or 65, they do not have a
job, they do not have any other savings. They only have the Social
Security check.
So this idea of an individual personal account is not a brand-new
idea, and I know my colleagues agree with me on this point. It is not
privatization. We are not turning the Social Security trust fund over
to Merrill Lynch or Smith Barney and saying, here, go ahead and invest
the money and you do this on behalf of the government and its retirees,
and if you want to invest in Enron or Global Crossing or WorldCom or
something not at all.
I think it is just so disingenuous, but we have to spend so much time
undoing some of the negative publicity that has been sent out to our
seniors to literally scare them, just like the same scare tactics that
were used when we were passing the Medicare Modernization and
Prescription Drug Act. Tear up your AARP card because they supported
that; resign from that organization. Even if you are eligible to get
$600 a year benefit on your prescription drugs, $1,200 over 2 years, do
not accept that Medicare-approved drug discount card.
So we are spending an inordinate amount of time trying to overcome
that negative publicity, those scare tactics in regard, yes, now with
Social Security.
It is important and I really commend the gentlewoman from Kentucky
for sponsoring this hour, for leading this hour so that we can make
sure our colleagues understand that clearly it is time to do something
about Social Security, and we cannot afford to put it off to the
future.
Mrs. NORTHUP. Mr. Speaker, I thank the gentleman; and I want to yield
to the gentleman from Indiana (Mr. Chocola) to also discuss the trust
find and why we cannot wait and depend on the trust fund.

{time} 2145

Mr. CHOCOLA. Well, Mr. Speaker, that is a very good question, and
there has been a lot of discussion about what is the trust fund. Does
it have money in it? Does its have IOUs in it? Really, what does it
have? And that question was presented to David Walker, who is
Comptroller of the United States and responsible for the GAO.
In a committee hearing he was asked, how would you characterize the
trust fund? And David Walker is one of the most honest, knowledgeable
people I have ever heard talk about this issue. He is a Clinton
appointee, but he does not talk about it in partisan ways at all. And
paraphrasing his response, he said, well, the trust is less of a trust
and more of an accounting device. It really is only pieces of paper in
a filing cabinet. There is no marketable securities in there.
And I think his point was that we need to act now. Because in less
than 3 years from now, in 2008, the baby boomers will start to retire.
What we are faced with, in large part, is a demographic math problem.
We have so many people retiring that we do not have enough people
paying into the system to be able to provide the benefits for those
collecting those benefits.
So that the trust fund itself, again characterizing the comments of
David Walker, is that there are no assets there. There are only
liabilities. They are IOUs that the government owes itself and that we
must pay. We must find a way to live up to the promises we have made to
current retirees and future retirees. But we are going to have to do it
by thinking about alternative solutions. All the options need to be put
on the table.
The fact is that one of the earliest lessons I learned in business
was that balance sheets and income statements are fiction, cash flow is
reality. The reality is that we have a cash flow problem. We do not
have enough cash to pay the benefits, and we need to act now. As my
colleague from Georgia said, if we fail to act, every year it costs us
$600 billion more and the options on the table become fewer and more
painful.
And so we need to act now. We need to find a bipartisan way and we
need to invite our colleagues, especially on the other side of the
aisle, to be part of the solution, not just part of the problem.
Mrs. NORTHUP. Mr. Speaker, I also would like to address the trust
fund issue. I often use as an example an analogy that most people in
every home can understand. I would say if you came home from work every
week and you put some of your paycheck in a cookie jar for your child's
college education, and then you borrowed it and you took a vacation,
you bought some clothes, you did whatever with it, and you left an IOU
in the cookie jar, at the end of 18 years you would have a cookie jar
full of IOUs with no assets to back those up. In a sense, you would
have nothing more than if you had never had the trust fund to start
with. It is nothing but an accounting tool that shows us how much has
gone in.
Now, this is how it was from the beginning. It is possible if we
could bring back the Congresses of 1945 and 1948 and 1950 and 1960 and
1967, we could ask them if they would like to rethink that, and if they
would have wanted to put it in a trust fund and put it someplace where
it would grow and get interest and so forth. But in the meantime, those
Congresses, believing that it was important to build an educational
system and so forth, they spent the money.
In fact, in 1967, when Social Security was fixed at one point,
increased revenues, it supported the war in Vietnam and at the same
time the Great Society. Unfortunately, those programs that were started
at that time still are the responsibility of the generations that
followed behind. So our children are not only going to have the
responsibility of Social Security, they also are going to bear the
responsibility of continuing these programs that our educational system
is dependent on, that our health system is dependent on, and that our
rural communities have depended on. It is part of the American
foundation.
So that is an enormous responsibility, filling the necessary programs
and at the same time paying Social Security benefits that should have
been part of a trust but that are not. So the trust fund is not
something that is going to be there for our children to depend on or
for those that are about to be retiring. In fact, already Social
Security is reaching across to the education programs, the health
programs, and pulling those dollars back across into Social Security to
pay out the old-age benefits that have been promised, and that of
course we are going to pay.
So already we are feeling the pressure on all of the other programs
that got used to depending on the Social Security surplus dollars. Each
year that is difficult for us, but starting in 2017 not only will every
Social Security dollar be absorbed in benefits that will be paid out,
but also dollars that have come in in general revenues, that had been
used to sustain our defense, to keeping our rivers going and our
airports flying and all the other responsibilities that government has,
they will have to be foregoing those dollars to pay Social Security
benefits. And as more of the baby boomers retire, that gets into a
deficit that is so steep it challenges this country for all the rest of
the years without a fix in Social Security.
Mr. Speaker, I do see that my friend and colleague, the gentleman
from Wisconsin (Mr. Ryan), has come in. I know that he has put forth or
introduced a plan that has all of us very interested in that plan and
how it would work. Maybe I could ask the gentleman to spend a little
while telling us about his program.
Mr. RYAN of Wisconsin. Mr. Speaker, I would be glad to do so, but let
me first thank my colleagues from Georgia, Indiana and Kentucky for
talking

[[Page H2635]]

about this issue tonight. This is one of the most important issues
facing our country, and it faces all generations; our seniors'
generation, our worker generation, our children's generation and our
grandchildren's generation.
We have one problem that my colleagues have done such a good job of
talking about, which is the insolvency problem, that when we go from
3.3 workers paying for one retiree to 2 workers paying for one retiree,
or put another way, when we go from 40 million seniors to 80 million
seniors within one generation, it is bringing the system to insolvency.
But the real problem starts not just in 2017 but in 3 years, in 2008,
when the oldest baby boomers begin retiring. That is when the revenues
coming into Social Security start going down. And in 12 years, we no
longer have enough money coming in to pay off all the benefits.

But there is one more problem that is coming to Social Security that
we also want to fix, in addition to making the program solvent, and
that is we want to make this program generationally fair, and it is not
right now. Take me, for example. My mom is 70 years old and she gets
about a 5 percent rate of return on her payroll taxes that she paid
when she worked. It is a good deal for current seniors. They are
getting a relatively good market rate of return on their payroll taxes,
5 percent for a 70-year-old; even higher for an 80-year-old.
But for current workers today, based upon the payroll taxes they are
now paying, they are getting anywhere from 1 to 1.5 percent. The
average worker today gets a 1.25 percent rate of return on their
payroll taxes. Well, when you take a look at my children, our
children's generation, I have three little toddlers, right now, under
the current system, they are scheduled to get today a negative 1
percent rate of return on their payroll taxes.
Now, why is that important? I would say it is important because 80
percent of the American worker pays more in payroll taxes than they
even pay in income taxes. It is the biggest tax most Americans pay.
When Americans take 12.4 percent of their wages and put it into this
program and it is a program that they are not even getting a fair share
on, we have to ask ourselves can we not do better? Can people get a
better retirement benefit from Social Security if they could only grow
their money, this 12.4 percent coming out of their paychecks, at a
better rate of return, like current seniors are getting?
That is why when we talk about saving Social Security, we want to do
more than what Congress has traditionally done in the past. What have
they traditionally done in the past? Raised taxes or reduced benefits.
Specifically, Congress has raised payroll taxes 22 times since this
program began. The payroll tax rate was 2 percent in 1937. Today, it is
12.4 percent. So we could save this program with solvency by just
raising taxes again or reducing benefits. But if that is what we do,
then that 1.25 percent that current workers are getting, and that
negative 1 percent that our children will be getting, will just get
much worse.
When you take a look at the pension plans around America, if you take
a look at the Thrift Savings Plan that we here in Congress and other
Federal employees have, which got us an average of 7.67 percent over
the last 10 years; or if you take a look at most of the union pension
plans, the Taft-Hartley plans, that got between 7 and 10 percent over
the last 10 years; or if you look at the AARP's mutual funds, they have
35 bond and stock mutual funds that got on average about 7 percent over
the last 10 years; and you look at the pension system, you say we can
do better for workers today.
Why are today's workers only going to get a little over a 1 percent
rate of return on their payroll tax dollars when every other pension
fund, every other savings system out there does about 5 or 6 or 6 times
that? So that is what we are taking a look at.
What I do in my bill is give people a choice. For those people under
the age of 55, if they want to, they can dedicate a portion of their
payroll taxes to their personal savings accounts. And we are not
talking about privatizing Social Security. We are not even talking
about partially privatizing Social Security. Because to privatize the
program would be to let someone take a chunk of their payroll taxes and
go outside the system, take it to their stock broker and do whatever
they want with it. That is not what is being debated here. That is not
what is on the table. That is not what is being discussed.
What we are talking about, whether you look at the Ryan-Sununu bill
or any other bill in Congress, or the President's framework, what we
are talking about is personal accounts that are inside of Social
Security; that are run, overseen, managed, and regulated by Social
Security, not Wall Street firms outside of the system. The vision that
we have is to give people a choice of having a personal retirement
account inside of Social Security, run by Social Security, just like
the Thrift Savings Plan that we here in Congress have where we can get
a better rate of return on our dollars. That is what we are planning on
doing.
Now, the great thing that you can accomplish with personal retirement
accounts is it can help bring solvency to the system and it can reduce
the need to raise taxes or reduce future benefits. So what I would say
is, the most humane way to save Social Security for future generations,
to make it fair for our kids so they can get a similar retirement
benefit like our seniors are getting today, and to bring the system
into solvency and preserve the Social Security safety net, which we are
all interested in continuing, personal retirement accounts are the most
humane way to save the system. Because without them, then you have to
resort to steep tax increases or benefit reductions.
If we want to fix this problem right now, tomorrow, and just do it on
taxes, what the Social Security trustees, what the actuaries tell us,
is the payroll tax rate would have to go up 50 percent tomorrow, to
18.6 percent. So when you are looking at the fact that 80 percent of us
in this country, the biggest tax we pay is payroll taxes, and you want
to raise that 50 percent to solve this problem, we say no to that.
When you take a look at the benefits, if you want to do this just on
benefits, we would have to reduce future benefits by 40 percent just to
solve this problem for the three generations we have. But with personal
retirement accounts, you can prevent those kinds of painful options and
give people a chance of making their money work harder for them so they
can actually accumulate real wealth and get a better benefit when they
retire.
The added benefit of a personal retirement account also is that it is
your property. It is part of the individual's property. The government
cannot take it away from you. It is the ultimate lockbox. Because
unlike today, where the government spends all the Social Security
surpluses, raids the trust fund, the government cannot take your
personal account away from you.
When I talk to constituents, one thing that surprises them so much is
that they think that they have a personal retirement account already.
When they get their statement in the mail from Social Security, it says
here is what you are entitled to, here is what you paid into it. People
think there is an account with their name on it with money in it
waiting for them. That is not the case. Court case after court case,
from Fleming v. Nester in 1960, the Supreme Court has continuously told
us no American has a legal or a contractual right to their Social
Security benefit. The only guarantee any American has to their Social
Security benefit is whatever the 535 politicians in Congress in any
given year decide it is going to be.
But with a personal retirement account, that is your money. That is
your property. It is surrounded by private property rights that the
government cannot take from you. If you die, it goes to your family. It
does not go back to the government.
I take a look at my personal situation from my own life, because our
lives shape our values, which shape what we do here. My father died
when I was 16 years old. He was 55. I was a recipient of the safety
net. The survivor benefits that I got from Social Security helped me
pay for college and finance my education. My mom at the time had a
choice to make. She could either keep the payroll taxes that she paid
when she worked, and my mom was a stay-at-home mom for a number of
years, but also worked at a hospital. So she paid a lot of payroll
taxes. But

[[Page H2636]]

she had a choice when my dad died: Keep what she paid in her payroll
taxes or not, and/or keep what my dad had paid in his payroll taxes.
Not both.
She got a $250 death benefit and then she had to give away all that
money she paid in payroll taxes throughout her working career. She had
to give that all back into the system and get the benefit based on my
dad's payroll taxes. Under the personal retirement account system,
especially for women who outlive their husbands, especially for any
spouse who outlives the other spouse, not only would my mom be able to
keep the payroll taxes she had always paid over those years for
herself, she would also get my dad's personal retirement account on top
of it.
So there are a lot of problems in the current system that I think a
personal retirement account fixes, not least of which is
inheritability. You actually own the fruits of your own labor and you
own the account that you have in your name. The great thing that occurs
in society by fixing Social Security this way, instead of going to the
old-fashioned way of cutting benefits or raising taxes, is you broadly
decentralize the concentration of wealth in America through personal
retirement accounts.

{time} 2200

Mr. Speaker, what do I mean when I say that. Under the Ryan-Sununu
bill with accounts that we are proposing, where we have accounts and we
keep the safety net of Social Security intact, we do not reduce
benefits or raise taxes. According to the Social Security actuary,
workers will have $7 trillion in their personal retirement accounts
within 15 years. That is $7 trillion that every willing worker in
America will have in their name as part of their property that they
otherwise would not have. That is $7 trillion that would have otherwise
gone to Washington will instead go into workers' savings.
Half of America today is the investor class. Half of the households
own stocks and bonds. What that also means is the other half of America
does not. The other half of America are not members of the investor
class.
With personal retirement accounts which come from the existing
retirement accounts that workers already pay, the biggest tax that they
pay, every willing worker will be an owner in our society. They will
own a piece of America's free enterprise system. They will have a stake
in our society, they will be an owner of real assets and real wealth.
That is a good thing.
I would like to think from the left or right, Republican or Democrat
in Congress, we can agree on a couple of notions, that to decentralize
the concentration of wealth in America and to narrow the gap between
rich and poor would be a good thing to do. That is exactly what would
happen when we have personal retirement accounts as part of the plan to
save Social Security. That is essentially what our bill does.
If Members have any other questions on the specific mechanics, I will
be happy to go into them. I thank the gentlewoman from Kentucky (Mrs.
Northup) for talking about this issue. If we delay like the gentleman
from Indiana (Mr. Chocola) said, every year we delay, according to the
trustees, not the Republicans or the Democrats, but the trustees, it is
another $600 billion of debt that we go into the hole. We owe it to our
kids and grandkids not only to make this program solvent, but to give
them a choice to have a system so they get an actual decent retirement
benefit when they retire.
Mrs. NORTHUP. Mr. Speaker, I will give all of my colleagues a chance
to respond to the presentation of the gentleman from Wisconsin (Mr.
Ryan), and I thank the gentleman for his hard work. It is very
difficult with all of the numbers and all of the actuarial work, and we
are all very excited about this plan.
When the gentleman talks about the $7 trillion that would accumulate
in workers' accounts, it reminds me of how important in an economy it
is to have a thriving middle class. Economies with a few rich and many
poor do not thrive because there is not a majority of people with
purchasing power. In my district we make refrigerators and dishwashers
and Ford has a Ford Explorer plant. We need a huge middle class that
can create demand and gain the benefits of that production.
Years ago when there was only a fraction of Americans that owned
stocks, all they got was what they made when they went to work. They
got paid by the hour, week, or the month. As the economy grew, only
that 20 percent that owned stocks shared in the wealth that came from
the growth of the economy.
When you start to have every worker start to own stocks and bonds,
they get to share in the economic growth of this country so you
increase the purchasing power of the middle class. So you not only
allow every single worker to increase the fruits of their labor; you
also create an economy that is vibrant and exciting.
Also as we have more seniors that retire, it is important that they
maintain their purchasing power. If our seniors wind up with the lowest
amount of dollars that they can spend, they will not be able to
participate in growing our economy. So the benefits of every single
person growing a nest egg, a nest egg that they can count on and pass
on to their children, that they can watch and understand what it means
to the relationship between their job and their future when they retire
is hugely important. We thank the gentleman.
Mr. Speaker, I yield to the gentleman from Georgia (Mr. Gingrey).
Mr. GINGREY. Mr. Speaker, I thank the gentleman from Wisconsin (Mr.
Ryan). I think the Ryan-Sununu plan is one that excites me. There are
several others out there, but one thing that the gentleman from
Wisconsin (Mr. Ryan) said that we need to emphasize, he is explaining
that if we totally, completely say that an individual personal account,
not privatization but as he has explained it, an opportunity to invest
a portion, just a portion of that payroll tax in something like a
thrift savings plan, if we completely rule that out as our friends on
the other side of the aisle have done in both Chambers, drawn a deep
line in the sand and said no, not only no, but heck no.
But when we say show us your plan, what do they do, they hold up a
blank sheet of paper because they do not want to admit what the
gentleman from Wisconsin (Mr. Ryan) just pointed out, alternatives are
to raise the payroll tax or to decrease benefits or raise the age at
which a person can receive full benefits. Let us say because people are
living longer and are healthier, let us say full retirement is 75 and
early retirement is age 70, so it is important that people understand.
We are not ruling out anything on our side of the aisle. We do not
have a plan set in stone, but clearly this option of an individual
personal account enjoys, like no other fix, the miracle of compound
interest. Einstein, when asked what the greatest power on Earth was,
everyone expected him to say atomic energy, but he said the miracle of
compound interest. I think the gentleman is on the right track.
Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman. Also,
there are some fiscal issues that we need to talk about. There are some
real misnomers out in the press. The trustees of Social Security have
told us that the long-term debt, the unfunded debt we would owe to
Social Security, that we would have to put aside today to keep it going
into the future, is $11.1 trillion. Add to that the $1.7 trillion in
unfunded IOUs we have in the Social Security trust fund, and it is not
an asset, it is a debt, that is over $12 trillion we are short of money
we would need to keep Social Security going at the current level where
my kids get a negative 1 percent rate of return.
If we come up with a plan to save the system that has a personal
retirement account as a part of it, and any borrowing or cost
associated with transitioning from the current system over to a saved
system, that cost is not new debt. Many people say that the Bush plan
costs $2 trillion.
Well, that is not true; but, nevertheless, because there are not
enough specifics to even analyze that plan, it is a framework, but let
us take that at face value. The Bush plan costs $2 trillion to have
personal retirement accounts that are voluntary. To bring the system
into permanent solvency, $2 trillion wipes out that $12 trillion in
debt. So if we are talking about debt that is incurred to save the
system, that is not new debt; that is taking debt that is hanging out
there on top of the American people, recognizing it and paying it off
today, just like you refinance your mortgage but paying it off at a

[[Page H2637]]

smaller digestible level, and leaving the country debt-free with a
better Social Security system that is guaranteed and gives people
better benefits when they retire. It is a really important point that I
think is missed a lot in the debate up here.

Mrs. NORTHUP. Mr. Speaker, that is true and certainly in an
accounting system, no one would approve an accounting system where the
assets that are coming in are going to have to meet future liabilities
without also accounting for those future liabilities. If you can reduce
a 10 or 11 or $12 trillion liability to a $2 trillion transition, that
you incur as a transition, what you have done is overall reduced
liability to our children and grandchildren. That is an excellent
point.
Mr. Speaker, I yield to the gentleman from Indiana (Mr. Chocola).
Mr. CHOCOLA. Mr. Speaker, I thank the gentleman from Wisconsin (Mr.
Ryan) for his leadership on this issue. He has provided a lot of great
ideas and leadership throughout this body.
Just to reinforce a couple of things, as the gentleman from Georgia
said, Albert Einstein said the greatest force in the universe is
compound interest. And I would argue the second greatest force in the
universe is ownership. I saw that firsthand in my private life. Before
I was a Member of Congress, I ran a publicly traded company. We had a
401(k) and a profit-sharing plan. People who lived paycheck to
paycheck, that one might not consider to be financially sophisticated,
they would come into my office and say, How much management fee would I
pay on that? What was the last 5-year return? How should I think about
my risk tolerance?
Mr. Speaker, when people are given ownership of their own money, they
become real smart. It was commonplace for people to retire after a 30-
or 40-year career, to retire as hourly workers with $300,000 or
$400,000 in a retirement nest egg. So they were proof that one of the
most powerful forces in the universe is compound interest.
Those that criticize the gentleman's plan who say we would put at
risk guaranteed benefits, I think it is an important point that the
current system has zero guaranteed benefits. None of the benefits are
our property or have our names on them, and having millions of small
lockboxes with our names on them is the only way we can guarantee
benefits for future retirees.
Finally, the transition financing issue. Part of the gentleman's plan
is to pay transition financing through savings in government, slower
growth in government, which is a great idea. But even if we had to
borrow the money, every public company uses what is called accrual
accounting, that you have to identify and state on our financial
statements liabilities as they are incurred. We use a cash basis in
government, and we identify or recognize those liabilities when we
write the check.
If we are going to have truth in accounting, we have to stand up and
say this is an unfunded liability that is already an obligation. So
paying off our mortgage early as the gentleman pointed out is the
responsible thing to do and in fact results in a lower financial
obligation long term. That is how we get solvency and act responsibly,
and I thank you for your leadership.
Mrs. NORTHUP. Mr. Speaker, I see that the gentleman from Georgia (Mr.
Kingston) has joined us, and I yield to the gentleman from Georgia (Mr.
Kingston).
Mr. KINGSTON. Mr. Speaker, I want to make a couple of points. Number
one on the compounded interest, at one of my 16 Social Security town
meetings, a woman from Douglas, Georgia, came up to me and said, as I
got a little older, in 1989 I started saving $200 a month. Compounded
daily, that money is now worth $320,000. That is the miracle that
Einstein was talking about.
I also wanted to bring out one point here. We focus so much on
solvency, but there is also a generational fairness issue, and that is
best shown if we think about somebody retiring in 1980, they got all of
their money out of Social Security in 2.8 years. If you retire in 2003,
it will take you 17 years to get your money back. If you retire in
2020, it is worse than that, it is more like 21 years. One of the
things that we have is a solvency challenge, and we also have a
generational fairness challenge.
Finally, I want to make the point that we are Republicans. We are the
majority. It is going to be a little more difficult because we have to
govern and come up with ideas. And it is easier if you are in the
minority party to just sit back and criticize and live out there and
tell people there is no problem with Social Security. The reality is we
need and we want Democratic ideas. I think Social Security should be
bipartisan and it should transcend the next election, and you should
get the best ideas of the Democrats and of the Republicans, and move
forward with the best.
I was disappointed to learn that the meeting which some of us are
going to be participating in tomorrow, the bipartisan meeting, now the
gentlewoman from California (Ms. Pelosi) has said to her Members that
they cannot go to it.

{time} 2215

And I think of the bipartisan meeting that we are going to have with
the AARP, an equal number of Democrats, equal number of Republicans,
that we now only have two Democrats who are going to go even though
others said, yes, we will go, this time works for us.
So I am hoping that the gentlewoman from California (Ms. Pelosi) and
the Democrats will back off their extreme obstructionist position and
allow Members to sit down and negotiate with the other party and try to
come up with ideas, because that kind of partisanship, that kind of
silliness, that kind of bitterness is not going to help our seniors and
our future generations.
So I am looking forward to this meeting. I know the gentlewoman from
Kentucky (Mrs. Northup) is going. I do not know if all of my colleagues
here are going or not, but we would like to have everybody in
attendance there.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, let me just reiterate
what the gentleman said. How important it is and how thrilled we would
be to have more of the Democrats there. First of all, I want to thank
the Democrats who are still committed to come to it. I am eager to meet
with them. I remember when I was in the Kentucky legislature in 1990,
that we had education reform and I was in the minority and I was one of
the Republicans that reached across the aisle and joined the majority
party in passing educational reform. It just had a profound impact on
education. It was one of the first systems that had an accountability
system where we tested and held schools accountable.
It is thrilling when something happens, where people put party aside
and step forward and pass something that will make generations of
differences. And I am so excited that AARP is going to be part of a
meeting, a bipartisan meeting. I am thrilled that two of our Democrat
colleagues are eager to come. I know my colleagues here share my
eagerness to hear what they have to say and start to look for common
ground. I hope they will prevail upon some of their other members that
this is bigger than a party thing. It is really something that is
important for the future of our country, and I believe that it could
still be quite a successful meeting.
Mr. CHOCOLA. Mr. Speaker, if the gentlewoman would yield, I just go
back to the eighth graders I visited last week in Culver, Indiana. And
I do not know if they remember that I was there a week later. But I
guarantee in 20 years they will remember that I was there and they will
look back and say, ``That darn Chris Chocola, he was part of a Congress
that could not get above the political rhetoric, could not put partisan
politics aside and solve this problem for me and my family''; or they
will think back and say, ``Finally somebody did the responsible thing
and I do not have to pay for the inaction of a Congress that was
elected to make sure I did not have to pay the bill when I grew up and
I was trying to grow my family and grow my career.''
So I think that we should always keep in mind when we have these
discussions those eighth graders and what they are going to think about
us in 20 years, because, after all, that is what this is about. It is
about the future of our country. It is about giving future generations
the opportunity to enjoy some of the same benefits and opportunities
that we have all had, that our parents have had, and if we do not act
responsibly, I am afraid that those

[[Page H2638]]

eighth graders will certainly recognize that and hold us responsible,
as they should.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I know our time is
about up. So let me start by yielding to the gentleman from Wisconsin
(Mr. Ryan) to see if he has any final thoughts or anything he wants to
say in conclusion.
Mr. RYAN of Wisconsin. Mr. Speaker, only that I think it is very
important that we come together, bring our ideas to the table, and fix
this problem. We cannot keep kicking the can down the road. We owe too
much to our kids, and just the numbers are so overwhelming. When we in
one generation are going to double the number of retirees we have in
this country, followed by fewer workers paying into the system, it is a
system that cannot sustain itself. That is why we have got to fix this.
Social Security, I would argue, is the most successful and important
program ever devised and created by the Federal Government. It has done
wonders keeping people out of poverty. It is too important to let it
fail and fall because of partisan politics. We have got to fix it for
our kids and grandkids.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, let me close by
thanking my colleagues who are here tonight. The gentleman from
Elkhart, Indiana (Mr. Chocola) has been a friend who has been on the
floor. We have had opportunities to discuss this previously, and I know
we will be back for future opportunities. And the gentleman from
Georgia (Mr. Gingrey) has been a great leader on this issue. He is so
thoughtful and so articulate on it, and I know that Americans around
the country that heard him tonight were inspired. And, finally, the
gentleman from Georgia (Mr. Kingston) is a leader in our caucus, and we
depend on his advice and his leadership, and he has made a huge
difference.
And we look forward to joining our fellow Americans around the
country to continue these conversations in the future.

____________________