SOCIAL SECURITY
(House of Representatives - June 26, 2000)

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[Pages H5088-H5089]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            SOCIAL SECURITY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Michigan (Mr. Smith) is recognized 
during morning hour debates for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, I want to take a couple of 
minutes to talk about one of America's most important programs and that 
is Social Security. Looking at this chart, we see the pie graph of all 
of the Federal Government's $1.8 trillion Federal spending. The bottom 
piece of pie represents Social Security. Social Security now is 20 
percent of everything that the Federal Government spends. Medicare is 
at 11 percent, and both programs are growing very rapidly in terms of 
outlays. Senior programs now utilize over 50 percent of total Federal 
spending. Because of the demographics, because of the fact that 
individuals are living longer and because of the slowing down of the 
birthrate over the years the problem is exacerbated. When the baby 
boomers retire we will have this exceptionally large number of 
individuals born shortly after World War II retire. They will change 
status from paying tax into the Social Security System to retirees that 
take out, along with the fact of increasing life span that is going to 
additionally complicate the challenges of keeping Social Security and 
Medicare solvent.
  In this morning's Washington Post, a news piece quoted Vice President 
Gore as saying that Governor Bush's plan, if he does what he says and 
protects all current retirees against having any cut in benefits, it 
would take 14 years off the already short life, and Social Security 
would go bankrupt by 2023. This statement is false. Most every bill 
introduced in the House and Senate in fact do make sure there is no 
reduction in retirees benefits. To the contrary, the Vice President is 
suggesting that we take the Social Security surplus and pay down the 
debt held by the public. That means, if you will excuse the analogy, 
using one credit card account to pay down another credit card account. 
Mr. Gore is suggesting, taking the Social Security Trust Fund surplus 
money and using that money to pay back another debt, a debt held by the 
public. But that does nothing to solve the long term solvency. At such 
time there is less Social Security tax revenue coming in than is 
required to pay benefits, in about 2014, the debt starts increasing 
again and as you see on this chart, debt soars, and we leave our kids 
and grand kids a huge mortgage. That is why it is so important that we 
have some structural changes to keep Social Security solvent.
  I hope what the Vice President was quoted in the newspaper was not a 
correct quote, because the statement has been repeatedly demonstrated 
as false by the Social Security actuaries themselves.
  There are several plans. In fact, most of the plans that have been 
introduced in the Senate, most of the plans that have been introduced 
in the House are plans that reflect what Governor Bush has suggested. 
That is they actually make sure that we do not cut benefits for 
existing retirees and we do not cut benefits for near-term retirees. I 
will give a few examples. The Senate bipartisan Social Security plan 
introduced in the Senate by six Senators; the gentleman from Ohio (Mr. 
Kasich's) plan; and my Social Security proposal contains no changes to 
the benefit levels of current retirees and all of these proposals have 
been certified by the Social Security Administration as keeping Social 
Security solvent. So to play light with such an important program I 
think does a disservice. It would have been my hopes that President 
Clinton and Vice President Gore would have taken the opportunity in the 
last 2 years to move ahead with plans and proposals to keep Social 
Security solvent. With White House leadership, we could have done that 
this year. It is going to take the leadership of a President to bring 
Democrats and Republicans together to make sure that we save this 
important program. Simply by creative financing such as adding 
``I.O.U.s'' to the trust fund, that does not honestly deal with the 
fact that there is going to be less revenues coming in than what is 
needed to pay benefits is a disservice because it does not solve the 
problem.
  Briefly, I want to go over my Social Security proposal, the Social 
Security Solvency Act for 2000. It allows workers to invest a portion 
of their Social Security taxes in their own personal retirement 
accounts. I start at 2.5 percent. It may be appropriate that government 
defines limits on how you invest that money to make sure they are safe 
investments. It won't take much investment wetdown to make sure that it 
brings in more money than the 1.7 percent that economist predict 
workers can expect as a return on the payroll

[[Page H5089]]

taxes paid in that they will get through their retirement years from 
Social Security. 1.7 percent is what the economist predict you are 
going to get in your retirement years. We can do better than that in a 
CD at your local bank. The problem is that government doesn't save and 
invest your money, it spends it.
  But I think the other important consideration is that the Supreme 
Court has said that there is no obligation of the Federal Government to 
give you Social Security benefits. The Social Security tax is a 
separate tax. Benefits is a decision made by Congress and the 
President. That is why when we have gotten in trouble in several times, 
such as in 1977, again in 1983, we increased taxes and cut benefits. 
Let us not let that happen again.
  The highlights of my bi-partisan Social Security bill, H.R. 3206, are 
as follows:
  Allows workers to own and invest a portion of their Social Security 
taxes by creating Personal Retirement Savings Accounts (PRSAs);
  PRSA investment starts at 2.5% of wages and gradually increases;
  PRSA limited to a variety of safe investments;
  Uses surpluses to finance PRSAs;
  No increases in taxes or government borrowing;
  PRSA account withdrawals may begin at 59\1/2\ while the eligibility 
age for fixed benefits is indexed to life expectancy;
  Tax incentive for workers to invest an additional $2,000 each year;
  Gradually slows down benefit increases for high income retirees by 
changing benefit indexation from wage growth to inflation;
  Divides PRSA contributions between couples to protect low income and 
non-working spouses;
  Widows or widowers benefit increased to 110% of standard benefit 
payment;
  Repeals the Social Security earnings test;
  Scored by the Social Security Administration to keep Social Security 
solvent; and
  Maintains a Trust Fund reserve.

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