[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[House]
[Pages 2717-2718]
[From the U.S. Government Publishing Office, www.gpo.gov]



         SOCIAL SECURITY MUST BE SAVED FOR THE NEXT GENERATION

  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, I would like to discuss for the 
next 4 or 5 minutes why everybody is talking about Social Security, why 
they are concerned that Social Security is in trouble some time in the 
future, why young people today think the chances of their getting any 
Social Security are pretty remote. It is the young people today, 
probably under 35 years old, that are most at risk in not having Social 
Security in their retirement years if we continue to fail to do 
anything to keep Social Security solvent.
  The chart that I brought in represents where we are now. If we look 
at the top left part of the chart, the little blue area in the top left 
is the current surpluses coming in to the Social Security trust fund, 
in other words, the amount of taxes that are in excess of benefits 
payments going out. That is going to stop around 2011 or 2012. At that 
point, there are going to be fewer Social Security taxes coming in than 
are needed to pay current benefits. Of course, Social Security, since 
it started in 1935, has been sort of a Ponzi game where current workers 
pay in their taxes that is immediately sent out to current retirees, 
and so it is a pay-as-you-go program.
  The red portion represents where we are in terms of what is going to 
be the additional amount of dollars needed to pay current Social 
Security benefits in future years. We get down to 2019, and we are 
going to need something like $400 billion additional money from some 
place, either increased taxes or increased borrowing, to pay promised 
Social Security benefits. It is a problem.
  We are now looking at probably the best economic times in the history 
of the United States, where we are having a surplus of total revenues 
coming into the Federal Government. The question is now, do we use 
those revenues to spend on new expanded social programs and expand the 
size of Federal Government? Do we use those monies to start solving the 
Social Security problem? Here is what is needed: right now the average 
retiree that retires from now on is not going to get the money back 
that they and their employer put into Social Security, so essentially a 
zero-percent return on their finances unless they are lucky enough to 
live into their 80s and 90s or to be 100 years old.
  So what do we do? I think one thing we have to do in the first place 
is to understand the seriousness of the problem. To demonstrate how 
serious it is, I projected what is going to be needed in payroll taxes 
if we do nothing in the next 30 or 40 years. If we are going to have a 
FICA tax, a payroll tax, that accommodates the needs of Social Security 
and Medicare and medicaid, Social Security taxes are projected to go up 
to be 40 percent of one's income within the next 35 to 40 years.
  All we have to do to verify that kind of serious situation, 
increasing the cost of producing everything we produce in this country, 
is to look at what is happening in Europe, in Japan. Several countries 
now in Europe are up to that 40 percent mark. Japan is approaching it. 
A country like France, the effective payroll deduction to pay for the 
senior programs in France now is approximately 70 percent of payroll. 
It is no wonder that France is finding it very

[[Page 2718]]

difficult to compete in the world market.
  If we do nothing in this country, if we keep putting these proposed 
solutions off because it is easy to demagog, because really there is 
only two ways, Madam Speaker, to fix Social Security and to fix 
Medicare. We either bring more revenues into the program or we reduce 
the amount of money coming out. That means increasing taxes or reducing 
benefits. One way to increase revenues, though, is starting to get a 
better return on the investments coming in to Social Security, coming 
into Medicare. That means investing some of that money in real returns 
with real investments. That is why I have advocated for the last 
several years that we have personal retirement savings accounts that 
can draw real interest returns so that modest-income workers today can 
retire wealthy because of the magic of compound interest.
  My grandson painted our fence this last summer, and I tried to 
convince him to put his money into a Roth IRA, and we figured what that 
money would be worth 50 years from now. He said, Grandpa, I want to 
really buy a car with that money and save up for a car. So we went step 
by step, year after year to see if that money would return revenues and 
we found out that $160 would turn into $70,000 by the time he was ready 
to retire.
  We have to have some real retirement accounts. We have to start 
getting real returns on the money that is coming in from Social 
Security.

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