Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, a highly educated workforce is critical to America's future competitiveness. And the quality of education in America's schools is directly related to the quality of the teachers entrusted with the vital task of educating the Nation's students. Today's students are tomorrow's workforce, and for that reason education is directly linked to America's future competitiveness in a changing economy. H.R. 4411, the Priorities for Graduate Studies Act, addresses the shortage of highly qualified math and science teachers at the K-12 level. One of the problems is the continuing lack of faculty at the graduate level to train the teachers of tomorrow in these demanding fields. This must be addressed to fortify the pipeline of highly qualified teachers for our Nation's youth. To increase faculty in these high-demand subject areas, the Priorities for Graduate Studies Act will target Federal aid for graduate studies to these subject areas. The bill, introduced by my colleague from Georgia Representative Max Burns, places a priority on the areas of math and science for graduate fellowship programs in the Higher Education Act. Further, this bill reinforces previous Federal efforts in the ``No Child Left Behind Act'' requiring a ``highly qualified'' teacher in every classroom. This bill, along with the other bills being discussed today, also provides State grants to recruit and train teachers. In addition, loan forgiveness programs at the Department of Education and the Noyce Scholarship Program at the National Science Foundation (NSF), which seeks to encourage top math and science students to enter the teaching profession, are just some of the initiatives that have been designed to address issues of teacher recruitment and retention. Federal Reserve Chairman Alan Greenspan recently testified before the House Education and Workforce Committee and said that strengthening the Nation's education and worker training systems and supporting innovation are essential to creating jobs and sustained economic growth for American families. He said that the U.S. appears to be lagging seriously behind other nations in terms of the quality of education being provided to students at the K-12 level. He quoted a study conducted in 1995 (The Third International Math and Science Study, a project of the International Study Center, Lynch School of Education, Boston College) revealing that although our fourth-grade students were above average in both math and science, by the time they reached their last year of high school they had fallen well below the international average. The quality of America's workforce is inextricably tied to the quality of America's education system. For that reason, advanced degrees in specific subject areas will help to improve the training of our schoolteachers, building upon the quality of elementary and secondary education and, in turn, strengthening the competitiveness of the American worker. The House bill being discussed today recognizes that a shortage of advanced degrees earned in high-demand subject areas such as math and science can create a void from the university level down to K-12 classrooms. To address this shortage, the bill places a priority on these subject areas when awarding graduate level fellowships. Mr. Speaker, when I have an opportunity to speak with teachers about education, I often ask them if teaching a child math or science is more like lighting a fire than filling a container, at what age they believe the flame of interest for math and science education is sparked and how can we keep it burning. I get all sorts of answers. Some say third grade. Others say kindergarten. But they all generally agree that our greatest challenge is to ensure that all children experience that initial spark to create more interest in science and math. As Chairman of the Science Research Subcommittee, I recently introduced legislation that passed this House, creating a Congressional award for private sector entities that partner with schools to improve science, technology, engineering, and math education. The bill, H.R. 4030, would provide well-deserved recognition for outstanding private sector efforts and directs the National Science Foundation to disseminate information about award winners to educators, businesses and the general public. The way to maintain and increase our standard of living is through innovation, technological advancement and hard work. We need to do a better job of encouraging student interest and achievement in math and science so that today's students will be successful in the highly competitive global economy.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentlewoman for yielding me this time. Mr. Speaker, I would like to relate some of my memories of World War II. I was born in 1934. I was about 7, 8, 9 and 10. In our community what allowed Rosie the Riveter to go into the workforce and our factories was other women on the homefront, that substituted for taking care of children. So some of the women in our community went and babysat for other women to allow them to go into our factories to do some of this work. So I am pleased that one of the resolved clauses reads, ``honors the extraordinary contributions of the women whose dedicated service on the homefront during World War II was instrumental in achieving the Allied victory.'' Those women that made the effort, that got in the physical conditioning to allow them, really unheard of before, to do man's work was also supplemented by so many mothers and so many other women in every home in most every community of the Nation. In our rural area of Michigan, women were the ones that were encouraging the savings of string and tinfoil and saving all of their bacon fat and encouraging their children to contribute to the war effort. So it was not only the work in the factories, but it was the inspiration that mothers and other women gave to their communities. So it was more than the factories. It was women going in to become members of the school board, to help guide the community and to substitute in public service organizations, where women came forward to really start a new era in America of women proving themselves to be so effective in achieving goals. So I commend the resolution, I commend the effort of these women, especially as we have just finished the dedication of the memorial of World War II. Because that memorial is a dedication not only to those that died but to all of our fighting men and their families. The women during World War II were what kept the spirit up in a very strenuous time for many families in many communities as we saw relatives and loved ones die in service. So I would just like to expand the commendation of women during World War II to the knitting of scarves and the collecting of cookies and all of the work that went on, in addition to those women that allowed us the production of planes and ships and guns and ammunition.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, over the last few years, we have been able to cut taxes; but we have not been able to simplify those taxes. Maybe this is a step in the right direction. And I am the prime sponsor of the flat tax because there is so much favoritism that is now incorporated by special interests, lobbyists and groups putting into our Tax Code, that every favor becomes a disservice to everybody else that has to make up those taxes. Today the Federal Tax Code has 400 percent more words than the Bible and accompanying the law are a staggering 2.5 million pages of regulations. As a result, it now takes a person filing a 1040 form a full 13 hours and 27 minutes to do their taxes. H.R. 4109 helps seniors reduce this burden by requiring the IRS, and not leaving it to their discretion, where some administrations might say, let us go ahead and have a 1040S and some administrations say, well, we do not need the 1040S. But this would require the IRS to have a more simplified version of the tax form for seniors. Under present IRS rules, more than 35 million individuals age 65 or older are not permitted to use the 1040EZ; and the ratio of seniors to all individual income tax filers is growing. According to an IRS study, the return filing population aged 65 and over will grow from 10.7 million in 2000 to 12.5 million in 2010. In light of this trend, the IRS has been considering, like the gentleman from North Dakota (Mr. Pomeroy) suggests, a simplified tax form for seniors. This legislation will assure IRS follows through on its promise to make such a form available. In particular, the bill requires the IRS to offer to individuals age 65 and over a form 1040S that is as similar as practicable to the 1040EZ. The IRS is instructed to make the form available notwithstanding the receipt of Social Security benefits, distributions from a qualified retirement plan, annuities or other deferred payment arrangements, interests or dividend or capital gains or losses. Finally, the IRS is instructed not to establish an income threshold for use of the form so that seniors with incomes in excess of the $50,000, the current threshold for form 1040EZ, will be permitted to use the simplified form. The IRS estimates that as many as 11 million seniors will use the new form in the first year it is made available. As one of the few members of Congress who does his own taxes, I am well aware of the mind-numbing complexity of figuring out the income tax. As the old saying goes, there's nothing certain but death and taxes. We can't do anything about death, but we can and should make taxes as fair and easy as possible.''

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, 54 minutes probably is very adequate. I was sitting up in my office listening, reading letters from constituents, letters that wanted more money for the AIDS program, letters that wanted more money over the approximately $29 billion that is going to our foreign support programs. They wanted more money for food stamps, letters coming in wanting more money for health care, wanting more money for NIH. I think it should be obvious, certainly it is with most of our Members, that there are many, many problems out there; and the question is how many of those problems should it be the responsibility of government to solve. We are now faced with a situation in the United States where approximately 50 percent of the adult population only pay about 1 percent of the income tax. So as we have moved in the last 30 to 40 years from an environment that our forefathers set up in the Constitution that encouraged effort, it encouraged savings, it encouraged individuals that saved and worked hard and invested, because they would be better off than those that did not; then, over the last 35 to 40 years, we have been sort of dividing the wealth up by increasing the taxes on those that might make it or those that work harder, or those that save and invest, and distributing some of their tax money to the individuals that made less effort or were, in other words, sometimes unlucky. I think that is a danger for our future. Mr. Speaker, this is the 195th year of Abraham Lincoln's birth; and in his famous Gettysburg Address, he sort of surmised and wondered if a nation of the people, by the people and for the people could long endure. And I think in this kind of an environment where we have both sides of the aisle now calling for more spending; and it is an advantage to get reelected, Mr. Speaker, those individuals that take home more pork barrel projects, that promise more spending to solve more of these problems, probably do get on the television a little more, maybe get a picture of cutting their pork barrel project ribbon that they have taken home to their community. But the imposition on taxpayers today and maybe more importantly the burden that we are placing on taxpayers tomorrow, our kids and our grandkids, should be considered in the decisions we are making today. I wanted to start out, Mr. Speaker, with sort of a pie chart on how we spend our Federal dollars this year. As you see, the biggest piece of pie in this chart is Social Security. Some people suggest, well, why is Social Security part of that Federal spending pie? It is really a separate account. It is a separate account. However, I think it should be noted that on two occasions the Supreme Court has said just because you pay Social Security taxes there is no entitlement to the program benefits when you retire. Social Security is simply another tax that Congress and the President have imposed on people, and the benefits are a separate bill of benefits that can be changed any time Congress and the White House wants to change those benefits. Of course, that is what we have done over the years. Every time we need a little more money for Social Security in this, if you will, pay-as-you-go program, the taxes have been increased or benefits have been cut or a combination. So as we go around the pie chart we have Social Security taking in 21 percent of the total Federal spending. Coming around at 7:30, 8:00, Medicare is at 12 percent. The prediction is that Medicare costs will overtake Social Security within the next 18 to 20 years. Other entitlement programs, 10 percent; domestic discretionary 16 percent. That is outside of defense. Domestic discretionary is what this body and the Senate discuss and argue about for 6 or 7 months out of the year. The rest of it is almost on fixed type of spending. As you see, the next item is defense spending at 20 percent. That has gone up a little over a percent because of the war in Afghanistan, the war on terror and the war in Iraq. Interest. I want to dwell a moment in interest at 14 percent. The interest on our debt in this country, now a little over $7.3 trillion, is $300 billion a year. That is $300 billion at a time when we are looking at a future of deficits that is adding to that debt approximately $500 billion plus a year. We are looking at relatively low interest rates today compared to the prospect of going back to much higher interest rates. So if we continue this overspending and if interest rates are going to go back up higher, which Mr. Greenspan predicted, which most of the economists are now predicting, we could well see interest on the debt within the next 20 years taking up 25 to 30 percent of the total Federal budget. And I would just suggest, Mr. Speaker, this is, maybe a stronger word than unfair, would be unconscionable for Congress, the House and the Senate and the White House to think our problems today are so great that it justifies taking the money of our kids and our grandkids that they have not even earned that yet. They are going to have their own challenges, their own problems, and they are going to be unable to continue to increase the debt of this country to pass on to their kids and their grandkids. I am a farmer from Michigan. Traditionally, on the farm what we try to do is pay down the mortgage so that our kids will have a little better chance of having an easier life than maybe their parents or grandparents did. In this body, Mr. Speaker, what we are doing is just the opposite. We are increasing the debt every year. Deficit, of course, is how much we are overspending over and above the revenues coming into the Federal Government. The overspending or deficit spending this year is going to be about $560 billion, next year about $530 billion, maybe a little higher. And what we are saying is we are adding that much to the debt. In the next 2 months we are going to have to again pass a legislation in the House and the Senate signed by the President to increase the debt limit from its current $7.3 trillion on up to cover this kind of overspending and the debt that we are passing on to our kids. I want to emphasize two things. We are passing on this liability to our children and our grandchildren in two ways: One is the deficit spending and the increased debt and the burdens of being responsible for that debt in future years, and the other is making promises that we do not have the money to pay for. That is the next chart. The budgeteers call this unfunded liabilities. Unfunded liabilities means passing a law for a benefit program and the funds that are going to be required over and above what is coming in to pay for those programs. The payroll tax for Social Security, Medicare, is going to be the unfunded liability, what we are going to need over and above the payroll tax coming in. $73.5 trillion is estimated by the actuaries. Medicare part A is $21.8 trillion. That is mostly the Medicare that goes to hospitals. Medicare part B is mostly what goes to the doctors. $23 trillion, Medicare part D, the new drug program that was passed last November, the unfunded liability on that program is $16.6 trillion. And so Social Security is $12 trillion. That is more than a quarter million dollars of unfunded liability for every man, woman, and child in America; and what is happening, of course, is the demographics of individuals living longer and the birth rate declining means that there is going to be even greater burden for our kids and our grandkids. The next chart shows if we do not do anything, if we keep just simply continuing to talk about that 16.6 percent of the spending that is discretionary spending and we do not deal with the kind of changes in the rest of the so-called entitlement programs, it is going to not only be a huge impact on the way of life and the potential success of our kids and our grandkids but it is going to be a huge imposition and strain on the economy of this country. And let me just ask, Mr. Speaker, if anybody would like to venture a guess on what the payroll tax is in France, for example. The payroll tax to accommodate their senior programs in France is now over 50 percent of a payroll tax. Germany just when over 40 percent for their payroll tax to accommodate their senior population. If the United States continues to put off the solutions and dealing with these tough problems, then we are certainly going to see a situation where it is going to make us even more at a competitive disadvantage. We are already increasing our taxes on our businesses approximately 18 percent over the taxes that are charged to our competitors. Our overzealous regulations, our high health care costs added to that put our business at a competitive disadvantage with many countries. But if we continue to slip and slide and not deal with the problems of the unfunded liability for Social Security and Medicare and Medicaid, then the situation is even going to be worse. And if we have that kind of a payroll tax, one understands that that business only has a couple options. They either try to pay less wages and salary to their employees in order to be competitive, or they try to increase the price of their product to cover their cost, and that tends to make them less competitive. So one can understand the demonstrations and frustrations in countries like France and Germany. This chart shows that just in 16 years from now we will have to take an additional 28 percent out of the general fund to accommodate those other programs, what is needed over and above the money coming in from the payroll tax. By 2030, it is going to be over 52 percent that is going to come out of the general fund. We add to that the projection of the cost of the debt, servicing that debt, that is probably going to be approaching 20 percent at least in the next 15 years. This chart is just a quick glimpse of the short-term surpluses from the huge tax increase on Social Security on the increase in the FICA tax that was passed by the Greenspan Commission in 1983. That increased tax money to cover temporarily the increase the cost of Social Security is going to last until about 2017, and then we have a huge, big red future. The red part of this graph projects the $12 trillion unfunded liability in Social Security. I want to spend a minute, Mr. Speaker, talking about how Social Security works and the problem with Social Security. It is a tough problem; and it is easy to understand why Members of Congress have tended to say, well, look, we are going to save Social Security but we are not going to pass the bill right now, we are going to look at it more closely. Mr. Speaker, many of my colleagues in their past campaigns said, look, we need to do something about solving the problem with Social Security. Here is how Social Security works. Benefits are highly progressive and based on earnings. At retirement, all of a worker's wages up to the tax ceiling are indexed to present value using wage inflation. What that means is if wage inflation means a doubling of wages every 9 years, it means a job 20 years ago that, or 18 years ago, that paid $10,000 now you would be paying maybe $30,000 for that job. So when Social Security indexes your best 35 years, it adds into those 35 years what the current value of that job was, whether it was held 10 years ago or 20 years ago or 30 years ago. The annual benefits for those retiring in 2004 is very progressive. And, very quickly, today 90 percent of the earnings up to $7,340, in other words, if you are a low-income earner and over those 35 years you averaged $7,500 in wages, the government would pay you 90 percent of your weekly or monthly take-home pay in your retirement years. The next 32 percent of earnings between the $7,300 and the $44,000, is 32 percent of your earnings. And then as we deal with higher wage earners when they retire, everything above the $44,000 is only given 15 percent in terms of what you get back in Social Security benefits. And I added this. Early retirees receive adjusted benefits, and SSI does not come out of the Social Security system. It comes out of the general fund. Let us talk a little bit about how we are going to fix Social Security. One way is to get a better return on the investment, the money that is sent in by the employee and the employer. Right now, Social Security is not a good investment. The average retiree will receive 1.7 percent return above inflation on what they and their employer sent into the Social Security system. Franklin 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. His suggestion that he sent to Congress is that there be personal accounts but that individual would be forced to put into that personally owned account and they would not take anything out until they reached age 65. Looking through the archives in downtown Washington, I discovered that the Senate did pass that bill for personally owned accounts. The House passed a bill suggesting that it should be the government in control, taking all the money in and then paying out benefits when that individual reached 65. By the way, the program worked very well in those early years because the average age of death was 62. One could not collect benefits until you reached age 65. So most people paid in but never took out benefits. It is a program that is stretched to its limits. And the reason is demographics. Seventy-eight million baby boomers are going to begin retiring in 3\1/2\ years from now. Social Security spending exceeds tax revenues in 2017, and Social Security is simply going broke, and it needs to be fixed. It is not guessing on insolvency. I have heard suggestions from both sides of the aisle if we can get our economy strong enough, it will fix Social Security. Well, the fact is that we know how many people there are, we know when they are going to retire, we know that people will live longer in retirement. But here is what also we know: We know that if we are earning more wages now because of a stronger economy, or if more people are working now because of a stronger economy, because there is a direct relationship to how much you are earning and paying in now and how much you will get out when you retire, a stronger economy now means there is more money going into the system, but it means when these people retire there is more money going to be spent going out of the system. So simply having a strong expanding economy by itself does not solve the Social Security problem. My last blip on this chart, payroll taxes will not cover benefits starting in 2017 and the shortfalls will add up to $120 trillion between 2017 and 2075. Here is the problem of the birth rate going down and the fact that people are living to older ages. In 1940 there were 28 people working paying in for every one retiree, so they were spreading the costs between those 28 workers on their payroll tax to finance every one senior. By the year 2000, it got down to three people working paying in and supporting one senior, so the taxes kept going up. The projection for 2025 is there will be two individuals working for every one senior that they are trying to support in their retirement. Economic growth will not fix Social Security, Social Security benefits are indexed to wage growth; and 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, as we discussed, but leaves a larger hole to fill in in later years. Mr. Speaker, I was chairman of the bipartisan Social Security Task Force, and I probably made maybe 250 speeches around the country. In those early speeches people said, well, if Congress would keep their hands off the money coming in from Social Security, if they would keep their hands off the Social Security trust fund, everything would be okay. Well, we should keep our hands off that trust fund. That money should be invested and returning real earnings back to the Social Security. But these two columns show the money that is in the trust fund, roughly $700 billion borrowed. You add interest to that, so now there are IOUs out there that represent $1.4 trillion. But here is the total column of what is required for the Social Security problem. That is $12 trillion. So we need to get back that $1.4 trillion, and it is all spent; so government has spent all the money when it came in. So now the challenge is how do we, do we simply reduce benefits again so that we do not need as much money, do we raise taxes again on workers where already 78 percent of American workers are paying more in the payroll tax than they do the income tax? On this chart, it probably justifies an explanation. We will need $120 trillion between 2017 and 2075 in future dollars. The $12 trillion that we talk about in unfunded liability or the total for Medicare and Medicaid added to that is $73.5 trillion. That means that money would have to be put in a savings account today accruing interest that would accommodate for inflation plus the time value of money to come up with the $120 trillion that is required until the future years to cover Social Security benefits, that much more is needed over and above what is coming in on the payroll tax now. Social Security has a total unfunded liability of $12 trillion. 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 put by 30 percent. And with this program, with most of our seniors depending on Social Security for most of their retirement income, I think it would be very bad policy to again cut benefits. But that is what we have done in the past. That is what we did with the 1983 changes. We increased the taxes up to 12.4 percent, and we cut benefits in several ways including increasing the retirement age gradually from 65 to 67 years old. This figure shows that Social Security is a bad investment. In fact, if you are a black male, you have a negative return on the money you pay in to Social Security because on average a black male will die at something like 63\1/2\ years old, before they reach 65 years old. The average return for the average retiree is 1.7 percent. The column to the far right represents what the market has done, and this is the Wilshire 5000 that actually earned 11.86 percent over and above inflation for the 10 years ending January 31, 2004. This, of course, included almost 2\1/2\, almost 3 years of a down equity market on the stocks. This is another way of saying, Mr. Speaker, that Social Security is a bad investment. This chart shows how many years a retiree is going to have to live after retirement to break even on the money he and his employer, or he or she if they are self-employed, sent into Social Security. In 1995, if you retired in 1995, you have to live 16 years after retirement. By 2005 you will have to live 23 years after you retire to break even on the money you send in to Social Security. So that should bring to mind, is there a better way to invest some of this money than simply sending it to the government and letting the government write out an IOU and spend any extra money that they have and only giving the retiree an average of 1.7 percent return? This chart I wanted to show simply because I think it indicates the danger of doing nothing and continuing to put off this decision. I would, as a footnote, I would just urge that every citizen in this election year when you go to candidate forums, when you go to Presidential forums and speak to their representatives, ask them what bill they have signed on or introduced to solve the Social Security and Medicare problem of unfunded liability, the fact that these programs are going broke. Because I think the danger is putting it off and then we simply increase taxes again. As you see, in 1940 we had the first tax increase. We went from 1.5 percent to 2 percent, 2 percent of 3,000. In 1960 we tripled it to 60 percent of a base of 4,800. In 1980 almost doubling it again to 10.16 percent of the first 26,000. By 2000 we raised it to 12.4 percent of the first 76,000. In 2004, 12 percent of the first 87,900. And that view of history of what Congress and the administration has done probably is a danger signal to what we might do again if we do not stand up and deal with this problem. I know it is so easy to demagogue because this is my, I introduced my first Social Security bill when I came here in 1993. And I have introduced a Social Security bill every year after that that has been scored to keep Social Security solvent. So every election, I face the challengers that are saying I want to ruin Social Security. Now, probably after so many speeches in my 7th Congressional District of Michigan, most of my constituents understand the real problem of Social Security. So if those candidates that are replacing me, they are all very supportive that the system needs to be changed to keep it solvent and to keep this important program going and to keep our promises. Because what seniors, of course, what working people do is they look at how much revenue is going to come in from Social Security and what other kinds of savings they need to accommodate a retirement life-style that is going to be satisfactory. So simply telling these workers in their late forties and fifties that we are going to start reducing benefits would be terribly unfair. This simply is a chart showing that 78 percent of workers today pay more in the Social Security tax than they do in the income tax. The six principles that I have set up, one, protect current and future beneficiaries; two, allow freedom of choice; three, preserve the safety net. In other words, in my bills I leave at least half of the trust funds in place. Four, make Americans better off, not worse off. So have a program where savings and investment in our industry is encouraged. Five, create a fully funded system. And my last blip that I think is important is no tax increases on your payroll taxes. Mr. Speaker, I am going to briefly run through the bill that I have just recently introduced. The Social Security trust fund continues, voluntary accounts would start at 2.5 percent of a personally owned retirement account and would reach 8 percent in future years, 2075. Investments would be safe, widely diversified, and investment providers would be subject to government oversight. The government on the last blip, the government would supplement the accounts of workers earning less than $35,000 a year. And what that does is ensure that with the magic of compound interest, adding a little bit to these low-wage workers into their privately held savings account, means that their trust funds are going to grow to a modest income workers can retire with what millionaires are getting from Social Security today. So the goal is to encourage savings and to have a system that does even better than our current Social Security system. Actually, I think this was first suggested by President Clinton that we add some funds to low-income workers in their personal savings account to help encourage more savings and to give them the kind of retirement benefits with that larger nest egg and how it can accumulate. My Social Security bill, as all my Social Security bills, has been scored by the Social Security Administration to restore long-term solvency to Social Security. No increase in the retirement age and no changes in the COLA, the cost of living, or no changes in the benefits for seniors or near-term seniors. Solvency is achieved through higher returns from worker accounts and slowing down the benefits for high- income retirees. I do that by adding another ben point. You remember the ben point chart that went from 90 percent to 32 percent to 15 percent. I add another so-called ben point at 5 percent so that high-income retirees would have the effect of having their benefits, their increase in benefits slowed down. Workers' accounts, all workers' accounts would be owned by the worker and invested through pools supervised by the government. Regulations would be instituted to prevent people from taking undue risks. In other words, we start out like the Thrift Savings Account for Federal employees, and that is a limit on where you can invest the money, such as index stocks, index bonds, index cap funds and other safe investments as determined by the Secretary of Treasury. Regulations would be substituted to prevent people from taking those undue risks through that process, and workers have a choice of those three safe index funds with more options after they have a balance in their account of $2,500 or more. What we also include in the bill is once you are able to have a permanent annuity that will guarantee you the same benefits as Social Security, then you can stop paying the 6.2 percent of your wages, of your income that you now pay into Social Security. So it gives you that kind of option if you think you can make the kind of investments and have the ability to set up that kind of insurance system just to guarantee that you are not going to later ask people to help finance your retirement if things go wrong. Worker accounts. Accounts are voluntary and participants would receive benefits directly from the government, along with their accounts. Government benefits would be offset based on the money deposited into their account, not on the money earned, and workers could expect to earn more from their accounts than from the traditional Social Security. I think it is obvious that we could incorporate in this legislation a guarantee that if anybody selected the option, you can stay with the old system if you want to and not have personal retirement accounts, in my proposed legislation, but if you do go into personally-owned retirement accounts, we are guaranteeing that they are going to be at least as good in terms of what they are going to contribute towards your retirement as Social Security. So you cannot lose. Fairness for women. This is what I have incorporated in this Social Security bill. For married couples, account contributions would be pooled and then divided equally between husband and wife. So, if one spouse is earning much more than the other spouse, you add the two earnings together, you divide by two to determine what is going to be the identical amount that is going to go into both the husband's and the wife's personal retirement savings account. Two, it would increase surviving spouse benefits to 110 percent of the higher earning spouse's benefit. Currently, it is 100 percent. This tries to encourage people to stay in their own home a little longer rather than going to a nursing home. So we have upped the minimum amount that is going to be allowed after one spouse's death. Then stay-at-home moms. For stay-at-home mothers with kids under 5, they would receive retirement credit. So, for those limited number of years that they stay at home with those kids under 5 years old, we give them the average of their higher earnings for those outyears to fill in that best 35 years in determining their benefits. The additional retirement security. Trying to encourage a couple of things, encourage more savings, encourage people to stay in their own homes a little longer after they retire. So these are other provisions I have incorporated in my bill that is a bipartisan bill, signed by Democrats and Republicans. The increased contribution limits for IRAs, 401(k)s and pension plans, we would increase that contribution limit. The second blip, a 33 percent tax credit for the purchase of long-term care insurance up to $1,000 per individual, $2,000 per couple. Low-income seniors would be eligible for a $1,000 tax credit for expenses related to living in their own homes and households caring for those dependents. So, if the kids are having one of their parents or both of their parents live with them, they would get a tax credit to encourage them to use their facility and care for their parents as opposed to maybe their parents going into a nursing home. Nursing home care, of course, is now increasing dramatically as we pass more rules and regulations. On the average, in my area of Michigan, nursing homes cost from $40- to $55,000 a year for a senior to stay at that nursing home, and with the increased medical technology, these elderly individuals that thought they had saved enough during their working years soon find out that if they are going to live that longer period of time, then their savings is used up, and they switch and then they are eligible for Medicaid, where the government pays the cost of that nursing home care. The promises that Congress has made. As I summarize Mr. Speaker, I would just encourage all citizens of this country to look at the overpromising and the overspending that seems popular for the moment, but in the long run, it becomes a detriment not only to our kids and our grandkids but to the kind of pressures it is going to put on economic growth in future years.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Kelli McCarrell, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Kelli is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Kelli is an exceptional student at Western High School. Aside from being at the top of her class academically, she possesses an outstanding record of achievement in high school. She has participated in Varsity Golf and Cheerleading for four years as well as the school band. Notable among her many activities is her service as President of the Spanish Club, Treasurer of the National Honor Society, and Captain of the Math Academic Team. Kelli is also very active with her church. On behalf of the United States Congress, I am proud to join her many admirers in extending our highest praise and congratulations to Kelli McCarrell for her selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes her efforts, but is also a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to her success. To this remarkable young woman, we extend our most heartfelt good wishes for all her future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence that he has compiled in academics, leadership, and community service, that I am proud to salute Shea Scott Dow, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Shea is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Shea is an exceptional student at Jonesville High School. Aside from being at the top of his class academically, Shea has an outstanding record of achievements in high school. Shea is very active in the National Honor Society, F.F.A., 4-H, student government, and band. He has also devoted a great deal of his time to volunteer with a variety of different civic organizations and is a very active member of his church. On behalf of the United States Congress, I am proud to join his many admirers in extending our highest praise and congratulations to Shea Scott Dow for his selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes his efforts, but is also a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to his success. To this remarkable young man, we extend our most heartfelt good wishes for all his future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Bobby Jo Ludwick, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Bobby Jo is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Bobby Jo is an exceptional student at Bronson High School. Aside from being at the top of her class academically, Bobby Jo possesses an outstanding record of achievement in high school. She is very active in the National Honor Society, F.F.A., 4-H, and student government. She has also devoted a great deal of her time to volunteering with a variety of different civic organizations. On behalf of the United States Congress, I am proud to join her many admirers in extending our highest praise and congratulations to Bobby Jo Ludwick for her selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes her efforts, but is also a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to her success. To this remarkable young woman, we extend our most heartfelt good wishes for all her future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Heather Lucey, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Heather is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Heather is an exceptional student at Blissfield High School. Aside from being at the top of her class academically, Heather possesses an outstanding record of achievement in high school. She is a member of the National Honor Society and a peer mentor at school. Heather is also very active with her church. On behalf of the United States Congress, I am proud to join her many admirers in extending our highest praise and congratulations to Heather Lucey for her selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes her efforts, but is also a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to her success. To this remarkable young woman, we extend our most heartfelt good wishes for all her future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence he has compiled in academics, leadership and community service, that I salute Tyler William Losinski, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Tyler is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Tyler is an exceptional student at Bronson High School. Aside from his academic excellence, Tyler possesses an outstanding record of achievement in high school. He has participated in F.F.A./4-H for four years and has served as both Secretary and Vice President. Notable among his many activities are his four years on both the Varsity Football and Baseball teams. Tyler also hopes to one day become a teacher. On behalf of the United States Congress, I am proud to join his many admirers in extending our highest praise and congratulations to Tyler William Losinski for his selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes his efforts, but is also a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to his success. To this remarkable young man, we extend our most heartfelt good wishes for all his future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect and admiration that I rise today to recognize Dorrene Gilbert, whose generosity of spirit, intelligence, responsible citizenship, and capacity for human service has earned her the 2004 State of Michigan Volunteer Award. Dorrene is an enthusiastic and energetic promoter of Grand Ledge, especially its historic and cultural projects. For forty years, she has notably spearheaded activities for the Grand Ledge Area Historical Society, the Art Guild, Ledge's Playhouse, Ledge Craft Lane, the Garden Club, Lincoln Brick Park, Michigan Week, and her church. Dorrene is extremely creative and well known for her cultural endeavors and bringing beauty to the community. A founder of the Art Guild, Dorrene served as its president in the 1960s. She was Artist of the Month chairman for Ledge Craft Lane, a non-profit arts and crafts center, in the 1970s and still serves there as a volunteer. Known for her talent as a writer who has been publicity or promotion chairman for many groups in town, Dorrene has written and produced plays for church and for several style shows as fundraisers for the Opera House and Historical Society. Having always been interested in gardens and nature, Dorrene has devoted a great deal of time and effort to the Garden Club and its projects. She has served as president twice, and program chairman many times, while remaining a long time geranium sale promoter and working on the gardens at the restored Opera House in downtown Grand Ledge. Dorrene has also been involved with the Memorial Tree Trail, where over 300 crab trees have been planted on the streets and in the parks in Grand Ledge in honor of or as memorials to residents. When Dorrene's husband passed away, she decided that she wanted to do something special in his memory. She wanted to promote recreation and historical traditions at the Lincoln Brick Park, which, at the time, was just being developed. The Brick Factory on the park's grounds had been a part of his family's heritage. Working with the park staff, she helped develop the Ashley Gilbert Memorial Historical Trail. When her son passed away, Dorrene wanted to add something educational and beautiful to Lincoln Brick Park once again. The David Gilbert Memorial Sugar Bush, with 105 maples and dogwoods, was born from memorial funds, family contributions and a grant. She has also encouraged the Garden Club to plant at Lincoln Brick Park and is a contributor and supporter of the Lincoln Brick 100 Club. Furthermore, as a board member of the Grand Ledge Area Historical Society, Dorrene has chaired and presented several programs on the history of Grand Ledge over the years. She is currently planning a vintage clothing style show as a fundraiser for the Historical Society. Dorrene has also spearheaded Festive Tables at the Opera House during the Historical Society Annual Holiday Home Tour for several years. She has served her church as the Sunday School Superintendent, a Church Council Member, Fine Arts and Decoration Chairman, and often handles its publicity. Dorrene also wrote and produced a play on the 125 years of the church. She has served on Michigan Week Committees for nearly forty years as promotion and publicity chairman, hospitality chairman, and in recent years, on the Awards Committee. The list of her activities is vast, diverse, and always growing. On behalf of the United States Congress, I join her many friends, admirers, fellow volunteers, and the people of Grand Ledge in extending our highest praise and congratulations to Dorrene Gilbert for winning the 2004 State of Michigan Volunteer Leadership Award. Her personal interest and active participation in her community are deeply appreciated and should serve as an example for us all.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today to congratulate the community of Grand Ledge, Michigan for the successful completion of the Island Park Restoration Project. For the past five years, countless individuals and groups have persistently worked with patience and pride to restore the luster of the cultural, recreational, and economic gem nestled in the heart of Grand Ledge. The Island Park is a 2.5-acre recreation facility in downtown Grand Ledge. It is an integral part of Grand Ledge's history and culture, and it serves as one of the city's main tourist attractions. Beginning in the 1870s, Grand Ledge was characterized as a charming summer resort town situated on the banks of the majestic Grand River. The principal attraction was the picturesque scenery, with intermingled cliff, river, and island views. As many as 12 trainloads of visitors from across the state would visit the city each day. Today, the economics of tourism is just as important to Grand Ledge as it was over 125 years ago. An estimated $1 million is generated annually for the community from events held at the Island Park, such as the Color Cruise & Island Festival, the Island Art Fair, and the Mudge's Follies variety show. The Island Restoration Project began in earnest when the city received a Clean Michigan Initiative grant from the Michigan Department of Natural Resources in 2001. Of the $666,000 needed for the project, the state provided $455,000 and Grand Ledge contributed $211,000, including $90,000 from community donations. The vast restoration, erosion control, and landscaping was done during the spring, summer, and fall of 2003. The work included adding pathways, new grass, new trees, decorative iron benches and lampposts, electrical and water conduits, gazebo restoration, and a viewing area with benches. The completed project is a culmination of five years of meticulous community planning, fantastic grant writing, creative fund raising, and extensive cooperation. Grand Ledge Island Restoration Project Steering Committee members included Graydon Briggs, Karla Chamberlain, Rich Cissel, Steve Graszler, Susan Sasse, Tim Sattler, Kalmin Smith, Mike Stevens, Pete Stoughton, Mary Suurmeyer, Warren Wells, Cathy Wilhm, Don Willems, and Kay Wyszynski. These are extremely civic-minded individuals who also serve as members of the City Council, the Planning Commission, the Parks and Recreation Commission, the Chamber of Commerce, the Downtown Development Authority, and the Historical Society. City Administrator Jon Bayless and Parks and Recreation Commission Chairman Marv Hummel handled the day-to-day details and kept the project on track. On behalf of the United States Congress, it is with great pleasure that I rise today to extend our highest praise and congratulations to the community of Grand Ledge, Michigan for restoring the Island Park for all to enjoy.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today to honor three young men from my district who sacrificed their lives while serving in the Armed Forces in the war on terror. Jason Plite of Delta Township, Eaton County, Michigan, was a senior airman in the Air Force who died while on a mission to rescue two injured Afghan children. He was an extraordinary young man who took part in an elite Special Forces program to become an airborne paramedic and was serving his second tour in Afghanistan. Jason was both artistic and athletic, serving as captain of his high school swim team and painting murals for local businesses. A sensitive individual who loved his country, his family and his friends, Jason was always there when someone needed him. He was 21 years old. D.J. Wheeler of Concord, Michigan, died in Tikrit while serving as gunner on an armored vehicle that was attacked with a rocket-propelled grenade. D.J., whose nickname was ``Sunshine'', enlisted right after the 9/11 attacks. He delighted in handing out dollar bills and candy to Iraqi children and was known for his sense of humor and generous spirit. While attending Lumen Christi High School he played offensive lineman on the football team. In spite of his towering height, he was gentle and loving with friends and family. He was 22 years old. Bradley Fox of Adrian, Michigan, was an Army gunner in Iraq. He enlisted at age 19, serving in the first Gulf War, Kosovo, Panama and Afghanistan. He was severely wounded when his Bradley Fighting Vehicle was hit by a roadside bomb and he was evacuated to Germany for treatment. Brad was on life-support for a month before he succumbed to his injuries with his wife at his side. His fellow soldiers told his mother, his wife, and children how proud they were to have served with him and what a dedicated leader he had been. Working on his master's degree, he was planning to teach after he completed 20 years in the Army. He was 35 years old. My tribute to these young men should be measured by showing that they did not strive and die in vain, but that through their sacrifice, future generations can live in greater peace, prosperity, and hope. Mr. COSTELLO, Mr. Speaker, I rise today to pay tribute to all the many men and women who have died in defense of our nation. Next week is Memorial Day where we join our constituents in honoring those who gave their lives to ensure that we enjoy the principles of liberty, justice, and democracy. During that time, we remember, honor, and reflect on the men and women who paid the ultimate price for their country. Flags fly at half-mast, relatives and friends place wreaths and flowers on the graves of those they loved, and communities host parades adorned in red, white, and blue. These tributes are small tokens we perform in an effort to convey our gratitude to those who have served for the cause of freedom and democracy. Over this last year, my district alone has lost three soldiers: Pfc. Matthew Bush, Spc. William Dusenbery, and Capt. John Tipton. Further, in my district, Jack Montague, a civilian KBR employee for the Halliburton Corporation, died while working in Iraq. Today and throughout this Memorial Day week, we honor their memories and their families who bear the heaviest burden of our freedom. They are not simply statistics; these fallen soldiers were dads, brothers, sons, neighbors, and community leaders. While the grief and pain may not have faded, I hope it is comforting for them to know that their fallen heroes are loved, honored, respected and their cause was just. In addition, let us remember that thousands of servicemembers will spend this Memorial Day stationed in other countries defending our freedoms far away from their families. Mr. Speaker, I join my colleagues today in a moment of silence to remember our fallen soldiers and pray for peace.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman very much for the recognition. I think it is important to recognize, first, that safe working conditions are primarily the result of efforts by employers and employees working together. Safety consciousness probably is the best key to worker safety. When we add OSHA, and I was one of Michigan's OSHA commissioners for 4\1/2\ years, I can guarantee my colleagues that OSHA regulations are some of the most onerous, the most complex legal mandates on business and very difficult to understand. So, in many cases, low wage inspector can go out and, trying to read and enforce the regulation, will cite an employer. If you are a large business, if you are GM or Ford or Chrysler, you have the legal staff to review and understand that kind of allegation and maybe come to terms even before it goes to court. H.R. 2731 levels the playing field for small businesses and encourages OSHA to have greater fairness, and to provide better access to examine the merits of the case. This legislation simply says that OSHA and, therefore, States that adopt OSHA, such as MIOSHA in Michigan, can arbitrally make the determination that if a case was ``substantially justified'' or the ``result of special circumstances'', then you do not have to reimburse that small company for attorneys' fees. The fairness that was tried to be reached in the first place from OSHA was saying if it is a frivolous lawsuit, in effect, then OSHA has a responsibility to reimburse the legal attorneys' fees for that business. This is especially important to small business. I would encourage my colleagues to support 2731. Small business is the key to our economic success in this country, and this simply levels the playing field to make it fair in a challenge by OSHA to that small business and the ability of that small business to react.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I would suggest this kind of partisan language would not be appropriate in any legislation. I assume the goal of the gentleman from California (Mr. Waxman) is not to politicize science and research, yet I respectfully suggest that is what this amendment does. And the comments of the gentleman on the floor were sort of blasting the Bush administration for some of the things that they have done. I am chairman of the Subcommittee on Research, and the gentlewoman from Texas (Ms. Eddie Bernice Johnson) is the ranking member of that subcommittee. In fact, all of the members on that committee, Republicans and Democrats, and on the full Committee on Science work very diligently to not politicize what we are doing in science and research in this country. This amendment requires that a commission be created to study the politicization of science by the Bush administration. What we all sort of agree is, politicizing this is what we are doing with this amendment. I urge my colleagues, I urge the Democrats not to start, even though it is an election year and we are approaching the election, not to start politicizing. We have references to the Committee on Government Reform. Regardless of whether it is an August or November date, it is a minority staff report that the majority had nothing to do with, and it is directing the commission in this amendment. And by the way, this amendment, as I count the pages, a 10-page amendment in a 9-page bill, otherwise directs this new commission to take the minority report and study that report that bashes the Bush administration. The sponsor references the Union of Concerned Scientists and their report; and the Union of Concerned Scientists, with all due respect, is a left-wing organization which has been bashing the Bush administration for the last 2 years. So I think we need to be very careful of not politicizing what we are doing in science and research in this country and in this Congress. On the Union of Concerned Scientists, Mr. Marburger, the scientific adviser for the President, informs me that they have studied and reacted to every point of suggested criticism in that report. If there is additional review of the gentleman's minority report, I would be glad to instigate it in our Subcommittee on Research because I think it is important that we do not politicize. But it seems to me, and I would respectfully and humbly suggest that passing this amendment does just that, it politicizes by creating a commission that bashes the Bush administration.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, the challenge is unending, and one thing I am nervous about in terms of Washington sometime in the future is paying the Social Security benefits, the Medicare and Medicaid benefits that we have promised, because what we have done over the last 30 years is promise more than we have money to pay for in those promises for Social Security and Medicare and Medicaid. In the next 2 days, we are going to take up the budget. There has been a compromise reached between the House and the Senate for a budget resolution, and that is how we plan to spend our appropriations and money for the 2005 fiscal year which starts the end of September 2004 and goes through 2005. We spend most of the year or a lot of the year dealing with the appropriations bills that are discretionary, so-called discretionary. A little less than half of the appropriations total spending of the Federal Government is discretionary spending, a little more than half of the total government spending is entitlement spending. I started out with a pie chart showing how we are spending money in the 2004 year, this year, about $2.2 trillion dollars; and as Members see by this pie chart, the largest piece of this pie of Federal spending is Social Security. The Federal Government will spend about $500 billion on Social Security this year in 2004. Interest, as we go around the pie chart, interest is at 14 percent of total spending. That is about $300 billion that we are paying in interest. As we have heard over the last several days, interest rates are going up. I suspect Mr. Greenspan and the Federal Reserve are going to decide to increase the discount rate, increase the interest rate, and so we can expect to see interest rates go up. At the same time, we are increasing the total debt that we have to pay interest on, and that means that this 14 percent over the next 15 to 20 years can go to 25 percent, instead of 25 percent of the total budget paid in interest on the debt. So it should concern us. Actually, what we are doing, and I am a farmer from Michigan, and on the farm we try to pay down the mortgage of the farm so our kids will have a little better chance and a little better success in their living standards maybe than their parents, but in this Chamber and in the Senate and in the White House over the last 30-40 years, what we are doing is increasing the debt that we are passing on to our kids. Defense spending, 19 percent last year and now 20 percent; domestic discretionary spending, 16 percent; other entitlement spending, 10 percent; Medicaid, 6 percent, growing very quickly; Medicare, 12 percent. Medicare is projected to overtake the size of the total pie in the next 20 years. Medicare will overtake Social Security in the next 15-20 years. So what that means in terms of entitlement spending, if you reach a certain age, you are entitled to Medicare benefits; if you are at a certain level of poverty, you can get food stamps. If you are a certain age, also you get Social Security, if you are at a certain poverty level, you can get Medicaid. Medicaid is the medical coverage for low income; Medicare is the government's health care program for seniors. This chart, a very colorful chart, shows what is happening to the increase in spending of entitlement programs, increasing at about 5.5 percent a year. So total Federal Government is growing two and three and, in 1 year, almost four times the rate of inflation. A lot of that problem is the increased cost of entitlement spending. Of course, the question is, will this Chamber have the intestinal fortitude, along with the Senate and the White House, will this Chamber have the intestinal fortitude to control spending? Will we have the willingness to cut down on some of the increase in discretionary spending? Today in my office, like I suspect in other Members' offices, there were people suggesting there was a need for more government spending. We heard in the previous hour that government should spend more, and it was unfair for the government not to spend more on different programs. The situation that this country is facing is an increased demand for Federal spending matched with a situation where 50 percent of the adult population in this country paid less than 1 percent of the income tax. Think about it. We have now divided the wealth through government programs and taxation to the extent where 50 percent of the adult population in this country pay 1 percent of the income tax. So we can understand why some people are saying give us more government, it does not cost us much. Look at this next chart on what we have done in what I call unfunded liabilities, the promises that we have made in excess of what money we have to pay for them. On the top line we have got Medicare part A as an unfunded liability of $21.8 trillion. Let me stop here and give my definition of unfunded liability. Unfunded liability is today's dollars that we would have to put in a savings account that is going to earn the rate of inflation plus the time value of money. This is the money we would have to put in an account today to accommodate the needs of these programs over the next 75 years: Medicare part A, $21.8 trillion; Medicare part B, $23.2 trillion; Medicare part D, the drug program that we just passed recently. Will we have the willingness to reduce these other programs? We did not have the willingness not to increase the prescription drug program. So what we are borrowing from our kids is $16.6 trillion of unfunded liabilities, that we have, in effect, decided that our problems are so great today that it justifies taking that money away from our kids, suggesting that maybe they are not going to have their own problems to deal with, but we are leaving them this unfunded liability in addition to a huge debt. It totals up to $73.5 trillion, unimaginable in terms of what we are leaving as far as a legacy to our kids and our grandkids. This is another chart that says it in a different way. If we are going to accommodate Medicare, Medicaid, and Social Security and take the money out of the general fund to pay for the money that is going to be needed for these programs over and above what is coming in from the FICA tax, what is coming in from the taxes to pay for these programs, by 2020, in 16 years, it is going to be 28 percent of the budget that is required to make up the difference between the money coming in for Social Security and Medicare and Medicaid and the additional money that is going to be needed. Simply, by 2030 it is going to take 52 percent of the general fund budget to accommodate these programs. We know we cannot do that. Is that going to mean a drastic reduction of some of these programs? Is it going to mean a drastic increase in what we are going to have to borrow in future years? The challenge now before us is we are increasing debt at the same time that interest rates are going up. So as the Members recall, the pie chart today, spending $300 billion a year, 14 percent of the total Federal spending on interest costs, that could double in the next 20 years. This is a quick snapshot of the red and the green, if you will, of what is happening in Social Security. In 1983 the Greenspan Commission dramatically increased Social Security taxes and at the same time dramatically reduced benefits. But even so, the short-time surplus coming in is going to run out in 2017, and then we are looking at a future of huge deficits that somehow is going to have to be made up if we are going to continue this program. As I go around my southern district of Michigan, a lot of people wonder more exactly how Social Security works. This is just a very brief way of how this highly progressive program started. We started it in 1934; and at that time, the provisions were that once people reached 65, they were entitled to benefits and they would have to pay in all those years. But in a pay-as-you-go program, we found out that the money coming in from Social Security was very ample and that most people died before they reached the age of 65. So another way to say that is most people paid in their benefits but never collected much of anything and the program worked very well. From the beginning program, the benefits have been highly progressive and based on earnings. At retirement all of the workers' wages up to the tax ceiling are indexed to present value using wage inflation. Let me say that a different way. If one had a $20,000 job 15 years ago, that $20,000 job today might be $40,000 with wage inflation. So Social Security puts down $40,000 income for that $20,000 job they were earning maybe 16 years ago. So everything is indexed based on what that kind of job would pay today. And then they take the best 35 years of earnings and average them together and decide what that person's benefits are going to be. So they take the best 35 years. Maybe they did not work 5 years. So 5 years would be entered as zero, and then they would take the 30 years of pay and divide by 35. So, in effect, if they did not have those working years, they would be indexed as zero. If someone works 40 years, then they would take the best 35 years. The annual benefit for those retiring in 2004, this is where it is progressive in terms of the payout: 90 percent of earnings up to $7,344; 32 percent of the earnings between that amount, $7,344 and $44,268; and then 15 percent of the earnings above $44,268. Early retirees receive adjusted benefits. A question that is often asked on complaints of abuses for SSI of families down the road is that maybe some people think they do not deserve the supplemental security income, and people are concerned that this comes out of Social Security. Actually it does not come out of Social Security. SSI comes out of the general fund even though it is administered by the Social Security Administration. Going back up to this 15 percent of earnings above $44,268, one way that I have structured my legislation that results in solvency for Social Security is I add another ben point of 5 percent. That has the effect, Mr. Speaker, of slowing down the increase in benefits for high- income retirees. So it is going to cost money. Either we reduce benefits or we increase the income. I do a little of both in my legislation. But one way I do it, breaking off from this chart, is I add another ben point of 5 percent that has the result of slowing down the increase in benefits for the high-income retirees. We have talked a lot about personal savings accounts. The Democrats and a lot of the news media refer to it as privatization of Social Security. Let me just say, Mr. Speaker, that there is no legislation that privatizes Social Security. The most that any of the legislation that I have seen does is take a portion of what people are paying in for Social Security, 12.4 percent of earnings, and my bill is as high I think as any legislation I have seen, and what I do in my legislation is take 2.5 percent of earnings and allow that amount or that percentage of one's earnings to go into one's own individual retirement account that becomes their property, that unlike Social Security, if one dies, they can pass it on to their heirs. It is part of their estate. When Franklin Roosevelt created Social Security back in 1933 and 1934, he wanted to feature a private sector component to build retirement income. I mean, this was a time after the Depression with people going to the poor house, and the Congress and the White House and FDR said, look, there is a better way. Let us have a law that forces savings while people are working to make sure they save some of that money to increase or guarantee a little bit more of Social Security so they do not have to go over the hill to the poor house when they retire. So we passed that law and said here is mandated savings. But Franklin Roosevelt said let us do it in privately owned accounts and simply say they have got to set aside this much of their earnings, they cannot take it out until they retire. In fact, when the Senate passed their Social Security bill in 1933, they said let us do it the way the President suggested and have private savings accounts owned by the individual with limitations on where they could invest the money, but it was owned by the worker. This House passed a bill that said, no, let us have the Federal Government take it all in and pay it out when these people retired, and we will have a system where people that are working pay in their money today and that way we can start paying benefits out right away. So we charged workers to pay into the Social Security, and immediately we started paying benefits to senior citizens, older people. So that was very good for some of those older people to immediately receive that benefit, but what it does on this kind of a pay-as-you-go program is it depends on more and more workers paying in more and more of their earnings into Social Security taxes to accommodate a growing senior population. Now we are faced with 78 million baby boomers that are going to begin retiring in another 4 years. That means 78 million individuals that are at the height of their earnings, paying in maximum Social Security benefits, and are going to be going on to the system, taking out maximum benefits. And that is where the demographics start hitting us. The Social Security actuaries last month suggested that we are in a very bad situation in terms of the insolvency of Social Security with an unfunded liability of $12 trillion for Social Security, that we would have to put that $12 trillion in a savings account today to accommodate the additional money that is going to be needed over and above what is coming in payroll taxes, FICA taxes. Social Security spending exceeds tax revenues in 2017, is what the actuaries said. The Social Security trust fund goes broke in 2037. That is a little bit of a pretend figure because when we really run out of money in 2017, this government, this Congress, House and Senate and the White House, have already spent all of the extra money coming in from Social Security. They spent it on other programs. So there has never been a savings account with any individual worker's name on it. In fact, Mr. Speaker, what really should concern all of the people, the electors in this country, is that they are not entitled to any Social Security benefits. The Supreme Court now in two rulings has said that Social Security taxes are simply another tax, Social Security benefits are simply another benefit, and there is not an entitlement just because one pays Social Security taxes all their life. Insolvency of Social Security 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. We know how much they are going to pay in and how much they will take out. Payroll taxes will not cover benefits starting in 2017, and the shortfalls will add up to $120 trillion between 2017 and 2075. $120 trillion between 2017 and 2075, and the one way to define unfunded liability is how much money would have to go in a savings account today to accommodate that $120 trillion; and what that is, is about $12 trillion today in a savings account that is at least going to draw the interest at the rate of inflation and a time value for the money. On the demographics, here is what happened as to how many people are working, paying in their Social Security tax. In 1940, there were 28 people working and paying in their Social Security tax for every one retiree. In 2000, three people were working in the United States paying in their Social Security tax for every one retiree. The estimate by the actuaries at Social Security is that in 2025 there will only be two people working paying in their Social Security tax. That means, again, we are faced with a dilemma of not having enough money and possibly increasing taxes. The Social Security trust fund, I was Chairman of the bipartisan Social Security Task Force. In fact, when the Democrats and Republicans met for about a year hearing witnesses and understanding the dilemma of what Social Security is facing, what we found out is we had unanimous agreement that we have got to do something to fix Social Security, and the longer we put off a decision, the more drastic the solution is going to have to be. This chart reacts to what a lot of people have asked me, that if government would just keep their hands off the surplus coming in for Social Security and pay back what we borrowed, everything would be all right. The little stack on the left represents what is in the trust fund, including the interest that has accumulated by IOUs of what government has, and I put it in quotes, ``borrowed'' from the trust fund. That is $1.4 billion that the government owes the trust fund to pay back what it has borrowed and spent on other programs. But the shortfall in Social Security, $120 trillion in future dollars, $12 trillion today, is what is needed to accommodate and keep Social Security solvent. There needs to be a fix. It is unconscionable that we simply tend to look the other way and not face up to the problem of Social Security. In campaigns, I have been in Congress for the last 12 years and I started my first Social Security bill in 1993 when I first came to Congress. In that first election, and every election, there has been the charge by my opponent that ``Nick Smith wants to take away your Social Security.'' It is sort of effective, because so many of our seniors today depend on Social Security for their livelihood that it scares the dickens out of them to think that maybe somebody is messing around with the program and is going to take away their Social Security benefits. So politically, some people call it the third rail of politics, it has been difficult for politicians to try to explain the program. In the 8 years of the Clinton administration, President Clinton originally was dedicated to doing something to fix Social Security. Because once you talk to the people that understand the program, that know its insolvency and know the hugeness, the dramatic trillions of dollars that are needed to fix this program and the importance of this program to so many seniors, President Clinton wanted to fix it. He had several task forces. I served on those task forces. I went to the White House. We talked about the problems with Social Security. But it ended up that the President and most of the Members of the House and most of the Members of the Senate did not want to talk about it. ``Let us put it off until the next election.'' President Bush was brave in the campaign, and he talked about it. Senator Lindsey Graham and others, including myself, every year talked about the need to fix Social Security. So we are coming closer. There is a greater understanding by more and more people that there needs to be something done to save this program. So I call, Mr. Speaker, on voters in this election coming up this year to size up your Congressional candidate. Ask them which Social Security bill that they have cosponsored is going to save Social Security. And do not let them get by with this rhetoric that, ``Look, I am going to do everything necessary to save Social Security.'' You need a plan, you need action, you need forward, in-advance thinking. It cannot be a crash program. It has to be gradual. What I have learned over the last 12 years, and I have introduced this Social Security bill every 2-year session over the last six sessions, every 2 years it had to be a little more dramatic in terms of reaching solvency, because you have lost the surplus over those past years that has been coming in. As we said, Social Security has a total unfunded liability of over $12 trillion. The Social Security trust fund contains nothing but IOUs. To keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent, and we do not want that to happen. Here is another chart that I made up trying to show that Social Security is not a good investment. The average retiree gets a return on the money that they have sent in for Social Security of 1.7 percent on that investment. If you happen to be a minority, a young black man that dies on the average at age 62, as we originally started back in the 1934-35-36 period, you did not live quite long enough to draw benefits. So there is actually a negative return for minorities. The average return is 1.7 percent. I put in this column, it is representing the Wilshire 5000, and if you were invested in that index of stocks over the last 10 years what you earned is 11.86 percent after inflation, over the decade ending January 31, 2004. So that is why in my bill we can guarantee if you decide to go into a retirement savings account, where 2.5 percent of your earnings is transferred by government into an account owned by you and managed by the government, with limited investments, we can guarantee, if you choose that option, you will get as good or better a return than you would staying under the Social Security traditional program. But we still leave it optional in my bill, that you can stay with the current Social Security program if you want to. Another way of saying it is not a good investment, if you retired in 1980, you had to live 4 years after retirement to break even. If you retire next year, in 2005, you have to live 23 years after retirement to break even, collecting those Social Security benefits. After that, it goes up to 26 years that you have got to live after retirement to break even on your Social Security. The next charts, please. Our pages are so great. They are going to finish up I think in 2 weeks. These are the full-year pages. They get up about 5:30 every morning, if they want to eat something before they go to school, and then they are ready to work for Members of Congress and the U.S. House of Representatives. There are also pages in the Senate. Back to Social Security. Mr. Speaker, 76 percent of families pay more in payroll taxes than income taxes. I say that and I show that because I think it would be very unfair to say that we are going to solve Social Security by again raising the payroll tax. Of course, that is what we have done over the years. Every time we have run out of money, because what we have done over the years too is continued to increase benefits. Actually, Medicare in 1965 was an amendment to the Social Security bill, to add Medicare privileges or health care coverage for seniors. So we have continually increased the benefits in Social Security, and in so doing we have simply increased the taxes to pay for those extra benefits and the increased costs. In 1940, we increased from 1 percent to 2 percent the rate on the first $3,000 as the total maximum payment of taxes. The maximum was $60 dollars. In 1960, we tripled it and raised it to 6 percent and increased the base to the first $4,800. In 1980, it was over 10 percent of the first $26,000. By 2000, we raised it to 12.4 percent of the first $76,000. Today, in 2004, it is 12.4 percent of actually now $89,000. So we have continued to increase taxes to cover benefits, in a situation where the birth rate has gone down, so there are fewer workers in relation to an increased number of seniors, because seniors, number one, are living longer. In the Social Security Task Force, the bipartisan Social Security Task Force that I chaired, we had medical futurists suggesting that within 20 years, anybody that wanted to live to be 100 would have the medical technology to allow them to be 100 years old, and within the next 30 years, anybody that wanted to live to be 120 years old, it was their projection that people could live to be 120 years old. Of course, that means a tremendous increase in the amount that the would be paid out from Social Security compared to the amount coming in to Social Security. These are six principles that I thought were reasonable in developing any Social Security changes to keep it solvent: Protect current and future beneficiaries; allow freedom of choice; preserve the safety net. What I do in my bill is I leave half of the money in the trust fund and only use half of the money in the trust fund to accommodate the transition to personal savings accounts. What I think we also have to do is make Americans better off, and not worse off. That means, to me, in addition to some other provisions of a Social Security bill, that we do not solve it by increasing taxes; that we do not simply say, well, we will increase taxes on the rich. Some people have suggested, well, why not make Social Security into a welfare program and only pay out Social Security benefits to people that really need it? It is interesting, both Democrats and Republicans, labor unions and others have said, well, that is going to take away the support for Social Security, because, now in America we have a system where you can start out poor and end up one of the richest people in the country. We have a system where saving a little bit early on and continuously, with the magic of compound interest, can make an average-earning individual the equivalent of a millionaire when they retire. So my suggestion to parents and grandparents and to young people is to encourage that savings in young workers, because if they save now, it can secure their retirement, and who knows what future Congresses are going to do to Social Security in terms of cutting benefits, if we continue to put off the solution to this problem? Lastly, it creates a fully-funded system and no tax increases. I am going to just briefly run through, Mr. Speaker, my Social Security bill. The Social Security trust fund voluntary accounts would start at 2.5 percent of your earnings and would reach 8 percent of income by 2075. In every case, the benefits you would receive would be more than if you stay with the current Social Security system. Investments would be safe, widely diversified, and investment providers would be subject to government oversight. The government would supplement the accounts of workers' earnings that earn less than $35,000. Actually, this was a suggestion, I think it was maybe the Golden Savings Account that President Clinton suggested, where we start putting in a little extra money for low income workers in their savings accounts so that the magic of compound interest can increase the benefits for them. So that is what I do in my bill. I say that workers earning less than $35,000 would have additional money put into their personal retirement accounts to ensure that they build up significant savings for retirement. My bill has been scored by the Social Security Administration actuaries to restore long-term solvency to Social Security. As I mentioned earlier, all of my bills that I have introduced have been scored to make Social Security solvent. What I am concerned about, and what I am nervous about, and this is my last year in Congress, is that the tendency is going to maybe just to go a little ways in terms of solving the problem, and to put off what is needed for a long-term solution until later on. And so we mess around with the edges a little bit and we say, well, this means that we are not going to face the real dilemma, the real problem, the real catastrophe for another 10 years. So let us fix it a little bit. I think that would be a huge mistake. In my bill, no increases in the retirement age. No changes in the COLA; that is the annual increase based on inflation that is given. And no changes in benefits for seniors or near-term seniors. Solvency is achieved through higher returns from worker accounts and slowing the increase in benefits for the highest earning retirees. On worker accounts, accounts are voluntary and participants would receive benefits directly from the government along with their accounts. So you still have Social Security. It is not privatizing Social Security. There is still a structure for Social Security. In fact, this bill does nothing with the insurance provisions of the Social Security legislation. So the disability insurance, the accident insurance is still totally a government insurance program ensuring workers that if they get hurt on the job and they are eligible under Social Security, they will get disability benefits under Social Security until they reach the age of 62 or 65. Government benefits would be offset based on the money in their account, not on the money earned. In other words, if you earn more than the 1.7 percent, you can be guaranteed that you are going to have benefits that exceed current Social Security. Workers could expect to earn more from their accounts than from the traditional Social Security. And, again, as I mentioned earlier in my bill, we guarantee that the benefits that you earn, if you take the option of a personally owned account, the benefits that you earn would be greater than staying in the traditional Social Security. All workers accounts would be earned by the work and invested through pools supervised by the government. Regulations would be instituted to prevent people from taking undue risk in investments, and workers have to have a choice of three safe indexed funds to start with, with more option after their balance reaches $2,500. Not so tough, right? Not so tough. We can do it. And this is scored by the Social Security Administration to keep Social Security solvent. Here is a provision that I call ``fairness for women.'' It might not be politically correct. Maybe I should say fairness for spouses, but what I provide in my legislation for married couples, account contributions would be pooled and then divided equally between husband and wife. In other words, Mr. Speaker, the man and the wife each would have their separately owned accounts and they would have identical amounts of money. So if one spouse is earning 80,000 and the other spouse is earning 10,000, you would add those together and each spouse would be credited based on 2.5 percent that increases every year of that 45,000. So man and wife would have the same money going into their each separately owned accounts. It would increase surviving spouse benefits to 110 percent of the higher earning spouse's benefits. So if your husband dies and he has the higher Social Security benefit, my legislation provides that the continuing Social Security check would be 110 percent of the highest Social Security benefit received by either the husband or wife. I do this because a tremendous increase in cost of the government is nursing homes. At roughly $50,000 a year for nursing home costs, people that assume that they were going to die at 80 or 85 now are living to 90 or 95. They run out of their savings and when they do that, they have no estate and they end up taking the Medicaid provisions that are for low income, or in this case non-income, that have now spent all their money. But if we can encourage these people to stay in their homes longer rather than going into the expensive nursing homes, it is going to reduce the overall cost for government. That is why I increased the amount from 100 percent to 110 percent to encourage staying in your own home after one spouse dies. The third provision is stay-at-home mothers with kids under five would receive retirement credit. I mean, they are probably working harder quite often than maybe their husband's work or the other way around, whoever stays home. But to encourage a parent to stay home with those young kids, I put a provision in where they are going to earn credits for those years that they stay home with kids under five years old up to a certain limit. Here is some additional provisions that I put in my legislation to encourage additional savings. Increased contribution limits for IRAs and 401(k)s and pension benefits, so I increased that; a 33 percent tax credit for purchases of long-term care insurance up to $1,000 a year, $2,000 for a couple; low-income seniors would be eligible for $1,000 tax credit for expenses related to living in their own home and that is in addition to the 110 percent of Social Security benefits, and households caring for dependent parents would also be eligible for $1,000 credit for expenses. Social Security at $12 trillion unfunded liability is what we have not been willing to deal with; and yet that is the lowest of the insolvency figures. Again, the insolvency of Social Security is $12 trillion going into an investment fund today; but for the rest of Medicare and Medicaid, it is an additional $60 trillion that would have to go into a fund. So Social Security is what I have been working on, but we are going to also have to deal with Medicare and Medicaid provisions to somehow encourage logical, good decisions reducing the cost of health care. The whole thing of our future in America, we are a country that was originally created under our Constitution to have the kind of incentive that provides the people that work hard and save hard and go to school and use their education are better off than those who do not. But over the last 30 years we have sort of evolved into a divide-the-wealth philosophy where today 50 percent of the adult population pays about 1 percent of the income tax and the other 50 percent pays 99 percent of the income tax. So more and more people are electing legislators that promise them more government benefits and that is the danger. This is the 195th birthday of Abraham Lincoln. And he said in his famous Gettysburg address, Can a nation of the people and for the people long survive. At least he implied that. I think it can, but I think it is going to take some leadership, some willingness to face up to some of these challenges, less partisanship, more bipartisan cooperation in terms of trying to solve and deal with some of these problems that are facing this country. We have got to have the kind of education, we have got to give education the kind of priority it needs. We have got to continue to invest in research to make sure that we develop the kinds of products and an efficient way to produce products that the world wants to buy to make sure that we continue to be competitive in this country. We are the greatest country on Earth, militarily, economically; but now we are moving into a dangerous situation where we are overspending every year, going deeper into debt, where we are making promises that our kids and our grandkids are going to find very difficult to pay for. And so the challenge is not just in our Republic, with Members of Congress. The challenge is also in this election year and every election year to size up the candidates that you think are going to be willing to make the tough decisions, to solve some challenges that this country is facing. With that, Mr. Speaker, I would ask all of my colleagues to examine the Social Security bills that have been introduced, to consider sponsoring some of that legislation or writing their own legislation to solve and keep Social Security solvent.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Renee Elizabeth Burdick, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Renee is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Renee is an exceptional student at Harper Creek High School. Aside from her perfect 4.0 grade point average, she possesses an outstanding record of achievement in high school. She is a member of the National Honor Society and Youth Engaged in Service. Renee also excels in several mediums of art, including pottery. On behalf of the United States Congress, I am proud to join her many admirers in extending our highest praise and congratulations to Renee Elizabeth Burdick for her selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes her efforts, but represents a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to her success. To this remarkable young woman, we extend our most heartfelt good wishes for all her future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence he has compiled in academics, leadership, and community service, that I salute Michael James Horosko, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Michael is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Michael is an exceptional student at Concord High School. Aside from his perfect 4.0 grade point average, Michael possesses an outstanding record of achievement in high school. He has played football for four years and was named academic all-state. Notable among his many activities is his participation in Quiz Bowl, National Honor Society, and S.A.D.D. Michael is also Vice President of his graduating class. On behalf of the United States Congress, I am proud to join his many admirers in extending our highest praise and congratulations to Michael James Horosko for his selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes his efforts, but represents a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to his success. To this remarkable young man, we extend our most heartfelt good wishes for all his future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence he has compiled in academics, leadership and community service, that I salute Matthew Charles Wixson, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Matthew is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Matthew is an exceptional student at Concord High School. Aside from being at the top of his class academically, Matthew possesses an outstanding record of achievement in high school. He has run Varsity Track for four years and Varsity Cross Country for two years. Notable among his many school activities is his participation in Quiz Bowl, National Honor Society, and S.A.D.D. Matthew is also Treasurer for his graduating class. On behalf of the United States Congress, I am proud to join his many admirers in extending our highest praise and congratulations to Matthew Charles Wixson for his selection as winner of the 2004 LeGrand Smith Scholarship. This honor not only recognizes his efforts, but represents a testament to the parents, teachers, and other individuals whose personal interest, strong support, and active participation contributed to his success. To this remarkable young man, we extend our most heartfelt good wishes for all his future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, H. Con. Res. 409 resolves that Congress recognizes with humble gratitude the more than 16 million veterans who served in the United States Armed Forces during World War II and the Americans who supported the war effort on the home front and celebrates the completion of the National World War II Memorial on the National Mall in the District of Columbia. The National World War II Memorial on the National Mall in the District of Columbia will be the first national memorial to both recognize the courage, bravery, and unselfish dedication of the members of the United States Armed Forces who served in World War II and those who served on the home front and acknowledge the commitment and achievement of the entire American people in that conflict. Many of my family and friends that served in World War II suggested to me some kind of a National World War II memorial. I join with my friend Congresswoman Marcy Kaptur of Ohio who introduced legislation to establish the memorial in the District of Columbia to honor members of the Armed Forces who served in World War II and to commemorate the participation of the United States in that war. Congress authorized the American Battle Monuments Commission to design and construct the memorial. The location selected as the site for the memorial, the Rainbow Pool site on the National Mall at the east end of the Reflecting Pool between the Lincoln Memorial and the Washington Monument, was dedicated on November 11, 1995. In an open competition, the American Battle Monuments Commission selected Friedrich St. Florian as the design architect for the memorial, and his final architectural design was approved by the Commission of Fine Arts, the National Capital Planning Commission, and the Secretary of the Interior. The late Representative Bob Stump of Arizona, who served as Chairman of the Committee on Veterans' Affairs and the Committee on Armed Services of the House of Representatives, sponsored several measures to expedite the funding and construction of the memorial, which were enacted. After 8 years of planning, 6 years of public deliberation, and 4 years of fund raising, construction began on the memorial in September 2001. The memorial would not have been possible without the efforts and dedication of National Chairman Senator Robert J. Dole and National Co- Chairman Frederick W. Smith, who were instrumental in raising over $194,000,000 for the construction of the memorial. These generous contributions came from hundreds of thousands of individual Americans, as well as corporations, foundations, veterans groups, fraternal and professional organizations, States, communities, and schools. Actor Tom Hanks, the Advertising Council, and the History Channel played a key role in increasing public awareness of the heroic achievements of American World War II veterans and the war effort and in raising support for the memorial. President George W. Bush will formally dedicate the memorial on May 29, 2004. The memorial will be a monument to the selfless sacrifice and undaunted courage of the members of the United States Armed Forces who served in World War II as well as a tribute to their families and most Americans that joined in the war effort. It is a place of remembrance to honor the more than 400,000 American servicemen and servicewomen who died in that conflict defending the United States. The memorial will be a source of inspiration for current and future generations of Americans, giving visitors to the memorial a new appreciation for the accomplishments of America's World War II generation, which united in the quest to free the world from tyranny. It is with great respect that I strongly support this resolution. Smith Announces Veterans History Project Washington, DC.--Congressman Nick Smith announced a special initiative today, encouraging citizens to participate in the Veterans History Project, which is an effort by Congress and the Library of Congress to collect audio- and video-taped interviews of veterans, or civilians who served in support of the war effort, along with other first-hand materials such as photographs, diaries, and letters. ``As we approach Memorial Day, I would like to invite all of my constituents to get involved in the Veterans History Project,'' Smith said. ``I encourage families, friends, historians, teachers, senior care workers, and students to participate and volunteer to interview a veteran.'' On Monday, Congressman Smith sat down with James Cox, a WWII veteran, to conduct an interview for the Veterans History Project. Cox served with the famed 30th Infantry Division. The 30th opened the way for General Patton's 3rd Army to drive into Brittany and on to Brest, and was kept in the forefront all the way into Belgium, Holland and Germany. The interview is being aired on cable public service channels. Congressman Smith will be interviewing someone from each county in the 7th District to raise awareness about the Veterans History Project. ``The Veterans History Project is important, not only to preserve the experiences and memories of our nation's veterans, but also to bring families and communities together. Grandchildren should interview their grandparents, students should interview community members, and veterans should interview each other.'' The Veterans History Project was enacted in October of 2000. Oral histories and documents collected through this project will be part of the national Veterans History Project Collection at the Library of Congress. Interview kits are available at Congressman Smith's office in Battle Creek and Jackson. People who have questions about the Veterans History Project should contact the Congressman's office or go to the home page of Congressman Smith's Web site at: www.house.gov/nicksmith, which has a link to the Veterans History Project in the ``Quick Links'' section. Completed interviews can then be sent to Congressman Smith's office which will then be submitted to the Library of Congress.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, this afternoon I am going to give sort of a tutorial on Federal Government finances. This is the 195th birthday of Abraham Lincoln and, in his famous Gettysburg Address, he sort of indicated, can a Nation of the people and by the people and for the people long endure? Of course, the challenge of the Civil War was a huge challenge. But I would suggest, Mr. Speaker, that a challenge even greater than the wars might be the willingness of the United States, the House and the Senate and the President, to deal with real financial problems and, of course, the financial challenge before us is overspending and overpromising. This is a pie chart of how we spend Federal Government money. We see at the bottom piece of the pie is the 21 percent that is spent on Social Security right now. Then, as we go around, Medicare is 12 percent. However, it is interesting that Medicare is expected to be a greater piece of the Federal pie, if you will, a greater percentage of total Federal spending than Social Security within the next 25 years, because it is growing very quickly. Medicaid is 6 percent, also growing, and that is growing with the increasing number of seniors that are spending all of their savings, as they have spent $40,000 or $50,000 or $60,000 per year on nursing home care, and then after all of their finances have been depleted, then they go on Medicaid and the Federal Government starts paying nursing home care. Other entitlement programs, 10 percent. Entitlement means if you reach a certain age, if you reach a certain level of poverty, you are eligible for additional help. If you are a business or an industry or a worker, you are entitled if you work, but do not make very much money, you are entitled to an income tax credit. If you are a farmer and the prices of the products you sell are low, you are entitled to a supplement to build it up, that income, a little more for those farmers to keep the farmers in business. This Congress and the United States has been very generous with other people's money. In fact, so generous that we are now facing the dilemma of a huge debt and huge promises that I call entitlements, unfunded liabilities. The domestic discretionary spending that goes in the appropriation bills, along with defense, is 16 percent. Defense is 20 percent. With the Iraq and Afghanistan war, it has gone from about 19 percent up to 20 percent, and then interest, interest, interest on this increasing debt. The interest cost for this country is now about $300 billion a year to pay interest at a rate that is the lowest, almost the lowest in history, but a very low interest rate. Alan Greenspan, the chairman of the Federal Reserve, has now suggested that there is no question that eventually interest rates are going to go back up again, and that, compounded by the fact that we are increasing the amount of debt that we have to pay interest on, it is anticipated that within the next 20 years, interest on the debt will be one of the largest pieces of pie. What does that mean to future generations? What does that mean for our kids and our grandkids. I am a farmer from Michigan, and the tradition on the farm has been you pay off some of that farm mortgage to try to give your kids a little better chance at a better life than you might have had. But in this Congress, what we are doing is going the other way. We are building up a debt, we are building up obligations because, somehow, we think the problems we have today are so great that it justifies us borrowing money from our kids and our grandkids and making them pay for the overspending that we are pushing on them today in this Congress. Right now, we are in the midst of a budget decision in conference committee with the House and the Senate, trying to figure out a budget of what we are planning on spending for the 05 budget, that means the 05 fiscal year starting September 30, October 1 of 04, and going for 12 months until October 1 of 05, that is called the 05 fiscal year budget, and that is what we are working on, that is what we are arguing about. This year, the good news is it is probably the most lien budget that we have had since 1996. But still, it is growing at between two and three times the rate of inflation in terms of the increased expansion of that spending, the increased size of government, taking money away from the people that have it and coming up with new programs and new entitlements and new discretionary spending. That means that this year, we can anticipate in 04 we are looking at a debt that is going to be close to $600 billion. Next year the debt is going to be approximately $530 billion. We are spending more than what is coming in, and this just adds on to how much interest we are going to be paying in the future. Mr. Speaker, we are a country that is about, let us see, where are we, 228 years old. In the first 200 years of this country, we were very frugal and we have gradually accumulated a debt in that first 200 years of $500 billion. Now we are going deeper into debt, over $500 billion a year. Now, how do we get the discipline? How do we get the intestinal fortitude to say, look, we are going to quit playing politics and start doing what is right for our kids and our grandkids in terms of the overspending and the overpromising. Let me just mention what happens to a Member of Congress when they go home to their district. If they take home pork barrel projects, and pork barrel projects, as far as the line items for pork barrel projects that individuals take home: new libraries or new jogging trails or new whatever, or new promises of new programs, or keeping some historic monument in their hometown open, their chances of getting reelected are greater, because they get on the front page of the newspaper, maybe cutting the ribbon and they get on television. So in pleasing a lot of the American population that is, in effect, saying, give me more government, because it helps get some of these Members elected, we end up with a lot of Members that tend to want to make more promises, to solve more problems. But it is just so important that we remember where government gets its money is two ways: We either tax people that are now working and now earning money and take the money away from them to start these new programs, or we borrow the money and say, well, somehow, sometime, future generations are going to have to pay it back. It is a challenge that somehow we must face up to. That is one of the problems of overspending. Now I want to discuss for a moment overpromising. Here is our main overpromising programs, our entitlement programs. Medicare Part A, which is the Medicare program that is mostly for hospitals. Medicare Part B, the program that is mostly for doctors. Medicare Part A is an unfunded liability of $21.8 trillion, Medicare Part B, $23.2 trillion. The Medicare drug program that we passed last November is estimated, and this is from Tom Savings, these figures, an actuary for both Medicare and Social Security; he is estimating that Medicare Part D, the prescription drug program, has an unfunded liability of $16.6 trillion. It is hard to conceive how much $1 trillion is. But compare that to what we are spending in this Congress, and right now we are looking at a budget that is going to spend $2.4 trillion. But if we add Social Security, about $12 trillion to the unfunded liability, it adds up to $23.5 trillion unfunded liability. That means that we would have to come up with $73.5 trillion and put it in a savings account today that is going to earn in interest at least equal to inflation and what is called the time value of money, pretty much the interest rates, to accommodate the increased money that is going to be needed over and above what people are paying in on their taxes to accommodate what we promised in Social Security, what we promised in Medicaid and Medicare to keep those promises. A huge challenge. Why do we not pay attention to the obligation that we are passing on to our kids and our grandkids? I think, number 1, it is such a huge problem that it is easy to overlook it. It is easy for some people to say well, if the economy would get better, maybe we could solve these problems. But let me just talk about Social Security for a minute. Our retirement benefits are based on how much you are earning. So if you are earning a lot now, that means eventually when you retire at 65, you are going to get a lot more in Social Security benefits. So an expanded economy, the way we have written the Social Security law, does not fix the problem of Social Security. The unfunded liabilities, and I am going to show my colleagues unfunded liabilities, Mr. Speaker, in a different way, and that is at what percentage of our total general fund budget is going to have to be used to pay the difference between what is coming in in the payroll tax, the FICA tax, compared to what is going to be needed to keep promises. In just 16 years, in 2020, it is going to use 28 percent. We are going to need 28 percent of the general fund budget to accommodate the unfunded liabilities, what we need to pay in addition to the FICA tax, the payroll tax for Medicare, Medicaid and Social Security. By 2030, we are going to have to come up with over 50 percent. About 53 percent of the general fund budget is going to have to be used to accommodate keeping the promises for those three promises, a huge challenge. Let me say why I think it is so serious. That is because ultimately, this overspending and overpromising is going to mean tax increases some time in the future. The equivalent payroll tax in France right now to accommodate their senior benefit programs is over 50 percent. Now, what does that mean to a business in France? It means they are either going to have to increase the price of their product to accommodate that kind of payment, or they are going to have to reduce the wages that they pay those employees. I mean that is probably one of the major reasons why it is difficult right now for France to compete in a world market on much of their production. It is probably one of the reasons why there is a lot of demonstrations in the street with farmers and workers saying, I have to have more money, because you are taking too much out of my paycheck. In Germany right now, the payroll tax to accommodate senior citizens has just gone over the 40 percent mark. That means it is going to be tougher if we do not deal with these programs in the United States, if we put the solution off, number 1, the longer we put off the solution, the more drastic the solution is going to be; and number 2, if we have to start taxing our businesses, it is going to put them at a competitive disadvantage that much more than what it already is with other countries. Now I am going to talk about Social Security. The Social Security program was started in 1934 by Franklin Delano Roosevelt, after the Great Depression, when people, old people were going to the poor house. The President said, look, let us start a program where we have a law, a requirement that while you are working you put some of that money aside to make sure that you will be more socially secure when you retire. So we passed the Social Security Act in 1934. It started in 1935. Here is how Social Security works. Benefits are highly progressive and based on earnings. So the more you earn, the more you will get out in benefits when you retire. At retirement, all of a worker's wages up to the tax ceiling are indexed to present value using wage inflation. Well, what that means is we have continued to raise the ceiling on how much we charge the 12.4 percent Social Security tax on and currently that is $89,000. So when I say up to the ceiling, that is $89,000. And when I say indexed at present value, that means that we have a wage inflation factor. So what you have earned over the last 35 years, what you were earning, for example, 15 years ago, and if wage inflation doubles every 15 years, that $20,000 job 15 years ago would be added on in terms of determining what your benefits are on, that $20,000 would be up to $40,000, what that job is paying today. That is how we figure Social Security benefits. The best 35 years of earnings are averaged. If you only work 30 years, there are 5 years that are thrown in at zero. The annual benefit for those retiring in 2004, here is how it is progressive. Ninety percent of earnings up to the $7,344. So if you are a very low-income wage earner, you get 90 percent of what you were making back in Social Security benefits if that was your average for 35 years. Over the 7,300 you get 32 percent of the earnings between the 7,300 and the 44,268. And over the 44,000, you get 15 percent of everything over that 44,000 level. So that is progressive in benefits to the extent that if you are a very high- income worker, you will be getting back maybe 15 or 16 percent of what you paid in; and if you are a very low-income worker, you will get 90 percent of what you pay in. Early retirees receive adjusted benefits. If you decide to retire at age 62, the actuaries have figured out on average how long you are going to live. So if you are very healthy and you think you are going to live longer, then you are better off to wait until you are 65 to retire. If you do not think you will live very long, it will probably be better to retire early at 62. I added this last blip because, as I have given speeches across Michigan and across the United States, a lot of people say, well, there is a lot of cheating going on with supplemental security income paid out by the Social Security Administration. Well, it is paid out by the Social Security Administration, but it does not come out of the Social Security trust fund. It comes out of the general fund. It is a program for low-income people with some kind of disabling problems that becomes a program to help low-incomes with problems, like a welfare program, but it does not come out of Social Security. I am going to go rapidly through some of these charts. This chart demonstrates why we are in a problem now with the PAYGO program. I chaired the bipartisan Social Security Task Force in Congress made up of Democrats and Republicans. And after almost a year of hearing testimony, we all agreed that something has to be done, and the sooner the better, to correct Social Security. Otherwise, we are going to be in huge problems of insolvency in the near future. This represents the problem of a Social Security program that was developed in 1934, saying that current workers pay in their taxes that are immediately sent out to current retirees. So it is a challenge of having enough workers to pay in a FICA tax, a pay roll tax, to accommodate the number of seniors. And of course what is happening is the birth rate has been going down and the length of years that a person lives has been going up. In fact, in 1945 we had about 34 people working paying in their taxes for Social Security for every one retiree. By the year 2000, it got down to three people working. This is because people are living longer because the birth rate is going down. By 2000 we had three people working paying in their increased tax now, because that is what we do every time we run into problems: we increase the taxes. Now three people are working for every retiree. The estimate by the actuaries is by 2025 there will only be two people working, paying in their increased tax for retirees. There are 78 million so-called baby boomers, the babies that were born right after World War II from 1946 to 1966. Seventy-nine million of what are the high-income workers now, mostly paying in the maximum Social Security tax, are going to be retiring and drawing out the maximum Social Security benefits. And that is why the insolvency is coming very quickly. The insolvency on Social Security will be here some time between 2016 and 2018 according to the actuaries' report. Insolvency is certain. We know how many people there are, and we know when they will retire. We know when people will live longer in retirement, and we know how much they will pay in and how much they will take out. So we know that Social Security is insolvent. We know that it is going to take $12 trillion in today's dollars, put into a savings account to accommodate what we need to pay out, promised benefits, over and above what is coming in in the pay roll tax. So do we start using the income tax to pay Social Security benefits? Do we change Social Security into a welfare program where we say that, oh, if you have been lucky enough to be successful in America, then we will not pay you Social Security even though we have made you take money out to save for retirement? The general feeling is that there would be some danger in a lack of support. In fact, the unions have suggested that we do not make it into a welfare program because America is a place where we started with our forefathers writing a Constitution sort of designing our economic system, in effect saying that those that study and learn and use it, those that work hard and save end up better than those that do not. Now, we have been in sort of a system of dividing the wealth and saying pay in according to your ability and the government will provide services according to your need. There has got to be, for lack of a better word, maybe a golden mean to still have that kind of incentive, to do what has made America great in the first place, and that is to work hard. A young couple that decides to work two shifts or both mom and dad work so they can earn more money to have a better life for their kids, we now not only say, well, if you are going to earn more money, we are going to tax you more. But if you earn more money, we will even tax you at a higher rate than if you just worked as a single parent or just worked on one 8-hour shift instead of doing two 8-hour shifts. Social Security benefits are indexed to wage growth. So when the economy grows, workers pay more in taxes but they earn less in benefits when they retire. Growth makes the numbers look better now, but leaves a larger hole to fill later on. And that is why when I introduced my first Social Security bill in 1994, it was much easier to achieve solvency than it is today. And the estimate in 1994 was Social Security was going broke in 2012. Now the new estimate is that Social Security probably is going to last until 2018, 2017 or 2018, because there is more money coming in, but eventually there is going to be more money going out. Social Security has a total unfunded liability of over $12 trillion. The Social Security trust fund contains nothing but IOUs. And to keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. Social Security is not a good investment. And so one way to fix Social Security is getting a better return on the money made in. And that is why many people, including President Clinton, including President Bush, including myself and other Members have suggested let us look for a better way to get a better return on the money that people pay in on their payroll taxes. The average return is 1.7 percent for retirees on Social Security. If you are a minority, because black young men have an average age of death at approximately 63 years old so many of them do not collect benefits, but if you compare the average retiree return at 1.7 percent for the average Social Security recipients, compare that to what has happened for equity investments, and even the Wilshire 5,000 actually earned 11.86 percent after inflation over the last 10 years ending January 31, 2004. And that is even through some downer years after the bubble broke on the stock markets. So even with those downer years, you have an average equity return on those 5,000 stocks of over 11 percent, and that compares to the 1.7 percent on Social Security. Is there some way to accommodate both sides so that there is some concern that we do not want to have private investments so wild that individuals can invest in things where they might go broke and still come back on the government? But the other side of the coin is, is it reasonable to have a worker- owned account that is their property, that if they die early it passes on to their heirs? Some kinds of structures such as Federal employees have in the Thrift Savings Account is what I have structured into my Social Security bill to essentially try to limit it to safe investments. Just quickly on this chart, again trying to represent and convince that Social Security is not a good investment. If you retired in 1980, you have to live 4 years after retirement to break even on Social Security. By 2005, next year, you are going to have to live 23 years after retirement to break even. And then you see what happens after 2015. You have to live 26 years after you retire to break even. Well, here is what we have done in the past. Every time we have gotten into trouble, we either increase taxes or reduce benefits or a combination. And of course, in 1983 under the Greenspan Commission that is what we did; we said we are going to increase the retirement age to 67, gradually, so that is going to gradually happen. That started 2 years ago on so many months per year. But mostly it has been increasing taxes. In 1940, we went from 1 percent up to 2 percent. It was 2 percent of the first 3,000. In 1960 we raised it to 6 percent of the first 4,800. In 1980 we raised it to over 10 percent to over 25 to almost 26,000. In 2000 we raised it to 12.4 percent of the first 76,000. In 2004 it went up to 87,000. Today it is up to 89,000. So you pay your 12.4 percent tax on your first 89,000. If you are self-employed, of course, you pay all of it. If you are working for somebody, then the company says, well, I am going to in effect reduce wages to pay my 6.2 percent. So I really think it is fair to assume that the whole 12.4 percent comes out of the worker's pocket even though the worker only actually sees on his pay check stub the 6.2 percent coming out of his pocket. The other 6.2 the employer pays. But here is what happens: now 78 percent of families pay more in the payroll tax than they do in the income tax. Huge challenge. And what this also means is back to our starting point of overpromising government programs and overspending and going in debt, today 50 percent of the adults in America pay about 1 percent of the total income tax. And so you can see that there are some parts of our population that have little to lose if they say, give me more government programs. So there is that kind of pressure with lobbyists coming in and saying, well, we represent this program or that program. In my 12 years in Congress, my experiences have been that if new programs can last 2 years, then the interest groups to try to continue that spending are in visiting all of our offices saying how important their program is. And so the momentum of 2 years and 3 years almost becomes an entitlement program, even though we call it discretionary spending, that goes through the appropriations process. Here are six principles that I have in my five Social Security bills that I have introduced. All have been scored to keep Social Security solvent. The six principles I have used is protect current and future beneficiaries, allow freedom of choice, preserve the safety net, make Americans better off, not worse off, and create a fully funded system. I think it is really important not to have any tax increases on workers. I am just going to go through some of the highlights of my Social Security bill. Number one, it is scored by the Social Security Administration to restore long-term solvency to Social Security. There are no increases in the retirement age, no changes in the COLA, that is the cost of living index every year, and there are no changes in benefits for seniors or near seniors. Solvency achieved through higher returns from worker accounts and slowing the increase in benefits for highest earning retirees. Remember, Mr. Speaker, I had the chart that had the bend points of the 90 percent, the 32 percent and the 50 percent. I add another bend point of 5 percent which has the effect of slowing down the increase in benefits for high-income retirees. That is how I pay for the transition to allowing a worker to take 2.5 percent of their income and putting it in an account they own, even though government limits where they can invest that money. Social Security trust fund continues. Voluntary accounts would start at 2.5 percent of income and would reach 8 percent of income by 2075. The 8 percent would be bringing in much more money than they ever would have received with the existing Social Security program. Investments would be safe, widely diversified. Investment providers would be subject to government oversight. The government would supplement the accounts of workers earning less than $35,000 to ensure that they build up a significant savings, too. Actually, I sort of copied this from, I think, the USA account that President Clinton proposed that says for low-income workers, let us start adding to their savings and let the magic of compound interest build up their accounts, so even an average income worker can retire with millionaire-type benefits. All worker accounts would be owned by the worker and invested through pools supervised by the government, sort of like our Thrift Savings Account for all government employees and Members of Congress. That is how they save. Sort of like the regulations would be instituted to prevent people from taking undue risk. Workers have a choice of three safe indexed funds with more options after their balance reaches $2,500. Accounts are voluntary, so you do not have to go into this system of investing part of your money in private accounts if you do not want to and you can stay with the traditional program. But what we can do because the actuaries have scored that the investments on these types of limited investments will make more than the 1.7 percent Social Security pays you, we can guarantee workers in their personally-owned accounts will have as much return on that portion of their retirement income as they would have on the fixed Social Security system. You still would get your Social Security benefits, but to the extent that your traditional Social Security benefits are going to be reduced proportionally by the 2.5 percent of your earnings that you put into this savings account, so you will end up getting both the return in investments from the savings account as well as the fixed payments from the traditional Social Security. Government benefits would be offset based on the money deposited into their account, not on the money that you might earn from that account, and workers could expect to earn more from their account than from their traditional Social Security. Here are some provisions that are interesting, Mr. Speaker. It is what I call fairness to women. To be politically correct, probably you would call it fairness to spouses. Actually I was told that there were more females that graduated from college last year than males, so maybe eventually the women will be the high-income workers. What I have said is for married couples, account contributions would be pooled and then divided equally between husband and wife. So if one spouse earns a lot more than the other spouse, you add the two incomes together, what they are allowed to invest in their personal retirement savings account, and you divide by two. So each spouse has the identical amount invested in their personal retirement account. It would increase surviving spouse benefits to 110 percent of the highest earning spouse. One challenge that we have in the increased cost of Medicaid is people moving out of their homes. And now even with 100 percent of the higher spouse's earnings, when one spouse dies, and the projection is for the males to have about 3 years' shorter life span than the females, so you have a widow that is trying to get by on 100 percent. Often that is not enough to accommodate the fixed costs of staying in their own home. So in several ways in this bill, I try to encourage staying in their own homes instead of going into a nursing home. This is a bipartisan bill sponsored by both Democrats and Republicans. The way I do this is increasing the minimum to 110 percent instead of the existing 100 percent. And then stay-at-home mothers with kids under 5 would receive a retirement credit for a certain number of years. If you are a mother staying home with your kids, then we will give you the high average earnings to fill in some of those years because you have to have 35 good years. So it seems reasonable for those mothers that are probably working as hard as their spouse, anyway, staying home with their kids, that you give them credit for those years that they are staying home with those kids under 5 years old. But I limit the number of kids and limit the number of years. Here is the last sort of sheet that I have done. This does a couple of things. We have one of the lowest savings rates in the world right now. Where our savings rate used to be as high as 6 percent, now it is actually about 1 percent. This whole mood of buy now and pay later, the mood of this Congress, in fact, that tends to say, well, a little borrowing now might improve something later on, so we are going deeper and deeper in debt. Likewise in the unfunded liabilities, we make more promises. So we sort of tried to look at a system that is going to allow encouragement to increase savings. We increase contribution limits on IRAs and 401(k)s and pension plans. We include in our legislation a 33 percent tax credit for the purchase of long-term care insurance up to $1,000, $2,000 if you are a married couple, per year. Low-income seniors would be eligible for a $1,000 tax credit for expenses related to living in their own home or if the seniors live with their kids or somebody else, that tax credit would be eligible for that particular family. In conclusion, overspending is dangerous for the economy. It is dangerous for our kids and our grandkids. In fact, it makes us more susceptible to international pressures. It makes us vulnerable. If one were to guess, Mr. Speaker, how much of our deficit this year is being financed by foreign countries, foreign investments, what would you guess? Seventy percent. Foreign investment is picking up 70 percent of the money that we have to borrow this year for overspending. Right now, foreign investments lend to the United States Government 33 percent of our debt in this country. A huge challenge. Our trade deficit of now over $500 billion means that some countries have decided that they would prefer to keep those dollars and invest them by buying our businesses, by buying our equities, by buying our Treasury bills rather than buying the products that we make in this country. China, of course, is a huge challenge. I just recently returned from China. China's trade deficit with the United States, our deficit, has gone up to $125 billion. That means China takes these $125 billion and buys part of our Treasury bills, buys some of our equities. That results in us being more vulnerable to trade negotiations. If they say, well, look, United States, you're not being fair with us, we might just have to pull our money out of your Treasury bills. With foreign investments borrowing 30 percent of our money, tremendously vulnerable, it would put us at a huge disadvantage. Not only is this overspending and overpromising a burden on our kids, it is a tremendous challenge to our future economy.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with great respect for the outstanding record of excellence she has compiled in academics, leadership and community service, that I am proud to salute Lyndsey Lea Teller, winner of the 2004 LeGrand Smith Scholarship. This award is given to young adults who have demonstrated their true commitment to playing an important role in our Nation's future. As a winner of the LeGrand Smith Scholarship, Lyndsey is being honored for demonstrating the same generosity of spirit, intelligence, responsible citizenship, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. Lyndsey is an exceptional student at Litchfield High School. Aside from being at the top of her class academically, she possesses an outstanding record of achievement in high school. She is the Secretary for the National Honor Society and the Treasurer for her graduating class. Lyndsey has run cross country and track for four years. She is also very active with her church. On behalf of the United States Congress, I am proud to join with her many admirers in extending our highest praise and congratulations to Lyndsey Lea Teller for her accomplishments and selection as winner of a LeGrand Smith Scholarship. This honor not only recognizes her efforts, but it is also a testament to the parents, teachers, and other individuals whose personal interest, strong support and active participation contributed to her success. To this remarkable young woman, I extend my most heartfelt good wishes for all her future endeavors.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is with my sincerest pleasure that I rise to recognize the finalists of the 2004 LeGrand Smith Congressional Scholarship Program. This special honor is an appropriate tribute to these remarkable young adults for their academic accomplishments, demonstration of leadership and responsibility, and commitment to social and civic involvement. We all have reason to celebrate their success, because our future rests in their promising and capable hands. The finalists are being honored for showing the same generosity of spirit, depth of intelligence, and capacity for human service that distinguished the late LeGrand Smith of Somerset, Michigan. They are young men and women of character, ambition, and initiative, who have already learned well the value of hard work and commitment. These exceptional students have consistently displayed their dedication, intelligence and concern throughout their high school careers. They stand out among their peers not only because of their many achievements, but also the disciplined manner in which they meet all challenges. Although they have already accomplished a great deal, these young people possess unlimited potential. On behalf of the United States Congress, we join the many admirers in extending our highest praise and congratulations to the finalists of the 2004 LeGrand Smith Congressional Scholarship program: Tinsley Hunsdorfer of Albion, Michigan; Renee Gaudreau of Albion, Michigan; Benjamin Wilson of Battle Creek, Michigan; Heather Taylor of Homer, Michigan; Michael Schneider of Litchfield, Michigan; Lacey Ferro of Jonesville, Michigan; Joshua Robare of Hillsdale, Michigan; Amy Sanford of Reading, Michigan; Elysia Berry of Reading, Michigan; Kimberly Emens of Waldron, Michigan; Zachary Risk of Jonesville, Michigan; Ryan Cherry of Brooklyn, Michigan; Amanda Jones of Michigan Center, Michigan. Tiffany Lambert of Jerome, Michigan; Eric Palmer of Jerome, Michigan; Amy Nemeth of Jackson, Michigan; Kathryn Gillen of Jackson, Michigan; Zachary Kanaan, Jr. of Clark Lake, Michigan; Susan Hammond of Jackson, Michigan; Benjamin Stafford of Parma, Michigan; Rachel Osborne of Hudson, Michigan; Lyndsey Banks of Adrian, Michigan; Olivia Rawson of Onsted, Michigan; Leanna Pelham of Onsted, Michigan; Sara Worsham of Onsted, Michigan; Blythe Crane of Chelsea, Michigan; Ashleigh Doop of Dexter, Michigan; and Elizabeth Parker of Dexter, Michigan.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today to honor Tom MacNaughton, director of the Lenawee County Department on Aging, and to recognize his dedication to the senior citizens of Lenawee and Monroe counties and the Foster Grandparents program. Tom has given 20 years to the Foster Grandparents program and has helped improve the lives of countless seniors and at-risk youth in Lenawee and Monroe counties. Tom is passionate about everything he does. Whether it's running a marathon or helping the senior citizens in the community, Tom's commitment to excellence is clearly evident. His hard work has helped the senior citizens of Lenawee and Monroe counties live independently with dignity for as long as possible. We live in a time when many children lack extended families and seniors face many challenges while living independently. The Foster Grandparents program matches these at-risk children with low-income seniors in a win-win program that fosters caring, compassion, and confidence. The foster grandparents help the children with schoolwork and act as a necessary source of positive reinforcement and attention, while earning money that helps them live independent lives. In 1982, the State of Michigan allocated additional funding to the Lenawee Foster Grandparent program. While serving as director, Tom MacNaughton used the funding to expand the program into Monroe County. Tom's diligence in working with the local school districts and securing local funding has greatly contributed to the program's success. For these reasons, I rise to honor Tom MacNaughton of Adrian, Michigan. May his actions be an example for all.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank my colleague for yielding me this time, and I think there are things both sides of the aisle can agree to. Certainly this side agrees to fiscal responsibility. I hope we can move ahead and have a balanced budget. But there are two ways to get to the balanced budget. We can increase taxes and continue on this splurge of increased spending from the Federal Government and the growth of Federal Government and making promises when we do not know where the money is coming from. We can either raise taxes to accomplish that, or we can slow down on this splurge of spending increases that this Chamber and the Senate and the White House for the last 20 years have proceeded on. We are now facing that decision. Do we try to reduce spending to accommodate a balanced budget so that we do not pass on to future generations, or do we increase taxes? And let me just suggest to the gentleman from Maryland (Mr. Hoyer), with his hand on the microphone, that our taxes on business today are 18 percent higher than our competitors in other nations. So to simply say we want to accommodate government's increased spending by taxing our citizens and our businesses more, like the Democrats did in their alternative budget proposals with increased taxes and increased spending, like the Democrats are doing in this substitute, adding another 200 to add to taxes that will go essentially to married families, we cannot continue to put our businesses at a competitive disadvantage by simply saying we want more money in Washington, therefore we are going to increase taxes. Let us move ahead with the Republican proposal that has the marriage penalty relief. And I will make this commitment. If we do not stick to our guns on holding the line on spending, like we did in the House budget, then I will simply vote against those bills that increase spending.

Mr. SMITH of Michigan. I think my time has run.