[Congressional Record (Bound Edition), Volume 151 (2005), Part 3]
[House]
[Pages 4250-4256]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       REFORMING SOCIAL SECURITY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2005, the gentleman from Colorado (Mr. Beauprez) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. BEAUPREZ. Mr. Speaker, I rise today to address this House and the 
people of the United States of America on a very, very timely subject: 
Social Security and, more specifically, the opportunity to reform 
Social Security. Now, recently, the President, President Bush, has been 
given a whole lot of credit, or blame, whichever your perspective may 
be, for even bringing this issue to the forefront of the American 
people and to this body.
  I have the pleasure of serving on the Committee on Ways and Means of 
this House of Representatives; and, of course, it is going to be the 
obligation of the Committee on Ways and Means to deal with this issue 
and try to bring some consensus to the subject of how we might reform, 
fix, strengthen Social Security, an institution that has served 
generations of America very, very well, going back to the era of just 
post the Great Depression when my parents were just about to enter the 
working environment themselves as young adults.
  So we do this with some degree of trepidation, but we also do it with 
a considerable sense of obligation to our children; in my case, a 
grandson now, knowing that an entitlement program such as Social 
Security that is especially critical to the survival, and I say that 
word advisedly, survival of so many of our senior citizens and 
especially the lower-income members of our senior citizen population 
who absolutely rely on Social Security for their very sustenance, we 
should pass that benefit, that promise of America on to our children's 
generation and all generations to come. That is not an easy challenge, 
as we are going to talk about in the time I have had allotted to me 
tonight.
  Now, as I said at the beginning, at the outset, President Bush seems 
to get a tremendous amount of credit these days for bringing this to 
our attention. If the truth be known, President Bush was not the first 
one to point this out. In fact, if we go back to the very beginning, 
Franklin Roosevelt himself, often called the Father of Social Security, 
told us then that the plan put in place, the plan we are still on, was 
but a starting point, was but a beginning; that it would not be 
sustainable, nor adequate, forever; that at some point in the future, 
he even used the word ``annuity,'' an annuity would have to be created, 
a prefunded liability, a prefunded liability set aside to augment 
Social Security, because Social Security was never going to be adequate 
for the entire challenge in front of us.
  Now, in addition, and much more recently than Franklin Roosevelt, our 
last President, the 42nd President of the United States, Bill Clinton, 
recognized the challenge in front of us and the obligation in front of 
us to reform Social Security. Now, President Clinton, as this poster to 
my left says, President Clinton in his State of the Union address in 
January 1998 said: ``We will hold a White House conference on Social 
Security in December. And one year from now, we will convene the 
leaders of Congress to craft historic, bipartisan legislation to 
achieve a landmark for our generation: a Social Security system that is 
strong in the 21st century.'' Bill Clinton.
  President Clinton appointed that commission, and it was headed by 
Democrat Senator Daniel Patrick Moynihan.
  President Clinton, just a month later, in February of 1998 also had 
these words to say at an address at nearby Georgetown University: So 
that all of these achievements, these achievements meaning the economic 
achievements, our increasing social coherence and cohesion, our 
increasing efforts to reduce poverty among our youngest children, all 
of them, all of them are threatened by the looming fiscal crisis in 
Social Security. President Clinton said that.
  Now, recently, very recently, President Bush has been attacked for 
even suggesting that there is a problem, perhaps even a crisis with 
Social Security. I submit to my colleagues again that President Clinton 
certainly thought that there was, and I say to my colleagues I 
certainly think that there is as well. We will talk about that in the 
next little while.
  How was Social Security established? Well, again, when my parents 
were young adults back in the mid- to late 1930s, coming out of the 
Depression, I am sure that in this very same Chamber, Members of the 
House of Representatives, led by a directive from President Roosevelt, 
felt an obligation to some of our seniors that were struggling; and 
coming out of the Depression, I am quite certain times truly were 
tough.
  And this great Nation wanted to be there for those that needed us the 
most and had every right to ask for a bit of a helping hand so that 
they might have dignity in their last days. So Social Security became 
the program to provide just a little bit of support to maintain that 
dignity as people lived out their last days.
  When it was established in the beginning, there was but a 2 percent 
tax placed on the first $3,000 of income a worker had. Now, there are a 
couple of other little details that are of fairly great significance. 
Back when it was established, for every beneficiary, every individual 
who received a Social Security benefit, there was about 42, 43 workers 
that paid the tax that created the immediate revenue to provide the 
benefit to that one worker, about a 42 to 1 ratio.
  By 1950, shortly after I was born, demographics had changed and there 
were but 16 workers to pay for one beneficiary.

                              {time}  1630

  Even today, we have barely three workers paying for one beneficiary. 
And by the time my children approach their retirement, there will be 
barely two workers to pay for one beneficiary.
  Now a couple of other little details, and fairly significant and 
important

[[Page 4251]]

details, is back in the beginning when Social Security was established, 
the retirement age, the age when one was eligible for benefits was 
established at 65. Now, today, we think that that is pretty generous, 
makes sense. That is when people typically retire, a little bit 
earlier, a little bit later, about 65.
  But, of course, the interesting little fact back in the late 1930s 
was that the average life expectancy was only about 60. So most people, 
before they even reached the age of 65, the eligible age for the 
benefit, had passed on.
  Those that did survive typically did not live nearly as long as we 
all live today; thankfully, I certainly plan to. So there were not as 
many living in retirement, and they were not living nearly as long.
  Today, of course, life expectancy is closer to 80. There is a whole 
lot more of us and, again, far fewer people paying that benefit.
  That really is the essence of the challenge in front of us. Some 
would have you believe that this is some great debate about public 
policy differences, very different views of the world, maybe the left 
spectrum, the right spectrum of the political debate going on here. I 
do not think it is.
  Frankly, I think it is pretty much a case of arithmetic. The numbers 
are in front of us. And the challenge is a result of the changing 
demographics.
  There are a couple of other things that I think we need to have in 
front of us in our minds as we approach this debate, just simple little 
facts. Now, this chart shows current time, 2004, current year, last 
year; and the revenue that comes into the system, into Social Security, 
is marked on this line.
  You will note that the zero indicates the break-even point. In other 
words, this is the benefits; this is over time. And right now indicated 
in black is the surplus. So we have more money coming into the system 
than there is going out. That is a good situation. You can pay your 
bills if you are running your house that way. That is a great 
opportunity.
  But, very shortly, things are going to start to change. You will 
notice, in 2008, about right here, instead of a growing surplus, the 
line goes the other direction and continues in that direction. Why does 
that happen? Because in 2008, the very first of the baby boomers, those 
born in 1946, turn 62. And under the current system, you are eligible 
for early retirement at age 62 and start drawing benefits. In other 
words, you change from being a payor into the system to a payee, 
receiving the benefits.
  And current statistics tell us that about 55 percent of our people 
opt for early retirement. So with that big wash of baby boomers coming 
at us here very shortly in 2007, the whole workforce, the whole 
demographic is about to change on us, to where we begin that decline of 
a growing surplus of revenue, more revenue coming into the system than 
we have benefits going out.
  And we begin the decline. In 2018, the actuaries tell us at Social 
Security, this point, revenue actually is less than revenue coming into 
the system, is less than the obligation of the benefit. Now, many say 
that, you know, what is that problem? Is it a problem? Is it a crisis? 
Well, I do not know about the world you all live in, but in my 
household, when your expenses exceed your income, it is a crisis. And 
there seems to be a huge debate going on out there, is it a problem? Is 
it a crisis? Is it bankrupt? Is it insolvent? I submit to you, when you 
do not have enough money to pay the bills, you have got a real problem 
on your hands, and that is what we are facing very, very shortly.
  In addition to that, I want to stay in kind of current time frame 
here, at this point, at 2008, when those first baby boomers start to 
retire, here is the other impact we are going to have to deal with 
right here in this chamber, the United States House of Representatives, 
in charge of the revenue and the paying of the bills for the United 
States of America right here.
  We know we are in a deficit situation today. I submit to you that all 
Members on both sides of the aisle in this chamber, Democrat, 
Republicans alike, are concerned about our deficit spending. Think 
about this, folks: When we begin this decline, yes, that surplus as 
indicated in black, we have been living on that for a long, long time. 
We have been paying the bills of this great Nation: We have been paying 
for our veterans benefits; we have been paying for Medicare; we have 
been paying for education; we have been doing the great projects of 
this great Nation, the United States of America.
  We have been running the country on that. Now, we will talk some more 
later about whether that is good or bad public policy, but it is a fact 
of life and Democratic administrations, Republican administrations, 
Democratic Members of the House when they were in the majority, 
Republican Members of the House when they were in the majority, have 
done exactly the same thing.
  And here is why: Because if we did not use that to pay the bills, we 
are either going to have to drastically reduce the bills we pay, in 
other words cut programs, or we are going to have to go borrow even 
more money. It has got to come from someplace. And it has been coming 
from that black part of this graph.
  So as that decline begins, as that line starts to turn down, and we 
have less of a growing surplus, we have got to go get the rest of the 
money to run this Government from some place.
  And as you can see, the part that is in red, we not only lose the 
surplus, we start getting into a situation where fairly rapidly, this 
is just 2002 right here, by 2040, which is about the time, one side or 
the other, where my four kids are going to be retiring, by about 2040, 
we have got a serious problem on our hands. This is the deficiency 
between the money coming into Social Security from taxes and the 
benefit going out.
  That is not the total obligation; that is just the deficit, just the 
deficit on an annual basis between the money coming into the system and 
the money going out. And, again, in addition to that, we do not have, 
at this point, any given year, we will not have the benefit of this 
surplus that we have been living on until now to pay the additional 
bills of this country.
  Well, some say, go to the bonds, go to the trust fund, the Social 
Security Trust Fund. Give me just a minute on that. This is the way it 
works. And again, this is not devious. This is not some scheme that 
this administration or this majority cooked up. This is the way the 
system has worked for a long time.
  Republicans, Democrats, this administration, that administration, 
this is how it works. By law, when you have got a surplus, the 
Government is obligated to sell those bonds; basically sell them to 
themselves because we write them. They are a special bond; they are not 
a bond like you take out on the street corner and sell to individuals 
or pension funds or even other nations. We sell them to ourselves.
  It has been referred to as an IOU, and in fairness, I think that is a 
pretty good analogy, because the Federal Government is saying we are 
going to take this money, we are going to pay all of the other bills, 
and that is why it is gone. But as evidence that it is a debt back to 
ourselves, the Federal Government, we are going to write a bond, a 
loan, if you will. We are going to sign it, U.S. Government promises to 
pay the United States Government so many billion dollars and trillions 
of dollars, and it earns interest.
  So we think, well, that is great. Let us just go to that drawer in 
West Virginia, open it up and cash in those bonds, and we will pay all 
of those with those bonds, will we not? Where do we get the cash to 
redeem the bonds? From the tax revenue that comes into the United 
States Treasury year after year. And, folks, we have been using that 
money. We will use that money in the future to pay all of the other 
bills of the Federal Government. It is a classic take it from the right 
hand and put it into the left.
  Now, that may seem like a subtlety, it is not a subtlety. It is a 
very important fact to remember. Yes, there are bonds, and yes, I 
guess, technically in a way, there is a trust fund. But it is the 
Federal Government, the U.S. Government, promising itself that it will 
pay

[[Page 4252]]

itself back with its own money from the taxpayers, with interest.
  Some choose to look at this thing in complete isolation of every 
other part of the Federal Government and say, oh, no, we can go out to 
75 years. And if you do the math and are a little bit generous in your 
assumptions and you take all of the money that will come into the 
system and all of the bonds that will be created and add to that the 
interest earned, you can pay the bills.
  And you can for quite a while. Not forever, but for quite a while. 
But, what happens is you dry up almost all of the rest of the 
government to do it. Because that deficit has to come from some place. 
And by taking the cash to close that deficit from all other programs 
and services in this country, most of which are on a growth curve 
themselves, by the way, you might sustain Social Security for a while 
longer, but at what price?
  That is what we are dealing with in this chamber, and we are going to 
have some tough choices to make. I am joined in this Special Order by a 
good friend of mine, a new colleague from the great State of Texas (Mr. 
Conaway).
  And the gentleman from Texas (Mr. Conaway) comes to this chamber, as 
many do, with considerable credentials himself, having had more than 
just a little bit of experience in the financial world. And it is a 
pleasure to have you with me tonight on this very important subject.
  Mr. CONAWAY. Mr. Speaker, I thank the gentleman for those kind 
remarks. And I actually chose the office that you vacated, so that, as 
my initial start in this chamber, I would have the good vibrations that 
you left behind on your good start in this body.
  I want to make a few points, some of which play off of the ones that 
you have already made. Unfortunately, we got off on what I think is the 
wrong foot when we began to call this situation a crisis. We in America 
have a relatively short attention span, and crisis means something is 
going to happen in the next 15 minutes or certainly by tomorrow. So 
that was probably an ill word to use, and we spent an inordinate amount 
of time arguing over that word.
  I am a CPA by background, 30-plus years of business experience. And 
as I look at what I believe to be the very compelling arguments and 
facts that you present, then that leads me to believe that we do have 
something we ought to deal with, and that we ought to deal with that 
today and not continue to put that off.
  Now, is the time to fix this problem. You have already mentioned 
that, each year that we delay in this fix, it adds an additional $600 
billion of unfunded benefits and liabilities to our problem.
  So, in your family, my family, my business, the clients that I have, 
if we had circumstances where we had cash flow deficits and I went to 
the Chairman and the CEO and I said, you know you are going to bring in 
less money than you are spending this year, do not worry about it, it 
will be okay, let us just do not fix it, wait 3 or 4 years from now.

                              {time}  1645

  Well, that is nonsense. Nobody does that in the real world, and we 
should not be about doing that here in Congress.
  So I think the facts compel us to see the problem, see the issue that 
needs to be done and also compel us to say, we should be the ones who 
fix it. If you agree with the facts that we have a system that is no 
longer sustainable, there is a great adage that I picked up in one of 
the briefings that we had early in November that said, things that 
cannot be sustained will not be sustained. It is a pretty 
straightforward statement. That is exactly what we have here. We have 
something that will not sustain itself.
  When it originally came into being in 1935, it could clearly sustain 
itself. The more callous of some would look at that system and say, 
that is nothing more than a pyramid scheme where you collect from all 
these people and give it out to a few.
  In this instance, it is a legitimized pyramid scheme, but as every 
pyramid scheme in history it runs out of gas. The facts compel us to 
say that this system that we have got is running out of gas.
  We hear the phrase PAYGO bandied about this body and in committees a 
great deal with some passion and disdain. This was an original PAYGO 
system, pay as you go. The monies you bring in are paid out to 
beneficiaries. I do not think it applies to Social Security and here is 
why. PAYGO means in this circumstances you pay, and if I am retired, I 
go. PAYGO ought to mean the folks incurring the bills ought to pay the 
bills. So I do not think the term PAYGO really applies to Social 
Security.
  The next thing is once you have this issue in front of us, let us 
take a step back and put ourselves back 75 years ago when it was 
conceived and the leadership at that point in time, the wonderful 
leadership it was, clearly thought a lifetime benefit, a Social 
Security stream of cash flow that you cannot outlive, was an important 
public policy arrangement.
  I do not hear anybody on either side of the aisle hinting that this 
is not still really a good public policy for our country to have. I 
have counseled many clients who as they approach retirement age one of 
the first questions they ask is, am I going to outlive my money? I have 
got all this put away that I have saved and scrimped and foregone 
purchases and have put this money away. Am I going to outlive that?
  Well, the wonderful thing about Social Security is you have got the 
security of knowing you simply cannot outlive this lifetime benefit. So 
if we are compelled to fix it, and I think we are compelled to keep it, 
if it is good public policy for my mom and dad and for me, then I would 
argue that it ought to be good public policy for my grandchildren and 
my children, just like the gentleman has talked about his children as 
well. So I think we are coming to some things we can all agree on as we 
begin to move toward how do we come about this conclusion of fixing 
whatever is in front of us.
  I have six wonderful grandchildren. God has blessed me immensely with 
four wonderful children and two daughters-in-law and a son-in-law and 
six magnificently wonderful grandchildren. It would never ever occur to 
me to gather those six little critters up, take them down to my local 
bank and say, Mr. Banker, I want to borrow a lot of money. And I want 
to spend that money over the rest of my life time, and I want my six 
grandkids to sign that note. And when they grow up they will pay off 
what granddad spent.
  If you individualize what we are really doing every single day in 
this country, there is not a grandparent on Earth I do not believe who 
would do that, who would obligate their individual grandchildren for 
some individual debts that they might incur. So if it is not good 
public policy on an individual grandparent-to-grandchild basis, then it 
really should not be good public policy on a corporate basis to do this 
very exact same thing.
  We are a Nation at war, and we have these wonderful stories coming 
back from men and women and the sacrifices they are making on behalf of 
liberty, on behalf of freedom, spreading freedom around this world. 
They are answering a call to duty, a call to country, a call to honor 
that is magnificent on every level. But there are a select few, there 
are a lot of them, but in comparison to Americans there are a select 
few.
  We ought to look at that example and say, given the sacrifices they 
are making, given their role that they are playing, is there some 
similar role that we can play? Is there some similar duty, some similar 
responsibility to country that we ought to be obligated, we ought to be 
taking on or shouldering; and in my mind this is clearly it. I cannot 
think of a better place to start on the financial problems that face 
this country than solving this problem.
  Now, once you get the groundwork laid for the problem, once you get 
the groundwork laid that it is a process and a public policy we ought 
to keep in place, once you get in place that we ought to be the ones 
that fix it, then

[[Page 4253]]

you begin to start what I think is a very thoughtful, logical, step-by-
step process of coming about how to do that.
  The President has laid out personal savings accounts as a piece of 
the solution. All of us collectively are going throughout our 
districts, looking at our men and women, the voters of the United 
States: if you have some ideas that will work on fixing Social 
Security, let us get those on the table. Let us get that into the mix 
as we try to coalesce around a solution that collectively, both sides 
of this aisle, a vast majority of both sides of this aisle, can gather 
around. Because the big public policy moves in this country happen when 
we collectively agree.
  If we have to vote 232 to 203 on this deal, we do not have the right 
answer. We want an answer that is broad-based support throughout both 
sides of this aisle. And I appeal to my colleagues on the other side of 
the aisle that whatever this solution looks like, I assure you it is 
not wearing a jersey that has an elephant on it or a donkey on it. This 
solution just has the jersey of what is best for America, what is best 
to continue the promises made to my mom and dad. We will work to put 
the security back in Social Security for my grandchildren as well.
  A couple of other points and then I will turn back to the gentleman. 
The black area that the gentleman is talking about, when I am out and 
about in my town hall meetings, one of the misconceptions that 
permeates them is that there is something wrong with having used the 
Social Security surpluses the way we have done it. Lyndon Johnson 
started it with a unified budget in 1969, I think, so we have had this 
for quite a while, both parties in charge of the White House and both 
parties in charge of the Congress. So we have been at this a long, long 
time.
  We also have a push-back in what is called the transition costs. How 
do we pay for this transition? How do we pay for this fix? One of the 
things I would like to put forward, and I think it would resonate with 
many, is let us start today and capture that surplus.
  Now, it is an accounting gimmick, and I use that phrase cautiously 
because what that will require us to do is rather than us borrow the 
money for the general fund from the Social Security trust fund and 
spend it, if we capture that money as a quote/unquote down payment on 
the transition costs, a down payment on the fix, then we will be 
required if we continue to spend the same levels of monies that we are 
going to spend the next years to 2018, we will have to go into that 
market and borrow that money from the public and borrow that money from 
the Chinese or the Japanese or other investors to fund the operations.
  While it may be more form than substance, it may be a cornerstone of 
an idea that the folks can say, okay, that I understand. We are no 
longer spending the Social Security surplus. We are capturing that for 
a down payment of the transition costs. And maybe that is an idea that 
can be folded into the overall fix that will help the Americans rally 
around whatever this fix may be.
  Let me speak finally about that red section. That red section there 
for the most part is unfunded liabilities, unfunded promises that this 
country has made. We owe that money to somebody. So if we collectively 
said, we are going to stop Social Security, we are only going to pay 
off the benefits that we accrued, we will still have this staggering 
deficit of unfunded promises that we have made.
  As I campaigned and talked in town hall meetings, I heard the comment 
that Social Security is a contract with ourselves, and we are not going 
to breach that contract. Breaching that contract will be reneging on 
those promises and affecting benefits for the current beneficiaries who 
are counting on the cash flow for a lifetime, the lifetime benefits. If 
you are on benefits right now that will not change. If you are within a 
certain number of years that we can collectively agree on retirement 
this is not about you. This fix is not about you.
  This fix is about our grandchildren and our children as they begin to 
approach that. So when we talk about borrowing money, we have already 
borrowed that red money. It is just not on our balance sheet. The 
Federal Government's financial statements are rather poor, speaking as 
an accountant, a CPA. If somebody had to sign the Federal Government's 
financial statements with the same liabilities that major publicly 
traded companies' CFOs sign, we would put them in jail. That liability 
is ours. We have made those promises. They are out there. They are on 
the quote/unquote U.S. Government balance sheet, or ought to be; but 
they are there.
  It is not a matter of borrowing new money. It is figuring out how do 
we fund an obligation that we will keep, we have obligated ourselves 
to. The bill just has not come due yet.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman because I think he 
has made one of the key points in this whole debate and one that, 
frankly, frustrates me a little bit having been a community banker 
before I came to this Chamber. We do not hear enough talk about the 
difference between a funded and unfunded liability. And I completely 
agree with the gentleman. The promise has been made. The liability is 
on our books. I know we do not show it that way. We do not draw up the 
balance sheet of the United States of America quite the way that the 
private sector is familiar with seeing balance sheets drawn up. But the 
liability is there.
  The gentleman is here in this Chamber just like I am, and I have told 
people that I cannot in my wildest dreams comprehend that there is 
going to be some future Congress that will say, oh, well, we have a 
problem. We are a little short on cash. We are just going to whack your 
benefits, because I think most of us like our heads attached to our 
shoulders. If we whack benefits, we would get our head lopped off, and 
probably should.
  The gentleman is absolutely correct, and I commend him again. The 
liability is ours. The promise has been made. The challenge in front of 
us is to come up with the most fiscally responsible way of funding, 
paying for that liability.
  Mr. CONAWAY. Mr. Speaker, one other point. Not only the liability for 
the promises that have been made but also the promises we intend to 
make to our grandchildren, a lifetime benefit for each and every one of 
those, a benefit that they cannot outlive. It was good public policy in 
1935. It is good public policy in 2005. It ought to be good public 
policy in 2035 when my sons and daughters begin to retire.
  I want to misquote Ronald Reagan in one of his inaugural speeches 
talking about the problems this country faces that in terms of 
solution, if not us, who? And if not now, when?
  I thank the gentleman for allowing me to share his time this 
afternoon.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman. I believe he has 
brought some clarity to the issue.
  The gentleman mentioned a point that needs to be made over and over 
again, that is, for current retirees, the seniors that are out there I 
hope listening to what we are saying this evening on the floor here at 
the House, seniors today, current beneficiaries have absolutely nothing 
to worry about. We have got the money there. We can pay the bills. They 
are going to keep getting their checks. Nobody is talking about even 
touching them. Quite the opposite, making sure that they are not 
touched, not damaged in the least. We are not taking a thing away. And 
near-term retirees, like me, I am 56. I certainly do not want anybody 
messing with the benefit that I hope to have there and expect to have 
there and will be there, because the money is there.
  The gentleman is absolutely right. It is about our kids, in my case 
my one grandchild so far. I am working on more. I am dropping those 
hints, and the gentleman's six and future generations as well.
  I think one of the challenges in front of us, and I have certainly 
heard this on my committee work on the Committee on Ways and Means from 
the Social Security actuaries. Yesterday we had the Comptroller General 
in front of us, David Walker, and he said, you guys can play with it a 
little here, you can play with it a little bit there

[[Page 4254]]

by making subtle changes, and you can push out a little farther, you 
can extend the edge of the cliff, but you are not going to solve it 
unless you are bold.
  We have to reform the system.
  Mr. CONAWAY. Let me make a comment. The gentleman talked about when 
the collective surplus is paid off to beneficiaries, and it is 
estimated that it is somewhere in the 2042 range, beneficiaries on that 
date under today's law with us doing nothing else will suffer a 25 
percent haircut immediately in their benefits. That is out there. That 
is in current law. That ought to be on the minds of all the folks who 
think about benefits.
  Today's beneficiaries, it is not likely that many of them will live 
to 2042; but we will keep those promises. But 2042-ish there are 
immediate cuts. I would like to get that fact on the table.

                              {time}  1700

  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman. In fact, he recalls 
for me testimony made by, again, the Comptroller General, David Walker, 
just yesterday. This is the Comptroller General of the United States of 
America, in front of the Committee on Ways and Means, just yesterday; 
he pointed out that, even right now, 2004, if we wanted to just fix, 
now by fixing the system, let me define that, make it sustainable 
forever, perpetually sustainable, do not have to go back and do it 
again, keep it on the same path for benefits, same path for payroll 
taxes as we now have, to get it to the point where you do not start 
getting in the red again, way out there; to make it sustainable today, 
we would either have to reduce benefits 13 percent or increase taxes 
15. That is for permanent sustainability, if you only play with those 
two factors.
  Now, if you go out to 2018, that is this year right here, where we 
expect the line to cross and start the growing deficit cash deficits in 
the system, that increases. Of course, it has to have a bigger fix, 16 
percent benefit cut or an 18 percent tax increase, and the gentleman is 
absolutely right, that the numbers that he gave us, if we wait till 
2042, which is the year I believe that the CBO, Congressional Budget 
Office, says that is when we run out of dough, that is when all the 
bonds are used up, interest on the bonds. We are done. We have got to 
rely now just on the payroll taxes that come in on a daily, monthly 
basis to pay whatever benefits.
  Benefits immediately would drop, he said, about 30 percent, my 
colleague I think said 27, or increase taxes 43 percent. We cannot go 
down that path, and I liken it to, this is just too much common sense, 
and once in a while, it actually applies in this chamber.
  If your roof is leaking, when you notice that first drip, it is a 
little more prudent to go up on your roof and patch that roof when it 
is leaking just a little bit. It is cheaper. It is quicker than to wait 
until the entire roof collapses on you. Well, we can wait, and many are 
suggesting just exactly that. What is the hurry? What is the hurry?
  As my colleague pointed out, these are not numbers we have somehow 
created. These are from the actuaries. For every year we wait, it costs 
us $600 billion. Why is that? Because we are trading a year like this, 
especially on the front end, for a year like that on the back end, $600 
billion.
  Now, how much is $600 billion? Well, that is about one-and-a-half 
times what we spend in the United States of America on our Defense 
budget every year. It is a lot of money, and I submit we cannot go 
there.
  I am joined by another colleague of mine, the gentleman from North 
Carolina (Mr. McHenry). Did I get that right?
  Mr. McHENRY. Mr. Speaker, that is right.
  Mr. BEAUPREZ. North Carolina, Patrick McHenry, a great name and a 
proud name.
  Mr. McHENRY. Almost as good as Bob Beauprez.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman for being with me, 
and he brings a slightly different perspective being I think maybe the 
youngest Member.
  Mr. McHENRY. In fact, I am.
  Mr. BEAUPREZ. Congratulations, youngest Member of this chamber. So 
maybe an even fresher perspective to this issue of Social Security 
reform, and with that, I will yield to the gentleman from North 
Carolina (Mr. McHenry).
  Mr. McHENRY. Mr. Speaker, I thank the gentleman so much for yielding 
and for hosting this discussion about the issues that we are facing as 
a country and I believe the most pressing issue we are facing in terms 
of our economic outlook and our ability to help those that are at or 
near the poverty level, especially those seniors. I thank him for 
affording me the opportunity to talk about Social Security.
  Social Security is America's most trusted Federal program. My 
colleagues know this, I know this. I would submit that the American 
people are beginning to realize how vital this program is, and 
certainly, the gentleman from Colorado (Mr. Beauprez) knows this, but 
my constituents in western North Carolina know this distinctly.
  In fact, my grandmother, my Granny Gooch, in fact, knows this issue 
as well. My grandmother would be quite offended if I mentioned on the 
Floor of this chamber how old she is, so I will just submit she is 
retired, and with that, I will be able to go home at Christmastime and 
enjoy my grandmother's cookies, but she receives her Social Security 
payment each month, and she depends on this.
  As an elected official in the United States, I do not want to take 
away my Granny Gooch's benefit, and this Congress will not do that. Mr. 
Speaker, you would not know this from the Democrats' attacks on the 
President's proposal. You would not know this by the ideas that we are 
talking about in this Congress and over on the other side of this 
wonderful Capitol Building. Social Security is broken, and it needs to 
be fixed. This is not a matter of opinion. This is a fact.
  We need to strengthen it for future generations so that it will 
remain a viable and sustainable government program. We must guarantee 
the promised benefits for current and nearly-retireds. I think that is 
a vital part of every reform proposal that has been offered this year 
in this Congress. We must guarantee a government safety net to ensure a 
retirement benefit. None of my colleagues disagree with this. Those on 
the other side of the aisle who will deny that reform is even needed 
will, in fact, agree that we must at least provide a safety net. My 
colleagues over here on this side, even the most conservative, would 
agree that we must guarantee a safety net.
  We are going to do that as a Congress, but many of my Democrat 
opponents on the other side on this issue, they will not even take a 
second look at the problem. They believe it is such a great hot button 
political issue that they can demagogue it to win the next election, 
and this Republican Congress is taking on the challenge that Social 
Security is presenting to our budget, that it is presenting to our 
seniors and that it presents to all generations in America.
  We are going to make sure it is a sustainable program, and we will 
make sure that it is viable for generations to come. We are not going 
to use it as a political issue. We are going to do the right thing. We 
are going to act to make sure that we can fix this issue and make it a 
sustainable program.
  Demonizing the issue does not achieve results. Anyone who proposes a 
reform plan has an obligation to step forward and do what is right. 
Anyone who is in Congress has an obligation to do what is right on this 
pressing issue of the day, and right now, Social Security taxes take 
more money in than the system pays out in benefits. That is true, but 
that is not the case going forward.
  In a few years, we will be paying out more in benefits than the 
Social Security system arrives at or receives from the American people, 
and going forward, we have enormous deficits that the gentleman from 
Colorado (Mr. Beauprez) has shown on charts here earlier today, and by 
2042, which just, in fact, happens to be the date that I am eligible 
for Social Security, the system goes bust. It will only be able to pay 
about 60 to 70 percent of the

[[Page 4255]]

benefits pledged and guaranteed or it will necessitate such a crippling 
tax increase that this country has never seen before the likes of it.
  Look at the facts. We are going through a demographic shift in this 
Nation. We are an aging Nation. When the program began, there were 
about 40 workers per one retiree when Social Security was implemented. 
By the 1950s, it was roughly 16 workers per one retiree. Today, we have 
roughly 3.3 workers per one retiree. Clearly, we have an issue with 
being able to sustain Social Security because of the changing 
demographics in our country. Therefore, reform is necessary because of 
our shift in demographics.
  These are the facts. They are hard facts. They are real. They are 
undeniable facts. Social Security is a broken system that needs to be 
fixed, and our Republican Congress is going to take on this issue.
  My colleagues on the other side of the aisle on the left would say 
that it is a great political issue. They would like to see it for years 
to come so that they can try to win elections on this issue, this 
problem. But to help strengthen Social Security, the President has 
proposed, and I support, allowing younger workers such as myself to 
invest a small portion of their payroll taxes, take that small portion 
and invest it in Social Security personal accounts, diversified bond 
and stock funds, safe investments, tried and true investments here in 
the United States of America and, in fact, in the world market.
  These safe investments will allow every worker to build up a 
significant nest egg for when they retire. Right now, the returns a 
person gets on Social Security are about one-and-a-half percentage 
points on what you invest in Social Security, less than two percent 
even under the best cases. With bonds and stocks, diversified bond 
funds and stock funds, taxpayers could get a return of 5 percent, 7 
percent, 10 percent. Even the worst returns the stock market has 
produced on a large scale over the course of 20 years has been about 4 
percent. Certainly, it is a better deal than the current Social 
Security system.
  Look beyond that. Those that have personal accounts will be able to 
pass on a nest egg to their children and grandchildren once they pass 
on. Right now, if you were to die just one month after you retired, you 
would collect only a check from Social Security after paying in for 40 
or 50 years into the system, and what would your spouse, what would 
your child receive? Certainly not much. I think we have a higher 
obligation here in the United States, and personal accounts would allow 
that nest egg to be passed on from generation to generation.
  That is why I support personal accounts, Mr. Speaker. They are safe. 
They are smart. They fix the Social Security system, not just for the 
next few years, but for generations to come, and they strengthen the 
Social Security program in the Federal Government.
  Look, I support five guiding principles for reforming Social 
Security. First, we must guarantee promised benefits for those that are 
at or near retirement age. They played by the rules. They have paid 
into the system. We have that obligation, that moral obligation, I 
believe, as a country to help those that are close to retirement age.
  Second, workers should have the choice to put a portion of their 
payroll taxes in prudent diversified investments. These are safe 
personal accounts that the government will not be able to take away 
like they could take away a Social Security benefit. There would be a 
property right to these things.
  Third, workers should own their accounts, not the government. 
Property rights are sacred in this country, and I believe that these 
personal accounts should have a right as private property so that you 
could actually pass that on to future generations.
  Fourth, the government should provide a safety net to ensure a 
minimum retirement guarantee. Folks cannot gamble their retirement 
accounts in Vegas, I will tell you that much, and there will always be 
a benefit for every worker.
  Finally, there should be no payroll tax increase involved with any 
effort to reform Social Security nor should we subject new income to 
the Social Security tax, to the payroll tax. Tax hikes are not reform. 
They are pawning any and all problems with the program on to the backs 
of younger workers such as myself.
  Social Security is one of the government's most trusted programs. We 
are going to maintain that commitment, and we need to make sure it is 
there not just for me but for my Granny Gooch; not just for me but my 
children that I hope to have; for my grandchildren; for future 
generations. But to do that, we need to have serious reforms. We need 
to have a real discussion and dialogue on the problems of Social 
Security and the best ways of fixing this program for permanent 
solvency.
  Sweden and Britain have personal accounts. Countries around the world 
have personal accounts. So the U.S. is not leading on this. We can look 
to other areas in the world that have been successful in this way. We 
can look at 401(k) accounts that have been widely successful across 
this Nation. We can look at thrift savings accounts that all Federal 
employees have that have been so successful, that have changed 
retirement security in this Nation.
  I believe that we should look at prudent ways to fix this problem 
because of the generational shift we have in this country, because of 
the demographic shift we have in this country. We have an obligation to 
do this.

                              {time}  1715

  Mr. Speaker, this Congress must act. We must act now to ensure that 
we have a viable Social Security system for years to come. That is what 
my constituents in western North Carolina want; that is what the 
American people want. They want us to not demagogue this issue, but 
look at real reforms that have a substantive effect, that have a 
lasting impact.
  On a final note, Mr. Speaker, we have to first say to those at or 
near retirement age, this is not about you. We are going to maintain 
our commitment to you. You are going to get the same Social Security 
benefit that we have pledged to you; but at the same time we have to 
ask those that are at or near retirement age, what do you want to leave 
to your children? What do you want to leave to your grandchildren? What 
kind of America do you want to leave them? Do you want a better, 
brighter day for them, or do you want to sink them into a failing 
program, like Social Security? Do you want to leave America a better 
place than it is today?
  I submit to my colleague that the American people appreciate that. 
Those that are receiving Social Security checks today do in fact want 
to help their children and grandchildren get into a better system for 
Social Security than they were able to benefit from. It is not about 
current retirees' checks they are receiving. This debate is not about 
them. It is for those that are younger in this Nation, those under 55 
that could benefit from this program, that could benefit from this 
program.
  In fact, as a 29-year-old, I believe this is a wonderful opportunity 
for my generation to actually have great personal savings, a nest egg, 
a better, brighter future for our country and for our families.
  Mr. Speaker, I thank my colleague for hosting this Special Order on 
Social Security. I think the gentleman's constituents as well as mine 
appreciate the fact that we are willing to talk about the problems we 
are facing and yet offer substantive solutions. This is not easy 
lifting, so I thank my colleague for his leadership on this issue.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman for joining me, and 
my colleague puts in very good context the challenges in front of us.
  I think it is important to note that right now, recognizing the 
substance of the problem in front of us, but especially listening, and 
listening certainly to Members in this Chamber, this body, the people 
in this town, but, more importantly, listening to America for those 
good solutions is what we ought to be about.

[[Page 4256]]

  A couple of things I have already picked up on. In the last few 
weeks, I have had the pleasure, I guess it was a pleasure, although it 
was a stark message, of hearing the Deputy Commissioner of the Social 
Security Administration testify in front of our Committee on Ways and 
Means, Mr. James Lockhart. Mr. Lockhart was the first one during this 
new Congress to actually look us right in the eye and say ``Social 
Security, as it currently exists, is unsustainable.''
  Now, there are a whole lot of words thrown out around here: problem, 
crisis, bankrupt, insolvency, all that stuff. But when the Deputy 
Commissioner of the program says it is unsustainable, I get that word. 
I also understand that over time, as I pointed out earlier in this 
hour, it started out with a 2 percent tax on the first $3,000, and it 
has been tweaked a little as we go.
  Along the way, the tax that the employer pays was implemented. And 
many people think, well, that is great, it is not mine. I submit, 
though, that if you are the worker, that is coming out of the personnel 
costs that that company, your employer, is allocating because he thinks 
it is an expense for having you as a worker. It is now 12.4 percent of 
not $3,000, but $90,000. So it has grown.
  Some are saying let us just tweak it again. We are not going to put 
it on a path of sustainability by another relatively subtle adjustment, 
subtle in some people's minds.
  Now, more recently, in fact yesterday, David Walker, the Comptroller 
General of the United States of America, had this to say. Some picked 
up on but a few words of what he had to say, but I will give the first 
several sentences: ``Although the Social Security System is not in 
crisis,'' and at least one of the major papers in this town had a 
headline that said ``Walker Says Social Security System Is Not in 
Crisis,'' and stopped there. But here is what he said: ``Although the 
Social Security system is not in crisis, it faces a serious solvency 
and sustainability challenge that is growing as time passes. If we do 
nothing until 2042,'' and that is suggested, ``achieving actuarial 
balance would require a 30 percent reduction in benefits or a 43 
percent increase in payroll taxes for just the period of 2042 to 
2078.'' And then once again you are back in the soup. You have got a 
problem in front of you there. All we do is defer into the future if we 
do not fix it now.
  ``Furthermore,'' he says, ``Social Security's problems are a subject 
of grave fiscal challenge facing our Nation. Absent changes in budget 
policy, the Nation will ultimately have to choose among escalating 
Federal deficits and debt, huge tax increases and/or dramatic budget 
cuts.'' Pretty stark words. ``As the General Accounting Office's long-
term budget simulation shows, substantive reform of Social Security and 
our major Federal health programs is critical to saving our Nation's 
fiscal future. Taking action soon would serve to reduce the magnitude 
of the changes needed to ensure that Social Security is solvent, 
sustainable, and secure for current and future generations.''
  I submit to you, Mr. Speaker, that is the challenge in front of us: 
``Take action soon to reduce the magnitude of the changes needed to 
ensure that Social Security is solvent, sustainable, and secure for 
current and future generations.''
  Last week, and I will close with this, Federal Reserve Chairman Alan 
Greenspan had this to say: ``In my view, a retirement system with a 
significant personal accounts component would provide a more credible 
means of ensuring that the program actually adds to the overall saving 
and, in turn, boosts the Nation's capital stock.''
  We are beginning to develop consensus. This is a huge heavy lift, but 
it is a lift that is necessary, as Mr. Walker said yesterday, ``to 
ensure that Social Security is solvent, sustainable, and secure for 
current and future generations of Americans.''

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