[Congressional Record Volume 155, Number 29 (Thursday, February 12, 2009)]
[Senate]
[Pages S2236-S2239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BENNETT:
  S. 426. A bill to amend title II of the Social Security Act to 
provide for progressive indexing and longevity indexing of Social 
Security old-age insurance benefits for newly retired and aged 
surviving spouses to ensure the future solvency of the Social Security 
program, and for other purposes; to the Committee on Finance.

[[Page S2237]]

  Mr. BENNETT. Mr. President, we are awaiting the conference report on 
the stimulus package. The papers and the airwaves are full of the fact 
that this will be the largest expenditure we have made in peacetime 
perhaps in our history.
  I think it well, as we wait for the details of the package, for us to 
pause for a moment and take a longer look, beyond the recession, beyond 
the financial circumstances we are facing at the moment, and look down 
the road at what we are facing as a nation as a whole.
  So I am going to make a historic pattern today and then introduce, at 
the end, a bill I believe is necessary for us to deal with our 
financial problems. Let's go back a moment in history to the year 1966. 
Why do I pick 1966? Because that was the year we significantly expanded 
the entitlement spending in the United States. That was the year we 
adopted Medicare as a Federal program.
  As you see from the chart, at that time the mandatory spending 
constituted 26 percent of the budget. By ``mandatory,'' I mean spending 
that we have to do. People are entitled to receive that money whether 
we have the money or not; it is mandatory under the law.
  The largest portion of the mandatory spending in 1966 was Social 
Security.
  We were paying roughly 7 percent of our budget for interest. We had 
nondefense discretionary spending which was 23 percent. The big item, 
the big ticket item that dominated the budget in 1966 was defense. It 
constituted 44 percent of Federal spending in 1966.
  Let's see what has happened since that time. Let's see where we are 
today. In fiscal 2008, this is where we are. The mandatory spending has 
grown from 26 percent to 54 percent. Interest costs are roughly the 
same. They were 7 percent; now they are 8. Nondiscretionary spending 
has shrunk to 17 percent. Defense discretionary, even though we are in 
a wartime, is 21 percent. It is clear the mandatory spending is taking 
over control of the Federal budget. And interest costs, of course, are 
mandatory. We owe those interest costs.
  If you add the two together, 54 and 8, you get 62 percent of the 
Federal budget beyond the control of Congress. That is, when we pass 
the appropriations bills, when we make our decisions what to spend 
money for, we are spending money in the minority; whereas, 62 percent 
majority is out of our control. When you take away the defense spending 
and assume that has a semimandatory aspect to it and put defense 
spending in the mix, that means the Congress only has control of 17 
percent of the budget, an amazing change in the roughly 40 years from 
1966 until today.
  What does the future look like? I must make the point that every 
projection we make around here is wrong. Every projection is an 
educated guess. But the educated guess of what will happen 10 years 
from now is that mandatory spending will have grown to 61 percent and 
interest costs to 10 percent. That is 71. The Congressional Budget 
Office won't make a guess as to the divide between defense and 
nondefense discretionary spending. So all discretionary spending will 
be 29 percent, if we divide it in half, as it has historically been. 
That means the Congress, just 10 years from now, will only control 10 
percent of the Federal budget. All the rest of it will be on automatic 
pilot. That is a startling thing to look forward to.
  So as we talk about the stimulus package, we need to pause and pay a 
little attention to the entitlement spending that will go on and the 
kind of spending that will be built up, and we are adding to that with 
this stimulus.
  Here it is in the projections of what it will be. It constitutes a 
wave. Indeed, it has been referred to almost as a tsunami of spending. 
It is broken down into the three primary sources of mandatory spending, 
the three biggest entitlements. At the bottom is the one that is the 
biggest now, and that is Social Security. But Social Security does not 
grow as fast as the next one, which is Medicare. And then on top of 
that is Medicaid. One can see this tsunami of spending will take our 
mandatory spending, which at the moment is less than 10 percent of GDP, 
up to more than 20 percent of GDP.
  Let me show another chart that illustrates the same point in a 
slightly different way. You have the same entitlements. We have added 
in this chart discretionary spending. The solid line across is the 
average revenue of the Federal Government. It is recorded in percentage 
of GDP. We have historically had a revenue average of 18.4 percent of 
GDP. As we can see in 2007, the expenditures were slightly above that 
line. The largest portion of the expenditure was the combination of 
defense and nondefense discretionary spending. But the projection, as 
you go out, you see that at some point the entitlements will take over 
every dime we take in. The largest portion of it will be Medicare. 
Social Security will still be there. Medicaid will still be there. 
Discretionary spending will shrink even further as a percentage of what 
we are dealing with.
  Why is this happening? Is this some kind of a plot that somebody is 
involved in? No. This is a result of the demographic changes that are 
occurring in our country. This chart summarizes it with the headline: 
``Americans Are Getting Older.''
  If you go back to 1950, the percentage of Americans who were age 65 
or older was about 7 percent. It grew, the percentage, at a relatively 
slow level and then actually began to shrink. Why did it begin to 
shrink, the percentage of Americans 65 and over? This is a reflection 
of the Great Depression. People had fewer children in the Great 
Depression. So it follows that 65 years later, there were fewer people 
who were of retirement age. But following the Great Depression, you had 
the Second World War and then, when people came home from war, you had 
what historians refer to as the baby boom. All of those who came as a 
consequence of that are called the boomers.
  Starting in 2008, which is now history, the line started upward in a 
dramatic fashion. In the next 20 years, we are going to see something 
happen that has never happened in American history. In the next 20 
years, the percentage of Americans who are over 65 is going to double. 
That is what is driving all the numbers I put up before, all the 
changes in entitlement spending. These people are already born. This is 
not a projection that depends on guesses. This is something we can be 
sure of because the demographics of these folks are already there.
  Now the projection is that 20 years from now, when the baby boomers 
finish retiring, the rate of increase will slow down again and go back 
to the somewhat gentle rate it was before we got into this situation. 
But that is the reality we are dealing with. In the next 20 years, the 
percentage of Americans who are 65 or over is going to double.
  Let's look at some of the detail behind these demographics. Seniors 
are living longer. Not only are we going to get more of them, but they 
are living longer. That is why that trend is not going to turn down 
once the baby boomers have been absorbed. If you go back to 1940, after 
you reached 65 in 1940, if you were a male, your life expectancy was 
another 12 years, female 13. The chart shows how it has changed. Now if 
you are male and you reach 65, your life expectancy is another 16 
years. If you are female, it is another 19 years. And roughly a short 
decade away, a male will go to 18 and female to 21. That means all the 
entitlement programs geared toward our senior citizens are going to be 
tapped into for many more years than was the case when they were put in 
place.
  If we go back to the history of Social Security, we realize Social 
Security was something of a lottery. When Social Security started in 
the 1930s, roughly half of American workers did not survive until they 
were 65. So it was a lottery with 100 percent of the people paying in 
and only 50 percent taking anything out. Those who paid in got nothing 
for having done so. Those who survived to 65 got the benefit of their 
survival. Now you see they are living longer today, something like 75 
or 80 percent of workers who join the workforce at age 20 are still 
alive at 65, so the lottery doesn't work anymore. Instead of half the 
people paying into the lottery, not getting anything out, you have more 
than three-quarters of the people who pay into the lottery getting 
something out. Then, once they get it, they get it for longer. The life 
expectancy of Americans is going up, as was shown in the last chart. 
This

[[Page S2238]]

shows the trend lines for male and female.
  Again, in 1940, the life expectancy of Americans who had reached 65 
was, for males, about 75. When we get out into the future, it will be 
86. Put those two facts together. More people survive to 65 and, then, 
more people who get into the pool over 65 stay there for more years.
  All this means that the financial structure of Social Security is 
simply unsustainable. Social Security cannot deal with these 
demographic changes. This is not a Republican plot or a Democratic 
plot. This is the demographics of the reality of the fact that 
Americans are healthier, living longer, and surviving to older age. So 
you get this reaction to the Social Security situation.
  We go to the next chart that shows how Social Security works, in 
terms of the lottery I was discussing. In 1945, the program was still 
in its infancy. So this is a bit of a distortion. There were 42 people 
working and paying into the program for every one retiree drawing out. 
As the program matured and more and more of the workers retired, this 
number very appropriately came down. By 1950, there were still 17 
workers paying into the program for every one retiree drawing out. 
Today there are three workers paying into the program for every one 
drawing out. With the demographic realities I described in the previous 
charts, we are looking at a time when there will be two workers for 
every retiree. That means, if the retiree is going to take out $1,000 a 
month, each worker has to be putting in $500 a month in order to make 
that happen and for a long period of time. This is how we have dealt 
with this demographic change throughout our history. We have dealt with 
it by raising taxes. Every step along the way, as the number of workers 
to retirees has gone down, the amount of taxes every worker pays has 
gone up.
  Here is the history of the payroll tax increases: In 1937, you paid 
taxes on $3,000. That was it. Now it is $106,000. It has gone up and up 
all the way through.
  This is unsustainable. You cannot continue to deal with the 
demographic changes in Social Security by simply ratcheting up the 
taxes. You have to do something to stabilize Social Security in a way 
that it will be there for our children and our grandchildren.
  There is a reported survey--I have seen it many places, but I have 
never seen the source--that says a poll shows that among the young 
people in America, more believe in the existence of UFOs than believe 
Social Security will be available for them when they retire. I have 
grandmothers come up to me spontaneously on the streets in Utah and 
tell me how concerned they are their children and grandchildren will 
not have Social Security. I have people entering the workforce who come 
to me and say: Senator, my biggest question is, Will Social Security be 
there for me? And, increasingly, people are sure it is not.
  The legislation I introduce today is geared to make sure Social 
Security will be there for our children and our grandchildren and that 
it will be there at roughly the same level it is for us; that is, they 
will not have to accept significantly less than we accept in order to 
make this program work.
  How do we do that in the face of this demographic challenge? How is 
that possible? Well, one of our colleagues in the Senate for many 
years, Senator Pat Moynihan of New York, had the answer. Senator 
Moynihan looked back on how Social Security benefits were calculated, 
and he said: We calculate the increase in Social Security benefits on 
the wrong base. I do not want to get too technical, but the term that 
applies is ``wage-based'' increases for cost of living. Senator 
Moynihan pointed out the cost of living is not going up as rapidly as 
wages are. So if we would just adjust the base from wage base to cost-
of-living base, a true cost-of-living base--that means we would slow 
down the rate of growth in benefits, and in slowing down the rate of 
growth in benefits in that fashion, we would solve the problem. It 
would become solvent.
  That is fine. But what if you are someone who depends upon Social 
Security as your sole source of retirement? It was never intended that 
would be the case when it was put in place, but it has become that way 
for too many Americans. If they were to give up the benefit that comes 
from an overpayment--that is the form of wage-based adjustments--to go 
to the true payment of cost of increasing, which is the cost of the 
Consumer Price Index, it would hurt them. They would give up 
significant benefits. On the other hand, if you look at people such as 
Warren Buffett and Oprah Winfrey, they do not really need to have 
Social Security go beyond the true increase in cost of living.
  So the solution is to say, for those who are at the bottom of the 
economic ladder, we keep Social Security benefits exactly as they are. 
For Warren Buffett and Oprah Winfrey and those who are at the exact top 
end of the economic ladder, we take Senator Moynihan's idea and we put 
it in place and say: You will have to struggle by with a Social 
Security plan based on the actual increase in cost of living rather 
than an inflated increase in cost of living.
  What about those of us who are in between, the people at the bottom 
and the people at the very top? For those of us who fall in between 
those two areas, we get a mix, a blend, if you will, of wage base or 
cost-of-living base. It is called progressive indexing. All of the 
details are available in hearings that have been held on this subject 
which I chaired when I was chairman of the Joint Economic Committee and 
in other publications that have addressed this question.
  What will this do to the actual benefits of the people in Social 
Security? We have asked the Social Security Administration to tell us. 
Now, again, these are projections, and as projections, they are subject 
to some kind of challenge. But they are the best analysis that people 
can make.
  We start out with people who are currently 55; that is, only 10 years 
away from the 65 retirement date, although Social Security, by the time 
they get there, will be at 67. But what is going to happen to them 
under the bill I am introducing?
  As shown on this chart, the dark bar is what a 2009 retiree will get. 
The red bar is what a 2019 retiree will get. These are in constant 
dollars; that is, an adjustment has been made for inflation. You see in 
every instance, the 2019 retiree will get more than the 2009 retiree.
  Now, this is for the low earner. These are the people who are at the 
bottom third of our economic structure. Then the medium earner, and the 
high earner. So you see, in every case, people are made whole and 
protected.
  This last chart is for the max earner, the maximum earner, who, quite 
frankly, probably does not exist. That would assume that somebody 
entered the workforce at age 20, earned $106,000 a year the first year, 
and continued to earn that level going on up through his entire career. 
The maximum he could possibly draw from Social Security: that would be 
that one.
  But 82 percent of Americans fall in these two categories. So for 
someone age 55, under this bill, they come out just fine. They have 
nothing they should worry about.
  Well, what about somebody who is 45, a little bit younger? What 
happens to them? Again, these are the estimates made by the Social 
Security Administration. Once again, the low earners, they do better 
under the Bennett plan. The medium earners, they do better under the 
Bennett plan. The high earners, virtually the same under the Bennett 
plan.
  We can make the statement that we are going to hold everybody 
harmless. We will adjust Social Security in a way that makes it 
solvent, while at the same time preserving the same level of benefits 
we have for those of us who are currently drawing Social Security 
benefits, and we can see the same level of benefits would be available 
to those who come after us.
  We will reach out all the way to 2075 and see what the estimates are 
from the Social Security Administration. These are people who will be 
born in 2010. It is a little hard to make a projection as to how much 
money they will have when they are not alive yet, but the projections 
are made.
  Once again, under the bill I am introducing today, in 2075, the 
people at the bottom will do substantially better comparing today's 
benefit of $800 to the potential benefit of nearly $1,300 because they 
are the ones who are held harmless in the way Social Security benefits 
are currently calculated. So

[[Page S2239]]

they will get a significant position of significantly greater benefit 
than they do under current law. The medium earner--well, they also will 
do better. The high earner also will do better. Even the max earner 
will come out essentially the same.
  Now, I cannot guarantee these numbers. You cannot guarantee with any 
certainty what the numbers are going to be in 2075. But the fact is 
that the Social Security Administration, looking over a past version of 
this bill I have introduced, has said everyone can look forward with 
some certainty--this is my description of it, not their words--everyone 
can look forward with some certainty to seeing that his or her Social 
Security benefits will be roughly the same as the benefits that are 
being paid to retirees today, and the system will be solvent, not 
requiring any increase in taxes throughout the life of the system.
  We have had a lot of debates about Social Security, and we have had a 
lot of proposals about Social Security. To my knowledge, this is the 
only one that can say the two things I have just said; that is, that 
everybody's benefit, wherever they fall on the economic continuum, will 
be held at roughly the same level as today's benefit--in the case of 
the low earners, substantially better--and it can be done without 
raising any taxes. That is why we call this the Social Security 
Solvency Act.
  Let me go back to the charts I put up in the beginning to stress once 
again the importance of bringing entitlements under control.
  As shown on this chart, this is where we were in 1966 before 
entitlements started to get out of control. We in the Congress 
controlled 23 percent of the budget in nondefense discretionary 
spending and 44 percent of the budget in defense spending. So we 
controlled the majority. Today, we have shrunk that to the point where 
we control only 17 percent of the Federal budget, with 21 percent for 
defense spending, and the mandatory and interest costs have grown to a 
majority--a significant majority. Looking ahead just 10 years, if we do 
not do something about the entitlements, the mandatory spending will be 
61 percent, 71 percent when you add interest costs. If you divide 
defense and nondefense in this historic pattern, we will only have 15 
percent of the entire Federal budget under our control for nondefense 
discretionary spending.

  We are talking about the largest single expenditure in our peacetime 
history. As we adopt it, we should do so against the backdrop of what 
we are looking at in mandatory spending down the road and realize if we 
are going to be able to afford this stimulus package, we have to have 
the courage to tackle mandatory spending at the same time.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.
  Mr. WYDEN. Mr. President, before he leaves the floor, I simply want 
to say to Senator Bennett, my partner lo these many years in the 
bipartisan effort to fix health care, how much I appreciate his 
leadership on the Social Security issue.
  I think everybody understands what the demographics are all about. In 
fact, the demographics on Social Security are very similar to the 
demographics on health care. Yet Senator Bennett has been out there 
prosecuting the case of trying to bring the Senate together for a 
bipartisan approach on Social Security, just as we have sought to do on 
health care.
  I want to let the Senator from Utah know how much I am looking 
forward to working with him on this issue. I think he knows there are a 
number of us who believe this is going to take a bipartisan effort. 
Like most of the big issues, if you are going to get an enduring 
reform, bring the country together, you have to take the pursuit that 
Senator Bennett has followed, which is to do your homework and get the 
financial underpinnings in place.
  I commend my colleague for all his effort to zero the attention of 
the Senate in on the Social Security question. I am looking forward to 
working with him in partnership on this issue as well as continuing our 
health care effort.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. BENNETT. Mr. President, I thank my friend and colleague from 
Oregon for his kind words. He was not here when I put up one chart 
which has now been taken away that showed the tsunami of entitlement 
spending, consisting of a band of three programs. The largest portion 
of that tsunami band was made up of health care spending. I will 
confess to having taken the easy route. Social Security is the easiest 
one to fix because we can make the kinds of changes I described here 
that go back to the effort started by Senator Moynihan.

  Here is the chart. We can see Social Security is the easy one and 
eventually the small one. Medicare and Medicaid are the ones that are 
going to overwhelm us. They are the most difficult ones to fix.
  So I am honored to have the Senator from Oregon say what he has to 
say because he has been the leader in recognizing that this challenge; 
that is, the challenge of dealing with the health care costs, is the 
tougher challenge, but, as with most tough challenges, it is also the 
one that will produce the biggest reward. It is where the biggest 
opportunity lies.
  As I have said many times and repeated here on the floor of the 
Senate, one of the things I realized while working with the Senator 
from Oregon is that the best way to get all of these costs under 
control and turn these lines downward is to get quality going in our 
health care program. The bill I have had the honor to cosponsor, along 
with the Senator from Oregon, is focused on getting proper quality into 
our health care system.
  If the Senator from Oregon is successful, with whatever help I can 
give him along with those others who have joined us, he will have made 
a significant contribution to our country, not only in terms of the 
benefits that come from having done health care right but from the 
economic impact of having done health care right. He will have made it 
possible for us to even consider such expenditures as a target in the 
stimulus package because this is the backdrop against which we are 
going to have to pay for those. So I thank the Senator from Oregon for 
his kind words, but I thank him even more for his valiant effort and 
his leadership on the whole issue of trying to deal with the health 
care challenge.
  Mr. WYDEN. Mr. President, I would close this discussion with Senator 
Bennett by saying that I think, having listened to his comments with 
respect to Social Security and knowing of our work together on health 
care, if anything, we have seen during this last couple of weeks of 
discussion about the economic stimulus how important it is going to be 
to bring the Senate together in the months ahead in a bipartisan way to 
tackle these most significant economic questions. You are not going to 
fix Social Security and you are not going to fix health care on a 
narrowly partisan approach. The Senator has made that clear with the 
ideas he has advanced on Social Security.
  It is a pleasure to team up with the Senator on health care. I look 
forward to joining with him in following up on the Social Security 
proposal he has made this afternoon. I thank him for his work.
  Mr. BENNETT. Mr. President, I again stress how grateful I am to the 
Senator for his leadership and how happy I am to be one of his cadre of 
loyal followers on this issue.
                                 ______