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John Sununu Issues Files
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Originally Processed With FOIA(s):
foia Number:
1998-0004-F[1]
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Chief of Staff, White House Office of
Series:
Sununu, John, Files
Subseries:
Issues Files
OA/ID Number:
29171
Folder ID Number:
29171-005
Folder Title:
Social Security (Moynihan) (1990)
Stack:
Row:
Section:
Shelf:
Position:
G
15
25
4
2
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
February 22, 1990
THE CHIEF of STAFF
has seen
MEMORANDUM FOR JOHN H. SUNUNU
CHIEF OF STAFF TO THE PRESIDENT
FROM:
MICHAEL J. BOSKIN mm
SUBJECT:
Meeting with Representative John E. Porter (R-IL)
At his request, I met Tuesday with Representative Porter
concerning his proposal to create Individual Social Security
Retirement Accounts (ISSRAs).
Representative Porter felt the need to encourage the
President to "show leadership" on the Social Security issue.
I stressed that the Administration's proposal to save the
Social Security surpluses is a strong, innovative plan that
is superior to the Porter plan (see below).
I noted that the Administration valued creative thinking on
any and all issues and that we are sympathetic to his
general goals for Social Security:
- protecting the integrity of the Social Security system
for current and future beneficiaries;
- preparing for the retirement of the baby-boom generation
by ensuring that projected Social Security surpluses are
not used to fund an explosion of new spending; and
-
raising the low rate of national saving.
At the same time, I made clear that the Administration is
committed to the President's pledge to not "mess around"
with Social Security. In particular (see below) we firmly
reject any privatization proposal.
Representative Porter briefly outlined the general character
of his plan. Without endorsing his approach in any way, I
discussed both potential difficulties with the plan and
further issues for his study:
- Social Security is a very special program. Among other
features, it offers an inflation-protected annuity for
retirees. No private market investment plan can
duplicate this feature since there are no securities
that guarantee a positive real return (e.g., an indexed
government bond).
2
-
Similarly, a private market investment cannot guarantee
a positive real return to contributions made during
working years.
-
Representative Porter's approach leans heavily upon the
additional income he anticipates from investing in
securities--particularly AAA-rated corporate bonds--that
offer higher returns than Treasury securities. He
seemingly recognizes neither that seeking these higher
returns requires assuming additional risk in retirement
income nor that the difference in yields may narrow in
response to such a large change in market investment
patterns.
- Social Security addresses a wide range of insurance
needs such as disability, surviving spouses, and
dependent children. Social Security also provides an
adequate minimum benefit in part through a progressive
benefit formula. The Porter plan does not currently
address these issues and such complications as
nonworking spouses, divorce, and non-traditional
families.
-
The pay-as-you-go approach to Social Security produced a
large unfunded liability. When completely implemented,
the Porter plan would fully fund benefits, with each
worker being taxed for his or her benefits. Initially,
however, the plan would both meet the current unfunded
liability and fully fund future benefits. This
necessarily involves double-taxing current workers to
meet both needs.
o The General Accounting Office is currently studying the plan
at his request. He intends to keep the Council informed of
both the results of the study and any further developments.
CC: Richard G. Darman, Director, OMB
Nicholas F. Brady, Secretary of the Treasury
Roger B. Porter, Assistant to the President for Economic
and Domestic Policy
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
01. Memo
From Roger Porter to John Sununu
1/22/90
P/5
Re: More on Moynihan and Social Security (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Chief of Staff, White House Office of
Open on Expiration of PRA
(Document Follows)
Series:
Sununu, John, Files
Subseries:
Issues Files
By If (NLGB) on 5/12/05
WHORM Cat.:
File Location:
1990 Social Security (Moynihan)
Date Closed:
12/11/2004
OA/ID Number:
29171-005
FOIA/SYS Case #:
1998-0004-F[1]
Appeal Case #:
Re-review Case #:
2005-0426-S
Appeal Disposition:
P-2/P-5 Review Case #:
Disposition Date:
AR Case #:
MR Case #:
AR Disposition:
MR Disposition:
AR Disposition Date:
MR Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
PRM. Removed as a personal record misfile.
THE WHITE HOUSE
WASHINGTON
January 22, 1990
THE CHIEF of STAFF
has seen
MEMORANDUM FOR GOVERNOR SUNUNU
FROM:
ROGER B. PORTER
RBP
SUBJECT:
More on Moynihan and Social Security
I asked Larry Lindsey, of our staff, to look at what Senator
Moynihan would do to finance his $55 billion Social Security tax
cut if he chose not to reduce spending or to conveniently forget
Gramm-Rudman-Hollings. Larry's memorandum is attached, and shows
what would have to be done with respect to the current marginal
income tax rates to generate the kind of income envisioned in
Moynihan's proposal. Once again, Senator Moynihan is skating on
very thin ice.
Attachment
THE WHITE HOUSE
WASHINGTON
January 18, 1990
MEMORANDUM FOR ROGER B. PORTER
FROM:
LARRY LINDSEY
SUBJECT:
Paying for Moynihan Without Raising Capital Gains
Taxes
This memorandum is in response to your further inquiry about
how Moynihan might finance his $55 billion Social Security tax
cut by raising income taxes. For a number of reasons, not the
least of which is that we are currently at or above the revenue
maximizing capital gains tax rate, Moynihan might have to exclude
gains from any rate increase. Needless to say, the necessary tax
rate increase under this assumption would be far greater than
that previously reported.
Tax Base Including and Excluding Capital Gains
The table presents the number of dollars of taxable income
expected in each tax bracket in 1991 with capital gains in the
tax base and with capital gains excluded from the base. This
latter assumption is the one which should be used in evaluating
rate increases with the top capital gains rate frozen at some
level like 15 or 20 percent.
Distribution of Income Tax Base
Tax Bracket
Taxable Income
T.I. Excluding Capital Gains
15%
$ 1623 billion
$ 1602 billion
"low" 28%
$ 521 billion
$ 485 billion
33%
$ 173 billion
$ 129 billion
"high" 28%
$ 228 billion
$ 93 billion
Previously it was noted that if we assume no behavioral
response by taxpayers and include capital gains in the tax base,
Moynihan could finance the Social Security tax increase by (1)
increasing the present "low" 28% bracket to 33% and (2)
increasing the present 33% bracket and the "high" 28% brackets to
38%.
In order to finance the $55 billion cut without raising the
tax rate on gains, Moynihan would have to add an additional 7
points to the top tax rates as well as eliminating the bubble.
This would take the "low" 28% rate up to 35% and the 33% and
"high" 28% rates up to 40%.
Of course, even these assumptions presume no behavioral
response by taxpayers with respect to their earning or deduction
behavior. My own research as well as that of others indicates
that this is an extreme assumption. However, it is unlikely that
the Treasury or CBO scoring processes would take any non-capital
gains behavioral response into account.
This represents the proposal as announced on December 28,
1989 and not the bill as introduced today.
January 23, 1990
SENATOR MOYNIHAN'S SOCIAL SECURITY PROPOSAL
Senator Moynihan has announced that he will introduce
legislation on January 23, 1990 to cut the Social Security
payroll tax rate. This memo
a. Outlines current law;
b. Describes Senator Moynihan's proposal; and
C. Outlines pros and cons.
A.
CURRENT LAW
The 1983 Social Security Amendments set payroll tax rates to
accumulate a Social Security Trust Fund surplus. That surplus
would then be available to help finance the retirement benefits
of the baby boom generation.
SOCIAL SECURITY TAX RATES
Employee
Employer
Share
Share
Total
1984 - 1987
5.70%
5.70%
11.40%
1988 - 1989
6.06%
6.06%
12.12%
1990 and after
6.20%
6.20%
12.40%
NOTE: This does not include the 1.45% payroll tax for
the Medicare Hospital Insurance (Part A) program.
The tax is paid on annual earnings of up to $51,300 in 1990.
No tax is paid on earnings above that amount. The $51,300 limit
-- the so-called wage base -- is increased each year based on
year-to-year growth in the national average wage.
B. SENATOR MOYNIHAN'S PLAN
The plan has two parts:
1. Repeal the 1990 increase.
For 1990, Senator Moynihan would reduce the rate from
6.20% each on employer and employee to the 1989 level of
6.06%.
Estimated 1990 cost: $7 billion.
-2-
2.
Beginning in 1991, Shift Social Security to Pay-As-You-Go
Financing.
a. For 1991 - 2014, Senator Moynihan would cut the
payroll tax rate dramatically to 5.1%. This would
return Social Security to so-called "pay-as-you-go"
financing, under which a given year's benefits are
paid for by that year's payroll tax receipts. Social
Security operated under pay-as-you-go for many years
prior to 1983.
Estimated 1991 cost: $55 billion.
b. For 2015 - 2045, Senator Moynihan would increase the
tax rate significantly in order to pay the baby boom
retirement benefits. Senator Moynihan estimates it
would jump to 6.0% in the year 2015 and reach 7.6% by
2025.
Basically, Senator Moynihan trades a lower payroll tax rate
in the next 25 years (1990 - 2015) for a higher rate in later
years (2015 - 2049).
The following shows tax rates under current law and Senator
Moynihan's plan:
SOCIAL SECURITY TAX RATE
EMPLOYEE SHARE ONLY (MATCHED BY EMPLOYER)
Current Law
Senator Moynihan*
(Build Surplus)
(Pay-As-You-Go)
(These are preliminary
estimates provided by
Moynihan's staff.)
1984 - 1987
5.70%
Not applicable
1988 - 1989
6.06%
Not applicable
1990
6.20%
6.06%
1991
6.20%
5.10%
1992
6.20%
5.10%
2015
6.20%
6.0%
2020
6.20%
6.80%
2025
6.20%
7.60%
2049
6.20%
*Awaiting estimates
-3-
Note: These rates do not include the payroll tax of
1.45% for Medicare Hospital Insurance (Part A)
Coverage because the proposal affects only the
tax rate for the Old Age, Survivors, and
Disability (OASDI) program. The proposal would
not change the current rate of 1.45% for
Medicare Part A. Nor does it change the wage
base of $51,300 in 1990.
to John SUNUM
This is a weynu lund -
conservative Movement document. FYC
1/24/90
New Y25790
ANSWERING MOYNIHAN
Senator Moynihan's proposal to cut Social Security taxes has created political chaos in the
Republican Party and the conservative movement. This paper proposes an answer to Scn.
Moynihan.
PREMISES
1. The Social Security surplusses are in fact being used to finance Federal spending and
mask the deficit. They are not being "saved" to fund the retirement of the baby boom generation.
In this, Sen. Moynihan is right.
:
2. The Moynihan plan would eliminate the surplusses, but not resolve the problem of
funding the baby boom's retirement.
3. Regardless of what demographic and economic assumptions are made, funding the baby
boom's retirement on a pay-as-you-go basis would require undesirable tax rates increases and reduce
America's economic growth in the 21st century.
4. In the absence of an alternative, many conservatives and business groups will support
the Moynihan plan, as will most American taxpayers, especially young workers. At a minimum, this
will create strains within the Republican party. At worst, it could result in severe political damage
to the Administration, the Republican party and the conservative movement.
5. Economic growth has outstripped what was anticipated in the 1983 Greenspan
Commission report. The surplus is therefore larger than is needed at this time. This justifies
rolling back the 1990 FICA rate increase, but does not justify Moynihan's proposal for a $55 billion
1991 FICA tax cut.
6. Increased reliance on private savings to fund retirement benefits is a desirable policy
objective.
7. Proposals (e.g. Cong. Porter's and Sen. Symm's) to rely on private savings to ameliorate
the long-run Social Security financing problem cannot achieve critical mass within the time frame
of the debate over the Moynihan plan (i.e. Spring 1990).
8. The Moynihan proposal has created an opportunity to reshape the political landscape,
and adoption of a plan like Porter's or Symm's is within the realm of possibility within a period of
12-24 months.
ANSWERING MOYNIHAN, Page 2
PROPOSED STRATEGY
The Administration should respond to Senator Moynihan by:
1. Accepting -- indeed, embracing -- the rollback of the 1990 FICA tax rate increase, on
the grounds that the Rcagan-Bush expansion has yielded more revenues than anyone anticipated
in 1983, and that tax cuts are good for economic growth.
2. Explaining that the surplus is the result of a bi-partisan commission that Sen. Moynihan
participated in in 1983 and is intended to ensure that today's workers get their benefits.
3. Suggesting that if Sen. Moynihan thinks his 1983 plan is failing, it may indecd be time
to take a careful look to see if it is doing what he said it would do.
4. Insisting that any consideration of major changes in Social Security should be delibcrate
and non-partisan -- not part of a politically-charged election-year debate.
5. Proposing the creation of a bi-partisan commission to review the 1983 compromise and
suggest changes, if any, that may be needed. It should report back in January 1991.
DISCUSSION
The Moynihan "grenade" is now on trajectory to explode in Republican territory. The
immediate objective is to bat that thing back up in the air. At a minimum, the above proposal
would accomplish this objective.
A longer-run objective is to increase reliance on private savings to fund the baby boom's
retirement. A properly-constituted commission could explore means of accomplishing this objective.
At a minimum, a year's breathing space would give proponents of such proposals (Porter, Symms,
etc.) a chance to demonstrate whether political support exists for their ideas. If not, the
commission can propose the status quo. If so, other options would be available.
Would Democrats object to the creation of a new commission? Republicans? Hardly. In
all likelihood, nearly everyone would be thrilled to sec the pin put back in this particular grenade.
(However, this is true only until positions begin to gel. Thus, the above steps should be taken
ASAP -- e.g. in the State of the Union.)
Voters would also applaud the President. If there is one issue where the public wants to
see deliberate decisionmaking, it is Social Security.
THE WHITE HOUSE
WASHINGTON
January 18, 1990
MEMORANDUM FOR JOHN H. SUNUNU
THROUGH:
Frederick D. McClure 7m
FROM:
Brian Waidmann, Special Assistant for Legislative
Affairs
SUBJECT:
Senator Bentsen's views on the Moynihan Social
Security Tax Cut and on Capital Gains
Senator Bentsen, chairman of the Senate Finance Committee that
has jurisdiction over Social Security, is in the Soviet Union
this week talking to officials there about trade agreements. His
top staffer, Senate Finance Committee Staff Director Van McMurtry
reports the following:
*
Senator Bentsen's visceral reaction when he heard about the
Moynihan Social Security proposal is that he did not like
it, and thought it was trouble. He is meeting with his
staff Monday to decide how to proceed, then will talk to
Senators Mitchell, Moynihan and Sasser.
*
The staff will recommend that Senator Bentsen hold lengthy
hearings on the proposal to see if that will calm the
waters. They want Sen. Bentsen to say that this proposal
needs careful study to determine its true ramifications.
They may also get the issue tied up with a host of other
issues, including the possibility of a multi-year budget
agreement.
*
If this strategy does not work, he fears a stampede on the
Senate floor.
*
As far as he knows, only Senators Pell, Baucus and Kasten
have signed on as cosponsors.
He floated the possibility of the combined Congressional
leadership and the White House opposing Moynihan.
On capital gains:
*
Senator Bentsen wants the White House to know that he wants
to work with us on capital gains and savings incentives. He
thinks a package can be worked out that would attract 80
votes. He says Senator Bentsen is not out to trap the White
House into backing higher tax rates.
- 2 -
*
He wants Treasury staff authorized to work out a package
that would be deficit neutral.
*
He wants to negotiate with Treasury and the White House, and
not Senator Mitchell. If those negotiations were
successful, he would bring along Senator Mitchell, or at
least minimize his opposition.
*
He says the key to making this package work is to make it
deficit neutral. I pointed out that if Senator Moynihan
appears to be on the verge of success in his $55 billion
blowout of the budget without offsets, it hardly seems
realistic to impose fiscal discipline on our capital gains
talks.
*
Senator Bentsen is meeting with Secretary Brady and Director
Darman next week to explore options. He wants the
opportunity to discuss this with the President shortly
thereafter.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
02. Memo
From Roger Porter to John Sununu
1/18/90
Re: Social Security and Regressivity (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Chief of Staff, White House Office of
Open on Expiration of PRA
Series:
Sununu, John, Files
(Document Follows)
Subseries:
Issues Files
By
H
(NLGB)
on
5/12/05
WHORM Cat.:
File Location:
1990 Social Security (Moynihan)
Date Closed:
12/11/2004
OA/ID Number:
29171-005
FOIA/SYS Case #:
1998-0004-F[1]
Appeal Case #:
Re-review Case #:
2005-0426-S
Appeal Disposition:
P-2/P-5 Review Case #:
Disposition Date:
AR Case #:
MR Case #:
AR Disposition:
MR Disposition:
AR Disposition Date:
MR Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C: 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
PRM. Removed as a personal record misfile
THE WHITE HOUSE
WASHINGTON
January 18, 1990
MEMORANDUM FOR GOVERNOR SUNUNU
FROM:
ROGER B. PORTER
RBP
SUBJECT:
Social Security and Regressivity
One of the frequent claims made is that the social security
system in general and the social security payroll tax
specifically are highly regressive. I asked Larry Lindsey to
examine the effect of the increased ceiling -- up to $51,300 of
earnings -- and the effect of the progressive benefit schedule on
the question of how regressive the social security system really
is.
His memorandum, which is attached, should provide some
useful ammunition in the days ahead.
Attachment
THE WHITE HOUSE
washington
January 17, 1990
MEMORANDUM FOR ROGER B. PORTER
FROM:
LARRY LINDSEY
SUBJECT:
Social Security and Regressivity
Much of the liberal support for Senator Moynihan's proposal
to cut Social Security taxes has centered on the allegedly
"regressive" nature of the Social Security tax. In fact, there
is good reason to believe that the alleged regressivity of the
tax is greatly exaggerated.
1. By definition, the Social Security tax is "regressive".
The Social Security tax is levied at a flat percentage rate
up to a given level of income or "ceiling". In 1990, employers
and employees are both taxed at a 7.65 percent rate on the first
$51,300 of earnings. The alleged regressivity comes from two
factors. First, earnings over the ceiling are not subject to
tax. Second, only wage income is subject to tax, not capital
income such as interest and dividends. Capital income tends to
be concentrated among higher income taxpayers.
2. Still, in 1991, the top 10 percent of American taxpayers
collectively will pay one third more Social Security tax
than the bottom 50 percent.
The fact that the Social Security ceiling is SO high means
that 89 percent of all wage and salary income is covered by
Social Security. Roughly 94 percent of all American families see
their entire wage and salary income covered by Social Security.
Thus, for the vast majority of the population, the Social
Security tax is proportional. The table presents estimates for
1991 of the percent of total income, income tax, and social
security tax paid by various groups in the population.
Taxpayer
Approximate
Percent of
Percent of
Percent of
Group
Income Range
Income
SocSecTax
Income Tax
Top 1%
over $150,000
12.1%
2.1%
27.1%
Next 4%
$80,000-$150,000
13.2%
9.9%
17.3%
Next 5%
$60,000-$80,000
11.3%
12.2%
11.7%
Next 10%
$45,000-$60,000
17.3%
20.3%
15.4%
Next 10%
$36,000-$45,000
13.3%
16.3%
10.3%
Next 20%
$21,000-$36,000
18.2%
21.2%
12.1%
Bottom 50%
under $21,000
14.6%
18.0%
6.1%
3. It is also important to keep in mind that Social Security is
a tax-transfer system. The combined system is quite
progressive.
Social Security benefits are tied to lifetime wages and thus
to lifetime tax payments. But, the relationship is not linear.
A progressive benefit schedule which is heavily weighted toward
individuals with relatively low lifetime wages skews benefits
toward relatively low income individuals. The following table
provides average monthly benefits for retirees aged 65 at
different earnings level. It is assumed that earnings over the
individuals' worklife kept pace with the average growth in
earnings and that therefore the individuals relative earnings
were constant throughout their lives.
In addition, the table provides the amount of benefits
received in comparison to taxes paid for each worker relative to
a worker earning $10,000. A Relative Benefit to Tax Ratio of 0.5
means that the Social Security system was only half as good a
deal for that individual as for a worker with an income of
$10,000. For the vast majority of workers currently retiring,
the Social Security system does provide a net "good deal". As
the system matures, however, increasing numbers of higher income
workers will find themselves net losers from the system while
lower income workers will, on net, be beneficiaries.
1989 Annual
1990 Monthly
Relative Benefit
Earnings
Benefits
to Tax Ratio
$10,000
$456
1.00
$20,000
$708
0.76
$30,000
$896
0.65
$48,000
$974
0.44
$70,000
$975
0.44
Two other factors should be noted. First, upper income
retirees are quite likely to have half of their Social Security
benefits subject to the personal income tax. This will reduce
the after-tax benefits for these retirees and thus further
increase the relative progressivity of the system. Second, the
actual net benefits of the system depend on the worker's life
span and marital status. In general, higher income workers live
longer and thus receive relatively greater benefits, in actuarial
terms, than lower income workers. On the other hand, single
earner married couples do significantly better in terms of
benefits received relative to taxes paid than do two earner
married couples. As two earner couples tend to have higher
lifetime incomes, this factor may enhance the progressivity of
the system overall.
I
101ST CONGRESS
1ST SESSION
H.R.3505
To amend title II of the Social Security Act to assure the continuing financial
solvency of the OASDI Trust Funds, and to require periodic reports by the
Board of Trustees of the Trust Funds regarding the actuarial balance of the
Trust Funds.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 23, 1989
Mr. ROSTENKOWSKI (for himself, Mr. JACOBS, Mr. PICKLE, Mr. GIBBONS, Mr.
RANGEL, Mr. STARK, Mr. FORD of Tennessee, Mr. JENKINS, Mr. DOWNEY,
Mr. GUARINI, Mr. Russo, Mr. PEASE, Mr. MATSUI, Mr. ANTHONY, Mr.
FLIPPO, Mr. DORGAN of North Dakota, Mrs. KENNELLY, Mr. DONNELLY,
Mr. COYNE, Mr. ANDREWS, Mr. LEVIN of Michigan, Mr. MOODY, and Mr.
CARDIN) introduced the following bill; which was referred jointly to the
Committees on Ways and Means and Rules
A
BILL
To amend title II of the Social Security Act to assure the
continuing financial solvency of the OASDI Trust Funds,
and to require periodic reports by the Board of Trustees of
the Trust Funds regarding the actuarial balance of the
Trust Funds.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4
This Act may be cited as the "Social Security Solvency
5 Protection Act of 1989".
2
1 SEC. 2. PROTECTION OF OASDI TRUST FUNDS.
2
Section 201 of the Social Security Act (42 U.S.C. 401)
3 is amended by adding at the end the following new sub-
4 section:
5
"(n)(1) It shall not be in order in the House of Repre-
6 sentatives or the Senate to consider any bill or resolution, or
7 any-amendment thereto or conference report thereon, if upon
8 enactment such legislation-
9
"(A) would provide for a net increase in benefits
10
under sections 202, 223, and 228 of more than-
11
"(i) $100,000,000 for a period comprising
12
the fiscal year during which the legislation would
13
be enacted and the next 5 fiscal years, or
14
"(ii) an amount which is equivalent to the
15
amount specified in clause (i) with respect to the
16
period referred to in clause (i) but which is further
17
projected under identical actuarial assumptions
18
over a period comprising the calendar year during
19
which the legislation would be enacted and the
20
next 74 calendar years,
21
without providing at least a net increase, for the same
22
period referred to in clause (i) or (ii), in the taxes im-
23
posed under sections 1401(a), 3101(a), 3111(a),
24
3201(a), 3211(a), and 3221(a) of the Internal Revenue
25
Code of 1986, and chapter 1 of such Code (to the
26
extent attributable to changes in section 86 of such
HR 3505 IH
3
1
Code), of an amount by which the net increase in such
2
benefits exceeds the amount specified in such clause; or
3
"(B) would amend one or more of the provisions
4
comprising sections 86, 1401(a), 3101(a), 3111(a),
5
3201(a), 3211(a), and 3221(a) of such Code SO as to
6
provide for a net decrease in the taxes imposed under
7
such provisions, and chapter 1 of such Code (to the
8
extent attributable to changes in such section 86), of
9
more than-
10
"(i) the amount specified in subparagraph
11
(A)(i) for the period referred to therein, or
12
"(ii) the amount specified in subparagraph
13
(A)(ii) for the period referred to therein,
14
without providing for at least a net decrease, for the
15
same period referred to in clause (i) or (ii), in such ben-
16
efits of an amount by which the net decrease in such
17
taxes exceeds the amount specified in such clause.
18
"(2) For purposes of this subsection, all estimates of
19 revenues and outlays shall be made by the Congressional
20 Budget Office, in consultation with the Director of the Joint
21 Committee on Taxation.
22
"(3) The point of order set forth in paragraph (1) may be
23 waived or suspended in the Senate only by the affirmative
24 vote of three-fifths of the Members, duly chosen and sworn.".
HR 3505 IH
4
1 SEC. 3. REPORT TO THE CONGRESS BY THE BOARD OF TRUST-
2
EES OF THE OASDI TRUST FUNDS REGARDING
3
THE ACTUARIAL BALANCE OF THE TRUST
4
FUNDS.
5
Section 201(c) of the Social Security Act (42 U.S.C.
6 401(c)) is amended by inserting, after the first sentence fol-
7 lowing clause (5), the following new sentence: "Such state-
8 ment shall include a finding as to whether the Federal Old-
9 Age and Survivors Insurance Trust Fund and the Federal
10 Disability Insurance Trust Fund, individually and collec-
11 tively, are in close actuarial balance, as determined by the
12 Board of Trustees.".
2505 no
Sac
Std
34
TABLE 10.- SELECTED ECONOMIC ASSUMPTIONS BY ALTERNATIVE, CALENDAR YEARS
1960-2065 (Cont.)
Average annual percentage increase in-
Average
Average
annual
Average
annual
wage
Consumer
Real-wage
annual in-
unemploy-
in covered
Price
differential*
Tyem Date
terest rate*
ment rate'
Calendar year
Real GNP'
employment
Index
(percent)
(percent)
(percent)
Alternative I:
1988
3.9
6.4
4.0
2.4
8.8
5.5
1989
3.7
6.4
3.8
2.6
9.3
5.2
1990
3.6
5.5
3.0
2.4
8.7
5.0
1991
3.6
5.4
2.8
2.5
7.8
5.0
1992
3.4
5.0
2.5
2.5
6.9
4.9
1993
3.3
4.7
2.3
2.5
6.2
4.9
1994
3.2
4.4
2.1
2.3
5.5
4.8
1995
3.2
4.1
2.0
2.1
4.9
4.7
1996
3.0
4.0
2.0
2.0
4.7
4.7
1997
2.9
4.1
2.0
2.1
4.9
4.7
1998
2.9
4.1
2.0
2.1
5.0
4.7
2000
3.1
4.3
2.0
2.2
5.0
5.0
2010 & later'
2.6
4.2
2.0
2.2
5.0
5.0
Alternative II-A:
1988
3.9
6.4
4.0
2.4
8.8
5.5
1989
3.2
6.0
3.9
2.1
9.3
5.2
1990
3.2
5.5
3.7
1.8
9.0
5.1
1991
3.1
5.1
3.2
1.9
8.2
5.1
1992
2.9
5.0
3.0
2.0
7.5
5.1
Now
6.2%
1993
2.8
5.0
3.0
2.0
6.7
5.2
1994
2.7
4.9
3.0
1.9
6.2
5.2
1995
2.6
4.7
Now
3.0
1.7
5.8
5.2
1996
2.6
4.7
3.0
1.7
5.6
5.2
1997
2.6
4.8
3.0
1.6
5.6
5.2
Actually
1998
2.5
4.7
3.0
1.7
5.6
5.2
2000
2.6
4.8
3.0
1.7
5.5
5.5
2010 & later'
2.1
4.7
3.0
1.7
5.5
5.5
Alternative II-B:
T
1988
3.8
6.4
4.0
2.4
8.8
5.5
PRODENT ASSUMP.
1989
2.6
6.2
4.8
1.4
9.5
5.4
1990
2.6
5.3
4.5
.8
9.4
5.5
1991
2.6
5.5
4.5
1.0
HHS
9.1
5.5
1992
2.5
5.6
4.3
1.2
8.6
5.5
1993
2.5
5.8
4.2
1.6
8.0
5.5
1994
2.4
5.6
4.0
1.6
7.4
5.5
1995
2.3
5.5
L
4.0
1.5
6.9
5.5
1996
2.3
5.5
4.0
1.5
6.6
5.6
1997
2.3
5.6
4.0
1.6
6.4
5.6
1998
2.2
5.4
4.0
1.4
6.2
5.6
2000
2.2
5.4
4.0
1.3
6.0
6.0
2010 & later'
1.8
5.3
4.0
1.3
6.0
6.0
Alternative HI:
1988
3.8
5.2
4.0
1.2
8.8
5.5
Soc
1989
-.6
4.7
5.4
-.8
9.7
5.9
1990
.9
5.4
5.8
-.4
10.1
6.7
1991
2.4
6.4
6.4
(*)
10.5
6.4
1992
1.2
5.8
6.3
-.5
10.3
6.2
Returnes
1993
-.7
4.6
5.0
-.3
8.6
7.2
1994
2.7
6.8
5.3
1.5
8.8
6.9
1995
1.9
5.9
5.0
.9
7.9
6.7
1996
1.8
5.9
5.0
.9
7.5
6.6
1997
1.6
6.0
5.0
1.0
7.2
6.5
1998
1.6
5.8
5.0
.8
6.8
6.5
2000
1.7
5.9
5.0
.8
6.5
7.0
2010 & later'
1.2
5.8
5.0
.8
6.5
7.0
The real GNP (gross national product) is the value of total output of goods and services, expressed in 1982 dollars.
The Consumer Price Index is the average of the 12 monthly values of the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W).
The real-wage differential is the difference between the percentage increases, before rounding, in (1) the average
annual wage in covered employment, and (2) the average annual Consumer Price Index.
The average annual interest rate is the average of the nominal interest rates, which, in practice, are compounded
semiannually, for special public-debt obligations issuable to the trust funds in each of the 12 months of the year.
Through 1998, the rates shown are crude civilian unemployment rates. After 1998, the rates are total rates (including
military personnel), adjusted by age and sex based on the estimated total labor force on July 1, 1988.
*Preliminary.
This value is for 2010. The annual percentage increase in real GNP is assumed to continue to change after 2010 for
each alternative to reflect the dependence of labor force growth on the size and age-sex distribution of the population.
The increases for 2065 are 2.7, 1.8, 1.5, and 0.5 percent for alternatives I. II-A, II-B, and III. respectively.
This value is between 0.05 percent and -0.05 percent.
BASE CASE (ALTERNATIVE II-B)
($ TRILLIONS)
4.0
3.5
3.0
TOTAL
INCOME
2.5
2.0
NONINTEREST
INCOME
1.5
phone
1.0
OUTGO
INTEREST
INCOME
0.5
SURPLUS
0
0.5
1989
1993
1997
2001
2005
2009
2013
2017
2021
2025
2029
DATA FROM THE 1989 TRUSTEES REPORT
($ BILLIONS)
BASE CASE (ALTERNATIVE II-B)
Even in a fay as you
OASDI
go
system
INCOME
Hus a reserve
EXCLUDING
TOTAL
YEAR-END
TOTAL
INTEREST
INTEREST
OUTGO
SURPLUS
ASSETS
1989
294.2
281.2
13.1
235.7
58.5
168.3
1990
322.2
303.3
18.9
253.2
69.1
237.3
1991
347.2
321.8
25.4
270.3
76.9
314.2
1992
374.4
342.2
32.2
287.9
86.5
400.7
1993
404.1
364.8
39.2
306.4
97.6
498.4
18
morth
rale
1994
435.6
389.0
46.7
324.8
110.8
609.1
1995
468.3
414.1
54.2
343.8
124.5
733.6
1996
502.6
440.7
62.0
363.9
138.7
872.3
1997
538.4
468.2
70.2
385.2
153.2
1,025.5
1998
576.9
497.7
79.2
408.1
168.8
1,194.3
1999
617.1
528.5
88.6
432.2
184.9
1,379.2
2000
660.4
562.1
98.3
457.7
202.7
1,581.8
2001
706.0
597.9
108.1
484.8
221.2
1,803.1
2002
753.5
635.5
118.0
513.5
240.0
2,043.1
2003
803.0
675.2
127.8
544.6
258.4
2,301.4
2004
861.1
717.4
143.8
578.4
282.7
2,584.2
2005
923.2
762.0
161.2
614.9
308.3
2,892.5
2006
989.0
808.9
180.1
654.5
334.6
3,227.0
2007
1,058.3
857.7
200.6
697.3
361.0
3,588.0
2008
1,131.5
908.9
222.6
744.9
386.6
3,974.7
2009
1,207.9
961.8
246.0
798.1
409.7
4,384.4
2010
1,288.2
1,017.4
270.8
857.0
431.2
4,815.6
2011
1,372.1
1,075.4
296.7
921.3
450.8
5,266.4
2012
1,459.4
1,135.7
323.7
992.6
466.8
5,733.2
2013
1,550.7
1,199.2
351.5
1,071.0
479.7
6,213.0
2014
1,645.3
1,265.3
380.0
1,156.5
488.8
6,701.8
2015
1,743.7
1,334.8
408.9
1,249.4
494.3
7,196.1
2016
1,845.3
1,407.4
437.9
1,350.6
494.7
7,690.9
2017
1,950.4
1,483.6
466.8
1,460.5
489.9
8,180.8
2018
2,058.8
1,563.6
495.2
1,578.3
480.5
8,661.3
2019
2,170.8
1,647.8
523.0
1,704.3
466.5
9,127.8
2020
2,286.2
1,736.4
549.8
1,838.4
447.8
9,575.6
2021
2,404.4
1,829.2
575.3
1,980.5
424.0
9,999.6
2022
2,526.1
1,926.9
599.2
2,130.9
395.2
10,394.8
2023
2,650.9
2,029.6
621.3
2,289.9
361.0
10,755.8
2024
2,778.9
2,137.7
641.2
2,456.8
322.1
11,077.8
2025
2,910.3
2,251.8
658.6
2,632.6
277.8
11,355.6
2026
3,045.0
2,371.8
673.2
2,817.5
227.5
11,583.1
2027
3,183.9
2,499.1
684.8
3,009.2
174.6
11,757.7
2028
3,326.7
2,633.6
693.1
3,208.7
118.0
11,875.7
2029
3,473.6
2,775.6
698.0
3,415.2
58.4
11,934.1
2030
3,624.7
2,925.4
699.3
3,629.0
(4.3)
11,929.8
ALTERNATIVE III
($ TRILLIONS)
5.0
4.0
OUTGO
3.0
2.0
TOTAL
INCOME
NONINTEREST
INCOME
1.0
INTEREST
INCOME
0
1.0
SURPLUS
2.0
3.0
1989
1993
1997
2001
2005
2009
2013
2017
2021
2025
2029
DATA FROM THE 1989 TRUSTEES REPORT
($ BILLIONS)
ALTERNATIVE III
OASDI
INCOME
EXCLUDING
TOTAL
YEAR-END
TOTAL
INTEREST
INTEREST
OUTGO
SURPLUS
ASSETS
1989
287.7
274.8
12.8
236.5
51.2
161.0
1990
309.3
291.6
17.8
256.0
53.4
214.3
1991
334.3
310.9
23.4
277.4
57.0
271.3
1992
363.2
333.7
29.5
301.6
61.7
332.9
1993
383.9
348.8
35.1
326.8
57.1
390.0
1994
414.3
373.8
40.4
349.9
64.4
454.4
1995
445.6
400.1
45.5
374.5
71.1
525.5
1996
479.0
428.6
50.4
400.9
78.1
603.6
1997
513.1
457.7
55.4
428.6
84.5
688.1
1998
548.8
488.5
60.3
458.6
90.3
778.4
1999
586.2
520.5
65.6
487.9
98.2
876.6
2000
626.2
555.9
70.3
519.0
107.2
983.8
2001
667.6
593.1
74.5
551.8
115.8
1,099.6
2002
710.6
632.3
78.3
587.0
123.6
1,223.2
2003
755.2
673.8
81.4
624.8
130.4
1,353.6
2004
808.8
718.8
90.1
666.1
142.7
1,496.2
2005
866.1
766.6
99.5
710.6
155:4
1,651.7
2006
926.5
816.8
109.7
758.7
167.8
1,819.5
2007
990.0
869.3
120.7
811.2
178.9
1,998.4
2008
1,057.0
924.7
132.3
868.9
188.1
2,186.4
2009
1,126.3
982.0
144.3
935.0
191.4
2,377.8
2010
1,198.9
1,042.5
156.4
1,008.2
190.7
2,568.5
2011
1,274.0
1,105.8
168.2
1,088.6
185.5
2,753.9
2012
1,351.2
1,171.6
179.5
1,177.3
173.9
2,927.8
2013
1,431.2
1,241.3
189.9
1,274.9
156.3
3,084.1
2014
1,512.8
1,313.9
198.8
1,381.9
130.9
3,215.0
2015
1,596.4
1,390.4
205.9
1,498.8
97.5
3,312.5
2016
1,680.9
1,470.3
210.5
1,626.8
54.0
3,366.6
2017
1,766.3
1,554.3
212.0
1,766.0
0.3
3,366.9
2018
1,852.4
1,642.7
209.7
1,917.2
(64.8)
3,302.1
2019
1,938.4
1,735.6
202.9
2,079.5
(141.1)
3,161.0
2020
2,024.4
1,833.6
190.8
2,253.3
(228.9)
2,932.1
2021
2,108.9
1,936.3
172.6
2,439.9
(330.9)
2,601.1
2022
2,191.9
2,044.4
147.5
2,638.6
(446.7)
2,154.4
2023
2,272.5
2,158.0
114.5
2,850.3
(577.8)
1,576.6
2024
2,350.4
2,277.8
72.6
3,075.8
(725.4)
851.3
2025
2,425.2
2,404.5
20.7
3,315.5
(890.3)
(39.1)
2026
2,495.0
2,537.3
(42.3)
3,569.2
(1,074.2)
(1,113.3)
2027
2,560.3
2,677.9
(117.6)
3,835.7
(1,275.4)
(2,388.7)
2028
2,620.1
2,826.4
(206.3)
4,116.2
(1,496.1)
(3,884.8)
2029
2,674.0
2,983.7
(309.7)
4,409.7
(1,735.7)
(5,620.6)
2030
2,719.5
3,148.6
(429.1)
4,716.8
(1,997.3)
(7,617.8)
ALTERNATIVE I
($ TRILLIONS)
4.0
3.5
3.0
TOTAL
2.5
INCOME
2.0
NONINTEREST.
1.5
INCOME
OUTGO
1.0
SURPLUS
0.5
INTEREST
INCOME
0
1989
1993
1997
2001
2005
2009
2013
2017
2021
2025
2029
DATA FROM THE 1989 TRUSTEES REPORT
($ BILLIONS)
ALTERNATIVE I
OASDI
INCOME
EXCLUDING
TOTAL
YEAR-END
TOTAL
INTEREST
INTEREST
OUTGO
SURPLUS
ASSETS
1989
295.3
282.3
13.0
235.2
60.2
169.9
1990
324.4
305.6
18.8
249.5
74.9
244.8
1991
350.6
325.5
25.1
262.3
88.2
333.1
1992
376.9
345.5
31.5
274.9
102.0
435.1
1993
403.5
365.7
37.9
287.1
116.4
551.6
1994
430.2
386.1
44.1
299.1
131.1
682.7
1995
456.6
406.6
50.0
310.7
145.9
828.6
1996
483.5
427.6
56.0
322.9
160.7
989.3
1997
511.5
448.5
62.9
335.6
175.8
1,165.1
1998
541.9
470.9
71.0
349.3
192.6
1,357.7
1999
576.0
495.7
80.3
364.5
211.5
1,569.1
2000
612.6
522.4
90.1
380.4
232.2
1,801.3
2001
651.3
550.8
100.5
396.9
254.3
2,055.7
2002
691.6
580.3
111.2
414.5
277.0
2,332.7
2003
733.6
611.2
122.4
433.5
300.1
2,632.7
2004
780.6
642.8
137.8
454.3
326.4
2,959.1
2005
830.5
675.9
154.6
476.7
353.8
3,313.0
2006
883.0
710.2
172.8
500.8
382.2
3,695.1
2007
937.8
745.5
192.3
527.0
410.8
4,105.9
2008
995.3
782.1
213.3
556.5
438.9
4,544.8
2009
1,055.3
819.7
235.6
589.2
466.1
5,010.9
2010
1,118.1
858.9
259.2
625.2
492.9
5,503.8
2011
1,183.4
899.3
284.1
664.7
518.7
6,022.5
2012
1,251.3
941.0
310.3
708.5
542.8
6,565.3
2013
1,322.3
984.6
337.6
756.1
566.2
7,131.4
2014
1,395.6
1,029.6
366.0
807.7
587.9
7,719.4
2015
1,472.0
1,076.5
395.5
863.4
608.6
8,328.0
2016
1,551.0
1,125.1
425.9
923.6
627.4
8,955.4
2017
1,633.0
1,175.7
457.3
988.2
644.8
9,600.2
2018
1,718.0
1,228.6
489.4
1,056.7
661.3
10,261.5
2019
1,806.1
1,283.8
522.4
1,128.8
677.3
10,938.8
2020
1,897.7
1,341.6
556.1
1,204.4
693.3
11,632.1
2021
1,992.4
1,401.8
590.6
1,283.2
709.2
12,341.3
2022
2,090.6
1,464.7
625.9
1,364.9
725.7
13,067.0
2023
2,192.6
1,530.5
662.1
1,449.8
742.8
13,809.8
2024
2,298.5
1,599.5
699.1
1,537.5
761.0
14,570.8
2025
2,408.9
1,671.9
737.0
1,628.5
780.4
15,351.3
2026
2,523.5
1,747.6
775.9
1,722.0
801.6
16,152.8
2027
2,643.6
1,827.6
816.0
1,817.1
826.4
16,979.2
2028
2,769.2
1,911.8
857.4
1,914.2
855.0
17,834.2
2029
2,900.7
2,000.3
900.3
2,012.1
888.6
18,722.8
2030
3,038.2
2,093.1
945.0
2,111.5
926.7
19,649.5
ALTERNATIVE I
($ TRILLIONS)
4.0
3.5
3.0
TOTAL
2.5
INCOME
2.0
NONINTEREST.
1.5
INCOME
OUTGO
1.0
SURPLUS
0.5
INTEREST
INCOME
0
1989
1993
1997
2001
2005
2009
2013
2017
2021
2025
2029
FROM THE OFFICE OF
Senator Daniel Patrick Moynihan
New York
Friday, December 29, 1989
Contact: Brian Connolly
202/224-4451
A PROPOSAL TO CUT SOCIAL SECURITY TAXES
Statement of
Senator Daniel Patrick Meynihan (D.-N.Y.)
Senate Radio-TV Gallery
Room S-325, The Capitol
Washington, DC
On January 23, 1990, the first day of the next session of
Congress, I will introduce a measure to repeal the scheduled
increase in the Social Security tax immediately, and to return the
system to a pay-as-you go basis beginning in 1991.
This. will mean a tax cut in 1991 of approximately $500 for a
couple with combined earnings at the Social Security taxable
maximum (an estimated $54,300 in 1991). Savings in future years
would be even greater.
Why do I make such a proposal? Because the Social Security
trust fund surpluses are being used to finance the deficit in the
operating budget of the federal government. This masks the true
size of the budget deficit and perverts the original purpose for
the surpluses -- to provide for the retirement of the baby boom in
the next century.
I do not take this measure lightly, or without awareness of
the complexity of the matter. To the contrary, at the beginning of
this year I made it quite explicit that this option might have to
be chosen.
Specifically, the report of the Democratic Commissioners of
the National Economic Commission, issued on March 1, 1989, dealt
primarily with the opportunities presented by the existence of
large and growing surpluses in the Social Security trust funds. We
stated that 1f the administration and Congress could bring about a
balanced operating budget, the Social Security surplus would allow
us to retire privately held government debt. This would
automatically translate into an increase in national savings --
perhaps doubling the current savings rate -- which offered a means
of insuring c strong productive U.S. economy capable of supporting
retirees in the next century. We recommended this. At the same
time, Commissioners Strauss, Gray, Iacocca, Kirkland, Rohatyn and
myself were explicit in stating that unless this were done, there
would be no defensible reason for continuing the payroll tax at
present levels. Our report ended thus:
Let no one suppose that a Democratic Congress will much
longer allow a payroll tax to be used to service a $2 to $3
trillion dollar debt owned in vastly disproportionate amounts
by wealthy individuals and institutions. It already requires
nearly one-half the revenues of the income tax to pay the
interest. This is surely the largest transfer of wealth from
labor to capital in the history of our "political arithmetic."
But at least this is a graduated tax. By 1992 the trust fund
reserves will have reached 100 percent of annual cutlays; a
considerable reserve. By 1994 the proportion reached 150
percent. If, in the next five years, no arrangements are made
to save the future incomes to the funds, Congress -- you may
depend on it -- will return to a "pay-as-you-go" financing.
That is not a threat. It is a political reality and
indeed, an ethical imperative. The nation struggled for a
generation to ratify the XVIth Amendment to the Constitution.
We are not about to see it effectively repealed by a reform in
financing of Social Security.
The better part of a year has gone by. Early on there were
various suggestions from the administration that our warning had
been heard, and that some general agreement would be reached. Then
silence. silence can denote but one thing. The administration is
content to see the budget deficit gradually eliminated by the
growing Social Security tax revenue.
As we pointed out in our NEC report, the operating budget
deficit is not declining. It is growing. The deficit for FY 1989
was $204 billion without the Social Security surplus. The
Congressional Budget Office baseline projections show the deficit
in the operating budget growing to $268 billion in the year 2000.
In that same year the Social Security surplus will be $235 billion.
A $268 billion deficit financed almost exclusively by the Social
Security payroll tax.
This is totally unacceptable. The United States almost
certainly now has the most regressive tax structure of any Western
nation. The 1980s have witnessed a decline in the progressivity of
federal taxes as a whole -- income, payroll, and excise taxes
combined -- despite improvements made in the Tax Reform Act of
1986. As CBO Director Robert D. Reischauer recently noted:
federal taxes in 1990 will be less progressive than they ware in
either 1977 or 1980
This is 50 because the Social
Security payroll tax -- which is decidedly regressive -- has come
to make up an increasingly large share of total federal tax levies.
social Security tax revenue as a percent of total federal revenue
rose by 23 percent from 1980 to 1988, while personal and corporate
income tax revenue as a percent of total federal revenue declined
by 6 percent and 23 percent, respectively. And the Social Security
Administration reports that of those taxpayers who will pay any
Social Security tax in 1990, about 74 percent will pay more in
FICA taxes (including the employer's share) than in income taxes.
The 1983 decision to move the Social Security trust funds to a
partially funded basis was a responsible one. There are good
grounds for actually saving for future retirement -- that is, using
Social Security surpluses to increase national savings and
investment and hence economic growth. As Michael Kinsley recently
put it:
There is no way society as a whole can save money for its
future retirement. The resources retirees consume in the year
2025 will have to be produced in the year 2025 or thereabouts.
All we can do is take steps now to increase our future
productive capacity. If the Social Security surplus were
increasing productive investment -- even indirectly, by
reducing the government's demand for credit -- it would be
achieving that purpose.
"But," he adds, "it clearly isn't. Instead, it is enabling
the government to avoid fiscal reality."
Exactly 50. And we can no longer tolerate the use of Social
Security surpluses to finance, say, B-2 bombers or A capital gains
tax cut. The time has come to return Social Security to pay-as-
you-go financing.
Social Security was financed on a pay-as-you-go basis for
decades prior to 1983. Under this financing method, we set the
Social Security tax rate at the level needed to produce the
revenues for current benefits. This approach will eliminate the
current regressive financing of the budget deficit, while keeping
Social Security on a sound financial basis. It will also address
the concerns of those who fear that large Social Security surpluses
would inevitably be spent on benefit liberalizations.
Robert J. Myers, who helped create our Social Security system
in 1934 and who for 23 years was its chief actuary, has urged a
return. to pay-as-you-go financing. In testimony of May 1988 before
the Senate Finance Subcommittee on Social Security, which I chair,
Myers stated: "I believe that OASDI should be financed on close to
a current cost basis. Income should, on the whole, slightly exceed
outgo each year, in order to build up a fund which is about equal
to one year's outgo -- and certainly no more. This should be
accomplished by changing the future tax-rate schedule so as to more
nearly match the trend of outgo."
We have tailored our proposal to Mr. Myers' specifications.
The proposal calls for repealing the tax rate increase scheduled
for January 1 and a further rate reduction on January 1, 1991. By
keeping the current rate of 6.02 percent for employees and
employers each through 1990 (rather than increasing the rate to 6.2
percent, as called for under present law), we will still build the
reserve to roughly 95 percent of the following year's outgo. On
January 1, 1991, we would cut the Social Security tax rate to 5.1
percent, the rate recommended by Mr. Myers.
The proposal would result in a $7 billion saving for Social
Security taxpayers in 1990 and a $55 billion saving in 1991.
For later years there would of course be scheduled tax rate
increases to meet rising costs. The rate would peak at 7.7 percent
in 2049 and thereafter. This sounds high, but we would have to go
this high around the same time under the current arrangements
anyway, after the reserve was drawn down. And it must be
remembered that with even modest rates of economic growth between
now and then, the after tax living standard of workers in 2049
would still be greater than that we have today.
SENT BY:AARP COMMUNICATIONS ; 1-17-90 1:37PM ;
202->
2024566218; # 1
Legislative Council MEETING. 29TH
TALKING POINTS
SENATOR MOYNIHAN'S PROPOSAL TO REDUCE PAYROLL TAXES
BACKGROUND
The 1983 Social Security Amendments called for increasing
Social Security payroll tax (FICA) rates to assure the fiscal
stability of the Old-Age Survivors and Disability Insurance
Trust Funds for 75 years. The tax rates were raised in 1984,
1985, 1986 and 1990. The 1990 increase is the last scheduled
raise in the rates.
In a departure from past practice, these FICA tax rates were
set at a level sufficient to prefund a portion of the
retirement benefits of the "baby boom" generation.
Senator Moynihan, one of the architects of the 1983
compromise, has now proposed rolling back the 1990 increase
in the payroll tax (.14%) and then in 1991, "floating the tax
rate--setting it a level to cover current benefits and a small
contingency reserve. Essentially, current workers (dominated
by the baby boom) would only pay sufficient taxes to cover
current retirees and future generations would pay higher
payroll taxes to cover retirement benefits for the baby boom.
"The debate over this and similar proposals is not essentially
about the well being of today's retirees. Rather, it is a
debate how the Social Security promise will be honored in the
future. The economic choices we make in the next few years may
very well determine whether or not we will be able to keep
these promises for the baby boom and beyond."
This proposal raises a number of significant issues and
concerns:
1. The Trust Funds do not even have a contingency reserve of
one year at this time. The one year level is considered a
minimum. AARP believes that up to two years reserves are
necessary. The contingency reserve is need to ensure that the
Social Security System can get through periods of economic
slowdown or recession without crisis.
SENT BY:AARP COMMUNICATIONS ; 1-17-90 1:38PM ;
202->
2024566218;# 2
2. Senator Moynihan's major reason for proposing a rollback
in the tax rates is that the Social Security trust fund
buildup is being used to mask the true extent of the Federal
deficit and to finance the deficit in the operating budget of
the Federal government. These are legitimate concerns but the
Moynihan issue. proposal goes well beyond simply dealing with this
3. AARP believe that gradually removing the Trust Funds from
the Gramm-Rudman-Hollings (GRH) deficit calculation would
action. expose the true dimensions of the deficit and spur positive
4. The reserve was designed to ensure benefits to future
generations. It was seen as source of new national savings
which would make the economy stronger and more productive in
the future.
5. The reserve was also seen as a fairer way to ensure
benefits to the baby boom. It is reasonable to ask the large
baby boom generation to provide for a portion of its own
retirement benefits since future working generations will be
of much smaller numbers.
6. However, the reserve can only serve these beneficial
functions if the rest of the Federal budget is in relative
balance. Senator Moynihan's proposal is based on the premise
that we cannot get our budget house in order and therefore,
we should not make future promises based on the buildup of the
reserve. Many believe that this determination is premature
and that we should not give up on the reserve yet.
7. Floating the tax rate would give an immediate tax cut to
workers and their employers. But, it may undermine further
confidence in Social Security. Eliminating the buildup of the
reserve in favor of raises taxes in the future to pay benefits
could raise anxiety and lower confidence. Some fear that
benefits to the baby boom would end up being reduced because
there would be little willingness in the future to raise the
payroll tax to the levels necessary to sustain the current
benefit promise.
8. Giving a tax cut now could be seen as little more than a
continuation of the trend of the last ten years of immediate
gratification with the bills to be paid later.
9. However, this tax cut is not "free". The money ($50
billion or more in the first year of the floating tax rate)
would have to be made up in other taxes or by increasing
government indebtedness.
10. This proposal should be taken seriously and its effects
carefully scrutinized.
TALKING POINTS RE:
MOYNIHAN'S SOCIAL SECURITY PLOY
(1) In an ideal world, we would all love to be able to cut
Social Security taxes without any cost.
(2) Unfortunately, if we do cut Social Security receipts, we
will short-change the very people we want to help: today's
workers. We would undo the bipartisan Social Security
rescue that was enacted in 1983.
(3) In the long term, as a practical matter, the Moynihan plan
would have to mean a major cut in Social Security benefits.
(If reserves are not built up, they will not be there when
baby-boomers retire -- and the tax burden on future workers
would be prohibitive.)
(4) To make sure the reserves are there, the Administration is
proposing a new "Social Security Integrity and Debt
Reduction Fund. " (Legislation available in late January.)
(5) In the near term -- as Moynihan himself acknowledges -- his
plan would cost $55 billion in FY '91 alone. (That's the
coming budget year.) That $55 billion revenue loss would
have to mean one of three things:
(a) abandon the G-R-H targets and abandon any serious
interest in deficit reduction; or
(b) cut benefits; or
(c) raise taxes. (Whose? Where does one find $55 billion
without hitting the average taxpayer?)
(6) Moynihan, in fact, knows much of this. His plan is not
serious. It is a political ploy.
TIMES 07-19-88
Don't Touch Those Social Security Funds
To the Editor:
30/104/309
Morgan group, "the trust funds could
A Princeton economist recently
absorb all outstanding Federat-debt
wrote that the secret is out concern-
by the year 2005." We were "well
Ing the surpluses in the Social Se-
aware that we had put in place's feve-
curity trust funds. Indeed it is, and so
nue stream that could quadruple the
I fear are assorted entrepreneurs
national savings rate, again to cite
with schemes for getting their hands
the Morgan study.
on some portion thereof!
All that need be done now To lot,
On your Op-Ed page of July 7, my
but even so, all is to get our operat-
good friend Walt Rostow of the Uni-
ing budget in balance. Thereafter, the
versity of Texas proposes that we use
trust funds will absorb the privately
the money to set up a public invest-
held debt, which automatically trans-
ment bank, which among other
lates into an increase in national sav-
things, "would help put the stricken
ings. But the trust funds themselves
banking systems of important parts
must remain intact and untouchable
of the nation back on their feet."
save to pay benefits. This becomes an
Hmm.
issue of integrity and was integral to
This morning, you report ("Study
the Blair House accords.
Suggests a Partly Private Social Se-
It would be useful to hear from our
curity," Business Day) that a group
Presidential candidates on this sub-
at J.P. Morgan & Company would
ject.
DANIEL PATRICK MOYNIHAN
have us refund the surplus to Individ-
U.S. Senator from New York
uals so that they can invest in stocks
Washington, July 11, 1988
and bonds. Again, hmm.
A common theme of these and
other proposals is that the political
process cannot be trusted with so
much money. The Morgan study be-
gins: "The burgeoning surplus of the
U.S. Social Security system has come
to the fore this year as the latest
temptation to procrastinate on deci-
sive measures to cut the Federal
budget deficit." Possibly. May one
ask, however, that some considera-
tion be given the fact that it was the
political process that created this
revenue stream.
This began with a conversation be-
tween me and Senator Bob Dole on
the Senate floor on Jan. 3, 1983, fol-
lowed by 11 days of intensive negotia-
tions with a White House team led by
James A. Baker 3d, then chief of staff.
Agreement was reached at Blair
House on Saturday night, Jan. 15.
In essence, we agreed to move from
a pay-as-you-go system to a partly
funded one. (The Canadians had
shown the way.) We could count. We
knew perfectly well that, to quote the
WASH.POST: 10-19-89
Split-Level Government: Sen. Moynihan Replies
A Post editorial ["Split-Level Govern-
"would instantly raise the lagging me-
ment," Oct. 18] states that it "sets a bad
tional savings rate, reduce depen-
precedent" to move the Social Security
dence on foreign loans and allow the
trust funds off-budget. May I point out
Federal Reserve Board to lower in-
that they are already off-budget? S. 219
terest rates-all steps toward eco-
simply excludes them from the calcula-
nomic health."
tion of whatever you want to call the
Not bad for 1 day's work. As the
number that the Gramm-Rudman-Hol-
chairman of the subcommittee on So-
lings legislation requires the budget
cial Security, I introduced the bill in
committees to comply with.
the last Congress and again on the
The object of the bill is to bring the
first legislative day of this Congress. I
current operating budget of the feder-
didn't think it was "showy." I thought
al government into balance, whereup-
nobody even noticed.
on the trust funds commence actually
DANIEL P. MOYNIHAN
to be "saved." This takes the form of
U.S. Senstor (D-N.Y.)
retiring privately held public debt.
Chairman, Subcommittee OR Social Security
The result, as The Post writes,
Washington
WASH. POST 07-06-88
104
309
No Money Worries?
In his column on the Social Security
surplus [op-ed, June 16], Hobart Row-
en cited Alan Greenspan to the effect
that "unless we invest our Social Se-
curity accounts in private instru-
ments, the surplus by itself doesn't
contribute to net savings [in the econ-
omy]." Strictly construed, this state-
ment is false. However, I believe one
can see what the chairman of the
Federal Reserve intended. If the So-
cial Security surpluses lead to re-
duced borrowing by government, that
in turn automatically leads to an in-
crease in national savings. However,
if the surpluses are "spent" by the
government-which is to say used to
disguise a true deficit in current ac-
count-then there is indeed no in-
crease in savings.
The great object of fiscal policy in
the next decade must be to increase
savings by rolling back debt. The
revenue stream-Social Security tax-
es-that makes this possible is in
place. The funds are increasing at
$109,440,000 per day. The coming
surpluses are, to cite the First Boston
Corp., mammoth. The temptation will
be to act as if we suddenly came into
a lot of new money and had no
more worries. This has to be resisted
and to be resisted has to be under-
stood.
The half-dozen of us who put the
current arrangements in place in 12
days of negotiation in January 1983
knew we were creating the revenue
stream that is now appearing. We
knew we were moving from a pay-as-
you-go social insurance system to a
partially funded system. (The Canadi-
ans did this in the 1960s.) We knew
the money would be needed as a form
of forced national savings. To miss
this opportunity-especially in the af-
termath of the 1980s-would truly
put the nation at risk.
DANIEL P. MOYNIHAN
U.S. Senator (D-N.Y.)
Washington
WASH.POST: 10-19-89
Split-Level Government: Sen. Moynihan Replies
A Post editorial ["Split-Level Govern-
"would instantly raise the lagging no-
ment," Oct. 18] states that it "sets a bad
tional savings rate, reduce depen-
precedent" to move the Social Security
dence on foreign loans and allow the
trust funds off-budget. May I point out
Federal Reserve Board to lower in-
that they are already off-budget? S. 219
terest rates-all steps toward eco-
simply excludes them from the calcula-
nomic health."
tion of whatever you want to call the
Not bad for a day's work. As the
number that the Gramm-Rudman-Hot-
chairman of the subcommittee on So-
lings legislation requires the budget
cial Security, I introduced the bill in
committees to comply with.
the last Congress and again on the
The object of the bill is to bring the
first legislative day of this Congress. I
current operating budget of the feder-
didn't think it was "showy." I thought
al government into balance, whereup-
nobody even noticed.
on the trust funds commence actually
DANIEL P. MOYNIHAN
to be "saved." This takes the form of
U.S. Senstor (D-N.Y.)
retiring privately held public debt.
Chairman, Subcommittee on Social Security
The result, as The Post writes,
Washington
PAGE
2
2ND STORY of Level 1 printed in FULL format.
Copyright (c) 1989 The Washington Post
March 7, 1989, Tuesday, Final Edition
SECTION: EDITORIAL; PAGE A25
LENGTH: 801 words
HEADLINE: Why We Called for a Surplus
BYLINE: Daniel Patrick Moynihan
BODY:
There was one thing the National Economic Commission could do, and we did do
it.
We introduced into the deficit "debate" the proposition that if the United
States is to maintain its standing in the world, it must promptly move to a
sustained budgetary surplus.
Further, we identified and quantified that surplus. It should consist of and
amount to the Social Security surplus. This is to say the roughly $ 3 trillion
in cash reserve that will accumulate in the Old Age Survivors and Disability
Insurance Trust Funds between now and the year 2018. The reserve is currently
rising at $ 1 billion a week. Saving the surplus would roughly double net
national savings, now a desperately low 2 percent of GNP.
We surprised ourselves. Or at least I was surprised. Nominally we ended up a
divided commission. That became ingvitable at about 9:15 p.m. EST last Nov. 8,
when exit polls showed that Mr. Bush would be elected, having pledged no new
taxes. Our Republican appointees were thereupon bound not just to support the
pledge but to affirm that a "flexible freeze" would get the budget into balance.
Our side could not do that, and 50 there is a majority and minority report.
However, the commission had two goals. First was the short-term issue of the
deficit. Second, the long-term issue of economic growth. This latter issue took
us directly to the question of the Social Security surplus.
It was by no means inevitable that we would agree on this issue. But we did.
(For what it is worth, the reports were prepared separately. The NEC staff had
no idea what the Republicans would propose until their text arrived 15 minutes
before the Public Printer's deadline on the afternoon of Feb. 27.) I dare to
suggest that we did because of a set of exceedingly chastening facts.
The first set has to do with the enormity of the fiscal excess of the 1980s.
In the two Reagan terms, the United States incurred almost as much debt as was
required to wage the Second World War. After each of our wars, from the
Revolution on, we have had to go into sustained periods of surplus to pay off
the debt. If you like, we now have the moral equivalent of a war debt.
The second set of facts concerned the impact of current borrowing on future
economic growth. We are in the process of beggaring the next generation and
those that follow. Our witnesses pounded away at this. Volcker, Rivlin,
Greenspan, Bergsten, Brock. Start up savings again or be known as a political
generation that quite literally sold its country.
Mead Data Central
PAGE
3
(c) 1989 The Washington Post, March 7, 1989
Enter the Social Security surplus. In 1983 another commission -- the
national Commission on Social Security Reform -- proposed a set of sweeping
changes to the Social Security system. We had, for a near half-century, been
operating on a pay-as-you-go basis. We now moved to a "partially funded" system
whereby more 15 taken in than paid out, to establish a reserve when the "baby
boom" retires (something the Canadians did in the 1960s.) For what it may be
worth, some of us at least on the earlier commission had in mind that we were
creating a revenue stream that would become available in the 1990s when the
borrowing would have to stop.
At this point, most readers ask, what are you talking about? Fair enough. It
has been at least three political generations since we have routinely run a
surplus. Further, the process whereby extra cash flowing into the Treasury leads
to the retirement of privately held public debt and a corresponding increase in
private savings and investment, while simple, doesn't sound simple. We can't
help that. AS the saying goes, If we can send a man to the moon, we can take the
trouble to figure out what happens when Treasury bonds are retired.
Now then. The deficit today. Isn't that a slight obstacle on the way to
surplus? Yes and no. Yes, 1f you don't intend to do anything. But if you think
that something like the fate of the nation is involved, it begins to look easy
enough. Doable, certainly. There would be no significant social dislocation
involved in, let us say, letting taxes return gasoline prices to their 1980
levels. ($ 1 billion for 1 cent.) In the course of our deliberations,
Commissioner Dean Kleckner of the Farm Bureau made a brilliant case for slashing
farm programs which Mr. Reagan's last budget termed "far too costly" ($ 600,000
per farmer over the period 1986-89). Easy $ 20 billion there. So it goes.
A closing point. Budget balancing has been presented in the main as an
exercise in virtue, which may account for the limited enthusiasm it has so far
evoked. But if eliminating the deficit leads directly to a surplus? Interest
rates go down. Stocks go up. Investment booms. Does not that prospect please?
Even, possibly, entice?
The writer, a Democratic senator from New York, served on the National
Economic Commission.
TYPE: OPINION EDITORIAL
SUBJECT: SOCIAL SECURITY; ECONOMIC CONDITIONS
ORGANIZATION: NATIONAL ECONOMIC COMMISSION
NAMED-PERSONS: DANIEL PATRICK MOYNIHAN
Trillions, Limos in the Night
tunity as peril, he went on:
floor. If he was as optimistic as his ar-
And President Reagan was not going
By Daniel Patrick Moynihan
"Social Security is a case in point.
ticle suggested, shouldn't we make
to do anything to prevent it.
With 116 million workers supporting
one last try? Two days later, he and I
And so we would. Until then, Social
WASHINGTON
it and 36 million beneficiaries relying
and Representative Barber B. Cona-
Security had been on a pay-as-you-go
It all started
his appears to be the
on it, Social Security overwhelms
ble Jr. were secreted out to White
basis, with a little cushion 10 take
T
season for disclosing
every other domestic priority.
House chief of staff James A. Baker
care of economic downturns. We
with a Dole
Washington secrets,
Through a combination of relatively
3d's house in northwest Washington.
could have fluffed up that cushion and
and I don't see why
modest steps, including some accel-
Negotiations began.
let it go at that. We decided instead on
article.
only
Republicans
eration of already scheduled taxes
In time, we shifted our talks to
a radical change in policy. Hence-
should be able to play.
and some reduction in the rate of fu-
Blair House (which was empty, owing
forth, we would collect and save for
I've got a pretty good one. Secret
ture benefit Increases, the system
to the chandeller incident), and on the.
the far future, and not just the next
messages concealed on the Op-Ed
can be saved. When It is, much of the
night of Saturday, Jan. 15, we reached
year. An immense reserve would be-
page of The New York Times. Whis-
credit, rightfully, will belong to this
agreement on arrangements to save
gin to accumulate before beginning to
1994. As public debt declines, national
pered conversations on the Senate
President and his party."
the system, which were promptly en-
run down about 2030. In the process,
savings Increase.
floor. White House limos hurtling
Oh? Not 24 hours earlier the budget
dorsed by the commission and the
we would pay off the national debt.
By 2010 the Social Security reserve
through the wintry night to a house in
director, David A. Stockman, had
President.
We have now had four full calendar
is projected to be nearly $4.5 trillion.
northwest Washington. A bedroom -
foretold that the "most devastating
Most of this story is now familiar.
years of the new revenue base. The
($4,460,600,000,000)) If we wanted to
yup - on the second floor of the
bankruptcy in history," that of the So-
Here is what is not generally under-
trustees have just reported, and I
go all the way, we could probably
President's guest house, where nights
cial Security Trust Funds, was only
stood. Almost everyone Involved
have Just had the first oversight hear-
have zero national debt by that time.
earlier a visiting potentate would
months away. Which wasn't so, but a
knew - by then - that the Adminis-
Ing. Here are the numbers. The Social
For the first time, incidentally, since
have been skewered by a plunging
lot of people believed hirn. What the
tration had got the nation's finances
Security Trust Funds are Increasing
1836 - when we were down to $38,000.
chandelier had he not been mysteri-
columnist Sylvia Porter called "a
in terrible shape. Mr. Stockman, who
at the rate of $109,440,000 per day and
We could of course blow the oppor-
ously otherwise engaged at the
scare campaign of vicious propor-
joined our deliberations, has written
rising.
tunity. We could start to "spend" the
Watergate.
tions" had been going on. The new
about this in great detail. There
The current reserve is approaching
Social Security surplus rather than
Huddled conspirators. Big bucks.
breed of conservatives seemed to de-
would be $200 billion budget deficits
$100 billion. Between now and the
using it to retire debt, and so get rid of
Like, maybe, trillions?
test the program even more than the
"as far as the eye could see." The na-
year 2000 it will grow to $1.4 trillion.
the deficit. (Which for practical pur-
Trouble is it was really on the up
old breed. And the funds were going
tional debt would triple in eight years.
(As of 1987, the entire assets of pri-
poses now consists almost entirely of
and up. And has a happy ending. So I
down, the result of an Interval
vate pension funds were about $1.49
debt service.) But surely we should
don't suppose it would sell, and I
In the 1970's when prices l'an ahead of
billion.) This revenue stream must be
"save" it, and thus put aside the fis-
might as well come out with it here
wages so that cost-of-living adjust-
deposited with the Treasury. If at the
cal mess of the 80's.
and now.
ments were not being offset
A true
end of the day the Treasury has more
Our real economic problem is that
in brief, in 12 days in January 1983,
by increased payments into the
money on hand than it needs, it sim-
we don't save enough. Of 24 members
a half dozen people in Washington put
funds.
in place a revenue stream that is just
A year or so earlier, the Senate ma-
inside
ply retires privately held
of the Organization for Economic
debt.
Cooperation and Development, we
beginning to flow and that, If we don't
jority leader, Howard H. Baker Jr.,
This can sound arcane but isn't.
rank 20th, followed by Iceland, and a
blow it, will put the Federal budget
had put together a bipartisan Na-
story
Every week some millions of Treas-
few such. Yet, as one witness at our
back in the black, pay off the pri-
tional Commission on Social Security
ury bonds and bills "mature" and are
oversight hearings put it, by the next
vately held Government debt, jump
Reform. Mr. Dole and I were appoint-
revealed by
cashed in. At present, the Treasury
decade we could be "awash to capt
start the savings rate and guarantee
ed. Alan Greenspan was made chair-
"rolls over" the debt, Issuing new
tal." This is the one sure way - sav-
the Social Security Trust Funds for a
man. Months went by with no appar-
the Senator
bonds or bills to gel the cash to pay
ing and investment - to make cer-
half century and more.
ent movement from either side. Then,
off the old ones. But If it isn't short of
tain the Social Security funds are still
It all began on a Monday morning,
suddenly, this signal from Mr. Dole.
Who Knows!
cash It needn't do this. The national
ample when the baby boom retirees.
Jan. 3. Bob Dole of Kansas had an Op-
He and Mr. Greenspan had come to
debt begins to shrink.
One further point. In the near term,
Ed article that Insisted that things
understand that the system's prob-
Our present deficit "path" takes us,
the proportion of retired persons In
would soon be looking up for the Ad-
lems really were temporary and that
in theory at least, to a zero deficit by
the population will be quite stable:
ministration there was a near-de-
in the long term It could be made he-
1993. If that happens, the revenue
the depression bables. Today, there
pression on and that Congressional
roically solvent.
stream from Social Security will be
are 21 persons retired for every 100 of
Republicans were behind him. Noth-
On the day I was sworn in for a sec-
sufficient to begin retiring debt by
working age. This ratio stays flat
ing special, save for one paragraph.
ond term, I went over 10 Mr. Dole,
through 2010. Claims on the funds will
Having said that the issues confront-
who happened to be on the Senate
be steady.
Ing them presented as much oppor-
There you have it. Hard to believe?
Yes. But within our grasp.
Daniel Patrick Moynihan, Democrat
All done in 12 days in January.
of New York, is chairman of the Sen-
ate Finance Committee's subcommi-
lee on Social Security and Family
Policy.
January 12, 1990
SELECTED PAST REMARKS BY SEN. MOYNIHAN ON SOCIAL SECURITY
Moynihan on Social Security and the the Greenspan Commission:
0
"'If it ain't broke, don't fix it,' is a commonsensical
caution for people not content to leave well enough alone.
I propose a corollary, one particularly suited to any
discussion of the Social Security system; 'If it's fixed
don't break it! [emphasis added]'
"If we are to have another debate about changing the
Social Security system, let us not lose sight of these
facts: The program is secure; it is depended on; it
is effective. The burden of proof falls upon those
wishing to change things.'
O
"I submit to you that after 1985, social security will
not contribute one cent to the Federal deficit -- in
fact, it will be part of the solution."
[The Social Security system is] "the most successful
policy ever devised in our land.
[The revenue stream resulting from the the Greenspan
Commission's reforms] "will put the Federal budget back
in the black, pay off the privately held government
debt, jump start the savings rate and guarantee the
Social Security Trust Funds for a half century and more
[emphasis added].
1 Congressional Record, 7-31-84, E3378
2
Congressional Record, 7-31-84, E3378
3 Congressional Record, 3-20-84, S2926.
4
"Moynihan Praises Social Security System," by Robin
Greene, UPI, 12/31/88.
5
"Conspirators, Trillions, Limos in the Night," by Sen.
Daniel Patrick Moynihan, New York Times, 5/23/88.
(more)
2
Background On Moynihan And The Greenspan Commission
As a member of the National Commission On Social
Security Reform (The Greenspan Commission), which
issued its report in January, 1983, Moynihan supported
increases in the payroll tax that funds the retirement
portion of the program -- increases to be phased-in
over a seven year period. One of those increases, from
6.06 percent to 6.2 percent, just took place on January
1st. Moynihan seeks repeal of that increase, and a
further cut in the rate to 5.1 percent by Jan. 1,
1991. In other words, Moynihan now wants to do away
with the increases he favored in 1983.
In fact, Moynihan wanted the tax increases to be even
higher. In a supplementary statement to the Greenspan
Commission's Report, signed by Moynihan and four other
members', a proposal to further increase taxes read as
follows:
"For purposes of present legislation we would support
putting in the law now an increase in the contribution
rate beginning in 2010 of %.046 of payroll
"
After
the Greenspan Commission submitted its report, Moynihan
tried his additional tax increase in the Senate Finance
Committee, which voted 15-2 against Moynihan's
proposal.
The Greenspan Commission unanimously recommended, in
the words of the report,
"that the Congress, in its deliberations on financing
proposals, should not alter the fundamental structure
of the Social Security program or undermine its
6
"Moynihan's Plan Makes Bush the Tax Ogre," by Donald
Lambro, Washington Times, 1/11/90.
7
The four other members were Lane Kirkland, Claude Pepper,
Robert M. Ball, and Martha Keys. There were 15 members total on
the Commission.
Report of the National Commission on Social Security
Reform, (Washington, 1983).
"Social Security Rescue Plan Rushes to Final Hill
Accord," by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
(more)
3
fundamental principles. The National Commission
considered, but rejected, proposals to make the Social
Security program a voluntary one, or to transform it
into a program under which benefits are a product
exclusively of the contributions paid, or to convert it
into a fully-funded program, or to change it to a
program under which benefits are conditioned on the
showing of financial need. "[emphasis added]
Both houses of Congress, in a remarkable show of unity,
swiftly enacted the Greenspan Commission's
recommendations, including the seven year phased-in
payroll tax increase. A typical lead was from
Congressional Quarterly: "Setting partisanship aside,
the full House and the Senate Finance Committee have
given a Social Security rescue plan a quick push toward
final passage. """
The vote in the House for the Greenspan reforms was
282-148, on March 9, 1983. 12 The Senate voted 58-14,
on March 25th, 1983, with Moynihan voting Yea.13
ATTACHMENTS
10 Report of the National Commission on Social Security
Reform (Washington, 1983)
11
"Social Security Rescue Plan Rushes to Final Hill
Accord," by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
12
"Social Security Rescue Plan Rushes to Final Hill
Accord," by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
13
1983 CQ Almanac; CQ Senate Vote 54
E 3378
CONGRESSIONAL RECORD Extensions of Remarks
July 31, 1984
1
strategy for dealing with the Soviet Union.
uitable balance in arms sales between the
rity System in the future to meet the
At very least, this strategy would require a
U.S. and the allies. At present, the U.S.
needs of today's young people. For 50
coordinated response by NATO members to
enjoys a seven-to-one advantage in such
major Soviet challenges around the world.
sales within NATO. The allies recognize
years now, the American people have
Such a strategy was possible during the first
NATO's need for advanced weaponry. but
honored the social contract in which
twenty years of the alliance's life, but de-
they are afraid that a U.S. push for more of
working people provide the financial
tente in the last decade brought benefits to
it will give American arms manufacturers an
security for older Americans and
Europe that were not shared by America.
even larger share of NATO's markets. The
income security for those disabled. Ir-
Thus, most Europeans today believe that a
cost of new weapons is high, and many Eu-
responsible statements from President
working relationship can be maintained
ropeans doubt that they can afford them.
Reagan or others are geared to under-
with the Soviet Union, while most Ameri-
NATO's conventional strategy is also un-
cans still see the Soviet Union as an aggres-
mine the Social Security Program and
settled. Greater conventional strength
sive power whose designs on Europe and
based on advanced weaponry would decrease
generational contract. The real risk to
other regions must be resisted. This differ-
NATO's reliance on nuclear weapons, but
the Social Security Program comes
ence in perception is dividing the alliance,
also would enable NATO to strike deep into
from the catastrophic events in our
and ultimately may threaten its viability.
Warsaw Pact territory. The possibility that
economy which has been subjected to
A second issue for NATO is how to ease
new weaponry might cause NATO to shift
the roller coaster ride of Reagan's
economic tensions that are sapping the alli-
to an offensive strategy is extremely trou-
"voodoo economics!" There is no
ance's strength. The U.S. is enjoying an eco-
bling to many in Europe, particularly in
nomic recovery that is faster than Europe's.
sound reason to suggest that this
Germany.
European leaders argue that the U.S. recov-
social contract will not be honored for
These are the major issues that will domi-
ery is taking place at Europe's expense, and
nate NATO's deliberations during the
future generations as well as current
that high U.S. interest rates soak up money
coming year. One of the important ways
retirees. The universal nature of the
that could be invested in Europe's recovery.
that the U.S. can contribute to resolving
Social Security System has been and
The U.S. and Europe are also engaged in
them is through arms control. Goodfaith ef-
will continue to be the foundation of
several trade disputes that have serious im-
forts and meaningful negotiations with the
the System's strength, both for
plications for important economic sectors on
Soviet Union can help close the rift between
both sides of the Atlantic. The strength of
today's and tomorrow's beneficiaries.
American and European perceptions, and
NATO depends on the combined economic
can give our friends in Europe the political
[From St. Paul (MN) Sunday Pioneer Press,
strength of its members, and both the U.S.
support that they need to make the case for
July 15, 1984]
and Europe will have to make future eco-
increased defense spending and stronger
SOCIAL SECURITY DEPENDABLE, DON'T TAMPER
nomic decisions in view of their impact on
conventional forces.
WITH IT Now
the alliance.
Other issues will surface, but If the alli-
How NATO should react to the challenge
"(By Senator Daniel Patrick Moynihan)
ance can handle these ft will continue to
of events beyond the North Atlantic region
"If It ain't broke, don't fix it," is a com-
is a third issue. The U.S. position is that
provide an effective military shield behind
monsensical caution for people not content
NATO should fashion a coordinated re-
which the nations of the West can prosper.
to leave well enough alone. I propose a cor-
The allies still appreciate the importance of
sponse to such events. Washington believes
ollary. one particularly suited to any discus-
that NATO has a duty to act when its secu-
NATO. So do many Americans. All parties,
sion of the Social Security system: "If it's
rity is at stake, and that European members
however, must be willing to accept the re-
fixed, don't break It!"
should be ready to replace U.S. forces that
sponsibilities and sacrifices necessary to
On Jan. 15, 1983. the National Commis-
might be moved from Europe tn an emer-
keep the alliance healthy.e
sion on Social Security Reform. on which I
gency. The Europeans, however, are not
served, agreed to a set of recommendations
keen on replacing U.S. troops, and they are
SOCIAL SECURITY DEPENDABLE
to put Social Security on a firm financial
especially reluctant to ready their own
footing.
troops for combat abroad. They point out
HON. BRUCE F. VENTO
Our proposals became law three months
that U.S. and European interests may not
later. and my optimism about their effica-
coincide outside Europe. that some nations
OF MINNESOTA
cy-expressed at the time-remains. On
cannot legally use armed force outside their
IN THE HOUSE OF REPRESENTATIVES'
April 5 of this year. Donald T. Regan. treas-
borders, and that Europe no longer has the
ury secretary, Raymond J. Donovan. labor
resources necessary to project military force
Tuesday, July 31, 1984
secretary. and Margaret M. Heckler. health
to distant points.
Mr. VENTO. Mr. Speaker, recently
and human services secretary-the trustees
A final issue before NATO is how to im-
an article by Senator DANIEL PATRICK
of the Social Security funds-reported that
prove its conventional military strength.
MOYNIHAN concerning the current
the benefits provided "under these pro-
This is a pressing concern because there is
doubt whether NATO could counter an in-
status of our Social Security System
grams can be paid well into the next centu-
vasion by the Warsaw Pact without early,
and its outlook for the future was pub-
ry."
During the commission's deliberations,
and probably cataclysmic, use of nuclear
lished in the St. Paul Sunday Pioneer
Alan Greenspan, our chairman and former
weapons. The Europeans know that their
Press (July 15). Senator MOYNIHAN,
chairman of the president's Council of Eco-
own homelands would be the first areas dev-
who served as a member of the Nation-
nomic Advisors, imposed a simple but cru-
astated in a nuclear exchange, so they and
al Commission on Social Security
cial rule: Members were entitled to their
the U.S. have agreed on the need to upgrade
Reform. observes that Congress' pas-
own opinions, but not to their own facts. In
conventional forces. There is disagreement,
sage of the Social Security Act Amend-
deference to our chairman's rule, herewith
however, on the allocation of expense. The
ments of 1983 insured the future sta-
some facts:
U.S. wants its allies to increase their defense
bility of our Nation's basic social in-
By next year, the revenues from Social Se-
budgets 3 percent annually, just as they said
curity taxes will match the costs of Social
that they would do in 1978. The allies say
surance program and notes that the
Security benefits. Indeed, we now expect
that they will do their best to increase de-
Social Security Program has helped
revenue surpluses to begin in 1986 and
fense spending, but contend that their eco-
millions of older Americans avoid
build, according to Social Security's actuar-
nomic troubles may keep them from reach-
living in poverty. Senator MOYNIHAN'S
ies, to $13.4 trillion by 2025 and $18.4 tril-
ing the original goal.
reasoned observations are especially
lion in 2045. Unless the economy takes a
How the burden of a stronger convention-
timely in light of the recent remarks
sudden nosedive and sharply erodes Social
al defense should be shared is in fact one of
NATO's knottiest problems. The U.S.
by President Reagan suggesting that
Security revenues within the next few
spends more of its gross domestic product
young people will never be able to re-
years, the retirement and disability funding
problems would seem to be behind us.
(6.5 percent in 1982) on defense than do its
ceive as much from this system as
The universal social insurance system es-
NATO allies ₹3.7 percent in 1982), and in
they are paying into it and that fur-
tablished in 1935 is central to the way we
1983 the U.S. increased its defense spending
ther (although unspecified) changes
plan our lives.
by 7.6 percent while the allies raised theirs
may be necessary.
Social Security is an undeniable success.
by only 2 percent. For their part, the allies
President Reagan's comments are a
The system has helped reduce poverty dra-
point out that during the 1970s they in-
disservice to the Nation and only serve
matically among the nation's elderly. In
creased their defense spending by 2 percent
annually while U.S. military outlays fell by
to exacerbate unfounded fears and
1937, three years before the first check was
anxieties among young workers and
distributed, two-thirds of all Americans 65
1 percent per year. They note as well that
older Americans. The President's
years or older had no means of support
they get more value for each dollar because
except help from friends and relatives or
their conscripted forces cost less than Amer-
statements and responses mislead
private charities. Today, more than 85 per-
ica's volunteer force. Burden-sharing also
young people when he suggests that
cent of all elderly citizens have incomes
involves NATO's commitment to a more eq.
there will not be a strong Social Secu-
above the national proverty line.
July 31, 1984
CONGRESSIONAL RECORD - Extensions of Remarks
E 3379
If we are to have another debate about
(which would not change the benefit struc-
Mr. Speaker, this initiative to
changing the Social Security system, let us
ture) "would add significantly to the public
not lose sight of these facts: The program is
strengthen mathematics and science
understanding of the trustee character of
secure; it is depended on; it is effective. The
Social Security as a retirement and group
education in this country is long over-
burden of proof falls upon those wishing to
insurance plan."
due. Deficiencies in math and science
change things.
Social Security has been a fixture in the
curricula and equipment have serious
President Ronald Reagan recently re-
United States for nearly a half-century. Yet
injured the morale of this country's
marked (once again!): "There is a possibili-
after all this time and success, some are not
ty-well, probability-that many people,
teachers and the capabilities of our
reconciled to it. This is unfortunate. But it
young people now paying in, will never be
students. The National Science Foun-
is a minority view, and it doesn't change the
able to receive as much as they're paying."
facts. Social Security is fixed in more ways
dation [NSF] has reported that math
In response, James M. Brown, a spokesman
than one. Don't break it.
and science teachers have had serious
for the Social Security Administration, said
[Senator Moynihan, of New York, is the
difficulty in obtaining information
2
that Social Security "is not just a retire-
ranking Democrat on the Senate Finance
concerning new instructional materi-
ment benefit. You are buying a package
Committee's Social Security and income
that also includes protection against disabil-
als, thereby hampering the Nation's
maintenance programs subcommittee.-The
ity and death. Nobody else offers a package
efforts to improve curriculum. Addi-
Los Angeles Times]
like that," The president sometimes seems
tionally, the National Association of
genuinely to misunderstand the system.
Secondary School Principals has re-
Few amoung us know what our financial
IN MEMORY OF FORMER CON-
ported that only 45 percent of all sec-
condition will be in the future, and it is only
GRESSMAN CHARLIE WILSON
wise to eliminate fear of economic calamity
ondary schools possess some sort of
by making regular, and relatively small, pre-
science equipment. These are disturb-
mium payments throughout our working
HON. WILLIAM (BILL) CLAY
ing facts demonstrating serious, wide-
lives.
OF MISSOURI
spread problems in our country's abili-
At its inception in 1935, Social Security
provides benefits only for retirees, but eligi-
IN THE HOUSE OF REPRESENTATIVES
ty to educate our children.
bility has since been broadened. In 1939
Tuesday, July 31, 1984
Fortunately, H.R. 1310 defines im-
before the first benefit was paid, retirees'
mediate Federal, State, and local roles
dependents and survivors were accepted as
Mr. CLAY. Mr. Speaker, a former
for improving math and science educa-
beneficiaries. And under President Dwight
colleague, Charles Wilson, passed
tion and teacher preparation. The bill
Eisenhower in 1956, permanently and total-
away Saturday, July 21, 1984. I insert
provides incentives to encourage
ly disabled workers began receiving Social
my message to his lovely wife, Bok, as
Security checks. Today, some 25 million re-
future generations of teachers to enter
a lasting tribute to a true friend:
tired workers, almost 4 million disabled
these fields, and to help improve the
DEAR Box: You are not alone. All of Char-
workers. and more than 7 million survivors
skills of current teachers. Additional-
receive Social Security benefits.
lie's many friends share his loss with you.
As with other types of insurance, of
Carol and I count ourselves among his clos-
ly, the problems of student prepara-
est friends.
tion and achievement are addressed by
course, the lucky ones are those who do not
need to collect. But it is nice to know it is
At a time like this, words are not adequate
authorizing educational agencies and
there.
to convey the pain and emptiness we feel.
institutions to develop methods to im-
There is no little antagonism to the com-
Even constrained by our limited power of
prove, strengthen, expand, and mod-
pulsory nature of Social Security. However,
expression, we are compelled to verbalize
ernize math and science education.
the system is trustworthy only if it's univer-
the deep hurt we share with you-the loss
of our dear and longtime friend, Charlie.
Moreover, H.R. 1310 addresses the
sal. If given the chance, how many people
would have the time. knowledge. and, above
True friends are a rarity, Charlie was our
serious problems of underrepresenta-
all, capital to provide securely for the
true friend. When he laughed, we laughed.
tion of women and minorities in these
future? And what of those who would try
When he cried, we cried. When he rejoiced.
disciplines by requiring grant recipi-
but fail? Stock go down sometimes, right?
we rejoiced. When he hurt, we hurt. When
ents to take concrete action to ensure
The plain fact is that Social Security
he died, a part of all mankind died.
means that older persons in America do not
Ernest Hemingway put it best when he
equal educational opportunity. I
depend on their children for support. This
wrote: "For Whom the Bell Tolls." He said,
strongly support this provision and
is a blessing beyond words. Not to the chil-
"No man is an island, entire of itself; every
salute the committee's continued ef-
dren, but to the parents who know they
man is a piece of the continent. a part of
forts to improve opportunities for all
never will be a burden to the dearest per-
the main: if a clod be washed away by the
Americans.
sons in their lives.
sea, Europe is the less, as well as if a prom-
Recently. Treasury Secretary Regan said
ontory were, as well as if a manor of thy
Mr. Speaker. in considering the bill
the practice of paying benefits to those at
friends or of thine own were: any man's
before us today, however, I am con-
the "upper end" of the economic scale
death diminishes me, because I am involved
cerned over one amendment added by
should be re-examined. Well, why should
in mankind: and therefore never seem to
the other body to provide funding for
well-off Americans receive an income sup-
know for whom the bell tolls; it tolls for
magnet schools which are part of an
plement? Because depriving them of the
thee."
approved desegregation plan. My res-
benefits for which they have paid under-
A longtime family commitment forced
Carol and I to be in Connecticut, and we will
ervations about supporting this
mines the insurance principle of Social Se-
curity.
be unable to see you for the next few days,
amendment stem from its heavy bias
Would it be right or prudent to tell those
however, we will call you when we return so
toward the larger school districts,
whose homes burn down that they cannot
that we can get together.
while appearing to shun the smaller
collect fire insurance because they have re-
Sincerely,
but equally needy districts. I under-
sources sufficient to cover the losses? Of
BILL AND CAROL CLAY.
stand from the colloquy on this
course not. Just so with Social Security.
Once we end the universal nature of the
debate, however, that the eligibility
system. we inevitably weaken the universal
SECTIONS 1 THROUGH 7 OF H.R.
criteria set forth in the amendment do
nature of its political support.
1310
not preclude those smaller desegregat-
Certainly, there are administrative
ing districts, and therefore I withdraw
changes that can improve Social Security
SPEECH OF
my reservations. Further I would hope
Administration operations. Our commission
recommended, and Congress approved, ap-
HON. SILVIO O. CONTE
that, this being the case, the Secretary
pointment by the president of two members
will give close consideration to the
OF MASSACHUSETTS
of the public to the Social Security Board of
needs of those smaller districts when
IN THE HOUSE OF REPRESENTATIVES
Trustees. We can enhance public confidence
considering awards under this pro-
in the system by increasing public involve-
Wednesday, July 25, 1984
gram.o
ment in its oversight. But these appoint-
ments have not been made.
Mr. CONTE. Mr. Speaker, I am glad
It has been suggested that the agency be
to see that H.R. 1310, the math and
made an independent body (it is now within
science education bill. has returned to
the Department of Health and Human Serv-
this floor for our consideration. And I
ices). I agree with Robert Ball, the agency's
am pleased to rise in support of this
former commissioner, who said this step
important measure.
S 2926
CONGRESSIONAL RECORD - SENATE
March 20, 1984
others. I am proud to have the oppor-
At a time when it has become fashion-
er Congress' brave decision to go beyond the
tunity today to commend Mr. Michael
able to advocate cuts to run-away enti-
commission's recommendations and phase
Bongiovanni.
tlement programs in order to reduce
in a delay in the retirement age makes it
the deficit, we must recognize precise-
less likely that drastic changes will then be
ly how, or if, entitlement programs are
needed. In the meantime, building up enor-
SOCIAL SECURITY
mous reserves in the trust funds-which
contributing to the deficit. I submit to
would offset deficits in other parts of the
Mr. MOYNIHAN. Mr. President, 1
you that after 1985, social security will
budget-would only discourage needed
year ago, the Senate began its consid-
not contribute 1 cent to the Federal
budget discipline.
eration of H.R. 1900, the Social Secu-
deficit-in fact, it will be part of the
There is no way to put a system as big and
rity Act Amendments of 1983. At this
solution.
important as Social Security on automatic
benchmark, it is instructive to reflect
I hope that my colleagues will take
pilot for all time. But there is no sense in
on the reform legislation enacted last
the time to review these articles.
sounding a general alarm while sailing in
April.
There is no way to guarantee that
untroubled waters.
I call my colleagues' attention to the
social security will never need addi-
recent report by the Committee for
tional financing changes. But as the
[From the Washington Post, Feb. 10. 1984]
Post editorial concludes, "there is no
SOCIAL SECURITY Is IN GOOD SHAPE
Economic Development, entitled
"Social Security: From Crisis to
sense in sounding a general alarm
(By Robert M. Ball and Robert J. Myers)
Crisis?" CED, a private nonprofit, non-
while sailing in untroubled waters."
Hobart Rowen ["Social Security: It's Not
3
partisan organization of business ex-
Mr. President, I request unanimous
So Secure." op-ed, Feb. 16] asserts that the
ecutives, has suggested that the 1983
consent that the following articles
Social Security system is once again likely
amendments to the Social Security
from the Washington Post, "Social Se-
to run into financial difficulties despite the
Act "provide very little margin of
curity False Alarm" and "Social Secu-
reform legislation enacted last April. A large
part of his conclusion is drawn from the
safety." It contends that, should eco-
rity is in Good Shape" appear in the
recent report by the Committee for Eco-
nomic and demographic trends be less
RECORD.
nomic Development entitled "Social Secu-
favorable than assumed in the 1983
The articles follow:
rity: From Crisis to Crisis?"
amendments, the system could face
[From The Washington Post, Feb. 25, 1984]
We disagree strongly with Rowen's con-
another financial crisis in this decade.
SOCIAL SECURITY FALSE ALARM
clusions. We refer only to the Social Secu-
The economic assumptions on which
Less than a year ago Congress enacted a
rity program (Old-Age, Survivors and Dis-
Congress relied for these amendments,
bipartisan reform program to put the Social
ability Insurance-OASDI) and not to the
Security retirement system on sound foot-
Hospital Insurance portion of the Medicare
it is claimed, "fail to cover a realistic
range of possibilities" with respect to
ing for the foreseeable future. Now comes a
program. The National Commission on
actual economic performance.
report from the Committee on Economic
Social Security Reform recognized, and we
Development, a national business policy
agree, that under present law Hospital In-
This simply is not the case. The Na-
group, warning that Social Security may be
surance has a serious financing problem
tional Commission on Social Security
in trouble before the end-of the decade.
some five or more years from now. It was
Reform, on which I served, based its
Before you pick up your pen to dash off a
not the assignment of the national commis-
recommendations on economic as-
worried letter to the president or Congress,
sion to deal with this problem. but rather
sumptions generally considered to be
you should know that the CED's report is
with the more immediate problem of the
not based on any new analysis or insight.
Social Security programs.
quite cautious. The intermediate as-
The projections it cites are taken from last
Rowen claims that eventually Social Secu-
sumptions were thought by some to be
year's report of the Social Security Trust-
rity and other entitlement programs will re-
less favorable than our best estimates
ees. and are essentially the same as those
quire further changes for two reasons: first,
would have suggested, but we were
used by Congress and the bipartisan Social
"to keep them financially healthy and,
wary of the perils of over optimism.
Security commission in framing the reforms
second, to help cut the dangerous federal
I submit for your attention, then, an
put into law last March. True. things have
deficits." We believe that it is highly prob-
editorial which appeared in the Wash-
changed somewhat since that time-but not
able that the Social Security system will be
ington Post on February 25, entitled
in the way that the CED's report would sug-
financially healthy over at least the next
"Social Security False Alarm," and a
gest. They've gotten better.
two decades. For the period 20 to 75 years
letter to the editor of the Washington
The important thing to remember about
after that for which estimates are tradition-
last year's reforms is that, for once, they
ally made, we believe the estimates underly-
Post written by Robert M. Ball and
were not based on a rosy view of the future.
ing the financing of the program are reason-
Robert J. Myers. These two pieces give
The reform package was designed to see the
able and even somewhat on the conservative
an accurate first year report card on
Social Security trust funds through this
side.
the Social Security Amendments of
decade under a very pessimistic economic
As to Rowen's second point, the Social Se-
1983, one that ought to be considered
forecast-unemployment remaining above
curity program, which will be part of the
by all.
10 percent until 1985 and not dipping below
unified budget until 1992, will not be a cause
Mr. Ball, the distinguished former
8 percent until almost the end of the
of the deficit, but rather will be part of its
decade, and wages barely outpacing infla-
solution. This is so because, under any rea-
Commissioner of Social Security and a
tion.
sonable assumptions, income to the self-fi-
member of the National Commission,
Of course, the economy is already much
nanced OASDI trust funds will exceed
and Mr. Myers, the highly respected
better than that. And, as the Congressional
outgo during the near-future years and for a
former Chief Actuary and Deputy
Budget Office's new projections show, even
couple of decades. thereafter. It would not
Commissioner of Social Security who
if the economy heads back into a recession a
seem reasonable to further help reduce the
served as executive director of the
year or so from now, the trust funds should
general federal deficits by cuts in the Social
Commission write that the economic
have sufficient reserves to make it through
Security program which, in itself, is in a
assumptions used by the National
the tightest period before legislated tax in-
state of positive fiscal balance.
Commission were-
creases begin to build up the funds later in
The CED report leaves the implication
the decade. And, if economic conditions
(which Rowen latches on to) that, if eco-
Slightly on the pessimistic side (and cur-
become very bad, the law now contains a
nomic conditions are only slightly worse
rently economic conditions are more favora-
safeguard that keeps benefit cost-of-living
than the intermediate assumptions, the
ble. Moreover, even under the pessimistic
adjustments from outpacing wages when
system will be insolvent before the end of
assumptions, the financing of the system
trust fund reserves are low.
the 1980s. This is not correct, because the
will be reasonably adequate in the 1980's,
Beyond this decade, it's important to re-
intermediate assumptions are, we believe,
and it would take much more than a small
member, the retirement trust fund is
slightly on the pessimistic side (and current-
unfavorable wiggle in basic trends to pro-
headed toward a period of surpluses. That's
ly economic conditions are more favorable).
duce a financial crisis.
because the generation that will be retiring
Moreover, even under the pessimistic as-
Mr. Ball and Mr. Myers make a
in the mid-1990s was born in the low-birth-
sumptions, the financing of the system will
second point of considerable impor-
rate years of the Depression, while the
be reasonably adequate in the 1980s, and it
labor force, which pays Social Security
would take much more than "a small unfa-
tance:
taxes, will still be swollen by the baby-boom
vorable wiggle in basic trends" to produce a
The social security program, which will be
generation.
financial crisis.
part of the unified budget until 1992, will
Sometime in the next century, when the
This is not to say that there is no possible
not be a part of the deficit, but rather will
baby-boomers reach retirement, the surplus-
scenario that would cause the Social Secu-
be part of its solution.
es will disappear, as the CED warns. Howev-
rity system to have short-term financing
March 20, 1984
CONGRESSIONAL RECORD SENATE
S 2927
problems. What it would take is something
I have introduced legislation to pro-
like double-digit unemployment. with wages
making an important contribution to
rising no more rapidly than prices. This we
vide a Federal matching grant pro-
marine resource management through
believe to be very improbable.
gram for computer education and
research and field services designed to
Even under the pessimistic assumptions of
teacher training. I think that comput-
promote the development, use, and
the 1983 Trustees Report, the OASDI trust
er education can serve to enhance the
conservation of ocean and coastal re-
funds would have a balance of at least two
teaching of more traditional academic
sources.
month's outgo at all times in the 1980s.
and intellectual skills. Putting comput-
By designating the "Year of the
while under the intermediate assumptions
ers in classrooms will not be a solution
Ocean" Congress can renew its com-
this ratio would, desirably. build up and
for the problems in education. Howev-
mitment to addressing the problems
would amount to about five months' outgo
er, with careful planning, computers
at the beginning of 1990, and increase rapid-
which threaten the ocean and coastal
ly thereafter.
can provide a new tool for teaching
zone. Passage of this resolution can
We see no reason to make changes in the
writing, mathematics, social studies,
enhance public awareness of our tre-
benefit structure in order to provide an even
and other courses, and analytical
mendous reliance upon marine re-
wider margin of safety than now exists.
skills.
sources, as well as the consequences of
Reauthorization of the Vocational
failing to manage them wisely.
Education Act must be a top priority
The ocean is essential to the life of
STRENGTHENING AMERICAN
for 1984. Solid vocational training is
the world. The "Year of the Ocean"
EDUCATION
important in preparing students for
program can help us to focus on its im-
Mr. LAUTENBERG. Mr. President,
productive careers.
portance in each of our lives. I hope
few issues have more importance to
Another major unfinished item on
my colleagues will join in supporting
the future of our country than educa-
the education agenda is legislation to
the passage of this resolution and pro-
tion. Our ability to compete in the in-
improve math and science education.
moting its observance.
ternational economy in years to come,
The House of Representatives passed
our ability to continue as a nation of
a math and science bill last spring. but
opportunity for all, and to advance to-
the Senate has not yet scheduled con-
HONORING JACK DEMPSEY
gether as a nation, is dependent on the
sideration of its version of the bill.
Mr. D'AMATO. Mr. President, I rise
education provided our young people.
The present unhappy state of
to ask this body to honor one of
Recent reports from the Commission
American education has not developed
America's greatest sports legends, the
on Excellence on Education and
overnight, nor will it be improved im-
others highlight existing weaknesses
mediately. But there must be a starting
late Jack Dempsey. A legend in the
boxing ring as well as in everyday life,
in our educational programs. Indeed,
point on the road to recovery.
the National Commission on Excel-
We must not fail our children by re-
Jack Dempsey's rise to heavyweight
lence in Education has likened the sit-
fusing to heed the harsh message of
champion made him an example of
uation in American education today to
the Nation at Risk report. We owe
the American spirit throughout the
unthinking. unilateral education
them the bright promise of a good
"Golden Age of Sports," the 1920's.
education. We owe their teachers our
Like other legendary sports figures
disarmament.
strong support. And we owe the
of that era, such as Babe Ruth. Bobby
If such an incident had been leveled
Nation an adequate investment in our
Jones, and Johnny Weissmuller. Jack
at the defense establishment in this
educational system If we hope to pros-
Dempsey's style and accomplishments
country, the cries of dismay from the
White House and the Congress would
per and maintain U.S. leadership in
in his sport were revolutionary. Demp-
the world economy
sey's aggressive "bob and weave" style
have been loud and instantaneous.
ended the era of standup defensive
Reaction to the harsh assessment of
style boxing forever and turned boxing
the Education Commission has been
YEAR OF THE OCEAN
into a top drawing spectator sport.
more temperate. Nevertheless. Mr.
Mr. CHAFEE. Mr. President. the
Winning the heavyweight crown for
President, I. for one, must express my
ocean environment remains one of our
the first time in 1919, Dempsey re-
deep chargin over the state into which
country's most precious natural trea-
tained the title until 1926. But his loss
our educational system has fallen. As
sures. In order to encourage better un-
did not affect his popularity with the
the Commission on Excellence report
derstanding and appreciation of the
American public. Jack Dempsey re-
rightly notes. citizens look to educa-
need to preserve ocean and coastal re-
mained a hero because he found suc-
tors and elected officials to provide
sources, I am pleased to join Senator
cess in his failures. an accomplishment
leadership to reverse educational
STEVENS as a cosponsor of Senate Joint
endearing to many people who viewed
trends in our country.
Resolution 257, designating the 12-
Dempsey's rise to champion as repre-
Providing more money for education
month period beginning July 1, 1984,
sentative of the everyday battles of
is by no means the only answer to dif-
as the "Year of the Ocean."
most ordinary Americans.
ficulties in education today. However,
I represent the Ocean State. The sea
His life before becoming champion
approval of increased educational ex-
figures prominently in Rhode Island's
also adds to the legend his name car-
penditures can give encouragement to
heritage. Narragansett Bay remains
ries. The son of an impoverished Mid-
educators doing their best under diffi-
our preeminent natural, commercial.
western family. a miner at 13, a veter-
cult circumstances in the Nation's
and recreational resource. Rhode Is-
an of hobo jungles at 19, and
classrooms. It can provide increased
landers cherish the ocean for its
heavyweight champion of the world at
resources for existing programs that
beauty, for its rich abundance of
24, Jack Dempsey's struggle is a true
have proved their effectiveness. It can
marine life. and for what it contrib-
symbol of the American dream.
help initiate new programs.
utes to our State's economy.
His legend is further supported by
This year I have been working in the
Rhode Islanders are also keenly
his unfailing kindness outside of the
Senate as part of a special working
aware of the fragility of delicate ocean
ring. From his restaurant on Broad-
group on education set up by Minority
and coastal habitats. The problems
way, Jack Dempsey played the role of
Leader ROBERT BYRD. Our group will
posed by pollution. waste disposal,
host to the city of New York, as well
be seeking a consensus on the appro-
coastal development, and energy ex-
as of a gentle, charitable man, always
priate spending levels for education in
ploration constantly threaten the
willing to help the unfortunate and
the fiscal year 1985 budget. After al-
ocean environment and require action
the needy.
lowing for inflation, the President's
to preserve marine resources.
Touted as the greatest fighter of the
budget request is about $5 billion
As we continue to exploit the wealth
half century in 1950 and inducted into
below what education spending was 4
of the ocean, it is our responsibility to
the Boxing Hall of Fame in 1954, Jack
years ago. While we may not be able to
plan now for the prudent management
Dempsey is still remembered as one of
make up this entire shortfall. I cer-
of the marine environment. The Uni-
the greatest fighters of all time. But
tainly think an increase over the
versity of Rhode Island's distinguished
his legend is incomplete without men-
President's proposed budget is needed.
Graduate School of Oceanography is
tion of his kindness out of the boxing
Services of Mead Data Central
PAGE
7
6TH STORY of Level 1 printed in FULL format.
Proprietary to the United Press International 1988
December 31, 1988, Saturday, BC cycle
SECTION: Washington News
LENGTH: 313 words
HEADLINE: Moynihan praises Social Security system
BYLINE: By ROBIN GREENE
DATELINE: WASHINGTON
KEYWORD: Reagan-Dems
BODY:
Sen. Patrick Moynihan, D-N.Y., praised the Social Security system
Saturday as ''the most successful policy ever devised in our land'' and then
4
ade a New Year plea on behalf of needy children in the United States.
Moynihan, who delivered the Democratic response to President Reagan's weekly
radio address, got off an optimistic note by asking Americans to join him in ''a
special wish for President and Mrs. Reagan.
The New York senator noted that he and the president had been sparring with
each other for the past eight years, saying 'they've been fair fights from
first to last'' and admitting, ''I'm going to miss them.
''Our first go-round had to do with Social Security,' Moynihan said in
praising the entitlement program.
'Without Social Security, almost half of the elderly would be poor today,'
he said. 'With Social Security, Medicare and other government programs, the
number of elderly poor has all but disappeared.
''Social Security is the most successful policy ever divised in our land,'
Moynihan said.
Citing a Census Bureau study released last week, Moynihan said: ''I wish I
could report that the study concluded the same for children. It did not. ...
Government benefit programs hardly touch child poverty.
Moynihan said the study showed that 'there are two kinds of children in
America and they live in two kind of families.
The senator said children who live in two parent families will never be poor
while children in single-parent families ''will almost always be poor sooner or
later.
'Their numbers are staggering,'' Moynihan said. ''As many as one-third of
our children live this way today. We've become the first industrial nation on
earth in which children are the worst-off group.
Calling child poverty ''the great challenge before us,'' Moynihan said: ''If
we get to work, it will really be a happy New Year.
LEXIS® NEXIS® LEXIS® NEXIS
5
so/v4/Conspirators, Trillions, Limos in the Night
tunity as peril, he went on:
floor. If he was as optimistic as his ar-
And President Reagan was not going
By Daniel Patrick Moynihan
"Social Security is a case in point.
ticle suggested, shouldn't we make
to do anything to prevent it.
With 116 million workers supporting
one last try? Two days later, he and I
And so we would. Until then, Social
It all started
05-23-88
WASHINGTON
it and 36 million beneficiaries relying
and Representative Barber B. Cona-
Security had been on a pay-as-you-go
his appears to be the
on it, Social Security overwhelms
ble Jr. were secreted out to White
basis, with a little cushion to take
every other domestic priority.
House chief of staff James A. Baker
with a Dole
T
season for disclosing
care of economic downturns. We
Washington secrets,
Through a combination of relatively
3d's house in northwest Washington.
could have fluffed up that cushion and
and I don't see why
modest steps, including some accel-
Negotiations began.
let it go at that. We decided instead on
article.
only Republicans
eration of already scheduled taxes
In time, we shifted our talks to
a radical change in policy. Hence-
should be able to play.
and some reduction in the rate of fu-
Blair House (which was empty, owing
forth, we would collect and save for
I've got a pretty good one. Secret
ture benefit increases, the system
to the chandelier incident), and on the.
the far future, and not just the next
messages concealed on the Op-Ed
can be saved. When it is, much of the
night of Saturday, Jan. 15, we reached
year. An immense reserve would be-
page of The New York Times. Whis-
credit, rightfully, will belong to this
agreement on arrangements to save
gin to accumulate before beginning to
1994. As public debt declines, national
pered conversations on the Senate
President and his party."
the system, which were promptly en-
run down about 2030. In the process,
savings increase.
floor. White House limos hurtling
Oh? Not 24 hours earlier the budget
dorsed by the commission and the
we would pay off the national debt.
By 2010 the Social Security reserve
through the wintry night to a house in
director, David A. Stockman, had
President.
We have now had four full calendar
is projected to be nearly $4.5 trillion.
northwest Washington. A bedroom -
foretold that the "most devastating
Most of this story is now familiar.
years of the new revenue base. The
($4,460,600,000,0001) If we wanted to
yup on the second floor of the
bankruptcy in history," that of the So-
Here is what is not generally under-
trustees have just reported, and I
go all the way, we could probably
President's guest house, where nights
cial Security Trust Funds, was only
stood. Almost everyone Involved
have just had the first oversight hear-
have zero national debt by that time.
earlier a visiting potentate would
months away. Which wasn't so, but a
knew - by then that the Adminis-
ing. Here are the numbers. The Social
For the first time, incidentally, since
have been skewered by a plunging
lot of people believed him. What the
tration had got the nation's finances
Security Trust Funds are increasing
1836- when we were down to $38,000.
chandelier had he not been mysteri-
columnist Sylvia Porter called "a
in terrible shape. Mr. Stockman, who
at the rate of $109,440,000 per day and
We could of course blow the oppor-
ously otherwise engaged at the
scare campaign of vicious propor-
joined our deliberations, has written
rising.
tunity. We could start to "spend" the
Watergate.
tions" had been going on. The new
about this in great detail. There
The current reserve is approaching
Social Security surplus rather than
Huddled conspirators. Big bucks.
breed of conservatives seemed to de-
would be $200 billion budget deficits
$100 billion. Between now and the
using it to retire debt, and so get rid of
Like, maybe, trillions?
test the program even more than the
"as far as the eye could see." The na-
year 2000 it will grow to $1.4 trillion.
the deficit. (Which for practical pur-
Trouble is it was really on the up
old breed. And the funds were going
tional debt would triple in eight years.
(As of 1987, the entire assets of pri-
poses now consists almost entirely of
and up. And has a happy ending. So I
down, the result of an interval
vate pension funds were about $1.49
debt service.) But surely we should
don't suppose it would sell, and I
in the 1970's when prices ran ahead of
billion.) This revenue stream must be
"save" it, and thus put aside the fis-
might as well come out with it here
wages so that cost-of-living adjust-
deposited with the Treasury. If at the
cal mess of the 80's.
and now.
ments were not being offset
A true
end of the day the Treasury has more
Our real economic problem is that
In brief, in 12 days in January 1983,
by increased payments into the
money on hand than it needs, it sim-
we don't save enough. Of 24 members
a half dozen people in Washington put
funds.
inside
ply retires privately held
of the Organization for Economic
in place a revenue stream that is just
A year or so earlier, the Senate ma-
debt.
Cooperation and Development, we
beginning to flow and that, if we don't
jority leader, Howard H. Baker Jr.,
This can sound arcane but isn't.
rank 20th, followed by Iceland, and a
blow it, will put the Federal budget
had put together a bipartisan Na-
story
Every week some millions of Treas-
few such. Yet, as one witness at our
back in the black, pay off the pri-
tional Commission on Social Security
ury bonds and bills "mature" and are
oversight hearings put it, by the next
vately held Government debt, jump
Reform. Mr. Dole and I were appoint-
revealed by
cashed in. At present, the Treasury
decade we could be "awash in capt
start the savings rate and guarantee
ed. Alan Greenspan was made chair-
"rolls over" the debt, issuing new
tal." This is the one sure way - sav-
the Social Security Trust Funds for a
man. Months went by with no appar-
the Senator
bonds or bills to get the cash to pay
ing and investment - to make cer-
half century and more.
ent movement from either side. Then,
off the old ones. But if it isn't short of
tain the Social Security funds are still
It all began on a Monday morning,
suddenly, this signal from Mr. Dole.
Who Knows!
cash it needn't do this. The national
ample when the baby boom retirees.
Jan. 3. Bob Dole of Kansas had an Op-
He and Mr. Greenspan had come to
debt begins to shrink.
One further point. In the near term,
Ed article that insisted that things
understand that the system's prob-
Our present deficit "path" takes us,
the proportion of retired persons in
would soon be looking up for the Ad-
lems really were temporary and that
in theory at least, to a zero deficit by
the population will be quite stable:
ministration - there was a near-de-
in the long term it could be made he-
1993. If that happens, the revenue
the depression babies. Today, there
pression on - and that Congressional
roically solvent.
stream from Social Security will be
are 21 persons retired for every 100 of
Republicans were behind him. Noth-
On the day I was sworn in for a sec-
sufficient to begin retiring debt by
working age. This ratio stays flat
ing special, save for one paragraph.
ond term, I went over to Mr. Dole,
through 2010. Claims on the funds will
Having said that the issues confront-
who happened to be on the Senate
be steady.
ing them presented as much oppor-
There you have it. Hard to believe?
Yes. But within our grasp.
Daniel Patrick Moynihan, Democrat
All done in 12 days in January.
of New York, is chairman of the Sen-
ate Finance Committee's subcommi-
lee on Social Security and Family
Policy.
Moynihan's plan makes Bush the tax ogre
By Donald Lambro
ers.
from some of his traditional sup-
class Americans are clearly over-
THE WASHINGTON TIMES
The proposal by New York Sen.
porters.
taxed."
Daniel Patrick Moynihan, which
"This is a very dumb thing for the
There were even some within the
A Democratic proposal to reduce
would cut the payroll tax by more
[administration] to be doing," said
WASHINGTON TIMES 1/11/90
administration, such as Housing and
Social Security taxes is winning
than a percentage point, has
Kate O'Beirne, deputy director for
Urban Development Secretary Jack
cheers from conservatives and busi-
spawned an internal political debate
domestic policy studies at the Heri-
Kemp, who made it known yesterday
ness groups, but it has put President
within the White House, according
tage Foundation, which has enthusi-
that they support the idea of cutting
Bush in the risky position of oppos-
to administration officials.
astically endorsed the Moynihan tax
the payroll tax to boost savings and
ing a politically appealing tax cut
It also has triggered some unusu-
cut. "Cutting the payroll tax is good
aimed at his middle-class support-
ally harsh criticism of Mr. Bush
politics and good policy. Working-
see TAXES, page A10
TAXES
helped the Republicans win the
opposed by Mr. Bush. Mr. Darman
Ironically, the strongest and most
White House in five out of the last
says the $55 billion in lost Social Se-
immediate support for Mr. Moy-
six presidential elections.
curity revenue that the tax cut would
From page Al
nihan's proposal has come from an
Among other things, say eco-
cost in 1991 alone would balloon the
unholy alliance of liberal and con-
economic growth.
nomic and political analysts, it hands
deficit and lead to renewed Demo-
servative organizations, business
"[Budget Director Richard] Dar-
the Democrats a golden opportunity
cratic pressure to raise the top in-
groups and some GOP leaders in
man's position that he wants to keep
to appeal to traditionally Republican
come tax rates.
Congress. In addition to Heritage's
the [Social Security] surplus buildup
voters and at the same time turn the
Mr. Moynihan has yet to say how
endorsement, the proposal has won
and opposes the tax cut is inconsis-
tables on the Bush administration by
he will offset this revenue loss,
favorable reactions from the liber-
tent with Jack's position," said a top
forcing it to oppose a popular tax-
whether through spending cuts or
tarian Cato Institute, the National
Kemp aide. "He sees this as a burden
cutting idea.
tax increases elsewhere.
Taxpayers Union, the National Fed-
on middle-income workers and
"Poor George Bush," said Robert
White House Chief of Staff John
eration of Independent Business
small businesses."
Shapiro, director of economic stud-
Sununu said earlier this week that
and the U.S. Chamber of Commerce.
ies with the Progressive Policy Insti-
the administration was against cut-
Mr. Moynihan chairs the Senate
"It's a good idea," said David Boaz,
Finance subcommittee on Social Se-
executive vice president of the Cato
curity and is considered by groups
Institute. The administration "ought
representing the elderly to be one of
Ironically, the strongest and most immediate
to become an enthusiastic sponsor of
the program's strongest supporters.
it. Otherwise, they'll let the Demo-
He surprised his party's leadership
support for Mr. Moynihan's proposal has come
crats steal the most successful Re-
and the administration when he un-
from an unholy alliance of liberal and
publican issue."
expectedly announced late last
Support on the left also has come
month that he would introduce legis-
conservative organizations, business groups
from the Institute of Policy Studies,
lation to cut the payroll tax when
where public policy analyst Robert
Congress returns to business on Jan.
and some GOP leaders in Congress.
Borosage has called the idea "good
23.
economics, good public policy and
The Social Security tax rate that
good politics - the first protest of
funds the retirement portion of the
an increasingly hard-pressed mid-
tute, a Democratic think tank, and a
ting the payroll tax until the deficit
program increased on Jan. 1 from
dle class."
close Moynihan adviser. "The White
was eliminated. Mr. Bush is ex-
6.06 percent to 6.2 percent. Mr.
On Capitol Hill, Sen. Robert Kas-
House decision to oppose the
Moynihan would repeal that in-
pected to propose an alternative plan
Moynihan tax cut makes him not
ten of Wisconsin, one of the leading
in his forthcoming budget to grad-
crease retroactively and then cut the
Republican supply-side tax cutters,
only the president of no new taxes
tax rate further to 5.1 percent by
ually reduce the national debt by
has indicated he would like to co-
but of no new tax cuts."
using the accumulated Social Secu-
Jan. 1, 1991.
According to Mr. Shapiro, an en-
sponsor the measure. GOP support
rity surpluses.
"This would be a $55 billion tax
also has been voiced by House Mi-
thusiastic supporter of the idea,
cut for working people in 1991, and
Nevertheless, aides to the presi-
nority Whip Newt Gingrich of Geor-
"The Democrats have learned the
the amount would be greater in fu-
dent said yesterday that Mr. Moy-
gia and Rep. Henry Hyde of Illinois.
lesson that the Republicans have
ture years," Mr. Moynihan said in an-
nihan's proposal has been getting
However, Democratic leaders
taught them, that there is never a
long and serious scrutiny.
nouncing the idea.
have yet to reveal their positions,
political cost to cutting taxes. I think
"There's been a lot of debate over
His proposal would benefit pri-
though Ed Lopez, Mr. Moynihan's
the political temptation is too great
it, pro and con," said one Bush ad-
marily working-class and middle-
chief Social Security aide, said the
for the Democrats to turn away from
viser. "This is a very clever political
income taxpayers the bedrock po-
this."
senator has been receiving support
litical constituencies that have
move by Moynihan, but we don't
from Democratic offices "at the
The Moynihan proposal is flatly
think it's going to hurt us politically."
staff level" for the idea.
SUPPLEMENTARY STATEMENT
BY
Commissioners Robert M. Ball, Martha Keys,
Lane Kirkland, Daniel Patrick Moynihan and Claude Pepper
(members selected by the Democratic leadership of the Congress)
Long-Term Financing and Issues of Special Concern to Women
Meeting the Remaining Long-Term Deficit
All of us supported the compromise agreement which is being recommended by
a vote of 12 to 3 of the full Commission.1/ The agreement provides for fully
meeting the Commission's short-term financing goal and also for meeting about
two-thirds of the Commission's long-term goal--1.22% of payroll out of the 1.8%
projected need.
We recommend that the remaining 0.58% of payroll deficit be met by
providing additional revenues starting in the year 2010, in advance of the
period when the bulk of the deficit is projected to occur. Sufficient
additional revenues would be provided by an increase of less than one-half of 1%
(0.46%) in deductions from workers' earnings beginning in 2010 and a like amount
in employer payroll taxes (with an equal combined rate for the self-employed) or
the revenue could be supplied by an equivalent general revenue contribution, or
7/8
some combination of the two. For purposes of present legislation we would
support putting in the law now an increase in the contribution rate beginning in
2010 of 0.46% of payroll (with the employee contribution offset by a refundable
income tax credit) recognizing, of course, that in the next century the Congress
may prefer to raise the money in some other way and that, in fact, such a rate
increase would not be allowed to go into effect unless estimates at the time of
the scheduled increase showed that it would be needed.
Social Security - 2
to about 42 percent of their last pay-
check. The package would reduce this
Benefit Cuts Under Pickle Plan
"replacement rate" to 40 percent.
In addition, Heimz' amendment
Percentage of Full Retirement Benefits*
called for elimination of the current
penalty imposed on beneficiaries who
Age at
Current
End of
End of
work after they reach retirement age,
Retirement
Law
Stage One (2009)
Stage Two (2027)
over a five-year period beginning in
1990. Now, benefits are reduced $1 for
62
80.0%
75.0%
70.0%
every $2 retirees up to age 70 earn
63
86.7
80.0
75.0
over $6,600 a year.
64
93.3
86.7
80.0
The package also would increase
65
100.0
93.3
benefits for those who leave the work
86.7
66
103.0
100.0
force to care for their children at home
93.3
67
106.0
108.0
100.0
under age six. Currently, a worker's
five lowest-earning, or non-earning,
"Percentage of benefits available to a worker who retires at the normal retirement age.
years are not counted when determin-
ing his or her initial Social Security
benefit. The bill would allow two addi-
tional "drop-out" years for child care.
tion for his long defense of the elderly,
and charged it would penalize the mil-
The committee rejected 15-2 a
most would not give him their votes.
lions of workers who must retire early
proposal by Daniel Patrick Moynihan,
The Pickle amendment was ap-
because of poor health or mandatory
D-N.Y., to raise payroll taxes in the
proved by a 228-202 vote, with the
retirement.
year 2010, in place of benefit cuts.
backing of 152 Republicans and 76
"This amendment assumes peo-
Democrats, including Ways and
ple are able to work longer than they
Other Finance Action
Means Chairman Dan Rostenkowski,
are now. This is just not the case,"
The committee also rejected 11-6
D-Ill., and a majority of committee
argued James M. Shannon, D-Mass.
a motion by Russell B. Long, D-La., to
members. (Vote 20, p. 530)
"This will simply cut their benefits."
delay the effective date of a provision
Pepper's measure, despite the
But Pickle defended the age in-
calling for Social Security coverage of
backing of House Speaker Thomas P.
crease as necessary to keep up with
new federal employees until a supple-
O'Neill Jr., D-Mass., was rejected by a
changing demographics. He pointed
mental Civil Service retirement plan
vote of 132-296. (Vote 21, p. 530)
out that life expectancy had increased
could be established.
"History is being written on this
more than 10 years since the 65-year
Members have given assurances
floor. We are changing the tradition of
retirement age was set in place over 40
that such-a supplemental plan would
this country," O'Neill said when it was
years ago.
be set up, but federal workers fear
apparent the Pepper measure would
Raising the retirement age is "not
they face retirement benefit cuts if no
fail. "In America, each generation has
harsh," he said. "That is just in keep-
new workers are available to pay into
always paid for the generation that
ing with the times."
their current system.
has gone before them."
Pickle's amendment also would
Federal employee unions have
The controversy over raising the
require the Department of Health and
waged an all-out campaign to defeat
retirement age or increasing taxes has
Human Services to make recommen-
the coverage provision, but have met
been one of the major ones surround-
dations by Jan. 1, 1986, on how Con-
with little success so far. Finance
ing the Social Security crisis.
gress should deal with individuals who
Chairman Robert Dole, R-Kan.,
Pepper's impassioned plea to his
cannot retire later because of phys-
charged that a delay in the Jan. 1,
colleagues not to cut benefits won him
ically demanding jobs.
1984, effective date would only give
a standing ovation, but it was not
Those voting against passage of
lobbyists a longer time to fight for re-
enough to convince most members
the bill included both liberals opposed
peal.
that the "structural" change of a
to the higher retirement age and cov-
Besides agreeing to the package of
higher retirement age was the best
erage of federal employees and conser-
long-term provisions, the committee
way to restore the confidence of cur-
vatives opposed to additional taxes.
made several other changes in the
rent workers in the retirement system.
House bill. One of the major ones was
The Pickle amendment would
Senate Solution
a proposal by Long to cut beneficia-
raise the retirement age in two stages.
The Finance Committee agreed to
ries' cost-of-living checks, as a last re-
9
The first would be a gradual increase
a broader package of changes to ad-
sort, if reserves in the Social Security
from 65 to 66 over a six-year period
dress the system's long-range prob-
trust funds fall below a certain level
ending in the year 2009. The second
lems.
because of unexpectedly bad economic
increase would be from 66 to 67 over
The package, proposed by John
conditions.
another six-year period ending in the
Heinz, R-Pa., and adopted 13-4, called
The provision would go into effect
year 2027.
for a gradual increase in the retire-
in 1985, but would be used only after
While individuals still would be
ment age from 65 to 66 over a 15-year
all other emergency measures allowed
able to take early retirement at age 62,
period beginning in the year 2000.
in the bill - including borrowing be-
their benefits would be reduced from
It also would reduce initial bene-
tween the system's three trust funds
the current 80 percent of full benefits
fits by 5 percent beginning the same
- had been exhausted.
to 70 percent in 2027. (Box, above)
year. Currently, workers receive an
The bill also would require the
Opponents seized on this change
initial Social Security payment equal
managers of the trust funds to give
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC.
PAGE 488-March 12, 1983
Reproduction prohibited in whole or in part except by editorial clients.
Social Security - 3
six-months' notice that such a benefit
jobless benefits than the program
Both bills are based on the ad-
cut might be necessary so that Con-
adopted by the House. Existing emer-
ministration plan to provide for a sys-
gress would have the option to make
gency benefits, approved by Congress
tem of set prices for ingatient treat-
other adjustments to the system be-
last year, are set to expire March 31.
ment of different illnesses, and they
fore the COLA cuts were made.
(Background, Weekly Report p. 420)
prohibit charging individual patients
The committee also agreed to:
The Senate measure - expected
more than the set price. Hospitals de-
Include tax-exempt income when
to cost over $2 billion - would allow
livering care for less than the set price
computing a beneficiary's income to
up to eight more weeks of benefits to
may keep the difference. This scheme
determine if his or her Social Security
those individuals who have exhausted
would replace the existing system in
benefits should be taxed. Both the
up to 55 weeks of federal and state
which, within certain limits, hospitals
House and Senate bills call for tax-
benefits before April 1. The House bill
are paid after delivery of care for the
ation of a portion of benefits for indi-
would allow up to 10 more weeks.
portion of their total costs attribut-
viduals whose adjusted gross income,
In addition, individuals who do
able to Medicare patients.
plus 50 percent of Social Security
not qualify for the federal emergency
The set prices would not include
benefits, exceeds $25,000 ($32,000 for
benefits until after April 1 could re-
hospitals' teaching costs or capital ex-
married couples filing a joint return).
ceive up to 14 weeks of additional
penditures for construction or major
The proposal was offered by John
benefits depending on their state's
equipment; those costs would con-
H. Chafee, R-R.I., who argued that
jobless rate, under the Finance bill.
tinue to be paid under the existing
some beneficiaries might try to avoid
Those who have not exhausted
system. The Senate bill, however,
the new tax by diverting their taxable
their emergency benefits when the ex-
mandates that capital costs be
income into tax-exempt income.
tension expires Sept. 30 could receive
factored into the new price structure
Provide a more generous tax
up to 50 percent of their remaining
after October 1986. Many medical
credit to offset higher taxes for the
payments after the expiration date.
economists regard controls on capital
self-employed. The Finance Commit-
The Senate bill also would pro-
expenditures to be an important step
tee bill calls for a credit against self-
vide a plan to give certain hard-hit
toward controlling inflation in health
employment taxes of 2.9 percent in
states some leeway in repaying inter-
care costs.
1984, 2.5 percent in 1985, 2.2 percent
est owed on outstanding loans from
Both bills substitute a four-year
in 1986, 2.1 percent in 1987-89 and 2.3
the federal unemployment trust fund.
phase-in of the new payment method
percent after 1989.
Currently, states owe about $12 billion
for the Oct. 1 effective date suggested
The House bill calls for a credit of
to the fund, and many see little chance
by the administration. Both require
2.1 percent in 1984, 1.8 percent in
of being able to repay the loans, or
separate rates for urban and rural hos-
1985-87 and 1.9 percent after 1987.
make large interest payments, soon.
pitals, and for different regions of the
Both measures would increase payroll
Under the plan, states would be
country; the administration plan had
taxes for the self-employed 33 percent,
allowed to spread their interest pay-
called for a single, national schedule of
beginning in 1984, to equal the com-
ments over a five-year period if they
rates with area adjustments only for
bined taxes now paid by employers
can show that they are taking steps to
labor costs. Both would give state cost
and employees.
improve the solvency of their state un-
control systems substantially more au-
Eliminate Social Security benefits
employment compensation programs.
thority than the administration
for non-resident aliens, their depen-
The committee also agreed to ac-
wanted to depart from the set-price
dents and survivors, except for pay-
cept provisions in the House bill to
payment method if they meet certain
ments equal to the amount the alien
increase monthly SSI benefits $20 and
criteria.
worker had paid into the system, plus
to delay a scheduled SSI COLA six
Both bills require the secretary of
interest.
months until January 1985.
health and human services to study
Expand Social Security coverage
and report to Congress on the feasibil-
to include all new federal employees,
Medicare Provisions
ity of applying the new price system to
members of Congress, the president
The Senate bill's Medicare provi-
physician services in the future.
and vice president. The House bill
sions are generally the same as those
also would include top political
in the House measure, with differ-
appointees, certain elected officials
ences in certain details. (House bill,
and sitting federal judges.
Weekly Report p. 455)
Exempt from Social Security cov-
For instance, both bills depart
CLARIFICATION
erage members of the Amish religious
from the administration proposal by
sect who work for Amish employers.
mandating that hospital admission
Medicare Payments. Weekly
Allow the three Social Security
patterns and other factors be reviewed
Report p. 457, col. 3, 2nd full para-
trust funds to borrow from each other
to guard against costly manipulations
graph. The Gephardt amendment per-
through 1987, as long as no funds were
of the new system, or poor care for
mits hospitals to bill separately for
borrowed from the Hospital Insurance
patients. But the Senate measure
services provided during hospitaliza-
(HI) trust fund, which finances Medi-
specifies that Professional Review Or-
tion if the hospital billed separately
care, when its reserves were low.
ganizations (PROs) authorized in the
for such services before Oct. 1, 1982.
Eliminate Social Security benefits
1982 tax bill must do the job, while the
However, because the legislation (HR
for imprisoned felons.
House bill permits the use of other
1900) includes an overall prohibition
Jobless Benefits/SSI
types of organizations. The Senate bill
against billing individual Medicare
does not include a House provision
patients, separate billings under this
The Finance Committee also
authorizing severe penalties for cer-
provision would be allowed only to
agreed to a slightly less generous six-
tain violations of the system or com-
Part B of Medicare, the optional plan
month extension of federal emergency
promised quality of care.
that covers physician fees.
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC
Reproduction prohibited in whole or - pan except by admond chents
March 12, 1983-PAGE 489
REPORT OF THE
NATIONAL COMMISSION
ON
SOCIAL SECURITY
REFORM
JANUARY 1983
The National Commission makes the following recommendations unanimously:
(1) The members of the National Commission believe that the Congress, in
its deliberations on financing proposals, should not alter the
fundamental structure of the Social Security program or undermine its
fundamental principles.* The National Commission considered, but
rejected, proposals to make the Social Security program a voluntary
one, or to transform it into a program under which benefits are a
product exclusively of the contributions paid, or to convert it into a
fully-funded program, or to change it to a program under which
benefits are conditioned on the showing of financial need.**
(2) The National Commission recommends that, for purposes of considering
the short-range financial status of the OASDI Trust Funds, $150-200
billion in either additional income or in decreased outgo (or a
combination of both) should be provided for the OASDI Trust Funds in
calendar years 1983-89.
(3) The National Commission finds that, for purposes of considering the
long-range financial status of the OASDI Trust Funds, its actuarial
See additional views of Commissioner Archer in Chapter 4.
See additional views (with regard to the last point) of Commissioners
Archer, Fuller, and Waggonner in Chapter 4.
10
2- 2
of
Social Security
Leaders Optimistic:
all new federal employees and workers
in non-profit organizations beginning
Jan. 1, 1984, and would include all
Social Security Rescue Plan
current and new members of Congress
under the Social Security system.
In addition, both bills include a
Rushes to Final Hill Accord
major revamping of the way the gov-
ernment reimburses hospitals under
Setting partisanship aside, the
one of the biggest Senate opponents of
Medicare and a six-month extension
full House and the Senate Finance
the commission plan, praised the Fi-
of an emergency jobless benefit pro-
Committee have given a Social Secu-
nance Committee bill, although he
gram. They also increase certain Sup-
rity rescue plan a quick push toward
said he still planned to offer some
plemental Security Income (SSI)
floor amendments.
benefits for the aged, blind and dis-
final passage.
The House March 9, by a 282-148
He observed that quick action in
abled poor.
vote, passed a bill (HR 1900) to keep
both houses and adoption of the re-
the system from going broke. The Fi-
tirement-age increase had proved "the
Pickle or Pepper?
nance Committee approved a similar
cynics are wrong. There are occasions
Final House passage did not come
measure (S 1) the following day by a
when Congress will rally to the task
without a sometimes emotional floor
vote of 18-1. (House vote 23, p. 530)
and do what is politically hard."
debate over the best way to solve the
The legislation now goes to the
Armstrong and other conserva-
system's projected financial difficul-
Senate floor where debate is expected
tives had criticized the commission's
ties when the Baby Boom generation
to begin March 15 or 16. Congres-
rescue plan because of its reliance on
begins to retire in the next century.
sional leaders are optimistic about
some large tax increases to keep the
The president's commission left
sending a package to President Rea-
gan before the March 26 Easter break.
The votes in both houses heralded
the end of nearly two years of bitter
partisan bickering over Social Secu-
rity. Members indicated they expected
little trouble with the legislation be-
fore it reaches the president's desk.
"The cynics are wrong.
Congress must complete action
There are occasions when Con-
soon or the financially troubled retire-
gress will rally to the task and
ment system will be unable to pay out
do what is politically hard."
some 36 million benefit checks in July.
The House and Finance Commit-
-Sen. William L. Armstrong, R-Colo.
tee measures closely parallel the rec-
ommendations made in January by
the president's National Commission
on Social Security Reform. But they
also include provisions dealing with
the system's long-range problems -
an area where the commission could
system afloat. One critic, Steven D.
not reach consensus - that appear to
that sensitive issue unresolved, and
Symms, R-Idaho, cast the one dissent-
have dampened much of the conserva-
the House Ways and Means Commit-
ing vote in the Finance Committee.
tive opposition to the commission
tee bill called for a hybrid solution -
Both bills would raise about $165
plan. (Commission recommendations,
cutting benefits and raising taxes -
Weekly Report p. 155)
billion over the next seven years. They
with the understanding that two sub-
are expected to solve the retirement
These include steps in both bills
stitute proposals would be considered
and disability system's financial prob-
to raise the retirement age. The House
on the floor. (Weekly Report p. 453)
would raise the age gradually from 65
lems well into the next century by
Besides an amendment raising
to 67 by the year 2027; the Senate
raising a total of almost $1.9 trillion
the retirement age - offered by Social
over a 75-year period.
Finance Committee approved a one-
Security Subcommittee Chairman
Besides increasing the retirement
year increase by the year 2015, but it
J.J. Pickle, D-Texas - Rules Com-
age, the two measures would raise
also agreed to cut initial benefits 5
mittee Chairman Claude Pepper, D-
scheduled payroll taxes over the next
percent after the turn of the century.
Fla., proposed a .53 percentage point
William L. Armstrong, R-Colo.,
decade, delay the July cost-of-living
increase in payroll taxes in the year
allowance (COLA) six months and tax
2010 to prevent a cut in benefits.
the Social Security benefits of high-
But House members showed dur-
-By Pamela Fessler
income individuals for the first time.
ing the debate that while they were
and Elizabeth Wehr
They also call for the coverage of
willing to give Pepper their admira-
11/12
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC
Reproduction
prohibited
or
port
except
by
editorial
clients
March 12, 1983-PAGE 487
:01-19-90
Fight Over Tax Cut Heats Up
As Bush and Moynihan Dig In
By DAVID E. ROSENBAUM
Special to The New York Times
WASHINGTON, Jan. 18 - An emerg-
ing battle over whether to,cut Social Se-
system and the extent to which Social
curity taxes heated up today with
Security revenue is being used to mask
President Bush sharply criticizing the
have to cut benefits at some time, and
the size of the Government's budget
proposed cut while the author of the
the President and the Republican
deficit. But the Democrats, and most
proposal, Senator Daniel Patrick
Party now have an opportunity to show
moderate Republicans, also believe
Moynihan, said he would not budge.
the American people, once and for all,
that the country cannot afford a tax cut
that the Republicans are as committed
of any kind.
Their statements indicated that Mr.
Moynihan's proposal could trigger a
to the integrity of this Social Security
Schumer Sees Economic Danger
fierce political and legislative battle
trust fund as anybody."
Reflecting that conviction, Repre-
over a sensitive issue.
Moynihan Sees No Budget Link
sentative Charles E. Schumer, a Brook-
Senator Moynihan was interviewed
lyn Democrat who is on the Banking
Mr. Bush called the Senator's pro-
by in a telephone call to Jerusalem,
and Budget committees, said a tax cut
posal to cut Social Security taxes a
where he is winding up a trip for the
would drive up the deficit, cause more
"charade" that would lead to a tax in-
Foreign Relations Committee to Africa
Government borrowing, soak up pri-
crease or lower retirement benefits.
and the Middle East.
vate savings and damage long-term
Mr. Moynihan, in his first interview on
"No, no, no," the Senator said when
economic growth.
the subject since he made the proposal
asked whether his proposal was a trap
Senator Moynihan said he hoped that
to force an increase in the income tax
the President and Congress could get
three weeks ago, insisted that he in-
or some other tax. "It is not fair to say 1
together and agree on ways to reduce
tended neither a political trap nor a
gambit to force other taxes to be
want to raise taxes to offset the Social
the budget deficit, by cutting spending
raised. He also strongly rejected the
Security tax cut."
or increasing some other tax. But even
The Social Security system, he con-
without that, he said, the Social Se-
suggestion that he wanted to lower re-
tinued, "edges on the sacred, and to see
curity tax should be lowered. "If the
tirement payments.
its revenues debauched this way is an
deficit is increased, that would be bad,"
At the White House today, President
independent question that stands apart
he said. "But if we have to go through a
Bush repeated the charges his aides
from the budget deficit, a tax increase
small crisis to straighten things out,
have been making for days. "It's an ef-
or any other question."
fine, let's do it."
Mr. Moynihan observed that he had
fort "to get me to raise taxes on the
How It's Being Paid
long supported an increased gasoline
American people by the charade of cut-
As of Jan. 1, workers and their em-
ting them, or cut benefits," the Presi-
ployers are each paying a 7.65 percent
tax, but he said he would not stick his
dent said of the Moynihan proposal,
payroll tax, 6.2 percent for retirement
neck out and suggest any tax increase
now unless Mr. Bush did likewise.
"and I'm not going to do it to the older
under Social Security and 1.45 percent
people of the country."
for Medicare, the health insurance pro-
The issue is being driven by partisan
gram for the elderly and disabled. The
politics. Senator Moynihan has embar-
With both sides jockeying for politi-
Social Security rate rose from 6.06 per-
rassed Republicans by proposing a tax
cal advantage, Vice President Quayle
cent last year and the overall rate from
cut. It is the same kind of proposal that
also weighed in on what has become
7.51 percent.
helped Republicans win the last three
one of the hottest topics of an especially
Presidential elections.
The tax is paid on the first $51,300 of
slow period in Washington.
wages. The maximum tax this year is
Help to All Workers Seen
In an interview with The Associated
$3,924.45.
Mr. Moynihan said that a reduction
Press, the Vice President said: "Let:
Mr. Moynihan would repeal this
in the Social Security tax would help all
me tell you something. Cut these taxes;
year's increase and reduce the Social
workers, while the Bush plan to lower
the way Moynihan is talking about, you!
Security portion of the tax to 5.1 per-
the capital gains tax rate would largely
cent next year, saving workers and
help the wealthy.
their employers as much as $560
apiece.
The rejoinder today from Mr. Bush
and Mr. Quayle - that Mr. Moynihan's
Social Security and Income Tax
plan would lead to a cut in Social Se-
He argued that in the Reagan and
curity benefits - was similarly a move
Bush years the Social Security tax had
to capture a Democratic stronghold,
been increased to balance a cut in in-
the party's long-time advocacy of
come taxes. That is "inequitable," he
higher retirement payments.
said, because the poor and the middle
Mr. Moynihan maintains that the
class are affected more by the Social
money raised today through Social Se-
Security tax and less by the income
curity taxes affects future benefits
tax.
only indirectly. He said he planned
Income taxes increase the more a
nothing that would lower those bene-
taxpayer earns from all sources. Social
fits.
Security taxes are paid at the same
rate by all workers, they are assessed
only on wages and not on interest, divi-
dends or capital gains, and they are not
paid at all on wages above $51,300.
"We now have the most regressive
tax system in the Western world," Mr.
Moynihan said.
Congress has been in recess since
Mr. Moynihan offered his proposal just
before New Year's Day. Democrats
have reveled in the political discomfort
it has caused President Bush and his
Republican allies, but no Democrat has
yet endorsed the Moynihan plan. The
only support Mr. Moynihan has gained
has come from a few conservative Re-
publican lawmakers
The view of most Democrats is that
Mr. Moynihan should be applauded for
underscoring the inequities of the tax
WASH. POST 01-19-90
Bush: Moynihan Idea a "Charade'
Social Security Plan Is Cover for Tax Increase, President Charges
By Ann Devroy
ing the buildup of a huge surplus to
Quayle, in an interview with the
Washington Post Staff Writer
cover the retirement benefits of the
Associated Press, called the Moyni-
Baby Boom generation. The surplus
han plan "a political trap, and once
President Bush, leading the
is being used to mask the real size
people understand it, they won't fall
charge against a Democratic pro-
of the federal budget deficit and the
for it." Referring to the Hollings
posal to reduce Social Security
New York senator argues that this
plan, he said, "The cat's a little bit
taxes, said yesterday the plan is a
amounts to "thievery."
out of the bag right now."
"charade" aimed at getting him to
Hollings proposed Wednesday
The emerging debate over the
raise income taxes or eventually
enactment of a 5 percent value
level of Social Security revenues
reduce Social Security benefits.
added tax (VAT), in effect a nation-
and their use to mask the budget
Bush, Vice President Quayle and
al sales tax, to replace the revenues
deficit was joined yesterday by a
White House press secretary Mar-
that would be lost by the Moynihan
group of 11 leading economists, in-
lin Fitzwater joined yesterday in
pian and by Bush's proposal to re-
cluding those who have served
assailing both a tax increase plan
duce taxes on capital gains.
Democratic and Republican admin-
unveiled Wednesday by Sen. Ernest
Republicans yesterday gleefully
istrations, who sharply criticized
F. Hollings (D-S.C.) and last
seized on the Hollings proposal as
the Moynihan plan, saying it would
month's call by Sen. Daniel Patrick
proof that the Moynihan plan was a
do "serious harm to the economy."
Moynihan (D-N.Y.) for a cut in So-
Democratic ploy to force a tax in-
The group said the immediate ef-
cial Security taxes. They linked the
crease. Fitzwater, who called the
fect of cutting $55 billion in payroll
two proposals, arguing that they
Moynihan plan a "wolf in sheep's
taxes would be to worsen the fed-
are both part of a Democratic
clothing," said, "First we had the
eral deficit, leading to an increase in
scheme to force a general tax in-
tax cut, now we have the tax in-
interest rates and further erosion in
crease.
crease. Can cuts in [Social Security]
growth of the economy.
Moynihan in December an-
benefits be far behind? Look out,
The economists acknowledged
nounced he will introduce legisla-
older Americans."
the proposal could be a "tactical
tion when Congress returns next
Bush, questioned about the
device" aimed at focusing public
week to roll back the Social Secu-
Moynihan plan at a picture-session,
attention on the "outrage" of using
rity tax increase that took effect
said, "This is an effort to get me to
Social Security surpluses to reduce
this year and another hike sched-
try to raise taxes on the American
the deficit level. But the result,
uled to take effect Jan. 1, 1991.
people by a charade of cutting
they argued, could be a general tax
The Moynihan plan would return
them, or cutting benefits. And I am
increase and a payroll tax cut but no
the Social Security system to a pay-
not going to do it to the older peo-
effort to reduce federal spending.
as-you-go system, instead of allow-
ple in this country."
"The best hope is that Sen. Moyni-
han's proposal provokes a review of
the nation's currently absurd budg-
etary policies," the statement not-
ed. "The worst fear is that it might
actually be enacted."
The statement was signed by
economists that included Henry
Aaron of the Brookings Institution;
Nobel Prize winner James Tobin;
Barry Bosworth, who served in the
Carter administration; Alice Rivlin,
former director of the Congression-
al Budget Office; Charles Schultze,
and Paul Samuelson.
The White House finds itself in
an awkward position, opposing a tax
cut that has drawn support from its
usual allies at the Chamber of Com-
merce and the conservative think-
tanks. But officials have settled on a
strategy of attempting to portray
the Moynihan plan as inevitably
linked to a later tax increase, or to a
reduction in benefits.
WASH.POST:01-19-90
Charles Krauthammer
Moynihan's frustration is understand-
able, but it doesn't justify bomb-throwing.
Moynihan's
A Social Security tax cut is a very bed
idea. Why? Don't listen to me. Listen to
Daniel Patrick Moynihan: Writing as late
274A
as May 1988, he reveled in the brilliance
Gambit:
of the tax hike he now wants to kill
"In twelve days in January 1983,"
wrote Moynihan, "a half dozen people in
A Terrible
Washington put in place a revenue stream
that is just beginning to flow and that, if
we don't blow it, will put the Federal
budget back in the black, pay off the
Idea
privately held Government debt, jump
start the savings rate and guarantee the
Social Security Trust Funds for-a half
century and more."
The '90s are three weeks old and we
There is no better way to "blow it"
already have a candidate for most irre-
than to destroy the surplus. Moynihan's
sponsible idea of the decade. The idea is
tax cut would do exactly that.
to cut Social Security taxes. The bomb-
But Moynihan now claims that the
thrower is Sen. Daniel Moynihan (D-
Republicans blew it. He feels betrayed
N.Y.).
that the Republicans did not clean up the
We are a country with a $3 trillion
budget deficit but instead used the Social
debt. Debt service alone claims one out of
Security surplus to balance the books.
every seven dollars in the federal budget.
This he calls thievery.
Our savings rate in the '80s was the
lowest of any of the major industrial
Today, that is. In 1988 he considered it
countries (about a third of Japan's, for
normal accounting. "This revenue stream
instance). In such a country, talk of any
must be deposited with the Treasury," he
declared. Today he professes to be
tax cut is irresponsible. Yet Moynihan
shocked-shocked!-that the Treasury
proposes one that he matter-of-factly ad-
used it to shrink the deficit.
mits will increase next year's deficit by
$55 billion.
Moynihan in 1988: "Our present deficit
True, Social Security taxes are about
'path' takes us, in theory at least, to a
the most unfair way to boost national
zero deficit by 1993. If [his italics) that
savings and keep the deficit down. A
happens, the revenue stream from Social
responsible politician, therefore, would
Security will be sufficient to begin retiring
propose (as this most responsible colum-
debt by 1994."
nist suggested 18 months ago) not to cut
To begin retiring debt by 1994. So all
but to shift taxes: to match a cut in Social
along Moynihan expected that until 1994
Security taxes with an offsetting rise in
the Social Security surplus would be used
the more progressive income tax. That
to shrink the current budget deficit. The
way Joe Sixpack is relieved of some of the
projected Social Security surplus in 1993
burden of balancing the budget while the
is $99 billion. All along he was prepared
budget itself is not further unbalanced.
for $99 billion of the Social Security
This Moynihan does not propose. Why?
surplus to go toward offsetting the oper-
I suspect it is partly out of anger and
ating budget deficit-a prospect, he now
frustration. He helped engineer the Social
professes, that scandalizes him.
Security tax hike of 1983. That increase
Why was the original Social Security
is generating a huge Social Security sur-
tax increase such a good idea? Because,
plus: $65 billion in 1990, going up to
explained Moynihan in 1988, "our real
$236 billion in the year 2000. That
economic problem is that we don't save
surplus, which Moynihan had hoped
enough." That is as true today as it was in
would be used to retire old debt, is
1988. Now, however, Moynihan launches
instead being used to finance current
a gratuitous proposal for a $55 billion
deficit spending.
annual dissaving.
Moynihan's response: cut the tax, abol-
Moynihan really doesn't want this to
ish the surplus. This proposal is probably
happen. He wants to keep his 1983 baby,
meant as a ploy only. If you are going to
have the operating budget balanced, have
continue to live off my Social Security tax,
his Social Security surplus retire all of our
he is saying to George Bush, while dema-
outstanding debt to the Japanese and
goguing for a capital gains tax cut, I can
others, and thus reclaim our economy and
out-demagogue you. If you don't stop
increase our productivity. Good idea. But
talking about capital gains, if you don't
he threatens the entire enterprise with
balance the operating budget by cutting
his shock treatment.
spending or raising taxes, if you don't
Shock treatment that makes no sense.
begin using the Social Security surplus for
He wants to balance the operating budget
what it was intended (to pay off old debt)
without Social Security. For that, a tax
-then I'll cut $55 billion in taxes myself
hike (or drastic spending cuts) is needed.
and really wreck the budget.
The idea that the way to get Republicans
It is hard to believe that Moynihan
to accept a tax hike is to threaten them
actually wants this to happen. But ideas
with a tax cut is bizarre.
like this, particularly politically irresist-
It is understandable that Democrats,
ible ideas like tax cuts, have a life of
having been whipsawed on the tax issue
their own. Moynihan may not be able to
for so long, now savor the chance for
control his monster.
some tax cutting demagoguery of their
own. As one eager Democrat put it,
"Ronald Reagan and George Bush have
relieved the Democrats of any obligation
to be responsible in fiscal matters." The
Moynihan gambit embraces this newly
WASH.POST:01-19-90
HAYNES JOHNSON
Devilishly Clever
at, that pixie, has turned the
"trickle down" theory of economics
P
Washington political world upside
favoring the rich over the poor.
down. His proposal to cut the
Stockman's dirty little secret, as
Social Security payroll tax is the most
imparted to Greider, was that supply-side
ingenious, seductive and maybe
doctrine "was always a Trojan Horse."
destructive Machiavellian political
Now, with exquisite irony, it is
maneuver since the Reagan true
Stockman's mentor, Moynihan, who has
believers came to town preaching the
employed tax-cut politics to confound the
miracles of supply-side economics and
conservatives and make them squirm. At
the benefits of big tax cuts.
Harvard University, where Moynihan
In one brilliant move, Sen. Daniel
then was teaching, young graduate
Patrick Moynihan (D-N.Y.) has struck a
student Stockman lived in Moynihan's
welcome blow for honesty instead of
home. "I have never known a man
hypocrisy in government, shifted the
capable of such sustained self-hypnotic
political focus from favors for the few to
ideological fervor," Moynihan later said
those for the many, challenged every
of his part-time baby sitter. "One day, he
adult American to decide what he or
arrives at Harvard preaching the
she is willing to pay for and turned the
infallibility of Ho Chi Minh. Next thing
tables on the supply-side tax-cut
you know he turns up in Washington
theorists who held sway here with such
proclaiming the immutability of the
damaging effect on the country.
Laffer Curve."
You remember the supply-siders. Cut
Moynihan also was first to charge that
taxes, they proclaimed, and miracles
the Reagan administration had
will occur: Economic growth will soar,
"consciously and deliberately brought
tax revenues will actually increase,
about" higher deficts as a means of
inflation will decline and savings rates
forcing congressional domestic-spending
will rise. And all of this will be achieved
cuts. At the time, Moynihan was
without having to endure the painful,
denounced for making such an assertion.
politically unappealing process of
Events proved him correct, with a
slashing federal spending, enduring a
vengeance. Cuts necessary to achieve
wrenching recession or a combination
balanced budgets were never made,
of both.
however. The deficit ballooned to even
Theirs was a fail-safe, pain-free
greater heights.
formula for easy economic success and
So, nine years later, comes a
all so breathtakingly simple. Cutting
Moynihan-led move that promises to
oppressive top tax rates meant that
reverberate through the politics of the
people would have more money to
'90s. Under his plan, ordinary taxpayers
spend. Higher tax rates discouraged
reap the greatest tax-cut benefits. By
investment; lowering them encouraged
contrast, under President Bush's
it. Furthermore, they promised, the
capital-gains tax-cut plan, the wealthy
more taxes were cut, the more
benefit most.
economic activity would be generated.
Moynihan's proposal is deceptively
The greater the general prosperity, the
simple and devilishly clever.
greater the tax revenues for the
Funds from the annually rising Social
general good. Why, you could actually
Security payroll taxes are being diverted
reduce the national debt, increase
to mask the real size of the federal deficit
defense spending and balance the
and sustain the operating costs of the
budget within three years. Utopia.
government. That's not the way it was
Of course, it didn't turn out that way.
supposed to work when Moynihan,
The Reagan years did produce
among others, helped to achieve
economic growth, lowered inflation and
bipartisan agreement on Social Security.
a huge defense buildup-but at a price
Those funds were intended to be
of a severe recession in 1981-82, the
preserved to pay Americans' retirement
greatest deficits in the nation's history,
benefits in the next century. Instead,
sharply reduced savings rates and a
they're being plundered by today's
society so laden with debt that
politicians.
America's future has been mortgaged.
Let's end the charade, Moynihan
It turned out, too, that the famous
argues. Cut back those payroll taxes and
supply-side tax cuts were hardly as
adopt a pay-as-you-go method for Social
advertised. They represented a cynical
Security. Critics fear that Moynihan's
public deception.
plan will wreck "the system." Some of us
As Reagan's budget director, David A.
who look back on the record of fiscal
Stockman, later confessed to writer
irresponsibility of the last decade think
William Greider, the truth about supply
that the system already is wrecked. It's
side was nothing more than the old
about time to start over.
SENT BY:AARP COMMUNICATIONS
:
1-17-90
1:37PM
:
202+
2024566218:# 1
Legislative Council MEETING. 29TH
TALKING POINTS
SENATOR MOYNIHAN'S PROPOSAL TO REDUCE PAYROLL TAXES
BACKGROUND
The 1983 Social Security Amendments called for increasing
Social Security payroll tax (FICA) rates to assure the fiscal
stability of the Old-Age Survivors and Disability Insurance
Trust Funds for 75 years. The tax rates were raised in 1984,
1985, 1986 and 1990. The 1990 increase is the last scheduled
raise in the rates.
In a departure from past practice, these FICA tax rates were
set at a level sufficient to prefund a portion of the
retirement benefits of the "baby boom" generation.
Senator Moynihan, one of the architects of the 1983
compromise, has now proposed rolling back the 1990 increase
in the payroll tax (.14%) and then in 1991, "floating the tax
rate--setting it a level to cover current benefits and a small
contingency reserve. Essentially, current workers (dominated
by the baby boom) would only pay sufficient taxes to cover
current retirees and future generations would pay higher
payroll taxes to cover retirement benefits for the baby boom.
"The debate over this and similar proposals is not essentially
about the well being of today's retirees. Rather, it is a
debate how the Social Security promise will be honored in the
future. The economic choices we make in the next few years may
very well determine whether or not we will be able to keep
these promises for the baby boom and beyond."
This proposal raises a number of significant issues and
concerns:
1. The Trust Funds do not even have a contingency reserve of
one year at this time. The one year level is considered a
minimum. AARP believes that up to two years reserves are
necessary. The contingency reserve is need to ensure that the
Social Security System can get through periods of economic
slowdown or recession without crisis.
SENT BY:AARP COMMUNICATIONS ; 1-17-90 1:38PM ;
202->
2024566218:# 2
2. Senator Moynihan's major reason for proposing a rollback
in the tax rates is that the Social Security trust fund
buildup is being used to mask the true extent of the Federal
deficit and to finance the deficit in the operating budget of
the Federal government. These are legitimate concerns but the
Moynihan issue. proposal goes well beyond simply dealing with this
3. AARP believe that gradually removing the Trust Funds from
the Gramm-Rudman-Hollings (GRH) deficit calculation would
action. expose the true dimensions of the deficit and spur positive
4. The reserve was designed to ensure benefits to future
generations. It was seen as source of new national savings
which would make the economy stronger and more productive in
the future.
5. The reserve was also seen as a fairer way to ensure
benefits to the baby boom. It is reasonable to ask the large
baby boom generation to provide for a portion of its own
retirement benefits since future working generations will be
of much smaller numbers.
6. However, the reserve can only serve these beneficial
functions if the rest of the Federal budget is in relative
balance. Senator Moynihan's proposal is based on the premise
that we cannot get our budget house in order and therefore,
we should not make future promises based on the buildup of the
reserve. Many believe that this determination is premature
and that we should not give up on the reserve yet.
7. Floating the tax rate would give an immediate tax cut to
workers and their employers. But, it may undermine further
confidence in Social Security. Eliminating the buildup of the
reserve in favor of raises taxes in the future to pay benefits
could raise anxiety and lower confidence. Some fear that
benefits to the baby boom would end up being reduced because
there would be little willingness in the future to raise the
payroll tax to the levels necessary to sustain the current
benefit promise.
8. Giving a tax cut now could be seen as little more than a
continuation of the trend of the last ten years of immediate
gratification with the bills to be paid later.
9. However, this tax cut is not "free". The money ($50
billion or more in the first year of the floating tax rate)
would have to be made up in other taxes or by increasing
government indebtedness.
10. This proposal should be taken seriously and its effects
carefully scrutinized.
January 12, 1990
SELECTED PAST REMARKS BY SEN. MOYNIHAN ON SOCIAL SECURITY
Moynihan on Social Security and the the Greenspan Commission:
"If it ain't broke, don't fix it,' is a commonsensical
caution for people not content to leave well enough alone.
I propose a corollary, one particularly suited to any
discussion of the Social Security system; 'If it's fixed
don't break it! emphasis added]¹
"If we are to have another debate about changing the
Social Security system, let us not lose sight of these
facts: The program is secure; it is depended on; it
is effective. The burden of proof falls upon those
wishing to change things.
"I submit to you that after 1985, social security will
not contribute one cent to the Federal deficit -- in
fact, it will be part of the solution.
[The Social Security system is] "the most successful
policy ever devised in our land.
[The revenue stream resulting from the the Greenspan
Commission's reforms] "will put the Federal budget back
in the black, pay off the privately held government
debt, jump start the savings rate and guarantee the
Social Security Trust Funds for a half century and more
[emphasis added].
1
Congressional Record, 7-31-84, E3378
2
Congressional Record, 7-31-84, E3378
3
Congressional Record, 3-20-84, S2926.
4
"Moynihan Praises Social Security System," by Robin
Greene, UPI, 12/31/88.
5
"Conspirators, Trillions, Limos in the Night," by Sen.
Daniel Patrick Moynihan, New York Times, 5/23/88.
(more)
2
Background On Moynihan And The Greenspan Commission
As a member of the National Commission On Social
Security Reform (The Greenspan Commission), which
issued its report in January, 1983, Moynihan supported
increases in the payroll tax that funds the retirement
portion of the program -- increases to be phased-in
over a seven year period. One of those increases, from
6.06 percent to 6.2 percent, just took place on January
1st. Moynihan seeks repeal of that increase, and a
further cut in the rate to 5.1 percent by Jan. 1,
1991. In other words, Moynihan now wants to do away
with the increases he favored in 1983.
In fact, Moynihan wanted the tax increases to be even
higher. In a supplementary statement to the Greenspan
Commission's Report, signed by Moynihan and four other
members', a proposal to further increase taxes read as
follows:
"For purposes of present legislation we would support
putting in the law now an increase in the contribution
rate beginning in 2010 of %.046 of payroll
118
After
the Greenspan Commission submitted its report, Moynihan
tried his additional tax increase in the Senate Finance
Committee, which voted 15-2 against Moynihan's
proposal.
The Greenspan Commission unanimously recommended, in
the words of the report,
"that the Congress, in its deliberations on financing
proposals, should not alter the fundamental structure
of the Social Security program or undermine its
6
"Moynihan's Plan Makes Bush the Tax Ogre," by Donald
Lambro, Washington Times, 1/11/90.
7
The four other members were Lane Kirkland, Claude Pepper,
Robert M. Ball, and Martha Keys. There were 15 members total on
the Commission.
B
Report of the National Commission on Social Security
Reform, (Washington, 1983).
"Social Security Rescue Plan Rushes to Final Hill
Accord, " by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
(more)
3
fundamental principles. The National Commission
considered, but rejected, proposals to make the Social
Security program a voluntary one, or to transform it
into a program under which benefits are a product
exclusively of the contributions paid, or to convert it
into a fully-funded program, or to change it to a
program under which benefits are conditioned on the
showing of financial need. "[emphasis added]¹
Both houses of Congress, in a remarkable show of unity,
swiftly enacted the Greenspan Commission's
recommendations, including the seven year phased-in
payroll tax increase. A typical lead was from
Congressional Quarterly: "Setting partisanship aside,
the full House and the Senate Finance Committee have
given a Social Security rescue plan a quick push toward
final passage.
The vote in the House for the Greenspan reforms was
282-148, on March 9, 1983. 12 The Senate voted 58-14,
on March 25th, 1983, with Moynihan voting Yea.¹³
ATTACHMENTS
10
Report of the National Commission on Social Security
Reform (Washington, 1983)
11 "Social Security Rescue Plan Rushes to Final Hill
Accord," by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
12
"Social Security Rescue Plan Rushes to Final Hill
Accord," by Pamela Fessler and Elizabeth Wehr, Congressional
Quarterly, 3/12/83.
13
1983 CQ Almanac; CQ Senate Vote 54
3378
CONGRESSIONAL RECORD Extensions of Remarks
July 31, 1984
strategy for dealing with the Soviet Union.
uitable balance in arms sales between the
rity System in the future to meet the
At very least, this strategy would require a
U.S. and the allies. At present, the U.S.
needs of today's young people. For 50
coordinated response by NATO members to
enjoys a seven-to-one advantage in such
major Soviet challenges around the world.
years now, the American people have
sales within NATO. The allies recognize
Such a strategy was possible during the first
NATO's need for advanced weaponry. but
honored the social contract in which
twenty years of the alliance's life, but de-
they are afraid that a U.S. push for more of
working people provide the financial
tente in the last decade brought benefits to
it will give American arms manufacturers an
security for older Americans and
Europe that were not shared by America.
even larger share of NATO's markets. The
income security for those disabled. Ir-
Thus, most Europeans today believe that a
cost of new weapons is high, and many Eu-
responsible statements from President
working relationship can be maintained
ropeans doubt that they can afford them.
Reagan or others are geared to under-
with the Soviet Union, while most Ameri-
NATO's conventional strategy is also un-
cans still see the Soviet Union as an aggres-
mine the Social Security Program and
settled. Greater conventional strength
sive power whose designs on Europe and
based on advanced weaponry would decrease
generational contract. The real risk to
other regions must be resisted. This differ-
NATO's reliance on nuclear weapons, but
the Social Security Program comes
ence in perception is dividing the alliance,
also would enable NATO to strike deep into
from the catastrophic events in our
and ultimately may threaten its viability.
Warsaw Pact territory. The possibility that
economy which has been subjected to
A second issue for NATO is how to ease
new weaponry might cause NATO to shift
the roller coaster ride of Reagan's
economic tensions that are sapping the alli-
to an offensive strategy is extremely trou-
"voodoo economics!" There is no
ance's strength. The U.S. is enjoying an eco-
bling to many in Europe, particularly in
nomic recovery that is faster than Europe's.
sound reason to suggest that this
Germany.
European leaders argue that the U.S. recov-
social contract will not be honored for
These are the major issues that will domi-
ery is taking place at Europe's expense, and
nate NATO's deliberations during the
future generations as well as current
that high U.S. interest rates soak up money
coming year. One of the important ways
retirees. The universal nature of the
that could be invested in Europe's recovery.
that the U.S. can contribute to resolving
Social Security System has been and
The U.S. and Europe are also engaged in
them is through arms control. Goodfaith ef-
will continue to be the foundation of
several trade disputes that have serious im-
forts and meaningful negotiations with the
the System's strength, both for
plications for important economic sectors on
Soviet Union can help close the rift between
both sides of the Atlantic. The strength of
today's and tomorrow's beneficiaries.
American and European perceptions, and
NATO depends on the combined economic
can give our friends in Europe the political
[From St. Paul (MN) Sunday Pioneer Press,
strength of its members, and both the U.S.
support that they need to make the case for
July 15, 1984]
and Europe will have to make future eco-
increased defense spending and stronger
SOCIAL SECURITY DEPENDABLE DON'T TAMPER
nomic decisions in view of their impact on
conventional forces.
WITH IT Now
the alliance.
Other issues will surface, but If the alli-
How NATO should react to the challenge
"(By Senator Daniel Patrick Moynihan)
ance can handle these ft will continue to
of events beyond the North Atlantic region
"If ft ain't broke, don't fix it." is a com-
provide an effective shield behind
is a third issue. The U.S. position is that
monsensical caution for people not content
NATO should fashion a coordinated re-
which the nations of the West can prosper.
to leave well enough alone. I propose a cor-
sponse to such events. Washington believes
The allies still appreciate the importance of
ollary. one particularly suited to any discus-
that NATO has a duty to act when its secu-
NATO. So do many Americans. All parties,
sion of the Social Security system; "If it's
rity is at stake, and that European members
however, must be willing to accept the re-
fixed, don't break It!"
should be ready to replace U.S. forces that
sponsibilities and sacrifices necessary to
On Jan. 15, 1983. the National Commis-
might be moved from Europe tn an emer-
keep the alliance healthy.e
sion on Social Security Reform. on which I
gency. The Europeans, however, are not
served, agreed to a set of recommendations
keen on replacing U.S. troops, and they are
SOCIAL SECURITY DEPENDABLE
to put Social Security on a firm financial
especially reluctant to ready their own
footing.
troops for combat abroad. They point out
HON. BRUCE F. VENTO
Our proposals became law three months
that U.S. and European interests may not
later. and my optimism about their effica-
coincide outside Europe. that some nations
OF MINNESOTA
cy-expressed at the time-remains. On
cannot legally use armed force outside their
IN THE HOUSE OF REPRESENTATIVES'
April 5 of this year. Donald T. Regan. treas-
borders, and that Europe no longer has the
ury secretary, Raymond J. Donovan, labor
resources necessary to project military force
Tuesday, July 31, 1984
secretary. and Margaret M. Heckler. health
to distant points.
Mr. VENTO. Mr. Speaker, recently
and human services secretary-the trustees
A final issue before NATO is how to im-
an article by Senator DANIEL PATRICK
of the Social Security funds-reported that
prove its conventional military strength.
MOYNIHAN concerning the current
the benefits provided "under these pro-
This is a pressing concern because there is
status of our Social Security System
grams can be paid well into the next centu-
doubt whether NATO could counter an in-
vasion by the Warsaw Pact without early,
and its outlook for the future was pub-
ry."
During the commission's deliberations,
and probably cataclysmic, use of nuclear
lished in the St. Paul Sunday Pioneer
Alan Greenspan, our chairman and former
weapons. The Europeans know that their
Press (July 15). Senator MOYNIHAN,
chairman of the president's Council of Eco-
own homelands would be the first areas dev-
who served as a member of the Nation-
nomic Advisors, imposed a simple but cru-
astated in a nuclear exchange, so they and
al Commission on Social Security
cial rule: Members were entitled to their
the U.S. have agreed on the need to upgrade
Reform. observes that Congress' pas-
own opinions, but not to their own facts. In
conventional forces. There is disagreement,
sage of the Social Security Act Amend-
deference to our chairman's rule, herewith
however, on the allocation of expense. The
ments of 1983 insured the future sta-
some facts:
U.S. wants its allies to increase their defense
bility of our Nation's basic social in-
By next year. the revenues from Social Se-
budgets 3 percent annually, just as they said
curity taxes will match the costs of Social
that they would do in 1978. The allies say
surance program and notes that the
Security benefits. Indeed, we now expect
that they will do their best to increase de-
Social Security Program has helped
revenue surpluses to begin in 1986 and
fense spending, but contend that their eco-
millions of older Americans avoid
build, according to Social Security's actuar-
nomic troubles may keep them from reach-
living in poverty. Senator MOYNIHAN'S
ies, to $13.4 trillion by 2025 and $18.4 tril-
ing the original goal.
reasoned observations are especially
lion in 2045. Unless the economy takes a
How the burden of a stronger convention-
timely in light of the recent remarks
sudden nosedive and sharply erodes Social
al defense should be shared is in fact one of
NATO's knottiest problems. The U.S.
by President Reagan suggesting that
Security revenues within the next few
spends more of its gross domestic product
young people will never be able to re-
years, the retirement and disability funding
problems would seem to be behind us.
(6.5 percent in 1982) on defense than do its
ceive as much from this system as
The universal social insurance system es-
NATO allies T3.7 percent in 1982), and in
they are paying into it and that fur-
tablished in 1935 is central to the way we
1983 the U.S. increased its defense spending
ther (although unspecified) changes
plan our lives.
by 7.6 percent while the allies raised theirs
may be necessary.
Social Security is an undeniable success.
by only 2 percent. For their part, the allies
President Reagan's comments are a
The system has helped reduce poverty dra-
point out that during the 1970s they in-
disservice to the Nation and only serve
matically among the nation's elderly. In
creased their defense spending by 2 percent
annually while U.S. military outlays fell by
to exacerbate unfounded fears and
1937, three years before the first check was
anxieties among young workers and
distributed, two-thirds of all Americans 65
1 percent per year. They note as well that
older Americans. The President's
years or older had no means of- support
they get more value for each dollar because
except help from friends and relatives or
their conscripted forces cost less than Amer-
statements and responses mislead
private charities. Today, more than 85 per-
ica's volunteer force. Burden-sharing also
young people when he suggests that
cent of all elderly citizens have incomes
involves NATO's commitment to & more eq.
there will not be a strong Social Secu-
above the national proverty line.
July 31, 1984
CONGRESSIONAL RECORD Extensions of Remarks
E 3379
If we are to have another debate about
(which would not change the benefit struc-
Mr. Speaker, this initiative to
changing the Social Security system, let us
ture) "would add significantly to the public
strengthen mathematics and science
not lose sight of these facts: The program is
understanding of the trustee character of
secure; it is depended on; it is effective. The
education in this country is long over-
Social Security as a retirement and group
burden of proof falls upon those wishing to
insurance plan."
due. Deficiencies in math and science
change things.
Social Security has been a fixture in the
curricula and equipment have serious
President Ronald Reagan recently re-
United States for nearly a half-century. Yet
injured the morale of this country's
marked (once again!): "There is a possibili-
after all this time and success, some are not
teachers and the capabilities of our
ty-well, probability-that many people,
reconciled to it. This is unfortunate. But it
students. The National Science Foun-
young people now paying in, will never be
is a minority view, and it doesn't change the
able to receive as much as they're paying."
dation [NSF] has reported that math
facts. Social Security is fixed in more ways
In response, James M. Brown, a spokesman
than one. Don't break it.
and science teachers have had serious
for the Social Security Administration, said
[Senator Moynihan, of New York, is the
difficulty in obtaining information
that Social Security "is not just a retire-
ranking Democrat on the Senate Finance
concerning new instructional materi-
ment benefit. You are buying a package
Committee's Social Security and income
that also includes protection against disabil-
als, thereby hampering the Nation's
maintenance programs subcommittee.-The
ity and death. Nobody else offers a package
efforts to improve curriculum. Addi-
Los Angeles Times]
like that," The president sometimes seems
tionally, the National Association of
genuinely to misunderstand the system.
Secondary School Principals has re-
Few amoung us know what our financial
IN MEMORY OF FORMER CON-
ported that only 45 percent of all sec-
condition will be in the future, and it is only
GRESSMAN CHARLIE WILSON
ondary schools possess some sort of
wise to eliminate fear of economic calamity
by making regular, and relatively small, pre-
science equipment. These are disturb-
mium payments throughout our working
HON. WILLIAM (BILL) CLAY
ing facts demonstrating serious, wide-
lives.
OF MISSOURI
spread problems in our country's abili-
At its inception in 1935, Social Security
IN THE HOUSE OF REPRESENTATIVES
ty to educate our children.
provides benefits only for retirees, but eligi-
bility has since been broadened. In 1939
Fortunately, H.R. 1310 defines im-
Tuesday, July 31, 1984
before the first benefit was paid, retirees'
mediate Federal, State, and local roles
dependents and survivors were accepted as
Mr. CLAY. Mr. Speaker, a former
for improving math and science educa-
beneficiaries. And under President Dwight
colleague, Charles Wilson, passed
tion and teacher preparation. The bill
Eisenhower in 1956, permanently and total-
away Saturday. July 21, 1984. I insert
provides incentives to encourage
ly disabled workers began receiving Social
my message to his lovely wife, Bok, as
future generations of teachers to enter
Security checks. Today, some 25 million re-
a lasting tribute to a true friend:
tired workers, almost 4 million disabled
these fields, and to help improve the
DEAR Box: You are not alone. All of Char-
workers. and more than 7 million survivors
skills of current teachers. Additional-
lie's many friends share his loss with you.
receive Social Security benefits.
As with other types of insurance, of
Carol and I count ourselves among his clos-
ly, the problems of student prepara-
est friends.
tion and achievement are addressed by
course, the lucky ones are those who do not
At a time like this, words are not adequate
authorizing educational agencies and
need to collect. But it is nice to know it is
there.
to convey the pain and emptiness we feel.
institutions to develop methods to im-
There is no little antagonism to the com-
Even constrained by our limited power of
prove, strengthen, expand, and mod-
pulsory nature of Social Security. However,
expression, we are compelled to verbalize
ernize math and science education.
the system is trustworthy only if it's univer-
the deep hurt we share with you-the loss
sal. If given the chance, how many people
of our dear and longtime friend, Charlie.
Moreover, H.R. 1310 addresses the
would have the time, knowledge, and, above
True friends are a rarity, Charlie was our
serious problems of underrepresenta-
all. capital to provide securely for the
true friend. When he laughed, we laughed.
tion of women and minorities in these
future? And what of those who would try
When he cried, we cried. When he rejoiced,
disciplines by -requiring grant recipi-
but fail? Stock go down sometimes, right?
we rejoiced. When he hurt, we hurt. When
ents to take concrete action to ensure
The plain fact is that Social Security
he died, a part of all mankind died.
means that older persons in America do not
Ernest Hemingway put it best when he
equal educational opportunity. I
wrote: "For Whom the Bell Tolls." He said,
strongly support this provision and
depend on their children for support. This
is a blessing beyond words. Not to the chil-
"No man is an island, entire of itself; every
salute the committee's continued ef-
dren, but to the parents who know they
man is a piece of the continent, a part of
forts to improve opportunities for all
never will be a burden to the dearest per-
the main: if a clod be washed away by the
Americans.
sons in their lives.
sea, Europe is the less, as well as if a prom-
Recently. Treasury Secretary Regan said
ontory were. as well as if a manor of thy
Mr. Speaker, in considering the bill
the practice of paying benefits to those at
friends or of thine own were; any man's
before us today, however, I am con-
the "upper end" of the economic scale
death diminishes me, because I am involved
cerned over one amendment added by
should be re-examined. Well, why should
in mankind: and therefore never seem to
the other body to provide funding for
well-off Americans receive an income sup-
know for whom the bell tolls; it tolls for
magnet schools which are part of an
plement? Because depriving them of the
thee."
approved desegregation plan. My res-
benefits for which they have paid under-
A longtime family commitment forced
Carol and I to be in Connecticut, and we will
ervations about supporting this
mines the insurance principle of Social Se-
curity.
be unable to see you for the next few days,
amendment stem from its heavy bias
Would it be right or prudent to tell those
however, we will call you when we return so
toward the larger school districts,
whose homes burn down that they cannot
that we can get together.
while appearing to shun the smaller
collect fire insurance because they have re-
Sincerely,
but equally needy districts. I under-
sources sufficient to cover the losses? Of
BILL AND CAROL CLAY.O
stand from the colloquy on this
course not. Just so with Social Security.
Once we end the universal nature of the
debate, however, that the eligibility
system. we inevitably weaken the universal
SECTIONS 1 THROUGH 7 OF H.R.
criteria set forth in the amendment do
nature of its political support.
1310
not preclude those smaller desegregat-
Certainly, there are administrative
ing districts, and therefore I withdraw
changes that can improve Social Security
SPEECH OF
my reservations. Further I would hope
Administration operations. Our commission
recommended, and Congress approved, ap-
HON. SILVIO O. CONTE
that, this being the case, the Secretary
pointment by the president of two members
will give close consideration to the
OF MASSACHUSETTS
of the public to the Social Security Board of
needs of those smaller districts when
IN THE HOUSE OF REPRESENTATIVES
Trustees. We can enhance public confidence
considering awards under this pro-
in the system by increasing public involve-
Wednesday, July 25, 1984
gram.o
ment in its oversight. But these appoint-
ments have not been made.
Mr. CONTE. Mr. Speaker, I am glad
It has been suggested that the agency be
to see that H.R. 1310, the math and
made an independent body (it is now within
science education bill. has returned to
the Department of Health and Human Serv-
this floor for our consideration. And I
ices). I agree with Robert Ball, the agency's
am pleased to rise in support of this
former commissioner, who said this step
important measure.
S 2926
CONGRESSIONAL RECORD - SENATE
March 20, 1984
others. I am proud to have the oppor-
At a time when it has become fashion-
er Congress' brave decision to go beyond the
tunity today to commend Mr. Michael
able to advocate cuts to run-away enti-
commission's recommendations and phase
Bongiovanni.
tlement programs in order to reduce
in a delay in the retirement age makes it
the deficit, we must recognize precise-
less likely that drastic changes will then be
ly how, or if, entitlement programs are
needed. In the meantime. building up enor-
SOCIAL SECURITY
mous reserves in the trust funds-which
contributing to the deficit. I submit to
would offset deficits in other parts of the
Mr. MOYNIHAN. Mr. President, 1
you that after 1985, social security will
budget-would only discourage needed
year ago, the Senate began its consid-
not contribute 1 cent to the Federal
budget discipline.
eration of H.R. 1900, the Social Secu-
deficit-in fact, it will be part of the
There is no way to put a system as big and
rity Act Amendments of 1983. At this
solution.
important as Social Security on automatic
benchmark, it is instructive to reflect
I hope that my colleagues will take
pilot for all time. But there is no sense in
on the reform legislation enacted last
the time to review these articles.
sounding a general alarm while sailing in
April.
There is no way to guarantee that
untroubled waters.
I call my colleagues' attention to the
social security will never need addi-
recent report by the Committee for
tional financing changes. But as the
[From the Washington Post, Feb. 10. 1984]
Economic Development, entitled
Post editorial concludes, "there is no
SOCIAL SECURITY Is IN GOOD SHAPE
"Social Security: From Crisis to
sense in sounding a general alarm
(By Robert M. Ball and Robert J. Myers)
Crisis?" CED, a private nonprofit, non-
while sailing in untroubled waters."
Hobart Rowen ["Social Security: It's Not
partisan organization of business ex-
Mr. President, I request unanimous
So Secure." op-ed, Feb. 16] asserts that the
ecutives, has suggested that the 1983
consent that the following articles
Social Security system is once again likely
amendments to the Social Security
from the Washington Post, "Social Se-
to run into financial difficulties despite the
Act "provide very little margin of
curity False Alarm" and "Social Secu-
reform legislation enacted last April. A large
part of his conclusion is drawn from the
safety." It contends that, should eco-
rity is in Good Shape" appear in the
recent report by the Committee for Eco-
nomic and demographic trends be less
RECORD.
nomic Development entitled "Social Secu-
favorable than assumed in the 1983
The articles follow:
rity: From Crisis to Crisis?"
amendments, the system could face
[From The Washington Post, Feb. 25, 1984]
We disagree strongly with Rowen's con-
another financial crisis in this decade.
SOCIAL SECURITY FALSE ALARM
clusions. We refer only to the Social Secu-
The economic assumptions on which
Less than a year ago Congress enacted a
rity program (Old-Age, Survivors and Dis-
Congress relied for these amendments,
bipartisan reform program to put the Social
ability Insurance-OASDI) and not to the
it is claimed, "fail to cover a realistic
Security retirement system on sound foot-
Hospital Insurance portion of the Medicare
range of possibilities" with respect to
ing for the foreseeable future. Now comes a
program. The National Commission on
actual economic performance.
report from the Committee on Economic
Social Security Reform recognized, and we
This simply is not the case. The Na-
Development, a national business policy
agree, that under present law Hospital In-
group, warning that Social Security may be
surance has a serious financing problem
tional Commission on Social Security
in trouble before the end-of the decade.
some five or more years from now. It was
Reform, on which I served, based its
Before you pick up your pen to dash off a
not the assignment of the national commis-
recommendations on economic as-
worried letter to the president or Congress,
sion to deal with this problem. but rather
sumptions generally considered to be
you should know that the CED's report is
with the more immediate problem of the
quite cautious. The intermediate as-
not based on any new analysis or insight.
Social Security programs.
The projections it cites are taken from last
Rowen claims that eventually Social Secu-
sumptions were thought by some to be
year's report of the Social Security Trust-
rity and other entitlement programs will re-
less favorable than our best estimates
ees, and are essentially the same as those
quire further changes for two reasons: first,
would have suggested, but we were
used by Congress and the bipartisan Social
"to keep them financially healthy and,
wary of the perils of over optimism.
Security commission in framing the reforms
second, to help cut the dangerous federal
I submit for your attention, then, an
put into law last March. True. things have
deficits." We believe that it is highly prob-
editorial which appeared in the Wash-
changed somewhat since that time-but not
able that the Social Security system will be
ington Post on February 25, entitled
in the way that the CED's report would sug-
financially healthy over at least the next
"Social Security False Alarm," and a
gest. They've gotten better.
two decades. For the period 20 to 75 years
letter to the editor of the Washington
The important thing to remember about
after that for which estimates are tradition-
last year's reforms is that, for once, they
ally made, we believe the estimates underly-
Post written by Robert M. Ball and
were not based on a rosy view of the future.
ing the financing of the program are reason-
Robert J. Myers. These two pieces give
The reform package was designed to see the
able and even somewhat on the conservative
an accurate first year report card on
Social Security trust funds through this
side.
the Social Security Amendments of
decade under a very pessimistic economic
As to Rowen's second point, the Social Se-
1983, one that ought to be considered
forecast-unemployment remaining above
curity program, which will be part of the
by all.
10 percent until 1985 and not dipping below
unified budget until 1992, will not be a cause
Mr. Ball, the distinguished former
8 percent until almost the end of the
of the deficit, but rather will be part of its
Commissioner of Social Security and a
decade, and wages barely outpacing infla-
solution. This is so because, under any rea-
tion.
sonable assumptions, income to the self-fi-
member of the National Commission,
Of course, the economy is already much
nanced OASDI trust funds will exceed
and Mr. Myers, the highly respected
better than that. And, as the Congressional
outgo during the near-future years and for a
former Chief Actuary and Deputy
Budget Office's new projections show, even
couple of decades. thereafter. It would not
Commissioner of Social Security who
if the economy heads back into a recession a
seem reasonable to further help reduce the
served as executive director of the
year or so from now, the trust funds should
general federal deficits by cuts in the Social
Commission write that the economic
have sufficient reserves to make it through
Security program which, in itself, is in a
assumptions used by the National
the tightest period before legislated tax in-
state of positive fiscal balance.
Commission were-
creases begin to build up the funds later in
The CED report leaves the implication
the decade. And, if economic conditions
(which Rowen latches on to) that, if eco-
Slightly on the pessimistic side (and cur-
become very bad, the law now contains a
nomic conditions are only slightly worse
rently economic conditions are more favora-
safeguard that keeps benefit cost-of-living
than the intermediate assumptions, the
ble. Moreover, even under the pessimistic
adjustments from outpacing wages when
system will be insolvent before the end of
assumptions, the financing of the system
trust fund reserves are low.
the 1980s. This is not correct, because the
will be reasonably adequate in the 1980's,
Beyond this decade, it's important to re-
intermediate assumptions are, we believe,
and it would take much more than a small
member, the retirement trust fund is
slightly on the pessimistic side (and current-
unfavorable wiggle in basic trends to pro-
headed toward a period of surpluses. That's
ly economic conditions are more favorable).
duce a financial crisis.
because the generation that will be retiring
Moreover, even under the pessimistic as-
Mr. Ball and Mr. Myers make a
in the mid-1990s was born in the low-birth-
sumptions, the financing of the system will
second point of considerable impor-
rate years of the Depression, while the
be reasonably adequate in the 1980s, and it
tance:
labor force, which pays Social Security
would take much more than "a small unfa-
taxes, will still be swollen by the baby-boom
vorable wiggle in basic trends" to produce a
The social security program, which will be
generation.
financial crisis.
part of the unified budget until 1992, will
Sometime in the next century, when the
This is not to say that there is no possible
not be a part of the deficit, but rather will
baby-boomers reach retirement, the surplus-
scenario that would cause the Social Secu-
be part of its solution.
es will disappear, as the CED warns. Howev-
rity system to have short-term financing
March 20, 1984
CONGRESSIONAL RECORD SENATE
S 2927
problems. What It would take is something
I have introduced legislation to pro-
making an important contribution to
like double-digit unemployment. with wages
vide a Federal matching grant pro-
rising no more rapidly than prices. This we
marine resource management through
believe to be very improbable.
gram for computer education and
research and field services designed to
Even under the pessimistic assumptions of
teacher training. I think that comput-
promote the development, use, and
the 1983 Trustees Report, the OASDI trust
er education can serve to enhance the
conservation of ocean and coastal re-
funds would have a balance of at least two
teaching of more traditional academic
sources.
month's outgo at all times in the 1980s.
and intellectual skills. Putting comput-
By designating the "Year of the
while under the intermediate assumptions
ers in classrooms will not be a solution
Ocean" Congress can renew its com-
this ratio would, desirably. build up and
for the problems in education. Howev-
mitment to addressing the problems
would amount to about five months' outgo
er, with careful planning, computers
which threaten the ocean and coastal
at the beginning of 1990, and increase rapid-
ly thereafter.
can provide a new tool for teaching
zone. Passage of this resolution can
We see no reason to make changes in the
writing, mathematics, social studies,
enhance public awareness of our tre-
benefit structure in order to provide an even
and other courses, and analytical
mendous reliance upon marine re-
wider margin of safety than now exists
skills.
sources, as well as the consequences of
Reauthorization of the Vocational
failing to manage them wisely.
Education Act must be a top priority
The ocean is essential to the life of
STRENGTHENING AMERICAN
for 1984. Solid vocational training is
the world. The "Year of the Ocean"
EDUCATION
important in preparing students for
program can help us to focus on its im-
Mr. LAUTENBERG. Mr. President,
productive careers.
portance in each of our lives. I hope
few issues have more importance to
Another major unfinished item on
my colleagues will join in supporting
the future of our country than educa-
the education agenda is legislation to
the passage of this resolution and pro-
tion. Our ability to compete in the in-
improve math and science education.
moting its observance.
ternational economy in years to come,
The House of Representatives passed
our ability to continue as a nation of
a math and science bill last spring, but
opportunity for all, and to advance to-
the Senate has not yet scheduled con-
HONORING JACK DEMPSEY
gether as a nation, is dependent on the
sideration of its version of the bill.
Mr. D'AMATO. Mr. President, I rise
education provided our young people.
The present unhappy state of
to ask this body to honor one of
Recent reports from the Commission
American education has not developed
America's greatest sports legends, the
on Excellence on Education and
overnight, nor will it be improved im-
late Jack Dempsey. A legend in the
others highlight existing weaknesses
mediately. But there must be a starting
boxing ring as well as in everyday life,
in our educational programs. Indeed,
point on the road to recovery.
the National Commission on Excel-
We must not fail our children by re-
Jack Dempsey's rise to heavyweight
champion made him an example of
lence in Education has likened the sit-
fusing to heed the harsh message of
the American spirit throughout the
uation in American education today to
the Nation at Risk report. We owe
"Golden Age of Sports," the 1920's.
unthinking, unilateral education
them the bright promise of a good
education. We owe their teachers our
Like other legendary sports figures
disarmament.
strong support. And we owe the
of that era, such as Babe Ruth, Bobby
If such an incident had been leveled
Nation an adequate investment in our
Jones, and Johnny Weissmuller, Jack
at the defense establishment in this
educational system If we hope to pros-
Dempsey's style and accomplishments
country, the cries of dismay from the
White House and the Congress would
per and maintain U.S. leadership in
in his sport were revolutionary. Demp-
the world economy
sey's aggressive "bob and weave" style
have been loud and instantaneous.
ended the era of standup defensive
Reaction to the harsh assessment of
style boxing forever and turned boxing
the Education Commission has been
YEAR OF THE OCEAN
into a top drawing spéctator sport.
more temperate. Nevertheless. Mr.
Mr. CHAFEE. Mr. President. the
Winning the heavyweight crown for
President, I, for one. must express my
ocean environment remains one of our
the first time in 1919, Dempsey re-
deep chargin over the state into which
country's most precious natural trea-
tained the title until 1926. But his loss
our educational system has fallen. As
sures. In order to encourage better un-
did not affect his popularity with the
the Commission on Excellence report
derstanding and appreciation of the
American public. Jack Dempsey re-
rightly notes. citizens look to educa-
need to preserve ocean and coastal re-
mained a hero because he found suc-
tors and elected officials to provide
sources, I am pleased to join Senator
cess in his failures, an accomplishment
leadership to reverse educational
STEVENS as a cosponsor of Senate Joint
endearing to many people who viewed
trends in our country.
Resolution 257. designating the 12-
Dempsey's rise to champion as repre-
Providing more money for education
month period beginning July 1, 1984,
sentative of the everyday battles of
is by no means the only answer to dif-
as the "Year of the Ocean."
most ordinary Americans.
ficulties in education today. However,
I represent the Ocean State. The sea
His life before becoming champion
approval of increased educational ex-
figures prominently in Rhode Island's
also adds to the legend his name car-
penditures can give encouragement to
heritage. Narragansett Bay remains
ries. The son of an impoverished Mid-
educators doing their best under diffi-
our preeminent natural, commercial,
western family. a miner at 13, a veter-
cult circumstances in the Nation's
and recreational resource. Rhode Is-
an of hobo jungles at 19, and
classrooms. It can provide increased
landers cherish the ocean for its
heavyweight champion of the world at
resources for existing programs that
beauty. for its rich abundance of
24, Jack Dempsey's struggle is a true
have proved their effectiveness. It can
marine life. and for what it contrib-
symbol of the American dream.
help initiate new programs.
utes to our State's economy.
His legend is further supported by
This year I have been working in the
Rhode Islanders are also keenly
his unfailing kindness outside of the
Senate as part of a special working
aware of the fragility of delicate ocean
ring. From his restaurant on Broad-
group on education set up by Minority
and coastal habitats. The problems
way, Jack Dempsey played the role of
Leader ROBERT BYRD. Our group will
posed by pollution, waste disposal,
host to the city of New York, as well
be seeking a consensus on the appro-
coastal development. and energy ex-
as of a gentle, charitable man, always
priate spending levels for education in
ploration constantly threaten the
willing to help the unfortunate and
the fiscal year 1985 budget. After al-
ocean environment and require action
the needy.
lowing for inflation, the President's
to preserve marine resources.
Touted as the greatest fighter of the
budget request is about $5 billion
As we continue to exploit the wealth
half century in 1950 and inducted into
below what education spending was 4
of the ocean, it is our responsibility to
the Boxing Hall of Fame in 1954, Jack
years ago. While we may not be able to
plan now for the prudent management
Dempsey is still remembered as one of
make up this entire shortfall. I cer-
of the marine environment. The Uni-
the greatest fighters of all time. But
tainly think an increase over the
versity of Rhode Island's distinguished
his legend is incomplete without men-
President's proposed budget is needed.
Graduate School of Oceanography is
tion of his kindness out of the boxing
Services of Mead Data Central
PAGE
7
6TH STORY of Level 1 printed in FULL format.
Proprietary to the United Press International 1988
December 31, 1988, Saturday, BC cycle
SECTION: Washington News
LENGTH: 313 words
HEADLINE: Moynihan praises Social Security system
BYLINE: By ROBIN GREENE
DATELINE: WASHINGTON
KEYWORD: Reagan-Dems
BODY:
Sen. Patrick Moynihan, D-N.Y., praised the Social Security system
Saturday as ''the most successful policy ever devised in our land'' and then
made a New Year plea on behalf of needy children in the United States.
Moynihan, who delivered the Democratic response to President Reagan's weekly
radio address, got off an optimistic note by asking Americans to join him in ''a
special wish for President and Mrs. Reagan.'
The New York senator noted that he and the president had been sparring with
each other for the past eight years, saying ''they've been fair fights from
first to last'' and admitting, ''I'm going to miss them.
'Our first go-round had to do with Social Security,'' Moynihan said in
praising the entitlement program.
''Without Social Security, almost half of the elderly would be poor today,'
he said. ''With Social Security, Medicare and other government programs, the
number of elderly poor has all but disappeared.
'Social Security is the most successful policy ever divised in our land,'
Moynihan said.
Citing a Census Bureau study released last week, Moynihan said: ''I wish I
could report that the ... study concluded the same for children. It did not. ...
Government benefit programs hardly touch child poverty.'
Moynihan said the study showed that ''there are two kinds of children in
America and they live in two kind of families.
The senator said children who live in two parent families will never be poor
while children in single-parent families ''will almost always be poor sooner or
later.
'Their numbers are staggering,'' Moynihan said. ''As many as one-third of
our children live this way today. We've become the first industrial nation on
earth in which children are the worst-off group.'
Calling child poverty ''the great challenge before us,'' Moynihan said: ''If
we get to work, it will really be a happy New Year.'
so/v4/Conspirators, Trillions, Limos in the Night
tunity as peril, he went on:
floor. If he was as optimistic as his ar-
And President Reagan was not going
By Daniel Patrick Moynihan
"Social Security is a case in point.
ticle suggested, shouldn't we make
to do anything to prevent it.
With 116 million workers supporting
one last try? Two days later, he and I
And so we would. Until then, Social
WASHINGTON
it and 36 million beneficiaries relying
and Representative Barber B. Cona-
Security had been on a pay-as-you-go
It all started
his appears to be the
ble Jr. were secreted out to White
basis, with a little cushion to take
N.Y.TIMES:05-23-88
on it, Social Security overwhelms
House chief of staff James A. Baker
with a Dole
T
season for disclosing
every other domestic priority.
care of economic downturns. We
Washington secrets,
Through a combination of relatively
3d's house in northwest Washington.
could have fluffed up that cushion and
and I don't see why
modest steps, including some accel-
Negotiations began.
let it go at that. We decided instead on
article.
only
Republicans
eration of already scheduled taxes
In time, we shifted our talks to
a radical change in policy. Hence-
should be able to play.
and some reduction in the rate of fu-
Blair House (which was empty, owing
forth, we would collect and save for
I've got a pretty good one. Secret
ture benefit increases, the system
to the chandelier incident), and on the.
the far future, and not just the next
messages concealed on the Op-Ed
can be saved. When it is, much of the
night of Saturday, Jan. 15, we reached
year. An immense reserve would be-
page of The New York Times. Whis-
credit, rightfully, will belong to this
agreement on arrangements to save
gin to accumulate before beginning to
1994. As public debt declines, national
savings increase.
pered conversations on the Senate
President and his party."
the system, which were promptly en-
run down about 2030. In the process,
floor. White House limos hurtling
Oh? Not 24 hours earlier the budget
dorsed by the commission and the
we would pay off the national debt.
By 2010 the Social Security reserve
through the wintry night to a house in
director, David A. Stockman, had
President.
We have now had four full calendar
is projected to be nearly $4.5 trillion.
northwest Washington. A bedroom
foretold that the "most devastating
Most of this story is now familiar.
years of the new revenue base. The
($4,460,600,000,0001) If we wanted to
yup - on the second floor of the
bankruptcy in history," that of the So-
Here is what is not generally under-
trustees have just reported, and I
go all the way, we could probably
President's guest house, where nights
cial Security Trust Funds, was only
stood. Almost everyone Involved
have just had the first oversight hear-
have zero national debt by that time.
earlier a visiting potentate would
months away. Which wasn't so, but a
knew - by then - that the Adminis-
ing. Here are the numbers. The Social
For the first time, incidentally, since
have been skewered by a plunging
lot of people believed him. What the
tration had got the nation's finances
Security Trust Funds are increasing
1836- when we were down to $38,000.
chandelier had he not been mysteri-
columnist Sylvia Porter called "a
in terrible shape. Mr. Stockman, who
at the rate of $109,440,000 per day and
We could of course blow the oppor-
ously otherwise engaged at the
scare campaign of vicious propor-
joined our deliberations, has written
rising.
tunity. We could start to "spend" the
Watergate.
tions" had been going on. The new
about this in great detail. There
The current reserve is approaching
Social Security surplus rather than
Huddled conspirators. Big bucks.
breed of conservatives seemed to de-
would be $200 billion budget deficits
$100 billion. Between now and the
using it to retire debt, and so get rid of
Like, maybe, trillions?
test the program even more than the
"as far as the eye could see." The na-
year 2000 it will grow to $1.4 trillion.
the deficit. (Which for practical pur-
Trouble is it was really on the up
old breed. And the funds were going
tional debt would triple in eight years.
(As of 1987, the entire assets of pri-
poses now consists almost entirely of
and up. And has a happy ending. So I
down, the result of an interval
vate pension funds were about $1.49
debt service.) But surely we should
don't suppose it would sell, and I
in the 1970's when prices ran ahead of
billion.) This revenue stream must be
"save" it, and thus put aside the fist
might as well come out with it here
wages so that cost-of-living adjust-
deposited with the Treasury. If at the
cal mess of the 80's.
and now.
ments were not being offset
end of the day the Treasury has more
Our real economic problem is that
by increased payments into the
A true
In brief, in 12 days in January 1983,
money on hand than it needs, it sim-
we don't save enough. Of 24 members
a half dozen people in Washington put
funds.
ply retires privately held
of the Organization for Economic
in place a revenue stream that is just
A year or so earlier, the Senate ma-
inside
debt.
Cooperation and Development, we
beginning to flow and that, if we don't
jority leader, Howard H. Baker Jr.,
This can sound arcane but isn't.
rank 20th, followed by Iceland, and a
blow it, will put the Federal budget
had put together a bipartisan Na-
story
Every week some millions of Treas-
few such. Yet, as one witness at our
back in the black, pay off the pri-
tional Commission on Social Security
ury bonds and bills "mature" and are
oversight hearings put it, by the next
vately held Government debt, jump
Reform. Mr. Dole and I were appoint-
revealed by
cashed in. At present, the Treasury
decade we could be "awash in capt
tal." This is the one sure way - sav-
start the savings rate and guarantee
ed. Alan Greenspan was made chair-
"rolls over" the debt, issuing new
the Social Security Trust Funds for a
man. Months went by with no appar-
the Senator
bonds or bills to get the cash to pay
ing and investment to make cer-
half century and more.
ent movement from either side. Then,
off the old ones. But if it isn't short of
tain the Social Security funds are still
It all began on a Monday morning,
suddenly, this signal from Mr. Dole.
Who Knows!
cash it needn't do this. The national
ample when the baby boom retirees.
Jan. 3. Bob Dole of Kansas had an Op-
He and Mr. Greenspan had come to
debt begins to shrink.
One further point. In the near term,
Ed article that Insisted that things
understand that the system's prob-
Our present deficit "path" takes us,
the proportion of retired persons in
would soon be looking up for the Ad-
lems really were temporary and that
in theory at least, to a zero deficit by
the population will be quite stable:
ministration - there was a near-de-
in the long term it could be made he-
1993. If that happens, the revenue
the depression bables. Today, there
pression on - and that Congressional
roically solvent.
stream from Social Security will be
are 21 persons retired for every 100 of
Republicans were behind him. Noth-
On the day I was sworn in for a sec-
sufficient to begin retiring debt by
working age. This ratio stays flat
ing special, save for one paragraph.
ond term, I went over to Mr. Dole,
through 2010. Claims on the funds will
Having said that the issues confront-
who happened to be on the Senate
be steady.
There you have it. Hard to believe?
ing them presented as much oppor-
Yes. But within our grasp.
Daniel Patrick Moynihan, Democrat
All done in 12 days in January.
of New York, is chairman of the Sen-
ate Finance Committee's subcommi-
lee on Social Security and Family
Policy.
Moynihan's plan makes Bush the tax ogre
By Donald Lambro
ers.
from some of his traditional sup-
]/1]/90
class Americans are clearly over-
THE WASHINGTON TIMES
The proposal by New York Sen.
porters.
taxed."
Daniel Patrick Moynihan, which
"This is a very dumb thing for the
There were even some within the
A Democratic proposal to reduce
would cut the payroll tax by more
[administration] to be doing," said
Social Security taxes is winning
administration, such as Housing and
than a percentage point, has
Kate O'Beirne, deputy director for
Urban Development Secretary Jack
cheers from conservatives and busi-
spawned an internal political debate
domestic policy studies at the Heri-
Kemp, who made it known yesterday
ness groups, but it has put President
within the White House, according
tage Foundation, which has enthusi-
that they support the idea of cutting
Bush in the risky position of oppos-
to administration officials.
astically endorsed the Moynihan tax
the payroll tax to boost savings and
ing a politically appealing tax cut
It also has triggered some unusu-
cut. "Cutting the payroll tax is good
WASHINGTON TIMES
aimed at his middle-class support-
ally harsh criticism of Mr. Bush
politics and good policy. Working-
see TAXES, page A10
TAXES
helped the Republicans win the
opposed by Mr. Bush. Mr. Darman
Ironically, the strongest and most
White House in five out of the last
says the $55 billion in lost Social Se-
immediate support for Mr. Moy-
six presidential elections.
curity revenue that the tax cut would
From page Al
nihan's proposal has come from an
Among other things, say eco-
cost in 1991 alone would balloon the
unholy alliance of liberal and con-
economic growth.
nomic and political analysts, it hands
deficit and lead to renewed Demo-
servative organizations, business
"[Budget Director Richard] Dar-
the Democrats a golden opportunity
cratic pressure to raise the top in-
groups and some GOP leaders in
man's position that he wants to keep
to appeal to traditionally Republican
come tax rates.
Congress. In addition to Heritage's
the Social Security] surplus buildup
voters and at the same time turn the
Mr. Moynihan has yet to say how
endorsement, the proposal has won
and opposes the tax cut is inconsis-
tables on the Bush administration by
he will offset this revenue loss,
favorable reactions from the liber-
tent with Jack's position," said a top
forcing it to oppose a popular tax-
whether through spending cuts or
tarian Cato Institute, the National
Kemp aide. "He sees this as a burden
cutting idea.
tax increases elsewhere.
Taxpayers Union, the National Fed-
on middle-income workers and
"Poor George Bush," said Robert
White House Chief of Staff John
eration of Independent Business
small businesses."
Shapiro, director of economic stud-
Sununu said earlier this week that
and the U.S. Chamber of Commerce.
ies with the Progressive Policy Insti-
the administration was against cut-
Mr. Moynihan chairs the Senate
"It's a good idea," said David Boaz,
Finance subcommittee on Social Se-
executive vice president of the Cato
curity and is considered by groups
Institute. The administration "ought
representing the elderly to be one of
Ironically, the strongest and most immediate
to become an enthusiastic sponsor of
the program's strongest supporters.
it. Otherwise, they'll let the Demo-
He surprised his party's leadership
support for Mr. Moynihan's proposal has come
crats steal the most successful Re-
and the administration when he un-
from an unholy alliance of liberal and
publican issue."
expectedly announced late last
Support on the left also has come
month that he would introduce legis-
conservative organizations, business groups
from the Institute of Policy Studies,
lation to cut the payroll tax when
where public policy analyst Robert
Congress returns to business on Jan.
and some GOP leaders in Congress.
Borosage has called the idea "good
23.
economics, good public policy and
The Social Security tax rate that
good politics - - the first protest of
funds the retirement portion of the
tute, a Democratic think tank, and a
an increasingly hard-pressed mid-
ting the payroll tax until the deficit
program increased on Jan. 1 from
dle class."
close Moynihan adviser. "The White
was eliminated. Mr. Bush is ex-
6.06 percent to 6.2 percent. Mr.
On Capitol Hill, Sen. Robert Kas-
House decision to oppose the
Moynihan would repeal that in-
pected to propose an alternative plan
Moynihan tax cut makes him not
ten of Wisconsin, one of the leading
crease retroactively and then cut the
in his forthcoming budget to grad-
only the president of no new taxes
Republican supply-side tax cutters,
tax rate further to 5.1 percent by
ually reduce the national debt by
has indicated he would like to co-
but of no new tax cuts."
Jan. 1, 1991.
using the accumulated Social Secu-
According to Mr. Shapiro, an en-
sponsor the measure. GOP support
"This would be a $55 billion tax
rity surpluses.
thusiastic supporter of the idea,
also has been voiced by House Mi-
cut for working people in 1991, and
Nevertheless, aides to the presi-
"The Democrats have learned the
nority Whip Newt Gingrich of Geor-
the amount would be greater in fu-
dent said yesterday that Mr. Moy-
lesson that the Republicans have
gia and Rep. Henry Hyde of Illinois.
ture years," Mr. Moynihan said in an-
nihan's proposal has been getting
However, Democratic leaders
taught them, that there is never a
nouncing the idea.
long and serious scrutiny.
political cost to cutting taxes. I think
have yet to reveal their positions,
"There's been a lot of debate over
His proposal would benefit pri-
the political temptation is too great
though Ed Lopez, Mr. Moynihan's
marily working-class and middle-
it, pro and con," said one Bush ad-
for the Democrats to turn away from
chief Social Security aide, said the
income taxpayers - the bedrock po-
viser. "This is a very clever political
this."
senator has been receiving support
litical constituencies that have
move by Moynihan, but we don't
from Democratic offices "at the
The Moynihan proposal is flatly
think it's going to hurt us politically."
staff level" for the idea.
REPORT OF THE
NATIONAL COMMISSION
ON
SOCIAL SECURITY
REFORM
JANUARY 1983
SUPPLEMENTARY STATEMENT
BY
Commissioners Robert M. Ball, Martha Keys,
Lane Kirkland, Daniel Patrick Moynihan and Claude Pepper
(members selected by the Democratic leadership of the Congress)
Long-Term Financing and Issues of Special Concern to Women
Meeting the Remaining Long-Term Deficit
All of us supported the compromise agreement which is being recommended by
a vote of 12 to 3 of the full Commission.1/ The agreement provides for fully
meeting the Commission's short-term financing goal and also for meeting about
two-thirds of the Commission's long-term goal--1.22% of payroll out of the 1.8%
projected need.
We recommend that the remaining 0.58% of payroll deficit be met by
providing additional revenues starting in the year 2010, in advance of the
period when the bulk of the deficit is projected to occur. Sufficient
additional revenues would be provided by an increase of less than one-half of 1%
(0.46%) in deductions from workers' earnings beginning in 2010 and a like amount
in employer payroll taxes (with an equal combined rate for the self-employed) or
the revenue could be supplied by an equivalent general revenue contribution, or
some combination of the two. For purposes of present legislation we would
support putting in the law now an increase in the contribution rate beginning in
2010 of 0.46% of payroll (with the employee contribution offset by a refundable
income tax credit) recognizing, of course, that in the next century the Congress
may prefer to raise the money in some other way and that, in fact, such a rate
increase would not be allowed to go into effect unless estimates at the time of
the scheduled increase showed that it would be needed.
Social Security 2
to about 42 percent of their last pay-
check. The package would reduce this
Benefit Cuts Under Pickle Plan
"replacement rate" to 40 percent.
In addition, Heim' amendment
Percentage of Full Retirement Benefits
called for elimination of the current
penalty imposed on beneficiaries who
Age at
Current
End of
End of
work after they reach retirement age,
Retirement
Law
Stage One (2009)
Stage Two (2027)
over a five-year period beginning in
1990. Now, benefits are reduced $1 for
62
80.0%
75.0%
70.0%
every $2 retirees up to age 70 earn
63
86.7
80.0
75.0
over $6,600 a year.
64
93.3
86.7
80.0
The package also would increase
65
100.0
93.3
86.7
benefits for those who leave the work
66
103.0
100.0
93.3
force to care for their children at home
67
106.0
108.0
100.0
under age six. Currently, a worker's
five lowest-earning, or non-earning,
"Percentage of benefits available to a worker who retires at the normal retirement age.
years are not counted when determin-
ing his or her initial Social Security
benefit. The bill would allow two addi-
tional "drop-out" years for child care.
tion for his long defense of the elderly,
and charged it would penalize the mil-
The committee rejected 15-2 a
most would not give him their votes.
lions of workers who must retire early
proposal by Daniel Patrick Moynihan,
The Pickle amendment was ap-
because of poor health or mandatory
D-N.Y., to raise payroll taxes in the
proved by a 228-202 vote, with the
retirement.
year 2010, in place of benefit cuts.
backing of 152 Republicans and 76
"This amendment assumes peo-
Democrats, including Ways and
ple are able to work longer than they
Other Finance Action
Means Chairman Dan Rostenkowski,
are now. This is just not the case,"
The committee also rejected 11-6
D-Ill., and a majority of committee
argued James M. Shannon, D-Mass.
a motion by Russell B. Long, D-La., to
members. (Vote 20, p. 530)
"This will simply cut their benefits."
delay the effective date of a provision
Pepper's measure, despite the
But Pickle defended the age in-
calling for Social Security coverage of
backing of House Speaker Thomas P.
crease as necessary to keep up with
new federal employees until a supple-
O'Neill Jr., D-Mass., was rejected by a
changing demographics. He pointed
mental Civil Service retirement plan
vote of 132-296. (Vote 21, p. 530)
out that life expectancy had increased
could be established.
"History is being written on this
more than 10 years since the 65-year
Members have given assurances
floor. We are changing the tradition of
retirement age was set in place over 40
that such a supplemental plan would
this country," O'Neill said when it was
years ago.
be set up, but federal workers fear
apparent the Pepper measure would
Raising the retirement age is "not
they face retirement benefit cuts if no
fail. "In America, each generation has
harsh," he said. "That is just in keep-
new workers are available to pay into
always paid for the generation that
ing with the times."
their current system.
has gone before them."
Pickle's amendment also would
Federal employee unions have
The controversy over raising the
require the Department of Health and
waged an all-out campaign to defeat
retirement age or increasing taxes has
Human Services to make recommen-
the coverage provision, but have met
been one of the major ones surround-
dations by Jan. 1, 1986, on how Con-
with little success so far. Finance
ing the Social Security crisis.
gress should deal with individuals who
Chairman Robert Dole, R-Kan.,
Pepper's impassioned plea to his
cannot retire later because of phys-
charged that a delay in the Jan. 1,
colleagues not to cut benefits won him
ically demanding jobs.
1984, effective date would only give
a standing ovation, but it was not
Those voting against passage of
lobbyists a longer time to fight for re-
enough to convince most members
the bill included both liberals opposed
peal.
that the "structural" change of a
to the higher retirement age and cov-
Besides agreeing to the package of
higher retirement age was the best
erage of federal employees and conser-
long-term provisions, the committee
way to restore the confidence of cur-
vatives opposed to additional taxes.
made several other changes in the
rent workers in the retirement system.
House bill. One of the major ones was
The Pickle amendment would
Senate Solution
a proposal by Long to cut beneficia-
raise the retirement age in two stages.
The Finance Committee agreed to
ries' cost-of-living checks, as a last re-
The first would be a gradual increase
a broader package of changes to ad-
sort, if reserves in the Social Security
from 65 to 66 over a six-year period
dress the system's long-range prob-
trust funds fall below a certain level
ending in the year 2009. The second
lems.
because of unexpectedly bad economic
increase would be from 66 to 67 over
The package, proposed by John
conditions.
another six-year period ending in the
Heinz, R-Pa., and adopted 13-4, called
The provision would go into effect
year 2027.
for a gradual increase in the retire-
in 1985, but would be used only after
While individuals still would be
ment age from 65 to 66 over a 15-year
all other emergency measures allowed
able to take early retirement at age 62,
period beginning in the year 2000.
in the bill - including borrowing be-
their benefits would be reduced from
It also would reduce initial bene-
tween the system's three trust funds
the current 80 percent of full benefits
fits by 5 percent beginning the same
- had been exhausted.
to 70 percent in 2027. (Box, above)
year. Currently, workers receive an
The bill also would require the
Opponents seized on this change
initial Social Security payment equal
managers of the trust funds to give
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC.
PAGE 488-March 12, 1983
Reproduction prohibited in whole or in part except by editorial clients.
Social Security - 3
six-months' notice that such a benefit
jobless benefits than the program
Both bills are based on the ad-
cut might be necessary so that Con-
adopted by the House. Existing emer-
ministration plan to provide for a sys-
gress would have the option to make
gency benefits, approved by Congress
tem of set prices for ingatient treat-
other adjustments to the system be-
last year, are set to expire March 31.
ment of different illnesses, and they
fore the COLA cuts were made.
(Background, Weekly Report p. 420)
prohibit charging individual patients
The committee also agreed to:
The Senate measure - expected
more than the set price. Hospitals de-
Include tax-exempt income when
to cost over $2 billion - would allow
livering care for less than the set price
computing a beneficiary's income to
up to eight more weeks of benefits to
may keep the difference. This scheme
determine if his or her Social Security
those individuals who have exhausted
would replace the existing system in
benefits should be taxed. Both the
up to 55 weeks of federal and state
which, within certain limits, hospitals
House and Senate bills call for tax-
benefits before April 1. The House bill
are paid after delivery of care for the
ation of a portion of benefits for indi-
would allow up to 10 more weeks.
portion of their total costs attribut-
viduals whose adjusted gross income,
In addition, individuals who do
able to Medicare patients.
plus 50 percent of Social Security
not qualify for the federal emergency
The set prices would not include
benefits, exceeds $25,000 ($32,000 for
benefits until after April 1 could re-
hospitals' teaching costs or capital ex-
married couples filing a joint return).
ceive up to 14 weeks of additional
penditures for construction or major
The proposal was offered by John
benefits depending on their state's
equipment; those costs would con-
H. Chafee, R-R.I., who argued that
jobless rate, under the Finance bill.
tinue to be paid under the existing
some beneficiaries might try to avoid
Those who have not exhausted
system. The Senate bill, however,
the new tax by diverting their taxable
their emergency benefits when the ex-
mandates that capital costs be
income into tax-exempt income.
tension expires Sept. 30 could receive
factored into the new price structure
Provide a more generous tax
up to 50 percent of their remaining
after October 1986. Many medical
credit to offset higher taxes for the
payments after the expiration date.
economists regard controls on capital
self-employed. The Finance Commit-
The Senate bill also would pro-
expenditures to be an important step
tee bill calls for a credit against self-
vide a plan to give certain hard-hit
toward controlling inflation in health
employment taxes of 2.9 percent in
states some leeway in repaying inter-
care costs.
1984, 2.5 percent in 1985, 2.2 percent
est owed on outstanding loans from
Both bills substitute a four-year
in 1986, 2.1 percent in 1987-89 and 2.3
the federal unemployment trust fund.
phase-in of the new payment method
percent after 1989.
Currently, states owe about $12 billion
for the Oct. 1 effective date suggested
The House bill calls for a credit of
to the fund, and many see little chance
by the administration. Both require
2.1 percent in 1984, 1.8 percent in
of being able to repay the loans, or
separate rates for urban and rural hos-
1985-87 and 1.9 percent after 1987.
make large interest payments, soon.
pitals, and for different regions of the
Both measures would increase payroll
Under the plan, states would be
country; the administration plan had
taxes for the self-employed 33 percent,
allowed to spread their interest pay--
called for a single, national schedule of
beginning in 1984, to equal the com-
ments over a five-year period if they
rates with area adjustments only for
bined taxes now paid by employers
can show that they are taking steps to
labor costs. Both would give state cost
and employees.
improve the solvency of their state un-
control systems substantially more au-
Eliminate Social Security benefits
employment compensation programs.
thority than the administration
for non-resident aliens, their depen-
The committee also agreed to ac-
wanted to depart from the set-price
dents and survivors, except for pay-
cept provisions in the House bill to
payment method if they meet certain
ments equal to the amount the alien
increase monthly SSI benefits $20 and
criteria.
worker had paid into the system, plus
to delay a scheduled SSI COLA six
Both bills require the secretary of
interest.
months until January 1985.
health and human services to study
Expand Social Security coverage
and report to Congress on the feasibil-
to include all new federal employees,
Medicare Provisions
ity of applying the new price system to
members of Congress, the president
The Senate bill's Medicare provi-
physician services in the future.
and vice president. The House bill
sions are generally the same as those
also would include top political
in the House measure, with differ-
appointees, certain elected officials
ences in certain details. (House bill,
and sitting federal judges.
Weekly Report p. 455)
Exempt from Social Security cov-
For instance, both bills depart
CLARIFICATION
erage members of the Amish religious
from the administration proposal by
sect who work for Amish employers.
mandating that hospital admission
Medicare Payments. Weekly
Allow the three Social Security
patterns and other factors be reviewed
Report p. 457, col. 3, 2nd full para-
trust funds to borrow from each other
to guard against costly manipulations
graph. The Gephardt amendment per-
through 1987, as long as no funds were
of the new system, or poor care for
mits hospitals to bill separately for
borrowed from the Hospital Insurance
patients. But the Senate measure
services provided during hospitaliza-
(HI) trust fund, which finances Medi-
specifies that Professional Review Or-
tion if the hospital billed separately
care, when its reserves were low.
ganizations (PROs) authorized in the
for such services before Oct. 1, 1982.
Eliminate Social Security benefits
1982 tax bill must do the job, while the
However, because the legislation (HR
for imprisoned felons.
House bill permits the use of other
1900) includes an overall prohibition
Jobless Benefits/SSI
types of organizations. The Senate bill
against billing individual Medicare
does not include a House provision
patients, separate billings under this
The Finance Committee also
authorizing severe penalties for cer-
provision would be allowed only to
agreed to a slightly less generous six-
tain violations of the system or com-
Part B of Medicare, the optional plan
month extension of federal emergency
promised quality of care.
that covers physician fees.
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC
Reproduction prohibited in whole or in part except by admorial chents.
March 12, 1983-PAGE 489
The National Commission makes the following recommendations unanimously:
(1) The members of the National Commission believe that the Congress, in
its deliberations on financing proposals, should not alter the
fundamental structure of the Social Security program or undermine its
fundamental principles.* The National Commission considered, but
rejected, proposals to make the Social Security program a voluntary
one, or to transform it into a program under which benefits are a
product exclusively of the contributions paid, or to convert it into a
fully-funded program, or to change it to a program under which
benefits are conditioned on the showing of financial need.**
(2) The National Commission recommends that, for purposes of considering
the short-range financial status of the OASDI Trust Funds, $150-200
billion in either additional income or in decreased outgo (or a
combination of both) should be provided for the OASDI Trust Funds in
calendar years 1983-89.
(3) The National Commission finds that, for purposes of considering the
long-range financial status of the OASDI Trust Funds, its actuarial
See additional views of Commissioner Archer in Chapter 4.
See additional views (with regard to the last point) of Commissioners
Archer, Fuller, and Waggonner in Chapter 4.
2- 2
of
Social Security
Leaders Optimistic:
all new federal employees and workers
in non-profit organizations beginning
Jan. 1, 1984, and would include all
Social Security Rescue Plan
current and new members of Congress
under the Social Security system.
In addition, both bills include a
Rushes to Final Hill Accord
major revamping of the way the gov-
ernment reimburses hospitals under
Medicare and a six-month extension
Setting partisanship aside, the
one of the biggest Senate opponents of
full House and the Senate Finance
the commission plan, praised the Fi-
of an emergency jobless benefit pro-
Committee have given a Social Secu-
nance Committee bill, although he
gram. They also increase certain Sup-
rity rescue plan a quick push toward
said he still planned to offer some
plemental Security Income (SSI)
floor amendments.
benefits for the aged, blind and dis-
final passage.
The House March 9, by a 282-148
He observed that quick action in
abled poor.
vote, passed a bill (HR 1900) to keep
both houses and adoption of the re-
the system from going broke. The Fi-
tirement-age increase had proved "the
Pickle or Pepper?
nance Committee approved a similar
cynics are wrong. There are occasions
Final House passage did not come
measure (S 1) the following day by a
when Congress will rally to the task
without a sometimes emotional floor
vote of 18-1. (House vote 23, p. 530)
and do what is politically hard."
debate over the best way to solve the
The legislation now goes to the
Armstrong and other conserva-
system's projected financial difficul-
Senate floor where debate is expected
tives had criticized the commission's
ties when the Baby Boom generation
to begin March 15 or 16. Congres-
rescue plan because of its reliance on
begins to retire in the next century.
sional leaders are optimistic about
some large tax increases to keep the
The president's commission left
sending a package to President Rea-
gan before the March 26 Easter break.
The votes in both houses heralded
the end of nearly two years of bitter
partisan bickering over Social Secu-
rity. Members indicated they expected
little trouble with the legislation be-
fore it reaches the president's desk.
"The cynics are wrong.
Congress must complete action
There are occasions when Con-
soon or the financially troubled retire-
gress will rally to the task and
ment system will be unable to pay out
do what is politically hard."
some 36 million benefit checks in July.
The House and Finance Commit-
-Sen. William L. Armstrong, R-Colo.
tee measures closely parallel the rec-
ommendations made in January by
the president's National Commission
on Social Security Reform. But they
also include provisions dealing with
the system's long-range problems -
an area where the commission could
system afloat. One critic, Steven D.
that sensitive issue unresolved, and
not reach consensus - that appear to
Symms, R-Idaho, cast the one dissent-
have dampened much of the conserva-
the House Ways and Means Commit-
ing vote in the Finance Committee.
tive opposition to the commission
tee bill called for a hybrid solution -
Both bills would raise about $165
plan. (Commission recommendations,
cutting benefits and raising taxes -
billion over the next seven years. They
Weekly Report p. 155)
with the understanding that two sub-
are expected to solve the retirement
These include steps in both bills
stitute proposals would be considered
and disability system's financial prob-
to raise the retirement age. The House
on the floor. (Weekly Report p. 453)
lems well into the next century by
would raise the age gradually from 65
Besides an amendment raising
raising a total of almost $1.9 trillion
to 67 by the year 2027; the Senate
the retirement age - offered by Social
over a 75-year period.
Finance Committee approved a one-
Security Subcommittee Chairman
Besides increasing the retirement
year increase by the year 2015, but it
J.J. Pickle, D-Texas - Rules Com-
also agreed to cut initial benefits 5
age, the two measures would raise
mittee Chairman Claude Pepper, D-
scheduled payroll taxes over the next
percent after the turn of the century.
Fla., proposed a .53 percentage point
William L. Armstrong, R-Colo.,
decade, delay the July cost-of-living
increase in payroll taxes in the year
allowance (COLA) six months and tax
2010 to prevent a cut in benefits.
the Social Security benefits of high-
But House members showed dur-
-By Pamela Fessler
income individuals for the first time.
ing the debate that while they were
and Elizabeth Wehr
They also call for the coverage of
willing to give Pepper their admira-
COPYRIGHT 1983 CONGRESSIONAL QUARTERLY INC
Reproduction
prohibited
â
whole
or
E
port
except
by
editorial
clients
March 12, 1983-PAGE 487
CQ Senate Vote 54
Corresponding to Congressional Record Vote 54
KEY
Y Voted for (yea).
ALABAMA
IOWA
NEW HAMPSHIRE
# Paired for.
Denton
Y
Grassley
Y
Humphrey
Y
+ Announced for.
Heflin
?
Jepsen
Y
Rudman
Y
N Voted against (nay).
ALASKA
KANSAS
NEW JERSEY
X Paired against.
Murkowski
+
Dole
Y
Bradley
Y
- Announced against.
Stevens
Y
Kassebaum
Y
Lautenberg
Y
ARIZONA
KENTUCKY
NEW MEXICO
P Voted "present".
Goldwater
+
Ford
Y
Domenici
Y
C Voted "present" to avoid possi-
DeConcini
?
Huddleston
?
Bingaman
Y
ble conflict of interest.
ARKANSAS
LOUISIANA
NEW YORK
? Did not vote or otherwise make a
Bumpers
Y
Johnston
?
D'Amato
Y
position known.
Pryor
?
Long
N
Moynihon
Y
CALIFORNIA
MAINE
NORTH CAROLINA
Democrats
Republicans
Wilson
Y
Cohen
Y
East
N
Cranston
Y
Mitchell
Y
Helms
?
COLORADO
MARYLAND
NORTH DAKOTA
Armstrong
N
Mathias
?
Andrews
Y
Hort
?
Sarbanes
?
Burdick
Y
CONNECTICUT
MASSACHUSETTS
ОНЮ
TEXAS
Weicker
+
Kennedy
?
Glenn
Y
Tower
?
Dodd
Y
Tsongas
Y
Metzenboum
?
Bentsen
?
DELAWARE
MICHIGAN
OKLAHOMA
UTAH
Roth
?
Levin
Y
Nickles
N
Garn
N
Biden
Y
Riegle
Y
Boren
N
Hatch
N
FLORIDA
MINNESOTA
OREGON
VERMONT
Hawkins
Y
Boschwitz
Y
Hatfield
?
Stafford
?
Chiles
?
Durenberger
Y
Packwood
?
Leahy
Y
GEORGIA
MISSISSIPPI
PENNSYLVANIA
VIRGINIA
Mattingly
N
Cochran
Y
Heinz
Y
Trible
Y
Nunn
N
Stennis
Y
Specter
Y
Warner
Y
HAWAII
MISSOURI
RHODE ISLAND
WASHINGTON
Inouye
?
Danforth
Y
Chafee
Y
Gorton
Y
Matsunaga
Y
Eogleton
?
Pell
+
Jackson
Y
IDAHO
MONTANA
SOUTH CAROLINA
WEST VIRGINIA
McClure
N
Boucus
Y
Thurmond
Y
Byrd
Y
Symms
N
Melcher
Y
Hollings
N
Randolph
Y
ILLINOIS
NEBRASKA
SOUTH DAKOTA
WISCONSIN
Percy
?
Exon
N
Abdnor
Y
Kasten
Y
Dixon
Y
Zonnsky
N
Pressler
?
Proxmire
Y
INDIANA
NEVADA
TENNESSEE
WYOMING
Lugar
Y
Hecht
Y
Baker
Y
Simpson
Y
Quayle
?
Laxoh
?
Sasser
Y
Wallop
Y
ND Northern Democrats SD Southern Democrats (Southern states Alo., Ark., Flo., Go., Ky., La., Miss., N.C., Okla., S.C., Tenn., Texas, Va.)
54. HR 1900. Social Security Act Amendments. Adoption
of the conference report on the bill to overhaul the Social Security
system, to revamp the way the federal government reimburses
hospitals for Medicare, to extend the federal supplemental unem-
ployment benefit program for six months and to increase Supple-
mental Security Income benefits. Adopted (thus cleared for the
president) 58-14: R 32-8; D 26-6 (ND 22-2, SD 4-4), in the session
that began March 24, 1983. A "yea" was a vote supporting the
president's position.
12-S-1983 CQ ALMANAC
TIMES 07-19-88
Don't Touch Those Social Security Funds
To the Editor:
30/104/309
Morgan group, "the trust funds could
A Princeton economist recently
absorb all outstanding Federat-debt
wrote that the secret is out concern-
by the year 2005." We were well
ing the surpluses in the Social Se-
aware that we had put in place's feve-
curity trust funds. Indeed it is, and so
nue stream that could quadruple the
I fear are assorted entrepreneurs
national savings rate, again to cite
with schemes for getting their hands
the Morgan study.
on some portion thereof!
All that need be done now Ta ioi,
On your Op-Ed page of July 7, my
but even so, all - is to gel our operat-
good friend Walt Rostow. of the Uni-
ing budget in balance. Thereafter, the
versity of Texas proposes that we use
trust funds will absorb the privately
the money to set up a public invest-
held debt, which automatically trans-
ment bank, which among other
lates into an increase in national sav-
things, "would help put the stricken
ings. But the trust funds themselves
banking systems of Important parts
must remain intact and untouchable
of the nation back on their feet."
save to pay benefits. This becomes an
Hmm.
Issue of integrity and was integral to
This morning, you report ("Study
the Blair House accords.
Suggests a Partly Private Social Se-
It would be useful to hear from our
curity," Business Day) that a group
Presidential candidates on this sub-
at J.P. Morgan & Company would
ject.
DANIEL PATRICK MOYNIHAN
have us refund the surplus to individ-
U.S. Senator from New York
uals so that they can invest in stocks
Washington, July 11, 1988
and bonds. Again, hmm.
A common theme of these and
other proposals is that the political
process cannot be trusted with so
much money. The Morgan study be-
gins: "The burgeoning surplus of the
U.S. Social Security system has come
to the fore this year as the latest
temptation to procrastinate on deci-
sive measures to cut the Federal
budget deficit." Possibly. May one
ask, however, that some considera-
tion be given the fact that it was the
political process that created this
revenue stream.
This began with a conversation be-
tween me and Senator Bob Dole on
the Senate floor on Jan. 3, 1983, fol-
lowed by 11 days of intensive negotia-
tions with a White House team led by
James A. Baker 3d, then chief of staff.
Agreement was reached at Blair
House on Saturday night, Jan. 15.
In essence, we agreed to move from
a pay-as-you-go system to a partly
funded one. (The Canadians had
shown the way.) We could count. We
knew perfectly well that, to quote the
The
Herîtage Backgrounder Foundation
214 Massachusetts Avenue N.E.
Washington, D.C. 20002
(202)546-4400
1/10/90
120
Number
THREE CHEERS FOR MOYNIHAN'S $55 BILLION
TAX CUT FOR WORKING AMERICANS
(Updating Backgrounder No. 683, "The Case for Keeping Social Security in the Budget,"
December 19, 1988, and Backgrounder No. 597, "Upcoming Social Security Tax Hikes Can
Threaten Retirement Benefits," August 5, 1987)
By now most Americans have received their first pay checks of the new year. To their shock,
their take home pay is smaller than in 1989's final pay check. The reason is the stealth tax hike
that is raising Social Security taxes for the seventh time in ten years. This one takes $7 billion out
of American pockets, cutting the take-home pay of all American workers by up to $600 a year.
As bad, the increased levy on employers will cause many to trim jobrolls or cancel their expan-
sion. For 80 percent of middle-income families, the cruelly persistent escalating Social Security
taxes have eroded all of their income tax cuts of the Reagan years.
These tax hikes allegedly are imposed in the name of "saving" the Social Security system. Yet
even without the added revenues the retirement program will be financially solvent for at least
the next three decades. The new funds, moreover, would not be put aside to build up a reserve to
pay out benefits to "baby boomers" when they retire in the next century. Instead, the retirement
funds' surplus mountain - $70 billion this year and soaring to $230 billion by the year 2000 - are
to be spent on current government programs. Nothing is being saved, deposited, or invested for
future retirees. "Thievery" is what Senator Daniel Patrick Moynihan, the New York Democrat,
correctly brands this and he is attempting to stop it.
As chairman of the Senate Finance Subcommittee on Social Security, Moynihan will introduce
legislation to end permanently this congressional mismanagement of Social Security retirement
funds and grant long overdue tax relief to U.S. wage earners. His plan would cancel this year's
unneeded Social Security payroll tax increase immediately and cut a further 2.2 percentage
points next year. His intent is to have incoming payroll taxes and outgoing retirement payments
balance each other each year. This would give $55 billion back to American workers next year
without affecting current or future Social Security benefits. Social Security would become a
genuine "pay-as-you-go" system, rather than the cash cow that has been subsidizing federal
spending. Moynihan understands the soundness of this. So should George Bush. The President
should warmly endorse this tax cut for 125 million American workers. If he does not, he will be
making a serious economic (to say nothing of political) mistake.
Since the Social Security program's inception in 1937 when the tax rate was set at two percent
of payroll for the first $3,000 of earnings, Social Security taxes have risen steadily. In 1960, the
taxes amounted to 6 percent of wages; today they are 15.3 percent on income up to $51,300, with
half paid directly by workers and half by their employers. The current rate structure was set in
1983 when lawmakers expected sluggish economic growth, and thus low tax receipts, for the
remainder of the decade. But the gloomy forecasts proved to be wildly off target. The robust
economic expansion of the 1980s, with 18 million new jobs, generated a huge and unexpected
Note: Nothing written here is to be construed as necessarily reflecting the views of The Heritage Foundation or as an
attempt to aid or hinder the passage of any bill before Congress.
surplus in Social Security payroll tax receipts. The Moynihan tax cut proposal merely corrects the
tax rates for this error in government forecasting.
Reducing the payroll tax also would help to the American economy enormously. A payroll tax
is not merely regressive, falling disproportionately on lower-income workers, but it is one of the
most economically destructive ways for the government to raise revenue, because it discourages
businesses from hiring additional workers. Former U.S. Treasury economists Aldona and Gary
Robbins estimate that the 1988 and 1990 payroll tax hikes will cost Americans 510,000 jobs and
reduce gross national product by $320 billion over the next ten years. By contrast, they argue,
every dollar reduction in Social Security taxes would expand economic output by 68 cents.
Some critics of the Moynihan plan complain that his reduction in Social Security taxes today
would eliminate the surplus needed to pay the benefits when the baby boom generation
retirements. This ignores one central point: with or without a payroll tax cut, there will be no
Social Security fund surplus (actually not even a "fund") since the surplus money routinely is
spent on non-Social Security programs as soon as it reaches Washington. All that is in the "fund"
is a stack of IOUs from the Treasury.
The best way for Congress to protect the solvency of Social Security in the next century is
through a pro-growth tax policy. Part of this is the payroll tax cut recommended by Moynihan.
Part of this is the capital gains tax cut urged by Bush. And part could be by other tax reforms,
like expanding the Individual Retirement Account eligibility. Such a pro-growth tax policy is the
best way to assure funds for retiring Americans. Example: If Americans' real per capita incomes
were to grow by just 2 percent per year, or about the rate of growth of the 1980s, between now
and 2030 - the year in which the "baby boom" pressure on Social Security will reach its peak -
workers in that year will have more than double the incomes of today's workers, substantially
easing the burden of paying for retirement and health care programs for the elderly population
that year. By contrast, maintaining today's high payroll taxes will dampen productivity and
output, meaning tomorrow's workforce will be less capable of paying the bill for retirees.
Another objection levelled at the Moynihan plan is that a Social Security tax cut will inflate the
federal budget deficit. But the regressive Social Security tax was never intended to finance the
deficit or pay for any program other than Social Security. Moreover, projections show that even
with the Moynihan tax cut the deficit can be brought under control through modest spending
restraint. For instance, if the Social Security tax were reduced to the level needed just to cover
Social Security spending, and all other federal programs were frozen at 1990 levels, the budget
would be balanced by 1994.
Thanks to hikes in the Social Security payroll tax, the vast majority of middle-income
Americans forfeit a larger share of their income to the federal tax collector in 1990 than they did
in 1980. Senator Moynihan's plan to roll back Social Security taxes would end this stealth tax
increase and return pay-as-you-go honesty to the Social Security system by preventing
Washington from raiding the pension program. The White House should join other champions of
economic growth in endorsing the Moynihan tax cut.
Stephen Moore
Grover M. Hermann Fellow
in Federal Budgetary Affairs