Social Security

By:  Debbie Wasserman Schultz
Date: April 21, 2005
Location: Washington, DC

SOCIAL SECURITY -- (House of Representatives - April 21, 2005)

Ms. WASSERMAN SCHULTZ. Thank you so much, Congressman Meek. We are continuing to try to educate our generation and other generations about the significantly negative impact that privatizing Social Security would have on them. As much as the President, as you have outlined, would like to lead people to believe that privatization is not going to harm people 55 and older, and there is going to be this amazing panacea, this incredible windfall for our generation and for supposedly savvy investors that are from our generation, we know differently. What we have been trying to do as the 30-something Working Group convened by Leader Pelosi is to try to separate fact from fiction.

To follow up on some of your really excellent descriptions of what the kind of money we are talking about really means for people, you just talked about $5 trillion and what $5 trillion, which is what the President's privatization proposal would cost and add to the deficit in the next 20 years, what that would mean, what we could do with $5 trillion instead of ballooning the deficit.

I was just elected. I am a freshman Member of the Congress. We have had an opportunity to work together over the years. I am still definitely in learning mode, and I have got a learning curve. One of the things that I have noticed in my learning curve is that when you go from being in the State legislature like we were where you are dealing with billions of dollars, with a B, to the Congress, when you are dealing with trillions, with a T, it is hard for anyone, Members of Congress, Members of State legislatures and average citizens to really grasp what that kind of money is. No one deals with trillions of dollars. The current budget deficit is more than $7 trillion. It is $7.7 trillion. And what the gentleman just described, the President's privatization proposal would add another $5 trillion to that.

So let us just take the $7.7 trillion that is included in the projected deficit now and try to help people get their minds around what that is. If we took $7.7 trillion and can pile enough $1 bills, and there are actually people that figure these things out, on top of one another, it would reach the moon and back.

The Moon is 93 million miles away from here. I am pretty sure that is right, 93 million miles away from here. So that is two stacks of $1 bills that would reach the moon, and that is how much our deficit is.

We would still have almost $6.5 billion left over. With that money, after traveling to the moon and back, we could make 1,329 stacks of $1 bills that would reach up into the stratosphere, however high that would go.

There is a really instructive Web site that the Department of Treasury has, and I think it would be helpful for people to know what that Web site is. It gives what the current deficit is, and it also gives what is each American's share of that deficit. It is a ticker and it is constantly changing. But that Web site is Xdemocrats. And they can get access to the U.S. Treasury Department's Web page with that information; if they sign on to that Web site, it will link them right to that information.

The national debt as of April 21 is $7,782,705,281,978.34. We could really improve the quality of people's lives with that kind of money.

And the direction that this country has been going in is really disturbing. When I go home and talk to the people that live in my community in Broward and Miami-Dade Counties, and we represent both of the same counties in South Florida, it does not matter whether I talk to people who consider themselves conservative, people who consider themselves moderate, people who consider themselves liberal. After the events of the last few weeks and the concerns that people have over the deficit, their share of it, this privatization plan which the President is suggesting would pull the safety net of Social Security out from under people.

People are really starting to say just hold it a second, we need to get this train back on the tracks and start going in the direction that most people are comfortable with.

And I think we really need to start encouraging people, as we have been doing, to raise their voices to help get that train back on the tracks, because it is moving so far to the right even for people who consider themselves on the right, even people like that are coming up to me and telling me they are disturbed. So I just wanted to share that illustration with people.

We have talked often about the impact that privatization has had, and we had been on a break and we were not able to spend time during our 30-something hour. We did not have a 30-something hour last week because of votes.

So I think it is important, and I am not sure if the gentleman already talked about it, the impact that privatization would have on different categories of people. Particularly as the 30-something Group, we want to explain how it would hurt young people and working families.

The cost of privatization would just explode the national debt, which we have been talking about, but what it means beyond exploding the national debt is that people who collect Social Security would literally experience a 46 percent cut in their benefits.

There has been this portrayal by the President on his 60-day tour of the country to try to sell this plan, which I know the gentleman outlined and talked about, how they restrict access to their town hall meetings and we let anybody come and we are willing to take on the people who stand up and actually ask questions that are not the same as the position that we take in our town hall meetings.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, if the gentleman would continue to yield, it is really unbelievable.

I met with representatives of the Egyptian Government today, and they were talking to me about the democratic reforms that they are making and being more inclusive and involving their public in the role that government has. And I just cannot even imagine what kind of example the President is setting to burgeoning democracies and democracies that are trying to become even more democratic.

I mean, if the President of the greatest democracy in world does not feel that the right thing to do is to let anyone into a town hall meeting whether or not they agree with him, then that really sends a terrible message.


Ms. WASSERMAN SCHULTZ. Absolutely, Mr. Speaker. And that is because they do not want the facts to go out. Because if light is shed on their proposal, if they are forced to face their accusers, so to speak, if they are forced to respond to people who have the facts, their facts just do not hold up under the sheen of light.

So what I started to say a few minutes ago was what his proposal does is, and like I said, I call it a proposal, but I should say his vague outlines of a proposal, he has promoted across the country the concept or the belief that private accounts would be a windfall and has led people to believe that they would both be able to have the money in their private accounts as well as their Social Security benefits, and that is not the case. There would be a commensurate cut in Social Security benefits, about 46 percent, commensurate in proportion to the amount in someone's private account.

An average 20-year-old, over their 20-year retirement, would lose about $152,000 in Social Security benefits under the vague outlines of the President's proposal.

Let us take disability insurance and survivor benefits, because I am not sure if the gentleman talked about that before I got here; but Social Security provides disability insurance for young families. There is no private insurance plan that could compete with the disability benefits provided by Social Security. For a worker in her mid-20s who has a spouse and her two children, and there are millions of those across this country, Social Security provides the equivalent of a $350,000 disability policy. Most people, especially a young widow with two children, cannot afford to go out and buy a policy on the private market like that. It would just not be available to her.

Suppose, God forbid, there is a young parent who suddenly dies. Social Security provides for the children who are left behind. Social Security provides survivors benefits. Survivor benefits replace as much as 80 percent of the earnings for a 20-year-old average-wage worker who dies leaving two young children and a spouse. For that parent, Social Security survivor benefits are equivalent to a $403,000 life insurance policy.

That is what it means when we talk about what privatization would do to young families. That is real. That would be gone, that benefit. Because when it comes to disability and survivor benefits, privatization does not apply because there is no income being generated. One has to have income in order to have a private account. People who are disabled and people who are widows and widowers do not have that income coming in by its very nature.


Ms. WASSERMAN SCHULTZ. That is why we spend an hour on this every week, because there is plenty of information to disseminate. I sit on the Committee on Financial Services, and I have an opportunity to interact with people on the New York Stock Exchange and Chairman Greenspan, who testified before our committee, and representatives of the Mercantile Exchange and the Board of Trade and all of the exchanges. One of the things that I got out of those meetings that was clear and that has been written about in the last few days is, let us remember what the foundation of this whole privatization is built on. It is built on the stock market. It is built on stocks and bonds.

Now, last week, we had one of the most significant drops in the market in over 2 years. The Dow Jones Industrial Average has fallen more than 9 percent in the last 6 weeks, including a drop of 115 points, or 1.1 percent, on Wednesday. Now, I do not know if most Americans are going to want to throw their retirement security to the whims of the stock market. There are two words in the name of this program: social and security. This proposal removes and decimates the concept of ``security'' in Social Security. It would be social insecurity, because there would be no ability to ensure that future retirees would have that investment there for them when they retired, because we have fluctuations in the market.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, that is an important point, and I appreciate the gentleman making that point.

But the point is that from one day to the next, we had a 200-point swing. Now, is that what people are going to be comfortable with in terms of their retirement security, in terms of ensuring that they have at least a minimum amount of money available for them when they retire? Because, for example, 20 percent of single retired women, most of whom are widows, the only source of their income is their Social Security. Now, if we invest it in the stock market and privatize Social Security, what are we going to do for those women when their nest egg that they banked on is not there because of fluctuations like the one that the gentleman from California (Mr. Dreier) just referred to? I just wonder.


Ms. WASSERMAN SCHULTZ. Mr. Speaker, the gentleman is absolutely right. We have to right the ship of state. I mean, it is keeling over right now. It is going to fall from the weight of the debt. I mean, why the Republican majority here will not listen to Chairman Greenspan when he expresses again and again, as recently as this week, again and again he has warned us about the danger of the increasing deficits.

The leadership here is just ignoring it. It is like they hope that if they ignore the problem long enough, maybe it will go away. Maybe they will wake up, just like my kids hope that the next day something that happened that they did not like the day before will not be true when they wake up, like so many of us do. But the worst nightmare is that when something bad happens, when you wake up the next day, you cannot make it go away just by a night's sleep or ignoring it. It does not work that way. We have to be responsible. That is the whole way we need to deal with this Social Security problem. Problem, not crisis.

We have a problem, but we need to be responsible and take the time that we need to address the problem and do it right. We did not create this problem overnight, and there is no miracle solution; there is no instantaneous solution to this problem. The President has already acknowledged that privatization does not even solve the problem. We need to make sure that we get privatization off the table so we can all sit down together, just like they did in 1983, and find a bipartisan solution that we can all be comfortable with, or at least that the majority can be comfortable with, because we will probably not get everybody. But the majority is willing to come to the table, it is just that the President needs to let go of an untenable proposal that the vast majority of the people do not support. It is time to let it go, Mr. President.


Ms. WASSERMAN SCHULTZ. I agree with you. I am ready to stand and fight and make sure that the security remains in Social Security.

And, you know, just to close my portion of this out, the illustrative thing that I want to leave people with is we are both under 40; that is why we are here. Our generation, my friends, your friends, most of them when we chat with them when we are out to dinner, and we ask them whether they think Social Security is likely to be there for them when they retire, it is almost universal that the answer is no.

In 37 years, 36 years, let us say 2041, we are going to be 74 years old. You and I are 3 weeks apart. And I am 3 weeks younger, I might add. We are going to be 74 years old.

Now, when I learned that, I was amazed because I really was one of those people. Social Security will be there, even if we do nothing, which is not what we are advocating. We are advocating take a little slower approach. Let us make sure that we keep the security in Social Security.

In 46 years, the outlying date for which insolvency is less likely to occur, we will be 84 years old. Now, that is well within the number of years, 20 years after retirement, that we can ensure that Social Security will be there for us.

What we have to do is we have to stand with our feet firmly planted on the ground and say you have taken this country this far, no further.

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