[Congressional Record (Bound Edition), Volume 151 (2005), Part 6]
[House]
[Pages 8434-8435]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     GUT PUNCH TO THE MIDDLE CLASS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey (Mr. Pallone) is recognized for 5 minutes.
  Mr. PALLONE. Mr. Speaker, I wanted to talk tonight for 5 minutes 
about the President's latest proposal on Social Security, which I refer 
to as means testing.
  I have to say that from the very beginning, when I heard the 
President's privatization plan and the other statements he has been 
making about Social Security, I have very much opposed to what he has 
put forth, but this latest effort at means testing I think is, in many 
ways, the worst of all, the worst of his proposals.
  I just want to review some of the concerns that I have about his 
privatization plan, about his means testing in a few minutes here 
tonight. First of all, from the very beginning, I think, the President 
gave essentially misinformation because he kept talking about how 
Social Security was essentially going insolvent and yet we know that it 
is very solid, if you will, for the next 30 or 40 years. In fact, we 
have heard different figures from maybe 2030 or 2035, may be the date 
when we would begin to see less money available for Social Security. 
But until that time, the Social Security trust fund is very solvent and 
benefits would continue to be paid on a guaranteed basis the way they 
have for the last 60 or 70 years.
  So from the very beginning, he talked about Social Security in an 
inaccurate way because he talked about insolvency that does not exist 
for at least another generation or two. Worst of all, he never 
indicated that any proposal he had put forth would effectively deal 
with the eventual insolvency of Social Security.
  In other words, Democrats historically back in the early 1980s, for 
example, when there was a threat of insolvency or that money would not 
be there in the trust fund, basically sat down with Republicans on a 
bipartisan basis, back in the days when Speaker O'Neill was the Speaker 
of the House, a Democrat, and President Reagan, a Republican, was 
President. And they put forward a commission and they came up with a 
way of dealing the payroll tax, essentially, so that money would be 
available to keep Social Security solvent and so that benefits would 
continue to be guaranteed.
  But what the President proposed from the beginning was a very risky 
privatization plan that essentially would not do anything to help with 
the potential insolvency. In fact, it would make the situation even 
worse because we knew that he would be taking money out of the trust 
fund with his privatization plan and putting money in private accounts. 
And the consequence of that would be that there would be less money in 
the trust fund and the solvency problem would be aggravated all the 
more.
  At the same time, the people who put their money in these privates 
accounts, if they made a bad investment, ran the risk of gambling with 
their Social Security money and not having any money when the time came 
for them to retire.
  The bottom line is we could have gone back, if you adopted this, to 
the days before Social Security when people were on the street or were 
in an old age home because they did not have any retirement security. 
That is what Democrats are afraid of with the President's risky 
privatization plan.
  It gambles with your Social Security. It may essentially leave you 
broke with nothing, and even beyond that because you are taking money 
out of the trust fund, the solvency problem is aggravated and the 
potential looms for severe benefits because if you take the money out 
and you do not replace it with anything, the only thing you can do 
ultimately is cut benefits.
  Now, what we hear from the President, he was on the road for about 60 
days talking about that. At the end of the 60 days period he realized, 
as did his Republican colleagues, that this was not working. People did 
not want to hear it. They did not like his risky privatization plan.
  So what does he come up with last week in this proposal that he made 
on nationwide TV? He talks about means testing. What that essentially 
means is that people, as their income gets higher, would get less and 
less Social Security benefits. And he made it sound, once again, like 
this was a great thing because poor people would still get their money 
and rich people did not need it. But what he fails to point out is 
reality is who is really being targeted here is the middle class.
  It is the middle class person who will have their benefits cut and it 
is the middle class person who relies the most on that Social Security, 
much more so than the wealthy person.
  I want to point out, I saw an editorial yesterday, Mr. Speaker, by 
Paul Krugman in The New York Times, and he vividly points this out. He 
talks about the Center on Budget and Policy Priorities and a Jason 
Furman, who he asked about what the President had in mind.
  What he said is that the average worker now pays about $37,000 and 
retiring in 2075 would face a cut equal to 10 percent preretirement 
income. Workers earning 60 percent more than average, the equivalent of 
$58,000 today would see benefit cuts equal to almost 13 percent of 
their income before retirement.
  But above that level, the cuts would become less and less 
significant. Workers earning three times the average wage would face 
cuts equal to only 9 percent of their income before retirement. Someone 
earning the equivalent of $1 million today would see benefit cuts equal 
to only 1 percent of preretirement income. So in short, this would be a 
gut punch to the middle class. It is the middle class that would suffer 
and is targeted in the President's proposal.
  It is a terrible proposal. It is no better than the previous one.

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