[Congressional Record (Bound Edition), Volume 146 (2000), Part 15]
[House]
[Page 21894]
[From the U.S. Government Publishing Office, www.gpo.gov]



                    KEEPING SOCIAL SECURITY SOLVENT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Michigan (Mr. Smith) is recognized 
during morning hour debates for 5 minutes.
  Mr. SMITH of Michigan. Madam Speaker, a lot of problems face this 
country and certainly face our administration. One of those problems is 
keeping Social Security solvent. This affects everybody, not only 
existing retirees, but the young, middle age and future generations. 
What is going to be their future in terms of working and paying taxes 
and, maybe or maybe not, getting Social Security benefits when they 
retire?
  Social Security probably is one of this country's most successful 
programs in terms of helping people retire with some security. When we 
started Social Security in 1935, when Franklin Roosevelt decided we 
should have a program to force savings and pay for some disability 
insurance while you are working, rather than risk the poor house.
  At that time, there were something like 52 workers for each Social 
Security retiree. Remember, it is a pay-as-you-go program; existing 
current workers, pay in their Social Security tax and that tax 
immediately goes out to pay benefits for existing retirees. By the time 
we got to 1940, there were 38 people working paying in their taxes for 
every one retiree. This year we have three people working, three people 
working, paying in their taxes to cover each retiree's benefits.
  A couple of things have happened. Politicians in this chamber, the 
Senate and the presidents decided to increase benefits over the years 
because it was popular. When there was not enough money, they increased 
taxes and borrowing. By 2025, over on the far right-hand side of this 
chart, you see there are only going to be two workers paying in their 
taxes for each retiree.
  We started out back in 1940 having a 3 percent tax on the first 
$1,500 of wages. Today we have increased that to 12.4 percent on the 
first almost $76,000 of wages.
  So I hope we all agree one of our challenges is not to increase taxes 
yet again. Demographics of longer life span and lower birth rates have 
also greatly affected solvency.
  The diminishing return on our Social Security investment should 
concern us all. The real return of Social Security is less than 2 
percent for the average worker in the United States.
  Again, not counting the amount of the Social Security tax that pays 
for the disability insurance portion workers get a real return of less 
than 2 percent on the taxes paid in.
  For some, there is zero return on their Social Security. They are 
never going to live long enough to get back what they and their 
employer put into it. But, still, 1.9 percent is the average.
  Minorities do not get back what they pay in. A young black male, for 
example, is going live on the average 62 years. That means they pay in 
all of their life, but do not get benefits. But the average real return 
for the market, is over 7 percent. Part of the solution for Social 
Security has got to be a better return on the investment.
  This chart shows the number of years you are going to have to live 
after retirement to get back the money that you and your employer paid 
in, just to break even. If you were lucky enough to retire in 1940, it 
took 2 months. If you retired 5 years ago, in 1995, you are going to 
have to live 16 years after retirement to break even. On average if you 
retire in 2005, 2015 or 2025, it is unlikely you are going to ever get 
back what you put into this system.
  Even a ``C.D.'' or extra safe investments in the marketplace would 
give more to retirees. Governor Bush is suggesting limitations on any 
such investments; it can only be used for retirement purposes, it has 
to be limited to safe investments. We have companies now that will 
guarantee a return greater than Social Security without taking any 
risks. So, our challenge is we have to get people, this Congress, the 
President, to develop legislation to save Social Security.
  It is easy to put off the fixing to the next generation or future 
congresses. Vice President Gore has suggested adding giant IOUs that 
demand increasing taxes later. The last president should have dealt 
with the problem. The next president should not put off solutions that 
will keep Social Security solvent for the next 75 years.
  Right now there is enough money coming in to pay benefits, up until 
an estimated 2015. We need to take action. We cannot keep putting it 
off.

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