John Shadegg

Mr. SHADEGG

Mr. SHADEGG. Mr. Chairman, I simply want to thank the gentlewoman for her kind remarks and support. I appreciate that very much.

Mr. SHADEGG. Mr. Chairman, I offer an amendment.

Mr. SHADEGG. Mr. Chairman, I yield back the balance of my time.

Mr. SHADEGG. Mr. Chairman, I yield myself such time as I may consume. (Mr. SHADEGG asked and was given permission to revise and extend his remarks.)

Mr. SHADEGG. Mr. Chairman, I yield myself such time as I might consume. (Mr. SHADEGG asked and was given permission to revise and extend his remarks.)

Mr. SHADEGG. Mr. Chairman, I offer an amendment.

Mr. SHADEGG. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I appreciate the gentlewoman's argument, but I believe it misses the mark. Quite frankly, the current law has resulted in the circumstance where the penalty imposed for document fraud on average in this country is 8 months. An American prosecutor is not going to go to trial and pursue a criminal offense where someone fraudulently creates a document and then gets, on average, 8 months. Indeed, it probably takes longer than 8 months to get to trial on a crime of this nature. If the penalty is insufficient, we simply encourage this conduct. I know the gentlewoman makes a valid point about our failure to enforce our borders. Certainly that is our responsibility. But the point of this amendment is to say two things: Number one, the penalties connected with those who are really exploiting people, it is important to understand that human smuggling is the conduct of bringing across people who largely want to come across, but they are still being exploited; and human trafficking, the second offense, realize are people who are brought across, misrepresented and then, once they are here, become essentially indentured slaves. That is, they must work and work perhaps in a job they do not want at a sub level of pay in conditions that are unacceptable to them to pay off a huge debt for having brought them into the country. Integral to those offenses, as a key part of those offenses, is creating these fraudulent documents, a false Social Security card, a false green card, all types of identity that they use in this country to get the job. And the smugglers do the exploiting. The smugglers create those documents. It is unacceptable to have these kinds of fraudulent schemes perpetrated on essentially victims from other countries and have the penalty for those that are victimizing them be insufficient. In addition, I do not believe the gentlewoman means to oppose this, but it seems to me, if you come to this country and you victimize people in this country and you commit crimes here, we want to send a message that if you want to commit crimes, commit it back home; do not come here and commit it. And if you do come here and commit it, we are going to send you a very clear message. Because if someone comes here to victimize an American, they ought to get an additional penalty. So I urge the passage of the amendment.

Mr. SHADEGG. Mr. Chairman, I thank the gentleman for his support, and I reserve the balance of my time.

Mr. SHADEGG. Mr. Chairman, let me begin by thanking again Chairman Sensenbrenner for his hard work on this legislation. I think it is important to this country. I appreciate the openness of the debate. I also want to thank the gentleman from New York (Mr. King), the chairman of the Homeland Security Committee, for his work. This amendment adds two laws, human smuggling and human trafficking, to the list of specified unlawful activity under the Federal money laundering statute. Mr. Chairman, under today's law, human smuggling and human trafficking rings are highly sophisticated and organized crime operations. According to testimony here in the United States Congress before the subcommittee of my colleague, the gentleman from Illinois (Mr. Souder), these organizations are a complete one-stop operation. They recruit customers from deep inside countries outside of the United States. They arrange transportation to the United States border. They provide housing at the border. They then conduct the illegal aliens across the country where prearranged vehicles meet them and transport them to a nearby large city, often a city such as Tucson in my State of Arizona or Phoenix or Los Angeles. They also provide transportation in these cities and housing, and then they provide travel from those cities to the interior of this country, perhaps to Chicago or Philadelphia or New York. Once the illegal arrives at one of those cities, they are met by yet another agent of this sophisticated organization who provides transportation to a safe house where they are met. They are again provided housing, and they are provided the kind of documents that we just talked about, a fraudulent Social Security card, a fraudulent green card or some other documentation which will enable them to get a job. Often they advertise, what city do you want to go to? What kind of job do you want to find? Then these sophisticated operations find them employment in the area they are interested in. An integral part of these sophisticated human smuggling operations and the human trafficking operations is money laundering. They money launder the proceeds of these crimes. Yet unfortunately, at the present time, neither human trafficking nor human smuggling, which victimize people outside of this country and bring them here and enslave them in some instances, neither of those crimes are predicates for our Federal money laundering statute. That is to say one can engage in that crime, but that key statute of money laundering cannot be used to get after those people. Mr. Chairman, this simply adds those two statutes so that we say clearly when we want to get after these smugglers who are smuggling or trafficking human beings into this country, we can use our sophisticated statutes, including our money laundering statute, to get at these individuals.

Mr. SHADEGG. Mr. Chairman, I reserve the balance of my time.

Mr. SHADEGG. I yield to the gentleman from Wisconsin. (Mr. SENSENBRENNER asked and was given permission to revise and extend his remarks.)

Mr. SHADEGG. This amendment is simple and straightforward. It does two things. First, it increases the penalty for document fraud, and, second, it imposes a mandatory minimum sentence on any illegal alien convicted of either a crime of violence or a drug trafficking offense. Mr. Chairman, document fraud is a key component of the activities of human smugglers and human traffickers. These smugglers, many of them present in trafficking through my State of Arizona, create false Social Security cards, false green cards, visas and a variety of other fraudulent documents as an essential part of their smuggling activities. Yet, under current law, the penalty for these crimes is insufficient to deter this type of activity. The amendment increases the penalties for document fraud, first, committed to facilitate a crime of international terrorism by imposing a minimum sentence of 25 years. It also increases the penalty for document fraud committed to facilitate drug trafficking, and it increases the penalty for document fraud; that is, the creating of these type of documents fraudulently in connection with other activities, including human smuggling. It is widely reported that many Mexican organized crime syndicates have shifted much of their activity from drug smuggling to human smuggling and human trafficking, specifically because the penalties for human smuggling and human trafficking and for the related offense to which this amendment is directed, document fraud, are much lower, yet they can achieve the same profit. The penalties for committing these offenses, for creating these false crimes, must be significant, and they must be sufficiently high to deter this type of activity. Second, the amendment imposes minimum-mandatory sentences of 5 years on any illegal alien convicted of either a crime of violence here in the United States or drug trafficking. Under current law, there is no additional penalty for someone who enters the United States illegally and then commits either a crime of violence or a drug trafficking offense. They simply come under the same penalty as we have in current law. What this amendment does is add a minimum mandatory sentence to be imposed on top of the sentence for the crime. It is unacceptable for somebody to come to our country illegally and then prey on an American citizen and not receive a severe penalty. We must send a very clear message that if you enter our country illegally and then you commit one of these offenses, you will be dealt with harshly and you will pay a heavy price for your conduct. I would like to thank Chairman Sensenbrenner and Chairman King for their work on this legislation. I urge my colleagues to support it.

Mr. SHADEGG

Mr. SHADEGG. Mr. Speaker, on Friday, October 28, 2005, I had an out of town engagement and missed rollcall votes. I ask that my absence be excused, and that the Congressional Record show that had I been present: For rollcall no. 556, I would have voted ``aye.'' Again and again, Iranian government's policies have shown utter disrespect for international law, oppressed the Iranian people, and facilitated international terrorism. President Mahmoud Ahmadinejad's comments on October 26, 2005 in support of annihilating Israel reaffirm the necessity of strong American and United Nations policies towards Iran. Knowing of Iran's desire to develop nuclear capabilities and intentions to use them against Israel, we must, in the strongest terms possible, condemn President Ahmadinejad's statements and continue working towards a freer and more stable Middle East.

Mr. SHADEGG

Mr. SHADEGG. Mr. Speaker, I thank the gentleman for yielding me this time. Mr. Speaker, this piece of legislation addresses a concern which touches literally every single American life. A number of areas ago, in 2002, this Congress looked at the issue of health care in America and recognized that, sadly, there are those in this country who as a result of some form of health condition cannot acquire affordable health insurance. That is a reflection of the medical conditions they suffer, whatever it might be, and it drives the cost of the health insurance they need to acquire beyond their means. We have decided as a Nation that no one in this country should go without a basic level of health care; and recognizing these high-risk individuals, the Congress in 2002 passed legislation to encourage each of States across the country to establish a high-risk pool; that is, to create a pool of money sponsored by the State where individuals with serious illnesses, individuals in this high-risk category, could go and could acquire insurance at a more affordable rate, indeed, at a rate they could afford as opposed to going uninsured. I think this is a charitable thing to do, I think it is a compassionate thing to do, and I think it is important. This legislation today extends that principle. I am extremely encouraged that 33 States across this country have taken advantage of the prior legislation enacted in 2002 and have established these high- risk pools to help individuals in their State who are in the high-risk category and cannot find available to them insurance at an affordable rate. In carrying those principles forward, this legislation first and foremost encourages additional States to create high-risk pools. To accomplish that goal it provides $15 million in seed grants available to any State which does not currently have a high-risk pool. Each State is eligible for up to $1 million to found and begin its high-risk pool. So I hope that that money is taken advantage of by as many States as possible that do not currently have high-risk pools so that they can create a high-risk pool so those in our society who have the kinds of illnesses that make it impossible for them to acquire affordable health insurance will have that opportunity available to them in their State. The legislation also assists those States who have already established high-risk pools. It provides $50 million a year each year from fiscal year 2005 through fiscal year 2009 to offset operational losses for high-risk pools. These high-risk pools are funded by everyone in the State that has insurance. That is, a tax is levied on every single person that has insurance, and that tax is contributed to the high-risk pool. By having additional money from the Federal Government to help offset operating losses, we are lowering the cost of health insurance for every single insured American. This is vitally important legislation. I want to thank the chairman of the subcommittee, the ranking chairman of the subcommittee, the chairman of the full committee and the ranking member of the full committee for their assistance in bringing this important legislation to the floor.

Mr. SHADEGG

Mr. SHADEGG. I actually am going to spend a little time now trying, hopefully, to bring anybody who maybe joined this discussion late up to speed on this particular idea, and I want to do it first graphically. In this discussion tonight, we have talked about what is happening with Social Security and the whole notion of Social Security reform; but we have tried to focus on a simple idea that has come forward recently to deal with the several problems that are confronting the Social Security program. The biggest problem, of course, is that demographics make it unsustainable over time. We have too few people working and paying in benefits for the number of retirees. We have already heard about that tonight. In the long run, we are going to run out of money; but in the short run, we have a surplus and there is an idea that I think will protect America's taxpayers and strengthen our Social Security system that has just surfaced here in Washington within the last 3 or 4 weeks that I think is a brilliantly simple idea, and I want to try to explain it. It is embodied in a bill called the GROW Act; Growing Real Ownership for Workers Account is the name of the act. It is being introduced here on the House side by several Members of the Ways and Means Committee, led by the gentleman from Louisiana (Mr. McCrery) and on the Senate side by Senator Jim DeMint and 11 of his colleagues. I just want to explain very simply the concept of the bill. First of all, I have got a blank piece of paper here. I want to just graphically show what is going on with Social Security. The first thing I want to do is put a line on the chart which shows the benefits that we are currently paying out. Those benefits are fairly level. That line just runs across the chart from left to right. You can see benefits just move across that line. That is the amount of money we have to pay out each year to retired Americans. I want to start with today, and I want to show revenues. To show revenues, I want to show kind of the graphic notion of this temporary surplus. Right now, we are bringing in more money than we are spending in benefits. So the surplus stands out here. But that surplus begins to go down just like that. All of this is money that we are collecting in excess of what we are spending in benefits. So this is the benefit line, I will label it ``benefit,'' and this is the revenue line. You can see because the revenue line is above the benefit, we have more money coming in in Social Security taxes today than we are paying out in benefits. What that says is that today's retirees and near retirees are secure. We are not going to do anything to touch their benefits. If you are 55 years of age or older in America, you are safe. But let us put a date on this. This is 2005. This year is 2017. What happens is that in 2017 that surplus disappears, and we begin to have a deficit. That will be a line that goes down like this. We have to deal with our ability to pay our benefits during these years by using the trust fund. But the question is, what do we do with this surplus? I am going to label it ``S'' for the surplus. That is the money we have that comes in in payroll taxes that my constituents have deducted from their paychecks and it says FICA on it and that is the amount of money that is not needed to pay benefits. That is extra money. What we have been talking about here tonight is that extra money every year since 1983 with only two exceptions has been spent by Congress on something other than Social Security. They may be good things. They may be welfare benefits for those in need. They may be forest fire fighting. It may be spent for missiles or tanks for our war in Iraq, but it is being spent on something other than Social Security. Fundamentally, the American people deserve to have their payroll taxes that are collected to fund Social Security spent on Social Security. What the GROW Act does, this bill that is being proposed here on the House side and there on the Senate side to deal with at least a part of the Social Security problem, is to say we need to stop spending this surplus, and I am going to label the surplus as showing this block of money right here, that block of money, that we need to stop the practice of spending that Social Security surplus on things other than Social Security. It is pretty simple when we look at it graphically. Social Security money should be spent to pay for Social Security benefits, and if there is a surplus, we should set it aside to pay the Social Security benefits of those who will retire in years to come. Let me go through just a simple kind of a Q&A session about what this bill does because it might help people, and then I would urge people to get on the Web site of the Policy Committee or to get on the Web site of the Republican conference here in Washington and look at what this bill does and how it works. But before I do that, let me go through a Q&A, just kind of a basic so people can understand what we are talking about. First question: What will the GROW Act do? Simply put, it stops the government from spending the Social Security surplus, a person's payroll taxes paid to fund Social Security when they retire, on anything other than Social Security. Again, in almost every year since 1983, Congress has spent this surplus of payroll taxes over payroll benefits on something other than Social Security. How would we stop doing that, how will Congress stop spending that? The answer is we are going to put it into individual accounts. We will take this surplus. We will divide it by the number of Americans who are paying payroll taxes, and we will put it aside in an account with their name on it. From that instant forward, it is their money. It will be in an individual lock box, and that will change the way the program works rather dramatically. For one thing, as the gentleman from Texas (Mr. Hensarling) pointed out a few moments ago, people's current Social Security benefits are not guaranteed. If the government changes its mind, if Congress were to change its mind and stop paying those benefits or even reduce, people lose to that degree. Once we start taking this money and put it into a GROW account with their name on it, in my case, my daughter is young enough to enroll in this program. It would only apply to Americans under age 55. She can enroll and her name would be on an account. It would say ``Courtney Shadegg,'' and a portion of the payroll taxes that she is paying in would go into that account in her name. If she were to pass away today, God forbid, she would get nothing and she would have nothing as an asset in her estate to pass on. But the moment we establish these GROW accounts, she would have the money in that account to give to her children if she wanted to. People say to their themselves how much money in this surplus would that amount? If I am just an average worker in America and you take, Congressman, that surplus and you allocate it in my name, over the 10 years that we have left during which there is clearly a surplus, without any other reform, how much money would it amount to? Well, in typical Washington terms, they give us the gross number, and it is $790 billion. But what does that mean for me, individual? On average it means that every single working American paying Social Security taxes right now would have roughly $5,000 in this account in 2017, just 10 years from now. If we were to start the accounts this year, in roughly 10 years, they would have $5,000 in an account in their name that they could pass on. Now, what happens to that money if one passes away? The answer is it is their asset. It is just like the car they own today or the savings account they own today or the bank account or the money in their checking account. If they pass away, that money goes, all of it, 100 percent of it, to their spouse or, if they are unmarried or divorced, it goes to their other heirs. It can go to their children or their grandchildren or to their brother or sister or whoever they want to leave it to just like any other asset that they own. How does it affect current retirees? It does not affect current retirees. Current retirees are secure because we do not need this money to pay their benefits. This is, after all, the surplus after the benefits have been paid. What is the budget impact of establishing these GROW accounts? I would call it truth in budgeting. What it says is that once we establish a GROW account and stop taking the Security Social surplus and spending that money to fund other operations of the government, we will be able to see the real deficit each year, and that way we will be able to know honestly and straightforwardly how much money we have. What is the upside of these accounts? Well, there are so many upsides, it is hard to explain. Number one, it is a person's asset. They can keep it. Number two, initially they get to invest it in a treasury fund. For the first 3 years they may buy a treasury bill, and that is all they will be able to do is buy a treasury bill with it. But that treasury bill will be absolutely as secure as the Social Security funds are today, and indeed I will argue it will be more secure because it is theirs forever and the government cannot take it away. But 3 years from now the legislation provides that a board, an independent board, will be able to open up these GROW accounts so that they can invest them in other vehicles. They can invest them in an investment vehicle or an investment opportunity that would make a slightly better rate of return. They will not be able to invest them wherever they want. They will not be able to invest them in any risky scheme, and they will not be able to pick a private firm to invest them for them. But they will be able to direct how they are invested, whether they leave them in a treasury or whether they put them in one of two or three other investment options. And I want to talk about that in a moment. But there are two other basic things I want to touch upon. First, what about the issue of solvency? Well, GROW accounts alone will not solve the solvency problem. But they actually do make the solvency of the current system better. They make it better by roughly 2 years if we enact no other reform. Let me see if I understand this, Congressman. You are telling me that this is a portion of the solution to the Social Security problem, it will set up a GROW account, we will stop spending the surplus on things other than Social Security; so every dime of Social Security taxes collected will go into Social Security and it also helps make the program more solvent over time? I ask who would oppose that? Before I conclude, and I do not know quite how much time I have left, but I would like to talk about the whole notion of personal accounts versus private accounts. This is a topic that has been discussed a lot in the press, and I would dare say that many people in the public do not understand the difference between a personal account and a private account, and yet there are dramatic differences. Although they right now is that Republicans call them personal accounts or individual accounts and Democrats call them private accounts. But that is not true. There are dramatic, substantive differences. Under this proposal the individual accounts that would be established would remain in the hands of the government. They would go to a contract manager, who would manage them for everybody and who would put them only in very, very safe investments. The three most likely investments are: a municipal bond index fund; the second one is a corporate bond index fund; and the third would be a stock index fund. What do those terms mean? Number one, since this would be a decision made by an entity that was working for the government and it would be made for all of the money in the account, a person as an individual would not have to be particularly shrewd or in any way savvy about the markets to be able to participate because they are not going to pick the individual stock or the individual bond in which the money is invested. Rather, they will be given, like those of us in the Federal Thrift Savings Plan, a choice of probably three different investments or four different investments. They can leave it in a treasury, they can put it in a municipal bond index fund, a corporate bond index fund, or a stock index fund. And each of those will have slightly greater return. So people do not need investment knowledge and that is very important because some critics say that one has to be a savvy investor to be able to make this work. That is simply not true. The other point is that, because the investment decisions are made by an entity contracting with the government, the management fees are extremely low, and because they are managing a huge amount of money, the cost of investing remains extremely low. The last point I want to make is the restriction and the difference between a personal account and a private account is not just that the government will control the funds that are picked and the manager of those funds, but also people will not be able to invest them in risky investments. Unfortunately, both Chile and England allowed true private accounts where they picked their individual stock market in which to place the money and they picked the broker and the fees were high and the investments were risky. That is not what is being talked about here. I urge Americans to study the issue of GROW accounts. There is, I think, in reality no downside to these accounts. They enable the Congress to stop spending Social Security on anything other than Social Security, and they let each American have an individual share of the Social Security surplus that is theirs forever and can never be taken from them.

Mr. SHADEGG. And when they discover, as our colleague from Texas (Mr. Hensarling) explained, that we are actually taking that short-term surplus that we have, the excess of revenues we are getting in this year over the benefits we are paying out this year and we are spending it on other things, as he pointed out, we are spending it on phenomenally expensive wheelchairs or we are spending it on Forest Service pickup trucks or we are spending it on welfare benefits or we are spending it on whatever other program is out there and not spending their Social Security taxes to set aside for Social Security, not on Social Security benefits and not on paying future benefits, what kind of reaction did you get from your constituents?

Mr. SHADEGG. I think it is a fair question for us to ask as Members of Congress today, and I think the gentleman from Texas was very fair on that point, both Republican Congresses and Democrat Congresses have used the Social Security surplus for non-Social Security purposes. I guess the question, though, that I want to ask you and a question that I have thought about is, could I go home to my constituents and justify to them that it is appropriate for me to take their Social Security taxes and spend them on some other purpose? I think the answer for me is no. Have you given that question some thought?

Mr. SHADEGG. I suppose, like a lot of us, people are confused about, well, what is the right overall solution and they are not quite sure exactly which reform measure is the right one to do. Is that right?

Mr. SHADEGG. Just quit digging. Quit stealing that Social Security surplus and spending it on other things.

Mr. SHADEGG. If they went like mine, you got a lot of feedback and a lot of confusion about how the Social Security system works.

Mr. SHADEGG. I want to thank the gentlewoman for her contribution to this discussion and invite her to stay and discuss it further. I do want to build on a couple of points she made. First of all, I want to make it clear that this is not my idea. I am one of the people advancing it. Here in the House, it will be introduced by the gentleman from Florida (Mr. Shaw). I think his name will be the second on the bill. The first name on the bill will be that of the gentleman from Louisiana (Mr. McCrery), who is the chairman of the subcommittee on Ways and Means that deals with Social Security, so it will be the gentleman from Louisiana (Mr. McCrery) and then the gentleman from Florida (Mr. Shaw) and then the gentleman from Wisconsin (Mr. Ryan) along with the gentleman from Texas (Mr. Sam Johnson). Those will be the original cosponsors along with myself here on the House side. But I think there are literally dozens, maybe even hundreds, I would hope, of Members here on the House side who will be cosponsors of the bill when it is introduced. I have to give credit where credit is due. The original idea, as I mentioned earlier, was brought to the Congress by my former colleague here in the House, now a member of the United States Senate, Jim DeMint, and there are at least 11 Senators who have already signed on as a coalition to try to build support for this idea on the Senate side as well. I think it is important that we build momentum for that. When we have these discussions, it is useful for the listening audience to know that they can go other places to learn more. The policy committee which I chair has a Web site with substantial information about this idea of taking the Social Security surplus and dedicating it to individual accounts for individual taxpayers and making it their money forever; but I am certain that at your personal Web site and at my personal Web site, they can gather other information and learn about it. The thing that occurred to me in that question about how do you oppose this, and our colleague from Texas (Mr. Hensarling) said, Gosh, I don't even understand why this is even debatable, I would hope that Members listening to this debate, but, hopefully, Americans listening to our discussion tonight, might say to themselves, I would like to learn a little bit more about GROW accounts, I would like to at least ask my Member of Congress whether she or he thinks it is appropriate to take my payroll taxes that I pay in for Social Security and spend those on something other than Social Security, whether it is wheelchairs or jet airplanes; and if they say, no, it is not really appropriate to take the payroll taxes that I pay in for Social Security, FICA, that I get on my little pay stub and use those for something else, to ask their Member of Congress whether she or he will vote to dedicate the Social Security surplus, we have 10 more years of surplus that we know of without any reform at all, we have 10 more years of surplus, do you favor allowing the Congress to continue to steal that money and spend it on other things, agricultural programs, you name it, or will your Member of Congress agree to vote to dedicate the payroll taxes that we raise for Social Security solely to Social Security? I certainly hope that Americans across the country when they see their Member of Congress this coming weekend or sometime over the August break, I hope they will confront them and ask them that question because I think it is the question we have to answer. Maybe we cannot solve the whole Social Security problem in a single blow. Maybe we cannot do it all at once; but the one thing we can do, and I like the way you say it, we can stop digging the hole deeper by taking the Social Security surplus and spending it on something other than Social Security.

Mr. SHADEGG. If the gentlewoman will remain for a moment, I would like to just ask her, I presume you have done Social Security town halls back home.

Mr. SHADEGG. Madam Speaker, I rise today to engage, I hope, in a discussion with my colleagues about an important issue confronting our country, and it is an issue on which we have already begun a national dialogue. It is an issue that, at least before the last few months, was an issue of bipartisan concern, and that is reforming Social Security. As you know, Madam Speaker, the former President of this Nation, Bill Clinton, raised this issue during his tenure in office and noted that the Social Security program in its current structure is in trouble and in need of reform. It is facing several serious problems. One of them is the solvency of the program over time. And another is its fairness to the younger generations. There is a new idea here in Washington and a simple idea that has surfaced just within the last few weeks on Social Security reform that does not solve the entire problem in one fell swoop, but would start us on a path and would address the most egregious problem of all, and that is the structure of Social Security which simply is unsustainable in its current form. So I want to focus this discussion this afternoon largely on that new idea. It is an idea that responds as the House should respond to the concerns and the interests of the American people about what is happening with their Social Security taxes, their payroll taxes. Let me begin with some of the basics. As I think all Americans understand on both sides of the aisle, the Social Security system as it is structured today is a pay-as-you-go system. It is a system where those of us working today in the workforce pay in our payroll taxes and those payroll taxes by and large immediately go out the door to pay the retirement benefits of the Americans who are retired today. That is the structure of the current system, and that is the structure that many countries around the world created some 35 to 40 to 50 years ago. Germany, I think, was first to substitute a Social Security program for its elderly based on this premise, that is, that we would tax workers to pay retirement benefits for those retired. There was nothing wrong with that proposal when initiated because at that time the workforce was dramatically larger than those who were on retirement. Indeed, I think most Americans now know that in 1935 when Social Security was created, there were some 42 Americans working for every American collecting retirement benefits. Clearly, 42 workers can, through their payroll taxes, support one retiree. But as most Americans know by today, those numbers have changed dramatically. In the 1950s, it went to where we had roughly 15 or 16 workers per retiree. Again, that was sustainable. But now we face a new problem. The reality is that the workforce relative to the number of people retired has shrunk and today in America there are only 3.3 working Americans paying payroll taxes to support each individual currently retired and collecting Social Security taxes. If the trends continues, and it will, that is unsustainable. Very soon we will be down to where there are two workers and even less than two workers paying Social Security taxes, payroll taxes to support each retiree. That simply cannot be sustained over time. And so we have a problem with the structure of Social Security. We also have a problem with its long-term solvency. And, most importantly, I think we have a problem with what is referred to as generational fairness. We all know that solvency is the issue of whether or not we have the money set aside to pay the benefits we have promised, and in point of fact we do not. While the system runs a short-term surplus today, we collect more in Social Security taxes than we pay out today in Social Security benefits. That short-term Social Security surplus of revenues in over benefits paid out will end as soon as 2017. Indeed, the surplus itself will begin to shrink, that is go down, year to year as early as 2008. So this is a problem that confronts us very soon, and as the actuaries have told us and as I think Americans understand, the trust fund which we would have to begin drawing upon in 2017 to pay the promised benefit will itself be depleted by 2042. Thus, we have a long- term solvency problem with the current structure where we have a shrinking number of workers per retiree. But the other issue that is not discussed very often is the issue of generational fairness. Generational fairness is a term I use, and I think most Americans and my colleagues understand it, but then when I talk to an audience they say they do not understand it so let me try to make that point clear. Solvency is one issue, but generational fairness is a separate issue. As it turns out under the Social Security system that we have today in America, my grandparents, most Americans' grandparents, collected an effective rate of return on the Social Security taxes they paid, that is, on the payroll taxes they have paid into Social Security, when they collected their benefits, on average they got a rate of return on the money they had put in of about 5 percent. Now, 5 percent is not a great rate of return. You and I would like to be able to invest our money and get 8 or 10 or a better rate of return on the money we invest; but for a program which is designed as this program is designed to provide a floor of protection for those Americans who have either not been able to or have not, in fact, set aside money for their retirement, if you got a rate of return on the money you put into Social Security of 5 percent, you were doing fairly well. That is a decent rate of return. But because of the current structure of Social Security, that is not continuing. Indeed, our children, my children and my grandchildren, will get a rate of return of less than 1.6 percent; and, indeed, for many of them, their rate of return will be negative, that is, they will pay in more in social security taxes than they collect in their lifetimes, on average, in Social Security benefits. That is generational fairness, and it is simply not fair. I think most Americans would agree that creating Social Security, the Social Security program we have, creating a floor of protection so that all Americans can enjoy their retirement years, safe in knowing that they have money to pay for their groceries and to pay their rent is a laudable goal, and with a rate of return of 5 percent on your money, you can do that. But with a rate of return of 1.6 percent or less, or a negative rate of return, our children and our grandchildren, if we do not make changes, will in fact not have a secure retirement. Indeed, they will not have the funds when they go to retire to even minimally get by. Now, those are the basics that have been involved in this debate from the outset, and there are lots of ideas on the table. President Bush has put ideas on the table to deal with both the issue of solvency and the issue of generational fairness so that we can make the program financially sound for the future. Indeed, he would like to make it financially sound forever, not just for the 75-year horizon that the Social Security trustees base their analysis on. But also he would like to make sure that we guarantee the next generation as secure a retirement as this generation has had and as the last generation had. Now, I know a lot of Americans glaze over and say, wow, I have heard so many different ideas on Social Security and on Social Security reform that I get confused. People talk to me about personal accounts. People talk to me about benefit cuts. People talk to me about increases in taxes. I want to talk about a new idea, a new idea which can solve a part of the Social Security problem and stop a practice which is offensive and a bad idea. When I went home and did my town halls with my constituents in Phoenix, AZ, discussing the issue of Social Security, I had to explain to my constituents this short-term surplus that we have. That is the fact that today, and every year since 1983, we have been collecting more in Social Security revenues than we are paying out in benefits. So we have a surplus. And I had to explain to my constituents, as my colleagues here in the Congress have had to do, that that excess money is not being set aside for Social Security. Indeed, the Social Security surplus that Americans are paying in collectively through their payroll taxes, that is the money in excess of the amount spent today for those retired today, is being, I would say quite frankly, misappropriated by the Congress of the United States and the Federal Government. Because when Americans pay payroll taxes to fund the Social Security program, they believe, and they have an absolute right to believe, that their money, paid as payroll taxes to fund Social Security, should be and is being used for Social Security. But that is not true today, and it has not been true since 1983. That money, this short-term surplus of Social Security revenues or Social Security benefits paid out, is in fact taken each year by the United States Congress and spent for general government purposes. It is spent to fund the Department of Agriculture. It is spent to fund the Department of Defense. It is spent to fund the Department of Health, Education and Welfare. It is spent all over this government for general purposes having nothing to do with Social Security. And I will tell you, my constituents, when they learn that, are angry. Now, I mentioned a moment ago that there are many ideas for reforming Social Security. And some back home say, Congressman, it is all too confusing to me. I do not understand. That is the central key element of this new idea. When I went home and when my colleagues went home to address the issue of Social Security reform, and when the American people understood that we are misappropriating the Social Security surplus to things other than Social Security, they got angry; and they said, well, I do not care how and I do not understand how you reform the entire Social Security program, but the one thing you better do, Congressman, the one thing you owe to us, the American people, the one thing you owe to every single person collecting Social Security and every single person paying social security taxes is to stop stealing, stop raiding the Social Security surplus, those payroll taxes paid in for our future retirement, and using them for general government purposes. And that is precisely what this new idea does. A colleague of mine in the Senate, Jim DeMint, first elected to the House and served with me here in the House, has dropped a piece of legislation, and I and a group of members on the Ways and Means Committee in the House have dropped a piece of legislation that will do precisely that. It will take, from the moment it is enacted through a 10-year period, from roughly today through 2017, the Social Security surplus that comes in and it will stop spending that money on anything other than Social Security. Now, how do we do that? What we will do is allocate that surplus to every single American who is paying payroll taxes under the age of 55, and we will set up an account in their name and we will put that money in that account. Now, for the first 3 years, the accounts will be invested in U.S. Treasury bonds, the safest investment in the world and the same kind of investment where your social security taxes are being invested today. But the key difference, the critical difference is that we will stop using that money for general government purposes, we will stop using it to hide the real deficit and the real debt, and we will allocate it to Social Security. Talk about a simple notion. I, an American taxpayer, Joe Smith in my district, an American taxpayer who works at a job and pays payroll taxes, he may be one of those American taxpayers who pays more in payroll taxes than in income taxes. We are going to say to him, Beginning with the passage of this bill, which is called the GROW Act, we will make sure that every single dime you pay in payroll taxes to fund the Social Security System goes to Social Security. Now, a portion of it will go to current retirees, but the rest will no longer be spent for Forest Service pickup trucks or for national defense or for welfare benefits, or for any other purpose than Social Security. And the way we will do that is to put it into an account in your name. I think that is a simple, straightforward basic idea that the American people can address and they can understand, because it is not complicated, and they can embrace and say, well, if we cannot fix all the problems with Social Security, we ought to at least get started. And I am extremely excited and encouraged that this simple notion of taking the Social Security surplus that we will have for the next decade and locking it away in individual, and use the overused term lockboxes, in the name of each American taxpayer so that we do not spend it on any other purpose, I think, is a great idea whose time has come. By the way, these will be individual accounts. They will be in the name of each payroll taxpayer. They will be inheritable. It will be their money. Indeed, just to show you how different it is than the current system: under the current system, if you pay payroll taxes this year, and you pass away 2 years from now, and you are under the age of 65, that money that you paid in goes away. It is lost forever. If we enact this simple bill, locking away just the Social Security surplus, and you work for 2 more years after the program goes into effect and then you pass away, still under the age of 65, instead of getting nothing, your spouse or your children or your grandchildren will inherit every dime of that money. It is your money; and when you pass away, it becomes their money. This is not a gimmick. This is not a paper scheme. This is not a ledger entry here in Washington that never matters. This is hard, cold cash in the pockets of your children or your grandchildren beginning to accumulate the day this legislation takes effect. There are lots of other good things to say about it, but I have been joined by my colleague from Texas (Mr. Hensarling), and I have talked fairly long about this topic for a moment so maybe I will let him chime in and vary the discussion a little bit.

Mr. SHADEGG. Madam Speaker, I would like to engage in a brief discussion to make this a little more followable or reasonable for our listeners to understand. Like me, I assume the gentleman has done town halls at home on this topic.

Mr. SHADEGG

Mr. SHADEGG. Mr. Speaker, I move that the House do now adjourn.