[Congressional Record Volume 151, Number 61 (Wednesday, May 11, 2005)]
[House]
[Pages H3170-H3177]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         SOCIAL SECURITY REFORM

  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.


                             General Leave

  Mrs. NORTHUP. Mr. Speaker, I ask unanimous consent that all Members

[[Page H3171]]

may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on the subject of 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, tonight we are eager to talk about Social 
Security and to talk about what it means to this country, to our 
seniors, to those that are about to be seniors and to our younger 
generations, our children, our grandchildren who will support the 
system throughout their work years and to talk about new opportunities 
that exist in Social Security to make sure that Social Security is 
sustainable and solvent for their lives, just like it is for those who 
are seniors today.
  I think we should start the discussion by inviting seniors today who 
currently receive benefits to stay tuned. There are many people that 
talk about Social Security, that remind seniors that whatever changes 
occur they are changes for those who are in the current workforce and 
that it will not change for today's seniors. Sometimes that sounds a 
little bit like saying to today's seniors that they are not needed 
when, in fact, they are badly needed in this discussion.
  It has always been our seniors that have appreciated Social Security 
specifically, but also had a broad interest to reflect on what it means 
to them and how important it is for their children and grandchildren. 
Over the years, they have been the caretakers of a system to make sure 
that Social Security lasted beyond their generation and into the 
future, both for their children and grandchildren, but also for the 
good of this country.
  We need our seniors today just like we have always needed our 
seniors. We need them to pay attention to this debate, to participate 
in it, to bring us their good ideas, and to remind us that it is just 
as important to them that their children and grandchildren have a 
secure and solvent system of Social Security available to them.
  So I thank our seniors for their concern. I thank them for the fact 
that they raise the issue at public meetings, in letters to the editor, 
in the mall. All of the places that we visit, they remind us that 
Social Security is important and that they are listening and that they 
care about the issue.
  I invite them to listen to the ideas about the changes, changes in 
this country, changes in the demographics, changes in the challenges, 
and to bring to us their ideas of how we can better improve Social 
Security, make it stronger and more secure for their children and 
grandchildren.
  It would be hard to start such a discussion without starting with the 
difference in the demographics in this country and why they present to 
us new and different challenges than when Social Security began back in 
1935 or when it was last changed back in the early 1980s.
  So let us start there. When Social Security began, there were 40 
workers supporting every retiree. Forty workers are a lot of workers, 
and for a little bit, all of those workers could pool and support the 
retirees that were currently in the system.
  Not so long ago when we last changed Social Security, there were 12 
workers in the system that supported every retiree; and so, again, it 
was a program where current workers could fairly easily support the 
retiring community.
  Today, there are only three workers in the system for every retiree, 
and that means that every worker has to give considerably more to the 
system in order to make sure that we meet the needs of our retirees; 
and for our children when they start to retire, there will only be two 
workers in the system for every retiree.

                              {time}  1900

  And so we are looking to improve the system, to strengthen the 
system, to make sure it is for our children, as they bear that 
responsibility, also an opportunity to strengthen the system itself and 
that it will be a system that they can then pass on to the generations 
behind them as a strong, solvent and sustainable program.
  Mr. Speaker, my friend here, the gentleman from Minnesota (Mr. 
Kline), is eager to talk about this issue and to share with me his 
perspective. I know he hears from his seniors. I know he hears from the 
young people in his district, and he understands the challenge that we 
face as the demographics change, and so I yield now to him.
  Mr. KLINE. Mr. Speaker, I thank the gentlewoman from Kentucky (Mrs. 
Northup) for yielding to me and I also thank her for her leadership on 
this issue.
  I was just listening to her talk about the change in demographics, 
and I immediately sort of flashed back to a whole series of town hall 
meetings that I held in my district. I know many of my colleagues have 
done those, and one of the charts that I have put up in all of these 
town hall meetings is a graphic that shows very clearly the very issue 
that my friend from Kentucky was talking about. It is a chart that 
shows that, as late as 1950, there were 16 people working and paying 
social security taxes for each retiree. Sixteen for one, as late as 
1950.
  But, today, Mr. Speaker, as she so clearly pointed out, there are 
only three people working. And when my children, much less my four 
wonderful grandchildren, retire, there will be only two. That chart, 
when you put that on an easel and the folks attending the town hall 
meeting have a chance to look at that and absorb the impact, by the 
time I get to the point in the meeting where I ask all those attending 
how many of them think we need to do something, that we need to do 
something to strengthen Social Security, to fix Social Security, every 
hand goes up. I think it is inescapable.
  It is interesting that, in my town hall meetings, most of them were 
designed to invite senior citizens to come into the meeting, and so the 
vast majority of the folks attending the meeting and engaging in the 
discussion were in fact seniors. Some of them had come at the urging of 
organizations like the AARP. But across the board, they look at the 
inescapable fact that we have fewer and fewer and fewer people working 
for each retiree, and also they realize the inescapable fact that we 
are just living longer.
  If you look back to when Social Security started, under the urging of 
President Roosevelt, the average life expectancy was around 61. I know 
it changes if you are a man or if you are a woman and so forth, but the 
general life expectancy was about 61. By the way, retirement age was 
65. A very interesting concept they had back then. But, today, the life 
expectancy is on the order of 77 years. And as we look at the 
retirement situation for my children and grandchildren, life expectancy 
is around 83 or 84 years. Clearly, we are living longer, we are having 
smaller families, and we are going to end up in the situation where the 
demographic changes in this country are going to put us in a position 
where there simply are not enough people working in order to provide 
the benefits for our retirees.
  Now, in one moment, I will be happy to yield back to the gentlewoman, 
but it has been interesting to me as we have gone forward in the 
discussion in this debate how often some of us are accused of wanting 
to destroy Social Security or wreck Social Security or end Social 
Security or put something risky into the program that my mother, for 
example, my 84-year-old mother depends on, and that is Social Security. 
Now, I do not, I know the gentlewoman does not, and our colleagues do 
not want in any way to destroy Social Security and the very important 
benefits that so many of our seniors depend upon. So as we have gone 
forward in this discussion and certainly as we have looked at the many, 
many proposals, we track them in our office. And we are up to 13 
identified proposals to do something about strengthening and saving 
Social Security. We look to make sure it is not going to do any harm 
and then underscore, as the gentlewoman said earlier, that all of us, I 
guess it is a sign of the times, all of us who were born before 1950 
are not going to be affected.
  The plans have been made. Folks are depending on the checks coming 
like this. And, frankly, we do not want to have anybody alarmed that 
there will be changes in the Social Security checks that they have come 
to expect. But in the long term, we are looking to strengthen the 
program, and we are just coming to grips with the demographics that she 
described that show we simply are not going to have enough people 
working and paying

[[Page H3172]]

taxes to provide for retirees if we do not do something to strengthen 
the system.
  With that, I yield back to the gentlewoman.
  Mrs. NORTHUP. I thank the gentleman for his comments, Mr. Speaker. 
And, you know, the gentleman from Minnesota brought up the changes in 
demographics and not only the fact that there are fewer workers for 
every retiree but also the fact that we are living longer, and I think 
we all have to really celebrate that.
  It used to be that the average age of death was when you were 61; you 
could not retire until you were 65. So forward looking, you did not 
have the hope of so many years of retirement and opportunity to live 
and travel and live a life full of opportunities to see your 
grandchildren grow and graduate from high school. So the changes in 
demographics are really something to celebrate, to appreciate and to 
recognize that it is to the benefit of all of us. But we have to make 
sure that the Social Security System supports those changes.
  I see that my friend, the gentleman from Texas (Mr. Conaway) is here 
to join us in the discussion, and I want to welcome him and thank him 
for joining us. I will bet he is hearing many of the same discussions 
in Texas these days, and I yield to him now, Mr. Speaker, to comment 
about that.
  Mr. CONAWAY. Mr. Speaker, I appreciate the gentlewoman's yielding to 
me and allowing me to visit with our colleagues tonight on a very 
important topic of Social Security reform, and I am indeed hearing a 
good bit about this.
  Mr. Speaker, I am a CPA, an accountant, and I address problem solving 
by first deciding whether or not there is a problem. My colleagues 
tonight have presented a very good case for the fact that we do have a 
problem. Now, you can call it a crisis. You can call it a problem, or 
you can call it challenges. I think we should not get hung up on the 
descriptor; let us just simply look at the math.
  A lot of what we do in Congress is based on things that are not quite 
as verifiable as the math associated with this issue. And you do not 
have to be a rocket scientist to understand the math, to have gone 
through the number of employees working versus the number of recipients 
and how that ratio is closing to get to two to one and the fact that in 
the law today is built in a 27 percent cut in those benefits in the 
year 2041, 2042. It is at that point that the trust system, the trust 
fund will have exhausted, and there is a cut in benefits at that point 
in time. I have a son that will be retiring at about that point in 
time, and I am not interested in him having a 27 percent cut in his 
benefits.
  The other thing that I think each of us has to tell all of the 
seniors, and I have a mom and dad out there who are dependent upon 
Social Security, that your benefits are fixed. They will continue to 
grow under the existing laws. And my colleagues who are in the 55-and-
up bracket, the same rules apply to you. Your initial benefit, that 
primary insurance amount that is talked about, is in the law now, and 
when you turn 62 or 65, then that number will be set, as you are 
expecting it to be set today, and it will continue to grow over your 
lifetime so that your benefits are assured.
  Every single plan that is being discussed does absolutely nothing, 
repeat nothing, to affect those promised benefits. So once you have 
assured the folks that have retired and are near-term retirees, those 
people who have the least amount of time to react to whatever changes 
are made, that they are not going to be affected, then they should be 
on the side of those of us who want to change it, who want to put 
security in the Social Security for our children and grandchildren.
  My colleague from Minnesota mentioned his four grandchildren. You 
know, the first liar never stands a chance. I have six grandchildren 
that I am very proud of. And I believe that the lifetime benefit, the 
lifetime annuity that is Social Security, that this country has put in 
place for 75 years, that has stood us in good stead for 75 years, is 
important for my parents. It is going to be important for me, but more 
important to me as a grandfather, it ought to be in place for my 
grandchildren and my children. And we have the opportunity now to 
address that and to put the security back in Social Security for our 
grandkids.
  Another fact that is reasonably undeniable is that, each year we 
delay in whatever the fix is, whatever the compromises we make, 
whatever the solutions are, each year we delay that, we do a couple of 
things: One, we add $600 billion to the unfunded liabilities that are 
accumulating on the balance sheet of this country. The other thing that 
we do is we begin to narrow the options that we have to fix Social 
Security. Not only do we narrow those options, but we make whatever the 
fix is more extreme in those options that are available to us.
  So in my mind, we do not have to argue it is a crisis or whatever. In 
my mind, we ought to be about fixing Social Security today, so that 
when we begin to face what I think is a much heavier problem and 
heavier lift, which is Medicare and Medicaid, we will have Social 
Security behind us and set for the foreseeable future, infinite 
horizon, whatever you want to talk about, that we have in fact put this 
behind us and are now working on those two very daunting challenges.
  Some of the opposition that I hear, and most of that opposition until 
recently has been what I refer to as our outside voices; we have not 
had too many conversations using inside voices. Remember the 
kindergarten days, when you would come in off the playground, and the 
teacher would say, Let's begin to use our inside voices. We listen to 
each other better when we are using voices than when we are screaming 
at each other at the top of our lungs.
  Recently, I participated in a meeting with some representatives from 
AARP and a couple of my Democratic colleagues and some of my Republican 
colleagues, including the gentlewoman from Kentucky (Mrs. Northup). We 
sat in a room for about an hour and a half using inside voices, looking 
each other in the eye, trying to understand what the other person's 
position was, trying to understand how they see the problem, how they 
see the solutions and at the same time trying to convey to our 
colleagues as well as to the leadership of AARP, our positions and why 
we think our solutions are the ones that ought to be a part of the 
ongoing situation.
  As I understand it, that may have been one of the first opportunities 
for Members of both sides of the aisle to sit and look at each other in 
a quiet environment and to talk. I think the last 30 minutes of that 
meeting is probably one of the most productive we have had anywhere, 
because everybody had kind of gone through the initial party-line 
rhetoric and got that out of our system, and then we began to talk 
seriously about how we see Social Security and this need for change.
  Let me give one illustration. I mentioned I have six grandchildren. I 
cannot find one grandparent who would gather their, my number is six, 
did I mention I have six, three boys and three girls, gather their 
grandchildren up and take them down to their local banker and say, Mr. 
Local Banker, I want to borrow a lot of money that I want to spend on 
myself, and I want you to draw up the loan papers so that my six 
grandkids will pay that loan off. I am talking the money, but they have 
to pay it off. I do not find many grandparents on an individual basis 
that would do that to their own grandchildren. But, somehow, we 
collectively, as a society, think that is okay, because that is what we 
are doing, that exact same thing. We are writing checks that we cannot 
cash, that we are going to require our children and grandchildren to 
pay off.
  And Social Security is in that mix. And so we should be very serious 
about this process of reforming it. I am excited that, tomorrow, as I 
understand it, we will begin to have hearings in the Committee on Ways 
and Means to begin to look at specific things. Until this point in 
time, the effort has been to try to convince each other that we do in 
fact have a problem that needs addressing and needs addressing now.
  We are coming to the end of that stage, and now is the stage we begin 
to look at the individual solutions, adopt the ones that ought to stick 
with us and cull the ones that should not. So we are in the process of 
gathering all those good ideas up to see which ones fit. My guess is, 
it will be a multifaceted fix. There is no one single

[[Page H3173]]

change or new policy that will fix Social Security. It is going to 
require a lot of pushing and shoving in a lot of different areas.
  Two things, and then I will close and yield back. In my mind, 
personal savings accounts ought to be an integral part of whatever 
solutions we come up with. They are not a panacea. They do not in and 
of themselves fix this issue, but what they do address is a way to 
improve Social Security, to add an element of ownership to Social 
Security that we do not currently have.
  If I work 40 years and die, there is a little bit of survivor 
benefits that go to my wife, but the bulk of what I have accumulated in 
terms of Social Security benefits forfeits back into the system. We can 
do a better system than that, and these personal savings accounts will 
add ownership-like issues to Social Security, which in my mind is an 
improvement to the overall system.
  So I think that is important. And I have lost my second thought, so 
with that, I will yield back to my dear friend from Kentucky.

                              {time}  1915

  Mrs. NORTHUP. I am so impressed that the gentleman from Texas would 
tell us he has six grandchildren. My husband and I, after 36 years of 
marriage and six children, have one grandchild. I hope that I will 
catch you someday. They are the most blessed part of our lives and it 
is one of the things that makes us think long term as we consider 
public policy, what about our children, what about our grandchildren 
and hoping that their days are going to be as hopeful and filled with 
opportunity as our generations have been.
  The gentleman from Georgia (Mr. Gingrey) has joined us. Welcome. Tell 
us what you are hearing in Georgia about Social Security.
  Mr. GINGREY. I want to thank the gentlewoman from Kentucky (Mrs. 
Northup) and, of course, the gentleman from Texas (Mr. Conaway) and the 
gentleman from Minnesota (Mr. Kline). The gentleman from North Carolina 
(Mr. McHenry) is here, too. It is great to be here tonight to join with 
the team in talking about this. I did a quick count as we were talking 
about children and grandchildren. I think among the three of us, we 
have 15 children and 11 grandchildren. So it was really good 
particularly to hear the gentleman from Texas talking about our 
obligation to our children and our grandchildren. That is something 
that is so important, and it is an extremely important thing to mention 
tonight.
  The problem that we have with Social Security, as has been pointed 
out by my colleagues, is a demographic problem. And thank God we are 
living longer today than folks did back in 1935 and 1936 when, as the 
gentlewoman from Kentucky (Mrs. Northup) pointed out, the life 
expectancy was 61, 62 years old. You could not even get early benefits 
at that point. You had to be 65. So Social Security for the government 
was a pretty good deal. They were not really worried about the trust 
fund.
  Unfortunately, Congresses over the last 70 years have spent the trust 
fund money. I will not say squandered it. Certainly they have not 
stolen it. They have spent the money on very worthwhile endeavors, 
whether it is K-12 education, higher ed, Head Start, veterans benefits, 
agriculture, you name your favorite Federal program. But now we are in 
a real bind and that trust fund is not there and even if it were, even 
if it were and we did nothing to change Social Security as we know it, 
we get to the year 2042 and if we do nothing, and the other side of the 
aisle basically so far is saying, hey, it's not a crisis, maybe it's a 
nuisance and let's try to ignore it and do nothing. If you do that, 
across the board, Social Security beneficiaries are going to receive 73 
percent of that defined benefit plan, what we promised them; they would 
get 73 cents back on the dollar. That is just not acceptable.
  One way to fix the system, of course, and we have talked about this, 
would be to change the way you calculate that first check. The way it 
has always been done has been based on average wages, and that is what 
our current 45 million-or-so Social Security beneficiaries, their 
initial check is based on average wages. Then, of course, there is a 
COLA, cost-of-living adjustment, every year.
  One of the ways to fix this problem, to make sure that people get, 
the seniors who are continuing to receive their checks, would be to 
change the way we calculate the initial benefit for those who are not 
yet at retirement age and to go from that first check based on average 
wages to average prices. If we do that, then we will solve the Social 
Security solvency problem. But people who are not yet retired, who are 
approaching retirement, the younger workers, their initial check will 
be a benefit that is probably 30, 35 percent less than our current 
beneficiaries are receiving. They would continue to get a cost-of-
living adjustment. That would fix the system.
  What the President has said and what this majority is saying is, we 
can combine that with the option for our younger workers to invest in 
an individual personal account with up to 4 percent of the 12.4 percent 
FICA tax. That would be their money. It would be their account. They 
literally would have their name on it. It would enjoy the miracle of 
compound interest. And for somebody 25 years old, you would get 35 or 
40 years' worth of compounding. At the end of the day, that is, at the 
point of their retirement, whether they take the early retirement at 62 
or at their age of full retirement, the benefit they would accrue, and 
it could be as much as a total corpus of $250,000 in that individual 
personal account. That combined with their Social Security benefit 
check would mitigate a lot of that loss and they would get almost as 
much as the current retirees are receiving, or maybe even more 
depending on performance.
  Basically, the President has said, Mr. Speaker, very clearly that 
anybody 55 years and older and current retirees would be completely 
held harmless from any loss in their benefit. They would continue to 
receive what they are getting. There would be no changes. And now the 
President has actually, Mr. Speaker, taken it a step further. A week or 
so ago in a press conference, President Bush for the first time 
introduced the idea of progressive indexing and basically said this: 
those workers, those younger workers who are at the lower level of 
income, their initial check at retirement would continue to be based on 
average wages, so that they would absolutely not suffer any loss in 
their benefit. Yet they would have that option, if they wanted to, to 
take a small portion of their account, up to 4 percent initially, and 
put it in an individual savings account. It would be guaranteed that 
they would not take any loss of benefit, but there would be the 
distinct possibility, if you think about and look at the stock market 
over any 10-year period of time since its inception, that the return on 
that investment in that individual account would compound, would grow, 
would enjoy the miracle of compounding and they would have a much 
larger benefit at the end of the day than they would if they had not 
chosen that option combined with Social Security as we know it.
  I think the opportunity for us to come together in these late 
afternoon and evening sessions and talk to our colleagues on both sides 
of the aisle and make sure that they understand so they can go back 
into their districts and explain to their constituents, we each 
represent 630,000-or-so great Americans, those people back home are 
receiving a lot of misinformation. They are getting these automated 
phone calls, they are getting these direct mail pieces paid for by 527s 
and the unions and God knows who, and the well is being poisoned. These 
people need to know. They need the facts. They need some honesty.

  I really appreciate the gentlewoman from Kentucky for giving us this 
opportunity to come together this evening and talk to our colleagues 
and make sure that they are listening and understand because we want 
what is fair and balanced; we want what is good for our parents and our 
grandparents, but we certainly want the best possible for our children 
and grandchildren.
  Mrs. NORTHUP. I want to thank the gentleman from Georgia for joining 
us. I know you have talked at great length about this. You have worked 
so hard on it and talked to so many of your constituents, and you bring 
their wisdom and insights to us today. It is important that we talk 
about it. It is a very

[[Page H3174]]

complicated issue, talk about calculation of benefits; but it is very 
hopeful. It is hopeful that workers who are more likely going to depend 
on this even more, most of all because they are maybe in the lower 
third of wages, that they are going to have nothing but better 
opportunities. They are going to get the full benefit of calculation 
and the possibility of a personalized account also. For those at the 
highest end, they will have the calculation that starts maybe less, but 
they will have the personalized account that can give them every bit of 
what they would have gotten under the old system.
  So lower-income workers would have nothing but a better opportunity. 
Higher-income workers would be able to have about the same thing that 
they have under the current system. Yet there is a huge difference. The 
system would be sustainable and solvent for our children and 
grandchildren.
  There are people, as you know, that keep talking about why we should 
not change anything, but I think the point tonight is the hope and 
opportunity that exists in today's proposals.
  The gentleman from North Carolina (Mr. McHenry) has joined us. He is 
one of our youngest, but brightest, Members. He is a leader on this 
issue. He has spoken on it with such great wisdom. I thank him for 
joining us tonight.
  Mr. McHENRY. Mr. Speaker, I certainly appreciate the gentlewoman from 
Kentucky hosting this hour. It is a wonderful opportunity for us to 
discuss the most important issue that this Congress is bringing 
forward. The most lasting reform is the best reform, and that is what 
we need to look forward to with this challenge of reforming Social 
Security. The Member that preceded me speaking was the gentleman from 
Georgia (Mr. Gingrey) who has taken on this issue with gusto and also 
the gentleman from Texas (Mr. Conaway) who is one of the first Members 
of Congress that actually said, let's get all the people at the table, 
let's get Democrats and Republicans and let's sit down with the AARP 
and let's try to discuss solutions for this challenge of Social 
Security. It was a wonderful thing to try to get all these players at a 
table together to talk about this most important issue.
  Social Security is a program that is in trouble. It is in trouble 
because of the changing demographics of our Nation. It was built upon 
the idea that workers working today would pay for retirees that are 
retired currently. It was a system where workers would be taxed to help 
pay the benefits of retirees. That works when you have a large number 
of workers and a small number of retirees, but the changing 
demographics of our Nation require us to act in order to sustain this 
program.
  When Social Security was formed, there were 41 or 42 workers per one 
retiree. Today, there are only 3.3 workers per one retiree. Therefore, 
that system of taxing current workers in order to give a benefit to 
current retirees does not work with those numbers. It is not 
sustainable. What we need to look for is permanent solvency, lasting 
solvency, for this program of Social Security.
  It has been a vital institution for our Nation over the last 70 
years. It has helped many seniors be lifted up out of poverty. It has 
given a strong benefit to those that maybe are not able to work 
anymore. And it is a commitment that we have made as a great Nation to 
those that have put in their fair share into the system, those that 
have worked their whole life, played fair, paid into the system, and 
done what was right. We need to maintain that obligation that we have 
made, that previous generations in this country have made to seniors. 
This Republican Congress, this Republican House, this Republican 
President, have taken this issue on so that we can do good things for 
our seniors. We do not want to break Social Security. We want to make 
it stronger. The key way to make it stronger, the key way to create 
permanent, lasting solvency is through personal retirement accounts. 
That is the vital component for any reform. There are a couple of 
options that we can look at.
  First some say, well, let's just raise taxes, and we can keep those 
benefits going. Or let's subject new income and new forms of taxation 
on the American people and small businesses, and we can keep the income 
stream going. That may work. That may work. But in order to make that 
obligation, in order to meet our current obligation, taxes would have 
to double on Social Security. Taxes would have to keep going up in 
order to keep that commitment going.
  Others have said, Well, let's just cut some benefits. Again, that may 
be an opportunity for some to consider. It is something I reject. I do 
not think we need to cut benefits or raise taxes. I do not think they 
are the right way of achieving solvency.
  Mr. KINGSTON. If the gentleman will yield, I think it is important to 
think in terms of Social Security, there are two problems. One is of 
generational fairness, which we can talk about a little bit later. The 
other one is solvency, which you have been discussing. We have dealt 
with the solvency issue by cutting benefits and raising taxes many 
times over the years. In fact, since 1937 we have raised the taxes on 
Social Security 20 different times. That is the amount of your money 
that is taken out of your paycheck by the Federal Government, that FICA 
tax that all these 23-year-olds getting out of college have their first 
job and they discover somebody named FICA is sharing in their efforts, 
their sweat equity.

                              {time}  1930

  But that started out, as the gentleman knows, 1 percent and 1 percent 
in 1937; employer 1 percent, employee 1 percent. In 1960, it was 3 
percent, 3 percent. In 1978, 5 percent, 5 percent. Today, it is over 6 
percent. We have done that 20 different times.
  We have also cut benefits. In 1983, we actually raised the retirement 
age from 65 to 67. That is a benefit cut because, over one's lifetime 
in receiving benefits, if they have to wait 2 more years, that is a 
reduction of their benefit.
  So we have done that traditional solution, short-term political fix, 
which gets most politicians through their next term. And I am glad to 
hear the gentleman say that we have got to look for a different way to 
work on the solvency issue.
  Mrs. NORTHUP. Mr. Speaker, reclaiming my time, let me just point out 
that as recently as 1993, many of our colleagues across the aisle 
participated in raising taxes on Social Security benefits. So, 
previously, far more of the Social Security benefits were untaxed at 
any level. Today, far more of them are taxed, and they are taxed at a 
higher level because of the tax increase in 1993. Now, the way I think 
about it is, if we start taxing Social Security and we tax it at a 
higher level, that is a reduction in benefits.
  So I am shocked to hear some of our colleagues talk about criticizing 
anything about benefits when, in fact, there was an enormous chunk of 
Social Security benefits that were retaken back from seniors starting 
in 1993 because of the tax increase.
  Mr. McHENRY. Mr. Speaker, will the gentlewoman yield?
  Mrs. NORTHUP. I yield to the gentleman from North Carolina.
  Mr. McHENRY. Mr. Speaker, this goes to the heart of the problem. As 
the gentleman from Georgia (Mr. Kingston) and the gentlewoman from 
Kentucky (Mrs. Northup) have said, the heart of the problem is 
solvency. We have a system that is going progressively more insolvent 
each day. As the baby boomers begin to retire in 2008, 2009, we have a 
problem. We do. So the gentleman from Georgia (Mr. Kingston) mentioned 
solvency. The way in the past that we have achieved solvency was by 
raising taxes, cutting benefits. I prefer to say cutting taxes. That is 
just in my heart. But in terms of what we are trying to achieve, they 
have said we can cut some benefits, we can raise some taxes, and we can 
achieve solvency. The demographics of our Nation have changed so much 
that we have to look for the third way in order to get a better return 
on our Social Security investment, and the only way we can do that, the 
only way we can do that, is through personal retirement accounts. Much 
like 401(K) plans or IRAs or even the Thrift Savings Plan that current 
government employees, including us, have the benefit of. So it is 
wonderful, but that also goes to the heart. The heart of this issue is 
generational fairness, and I think that is an interesting point.
  Mr. KINGSTON. Mr. Speaker, will the gentlewoman yield?

[[Page H3175]]

  Mrs. NORTHUP. I yield to the gentleman from Georgia.
  Mr. KINGSTON. Mr. Speaker, I just wanted to say that the plans the 
gentleman from North Carolina is talking about are similar to mutual 
funds, which they, up here, are selling. But I wanted to mention this 
generational fairness issue because I think that is part of the kitchen 
table discussion, and I always say Social Security needs a kitchen 
table solution because, if we are talking with other seniors, we are 
not moving the ball down the road. If we are talking to college 
students, we are not moving the ball down the road. We have got to have 
Mom and Dad, grandparents and grandchildren at the kitchen table and 
say, What is fair? And this is why it is important: If one retired in 
1980, they got all their benefits back. Every nickel that they paid 
into the system, they got it all back within 3 years. If one retired in 
2003, it will take them 17 years.
  And if the gentleman does not mind my getting personal, as I recall, 
his magic retirement age is 2041.
  Mr. McHENRY. Absolutely.
  Mr. KINGSTON. Mr. Speaker, that is the year we cut benefits 27 
percent unless we do something to protect and preserve the system. So 
for somebody like the gentleman who retires in 2041, it is going to 
take them probably 30 years. I do not know the mathematics. He may have 
figured it out, if he knows. But I know it will take him about 20 to 25 
years at minimum to get all of his investment into it, and that means 
he can actually have a negative return; whereas there are a lot of 
people who have gotten a decent return out of Social Security, 5, 10 
percent. But today, it is a 1 percent return, getting worse, and that 
is why there is a generational fairness.
  My experience has been, when we talk to seniors and seniors who might 
even say, let us just raise taxes like we have in the past, we say, 
yes, but that does not solve the problem of the gentleman from North 
Carolina's (Mr. McHenry) friends. We are not worried about the 
gentleman from North Carolina, but we are going to worry about his 
friends. And the truth of the matter is when seniors say, Well, wait a 
second, you mean to tell me I have already gotten all my money back, 
but my kids will probably never get their money back? We say yes. Then 
we get into a real generational fairness. And that is why it is so 
important to have everybody at the kitchen table when we work on it.
  Mr. McHENRY. Mr. Speaker, if the gentlewoman from Kentucky will 
continue to yield, I spoke with a group of seniors in Hickory, North 
Carolina just 2 weeks ago and discussed Social Security reform, and I 
said all the proposals that have been put forward in front of Congress, 
all the proposals, if we consider every one of them, no single 
proposal, none of them, will change their current benefits if they are 
55 and older. So those that are retired today, they should not allow 
AARP to lie to them in order to say that their benefits are going to be 
cut because no change to this program will allow for benefit cuts of 
current retirees. That is a pledge that we have all made in this 
Congress and our President has made as well. So I think we have to, 
first of all, be honest about it and tell our seniors today, this is 
not going to change their check. Their check is going to be there. We 
have made that commitment to them. They have played by the rules. They 
have paid into the system. They have played fair. So we are going to 
honor our commitment to them. However, it is important for them, if 
they are retired today, in order to make sure that their children and 
grandchildren have the same benefit that they are currently receiving. 
They want to leave them in a better system.
  And I spoke to these retirees. I was at the seniors' games, in fact, 
300 members of our seniors community, and I discussed this. And they 
said, Wonderful. They are actually happy that we are trying to take on 
this challenge for younger workers while at the same time keeping our 
commitment to those that are at or near retirement age.
  So it is wonderful that the gentleman brings up generational fairness 
because, as the youngest Member of Congress and someone who is eligible 
to retire in 2041, that is the date that even some of the left wing 
Senators on the other side of the building here even admit that, in 
2041, the system goes insolvent. So I think it is important that we 
discuss this issue of generational fairness.
  I want to maintain the commitment to my grandmother, but at the same 
time, I want to make sure that my generation has the same benefit of a 
strong, vibrant Social Security system, so that when I retire, it is 
there, and it is affordable and reasonable.
  And with that, I certainly appreciate the Secretary of our Republican 
Conference allowing me to have this colloquy here on the floor.
  Mr. KINGSTON. Mr. Speaker, will the gentlewoman yield?
  Mrs. NORTHUP. I yield to the gentleman from Georgia.
  Mr. KINGSTON. Mr. Speaker, I wanted to mention, if I can, that we met 
with the AARP, American Association for Retired People, the largest 
retirement group in America, and did it on a bipartisan basis. And the 
gentleman mentioned that the gentleman from Texas (Mr. Conaway) pulled 
that group together. One of the things I was glad to hear AARP say is, 
We admit there is a problem; there is a problem with Social Security. I 
can tell my colleagues, in Washington, that is a huge first step 
because, months ago, we were hearing, No, there is no problem, that the 
President is exaggerating. So let us say we have got a little 
bipartisan glimmer of hope here that there is a problem.
  The next question might be then should we address it now or wait and 
punt for future Congresses and elections. AARP was a little more, Hey, 
it is probably right to discuss it now and try to get something done. 
The gentleman from Louisiana (Mr. McCrery) of the Committee on Ways and 
Means is going to start having hearings on it. In fact, I think he will 
this week, if I am not mistaken. Lots of hearings are good. Lots of 
thought, because, personally speaking, and I think I speak for my two 
colleagues, we do want Democrats at the table. We want this idea to 
say, Go into the meeting, but do not say these are my lines in the 
sand. Let us go into the meetings open minded.
  Mr. McHENRY. Mr. Speaker, if the gentlewoman will continue to yield, 
I would like to add one further thing. I enjoyed the piece the 
gentleman put together on Social Security reform and actually outlining 
what we in the conservative side of the House want to do in order to 
achieve lasting reform, to have generational fairness, while at the 
same time maintaining our commitment to have a strong, vibrant Social 
Security system. And I certainly appreciate what he wrote in the 
newspaper today. It was a wonderful article, and I recommend those who 
are watching or hear us here today to take a look at that, to 
understand what we are going for here by reforming this vital system.
  And I certainly appreciate the gentlewoman from Kentucky taking on 
this challenge and leading our public affairs team in the House on the 
Republican side in such a good, strong direction by getting the message 
out on the need for reform and the positive aspects of it as well.
  So with that, I thank the gentlewoman from Kentucky (Mrs. Northup) 
for hosting this hour.
  Mrs. NORTHUP. Mr. Speaker, I share my colleagues' concern about doing 
something now. The importance of it is easier to do it now because we 
can phase things in. We have opportunity and some time that we will not 
have if we wait until we are truly in a crisis.
  But the crisis is coming on us very soon. The fact is baby boomers 
are going to retire starting in 2008, and then we will have a quick 
increase in the number of benefits, more people retiring and getting 
out of the workforce and basically fewer years in which to make any 
transitions.
  One of the things that people say all the time that are on the ``we 
do not have to do anything now'' side is that they say we need to let 
the trust fund pay the benefits, all the money in the trust fund can 
pay the benefits up until a certain number of years. And, of course, 
the gentleman from Georgia (Mr. Kingston) knows there are no dollars in 
the trust fund. In fact, the trust fund never was meant to hold those 
dollars. They were meant to take in those dollars and lend them to the 
government.
  Now, I suppose if we could bring back the Congress of 1945 and 1950 
and 1955, we could ask them what their plans were for the year 2005, 
2018, 2042. I suspect they would say that, as many

[[Page H3176]]

times have happened, at that point, the need seemed to be to provide 
those additional revenues to the government. Again in 1967, when 
Congress changed the benefit scheme, they added increased taxes on an 
increased basis that they paid into Social Security. They needed it to 
fund the war in Vietnam and to fund the Great Society. And I guess if 
we could bring back those Congresses we could say, What do you mean by 
spending Social Security taxes on the Great Society and the war? But 
that has passed. And the fact is that those dollars were spent.
  I will say, though, that any company that took money into some sort 
of trust fund where there were going to be payouts expected would have 
had to accrue the liabilities, and if those liabilities had been 
accrued, along with the dollars in the trust fund, today, we would have 
$10 billion of accrued liabilities in the liability side across from 
the trust fund. So even if we had not spent the trust fund, not we but 
the Congresses of the past, before we got here, not spent the trust 
fund, the liabilities would swamp the dollars that are in the trust 
fund.
  So it is important to recognize that generations before us benefitted 
from the dollars that came into Social Security but then were paid out 
for other government programs. They funded the Great Society. They 
funded education benefits. They funded defense. Things that those 
generations believed were important. Our current seniors. And now the 
responsibility for our children, of course, is to continue to fund 
investments in education, Pell grants, medical research, our defense 
programs and, at the same time, assume the responsibility for Social 
Security.
  The exciting thing is, when we put our heads together, we can figure 
this out. The sooner we do it, the less difficult it will be so that 
benefits stay strong and are available to our seniors in succeeding 
generations, so that our children and grandchildren, as they meet the 
responsibility of retirees that go before them, can also grow within 
Social Security a solvent and sustainable system that will support 
their generation and the workers that are behind them in the system.
  So I know that the gentleman from Georgia (Mr. Kingston) shares my 
belief that this is a time of hope and opportunity. We need to seize 
the moment and to really get the best ideas together to tackle the 
problem and set this program on a long-term course of sustainability.
  Mr. Speaker, I yield to the gentleman from Georgia (Mr. Kingston).

                              {time}  1945

  Mr. KINGSTON. Mr. Speaker, I thank the gentlewoman for yielding.
  I wanted to say I think there are some real opportunities here to 
address a number of the issues. The gentlewoman has mentioned the 
diversion of some of the Social Security surplus fund. Our Democrat 
colleague, the gentleman from Mississippi (Mr. Taylor), has a bill I am 
interested in, and that bill has to do with a constitutional amendment 
that says any proceeds in the Social Security trust fund have to 
actually be taken completely off budget.
  It does not really say where it could be held, because the problem is 
if the Federal Government has all that surplus, where do they put it? 
Do they invest it, do they buy gold with it, do they bury it in the 
ground, do they put it in a vault somewhere? You hate to think of 
billions and billions of dollars not earning interest. But I think the 
gentleman from Mississippi (Mr. Taylor) has an interesting bill. I am 
looking at it.
  I also tried to figure out how do you do the lockbox. We have worked 
to try to get some sort of lockbox passed in the House in the past, and 
I am not sure we should reopen it. I have had some discussions about 
it, and it always boils down to, okay, you have a lockbox. What do you 
do with the money? I am a believer that if you almost did nothing with 
it, you would be better off than what we are doing now.
  But I think that part of the Social Security solution is we should 
have a real discussion on what do you do with the temporary surplus. I 
say ``temporary surplus,'' because it will start to be gone in the year 
2018, rapidly diminishing going to 2041.
  But I think all these things, if we can get some bipartisan 
discussions going, I believe we will find some things we agree with the 
other party about.
  The gentlewoman from Kentucky knows that when we sat down with the 
AARP and they showed us their set of core principles and we showed them 
our core principles, there was a lot of overlap. It was not perfect, 
,but there was plenty to stay in the room and keep talking about.
  Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I agree that it was a 
very interesting discussion. I will say, and I know that our younger 
generation would appreciate this, that in the course of conversations, 
there was one person that said, Let me just ask you this for 
curiosity's sake: If we had to say to our children and grandchildren 
that because of confluence of things, the economy, America's leadership 
in the world, whatever, that we were able to pay better benefits to 
current retirees and those about to retire, but you are just unlucky 
and you are not going to have the same benefits and that is just going 
to be where you fall in history, would that be acceptable?
  I think pretty much everybody in the room said that would not be 
acceptable, that that would not be something that any of us feel we 
could say to our children and grandchildren.
  Now, the opportunity is that we do not have to; that at the same time 
we shoulder the responsibilities of those that have retired and those 
about to retire, and at the same time we meet our responsibilities to 
domestic programs, that by investing in Social Security, and, yes, 
taking it off budget so we do not spend the surplus, yes, allowing 
personalized accounts, yes, guaranteeing those in the lower one-third 
of income full calculations, like they have always had, and for those 
in higher levels, maybe they would have a combination of personalized 
accounts and a different calculation, that all of that can make the 
system solvent, sustainable, and also maintain benefits.
  For those who think raising taxes is the answer, I think it is 
important to recognize that everything in this country, our domestic 
programs, Social Security's long-term solvency, depends on a growing 
and vibrant economy, and without that, this country will be in dire 
financial straits.
  When you look at a country like France that has maintained retirees' 
benefits, but at the same time has done it purely by taxing more and 
more in more and more ways and at higher and higher levels, basically 
what they have done is create a society that is stale, that is not 
growing and is not able to provide the revenues they hoped the tax 
increases would bring.
  Mr. KINGSTON. Mr. Speaker, if the gentlewoman would yield, I am glad 
the gentlewoman brought that up, because one of the things that is 
interesting, and I have traveled in some of the Eastern Bloc countries, 
and one thing that really amazes me when you talk to countries like 
Bulgaria or Lithuania, Latvia, Estonia, the Czech Republic, these 
countries that only 10 to 15 years ago were freed from Soviet 
oppression and they are now out experimenting with democracy and the 
rule of law, one of the things they realize is if you have absolute 
security for everybody in terms of government-sustained programs, then 
you do not have any work base and your economy does not move forward. 
You have done a lot of things at the cost of opportunity.
  I think France is a miserable country in terms of an economic role 
model. I see a lot of these other countries that are really growing and 
making some huge changes and taking some bold steps.
  I think one of the things we have to do is realize that decisions of 
1937, do you want to still be driving a car and relying on 
communications or medical systems from 1937? Yet when it comes to 
social programs, we think a 1937 social model is the best thing in the 
world, the best we can do.
  That is what bothers me. Because we are Americans. We should not 
fear. We should be able to be world leaders and not have to point to 
other countries and say, well, you know, look, this is what we want to 
do. We need to be braver and stronger and not become a nanny state.
  Mrs. NORTHUP. Mr. Speaker, reclaiming my time, if today Social 
Security was just being designed, if we knew that people who get to be 
65 are probably going to live 17 more years, if

[[Page H3177]]

we knew that you were going to work a certain number of years and then 
you were going to be able to have a life expectancy that would go on 
for a number of years, you might have dreams of traveling, of going to 
visit your grandchildren, of staying in your home and being able to 
maintain it, all of those dreams would depend on an entirely different 
savings and retirement system than the system that was designed in 
1945. You certainly would not design Social Security today like they 
designed it back in 1945.
  So to just steadfastly refuse to concede that opportunities are 
better for Americans, there is a new paradigm in retirement that 
exists, there are new opportunities, and there is a new way of deriving 
benefits that grow the economy, that do not overencumber the workers 
that are still in the workforce, we would do that in a minute.
  It is disappointing that we have not been able to move further in 
this discussion than we have. But as we all know, it takes a lot of 
discussion.
  I am eager to hear from my seniors. I know the gentleman is. Even 
though things will not change for them, I think it is important that we 
continue to invite our seniors to the table because seniors have always 
not only protected Social Security for their current benefits, but been 
very eager to make sure that it was going to be there for their 
children and grandchildren.
  I thank them for their continued investment in time and interest for 
that.
  Mr. KINGSTON. If the gentlewoman will yield, I again want to say that 
we often get bogged down in the politics of the moment, the politics of 
the next election, the politics of the current 5 years or whatever; and 
we should be thinking in terms of the next generation rather than the 
next election.
  But the other thing that I keep coming back to is because there are 
two issues, a solvency issue and a generational fairness issue, what my 
job assignment, my homework assignment is, when I have a town meeting I 
say to everybody, what I really want to ask you, sit down at the 
kitchen table with the parents, with the grandkids and the 
grandparents, and figure it out. Just see if you can find that balance.
  I had one guy in a town meeting say, This is all about greed. All you 
have to do is increase the taxes 1 percent. He was 70 years old. He 
would not be paying taxes. The guy behind him was 30 years old and 
said, Sir, respectfully, I have to tell you that is not acceptable for 
me, because I am going to be the one paying.
  Similarly, a lot of people think the golden arrow here is taking the 
cap off it. But if you take the cap off it, people get more benefits.
  One thing to keep in mind, anytime you make it more expensive to hire 
an employee, then our folks are going to be going offshore with the 
jobs. We are already losing too many jobs offshore. Furthermore, there 
will be a lot of illegal aliens in America not paying into the system. 
I think part of Social Security should be tied into illegal 
immigration. It is actually not immigration if it is illegal; you are 
here as an illegal alien.
  All of this stuff, we should get the best ideas of the Democrats and 
Republicans, throw them on the table, get the folks back home to say 
this is the direction we want, and that is what we are trying to 
accomplish here.
  Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I thank the gentleman 
for joining me tonight. The gentleman from Georgia (Mr. Kingston) is a 
leader in our conference and a leader on Social Security, and, of 
course, has long been appreciated for the ability to take very 
complicated issues and talk about them in ways that we all understand, 
and we can share and benefit from his insights.
  I want to end tonight by saying that we are all more concerned about 
the next generation than the next election, and how much we appreciate 
our President, who from the day the last election was over did not 
forget that through that campaign he talked about the importance of 
taking on this tough issue, and did it so well and has been out talking 
to the American people. It is very refreshing to see somebody take on 
such a tough challenge and talk to the American people about it.

                          ____________________