Social Security

SOCIAL SECURITY -- (Senate - February 01, 2005)

Mr. DURBIN. Mr. President, another issue that is, of course, timely and is brought up on a regular basis is the future of Social Security.

I believe there is a problem with Social Security. The President has said the same. However, I don't believe President Bush's plan to privatize Social Security is going to help. I think it is going to make the problem even worse.

Social Security should be strengthened, not weakened. Why isn't President Bush's plan the right way to save Social Security?

First, President Bush's plan would make deep cuts in the benefit paid under Social Security and in the process dramatically increase the deficit. The President's privatization plan for Social Security diverts money from the Social Security trust fund and creates an immediate cash-flow problem affecting seniors and those who are retiring right now.

We know that untouched the Social Security Program will pay every benefit promised with the cost-of-living adjustment until the year 2042, at a minimum. Some estimate 2052. For 37 to 47 years, Social Security is sound and solvent.

In comes President Bush who says we need to change Social Security. We need to take money out of the Social Security trust fund and allow people to create private accounts.

Private accounts may have some value. But what about the money the President just took out of Social Security?

Unfortunately, the President has not suggested how we would pay back that money to Social Security. As a result of the President's proposal, if the Social Security trust fund is diminished in size and weakened, unfortunately, it will run out of money even sooner than the projection of 2042.

President Bush's plan to privatize Social Security does not make it stronger, it makes it weaker. The President cannot explain how he will make up for the money that he takes out of the Social Security trust fund. The President's privatization plan will cost up to $2 trillion in the first 10 years, and then up to $5 trillion in the second 10 years. It is an extremely expensive proposal.

Where would we come up with the money to make up the difference, $2 to $5 trillion? The President suggested we add it to the national debt, a national debt which has already reached a record level. How do we take care of our national debt? Who comes in and loans money to make up for a national debt? Mainly foreign governments; No. 1, Japan, China, and Korea. The President's proposal to privatize Social Security not only weakens Social Security, it creates a greater debt for Americans and forces us to be more dependent on foreign governments to loan us money. That is the only way we sustain our national debt today. That, of course, is a challenge. If those foreign governments, for whatever reason, decide not to buy America's debt, we are in a perilous position. We will have ourselves a debt and a situation where our interest rates will have to go up substantially to attract others to buy our debt.

That is not where America should be. That $2 trillion deficit will not bring us any closer to Social Security solvency. In fact, it makes the Social Security system that much weaker.

The President has said over and over his plan to privatize Social Security is voluntary. If you do not want to create a private account with the President's plan, he says you do not have to. That may be, but, understand, when the President takes money out of the Social Security trust fund leading to benefit cuts, those benefit cuts are going to affect people whether or not they choose to have a private account. To say it is voluntary is to overlook the obvious. The cost of this privatization plan will affect every Social Security retiree whether or not they want to sign up for President Bush's privatization plan.

The President argues Americans will do better in the stock market than they would if they wait for Social Security benefits. That is possible, but there are risks attached to investment. Every ad on television for a mutual fund or investment says the same thing: Past performance is no indication of future return. What they are saying is, there is risk involved. If you put your life savings, your retirement savings, into a private account under President Bush's plan, you may come out ahead, but then again you may not.

Relying on Wall Street is like playing retirement roulette. You may guess right, you may come out ahead, but those who are invested in mutual funds in the stock market over the last 4 or 5 years know there have been probably more losers than winners.

Keep in mind that under the President's plan, part of all of your retirement savings invested are going to be paid to Wall Street stockbrokers for so-called administrative fees that can reduce your benefits by 25 percent--a windfall for Wall Street at the expense of retirees across America.

Democrats want to encourage and support retirement accounts not at the expense of Social Security but in addition to Social Security. We should change the Tax Code to encourage people to save, encourage people to create individual retirement accounts, 401(k) plans. We can do that but not at the expense of Social Security--in addition to Social Security.

Some say private accounts would be more efficient. Keep in mind the President's Commission on Social Security came up with the only plan we have for private accounts so far, and they would call for a massive new Government agency to administer these Social Security private accounts. This Government board will control the investment accounts of some 47 million Americans and administer the program. The private accounts will cost the average senior $134,000 in lost Social Security benefits over a 20-year period. This is not the great positive thing that has been portrayed.

Young people like to invest money. That is a good thing. Savings and investment ought to be encouraged, particularly by young people. We need to make certain we do not have savings and investment at the expense of retirement benefits that workers have paid for over their lifetime. People following this debate every day pay into Social Security with the understanding when they retire, this is going to be something they can count on. They may not be able to live in luxury with Social Security, but it is the nest egg, the cornerstone of your retirement income. The idea behind Social Security is still a sound idea. We should keep Social Security strong, we should strengthen it and do it on a bipartisan basis, but not at the expense of cutting benefits. That is what President Bush's privatization plan will do in addition to creating $2 trillion in additional debt. That does not help Social Security; in fact, it weakens Social Security. That should not be our goal.

I yield the floor and suggest the absence of a quorum.

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