Congressional Budget for the United States Government for the Fiscal Year 2006
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR THE FISCAL YEAR 2006
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AMENDMENT NO. 144
Mr. GRASSLEY. Mr. President, I rise to respond to Senator Conrad's amendment, the pay-go amendment he brings up as it relates to fixing Social Security. But before I get into my remarks, I wish to call attention to some points raised by Senator Conrad. I do not dispute anything he said, but I would like to give some refinement of some statistics he has given.
Recently he spoke about the decline in the value of the dollar. His figures were accurate, as far as the decline of the dollar. But also where he starts, there has been a decline of the dollar, but I think we ought to point out to the people of this country that from 1995 until the year 2002, we had a 50-percent increase in the value of the dollar. When we go back to 1995, the middle of the Clinton administration, we will find that we had a dollar lower in value than presently. Then we had the increase in the value of the dollar, and now we have had a 30-percent decline in the value of the dollar. The value of the dollar still is much higher than it was in 1995.
Another point I wish to make is on his dissertation on the estimate of the trustees of what the growth of the economy, of the growth of productivity will be over the next 75 years.
He would say that over the next 75 years, the growth of the economy, as the trustees put it, at 1.6 percent is too pessimistic, and consequently maybe the situation over the next 75 years of the Social Security system is not as bleak as the trustees might be led to believe. That is because he would point out that the average productivity of the economy over the last 40 years, from 1960 to the year 2000, was 1.76. So the point being made by the opposition is that the growth of the economy has really averaged more than what the trustees say it will over the next 75 years, so somehow we might not have anything to worry about.
If you take subsets of the years from 1960 until the year 2000, you will find from 1960 to the year 1975 we had a growth of productivity of 2.4 percent. But if you look at the period of time from 1975 until the year 2000, you would see that productivity growth was 1.38, to compare with what the trustees had used for the next 75 years.
So I don't think it is right to point out what the trustees have used as a figure because, compared to the last 25 years, it is not pessimistic whatsoever. You could even make an argument that maybe it is too optimistic.
As we listen to these figures, I hope there will be an effort on the part of my colleagues to study these figures and not just to take these charts at face value, because they may not tell the entire story.
Having pointed that out, I would like to speak about the amendment of Senator Conrad, not reinstating the pay-go rules until Congress addresses the Social Security issue. Stop to think what sort of proposition this really is. The amendment says we should not do anything else to deal with overspending by Congress until we address the Social Security issue. Unfortunately, no one I am aware of who supports this amendment has a plan before Congress to fix Social Security. So we have an amendment that says, in a sense, don't do anything until we fix Social Security but those who support this amendment don't have a plan to fix Social Security. So, as I see this amendment, this is an amendment to just simply do nothing--not do anything about a plan to keep spending under control or, if you can't do that, then under this amendment you can't do anything about Social Security.
Due to the retirement of the baby boomers, Social Security will face rising deficits in just a little bit more than a decade. In fact, some people, including me, can legitimately say that this problem really starts in 3 years, when baby boomers start retiring, because their retirement is going to lessen the amount of surplus going from the payroll tax into the Social Security trust fund, which really becomes a problem when we have negative cash flow, just 13 years down the road.
Because Americans are living longer and having fewer children, there are going to be in the future fewer workers to support each beneficiary. That means that Social Security will face rising deficits long after baby boomers are retired and gone. There is widespread agreement that Social Security is facing a significant financial problem.
We could lay out 10 different charts here that would demonstrate the problems of Social Security. I do not think there is a single Democrat or single Republican who would have any disagreement with the problems of Social Security, now or for the next 75 years. It is mathematical and we ought to be able to find a mathematical solution to it.
But when it comes to finding a solution, there is very little agreement on what needs to be done to address this problem. President Bush has made saving Social Security one of his top priorities this year. We ought to thank the President for doing it, because now we are in a position 3 years away from where baby boomers are retiring. We can look at this issue very dispassionately, not under a crisis environment. This is the period of time to deal with these problems. If President Bush had not raised this issue in the minds of the American people, we would not be dealing with it in Congress.
I have to say, as chairman of the committee that has to deal with this, I wish there was not a Social Security problem. Maybe people could say, Senator Grassley, you are chairman of this committee; why didn't you deal with this 2 or 3 years ago, or 4 or 5 years ago?
There are some things you could spend a lot of time on and not get anywhere, if you don't have any colleagues who want to deal with it. But President Bush, using the bully pulpit of the Presidency, has raised this in the minds of people now. Polls show the vast majority of the people know this is a problem Congress ought to deal with. So we ought to praise the President for helping us along a very difficult road here in the Congress, dealing with something that we would not otherwise even be talking about. So it is one of his top priorities, and we ought to thank him for making this a top priority. He should be commended for his leadership.
There are a lot of Members in this body who are now fully committed to saving Social Security and doing it this year. So, as chairman of the Senate Finance Committee, I must be ever mindful of the concerns of my colleagues and the rules of the Senate. Social Security improvement is one of the most politically sensitive issues Congress can ever deal with. That is why the last time it was dealt with was in 1983. That is 22 years ago.
President Clinton brought this issue to the attention of the American people and to the Congress by his very well-thought-out statement: Save Social Security first--before you do anything else. He even referred to Social Security as a crisis. Somehow, according to my colleagues here, when President Bush says Social Security is in a crisis, that is wrong. But I didn't hear those same people, in 1998 or 1997, when President Clinton said it was a crisis, ``save Social Security first,'' saying that there was anything wrong with calling it a crisis back then. Well, if it was a crisis then, it is more of a crisis now.
I don't care whether it is a crisis, a problem or a challenge, it is something we need to deal with and deal with today. That is because if we deal with it today, this year, as opposed to next year, it is $600 billion less of a problem, because it costs $600 billion more on a cumulative basis over the next 75 years to deal with it next year instead of dealing with it this year.
President Clinton raised this issue, and even brought up the issue of investing in the stock market as an example. But then, all of a sudden, it was dropped like a hot potato, and it was not brought up again until President Bush brought it before us.
This is a very sensitive issue, one dealt with every 20 years. We ought to deal with it now. We ought to welcome the opportunity to deal with it. We can deal with it in a calm atmosphere, not the crisis of 1983 when we were borrowing money from Medicare to keep Social Security checks going, or when we as a Congress put--I don't know whether it was $10 billion or $20 billion, but we put billions of dollars from general revenue into the trust fund to keep checks going. Prior to that, a lot of people were saying, I will never increase taxes, I will never cut benefits. But you know what happens when you are in a crisis; you end up doing both.
We have an opportunity to do this in the calm and correct way, such as the promise Congress made 28 years ago--not in 1935, not in the original contract where these promises were made. These promises we can't keep today were made 28 years ago. We have a chance to correct them and we ought to take advantage of that opportunity.
Of course, as we are dealing with this sensitive issue, we are all mindful that the Senate's rules require at least 60 votes to reform Social Security; that is, assuming that you would have a filibuster and you would have to overcome the filibuster. As a result of anything which is going to get done, we have to build strong bipartisan support if we are to succeed. Consequently, even if every Republican would vote for Social Security, that would be 55 votes, and you aren't going to get all of one party going in the same direction. We have to have bipartisanship to get anything done.
To begin the process of building bipartisanship and support for Social Security, I have met with the ranking Democratic member of the committee. I do that on a regular basis, not just on Social Security but on everything before our committee. We are going to try to find some common ground. We usually do. Everything should be on the table for discussion. We should consider all of our options. Developing a plan to protect and improve Social Security will be a complex and challenging task. It will require the support of both Democrats and Republicans. If we make a commitment to build a strong bipartisan consensus, we can break down partisan roadblocks that threaten the future of Social Security, but the first step is to agree on the nature of the problem.
As I said, if I laid out 10 different charts with different aspects of the problems of Social Security, nobody would dispute them. It is quantifiable, it is mathematical, and hence the agreement.
We have had in this debate, though, some critics who would muddy the water claiming that the Social Security problem is due to tax cuts that Congress enacted in 2001 and 2003. I don't quite understand how cutting the income tax has anything to do with the trust fund being in trouble, because we have followed the pattern that was laid out by Franklin Delano Roosevelt in 1935; that he wanted a payroll tax, money designated for Social Security so that there is a relationship between what you pay into it with what you get out, so that it would be an insurance program and not be a welfare program.
Maybe today, welfare doesn't receive the public's lack of respect it did in the 1930s. In the 1930s, it was a shame to be on welfare. Maybe today it is not. That is part of our problem with our society as a whole.
Franklin Delano Roosevelt wanted to be very careful that people who received Social Security checks were not seen as being on welfare. They weren't on welfare because they paid into it. They were buying insurance when they did that.
Arguing that the cutting of the income tax has something to do with taking money out of the Social Security trust fund would be the same as saying we are going to put this income tax into the trust fund and get away from the principle of a direct relationship between what you pay in and you get out in interest and principal, and, consequently, have it lean more toward being a welfare program.
The Social Security problem has nothing to do with the tax cuts of 2001 and 2003. The critics say that repealing the 2001 and 2003 tax cuts for the rich would cover the Social Security deficit. But according to the Congressional Budget Office, by the year 2050, the cost of extending the tax cuts, if you wanted to say it had something to do with the Social Security problem and make it a welfare program instead of an insurance program, would be 0.7 percent of gross domestic product.
As you can see by this chart, the Social Security deficit is in fact 1.4 percent of gross domestic product. In other words, repealing the tax cuts for everyone, not just the rich, would cover only half of the Social Security deficit in the year 2050.
If you want to start figuring that way, then turn the Social Security program into a welfare program where you get away from the principle set by Franklin Delano Roosevelt, that there had to be a relationship between what you pay in and what you draw out so that you weren't on welfare, so you didn't have the shame of welfare of the 1930s.
Moreover, the sustained use of general revenue to fund Social Security would destroy the historical link between individual benefits and contributions, thereby turning Social Security into another tax-and-spend welfare program. The figures being used by critics do not come from the Congressional Budget Office. They were made up by a liberal think tank often quoted here on the floor of the Senate. The critics' figures are also based upon what we call present-value calculations. Such calculations now would assume that a dollar of additional taxes collected today will pay about $17 of Social Security benefits down the road 50 years.
How could this be? These present-value calculations assume that all the money the Government collects from repealing the tax cuts would somehow be saved and be invested in interest-bearing assets, paying 5.8 percent a year in interest. There is simply no way for our Government to make this kind of investment. History shows that the Government spends every dollar of taxes it collects.
In fact, I often have said in the Senate I might be willing to increase taxes if I thought every dollar collected would go to the bottom line to reduce it. But what I find in the Congress, you raise taxes $1 and it gives Congress permission to spend $1.10 or $1.20 and sometimes even more. I have never run into anyone in Congress who wants higher taxes who has ever told me how high taxes have to be to satisfy their appetite to spend money. Until I can find out how high taxes have to be, I will be very squeamish about raising taxes and somehow reducing the deficit.
The only way to prevent the Government from spending the tax cuts they would propose would be to put them in personal accounts. Unfortunately, those who claim the tax cuts would pay for Social Security are the very same ones who oppose personal accounts.
There are a number of ways to address the Social Security long-term deficits. One such proposal would change the benefit formula from wage indexing to price indexing. Some critics of price indexing claim it would increase poverty among seniors. This point has been made in the Senate, but it is based on a number of erroneous assumptions.
First, critics say if you go back in time, reducing today's average benefit level to the level that would have been paid in 1940, benefits would be lower and poverty would be higher. What sort of spurious comparison is that? In 1940, the average retirement benefit was 40 percent of the poverty level. In 1960, the average retirement benefit for Social Security was about 60 percent of the poverty level. Today, the average retirement benefit is about 120 percent of the poverty level. So it is just this simple: no one is going to index benefits back to 1940. But that is the argument being made by our colleagues. The proposal that has been put forward would adjust, instead, today's benefits going forward into the future, not backward.
I also point out that many of the price indexing proposals include a new minimum benefit for low wage workers. An analysis by the Social Security Administration shows that a minimum benefit would actually reduce poverty more than current law does. So no one should be fooled by these spurious comparisons going back to 1940. It is almost laughable that someone would make that argument in the Senate.
The President has made Social Security a priority issue, and Congress should take advantage of this Presidential leadership. The chance to fix Social Security problems may not come again in 10 years. They will come for sure in 10 years because if we do not do anything, we get to the point of a crisis where people who want to increase taxes will not have a problem getting their heart's desire of raising taxes. But you will also do what no one wants to do: change the benefits. So we should not miss this opportunity.
President Bush needs to keep using the spotlight to educate the public about why we need to take action on Social Security. We want a safe and secure retirement for every American. That is part of the social fabric of America. It is kind of like Grandpa GRASSLEY. I am 71. I draw Social Security benefits. I am benefiting from a very good deal from the New Deal of President Franklin Delano Roosevelt--a good deal for me, my mom and dad, my grandparents. But for Carrie Grassley, 9 years old, my granddaughter, it is going to be a raw deal because doing nothing around here is not an option. Doing nothing is a guaranteed benefit cut for Carrie Grassley.
It is kind of a moral issue, whether Grandma and Grandpa GRASSLEY today ought to be concerned about a secure retirement for our children and grandchildren. Do we want to be selfish? I don't think I have a right to be selfish. I believe I need to be concerned about the next generation. We have that opportunity now. Are we going to take advantage of it?
Social Security is a successful program. It definitely is a part of the social fabric of America. These young people who are our pages are paying in dramatically for me to receive my Social Security check. Even if we did something today and they get 100 percent of the benefits that are promised today, they are still getting maybe not a raw deal but not as good as the deal I have. For sure, if we do nothing, 70 percent of those benefits is a raw deal. We have an opportunity to do something about it.
There has been a lot of attention brought to personal accounts by the other side of the aisle. The other side of the aisle has had a free ride on the question of solvency of Social Security. What about keeping promises to Carrie Grassley and the young pages so they can have what we have. What about everything else dealing with Social Security. Do they have a responsibility? After all, we all get paid $160,000 a year. You mean you cannot come to the table to negotiate with CHUCK GRASSLEY on a problem we all agree ought to be done with or without personal accounts? But don't figure you are negotiating in good faith if you say, before you sit down at the table, you can't have everything on the table. That is what negotiations are about.
The other side has had the luxury of the public's attention on personal accounts, and they are clouding that issue. This has given them the opportunity to avoid these tough issues of providing for Social Security for the pages or for Carrie Grassley. I don't think they can get away with it very long.
I hope by this summer my committee is able to meet and report out a Social Security bill. It is my intention to do that. Will I get the cooperation to do that? One person cannot provide the votes, but we ought to have that sort of discussion and see what we can do to bring it before the Senate.
I yield the floor and suggest the absence of a quorum.
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