[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 533-534]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  BENEFITS OF THE 2001 TAX RELIEF BILL

  Mr. GRASSLEY. Mr. President, I refer to an article on page 6 of the 
Washington Post this morning where there is a quote from colleagues in 
this body and in the other body about the President's budget. I refer 
to this comment from the ranking Democrat on the House Budget 
Committee, Congressman Spratt:

       When it comes to waging a war on terrorism, the President 
     has our total support, but national security and homeland 
     security need not come at the expense of Social Security.

  Philosophically, that is a good argument. It is an accurate argument 
for us to be using, but the inference is that with the President's new 
budget there is some sort of a new game in town, that because we do not 
have a general fund surplus, because we have to spend more money 
because of the war on terrorism, as well as the domestic aspect of the 
war on terrorism, we are going to take Social Security money to finance 
that because there is otherwise a debt. The implication is this is some 
new policy.
  The point I make is that this kind of talk is misleading because 
seniors become frightened that they might not receive their Social 
Security payments. Conservatives may feel as if there is not any fiscal 
discipline in Washington. Compared to the last 4 years, we have paid 
down on the national debt in the last 4 years on a relative basis. But 
conservatives might be concerned that there is no concern about fiscal 
discipline when it comes to Social Security. But, in fact, there is no 
new policy in town.
  The point I make is since Social Security was started in 1936, except 
for about 18 months in the years 1982 and 1983, it has had a positive 
cashflow, more money coming in from the Social Security payroll tax 
than has been paid out in benefits. As we anticipate that for the 
future, that will be true for another 14 years, or so.
  So for people who read this statement by Congressman Spratt--and I 
quote: When it comes to waging war on terrorism, the President has our 
total support, but national security and homeland security need not 
come at the expense of Social Security--I say it is not coming at the 
expense of Social Security. Nothing has changed on Social Security 
since 1936. We have a positive cashflow today. We have had a positive 
cashflow every year except for 18 months in 1982 and 1983, and we will 
have a positive cashflow in Social Security for at least another 13 or 
14 years. National security and homeland security are not coming at the 
expense of Social Security, I say to the distinguished Congressman in 
the other body.
  Since we still have a positive cashflow in the year 2002, and we had 
a positive cashflow starting when the tax was first implemented, except 
for those 2 years, what happens with Social Security money? The 
disposition of Social Security money is the same today, last year, and 
years we have been running a surplus in the unified budget, and for a 
long time back. The surplus is invested in Treasury bonds because those 
are considered the safest investment for retirees. They draw interest. 
The interest accrues to the benefit of Social Security. That positive 
cashflow invested in Treasury bonds, plus the interest that is accrued, 
is going to be used to pay Social Security benefits when there is a 
negative cashflow in some future year. That is the way Social Security 
was set up. That is the way it has been operated since it was 
implemented in 1936. That is the way I believe it will be for a long 
time into the future.
  National security and homeland security is not coming at the expense 
of Social Security. Let me give a parallel analysis. I will use the 
highway trust fund. In my State, it is the road use tax fund. At the 
Federal level it is the highway trust fund. All of the gas tax money 
goes into the highway trust fund. It is paid out of that highway trust 
fund for transportation, mostly for highways. It is not used for 
anything else. There are times, though, that the Federal Government 
decided they did not want to spend all the highway trust fund money. It 
was invested in Treasury bonds, as well. And it was not used to buy 
bombs and guns and pay military pay. Over a period of years a lot of 
money accumulated.

[[Page 534]]

  In the last highway bill, Congress decided we ought to spend down 
that money that accumulated in the highway trust fund, and we spent it 
down. Not entirely, but we are spending it down. Consequently, if you 
can take that money that accumulated in the highway trust fund, that 
was not spent on roads on a current basis, but later was and is being 
spent for highways, it is exactly the same for Social Security. Moneys 
accumulate, with interest accruing to the trust fund, to be spent when 
it is needed, in the same way that the gas money, when it was not spent 
on highways, accumulated and later Congress decided we ought to spend 
more money on highways and we spent more money on highways.
  It is one of the facts of trust fund accounting. The problem comes 
when we put Social Security in the context of a unified budget that it 
somehow gets lost in the public's mind. I assure the public that the 
implication of the statement by the ranking Democrat on the House 
Budget Committee, Congressman Spratt, that the President's war on 
terrorism, the American people's war on terrorism could somehow be paid 
for by Social Security. In fact, it is not being financed by Social 
Security money.

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