[Congressional Record Volume 151, Number 99 (Wednesday, July 20, 2005)]
[House]
[Pages H6190-H6196]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STRENGTHENING SOCIAL SECURITY
The SPEAKER pro tempore (Mr. Poe). 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
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on the subject of this special
order, which is Social Security.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Kentucky?
There was no objection.
Mrs. NORTHUP. Mr. Speaker, I am so delighted to be here with my
friends and colleagues who also are very committed to strengthening
Social Security to make sure that it not only is strong and a viable
program for current seniors and for those of us that are the baby
boomers and about to retire, but also that it is a program that is
sustainable and solvent for our children and our grandchildren.
That is a big challenge for us and it is easy today to put off
problems that look like they are going to be 2 years in the distance, 4
years in the distance, 10 years in the distance, 25 years in the
distance, to take up just what is the most pressing challenge today;
but that is a wrong strategy. That strategy leaves our country
vulnerable. In this case it gets worst the longer we fail to act.
I am pleased our President has discussed this with the American
people. He has been very forthright on what the challenges are, and he
has shared with the American people that doing nothing is the most
dangerous thing we can do when it comes to Social Security. We all know
Social Security is a pay-as-you-go. Those that are currently working
are paying for those that are currently retired.
It used to be that there were 16 workers in the workforce for every
retiree. Later there were 10 workers in the workforce for every
retiree. Today there are 3, and so that means that considerable
resources, considerable dollars that current workers make have to go to
sustain each retiree.
It is wonderful that we can anticipate longer lives than those who
designed Social Security. In fact, it used to be that life expectancy
was 62 years, and you could retire when you were 65 years. So when
Social Security was first proposed and first passed, there were far
more people that paid into the system than would ever think that they
would get actual Social Security benefits because of the life
expectancy.
To our benefit and to the quality of our life, Americans are living
far longer. So we need to modernize Social Security so that we do not
have two or three workers in the system supporting every retiree as
they also have to support their families. We need to make sure that
those in the workforce that actually make sure that Social Security is
solvent, that when they retire, it is there for them. We need to act
sooner rather than later because today it is still possible to deal
with the Social Security surplus, to put dollars aside, to build a
system that will help make the system solvent and sustainable in later
years.
I have with me today one of my colleagues, the gentleman from Florida
(Mr. Miller), who is very knowledgeable about Social Security and in
particular about the GROW accounts, the proposal before us right now as
we consider whether we take big steps or small steps towards personal
accounts that can help us bridge the gap between a system that is not
sustainable and not solvent to a system that is there for our children
and grandchildren.
I yield to the gentleman from Florida (Mr. Miller) and am eager to
hear what he has to say.
Mr. MILLER of Florida. Mr. Speaker, I am sure it is no surprise to
many of you that some of my constituents do oppose personal retirement
accounts, so when they do I ask them this very question: Would you
agree or disagree Congress should have, when it created Social
Security, set up a really true lockbox that earned interest on their
FICA contributions?
Of course they eagerly agree that the money should have been set
aside and used only for Social Security benefits.
I then follow up with the question: Then why in the world would you
be opposed to a personal lockbox, if you will?
[[Page H6191]]
It is not secret here in Congress we have not had the discipline in
many instances to keep our hands out of the cookie jar of Social
Security. Now to stop this I propose that in the future that Congress
cannot get its hands on the money in the first place. As soon as
workers can start to save part of their Social Security money in a
personal retirement account, with their very name on it, this Congress
will have to find its money elsewhere.
Growing Real Ownership for Workers legislation is something that our
colleague, the gentleman from Louisiana (Mr. McCrery) introduced, that
would strictly use Social Security dollars for Social Security
benefits. Now these GROW accounts mandate that Social Security taxes be
used for benefit payments to those people who have worked hard, who
have followed the rules and have earned the right to a secure
retirement. The accounts would be created for workers under the age of
55 unless they choose not to participate.
{time} 2115
The current Social Security surplus would be dedicated to individual
GROW accounts where it would be invested in guaranteed marketable
Treasury securities, real assets that workers themselves would own and
on which account balances would, in fact, be inheritable. Workers age
55 and older will continue to participate in the Social Security system
that we know today. Nothing changes. People should have the right if
they wish to invest their Social Security taxes in safe, diversified
funds like a Thrift Savings Plan that Federal employees and Members of
Congress have. The return, in fact, has been proven to be better than
the government's 1.6 percent return on Social Security.
Younger workers should have the opportunity to receive a higher
retirement income than the current system will be able to pay by the
time that they can retire themselves. Workers between the ages of 22
and 55 should have the option of joining the personal account system,
and people younger than 22 could, in fact, be required to join that
system. Those retiring after about 2042 can really expect to receive
only about 73 percent or less of what they are being promised today. A
reasonable reform would allow them the opportunity to improve their
retirement incomes by investing a portion of their current payroll
taxes.
The current system owes some $10.4 trillion more in promised benefits
than it can afford to pay, and each passing year adds an additional
$600 million to the cost of permanently fixing the Social Security
system. Benefits will be reduced and taxes may have to be raised.
As I have been visiting high school seniors in my district over the
last few months, I have entered into a dialogue with many of the
students over the future of Social Security, and I have asked some
students if they believe that Social Security will be around for them
to collect when they retire. Out of the five classrooms, only one hand
was raised. That is one out of approximately 175 young adults around
the age of 18 who actually have faith in our current Social Security
system.
Young adults are supportive of personal accounts because they
understand that they will be better off during their retirement years.
And they also realize that they will not have to worry about placing a
financial burden on their children and grandchildren who would
otherwise have to act as a financial caretaker in their retirement
years.
I have received correspondence from my constituents 50 years and
older eagerly opposing the accounts due to a very common misconception.
The middle-aged and elderly residents in my area have a fear of not
receiving the benefits that they have been promised in the system. To
them I say this: they will receive their benefits just as promised. For
them the Social Security system will not change in any way.
However, I think it would be a disgrace to deny our younger
generation and generations to come the opportunity to build a nest egg,
if you will, and prepare adequately for their future. Many people ask
what safeguards will the government have to protect these personal
accounts if someone invests poorly or recklessly. Clearly, not everyone
is comfortable in investing. So Social Security reform will have to
include some type of safeguard for its participants in the personal
account system. Aside from the strong performance of financial markets
over the long term, as well as the fact that a majority of your account
will remain in the Social Security trust fund as a safety net, the
personal accounts that will be offered will be fully diversified.
Another idea that has been talked about is having participants
purchase an inflation-adjusted annuity that is at least equal to 100
percent of the poverty level for their retirement. Democrats have said
this: they think that we should eliminate the $90,000 cap on income.
Even completely eliminating the cap on taxable wages would only
postpone permanent deficits by 6 years, from 2018 to 2024. A temporary
fix would likely require future generations to raise taxes over and
over, and I think that our constituents deserve better than that.
Now more than ever, those of us here in Congress have a
responsibility to make the tough decision while not making the
financial burden any harder on the American people. Voluntary personal
retirement accounts are very beneficial for the workers and retirees of
the future. They would be accumulating money in their own account
throughout their working life. And that money would grow through
investment over the years. Because their dollars are growing over the
course of decades, they would be able to have a more comfortable
retirement without relying entirely on the next generation of workers
coming after them.
Mr. Speaker, I think we all agree that we need to move towards change
now. Let us pass legislation that includes some type of personal
retirement accounts. And as we talk about this issue tonight, again I
want to thank the gentlewoman from Kentucky (Mrs. Northup) for bringing
this issue forward. I look forward to the opportunity of conversing
with my other colleagues on the this very important issue.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I thank the gentleman
from Florida (Mr. Miller) for all the hard work he is doing on this
issue. It takes people who are very dedicated to talk about the issue.
We know that there have been a lot of groups that have tried to scare
the American people. They have tried to scare our parents and current
retirees that somehow this jeopardizes the check that they currently
get. And they try to scare younger workers that this is going to be
something that is risky. And his courageous and understanding
leadership in this to delve into an issue and to explain it in a way
that the high school students that he talked to understood and had
confidence in it is so important.
And I know it will not surprise him to know that the gentleman from
Indiana (Mr. Chocola) has people that are scaring seniors, the young
people in his district, throwing out misinformation, trying to dissuade
them from supporting these GROW accounts.
I invited him here tonight to talk about maybe some of the
information, some of the fears, some of the criticisms, maybe some of
the rhetoric that he is hearing and to share with us what his answers
are to the people in his community and make sure that people that are
listening at home tonight that maybe are hearing some of these same
things, either recorded phone calls or posters around town, that they
will identify with this tactic and understand that they could be
reassured that this is a good plan for them.
Mr. Speaker, I yield to the gentleman from Indiana.
Mr. CHOCOLA. Mr. Speaker, I thank the gentlewoman for yielding to me,
and I thank her for her leadership on this issue.
This is one of many times she has come to the floor and spoken on
this very important issue that I think is important to generation of
Americans, and it is important that we focus on the facts and how we
can strengthen Social Security for the long term. And the gentleman
from Florida did a tremendous job in talking about a first step, I
think a very appropriate step, in making sure that we preserve the
Social Security surplus for Social Security reasons and benefits.
I did 15 or 20 town hall meetings so far this year on Social
Security; and if there was one message I heard loud and clear, Mr.
Speaker, from the people of
[[Page H6192]]
the Second District of Indiana it is: let us stop raiding the Social
Security surplus. Let us stop spending it on everything from the
Cowgirl Hall of Fame to the war in Iraq. Let us use that surplus for
what it is there for, and that is simply to provide the benefits for
Social Security beneficiaries in the future. And that is exactly what
GROW accounts do. They simply stop the raid. I think facts matter, and
with anything I think that we should understand the facts before we
make decisions.
And I learned recently that there is going to be a group of people in
my district office in South Bend, Indiana tomorrow, and they are going
to demand that I take my name off as a cosponsor of the bill that
creates GROW accounts. I am not going to take my name off of that bill
because I think that their request is based on a misunderstanding of
the facts, and I know that because they sent me a letter, or they are
going to deliver to me a letter tomorrow, I think, but we got an
advance copy, and some of the things they have stated in this letter
are gross misstatements of the fact and I think mislead people as to
what GROW accounts do and how they start to solve our Social Security
problem.
The first misunderstanding is they say that ``rather than ensuring
that American workers receive the benefits they have earned, this bill
would divert payroll contributions to create private accounts and would
fund these private accounts using the `surplus,' money which has
already been earmarked to pay the baby boomers' Social Security
benefits.''
Mr. Speaker, it is true that this bill would create personal accounts
and those personal accounts will be funded by surplus Social Security
money that goes into the system that is not needed for current
beneficiaries. What is not true is that the surplus has been earmarked
for baby boomers in the future. In fact, the opposite is true. The
surplus is simply spent on everything that the government needs that is
outside of Social Security benefits. So I think it is very important
that we understand that the GROW account simply makes sure that we
spend Social Security surplus money on Social Security purposes.
The second misunderstanding is they say: ``This plan would cut
guaranteed benefits.'' There are two things wrong with that statement.
One, there are no guaranteed benefits under Social Security as it is
currently implemented. The Supreme Court has said that no one has a
property right, no one has a right to your benefits. Congress can
change the Social Security system at any time in the future and no one
can make a claim for their benefits. So under the current Social
Security plan, there are no guaranteed benefits.
But if we have GROW accounts, there is a guaranteed benefit because
that becomes a personal asset. That becomes an asset with their name on
it. It becomes a part of their estate. It becomes inheritable if they
die before they can collect their benefits, and currently Social
Security has none of those aspects and none of those benefits.
The third misunderstanding is: ``This plan would finance risky
private accounts.'' Again, Mr. Speaker, it does fund personal accounts.
It is a personal asset for individuals who are in the Social Security
system. But they are not risky because these accounts would simply have
one asset in them when they are created, and that is government-backed
securities, government bonds, the safest investment in the world, and
these are tradeable and marketable bonds that can be sold at a later
time when people have their retirement needs, and they can use that for
their retirement benefits.
So, Mr. Speaker, I do think that facts really matter in this debate
because the consequences are very important to every generation of
Americans.
We can talk more about these accounts and more about the Social
Security situation overall, but again I want to thank my colleagues for
being here tonight talking about this very important issue. And one of
the things that I always want to encourage people to do is to share
with us what they are for. The people coming to my office tomorrow are
going to tell me what they are against. I would love to hear what their
ideas on saving Social Security are. I would love to hear what they are
for. I know that their colleagues are open minded and that we are
willing to listen to any good idea to make sure that we permanently
solve the problems that Social Security faces. So I hope that we can
have some positive input from both sides of the aisle and all the
American people because we need that to solve this problem.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I would just like to
ask my friend from Indiana specifically about the concern that the
people coming to his office have about any sort of risk as though
current benefits are guaranteed and they are in place. As he said, they
are not guaranteed. The fact is the Supreme Court has recognized that.
More importantly, we hear people on the floor every day talking about
everything is fine until 2042 and then there would be a 25 percent cut
in benefits, as though that is perfectly okay for our children and
grandchildren.
But I would just like to ask the gentleman what he thinks of the 1993
tax bill that raised taxes on Social Security, both the percentage that
people pay, the percentage of tax, and the baseline that caused them to
have to start paying this tax, if he would not call that a reduction in
benefits. If previously those Social Security dollars that people got
were not taxed and the portion that was, was taxed at a lower rate, in
1993 in one day, Congress changed the law to start taxing more of
people's Social Security dollars at a higher rate, if that was not the
government reducing their benefit.
Mr. CHOCOLA. Mr. Speaker, will the gentlewoman yield?
Mrs. NORTHUP. I yield to the gentleman from Indiana.
Mr. CHOCOLA. Mr. Speaker, the gentlewoman is exactly right. Congress
has changed the Social Security system over time, and over 20 times in
the past Congress has raised taxes on Social Security in payroll taxes
into the system. And that has never solved the problem. And if we
include raising the amount of payroll that is subject to the tax, it is
something like 38 or 39 times we have raised the contribution to the
system.
What we have to do is find a way to permanently solve the Social
Security challenges that are really undeniable. As she said, the only
thing guaranteed is a significant cut in benefits in 2041 or 2042 if we
do nothing. So I think it is time that we find a way to permanently
solve this problem. The GROW accounts are a great idea as a first step.
They are not the total answer, but they are a first step to give people
an ownership stake in Social Security, make sure that we use the
surplus for what it is intended for, and that is Social Security
benefits, stop raiding the surplus and begin to strengthen Social
Security for the long term.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I thank the gentleman
for his comments.
And I know he shares with me an eagerness to hear from the
gentlewoman from Pennsylvania (Ms. Hart), who is so knowledgeable about
this issue and works on it every day and has been a remarkable
spokesperson for the personal accounts, what they mean to Americans.
{time} 2130
I am eager to hear her thoughts tonight on this also.
Ms. HART. Mr. Speaker, I thank the gentlewoman for yielding to me,
and I appreciate the opportunity to have this discussion tonight,
because, unfortunately, the American people are hearing a lot of
diatribe that really has no basis in fact regarding Social Security.
The gentlewoman mentioned earlier a point that needs to be stressed,
and that is that people believe that Social Security is just fine, that
their benefits that they expect are going to be paid, and that nothing
is going to change. Unfortunately, that is just not the case.
As was mentioned also earlier, in 1983 there was a significant change
in the law, and the reason they had to do that was because Social
Security was not going to have enough money to pay out the benefits. So
the taxes did increase.
Now we are at another point where we are having a very serious change
in our demographics, and that means that there are a lot more people
who are going to be receiving Social Security benefits in the coming
years. The good news is they are going to live a lot longer than they
used to, but the bad news is that the Social Security money
[[Page H6193]]
is not going to be enough to fund the benefits they expect.
Of course, another problem that Social Security has had for years and
one that the GROW Act of 2005, which several of my colleagues have
mentioned, will help us fix, is that the money that comes into Social
Security now is not even being spent on Social Security to a
significant degree.
There is a surplus in the Social Security account for the next
several years and that money should actually be saved for Social
Security benefits. But right now it is not being saved for Social
Security benefits. That money is being spent on general government
operations, as my colleague from Indiana mentioned. It could be
anything from some crazy museum or the war. But that money has been
collected for Social Security, so it should be spent there.
We need to stop the raid on Social Security. We need to stop spending
the surplus on things other than Social Security. One of the best
proposals I have seen to do that is the GROW Act of 2005. It would not
only stop the raid, but it would give Social Security a different
dimension that I think is important to Americans, especially in this
day and age, and that is that it would set up personal accounts for
each American in the Social Security system. That money would actually
have their name on it.
A lot of people think that the Social Security money they pay in goes
into an account with their name on it. But that is not the case. It
goes into the trust fund and gets spent on a number of things.
What the GROW Act would do is set up personal retirement accounts for
each person in the Social Security system. Everybody who is paying in
taxes would have this account, and that money could no longer be spent
on other government operations. It would stay in Social Security. It
would be our money. It would have our name on it. It would be
inheritable. It is not today, so if you die at 64 and you still have
not begun receiving your Social Security benefits, those benefits are
lost and your family does not have any claim on those benefits.
So the GROW accounts would be created for anybody under 55, unless
they choose not to participate. Then they can stay in traditional
Social Security. So that Social Security surplus would be dedicated to
these GROW accounts and they would be invested in guaranteed,
marketable Treasury securities.
Another concern and some of the demagoguery we have heard is that you
can invest this money in something and lose it in the stock market.
That is what you hear, it is a risky investment.
These are marketable Treasury securities, not risky investments. They
are real assets that are very conservative, in fact. Upon retirement,
these account balances would be used to help pay Social Security
benefits.
I mentioned that they are inheritable. I think this is worth
stressing over and over again, because most people understand that they
do not have an ownership right in Social Security. But under the GROW
Act, they would.
So I think there are a lot of things that are an advantage to people
that these proposals would really bring that they are not aware of; and
as long as some of these groups, such as the ones in the district of
the gentleman from Indiana (Mr. Chocola), are out there, we really need
to clear the record, to make it clear.
I serve on the Committee on Ways and Means. We have been looking at
ways to basically shore up Social Security, to make sure that the
American public will have an investment that they can depend upon for
their retirement; something that will be real; something that will give
them a real ``bang for their buck'' as they invest it through their
entire lives. And we know that investing it this way is just much
smarter. Every person who pays those taxes certainly wants to get the
most out of them that they can.
Mr. Speaker, I would say to the gentlewoman from Kentucky (Mrs.
Northup), I really appreciate the opportunity to join you tonight.
Mrs. NORTHUP. Mr. Speaker, reclaiming my time, I think it is really
important that we talk about not only the benefits, but some of the
misinformation out there, because we know that our constituents are
hearing it. They are eager to figure out for themselves what the best
course is, and it is important that we both not only talk about the
benefits, but also the misinformation and what the answer is to that.
One of the things I wanted to ask my colleague, the gentleman from
Indiana (Mr. Chocola), about, he was talking about some of the
questions or misinformation that were raised in his district with his
constituents who he expects to be in his office.
One of the things I hear all the time is that these GROW accounts,
they are going to increase the deficit for our country and that is
going to jeopardize sort of the solvency of the country. Can the
gentleman discuss that, whether or not these accounts are going to
specifically make the deficit worse.
Mr. CHOCOLA. Mr. Speaker, I appreciate the gentlewoman bringing up
that point. That is a consistent criticism of the GROW accounts, that
they would increase the debt or the deficit; but in fact what they do
is unmask or reveal the true budget deficit.
Today we have a Social Security surplus, which we have talked about.
That money is used to pay for general government needs, and it reduces
or masks the amount of money we really need to run government, because
we are taking Social Security money and using it for general government
purposes.
With GROW accounts implemented and enacted, we would stop doing that.
We would stop using Social Security surplus money for anything except
Social Security. The problem with that, the critics would say, is that
we have to go find the money to fund general government somewhere else.
So on paper it increases the deficit, when in fact it unmasks the
deficit.
It is simply a matter of truth in accounting. It is being honest with
the American people how much money we spend as a government and where
the money comes from. Then we will be more accountable to the American
people by not spending their Social Security money on things other than
Social Security and being honest as to how much we need to spend or
borrow to fund the general government needs.
Mr. Speaker, it is simply a matter of transparency and truth in
accounting. Frankly, we need more of that in other parts of government,
which we could spend several hours talking about. It is being honest
with the American people, and I think it is one of the great benefits
of GROW accounts.
Mrs. NORTHUP. Reclaiming my time, in fact, for years Congress has
spent the Social Security surplus on other things, and it looked as
though those things were all affordable because in fact it did not look
like deficit spending, when in fact it was taking the Social Security
surplus and diverting it to other things.
Sometimes people ask me why Congress did that. I always say, you
know, if we could bring back the Congresses, if we could get Roosevelt
to come back or the ghost of Roosevelt to come back, if we could bring
back the Congresses in those days, or even the Congresses in the 50s
and the 60s, we could ask them that question. I will bet if they looked
at things through our eyes, they would think that maybe they should
have put these dollars away into accounts that the American people
would own and keep them away from Congress.
But all we can do is act as good stewards of the Social Security
dollars that are coming in today. None of us can reach back and change
what happened in the 60s and the 70s and the 80s. I think the American
people understand that. They realize that it is not today's Congress
that spent the Social Security surplus in the 60s, but they do expect
us to do what we ought to do to make it solvent for the future.
Mr. CHOCOLA. Mr. Speaker, if the gentlewoman would yield further,
just to put this into context, between 2006 and 2015, it is estimated
that the surplus will be $790 billion that we would put into personal
accounts for retirement needs for Social Security benefits versus
spending it on general government purposes. So this is a lot of money
that can be put aside now for Social Security benefits in the future. I
think it is high time we start.
Mrs. NORTHUP. Reclaiming my time, it is a huge amount of money. It
would be a great investment in the long-term solvency of the program.
I did not know whether the gentlewoman from Pennsylvania (Ms. Hart)
[[Page H6194]]
might want to talk a little bit about the deficit too, because I do
think that is something we are hearing a lot about, and it is very
reassuring to Americans when they understand this is not more debt.
Ms. HART. Mr. Speaker, I thank the gentlewoman for yielding. I would
like to discuss that a bit.
I think it was mentioned, the large amounts of money that are
involved in Social Security, because everybody who is working is paying
into their Social Security fund. In fact, I think a lot of people do
not really realize how much they are paying in. They are paying this
tax and their employer is paying the tax for them, as well, and it
totals 12 percent-plus of their income that is going into the Social
Security fund. That is a lot of money.
If people could actually have control of that money, they could
certainly earn more on it through these investments, even in Treasury
bills, but especially in different kinds of securities.
But the deficit, people talk about how we spend too much money. One
of the ways, certainly, to prevent the Congress from spending too much
money is to not give the Congress this extra money to spend. Because
what has happened over the years is it has just become sort of an
assumption that that money that is sitting there in the Social Security
surplus can be spent on whatever we want to spend it on. Unfortunately,
that creates a serious problem for us down the road, because we are not
investing that money, because we are not getting a return on that money
that is going to help us pay Social Security benefits down the read.
So the idea of the GROW accounts, which would prevents us from
spending that money, I think has a double benefit. It would tell the
Congress, hey, this is not your money to spend, and you need to find
ways to get your spending in order; you need to get ahold of that and
review the programs and cut the programs that are not really doing
anything for the American people. In fact, right now I am pleased to
say there have been well over 100 programs cut in this year's
Republican budget, which is very important.
We need to continue along that track. One of the ways to push us to
continue along that track is to take the Social Security surplus and
put it in a bunch of personal lockboxes like the GROW accounts would
set up, so that every American will have confidence that there will be
money there for them in Social Security, with their name on it, so we
will have that money for them when they need it when they retire.
Mrs. NORTHUP. Reclaiming my time, it is really a matter of restoring
the confidence of the American people that we are going to act in the
best long-term interests, fiscal interests, of this country. So I thank
the gentlewoman very much for her thoughts on that.
I see that now my good friend, the gentleman from Georgia (Mr.
Gingrey), is here. He has spent a lot of time talking about and
studying the issue of Social Security, is very knowledgeable about it;
and I am eager to hear his thoughts on this issue tonight.
Mr. GINGREY. Mr. Speaker, I thank the gentlewoman from Kentucky for
not only recognizing me for a few minutes, but for putting together
this special hour to discuss something that is so important.
As I went across my district, and I know my colleagues did the same
thing, talking about Social Security when the President first rolled
out his suggestion of having an individual personal account, it was not
just his idea, but I think a very good idea, to carve out up to 4
percent of the 12.4 percent payroll tax in an optional way for those
workers under 55, and to let that part of their Social Security account
be an account that they actually own, they actually have ownership of,
and it could enjoy the miracle of compound interest. Einstein said that
was the greatest power in the world, even more powerful than atomic
fission. But clearly that was a good idea. I think it is still a good
idea.
But as I talked about that in my town hall meetings across the
Eleventh District of Georgia, Mr. Speaker, the one recurring theme that
I heard from folks, mostly seniors in the audience, but a lot of times
they were younger workers, they said, Congressman, we are not sure
about this individual personal account thing.
I think people are afraid of change, and they would express a little
bit of hesitation and doubt about it. But one thing that seemed
consistent almost every time I did a town hall meeting, and I think I
probably have done at least 15 on this subject, was whatever you do,
Congressman, please, go back to Washington and tell your colleagues on
both sides of the aisle that this business of robbing, of raiding that
trust fund has got to stop. If you do not do anything else, just solve
that problem, because nothing else really matters if you continue to
take this excess money that has been coming in since 1935 when we had
15 workers for every beneficiary and people died before they reached
the age at which they could earn a benefit at age 65. Life expectancy
was 64 on average, and we did not have any problem.
{time} 2145
But we have time over these coming years. I say ``we,'' and my
colleague pointed out just a little earlier, we were not around, not
many of us, I think I was 3 years old when Franklin Delano Roosevelt
died. But Congresses have been spending that excess money in the so-
called trust fund to the point that $1.7 trillion is missing.
But I think it is important for us, my colleagues, to let the
American people know that that money was not squandered, it was not
wasted. We are not talking about fraud and abuse; we are talking about
spending money on things like K through 12 education, Head Start
programs, benefits for our veterans, which they so richly deserve, in
times like we are now when we are in a shooting war and we have to
equip our troops to make sure that we give them every opportunity to
win. That is where the money has gone.
I think Members of Congress on both sides of the aisle are, by their
very nature, compassionate. And when these folks come to us and say, we
need just a little bit more, Mr. Congressman and Mrs. Congresswoman, we
need just a little bit more, we have little children that have needs,
we have disabled people that have needs, that is where the trust fund
has gone.
So I think it is understandable. We can play this blame game and
finger point and say, well, the Democrats did this, or President
Clinton, or the Republicans have spent the money, or President Bush is
spending the money to wage a war in Iraq and Afghanistan. But what we
are talking about now with this idea of the GROW account is to answer
the complaint of the people in the 11th district of Georgia, and I am
sure my colleagues' districts as well, let us do finally put a lockbox
on the Social Security Trust Fund.
So I really commend the members of the Committee on Ways and Means,
the gentleman from Louisiana (Mr. McCrery), the gentleman from Florida
(Mr. Shaw), the gentleman from Texas (Mr. Sam Johnson), the gentleman
from Wisconsin (Mr. Ryan), the gentleman from Arizona (Mr. Shadegg),
and my colleagues here tonight, the gentlewoman from Pennsylvania (Ms.
Hart) and, before that, the gentleman from Indiana (Mr. Chocola) was
with us. I think the Committee on Ways and Means has really come up
with a novel idea. I hope we will not abandon the thought of individual
personal accounts coming out of the payroll tax, and I think at some
point we will do that, and we need to continue to work on the solvency
of Social Security.
But this is a great way, these GROW accounts, to say that we are
going to take the excess, and there will be, Mr. Speaker, an excess of
revenue coming in over benefits being paid out from now until 2017. I
do not think anybody disagrees with that. I think one of my colleagues
tonight said that we are talking about maybe as much as $700 billion
over that period of time before we reach that cross-over where the
amount coming in is the same as the amount going out. But we have got
that window of opportunity, we are talking about 12 years, where we can
allocate that money, that excess money to individuals younger than age
55, unless they opt out, and then in 2009, as I understand the GROW
accounts, we will actually not only have the opportunity to invest that
into government bonds, but put it in a well-managed Thrift Savings Plan
so that our beneficiaries can then enjoy the miracle of compound.
So I am really glad to be here tonight to lend my thoughts to it. I
think it is
[[Page H6195]]
a great idea. I commend the committee. I look forward to having the
opportunity to go back home during the August recess and tell my
colleagues that yes, we are finally going to respond to the best
suggestion that I have heard, and it was from the folks back home; let
us finally put a lockbox on the excess dollars coming in.
With that, I will yield back to the gentlewoman from Kentucky and
thank her for letting me participate this evening.
Mrs. NORTHUP. Mr. Speaker, I thank the gentleman, and I think he
raises a point that is important.
Many nights we have talked about personal savings accounts and how
many of us believe that in the long run they are the best answer to
solvency, to making sure that our younger workers have a system that is
there for them, that gives them a good return on investment, a system
where as Americans live longer they can count on these dollars in their
retirement.
But that is not possible today. It is not possible for a variety of
reasons. Part of it is politics, part of it is all of the scare tactics
that are being used. But, more importantly, sometimes, when you have a
very big, complicated problem, it is easier if you solve it in steps,
and the first step that Americans seem to be asking us to do is stop
making the problem worse by spending the Social Security surplus on
other things other than Social Security.
I think that is very exciting. When we do that, and I am convinced we
will do that, we are going to see that seniors are going to keep
getting their Social Security check just like they always have; we are
going to see that younger workers are going to find out each year what
they have in a personal account for themselves that is going to grow.
Many families, especially young families that are trying to balance
children and new jobs and so forth, this may be the only savings that
they have from one year to the next, and that will be reassuring. And
as people understand how that works, I am convinced that the support
and the interest in growing that to truly solving the Social Security
system will be there.
I know that my friend, the gentlewoman from Pennsylvania (Ms. Hart)
also has talked before about the hole we are in, if we do nothing, and
why we have to deal with this problem now. I think it is important that
the gentlewoman add that to the record of our discussion tonight.
Ms. HART. Mr. Speaker, I thank the gentlewoman for yielding. I will
be brief. I think it is important for us to understand the absolute
size of this problem if we do not do anything. Because again, GROW
accounts are the beginning of a solution to the problem of making sure
that there are benefits that are going to be able to be paid to people
who are expecting Social Security.
Right now we just cannot make that statement. We cannot tell people
we are going to make sure all of your benefits are paid because, in
fact, in 2041, the trust funds will be gone. At that point, the payroll
taxes will be paid out as they come in and will only cover 74 percent
of the benefits. A couple of years later, it declines to a much lower
percentage, in the 60 percent range, and lower and lower. Obviously,
people do not want to receive less in their Social Security check.
So we are in a position where we need to identify and really realize
that we have a serious unfunded liability, the gap between program
revenues, things that are coming in, and the costs that we know that we
will have to pay. It is like a pension plan that is going bankrupt.
After considering the trust fund's current balance of about $1.7
trillion, which is the unfunded liability, the cost of the program
would be $4 trillion in present value. That is $300 billion more than
last year's report. So the longer we wait to try to change the system,
the more it is going to cost to change the system and find a way to
GROW accounts, and this GROW account bill will help us find a way to
fill in that unfunded liability.
So the promise to maintain those benefits for people is really an
empty promise until we make a change.
We have an opportunity from now until 2017 to start real accounts
with real money in them for the American public.
I really thank the gentlewoman from Kentucky (Mrs. Northup) for
bringing this to the attention of the American people, because they
need to spend some time and understand this issue so that they can
support these good proposals that are out there. I commend the
gentlewoman for what she is doing and I thank her for allowing me to
join her tonight.
Mrs. NORTHUP. Well, I am so excited. I know that the gentlewoman is
on the committee that is heading this up. It is an enormous challenge
and you all are doing a fabulous job. As the rest of us worry about
this and study it and provide ideas, we are so grateful that the
gentlewoman's committee is committed to making this happen.
Mr. Speaker, I see now that the gentleman from Texas (Mr. Hensarling)
has joined us. It is the end of a very long day, and I am so
appreciative that the gentleman came down, because I know that he has
worked hard on these proposals and has been committed to them. He has
been here with us on other evenings as we have talked about Social
Security, and we are eager to have the gentleman join us tonight.
Mr. HENSARLING. Mr. Speaker, I thank the gentlewoman for yielding,
and I especially thank her for her leadership.
Retirement security and saving Social Security is truly a critical
issue in America. To me, this is much more than a simple congressional
debate; this is a debate that I take very personally. Mr. Speaker, my
parents are in their seventies. Social Security is part of their
retirement, a very important part of their retirement security, and not
only as a United States Congressman, but as a son, I am committed to
ensuring that they receive every single dollar that Social Security
says that they will receive. I have a moral obligation to my parents,
and I know everybody in Congress feels that same obligation.
But not only do I feel I have a moral obligation to my parents, I am
also a father. I have a 3\1/2\-year-old daughter. I have a 22-month-old
son. Social Security as we know it will not be there for them unless we
act.
I can understand how different people in this body can have different
solutions to the problems that we are facing in Social Security, but I
cannot believe those who would simply deny the existence of the
problem.
Mr. Speaker, I guess the challenge is, because too often in this town
we are looking to the next election and we are not looking to the next
generation. I guess there is some good news, and we are talking about
it tonight. Social Security is still running a surplus today. That is
good news. Those who are on Social Security, those who will soon be on
Social Security, they are going to be in fine shape, Mr. Speaker. But
it is those future generations, it is for everybody in America who may
have that 3\1/2\-year-old daughter, that 22-month-old son, for whom we
have to do something.
Now, as much as we would like in Congress to repeal the laws of
demographics, we simply cannot do it. We cannot deny the fact that when
Social Security was first created, you had almost 50 workers paying
into the system for every one person taking out of the system. Now, Mr.
Speaker, we are down to only 3 and a third workers, 3 and a third
workers paying into a system for every one that is taking out. Very
soon, we are going to be down to 2 workers paying into the system for
every one.
Another demographic trend that we cannot outlaw, it is great for
seniors, not too good for Social Security, is the average life span in
America is increasing. When Social Security was first created, the
average life span of an American was 60 years of age. I mean, their
name was called on the roll up yonder before they ever saw one penny of
their retirement. That is what many Americans faced. Well, thanks to
the marvels of modern medicine, which my colleague, the gentleman from
Georgia (Dr. Gingrey) knows a lot about, the average life span of an
American today is 77 years of age.
So we have more and more retirees, we have fewer and fewer workers,
and those retirees are living longer and longer and longer, and the
system simply cannot handle that. I mean, right now the cost of doing
nothing is tremendous. We are looking right now at a shortfall in
Social Security of $10.4 trillion.
[[Page H6196]]
Now, I am not sure if anybody in America can really conceptualize or
grasp this figure of $10.4 trillion, trillion with a T. But I did a
little math and what that means, Mr. Speaker, is if we wanted to try to
solve the problem of Social Security for future generations and solve
it today, every American would have to write a check out for $34,000; a
family of four over $125,000, to try to solve the problem today.
Now, what happens if we do nothing? And unfortunately, many of our
colleagues on the other side of the aisle are part of the school of
thought that we should do nothing. Well, if you look very closely at
what the Social Security law says today, what current law says, what it
really says is that my children are going to face an automatic benefit
cut of probably over a third. Now, when I go to town hall meetings in
my congressional district back in Texas and ask how many people are on
Social Security and maybe half of them raise their hands, I ask, how
many of you would be willing to take a third cut of our Social Security
benefits? Not one hand goes up. And then I ask, well, how about your
grandchildren? Do you mind if they have their benefits cut by a third?
Not a single hand goes up.
Current law says, when the trust fund is exhausted, there will be an
automatic benefit cut, and it can approach one-third. Mr. Speaker, that
is just not fair. I mean, this is an issue of generational fairness.
I would love for us to solve the problem of Social Security tonight.
Every day we put it off, it is costing the American people an extra
$200 million. We are kicking that can down the road, because too many
people are looking at that next election and not the next generation.
So as much as I would like to solve the problem tonight, I know perhaps
that is not realistic.
{time} 2200
But surely, Mr. Speaker, surely we can agree that the trust funds in
Social Security ought to be dedicated to Social Security. But that is
not the case. Forty-nine different times Congress has taken that money,
and they spend it for something else.
Now, sometimes they spend it for really good things. They spend it on
Kevlar vests for our troops in Iraq. Maybe they spend it to help
guarantee a student loan. Maybe they help a low-income person get into
their first home.
But more often than not, they also spend it on wheelchairs for
Medicare that cost five times as much as those in the VA. They spend it
on $800,000 outhouses in Iowa, and the toilet does not even flush. They
spend it on studies of how and why college students decorate their
dorm, and the list goes on and on and on.
There is a spending problem in Washington, D.C., Mr. Speaker, and we
need to make sure that the Social Security trust funds are solely
dedicated to Social Security. And so, fortunately, a number of our
colleagues came up with an idea.
They call them GROW accounts, and it is a very, very simple idea. It
says, take the remaining Social Security surpluses, and we think maybe
we have about 12 years left before Social Security begins to go
bankrupt. If the tidal wave of red ink only gets larger and larger and
larger, let us at least save the surpluses we have and let us get it
out of Washington because Washington has been taking that money and
spending it on something else.
Let us get it into your account, an account with your name on it,
something that you own. And, Mr. Speaker, a lot of people in America do
not realize that they do not own their own Social Security. Several
Supreme Court cases have ruled you do not own your own Social Security.
So this is a very simple idea. Surely, we in Congress can at least
agree on this one small baby step, to try to keep the security in
Social Security. Let us take these remaining surpluses, let us put them
into an account that you own, that Congress cannot spend, that
bureaucrats cannot take away. You own it, something that you can leave
to your family. Put it in a very safe investment, put it into a T-Bill.
Now, I do not know how anybody, Mr. Speaker, can call this a risky
proposition, but they do. Let me tell you what is really risky. What is
really risky is Americans leaving their retirement security here in
Washington, D.C. when the trust fund has been raided 49 different
times.
Mr. Speaker, there have been 20 different tax increases on Social
Security, 20 different tax increases. And every time that the taxes are
increased, your rate of return goes down. And that is important because
we are losing the security out of Social Security.
Now, my grandparents, who are deceased, who were born about 1900,
they got about a 12 percent rate of return on their Social Security.
That was a great rate of return. My parents, who I alluded to earlier
this evening, they were born in roughly 1930. They are getting about a
4\1/2\ percent rate of return on their Social Security, and that is not
bad. My generation, represented by those born roughly 1960, we are
going to get about 2\1/2\ percent rate of return on our Social
Security. That is barely keeping pace with inflation. And my children,
my children, my 3\1/2\-year-old daughter, my 22-month-old son, Mr.
Speaker, they are going to get a negative rate of return. They are
going to put more money into Social Security than they take out.
Mr. Speaker, that is not fair. That is where the risk is. The risk is
doing nothing. The risk is leaving our Social Security here. There have
been multiple benefit cuts in Social Security. We cannot have the trust
fund raided. The tax increases, the benefit cuts, the declining rates
of return, the no ownership rights. Surely we can agree on this modest
step forward of setting up these GROW accounts so that Americans can
count on that Social Security so the trust fund cannot be raided and we
can have personal accounts with your name on it. And, Mr. Speaker, that
would be one positive step that we could take in this body to help save
Social Security for future generations.
Mrs. NORTHUP. I thank the gentleman from Texas (Mr. Hensarling), who
is a good friend. I also thank the gentleman from Georgia (Mr. Gingrey)
and the other Members that joined us tonight to talk about this very,
very important issue.
You talk so much about the different generations. It is amazing how
many people that are concerned about Social Security solvency think
about this in terms of all the different generations. I often picture
the generations sort of lined up, my mom and dad, my dad passed this
year, but my mom. She is 82, and she is sort of up at the front of the
line. And then you get back, as people age, and I am 57 and so I am
back still on this side of the line of retirement, eight steps away
from retirement. My children in their 30s and 20s are further behind me
in the line.
And the way Social Security works is everybody in the back of the
line, before they get to retirement, helps pay the retirement for those
at the front of the line. The problem is the line in the back is
getting shorter as the line in the front is getting longer. What GROW
accounts do is allow younger workers in a sense to throw over the line
some savings that will be there when they get there. It saves the
people behind them in the line from having to fully fund their
retirement, and it gives them the confidence that there will be a
retirement savings for them.
It begins to change from of a pay-as-you-go system to a long-term
funded solvent system that will take care of Americans today, Americans
tomorrow, and Americans in the future, so that our whole country will
be solvent and able to address the emerging challenges that are bound
to emerge with each generation. It is the right thing to do. It is the
fair thing to do. It is a good idea for a transition to go through the
GROW accounts so that we can set up a system that helps us transform
Social Security from a pay-as-you-go to an invested solvent system.
I would like to thank my friends and colleagues who joined us late
tonight to discuss this important issue. I look forward to working with
you, and I know you do also with all the Members the Congress so that
we can serve the American people in a responsible way.
Mrs. NORTHUP. Mr. Speaker, I yield back the balance of my time.
____________________