[Congressional Record (Bound Edition), Volume 147 (2001), Part 18]
[House]
[Pages 24827-24828]
[From the U.S. Government Publishing Office, www.gpo.gov]



AN ALTERNATIVE PLAN TO PRIVATIZATION TO SECURE SOCIAL SECURITY FOR THE 
                                 FUTURE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Oregon (Mr. DeFazio) is recognized 
during morning hour debates for 5 minutes.
  Mr. DeFAZIO. Mr. Speaker, responding to the gentleman that preceded 
me, I agree that there is a problem with Social Security, and it is 
something that this House and this administration should deal with. We 
do agree there.
  However, the problem is a little different than described. In the 
year 2016, Social Security will get to the point where the income, it 
is true, will not equal benefits; but it will begin only to draw on the 
interest on its accumulated trust funds.
  Now, we either have assets in Social Security, because we are paying 
much more in taxes today and accumulating trust funds, or we do not. 
There is some disagreement over whether Federal Treasury notes 
deposited for Social Security constitute real assets. In fact, the 
Secretary of the Treasury went so far as to say that there are no real 
economic assets in the trust fund, only obligations, the full faith and 
credit of the Federal Government of the United States of America, which 
the last time I checked was the safest investment in the world.
  So from 2016 to 2025, we will only spend down interest. In 2025, just 
like someone in retirement, then the government would begin to redeem 
the bonds, the investments, the principle. And yes, in 2038, there will 
be a real problem. In 2038, Social Security will only have income 
sufficient to pay 70 percent of promised benefits. So starting in 37 
years, we have a 30 percent problem.
  Now, the question becomes, do we destroy the entire existing system, 
which benefits more than 40 million Americans today and many more 
millions in the future, or do we adjust it a little bit, especially 
with 37 years lead time?
  There are three ways to do it:
  First, we can increase the income, which either means some different 
kind of investments other than Federal debt; or we can increase taxes, 
which has been ruled out by this administration.
  Next, we can decrease expenditures, that is, lower benefits; or we 
can have deficits, as the gentleman alluded to under option three of 
this commission; or we can have a combination of those three things.
  Now, the President appointed a commission that was supposed to deal 
with this. Unfortunately, the commission's charge was not to stabilize 
the financing of the most successful social program in the history of 
the United States. The charge of this group, and every single member 
was hand-picked because of this, was to privatize the system, to begin 
to undermine that system for the future. That was their charge. And 
even there, they really kind of failed.
  Now, they are led by the CEO of Time Warner, of course, who has a 
vital interest in the future of Social Security. He had to divert part, 
part of his bonus last year to buy a winery in Tuscany. Imagine that, 
he had to spend part of last year's bonus for that, so he is vitally 
concerned. He knows some day he will need that Social Security, like 
tens of millions of working Americans.
  Then we have a former Democratic Senator who used to say that raising 
taxes was the answer, but late in his career he changed his mind and 
said privatization was the answer. So their pronouncements are sort of 
a mix here. Actually, all three of their solutions worsen the financial 
situation of Social Security. Is that not interesting, a commission to 
solve the problems of Social Security, but since they were charged only 
to privatize it, they did not even deal with the financing problems?
  In their first solution, they would bring us insolvency 5 years 
sooner than the current system. They would reduce benefits under the 
premise that people's benefits are being reduced but they will gain 
more with their diverted investments. But if the investments do not pan 
out, well, hey, that is the way it goes. Mr. Parsons will be living on 
his vineyard in Tuscany, and they will be down at the local Dumpster 
trying to find food.
  Now, we could go with the second option: a 4 percent diversion of 
trust funds. Then they would change the way they index future benefits, 
reducing the benefits for everybody in the program, even those who do 
not choose the option of the 4 percent diversion; and they would have 
to inject general funds, that is, subsidize Social Security, beginning 
in 2025. That means insolvency comes 30 years sooner than under the 
current system.
  Finally, in their last option, which no one can describe, the Wall 
Street

[[Page 24828]]

Journal said, for option three, ``Suffice it to say, it is so 
complicated we are not even sure we understand it,'' but it does have a 
combination of a benefit reduction, of benefit reductions, increase in 
age of retirement, and huge trust fund transfers from the general fund.
  There is a much simpler solution; but this commission, this 
President, will never touch it, because it revolves around tax 
fairness.
  Americans only pay the regressive Social Security tax on the first 
$850,400 of income. So that means someone who earns $160,000 pays 
Social Security taxes at half the rate of someone who earns $80,000 or 
half the rate of someone who earns $10,000 a year on every dollar they 
earn. If they earn twice that, it goes down to a quarter.
  Now, one simple solution would solve the problem of Social Security 
forever: have every working American pay the same tax on every penny 
they earn; that is, Mr. Parsons, the CEO of Time Warner, would 
contribute the same percentage of his income in taxes as would the 
minimum wage worker.
  It is fair, and the Social Security trustees tell us that in fact 
that is more money than we need to assure the future of Social Security 
forever. Unfortunately, this commission and this President will never 
go there.

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