Mr. President, as the new Congress begins work, I am pleased to join with Senator Domenici in addressing one of the most serious and intractable problems facing the Nation--restoring the long- term fiscal health of Social Security and…
Mr. President, as the new Congress begins work, I am pleased to join with Senator Domenici in addressing one of the most serious and intractable problems facing the Nation--restoring the long- term fiscal health of Social Security and Medicare.
Today we propose a bipartisan, independent and permanently existing commission to return these essential programs to solid financial footing for generations to come.
Our legislation mandates the periodic, comprehensive review of Social Security and Medicare to ensure their present and future solvency. By a year from the date of enactment, it requires the Commission to devise and recommend to Congress and the President a benefit and revenue structure that allows Social Security and Medicare to become, once again, stable and effective.
A key aspect of the bill is that its mission is ongoing indefinitely. Every five years the Commission returns with new recommendations--small tweaks or larger adjustments, whatever is necessary--to keep these entitlement programs in actuarial balance.
Since 2005, the President, Congress and the Nation have stalemated over the issue of privatizing Social Security. The issue remains contentious. Recent press articles suggest the Administration would be prepared to drop carve out accounts as the price of overall reform.
Meanwhile, the Social Security funding shortfall is projected to balloon to roughly $4.6 trillion over the next 75 years to pay all scheduled benefits. This unfunded obligation has increased by $600 billion alone over the last year. Medicare is in far worse shape, needing $11.3 trillion over the next seventy-five years to close the gap and remain in balance.
The 2006 report from the Trustees of Medicare and Social Security is alarming to say the least. They describe the current path of spending for both as ``problematic'', ``unsustainable,'' ``severe'', and in ``poor fiscal shape.'' In sum the Trustees say that ``the problems of both programs are driven by inexorable demographics, and, in the case of Medicare, inexorable health care cost inflation, and are not likely to be ameliorated by economic growth or mere tinkering with program financing.''
Simple numbers tell the story: growing cash flow deficits will exhaust the Medicare trust fund in 2018, and Social Security reserves will be overcome in 2040, according to the Trustees report.
Our legislation takes a new approach and is bipartisan to the core. Instead of emphasizing the merits of one proposal over another, we wipe the slate clean.
Fifteen experts, some of whom are Members of Congress from the committees of jurisdiction, are appointed. They take a full year to conduct town hall meetings nationwide, assess these trillion dollar programs from top to bottom, and rationalize their cost structure through intensive evaluation.
We advocate an open process, where all American voices can be heard. We have learned in the last two years that these issues effectively surpass the Congress' and President's ability to reach a compromise.
Relying strictly on elected officials to meet privately and out of the public view to negotiate a multi-trillion agreement I believe risks more failure. We have no demonstrated track record since 2005 of being able to achieve bipartisan consensus. And there are no new developments of late that suggest a different outcome than more partisan gridlock.
I know Majority Leader Reid is instructing on certain members of the Senate to gather and discuss these issues in the coming months. I hope it works. But I basically share his outlook for the prospects of a bipartisan deal: ``It's a tremendous long shot. If you were a Las Vegas bookmaker, you'd put the odds pretty [long] for being able to do that.''
The Commission we propose would not be offering one-time solutions that get tossed aside and collect dust. Far from it: the Commission's detailed analysis, nonpartisan recommendations and findings are provided in writing and take the form of legislation that Congress formally considers.
The Senate and House, in turn, through expedited legislative procedures, will hopefully be poised to amend if need be and then enact the changes into law.
Compromise, in the form of increasing payroll tax revenues or other fees and cutting benefits, is the inevitable reality which we face. Senator Domenici and I are focused on creating a pathway to reach that compromise. We do not hold out, today, certain ideas that we believe Commission Members ought to consider.
We rely on their independent expertise and motivation to derive what is best for the Nation. Then we let the chips fall where they may from there.
The former Chairman of the Federal Reserve, Alan Greenspan, said two years ago that we had little time to waste in fixing Social Security. He endorsed the notion of establishing a Commission, much like the one he led in 1983 that led to historic changes in the program. His congressional testimony bears repeating:
This is not a hugely difficult problem to solve . . . And I
guess what is missing is the fact that at this stage there
has been a rather low interest in actually joining, in
finding out where some of the agreements are, and I have a
suspicion that when that occurs, that will happen. It may
well be that some mechanism such as that which we employed in
1983 may be a useful mechanism to get groups together and
find out where there are agreements. I tend to think what
happens in these debates is nobody talks about what they
agree about but only about what they differ about. And
something has got to give soon because we do not have the
choice of not resolving this issue.
Chairman Greenspan is absolutely right that it is only a matter of time that we implement Social Security reform. That is because 48 million people, or 1 out of every 6 Americans, depend on it. And by 2050, an astounding 82 million Americans will receive this guaranteed benefit.
For more than 20 percent of retirees, Social Security is it: their only source of income.
For half of those 48 million, Social Security keeps them out of poverty. And for almost two-thirds, Social Security makes up more than half of their total income.
4.8 million widows and widowers rely on Social Security, as do 6.8 million disabled workers and 4 million children.
The long-term challenges are significant. It is not a crisis, we have time to implement gradual reform over time, but we need to get started.
While the current projected shortfall for Social Security amounts to about $4.6 trillion, the fact of the matter is that 100 percent of benefits can be paid until 2040 by some estimates (Social Security Administration) or 2046 by
others (CBO). Beyond that time horizon, 73 percent of benefits can be paid.
So the bottom line is, there is time, the know-how, and the resources to be able to maintain the current system, with phased adjustments occurring over many years to the Social Security Trust Fund.
The key, of course, is coming to a rational consensus--Democrats and Republicans united--in the effort to make Social Security solvent from this day forward.
Most budget experts agree that the Social Security problem pales in comparison to the enormous shortfall facing the Medicare Trust Fund (Part A)--over the next 75 years a total of $11.3 trillion. The various technical estimates are that Medicare is projected to become insolvent far sooner than Social Security.
In fact the most recent Medicare Trustees report confirms that the trust fund will be exhausted in 2018, yet the number of beneficiaries skyrockets upwards--from 42.7 million now, a number which will double by 2030--as the Baby Boom generation ages.
Compounding the problem, the Congressional Budget Office projects that Medicare spending will rise to 11 percent of the gross domestic product by 2080, up from 3.21 percent of GDP in 2006.
And the number of those paying into the system gets smaller and smaller: in 2000, 4 workers supported every Medicare beneficiary. That number shrinks to 2.4 workers per beneficiary by 2030.
The plain truth is that surging health care costs need to come under control or Medicare faces a dire situation. Because the program is financed through payroll taxes on working Americans, and general tax revenue, the pressure is building now on working Americans, given the huge demographic changes we expect when Baby Boomers retire.
In closing let me share one pertinent fact from the Social Security and Medicare Trustees and their 2006 report: ``to the extent that changes are delayed or phased in gradually, greater adjustments in scheduled benefits and revenues would be required.'' The time to act is now, and Senator Domenici and I believe that our legislation represents a reasonable and good faith step for curing what ills these vital safety net programs.
Mr. President, I rise today to offer a bill with my colleagues Senators Snowe, Inouye, Durbin, Kerry, Boxer, Bill Nelson, Cantwell, Lautenberg, Lieberman, Menendez, and Collins to close the SUV loophole.
This bill would increase Corporate Average Fuel Economy, CAFE, standards for SUVs and other light duty trucks. It would increase the combined fleet average for all automobiles--SUVs, light trucks and passenger cars--from 25 miles per gallon to 35 miles per gallon by model year 2019.
The high price of oil is not a problem we can drill our way out of. Global oil demand is rising. China imports more than 40 percent of its record 6.4 million-barrel-per-day oil demand and its consumption is growing by 7.5 percent per year, seven times faster than the U.S.
India imports approximately 70 percent of its oil, which is projected to rise to more than 90 percent by 2020. Their rapidly growing economies are fueling their growing dependence on oil--which makes continued higher prices inevitable.
The most effective step we can take to reduce gas prices is to reduce demand. We must use our finite fuel supplies more wisely.
This legislation is an important first step to limit our Nation's dependence on oil and better protect our environment.
If implemented, closing the SUV Loophole would: save the U.S. 2.1 million barrels of oil a day by 2025, almost the same amount of oil we currently import from the Persian Gulf.
It would also prevent about 350 million tons of carbon dioxide--the top greenhouse gas and biggest single cause of global warming from being emitted into our atmosphere by 2025. This is an 18 percent reduction, the equivalent of taking 60 million cars--or 50 million cars and light trucks--off the road in one year.
This bill would also save SUV and light duty truck owners hundreds of dollars each year in gasoline costs.
CAFE standards were first established in 1975. At that time, light trucks made up only a small percentage of the vehicles on the road, they were used mostly for agriculture and commerce, not as passenger cars.
Today, our roads look much different, SUVs and light duty trucks comprise more than half of the new car sales in the United States. As a result, the overall fuel economy of our Nation's fleet is the lowest it has been in two decades, because fuel economy standards for these vehicles are so much lower than they are for other passenger vehicles.
The bill we are introducing today would change that. SUVs and other light duty trucks would have to meet the same fuel economy requirements by 2013 that passenger cars meet today.
In 2002, the National Academy of Sciences, NAS, released a report stating that adequate lead time can bring about substantive increases in fuel economy standards. Automakers can meet higher CAFE standards if existing technologies are utilized and included in new models of SUVs and light trucks.
In 2003, the head of the National Highway Traffic Safety Administration said he favored an increase in vehicle fuel economy standards beyond the 1.5-mile-per-gallon hike slated to go into effect by 2007. ``We can do better,'' said Jeffrey Runge in an interview with Congressional Green Sheets. ``The overriding goal here is better fuel economy to decrease our reliance on foreign oil without compromising safety or American jobs,'' he said.
With this in mind, we have developed the following phase-in schedule which would follow up on what NHTSA has proposed for the short term and remain consistent with what the NAS report said is technologically feasible over the next decade or so. As a first step, by model year 2010, passenger cars must meet an average fuel economy standard of 29.5 mpg, and SUVs and light trucks must meet 23.5 mpg. By way of comparison, passenger cars in model year 2005 averaged 30 mpg, light trucks averaged 21.8 mpg, and the overall combined fleet average is 25.2 mpg.
The bill also increases the weight limit within which vehicles are bound by CAFE standards to make it harder for automotive manufacturers to build SUVs large enough to become exempted from CAFE standards. Because SUVs are becoming larger and larger, some may become so large that they will no longer qualify as even SUVs anymore.
We are introducing this legislation because we believe that the United States needs to take a leadership role in the fight against global warming.
We have already seen the potential destruction that global warming can cause in the United States.
Snowpacks in the Sierra Nevada are shrinking and will almost entirely disappear by the end of the century, devastating the source of California's water.
Eskimos are being forced inland in Alaska as their native homes on the coastline are melting into the sea.
Glaciers are disappearing in Glacier National Park in Montana. In 100 years, the park has gone from having 150 glaciers to fewer than 30. And the 30 that remain are two-thirds smaller than they once were.
Beyond our borders, scientists are predicting how the impact of global warming will be felt around the globe.
It has been estimated that two-thirds of the glaciers in western China will melt by 2050, seriously diminishing the water supply for the region's 300 million inhabitants. Additionally, the disappearance of glaciers in the Andes in Peru is projected to leave the population without an adequate water supply during the summer.
The United States is the largest energy consumer in the world, with 4 percent of the world's population using 25 percent of the planet's energy.
And much of this energy is used in cars and light trucks: 43 percent of the oil we use goes into our vehicles and one-third of all carbon dioxide emissions come from our transportation sector.
The U.S. is falling behind the rest of the world in the development of more fuel efficient automobiles. Quarterly auto sales reflect that consumers are buying smaller more fuel efficient cars and sales of the big, luxury vehicles that are the preferred vehicle of the American automakers have dropped significantly.
Even SUV sales have slowed. First quarter 2005 deliveries of these vehicles are down compared to the same period last year--for example, sales of the Ford Excursion is down by 29.5 percent, the Cadillac Escalade by 19.9 percent, and the Toyota Sequoia by 12.6 percent.
On the other hand, the Toyota Prius hybrid had record sales in March with a 160.9 percent increase over the previous year.
The struggling U.S. auto market cannot afford to fall behind in the development of fuel efficient vehicles. Our bill sets out a reasonable time frame for car manufacturers to design vehicles that are more fuel efficient and that will meet the growing demand for more fuel efficient vehicles.
We can do this, and we can do this today. I urge my colleagues to support this legislation.
I ask unanimous consent that the text of the bill be printed in the Record.