Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. This is a bill to restore stability to America's dairy markets. I introduced the Dairy Market Enhancement Act of 2000, H.R. 5372 earlier this year. The bill establishes a fair and accurate reporting system for manufactured dairy products, requires independent verification for price reporting, and implements measures to ensure compliance with reporting and verification requirements. Senator Russ Feingold (D-WI) introduced the companion bill in the Senate. This bill S. 2773 now goes to the White House where the President is expected to sign it into law. Recent reporting errors have highlighted the need to make reporting of dairy products mandatory, verifiable, and enforceable. While I recognize that this legislation will not solve the problem of low milk prices, it will go a long way toward assuring an accurate Federal order price and stabilizing month-to-month fluctuations for farmers. The bill requires that the U.S. Department of Agriculture use the current survey format as a starting point for mandatory reporting. In order to ensure accuracy, the bill allows the Secretary of Agriculture to require that reporting companies make their records available for department audit. Any willful and intentional violation of requirements to make accurate and timely reports is punishable by a civil fine of up to $20,000 under the terms of the bill. It also requires that USDA guard the confidentiality of information from each reporting company. Because the determination of the federal order price is based on the price of components such as butter, cheese, and dry milk, it is important to have processors report price and inventories. This bill makes such reporting mandatory to assure that farmers are paid a price that reflects the current demand for milk and milk products. This is good legislation and I'm glad my colleagues in Congress join us in recognizing its merits.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would object to anything more than 5 minutes. A couple of us have been waiting quite a while. I certainly respect the opportunity for the gentleman from Missouri (Mr. Clay) to respond, so I would not object to 5 minutes. But I would object for more than that.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I yield to the gentleman from Missouri (Mr. Clay).

Mr. SMITH of Michigan. Mr. Speaker, the full body certainly thanks the gentleman from Missouri (Mr. Clay) for his service and wishes him good luck and Godspeed. Mr. Speaker, I am going to give, if you will, a short lecture on what I consider one of the most important topics of the day, and that is Social Security. I put the first poster up here, ``no new taxes.'' Because if we do nothing, then it almost mandates that we are going to yet again increase taxes Social Security taxes on American workers to pay for the benefits that we have promised. I entered Congress in 1993. And actually, while I was still chairman of the Senate Finance Committee in the State of Michigan, I wrote my first Social Security bill and I introduced it when I came down here. I have introduced a Social Security bill every session since. So my last three Social Security bills have been scored by the Social Security Administration to keep Social Security solvent for the next 75 years without any tax increases and without any cuts in benefits for seniors or near-term retirees. I was named chairman of the Bipartisan Social Security Task Force from the Committee on the Budget. And so, we got some of the most expertise people not only in this country but throughout the world in trying to decide how we are going to fix a system that is going broke. So, the first consideration is the fact that American workers now pay more in the Social Security tax than they do in the income tax. Seventy-eight percent of American workers pay more in the Social Security tax than they do the income tax. Okay, a brief history. When Franklin Delano Roosevelt in 1935 created the Social Security program, that was over six decades ago, he wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand-in-hand with personal savings and private pension plans. In fact, researching the archives on the debate in 1934 and 1935, the Senate on two occasions voted that individual privately-owned investments should be an alternative to a government-run program. But in the final conference committee the decision was that it would be a government program, a pay-as-you-go program, where current workers paid in their Social Security tax to support current beneficiaries. Because at the time when the program was started the length of your life span was 62\1/2\ years, and still you had to be 65 to receive benefits, that meant most people did not live long enough to receive benefits. They paid in all their life, but then did not get anything out, and this pay-as-you-go program worked very well then. What has happened since is Social Security has fewer workers and is running out of money. So first this evening I am going to cover a little bit of the problem, how Social Security works, and then some of the proposed solutions. It is a system stretched to its limits. Seventy-eight million baby- boomers begin retiring in 2008. What happens at that point in time is the baby-boomers are now at the top of their income level, and we charge Social Security tax based on the first $76,000 of income, so they are paying in the maximum tax. When they get out, because there is a direct correlation between what you paid in and your income and what you are going to get in retirement benefits, they go from the big payer-inners, if you will, to the big taker-outers in Social Security benefits. Social Security spending exceeds tax revenues in 2015. That means somehow government is going to have to come up with some more money at that point in time. Social Security trust funds go broke in 2037, although the crisis could arrive much sooner. What government has been doing, what this Congress, this chamber, the people on this side of the aisle and that side of the aisle have been doing for the last 40 years, up until the last 3 years, is taking any extra money coming in from Social Security, the Social Security surplus, and spending it on other government programs, so it was gone. So if we pay all that money back, and we will, somehow we have to come up with the money, then it is going to last until 2037, but we run out of money in 2015. So the big question, the problem that needs to be solved, is where does the money come from? I think a lot of people have said, well, you know, it is just another guy with a green eyeshade on, economist, making some prediction. But insolvency is an absolute. It is certain. We know how many people there are and when they are going to retire. We know that people will live longer in retirement, and we know how much they will pay in and how much they are going to take out. Payroll taxes will not cover benefits starting in the 2015 when we have less money coming in than is needed to pay benefits, and the shortfalls will add up to $120 trillion between 2015 and 2075. $120 trillion. Nobody knows exactly how much money that is. Probably very few of us in this chamber, and I am a senior member of the Committee on the Budget. Comparing it a little bit, our budget this year is going to be $1.9 trillion. But we are going to be $120 trillion short in terms of what we need over and above Social Security taxes, that are at record high levels already, to come up with the money to pay the benefits that have been promised. Somehow we have got to change the program so that we start moving from a pay-as-you-go program to a program that can start earning revenues and use the magic of compounding interest to help make sure that we are not only going to cover the promised benefits, but increase those benefits. In the bipartisan Social Security task force, we agreed, Republicans and Democrats, on 18 findings. One of the witnesses before our hearings suggested that, within the next 25 years, medical technology would allow an individual to select, to choose, whether or not they wanted to live to be 100 years old. So back to the three-legged stool. Social Security is going to have even a tougher time if people are going to live that long. But if individuals, especially young people today, want to have the kind of retirement that is going to accommodate them to the kind of standards that they had while they were working, then there is going to have to be two more legs to that stool, and they are going to have to develop the kind of pension plans, develop the kind of savings plans, and, thirdly, make sure that Social Security stays solvent. The demographics are part of what has led us to this situation. So if you do a chain letter, I like the cartoon I saw in one of the papers where the young worker was talking to Uncle Sam, you know, with his hat on and his stars and stripe suit, and Uncle Sam says, well, it is simple. You just put your name at the bottom of this list, you send your money to the person at the top of the list, add your name to the bottom of the list, and when your name comes up, other people will be sending you money in your retirement. That is sort of what it is. It is a Ponzi game. It is a pay-as-you-go system that cannot survive if you start losing the names off that chain letter of the people at the bottom, if they do not keep paying the people at the top. Back in 1940, for example, there were 38 workers working, paying in their tax, to collectively add up to the benefits that were paid to each retiree. Today we are down to three workers paying in their Social Security tax to accommodate the Social Security benefits for every one retiree, and the estimate is, by 2025, there will be two workers paying in their Social Security tax for every one retiree. So they are going to have work long and hard enough, if we keep this current system, without developing some kind of a better return on investment, if we do not start modifying it from a pay-as-you-go program to a program that individuals have some ownership of those particular accounts and they can accrue compounded interest so we will end up better off than what we are under the current program. This just represents the problem with the red, and if this were green it might be a little better. But when we had the last change in Social Security under the Greenspan Commission in 1983, the decision then was to lower benefits and increase taxes. By the way, that is the same thing we did in 1978 when we ran into financial problems, we lowered benefits and increased taxes. So with the increased taxes, right now there is a little more money coming in, Mr. Speaker, than is needed to pay out benefits. That stops in 2015 and we run into the red. So the future deficits in tomorrow's dollars, tomorrow's inflated dollars, are $120 trillion. If you talk about the words ``unfunded liability,'' and those are the words that Alan Greenspan of the Federal Reserve uses, he says the unfunded liability is $9 trillion, which means we would have to have $9 trillion today and put it in an investment account earning 6.7 percent interest to accommodate through the future years the $120 trillion we are going to be short. Again, the annual budget is $1.9 trillion. The debt, by the way, does anybody know what the debt of this country is? The total debt this country is $5.6 trillion. So what we have done, and the Constitution says the Congress has to pass a law saying that we are going to be allowed to increase the debt of this country, we have kept increasing debt, which, put in other terms seems to me, I am a farmer from Michigan, and what I always learned growing up on the farm is you try to pay off some of that mortgage so your kid might have a little easier time. What we are doing in this country and what we have been doing in this country is leaving a larger mortgage, a larger debt to our kids. Somehow, being so egotistical we think our problems today, that we deserve to have the extra money to solve what we consider our problems today, and then we will leave that mortgage, that debt, that obligation of increased taxes to our kids and our grandkids. That is why I put up the first chart that says, let us start as part of any Social Security proposal that we do not increase taxes. The economic growth will not fix Social Security. We are enjoying economic growth, surpluses coming in to the Federal Government, arguing about what we are going to do with those surpluses. Let me just mention three years ago I introduced a bill that said we cannot use any of the Social Security surplus for any other programs, because, if we did, under the law I introduced we would start cutting all other spending to make sure that we did not use any of the Social Security surplus. Last year we put this into a law, we passed a bill through this chamber, maybe a little bit gimmicky, but we called it a Social Security lockbox. What that did was said in effect we are not going to spend any of the Social Security surplus for any other government programs, and the only way that surplus can be used is to help save Social Security or use it to pay down that part of the debt held by the public. That worked. That caught on. The administration decided they had to go along with it, because it is so logical and the American people supported it. This year, let me tell you what we have done this year to try to slow down the growth in spending. About four weeks ago the Republican Conference made a decision that we were going to take 90 percent of the surplus coming in for this fiscal year we are now appropriating money for, we are going to take 90 percent of the surplus and dedicate that to debt reduction, dedicate that money to pay down the debt held by the public, and only use 10 percent of the surplus to argue with the President, the White House or anybody else how that money might be used. So, again, a pretty good start in the right direction of starting to reduce the mortgage that otherwise we would leave to our kids and our grandkids. On the economy, Social Security benefits are indexed to wage growth. That means the higher the wages now, the higher the benefits for everybody later on. If you have higher wages, because there is a direct relationship between what you pay in in taxes and that is based on what you are earning, your benefits are going to be higher. In other words, when the economy grows, workers pay more in taxes, but also they earn more in benefits when they retire. Growth makes the numbers look better now, but leaves a larger hole to fill later. The administration has used these short-term advantages as an excuse to do nothing, because it looks good. Four years ago, Social Security was going to run out of money in 2011, but, because of the economic growth, because of higher wages, more people got jobs, extra money is coming in in Social Security taxes now that is going to be offset later by larger payouts, but that puts the date of reckoning up to 2015 now. So over the last 3 years that date when there is less money coming in than is needed to pay benefits has now moved up 4 years to 2015. A lot of people, as I have given maybe around 250 talks around Michigan, the Seventh District of Michigan, around different states of the United States, a lot of people feel that somehow there is an account with their name on it for Social Security, that they have sort of got a locked-in legal right to have some Social Security benefits. I would remind the American people, Mr. Speaker, that the Supreme Court in two decisions now has said that there is no entitlement to Social Security, regardless of how many Social Security taxes you have paid in. They say that the Social Security tax is simply another tax. The decision for any benefits is simply an entitlement law, that can be changed at any time by Congress, with the signature of the President. So no locked-in trust funds with your name on it. These trust fund balances are available to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. Again, before I read the rest of this, the source of this is President Clinton's Office of Management and Budget. The trust fund, what is owed to the Social Security trust fund, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. Think for a moment with me. What would we do if there was no trust funds, but we made this commitment for Social Security benefits? Then we would come up with the money by increasing taxes or by cutting benefits so that we did not have to pay out so much, or a combination or borrowing more money from the public funds. That is what we would do if there was no Social Security trust fund. There is a Social Security trust fund that has IOUs, the government's IOUs that owes Social Security approximately $900 billion, but to come up with that $900 billion, the same three things have to happen: You either reduce benefits, increase taxes or increase public borrowing. In effect, if we are going to keep our commitment on Social Security, the paperwork, the ledger that says how much government owes Social Security is only as good as the way we come up with the money to pay it back, to make sure that we continue those Social Security benefits. We have to do it. The key is getting a better investment on some of those Social Security funds coming in. Here again, because after 2015 all of the funds, we are going to have to call on for extra money coming in to pay benefits after 2015. It is so important that we come up with a decision now of how to use some of this surplus in the transition to move from a fixed benefit program to at least part of the money coming in to a personally-owned savings investment account that can gain more interest income than is now accommodated by Social Security. I will come up with those figures in a minute. But the average retiree today receives back 1.9 percent, a real return of 1.9 percent of the money they and their employer pay into Social Security. You can do better than that with a CD. The average investments over the last 100 years have averaged almost a real return of 7 percent. Mr. Speaker, one of the proposals has been that let us borrow some of the money from the Social Security trust fund between now and 2015 and use those extra dollars, write an IOU to the Social Security trust fund, but use those extra dollars to pay down that part of the debt that is held by the public and not to give you the whole load of hay on this. But roughly of the $5.6 trillion dollar debt, there is $3.4 trillion that is so-called Wall Street debt, the Treasury paper, the Treasury bonds, what Treasury does in its auction every week. There is $3.4 trillion there, about a trillion is owed to the Social Security trust fund, and then there is approximately another $1.3 trillion that is owed to the other 120 trust funds that we borrow money from, that the government borrows money from, and eventually we need to stop that, too. So far we have made a decision not to borrow, not to use any more of those Social Security trust fund money for other government expenditures or to use any of the extra money coming in from Medicare for any other government expenditures. Now, back to Vice President Gore's proposal. He says his proposal will keep Social Security solvent until 2057. What is needed over and above taxes between now and 2057 is $46.6 trillion. Paying off this $3.4 trillion dollar debt is not going to accommodate that kind of a shortfall. We are paying about $260 billion a year interest on this $3.4 trillion debt, $260 billion a year. If we were to say, look, from now on we are going to take that $260 billion a year and we are going to credit it to Social Security, that would be represented by this blue line across the bottom. After we hit the peak around 2015, then the $260 billion a year would lessen the obligation for Social Security, the width of that blue line, what is left is $35 trillion short of what is needed to pay those benefits. Talk about fuzzy math. This is fuzzy math. It is adding up, in effect, another giant IOU to the trust fund but does nothing to help figure out how we are going to come up with the extra money to pay this shortfall. This is one of this country's most important programs. I think we need to be very honest with the American people. And I would hope that any time you hear a debate or have a chance to ask questions to any Member running for Congress or the United States Senate or the candidates for President, you would say, look, what is your plan to keep Social Security solvent for the next 75 years as scored by the Social Security Administration? It is so easy for us politicians to say, well, we are going to put Social Security first. That will not do it. I mean, these are tough decisions. There is a lot of money to come up with. Making the transition from needing all the money to pay benefits to something that you can start investing for the future is the huge challenge. I mentioned $9 trillion. Social Security has a total unfunded liability of a little over $9 trillion. The Social Security trust fund contains nothing but IOUs. So when the Vice President says we are going to add the amount of this savings from interest savings on paying down the debt held by the public, its, in effect, adding another IOU to the ledger, but it does not accommodate how we are going to come up with the money to pay for it. That is the challenge. That is the problem. How do we come up with those dollars? 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 if we do nothing to change the plan, if we do not start getting a better return on some of those tax dollars coming in. In the Social Security task force, one of the witnesses said that within the next 30 years with the decreased number of people working in relation to retirees, to cover Medicare, Medicaid and Social Security, the payroll tax would have to go up to 47 percent. Unconscionable. We cannot allow that to happen. What would happen to our kids who if they are asked to pay that kind of payroll tax in addition to the income tax to accommodate the rest of the operation of government? I mentioned the Social Security lockbox. It's saving Social Security trust fund dollars for Social Security, and it keeps Washington's big spenders away from that money. The same as our 90-10 percent proposal, where 90 percent is going to pay down the debt of all of the surplus now, the diminishing returns of your Social Security investment. I mentioned the 1.9 percent average return. For most workers, the average is 1.9 percent, but for some workers, it is a negative return. For example, minorities do not get back their money. If, you take a young black male, their average life span is 62 and a quarter years, and so that means they can pay in to Social Security all their life, but they do not get anything back and get anything out of it. So some parts of our population are severely disadvantaged by this current system. I mean, if you are in a hard, physical work job, your lifespan normally is a little less. So Social Security gyps you a little more. The average again is 1.9 percent, the average market return over the last 50 years has been 7 percent. Let me describe it in a little different way, because we have continually increased taxes and you are putting more into Social Security. If you have to retire in 1940, you work 2 months to get everything back you and your employer put in, and it kept going up and up, until 1980, you had to live 4 years after retirement to get it all back. If you retired in 1995, you had to live 16 years after retirement to get everything back, that went to 23 years in 2005. Anybody that retires after 2015 is going to have to live 26 years after retirement if we do not make some changes in this program. This is a picture I keep on my wall in my office and I ask myself how do I make the decisions on voting on any bill, because most every bill we vote on is a transfer of wealth, we take from somebody and we give it to somebody else. Our lack of willingness to move ahead on Social Security, I criticize the White House certainly for not giving us the leadership or not coming up with a proposal that can be scored to keep Social Security solvent. I think we have missed a great opportunity over the last 8 years. I am hoping that the next President, whoever he might be, will be willing to make some of the tough politician decisions to move ahead on Social Security. Anyway, these are Bonnie's and my grandkids and they are getting ready for Halloween. I share these pictures with every grandparent hoping grandparents will be just as aggressive as you are faced with the temptation of somebody suggesting I am going to give you more benefits, the Vice President does that, he increases Social Security benefits, or if you are faced with how far we should go on prescription drug coverage under Medicare, where other taxpayers pay for those prescription drugs. We have to start looking at what are the consequences on our kids and our grandkids. What is going to happen to them 20 years and 30 years from now? Selena and James are in Pittsburgh right now. Henry is on my farm in Addison with his dad, Brad, and his mom Diane. George is a tiger. Claire and Nicholas and Francis and Emily. Anyway, thank you for letting me share my grandkids. Keep your own kids and grandkids in mind as Congress and politicians make all of these glorious promises that are going to leave a larger burden on our kids and our grandkids and our future. The other consequence is how far might we increase taxes as sort of the easy way to go for this gang down in Washington. So I'll review what has happened to tax. In 1940, the tax rate was 1 percent for the employee and 1 percent for the employer. The base was on the first $3,000, so the maximum tax was $60, employer and employee $60. By 1960, it went up to 6 percent on a base of $4,800, maximum tax for both employee and employer are $288 a year, not a piece, just $144 a piece. In 1980, 10.16 percent, it was upped again to cover benefits on the first $25,000. So the base was raised, the rate was raised. It went to a maximum of $2,631. Today it is 12.4 percent, Social Security tax on the first $76,200, that is indexed to inflation, for a maximum tax of $9,448 a year. As you saw, if we let this go, because of the reduced number of workers paying in their taxes in relation to the number of retirees, then the taxes could be phenomenal. Let us not allow that to happen. Let us look at a pie chart, 78 percent of families now pay more in the payroll taxes than income taxes; too much, especially as we make this transition out for those families that have been on welfare to work and to hit them with this kind of consequence. Tax needs to be reviewed if we are going to encourage those people to start moving up that economic ladder. The 6 principles of saving Social Security, these are my principles. They are Governor Bush's principles. They are Senator Rod Grams' principles. I borrowed a lot of these charts from Senator Rod Grams from Minnesota. Number 1, protect current and future beneficiaries; 2, allow freedom of choice; 3, preserve the safety net. Preserve the safety net, nobody has a proposal or plan that does anything to the insurance portion, to the roughly over a little over 2 percent of your Social Security tax, that is the disability insurance. That is what we are paying in to cover the insurance in case something might happen to us. So nobody has considered doing anything with that; that stays totally as a Federal program. In fact, all of our proposals are optional. If somebody wants to stay in the current system, they would have that option. The way it is set up with some suggesting that for every $4 you make in investments, you would lose $1 less for every $4 you make in earnings. In your investments, you would lose $3 of Social Security benefits. It comes close to us being able to do that, and I will get into what kind of returns we might look at with a combination of index bonds and index stocks. We make Americans better off, not worse off. We create a fully funded system and no tax increase. And no cuts in benefits for retirees or near-term retirees. The personal retirement accounts, they do not come out of Social Security. It has bothered me a little bit when some of the Gore campaign people have said that Governor Bush is taking a trillion dollars out of Social Security and he is jeopardizing Social Security recipients as he starts making this transition into privately owned retirement accounts. They are part of that account, and like I said, some have said for every $7 dollars made, a recipient would lose $6 of benefit. What I say in my bill that I have introduced is that assuming a 3.7 percent return on a personal retirement account investment as a reduction in Social Security benefits, and anything over a 3.7 percent return would increase the ultimate retirement benefits. A worker will own his or her own retirement account. I think it is important simply because what I have seen this body do in the past in terms of reducing benefits. And four, limited to safe investments that will earn more than the 1.9 percent paid by Social Security. I forgot I had that chart, actually, but this represents what is going to happen in the next 10 years, sort of representing Governor Bush's plan to take $1 trillion out of Social Security over the next 10 years. The total revenues coming into Social Security are $7.8 trillion, total benefit costs are $5.4 trillion. It leaves a surplus of $2.4 trillion. The governor has said let us take $1 trillion of this and start those private accounts. They cannot be used for anything except retirement. They are going to be limited to safe investments, and so in fact there are some insurance companies now that will guarantee a return, a positive return on those investments. Just covering a couple of the personal retirement accounts that would offer more retirement security than Social Security. If John Doe makes an average of $36,000 a year, he can expect monthly payments of $1,280 from Social Security. If he were investing 6 percent of that earnings, he would get $6,514 from his personal retirement account. Galveston County, Texas. When we started Social Security in 1935, it was the option of State and counties whether or not they wanted to opt out of the Social Security system and have their own pension retirement programs. Galveston County, Texas, was one of those counties that exercised that option. The death benefits in Galveston County are now $75,000. If one dies as a worker in Social Security, it would be a death burial benefit of $253. On disability benefits under Social Security, $1,280 a month. The Galveston plan for disability benefits, $2,749 a month. Social Security benefits after retirement, same as disability, on Social Security, $1,280. The monthly payment from the Galveston plan is $4,790 a month. This is another representation of San Diego that also wanted to have their own plan. A 30-year-old employee earns a salary of $30,000 for 35 years and contributing 6 percent to his PRA, personal retirement account, would receive $3,000 a month in retirement. Under the current system, he would contribute twice as much but receive only $1,077 under Social Security. So under the current Social Security system, he would contribute twice as much but receive almost two-thirds less. The U.S. trails other countries. I represented the United States at an international conference in London a few years ago and I was amazed how much other countries are moving into getting real returns on those investments. In the 18 years since Chile offered the PRAs, 95 percent of the Chilean workers have created accounts. Their average rate of return has been 11.3 percent a year. Australia, Britain and Switzerland offer workers PRAs. In Britain, here is a socialist country that is much further ahead than we are. Two out of three British workers enrolled in the second tier Social Security system choose to enroll in PRAs. British workers have enjoyed a 10 percent return on their pension investments over the past few years. The pool of personal retirement accounts in Britain now exceeds nearly $1.4 trillion, larger than their entire economy and larger than the private pensions of all other European countries. Based on a family income of $58,475, that is a figure that came out nice for the length of this bar chart, if we are to invest either 2 percent of our payroll or 6 percent or 10 percent for 20 years, we would get $55,000, $165,000 or $274,000 back after 20 years. After 30 years, if we were to invest 10 percent, which would leave the disability part in effect, then it goes up to $800,000. And if we were to go the full height and invest 10 percent over 40 years, then we would have at the end of 40 years, because of the magic of compound interest that our money grows every year and the interest on that extra money that is compounding all the time, would amount to $1,389,000. At 10 percent interest, of course, that would be $138,000 a year. At 5 percent interest, half of that, it would be $70,000 a year. So the question is with the fluctuation in the stock markets, is that a risk? Considering the fluctuations, what if somebody were forced to invest last year or the first of this year and take out money now? For short-term investments, there are ups and downs. For long-term investments, there has never been an average downer as low as the 1.9 percent that Social Security pays. This represents the last hundred years, and so this is a real rate of return over and above inflation on stocks from 1901 to 1999. And we see they get as high as about 12 percent, averaging 12 percent, and as low as about 3.6 percent. But the average is 6.7 percent. So, the key to this kind of investment is leaving that investment in for longer periods of time. I think the key in my bill I gave the option of index stock, index bonds, index global funds. These figures represent an index. But as we see, nothing is low as the 1.9 percent return that is now accommodated by Social Security. I think my time is coming to a close, but I wanted to briefly go over the provisions of my Social Security bill. We have no tax increases, no transition costs. It balances the Social Security system for 75 years, as scored by the Social Security Administration. Newly hired State and local government employees would join, but it allows the private investment account withdrawals at age 60. What I do, instead of any kind of increase in retirement age, I build in an incentive. So if workers are 65 years old and eligible for retirement and decide to put it off, for every year they put it off, they would get an 8 percent increase in their benefits. That is actuarially sound. So if we keep working and keep paying in our Social Security tax, the benefits for every year we put off retirement, and we are living longer, healthier lives, we would get an 8 percent increase in those benefits. So it is our decision with an incentive of whether to have our retirement age increased, and being able for some people to retire even earlier when it is actuarially sound. Retirement age is automatically indexed to life expectancy. It increases retirement age 2 additional years. That is simply complying with current law. In 1983, they said the retirement age to get maximum benefits between 2002 and 2017, over that time period, would gradually increase from 65 to 67. So that is in current law. That is a law that they passed back in 1983. Benefit changes. The private investment accounts using the trust fund surpluses, it gradually reduces the increase in benefits for high income retirees. Couples receive a minimum of 133 percent of the higher of each of the couple's benefits. Right now, it is 100 percent. It allows additional voluntary PRAs. And for anybody that would like to look at the Social Security background charts or the legislation I have introduced, go to one of the search engines and type in ``Nick Smith'' and ``Social Security.'' But officially it is www.house.gov/nicksmith/welcome.html. Mr. Speaker, I thank you for this time. I give the challenge to my colleagues to move ahead on Social Security. And most of all I give the challenge to Mr. Gore and Mr. Bush to make the effort and take whatever action is necessary to get a bipartisan agreement in this House and in the Senate to move ahead to make sure that we save Social Security and that we do it without increasing taxes and that we do it without reducing benefits for current or near-term retirees.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman from Wisconsin for yielding me the time. Mr. Speaker, as the gentleman from Wisconsin (Mr. Sensenbrenner) noted in his remarks, this bill represents the combination of two good bills that will go a long ways towards reducing the risk of damage to property and injury to Americans due to fire or earthquakes. As chairman of the Subcommittee on Basic Research, it was my privilege to introduce the two bills that have become the two titles of this legislation today. H. Res. 655 really, as I see it, is legislative substitute of a conference committee. So it moves the process a long a little faster. It incorporates the agreed-to changes by the Senate and by the House. Mr. Speaker, title I is the Fire Administration Authorization Act of 2000. Since its creation in 1974, the Fire Administration has had a notable, positive impact on communities across the country. Between 1986 and 1995, for example, fire deaths decreased 30 percent, and the adjusted dollar loss associated with fire decreased 13 percent. Mr. Speaker, much of this decrease can be traced to the research sponsored by the USFA. Now, I think we need a renewed effort to reduce damage and loss by fire and support our first responders. We passed exceptional help in the Defense authorization bill this year and plan to appropriate $100 million for a new grant program for fire departments. All of this legislation demonstrates our commitment to the 1.2 million men and women of the fire service, 80 percent of whom serve as volunteers. This bill authorizes a total of $142.6 million for the Fire Administration for the next 3 years, including nearly $10 million for research, but it does more than authorize increased funding. It also requires the Fire Administration to develop a strategic plan, and ties obligations for Fiscal Year 2001 to that plan. I believe that while it is important for the Federal Emergency Management Agency to incorporate the Fire Administration into its Federal-disaster planning, it is also important for the Fire Administration to establish strategic priorities of its own that, when taken in the aggregate, can have a huge impact in reduced life and property loss from fire. In addition to the substantial increase authorized for research, this legislation also directs the Fire Administration to establish a research agenda. Coupled with the increased money, this research agenda will compel the Fire Administration to set priorities and give research a more central role in its activities. 2115 Title II of this legislation is the Earthquakes Hazard Reduction Authorization Act of 2000. The National Earthquake Hazard Reduction Program called NEHRP has enjoyed strong bipartisan support. Again, the primary purpose of NEHRP is simple: to save lives and property. But while the goal may be stated simply, really getting a grip on the problems earthquakes pose is a more difficult challenge. Since its inception in 1977, NEHRP has done a credible job of contributing to our store of knowledge about the causes and effects of earthquakes, and it has reduced our vulnerability to them through engineering research and new building designs. The Program's monitoring component also holds the promise of providing real-time warning to citizens and a wealth of data to researchers. Indeed, improving earthquake warnings by just a few seconds can mean the difference between life and death. This bill reauthorizes the base NEHRP programs at $104 million for FY 2001, $108 million for FY 2002, and $113 million for FY 2003. Mr. Speaker, let me conclude by saying 39 States are exposed to a significant earthquake risk, and about 75 million people live in urban areas with moderate to high earthquake risk. The programs authorized in this bill will enable us to have better warnings and be better prepared for the inevitable earthquakes in our future. Mr. Speaker, in closing, I would like to thank the gentleman from Wisconsin (Mr. Sensenbrenner); and I would like to thank the gentleman from Texas (Mr. Hall), the full committee ranking member; and certainly the gentlewoman from Texas (Ms. Eddie Bernice Johnson), the ranking member of the subcommittee; and all of my colleagues on the Subcommittee on Basic Research for their efforts in bringing this bill forward. I would also like to recognize the efforts of our late ranking member. As was commented on by both the gentleman from Texas (Mr. Hall) and the gentleman from Wisconsin (Mr. Sensenbrenner), Representative George E. Brown, Jr. was the originator of the NEHRP program, and he believed strongly in the need for earthquake research and preparedness. I am pleased that this bill will authorize the Network for Earthquake Engineering Simulation in his name. I urge my colleagues to once again support this important legislation.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, Social Security has really come to light, so I am going to spend 5 minutes talking about Social Security, the problem and the potential solution, and what the presidential candidates are doing in their suggestions to help resolve this serious problem of Social Security. Mr. Speaker, I came into Congress in 1993; and I introduced my first Social Security bill. I have introduced a Social Security bill every session, and the last three were scored by the Social Security Administration to keep Social Security solvent for the next 75 years. I was selected to be chairman of the bipartisan task force on Social Security. I have found it is sort of like an automobile mechanic, the more the mechanic knows about the inside operations, probably the better he lubricates and adds the oil and greases his car. I am concerned, knowing some of the internal operations of Social Security, that there is a lot of friction there, that it is not solvent. Just briefly, insolvency is certain. We know how many people there are. We know when they are going to retire. We know that people will live longer in retirement. We know how much they are going to pay in and how much they are going to take out. Payroll tax is not going to cover the benefits starting in 2015. It is a pay-as-you-go program. Current workers pay in their tax, and it is almost immediately sent out to current retirees. It is going to take $120 trillion over and above tax revenues over the next 75 years to accommodate the promises we have made in Social Security. Some have suggested that economic growth is great now, that that is going to help solve the problem of Social Security. Not true. Social Security benefits are indexed to wage growth. So the higher the wages, the higher the benefits for everybody. When the economy grows, workers pay more in taxes, but also they 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 has used these short-term advantages as an excuse to do nothing. So if there is one criticism I would have it is the missed opportunity over the last 8 years of not really stepping up to the plate and fixing Social Security. The Vice President has suggested that if we pay down the debt to the public, the debt we owe to the public is $3.4 trillion, the suggestion is that we use some of the Social Security surplus, pay down that debt, and then apply another IOU, or use the interest savings on that debt to help fix this big tall tower over here of $46.6 trillion. So the suggestion is that by paying down the debt, we will solve this problem. This next graph shows why that will not happen. The blue at the bottom represents $260 billion a year that we are now paying in interest on the debt. So, look, it has to be a priority. Putting Social Security in the lockbox was a great thing the Republicans did. This year saying that at least 90 percent of the surplus has to go to pay down the debt was a good idea. But even if all of the $260 billion every year for the next 57 years was used to go into the Social Security Trust Fund, there would still be a shortfall of $35 trillion. Look, this is a big-time problem. We have to do it now and not leave a big mortgage for our kids. Very briefly, the biggest risk is doing nothing at all. I want to show these charts, because Al Gore has criticized Governor Bush of taking a trillion dollars out of Social Security, or using it twice. He is saying that the Governor is going to use it once to pay benefits and once to start private investment accounts. Over the next 10 years, the revenues coming in to the Social Security Trust Fund are $7.8 trillion. The benefits, or the money going out, is $5.4 trillion. That leaves a surplus of $2.4 trillion. Governor Bush is suggesting we take $1 trillion of that and start using that to accommodate personally owned retirement accounts that individuals own; that if they die it goes into their estate, unlike Social Security, of course. So as we can see, having current medium-income workers retire much wealthier by having this kind of magic that will develop with the magic of compound interest is one way to increase retirement benefits and save the system. Some people have said it is too risky. I show this chart just because this represents the up and down of a 30-year average. Over a 30-year average for the last hundred years, the average income is 6.7 percent.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I heard again yesterday Mr. Gore's attack on Governor Bush; that he was spending over the next 10 years the same $1 trillion twice, once to start up an investment account so that retirees could end up with more money, and once on Social Security benefits. I just wanted to set the record straight. Over the next 10 years, there will be $7.8 trillion coming in to the Social Security Trust Fund. Benefits, or the cost during the next 10 years, is going to be $5.4 trillion. That leaves a balance, a surplus, of $2.4 trillion, and $1 trillion out of that $2.4 trillion is what Governor Bush is suggesting to use during the transition to start setting up personal retirement savings accounts that will supplement Social Security and add to benefits. It will stay in Social Security. I think our goal has got to be to deal honestly with this problem; to get a better return on investments than the 1.9 percent that the average retiree now gets from the money sent in from the employer and employee.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman from Florida for that introduction. This represents the bleak future of Social Security. Because of the substantial tax increase on American workers, the FICA tax increase in 1983, there is now more money coming into Social Security than is needed to pay out benefits. And again a reminder that Social Security is a pay-as-you-go program. Current workers pay in their tax and it is almost immediately sent out to current beneficiaries. Because of the tax increase in 1983, an extra surplus is coming in from the higher tax. After 2015, we go into a bleak future of somehow coming up with the funding necessary to pay benefits. Let me just comment on this short term surplus. During this surplus over the next 10 years, there is going to be $7.8 trillion. I know this gets into statistics but bear with me. In the next 10 years, there is going to be $7.8 trillion coming into the Social Security; $5.4 trillion is going to be used to pay benefits. That leaves a surplus over the next 10 years in Social Security of $2.4 trillion. Governor Bush has suggested that we take $1 trillion out of that $2.4 trillion and use it as a transition to set up personal retirement savings accounts. Unlike the Vice President, he is not using the same trillion twice. What he does is take $1 trillion out of the $2.4 trillion surplus. Benefits are already going to be paid. There is $2.4 trillion left over. In contrast, the Vice President has suggested that we increase spending over the next 10 years by $2.3 trillion. So he is using that extra money to increase spending. I think in terms of the implication for our kids and our grandkids, it is much better to start solving the Social Security problem than expanding government and making these huge promises of increased spending. Let me comment briefly on the Vice President's suggestion for saving Social Security. He is suggesting that if we use this extra money coming in in surplus, on- and off-budget a 2nd time we can pay down the debt held by the public. That is $3.4 trillion. Again the total debt, what we owe Social Security plus the other trust funds combined with the $3.4 trillion, amounts to a $5.6 trillion debt that we are going to leave our kids if we do not start paying it down. So everybody agrees, let us start paying the $3.4 trillion of debt held by the public, down. But the Vice President is suggesting that somehow paying this $3.4 trillion down and the savings of the interest that we are paying on this amount, to about $260 billion a year, it is going to accommodate the shortfall of $46.6 trillion between now and 2057. Let me say that again. Mr. Gore is suggesting that if we pay off this $3.4 trillion, the interest savings is $260 billion a year. I think it is reasonable to say, start using that $260 billion a year saving to apply to the shortfall in Social Security. The blue line at the bottom represents the $260 billion a year. But what is left of the shortfall even if we have the guts, if we have the intestinal fortitude to use all that interest savings and apply it to Social Security, there is still a shortfall of $35 trillion. It is fuzzy math. It does not work. It is a tremendous disappointment to me. I have been chairman of the bipartisan task force on Social Security in this Chamber. It is a disappointment that in the last 8 years we have not moved ahead to solve Social Security. Because the longer we wait, the longer we put off a decision to fix Social Security more drastic the solution is going to have to be. We failed in the last 8 years to move ahead on that proposal because of the lack of leadership coming out of the White House.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I wanted to address what I think is one of the important issues in this election, and I would hope everybody all over the country would ask the candidates that are running for the United States Senate, or for the U.S. House of Representatives, or for the President, do they have a plan that will keep Social Security solvent. Social Security, which is probably one of our most important, most successful programs in the United States, now pays over 90 percent of the retirement benefits to almost one-third of our retirees. Social Security is important. The longer we put off developing a solution for Social Security, the more drastic that solution. I first came to Congress in 1993. I introduced my first Social Security bill that year; and then in 1995, 1997 and 1999, I introduced a Social Security solvency bill that was actually scored by the Social Security Administration, scored to keep Social Security solvent for the next 75 years. It is interesting that in the earlier years there were less changes, and we needed less money from the general fund to accommodate the continuation of Social Security. In other words, putting off that bill, missing our opportunity for the last 8 years has meant that the changes are going to be more dramatic. Somehow we have got to do it without reducing benefits for existing or near-term retirees and somehow we have got to do it with yet again increasing taxes on working Americans. I am going to go through a few charts very quickly. This is, of course, a picture of President Franklin Delano Roosevelt. When he created the Social Security program over 6 decades ago, he wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand in hand with personal savings and private pension plans. A lot of people have said, well, Social Security somehow is going to solve the problem and so maybe I do not need to save. So where we have ended up in this country is having a lower savings than most any of the other industrialized countries in the world. Somehow because savings and investment are important, we need to refurbish and encourage savings and investment; and we need to save Social Security to the full extent of its benefits. How do we do that? That is the question. That is the argument in this election year. The system is stretched to its limits. 78 million baby boomers begin retiring in 2008. Social Security spending exceeds tax revenues in 2015. So as the baby boomers retire, these are the higher wage earners now, so since Social Security taxes are based on how much one's income is, they go out of the high paying-in mode, if you will, and start taking the higher benefits, because benefits are also indexed to how much one paid in during one's working life. So the problem is Social Security trust funds go broke in 2013 although the crisis could arrive much sooner. I want to spend a little time on the crisis arriving much sooner, because it is 2015 up here when tax revenues are going to be short of paying benefits. Then the question is, or I could say the problem, where does the money come from to start supplementing those benefits over and above tax increases? What should make us all very nervous, Mr. Speaker, is that, in the past, in 1978, in 1977 and again in 1983, what we did when we ran into a financial problem of being short money, we reduced benefits and increased taxes. Let us not put it off. Let us not do it again. It is too much of a burden. It is too disruptive for the economy to yet again increase taxes on the American worker. Insolvency is certain. It is not some wild-eyed, green-shaded economist predicting insolvency. We know how many people there are, and we know when they are going to retire. We know that people will live longer in retirement. We know how much they will pay in in taxes. We know how much they are going to take out in benefits. It is all a strict formula. Payroll taxes will not cover benefits starting in 2015, and the shortfalls will add up to $120 trillion between 2015 and 2075; $120 trillion. Who knows what $120 trillion is? Most of us in this Chamber certainly do not. But our annual budget is approaching $1.9 trillion. That is the annual budget, $1.9 trillion. But for the next 75 years, between 15 and 75, it is going to take $120 trillion more than what is coming in in Social Security taxes to accommodate the benefits that we have promised the American people. One thing that needs to be done is we need to start getting a better return on that investment that employees and employers are paying into Social Security. The demographics are part of what is causing the insolvency. Our pay as you go retirement system will not meet the challenge of demographic change. Let me just state, before we get to how many workers are paying in their taxes for each retiree, that when this system started in 1935, when we started Social Security, the average age, the average life-span was 62 years. That meant that most people paid into Social Security taxes all their lives but did not take out Social Security benefits. So that pay as you go worked very well in those years. But what is happening now, there are fewer workers paying in every year because of the reduction in birth rate, because life-span is increasing. In 1940, for example, there were 38 workers paying in their Social Security taxes that was immediately sent out, it almost goes out the same week that Treasury gets it, 38 people paying in their Social Security tax to accommodate every one retiree. Today there are three workers paying in their Social Security tax to pay the benefits for that one retiree. By 2025, the estimate is that there will be two workers. So there is a tremendous burden on those two workers. If the benefits in today's dollars are, some of the average is $1,200 a month, for that $1,200 a month, that means in today's dollars each one of those workers is going to have to chip in $600 a month to pay for the retirement benefits. Again, we are not talking about touching the insurance portion of Social Security. The disability insurance is never being considered to be invested in anything else. It is an insurance program. Whether it is Governor Bush's plan or my plan or the plan of the gentleman from Arizona (Mr. Kolbe) and the gentleman from Texas (Mr. Stenholm), it never touches that portion that is the insurance portion of Social Security. I was trying to represent how serious the unfunded liability is for Social Security. So this chart sort of represents what I call a bleak future of future deficits. Because of the large tax increases in 1983 when we started having problems coming up with the money, we really jacked up those taxes, those payroll taxes for Social Security in 1983. So that means that there is more money coming in to Social Security than is needed to pay benefits. But that runs out in the year 2015. I think it is, I am trying to think of the best word, maybe unconscionable is a good word, to start promising more benefits now in Social Security or to stand aside and not do anything to solve Social Security because all of this red most likely is going to have to be paid with tax increases. We cannot borrow $120 trillion because the economists say to borrow that much from the private sector would totally disrupt the economy. But really there are only three choices. We either increase taxes, reduce benefits, or we borrow from the private sector. So to do nothing I think puts a huge burden on our kids and our grandkids. Some have said, well, the economy is great, the economic growth will solve the Social Security problem. Social Security benefits, however, are indexed to wage growth. That means the more money one makes now one pays in more Social Security taxes now, but eventually one's benefits are also going to be higher. So in the long run, economic expansion and higher wages are a short- term benefit, but it leaves a long-term hole. 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 that larger hole to fill later. The administration has used these short-term advantages as an excuse to do nothing. I think it is unfair, I think it is, in a way, untruthful for anybody to suggest that somehow because we do not hit the problem until 2015, another 14 years from now, that we do not have to worry about it now, because, again, to put off this problem not to take advantage of the surpluses while we have them is going to be just a huge burden on future young people and their taxes. It is now predicted that to pay Social Security, Medicare and Medicaid, it would take 47 percent payroll tax within the next 40 years. So if we do nothing, no changes, no better return on the money coming in, payroll taxes could go up to 47 percent to cover the cost of Medicare and Medicaid and Social Security. There is no Social Security account with one's name on it. The Supreme Court, on two decisions now, have said, look, the Social Security tax is a tax. Any benefits that people decide to give to seniors or the disabled is a decision of Congress and the President. There is no relation, there is no entitlement to Social Security benefits. So what should make us all a little nervous is, when times really get tough, will Congress and the President decide to reduce benefits, or will they increase taxes, or will they do both? This is a quote that I brought from President Clinton's Office of Management and Budget: These trust fund balances are available to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. This is the trust fund they are talking about. They are the claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. In the trust fund, for the last 40 years, up until the last 5 years, we have been taking all the Social Security surplus and spending it on other government programs. So a lot of people, as I give talks in my district and throughout the country, they said, well, look, if government would just keep its hands off those trust funds, we would be okay. Government has got to keep its paws off the trust funds, but it is still not enough that we will get into. We have got to do more. What we did 3, 4 years ago in this Congress is we started saying, look, we are going to slow down the growth of government. We are going to save and put aside the Social Security trust funds. I introduced a bill 3 years ago that said we are not going to spend any of the Social Security surplus, and we started implementing that. We called it a lockbox for the Social Security surplus. But what it does is it makes sure that we do not spend any of the Social Security surplus for other government programs. We do not expand government that is going to be demanded for that increased expansion in the future. That is a good start. This year to draw the line in the sand, our Republican conference said, well, we need public support, again, if we are not going to increase spending so much and let this government bureaucracy continue to grow as fast as it has grown in the past. So this year what we did is we came up with another sort of gimmick, but it is going to do the job. It says we are going to take 90 percent of all of the surplus, Social Security and so-called on budget surplus, and we are going to use 90 percent of all that total surplus to pay down the debt held by the public, and only 10 percent is going to be available for spending. Now, there is enough public support on that, that these appropriation bills we are going to pass in the next, hopefully this week, but within the next 2 weeks is going to live within that commitment to use 90 percent of the surplus to pay down the debt held by the public. I am concerned with the suggestion, in fact this is the Vice President's suggestion on Social Security that we pay down the debt held by the public and then we use that interest savings, what we are paying in interest of what we owe on the $3.4 trillion that is the debt held by the public. Let me just give my colleagues a quick note on that. The total debt of this country is $5.6 trillion. Of that $5.6 trillion, $3.4 trillion is the so-called Treasury bills. It is what Treasury has its weekly auctions. When one buys a bond or any other Treasury paper, that is the debt held by the public. That accounts for $3.4 trillion out of the $5.6 trillion total. The rest, there is about a trillion that is owed to the Social Security Trust Fund and then another trillion that is owed to all of the other 120 trust funds in government. So we are still sort of playing creative financing games. We have got to be careful about doing that. But the Vice President has suggested pay down this debt and then accommodate what he suggests that will save Social Security until 2057. The problem is that it is going to take $46.6 trillion between now and 2057 to accommodate the shortfall, the shortage, where we need another $46.6 trillion over and above what is coming in in Social Security taxes. And so to pay down this amount cannot accommodate the need for that many dollars over and above taxes. So I think it is, I guess some people have been using the words ``fuzzy math.'' This is fuzzy math. This is another way of depicting what the problem is if we simply rely on the $260 billion a year that we are now using to service the debt held by the public. $260 billion a year. It may be reasonable to say, well, we can add another IOU to the trust fund to the amount of $260 billion a year, but here the blue shade at the bottom represents the $260 billion a year for the next 57 years. Still, the difference between that $260 billion a year in total leaves a shortfall of $35 trillion that is needed over and above the $260 billion in interest. So it still is not going to accommodate the needs. So to not be totally up front with the American people, I think, is unfair. The biggest risk is doing nothing at all. Social Security has a total unfunded liability of over $9 trillion. I mentioned the $120 trillion over the next 75 years. If we put $9 trillion into a savings account now, earning a real 7 percent, then it will be worth the $120 trillion as we need it over the next 75 years. But we need, today, an unfunded liability of coming up with $9 trillion today and putting it into that kind of an interesting bearing account if we are to have enough money. The Social Security trust fund contains nothing but IOUs in a steel box in Maryland. Again, the challenge is coming up with the money we need to pay these benefits. To keep paying promised Social Security benefits, the payroll tax, if we make no changes in the program, no systemic changes, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. Neither one of these should be acceptable to this body or the President or the other Chamber, and that is why it is important that we move ahead. I have introduced Social Security legislation, as I mentioned, that does not have any tax increase, that does not reduce the benefits for seniors or near-term seniors, very similar to what Governor Bush has suggested that we do with Social Security to make sure that we get a better return on investment. I wonder if my colleagues can guess how much the average retiree will get back, in their retirement years, of the money they and their employer put into Social Security; 1.9 percent, on average. Some get back a negative return. Just a mention of the Social Security lockbox. It is maybe a little gimmicky, but it accomplished our goal this past year in saying, look, we are not going to spend any of the Social Security surplus for anything except Social Security or to pay down the debt held by the public. And the Vice President, by the way, as an officer of the United States Senate, I am sure could help us get that bill through the Senate. We passed it in this Chamber, sent it to the Senate; and now, as I understand it, there has been a threat of a filibuster. So the Vice President could help us get that bill passed and into law so that the lockbox is locked in. I mentioned the return of Social Security. The real return of Social Security is less than 2 percent for most workers and shows a negative return for some compared to over 7 percent for the marketplace. So over the last 100 years, the equity market has given a real return of 7 percent. But looking at this chart, we see the light blue over here that shows that minorities actually have a negative return. One reason for that is that, for example, a young black male on average is going to have a life-span of 62 years. So that means that they die before they are eligible for their Social Security benefits. So they pay in all their life and do not get anything in return. If there was a retirement account in their individual name, at least it would go into their estate and the government could not mess around with the benefits in the future. The average is 1.9 percent return for the average retiree; and again, the market average for a real return on investments is 7 percent. I am going to get a little more into this. This is another way of expressing that Social Security is a bad investment right now. The insurance part for disability is good, and that needs to be totally saved. That cannot be privately invested. It has to stay in the same system as it is. It is working well. But the rest of Social Security, as an investment, is not good. For example, if a person retired 5 years ago, they would have had to live 16 years after retirement to break even with what that individual and his or her employer paid into Social Security. By 2005, they would have to live to be 23 years. Remember, at one time there were 38 people working for every retiree. If someone retired in 1940, in 2 months they got back everything they and their employer put into it. But for our kids and our grandkids, if they retire after 2015 and 2025, they will have to live 26 years after retirement to break even. It is not a good investment. How can we do better than the 1.9 percent? A CD gives better than 1.9 percent. This is the picture I have on my wall of my office. When I come out to vote, I look at my grandkids. Bonnie and I have nine grandkids, and I think they really are the generation at risk. It is easy for politicians to make all kinds of promises now and to do more things for more people so that they can get elected to office, but part of the decision has got to be what are our high standards of living, and doing what we think we deserve now, going to do to our kids and our grandkids in terms of the obligation that they are going to have in taxes or paying off our bills. I am a farmer from Michigan, and it has always been a goal in our farm community to just try to pay down the mortgage to let our kids have a little better start than we might have had. But in this Congress, in this government, what we are doing is increasing the debt, increasing the mortgage on our kids and our grandkids. Let us not do this. I will do this for practice now, in case my family is looking. This is my oldest, Nick Smith; this is my youngest, Frances, and Claire and Emily, and George is a tiger, and here is Henry and James, and Selena. I might show that again, because I would hope that every grandparent, I would hope every grandparent, Mr. Speaker, considers the implication of not doing anything and just saying, well, Social Security is important, we have to put it first, but they have to come up with a plan. It should be scored by the Social Security Administration to keep Social Security solvent for the next 75 years. Just look what we have done on tax increases and think what is going to happen in the future if we continue to depend on tax increases on working Americans. In 1940, the rate was 2 percent, 1 percent for the employee, 1 percent for the employer; a total of 2 percent on the first $3,000 for a total of $60 a year taxes for Social Security. By 1960, that went up to 6 percent, 3 percent for the employee, 3 percent for the employer, first $4,800; total a year $288. In 1980, we jumped the taxes again because benefits were jacked up and people said, well, we need more money. So again we imposed this tax on the American worker of 10.16 percent of everything they made, and so the base was $25,900; the total tax by the employee and the employer went up to $2,631. Today, our taxes are 12.4 percent on the first $76,000, and the $76,000 is indexed for inflation. So that $76,000 base goes up every year. So I think the question is, if we keep putting this problem off, like we have in the past, are we going to do the same thing we did in 1977 and 1983, reduce benefits and increase taxes? I am concerned that the temptation to do that is going to be great, and that is why it is so important that during these good times, where we have a surplus, not in Social Security but in the general fund, that we use that surplus now. We do not spend it on expanded government, but we use it to make sure that we keep Social Security safe. And that means we have to introduce bills. In the legislation that I introduced, what I did was I started out allowing 2.5 percent, or the equivalent of 2.5 percent of the taxes to be invested in a private retirement account that can only be used after retirement; that can only be invested in safe investments, index funds or other safe investments determined by the Secretary of the Treasury. So it is only for retirement; it does not go out of Social Security. Like Governor Bush's proposal, it does not go out of Social Security; it supplements Social Security. There have been suggestions that one way to do it, and we could do this, is that for every $4 an individual makes on their investments, they would lose $3 of Social Security benefits. So it can be a fail- safe system, and what we have to accomplish is a return of better than the 1.9 percent. This pie chart is part of the problem. We have raised social security taxes so high that 76 percent of American workers pay more in the Social Security tax than they do in the income tax; 78 percent of American workers now, if we add the Medicare to it, 78 percent of the American workers pay more in the FICA payroll reduction tax than they do in the income tax. So when we talk about income tax changes, somehow we have also got to get to the top of the discussion priorities: What do we do about the FICA tax? Are we just going to continue increasing the FICA tax to accommodate the demand for more spending by this Congress? These are the six principles of Social Security. Senator Rod Grams from Minnesota has these criteria. I have these criteria in my bill. Governor Bush has these criteria in his proposal. Number one, protect current and future beneficiaries; two, allow freedom of choice; three, preserve the safety net; four, make Americans better off, not worse off; five, create a fully funded system; and, six, no tax increases, and no reduction in benefits for seniors or near-term retirees. Personal retirement accounts. How much of a risk is it? In the first place, they do not come out of Social Security. They are part of the Social Security benefit. They become part of the Social Security retirement benefits and an offset to the fixed program; yet everybody would have the option whether to go into this kind of an investment where they can invest and own their own retirement account or whether they stay in the same system. A worker will own their own retirement account. It is limited to safe investments that will earn more than the 1.9 percent paid by Social Security. This was a chart I got from Senator Grams; no new taxes. I think that has to be paramount. The burden on social security taxes on so many working families today is already way too high. A little more on personal retirement accounts. If, for example, if an individual is able to invest 2 percent of their earnings, if John Doe makes an average of $36,000 a year, he can expect monthly payments of $6,000 rather than the $1,280 from Social Security, if he has his own PRA to supplement it. I think it is good that when we passed the Social Security bill in 1935 there were provisions that said counties and States do not have to opt into Social Security. They could develop their own retirement system if they were a county employee or a State employee. Several counties in the United States, Galveston County, Texas, being one of them, opted to go into personal savings accounts. Employees of Galveston County, Texas, that opted out of Social Security, here is what they are getting: Death benefits $75,000. Social Security would pay a burial benefit of $253. The disability benefits $1,280 for Social Security. The Galveston plan is accommodating $2,749. For retirement benefits Social Security is the same as disability, $1,280. The Galveston plan is paying $4,790 a month for their retirees. Spouses and survivor benefits under the Galveston County plan: This is a young lady by the name of Wendy Colehill that used her death benefits check of $126,000 to pay for her husband's funeral and to get a college education. I just put this up here just to try to emphasize that those kind of personal investments can do much better for us. And so, there has got to be a safety net for everybody. I mean, we are not a society that is going to let old people go hungry or go without shelter, but we have got to look for ways that are going to supplement the income coming in for these retirees. She says, ``Thank God that some wise men privatized Social Security here in Galveston. If I had regular Social Security, I would be broke.'' San Diego is another county that has opted out of Social Security. A 30-year-old employee who earns a salary of $30,000 for 35 years and contributes 6 percent to his PRA would receive $3,000 per month in retirement. Under the current Social Security system, that employee would get $1,077 a month under Social Security. So $3,000 compared to $1,000. The difference between San Diego's system of PRAs and Social Security is the more than the difference in a check, it is also the difference between ownership and dependence. It is the difference between having that money there, that it is your money, that if you die before retirement age, it goes into your estate. It means that, with the Supreme Court decisions, that there is no guarantee that politicians do not mess around with that money that you have expected in your retirement. Even those who oppose PRAs, I thought this was an interesting quote. I got this from Senator Grams also. This is a letter from Senators Barbara Boxer, Dianne Feinstein, and Senator Ted Kennedy to President Clinton saying let San Diego keep their PRA program and not use a technicality to force them back into Social Security. And they said in the letter to President Clinton, ``Millions of our constituents will receive higher retirement benefits from their current public pension than they would under Social Security.'' I am wrapping this up with the last three charts. This again is what other countries are doing by privatizing, well ahead of America. Even these countries that are socialist countries have now gone to privatization. The British workers chose PRAs with 10 percent returns. And who could blame them. They have got a two-tier system. But two out of three of the British workers enrolled in the second tier, Social Security system chose to enroll in the personal retirement accounts. The British workers have enjoyed a 10 percent return on their pension investments over the past few years. The pool of PRAs in Britain exceeds nearly $1.4 trillion, larger than their entire economy and larger than the private pensions of all other European countries combined. The U.S. trails other countries in saving its retirement system. Of course Chile was one of the early countries. In the 18 years since Chile offered the PRAs, 90 percent of the Chilean workers have created accounts. Their average rate of return has been 11.3 percent per year. Among others, Australia, Britain, Switzerland offer workers the PRAs. I represented the United States Public Pension Retirement Program in an international meeting in Europe 3 years ago. I was really, and I am not sure if the word is impressed or astounded, at the number of countries throughout the world that is moving their public pensions to have some real investments with some of that money that is coming in. We have got countries now that are paying up to a 40 percent payroll tax to cover their senior benefits and a tremendous pressure not only on the workers and how much money they get, but a tremendous pressure on the cost of the goods they produce. So it puts those countries at a real competitive disadvantage when they have to add to the cost of products they sell enough to pay their workers to survive and still take almost half of it for their senior retirement program. I want to save this one. This is the average rate of return on stocks in the last 100 years. But this is based on a family income of $58,000. The returns on a PRA, the three colors, the light blue is 2 percent of your earnings, the pink is 6 percent of your earnings, and the purple is 10 percent of your earnings. And so, you can see that in 20 years you can take 10 percent of your earnings and have it valued at $274,000. If you were to leave that in for 40 years, it would be worth $1,389,000. The point is that you can be an average income worker and you can retire as a wealthy retiree because of the magic of compound interest. And that means the long-term investments. I drew this chart which represents what you would have paid in if you had left the money in for 30 years. Any year in our history, a 30-year period put around the worst depressions that we have had in the last 100 years is still going to end up with a positive return of almost three percent. The average is 2.6 percent. So, on average, leaving that investment in the equity stock markets for 30 years, it is a 2.6 return. We have got to have provisions where you do not have to bounce out and cash in all at once. And I do this in my legislation. It has got to be done in any legislation we have. We have got to continue the safety net. We have got to continue having options for those individuals that decide they want to stay in the same system. But we have also got to have an opportunity where individuals have that ownership, have that control by having their own accounts without the chance that Government is going to mess around with it later. And we have got to have the criteria in developing any plan that we do not have yet again another tax increase, that we do not have any benefit cuts for seniors or near- term retirees. If anybody would like to see the details of my Social Security proposal and probably more than you ever wanted to know about Social Security, this is my website: www.house.gov.NickSmith/welcomehtml. If you go to one of the search engines and you do ``Nick Smith on Social Security,'' it should come up here on my website. Mr. Speaker, I think we have come a long way in terms of the lockbox, not spending the Social Security surplus. I think this year we are doing it again by saying we are going to take at least 90 percent of the total surplus and put that 90 percent for either Social Security for the time being, use it to pay down the debt held by the public, and only argue about the other 10 percent. There is a danger of Government growing faster than it should simply because politicians get on the front page of the paper and on the television set when they take home pork barrel projects. I think if there is anything I would ask the public, Mr. Speaker, to do in this campaign when they are talking to the representatives running for Federal office is to pin them down on Social Security. It is something that we cannot afford to give up.

Mr. SMITH of Michigan

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

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I considered myself an interpreter. I apologize for any infraction. Let me start out with these charts. Social Security Benefit Guaranty Act. When Franklin Delano Roosevelt created the Social Security program over 6 decades ago, he wanted it to feature a personal investment component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand-in-hand with personal savings and private pension plans. In fact, researching the archives, it is interesting that in the debate in 1935 in the Senate, the Senate on two occasions voted to have it optional to have a personal retirement savings account. So individuals owned accounts. Even in that case they could only be used for retirement, but there would be some individual ownership. When they went to conference, the House and the Senate ended up having government do the whole thing. It was made from the very beginning as a pay-as-you-go program, where existing workers paid in their Social Security tax and almost immediately those dollars were sent out to beneficiaries. So it was a pay-as-you-go program with existing workers paying in their taxes to pay for existing current retirees. The system is really stretched to its limits, and the actuaries are concerned. They say that Social Security is insolvent. We just changed it in 1983, reduced benefits and increased taxes. Yet already they are predicting that it is going to run out of money if we continue the same structure. So we have to make changes. We have to do it without reducing any benefits to existing or near-term retirees. We have to do it by making sure that we do not increase taxes on workers, and that means we have to get a better return on some of those tax dollars coming in. Seventy-eight million baby boomers begin retiring in 2008. That means these high-income workers go out of the paying-in mode. In a sense what they pay in is related to how much they are making. They are at the top of the scale in terms of how much they are paying in taxes. Then they retire, and because the benefits are directly related to what they paid in in taxes, how much they were earning, so there is a relationship to benefits, they draw out more than maybe the average is drawing out. So a huge predicament, demographic problem. Social Security trust funds go broke in 2037, although the crisis is going to arrive when there is less tax revenues coming in than for retirement purposes. I will go through these slides rather quickly, but I just urge everybody, Mr. Speaker, to look and do a little studying and a little learning of the Social Security problem because it is probably one of the most significant financial challenges that Washington, that this House and the Senate and the President face. Insolvency is certain. It is not some kind of a far-flung estimate. It is an absolute. We know how many people there are, and we know when they are going to retire. We know that people will live longer in retirement, and we know how much they will pay in and how much they are going to take out. Payroll taxes will not cover benefits starting in 2015. And the shortfalls will add up to $120 trillion over the next 75 years, or actually when we run out of tax dollars covering benefits. So starting in 2015 to 2075, $120 trillion is going to be needed over and above what we are going to take in in Social Security taxes. And just to put that in some kind of perspective, since most of us do not know what a trillion dollars is, our annual budget is about $1.9 trillion for all expenditures of the Federal Government. The coming Social Security crisis, our pay-as-you-go retirement system, will not meet the challenge of demographic change. I started talking about that. This is the number of workers per retiree. And since the number of workers contribute their taxes and it is combined to pay retirement benefits, it makes a difference. This represents what is happening as we reduce the number of workers for each retiree they are supporting. In 1940, there were 38 retirees paying in their taxes to support each retiree. There were 34 workers supporting each retiree. So they could divide that retiree's benefits by 38 and that is what they were paying in. Today, there are three workers. So whatever a retiree gets on the average, you divide it by three and that is what the workers are paying in. By 2025 there are going to be two workers. So together, if the retirement benefit is $1,200 a month, they are each one going to have to tribute $600 out of their paycheck to pay that retirement benefit. So the demographics are the serious problem, what is giving us a big bleak future that is represented on this chart by the red. And in 1983, we substantially increased the Social Security tax. So we went up to 12.4 percent and the 12.4 percent is now on most of the income you get. I have got a chart on that. But that high tax increase in 1983 has resulted to more coming in in Social Security taxes that are needed for benefits, a surplus if you will. But the blue area up here, that surplus, only lasts until 2015. And then the bleak future is demonstrated in the red part of the graph. And this is where we are going to be $120 trillion short of what is needed to pay benefits over and above what is coming in in the Social Security tax, a huge challenge, a huge problem. As I have studied this over the last 6 or 7 years, one of the things that has become very clear is we have got to get a better return on investment. Economic growth will not fix Social Security. And so many people now are saying, well, look at this great economic growth. That is going to take care of Social Security. Since benefits are directly related to how much money you are making and if you have a job and start paying Social Security taxes, in the early years, the Social Security Administration is going to bring in more money, but since there is the direct relationship, when you retire, you are going to take out more money. So, in the long-run, economic growth is not going to fix Social Security. Again, Social Security benefits are indexed to wage growth. 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. And what concerns me is the administration has used these short-term advantages as an excuse to do nothing. I would suggest to you that we have missed a real opportunity in the last 8 years to fix Social Security. When I introduced my first Social Security bill, that was scored to keep Social Security solvent until 1995, you did not have to be as aggressive in making changes to keep Social Security solvent for the next 100 years but you had to make a few more changes. And in fact, I ended up borrowing some money from the general fund in this last bill to keep Social Security solvent in a way to pay for the transition of some of those investments as we start getting real return on some of those investments. My point is that the longer we wait, the more drastic the changes are going to have to be. And if you just review what this country has done, every time we have run into problems we have reduced benefits and increased taxes, one or the other, or both. In 1978, that is what we did. In 1983, under the Greenspan Commission, that is what we did. In fact, this is when we reduced benefits by saying, look, we are going to add 2 years to the retirement, so, starting next year, we are gradually going raise it to making the maximum retirement eligibility age 67 rather than 66. But at the same time, that is when they jumped these taxes to account for the surpluses that we are having now. There is no Social Security account with your name on it. These trust fund balances are available to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. They are claims on the Treasury that when redeemed will have to be financed by raising taxes, borrowing from the public, or reducing benefits or reducing some other expenditures. And the source is President Clinton's Office of Management and Budget. So we have a trust fund. They say, well, if somehow the Government pays back the trust fund, then we really will not run out of money until 2035. The argument is maybe complicated to make. But maybe think of it this way maybe: What would we do if we had no trust fund and then versus we have a trust fund? If we had no trust fund but wanted to meet our obligations of Social Security, which I think this House is going to do, we are either going to have to reduce benefits or increase taxes, like we did in 1983 and 1977, or we are going to have to reduce other expenditures. And that is the exact same three steps you take if you have a trust fund. So the challenge for us is how do we come up with the money when we need the money. Now getting a little bit into politics and the election trying to analyze Governor Bush's proposal and analyze Vice President Gore's proposal. The Vice President says our current debt that we owe the public is $3.4 trillion. That is the Treasury debt. It does not include what we owe Social Security trust fund or the other trust fund. It is the debt that is owed to the public. The Vice President is suggesting that by paying off this $3.4 trillion debt we can somehow accommodate the $46.6 trillion that is unfunded that is going to be what we are going to need over and before taxes up until the year 2057. So somehow this public debt at $3.4 trillion is going to somehow accommodate paying off what we need in extra money the $46.6 trillion. I did another graph to sort of try to depict these same statistics trying to show that it is not going to work. But adding mother giant IOU to the trust fund does not help. The actuaries and Alan Greenspan estimate that the unfunded liability of Social Security right now is $9 trillion. In other words, to come up with $120 trillion over the next 75 years, you would need $9 trillion today with interest income on top of it earning something like 6\1/2\ to 7 percent real return to come up with $120 trillion you need over the next 75 years. The bottom blue represents the $260 billion a year that we are paying in interest right now on the debt held by the public. So you have got $260 billion a year that we would save. And so maybe there is some rationale to say, well, let us use Social Security trust fund surpluses and use those Social Security trust fund dollars, write Social Security an IOU, use those dollars to pay down the public debt and then we will add an additional bonus to help cover Social Security by saying that we are going to use that savings every year for the next 57 years to help pay the Social Security bill. But again, as you see, it does not do it. The $260 billion a year still leaves a $35 trillion shortfall just until 1957. And this is up until 1957 is when the Vice President says that his plan will keep Social Security solvent. The key, the challenge is coming up when you need the money, not writing giant IOUs to the trust fund. The biggest risk I really think is doing nothing at all. Social Security, as I mentioned, has a total unfunded liability of over $9 trillion. The Social Security trust funds contain nothing but IOUs. There is a box down in Maryland where every time there is more money coming in than what is needed to pay out benefits, the Government writes an IOU and puts it in this steel box. And here again their IOUs, their bills, their notes from the U.S. Treasury I think they are going to be covered somehow. But the question is how do you cover them? The economists say that if we were to borrow that $120 trillion from the public over the next 75 years, it would almost totally disrupt this economy with Government borrowing that much money. Some have suggested, well, we could cut down on some of the other spending. I am sure, Mr. Speaker, people that have observed how spending is going up and the propensity of Congress to spend doubt whether we are going to take the whole Federal budget and do nothing with it except use it for Social Security. That is why we have got to start investing this money and that is why the magic of compound interest can help us get out of the problem we are in. 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. And I say that is a no. We cannot do that. We are already increasing the taxes way too much on the American workers. We have heard a lot of talk about the Social Security lockbox. It may be a little gimmicky, but it has accomplished a lot for us. When Republicans took the majority in 1995, we got together and here was a group of Republicans that had not been in the majority for almost 40 years in the House and we decided one thing we were going to do is work to balance the budget and part of that was not using the Social Security trust fund surplus for other Government spending. The problem with this chamber, of course, once you start spending more money, if you spend it on a particular program for maybe 2 years, those recipients start hiring lobbyists to say, boy, this program is really important. We have got to continue this spending. So even the emergency spending has become routine spending and we continue to expand spending. So one of the important things that it seems to me that we have got to do is have the discipline, have the intestinal fortitude to hold back on the growth of Government because it leaves that much more obligation to our kids and to our grandkids on top of the Social Security problem. Vice President Gore has talked about the lockbox, but I would simply say that this chamber has passed the lockbox legislation. It is over in the Senate and right now there is, as I understand it, a problem, a filibuster. If Vice President Gore would urge his Senate colleagues on his side of the aisle to pass the lockbox, there is no question in my mind that it would pass through the Senate and we would send it to the President and I think the President would sign it. Let me talk about the diminishing returns of your Social Security investment. On average, the average retiree today receives back a real return of 1.9 percent on the taxes that they and their employer put in, or if they are self-employed, all their taxes that they have put in. This is what the middle light purple shows is the average of 1.9 percent. You see, some do not even break even. Some have a negative return. That is minorities. A young black worker, for example, on average is going to live 62\1/2\ years. That means they can work all their life but they die before they are eligible for benefits and they get nothing but a burial expense of something like $250. So it is especially unfair to those particular groups that have a shorter lifespan right now. The market for the last 100 years has been almost a return of 7 percent real return, and we will get into those figures a little bit. My grandson, well, I will wait until I get to the picture of my grandson, but it is the future generation at risk. If we do not do something, I can see a generational warfare where the young workers of this country, if they are asked to pay 47 percent payroll tax without any changes, without adding prescription drugs or any extra benefits to Social Security, and the vice president also adds increased benefits on Social Security, but with doing no more adding of benefits the prediction is that to cover Medicare, medicaid and Social Security within the next 35 years we are going to have to have a payroll tax that is about 47 percent of what you make. Right now the payroll tax is 15 percent. Under the current Social Security program, this is how many years you are going to have to live after retirement to break even with what you and your employer put into Social Security taxes, and this does not include that part of the Social Security tax that goes for insurance, goes for disability insurance. So that is taken out of the calculation. Nobody is touching that. Nobody is suggesting we do anything with that portion, that you are really buying insurance in case you become disabled or something. That stays in place and that is never touched as far as anything but an absolute insurance policy for disability. If you were lucky enough to retire in 1940, it took 2 months to get everything back that you and your employer put in. Two years, 1960; 4 years 1980. If you retired in 1995, you are going to have to live 16 years after you retire to get everything back. If you retire in 2005, you are going to have to live 23 years. If you retire in 2015, 26 years. Now our medical technology is doing great things. We have the nano technology. We have the new gene cataloging. Maybe it is possible to develop the kind of medical techniques that is going to allow you to live long enough after you retire to break even and get back everything you and your employer put in, but I will guarantee everybody, Mr. Speaker, that they also better do some extra saving now to account for the other two legs of that three-legged stool if they want to live in any kind of decent conditions if they are going to live that long. Anyway, my point here is that it is a bad investment. It is a bad investment on Social Security and we are going to get into that. These are my grandkids getting ready for Halloween. Bonnie and I have nine grandkids now so there are a few missing here, and I blew this picture up. I have the picture on my wall as I go out my door to make votes. Let me sort of, I think, brag a little bit. I have never taken any special interest PAC money because I sort of always have wanted the independence. So I make my decision looking at this picture and deciding what is going to be best for these kids and your kids, your grandkids 20, 30, 40 years from now. Sometimes you cannot tell for sure but at least you put that as sort of a criteria and you try to say, look, is this decision going to make America stronger; is it going to keep our economy going? Well, that is Selena and James and Henry and George, he is a tiger, Emily, Clair, Francis and my grandson Nick Smith. My name is Nick Smith so it is sort of maybe that is my immortality, but even Nick at 13 years old is going to have to live that 26, 28 years after retirement to break even. That is under the existing program and that is assuming that somehow we are going to come up with the money, but if we do not get a better return on the investment of some of the money going in, then he may very well be asked to go up to 47 percent of what he makes on a payroll tax to cover medicaid and Social Security and Medicare. If he does that, then he is probably going to have to live 60 years after he retires. Anyway, I put the picture up just to make every grandparent think that as they look at the possibility of somebody that might promise them more benefits, every grandparent has to also think, what is going to be the implication on their grandkids, and it is going to be huge if we continue to increase benefits, and that starts, of course, when the baby-boomers start retiring in 2008, 2009. This is what we have done on tax increases. Just look at this a minute, Mr. Speaker. In 1940, we had a 2 percent rate. The employee paid 1 percent. The employer paid 1 percent. The base was on the first $3,000 so $30 for the employee, $30 for the employer for not more than $60 a year. 1960 upped it to 6 percent, the base was $4,800. The base was also raised. That meant $288 a year combined employer/employee; 1980, 10.16 percent, raised the base again to $25,900. That means employee/employer together paid $2,631 and today, of course, it is 12.4 percent of the first $76,200. That is a total of $9,449. A huge challenge of what I think happens down here at the bottom of this chart, if we continue to go like we have been, with politicians seeking rewards and getting on the front pages of the papers, they take home pork barrel projects and make promises of more benefits, but it all comes from somebody and the somebody is the American people that are paying taxes. So, again, I just urge our presidential candidates to move ahead. Vice President Gore was at several meetings I was at at the White House and I thought we were close a couple of years ago to moving ahead with the Social Security problem, but you can understand that it is easy to demagog. With all the seniors that get Social Security and so many that are so dependent on Social Security, it is easy to scare people. The tendency somehow in this political bickering is to try to put the other person down somewhat. This pie chart, back to how high taxes have gone, right now 78 percent of families pay more in payroll taxes than they pay in income taxes. Seventy-eight percent of American workers pay more in the Social Security tax than they do in the income tax, and I think that is a huge problem that should reinforce our determination not to yet again increase taxes. Here are Governor Bush's six principles. They also happen to be my six principles. They also happen to be the principles of the gentleman from Arizona (Mr. Kolbe) and the gentleman from Texas (Mr. Stenholm). They also happen to be Senator Rod Grams' principles from Minnesota. I borrowed some of the Senator's charts here. Protect the current and future beneficiaries; allow freedom of choice; preserve the safety net; make Americans better off, not worse off. Let me stop here a minute. On the personal investments, several suggestions. One suggestion, the way it worked out was that for every $3 you made in your private investments and they have to be safe investments, most of the bills, and my bill, call for indexed investments, and it is arranged that for every $3 you make on the stock market you would lose $2 of fixed Social Security benefits but still everybody would have a choice whether to go into the personal savings retirement program, where they own that particular retirement fund. It would become optional. But the point is, is that whether you lose $4 of Social Security benefits for every $5 you make in your investments or, in my case, you would lose Social Security with an assumption that you could make at least 4-point-some percent return on your investments. So almost in every case of every projection, individuals are better off and we will get to that with actual figures on some of the counties in America that had the option of going in to personal retirement accounts rather than going into the government's Social Security. No tax increases is pretty much an absolute what we have developed into all of these programs. Personal retirement accounts, they do not come out of Social Security. So I have heard the vice president say, well, Governor Bush is taking the money out of Social Security but it sort of substitutes for Social Security. It stays within the Social Security system. It can only be used for retirement and it is limited to safe investments. Most of those, what I do is index stocks, index bonds and index global funds and other safe investments as determined by the Secretary of the Treasury would be the option, sort of like a 401(k), sort of like if you work in government the thrift savings accounts. They become part of your Social Security retirement benefits. You own them. I think it is good to mention here that the Supreme Court on two occasions now has ruled that there is no entitlement, there is no connection between the Social Security taxes you pay in and your right to have any benefits. One is strictly a tax and the other is a benefit that is determined by Congress and the President. Likewise, if you happen to die before you reach retirement age, if it is money in your own account it goes into your estate, to your kids and your grandkids. It is limited to safe investments that will earn more than the 1.9 percent paid by Social Security. I made this big because on my stump it has been used against me in my campaigns; well, the Congressman just wants to take away benefits or he wants to increase taxes, but all of these plans, no tax increases, no benefit cuts for retirees or near-term retirees. So it would be the younger worker that would have the option of the personal retirement investment accounts. Personal retirement accounts offer more retirement security. If John Doe makes an average of $36,000 a year, he can expect monthly payments in a PRSA, a personal retirement account, of $6,514 from his personal retirement account as opposed to $1,280 from Social Security. This is just trying to demonstrate the magic of compound interest. Choosing personal accounts, Galveston County, Texas, when we did the program in 1935 counties had the option of whether or not they wanted to put it into their personal retirement accounts or whether they wanted to put it into Social Security. Listen to this. Death benefits in Galveston, $75,000 death benefits under their personal investment accounts; Social Security $253. Disability benefits per month, Social Security $1,280; the Galveston plan, $2,749. Social Security $1,280, the same as the disability; but the retirement is $4,790 a month. This is a statement by a young lady whose husband died, and she said thank God that some wise men privatized Social Security here. If I had regular Social Security, I would be broke. And after her husband died, Wendy Colehill used her death benefit check of $126,000 to pay for his funeral and enter college. Under Social Security she would have received a mere $255. San Diego has the personal retirement accounts as opposed to Social Security and a 30-year-old employee who earns a salary of $30,000 for 35 years, $30,000 for 35 years and contributes 6 percent to his PRA would receive $3,000 per month in retirement and that compares to $1,077 in Social Security. The difference between San Diego's system of PRAs and Social Security is more than the difference in a check. It is also the difference between ownership and dependence on a bunch of politicians sometime to maybe make a decision like they did in 1977 and 1983 to cut benefits again. I got this from Senator Rod Grams. This is a letter from Senator Boxer, Barbara Boxer, Senator Feinstein and Senator Ted Kennedy to President Clinton on April 22, 1999, in support of allowing San Diego to keep with their PRA system rather than go into Social Security. They said in this letter, ``Millions of our constituents will receive higher retirement benefits from their current public pensions than they would under Social Security.'' They are going to do better. So even these people have said, look, that private investment is better. Let San Diego keep their system. The United States trails many other countries in the world in terms of making this change. In the 18 years since Chile offered PRAs, 95 percent of the Chilean workers have created accounts. Their average rate of return has been 11.3 percent per year. Among others, I visited Australia, Britain and Switzerland. They offer workers PRAs. I represented the United States in an international meeting where we all talked about our public pension retirement systems, and I was so impressed with what these other countries had done. Europe, for example, ended up with a 10 percent return on their second tier investments, and two out of three British workers enrolled in the second tier social security system chose to enroll in PRAs. Here we have a socialist country, but they are saying, look, allow us at least in part to invest some of our money in our own accounts, in personal retirement accounts. British workers have enjoyed a 10 percent return on their pension investment over the past few years. The pool of PRAs in Britain exceeds nearly $1.4 trillion, and it is larger than their entire economy and larger than the private pensions of all other European countries combined. Very successful. I sort of stuck this little chart on, and I do not know, Mr. Speaker, if the camera picks this up, but based on the family income of $58,475, the return on a PRA is even better. So without looking at this for a minute, if it is in there, the light blue is 2 percent of your income, and I will call it a pinkish-purple is if you invested 6 percent, and the dark purple is if you invested 10 percent of your income. If you leave it in for 40 years, then 10 percent of the $58,000 a year would end up in 40 years worth $1,389,000. That means with 5 percent interest on that, you would not even have to touch the principal; you could get almost $70,000 a year just from interest at 5 percent. Okay, if we can look at this little chart, and I will sort of explain it as we finish off here, the question is, what about a downturn in the stock market? You can invest in the stock market, but what if you have a crash? What if you have a crash like we did in 1917 or 1929 or 1978? What if the stock market really goes down? This shows what has happened over the last 100 years in stock investments in the United States. You see a few dips, but it has never gone down below 3 percent. So at the very worse, over any 30-year average, any 30 years on average, it has never gone down to what the 1.9 percent return is on Social Security right now. The average, if you take any 30-year period, and likewise, a 20-year period, you have never lost money, even putting that 20 years around the worst times in this country. If you put the 20 years or the 30 years any place around the Great Depression, you still have a positive return on that investment. The average return for any 30-year period for the last 120 years has been a return of 6.7 percent. So, sometimes we get nervous and take our money out of the stock market, but the key to these kind of PRAs is it only can be used for retirement, so it tends to be long range. Individuals would have the choice. So Governor Bush is saying, look, leave some choice for individuals, such as our thrift savings account. Do you want it a little more in stocks and a little less in bonds, or vice versa, and where do you want to put some of that money as an individual? So some people will end up better off than others. I will finish up on my last chart by putting up a bunch of kids getting ready for Halloween. Their future is in our hands, Mr. Speaker, and I would hope that all of us would give some conviction. We have done a fairly good job the last several years reducing spending. In 1993 we saw the largest tax increase in history. We decided 2 years later when the Republicans took the majority not to spend that tax increase and to hold government spending down. That has ended up in a surplus, along with just this tremendous system that we have got in this country, where those that work and save and try and invest end up better off than those that do not. Like I say, we have used maybe some suggestions like the lockbox that kept us from spending the Social Security surplus. What we did last month as a Republican Conference is we decided, look, our line in the sand this year is going to take 90 percent of the surplus and use that to pay down the debt held by the public, and take the other 10 percent, and that is what we have been arguing about for the last month, what to do with that other 10 percent. But I think we have the President convinced now, because the public supports it, is using 90 percent of the surplus to pay down the public debt, and we have come a long ways. That is what we are doing. But for my grandkids, for your kids and your grandkids and your great grandkids, please help us move ahead in dealing with Social Security and not continuing to put it off.

Mr. SMITH of Michigan. That is not proper; is that right?

Mr. SMITH of Michigan. Mr. Speaker, we are having an election, and the election is important for many reasons. Regarding the discussion of appointing Supreme Court Justices, I would hope that whatever President we elect does not have a litmus test for those judges; that they should be some of the smartest, some of the most well-read literary law judges that we can find in the country. We have tried to help assure that by having the advice and consent of the Senate. What they do is interpret the Constitution, and I hope that is the kind of judges that we will have. I rise tonight, Mr. Speaker, to talk about another issue that is sort of in this campaign and is being talked about by the Vice President and Governor Bush, and that is Social Security. Social Security is an issue that I have been studying since I came to Congress in 1993. I introduced my first bill in 1993 on Social Security and my second bill in 1995. It is a 2-year session, so every session I have introduced a bill. The last four bills have been scored by the Social Security Administration to keep Social Security solvent, and we have done that without any tax increases, without any reduction in benefits for retirees or near-term retirees. I was appointed chairman of a bipartisan Social Security task force where we studied for many months and had witnesses, expert witnesses from all around this country and, in fact, all around the world, talking about this situation with Social Security. I suspect it is sort of like an automobile mechanic. The more he understands how an internal combustion engine works, for example, the more he is concerned about keeping it lubricated and reducing the friction. So probably mechanics are pretty diligent in terms of greasing and lubrication. So, too, I have become sort of a mechanic with Social Security, knowing its internal operations, how it works, and some of the friction points that can develop. So I guess my colleagues can consider my presentation tonight sort of like they might consider the mechanic: they should take out what they think is pertinent but get a second opinion. Social Security is probably America's most important program. We have almost a third of our retirees that depend on the Social Security check for 90 percent or more of their total retirement income. Mr. Speaker, I would like to introduce Erika Ball. Erika is a page, and she is from Arizona. Sarah, come up in the limelight. You might as well, too, as long as you ladies are helping me. A little closer so we get you right in the picture. How many pages do we have? Sarah Schleck is from the great State of Minnesota. Ladies, thank you for helping me with the charts tonight. Announcement by the Speaker Pro Tempore

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Thank you, Mr. Speaker, and I would apologize if I did that. Mr. Speaker, this Chamber passed the bill. It has languished over in the Senate. With the Vice President's help, I am sure we could get it through the Senate Chamber. The diminishing return of your Social Security investment. The average Social Security taxpayer will receive a 1.9 percent interest rate, real interest rate return, on what that worker and their employer, or, if they are self-employed, what they pay into Social Security. So the average worker is not going to live long enough, even though our life spans are substantially increasing, to get back what they have paid in in Social Security tax. So that is part of the problem, is getting a better return on that investment. The real return on Social Security is 1.9 percent for most workers, and it shows a negative return, as you see over here, for some, compared to over 7 percent for the marketplace. So the marketplace for the last 120 years has averaged a return of 7 percent, a real return. This is what this graph depicts. You have a negative return if you happen to be a minority. The reason is that a young black worker today, their life expectancy is about 62.5 years. That means they can work all their life, paying into Social Security, but, on average, they die before they start taking any benefits out, and they are substantially shortchanged. But even the average, even the best, even the person that lives to be 105, on average they are only going to get a return that is 1.9 percent real return on the money, tax money, that has been sent in. And this is over and above that amount of the Social Security tax that is used for insurance, for disability insurance. This only counts that amount that is put into the OSDI fund. Again, on the average, the market return is 7 percent. Another way of depicting the problem, because it is sort of like maybe the mechanic that knows the operation of the internal combustion engine, so they are very careful about taking care of their automobile, and they change the oil and they do the lubrication on a regular basis. Well, I have been studying Social Security now for 7 years. I know the internal workings of Social Security, and it is running out of lubrication. The friction currently on Social Security means that there are going to be tremendous problems in the future, and that huge liability is going to fall on our kids and our grandkids. I am a farmer from Michigan, and traditionally we have always tried to pay down the farm mortgage in an effort to leave our kids a little better off. This government, this Congress, this White House, is now taking a course where we are jeopardizing the potential happiness and success of our kids and our grandkids by leaving them this great huge obligation. We have got to deal with it, we have got to change it. It has to be more than rhetoric. It has got to be real action for written bills that can keep Social Security solvent. This chart, very briefly, is the number of years it takes to get back your Social Security tax. If you were lucky enough to retire in 1940, because of the low taxes, you could get back everything you and your employer paid in in 2 months. By 1980, you have to live 4 years after retirement. If you retire in 2005, you have got to live 23 years after retirement to break even, to get back just what you and your employer put in into the tax. In 1983, they increased the age limit that starts this next year, and that is why this sort of levels off up here. But by 2015 and 2025, you are going to have to live 26 years after you retire in order to get back what you and your employer paid in. I am not sure our medical technology is going to be that good by that time. It may be, but a better way to do it is to make some changes now that will mean that our kids and our grandkids are not put under this huge burden and that they can appreciate the benefits of Social Security, as their grandparents and their parents hopefully have. This is a picture of my grandkids getting ready for Halloween. Whether it is Selena or James or Henry or George, he is a real tiger, or Emily or Clair or Francis or Nicholas. Nicholas is now 13. When he retires, he is going to have this challenge, not to mention his younger brothers and sisters and cousins, that they are going to have if we do not do something on Social Security. I put the picture of my grandkids on my office wall. As I walk out to vote, I try to make my voting decisions on how it will affect this country and the future generations of this country 15, 20, 30, 40 years from now. We have got to start looking longer range. We have got to start dealing with the two important programs that we have for seniors, Medicare and Social Security; and Medicaid with nursing home care is another issue that we have got to start dealing with. We cannot keep putting it off simply because it is hard, because it is a difficult problem, simply because somebody might criticize us for things or portions that we do in it. Somehow Republicans and Democrats have got to get together and seriously move ahead. This chart represents what we have done in the past. I do not know if the cameras still show my grandkids, but imagine them up there, because what we are going to do with their taxes down here can be very significant. Here is what we have done in 1940, 1960, 1980 and 2000. In 1940 the rate was 2 percent and the base was $3,000. So the total amount of tax for the employee and the employer was $60, combined; combined. In 1960, it got to 6 percent, and the base was $4,800. So you, the employee, paid 3 percent on the first $4,800, and the employer paid the same; a maximum tax combined for the employee and the employer of $288. It got up to 1980, and they raised the tax again; got into a little problem, so this Chamber decided, well, an easy way to do it is load more taxes on the American worker. So, again we increased the tax up to 10.16 on the first $25,900, total possible tax for employee and employer combined, $2,631. In 2000, we got up to 12.4 percent on the first $76,200, a total tax now of $9,448.

Mr. SMITH of Michigan. Mr. Speaker, I rise tonight to discuss Social Security. It is going to be almost like a professor lecturing a class. So everybody that is interested in Social Security should listen up. Those that are not interested in Social Security should be because it is America's biggest program, probably the United States Government's most important program. When I came to Congress in 1993, I left the Michigan Senate as chairman of the Taxation Committee. At that time, we were looking at the consequences of low investment and savings. I discovered that, in the United States, we have the lowest savings of any industrialized country in the world. And then I started looking at Social Security and the problems that Social Security was having in terms of the demographics in terms of financing the current promises in future years. When I came to Congress, what I did in 1993, I introduced my first Social Security bill. And then 2 years later, in 1995, 1997, and 1999, I introduced subsequent Social Security bills, all scored by the Social Security Administration to keep Social Security solvent for the next 75 years. I have been serving as chairman of the Bipartisan Task Force on Social Security in the Committee on the Budget. With testimony we received, we came up with 18 unanimous recommendations of what should be in a Social Security bill. I incorporated those and introduced a bipartisan bill that is now before the House. I would suggest to everybody, current retirees, near retirees and young workers and young people in general to start looking at Social Security because it has the potential of developing a generational warfare if we continue to make promises of increased Social Security benefits and then we simply satisfy that challenge by increasing taxes on future generations. Let me just say that if we do nothing, if we add no more benefits to Social Security or Medicare or Medicaid but continue under the existing programs to keep those programs solvent, we will have to have a payroll tax to keep Social Security and Medicaid and Medicare solvent that will take 47 percent of our wages. Right now the FICA tax is 15 percent of wages. The Social Security Benefit Guarantee Act. When Franklin Delano Roosevelt created the Social Security program over 6 decades ago, he wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand in hand with personal savings and private pension plans, and it is interesting, searching in the archives for some of the testimony back in 1935 when we started Social Security, to see that the Senate on two different occasions voted that it should allow private investment savings as an alternative to the government doing it; but when the House and the Senate went to conference, the decision was made that year to simply have it a totally government program, and that is what it is, a pay-as- you-go program where existing workers pay in their taxes to support existing retirees. The demographics, the problem of demographics, fewer workers and more retirees, which we will get into in a moment. The system is really stretched to its limits. Seventy-eight million baby boomers begin retiring in 2008. These are the high-income people in general. That means they go out of the paying-in mode, paying in their taxes, directly related to their higher incomes, and start taking out benefits again directly related to what their incomes have been. That is when the problem starts. Social Security spending exceeds tax revenues starting in 2015. We increased the Social Security taxes substantially in 1983 so currently, temporarily, there are huge surpluses coming in, and we have been spending that surplus for other government programs. Social Security trust funds go broke in 2037, although the crisis could arrive much sooner. The crisis is going to arrive when we need to start coming up with the money that we borrowed and spent for other programs in the past, and that is the real problem. That is the real challenge. Insolvency is not some guess or estimate. Insolvency is certain. We know how many people there are, and we know when they are going to retire. We know that people will live longer in retirement, and our estimates on how long they live have been fairly accurate over the past. We know how much they will pay into Social Security and taxes, and we know how much they are going to take out under the benefit structure we have. Payroll taxes will not cover benefits starting in 2015, and the shortfalls will add up to $120 trillion of extra money needed over and above what is coming in in taxes, $120 trillion between 2015 and 2075. To put that in perspective, I am not sure any of us really know how much a trillion dollars is, but our spending that we are going to end up for this current fiscal year that we have just started is going to be approximately $1.9 trillion. Just for Social Security over the next 75 years, we are going to need to come up with an additional $120 trillion. It is a huge problem, and it is so frustrating that we have not paid attention to it. We have let the last 8 years go because politicians have been afraid that they would be demagogued in the election. We have missed an opportunity over the last 8 years by not having the leadership in the White House to move ahead with saving Social Security. Instead, we have had words saying Social Security should come first but no legislation proposed that could be scored to keep Social Security solvent over the next 75 years. Here is part of the demographic problems. The coming Social Security crisis, pay-as-you-go retirement system, will not meet the challenge of demographic change. Workers per Social Security beneficiary. Back in 1940, here are 38 workers paying in their taxes for every one retiree. Today there are three workers paying in their taxes for every one retiree, and the estimate is by 2025 there are only going to be two workers paying in their benefits that is going to cover the Social Security check for every one retiree. So if that person's Social Security benefits end up being whatever, $15,000, or $1,200, $1,500 a month, those two workers are going to have to pay in that $600 or $750 a month each to cover those benefits of that one retiree. So we would let taxes go that high. This depicts sort of graphically the short-term surplus and the long- term future deficits. Remember, I mentioned this red represents $120 trillion, $120 trillion that we are going to be short; that that much more is needed over and above the Social Security taxes to accommodate the promises that we have made in Social Security. Because we have been raising taxes a great deal on the fewer and fewer workers, we have ended up with a short-term surplus, and Republicans came in as a majority in 1995 and for the first time we started not using all of the Social Security surplus for other government program spending. For the first time in 40 years we started saying, look, we have to stop spending the Social Security surplus, and last year we called it a lockbox. Whatever it is called, what we did was made a decision, and we enforced it by saying we are not going to spend any of the Social Security surplus on any other programs. We talk about all of these huge surpluses. Most of the surplus coming in is from the Social Security tax. Let me just give three numbers in terms of what is going to happen this current fiscal year that started the first of this month. This year we are estimating that we are going to take in $533 billion of Social Security taxes, $533 billion coming in. What is needed to pay benefits this year is $367 billion. That means we have a surplus in Social Security of $166 billion. So the $166 billion that is coming in from the Social Security tax, where we are really at this time at least overtaxing American workers to come up with the extra money and we are using that extra money to pay down the debt held by the public. So what we will do is we will write an IOU to the Social Security trust fund. There is a box down in Maryland full of IOUs where we have spent the money in the past, where we have borrowed it and spent it for other things; and this current year we expect to take $166 billion for the Social Security surplus, write an IOU for it, and use that money to pay down the public debt. This is Barry Pump. I do not know if the cameras see him; but Barry Pump is from Iowa, one of our star pages. So I thank Barry very much. Economic growth will not fix Social Security. So some have said the economy is great, it is going to mean that we are not going to have the Social Security problems; let us keep this economy rolling and we can quit worrying about Social Security. Untrue. Social Security benefits are indexed to wage growth. So the higher one's wages, when they retire the higher their benefits. So an increased economy means that more taxes are paid in earlier; but later on when one eventually retires, they are going to take more benefits out. So the growing expanding economy, the way we have Social Security structured right now, is not going to solve the problem. I mean, that is why 4 years ago when I introduced my bill Social Security was estimated to go insolvent, to not have enough money coming in in 2012. The expanding economy over the last 3 years has grown enough, a lot of it coming in from capital gains taxes, by the way, has grown enough that short-term, as far as the extra money coming in, means that we will have enough money to cover benefits another extra 3 years until 2015. Growth makes the numbers look better now but leaves a larger hole to fill later. The administration has used these short-term advantages as an excuse to do nothing; and I just want to emphasize that this growing economy, though they can say, look, the Social Security trust fund is going to be there to pay benefits until 2035, it used to be 2032, or we are not going to have enough money coming in from the Social Security tax by 2012, now we are extended to 2015, does not solve the long-term financial fiscal problems for Social Security because the paychecks going out later on are going to be that much greater. I think this is important that most Americans do not realize. Somehow they feel that somehow they earn something with a Social Security account, a Social Security fund. Not true. There is no Social Security account with their name on it. These trust fund balances, and I am quoting from the Office of Management and Budget of this administration, these trust fund balances are available to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. They are claims on the Treasury that when redeemed will have to be financed by raising taxes, borrowing from the public, or reducing benefits or somehow reducing other government expenditures. Again, the source is the Office of Management and Budget. I think it is interesting to note that the Supreme Court now in two decisions has ruled that there is no entitlement for Social Security. Regardless of how many years one paid into Social Security, Social Security is a tax. The benefits are whatever Congress and the President decide those benefits are going to be. So what we have seen in the past, when there was a financial problem in 1977, 1983, when they were coming short of money, they reduced benefits and increased taxes. I just stress as vigorously as I can that it is going to be unconscionable to yet again raise taxes on the American worker. We will see a chart later I have, but right now 75 percent of American workers pay more in the Social Security tax than they do in the income tax. This represents the public debt versus the Social Security shortfall. Our total debt in this country, what we owe the trust funds and what we owe in Treasury bills, is $3.4 trillion. The shortfall of Social Security between now and 2057 is $46.6 trillion. Vice President Gore is suggesting that if we pay off this debt by using extra Social Security money coming in and any other surplus that can be found, that if we pay off this debt it is going to solve this problem and keep Social Security solvent until 2057. It is like adding another giant IOU to the trust fund. So technically if this Chamber passed a bill saying we are going to write an IOU for $9 trillion to the Social Security trust fund, the actuaries would say well, this will keep Social Security solvent for the next 75 years. The fact is that the challenge, the problem, is coming up with those dollars once we have fewer dollars coming in on the taxes than are required for the benefits. I am going to portray this in another way. The blue at the bottom, the light blue, represents the $260 billion that we are now using to pay on financing the debt, the interest on that particular debt approaching $300 billion. Vice President Gore is suggesting that if we dedicate somehow this savings every year for the next 75 years to Social Security, it will keep Social Security solvent. So what the difference between the $46.6 trillion that is needed and what this interest savings will be is $35 trillion. So the red part of this graph represents the shortfall that still is going to be there even if this Chamber and the Senate and the President has the guts, has the intestinal fortitude, to dedicate this kind of interest rate savings to Social Security. It is a problem that cannot be solved by adding IOUs. The biggest risk is doing nothing at all. Social Security has a total unfunded liability of over $9 trillion. I mentioned that over the next 75 years you need $120 trillion of future dollars, that inflated future dollar. To raise that $120 trillion over the next 75 years, you need $9 trillion today. So Alan Greenspan, the Chairman of the Federal Reserve, suggests that we need $9 trillion today, so put it in a real interest bearing account that will bring in 6 to 7 percent real return in order to accommodate the $120 trillion shortfall over the next 75 years. Nine trillion dollars we have got to come up with today if we are going to solve the problem and not make any changes in this program, and not get any better return on the investment than we are getting on Social Security now, which is less than 2 percent for the average taxpayer. 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. Everyone should start out with a prerequisite that we are not going to increase taxes once again, and we are not going to cut benefits for existing retirees or near term retirees. Somehow we have got to do a better job on getting a better return on that investment. The Social Security lockbox. A little bit of a gimmick, but it has served us well in trying to make sure that we do not spend the Social Security surplus. It saves the Social Security trust fund dollars for Social Security. It keeps Washington's big spenders from using trust fund dollars for other government spending. I have heard the Vice President say, look, we need that lockbox for Social Security. The House, this Chamber, has passed the lockbox language. We have sent it to the Senate. Now the Democrats in the Senate are filibustering that so it is not passed into a bill and sent to the President. If Vice President Gore really wants to implement that lockbox provision to make sure that we do not spend the Social Security surplus, then I think probably all he has to do is tell that particular Chamber that they should go ahead and pass the legislation.

Mr. SMITH of Michigan. Mr. Speaker, reclaiming my time, I would certainly thank the gentleman from California (Mr. Dreier), the chairman of our Committee on Rules. Mr. Speaker, just finishing the taxes, and maybe really what we have not finished is the bottom line. If we do not get a better return on the investment, we are in for real problems. Governor Bush has suggested that we have some real investment that stays within Social Security; that is not going outside of the Social Security system, but simply allows a better return on some of the money. We can do better. As we know, you can get a CD and do better than a 1.9 percent return. Any return that we can expand over and above 1.9 percent on average is going to mean that retirees live a better life. My oldest grandson's name is Nick Smith. Maybe that is my immorality. But Nick painted the fence for us this past year. He made $180, and I said, Nick, you really need to put some of that into a Roth IRA. Then I went through the tables year by year on the magic of compound interest. So we went year by year and found out that by age 66, he would have almost $70,000; and if he waited until he was 72 to take that money out at the rate investments have been earning money over the last 100 years on average, it would end up $140,000. He said, well, grandpa, can I still put some money, maybe, in your Roth IRA, but I want to save most of it to buy a car. That is part of the problem we are facing today. Our savings and investment in this country is still low, and that means two things. It means we do not have the money to do the research, to put into the companies, to expand to the best possible state-of-the-art machinery to compete in this world, but it also means that the retirement for these individuals is not going to be as good as it really could be. With good investments, let me say, and I am going to show you some examples from Texas and California, with good investments, a modest- income worker today can retire as a rich retiree. This is one of the problems why it is so important, I think, that we do not again raise taxes on the working poor in this country, on the average working family. This pie chart represents that 78 percent of families now pay more in the payroll tax than they do the income tax. Mr. Speaker, 78 percent of our families pay more in the FICA tax than the payroll deduction. Actually, it drops down to 74; 74 percent pay more in the Social Security tax than they do in the income tax. Let us not raise taxes again. The longer we put off this decision, the longer we put off this decision, the more drastic the changes are going to have to be. So the bills that I introduced in 1995 and 1997 were less drastic, it did not have to make the kind of changes, but the bill I introduced this year actually had to borrow some money from the onbudget surplus to accommodate the transition to make the system work, to make the system solvent, without reducing any benefits for existing or near-term retirees and without increasing taxes. The longer we wait, the more drastic the solution. So let us do it. Mr. Speaker, the six principles of saving Social Security that Governor Bush has proposed, that are consistent with the bills many of us have introduced: protect current and future beneficiaries; allow freedom of choice; preserve the safety net; make Americans better off, not worse off; create a fully funded system; no tax increases. Mr. Speaker, let us talk just for a second about personal retirement accounts. They do not come out of Social Security. They stay in Social Security, and they are part of your retirement. They can only be used for retirement purposes, and the way Governor Bush has proposed, the way I have proposed, the way the gentleman from Texas (Mr. Stenholm) and the gentleman from Arizona (Mr. Kolbe) have all proposed is that we have limited safe investments, that we can only invest in certain safe investments, such as an IRA or a 401(k) or the Thrift Savings Plan that we have for Federal employees, where you get your choice of four or five safe investments to invest in, and then you can only use it for retirement purposes. They become part of your Social Security retirement benefits. A worker will own his or her retirement account; and if you die before you reach retirement age, it is not a case where you get zero, zip, nothing; but it will go into your estate for your heirs and, again, limited to safe investments that will earn more than the 1.9 percent paid by Social Security. That is dramatic maybe, but no new taxes, no cut in benefits for existing or near-term retirees. Mr. Speaker, I borrowed a lot of these charts from Senator Rod Grams. He has also introduced a Social Security bill that keeps Social Security solvent that allows choice within safe savings accounts. Personal retirement accounts offer more retirement security. If John Doe makes an average of $36,000 a year, he can expect monthly pays of $6,514 from his personal retirement account compared to Social Security, which is $1,280. And that is because of the magic of compound interest. Mr. Speaker, choosing personal accounts, in our law in 1935, we gave State and local governments the option of whether or not to go into Social Security or set up their own retirement pension system, where they could do their own investments for their own pension. The Galveston County, Texas, employees reap the benefits. Employees of Galveston County, Texas, opted out of Social Security. This is how they faired: death benefits under Social Security $253. You get a burial benefit. Under the Galveston plan, you get $75,000 death benefit. Disability benefits per month, Social Security $1,280, and Galveston plan, they are ending up with $2,749. This is disability. This is retirement. The retirement benefits per month, retirement is the same as disability under Social Security $1,280; but under the Galveston plan for retirement benefits, it is $4,790 a month compared to Social Security of $1,280 a month for that same person if they had paid into Social Security and let government use the money the way the government administers and uses this program. Spouses and survivors benefit under the Galveston County plan. I use these plans to try to argue to my grandson Nick Smith why the magic of compound interest is so important and why savings and investment now can make a huge difference. This is a quote from a young lady whose husband died, and she said, ``Thank God that some wise men privatized Social Security here. If I had regular Social Security, I'd be broke.'' After her husband died, Wendy Colehill used her death-benefit check of $126,000 to pay for his funeral expenses and she entered college. Under Social Security, she would have received a mere $255. Fairly young, so he died at an early age, she was not eligible for all of those benefits. How do we save Social Security? That is the question. Right now, as chairman of the Joint Task Force on Social Security, some of the witnesses came in making predictions with the new RD&A technology, the new gene sequencing, where the new gene catalog and the nanotechnology that is developing very rapidly, they were estimating that within 25 years a person would have the option of whether or not they wanted to live to be 100 years old; and within 35 years, our technology would be such that they could have the option of whether or not to live to be 120 years old. Tremendous policy implications, let alone the increased argument that young people more than ever before should be as diligent as possible to save and invest today. You should take that money out, get it out, have it directly taken out of your paycheck, maybe, something to add to those retirement benefits, because you need that personal savings on top of Social Security even at its best, even if we can solve it. Again, San Diego enjoys the personal retirement accounts because they opted out of Social Security. A 30-year-old employee who earns a salary of $30,000 for 35 years and contributes 6 percent to his personal retirement account would receive $3,000 per month in retirement. Under the current system, he would contribute twice as much, but receive only $1,077 in Social Security. The difference between the San Diego system and the PRAs and the Social Security is more than the difference in a check. It is also the difference between ownership and depending on politicians in Washington on what they do with your Social Security. Even those who oppose PRAs agree they offer more retirement security. This is interesting. It is a letter from Senator Barbara Boxer, Senator Diane Feinstein, and Senator Ted Kennedy to President Clinton allow the PRAs in San Diego to continue and not go into Social Security. They said in the letter to the President, quote, ``Millions of our constituents will receive higher retirement benefits from their current public pensions than they would under Social Security. So let them keep Social Security. At least that has to be an option.'' Nobody is proposing, Governor Bush is not proposing that it be a mandate. Everybody is saying it is still an option whether you want the potential to earn more money where it belongs to you, where it is in your account; but if you want to stay in the existing system, you can. The United States certainly trails other countries in saving its retirement system. In the 18 years since Chile offered PRAs, 95 percent of Chilean workers have created accounts. Their average rate of return has been 11.3 percent per year. Among others, Australia, Britain, Switzerland offer workers PRAs. I represented this country in an international conclave, if you will, discussing public pension retirement benefits and listening to those other countries what they are doing to very quickly move ahead with getting a better return on some of that investment. It made me feel somewhat embarrassed as we lag behind, as we have been unwillingly to step up to the plate, if you will, and make some solid decisions that are going to save Social Security, one of our most important programs. British workers chose PRAs with 10 percent returns. And who could blame them compared to our 1.9 percent return we are getting? Two out of three British workers enrolled in the second tier Social Security, they have half of it they allow to go into the second tier. They chose to enroll in PRAs. The British workers have enjoyed a 10 percent on their pension investment. Over the past few years, the pool of PRAs in Britain exceeds nearly $1.4 trillion larger than their entire economy and larger than the private pensions of all other European countries combined. So what we have now is other European countries that are following the lead of Australia, Chile, Great Britain in terms of looking at ways to get a better return on the investment that is coming in. Based on a family income of $58,475, the return on a PRA is even better. If you invest 2 percent of what you earn versus 6 percent for pink or if you are investing 10 percent, which is the dark purple, and if you were to invest that kind of money over 20 years and 30 years and 40 years, even at the 2 percent, you see you have $55,000 at the end of 20 years. That is the magic of compound interest. In 30 years, it keeps going up, and by 40 years, it is worth $278,000. Look at what happens if you were to invest 10 percent and the Social Security tax is now 12.4 percent. It takes about 2 percent for the disability insurance program. Nobody is touching that. That insurance has to stay in place for the disability portion; but eventually, if you were allowed to invest 10 percent or you dig into your pocket and come up with other investments to account for 10 percent, in 40 years that would be worth $1,389,000; and if you have a 10 percent return on that, you would not have to go into the base, but just the interest would be $138,000 a year. A 5 percent return would be half of that, or about 70,000 a year. The magic of compound interest is important. Somehow we have to allow and provide ways for more Americans to save and invest more. Mr. Speaker, I saved out the chart of my grandkids just to stress with every grandparent, with every parent that might be listening tonight, with every young student who is really the kids that are at risk for the kind of future that we might give them, if we do nothing, because the potential is that they are going to have to pay huge tax obligations, Vice President Gore by suggesting that we add another IOU and take the interest savings and apply it to other Social Security and, therefore, the trust fund gets big enough to pay it simply demands that sometime in the future, somebody is going to have to come up with that money to pay off the trust fund. To do that, what we have done in the past is increase taxes; that is the easiest thing for this Chamber to do. It is the worst thing for our economy. There are only three ways to come up with the money. Let me point that out; I will put my pointer down so I can use my hands as I conclude this last statement. Some people have said, do not worry, there is a trust fund out there. If we use the payback, the money from the trust fund, Social Security will last until 2035; and for the most of us, that is long enough. I would suggest to you that there is no difference between having a trust fund and not having a trust fund, if we are going to keep our commitment that we are going to provide the benefits that we promised, because if we do not have a trust fund, the way to come up with the money to continue paying benefits is threefold. You either borrow the money from the public, and all the leading economists say if we were to borrow $120 trillion over the next 75 years, it would so disrupt our economy that it would be disastrous for the United States of America. So if we cannot borrow it, then how about the option of increasing taxes? That is the other option, increasing taxes. Of course, the third option is cutting benefits. What they did in 1973 and again in 1983, before I got here, was they did both, increased taxes and cut benefits. Let us not do that again. Those are the same alternatives we would have if we have a trust fund. So to pay back the money that is in the trust fund, we still have to raise taxes or cut other spending, or increase public borrowing. So, in effect, it is the same having or not having a trust fund. It is important to pay down the public debt. It is a good start. It means we do not start spending the money for other government programs, and that is the danger. The argument between the Republicans and the Democrats is, the Republicans say, let us get the money out of town. Otherwise, we will spend it. The Democrats say, we will pay down the debt but we have a lot of increased spending we want to do. The challenge is not whether we cut spending or pay down the debt, the challenge is, are we going to hold down spending in this country? Can we get this money out of town in some way? The first choice would be to continue to pay down the debt held by the public with all of these surpluses that we bring in. We have decided 2 weeks ago, our Republican majority, that we were going to draw a line in the sand. Like last year, we drew a line in the sand saying, here is the social security lockbox. We are not going to spend any of the social security surplus for any government programs. We held to it, we did it. That was good. This year we went further. We said, of all of the social security surplus, of all of the surplus coming into all of the other 120 trust funds, where most of the money is coming from, of all of the surplus, on-budget and off-budget, we are going to take 90 percent of that and use that money to pay down the debt held by the public. Good. Good policy. That leaves 10 percent that we are arguing about, and that we hope to conclude this budget and this spending this year as we argue about that remaining 10 percent. But I think we have the edge now in the support of public opinion that we at least take 90 percent of all that surplus and use it to pay down the public debt.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, well, again, thanks to the gentleman from South Carolina (Mr. Spence) and the gentleman from Missouri (Mr. Skelton), ranking member. Seventeen young crew members in the U.S. Navy were serving their country. In an instant, their lives were taken as a result of this terrorist attack on the U.S.S. Cole. Of those killed, most were young. Most came from our typical American hometown. They all left families and friends to mourn them. My thoughts and prayers go out to those families and friends. We, as a country, grieve with them. I feel, I think, some of this grief as I remember that day in 1957 when we received word that my brother's plane had gone down, and he was killed. The family is never quite the same. A senseless tragedy like this attack on the U.S.S. Cole, I think, allows us to reflect on all those military service members and their families who sacrifice so much while serving this great country. Our brave men and women in all the branches of the armed services stand ready to defend America, not only within our borders, but throughout unpredictable international waters and lands. Let us continually stand behind them and support them and humbly recognize their sacrifices. I think too often we take their services for granted. We would not be enjoying the freedoms we have now without the sacrifices of so many during our great country's history. I hope we will often remember how important America's military is to ensure the freedoms and liberties we have in this country. Again, my very sincere condolences go out to the family and the loved ones of those service men and women who had their life taken. May God help them through this difficult time.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, to whoever might be looking at this session, this is going to be sort of a briefing on Social Security. Social Security has come to the forefront of one of the very important issues in this Presidential debate, certainly with every senior, certainly also with every worker in this country as they now pay more into the Social Security tax than they do in the income tax, and certainly for our kids, our grandkids, those kids that are not born yet, is Social Security going to be there for them. Let me start with my first chart. I would like to thank Senator Rod Grams from Minnesota. He has introduced legislation to keep Social Security solvent, as I have. I have been chairing the bipartisan Social Security Task Force of the Committee on the Budget and, so, we have been working on Social Security for the last 5 years trying to get public attention to the fact that Social Security is insolvent and eventually there is going to be less money coming in than is required for benefits and the challenge facing this country if we are going to make a commitment not to reduce benefits, and we should do that, not to increase taxes even further on workers in this country, and we should do that. When Franklin Delano Roosevelt created the Social Security program over 6 decades ago, he wanted it to feature a private sector component to build retirement income. Social Security was supposed to be one leg of a three-legged stool to support retirees. It was supposed to go hand-in-hand with personal savings and private pension plans. In fact, it is interesting, looking up and researching in the archives in 1935, the Senate on two occasions voted that private personal investments should be an option to the Government handling the system. When it finally went to the conference committee between the House and the Senate, it turned around strictly to a Government-run program, a pay-as-you-go program where current workers pay in their taxes and immediately it goes out to current retirees. This is Berry Pump, an intern that is going to be helping me, from Iowa. So our intern program is an excellent opportunity for juniors in high school. So, Berry, thank you very much. The system really is now stretched to its limits. Seventy-eight million baby boomers begin retiring in 2008. That means they go out of the, if you will, paying in mode, paying their Social Security taxes, to the taking out mode. And these baby boomers are at the high end of the income scale, so they pay a much higher tax since our tax now is 12.4 percent on the first $76,000. Social Security expending exceeds tax revenues in 2015, and so the problem is where do we start getting the extra money starting in 2015. The bottom blip is Social Security trust funds go broke in 2037, although the crisis could arrive much sooner. And the crisis is trying to come up with that money. The danger historically as we look at what has happened through history, politicians in Washington and the President, for example, in 1997 and again in 1983, when money was short to pay out benefits, legislation was passed to reduce benefits and increase taxes. And that is why it is so very important that we deal with this problem now, we do not delay, we do not put it off. The longer we put off this problem, the more drastic the changes are going to have to be. So I think it is very important that we deal with this very important program as soon as we can. Some have said, well, these are just people's estimates of the future. Not so. Insolvency is an absolute. Insolvency is certain. We know how many people there are and we know when they are going to retire. We count the people. We know what their ages are. We know what their earning is, how much they are paying in. We know that people will live longer in retirement. When Social Security started in 1935, the average age of death was 62 years. For this pay-as-you-go program, that meant most people paid in all their lives but never took anything out. It worked very well. But now the life span of individuals has been increasing substantially. We know how much these individuals will pay in, how much they will take out. The payroll taxes will not cover benefits starting in 2015. And the shortfalls will add up to $120 trillion between 2015 and 2075. So, in tomorrow's dollars, in those inflated dollars, it is going to take $120 trillion more than the tax revenue coming in from the Social Security tax to pay benefits. I suspect most of us do not know how much really a trillion dollars is. I certainly do not. But you can compare it maybe with our annual budget, which now is approximately $1.8 trillion annual budget. It is a huge challenge. And that is why it has been so easy for this Chamber and the Senate and the President not to take action on it. It is too easy to demagogue. And with this Chamber running for election every 2 years, it is easy to put it off. We cannot do that any more. It is not fair to our kids. It is not fair to our grand kids. Our pay-as-you-go retirement system will not meet the challenge of demographic change. This is an example of workers per Social Security beneficiary. Back in 1940, there were 38 workers in this country paying in their Social Security tax for every one retiree. Now there are three workers paying in their increased Social Security tax for every one retiree. And by 2025 there is going to be two workers paying in their Social Security tax for every one retiree. This was developed because of demographic changes. One is the falling birth rate after the baby boomers after World War II. So the number of workers has not increased at the rate it was in the past. And secondly, the life span is tremendously increased. So if you reach retirement age, 65, then on average you are going to live another 18 to 20 years. So life span is going up, the number of workers' birth rate is going down, and that leaves us with a huge problem of insolvency. The little blue blip on the top left, maybe it should be green, is the period between now and someplace around 2015 when there are more revenues coming in from Social Security taxes than is used to pay benefits. The reason there is a surplus now in the Social Security tax is because we raised the Social Security tax, Congress and the President raised the Social Security tax substantially in 1983. And we will be looking at that chart in a moment. What happens after 2015 is the shortfall. The red represents how much money we are going to need above and beyond the Social Security taxes that will be coming in from American workers. Berry will help us with the next five. Some have suggested we really do not need to do anything now because economic growth is great, we are going along smoothly. The fact is economic growth will not solve the Social Security problem. Let me tell you why. Social Security benefits are indexed to wage growth. In other words, the more wages you earn, the more taxes you pay in earlier. But when you retire, the more benefits you will get out because the benefits are directly related to the wages you earn. 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. That is what has happened. Three years ago, we were going to run out of money by 2012; but with the economy expanding, now the projection is that we are going to have less money than needed 3 years later, in 2015. But when these people retire, then they are going to take out more. So over the long run, it does not offer a solution to Social Security. The administration has used these short-term advantages as an excuse to do nothing. Politicians have used this as an excuse to do nothing. I think the fact is clear that many people have called this the third rail of politics. They have suggested if you come up with a fix for Social Security, you are going to be criticized so aggressively by one of the most powerful groups in this Nation, the AARP is going to say, ``Don't mess around with our Social Security.'' Working as chairman of the bipartisan Social Security task force, it was interesting to find out that the people from AARP understand the problems with Social Security and so they are no longer criticizing individuals or the Presidential candidates that come up with potential solutions for Social Security because they know it is a huge problem in the future. There is no Social Security account with your name on it. A couple of footnotes on this issue. The Supreme Court on two occasions now has ruled that there is no entitlement, no connection, between the Social Security taxes that you pay in and your rights to have any benefits. These trust fund balances are available to finance future benefit payments and other trust fund expenditures but only in a bookkeeping sense. They are claims on the Treasury that when redeemed will have to be financed by raising taxes, borrowing from the public, reducing benefits or somehow reducing other expenditures. This is from the Office of Management and Budget. Some have compared the trust fund, that it is somehow a magical safeguard, that the money will be there. I like to use the comparison, what would happen with or without a trust fund, if we had no trust fund, coming up with the money to meet our promises, and I think we are going to do that. I think we have got to do that. If there was no trust fund, you would come up with the money in one of three ways: You would either reduce other spending, increase borrowing or increase taxes or reduce benefits. If there is a trust fund and you start calling on the trust fund but it is a bunch of IOUs in a box, government still has to come up with those same alternatives to pay back the money that has been borrowed from the trust fund and, that is, you increase borrowing, you increase taxes, you reduce benefits or you cut other expenditures. I do not think this body or the President is going to cut other expenditures of the Federal Government to the extent that is needed to cover the Social Security shortfall. I think the greater danger is in a continuing decision to say, ``Well, it's easier just to raise taxes a little bit or cut benefits a little bit.'' Some have suggested that if we just pay down the debt held by the public and use that interest savings, that will help take care of the problem of Social Security and keep it solvent until 2057. In fact, Vice President Gore's plan, in effect, says, Let us add another giant IOU to the Social Security trust fund. But in trying to look at the problem of coming up with the finances necessary, and it is going to take $46.6 trillion to come up with the money to pay off Social Security until 2057. You cannot do that. This is the total debt held by the public. This is the total debt that everybody is talking about, bragging about, being able to pay down maybe in the next 10 to 12 years. The interest savings from that $3.4 trillion can never solve a $46.6 trillion problem. So adding another IOU to the trust fund will not work. I have demonstrated this same problem in another graph. If you will, paying off the trust fund over this same period of time, we start with about a $180 billion a year savings in interest charges if we are going to pay off the $3.4 trillion of debt held by the public. That grows around to 2018 to be about $260 billion a year, and so the blue line represents, assuming that this $260 billion a year is now going to be dedicated every year to Social Security, it still only represents that bottom two inches of an 18-inch problem. And so the shortfall still remains $35 trillion. So to simply say we are going to add an IOU and somehow government is going to come up with the money and add this extra interest charge, interest savings to the Social Security trust fund is not going to solve the problem even if all the money was there. But again the problem is, where do you come up with the dollars? You come up with it by increasing taxes, cutting benefits, increasing borrowing. Just for the next 57 years, if we were to borrow that extra $35 trillion, the economists suggest that that would so disrupt the market and the economy in this country that it is not feasible. Remember, I said for 75 years it is going to take $120 trillion. There has got to be program changes. They can be made. Rod Grams and I and several others have introduced legislation that do not reduce a current or near-term retiree's benefits, that end up trying to accommodate by having a greater return on some of that investment that the worker is sending in in taxes. The average worker now is only getting less than a 2 percent return on those Social Security taxes they send in and we can do much better than that. The biggest risk is doing nothing at all. Social Security has a total unfunded liability of over $20 trillion. Let me sort of go over these numbers. Over the next 75 years in today's dollars, it would be $20 trillion. If we could come up with the $20 trillion now and start earning interest on it, we could solve the problem. If we wait year by year, then it is $120 trillion over the next 75 years and it is the 46, $47 trillion until 2057 when Vice President Gore says that it is going to keep the trust fund solvent. 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. I say that not to scare people but just to try to send the message that the longer we delay, the more drastic the solution. Something has got to be done now, because I think it would be unconscionable to increase taxes even further. The Social Security lock box. A little gimmicky maybe. I introduced a bill so that we would not spend any of the Social Security surplus. But this Congress has been spending the Social Security surplus for the last 40 years. So any extra money that comes into the Social Security trust fund has been spent for other government programs. The bad part of that is that it becomes almost an entitlement. Any program spending that we spend for 2 or 3 years, there is such a lobbying group, an infrastructure built up to insist that we continue spending that money that government has continued to grow. So increasing discretionary domestic social spending is very dangerous in terms of the obligations to our kids and our grandkids on future generations. The Social Security lockbox is what Republicans made. The decision was a good way to put that Social Security surplus aside, not spend it on other government programs, and it sort of ended up reducing the amount that we spend on government. That means that it has helped give us the kind of huge surplus that we are now experiencing this calendar year and again next year. It is interesting. The Vice President has said the lockbox is a good idea but I would remind everyone, Mr. Speaker, that we passed the lockbox legislation in this Chamber, we sent it to the Senate, and now the Senate Democrats are filibustering the lockbox law that we sent them. If the Vice President would ask the Democrats in the Senate to pass that bill, there is no doubt in my mind that it would be passed and sent to the President for signature. I am going to get in a little bit to talking about the diminishing returns on your Social Security investment. The real return of Social Security is less than 2 percent. It is about 1.9 percent on average for all workers. But it shows a negative return for some workers compared to the over 7 percent real return that you can get on average over the last 120 years in the stock market. As you look at this chart, and I hope the cameras can show it closely enough, minorities on average are going to have a negative return on the money they send in for Social Security. A young black male working today on average will die at age 62\1/2\. That means that they will pay in Social Security taxes all their life and not be entitled to anything except a $240 death tax for burial. So they are really getting gypped. The average again is 1.9 percent. Compare that to the market of real return of 7 percent. So if you can get a better return on some of that money being sent in for Social Security, that has got to be part of the solution. Then part of the problem is the transition cost. How do we make this transition from wanting to start some of those retirement accounts that are going to get some of the higher interest rate returns and the challenge, of course, is using some of the surplus coming in to government today, some of the Social Security surplus, some of the general fund surplus to start some real investments that are going to give Americans an average income worker the opportunity to be a rich retiree. With this chart, I have attempted to demonstrate in another way what a bad investment Social Security is. This does not include the disability insurance. So the disability insurance is an absolute. No plan touches the disability insurance. So that part is insurance. You take your chances. Some people need the disability insurance and some do not. What I am talking about is the retirement, the rest of, I think it is approximately 10.4 percent of the 12.4 percent that is used for retirement purposes. And so that is what we are talking about. To get that portion back, if you retired in 1940, then that was pretty good. Taxes were not very high in those early years and you received everything you and your employer put into Social Security taxes and you received that back in 2 months. In 1960, it took 2 years to get it back. In 1980, it took 4 years to get it back. In 1995, if you retired in 1995, you have got to live 16 years after you retire to get your Social Security benefits back that you paid in, to break even for what you and your employer put into Social Security taxes. And you see 2015, 26 years; 2025, 26 years. The reason this goes down a skosh is because of the fact that in 1983 when they passed that law, they actually increased the retirement age gradually, so now it goes gradually up from 65 to 67 over the next 20 years. This is a picture of Bonnie's and my grandkids. I have the picture on the wall of my office. When I come to vote in this Chamber on legislation, I look at that picture and think how is it going to affect my grandkids, 10, 20, 30, 40, 50 years from now. Our youngest here is Frances and our oldest in this picture is Nick, but both of them are going to have real challenges if they are ever going to get Social Security back. It is interesting that young people today do not believe that Social Security is going to be there yet they are saving less than the previous generations of young people. How do we encourage more savings? The challenge is to fix this program now, because if we simply add IOUs to the trust fund, if we simply say that look, we are going to pass a law and put $20 trillion in the trust fund, then the actuaries would score Social Security as solvent for the next 75 years. The problem is still when there is less money coming in in taxes in 2015 than what is needed for benefits, where do you come up with the money? I am afraid what is going to happen if we continue to put off solving this problem is my grandkids, your kids and grandkids and their kids, are going to end up paying huge taxes. Right now the estimate is that if we do nothing to cover medicaid, Medicare and Social Security, you would have to go to a 47 percent tax on payroll. Our economy in this country was built on encouraging those people that work and that save, that try and invest, and if we were to put that kind of taxes on our workers I think there would be a generational rebellion. If we simply say, look, we are going to live how we want to live today and somehow make our kids and our grandkids pay for it later, we cannot do that. This is Salina; this is James; this is Henry; this is George, he is a real tiger; Emily; and I have actually two more grandkids I will have in the next couple of months. Maybe it is a situation where if all of us were grandfathers and we were in this chamber and we were concerned about the obligations that we are putting on our kids and grandkids as we make decisions to pass laws to make our lives easier now but put the debt on them, we have a $5.6 trillion debt that needs to be paid down. This is a chart on taxes. So just briefly in 1940 the Social Security tax was 2 percent on the first $3,000, or a maximum of $60. By 1960 it was 6 percent on the first $4,800, or a maximum of $288. By 1980 it was 10.16 percent of the first $25,900, for a total of $2,630. Today it is 12.4 percent on the first $76,200, for a total of $9,448. If we continue to add benefits to Social Security, not correct the problems with Social Security, then it is going to be my grandkids and your grandkids that are going to be facing the kind of increased tax that is going to be intolerable. Seventy-eight percent of families, working families in the United States, now pay more in the payroll tax than they do in the income tax. So we continue to raise this payroll tax. It is a tax that hurts low- income people much more than high income people. It is the kind of tax that we should not be increasing. So let us not do it. The 6 principles that I agree with that Senator Rod Grams has agreed with, that Governor George W. Bush has agreed with, are we protect current and future beneficiaries. We allow freedom of choice. We preserve the safety net. We make Americans better off, not worse off. We create a fully funded system and no tax increases, and no reductions in benefits for those retirees, or near-term retirees. Personal retirement accounts, they do not come out of Social Security; they help Social Security earn more money to assure that those benefits are going to be there. They become part of your Social Security retirement benefits and a worker will own his or her own retirement account. That means if an individual might die before they are eligible for retirement, the money goes into their estate. Unlike today, if you die before your retirement then there is nothing there and it simply is added to the pot for other future retirees and beneficiaries and disability individuals; limited to safe investments that will earn more than the 1.9 percent paid by Social Security. So nobody is suggesting that we simply give this money to individuals and they be allowed to invest it however they want. All of the plans that I have seen say that it has to be a structured, limited type investment, something like maybe a 401(k), something like the Federal Thrift Savings Plan, where you choose from several safe investments; you have some options but they are all safe investments. In my bill that I introduced, I limit it to four safe investments with a potential expansion of additional safe investments that is decided by the treasurer of the United States. So the point is can we get a better return on our investment than 1.9 percent? The answer is, yes. I borrowed this from Senator Grams because I think it is so important that we have to make sure we do this with the prerequisite that we do not increase taxes and that we do not reduce benefits for retirees or near-term retirees. Term retirement accounts offer more retirement security. If John Doe makes an average of $36,000 a year, he can expect monthly payments of $1,280 from Social Security. If he puts 10 percent of the 12.4 percent into a savings account, he can get $6,000 a month from his personal retirement savings account. Remember the picture of Nicholas, my oldest grandson, he painted my fence last year and I said, look, you have $180. I would like you to put it in a Roth IRA, and he said, gosh, grandpa, I sure wanted to put that in the bank and maybe buy a car when I was 16. So I went step through step trying to explain the magic of compound interest and what it would do every year if it was drawing the kind of interest that the equity stock markets have averaged over the last 20 years, the ups and downs. So I went through this and I said, look, by the time you are 68, that $180 will have grown to almost $64,000, and if you wait another 6 years and 8 months, it will be almost $140,000. He seemed impressed but he said, well, grandpa, can I just maybe put a little bit of it in that Roth IRA and then put the rest in the bank for a car? And I think it demonstrates sort of part of the problem today to encourage people to save. It is so important that everyone, Mr. Speaker, everyone, young, medium age, older age, discipline themselves to put more money in a savings account. The savings account in the United States of America is one of the lowest out of the industrialized world. We have to do better in encouraging savings. This Chamber has come a long ways, developing the regular IRA, the Roth IRA. Now in a bill that we have sent to the Senate, we expand how much you are allowed to save in those IRAs; educational savings accounts. It is important that we encourage that extra savings, but it is even more important that we deal with Social Security and not put it off. In the law of 1935, we left it operational for State and local governments whether they wanted to get in the Social Security program or have their own retirement program. Galveston County, Texas, was a county that decided it wanted to do its own investments so their employees do not have the payroll deduction. They have a deduction that goes into their personal retirement savings accounts. Let me just compare Galveston with Social Security. Death benefits now in Galveston are $75,000 with a Social Security burial benefit of $253. The disability benefit per month under the Galveston plan is $2,749. With Social Security it would be $1,280. The retirement benefits per month in Galveston, this is disability, the retirement benefits are $4,790 compared to $1,280. It is an example of how real investments can make a much greater difference than what is happening in the pay-as-you-go Social Security program. Social Security is sort of like, I saw a cartoon I think was interesting that represented the pay-as-you-go program. It had this person coming in to Uncle Sam with a hat on in the cartoon saying, well, now just how does Social Security work? And Uncle Sam was saying, well, see this list here. Now, you send money to the name on the top of this list and you add your name to the bottom of this list, and then when you retire you will get all this money. A chain letter is sort of like the Social Security program. You depend on somebody else later on that might send you that money when you retire, and that is dangerous. Spouses and survivors benefits under the Galveston County plan, and I quote this young lady that gave this quote, she said, thank God that some wise man privatized Social Security here. If I had regular Social Security, I would be broke. After her husband died, Winnie Colehill used her death benefit check of $126,000 to pay for his funeral and she also entered college herself. Under Social Security, she would have gotten $255. San Diego has a similar plan. San Diego enjoys PRAs, personal retirement accounts. A 30-year-old employee who earns a salary of $30,000 for 35 years and contributes 6 percent to his PRA would receive $3,000 per month in retirement benefits. Under the current system, he would contribute twice as much to Social Security but receive only $1,077; $1,077 in Social Security compared to $3,000 per month in their retirement plan. The difference between San Diego's system of PRAs and Social Security is more than the difference in a check. It is also the difference between ownership and dependence. It is you owning that amount of money; not leaving it up to politicians to mess around with that money or your potential future benefits. I thought this was very interesting. Even those who oppose PRAs agree they offer more retirement security, and I am quoting from a letter from Senator Barbara Boxer and Senator Diane Feinstein and Senator Ted Kennedy to President Clinton on April 22, 1999, in support of allowing San Diego to keep continuing with their private retirement system. They said in this letter, millions of our constituents will receive higher retirement benefits from their current public pensions than they would under Social Security, and that is the truth. So why do not we do it? The U.S. trails other countries in saving its retirement system. As advanced as we are and as smart as we are, other countries are moving ahead of us with their retirement systems that they are starting to get real investment returns from. In the 18 years since Chile offered the PRAs, 95 percent of Chilean workers have created accounts. Their average rate of return has been 11.3 percent for years. Among others, Australia, Britain, Switzerland, they offer their workers PRA. It becomes an option to own their own savings account where they can get their own returns on that money. British workers choose PRAs. With the 10 percent returns, we cannot blame them. Two out of three British workers, and this is a socialist country, enrolled in the second-tier social security system chose to enroll in PRAs. British workers have enjoyed a 10 percent return on their pension investments over the past few years. The pool of these personal retirement accounts in Britain now exceeds nearly $1.4 trillion, larger than the entire economy of Great Britain. Based on a family income of $58,475, the return on a PRA is even better. Over a 20-year period, if you put in 10 percent of your payroll, you would end up having $274,000. The bottom blue mark is 2 percent of your payroll. At 2 percent of your payroll, it is $55,000. If we left it in for 30 years, and here again is the magic of compound interest, these investments held over that 30 or 40 years is so significant, and can again make an average income worker a rich retiree. If one leaves it in for 40 years, and we are allowed to put in 10 percent of the payroll, and social security now takes 12.4 percent, we would have $1,389,000. If one was to get a 5 percent return on that money, it would still be about $70,000 a year without even going into the principal. Again, let me conclude by saying 78 percent of families pay more in payroll taxes than income taxes. Several of us, bipartisan, when I chaired the social security bipartisan task force, it was interesting that the demographics, the current demographics of how long people are expected to live and therefore how much it is going to cost future taxpayers to pay their benefits. With our medical technology, some medical futurists are now estimating that within 25 years a person will be able to live to be 100 years old if they want to. Within 35 to 40 years, an individual can live to be 110 years old . Are we doing what we need to do as individuals in putting aside savings to accommodate the kind of living standard that the future kind of medical technology is going to allow? Of course, if that happens to social security, then the tremendous extra pressures on social security in future generations that are going to have to pay the increased tax will occur. Right now we are talking about adding prescription drugs to Medicare. Medicare could go broke with the legislation that has passed as early as 2004 or 2005. If we add prescription drugs to it, then my guess is a couple of things will happen. We end up with a government-run program that if it starts costing too much, it is going to look at rationing. That rationing is going to hold true whether it is Medicare and the government running that program, or whether it is social security. So my bottom line, Mr. Speaker, is, let us not delay. Let us not neglect this promise any longer. We have lost the last 8 years. Let us make sure that we move ahead with this next administration and come up with a program that will keep social security solvent.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I ask the gentleman from Michigan (Mr. Conyers) to repeat the question.

Mr. SMITH of Michigan. Yes, Mr. Speaker. But I certainly hope the other provisions that are so important, such as the discharge of those debts owed in child support, et cetera, somehow need to be corrected. But, yes, I have introduced such a bill. It is very important to farmers. I would hope we would pass the provisions in this bill.

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman very much for yielding me this time. Mr. Speaker, I think this legislation is very important and it is so important that we move ahead and send it to the President. I became interested and concerned with bankruptcy laws when I became chairman of the Michigan Senate Agricultural Committee back in the early 1980s. Farmers came to me with their frustrations and I note those were tough times for farmers. Farmers came to me with their frustration that they were not allowed to reorganize. They were forced to sell their equipment and then told, well, if you can find a way to pay your way out of this, fine. With out their equipment it didn't work. I met with my congressman, wrote many others and it was in 1986 that we first came up with chapter 12 to allow special considerations for farmers. In 1992 and 1993, when my son Brad Smith became a law clerk with Judge Edith Jones in Houston, Texas with the Fifth Circuit Federal Court of Appeals. I become more aware of problems with the federal law, talking to my son Brad and Judge Jones. If bankruptcy is to easy lenders raise interest rates for everybody else. Because thru bankruptcy it was too easy for many to get out of paying what they owed somebody else other borrowers are charged more to cover the unpaid bills. So there must be a balance. One wants to be fair, but on the other hand, one does not want to punish everybody to make it too easy so a few people can declare bankruptcy and not pay what they owe. I have two bills that I introduced that are now incorporated in this bankruptcy law. One is the child support payments that are owed to local units of government. They have been dischargeable. Now, under my amendment and this legislation they are not. The other, of course, is making section 12 of the bankruptcy law permanent. In tailoring chapter 12 to meet the economic realities of family farming, this bill has eliminated many of the barriers that family farmers have faced when seeking to reorganize successfully under either chapter 11 or chapter 13 of the Bankruptcy Code. For example, chapter 12 is more streamlined. It is less complicated. It is directed towards family farmers, not the giants, not the corporation, but family farmers. It provides that they can reorganize in such a way that they do not have to sell their tractors, their plows and their corn planter. It gives them a chance to get back on their feet. Chapter 12 provisions no longer exist in current law. Farmers are not allowed to use these provisions, because they have expired. This bill, this legislation makes chapter 12 permanent. I hope we move ahead and support this rule and the bill.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, as chairman of the Science subcommittee that oversees the fire administration, I rise in support of this legislation, particularly because of the important provisions included that will assist our Nation's first defenders, our firefighters and emergency service personnel. It incorporates provisions of a bill I introduced earlier this year called the Hero Act, H.R. 4146. Look, this Nation is well served by the 1.2 million men and women who work as fire and emergency service personnel in over 32,000 fire departments. Local firefighters, 80 percent who are volunteers, put their lives on the line every day for their communities and area residents. This legislation marks a new beginning. Our firefighting volunteers contribute billions of dollars worth of time and they need our help now. It is important that local, State, and the Federal Government step up to the line and give more support and help to our firefighters. They play a crucial role protecting and preserving our lives and our property . . . a dangerous role--an average of nearly 100 firefighters a year lose their lives in the line of duty. 80 percent of those who serve do so as volunteers. And so I'm pleased that this legislation demonstrates our commitment to our first responders by establishing a competitive grant program at the Federal Emergency Management Agency to assist volunteer and paid fire departments across this country purchase equipment, improve training, hire firefighters, fund emergency medical services, and establish fire prevention and safety programs. In this bill, we're also increasing the authorization for the USDA's Volunteer Fire Assistance Program and establishing a grant program to help fund burn research and burn recovery. These are two very important steps and are two elements of my bipartisan Helping Emergency Responders Operate, or HERO, legislation I introduced earlier this year. Mr. Speaker, we see our firefighters and EMS personnel responding to emergencies every day, more than 18 million calls a year. From car accidents, to brush fires, to large scale disasters, emergency responders are first on scene, first to react, first to provide the assistance we've come to take for granted. I'm pleased to support this legislation that brings some much needed assistance to those who literally put their lives on the line for us each day. Today's passage of several fire-related measures is a milestone victory for local firefighters. These projects constitute the largest and most comprehensive package of legislation to aid the fire service in the history of the country. Local firefighters, 80% of whom are volunteers, put their lives on the line every day for area residents. Increasingly, fire departments are having trouble making ends meet--with many departments forced to raise money through chicken dinners and other fundraising efforts. This legislation marks a new--and well-earned--commitment from the federal government to our nation's firefighters. Never before has the federal government taken steps even approaching this magnitude to aid the fire service. It is about time that America's heroes receive the assistance they so desperately need. Headlining the package is an unprecedented $460 million authorization which would create a grant program to send much needed funds directly to local fire departments. This language, dubbed the Domestic Defenders Initiative, is attached to the Defense Authorization bill, scheduled to be voted on today. Besides the new grant program, the bill also includes authorized funding for the Volunteer Fire Assistance Program, burn research programs, a study of Hepatitis C occurrences in firefighters, and a study of Department of Defense spectrum potentially available for sharing with local fire and EMS agencies. Additionally, there is language that improves the opportunities for fire departments to obtain excess Department of Defense property. Finally, a task force is created to identify defense technologies that can be put to civilian use by local emergency response. The House of Representatives is also committed to approving a $100 million appropriation for fire departments in one of the upcoming appropriations bills, most likely VA/HUD. While the authorization mentioned above would still be subject to future appropriations, this $100 million legislation would constitute immediate relief for needy fire departments. It is a similar package to that passed by the House on the Emergency Supplemental Appropriations bill in March. Finally, the House and Senate both recently passed the conference report to the Interior Appropriations bill. This legislation includes $2.9 billion in funding for wildfire related activities. This year has undoubtedly been one of the worst wildfire seasons in recent years, and this funding is critical to helping local fire companies respond. In addition, legislation has recently been introduced in Congress that would make volunteer firefighters eligible for funding under the AmeriCorps program. Congressman Curt Weldon (R-PA), the sponsor of the bill, has spoken with Harris Wofford, president of the Corporation for National Service, who has indicated his support for the legislation and his intention to work to include volunteer fire companies in AmeriCorps. Individually, these initiatives represent steps forward for America's fire service. Together, they demonstrate that the Republican leadership in Congress is committed to reversing the years of neglect endured by America's first responders for so long.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, a lot of problems face this country and certainly face our administration. One of those problems is keeping Social Security solvent. This affects everybody, not only existing retirees, but the young, middle age and future generations. What is going to be their future in terms of working and paying taxes and, maybe or maybe not, getting Social Security benefits when they retire? Social Security probably is one of this country's most successful programs in terms of helping people retire with some security. When we started Social Security in 1935, when Franklin Roosevelt decided we should have a program to force savings and pay for some disability insurance while you are working, rather than risk the poor house. At that time, there were something like 52 workers for each Social Security retiree. Remember, it is a pay-as-you-go program; existing current workers, pay in their Social Security tax and that tax immediately goes out to pay benefits for existing retirees. By the time we got to 1940, there were 38 people working paying in their taxes for every one retiree. This year we have three people working, three people working, paying in their taxes to cover each retiree's benefits. A couple of things have happened. Politicians in this chamber, the Senate and the presidents decided to increase benefits over the years because it was popular. When there was not enough money, they increased taxes and borrowing. By 2025, over on the far right-hand side of this chart, you see there are only going to be two workers paying in their taxes for each retiree. We started out back in 1940 having a 3 percent tax on the first $1,500 of wages. Today we have increased that to 12.4 percent on the first almost $76,000 of wages. So I hope we all agree one of our challenges is not to increase taxes yet again. Demographics of longer life span and lower birth rates have also greatly affected solvency. The diminishing return on our Social Security investment should concern us all. The real return of Social Security is less than 2 percent for the average worker in the United States. Again, not counting the amount of the Social Security tax that pays for the disability insurance portion workers get a real return of less than 2 percent on the taxes paid in. For some, there is zero return on their Social Security. They are never going to live long enough to get back what they and their employer put into it. But, still, 1.9 percent is the average. Minorities do not get back what they pay in. A young black male, for example, is going live on the average 62 years. That means they pay in all of their life, but do not get benefits. But the average real return for the market, is over 7 percent. Part of the solution for Social Security has got to be a better return on the investment. This chart shows the number of years you are going to have to live after retirement to get back the money that you and your employer paid in, just to break even. If you were lucky enough to retire in 1940, it took 2 months. If you retired 5 years ago, in 1995, you are going to have to live 16 years after retirement to break even. On average if you retire in 2005, 2015 or 2025, it is unlikely you are going to ever get back what you put into this system. Even a ``C.D.'' or extra safe investments in the marketplace would give more to retirees. Governor Bush is suggesting limitations on any such investments; it can only be used for retirement purposes, it has to be limited to safe investments. We have companies now that will guarantee a return greater than Social Security without taking any risks. So, our challenge is we have to get people, this Congress, the President, to develop legislation to save Social Security. It is easy to put off the fixing to the next generation or future congresses. Vice President Gore has suggested adding giant IOUs that demand increasing taxes later. The last president should have dealt with the problem. The next president should not put off solutions that will keep Social Security solvent for the next 75 years. Right now there is enough money coming in to pay benefits, up until an estimated 2015. We need to take action. We cannot keep putting it off.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on the subject matter of the remarks to be presented by the gentleman from Virginia (Mr. Wolf).

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to take this opportunity to talk a little bit about our work in the Subcommittee on Basic Research, a subcommittee I am honored to Chair. This Subcommittee has had a busy and productive two years. In the 106th Congress, we have held a total of 25 oversight hearings, field briefings, and mark-ups on a range of important and timely issues. In addition, we have passed through the House two bills authorizing fire and earthquake programs under this Subcommittee's jurisdiction, and these may yet be passed into law in the final days of the session. I believe the work we do in this Subcommittee truly is unique. In our hearings on information technology, nanotechnology, education research, plant genomics, and biotechnology, for example, we have been able to glimpse the future. And through our oversight and our authorization bills, I hope that we are able to help shape that future, as well. I am proud of our record of collegiality and bipartisanship on the Subcommittee, and I look forward to continuing that tradition in the next Congress. I would also like to this opportunity to thank the staff of the Subcommittee, who work behind the scenes to get things done. Stephen Eule, Peter Harsha, Mark Harrington, Sharon Hayes, and Steve Howell have made my job easier, and I thank them for all their good ideas and hard work. I congratulate all the members of the Subcommittee especially Ranking Member Eddie Bernice Johnson and her chief of staff Jim Wilsort.