[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.

                          ____________________