[Congressional Record (Bound Edition), Volume 153 (2007), Part 1]
[Extensions of Remarks]
[Pages 1170-1172]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 REINTRODUCTION OF THE SAFE COMMISSION

                                 ______
                                 

                           HON. FRANK R. WOLF

                              of virginia

                    in the house of representatives

                        Friday, January 12, 2007

  Mr. WOLF. Madam Speaker, few are willing to admit--much less 
discuss--the looming financial crisis facing our country, but there is 
less than 1 year until the first baby boomer is eligible to retire.
  On Wednesday, January 10, the Washington Post included an op-ed by 
Robert Samuelson which paints a poignant picture of the generational 
conflict approaching on the horizon. He makes a compelling case for why 
it is critical that Congress take action now to address the financial 
emergency facing the Nation with the retirement of the baby boomers.
  That is why on Tuesday, Senator George Voinovich and I will 
reintroduce identical legislation to establish a national bipartisan 
commission that will put everything--entitlement benefits and all other 
Federal programs as well as our tax policies--on the table and require 
Congress to vote up or down on its recommendations in their entirety, 
similar to the Base Realignment and Closure Commission (BRAC) first 
created by former Rep. Dick Armey in 1988. This commission would be 
called the SAFE Commission, to secure America's future economy.
  I first introduced the idea of the SAFE Commission last summer. Since 
that time, the proposal has received strong support from across the 
political spectrum including the Heritage Foundation; the Concord 
Coalition; former congressional members from both sides of the aisle; 
and former Congressional Budget Office directors. It has been favorably 
endorsed by newspapers across the country, including the Dallas Morning 
News, the Orlando Sentinel and syndicated columnist David Broder.
  There is near universal agreement that the longer we wait to deal 
with this problem, the tougher the medicine will be to swallow. As a 
father of five and grandfather of 12, the challenge posed by the 
pending retirement of baby boomers strikes me as much more than a 
routine policy discussion. Without action, just what kind of future are 
we leaving to our children and grandchildren?
  My youngest grandchild is just 10 months old. By the time she is 15 
years old, 29 cents out of every dollar paid in income taxes will be 
required to cover the needs of Social Security and Medicare to pay for 
my retirement. That's not including payroll taxes of almost 15 percent.
  By the time she completes her undergraduate degree, more than 45 
cents out of every dollar of income taxes then will be needed to cover 
the shortfall of Social Security and Medicare, rising to 62 cents out 
of every dollar if she decides to get her doctorate 10 years later. 
Again, this is on top of payroll taxes.
  Sadly, before she retires--and looks into the eyes of her own 
grandchildren--retired baby boomers will be consuming 88 percent of 
every income tax dollar. With the baby boomers consuming so much, there 
will be little money left to meet the needs and challenges of her 
generation. Not only is this unacceptable, it raises serious moral 
questions. Is it right for one generation to live very well knowing 
that its debts will be left to be paid for by their children and 
grandchildren?
  Abraham Lincoln, one of our Nation's greatest presidents, once said, 
``You cannot escape the responsibility of tomorrow by evading it 
today.'' Yet that is precisely what we have been doing--avoiding our 
responsibility to future generations of Americans by passing on a 
broken system in the form of unfunded Social Security, Medicare and 
Medicaid obligations.
  I deeply believe there is a moral component to this issue that goes 
to the heart of who we are as Americans. By that I mean, I wonder if we 
have lost the national will to make tough decisions that may require 
sacrifice? Moreover, have we lost the political courage to reject the 
partisan and special interest demands and do what is best for our 
country?
  If we remember the legacy we have inherited, the debt we owe to 
previous generations--our grandparents and our parents and the 
sacrifices they made to make our country what it is today--we all will 
be moved to do our duty. The SAFE Commission should be embraced by both 
sides of the aisle. I am open to suggestions about the legislation from 
members of both parties. This is a national issue; not a Republican 
issue or a Democrat issue.
  Last spring I took a trip to Antietam National Battlefield. As I 
walked along ``Bloody Lane,'' the site of one of the most vicious 
battles of the Civil War, I was struck by how many individuals made the 
ultimate sacrifice.
  September 18, 1862, was the bloodiest single day in American history. 
There were more than 23,000 casualties, nine times as many Americans 
killed or wounded in World War II's D-Day on June 6, 1944. More 
soldiers were killed and wounded at the Battle of Antietam than the 
deaths of all Americans in the Revolutionary War, the War of 1812, the 
Mexican War and Spanish-American War combined.
  I also visited the site of George Washington's crossing of the 
Delaware River in anticipation of the Battle of Trenton. Washington was 
down to only 3,000 soldiers and the war was almost lost. Yet, with 
great courage--and sacrifice--Washington and his forces were successful 
in changing the direction of the American Revolution.
  I often think of the tremendous sacrifice being made by the thousands 
of men and women serving today not only in Iraq and Afghanistan, but 
around the globe. Their families here at home are also making great 
sacrifices. These examples of sacrifice for country are what led me to 
ask just what are we passing on to those who are coming after us?
  In less than a year, the baby boom generation will begin trickling 
into retirement. A few years later, that trickle will become a flood 
that within five more years will become a tsunami that will begin to 
wreak havoc on our Social Security and Medicare systems. Medicare, 
Medicaid and Social Security consume 40 percent of the budget in 2006, 
but will consume 51 percent by 2016--and that is just the tip of the 
demographic iceberg.
  As we tragically learned the lesson of Katrina in New Orleans, the 
best time to deal with a damaged flood wall is before the rains begin. 
Make no mistake; the levies that are our country's entitlement systems 
can only be plugged for so long. Without major repair and a long-term 
fix, we are facing a financial perfect storm like never before.
  There is near unanimous agreement by all who have looked at this 
issue: Social Security and Medicare are amassing huge deficits and are 
ill-prepared for the coming flood of new baby boom retirees. When our 
retirement security programs like Social Security and Medicare were 
established, the ratio of workers supporting each retiree was more than 
10 times the number supporting retirees today. In 1945, there were 42 
workers for each retiree. Last year, the ratio dropped to three workers

[[Page 1171]]

for each retiree and is expected to drop to just two workers for each 
retiree by 2030.
  Perhaps even more troubling than the Social Security projections are 
those for Medicare. By 2010, the trust fund expenditures are projected 
to exceed annual income from all sources and the reserves will be 
depleted by 2018, 11 short years from now. According to the trustees, 
``Medicare's financial outlook has deteriorated dramatically over the 
past five years and is now much worse than Social Security's.''
  This coming crisis demands our immediate attention. While there is 
never a convenient time to make hard decisions, the longer we wait, the 
more dramatic the required remedy will be. According to the Government 
Accountability Office (GAO), balancing the budget in 2040 necessitates 
one of two alternatives: cutting total federal spending by 60 percent 
or raising federal taxes by two and a half times today's level. Either 
of these options would devastate our economy. But if we can summon the 
resolve to begin these difficult conversations now--and make some hard 
choices on the front end--we can change our current course.
  Basic economics underscore the dangers inherent in our current 
national trends. America is living on borrowed dollars and borrowed 
time. U.S. spending is outpacing income growth and personal savings 
rates have dropped to negative 1.3 percent in the first quarter, 
meaning that U.S. consumers are spending more than 100 percent of their 
monthly after-tax income.
  In spite of this, our economy has remained strong, in large part 
because other countries have been willing to buy our debt. But 
borrowing hundreds of billions of dollars from countries like China, 
Saudi Arabia, Japan, South Korea, and others puts not only our future 
economy, but also our national security, at risk. More than $2.6 
billion a day is needed to fund our savings shortfall, which has left 
us with nearly 40 percent of our domestic economy in foreign hands.
  As our fiscal deficit balloons, our current account deficit is 
projected to hit historically unprecedented highs, and our country's 
net investment position abroad is eroding rapidly. While the Asian 
Central Banks and petrodollar countries like those in the Middle East 
have no doubt contributed to our country's growth (the housing boom and 
the ability of U.S. consumers to spend), the purchase of U.S. 
securities by foreigners has, at the same time, enabled us to live way 
beyond our means.
  This makes our country--and our children and grandchildren--much more 
vulnerable in the future. Will a geopolitical dispute with a major oil 
exporter cause it to stop funding our deficit, resulting in a sharp 
drop in the dollar, a spike in interest rates and a market meltdown?
  If foreigners lose faith in the U.S. and our ability to put our own 
fiscal house in order, their investment decisions could send shock 
waves through our financial markets and even result in a collapse of 
U.S. real estate prices. If we don't address this issue, higher 
interest rates and inflation are inevitable. It would be only a matter 
of when and how high. If we don't change our current unsustainable 
path, our future economic growth, standard of living, and even our 
national security may be at risk.
  Our children and grandchildren deserve a future that will allow them 
to respond to the challenges of their generation. Who could have 
predicted, even 10 years ago, that today our Nation would be engaged in 
a global war on terror. Each generation faces its own international 
threats, and we have an obligation to ensure that future generations 
have the flexibility to respond to the challenges of their time.
  If current policies are left unchanged, in as few as 33 years and in 
no more than 40 years, there would be no discretionary money left for 
defense spending. All federal revenue would have to go to only four 
sources: Medicare, Medicaid, Social Security and interest on past debt.
  In addition to international considerations there are domestic 
factors. Getting our financial house in order will allow us to 
prioritize spending in areas such as cutting edge medical research for 
cancer, Alzheimer's and autism, and for education, particularly in 
mathematics and science, which are critically important to America's 
remaining the world's leader in innovation and technology.
  It is with the hope of building consensus on this very difficult 
issue that I am offering legislation to set up a bipartisan commission 
charged with evaluating the scope of our fiscal problem and 
recommending tangible solutions. One of the most critical 
responsibilities of this panel will be explaining the crisis we face 
and listening to the American people about how to get the country back 
on sound financial footing. It will also develop a strategic plan for 
the future. It will look beyond the Beltway for solutions, holding at 
least 12 town meetings--one in each of the Nation's Federal Reserve 
districts--over the span of 12 months in order to hear directly from 
the American people.
  The SAFE Commission will be truly bipartisan--comprised of 16 voting 
members, four appointed by the Senate Majority Leader, three by the 
Senate Minority Leader, four by the Speaker of the House, and three by 
the House Minority Leader. Four of the 14 congressional appointments 
must be sitting members of Congress. Additionally, the director of the 
Office of Management and Budget as well as the secretary of the 
Treasury will serve as voting ex-officio members. The Congressional 
Budget Office and the Comptroller General of the United States will be 
appointed as non-voting ex-officio members of the commission to lend 
their expertise. The president will appoint bipartisan co-chairs from 
among the 14 voting members appointed by Congress.
  I have heard criticism that such weighty decisions on the Nation's 
financial future are the responsibility of Congress. I couldn't agree 
more. The SAFE Commission has two provisions to protect congressional 
prerogatives. First, of the 14 members appointed to the commission, 
four must be sitting members of Congress. Second, if Congress takes on 
the task and enacts significant legislation aimed at addressing this 
looming crisis, the SAFE Commission would terminate and cease to exist.
  The group will comprehensively review entitlement benefits, patterns 
in savings and insurance for retirement, tax policies and the long-term 
implications of increasing foreign ownership of the U.S. Treasury. But 
given the enormity of the challenge, the commission needs to be able to 
look at every component of our fiscal policy to fairly assess where we 
stand and how we can best move toward a sound fiscal future. Everything 
must be on the table. As a fiscal conservative, I believe that the 
economy grows when people keep more of their hard-earned money, and my 
voting record reflects this belief.
  The SAFE Commission is tasked with addressing tax issues as well as 
spending policies because current law puts us on a track to sharply 
higher taxes as well as spending. If the current tax cuts are sunset, 
then beginning in 2011, taxes as a percent of GDP will jump and then 
rise each and every year to nearly 20 percent of GDP in 2016, less than 
10 years from now. After that they will keep on growing to record 
levels, hitting over 23 percent in 2046. This happens because rising 
incomes push Americans into both higher brackets and into the 
alternative minimum tax (AMT). Yet even extending the tax cuts will 
shave only one percentage point off these rising numbers.
  Americans need to understand all the numbers to avoid the grim 
default of a rising burden of taxes and spending that will damage our 
economy. I believe that having revenues as part of the discussion, as 
one of the areas of reform for the SAFE Commission, will help us paint 
the full picture and help us confront the tax increases that the 
country faces in the coming years under current law.
  In looking at revenues, I believe reform of the tax code must help 
simplify the system and stimulate increased economic growth and thereby 
tax revenue. The late William Simon, who served as Treasury secretary 
under presidents Nixon and Ford, believed ``the United States should 
have a tax system, which looks like someone designed it on purpose.''
  The IRS estimates Americans spend 6.6 billion hours per year filling 
out tax forms including 1.6 billion hours on the 1040 form alone and 
nearly $200 billion on tax compliance. That amounts to 20 cents of 
compliance cost for every dollar collected by the tax system.
  Shouldn't we have a system that people understand? One that 
encourages faster growth in business formation, jobs, family income and 
tax revenue? A simplified tax code also could help increase the 
personal savings rate, which went negative for the first time since the 
Great Depression earlier this year.
  The SAFE Commission legislation provides an opportunity to 
simultaneously address the likely tax increases that middle class 
Americans are projected to face and the explosion in entitlement 
programs. It does this by focusing on reform. The legislation provides 
an opportunity to reform the tax code in ways that generate more rapid 
growth. We know from the recent revenue figures that tax policies that 
spur growth also bring in needed revenue. And the legislation also 
tasks the commission with exploring entitlement reforms that protect 
safety net programs while reining in total costs.
  After spending 12 months conducting town meetings around the country 
to determine the scope of the problem and consider solutions, the 
commission will present to Congress a report describing the long-term 
fiscal problems, public suggestions and views expressed during the town 
meetings and policy options available to ensure federal programs and 
entitlements are available for future generations.

[[Page 1172]]

  With a bipartisan three-fourths majority vote, the commission will 
send to Congress a legislative package to implement the commission 
recommendations no later than 60 days after the interim report. The 
administration and Congress will have 90 additional days to develop 
actuarially equivalent proposals to achieve the same cost savings. 
Essentially, no later than 16 months from the organization of the 
commission, Congress would be required to vote--up or down--on each 
proposal.
  For example, if the commission's report is delivered on January 1, 
2008, then the commission's legislative package would be due by March 
1, 2008, and any alternative developed by Congress or the 
Administration would have to be presented by June 1, 2008.
  All proposals must include a 50-year CBO score in addition to 
disclosing any impact on future federal liabilities. If more than one 
proposal receives a majority, the one garnering the greatest number of 
votes would prevail.
  I have put in the legislation procedures for expedited consideration 
of the commission's legislation to ensure that the Congress acts. I do 
not want this to simply be another blue-ribbon commission whose 
findings end up on a bookshelf somewhere only to collect dust and never 
be acted upon.
  I look forward to working with my colleagues to enact this 
legislation. I also welcome a forthright national dialogue. Only by 
working together in a truly bipartisan manner will we be able to secure 
America's future economy. I believe most Americans will welcome it as 
well, especially considering we all want what is best for our children 
and grandchildren.
  I will close with the cautionary words of George Washington's 1796 
farewell address: ``We should avoid ungenerously throwing upon 
posterity the burden of which we ourselves ought to bear.''

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