[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Senate]
[Pages 2066-2067]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            SOCIAL SECURITY

  Mr. BENNETT. Mr. President, this morning's paper has in it once 
again, as we often get here in Washington, a poll. It seems everything 
we do is focused on polls and what the people think. This poll is on 
the question of whether there is a crisis in Social Security. Frankly, 
the numbers are confusing, because it depends on the definition. If the 
question is whether there is a problem, there is a majority who say 
there is a problem; there is a smaller percentage that say there is a 
crisis, and so on. It gets very confusing.
  I would like to speak today in answer to the fundamental question 
posed by the poll, and do what I can to shed some light on the question 
of what condition Social Security is in.
  I am not a newcomer to this. We have held hearings in the Joint 
Economic Committee, while I have been chairman, examining this 
question. We have a body of institutional knowledge that we have put 
together now over the past year and a half. I want to pose and I hope 
answer three fundamental questions here today that can be the basis for 
the debate on Social Security.
  Those questions are: No. 1, is there a problem? No. 2, if so, how big 
is it? No. 3, when will it hit?
  With those three questions in mind, let us go forward. Individuals 
come to me and ask these questions through the lens of their individual 
situation. Is there a problem with Social Security? They are really 
asking, Is there a problem for me in Social Security? The answer to 
that question is a question: When were you born?
  Stop and think for a minute of your own birth date, and then address 
the question, Is Social Security going to be a problem for me? If you 
were born in the 1930s, as I was, or if you were born in the 1940s, as 
my wife was, or if you were born in the 1950s, as my nieces and nephews 
were, the answer is no, there is not a problem for you with respect to 
Social Security. Your benefits will be paid. They will be paid at the 
full level the law requires. You do not have a problem with Social 
Security.
  If you were born in the 1960s, as my children were, the question of 
whether you have a problem depends on how long you will live. If you 
were born in the 1960s and you live into your eighties, chances are in 
the last few years of your life the Social Security benefits are going 
to be cut quite dramatically. If you manage to die before you get to 
age 80, then you won't have a problem.
  If you were born in the 1970s, it is almost certain you will have a 
problem. And if you were born in the 1980s, it is guaranteed that the 
Social Security benefits will have to be cut before you reach 
retirement age.
  For these young pages sitting here, it is very clear that if we don't 
start to do something now, you will be penalized for your youth. The 
Social Security benefits will be seriously curtailed for you.
  Let us review some history to put some flesh on the bones as to 
whether there is a problem. Think of Social Security in these terms: It 
is a little like a lottery. A lottery works this way: A lot of people 
pay in, and only some people get paid out. So it produces winners

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and losers. With Social Security, a lot of people pay in, and not all 
of them get money out.
  Here are the statistics which demonstrate what has been happening to 
this lottery. In the 1940s, 54 percent of the workers who paid into the 
system lived long enough to be winners. This is the ideal political 
situation, because the losers were dead. They were not in a position to 
protest that they had paid in and had gotten nothing out. Fifty-four 
percent in 1940 of the men--and in 1940 our workforce and retiree 
population was almost entirely male--got money out of the lottery and 
the other 46 percent who had paid in got nothing, but they weren't 
complaining because they were dead.
  But then the women started to join the workforce, and now women make 
up as high a percentage of the workforce as men, and the age kept going 
up. Today, 72 percent of the men who paid into the lottery are eligible 
for benefits, and 83 percent of the women who paid into the lottery are 
eligible for benefits. Whereas it was 54 percent who were winners in 
1940, it is now 80 percent who are winners, and the number keeps going 
up.
  There is another factor. This shows how many people get into the 
winner side who are going to be drawing money from Social Security. How 
long did they stay there? In 1940, once a man got to retirement age, he 
would stay there on the average for 12 years. Women--there were fewer 
of them who were in the program--lived for 14.7 years. But the numbers 
kept going up. Today, a man will be in the program for 15 years, and a 
woman for nearly 20. The average time people draw out their Social 
Security benefits has gone up from 12 to 18--a 50-percent increase.
  You have many more people who get into the program by virtue of 
living beyond the age of 65, and then once they are in the program they 
stay longer.
  What is the obvious result of this kind of change in demographics? 
Let us see what has happened to the pool of people paying in.
  In 1945, there were 42 people paying in for every one person drawing 
out. That is true because the program was still new enough that there 
were not enough people old enough to take advantage of it. That came 
down dramatically, as you would expect it would, as more and more 
retirees came on. In the 1950s, 5 years later, the number was down to 
17. Now it is down to 3, and the projections are that it will go down 
to 2. You cannot have that kind of a lottery where only two people are 
paying in for every person who is drawing out, while the people who are 
drawing out are growing as a percentage of the whole program.
  How do we deal with this? How have we dealt with this historically 
over this period? This is how we have dealt with it. Take the 50-year 
period from 1945 to 1995, and this is the list of tax rates that have 
been applied to Social Security. For 50 years of time, we have run into 
one of these demographic problems. We have solved it by raising the tax 
rate.
  I would like to demonstrate what Franklin Roosevelt and Congress in 
1936 promised the American people on this issue of tax rates. This is 
the photograph of the brochure that was distributed to every recipient 
of Social Security in 1936. ``Security In Your Old Age, Social Security 
Board, Washington, DC.''
  Here is the quote from that pamphlet that was distributed to every 
Social Security beneficiary. ``Beginning in 1949, twelve years from 
now, you and your employer will each pay 3 cents on each dollar you 
earn up to $3,000 a year. That is the most you will ever pay.''
  If ever there was a promise the Government made that the Government 
broke, that is the promise.
  Let us go back to the previous chart that shows the history.
  This is the 3 percent that was promised in the 1930s; this is the 
12.4 percent we are paying 50 years later. That is a 300-percent 
increase in tax rate. That is not 300 percent in dollars. That is a 300 
percent increase in the rate to keep up with the demographic situation 
we have seen.
  I asked three questions: Is there a problem? How big is it? When will 
it hit?
  I have cited the history. Now it is time to get prospective and talk 
about what is coming.
  All of the demographic statistics I have quoted are shown here on 
this chart. It starts in 1950, and here is where we are now. This is 
the percentage of Americans who are 65 or older. It has been going up. 
Yet, it leveled off starting around 1990, and stayed stable; even went 
down a little. But starting in 2008, something is going to happen. I 
stress the 2008, because a lot of the accountants have ignored that 
year, and said, No, the crisis is in 2018, or 2042, or 2042 isn't 
right, it's 2052.
  Here are the demographic realities of what we are facing. Starting in 
2008, this line is going to start up dramatically and steeply, and over 
the period of the next 30 years the percentage of Americans who are 65 
and older will double.
  When will it hit? It will start to hit in 2008. That is not a long 
way off. That is within the term for which I was just elected--the 6-
year term that the people of Utah gave to me--that this problem is 
going to start to hit us. We have to deal with it or 30 years from now 
we are going to end up with a population twice the percentage of the 
level it is now and no solution.
  Let's look at what the Social Security Administration says this will 
do. This is the chart of current benefits, current law. Here is the 
revenue line; here is the cost line. How do we fill in the hole of the 
cost line that is much higher than the revenue line? This hole by 
itself is $1.5 trillion. Where is that $1.5 trillion going to come from 
to pay the benefits? It will have to come from either increased tax 
revenues or increased borrowing to the public. Or it will have to come 
from some kind of increased rate of return on the money coming in down 
here. Those are the only three ways to deal with it.
  We should understand, once again, the pressure will start in 2008. It 
will be gradual but it will build. And over the next 30 years, it will 
overwhelm us if we do not either raise the taxes, cut the benefits, or 
increase the rate of return.
  The proposals of what to do about this range across a wide spectrum 
of ideas. The President has focused on an idea that he thinks will 
raise the rate of return on the income coming in. Others have focused 
on taxes. That is, indeed, how we have handled this for the last 50 
years. We have always raised taxes. Some have said we have to begin to 
adjust the benefits. All of these proposals should be on the table. All 
of these proposals should be discussed in perfectly good faith. I am 
willing to discuss anything.
  As I said at the outset, we have a history now in the committee that 
I have chaired of examining these issues. We believe we understand the 
realities of the past and the challenges and opportunities of the 
future. We are willing to discuss with anyone any of these proposals 
and responsibilities.
  Remember, there is a problem. It is at the very least a $1.5 trillion 
problem. It is going to start to hit us in 2008. Surely we in this 
Chamber can in good faith recognize these facts and deal with them in a 
spirit of cooperation, reach out to the White House and try to find a 
solution so these pages will not, in fact, be penalized for their youth 
and find themselves in a situation where they do not get the benefits 
their grandparents and others received. They will be paying into the 
system. They will not get the benefits the others have received unless 
we lock arms, cooperate, and produce a solution.
  My focus today has been to review the history of where the problem 
has been and review the prospective demographic realities we face. At 
some future time I will outline some of the solutions my committee has 
discovered might very well work as we try to find a way to deal with 
this very real problem.
  I yield the floor.
  The PRESIDING OFFICER (Ms. Murkowski). The next 30 minutes is under 
the control of the Democratic leader or his designee.
  The Senator from Illinois.

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