[Congressional Record (Bound Edition), Volume 151 (2005), Part 3]
[House]
[Pages 3306-3312]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       DIALOG ON SOCIAL SECURITY

  The SPEAKER pro tempore (Mr. Kuhl). Under the Speaker's announced 
policy of January 4, 2005, the gentleman from Arizona (Mr. Kolbe) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. KOLBE. Mr. Speaker, I take the time this evening to rise on a 
subject that we have just heard a great deal about this last hour, and 
I certainly invite my colleagues from the Democratic side to stay 
around. I would be happy to yield part of my time to them so maybe we 
could begin this dialogue that we heard about in the last hour that is 
much needed here because I do believe that we do need to have a 
dialogue.
  I have actually been conducting a dialogue on this for a long time. 
10 years ago, 10 years ago this spring, Congressman Charlie Stenholm of 
Texas and I formed the Public Pension Reform Caucus in the House of 
Representatives to begin to educate members of the House and the 
American public and staff here in the House about some of the issues, 
the looming issues of Social Security.

                              {time}  2145

  Ten years ago it was as obvious as it is today or perhaps today it is 
even more obvious, but it was obvious even then because of the 
demographics that we were facing a problem with Social Security. And we 
thought that it was time for us to start addressing and to talk about 
what ought to be done. So tonight we are here to talk about 
strengthening Social Security.
  I heard the word ``gutting'' Social Security used by the other side a 
few minutes ago. Nothing could be further from the truth. Nothing could 
be more like gutting Social Security than to do absolutely nothing. 
That truly is the way to hollow out Social Security and say to the next 
generation and the generations that follow that there will not be 
Social Security. But there is a way that we can strengthen Social 
Security, make sure that that benefit is there for the women and 
children that we heard about here, for the low-income person, for the 
retiree that does not have much else.
  We can make sure that it is there. We can do it by coming together, 
reasoning together and making some suggestions and ideas, coming up 
with ideas about how we can strengthen Social Security, how we can 
protect it for the future, how we can protect it for current retirees 
and how we can make sure that the next generations of retirees have a 
Social Security benefit.
  Now, it is not certainly just our side on the aisle that has been 
talking about this. We seem to agree on this idea that there is a 
problem. And even before we began this discussion this year on this, I 
am delighted to see that there are previous high-ranking Democrats that 
have been talking about this.
  President Clinton in 1998 talked about Social Security and said that, 
Of all of these achievements, the economic achievements, and our 
increasing social coherence and cohesion, our increasing efforts to 
reduce poverty among our younger generation, all of them are threatened 
by the looming fiscal crisis in Social Security.
  That is 7 years ago. President Clinton identified that there was a 
looming fiscal crisis in Social Security. He did not say Social 
Security was in danger of going away. He did not say Social Security 
was in danger of being gutted. He said there was a fiscal crisis, and 
that is exactly what we face today. It was a cash-flow crisis.
  Senator Hillary Clinton while she was still first lady, she said that 
one of the most critical challenges of our time is preserving and 
strengthening Social Security for future generations.
  That is exactly what we are talking about here tonight. We are 
talking about how can we make sure that Social Security is preserved 
for those who need it today, how can we make sure it is strengthened 
for those who will need it in the next generations. That is precisely 
what we are talking about.
  Now, we will look a little bit at some of the dimensions of the 
problem as to why we do have a problem. And by the way, problem, 
crisis: there is a lot of talk around here. It is not a crisis. In 
fact, we are hearing it is not a problem at all. Obviously, President 
Clinton did not agree with that. Obviously, Senator Clinton did not 
agree with that. I have never used the term ``crisis,'' but it is a 
problem.
  You know what happens when you have a problem and you do not do 
something about it: it becomes a crisis. If you ignore it, the problem 
becomes a crisis. It is not a crisis today, but we can see the crisis 
looming in the future. And I can tell you from having introduced the 
only bipartisan and the only comprehensive Social Security reform bill 
for these last 8 years, that Former Congressman Stenholm and I 
introduced and the current Congressman, the gentleman from Florida (Mr. 
Boyd), and I have introduced it this year, still a bipartisan bill that 
covers every detail of strengthening Social Security. I can tell you 
that if you do not work on strengthening and if you do not work on 
fixing it now, it becomes more difficult in the future.
  Every 2 years when we introduce our bill in the next Congress, we 
have to go back, of course, and recalculate the figures for the fact 
that 2 years have passed by, the demographics have changed a bit, and 
it becomes more difficult. It becomes more expensive. It becomes more 
costly. It becomes harder for the next generation, and it becomes 
harder for the current generations.
  What is the problem? What is the basic problem that we have in Social 
Security? It is a problem of demographics, that people are living 
longer. We have more people who are retiring. They are living a longer 
life. And at the other end we have families that are smaller. They are 
being started later. And so we have fewer people coming into the 
workforce.
  I have heard here this evening the talk about how this is a social 
insurance program. It is social insurance. It is social insurance, but 
the insurance program, the insurance that we have here is a contract 
between generations because Social Security, and let us make no mistake 
about this. If we do nothing else this evening, I hope we can convey 
one thought: Social Security is a pay-as-you-go program.
  Taxes are collected today that are paid out in benefits at the end of 
the month. The contract is between generations, that when the next 
generation gets ready to retire that there will be somebody there to 
pay their benefits.
  Let me go through this chart and let me yield to my distinguished 
colleague here because this is the fundamental problem that we face.
  In 1950, there were 16 workers paying their taxes for every single 
person that was receiving Social Security benefits, 16 people working, 
for every one receiving their benefits. Today there is only 3, 3\1/3\ 
people working for every one that is receiving their benefits. When the 
younger workers retire in 20 years, that is not so young actually, but 
when people start retiring in 20 years, there will only be two workers 
that are going to be paying for the taxes for every single beneficiary. 
That is two people are going to have to pay their taxes each month to 
equal the benefit that is going to one retiree. That is a huge tax that 
people are going to have to pay.
  The reason is quite simple, as we just said. All the baby boomers 
begin retiring in the year 2008, and then we have those people living a 
lot longer, and a smaller number of people coming into the workforce to 
cover those taxes. That is the essence of the problem that we have got. 
That is why working together here, Republicans and Democrats, both 
sides of the aisle here, we need to work together to find a way to 
strengthen Social Security, to make sure that it is strengthened for 
the next generation, that we preserve it for the current retirees, but 
that the young people will have some hope that there will be something 
there for them.

[[Page 3307]]

  I know the gentleman from Minnesota (Mr. Kline) has worked very hard 
on this issue. I know he has conducted some town halls, which I want to 
talk about some that I have done recently; and I would like to yield to 
the gentleman from Minnesota (Mr. Kline).
  Mr. KLINE. Mr. Speaker, I thank the gentleman for yielding to me.
  Before we move further in this discussion, which I am looking forward 
to this evening, I just wanted to touch on a couple of subjects that my 
distinguished colleague from Arizona has brought up and some of the 
things we heard from our colleagues on the other side of the aisle.
  First of all, I know that the gentleman from Arizona (Mr. Kolbe) and 
all of my colleagues on both sides of the aisle really would like to 
see a strong Social Security program. I have been telling folks, in 
fact, I was talking to high school students in Minnesota this last week 
that it is very important to me that Social Security be in place for my 
84-year-old mother, and it will be in place for my 84-year-old mother. 
But I want Social Security to be in place, to be strong, to provide the 
kind of retirement safety net that our colleagues have been talking 
about for my 35-year-old son, my 38-year-old daughter, my 3-year-old 
granddaughter.
  The demographics that my colleague has just put up there start to 
show the problem. And we are going to get into that some more this 
evening; but I am disheartened, frankly, I am disheartened to hear some 
of the language that we were listening to earlier.
  Our colleagues ascribed some motives that I think are out of place. 
One of them, for example, said that the President wanted to reward his 
buddies with his proposal, and that is simply not true. It is not fair 
and it ascribes a motive that is not there. One of our colleagues said 
that we want to gut Social Security. That is not true.
  I know that the gentleman has been trying year after year after year 
to, in fact, strengthen Social Security and make sure that not only do 
the current retirees not lose benefits, but that my daughter, my son, 
and my grandchildren do not lose benefits either. And I just hope that 
my colleagues would all understand that our motives are to strengthen 
Social Security. We should be working together in a bipartisan way as 
my colleague has been doing to do just that, and I hope that we can 
move away from some of the harsh rhetoric that we unfortunately have 
heard tonight and I am afraid that we are going to be hearing in the 
future.
  Mr. KOLBE. Mr. Speaker, I appreciate the comments of the gentleman 
here, and I think they are on point. I think the gentleman is 
absolutely correct.
  It really does not serve anyone very well to have the kind of harsh 
rhetoric that we have been hearing about this issue. It is too 
important to carry on in that kind of a partisan nature.
  I remember sitting on this floor when the President of the United 
States, President Bill Clinton, talked about Social Security reform in 
1998 and standing and applauding when he had the courage to get up 
there and talk about it. In fact, the President then followed up with 
only one major effort, out-reach effort that he did, and he happened to 
do it in my congressional district.
  I flew with him on Air Force One to Tucson in order to talk about 
this issue, and I was struck by the amazing grasp of the detail that 
President Clinton had about the nature of the problem that we were 
facing. It is exactly the things that we have been talking about and 
that we will continue to talk about and that President Bush is talking 
about today.
  We have a problem. We need to find a way to fix it. We need to find a 
way to strengthen Social Security so it will be there for the next 
generations as well as for current retirees. So we are not talking 
about taking it away. These kinds of scare tactics, they are not only 
bogus but they are disheartening as the gentleman from Minnesota (Mr. 
Kline) said, but they are also very destructive.
  They do not help us find a solution. And if ever we needed to have a 
bipartisan reach-out to find the solution to this problem, it is on 
this issue. The American people are watching us to see whether Congress 
really can reach out to find some way to fix this.
  Mr. KLINE. Listening to the debate, the arguments earlier this 
evening, it was clear that our colleagues recognize that something 
needs to be done. I know that the gentleman from Connecticut, I 
believe, said everybody knows that we have got to do something to 
strengthen Social Security, and other Members have said everybody knows 
we have to do something. And we heard a couple of proposals and 
increasing taxes was proposed by the gentleman from California, I 
believe; but if we know that something has to be done, we ought to be 
able to move forward and engage in the debates and engage in the 
discussion about what we are going to actually do to strengthen Social 
Security.
  But I know that not everyone understands the nature of the problem 
and how quickly it is going to arrive, and, unfortunately, if we do not 
do something, how quickly it will turn into a crisis. I ask the 
gentleman to continue the explanation.
  Mr. KOLBE. Mr. Speaker, I thank the gentleman from Minnesota (Mr. 
Kline) for his comments, and I hope he will continue to engage in this 
discussion here tonight.
  I do want to take a few moments to talk about this particular chart 
up here because I think it expresses better than anything I could say 
verbally what the nature of the problem is that we are facing.
  Going back, thinking back to the last chart where we talked about how 
the fewer numbers of people are paying the taxes to support the 
beneficiaries, the people getting the benefits, this illustrates 
exactly what that means in terms of the cash that is coming into the 
Social Security trust fund. The reforms, the changes that were made in 
1983 went a long way towards fixing Social Security in the short and 
the median term; but for the long term, it just kicked the problem down 
the road. It did not make a permanent fix to it. It just postponed the 
day of reckoning, postponed the day of reckoning because it increased 
the taxes. And gradually we are in the process now of raising the 
retirement age. It made some other things.
  So since the late 1980s and early 1990s, we have been collecting more 
in revenues from Social Security tax than we have been paying out in 
benefits. That means the Social Security trust fund has been reaping 
this windfall, if you will. It has had this extra money which we all 
know really is one arm of the Federal Government that is the Social 
Security trust fund taking the money and then turning around and 
loaning it to the Federal Government for part of the operations of the 
Federal Government. It is really paying part of the deficit, if you 
will, the operations of the rest of the government.
  Now, the trust fund gets some IOUs and some Treasury bills in its 
name in there, and those are earning some interest. But here is what we 
have got right now. There are more benefits coming in. But as you can 
see here this black part up here which is the revenues exceeding the 
benefits being paid out, it takes a downturn here in just 3 years.
  Now, that is the first critical date we need to focus on, the year 
2008. It is in the year 2008 where the revenues start to decline and 
the excess revenues start to decline. And so the deficit, instead of 
masking more of the deficit each year, it will start masking less and 
less of the deficit each year.

                              {time}  2200

  So we will be doing more borrowing in order to cover the rest of the 
deficit.
  Then, in the year 2018, you can see where these lines cross and the 
black turns to red. That is where the benefits being paid out exceed 
the revenues; the taxes that are actually being collected. So the 
Social Security trust fund has to go back to the Treasury, they have to 
go and cash in those IOUs they are holding, which means that the 
Federal Government has to give them cash and replace that borrowing 
with massive amounts of borrowing over here to cover the deficit.

[[Page 3308]]

  At that point, they not only have the annual amounts they are 
covering for each month to cover the benefits, but they also are going 
to have to be covering the replacement of the IOUs. So the deficit 
really starts to balloon at that point. And within just a very few 
short years, up to 2018, the deficit being caused by the Social 
Security Trust Fund cashing in those IOUs is in the hundreds of 
billions of dollars a year.
  We are going to be faced with a Titanic, a major, a simply major 
problem that we are going to have to confront at that point. How much 
do we borrow? How can we keep on borrowing those amounts of money, just 
to cover the shortfall in Social Security? And this is not saying 
anything about the shortfall in Medicare or the other kinds of 
entitlement programs that we have.
  We are talking just about Social Security. It is going to be a 
massive shortfall that we are facing. That is why it behooves us to 
start thinking about this now.
  Now, the third and last date that is currently projected is the year 
2042. That is when the IOUs are gone. They have cashed in all the IOUs. 
Somehow we have managed to borrow the money from the Chinese or 
Japanese or the Germans, or whoever, to replace that borrowing, and we 
have managed to get the cash to pay the benefits. But in 2042, the IOUs 
are gone. There is nothing more for the trust fund to go out and use, 
except the money that is coming in each month.
  At that point, assuming we have done nothing, as some people I have 
heard tonight over on this side suggest that we do, do absolutely 
nothing, if we do absolutely nothing, at that point the Social Security 
benefits would be cut by 27 percent.
  Now, is there anybody listening this evening, and my colleague can 
answer this for himself, is there anybody that really thinks 
politically, with all the retirees we will have in the year 2042, we 
could realistically say, gee, your benefits just got cut 27 percent 
this month. Take it or leave it. That is it.
  Obviously, that cannot happen and will not happen, which is why we 
have to think now about how we will fix this so that it is strengthened 
for future generations.
  Mr. Speaker, I will be happy to yield to the gentleman again.
  Mr. KLINE. Mr. Speaker, I thank the gentleman for yielding to me. I 
think it is a terrific graph. The problem is clearly outlined with that 
big red area that says cash deficits.
  I just want to reinforce what the gentleman said about the trust 
fund; the trust fund not actually having any money in it, having IOUs, 
having bonds that have to be redeemed through the general fund. And the 
gentleman, I know, understands full well that it is highly unlikely 
without some major change that we could reach that 2042 date when the 
IOUs run out. The impact to all of America between 2018 and 2042, if we 
do not do something now, would just be catastrophic.
  To get back to the gentleman's opening comment about problem or 
crisis. Certainly it is a problem today, but clearly a crisis when you 
get into that big red area that says cash deficits. That is why it is 
so important we should have this debate today; that the American people 
understand that we are facing a problem which is going to turn into a 
crisis. We need to get this debate engaged and agree on a solution 
which will strengthen Social Security.
  I know there are many proposals out there. The gentleman has a 
bipartisan proposal, the President has put forth an outline of a 
proposal. Our colleague, the gentleman from Wisconsin (Mr. Ryan), and 
Senator Sununu have a proposal, and others, and that debate, that 
discussion is the one we need to have. If there are others who think 
that simply the solution is to raise taxes, which was suggested here 
tonight, then, fine, let us put that discussion into the debate as 
well. But let us recognize that that red area, that sea of cash 
deficits is something that is looming.
  Now, I am part of that leading edge, or maybe 1 year behind it, of 
those baby boomers, and it is a rapidly approaching demographic shift 
that we need to address.
  Mr. Speaker, I yield back to the gentleman.
  Mr. KOLBE. I thank the gentleman again for his comments. The 
gentleman is a bit younger than I am. I am afraid I got ahead of the 
baby boomers on this.
  Mr. KLINE. You are one of the few.
  Mr. KOLBE. One of the few left around here.
  Mr. Speaker, I agree with what my colleague has just said, and I 
think he is exactly on target. We do need to be thinking about all the 
different ways in which we could fix this. Certainly taxes is one of 
the ways we can fix this. Certainly we can do some reduction of 
benefits. But, really, if you think about it, there are really only 
three ways you can have a fix or do something to really reform Social 
Security.
  One is increase the revenues. That is increase the amount of taxes 
you collect; whether you increase the amount of wages subject to the 
taxation, or whether you raise the rate of taxation, that is the rate 
of the Social Security tax we are paying today.
  The second, of course, is to make some reductions in the benefits. 
You can make the reductions for future retirees, or whatever, what ever 
other retirees we are talking about. But you can reduce the benefits.
  The third thing is to increase the rate of return on the investment. 
And that really gets us to the personal accounts, which I want to talk 
about in just a moment.
  But before I do, I thought maybe it might be useful for us to talk a 
little bit about the town halls that I have been holding, and I know a 
number of my colleagues have been holding about Social Security. Of 
course, for me, having had a proposal, a complete proposal introduced 
in Congress for the last 8 years, and having been talking about this 
for at least the last 10 years on the floor of this House and in every 
single town hall I have done, we have been talking about this. And I am 
talking about in my retirement communities, where everyone who comes to 
the town hall is 65 and over, I have been talking about this for a 
long, long time.
  So I am not fazed by the fact that a handful of people show up at my 
most recent town hall and they are, well, let us say fairly vitriolic. 
They have a few unkind words to say because they have not been there 
before. And I know these people are coming as a result of some e-mails 
that were received from different organizations. But by and large, the 
vast majority of the people that have come to my town halls during this 
last recess that we had were interested in seriously hearing about the 
nature of the problem and what kind of fixes we could have.
  I think on that score, by the way, the President has won the first 
round of this battle. My colleagues on the other side that want to deny 
that there is a problem have lost that battle. Because the polls now 
show by an overwhelming margin that the American people do think there 
is a problem with Social Security, and they think Congress needs to fix 
it, and they think it needs to be the highest priority of Congress to 
strengthen Social Security. So we have reached over that first hurdle.
  Okay, there is a problem. Now, let us get to talking about what are 
the solutions. What are the things we might do that could make Social 
Security a better program for the future.
  Coming back to my town halls, I just wanted to share this one story. 
And I do not know if the gentleman from Minnesota has some others that 
he might want to share, some of the experiences he has had in talking 
about this, but I had a town hall down in Sierra Vista, which is one of 
the communities in my district. There is a large military facility down 
there and we talked about Social Security for 1 hour of the meeting.
  I had two women who came up to me after the town hall was over and 
they both said they were Democrats. And they said they had come to the 
meeting as a result of an e-mail they had gotten and they had come 
opposed to reform and very much opposed to the concept of personal 
accounts. But after hearing the facts and the data, and we did have a 
real debate because there were plenty of people in the audience that 
were trying to dispute the things

[[Page 3309]]

I was saying, so we had a real discussion about it. But they said after 
hearing the facts, the data, and the reason why reform is essential, 
they told me they were supporters of the concept of personal accounts, 
and that they were going to go away and explain to their Democratic 
friends why personal accounts are necessary and why we really ought to 
be doing something to reform Social Security now.
  So I say that there is no doubt that if we talk about this issue with 
our constituents, with the people we represent at home, I think there 
is no doubt that they will understand that there is a need to do 
something to strengthen it. I think there is still a lot of uncertainty 
about what the reform should be. How should we fix it? How should we 
make it better? How should we strengthen it? But I think there is a 
growing awareness that we do have a real problem there.
  Mr. Speaker, I would be happy to yield again to the gentleman.
  Mr. KLINE. I thank the gentleman for yielding once again, and I just 
want to underscore the point the gentleman made that increasingly our 
constituents understand that something needs to be done.
  This sort of anecdote has been put forth many times before, but just 
this last week when I was back in my district, I was visiting one of 
the high schools. I had a group of students, about three classes, and 
we were discussing a large number of subjects, everything from the war 
to taxes to education, and one of the subjects was Social Security.
  I asked the question, which I am sure many of my colleagues have 
asked, to those students. I said, how many of you believe that Social 
Security is going to be there when you retire. Just asked the basic 
question. Not a hand went up. I thought, well, maybe they are just a 
little shy and do not want to raise their hand. So I reversed the 
question. I said, how many of you believe that Social Security will be 
gone when you retire? And about a third of the hands went in the air.
  Now, as the gentleman knows, sometimes when talking to high school 
students, or Members of Congress for that matter, not everybody is 
paying full attention, but it was clear to me the young people in my 
district, and I think across the country, just have no confidence that 
the Social Security that their grandparents are using and enjoying is 
going to be there for them. And the gentleman has shown us very 
graphically what that demographic problem is. I believe that 
underscores our purpose here to strengthen Social Security. Not to 
destroy it, not to weaken it, and certainly not to gut it.
  I know many of the proposals that have been put forward, the 
President and many of our colleagues, call for including the personal 
accounts, which the gentleman is going to talk about and taking 
advantage of the enormous power of compound interest to create a nest 
egg which they will have in conjunction with the Social Security 
program and that will provide the benefits that we were hearing about 
earlier tonight that women particularly require. We want to make sure 
that the program is there. We are looking for a way to strengthen it.
  Again, I just thank the gentleman for his persistence on this issue 
and his continued leadership as we move forward in the debate.
  Mr. KOLBE. Again, Mr. Speaker, I thank the gentleman from Minnesota 
for his participation in this discussion here tonight.
  Just moving forward a little bit, and I do want to respond to what my 
colleague said, it reminds me of some experiences I have had. I have 
been, as I mentioned, talking about this for a lot of years. And I go 
into high school audiences, where there are seniors that are old enough 
to kind of understand the issues involved here, or go into college 
classes and I ask the same questions every time: How many of you think 
Social Security will be there when you get ready to retire? I almost 
never have a single hand that goes up. Never a single hand. So they do 
sense that there is a problem with it.
  And they are exactly right, because the numbers we just ran through, 
Social Security will not be there for them in the same way that it is 
today. There is no possible way when they get ready to retire that 
Social Security will be there in the same form. Something will have 
changed about it. Their benefits will have been reduced, taxes will be 
increased, or we will come to some other conclusion about a way to 
reform Social Security.
  So they understand what the issue is. And I think, generally 
speaking, the American people are coming to understand that.
  Mr. Speaker, I am happy to yield to the gentleman once again.
  Mr. KLINE. I believe that is true.
  As I said in my remarks just a moment ago, I know that that was an 
anecdote that many of our colleagues have expressed, because they have 
had the same experience of asking young people, high school seniors, 
college students, others, if they think Social Security is going to be 
there when they retire. I have never had a hand, I have had the same 
experience as the gentleman, I have not been asking the question for as 
many years, but never a hand goes up where they believe it is going to 
be there.
  And what a shame, because they ought to have a system, all Americans 
ought to have a system that they can count on and that they believe is 
going to be there. And until we do something to really strengthen the 
system, they will not have faith that it is there. And they should not, 
because without that fix it just will not be there in that manner.
  Mr. KOLBE. I appreciate the gentleman's comments, and I think what 
his experience illustrates, as a newer Member of the Congress, is that 
if you are out there talking about this issue candidly and honestly 
with the people you represent, your constituents, they are willing to 
listen to what you have to say. They will not reject out of hand what 
you are saying.
  So I hope we have been able to dispel the notion that there is no 
problem out there. I hope we have been able to dispel the idea that we 
need to do absolutely nothing. We do need to do something to strengthen 
Social Security to make sure it is there for this generation as well as 
for the next generation.
  So that brings us to the ideas of what can we do to make it work.

                              {time}  2215

  Now, as I mentioned earlier, there are three things or variations on 
three things: raise taxes, decrease benefits, or increase the rate of 
return on investment that we have in Social Security. I happen to 
believe that we ought to do a little bit of all of those. If you are 
going to strengthen Social Security, you need to do a little bit of 
each of those things.
  But the heart of that strengthening is increasing the rate of return 
on the investment we have, and that is why personal accounts are so 
important. Now, I have heard it said personal accounts do not fix it, 
and that is accurate. That is right. I have never said personal 
accounts fix it. Personal accounts are your link to the next generation 
because you are going to say to the next generation, look, you are 
going to have to pay just a little bit more to support this defined 
benefit, and you are going to get a little bit less.
  And so the younger person is going to say, what is in it for me. So 
we can say there is a chance to have a greater return on investment 
through a personal account. Even though you are paying a little more 
taxes and getting a little less benefit from the defined benefit part 
of Social Security, you are going to have a part of it set aside, and 
it will grow as the country grows, grows as the economy grows, grows as 
the world economy grows; and that will yield a retirement that is 
better even with the reductions we are going to have to force. It is 
going to be better than what we have today.
  So the first principle we have to agree on is we do not do anything 
to change the benefits of people today who are retired or near 
retirement get. I do not know of a single plan offered by anybody on 
this side of the aisle or the plan that I have offered along with that 
side, the only bipartisan bill which has been introduced in Congress,

[[Page 3310]]

none change it for anybody who is over 55. To everybody that is 
watching this, if they are over the age of 55, you can turn the 
television set off because this does not affect you. We are not talking 
about anything that changes your benefits.
  Mr. KLINE. Mr. Speaker, I think that it is critical that all of 
America understands what the gentleman said is accurate. I have a table 
that my staff keeps updated almost daily as we start to engage in this 
debate. I do not know of a single proposal, certainly no serious 
proposal, that alters in any way, in any way the Social Security 
program for those my age, or 55 and up. It does not change it a bit. It 
is the same. You get the same check, the same increases. The program is 
exactly the same. My 84-year-old mother is going to continue to get her 
checks in exactly the same way she has been getting them for the last 
20 years. The program does not change for her.
  I think that is a key piece of this overall picture that we are 
talking about as we move forward in the debate. There are different 
programs, and the gentleman from Arizona (Mr. Kolbe) has a program he 
has been working, others have other proposals. Most of those on this 
side of the aisle correctly create some sort of a personal account, an 
account that our younger workers can own, that grows, that has the 
opportunity to give them a greater return than the current system gives 
them. It gives them something that they own that they can leave to 
their heirs. No proposal affects the benefits of any current senior 
whatsoever.
  I think it is important that we understand that as we debate the 
details of the proposals such as the one that my colleague has, and we 
have that basic understanding that we are talking about no changes for 
seniors, an opportunity to increase the return, to take advantage of 
that interest, increase the rate of return for our younger workers. 
That is the position we are starting from, not the position that we 
heard earlier in the evening of gutting Social Security, of trying to 
do something to help the President's buddies and those other 
unfortunate things we heard earlier. This is about making sure the 
program is there for our grandkids like it has been there for our 
parents.
  Mr. KOLBE. Mr. Speaker, the gentleman is exactly correct and on 
target. Obviously, when we talk about personal accounts, it has not 
always been that Democrats have opposed that. In fact, when President 
Clinton in the last 2 years of his term, second term in office, was 
talking about Social Security reform, talking about it honestly and 
openly, Democrats began to embrace the concept that maybe there ought 
to be a greater return on investment; maybe some of the money ought to 
go into a personal account.
  Senator Reid, now the minority leader in the United States Senate 
said, ``Most of us have no problem with taking a small amount of the 
Social Security proceeds and putting it into the private sector.'' He 
said that on Fox News in 1999. I think the Senator was correct about 
that. There are similar kinds of things that have been said by other 
leaders.
  The ranking Democrat on the Committee on Ways and Means said at a 
press conference at the same time, this was the same time the President 
was talking about Social Security reform, he said, ``I am one Democrat 
who truly believes that Democrats will not benefit by doing nothing on 
Social Security.'' So he recognized the problem, and he believed we 
should do something.
  I say if they do not like the plans that are out there, the plan that 
the gentleman from Florida (Mr. Boyd) and I have introduced, or other 
plans introduced by the gentleman from Wisconsin (Mr. Ryan) and the 
gentleman from Florida (Mr. Shaw) and others, fine, but bring something 
to the floor that we can start this dialogue, that we can begin this 
debate.
  Coming back to the topic of personal accounts, we just heard a few 
moments ago the gentlewoman from California talk about how Social 
Security is so important for women, and she is absolutely right. Social 
Security is important for women, but Social Security is not very good 
for women right now. One of the reasons it is not so good, it is 
because they tend to drop out of the workforce at a certain point, when 
they are raising children, and so they get less from the system when 
they get ready to retire.
  There are a lot of single women who raised their children. I like to 
use the analogy of the 48-year-old single mother. She got her kids 
through school and college, worked herself to the bone, and now they 
are both over the age of 21, and she drops dead of a heart attack at 
the age of 48. What does Social Security provide? Zero. Not one dime, 
because her children are over 21. She is not married; there is no 
spouse. There is not one dime from Social Security.
  Now, if a portion of what she had been paying in those taxes had been 
put into a personal account, she would have owned something. She would 
have owned something that she could leave to her heirs; and if she 
forgot to write that will, it still would have gone to her heirs, which 
would have been her children. That is the magic of personal accounts. 
They not only provide a greater retirement benefit, but it is an asset 
that people own. They own it. They can manage it and figure out what to 
do with it. They can leave it to their heirs. That is the magic of 
personal accounts.
  As I said, it is the link to the next generation because as I said, 
personal accounts do not fix the problem. Indeed, if we are going to 
take a carve-out as I think we should because to add it on is to say 
just a huge new tax on Social Security, a tax to be added as a burden 
on the people, if we are going to carve it out of the current amount 
being paid in retirement taxes, we are going to have in a sense a 
bigger problem, so we have to do something to make it all balance.
  Guess what, you can do it, but you have to make some tough choices, 
and that is what nobody has been willing to do. Particularly as I 
listened over here, I do not hear anybody willing to make some of those 
tough choices. What do we do?
  Well, the legislation we have introduced does a little bit of 
everything. We would make some modest reduction to the Consumer Price 
Index on which the annual cost-of-living adjustment is made, and that 
is justified by the superlative index which accounts for durable goods 
lasting longer today. Alan Greenspan has talked about it. It is a 
little complicated economic issue, but basically the Consumer Price 
Index today is a little bit out of whack with the reality of where the 
inflation rate is actually going.
  In our bill, we would increase the amount of income subject to taxes, 
not increase the wage rate because we do not want to say to the person 
earning $25,000 we are going to increase your Social Security tax, too; 
you are going to have less take-home pay. But we are going to say to 
the person who currently makes over $100,000, you are going to pay more 
tax because we are going to increase the amount of wages subject to 
taxation. That is legislation that the gentleman from Florida (Mr. 
Boyd) and I have introduced. This is not necessarily the President's 
plan or any official plan on this side of the aisle, but I use it only 
to illustrate if you make some of these choices, you can fix some of 
these things.
  We would also accelerate the retirement age so we take out that 10-
year gap from 65 to 67, we take that out so it goes to 67 a little 
faster. We do not change the retirement age; we just accelerate the 
speed at which it goes.
  We would make some changes to the benefit structure for younger 
people, people with personal accounts, make some reduction in their 
benefits; and you can make Social Security solvent not for 10 years, 
not for 20 years, not for 40 years, and not even for 70 years, which is 
the only horizon that the Social Security Administration will look at. 
But economists have looked at ours and the CBO has looked at ours, and 
they say it goes as far as the eye can see as being solvent. So we can 
say to younger people, yes, you are going to pay a bit more in taxes, 
and, yes, you are going to get a little less benefit; but you are going 
to have retirement that nobody else has had up to this

[[Page 3311]]

time. That is what personal accounts do, and that is why I think 
personal accounts are a critical part of any reform of Social Security.
  It is not the be-all, it is not the end-all, it does not answer all 
of the problems; but it gives some confidence to younger people that 
there is going to be something in it for them when they get ready to 
retire. That is why I think the personal accounts are so very 
important.
  Before we wrap up here, let me outline a couple of other ideas.
  Again, we are looking at what President Clinton said in that State of 
the Union address in 1998 where he said, ``We are going to hold a White 
House conference on Social Security in December, and one year from now 
I will convene the leaders of Congress to craft bipartisan legislation 
to achieve a landmark for our generation, a Social Security system that 
is strong in the 21st century.''
  I am sorry to say because of personal things that occurred after 
that, we never got around to that. The President's clout here in 
Congress was diminished, his clout with the American people was 
diminished. He was not able to carry that off. There is no doubt it 
takes a great deal of Presidential leadership to carry that out, but 
President Clinton knew what the problem was, and he identified it at 
that time.
  Much more recently, in fact just today, just today in testimony 
before the Committee on the Budget, Alan Greenspan, the chairman of the 
Federal Reserve Board, said, ``In my view, a retirement system with a 
significant personal account component would provide a more credible 
means of ensuring that the program actually adds overall saving and in 
turn boosts the Nation capital stock.'' That is a little bit of 
economic legalese there, but he is basically saying it is a better way 
and it adds on the total savings that the United States has if you have 
personal accounts.
  The thing that is important about personal accounts is they belong to 
every individual and they can be tailored. They can change as 
circumstances change.
  The gentleman from Minnesota (Mr. Kline) knows this. As Members of 
Congress, we have exactly what we are talking about doing for Social 
Security. It is called the Thrift Savings Plan, and all Federal 
employees have it.

                              {time}  2230

  It is a piece of our retirement and it is money that we put in out of 
our wages that is matched in part by our employer, which in this case 
is the House of Representatives, and it goes into a personal account 
that belongs to us and we get a statement every year that tells how 
much we have invested and we have some choices about where we invest 
that. No, we do not go out and have to ponder every night looking over 
the stock pages and deciding which stock to buy because it goes into 
index funds. We can choose a stock index fund where it buys every stock 
in that index, we can choose a bond index fund where it buys every bond 
in that index, or we can choose a Treasury bill.
  Want low risk? You have got to assume that Treasury bills are 
probably the safest thing. The government is not going bankrupt. I 
think we believe that. The government is not going bankrupt. So you can 
buy a Treasury bill index fund where it buys all the Treasury bills, 
medium, short, long-term Treasury bills. It has a lower rate of return, 
but it is absolutely safe. The nice thing is that as you get close to 
retirement, you can start to shift that from one account to the other. 
That is exactly what I have done with mine. I want less volatility. I 
am getting closer to the age of retirement. I want less volatility, so 
I moved some of it out of the stock index fund into the Treasury bill 
fund. That is the beauty of this is it gives you some choices to plan 
for your own retirement. Social Security does not give you that.
  Mr. KLINE. If the gentleman will yield, I would like to take this 
opportunity to go back to the point that the gentleman made earlier in 
his example of the 48-year-old single mother. The gentleman from 
Arizona and I are paying in to Social Security. We are in the Social 
Security retirement system.
  We also have the Thrift Savings Plan that he just described. Should I 
die today, I would not be able to leave for my children or my 
grandchildren anything out of the money that I have paid for many 
years, not quite as many as the gentleman but many years into Social 
Security, but I can leave and I will leave the money that is in that 
Thrift Savings Plan because I own it. And it underscores the point that 
the gentleman made earlier, that one of the terrific benefits about 
having a system that strengthens Social Security, that has a personal 
account as a component of that is that that money is absolutely yours, 
and I believe that in all the proposals that we are going to be 
debating put forward by the gentleman that we have talked about 
earlier, that account is owned by the individual and they can leave it 
to their heirs when they die.
  It is a major difference between this proposal and the current 
system. While it is providing wonderful paychecks for my mother, she 
does not own that. And I want my children and my grandchildren to own 
something that is part of their retirement system. Unfortunately, as we 
said earlier, for those that are 55 and up, we cannot strengthen that 
program for them. Nothing in the system is going to change for them. 
Nothing. It is not going to get better. It is not going to get worse. 
It is exactly the same. But for my kids and my grandkids, what a 
wonderful thing to have as part of their Social Security an account 
that they will own like the one that the gentleman was describing, the 
Thrift Savings Plan that can be tailored to their needs and their age 
and they will own. They can use it in their retirement or they can 
leave it to their heirs. I just wanted to step in at that moment to see 
if we could not underscore the important difference between having an 
account that you own and one that you do not.
  Mr. KOLBE. This discussion about the personal accounts and the kinds 
of index funds they might be invested in leads me to the two kind of 
final points that I wanted to make here tonight. We heard on the other 
side, and the gentleman talked about this a moment ago, the comment 
that was made tonight saying this is being done for the President's 
buddies on Wall Street. The truth of the matter is, I have been working 
at this thing for 8 years with a bill. I have never heard from Wall 
Street on this. The reason is simple. There really is not much in it 
for Wall Street. Why? Because you are investing in index funds. My 
colleague may not know this, and I certainly know that a lot of the 
American people do not understand this, but the Thrift Savings Plan, 
the one that he and I are a member of, the management fee for that is 
two basis points. That is two hundredths of 1 percent. That is what the 
Wall Street manager gets, two one-hundredths of 1 percent of the assets 
for management of that.
  Why is it so low? That is obviously a fraction of what any IRA or any 
mutual fund that most people have some kind of an investment in, it is 
a fraction of that. Why is it so low? Because it is an index fund. You 
are not doing research. You are not making choices about investments. 
You are buying every stock in the index fund and so each month when 
more money comes into the fund, you simply execute buy orders for the 
funds and as you have to sell it for retirement benefits, you execute 
sell orders for it. It is very simple in that sense. That is why the 
management cost is so very, very low. I know we are going to continue 
to hear that bogus argument, but it is absolutely bogus. It is 
absolutely false. The one other argument that I wanted to address is 
the gentleman said earlier on the other side, made this point, why 
introduce risk in the only guarantee that we have. Well, Social 
Security has undergone more than 50 changes. I think it is actually a 
lot more than that, but I know it is more than 50 changes since we 
introduced it in the 1930s. Fifty times Congress has come along and 
made changes to it, changed the taxes, changed the benefits. We have 
changed it and added disability. We have changed it in one way or the 
other.

[[Page 3312]]

  So if you want to talk about risk in Social Security, then talk about 
leaving it in the hands of Congress. That is why the personal savings 
account eliminates that risk, because it belongs to you. Congress 
cannot take it away. You have ownership of it and we cannot take it 
away from you. That is why I think the personal savings accounts are so 
very, very important. So if we want to talk about risk and we want to 
talk about reducing risk, let us talk about ways in which we can make 
sure that people have control over some part and we are only talking 
about a very small part of the total amount being paid in Social 
Security taxes, because if I have not made this clear this evening, all 
the plans we are talking about leave the vast majority of the taxes in 
the current system, so that it pays beneficiaries today and is going to 
pay beneficiaries in the future the same kinds of defined benefit that 
we now get from Social Security.
  Mr. Speaker, I appreciate this opportunity this evening to have this 
dialogue with my friend from Minnesota. I appreciate his comments and I 
appreciate the passion with which he approaches this issue. I think we 
both know this is one of the most significant debates I think we will 
ever have in our lives in this legislative body, because I think it 
says a great deal not just about the future of Social Security, but it 
says a great deal about whether we as a Congress are going to have the 
will to tackle the really tough problems which face us. Social 
Security, believe it or not, is one of the easier ones. We have to get 
to Medicare to really look at the very difficult problems that we are 
facing. But if we can show we have the will to come together and find 
solutions to strengthening and making Social Security a better 
retirement system, then I think we can go on to finding ways to 
strengthen and make Medicare a better health care system for our senior 
citizens. That is why I know the gentleman from Minnesota is down here 
tonight, because he believes that and he believes that is exactly what 
we must do and I believe it very strongly.
  In my heart of hearts, I believe that what we are doing here today is 
to help preserve this system for those who are already retired but also 
to say to the next generation, we believe that you too should be able 
to benefit from a retirement system, a Social Security system that will 
be there for you when you get ready to retire. I believe that this 
dialogue needs to continue. We have started it this evening, we have 
joined this debate, and I hope we can have more discussion of these 
issues, not just with Republicans on one side of the aisle, not just 
with Democrats on the other side of the aisle but coming together here 
to carry on these debates and this discussion together and perhaps we 
can find some kinds of ways in which we can have the solution. I thank 
the gentleman for his participation.

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