[Congressional Record Volume 152, Number 72 (Thursday, June 8, 2006)]
[Extensions of Remarks]
[Pages E1057-E1059]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INTRODUCTION OF THE SAFE COMMISSION (SECURING AMERICA'S FUTURE ECONOMY)

                                 ______
                                 

                           HON. FRANK R. WOLF

                              of virginia

                    in the house of representatives

                        Wednesday, June 7, 2006

  Mr. WOLF. Mr. Speaker, few are willing to admit--much less discuss--
the looming financial crisis facing our country.
  However, the longer we put off fixing the problem, the worse the 
medicine will be and the greater the number of Americans who will be 
hurt. We need to begin this conversation with the American people 
today.
  That is why I am introducing legislation to establish a national 
commission that will put everything--entitlement benefits and all other 
federal programs as well as our tax policies--on the table and require 
Congress to vote up or down on its recommendations in their entirety, 
similar to the Base Realignment and Closure Commission (BRAC) first 
created by former Rep. Dick Armey in 1988.
  This commission would be called the SAFE Commission, to secure 
America's future economy.
  Many will say the problem is too big to be fixed. Some will view the 
proposal as too risky, particularly in an election year. Others will 
say it is an abdication of congressional responsibility.
  My response to such comments is that the problem is so great we can 
no longer look for excuses not to act. Nothing, I believe, is too big 
to undertake.
  Abraham Lincoln, one of our Nation's greatest presidents, once said, 
``You cannot escape the responsibility of tomorrow by evading it 
today.''
  Yet that is precisely what we have been doing--avoiding our 
responsibility to future generations of Americans by passing on a 
broken system in the form of unfunded Social Security, Medicare and 
Medicaid obligations. And it's been both sides of the aisle and in both 
Republican and Democrat administrations.
  The growing gap between money that has been promised to future 
generations in various entitlement programs and that which is available 
to pay these promised benefits is staggering.
  To meet the government's current unfunded promises for future 
spending, every American--including multimillionaires like Bill Gates 
and Warren Buffett--would have to hand over 90 percent of their 
personal net worth in today's dollars. This is unacceptable.

  I deeply believe there is a moral component that goes to the heart of 
who we are as Americans. By that I mean, I wonder if we have lost the 
national will to make tough decisions that may require sacrifice? 
Moreover, have we lost the political courage to reject the partisan and 
special interest demands and do what is best for our country?
  If we remember the legacy we have inherited, the debt we owe to 
previous generations--our grandparents and our parents and the 
sacrifices they made to make our country what it is today--we all will 
be moved to do our duty.
  The SAFE commission should be embraced by both sides of the aisle. I 
am open to suggestions about the legislation from members of both 
parties. This is a national issue; not a Republican issue or a Democrat 
issue.
  A month ago I took a trip to Antietam National Battlefield. As I 
walked along ``Bloody Lane,'' the site of one of the most vicious 
battles of the Civil War, I was struck by how many individuals made the 
ultimate sacrifice.
  September 18, 1862 was the bloodiest single day in American history. 
There were more than 23,000 casualties, nine times as many Americans 
killed or wounded than in World War II's D-Day on June 6, 1944. More 
soldiers were killed and wounded at the Battle of Antietam than the 
deaths of all Americans in the Revolutionary War, the War of 1812, the 
Mexican War and Spanish-American War combined.
  I also recently visited the site of George Washington's crossing of 
the Delaware River in anticipation of the Battle of Trenton. Washington 
was down to only 3,000 soldiers and the war was almost lost. Yet, with 
great courage--and sacrifice--Washington and his forces were successful 
in changing the direction of the American Revolution.
  And with Memorial Day's recent passing, I think of the tremendous 
sacrifice being made by the thousands of men and women serving today 
not only in Iraq and Afghanistan, but around the globe. Their families 
here at home are also making great sacrifices.
  These examples of sacrifice for country are what led me to ask just 
what are we passing on to those who are coming after us?
  In two short years, the baby boom generation will begin trickling 
into retirement. Five years later, that trickle will become a flood 
that within five more years will become a tsunami that will begin to 
wreak havoc on our Social Security and Medicare systems.
  As we tragically learned the lesson of Katrina in New Orleans, the 
best time to deal with a damaged flood wall is before the rains begin. 
Make no mistake; the levies that are our country's entitlement systems 
can only be plugged for so long. Without major repair and a long-term 
fix, we are facing a financial disaster like never before.

  There is near unanimous agreement by all who have looked at this 
issue: Social Security and Medicare are amassing huge deficits and are 
ill-prepared for the coming flood of new baby boom retirees.
  When our retirement security programs like Social Security and 
Medicare were established, the ratio of workers supporting each retiree 
was more than 10 times the number supporting retirees today. In 1945, 
there were 42 workers for each retiree. Last year, the ratio dropped to 
3 workers for each retiree and is expected to drop to just 2 workers 
for each retiree by 2030.
  The 2006 Social Security Trustees Report paints a grim picture with 
projections that the Social Security Trust Funds will begin running 
cash flow deficits in 2017 and be exhausted in 2040--one year sooner 
than last year's projection. That means that by the year 2040, the 
projected federal income will only be sufficient to pay 74 percent of 
scheduled benefits.
  Perhaps even more troubling than the Social Security projections are 
those for Medicare.
  By 2010, the trust fund expenditures are projected to exceed annual 
income from all sources and the reserves will be depleted by 2018, 12 
short years from now. According to the trustees, ``Medicare's financial 
outlook has deteriorated dramatically over the past five years and is 
now much worse than Social Security's.''
  As a father of five and grandfather of 11--soon to be 12--the 
challenge posed by the pending retirement of baby boomers strikes me as 
much more than a routine policy discussion.
  Without action, just what kind of future are we leaving to our 
children and grandchildren?
  My youngest grandchild is just two months old. By the time she is 15 
years old, 29 cents out of every dollar paid in income taxes will be 
required to cover the needs of Social Security and Medicare to pay for 
my retirement. That's not including payroll taxes of almost 15 percent.
  By the time she completes her undergraduate degree, more than 45 
cents out of every dollar of income taxes then will be needed to cover 
the shortfall of Social Security and Medicare, rising to 62 cents out 
of every dollar if she decides to get her doctorate 10 years later. 
Again, this is on top of payroll taxes.
  Sadly, before she retires--and looks into the eyes of her own 
grandchildren--retired baby boomers will be consuming 88 percent of 
every income tax dollar. With the baby boomers consuming so much, there 
will be little money left to meet the needs and challenges of 
her generation. Not only is this unacceptable, it raises serious moral 
questions. Is it right for one generation to live very well knowing 
that its debts will be left to be paid for by their children and 
grandchildren?

[[Page E1058]]

  Before he left the Federal Reserve, Alan Greenspan gave a speech in 
Jackson Hole, Wyoming, where he echoed the significance of the coming 
baby boom retirement on our budget and economy. In stark language, he 
noted that because of lower fertility rates and longer life 
expectancies, we are faced with dramatic elderly dependency ratios that 
will pose ``substantial challenges to Social Security,'' which he noted 
is already in ``chronic deficit.''
  This coming crisis demands our immediate attention. While there is 
never a convenient time to make hard decisions, the longer we wait, the 
more dramatic the required remedy will be.
  According to the Government Accountability Office (GAO), balancing 
the budget in 2040 necessitates one of two alternatives: cutting total 
federal spending by 60 percent or raising federal taxes by two and half 
times today's level.
  Either of these options would devastate our economy. But if we can 
summon the resolve to begin these difficult conversations now--and make 
some hard choices on the front end--we can change our current course.
  Basic economics underscore the dangers inherent in our current 
national trends. America is living on borrowed dollars and borrowed 
time. U.S. spending is outpacing income growth and personal savings 
rates have dropped to negative 1.3 percent in the first quarter, 
meaning that U.S. consumers are spending more than 100 percent of their 
monthly after-tax income. In spite of this, our economy has remained 
strong, in large part because other countries have been willing to buy 
our debt. In fact, we have benefitted greatly from low long-term 
interest rates that have been kept low largely because of continued 
foreign purchases of our national debt. As our fiscal deficit grows, we 
can finance it in one of three ways: through foreign-held debt, through 
reduced domestic spending, or by selling U.S. goods abroad. In 2004, 
foreigners bought $900 billion of U.S. long-term bonds. I am told that 
we now need more than $2.6 billion a day of capital inflows to fund our 
savings shortfall.
  As our fiscal deficit balloons, our current account deficit is 
projected to hit historically unprecedented highs, and our country's 
net investment position abroad is eroding rapidly.
  While the Asian Central Banks and petrodollar countries like those in 
the Middle East have no doubt contributed to our country's growth (the 
housing boom and the ability of U.S. consumers to spend), the purchase 
of U.S. securities by foreigners has, at the same time, enabled us to 
live way beyond our means.
  This makes our country--and our children and grandchildren--much more 
vulnerable in the future. Will a geopolitical dispute with a major oil 
exporter cause it to stop funding our deficit, resulting in a sharp 
drop in the dollar, a spike in interest rates and a market meltdown?

  If foreigners lose faith in the U.S. and our ability to put our own 
fiscal house in order, their investment decisions could send shock 
waves through our financial markets and even result in a collapse of 
U.S. real estate prices.
  Our children and grandchildren deserve a future that will allow them 
to respond to the challenges of their generation.
  Who could have predicted, even 10 years ago, that today our Nation 
would be engaged in a global war on terror.
  Each generation faces its own international threats, and we have an 
obligation to ensure that future generations have the flexibility to 
respond to the challenges of their time.
  In addition to international considerations there are domestic 
factors. Getting our financial house in order will allow us to 
prioritize spending in areas such as cutting edge medical research for 
cancer, Alzheimer's and autism, and for education, particularly in 
mathematics and science, which are critically important to America's 
remaining the world's leader in innovation and technology.
  It is with the hope of building consensus on this very difficult 
issue that I am introducing legislation to establish a bipartisan 
commission charged with evaluating the scope of our fiscal problem and 
recommending tangible solutions. One of the most critical 
responsibilities of this panel will be explaining the crisis we face 
and listening to the American people about how to get the country back 
on sound financial footing. It will also develop a strategic plan for 
the future. It will look beyond the Beltway for solutions, holding at 
least 12 town meetings--one in each of the Nation's Federal Reserve 
districts--over the span of six months in order to hear directly from 
the American people.
  The SAFE commission will be comprised of 15 voting members, three of 
which will be appointed by the president, three by the Senate Majority 
Leader, three by the Senate Minority Leader, three by the Speaker of 
the House, and three by the House Minority Leader. The director of the 
Congressional Budget Office and the Comptroller General of the United 
States will be appointed as non-voting ex-officio members of the 
commission to lend their expertise. The president will have the ability 
to appoint the chair from among the 15 voting members.
  To be successful, I believe the commission must include men and women 
who are more committed to their country than they are to their 
political party and committed to working in a bipartisan manner. Names 
such as former U.S. Treasury secretaries James Baker and Robert Rubin, 
former Federal Reserve Chairmen Alan Greenspan and Paul Volker, former 
Senators Phil Gramm and Bob Kerrey and former Congressmen John Kasich 
and Charlie Stenholm come to mind. Leading economists from both the 
public and private sectors must also be included on the panel. 
Bipartisanship is critical to the commission's success.

  I have heard criticism that such weighty decisions on the Nation's 
financial future are the responsibility of Congress. Because of the 
ever-increasing politically charged atmosphere that has come to 
characterize dealings in our capital city, I fear that partisan rather 
than national interest has become the order of the day. Congress is 
paralyzed. Our political system is polarized. Many now only think about 
``red'' or ``blue'' ideology, which has led to paralysis and disregard 
of the common good. The American people deserve an honest assessment 
about the federal government's future saving's account and checkbook--a 
discussion driven not by politics, but by statesmanship and one which 
elevates the Nation's sights.
  Working together to find common ground, this group will 
comprehensively review entitlement benefits, patterns in savings and 
insurance for retirement, tax policies and the long-term implications 
of increasing foreign ownership of the U.S. Treasury.
  Everything must be on the table. As a fiscal conservative, I believe 
that the economy grows when people keep more of their hard-earned 
money, and my voting record reflects this belief. But given the 
enormity of the challenge, the commission needs to be able to look at 
every component of our fiscal policy to fairly assess where we stand 
and how we can best move toward a sound fiscal future. In looking at 
revenues, I believe any changes in the tax code must help simplify the 
system and stimulate increased economic growth and thereby tax revenue. 
The late William Simon, who served as Treasury secretary under 
presidents Nixon and Ford, believed ``the United States should have a 
tax system, which looks like someone designed it on purpose.''
  The IRS estimates Americans spend 6.6 billion hours per year filling 
out tax forms--including 1.6 billion hours on the 1040 form alone and 
nearly $200 billion on tax compliance. That amounts to 20 cents of 
compliance cost for every dollar collected by the tax system.
  Shouldn't we have a system that people understand? One that 
encourages faster growth in business formation, jobs, family income and 
tax revenue? A simplified tax code also could help increase the 
personal savings rate, which went negative for the first time since the 
Great Depression earlier this year.
  After spending six months conducting town meetings around the country 
to determine the scope of the problem and consider solutions, the 
commission will present to Congress a report describing the long-term 
fiscal problems, public suggestions and views expressed during the town 
meetings and policy options available to ensure federal programs and 
entitlements are available for future generations.
  With a bipartisan two-thirds majority vote, the commission will send 
to Congress a legislative package to implement the commission 
recommendations no later than 60 days after the interim report. The 
administration and Congress will have 60 additional days to develop 
actuarially equivalent proposals to achieve the same cost savings. 
Essentially, no later than 10 months from the organization of the 
commission, Congress would be required to vote--up or down--on each 
proposal.

  For example, if the interim report is delivered on January 1, then 
the commission's legislative package would be due by March 1 and any 
alternative developed by Congress or the Administration would have to 
be presented by May 1.
  All proposals must include a 50-year CBO score in addition to 
disclosing any impact on future federal liabilities. If more than one 
proposal receives a majority, the one garnering the greatest number of 
votes would prevail.
  I have put in the legislation procedures for expedited consideration 
of the commission's legislation to ensure that the Congress acts. I do 
not want this to simply be another blue-ribbon commission whose 
findings end up on a bookshelf somewhere only to collect dust and never 
be acted upon.
  I look forward to working with my colleagues to enact this 
legislation.
  I also welcome a forthright national dialogue. Only by working 
together in a truly bipartisan manner will we be able to secure 
America's future economy.

[[Page E1059]]

  I believe most Americans will welcome it as well, especially 
considering we all want what is best for our children and 
grandchildren.
  I will close with the cautionary words of George Washington's 1796 
farewell address:
  ``We should avoid ungenerously throwing upon posterity the burden of 
which we ourselves ought to bear.''

                          ____________________