Strengthening Social Security

STRENGTHENING SOCIAL SECURITY -- (House of Representatives - July 20, 2005)

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Mr. MILLER of Florida. Mr. Speaker, I am sure it is no surprise to many of you that some of my constituents do oppose personal retirement accounts, so when they do I ask them this very question: Would you agree or disagree Congress should have, when it created Social Security, set up a really true lockbox that earned interest on their FICA contributions?

Of course they eagerly agree that the money should have been set aside and used only for Social Security benefits.

I then follow up with the question: Then why in the world would you be opposed to a personal lockbox, if you will?

It is not secret here in Congress we have not had the discipline in many instances to keep our hands out of the cookie jar of Social Security. Now to stop this I propose that in the future that Congress cannot get its hands on the money in the first place. As soon as workers can start to save part of their Social Security money in a personal retirement account, with their very name on it, this Congress will have to find its money elsewhere.

Growing Real Ownership for Workers legislation is something that our colleague, the gentleman from Louisiana (Mr. McCrery) introduced, that would strictly use Social Security dollars for Social Security benefits. Now these GROW accounts mandate that Social Security taxes be used for benefit payments to those people who have worked hard, who have followed the rules and have earned the right to a secure retirement. The accounts would be created for workers under the age of 55 unless they choose not to participate.

The current Social Security surplus would be dedicated to individual GROW accounts where it would be invested in guaranteed marketable Treasury securities, real assets that workers themselves would own and on which account balances would, in fact, be inheritable. Workers age 55 and older will continue to participate in the Social Security system that we know today. Nothing changes. People should have the right if they wish to invest their Social Security taxes in safe, diversified funds like a Thrift Savings Plan that Federal employees and Members of Congress have. The return, in fact, has been proven to be better than the government's 1.6 percent return on Social Security.

Younger workers should have the opportunity to receive a higher retirement income than the current system will be able to pay by the time that they can retire themselves. Workers between the ages of 22 and 55 should have the option of joining the personal account system, and people younger than 22 could, in fact, be required to join that system. Those retiring after about 2042 can really expect to receive only about 73 percent or less of what they are being promised today. A reasonable reform would allow them the opportunity to improve their retirement incomes by investing a portion of their current payroll taxes.

The current system owes some $10.4 trillion more in promised benefits than it can afford to pay, and each passing year adds an additional $600 million to the cost of permanently fixing the Social Security system. Benefits will be reduced and taxes may have to be raised.

As I have been visiting high school seniors in my district over the last few months, I have entered into a dialogue with many of the students over the future of Social Security, and I have asked some students if they believe that Social Security will be around for them to collect when they retire. Out of the five classrooms, only one hand was raised. That is one out of approximately 175 young adults around the age of 18 who actually have faith in our current Social Security system.

Young adults are supportive of personal accounts because they understand that they will be better off during their retirement years. And they also realize that they will not have to worry about placing a financial burden on their children and grandchildren who would otherwise have to act as a financial caretaker in their retirement years.

I have received correspondence from my constituents 50 years and older eagerly opposing the accounts due to a very common misconception. The middle-aged and elderly residents in my area have a fear of not receiving the benefits that they have been promised in the system. To them I say this: they will receive their benefits just as promised. For them the Social Security system will not change in any way.

However, I think it would be a disgrace to deny our younger generation and generations to come the opportunity to build a nest egg, if you will, and prepare adequately for their future. Many people ask what safeguards will the government have to protect these personal accounts if someone invests poorly or recklessly. Clearly, not everyone is comfortable in investing. So Social Security reform will have to include some type of safeguard for its participants in the personal account system. Aside from the strong performance of financial markets over the long term, as well as the fact that a majority of your account will remain in the Social Security trust fund as a safety net, the personal accounts that will be offered will be fully diversified.

Another idea that has been talked about is having participants purchase an inflation-adjusted annuity that is at least equal to 100 percent of the poverty level for their retirement. Democrats have said this: they think that we should eliminate the $90,000 cap on income. Even completely eliminating the cap on taxable wages would only postpone permanent deficits by 6 years, from 2018 to 2024. A temporary fix would likely require future generations to raise taxes over and over, and I think that our constituents deserve better than that.

Now more than ever, those of us here in Congress have a responsibility to make the tough decision while not making the financial burden any harder on the American people. Voluntary personal retirement accounts are very beneficial for the workers and retirees of the future. They would be accumulating money in their own account throughout their working life. And that money would grow through investment over the years. Because their dollars are growing over the course of decades, they would be able to have a more comfortable retirement without relying entirely on the next generation of workers coming after them.

Mr. Speaker, I think we all agree that we need to move towards change now. Let us pass legislation that includes some type of personal retirement accounts. And as we talk about this issue tonight, again I want to thank the gentlewoman from Kentucky (Mrs. Northup) for bringing this issue forward. I look forward to the opportunity of conversing with my other colleagues on the this very important issue.

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