Floor Statements

Mr. Speaker, I rise today in honor of William Deary the United States Small Business Administration 2003 Michigan Small Business Person of the Year.

In 1994 William Deary and his wife Cheri Lyn returned to her hometown of Jackson, MI and founded Great Lakes Home Health Services. Since that time the business has not only survived adverse conditions that saw almost a third of home health care companies close their doors, they have thrived. His commitment to his employees and the community was reflected by his decision to cut costs, but not lay off a single employee.

Today they have expanded the business now known as Great Lakes Home Health and Hospice, and are recognized nationally for their excellence in the field. In a national study conducted by Fazzi Associates Great Lakes Home Health ranked #1 in the country among agencies of similar size.

Mr. Deary is a leader in the Jackson community actively involved in assisting various organizations from the grass roots level to serving on the board of directors. He and his wife Cheri Lyn are the primary benefactors to the St. John Parish Educational Scholarship Program where they are parishioners. He serves as a member of the Board of Directors of this program that allows children from families who cannot afford the expense, but feel their children would benifit from a parochial school education to do so.

William is also Chairman of the Board and a member of the Executive Committee of the Jackson Downtown Development Authority. In addition he is active and has served in various capacities on the boards of the United Way of Jackson, Disability Connection, Child Benefit Program, Junior Achievement and helped to raise funds for the Ella Sharp Museum in Jackson. He was honored in 1998 to serve as one of the Congressional appointees for the state of Michigan at the inaugural Small Business Summit and has a been on the National Board of Directors of the Home Care Association of America.

William Deary is truly deserving of his recognition as 2003 Michigan Small Business Person of the Year. He has met and exceeded all the criteria of: Staying power; Growth in employees; Increase in sales; Improved financial position; Innovativeness; Response to adversity; and Contributions to aid community-oriented projects. He has made the Jackson community a better place to live by his commitment to excellence in the services he provides and in his willingness to give something back to the community.

Mr. Speaker, I was one of the Members down in Mexico this past Thursday, Friday and Saturday and Sunday at the WTO negotiations. I think a lot of Members of Congress were concerned that, again, this country might give in to what other countries wanted just for the sake of more world trade.

I would like to commend the Bush administration, and Robert Zelnick, our trade ambassador, for holding the line and not giving away things just for the sake of more world trade that eventually might have hurt our manufacturing business and our agriculture. I think no longer can we afford to have world trade just for the sake of world trade. It has got to be fair. It cannot be to the long-term disadvantage of America.

Mr. Speaker, in 5 minutes I am going to give a short tutorial on the bleak future of Social Security. A proposal that I just introduced, H.R. 3055 tries to make sure that we keep Social Security solvent. Social Security is one of the most successful programs in assuring that retirees continue to have some real social security.

After the Great Depression, Franklin Delano Roosevelt said what we should have is a program of forced savings during one's working years, to set aside to make sure that people have some money in retirement.

Well, as it turned out, the law that was passed provided that nothing was set aside in an individual's name. Existing workers paid in the Social Security tax and that was immediately sent out to current retirees. It was sort of a pay-as-you-go program.

It is, if you will, Mr. Speaker, like a chain letter. Uncle Sam says, look, here is a list of names; put your name at the bottom of the list and send a check to all those people above you. And when your name gets to the top when you retire, all of the people below you at that time will send you a check.

The problem is there will be fewer people to send you a check. There are two colliding forces, not only in the United States but across the world where the age of death is higher. We are living longer. And at the same time, the birth rate is going down.

In Europe, France now has a payroll tax of 51 percent. You make a dollar and have to give 51 percent to the government to take care of the seniors in that country. That is because a pay-as-you-go program with such a large senior population and a reducing birth rate means fewer number of workers to pay in, which means each individual workers has to pay out more in taxes.

Let us not let the United States come to that predicament because it will mean one of two things: a company either charges, more for this products to pay for the extra cost of that tax or you pay workers less. Either way, it is bad for the future of our economy and our ability to compete with other countries.

Mr. Speaker, let me describe H.R. 3055: The trust fund continues in our bill. The Retirement Security Act would allow workers to create on a voluntary basis accounts funded from their payroll taxes. The accounts would start at 2.5 percent of income and would reach 8 percent by 2075, a slow process as you shift away from the pay-as-you-go. Workers would own the money in their accounts. Investments would be limited and widely diversified, and investment proceeds would be subject to government oversight.

The government would supplement the accounts of low-income workers making less than $35,000 a year to ensure they build up a significant savings. What is important in those early years is the magic of compound interest, starting with a small amount of dollars and letting it grow. Again, it is an optional program.

People choosing to participate in the voluntary account program would continue to receive benefits directly from the government, and those benefits would be offset based on the amount of money going in. But they would be guaranteed so that the person that opts in to a personal retirement savings account would be guaranteed that they would be at least as well off as those that did not take that option.

Worker accounts: all worker accounts would be owned by the worker and invested through pools supervised by the government. Regulations would be instituted to prevent people from taking undue risk. Until an account balance reaches $2,500, a worker would be limited on the kind of index investments they could make; and after the balance reaches $2,500, they would have more flexibility but only investing in safe accounts as determined by the Secretary of the Treasury.

The fairness to women's provision that we put in this bill: for married couples, account contributions would be pooled and then divided equally between the husband and wife. So whatever the husband and wife would be eligible to invest would be added together and divided by two so each spouse would have the same in their individual account. Second, it would increase surviving spouse benefits to 110 percent of the higher-earning spouse's benefits. Third, stay-at-home mothers with kids under 5 would receive retirement credit. In other words, we are saying for a spouse that stays home with those young kids, they can have those years credited at the average for the other years.

In conclusion, Social Security solvency, the Retirement Security Act has been scored by the Social Security Administration actuaries to keep the program solvent. There would be no increases in the retirement age, changes in benefits for seniors or near-seniors, or changes in the Social Security COLA.

Mr. Speaker, there are only 24 Members in the House and Senate that have ever signed onto a bill. We need to move ahead and save this program.

Mr. Speaker, since I came to Congress in 1993, I have been very concerned about the future of Social Security. Because when I was chairman of the Senate Taxation Committee in the State of Michigan, it was brought to my attention that Social Security was running out of money. It seemed like an easy challenge to convince, if you will, America and Congress that something needs to be done if we are to save this important program that has been so helpful to so many senior citizens.

We talk about $87 billion that the President has now requested for additional help in fighting the war in Afghanistan and Iraq and for homeland security, but retirement security is just as important. And the retirement security in this country is in great risk, and if we keep putting off a solution to the problem of Social Security, then the solutions are going to be more drastic as we wait years and years. And that is what I have found out over the last 9 years as I have introduced additional business.

Let me give some figures, dollar figure, Mr. Speaker, on how short of keeping our promises on Social Security we are. The actuaries estimate that it is going to estimate that it is going to take $120 trillion, $120 trillion over and above what we are taking in in the Social Security tax to keep our promises of benefits for Social Security over the next 75 years. And why are we unwilling to deal with this? So discouraged that there has only been on my count, 26 Members of either the House or the Senate that has ever been willing to sign on the bill to keep Social Security solvent.

There are two global forces coming to hit head on, not only in the United States but throughout most of the world. One force is the fact that our seniors are living longer we are having an aging of society. And that does not mean you are growing older. It means the number of old people in relation to young people is growing very rapidly. And the other force is the birth rate is going down.

Most countries in Europe and the United States have a birth rate that does not propagate and replace the mother and father of those children, so fewer children and more people living longer, and since we have a pay-as-you-go program, where current workers take their tax dollars and send it and immediately the next week it goes out to current retirees, the program is unsustainable.

Here is my challenge and my warning. If we do not do something, we can have the same kind of problem that countries like France and Germany and Italy and Spain and Japan are facing now. The payroll withholding tax in France is 51 percent for their senior citizens. Fifty-one percent out of every dollar they make is deducted to pay for their senior citizens in that country, and that is because there are so many senior citizens in relation to the number of people working.

In Germany, it is approaching 42 percent payroll tax deduction. Just think of the pressure on business because the only way they have to make up this money is to charge more for their product or to reduce what they are paying for their employees, and therefore, they are going to be less competitive.

Let us not let that happen in the United States. Let us not allow a program like Social Security that has been so helpful to so many of our seniors, that so many of our seniors in this country depend on.

Right now over 80 percent of our seniors depend on Social Security for over 90 percent of their total retirement income. It is a huge challenge. We need to deal with it. I ask my colleagues to examine this problem.

Mr. Speaker, I would just ask all Americans in the next election to ask the candidates that are running for office what is their solution to save Social Security.

Mr. Chairman, through you to my colleagues, it has been 43 years that we have had this embargo with Cuba. It has not worked. It seems to me we should do one of two things: we should either make the pain greater for the Cuban people, as we so with the embargo, or we should make some changes to improve communications.

How do we make those kind of changes? One change that I think of is perestroika in Russia. In the late 80s, when more open communication was started, when the Russian people started learning about what America was and what we were doing, we saw the beginning of change in Russia.

How can we better communicate with the Cuban people? I was down in Cuba about a year and a half ago, and most people of Cuba that I talked to do not seem to really know what America is all about, what the free market and free enterprise and liberty is all about. Of course, because under Castro they have not had it.

I think it should be clear that none of us support Castro. None of us disagree that Castro is bad. None of us disagree it would be good to have Castro out of the way. The question is, how do we do something better than what we have done for the last 43 years?

We talk about some of the prisoners, saying, keep up the pain and keep your embargo going. I would quote one of the prisoners, Espenosa Chapa, who said, ``The policy of isolating Cuba, far from bringing freedom, has only served to give the regime an alibi that the embargo is the cause of all the ills the country suffers, and it has kept Cuban society away from a greater flow of democratic ideas and values.''

The current ban on travel is only one element of the embargo. Mr. Chairman, I would say it is somewhat akin to increased free trade worldwide where there is freer interaction and more open communication.

So I just call on my colleagues, do not go along with the status quo. Let us make a change, because the last 43 years have not accomplished the goals that we want to accomplish. Support the Flake amendment.

Mr. Speaker, I rise to address another serious security problem. It is retirement security. Let me read a quote from 1994:

``Failing to take prompt action on Social Security will burden our children and our grandchildren with benefit cuts and crippling taxes.''

That was part of my opening statement as chairman of the Task Force on

Social Security in 1994. When I wrote this almost 10 years ago, I was simply acknowledging what was evident to the actuaries of Social Security. Because we know how many people are paying into Social Security, and we can estimate the cost of future benefits from what has been paid in, the looming insolvency of the program was very clear then. It is even more clear today. Yet a crisis that is imminent in the eyes of an actuary looks like a long way off to many politicians, and as a result Congress has ignored and delayed action on what is probably this country's most serious long-term financial challenge.

In just 10 years, we will need $100 billion from other sources to make up $100 billion, that is 5 percent of what will be coming in 10 years from now from the total income tax revenues, we are going to need that much in addition to what is coming in on Social Security and Medicare taxes to pay promised benefits. It has been frustrating at times, but we have worked for more than a decade trying to focus attention on fixing Social Security.

I introduced my first Social Security bill back in 1994. In fact, I wrote it while I was still chairman of the Senate taxation committee in Michigan. Tomorrow, I will offer my sixth legislation that has been scored by the actuaries to keep Social Security solvent. The good news is, I think awareness has increased. There is a greater appreciation and an acknowledgment that Social Security is going broke. Today, most Members are aware of the problem, even if there is still reluctance to tackle it.

President Bush's support in the 2000 campaign, I think, moved us a long ways toward a greater American understanding of the seriousness of the problem, and tomorrow I will introduce my bipartisan Retirement Security Act that has been scored by the Social Security actuaries to keep Social Security solvent and restore its tremendous support for retirees in the United States. Workers could voluntarily devote 2.5 percent of their income for a start from their payroll taxes. It would be voluntary. And workers would own the money in the accounts, which can be put in well-diversified investments. In our bill, we guarantee that the individuals that opt for these personally-owned accounts will earn as much as those that opt not to go into that particular investment. The government would supplement the accounts of low-income workers to help build up those accounts for future retirement savings. People would continue to receive government benefits, as in the current system, as part of their retirement income, but those participating in the private account would have their government benefits reduced to reflect the money that goes into their private accounts. But, again, it would be insured.

To ensure fairness for women, a married couple's account contributions would be divided equally between spouses. My bill also increases the widow's/widower's benefit to 110 percent of the higher earning spouse's benefit and would give retirement credits to spouses who stay at home to care for young children.

In conclusion, there are some important costs to the bill which eliminates $10 billion in unfunded liabilities. It calls for a $900 billion loan over the next 20 years from government to Social Security in addition to repaying the trust funds that have been borrowed from Social Security and this will be repaid after the program becomes solvent. It also slows down the increase in benefits for the highest earning retirees. It does not, however, change benefits for those who have already retired or are close to retirement.

Action to preserve and strengthen Social Security is long overdue. By acting now, we can reduce the cost of restoring Social Security for our children and our grandchildren. By increasing the return earned on Social Security surpluses, we can make the transition to a better system cheaper and easier. The Retirement Security Act is my proposal along with my eight cosponsors to move forward.

Mr. Speaker, last week the Congressional Budget Office released their new projections on the budget and the economy. I commend the reading to my colleagues. Projected deficits, overspending, for 2003 is $401 billion and if you include what Congress is borrowing from the Social Security Trust Fund it amounts to $562 billion. For next year (2004) the on-budget deficit is $644 billion. Deficit spending means future tax increases.

I submit for the Record, Mr. Speaker, an article, in the Investor's Business Daily, by Stephen Moore, President of the Club for Growth.

Washington's Biggest Deficit Is the Shortfall of Courage

(By Stephen Moore)

The new estimates by the federal budget office that the

budget deficit this year will reach $400 billion and next

year will reach $500 billion should be a major source of

embarrassment to the Republicans in Washington--assuming they

have any fiscal conscience left to embarrass.

President Bush and Congress have simply refused to make

fiscal choices--they have cut taxes, increased the military

budget, the foreign aid budget and increased social spending

all at the same time. Now we are swimming in red ink.

Next month they are set to enact a $460 billion Medicare

bill to provide drug benefits to the wealthiest age group in

America. This will be the biggest new entitlement program in

25 years.

The tide of red ink will rise even higher, with economists

at the National Center for Policy Analysis suggesting that

the debt from this program could exceed $3 trillion over the

next 50 years.

Should Be Ashamed

The new Congressional Budget Office numbers gloomily inform

us that in Bush's four years in office, the budget will be up

by $500 billion. That's a bigger increase than the amount the

budget grew in Bill Clinton's eight years in office. It's

hard to imagine that the budget would grow that fast even if

Carol Moseley Braun had been elected to the White House.

There's also no hint that the GOP has been chastened by the

enormous deficits it is responsible for or the meteoric rise

in spending.

Example: Rep. Mark Kennedy of Minnesota is now fighting a

lonely battle to try to trim the cost of the upcoming highway

bill that is slated to have a cost of about 50% more than the

last bloated highway bill.

I have said it before and will say it again: This is fiscal

child abuse. Passing on costs to future generations for

today's wasteful government spending is an assault on the

financial well-being of our children. Conservatives can no

longer apologize for the Republicans' miserable financial

mismanagement. They should be infuriated by it.

I believe that Bush has been a star when it comes to

enacting pro-growth tax changes. The tax code has taken a

pro-investment, pro-worker direction through cuts in the

death tax, the capital gains tax, the dividend tax and the

income tax rates.

Bravo. Bush is absolutely right that the first step to

getting the deficit under control is to get back on high

economic growth trajectory. And tax rate cuts will certainly

help achieve that faster growth.

Don't believe a word of the Democratic whine from

presidential wannabes like Dick Gephardt and Howard Dean that

if only we hadn't cut taxes, the budget would be under

control. That's a fantasy.

Without the tax cuts, the budget would still be in huge

deficit and the budget would have probably grown even more

recklessly.

Ignored Deal

A fascinating new study was just released by the House

Republican Study Committee under the able leadership of Rep.

Sue Myrick of North Carolina. The RSC shows that if Congress

had simply lived under the spending limits set forth in the

1997 budget deal agreed to by Clinton and the Republicans in

Congress, the budget would be balanced today--even with

Bush's tax cuts.

Meanwhile, my own budget analysis shows that every Congress

since 1994 has accelerated expenditures at a faster pace.

Conclusion: It's the spending, stupid!

There's a spirited debate in Washington about how the

budget deficit impacts our economy. Some say deficits cause

inflation and higher interest rates. Maybe so, but there's

little evidence of that effect.

Some say interest payments on debt crowd out other

spending--which may be true, but if it is, that's a good

thing, because it constrains the congressional spending

appetite.

My belief is that budget deficits are primarily harmful

because they make it too easy for politicians to spend money

now and then pass the bill to taxpayers later. And many of

those future taxpayers are too young to vote now, so we have

an unrivaled case of taxation without representation.

No free Lunch

The ultimate blame for the enormous mushrooming of deficit

spending ultimately rests with the White House. The buck

simply doesn't stop at this president's desk. Bush wants more

guns and more butter, and wants to pretend that no one will

ever have to pay for the profligacy.

But Milton Friedman taught us years ago that ``there ain't

no such thing as a free lunch.'' Government spending comes

out of somebody's hide--eventually.

What' reprehensible is that the Republicans now say in

unison: Let the 2-year-olds pay for it. And someday they

will. This is the coward's solution. A balanced budget

requirement with an expenditure limitation is probably

necessary because the biggest deficit in Washington these

days is the deficit of courage.

Mr. Speaker, I thank the gentleman for yielding me time.

I will do a Special Order tonight on Social Security, that we need to deal with Social Security. And maybe it should be made clear to everybody what the motion to instruct does is in effect saying that those individuals that do not pay income tax should still have the child tax credit. I wonder if there might not be another solution.

In my Social Security bill that I am introducing next week, I say for those private investment accounts that are safe investments, and we will not get into the debate on whether that is advisable or not, but what I do is for

those individuals making less than $34,000, I add money to their personal retirement fund that they own to help give them a chance to accrue increased benefits that is going to give them maybe even a better income and retirement than they had in their working years.

So maybe instead of suggesting we should have a child tax credit relief for those individuals that do not pay any income tax, maybe we should be talking about some relief for those low-income individuals paying into Social Security. Because after all, 75 percent of Americans working now pay more in the Social Security tax, the FICA tax, the withholding tax than they do in the income tax. So I think rather than confusing the issue saying let us give an additional, you might call it, some people would dislike having it called a welfare payment, but if it is for individuals as an income tax rebate for individuals that do not pay any income tax, then it could be conceived that way. So I wonder if maybe it is not a more fair and reasonable debate for those 75 percent of Americans who pay more in the FICA tax than they do in the income tax to talk about reducing their FICA tax and still giving them some kind of credit for retirement.

So I oppose the motion to recommit because I think it confuses the issue.

Mr. Speaker, tonight, while we discuss issues, there are two global forces proceeding on a collision course. The first is the aging of society. This does not mean that each one of us is getting older, which is true, but rather that the elderly population is increasing more rapidly than the population as a whole. The second is that Social Security systems which provide most elderly people financial support are not sustainable as they are recently structured because as people are getting older the birthrate is also decreasing.

The paths of these forces ultimately will affect most countries of the world, both developed and lesser developed. The wages of employees and workers will be going down and the security of the elderly and the people's very economic well-being will be disrupted.

I would suggest, Mr. Speaker, that much is at stake and the challenges are real, but the opportunities are also unprecedented. As few as 6 years ago it was very unpopular to discuss Social Security and the problems of the solvency of Social Security and the fact that Social Security was going broke because it was so, for lack of a better word, demagogued in political campaigns.

When I introduced my first Social Security bill, 9 years ago now, my opponents in the next election said, well, the gentleman from Michigan (Mr. Smith) is trying to harm Social Security and your Social Security is in danger. And of course seniors, better than half of whom depend on Social Security for over 90 percent of their retirement income, were concerned. And so it took a lot of speeches on my part, I gave 200 speeches in my district in my first 4 years in Congress, explaining what the problems of Social Security are. So the people in the 7th Congressional District of Michigan understand the charts that I am going to go through tonight and the predicament that Social Security faces and the fact that it is going to be insolvent very shortly.

Social Security is a pay-as-you-go system. And unlike privately invested savings accounts, where contributions are invested in wealth- producing assets for retirement, Social Security benefits, the taxes that come in to pay your Social Security, are immediately sent out as benefits. So it is a generation transfer of wealth. Younger workers today are paying in their FICA tax, their Social Security tax, and almost immediately by the time it gets to the Social Security Administration that money is sent out in benefits for existing retirees.

And of course it is sort of like a chain letter. If you can imagine, government is saying, well, look, you pay to the names at the top of this list, you add your name to the bottom of the list, and then in later years, all of the people under you on that list will be sending you money. Well, the success of a pay-as-you-go system like Social Security is predicated on the fact that there is going to be a growing worker population, or at least the worker population as a percentage of the number of retirees is not going to dwindle. And of course right now the number of workers per senior in many countries of the world is going down.

We can talk about the extreme problems that are now facing Japan and Italy and France and Germany. In France, for example, Mr. Speaker, their payroll tax in France is 51 percent of the paycheck that they earn. Now that means that the company is deducting that 51 cents from their pay, and what they cannot deduct from the pay because they cannot hire employees, then they have to increase in the price of their product. So two things happen: the worker earns less than they might otherwise earn and the price of the product goes up. So that particular company is less competitive than other countries that do not have that kind of huge burden of accommodating their senior population.

Germany is approaching a 40 percent payroll tax deduction. In the United States we have a 15 percent payroll deduction. We have 12.4 for Social Security and the remainder is for Medicare and Medicaid, the Medicare part A and Medicare part B.

I put this first chart up to sort of review the history of the United States and how Social Security first got started. We went through the very severe depression of the late 1920s and early 1930s, and Franklin Delano Roosevelt said, look, there needs to be some kind of a forced savings program so that old people do not have to go over the hill to the poor house and live in poverty. There should be some kind of security for these people. So he suggested a forced savings plan while people were working, to take some of those earnings and, in effect, put it aside so we had that social security, those benefits that could be paid out in retirement.

When Franklin Roosevelt created the Social Security program over 6 decades ago, he wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand in hand with personal savings and private pension plans.

Researching the archives of some of the debate in the House and the Senate was very interesting. Back in 1934 and 1935, as it turned out, the Senate proposal, and of course what we do here is the Senate passes one bill, the House passes another, then it goes to conference committee for the final compromise before we send it to the President. The Senate said, look, it should be privately owned accounts. We are going to force people to take a portion of their earnings and put it in a savings account, an investment account, for their future retirement, but it is going to be owned by the workers. The House, on the other hand, passed legislation that suggested that, look, government would handle all of this money coming in and then government would keep that money and pay it out when the time came for these retirees to retire.

In the conference committee, the argument from the House was very strong. They said, look, we just went through this terrible depression; we need government to control this money instead of having individuals maybe investing in something they should not invest in. So let us have the government control it. So it ended up with a compromise of what we have today as Social Security with workers paying into the Social Security System, the government taking all this money, and then paying it out when somebody would retire.

Now, since 1983 when we had the huge tax increase on Social Security, the Greenspan commission said well, Social Security is going broke, we are going to cut benefits and increase taxes, so we had a huge tax increase. Since 1983, there has been extra surplus money coming in from the FICA tax, and part of the problem is instead of that extra surplus money being invested and gaining returns, this Chamber, the Senate, the President, has spent that money every year for some other purpose. In the pretense of having a lockbox in a couple of the good years, we borrowed that money from Social Security and we paid down some of the public debt, the Wall Street debt, but we still used it. It was gone instead of being invested.

I wanted to show a pie chart of how we spend the revenues coming into the Federal Government to demonstrate just how big Social Security is as a total part of total government expenditures that are now approaching $2.2 trillion. And I am not sure Members can read the numbers, but Social Security is 22 percent of the total Federal budget compared to defense. Even with Iraq and Afghanistan at 18 percent, other domestic discretionary spending, all of the 13 appropriations bills which go through this Chamber that we spend half the year arguing about, those 13 appropriations bills for discretionary spending only amount to 19 percent. The point I am trying to make is Social Security is the largest part of the total budget and the problem is that if we have seniors living longer, that part of the pie is getting bigger and bigger.

If we add prescription drugs to Medicare, then the green-eyeshade predictors are predicting that within 50 years Medicare will be a larger expense than Social Security, but essentially taking up to over half of all Federal revenues spent for Social Security and Medicare.

Because Social Security solutions are complicated by other spending, I want to demonstrate with this chart what is happening to Federal spending. It was President Reagan that said we are spending worse than drunken sailors and the sailors were offended, but government has been growing at 2 and 3 times the rate of inflation, so government is getting bigger and bigger. And we are doing that not with tax revenues coming in, because it is unpopular to raise taxes, so it is sort of a tricky system which has been devised which will simply borrow the money so people back home cannot really see that that extra borrowing affects their lives, nothing like what they see when they pay their tax bill, so we have continued borrowing. So the debt of this country is now growing very rapidly. We now have a debt of $6.8 trillion, and the total debt is approaching $10 trillion in the next 10 years.

This middle green line is the debt held by the public. That has been going up. We had a little downside during the good years of 1999 and 2000 and 2001, but even that is going to continue to increase. But the dramatic increase is the bottom purple line, and that is the amount that we are borrowing from Social Security. So we continue to borrow from Social Security, and that means that the total debt, what we are borrowing from Wall Street, and now so much of that borrowing is from other countries. Because of our trade deficit, they invest their money in this country and now they own more of this country than I think we should be comfortable with, but that is another debate. But the total debt of this country is the sum of what we are borrowing on Wall Street plus what we have borrowed from Social Security, and it is approaching $10 trillion.

The Congressional Budget Office just made their predictions last Friday which is that for this year, 2003, the deficit spending, how much more we are spending than what we are taking in, if we include what we are borrowing from Social Security, is $560 billion in 2003, $640 billion in 2004.

Is that bad? Is that a lot of money? Maybe putting it in perspective, what are we, 227 years old as a country. In the first 200 years of this country, we amassed a debt of $500 billion, and now we are going over $500 billion deeper in debt every year. I think it is important to remember that those current taxpayers and citizens do not feel the pain of this extra borrowing and extra debt. The deficit is how much we overspend in 1 year over and above the revenues that are coming in, and debt is the accumulation of those annual deficits. But debt and deficit is the promise of future taxes. Who is going to pay these future taxes? It is our kids and grandkids that we are imposing this burden on, saying we think our problems are so great today that we are going to borrow this money that you have to pay back somehow in future years because we think our problems

are so important today that we are going to make you pay back the cost of this overspending that this Congress, this House, this Senate, this President, the last President, the President before him, have decided it is reasonable to put you deeper in debt.

Right now every man, woman, and child in this country owe over $26,000. A baby is born, that baby has a debt of $26,000 burden for the rest of his life that sometime is going to have to be accommodated.

Here is my one-glance chart. The red means how deep we are going to be in trouble with Social Security in future years. The short purple- blue here is the surplus, the extra money, the money that is greater than the benefits being paid out that is coming in in FICA taxes and Social Security taxes right now. And the only reason again that we have this extra amount coming in, as it turns out it was a mistake in 1983. They calculated the increased tax on Social Security that was needed. They calculated higher than they actually needed, so we have had huge surpluses coming in because those surpluses are going to run out simply because the baby boomers are going to start retiring in the next few years, and those baby boomers that are at the top of their earning, paying in maximum Social Security taxes, are going to go into the receiving side of Social Security and taking out maximum benefits.

It is a tremendous challenge. The unfunded liability is estimated between $9 trillion and $10 trillion today. If we are going to keep Social Security solvent for the next 75 years, it would take between $9-10 trillion today to put into an investment fund to accommodate the shortage of revenues as opposed to promised benefits.

This chart represents the problems of fewer workers being responsible to pay the retirement benefits of our retirees in this country. In 1940 there were 38 workers working for every person over age 65. By the year 2000, it was three workers. The projection by the actuaries at the Social Security Administration is that by 2025, there will only be two workers working and paying in their Social Security tax for every retiree. If we are to give those retirees the same amount, you can see that taxes have to be increased. And so I have another chart that is coming up pretty soon on how every time we have been in trouble in this country since we started Social Security, every time we started running low on funds, we increased the tax rate or the tax base, how much the tax rate is on so many dollars that you might earn.

This is not a new situation in terms of knowing it was a problem. Let me read you a few quotes, starting with 1991 from the former commissioner of Social Security, Dorcus Hardy, at that time. He said, and I quote:

``The crisis is coming fast in the lifetime of a few already retired and of almost all those now under age 55. The stakes are high, trillions of dollars.'' That is 1991.

The next quote is from 1994: ``Failing to take prompt action on Social Security will burden our children and our grandchildren with benefit cuts and crippling taxes.'' That was Representative Nick Smith. When I came to Congress in 1993, I already had my first Social Security bill. So every 2-year session I have introduced another Social Security bill. Since 1994, they have all been scored by the Social Security Administration to keep Social Security solvent. I came to Congress and went on the Budget Committee, in my first year, freshman year in Congress, I introduced a budget that balanced the budget for this country because I felt so strongly as a farm kid from Michigan that government should act like we ask families to act, that they cannot just go deeper and deeper into debt and never pay it back. Somehow there has to be some kind of a plan where eventually you start paying back all the debt you earn. Right now we have the interest on the debt, if we were to go back to that pie chart, is approaching $300 billion, but this is at record low interest rates. If interest goes back to normal, then the servicing of that debt, the interest payment on that debt, is going to almost be a much more dramatic part of the whole Federal Government spending.

And what do we do to pay the interest on that debt? Do we just simply borrow more money, pretending that sometime in future years our kids and our grandkids will magically come up with the productivity and the competitiveness internationally to pay off this debt that we are accumulating today? I think we should be ashamed of ourselves.

I get off the track here, but let me go through a few more of these quotes which I am trying to simply demonstrate that we have known for a long time that it has been a problem. This is in 1996 and it is the former Secretary of Commerce and the Concord Coalition President, Peter Peterson: ``Will America grow up before it grows old? Will we make the needed Social Security transformation early, intelligently and humanely or procrastinate until delay exacts a huge price from those least able to afford it?''

1998: ``We face a crisis in the Social Security system and we can no longer wait to put it on a sound footing. We need to move from the unreliable pay-as-you-go system to one based on benefitting from real investment.'' That was representative Tim Penny, Democrat from Minnesota, 1998.

In 1999: ``Time is the enemy of Social Security reform and we should move without delay.'' Actually that came from a bipartisan Social Security task force that I chaired where Democrats and Republicans agreed that we cannot delay and put off any longer a solution to make Social Security solvent because we knew and Americans know that Social Security is an important program to so many Americans, current and future retirees, that we simply should not overlook it.

I just am so discouraged that there has been little reaction from the House or the Senate in developing solutions to Social Security. By my count, there have only been 26 Members since I came to Congress in 1993, only 26 Members that have signed on to the Social Security solution bill that would keep Social Security solvent.

Let me move ahead with the charts. Insolvency is certain. We know how many people there are and we know when they are going to retire. We know that people will live longer in retirement. We know how much they will pay in and how much they will take out. Payroll taxes will not cover benefits starting in 2017 and the shortfalls will add up to $120 trillion between 2017 and 2075. $120 trillion over those years is the same as putting that nine to $10 billion in a savings account today.

If we are to increase taxes to cover these deficits, again that means that the taxes come out of the hide of those workers for less income or it means higher prices that that company charges when they sell their products. So somehow people are paying that tax. Doing nothing means tax increases of some kind in the future.

I thought this was a fun chart, Mr. Speaker. This is how many years it takes over the past 60 years that you have to live after retirement to break even on the Social Security taxes that you have sent to government. If you were lucky, in 1940 since that was just the beginning, you could get back all you and your employer put in in 2 months. By 1980, you had to live 4 years after retirement. In 1995, you had to live 16 years after retirement. It keeps going up because we keep over these years increasing the taxes that you pay in, so you are paying in more money, benefits are not increasing proportionally that much so you end up having to live longer to break even on Social Security. The purpose of this chart is to try to start sending the message that Social Security is not a good investment for retirement. By 2015, it goes to 26 years that you have to live after you reach 65 to break even on the money you have sent in to Social Security.

Announcement by the Speaker Pro Tempore

Mr. Speaker, I will not take all the time. I will cut my speechmaking down a little bit, but allow me to go quickly through these charts. If you know everything that is on these charts, then I would suggest, Mr. Speaker, the people that might be watching would be more informed on the problems of Social Security than probably many Members of the House and the Senate.

The Social Security trust fund, when I started making my 200 speeches in my district to explain Social Security, people thought if government would just keep its fingers off the Social Security trust fund, not taking that surplus money, that Social Security would be okay. This chart represents how much is in the trust fund, how much government has borrowed and owes to the trust fund, government does not know how it is going to pay it back, but on the books government owes $1.3 trillion to the Social Security trust fund. The shortfall that we talked about earlier between nine and $10 trillion is the shortfall that we need today in an investment account receiving interest rate returns to accommodate the shortfalls in Social Security. By shortfalls, I mean how much is needed over and above the dollars coming in from the FICA tax.

A system stretched to its limits. Seventy-eight million baby boomers begin retiring in 2008. Social Security spending exceeds tax revenues in 2017. And Social Security trust funds go broke in 2037. What that means, Social Security trust funds go broke, that is assuming, and I think it is a fair assumption, that somehow government is going to borrow more money or reduce benefits to pay back, but eventually it is going to pay back what it has borrowed.

The challenge is where does that money come from? Do we lower benefits to save some of the money? Do we lower spending on other programs, or do we increase the income tax? Do we increase user fees, or do we increase the payroll tax?

This is an interesting chart, Mr. Speaker. The real return of Social Security is less than 2 percent for most workers, and it shows a negative return for some compared to over 7 percent of the market. If they are very low income and they do not have good food and they do not have the kind of health care they should, then often they are going to die before age 65. So they pay in money, and then they do not get that money back because they do not reach 65. The average return is just under 2 percent, about 1.7 percent, but the Wilshire 5000 index, an index fund of 5,000 of the leading stocks in this country over the last 10 years, and that includes the last 3 bad years of the Dow in the stock market, the average for the Wilshire fund over and above inflation is 7 percent. So is there some way that we can decide that here is some kind of a safe investment, it is going to be in the worker's name so that government in these cases, in the cases of individuals that might die before they reach 65, that money still goes into their estate to go to whoever they choose that it might go to rather than government saying they died too early and they do not get anything.

Social Security is a challenge. We have got to face up to it. I went over to the White House a few weeks ago. I talked to the President about it. I talked to Karl Rove about it. They agreed that it has got to be one of the main issues that we talk about in next year's campaign. And so, Mr. Speaker, I would hope that everybody that is interviewing candidates that are running for the U.S. House of Representatives or running for the United States Senate or running for President to say, look, what are your plans to save Social Security? And do not go along with this hogwash rhetoric of saying, boy, Social Security is important and we are going to save it. Ask a follow-up question: How are you going to do that? Do you know that Social Security has a liability right now of $10 trillion? Where are you going to come up with the money? How are you going to do that?

So I think it is important that we pin every candidate down to make them develop and come up with a plan that is going to save Social Security instead of simply glossing over with rhetoric that it is an important program and, by gosh, we are going to save it.

The U.S. trails other countries in saving its retirement system. In the 18 years since Chile offered PRAs, personal retirement accounts, 95 percent of Chileans have created accounts. Their average rate of return has been 11.3 percent a year. Among others, Australia, Britain, Switzerland offer personal retirement accounts.

There is no Social Security account with their name on it. I like this quote from the Office of Management and Budget: ``These (trust fund) balances are available to finance future benefit of payments and other trust fund expenditures but only in a bookkeeping sense. They are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.''

There have been two cases that have gone before the Supreme Court of the United States with people that did not receive Social Security benefits but they said, Look, we paid into Social Security, we deserve those benefits. In two different decisions, the Supreme Court of the United States said there is no entitlement to Social Security benefits just because they paid into the Social Security system. So there should be an acknowledged, a realized danger that if worse comes to worst, government can say we are not going to pay all those benefits because we do not have the money and after all we are doing all these other important things; so they need to sacrifice with the rest of the Nation. But if they are in their own personal accounts and if we go to a fixed contribution with guaranteed returns, the bill I am going to introduce next week, and my press conference is in room 2200 over in the Rayburn building announcing the bill that I am going to introduce on Social Security, it has been scored by the Social Security Administration and it is keeping Social Security solvent forever, and takes the kind of actions of making it optional if one wants to have a private savings account earned by them as the worker; but it also guarantees that they will get as much back as they would out of Social Security for people who choose not to invest in personal savings accounts.

Economic growth will not fix Social Security. We hear quite often when the economy gets back on its feet, then there is no problem. The problem is Social Security benefits are indexed to wage growth; and when the economy grows, workers pay more in taxes but also will earn more in benefits when they retire. So temporarily we have more taxes coming in, but because there is a direct relation between the earnings that they have and the taxes they pay in to the benefits that they eventually get out, we dig a deeper hole later. Growth makes the numbers look better now, but leaves a larger hole to fill later.

I think the important point, Mr. Speaker, is that we have got to do something. It is just unconscionable, and I feel embarrassed that I have not been able to excite more of our Members. I mean, there are important things going on from Iraq to Afghanistan to how do we deal with prescription drugs and Medicare. But to put off and not face up to the largest financial crisis that we see down the road that is going to affect such an important program for Americans is not fair. It is not fair to our kids. It is not fair to retirees. It is not fair to our workers. The biggest risk is doing nothing at all.

Social Security has a total unfunded liability of over $9 trillion. It looks like about $9.6 trillion. The Social Security trust fund contains nothing but IOUs. To keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. Probably politically we will not cut benefits. That means that the other option is to increase taxes on somebody; but here again our businesses, we are losing our manufacturing base. What bothers me even more as chairman of the Subcommittee on Research of the Committee on Science is we have lost 500,000 jobs in the last 3 years, the high-tech jobs; and if we start putting an extra 50 percent price on the products that we are selling trying to compete in the world or if we cut the pay of workers, either way it has a tremendous effect on our ability to compete.

Increasing payroll taxes, I suggest, is not the answer. In 1940 the rate was 2 percent on a base of $3,000; so one could pay $60 a year. By 1960 we were running out of money again; so we tripled the rate to 6 percent on the first $4,800 base for $288 a year. In 1980 we upped it to 10.16 percent of the first $25,900 for a $2,600 possible tax per year. In 2000 we upped it to 12.4 percent on $76,000, but the $76,000 was indexed for inflation; so now it is 12.4 percent on the first $84,000. So here again just to demonstrate that what we can expect in

the future if we continue to put off Social Security, the longer we put off the solution, the more drastic the solution has to be; and I know that because this is my fifth Social Security bill that I am introducing next week.

I thank our pages this late at night. Let me just wrap this up. Our two pages working this late in the evening, one from New Jersey and one from Arizona. So I thank the pages, and I am about to conclude.

Seventy-eight percent of families pay more in payroll taxes than in the income tax. The percentage of families that pay less in payroll taxes than income taxes is 22 percent, so the reciprocal is 78 percent. We have raised Social Security taxes so much on the workers that 78 percent pay more in the Social Security tax than they do in the income tax.

Personal retirement accounts, they do not come out of Social Security. They become part of your Social Security retirement benefits. A worker will own his or her own retirement account and is limited to safe investments that will earn more than the 1.9 percent paid by the Social Security. Actually it is 1.7 percent.

The findings of the House Committee on the Budget Task Force on Social Security that I chaired several years ago, 4 years ago, after we heard all of the testimony over a period of a year, we all agreed, Republicans and Democrats, that we have got to do something, that Social Security is going broke, that we need to have some guidelines to guide us in how we revise Social Security, and the guidelines essentially boiled down to three statements. Number one was that we should not affect existing retirees; number two, that workers should be able to be even better off with retirement benefits than they are today; and the third proposition is that somehow the changes should not damage our economy in America, but actually improve the economy. That is why savings and investment is so important.

Mr. Speaker, I urge all my colleagues to be prepared when their constituents ask them what are they going to do about solving the Social Security problem.

Mr. Speaker, I move that the House do now adjourn.

The motion was agreed to; accordingly (at 11 o'clock and 52 minutes p.m.), the House adjourned until tomorrow, Friday, September 5, 2003, at 9 a.m.

Mr. Speaker, last Friday the Congressional Budget Office came out with their new economic outlook, and I am somewhat ashamed as a Republican that it does not look very good in terms of what Republicans and Democrats have done in the last several years.

They are estimating for this year, 2003, we are going to run a deficit of $562 billion. That includes the $162 billion we are borrowing from Social Security, but it also considers what we are borrowing from all of the other trust funds. They estimate the deficit for 2004, next year, is going to be $644 billion.

Mr. Speaker, when you realize that it took the first 200 years of this country, the first 200 years, to accumulate a debt of $500 billion and now we are exceeding that every year, we should be ashamed. I am ashamed.

The gentlewoman from North Carolina (Mrs. Myrick) and the Republican Study Committee just issued a report that said if Republicans and Democrats and the President had stuck to the commitment that we made in 1966, we would have a balanced budget today, even with the tax cuts.

Mr. Speaker, Social Security. I am disappointed that there are only about 22 people that have ever sponsored legislation to help solve the Social Security problem, probably one of the greater challenges that we have faced in this country as far as financial.

Certainly I yield to the gentleman from Hawaii (Mr. Abercrombie), my friend.

Mr. Speaker, the gentleman from Hawaii and I discussed, maybe it was 8 years ago, the problems of Social Security and the problems that we were pretending somehow that taking all the Social Security surpluses and spending them for other programs was not being something considered in this body or in the White House. The challenges of Social Security are real, and as short a time ago as 5 years to 6 years, it was considered very unpopular to discuss any changes in the Social Security system.

Certainly the fact that we have an aging population and a slowing down of the birth rate, in fact, many countries of the world, and the United States is approaching that situation, where we are going even below the zero sum growth. If a mother has an average of something like 2.2 children, then on average it is going to replace the mother and the father. But many countries of Europe, most countries of Europe, and now the United States, are approaching a situation where we are not reproducing a workforce that ultimately is going to have to pay Social Security benefits, and that is because we have a Social Security system that is referred to as ``pay as you go.'' That means we tax the existing workers of this country and their taxes immediately are sent out in benefits to recipients.

And to demonstrate how much Social Security has grown as far as a percentage of the total budget, I have drawn this pie chart; and that shows that Social Security is now the largest piece of pie, the largest portion of total Federal spending, representing 22 percent of total Federal spending. And defense, even with the increased challenges that we are now facing in Iraq and Afghanistan, Social Security is still a much higher cost than defense. And of course we see other entitlements. All other entitlement programs only represent 14 percent, but we should not overlook Medicare and Medicaid. Medicare it allows at 11 percent; but if prescription drugs are added to that program, the estimates are that the cost of Social Security and Medicaid will soon even be greater than Social Security.

So the question is what do we do about it? How do we come up with money? What do we do in an aging society? An aging society does not mean that each one of us is growing older, which is true, but rather that the elderly population is increasing more rapidly than the population as a whole. The second is that Social Security systems which provide most of the elderly people's financial support are not sustainable as they are presently structured. All we have seen in some other countries, what we have seen in most States of the United States, is moving from a fixed benefit program to a fixed contribution program.

There are three goals that I think we need to pursue in terms of making any changes in Social Security. Number one, that current retirees do not have a reduced benefit program. Number two, is that future retirees, our young workers today, can expect even a better retirement in terms of guaranteed money coming in during their retirement years than exist today for the current population. The number three requirement is that it should be a program that does not jeopardize our economy but encourages economic growth.

The next chart represents what has been happening in the Social Security. This past Friday the Congressional Budget Office came out with their new estimates of the economy and projections for our deficit spending in this country. Their projection was for this fiscal year, 2003, we would be having deficit spending, spending more than we are taking in, of $562 billion. 562 billion includes all of the surplus money that is coming into the Social Security trust fund. Next year, they are projecting that we are going to have deficits, spending more than we are taking in, of $644 billion. And I just say in relation to Social Security, we cannot continue to expand the spending of the Federal Government and at the same time not deal with the unfunded liability of Social Security, the

unfundability of our other programs, Medicare, Medicaid, the promises that we have made to military retirees, the promises that we have made to civil servants for their retirement.

This chart shows the projections of where we are going in deficits, and deficits are the annual overspending. Debt of this country is the sum or the accumulation of that annual overspending to how much this country has gone in debt. We have a law in this country that says we cannot increase how much the government goes into debt unless we have a law that ups that amount and it is passed by the U.S. House of Representatives, it is passed by the Senate, and it is signed by the President. We have been doing that on a regular basis, and now we sort of hide it into the inner chapters of some budget resolution that automatically increases how much we are allowed to go in debt.

But, Mr. Speaker, nobody should misunderstand what deficit spending and debt does in terms of the obligation to our children and our children's children, and deficit spending and debt are the promises of tax increases in the future. Just let me say, to pretend that our problems today are such that it justifies taxing younger workers and kids that are not even born, pretending that maybe their problems are going to be less than what we have today is not only unfair, it is unconscionable. This simply says that gross Federal debt by 2013 is going to be approaching $10 trillion. Today it is $6.8 trillion, rising very rapidly at the rate of $562 billion this year and another $644 billion next year.

This is sort of a red and blue display of what is happening in Social Security. The short very small bluish-purple area is surpluses that are coming in from Social Security; and we have surpluses coming in from Social Security because in the past history of Social Security, since it started in 1935, has been every time we are shy on money to pay out promised benefits or we increase promised benefits because it is politically popular, we raise taxes; and in 1983, under the Greenspan Commission, we dramatically increased taxes and reduced benefits. And so we have a short-term surplus that is going to be coming in and available. As we see, it is diminishing until about 2017, and then by 2018 we dramatically go into the red, and the red means that there are not enough tax revenues coming in from our payroll taxes, taxing workers in this country to pay promised benefits to retirees.

The coming Social Security crisis. Our pay-as-you-go retirement system will not meet the challenge of demographic change, and this represents workers paying into the system for each one retiree. And of course as we age, as we are living longer, and the wealthier nations do live longer, the more impoverished nations die at an early age, and actually those developing countries actually have a higher birth rate. So there is a greater replacement. But in wealthy nations like the United States, like most of Europe, they are having a birth rate or a replacement that means that there is going to be a decline in the birth rate and an increase in the number of years that people live and therefore it is going to take more workers working, paying into the system to accommodate every one retiree.

So we go from 50 workers in 1940 working, paying in their taxes for every one retiree. By the year 2000, it is three workers. The estimate is by 2025, there are going to be two workers for every individual over 65 years old. So a greater obligation. So what we have done in the past is continue to reduce benefits or increase wages. And as we started out with what I think should be the goals, we should not reduce the benefits to current recipients of Social Security. Insolvency is certain. I mean, we are not guessing. We know how many people there are, and we know when they are going to retire. We know that people will live longer in retirement. We know how much they will pay in and how much they will take out. Payroll taxes will not cover benefits starting in 2017, and the shortfalls will add up to $120 trillion between 2017 and 2075. Between 2017 and 2075, we are going to be short $120 trillion to pay benefits. $120 trillion is going to be needed over and above what comes in in Social Security taxes.

Now, just to put that in comparison, our annual budget is a little over $2.2 trillion, a huge financial challenge for this country and this Congress. Yet I am so disappointed that we have known that this problem existed since 1994, very accurately in our projections from the actuaries at the Social Security Administration, and yet in my count there are less than 22 Members of Congress in both the House and the Senate that have ever signed on to a bill that can keep Social Security solvent. It should disturb us all that we have been unwilling to face up to probably the greatest challenge that we have, and I think all of us agree that Social Security is a program that has served us well and served so many seniors in their retiring years.

In most developed countries they are dealing with similar challenges for an aging population. Take Japan or Germany or France or Italy. In France, the payroll tax is 51 percent. Can you imagine? Out of every dollar you make as a worker, now you are taxed 51 cents on that payroll dollar in France. Germany is approaching that amount. A little over 40 percent tax in Germany to accommodate their aging population.

What this does, of course, it puts businesses at a competitive disadvantage. If businesses have to in effect pay this Social Security tax or in effect pay less wages to the workers because they have got to come up with the Social Security tax or the senior retirement tax that is going to accommodate seniors, then it makes those particular companies in those particular countries less competitive.

So my plea is, let us not allow this to happen in the United States. Let us start moving to a system that is going to protect current retirees, that is going to make existing young workers even better off than their fathers and grandfathers. It is going to make sure that it strengthens our economy in the United States and it does not weaken it.

This is another example of what a bad investment Social Security is, because this chart represents how many years you are going to have to live after retirement, assuming you retire at 65, how many years you have to live after retirement to break even on the money you and your employer have sent in to the Social Security system. It was not bad in the early years, when we were first getting started, but by 1995 you had to live 16 years after retirement. By 2005, it is 23 years. Then by 2015 it is projected you have to live 26 years after retirement is projected. That is just to break even on the investment.

So is there a better way? My suggestion is there is a better way. Some people have suggested that if government would just keep its fingers out of the pot of the Social Security trust fund, everything would be okay.

We should keep our fingers out of the pot of the Social Security trust fund, and that should be invested to make sure Social Security stays solvent instead of Congress and the President spending all of the surpluses. Of course, that is what we have been doing for the last several years, is taking all the Social Security surplus and spending it on other government programs. So when we talk about prescription drugs or some other good sounding programs, what we are doing is borrowing that money from Social Security, or borrowing it from other areas the government can borrow from, like Wall Street, to pay for expanded programs that this Congress comes up with.

Back to my chart. The trust fund is short $1.3 trillion that we owe Social Security. The shortfall after repayment of the trust fund, the shortfall, if we came up with the money right now, is $10 trillion. Remember earlier I mentioned $120 trillion over the next 75 years? What we need in today's dollars to put into an investment account is $10 trillion. In other words, the unfunded liability of Social Security, some estimates are $10 trillion. Some estimates are $9 trillion.

The system is stretched to its limit. Seventy-eight million baby- boomers begin retiring in 2008, Social Security spending exceeds tax revenues in 2017 and the Social Security trust fund goes broke in 2037, although the crisis is going to arrive much sooner. When the crisis arrives is 2017.

Where do you come up with the extra money? Some people suggest, well, if

we can get the economy going, or all government has to do is pay back what it has borrowed from the trust fund. That will keep us going until 2037.

On the economy, the fact is that a stronger economy that results in higher wages has a short-term effect of increasing revenue coming into the Social Security system. But the long-term effect, because of the fact that benefits are directly related, benefits in your retirement years are directly related to the wages and the taxes you pay in on those wages when you are working, means that ultimately it is going to be a bigger problem in terms of the amount of dollars that is paid out. So suggesting that a strong economy will solve Social Security is totally inaccurate.

I like to put in this chart with a picture of Franklin Delano Roosevelt, because he created the Social Security program over six decades ago. He wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand- in-hand with personal savings and private pension plans.

Let me tell you an interesting research item I found as I went through the archives of that debate back in 1934 and 1935. As it turns out, the Senate had decided on private investments in the name of the worker, so that it was the property of the worker. Even though it was restricted and he could not take out that investment until he retired, the Senate decided that that was the best way to go, to allow private required deductions from payroll to go in a fund that was owned by the worker.

The House, on the other hand, said, well, government should run the system and have that extra money available to government, and then be responsible for paying out the benefits in later years.

When it went to the conference committee between the House and the Senate, the final decision was what we have today, and that is government taking all the money that comes in and then being responsible for paying out the benefits. But, of course, over the years what has happened, as there ended up demographically fewer workers in relation to the number of retirees that were promised benefits, the United States on every occasion when they did not have enough money coming in taxes to accommodate promised benefits, is they increased the tax and/or lowered benefits. Usually it was both.

In most countries, issues of the administration have not been fully explored. Most countries do not have the kind of market-based economy we do in the United States. They are not used to having 401(k)s and other investment plans which individuals own and are a little more responsible for some of those investments. But in the United States, we are pretty used to it. Yet we have put off a market-based system for Social Security that can accomplish the goals of more retirement income for the retirees.

I chaired the House Committee on the Budget Bipartisan Task Force on Social Security. We had experts in from this and other countries testifying to the problems of accommodating senior citizens through a government program. The Democrats and Republicans on that task force agreed that something must be done as quickly as possible to change Social Security to keep it solvent, and that privately-owned investment accounts should be one option.

One of the criticisms of private investment accounts was that it would cost too much. The brokers would be charging the individuals huge amounts to keep track of the investments of those individuals. We had testimony from several individuals that it could be as low as one or two cents.

This is the letter I wrote David Walker, Comptroller General of the United States, in which I stated, ``The House Budget Committee Task Force on Social Security recently heard testimony from William Shipman. His firm completed a study that concluded that the administrative annual costs for establishing broadly diversified Social Security personal retirement accounts would equal between $3.38 and $6.58 per account holder.''

I continued in the letter to the Comptroller General, ``If verified, I believe the conclusion will prove highly significant as Congress evaluates plans to modernize the retirement system. It will demonstrate that it is possible to provide meaningful investment opportunities to all Americans for only one or two cents a day. For that reason, I am requesting that the GAO study the methods and conclusions of this report and determine its accuracy.''

What they determined is this was possible, and very likely, if we had indexed investments, such as we do in our Thrift Savings Account that is available to all Federal employees. So arguing that the brokers are going to get rich off of this program or that ``snake-oil'' salesmen will convince some of the investors to invest in bad investments is safeguarded in the Social Security bills that I have introduced over the last 6 years.

Just as a footnote to introducing a bill, let me mention that next Wednesday at 10:30 a.m. in Room 2200 we are going to have a press conference on the reintroduction of my 2003 Social Security bill that has now been scored by the Social Security Administration to keep Social Security solvent, and it meets the three goals that I expressed earlier.

Again, let me demonstrate how bad a savings retirement investment this is by using the existing Social Security system. The real return of Social Security is less than 2 percent for most workers and shows a negative return for some, compared to over 7 percent market return as far as equities.

If you are poor and if you are hungry and, as it turns out, if you are a young black worker, you die before you reach age 65. That means that you pay in for most of your life, but you do not reach the age that you are going to take out and accrue the benefits that supposedly you paid in for.

If we have a private investment account, what I am suggesting in my legislation that I will be introducing next week is you allow 2.5 percent out of the 12.4 percent FICA tax that goes into Social Security to be privately owned. The investments are restricted. There are safeguards in government, oversight of how the money is handled, similar to our Thrift Savings Account for Federal employees and for Members of Congress. But the safeguards can be there.

What this chart demonstrates is that if you are a young worker that is poor, that means you are probably going to die before age 65, or if you are a black worker, which means you are going to die on average before age 65, that it is your money. It can go into your estate for your heirs.

The average again is 7 percent. But the market return, and this includes the last three downside years of the market, the Wilshire Index from 1993 to 2003 had a 7 percent return, real return on equity, a 7 percent return over and above inflation. There has been no 12 year period in the last 100 years where there has not been a very substantial positive return to equity investments, and, if they are diversified, that assures additional safety.

One of the most often talked about solutions for Social Security in the United States and other countries, I represented the United States in a forum in England several years ago where all countries were coming in talking about their problems and potential solutions for accommodating an aging population, most often the suggestion was either reducing benefits or increasing taxes, if you will, sort of like a band-aid for the problem, for temporarily fixing the problem; instead of making a transition from a fixed benefit program to a fixed contribution program, using the market economy especially available in the United States to accommodate even higher returns in retirement for young workers.

I was disappointed that the U.S. trails many other countries in saving its retirement system. In the 18 years since Chile offered personal retirement accounts, 95 percent of Chilean workers have created accounts. Their average rate of return has been 11.3 percent per year. Now, remember, this compares to the 1.6 percent return we are getting on Social Security in America. Among others, Australia, Britain, Switzerland, offer workers their own personally owned retirement accounts.

Let me emphasize with this chart that there is no Social Security account with your name on it. And I

quote from the Office of Management and Budget, ``These trust fund balances are available to finance future benefit payments, trust fund balances, trust funds. They are there to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. There are claims on the Treasury that when redeemed will have to be financed by raising taxes, borrowing from the public or reducing benefits or other expenditures.''

So we have been borrowing from Social Security all of these years. We now owe Social Security a little over $1.3 trillion. The question is where are we going to come up with the money when it comes time to start paying those funds back. What we should be doing now is developing a system where we get real returns from the Social Security taxes coming in, the surplus coming in that is available for real investment with real returns.

Economic growth will not fix Social Security. Social Security benefits are indexed to wage growth. When the economy grows, workers pay more in taxes but also will earn more in benefits when they retire. Growth makes the numbers look better now but leaves a larger hole to fill later. The biggest risk is doing nothing at all. Social Security has a total unfunded liability of over $9 trillion. The estimate when I made this chart is $9 trillion; now it is closer to $10 trillion. The Social Security trust fund contains nothing but IOUs to keep paying promised Social Security benefits. The payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. Let me say that again. It is part of the desperate situation that we are faced with in solving Social Security if we continue to put off a solution.

This Chamber, the Chamber across the Capitol, the Senate, the administration, the tendency is for politicians to not deal with tough problems like solving Social Security until the disaster is upon us. But the longer we put off a solution, the more drastic that solution has to be. I know that because this is my fifth Social Security bill that I have introduced; and every session, every 2 years, it takes a little more in terms of coming up with money to fund the program than it did the 2 years earlier. That is because the surplus for Social Security is running out, and after 2017 there will no longer be more money coming in from taxes than is required for benefits.

If you remember the red chart, that is where very deeply we go into some other form of financing Social Security.

So some people have said, Should we turn Social Security into a welfare program? Should we just make the rich pay in and more greatly reduce or not pay benefits to rich retirees? Well, even the unions have suggested this is a dangerous direction to go because most of us in America think that we are going to make it and to have the government say, look, we are going to mandate that you save for your retirement but if you are successful and work hard and invest, then we are not going to give it to you after all, would decrease the problem for a Social Security system.

It is not working as a welfare system because we are not giving those people that really need it enough, and it is not working as a system to tax the rich simply because we give higher income earners a greater retirement benefit in the end, even though it is very progressive. That means if you are lower income, you are going to make 95 percent of what you were making on average when you were working. However, if you are a high-income retiree making a very large salary, you can get as little as 15 percent on average of what you were making during your working years back as a Social Security benefit.

Here is what we have done. Here is a chart that does not show earlier years. It does not show what some have suggested for future years. But it shows, it demonstrates not the reduction in benefits, and I should make a chart on that, how we have reduced benefits, and you reduce benefits trickily, because if you are a politician you do not want your voters scolding you, so we simply do things like we are reducing the COLA by a little bit or we are increasing the retirement age. Of course, that is what we did in the 1983 program. We said we are going to start increasing the retirement age. That means reducing benefits. Or we are going to index benefits, instead of wage inflation, we are going to index them to CPI, just plain inflation.

You can reduce benefits, but in the long run we need a transition from a fixed benefit program to a market-oriented program that is also going to help the economy.

In 1940 we had a 2 percent tax on the first $3,000 for a maximum tax for any American worker of $60. By 1960 we saw the working population go down in comparison to the number of retirees, and we upped not only the rate but we upped also the base so the maximum taxes for any one year was $288. By 1980 we increased the rate to 10.16 percent on the first $26,000, $25,900; and by the year 2000, the 1983 changes we had indexed the base up to $76,200. Now that based is 84,000 with a 12.4 percent tax.

The next chart shows the number of American workers that pay more in the Social Security tax than they do in the income tax, and that is a current debate. So right now the percentage of families that pay more in the Social Security tax than they do in the income tax is 78 percent. Seventy-eight percent of American workers pay more in the Social Security tax than they do in the income tax. And so to think that we can accommodate this problem with solutions that simply raise taxes on American workers, I think should be out of the question.

Personal retirement accounts, they do not come out of Social Security. They have become part of your Social Security retirement benefits. A worker will own his or her own retirement account, and it is limited to safe investments that will earn more than the 1.9 percent paid by Social Security.

How do we get Congress interested in dealing with this problem? And the reason politicians are not interested in solving Social Security is because if you are a Republican, the Democrats go back home the next election and they demagog the issue saying that I am trying to ruin Social Security. Vote him out of office, and vote me in and I will save your Social Security.

The only way to save Social Security is two ways: either increase revenues or reduce benefits. Maybe a third way is a combination of the two. It is not complicated. We have got to do one or the other, and what I am suggesting is that we increase revenues by a better return on investments.

Findings of the House Budget Task Force on Social Security that I chaired a couple of years ago are that guaranteed return securities and annuities can be used with personal as part of an investment safety net.

So we can have companies that are now willing to offer a greater return than the 1.6 or 1.7 percent depending on how much you earn that is given by Social Security, companies that will guarantee that they will give you better than what Social Security is offering as far as an investment.

A universal Social Security survivor and disability benefit program needs to be maintained. And let me just stress that point. Some people have said, well, Social Security is sort of an insurance policy against getting injured on the job or if you happen to die, benefits for survivors. No suggestion of any Social Security proposal that I or any other Members have introduced do anything to touch the insurance part of that program. The injury and survivor benefit insurance program should be maintained and is going to be maintained.

Congress should consider paying for a portion of disability benefits for workers who have been in the system a short time using monies from the general fund. And I agree. We need to. In fact, the legislation that I am offering next week will have an additional amount contributed by government to their personal savings investment account for workers that are earning less than $34,000 a year. That is so some of these individuals may very well have more money in retirement than they did in their working years.

The six principles of saving Social Security: protect current and future beneficiaries, allow freedom of choice; and freedom of choice, my bill and most every other bill that has been introduced says it is going to be voluntary. You do not have to have private investments accounts you earn, but you have the option of having those accounts. And what we will be announcing at the press conference

next week is we have a provision where we can guarantee a greater return than Social Security is now paying retirees. Makes Americans better off not worse off, it creates a fully funded system, and no tax increases.

This is a challenge that we need to deal with. Because of past demographic realities and in order to pay promised benefits, government has too often responded by either increasing taxes or slowly but relentlessly decreasing benefits. It is not fair to current retirees, it is not fair to future retirees to start reducing those benefits. And it is not fair to current or future workers to say we are going to continue to tax you more because we have not adequately planned for the kind of demographics that we are challenged with in Social Security.

Again, let me reemphasize that a country like France that now taxes 51 percent of what that individual worker earns is simply money that effectively comes out of that business operation and that they have to pay for by reducing the wages they pay to employees or by increasing the price that they charge customers that might buy their particular product. So for the three goals that I think we all should agree on, let us have changes that do not reduce benefits for current retirees. Let us develop the kind of changes that are going to keep the program solvent, that are going to increase the benefits for current and future workers as far as their potential increase in retirement income; and let us have a program that is going to help the economy of the United States.

That means savings and investments, to allow those savings and investments to expand our research efforts and expand the kind of products that we develop that people want to buy and to increase our productivity in this country.

Mr. Speaker, I move that the House do now adjourn.

The motion was agreed to; accordingly (at 9 o'clock and 45 minutes p.m.), the House adjourned until tomorrow, Thursday, September 4, 2003, at 10 a.m.

Mr. Speaker, this legislation is designed to lower the high prices for prescription drugs in this country by allowing Americans to import from twenty-five developed countries including Canada and most of Western Europe. Prescription drug costs are significantly lower in these countries than they are in the United States. Drug companies have been charging more to Americans, I think, because we have been willing to pay.

But it is not right to expect American consumers to subsidize prescription drug prices for other industrial countries. By holding American consumers in a captive market, prices for drugs here have been able to climb an average of 77 percent above prices found in other countries.

Because of the huge difference between what Americans pay for prescription drugs here and what they can pay just across the border, these drugs are already making their way to Michigan by the busload. This bill will simply expand access to increased savings for all Americans and require FDA to ensure the authenticity and safety of these products.

The Medicare Prescription Drug bill we passed last month did nothing to address the skyrocketing costs of prescription drugs, and simply committed the government to picking up part of the tab. Unfortunately, this means that Americans can now get fleeced by these costs as both consumers and taxpayers. Opening up drug prices to an international market while limiting purchases to drugs approved by the FDA and produced in FDA approved facilities will help assure safety and help keep costs down.

Mr. Speaker, supplemental appropriation bills are too often used to fund expenses that can, on average, be predicted. They allow politicians to keep the annual appropriation budgets at a level that is less objectionable to fiscal conservatives. In effect it is a hoodwinking of taxpayers who think that Congress sticks to its budget.

In my eleven years in this House we never have supplemental appropriation bills increase deficit spending and total debt of the government.

A reasonable average of past supplementals should be included in annual budgets as a reserve fund that can be used for emergency or unexpected necessary spending. To do otherwise is not good spending policy.