Floor Statements

Madam Speaker, I would like to address certainly different issues that I think are possibly more serious than a lot of challenges this Congress has faced, this Nation has faced in fact.

This is the 195th birthday of Abraham Lincoln, and in my district Republicans are celebrating Abraham Lincoln's birthday with their annual dinners. And I think of what Abraham Lincoln said in his Gettysburg Address when he indicated that, Can a country of the people, by the people and for the people long endure?

And now I am concerned about the system that we have in the United States where we have so many lobbying groups pushing for more money and a political system where Members of the House and the Senate often are better off and increase their probabilities of getting reelected if they start promising more programs, if they take home pork barrel projects that might allow them to be on the front page of the newspaper or on television and it ends up that they have more publicity if they spend more money down here.

And that has led us into a dilemma of overspending and overpromising. And I have put this pie chart up simply to review how the Federal Government now spends approximately $2.4 trillion in the year that we are budgeting for right now.

We see the largest portion of our total spending pie that represents 21 percent of the total spending of the Federal Government is Social Security. But Medicare, which is now 12 percent, is going to overtake Social Security in terms of the percentage of total spending, total Federal Government spending that it consumes, and that is going to happen within the next 25 years.

Part of it is because we have dramatically expanded the Medicare program to now cover more benefits, including prescription drugs. And there is a problem with prescription drugs because if you are on Medicare and you do not have the proper drugs and you go into the hospital, then Medicare pays for all those prescription drugs while you are in the hospital. So to the extent that some of the new prescription drugs can keep you out of the hospital, it is reasonable to have some help from Medicare to furnish those drugs to keep you out of the hospitals.

But what we have done now is we have expanded the entitlement program in Medicare for prescription drugs without making strong changes to the programs that are going to keep the program solvent. So the actuaries in Medicare are estimating that the unfunded liabilities for Medicare now is approaching almost over $60 trillion. In other words, over $60 trillion would have to be put in a savings account today with returning the amount of interest that would represent inflation plus the time value of money to come up with enough money to continue to pay benefits and to have enough money over and above the FICA tax, the payroll tax that is contributing to the Medicare fund.

As we go around this pie chart, we see that defense is 20 percent, 2 years

ago it was about 18.5 percent. Going into Afghanistan and going into Iraq has increased about 1.5 percent of the budget now dedicated to defense. But still Social Security compared to defense, you see Social Security is much larger. Domestic discretionary is 16 percent. Other entitlements are 10 percent. Medicaid is now 6 percent. We were growing very quickly, and part of that is long-term health care.

So even if you are fairly diligent in saving during your working life and your early retirement years, if you have to go into a nursing home that is now costing between 40 and $70,000 a year, it very quickly uses up those savings, and you have gone from a self-payer to a system of Medicaid.

Medicaid is the health care system for the low income, and Medicare is the health care system once you reach 65 for seniors, and I want to make a point over here at about four o'clock.

You see about 14 percent of that pie in that purple section; that is interest on the debt. Today's debt that is subject to the debt limit in the United States, the 14 percent, is now over $7 trillion. In a few months, we are going to have to again vote in this Chamber and in the Senate, and the President is going to have to sign it, a bill that increases the debt limit of this country.

What does that mean? It means that somehow, we are pretending that our problems today are so great that it justifies us borrowing money from the earnings that our kids and our grandkids have not even received yet. We are borrowing money and passing this increased debt on to them to let them worry about servicing the debt; and right now, interest rates are at record lows.

When interest rates go up, and Alan Greenspan chairman of the Fed has suggested that is going to happen, we know it is going to happen. The 14 percent of the total Federal spending that is now used to pay the servicing of that debt, paying interest, could dramatically increase from two fronts. One is the increased rate that government is going to have to pay to entice people to loan money and buy Treasury bills; and of course, the second is that we are dramatically increasing the debt.

This country from 1776 till now, what, that adds up to about 228 years, it took the first 200 years of this country to amass a debt of $500 billion, and now we are increasing our debt every year by an additional $500 billion. So we are mounting the debt load that we are passing on to the next generation for the next several generations, and it is going to be intolerable if we do not control how much we are overspending, and even more significant is unfunded liabilities.

Unfunded liabilities, Madam Speaker, is what politicians promise that they are going to do in the future, for example, Social Security. We are promising to pay Social Security benefits, and I would like everyone to know that there is no entitlement to Social Security. There is no account with your name on it. So you can work all of your 40, 50 years, you can pay into Social Security, but you are not automatically deserving of Social Security benefits based on the fact that you paid into it. It has gone to the Supreme Court twice, and twice the Supreme Court has ruled that Social Security taxes are simply another tax that is charged by legislation passed by the House and the Senate and signed by the President; and Social Security benefits are a benefit program that is not directly related to the fact that you have made payments in all of your life.

So that is one reason we should consider private savings accounts that are owned by the worker, that government cannot mess around with, for lack of a better description, and this is the messing around. Government has been taking all of the surplus from the Social Security trust fund and spending it for other purposes; and so we have continued over the years to expand the benefits of Social Security to the extent that today we have a $12 trillion unfunded liability; and, again, that means that we are going to have to put $12 trillion in a bank account today that is going to, over the next 75 years, earn about $120 trillion, and this is what we are going to need for the next 75 years in future years' dollars, $120 trillion in addition to the payroll tax that is coming in from existing workers to accommodate and to meet promised benefits that we have promised in the current Social Security legislation.

Medicare part A. Medicare part A is mostly hospitals, and the unfunded liability for Medicare part A is $21.8 trillion. Medicare part B, mostly doctors, is $23.2 trillion, and Medicare part D, the drug program that we passed last November, is $16.6 trillion. This is the unfunded liability, what is going to be needed in addition to the money coming in for those programs; and on the Medicare drug program, it is interesting that Tom Savings, an actuary in Medicare, estimated last November that the unfunded liability for Medicare would be about $7.5 trillion. The new estimate that came out last month is $16.6 trillion, a huge liability to leave to our kids and our grandkids.

The unfunded liabilities, the generosity of this body, saying we are going to make all these kinds of promises and let our kids and our grandkids pay for it and we are going to continue to increase overspending in addition to these promises on Medicare and Medicaid and Social Security, in addition to that we are going to overspend. Last year, it was $530 billion overexpenditure. This year it could very well get up to $620 billion overexpenditure. Next year, another 520 to $530 billion overexpenditure.

Overexpenditure means deficit spending; and the deficit spending every year you add that up, and it comes to the total debt, and somebody's going to deal with if not paying back the debt, at least paying the interest on that increased debt, a huge challenge that is going to make life much tougher for our kids and our grandkids.

I am going to talk about Social Security and the Social Security bill that I have introduced. I was chairman of the bipartisan Social Security Task Force; and when Democrats and Republicans met and had witnesses, we brought in witnesses every week for close to a year, it was unanimous: Republicans and Democrats, everybody agreed, we have got to do something with Social Security; and the longer we wait to solve this program, the more drastic the solution is going to have to be.

And yet we do not do anything. We do not mention it, we do not mention the huge entitlement programs in our budget. We simply pass a budget every year, and now what is called the Gephardt amendment in our rules says that when we pass a budget, this is sort of a footnote, when we pass a budget, instead of bringing it up for a separate bill and debate, we will automatically consider a separate bill that increases the debt limit. It will be assumed to be passed when we pass a budget, so sort of hidden in that budget bill. So we really do not talk about the significance of increasing the debt on our kids and our grandkids and the tremendous challenge it is going to be to pay the interest on that debt, as well as trying to sometime, somehow, somewhere trying to pay some of that debt down.

This is sort of a quick tutorial on how Social Security works, and then I will go into what I have done in my Social Security bill to keep it solvent forever as scored by the Social Security Administration.

Benefits are highly progressive and based on earnings. That means the lower income you are through your working lifetime, as you pay in your Social Security tax a higher percentage, you will get back a lot more relative to what you earn than if you are higher income; and this is how this is going to work down here. At retirement, all of a worker's wages up to the tax ceiling are indexed to present value using wage inflation.

What we do is for your 35 best years, so if you are working 40 years you take your best 35 years of earnings, if you work 30 years, that means 5 years are scored as zero, as you add those 35 best years together and divide by 35, but in terms of indexing to present value, on wage inflation, wages double about every 11 years, and so that means if 11 years ago you were making $20,000 and you score it 11 or 12 years later, you are scored as making $20,000. So it is the kind of job that you had in earlier years and what the wages would be for that job today is what is credited, adding up your 35 best years on Social Security. Here is the progressivity.

The annual benefit for those retiring in 2004 equals 90 percent of earnings up to $7,344. So if you are making $7,344 or

less a year, you would get 90 percent of that back in Social Security payments if that was your average for the 35 years. For that amount over the $7,000 up to the $44,000, it is 32 percent of the earnings between the $7,300 and the $44,200, and then 15 percent of the earnings above $44,268.

It might be good to just mention here that one of the ways that I keep Social Security solvent is slowing down the increased benefits for high-income retirees, and what I do, these are called ben points. What I do is add an additional ben point of 5 percent and say that higher- income earners over $38,000 would get a return of 5 percent of those higher wages. So a low income would get 90 percent, and then it would go to 32 percent, 15 percent. Then I add another ben point of 5 percent.

I put this blip in because I think that a lot of people do not understand or have not figured out, should they retire at 62 and start earning benefits or should they wait till age 65. Based on average life expectancy, early retirees would get less. So at the average age of death, which is now 86 years old for a male and 88 years old for a female, the average earnings for those years, whether you retire at 62 or 65, would still amount to the same amount of payments back to you. In fact, if you wait 2 years to retire after 65, you can have an additional 4 percent added to your benefits for each one of those years. In terms of waiting until you are 66 or 67, you can have additional benefits if you wait an extra 2 years.

When I give speeches around Michigan and around the country, a lot of people say, well, I know people that are getting SSI, supplemental security income, payments on welfare, and they really do not deserve it; and I should not have to have that come out of my Social Security. Actually, the Social Security Administration runs the program, but it comes out of the general fund. It does not come out of the FICA tax. It does not come out of the Social Security trust fund.

This picture sort of represents the demographic problems. The birth rate is going down, and the age of death is going up, and since Social Security is a pay-as-you-go program, with existing workers paying in their tax, and within days that withholding from your paycheck is sent out to current retirees; and the problem is there are fewer workers working per retiree.

In 1940 we had about 36 workers working, paying in their Social Security tax to accommodate the needs of every one retiree. By 2000, the taxes had to go up, of course, because there were only three workers working to pay in their taxes to accommodate every retiree; and by 2025, there will be just two workers in the United States working to pay the benefits of every retiree.

The United States is heading towards a ratio of workers to senior citizens that is going to continue to result in a pay-as-you-go program, like our Social Security System, to have it continue to be insolvent. So now we can play around the edges a little bit and say, well, let us increase taxes or let us reduce benefits. But even those kinds of decisions are going to eventually again keep the Social Security System from, in the long range, being solvent.

The birthrate. Well, of course, we have 78 million baby boomers, those born right after World War II, from about 1946 to 1965. We have 78 million of them that are going to start retiring in 5 years, and these are the people that are high-income now. So the 12.4 percent of their payroll brings a lot of money into the Social Security System. Again, as they retire, we lose those high-paying individuals, and they go out as recipients collecting the high payments as retirees, since there is a direct relationship, even though it is progressive, between what you pay in and what you take out.

I think it is important to sort of reflect historically on what we have done. Some people suggest, well, maybe the economy can help us. If the economy can come back stronger, we are going to have money. But that is not true, of course, because of the direct relationship of benefits to earnings. So if the economy increases even more rapidly than it is now and jobs expand, then we have more people paying into the system now, which means that there will be more money in the short run; but when they retire, because they are paying in more money now, they are going to take more benefits out when they retire to leave a deeper hole then. So it is going to take some structural changes to the program.

What this body in the House and what the Senate and what the President have done over the years when they needed a little more money for Social Security, they said, well, let us just increase taxes again. There is sort of a historical picture of taxes going from 1 percent to, in 1940, increasing it to 2 percent of the first 3,000, which meant a maximum tax of $60 a year. In 1960, when we needed money, we increased the rate threefold to 6 percent, upped the base to $4,800, for a total of $288 a year. In 1980, we increased it again to 10.16 percent of the first $26,000, roughly; and that amounted to $2,631. In 2000, we increased it again to 12.4 percent, and that was of the first $76,200 then. But since that is indexed, we have now upped that. By 2004, it has gotten up to 12.4 percent of the first $87,900. Next year it is going to be 12.4 percent of $89,000. And that will continue to be indexed to increase.

The point I am trying to make is that by delaying, by not paying attention to some of these very serious problems that are going to confront this country, I think, is in effect passing on a legacy to our kids and our grandkids that is going to mean that their life-style is going to be much less than the opportunities that we have had in this country. We are saying to them, look, you are going to have to pay off our debts that we are borrowing today. So it is important to have a program that does not increase taxes, the FICA taxes, on payroll.

Madam Speaker, I would ask everybody that is listening to guess what the payroll taxes are right now in France. The payroll taxes in France, to accommodate their retired population, their senior population, is over 50 percent. That is one of the reasons why France is having such a problem competing. Because if a company has to pay a 50 percent payroll tax, that means they have two choices. To stay in business they either reduce wages to their workers, or they increase the price of their product to accommodate the extra taxes that they are paying. If they are increasing the price of their product, then of course they are less competitive to trade with other countries of the world. Germany just surpassed 40 percent.

I just think it is so important that we act on this huge challenge of correcting Social Security and that we not end up having another tax increase that is going to make our businesses at even a greater disadvantage.

Let me just put a footnote on that. We are concerned about losing jobs. A lot of it is because of our increased productivity to try to stay competitive. But our taxes on our businesses in the United States are about 18 percent higher than the taxes of our competitors in the G- 7, in the other industrialized countries. So when we hear from this Chamber, quite often from this side of the aisle over here, let us increase taxes to accommodate some of the great needs that we have in our districts back home, and there are needs, there are unlimited problems, the question is how many of those problems should be the responsibility of the Federal Government and how many of those problems should be accommodated by borrowing more money or increasing taxes to put our businesses at a greater competitive disadvantage, and, of course, taking the money out of the pockets of the people that have earned, telling all the American citizens that they have to give more to the government to make the government stronger, making them less able to do the things that they want to do with their money.

We have had a system, and maybe I am philosophizing here a little bit, but our forefathers came up with a system in our Constitution in this country that in effect said that those that work hard and save and that try and invest and that go to school and use that education are going to be better off than those that do not.

But now we have sort of come with a philosophy for the last 25 years in this country where we are sort of dividing the wealth up. So we have got a tax system that is very progressive, where we take from the people that are successful and give to the people that are

not successful. So we are ending up with a situation where roughly 50 percent of the adult population in the United States pays less than 1 percent of the income tax. Fifty percent of the adult population in the United States, the lower-income earning 50 percent of the adult population in the United States, pays less than 1 percent of the Federal income tax.

So with a lot of people, they say, well, let us have a few more government services, because when there is more government services, we gain, because we are not paying in tax in the first place. So it is maybe a whole new discussion on Special Orders, but how do we change our tax system so that everybody has a stake in how big this government gets?

There are a lot of Members in the Chamber that react to that kind of pressure and say, well, I am going to take home more pork barrel projects, I am going to start more social programs, I am going to make more promises, even though we do not know where the money is going to come from to keep those promises.

Let me conclude by going over the provisions of the Social Security bill that I have introduced, and this is a bipartisan bill. I have both Republicans and Democrats on the bill. These are the six principles that I went by in designing my bill:

Number one. Protect current and future beneficiaries.

Number two. Allow freedom of choice, so that if you do not want to go in the program and want to stay with what we have now, you have that option.

Three. It preserves the safety net, and so the Social Security TRUST FUND, where now we have IOUs of $1.4 trillion, that is the $1.4 trillion where the Congress, the House and the Senate, and the President have taken the surpluses coming in from Social Security and spent it for other government programs. So I do not spend all of that trust fund money. I save half of it and only use half, obviously, to make the transition to start getting some real returns on some of the money that is paid into Social Security.

Four. Make Americans better off and not worse off.

Five. Create a fully funded system.

And Six. No tax increases.

Madam Speaker, it is interesting that in looking in the archives, that in 1934, Franklin Delano Roosevelt thought it was very important to stop the number of hardship seniors that were, if you will, as Will Carlton says, going over the hill to the poor house. So instead of having so many people depending on going over to a poor house and having very meager, very difficult retirement years, he said, well, let us have a program, a system where we require savings of some of your earnings while you are working and set that aside so that you cannot use it until you retire so you have a little more social security when you retire.

So the House passed a bill following FDR's recommendation; and it said government will keep all the money and then pay the benefits when the time comes, when the individuals turn 65 years old. The Senate passed a bill, however, that said, well, we are going to do the same thing, but instead of government keeping all the money, we are going to have the accounts in individuals' names, where the individuals own that account. But if they die before age 65, it is still money that will be passed on to their heirs. But there will be a rule that they cannot take that money out of that special account until they turn 65 years old.

What is interesting is that the average age of death, up until about 1940, the average age of death was 62 years old. But the program says you cannot have Social Security benefits until you are 65. When the House and the Senate went to conference committee, we went with the House version that said government is going to handle all the money. And it worked very well for many years. We only had to start increasing the tax in 1940, because the average age of death was 62. So most people died before they became eligible for Social Security. So the pay-as-you-go program worked very well.

Here is my bill. It has been scored by the Social Security Administration actuaries to restore the long-term solvency of Social Security.

There is no increase in the retirement age. No changes in the COLA, the annual cost of living index that we increase payments to COLA. And there is no change in the benefits for seniors or near-term seniors.

Solvency is achieved through higher returns from worker accounts and slowing the increase in benefits for the highest-earning retirees.

Right now, Social Security is not a good investment. The average return for retirees in Social Security is 1.7 percent. And what we do in our legislation is we guarantee that if you decide on a personal retirement account that you own, and that is going to be optional, but we will guarantee that you will get as much payments in your retirement years from having an account as you will if you did not have an account, but the option is still up to the individual.

The Social Security trust fund continues. Voluntary accounts would start at 2.5 percent of your income and would reach 8 percent of income by the year 2075. A long time.

My first bill that I introduced, and this is the fifth Social Security bill I have introduced that has been scored by the actuaries to keep Social Security solvent, but in 1993 and 1994, the legislation did not have to borrow any extra money from the general fund of government. It did not have to wait until 2075, until we upped the amount that you are going to be allowed in your own savings account.

But now it is a little more drastic. If we wait another 4 years, it is going to even be more drastic. If we wait more than 4 years to solve Social Security, then plan on a higher Social Security tax. Increased taxes will be on somebody someplace because there is no other way to accommodate it. Investments would be safe, widely diversified and investment providers would be subject to government oversight. It is sort of a copy of what Federal Government employees have now in their thrift savings account. They have several options, indexed bonds, indexed stocks, indexed cap funds. So very low risk, but it starts growing up in your account and the magic of compound interest means that you can be a modest earning worker but you can retire as a millionaire.

Part of my persuasion I hope today, Mr. Speaker, is to encourage everybody to start saving, to let these savings grow and not live sort of the satisfying our needs of today and hoping that somebody else will take care of us in the future. You are going to need something probably in your retirement years in addition to Social Security if you are under 45 years old now.

The next blip is the government would supplement the accounts of workers earning less than $35,000 to ensure they build up significant savings. Actually I sort of copied this from our former President, President Clinton, from his U.S. savings accounts. So that even low- income workers can have a little more in their savings account to result in the magic of compounding to give them more money in these accounts. These accounts belong to the workers.

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 risks, so you would have limited investment opportunity. Workers have a choice of three safe indexed funds with more options after their balance reaches $2,500. So it is very limited until you have at least a balance of $2,500, then in my legislation additional safe investments as determined by the Secretary of Treasury would be allowed for individuals once they hit the plateau of having $2,500 in their own retirement savings account. This, of course, is what you get from the savings account. Right now as I mentioned, Social Security has a return of 1.7 percent. So in effect anything you can earn from that savings account in excess of that 1.7 percent would add over and above what you would otherwise get from Social Security.

Worker accounts. Accounts are voluntary and participants would receive benefits directly from the government along with their account balance. There is a provision that I do not have on the board but at such time over age 55 that you buy an annuity to, in effect, guarantee that your retirement income is going to be at least what Social Security would pay you and that you are not going to ask other taxpayers to help you later on, then you

would have the option of investing your personal retirement savings account in anything you want to invest it in, or if you want to start using it. The government benefit would be offset based on the money deposited in their accounts, not on the money earned. And workers could expect to earn more from their accounts than from traditional Social Security. That is why we can guarantee that the 1.7 percent that you get from Social Security, that is why we can guarantee that you will get at least as much earnings as you would have from Social Security.

Here is a provision that I put in. My politically astute colleagues tell me that it is not politically correct to say fairness for women. I should say fairness for lower earning spouses that might be staying home with children. But these three changes for married couples, account contributions would be pooled and then divided equally between the husband and wife. So for your personal savings account, if one spouse is earning twice as much as the other spouse and so, therefore, is eligible to put more money into the personal savings account, you add what each spouse can put into the personal savings account, you divide by two, and so each spouse owns an identical amount that goes into their personal savings account every pay period, every month, every year. It would increase surviving spouse benefits to 110 percent of the higher earning spouse's benefit. Right now the surviving spouse is entitled to 100 percent of the higher benefit. But even that amount often requires that these individuals move out of their home into more expensive nursing home care as they shift from Medicare to Medicaid. And so what kind of provisions can we have to encourage people to stay in their own homes, which is so much lower cost than if they go to a nursing home?

Stay-at-home mothers with kids under 5. Maybe this is just a personal opinion of mine, but I put it in the legislation that stay-at-home moms, staying home with kids under 5, would receive a credit as if they were working years at the higher earning salary when their Social Security benefits are calculated.

These are some other areas, simply to try to increase and stimulate more people to think about their retirement. Number one, increase contribution limits for IRAs and 401(k)s and pension plans; two, a 33 percent tax credit for the purchase of long-term care insurance, up to $1,000, $2,000 for a couple per year; and low-income seniors would be eligible for a $1,000 tax credit for expenses related to living in their own homes, or if they are living with their kids or somebody else, whoever they are living with could receive that $1,000 tax credit, reimbursable tax credit on their income tax.

Let me conclude, Mr. Speaker, by just urging my colleagues to face up to this challenge. More than that, this is an election year for both Members of the House and roughly a third of the Members of the Senate. So every time you have an opportunity to go and hear a candidate or talk to a candidate, ask them what they are going to do about the problem of Social Security running out of money. Ask them what they are going to do about the huge unfunded liabilities of Medicare and Medicaid. Ask them what they intend to do about increasing the debt of this country to the extent that we are asking foreign countries now to help pay for our debt.

We have about a $500 billion trade deficit. What that means is that we send out $500 billion to other countries more than they send to us when they are buying our goods. What happens to that $500 billion? It is American dollars. They are not good anyplace unless they end up in America. What other countries are doing now with that $500 billion is buying our Treasury bills, they are buying our companies through stocks and equities, and that additionally leaves us in a very precarious situation to be that vulnerable to some of these countries.

China, for example. I just returned from China. I am concerned about some of their what I perceive to be violations of the WTO agreements, their trade agreements. We have a deficit with China of about $100 billion. China right now sometimes puts some of that money, in effect, under the mattress to hold it out there. Sometimes it buys Treasury bills. This country has accumulated enough that if they pulled their money out of Treasury bills or out of our stock market, it could dramatically affect the economy of the United States.

So as we cavalierly overspend, as we increase promises to increase the unfunded liabilities, we are not only making our children more vulnerable in the kind of taxes they are going to pay but we make the future of America more vulnerable to what other countries might do. If, for example, other countries decide that there is a better place to invest their money than the United States because the United States is less dependable and starts paying a lower return and they decide to invest it someplace else or they decide for political purposes that they want to negotiate trade deals by saying, Look, we're going to pull our trillions of dollars out, that is going to disrupt your economy because we just don't want to do business with you unless you agree to our trade deal or to our other political deal or to our whatever deal. Let us not allow ourselves to continue down this road of leaving our kids and our grandkids a bigger debt.

I am a farmer from southern Michigan. Traditionally what we have always figured on the farm, what my grandfather taught my dad, what my dad taught me is you try to pay off some of the mortgage on the farm to let your kids have a little better life than you have had. But in this Chamber and over in the Senate and in the White House, we are doing just the opposite. We are mounting up that mortgage. We are mounting up that debt and making the future of our kids and our grandkids more vulnerable.

Mr. Speaker, we are now in the process of deciding how much money we are going to spend. The budget is being finally decided, and then the appropriations process makes the decision, where money is spent and how big should government be.

Tom Savings, an actuary with both Medicare and Social Security, came to my office a couple of weeks ago. This is what he said where our promises exceed our ability to pay for it, unfunded liabilities: Medicare part A, $21 trillion; Medicare part B, $23 trillion; Medicare part D, the new drug bill, $16.6 trillion; Social Security, $12 trillion.

At this time, I just call on all my colleagues to be tight-fisted. Let us start prioritizing spending and reduce the tremendous burden we are placing on our kids and our grandkids.

Mr. Speaker, I commend the gentleman from Georgia (Mr. Gingrey), and I certainly commend the gentleman from Tennessee (Mr. Gordon), the gentlewoman from Texas (Ms. Eddie Bernice Johnson), the chairman of the committee, (Mr. Boehlert).

As we expand in population in this home that we call Earth, being more sensitive to the environment is continually a greater challenge and a greater need. So I commend the legislation. The legislation is going to be good for the economy. It is going to be good for improving worker safety. It is going to be good for improving public safety, for national security, and certainly it is going to be better for our environmental needs.

We need to expand our thinking not only for chemistry, but maybe for all of the research that we do to be more sensitive to make sure that this Earth continues to be as safe and beautiful for future generations as it has been for us. So I urge my colleagues to support Dr. Gingrey's bill.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4030) to establish the Congressional Medal for Outstanding Contributions in Math and Science Education program to recognize private entities for their outstanding contributions to elementary and secondary science, technology, engineering, and mathematics education, as amended.

Mr. Speaker, I yield myself such time as I may consume.

First, I would like to commend the chairman and the ranking member and certainly the gentlewoman from Texas (Ms. Eddie Bernice Johnson) for her help in moving ahead, trying to get more involvement from the business community in helping with K-through-12 education, especially in the areas of math and science.

This legislation establishes a national recognition program at the National Science Foundation to honor those in the private sector who work with K-through-12 schools to improve science and math education. In addition, the bill makes information about award winners publicly available so that the examples that they are using across the country that are effective, that are making a difference in our math and science performance can be considered by other school systems around the Nation.

The way to maintain and increase our standard of living certainly is through innovation, technological advances and hard work. Unfortunately, our schools, Mr. Speaker, are currently not producing enough young people with the math and science interest or the skills necessary to meet the emerging demand. We need to do a better job of encouraging student interest and achievements in fields like science, technology, engineering, and mathematics so that today's students will not only be successful in their own lives, but will contribute to the economy that we are going to need in future years.

The challenge of competition for our kids and our grandkids are going to be probably so much greater than they are for us today, and having the kind of technology that can result in new innovation, the kind of research that can develop new products and the ways to produce those products at a cost and a quality level that is competitive with products that are produced across the world is going to be much more important for our kids and grandkids than maybe it was for us.

In this legislation we recognize the industry leaders and companies and businesses that make a special outstanding effort in working with their schools. We included in the legislation work that these companies might do to encourage parents to be more involved with their students and schools because we think the interest and encouragement of parents is probably just as important as the quality of teachers that we have in math and science.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 4030, as amended.

Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Ehlers).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the ranking member makes a good point, and maybe it is an opportune time to explain some of what goes into developing legislation. A lot of work from staff, Democrat staff and Republican staff on our committee. Kara Haas, certainly David Finger, spent many hours, sending out inquiries to the business community around the United States for their suggestions on how this award program should evolve and develop to really accomplish our goals of encouraging the business community to be more active and take a greater part in improving math and science education.

I would like to tell a very short story in trying to improve math and science education. I was talking to an individual who is the director of international studies at one of our Michigan

colleges. I asked him his ideas. He is from India. He grew up in India. He told me the story when he came home in about the 8th grade with a report card that showed a B in math, and he showed that to his father and tears welled up in his dad's eyes. And his dad went out and hired a tutor to try to improve his son's math skills. He suggested that almost all students in India concentrate on being successful in fundamental math and science before they continue their career maybe in some other field.

That lesson should be especially acknowledged by us today when we are doing a lot of outsourcing of math and science to engineers in other countries such as India. We need to do a better job at home. Parents need to do a better job.

Often when I ask witnesses before our committee how do we motivate and excite students in math and science. To the extent that education in kindergarten through twelfth grade is more like a lighting of a fire, lighting that interest and enthusiasm, rather than simply filling a container with information, when is that fire lit for these students. Their suggestion was maybe at home when they are 3 and 4 and 5 years old, maybe in kindergarten, first and second grade. So if we lose that individual with their interest in math and science at that stage of their lives, it is hard to rekindle that fire.

Improving math and science education is important for the sake of business and industry because they have a special economic interest in having enough qualified students in math and sciences to make sure they are going to be able to stay in this country and compete.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, today I am going to discuss what Congress is doing in the last several weeks and the next several months, and that is appropriating money.

A week or so ago, most of the people in the United States were completing their tax bills. This is sort of a tutorial on what happens to the tax dollars of American taxpayers and what happens to the FICA tax, the payroll deduction tax, taken out of American workers.

I start with a pie chart, if you will, Mr. Speaker, and this pie chart represents how we are spending the $2.4 trillion that we are budgeting for this coming year. We see the biggest piece of pie is Social Security at 21 percent. The previous speakers were talking about defense. Defense and national security, they are probably the prime objectives of the Federal Government compared to what State governments do, and yet we have diminished the share of total Federal spending of defense since World War II down to 20 percent of the total expenditures of Federal Government.

I want to especially pay attention to the 14 percent that says interest. The interest of the Federal Government now is $240 billion a year. That is the interest that we are paying on the national debt. It is an interest rate that

is almost at record lows. Alan Greenspan, the Chairman of the Fed, said today in testimony that interest rates probably are going to increase. We know what interest rates are today, a little over 4 percent for the prime. Compare that to the early 1980s where interest rates were approaching 12 and 13 percent.

Now, if we have a 14 percent of the budget, a cost of $240 billion on the interest we pay out for this increased debt of overspending, that that side of the aisle and this side of the aisle and the Senate and the White House have been overspending, spending more money than has been coming in, if interest rates were to double, and we continue increasing the size of the debt, it is easy to see that servicing that debt is going to be a huge challenge, even for a Nation as rich and as prosperous as the United States of America.

What happens to empires that do not pay attention to serious problems are empires that diminish and cannot survive. So I suggest, Mr. Speaker, it is so important that we start looking at our overspending and our overpromising.

Briefly, to go around the piece of pie, discretionary spending uses up 16 percent of the budget. Discretionary spending is what we spend most of the year doing with our appropriation bills.

Other entitlement spending, the food stamp program, the WIC program, the welfare program, the other entitlement programs, if you reach a certain age or a certain level of poverty, you are automatically entitled to some of those payments. That is what entitlement programs are.

Then we have Medicaid, now at 6 percent of the budget, Medicare at 12 percent of the budget. The projections are that Medicare will overtake Social Security as far as cost within the next 20 years, and that leads me to the overpromising.

Two bad things that Congress does and the administrations for the last 25 years have done, and that is make a promise when they do not know where the money is coming from, and I call that unfunded liabilities.

The unfunded liability report that came out 3 weeks ago, when the actuaries of Social Security and Medicare met, were enormous, and their estimate is that the unfunded liabilities, to pay for programs that we promised but do not have the money to pay for, and so we need extra money on top of the payroll tax and the FICA tax and the other revenues coming in for those programs, amounts now to $73.5 trillion. And remember, what is our budget? Our budget is now $2.3 trillion this year, about $2.4 trillion we are anticipating for next year.

In breaking it down, there are two parts to Medicare. Medicare Part A is mostly the hospitals. Medicare Part A is projected by Tom Savings, one of the actuaries of Social Security, and he is also an actuary of Medicare, he is estimating $20.8 trillion; Medicare Part B, mostly doctors, $23.2 trillion. Medicare Part D, drugs, the drug program that we passed last November, is now estimated to be $16.6 trillion. Last November when we passed that bill, Tom Savings, the same person, estimated the unfunded liability to be about $7.5 trillion, and now with the new report that has just come out for Medicare and Social Security, the estimate has dramatically gone up, and that is based on the increased cost and the increased number of people that are expected to use the program.

Then we come to Social Security, Social Security, a program that was started in 1934 by Franklin Delano Roosevelt. We have made promises in excess of the money coming in from the Social Security tax that amounts to about $12 trillion. The estimate is between $11.9 trillion and $12.3 trillion that we would have to put into a savings account today that is going to have a return to cover inflation and the time value of money to accommodate the money that is going to have to be paid out in future years. So if you want to be really dramatic, you can say what we are going to need in the next 75 years is $120 trillion more than is coming in to Social Security to pay promised benefits.

So what are we going to do? Are we going to reduce benefits? Are we going to increase taxes? Is it going to be a combination? What we have done historically in this country is the combination. We have increased taxes and reduced benefits, and I think the danger might be demonstrated by the predicament that some other countries of the world now find themselves in.

France, for example, the percentage of the payroll that is used to finance the senior citizen population in France is now over 50 percent. So you can imagine a company or a business trying to compete in world trade that has one of two choices with that kind of cost coming out of the payroll tax. They either have to increase the price of their product to pay for it, or they reduce what they are paying to workers. Either way, let us not allow that to happen in the United States.

The country of Germany just went over 40 percent in terms of the amount of payroll tax that is required for their senior population. I just think it is very important that when we talk about this unfunded liability, you compare it. That is about seven times the total production of the United States, the GDP. So it is about seven times GDP. At a little over $2 trillion a year, that means that we would have to come up with the equivalent of about 35 years of government spending to accommodate what would need to be put in a savings account now.

So why do not we pay attention to some of these huge challenges that are facing this country? Let me give you my best guess.

Politicians have discovered that they are more apt to get reelected or elected if they promise more and more benefits, and, look, there are a lot of problems out there. There are a lot of things that need to be doing. So the question is, how much should government do? But we now have evolved into, if you will, dividing the wealth with our tax system where we have 50 percent of the adult population that now pay less than 1 percent of the income taxes in this country. So 50 percent pay less than 1 percent of the income taxes.

What is the natural reaction of some of those 50 percent? The natural reaction is to elect Members to Congress that bring home more pork, that bring home more benefits, that start more social programs, and that is what we are evolving into.

I am a Republican, a farmer from Michigan, and we are now doing our Lincoln Day banquets, the Republican fund-raising dinners, celebration dinners of Lincoln's birthday. It is the 165th birthday of Abraham Lincoln. In his famous Gettysburg Address, he sort of expressed a wonder whether a Nation of the people, by the people and for the people can long endure.

And I think that challenge is now before us.

We hear other Members talking about the conflict of this war. Certainly we have had huge challenges, such as the Civil War. But I would respectfully suggest that the challenges of overspending and overpromising are probably greater in terms of the survival of this great Nation than any of those wars. So somehow, how do we get the discipline to try to make changes?

I chaired the bipartisan Congressional Task Force on Social Security and served on the Committee on the Budget for 8 years and have sort of been on my soapbox, pulling my hair and complaining about the fact that we are not dealing with the increased cost of Social Security and Medicare and our reduced ability to pay for that dramatic increase in cost.

This is another demonstration of the unfunded liabilities. It just says that if we do not make some changes by 2020, 16 years from now, we are going to have to take out 28 percent of that pie chart that we started out with. We are going to have to use 28 percent of the general fund budget to accommodate the shortage of money that is needed to cover those three programs: Medicaid, Medicare and Social Security. By 2030 it is going to be over 50 percent that is required of that budget.

This body and the Senate quite often do not deal with problems until the disaster is almost on us. But the problem with solving Medicare and Social Security is the longer you wait, the more drastic the solution is going to have to be.

The Social Security bills that I introduced when I first came to Congress in 1993, 1994, and 1995 were much simpler then because we had surplus money coming in from Social Security. Right

now, this year, coming in from the Social Security FICA tax will be $645 billion. What we are using to pay benefits out of that money coming in is $490 billion. So there is a little surplus there that we could do something with. But what we do is we spend it for other government programs.

My caution is that this money is going to be running out in the next 8 or 10 or 12 years, and at that time we will have less money coming in from the Social Security FICA tax. That is 6.2 percent on workers now and 6.2 percent on the employer. But, really, if you are going to be fair, it all comes out of the employee's pocket when an employer has to pay part of it, even though it is not a deduction on the check of the employee.

So here is a time that we have more money coming in that offers us the opportunity to make changes to the program and use that surplus money coming in. In my Social Security bill that I introduced 10 years ago, I did not require any extra funds. The Social Security bill that I have introduced this session requires that we borrow almost $1 trillion from outside borrowing to accommodate a transition to keep Social Security solvent for the long run.

I thought it would be good just to give sort of a thumbnail impression on a chart of the predicament we face in Social Security in the future. What happened with the Greenspan Commission in 1983, they decided the way to solve the Social Security problem and the increased number of seniors in relation to the people and workers paying in that money was to raise taxes and reduce benefits. So they said, starting in 2001, we would start increasing the retirement age for maximum benefits from 65 to 67, and they said we are going to dramatically increase the taxes that are charged to American workers by a 20-plus increased percentage on the increase in taxes.

Here is how Social Security works. Benefits are highly progressive. Everybody pays the 12.4 percent tax. If you are self-employed, you pay it all yourself. If you have an employer, then, theoretically, the employer does not pay you quite so much and the employer pays 6.2 percent and 6.2 percent is deducted from the employee's wages. At retirement, all of a worker's wages, up to the tax ceiling, which is now $89,000, are indexed to the present value using wage inflation.

In other words, it is not complicated, but if wages for a particular job double every 12 years, and you were making $20,000 12 years ago, then that would be indexed in the computation of your Social Security benefits up to $20,000. So it is what that particular job would pay today is how they calculate the kind of benefits you are going to get.

And here is how it is calculated. The progressivity of the program says if you are a low-wage earner, earning less than $7,344, you get 90 percent back in Social Security checks of what you were making while you were working. Then the difference between the $7,300 and the $44,000 is 32 percent. So 32 percent of the earnings between the $7,300 and the $44,200 you get 32 percent of that back, and you only get 15 percent back over the $44,000.

Now, what I do in my Social Security bill to come up with some of this extra money, I add what are called ben points, but I add another ben point of 5 percent. What that means is that if you are a high-wage earner retiree, the increase in your benefits are slowed down. So we make it a little more progressive and we save some of the money to make the transition to really investing some of this money that is coming in and getting a better return than the 1.7 percent that the average retiree gets in Social Security.

Let me just mention that early retirees receive adjusted benefits. So the actuaries make the best guess of how long the average person is going to live. So on average, the person that retires at 62, with a slightly lower benefit, is going to receive the same total benefits by the time they die as the individual that waits to 65 or 66 to start drawing benefits.

And, by the way, if you wait until you are age 66 or 67, there will be a 4 percent increase for each one of those years to increase your Social Security benefits. So if you are jogging, if you are really healthy, it might be in your best interest not only to wait from 62 to 65, but to maybe wait and retire at 66 or 67.

SSI, by the way, does not come out of Social Security. There is a lot of concern amongst my constituents in lower central Michigan who complain about those who are receiving Supplemental Security Income payments who do not deserve it. But SSI comes out of the general fund. Even though the Social Security Administration administers and handles that program, it does not come out of the Social Security trust fund.

Well, insolvency is certain. We know how many people there are, 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 we know how much they will take out. Also, the payroll taxes will not cover benefits starting in 2017. The shortfalls will add up to $120 trillion between 2017 and 2075. The $120 trillion is what we are going to need in future years. What we need right now is to put $12 trillion in a savings account with compounded interest that will grow at least at the rate of inflation.

The demographics are what is bringing this pay-as-you-go program to a crisis situation. There are 78 million baby boomers beginning to retire in 2008. The baby boomers are what we call those babies that were born right after World War II, roughly from 1946 to 1966, that age group, that are now in their maximum earning. So they are paying in maximum social security taxes, but also, when they retire, number one they stop paying those taxes in and they start taking out maximum benefits.

The baby boomers that are retiring probably will be the most well-off generation that we probably have ever had in this country, possibly the best well-off generation that we will ever have in this country, considering the fact that we are putting a huge burden on future workers and future retirees by making more promises than we can afford and going deeper into debt.

Social Security spending exceeds tax revenues in 2017, and so Social Security trust funds go broke. Technically, if we pay back the $1.4 trillion that we now owe the Social Security trust fund, then that will allow Social Security to continue. But the problem is that the trust fund contains nothing but IOUs.

And here is a worse situation, or a more dangerous situation. The Supreme Court, on two occasions now, has said that no one is entitled to Social Security benefits, and it does not make any difference whether you paid in social security taxes. Social security taxes are simply another tax, is what the Supreme Court said; and benefits from Social Security are simply a new benefit passed by Congress and signed into law by the President.

This chart sort of pictorially represents the demographics of living longer, of seniors living longer and the birthrate going down. So back in 1940, there were about 36 workers paying in their Social Security tax for every one retiree. By the year 2000, it came down to three workers. So we dramatically increased taxes. The estimate by 2025 is that there is going to be two workers paying in their Social Security tax for that growing number of seniors. There is going to be two workers paying in their tax to accommodate the Social Security benefits of every one retiree.

This is a huge challenge in terms of putting this kind of pressure on our workers, and we talked about what has happened to the tax rate in countries like France and Germany and the predicament that now Japan is facing with their senior population.

I did this picture of FDR just to start a discussion of should we have privately owned accounts. When Franklin Delano Roosevelt in 1933 started advocating a Social Security System of mandated savings while you are working, to help assure that you will have a little Social Security instead of going over the hill to the poor house when you retire, he started out saying that individuals should own their own savings account, but it should be a law that they had to put so much money in it, and that it should be a law that they could not take it out until they reached the retirement age of 65.

By the way, when we started Social Security, the retirement age was 65; but the average age of death was 62. That meant most people paid in their Social Security tax but did not live long enough to take out Social Security benefits. And, of course, the program stayed funded very well. But

today, the deduction is made on your payroll check; and immediately, within 3 or 4 days, that money is sent out to beneficiaries. So we are going deeper in the hole even as we increase taxes and reduce benefits.

Social Security benefits are indexed to wage growth. And I say that because I hear so often many of my colleagues saying that when the economy gets better, then everything will be okay. But because benefits are indexed to the wages you make, and even if there are more people that have a job and more money coming in to Social Security in the form of taxes, and maybe some are making higher wages so they pay in a higher amount, that 12.4 percent times the higher amount of earnings, because eventually when they retire they are going to take out more from Social Security, in the long run economic growth does not solve the problem that we are facing with Social Security running out of money.

Growth makes the numbers look better now, but leaves a larger hole to fill in the future. I think what has happened with a lot of Members of Congress is that it is easy to put off the solution. When I give speeches in Michigan and around the country, a lot of people say if Congress would just keep their hands off the Social Security trust fund and that surplus money, everything would be okay.

Well, I did this bar chart to represent what the Federal Government now owes the Social Security trust fund. We borrowed $600 to $700 billion; but because we will write another IOU for interest, the total debt that government owes the Social Security trust fund is now $1.4 trillion; but the total problem needs $12.2 trillion. So we owe $1.4 trillion that is in the trust fund, but to solve the problem we need between $11.9 trillion and $12.3 trillion to solve the problem. Government should stop taking that money and spending it for other government purposes. We also need to start investing some of the short- term surplus we have had.

Like I mentioned, coming in from the Social Security trust fund today, there is about $645 billion, and what we are paying out in benefits is $490 billion.

I will jump to the second blip. The Social Security trust fund contains nothing but IOUs; and to keep paying promised benefits, payroll tax will have to increase by nearly 50 percent, or we will have to cut benefits by a third. I have a chart that I will be coming to on how Washington has increased benefits over the years. But I wanted to show this chart to try to demonstrate that Social Security is not a good investment. It is nice to have that guarantee. Nobody is suggesting any Social Security reform. Certainly not in the five or six bills that I have introduced, nobody touches the disability portion, so getting hurt on the job continues to be a Federal Government insurance policy and nobody is touching that. All we are dealing with is the old age and survivor benefit portion of Social Security. By the way, in only 5 years, the disability insurance is going to have less money coming in from that particular trust fund than is needed to accommodate disability payments.

This chart shows that the average return for the average retiree is 1.7 percent of what they and their employer sent in to Social Security. I put down what has happened in the last 10 years in the Wilshire 5,000 stock market. The Wilshire 5,000 earned, even with the 3 bad years we have been experiencing on stock markets and equities, the average over the last 10 years has been 11.86 percent. If we take the last 100 years in this country where we have kept track to what has happened to stock and equities, the average is 7.4 percent. So in some way, we can guarantee that you can have a better return on your private accounts. And so what I do in my proposal in my bill, I allow 3.5 percent of your wages to be put into your own personal retirement account and then we limit where you can invest it. Simply to try to get Democrats on board, and my bill is a bipartisan bill, we have added provisions where any investment is going to be limited to index stocks and index bonds.

But I think one of the challenges that needs a lot of explaining is the fact that we hear Members of Congress brag sometimes that we are paying down the debt, and that is not true. One of the strong advocates of explaining the fact that the debt is never really reduced is the gentleman from Maryland (Mr. Bartlett).

Mr. Speaker, I yield to the gentleman for his comments and maybe a couple of his solutions on Social Security, Medicare, going deeper into debt, and unfunded liabilities.

Mr. Speaker, our forefathers thought they were putting a little safeguard on it when they said if you ever increase the debt limit of this country, you have to vote in the House and the Senate, and it has to be signed by the President. They thought that might protect us a little bit in not dramatically increasing the debt the way we have. I think what the gentleman is saying is the fact that the total debt has never gone down.

Mr. Speaker, I hope Members are watching this just as a reminder of what we have done to try to not embarrass ourselves as we sort of secretly increase the debt.

Members are pretending that our problems today are so important that it justifies taking the money that our kids and grandkids have not even earned yet. It is sort of like breaking into their piggy bank and saying I will try and pay you back some time, but for now let us go out and buy some candy bars and ice cream. There might be a better word, but ``unconscionable'' comes to my mind to consider the burden of debt, to consider the burden of promises that exceed our ability to pay for them in terms of unfunded liabilities that we are placing on future generations.

Mr. Speaker, this pie chart shows that currently the interest that we are paying on the debt, servicing the debt, the interest is $240 billion a year. This represents 14 percent of the budget. Yet interest rates are almost at record low levels, and so what happens as we increase the debt by $500 billion to $700 billion a year, and interest rates go up, and Alan Greenspan said today that is going to eventually happen, it is going to eat up a bigger piece of that pie. One of these days it has got to come to our obvious attention that something needs to be done to control spending.

Right now interest is 14 percent of the budget. Defense is 20 percent of the budget. It is easy to at least assume there is a good possibility that the very low interest rates today could double. That would mean $440 billion a year, or 28 percent of the budget. It would mean our borrowing and servicing that debt is more important than what government should be paying attention to, and that is security and defense.

And, Mr. Speaker, of course the lobbyists that come in, they would prefer that it be mandatory spending; so some of these programs, if they can write it in law that if they meet certain qualifications, they automatically get it and it does not go through the appropriation process, it is not subject to prioritizing. So we have ended up with more and more of our budget being spent in this mandatory spending, and really even though technically defense is discretionary, most of the defense budget becomes the kind of obligation, because that is what we are here for, defense and security, becomes almost untouchable.

Mr. Speaker, how do we change? How do we develop the kind of discipline, intestinal fortitude to start slowing down this huge growth of government to the extent that we have decided we will simply borrow more and more money to take home to our districts or to start new social programs? Does the gentleman have any thoughts on how we can discipline ourselves better than we have been?

Mr. Speaker, I think it is good to remind ourselves that our Founding Fathers in the original Constitution did not want to penalize individuals that were going to school and working and saving. So the original Constitution says we cannot have a tax based on how much we earn, and that is what we were founded on. That is part of the incentive. But this body and Congress and the White House over the last 50 years have decided trying to equalize that wealth, dividing the wealth, taxing the people that have made it a little more and giving that back in some forms of government service to the individuals than have not. And there is a balance there. There is a golden mean.

We want to help people that really need help, but we need to try to develop programs that help lift them up because we have got now a tax system that the young couple that decides to go get a second job ends up not only being taxed more for working harder to try to earn enough money to do well for their family, but they get taxed at a higher rate. So we have sort of evolved into taking away from the people that work hard and try and are successful, and dividing that wealth in a system of government where now 50 percent of the adult population of the United States now pay less than 1 percent of the total income tax.

Mr. Speaker, so there we come to the popular criticism that it is a tax cut for the rich, but because of the fact that that 50 percent of the population pay essentially very little of the income tax, when we have any kind of a tax cut, it tends to go to the 50 percent that do pay taxes. So here again it is a balance.

But as we talk about jobs and economic expansion, when we have a system that taxes our companies and our businesses 18 percent more than what their competitors in other countries are taxing their businesses, we are putting our business at a competitive disadvantage, and our overzealousness to pass on new regulations and more taxes so that this body and the Chamber across the Capitol can have more money to spend I think is one of the negatives and something we have to correct if we are going to expand business and jobs and the economy in this country.

Mr. Speaker, I happen to be the prime sponsor of the flat tax. But whether it is a flat tax or a value-added tax or a type of sales tax, we need to change our Tax Code if we are not going to continue to put a lot of people at a disadvantage and a lot of businesses at a disadvantage. Most of our businesses pay the same 1040 personal income tax that the gentleman and I do. As we increase the tax on those businesses, it hurts the chances of the survival of that business.

How do we get the discipline? How do we get the discipline to police ourselves? We are talking about a PAYGO bill. Maybe that will help. It sort of helped during the 1980s and some of the 1990s, but convincing the American people, I think, might be the best way in terms of getting that voice heard in this Chamber and in the Senate Chamber and at the White House.

Mr. Speaker, the gentleman from Maryland (Mr. Bartlett) carries the Constitution in his pocket.

Mr. Speaker, I want to show this chart of what government has done historically every time Social Security has less money than what is needed to pay benefits, and it is a pay-as-you-go program. It is deducted from the paycheck at the end of the 1 week or the 2 weeks or the month, and within days it is sent out to beneficiaries. So there is no savings account with one's name on it. So we have run into problems of not having enough money in Social Security to pay benefits on several occasions, but what we have done historically, and I use this because I think it is a danger of what can happen in the future, is simply that we have increased taxes and reduced benefits. This is a chart that shows the increase in taxes.

In 1940, we had 2 percent of the first 3,000. By 1960, it went up to 6 percent of the first 4,800. By 1980, 10 percent-plus of the first 26,000. In 2000, 12.4 percent of the first 76,200. And currently it is not a rate increase, but it is a base increase; so it is the same 12.4 percent on the new base of $89,000 a year. So continually we have continued to increase taxes on working Americans to the extent that most working Americans now pay more in the Social Security tax than they do in the income tax.

So the challenge is Social Security has an unfunded liability of about $12 trillion now. But now we have made even more promises in Medicare and Medicaid. So not only deficit spending is how much we overspend in one year; the debt is adding up every year's overspending. It is now over $7 trillion of debt in this country, in addition to the promises that do not know how we are going to pay for.

But within the next 3 months, Congress probably again, as the gentleman from Maryland (Mr. Bartlett) and I talked earlier, is going to have to face up to increasing the debt limited. My guess is we will do it again like we have done in the past, so that we do not have to talk about it, so we are not embarrassed in this Chamber. It will be some legislation that is hidden in the rule, so if you vote for the rule you vote for an increase in the debt limit, which I think should disturb us, because it does not make us stand up and deal with the huge challenges we are facing in this country in terms of overpromising and overspending.

The debt is $7 trillion divided by about 290 million. It comes out to almost $25,000 for every man, woman and child in terms of their share of the debt.

No plans. I do not see it in terms of responsibility much different than what any family should do, what any business should do, and that is you cannot just keep going deeper and deeper into debt without any plan to ever pay that debt back.

I am a farmer from Michigan, the gentleman is a farmer from Maryland, and philosophically we felt that if we can pay down the mortgage on the farm so that we can leave our kids a little better chance of having a better life than we have, we should.

But in this body, in Congress, we are not doing that. We are not only not paying down the debt; we are increasing the debt load that they are going to have to be responsible for, and the tremendous amount that is going to have to come out of their pockets to pay the increased promises and even the interest on the debt, not even mentioning starting to pay that debt down.

It is a whole different 1-hour debate and discussion; but just, for example, one country, we have $100 billion deficit trade with China, and what does China do with that extra $100 billion? They probably invest it in our companies, or buy some of the property in the United States. So it makes this country more vulnerable.

But in terms of the total debt, both our Treasury bills, the debt of companies, we are becoming more and more dependent on other countries.

It is time we took ahold of ourselves, pulled ourselves up from our bootstraps, and started to be responsible, and not leave the kind of debts and responsibility to our kids and our grandkids simply because we think our problems today are great.

I thank the gentleman from Maryland for joining me.

Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Rosanna May Leddy-Green, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future.

As a winner of the LeGrand Smith Scholarship, Rosanna is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan.

Rosanna is an exceptional student at Morenci High School. She has an outstanding record of achievement, exemplified by her status on the All `A' Honor Roll. Rosanna has excelled in athletics as a member of the cross

country and track teams for four years and was named academic all- state. Her extensive list of school activities includes Spanish Club, National Honor Society, and S.A.D.D. Rosanna is also secretary of her graduating class.

As a Member of the United States Congress, I am proud to join with her many admirers in extending the highest praise and congratulations to Rosanna May Leddy-Green for winning the 2004 LeGrand Smith Scholarship. This honor not only recognizes her accomplishments, but also is a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation have contributed to her success. To this remarkable young woman, I extend the most heartfelt good wishes of the United States Congress for her success and for all her future endeavors.

Mr. Speaker, as the gentleman from Hawaii (Mr. Abercrombie) said, yes, we have had many conversations about Social Security including the stealing of the extra trust fund surplus that has been coming in. We have never been quite square with the American people.

I would yield to my colleague.

Mr. Speaker, I think that the people of Hawaii are still wide awake and listening to this debate.

Mr. Speaker, I am going to comment tonight not only on Social Security but what I consider a huge challenge for this country, and that is going deeper into debt and increasing the spending of the Federal Government and sacrificing the increased burdens of that increasing debt in addition to the kind of high taxes that it takes to accommodate this kind of spending and this kind of servicing of the debt.

The first chart I have is a pie chart that I wanted to sort of show how the Federal Government is spending $2.4 trillion. And we see the largest piece of this pie is Social Security, spending 21 percent of all Federal spending; and that is going up.

In 1983 we had the Greenspan Commission that gathered together because Social Security was going broke, and what they decided is to dramatically increase taxes, payroll taxes, our FICA taxes, for Social Security and at the same time reduce benefits. And that is the challenge for Social Security, that is the challenge for Medicare, that is certainly the challenge for Medicaid, the three major programs where Members of Congress have continued to make promises over and above far beyond our ability to pay for them in the future. And that is the problem with extra pressure on increasing taxes and increasing debt on these kind of unfunded liabilities.

We see the other pieces of the pie. Defense is 20 percent; 2 years ago it was 19 percent.

Interest. Look at this issue of interest on the debt. It is now 14 percent of total spending. Within 6 to 8 years that amount of the piece of pie that interest consumes servicing this increasing national debt is probably going to double.

Now, interest rates right now are almost at record lows. We know that interest rates eventually are going to increase. And so increasing interest rates

in addition to the increased debt is going to consume a lot larger piece of the total Federal spending.

Then how do we accommodate that increased spending? Do we simply say, well, we are going to increase debt more or increase taxes more? Increasing debt puts additional pressure on the interest rates which is going to up interest rates and up the cost. If we increase taxes, that puts our businesses at a greater competitive disadvantage to other businesses in other countries that we are competing with.

Right now we charge our business approximately 18 percent more taxes than the taxes that are charged to our major competitors in the major industrialized countries of the world.

The other problem with the increased debt is how fast government is growing. The debt of this country, we are about 227 years old as a country, it took the first 200 years of this country to amass a debt of $500 billion. Now, Mr. Speaker, we are going deeper in debt over $500 billion a year. For the past several years, and it looks like as far as we can see into the future, we are continuing to increase debt over $500 billion a year.

How can we do that? We can do it because Members of Congress have felt that it is in their political interest of getting reelected to expand government programs. And now we are in a situation where almost one-half of the adult population in the United States pays less than 1 percent of the total income tax so they do not have a lot at stake in terms of their pocketbook. So it is easier for that population to elect representatives that promise them more and more Federal programs, more and more Federal spending.

Look, there is no limit to the problems in the United States.

But a country that does not pay attention to the major concerns and major problems it is facing ends up being dismantled and diminishes. As strong a country as the United States is, militarily, economically, we cannot survive the kind of unfunded liability and increasing debts that we are accumulating.

Just briefly to go around the pie chart, and then I will go to unfunded liabilities in a second. The domestic discretionary is 16 percent. Other entitlements is 10 percent. Medicaid is 6 percent. Medicare is 12 percent.

Medicare is going to be overtaking Social Security in terms of its percentage of total Federal spending within the next 25 years. Here again, promises we made compounded by the demographics of an increasing retired generation of Americans compared to a relatively small number that are working in this country and paying in their taxes to accommodate Medicaid, Medicare, Social Security and the other programs.

On this next chart, Mr. Speaker, I ask everyone to consider the kind of promises that we have made over and above our ability to pay for those promises. I call that unfunded liabilities. The massive unfunded liabilities, in other words, the promises we have made in some of these programs over and above the revenue that is coming in to pay for them, is going to become a disastrous challenge for this Nation. And we pass these budgets now, and we do not pay attention to what we are doing to take care of the problems of Medicare, Medicaid and Social Security.

Look at these figures. Medicare Part A, mostly hospitals, is $21.8 trillion. That is going to be needed in today's dollar value to accommodate the promises that we have made just in Medicare Part A. When I say today's dollar value, in effect, these the accumulations, the sum of the Medicare A, B, Part D, and the Social Security comes to $73.5 trillion. In other words, we would have to put $73.5 trillion in a savings account that is going to grow with inflation and probably the time value of money to accommodate the more expensive wage inflation that represents the increase in benefits for many of these programs to accommodate what we are going to have to dig up in the future.

To me, Mr. Speaker, it is unconscionable. I hear Democrats say, well, we need more spending, we cannot cut taxes, but Democrats and their budget proposed greater spending than the Republicans did in their budget. But the Republicans, on the other hand, are suggesting in effect, let us borrow more money to accommodate the spending even though we start slowing down the spending. This year, probably the best year since 1995, 1996, we are holding spending down. But even so, Mr. Speaker, holding down this spending, we are still ending up with an increased expansion of the size of the Federal Government that is almost three times the rate of inflation.

So just imagine for a moment if you project this out, and the size of government is growing three times as fast as inflation, then we are going to have such an empowered Federal Government with such great dependency from the American people that even more Americans are going to call for more government services. I think as you look at the unfunded liabilities of $73.5 trillion, Medicare Part B, mostly doctors, $23.2 trillion. Medicare Part D is $16.6 trillion. Medicare Part D is the new prescription drug bill that we passed. That is interesting.

Last November the projections for the unfunded liability were about $7.5 trillion for the Medicare prescription drug program. Now with the actuary's report that came out about 4 weeks ago, the Medicare and the Social Security actuaries' report, the new estimate is $16.6 trillion unfunded liability. So skyrocketing costs, prescription drugs are sometimes the kind of medical technology that can keep people out of the hospitals. And so if you go in the hospital and you are on Medicare, then your prescriptions are covered. So it is reasonable for some of those drugs to be covered. But to have such a huge expansion of this program without cutting back and reforming the system so that it can survive and so it is sound financially again I think is a great mistake.

And of course, I had a tough night that night. I ended up voting against the prescription drug program because I am so concerned that we are digging a deeper hole in terms of the challenge that we are putting on our kids and our grandkids and our great-grandkids to try to pay back what we now consider is our justified overspending.

And think about that just for a moment. Do we pretend that their problems are not going to be as great or as challenging in the next generations, 10, 20, 30, 40 years from now? Because that is what you would have to assume when we see Democrats and Republicans, House and Senate, vote to expand spending to the extent that we are, continuing borrowing the money and expect future generations to pay off that debt.

Social Security, the Social Security Trust Fund's IOUs, we are going to have to come up with $12 trillion to accommodate the increased promises for future Social Security retirees. About $12 trillion, between 11-, it is between 11.9 and 12.2 that we are going to need over and above the Social Security FICA tax. That is 6.2 percent of what you earned for the employee, another 6.2 percent paid by the employer. But make no mistake, it all comes out of the employee's pocket. We are going to need that $12 trillion over and above what is coming in over the next 75 years to pay for promised benefits.

How do we get this Congress' attention? I think, Mr. Speaker, the way to get the attention of Members of Congress is for voters in the United States, this election and every election, to say to individuals that are running for the House, that are running for the Senate, that are running for the President, look, what are you going to do about all of these promises that you cannot pay for? What are you going to do about the increasing debt that you are passing on to our kids and our grandkids, pretending that your problems today are so much greater than theirs? How do we get their attention? I think that is how we get their attention.

I think the American people have got to start realizing that you cannot just have government, some money that is printed in Washington, pay for more and more of the problems of America and more and more of the problems of the world.

We are in a war. During World War II, I was a little kid, and I collected string. I collected tin foil because Mom and Dad and Uncle Sam said that, look, you need to sacrifice. So during World War II we did. We cut way down on all other spending. Every family in America tried to sacrifice and help fight a

war, and we fought a war, and we won a war. But now we are pretending that it is not a real war, and there is no reason to justify cutting other spending because it might hurt us politically back home, and, of course, that is what happens.

I was on the Committee on the Budget for my first 8 years in Congress, and you start a new program, and, of course, if they can get funding to continue that program for a second year, it becomes almost like an entitlement, and they form their own lobbyists and special interests to lobby Congress by contributing to campaigns to encourage Members of Congress to continue to contribute and put money in the appropriations process to those programs. And make no mistake, when you take a race track home or a jogging trail or a bike path or a library or any of the other pork barrel projects, the news media probably puts you on television, puts you on the front page cutting the ribbon, and they say, look what our Congressman has brought home.

Here is the problem. When you take pork back home to your District and it is in an appropriation bill, it obligates you as a Member of Congress to vote for everybody else's pork, and now we have put in so many line items of so many pork barrel projects that it has become one of the main reasons that we have expanded Federal Government spending.

This is another bar chart that represents how much money is going to come out of the general fund to accommodate these programs: Medicare and Medicaid and Social Security. If you see the year 2020, for example, 16 years away, unless we raise taxes or otherwise increase borrowing, we are going to have to reach in to the general fund to the extent of 28 percent, taking 28 percent of this general fund, just 16 years from now, to accommodate our overpromises. I say overpromises, maybe it is nice, maybe it is good, but the fact is we do not have the revenue to pay for those promises because what we are doing at the same time is increasing all spending.

We have had increased spending every year that I have been here. Earlier this evening I heard individuals saying, look, President Bush has been using all of the surplus revenues coming in from Social Security and that is bad, but that kind of demagoguery, that does not get us ahead.

The fact is, ever since Social Security started, anytime there has been more money coming in through Democrat administrations, through Republican administrations, through Republican control of the House and Senate and Democrat control of the House and Senate, every year we have spent all the surplus from Social Security coming in. There has never been a year since I have been in Congress and for the last 20 years at least that the total debt of this country has not increased.

We started bragging back in 1995 and 1996 of a lock box, but that did not last long. It was a gimmick phrase. Hopefully it was going to give us the intestinal fortitude to slow down our increase in spending. It did not work. In one year, we took the Social Security surplus and used it to pay down some of the public debt, sort of like changing credit cards, but the total public debt of this country subject to the debt limit never went down. It continued to go up. Now that debt is over $7 trillion, and within the next four months we are going to have a vote in the House and Senate to, yet again, increase the public debt of this country, and hopefully, we can talk about that vote when it comes up, talk about the fact that we are putting an extra burden on our kids and our grandkids.

See what happens in the year 2030? If we do nothing to change these programs, it is going to take over 50 percent of the current general fund that we spend on the rest of the pie chart that we showed earlier to accommodate Medicare and Medicaid and Social Security. Let me talk a little bit before we close tonight about Social Security.

I was fortunate enough to chair the Bipartisan Task Force on Social Security. Democrats and Republicans, after we heard testimony from the experts for about a year, we all agreed that the longer we put off the solution to Social Security, the more drastic that solution is going to have to be.

With this chart I wanted to just give a quick bird's-eye view of the temporary surplus coming into Social Security, and that is because the taxes were increased so dramatically back in 1983 that we have had a surplus. Now we are anticipating 2017 or 2018 is when there is less money coming in from the Social Security tax than what is required to pay benefits, and there are a lot of people that think that somehow there is a Social Security fund with their name on it. Not so. This is a pay-as-you-go program. Let me just explain that pay-as-you-go program in Social Security.

Current workers pay in their FICA tax for Social Security on Monday, for example, and by Friday it is all sent out in benefits. Current workers pay the benefit of current retirees, and that is what is bringing us into the predicament that we are now facing. When we started Social Security back in 1934, the average age of death was 62, and the official retirement age for benefits was 65. What does that mean? That means that most people died before you paid out anything, and the program was working very well. Now people are living longer, the birthrate has gone down, and we are having a problem.

Here is how Social Security works. Benefits are highly progressive based on earnings. At retirement, all of a worker's wages up to the tax ceiling that is about now $89,000, all of the wages are indexed to present value using wage inflation. What that means is and what the next blip says is the best 35 years of earnings are averaged, but for example, if wage inflation doubles, let us say, every 12 years, so if 12 years ago you were making $20,000, it is calculated on the way your Social Security benefits are calculated to be double that or $40,000 now. So it is not the actual dollar amount that you earned 10, 20, 30 years ago. It is the wage inflation of what that kind of job would pay today.

Here is how the progressivity of the Social Security system works. If you are a very low income worker, you get almost 90 percent back in Social Security checks of what you were making on your job in payroll, 90 percent of the earnings up to the first $7,344 is what you get back in Social Security payments. The next space between $7,300 and $44,200, you get 32 percent of that back, and then after that you get the 15 percent of earnings above the $44,000. So the more you earn, the less percentage of what you get back. So if you are a very high income earner, it is a little over 15 percent. If you are a very low income earner, you get back up to 90 percent.

I just put this line in because a lot of people are concerned about the fact that early retirees receive adjusted benefits. It is true. If you retire early at 62, so based on the average life span, a wage benefit is calculated so the person that retires at 62 and now dies at the average age of 86 will get the same benefits as an individual that waits to 65 years old to start taking those benefits. If you wait until 66 or 67, your benefits actually increase in those two following years by 4 percent a year. So sometimes it is to your advantage to wait.

There has been a lot of debate and discussion on should we have personally-owned savings accounts that belong to the individual worker that the government cannot touch and that would bring in more earnings than what Social Security would. When President Roosevelt first came up with the proposal for Social Security, he suggested that it be privately-owned accounts, and it would still be accounts that you were required to put in a certain percentage of what you earn, but they would be in your name and you could not take them out until you retired.

It was interesting searching the archives. Actually, the Senate passed a bill for personally-owned accounts, and the House, the House said, well, government should be responsible and government should take in all the money and the Federal Government should invest it.

I think probably when it went to conference, because it was so soon after the recession, that decision was made, well, we better let government do it instead of having those accounts personally owned. But Social Security is not a good investment. It is a system that

we know is stretched to its limits, and that is because 78 million baby boomers begin retiring in 2008. Social Security spending exceeds tax revenues in 2017. Social Security Trust Funds go broke in 2037.

Now, just a word on the trust funds. As I mentioned earlier, every year there is more money coming in from the Social Security tax than is needed to pay benefits, and right now we are bringing in about $90 billion more than the benefits. But, again, that runs out in 2017-2018. That is when there is not enough money coming in.

The government writes out an IOU to the Social Security Trust Funds. It spends the money on other government programs or paying off some of the Wall Street debt. But, again, we have never had a year where the total debt of this country has not increased, so we are facing a predicament with Social Security Trust Funds. Even if they are paid back, it means increased borrowing or increased taxes.

I have a chart I hope to get through in a few minutes, because we are going to conclude this evening's session soon, that shows that every time the United States has been in problems with less money coming in than what is needed for Social Security, they have done one of three things. They have either increased taxes or reduced benefits or a combination of both. Usually, it is a combination of both.

Here is a pictorial view of the demographic problems of fewer and fewer people that are working and paying for the benefits of retirees. In 1947, there were 34 working Americans paying in their Social Security tax for every retiree. By the year 2000, it got down to three. The estimate is that by 2025 there is going to be two American workers paying an increased amount of Social Security tax to accommodate every retiree.

A lot of people say that economic growth will not fix Social Security. Social Security benefits are indexed to wage growth. So if you have a strong economy, and there is more jobs and higher wages, because you are paying in on those more jobs and higher wages temporarily, there is more money coming in to Social Security. But in the long run, when that person or that increased number retires, then there is more money going out of Social Security. So economic expansion, because of the fact that Social Security benefits are directly indexed to how much you were making when you were paying in, does not solve the problem. It simply tends to fill the hole a little in the early years, but it leaves a bigger hole in the later years.

The fact is that it is going to take more than economic growth to fix Social Security. And to think that you can fix Social Security simply by upping taxes again only solves the problem in the short run. We have to end up with a better return on those Social Security benefits.

As I make speeches around the country and around my Seventh District in Michigan, a lot of people say, look, if government would keep their cotton-picking hands off the Social Security Trust Fund money, then everything would be okay. And I agree with that, we should keep our hands off that Social Security surplus. It should be really invested instead of spent on other programs. But to represent how great the problem is, what the challenge really is to Social Security, I did this bar chart.

Right now what we have borrowed from Social Security, taking all the extra money in every year, plus paying interest on it, the IOUs now amount to $1.4 trillion. But the extent of the Social Security unfunded liability problem is between $11.9 trillion and $12.4 trillion. So I use the figure $12.2 trillion as far as the unfunded liability. That is, again, what we need in today's dollars over and above what is going to be coming in from the Social Security tax.

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. To me, this shows why Social Security is not a good investment. The real return on Social Security, the return of what you and your employer, or if you are a sole proprietor, of what you pay into Social Security, the return on average is 1.7 percent.

And I compare that, over in the far right chart, which is the Wilshire 5000 Index. Over the last 10 years, even with a bad, poor 3 years on equity investments, still the 5000 equity stocks earned 11.86 percent. Compare that to the 1.7 percent that you receive from Social Security.

This is how many years it takes to break even on your Social Security benefits. By 2005, you have to live 23 years after retirement.

Okay, here, Mr. Speaker, is what we have been doing. Every time we have gotten in some problems, we have simply increased taxes. This chart shows the history of tax increases. In 1940, 2 percent of the first $3,000. In 1960, they decided to raise it to 6 percent of $4,800. Then in 1980, we made a big jump to 10.16 percent of the first $26,000. By the year 2000, 12.4 percent of $76,000. Now it is 12.4 percent of $89,000 this next year. So what we have done is continued to increase taxes to the extent that now 78 percent of Americans pay more in the Social Security tax than they do in the income tax.

And that is what that chart says; 78 percent of families pay more in the payroll tax than in the income tax.

Here are six principles that seem reasonable to me as we try to face the challenge of how do we change Social Security, and one of the problems that I faced. I have introduced Social Security bills since I first came to Congress in 1993 that have been scored to keep Social Security solvent. In the changes back in 1993, 1994, 1995 and 1996, I did not have to borrow any money from the general fund to accommodate some of the changes that would keep Social Security solvent.

The six principles that seem reasonable to me as we protect current and future beneficiaries are that we allow freedom of choice; we preserve the safety net; we make Americans better off, not worse off; we create a fully-funded system; and no tax increases. And maybe, if there is another blip, it should be a system that makes sure that the American economy stays strong instead of the kind of changes such as increased taxes that are going to weaken our economy.

Let me conclude, Mr. Speaker, by asking everybody to make a guess of what the FICA tax is in the country of France, for example. Right now the payroll deduction on wages in France is over 50 percent to accommodate the senior population. So no wonder France is having trouble competing. No wonder France did not want to spend any money in Iraq. No wonder there are demonstrations in France, because if you are paying a 50 percent tax on wages that you have to withhold, then you have two options. You either increase the price of your product, that makes you less competitive, or you increase the wages you pay to your worker. Let us not allow America and the United States to get into that kind of predicament.

Germany just went over 40 percent of payroll tax. So, again, Germany is discovering that it is much more difficult to compete.

Mr. Speaker, I would again encourage my colleagues and I would encourage the American people to start talking to their candidates that are running for Congress, that are running for the Senate, that are running for President of the United States. What is their plan in the long range to save Social Security, to keep Social Security solvent, to save Medicare and Medicaid and keep those programs solvent? It is a huge challenge, and we should be willing to face up to it.

Mr. Speaker, we have had a system in this country where those who work hard and save and try and invest end up better than those who do not. So to continue to increase taxes on those individuals that do save and do try and do invest is going to discourage some of the motivation and incentives that have made this country great. Let us deal with these problems now. Great empires that put off solutions to important problems are those kinds of empires that collapse. Let us not allow that in America.

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

The motion was agreed to; accordingly (at 11 o'clock and 51 minutes p.m.), the House adjourned until tomorrow, Wednesday, April 21, 2004, at 10 a.m.

Mr. Chairman, this bill has several problems. The people of Michigan get even less money for their dollar than they did before. Currently, Michigan taxpayers get 88 cents back for every gas tax dollar that we pay to Washington for highway funding. Under this new bill, that falls to 79 cents. That's unacceptable. Today, people in Michigan pay 18.4 cents in federal gas taxes and 20 cents in state gas taxes. All of the state gas taxes stay in Michigan, but only 79 percent of the federal gas taxes will be returned to Michigan.

President Bush's budget requested $256 billion over 6 years for a transportation bill. H.R. 3550 has been estimated to cost $284 billion. That's a 30 percent increase above the previous transportation bill of $218 billion. And the reopener provision is going to force us to increase spending in the future.

Much of this money is not even spent on transportation projects. There is $3 million for a park in Alabama and $1.5 million for ``streetscape improvements'' in Long Beach, California. There are $1.2 billion for bike paths and more set asides for hiking trails, nature centers, obesity programs for children and battlefield preservation. There are 2,800 earmarks in this bill, 1,000 more than in the last transportation bill. And the Manager's amendment added $1 billion in projects to encourage people to support the bill.

Mr. Speaker, there is a problem that Congress needs to pay attention to in terms of the dramatic increase in the price of scrap steel. It is hurting manufacturing in Michigan and around our country. China is bidding up the price and hoarding steel. If China won't conduct business and comply with WTO rules, then we need to consider drastic action, such as cutting off imports coming from China. If the shelves of some of our discount stores go bare, buy American.

Madam Speaker, this is a good budget we passed out of this House and sent to conference. I am hoping that the kind of frugal budget that we sent to conference is going to come back to this House for a final budget of the House and the Senate.

One thing that the budget did not deal with is unfunded liabilities. Unfunded liabilities are the promises that politicians make when they do not know where the money is coming from in later years. Last week, the actuaries of the Social Security Administration and the Medicare trust fund came up with their estimates of unfunded liabilities, and that is what this chart shows. It should scare the heck out of us.

The Social Security and Medicare trustees have calculated that these programs have $73.5 trillion in unfunded liabilities. Now, if you divide the population of the United States, which is roughly 290 million, into that $73.5 trillion, you end up with over a quarter of a million dollars for every man, woman and child that somehow is going to be responsible for paying for these benefits over and above what we have promised because the money coming in from the FICA tax, and that FICA tax supports Social Security and Medicare, over and above the money coming in in revenues from that tax, we are still short $73.5 trillion.

Medicare part A is short $21.8 trillion; Medicare part B, $23.2 trillion; Medicare part D, the drug program that we passed 4 months ago, $16.6 trillion.

It is interesting on the prescription drug bill that Tom Savings, one of the actuaries, estimated at the time it was passed that the unfunded liability would be $7 trillion. His estimate now is $16.6 trillion.

The danger, of course, is that what we are doing in effect is acting like our problems are so important today that it justifies taking the money of our kids and our grandkids that they have not even earned yet. The unfunded liabilities, in addition to the debt that we are accumulating, now over $7 trillion, is a huge liability to leave to our kids.

I am a farmer from Michigan. What we have traditionally tried to do is pay off the farm so that our kids had a little better chance than we did. Instead, we are now faced with a situation, and here is my political take on it. Right now roughly 50 percent of the working population pays less than 1 percent of the total income tax in this country. What we have done is become more and more progressive with the easy flow of language and justification to tax the rich, but here is 50 percent of the population that has little stake but to ask candidates that are running for Congress for more government services rather than less, and politically it has seemed to be to the advantage of politicians to make more and more promises. This represents how many promises we have made over and above our ability to pay for it.

I did this chart, this was also with Tom Savings' help, just to show that in 16 years it is going to take 28 percent of our general fund budget to pay for the makeup difference in Medicare and Social Security. By 2030, it is going to take almost 53 percent of the total budget.

So what do we do? How do we deal with this? Here is what this Congress, the House and the Senate and the White House has done in the past. This is when we run short of funds in Social Security.

It started out with 2 percent in 1940, 2 percent of the first $3,000. It ran short of money, so in 1960 we raised it to 6 percent of the first $4,800. In 1980, we ran short again, so we raised it to 10.16 percent of the first $26,000; and then in 2000, 12.4 percent of the first $76,000. In 2004, now, today, 12.4 percent of the first $89,000. So what we have done is either reduced benefits, increased taxes or a combination of both. That is what we did in 1983.

I just call on my colleagues and I call on the American people, Madam Speaker, to ask their Members of Congress what bill have you written, what bill have you signed on to to make sure that we keep Social Security and Medicare solvent and not leave the total bill up to our kids?

Mr. Speaker, this year we celebrate Abraham Lincoln's 195th birthday. In his famous address at Gettysburg, he noted that ``our fathers brought forth on this continent a new Nation conceived in liberty and dedicated to the proposition that all men are created equal.'' The Civil War was ``testing whether that Nation, our Nation or any Nation so conceived and so dedicated can long endure.''

Now, that challenge is with us. Today, we face a threat to the country that may well be as serious. It lies not in the dramatic clash of arms, but in neglect of our Nation's finances, especially our long- term finances.

Voters vote for benefits, and politicians promise them without knowing how to pay for it. Just 4 months ago, Congress voted for a prescription drug benefit that adds $16 trillion to the program's unfunded liability. That is over two times our total national entire debt, and it was done mostly for short-term political gain with little reform of the underlying program. There is now a call from some Members proclaiming that the budget we are now working on for 2005 that is actually twice an increase in government, twice the rate of inflation is not enough and we should have more spending to increase taxes eventually. There are very few in Congress who are willing to resist the continual pressure to spend; and I think part of that, Mr. Speaker, is because of the fact that most citizens today now pay less in income tax than they get from government services, so it is easy to ask for more.

From the founding of this country, it took until 1975 to amass a debt of $500 billion. Unfortunately, we are now adding more debt to our books every year than we did over the first 199-year history of this country. The deficit for fiscal year 2003 was $536 billion, $631 billion this year, and another $534 billion expected for next year. We have never run a deficit this high, and we need to take decisive action in this budget to address our overspending.

This kind of spending means that higher taxes are coming, maybe not in the next year or two, but eventually. The same Congress that could not bring itself to add a few real reforms to Medicare in a gigantic benefit expansion bill is not likely to cut benefits to the degree necessary to head off financial crisis until the disaster is on us.

I take some comfort from a new willingness among many members of the Republican Conference to tighten our line on spending. Though some Members expressed concern about cuts in an election year, a strong majority have insisted that we reduce spending. There is general cooperation and agreement that we should spend less, not tax more, and we will see if that determination translates into effective spending restraint.

Joining with colleagues who share our concern about government overspending, we will reimpose discretionary spending caps which were in effect from the early 1980s through the surplus period of the late 1990s. It is important, Mr. Speaker, that Congress work hard to cut out unnecessary waste and abuse. We also need to make very hard decisions to prioritize spending.

Another aspect of the solution, I think, is improving the honesty of government accounting. I have a bill to require the CBO and the OMB to include unfunded liabilities in their budget projections. This unfunded liability is now projected to be $71 trillion, $71 trillion that our kids and our grandkids are eventually going to have to finance, pay the interest on, and start paying it back.

Some people have said that we should not worry so much about unfunded liability because it can be wiped out by reforms, but Congress has shown little political will to deal with the problem. Perhaps making it more visible will help bring about some of the reforms that will be necessary to come to grips with the problem.

Congress and the President can redeem their record on spending to a large degree if they push hard for Social Security reform. It would be nice to do it before the election. Maybe we can do it after the election, but it remains to be seen whether we will take on that fight. It will be a fight because steeply progressive taxes and big government have combined to form a powerful electoral block. Here, again, the bottom 50 percent of earners now pay virtually no income tax and, therefore, have little will.

Empires decline when they fail to act on fundamental problems, and I wonder at times if we are not too distracted by the endless scandals and the horse race politics of our media culture to grab what is best for our country.

Mr. Speaker, last week the actuaries of the Social Security Administration and the

Medicare came up with their estimates of the predicament that we are facing in those two programs in terms of having less revenue, less money coming in than is needed to pay for promised benefits. The news was not good.

I wanted to start with this pie chart to give everyone an impression of how we spend Federal Government money; and as you see by the title of the chart, Social Security is the largest budget expenditure. This is the Social Security piece of pie, if you will, at 21 percent of all of the money spent by the Federal Government. That compares to 20 percent for defense, and defense, 2 years, 1, 2, 3 years ago was a little over 18 percent. So, even though, defense has grown, Social Security is growing even faster.

We have Medicare at 12 percent, but that is the fastest growing program; and within 30 years, Medicare will overtake Social Security as the top Federal budget spending program.

Other entitlements, 10 percent; domestic discretionary, 16 percent; and here is a problem area over here, interest on the debt, 14 percent. The reason that is a problem is because we are amassing a dramatic increase in debt.

Last month, we celebrated Abraham Lincoln's 195th birthday. In his famous Gettysburg Address, he sort of noted whether a country of the people, by the people, and for the people could long endure. The Civil War, of course, was sort of a testing ground, whether that Nation or any Nation so conceived and so dedicated could last.

The actuaries in their report last month estimated that the total unfunded liability, the amount of promises or the cost of those promises over and above revenues coming in from the FICA tax, from the payroll tax, was going to be $73.5 trillion. To put that in a little bit of perspective, the budget that we are looking at for this current year is about $2.28 trillion, and for next year the budget we are working on is about $2.4 trillion. The unfunded liability, how we are going to have to somehow cut benefits or increase borrowing or increase taxes is $73 trillion or over $73 trillion; and breaking these down, we see Medicare part A estimated at $21.8 trillion; Medicare part B at $23.2 trillion; Medicare part D, the new prescription drug program, at $16.6 trillion.

So passing the Medicare drug bill increased the unfunded liability by $16.6 trillion, and Social Security with the trust funds comes to almost $12 trillion. It is more than a quarter million dollars of the unfunded liability for every American. Every baby that is born tomorrow, every child and woman and man in this country, their share of this unfunded liability that they are going to have to deal with the extra interest on the debt and paying back that debt is over a quarter of a million dollars.

This chart that Tom Saving came up with, an actuary in both Medicare and Social Security, indicated how much of the general fund revenue is going to have to be used up to pay for promised benefits in Social Security and Medicare; and we see that within 16 years, by 2020, it is going to take 28.6 percent of our current general fund budget to pay for the promises we have made in Social Security and Medicare. By 2030, it is going to take 52.7 percent of the general fund to pay for these programs.

The reason that I am making this presentation tonight, Mr. Speaker, is to call to my colleagues' attention, call to everyone's attention the very serious situation of the promises that have been made over and above the money that is coming in for those programs and how it is going to impact other programs that government now provides.

We talked about the Civil War with Abraham Lincoln. The earlier group talked about the Iraq War; but today, we face a threat to the country that may well be more serious than any war we have had. It is not in a dramatic clash of arms, but in neglect of the Nation's finances, especially our long-term finances.

Voters vote for benefits, and politicians promise them, without knowing where the money is coming from. They do not know how to pay for it.

Just 3 months ago, Congress voted for a prescription drug benefit that adds $16.6 trillion of the program's unfunded liability. That is more than twice our Nation's entire national debt, without knowing where the money is coming from; but when I say without knowing where the money is coming from, actually it means that our kids and our grandkids, that somehow some of these programs justify borrowing from the money that our kids and grandkids have not even earned yet. So to continue promising programs because it seems to be politically favorable to individuals in their reelection is unconscionable in terms of the burden that it is putting on our kids and grandkids.

From the founding of this country, Mr. Speaker, it took until 1975 to amass the first $500 billion worth of debt. Unfortunately, we are now adding more new debt to our books every year than it took in the first nearly 200 years of this country to amass because we are going over $500 billion every year.

The deficit for fiscal year 2003 was $536 billion. It is expected to be $631 billion this year and another $534 billion next year. We have never run a deficit this high, and we need to take decisive action in this budget to address our overspending; and though this budget is, for lack of a better word, more frugal than maybe any budget that we have passed since 1996, it still increases total spending of the government almost twice the rate of inflation, and it does not deal with unfunded liabilities. It does not deal with changes to Social Security, with changes to the Medicare program or the Medicaid program that are going to allow these programs to survive without threatening future generations with huge tax increases.

This is sort of a quick snapshot of the problems of Social Security, a short-term surplus. In 1983 under the Greenspan Commission, they raised the taxes so high that there was more money coming in than was needed; and so that money, maybe the word is ``theoretically,'' was put into a trust fund, but there is nothing there except IOUs because government spent every cent of that money for other government programs. So in the short run, we had extra money coming in, all spent; and now in 2018 we are looking at there being less revenues coming in from even that high tax increase than is needed to pay promised benefits.

So a very bleak future in terms of future deficits.

When I have given speeches on Social Security, a lot question, how does Social Security work? So, very briefly, let me go through some of the provisions of how the Social Security program works.

Benefits, first of all, are highly progressive. That means that if you are a low-income earner, when you retire you can receive up to 90 percent of your average monthly check that you had for the 35 eligible years that you gained your Social Security credits. If you are a very high-income earner, then you come closer to getting back only maybe 15 percent of your average monthly check that you were earning when you were paying in your social security taxes.

At retirement, all of a worker's wages, up to the tax ceiling, are indexed to the present value. We are using wage inflation. The best 35 years of earnings are averaged out. So if you only worked 30 years, you got 5 years that is zero, and that is averaged in and averaged out as zero years. The average benefit for those retiring in 2004 equals 90 percent of earnings up to the first $7,344. This is the progressive part. Ninety percent for that low income. Thirty-two percent of earnings between $7,300 and 44,268, and then 15 percent of earnings above the 44,268. Early retirees receive adjusted benefits.

SSI. A lot of complaints about SSI, about the abuse of the Supplemental Security Income program and how that is hurting Social Security. Actually, SSI does not come out of the Social Security Trust Fund. It comes out of income taxes that go into the general fund.

Joining with colleagues who share my concern about government overspending, I think we are coming to a good start this year in making a difference on how we hold spending in line.

It is interesting that Franklin Delano Roosevelt, when he started Social Security in 1934, actually was suggesting that the savings be in private accounts but it be mandated savings based on earnings and that you could

not use that savings until your age of retirement. But that changed. Looking at the archives over here, it is interesting, the debate that went on in the House and the Senate in those years.

The House passed legislation that said government should run the whole program. Government should take the money and invest it and save it and then give fixed benefits to retirees when they retire.

The Senate passed the bill saying these should be individually owned accounts, where individuals could invest in limited investments, but of course forced to save and forced to invest with that money and not being allowed to be taken out until they retire.

When they went into conference, the House won that debate; and we ended up with a program where government takes all the money in and spends any extra money that is coming in and then promises that benefits will be paid. Several times over the history of the program since 1935 we have ended up with less money than we have needed, and what has happened is this Chamber and the Senate Chamber across the way, and the President, have simply said, every time money was short, that we are going to cut benefits or raise taxes or do both. And that is what has happened over the years.

The system is stretched to its limit in Social Security. There are 78 million baby boomers that will begin retiring in 2008. Social Security spending exceeds revenues in 2017 and Social Security trust funds go broke in 2037, although the crisis could arrive much sooner. The reason the crisis is coming much sooner is because, even though the government has IOUs to pay back the money it has borrowed, government does not know where the money is coming from. So the danger when we come to the point of 2017, when there is less money coming in than going out, whether it is 2017 or 2018, is how does government come up with that money to pay promised benefits? Well, they either cut benefits or increase taxes or increase borrowing.

Social Security trust funds go broke technically in 2037, but that is if government pays back everything it has borrowed. Insolvency is certain. We know how many people there are and when they will retire. We know that people will live longer in retirement, and we know how much they will pay in and how much they will take out. We know that payroll taxes will not cover the benefits starting in 2017, and the shortfalls will add up to $120 trillion between 2017 and 2075. So that is $120 trillion in tomorrow's dollars. That translates into $12 trillion that would have to be put in a savings account today, earning whatever the CPI inflation is, to accommodate the $120 trillion that is needed in future years.

The coming Social Security crisis, our pay-as-you-go retirement system, will not meet the challenge of demographic change. Here is the problem, Mr. Speaker. The problem with Social Security, the problem with Medicare is the problem we would have with any program that is based on a pay-as-you-go system, where existing workers pay in their taxes which are then immediately sent out in benefits for existing retirees.

The problem is that way back in 1940 we had 32 workers for each one retiree. By the year 2000, we got down to three workers for each retiree. And by 2025, the estimate is that there will be two workers for every retiree. So it is understandable that if those retirees are going to receive the same level of benefits, then each worker is going to have to pay in more tax revenue; and that is what we have been doing, is continually increasing the FICA taxes on existing workers over the years.

So, two problems: Well, problems, I have to be careful of that word. Two situations that have brought about the demographic changes: One is the situation where people are living longer. The other is the birth rate is going down. Now, remember the chart where we go from the green to the red? That is because of the fact that the big birthrate increase after World War II, the so-called baby boomers, are going to start retiring in the next few years.

Some have suggested, well, if we can just get the economy going, that will help; and there is no question that the economy helps in the short run. It helps in the short run because, as wages go up and more people are working, then there is more FICA tax coming in, more Social Security tax coming in. But it does not help in the long run because there is a direct relationship to wages while you are paying in and eventually the benefits that you are going to be taking out. So when the economy grows, workers pay more in taxes, but it also will earn more in benefits when that individual retires. Growth makes the numbers look better now but leaves a larger hole to fill later.

The administration has used, I think, sometimes, these shortcut figures to say that the desperation date of when we are going to run out of money is increasing, and that certainly happens with a strong economy.

Now, Social Security trust funds versus the Social Security's shortfall. A lot of people suggest that if government would just keep their hands off that surplus money coming in, that Social Security Trust Fund, everything would be okay.

I wanted this chart to show the relative difference between what is in the trust funds, the IOUs that are now down in Virginia, and where we have borrowed $1.4 trillion from Social Security over the years. But the shortfall, as you remember, is $12 trillion. So even if we pay all this money back, and we will, somehow. We will pay it back with extra borrowed money or we will increase taxes on the workers in those years when we make the change. The money will be paid back, but it is going to be very difficult as we continually depend on tax increases to solve the Social Security problem.

Let me tell you why I am saying that. The situation is real in countries like France and Germany and Japan, where the senior population is a larger percent of the working population than it is in this country. The payroll taxes in France, for example, now are at about 50 percent. So an individual goes to work and works and earns so much money and half of that money is taken out for their taxes to cover the seniors in that country. In this country, we are up to 15.2 percent for our FICA tax. France is at 50 percent. Guess what Germany is? Germany has just passed a 40 percent payroll tax to cover the benefits for their senior population, and Japan is overwhelmed with the problems of their senior population as they try to tax workers.

You can understand that if you have that high of a tax, that businesses, that industry, that companies have to pay out, it comes from two places. They have to increase the price of their product or they decrease the salary and wages they are paying to their workers; and that makes them, that makes that country much less competitive. So you can sort of understand, simply by looking at the payroll taxes in France, some of their problems that they are now having with what I understand is 10 percent unemployment and some of the problems they are having with trying to compete with the United States and other countries.

The biggest risk for Social Security is doing nothing at all. Social Security has a total unfunded liability of over $12 trillion. The Social Security trust funds contain 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 or we will continue increasing the debt of this country and the borrowing, which means that there is going to be a mounting interest rate.

When we look at the interest rate expense for this country, that is based probably on one of the lowest interest rates that we have had in a long time. So if interest rates go back up to normal, that can eat up twice the amount of the total spending budget that we now have simply because of the propensity of Members of Congress to spend more, to make more promises without knowing how those promised benefits are going to be paid for.

This is the diminishing returns on Social Security, and the reason that I made this chart is to demonstrate that Social Security is not a good investment. 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 for the general market. So if you happen to be a minority, which means on average you die before you reach the 65-year- old retirement for maximum benefits, so the average return on the investment for minority workers is a

negative figure. If you are average, then you average just under a 2 percent return.

But compare this with the Wilshire 5000 Index, where that index, in equities, has earned 11.86 percent, and that is after inflation, over the decade ending January 31, 2004. That is even through the slumping years of 2001 and 2002 and somewhat in 2003.

This is how long you are going to have to live after you retire if you are going to break even on what you and your employer have paid in to Social Security. The people who retired in 1940 at the beginning of the program, it was pretty good. They only had to live 2 months after retirement. By 1995, you had to live 16 years after retirement to get your Social Security checks coming in to break even. By 2005, now you have to live 23 years after. By 2015, you are going to have to live 26 years to break even on what you and your employer have paid in to Social Security. This is what we have done to American workers. There are 78 percent of American workers that pay more in the FICA tax, the Social Security tax, than they pay in the income tax. So in terms of tax breaks for working Americans, we should be looking at possibly lowering their FICA tax, because that is where they are spending the money.

Let me go into my proposals for changing Social Security. I chaired the bipartisan Social Security task force. After about a year, every member of that task force agreed that we had to do something very quickly to save Social Security. The tendency of Congress is you wait until the disaster hits and then you make changes. But the longer we wait to solve Social Security, the longer we wait to solve the Medicare and Medicaid problem the more drastic those solutions are going to be. The six principles that I think are reasonable are protect current and future beneficiaries; allow freedom of choice; preserve the safety net, in other words, leave some of that trust fund money available; make Americans better off, not worse off; create a fully funded system; and no tax increases.

I have introduced legislation. This is my 12th year in Congress. I have introduced Social Security legislation ever since I first came to Congress. Actually, I wrote my first bill when I was chairman of the Michigan Senate finance committee, because it was obvious, even in the late eighties and early nineties, that Social Security was heading for a cliff of very serious financial problems of solvency. The people choosing to participate in the voluntary account program would continue to receive benefits directly from the government. This is my bill that I introduced a few months ago. Those benefits would be offset based on the amount of money deposited into their account and not on the amount of money earned in the account. This means that workers could expect to earn more from their accounts than was the offset for the Social Security benefits that would be reduced.

It is interesting to observe some of the municipalities that have elected to have their own personal retirement savings plans rather than have Social Security. When we passed the Social Security bill and started it in 1935, the option for State government and local government was to allow them to opt out of Social Security. Some of those counties now in the United States that opted out of Social Security are having retirees with benefits as high as 40 and 50 and $60,000 a year because of personal investments as opposed to the general Social Security program that has ended up with a 1.7 percent return on Social Security.

I think it is important to mention that part of Social Security is the disability program. The disability insurance program is not touched by anyone that has suggested any changes in Social Security, so the insurance part of that program continues to be a government insurance program to protect eligible workers and make payments if they are injured on the job.

The worker accounts, the question is, can we do better? Is there some way to earn more than the 1.7 percent that we are now earning on Social Security dollars coming in? All worker accounts would be owned by the worker and invested through pools supervised by the government. In other words, they would be limited to index stocks, index bonds, index cap funds, and investments otherwise determined by the Secretary of the Treasury to be safe investments. So the investments are limited, just like anybody that works for government now. Our Federal payroll deductions go into a Thrift Savings Plan with individual employees and members able to choose how much of the money goes into each plan, but there is a limited choice on the number of plans that you are eligible to invest in. Regulations would be instituted to prevent people from taking undue risks. And until the account balance reaches $2,500, a worker would be limited to choosing one of three funds, an 80 percent bond/20 percent stock fund or a 60/40 fund or a 40/60 fund. And after the balance reaches $2,500, workers would have access to additional safe funds as determined by the Secretary of the Treasury.

The legislation that we introduced, and this was bipartisan legislation with Republicans and Democrats that signed on to my bill, the bill would increase contribution limits for IRAs and 401(k)s and pension plans. I put this in the bill because I think it is important that we increase the savings of the United States. The savings of the United States is one of the lowest savings rates in the world. And so how do we get back to the days where the United States had one of the highest savings rates in the world? I think allowing some tax advantages to encourage savings is part of the motivation that can bring us back to a reasonable savings.

The legislation I introduced would create a 33 percent tax credit for the purchase of long-term care insurance up to $1,000, $2,000 for a couple. It would create a tax credit to make it easier for low-income seniors to live at home or with family rather than going to retirement care. And low-income seniors would be eligible for the $1,000 for expenses related to living in their own home. Households caring for dependent parents would also be eligible for a $1,000 credit for expenses.

I call this fairness for women. I suppose if I was politically correct, I would call it fairness to spouses. But generally women have been shortchanged in the Social Security program. These are the changes that are incorporated in my legislation. For married couples, account contributions would be pooled and then divided equally between husband and wife. In other words, if one spouse was making $80,000 a year and the other spouse was making $20,000 a year, they would be added together; and the eligibility at $50,000 for each spouse and the percentage allowed to go into their private investment account would be based on adding the two incomes together and dividing by two. So both husband and wife would have exactly the same amount every year in their personally owned savings account.

The legislation would increase surviving spouse benefits to 110 percent of the higher earning spouse's benefit. Somehow we need to have programs that encourage seniors to stay in their own homes rather than nursing home care that can cost 40, 50, $60,000 a year. This is one of the areas that instead of the current law that says you could have 100 percent of that higher benefit, this legislation would increase it to 110 percent of the higher benefit. The stay-at-home mothers with kids under 5 would receive retirement credit. So for those limited years that they have children under 5 years old, they would be credited for the 35 years that is being used to determine benefits. For those years that they are at home with these young kids, they would be credited with the average earnings for those higher income years.

The Retirement Security Act has been scored by the Social Security actuaries to restore long-term solvency to Social Security. There would be no increases in the retirement age, changes in benefits for seniors or near seniors, or changes in the Social Security COLA. Solvency would be achieved by recouping a portion of the higher returns from worker accounts and slowing the increase in benefits for the highest earning retirees.

So what we do to help come up with the money to keep this program solvent is we reduce the increase in benefits for higher-income retirees, and secondly we allow a personal investment that can earn more money, but that individual worker still can have a retirement benefit that even though they are

working in modest income, they can retire at very much higher incomes. The bill would also call for a loan of $900 billion from the general fund to Social Security to ease in the transition as we go into some of these private accounts. That loan is paid back over the years.

When I introduced my first bill in 1994 and 1996, it was not necessary to borrow that money because the surplus coming in in those early years was so much greater. Now the surplus coming in from Social Security is declining; and, of course, as we noted on the one chart, it is going to run out.

The program, the trust fund continues. The Retirement Security Act would allow workers to create on a voluntary basis accounts funded from their payroll taxes. It would be in their name; so if they die before the age of 65, they own the money. The money would go to their heirs and their kids. The accounts would start at 2.5 percent of income and would reach 8 percent of income by 2075. Workers would own the money in their accounts. It is their money. Investments would be limited and widely diversified and investment providers 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 that the lower income workers build up the kind of equity that is going to allow them to retire with much higher incomes.

The kind of spending that we have had in Congress means higher taxes are coming, maybe not in the next year or two, but eventually. The same Congress that could not bring itself to add a few real reforms to Medicare in a gigantic benefit expansion bill is not likely to cut benefits to the degree necessary to head off financial crisis. I take some comfort in what is happening this year from a new willingness among many Members of the Republican Conference to tighten our line on spending. And though some Members express concerns that maybe you should not have cuts in an election year, the overwhelming majority of Republicans agree that we have got to cut down on spending, we have got to have some kind of PAYGO rules that put some teeth, if you will, into assuring that we are going to limit spending. Joining with colleagues who share my concern with government overspending, we are going to reimpose those caps that we had in the 1980s and through the surplus period of the late 1990s.

Another aspect of the solution is improving the honesty of government accounting. I would like to mention, Mr. Speaker, a bill that I am introducing to require the CBO, the Congressional Budget Office, and OMB to include unfunded liabilities, the $73.5 trillion that we mentioned, in their budget projections. So it is legislation that is going to make us more aware of the fact that we are making more promises than we can afford.

To put $73.5 trillion in perspective, it amounts to 7 years of the gross domestic product of the United States, more than 30 times the President's proposed budget for this year; and it means that with 290 million Americans divided into that $73.5 trillion, every man, woman and child has a responsibility for more than $250,000. Some people have said that we should not worry so much about unfunded liability because it can be wiped out by reforms. I think that is the challenge. Are we going to do reforms this election year? Or are we going to put off those reforms until maybe after the election and try to do them next year?

Congress and the President I think can redeem their record on spending to a large degree if they push hard for Social Security reform after this election. But it remains to be seen whether we will take on that fight, and it will be a fight because steeply progressive taxes and big government have been combined to form a powerful electoral bloc.

Here again that bloc is 50 percent of earners in this country pay less than 1 percent of the income tax; and, as with health care, somehow everybody has got to participate in the taxes that run this government if they are going to look at their demands for increased government and know somehow that it affects their particular pocketbook. The same is true with Medicare and Medicaid. Somehow the reasonableness of those that are frugal in demanding additional health care need to have some kind of reward and those that are wasteful need to have some kind of scolding.

The old system, of course, before Medicare and Medicaid was that one worked hard and they earned money and they wanted to save that money, so they were very careful how they spent that money for health care and they asked the doctor, look, how much is this going to cost and why are you charging me this much on the bill? But when there are third-party payers, when government is paying the full bill, it is easy not to be as conscientious in demanding accountability from health care providers.

Empires decline when they fail to act on fundamental problems; and I wonder at times, Mr. Speaker, if we are not too distracted by endless scandals and horse-race politics of our media culture to grapple with what is best for our country. Too often, politics get reduced entirely to who benefits and who pays, but there have been times when I have been both surprised and inspired by the American people, by the people in this Chamber and the Senate and the White House who say we have got to come to grips with real problems that are facing this country. Despite the fact that it would sometimes seem easy to say, well, let us tax the rich and spend more money for the less rich and divide the wealth, I think it is important to remember that this country was built on a foundation and a motivation where those individuals that worked hard and saved, that tried and invested and that were careful with their spending ended up better off than those that did not.

So as we come with legislation that sometimes on the surface seems attractive to divide the wealth, I think we have got to be very careful; and this gives me help and hope.

As Lincoln concluded at Gettysburg ``that this Nation under God shall have a new birth of freedom and that government of the people, by the people, and for the people shall not perish from the earth,'' I think he was right because we are going to come to grips with these problems.

It is just important that the American people this year remind their elected representatives. In fact, I say to the American people when they go to debates to ask those individuals running for President, those individuals running for the U.S. Senate, those individuals running for the U.S. House of Representatives, ``What bill have you sponsored or signed on to to save Social Security and to save Medicare?'' Do not let them give a lot of fast talk, but ask exactly what are they going to do to deal with this huge unfunded liability that this country is facing, where promises have far exceeded our ability to pay for them.

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

The motion was agreed to; accordingly (at 10 o'clock and 20 minutes p.m.), the House adjourned until tomorrow, Wednesday, March 31, 2004, at 10 a.m.

Mr. Speaker, today is going to be a good debate on the budget. We are going to hear suggestions, maybe from both sides of the aisle, certainly from the Democrats, that we do not spend enough in this budget.

The reason I am supporting this budget is because it is probably the most frugal budget spending increase we have had since 1996. There is a weakness in this budget that some day we are going to have to face up to, and that is unfunded liabilities. The day before yesterday, the Medicare and Social Security trustees estimated that the unfunded liabilities for those programs are $71 trillion. What that means is, in 15 years, we are going to have to use 28 percent of the general fund revenue to make up the difference between our promises and the tax funds coming in for Social Security and Medicare.

Mr. Speaker, we have got to deal with the entitlement programs if we are not going to leave our kids and our grandkids with a huge debt.