[Pages H1686-H1692]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOCIAL SECURITY AND THE BUDGET
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 1999, the gentleman from Oklahoma (Mr. Coburn) is recognized
for 60 minutes as the designee of the majority leader.
Mr. COBURN. Mr. Speaker, I come to the floor tonight with several of
my colleagues who I think will be joining me, the gentleman from
Minnesota (Mr. Gutknecht) as well as the gentleman from California (Mr.
Cunningham). I am in my fifth year as a Member of Congress from
Oklahoma. I am also in my last term as a self-imposed term limit on
myself.
[[Page H1687]]
One of the reasons I think that we only have 40 percent of the people
voting in elections is that in fact there is a crisis of confidence in
the Congress of the United States. I want to spend some time tonight
outlining what we have heard many people say, whether it is the
President in his State of the Union speech or others in terms about our
budget, this so-called surplus that does not exist, explain to the
American people why it does not exist and what it is really made of,
and then talk about some of the facts of the last 3 or 4 years of what
has gone on and what we can expect in the future if in fact we do not
have honesty with the American public in terms of our budget, the
budget process, and speaking honestly about where American tax dollars
go.
I also might add that besides being a medical doctor who continues to
practice and deliver babies on the weekends and the days that we are
not in session, my original training is as an accountant. I can tell my
colleagues, there is not an accountant in this country that would sign
off on the books of the Federal Government. The reason is because it
moves money around, it does not account for it, it uses the same money
twice and then claims it as a surplus.
To start this discussion, I really want to try to explain to the
American public the Social Security trust fund. Most people are paying
12.5 percent, half of it themselves, half of it by their employers, in
to fund the Social Security system. At the present time, we have a
significant excess number of dollars coming in above and beyond what is
required to pay out benefits for our seniors under Social Security.
What really happened is we are collecting more than we are spending in
terms of Social Security dollars. What happens now is that the Federal
Government uses the excess Social Security money to pay for more
spending and to pay off publicly held debt. But as they pay off
publicly held debt, they incur another debt and that is an IOU to the
trust fund that says we will pay this back. That also incurs interest.
The fancy way Washington talks about that is that that is a surplus. In
fact it is only a surplus in that we have transferred the obligation to
our children and grandchildren and they will pay that back through
increased payroll taxes. So we put IOUs that are credited to the trust
fund.
In 2013, we face a major problem, and that is the year in which the
revenues that come into the Social Security trust fund will be less
than the payments that we have to pay out. What is going to happen
then? Social Security spends more than it collects. In order to pay all
the Social Security benefits, Social Security is going to have to try
to collect from the Federal Government on the IOUs, the money the
Congress has borrowed. What happens? Having spent all the money, the
Federal Government has to raise the income taxes or the payroll taxes
on the people who are paying Social Security taxes just to meet the
obligations.
That is borne out a little bit better when we actually see what the
Social Security Administration says about what is going to happen to
the fund. As you can see, all this in red is actually money coming in
to Social Security in excess of what we are paying out. You will notice
in 2013, we actually spend more money. But if you go out to the end of
this graph, what you will see is we are getting close to $750 billion
more a year in payments from general tax revenues, or increased raises
in the tax paid on hourly wages in this country.
We have a terrible picture developing. I say all this because the
politicians in Washington claim we have a surplus. There is no surplus.
The money that they are using to pay down external debt is actually
money they are going to be obligating our grandchildren for with a
Treasury IOU that is interest-bearing. That money is a false surplus.
All it is is the difference between what we paid out and what we have
collected versus what we have spent more in other revenues that the
Federal Government has taken in.
We are going to have only three options in 2013, and, better, we only
have three options now to fix this problem: One, we can save 100
percent of the Social Security surplus and we can transition to a
system that increases the earnings for all payments on Social Security
between now and 2013 and thereafter. The annualized yield, the return
on the investment on Social Security over the last 20 years, has been
less than 1 percent. We would have been better to put it in a passbook
savings account by 300 percent in terms of the power of compound
interest. Had we done that, we would have displaced this day of
reckoning where the imbalance in payments out versus revenue in would
have been at least delayed another 10 to 12, maybe even 15 years, had
they gotten some return.
I think the other point that needs to be made, why are we in trouble
on Social Security? We are in trouble on Social Security because
politicians easily spend your money without coming and saying, ``We're
going to give you an increased benefit but we're not going to tell you
that your children and grandchildren are going to have to pay that
back.'' How do they pay that back? They pay that back by lowering their
standard of living and sending more of their hard-earned dollars to
Washington to pay for the benefits today that we did not have the
courage to tell the American public that for this benefit, this
increase in benefit, we have to pay for it.
What is easy to do in Washington, I have found in 5 years, is to pass
on a benefit and not be responsible for paying for it. It is called
spin. The real thing it is called is a half-truth. A half-truth, my
daddy taught me, was a whole lie. We have seen a lie.
The second option we have, we can repay the money from the trust fund
by raising income taxes. We are at the highest rate of taxing the
American public that we have ever been with the exception of World War
II. Almost 22 percent of our gross domestic product is now consumed by
taxes in this country. That is not a good option.
The third option is we can change the retirement system. We can delay
the onset, we can decrease the benefits. That is just like we have done
to the veterans. We promise one thing and then we deliver far less. It
is not a principle of integrity to do something less than what you
commit to do. So we only have three options when we are faced with
Social Security. I want to just develop this for about another 5
minutes and then I will recognize the gentleman from Minnesota.
Now, we hear Washington say we have a surplus, but the fact is, is
every day $275 million is added to the national debt. If we have a
surplus, if we have more money coming in than we are paying out, how
come the debt for our children and grandchildren is rising? It is
because we are not honest in our bookkeeping. We are not honest about
it. In 1997, each citizen's share of the national debt was $19,898. By
the end of this year, every man, woman and child from baby to grandmom
will owe $20,693. You cannot have a surplus and the debt rise. The
question that the American people should ask when they hear the word
surplus is, ``Did the debt go down?''
There is another tricky word that the politicians use. They say
publicly held debt. Because that is the debt that is external to the
internal IOUs that the government has paid or made with Social
Security.
{time} 2145
So it is true that the external-held debt of the United States went
down, but only because we took money from the Social Security Trust
Fund and wrote another IOU. So the total debt in terms of the Social
Security increased revenues or excess revenues have not changed at all.
We have just decided we are not going to pay ourselves and we will slow
down the pain to those people on the outside.
So less debt is held by the public; that is true, but the total debt
is rising, and, as my colleagues can see, it is rising $275 million per
day, and where I come from, $275 million is one whole heck of a lot of
money. It is about enough to run the State of Oklahoma for a month. So,
we are talking about huge sums of money.
Again, I would make the point Washington says we have a surplus. If
we have a surplus, why is the debt that our grandchildren and children
are going to have to bear rising? Why is it going up? It is because we
are not honest in our bookkeeping.
Another way of looking at that, and this chart shows exactly what we
have seen and heard about 1998, is what I call the politicians'
surplus. Here is what we claim was a surplus, the Washington
establishment. But, as my colleagues will note, here is the debt in
[[Page H1688]]
1997. What has happened to the debt? The debt went from $5,325 trillion
to close to $5,440 trillion, almost a $120 billion increase. So, if the
surplus was 60 some billion dollars, how come the debt went up $120
billion?
Look what is projected in 1999. We are going to have this great big
surplus that everybody wants to save or spend in a certain way. But
look what the debt projection is. These are not my numbers; these are
from the Congressional Budget Office, a nonpartisan agency made up and
influenced by both Democrats and Republicans, and they are saying the
debt is going to continue to rise despite this surplus.
So, Mr. Speaker, I think we can see that there is a lack of honesty
about our budget policy and there is only one answer. It is called
restrained spending. We have to be fiscally disciplined in the money
that comes to the Federal Government.
The other thing I have learned is that if we leave money in
Washington, do my colleagues know what happens to it? It gets spent.
Somebody always has a good idea on a way to spend the money, except the
money we are spending now we are stealing from the Social Security
system and we are transferring a lowered standard of living to our
children.
And what we can see under President Clinton's budget, and this is
real numbers by the Congressional Budget Office under the budget that
he proposes to see that there is no surplus; the red indicates real
deficit in terms of moneys in versus moneys out, and even though all
sides of the aisle, Democrat, Republican and the President, are
claiming the surplus, we can see from here that one does not exist.
Even with a conservative plan that restrains spending we are still
going to see a deficit up until about 2000. It may be that the economy
is good enough that we may see a real surplus this year. But look at
the difference if we restrain spending in terms of real surplus; in
other words, something that will actually slow down the growth and the
debt, decrease the debt, decrease or, in an inverse, increase the
standard of living for our children, that if in fact we will restrain
spending, that in fact we will markedly help the children of tomorrow.
Mr. Gutknecht.
Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for having this
special order.
I think we need to put this in some historical context though of
where we were just a few years ago when the gentleman, and I and the
gentleman from South Carolina who is going to be joining us in a
minute, when we were first sent here to Washington after the 1994
elections. The Congressional Budget Office then told us that we were
looking at $200 billion deficits growing to nearly $600 billion by the
year 2009, and that was using the Social Security surplus to make those
deficits look even smaller. So in reality, using honest accounting,
honest bookkeeping, those deficits were probably between 350 and over a
trillion dollars that we are looking at in annual deficits.
That is where we were just a few years ago, and I think it is
important to note how far we have come just in the last several years
in part because we have had the fiscal discipline. We have eliminated
400 programs, we have cut the rate in growth in Federal spending by
more than half, and that coupled with lowered interest rates that
helped bring about and the welfare reform, more people going back to
work, a stronger economy; all of that has made it easier for us to get
to what will be, I believe this year, the first real balanced budget;
in other words, not using the Social Security surplus, the first real
balanced budget I think this country has seen in many, many years.
Mr. COBURN. Let me add one thing.
I remember my first year in Congress. We rescinded and cut $70
billion worth of spending from this government that year, and I would
tell my colleague that nobody in my district noticed that, and if we
extrapolate $70 billion a year over the last 4 years, what we plainly
see is the main reason that we are in surplus is what is 70 billion one
year becomes 90 billion the next, becomes 120 billion the next, becomes
150, that that is worth about $160 billion in spending that is not
happening today that would have happened had we not come in here and
done a large rescission and also markedly cut the size of the
government in 1995.
And so it is important to use that as a historical thing, that
because we had fiscal discipline, that we, in fact, have an opportunity
to truly lower the debt, not just the public debt, but all the debt,
and that means creating a better future, creating opportunity, creating
a standard of living that is going to be greater than what we have
experienced for our grandchildren.
I yield back to the gentleman from Minnesota.
Mr. GUTKNECHT. The gentleman is correct. I mean that in the end of
this debate sometimes we get so caught up with numbers and statistics,
we all have charts now, and we can use percentages, and we can talk
about dollars and so forth.
But in the end the gentleman is absolutely right. What this debate is
about is about generational fairness, and I think we have got to be
fair to our parents, and I always talk about in my town hall meetings
the fact that I was born in 1951.
Mr. COBURN. Youngster; are you not?
Mr. GUTKNECHT. I do not feel quite so young any more, but I will tell
my colleagues it is important because we are the peak of the baby
boomers, and both my parents are still living, they are both on Social
Security, they are both on Medicare, and the last thing I want to do is
pull the rug out from under them.
But I also have three kids, and I worry about what kind of a country
we are going to pass on to them, what kind of a standard of living are
they going to enjoy.
And I want to get our colleague from South Carolina involved in this
because something else the gentleman mentioned about using what
Einstein called the most powerful force on earth, the magic of compound
interest long term to allow individuals to save and invest for their
own future. I have been told, and there are different numbers floating
around, and it depends on which years you use, but, as my colleagues
know, often we hear that Americans do not save enough for the future.
But my colleague mentioned before that the average American between
what they pay and what their employer pays into Social Security, they
are saving about 12\1/2\ percent of their annual income.
Now the problem is not that Americans do not save enough. The problem
is that we get such a lousy rate of return, and the number that I
worked with usually and the average that I have seen provided by the
Congressional Budget Office is for the last 30 or 40 years the average
rate of return was 1.89 percent.
Now not many Americans would invest 12\1/2\ percent of their income
into an IRA, or a 401(k), or even a savings account; can only earn 1.9
percent.
Mr. COBURN. It is interesting to note 1.9 percent is not in terms of
real rate of return, that is not an inflation adjusted number, because
when you do an inflation adjusted number, you go to .6 percent.
One last thing before the gentleman from South Carolina talks. I
delivered 97 babies last year as a Member of Congress, and that is pure
joy. But with that comes a heartache because I know that unless we
change the environment in Washington that those children that I got to
spank their back sides of and heard their first cry will never have the
opportunity that my children had or I had as a youngster in this
country.
I yield to the gentleman from South Carolina.
Mr. SANFORD. I thank the gentleman for doing so, and I thank him as
well for convening this special order.
I want to follow up on what the gentleman from Minnesota (Mr.
Gutknecht) said, which was touching on the whole power of compound
interest which cannot be underestimated. In fact, I saw an article
yesterday in the Washington Post that I wish I had brought with me
about an older man that put a little bit of money in stocks and lived a
very simple life and yet ended up with a whole lot to show for it.
What I think is interesting on that point though is somebody on my
staff was kind enough to do this, and this is a home-done chart, so I
guess we are saving the taxpayer money by not having a professional
chart done, but it
[[Page H1689]]
points out this power of compound interest because in 1937, and I did
not realize this, Social Security actually ran a $766 million surplus.
It is a pay-as-you-go system, so what is not spent ends up going into
the general coffers the way it is now configured.
Now, if we grew that at about 10 percent, maybe that is too high a
rate, maybe the appropriate number that the staffer should have picked
would be 5 percent or 6 percent, but he picked 10 percent. Anyway, that
would result today, that pot of money back in 1937, that $766 million
pot of money, if it grew and compounded at about 10 percent, would end
up today having about $1.17 trillion in your bank account.
And so when older folks at town hall meetings say to me, ``Mark, you
know we wouldn't even be having this problem on Social Security if you
all had kept your hands off the money.'' Well, it turns out they are
right because just that one year alone you would end up with $1
trillion.
Now 1938 the surplus was $365 million. If again you compounded and
grew that over this long time period between now and then, you would
end up with about $485 billion in the bank. Well, you add those 2
together, and you get 1.66 trillion.
In 1939, our surplus in Social Security was 590 million bucks. Again,
if you grew and compounded that over time, you would end up with $680
billion.
And you do that in 1940; surplus then was $305 million. You grow that
and compound that over time, you end up with $310 billion in the bank.
In 1941, our surplus was $760 million in payroll taxes. You grew that
and compounded that over time, that would be $670 billion.
In 1942, and I will not over do this point, but the surplus then was
$926 million. You grow and compound that over time, you would end up
with basically about $700 billion in the bank.
You add all that up just over the 1,2,3,4,5,6 years, that is about $4
trillion.
Now the contention liability with Social Security is about $8
trillion. In other words, very quickly you could get to the point
wherein the people in my town hall meetings are exactly right. If
Washington had truly kept their hands off the money, if the money had
been in an account and had grown and compounded over time, we would not
be having this conversation tonight, which goes straight back to what
the gentleman from Minnesota (Mr. Gutknecht) is getting at, which is
this power of compound interest.
The other thought I wanted to pick up on for just 2 seconds is what
the gentleman from Oklahoma (Mr. Coburn) was talking about, and that is
just plain honest accounting, and that is, if you look at the numbers,
and again just to pick a couple of numbers, this is fiscal year 1994.
Now everybody thought we ran a deficit of about $200 billion. That
would have been the number that was talked about. But what is
interesting here is, as the gentleman from Oklahoma (Mr. Coburn) very
correctly pointed out, if you actually look at how much the debt went
up, the debt went up by $293 billion. Same thing happened in 1995. It
looked like it was 164, but if you look at how much the debt actually
went up, it was 277. Same thing a year later.
{time} 2200
The same thing a year later. Apparently it appeared as if our deficit
was $100 billion, but if we look at how much the debt went up, it went
up $261 billion. Even just this last year it appeared, now that we are
in the black, that we ran a surplus of about $70 billion. Again, if we
look at how much the debt actually went up, it actually went up by
basically $100 billion.
That is not the kind of basic accounting that people use back home in
their businesses. It is not the kind of basic accounting somebody uses
in balancing the family checkbook. It clearly states we have a real
problem with this stuff here in Washington.
I have some other weird charts here in my home-done log of charts,
but I do not want to belabor that point. I want to talk about these
because it is what we are talking about.
Mr. COBURN. Mr. Speaker, we will come back to that in just a minute.
I yield to the gentleman from California (Mr. Cunningham) to comment
on this situation.
Mr. CUNNINGHAM. Mr. Speaker, I thank the gentleman for yielding, and
I have enjoyed listening. It just reinforces the things we do every
day.
One of my colleagues once said that when we talk about all these
numbers, people's eyes glaze over. It is, how does it affect them
personally, and can the men and women at the Red Pig understand it.
That is what I am going to try and do.
Once it was said that if we do not remember history, then we are
likely to repeat it. I would like to take just a brief run, based on my
colleague's 1 hour, and I will do it briefly. It is laughable, that
Congress spends money, not the White House. We authorize, we
appropriate; we authorize to spend it.
For 40 years, except for a small period of 1 term in the Senate, the
Democrats have controlled the House and Senate, which controls all
spending. When they say that they are fiscally responsible, that is an
oxymoron. The debt was acquired, the deficit was acquired, and it put
us on a negative road.
They have to spend. I feel sorry for my colleagues on the other side
because they have to spend. By their party, they want big government
because they believe government can do it better. That requires
spending, and that increases taxes to pay for it. It is automatic. They
have to spend that.
What I would like to do is take us on a walk through memory lane.
When I came in in 1990, we said that enough was enough. We had the Gang
of Seven. I don't know if Members remember that, for those who were not
here. We shut down the House bank. We shut down the post office,
because we knew that an individual here was dealing stamps. We set
about to do the balanced budget. As a matter of fact, a lot of us
wanted the Speaker to be changed at that point, so we could move ahead.
But my colleagues said in 1993 that it took courage for them to vote
for that budget. It went by for me, because they said in 1993 their
highest tax increase in the history of the United States is responsible
for the economy today.
Let us take a look. In 1993, they promised a tax cut for what they
call the middle class. First of all, there are no middle class citizens
in this country, they are middle-income. I think we do a disservice to
people by calling them middle class.
They said they would give tax relief for that group. They increased
the tax in that budget. They increased taxes themselves by $270
billion. They cut defense $127 billion. They increased the tax on
social security. They cut the COLA for veterans, they cut the COLAs for
military. They had no welfare reform, they had no education reform.
When they had the White House, the House and Senate, did they have a
minimum wage increase? Absolutely not. They said that was not the way
to stimulate growth or jobs.
When we took the majority in 1994, we did away with the 1993 tax
increase. We dissolved it. What did we do? The first thing, we gave
back middle-income tax breaks. There are a whole host of ways we did
that. People are enjoying that today.
We were not able to increase defense. It went down under that watch.
That is one of the low points, I think, of our particular budget. But
we took away the increase on social security tax. We reinstated our
veterans' COLA. We reinstated our active duty military COLA, and while
the Democrats put $100 million against us, while we were trying to save
Medicare, and blasted us from the unions and all sides, at the end, the
President signed our Medicare bill, after he vetoed it.
Because of welfare reform, the welfare reform we did in 1995, we have
billions of dollars coming into the Treasury instead of going out. The
average was 16 years. We changed that. So for them to say that they
were responsible for the economy today is laughable.
Mr. SANFORD. Mr. Speaker, if the gentleman would yield, the gentleman
is so right. Again, with my homemade charts here, I have another chart
showing that exact point the gentleman is making, which is that
Washington has been getting bigger raises than working families have
gotten.
I do not want to bore people to death with a lot of numbers, but
whether we start in 1993, we go to 1994, this is the rate at which
money coming into
[[Page H1690]]
Washington has gone up. This is the rate at which people's pocketbooks,
if you will, their earnings, have gone up. In every case, it is that
red line, which is the money coming into Washington, that has been
going up faster than money back home.
To say it another way, if we look at these two little lines, this is
the rate at which Washington has been getting raises versus the rate at
which the rest of America has been getting raises. So the gentleman is
exactly right, the thing that is ``balancing the books'' up here has
been hard-earned taxpayer dollars coming into Washington, as opposed to
fiscal restraint.
Mr. CUNNINGHAM. I thank the gentleman. The overall point I am trying
to make is that Alan Greenspan, because of our tax relief, of us
``balancing the budget,'' do Members remember when the President said,
I can do it in 7 years, in 2 years, in 3 years? It is an arbitrary
number. When we finally pinned the President down, three of his budgets
increased the deficits by over $260 billion, with a forecast to $200
billion forever.
What we did is say no, a balanced budget is important. For them to
say that they are fiscally responsible, I would ask Members, look at
every bill on the Floor. The other side of the aisle will always want
to increase the spending. They will say, we are cutting, we are
cutting, except for one area, in defense. That is their cash cow. They
also want to raise taxes to pay for it.
My last statement I would like to make, I would like Members to look
up www.dsausa.org, on the Web page. That stands for the Democrat
Socialists of America. This is on the Web page, this is not the
gentleman from California (Mr. Duke Cunningham). In there is the
Progressive Caucus.
In the socialist contract, they want government health care. What did
they do when they had the leadership of the White House, the House and
Senate? They want to cut defense in this Web page by 50 percent. What
does the President do? He has cut it in half. They want to cut it 50
percent more. They want government control of education, private
property; they want union control over small business; they want to
increase socialized spending the highest ever. They want to raise taxes
to the highest progressive tax ever, in this 12-point agenda. How do
they pay for it? By increased taxes and cutting the military.
That is not what other forefathers meant when they talked about
fiscal responsibility. We cannot do it by having government do it. I
thank the gentleman.
Mr. COBURN. Mr. Speaker, I want to spend just a minute here going
over the present budgets, if we can.
Mr. SANFORD. Before the gentleman does so, if the gentleman will
yield for one more second, again, I want to follow up on the point of
the gentleman from California.
Consistently, the way the rhetoric works around Washington, we would
think that Republicans are trying to slash and burn and basically
eliminate the city and eliminate all Federal functions. That is what I
think is very interesting about this chart.
If we look at this line, would the gentleman from Oklahoma (Mr.
Coburn) tell me whether the line goes up or down? It is a one-way line,
and that is going up. All Federal spending in Washington, D.C. has not
been cut in real dollars or in nominal dollars. On the whole it has
been going up. In 1994 it was $1.4 trillion. In fiscal year 1999, it is
$1.7 trillion. The Republicans have not been cutting, eliminating. In
fact, things have been going up in Washington.
Mr. COBURN. Actually, the gentleman makes my point. We have not done
as good a job as we should have. We should have restrained spending
more.
Let me spend a few minutes talking about the budget proposal of
President Clinton and what has happened in 1999, and what has been
projected. Then I want the gentleman from Minnesota (Mr. Gutknecht) to
kind of talk on these budget items.
The other thing we hear, and I hope we get some time to spend on it,
is Medicare. I know a lot about Medicare because I interact with
Medicare every day as a physician. I know the ins and outs of it. I
know what is good about it and what is bad about it.
The one thing I want the American public to know is the Congress,
regardless of its politics, regardless of the rhetoric, nobody in
Washington wants to do anything except enhance the viability of
Medicare.
What I want to do is go through the budget for 1999, which we are
operating under right now. By the end of this year, the fiscal surplus
on social security, the amount of money taken in versus the amount of
money taken out, is expected to be $127 billion.
If the government would have exercised fiscal discipline, we would
have saved $126 billion. That is where this red line is. But we did
not. Last year in the omnibus appropriations bill this Congress, over
the threat of a government shutdown, spent $15 billion above what the
budget caps had said we would spend in 1997, an agreement that the
President agreed to and the Congress agreed to. They did not keep it.
What happens? Instead of a $127 billion surplus, it became $111. Now
the President wants to spend another $1 billion on foreign aid. That
takes us down to $110 billion in terms of social security.
We have a chance to have a real surplus this year because the
revenues coming to the Federal Government, as the gentleman from South
Carolina said, are rising. Why are they rising? It is called bracket
creep. As people make more money, they move into a higher tax bracket,
so therefore, the government takes more of our money. They reward us
for working harder and earning more by taking a lot of that money away.
What happens is the revenues to the Federal Government grow.
If we take the President's budget, the Congressional Budget Office
estimates there will be $138 billion more in social security coming in
than is paid out. Our idea is to not spend any of that on anything but
social security, to solve the problems associated with Medicare and
social security; to not spend any of it, to save 100 percent of it.
If we reject what the Republican budget plan is, the Congressional
Budget Office anticipates right now that we will spend at least $5
billion of that $138 billion, bringing us down to only taking $5
billion out of the social security trust fund. We will only have $133
billion.
If we take what the President has proposed under his budget proposal,
we will take another $20 billion of that and spend it. Remember, we all
agreed in 1997 that we are not going to spend above the caps. We
already have $35 billion proposed spending above the caps.
Finally, if we take the President's plan of saving 62 percent of the
social security fund and spending 38 percent on new spending, what we
get down to is actually, by all his plans, down to somewhere around 57
or 58 percent he wants to save.
If something is wrong, it is wrong all the time. If it is wrong to
take the social security trust fund, and what that means is lowering
the standard of living for our children and grandchildren, and placing
a tremendous increased burden on them from a tax standpoint, it is
wrong now, it was wrong before, as we have seen from the gentleman from
South Carolina's chart, and it is wrong for the future.
There is no way we will ever solve this problem until we start being
honest about what the word ``surplus'' means, until we start being
honest about the social security trust fund, and we start being honest
about the problems coming up with Medicare.
Nobody is proposing that we spend this money on anything except
social security. It is true that we will reduce external debt with
that, but the total debt will not go up if we do not spend this money,
so it is important that we have the restraint on spending.
I yield to the gentleman from Minnesota (Mr. Gutknecht).
Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for yielding. I
just want to read a couple of quotes.
In his 1998 State of the Union Address, President Clinton said,
``Tonight I propose that we reserve 100 percent of the surplus, every
penny of any surplus, until we have taken all the necessary measures to
strengthen social security for the 21st century.''
This year the President lowered the bar. This year he said, ``I
propose that we commit 62 percent of the budget surplus for the next 15
years to social security.''
We took the President at his word. In the budget that we will debate
tomorrow, the House Republican-passed
[[Page H1691]]
budget will take 100 percent. That means that every single penny, for
the first time I think perhaps in my lifetime, every penny of social
security taxes will only go for social security.
What we will do with money that is not needed to pay those benefits
is we will actually pay off some of the debt that is owed to the
public.
{time} 2215
The debt will still probably go up slightly.
Mr. COBURN. Mr. Speaker, let me ask a question because the assumption
in the partisan nature of this place is, if we say that money in there
is a real surplus, then automatically money is going to go out of
Washington to give a tax cut to the rich.
Does the gentleman know anybody in Washington in any area that is
proposing to do that?
Mr. GUTKNECHT. No, Mr. Speaker.
Mr. COBURN. Mr. Speaker, in fact what we will do is make a
determination of where we need to use that money. If it is shoring up
Medicare, we will use it for shoring up Medicare.
But I will remind the gentleman and the American people that we had a
commission that gave great recommendations on Medicare and how to save
it, and the President rejected his own commission on what to do.
I think the gentleman has some things that are very important for us
in discussing that in his charts.
Mr. GUTKNECHT. But first, Mr. Speaker, I think we have to establish
that our priorities are very clear in our budget. First and foremost,
we need to solve that problem. If the gentleman will put that chart up
with the blue and the red bars which demonstrates where we are headed
with the Social Security Trust Fund, it demonstrates why it is so
important that we begin as soon as we can to say that every penny of
Social Security taxes will go only for Social Security. We are going to
do that this year. That is the most important thing.
Now if we find out come later in the year that there is more revenue
available, then we should allow some of the families to keep some of
what they earn. I happen to believe that if we do start talking about
tax relief as this process goes forward, I believe that the first and
foremost tax we ought to solve is this marriage penalty tax.
Every year about 21 million American families pay a penalty for being
married. They pay extra taxes to the tune of an average of about $1,200
per family just because they are married. That is my own personal
opinion. That has nothing to do with the rich versus the poor. That has
nothing to do, in my opinion, with right versus wrong.
But the gentleman asked about Social Security and Medicare. I might
just point out we were talking earlier, and the gentleman from South
Carolina I think will appreciate this particular chart and this quote.
One of the things we believe long-term, I believe, is allowing
individuals to take at least a portion of their FICA taxes and be able
to invest for themselves in personalized retirement accounts and take
advantage of what Einstein described as the most powerful force on
earth, the magic of compound interest.
But I want to make it clear, the President has a slightly different
scheme. What he wants to do is take taxpayer money and invest it
directly in the stock market.
One of the people who has probably had more influence on fiscal
policy, at least as it relates to the Federal Reserve and interest
rates and all the things that have helped keep this economy strong, is
a gentleman by the name of Alan Greenspan. I want to just read this
quote and what he said about the President's scheme of investing
taxpayer money without the permission of retirees directly in the stock
market.
He said, and I quote, ``Investing a portion of the Social Security
Trust Fund assets in equities, as the administration and others have
proposed, would arguably put at risk the efficiency of our capital
markets and thus our economy. Even with Herculean efforts, I doubt if
it would be feasible to insulate the trust funds from the political
pressures.'' That is what Alan Greenspan said.
Mr. COBURN. Mr. Speaker, everybody up here knows that that would
happen, that political pressure would decide what and how that money
was invested.
Mr. GUTKNECHT. Mr. Speaker, I just want to make it clear, we look at
this as a possibility in the future of allowing people to invest for
themselves, where on the other side the administration is saying,
``Well, we will invest it for you.'' With that we see all the political
pressures and really the tremendous number of potential conflicts of
interest.
I mean what would the government do if they were one of the largest
investors in Microsoft, for example? Could they pursue the antitrust
suit that they are doing right now, or any antitrust suit?
In fact, it is estimated that if we went ahead with the scheme that
the President was talking about, that within 10 years the Federal
Government could own as much as 25 percent of all the stocks on the New
York Stock Exchange, and we become more than the 800-pound gorilla. It
is more like the 5,000-pound gorilla on Wall Street.
Mr. SANFORD. Mr. Speaker, if the gentleman from Oklahoma (Mr. Coburn)
will yield, I would just pick up where the gentleman from Minnesota
leaves off now.
I think Alan Greenspan very correctly pointed out the dangers in
collective investment. It sounds good, it sounds alluring, and that is,
let us send all the money to Washington, let the experts take care of
it.
But there are real dangers that come with that idea. This other idea,
again we are talking about a gradual shift in that direction. It would
take time. It is going to take a lot of debate in this place. But the
idea of allowing people to invest a portion of their payroll tax in
their own personal account does take advantage of this powerful
compound interest and takes advantage of it in, I think, a special way
that was highlighted in the Washington Post today.
In the Metro section of today's Washington Post, there is an article
entitled, the ``Munificence of an Unusual Millionaire''. If I may, I
would like to read just the first couple of paragraphs of this article.
Karl H. Hagen lived modestly and alone for much of his
life, in his family's decaying farmhouse in Suitland. For 36
years, he worked for the Potomac Electric Power Co., painting
signs and fences and doing other maintenance jobs.
He did indulge in a few passions, however, including
travel, watercolor painting, reading, ballroom dancing, and
investing in stocks and bonds.
The latter paid off in a big way.
Hagen, whose clothes came from thrift shops and who looked
to acquaintances as though he might be homeless, managed to
amass a fortune of about $3 million. When he died of a stroke
last Thursday at the age of 89, he left his estate to three
institutions that had earned his admiration: . . . Johns
Hopkins University, the National Air and Space Museum and
National Geographic Society.
I think that that says a lot about this simple thing of compound
interest so well highlighted in today's Washington Post on the front
page of the Metro section.
Mr. COBURN. Mr. Speaker, what we are going to hear tomorrow, too, I
think that is important in terms of Medicare, is that they want to take
15 percent of Social Security money and shift it over to Medicare. That
may or may not be a good idea, but if we are going to preserve Social
Security, the one way to do it is not to spend Social Security money on
Medicare, because all we are going to do is undermine Social Security
even further.
President Clinton's own chairman, Senator Breaux, had this quote from
the Wall Street Journal on March 12. ``I think what we have on the
table is a classic Clinton New Democrat reform, but there are
entrenched people within the White House who do not want any change.''
The fact is, if we are going to save Medicare, it is going to have to
have some change. Politicians generally worry about changing something
as important as Medicare. It takes real courage to solve the Medicare
problem. But we have to change it if we are going to solve it. We can
not solve it, and we can do the same thing to our children on Medicare
as we have done on Social Security, and that is steal the money from
somewhere else and then raise their taxes in the future.
Mr. Speaker, I just yield to the gentleman from Minnesota (Mr.
Gutknecht) on that point. I think he has a
[[Page H1692]]
chart that talks about the amount of money that can be saved if we
fiscally restrain spending.
Mr. GUTKNECHT. Mr. Speaker, I would just point out a couple of
charts, because there is going to be, I suspect, a rather heated debate
tomorrow and for the next several weeks about who is doing a better job
of saving Medicare and Social Security.
I think the numbers do speak for themselves. This is a chart, and
again, these are not our numbers. These numbers actually are generated
by the Congressional Budget Office. But it shows that over the next 10
years we are going to save $1.8 trillion for Medicare. The Clinton
plan, which is rather complicated and difficult to explain, will save
about $1.65 trillion over that period. There is a big difference.
Mr. COBURN. Mr. Speaker, the difference is $150 billion.
Mr. GUTKNECHT. Exactly. Mr. Speaker, that is a lot of money even
around here.
Mr. COBURN. Right.
Mr. GUTKNECHT. Mr. Speaker, let me point out, though, what some of
the Congressional Budget Office people and what the Office of
Management and Budget also said. They did not actually use the term
``irresponsible''. I want to show this article which appeared in the
Washington Post last week, and they were both very, very critical of
the Clinton plan. Basically, they described it as sort of a smoke and
mirrors type plan.
Frankly, even the chairman and many of the Democrats who either
served on or were very involved in the Medicare Commission essentially
came to the same conclusion, that what the President was really
proposing was nothing. He was proposing taking more general fund
revenues to try and supplement Medicare, when really what we need with
Medicare is not necessarily just more money. We need real reforms. We
need to get under the hood, as Ross Perot used to say, and really fix
this thing.
By doing what the President was doing, it was called irresponsible
because it really, in some respects, only makes the problem worse over
the long-term.
So I think we are going to have a good and healthy and heated debate
about Medicare, but it is important to see what some experts have said.
It is not just us. As I say, it is the Congressional Budget Office. It
is OMB. It is columnist David Broder.
He wrote a column last week. It appeared in Sunday's Washington Post.
The headline was ``Medicare: Another Clinton failure?''
As we look through his plan, and it is described in detail here, and
if people would like a copy, we can certainly make certain they can get
a copy of it, but there have been many people who have studied the
Clinton plan and they say this is a joke, and unfortunately it is kind
of a sad joke for American seniors.
Mr. COBURN. Mr. Speaker, one of the things I do with my seniors who
are on Medicare, I have actually asked them this at home when the
President started talking about a drug benefit, we are talking about
here we go again, politicians adding a benefit to a program that we
cannot afford now. When we ask the seniors, ``Do you want to increase
the benefits associated with Medicare, and the way we are going to pay
it is we are taking it away from your grandchildren,'' they uniformly
say no.
But they also will say, ``If you will spend wiser in Washington,
maybe you can do more for me, because I am struggling.'' But they do
not want their children and their grandchildren to have to pay for it.
So I want to thank the gentleman from Minnesota (Mr. Gutknecht) and
the gentleman from South Carolina (Mr. Sanford) for being here tonight.
My purpose is not partisanship. My purpose is to make sure the American
public knows that there are some of us here that are going to honestly
talk about what the numbers are, honestly talk about being critical of
both Republicans and Democrats in the past in terms of the mistakes
that have been made that have been politically expedient.
I want to close this tonight with a statement that Martin Luther King
said in his last speech in the Washington Cathedral not long before he
was assassinated. What he said was is that ``Vanity asked the question,
is it popular? And cowardice asked the question, is it expedient? But
conscience asked the question, is it right?''
The gentleman related to something, right versus wrong. For too long
Washington has been asking the wrong question. What they have been
saying is, is it popular, and is it expedient for my political career,
versus is it right for our country, right for the future generation and
the following?
I hope the Congress will have the courage to do what is right rather
than what is expedient and what is popular. That is what we are sent up
here to do.
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