Date: 2005-04-05
Speaker: GENE GREEN (democrat)
Chamber: H
State: Texas

Mr. Speaker. during the Easter recess. our office sponsored a town hall meeting for constituents to voice their opinions on the administrations plan to partially privatize Social Security. It was actually held at a community college. at Houston Community College Northeast. that is in our district. and we had both college students and senior citizens there. One of the things that came out of that town hall meeting is the concern that Social Security is not broke. that sure. $1.7 trillion of our national debt is. as the President says. IOUs from Social *Security. and my constituents concern is that if we are going to pay back the 40 percent of our national debt. about $7 trillion. to the many citizens of foreign countries who loan money to the United States. why on this Earth would we not pay back the Social Security trust fund that $1.7 trillion. One thing that came out of that town hall meeting is that the more details they learned about the Presidents plan. the less they favor it. That might be why the administration has released so few details about their plan. What we know is the plan includes a proposal to allow taxpayers 4 percent or up to $1.000 in private savings accounts that theoretically would yield a greater return than the government bonds on which Social Security is now invested. That proposal sounds all well and good until the American people. in our district particularly. realized that the private accounts would not alleviate any of Social Securitys financial challenges. The recent Social Security Trustees Report estimated the Social Security shortfall to be $3.7 trillion over the next 75 years. But the proposal to create these private accounts or personal accounts will not help the bottom line at all. Even the President. before we broke for our Easter recess. admitted that "personal accounts do not solve the issue." What the President needed to add at the end of that sentence is that the private accounts actually make the problem worse. In the first 20 years of the Presidents plan. the Federal Government will have to borrow $5 trillion to make up for the. additional shortfall created by these private or special accounts. And. even worse. if you use the Social Security Administrations assumption. the administrations privatization plan would exhaust the trust fund actually 11 years earlier than currently projected. Through this particular concern. several of my constituents pointed out that the creation of private accounts is voluntary. and that is true. That is. if the folks- think that the market is too risky. they do not have to open that private account. and that is true. Private accounts are 100 percent voluntary. But what folks have often heard is that the plan also includes the proposal to change the way the benefits are calculated. This element of that plan. called price indexing. would help pay for the private accounts and reduce the Social Security shortfall. But at the end of the day. the price indexing would result in a cut of guaranteed benefits for all beneficiaries. regardless of whether they choose to enroll in a private or personal account. It would cut everyones. So under the administrations plan. the private account is voluntary. but the cut in guaranteed benefits is mandatory. Here is how price indexing works. Currently. benefits are tied to wages. which rise higher than prices. giving us an increased standard. of living each year. Under the administrations plan. the benefit calculation would be tied to prices and not wages. Under this calculation. Social Security benefits that seniors would receive would replace a smaller portion of their paycheck before retirement. Currently. Social Security benefits make up 42 percent of the average wage earners salary. Under price indexing. however. Social Security will only replace 27 percent of wages for someone retiring in 2042. The picture is even worse for our children and grandchildren. I am proud to have a granddaughter who was born on February 1 of this year. In 2075 when she is 70 years old. her Social Security benefits would only be 20 percent of her wages if we allow this element of the administrations plan to take effect. So in other words. price indexing lowers what our seniors get in their costofliving increase. and they already get so little compared to the cost increases with Medicare that they are having to pay.. It is extremely important that the younger generation gets the straight story about how this plan will affect them. According to a poll commissioned by Rock the Vote. once young people learn about the tradeoffs that come from private accounts. they will overwhelmingly oppose this risky proposal. Among 18- to 39yearolds. 63 percent oppose private accounts if it means that the Federal debt will have to increase to pay current bebefits. Seventy percent of 18- to 39yearolds oppose private accounts if they mean cuts in guaranteed benefits the private accounts will not cover. Sixtyfive percent of those 18- to 39yearolds oppose private accounts if it means cuts in guaranteed benefits for all beneficiaries regardless of their participation in the private accounts. With the effect of the administrations plan being a $5 trillion addition to our national debt. a 46 percent cut in guaranteed benefits for all. this proposal does not sound like a good one for anyone. including the constituents that I represent.