Social Security Reform

By:  Debbie Wasserman Schultz
Date: March 10, 2005
Location: Wahington, D.C.

SOCIAL SECURITY REFORM -- (House of Representatives - March 10, 2005)


Ms. WASSERMAN SCHULTZ. Mr. Speaker, I thank my colleague for yielding to me, and it is an honor to be here once again with him. It has been my distinct pleasure to serve with my colleague in various capacities over the last 10 years, and particularly because we represent a State that would be so impacted by whatever the vague outlines of the President's suggestion, for lack of a better term. Because what has been truly unfortunate about the President's concept is that that is all it has become. It has just been a concept.

We are trying to help people understand that the President, although he has been stumping the country promoting his concept, his concept has never amounted to legislation. He has not asked any Member of Congress to file legislation. We have not seen a bill; therefore, we have no specific details. And coming from the State that we do, which is one of the States whose residents would be the most significantly impacted by the devastating results of his proposal on Social Security, we have spent quite a bit of time trying to educate our constituents about the dire ramifications.

Given our generation and the impact ultimately that the President's outline would have on them, we need to continue to spend time doing what we have been doing, which is trying to spread the word and make people aware that, despite what they may have heard in the previous hour, we are on a fact-disseminating mission. We need to get the word out and make people understand that there is a lot of fiction and a lot of trumped-up reality that has been disseminated.

We need to help people understand that while there is a problem with Social Security, we need to be responsible and take the time that is required, that is our responsibility to take, to get it right. It is not a crisis.

The year 2042 is what has been clearly acknowledged as the earliest that we have to be concerned about there being a cut in benefits. And while we absolutely do not think we should reach that point, in 2042, since this is the 30-something Working Group, I will be 75 years old. In 2052, which is the more likely scenario, given the dim economic picture they have painted and given our economic history, it is unlikely that in 2042 there would even be a problem yet. I will be 85 years old.

The reason that is important, as my colleague knows when he talks to his friends and when I talk to my friends, people who are listening out there, people our age think Social Security will not be there for them. They really do. And with the facts, they will understand that it will be there for them well beyond their retirement years. We need to be responsible and take some time to make the changes necessary and not yank the rug out from under our generation or our children's generation. We need to make sure we can preserve the Social Security safety net.

So, Mr. Speaker, I am glad to join my colleague this afternoon because we have a lot of educating to do.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, what could happen is our colleagues on the other side of the aisle just spent an hour talking about how there is a crisis, and we need to address it. It could appear as though we are engaging in a debate of, yes there is, no there is not. Let me just show the folks at home who is saying and agreeing there is not a crisis.

The other day, the Comptroller General, David Walker, testified in front of the Committee on Ways and Means, which is the committee with main jurisdiction over this issue. He said, while the program faces no immediate financial crisis, he did say that time is working against us, and the longer we wait, the further you put off solving this problem, the more difficult it is going to be. He did acknowledge in full public view, the Comptroller General of the United States, that the program faces no immediate financial crisis.

Now, I would not think that the Comptroller General would deliberately contradict the President unless he wanted to make sure that he stuck to what is factual versus hyperbole. We have been truly committed to disseminating facts and not just blowing this problem out of proportion to get to our political goal. That is what the other side has been doing.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, it is important to continue along the vein that we have. These are not manufactured facts by the gentleman from Florida (Mr. Meek) and the gentlewoman from Florida (Ms. Wasserman Schultz).

If we look at this chart that shows how the debt would increase under the President's budget proposal if this plan goes forward, this is the portion of the debt from 2004 through 2015 that each American would be responsible for. It starts at $4,395 in 2004 and goes up to $10,500. This is gross income per family of four, and this is CBO numbers. This reflects the CBO's estimate of the President's budget that he has recently proposed. We are already in pretty dire straits when it comes to the deficit. The deficit, when divided amongst every American and each family, this is what it translates to over time. This is what it means to a family of four in real burden.

So if Members think about the real burden that a family of four takes on in adding to the debt because the proposal that the President has put forward grossly increases the deficit. I want to take this chart down and go to the next chart, in order to privatize Social Security and make the transition to private accounts, that would cost $1.4 trillion in borrowing in the first 10 years of the plan.

That obviously will endanger the economy. It makes us further indebted to foreign nations and sends essentially the decision making about our economic future to China and Japan as opposed to remaining here in Washington, D.C., where we think most Americans would obviously prefer it to be. It raises taxes on our children and grandchildren over time because that number goes from $4,300 in debt per family of four to more than $10,000 per family of four.

Going past 10 years, it costs another $3.5 trillion. The Republican Social Security privatization plan adds further to our debt. Here is the $1.4 trillion in the next 10 years and an additional $3.5 trillion over the 10 years after that. That adds additional debt in the first 10 years, and this shows the current debt that we have.

We have got to make sure that we become once and for all fiscally responsible. We have a goal to remain committed to the preservation and solvency of Social Security because we have been, as Democrats, supportive of creating, sustaining and improving Social Security since 1935. The proof is in the pudding. The proof is in where the votes have been, and the votes have been in terms of sustaining Social Security's future, on the Democratic side of the aisle.


Ms. WASSERMAN SCHULTZ. To add insult to injury, if we are going to spend time talking about private accounts and that really seems to be the way the President has shaped this debate, that is the issue around which the President has shaped this debate, what is unbelievable is that private accounts by anyone's admission do not even solve the problem. Private accounts do not shore up Social Security, they do not improve its solvency, they do not solve the 2042 problem. They just create private accounts and privatize Social Security and pull the rug out from under people's future retirement security. That is all they do.

Just so that we can stick to the facts and not hyperbole, I will highlight the gentleman from New York (Mr. Rangel), our ranking member on Ways and Means. The other day, he spoke to Mr. Walker and asked him about private accounts and his opinion. Mr. Walker, the Comptroller, said that as a carve-out, and this was in front of the House Committee on Ways and Means, personal accounts financed with payroll taxes could worsen the program's financial stability. He said if it was designed as a supplement to traditional benefits, as an add-on, that personal accounts would not cause a problem. And, essentially, the gentleman from Michigan (Mr. Levin) said, well, what the President proposed was a carve-out. That is clearly not acceptable under the Comptroller General's concept.

By the President's own experts' admission, Social Security is not in crisis, Social Security is solvent until at least 2042; and then what is unfortunate is the hyperbole, because our colleague from North Carolina, who was spending some time on the floor a little while ago talking about their view, his view, on Social Security referred to the solvency issue and said that out in 2042 that Social Security would be flat busted, I think was the term he used while I was listening to his debate. That is absolutely incorrect. Flat busted. My definition of flat busted means no money, gone, cannot provide any benefits at all. Then he, a few minutes later, said, well, it would provide 60 to 70 percent of benefits.

The reality is that the factual numbers from the Social Security Administration itself, from the trustees who manage the Social Security trust fund, they say that at the earliest in 2042, Social Security would pay 80 percent of benefits if we do nothing, which you and I and others continue and the leader and the whip and the chairman of the caucus continue to stress, we are not suggesting that we do nothing. We are suggesting that if we are going to focus on this problem, that we call it a problem and not a crisis, couch it the way it is, and let us come together in a bipartisan fashion and sit down and hash out solutions.

Our point is why spend time wringing our hands, gnashing our teeth, and stressing out our constituents who are really concerned about whether or not Social Security is going to be there for them talking about privatizing Social Security which is the vast majority of what we are spending our time talking about when it does not even solve the problem. That is the bottom line.

When I had my town hall meetings, Democrats have held more than 300 town hall meetings, like the gentleman said, more than 80 percent of our colleagues in the caucus have had town hall meetings, there have literally been more than 300 of those. At so many of those, senior citizens, our wonderful senior citizens who literally we all stand on their shoulders today, you and I especially, our generation has been able to achieve what we have been able to achieve by standing on their shoulders.

People ask, why do seniors care about this issue? The President has said, people 55 and over are not going to have to worry about it. They care because they care about their grandchildren. They also care because they have a healthy dose of skepticism. What they lived through in their lifetimes has taught them not to take everything at face value. And they understand that when you have such a gargantuan, mammoth change to a system as large as Social Security, there is no way that you can trust that people who are 55 and older will not have to worry.

They also understand that they need to be concerned about their children and their grandchildren. That same AP story that the gentleman quoted a little while ago focused on the President and what he has said about this issue. The President commented on people 55 and older. At the same time he was saying they would not need to be concerned about his plan, he also said grandmothers and grandfathers need to be worried about their grandchildren when it comes to Social Security. So at least the President acknowledges that people 55 and older have a legitimate reason to be concerned about this. We have got to make sure that we continue to disseminate the facts and not engage in the hyperbole that the Republicans have been.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, if the gentleman will yield, I want to get to some of the e-mails we received since the last hour. I want to highlight an e-mail we got from a young woman, someone who just passed 30-something, she just turned 40, so she is just outside of our generational span here, but she said this about privatization and private accounts: ``I am very uncomfortable with the idea of using private accounts for Social Security. My mutual fund lost half of its value and, at the rate it is earning, will take another 5 to 8 years to get to the rate of my deposit. My stocks, bonds and annuities lost, but not as big, but they haven't really earned in about 5 years. My IRAs earned at about 3 percent. Everyone else I know, from my retired father to my peers to my kids who have mutual funds in their names for college funds, have been burned by the private financial sector. In addition, I know people whose employers have defaulted on pension plans.''

This is the type of risk that we would be subjecting people's retirement security to if we transition to private accounts. That is what people are afraid of.

There is not so much confidence in investing in the stock market. When I had my town hall meetings, and I had three of them, I asked people to raise their hands, and I had more than 200 at two of mine, and 500 or more at all three combined, and I asked people at each town hall meeting for a show of hands, how many of them would feel comfortable in their own ability to make investment decisions or their children's or grandchildren's ability to make investment decisions to ensure that they would have as much money as Social Security would provide for them when they got to their retirement. And literally, at my first town hall meeting, three people raised their hand; at my second town hall meeting, two people raised their hand; and no one raised their hand at the third one.

People do not want to throw their retirement security to the wind. They do not want to subject it to the whims of the stock market. Social Security is not supposed to be a gamble, like investment in the stock market is. You go in with your eyes open when you invest in the stock market. You know you may lose your money.

That is not what Social Security was designed to do. Social Security was designed to provide you with security, not designed to stress you out for the rest of your life and have you pray on your knees every night that you made the right decision and your money is going to be there for you when you retire.

Twenty percent of women who are single and retired and collecting Social Security have Social Security as their only source of income. That number is only going to go up because, as we all know, given our age, our generation has not been the generation of savers. Our generation has not squirreled money away under the mattress or in savings accounts. They do not have a significant nest egg.

The President is trying to say that this could be their nest egg. The only trick is, if you move to private accounts, he does not really talk too much in his town hall meetings about how there is going to be a commensurate cut in Social Security benefits. You do not get both under his plan.


Ms. WASSERMAN SCHULTZ. That is okay. I thank the gentleman. He is right, I was giving him too much credit. You do not get both. You get at least a 46 percent cut in your benefits in the Social Security benefits that you would have gotten if you move to a private account.

I want to give some information to our younger peers about what it would mean. Risky private accounts do not make up for the 46 percent cut in benefits that President Bush has proposed. A 20-year-old who enters the workforce this year would lose about $152,000 over their working lifetime in Social Security benefits under the Bush plan.

Social Security provides disability insurance, which we have not talked too much about yet. I had a man who suffers from MS come to one of my town hall meetings. He could barely speak because it has affected his voice.

He can no longer work. He collects Social Security. We need to remind people of people who are survivors, who are collecting survivors benefits, their families, people on disability.


Ms. WASSERMAN SCHULTZ. Absolutely. A third of Social Security goes to people who are survivors of Social Security recipients. The Social Security recipient in their family has passed on. That person's dependents who remain alive collect that person's Social Security benefits.

There are young children and widows who are sustained through their life, who are able to remain in their house, who are able to send their children to school and leave the legacy that their deceased parent would have wanted for them, because Social Security is in place.

If you shift to private accounts, the President's outline does not help people on disability or survivors or their families because they cannot work, because they do not have a way to invest in private accounts, because they do not collect a salary. So we are going to essentially leave them out in the cold.

For a worker in her mid-20s with a spouse and two children, and there are millions of families like that across this country, Social Security provides the equivalent of a $350,000 disability insurance policy. Most people that I know cannot afford to go out and buy one of those on the private market. That is the type of thing that Social Security provides.

Suppose, God forbid, a young parent dies suddenly. Social Security provides for the children who are left behind. The survivors benefits will replace as much as 80 percent of the earnings for a 25-year-old average wage worker who dies leaving two young children and a spouse. For that parent, Social Security survivors benefits are the equivalent to a $403,000 life insurance policy.

That is what Social Security means to real people who suffer through these unexpected tragedies every single day.

We need to fix Social Security. We acknowledge that there are problems. We do not think that we should get to 2042 and have there only be 80 percent benefits paid. We believe in shoring up Social Security, but we believe in doing it responsibly, and we are not going to come to the table and negotiate on a risky privatization plan which does not solve the problem, which adds to our national debt, makes us more reliant on foreign nations and their economic decisions and leaves the future of our generation twisting in the wind, hoping that they will have benefits that would probably go away if this is the direction we are going in.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, I want to remain true to my gender, and I have done this every week since I have been participating in the 30-something group. I have an 18-month-old who I want to take to Mommy and Me in the morning, so I am going to go home in a minute and catch my flight so I can do that.

The reason that I am saying that is that I am one of three women younger than 40 in the Congress, out of 435 Members. There are a unique set of issues that women face when compared to men. The privatization outline that the President has suggested really puts women in a dire situation. For example, in 2003, the average monthly Social Security benefit for a woman was only $798, which is $241 less than the average man's monthly retirement. Women's earnings were 76 percent relative to men in 2003, which is down from 77 percent in 2002.

Women who reach retirement age live on average at least 3 years longer than men, so this is going to be their problem 3 years longer than men. Social Security is the only source of retirement income for one in three unmarried, retired women. Without Social Security, 52 percent of white women, 65 percent of African American women, and 61 percent of Hispanic women would live in poverty upon retirement. It provides more than half of the total income for widows and single women.

We have got to make sure that Social Security provides for all of us. We have got to make sure that we get the facts out as it relates to this problem. Not crisis, but problem. And we in the 30-something group, the members of our generation are going to continue to help educate, as we go around the country on the campus tours that we are planning, as we work with Rock the Vote and the myriad of organizations that the gentleman has detailed. The Older Women's League also is on that list in being in opposition to the President's outline.

It is our responsibility to ensure that when the baton is handed to our generation, that we commit to carrying it forth and run up those stairs like they do in the Olympics and light the torch so that we can make sure that we preserve the safety net that was created back in 1935.


Ms. WASSERMAN SCHULTZ. Absolutely. The Speaker is also wearing the tie. During this week, the Lifetime Network has promoted the issue of violence against women and highlighted the issue of violence against women on their Web site and on their network. We have all been wearing and have been asked to wear this tie and scarf to highlight domestic violence and the tragedy of domestic violence so that we can make sure that we can fight domestic violence in every corner of this country.

So I am pleased that the men and women of the Congress on both sides of the aisle have been committed to this and we are standing in solidarity with the women who have been victims of domestic violence.


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