SOCIAL SECURITY -- (House of Representatives - March 08, 2005)
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Texas (Mr. Burgess) is recognized for 5 minutes.
Mr. BURGESS. Mr. Speaker, the American people are hearing a lot of information about our Social Security system, and I am sure they have got legitimate questions: Is there a crisis or not? If there is a crisis, then is there a trust fund or not? If there is not a trust fund, where did it go, who took it and when?
There are, of course, those who say that there is no crisis, that we have a system that is awash in cash and can fund all future benefits but it needs minor tweaking to ensure solvency.
Perhaps crisis is the wrong word. Captive may be a better selection because certainly we are held captive by our demographics. If our current system is to work and work well, we need large numbers of young people to pay into the system, and we need retirees to live relatively short intervals after their retirement; but in fact, neither of these situations reflects reality.
Birth rates are down in this country, although not to the degree as seen in some Western European countries, still resulting in a smaller pool of younger workers to support retirees. Life expectancy is up, largely because of the unbelievable advances in medical care that have occurred in the last 70 years since 1935. Both situations are arguably good news, but they do portend a serious situation for our Social Security system.
For example, in the country of Japan there are now four retirees to be supported by every new job that is created. It becomes extremely difficult to remain competitive in such an environment. Raising taxes to deal with the Social Security shortfall arguably has been done several times in the past 70 years; but, unfortunately, that makes the problem even worse. The old axiom states that you tax what you do not want, but surely we want jobs for tomorrow's Americans, but increasing the payroll tax may mean ultimately there are fewer such jobs.
In 1937, the Supreme Court ruled that excess Social Security funds were to be placed in the general revenue fund. Mr. Speaker, that is what happened to the trust fund. In fact, nonnegotiable government instruments housed in a metal filing cabinet in West Virginia represent the surplus in Social Security, and that surplus has been spent over the last several decades by Congress. Congress spent the money, Congress wrote out an IOU for the money, and we continue to write IOUs for the interest.
Mr. Speaker, where is the fairness in a system that holds captive 12 percent of the country's payroll and pays no interest on the money? This, I think, is the heart of the problem. What Albert Einstein described as the miracle of compound interest is denied to American workers.
What are the solutions that might be there for us to help with Social Security? We could cut benefits. I did not come to Congress to do that. We could raise taxes. Not this guy.
There are, of course, those who feel that growth in the economy will help those two workers that are going to have to support every retiree into the future; and I will tell my colleagues, Mr. Speaker, I will bet on the American economy every time, but I am not sure if we can improve productivity to that degree.
Mr. Speaker, what we can do is take those excess funds being paid into Social Security and place them into individual accounts that would not be accessible to government spenders and not be accessible to congressional appropriators. Allow these accounts to earn interest by following a conservative investment strategy, and now perhaps we begin to see the opportunity to preserve Social Security and ensure its solvency well into the future.
The question is always asked how to pay for this transition. I have already excluded a tax increase or benefit cut as a viable mechanism. The money to finance the transition would have to be borrowed; and in fact, this does not represent new debt because the obligation has already been incurred. The borrowing is only to refinance an obligation that already exists, a situation analogous to refinancing a mortgage.
Mr. Speaker, we should always be for good government. The principle of good government would suggest that the current obligation is present, but we are not acknowledging its presence. By financing the transition, we can convert an unknown obligation into bonded indebtedness. It becomes a marketable instrument; and that, in fact, would be a commitment to good government.
Financial markets are not known for their courage. They do not like uncertainty; and, clearly, the uncertainty of
monetizing the Social Security debt in the future is one that they will deal with fairly severely. But by making that a known obligation, we are giving the markets more comfort into what our intentions are with regard to the unfunded Social Security liability.
Mr. Speaker, I would like to close with a quotation that was delivered in this House some years ago: "Voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans."
These words were spoken in this Chamber 70 years ago by Franklin Delano Roosevelt, the father of Social Security.
Mr. Speaker, it is our obligation to deal with this problem this year. I applaud the President for pushing it on the national agenda, and I look forward to the debate.