|
MR. MATTHEWS: It is now my pleasure to introduce Congressman Jim Kolbe. Congressman Kolbe is -- well, he is both brave and an innovator. He is brave because he is willing to address the third rail in American politics, Social Security, in which many people said you touch that rail and you die. Yet, Congressman Kolbe is willing to do this, and coming from Arizona, a state in which seniors move to retire, and yet he still wants to make this one of the elements that he wants to focus on as co-chair of the House Public Pension Reform Caucus.
In addition, he is a cutting edge Congressman. There have been many times that his staff would call and they'd want to talk about some of the issues that the NCPA had been discussing, things that are out there on the cutting edge, not looking at the old tired things that we might be doing, but what could we do in order to bring new reforms, new proposals, new ideas to Congress. One of the things that he'd talked about much in the past is the charity tax credit. In order to bring a new kind of thinking to welfare reform he is bringing that new kind of courageous, cutting edge thinking to Social Security reform and I'd like to introduce him to come talk about Social Security reforms before Congress.
| |
Representative Jim Kolbe
|
Well, thank you very much. I don't think I have nearly the interest or attention that Steve Forbes will ever get in an audience like this, but I am delighted to appear with this audience here today.
Merrill just mentioned that this has been now the third rail of politics. We always talk about the third rail of politics and how it's been unacceptable to talk about it, and how it can be talked about. Well, I'm here to tell you that it's not just politicians that are talking about it, but I noticed that Jay Leno the other night was talking about it. So I'll just give you his little story.
He said after looking at all the news clips from Albania he said, "Bad news. Bad news from Albania. Did you see all that gunfire? It's a terrible situation. People are furious, people are just ripping mad over there. Apparently what's happened to them is they've had their life savings in a bankrupt pyramid scheme that was supported by the government. You know, we call that here in the United States -- well, we call it Social Security." That's Jay Leno.
Well, all jokes aside, I am pleased to be here today because I think this is an issue of vital importance and one in which I relish the opportunity to continue with each of these kinds of sessions that we have, what I think is an ongoing and a fairly long-term education process that we've got to have.
Education is one of the main reasons that my colleague, Charlie Stenholm from Texas, and I, formed the House Public Pension Reform Caucus. Now I know education isn't all that sexy, it isn't all that exciting, but Congress likes to think of themselves as doers, of action, and getting things done. But I am here to tell you that you can't do something on Social Security reform until you've developed a national consensus in education, is really the main thing that we have to accomplish in the next couple of years if we're going to develop that kind of consensus. So that's the purpose of this caucus, in a bipartisan way to direct our efforts to look at the problems that are plaguing Social Security, and the various options that are out there for reform, so that we can begin to see the building of a consensus for some kind of a reform.
Why have so many of us gathered here today to discuss this issue of Social Security reform? I think all of us are going to agree that it has been one of the most vital programs for seniors. If you look at the history of Social Security, it has done exactly what we want, and that is to get seniors out of poverty. It has given them dignity -- retirement in dignity. It has accomplished what we want.
But the fact of the matter is that times have changed, demographics have changed, the program has changed. And as a result of that, people, I think, instinctively sense that the program doesn't work today the way it was intended, or the way it worked 60 years ago when we created it. And so, you've got this strange anomaly that more people in the age group of 18-34, more young people, actually believe that in their lifetime they'll see an unidentified flying object, a UFO, than they'll ever see a Social Security payment. That's not anything that -- that creates a generational gap between generations that I think is simply unacceptable, and one in which we have to find a way to bridge.
No one wants to destroy benefits for Social Security beneficiaries, those that are getting them today. And I don't care how many times we repeat it, it's obvious that we don't say it enough. We can say it over and over again but people somehow don't want to hear it. And so we're going to have to repeat it over and over again. We're not talking about taking away benefits from people who are retired. We are not talking about taking away benefits from those who are on the edge of retirement and robbing them from their retirement programs. We're talking about allowing them to continue to have their retirement with dignity, but also making it possible for young people to have a retirement in the future, for having some hope that they too will be able to provide for themselves, and for their families, and ultimately for their children and grandchildren when they get ready to retire. And that's why we've joined together, today, to discuss some of these alternatives that use the private market, use private market alternatives to continue Social Security programs for those who are in the near retirement area, but also ensures the viable retirement for future generations.
So the real question is how are we going to update a program that was designed in 1935 with a very different demographic profile that we have today. How are we going to revise it? How are we going to change it to create a more equitable retirement program for all generations, for those who rely on Social Security today, but those who will have to rely on some other kind of system in the future?
And that's why I think I have taken on this issue, why Charlie Stenholm and the 70 or more other people that have joined the Public Pension Reform Caucus and are willing to put their hand on this third rail of American politics, have been willing to do it because we do understand that it is about our future, it is about our children and our grandchildren, and it is about seniors today and what's important to them and their future and the legacy that they leave, which is for their children and their grandchildren.
So what can we do and what is being done in Congress?
The Social Security reform discussion has already begun right here in Congress, in both the House and the Senate. We have here today somebody like Nick Smith, who has been one of those leaders who has been proposing different ideas in Social Security reform ideas. The caucus itself, the Public Pension Reform Caucus, which has moved a little bit more glacially perhaps, but a little more careful way because we have focused on educating people and getting them to understand what the problems are, we've been active since early 1995. We've gained the support, as I have mentioned, of 70 members, almost equally divided between Republicans and Democrats, discussing all the reform options, simultaneously. You have people like Mike Sanford, Nick Smith, John Porter, Bill Thomas, Gerry Solomon, all of them that have proposed their own ideas, introduced their own bills, their own ideas that would create a more equitable Social Security program for all generations.
On the Senate side you've got Bob Kerrey, who has reintroduced his Social Security reform legislation, the one that he and Alan Simpson had co-authored during the last Congress, and Senator Judd Gregg has introduced a similar reform package.
So there's plenty of ideas out there. There is plenty of ferment in this area and yet I think we still have a long way to go before we're going to be actually consider the options and before Congress is going to be ready to actually act on some of these options.
Also, we have had this year the Social Security Advisory Council which released its recommendations to Congress, that included the three different options that I'm sure you've heard about or are going to be hearing about here today.
There's been a lot of criticism raised about the council and those options because they have produced three different options and not a single one, but I disagree with that criticism. I disagree because I think it's important that all three of the options recognize the importance of using market alternatives as part of the solution. So I think it's important that we have the degree of consensus of those options, that we make a pretty fundamental change that we're talking about, from the Social Security system as it is today, I think is what we should be focusing on, not the negative side. Is the cup half full or half empty? And I would say that it's very much half full when you get the council making recommendations all of which -- all of which rely on some kind of use of market alternatives.
We're still very much in the early stages of this discussion. As I say, something that I know that's frustrating for my colleagues here in Congress, who feel that we know what the right thing to do is, and we want to move ahead with that. The more alternatives that we have to review the more we're going to be better prepared and more knowledgeable we're going to be when Congress actually begins this debate and gets legislation reported from the committees and gets it reported to the floor of the House of Representatives. And I know that today you're going to be hearing from Carolyn Weaver, who is going to be sharing with you the Advisory Council's recommendations that I discussed a moment earlier here.
We have some extremely good pieces of legislation in the House and the Senate. A majority of the country and the Congress has nonetheless, I think, remained fairly oblivious to the Social Security dilemma, and that's why education is the key element. I want to just mention to you a few of the financial and demographic trends that makes this issue so pressing. I am not going to bore you with a lot of statistics, either what you've heard here, or will be hearing, or you're going to have in packets of information that's given to you.
The federal budget is going to face some fiscal constraints in the near future that really is going to threaten the Social Security contract that we have with future beneficiaries. In the Medicare and Social Security Board of Trustees 1996 report, the trustees found that the Social Security Trust Fund will be bankrupt without any kinds of funds by the year 2029. But an even more alarming figure, year, is 2012 when we go negative. That is we start spending more than we're going to be taking in, in revenues. So that really is the date that ought to be our chief focus, and even that may be optimistic because each year that date has crept closer, even as we move closer to the date.
So if we're only faced with an impending fiscal problem the Social Security dilemma may not appear so grave, but the country also faces dramatic changes in demographic trends. The good news is, of course, that elderly are living longer, that all of us are living a lot longer, and therefore drawing Social Security for a lot longer of period of time than we had ever thought possible.
Additionally we're not having -- but the other side of that is that we're not having children in the numbers that our parents and grandparents had, and so the worker to retiree ratio is declining. In 1935 there were 16 workers for everyone who was a potential beneficiary. Today the ratio is 3 to 1 and by the year 2020 it will be 2 to 1. And you can go not too far away across the ocean to Germany and find a country where it is almost 1 to 1 today.
So what does that mean for the Social Security discussion? What does that mean for where we go from here? I am often asked what I envision as our time line.
Well similar to the Medicare and Social Security Board of Trustees, I foresee three different assumptions, the optimistic, the intermediate, and the pessimistic assumption.
The optimistic assumption goes as follows. This would be my favorite. In 1997 Congress focuses on education both in Congress and at the grassroots level. This effort has already begun with the organization that I have mentioned, and there are others in Congress that are doing this as well. In 1998 we begin to focus our attention on legislative proposals, have hearings on serious discussions of different legislative alternatives, and in 1999, then, we would begin the debate over legislation and the possible enactment of it.
The intermediate assumption would prolong the debate until 2001. We can't do anything now, so we get past the election. We really don't start the education and debate process till '98 and '99, and then you can't do anything in the year 2000 because of the election, and so you postpone it until after that.
The pessimistic assumption, of course, is one that there would be no reform, or that we would absolutely do it so far down the future, we can't even see what when it would be, it would be when the crisis is immediately upon us.
If we wait we help no one but we hurt everyone, and that's why in my opinion we really do need to move fast.
Is there really a Social Security problem? Some have said there really isn't one, that Social Security is going to be able to pay all of the benefits that are required through the year 2029 with the use of the trust fund dollars. But I ask how can we ignore that year of 2012 when suddenly our borrowing has to increase very dramatically in order to pay -- we're borrowing from the trust fund -- and this is all on paper anyhow, I won't go through all of that -- in order to pay the benefits? That when the real impact on the fiscal budget becomes so very apparent.
So yes, in 2012 Social Security probably won't be able to redeem Treasury Bonds to pay benefits, we all know that the burden on the Treasury to begin redeeming several trillion dollars of bonds over 10 years is going to be very heavy. Where and when is Congress going to find the funds to pay benefits? What options does the Congress have? What options do we have?
Well, one of them is obvious. We can drastically reduce the benefits to beneficiaries. That's not something that anybody here in Congress looks forward to doing.
Another is that we can increase drastically the taxes on working people that pay for it. Already more than half the people pay more in Social Security taxes than they pay in income taxes, so we can increase that drastically. That's certainly not a very good option.
And the third is, of course, simply to borrow more money and just run it up as additional borrowing and we go back to a very dramatic increase in deficits. So none of these options are terribly good. That brings us back again to why education is so important. It's the essential element in all of this discussion. We've begun that process now. This year we're going to have a number of meetings for caucus members only. We're going to have a binder that will be given out to every staffer, person who is there, so that they'll be able to have and update with new information that comes along, and new kinds of arguments come along on what can be done on Social Security. I think this is all an important part of keeping people current with the thinking that is going on in the country.
And so, again, I would conclude with this thought, education. Education is what it's all about, getting people to understand the parameters of the problem and then to be talking about where we go from here in terms of the alternatives.
Daniel Yankelovich has this book called "Coming to Public Judgment" in which he outlines seven steps that the public has to have in coming to judgment. And you don't get to the law or the consensus until you go through these seven steps. And first you have to have an awareness of the problem; and then you have to have a sense of urgency; and then people have to start thinking about the alternatives; and then there is a step of denial; and finally you are beginning to come to an emotional and intellectual understanding; and then finally a consensus on it.
We're at that stage now where we're somewhere getting people to begin to understand the urgency of this, and just with the Social Security Advisory Commission, we're just beginning to see some of the alternatives considered. But you still see a tremendous amount of the denial there. So we haven't gotten through considering the alternatives. We haven't even gotten everybody to understand this is a real sense of urgency. So we're somewhere in those steps of two and three at this point and we still have a long ways to go before we get to the end. And that's why this kind of effort that we're doing here today is so important.
A month ago in Tucson I had a half a day conference on Social Security issues. Carolyn Weaver was one of those that was there. It was an incredibly successful event. We got tremendous coverage from all of the press, a half hour on the evening news from the PBS station there. We got tremendous amounts of coverage in the print news. All the community leaders that we needed were there. It's the kind of thing that we need to do more of and I encourage you to do it. We can help you go through the model that we used.
Well, bottom line is reforming Social Security is going to take a major effort by all of us. It's going to take a major effort between policy makers and the public. The American people are equal partners are we need to work together to develop a retirement system structure for the 21st century that's going to work for all of us. And I look forward to working with groups like this and people that are around this table to make it happen. Thank you.
|