[Congressional Record Volume 151, Number 56 (Tuesday, May 3, 2005)]
[House]
[Pages H2745-H2746]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  SOCIAL SECURITY WILL NOT GO BANKRUPT

  Mr. DeFAZIO. Mr. Speaker, well, last week the President finally 
revealed a few more specifics about the direction he wants to take to 
deal with the potential, possible, future funding shortfalls in Social 
Security. He used some unfortunate verbiage. He said Social Security 
will be bankrupt in 2041. It will not be bankrupt; it will pay 75 
percent of promised benefits under very conservative economic 
assumptions into the indefinite future, or 2053 if we use the estimates 
of the Republican Congressional Budget Office. So it would not be 
bankrupt in any sense.
  But he did talk about the possibility there could be a shortfall in 
Social Security starting 40 or 50 years from today. That is progress 
that he is beginning to talk about that problem. He actually offered a 
solution, for once. His privatization plan he has admitted would in 
fact make Social Security's finances worse, has nothing to do with 
dealing with the future possible potential shortfalls in the Social 
Security trust fund, the program as we know it today. He said, finally, 
let us talk about how we might get there.
  He cloaked benefit cuts in a veneer in high-falutin rhetoric. He 
called it progressive indexing of wages. What he is talking about is 
benefit cuts. Who would pay the benefit cuts? Let us take someone who 
is 22 years old, graduated from college last year. They are a public 
schoolteacher. They are going to work the next 40 years as a public 
schoolteacher and hope to retire in their 60s with a Social Security 
benefit. If they earn $36,000 average over their lifetime, their 
benefits would be cut by 16 percent, $3,000 a year. Their proposed 
benefit would go from $19,800 down to $16,500. These are calculations 
of the Social Security actuaries of the President's proposed cuts.
  Now let us say that young person graduating from college is going to 
become an entrepreneur, small business person and do pretty well with a 
truly small business, and they average $58,000 a year throughout their 
lifetime. What would the President do to them? He would cut their 
Social Security benefit from $26,000 to $19,800 which would be a 25-
percent cut which they could get if Social Security went, under the 
President's words, bankrupt. That is if Congress did nothing and Social 
Security had a shortfall starting 40 or 50 years from today. Under the 
worst-case scenario, that person would get the same. But the President 
wants to guarantee a cut in that person's benefits. Remember, this does 
not have anything to do with the President's privatization plan which 
would further undermine the finances of Social Security and accelerate 
the date of what the President calls bankruptcy, others call trust fund 
exhaustion, I call benefit reductions.
  The funny thing is that half of the American people pay more in taxes 
to Social Security than Federal income taxes. They have a lot invested 
in this program, and they would like to see the benefits when they 
retire.
  Now, it is a little different for rich people. Let us take the 
President on his modest $400,000 which is a lot less than he earns from 
his private investments. Let us just take his salary and pretend that 
is all he has. He stopped paying Social Security taxes on the morning 
of March 24. That American

[[Page H2746]]

that earns $36,000 or $58,000 or even $90,000 pays Social Security tax 
every day of the year, this year, with the expectation they will get a 
benefit; but not so for people who earn more, $90,000, including 
Members of Congress. When income hits $90,000, the tax goes away. The 
President stopped paying on March 24, and he wants to cut the benefits 
of people who pay that tax every day this year, many of them a bigger 
tax than they pay to the Federal Government under income taxes, 
particularly low-income people.
  Let us take some other friends of the President. The heads of Viacom, 
Tom Freston and Les Moonves, they stopped paying the Social Security 
tax at 4 a.m. on January 2 because they earn $77,000 a day. So at 4 
a.m. on January 2, their obligations to Social Security went away. 
Despite their huge $20 million salary, they will pay one one-thousandth 
of 1 percent of their salary to Social Security, but working Americans 
are going to pay 6.2 percent of every paycheck and self-employed will 
pay 12.4 percent of every paycheck, and the President wants to cut 
their benefits. But he does not want to cut the tax cuts for Mr. 
Moonves or Mr. Freston, and he does not want to cut the tax cuts for 
himself.
  There is a better way to solve the Social Security problem, and I 
will talk about that another day.

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