Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I chaired the bipartisan Social Security Task Force, and we talked about this so-called totalization, which is pretty much a reciprocal effort between countries to earn and get payments for retirement benefits, for three reasons. One is the oversight of Congress would result in maybe 60 days delay, but not a real opportunity to turn this around. I support the amendment, but because I think we need sort of a cooling off period of at least a year to look at the consequences, a couple of consequences. One is the solvency of Social Security. So as we look at the potential cost to Social Security, the actuaries are already estimating that Social Security is going to be insolvent by 2018, this provision lowers the date of insolvency because of the cost. Let me just quote what the Social Security Administration estimates. Number 1, it is going to cost approximately $105 million per year over the first 5 years, like the chairman suggested; but, further, the GAO found that a lack of consideration to the estimated millions of current and former unauthorized workers and family members from Mexico who are already residing in the United States who could qualify under various amnesty and guest worker proposals make the cost of such an agreement highly uncertain and could have a measurable impact on the long-range actuarial balance of the trust fund. This is what the GAO said. So the potential benefits are to 3,000 workers in Mexico, American workers, and what we are looking at is potentially millions of Mexican workers in the United States. Now, there is a huge difference in the totalization agreements that we have with Europe. The differences, I think, are substantial in two ways. Number 1, in addition to the vastly greater number of new beneficiaries claiming claims to this entitlement from under the Mexican agreement, the other nations, mostly in Europe, that we have these reciprocal agreements with involve a relatively small or few number of people, and there is closer economic parity. So because of the wage differences between Mexico and the United States, it could be very costly to the Social Security system. I just suggest to my colleagues that as Social Security looks at a $12 trillion unfunded liability, to add these potential large costs to Social Security without thoroughly examining the consequences of what it is going to do to our solvency of our system in the United States, without the kind of changes that we need in Social Security, should be put off for a year.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I submit for the Record my friend Grandmaster Jhoon Rhee's Open Letter of September 10, 2004 to the Honorable George W. Bush, President of the United States. President George H.W. Bush named Jhoon Rhee the 721st ``Point of Light'' for his voluntary work to help others and served as a member of the White House Commission on Asian Americans and Pacific Islanders until June 2004. His letter is as follows: Dear President Bush: On the tragic event of September 11, 2001, I wish to thank you for your efforts to defend our Nation and our freedom. All Americans should join in prayer for you as you certainly have one of the most challenging jobs in the world. God bless the Forces of Might for Right, the soldiers, sailors, airmen, Marines, and National Guard who serve in harm's way, far away from their loved ones, to safeguard and defend us. God bless the policemen, firemen, border patrol officers, emergency first responders, and all those who work here at home to safeguard and protect our Nation. The martial arts community joins you in thanking all of those who serve and protect us as a Nation and a people. The terrorists assaulted our country on 9/11, but they didn't destroy our spirit. Mr. President, your seal of office shows an eagle grasping both the arrows of war and the olive branch of peace. We in the martial arts have always taught these twin precepts. We believe, and practice, that it is best to be prepared and capable to defend yourself, while seeking the path of peace and love. In remembrance of the terrible tragedies surrounding the date of 9/11, the martial arts community is taking action on the philosophies of peace and respect. Our plan is to both help heal our old wounds and turn around the ongoing battle to maintain the positive spirit of America. Beginning today, as every day is a new beginning, American martial artists have declared 9/11 to be ``Acts of Kindness Day,'' and will go forth doing Acts of Kindness on 9/11--and year-round--to demonstrate to the world the American spiritual tradition. This year's goal among America's martial artists is to perform one million acts of kindness between September 11 and October 11, 2004. More on our ``Acts of Kindness'' initiative, launched by martial arts teachers Tom Callos, Fariborz Azhakh, Ken Carlson and myself, can be found at www.911aok.com. We would like to ask you sir, as President of the United States, to declare 9/11 to be an annual Acts of Kindness Day, urging all Americans to perform unselfish acts to help others, to answer hatred and terror with kindness and love. That is the American spiritual tradition we are proud of and, we think, the ultimate way to offer tribute to the men, women, and children who perished that day. We ask you to help us carry this message from the martial arts community to all Americans and to the world. Thank you. God bless you.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, those that have tuned into the previous presentation I think understand that there are many challenges facing the United States of America. There are many needs, whether it is health or education or welfare or more money for transportation or more money for national security. I think we need to pause for a moment sometime and ask ourselves how far and how much money should be spent by the Federal Government in solving an unlimited array of problems. National security certainly is important, and we have upped our stakes and upped our expenditures for national security. I came to Congress 12 years ago; and when I came in, I said I was going to serve six terms. So this is my final term in Congress. Several priorities I set for myself that I thought were important for the Federal Government to deal with, and one was balancing the budget and the other was trying to change Social Security so it becomes solvent, so it stays viable for so many of our senior Americans that need that money to stay out of the poverty level. I am going to talk for some minutes tonight about overspending, and predominantly I am going to concentrate on what I have been very interested in, and that is keeping the solvency of Social Security. The overexpenditure of Federal funds this year is now $574 billion. We are spending $574 billion more than what is coming in in revenues to the Federal Government. Some people have bragged in the last several weeks that the new budget analysis says that we have lowered the deficit spending for 2004. The fact is that we have lowered it some. Some use the figures $422 billion, and I want to explain, Mr. Speaker, why that is misleading and technically untrue. 422 billion is the money that we are borrowing to pay for our overspending, not including what we borrow from Social Security. So if we, I think, were fair with the Social Security Administration and the trust fund and future generations, then the real amount that we are overspending this year is $574 billion. The estimated overexpenditure for next year again is over $500 billion. Last year it was over $500 billion. The year before that it was over $500 billion. How do we put that money into perspective? Well, the Federal budget in 2004 is $2.4 trillion approximately. We are a country that is now 228 years old. It took the first 200 years to amass a debt of $500 billion. Now we are going deeper into debt $500 billion every year. What does that mean? I do not think it takes a genius economist to understand the implication that that has for future generations. Somebody is going to have to deal with that debt. This is a pie chart. And one of the areas on the pie chart, just around the 3:30 to 5 o'clock area, the purple section on the pie chart, is interest which represents 14 percent of total Federal spending. Fourteen percent of total Federal spending is what we are paying in interest, and this is at a time when interest rates are relatively low; and it does not consider how much we are going deeper and deeper into debt every year. So the implication of what we are paying in interest, roughly $300 billion a year, becomes a responsibility of our kids and our grandkids. If we are a family, if we are a business, we do not simply continue to go deeper and deeper into debt without any plans of ever paying it back. And the Federal Government does not have any plans of paying it back. What we found out politically is that if Members of Congress, Members of the House, Members of the Senate, the White House, promise more solutions to more of the problems that we have in this country, in this world, they are more apt to get reelected. So what we have been doing is in two areas putting a tremendous burden on our kids and our grandkids. One is the overspending that we just talked about. The other is overpromising and overpromising means that we are making promises that we do not have the money to pay for. And the economists with the green eyeshades call that unfunded liability. Let me just briefly go around the pie chart of expenditures. Social Security is the largest expenditure of the Federal Government. Some people say why do we put Social Security as part of a Federal expenditure in the budget? It is a separate program. The reason is that the Supreme Court on two occasions now has said that Social Security taxes are simply another tax, benefits are simply another benefit program passed by the Congress and signed by the President. So 21 percent of the Federal budget is now spent for Social Security benefits, roughly $500 billion a year. Medicare is 12 percent, but it is growing rapidly with the addition of the prescription drug bill. Medicare and Medicaid will overtake Social Security within the next 15 to 20 years. Other entitlements, 10 percent; domestic discretionary spending, 16 percent. We have 13 appropriation bills. We have now filed, by the way, the 12th appropriation bill. Hopefully we can complete the appropriation process before the election so the people of the country know what we are doing in terms of spending instead of coming back in a lame duck session, which I consider dangerous with the temptation of overspending. Twelve appropriation bills are represented by the 16 percent. One of the appropriation bills, defense, is 20 percent. We spend most of the year arguing about the 16 percent of the Federal budget that we spend in those 12 appropriation bills. I want the Members to take a quick look at the overpromising that we mentioned. This is one of the trustees of Medicare and of Social Security. These are his estimates of unfunded liabilities, the amount that we have promised over and above the revenues coming in in a payroll tax, the FICA tax. The Social Security and Medicare trustees have calculated that we have $73.5 trillion in unfunded liabilities. Medicare part A, which is mostly the hospitals, 21.8 trillion; Medicare part B, 23.2 trillion; Medicare part D, the new drug program, $16.6 trillion. So the prescription drug program that we recently passed adds $16 trillion to unfunded liabilities that somehow, some way, sometime our kids or our grandkids or our great grandkids are going to have to figure out a way to come up with those revenues to pay the interest on this huge amount of borrowing. Let me just mention what I consider another serious ramification of this overspending, that is, where we are getting the money. Whom do we borrow the money from when we overspend $574 billion this fiscal year 2004? Seventy percent of that net increase that we need in borrowing comes from foreign interests. So here are foreign countries, foreign individuals that are lending and buying our Treasury bills because they figure it is a fairly good investment for the time being. What if some of these countries, such as China, which is amassing one of the largest, fastest-growing trade deficits that has extra U.S. dollars that is buying our Treasury bills, not to mention the equities in the United States that they are buying, what if they say some day, We think you are treating us unfairly in this trade agreement and we just might have to pull our money out of the United States? Economically it would be a disaster if this large amount of money that we depend on coming from foreign countries and foreign interests were pulled out of the United States. They are investing in the United States. That is a good sign. They are investing in the United States because they figure it is a good place to invest their money. What if someday, sometime that we continue to overspend to the extent that our economy is no longer the strongest, the best economy in the world, they decide to invest elsewhere? I am just suggesting, Mr. Speaker, that not only is overspending bad, but it makes us more vulnerable as these Treasury bills are bought up by foreign interests. Again, an unfunded liability is the amount of money that we would have to put in a bank account that is going to return, at least with inflation and the time value of money, to accommodate what we are going to owe for the next 75 years in these programs. The next chart shows what we have to take out of the general fund, out of the money that we spend for health, welfare, transportation, military. This is the amount of money that we are going to have to take out of the general fund to accommodate the entitlement programs of Medicare, Medicaid, and Social Security over the next 75 years. And as we see, simply 16 years from now, it is going to be 28 percent of the general fund budget that is going to have to be contributed to accommodate the needs of these entitlement programs. That is probably not realistic. So what are we going to do? We are either going to increase borrowing, where we have talked about the disadvantages of simply continuing to borrow more and more money, or we are going to have to dramatically increase taxes. One of these days we are going to have to increase taxes. I will not go through the whole chart, but if we do not increase taxes and get additional revenues from someplace else, and already there is a suggestion by the trustees that we could increase the payroll tax now by 15 percent to accommodate our needs, and the fact is that most working Americans now pay more in the payroll tax than they do in the income tax. But by 2030 without an increase in tax, we are going to have over 50 percent of the general fund budget that is going to have to be contributed to these entitlement programs. This is a quick birds-eye view of the Social Security problem. Surpluses coming in until about 2018, they diminish. The surpluses are coming in from Social Security simply because the Greenspan Commission in 1983 increased taxes and reduced benefits so much that there was extra surplus money coming in. And what of course has happened to that surplus is this Chamber and the Senate and the White House has spent all of that extra money coming in from Social Security for other government programs. It is not there anymore. So the trustees are guessing that by 2018 there is going to be less revenues coming in from the payroll tax than can accommodate the promises for Social Security. Then a huge future of deficits, and nobody is guessing where the money should come from. We are talking about a lot of things in this election, as you decide who your next Congressman is going to be, as you decide who your next President is going to be. What we are not talking enough about is what we are going to do about these huge challenges that are facing us in these programs, especially Social Security and Medicare. Senator Kerry has said on his Web site, and let me quote that, that he will not raise taxes on Social Security, he will not raise the retirement age, he will not cut benefits for those that rely on Social Security, he will not in any way privatize the program. I really do not know what else Senator Kerry plans to do. There are only a couple of ways to solve Social Security, or a combination. You either bring in more revenues, or you cut benefits, or it is a combination of both. It is not complicated. So why are people not talking about solutions for Social Security? Why have the Republicans not come up with a proposal for solving this tremendously important program for so many seniors? Why have the Democrats not? I have introduced a Social Security bill every session since I have been in Congress. The attacks on me for my first Social Security bills were, ``Do not vote to reelect Nick Smith. He is trying to ruin Social Security and take your Social Security away.'' Social Security solutions have been demagogued to the extent that most Members of Congress, most politicians, are afraid to come out with a proposal to solve Social Security. I was chairman of the Social Security Task Force. We held hearings for about a year. We ended up with both the Democrats and Republicans on that task force agreeing to the fact that Social Security was going broke, and that the longer we put off a solution to solve Social Security, the more drastic that solution would have to be. Of course, that has been my experience over the six Social Security bills that I have introduced that have been scored by the Social Security Administration to keep Social Security solvent. My last Social Security bill that I introduced last year is much more drastic. It requires additional borrowing from the general fund that we pay back 60 years from now simply because of, if you remember the chart, the surpluses coming in from Social Security are diminishing, and those are going to run out. Then we are going to have to come up somehow with the money to pay back Social Security. Social Security works this way: Benefits are highly progressive and based on earnings. That means that lower-income people, they get back 90 percent. If you are low-income, you get back 90 percent of the wages you were making on the average during those working years. If you are a high-income person, then you get back as low as about 15 percent of the income you were receiving from Social Security. So that is why it is highly progressive. The lower-income people get back a much higher percentage of their working years' benefits. At retirement, all of a worker's wages up to the tax ceiling are indexed to present value using wage inflation. In other words, they do not average in what you were making 20 years ago or 30 years ago, they average in, in effect, what that job would be paying today. That is what they add up for your best 35 years to decide what your average earnings are, and therefore what your benefits are going to be. Here is how benefits are calculated: Ninety percent of earnings up to $7,344 is going to be what the low-income earner gets back; 32 percent of the earnings between the $7,344 and $44,000; and then 15 percent you get back of your earnings above $44,286. Early retirees receive adjusted benefits. In fact, if you delay retirement over 65, then you get an increase in benefits for those years that you delay benefits. I put this last blip in, because so many people complain about the abuses of the Supplemental Security Income that is administered by Social Security, but does not come out of the Social Security Trust Fund. When we started Social Security in 1934, Franklin Roosevelt started it, people during the Great Depression were going to the poorhouse. His idea was if there can be some forced savings during your working years, you will have a program that gives you more social security in your retirement years. So in 1934, we started the Social Security program. It was created not to be the sole income of retirees, but to be one of a three-legged stool. As I visited the Archives, in fact, they have the brochures back in those years of the three-legged stool; one being your pension benefits from work, one being what you save yourself, and the other Social Security programs. But now more and more people are depending on Social Security as their main source of retirement income. Social Security was supposed to be one of the legs of the three- legged stool to support retirees. It was supposed to go hand-in-hand with personal savings and private pension plans. Let me tell you something interesting in terms of the debate and arguments between the House and the Senate when we formed Social Security. The Senate actually passed a bill that it would be privately owned bank accounts by the individual workers, but that they could not take out that money until they retired. But it would be their money, and if they died before age 65, then it would be passed on to their heirs. The House, on the other hand, passed legislation that said the government should take in all of this money, control it, and then promise a fixed benefit at retirement. So if a person died before age 65, they would not get anything. It worked very well in those early years. But the compromise between the House and the Senate, with some of the concerns about the investments of the great stock market crash of the late 1920s and early 1930s, the compromise was that we have the Social Security plan that we have today, which means that government takes in all of the money, and if there is any extra, government spends it on something else and still continues to promise benefits. What we have done, because it is politically popular, we have expanded the Social Security benefit program to include spouses and then to include early retirement. In 1965, we amended the Social Security Act to start the Medicare program that now is going to overtake the base Social Security program as a cost item. The fact is that Social Security is a system stretched to its limits. Seventy-eight million baby-boomers begin retiring in 2008, Social Security spending exceeds tax revenues in 2017, and Social Security Trust Funds go broke in 2037. The Social Security Trust Funds, however, there is going to be less money coming in from Social Security than we need to pay in benefits starting in 2017 and 2018, so where is the government going to come up with that money? I suspect the easy way will be borrowing more money. Of course, that means enticing more foreign investors to invest in our Treasury bills. We are going to pay it back, but the fact is the $1.4 trillion the government now owes in Social Security does not accommodate the $12 trillion unfunded liability for Social Security. Again, let me repeat that we would have to put around $11.8 trillion in a savings account today drawing the interest that would reflect inflation and the time value of money to accommodate what is going to be needed over the next 75 years to keep our Social Security promises. We know how many people there are and when they will retire. This is what the Social Security trustees do. We know that people will live longer in retirement. We know how much they will pay in and how much they will take out. Payroll taxes will not cover benefits starting in 2017, and the shortfalls will add up to $120 trillion between 2017 and 2075. This is all sort of downer news. But the good news, Mr. Speaker, is more and more people are aware that Social Security is a huge problem. We are talking about it a little bit in some of the campaigns. Alan Greenspan, Chairman Alan Greenspan on several occasions now has said, look, do not put it off any longer. You have got to do something to keep Social Security solvent. It is not fair to future retirees to simply let them go on thinking that they are going to receive these benefits, and then the money is not going to be there when they retire. So, hooray for Alan Greenspan. But when Alan Greenspan, the Chairman of the Fed, said that in committee, both Republicans and Democrats jumped on him, saying, look, no way. We are going to protect our seniors. We are not going to reduce benefits, and we are not going to increase taxes. Well, you cannot do it that way. This is a quick picture of the demographic problems we are running into. People are living longer, and the birth rate is going down. Therefore, when you have a program that is pay-as-you-go, that depends on current workers to pay in their payroll tax that within 5 days goes out to pay benefits, if you do not have a growing working population, then you are in trouble. That is the problem with Social Security. In 1940, we had 28 people working, dividing between them what is needed for each retiree. In the year 2000, it went down to three people working, dividing between those three one person's Social Security benefits. By 2025, in the United States there is going to be two people working paying in benefits for Social Security. Here is the danger. Here is what I tell the business community, the National Association of Manufacturers, in encouraging them to be more aggressive in supporting Social Security reform: That if we do nothing, the danger is increasing the payroll tax. And what does that mean? That means we become less competitive in this country. Look at France. Guess what the payroll tax is in France to accommodate their senior retired population? It is over 50 percent. So no wonder France is complaining and demonstrating and striking to try to get better returns on their wages, and no wonder their economy is tremendously challenged. Germany just went over 40 percent of their payroll tax to accommodate their senior population. If we do not do anything and we simply keep putting off the problem, then we are destined to have the kind of tax increase that is going to make us less competitive in a world economy that is challenging us more and more every year, and that is a huge challenge. I chair the Subcommittee on Research of the Committee on Science, and what we are looking at is a lot of our talent is moving overseas. As we become more and more restrictive on homeland security, for example, it means that it is tougher and tougher for foreign students to get into our universities to do their graduate work in math or physics or chemistry, in the sciences. That is what we have depended on. Half of our research in the United States that is government-funded, that is, most all of our basic research, has been done by foreign students. The other part of that problem is that our seniors in high school have scored very low on international tests in science and math. So our challenges are huge, to do a better job in education; to do a better job in our homes, with parents encouraging their students; to do a better job to encourage more students to achieve in science and math if we are going to start holding some of these foreign students out of our country. Some people have suggested, in fact I wrote a letter to the editor of the Wall Street Journal when there was an op-ed saying if our economy grows, that is going to fix Social Security. Here is why that is not true. Social Security benefits are indexed to wage growth. In other words, if the economy grows and more people are working and wages go up, that means that your benefits are going to also go up eventually. When the economy grows, workers pay in more in taxes, but also will earn more in benefits when they retire. Growth makes the numbers look better now, but leaves the larger hole to fill later. The administration has used these short-term advantages for the last 16 years to say, well, maybe the economy will work us out of this problem. I have incorporated in the bill that I introduced last year, I have incorporated some of President Clinton's ideas on how to deal with the Social Security problem. I have incorporated some of President Bush's ideas, and it has now been scored by the Social Security Administration that it will keep Social Security solvent. A lot of people, and I have given maybe 200 speeches around my district and the United States on Social Security, a lot of people say, well, if Congress would keep their hands off the surplus coming in from Social Security, everything would be okay. I wanted to show this chart to show what is needed versus what the trust fund is. The trust fund now, with interest that has accrued every year, is $1.4 trillion. What is needed for the unfunded liability for Social Security is $12.2 trillion. So we are going to pay the trust fund back, but it is not even going to come close to accommodating the need of up until 2075, what is needed in Social Security. Shortfalls will add up to $120 trillion in future dollars, but that means right now the unfunded liability, $12 trillion, would have to go into a savings account, returning at least interest that accommodates inflation. Social Security as a total unfunded liability of $12 trillion. The Social Security trust fund contains nothing but IOUs. To keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent, or benefits will have to be cut by 30 percent. Hang on, everybody. Hang on, Mr. Speaker. This is tough going. This is sort of a 35-minute tutorial on Social Security, and if everybody knows everything on these charts, they probably know more than most Members of the House and the Senate and many of the economists. But what is satisfying is that more and more people are talking about it. And I think it is good to ask the Members of Congress and the candidates for President what their plan is for saving Social Security and Medicare. But on the other hand, a campaign year is probably not a good time to force a solution, simply because it is so easy to scare half of the retirees in this country that depend so much on Social Security. So you can understand how they can be swayed in their vote of who they vote for, and just the suggestion that the opposing candidate is going to take away their Social Security benefits. So I think our best chance is in the first year of a 4-year term of the President. So I am hoping, whether it is Kerry or Bush, that they will not dig a hole so tight that it limits real solutions to keep this program solvent for a long time, hopefully forever. Social Security is not a good investment. That is what this chart shows. The real return of Social Security is less than 2 percent, and that compares to over 7 percent for the market, on average. So if you invested in equities and keep them at least 12 years, your average return is 7 percent. This shows that minorities get less, a negative return from their investment in Social Security. That is because the average return, the average life span of a black male is 62 years old, and it is interesting that that was the average life span when we started Social Security. Up until about 1940, the average age of death was about 62; but even from the very beginning, the benefit entitlement did not start until age 65. So you can see Social Security worked very well in those early years, because most people did not live long enough to start collecting benefits. The average return that the average Social Security recipient gets is just under 2 percent. This is what the market pays on average, 7 percent. However, the Wilshire 5,000 actually earned 11.86 percent, and that was over and above inflation, over the decade that ended January 31, 2004. So even in the slump years of equities, these 5,000 stocks of the Wilshire average still was over, almost 12 percent return on investment. Again, that compares to an average of 7 percent for the average retiree, for the money they pay in in Social Security. This is how long you have to live after retirement to break even on the money that you and your employer sent in on Social Security. In 2005, you have to live 23 years after you retire; and as you see, it goes up to 26 years after 2015. That is because we keep increasing the amount that you pay in. Here is the danger. Here is maybe the most important chart I think of why we need to do something with Social Security. And that is historically, every time we have had a problem with less money coming in than what we need to pay benefits, we have increased taxes and reduced benefits. Here is the history of tax increases. In 1940, it went up to 2 percent from the 1 percent, to $3,000. In 1960 we ran a little short of money, so we tripled the tax rate up to 6 percent, and we increased the base to $4,800. In 1980, we increased the tax rate to 10.16 percent, and increased the base to $25,900. In the year 2000, we increased the tax rate to 12.4 percent of the first $26,700. In 2004, we did not increase the tax; but the base has gone up to, it is now $89,000 base that you pay Social Security taxes on. I think I mentioned most all working Americans, 78 percent of families pay more in the payroll tax than they do the income tax. So to increase taxes I think is a bad idea; it is a wrong idea. It is bad for the economy. Let us encourage the kind of changes in Social Security that are going to tend to help the economy by helping more money in investing. I am going to briefly run through my Social Security bill. It is scored by the Social Security Administration actuaries to restore the long-term solvency of Social Security. There is no increase in the retirement age, no changes in the COLA, the cost of living annual payments, or, there is no changes in the benefits for any senior or near-term seniors. Solvency is achieved through higher returns from worker accounts and slowing the increase in benefits for the highest earning retirees. So what I do is I add another ben point. Remember earlier when we talked about the high income gets 15 percent of their wages. I add another ben point that is 5 percent that results in slowing down the increase in benefits for high-income retirees. I mean, somehow it is going to take money. That is one of the benefits. The Social Security trust fund continues. Voluntary accounts would start at 2.5 percent of income and would increase to 8 percent of income by 2075. And the personally owned worker savings account is voluntary, number one. And number two, we guarantee that they are going to have as much return and revenue and retirement benefits from that personally owned retirement account as they would from the traditional Social Security. So with that guarantee, we assume that everybody under 50 years old at least is going to have that kind of personally owned account where they own the money. If something happens to them before they reach retirement age, it is going to be passed on to their heirs instead of the Federal Government. Investments would be safe, widely diversified, and investment providers would be subject to government oversight. The government would supplement the account of workers earning less than $35,000 to ensure that they build up significant savings. This is one of President Clinton's ideas. I think it was the USA account he called it, as I recall. It simply says, for those lower- income workers, so that they can experience the magic of compound interest, we will add a little bit to their personally owned savings account so that even modest workers can retire as much wealthier retirees. All worker accounts would be owned by the worker and invested through pools supervised by the government, something like the Thrift Savings Plan that all Federal employees have now. Regulations would be instituted to prevent people from taking undue risk, and workers would have a choice of three safe index funds with more options after their balance reaches $2,500. And even then, it has to be an investment determined by the Secretary of the Treasury that is a safe investment. And for my last three charts, accounts are voluntary and participants would receive benefits directly from the government, along with their accounts. Government benefits would be offset based on the money deposited into their accounts, not on the money earned; and workers could expect to earn more from their account than from traditional Social Security. These are some things that have concerned me a little bit in terms of fairness. To be politically correct, maybe I should say fairness to spouses; but, in truth, it is fairness to women. So these are some provisions that I have included in the bill. For married couples, account contributions would be pooled and then divided equally between husband and wife. In other words, everything that the husband is allowed to invest in his private account would be added to the amount that the wife is allowed to invest in her private account. They would be added together and divided by two, so both the husband and the wife would have identical investments in their personally owned account. It would increase surviving spouse benefits to 110 percent of the higher earning spouse's benefit. Right now, if the husband dies, the wife is entitled to 100 percent of the husband's benefit, and then she loses whatever benefit she was getting. It is important that we look at ways to keep more and more people in their own homes, rather than going to nursing homes and going on Medicaid. So increasing this benefit 110 percent is estimated to keep a lot more people in their own homes rather than going to nursing homes. And the last change is stay-at-home mothers with kids under 5 would receive retirement credit in the way their Social Security benefits are calculated. Here is some additional provisions in the bill, just briefly. Increased contribution limits for IRAs and 401(k)s and pension plans to increase more personal efforts at savings. A 33 percent tax credit for purchase of long-term care insurance up to $1,000, $2,000 per couple per year. Low-income seniors would be eligible for a $1,000 tax credit for expenses related to living in their own home, and households caring for dependent parents would also be eligible for a $1,000 credit for expenses. Back to the beginning of my presentation. We are faced with a lot of challenges, a lot of problems. And what we have to face up to is how many problems should the Federal Government, through increased taxes or increased borrowing, solve. And somehow, people that go to the ballot box and elect Members of Congress and elect their President are going to have to make eventually that decision: How much do we want to go in debt in this country? How vulnerable do we want to be to the foreign investments that are now buying up more and more of our equities and our Treasury bills? So I just plead with, Mr. Speaker, through you to all America, as we go through this election year in November, consider some of the ramifications of the huge challenges, in addition to national security. How much should we be spending in addition to the programs that we just debated earlier this evening that we are going to be voting on tomorrow, a program that it is hard to object to, but it is a new $80 million program that sets up a Federal Government fund in schools to try to reduce suicide rates. To me, I am still debating how to vote on that bill because I am concerned about that increased borrowing and expanding government programs at a time when we are going so deep in debt and when the interest on that debt is eating up a larger and larger share of our Federal budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I thank the chairman for yielding me this time, and I think there is going to be unanimous support for this resolution. I think it is appropriate to mention the only reason this really came to the forefront and has become an issue is because the Election Assistance Commission Chairman, DeForest Soaries, proposed a possibility of a policy for allowing the alteration of the schedule for Federal elections in the event of an unspecified emergency. He said maybe we should be looking at that possibility. I think it was never the intention of Congress or the administration or anybody else for the reasons that have been presented from both sides to ever alter our election schedule in the United States of America. I would like to add some of the whereases in the concurrent resolution that I introduced earlier in July, on H. Con. Res. 474. And it says: ``Whereas the United States has never postponed or delayed a Federal election for any reason, even during the Civil War'' and ``Whereas Condoleezza Rice, the Assistant to the President for National Security Affairs, has stated that the administration has no intention of altering the schedule for Federal elections and expects the elections to occur as scheduled'' and ``Whereas the American people have a longstanding and legitimate expectation that regularly scheduled Federal elections will continue to be held in accordance with Federal law'' and ``Whereas keeping the schedule of Federal elections is necessary to maintain confidence in the legitimacy of the Presidency and Congress both in the United States and around the world: Now therefore be it resolved'' it is not going to happen and this Congress is never going to permit the alteration of law that would be required to have a postponement of our Federal elections because of terrorist threat. I compliment both sides of the aisle for moving ahead with this resolution.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I rise to oppose the bill and ask that my ``no'' vote be submitted in the Record at this point because of the uniqueness of the intrusion of the Federal Government in demanding accounting principles. I oppose H.R. 3574 for two reasons. First, it would set a precedent of Congress interfering in accounting minutia. According to CRS, Congress has never passed a law telling the private sector how to do accounting other than taxes. Second, if this bill were to become law, it would require different accounting standards for the United States and the rest of the world. It would, in effect, require two different accounting numbers for international companies, one with U.S. standards and one with international standards, as set by the International Accounting Standards Board (IASB). FASB, Federal Reserve Chairman Greenspan, SEC Chairman Donaldson, and many others have said that this type of rule change may harm the transparency of American accounting rules. Mr. Chairman, I add to my ``no'' vote explanation, comments by some financial experts: The Honorable Alan Greenspan, Chairman, Federal Reserve System, April 21, 2004 With respect to stock options, I think it would be a bad mistake for the Congress to impede FASB in this regard. And in this regard, as best I can judge the FASB changes in recommendations with respect to accounting procedures strike me as correct, and it's not clear to me what the purpose of Congress is in this particular procedure. I think the Congress would err in going forward and endeavoring to impede FASB in its particular activities: William H. Donaldson, Chairman, United States Securities and Exchange Commission, May 3, 2004 For the policy reasons described above, recently underscored by the Sarbanes-Oxley Act, I strongly support an independent and open standard-setting process for establishing accounting principles for U.S. public companies. Accordingly, I believe that the process established by the FASB to consider the pending stock option proposal should be allowed to run its course: The Honorable Paul A. Volcker, Chairman of the Trustees of the International Accounting Standards Committee Foundation, and former Chairman of the Federal Reserve System, April 20, 2004 I suggest that, before acting, Senators and Congressmen ask themselves two simple questions: Do I really want to substitute my judgment on an important but highly technical accounting principle for the collective judgment of a body carefully constructed to assure professional integrity, relevant experience, and independence from parochial and political pressures? Have I taken into account the adverse impact of overruling FASB on the carefully constructed effort to meet the need, in a world of globalized finance, for a common set of international standards? Warren Buffett, Chairman and CEO, Berkshire Hathaway, May 1, 2004 Write your congresspeople giving them your views on whether options should be expensed. . . . It was a disgrace 10 years ago when Congress bludgeoned the SEC and the [Financial] Accounting Standards Board to override FASB's decision to expense options. It accelerated the anything-goes mentality of the 1990s. The Honorable Richard C. Shelby, Chairman of the Committee on Banking, Housing, and Urban Affairs, United States Senate, June 30, 2003 I don't think we should make those rules in the Banking Committee or even in Congress. . . . [FASB] understands the implications. There are economic implications here, but it also gets into corporate governance and honesty in financial statements. In conclusion Mr. Chairman, options clearly have a value and failing to expense them, despite the difficulty of doing so, distorts financial statements and is misleading and unfair to the casual investor.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, on May 29, 2004, members of the Greatest Generation gathered for the unveiling of the World War II Memorial on the Mall in Washington, D.C. It is right that we, as Americans, commemorate the men and women who selflessly gave their lives on foreign shores to halt the march of tyranny during the darkest days of World War II. Roger Durbin was a young man and father when he enlisted in the U.S. Army in 1942. After the war, the former tank mechanic went on to work, raised a family, and lived a normal life, but he never forgot what he had seen and experienced in the War. At the Jerusalem Township Fish Fry in 1986, Roger Durbin approached Congresswoman Nancy Kaptur about a memorial to commemorate the sacrifices made by the Greatest Generation. That conversation would be the beginning of a 17-year quest for Roger Durbin, which culminated on May 30, 2004 with the dedication of the World War II Memorial on the National Mall in Washington, DC. Roger Durbin would not live to see his dream become a reality; he passed away in February of 2000. It would fall to his son, Peter Durbin, and his granddaughter, Melissa Growden, to continue to advance the memorial through to completion. From maintaining Roger's collection of letters and war memorabilia to serving on the Battle Monuments Committee, Peter and Melissa have kept Roger's dream alive. I rise today to honor the dedication of the Durbin family to the World War II Memorial. Their hard work and determination to honor those who have fallen in service to their country is a testament of what can be accomplished when we persevere in a task to honor not ourselves, but others.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise to honor and remember H. Morley Fraser, a wonderful friend of mine and the beloved Albion College coach and mentor to generations of students, alumni and colleagues, who lost his struggle with cancer June 28, 2004 at the age of 82. A native of Milwaukee and a graduate of Washburn University in Topeka, Kansas, and Michigan State University, Morley was a Navy captain during World War II. He began his coaching career in the high school ranks in 1947, coaching for 2 years in Kansas prior to moving to Newberry, Michigan in the Upper Peninsula. At Newberry High School, he compiled a 22-0-1 record in football and had 3 conference championships in 3 years. His Newberry track team earned the 1951 conference title and regional championship. Morley then moved to Lansing and in a 2-year stint at Lansing Eastern High School, he moved a last-place team to a second-place finish in the school's 5-A conference. He moved to Albion in 1954. As Albion College's head baseball coach for 18 years, Morley won 6 Michigan Intercollegiate Athletic Association championships. But he will be best remembered for the 14 years he prowled the sidelines as Britons' head football coach. During that era, Albion won 5 MIAA championships, compiled an 81-41-1 record, had 5 MIAA Most Valuable Players, recorded 2 undefeated seasons, and had a winning streak of 15 consecutive games. The school's football field is now named after him. After leaving coaching, Morley joined Albion's administration and was executive director of the Albion College Conference Center from 1973- 1989. He was chosen for the National Fellowship of Christian Athletes Hall of Champions, the Upper Peninsula Sports Hall of Fame and received the Lifetime Leadership and Athletic Hall of Fame award from Albion College. Although he was best known for his work at Albion, Morley was also known throughout the State as a motivational speaker, routinely giving 200 speeches a year. Among his many engagements, University of Michigan football coach Lloyd Carr invited him to speak to his team before a game every season. He was a mentor to generations of athletes and coaches throughout the Great Lakes region. Morley was also involved in several organizations locally and nationally. In addition to the Fellowship of Christian Athletes, he was a member of the Albion Rotary, the Jackson Kiwanis, and served as the longtime Sigma Nu fraternity adviser at Albion College. He was also a member of the Albion First United Methodist Church for 50 years. Morley Fraser loved people, his community, and his country. Coach Fraser was a man whose dedication for coaching was only exceeded by his love for his players themselves. He demanded nothing less than the best and he always saw the best in everyone. Morley had a preternatural ability to not only teach offense and defense, but also responsibility, loyalty, civility, and virtue. Most importantly, he lived the values, virtues, and lessons that he taught. To balance his tenacity on the athletic field, he was a gentle, compassionate, and loving husband, father, and friend. On behalf of the United States Congress, we offer our condolences to Morley's beloved wife of 57 years, Elizabeth, his daughters, Diane and Kathy, his sons, Morley Jr. and Douglas, his 11 grandchildren, and his 2 great-grandchildren. Morley was passionate for his causes and was a role model for all of us who seek to improve our communities and our country. We offer our thanks to Morley for all he did for countless students, alumni, colleagues and his community.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise to honor Dale Koroluck, an exceptionally bright young man who has been awarded the President's Award for Educational Excellence for 2003. Dale is an inquisitive, high energy, intelligent student who will be entering the. eighth grade at Amelia Earhart Middle School in the fall. He excels academically among his peers and also consistently demonstrates the motivation, initiative, integrity, leadership qualities and exceptional judgment that set him apart from his fellow students. Although Dale's favorite subjects are math and science, he truly enjoys engaging in debate and public speaking. He hopes that his budding litigation skills will someday prove useful while attending law school. Dale also likes to play football and basketball, and he has trained to earn his first degree-black belt in Taekwondo. On behalf of the United States Congress, we offer our congratulations to Dale for earning this prestigious academic award and applaud him for his tenacity to learn. Dale is passionate in all of his endeavors and serves as a fine role model for his peers. We also extend our compliments to Dale's wonderful parents, Kay and Daryl, and his brother Dillon. I suspect that it is very likely that Dale and Dillon will follow in the family tradition of being involved in public service and possibly someday run for public office.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I move that the House do now adjourn.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I want to tell my colleagues and the audience, Mr. Speaker, about the new threat and the fact that some Democrats are saying, look, you have got to do something about Iran. Iran was one of the several countries after 9/11 that we knew were developing weaponry, that we knew that was a country being led by a tyrant dictator that was not trustworthy in terms of the threats and the blackmail. Iran today is becoming increasingly active in its drive not only to derail Iraq democracy but to lead the Islamic radical movement into the future. In recent months, we have seen a series of provocations in Iraq that could be considered acts of war, that may make a coalition response necessary. Iran appears to have financed and encouraged the Shiite cleric Muqtada al Sadr's Mehdi Army in their resistance and which was behind the April uprising in Sadr City and Najaf. Al Sadr continues to denounce the new Iraqi government. How much of this is coming from Iran? We now know that some is. We held a recent hearing in our Committee on International Relations, and we found out that border patrols have captured at least 83 Iranians trying to cross illegally into Iraq, and there are several reports of brief incursions of the Iranian troops into Iraq along the borders. Also in June, Iranian military forces hijacked a small British navy vessel in the Shatt al-Arab waterway with eight crew members aboard. The relief crew members say they were hijacked in Iraqi territorial waters before being escorted into Iran. On July 5 American-Iraqi joint patrols, along with U.S. special operations teams, captured two men with explosives in Baghdad who identified them as Iranian intelligence officers, and I am relating now to the problems in Iran because it was one of several countries that intelligence says was developing mass weaponry and that was using that weaponry to blackmail its neighbors and threaten the world. In addition, Iran has been working actively to produce chemical, biological and nuclear weapons, along with ballistic missiles for delivery. The Under Secretary of State John Bolton testified before our Committee on International Relations: The recently apprehended Pakistani proliferator Dr. A.Q. Khan has confessed to having shared nuclear technology with Iran. North Korea has provided missile technology, including the SCUD B, the 300 kilometer range missiles; and the SCUD C, the 500 kilometer range missiles. Iran's Shahab-3 missile is thought to be based on North Korea's so-called No Dong missile design. The International Atomic Energy Agency inspectors say that Iran is in violation of its commitments as a signatory of the non-proliferation treaty. Iran is engaged in prohibited uranium enrichment activities, is in the process of constructing a heavy water reactor designed specifically to produce large quantities of plutonium usable for weapons and is seeking to produce polonium-210 which is used as a weapon initiator. Iran failed to announce any of these activities as required by the non-proliferation treaty, and they go well beyond any conceivable, peaceful nuclear program. Iran has responded to these charges by threatening to end inspections and withdraw from the non-proliferation treaty. My point is, Mr. Speaker, that we are facing a new challenge, somewhat unlike the challenge of the Cold War with the Soviet bloc, but every bit as challenging, every bit as dangerous. The State Department continues to recognize Iran as the world's foremost State sponsor of terrorism. Iran's links to Hezbollah, Hamas, Palestinian Islamic Jihad, the Popular Front For the Liberation of Palestine, the al Aqsa Martyr's Brigade and the al Qaeda, has been directly implicated in the 1983 bombing of the U.S. marine barracks in Beirut, a series of bombings in 1986 in Paris, the 1992 bombing of the Israeli embassy in Buenos Aires and the 1996 Khobar Towers in Saudi Arabia. In recent weeks, two Iranian diplomats assigned to the U.N. in New York were ejected for spying. The diplomats were said to be photographing sensitive sites. Iran is clearly one of the most dangerous countries in the world and appears to be stepping up its efforts against a free Iraq. The West and the United States, we are working with allies to try to contain these threats. It cannot be just the United States. Iraq Mr. Speaker, again realize that the U.N. is made up of some of these tyrant dictators. The U.N. is made up of individuals representing some of these countries with very selfish motivations. When we look at the 13th and 14th resolution of trying to convince other nations to join with us in countering what was happening in Iraq with their total disregard for the 13 resolutions, saying that there has to be inspectors, with Iraq kicking these inspectors out, it was countries like France and Germany and Russia that had deals with Saddam that were going to lose money if there was an invasion of Iraq. They were trying to actually lift the embargo on Iraq at that time because they could profit by it. The chairman of sort of the counterpart for the Committee on International Relations from the Duma, the Soviet Union in Moscow, came before our Committee on International Relations, and he was talking about and mentioned that Iraq and Saddam Hussein owed Russia between $9 and $12 billion. One of us said, well, if the United States guaranteed that you would get that paid back, would that make a difference in how you would vote in the United Nations on the Iraq resolutions? He said, well, of course. Here again, my point is that these countries are looking out for their self-interests, and if the United States is willing to spend its money, it is easy for some of these countries to stand back that might lose by going into Iraq, other countries that might lose by having to contribute finances at a time when their budgets are under the same kind of pressures ours are, and so I come back to how historians will look on our action after 9/11, going into Afghanistan and going into Iraq to try to counter the terrorist threat that is now facing the new free world. I cannot help but criticize those individuals that try to play partisan politics to the extent of showing their exuberance in criticizing this administration for actions that most of that side of the aisle, certainly most of this side of the aisle, voted on when we voted to give the President the authority to militarily go into Iraq. Delaying November Election Mr. Speaker, there has been discussion, that I just want to comment on, about criticizing this administration for suggesting that we might delay the election. Every Republican I know in this Chamber and in the Senate have said no way are we going to postpone the election. If there is any agreement that needs to be made in terms of potential terrorist disruption of the election, it is an agreement by the Republicans and the Democrats that we are going to have the election; that we are going to count the votes; and whatever the votes are is going to determine who is going to be the next President of the United States. Social Security Mr. Speaker, I am going talk a little bit about Social Security this evening, but also it is partisan politics and demagoguery that I would suggest has been the reason why we have not proceeded with a solution on Social Security. We have known Social Security is going bankrupt, and we have known that for the last 14 years. In fact, I wrote my first Social Security bill when I was chairman of the senate finance committee in the State of Michigan, and I brought it to Congress and I introduced it. I have introduced five Social Security bills, all of which have been scored by the Social Security Administration to keep Social Security solvent, and I have considered this one of my priorities in Congress because not solving this problem of keeping Social Security solvent and putting it off means that there is going to be much more drastic solutions that will have to be made in the future to keep Social Security solvent. In terms of the demagoguery, it is easy to criticize anybody's suggestion on solving Social Security or Medicare or Medicaid, some of the overpromising we have done in those areas, because, for example, in Social Security, we have 80 percent of all of the retirees that are very heavily dependent on Social Security for their retirement income. So you can understand that it is very easy to frighten these people by saying, well, look, that Republican or this Republican wants to jeopardize your Social Security benefits. And, boy, they want to privatize it; and the snake oil salesmen are going to lose it; and you will end up not having Social Security. Of course, I am paraphrasing, but you can understand that it is easy to scare seniors rather than coming together. And it has to be a coming together, Republicans and Democrats, to solve Social Security. On this chart, Mr. Speaker, it is a pie chart of how we are spending money this year. As you see, the biggest piece of pie, the biggest, largest expenditure of the Federal Government, is Social Security, at 21 percent. The domestic discretionary programs represent 16 percent. We spend most of the year in our 12 appropriation bills, outside of defense, arguing about how we are going to spend that 16 percent of the total Federal spending. Most of it is entitlement programs on automatic pilot. Even interest over here is essentially on automatic pilot. But I think it is important also to mention the dangers that are facing our kids and our grandkids in terms of increasing the debt of this country. Fourteen percent of the total Federal budget is used servicing the debt, or paying interest on the debt that we owe. That represents over $300 billion a year, and this is at a time when interest rates are relatively low. We saw Greenspan and the Fed raised interest rates a little bit a few weeks ago. Probably another two times, maybe three times the rest of this year there might be another quarter. Maybe one of these times, depending on inflation, they might go up as much as a half. But the fact is, interest rates are going up. That means this piece of the pie is going up simply to pay interest on the outstanding debt, which is now $7 trillion. And we are adding to that debt by our annual deficit spending. Now, deficits mean how much we overspend in 1 year. Debt is the adding up or the sum of all those annual overspendings. And as I mention, that is now $7 trillion. But we are increasing the debt by over $500 billion a year. How do you put that in perspective? I think about the fact that we are a 228-year-old country, and it took the first 200 years of this country to get up to the first $500 billion of debt. Now we are going deeper into debt $500 billion a year. For lack of a better word, it is unconscionable for Washington to be so egotistical that they think our problems today justify taking the money from our kids and our grandkids that they have not even earned yet. What I am saying is this huge burden of the debt is going to be placed on future generations. And the debt is only part of it. Overpromising. There is no question a politician that goes home and promises new services, new benefits coming from government probably gets on television or on the front page of the paper. And politicians that take home the pork barrel projects, that are seen cutting the ribbon probably are more likely to get elected. So we have been overspending and overpromising. The green eyeshade people, our economists, call the overpromising unfunded liabilities. Unfunded liabilities mean that we do not have enough money coming in to accommodate those promises. This chart shows how much we are going to have to take out of the general fund to accommodate Social Security and Medicare and Medicaid. And by 2020, it is going to take 28 percent of the general fund budget, added to our payroll tax, our 15.2 percent payroll tax, to accommodate the shortfall, or the shortage between what we have promised in these programs and the extra money needed to keep those promises. If you go up to 2030, it is going to take over 50 percent of the general fund budget. Are we going to take 50 percent of the general fund budget? No. That means tax increases. Or, if we do not have the guts, if we do not have the intestinal fortitude in Congress and in the White House, it means maybe adding to borrowing, which is going to add to the burden of interest. After I voted against the prescription drug bill, Tom Savings, one of the actuaries, came to my office and said, these are my calculations of the unfunded liability, of what it is going to take in these programs over and above the money coming in from the payroll tax. Medicare part A, which is mostly hospitals, is going to be almost $22 trillion unfunded. Medicare Part B is going to be $23 trillion unfunded. Medicare part D, the new drug program, adds $16.6 trillion of unfunded liability. Social Security is $12 trillion unfunded liability. Again, that means that that $73.5 trillion would have to be put into some kind of a savings account or investment account that is going to have a return of at least inflation to accommodate the money that is needed over the next 75 years to pay for the benefits that have now been promised in those programs. I mean huge amounts of money, an almost inconceivable $73.5 trillion, that we would have to come up with today. But our total Federal budget, back to that pie chart, our total Federal spending only comes to approximately $2.4 trillion in 1 year. So total Federal spending is $2.4 trillion in 1 year. This is a quick snapshot of the problems with Social Security. A very short-term surplus. What happened with the Greenspan Commission in 1983, they reduced benefits and increased taxes. A huge jump in taxes. So the huge jump in taxes, they figured if that was invested in a proper way, it could accommodate a longer-term solvency. But their expectations did not culminate the way they thought it would. And the fact is that starting in 2017, we simply go into the red from there on out, and that is sort of representing the unfunded liability in that program. I think it is important to briefly describe how Social Security works. Benefits are highly progressive based on earnings. That means that if you are a lower income, you get 90 percent back. Ninety percent of what your wages were you will get back in Social Security benefits for that every month. So if you had $1,000 coming in for Social Security over a month's period, you would get $900 back in Social Security benefits for that month. At retirement, all of a worker's wages up to the tax ceiling are indexed to present value using wage inflation. Indexed to present value means that if a job as a farmer, a boot maker, or anything else paid X amount 20 years ago, then that is going to be what you would pay that profession now. As far as wage inflation, that would be what you are given and assumed. So that just because you worked for a low wage 20 years ago, it would be put on the books and added up and calculated to determine benefits based on what that job would be paying today. The best 35 years of earnings are averaged. The annual benefit of those retiring in 2004 equals 90 percent of the earnings up to $7,344, thirty-two percent of the earnings between the $7,344 and the $44,000 and then 15 percent of the earnings above $44,000. What I do in my Social Security bill, I add another so-called bend point of 5 percent which has the effect of saving money by reducing the increase in benefits for high-income retirees. And then early retirees receive an adjusted benefit so if you decide to retire at 62 or 63, it is going to be less than if you decide to retire at 65 or 66 or 67. I put this on because so many people in the maybe 250 speeches I have given on Social Security complain about somebody abusing Social Security with supplemental security income. And so I wanted to put this on my chart that SSI does not come out of the Social Security, it comes out of the general fund even though it is administered by the Social Security Administration. We do a lot of talk about this word privatizing. Privatizing is a negative word. I, nor any other Member of this body or the Senate, has done anything except have a percentage of your wages go into a fund that is dedicated to your name. So government still controls it. What you invest in is limited to safe funds, so you do not have the option of saying, well, gee, this sounds like a really good deal so I'm going to invest in this new energy substitute. In my legislation, we limit investments to index bonds, index stocks, index cap funds. It is interesting that when Franklin Roosevelt created the Social Security program over six decades ago, he wanted it to feature a private sector component to build retirement income. Actually when the Senate passed their Social Security bill in 1933, the Senate said these savings accounts are actually going to be owned by the worker but they can't take any money out till they retire. The House, and again this was after the Great Depression, said, well, we better have government handle all of these Social Security funds coming in and not really have any of the Social Security benefits in an individual's name. When they went to conference, the House won out and we have the program that we have today with the government taking all the money and if there is any surplus coming in from the FICA tax, from the payroll tax, then what Congress and the White House does is spend that surplus on other government programs. So for a start, let us get some real return on that extra investment from the surpluses coming in and let us not simply use it up by spending it on other programs. That is part, I think, of every bill that I have seen introduced. The system is stretched to its limits. Seventy-eight million baby boomers begin retiring in 2008. Social Security spending exceeds tax revenues in 2017. Social Security trust funds go broke in 2037. But it is worse than that, because all the money is spent and there is only IOUs, that government owes this money back. If government follows the pattern that has been traditional for the last 50 years, then every time they have come short of money, they do a combination of reducing benefits and increasing taxes. When you consider that about 78 percent of American workers today pay more in the payroll tax than they do the income tax, I think it should be out of the question because it is significantly reducing the chances that workers can become wealthy if we continue to increase the tax on them like that. Insolvency is certain. We know how many people there are and when they will retire. We know that people will live longer in retirement. I chaired the Social Security bipartisan task force. The medical futurists came in and predicted that within 25 years, anybody that wanted to live to be 100 years old would have that option and within 30 years with our new medical technology, with nanotechnology and what is happening in our research, anybody that had the money and wanted to live to be 120 years old would have that option. Already companies are coming in and saying we are paying retirees now, we are paying retirement benefits longer than they actually worked for us. You can see the predicament of the life span. That is the demography of the situation that now faces us in a sort of pay-as-you-go program where we depend on existing workers to pay their taxes in that immediately goes out to pay the benefits of existing retirees. As the birthrate goes down and as our medical technology allows people to live longer, it makes that kind of pay-as-you-go program unworkable. And so some changes have to be made. Almost every State now has made a transition from a fixed benefit to a fixed contribution type program. For the long run, we have got to move in that direction. Part of that movement is getting a real return on some of this money that American workers are sending in so that it can be their own individual account. A good persuasion is the fact that the Supreme Court now on two decisions has said that there is no connection between the taxes you pay in for Social Security and your entitlement to benefits. Taxes are just another tax bill, a tax on your payroll, and benefits are simply another benefit program and they are separate and there is no entitlement simply because you pay into Social Security all your life. It seems like that is a good argument, Madam Speaker, that says, look, let's have some of this in our open accounts so that if we die before we are eligible for Social Security it goes into our estate and it passes on to our heirs. Here is sort of the picture of the demographic problem. In 1940, there were 28 workers paying in their Social Security taxes to accommodate every one retiree. By the year 2000, with people living longer and the birthrate going down, it got down to three people having to pay increased taxes when it is just the three people paying in to accommodate every retiree. Of course, all this time we are increasing our benefits for retirees. By 2025, the estimate is that there is only going to be two people working for every one retiree. Talking to the National Association of Manufacturers and some of the business groups, I have suggested that if they do not help in explaining the problems of Social Security, then we could be facing the kind of situation of being forced to pay higher and higher payroll taxes that would put our businesses at a competitive disadvantage. Take a guess what the payroll tax equivalent is in France. It is over 50 percent. Over 50 percent of their payroll in France goes to accommodate their senior programs. Germany just went over 40 percent. No wonder that they are complaining about their competitive disadvantage in terms of trying to compete with the rest of the world. It is so important that we move ahead trying to solve this problem now of insolvency rather than just simply looking the other way and putting it off because it does two things. It puts an extra burden on our kids and our grandkids and future generations. Secondly, it is going to be much more difficult to solve the longer we put off the solution. That is because of the little blip where we have surpluses coming in now and pretty soon we are going to have to reach into other funds to accommodate our promises on benefits. Economic growth will not fix Social Security. I have heard some people say, actually from the other side of the aisle, look, if we can get a President that creates a strong economy. First of all, a President or this Congress does not create a strong economy. It is our system that we have in this country. It is a wonderful system that we devised back in our Constitution when we structured it so as to encourage hard work and effort. So we have a Constitution and system in America that those that work hard, that save, that try and invest, that go to school and use that education, end up better off than those that do not. Now we are sort of floundering a little bit in an ambition of some to divide the wealth, taking from the people that have made it and giving to the people that have not made it. So if a young couple decides, look, we are going to work double shifts so I can have more money and do better for my family, we not only tax them more, but we tax them at a higher rate. So we have got to be very careful that we do not discourage the kind of policies that have made this country grow better and faster and stronger with a higher standard of living than any other country in the world by continuing to say if you are successful, we are just going to really hit you with larger taxes. When the economy grows, workers pay more in taxes, but also will earn more in benefits when they retire. Growth makes the numbers look better now, but leaves a larger hole to fill later. The administration uses some of these figures, and I have met with both President Clinton, who tried to move ahead with Social Security reform, and President Bush, who has tried to move ahead with Social Security reform. But here is my guess: Whether it is Mr. Kerry or Mr. Bush, I think that it is very important that we move ahead with Social Security reform next year. The first year in a 4-year cycle for the President is the only real opportunity for a President to push for the kind of agreement between Democrats and Republicans that is going to be able to solve the Social Security problem. If there is not bipartisan support for some way to solve the problem, then we are going to be faced with a future of reducing benefits. Some people have suggested if government would keep their hands off the surplus and not spend it for other government programs, keep their hands off the money in the trust fund, that Social Security would be okay. I have this bar chart to show you the difference between what is needed and how much is in the trust fund. The trust fund, or the IOUs, where there is no money there, is $1.4 trillion. The unfunded liability, in other words, what is needed to go into a savings account that will earn interest at the rate of inflation, is $12 trillion. So what is in the trust fund is not nearly enough to accommodate a solution for the problem. We have got to pay it back, and we will; but will we borrow money, or increase taxes to come up with that $1.4 trillion to pay back? The biggest risk is doing nothing at all. Social Security has a total unfunded liability of over $12 trillion. The Social Security trust fund contains nothing but IOUs, and to keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. A dire prediction, a real problem for seniors 20 years from now and for our kids and our grandkids that are going to have to put up with our overspending and our overpromising. The real return to Social Security, this chart is supposed to show that Social Security is not a good investment. The real return on Social Security is less than 2 percent for most workers, and shows a negative return for some, compared to the 7 percent that the market has shown us over the last 100 years. The first chart is minorities. If you are a black male, your average age of death is 62 and you end up with negative return on the money that goes into Social Security. It is interesting that back in 1934, in fact from 1934 up until the start of World War II, the average age of death in America was 62 years old. But benefits, even when we started, you could not draw Social Security benefits until you were 65. So if you die on average at 62, the program worked very well, because most people never collected any benefits. The average return, again, is 1.7 percent. The tall blue graph on the right shows what the Wilshire 5000 index earned, and that was 11.86 percent after inflation, and that was for the last 10 years, including the last three down years. This is how long you have got to live after you retire if you are going to break even on Social Security benefits. If you retire in 2005, you are going to have to live 23 years after you retire to break even on Social Security. As you see, in the earlier years, if you happen to retire in 1980, you only have to live 4 years after you retire. That is because you paid much less in in relation to what you are going to take out as we have reduced benefits and increased taxes. This is the increased taxes. So every time we have gotten into problems we have said, well, let us increase the taxes on workers. In 1940, we raised it from 1 percent to 2 percent of the first $3,000. In 1960 we raised it to 6 percent of the first $4,800. In 1980, we raised it to 10.16 percent of the first $26,000. In 2000, we raised it to 12.4 percent of the first $76,200. In 2004, the rate did not go up, 12.4 percent for Social Security, but the base was increased to $87,900. $89,000 is now the base that we tax the 12.4 percent on for Social Security. Madam Speaker, 78 percent of working families now pay more in payroll taxes than income taxes. These are the six principles that I sent to the House and Senate Members suggesting maybe at least we can agree on some of the principles. One, protect current and future beneficiaries. Two, allow freedom of choice on whether you want to stay in the existing program or whether you want to go into a program where you would have some of the money dedicated to your own account that you own. Preserve the safety net. In other words, I do not use all of the trust fund to make the transition into a program that starts putting money in these personal savings accounts. Make Americans better off, not worse off. Next I say investing, allowing some of the investment to go into mutual funds, index funds. That is the seed corn for our business and industry to do the research, to make the kind of improvements to increase their efficiency and competitive position within the world trade we are now facing. Create a fully funded system. And no tax increases. Just briefly, I am going to finish up by going through the Social Security bill that I just introduced, and that is a bill that is sponsored by both Republicans and some Democrats. It is scored by the Social Security Administration to keep the program solvent. There is no increases in the retirement age, no changes in the COLA, the cost of living index, depending on inflation, where we increase benefits every year, and that there is no change in the benefits for seniors or near- term seniors. Solvency is achieved through higher returns from worker accounts and slowing the increase in benefits for the higher-income retirees. The Social Security trust fund continues. Voluntary accounts would start at 2.5 percent of income and would reach 8 percent of income by 2075. So it is a gradual transition into a personal savings account, and it is important we do it gradually. The other option we are looking at is you could issue bonds and make the transition to start at a higher rate, such as 5 percent of your income would go into your personal retirement account quicker, but that means in effect borrowing more money to accommodate the transition costs. Investments would be safe, widely diversified, and investment providers would be subject to government oversight. And the government would supplement the accounts of workers earning less than $35,000 to ensure that they build up significant savings. This was an idea that President Clinton had that said for the lower incomes, so that low income workers can retire more like millionaires, we need to add a little money, I think President Clinton called it a ``golden savings account.'' But what I do in my legislation is say we are going to assume that everybody can at least have the 2.5 percent to start with, and then it goes up, of $35,000, that goes in their personal retirement savings account to accumulate and to have the magic of compound interest. And that is what it is all about. Just as a footnote, Madam Speaker, I am still going to suggest to not depend on some kind of a magic solution. Every person under 50 years old; in fact, every person, should make a very strong, dedicated effort to start putting money aside for your retirement. Start figuring out what you are going to need. If you are going to end up living 40 years after you retire, how much money are you going to have to start putting aside. And the magic of compound interest and those figures, which maybe deserve a whole hour of briefing on encouraging savings, but let me just say that it is so important for everyone, for everybody from the age of 16 to the age of 60, to start setting aside as much as you can now and let the magic of compound interest help with the retirement benefits. In conclusion, accounts are voluntary, and participants would receive benefits directly from the government along with their accounts. Government benefits would be offset based on the money deposited into their accounts, not on the money earned, and workers could expect to earn more from their account than from traditional Social Security. In fact, what we do in our bill is we guarantee an individual worker that decides that they want to go into the personally-owned account system, and that is optional, that they will get at least as much as they would from the fixed Social Security system that exists today. So we can guarantee that, since they only earn 1.7 percent on Social Security. If anybody would like to review my charts, then they are on my website. If you go to one of the search engines and you type in ``Congressman Nick Smith,'' you can get to my website. You can get to these charts that display my particular proposal for solving Social Security and, again, this proposal has been scored by the Social Security Administration to keep Social Security solvent. I have gone to the White House. The White House feels very strongly that it is important next year to start working aggressively to get some kind of a compromise between the Democrats and the Republicans in the House and in the Senate to move ahead with a solution for Social Security that is going to make sure that we keep this program solvent for the long run.

Mr. SMITH of Michigan. Mr. Speaker, after listening to the previous speakers, Mr. Speaker, I think of Ronald Reagan's words, There you go again. Every 4 years we sort of experience the spinning and the demagoguery that takes place in this chamber using these podiums and C-SPAN to criticize the sitting President. Of course, Republicans did it 4 years ago and 8 years ago. When I first came into office and was elected in 1992, the Democrats in this Chamber were using this forum to criticize the first President Bush, all the things that went wrong. But I think of what the criticisms were of President Reagan when he came into office. When President Reagan came to office America was demoralized. President Carter had spoken about our malaise in Watergate, and our defeat in Vietnam had all shaken our self-confidence. We had given up the Panama canal. The Shah of Iran and supporters of the Ayatollah Khomeini held 52 of our Americans hostage for more than a year at our embassy in Tehran. The military rescue mission, of course, failed in the desert, and we lost eight of our servicemen in that venture. Communism was on the march, and after South Vietnam fell, Cambodia followed. The Sandinistas took control of Nicaragua and Communist insurgencies were underway in Ethiopia, Angola, and certainly the Soviets invaded Afghanistan in 1979 and were suppressing the solidarity movement in Poland. Our economic situation was very dire in 1980, and President Reagan came in and actually renewed our faith. America, in most American's minds, no longer seemed to be special, and we needed that kind of determined leadership. The point I want to make, in reacting to some of the Democrats' criticism of this administration, was the criticism that President Reagan received when he believed we should stand up to the Soviet Union and we ended up doing that. It was President Reagan's resolve that repulsed communism in the Caribbean and Central America and repulsed it also in Afghanistan. It was Reagan's resolve that nurtured solidarity in Poland and gave heart to the dissidents of the Soviet bloc, and it was Reagan's faith in American ideals that toppled the Berlin Wall. All of this time he was being criticized as being a trigger happy President that might push the red button for a World War III with the Soviet Union. When he went to Berlin, and he was writing a speech for Berlin, he started out writing in that he wanted to include ``Mr. Gorbachev, tear down this wall,'' and all of his advisers and his speech writers said, no, do not do that; it will anger the American people and the world. They will think you are too bold; they will think you are too challenging. That might end up in war. You should just try to get along and make peace. But he insisted it go in despite that criticism, and that leads me to what historians are going to say 30 years from now in analyzing the decision and the determination of this President to go into Iraq. Most everybody in this chamber and the Senate had the same kind of intelligence information that the President and the administration had. Some of that intelligence information, we have now discovered, was very inaccurate in some regards. Iran

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I rise to make the point that under the current law, there are no limits for government price support payments to farmers using commodity certificates. If commodity certificates and loan forfeitures would have been included under the payment cap limit like in the Senate version of the 2002 farm bill, the CBO has estimated we would save $118 million in FY 05 alone--$118 million--that could be used for some other very worthy initiatives in this agriculture appropriation bill or larger supports for family farmers. We all have heard the news reports about large corporate farms receiving millions of dollars in government payments through the use of generic commodity certificates. Generic certificates do not benefit average family farmers but allow the largest farmers to receive unlimited payments. It is not good public relations for agriculture or our next farm bill. Under our current system, when the $75,000 limit is reached, producers can continue to receive unlimited price support benefits through loan forfeitures and generic commodity certificates. Generic commodity certificates are in practice the same thing as marketing loan gains, yet they are not included under the payment limitations. Thus, generic commodity certificates are essentially loopholes allowing large farming operations to exceed the payment limits. Should it be the objective of federal farm policy to provide virtually unlimited price support to large farming operations? To add insult to injury, in a May 2003 article published in Tax Notes, it shows that gains from commodity certificates are not reported to the Internal Revenue Service. Reading some of the comments following the USDA's Payment Limit Commission Report from last fall, it seems important to stress the fact that a few large farmers utilizing generic commodity certificates are avoiding payment limits. While the Commission indicated that no changes should be made to payment limits until the next farm bill, we need to seriously consider where our agricultural appropriations money is going. Should the Federal Government be paying over 50 percent of the gross income for certain commodities? It is often argued that cooperatives need to use these commodity certificates as a marketing tool and that the money is spread over numerous producers. This argument dodges the real issue, however, that generic certificates provide a loophole for large producers in the cooperatives to collect unlimited dollars in federal subsidies above and beyond the so-called payment limits. Even within such co-ops, individual farm production records can be used to enforce compliance if this loophole were closed. As you may know a majority of the Senate and the House voted to instruct conferees to have ``real'' payment limits. Unfortunately, the conferees did not follow through. The next farm bill is at risk of overly severe limits if continued abuse is evident. The CBO projected savings of $118 million for FY05 and nearly a half billion dollars during the 5 years of our current farm bill. That money could be used to fund the National Research Initiative, NRI, which is a national grant-based agricultural research program for our public and private scientists. The NRI was authorized in 1994 at $500 million per year, but has received less than $200 million every year since its inception. This kind of research can allow our farmers to be more productive and efficient, being less dependent on Federal farm programs. The NRI has provided the agriculture community with valuable research such as sequencing the rice genome, disease resistance in soybeans, and improved management practices for livestock and crop producers. Supporters of payment limits argue that large or unlimited payments benefit large farms, facilitate consolidation into larger units, raise the price of land, and put smaller, family-sized, or beginning farming operations at a competitive disadvantage. Critics of payment limits counter that all farms are in need of support, especially when market prices decline, and that larger farms should not be penalized for the economies of size they have achieved. Although the effect of payment limits can vary, affected farms are usually relatively large. Cotton and rice farms are affected more frequently because they tend to be larger and their subsidy value per acre is relatively high. Cotton and rice farms are also the largest users of commodity certificates in the marketing loan program, an important fact for payment limits. Under the 2002 farm bill, producers receive three types of commodity payments that are subject to limits: direct payments, counter-cyclical payment, and marketing loan payments. With respect to payment limits, direct and counter-cyclical payments are relatively straightforward since they are direct transfers made in cash. Marketing loans, however, are more complicated. The marketing loan program has four mechanisms to provide benefits when market prices are below loan rates: (1) loan deficiency payment (LDP)--a direct payment instead of a loan; (2) marketing loan gain (MLG)--repaying a loan at a lower market price (posted county price, or average world price for cotton or rice); (3) ``commodity certificates''--purchased at the posted county price to repay the loan; similar to a MLG but without payment limits; and (4) forfeiting the collateral (commodity) and keeping the cash. The 2002 farm bill retains annual limits on selected commodity program payments. It creates a prohibition on payments to persons or entities with adjusted gross income exceeding $2.5 million--unless 75 percent or more comes from farming. The annual limit per person is $40,000 for direct payments, $65,000 for counter-cyclical payments, and $75,000 for marketing loan gains and loan deficiency payments. However, because commodity certificates and forfeiture of commodities are not subject to any limits, the limit on MLGs and LDPs simply becomes the point at which the farmer shifts to commodity certificates. So, as a practical matter, the marketing loan program is not limited. Mr. Chairman, again I want to reiterate the pro-farmer, practical need to close the payment limit loophole. Without putting constraints on the benefits earned through marketing certificates and loan forfeitures, the annual per person payment limit on the marketing loan program is not a true limit on federal payments to large farmers with budgets that must be restrained the challenge of writing the next farm bill that will keep American agriculture strong will be a huge task.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would just like to speak about what some consider boring statistics on government growth. I can add later in this 5-minute short brief, on where we are on not only overspending but over-promising. We are now doing the appropriations bills. This is my last year in Congress. In the 12 years that I have been in Congress, all spending appropriations are increasing much faster than inflation. That means government is growing faster than everybody else's financial pocketbook who are citizens in this country. Some years we have seen 3, 3\1/2\, one year almost 4 percent growth in the Federal Government faster than inflation. The percentage of our total Federal budget that goes to service the debt, pay interest on the debt, of our annual overspending is now $7 trillion. And what it costs the taxpayers of this country to pay the interest on that debt is 14 percent of our total Federal spending. 14 percent represents a little more than $300 billion a year that we are spending on interest. And so I ask, Mr. Speaker, guess what is going to happen to interest rates over the next couple of years or the next 10 years. Interest rates are going to go up. They are now at a relatively low percentage. And if the lower percentage represents a cost to us of $300 billion a year, what if interest rates were to go back up to where they were in the early 1980s? Now, let us move from the high interest rates and that cost to taxpayers in the future to how much the total debt of this country is increasing. Now, I mentioned about $7 trillion current debt. We are increasing the debt now by over $500 billion a year. That means that this body, this Congress, these Members are going to have to look their grandkids in the face and try to explain today's overspending, saying something, some excuse, it was not my fault, it was somebody else's fault that taxes in your generation are so high. We are going to hear a lot of rhetoric during these appropriation bills that Congress should spend more, in other words, go deeper into debt. And it is somewhat of an egotistical attitude that somehow we are pretending that our problems today are greater than what the problems are going to be for our kids and our grandkids. Let me conclude by suggesting that it is not good for our security in this country. The Department of Treasury reports that 45 percent of our marketable debt for this government is held by foreign interests. Last year the overspending, which means more borrowing, resulted in 75 percent of it being picked up by foreign interests. China is now the country that is accumulating more of our debt. Just imagine, for a moment, the vulnerability that puts us in when we become so subject to another country in any kind of negotiations. Whether it is military or whether it is trade, and that country that owns so much of our equity says, well, you might not be the country we wish to invest in. That would put us in a very serious economic situation. I conclude with the estimate by the actuaries of Medicare, Social Security, and Medicaid that are now predicting that the over-promising, the unfunded mandates, meaning how much money we are going to have to come up with over and above what is coming in currently in the FICA tax, the payroll tax, to accommodate the extra spending that is needed, again over and above the money that is coming in, is $73.5 trillion. So if one adds the unfunded liability of $73.5 trillion to $7 trillion debt, that means $80 trillion plus responsibility that we are loading on our kids. I am a farmer from Michigan. We try to pay down the mortgage on the farm. This body is in effect saying let us spend more, let us solve more of the problems by borrowing more and let us pass the bill on to our kids.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, this bill, H.R. 3598, will ensure that the Federal agencies will coordinate their programs. That is important. It expands the effort to have more students be trained in the manufacturing science. That is important. It ups the authorization amount for the MEP program. Yesterday we passed a bill that increased the appropriations for that program, the Manufacturing Extension Program. I will just urge every small and medium-sized manufacturer in this country, everyone that knows somebody that works in that kind of industry, to take advantage of this program. Look, you are getting expert advice for one-third of what it is otherwise going to cost you as a manufacturer for expert advice. The State provides one-third, the feds under our program provides one- third, that leaves one-third for the participating manufacturers. Use the program. If you know somebody that is in the manufacturing arena, tell them to go to the Web site. Type in MEP and NIST and let a search engine find it. If you want the details, it is www.MEP.NIST.gov/state-affairs. It is a good program. Use it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I oppose H.R. 2828, the California Water Bill because it preauthorizes wasteful projects. It forces federal taxpayers to pick up more than a $1.5 billion tab for a California-only project. It would not prevent taxpayers from getting stuck with the cost for large water projects, and would open the Federal treasury to raids by disingenuous water users. H.R. 2828 would ``preauthorize'' major water projects. A ``yes'' vote on H.R. 2828 would mean Congress gives up its long-standing right to have a say over taxpayer funded projects. Why should the rest of the country pay for California's water problem? They have 35 million taxpayers to pay for it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, first I feel somewhat obligated to explain that my wife was not in town this week and I had to pick out my own tie. As we approach more decisions on appropriations, this is the chart that I used on my Social Security presentation. I want to focus on the fact that 14 percent of total Federal spending is interest on the debt. That now amounts to about $300 billion a year. So let us be conscious of the fact of how much we are spending and overspending. This year we are going to spend about $500 billion more than we are taking in. That is going to add to the debt. Interest rates are going up. We are putting a huge burden on our kids and our grandkids and future generations as this body and the Senate and the White House continue to overspend. Let us be frugal; let us realize that the imposition on our kids and grandkids is not fair and jepordizes their future.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I rise this evening to honor and remember Rolland ``Bob'' Lyons, who lost his struggle with cancer June 17, 2004. Bob was born in Ann Arbor, Michigan, and lived in several Michigan cities before graduating from Kalamazoo High School in 1948. He served his country in Korea as a second lieutenant in the Army. A graduate of the University of Michigan, he founded the Michigan Trenching Service, Incorporated, and became a prime contractor for service companies. Although he was a highly successful businessman, he humbly referred to himself as ``just a ditch digger from Ann Arbor.'' Bob Lyons inspired optimism and a community-minded spirit that has left a lasting mark on those who were fortunate enough to have known him. Bob's commitment to improving society can be seen through his membership on the Mackinac Center Board of Directors. However, he will best be remembered, I think, for his boundless energy and commitment to numerous causes: Cleary University, St. Joseph Hospital, the Boy Scouts, the Hands On Museum, and many, many others. Bob Lyons' humor and outgoing personality made him a natural at fundraisers and political events where he was a regular. He recruited, encouraged, supported and helped elect many political candidates. Bob was passionate for his causes and was a role model for all of us who seek to improve our communities and our country. Thank you, Bob, for all you did for us. You will be remembered fondly. We offer our condolences to your beloved wife Jan, daughter Suezahn, son Rob. Bob, your service to your community and your country will be remembered.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I ask unanimous consent to proceed with my 5 minute at this time.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I demand a recorded vote.

Mr. SMITH of Michigan. I do, Mr. Chairman, just for an explanation to the body. Originally, we thought we could work out a word change that would be acceptable, but it would still be subject to a unanimous consent request. We were informed there would be an objection, so that is why we vacated the rewording of the amendment. Mr. Chairman, I withdraw my reservation of objection.

Mr. SMITH of Michigan. Mr. Chairman, I reserve the right to object.

Mr. SMITH of Michigan. Mr. Chairman, I withdraw it, with the understanding that I could redraft it and bring it to the desk.

Mr. SMITH of Michigan. Mr. Chairman, I would be glad to change that, too. If there is no objection, I would make that amendment. I would ask for unanimous consent. I understand that it has to be in writing. Is that correct, Mr. Chairman?

Mr. SMITH of Michigan. If it says that the $20 million is going to be withheld unless and until there is full cooperation by the United Nations and participating countries releasing available information on the Oil-for-Food program?

Mr. SMITH of Michigan. Would you support the amendment with that language?