[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[House]
[Pages 7900-7901]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  IMPORTANCE OF SAVING SOCIAL SECURITY

  The SPEAKER pro tempore (Ms. Granger). 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, yesterday, Governor Bush came 
out with some general parameters on saving Social Security and the 
importance of saving Social Security. There has been a lot of 
discussion of whether there should be any privately-owned investment 
owned by the American worker as opposed to continuing to keep on going 
with a system that is insolvent. What it boils down to is that because 
of the demographics, because people are living longer, because the 
birth rate has been going down, there are fewer workers paying their 
taxes into a system to support and finance existing senior citizens 
benefits.

[[Page 7901]]

  It is important that everybody understands that it is a pay-as-you-go 
program. It is a program where taxes come in one week, and by the end 
of the week, they are paid out in benefits. If you are an average 
worker today, then you are going to get an estimated 1.7 percent real 
return on the money you and your employer put into the system.
  If you are a young worker, because we are going to run out of enough 
money eventually, there is not going to be adequate tax money, coming 
in to pay benefits, then you are going to get even a smaller return. 
There are two ways to fix Social Security; you either increase the 
revenue coming in, or you reduce the benefits going out.
  None of us want to reduce benefits. Everybody, including Governor 
Bush, has committed that we are not going to reduce benefits for 
current retirees or near-term retirees. So then the question is, is 
there merit in having privately-owned accounts, and if we get a larger 
real return than 1.7 percent, then, absolutely, it brings more revenue 
into the system. In fact, if my Social Security bill had been passed, 
the first one that I introduced 5 years ago, the 25 year old when they 
retire would have $150,000 more than what they are going to receive 
under the current Social Security system.
  There are safe investments even through the worst parts of the 
history of this country, on dips in Social Security. We saw that there 
was no 12-year period where there was not at least a positive gain on 
Social Security.
  There are companies now that will guarantee you a gain, and if you 
are going to do a reasonable investment, and I would say reasonable for 
people over 45 is maybe 40 percent in bonds and 60 percent in safe 
stocks, in most all the proposals, Democrats and Republicans have all 
agreed that there needs to be privately-owned investment accounts, I 
mean Senator Kerrey, Senator Moynihan respected in this regard, 
Democrats in the House, the gentleman from Texas (Mr. Stenholm) has 
been working on this for years, and he comes to the conclusion that 
there needs to be some privately-owned accounts, that are put into safe 
investments, low-risk investments, because it is an absolute certainty: 
If you leave those investments in more than 12 years, it is going to 
recover more than the 1.7 percent average that Social Security is going 
to pay people.
  Now, the other part of the problem is that Social Security is running 
out of money, so we need to do something. We cannot just pretend that 
the problem is not there. On this chart, Social Security the bottom 
piece of pie now represents 20 percent of all government spending. This 
is a graphic impression of what is happening in Social Security. The 
blue at the top left is this short period of time where there is more 
tax money coming in than is needed to pay benefits, but over time, for 
the next 75 years, we are short $120 trillion.
  Tax revenues are short $120 trillion of what is needed to pay what is 
promised in benefits today. Another way to say that is that the 
unfunded liability is short, $9 trillion today. You would have to put 
$9 trillion into an interest bearing account today to come up with the 
$120 trillion that is needed over the next 75 years. We have got to do 
something.
  Madam Speaker, suggesting, like the Vice President has, that simply 
if we pay down the debt, and you are doing that by borrowing the excess 
money from Social Security and using that money to pay down the debt 
held by the public, it is like using one credit card to pay off the 
debt of another credit card; to pretend that is going to somehow solve 
this red deficit problem is unrealistic.
  It cannot be scored by the actuaries over at the Social Security 
Administration. So I plead with the Vice President, I pled with the 
President of the United States do not demagog suggestions of how we 
move ahead to fix Social Security. It is too important a program.
  I have met with the President maybe four times over the last 16 
months, he ended up saying that he is not going to come up with a plan 
because he is afraid it would be criticized. Let us move ahead, let us 
work together, let us, Republicans and Democrats, make sure that we fix 
this important program.

                          ____________________