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March 23, 1983
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Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3690 CONGRESSIONAL RECORD - SENATE March 23, 1988 Mr. BAUCUS. Mr. President, I have The PRESIDING OFFICER. The an amendment prepared which I am question is on the amendment. going to offer, but I will wait just a Mr. BAUCUS. Mr. President, I will few minutes while the amendment is not take much time because we have being modified in accordance with an reached agreement on this amend- agreement that we have just reached ment with the chairman of the Com- with the chairman of the committee. mittee. Let me just say a few words about the amendment while it is being modi- fied. The modification should not take more than a few minutes. The general thrust of the amend- ment is to provide a credit to small businesses for the increase in social se- curity payroll taxes in 1984 that em- ployers will have to pay under the committee's bill. As you will recall, Mr. President, the national commission recommended, and the House and the Senate Finance Committee have agreed, that the pay- roll tax increase scheduled to go into effect in 1985 will be accelerated to 1984. In addition, employees will get a full credit against their income taxes for that increase in 1984. The amend- ment that I am offering will provide a similar credit to small businesses. The Senator from Colorado (Mr. ARMSTRONG) yesterday offered an amendment to repeal the proposed ac- celeration of payroll tax increases in this decade. This body did not agree with that amendment. This Senator, in fact, voted against that amendment because such an amendment would, in my judgment. jeopardize the national commission's package, which I think in the main most of us want to sup- port. AMENDMENT NO. 135, AS MOD[FIID Mr. BAUCUS. Mr. President, at this time I send the amendment to the desk and ask for its immediate consid- eration. The PRESIDING OFFICER. The amendment is so modified. The amendment will be stated. The assistant legislative clerk read as follows: The Senator from Montana (Mr. BAUcus) proposes an amendment numbered 535, as modified. Mr. BAUCUS. Mr. President, I ask unanimous consent that further read- ing of the amendment be dispensed with. The PRESIDING OFFICER. With- out objection, it is so ordered. The modification is as follows MODIFICATION TO BAUCUS AMENDMENT No. 535 On page 4 Hne 17 substitute the following line: (1) Shall not exceed $300. Mr. BAUCUS. Mr. President, I do not know if the version of the amend- ment at the desk contains the modifi- cation or not. I will read the modifica- tion if it is so appropriate: On page 4, line 17, substitute the follow- ing line: (1) shall not exceed $300." The PRESIDING OFFICER. Will the Senator send the modification to the desk? Mr. BAUCUS. I do so, Mr. President. Mr. President, what is the pending business? Let me say at this point that the amendment I originally planned to offer would have provided for a $500 cap on the tax credit. That is, no em- ployer would be entitled to receive more than $500 in credits during the year. The amendment also provides that the credit would go to only those firms with 50 or fewer employees. In discussing the amendment with the chairman of the committee, we were somewhat concerned about the cost of this amendment. The estimates are approximately $900 million with a $500 cap. Like the credit being given to workers in 1984, this money comes from general revenues, not from the Social Security trust funds. Employers will simply take this credit into ac- count when they make their regular FICA payments. It seems to me, Mr. President, that because this amendment is designed for small business it is reasonable to lower the cap to $300. This is a small business amendment. It is especially targeted to provide full relief for out very smallest business- es-those with 10 or fewer employees. We all know the importance of small business in our country. We also know that increased payroll taxes tend to adversely affect small business more compared to big business. Even though all businesses as employers will have to pay the increase in payroll taxes, big business is more easily able to accommodate those increases be- cause bigger businesses generally can more easily pass on those costs in terms of the products they sell. In con- trast, the nature of small business is such that it generally is in less of a po- sition to pass on increased costs. Mr. President, small business is our most productive and, at the same time, most hard-pressed economic sector. They need this relief. Although this proposal represents a modest draw on the Treasury, we believe that this amendment will encourage and assist small businesses as they begin to expand production and employment during what we hope will be a period of economic recovery in 1984. This amendment is all the more ijnportant since we look to our small business community as a key force in creating new jobs. According to recent studies, small business accounts for more than half of all new jobs in America. It would be counterproductive for us to impose higher regressive payroll taxes on the same employers we are depend- ing on to hire our unemployed. If any sector of our economy de- serves special consideration within the context of the social security debate, it is the small business community. These employers ought to be given at least the same relief that we have ex- tended to their employees. The value of this credit to our small business community is immense. In fact, the National Federation of Inde- pendent Business has called this amendment "The most important small business vote of the 98th Con- gress to date." I favor the National Commission's package. I think most of us do. I do not want to offer an amendment or support an amendment which, in my judgment, will break open the pack- age. This amendment does not do so. It does not break open the package. The revenue loss, not to the trust funds but to the general fund, will be significantly lower than $900 million. We do not have the estimates. It will certainly be much lower than $900 million. Mr. BOSCHWITZ. Mr. President, will the Senator yield for a moment? Mr. BAUCUS. I am delighted to yield. Mr. BOSCHWITZ. Will the Senator add me as a cosponsor? Mr. BAUCUS. I would be very happy to. Mr. President, I ask unanimous con- sent that the Senator from Minnesota (Mr. BoscHWITZ) be added as a cospon- sor. The PRESIDING OFFICER. With- out objection, it is so ordered. Mr. BAUCUS. Mr. President, this amendment has broad support from many. Members and from many small business groups. In addition to Sena- tor QUAYLE and Senator BOSCHWITZ, cosponsors of this amendment include Senators NuNN, SASSER, GORTON, PRYOR, HUDDLESTON, and ARDNOR. I want to compliment particularly the Senator from Indiana (Mr. QUAYLE) who has worked with this Senator in drafting this amendment. He has made many very helpful sug- gestions. We have included those in this effort, and I think this body should be aware of his help. I also want to pay particular tribute to the chairman of the committee, the Senator from Kansas, who has worked with us and suggested this compro- mise, which I will agree with, which is to lower the cap from $500 to $300 per employer. Mr. President, I ask unanimous con- sent that the following four letters from supporting small business organi- zations be included in the RECORD, as if read There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: NATIONAL ASSOCIATION OF W H OLESALER-DI STRIBUTORS, Washington, D.C., March 22, 1983. Hon. MAx BAUCUS, U.S. Senate, Washington, D.C. DEAR SENATOR BAucus: This is to express the strong support of the National Associ- ation of Wholesaler-Distributors' 121 member national associations and their 45.000 member companies for your proposed Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3692 CONGRESSIONAL RECORD - SENATE March 23, 1983 As we have repeated several times, we Mr. BAUCUS. I appreciate the confi- are advancing this idea as a small dence of the Senator. Obviously, a measure to ease the burden of the in- rollcall vote would help persuade the crease in the employer contribution House conferees of the seriousness of next year on this Nation's small busi- this amendment. The basis of my con- nesses. We all know that the economic cern is that it would represent to the and regulatory burden on small busi- ness because of Federal statutes can often make the difference between success and failure. Our amendment allows qualified businesses to take a $300 credit against their tax liabilities, and defines quali- fied small businesses as those with fewer than 50 employees. It is not our intent to generate a new set of report- ing requirements or forms for certify- ing eligibility for this credit. For a credit this size, especially for very small businesses which often have no more than one or two employees, such an addition to the paperwork and re- porting requirement would be contra- dictory to the intended purpose of the amendment. So let me just insist that we intend that a simple self-certifica- tion mechanism be used to establish eligibility for this credit, and that no new reporting requirements be im- posed as a result of this amendment. Mr. President, I urge all of my col- leagues to support this amendment as a small yet much needed measure of relief to the small businesses which are leading us in the emerging eco- nomic recovery. Mr. BAUCUS. Mr. President, I have no other points to make at this time, since we have reached an agreement. Therefore, I yield the floor. The PRESIDING OFFICER. The question is on agreeing to the amend- ment. Mr. DOLE addressed the Chair. The PRESIDING OFFICER. The Senator from Kansas. Mr. DOLE. Mr. President, I appreci- ate the distinguished Senator from Montana modifying the amendment to lower the cap to $300. I would point out that this was not part of the rec- ommendation of the National Commis- sion. We felt employers could already deduct their payroll: tax contributions against income tax. Employees do not have this benefit, so there was not much reason to give a double benefit to employers. However, I think we have now been able to reduce the cost, and I am certainly prepared to take the amendment. As I have indicated privately to the Senator from Mon- tana,, I will do what I can to keep the amendment in conference. I think it does provide some equity. The Senator has limited it to 50 em- ployees or less. It is directed toward small business. I know that a lot of small business groups, including NFIB and others, have a strong interest in this amendment. I hope the Senator will let us accept it without a rollcall vote, because I will not be impressed by that. The rollcall will be 99 to 0-I will stipulate that. Mr. BAUCUS. Mr. President, will the Senator yield? Mr. DOLE. I yield. other body the opinion of this body. If the chairman will fight hard for this amendment in conference, I will not ask for a rollcall vote. Mr. DOLE. We did some checking in advance and found there was a lot of support for this. So I can safely say that had it not been modified, in my view, it would have 60 or 65 votes; and with the modification. I think it has substantially every vote. Mr. MOYNIHAN. Mr. President, will the Senator yield? Mr. BAUCUS. I think the Senator from Kansas has the floor. Mr. MOYNIHAN. I just want to say that a 99-to-0 vote is trivial compared to the good will and energetic advoca- cy of the Senator from Kansas. So I congratulate the Senator from Mon- tana on his prudence. Mr. BAUCUS. I thank the Senator. Mr. SASSER. Mr. President, I rise today as a cosponsor to the Baucus/ Quayle amendment which provides small business relief from the 1984 payroll tax increase contained in this bill. This amendment is rather modest in its scope but provides the type of relief that is urgently needed in the small business community. The in- crease of social security costs to em- ployers contained in this package will prove most burdensome to our Na- tion's small firms. This amendment decreases the economic shock of this increase without jeopardizing the basic funding structure set forth in the social security package. We need to take this type of action Mr. President because of the role small businesses play in our economy. This is our most productive segment of our economy, it is the major source of innovation in our country and unfor- tunately it is the hardest hit segment of the economy during this recession. In Tennessee; 58,922 firms out of a total of 77,328 firms have fewer than 10 employees. The amazing fact about these small establishments is the impact they have had on employment in Tennessee. Between 1979 and 1981 overall employment in the State de- creased by 0.2 percent. However, those firms with fewer than five employees saw a 16.8-percent increase in employ- ment for this same period. In addition, firms with less than 100 employees constitute 80 percent of the manufacturing companies, 99 percent of the construction firms, 61 percent of the wholesale operations, 98 per- cent of the service companies and 99 percent of the finance, insurance, and real estate business in Tennessee. These small firms contributed about 45 percent of the State's total payroll last year while producing roughly half of Tennessee's $59 billion in goods and services. The sad truth of the situation Mr. President is that these firms, which mean so much not only to the econo- my of Tennessee, but also to our Na- tion's economic well-being, are not re- ceiving their fair share of tax breaks. The Internal Revenue Code is full of items that benefit our large business- es, but there is little in the Tax Code that serves as an incentive to or comes to the assistance of small business. The amendent we offer today seeks to rectify that situation at least in regard to this social security bill. The small business men and women of this country are willing to support the social security compromise so long as it is an equitable solution. The Baucus/Quayle amendment takes a large step ? in that direction, and I strongly urge my colleagues to support this amendment. The PRESIDING OFFICER. The question is on agreeing to the amend- ment. The amendment (UP No. 535), as modified, was agreed to. Mr. DOLE. Mr. President, I move to reconsider the vote by which the amendment was agreed to. Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. DOLE. Mr. President, before the Senator from Montana offers the next amendment, I wonder if we might take up a couple of noncontroversial amendments. It will take about 1 minute.. The PRESIDING OFFICER. The question recurs on the Quayle amend- ment Mr. DOLE. I ask unanimous consent that that amendment be temporarily laid aside. The PRESIDING OFFICER. With- out objection, it is so ordered. Mr. DURENBERGER. Mr. Presi- dent, I ask unanimous consent that my name be added as a cosponsor of the Baucus amendment. The PRESIDING OFFICER. With- out objection, it is so ordered. UP AMENDMENT NO. 121 (Purpose: To provide that payments to PRO's shall be treated the same as pay- ments for benefits for purposes of trans- fers from the trust fund) Mr. DURENBERGER. Mr. Presi- dent, I send an unprinted amendment to the desk and ask for its immediate consideration. The PRESIDING OFFICER. The amendment will be stated. The legislative clerk read as follows: The Senator from Minnesota (Mr. DuREN- BERGER) proposes an unprinted amendment numbered 121. Mr. DURENBERGER. Mr. Presi- dent, I ask unanimous consent that reading of the amendment be dis- pensed with. The PRESIDING OFFICER. With- out objection, it is so ordered. The amendment is as follows: Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3694 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 CONGRESSIONAL RECORD - SENATE March 23, 1983 (1XCXii)). In the case of an individual who has more than 24 years of coverage but less than 30 years of coverage (as so defined), the percent specified in subparagraph (B)(ii) shall, if larger, be". On page 23, strike out lines 1 and 2. On page 23, line 3, strike out "(ii)" and insert "(I)". On page 23, line 4, after "years" insert "of coverage". On page 23, line 5, strike out "(iii)" and insert "(ii)". On page 23, line 7, strike out "(iv)" and insert "(iii)". On page 23, line 9, strike out "(v)" and insert "(iv)". On page 23, line 11, strike out "(vi)" and insert "(v)". On page 23, line 15, strike out "was not" and insert "first becomes". On page 23, line 16, astrike out "for" the second place it appears and insert "after". On page 23, line 20, strike out "or" and insert "including". On page 23, line 21, after "(D)" insert "but excluding a payment under the Railroad Retirement Act of 1974 or 1937". On page 23, line 24, strike out "for pur- poses of" and insert "during". On page 23, line 25, after "benefits" insert "and effective with the initial month for which the individual becomes concurrently eligible for such benefit and such periodic payment,". On page 24, line 11, strike out "entitled" each place it appears and insert "eligible". On page 24, line 12. after "his" insert "concurrent". placation) to benefits under section 202 (e) On page 24, line 13, before the period or (f) of the Social Security Act after De- insert "and such periodic payment". cember 1984. On page 24, line 19, before "bears" insert On page 33, between lines 3 and 4, insert "(but only counting any such months occur- the following: ring after 1956)". (7) Section 202(m)(2)(B) of such Act (as On page 24, strike out lines 22 through 24, applicable after the enactment of section 2 and insert "recomputed under subsection of Public Law 97-123) is amended by strik- (f OW).". ing out "subsection (q)(6)(A)(11)" and insert- On page 27, line 3, strike out "In" and ing in lieu thereof "subsection (q)(6)(B)". insert "Notwithstanding paragraph (4), in". On page 40, line 23, strike out "2014" and On page 27, line 8, insert after "payment" Insert "2011". the following: "effective with the month of On page 41, strike out lines 17 through 23 such change". and insert "duction factor applicable shall On page 27, line 9, -strike out "202 be.the same as under paragraph (1) for the (eX2XBXi) and 202(ine 9 XB)(iY' and insert first 36 months included in either the reduc- "202(e)(2) and and 23)". tion period (as defined in paragraph (6)) or On page 27, line 21, after "60" insert "(or the adjusted reduction period (as defined in after attaining age 50 if she was entitled paragraph (7)), and shall be five-twelfths of before such marriage occurred to benefits one percent for all additional months in- based on disability under this subsection)", cluded in such period; and". On page 28, line 5, after "60" insert "(or Beginning on page 41, line 24, strike out after attaining age 50 if he was entitled through page 42, line 6, and insert the fol- before such marriage occurred to benefits lowing: based on disability under this subsection)". 11 (B) for widow's insurance benefits and On page 28, line 25, after "individual" dower's insurance insert "who died before attaining age 62 the amount of the benefits- reduction at early mod., retirement age (as defined in n section tion 216(a)) 8 2.6 1989 .................................................... 3.1 1983-89 .............................................. 12.5 Armstrong amendment: Cover em- ployees of nonprofit organizations- which are not currently covered-who are hired on or after January 1, 1984. (Similar to treatment of Federal em- ployees.) Also, prohibit any nonprofit organization from terminating cover- age after the date of enactment of the provision. OASDI savings Calendar years: Buttons 1984 .................................................... $0.3 1985 .................................................... 0.6 1986 .................................................... 1.0 1987 ................................................:... 1.3 1988 .................................................... 1.8 1989 .................................................... 2.3 1983-89 .............................................. 7.3 The 1983-89 revenue loss from this proposal is $5.2 billion, out of the $12.5 billion we hoped to raise with this provision. This proposal was considered and re- jected in committee by a vote of 4 to 11. I think it is important to note that already 85 percent of all nonprofit em- ployees have opted to be covered by social security. The provision would just bring in the remaining 15 percent and treat them the same as the rest of private sector employees who are al- ready covered. I am not persuaded by the argument that we should treat nonprofits the same way we do Federal employees. Social Security coverage has been ex- panded repeatedly over the years to a variety of private sector employees. Each time, coverage was extended to the new group on a mandatory, cur- rent employee basis. In addition, private sector pension plans should be better able to adjust to coverage-they are often newer plans, and more flexible than the huge Federal Service Retirement System, for example. I might add that many of the people employed in nonprofit organizations want to be covered by social security, but the choice was taken away by the organization itself, without the con- sent of employees. In testimony we received in the Fi- nance Committee, we were reminded that many of the nonprofits that are not now covered or that are opting out of social security are hospitals, for ex- ample, whose employees would prefer to be a part of the social security system. People who are not under social security do not have p6rtable pension rights; frequently they do not have disability protection. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3748 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 CONGRESSIONAL RECORD - SENATE March 28, 1988 Mr. BRADLEY. Mr. President, I ask unanimous consent that I be added as a cosponsor to the Levin amendment. The PRESIDING OFFICER. With- out objection, it is so ordered. Is all time yielded back? Mr. LEVIN. Mr. President, I yield back the remainder of my time. The PRESIDING OFFICER. All time is yielded back. The question is on agreeing to the amendment of the Senator from Michigan. The amendment (UP No. 138) was agreed to. Mr. DOLE. Mr. President, I move to reconsider the vote by which the amendment was agreed to. Mr. LEVIN. I move to lay that motion on the table. The motion to lay on the table was agreed to. UP AMENDMENT NO. 139 (Purpose: To provide health care coverage for the unemployed) Mr. DOLE. Mr. President, I send an unprinted amendment to the desk and ask for its immediate consideration. The PRESIDING OFFICER. The amendment will be stated. The assistant legislative clerk read as follows: The Senator from Kansas (Mr. Dots) pro- poses an unprinted amendment numbered 139. Mr. DOLE. Mr. President, I ask unanimous consent that further read- ing of the amendment be dispensed with. The PRESIDING OFFICER. With- out objection, it is so ordered. The amendment is as follows: At the end of title III add the following new section: HEALTH SERVICES FOR THE UNEMPLOYED Sac. 308. (a) Title XX of the Social Secu- rity Act is amended by adding at the end thereof the following new section: "HEALTH SERVICES FOR UNEMPLOYED WORKERS "SEc. 2008. (a)(1) Notwithstanding section 2005 (aX4) and any other provision of this title, any State may establish a program under this section for providing health care coverage for unemployed workers, subject to the provisions of this section. "(2) The State may .choose those groups of individuals (and their immediate fami. lies) who shall be covered under the pro- gram, the duration of such coverage, and the duration of the program, as the State determines to be appropriate, except that- "(A) no coverage may be provided to any individual (or his immediate family) unless such individual (I) is receiving regular, ex- tended, or Federal supplemental compensa- tion (or, at the option of the State, railroad unemployment compensation), or (ii) is un- employed and has exhausted his rights to such compensation (by reason of payment of all such compensation for which he is eli- gible, other than for cause) within the prior six months, or (iii) was eligible for such compensation within the prior 30 days but lost such eligiblity on account of employ- ment; "(B) no coverage may be provided for the- first 6 weeks during which an individual is eligible for compensation (referred to in subparagraph (A)) in a benefit year (as de- termined under the State unemployment compensation law); "(C) no coverage may be provided to any individual unless such individual was en- rolled in a group health plan of the employ- er by whom he was employed at the time he last became eligible for compensation de- scribed'in subparagraph (A) (and in making a determination with respect to prior enroll- ment, the State may use the broadest possi- ble determination of proof); "(D) no coverage may be provided with re- spect to any services provided prior to June 1, 1983, or with respect to services provided for an individual prior to the time such indi- vidual is determined to be eligible under such program; and "(E) no coverage may be provided for any individual who is otherwise eligible for medical assistance under the State plan under title XIX. "(b)(1) Services under the program estab- lished under this section shall include only inpatient and emergency outpatient hospi- tal services and physician services, including those.provided in health clinics but not in- cluding those provided in nursing care facili- ties, and prenatal and postpartum care. No drugs or biologicals shall be included within the covered services described in the proced- ing sentence unless provided as part of inpa- tient hospital services. "(2) The State shall determine the amount, duration, and scope of the covered services described in paragraph (1) which shall be included under the program, but in no event shall the amount, duration, or scope of such services under the program under this section exceed the amount, dura- tion, or scope of such services included under the State plan for medical assistance for individuals described in section 1902(a)(10)(A). "(3) Services may be provided through varying arrangements made with providers by the State, but no such arrangement may provide services which are more generous than those provided under the State plan for medical assistance for individuals de- scribed in section 1902(a)(10)(A). "(cX1) The State may provide for a weekly premium charge for individuals par- ticipating in the program under this section, but no such premium charge may exceed an amount equal to 8 percent of the amount of compensation (referred to in subsection (aX2)(A)) for which such individual is eligi- ble for such week. Such premium charges may vary for individual coverage and family coverage and by provider arrangement. "(2) The State may provide that deducti- bles and coinsurance amounts be imposed under the program, but the estimated aver- age monthly amount of such deductibles and coinsurance amounts for users of serv- ices may not exceed an amount equal to 10 percent of the average monthly benefit amount in such State for compensation (re- ferred to in subsection (a)(2XA)). No such deductible or. coinsurance may be imposed with respect to prenatal or postpartum care, and no such deductible or coinsurance may be imposed until after public hearings which provide adequate notice and opportu- nity for public participation have been held by the State with respect to such imposi- tion. Such deductibles and coinsurance may vary with respect to different groupings of eligible individuals, different types of serv- ices, different provider arrangements, and varying coverage periods. "(3) Any amounts imposed by the State for premiums, deductibles, or coinsurance which are imposed by the State must be used by the State to pay the State share of the cost of the program under this section, or to provide additional services or periods of coverage to individuals eligible for cover- age under such program. "(d) Payment by the State for services provided to individuals eligible for the pro- gram under this section shall be made through the same adminstrative mecha- nisms through which payments are general- ly made under the State plan for medical as- sistance under title XIX; however, the State may provide for contracts with cost effec- tive financing and delivery systems among carriers or providers, and may selectively contract with a specific group or' provide for capitation reimbursement, but no such con- tract may provide for services which are more generous than those provided under the State plan for medical assistance for in- dividuals described in section 1902(a)(10)(A). Any limitations under the State plan for medical assistance on the amount that a provider of services may charge the recipi- ent of such services shall also apply to the program under this section, except that pre- miums, deductibles, and coinsurance may be charged in accordance with subsection (c). "(e)(1) Determinations of qualification for coverage under the program under this sec- tion shall be made by the State agency ad- ministering the State's unemployment com- pensation law under section 3304 of the In- ternal Revenue Code of 1954, and the pro- gram shall be administered by the State agency administering the State plan for medical assistance under title XIX of this Act. "(2) Upon becoming eligible for compensa- tion (referred to in subsection (aX2)(A)), an individual shall be informed of the eligibil- ity criteria for coverage under the program established under this section and the bene- fits provided, and shall have four weeks in which to voluntarily enroll in such program. Such individual shall also be informed of the possibility that such individual may be eligible to enroll in a health plan of his spouse or parent. If the individual declines the opportunity to enroll, or later voluntar- ily terminates his enrollment, he may not again enroll in such program unless he sub- sequently becomes eligible for compensation (referred to in subsection (a)(2)(A)) for a new benefit year (as determined under the State unemployment compensation law). In the case of any State which chooses to re- quire the payment of a premium, the State may deduct the amount of the premium from the amount of such compensation paid to an individual enrolled in such program. "(f)(1) Notwithstanding sections 2002 and 2003, payments to States having programs established under this section shall be made in accordance with the provisions of this subsection. Payments under this subsection are in addition to any amounts to which a State is entitled under section 2002, and payments made under section 2002 may not be used for purposes of this section. An amount, not to exceed the State's allotment determined under paragraph (2), equal to the Federal percentage (as determined under paragraph (6)) of the amount expend- ed by such State for its program established under this section (excluding administrative costs) shall be paid to the State in the same manner as payments are made under section 1903(d). "(2) The Secretary shall allot $750,000,000 to carry out this section for each of the 12- month periods beginning on June 1, 1983, and June 1, 1984 among the States as fol- lows: "(A) One-half of such amount shall be al- lotted among the States on the basis of the relative number of insured unemployed indi- viduals who reside in each State as com- pared to the total number of insured unem- ployed individuals in all the States. "(B) One-half of such amount shall be al- lotted among the States on the basis of the relative number of individuals who have been unemployed for 28 weeks or more and who reside in each State as compared to the Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 29, 1989 CONGRESSIONAL RECORD - SENATE S 3749 total number of such individuals in all the States. "(3) Allotments shall be made on the basis of the most recent 12-month period, preced- ing the month in which the Secretary makes such allotments, for which adequate data is available. "(4) Funds shall be allotted at the begin- ning of each 12-month period referred to in paragraph (2), but payment shall be made as described in paragraph (1). Amounts al- lotted for the 12-month period beginning June 1, 1984, may be paid to States for ex- penses Incurred in providing services under the program for individuals who are en- rolled in the program on May 31, 1986, until their eligibility for such program termi- nates, or November 30, 1986, whichever is earlier. "(6) Any funds allotted to a State which did not establish a program under this sec- tion shall be reallotted to those States having a program, at the end of the 12- month period beginning June 1, 1984. Such funds may be expended in the same manner as described in paragraph (4). "(6) For purposes of this section, the Fed- eral percentage is- "(A) 95 percent with respect to services provided in any State during a week fof which the State's rate of insured unemploy- ment (as determined for purposes of section 203 of the Federal-State Extended Unem- ployment Compensation Act of 1970) for the period consisting of such week and the preceding 12 weeks is equal to or exceeds 5.0 percent; and "(B) 80 percent for any other week, except that if a State qualifies for the 95 percent Federal percentage under subparagraph (A) for any week. such 95. percent Federal per- centage-shall remain in effect with respect to such State for the duration of such State's 4-month initial period of qualifies- tion (in the can of a State which qualifies for the 95 percent Federal percentage for a week ending on or before September 30. 1983), and for the duration of such State's 6-month period of qualification (as deter- mined under subsection (gxl)) (in the can of a State which qualifies for such percent- age for a week ending after such date). "(7) The Secretary shall make payments to States for administrative costs incurred in carrying out the program established under this section. in a total amount not to exceed $150,000,000 for each of the 12- month periods beginning on June 1, 1983, and June 1, 1984, as he determines appropri- ate. Seventy million dollars of such reim- bursement for each fiscal year shall be made to the State agencies administering the State program under this section, and $80,000,000 of such reimbursement for each fiscal year shall be made to the Department of Labor for payment to the State agencies administering the State's unemployment compensation law. Payments-to any agency administering the State program under this section shall be made in an amount equal to the Federal percentage, in effect under paragraph (6), of the amounts expended by such agency in carrying out the program. Payments under this paragraph may be made with respect to program costs insured after November 30, 1985. "(gXl) With respect to services Provided to individuals who are enrolled during the period beginning on June 1, 1983, and ending on September 30, 1983, any State may qualify for payments under this section if it has a program which meets the require- ments of this section. With respect to serv- ices provided on or after October 1, 1983, only a State having a rate of insured unem- ployment (as determined for purposes of section 203 of the Federal-State Extended Unemployment Compensation Act of 1970) for a period consisting of any week ending after September 30, 1983, and the 12 preced- ing weeks, of 4 percent or more, may enroll new individuals in the program under this section. If a State qualifies to enroll new in- dividuals under the preceding sentence, such qualification shall continue' for a period of not less than 8 months beginning with the first week in which such State so qualifies, and any State may subsequently requalify upon reaching the required rate of insured unemployment after the end of such 8-month period, but not such period may extend beyond November 30. 1985. "(2) During the period in which a State may not enroll new individuals in its pro- gram by reason of paragraph (1), payment under this section may be made with respect to individuals previously enrolled in such program until their eligibility expires, or, if sooner, November 30, 1985. "(h) Any State establishing a program under this section shall submit a report to the Secretary on March 1. 1984, on the pro- gram's implementation and impact. A final report shall be submitted in January 1986 by any state which carries out its program for any period after September 30, 1983, upon expiration of its program. "(I) The State shall provide that the pay- ment for any services received by an individ. ual under the program shall be reduced by the amount of any other payment which is or could be made with respect to such serv- ices under any other health plan or public program. or from a third party, and shall re- quire each individual enrolled in the pro- gram to assign all rights to such payments as he may have to the State as a condition of enrolling lb the program.". (b) Section 3304(a) of the internal Reve- nue Code of 1954 Is amended by redes- ignating paragraph (17) as paragraph (18) and inserting after paragraph (16) the fol- lowing: "(11) If the State establishes a program under section 2008 of the 'Social Security Act, the State agency administering the State -unemployment compensation law shall carry out the functions required of it under such section;'and". (cxl) Subsection (i) of section 162 of the Internal Revenue Code of 1954 (relating to group health plans) is amended by redes- ignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the follow- ing new paragraph: "(2) Denial of 50 percent of deduction in cases where employer does not provide open enrollment if the spouse or parent or the employee becomes unemployed.- "(A) In atiaw..-In any can in which a group health plan does not meet the re- quirements of subparagraph (B) for any portion of the taxable year, no deduction shall be allowed under this section for 50 percent of the amount of the expenses paid or incurred for such taxable year by an em- ployer for such group health plan. "(B) Rneuua ra,Ts WHICH MAN MUST peer.-A group health plan shall be treated as meeting the requirements of this subpar. agraph if, in the case of an individual cov- ered (or eligible to be covered) under such plan who has a qualified spouse or parent. such plan allows such individual during the qualified open period- "(I) to change coverage from self-only to family, except that in the case of a plan of- fering different levels of benefits, such plan meets the requirements of this clause even if the change in coverage does not include the ability for an employee to elect a higher level of benefits, or "(u) to commence coverage for himself and his family. "(C) Tams Aim coxDrrtons SANS As MR oTHs optic ssnoLLMmrrs.-The terms and conditions of the coverage required under subparagraph (B) during any qualified open period shall be at least as favorable to the employee as the terms and conditions of- fered by the group health plan under any other opportunities offered to employees to commence or change coverage under such plan. "(D) Quaw'r spouss on FAR=T: For purposes of this paragraph, the term 'quali- fied spouse or parent' means the spouse or parent of an individual who- "(I) becomes unemployed (other than for cause), and "(11) as a result of such unemployment, loses eligibility under a group health plan of the employer of such spouse or parent. "(E) QvALrsisa optic naroD.-For pur- poses of this paragraph, the term 'qualified open period' means the 30-day period begin- ning on the day on which the appropriate State agency notifies the qualified spouse or parent of an individual covered under a group health plan that such spouse or parent has become eligible for receipt of un- employment compensation under any Fed- eral or State law by reason of the unem- ployment described in subparagraph (Dxl).". (2XA) Except as provided in subparagraph (B), the amendments made by this para- graph shall take effect on the 60th day after the date of the enactment of this Act. (B) In the case of a group health plan which.waa subject to a collective-bargaining agreement In effect on the date of the en- actment of this Act, the amendments made by this Act shall take effect on the later of- (i) the date under subparagraph (A). or (ii) the date on which such agreement ex= pares (determined without regard to any ex- tensions agreed to after the date of the en- actment of this Act). (dxl) Paragraph (4) of section 3304(a) of the Internal Revenue Code of 1964 (relating to requirements for approval of State unem- ployment compensation laws) is amended by striking out "and" at the and of subpara- graph (A), by adding "and" at the end of subparagraph (B), and by adding after sub- paragraph (B) the following new subpara- graph: "(C) nothing in this paragraph shall be construed to prohibit deducting an amount from unemployment compensation other- wise payable to an individual said using the amount so deducted to pay for health em if the individual elected to have such deduc- tion made and such deductiof was made under a program established under section 2008 of the Social Security Act;". (2) Paragraph (5) of section 303(a) of the Social Security Act is amended by striking out "; and" at the and thereof and inserting in lieu thereof ": Provides fattier. That nothing in this paragraph shall be con- strued to prohibit deducting an amount from unemployment compensation other- wise payable to an individual and using the amount so deducted to pay for health care if the individugl elected to have such deduc- tion made and such deduction was made under a program established under section 2008 of the Social Security Act; and". Mr. DOLE. Mr. President, what I want to discuss just for a very few mo- menta is the amendment I have Just introduced. Then I would hope to withdraw the amendment: Earlier this evening when the distin- guished Senate majority leader (Mr. Bmm) was proposing a unanimous- consent request, we came to an area where there was some agreement and Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3750 CONGRESSIONAL RECORD - SENATE March 23, 1983 State administered program would be voluntary on the part of unemployed workers and their dependents. States could require payment of an enroll- ment premium for such coverage. States would be entitled to Federal matching payments for the costs of benefits for enrolled unemployed workers and their dependents up to a maximum payment amount for each State determined ,by a special alloca- tion formula. The allocation formula takes into account State insured un- employment rates in comparison with the national unemployment rate and other factors. The program would begin on June 1, 1983, with all States entitled to Feder- al matching payments to finance the program through September 1983. Be- ginning on October 1, 1983, only States with insured unemployment rates-determined on the basis of a 3- month moving average-at or above 4 percent could elect to continue to re- ceive Federal matching funds. The program would end on May 31, 1985, with any fund allocation balances re- maining available for 6 months to fi- nance program benefits for those still on the rolls. PUBLIC SECTOR PROVISION Program eligibility: Unemployed workers, and their immediate family members, who are entitled to receive benefits under a State unemployment compensation system and who were enrolled in an employer or other group health benefit plan when they lost their jobs, would be eligible to enroll in the program. Entitlement to unemployment compensation means entitlement to receipt of regular State unemployment benefits, Federal sup- plemental program benefits or bene- fits provided under the extended bene- fits program. This provision would allow States to provide coverage to anyone who had received Federal supplemental bene- fits in the past and those who would. again receive these benefits as a result of the FSC extension contained in S. 1. So those who have, as of the date of enactment, exhausted regular unem- ployment compensation benefits and extended benefits, but had received FSC benefits, would be eligible. This could cover people who had received benefits as far back as December 1979. For those who elect to enroll, cover- age under the program would begin no sooner that 6 weeks following the week in which the unemployed worker is first entitled to unemployment com- pensation benefits and has applied to enroll in the unemployed health bene- fits program. States could at their option, establish a longer waiting period before coverage first begins. Coverage under the program would end no later than 6 months following the date on which the eligible worker is no longer entitled to compensation benefits or for a lesser period at the Eligible workers would have to sat- isfy the State agency administering the program that they, and, if appro- priate, their dependents, were enrolled in an employer or other group health benefits plan at the time they lost their jobs. It is expected that States will rely upon the broadest possible evidence of such previous enrollment, and may, upon their election, satisfy such requirement by obtaining a decla- ration from the worker of such previ- ous enrollment. Benefits: Program benefits would be limited to inpatient hospital services; emergency, outpatient hospital serv- ices; physiciap services, including those provided in health clinics and hospital outpatient departments, but excluding those provided in connec- tion with nursing home care; and pre- natal and post partum care, which may be provided by a hospital, physi- cian, clinic, or nurse midwife. No coverage is available for prescrip- tion drugs or biologicals, except those provided on an inpatient hospital basis. States may determine the amount, duration and scope of covered services. However, in no case may the benefits offered under this program exceed those offered under the State's medic- aid program for the categorically needy. States would be allowed to provide for cost-effective financing and deliv- ery structures, and to contract with specific providers for the provision of covered services to the enrolled popu- lation. State's electing this option would be limited to contracting with providers eligible to serve the States medicaid population. Payment could only be made for services provided on or after the date the State begins participation in the program and only on behalf of eligible enrolled individuals. Premiums: The plan permits the State to establish a premium for health care coverage equal to an amount no greater than 8 percent of the individual's weekly UC benefit. Separate premium schedules could be established for self-only and family coverage. Patient cost sharing: The proposal would permit a State to impose cost sharing-that is deductible and coin- surance-requirements after public hearings for which adequate notice and opportunity for public participa- tion have been provided. Cost-sharing requirements could not, on the aver- age, exceed 10 percent of the State's average monthly UC benefit. Further, no cost sharing could be required for prenatal or post-partum care. The proposal would permit deducti- bles and coinsurance to be applied on a differential basis with respect to the target population, services provided, provider arrangements and the cover- age period it involved a very important program that I had hoped to address in this bill. It is health benefits for the unem- ployed. The Senator from Kansas, the Sena- tor from Minnesota (Mr. DuREN- BERGER), the.Senators from Pennsylva- nia-Senator HEuiz, a member of our committee, and Senator Spzcrs, who has had an interest in this matter for some time-Senator Rizci s, and many other Senators have been trying to come up with some package that we could properly present and for which we could have rather widespread sup- port. I have met with White House offi- cials; I have met with FMS officials. We have spent a lot of time at the staff level trying to come up with some package that we thought we could sustain on the Senate floor this evening. I want to make it clear that I intend to do something about health benefits for the unemployed, but I am con- vinced that without administration support, this would not be the right vehicle. In addition, I have made some in- quiries on the House side, and they have indicated that they prefer we.not attach such an amendment to this leg- islation. But I do intend to propose legislation in this area as soon as possi- ble-in fact, tomorrow. I hope that Senators who have an interest in either the legislation on which we have been working together or some separate legislation, if they do not already have their own legislation, might join as cosponsors. The loos of health benefits by those who have lost their Jobs is a serious issue and one that should be addressed by our committee. As I have indicated, we considered offering this proposal as an amend- ment to S. 1, but I honestly believe that the proposal warrants hearings, so that those who are interested can. comment and make suggestions as to how we might improve this proposal. Our proposal is not the only way to proceed. It is Just one option, but one' that we believe makes some sense. The point is that we have a problem, which I hope will be short-lived, but it is one that must be dealt with. We cannot postpone it. Someone might say that we should postpone it to June, July, or August. We will still have the problem, and in the mean- time, hundreds of thousands of people are without health coverage. It is a matter of great urgency, and we should face it at the earliest possible time. GENERAL cowcsPr OF PROPOSAL To COVSR THE UNEMPLOYm Under the proposal, title XX of the Social Security Act would be amended to provide certain unemployed work- ers and their immediate families with inpatient and outpatient hospital serv- ices, physician services, except for nursing home care, and prenatal and post-partum care. Coverage under the option of the State, or 1 month after The proposal would require that all reemployment, whichever occurs first. premium and cost-sharing revenues Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 29, 1989 CONGRESSIONAL RECORD -- SENATE must be used to offset the State share of program benefit costs, to provide covered services to eligible individuals, or to reduce the cost sharing require- ments placed on eligible individuals. Reimbursement: The proposal would require States to utilize the same reim- bursement mechanisms currently uti- lized under their medicaid programs. They could, within that limit, choose to use a variety of arrangements, in- cluding capitation, as long as no ar- rangement is more generous than those provided to their medicaid cate- gorically eligible. Providers would be required to accept the program's pay- ment as payment in full for covered services except for any required cost- sharing amounts. Administration: State unemploy- ment offices would be responsible for determining program eligibility. VA Upon initial application for unem- ployment compensation benefits, or after enactment for those already on the unemployment compensation rolls, a worker would be Informed of his potential eligibility for health benefits under the open enrollment opportunity provided his working spouse or parent and under the State- administered program. He would then be allowed a 4-week period In which to elect or decline coverage under the State program. Once covered, an indi- vidual could opt out of the program at any time. However, once out he could not reenter until he again became eli- gible for a new benefit year as defined under the State unemployment com- pensation program. The State unemployment compensa- tion office would inform the individual concerning the date of eligibility, and the actuarial value of the benefits pro- vided. Premium payments, at the option of the State; would be deducted from the individual's unemployment compensation check. Alternatively, the State would be permitted to estab- lish some other collection mechanism. The administration of the health benefits provisions under this program would be the responsibility of the State agency established or designated to administer the State's medicaid pro- A State participating in the program would be entitled to Federal matching payments for the costs of services pro- vided to unemployed workers and their families up to a cap amount de- termined by the - allocation formula. Funds would be allocated at the begin- ning of each program year although the States would not be provided the money in a lump sum at that time. Funds would be expended in adminis- tratively the same manner as they are under the State's medicaid program. At the end of the second year, Individ- ual State fund allocation balances re- maining would be available for 6 months to expend on already enrolled beneficiaries whose coverage periods have not expired. The Federal matching rate would be 80 percent for States with insured un- employment rates below 5 percent, and 95 percent for States with IUR's equal to or greater than 5 percent, during the Initial 4-month and any 6- month participation period beginning after September 30, 1983. The match- ing rate would remain stable for a par- ticipation period unless the rate was 80 percent and the State's IUR rose to 5 percent or greater, based on a 3- month moving average. In that can the Federal matching rate would be increased from 80 to 95 percent for the rempdnder of the period. Any State which experiences a break in program participation because their IUR falls below 4 percent based on a 3- month moving average, would be re- quired to stop enrolling eligible Indi- viduals. Federal matching at the rate in effect at the time of the break in participation will continue to be pro- vided for services to enrollees until their State determined individual cov- erage period expires, but In -no case beyond November 30, 1985. Under the program, $150 million would be authorized for the 12-month period beginning June 1, 1983 and $150 million for the 12-month period beginning June 1, 1984 to cover the costs of program administration. Up to $70 million would be allocated each year to each State by the Department of Health and Human Services to cover the costs Incurred by the State's medicaid agency in administering this program. $80 million in each year would be allocated by the Department of Labor to the State unemployment programs for their administrative costs. All States participating in the program would be required to report to the Department of Health and Human Services (HHS) by March 1, 1984 on the program's implementation and impact on the target population. A final report due in January of 1986 would be required of all States that participate in the program after Sep- tember 30, 1983. Benefit dollars allocation formula: The Secretary of HHS is directed to allot amounts appropriated under the act for services for any year among the States as follows: S 3751 First, one-half on the basis of the number of insured unemployed in each State to the total number of in- sured unemployed in all States; Second, one-half on the basis of the number of persons unemployed for 26 weeks or more in each State to the total number of such persons in all States. Allotments are to be determined on the basis of the most recent 12-month period, preceding the month of the de- termination, for which adequate data are available. PRIVATS.SSCTOR PROVISION Special open enrollment provision: Under the proposal, employer-spon- sored-and other qualified group- health benefit plans would be subject to a loss of 50 percent of the deduction for employer-provided health care costs if they fail to provide an open enrollment opportunity for persons to change from self-only to family cover- age or to commence coverage for him- self and his family. By providing these opportunities to certain workers, we are hoping to avoid the situation where a worker or a worker's family loses, or will lose, group coverage be- cause the second worker in the family is laid off or involuntarily separated from his job-other than for cause. The provision would permit such open enrollment for a 1-month period fol- lowing the date of notification to the employer of the second worker's eligi- bility for receipt of unemployment compensation. Since the determining event, namely, job loss, is unrelated to the health status of either the depend- ent or the laid-off worker, virtually no adverse selection should develop for the employer of the dependent person. Coordination of benefits: Any bene- fits for which an Individual or family is eligible under the new health bene- fit program for the unemployed would be reduced to the extent that support or payments for items and services are, or could be, made under any other group health insurance plan, public program providing benefits to such in- dividual or family member, or by any third party. An assignment of rights, to any support or payments for medi- cal care from any third party must be made at the time coverage Is elected. Mr. President, I understand that other Senators want to make com- ments. I emphasize that I know that some Members may desire to pursue this matter, notwithstanding the com- ments of the Senator from Kansas. I again indicate that we are serious about the proposal. It is a need that should be met. There will be hearings at the earliest possible time. I am cer- tain that what I have outlined in a brief fashion could be improved. I do not believe we should give the American public the idea that we do not view health benefits for the unem- ployed as a very serious issue-to con- sider a solution to this problem In such a hasty fashion does not do jus- tice to the complexities of this issue. Federal/State funding: Under the program, $750 million in Federal matching funds would be authorized for the 12-month period beginning June 1, 1983, and $750 million for the 12-month period beginning June 1, 1984. All States would be entitled to Fed- eral matching payments to finance the program through September 1983. Be- ginning on October 1, 1983, only those States with insured unemployment rates, based on an average of the pre- ceding 3 months, equal to or exceeding 4 percent could elect to participate. Any State making an election after September 30, 1983, would be guaran- teed participation in the program for at least 6 months, not to go beyond May 31, 1985, regardless of any change in its insured unemployment rate. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3752 CONGRESSIONAL RECORD - SENATE March 23, 1989 That is why I hope we might get some agreement tonight that we would have hearings. Let there be no mistake about my in- terest in working out a solution, but I think all the parties involved should have an opportunity to comment. That is the purpose of public hearings. Adoption of this amendment this evening means the House has had no opportunity to review any aspect of this new program, and are likely to object to its consideration at this time. We should have an opportunity to work something out that is amenable to both sides-a late-night, last-minute conference is not the place to do that. I have a commitment from the ad- ministration to work with us closely in drafting a proposal. I think we should give them this opportunity. I did discuss this ma ,tter with some who will be House conferees, and I hope we will not include this provision in this bill, because the House is still in the process of trying to put togeth- er a package. They have not had suffi- cient hearings. As I Indicated earlier, I have been unable to receive a commitment from the administration on this proposal, but I do have a commitment from the administration that they will try to work with us on developing a compre- hensive proposal. And we will await that assistance and if it is not forthcoming we will proceed with hearings, and I am cer- tain we will have the opportunity then to hear administration witnesses and others. Mr. President, having made that statement, and I know others may wish to comment, I am happy to yield the floor. Mr. HEINZ. Mr. President, will the Senator yield without losing his right to the floor. Mr. DOLE. I yield. Mr. HEINZ. Mr. President, I might say I am intimately familiar with the amendment the Senator from Kansas has sent to the desk. It represents the work of about 2 or 3 months of con- certed effort on the part of my col- league from Pennsylvania, Senator Sracvzi, my colleague from Minneso- ta, Senator DvRzws=aM and myself, together with the Senator from Kansas, Senator Dor.s. It is in many respects quite similar to the bill introduced by Senator Srac- Tao and myself a week or so ago. It is somewhat similar in concept, Slightly less expensive in terms of cost. It is my understanding that, and if the Senator from Kansas will yield, his amendment would cost roughly $900 million a year, Is that correct? Mr. DOLE. The Senator is correct. Mr. HEINZ. I happen to think we need a program such as this. I am pleased the Senator from Kansas has indicated his interest and a commit- ment to moving ahead in this area. I think the amendment he has sent to the desk, although he intends to re- trieve it shortly, is responsible in every respect. It will meet the pressing medi- cal needs of the Jobless and their fami- lies who cannot obtain affordable health insurance coverage. The Sena- tor from Kansas made the point that perhaps this is not Cadillac coverage in terms of the benefit package, but let me assure him it will provide a very meaningful package of health benefits for people who right now have no benefits at all. In my home State of Pennsylvania we have 716,000 Pennsylvanians who are unemployed and in most cases, they have no access to affordable health insurance. Pennsylvania is reel- ing from layoffs in steel, mining, tex- tiles and related industries. My State is fast approaching an insured unem- ployment rate of 8 percent. It is also my understanding that States particularly hard hit in terms of unemployment would get a little bit more of a break under this proposal. Such States only will have to come up with 5 percent matching funds to par- ticipate in this program This program is maybe 95 percent of the health cost, as I understand it, 100 percent of the administrative cost. Is the Senator from Pennsylvania correct in that regard? Mr. DOLE. Yes. Mr. HEINZ. I have listened carefully to the Senator from Kansas and hope to have his attention shortly because I am concerned about the extent to which we- Mr. DURENBERGER. Mr. Presi- dent, does the Senator care to yield until the Senator from Kansas re- turns? Mr. HEINZ. I will yield without losing my right to the floor. Mr. DURENBERGER. I will get the attention of the Senator from Kansas. Mr. HEINZ. I wish to say this before I yield.' Mr. DURENBERGER. All right. Mr. HEINZ. I hope irrespective of what the Senator from Kansas does here tonight, that the administration, which has not been very forthcoming in their support for what I believe is an essential legislative initiative, will realise there are a group of Republi- can Senators in this Chamber who are very committed to doing something in this area. We would rather do some- thing with them than without them. We do not want to get the hopes of unemployed people up to see them dashed by Presidential veto. If that is the road that we are forced to go down, then each will choose our own paths. I know where I will be compelled to go, which is toward making sure that my constituents are not left out in the cold freezing with- out a home, and without access to health care services. I do hope the administration will listen carefully, and look carefully at tonight's debate; because unless we do something soon, we are going to cause an irreparable amount of harm. I am happy to yield to the Senator from Minnesota. Mr. DURENBERGER. I thank my colleague. The PRESIDING OFFICER. The Senator from Minnesota is recognized. Mr. DURENBERGER. Mr. Presi- dent, let me begin by expressing my appreciation to the two Senators from Pennsylvania for their broad efforts In the area of the problems that face the unemployed in this country and to thank our colleague, the chairman of the Finance Committee, for his efforts and for introducing this amendment. Let me just start with the comments the Senator from Pennsylvania made about being forthcoming. Look around the Chamber. Not only are the galleries empty but the Cham- ber is also. I imagine that when Sena- tors and Congressmen return to their States, with the hundreds of thou- sands of unemployed persons, the speeches about the plight of the un- employed flow readily from their lips. That is why it is unfortunate that there are only a few Senators here to discuss this very, very important issue. It is also unfortunate that no one has endeavored to address the subject before now. Unemployment has been with us for a long time, and the lack of health care coverage for persons who are unemployed and their families has been with us for a long time. I presume that one of the reasons health care coverage is a more diffi- cult problem for people today than it has been in the past is that health care costs have risen so high. The senior Senator from Pennsylvania, be- cause of his long commitment to health care policy issues, recognises that finally Congress is addressing the role that individuals play, the role that the insurance companies play, the role that doctors, hospitals, and the Government through its medicare and medicaid programs have to play in doing something about the high cost of health care. I happen to think that despite the fact that only 2 or 3 months have been spent on the specifics of this bill, it is an excellent piece of legislation. Were it not for the fact that we are amend- ing this particular piece of legislation and the problems that were referred to by the Senator from Kansas, I would strongly recommend it as a very good program that will provide health care for unemployed Americans and their families. The reason it is a particularly good amendment and the reason that I intend, as a chairman of the Senate Finance Committee's Health Subcom- mittee, to start hearings on this sub- ject, whether the administration is forthcoming or not, and why I intend, as I am sure the Senator from Penn- sylvania does, to press the chairman of this committee to report out a bill within the next several months is very simply that this amendment proposes to build health care for unemployed off of the very same principles that Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3754 CONGRESSIONAL RECORD - SENATE of the Finance Committee has, and the Senators from Pennsylvania. But I just do not know how we justify the fact that there are people out there right this minute who desperately need this kind of response from us and, in a sense, we are sidestepping the issue and letting the clock run I think for an unconscionably long period of time. I guess I do not under- stand why that is necessary, given all the work that has been done here. Mr. DURENBERGER. I would re- spond by saying that I share that con- cern. The States represented on the floor right now certainly represent the regions that are heavily populated with basic industries that are failing. In the short term it is very difficult for us to promise a great deal of relief via the employment route. But so far as this Senator is con- cerned, my concern is twofold: One, it may be a well-thought-out plan, but it has been thought out by a few people like me and Senator HEINZ and a few others, and I do not know that we are necessarily the best thinkers in this country. On the other hand, I would say that when we do go to the American people with a plan, I want to be able to indi- cate to them that the plan is a com- mitment, a national commitment, to build a program providing for health care for the unemployed. I think we ought to be totally confident that this is the best kind of a program we put together. We should have a plan we are totally confident with. We should not come back next fall and start tinkering with it, or next year and start playing with it. It is for that reason I feel we should take a little time and work to improve this plan. Those who have been unemployed for 1 year, for 2 years or even longer need our assistance now. Last week the Senate passed the jobs bill. Now we have the opportunity to lend an- other helping hand to the unemployed by giving them the peace of mind that comes with health coverage. I urge my colleagues to work with us in further refining and forging a proposal. The PRESIDING OFFICER. The Senator from Colorado. Mr. ARMSTRONG. Mr. President, I would be glad to defer to the Senator from Pennsylvania. Mr. SPECTER. I thank the distin- guished Senator from Colorado for yielding to me. The presentation by the distin- guished Senator from Kansas was most eloquent in his outline of the need for health coverage for the un- employed and in his outline of a pro- gram to meet that need. My colleague from Pennsylvania, Senator HEINZ, my colleague from. Minnesota, Senator DURENBERGER, Senator DOLE and I have been discuss- ing this matter for the past several days, and it is apparent from the text of Senator DOLE'S speech that it could have gone either through an advocacy approach, an amendment to this bill, or simply a limited move forward and, as he has indicated, a withdrawal. But my sense of the situation is that the unemployed who are without health benefits have been asked to wait too long already. The statistics have already been outlined, and Sena- tor HEINZ has stated the statistic in Pennsylvania is several hundred thou- sand. Senator HEINZ and. I have collabo- rated for the past several months on a health program, and its importance was emphasized to us when we were in Midland, Pa., about a month ago. We had a high school auditorium full of people who emphasized that health in- surance was their No. 1 concern, even above the rising cost of fuel and the unemployment problem generally. In that context, we have been press- ing Senator DOLE to try to come for- ward with an amendment which would be attached to this bill at this time. One of the difficulties is to attract the attention of the administration, and I think we have to some extent at- tracted their attention at this time. But my thought is we ought to pro- ceed to move on this amendment now. I ask the distinguished Senator from Kansas if we do not press an amend- ment and press it to a vote, how soon can we have the meeting which the White House officials have stated they would be willing to undertake? I also ask whether such a meeting can be ac- complished this week? Mr. DOLE. The Senator from Kansas is willing to meet this week. If we can dispose of this bill tonight and go to conference tomorrow we can meet as early as Friday, and the Sena- tor from Kansas and, I think, the Sen- ator from Minnesota, who is chairman of the subcommittee, are certainly willing to commence hearings soon after we return. The Senator from Kansas may be tied up on withhold- ing, but I am serious about the com- mitment, I can tell the Senator from Pennsylvania. I have tried to make my case. Again I cannot quarrel with those in the White House who have overall respon- sibility because they just have not had time to focus on it. They do not suggest that ours is a bad idea. They just have not had a chance to make a judgment. So what I hope we would do is to make it clear this evening, as we have-I think the record is very clear-that we are going to move ahead with or without a stamp of ap- proval. Mr. SPECTER. Will the Senator from Kansas yield for a question? Mr. DOLE. Yes. Mr. SPECTER. What timetable would the Senator from Kansas be willing to commit to move ahead with or without a stamp of approval from the administration? Mr. DOLE. In visiting with White House officials today, they indicated March 29, 1983 they would be prepared to come for- ward and help us-that is not to say they will agree with everything we do-to put together a package in the immediate future. I assume we are talking about some time right after we come back. Mr. SPECTER. Would it be possible to have such a meeting with the White House officials yet this week on Friday, as was originally stated, and have a commitment for hearings for the week when we . return, which would be Tuesday, April 5, sometime during that week? Mr. DURENBERGER. Mr. Presi- dent, keeping in mind that the week we come back I have 3 days of hear- ings in the Governmental Affairs Committee, if it would not be too much trouble to the Senator from Pennsylvania to use the second week after we come back, I cannot recall what we are having that week, but we will try to postpone those, and I would be happy to do it in that second week. Mr. SPECTER. If the Senator from Minnesota would commit to that kind of timetable and if we could meet on Friday with the administration offi- cials. Mr. DOLE. Mr. President, the Sena- tor from Kansas will be in town Friday and certainly will be willing to arrange a, meeting with the appropriate offi- cials. I understand Secretary Heckler has made a number of calls today. I was not able to return the calls, but I think she has indicated an interest in us not moving ahead tonight, but at least some commitment that she would be helpful. Mr. DURENBERGER. The Secre- tary made that commitment to me and she may have to the Senator from Pennsylvania, also. I am available on Friday. Mr. RIEGLE. Will the Senator from Kansas yield? Mr. DOLE. Yes. Mr. RIEGLE. Would. the Members on this side of the aisle who happen to have an interest in this matter have an opportunity to participate in that meeting? I do not presume we would not, but I would like to make sure that we have a chance to participate. Mr. DOLE. Mr. President, I was only responding to the question of the Sen- ator from Pennsylvania. Obviously, as far as this Senator is concerned it would include everybody who has an interest. There may come a time when we will have to visit privately with the administration, as you will under- stand. But I have no pride of authorship. I think there is a need that must be served. So the Senator from Kansas believes this is the best way to pro- ceed. We believe we have a good idea. The Senator from Michigan has good ideas and other Senators have good ideas. But it may take some refine- ment. Obviously, it will take some hearings, bringing in the private Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3756 CONGRESSIONAL RECORD - SENATE March 23, 1989 going to press it, but I wanted to dis- change included in the package, I be- cuss it, as other Senators do with lieve that it is probably the best com- amendments. Most demand rollcalls. I promise possible-one that is fair to have not done that. I am going to recipients as well as workers paying withdraw the amendment. taxes. The PRESIDING OFFICER. The Social security is a vital part of the Senator has a right to withdraw the fabric of our society. It is the best ex- amendment. The amendment is with- pression of community that we have- drawn. with workers willing to pay in because Mr. SPECTER. Mr. President, we they expect there will be others sup- have consumed 37 minutes, perhaps porting them when they reach retire- now up to 42 minutes, not at the most ment. Over the past I % years I have convenient hour, but there have been held social security conferences many of us who have been waiting for throughout New Jersey for senior citi- several days to have this amendment tens-both to lay out the facts about heard. I understand that I have a the present crisis and to get reaction right to offer an amendment if I to possible suggested proposals and to choose to do so. But, with the assur- involve them in arriving at a solution. ances that have been made here this The participants in these forums have evening about a specific timetable, a generally agreed that all citizens- meeting with the administration on social security recipients and taxpay- Friday, the commitment to hearings ers-must share the burden of keeping by the subcommittee during the week the system solvent in years to come. of April 11, and the commitment by And Mr. President, I believe that the the Senator from Kansas that he will reform legislation generally meets the move ahead at an early date with or criteria established by participants in without administration approval, that these forums for a fair'solution. If ev- is satisfactory to the Senator from eryone had refused to make any sacri- Pennsylvania. fice the check would not go out this Mr. BAKER addressed the Chair. July. But because everyone has seen The PRESIDING OFFICER. The the need to pitch in we will resolve majority leader. this problem and keep this important Mr. BAKER. Mr. President, I hope life support system going. We will we can finish now. I do not know what have saved social security. other amendments are scheduled, but Mr. President, this legislation is I think we are close to the end. I urge based largely on the recommendations any Senator who has an amendment made by the National Commission on to come quickly to the floor and offer Social Security Reform. Both the it. Senate and the House versions of the Mr. BUMPERS. Third reading. reform, legislation closely follow the Mr. DOLE. Mr. President, I do not Commission's recommendations. The want to upset anybody over here, be- four major provisions included in the cause those of us who have to go to bill are as follows: conference have some things to do, First, delaying cost of living adjust- also, ments. Beginning this year, the COLA I understand the Senator from New for social security benefits will be de- York, Senator D'AMATO, sent word layed by 6 months. Under the current that he might have an amendment. law, COLA's are paid in July; from Has that been taken care of? now on, COLA's will be paid in Janu- Mr. LONG. It is my understanding ary. that the Senator from New York does Second, taxing social security bene- wish to make a brief statement, but he fits. The bill includes the provision is not going to insist on offering his that social security will be subject to amendment. income tax based on thresholds of Mr. CHILES. Mr. President, we $25,000 for single taxpayers and should make sure. If the Senator from $32,000 for married taxpayers. To de- New York sent word that he would termine whether the taxpayer's have something, I think we ought to income exceeds these thresholds, one- wait a while for him. half of social security benefits would Mr. DOLE. The Senator has the be added to adjusted gross income. For same rights as any other Senator. taxpayers over the threshold, one-half Mr. LONG. Might we just take a of social security benefits would be moment to have someone check with subject to income tax. the Senator from New York? Third, coverage of nonprofit employ- Mr. BRADLEY. Mr. President, we ees and newly hired Federal employ- have worked hard to resolve a very dif- ees. The bill extends social security ficult problem-how to find the money coverage as of January 1, 1983, to all to save one of our most basic institu- persons who work for nonprofit orga- tions-the social security system. None nizations and to all current members of. the choices are painless, none are of Congress, the President, Vice Presi- particularly pleasant. I have made dent, and the Social Security Commis- clear from the beginning that we must sioner. In addition, all new Federal develop a solution in which everyone and congressisonal employees hired is asked to share a part of the burden. after 1983 will be covered by social se- And I believe that the bill before us is curity as soon as supplementary civil a reasonable attempt to do just that. service retirement plan has been devel- Everyone is asked to sacrifice a bit. oped for them. To alleviate the fears While I do not support each and every of Federal workers that the current civil service retirement system will go bankrupt, the bill includes a provision which I cosponsored that: Nothing in this act shall reduce the ac- crued entitlements to future benefits under the Federal retirement system of current and retired Federal employees and their families. The full faith and credit of the U.S. Government is pledged hereby in sup- port of the payment of said accrued entitle- ments. Fourth, increased payroll taxes. The bill includes a provision to move the scheduled 1985 tax increase to 1984, with a tax credit to offset the increase. In addition, the 1985-87 tax rate would remain as scheduled under pres- ent law, part of the 1990 rate would be moved to 1988, and the rate for 1990 and after would remain unchanged. Mr. President, the bill includes two other major provisions to resolve social security's long-term deficit prob- lem. The first provision relates to increas- ing the retirement age. The bill gradu- ally raises the social security retire- ment age to 66 by the year 2012, begin- ning with those who attain age 62 in 2000. Early-retirement benefits would continue to be available at age 62 for workers and spouses and at age 60 for widows and widowers, but the benefit reduction for early retirement would be larger. The minimum age for eligi- bility for medicare benefits would con- tinue to be tied to the age at which unreduced retirement benefits are first available. The second provision reduces by 5 percent the initial social security bene- fit level for workers that first become eligible for social security benefits in the year 2000. - Mr. President, as I stated earlier, I do have some strong concerns about some parts of this proposal. One of my deepest reservations about the reform package relates to taxing social security benefits. The provisions in the bill amount to chang- ing the rules after the fact. -People who have already retired made finan- cial decisions during their working lives based on the premise that social security benefits would not be taxed. Now we are changing the rules after the fact-for people who have already retired. If we must to tax benefits, I believe that the fairest way would be by ex- cluding from taxation people who have already retired or who are about to retire-for example, people who are 55 years of age. and older. But given social security's severe fiscal problems, such a proposal was never given seri- ous consideration by the Congress. I offered an even more modest amend- ment in committee that would only tax social security benefits after the person has received back in benefits all that he or she paid into the system, plus interest. This seems to me to be the minimal acceptable proposal for taxing benefits; unfortunately, the amendment was also not accepted. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 2S, 1989 CONGRESSIONAL RECORD - SENATE Mr. President, another area of con- cern to me relates to increasing the re- tirement age. It seems to me that if we must raise the social security retire- ment age we need to develop a safety net for older workers who, for health reasons, simply cannot keep working. I offered an amendment on the Senate floor that would have estab- lished a new social security program to aid older workers with major health problems. Under the proposal, begin- ning in the year 2000, a limited number of workers between the ages of 62 and 66 would have received a new "disability-retirement" benefit if they were unable to work in their cur- rent occupation because of poor health. - I believe that it is imperative that we take this step in conjunction with any increase in the social security retire- ment age. If the retirement age is in- creased, as now seems inevitable, it will mean a hardship for many older workers who cannot stay in their jobs because of poor health and also can not qualify for regular disability insur- ance benefits. These workers should not be shortchanged in any way, but that will happen in a lot of cases unless steps are taken to protect these workers. My amendment would have allowed workers to qualify for these benefits if they could demonstrate inability to perform the major occupation they had held in the recgnt past. Benefici- aries for this program would have been paid the benefits they are enti- tled to under the current social secu- rity law. In effect, these workers would be "held harmless" to the pro- posed increase in the retirement age and reduction in early retirement benefits. Mr. President, a majority of the members of the Social Security Com- mission, including Senators Dots and Haxxz, recommended that the retire- ment age be raised. In addition, these same recommended a liberalization of the disability program for those aged 62 and above. I quote from the Commission Report: Disability benefits are now available under somewhat less stringent definitions for those aged 60 to 64. However because some workers, particularly those in phys- ically demanding employment, may not. benefit from improvements in mortality and be able to work longer, we assume that the disability benefits program will be improved prior to the implementation of this recom- mendation to take into account the special problems of those between age 62 and the normal retirement age who are unable to extend their working careers for health rea- sons. Mr. President, the Senate bill only raised the retirement age-it did not make improvments to the disability program. Unfortunately, my amend- ment, which merely followed through on the recommendations made by a majority of the members of the Social Security Commission, was not adopted by the Senate. Instead the Senate has requested that a study be conducted to determine how to best deal with the problem. I am hopeful that a measure similar to mine will be adopted by the Congress. prior to the implementation of the increase in the retirement age, and I will continue to press for its pas- sage. Mr. President, there is one other provision included in this bill that I 'strongly oppose. The Senate Finance Committee included a provision that would allow the Secretary of Health and Human Services to scale back or even eliminate social security COLA's if the trust funds are running low. I- oppose this idea for two reasons. The first and most important reason is that the proposal is unfair to social se- curity recipients; benefits may be cut over time if we are faced with another economic period similar to the past 5 years-high inflation coupled with slow growth. The second reason why I oppose the provision is that it ties the hands of future Congresses in dealing with po- tential funding problems. During com- mittee consideration of the social secu- rity reform legislation, I offered an amendment which was not adopted that would have allowed the Social Se- curity Administration to borrow from general revenues if the trust funds run out of money. My amendment also re- quired the Congress to develop a plan for repayment of the borrowed funds, leaving the decision as to how to repay the funds up to future Congresses. I believe that my approach is fairer than the one adopted by the Senate. A person's benefits should not be arbi- trarily cut back without serious con- gressional debate. Mr. President, the House did not in- clude a provision for cutting COLA's in future years if the trust funds run low. And the Commission did not rec- ommend cutting future COLA's. I hope that the conferees realize the se- rious mistake that has been made, and I hope they strike this provision from the final bill. The financing of the social security system is extremely sensitive to the health of the economy. Recently, high unemployment reduced the number of people paying taxes into the trust fund while high inflation caused social security benefits to rise. That combi- nation of high unemployment and in- flation has caused a serious, Immedi- ate cash-flow problem that needed im- mediate attention. It is my belief that the legislature changes included In the reform package should be sufficient to solve this cash-flow problem, so long as the economic picture continues to gradually improve. But some people are afraid that we have not made sufficient changes to keep the system afloat. They believe that the social security system is fun- damentally flawed and that the pro- posals included in this reform package only delay for a few short years the final day of reckoning. I simply do not agree with this assessment. Social se- curity is a sound and durable system that has worked well for the past 45 years, and with these adjustments, should continue to work well for the next 45 years. Mr. President, it is my belief and my hope that this social security reform package will eliminate the current un- certainty about the future of social se- curity and assure continuation of one of the most significant achievements of the 20th century. As long as we all work together, social security will con- tinue to provide benefits to our chil- dren's children. The Congress, through its work on social security, is showing that it can grapple with a very serious issues in a fair and sound way, which should give us confidence as we face the challenges of the 1980's and 1990's. Mr. GORTON. Mr. President, I wish to voice my strong support for the bill now before the Senate with one sig- nificant reservation. H.R. 1900 will im- plement the recommendations of the National Commission on Social Secu- rity Reform. The Commission was charged with restoring the short- and long-term solvency of the social secu- rity system. Its recommendations do so without altering the system's basic financing and benefit provisions, and in a manner which is responsive to the needs of all aspects of American soci- ety. Moreover, the reforms in this bill added to the Commission's recommen- dations add to its responsiveness and long-term soundness. The importance of social security to its beneficiaries-present and future- cannot be overstated. Monthly social security checks are the primary-if not the only-dependable source of income for millions of Americans. The system assures active workers and their families of financial protection in case of their disability, retirement, or death. Obviously, public support for a viable and fair social security system is overwhelming. The Commission actually was charged with two problems. First was the financing issue; second, the need to restore the public's confidence in the system. Using reasonable economic and demographic assumptions, the Commission put together a package which meets both goals: fiscal and po- litical. The bill before us, which em- bodies this package, with the excep. tion of the Long amendment, together with amendments proposed by Con- gressman Pxcxaa, Senator Dote, and Senator ApmsTRoxa, strikes a good bal- ance between the financial needs of social security beneficiaries and the need to limit the burden placed on workers and employers who finance the system through payroll taxes. The passage of this bill will renew the con- fidence of all Americans in social secu. rity. Mr. President, it Is also appropriate to comment on the process which has led to the consideration of - this bill. Passage of the 1983 social security Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3758 CONGRESSIONAL RECORD - SENATE amendments will demonstrate that our democratic political system works and works well Everyone who cared to participate has been heard, and the result is a bill which responds to the concerns and the needs of all citizens. Significant differences of opinion have been resolved. Guidance from the President and the leaders of Congress was essential to this result, as was the participation of the nonelected mem- bers of the Commission who repre- sented important constituencies. Equally valuable to the process was the dedication of experts and ordinary citizens alike who made their views known to the Commission and to their elected representatives in Congress. The distinguished chairman of the Committee on Finance, Mr. Dora, de- serves the special recognition of the Senate. The Senator from Kansas con- tributed mightily to the compromise package before us today. In my view, his work, in collaboration with the other members of the Finance Com- mittee, most particularly Senator Aunts owo and Senator MorxuAx, has resulted in a bill which improves upon the work of the Commission, on which he served, and on the measure already passed by the House. I com- mend the Senator from Kansas for his work and leadership. Mr. President, in terms of the future solvency of the social security system and the equity of the proposed changes, the package before us was to- tally sound and deserving of support before the adoption of the Long amendment. That amendment, which destroys the consensus which created this package, effectively strips from the bill the mandatory coverage of future Federal Government employ- ees. That, in turn, means that the sol- vency of the system is not assured and thus that recipients of benefits may have those benefits threatened before the end of the 1980's. Moreover, the Long amendment undercuts the vital principle of universal coverage. The Long amendment seriously calls in question the long-range soundness of the bill. Because of my belief that the conference committee will drop or correct the Long amendment, I remain firmly in support of the bill. What remains for Congress to ad- dress, however, are features of the social security system which may well remain unsound and flawed. These problems relate to the fundamental design of the system and its relation- ship to the Nation's economy. Let me briefly discuss these short- comings. The automatic growth fac- tors built into the social security system trouble me. Benefits of current recipients grow without congressional action. But these escalators also will cause the initial benefits of future re- cipients to increase in real terms well above levels paid today, and well above those that can be supported by today's contributions, even with the modest reductions ? included in the bill before us. These automatic, uncontrolled in- creases led. in large part, to the solven- cy problem addressed by this bill. My reservations about the automatic benefit increases of the social security system run deeper than simple dismay over the short-run solvency problem they caused. These escalators-in social security and many other Federal programs-pose a threat to the solven- cy of the Federal Government. The enormous budget deficits we face today are ample proof of that fact. The ability to alter spending programs is a fundamental attribute of free gov- ernment. The features of the social se- curity system which lead to these un- legislated increases encroach on this necessary function. Reform of these escalators must be addressed in the future. I am also unconvinced that we have dealt adequately with the increasing long-run system costs which stem from the advancing average age of our population. This bill does include a 1- year increase in the retirement age which will take full effect in 30 years. As this change is part of the compro- mise which enables us to have such a fine package before us, I do not want to press debate on this issue now. Per- haps we should, however, reexamine the merits of having a fixed age of "normal" retirement which does not respond to the inevitable trend of our population toward longer lifespans. The present system also fails to rec- ognize the changes which have oc- curred in the roles women play in soci- ety. The benefit structure is based on the assumption that families are com- posed of a single wage earner and-a de- pendent spouse.' This assumption is naive by today's norms, and is becom- ing increasingly outdated. I would be receptive to reforms in the system which were developed from careful study of women's increased participa- tion in the labor force and the growing frequency with which they live inde- pendently or are heads of households. I call on women's groups and other af- fected parties to come forward with proposals which are designed with an eye sensitive to both costs and bene- fits. The final structural problem of the social security system I want to discuss was acknowledged but not addressed by the Commission. The Commission's recommendations affect the oper- ations of only two of the system's four trust funds. Nonpolitical experts point out that the long-term deficits facing parts A and B of medicare-the social security system's other two pro- grams--are at least as large as the funding shortage in the combined re- tirement and disability programs which are addressed by this bill. Title III of this bill phases in a revamped hospital reimbursement system. The theoretical incentives of this system bode well for the future, but are un- tested. And the system is designed to be "budget neutral" in the near term. Although individual hospitals will ex- perience changing medicare revenues, March 23, 1989 aggegate Federal spending will not change markedly. This is only a first 'step toward better health care policies at the Federal, State, and local levels. Such improvements are necessary to slow the growth of health care spend- ing, as well as to preserve the solvency of the medicare trust funds. In summary, Mr. President, I would like to reiterate my support for this bill. We have addressed the immediate problems before us in a responsible manner. The public should be assured that we are taking action which will yield a solvent and more affordable social security system. But we will not have served our Nation well if we are content to stop with the reforms con- tained in this bill. The issues which I have identified must be given careful attention. Mr. DzCONCINI. Mr. President, I intend to cast my vote today in favor of final passage of S. 1, the Social Se- curity Act Amendments of 1983. This is a difficult vote for me to cast be- cause I continue to have reservations about some elements of the bill. On balance, however, I believe that the legislation should be passed and that it will significantly add to the final stability of the social security system. Most Americans regard the social se- curity system as the single most im- portant Government program. Origi- nally conceived as a retirement supple- ment, it has for millions become either the sole or at least the primary source of retirement income. Because social security is so fundamentally impor- tant, I am absolutely committed to in- suring its financial integrity. And that is precisely what S. 1 does. As in any piece of major legislation, the many provisions represent com- promises between differing points of view and a balancing between differ- ent interests. On the whole, this legis- lation succeeds in the dual goals of ef- fectiveness and fairness. With the en- actment of S. 1, the future solvency of the social security system will be as- sured for the foreseeable future. During the last Congress, the admin- istration proposed solving social secu- rity's financial problems by reducing benefits. Indeed, it succeeded in per- suading Congress-over my opposition and that of a number of colleagues-to eliminate the minimum benefit. A few months later, Congress reversed itself and decided to find an equitable solu- tion. A National Commission was es- tablished to study the problem and propose a legislative solution. The members of that Commission met for many months, listening to all points of view, and ultimately crafted a compromise proposal which is trans- mitted to Congress. That document became the starting point for Senate Finance Committee hearings which re- sulted in the legislation before us today. It is in order, Mr. President, to con- gratulate not only the members of that Commission but my colleagues on Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 23, 1988 CONGRESSIONAL RECORD - SENATE the Senate Finance Committee. espe- cially its chairman. Senator Dais, and its ranking member, Senator LONG. Whether we agree on every point or not, I doubt if anyone can legitimately accuse S. 1 of fundamental unfairness. I have been an avid opponent of cuts in social security benefits for the simple reason that too many retired Americans need that income to sur- vive. My opposition to cuts has contin- ued during the Senate deliberations on S. 1. My preference is to balance the books by other means, primarily through various revenue-raising de- vices and interfund borrowing. In sum, Mr. President, this legisla- tion is both fair and reasonable. I be- lieve that the present legislation keeps benefits intact and, more importantly, it retains the principle of readjusting benefits to keep pace with inflation. Had I been its sole architect there are things I would have done differently. But, on balance, it should be support- ed. (By request of Mr. Loxa, the follow- ing statement was ordered to be print- ed in the Racoon:) t Mr. HOLLINGS. Mr. President, it was only in 1977 that Congress last en- acted a social security reform bill. A bill, we should all remember, that was to put the system on a firm financial footing for at least the next 50 years. Unfortunately, that reform lasted only 5, not 50, years. And, more unfortu- nately, there are parallels to that ear- lier, failed effort in this present legis- lation. First of all, this bill relies too heav- ily on tax increases. In 1977 we en- acted the largest tax increase in our history, only to be here a few years later to add on more. Fully two-thirds of the total fiscal impact of this legis- lation is due to tax increases. Mr. President, the problems of social security are not due to people paying too few taxes. Indeed, the average American now pays more in social se- curity taxes than he does in Federal income taxes. The maximum social se- curity tax quadrupled in the 1970's, and it will triple again in the 1980's. Surely, this trend cannot continue. And more assuredly, it cannot contin- ue without serious economic and social consequences. The tax increases in this bill will mean fewer jobs during, the next few years-perhaps as many as 100,000 to 200,000 Jobs according to economists that I have spoken to. In addition, it burdens our current and future workers-our children and grandchildren-with the bulk of the fi- nancial cost of this compromise. These taxes will be with them for life while- changes such as the cost-of-living delay will only be temporary. And it is this imbalance that has led such groups as the American Association of Retired People and the National Alli- ance of Senior Citizens To Oppose the Higher Payroll Taxes. Furthermore, Mr. President, this legislation disrupts many of tl}e funda- mental principles that are the founda- tion of our social security program. For example, it begins a means test on benefits and .it taxes benefits for the first time. it also infuses general rev- enues into the system and thereby erodes the distinction between social security and welfare. And, finally, it increases the retirement age for our elderly. Those people who need to or want to retire at our established re- tirement age will no longer be able to do so without a penalty. While all of this is bad enough, it is intolerable in view of the fact that a fair and efficient alternative exists. For the past 2 years now I have advo- cated a temporary freeze in cost-of- living adjustments as part of a total Government-wide freeze on expendi. tures. Such a proposal would restore social security solvency and I am sure, from conversations that I have had with retirees, that most people would be willing to give up a bit of their COLA if it insured that the system would survive. Also, such a proposal would not make drastic cuts in basic benefits or the retirement age-it only slows up the increase in benefits. And, finally. it restores some equity be- tween retirees and the workers who now support the system but who do not get automatic COLA's on their wages every year. Mr. President, it is heartening to see bipartisan agreement on the social se- curity problem. But it does us no good to agree on a set of poor, policies. In 1977 we tried to get out of a similar fiscal dilemma by relying onitax in- creases and failed. For the past 2 years both parties have avoided addressing the root causes of social security's-fl- nancinftroblems and we are now only delaying the day of reckoning. Indeed, this compromise appears to be bits and pieces of the worst of all suggestions- massive tax increases that penalize the young, benefit taxes that penalize the retiree, retirement age increases that penalize the blue collar worker, and general revenue funding that penalizes the dignity derived from an insurance program, not welfare. We certainly can do better than that. We do not need more partisan politics, but we also should not be rub- berstamps to poor policy. We owe more to current retirees, current work- ers, and future generations than an- other round of stopgap, shortrun rem- edies. For all these reasons, Mr. Presi- dent, I oppose this legislation.* Mr. HELMS. Mr. President, I am obliged to vote against H.R. 1900 the Social Security Act Amendments of 1983, because I am convinced that the bill will not solve the social security crisis. It is a bandaid, pure and simple, and while it might patch up the pres- ent system and pay the bills for a few more years, it does not address the long-term problem. I commend my good friend, the dis- tinguished Senator from Kansas (Mr. Dols), for his diligent work on this bill. He has done his best to work out the problems in difficult circum- S 3759 stances. I also commend the Senator from Colorado for his interest in real reform. But this bill simply does not go far enough. I predict that within a short time, the social security system will face an- other funding crisis that will make the present one seem mild by comparison. Already, there is a commission study- ing ways, to avert a medicare funding crisis. In an likelihood, the panel will recommend still higher taxes, benefit cuts, or both. However, Mr. President, I am pleased that 11 of the 20 provisions in the comprehensive reform bill I intro- duced a month ago are in this bill. These 11 provisions address a number of substantial problems. Unfortunate- ly, they do not address the long-term social security funding problems. This bill does little to provide Americans the retirement security they so badly need. Let us examine for a moment how this bill addresses the looming social security crisis. First, it raises payroll taxes signficantly. We have Just com- pleted work on the so-called jobs bill, which provides almost $5 billion for porkbarrel, make-work projects.. If- Congress is so concerned about Jobs, why is it raising the payroll tax when the Congressional Budget Office has told us the 1977 payroll tax increase cost 500,000 working men and women their jobs? The American people cannot stand another round of tax increases. If any- thing, we should be talking about cut. ting taxes. The bill also reduces social security benefits by raising the retirement age, postponing cost of living adjustments, and so forth. The U.S. Government has a commitment to millions of social security beneficiaries-a commitment that ought not be broken. But here is Congress, breaking that trust. Any government that cannot keep its com- mitments cannot maintain its credibil- ity. This bill does not solve underlying problems. It is merely another bailout, and I predict it will be just another disaster. Just like 1977. The bill does not provide for any long term means of establishing private, fully funded retirement plans to ensure the secu- rity of elderly Americans. It does not eliminate the dependence people have on government programs. Mr. President, my colleagues are aware of what I have tried to do to help solve the social security problem. I offered a comprehensive plan to save social security-S. 541-that would have allowed workers to establish for themselves in the private sector an In- dividual Retirement Security Ac- count-IRSA. These IRSA accounts would have accumulated billions of dollars for individuals to draw on when they retire, stimulating the economy by lowering interest rates and creating jobs. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S3760 CONGRESSIONAL RECORD - SENATE Mr. President, obviously Congress is not yet ready for such a reform. I am pleased that this bill requires the Treasury Secretary to conduct a study of the feasibility of my proposal, and to report back to the Senate Finance Committee by July 1, 1984. Perhaps then the value of my proposal will become clearer. Thousands of citizens across America have endorsed my pro- posals. Mr. President, I believe in incre-. mental success. I intend to continue to advocate my reform proposal. Progress has been made, and I believe the American people now understand my proposal. Judging from the mail I have received on the subject, they not only understand it, but they want it. One dory, Mr. President, Congress Will no longer be content to "paper over" the social security problem. It will be obliged to adopt a private re- tirement system along the lines of my proposal to replace the bankrupt Gov- ernment-run system we have today. If we begin to take prudent steps now, however, the transition will be smooth and gradual and not a penny of bene- fits will be jeopardized Mr. HATCH. Mr. President, I cannot support H.R. 1900 which is alleged to restore the financial soundness of the old age and survivors' insurance- OASI-program. The recommendation of the Nation- al Commission on Social Security Reform provided a good point from which to begin. The changes made in the House of Representatives gradual- ly raising the retirement age were in the right direction. They reflect cur- rent demographic reality but standing alone do not overcome the quick-fix solution contained in the bill being touted as a bipartisan solution to a se- rious problem. Mr. President, in my view the funda- mental structural deficiences of social security were not addressed. Instead we further increased the regressive payroll tax; introduced a back door means test in the method by which benefits are taxed; increased the use of general revenues to fund social se- curity and created a break in parity in employer-employee PICA tax contri- bution. Mr. President, my colleague Senator AsM$TaoerG, a member of the National Commission and chairman of the Sub- committee on Social Security of the Committee on Finance, has indicated that high taxes account for 75 percent of the proposed deficit reduction in the system between now and 1990. That is $126 billion out of the $169 bil- lion total. In the long run, tax in- creases constitute 91 percent of the Commission's total recommendation. Further, during the 1970's, maxi- mum -payroll tax rates quadrupled. Without the Commission's recommen- dations, they are scheduled to triple again during the 1980's. During the period from 1970 to 1981, pretax wages increased 122 percent. The consumer priced index went up 136 percent. Social security benefits rose 205 per- cent. Such trends make it almost im- possible to justify further payroll levies on wage earners, many of whom already pay more in social security taxes than Federal income taxes. It is obvious that higher payroll taxes will have a serious effect on un- employment. As employers also pay social security taxes equal to what their employees pay, the tax rate in- crease will raise the cost of employing each worker. These higher labor costs will make the employment of labor relatively more expensive than the employment of capital in the produc- tion process. Since labor is now more expensive, employers will tend to reduce the amount of labor they use and increase the amount of capital used. This substitution of capital for labor, due to higher labor costs caused by the increase in social security taxes, will contribute toward increasing un- employment. Mr. President, the bill provides for the taxation of benefits and thereby penalizes those who save, and rewards those who do not. It penalizes a dis- abled Individual by taxing his benefits if his spouse takes a job to help pay for his special needs, thus raising the family income above the tax thresh- old. For some individuals now at the earnings limitation level, the combina- tion of taxes and loss of benefits re- sulting from additional earnings could actually exceed 100 percent of those earnings. This is a strong disincentive for those who otherwise want to con- tinue working to supplement their income. This provision radically alters the fundamental nature of the system by imposing a means test. Even worse, this particular form of means test vastly overemphasizes the social ade- quacy features of social security and reduces the individual equity element which is so essential to the credibility and popularity of the system. Mr. President, the bill further changes the nature of our social secu- rity system by its use of general rev- enues. This is an abrupt deviation from the discipline of a self-contained system, recognized as being essential in the original design of the program. It is also a fiscally irresponsible change, given the projected deficits in the Federal budget for the foreseeable future. The injection of general revenues, without any significant structural reform to restrain the growth in bene- fit outlays, creates serious questions regarding the ability of workers to sus- tain the system in the future. Finally, Mr. President, this bill de- stroys the parity of treatment between employers and employees. In order to ease or partially cushion the impact of higher payroll taxes, the bill provides employers with a credit against pay- roll tax and eliminates the parity of cost. Traditionally, the employer and the employee have shared the cost burden March V, 1988 of the system. The tax on earnings covered by the system was to be com- puted on the same basis and the same rate for employer and employee alike. If we are serious about providing a cushion to the employee we would not accelerate the payroll tax increases that were enacted in 1977. Mr. President, in summary, the bill fails to address squarely the problems which remain in place in the social se- curity system. The bill merely focuses on symptoms while allowing the basic problems to continue to grow un- checked. By relying upon general revenues and new payroll taxes, we have squan- dered a historic opportunity to bring about the structural changes which would provide greater assurance of stability in the system for the future. That stability can come about only by altering the basis structure of the program, by designing a system which relates benefits more directly to taxes paid by an individual. SOCIAL SECURITY: A NATIONAL COMkITMENT ? Mr. JEPSEN. Mr. President. I sup- port the social security reform pack- age put together by the Senate Fi- nance Committee. I believe it is a sound package which will go a long way toward restoring our Nation's con- fidence in this very important pro- gram. It has been a long and sometimes rocky road we have followed to this point, Mr. President. As you will recall, it was only a few short months ago that many in Congress were still trying to convince the American people that there was not a problem. But through the dedication and deter- mination of those people who faithful- ly served on the National Commission on Social Security Reform, we were able to come up with the basis for this proposal. As the legislation has worked its way through the legislative process, I think changes have been made which make this a much stronger package. While there are still a number of changes which I do not personally believe are necessary, I, like so many others, am willing to support those changes in the interest of securing the long-term sol- vency of the social security system. I would like to take a few minutes, Mr. President, to speak briefly about some of the changes which I believe are of utmost importance. EARNINGS LIMIT REPEAL During the Senate Finance Commit- tee's deliberations, Senator ARM- sTROxG offered an amendment to phase out the social security earnings limitation. I cannot tell my colleagues how extremely important this change is to the future of social security. As my good friend from Colorado knows, I have been working to get the earn- ings limit repealed since shortly after I was elected to the U.S. Senate. While I would prefer to see the ceiling lifted sooner than the bill specifies, I am Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 23, 1983 pleased that the oommitte was at least willing to take this important step. In conjunction with the earnings limit repeal is another important change, and that is the increase in the delayed retirement credit. This, com- bined with the earnings limit repeal, will be a strong incentive for people who want to continue working to remain In the work force. Although these two provisions have not received the media attention they deserve, I belive that history will show that- these changes will prove very signifi- cant to the long-term solvency of the social security system. I commend the Senator from Colora- do for his efforts on this Issue, and I look forward to working with him In the future on other issues of mutual interest. DROPOUT YRARS FOR CRUD CARS Another provision, also recommend- ed by the Senator from Colorado. deals with the Increase In the dropout years for child care. I was most pleased to see the committee's accept- ance of this proposal, and I commend Senator ARMSTRONG for having the foresight to offer this amendment In committee. For years, Mr. President, women have suffered significant losses of benefits because of time out of the paid work force during childrearing years. While this increase does not correct all of the inequities In the system, it is a start. I would hope that the committee will continue to consid- er further changes to remove some of the penalties married couples face with regard to the social security system. I understand that the Com- mittee has agreed to give serious con- sideration to Senator CRANsTON's earn- ings sharing proposal, and I think that is an Important step. I look forward to studying the committee's recommen- dations in this area. WIDOW (RR)5 AND DIVORCZD SPOUSES B 5 rLTm Another important change recom- mended by the committee deals with improved benefits for disabled widows or widowers and divorced spouses, as well as the ability of divorced spouses to receive benefits despite the retire- ment decision of the former spouse. Again, both of these changes are ex- tremely important In eliminating some of the provisions in the social security law which discriminate against women. While it Is true that the social secu- rity law is "blind" with respect to sex, it is also true that because of the his- torical makeup of this country's work force, there are certain provisions which impact more heavily on women than on men. More specifically, these are the provisions which deal with widow's benefits and spouses' benefits. I believe these changes are extremely important and will go a long way toward making social security a more equitable and fair system. PAn aArs/sTARn.Imd Psovssioxs Before concluding, Mr. President, I want to point out two additional CONGRESSIONAL RECORD SENATE S 3761 changes which are recommended by the committee which will perhaps do the most to restore confidence in the social security system: the fail-sate mechanism and the stabiliser pro* lions. As my colleagues know. the fail-safe. mechanism is intended to prevent the type of situation that forced us into the current reform proposal--chang- ing economic conditions. I cannot tell my colleagues how many times I have been asked by people why this reform package is necessary. After all, they state, we were told by President Carter that the system was solvent for the next 75 years. Well. unfortunately, the social secu- rity system is extremely sensitive to a changing economy. Prior to the Carter administration. the thought at prices Increasing faster than wages was simply unheard of. The sad fact is, it can and did happen. The fail-safe mechanism will not prevent prices from rising faster than wages, but it will help the social secu- rity system adjust if this continues to occur. Specifically. the Secretary of Health and Hunan Services will have the authority to reduce cost-of-living adjustments if trust fund reserves fall to dangerously low levels. In additionk the stabilizer provision will also change the way the cost-of-living ad- justment is computed It the trust fund reserves fall too low. Of equal importance, however, is the "catch-up" provision which will allow larger cost-of-living adjustments if the trust fund reserves exceed a certain level. This, Mr. President, will Insure that social security beneficiaries will be able to benefit from a strong econo- my. Clearly there were some other things which could have been done to further protect trust fund reserves frdml a changing economy, but as with many of the other changes, these are important first steps. If we did noth- ing else, we have tried to exercise some restraint on the cost-of-living adjust- ments, and I think this was extremely important. I close, Mr. President, by commend- ing all those people who served on the National Commission on Social Secu- rity Reform. Theirs was not an easy task. I dare say that at times it ap- peared impossible. But in the end, what some people said could not be done, has been done-a social security reform package with bipartisan sup- port has been brought to the floor of the Senate and it will be approved. If nothing else, I hope we have sent a signal to the American people that says that when the chips are down, we can join hands and try to resolve a na- tional problem in an honest and re- . sponsible manner.0 ? Mr. BOSCHWITL. Mr. President, almost 2 years ago, I began studying the social security program and sug- gesting ways to Insure its fiscal sound- ness and integrity. It became increas- ingly clear to me, through my work on the Budget committee, that serious thought and effort needed to be given to controlling the rate of growth of the so-called entitlement programs- particularly the nonmeans tested ones-social security, medicare, civil service, railroad retirement, veterans pension, and so forth. Social security is nearly half-43 percent-of all the entitlements combined. Total entitle- ments that cost $3e billion in 1961 Loomed to $350 billion in 1982-a 1,150-percent growth. I do not criticize the existence of these programs at all. They fulfill vital needs. Although It has traditionally been considered close to political suicide to even suggest slowing the growth rate of entitlement programs, I have be- lieved for a long time that If we do not do something, social security will not be around for the children and grand- children of those people receiving social security today, How did we get where we are? How did we get to the point where 63 per- cent of our workers, in a spring 1982 Oall_up poll, believe that they will get no benefits when they retire? There are several problems unique to the social security system that have caused us to be facing a short-term and long-term crunch. But, while we have many economic problems, the thread of inflation is interwoven In all of them-the social security' problems are no exception. What specific factors have led to social security's funding problems? First, when the system was in its early years there were many more people paying in per beneficiary draw- ing benefits: In 1945 there were 42 workers paving in for every 1 benefici- ary, currently the ratio is 3 to 1 and. when the baby-boom generation starts retiring in about 2013, it will bring the ratio down to only 2 to 1 by the year 2030. Second, people are living longer today, and consequently drawing bene- fits for a longer period of time than they did when the social security pro- gram was inaugurated. According to the Commission's report, men live on the average 15 years past retirement, and women 19 years; a lifespan in- crease of 20 percent over 40 years. Compounding this problem is the fact that more Americans are opting for retirement before age 65-96 per- cent. of Americans who retire, do so before age 65. Therefore, beneficiaries are drawing benefits sooner, and they are living longer, extending on both ends the period during which they re- ceive benefits. Third, the average social security re- cipient now gets back $5.60 for every $1 they put Into the system. Social se- curity is a pay-as-you-go system and was never intended to be a retirement system where social security taxes would build up In a pension fund for an individual or group to meet their eventual benefits, as it is in private pension funds. Nevertheless, a 5 to 1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3762 CONGRESSIONAL RECORD - SENATE March 23, 1989 payback ratio cannot be maintained sion's proposals and seven of my own. how much they earn. People under 72 while the ratio of workers to retirees Of the 12 possible solutions, only 2 lose $1 of social security benefits for declines to 2 to 1. were supported by less than half of each $2 of income they earn over And last, but certainly not least, the those responding. I--believe this dem- $6,600. My proposal would have ex- effects of inflation have been devastat- onstrates that if people are given a tended this to anyone under 75. ing to the OASDI trust fund. In 1975, chance to review some of the changes Ninth, tax social security payments we began to fully index benefits for in- in social security without the usual if the social security recipient has flation commensurate with increases politicking and demagoguery that ac- income exceeding $20,000 besides in the Consumer Price Index (CPI). companies them, they will make social security ($25,000 for couples). Certainly the goal of protecting thoughtful, reasoned judgments. The Tenth, raise the 65-year-old retire- beneficiaries from the effects of infla- dialog was heated at times, to be sure, ment age to 65 plus 3 months (and the tion is laudable, but we could not have but generally pretty constructive. 62 year early retirement age to 62 chosen a time in the history of our The thoughtful, pragmatic approach years plus 3 months). Nation when the cost-of-living adjust- taken by the National Commission on Eleventh, raise the retirement age to ments (COLA's) indexed to the CPI Social Security Reform, the House of 65 years plus 6 months. would have been more costly to the Representatives, and the Senate dem- Twelfth, lower the cost-of-living ad- social security system. onstrate that others have gotten the justment (COLA) to 3 percent less Since 1975 COLA's for all benefici- same reaction from the folks back than the inflation rate for 3 years, aries have cost the system more than home. except for the lowest 25 percent of $200 billion. We have experienced I am pleased to see that many of the social security recipients who would double digit inflation since COLA's changes suggested in my 19-point continue to receive the full COLA. were implemented; and the CPI, and "laundry list" have been included in Thirteenth, delay the COLA 3 consequently the OASDI benefit in- the social security reform package. months to October 1, to coincide with creases, have outstripped the increases The 19 possible changes I suggested the beginning of the Government's in average wages. The bottom line is were: fiscal year. that social security benefits have gone First, limit social security benefits Fourteenth, index "bendpoints" by up faster than the wages which pay paid to foreigners not living in the one-half of the wage index for 4 years. the benefits. United States. Fifteenth, eliminate survivor bene- No one would argue that social secu- Second, increase immediately the fits for minor children if the remain- rity recipients are getting rich. My number of quarters needed to qualify ing parent has income exceeding point is simply that when the amount for full social security benefits. $25,000. being paid out of the system is increas- Third, only allow 1 quarter's credit ing at a faster rate than the amount for 1 quarter's work. A quarter is cur- Sixteenth, lengthen the benefit com- coming in, we are jeopardizing the sta- rently measured as a 3-month period putation period by 3 years. Benefits bility and solvency of the social secu- during which a worker earns more are determined by applying a formula rity system. than $370. Suppose a worker earns to a worker's average monthly. earn- About a year ago, I prepared a $1,480 (4 times $370) in that quarter. ings over a certain period of time. In "laundry list" of ideas, consisting of 19 Under present rules a worker gets most cases the averaging period is the ways to slow the rate of growth of the credit for 4 quarters, even if he does number of years after 1950 up until social security system. I sent out not work at all the rest of the year. i the year the person reaches 62 less the 50,000 copies of my newsletter enti- proposed changing this rule, 1 quar- 5 lowest years. I proposed dropping tled, "Saving Social Security." Thou- ter's work should only get 1 quarter's only the 2 lowest years rather than sands of Minnesotans responded. credit. the 5 lowest. Most-not all-agreed with most of my Fourth, require all new government Seventeenth, eliminate parent's ideas. In fact, I received positive re- employees (Federal, State and local) benefit when the youngest child is age sponses from all over the country be- to pay into social security. This is a 6. The child would continue to receive cause the Minneapolis Tribune, the proposal that deserves serious consid- survivor's benefits until he or she is Washington Post and many other eration and presents an opportunity 18, but I proposed eliminating the sur- newspapers published my ideas. I tal- for Congress to examine the retire- viving parent's benefits when the lied the results of this poll. More re- ment system for Federal employees. youngest child reaches age 6-not 16. I cently I held town meetings through- Fifth, eliminate children's benefits felt this proposal acknowledged the out Minnesota to conduct further sur- for early retirees. If a worker takes major increase in the number of veys on the Commission's proposals as early retirement at 62 and has chil- women working in outside jobs. well as some of my own. I ask unani- dren under 18, the worker receives Eighteenth, expand workers' com- mous consent that the results of my benefits and the children receive sepa- pensation offset. About 165,000 people poll and surveys conducted at the rate benefits as well. I proposed not al- now receiving social security disability town meetings be printed at the end of lowing the children to get benefits benefits also receive payments from my remarks. until the retiree is 65, unless he or she other Federal programs: veterans com- The PRESIDING OFFICER. With- retired early for health reasons. pensation, civil service, military dis- out objection, it is so ordered. Sixth, increase the self-employed ability retirement benefits and black (See exhibit 1.) person's taxes withheld for social secu- lung benefits. All these benefits are Mr. BOSCHWITZ. The results of my rity by 2 percent, calculated without regard to what informal surveys taken at the town Seventh, give incentives to people to other benefits the person is receiving. meetings suggest that both retired and keep working beyond age 65 by in- After February 1981, people eligible ponretired people understand and ap- creasing benefits each year the person for social security disability payments prove of some reasonable modifica- works beyond 65. Specifically, my pro- have a "cap" on their total combined tions in the social security system de- posal would give an extra 5 percent benefits equal to 80 percent of their signed to make the system solvent. (105 percent of the regular social secu- average predisability earnings. I pro- The survey was taken of about 800 rity -benefit) if a person retires at 66; posed extending this provision to all people attending the town meetings in at 67 an extra 11 percent (5 percent recipients of social security disability Willmar, Worthington, Rochester, plus 6 percent); at 68 an extra 18 per- benefits. Duluth, and Roseville. I also made the cent (5+6+7 percent); at 69 an extra Nineteenth, increase the number of presentation to a group representing 26 percent (5+6+7+8 percent); and if required quarters in covered employ- the St. Paul Chamber of Commerce the worker retires at 70, an extra 35 ment to be disability-insured to 30 out and the Metro Senior Federation in percent (5+6+7+8+9 percent). of 40 quarters. To receive disability Minneapolis. Eighth, raise the offset age to 75. benefits, a person must have worked I presented 12 different proposals at Currently people over 72 who keep at least 1 quarter for each year of age the meetings-five of the Commis- working receive benefits no matter above 21 and have worked a total of at Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3764 CONGRESSIONAL RECORD - SENATE March 29, 1983 York (Mr. MoY Im I) both served significant degree that important and upon the National Commission on fundamental purpose. Social Security Reform and played an Mr. President, it Is also important to enormously important role In guiding point out what this legislation does this legislation through the Finance not do. It does not alter the funda- Committee and the Senate. Develop- mental structure of social security or tog a compromise proposal in an area propose Its replacement with some of many so deeply felt views is an awe- other system, as some have recom- some task and the mere fact that the mended. The Commission and the Commission was able to reach a com- Congress in passing this bill are reaf- promise is commendable in and of firming the basic soundness, fairness, itself. The Finance Committee's work and necessity of continuing the social adhered closely to the basic frame- security system. That message needs work of the Commission's proposal. to be communicated throughout the 'Mr. President, I also pay tribute to country. the distinguished Senator from Louisi- RAISING THE AGE OF RETIREMENT ana (Mr. Loxo), the ranking minority member of the Finance Committee. Senator LONG has contributed signifi- cantly to the refining of this proposal and I was pleased to cosponsor his amendment dealing with equitable im- plementation of the provisions in the legislation relating to coverage of Gov- ernment workers. As always, the expe- rience and wisdom of the Senator from Louisiana adds immeasurably to the legislation that emerges from the Senate Finance Committee. Mr. President, I want to also recog- nize the enormous contribution and leadership which has come from the distinguished chairman of the House Rules Committee, Representative CLAUDE PEPPER. Representative PEPPER has long been the outstanding ehampi- on of the needs of older Americans and his support for this proposal has influenced the views of many Mem- bers of the Congress. Mr. President, I intend to vote for H.R. 1900, as amended in the Senate. This is a decision I have not come to lightly. I have had, and I continue to have, grave reservations about certain aspects of this legislation. Certain pro- visions, if presented to the Senate alone, would not have my support. However, it is a reality of the legisla- tive process that compromises must be reached in order that important goals can be achieved. At stake here is the confidence of the American people in our ability to assure the continuation of the social security system. Social security affects the lives of every single American, whatever his or her age or walk of life. For older Americans, It is often the lifeline for basic survival. For young workers, it provides the security of knowing that they will be protected in the event of disability and in retire- ment. Every American has an enor- mous interest in the continuation and stability of the social security pro- gram, and each has an obligation to share in the process of restoring this important program to a stable and secure fiscal status. The legislation before us seeks to spread the burden of stabilizing the Mr. President, I do not intend to take the time of the Senate to discuss each and every provision of the legisla- tion. However, there is one provision that has caused considerable con- cern-the raising of the age of retire- ment to 66 after the turn of the cen- tury-which I wish to discuss. Mr. President, on January 26, I in- troduced legislation, S. 2, the proposed Employment Opportunities for Older Americans Act, which contains a number of provisions to encourage older workers to stay in the work force, particularly in part-time posi- tions. Public opinion polls over the past few years have demonstrated that older workers in - overwhelming num- bers would generally like to remain in the work force. Demographic data also clearly indicate that in the next cen- tury we will be entering a labor scarce era when the contributions of older workers will be greatly needed. I be- lieve that we ought to take every step possible to encourage employers to provide work opportunities for older workers and to encourage older work- ers to delay retirement. Two issues ad- dressed in S. 2-the increase in the de- layed retirement adjustment factor and modification of the earnings limi- tation test-are included in the legisla- tion before us today and are aimed at encouraging continued work effort by older workers. My bill focuses on creating incen- tives and eliminating or reducing disin- centives for delayed retirement; it did not, as does the present bill, reduce signficantly social security benefits for those who choose or must retire before age 66. I would prefer to follow the approach of S. 2-creating incen- tives, rather than penalties. I also think that it is unrealistic and inequitable to raise the age of retire- ment without taking the necessary steps to assure that the employment opportunities will be available for these older workers and that adequate protections are provided to those indi- viduals who will be unable to continue in the work force. The amendment offered by the Sen- ator from New Jersey (Mr. BRADLEY), social security program between the to establish a new disability program various segments of the population. for those over age 62 in ill health and While not necessarily agreeing with unable to continue in their prior occu- the exact balance reached. I recognize pational fields, but not disabled that this proposal does achieve to a enough to meet the current SSDI to- tally disabled criterion, would deal with a portion of this problem. Unfortunately, the Senate did not adopt this amendment. It is clear, however, that some type of protection along the lines proposed by the Sena- tor from New Jersey for workers who fall into this category must be devel- oped before the increase in the retire- ment age is implemented, and the amendment of .the Senator from Penn- sylvania to require a study of this matter should be helpful In moving toward the development and enact- ment in a timely fashion of provisions relating to early retirements forced by Ill health. There are other individuals, particu. larly older women and minority Indi- viduals, who are likely to lack employ- ment opportunities as older workers. We need to take new steps to make sure that all segments of our popula- tion will have equal access and ability to continue working if the benefits are to be reduced for retirement before age 66. If we fail to do this, we will- very unfairly-be simply reducing benefits for those who have no alter- natives to supplement their income. Fortunately, the effective date of the increase in the age for full bene- fits is almost two decades away- longer under the House bill-and there will be ample opportunities to reassess the impact of these provisions and our progress in rectifying these problems in employment opportunities before a new retirement age actually takes effect. However, I believe that it is in the interests of both our Nation and older workers themselves to begin a process of reevaluating our policies regarding retirement and older workers. Each year, thousands of older workers are forced against their wills out of the work force by mandatory retirement policies, age discrimination, and the existence of fiscal disincentives in public and private pension programs. I think it is time for our Nation to being to foster a new perspective on retire- ment that would be premised upon a shift from the concept of an abrupt, total withdrawal from the labor force to one of gradual withdrawal where older workers are afforded the oppor- tunity, if they choose, to reduce their work pace, shift to less demanding work roles, or participate in more flexible work schedules. My legisla- tion, S. 2, is designed to.encourage this shift and I intend to devote substan- tial effort to achieving its goals. In tie near future, I plan to reintroduce S. 2 in two separate bills so that the provi- sions which relate to matters within the jurisdiction of the Labor and Human Resources Committee will be separated from those within the juris- diction of the Finance Committee. If the two aspects of S. 2 in the legisla- tion before us today are enacted, those provisions will be deleted. I very much hope that both committees will con- duct hearings on these separate bills. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March 28, 1988 CONGRESSIONAL RECORD - SENATE Covsrtnas Or 1IDSRAL n[YLOYaaS Mr. President, I also have had strong reservations regarding the manner in which the committee bill dealt with Federal employees. The Commission recommended that new Federal em- ployees be brought into the social se- curity system, but also recommended the development of a supplemental civil service retirement program-like that available to private employees covered by social security-for Federal workers. The Finance Committee bill. however, dealt only with bringing new workers into social security; it pro- vided no assurances that a new supple- mental system would be developed or that the interests of present Federal workers in the existing civil service re- tirement system would be protected. I was therefore pleased to be an original cosponsor of the amendment offered by the distinguished Senator from Louisiana (Mr. LoNO) to delay bringing new Federal employees into the social security system until such time as Congress has provided a modi- fied Federal retirement system which coordinates benefits with the social se- curity system and protects the integri- ty of the Federal retirement system. I was delighted that this amendment was adopted. CONCLUSION Mr. President, as I stated at the outset, I will support the social secu- rity reform legislation. I have strong reservations about certain aspects of the package but, on balance, the enor- mous importance of demonstrating to the American people that the social security system will continue overrides the specific shortcomings in the pack- age. Mr. PERCY. Mr. President, I sup- port the Social Security Amendments of 1983 because they will restore fi- nancial solvency to the social security system and will, in future years, pro- vide the reforms necessary to insure the stability of the system for tomor- row's retirees. I want to commend all of those who have played a major role in fashioning this bipartisan, compromise package: Senator Dons, the distinguished chair- man of the Committee on Finance; Senator Hanvz, chairman of the Aging Committee, on which I have been hon- ored to serve for many years; Senators MOYNIHAN and ARMSTRONG and the other members of the Finance Com- mittee. Putting together this package re- quired making very difficult choices. I am not aware of one Senator that sup- ports each and every provision of the bill There are parts of it that I do not support. Many of my Illinois constitu- ents have serious concerns about var- ious provisions of the bill. I conducted a special survey of elderly Illinoisans- their concerns are quite evident. But even they as a group do not agree on which measures should be adopted. Given this disagreement on all parts of the bill and the urgency of dealing with the social security financing problem. H.R. 1900 Is a fair and rea- sonable compromise which should be supported. The Social Security Amendments of 1983 are a major accomplishment for two reasons. First, it will allay the fears of millions of elderly Americans who have been living for 2 years with a social security system teetering on the brink of bankruptcy. H.R. 1900 will insure the timely payment of all social security benefits from 1983 to 1989, the 7-year period for. which the National Commission on Social Secu- rity Reform has identified a $165 bil- lion deficit. Second, the Social Security Amend- ments of 1983 address the long-range deficit expected to occur under the ex. isting system when the baby boom generation begins to retire in the next century. Confronting this problem is even more significant because it has served to undermine the confidence and popularity the social security system has so long enjoyed. Recent polls have shown that three out of four people under age 45 believe the social security system will collapse before they reach retirement age. H.R. 1900 will eliminate the long-term defi. cit within a reasonable range of eco- nomic projections through several modifications in the system. Along with the automatie\stabilizers included in the bill, these reforms will avert funding crises like 'the one we now face. H.R. 1900 essentially embodies the recommendations of the National Commission on Social Security Reform. It is a solution that requires sacrifice on the part of all parties who have a stake in social security-cur- rent and future beneficiaries and tax- payers alike. Contained in the bill are measures which restore the solvency of the system for the foreseeable future with no benefit reductions in current social security benefit levels and no increases in payroll tax rates above those al- ready scheduled in the law. The bill reaffirms the soundness of the basic structure of social security by making balanced and minimal adjustments to provide immediate relief from the short-term financing problems and to restore the long-term solvency of the program. First, the bill would expand cover. age. Newly hired Federal employees, the President, Vice President, Mem- bers of Congress the Social Security Commission and employees of non- profit organizations would be covered by social security. State and local gov- ernments would no longer be granted the. privilege of opting out of the system. To deal with the problem that will exist as long as coverage is not universal, windfalls will be eliminated for people who earn disproportionate- ly large benefits because of long peri. ods in noncovered employment. To moderate the impact of this provision, the bill would phase in the windfall provision and provide additional guar- 83765 antees for persons with long periods of covered employment. Second, the annual cost-of-living ad- justment (COLA) of social security benefits and supplemental security income payments would be delayed by 6 months, from July to January. To protect the needy elderly during the transition to the new payment sched. ule, the maximum payment under the 88I program would be increased $20 per month-$30 for couples. This would allow the income of all 88I re. cipients to rise by $20 per month be- ginning in July even though his or her COLA is delayed. Third, for beneficiaries with high in- comes, half of social security benefits would be included in taxable income. The "notch" resulting under the Com- mission's recommendation to tax one- half of benefits for persons with ad- justed gross income of $20,000 or more was eliminated by specifying that half of social security benefits be added to the individual's adjusted gross income and his income from tax-exempt obli- gations to determine whether any of his benefits will be subject to taxation. Counting adjusted gross income, tax- exempt interest and half of social se- curity benefits in this manner result in thresholds of $25,000 for an individual and $32,000 for a couple. The lesser of one-half of social security benefits or one-half of income above the thresh. olds would be subject to income taxes. Fourth. Part of the payroll tax in- creases now scheduled by law would be accelerated, as recommended by the National Commission. The 1985 in- crease in the tax rate would take place in 1984, and part of the 1990 hike would take place in 1988. A direct credit against FICA tax would exactly offset the increase in the employee's tax in 1984 so that the acceleration in the rate increase originally set for 1985 will increase trust funds receipts without increasing an employee's tax liability. Fifth, for the self-employed, the tax rate on self-employed income would be increased so as to equalize his or her contribution to the social security trust funds with the combined contri. bution paid by workers and their em- ployers. To offset partially- the in- creased tax burden, the bill would pro- vide a tax credit against self-employ. ment taxes equal to 2.9 percent of income in 1984, 2.5 percent in 1985, 2.2 percent in 1986. 2.1 percent for 1987 through 1989, and 2.3 percent in 1990 and thereafter. Sixth, the bill would raise the age at which full retirement benefits are pay- able from 65 to 66, by 1 month a year, between 2000 and 2012. Early retire. ment benefits would continue to be payable at 62. Seventh, H.R. 1900 would gradually reduce the level of present law bene- fits payable to people who retire after the turn of the century by about 5 percent. In conjunction with the rest of the bill's provisions, these two Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 83766 CONGRESSIONAL RECORD - SENATE March 23, 1983 changes would eliminate the long-term deficit projected by the National Com- mission on Social Security Reform. Eighth, for the elderly who continue to work and who do not now receive an actuarially fair increase in benefits when they delay retirement, the de- layed retirement credit would be in- creased from 3 percent to 8 percent a year. Ninth, to further eliminate the dis- incentive for older persons who wish to continue working, the bill would gradually phase out the retirement earnings test for people 65 and older. I have long supported this change and applaud its inclusion in the Senate bill. Tenth, the bill also includes several provisions designed to address a number of inequities that have mostly affected women. Benefits are im- proved for widows and widowers and for disabled widows and widowers. Last, the social security amendments contain fail-safe and stabilizer provi- sions to insure that the social security system never again finds itself at the brink of bankruptcy. First, to stabilize the system, the bill includes the rec- ommendation of the National Commis- sion to trigger a new method of index- ing benefits if reserves are critically low, beginning in 1988. H.R. 1900 also includes a provision that requires the Secretary of Health and Human Serv- ices to determine whether the full amount of the annual cost-of-living ad- justment (COLA) can be paid without reserves falling below 20 percent of outgo. If reserves would fall below that amount, the Secretary is required to announce by the preceding July 1 the amount of the COLA that could be provided without further depleting re- serves. Should Congress then fail to respond by providing the additional fi- nancing necessary to keep the reserves from falling, the lower COLA would then go into effect in January. The bill directs the Secretary to adjust the COLA first for persons with monthly benefits above $250 to protect the el- derly poor who receive social security benefits. To further bolster the trust funds in the event of adverse economic condi- tions, the bill includes tnterfund bor- rowing among the three social security trust funds. Also, when trust funds are unable to pay at least 1'/z months of benefits, the Secretary of the Treas- ury would be required to transfer to the old age and survivors and disabil- ity insurance trust funds on the first day of the month the full amount of payroll tax revenues expected to be collected during the month. This "nor- malizing" of tax transfers would pro- vide income to the trust funds at the start of the month when benefit ex- penditures are heavily concentrated. Interest would be charged on the excess sums so transferred. Together these provisions will, for the first time, provide the safety valve necessary to insure the-continued solvency of the social security system during the eighties and beyond. Mr. President, as I said before, this package strikes a balance which spreads the cost of a sound social secu- rity system among all of us. That is why I opposed a number of amend- ments offered on the floor of the Senate to make major changes in the bill. I opposed two amendments which would have made reductions in the COLA. One would have eliminated the COLA for 1983 rather than delay it 6 months. The other would have had the effect of cutting next year's COLA. I also voted against an amendment to raise the retirement age to 68, rather than 66 in the committee bill and to raise the early retirement age to 65. The committee bill preserves the age 62 early retirement option. I op- posed this amendment for two rea- sons. First, the bill contains long-range reforms that will meet the deficit ex- pected in the next century, according to the best economic assumptions we have. Second, splitting the long-run solution between raising the retire- ment age and reducing replacement rates spreads the added costs of fi- nancing the projected growth in bene- ficiary population equitably among those who will be beneficiaries in the 21st century. This in my view is a better approach than raising the early retirement option to age 65 because it would place the heaviest burden on those who are forced into early retire- ment by disability or job loss. All three of these amendments would have essentially cut benefits beyond the reforms contained in this bill and beyond those needed to meet the estimated deficits in the short- and the long-term. They went beyond the commitment I have to my con- stituents to support measures neces- sary to put the system back on firm fi- nancial footing. This brings me to my support of the Heins amendment which would have removed from the Federal unified budget the old age and survivors insur- ance trust fund (OASI) and the dis- ability insurance (DI) trust fund. I agree with Senator Hsnvz that this measure is necessary to fully restore confidence in the social security system, to guarantee its independence now and in the future and to assure that the changes made here today are made for one and one reason only-to restore fiscal solvency to the system so that benefits can continue to be paid. There should be no fear that Congress will "balance the budget dm the backs of the elderly." This fear is height- ened every year during the annual debate on the budget resolution when, because the social security trust funds are included in the unified budget, we give the impression that the flow of benefits Is dependent upon the health of the entire Federal budget. This is simply not true. The social security system is an independent one which pays benefits with the contributions it receives from workers. Congress should not consider changes in the social security system beyond those necessary to insure that it can meet its own commitments. I regret that the amendment was not adopted by the full Senate. Last, Mr. President, I voted against an amendment to delete coverage of new Federal workers, which was de- feated by a vote of 86-12. I opposed the amendment because it would have eliminated a key part of the social se- curity compromise package, creating a short-term deficit of $9.3 billion and a long-range deficit of 0.2 percent of payroll in the long run, rather than the modest surplus now in the bill. I could not support the amendment be- cause it would have unraveled the package. I was, however, concerned about new Federal workers coming into the system without a supplemental pen- sion plan which was recommended by the National Commission on Social Se- curity Reform. For that reason, I sup- ported an amendment to establish a timetable for developing a supplemen- tal pension plan by October 1, 1985. This amendment was defeated by a majority of the Senate, and coverage of new workers was subsequently de- layed until a supplemental pension plan can be developed. On balance, Mr. President, the Social Security Amendments of 1983 are equitable and accomplish the very crucial task of preserving the social se- curity system. I st}pport this biparti- san compromise and urge my col- leagues to join me in voting It is a vote for maintaining the flow of benefits to today's retirees and a vote for restoring confidence in the future of the system for generations to come. ? Mrs. ICASSEBAUM. Mr. President, the major elements of the social secu- rity financing package are widely known and have been thoroughly dis- cussed and analyzed. This comes as little surprise, as these provisions will affect millions of Americans; and all of us find things to like and dislike about the package. I would like at this time to turn to several features of the measure which I like very much. They are not well known due to their more limited impact, but they can be enor- mously important to many people- particularly women. These provisions take a number of positive steps toward improving the system in Ways which are helpful largely to women. I commend the Na- tional Commission on Social Security Reform and the Finance Committee for having acknowledged the need in this area. Although these are small steps, I think it is useful to draw to. the attention of the Senate the need for improvement and to the role of this legislation in meeting a part of it. Discussion of the treatment of women under social security quickly becomes complex because the Social Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March SS, 1988 CONGRESSIONAL RECORD - SENATE Security Act, for the most part,, is a marriage has particularly severe con- gender-neutral on its face. In fact, the sequences for those women who have few remaining gender-based distino- spent most of their adult lives working tions in the law are eliminated in the in the home. Without recent training House version of H.R. 1900. These dis- or outside work force experience, tinctions are highly technical and these women experience serious diffi- many have already been effectively culty In finding jobs. In addition. they negated as a result of court actions, have little time In which to build Inde. The problems that many women ex pendent eligibility for benefits. The perience occur because the assump- Social Security Act does recognise this tions upon which the act is based no situation through provisions which longer hold true in an increasing allow a divorced spouse to receive number of cases. Social security is benefits based upon the earnings built on the assumption that a mar- record of . a former spouse if the mar- ried couple is, composed of a breadwin- riage lasted 10 years or longer. ning husband and a homemaker wife. Thus, the current law is helpful, but It further assumes that marriages last not without its flaws. Because benefits a lifetime and that a wife will outlive made available to the divorced spouse most. These logical assumptions for the late thirties-when fewer than 20 percent of married women worked out- side the home, when 1 in 7 marriages ended in divorce, and when life expeo- tancies between men and women varied little. Today, the experiences of more and more women fail to fit the pattern which existed In the thirties. What we now we is a diversity of patterns, each raising separate Issues with respect to social security. The most useful framework for examining the changes made by this legislation In to look at its treatment of women as workers, as divorced spouses, and as widows. WORKING VV03 f Female participation In the paid work force has increased dramatically and Is continuing to do so. From the standpoint of social security coverage, this trend is helpful in that women are increasingly able to establish inde- pendent entitlement to benefits. How- ever, the work patterns of women vary from that of men as many workingwo- men drop out of the labor force for some period of time to raise young children. These nonworking years are counted as zero-earnings years for the purpose of determining the average earnings upon which social security benefit amounts are based. Currently, up to 5 years of lowest career earnings are dropped before this calculation is made-thereby reducing the impact which low or zero-earnings have in bringing down average earnings levels. The legislation reported by the Senate Finance Committee allows up to two additional "dropout" years for persons who leave the work force to care for a child under the age of 3 in the home. A worker must have no earnings during the year in order to take advantage of this new provision. This change will have the effect of in- creasing the social security benefits of women who interrupt their working careers for the purpose of child rear- ing, recognising the growing preva- lence of this pattern. DIVORCID SPOUSZS The Incidence of divorce has in- creased substantially since social secu- rity was first enacted, with the mar- riages of I In 3 women age 26 to 40 ex- pected to end In divorce. Dissolution of are based on the earnings record of the former spouse, the dependent spouse--generally the woman-cannot receive any benefits until the working spouse receives benefits. Take the situ- ation of a divorced couple, both aged 65. The former wife spent most of her adult life- as a homemaker and, at age 65. is no longer able to find employ- ment. If she has any Independent enti- tlement to social security benefits at all, it is extremely small. Should her former husband choose to continue working until age 68 or 70. she would be unable to receive any benefits based on his record until that time. Alterna- tively, he may retire at age 65 and sub- sequently decide to return to work at age 67. If his earnings are high enough. he would not be receiving benefits: and benefits to his former wife would be terminated as well. Although such situations are ram they do impose substantial hardship and uncertainty upon older divorced women. This legislation addresses this problem by permitting spouses who have been divorced for at least 2 years to draw benefits at age 62 If the former spouse is eligible for benefits- even if the benefits are not being col- lected at that time. Wmowa Approximately 75 percent of older men are married and living with their wives, while 52 percent of older women are widows. Currently. 59 percent of Individuals 65 and older are women. At the oldest ages, women outnumber men2to1. Many of these widows have been de. Pendent upon their husbands' incomes and long years of widowhood have often exhausted supplemental. re- sources. On the average, total death benefits left by husbands to widows amount to $12,000 from all sources. It is not surprising therefore to realize that older women living alone are among the poorest groups In our soci- ety. Although changes in the Social Se- curity Act alone cannot be expected to deal with all these serious problems. the legislation under consideration does offer assistance to certain groups of widows and widowers. First. the bill provides for changes in the method of indexing a deceased worker's earnings for purposes of determining a survivor 83,767 benefit. Under the measure, these earnings would be indexed to reflect economywide wage Increases up to the year the worker would have reached age 80 or 2 years before the survivor becomes eligible for benefits-which- ever is earlier. This change would pro- vide particular assistance to survivors of workers who die long before their survivors are eligible for benefits. In these situations, surviving spouses now receive a benefit based on outdated wage levels. Under the bill, benefits would be calculated an a basis that more closely reflects current wage levels. A second group which would benefit from this bill Is disabled widows and widowers. In general, surviving spouses are first eligible to receive benefits at age 80 at an actuarially re- duced level of 71.5 percent of the de- ceased workers' full benefit amount. However, disabled survivors may re. ceive benefits between the ages of 50 to 59. Benefit amounts are also actu- arially reduced, so that an individual who begins receiving benefits at age 50 receives a benefit amount-equal to 50 percent of the full benefit. This bene- fit level is quite low-averaging about $242 per month-particularly consider- ing that the recipient's disability pre- vents him or her from working. This measure provides that benefits to dis- abled widows and widowers between the ages of 50 to 59 will equal 71.5 per- cent of the workers' benefit amounts- the same level provided survivors who begin receiving benefits at age. 60. Thirtt earlier today the Senate ap- proved an amendment offered by the Senator from Michigan. Mr. Lsvnr, which would provide transitional as. sistance to widows between the ages of 55 and 59.1 was pleased to have joined in cosponsoring this ,amendment, which offers support at a critical time In the lives of many women confront- ing widowhood. Currently, a widow under age 60 does- not qualify for social security benefits unless she is disabled or is caring for a child who Is either disabled or under the age of 18. Consequently, there are a number of women who, having spent most of their adult years as homemakers, are Ill-prepared for the paid labor force immediately upon the deaths of their husbands. The amendment would pro- vide these women with 8 months of transitional benefits to permit them sufficient time to obtain training or to seek employment. These benefits would be subject to the social security outside earnings limitation. so that they would not be provided to Individ- uals who do receive Income after being widowed. One final feature I want to mention is one which treats benefit eligibility upon remarriage In a consistent manner for all types of beneficiaries. Currently. -surviving spouses may re- marry after age 60-the time at which they first become eligible for bene- fits-and continue receiving benefits. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 83768 CONGRESSIONAL RECORD - SENATE March 29, 19M However, benefits for disabled surviv- ing spouses and disabled divorced sur- vivors are trmi~ted if the individual remarries prior to age e0, even though they may first become eligible for benefits from age 59 to 59. Benefits are temi:mted for suviving divorced spouses in remarriage at any age. This measure eliminates these dis? tinctions, providing that remarriage after the date of first eligibility for benefits will not result in the termina- tion of benefits. Obviously, the revisions made by the legislation fall short of meeting the broader concerns expressed regarding the treatment of women under social security. For example, many married women who have worked and paid social security payroll taxes for several years have expressed deep concern that they receive no more in benefits than they would have received had they never contributed to the system. The earnings sharing approach, allow- ing married couples to combine and divide- their earnings records for pur- poses of establishing social security eligibility, is one which has received considerable attention as a more far- ranging reform of the system. During earlier consideration of this measure, the Senate adopted an amendment re- quiring the Secretary of Health and Human Services to prepare an imple- mentation report on earnings sharing. This is an area which will continue to receive attention. I am pleased that my colleague from Kansas. Mr. Dons, has indicated the intentions of the Senate Finance Committee to hold hearings this year on the issue of women and retirement income. Again, I applaud the effort of those who have worked hard on behalf of positive improvements in the system.* Mr. ROBERT C. BYRD. Mr. Presi- dent, I cast my vote in support of this legislation after much reflection and despite the fact that I have grave res- ervations about many of its individual provisions. This is a compromise bill, arrived at after many days of arduous and occa- sionally acrimonious debate, delibera- tion, and negotiation. Like every com- promise, it contains its share of bitter pills to swallow. i, for one, am especially troubled that this legislation will raise the re- tirement age to 66 in the next century. Raising the retirement age will mean real hardship for many older Ameri- cans who simply cannot continue to work until age 66, but who are not so totally disabled that they can qualify for disability benefits under the very stringent disability definition in cur- rent law. This provision will particu- larly hurt blue collar workers, those who earn their living by working with their hands. Many of these people will be forced to retire early at age 62, and will suffer even deeper reductions in their benefits as a penalty. It is my fervent hope that Congress will recon- sider this change in future years, and substitute a better alternative for meeting the long-term deficit facing the social security system. Nor is this the only provision in this bill which I could not support, were it not part of a larger, bipartisan com- promise. I do not like asking older Americans to delay their cost-of-living increase, or to pay taxes on their social security benefits. I do not like asking self-employed Americans to contribute a greater share to social se- curity or asking working Americans and their employers to pay social secu- rity tax increases on an accelerated schedule. I wish that none of these provisions were part of this legislation. Despite these serious concerns, I be- lieve that this is a fair and reasonable package, one which meets the test of evenhandedness and balance in the sacrifice it asks of all our citizens to make the social security system whole again. Under this bill, all those who have a stake in social security's future-the 116 million Americans whose taxes support the system, the 36 million beneficiaries who depend upon social security for their liveli- hood, and those Federal workers and Members of Congress not now a part of the system-would share in the burden of restoring the system to sol- vency. I wish that it were not necessary to ask that these sacrifices be made, but what is at stake here is nothing less than the. very future of our most im- portant and enduring social program, a system which touches the lives of virtually every American. Today, that system faces a financing crisis of un- precedented magnitude, as well as a crisis in confidence on the part of the American people, whose faith in the system has been deeply shaken by the recurrent crisis surrounding social se- curity in recent years. We must act decisively to end this crisis of confidence. We owe a debt of gratitude to all of those who worked so hard to bring this compromise bill before us, to the National Commission on Social Security Reform, to all the Members of the House and Senate who have worked to improve and pass this legislation, and to the many out- side individuals and organizations that have contributed to its development. In passing this legislation, we take the necessary steps to restore- social se- curity to both short- and long-term solvency. In voting for this bill, we send a clear message to the American people that this Congress has the po- litical will to keep its promises to those Americans who have faithfully paid into social security in the expec- tation that it would be there for them when they retire. In sum, I do not like this bill and I wish that the problem would just go away. But when faced with the alter- native-bankruptcy of the social secu- rity system-I have no other choice. ? Mr. RIEGLE. Mr. President, I want to take this opportunity to comment on this critical legislation we have been considering over the last few days designed to assure the financial integrity of the social security system. The social security system has been one of the most important initiatives undertaken by the Federal Govern- ment during this century. By provid- ing a guarantee of basic retirement income for senior Americans, no longer will older workers have to fear retirement. While social security does not provide, nor was it ever intended to provide, a full retirement pension, it does nevertheless supply a basic income, protected against inflation, for retired workers and their families. This is not welfare or Government charity. Social security benefits are based on contributions made by work- ers and their employers throughout their working career. Congress has a solemn obligation to assure that social security remains on a sound financial footing, and that is the reason we are acting on the legislation before us today. Mr. President, I strongly believe that the recommendations of the National Commission of Social Security Reform and the bill before us today are a re- markable achievement in compromise. The burdens resulting from the pro- posals contained in this legislation fall upon all sectors of society where all have been asked to sacrifice. Neverthe- less, I have strong reservations regard- ing several of the proposals included in this package. We voted on many amendments, several of which were designed to lessen the inequitable hardships created by particular provi- sions. The Long amendment which I strongly supported, was adopted and that was an important improvement. Mr. President, on balance, I believe this is the best possible compromise that can be achieved at this time with the Reagan administration in control of the executive branch of Govern- ment. It is profoundly in the national interest that we deal now with the fi- nancial problems facing social security growing out of years of major reces- sion and high inflation. It is essential that the social security system be kept solvent and strong and absolutely guaranteed into the future for our workers, retirees: and their families. We must take social security out of the line of attack of the Reagan ad- ministration. This package, while imperfect, is the best compromise we are able to achieve at this time. Perhaps we can make other positive modifications and changes in the future when the politi- cal balance of power again shifts in our country. For now, we have suc- ceeded in the struggle to prevent the major cuts in benefits originally sought by the Reagan administration. That is a major accomplishment. I did not cosponsor this legislation due to my reservations about several aspects of the package. Mr vote for final passage does not withdraw those reservations. Further beneficial changes will have to come from future ? Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3770 CONGRESSIONAL RECORD - SENATE March 23, 1983 I do not need to remind my colleagues about the severe financial problems we face in the near future in medicare. Finally, the legislation contains ad- ditional unemployment benefits for the long-term jobless which are crucial to the many individuals who have ex- hausted their current benefits. With- out swift passage of this legislation, hundreds of thousands of workers across the Nation will be left without any unemployment benefits. In my own State of New Mexico, 5,000 indi- viduals will be affected immediately. In summary, the welfare of most Americans is affected by this bill and therefore, I must vote for it. Mr. President, I ask unanimous con- sent that the synopsis be printed in the Racoiw. There being no objection, the syn- opsis was ordered to be printed in the REcoRD, as follows: SOCIAL SscmRITY ACT AMENDMENTS OF 1983: SUMMARY OF PROVISIONS The Senate Finance Committee-reported bill would correct the financial problems of the social security retirement trust fund, provide for a prospective reimbursement system in medicare, extend long-term bene- fits for the unemployed, and provide relief for states which must borrow to pay regular state unemployment benefits. SOCIAL SECURITY (OASDI) PROVISIONS Coverage of newly-hired federal employ- ees.-Extend social security coverage to all new federal civilian employees, all current members of Congress and the President, and all employees of non-profit agencies (new federal employees would be brought under social security after a supplementary pension plan is established; non-profit em- ployees would be covered effective January 1984). Prohibit state and local governments from terminating coverage for their employ- ees. Eliminate "windfall" benefits.-Reduce social security benefits for recipients who become eligible for pensions based on non- social security employment, subject to cer- tain limitations. Six month COLA delay.-Delay the cost- of-living adjustment by six months from July 1983 to January 1984 in the retirement and disability insurance programs and the supplemental security income (SSI) pro- gram. Increase the SSI benefit by $20 for in- dividuals and $30 for couples to compensate for the COLA delay. Emergency COLA provisions.-Scale back COLA increases when the trust funds are expected to dip below a 20 percent reserve ratio, continue to decline, and interfund borrowing is exhausted. Provide for COLAS equal to lower of wages or prices if the trust fund reserves dip below a 20 percent level in 1988 and beyond, with a "catch-up" when the reserves exceed 32 percent. Increase delayed retirement credit.- Gradually increase, between 1990 and 1995, the delayed retirement credit from 3 per- cent to 8 percent per year. Increase social security retirement age.- Gradually raise the social security retire- ment age to 66 by the year 2012, beginning with those who attain age 62 in 2000. Early retirement benefits would continue to be available at age 62 for workers and spouses, but the benefit reduction factors would be larger. Long-range benefit change.-Reduce ini- tial benefit levels by about 5 percent after the year 2000 by decreasing the percentage factors in the benefit formula. Eliminate retirement earnings test.- Gradually phase out, between 1990 and 1994, the retirement earnings test for people 65 and older. Child-care dropout years.-Allow two years. to be dropped out of the formula for computing social security benefits for per- sons who leave the workforce to care for children under age 3 at home. Tax social security benefits.-Subject social security benefits to income tax based on thresholds of $25,000 for single taxpay- ers and $32,000 for married taxpayers. To determine these thresholds, one-half of social security benefits and all tax-free income would be added to adjusted gross income. For taxpayers over the threshold, the lesser of one-half of social security bene- fits or one-half of the excess combined income over the threshold amount would be subject to income tax. Transfer the rev- enues to the trust fund. Increase FICA taxes.-Revise the OASDI tax schedule so that the 1985 rate would be moved to 1984, the 1985-87 rate would remain as scheduled, part of the 1990 rate would be moved to 1988, and the rate for 1990 and beyond would remain unchanged. For 1984, a refundable tax credit would be provided for employees equal to the in- crease in the employee taxes. The credit would be allowed against 1984 employee FICA taxes rather than against income tax. Self-employed tax increase.-Increase the social security and medicare tax rate for the self-employed to equal the rate paid by em- ployers and employees. Provide a tax credit equal to about 15 percent of the combined social security tax rate. Military transfer credit.-Require the Treasury to pay social security in fiscal year 1983 for free social security credits extended in the past to members of the armed serv- ices. Require the Treasury to credit the social security trust funds with uncashed benefit checks. Reallocate OASDI tax rate.-Reallocate the OASDI tax so that both the OASI and DI trust funds will have about the same re- serve ratios. Extend interfund borrowing.-Authorize, through 1987, interfund borrowing between the OASI. DI, and HI trust funds, with pro- tections provided for each fund. Women's equity provisions.-Provide for several changes in the way women are treat- ed under social security. These would affect divorced and surviving spouses, and disabled widows. Alien benefits.-Eliminate benefits to alien workers who live abroad, except for certain aliens who would receive back their contri- butions plus interest. Also, prohibit social security benefits to aliens who have worked illegally in this country. Miscellaneous provisions.-Eliminate benefits to felons; modify trust fund invest- ment procedures; add two public members to the Board of Trustees; normalize tax transfers; expand the social security wage base to include certain deferred compensa- tion; and provide that local governments shall directly deposit social security taxes to the U.S. Treasury rather than to the State government. MEDICARE (HI AND SMI) PROVISIONS Prospective payment.-Establish a pros- pective payment system for hospitals which would set a specific payment for each of 467 diagnoses. Delay in Part B Premium.-Delay the in- crease in the Part B (medical insurance) premium from July 1, 1983, to January 1, 1984, to make it consistent with the delay in the social security cost-of-living adjustment. Increase the tax on the self-employed.-In- crease the hospital insurance tax paid by the self-employed to the combined employ- er-employee rate of 2.6 percent of covered wages. Cover employees of non-profit institu- tions.-Consistent with the extension of coverage in OASDI, require medicare cover- age of employees of non-profit institutions. Military wage credits.-Reimburse the hospital insurance trust fund for liabilities incurred as a result of providing credit toward medicare coverage based on pre-1957 military service. UNEMPLOYMENT COMPENSATION PROVISIONS Long-term benefits.-Extend and restruc- ture the program of benefits for the long- term unemployed (FSC) which expires at the end of March 1983. Basic FSC benefits of up to 14 weeks would be available be- tween April 1 and September 30, 1983, de- pending on a state's insured unemployment rate (New Mexico would receive 10 weeks of benefits, compared to 14 weeks under the current program)., Additional FSC benefits of up to 8 weeks would be available to work- ers who have already exhausted all benefits (New Mexico would receive 4 weeks of bene- fits, compared to none under current law). Unemployed workers receiving benefits when the program ends on September 30, 1983, could continue to receive one-half of the remaining benefits. Intererst on loans.-Provide relief to states which owe interest on loans from the federal government made to pay regular state unemployment benefits. Make the in- terest provision permanent, but allow States to defer interest payments and pay a dis- counted interest rate if the state takes steps to ensure the solvency of the state's' unem- ployment program. Mr. GLENN. Mr. President, as a result of the work of the National Commission on Social Security Reform and the prompt consideration of the Commission's proposals by the House of Representatives and the Senate Finance Committee, we are today acting on H.R. 1900, the Social Security Act Amendments of 1983. All Americans have an interest in this leg- islation, for social security-in one way or another-affects us all. The Commission faced a difficult challenge. The President proposed its creation only months after the end of a bitter and prolonged fight regarding the administration's early proposals to cut social security benefits by $88 bil- lion over 5 years. That May 1981 plan would have immediately and perma- nently made deep cuts in social secu- rity retirement and disability benefits. It was met with widespread outrage and protest from the public and the Congress. Several months later, after the President withdrew his social secu- rity plan and indicated his intention to separate social security from the poli- tics of reducing the Federal budget, he established the National Commission on Social Security Reform. The National Commission on Social Security Reform recognized that the retirement trust fund-the largest of the social security program-faces two separate financing problems. The first, between now and 1990, is largely the product of severe economic troubles. It began with an outburst of inflation when the OPEC cartel began flexing its muscle and the historic trend of Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3772 CONGRESSIONAL RECORD - SENATE March 29, 1983 of a homemaker to our society by al- lowing individuals who leave the labor force to care for a child under the age of 3 to drop up to 2 years of earnings in computing their wage history. Addi- tionally, as recommended by the Na- tional Commission, benefit protection would be improved for surviving, di- vorced, and disabled spouses. In the near future, we must further reform social security so that the benefit structure is more reflective of marriage as an equal partnership. The legislation requires the Department of Health and Human Services to pre- pare a report by the end of the year on specific ways to implement an earn- ings sharing concept for the social se- curity program. We need to take action soon, for poverty among the aged has become a women's issue. Older women represent the fastest growing poverty group in America. We must start now to change our retire- ment system so that younger women will not face the same economic hard- ship so many elderly women today and in the past have had to endure. I am hopeful that the legislation presently before the Senate will ade- quately meet the social security sys- tem's financing needs through the year 1990, without imposing undue hardship on any one group. In some part, this will depend on our ability to revitalize our economy. In the first year of the Reagan Presidency, the Congressional Budget Office estimated that the social security system could meet its short-term cash-flow prob- lems by Interfund borrowing authority among the three trust funds. The CBO estimate was based upon econom- ic assumptions more pessimistic than those upon which the administration's own tax-cutting and defense-spending plans were premised. As we reexamine the financing needs of the social secu- rity system, perhaps it is only appro- priate to review these costly programs as well. The National Commission on Social Security Reform unanimously agreed that the Congress, in considering fi- nancing options, should not alter the fundamental structure of the social se- curity system or undermine its funda- mental principles. The Commission de- termined that one of the best ways to uphold this commitment was to spread the financing sacrifice around so that the burden of keeping the system sol- vent would not be unduly borne by one group. Just as social security em- bodies a compact between generations, the bill requires that these genera- tions share in the cost of keeping the system working. Despite concerns regarding the Com- mission's refinancing package, I will support it. I am aware that some be- lieve the agreement places too much of the financing burden on business and workers, and that elderly citizens have not been asked to sacrifice enough. To this argument, I can only say that our Nation has a compact with our aged to maintain their social security benefits. Social security is the primary source of retirement income for a majority of recipients, and for many it is the sole source of support to keep pace with the cost of food, shel- ter and medical care. The average social security beneficiary now re- ceives approximately $5,000 annually, barely above the poverty level. I do not believe that we can ask people like this to sacrifice beyond what this reform plan requires of them. Mr. THURMOND. Mr. President, I rise today in support of the Social Se- curity Amendments of 1983, legislation that is vital to the financial solvency of the social security system and all who depend on it for retirement secu- rity. The members of the Bipartisan Na- tional Commission on Social Security Reform, appointed by President Reagan in December 1981, deserve commendation for the job they have done in bringing to Congress the pack- age of recommendations which forms the core of this bill. I also wish to pay tribute to the distinguished chairman of the Senate Finance Committee, BoB DoLa, to the brilliant and articulate chairman of the Social Security Sub- committee, BILL ARMSTRONG, to the distinguished ranking members of the Finance Committee and the Social Se- curity Subcommittee, Senators LoNG and Mo4NIHAN, respectively. I also commend the other distinguished members of the Finance Committee of both parties who have diligently pur- sued the common objective of restor- ing financial health to the social secu- rity system, both in the immediate future and in decades to come. Because the individual features of this bill have been described in detail in the Finance Committee report and in the opening statement of the man- ager of the bill, Senator DoLa, I shall not reiterate them here. Instead, I wish to briefly comment on the back- ground, necessity for, and objectives of this virtually important legislation. Mr. President, this bill is not perfect, in my opinion. Indeed, it probably does not satisfy any single Senator or Member of Congress. It is a fragile package whose whole is strengthened by its somewhat imperfect parts which require some reasonable sacrifice by retiree, wage earner, and wage payer alike. My fervent hope is that this leg- islation adequately addresses, as it is represented to do, both the short and long term financial needs of the social security old age, survivor and depend- ents insurance (OASDI) program, for that is our legislative task and re- sponsibility in this endeavor. Mr. President, in the first instance, this bill must effectively address the concerns of the millions of older Americans who presently look to social security for part or all of their retire- ment income. Some 38 million retired Americans, survivors of insured per- sons, and insured dependents count on social security for part or all of their income. These older Americans, widows and widowers, and dependents are fearful that the imminent bank- ruptcy of the trust fund will cause an interruption of their checks unless corrective action is promptly taken. For those presently receiving social se- curity, this bill provides the necessary assurance that their benefits will con- tinue and, beyond this, that there will be no reduction in the current level of benefits. Mr. President, I believe this bill is eminently fair and responsible to pres- ent recipients of social security. The only sacrifices asked of this group, many of whom depend on social secu- rity for their very survival, are, first, a 6-month delay in the next scheduled cost-of-living adjustment (COLA) from July 1, 1983 to January 1, 1984, with benefits to be increased for inflation annually thereafter at the beginning of each calendar year. Second, the bill incorporates a "fail-safe" mechanism beginning the latter part of this decade to insure that benefits are not increased disproportionately to in- creases in wages and the expected growth in trust fund receipts through increased FICA taxes. This latter pro- vision is designed to prevent another solvency crisis in the OASDI trust fund in the event of either an unex- pected resurgence in inflation or a future recession. Third, the bill will make subject to the Federal income tax up to one-half of social security benefits for the more affluent social security recipients, with those rev- enues earmarked for the social secu- rity trust fund. In addition to reassuring those now dependent on social security, this bill should calm the fears of those still in the labor force who are within a few years of retirement. Many persons who are in their fifties or early sixties have been worried about possible bankruptcy of the OASDI system, which they have supported through FICA taxes throughout their working lives. They also fear that there will be either an abrupt reduction in retire- ment benefits or an abrupt increase in retirement age. The Bipartisan Social Security Commission, as well as the Congress, have been understanding of these concerns in crafting a bill that will not impose sudden changes on those who do not have sufficient time to alter their retirement income plan- ning prior to their expected eligibility for social security retirement benefits. Those for whom retirement is just around the corner can take comfort in knowing that this bill maintains their expected level of benefits and will allow them to retire at the age for which they have planned. Finally, Mr. President, this legisla- tion should calm the skepticism among younger participants in the work force and provide reassurance to them that the social security system will remain financially solvent into the next century when they can expect to receive a return in benefits for their Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 March fit, 1988 CONGRESSIONALRECORD -t SENATE years of wage tax contributions..r have received. numerous Communications from younger workers asking why they should pay higher and higher taxes to support a retirement system which may not be sufficiently solvent to even return their investment to them upon retirement, much less guarantee them the lifetime supple- mental source of retirement income which their forced participation in the social security system entitles them and their families. Mr. President, I certainly under- stand these concerns among young, and even middle-aged, employees and employers alike. That is why it is so vi- tally important that this legislation re- store the social security system to ac- tuarial soundness for the longer term, as well as meet the more immediate needs. The best actuarial estimates that can be obtained at this time pro- ject that this legislation .win accom- plish these goals. While I have reser- vations about the heightened FICA tax burden imposed under thi6 bill, it is clear that some acceleration of al- ready scheduled tax increases is both a political and a financial necessity to achieve enactment of this package and restore solvency to the trust fund. As we move forward with this essen- tial legislation, Mr. Pendent, it is im- portant that Congress recognize and emphasize the purpose and limits of the social security program. Social se- curity was intended to be, at best, only a supplemental retirement income source. Congress must resist the temp- tation to add new benefits or expand existing benefits beyond levels which can be afforded by those who support the system through employment taxes. Similarly, it would be unwise and ir- responsible for Congress to make social security into another welfare program, as some wish to do, by de- stroying its nature as an earned enti- tlement. As we know, social security benefits are paid to those who have earned them through tax contribu- tions, rather than being allocated based solely on need. Several of the provisions of this bill edge toward a needs-based welfare program, a tend- ency which I feel is ill-advised. Again, however, this legislation must be taken together as a package, and on balance, I have concluded that the package is necessary and worthy of support. Mr. President, I would like to espe- cially take note of two provisions of this bill which I believe are meritori- ous and needed. First, the bill will phase-out, by 1994, the so-called earn- ings test, which limits the amount which social fecurity retirees under age 70 can earn from continued em- ployment without suffering a reduc- tion in their social security checks. Consistent with my view of social secu- rity as an earned benefit, and also with my belief that our Government policies should not discourage from working those who, regardless of age, are willing and able-to do so, I believe elimination of the earnings test is long overdue. As one who has for a number of years either sponsored or cospon- sored legislation to do away with this limitation on earned income for older Americans receiving social security, I only regret that the phaseout does not occur sooner. Mr. President, I also strongly ap- prove of the provision In this bill which limits social security benefits for aliens to the amount of their FICA tax contributions plus interest. This concept is shnilar to that of a bill I have cosponsored with Senator Luosa. It has been strengthened by adoption of the Nickles amendment, which I also cosponsored. The social security system is simply not rich enough to provide overly generous benefits to those who have entered this country illegally, or who only worked here for a period of time before returning to their home abroad. I amalso pleased that the State took care of several potential problem areas relating to those who receive deferred compensation through adoption of the Bentsen amendment, which I cospon- sored. In conclusion, Mr. President, I wish to reiterate my support for this legis- lation, which is the product of much hard work and compromise. The social security program simply must be re- stored to a sound financial condition, which makes prompt passage of this bill, absolutely necessary. That goal of financial solvency must be accom- plished in a way that is fair and rea- sonable to both those who are sup- porting the social security system through taxes and those who are re- ceiving social security benefits that have been earned. I believe this legis- lation satisfies these fundamental cri- teria of fairness and reasonableness, and I hope it will be enacted. Mr. PELL. Mr. President, I rise to speak concerning final passage of H.R. 1900, the social security reform bill. I voted in favor of this measure, but I would like my colleagues and the people of my State to know the reser- vations that I had concerning the bill, and the reasons which overcame my reservations and convinced me to vote for this bill. There is no doubt, Mr. President, that the social security trust funds will be in deep trouble in a short time unless the present law is changed. There is no one that disputes the enormity of the deficit that faces social security in this decade under present law. Expenditures will exceed revenues in this decade by $150 to $200 billion. And there is no one that disputes that social security law must be changed now, this year, in order to prevent that deficit from taking place in a system that is designed to be self-suffi- cient. The National Commission on Social Security Reform worked long and hard to arrive at a package of changes for the social security system. Many of S 3773 the changes proposed by the Commis- sion or adopted by the Senate Finance Committee, however, detract rather than add to the fundamental fairness that should be the hallmark of this bill. There are three elements of this bill that deeply disturb me. One element is the 6-month delay in the cost-of-living adjustment. A delay of 6 months in this annual adjustment for inflation may seem minor, but for the 65 per- cent of social security recipients who rely on their benefits as their primary source of income, it works as a cut in income. The 4-percent in in- flation we have seen in the past year means a 4-percent cut in benefits fQr the retired, unless their benefits are adjusted. Asking many recipients to wait for another 6 months for their cost-of-living adjustment is asking them to continue surviving with less and less money for food, for heat, and for rent. Another element of this bill that I find disturbing is the inclusion of new Federal workers. The future of the civil service retirement system is a cru- cial factor in the fairness of this bill toward Federal employees, yet the future of civil service retirement has been left entirely unclear, This uncer- tainty, coupled with the administra- tion's proposals for major changes in civil service retirement, place an ex- traordinary burden on Federal em- ployees. Taken as a whole, these pro- posals clearly threaten the future of the civil service retirement system. That would be a tragic loss, not only to Government workers, but also to the public which depends on qualified Federal workers for essential services. The third element which concerns me is the combination of reduced benefits and a higher retirement age that would take place after the year 2000. At the same time that we would reduce benefits for our younger work- ers, we propose to raise payroll taxes for them. Such a triple blow to today's workers seems unduly harsh. Despite these reservations, Mr. President, I have voted in favor of pas- sage of this bill. I have done so be- cause of my larger concern that the social security system, the basic bridge between Government and retirees, cannot wait for another compromise bill which could be months or years in the 'making. The expected failure of the National Commission on Social Se- curity Reform, and the last-minute saving of its mission by the hard nego- tiations and compromises by Commis- sion members, demonstrate the fragil- ity and difficulty of compromise on so sensitive a problem I believe that the compromise package worked out by the National Commission and reflect- ed in the House bill and iii the Senate bill before us offers the best possibility for saving social security benefits that we have. I am not in favor of delaying the COLA. I am not in favor of including Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3774 Federal workers within social security without agreement on a supplemental civil service retirement system, and I am not in favor of raising the retire- ment age while lowering benefits and raising taxes. I am in favor of a solu- tion to the social security crisis which can be agreed on by Democrats and Republicans, liberals and coriserva- tives, and I think that the bill before us offers us the best, and the only, so- lution in sight. As much as there are elements with which I very much dis- agree, there are other elements strong- ly opposed by Senators with different points of view. A bill which no one is happy with. yet most Senators can accept, is a rare and valuable means to resolve a complex and emotional prob- lem. I have therefore voted in favor of the social security bill, and I will work in the future with my constituents and my colleagues to soften and change the elements which need improve- ment. DRG REGIONS ? Mr. BIDEN. Mr. President, inflation in the health care industry has oontin- ued to rise at double digit levels even though the Consumer Price Index rose only 3.9 percent in 1982. This has had especially grave Implications for the Federal budget as medicare spending has risen an average of 19.2 percent over each of the last 4 years. Clearly, Mr. President, something must be done to curb health care infla- tion. In this spirit, the Department of Health and Human Services has pro- posed a system in which hospitals would be reimbursed by medicare so- cording to a series of diagnostic relat- ed groups (DRG's); 467 classifications of diagnoses would be established, and hospitals would receive a flat rate for whatever particular ailment has brought a patient to the hospital. Re- imbursement levels for the various di- agnoses would be set on a regional basis, depending upon health care cost patterns and hospital utilization rates within that region. The House,has al- ready approved one version of this proposal providing for nine regions, and the Senate Finance Committee has approved a version providing for four regions. There is, however, a problem, Mr. President. While I believe the DRG system should be given a chance to prove itself, I am afraid the regions provided for in the House bill, and to a greater extent those provided for In the Senate bill, would have unintend- ed effects on urban hospitals in var- ious States, especially in the Middle Atlantic area. For example, Mr. President, take the cases of Delaware and the District of Columbia. Under the House bill, Dela- ware and Washington D.C. have been placed in the South Atlantic region. together with States such as Georgia and South Carolina. The Senate ver- sion goes even further, adding States such as Mississippi, Louisiana, and Oklahoma to the region including Delaware and Washington D.C. CONGRESSIONAL RECORD - SENATE March 23, 1983 Clearly, Mr. President, the State of Delaware and the District of Columbia have little in common with these States. Just as clearly, Mr. President, these two jurisdictions have much more in common with States in the Northeastern region. I am not planning to offer an amendment to address this problem, Mr. President. I do hope, however, that the conferees who will meet to iron out differences in the House and Senate versions of this legislation will give this problem special considera- tion.. If I may offer a suggestion. Mr. president, I hope the conferees will consider crafting language in the con- ference report so as to allow the Secre- tary of Health and Human Services to take into account regional differences and give him or her the authority to make such adjustments in the regional structure as may be necessary to insure equitable treatment of all States under the DRG legislation.. Mr. BAKER. Mr. President, I sug- gest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. TSONGAS. Mr. President. I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. With- out objection, it is so ordered. Mr. TSONGAS. Could I inquire why we are waiting? Mr. BAKER. Before we go to third reading, I have a commitment that all Senators have had an ample opportu- nity to present amendments. There is one additional Member on this side who may have an amendment, but I am not sure of that. It is the tradition- al role of the leadership on both sides of the aisle to protect their Members. Mr. D'AMATO addressed the Chair. The PRESIDING OFFICER. The Senator from New York. Mr. D'AMATO. Mr. President, I cer- tainly do not wish to prolong the ses- sion. I was going to rise to offer an amendment because I feel very strong- ly that what we did in accepting the provision which includes Income from municipal bonds when calculating taxes to be paid on the portion of social security above the threshold ig- nores the damage that provision will do. The results will be devastating to the finances of already hard-pressed local municipalities. There are some people who will put that aside because they want to create the perception of equity, the percep- tion of fairness. So while I will not offer my amendment, I want you to know, Mr. President, I feel quite strongly, and would like to take just 3 minutes to touch on the facts. The Finance Committee says that that revenue provision does not actual- ly place a tax on bond interest income. But it does, in essence, use the income from previously tax-exempt municipal bonds in the calculation of this tax. It will raise $5 million over 7 years. That is what it is going to raise. And it is going to play havoc with the financial markets for State and local bonds. Local governments are going to have to raise money to pay higher interest rates, and those taxes are going to be raised by increases in sales and real property taxes. Of course, the magnitude of the neg- ative impact of this provision on the municipal bond market will be a seri- ous one. The questions of this decision to use tax-exempt interest to calculate tax increases will raise in the minds of bond-market buyers is something that is very important. I have spoken to three municipal fi- nance officers within the past 20 min- utes. Bob Odell, city treasurer of the city of Los Angeles, indicated to me that it will cost Los Angeles a minimum of 25 basis points. That minimum means that it will cost the city of Los Angeles $1 million every year. We should be proud of ourselves be- cause we have raised $5 million over 7 years, less than $1 million per year. Let me go further. David Shuman, commissioner of finances of one county, Westchester County, N.Y., said that this would Increase the cost of borrowing for taxpayers, citizens of one county, Westchester, by $300,000 annually. But, after all, we have cre- ated the perception of equity. the per- ception of fairness. The act that It only enhances revenues by raising less than $1 million a year, but will cost the taxpayers, the villages. the towns, the States, and the counties anywhere from $240 million up; we put that aside. Finally, I spoke with the president- elect of the Municipal Finance Associ- ation, Mr. Karl White, who is also the director of finances for the city of San Antonio. Let me tell you what he said. He said that this is going to cost the city of San Antonio a minimum next year of $5 million. But we can be proud because we can say to the people that we have created an aster- isk? Maybe $5 million over 7 years, less administrative costs. Nationally, the Finance Committee says less than $1 million a year, but local governments will pay at least $240 million a year. I will not send that amendment to the desk. If we go home, if we can leave this as it is, fine, but I do not want it to be said that, "D'AaATo pro- longed this." He prolonged it by 3 min- utes. Now, you go home and tell the cities, the counties, the villages, the towns, and the States that we cost them hundreds of millions of dollars more by not striking this provision. Let me read to you a letter I just re- ceived from the Municipal Finance Of- ficers Association. It says: The Municipal Finance Officers Associ- ation estimates the effect of including inter- est on formerly totally tax-exempt munici- pal bonds will produce annual increased Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1 S 3776 CONGRESSIONAL RECORD - SENATE of S. 1 and H.R. 1900. The leadership of President Reagan and Speaker O'Neill, as well as our distinguished majority leader, Senator BAKER, was of course crucial to our success. But I be- lieve I may be forgiven if I specially mention Senators MOYNIHAN, HEINZ, and ARMSTRONG, because they served both on the National Commission and the Finance Committee as well as here on the floor. Each of them had a major impact on this agreement, and they were there from the beginning. Whatever disagreements we may have had, I congratulate them for their hard work and dedication. Mr. President, I also want to extend special thanks to my staff and the staff of Members on both sides of the aisle, the joint committee staff, the staff of the Social Security Adminis- tration, and many many individuals in other agencies who helped us to put this package together. Most of all, I thank the majority leader and the minority leader for helping us and keeping us moving and. finally, for the successful passage of this landmark legislation. We will go to conference tomorrow morning at 8:30. It is our hope that we will complete the conference by midaf- ternoon. I should think that with the overwhelming vote of 88 to 9 in favor of the legislation, we might be able to move rather quickly on the conference report. Mr. BAKER. Mr. President, first; let me say to every Senator that I am grateful for their cooperation and un- derstanding in the difficult matter of moving this complex piece of legisla- tion through the Senate in a relatively brief time. We have spent part of 6 days on this measure, more than 41 hours of debate. We conducted 23 rollcall votes all together. We considered 72 amend- ments; 49 of them were agreed to, 14 were rejected, 1 was tabled, and 4 were withdrawn. That is a considerable leg- islative undertaking. I wish especially to congratulate the distinguished managers of the bill: The chairman of the Finance Commit- tee, Senator Dolt, without whose expert guidance and legislative skill this package could not have passed; Senator LONG, the ranking minority member, who is so adept and skilled at the legislative procedure that his con- tribution is always felt and always val- uable in the business of facilitating the expression of the will of the entire Senate. Mr. President, I also pay tribute at this time to the members of the Social Security Commission, the so-called Greenspan Commission. While they were not involved directly in the delib- erations on the floor, except to the extent that some Members of the Senate were members of that Commis- sion, their presence was felt every moment during this debate. Their cou- rageous act in initiating recommenda- tions for fundamental changes in the social security system, for the first time in decades, led the way and per- haps made it possible for the House and the Senate to act on these politi- cally explosive matters. So I especially pay tribute to the members of the Commission for a job well done, and particularly to those Members of the Senate-such as Sena- tor MOYNIHAN, Senator DOLE, Senator ARMSTRONG, Senator HEINZ, and others-who participated so effectively in the deliberations of the Commis- sion. Mr. BYRD. Mr. President, will the Senator yield? Mr BAKER. I yield. Mr. BYRD. Mr. President, I join the distinguished majority leader in ex- pressing commendation to Mr. DOLE and to Mr. LONG, who have shown great dedication and who have worked hard in the deliberation of this bill. I do not like the bill. I wish the prob- lem would just go away. I did not want to vote for the bill. But when con- fronted with the alternative, the de- struction of the social security system, bankruptcy of the social security system, I was left no choice. Undoubt- edly, I speak for all Senators on both sides of the aisle. I also want to express my compli- ments and my thanks to those on the Commission. At this point, I want to thank public- ly the majority leader for allowing me to select two members of that Com- mission from my side of the aisle. He did not have to do that, but he was characteristically fair in the matter. I am proud of the two members I select- ed-Mr. MOYNIHAN, the ranking mi- nority member of the Social Security Subcommittee of the Committee on Finance, and Lane Kirkland. I also compliment the Republican Members chosen by Mr. BAKER. They performed a difficult task and spent many hours in the effort. As I say, this is a piece of legislation that I wish we had not had to vote on, but we had no choice. So I. compliment and thank all who participated. I think this has been a fine demonstration of bipartisanship on an extremely complex and difficult matter. Mr. BAKER. I thank the minority leader. May I say that without his as- sistance in facilitating the business of the Senate, even though on occasion he disagreed with the action that was presented to the Senate on particular matters, and had it not been for his cooperation and steadfast determina- tion to see the Senate function as an effective legislative body, we could not have brought this matter to a conclu- sion. I wish to publicly acknowledge his enormous contribution and the val- uable contribution he has made to the business of the Senate in this matter and in many other ways. Mr. BYRD. Mr. President, I thank the majority leader. March 29, 1983 TRIBUTES TO PARTICIPANTS IN THE JOBS BILL Mr. BAKER. Mr. President, may I take just a moment to pick up a stitch that I did not pick up earlier. I should have made similar remarks at the time we passed the jobs bill. I did not do so, and I am sorry for that; but it was late in the evening, and Senators were anx- ious to leave. Let me at this moment pay a special tribute to the chairman of the Appro- priations Committee, Senator HAT- FIELD, and the ranking minority member, Senator STENNIS, for their unfailing, unflagging efforts to move that equally difficult piece of legisla- tion. On that bill, I am told by the Jour- nal clerk, we deliberated almost as long, more than 35 hours, and had 50 amendments and 19 rollcall votes. Mr. President, for the Senate to have done these two important bills in a fairly brief span of time is an accom- plishment that deserves high praise; and I stand here to extend my praise to every Member of the Senate for the work they have done. It is indeed a job well done. Mr. BYRD. Mr. President, will the Senator yield? Mr. BAKER. I yield. Mr. BYRD. Mr. President, I simply say for the record that I wish to asso- ciate my remarks with the remarks the majority leader has made. I, too, ngratulate Mr. HATFIELD and Mr. STENNIS, the committee members, and the members of the conference. I will say, however, that I did not have as much difficulty voting for that bill as I did with the social security TINE MORNING BUSINESS Mr. BAKER. Mr. President, if no other Senator seeks to be recognized on this subject, I am going to ask the Senate to proceed to a period for the transaction of routine morning busi- ness. I make that request with the pro- viso that the time so provided will not extend past 10 p.m., in which Senators may speak. The PRESIDING OFFICER. With- out objection, it is so ordered. ORDERS FOR THURSDAY Mr. BAKER. Mr. President, the principal business of the Senate to- morrow will be to await the conference reports on which the Senate may act on the jobs bill and social security. It is my best estimate that we will re- ceive those reports tomorrow some- time in the course of 'the afternoon, at least one of them. Perhaps there will be no need to deal further with the jobs bill. I hope not. But in any event, I see no need for the Senate to convene early. We have had a tough week with long hours. Approved For Release 2008/10/06: CIA-RDP85-00003R000200120002-1