[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.
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