[Congressional Record (Bound Edition), Volume 146 (2000), Part 5]
[House]
[Pages 7077-7080]
[From the U.S. Government Publishing Office, www.gpo.gov]



                            SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Gutknecht). Under the Speaker's 
announced policy of January 6, 1999, the gentleman from North Dakota 
(Mr. Pomeroy) is recognized for 60 minutes as the designee of the 
minority leader.
  Mr. POMEROY. Mr. Speaker, I do not think I will take 60 minutes this 
evening.
  Mr. Speaker, I want to commend my colleague, the gentleman from 
Illinois (Mr. Weller) for a very interesting and thoughtful 
presentation preceding mine.
  Mr. Speaker, I intend tonight to address the issue of social 
security. I am pleased to see that the candidates for president are 
each speaking to this vital issue, and I want in the next several 
minutes to present some background in terms of what is encompassed 
within the social security program, what are the strains on the program 
that need to be addressed in the

[[Page 7078]]

future, and how the parties differ on the early proposals for change 
they are advancing, things that we need to look at very closely to make 
certain that we have a strong social security program going forward.
  Let me begin by talking about social security. First of all, the 
program passed in 1935. Someone suggested that of the many initiatives 
of Franklin Delano Roosevelt, social security remains in place as 
perhaps his most significant contribution to this country.
  I like to think of social security as a program designed to respond 
to the unavoidable, completely inescapable risks each of us have as 
Americans: dying at a time when we have dependents; becoming disabled 
and unable to make a living; or outliving one's assets in retirement 
years, each a very serious right-to-the-core financial threat to us and 
our families.
  Social security was built as a system whereby all of us as Americans 
insure each of us against these perils.
  I think it is vitally important that we remember social security is 
more than a retirement program. There is going to be a lot of 
discussion, I guarantee Members, over the next many months, a lot of 
discussion about whether a person is making enough return on their 
social security payments, the taxes withheld from our paycheck for 
social security; is the return on that what we might make if we just 
had that money and could go and invest it in the market?
  Most of that discussion does not acknowledge at all that in addition 
to the retirement benefit there is an insurance policy, essentially, 
that covers workers in the workplace if they die prematurely leaving 
dependents at home.
  More than one in seven Americans today will die before their 67th 
birthday. It is very foreseeable that they would have dependents at 
home depending on them, depending upon the income that no longer comes 
in.
  I know something about this particular coverage. When my father died 
with a sudden and unanticipated heart attack, just struck down, a 
complete shock to all of us, he had dependents. I was one of them, a 
teenager; my younger brother was another; my mother, a displaced 
homemaker without employment skills; all of us absolutely not just in 
an emotional state of shock, but without the resources to make it.
  The social security checks came. I have been a social security 
beneficiary. This vital support from social security helped us 
stabilize and allowed my brother and myself to get an education, to go 
out and get careers; allowed my mother that period of time she needed 
to get a job skill, get into the work force so she could make it on her 
own.
  That was what that social security survivors' benefit meant to my 
family, and that is a very, very common story. I would challenge anyone 
who really does not know about this survivors' benefit in the social 
security program to ask around. They will not have to ask far to find 
out someone who has benefited when a loved one has died leaving them 
with dependents, and depending upon, therefore, social security.
  Ninety-eight percent of the children in this country are covered 
under the survivors' benefit under social security, 98 percent.
  As we look at issues like uninsured children for health and other 
issues, we design programs anymore that if they get half of that, we 
think it would be a smashing success. We literally have all but 
universal coverage of our children in this country if their dad or mom 
die while they are still in dependent years. That is something we do 
not talk about. Remember that survivors' benefit. It is a vital part of 
the protection social security provides.
  Of course, we also have the disability coverage. Someone is working, 
becomes disabled, and can no longer make a living. What are they going 
to do? This is one of those core risks that social security responds to 
with its disability payment.
  This was designed in the thirties. I had a grandpa who was smashed 
against a barn driving a team of horses. Members can well imagine the 
kind of disability threats that accompanied the hard physical labor in 
the thirties. But believe me, it is still very much part of the work 
force, very much with men and women going to work today.
  In fact, if we just take 20-year-olds at a time in their lives where 
they are the strongest, healthiest, and have their career years right 
in front of them, it is pretty sobering to think that three out of 10 
will at sometime in their lives become disabled and unable to work 
before retirement, three out of ten 20-year-olds today. That is the 
kind of risk that is associated with disability.
  If you are in the work force, working for a living, getting by on 
your own, you become disabled and unable to pull down that paycheck, 
that is a very important coverage of social security.
  There is private disability coverage available. It is expensive. It 
is medically underwritten. Most do not have it. In fact, three of four 
workers in the work force today, 75 percent of men and women going to 
work today, only have social security if they become disabled. But that 
is another thing we really do not talk about as being wrapped into 
social security.
  Next time we hear somebody at the work force talking about, well, I 
am just not making on that social security money what I could make in 
the stock market, just ask them what they think the value of having 
coverage for their kids is if they get killed on the way home from work 
in an auto accident; or if tomorrow they have a stroke and they cannot 
work anymore, what the values of those coverages are like. Let me tell 
the Members, it improves the return on that social security investment 
very, very significantly immediately.
  Of course, the hallmark, the feature that social security is best 
known for, is its survivors' benefit. On average, social security pays 
$800 a month for individuals in retirement, $800 a month. It is not 
enough to live comfortably on at the margin one can get by on if that 
is all they have, so there is a tremendous pressure to do more, with 
social security as the foundation for retirement income and more, 
retirement savings; even earnings, and we have lifted the earnings cap 
so people can earn whatever they can earn once they get 65 and their 
social security starts, because we want to help people get a 
comfortable income in retirement.
  The reality is that $800 a month, that is more than 50 percent of the 
income for more than two-thirds, more than 66 percent, two-thirds of 
Americans receiving social security retirement payments. For one-third, 
the millions that represent one-third of social security retirement 
retirees, that social security check is all they have got. More than 
half of the income for two-thirds, that is all they got, for one-third.
  Let us face it, that $800 a month average payment, it may not seem 
like a lot to some, but to some it is everything. That is why, when it 
comes to social security, we have to be very, very serious and careful 
because it is the retirement foundation. I do not believe it is one 
place where we should add risk, more risk, to Americans than we already 
have about our retirement savings earnings.
  Social security at its formation was never intended to be a 
retirement plan, a stand-alone, this is all you need, live happy, plan. 
That is not what it was supposed to be. It was supposed to be the 
foundation. It continues to be just the foundation. No one aspiring to 
living on $800 a month in retirement years is looking at a standard of 
living that they might more fully aspire to. We need retirement savings 
in addition to achieve that. Let us just talk about how that one is 
coming along.
  We know that Americans' savings rate, their household savings rate as 
measured by the Department of Commerce is at its lowest point since the 
Depression. The February statistic of .8 percent was the lowest 
retirement savings rate since the Depression. Between World War II and 
1980, it averaged 8 percent. Now it is .8 percent.
  We are on a spending binge. I worry a lot about it. I think we need 
to try and encourage more savings in this country so people can live 
comfortably in retirement.

[[Page 7079]]

  If personal savings is not getting the job done, let us take a look 
at, are people saving in the work force, do they have their 401(k)s or 
whatever they have at the workplace that will help them save for 
retirement?
  Here the news is also very, very disturbing. One-half of the workers 
in the work force have no retirement savings plan at work, even a 
401(k) where the boss does not kick in anything. They do not even have 
that. They have nothing, nothing at work, so no personal savings and no 
savings plan at work for 75 million. Fifty million Americans have no 
retirement savings whatsoever, another statistic that we know.
  We know that more than half of all Americans have never calculated 
whether the savings that they have is going to match their expected 
need in retirement years. That can be pretty sobering. Maybe they stick 
a couple of hundred in now and then, maybe they get $1,000 in the tax 
return that people manage not to spend and put that in and they figure, 
well, we are working away at it.
  For the average man reaching the age of 65 today, he has 15 more 
years that he has to figure out how he is going to finance. For the 
average woman, it is even more telling, 19 additional years. They can 
expect 19 additional years once they have reached the age of 65. Yet, 
more than half of all Americans have not calculated whether they are 
saving enough with their workplace retirement plan and other savings to 
meet those needs in retirement.
  There is another evolution going on. Even within those places where 
there are retirement plans at work, we are going to a new design of 
plans. We are going away from the old pension plan where, no matter how 
long you live, you had that guaranteed pension payment. We are going 
more to what is called a defined contribution model, where what you 
will have to sustain you in retirement is dependent upon what you have 
saved and how well you invested.
  Unlike the old days when you did not have an investment 
responsibility, you now do have an investment responsibility under 
those 401(k) plans. We know some use it well and some do not use it 
well.
  We also know that for the millions that are depending upon their 
401(k) plans to sustain them in retirement years, those amounts may not 
be up to the test. Remember, there are literally lots and lots of years 
to account for once a person reaches the age of 65. Yet, a February 
year 2000 study by the Employment Benefits Research Institute shows 
that 47 percent, 47 percent of the 401(k) plans have less than $10,000 
in them. The average account balance on average is $47,000. Now try to 
sustain a comfortable living for 19 years if your balance is somewhere 
between $10,000 and $47,000. It is one mean trick, let me say.
  That is why we keep circling back to social security. It is the 
foundation. It must remain. We cannot have additional risk jeopardizing 
even that payment because we know we have all kinds of trouble on the 
private retirement savings side.
  I think the conclusion we can draw from all of this is that Congress 
has to pay attention to private retirement savings. We have to make it 
easier for people to save individually for retirement savings. We have 
to help modest income households even under tight discretionary income 
circumstances save for retirement.
  We also have to do more to help employers across this country offer 
retirement savings plans for their work force. Sometimes Congress has 
been guilty of putting in place way too much rigmarole and regulation. 
We have actually discouraged the very retirement savings that we want 
to encourage. We need to address that. That has to happen on the 
private retirement savings side.

                              {time}  2115

  But now we get to Social Security. Where are we standing on this one? 
Well, I am pleased to say that over the years I have been in Congress 
working on Social Security, the solvency outlook for Social Security 
has improved significantly. I do not claim full credit for that. It is 
a feature of our robust economy. It is a feature of more people in the 
workforce paying payroll taxes. And as a result, the solvency of this 
program has improved almost 10 years from only 2 or 3 years ago.
  The strain, of course, on Social Security is that we do not have an 
evenly allocated age range across the population of the United States. 
We have got this bulge, the much-discussed baby boomers. And while we 
are in the workforce today, and I am one of them, we are going to move 
into retirement in disproportionate numbers. The number of active 
workers today is three to one. And by the time all the baby boomers 
retire, it is going to be two workers per retiree. That is what causes 
the strain on this Social Security program.
  The earlier projections were that the surplus that has been generated 
will be completely exhausted by the year 2029, just when the baby 
boomers really are fully into retirement. Again, because of the 
increased participation in the workforce, low unemployment, a sustained 
record-setting economy in the history of this country, we have 
generated significant contribution to Social Security beyond what was 
anticipated by the actuaries even 3 years ago, and the most recent 
projection is that the Social Security Trust Fund will not be exhausted 
until the year 2037, and that is if nothing whatsoever is done with it.
  At the time, 2037, benefits fall 30 percent. It is not as if Social 
Security payments stop, but they are funded only by the payroll tax 
coming in. That is not enough to fully make those payments, so benefits 
collapse 30 percent. Therefore, we need to take action. And anyone that 
knows something about this is going to say: The earlier we take action, 
the less painful it needs to be to make the fixes to sustain Social 
Security for the long haul.
  So that is the backdrop to the presidential debate on Social Security 
that we will have in this upcoming election year. It is an absolutely 
vital program for Americans. It pays not just retirement, but survivors 
benefits and disability benefits. Its solvency has improved, and 
improved quite significantly, in recent years in light of the very 
healthy economy that we have had. But we have a shortfall and we have 
to address it.
  Let us take a look at the competing proposals to address Social 
Security. Vice President Al Gore has advanced a proposal that basically 
captures the strengths of our existing economy. He holds absolutely 
secure all of the surplus being generated by Social Security. And, 
again, that surplus is because we have got a three-to-one ratio, three 
workers per retiree. So as we generate the Social Security withholding 
taxes, we are generating a lot more surplus than required to pay the 
benefit.
  The Vice President would first of all hold that surplus secure for 
Social Security. He would use the surplus dollars to retire and 
eliminate completely the Federal debt owed by this country. He would 
save the money that the Federal Government now pays in interest on the 
debt, and commit it to the Social Security program.
  Let me go through this again. Here is the Vice President's plan: Hold 
Social Security surplus secure; eliminate the Federal debt; calculate 
the amount of money that the Federal Government has been paying in 
interest and, because there is no debt and that money is not owed in 
interest anymore, take that amount and pay it into the Social Security 
program to sustain it well through the middle of the 21st century.
  Some might say, wait a minute, we have Social Security taxes for 
Social Security and now we are going to take general fund revenues for 
Social Security? Absolutely appropriate. It is the Social Security 
surplus that is retiring the national debt, and this debt payment out 
of taxpayer dollars is staggering. To think that nearly 15 cents out of 
every dollar, just 15 cents of every dollar, take the first $15 in 
taxes out of $100, goes to pay interest on the debt. We are going to 
eliminate the debt. Eliminate it and then take that surplus, commit it 
to Social Security, take that savings, commit it into Social Security 
so that while preserving

[[Page 7080]]

the full benefit structure, Social Security is with us through the life 
span of the baby boomers.
  Mr. Speaker, I was born in 1952. A Social Security solvency program 
that gets us through the year 2050 takes care of me, believe me, and 
most of my peers in the baby boomer age group.
  In the event there continued to be solvency issues past the middle of 
this century, we can address them. But I think making this strong 
commitment, given the sound economy of this country, to paying down the 
debt, capture the interest savings, invest in Social Security so it is 
there through the middle of the century and beyond, these are the 
hallmark of the Vice President's plan. I think they are solid 
principles for Social Security. They absolutely preserve it as the 
income bedrock for Americans and that is what we have to do.
  Against that backdrop, the Bush plan, quite frankly, has caused me a 
great deal of concern. Although it is very sketchy and we hear that 
there may or may not be greater detail provided about the Bush plan, we 
know that he would basically carve up the program and create for each 
Social Security recipient an amount they could voluntarily elect as a 
private account.
  Now, who would not like additional private account on top of our 
individual retirement assets? If someone would say to me, ``You want an 
additional 2 percent in retirement savings to play around with invest 
and make some return?'' Sure, what do I have to give up? And this is 
the critical thing.
  To the extent that we invest our resources in an individual account, 
we subtract from the guarantee to the program. Now, there are those 
that advocate this private account business that say: No problem. We 
are going to make it a heads-you-win-tails-I-lose situation. If the 
individual account does not perform spectacularly, giving you more 
money that you know would otherwise have, the Federal Government is 
going to pony up the difference. So we have literally a no-lose 
situation. That sounds great.
  But, Mr. Speaker, sometimes things that sound so great need a little 
closer inspection. I used to be an insurance commissioner. My 
colleagues would not believe some of the sales pitches that I have seen 
behind complex financial instruments. The fact is I disallowed a lot of 
them because they were not fundamentally honest. I do not think that 
promises of that nature that are not based on sound economics, I do not 
think those promises are fundamentally honest either.
  Let us talk about the totality of the Bush economic plan and see 
whether this could possibly work. First of all, we know that instead of 
tackling that debt and eliminating it, the foundation of the Bush 
economic plan is a massive tax cut, even larger than the House passed 
and the President vetoed last fall. A tax cut that would basically take 
all of the non-Social Security surplus and eliminate it from the 
Federal budget.
  Then he would create these individual accounts. And if we are doing 
our math, at this point we are thinking, let us see. The general fund 
revenue is gone. And then there is the individual account, and that has 
got to carve into the Social Security guarantee, but they say it will 
not. So how do we fund that part?
  Well, Mr. Speaker, it really has not been made clear. Some of the 
options, frankly, if we do not have the revenue, would have to include 
benefit reduction, expanding the retirement age, not actually funding 
that backstop, that guarantee that we cannot do worse under this 
program. All of those are really core questions I think that have to 
come into the proposals advanced by George W. Bush.
  I give him credit for talking about these issues. These are 
complicated, controversial issues and I think it is good that he has 
advanced them as part of his campaign for President. But then it is our 
responsibility to look at it and ask the questions.
  Quite frankly, we do not have the dollars. We do not have the dollars 
with the tax cut he proposes to take the general fund revenue and the 
additional 2 percent commitment that he makes out of the Social 
Security revenue. We do not have the dollars to continue that base 
guarantee.
  The bottom line is at a time when we have inadequate savings for 
retirement on the private side, we have individual workers in the 
workforce taking more and more risk for their retirement by whatever 
employer program they are covering, at a time when Social Security 
checks average $800 a month, and we know that Americans have more and 
more life expectancy to try and make on that kind of income, we know 
that the Bush plan adds uncertainty into the Social Security picture.
  The investment counselors would say investors should allocate risk. 
There is a spectrum of risk in investment strategies, from the high-
tech on the risky side down to the bonds on the low end side and that 
way we kind of protect ourselves. We protect our investment picture. I 
think we need to look at retirement income similarly.
  Mr. Speaker, with retirement, we are going to have the high-risk 
stuff, and that is going to be including the private savings that we 
might have on a tech stock. It will include the kind of risky stuff 
that might be an aggressive portfolio of our 401(k). And then it has to 
include the bedrock, absolutely safe stuff, and that has to be the 
Social Security program.
  So this is not a place and we do not add risk on top of risk. We 
backstop more risk by maintaining the foundation, and that means 
keeping Social Security, keeping the commitment, keeping the retirement 
age, keeping the defined benefit guarantee that there is a payment 
there every month that we cannot outlive. And it is up to us not just 
to see this program, I think, for retirement needs of those now in 
retirement or those of us in the baby boom generation about to come on 
to retirement, but for our children and grandchildren as well.
  Mr. Speaker, for that reason this Social Security issue teed up in 
the presidential debate will be generating a great deal more 
discussion, and I thank you for giving me this time to advance these 
ideas tonight.

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