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March 9, 1983
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Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 946 CONGRESSIONAL RECORD - HOUSE March 9, 1989 chairman of the Committee on Ways and Means or his designee. At the conclusion of the consideration of the bill for amendment, the Committee shall rise and report the bill to the House with such amendments as may have been adopted, and the previous ques- tion shall be considered as ordered on the bill and amendments thereto to final pas- sage without intervening motion except one motion to recommit. The SPEAKER. The gentleman from Florida (Mr. PEPPER), is recog- nized for 1 hour. Mr. PEPPER. Mr. Speaker, I yield 30 minutes to my able friend, the gen- tleman from Tennessee (Mr. QuiLLEN), and to myself I yield such time as I shall consume. (Mr. PEPPER asked and was given permission to revise and extend his re- marks.) Mr. PEPPER. Mr. Speaker, House Resolution 126 provides for the consid- eration of H.R. 1900, the Social Secu- rity Act Amendments of 1983. By the way, this is an historic day in our land, Mr. Speaker, as we consider one of the most important measures ever to come before this House. The committee bill proposes sub- stantial changes in the social security cash benefit programs, the medicare hospital insurance program, the Fed- eral unemployment compensation pro- gram, and the supplemental security income program: Mr. Speaker, House Resolution 128 is a modified closed rule which is de- signed to permit the House to proceed to the consideration of H.R. 1900 in an orderly and expeditious manner. The rule provides 4 hours of general debate to be equally divided between the chairman and the ranking minority member of the Committee on Ways and Means. There are several waivers of points of order for violations of provisions of the Congressional Budget Act. First, the rule waives section 303(a) which prohibits consideration of legislation which provides new budget authority or increases revenues in a fiscal year prior to the adoption of the first budget resolution for such fiscal year. This waiver is necessary because var- ious provisions of the bill provide for increased revenues into the social se- curity trust fund, effective in fiscal year 1984, and as a consequence, new budget authority automatically cre- ated for fiscal year 1984. Since the in- creased revenues and the new budget authority flowing from those revenues are first effective in fiscal year 1984, and since no first budget resolution for that fiscal year had been adopted, the bill violates section 303(a) of the Budget Act. Second, the rule waives section 311(a) of the Budget Act which pro- hibits consideration of measures which increase spending in a fiscal year in excess of the ceilings set forth in the most recently agreed to budget resolu- tion. The current level of spending is over the budget ceiling for fiscal year 1983, and since this bill provides addi- tional spending for fiscal year 1983, it would be subject to a point of order under the provisions of the Budget Act. The final budget waiver is of section 401(b)(1) of the act which bars consid- eration of any legislation which pro- vides new entitlement authority which is to become effective before the first day of the fiscal year which begins during the calendar year in which the bill is reported. This waiver is neces- sary because section 401 of the bill provides for an increase in the Federal supplemental security income benefit standard for individuals and couples, effective July 1, 1983, and thus vio- lates section 401(b)(1) of the Budget Act. While the Committee on Rules does not intend to routinely waive these provisions of the Budget Act, the Committee on Rules recognized the need to support these emergency waivers to permit consideration of this crucial piece of legislation. Mr. Speaker, House Resolution 126 waives clause 5(a) of rule XXI which prohibits appropriations in a legisla- tive bill. Various provisions of the bill provide transfers of money from the general fund to the trust fund, direct payments from the trust fund or oth- erwise constitute an appropriation without any further action of the Ap- propriations Committee, and thus a waiver of clause 5, rule XXI, is needed. This is a necessarily tightly struc- tured rule to preserve the delicate bal- ance of the compromise of the Social Security Commission and the Ways and Means Committee amendments. However, the committee drafted a rule to permit consideration of the two dif- ferent approaches to resolving the problem of the long-term social secu- rity deficit. The bill shall be consid- ered as read for amendment. The rule provides that no amendments shall be in order in the House or in the Com- mittee of the Whole except: First, Ways and Means Committee amend- ments-and we were advised by the chairman of the Ways and Means Committee at the hearings before the Rules Committee that the committee has no amendments; second, the amendment by Representative PICKLE, which is printed in the CONGRESSIONAL REcoan of March 8, 1983; and third, my amendment printed in the CoN- GRESSIONAL RscoRD of March 7, 1983. These amendments shall be consid- ered in the specified order, are not amendable, but shall each be open to debate for 2 hours. I would point out to the Members that the Pepper amendment would be in order even if Mr. Picsa s's amendment is adopted. Under the normal parliamentary pro- cedure, the last amendment adopted would be the amendment prevailing. Finally, upon conclusion of the con- sideration of the bill, one motion to re- commit would be in order. Mr. Speaker, H.R. 1900 is primarily focused upon the refinancing of the social security cash benefit programs, and title I of the bill reflects the rec- ommendations of the National Com- mission on Social Security Reform. The Commission recommended that additional financing come from the following sources: First, extension of social security coverage; second, in- creased revenues from the payroll tax and general revenues; third, decreased outlays through certain limited bene- fit charges; and fourth, mechanisms to automatically "stabilize" the system and to assure benefit payments during periods of poor economic performance. The Commission also recommended benefit enhancements targeted to cer- tain divorced, disabled, and surviving spouses, as well as workers who delay retiring. ^ 1015 And, by the way, that is a very sig- nificant part of the bill, because it gives an incentive to the people to keep on working rather than taking their retirement benefits at an earlier age. For example, the present law pro- vides for a 3-percent increase in pri- mary benefits for every year between 65 and 70 in which retirement is de- layed. The Commission recommended and the Ways and Means Committee has adopted the recommendation of the Commission that the delayed re- tirement credit be increased to 8 per- cent annually. As a result, older per- sons who remain in the work force until age 70 would receive a 40-percent bonus, whereas under the present law these workers would only receive a total 15-percent increase. Title I of the bill addresses two- thirds of the projected 75-year actuar- ial deficit, and the entire short-range (1983-89) deficit in the cash benefit programs. The remaining one-third of the long- range deficit is addressed in title II of the bill. The revenue provisions of title II raise average income to the system of 0.28 percent of payroll, and the benefit provisions decrease system outlays by 0.43 percent of payroll. In general, benefit reductions account for 60 per- cent of the additional long-range fi- nancing, while revenue increases con- stitute the remaining 40 percent. Title III includes the miscellaneous provisions relating to cash manage- ment contained in H.R. 660 introduced by Mr. PICKLE. This title also embodies some of the recommendations of the Commission which have little or no fi- nancing impact. The consequences of the 6-month cost of living, adjustment allowance delay on lower income OASDI beneficiaries are addressed in title IV of the bill, which amends the SSI pro- gram. Under the bill, an across-the- board increase of $20 per month would offset the impact of a 6-month cost of living adjustment delay in both the OASDI and SSI programs. In short, what that means is that the lower income social security Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 948 CONGRESSIONAL RECORD - HOUSE delay of the effective date of this pro- vision until we come up with a new civil service retirement program for Federal employees who will be covered by social security, or until the end of 1984, whichever date would be the ear- liest, made the most sense. Suggested by our colleague, the gen- tleman from Minnesota (Mr. OSEB- sTAR), this amendment would have made coverage under social. security for new Federal employees a certain thing. At the same, the Oberstar amend- ment would have given those of us who serve on the Committee on Post Office and Civil Service a better op- portunity to write a new civil service retirement law for these employees. I offered the motion in the Committee on Rules to give Mr. OsaasTAa the right to offer his amendment on the floor of the House, but my motion was not agreed to. Nevertheless, Mr. Speaker, I support this rule and I urge the House to adopt the rule. I think it is important for us to keep in mind our common goal as a social security financ- ing package is concerned. The Congress needs to reach a solu- tion that will preserve the financial in- tegrity of the social security system; insure that benefits paid to current beneficiaries will not be reduced; insure that benefits are not cut below their current levels; and insure that the funding problems of future years are met in the most fair and humane manner. ^ 1030 Mr. PEPPER. Mr. Speaker, I yield 3 minutes to the able gentleman from Maryland (Mr. BAxxas). (Mr. BARNES asked and was given permission to revise and extend his re- marks.) Mr. BARNES. Mr. Speaker, I thank the very distinguished chairman of the Rules Committee and one of my heroes for yielding this time to me this morning. Mr. BARNES. Mr. Speaker, Federal employee constituents have told their Representatives in Congress that they do not want new Federal hires covered by social security. Federal employees have been lobbying for weeks on this issue. For weeks, many Members have relayed two messages to their constitu- ents: First, that the bipartisan agree- ment would disintegrate if new Feder- al hires were removed- from the pack- age; and second, that there would not be sufficient time to negotiate a new bipartisan agreement if the first pack- age fell apart. This explanation has not been warmly received. Social security cover- age, to no one's surprise, is the No. 1 bread and butter issue for Federal em- ployees. It threatens both pay and re- tirement benefits. A great deal has been written and publicized by both proponents and opponents of coverage in recent weeks on the impact of ex- tending social security coverage to new Federal hires. Much of what has ap- peared has attempted to dismiss em- ployee concerns as unfounded-based upon misstatement of fact and distor- tions about the intent of Congress. Mr. Speaker, I believe that it is vital- ly important that Members under- stand the impact of extending cover- age to new Federal hires. On January 1, 1984 new Federal hires must begin paying 7 percent of their income to social security and another 7 percent to the civil service retirement trust fund. We have chosen to extend social security coverage to new Federal hires well in advance of the development of a supplementary pension program. Such legislation should dovetail these two very dissimilar retirement pro- grams and insure that all Federal re- tirees, present and future, could main- tain retirement income commensurate to what the Federal Government pres- ently offers. Therefore, Mr. Speaker, for the for- seeable future, Federal employees en- tering the service will have to pay nearly one fifth of their net pay toward their retirement at a time in which Federal employee compensation lags 20 percent behind comparable wages paid in the private sector. Our Federal retirement program, until re- cently, attracted the Nation's finest in- dividuals to Federal service. It offered attractive, if deferred, compensation that insured a dignified retirement fol- lowing years of service, In the wake of the social security amendments, Fed- eral retirement would become the single greatest disincentive to joining Federal service. The fact that 94 per- cent of all private retirement plans re- quire no employee contribution em- phasizes the point. Current Federal retirees and Federal employees nearing retirement have-ex- pressed fears that extending social se- curity coverage to new Federal hires undermines the solvency of their re- tirement trust fund. Their trust fund is currently in excellent condition with $109 billion securities reserves project- ed for fiscal year 1984. Depriving the trust fund of the contributions of new hires would reduce the annual flow of funds to the trust by $665 million in fiscal year 1984. If no satisfactory sup- plementary plan is enacted in fiscal year 1985, the figure grows to $1.12 billion. In short, retirees know with certain- ty: First, their retirement system is under attack. the administration claims that Federal retirement is too expensive and too generous; second, Congress is moving legislation which would reduce the flow of funds into the retirement trust fund; third, a sup- plementary retirement plan remains an absolute unknown-and we now have reports from the Senate that the other body may not be willing to move quickly to shape a new retirement pro- gram, especially before a Presidential election. It seems, Mr. Speaker, readily appar- ent why retirees balk when we ask March 9, 1983 them to put their faith in Congress' willingness to fully fund their retire- ment program-as we promised to do when they went to work for the Feder- al Government. Pressured by continu- ing huge budget deficits, the tempta- tion to pare down Federal retirement will continue to haunt employees and retirees. They understand that inas- much as their program depends upon. Congress' will to fund it, the level of congressional commitment must, in turn, depend upon the outcome of po- litical struggle and economic progress. We have asked Federal employees and retirees to buy a surprise package with their limited incomes in the midst of the worst economic times in 50 years. For these reasons, I have tried to ex- plore every possible way to delete or at least delay implementation of new hire coverage. The Federal Govern- ment Service Task Force, which I chair, has researched alternative means to achieve the revenue gains sought by the package in connection with covering new Federal employees. I sincerely regret that we were unable to find a way to at least delay imple- mentation of new hire coverage, a pro- posal developed by my colleague, Ms. OAxAR, so that we could have had time to shape a supplementary retirement plan and give employees and retirees some peace of mind. Since the rule provides Members with no opportunity to act on issues affecting the short-term funding of the package, Members have been left with no choice but to vote for or against the package as a whole. For Members concerned about the integri- ty of the civil service retirement system, such an absence of choice is plainly intolerable. I fully recognize the dangers implicit in expanding the existing rule. Nevertheless, the leader- ship has impressively demonstrated its authority in successfully shepherding this bill in a manner that insures its passage. I support the leadership's efforts to pass this flawed, but important legisla- tion in a timely and responsible manner. Millions of retirees expect to receive their social security checks on time this summer. Their expectations should not be displaced by anxiety. Mr. Speaker, I would merely point out to my colleagues that our responsibil- ities do not end with passage of this legislation. We have a continuing re- sponsibility, as Board of Directors of the Federal Service, to maintain the integrity of a sound retirement system. Mr. Speaker, today we have reaf- firmed our commitment to the Na- tion's most important supplementary retirement program. In opposing the rule, I hope that the House affirms its commitment to the Nation's most im- portant pension program-civil service retirement. It is not a program that simply puts civil servants out to pas- ture at the end of their careers. It is Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 950 CONGRESSIONAL RECORD - HOUSE March 9, 1989 rather than later. This may come as early as the next 3 to 5 years. This view is shared by groups- as diverse as CHART 1.-THE IMBALANCE OF H.R. 1900-THE RELIANCE Percent of Percent of taxable OF REVENUES total bill the American Association of Retired [Expressed as percentage of the to_ savings in the NU Persons, the National Federation of Independent Business, the American Farm Bureau Federation, and the Na- Source: Based on figures of March 4, 1983, from the Committee on Ways and ndurMum sing the estimates of the Office of the Chief Actuary, Social a tional Taxpayers Legal Fund. By the handed coverage .......................................... 15.1 18.9 report of the National Commission on ?i '"x"18 ( income tam) 51.6 4.5 Social Security Reform, we are told ram' ............ 10.4 1 1.3 that the short-run deficit, that is from TOW ................ -.......................................... 77.1 67.1 now until the end of the decade, is in the range of $150 billion to -$200 bil- lion. Yet, the package before us only comes in at a net figure of $165 billion. Mr. Speaker, there are alternatives to this package which could be ex- plored if the rule would permit more open debate and greater consideration. Many outside groups and experts have come forth with their own thoughts and recommendations. They are too numerous to mention at this point, but I would refer my colleagues to the report of the Commission wherein var- ious staff memoranda and reports are cataloged, each of which explored al- ternatives of various shapes and sizes. The additional and minority views of members of the Commission are also fertile ground in the search for a more balanced approach. In general, the thrust of any alterna- tive proposals would be to reduce future benefit increases under social security. No one, including this Member from California, is advocating the reduction of social security bene- fits below those that are now paid to our Nation's retirees. Much could be done, however, along the lines of per- manent reform of the cost-of-living ad- justment mechanism, rather than the standby "stabilizer" under the ways and Means Committee bill that would kic$ in after 1987 only if the trust fund balance falls below specified levels. Initial benefit amounts for re- tirees into the future could also be al- tered with sufficient lead-time to permit individuals to adjust their own financial plans for retirement. We could also separate out the welfare functions of social security from those more directly related to pension Insur- long-run reform might even expand upon the existing individual retire- ment account (IRA) program. The Point, Mr. Speaker, is that we do not lack other options and advanta- geous alternatives. What we lack is the political courage to see beyond the im- mediate horizon and address the need for structural reform of social secu- rity, not just the infusion of yet more revenue. For all of these reasons, I must oppose the rule and the legislation as reported from the Committee on Ways and Means. CHART 2.-BREAKDOWN OF SOCIAL SECURITY ACT AMEND- MENTS OF 1983, AS REPORTED FROM THE COMMITTEE ON WAYS AND MEANS Short term Percent of (hill-) total Summary 1. Expanded coverage ...................................... $25.0 N. Benefit changes (COLA) ............................. 39.7 Ill. Revenues (increased taxes) ...................... 85.2 N. General revenues........................................ 11.2 I. Expanded coverage: New Federal employees ................................... Nmryrofit awes ........................................ Prohidt lemdeahp d State and bpi governnesd ................... -........................... Subtotal ........ ............................ -........ -.... N. Benefit cempuAw. COLA Six-month delay ................................... Needled termlit change ............... -...-............ subtotal....... _ ........................ -......... ........... Shat run Lon term (1983-90) (75 yr) 9.3 12.5 3.2 25.0 15.13 24.04 51.55 10.41 5.63 7.56 1_94 15.13 23.84 .20 24.0 N. Other: General revenue for military credit and miscellaneous ....................................................... .03 1.3 Gross total .................................................. 2.34 100.2 Women's benefit changes ........................................ -.07 ..................... Increased delayed credit ........................................... -.10 ...................... Net total ..................................................... 2.17 ...................... Mr. PEPPER. Mr. Speaker, I yield 6 minutes to that great champion of the cause of need in this House, the able gentleman from Kentucky (Mr. Plut- KINS). (Mr. PERKINS asked and was given permission to revise and extend his re- marks.) Mr. PERKINS. Mr. Speaker, I shall vote against the modified closed rule proposed by the resolution. In my humble judgment, neither the committee bill, the recommendations of the National Commission on Social Security Reform, nor the two amend- ments that would be allowed-none of these get to the heart of what is wrong with social security. At the very least, the Members ought to have a chance to propose meaningful amendments to H.R. 1900, and to engage in full debate on the long-range problem. This bill is not going to cure social security. No bill will cure it that does Ni Revenue Ikovislons: not take dead aim on the illness that Taxation of hag of SS benefits of "high income" I ......................................... 27.3 16.52 afflicts the economy that supports Payrol tax Increases ........................ -.......... -. 39.4 23.84 social security. Tax an 304niebyed at same rate as Gum .......................................................... 18.5 11.19 Notwithstanding the cheery bulle- ... 85.2 51.55 tins that come out of the White House N. other: Gearel tea reimbursement b SS these days, the American economy is trust haws for past military wage crafts........... 11.2 10.41 still sick. No amount of high pressure Teas net of Increased beaeas for political hype from 1600 Pennsylvania widowed and divorced women, costing Avenue is going to convince those 11.5 $1.5 billion) ................................................ 1165.0 ............... -..... million Americans standing in the un- 'The National Commission had estimated the short run (1983-89) deficit at $1504200 billion. CHART 3.-LONG TERaa BREAKDOWN The revised estimate of the 75-year short- fall, based upon the analysis of the Chief Actuary of the Social Security Administra- tion is 2.09 percent of taxable' payroll. The long term breakdown of the contribution of each of the elements of the bill is noted below. They actually total over the 2.09 per- cent, although on an estimated basis. Percent of Percent of tuft teal big Met L Expanded coverage: New Federal employees ................................... PrehRR tefmlhatel. d...Shale and IOd~ Borer W-L- ............................................. subtoal ...................................................... N. e x4 t10" 5x-month MA Si delay ..................................... .30 128 disability of its own. NOrafal aewhs change ................................. .03 1.3 I am standing here today and telling Return replacement rate from 2880-2008.... .43 18.4 you that if we do not get this economy s ....................................................... .76 32.5 back on an even keel, there will be pi Reverend I very few solvent pension plans any Taxation of onetaN of SS bad ts of "high income". ................................................. .61 26.1 FICA tax Naxeeaa (1980'x)........ _...... _...... .03 1.3 Tax an sefenNdeyed ...................................... .19- 8 1 FICA tm increase b 2015.......- ..................- .28 . 12.0 &, tie .......................... _.... --....... -........ _ 1.11 47.5 employment lines that recovery is here. In my'judgment, the President has listened to advisers who are more in- terested in the balance sheets of big banks than they are in the welfare of ordinary Americans. Lines of credit are more important to them thasi lines of unemployed. One prominent economist after an- other has told us during hearings before the Education and Labor Com- mittee that high interest rates-and I mean real interest rates-are a major factor in this sick economy. Those high interest rates are forcing business failures by the thousands all across this country, and they are the direct cause of the loss of millions of American Jobs. And that is certainly a factor in the reason social security is suffering a where in the country. Social security will have plenty of company. If we really want to cure the eco- nomic illness, we will open up this leg- islation before us today and reestab- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1988 lish machinery to control interest rates, wages, prices, credit-right across the board. . Now, I can count. I know that the probabilities are that this bill is going to pass pretty much as it came from the committee. It is much easier to go on fooling ourselves than to take the concrete action that is-needed. ? If, by some chance this rule is voted down and we have a chance to offer amendments, I will have an amend- ment to provide for controls on the economy. Actually, this can be done fairly easily. The language of the Council on Wage and Price Stability Act is still on the books. All we need is one sentence to authorize the Council to Impose mandatory economic controls with re- spect to prices, rents, wages, salaries, corporate dividends, and all other sim- ilar types of economic efctivity. And as for the all-important Interest controls, all we need to do is to repeal the expiration date of the Credit. Con- trol Act which is already on the books. This short, one-page amendment would give the President all the power he needs to get the economy under control, to get people back to work, to shorten the unemployment lines, to get people to work building homes, and making it possible for other people to buy them. I believe this is possible. I believe we could act here today to turn the econ- omy around, and that our action would go a long way toward curing the problems of the social security system. Mr. Speaker, I am sure we all re- member it was just a little over 5 years ago, in December 1977, that we gave final passage to a social security tax Increase bill that was hailed at that time as the answer to all of the sys- tem's deficit problems until the begin- ning of the 21st century, at least. We said "We have saved social secu- rity. We will not have to have any more social security bailout legisla- tion. Hooray for us." We believed the propaganda that was put out then, so we all voted for the bill and went home for Christmas. Well, as it turns out we did not do anything of the kind. Here we are, 63 months late, puckering up to "save social security" again. I just. do not believe the country Is going to have much confidence In. what we do here today if we no not bite the bullet and do what has to be done. We can make a start by voting down the rule and by letting H.R. 1900 be brought to the floor under conditions that will at least permit the House to debate the suggestions for improving it that I and others have to make. 0 1045 Mr. PEPPER. Mr. Speaker, I yield 2 minutes to the able gentleman from Minnesota (Mr. OBERBTAR). Mr. OBERSTAR. I thank the gentle- man for yielding. Mr. ADDABBO. Mr. Speaker, will the gentleman yield? CONGRESSIONAL RECORD - HOUSE H 951 Mr. OBERSTAR. I yield to the gen- tleman from New York. Mr. ADDABBO. Mr. Speaker, I rise in opposition to this rule and I strong- ly urge my colleagues-to vote down the previous question. It saddens me to be in opposition to the House leadership on such an Important question, but I am fully convinced that this rule does not allow the Members of this body to work their will on a bill which may be the most critical piece of legislation to come before this Congress in this ses- sion. It is a bill which effects all of our citizens and carries severe economic impacts upon those citizens well into the 21st century. With that in mind, I would have thought that the sponsors of this leg- islation would have allowed full discus- sion on the many critical and highly sensitive aspects which are included within the bill. That the sponsoring committee, the leadership, and the Rules Committee decided against that course of action is no substitute for the fact that that would have been the right way to proceed. Since they have allowed the Members to vote on only two amendments to the bill as brought out by the committee, it Is my belief that the rule is faulty and must be re- jected. I say to my fellow Members that to accept this gag rule is to fail to perform your duty to your constitu- ents and to all of the people of this country who look to this body to cor- rect the inequities In the social secu- rity financing system, to assure the or- derly payment of benefits to recipients and to assure wage earners their sala- ries will not be plundered. This rule does not even allow the Members the right to act on the most basic questions which effect millions of American workers; namely, the In- clusion of Federal and postal employ- ees and the Inclusion of all nonprofit organizational emplpyees. It further preempts the rights of State and mu- nicipal governments to decide for themselves whether or not they wish to be in the social security program. I think it must be stressed that those of us who are opposed to the bill as it now stands and who want to open this rule so that correcting amend- . ments can be offered are not against the social security system. I for one have been a strong advo- cate of the social security system for the 22 . years I have served in this House and people. who will examine my voting record will learn that I have supported increases in benefits for social security recipients without fail throughout those years. My record of support for the senior citizens of this country stands second to none to anyone serving in this body and I reject the arguments that because some who speak for senior citizens support this bill that all of us must fall in line with It. I will say further- that the most in- sidious turn of events has been the ability of this administration to turn senior citizens against Federal and postal workers in this matter and vice versa. These groups should be stand- ing together because they are in gen- eral the groups that this present ad- ministration seeks to take benefits from so that they might be given else- where. This ploy, Mr.8pebaker, will not hold up in the long run because the goals and aspirations of each is inevi- tably tied to the other. What we ought to be doing is finds' a way to solve the financial problems' of the social se- curity system without bringing harm to other Innocent, groups whose only fault as far as I can "see is to be part of a financially sound retirement system. o~ Once I have been saying under i the programs, under the e social security um were valid- and- I believe they are-then it ought to be the responsibility of the Federal Government to fund those programs as it funds any other worthwhile pro- gram It operates. What we have done Instead throughout the years Is to seek to lay the costs of these programs outside the normal budgetary process each year and to lay the burden for eso these onto the payingpayrolltax for f the . earner. I do not believe to good faith of this administratim, Insofar as the needs and requireme$yfe ; of our senior citizens are coneerrie4 Ulntil it became a political embarr to it, the present administratl more than willing to cut bad[ is to social security recipients an to eliminate a number of Wbi(ler the social security unit a Eves as we speak today, throughout this. country help- less citizens receive termination no- tices of disability.. bents even before an investigation has been conducted to determine If they are receiving those benefits properly. Is this the mark of an administration with a kind and warm heart for the a who can no longer help themselvI do not think so and it distinctly bothers me that the leaders of this 1110un are so quick to join with this Won to bring a bill to the that contains a political quick fix f a system that truly needs a major overhaul. There Is no doubt that the bill that will be brought to the floor under this rule is better than the elne which the administration would have offered had it controlled the House of Representa- tives. But that is only a. marginal im- provement and as it stands the inequi. ties created by passage of this legisla- tion would far outweigh the benefits. I sincerely hope, Mr. Speaker, that the House takes the courageous stand of refusing to go along with this rule. This entire charade has been s politi- cal blitzkreig In which those of us who have raised questions ! about the valid- ity of what we are'-doing and the extent of harm we are causing inno- cent people have been! brushed aside in the rush. to bring this bill to the floor before reason canaaseft itself. The previous question must be de- feated. If it is not than this entire rule Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 952 CONGRESSIONAL RECORD - HOUSE must be rejected and this measure sent back to the Rules Committee to open it up so that everyone who has a stake in what we do here can get a fair hearing. I thank the gentleman for yielding. Mr. OBERSTAR. Mr. Speaker, I rise on a matter of simple justice and equity for Federal workers. There will be no opportunity in this rule to give them just one small measure of fair- ness and that is to allow a period of time for this Congress to fashion a re- placement retirement pxosram for Federal workers before this legislation goes into effect and taxes new hires in the Federal Government system. I ap- preciate the remarks of the gentleman from Missouri (Mr. TiY o$) earlier. I made my case- before the Rules Com- mittee. Apparentiy the deck was stacked, the train was loaded, it did not stop at any stations to let anyone on or anyone off. And that is regretta- ble. We ought to have the opportuni- ty, this body ought to have the cour- age to face up to one of the most pressing social Justice questions and that is double taxation of new hires in the Federal Government system. As the gentleman from Ohio yester- day in the Rules Committee, Mr. LATTA, pointed out, a person hired on January 1 will pay 5.7 percent more in taxes than the person hired on Decem- ber 31 of the preceding year under the provisions of this bill. That is wrong. That means that out of the average salary of a new hire which Is $14,800, a worker will pay $2,072 In retirement tax to the civil service retirement system, OASI,? and medicare. Of that amount, a worker will pay $1.136 in civil service retirement, in addition to the social security tax which that person will pay. The lowest entry level, GS-5, will have to pay an addi- tional $935 in civil service retirement. That is just not fair. We ought to fashion a retirement plan that deals with the two issues of civil service re- tirement and social security retire- ment at the same time. That could be done in the timeframe of the amend- ment which I proposed that the Rules Committee allow for this body to con- sider. Regrettably we will not have that opportunity. I mast ask for a vote against the previous question and against the rule. Mr. QUILLEN. Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. CAS:NSY). (Mr. CARNEY asked and was given permission to revise and extend his re- marks.) Mr. CARNEY. Mr. Speaker, I rise in strong opposition to the rule. I believe that legislation of this magnitude which affects every American is too important to be considered under a modified closed rule, allowing for the consideration of only two amend- ments. Members of this body who do not serve on the Ways and Means Committee have not been given ade- quate opportunity to express either their support of, or reservations of, the various aspects of this historical legislation. The impact of this bill on all Ameri- cans is as profound as it is complex. The legislation today calls for a change in the Government's long- standing commitment to Federal em- ployees. A change of this magnitude, alone, deserves a separate vote. There are other issues as well requir- ing separate attention: Deferring the cost-of-living allowance; the issue of general revenue financing; the issue of the ratio between taxes and benefits; the extension of unemployment bene- fits; the changes in medicare pay- ments; and the changes in welfare benefits. These are all concerns which suggest that limited debate is inad- equate to Insure full consideration by this body of these issues. Mr. Speaker, along with my col- leagues, I am deeply concerned about the -future of the social security system. This program must continue to operate so that our Nation's older citizens will be guaranteed a secure livelihood when they retire. However, the provision in the bill which would force future Federal workers into social security, would not solve the fi- nancial problem$ of that system, but would bankrupt the fiscally sound civil service retirement system. In essence, the so-called universal coverage pro- posal is a classic example of "robbing Peter to pay Paul." The National Conunnission on Social Security Reform has asserted that the inclusion of new Federal employees under social security would generate approximately $12 billim in revenue for the system between 1983 and 1989. Yet, some independent actuaries are claiming that the real figure could be much lower-as low as $4 billion. In addition, the Commission, as well as the Social Security Administration actuaries, have projected a long-term shortfall in the system. This problem would occur at the same time Federal and postal workers begin to collect social security benefits. It is apparent, therefore, that the inclusion of these workers under the system would help create a long-term funding problem in return for a small stopgap infusion of revenue. I would also point out that the evi- dence is clear that the enactment of the universal coverage proposal would endanger the civil service retirement system. There is an ominous possibil- ity that, without the contribution of new hires, the civil service retirement fund will face bankruptcy by the end of this century. At that time, the bene- fits would have to be paid out of the U.S. Treasury, at a cost of at least $185 billion, in constant dollars. In my view, it is unwise to either force such a financial burden on the taxpayer or endanger the level of benefits that have been promised to Federal em- ployees. Although the social security legisla- tion before us provides for a new sup- March 9, 1989 plementary retirement program for Federal employees, the bill falls to de- scribe such a system. We are kept in the dark concerning the level of bene- fits under a new pension program. We are not told what contributions, from the Government and the employees, would be required to finance the system. Congress, if you will, is being asked to buy a "pig in a poke." I maintain that it would be prudent to at least delay the provision to in- clude Federal employees under social security until a supplementary pen- sion program is developed. But, unfor- tunately, this body has been denied the opportunity to vote on an amend- ment to delay the proposal. Let us not go forth in haste and commit mistakes that will jeopardize the future retirement benefits of mil- lions of older- Americans. Although some of you may disagree with my views regarding social security, I hope you will agree that we should at least have the occasion to pass judgment on specific provisions of this legislation that will affect so many. Both the public's interest and democratic proce- dure are ill-served when legislation is placed on the fast-track without proper scrutiny. Mr. Speaker, as H. L. Mencken once said, "For every problem there is a simple solution-quick, cheap, and usually wrong." So it is with H.R. 1900. I urge my colleagues to vote no on this gag rule so that 435 Members may more adequately express their views on this issue. Mr. QUILLEN. Mr. Speaker, I yield 1 minute to the gentleman from Penn- sylvania (Mr. GxaAs). (Mr. GEKAS asked and was given permission to revise and extend his re- marks.) Mr. GEKAS. Mr. Speaker, I, too, am concerned about the structure of the rule and rise in opposition thereto. I do so on the basis that if we did in- dulge in the? present provisions of the rule we will be withdrawing from the Congress the right to exercise fore- sight, for a change. It is absolutely a truism that if we do not incorporate into our total deliberations some as- pects of what is going to happen to the Federal civil service retirement system, within a very short time after today, then we are failing in our total commitment to solve our totality of problems with the various retirement systems, including the social security system. It seems to me that we ought to have this go back to committee and come forth with a plan that will take into account what is the future of the Federal civil service retirement system; just as the Federal employees themselves are saying what good is it to make one system well while making the other ill? It will hurt our taxpay- ers in the long run if in the next few years we are going to come back to these tables to deliver another com- mission report on what to do with the Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 956 CONGRESSIONAL RECORD - HOUSE funds is less than 20 percent. A catch- -up benefit would be paid if the ratio exceeds 32 percent. The bill gradually increases the de- layed retirement credit from 3 percent to 8 percent per year between 1990 and 2010. The bill includes in taxable income, beginning in 1984, aportion of social security benefits and tier 1 benefits payable under the Railroad. Retire- ment Act for taxpayers whose adjust- ed gross income combined with 50 per- cent of their benefits exceeds a base amount of $25,000 for an individual, $32,000 for a married couple filing a joint return and zero for married per- sons filing separate returns. The amount of benefits that could be in- cluded in taxable income would be the lesser of one-half of benefits or one- half of the excess of the taxpayers' combined income over the base amount. The proceeds from the tax- ation of benefits, as estimated by the Treasury Department, would be trans- ferred to the appropriate trust funds. The bill advances the payroll tax in- crease scheduled for 1985 to 1984 and part of the increase scheduled for 1990 to 1988. Conforming changes would be made in the tier 1 Railroad Retire- ment Tax rates. The bill provides for a one-time credit of 0.3 percent of wages to be al- lowed against 1984 employee FICA and tier 1 railroad retirement taxes. Appropriations to the old age and sur- vivors and disability insurance trust funds would be based on a 7-percent rate. Conforming changes would be made in tier 1 railroad retirement tax rates. The bill provides that, beginning in 1984, the OASDHI rates for self-em- ployed persons will equal the com- bined employer-employee OASDHI rate. In addition, self-employed per- sons would be allowed a SECA tax credit of 2.1 percent of net self-em- ployment income in 1984, 1.8 percent from 1985 through 1988, and 1.9 per- cent thereafter. The bill provides for a lump-sum payment to the OASDI trust funds from the general fund of the Treasury for additional benefits and potential taxes arising from gratuitous military service wage credits. The bill increases the Federal SSI benefit payment by $20 a month for individuals and $30 a month for cou- ples, effective July 1, 1983, to cushion the effects of the COLA delay. We have learned some sobering les- sons about the fallibility of economic projections since 1977. Today we give you no false promises about guaran- teeing the solvency of the social secu- rity system well into the 21st century. We have based our decisions on conservative, if not pessimistic, as- sumptions regarding economic and de- mographic performance. We have designed a series of three fail-safe provisions to assure full re- tirement benefit payments-particu- lary in the short run-should econom- March 9, 1983 is conditions dramatically worsen. The Therefore, as the Nation's economy first permits interfund borrowing from expands, and workers' productivity in- the disability and hospital funds from creases, a slight increase in taxes will 1983 to 1987, with repayment of prin- not harshly affect workers. cipal and interest no later than 1989. The bill then moderates future in- The second credits the OASDI trust creases in real benefit levels, without funds, at the beginning of each reducing their purchasing power. The month, with the amount of payroll tax tax increase called for takes place at a revenues expected to now in over that time when the scheduled tax burden month. And the third requires the will be proportionately lighter for ately to Congress any threats of short- fall in the trust funds, along with cor- rective recommendations. Perhaps the most courageous choice the House makes today is to reach beyond the immediate deficit and con- front the system's financial troubles beyond the turn of the century. Solv- ing the near-term financing crisis re- sponds to the fears of those at or near retirement age. Responding to the deficit that looms in the next century makes a promise to our children- workers than it is right now. Those ex- pecting to receive benefits in the next century would be assured that the system is solvent, while those who will be working to support those benefits will have the assurance that only a modest increase in taxes will be re- quired to maintain a sound social secu- rity program for their parents and them. Under the rule, the House will vote on two long-term alternatives to the committee compromise. The first would close the deficit gap by simply many of whom doubt the system's ca- workers. pacity to pay benefits when they sing second d the achieves tax the same end by nd by ____L retirement ___ a In that regard, the committee's bill reaches beyond the commission's report to confront the long-term-or 75-year-deficit-which rises sharply after the turn of the century as the "baby boom" begins to claim its retire- ment benefits. Agreeing that Congress must bring the system into long-range balance proved easier than agreeing on a par- ticular formula. The committee bill reduces initial benefit levels by 5 percent in each of 8 years, beginning in the year 2000, and increases the OASDI tax rate by 0.24 percent for employers and employees in 2015. A majority of the committee believes that making slight adjustments in taxes and benefits remains true to the enduring theme of this social security bill-to ask both those contributing to the system and those receiving bene- fits to share the price of long-term sol- vency. The committee's solution attacks the problem head on by reducing overall benefit levels through the formula. The primary reason for the longrun deficit is the increase in real benefits guaranteed by the current benefit for- mula. A minimum wage worker in the year 2045 will get benefits with the same purchasing power as a maximum wage earner gets today. H.R. 1900 will, therefore, cut back only slightly on the future real benefit increases al- ready guaranteed. Furthermore, this reduction will affect all beneficiaries in the same way, regardless of their benefit level or work history, or when they choose to retire. The committee solution also raises taxes slightly in 2015-the first in- crease since 1990. Because social secu- rity is a pay-as-you-go program, it is reasonable to raise taxes from time to time. In fact, future social security taxes as a percent of GNP actually fall, while the program's cost as a per- cent of GNP remains fairly steady. only raising the age at which full benefits are paid. One proposal puts the burden on future workers. The other puts the burden on future beneficiaries. The committee approved two addi- tional measures which we believe are timely and necessary. First, in response to the alarming rate of unemployment and the hard- ships faced by millions of unemployed, the committee extends for 6 months the Federal supplemental compensa- tion program (FSC). This program, which is due to expire on March 31,. 1983, will provide up to 14 weeks of benefits to individuals who have ex- hausted all other unemployment com- pensation. When this program was enacted last fall, it was hoped that strong signs of economic recovery would emerge during the program's 6-month dura- tion. Unfortunately, the unemploy- ment rate remains over 10 percent and holding. Over 11 million Americans are out of work. Jobless workers are exhausting their unemployment bene- fits at the rate of 300,000 per month and are depending on these additional weeks of FSC in order to provide for themselves and their families until they find employment. In addition, the committee was con- cerned about the 1.2 million people who will have exhausted their original FSC benefits by April 1, 1983. A simple extension of the program would not help these individuals. Recent unem- ployment statistics indicate that as the economy improves, these long- term unemployed individuals will be the last to be rehired. For these rea- sons, the committee bill provides up to 10 more weeks of FSC to individuals who have or soon will have exhausted their original FSC entitlement. These additional weeks of FSC benefits will help those who have been unemployed for the longest period of time and who are in the greatest need of assistance. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 r Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 958 CONGRESSIONAL RECORD - HOUSE tion's recommendation, and on its own, would not be supportable at the levels provided. The medicare changes are for the most part worthwhile, and, although they should have been handled sepa- rately, their inclusion is not a bad thing. Overall, the choice may not be the one each of us wants, but it is a clear choice. If we vote, as we should, for H.R. 1900, we can save the social secu- rity system, absent some unusual eco- nomic conditions. If this bill fails, we will deserve the chaos that results. Mr. ROSTENKOWSKI. Mr. Chair- man, I yield 15 minutes to the gentle- man from Texas (Mr. PICKLE). (Mr. PICKLE asked and was given permission to revise and extend his re- marks.) Mr. PICKLE. Mr. Chairman, I rise in strong support of the bill. The re- sponsibility this House faces today goes beyond assuring our elderly that their social security benefits will be paid, and beyond that, assuring future generations the social security pro- gram will be there when their turn comes. When we can pass this bill today, and I hope we can pass it expe- ditiously and with a minimum of bitter debate, then we will have enhanced confidence in our ability to govern. And we will do more for our economy than just about anything else we could do. More than passage of a social secu- rity bill is at stake here, and pass a social security bill we must. Social -security affects 38 million beneficiaries every . month, and through them every American family. It pays out benefits in monthly checks of $170 billion a year, and an addition- al $40 billion in medicare hospital pay- ments. Any program this large gets to be terribly important. Social security is even more important because it is not just large-it is also part of the fabric of our family life and of the eco- nomic life of our Nation. We know the issues we face. We have squeezed, massaged, molded, ig- nored. and finally faced up to these issues many times over in the past few years. Simply put, social security needs a substantial boost in this decade and real structural reform in the next century. The vote the House Members face today is to do what we can to insure social security benefits for the coming years and the coming generations. We must restore confi- dence in our young wage earners. Even before we begin, we have to ac- knowledge the extraordinary coopera- tion that goes into the shaping of any major bill such as-this one. Republican and Democrat, liberal and conserv- ative, have come together to do what is right-preserve social security, make it strong, and restore the peoples' con- fidence in her. My own subcommittee-all the mem- bers that have served this Congress and last-have shown an extraordi- nary courage, restraint, and willing- ness to move forward for the common good regardless of our personal prefer- ences. I pay my respects to the members of my subcommittee, the gentleman from Missouri (Mr. GEPHARDT). the gentle- man from Massachusetts (Mr. SHAN- NON), the gentleman from Georgia (Mr. FOWLER), the gentleman from California (Mr. MATSUI), the gentle- man from Arkansas (Mr. ANTHONy), the gentleman from Indiana (Mr. JACOBS). These men have worked har- moniously together to help us keep this package together and advance it to the floor. My own chairman, the gentleman from Illinois, Mr. DAN RosTENxowsxl, has entered into this contest and pushed and pushed to do what is right and what is responsible. His leadership has been more than essential. His leadership has been important and helpful and has been enlightened and we cannot overplay the importance of the role he has played, Mr. Chairman, in advancing this bill to the floor. I am mindful of the remark the. gen- tleman made to the gentleman from Texas and I reciprocate manyfold, but I appreciate the gentleman's leader- ship, Mr. Chairman. We have had co- operation from the other side of the aisle. We have had the clear thinking, as usual, of the gentleman from New York, BARBER CONABL.E, and we have had excellent cooperation from the gentleman from Ohio (Mr. GRADISON) and the gentleman from California (Mr. THowAs). We hive had the coura- geous presentation and views of the gentleman from Texas (Mr. ARCHER) and the gentleman from Illinois (Mr. PHILIP CRANE) and we have done it in the spirit of cooperation, although we might have had some differences, and I appreciate that. Other individuals from outside the Congress have played key roles. In particular we currently are indebted to Alan Greenspan and the other mem- bers-in and out of Congress-of the National Commission on Social Secu- rity Reform who took on an herculean task and stayed with it until the last moment-until the task was complete. The National Commission put to- gether from unacceptable provisions an acceptable package,- and that is what we must move forward today. The bill presented to you by the Committee on Ways and Means paral- lels closely the recommendations of the National Commission on Social Se- curity Reform. It is a bipartisan bill. It was reported from the committee by a vote of 32 to 3, an extraordinary, an impossible achievement. While any one of us could make a case of the harshness or the undesira- bility of any one of the provisions in this bill, taken together, it works. Only one major question remains, and that is for the House to work its will on how to go about addressing the long-term deficit. All of the options we face there will raise the sufficient funds. It is a matter of deciding what March 9, 1983 is the route that will be believable and acceptable to the public-what will do the best job of restoring confidence in this program. The committee bill raises $165 bil- lion in the short term between now and 1989. It raises 2.12 percent of pay- roll, which is slightly over the deficit projected under intermediate assump- tions into the next century. It diverges from the Commission recommenda- tions only where there seemed a clear need to refine a recommendation to make it more practically feasible or to fill in actual gaps left to the Congress. First, the bill has several provisions extending coverage. It would cover newly hired Federal workers, all non- profit employees, Capitol Hill employ- ees not participating in the civil serv- ice retirement program, and all Mem- bers of Congress. judges, and other elected officials and high-level politi- cal appointees. It provides- for the elimination of the so-called windfall benefits which accrue to individuals who also work in employment not cov- ered by social security and it would prohibit State and local governments from pulling out of social security. These provisions, combined, raise $25.4 billion of the $165 billion in the legis- lation and 0.47 percent of payroll, or almost one-quarter of the long-term needs of the program. Let me empha- size that again, because there is much rhetoric which has flowed around as- serting that extension of coverage would be bad for social security in the long run. Extension of coverage is good for social security both in the short term and in the long term and the facts are just indisputable on that. It is the committee's belief that ex- tension of coverage is good for the in- dividuals involved as well, and I would like to insert in the RECORD at this point a letter from a career civil serv- ant-and a great statesman-Mr. Robert Ball, which addresses this point. I would like also to insert some materials which the Members-will find useful in addressing the questions which naturally come up regarding the effect coverage will have on civil servants and others involved and on the Government. WASHINGTON, D.C., February 17. 1983. Hon. J. J. PlcKIZ, Chairman, Subcommittee on Social Secu- rity, Committee on Ways and Means, Washington, D.C. DEAR MR. Ciuuu AN: I fully support the coverage of Federal civilian employees newly hired after January 1, 1984, as recom- mended by the National Commission on Social Security Reform and the establish- ment for such newly hired employees of a benefit plan within the Civil Service Retire- ment system that would build on social se- curity coverage, Just as is the case with the pension plans of private employers. I would like to tell you why I take this position. I spent most of my working career, 30 years, as a Federal employee, and although during the last 11 years of that period I was a Presidential appointee, I have always thought of myself as a career civil servant. I believe that the business of the United Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H960 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 , - CONGRESSIONAL RECORD - HOUSE ' March 9, 1983 B. IMPACT ON CIVIL SERVICE RETIREMENT SYSTEM (CSRS) Coverage of new workers will not affect benefits being paid out of the current CSRS system, and current workers will continue to pay their contribution to the system. Revenues to the CSRS trust fund will be' reduced as new workers pay into the OASDI trust fund instead of into CSRS. The extent of the reduction will depend on the nature of the supplemental plan designed for new workers. If this plan is part of the CSRS, then the reduction will be less than 7%. It should be remembered that the CSRS system is primarily funded by general tax revenues; out of an estimated cost of 36% of payroll, only 7% is paid by employee contri- butions. Some of the 29% paid by general revenues is interest on the CSRS unfunded liability which is treated as an investment. Thus, re- serves of the CSRS trust fund do not depend on revenues coming in from outside the Federal government; they are deter- mined by the amount of benefit obligations the system is calculated to have in the future and the interest on those obligations. Long-run CSRS benefit obligations (the unfunded liability) will decrease as workers receive more of their total pensions from social security; the exact impact will depend on what sort of supplemental civil service pension is designed for the new workers. Congress could appropriate funds to the CSRS trust fund to make up for revenues lost because of social security coverage. However, there would be no real effect on the security of the retirement benefits due hr the future, since CSRS benefits are not guaranteed by existing revenues in the trust fund. but by the taxing power of Congress. Civil service retirement benefits are entitle- ments, similar to social security benefits, and can be increased or reduced at any time by Congress, regardless of the reserves in the CSRS trust fund. C. IMPACT On THE FUNERAL BUDGET Covering new Federal workers under social security does not change the total amount being paid out in either civil service benefits or social security benefits in the short run; in the long run, there is a Savings to social security. The difference in revenue to the Federal government would be between the 6.7 per- cent workers now pay to social security, and the 3.3 percent Federal workers now pay (7 percent to CSRS, 1.3 percent to Medicare). If no change were made In the CSbRS law at all, workers would pay both taxes; if a sup- plemental plan to which workers contribut- ed were enacted, some of this difference would be made up. This difference in reve- nue is not substantial. Even if additional payments were made to the CSRS trust fund to make up for losses frogs social security coverage, the payments would have no effect on the Federal deficit, since general revenue payments into a gov- ernment trust fund are inside the budget and don't affect total outlays or total rev- enues. D. IMPACT ON AFFECTED WORKERS Civil service retirees would not be affect- ed; their retirement benefits now in the future will depend on the Congress' commit- ment to continue to pay full benefits. Many Federal workers would be better off if covered by social security: (1) Social security provides family and sur- vivor benefits with no reduction in the bene- fit of the worker, unlike CSRS, which re- quires retirees to take a reduced annuity in order to provide benefits to their survivors. (2) Disability protection under social secu- rity requires recent covered employment, so that workers leaving Federal service are without disability protection for several years. (3) Over half of air workers who enter Federal employment will eventually leave Federal service with no eligibility for CSRS benefits; if they take their contributions with them, they receive no interest on con- tributions after the first 5 years, or employ- er-share on any contributions. Thus, their eventual social security benefits may be lower than if their Federal employment had been covered, and they will not have re- ceived any benefit at all from their contri- butions to CSRS. (4) The Federal employees who are low- paid would receive the advantage of the social security weighted benefit formula. The Civil Service benefit formula gives a greater advantage to higher-paid long- career workers. QUESTIONS AND ANSWERS ON CowERAGE OF PEDERaL Wo18IEES UNDER SOCIAL SECURITY EFFECT ON soCIAL SECURITY Q. How can covering new Federal workers under social security save money for social security since these workers will draw bene- fits out in the future? Won't this just make social security's long-run problem worse? A. Social security would realize a large long-term savings from covering new Feder- al workers:.28 percent of taxable payroll, a sizable contribution to solving the 1.8 per- cent long-term deficit. The long-term sav- ings results mainly from two factors: (1) Elimination of the windfall now availa- ble to the large majority of Federal retirees who collect social security based on very few years of work covered by social security. The weighted benefit formula treats these workers like low-wage workers so that they receive a relatively large benefit based on many fewer years of covered employment years compared to similar workers covered their whole careers. A recent study (Social Security Bulletin, February 1983) has found that 73 percent of as Federal retirees over 62 are entitled to social security benefits, and that the per- centage Is steadily increasing. Most of these workers are collecting a heavily weighted social security benefit that they paid rela- tively little for, in comparison with a worker in private industry who made similar wages that were covered by social security. This windfall means that all workers in covered employment are subeidi$ing the weighted benefits for Federal retirees, whose civil service benefit is already sup- posed to take the place of both social secu- rity and a private pension. These weighted benefits were meant for long-term, low-wage workers with few other sources of retire- ment income, not for retirees with pensions that already are meant to replace social se- curity. (2) Another reason for the long-term sav- ings to social security is that average sala- ries for Federal workers are higher than average covered wages. Therefore, higher payroll tax contributions would be made over the long term for Federal workers than for a similar number of private sector work- ers. Q. Why can't you just eliminate the wind- fall in the social security benefit formula and leave Federal retirees' benefits alone? A. The long-term savings could be achieved in part by addressing the windfall question alone, and changing the formula for workers with non-covered empldyment. However, no short-term savings would be re- alized, and the Commission's consensus package depends heavily on the immediate revenues from coverage. Furthermore, eliminating the windfall would only reduce social security benefits for those Federal workers who actually do qualify for civil service retirement benefits. It would do nothing for the majority of Fed- eral workers who leave Federal service with- out qualifying for civil service retirement benefits. Over half of all Federal workers never collect anything from CSRS: they are the least likely to have social security cover- age when they leave Federal service, and the most likely to need the protection social security provides for families against dis- ability and death of the worker. It should be remembered that social security as the Na- tion's basic social insurance system, was founded on the principle of universal man- datory protection for all workers. In the ab- sence of universal coverage, both windfalls for workers gaining protection under both social security and CSRS, and gaps in pro- tection for workers who move between the two systems are created. Q. What will happen to the retirement benefits of new Federal workers who come under the social security system? The retirement benefits of new Federal workers will depend on the supplementary plan enacted in addition to social security coverage. Many Federal workers would be better off if covered by social security: (1) Social security provides family and sur- vivor benefits with no reduction in the bene- fit of the worker. (2) Disability protection under social secu- rity requires recent covered employment; workers who leave Federal service are with- out disability protection for several years. (3) Over half of all workers who enter Federal employment will eventually leave Federal service with no eligibility for CSRS benefits; if they take their contributions with them, they receive no interest on con- tributions made after the first five years, or employer-share for any of their contribu- tions. Thus, their eventual social security benefits will be lower than if their Federal employment had been covered, and they will not have received any benefit at all from their contributions to CSRS. IMPACT ON CIVIL SERVICE RETIREMENT SYSTEM (Cass) Q. The CSRS trust fund is fully and soundly financed now. Cowering new work- ers under Social Security will cut off new revenues from CSRS, and the CSRS trust fund will eventually go bankrupt. How are future retirement benefits of current work- ers and retirees going to be guaranteed? A. The basic answer to this question is that the political will of Congress must guarantee Federal retiree benefits in the future, just as it does now. Revenues to the CSRS trust fund will de- cline as new workers pay into the QASDI trust fund instead of into CSRS. However, the CSRS system is primarily funded by general tax revenues; out of an estimated cost of 36% of payroll, only 7% Is paid by employee contributions. Reserves of the CSRS trust fund do not depend on revenues coming in from outside the Federal government; they are deter- mined by the amount of benefit obligations the system is calculated to have in the future and the interest on those obligations. A large part of the 29% paid by general rev- enues is interest on the CSRS unfunded lia- bility which is treated as an investment. Long-run CSRS benefit outlays will de- crease as workers receive more of their total pensions from social security; the exact impact will depend on what sort of supple- mental civil service pension is designed for the new workers. Congress could appropriate funds to place in the CSRS fund to make up for revenues Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 962 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 1983 Fifth, the bill enacts a series of changes which are designed to contin- ue smooth benefit payments this year and insure benefit payments through- out the decade; namely, it would pro- vide for a general revenue transfer of some $17.4 billion which will reim- burse the trust funds for military wage credits in advance and credit the trust funds for uncashed OASDI checks. Let me be very clear that these provisions do not provide to the funds general revenue that would not come to them anyway and that these provi- sions are necessary to continue retire- ment payments through 1983 without further depleting the other trust funds. The committee bill follows this with a three-part procedure to safeguard payments for the rest of the decade: First, it would institute a new account- ing procedure proposed by the admin- istration for crediting tax receipts to the treat funds at the first of the month, when the money to needed for benefit payments. This will have a sig- nificant impact an trust fumdb re- serves, which will be very important in the immediate years ahead. Second, it would allow taterfumd borrowing be- tween the funds for 1963-89. And third, it would require the trustees to report immediately to the Cbngress with a spectre legislative plan of action whenever the amount in any trust fund is unduly small. Sixth, the b@t makes several other charges, some of which are of general interest, but most of which are techni- cal in nature. I mention only three here. INVESTMENT OF SOCIAL SECURITY TRUST FUNDS The bill made several changes to in- crease income and reduce public criti- cisms.. The two most important changes are: First, investments would be made at the higher of two interest rates, the current law rate or a new short-term rate; Second, long-term obligations, that is, from I to 15 years, would be elhnf- noted and the rate earned by the trust funds would change monthly. ELDERLY AND DISABLED TAX CREDIT The bill provides a new credit for the elderly and disabled who do not re- ceive social security. The credit is de- signed to phi out at approximately the same levels that taxation begins for those who do get social security re- tirement or disability benefits The credit is equal to 15 percent of a base amount which is reduced by amounts received under social security and half of adjusted gross income above a certain point, $7,500/$10,000. The base amount is $5,009 for a single, $7,500 for a joint return. ? ELECTIVE COMPENSATION Under a cash-or-deferred arrange- ment (section 401(K)), a covered em- ployee may elect to have the employer contribute an amount to the plan on the employee's behalf or to receive the amount directly in cash. Amounts con- tributed to the plan are excluded from income tax and FICA. Employees who participate in 401(K) plans whose total annual earnings are below the social security annual tax- able wage base ($35,700 in 1983) or whose contributions to the 401(K) plan reduce the amount of their social security earnings below the annual taxable wage base forego social secu- rity benefits which would have been based on the amounts which they con- tributed to the plan (up to the differ- ence between his actual earnings and the wage base). Therefore, the participation of some workers in a 401(K) plan-which is de- signed to provide retirement income- may actually result in the loss of cer- tain amounts of social security bene- fits (including. but not limited to, re- tirement benefits). In addition, similar elective arrange- ments and tax treatment exist under cafeteria plans (section 125)) (which provide a choice between taxable and non4axabie amounts) and tax-shel- tered annuities (section 403(b)) (which often take the form of salary reduc- tion agreements). The committee bill provides that, to the extent that an employee could have elected to receiv'g cash, employer contributions to these three elective compensation arrangements will be treated as wages for social security tax and benefit purposes. This treatment is justified, in part, on the grounds that when an employ- ee is offered a c noire, between cash or a fringe benefit that is eaeluded from social security coverage and taxation, he has "constructively received" the amount of the cash. Under this view- point, the employee is considered to have been paid the cash and chosen to spend it for the fringe benefit himself. Since there is no exclusion for pay- ments a worker makes from his own funds to these benefits, the value of the fringe benefit will be treated as wages for social security coverage and tax purposes. Seventh, the bill takes perhaps the most important step of all and, com- bined with the rule and the floor amendments to be offered. gives the House a chance to determining how it will. solve the remaining long term needs of the social security program. I say how, not whether, because we must reduce the current long-term deficit as best we can if we are ever to restore confidence in this program. The committee bill takes the route of using a combination of benefit reduc- tions and tax Increases. Two amend- ments will be in order-one wholly to raise taxes and one to raise the age of fail retirement. Whichever route we take, our victory will be that we will resolve the current long-term deficit. There simply is no question that social security faces long-term prob- lems. It is true that, once we pass the 1980's, matters look fairly favorable for the social security retirement pro- gram for a number of years. But that does not mean we should ignore the long term. To do so suggests that there is no firm basis or pattern to the long-term projections and that the po- tential imbalance, especially in the later years. is caused more by putting random numbers together than by dis- cernible economic or demographic events. The fact is the projected im- balance in the final 25-year period of the long-term projections is over 26 percent of program costs, way above the 5 percent standard of leeway which has often been used. Moveover, this imbalance is driven by already discernible demographic circumstances. And it is not as far off as many assume: Actually the first wave of the baby boom generation reaches retirement by 2008. And even under intermediate assumptions, outgo begins to exceed income some- time between 2010 and 2015. The fa- vorable financial projections for the program beginning in the mid-1990's and continuing into the first decade or so of the next century rely on reserves actually being built up sufficiently during this period to carry the pro- gram for several years. But these pro- jected surpluses rely on real wage growth averaging 1.5 percent per year, when real wage growth for the last 30 years has averaged only 1.2 percent. They also rely on a slight increase in the birth rate and an no major break- throughs in average mortality im- provement. All of this is simply by way of saying that we must act. There is as much reason to believe that the'long-term problems of social security may not be so long off as we might think as there is to believe that things will improve somewhat. The people do not perceive social se- curity as just Government welfare pro- gram; every worker of every age is con- stantly aware that he or she has a stake in it. If we do not address its problems when they are brought to our attention. then the worker will adopt an ever more guarded attitude toward the program-to his detriment and to the detriment of social security. In summary, the hour has come. We cannot go back to the drawing board at this point because we do not have time to put together a package of amendments which can garner the support of so wide a variety of groups and indlviiduals as the one which is before us today. The choice is not one of our personal preferences. The choice is whether or not we want the checks to go out on time come July this year. We have all had to swallow hard on something in this package- but as a package, it can hold up. I strongly urge adoption of these social security amendments. ^ 1130 Mr. ROSTENKOWSKI. Mr. Chair- man, I yield 10 minutes to the gentle- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 964 tion, as I did when he gave me the privilege of testifying before his sub- committee, his words back in 1977 on the subject of that bill that was sup- posed to solve the problems. The gentleman from Texas (Mr. PICKLE) said: In passing this bill, we can say to the American people that we are putting social security on a sound financial basis for the next 25 to 50 years. Nothing can be more re- assuring to the public than taking this strong action. Mr. Ullman, who then was the dis- tinguished committee chairman, said at the same time, "(this bill) puts us in a surplus posture in social security for the next 25 years." When President Carter signed the legislation in 1977, he assured all Americans that the system was on firm footing into the 21st century. President Carter said, "Now this legis- lation will guarantee that from 1980 to the year 2030, the social security will be sound." Well, Mr. Chairman, obviously that did not happen, and the guarantees that we had at that time just have not been brought to fulfillment. What gives me additional concern, Mr. Chairman, is that the committee's report itself includes a letter from Mr. Richard Poster, the Acting Deputy Chief Actuary. In his memorandum, Mr. Foster says this: Thus H.R. 1900 as reported by the Ways and Means Committee would substantially improve the financial outlook for the OASDI program. It must be said, however, that this bill would not offer assurance that the OASDI program would operate satisfac- torily under adverse economic conditions. What I am saying, Mr. Chairman, is that I am prepared to support this package. But I hope that the manag- ers of this bill will be able to convince us that this time, in 1983, the assur- ances we are getting are more realistic than they were in 1977. I think the Members of the House deserve that kind of consideration, I believe the American people deserve that, and I am hoping that the managers will be able to convince this Member and other Members that this is a package that is fair and one that will definitely work and solve the problems of the social security trust fund. Mr. CONABLE. Mr. Chairman, I yield 3 minutes to the gentleman from New Hampshire (Mr. GREOG). (Mr. GREGG asked and was given permission to revise and extend his re- marks.) Mr. GREGG. Mr. Chairman, I ap- preciate the opportunity to address this issue which I consider to be the most critical issue this Congress will address possibly in this decade, but certainly in this session. We have not seen a great deal of leadership out of this Congress on the issue of social security. In fact, this Congress has over the last 2 years and maybe the last 4 years cringed from this issue for too long, hiding in the shadows of political gamesmanship. But for 36 million people who are on CONGRESSIONAL RECORD - HOUSE March 9, 1989 the social security system and for 110 million people who must pay into the .system, the issue of social security cannot be ignored. It is to them the key economic issue which the Govern- ment addresses to them at this time. Therefore, we as an institution have the opportunity today to fulfill our past history of leadership. As we look at the history of this institution, yes; it is one which has been carried on mostly by perpetual motion, but in in- stances throughout its whole history, when it has confronted a crisis of ex- treme proportions which have affected a great majority of people, this institu- tion has been able to rise up and to make the difficult decisions, whether those were the Great Compromises before the Civil War, or after the Civil War, during the period of Reconstruc- tion, or whether it was during the 1930's when this legislature took so many aggressive.steps to try to reverse the trends of the Great Depression. This is again an opportunity for Congress to stand up and be counted and to make the difficult decisions of our time. We are going to hear today many arguments about why this spe- cific item of this compromise is wrong or that specific item of this compro- mise is going to fail to carry it to its fruition. But the simple fact is that if we are going to bw honest and we are not going to play hypocritical games, this is the only proposal before us which has an option of survival. This is the only proposal which this Con- gress can legitimately say it is willing to address to allow a correction in the social security system which will cause the survival of that system. If we ignore this compromise, if we reject this compromise because we do not like this item or that item, then we will have failed as a body to have taken the option of delivering a rea- sonable response to one of the most se- rious problems which this country faces and which the people of this country face. I call upon the Members of this Leg- islature to look to our past and recog- nize that, we have an obligation here, an obligation which is written in the words of Daniel Webster, the words that are above us from a great states- man, one who came from New Hamp- shire. "Let us leave here and perform something worthy to be remembered." Mr. Chairman, this is our opportuni- ty to perform for my generation and for future generations which will be part of the social security system something worthy to be remembered. Mr. ROSTENKOWSKI. Mr. Chair- man, I yield 15 minutes to the gentle- man from Tennessee (Mr. Foan). (Mt. FORD of Tennessee asked and was given permission to revise and extend his remarks.) Mr. FORD of Tennessee. Mr. Chair- man, I thank the chairman of the full Committee on Ways and Means, the gentleman from Illinois (Mr. RosTEN- xowsxl), along with the chairman of the subcommittee, the gentleman from Texas (Mr. Picxi.E) for their ef- forts. I would like to commend the two of them, as well as my other col- leagues on the full Committee on Ways and Means. Mr. Chairman, I rise to go over title IV and title V of the bill that is before the House today. 0 1150 Mr. Chairman, title IV of the bill would raise the Federal benefit stand- ard for supplemental security income-MI-by $20 for a single indi- vidual and $30 for couples. The benefit standard is the maximum amount of 881 payable. Currently, this is $284 for a single individual and $426 for a couple. This Increase in the Federal SSI payment will take effect on July 1, 1983. The July COLA for SSI will be delayed until January 1984 in the same manner as the social security COLA. The SSI program provides income assistance to poor, aged, blind, or dis- abled individuals. 881 recipients re- ceive a cost-of-living adjustment- COLA-at the same time and in the same amount as social security recipi- ents. Of the 4 million 881 recipients, about 2 million receive both SSI and social security income. Current law "disregards" $20 of social security income in determining SSI eligibility for these concurrent recipients. Most of the remaining 2 million SSI recipi- ents are completely dependent on their SSI income. The Commission on Social Security Reform recommended, along with the 6-month delay in the social security COLA, an increase in the disregard from $20 to $50. The purpose of this was to protect those social securty re- cipients receiving very low social secu- rity payments from the loss of their COLA. Such an increase in the disre- gard, however, protects only half of the SSI population, those that are re- ceiving social security. The committee bill delays both the social security COLA and the SSI COLA for 6 months. In order to pro- tect the poorest individuals, the bill raises the benefit standard for all SSI recipients by $20 for single individual and $30 for couples. This allows the two systems, social security and SSI, to remain on track, while more than protecting the poorest recipients from loss of their COLA in July. Mr. Chairman, title V of H.R. 1900 extends for 6 months the Federal sup- plemental compensation program. This program, which is due to expire at the end of this month, provides ad- ditional weeks of unemployment com- pensation to individuals who have ex- hausted their regular State benefits and any extended benefits to which they were entitled. As originally enacted, the FSC pro- gram provides up to a maximum of 16, 14, 12, 10, or 8 additional weeks of benefits. Under the extension con- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 966 CONGRESSIONAL RECORD - HOUSE March 9, 1983 cally the Secretary could deny pay- ment, in whole or part, or take other corrective action for such things as un- necessary admissions or other inappro- priate medical or other practices. In addition, the bill provides for rec- ognition and use of State hospital pay- ment systems where such systems would not cost medicare more than payments under the federal system and meet certain other standards. I view this prospective payment pro- posal as a dynamic first step toward the implementation of the market- place forces of competition in the health care field which will ultimately stabilize health care costs in a manner far more acceptable than the alterna- tive of increased regulation. Our goal is to continue to make quality health care available to all, which goal is be- coming increasingly imperiled due to the spiriling cost of health care. Mr. Chairman, the committee has fashioned a good proposal and I urge my colleagues to join with us in this bipartisan effort to make economic sense out of the way the medicare pro- gram pays for hospital services. 01200 Mr. CONABLE. Mr. Chairman, I yield 2 minutes to the gentleman from Nebraska (Mr. DAUB). (Mr. DAUB asked and was given per- mission to revise and extend his re- marks.) Mr. DAUB. Mr. Chairman, I would like to enter into a colloquy for a moment with my good friend from Texas (Mr. Piciax) chairman of the subcommittee. I introduced a bill which is know as the nonresident alien social security bill, H.R. 765. I have been most encouraged by the interest. Some 111 Members, a very bipartisan membership from the House, have co- sponsored the legislation. In the full Committee on Ways and Means the gentleman may recall the vote to include a provision to eliminate certain nonresident foreign aliens from social security benefits failed after a tie vote 16 to 16. I would like to ask the chairman of the subcommittee what his intentions might be with re- spect to hearings on that particular matter so that it might enhance the solvency of our social securtiy system. Mr. PICKLE. Mr. Chairman, will the gentleman yield? Mr. DAUB. I yield to the gentleman. Mr. PICKLE. I thank the gentleman for his question. I have promised the members of the Ways and Means Committee and other Members such as the gentleman who is speaking that we will have committee hsirrings on this subject, I hope in April or in May. We do not have a specific plan ad- vanced. I think we are all agreed that we must take action on this nonresident alien problem. What we do not want to do is take away benefits from the wage earner who actually has earned bene- fits. But we must stop any of the abuses that may take place when benefits go to survivors or to new members of families. This area needs to be tightened up. We do not have a specific recommen- dation from the Department of Health and Human Services yet. We have asked for it because we must do some- thing abut this. I had attempted at one time to.bring this into the bill but we could not get a consensus to move forward at this time. But this must be done and I hope we can hold hearings by April or May. Mr. DAUB. I thank the gentleman for his encouraging statement of hear- ings to be held at an early date, in April or May. There is approximately a $4 billion savings that could be forged by that. Today is important because it gives the soolal security system a clean slate-so to speak-with regard to its financial soundness. This was some- thing that the Congress had thought it accomplished in the past, but each time circumstances changed and the system was again in need of additional moneys. Rather than rest on our laurels we should today make a commitment that we are not going to wait until the system again is teetering on the edge of bankruptcy before we initiate re- forms. We know how small changes in the system can amount to savings of billions of dollars, and when those changes are possible, they should happen and should not be allowed to go unaddressed until the last possible minute. One change that I recommend the Congress address as soon as possible is the issue of nonresident aliens draw- ing social security benefits. This matter is not unexamined. We have the facts, and we know today that the cost will be in billions of dollars over the coming years. This is a cost that the system, even in its newly found health, cannot afford, and it is dollars that would be better spent in the form of benefits for benficiaries or left in the pockets of the working Americans who finance the system. The lessons of the last 2 years should not be lost. The American people expect us to act responsibly and promptly when their interests are at stake. It would be a great tragedy were we to see additional reforms ig- nored now because we have solved most of the problem for the time being. Let us do the job the American people expect from us today and not wait until tomorrow when our backs are pressed against the wall. The alien social security bill which I introduced, H.R. 950, would limit bene- fits to nonresident aliens and their de- pendents. Aliens would receive only the amount of benefits they paid into the system. Dependents would receive benefits only if the relationship to the beneficiary existed before the wage earner's 50th birthday. This legislation will correct the cur- rent abuses to the system by alien beneficiaries. Currently, benefits are paid to 313,000 individuals living abroad, amounting to about $1 billion per year. In 1981, 62 percent of these beneficiaries were aliens. The General Accounting Office (GAO) has reported that on the aver- age, beneficiaries living abroad had worked fewer years in social security covered employment, paid less social security taxes, and had more depend- ents than the average social security beneficiaries. The average alien beneficiary living abroad earned only one-half the quar- ters of social security credits before re- tirement as the average social security beneficiary did. Also, alien dependents outnumber wage earners by 169 to 100. while there are only 40 dependents to every 100 wage earners in the overall beneficiary population. The GAO estimates that the average alien family receives about $23 in benefits for every $1 in FICA taxes paid before retirement. This is in marked contrast to the $5 in benefits for every $1 in FICA taxed for the average social security beneficiary family. These facts clearly highlight the im- portance of addressing this situation. It would allow a substantial savings to our social security system and show Americans that we are truly prepared to correct abusive social security situa- tions in order to insure the solvency of this important program. As I said, today marks a return to solvency for the social security system. My support for H.R. 1900 is not un- qualified. It had been my hope that this body could produce a solution to the financing problem without bring- ing in Federal employees. It is my firm belief that this will not result in a better solution but will instead create further problems in the future. We have met our first responsibility, however, and that is to bring back to Americans the peace of mind they de- serve regarding social security. And we should never again allow the system to deteriorate to the point where Ameri- cans young and old are uncertain about their future benefits under the system. There is no question that social security presents a continuing problem for Congress and America. We must retain a benefit level that ac- complishes social security's purpose without imposing a tax burden on the American worker that is too high. Al- ready we have a burden that is far greater than could ha' a been imagined 20 years ago and could if driven higher seriously affect employment. H.R. 1900 is a consensus bill. There is no one in this body who if given carte blanche to write a social security measure would have presented this bill to the full House, but no such bill would have had a chance of passing the full House. This bill represents compromise. It is a good compromise that spreads the sacrifice evenly throughout our society. The people in Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 968 CONGRESSIONAL RECORD - HOUSE to do so, but we ought to get out on the table what he is talking about. There is nothing in this legislation- never has been, and under the rule never can be-that affects the present civil service retirement system. There is no requirement that there be a sup- plemental system instead of the pres- ent systems. We have no intention of writing something to replace the pres- ent systems. We have no intention of, touching the existing systems in any way at all. However. there is pending before this House and before the Senate the President's budget request. And in his budget request he asks that In 1984 we raise the employee's contribution to 9 percent and in 1985 to 11 percent: He asks that we change the system to re- quire annuities to be computed on the average pay of the high 5 years of service instead of the high 3 years. He also asks for a 65-year-old retirement age with a provision that you lose 5 percent of your pension base for each year you are under 65 at the time of retirement. The result if you retire at 55 years of age with 30 years of service would be that your pension would be reduced by 50 percent. Those are not proposals that are in the Ways and Means bill. Those proposals have been rejected out of hand by a bipartisan vote in the Post Office and Civil Service Commit- tee and in our report to the Budget Committee, which is available for ev- eryone. It is a matter of record. It has gone to the Members. And to suggest to these Federal workers that they are in danger, by the enactment of this bill, of hurting their pension, is not serving your Federal constituents well, sir. And I suggest that you take a look at what is really happening and not wave around some smoke and mirrors fear. The only person In this town that they have to fear is your President who wants to kill their pension. Mr. PARRIS. Mr. Chairman, would the gentleman yield? Mr. FORD of Michigan. I yield to the gentleman from Virginia. Mr. PARIS. I thank the gentleman for yielding. I have the privilege of representing a great number of Federal employees. If there Is an overriding fear in the hearts of most of them it is what I call depending on your point of view, phase in or the phaseout problem. Mr. FORD of Michigan. We are not. If I can claim back my time. You are using the expression "phase in-phase- out," there is no phasing in or phasing out. Starting January 1, 1984, new Federal employees will be covered by social security, new Federal employees will be covered by the existing pension system. That is not phasing in, that is clear, clean and simple. Nobody coming to work for the Federal Gov- ernment after 1984 has the right by reason of anything In this bill to opt out of the civil service retirement system. Nothing in this bill permits the Federal Government to reduce its commitment to and its payment to the civil service retirement fund and I want you to quit using terms like phase in. We are not giving Federal employees an alternative, we are giving them coverage under both sys- tems. Mr. PARRIS. Would the gentleman yield? Mr. FORD of Michigan. I yield. Mr. PARRIS. I thank the gentleman for yielding. I think the real concern of most Fed- eral employees is as their number is reduced over the next 5, 10, to 20 years, this Congress, which cannot bind future Congresses, the future Congress may in fact as a result of the reduction of their political leverage then dump the balance of them into social security to their detriment and that is what concerns them and their is no way the gentleman from Michi- gan or the gentleman from Virginia can preclude that from happening. Mr. FORD of Michigan. I do not want to turn what has been a fine bi- partisan exchange here into a partisan one, but the only persons in this town talking about reducing future Federal benefits are David Stockman and your President. And we are, so far, success- ful in resisting the most draconian proposals that they have for reduc- tion. We will have 300,000 net new em- ployees next year on the basis of what happened this year and presumably a similar amount next year, because we lose about 5,000 people a week from the Federal Government. Mr. Chairman, unfortunately there has been considerable misunderstand- ing about a provision of this bill that would place newly hired Federal work- ers under the social security system. At the same time, there has been a lot of apprehension on the part of Federal workers and retirees. This indeed is understandable given the present administration's assault on their benefits. I want to set the record straight. This bill does not, and is not intended to, affect in any way the existing civil service retirement provisions or the applicability of such provisions to the newly covered employees. Put simply, new Federal workers will be required initially to contribute 7 percent of their pay to the civil service retirement system, the same amount as those now covered pay. Newly hired employees will also be required to pay the social security tax. I want to assure my colleagues that the Post Office and Civil Service Com- mittee will- act deliberately and re- sponsibly to develop a supplemental plan that will be fair to new workers coming into the system and insure the integrity of the retirement fund for present workers and annuitants. We want to avoid, however, rushing mindlessly and recklessly into adopt- Ing a plan without benefit of study and advice. Certainly we do not want March 9, 1983 to create a monster that could cause more problems than we are attempt- ing to solve today. And that is precise- ly what we could do through hasty action. Last month the Speaker, along with Chairman ROSTENKOWSKI of the Ways and Means Committee, and I sent a letter to our colleagues explaining our position on the question of extending social security coverage to newly hired Federal workers. I feel it is important today to reiterate that position. We said: We support the recommendation of the National Commission on Social Security Reform to extend social security coverage to newly hired Federal employees. We believe that new Federal employees who become covered under social security should be provided retirement benefits com- parable to those under the civil service re- tirement system. We oppose the Administration proposals that would reduce civil service retirement benefits and increase employee contribu- tions to the civil service retirement fund. We oppose the Administration proposal to treat cost-of-living adjustments. for Federal retirees differently from those of social se- curity recipients. We will oppose any proposal which would threaten or,Liversely affect the financial in- tegrity of the civil service retirement fund, or the ability of that fund to continue to pay benefits promised to participants in the civil service retirement fund. The bill before us today will allow us to achieve these goals. It is not encumbered with the heed- less proposals of this administration, espoused by OPM Director Donald Devine. All of us in Congress are keenly aware of our Nation's tragic economic dilemma and the urgent need to reduce the towering budget deficits created by this administration's costly supply-side economics failure. But where Federal workers are con- cerned, enough Is enough. For 2 years this administration has used Federal workers and retirees as convenient scapegoats. In the most blatant demagoguery I have witnessed in my political career, this administra- tion has gone to extraordinary lengths to portray Federal workers as indolent paper shufflers who are overpaid and underworked. It has done this, I must conclude, to enlist public support for draconian budget cuts against Federal workers and those who have retired from the Federal service-to reenforce the popular misconception about Fed- eral workers. At this point in time, there can be no doubt that the Reagan administration has sought deliberately to make Fed- eral employment less attractive. And I cannot help but wonder what price we will pay down the road in terms of efficiency and quality. If we continue this mindless diminution of pay and benefits, how will we attract - the best and brightest to work at NIH, NASA, the Food and Drug Administra- tion, the Department of Agriculture, the FAA and all those other depart- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 I Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 970 CONGRESSIONAL RECORD - HOUSE March 9, 1989 But, it is we, the elected Represents- a hospital straightens out a broken leg details. I have already alluded to the tives of the people, who must be held that will be worth approximately the problem of arriving at a fair price. The accountable for actions affecting same amount of money, no matter originally proposed legislation had es- social security. where it is done in one of the-nine re- sentially one price from coast to coast. We cannot evade our responsibility gions and the other division is between Then it was decided by the Ways and as lawmakers by simply ratifying the rural and urban hospitals. In other Means Committee, after a consider- recommendations of an unelected words, the effort has been made to able amount of testimony, that at panel. arrive at a fair price in the context of least for the first 4 years of this pro- am responsible for representing more operates. than 65,000 senior citizens, more than Now, what does that mean in terms 10,000 Federal workers, and tens of of Just commonsense and ordinary thousands of farmers and small bass- logic? It means that if you get $50 to ness men. set a broken leg and you can sharpen I take that responsibility seriously your pencil and your costs fall below and. therefore, must oppose this well- $50 that whatever the difference is be- meaning measure. We must not rush tween your costs and that $50 is your to Judgment on a proposal which does profit on the deal. not have a strong likelihood of success If, on the other hand, your costs and which does not adequately so- exceed $50, you have already made the count for the added hardship for mil- agreement and you still have to accept lions of Americans. the $50 in full payment as a hospital ^ 1220 and you gargle your loss. Mr. ROSTENKOWKSI. Mr. Chair- man, I yield 15 minutes to the gentle- man from Indiana (Mr. JAcoss), chair- man of the Subcommittee on Health. Mr. JACOBS. Mr. Chairman, I hear It said that this legislation Is a rush to Judgment. There is another rush under way and that is the trust funds are rushing toward the cliff. Before the end of this decade the medicare trust, fund. If nothing is done about it, is going to be in a very, very deep well of red Ink. I think the reason for that is the reason that the same can be said for the profligacy across the Potomac River in another depart- ment of Government where cost-plus contracts characterize the financial re- lationship between that department and its suppliers. The cost-Phu system has character- ized the medicare program since its in- ception in 1965. Medicare is a good idea, it has prevented a lot of unneces- sary and tragic suffering In this coun- try, but even a diamond has its flaws. And in its concept the medicare pro- gram by providing the cost-plus or re- imbursement system to the hospitals of the country has cost the taxpayers more than it ought to and before this decade Is out, it will be necessary to say, "You ain't seen nothing yet." - Here is a proposal by the administra- tion to change the manner of payment for medicare services to the providers. And here is a happy coincidence where the two political parties, where Con- gress and the White House, can come together on a proposal which makes a lot of commonsense. What is the pro- posal In essence? Well, It Is somewhat complicated in some of its detail, but it is quite simple In its concept. It simply provides that hereafter the medicare program, the U.S. Government through the medi- care program will compensate hospi- tals according to a schedule of reason- able prices for reasonable services. It Is called diagnostically related groups, and there are quite a few of them. But each category is set up to make a rea- sonable price in advance so that when Now at this point the free enterprise system may have come to your mind. That is Just exactly what we have in mind. A cost-plus system means whatever your costs are your profit is going to be on top of that. There is no incen- tive to use a sharper pencil, there is no incentive to find out whether maybe you are laundering towels too many times, or too many towels, or you are hiring too many people, or all the other things that go into managerial decisions. On the other hand, If there is a fixed price for your service, then you are in the role of other people in busi- nesses in this country and you have an incentive to cut the costs. Now, we have tried for more than a decade to cut the costs of the medicare system through the bureaucracy. Somebody looking over somebody's shoulder, somebody second-guessing the hospital administrator or adminis- tratrix as to what that person or what that hospital ought to be spending. And you get an army of bureaucrats, as the word goes, you get confusion, you get, as I say, bureaucracy looking over the shoulders of the people who are charged with the immediate re- sponsibility of doing the Job and trying to figure out without being on the Job what makes sense in terms of cost. This really eliminates that problem. This gives the incentive to the man- ager in the first place to find out in his or her own situation what the best ways are to cut costs. Now the next question that might come to mind is: What about the qual- ity of the service then? If you have a situation where you pay $50 to set the broken leg and there is incentive for the provider to cut his or her costs as much as possi- ble, would they not start cutting into the leg, would they not start cutting into the service? Well, there are provisions in this proposed legislation to look after the quality of the service also. As a matter of fact, there are a great number of gram there ought to be nine regions in the United States where the costs are determined, where the price will be de- termined according to labor costs in those respective areas, et cetera, other costs in those respective areas. It was recognized, too, that there may be a fundamental distinction be- tween rural and urban hospitals. That category has been established, too. ^ 1230 We might hope that at the conclu- sion of 4 years' time a national fair price might be arrived at for the medi- cal service, so that if there are ineffi- ciencies indigenous to any of the given regions, those Inefficiencies by grada- tion over the 4-year period of time might be eliminated; but due consider- ation has been given to the providers to phase in this commonsense ap- proach from the taxpayers' point of view. That, in essence, is what we offer. I think it is an idea not only whose time has come, its time probably came at the time that we began the medi- care system, but happily it is an idea that has converged, that is to say, var- ious parties to this action, this cre- ation of legislation, have converged In the opinion that it ought to be en- acted. It ought to be the least contro- versial part about this legislation, and yet at the same time It could very well be one of the more salutary elements of this legislation. Mr. CONYERS. Mr. Chairman, will the gentleman yield? Mr. JACOBS. I yield to the gentle- man from Michigan. Mr. CONYERS. Mr. Chairman, I want to compliment my colleague for many of the issues he has raised in his committee in connection with this leg- islation. Has the gentleman unfolded the saga of Government employees being folded Into the social security system and does the gentleman still oppose that provision? Mr. JACOBS. I think the proper answer to the gentleman is that it Is not one of the provision of the bill which animates me to support It. It Is well know that I opposed it in the committee. There is a rule that does not allow an amendment now. Haveing said that, I believe that whatever odium I find in that provi- sion is outweighed by a number of other provisions which I think are nec- essary. My personal opinion Is, and I will continue to hold this opinion and work for reform in the future, my personal opinion is that there are welfare ele- ments to the social security program. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 I Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 972 CONGRESSIONAL RECORD - HOUSE March 9, 1983 Out of this melee, the President es- $20,000. This is the second highest tax I -commend the bipartisan commis- tablished the National Commission on burden imposed by the compromise. sion for their proposal, though I do Social Security Reform, whose pur- Although it is intended to recapture not agree with every element of the pose it was to consider options in a some portion of the benefit that is un- proposal and I do not think it deals nonpolitical environment and then earned, the real effect will be to penal- with the long-term problem. make recommendations to the Con- ize those who have saved for their re- I do not think we are going to adopt gress on hbw hest to shore up the sys- tirement. At a time when we should be a proposal that I agree with every ele- tem's short-term and long-term finan- developing incentives to save and en- ment of, nor do I believe this Congress cial future. Even their efforts were courage people to work to supplement is going to adopt one package that is deadlocked for most of last year by their fetirement income, this proposal going to deal with the social security the very dynamics that forced the throws a huge obstacle in the path of problem once and for all. Commission's creation in the first those who attempt to do so. Second, I commend the members of place. At literally the last minute, There is no question but that im- the Ways and Means Committee. I they managed to stitch together a provements, if allowed, could be made commend our Speaker and the major- series of recommendations which even to the committee's bill.. I would be ity leader of the Senate and our Presi- the Commission conceded would not among the first to try to correct some dent for working out a package that solve the long-term problems, and of the problems outlined above. But keeps social security on its feet and which many analysts doubt will even improvements will not be allowed, and gives us time to come up with a real solve the short-term problems. Now, at this point there is no choice but to solution to the problem. with less than 6 weeks to go before the support final passage of the package. Mr. Chairman, there are those who deadline, we are forced to consider the Although there are many reasons to say that we do not do anything here package in a crisis atmosphere, with- vote against the bill, the one powerful, except raise taxes. I am willing to out even a chance to try and correct overriding argument for voting in grant that the great burden of dealing some of the more blatant problems on favor of the package is that we cannot with this problem has been placed the floor of the House. let the system go bankrupt. We must again on the shoulders of those who The choice is either to accept the act to insure that there is sufficient seem always to bear the burden for committee's product, or to send 'the revenue coming in to at least guaran- our failure, the working men and system into bankruptcy, a choice pur- tee benefit payments for the next few women of this country; but we do posely scheduled this way by the years. The only alternative is chaos, adopt changes that are important and Speaker and the Democratic Party and that is obviously unacceptable. changes that are equitable. We take leadership. We should learn from the lessons of the first step here in broadening the Despite the fact that, in general, the the past and begin immediate consid- base of the social security tax. committee's bill relies too heavily on eration of a true reform package, one We have heard a lot of people stand tax and revenue increases to deal with that will provide some measure of pay- u and talk about the problem, there are two aspects of p asking ecur ty tax. the proposal that deeply trouble me. roll tax relief while permanently guar- ployees to pay the social security tax. The first is the huge tax increase anteeing future benefit payments Mr. Chairman, I think the time has being levied on the self-employed, and based on earned income. come to ask every American to pay the farm population in particular. The Mr. CONABLE. Mr. Chairman, I social security taxes. In 1937 when we other is the taxation of benefits for in- yield 5 minutes to the distinguished were looking at what might be an ac- dividual beneficiaries with incomes gentleman from Texas (Mr. Gxnnm). tuarially sound system as a supple- above $20,000-$32,000 for a recipient Mr. GRAMM. Mr. Chairman, I rise mental income program, it made sense couple. in support of this compromise pack- to exempt Federal employees from The committee's bill would raise the age- social security taxes; but when today tax on the self-employed to the full I would like to address those of my the system has clearly lost any actuar- employer/employee rate-14 percent- colleagues here today who have come ial balance, when it represents a tax which is in effect a 33-percent tax in- to the well and said that we ought to and not a retirement program, it crease in a single year. That is a direct work on this package further and that makes no sense to exempt Federal em- tax on labor at a time when we should we should try to work out another ployees from bearing the burden of be enacting incentives to increase package. this tax and shouldering that burden labor. It will fall most heavily on small Mr. Chairman, I think we have had with other Americans. businesses, which have historically 2 years of an effort to work out a I am proud of the fact that the Con- been the prime generator of jobs. In package to deal with the social secu- gress has not bailed itself out of this particular, I am extremely concerned rity problem. I remember well 2 years package. I am proud of the fact that about the impact that this will have ago when our President sent to the the first Federal employees to pay on the farmers on my district, and the Congress a proposal to deal with the social security taxes will be Members indirect impact on an already belea- social security crisis that we all agreed of Congress, so that when Members guered farm economy. existed. I remember that package hit come to the well and pound their Even though the social security tax here about 2 weeks after we voted on breasts and talk about social security increases are offset to a certain degree the budget and I also remember that and dealing with the problem, they by refundable income tax credits, at many of my colleagues jumped to the can now say, "Let's deal with it by some point this can only have a nega- microphone and put the boot to the taking more money out of our pockets, tive impact on the Federal deficit. As first wave of political footballs on the rather than just out of the pockets of such, the tax will have a negative social security issue, an issue that those working people out there who impact on employment, thus reducing came to be the dominant issue in the pay our bills." the amount of real income flowing 1982 elections and an issue which de- I think the time has come to stop into the trust funds. In addition, it feated many of the people in this body the bailout whereby people were aban- moves us closer to the establishment who were willing to stand up and take doning social security and leaving of a guaranteed annual income policy a position that we had a social security those Americans who continue to be by putting the Government in support problem and that that problem needed covered with a heavier and heavier of a refundable tax credit. You can be to be dealt with. burden on their shoulders. It was im- sure that if there is any effort now or Mr. Chairman, I do?not think we are perative that we force our public em- in the future to reduce or ameliorate going to improve our situation by de- ployees to come under the social secu- the impact of this tax, I will lend my bating this issue any further. After 2 -rity system and to pay the tax along support to it. years of making social security the No. with others. The second provision that troubles 1 political football in the country, the It was also imperative that we take me is the tax on benefits for individual time has now come to do something steps to prevent State and local gov- recipients with incomes in excess of about the problem. ernment employees from bailing out Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 I Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 974 The Aging Committee, on which I have the privilege to serve, has looked long and hard at social security, and I am convinced after careful study that this legislation must be defeated, for many reasons. This bill delays the cost-of-living in- crease for all social security recipi- ents-millions of whom are now under the poverty level-by 6 months. It is clearly a benefit cut. I have heard from thousands of my constituents op- posing this provision, and I believe the Government ought to live up to its commitments and not approve this provision. We are increasing taxes for all American workers contributing to the system under this bill by tremendous amounts, on top of a tax bill that was passed last year to increase Federal taxes by $99 billion in just 3 years. We are penalizing self-employed workers and small businesses by drastically in- creasing their contributions to social security. But that is only one side of the coin. While we are asking all these people to pay more into the system, the com- mittee is asking us to reduce benefits. Another proposal would have us in- crease taxes even further. We are also asking civil servants to come under social security, yet we have not even addressed the question of what kind of pension system will re- place the one they now have. Conse- quently, we are asking them to pay an additional 7 percent in tax to the Fed- eral Government without even indicat- ing what the future system will be. What is worse, Mr. Chairman, is that the American public will be shocked this summer when they find out the situation in medicare. Right now, actuarial estimates show the medicare- system will be over $400 bil- lion in debt in 1995. Either the medi- care tax must be raised, the system must be changed, or some general rev- enues must be used. Whatever hap- pens, it is obvious that remedial legis- lation will have to be considered and approved by Congress. There Is a Commission now studying the medicare problem and they are due to issue their report in the middle of the summer. Clearly, it is possible for'us in Congress to approve remedial legislation for social security, and con- sider the medicare report in conjunc- tion with the results of the National Commission on Social Security Reform which has just completed its work. But to stand here today and tell the American people that if we pass this bill, the system will be safe, is simply not true. This legislation is filled with provi- sions that I cannot support: A 6-month delay in the COLA allowance. A tre- mendous tax increase on self-em- ployed individi}als and all working Americans. A benefit cut for middle- age Americans, and a long-range tax increase for all Americans. Taxation of social security benefits in clear viola- CONGRESSIONAL RECORD - HOUSE March 9, 1983 tion of the commitment of Congress that benefits will not be taxed. Mr. Chairman, I firmly believe there are better solutions in the long-range and more responsible policy alterna- tives in the short-range. This bill should not be approved. Instead, we ought to address ourselves to the real problems of the system. If the retire- ment age is to be changed, let us be honest with new workers. Let us tell them that we will have a "new con- tract" with them so that they will know what to expect when they retire. As it stands, this legislation does not address the system's needs and it is being considered under a rule that does not allow Members to offer amendments to improve. I intend to vote against this legisla- tion, and I urge my colleagues to join me in defeating it. ^ 1250 Mr. CONABLE. Mr. Chairman, I yield 7 minutes to the gentleman from Missouri (Mr. GMH iwT). Mr. GEPHARDT. Mr. Chairman, I thank the minority side for yielding this time to me. Mr. LEVITAS. Mr. Chairman, will the gentleman yield to me? Mr. GEPHARDT. I yield to the gen- tleman from Georgia. (Mr. LEVITAS Asked and was given permission to revise and extend his re- marks.) Mr. LEVITAS. Mr. Chairman, I rise in support of H.R. 1900, the bipartisan social security compromise. I oppose the closed-rule procedure under which we are considering this bill, and I regret that we did not have a recorded vote on that rule so that it could have been defeated to allow us to vote on many of the separate issues and alter- natives that could be considered. We are told that what we are consid- ering here today is a social security "reform" package, but it seems to me it is more appropriate to say we are considering a social security "rescue" plan. I say "rescue" because the bill we will vote on today is little more than a temporary bailout proposal that is only a first step to solving the deep-seated, long-term, structural problems that will continue to plague our social security system long after this legislation becomes law. It is a real tragedy that the Presi- dent and Congress are passing up this opportunity to enact a true reform package which would make the social security system once again a fair, af- fordable, and viable program. At best, with this plan, we are rescuing the system from short-term problems, but we are in a way which is not as equitable as it could be and in a way which just postpones the problems. Under this plan, we may be back in 2 to 3 years facing the same questions and the same concerns about short- falls and the same inequities in the social security system. It would have made more sense to face the true problems head on, today, instead of putting off until tomorrow decisions on truly reforming the system. Why just postpone cost-of- living adjustments as this bill does, when what we really need is a change in the structure of the COLA formulas and their relationship to the funding mechanism. Why keep raising payroll taxes, which are already overly bur- densome, when what we really need is to make structural changes in the system to improve the management of the funds, and establish some perma- nent balance between the outflows and intakes of the system. Unfortunately, we have no choice today but to consider and. vote upon the "rescue" package before us. I was disappointed that the rule for consid- eration of this bill allows only two amendments. I believe it would have been more appropriate to consider this bill under an open rule which would have allowed consideration of amend- ments to make this rescue plan a reform plan. An open rule would have allowed Members to record their-views on addressing the long-term problems of the social security system. Now we are in the middle of this debate, with only one alternative before us. While it is not the best al- ternative, it is the only choice we have been given. There is no question that something must be done to address the immediate crisis of the social secu- rity system. This bill will provide some relief for the system and it will avoid an immediate crisis. If a short-term fix is all we can vote on, then we must vote on it and I will vote to pass it. But it is a shame that we have not been given the opportunity to consider pro- posals which could actually solve the problems of the system, instead of just postponing them. Once again, howev- er, the political courage to bring true reform proposals before the Congress is lacking. I have a sense of dejA vu as we debate this bill today, for I recall simi- lar debates in the past on similar plans to solve the problems of the social se- curity system. The words of Santaya- na come to mind: "Those who disre- gard the past are bound to repeat it." And I anticipate that his words will prove true once again, as once again we only consider temporary fixes to the short-term problems which will lead us back to this same debate a few more years down the road. This problem with social security is not a new one. In fact, as early as 1975, when I first came to Congress, I was pointing out the need for congres- sional attention to the social security system, and the need for that atten- tion to be immediate before we reached the crisis situation we are in now. In 1975, I stated on the House floor: "It should be a matter of the highest pri- ority for Congress to begin to do something about this problem now and not wait until the crisis is upon us and emergency meas- ures and ill-considered reactions are re- quired. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H976 CONGRESSIONAL RECORD - HOUSE March 9, 1983 Ing a balance between outflows and in- The opportunity to pass a true this is the best package at hand to do takes. reform package has been passed up in the job. I honestly believe there is no This legislation contains one propos- our haste to put together a rescue other package that can be put togeth- al that particularly pleases me. I have plan. But I do believe strongly that we er this year, and I think this is our last always been a strong advocate of must do something while there still is and best chance to solve the problems making the system apply to everyone, time to save social security. The entire of the system. and I have introduced legislation in package that we are voting on here It is a good package. It event dis- this Congress and in previous Con- today is not completely satisfactory to y greases that would bring about univer- me, but I am prepared to vote for it must psfor pain reform. is the price we con- sal coverage. I believe it is outrageous because we have no alternative at this tams pay us no Draconian . It benefit cuts benefit c fair. that that the system does not now cover time. We must take some action. will s push the elderly pthat Members of Congress, who snake deci- Therefore, I intend to support over the poverty pport this line, nor does it protect retirees by hit- sions on the system, or even the Com- social security "rescue package." ting workers with excessive tax in- missioner of Social Security, who ad- I suppose that a dirty old plank is creases. ministers the system. I am pleased better than no plank at all to the vic- It is my belief that this same spirit that this legislation will include these tims of a shipwreck. And we must grab of compromise should extend to the individuals, as well as new Federal that plank now, and keep the Ameri- long-term solution. I do not think we workers and employees of nonprofit can public from drowning. should rely entirely on a single solu- organizations. Mr. GEPHARDT. Mr. Chairman, I tion or ask any single group to shoul- Universal coverage is appropriate be- think we all must remember that this der the entire cost. That is why I sup- cause it is fair-not because it would is the second time since 1936 that the bail out social security-which it Congress has considered and debated a port the approach in the eonenittee would not. In fact, over the long run, major reform in the financing of social bill iothat ns and includes taxes s mix solve t the hefit - it would be a financial washout with security. Some of us were here in 1977 term are ong- the new payers becoming benefit re- when the same kind of debate went on here term to give problem. a We alittle e bit to asking eoevveyohe cipients. The point is that there and when we felt we had fixed the roblem a the should not be some elitist group of problems of social security until way p. We are asking everyone to do people not participating in social secu- into the next century. Many of us something to address the long-term rity while the rest of America does. were convinced that was the case. Ob- not and tasking he short-term problems. y are I am pleased that this extension of viously, as we are here today, that was are asking everybody anyone to give everything; coverage is being done in such a way not the case, and we face again the we are asking eto do their that the civil service retirement business of reordering and restructur- diced a bit toward taxes, The short-term solution long- system will be preserved for its present ing the financing of the social security term u res, and the a w rd participants. I know that many ]Feder- system. eral solution is prejudiced toward al employees are worried that bringing In my view, this restructuring is fan- benefit reductions. new Government employees under perfect, but it is an important step in The point I am trying to make is social security could jeopardize the the right direction. Its creation re- that I think it is fair, I think it is rea- self-sufficiency of the existing civil flects credit on all who have addressed sonable; I think it is a good compro- service retirement system. Actually, the problem, ranging from the Presi- mise, and I think it merits the support the Federal retirement system is not dent's Commission to all of my col- of Members on both sides of the aisle. currently self-sufficient. In fact, ac- leagues on the Committee on Ways bet me finish my remarks with just cording to the Congressional Research and Means. I want to take this oppor- a few comments about the medicare Service, employee contributions ae- tunity to commend the chairman of reform. I think it is also important to count for only 13 percent of the funds the subcommittee, the gentleman note that while we are here doing the currently being paid into the system. from Texas (Mr. PicKLE), for the second major reform in social security Another 25 percent comes from inter- work, the perseverance, and the since 1936, we are also doing the most est, and the balance comes from con- energy that he has contributed in major reform since 1965 in the medi- gressional appropriations. Therefore, achieving the consideration of this care system. I stood on this floor in the future solvency of the present civil most important bill, because without 1979 and argued against the Carter service retirement system is dependent his leadership, I doubt that we could hospital cost containment bill. I said it on the commitment of Congress to have gotten this far. would not work. I said it treated symp- keep it funded. I believe that is an ab- In my view, social security is a valua- toms and not causes, and I said there solute commitment which must be ble program that absolutely must be were better solutions. I have to admit honored. preserved. It is part of the fabric of to the Members today that I was Congress also has such a commit- our society. It is a successful program wrong because by not enacting some- ment to make every effort to solve our that is, on a daily basis, doing great thing at that time, I think we missed social security problems. We cannot things for Americans. However, it is an opportunity. I wish that we would back away from these decisions. As I not the program and it is not the have developed a better alternative said in the 94th Congress, we must get fabric of the program that is wrong. I than the Carter bill. I think that is on with the job that has to, and must, think, rather, we are the victims of what we have before us today. be done if we are to keep the social se- honest mistakes that Congress has Let us be clear about it. It is a regu- curity system solvent, and keep our made in the past, including in 1977, lation. It is a lot of regulation, but in unbreakable commitment to the and unprecedented economic events, my view it is better to have these regu- American people. The best solutions and the two together have created the lations than the Carter cost contain- may have been overlooked in our problem we face. ment effort, because this proposal is hurry to rescue the program in this bi- I remember well, as I said, standing consistent with giving providers of partisan compromise. Certain propos- here in 1977 and believing that we hospital and health care incentives to als should have been considered, and were doing the best we could, that we be as efficient as they can be, which is voted on by the entire Congress. But were doingthe right thing, and that it very different than the Carter cost political courage was lacking to bring would solve the problem. It did not. containment formula. these difficult choices to the floor. We made honest mistakes, we made I do not know if it is going to work. I hope that this will not happen wrong assumptions, and the economy It suffers from having the same com- again. As I said before, I believe we did not work the way we hoped it plications the Carter bill did, but if may be back in just a few years to con- would. any regulation in the health care field sider again measures to save the social So I speak today with humility, not can work, I think this is it. It deserves security, system. I hope we will be saying that this is the best solution or a try. braver than we were in 1977, and than even the final solution. Rather, I say Mr. Chairman, I think the medicare we are being today. that social security must be saved and reforms, like the social security pack- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 i Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 978 CONGRESSIONAL RECORD - HOUSE March 9, 1983 For what good it would do it should be implemented in 1985 instead of 1988. However, in the long term it does nothing to restrain spending from the fund. The actuaries do not show it benefits the fund one single dollar. No. 6. the windfall 'benefits to noncovered employees, sometimes called double dipping, is not fully cured because H.R. 1900 embraces only 50 percent of the remedy suggest- ed by the National Commission. No. 7, this bill does not repeal the earnings limitation, a massive disin- centive to working beyond retirement years. No. 8, there is in reality no "fail- safe" really in the bill except to come back to Congress, and that is exactly what the Commission's recommenda- tions hoped to avoid. No. 9, with the changing economic conditions of more and more women working-over 50 percent in the work force today-we have not made struc- tural reforms necessary. Only short shrift has been given to that problem. In short, this package is not a reform package and will not stand the test of time. In committee I offered a package that would continue social se- curity on a basis that meets all of the above objectives. There is a positive answer to these problems for those who have the cour- age to embrace it. I am sad to say H.R. 1900 does not. In 1784 Samuel Adams, speaking on a major national issue said, and I quote, The necessity of the times demands our utmost circumspection, deliberation, and fortitude, for we must seriously consider that millions yet unborn may be miserable sharers in this event today. I believe the impact of social secu- rity Is our Nation's No. 1 economic problem in the long term. We can do better. I believe we must. Mr. CONABLE. Mr. Chairman, I yield 1 minute to the gentleman from Arizona (Mr. RUDD). (Mr. RUDD asked and was given per- mission to revise and extend his re- marks.) Mr. RUDD. Mr. Chairman, 6 years ago, the 95th Congress passed a social security rescue package that was ad- vertised as a long-term panacea for a program headed toward bankruptcy. That bill, which included major pay- roll tax increases for the decade of the 1980's, was shortsighted and blatantly ignored many of the very serious fun- damental reasons the social security program was becoming bankrupt, It should come as no surprise to any of us why the 1977 plan failed, and it should be just as apparent why the bill before the House today will not do the job. It relies heavily on this never. ending pattern of higher taxes. it clev- enues, and the bill makes no attempt Needless to say, the tax side has taken to correct some of the underlying the brunt of this choice. The com- problems that have led this system to bind employee/employer payroll tax the brink. has risen from 2 percent in 1937 to While I do oppose the bill, H.R. 13.4 percent today, and under this bill 1900, as reported from the committee, that rate will climb to almost 16 per- I urge my colleagues to support the amendment to be offered by Mr. Picxis, one of this body's foremost ex- perts on this subject. Raising the re- tirement age on a gradual basis, as his amendment would do, is about the most reasonable action we can take today. His proposal would up the re- tirement age to 67, phasing thischange in over a 22-year period, begin. ning in the year 2000. Demographic changes over the last decades alone have made a retire- age change essential if we expect social security to survive for future generations. In 1940, life expectancy was about 61 years for a man and 65 for a woman. By the year 2000, men reaching age 65 may be able to live an- 16.4 years while women may live another 22 years. Greater longevity is certainly goodnews for us, but it is bad new for, a re- tirement tirement program using outdated facts. A gradual retirement age in- crease of only about a month per year, in place early retirement benefits at the current age of 62, will give future retirees plenty of time to plan for retirement and not affect those who are near retirement. startling statistic that has evolved since the inception of social se- curity is the wage-earner to benefici- ary ratio. In 1945, we had almost 42 workers for every beneficiary of social security. Today, because of lower than birth rates and greater lon- gevity. the ratio is about 3.3 workers per beneficiary, and dropping. The pay-as-you-go financing scheme in security leaves our younger gen- eration with a tremendous burden, unless we alter the structure of future benefits in this program. proposals contained in the core bill, H.R. 1900, do not secure the pro- gram for today's workers, and severalof the bill's provisions further dampen the original purpose of social security since its enactment in 1935. The pro- gram's benefits have continually ex- panded since then, What started as a supplemental re- tirement program to help workers plan for the future, now includes: dis- insurance, a health insurance program, early retirement benefits, ex- tension of benefits to survivors and de- pendents of the original beneficiaries, and the indexation of benefits and the base to inflation. To top this off, in 1972, when Congress first author- annualized COLA's, a 20-percent benefit increase was included by a change in actuarial assumptions. These demographic and legislative changes to social security left but a few alternatives for Congress to keep the system in balance: Either raise and the revenue options or cent in 1990. Maximum taxes from 1970 to 1982 alone have gone up 580 percent for the employee while taxes for the average wage earner rose 259 percent. This bill seeks to accelerate, or in effect raise, payroll taxes again. For self employed persons, this bill raises taxes by 33 percent to equal the com- bined employe l-employee rate, and allows the self-employed workers to deduct half of their retirement taxes for income tax purposes. . How far can we cut into a worker's 's paycheck before it no longer becomes an incentive to work? The loss to the private economy is enormous in terms of increased burdens to the employers, burdens which eventually lead to less investment, , less private saving, less economic growth, and ultimately, less j The legislation also proposes to begin taxing a retiree's benefits by 50 percent if an individual earns more than $25,000 ,000 in annual income. Pro- ceeds for this additional tax will be moved from general revenues to the social security system. This change strikes at the heart of the "earned right" effect concept of social security, and ffect penalizes those who have had the foresight . I am disappointed that the commit- did not put a permanent control on toe cost-of-living the single biggest cause for the tremendous growth in benefits since 1972 when these inflation adjust- ers were instituted. the 1970's, coupled with lower wage earnings grown, left the system's income well behind benefit growth. Since 1965, , wages have increased 169.9 percent while social security benefits rose 209 9 percent because of indexa tion . Delaying this year's COLA may save $40 billion, but it does not prevent future disparities increases from again putting the system out of balance. Social security now accounts for 28 percent of our Nation's total Federal budget. . It affects nearly every single American with 116 million citizens paying Into million receiving retirement benefits. With so much at stake in this pro- grain, . we need to make decisions which not only reflect sound economic Judgment, udgment, but which allow our present and future retirees the chance for a secure program to count on. We must not rely on this bill's mixed bag of short-term remedies it we expect to re- alistically meet this dual commitment to our young people and present retir- ees. ees. This legislation does not reform a program that is plagued by past legis- lative mistakes and political compro- mises. What this bill does do is postpone the inevitable reckoning day for our Nation's social security and budget deficit problems by hiking taxes and Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 i Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 980 CONGRESSIONAL RECORD - HOUSE March 9, 198$ ents, or by compelling even more citi- Americans have now become financial- adequately meet the expected demand zens to take part in social security. ly dependent upon the Government in benefits and services. The financial problems of social se- for retirement- Income and economic As long as money remained in the curity have come not only from mis- security. Many people believe that trust funds-beyond that needed for management within the social security they have a legally enforceable con- retirement benefits-promises for new system and Congress insatiable desire tract with the Government entitling and increased welfare benefits kept to hand out free benefits, but also' them to future benefits. The truth is, growing. Benefit increases have been from Government manipulation of our Congress had no obligation to guaran- regarded as necessary corrective meas- national economy and monetary tee this form of economic dependence ures to keep the social security system system with irredeemable paper it has created. The Supreme Court has from accumulating a heavy surplus. money. ruled that there is not legal, enforce- Now we have reached the point where The facts about social security have able contract between the U.S. Gov- even current taxes cannot meet cur- been kept from the American people ernment and the citizens concerning rent benefits. Congress overextended long enough. The millions of workers social security benefits. Social security obligations have finally caught up who have been forced to pay social se- benefits can be changed or terminated with its somewhat limited ability to curity's bills are not only demanding at any time by Congress, and the Gov- pay for them. answers, but deserve to know the hard ernment's right to L ,nfiscate individu- Many of the economic problems of economic facts about this compulsory al social security benefits has been social security lie in the deep-seated system. We in Congress have a compel- upheld in the courts (Fleming v. contradictions between the welfare as- ling obligation to fulfill this demand. Nestor, 80 S. Ct. 1367 (1960)). pects and the retirement insurance as- Unfortunately, there are too many The greatest hypocrisy that Con- pects of the system. The welfare as- people in and out of Congress who do gress is committing against the Amen- pects of social security-that is, aid for not take this obligation seriously. ' can people is that social security con- dependent children, supplemental se- As is the case with most Govern- tributions paid by the employee and curity income, disability, and drug ad- ment programs, financial problems the employer are accumulated with in- diction and alcoholic provisions-have that develop are blamed on everything terest in a special account with the - been expanded at the expense of the except the Government itself. The employees name on it. The Govern- retirement insurance aspects. Social causes of social security's difficulties, ment stopped doing this in 1939. In- security has been and continues to be however, rest precisely on the Govern- stead, the taxes barely have time to understood by a majority of Ameri- ment's shoulders. The problems feed reach the books of account at the cans as an insurance program set up on themselves causing ever greater Social Security Administration before for their retirement. Because this con- economic hardships for our elderly. they are sent as earned benefits to 36 tradiction is being ignored by politi- The economic deficiencies of the pres- million people every month. Because clans and the press, the reform pro- ent makeup of social security are well of this substitution from an insurance clans documented in the fact that it has annuity program, tl?ie length of time it lems, within will will only social exacerbate the prob- taken not prove taken the Government less than 50 takes a retired individual to recover them. years to change the system from a re- FICA taxes is very short. Studies done tirement insurance program into a by the Congressional Research Service The a solutions Commission being pnroposed Social by the by the current taxes pay current benefits of the Library of Congress shows that rity Reform are nothing more than system, emptying the reserves in the a minimum wage earner will recover largest of the three trust funds, and his social security taxes paid in 13 quick fixes that will not pull social se- threatening to empty the other two. months. The average wage earner will curity out of its deep financial trou- Yet, it is maintained that social secu- collect in benefits what he has paid, in bles. The main thrust of the proposals rity does not need trust funds because, 17 months. The maximum wage earner is quite clear-to continue coercing unlike a private insurance company, will receive contributions in 22 and deceiving the American people the Government can force future months. On the surface this type of into paying still higher taxes and en- workers to contribute whatever is arrangement is a good deal for our el- couraging a belief that the system is needed to meet all benef obligations. derly. Receiving more in benefits than fundamentally sound. But this country is still democracy, paid in taxes appears as though the Some of the proposed solutions in- and this power to tax to meet social se- Government is doing a good job of in- clude: curity obligations hinges on the ability vesting. This seemingly wonderful ar- First, raising payroll taxes; and the willingness of the American rangement is typical of the startup Second, reducing benefits and slow- people to do so. phase which social security has been ing cost-of-living adjustments; Any private insurance company operating under for the past 50 years. Third, taxing social security bene- found financing its program with cur- The startup phase allows recipients to fits; rent premiums paid by the people receive greater benefits from the Gov- Fourth, raising the retirement age; would find its board of directors in jail ernment than could' have been earned Fifth, compelling all employees to and the company filing for bankrupt- if the money had been invested in the participate in social security, including cy marketplace. But now, the system is local, State, and Federal Government The prevailing attitude in Washing- entering the.mature or pay-as-you-go employees; and ton toward solving social security's phase. The trust funds are near Sixth, subsidize the social security problems continues to center around empty, and the cry for increased taxes trust funds with general revenue. increasing the Government's role in and reduced benefits are echoing in As if the American taxpayers are not controlling what clearly should be a the Halls of Congress to save the already overburdened with taxes, the private affair. Solutions calling for less system. The truth of the matter is, Social Security Reform Commission Government control are quickly social security benefits and services re- wants to increase the contributions shrugged off as being a threat to pres- ceived for the rest of one's retirement made to social security. The American ent or future retirees. Anyone espous- years are not paid-for benefits, but people are so well acquainted with ing the idea of making social security rather free windfall Government as- social security tax increases that for voluntary-not to mention phasing the sistance. While free windfall Govern- approximately 50 percent of all Ameri- program out altogether-is labeled an ment benefits are an economic gain can workers, their social security tax is enemy of social security and our elder- for the 36 million Americans receiving greater than their Federal income tax. ly. The real enemies of our present such aid, they represent an economic The original combined employee/em- and future elderly, however, are those loss for the 116 million Americans who ployer social security tax rate was 2 who continue to call this pay-as-you-go are forced to provide these benefits percent assessed against the first scheme security. through compulsory payroll taxes. $3,000 of income. This rate remained Social security has been exploited by This economic loss will become even in effect until 1950 when the rate was Congress to the extent that millions of greater as payroll taxes are raised to increased to 3 percent. Today, the Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 982 CONGRESSIONAL RECORD - HOUSE being a coercive social welfare scheme. Below is an outline for solving the social security dilemma. The most fundamental merit of this proposal is that it returns to the American people the freedom of choice to plan for their retirement. Nothing short of this will restore to the people the freedom they so desper- ately need and deserve to plan for the future of their own lives. First, freedom of choice must' be granted to every American citizen to voluntarily opt out of the social secu- rity system. Second, no new workers are to be, compelled by the Government to Join the social security system. Third. FICA payroll taxes will cease to be withheld from people voluntarily opting out of social security. The em- ployer FICA tax will also be eliminat- ed on those employees opting out of social security. Fourth. all persons voluntarily opting out of social security will relin- quish all claims to future benefits that would be provided under social secu- rity. regardless of the amount contrib- uted Into the system to date. Fifth, persons voluntarily opting out of social security will have their social security records destroyed by the Social Security Adminstration. Sixth. Government regulations per- tatoing to individual retirement ac- counts (IRA's) must be amended so that a person can put Into these ac- counts at least the same amount previ- ously withheld as FICA taxes.-both employee and employer share. An amounts contributed into IRA's and all Interest earned on iRA's must be tax free in the form of a deduction against Federal income tax liability, and IRA's must be allowed to Invest in collectibles. Seventh, an decisions pertaining to the type of IRA and the amount con- tributed to an IRA shall be the re- sponsibility of the individual. Eighth, the earnings limitation now imposed on persons between the ages of 62 and 70 shall be eliminated This will end the present practice of the Government discouraging older Ameri- cans to continue contributing their skills and knowledge in the market- place. Ninth, persons currently receiving benefits are to be notified that the system is bankrupt and his present benefit level will become a ceiling. All future payments will be financed on an annual bads. The amount needed for funding will be derived from: First, savings through the elimina- tion of foreign expenditures-both military and economic; Second. selling government proper- ty; Third, proceeds from the minting and selling of American gold eagle coins to the public; and Fourth, payroll contributions from people remaining voluntarily in the social security system. The system can use general revenue only to the extent that its use is offset by Implementing the first three Items above. An Increase In the FICA payroll contributions on those remaining in the social security system will be nec- essary to fully fund their retirement- and all promised related benefits--and to make up any shortfall realized after exhausting the aforementioned recom- mendations for funding benefits for present beneficiaries. Mr. CONABLE. Mr. Chairman, I yield 4 minutes to the distinguished gentleman from Georgia (Mr. Jza- srns). (Mr. JENKINS asked and was given permission to revise and extend his re- marks.) Mr. RICHARDSON. Mr. Chairman, will the gentleman yield? Mr. JENKINS. I yield to the gentle- man from New Mexico. (Mr. RICHARDSON asked. and was given permission to revise and extend his remarks.) Mr. RICHARDSON. Mr. Chairman. I realize this social security reform package is built upon a delicate bal- ance of compromise and concession. I also realize the importance of keeping the social security system solvent. But, Mr. Chairman. I must express my grave reservation about one of the provisions of this bill. I am speaking, of course, about the provision requir- ing all new Federal employees to be in- cluded in the social security system be- ginning January 1. 1084. I believe this provision is unjust and unwise. If newly hired Federal employees are brought within the social security system, I am deeply concerned that the absence of any new contributions being paid into the civil service retire- ment system could bankrupt that system In less than 40 years. If that happens, Mr. Chairman, who will end up funding the revenues needed to pay Federal retirement benefits? The answer is obvious: The taxpayers will The civil service retirement system is the crown jewel of Federal employ- ment. The system is viable and sol- vent. During the past 2 years of Feder- al budget cuts. Job firings and RIF's, proposed pay freezes, and increased health insurance costs, the one thing Federal employees have been able to cling to is their assured retirement program. To endanger that program now is to strike an unwarranted blow against our Federal workers. Mr. Chairman, I am fully aware that this proposal will pass the House in its present form. But I want to take this opportunity on behalf of the Ameri- can taxpayers and Federal employees nationwide to warn the House of the grave problems this bill may create. I hope and pray that we will not be faced with the task of forcing taxpay- ers to shore up a weakened civil serv- ice retirement program in the coming decades. But I must say, Mr. Chair- man, that I doubt this issue will solve itself and disappear into the night. March 9, 1983 Mr. JENKINS. Mr. Chairman, through the past several decades the Congress and the various Presidents of both political parties have been in the enviable position on being able to vote for Increasing benefits and expanded coverage under social security. Unfortunately, the same Congress and the same Presidents have been re- luctant and, indeed, they have been adamant in refusing to increase the taxes to pay for these-increased bene. fits that they so freely voted. As Is the case in any benefit pro. gram, there Is ultimately a day of reckoning. At some time benefits must be paid for by someone. It takes no political courage to vote to increase benefits or to expand cov- erage under social security. It does take some degree of responsibility to make the hard vote in preserving a good retirement system that 36 million people now depend upon. If any Member of this House decides to oppose this measure I respect that right. But with that opposition, if you are to be fair with the American people in opposing this bill, you do have some degree of responsibility to offer the alternative that you support. If you have an alternative plan. I would think you have the responsibili- ty to go before the Rules Committee and ask for a rule that would permit your plan to be voted upon on this House floor. It is easy to be against a measure where there are.some political liabil- ities, but there is a degree of responsi- bility that each of us in this body have to make the hard vote where that is necessary. Sure, you can say this increases taxes. Well, what Is your alternative to some increase or speed up in taxes? Yes. you may say that this decreases benefits ultimately. Well, what is your alternative to that? Yes. this Includes new Federal em- ployees and you could oppose the bill because you say that is unfair. Well, what is your plan? Do you want to in. crease the payroll tax today? Do you want to increase the retirement age today for those nearing retirement? The simple facts are unless you are a purist or unless you are finding some political reason to oppose the measure, then I think this package that is before us today, with whatever defects it may have, is probably the only measure that we will have the oppor- tunity to vote on to preserve social se- curity. So I say, Mr. Chairman, there are many parts of it that I oppose, that I do not like. There are many parts of it that I opposed in committee. There are some things that I wanted in the bill that I did not get. I am con- cerned about small business, the self- employed. I am concerned about a host of people. But I say to this body that this is the only package that you will get to vote upon and if you vote against it Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 984 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 198.E In 1976 at the end of the session the Ways and Means Committee brought to the floor under a closed rule a bill which was said to be the ultimate solu- tion to the problems of financing social security. Like this bill today, that bill in 1976 was pushed through- ramrodded through-this House be- cause of the impending crisis. Failure to pass this bill, we were told, would result In the-immediate crumbling of the social security system. We were urged by the White House and the House leadership to pass that bill despite our reservations with it because any inequities that might be found within It could be cor- rected after the bill was putin place. It was not until early in the follow- ing year that Members of the House realized the extent of their folly. We had passed a bill that greatly in- creased payroll taxes across this land for social security, but we had also not solved the problem. And so we are back here today being told once more that we must act blindly now with full faith In the pledge of the White House and the Ways and Means Committee that passage of this bill will solve our problems. We are told to put aside our reserva- tions about the harm we do to others In our haste to solve this problem and we are told that passage of this bill which we may not change will solve the financing problems of the social security system once and for all. I was wrong In 1976 when I support- ed my White Houe and the House leadership and voted for that social se- curity bill. I thought I was acting to help social security, but all I was doing was following the blind leading the blind. I have that sense that the same thing is happening today and it is something I cannot abide. I urge the House membership not to accept what we are offered either. I said earlier today that I bow to no person In this body over the last two decades of service in my support of the senior citizens of this country. I be- lieve that passage of this bill today is a disservice to them as well as to the millions of Americans whose personal retirement systems will be bankrupted by this bill. Passage of this bill today will' ultimately result in the bankrupt- cy of the social security system as we know it and it is my prediction that the Congress within no more than 5 to 10 years will be called upon again to take still another remedial action to save the social security system. I would hope that by refusing to swal- low this bill whole today, we might create the atmosphere for taking the time to find a proper solution to our financing problems for social security. I think it is an important enough issue to devote more than 4 hours of general debate to a bill that affects all Ameri- cans well Into the next century. I we no reason why the Members of this body cannot have the right to offer amendanents they believe are pertinent to this measure. I refuse to accept again the concept that only the Ways and Means Committee has the experience and intelligence to write this bill. Indeed. following our experi- ences of the past with remedies for the social security system, we stand a far better chance of helping our senior citizens and the other recipients of social security by rejecting this bill out of hand. Mr. CONABLE. Mr. Chairman. I yield such time as he may consume to the gentleman from Rhode Island (Mr. ST Cox). (Mr. ST GERMAIN asked and was given permission to revise and extend his remarks.) Mr. ST GERMAIN. I believe that the social security compromise report- ed by the Ways and Means Committee is a generally fair and effective pack- age, that will solve most of the prob- lems plaguing the social security system. However, a few elements of this package should be reconsidered on the floor, since they cast a pall of unfairness over the whole compro- mise. The font? the harshest, problem with this package is the 6-month delay in cost-of-living adjustments that would push back the necessary infla- tion adjustments for our senior citi- zens to January 1984. We have heard much about the plunging inflation rate during the last year but even a 4- percent increase in prices means a 4- percent decrease in purchasing power for the elderly. Perhaps a 4-percent pay cut would not be important to anyone in this Chamber, but it could be a matter of life and death to senior citizens who already eke out a bare existence, caught between skyrocketing medical bills, steadily mounting fuel bills, and rising food prices. One third of our over-45 population are women who are living alone. These women must make do with an average annual income of ;6,000, and I think we all know that the bare necessities of life eat up most of that $6,000. A 4-percent pay cut due to Inflation means $240 less to spend, and a harsher life for our senior citi- zens. Elderly women living alone are not the only ones who will suffer from this cut. Nearly one-fourth of all people over 65 count on social security as their sole source of Income, and a full 65 percent may social security is their predominant source of income. These people will all be badly hurt by a penny-pinching attempt to squeeze a few more cents from the least-well-off citizens in our country. We are told that these COLA delays are done to spare those currently working from further increases in their. social security taxes, yet when we look at the most recent public opinion polls, the COLA delay is op- posed by a far greater percentage of people aged 18 to 29 than of people aged 65 and over. Forty-seven percent of the senior citizens oppose this COLA delay. The elderly, as always, stand ready to make necessary sacrifi- cies to promote our economic health and the safety of the social security system. But we should not ask for sac- rifices by the less well off, when the privileged and healthy can be asked to bear their fair share. So, I will oppose the COLA delay in the compromise, and support the amendment to be offered by Congress- men Psrrsa that would insitute an em- ployer/employee tax rate increase of 0.53 percent in the year 2010. A tax in- crease of one-half of 1 percent, nearly 80 years from now for people still at their prime earning power, is much more fair than an Income cut of 4 per- cent this year for people who depend upon the little income they get from social security to survive. I will also oppose the so-called bend points shift that would have the effect of reducing the initial benefit levels for every worker aged 42 and under, and will cut the benefits of those workers 37 years old or younger by at least 5 percent. While tax rates are in- creasing for current workers, we would be taking benefits from them through the back door, if this shift became law. A third area of great concern is the Inclusion of new Federal empldyees in social security. It is imperative that we recognize our commitment to current Federal employees and the soundness of their retirement system. Members of this body have been deluged with calls, letters, and visits from justifi- ably worried Federal employees. They want and deserve tangible assurances that their retirement system will be preserved. Immediate action must be taken to address the Issue of the future of the civil service retirement system In the event that new Federal employees are brought into social se- curity. We must give them more than promises. We must demonstrate that, when they are ready to retire, the funds will be available to provide the benefits they have been told they would receive. I hope to support this social security package in final passage, but without reconsideration of the COLA delay provisions, the bend-point changes, and the plight of Federal employees, the pall of unfairness still hangs heav- ily over the compromise. Mr. CONABLE.. Mr. Chairman, I yield 2 minutes to the gentleman from Virginia (Mr. BLnaY). (Mr. BLILEY asked and was given permission to revise and extend his re- marks. ) Mr. BLILEY. I thank the gentleman from New York for yielding. Mr. Chairman, while I have several concerns with the legislation now before the House, my 2 years as a Member of Congress have shown me that rarely, If ever, can the necessary compromises which must be made in this body satisfy every Member. At the risk of repeating what several other Members have said before me, this Is not the package I personally would Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 986 CONGRESSIONAL RECORD - HOUSE First of all I would like to, along with others who spoke before me, commend Mr. PicKLE, the chairman of the Subcommittee on Social Security for the very fine job he and others have done to bring this bill to the floor of the House. In January of this year, if we would have thought this bill would reach the floor in the second week in March, people would have thought we were crazy. It is through his leadership that we have this bill on the floor at this time. I would like to enter into a colloquy with the chairman of the committee. The D.C. employees indicated to me there is some ambiguity as to whether or not they are under social security under the terms of the committee report. Would the chairman advise me whether the D.C. employees will be covered by social security? Mr. ROSTENKOWSKI. No D.C. em- ployees are affected by the coverage provisions of this bill. They are not considered Federal employees for this purpose. So the employees of the Dis- trict are not at all affected. Mr. MATSUI. I thank the chairman. Speaking of Federal employees, Mr. Chairman, I would just like to add one thing: If the bill had been divided up so that amendments were to be of- fered, I would guarantee you that there would not be a bill passing the floor of the House of Representatives this afternoon because you can elimi- nate Federal employees, we can elimi- nate the 6 months' delay in the cost of living, we could eliminate the increase in the various taxes that will be im- posed, and we could end up without a bill. Now, let me address the Federal employee issue, if I may. I have a number of Federal employ- ees in my district, some 20,000, and I might say that over the last 4 years I have been one of the staunch support- ers of Federal employee issues, prob- ably close to 100 percent in my voting record, of those issues of concern to them. I would like to set forth some facts, if I may, that we gathered from the deliberations of the committee when we had our hearings. First of all, with respect to the civil service retirement system, those 40 different systems within the trust fund, our actuaries have said there is $560 billion of unfunded liabilities in that system. So that system is not, at this time, a sound system, but in fact it will need an infusion of Federal dol- lars in addition to what is being put in now in the years to come. In addition to that, with respect to the supplemental system that will be set up, I know that many of the Feder- al employees in my district were un- aware of the fact that Mr. RosTEx- Kowsxz, Chairman FoRD and the Speaker, have sent a letter to all Democratic Members stating that they will maintain and protect the integrity of the current Federal employees re- tirement system. ^ 1330 And when that letter is delivered to my constituents most of their fears are alleviated and their concerns that their system is in fact in jeopardy is somewhat reduced. And let me conclude by setting forth some facts that the committee used in putting new Federal employees under social security. First of all, 50 percent of the Federal employees that go into the work force do not-I say do not-receive any civil service retirement benefits. And those are usually the lower income employ- ees. They are the ones who eventually go into private industry, and they are the ones who lose the period of time that they have been in Federal service and do not accumulate any social secu- rity credits. In addition, there is the portability factor with respect to social security. If a person is in the Federal retire- ment system today and he wants to leave, then he does not accumulate benefits under the civil service system. And third, and perhaps most impor- tantly, those Federal employees who will be under social security will re- ceive disability benefits and death benefits. I think the Federal employees, in- stead of fighting this issue, which is really a noiiissue for those Federal em- ployees frankly who are currently in the work force since they will not be covered by social security, they should be fighting the wage freeze that the administration is proposing. They should-be fighting the restructuring of their retirement system. So I think the Federal employees really should begin to divert their at- tention to the budget issues which will be coming up in the next few months. And in conclusion, Mr. Chairman, I would only like to say that frankly the groups that have been most helpful in this effort have been the senior citizen groups. I suppose that is partly be- cause the gentleman from Florida, Mr. CLAUDE PEPPER, has been their leader in this effort. When I went back home and talked to some of them and I advised them of the 6-month delay in their cost-of- living benefits, most of them were cou- rageous enough to say if all of us sacri- fice, then they are willing to sacrifice too. So I urge that all Members vote for this bill. Mr. ROSTENKOWSKI. Mr. Chair- man, I yield such time as she may con- sume to the gentlewoman from Mary- land (Ms. MIKULSxI). (Ms. MIKULSKI asked and was given permission to revise and extend her remarks.) Ms. MIKULSKI. Mr. Chairman, we are facing a difficult and important decision today. Our Nation's retire- ment system is in trouble and Con- gress has a responsibility to find an equitable and responsible solution to the financial problems facing the system. March 9, 1989 I have the utmost respect and regard for the bipartisan commission that worked so diligently to make recom- mendations. I also respect the Ways and Means Committee for their efforts to adapt these recommendations into legislation for consideration by the full House. I am deeply concerned about partic- ular aspects of this package and I am reflecting the concerns I have heard from my constituents. First, the delay in the cost-of-living adjustment will place an unfair and heavy burden on our Nation's elderly, especially those at the lower end of the benefit spectrum. Second, I think there is a myth about Federal employees getting some kind of free ride. I think many people in this country are unaware of the sig- nificant contribution Federal employ- ees have made to this country. They have been under assault for too long. It is unforgivable that Federal employ- ees continue to be the scapegoat for our Nation's budget problems. They have made significant contributions to their retirement system and are now being asked to sit by passively and accept a major change in that system with no guarantee that it will be there when they need it. I think - this is outrageous. It is unfair to current employees, and places an unbearable financial burden on new employees. We risk losing the best employees we have, and being unable to recruit talented newcomers. Third, I think more serious atten- tion should have been paid to the use of general revenues in specific and lim- ited circumstances. For instance, there could be trigger mechanism such as a certain unemployment level, which would cause general revenues to kick in, and then kick back out when the unemployment level went back down. Finally, we must continue to be con- scious of the burden that any more in- crease in payroll taxes will place on the self-employed and on business, small business in particular. I am going to vote for this legislation despite my misgivings for one reason: I cannot and will not play chicken with the checks that many of our senior citizens -depend on for their food and shelter. Mr. ROSTENKOWSKI. Mr. Chair- man, I yield 4 minutes to the gentle- man from Ohio (Mr. PEASE). (Mr. PEASE asked and was given permission to revise and extend his re- marks.) - Mr. PEASE. Mr. Chairman, I would like to begin my comments with com- mendations for the chairman of our committee, the gentleman from Illi- nois (Mr. RosvExxowsxi) and for the chairman of the subcommittee, the gentleman from Texas (Mr. PzcrLE). It is clear to me what without their expertise and their dedication and their political skill this bill would not be on the floor today in as good a shape as it is in. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 992 CONGRESSIONAL RECORD - HOUSE March 9, 1988 Purposes, which are, first, to allow of the elderly are among the poorest, perform at the optimistic levels pro- Congress to consider the entire budget in New Haven and elsewhere in the jected in the 1977 social security overall, to examine the effect of total district. With rising utility costs, rising amendments. The long-term financial spending, revenues, and deficit on the rents, and an increasing cost of living, problem is a result of demographics- economy, and, second, to facilitate this is not a sacrifice that they are when the baby-boom generation re- making tradeoffs among programs able to make. tires, there will be only two workers competing for public resources. I might have made a different deci- paying into the system to support Taking social security and medicare sion if this package provided real solu- each person drawing benefits. Neither off budget would severly weaken the tions to the long-term problems facing of these problems is changed one whit process. social security. I am convinced that by bringing more people into the Budget totals would be understated unfortunately, it does not, and that we social security system. by more than $300 billion, so it would will soon be back here facing this There is no plan before us today on be meaningless to talk of the size of problem again. We have to take fur- what sort of a pension system will be the budget in relation to the economy. ther steps to control the steady in- devised for the new Federal employees The budget deficit would be over- crease of the social security tax who are to be brought under social se- stated. This makes it difficult to relate burden on working people. We have to curity. Federal employees are being deficits to the economy. Further, it solve the problems of skyrocketing asked to take it on faith alone that seems paradoxical for us to arrange a medicare costs which will soon over- Congress will protect the financial se- system that will force us to vote for whelm the system. This bill does not curity of the pensions they have paid overstated deficits. sufficiently address these problems to for. This social security package is lim- This precedent could lead to pres- justify the immediate sacrifice, the im- ited in scope to insure that we do not sure to take other trust funds off mediate benefit cut, that is being break faith with the 36 million Ameri- budget, for example, the rest of medi- asked of the elderly. That is why, re- cans who have paid into the social se- care, the civil service retirement trust luctantly, I must vote against it. We curity system and are now receiving its fund, the highway and airport devel- must find better solutions for both the benefits. Those who have been paying oment trust funds, the general reve- short-term and the long-term prob- into the civil service retirement system nue sharing trust fund, the land and lems. deserve the same consideration. Every water conservation fund, and so on. Mr. CONABLE. Mr. Chairman, I Member who votes for this social secu- The combination of overstated defi- yield 1 minute to the gentleman from rity bill should make a commitment to cits and understated spending totals Missouri (Mr. COLEMAN). keeping the civil service retirement will lead to increasing pressure on the (Mr. COLEMAN of Missouri asked system financially sound as well. remaining on-budget programs, basi- and was given permission to revise and tally the discretionary. programs-de- extend his remarks.) Just 5 years ago, the congressional fense, education, employment, law en- Mr. COLEMAN of Missouri. Mr. leadership told us that the Social Be- forcement, and so on. Chairman, the social security legisla- curity Financing Amendments of 1977 Now people have argued that social tion before us today presents the most would place the system on a sound fi- security should be off budget because important and difficult choices this nancial footing well into the 21st cen- it is self-financed. This is not true-it Congress will be called on to face. The tury. We have all seen how inaccurate receives and will continue to receive a problems of the social security system that assessment has proved, so I think number of general fund subsidies. Fur- are grave-even as we talk, social secu- we should avoid making any similar ther, it is argued that taking it off rity is paying out $17,000 a minute Promises about the legislation we are budget will remove social security more than it is taking in. There is no considering today. Nevertheless, this from politics, easy way to solve the problems. But bill presents, on the balance, the soun- But, in fact, the insulation would not solve them we must, if we are going to dest and most responsible solution put work. Because the general fund subsi- keep faith with the 36 million Ameri- forward for addressing the very real fi- dies to the trust funds will still exist, cans who are counting on their month- nancial crisis of the social security proposals to raise or lower social secu- ly benefit checks and the 115 million system. No one group is asked to make rity or medicare benefits would still be workers who are paying into the all the sacrifices that are needed to reflected as on-budget changes to the system, make this system whole again. Passing cost of the subsidies. Thus, there could The legislation before us is not a this legislation is the best way to still be pressure to change social secu- perfect plan. I doubt if there is a assure all Americans that they can rity or medicare because of budgetary Member on this floor who does not depend on the social security system, considerations. object to at least one of its provisions, both now and in the decades to come. In summary, the proposal is bad for I myself am particularly concerned Now is the time to set aside partisan the process. It forces us to vote for over several of the provisions, among political considerations and legislate in overstated deficits. It puts unfair pres- them the inclusion of new Federal the compelling national interest. I sure on other programs. It is a bad workers in the social security system urge my colleagues to support this leg- precedent. It fails in its purpose of in- and the unprecedented change of islation. sulating the program. Therefore, the making some social security benefits Mr. ROSTENKOWSKI. Mr. Chair- Provision taking social security off taxable income for people who have man, I yield 4 minutes to the gentle- budget should be dropped in confer- made the effort to save and prepare man from Maryland (Mr. Home). ence. for their retirement. Or for that Mr. HOYER. Mr. Chairman, this Mr. CONABLE. Mr. Chairman, I matter, no one enjoys raising the rate legislation placed before us today may yield 1 minute to the gentleman from of social security taxation. But if each be an important response to the diffi- Connecticut (Mr. MoiuusoN). of us held out for what we considered cult challenge of producing a solvent (Mr. MORRISON of Connecticut the ideal solution, this House would and strong social security system. It asked and was given permission to still be debating our 435 separate pro- may be an example of how well Gov- revise and extend his remarks.) posals while the social security system ernment can respond to the cross-cur- Mr. MORRISON of Connecticut. went bankrupt in July. So we must rents between various interest groups Mr. Chairman, I rise to speak in oppo- balance our individual concerns over this critical issue. It may well be sition to this bill, sadly but necessar- against the interest of the entire the most equitable solution to this ily. The communications from the el- Nation in having a stable and strong ticklish problem of balancing options derly people of my district have made social security system, in the speediest fashion. But for me, it clear to me that they cannot bear Let me take just a moment to ad- Mr. Chairman, it is not a solution I the loss of 6 months' cost-of-living in- dress the concerns that public employ- can easily accept. Indeed, many of my crease. Mr. Chairman, the largest city ees have raised about the plan. Social colleagues on both sides of the aisle in my district, New Haven, is the sev- security's immediate finpncing crisis share my uneasiness over adopting enth poorest city in the Nation. Many stems from the economy's failure to this proposal. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H994 CONGRESSIONAL RECORD - HOUSE This equitably spreads a relatively small burden among all those now drawing benefits, rather than concen- trating a large burden on a small number of current beneficiaries. The very low-income elderly will be completely shielded from the impact of this provision. Although the COLA for supplemental security income (SSI)-Federal cash assistance for the aged, blind, and disabled poor-must also be delayed for adminstrative rea- sons from July to January, SSI beneficiaries will recieve a one-time across-the-board increase in monthly benefits of $20-$30 for couples. This is almost double the maximum SSI COLA of $11 that would have been paid otherwise. Higher income beneficiaries will also be called on to contribute to restoring social security to financial health. Our bill would require beneficiaries to in- clude in taxable income the lesser of one-half of benefits or one-half of the excess of the taxpayers' combined income-adjusted gross income plus one-half of benefits-over a certain base amount. The base amount would be $25,000 a year for an individual, $32,000 for a married couple filing jointly, and zero for married persons filing separate returns. I was quite concerned about taxing a small portion of social security bene- fits because this has never been done before. Changes in this provision made by the Ways and Means Committee reduce the percentage of beneficiaries affected by this provision to well under 8 percent. What is more, al- though employees pay income taxes on their income subject to the payroll tax, employers do not because they can claim a business expense deduc- tion for their payroll tax payments. Therefore, it is argued that requiring social security beneficiaries to pay taxes on the previously untaxed por- tion of their benefits-the part pro- vided from employer contributions-is appropriate at the time of receipt. Current workers are also called on to help. Already scheduled increases in the payroll tax for 1985 and 1990 would be rolled forward, under the bill, to 1984 and 1988, respectively. Many people have pointed out that in- creasing payroll taxes in 1984 may stifle recovery and hamper our efforts to reduce unemployment. That is why this bill would give employees a pay- roll tax credit, for 1984 only, equal to the payroll tax increaese in 1984. Self-employed persons would also make a sacrifice under this measure. When the self-employed were first covered by social security in the 1950's, their payroll tax rate was set at about 1% times the employee rate, or about 75 percent of the combined em- ployee-employer rate. Since that time, however, it has been widely recognized that although the employer nominally pays half of the total payroll tax for each worker, the worker himself bears the burden of this tax by receiving a lower net wage from his employer. Consequently it has been argued, and this bill pro- poses, that the self-employed, as both employee and employer, should also pay the same tax rate as the combined employee-employer rate. In recognition that this is a substan- tial tax increase on the self-employed at a time when the economic recovery may be only beginning, this bill also proposes a payroll tax credit equal to 2.1 percent of payroll in 1984, 1.8 per- cent in 1985 through 1987, and 1.9 per- cent thereafter. Although the President's National Commission on Social Security Reform originally proposed a tax de- duction equal to one-half of the self- employed's payroll tax payments, this bill restructured that proposal to pro- vide a credit of similar magnitude that will ease the burden of the additional tax for lower income self-employed. persons. The bill would also make a number of other important changes in social security. Federal workers hired after 1983, Members of Congress, the Feder- al judiciary, and nonprofit organiza- tion employees would join the 115 mil- lion people in the private sector in paying social security payroll, taxes. State and local governments now par- ticipating in social security would be prohibited from withdrawing from coverage. Windfall social security benefits for people who draw pensions from nonsocial security covered em- ployment would be eliminated, and the U.S. Treasury would reimburse social security for uncashed social se- curity benefit checks and gratuitous military wage credits. In the depths of the Great Depres- sion, amid widespread poverty among our Nation's elderly, the U.S. Congress enacted the Social Security Act of 1935. At that time, over half of our el- derly population subsisted on incomes below the poverty level. Over social security's 48-year histo- ry, the system has drastically reduced poverty among the elderly by 75 per- cent and become America's most popu- lar and most successful social pro- gram. Mr. Chairman, we cannot abdicate our responsibility to workers and beneficiaries. We must deal' decisively with this issue and restore faith to all Americans of Congress commitment to social security. In short, I urge my colleagues to support this bill as an equitable solu- tion to the crisis we now face in social security. Mr. ROSTENKOWSKI. Mr. Chair- man, I yield 1 minute to the gentle- man from California (Mr. Wexnsax). (Mr. WAXMAN asked and was given permission to revise and extend his re- marks.) Mr. WAXMAN. Mr. Chairman, I would like to take a few minutes to discuss the medicare prospective reim- bursement provisions of this bill. Rising hospital costs have been the major factor in increased health March 9, 1989 spending for many years. We tried 3 years ago to pass legislation to limit health inflation and spending with overall limits on all hospital costs through a hospital cost containment measure, but that effort was defeated on the floor. Today, we have before us a major re- vision in how medicare pays for hospi- tal care. All of us are very concerned that major reforms like this not be too abrupt-we do not want a system that imposes deep and irreversible changes before we can evaluate their impact, or that brings immediate windfalls or substantial deficits to individual hospi- tals. That concern is evident in many places, including my own State of Cali- fornia. But I believe that the changes made in the committee bill help to ad- dress this problem. The short-term impact is moderated by accounting for urban and rural differences, and for regional differences. Most important- ly, the system is phased in over 1 years. The first year retains 75 percent of payment on the basis of institution- specific cost limits, with only 25 per- cent on the basis of the new prospec- tive system. That phasing period will give us an ideal opportunity to exam- ine the impact of the proposal as it is phased in, and allow us time to make any adjustments that are required. We should all acknowledge that the proposal is not as comprehensive as the type of all-payor program that I would prefer. But it would serve none of our interests to hold this up for a system which may not be possible at this point, the bill offers important protections for States that do want to develop all-payor programs through provisions based on Mr. WyDzx's bill. I hope that we will see States respond- ing to this opportunity. In addition, it provides for the collection and study of data on the impact of such all-payor programs in order to provide us with the information needed to address this issue in the future. The bill is an important step in moving us from our existing and infla- tionary cost-based payment system to a prospective mechanism under which hospitals have some incentives to mod- erate their costs. There are a number of other fea- tures that were important to many of us and are now included in the Ways and Means committee bill. The system will initially be based on geographic regions to help take into account the existing differences among regions in hospital spending; The system adjusts for the higher costs in urban areas; The system takes into account some of the special needs of the urban public hospitals; The system includes special adjust- ments for teaching hospitals-it passes through the direct medical education costs, and includes a special adjuster to account for their indirect costs; Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1983 CONGRESSIONAL RECORD - HOUSE H 995 The system phases out the special hospital costs down and their oper- ty has now expired, and unless new return on equity that is part of the ation as efficiently as possible. legislation is enacted, the OASI fund cost-based system and places all hospi- I am very pleased with the provi- will be unable to pay July benefit tats on an equal footing in trying to lions of title V of this bill, which checks on time. earn a return based on their ability to would extend the authority for Feder- The House Ways and Means Com- operate at costs within these prospec- al supplemental unemployment com- mittee has reported-that if interfund tive limits; pensation benefits through September borrowing were merely continued The system passes through capital 31, 1983. without additional reforms, the three costs but includes a study and some in- This program has been extremely combined social security - funds would terim constraints to minimize any ef- beneficial in Puerto Rico in maintain- be unable to pay benefits on time be- forts at rapid and costly capital expan- ing a steady, though small, income for ginning in the spring of 1984. Under sion; families where the wage earner is ex- the circumstances we have no other The system includes all services- periencing long-term unemployment. choice but to consider comprehensive except physicians-provided by hospi- In an economy of 25.3 percent unem- legislation to rectify the problem. tals to help assure that the cost and ployment, we can only expect the H.R. 1900 represents over 1 year of charges are not simply shifted to numbers of people needing this addi- bipartisan work by the National Com- medicare part B; tional aid to increase. mission on Social Security Reform es- The system includes important stud- I am deeply concerned with the pro- tablished to recommend a fair, bal- ies of how to limit potential volume in- visions that will put various categories anced plan to restore the system and creases, and how to address the issue of federal employees under the social Americans' confidence in it. The Coln. of revising physician payments for in- security system. mission's recommendations included: patient services to parallel this new I urge my-colleagues to act promptly acceleration of already scheduled pay- hospital payment system; and and establish a new, supplementary roll tax increases, 6-month delay of ..Finally, I would stress that the com- system to give new social security cov- the cost-of-living adjustment, tax in- mittee bill prohibits hospitals from ered Federal employees retirement centives for those who retire after age extra billing the medicare patient-so benefits comparable to those that will 65, inclusion of newly hired Federal the costs cannot be passed on to them. be received by Federal employees that employees and employees of nonprofit All of these provisions help make will remain under the civil service re- organisations, changes in the self-em- this an acceptable first step in our tirement system. Both groups of em- ployment tax and revision of certain reform on hospital payments. I thank ployees as well as both retirement sys- social security rules. The plan won bi- the Ways and Means Committee-and tems should be fully protected. partisan support and balanced $40 bil- especially Mr. SHANNON, and Mr. Gzi - I also urge you to oppose any lion in benefit changes against $40 bil- HAaa'r, and the chairman and ranking amendment aimed at increasing the Ron in revenue increases. minority members of the full commit- present social security retirement age After minor modification, the House tee and health subcommittee, for their or curtail future benefits. Any long Ways and Means Committee reported efforts in these areas. term shortfall in the system should be this plan to the House. Is the plan per- Mr. ROSTENKOWSK. Mr. Chair- taken care of by raising employer-em- fect? Certainly not. Many of these pro- man, I yield such time as he may con- ployee contributions if and when nec- seem some to the gentleman from Puerto essary. visions, considered unjust . would Yet, con - Rico (Mr. CORRADA). I give my support to H.R. 1900 and both both insufficient and alone, package they represent (Mr. CORRADA asked and was urge all my colleagues to vote for it. sidered as a the most viable option open represent us at given permission to revise and extend By doing so we will be protecting a this point- his'remarks.) system that is essential to carry out No one really supports increased Mr. CORRADA. Mr. Chairman, the our commitment of social Justice to all actions we take today are important to American citizens in the Nation and in taxes. This bill would accelerate the preserve the financial health of the Puerto Rico. scheduled OASDI tax increases, but it social security system. A system that Mr. CONABLE. Mr. Chairman, I would also offer a 1984 tax credit to has served well, for close to 50 years, yield such time as he may consume to compensate for this increase of 0.3 millions of American citizens in the the gentleman from Wisconsin (Mr. percent of wages. In addition, the Nation and Puerto Rico. A pystem GuwDi asoN). social security tax rates for self-em- which shows that we as a nation care (Mr. GUNDERSON asked and was ployed persons would be increased by for our elderly, our disabled and for given permission to revise and extend 33 percent to the full employer-em- their families. his remarks.) ployee rate. Yet, this provision is cou- Our social security system is present- Mr. GUNDERSON. Mr. Chairman, I pled with yearly tax credits through ly in critical economic condition which rise in support of the bill before us. 1988. A portion of beneficiary social could endanger the well-being of mil- Mr. Chairman, as we consider legis- security payments would be subject to lions of beneficiaries nationwide. lation to remedy the serious funding taxation for individuals with $25,000 The social security rescue package shortfall of the social security system. income and couples with $32,000. It is we consider today reflects a bipartisan the words of Abraham Lincoln should important to note that the committee agreement between Democrats and offer some guidance. He once instruct- in its deliberations increased the Republicans aimed to save -the system ed the American public, "You cannot income threshold originally recom- from disruption. escape the responsibility of tomorrow mended by the Commission and al- As a package it has elements which I by evading it today." tered the computation procedure to fully support and elements that deeply How easy it would be to reject the make it more equitable. concern me. Social Security Amendments of 1983 Social security retirees would face a I fully support the establishment of (H.R. 1900) today for one political 6-month delay in their COLA from a medicare prospective payment -reason or another. Yet, Congress has a July 1983 to January 1984. Included In system for hospitals which I deem responsibility to this system, and the this provision Is an increase in supple- wise and beneficial to the hospitals, 150 million Americans affected by it, mental security income of $20 for indi- the Government and the medicare which cannot be ignored in good con- viduals and $30 for couples per month beneficiaries. It will improve hospital's science. to insure that this delay places no financial planning and serve as an in- The financing problems facing social undue burden on low-income and dis- centive to hospital's cost efficiency. security are real and immediate. The abled individuals. The COLA change The Government, on the other hand, old age and survivors insurance fund overall is expected to reduce the aver- will gain some control over its rising has already run out of money. Pay- age beneficiary's payment by about disbursements due to increasing hospi- ments continued during 1982 through 2.45 percent. In a time requiring deci- tals costs. The medicare beneficiaries interfund borrowing approved by Con- sive action, I believe many of my con will also benefit as a result of keeping - gress in 1981. That borrowing authors- stituents are prepared to make such a Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 996 CONGRESSIONAL RECORD - HOUSE March 9, 1983 sacrifice to insure solvency for social Mr. CONABLE. Mr. Chairman, we tude for his untiring efforts. He has security. have reached a climactic point in a been a bridgebuilder. Many Federal employees in my dis- long struggle to save our social secu- The final product of all these labors trict have criticized the inclusion of rity system. There have been many is, of course, imperfect. It is not pre- new hires under social security as a po- times-many times-when I have won- cisely what the chairman of the com- litically expedient measure to bail out dered whether we would get this far. mittee, the chairman of the subcom- the ailing system. But this proposal is But my worst fears have failed to ma- mittee, or any one of our colleagues not new by any means. In fact, since terialize, and we have before us today would prefer. 1938 social security advisory councils a bill that will not only avoid a finan- Let me emphasize that the bill cer- have advocated inclusion of new Fed- cial crisis this year but will permit the tainly does not represent my personal eral employees under social security. payment of significant benefits in the concept of the ideal way to reform The 1981 National Commission on future. social security. My views on this are Social Security outlined a detailed Even better, this solution does not well known to those Members who plan to cover new Federal emnlovee put an undue burden on any one including creation of a special Federal group or interest currently or poten- nave listened to me expound on them Employee Benefit Board to oversee tially related to the system. over the past 15 years; but my views in the transition by 1984. This bill is not an ironclad guarantee this respect are never going to be en- I certainly sympathize with their le- that nothing will ever go wrong with acted into law. gitimate concerns expressed about the the system. No legislation can offer I have presented my best thoughts future of the civil service retirement such assurance. We do not know the on the subject often, and the response (CSR) fund. However, in testimony future. But I,am convinced, absolutely, from this body has been, to put the before the House Ways and Means that H.R. 1900 represents the best best face on it, something less than en- Committee, Sylvester Schieber, re- answer to social security's financial thusiastic. To cite 2 outstanding inci- search director for the Employee problems that this body is capable of dents, in 1982, 34 Members voted with Benefit Research Institute, stressed producing at this time and after the me against an unfunded benefit in- that the exclusion of new employees legislative and political history of the crease, and in 1977 I was joined by 56 from the CSR system would. not bank- issue. Members in supporting a comprehen- rupt the fund. The Federal Govern- It has arrived here after a sometimes live Republican substitute for the ment already pays about 65 percent of Perilous journey through the National Carter tax proposal. I was not really the yearly income to the fwhile Commission on Social Security lonely on these occasions, but I cer- employee contributions the fund, un compose only Reform so ably chaired by Alan tainly did not feel crowded, nor did my 15 percent of this yearly revenue. Greenspan and the Committee on wonderful principles greatly affect Congress has maintained its oblige- Ways and Means. The Commission this troubled system in its declining Lion to this retirement fund and my provided a necessary preliminary to course over the years of the struggle. colleagues and must not and will not the success of our legislative effort. When this latest crisis began devel- renege on that commitment or allow The committee did not exactly rubber- oiling, it would have been easy enough the fund to go bankrupt. In floor stamp the Commission's consensus for one with my track record to devel- debate on this bill today, House Post recommendations, but it followed op another major social security Office and Civil Service Committee them so closely that anyone who en- reform bill. It would have been highly Chairman ?S FORD has assured dorsed the Commission's consensus satisfying substantively, but it never us that this bill protects the integrity can endorse the committee product would have gotten anywhere political- of the civil service retirement system with confidence. ly. I do not apologize to my principled of t het mandates service change in Federal The committee bill is not only con- friends for my part in the negotiations si ntrI mandate L no system IF adds- sistent with the Commission consen- which got us here with this legislation. tion, this bill merely calls for inclusion sus, it is timely. If certain key features Over the past 2 years, social security of new Federal employees under social of the legislation are to be implement- has become increasingly a subject that security without requiring a separate ed, enactment must take place early no longer can be discussed in terms of supplemental retirement pr ogram ate this spring. Therefore, there has been reason and logic. For some time it has visioned pple by . He t the irement o a has a strong sense of urgency to the mis- been purely a political topic, and the sion. pledged to work with his committee to The chairman of the Committee on politics have become the politics of develop a scheme that will preserve Ways and Means promised in Decem- fear. the financial condition of the CSR ber that he would start the hearing In this environment it has been obvi- system. I make a similar pledge. The process on this issue February 1 and ous that only a truly bipartisan pro- will of Congress is clear. The Federal have a bill on the floor of the House posal, agreed to by both the President retirement Program will be protected- during the week of March 7. This and the Speaker, could become en- Several groups have criticized this might appear an easy task, but for acted into law this year. H.R. 1900 is package of reforms since the Commis- every hour of committee deliberation such a proposal. sion completed its report. Some want on delicate matters, several hours no tax increases and substantial bene- must be spent behind the scenes in ef- 0 1410 fit reductions. Others believe the pro- forts to satisfy disparate desires of in- Each part of this bill engenders visions reduce COLA's too much and dividual Members. In the case of this strong opposition from one interest advocate general revenue transfers to bill, the chairman of the committee group or another, but as a package it bolster the system. This plan strikes demonstrated clearly his expertise in has found widespread acceptance. In an effective balance between these ap- this kind of leadership. He promised this case, the whole is truly greater proaches. and he delivered. And so a great deal than the sum of its parts. To fail to approve this legislation of credit for this effort to save the Yes, the bill does reduce benefits for would be to renege on our promises to social security system should go to the some beneficiaries with above-average current retirees and those who contin- gentleman from Illinois (Mr. Rosrxx- incomes. Yes, the bill does require ue to pay into the system. We must gowsss). greater contributions from self-em- accept our responsibility for the Much credit should also go to the ployed persons. Yes, the bill will accel- future by supporting this comprehen- distinguished chairman of the Sub- erate high tax rates paid by employees give package today. committee on Social Security, the gen- and employers. And, yes, the bill does Mr. CONABLE. Mr. Chairman, I tleman from Texas (Mr. Picsza). He require a sacrifice by those already yield myself 13 minutes. has persevered in his drive to make drawing benefits, who will have to (Mr. CONABLE asked and was given the social security system safe, and wait 6 months, until January of next Permission to revise and extend this both the contributors and the year, to receive their 1983 cost-of- remarks.) beneficiaries owe him a debt of grata- living benefit adjustment. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 998 CONGRESSIONAL RECORD - HOUSE March 9, 1989 ment compensation and medicare. medicare from payroll tax funding and corporations and those who earn more Above all, it is a bill to save our social fund it with general revenues. More- than $50,000 per year. security system from the threat of over the committee bill does not even Divert funds for the MX missile to bankruptcy. address the serious funding deficien- retirement benefits. Switch our appro- It emerged from the Committee on cies facing medicare. The actuarial es- priations from nuclear weapons escala- Ways and Means on a recorded vote of timates provided by the Social Secu- tion to the health, hospitalization, and 32 to 3. Not in many years has major rity Administration show that the educational needs of the American legislation been blessed with such a health insurance trust fund will con- people-and there will be no need to harmonious, bipartisan sendoff. This tinue to decline and be depleted in force Federal civil servants' retirement reflects, I think, the strong view of about 1990. Thus, even if the commit- plans down into social security, but most Members that the social security tee bill becomes law, we will still have rather the opportunity to lift social se- crisis must be averted, and soon, and to come back in several years to ad- curity up to the level of those retire- that this vehicle is the best one to do dress the serious deficiencies in the ment plans. the job. medicare program, dealing yet another The hodgepodge of political compro- I hope this is the prevailing view, body blow to public confidence in the mise before us did not require any Mr. Chairman, and that we can move long-term stability of social security. courage of convictions, but putting the today to save social security and then Our colleague LEON PAxrrrA has in- people first would. proceed with our other work. We and troduced legislation that would deal The problem with this bill is not a the American people need this reas- effectively with both, problems. I matter of adding or subtracting a suring vote. strongly urge the Ways and Means dollar here or there, or switching cate- Mr. ROSTENKOWSKI. Mr. Chair- Committee to take that proposal up, gories from here to there. We need to man, I yield 1 minute to the gentle- in this session, so we can avoid the send the whole mess back to commit- man from Ohio (Mr. SEIBERLIN(;). negative impact of the increase in the tee where the entire priorities of the (Mr. SEIBERLING asked and was payroll tax and also settle the ques- given permission to revise and extend tion of funding medicare before it be- to be turned to be nr our Federal recipe need his remarks.) right-side-up. Mr. SEIBERLINC3. Mr. Chairman, in comes a critical problem. We must restart by totally rejecting 1977 ml E L in Congress voted for Nor does the bill the House is consid- the upside-down priorities of that a 77 ml scof us financing v t e dor ering today contain the supplemental Robin Hood-in-reverse in the White socia bill ked because we were givens choice Federal pension that will be needed House, rather than merely seeking to between supporting that given and let- for new Federal employees and for reconcile the differences within them tang social security ortin th bankrupt. We Members of Congress who will be cov- between Democrats and Republicans. again face the choice of We ered by social security beginning next Consider the people above power. and ing the system go bankrupttaxes Under major concern to the many Federal its inception in 1935, the social secu- the circumstances, I intend to cast my and postal workers whom I have rite system has strived to adhere to vote for the bill before us. talked with in recent weeks. one of the most basic of American While the bill could be faulted on I am gratified by the assurances we values: the right of a person to live out many grounds, its worst feature is that have received from Speaker O'NEna. -his last years with dignity and some it increases social security's reliance and Chairman Foxe of the Post Office economic security. on the regressive payroll tax. The pay- and Civil Service Committee that a In the past few weeks I have trav- roll tax is just about the worst tax plan will be developed promptly and eled throughout my rural district in there is. It increases unemployment by submitted to Congress. New Federal Michigan and talked to senior citizens, making it more expensive for employ- workers being placed under social Be- business people, labor unions, and ers to hire new workers. It also in- curity deserve to know that they will farmers about this social security fi- creases inflation,, since most employers have supplemental retirement costs nancing package that is before us simply pass the tax increase through and benefits comparable to those of today. The message they gave me was to consumers in the form of higher current Federal workers. It is abso- clear. Even though this package will prices. lutely essential that Congress deal have a great impact on their own indi- Furthermore, it violates the princi- with this question in this session. I vidual interests, they told me, "Some- ple that, where possible, taxes should intend to do everthing I can to see thing must be done to keep social secu- be based on ability to pay; lower-` that it does. rity solvent; we must all have to income workers pay a higher percent- expect to make some sacrifices to age of their income in social security 0 1420 make sure that this is done." taxes than the well-to-do. It is truly a Mr. ROSTENKOWSKI. Mr. Chair- For those of my constituents who regressive tax. man. I yield 1 minute to the gentle- are willing to make sacrifices in order Yesterday, I placed in the REcoan on man from Illinois (Mr. SAVAGE). to insure the dignity and economic se- page H935 a Washington Post article Mr. SAVAGE. Mr. Chairman, I curity of our older Americans, I sin- by Thomas B. Edsall examining how oppose this bill because-just as we cerely thank you. Knowing that my our overall tax system has become less seek to balance the Federal budget on constituents are willing to set aside and less progressive in the past few the backs of the needy to give to the selfish interests and have asked that I years. He notes that social security greedy-we are seeking to balance our do what I feel is best for social secu- payroll taxes are three times higher as social security system on the backs of rity and the country, has helped me to a percentage of Federal revenues than its poor beneficiaries and future support this very necessary bi-partisan they were a quarter century ago. beneficiaries. reform package. During that same timespan, the per- If we want to find the money to heal To be honest, there are many parts centage contribution of personal social security, take it from bombs, not of this package I would have difficulty income taxes, which are based on abili- from bread. Pass a real jobs bill and supporting under other circumstances. ty to pay, has remained constant while put people back to work, and then the Increased payroll taxes for workers the corporate income tax today con- unemployed can pay into social secu- and the self-employed and delays in tributes barely one-quarter of what it rity. the cost-of-living adjustments are pro- used to. Take away our millions of dollars visions I could not support under ordi- This sad situation is made sadder by from the tyrannical El Salvadoran die- nary circumstances. However, the cir- the fact that it is unnecessary. There tatorship with which it is murdering cumstances we now find ourselves in are other alternatives-reasonable al- its citizens. Disengage the United demands that we make these difficult ternatives-to higher payroll taxes. States from its support of the racist/ decisions. The bi-partisan agreement One in particular which I have sup- fascist South African dictatorship. Do now before us requires that we all ported for many years is to remove not cut taxes any further for the big make sacrifices. A delicate balance be- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1000 funds, but their virtues have been ex- tolled far beyond the realistic abilities of those tax increases. I recall that, in 1977, then-President Carter stated that the massive payroll tax increases contained in the 1977 amendments were "the guarantee that, from 1980 to 2030, social security funds would be sound." The fact that we are here in this Chamber today debating the need for still more revenues seems to cancel Mr. Carter's "guarantee." Another objectionable feature of the bill is the proposal to modify the cost- of-living adjustment (COLA). The June 1983 COLA would be delayed until December, and all subsequent COLA's would be payable on a calen- dar year basis. It is grossly unfair to change the rules for those already de- pendent upon social security, parf1cu- larly the low-income elderly who rely upon social security and the COLIC as their sole source of income. If COLA is to be the instrument of salvation for social security, then we in Congress should review, the methodology for computing the Consumer Price Index, and should evaluate its applicability to the true cost of living for older Ameri- cans. Such an evaluation may lead to more realistic and cost effective means of calculating cost-of-living adjust- ments. There are certain provisions of the bill which have my support. Improving benefits fpr surviving divorced or dis- abled spouses who remarry is one such positive provision; increased benefits for disabled widows and widowers is another. Benefits would be increased for widows whose husbands had died several years before the widow was eli- gible for benefits. Divorced individuals would be allowed to receive spouse's benefits at age 62 whether or not the former spouse had retired. I am also pleased that title III of the bill in- cludes miscellaneous and technical provisions to eliminate gender-based distinctions under social security. The gentleman from Texas (Mr. PICKLE), is to be commended for his endeavors to remove from the system inequities against women. Another feature of the bill which I endorse is the provision to place each of the three trust funds within the unified budget as separate functions and, in 1988, to remove those trust funds from the budget altogether. I strongly endorse the off budget ap- proach. However, those positive components of the bill do not weigh heavily enough to offset its inequitable provi- sions. In essence, the legislation before us is another exampl of the treat- ment of symptoms, rather than the curing of causes. The social security system has many faults and negative aspects which must be corrected, not masked. The very structure of the system is in need of reform and revi- sion and, until such time as those structural weaknesses have been prop- erly corrected, ?I fear that social secu- rity will be continually plagued with CONGRESSIONAL RECORD - HOUSE March 9, 1983 ills. I am opposed to the bill, and I am My colleague from Connecticut, Mr. sincerely regretful that it is simply not MoRRIsoN, and I had hoped to propose enough. an amendment to the legislation that Thank you.. ? Mrs. SCHNEIDER. Mr. Chairman, I rise today in support of the bill, H.R. 1900. There is no question that there are portions of the bill that I am very unhappy to see become law. Yet, as so often is the case with major, landmark legislation, we are faced with a pack- age composed of many small parts. In order to reach enough of a consensus to save the system, it becomes neces- sary for all of us to accept some provi- sions we do not favor in order to ac- complish the need for both immediate and long-term relief for the social se- curity system. Mr. Chairman, I must honestly say that I am most impressed with the quality of debate in this Chamber today. However, we must not lapse into complaceny with passage of this' bill. I, for one, must insist that we con- tinue to monitor the welfare of the Federal worker, the disabled recipient, and the medicare beneficiary. I am dis- _ deficits, the President continues to turbed by the statements of some of our colleagues to the effect, "Sure, this is a difficult vote, but do it now and this is the last time we will ad- dress social security during our life- times." Let us remember that we have com- mittees whose responsibility it is to closely follow the welfare of those re- ceiving social security, disability, and medicare benefits. We must not ne- glect this very important responsibili- ty, and we must reassure the American people that we would not enact this package and forget about them. Mr. Chairman, yesterday I asked the Rules Committee to permit greater debate on some issues affecting the system, particularly with respect to coverage of Federal workers and delays in COLA adjustments. I certain- ly am disappointed that the Rules Committee failed to permit votes on these subjects, and I implore the com- mittees to give due attention in the coming months and years to the effect of these measures with a view toward correction, if necessary. Mr. Chairman, again, with these res- ervations and cautions to my col- leagues, I will vote for this package. But let us not forget that one of our major responsibilities is oversight- and that we have a duty to insure that the result of this legislation is that which was intended when it was draft- ed.? ? Mr. GEJDENSON. Mr. Chairman, I rise today in opposition to H.R. 1900, the Social Security Act Amendments of 1983. I oppose the bill because I believe that the Congress has, over the past 2 years, missed numerous opportunities to bring progressiveness to the Na- tion's tax structure, and that, by pass- ing this package as it now stands, we are missing yet another opportunity to enact a progressive tax policy. would have, in our estimation, made it far more equitable. Our amendment would have removed the cap from the taxable wage base for both employers and employees, a move that would have raised approximately $80 billion for social security between 1984 and 1990. In addition, we would have re- moved the language for the 6-month COLA delay and the inclusion of Fed- eral new hires from the bill. Our pro- posal would have raised approximately $27 billion more for social security than does the inclusion of those two provisions. Not only would our alternative have saved more money, but it would have done so in a far more equitable fash- ion. The Congress, over the past 2 years, has allowed a number of regres- sive tax proposals to be enacted, and has basically lost the opportunity to go back and make the tax cut progres- sive. In the face of huge Government propose regressive tax measures such as the gasoline tax. We have rolled over and played dead too long while the President's policies benefiting the rich and denying the poor have become the law of the land. Our proposal would have given Con- gress the opportunity to bring progres- sive tax treatment to the social secu- rity system-a move that is long over- due.. ? Mr. FAUNTROY. Mr. Chairman, I rise in opposition to title I of section 101(a) of H.R. 1900 which provides for the inclusion of new Federal employ- ees hired on or after January 1, 1984, into the social security system. I am also deeply disappointed that the rule under which we are debating the Social Security Act of- 1983 does not permit a vote on the inclusion of new Federal workers into the social se- curity system. The civil service retirement system is being put at risk in order to bail out the social security system. Is not the -inclusion of Federal workers into the social security system a case of rob- bing Peter to pay Paul? The civil service retirement pay as you go system will not be able to func- tion if new Federal workers are not added to the system. This provision to include Federal workers could mean that when current Federal workers retire there will not be a new genera- tion of Federal workers to contribute to the program. Federal employees have correctly argued that the only way to insure benefits for Federal workers is for the Government to put additional billions into the civil servicesystem. Mr. Chairman, what we are engaged in is a shell game. This proposal will provide no significant contribution to the solvency of the social security system. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1983 CONGRESSIONAL RECORD - HOUSE The estimates of the additional rev- enues that the inclusion of new Feder- al workers are greatly exaggerated. The Congressional Budget Office has estimated that revenues deriving from the inclusion of new Federal workers could be as low as $4.9 billion in the short term. Over the longer period, many believe, that the social security system, will lose money when Federal workers begin to receive social security benefits. . Government costs emanating from this provision will increase as the Gov- ernment begins matching Federal em- ployee's social security taxes and paying for the new retirement system to supplement social security benefits. Additionally, the Government would experience a loss in revenue as taxable civil service retirement benefits are re- placed by nontaxable social security benefits. Again, Mr. Chairman, I wish to ex- press my disappointment that the rule under which we are operating will not permit a vote on this very unwise pro- vision.* Mr. WALGREN. Mr. Chairman, I want to add my support for the Social Security Act Amendments of 1985. This legislation, a careful compromise which earned the support of many di- verse groups, promises to place social security on a sound financial basis well Into the next century and provide us all with a basic income in our retire- ment years. . In talking to many of the people I represent, It is clear - to me that the greatest reservation the public has is the belief that social security will run out of money again in the near future. After all, they say, we were told In 1977 that the tax increases the Con- gress then approved would keep the system sound into the 20th century. And, look what happened. The system is bankrupt in less than 5 years. However; unlike the 1977 amend- ments which proved to be inadequate because of the unexpected double burden of severe inflation and unem- ployment of the past decade, this bill contains Important automatic stabiliz- er which will do much to insure fi- nancial stability. Beginning in 1988, If the trust funds decline below a.reason- able level, the coat-of-living benent would automatically be reduced to the lower of the consumer price index in- crease or the increase in average wages. This will prevent depletion of the trust funds in times of rapid infla- tion and sluggish economic growth, when prices outstrip wages. When the funds recover, a "catch-up" benefit payment would be made. Passage of this bill demonstrates the commitment of the Congress to the fundamental structure and principles of the social security program. It is im- portant to keep In mind that the prob- lems confronting 'social security merely reflect the changes In our soci- ety. Most important of these is that we are an aging society with longer life expectancies and lower birth rates. In 1950. there were 10.5 workers sup- porting each social security benefici- ary; today there are only 3.2. We ex- pectancy for males has rises from 65 to 1950 to 70 In 1982. It is only to be expected that we must set aside more of our resources to meet the increased needs an aging population requires from our society. To think that we can avoid increasing our contributions and believe that basic social security bene- fits can be maintained, is simply wish- ful thinking. Finally, I believe it is most impor- tant that this bill requires universal participation and coverage in social se- curity. Every American without excep- tion, including the President and each Member of Congress, will now be re- quired to pay social security taxes. No one will be able to point to anyone else and say they are not bear- ing their -fair share. Each of us will know that that, whatever burden we are bearing, It is only our fair share when we think about what everyone else is paying. Mr. Speaker, the importance of con- tinuing a healthy social security system was especially well put by a constituent of mine. In a recent letter to me, she wrote: Dear Mr. Walsren: I am a senior citizen. My total income is $476 of social security and $5.00 benefit from the veterans admin- istration which I get along on. paying $209 rent in addition to my gas. electric, phone and medical items. I also keep my life insur- ance as well as Blue Cross up each month. I dropped my Blue Shield because I knew I couldn't do It, but I manage okay. I am 76 years of age and have been a widow for 7% years and I feel very lucky to be able to take H 1001 Insure its solvency, both for people now receiving benefits and for people now paying into the system. As we know, that solvency is threatened- social security is expected to need $150 to $200 billion between now and the end of the decade to stay healthy. Social security checks are now literally being sent out on borrowed time, time which will expire in July. If we fail to act today in approving this plan, we run a very real risk of letting that time expire and letting a lifeline for millions of older Americans expire too. What the President's Bipartisan Commission on Social Security accom- plished in achieving consensus on a package of reforms is nothing short of remarkable. This group. appointed by leaders of both parties, moved beyond the simplistic rhetoric in which many had engaged. Through more than a year of hard work and negotiation, they put together a realistic and bal- anced package. They deserve deep thanks from all of us. One of the hallmarks of a true com- promise is that there is something in it that everyone does not like. That is certainly true of this package. Each member of the CommisSiaac, acting in- dividually, would have written a differ- ent plan. The Commission is asking for some sacrifice from nearly every American. But the reason their work Is so impressive is that they do not ask an unfair sacrifice from any one group. Their comprgpaige strikes a fragile balance between a number of competing and legltim$te Interests. If we turn It down today, there is certain. with $10.000 or more should complain about having tax taken for social security when they know the condition of our great coun- try. Let everyone help as much as they can and be happy doing so. - I don't live in a shabby neighborhood and am not ashamed to bring anyone into my apartment. If they would only bring food prices down a little it would help a great many people. I am thankful for everything I have. My late husband worried how a frail person like me would even exist after he was gone. But I did it and am contented. Sure, I must sacrifice some times but It never hurts me to do so. God bless you and your fellow represents- tives. I can think of nothing more Important than that the Congress keep the social secu- rity system sound. ? Mr. WIRTH. Mr. Chairman, social security affects virtually every Ameri- can in a direct and important way. It has been remarkably successful at achieving its central purpose of keep- ing senior citizens from living in dire poverty. It has provided a basic floor of income for retired Americans and has given working people the security of knowing they will not be destitute when they grow old. It is our country's largest social program, the result of a social compact we made in the dark days of the Depression. Because social security is of such profound importance to all Americans, our overriding goal today must be to happy with parts of , the package would be more satisfied In the future. Indeed, there Is no guarantee that an- other compromise could be reached. When the Commission's plan was issued in January, I decided that before making my decision on whether to support it, I would consult broadly with my constituents. Through news- letters to each home in my district. I explained the major parts of the plan, and outlined arguments for and against each part. Hundreds of Coloradans took time to communicate with me about social security, and their thoughts were very helpful. Some of their feelings were touching- seniors living barely above the poverty line who wrote that a 6-month delay in their COLA's was a necessary part of keeping social security healthy, cur- rent workers stating that a gradual speedup In their payroll taxes was a reasonable part of the needed solu- tion, and many others. Other constituents shared their con- cerns about parts of the package: Fed- eral workers concerned about the future of their retirement system, small business people worried about the effect of the tax -hikes on their businesses, working taxpayers who are feeling the brunt of ever-rising taxes, and others. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1004 CONGRESSIONAL RECORD I am concerned with the impact of the delay in the cost-of-living increase for current beneficiaries, particularly those receiving minimal benefits and hope that every effort will be made to assure that the increase in SSI pay- ments will help to compensate for the COLA delay imposed on particularly low income social security recipients. The impact of the increase in tax- ation for the self-employed, especially small business people, is also a source of concern to me, and I sincerely hope that the tax credit provided the self- employed against their taxes will be adequate to help offset the increased burden, but I still have doubts-espe- cially, after the 2-year duration of the tax credit. Of particular concern to me has been the impact 'of the provisions ex- tending social security coverage to new Federal employees effective January 1, 1984. Like many, I have questioned the impact of such a provision on the via- bility of the civil service retirement system for those who will rely on that system for their future retirement benefits. Questions have been raised as to whether the system will ulti- mately go bankrupt because of the lack of contributions by new Federal employees. In my view, this has been a serious enough issue that I had considered voting against the bill solely because of that threat. In an attempt to gain a better perspective on just what this provision will mean to the future of the civil service retirement system, I spoke at length with the chairman of the Post Office and Civil Service Com- mittee, the gentleman from Michigan (Mr. Foxe) who was of immense assist- ance in helping to put this entire matter into better focus, and who has greatly assisted me in clarifying some misconceptions that have been pro- moted as arguments against such extension of coverage. As I now understand this legislation, while new Federal employees will be required to contribute to social secu- rity effective January 1, 1984, they will also be required, as is currently the case, to contribute to the civil serv- ice retirement system. Therefore, con- trary to the claims by many, the con- tributions of new Federal employees to the CSRS will not be lost. However, this does not alleviate an- other serious concern, namely, wheth- er these new Federal employees will therefore be forced to bear an unduly heavy financial burden because of the necessity of dual contributions to both systems, amounting to a total of about 14 percent of their salaries, at the outset, a very large assessment, indeed. Because of this factor, I am assured by Mr. Foxe and the House leadership that every effort will be made to im- plement a mini-program whereby new Federal employees will have, instead, a supplemental program under the civil service retirement system, permitting contributions at a lesser than full rate HOUSE March 9, 1983 of 7 percent. While the contribution burden will still be more than if they were required to participate in only one program, they will also have the advantage of comparably higher re- tirement benefits through the two pension programs when they finally do retire. I am further assured that every pos- sible guarantee will be made that the Federal Government will contribute whatever will be necessary to assure expected benefits for current Federal employees when they do retire. As we all know through studying this issue, the General Treasury already contrib- utes upward of 80 percent of the total needed to meet benefit obligations. Hopefully, under this new system, that contribution need not be signifi- cantly higher than it is today. Because of these assurances regard- ing the future preservation of the civil service retirement system for those who-must rely on that system for their retirement income, I have decided that, on balance, this is a supportable bill. However, I also believe that some questions which I have raised, includ- ing assurances that adequate funding for the CSRS will be guaranteed for future years to come, must be ad- dressed. I further believe that the Congress must closely monitor the impact of the dual contributions re- quired of new Federal employees to assess the financial impact of such re- quirements, particularly on those at the lower rung of the OS ladder. Mr. Chairman, on a final note I want to make the observation that Federal employees have been perhaps the most unjustifiably maligned group of workers in this country. For the most part these civil servants are hard working and dedicated employees who earn every dollar they make. They have continually been singled out for undue sacrifices ever time we face eco- nomic problems in this country. And, again, this administration has pro- posed asking more sacrifices from them by urging increased contribu- tions to their retirement systems, freezing their wages when they have already been held to COLA increases far less than the cost-of-living in- creases for several years resulting in a lag of 14.47 percent behind the private sector as of October 1982. If such actions continue, we will clearly come dangerously close to bringing reality to the myth that Fed- eral employees are poorly qualified workers by making Federal employ- ment so unattractive that we will be unable to find qualified persons to fill Government positions. Already studies show that Federal workers are paid an average of 20 percent less than compa- rable workers in the private sector and if the recommendations of this admin- istration are adopted, they will fall even further behind. I hope that bringing Federal em- ployees under social security will quiet some of the criticism that they are somehow a privileged class. I hope, even more, that we will finally cease treating Federal workers like second- class citizens. Mr. Chairman, I sincerely hope that with this legislation, and with what I assume will be comparable action by the Senate, we will adequately address the short-term needs of the social se- curity system. I trust that this pack- age will relieve the concern held by many that there will be no money in the trust funds when they retire. Whether the long-term needs of the system will also be met by whatever legislation is ultimately sent to the White House for the President's signa- ture, remains to be seen.? ? Mr. GONZALEZ. Mr. Chairman, I cannot support this bill. On principle, it is wrong, in that it makes fundamental and probably irre- versible changes in the nature of social security. For the first time, it places a tax on certain recipients, in effect cre- ating a means test for beneficiaries. This ultimately means that the pro- gram will not be seen as an insurance program wherein all premium payers are treated equally, but as a welfare program in which some are treated differently from others, based on a test of need. Naturally, we are told that only a small percentage of recipi- ents will be subjected to this new tax, but the principle will have been set, and that principle is clearly to trans- form the basis of social security from an insurance program into a means- tested welfare program. We will see that in the future, when the program is in trouble, the means test will be ex- panded, the number of people with drastically reduced benefits will in- crease, and public support for the pro- gram will fall off. It is a small provi- sion, this tax, but its meaning and por- tent are vast, and it is fundamental to the whole future of social security as we know and understand it today. On principle, I cannot support a bill that is drawn up in a matter of days, when we know that the recommenda- tions behind it were arrived at only after months of struggle, and then only after the Commission was force- fed. The issues embodied in this bill are immense. They deserve more care- ful consideration and time than we are permitted to give today. The questions before us are greater than the two amendments we are permitted to vote on. If the Commission on Social Secu- rity was free to work its will, and if the Committee on Ways and Means was able to work its will, why must we reduce ourselves to consideration of only two amendments? Why should we deny ourselves the opportunity to work our will on such matters as cov- erage of Federal employees, and on such issues as the new medicare reim- bursement system-just to name two of the larger questions in this bill. On principle. I cannot accept the ar- gument that this bill is the ultimate cure for all that ails social security. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1006 CONGRESSIONAL RECORD - HOUSE Furthermore, during the last 2 years Federal employees' health ipsurance premiums have sharply increased at the same time their health benefits have been significantly reduced. Under the Federal health benefit program (FEHBP) Federal workers and the Government share the costs of the system. In fiscal year 1981. when the Office of Management and Budget re- alized that there would be substantial shortfalls in the J HBP, President Reagan decided against requesting a supplemental appropriation. Instead, the. administration cut benefits and shifted the costs from the Govern- ment to civil servants by increasing their contribution. Last year, the ad- ministration once again increased worker contributions. Today, the aver- age Federal employee is now paying 55 percent more for health coverage than in 1981. The administration proposes to dras- tically alter the formula used in deter- mining the Government's contribution to FEHBP. In lieu of a percentage for- mula, the Government would adopt a voucher plan. This means that the government would contribute a fixed dollar amount toward the purchase of a health plan. This proposal will force the Federal employees to bear a much greater share of the health care costs. This proposal will not hold down health care costa as the administration contends. Escalating medical expenses will become the financial responsibili- ty of Federal employees. Finally, major cuts have been made in the civil service retirement system (CSRS) since 1980. Cost-of-living ad- justments (COLA) no longer come every 6 , months, but on an annual basis. In 1962, these adjustments were delayed 1 month for each of the next 3 years beginning in 1683. This means that instead ? of COLA adjustments being on a 6-month cycle as they were at the start of the administration they are now on a 13-month cycle. However, compared to the Presi- dent's 1964 budget request these past cuts are minor. If passed, the fiscal year 1964 COLA will be canceled. In addition, the budget contains provi- sions to lower retirement benefits, in- crease employee contributions, and raise the an at which Federal employ- ees can retire with full benefits. This proposal would, have a devastating effect on the civil service retirement system. The administration is sense- lessly attacking a retirement system, which unlike most private pension plans employees contribute to, where the average retiree receives $12,550 a year and 22 percent of retirees receive less than $500 a month. Furthermore, these generous benefits are subject to Federal income tax. Mr. Chairman, retired Federal em- ployees and those nearing retirement have worked their entire lives at jobs less, financially rewarding than those in the private sector. It is outrageous that we would now jeopardize their re- tirement security. Furthermore, unless this Congress passes a fair supplemen- tal pension plan, and rejects the Presi- dent's budget proposals pertaining to Federal employees, it will become im- possible to attract qualified public servants. Providing equitable Federal employee , benefits is a matter of simple justice and a necessary invest- ment in America's future.* ? Mr. THOMAS of California. Mr. Chairman, as we consider how best to repair our Nation's social, security system so that it will survive and con- tinue to pay benefits to our retirees into the 21st century, I sincerely hope that Congress avoids taking the easy route-that is, more tax increases- and instead attempts a more perma- nent solution. We have already agreed that in order to rescue the social security system, we must enact a set of short- term proposals with which every American may not agree, but which will put the system on a sounder basis. I may not agree with each proposal, indeed. no Member of Congress may agree on each proposal, but I believe the short-term package is by and large a responsible, balanced package which treats every group in our society fairly, and 4t must be enacted. I believe Congress should take the same responsible attitude in dealing with the long-term problems which social security faces. In my opinion, the most equitable and responsible of the alternatives before us to assure social security's long-term solvency is to gradually raise the retirement age by 2 years, beginning in the year 2000. According to actuarial estimates, this slight change, accomplished very gradually over a 25-year span in the next century, will assure that the system survives-without a future tax increase, without a future cut in bene- fits, without harming those now re- ceiving benefits, without harming the disabled or women workers. It is irresponsible and unfair for Congress to enact yet another payroll tax increase to cover 21st-century defi- cits. Payroll tax increases siniply at- tempt to mask the real problem we face with social security: In short, people are living longer, and relatively fewer workers are being asked to sup- port the system. Is it equitable for Congress to re- quire younger workers to pay more taxes and settle for a benefit cut of 5 percent when It is their turn to retire? That is one of the proposals we con- front today. Is it equitable or responsible to expect future employers and workers to contribute more and more of their payroll to cover yearly deficits that, under current law, are expected to reach $10 trillion by the year 2052? That is another proposal before us today. I say that the Pickle amendment is the most responsible choice of the al- ternatives before us to complete the reform package which we send to the Senate. Raising the retirement age by March 9, 1988 an average of 1 month per year is an honest way to deal with an inescap- able fact: The U.B. population is aging. The current social security problem is before us precisely because people have changed. It would be foolish for us not to admit that the system needs to be changed to meet changes in the population.* ? Mr. BIAGGI. Mr. Chairman, I rise to express my opposition to the amendment sponsored by the distin- guished chairman of the Social Secu- rity Subcommittee, Mr. Picxra, to raise the retirement age to 67 as a main means of guaranteeing the future solvency of social security. I oppose this amendment for several reasons, not the least of which is that fact that we should not be adopting this radical approach at this time. We have before us a comprehensive enough bill in H.R. 1900, with its $165 billion in new revenues for social secu- rity ostensibly to keep the system afloat through 1990 and beyond. To add yet another difficult feature to H.R. 1900 seems to go far beyond what we must do today. Yesterday. the House Select Com- mittee on Aging, on which I am proud to be an original member, conducted a hearing which focused in great meas- ure on the issue of raising the retire- ment age. At that time I raised the point that increasing the retirement age and justifying it by the fact that people are living longer overlooks a central issue. Just because people live longer does not mean that they are able to work longer. At this point a startling 74 percent of those exercising early retirement under social security must do so for reasons such as poor health. Will this percentage decrease that dramatically in the next two dec- ades? I doubt ft. Therefore, why do we assume it by raising the retirement age. A second concern I have I can state' very simply. If we raise the retirement age we may be seeing one of the first examples of our Nation legislating dis- crimination. It is a documented fact that the minority aged live fewer years than do their white counter- parts. Therefore, raising the retire- ment age does not afford all aged per- sons equal protection under the law. Finally, Mr. Chairman, I oppose the Pickle amendment because it once again places Congress in the position of cutting social security benefits. There should be other approaches ex- plored before we take a step such as proposed in the Pickle amendment.? ? Mr. ROTH. Mr. Chairman, I rise in opposition to yet another attempt to restrain the Members of the House from expressing the views of their con- stitutents on this historic legislation. We will take actions today that will impact on future generations of Americans. Provisions of this bill will shape the workplace and the lifestyle of workers and retirees well into the next century. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1010 CONGRESSIONAL RECORD - HOUSE ceived by the retired worker from 42 percent to 40 percent of previous monthly gross pay at the time of re- tirement as scheduled to be phased in from the years 2000 to 2008. It is incumbent upon Congress to in- novate new and relatively painless sources of income to help fund the Old Age Survivors and Disability Insur- ance program. I have recently reintro- duced H.R. 85, the "National Social Security Lottery Act," which would es- tablish a national lottery similar to the Irish Sweepstakes. If the Irish can fund their hospitals through a lottery, we should be able to held fund social security in the same manner. It is esti- mated that a national lottery could gross upwards of $25 billion over the next 7 years, the period of time the Commission addressed in their short term proposals. This would significant- ly lessen the number of unpopular compromises that would otherwise be necessary to keep the system solvent. A national lottery, however, is no panacea. Other avenues must also be explored in an effort to identify new sources of income. I urge the Congress not to act hastily. The outcome of this vote will shape the financial futures of millions of Americans.* ? Mr. BIAGGI. Mr. Chairman, the hour of decision has finally arrived. We stand on the threshold of a histor- ic decision affecting the lives of some 36 million of our citizens. The hours and days and months of wrangling over what approach to take to aid the social security system are, for all prac- tical purposes, over, for we have before us today, H.R. 1900, the Social Security Reform Act of 1983. With the passage of this bill today, Congress will have administered to itself a stiff dose of castor oil-bitter medicine necessary to effect a cure to the ailing social security system. This bill has been properly designated as a bipartisan compromise package. How- ever, as anyone in Congress knows, compromises by their very nature are imperfect, and H.R. 1900 Is no excep- tion. As I stated earlier during the debate on the rule governing consideration of this bill. H.R. 1900 would be a far better document were more Members of Congress able to shape it. The rule we are operating under provides for separate votes only on two amend- ments, both of which deal with the longer term financing issues related to social security. As far as &he issues af- fecting social security in the shorter term-as far as what comprises the $165 billion package before us-we have no opportunity to do anything but ratify or reject the entire package. Both routes are fraught with peril. However, I would emphasize the fact that the latter route is far more dan- gerous, for our failure to adopt a pack- age along the lines of H.R. 1900 could result in the collapse of social security, to which none of us would want to be a party. The facts are that social security is a system that is in the worst financial trouble in its more than 40-year histo- ry. The reasons are many-but very few do we have any real control over. One, of course, is demographic-social security as the "pay as you go" system is financed through taxes paid by both employers and employees into three trust funds. In the early days of social security, the ratio of contributors to beneficiaries was a healthy 5:1. This ratio has now slipped to just over 3:1, and based on current demographic projections could drop to a dangerous 2:1 by the year 2000. Further, none of us could anticipate the tremendous fluctuations in economic conditions which have been a part of this Nation over the past 10 years. In 1972, I sup- ported the legislation which provided social security beneficiaries with a once-a-year cost-of-living increase. One could not expect the rampant infla- tion which raged through our Nation in subsequent years-yet it occurred, and under the law, social security benefits were to be raised according to the Consumer Price Index. There is little doubt that this, too, adversely af- fected the financial picture of the social security system, yet we were on sound footing in trying to provide our senior citizens with some protection against inflation. Finally, as we move closer to the economy of today, now the impact of the recession is being felt on the social security system as well. One particular consequence is our high unemploy- ment rate; today, we have more than 11 million people out of work. Many of these people could be contributors to social security, yet, instead, they are idle. The impact of high unemploy- ment combined with demographic changes has done a great deal to put social security in the dangerous finan- cial condition we face today. As an illustration of how serious social security's problems have become for the past several months, the system has been forced to exercise its interfund borrowing authority pro- vided to it by Congress. Under the pro- posal, this will insure the timely pay- ment of benefits through July. This legislation will take care of the bene- fits after that date. What we have before us is a balance of benefit reductions: Tax increases, limited use of general revenues, and expansion of coverage under the system. It is a delicate balance, at-best, but obviously the whole is more ac- ceptable than the sum of its parts. I wish to address some of the fea- tures contained in this legislation. Let me begin with the proposal which will provide the greatest amount of new revenue for social security but which will cause the greatest hardship for people presently enrolled in social se- curity. I refer to the proposal to delay for 6 months the 1983 cost-of-living in- crease for the 36 million Americans on social security. Under this legislation, the 1983 increase would actually be in March 9, 1983 the January 1984 benefit check and all subsequent COLA's would be paid in January. The Committee on Ways and Means is to be commended for adding a very important provision guarantee- ing that at least a 3-percent COLA will be paid in 1983-84 even if the CPI should not be at the 3-percent level. However, there are powerful human problems associated with this provi- sion. For an estimated 26 percent of the 36 million people on "social secu- rity, this represents 90 percent or more of their income. H.R. 1900 is asking these people to go 18 months without an increase in their social se- curity check. This does not take into account that almost all of these people have suffered from increases in some essential staple of their lives whether it be rent, heat, food, or medical care. We know that inflation has decreased substantially, but it has by no means disappeared altogether. What about the low-income seniors who have the misfortune to heat their homes this winter with natural gas-and were unable to get assistance from the Fed- eral Government? What about the senior citizens who budget for the COLA in July-and suddenly realize the increase will not come until Janu- ary? What essential will they have to go without during the balance of this year? It is not easy for those of us who have worked so hard and voted for bills to preserve the integrity of the social security system to swallow a provision which constitutes a perma- nent reduction in social security bene- fits. These past 2 years have been dif- ficult in that we have had to accept legislation which calls for the first re- ductions in benefits in the history of social security. In 1981, it was the minimum benefit payment which was cut off under the terms of the Budget Reconciliation Act. Through efforts of myself and others, the decision was partially reversed when Congress voted to restore the benefit for those currently enrolled, but barred the benefit for new beneficiaries. In that instance-much like the so-called "diet COLA"-it is the low-income senior who gets hit the hardest. For some, corresponding increases in SSI bene- fits provided as part of this bill may help to offset the hardship of the de- layed COLA. However, it is by no means a substitute for it, and for many low-income seniors who fail to qualify for 881, the problem becomes that much more acute. One final point relative to the COLA delay-it seems hard for me to under- stand why it is necessary to implement this at a time when inflation is down drastically, therefore the size of the COLA would be far reduced from pre- vious years and the amount this would cost the system would be far less than in previous years. Delaying the COLA until January will pose many prob- lems-that is for certain-but having future COLA's paid in January instead Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1983 CONGRESSIONAL RECORD - HOUSE H 1011 of July and having the future formula it is wrong, the way. we are legislating labor-a new tax is imposed on you by after 1988 begin either the increase in this major change in law today. There the Government. the CPI for the last quarter of each should have been a separate vote on I believe the provisions in this legis- year or the increase i avera e es - a , n g w g . whichever is lower does throw into se- rious question our commitment to maintain the policy we began some 1044 years ago to provide seniors with adequate protection against inflation. I would state, as I have to my constitu- ents in New York, if we were given an opportunity for a separate vote on this issue, I would have voted against a delay in COLA's. Similarly, I am strongly opposed to the provision mandating social secu- rity coverage beginning in 1984 for all new Federal and postal workers and a host of other governmental employ- ees. My opposition is based on a simple cost-benefit ratio principle. The most which this "universal coverage" provi- sion could provide to social security would be some $12 billion. I would note that this is considerably lower than the $20 billion estimated by the Social Security Commission. The re- spected president of the National As- sociation of Letter Carriers, Vincent Sombretto, contends it will only pro- vide $6 billion for social security. Whether it be 6 or 12, this is not enough of a benefit to balance out the excessive costs which this provision will produce. First and foremost, based on current projections, putting new Federal and postal workers under social security will simply bankrupt the civil service retirement system in 'about 20 years-something which could cost the Oovernment $185 bil- lion, which I might point out is more than this entire bill will produce in new revenues, let alone the provision bringing in new Federal and postal employees. I am confident that the distin- guished chairman of the House Post Office and Civil Service Committee, Bas. FORD, will initiate proceedings in his committee, which is responsible for this retirement program, to insure that a supplemental system is put into place. In my capacity as a senior member of the House Select Commit- tee on Aging. I intend to do all that I can to assist Chairman FoR! and other concerned Members of Congress in de- veloping long-term protection for these Federal workers. They are enti- tled to equal benefits under social se- curity that they would have received under their own retirement plan and I am confident that Congress will re- spond in timely fashion to insure that this happens. Finally, let me add, as a former postal worker and current Federal em- ployee-from the managerial sense-It is ludicrous to legislate in a way that produces divisiveness among Federal and postal employees. It is irresponsi- ble to legislate in a way that produces different retirement systems for people doing the same type of work. It is wrong for Congress to pass legisla- tion which will lower morale among Federal and postal employees. Finally, to the lives of millions of. Federal and ~ _ _ tan w.y oa.ed'?ay"~ OVA postal employees. They have not been g by Con- grem ass 1977 is far preferable to In. ff d d d or e a emocracy. Another provision that I have some serious reservations over is the provi- sion to impose a first-time tax on social security benefits. Again, to the credit of the Ways and Means Com- mittee, certain adjustments were made from the original proposal of the Social Security Commission, but in re- ality, we are violating a principle here. Social security recipients paid taxes on each and every paycheck they received in their working years-taxes which were earmarked for the social security trust funds. These were to be used by the worker to help finance a secure re- tirement. It was not paid with the ex- pectation that they would be forced with another tax when they were begun to be applied to their retire- ment. Yet that is what we are propos- ing with this bill today. H.R. 1900 proposes that benefits would be taxed only for those redpi- ents whose taxable income (excluding social security) plus one-half of their social security benefits exceeds a base amount. This base would be $25,000 for an individual and $52,000 for a married couple. Further, the amount of social security benefiti that would be taxed would be the lessen of one- half of the excess of the ' taxpayer's combined income over the base amount or one-half of the taxpayer's social security benefits. As I mentioned earlier, the- Ways and Means Committee did make some important improvements in this provi- sion-perhaps the most important of which is eliminating the so-called "notch" problem which would have caused people with incomes just over the threshold to pay a, disproportion- ately high tax compared to the person well above the threshold. By allowing the tax to be applied to the amount by which a taxpayer's income exceeds the base amount alleviates this problem and institutes more equity into this process. Let me also add that I am pleased that this legislation mandates that all revenues raised from this tax be applied directly to the social secu- rity trust funds. While it is estimated that only 7 per- cent of current beneficiaries will be af- fected by this provision, it does repre- sent a radical departure from the his- tory of social security. In addition to it being a first-time tax on social security benefits, it promises to affect more and more people each year because the thresholds are not indexed. There is a great deal of inequity associated with this particular proposal. Let us assume you are an elderly person who has elected to invest or save wisely for a comfortable retirement after years of hard work. Just as you reach this point in life-or in some cases while you are enjoying the fruit, of your creasing them further between now and the year 1990. While it will be dif- ficult for some to assume these. in- creases under the timetable provided in this bill, there is sufficient time pro- . vided for people to Plan for them. Over the history of the system, It has been the payroll tax which has pro- vided the foundation of funding for social security. In the past decade, it has presented far more of a burden then in previous years, and H.R. 1900 strikes an effective balance in this area and I am in support of the lan- guage regarding the acceleration of the payroll tax increases, I have some concerns about the impact of the provision in this bill which will raise the payroll tax rates paid by self-employed persons. Under present law, the self-employed pay re- tirement and disability taxes at a rate equal to about 75 percent of the com- bined employer-employee tax rate, while only about 60 t of this rate for the medicare ;hospital insur- ance taxes . Under H,R. 1100, the self- employment tax for all three trust funds would be raised .100 percent of the combined pr-employee rate. However, is anotiiar example of how the committee improved upon the . Commission's reoomm sidation, they helped soften the Impact by allowing the self-employed a credit against their new self-employment tax rate amounting to 2.1 percentage points in 1984 and 1.8 percentaie, points over the period from 1986-87. and 1.9 per- centage points for 1988 $nd beyond. Clearly, like so many other provi- sions in this bill, a great sacrifice is being asked of a Particular segment of people-in this case, the self-em- ployed. Here we are in some ways.reo- tifying a situation and !bringing some degree of equity to the way payroll taxes are assessed. However, again like in so many other provisions in this leg- islation, we are asking too much too soon. There should be some degree of phase-in of provisions like this which so affect the economic fortunes of working people in already difficult economic times. The self-employed person-especially the small business- man-is 'being adversely affected al- ready by a number of economic fao- tors. H.R. 1900 asks for one more. Let me now address several provi- sions in the bill for which I can claim some degree of responsibility. The first has to do with the provision reim- bursing the social security trust fund for the full value, including interest, of uncaahed checks. It Was disclosed in hearings before my Aging 'Subcommit- tee in 1981, that while Cfal security checks are drawn f dm trust funds, if they should not be negotiated for whatever reason, the full value in- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1012 CONGRESSIONAL RECORD -- HOUSE March 9, 1983 cluding interest accrued on the check is credited to the General Treasury, not the trust funds from where they were originally drawn. This has caused social security to lose an estimated $500 million over the life of the system and it could lose another $30 million over the next 3 years unless the law was changed. Under this bill, the trust funds will be compensated for the full amount they are owed by the General Treasury for uncashed checks. Further, the bill contains pro- visions which would presume a check to be dncashed after a more reason- able time than is presently the case. This is an important administrative reform which I had advocated, as evi- denced by my authorship In the 97th Congress of H.R. 4003. A second provision of this legislation which I helped to shape has to do with stemming the flow of people who are leaving social security. Last year, I sponsored H.R. 6356, and H.R. 475 in the Congress, to impose a 5-year mora- torium on persons withdrawing from social security while also mandating that new nonprofit employees be cov- ered under social security. My bill also would permit those entities that did withdraw from social security to return, which Is not an option under current law. What H.R. 1100 provides Is the fol- lowing It bars State and local govern- ments 14+om terminating social security coverage for their employees if the termination had not taken effect by the time the measure is enacted. It also allows State and local govern- ments that have previously withdrawn from sodas security to voluntarily rejoin. Further, the bin before us ex- tends social security coverage to em- ployees of all nonorgandsatlon's chari- table at -private schools and uni- versities, and hospitals--and requires all of these organizations and their employees to begin paying social secu- rity taxes, effective January 1, 1984. This applies to all employees, not just newly hired. The bill does provide that people aged 55 and over would qualify for social security coverage with fewer quarters. I commend the Social Security Com- mission and the Ways and Means Committee for addressing this very se- rious problem. At the beginning of this year. the entire city of Is Ange- les-more than 100 counties-left social security. The Social Security Administration has applications pend- ing which, if not stopped, would result in more than 400,000 additional em- ployees leaving social security. If the system is already reeling from the ef- fects of a shrinking ratio of workers to beneficiaries, to permit upwards of 400,000 contributors to leave the system simply and unnecessarily exac- erbates this situation. Briefly, some final points about the social security provisions of this bill I regret that there is not stronger lan- guage governing the use of general revenues for social security. There are a number of us over the years who have believed that limited general rev- enue financing was needed in social se- curity. One approach was the one- third, one-third, one-third approach, advocated by our distinguished former colleague, Jim Burke of Massachu- setts. Another would be to have the disability insurance and hospital insur- ance funds funded under general rev- enues. None of this has come to pass either in the Commission's report or the bill before us. Instead, we have somewhat general language saying that if-and only if-we have a serious decrease in available reserves, would funds from the general revenues be used but these must be paid within 2 years. The bill does provide for an ex- tension of interfund borrowing au- thority through 1987 which is of obvi- ous Importance once we realize how the OASDI fund has paid its benefit checks these past several months. Finally. I commend the Commission and the committee for including lan- guage which will Improve the invest- ment policies of the trustees. The main improvement Is that, under the bill. trust funds could be Invested in short-term as ww11as long-term Treas- ury securities. This should help the all-Important rate of return on the In- vestments which has been seriously lagging and. according to a report issued by the Community Service Soci- ety of New York.- has cost the trust funds some $14 billion. There are other important provi- sions in this bill which I would like to mention briefly. H.R. 1900 while de- laying the cost-of-living increase until January, as in social security. does provide a one-time permanent Increase of $20 per month for all Individuals and $30 for all couples receiving 88I benefits, effective in July. The bill also prohibits States with their own 88I programs from lowering their benefits in order to offset the increase in Fed- eral benefits, thus Insuring that every needy 8SI person in every State re- ceives this Increase. 881 people are truly the poorest of the poor in our Nation and this increase is desperately needed for them to eke out a basic ex- istence. It Is long overdue and I fully support it. The bill extends for 6 months the emergency Federal supplemental oorn- pensation program. The need for this is as obvious as anything we could do up here. As unemployment increases both in terms of absolute numbers and duration. we must take steps to keep those unemployed from being thrown any further or deeper into poverty. As it stands now. many of our Nation's unemployed have or are about to ex- haust their unemployment benefits- their lifeblood, if you will. Many have already lost their health benefits, causing tremendous apprehensions that a serious illness could lead to fi- nancial ruin. We have an obligation to provide extensions of unemployment benefits for as long as it takes for full economic recovery to be translated into more people working. Finally, let me convey my tentative support for the provision in this legis- lation introducing a new prospective reimbursement or payment system for medicare hospital insurance. It seeks to attack the excessive cost problems of medicare at the root cause-exces- sive hospital and physician rates. The 1982 tax bill required the De- partment of Health and Human Serv- ices to come forth with a program to address the escalating drain on the medicare trust funds. This prospective payment plan is it. Prospective reim- bursement, when properly implement- ed, is a viable alternative to cost con- tainment as it pegs actual costs to average costs of a given region. This legislation rightly sets two variable rates for reimbursement of hospitals, one for urban and the other for rural. However. given the fact that health care costs have been disproportinately borne by the elderly over the past 2 years, we have to insure that any such system is sensitive to those on fixed income who could be forced to pay a greater share of their Income under such a payment plan. In other words, we do not want to pass along those costs not reimbursed by the Federal Government to beneficiaries. The legislation before us is of funda- mental importance to the future of 36 million of our fellow Americans and millions more to follow. We have no real choice we must pass this bill or face the national trauma of having social security miss its first payday In more than 40 years. Some of the best minds in the Nation were employed to bring about the reform package before us. Some of the best possible solutions are in this bill as are some of the worst. I do not vote for this bill with any enthusiasm but I do so with a sense of responsibility. It is a compro- mise-we all know it-but It Is also all that we have at the present time. Therefore, I urge a favorable vote so that the minds of our senior citizens can be eased and the apprehensions that social security is to collapse can be put to rest.? ? Mr. RITTER. Mr. Chairman. the social security system is an indispens- able source of income for millions of older Americans. The solvency of this system is of paramount concern to me, but I could not support H.R. 1900, the Social Security Act Amendments of 1983. There are many provisions in this bill that I feel we, as a legislative body, should examine more closely such as the coverage of Federal em- ployees, the increase in social security payroll taxes, and the long-term fund- ing sollutions. In 1977, the American people were told that the tax increases and benefit reductions would guaran- tee the health of the social security system into the next century. Six years later, the Congress came back for a massive bailout program. How Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1016 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD HOUSE March 9, 1983 dations for increasing revenues and re- ducing expenditures, this body has had little or no opportunity to consid- er alternative funding measures. Even worse, there has been little opportuni- ty for Members to vote on the impor- tant issues this legislation raises, either in committee or on the floor. We are presented with a take-it-or- leave-it situation. If this bill does not pass, the social security system will be in serious financial peril. It may be the only realistic chance we have to save the system. However, by passing it, we are heaping large new burdens upon self-employed, farmers and business- men, Federal employees, and other without any opportunity to consider their grievances and explore alterna- tive funding sources to meet those grievances. I am extremely disturbed that I am unable to vote separately on the af- fects of this bill on the self-employed. Unfortunately, this bill will mean a larger increase in taxes for the self- employed than for others. For the self-employed, the bill increases the tax from 9.35 percent to 14 percent. The tax credit of approximately 2 per- cent only reduces the real cost to 11.9 percent, which still is a huge increase over current law, and far higher than the employee rate. For a self-employed person earning $20,000, this amounts to an annual tax increase of $510. If the income level is $35,000, the increase will be almost $900. This is far too heavy a burden to impose on our farmers and small busi- nessmen, which are so essential to our economic well-being. It is especially unfair since employees will be paying more than 4 percentage points less than the self-employed rate. Certainly, there are more equitable solutions which we are not being' given the chance to consider today. The proposal to place new Federal employees under the social security system is unwise and shortsighted. Al- though this measure may help to re- solve the short-term financing prob- lems, I have serious reservations as to how this measure will affect the system in the long run. Further, I am extremely concerned about the inevi- table detrimental effects this proposal will have on the civil service retire- ment program. As Members of Congress we have a responsibility to provide Federal work- ers past and present with the retire- ment benefits they have earned and that they deserve. Placing new Federal hires under the social security system will make it difficult for us to live up to that responsibility. The major prob- lem with this proposal is that it will erode the future revenue base of the civil service retirement program. With the elimination of new funds coming into the civil service system. Congress will, at some time in the future, be re- quired to finance the system in order to meet the obligations to future Fed- eral retirees. This proposal would also require that a second, supplemental system be created to assure an adequate retire- ment for these new Federal workers. History has already shown us that the costs of operating two employee retire- ment systems is between two and four times greater than simply having one system. Furthermore, the U.S. Treas- ury will experience a substantial loss of revenues. Under the current system, social security benefits are tax free, whereas 10.6 percent of Federal annu- ity payments are returned to the Treasury in taxes paid by retirees. It is unfortunate that we are not being given the opportunity today to vote on these provisions of the bill. If we had been given the chance, I most certainly would have voted against placing Federal employees under the social security system, and against the onerous burdens imposed on the self- employed farmers and small business- men.? ? Mr. LEHMAN of California. Mr. Chairman, I rise today to speak in favor of the passage of H.R. 1900, the Social Security Act Amendments of 1983. It is no secret that the social secu- rity system is currently facing a severe financial crisis. In fact, upon close ex- amination of the social security system, it becomes painfully obvious that the social security trust fund is on the verge of bankruptcy. It is important to note that H.R. 1900 calls for sacrifices by all of those persons involved with social security; current social security recipients, future retirees, Federal employees, self-employed Americans, and all tax- payers. Like many of my colleagues, I realize that this package of reforms is far from perfect. However, I am con- vinced that the choice offered to us here today is a clear cut one. We can either vote for H.R. 1900, which pro- vides for the continued financial secu- rity of the social security system, or we can vote against the measure and leave social security to go bankrupt by the end of this year. With such a deci- sion before us, the only responsible course of action is to pass this meas- ure. Only through the passage and successful implementation of H.R. 1900 can we provide for the retirement incomes of the millions of American workers who depend on social security for their livelihood. With respect to the two amendments which are being offered today by my colleagues Messrs. PzcKI.z and PEPPER, I must vote against both. I believe that the National Commission on Social Se- curity Reform has adequately ad- dressed the vast majority of problems facing social security. I do not believe that it is in the best interests of social security that we make last minute changes in the Commission's recom- mendations. Like. many of my colleagues in the House of Representatives, I have re- ceived a great deal of mail from my constituents on this important issue. The great majority of this mail has been from Federal and postal employ- ees. I regret that I did not have the opportunity to vote upon the rule re- garding the inclusion of Federal and postal employees in the social security system. This is certainly one of the provisions that I would have changed had I had the opportunity. Many of the Federal and postal em- ployees whom I represent have ex- pressed their fear that H.R. 1900 will initiate the demise of the civil service retirement system. I would like to take this opportunity to stress my commit- ment to preserving the integrity of the civil service retirement system. The Congress will be addressing this issue later during the year, and I would add my voice to those of my fellow Mem- bers who have pledged their support of the Federal workers in their fight to preserve their retirement system.* ? Mr. RAHAL . Mr. Chairman, I rise in support of H.R. 1900, the Social Se- curity Act Amendments of 1983. While each of us has his or her disagree- ments on particular aspects of the bill, when taken as a whole, the legislation takes important steps toward solving the short- and long-term problems facing social security. Estimates by the Social Security Ad- ministration indicate this bill will create revenue increases and outlay decreases totaling $165.3 billion be- tween 1983 and 1989 for the retire- ment and disability trust funds. The bulk of savings will be achieved from delaying the COLA for 6 months- $39.4 billion-accelerating the payroll tax-'$39.4 billion-taxing benefits for those retirees earning over $25,000 as an individual or $32,000 for a couple, and increasing the self-employment tax-$18.5 billion. This legislation addresses the prob- lems created by a change in our eco- nomic climate. When trust fund re- serves drop below 20 percent at the be- ginning of any year after 1987, COLA's would be based on the average in- crease in the Consumer Price Index (CPI) or wages, whichever is lower. When reserves reach 32 percent in the trust fund, a catchup payment would be provided to all who suffered a loss in benefits during slower economic times. During periods when reserves are between 20 and 32 percent, COLA's will be based on the CPI as they are presently. In anticipating a slow economic upturn between 1983-87 the bill authorizes interfund borrow- ing between the three funds which comprise the social security system- retirement, disability, and medicare. It should be noted that provision must be made for the repayment at the ear- liest possible date, no' later than the end of 1989. At long last we have addressed the problems with uncashed social secu- rity checks. If a period of 6 months has elapsed from the time a check is issued, the Treasury Department now will be authorized to credit the Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1018 CONGRESSIONAL RECORD - HOUSE March 9, 1989 Mr. Chairman, by no means do I ad- they can bear the increased tax that went on between the political vocate returning to a system as lean burden. parties as to which could vote the and as incompassionate as that of And second, we must guarantee higher benefits to social security recip- 1935; I believe in opportunity for or- middle-aged Federal employees who ients, this side or that, 4 percent, 5 phans, dignity for widows, equity for are vested in the existing civil service percent or more. That is the way it the disabled, independence for the retirement and have paid into it for went and it got to be rather disgusting. aged, and I want them to have it. 10, 15, and 20 years that their retire- So a number of us got together and And I further believe in getting the ment will be there when they need it. considered why not turn to the system back to its basic soundness in They are worried the result of our scheme industry and labor are turning providing fair and Just old age benefits putting new Federal employees under to more and more in negotiating their that meet the needs of the times, and social security would be to lock their wage-management contributions, and in meeting as much of the other op- retirement into diminishing revenues that was tying wages and salaries to tions as the fund can accommodate; while the liability remains the same. the cost-of-living index. and we turn to general revenue for congress will stand behind their pen- If it was good principle for them, what is necessary to meet the needs sions. But we must assure them. why not for social security? above that. Mr. Speaker, there are several com- An well and good except for one For money we can look among the ponents of this bill that I do not like. I factor that we left out of our calcula- millions and billions spent on foreign am sure every Member of this House tions back in 1972 when we finally per- aid, among the millions and billions feels the same. But I have been im- suaded the Congress to adopt the prin- spent in developing the economies of pressed by the bipartisan effort by ciple of tying social security benefits foreign nations so they can dump Members as well as the support of my to the CPI and that was double-digit goods here that cause unemployment constituents, and I will vote for it be- inflation. among workers who pay the social se- cause we all will soon count on social Automatic increases of 14 percent, curity tax. security.. 11 percent, 10 percent, back to back, You see, if the additions get too ex- Mr. ROSTENKOWSKI. Mr. Chair- were just too much for the system to pensive, and the taxes too high, the man, I have no further requests for bear. people will break the contract and the time, and I yield back the balance of So that brings us, frankly, to where system is lost. If we bleed dry the Fed- my time. we are today. eral pension system for a quick fix in Mr. CONABLE. Mr. Chairman, I Mr. Chairman, it has taken this 1983, the only thing we guarantee is yield my remaining time to the gentle- House 2 years to make the Journey that the 107th or 108th Congress will man from Illinois (Mr. Mzcimi.). from crisis to compromise in social se- have to conscript more money to fix The CHAIRMAN... The gentleman curity financing reform. The Journey both-temporarily. from Illinois (Mr. MIcuaL) is recog- from there to here was senseless and The years have turned a sound basic nized for 18 minutes. rather destructive and debilitating. model into a lemon and it is never (Mr. MICHEL asked and was given rather has an issue demanded so going to deliver good mileage until permission to revise and extend his re- Congress takes it apart-not in haste marks.) much statesmanship but produced so doggone much demagoguery. or fear, but with deliberation-and Mr. MICHEL. Mr. Chairman, back in doggone have the the right repairs. This bill does 1941 when I was employed in my first Seldom a the e energies re- bodies and been been not do that. 40-hour-a-week Job between high misused y in the For these reasons, I must vote school and college I was paid the so reaching dhing and a consensus. But against this measure.e handsome sum of $13 a week gross or course misdirected ? Mr. SYNAR. Mr. Chairman, the $12.87 net take-home pay because the that is behind us and before us is a vote we face today on social security is social security tax in those days was compromise. one of the most difficult votes I have only 1 percent. Before us is a product born out of cast. On one hand, we face the pros- My father had deductions from his necessity and ripened by the kind of pect of burdening our small businesses pay in that same year that totaled $30 bipartisan deliberation that does this by moving up scheduled tax increases, for the entire year, since the law at body some real credit. I must pause taxing benefits for the first time, and that time called for a 1-percent-payroll here to reiterate what was said by my creating fear among current middle- deduction for an employee up to the colleague from Illinois (Mr. RosxxN- aged Federal employees over the fate maximum of $3,000 income. KOWSKI) the chairman of the Ways of their retirement. But on the other In filing my income tax return for and Means Committee. Throughout hand, we face the option of leaving 1982 I will pay a self-employed social the last 2 years several Members of social security without an answer to its security tax 100 times larger than my this body have certainly behaved and growing financial problem. While father paid as a maximum under the acted like statesmen. I am particularly voting against the bill would placate law 40 Years ago. proud of my two appointees to the the legitimate concerns of the various There is absolutely no way we can be Social Security Commission, BARBER groups affected by the bill-small busi- honest to ourselves or our children by CONABLE of New York, ranking nesses, senior citizens, and Federal em- forcing the same kind of progressive member on the Ways and Means Com- ployees-it would be irresponsible. tax burden on our children during the mittee, and Bn.t ARcmm of Texas, for There is no alternative. For that next 40 years. their invaluable contributions to the reason, Mr. Speaker, I will vote for the I guess I am also reminded of the work of the Commission. bill. number' of times my dad asked me I should also like to single out the Once we have completed work on before he died Just a few years ago chairman of the Ways and Means this bill and it is law, we must immedi- why he was getting those increases in Committee, the gentleman from Illi- ately address two equally important his social security checks when his nois (Mr. RosTENxowsxz), and the issues. First, the tax increase that we company pension check stayed the other gentleman from Texas (Mr. are moving up from 1985 to 1984 could same. ? Plcxza), chairman of the subcommit- have a serious impact on small busi- I had to respond by telling him that tee who in their own deliberate way messes, depending on the condition of I was one of those responsible for kept the light of compromise and con-. our economy and the status of recov- amending the law to tie social security ciliation burning while others did all ery. We must closely monitor this and benefits to the cost-of-living index. they could do to snuff it out. be prepared to act if needed. We owe it Then he would say, "But, Bob, I don't I support this compromise. I support to our small businesses: As I have know how long you can continue to do it despite reservations about the addi- walked up and down main streets in that when we didn't earn it." Then I tional tax burdens it will impose. northeastern Oklahoma the small would recount to my dad that when I I support it despite my own personal business owners have told me that was a Junior Congressman some of us belief that we could have done more in they want to help-but are not sure just got fed yip with the bidding game reforming the structure of the system, Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1988 CONGRESSIONAL RECORD - HOUSE and it is in that vein that I will vote for the Pickle amendment later on today. I support the compromise because compromise is the only hope we have for the survival of social security. We have no other choice. We have no other alternative that could pass this House., And I think that is what we have to be talking about. There are many of us, not a major- ity, a number of us who would like to do this, a number of us who would like to do that, some more who would like to do this and some more who would like to do that, and none of those indi- vidual groups willing to meet with the other enough to give you 218 votes to pass this House of Representatives. That is what makes this whole art of compromise, a working together with both sides of the aisle, factions on both sides to put together something that will fly in the House. There are people right now outside the Capitol standing in protest against the compromise because they contend there are other alternatives. But their interests are rather personal, Just as many of ours would be on an individu- al basis. Their intent Is sincere, but their conclusions are wrong. We have run out of time. We have run out of solutions. Time has run out for those Ameri- cans who are looking to social security to sustain them in their retirement years. Their future depends on what we do here today. Equally as critical to me is the future of those younger Americans who are Just beginning to make their way in the private sector, building a base of resources for themselves and their families. I feel a strong sense of obligation to those young people. I look at my four children now all married and hopeful- ly beginning to get into that grand- child area. We call upon them to supply the resources so that our older citizens can retire with greater dignity and greater security. We went to them in the last decade and imposed a heavier tax burden on them to secure social security beyond the next century, remember. Just a few years ago. We secured nothing. We saved nothing. We deceived them and, frankly, we deceived ourselves. I do not want that to happen again. This compromise must work as well for America's young people as it does for America's senior citizens. Again, this is why I intend to support the 'Pickle amendment over the Pepper amendment. If there is one compelling argument in favor of the Pickle amendment it is this: When social security was origi- nally enacted life expectancy for men was 60.8 years, for women it was 65.2. or an average of 62.9, remembering that 65 then was the year for retiring. 01430 By 1980 life expectancy for men had increased to 69.8, for women it went up to 77.2, or an average of 73.6 years on an average. Now that Is better than a 10-year increase in life expectancy during the past 40 years and it is high time we take those figures into ac- count before piling on yet another round of tax increasers on our children and our grandchildren. I want to preserve for my kids and my grandchildren a social security system worthy of the name. I do not ever again want to be asked to go back to those young Americans and demand from them still higher taxes to save social security. This compromise to me Is a commit- ment to them as much as it is a com- mitment to the current and future social security recipients. So I hope that in the course of our further deliberations this afternoon, during consideration of the debate on the two amendments, that there' will be a resounding vote for the Pickle amendment and against the Pepper amendment because that is one sure way of doing the right thing here today. The CHAIRMAN. Pursuant to the rule, the bill Is considered as having been read for amendment under the 5- minute rule. No amendments are in order except the following amend- ments, which shall not be subject to amendment and shall be considered only In the following order. First, amendments recommended by the Committee on Ways and Means; second, the amendment printed In the CoNORassxoNAL RECORD of March S. 1983, by Representative Picala of Texas, and said amendment shall be debatable for not to exceed 2 hours, H 1019 Sec. 103. Duration of agreements for cover- age of State and local employ- ees. PART B-CoxruTATrox or Barr AtiounTS Sea Sea Sec. Sec. Sec. See. Sec. 111. Shift of cost-of-living adjustments to calendar year basis. 112. Cost-of-living Increases to be based on either wages or prices (whichever Is lower) when bal- ance In OASDI trust funds falls below specified level. 113. Elimination of windfall benefits for individuals receiving pen- sions from noncovered employ- ment. 114. Increase in old-age insurance benefit amounts on account of delayed retirement. PART C-Rava,,IIR PROVISIONS 121. Taxation of social . security and railroad retirement benefits. 124. Credit for the elderly and the per- manently and totally disabled. 123. Acceleration of Increases In FICA taxes; 1984 employee tax credit. 124. Taxes on self-employment income; credit against such taxes. 125. Allocations to disability Insurance trust fund. equally divided and controlled by the PART E-MsCHANISMI ro AssvRR CoxTSxoso proponent of the amendment and the Bxx=T PAYnmITS nt UxarSCTSDLY Ai),. chairman of the Committee on Ways VERSE COMMONS and Means, or .his designee; and third. Sec. 141. Normalised crediting of social se- the amendment printed in the CoN- curity taxes to trust funds. ORESSIONAL RECORD of March 7, 1983, Sec. 142. Interfund borrowing extension. by Representative PErraa of Florida, Sec. 143. Recommendations by Board of said amendment shall be in order even Trustees to remedy Inadequate if the amendment designated No. 2 ~ the Social Security has been adopted, and said amend- ment shall be debatable for not to PART F-OTHSR FINANCING A menraxrs exceed 2 hours, equally divided and Sec. 151. Financing of trtbutory mil- controlled by the proponent of the Sec. 152. AccoItary wage credits. unting for certain unnegotiat- amendment and the chairman of the Committee on Ways and Means, or his ad checks for benefit@ under designee. the social security program. TITLE II-ADDITIONAL PROVISIONS -The text of tho hnl-- Wn I goo- in An fo ows' RELATING TO LONOrTZRM FINANC- " H.R. 1900 ENO OF THE SOCIAL SECURITY H.R. Be it enacted by the Senate and House of Sec. 201. Adjustments in OASDI benefit Representatives of the United States of formula.' America in Congress assembled, Sec. 202. Adjustments in OASDI tax rates. SHORT TrTLE TITLE III U$ AND Sacrlox 1. This. Act, with the following table of contents, may be cited as the "Social Security Act Amendments of 1983". TABLE OF CONTENTS Sea 1. Short title. TITLE I-PROVISIONS AFFECTING THE FINANCING OF THE SOCIAL SECU- RITY SYSTEM PAST A-Covssaos Sec. 101. Coverage of newly hired Federal employees. Sea 102.' Coverage of employees of nonprbf- it organizations. TECHNICAL PROVISIONS PART A-Cax MAs oaxzxi Sea 301. Float periods. Sec. 302. Interest on late State deposits. Sec. 303. Trust fund investment procedures. Sec. 304. Budgetary treatment of trust fund operations. PART B-ELsmATION Or 0mm-BAsss DISTINCTIorfs Sec. 311. Divorced husbands. Sec. 312. Remarriage of surviving spouse before we of eligibility. Drvoacm, LED DISAaLm BroUSSa 131. Benefit. for surviving divorced spouses and disabled widows and widowers who remarry. 132. Entitlement to divorced spouse's benefits before entitlement of Insured Individual to benefits; exemption of divorced spouse's benefits from deduction on so- count of work. 133. Indexing of deferred surviving spouse's benefits to recent wage levels. 134. Limitation on benefit reduction Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1020 CONGRESSIONAL RECORD - HOUSE Sec. 313. Illegitimate children. Sea 314. Transitional insured status. Sec. 315. Equalization of benefits under sec- tion 228. Sec. 316. Father's Insurance benefits. Sec. 317. Effect of marriage on childhood disability benefits and on other dependents' or survivors' bene- fits. Sec. 318. Credit for certain military service. Sec. 318. Conforming amendments. Sec. 320. Effective date of part B. PART C-COVERMNS Sec. 32L Coverage of employees of foreign affiliates of American employ- em Sec. 322. Extension of coverage by interna- tional social security agree- ment. Sec. 323. Treatment of certain service per- formed outside the United States. Sea 324. Treatment of pay after age 62 as wages. Sec. 325. Treatment of contributions under simplified employee pensions. Sec. 326. Effect of changes in names of State and local employee groups in Utah. Sec. 327. Effective dates of international social security agreements. Sea 328. Technical correction with respect to withholding of sick pay of participants In multiemployer plans. Sec. 329. Amount received under certain de- ferred compensation and salary reduction arrangements treat- ed as wages for FICA taxes. Sea M. Codification of Rowan decision with respect to meals and lodg- ing. PART D--OrnaR Asuamuzwra Sec. 331. Technical and conforming amend- ments to maximum family benefit provisions. Sec. 332. Reduction from 72 to 70 of age beyond which no delayed re- tirement credits can be earned. Sec. 333. Relaxation of Insured status re- quirements for certain workers previously entitled to a period of disability. Sec. 334. Protection of benefits of illegit- imate children of disabled beneficiaries. Sec. 335. One-month retroactivity of widow's and widower's insur- ance benefits. Sec. 336. Nonassignabfity of benefits. Sec. 33?. Use of death certificates to pre- vent erroneous benefit pay- ments to deceased Individuals. Sea 338. Public pension offset. Sea 339. Study concerning the establish- ment of the Social Security Ad- ministration as an Independent agency. Sec. 340. Conforming changes In medicare premium provisions to reflect changes in the cost-of-living benefit adjustments. TITLE IV-SUPPLEMENTAL SECURITY INCOME BENEFITS Sec. 401. Increase in Federal SSI benefit standard. Sec. 402. Adjustments in Federal SSI pass- through provisions. Sea 403. SSI Eligibility for temporary resi- dents of emergency shelters for the homeless. Sec. 404. Disregarding of emergency and other in-kind assistance pro- vided by nonprofit organiza- tions. TITLE V-UNEMPLOYMENT COMFEMSATION PROVISIONS Suara7.x A-FIDSzAL SUFH.EIZITAL COMPENSATION Sec. 501. Extension of Program. Sec. 502. Number of weeks for which com- pensation payable. Sec. 503. Coordination with trade readjust- ment program. Sec. 504. Effective date. Su BTrrLE B-Mxsczu.ANEoua PaovisxoNs See. 511. Voluntary health insurance pro- grams permitted. Sec. 512. Treatment of certain organiza- tions retroactively determined to be described In section 501(cX3) of the Internal Reve- nue Code of 1954. TITLE VI-PROSPECTIVE PAYMENTS FOR MEDICARE INPATUNT HOSPI- TAL SERVICES Sea 601. Medicare payments for Inpatient hospital services on the basis of prospective rates. Sec. 602. Conforming amendments. Sec. 603. Reports, experiments and demon- stration projects, and intent of Congress respecting new capi- tal expenditures. Sec. 604. Effective dates. TITLE I-PROVISIONS AFFECTING THE FI- NANCING OF THE SOCIAL SECURITY SYSTEM PART A-Covmaaas cOVERAGS OF NEWLY HUM TMEEAL ZVOWTIMS Sac. 101. (aX1) Section 210(a) of the Social Security Act is amended by striking out paragraphs (5) and (8) and inserting in lieu thereof the following: "(5) Service performed in the employ of the United States or any Instrumentality of the United States, if such service- "(A) would be excluded from the term 'employment' for purposes of this title if the provisions of paragraphs (5) and (6) of this subsection as in effect in January 1983 had remained in effect, and "(B) Is performed by an individual who (1) has been continuously in the employ of the United States or an Instrumentality thereof since December 31, 1963 (and for this pur- pose an Individual who returns to the per- formance of such service after being sepa- rated therefrom following a previous period of such service stall nevertheless be consid- ered upon such return as having been con- tinuously in the employ of the United States or an Instrumentality thereof, re- gardless of whether the period of such 'sepa- ration began before or after December 31, 1983, if the period of such separation does not exceed 365 consecutive days), or (11) Is receiving an annuity from the Civil Service Retirement and Disability Fund, or benefits (for service as an employee) under another retirement system established by a law of the United States for employees of the Fed- eral Government or members of the uni- formed services; except that this paragraph shall not apply with respect to- "(i) service performed as the President or Vice President of the United States, "(ii) service performed- "(I) in a position placed in the Executive Schedule under sections 5312 through 5317 of title 5, United States Code, "(II) as a noncareer appointee In the Senior Executive Service or a noncareer member of the Senior Foreign Service, or "(III) in a position to which the individual Is appointed by the President (or his desig- nee) or the Vice President under section 105(aXl), 106(aXl), or 107 (aXi) or (b)(1) of March 9, 1988 title 3, United States Code, If the maximum rate of basic pay for such position Is at or above the rate for level V of the Executive Schedule, "(iii) service performed as the Chief Jus- tice of the United States, an Associate Jus- tice of the Supreme Court, a Judge of a United States District Court (including the district court of a territory), a Judge of the United States Claims Court, a Judge of the United States Court of International Trade, a Judge of the United States Tax Court, a United States magistrate, or a referee In bankruptcy or United States bankruptcy judge, "(iv) service performed as a Member, Dele- gate, or Resident Commissioner of or to the Congress, or "(v) any other service in the legislative branch of the Federal Government if such service is performed by an individual who, on December 31, 1983, is not subject to sub- chapter III of chapter 93 of title 5, United States Code; "(6) Service performed In the employ of the United States or any Instrumentality of the United States if such service is per- formed- "(A) In a penal institution of the United States by an inmate thereof; "(B) by any individual as an employee in- cluded under section 5351(2) of title 5, United States Code (relating to certain In- terns, student nurses, and other student em- ployees of hospitals of the Federal Govern- ment), other than as a medical or dental intern or a medical or dental resident In training, or "(C) by any Individual as an employee serving on a temporary basis in can of fire, storm, earthquake, flood, or other similar emergency;". (2) Section 210(p) of such Act is amended by striking out "provisions of-" and all that follows and inserting in lieu thereof "provi- sions of subsection (aX5).". (bXl) Section 3121(b) of the Internal Rev- enue Code of 1954 is amended by striking out paragraphs (5) and (6) and Inserting In lieu thereof the following: "(5) service performed In the employ of the United States or any instrumentality of the United States, if such service- "(A) would be excluded from the term 'employment' for purposes of this title if the provisions of paragraphs (5) and (6) of this subsection as in effect in January 1983 had remained in effect, and "(B) is performed by an Individual who (1) has been continuously in the employ of the United States or an instrumentality thereof since December 31, 1993 (and for this pur- pose an individual who returns to the per- formance of such service after being sepa- rated therefrom following a previous period of such service shall nevertheless be consid- ered upon such return as having been con- tinuously In the employ of the United States or an Instrumentality thereof, re- gardless of whether the period of such sepa- ration began before or after December 31, 1983, if the period of such separation does not exceed 365 consecutive days), or (ii) is receving an annuity from the Civil Service Retirement and Disability Fund, or benefits (for service as an employee) under another retirement system established by law of the United States for employees of the Federal Government or members of the uniformed services; except that this paragraph shall not apply with respect to- "(I) service performed as the President or Vice President of the United States, (ii) service performed- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1022 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 1989 shall be deemed to have been determined by the Secretary of Health and Human Serv- ices to be a "cost-of-living computation quarter" under paragraph (2)(A) of such section) for all of the purposes of such Act as amended by this section and by other provisions of this Act, without regard to the extent by which the Consumer Price Index has increased since the last prior cost-of- living computation quarter which was estab- lished under such paragraph (1XB). COST-OF-LIVING INCREASES TO BE BASED ON EITHER WAGES OR PRICES (WHICHEVER 18 LOWER) WHEN BALANCE IN OASDI TRUST FUNDS FALLS BELOW SPECIFIED LEVEL Szc. 112. (a) Section 215(1)(1) of the Social Security Act is amended- (1) by striking out "in which" in subpara- graph (B) and all that follows down through the first semicolon in such subpar- agraph and inserting in lieu thereof "with respect to which the applicable increase per- centage is 3 percent or more;"; (2) by striking out "and" at the end of subparagraph (B); (3) by redesignating subparagraph (C) as subparagraph (H); and (4) by inserting after subparagraph (B) the following new subparagraphs: "(C) the term 'applicable increase percent- age' means- "(1) with respect to a base quarter or cost- of-living computation quarter in any calen- dar year before 1988, or in any calendar year after 1987 for which the OASDI fund ratio is 20.0 percent or more, the CPI in- crease percentage; and "(ii) with respect to a base quarter or cost- of-living computation quarter in any calen- dar year after 1987 for which the OASDI fund ratio is less than 20.0 percent, the CPI increase percentage or the wage increase percentage, whichever (with respect to that Quarter) Is the lower, "(D) the term 'CPI increase percentage', with respect to a base quarter or cost-of- living computation Quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the Consumer Price Index for that Quarter exceeds such index for the most recent prior calendar Quarter which was a base quarter under subpararaph (AXii) or, If later, the most recent cost-of-living computation quar- ter under subparagraph (B); "(E) the term 'wage increase percentage', with respect to a base quarter or cost-of- living computation Quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the SSA average wage index for the year immediately preceding such calendar year exceeds such index for the year immediate- ly preceding the most recent prior calendar year which included a base quarter under subparagraph (A)(li) or, if later, which in- cluded a cost-of-living computation quarter, "(F) the term 'OASDI fund ratio', with re- spect to any calendar year, means the ratio of- "(I) the combined balance in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, reduced by the outstanding amount of any loan (including interest thereon) theretofore made to either such Fund from the Federal Hospital Insurance Trust Fund under section 201(1), as of the beginning of such year, to "(ii) the total amount which (as estimated by the Secretary) will be paid from the Fed- eral Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund during such calendar year for all purposes authorized by section 201 (other than payments of interest on, or re- payments of, loans from the Federal Hospi- tal Insurance Trust Fund under section 201(1)), but excluding any transfer pay- ments between such trust funds and reduc- ing the amount of any transfers to the Rail- road Retirement Account by the amount of any transfers into either such trust fund from that Account; (G) the term 'SSA average wage index', with respect to any calendar year, means the average, of the total wages reported to the Secretary of the Treasury or his dele- gate for the preceding calendar year as de- termined for purposes of subsection (b)(SXAXii); and". (b) Section 215(1X2XA)(11) of such Act is amended by striking out "by the same per- centage" and all that follows down through the semicolon, in the sentence immediately following subdivision (III), and inserting in lieu thereof "by the applicable increase per- centage;". (c) Section 215(1) of such Act is further amended by adding at the end thereof the following new paragraph: "(5)(A) If- "(I) with respect to any calendar year the 'applicable increase percentage' was deter- mined under clause (ii) of paragraph (1XC) rather than under clause (1) of such para- graph, and the increase becoming effective under paragraph (2) In such year was ac- cordingly determined on the basis of the wage increase percentage rather than the CPI increase percentage (or there was no such increase becoming effective under paragraph (2) in that year because the wage increase percentage was less than 3 per- cent), and "(ii) for any subsequent calendar year in which an increase under paragraph (2) be- comes effective the OASDI fund ratio is greater than 32.0 percent, then each of the amounts described in sub- divisions (I), (II), and (III) of paragraph (2)(AXii), as Increased under paragraph (2) effective with the month of December in such subsequent calendar year, shall be fur- ther increased (effective with such month) by an additional percentage, which shall be determined under subparagraph (B) and shall apply as provided in subparagraph (C). "(B) The applicable additional percentage by which the amounts described in subdivi- sions (I), (ID, and (III) of paragraph (2)(A)(ii) are to be further increased under subparagraph (A) in the subsequent calen- dar year involved shall be the difference be- tween- "(1) the compounded percentage benefit increases that would have been paid if all increases under paragraph (2) had been made on the basis of the CPI increase per- centage. and 'Yin) the compounded percentage benefit increases that were actually paid under paragraph (2) and this paragraph, with such increases being measured- "(iii) in the case of amounts described in subdivision (I) of paragraph (2)(A)(11), over the period beginning with the calendar year in which the individual first became entitled to monthly benefits described in such subdi- vision and ending with such subsequent cal- endar year, and "(iv) in the case of amounts described in subdivisions (II) and (III) of paragraph (2)(A)(li), over the period beginning with the calendar year in which the individual whose primary insurance amount is In- creased under such subdivision (II) Initially became eligible for an old-age or disability insurance benefit, or died before becoming so eligible, and ending with such subsequent calendar year, except that if the Secretary determines in any case that the application (in accordance with subparagraph (C)) of the additional percentage as computed under the preced- ing provisions of this subparagraph would cause the OASDI fund ratio to fall below 32.0 percent In the calendar year Immediate- ly following such subsequent year, he shall reduce such applicable additional percent- age to the extent necessary to ensure that the OASDI fund ratio will remain at or above 32.0 percent through the end of such following year. "(C) Any applicable additional percentage increase in an amount described in subdivi- sion (I), (II), or (III) of paragraph (2XA)Ui), made under this paragraph in any calendar year, shall thereafter be treated for all the purposes of this Act as a part of the in- crease made in such amount under para- graph (2) for that year.". (dX1) Section 215(1X2XC) of such Act is amended by adding at the end thereof the following new clause: "(iii) The Secretary shall determine and promulgate the OASDI fund ratio and the SSA wage index for each calendar year before November 1 of that year, based upon the most recent data then available, and shall include a statement of such fund ratio and wage index (and of the effect such ratio and the level of such index may have upon benefit Increases under this subsection) in any notification made under clause (ii) and any determination published under subpara- graph (D).". (2) Section 215(1X4) of such Act (as amended by section 111(bXl) of this Act) is further amended by striking out "section 111(b)(2)" and inserting in lieu thereof "sec- tions 111(b)(2) and 112". (e) The amendments made by the preced- ing provisions of this section shall apply with respect to monthly benefits under title II of the Social Security Act for months after December 1987. (f) Notwithstanding anything to the con- trary in section 215(iXl)(F) of the Social Se- curity Act (as added by subsection (a)(4) of this section), the combined balance in the Trust Funds which is to be used in deter- mining the "OASDI fund ratio" with re- spect to the calendar year 1988 under such section shall be the estimated combined bal- ance in such Funds as of the close of that year (rather than as of its beginning). ELIMINATION OF WINDFALL BENEFITS FOR INDI- VIDUALS RECEIVING PENSIONS FROM NONCO- VERED EMPLOYMENT Sac. 113. (a) Section 215(a) of the Social Security Act is amended by adding at the end thereof the following new paragraph: "(7XA) In the case of an individual whose primary insurance amount would be com- puted under paragraph (1) of this subsec- tion, who- ',(I) . attains age 62 after 1985 (except where he or she became entitled to a disabil- ity insurance benefit before 1988 and re- mained so entitled in any of the 12 months immediately preceding his or her attain- ment of age 62), or "(ii) would attain age 62 after 1985 and be- comes entitled to a disability insurance benefit after 1985, and who is entitled to a monthly periodic payment (including a payment determined under subparagraph (C)) based in whole or in part upon his or her earnings for service which did not constitute 'employment' as defined in section 210 for purposes of this title (hereafter in this paragraph and in subsection (d)(5) referred to as 'noncovered service'), the primary insurance amount of that individual during his or her concurrent entitlement to such monthly periodic pay- ment and to old-age or disability insurance benefits shall be computed or recomputed under subparagraph (B) with respect to the initial month in which the individual be- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H1 024 CONGRESSIONAL RECORD - HOUSE "(d) SocIAL SECURITY BENSrrr.- "(1) IN GxtrattAL.-For purposes-of this sec- tion, the term 'social security benefit' means any amount received by the taxpayer by reason of entitlement to- "(A) a monthly benefit under title II of the Social Security Act, or "(B) a tier 1 railroad retirement benefit. "(2) ADJUSTMENT FOR REPAYMENTS DURING "(A) IN GENERAL.-For purposes of this sec- tion, the amount of social security benefits received during any taxable year shall be re- duced by any repayment made by the tax- payer during the taxable year of a social se- curity benefit previously received by the taxpayer (whether or not such benefit was received during the taxable year). "(B) DENIAL OF DEDUCTION.-If (but for this subparagraph) any portion of the re- payments referred to in subparagraph (A) would have been allowable as a deduction for the taxable year under section 165, such portion shall be allowable as a deduction only to the extent it exceeds the social secu- rity benefits received by the taxpayer during the taxable year (and not repaid during such taxable year). "(3) WORKMEN'S COMPENSATION BENEFITS SUBSTITUTED FOR SOCIAL SECURITY BENEFITS: For purposes of this section, if, by reason of section 224 of the Social Security Act (or by reason of section 3(a)(1) of the Railroad Re- tirement Act of 1974), any social security benefit Is reduced by reason of the receipt of a benefit under a workmen's compensa- tion act, the term 'social security benefit' in- cludes that portion of such benefit received under the workmen's compensation act which equals such reduction. "(4) Tint 1 RAILROAD RETIREMENT BENE- Frr.-For purposes of paragraph (1), the term 'tier 1 railroad retirement benefit' means a monthly benefit under section 3(a), 4(a), 4(f) of the Railroad Retirement Act of 1974. NO LIMITATIoN ON AMOUNT INCLUDED WHERE TAXPAYER RECEIVES Lump-SUM PAY- "(1) LIMITATION.-If- "(A) any portion of a lump-sum payment of social security benefits received during the taxable year is attributable to prior tax- able years, and "(B) the taxpayer makes an election under this subsection for the taxable year, then the amount Included in gross income under this section for the taxable year by reason of the receipt of such portion shall not exceed the sum of the increases in gross income under this chapter for prior taxable years which would result solely from taking Into account such portion in the taxable years to which it is attributable. "(2) SPECIAL RULES.- "(A) YEAR TO WHICH BENEFIT ATTRIBUTA- BLE.-For purposes of this subsection, a social security benefit is attributable to a taxable year if the generally applicable pay- ment date for such benefit occurred during such taxable year. "(B) ELEcTION.-An election under this subsection shall be made at such time and in such manner as the Secretary shall by regulations prescribe. Such election, once made, may be revoked only with the consent of the Secretary. "(f) TREATMENT AS PENSION OR Amxurry FOR CERTAIN PURPOSES.-For purposes of- "(1) section 43(c)(2) (defining earned income), "(2) section 219(fXl) (defining compensa- tion), "(3) section 221(bX2) (defining earned income), and "(4) section 911(bXl) (defining foreign earned income), any social security benefit shall be treated as an amount received as a pension or annu- ity." (b) INroRzATION REPoRTIN(L-Subpart B of part III of subchapter A of chapter 61 of such Code (relating to information concern- ing transactions with other persons) i8 amended by adding at the end thereof the following new section: "SEC. 4060F. RETURNS RELATING TO SOCIAL SECU- RITY BENEFITS. "(a) RsQUQRSMENT or REPORTING.-The ap- propriate Federal official shall make a return, according to the forms and regula- tions prescribed by the Secretary, setting forth- "(1) the- "(A) aggregate amount of social security benefits paid with respect to any Individual during any Calendar year, "(B) aggregate amount of social security benefits repaid by such individual during such calendar year, and "(C) aggregate reductions under section 224 of the Social Security Act (or under sec- tion 3(aXl) of the Railroad Retirement Act of 1974) in benefits which would otherwise have been paid to such individual during the calendar year on account of amounts re- ceived under a workmen's compensation act, and "(2) the name and address of such individ- ual. "(b) STATEMENTS To BE FURNISHED To IN- DIVIDUALS WITH RESPECT To WHOM INFORMA- TION Is FURNISHED.-Every person making a return under subsection (a) shall furnish to each individual whose name is set forth in such return a written statement showing- "(1) the name of the agency making the payments, and "(2) the aggregate amount of payments, of repayments, and of reductions, with respect to the individual as shown on such return. The written statement required under the preceding sentence shall be furnished to the individual on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. "(c) DEFINITIONS.-For purposes of this section- "(1) APPROPRIATE FEDERAL OFFICIAL.-The term 'appropriate Federal official' means- "(A) the Secretary of Health and Human Services in the case of social security bene- fits described in section 86(dX1XA), and "(B) the Railroad Retirement Board in the case of social security benefits described in section 86(dXl)(B). "(2) SOCIAL SECURITY BENEFIT.-The term 'social security benefit' has the meaning given to such term by section 86(d)(1)." (c) TREATMENT or NONRESIDENT ALIENS.- (1) AMENDMENT OF SECTION 871 (a).-+Sub- section (a) of section 871 of such Code (re- lating to tax on income not connected with United States business) is amended by adding at the end thereof the following new paragraph: "(3) TAXATION or SOCIAL SECURITY BENE- FITS.-For purposes of this section and sec- tion 1441- "(A) one-half of any social security benefit (as defined in section 86(d)) shall be includ- ed in gross income, and "(B) section 86 shall not apply." (2) AMENDMENT or SECTION 1441.-Section 1441 of such Code (relating to withholding of tax on nonresident aliens) is amended by adding at the end thereof the following new subsection: "(g) CROSS REFinaIIcE.- "For provision treating one-half of social secu- rity benefits as subject to withholding under this section, see section 871(aX3)." (3) DISCLOSURE or INFORMATION To SOCIAL SECURITY ADMINISTRATION OR RAILROAD RE- TIREMENT ROARD.- March 9, 1989 (A) IN GENERAL.-Subsection (h) of section 6103 of such Code (relating to disclosure to certain Federal officers and employees for purposes of tax administration, etc.) is amended by adding at the end thereof the following new paragraph: "(6) WITHHOLDINo or TAX FROM SOCIAL as- cURITY BzNzrxTs.-Upon written request, the Secretary may disclose available return In- formation from the master files of the in- ternal Revenue Service with respect to the address and status of an individual as a non- resident alien or as a citizen or resident of the United States to the Social Security Ad- ministration or the Railroad Retirement Board for purposes of carrying out its re- sponsibilities for withholding tax under sec- tion 1441 from social security benefits (as defined in section 86(d))." (B) CONFORMING AMENDMENT.-Paragraph (4) of section 6103(p) of such Code (relating to safeguards) is amended by inserting "(h)(6)," after "(h)(2)," in the material pre- ceding subparagraph (A) and in subpara- graph (FXii), thereof. (d) SOCIAL SECURITY BENEFITS TREATED AS UNITED STATES SomRcED.-Subsection (a) of section 861 of such Code (relating to income from sources within the United States) is amended by adding at the end thereof the following new paragraph: "(8) SOCIAL SECURITY BENEFITS.-Any social security benefit (as defined in section 86(d))." (e) TRANSFERS To TRUST FUNDS.- (1) IN GENERAL.-There are hereby appro- priated to each payor fund amounts equiva- lent to the aggregate increase in tax liabil- ities under chapter 1 of the Internal Reve- nue Code of 1954 which is attributable to the application of sections 86 and 871(aX3) of such Code (as added by this section) to payments from such payor fund. (2) TRANSFERS.-The amounts appropri- ated by paragraph (1) to any payor fund shall be transferred from time to time (but not less frequently than quarterly) from the general fund of the Treasury on the basis of estimates made by the Secretary of the Treasury of the amounts referred to in such paragraph. Any such quarterly payment shall be made on the first day of such quar- ter and shall take into account social secu- rity benefits estimated to be received during such quarter. Proper adjustments shall be made in the amounts subsequently trans- ferred to the extent prior estimates were in excess of or less than the amounts required to be transferred. (3) DEFINITIONS.-For purposes of this subsection- (A) PAYOR FUND.-The term "payor fund" means any trust fund or account from which payments of social security benefits are made. (B) SOCIAL SECURITY BENEFITS.-The term "social security benefits" has the meaning given such term by section 86(dXl) of the Internal Revenue Code of 1954. (4) RBFoRTs.-The Secretary of the Treas- ury shall submit annual reports to the Con- gress and to the Secretary of Health and Human Services and the Railroad Retire- ment Board on- (A) the transfers made under this subsec- tion during the year, and the methodology used in determining the amount of such transfers and the funds or account to which made, and (B) the anticipated operation of this sub- section during the next 5 years. (f) TECHNICAL AMENDMENTS.-. (1) Subsection (a) of section 85 of such Code is amended by striking out "this sec- tion," and inserting in lieu thereof "this sec- tion, section 86,". Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1028 shall be equal to the primary insurance amount (as determined for purposes of this subsection after application of subpara- graphs (B) and (C)) of such deceased indi- vidual. "(BXi) For purposes of this subsection, in any case in which such deceased individual dies before attaining age 62 and section 215(aXl) (as in effect after December 1978) is applicable in determining such individ- ual's primary insurance amount- "(I) such primary insurance amount shall be determined under the formula set forth In section 215(aX1XB) (1) and (ii) which is applicable to individuals who initially become eligible for old-age insurance bene- fits in the second year after the year speci- fied in clause (ii), "(II) the year specified in clause (ii) shall be substituted for the second calendar year specified in section 215(bX3XAXi1XI), and "(III) such primary insurance amount shall be increased under section 215(1) as if it were the primary insurance amount re- ferred to in section 215(1X2)(AX1iXII), except that it shall be increased only for years beginning after the first year after the year specified in clause (ii). "(ii) The year specified in this clause is the earlier of- "(I) the year in which the deceased indi- vidual attained age 60, or would have at- tained age 60 had she lived to that age, or "(II) the second year preceding the year in which the widower first meets the re- quirements of paragraph (1)(B) or the second year preceding the year in which the deceased individual died, whichever is later. "(iii) This subparagraph shall apply with respect to any benefit under this subsection only to the extent its application does not result in a primary insurance amount for purposes of this subsection which is less than the primary insurance amount other- wise determined for such deceased individu- al under section 215. "(C) If such deceased individual". (2) Section 202(f) of such Act (as amended by paragraph (1) of this subsection) is fur- ther amended- (A) in paragraph (1)(D) and in the matter in paragraph (1) following subparagraph (F)(ii), by inserting "(as determined after application of subparagraphs (B) and (C) of paragraph (3))" after "primary insurance amount"; and (B) in paragraph (3)(D)(ii), by inserting "(as determined without regard to subpara- graph (C))" after "primary insurance amount". (c) The amendments made by this sestion shall apply with respect to monthly insur- ance benefits for months after December 1984 for individuals who first meet all crite- ria for entitlement to benefits under section 202 (e) or (f) of the Social Security Act (other than making application for such benefits) after December 1984. LIMITATION ON BENEFIT REDUCTION FOR EARLY RETIREMENT IN CASE OF DISABLED WIDOWS AND WIDOWERS SEC. 134. (a)(1) Section 202(q)(1) of the Social Security Act is amended by striking out the semicolon at the end of subpara- graph (B)(ii) and all that follows and insert- ing in lieu thereof a period. (2XA) Section 202(qX6) of such Act is amended to read as follows: "(6) For purposes of this subsection, the 'reduction period' for an individual's old- age, wife's, husband's, widow s, or widower's insurance benefit is the period- "(A) beginning- "(I) in the case of an old-age or husband's insurance benefit, with the first day of the first month for which such individual is en- titled to such benefit, CONGRESSIONAL RECORD - HOUSE March 9, 1989 "(ii) in the case of a wife's insurance bene- fit, with the first day of the first month for which a certificate described in paragraph (5XA)(i) Is effective, or "(ill) in the case of a widow's or widower's insurance benefit, with the first day of the first month for which such individual is en- titled to.such benefit or the first day of the month in which such individual attains age 60, whichever is the later, and "(B) ending with the last day of the month before the month in which such indi- vidual attains retirement age.". (B) Section 202(QX3XG) of such Act is amended by striking out "paragraph (6)(A) (or, if such paragraph does not apply, the period specified in paragraph (6XB))" and inserting in lieu thereof "paragraph (6)". (C) Section 202(q) of such Act is further amended, in paragraphs (1XB)(i), (3XEXii). and (3XFXI')(I), by striking out "paragraph (6XA)" and inserting in lieu thereof "para- graph (6)". (3) Section 202(9X7) of such Act is amend- ed by striking out the matter preceding sub- paragraph (A) and inserting in lieu thereof -the following: "(7) For purposes of this subsection, the 'adjusted reduction period' for an individ- ual's old-age, wife's, husband's, widow's, or widower's Insurance benefit is the reduction period prescribed in paragraph (6) for such benefit, excluding-". (4) Section 202(q)(10) of such Act is amended- (A) in that part of the second sentence preceding cliause (A), by striking out "or an additional adjusted reduction period"; (B) in clauses (B)(i) and (C)(i), by striking out ", plus the number of months in the ad- justed additional reduction period multipled by *%40 of 1 percent"; (C) in clause (B)(ii), by striking out "plus the number of months in the additional re- duction period multiplied by 43440 of 1 per- cent,"; and (D) in clause (C)(ii), by striking out "plus the number of months in the adjusted addi- tional reduction period multiplied by 4%4o of 1 percent.". (b) Section 202(m)(2)(B) of such Act (as applicable after the enactment of section 2 of Public I,Aw 97-123) is amended by strik- ing out "subsection (q)(6XA)(11)" and insert- ing in lieu thereof "subsection (q)(6)(B)". (c) The amendments made by this section shall apply with respect to benefits for months after December 1983. PART E-MECHANISMS To ASSURE CONTINUED BENEFIT PAYMENTS IN UNEXPECTEDLY AD- VERSE CONDITIONS NORMALIZED CREDITING OF SOCIAL SECURITY TAXES TO TRUST FUNDS SEC. 141. (a)(1) The last sentence of sec- tion 201(a) of the Social Security Act is amended- (A) by striking out "from time to time" each place it appears and inserting in lieu thereof "monthly on the first day of each calendar month"; and (B) by striking out "paid to or deposited into the Treasury" and inserting in lieu thereof "to be paid to or deposited into the Treasury during such month". (2) Section 201(a) of such Act is further amended by adding at the end thereof the following new sentence: "All amounts trans- ferred to either Trust Fund under the pre- ceding sentence shall be invested by the Managing Trustee in the same manner and to the same extent as the other assets of such Trust Fund; and such Trust Fund shall pay interest to the general fund on the amount so transferred on the first day of any month at a rate (calculated on a daily basis, and applied against the difference be- tween the amount so transferred on such first day and the amount which would have been transferred to the Trust Fund up to that day under the procedures in effect on January 1, 1983) equal to the rate earned by the investments of such Fund in the same month under subsection (d).". (b)(1) The last sentence of section 1817(a) of such Act is amended- (A) by striking out "from time to time" and inserting in lieu thereof "monthly on the first day of each calendar month"; and (B) by striking out "paid to or deposited into the Treasury" and inserting in lieu thereof "to be paid to or deposited into the Treasury during such month". (2) Section 1817(a) of such Act is further amended by adding at the end thereof the following new sentence: "All amounts trans- ferred to the Trust Fund under the preced- ing sentence shall be invested by the Man- aging Trustee in the same manner and to the same extent as the other assets of the Trust Fund; and the Trust Fund shall pay interest to the general fund on the amount so transferred on the first day of any month at a rate (calculated on a daily basis, and ap- plied against the difference between the amount so transferred on such first day and the amount which would have been trans- ferred to the Trust Fund up to that day under the procedures in effect on January 1, 1983) equal to the rate earned by the in- vestments of the Trust Fund in the same month under subsection (c).". (c) The amendments made by this section shall become effective on the first day of the month follbwing the month in which this Act is enacted. INTERFUND BORROWING EXTENSION SEC. 142. (a) Sections 201(1)(1) and 1817(j)(1) of the Social Security Act are each amended by striking out "January 1983" and inserting in lieu thereof "January 1, 1988". (b) Sections 201(1)(3) and 1817(j)(3) of such Act are each amended by inserting before the period at the end thereof the fol- lowing: "; but the full amount of all such loans (whether made before or after Janu- ary 1, 1983) shall be the earliest feasible date and in any event no later than December 31, 1989.". RECOMMENDATIONS BY BOARD OF TRUSTEES TO REMEDY INADEQUATE BALANCES IN THE SOCIAL SECURITY TRUST FUNDS SEC. 143. Title VII of the Social Security Act is amended by adding at the end thereof the following new section: "RECOMMENDATIONS BY BOARD OF TRUSTEES To REMEDY INADEQUATE BALANCES IN THE SOCIAL SECURITY TRUST FUNDS "SEc. 709. If the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insur- ance Trust Fund, the Federal Hospital In- surance Trust Fund, or the Federal Supple- mentary Medical Insurance' Trust Fund de- termines at any time that the balance of such Trust Fund may become inadequate to assure the timely payment of benefits from such Trust Fund, the Board shall promptly submit to each House of the Congress a report setting forth Its recommendations for statutory adjustments affecting the receipts and disbursements to and from such Trust Fund necessary to remedy such inadequacy, with due regard to the economic conditions which created such inadequacy and the amount of time necessary to alleviate such inadequacy in a prudent manner.". PART F-OT ER FINANCING AMENDMENTS FINANCING OF NONCONTRIBUTORY MILITARY WAGE CREDITS SEC. 151. (a) Section 217(g) of the Social Security Act is amended to read as follows: Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1030 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 1983 mmaay oemme 09W di for *W bYity insMdmurance benefits, or die (bdem for purposes for purposes for purposes for purposes of clause of clause of clause of the first (I) of (0) of (ii) of sentence of ragraph paragr)( pu(1)agr(A pa(1)(A) ragraph p'(7 )(6) (1A le- IS- Is- n- governing the payment of monthly insur- ance benefits under title II of the Social Se- curity Act, and of the general feasibility and desirability of making adjustments in such procedures with respect to float periods; and (2) a separate investigation-of the feasibil- ity and desirability of providing, as a specif- ic form of adjustment in such procedures with respect to float periods, for the trans. fer each day to the general fund of the Treasury from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, as appropriate, of amounts equal to the amounts of the checks referred to in subsec- tion (a) which are paid by the Federal Re- serve Banks on such day. (c) In conducting the study required by subsection (a), the Secretaries shall consult, as appropriate, the Director of the Office of Management and Budget, and the Director shall provide the Secretaries with such in- formation and assistance as they may re- quire. The Secretaries shall also solicit the views of other appropriate officials and or- ganizations. WD Not later than six months after the date of the enactment of this Act, the Secre- taries shall submit to the President and the Congress a report of the findings of the In- vestigation required by subsection (b)(1), and the Secretary of the Treasury shall by regulation Mae such adjustments in the procedures governing the payment of monthly insurance benefits under title II of the Social Security Act with respect to float periods (other than adjustments in the form described in subsection (b)(2)) as may have been found in such investigation to be nec- essary or appropriate. (2) Not later than twelve months after the date of the enactment of this Act, the Secre- taries shall submit to the President and the Congress a report of the findings of the sep- arate investigation required by subsection (b)(2), together with their recommendations with respect thereto; and, to the extent nec- essary or appropriate to carry out such rec- ommendations, the Secretary of the Treas- ury shall by regulation make adjustments in the procedures with respect to float periods in the form described in such subsection. SEC. 302. (a) Section 218(j) of the Social Security Act Is amended- (1) by inserting "(1)" after "(j)", (2) by striking out "the rate of 6 per centum per annum" and inserting in lieu thereof "the applicable rate determined in accordance with paragraph (2)", and (3) by adding at the end thereof the fol- lowing new paragraph: - "(2) For purposes of paragraph (1), the rate of interest applicable to late payments outstanding during the six-month period be- ginning on January 1, 1984, shall be 9.0 per- cent per annum. The rate of interest appli- cable to late payments outstanding during the six-month period beginning on July 1, 1984, and subsequent six-month periods be- ginning on January 1 or July 1 thereafter, shall be determined by the Secretary of the Treasury not later than 15 days after the end of the base period described in the fol- lowing sentence and shall be an annual rate equal to the average (rounded to the near- est full percent, or the next higher percent if it is a multiple of 0.5 percent but not of 1.0 percent) of the annual rates of interest applicable to the special obligations issued to the Trust Funds (in accordance with sec- tion 201(d)) in each month of such base period. The 'base period' for the rate effec- tive on January 1 of a year Is the six-month period ending on.the immediately preceding September 30, and the base period for the rate effective on July 1 of a year is the six- month period ending on the immediately preceding March 31.". (b) The amendments made by this section shall apply with respect to payments made after December 31, 1983, under an agree- ment pursuant to section 218 of the Social Security Act. TRUST FUND INVESTMENT PROCEDURES SEC. 303. (a)(1) Section 201(d) of the Social Security Act is amended by striking out the second and third sentences and in- serting in lieu thereof the following: "Such investments may be made only in Interest- bearing public-debt obligations of the United States which are issued exclusively for purchase by the Trust Funds under title 31 of the United States Code.". (2) The fifth sentence of such section 201(d) is amended to read as follows: "Such obligations shall be redeemable at par plus accrued interest at any time, and shall bear Interest In any month (including the month of issue) at a rate equivalent to either (1) the average market yield (determined by the Managing Trustee on the basis of market quotations as of the end of each business day of the preceding month) on all marketable interest-bearing obligations of the United States then forming a part of the public debt (other than 'flower bonds') which are not due or callable until after the expiration of 4 years from the end of such preceding month, or (2) the average market yield (so determined) on all such obligations which are due or callable 4 years or less from the end of such preceding month, whichever average market yield (with re- spect to the month involved) Is larger; except that where such equivalent interest rate is not a multiple of one-eighth of 1 per- cent, the rate of interest on the obligations involved shall be the multiple of one-eighth of 1 percent nearest such equivalent rate.". (3) Section 201(d) of such Act is further amended by striking out the last sentence, and by inserting in lieu thereof the follow- ing: "For purposes of the preceding sen- tence, the term 'flower bond' means a United States Treasury bond which was issued before March 4, 1971, and which may, at the option of the duly constituted repre- sentative of the estate of a deceased individ- ual, be redeemed In advance of maturity and at par (face) value plus' accred Interest to the date of payment if (I) it was owned by such deceased individual at the time of his death, (ii) it is part of the estate of such de- ceased individual, and (iii) such representa- tive authorizes the Secretary of the Treas- ury to apply the entire proceeds of the re- demption of such bond to the payment of Federal estate taxes.". (b)(1) Section 1817(c) of such Act is amended by striking out the second and third sentences and inserting In lieu thereof the following: "Such investments may be made only in interest-bearing public-debt obligations of the United States which are issued exclusively for purchase by the Trust Funds under title 31 of the United States Code.". (2) The fifth sentence of such section 1817(c) is amended to read as follows: "Such obligations shall be redeemable at par plus accrued interest at any time, and shall bear interest in any month (including the month of issue) at a rate equivalent to either (1) the average market yield (determined by the Managing Trustee on the basis of market quotations as of the end of each business day of the preceding month) on all marketable interest-bearing obligations of the United States then forming a part of the public debt (other than 'flower bonds') which are not due or callable until after the expiration of 4 years from the end of such preceding month, or (2) the average market yield (so determined) on all such obligations an (y7ar rough 199999 .................... 90.0 32.0 15.0 610 2000 ......................... 89.4 31.8 14.9 60.6 2001 ......................... 88.8 31.6 14.8 60.2 2002 ......................... 88.2 31.4 14.1 59.8 2003 ......................... 87.6 31.1 14.6 59.4 2004- ....................... 87.0 30.9 14.5 59.0 2005 ......................... 86.4 30.7 144 58.6 2006 ......................... 85.8 30.5 14.3 58.2 2007 or thereafter.... 85.2 30.3 14.2 57.7." . ADJUSTMENTS IN OASDI TAX RATES SEC. 202. (a) Section 3101(a) of the Inter- nal Revenue Code of 1954 (relating to rate of tax on employees for old-age, survivors, and disability insurance), as amended by section 123(a)(1) of this Act, is further amended by striking out the last line of the table and inserting in lieu thereof the fol- lowing: "1990 through 2014 ............. 6.2 percent 2015 or thereafter ................ 6.44 percent." (b) Section 3111(a) of such Code (relating to rate of tax on employers for old-age, sur- vivors, and disability insurance), as amended by section 123(a)(2) of this Act, is further amended by striking out the last line of the table and inserting in lieu thereof the fol- lowing. "1990 through 2014 ............. 6.2 percent 2015 or thereafter ................ 6.44 percent." (c) Section 1401(a) of such Code (relating to rate of tax on self-employment income for old-age, survivors, and disability insur- ance), as amended by section 124(a) of this Act), is further amended by striking out the last line of the table and Inserting in lieu thereof the following, "December 31, 1989 ..................... January 1, 2015 212.40 December 31, 2014 ....................... ............................................ 12.88." (d) The amendments made by this section shall apply to remuneration paid, and tax- able years beginning, after December 31, 2014. TITLE III-MISCELLANEOUS AND TECHNICAL PROVISIONS PART A--CASH MANAGEMENT FLOAT PERIODS SEC. 301. (a) The Secretary of Health and Human Services and the Secretary of the Treasury shall jointly undertake, as soon as possible after the date of the enactment of this Act, a thorough study with respect to the period of time (hereafter in this section referred to as the "float period") between the issuance of checks from the general fund of the Treasury in payment of month- ly insurance benefits under title II of the Social Security Act and the transfer to the general fund from the Federal Old-Age and Survivors Insurance Trust Fund or the Fed- eral Disability Insurance Trust Fund, as ap- plicable, of the amounts necessary to com- pensate the general fund for the issuance of such checks. Each such Secretary shall con- sult the other regularly during the course of the study and shall, as appropriate, provide the other with such information and assist- ance as he may require. (b) The study shall include- (1) an investigation of the feasibility and desirability of maintaining the float periods which are allowed as of the date of the en- actment of this section in the procedures Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1036 CONGRESSIONAL RECORD - HOUSE March 9, 1983 shall exclude from the term 'wages' any em- ployer contribution- "(1) under a qualified cash or deferred ar- rangement (as defined in section 401(k)) to the extent not included In gross income by reason of section 402(aX8), "(2) under a cafeteria plan (as defined in section 125(d)) to the extent the employee had the right to choose cash, property, or other benefits which would be wages for purposes of this chapter, or "(8) for an annuity contract described in section 403(b)." (b) Section 209 of the Social Security Act is amended by adding at the end thereof (after the new paragraph added by section 101(cXl) of the this Act) the following new paragraph: "Nothing in any of the foregoing provi- sions of this section (other than subsection (a)) shall exclude from the term 'wages' and employer contribution- "(1) under a qualified cash or deferred ar- rangement (as defined in section 401(k)) of the internal Revenue Code of 1954 to the extent not included in gross income by reason of section 402(a)(8) of such Code, "(2) under a cafeteria plan (as defined in section 125(d) of suSh Code) to the extent the employee had the right to choose cash, property, or other benefits which would be wages for purposes of this title, or "(3) for an annuity contract described in section 403(b) of such Code." (c) The amendments made by this section shall apply to remuneration paid after De- cember 31, 1983. CODIFICATION OF ROWAN DECISION WITH RESPECT TO MEALS AND LODGING SEC. 330. (aX1) Subsection (a) of section 3121 of the internal Revenue Code of 1954 (defining wages) is amended by striking out ,,or,, at the end of paragraph (17), by strik- ing out the period at the end of paragraph (18) and inserting in lieu thereof "; or", and by inserting after paragraph (18) the follow- ing new paragraph: "(19) the value of any meals or lodging furnished by or on behalf of the employer if at the time of such furnishing it is reason- able to believe that the employee will be able to exclude such items from income under section 119." (2) Section 209 of the Social Security Act is amended by striking out "or" at the end of subsection (p), by striking out the period at the end of subsection (q) and inserting in lieu thereof 11; or", and by inserting after subsection (q) the following new subsection: "(r) The value of any meals or lodging fur- nished by or on behalf of the employer if at the time of such furnishing it is reasonable to believe that the employee will be able to exclude such items from income under sec- tion 119 of the Internal Revenue Code of 1954." (bX Subsection (a) of section 3121 of such Code is amended by inserting after paragraph (19) (as added by subsection (a) of this section) the following new sentence: "Nothing in the regulations prescribed for purposes of chapter 24 (relating to income tax withholding) which provides an exclu- sion from 'wages' as used in such chapter shall be construed to require a similar exclu- sion from 'wages' in the regulations pre- scribed for purposes of this chapter." (2) Section 209 of the Social Security Act is amended by inserting immediately after subsection (r) (as added by subsection (a) of This section) the following new sentence: "Nothing in the regulations prescribed for purposes of chapter 24 of the Internal Reve- nue Code of 1954 (relating to income tax withholding) which provides an exclusion from 'wages' as used in such chapter shall be construed to require a similar exclusion from 'wages' in the regulations prescribed for purposes of this title." (c) The amendments made by subsections (a) and (b) shall apply to remuneration paid after December 31, 1983. PART D-OTHER AMENDMENTS TECHNICAL AND CONFORMING AMENDMENTS TO MAXIMUM FAMILY BENEFIT PROVISIONS Sac. 331. (aXi) Section 203(a)(3)(A) of the Social security Act is amended by striking out clause (ii) and inserting in lieu thereof the following: "(11) an amount (I) initially equal to the product of 1.75 and the primary insurance amount that would be computed under sec- tion 215(aXl), for January of the year de- termined for purposes of this clause under the following two sentences, with respect to average indexed monthly earnings equal to one-twelfth of the contribution and benefit base determined for that year under section 230. and (II) thereafter increased in accord- ance with the provisions of section 215(iX2XAXii). The year established for purposes of clause (ii) shall be 1983 or, if it occurs later with respect to any individual, the year in which occurred the month that the application of the reduction provisions contained in this subparagraph began with respect to benefits payable on the basis of the wages and self- employment income of the insured individu- al If for any month subsequent to the first month for which clause (ii) applies (with re- spect to benefits payable on the basis of the wages and self-employment income of the insured individual) the reduction under this subparagraph ceases to apply, then the year determined under the preceding sentence shall be redetermined (for purposes of any subsequent application of this subpara- graph with respect to benefits payable on the basis of such wages and self-employ- ment income) as though this subparagraph had not been previously applicable.". (2) Section 203(aX7) of such Act is amend- ed by striking out everything that follows "shall be reduced to an amount equal to" and inserting in lieu thereof "the amount determined in accordance with the provi- sions of paragraph (3XA)(ii) of this subsec- tion, except that for this purpose the refer- ences to subparagraph (A) in the last two sentences of paragraph (3)(A) shall be deemed to be references to paragraph (7).". (b) Clause (i) in the last sentence of sec- tion 203(b)(1) of such Act (as amended by section 132(b) of this Act) is further amend- ed by striking out "penultimate sentence" and inserting in lieu thereof "first sentence of paragraph (4)". (c) The amendments made by subsection (a) shall be effective with respect to pay- ments made for months after December 1983. REDUCTION FROM 72 TO 70 OF AGE BEYOND WHICH. No DELAYED RETIREMENT CREDITS CAN BE EARNED SEC. 332. (a) Section 202(w) of the Social Security Act is amended- (1) in paragraph (2XA), by striking out "age 72" and inserting in lieu thereof "age 70"; and (2) in paragraph (3), by striking out "age 72 after 1972" and inserting in lieu thereof "age 70". (b) The amendments made by subsection (a) shall apply with respect to individuals who attain age 70 after December 1983. For individuals who attain age 70 before Janu- ary 1984, section 202(w) as in effect immedi- ately before the enactment of the amend- ments made by this section shall apply. except that no increment months as deter- mined under such section attributable to months after December 1983 shall accrue. RELAXATION OF INSURED STATUS REQUIRE- MENTS FOR CERTAIN WORKERS PREVIOUSLY ENTITLED TO A PERIOD OF DISABILITY SEC. 333. (a) Section 216(iX3) of the Social Security Act is amended- (1) by striking out the semicolon at the end of clause (ii) of subparagraph (B) and inserting in lieu thereof ", or"; and (2) by inserting after clause (ii) of such subparagraph the following new clause: "(iii) in the case of an individual (not oth- erwise insured under clause (i)) who, by reason of clause W. had a prior period of disability that began during a period before the quarter in which he or she attained age 31, not less than one-half of the quarters be- ginning after such individual attained age 21 and ending with such quarter are Quar- ters of coverage, or (if the number of quar- ters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter are quar- ters of coverage; ". (b) Section 223(c)(1XB) of such Act is amended- (1) by striking out the semicolon at the end of clause (ii) and inserting in lieu there- of ", or"; and (2) by inserting after clause (ii) the follow- ing new clause: "(iii) in the case of an individual (not oth- erwise insured under clause (i)) who, by reason of section 216(iX3)(B)(ii), had a prior period of disability that began during a period before the quarter in which he or she attained age 31, not less than one-half of the quarters beginning after such -individual attained age 21 and ending with the quarter in which such month occurs are quarters of coverage, or (if the number of quarters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter are quarters of coverage;". (c) The amendments made by this section shall be effective with respect to applica- tions for disability insurance benefits under section 223 of the Social Security Act, and for disability determinations under section 216(1) of such Act, filed after the date of the enactment of this Act, except that no monthly benefits under title II of the Social Security Act shall be payable or increased by reason of the amendments made by this section for months before the month follow- ing the month of enactment of this Act. PROTECTION OF BENEFITS OF ILLEGITIMATE CHILDREN OF DISABLED BENEFICIARIES SEC. 334. (a) The last sentence of section 216(h)(3) of the Social Security Act is amended by striking out "subparagraph (A)(1)" and inserting in lieu thereof "subpar- agraphs (AM) and (B)(1)". (b) The amendment made by subsection (a) shall be effective on the date of the en- actment of this Act. ONE-MONTH RETROACTIVITY OF WIDOW'S AND WIDOWER'S INSURANCE BENEFITS SEC. 335. (a) Section 202(!)(4XB) of the Social Security Act is amended- (1) by redesignating clauses (ill) and (iv) as clauses (iv) and (v), respectively; and (2) by adding after clause (11) the follow- ing new clause: "(111) Subparagraph (A) does not apply to a benefit under subsection (e) or (f) for the month immediately preceding the month of application, if the insured individual died in that preceding month.". (b) The amendments made by subsection (a) shall apply with respect to survivors whose applications for monthly benefits are filed after the second month following the month in which this Act is enacted. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1038 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 1983 (2) by striking out "the 12-month period "(d)(1) For any particular month after nished to or on behalf of the family which commencing July 1 of the next year" In the March 1983, a State which is not treated as (as determined under regulations of the Sec- first sentence and inserting In lieu thereof meeting the requirements imposed by para- retary by such State agency as the chief ex- "the following calendar year"; and graph (4) of subsection (a) by reason of sub- ecutive officer of the State may designate) (3) by striking out "for such next year" In section (b) shall be treated as meeting such is based on need for such support and main- the second sentence and inserting in lieu requirements if and only if- tenance, including assistance received to thereof "for that following calendar year". "(A) the combined level of its supplemen- assist in meeting the costs of home energy (b)(1) Section 1839(c) of such Act is tary payments (to recipients of the type In- (including both heating and cooling), and amended- volved) and the amounts payable (to or on which". (A) by striking out "December of 1972 and behalf of such recipients) under section (c) The amendments made by this section of each year thereafter" in paragraphs (1), 1611(b) of this Act and section 211(a)(1)(A) shall be effective with respect to months (3), and (4) and inserting in lieu thereof of public Law 93-66, for that particular which begin after the month In which this "September of each year"; month, Act is enacted and end before October 1, (B) by striking out "for the 12-month is not less than- 1984. period commencing July 1 in the succeeding "(B) the combined level of its supplemen- year" in paragraphs (1), (3), and (4) and in. ry payments (to recipients of the type in- COMP OMPE S UNEMPLOYMENT serting in lieu thereof "for months in the taENSATION PROVISIONS following calendar year"; volved) and the amounts payable (to or on PART A-FEDERAL SUPPLEMENTAL (C) by striking out "such 12-month behalf of such recipients) under section COMPENSATION period" each place it appears in paragraphs 1611(b) of this Act and section 211(a)(1)(A) (1) and (4) and inserting In lieu thereof of Public law 93-66, for March 1983, in. SEC. 501. EXTENSION OF PROGRAM. "such calendar year"; creased by the amount of all cost-of-living Paragraph (2) of section 602(f) of the Fed- (D) by striking out "that 12-month adjustments under section 1617 (and any eral Supplemental Compensation Act of period" in paragraph (3)(A) and inserting in other benefit increases under this title) 1982 is amended by striking out "March 31, lieu thereof "that calendar year"; which have occurred after March 1983 and 1983" and Inserting in lieu thereof "Septem- (E) by striking out "May 1 of the year" in before that particular month. ber 30, 1983". paragraph (3)(B) and inserting in lieu there- "(2) In determining the amount of any in- SEC. 502. NUMBER OF WEEKS FOR WHICH COMPEN- of "November 1 of the year before the crease in the combined level involved under SATION PAYABLE. year"; and paragraph (1)(B) of this subsection, any (a) GENERAL RULE.--Subsection (e) of sec- (F) by striking out "following May" in portion of such amount which would other- tion 602 of the Federal Supplemental Com- paragraph (3)(B) and inserting in lieu there- wise be attributable to the increase under pensation Act of 1982 is amended by redes- of "following November". section 1617(c) shall be deemed instead to ignating paragraph (3) as paragraph (4) and (2) Section 1839(g) of such Act is amend- be equal to the amount of the cost-of-living by striking out paragraph (2) and inserting ed- adjustment which would have occurred in in lieu thereof the following new para- (A) by striking out "June 1983" in pare- July 1983 (without regard to the 8-percent graphs: graph (1) and inserting in lieu thereof "De. limitation contained in section 215(i)(1)(B)) "(2)(A) In the case of any account from cember 1983", and if section 111 of the Social Security Act which Federal supplemental compensation (B) by striking out "July 1985" and insert- Amendments of 1983 had not been en- was first payable to an individual for a week ing in lieu thereof "January 1986" each acted.". beginning after March 31, 1983, the amount place it appears. SSI ELIGIBILITY FOR TEMPORARY RESIDENTS OF established In Such account shall be equal to (d) The amendments made by this section EMERGENCY SHELTERS FOR THE HOMELESS the lesser of- shall apply to premiums for months begin- SEC. 403. (a) Section 1611(e)(1) of the "(1) 65 per centum of the total amount of ning with January 1984, and for months Social Security Act is amended- regular compensation (including depend- after June 1983 and before January 1984- (1) by striking out "subparagraph (B) and ents' allowances) payable to the individual (1) the monthly premiums under part A (C)" in subparagraph (A) and inserting in with respect to the benefit year (as deter- and under part B of title XVIII of the lieu thereof "subparagraphs (B), (C), and mined under the State law) on the basis of Social Security Act for individuals enrolled (D)"; and which he most recently received regular under each respective part shall be the (2) by adding at the end thereof the fol- compensation, or monthly premium under that part for the lowing new subparagraph: "(ii) the applicable limit determined under month of June 1983, and "(D) A person may be an eligible individu- the following table times his average weekly (2) the amount of the Government contri- al or eligible spouse for purposes of this title benefit amount for his benefit year. butions under section 1844(a)(1) of such Act with respect to any month throughout shall be computed on the basis of the actu- which he is a resident of a public emergency "In the case of weeks The applicable limit is: arially adequate rate which would have during a: been in effect under part B of title XVIII of lations shelter for which the shall be homeless ( prescribed by defined in See- 6-percent period ..................................... 14 the Sec- such Act for such months without regard to 5-percent period ..................................... 13 the amendments made by this section, but eligible retary); except individual that or r person shall be an 4.5-percent period .................................. 11 using the amount of the premium in effect reason of this eligible spouse esubparagraph more than an 3.5-percent period .................................. 10 for the month of June 1983. three months In any 12-month period.". Low-unemployment period .................. 8 TITLE IV-SUPPLEMENTAL SECURITY (b) The amendments made by subsection "(B) In the case of any account from INCOME BENEFITS (a) shall be effective with respect to months which Federal supplemental compensation INCREASE IN FEDERAL SSI BENEFIT STANDARD after the month in which this Act is en- was payable to an individual for a week be- SEC. 401. (a) Section 1617 of the Social Se- acted. ginning before April 1, 1983, the amount es- curity Act is amended by adding at the end DISREGARDING OF EMERGENCY AND OTHER IN- tablished in such account shall be equal to thereof the following new subsection: KIND ASSISTANCE PROVIDED BY NONPROFIT the lesser of the subparagraph (A) entitle- "(c) Effective July 1, 1983- ORGANIZATIONS ment or the sum of- "(1) each of the dollar amounts in effect SEC. 404. (a) Section 1612(b)(13) of the "(I) the subparagraph (A) entitlement re- under subsections (aXl)(A) and (b)(1) of Social Security Act is amended by striking duced (but not below zero) by the aggregate section 1611, as previously increased under out "any assistance received" and all that amount of Federal supplemental compensa- this section, shall be increased by $20 (and follows down through "(B)" and inserting In tion paid to such individual for weeks begin- the dollar amount in effect under subsec- lieu thereof the following: "any support or ning before April 1, 1983, plus tion (aX1XA) of Public Law 93-66, as previ- maintenance assistance furnished to or on "(ii) such individual's additional entitle- ously so Increased, shall be increased by behalf of such individual (and spouse if any) ment. $10); and - which (as determined under regulations of "(C) For purposes of subparagraph (B) "(2) each of the dollar amounts in effect the Secretary by such State agency as the and this subparagraph- under subsections (a)(2)(A) and (b)(2) of chief executive officer of the State may des- "(I) The term 'subparagraph (A) entitle- section 1611, as previously increased under ignate) is based on need for such support or ment' means the amount which would have this section, shall be increased by $30.". maintenance, including assistance received been established in-'the account If subpara- (b) Section 1617(b) of such Act is amended to assist in meeting the costs of home graph (A) had applied to such account. by striking out "this section" and inserting energy (including both heating and cooling), "(ii) The term 'additional entitlement' in lieu thereof "subsection (a) of this sec- and which". - means the lesser of- tion". (b) Section 402(a)(36) of such Act is "(I) three-fourths of the subparagraph ADJUSTMENTS IN FEDERAL SSI PASS-THROUGH amended by striking out "shall not include (A) entitlement, or PROVISIONS as Income" and all that follows down "(II) the applicable limit determined Sac. 402. Section 1618 of the Social Secu- through "(B)" and inserting in lieu thereof under the following table times the individ- rity Act Is amended by adding at the end the following: "shall not include as income ual's average weekly benefit amount for his thereof the following new subsection: any support or maintenance assistance fur- benefit year. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1040 CONGRESSIONAL RECORD - HOUSE March 9, 1989 (5) by inserting "and subsection (d) and except as provided in subsection (e)" in paragraph (3)(B) after "subparagraph (A)"; (6) by Inserting-"or fiscal year" after "cost reporting period" each place it appears in paragraph (3)(B); (7) by inserting "before the beginning of the period or year" In paragraph (3)(B) after "estimated by the Secretary"; and (8) by striking out "exceeds" in paragraph (3XB) and inserting in lieu thereof "will exceed". (cXI) Subsection (c)(1) of such section is amended- (A) by striking out "and" at the end of subparagraph (B), (B) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof ' ; and", and (C) by adding at the end the following: "(D) the Secretary determines that the system will not preclude an eligible organi- zation (as defined in section 1876(b)) from negotiating directly with hospitals with re- spect to the organization's rate of payment for inpatient hospital services. The Secretary cannot deny the application of a State under this subsection on the ground that the State's hospital reimburse- ment control system is based on a payment methodology other than on the basis of a di- agnosis-related group or on the ground that the amount of payments made under this title under such system must be less than the amount of payments which would oth- erwise have been made under this title not using such system. If the Secretary provides that the assurances described in subpara- graph (C) are based on maintaining pay- ment amounts at no more than a specified percentage increase above the payment amounts in a base period, the State has the option of applying such teat (for inpatient hospital services under part A) on an aggre- gate payment basis or on the basis of the amount of payment per inpatient discharge or admission. If the Secretary provides that the assurances described in subparagraph (C) are based on maintaining aggregate pay- ment amounts below a national average per- centage increase in total payments under part A for inpatient hospital services, the Secretary cannot deny the application of a ? State under this subsection on the ground that the State's rate of increase in such pay- ments for such services must be less than such national average rate of increase."; (2) Subsection (c)(3) of such section is amended- (A) by striking out "requirement of para- graph l1XA)" and inserting in lieu thereof "requirements of subparagraphs (A) and (D) of Paragraph (1) and, if applicable, the re- quirements of paragrapIr (5),", and (B) by inserting "(or, if applicable, in paragraph (5))" in subparagraph (B) after "paragraph (1)". (3) Subsection (c) of such section is fur- ther amended by adding at the end the fol- lowing new paragraphs: "(4) The Secretary shall approve the re- quest of a State under paragraph (1) with respect to a hospital reimbursement control system if- "(A) the requirements of subparagraphs (A), (B), (C), and (D) of paragraph (1) have been met with respect to the system, and "(B) with respect to that system a waiver of certain requirements of title XVIII of the Social Security Act has been approved on or before (and which Is in effect as of) the date of the enactment of the Social Security Act Amendments of 1983, pursuant to section 402(a) of the Social Security Amendments of 1967 or section 222(a) of the Social Secu- rity Amendments of 1972. "(5) The Secretary shall approve the re- quest of a State under paragraph (1) with respect to a hospital reimbursement control system if- "(A) the requirements of subparagraphs (A), (B), (C), and (D) of paragraph (1) have been met with respect to the system; "(B) the Secretary determines that the system- "(I) is operated directly by the State or by an entity designated pursuant to State law, "(ii) provides for payment of hospitals covered under the system under a method- ology (which sets forth exceptions and ad- justments, as well as any method for changes in the methodology) by which rates or amounts to be paid for hospital services during a specified period are established under the system prior to the defined rate period, and "(iii) hospitals covered under the system will make such reports (in lieu of cost and other reports, identified by the Secretary, otherwise required under this title) as the Secretary may require in order to properly monitor assurances provided under this sub- section; "(C) the State has provided the Secretary with satisfactory assurances that operation of the system will not result in any change in hospital admission practices which result hn- "(i) a significant reduction in the propor- tion of patients (receiving hospital services covered under the system) who have no third-party coverage and who are unable to pay for hospital services, "(ii) a significant reduction in this propor- tion of Individuals admitted to hospitals for inpatient hospital services for which pay- ment is (or is likely to be) less than the an- ticipated charges for or costa of such serv- ices, "(iii) the refusal to admit patients who would be expected to require unusually costly or prolonged treatment for reasons other than those related to the appropriate- ness of the care available at the hospital, or "(iv) the refusal to provide emergency services to any person who is in need of emergency services it the hospital provides such services; "(D) any change by the State in the system which has the effect of materially reducing payments to hospitals can only take effect upon 60 days notice to the Secre- tary and to the hospitals the payment to which is likely to be materially affected by the change; and . "(E) the State has provided the Secretary with satisfactory assurances that in the de- velopment of the system the State has con- sulted with local governmental officials con- cerning the impact of the system on public hospitals. The Secretary shall ,respond to requests of States under this paragraph within 60 days of the date the request is submitted to the Secretary.". (d) Subsection (d) of such section, as added by section 110 of the Tax Equity and Fiscal Responsibility Act of 1982, is amend- ed- (1) by striking out "section 1814(b)" in paragraph (2)(A) and inserting in lieu there- of "subsection (b)", and (2) by redesignating the subsection as sub- section (j) and transferring and inserting such subsection at the end of section 1814 of the Social Security Act under the following heading: "Elimination of Lesser-of-Cost-or-Charges Provision". (e) Such section 1886 is further amended by adding at the end the following new sub- sections: "(d)(1)(A) Notwithstanding section 1814(b) but subject to the provisions of sec- tion 1813, the amount of the payment with respect to the operating costs of inpatient hospital services (as defined in subsection (a)(4)) of a subsection (d) hospital (as de- fined in subparagraph (B)) for inpatient hospital discharges in a cost reporting period or in a fiscal year- "(1) beginning on or after October 1, 1983, and before October 1, 1986, is equal to the sum of- "(I) the target percentage (as defined in subparagraph (C)) of the lesser of the hos- pital's target amount for the cost reporting period (as defined in subsection (b)(3XA)), or the limitation established under subsec- tion (a) (determined without regard to para- graph (2) thereof) for the period, and "(II) the DRG percentage (as defined in subparagraph (C)) of the adjusted DRG prospective payment rate determined under paragraph (2) or (3) for such discharges; or "01) beginning on or after October 1, 1986, is equal to the adjusted DRG prospective payment rate determined under paragraph (3) for such discharges. "(B) As used in this section, the term 'sub- section (d) hospital' means a hospital locat- ed in one of the fifty States or the District of Columbia other than- "(I) a psychiatric hospital (as defined in section 1861(f)), "(ii) a rehabilitation hospital (as defined by the Secretary), "(iii) a hospital whose inpatients are pre- dominantly individuals under 18 years of age, or "(iv) a hospital which has an average inpa- tient length of stay (as determined by the Secretary) of greater than 25 days; and, upon request of a hospital and in ac- cordance with regulations of the Secretary, does not include a psychiatric or rehabilita- tion unit of the hospital which is a distinct part of the hospital (as defined by the Sec- retary). "(C) For purposes of this subsection, for cost reporting periods beginning, or dis- charges occurring- ,,(I) on or after October 1, 1963, and before October 1, 1984, the 'target percentage' is 75 percent and the 'DRG percentage' is 25 per- cent; "(ii) on or after October 1, 1984, and before October 1, 1985, the 'target percent- age' is 50 percent and the 'DRG percentage' is 50 percent; and "(iii) on or after October 1, 1985, and before October 1, 1986, the 'target percent- age' is 25 percent and the 'DRG percentage' is 75 percent. "(2) The Secretary shall determine an ad- justed DRG prospective payment rate, for each inpatient hospital discharge in fiscal year 1984 involving inpatient- hospital serv- ices of a subsection (d) hospital (located in an urban or rural area within a census divi- sion) for which payment may be made under part A of this title, as folk ws: "(A) DETERMINING ALLOWABLE INDIVIDUAL HOSPITAL COSTS FOR BASE PERIOD.-The Secre- tary shall determine the allowable operat- ing costs of inpatient hospital services for the hospital for the most recent cost report- ing period for which data are available. "(B) UPDATING FOR FISCAL YEAR 1981.-The Secretary shall update each amount deter- mined under subparagraph (A) for fiscal year 1984 by- (I) updating for fiscal year 1983 by the estimated average rate of change of hospital costs industry-wide between the cost report- ing period used under such subparagraph and fiscal year 1983, and "(ii) projecting for fiscal year 1984 by the applicable percentage increase (as defined in subsection (b)(3XB)) for fiscal year 1984. "(C) STANDARDIZING AMOUNTS.-The Secre- tary shall standardize the amount updated Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1044 CONGRESSIONAL RECORD HOUSE March 9, 1988 bill for such services independent of the "(E) with respect to an individual who at- tions of the changes made by this section in hospital payment. tams early retirement age after December retirement age in the case of those Individ- (b) The Secretary shall make an appropri- 31, 2021, 67 years of age. uals (affected by such changes) who, be- ate reduction in the payment amount under "(2) The term 'early retirement age' cause they are engaged in physically de- section 1886(d) of the Social Security Act means age 62 In the case of an old-age, manding employment or because they are (as amended by this title) for any discharge, wife's, or husband's insurance benefit, and unable to extend their working careers for if the admission has occurred before a hos- age 60 In the case of a widow's or widower's health reasons, may not benefit from im- pital's first cost reporting period that begins insurance benefit. provements in longevity. The Secretary after. September 1983, to take into account "(3) The age increase factor for any indi- shall submit to the Congress no later than amounts payable under title XVIII of that vidual who attains early retirement age In a January 1, 1986, a full report on the study Act (as in effect before the date of the en- calendar year within the period to which and analysis. Such report shall include any actment of this Act) for items and services subparagraph (B) or (D) of paragraph (1) recommendations for legislative changes, in- furnished before that period. applies shall be determined as follows: eluding recommendations with respect to (OXi) The Secretary shall cause to be pub- "(A) With respect to an individual who at- the provision of protection against the risks lashed in the Federal Register a notice of tains early retirement age in the 5-year associated with early retirement due to the interim final DRO prospective payment period consisting of the calendar years 2000 health considerations, which the Secretary rates established under subsection (d) of through 2004, the age increase factor shall finds necessary or desirable as a result of section 1886 of the Social Security Act (as be equal to two-twelfths of the number of the findings contained in this study. amended by this title) no later than Sep- months in the period beginning with Janu- Mr. PICKLE (during the reading). tember 1, 1983. and allow for a period of ary 2000 and ending with December of the,. Chairman. I ask unanimous Con- public comment thereon. The DRO prospec- year in which the individual attains early Mr. the amendment unanimous as tive payment rates shall become effective on retirement age. sent October 1, 1983, without the necessity for "(B) With respect to an individual who at- read and printed in the REcoRD. consideration of comments received, but the tains early retirement age in the 5-year The CHAIRMAN. Is there objection Secretary shall, by notice published in the period consisting of the calendar years 2017 to the request of the gentleman from Federal Register, affirm or modify the through 2021, the age increase factor shall Texas? amounts by December 31, 1983, after consid- be equal to two-twelfths of the number of There was no objection. ering those comments. months in the period beginning with Janu- Chair- (2) Mr. ROSTENKOWSKI. Mr. Chair- A modification under paragraph (1) ary 2017 and ending with December of the that reduces a DRO prospective payment year in which the individual attains early man. pursuant to the rule, I designate rate shall apply only to discharges occurring retirement age.". the gentleman from Massachusetts after 30 days after the date the notice of (bXl) Section b02(gX9) of such Act is (Mr. SIrANNoN) a member of the com- the modification is published in the Federal amended to read as follows: mittee. to control the time in opposi- Register. "(9) The reduction factors for early retire- tion to the Pickle amendment. (3) Rules to implement subsection (d) of ment specified in paragraph (1) shall be pe- The CHAIRMAN. Pursuant to section 1886 of the Social Security Act (as riodically revised by the Secretary so that- so amended) shall, and exceptions, adjust- "(A) in the case of old-age insurance bene- House Resolution 126, the gentleman ments, or additional payment amounts fits, wife's insurance benefits, and husband's from Texas (Mr. Plcxi.E) will be recog- under paragraph (5) of such. subsection insurance benefits, the reduction factors ap. nized for 1 hour, and the gentleman may, be established In accordance with the plicable to an individual initially becoming from Massachusetts (Mr. SI ANNON) procedure described in this subsection. entitled to such benefits at an age not more will be recognized for 1 hour. The CHAIRMAN. Are there any than 3 years less than the retirement age The Chair recognizes the gentleman committee amen applicable to such Individual will be the from Texas (Mr. PICKLE). mar. WSffi.,Th=L_80 same as those specified in paragraph (1), Mr. PICKLE. Mr. Chairman, I yield ::~ c!emmi .taa mendment , Chair- and the reduction factors for each month such time as he may consume to the below the age which is 3 years lower than AMEEDMEr1T 0"nMED BY ]nC=X the applicable retirement age shall each be gentleman from Iowa (Mr. BEDELL). CKLE. Mr. Chairman, I offer five-twelfths of 1 percent; and (Mr. BEDELL asked and was given M(B) In the case of widow's insurance permission to revise and extend his re- an r. amendment. " benefits and widower's insurance benefits, marks.) The Clerk read as follows: the reduction factors applicable to an indi- Mr. BEDELL. Mr. Chairman, I rise Amendment offered by Mr. PICKLr Strike vidual initially becoming entitled to such in support ort of H.R. 1900, the Social See- out sections 201 and 202 (beginning on page benefits at early retirement age shall be the Amendments of 1983. Al- Insert line 9, and ending on page 86. line 8) and same as those specified in paragraph (1). Curity Act insert in lieu thereof the following new no- and the reduction factors applicable to indi- though I do not support each and tion (with a conforming amendment to the viduals initially becoming entitled to such every individual provision in this bill, I table of contents): benefits at a greater age shall each be estab- do feel that as a whole the agreement INCREAas nx arrIRE AGE lashed by linear Interpolation between the reached represents a shared sacrifice Sac. 201. (a) Section 218 of the Social Se- applicable reduction factor for such early between those who are presently re- curity Act Is amended by adding at the end retirement age and a factor of unity at the tired and those in the work force- thereof the following new subsection: applicable retirement age." both of which have so much at stake "RETIRSL13N'r AGE (2) Section 202(q)(1) of such Act is amend- the strength of the social security ed by striking out "If" and inserting in lieu "(1X1) The term 'retirement age' means- thereof "Subject to paragraph (9), if,,. system. "(A) with respect to an individual who at- (c) Title II of the Social Security Act Is Judging from the hundreds of let- tains early retirement age (as defined in further amended- ters, phone calls, and appeals raised paragraph (2)) before January 1, 2000, 65 (1) by striking out "age 65" or "age of 65". repeatedly across my congressional years of age: as the case may be, each place it appears in district, it is quite apparent that no "(B) with respect to an individual who at- the following sections and inserting in lieu other issue has alarmed so many talus early retirement age after December thereof in each instance "retirement age (as Americans and caused alarmed so aany 31, 1999, and before January 1. 2005, 65 defined in section 216(1))": years of age plus the number of months in (A) subsections (a), (b), (c), (d), (e), (f), (q). ety as the future of social security. Di- the age increase factor (as determined (r), and (w) of section 202, rectly or indirectly, social security under paragraph (3)) for the calendar year (B) subsections (c) and (f) of section 203, touches the lives of almost every in which such individual attains early retire- (C) subsections (f) of section 215, American. There is no question that it ment age; (D) subsections (h) and (I) of section 216. is the central feature of the way "(C) with respect to an individual who at- and Americans plan their financial futures. tams early retirement age after December (E) sections 223(a); 31. 2004, and before January 1. 2017, 66 (2) by striking out "age sixty-five" In sec- That security must be restored and years of age Lion 203(c) and inserting in lieu thereof "re- preserved. "(D) with respect to an Individual who at- tirement age (as defined in section 216(1))"; I want to commend the National tains early retirement age after December and Commission on Social Security for its 31, 2016, and before January 1. 2022, 66 (3) by striking out "age of sixty-five" in deliberations on this important matter years of age plus the number of months in section 223(a) and inserting in lieu thereof and for putting forth a consensus the age increase factor (as determined "retirement age (as defined in section package of recommendations designed under paragraph (3)) for the calendar year - 216(1))". the implies- - s lems land the system's short-range which such individual attains early retire- ensive stuuddy Secretary of its longer term prob- and analysis conduct ment age; and h Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1046 CONGRESSIONAL RECORD - HOUSE recognize this fact and increase the re- tirement age correspondingly. Only those persons 46 years of age or less will be affected by the increase to age 66, and those 19 or less by the increase to age 67. This is not an unreasonable burden to ask ? current generations which can expect to live longer than any other generation in our Nation's history. I might also point out that the origi- nal retirement age of 65 was estab- lished in 1936. It has never in the pro- gram's history been changed to reflect increased longevity. I wish also to re- state that this long-term funding pro- posal will not affect anybody currently over the age of 46. I am also supporting the Pickle amendment because it would supplant the long-term financing committee compromise to cut benefits slightly in the year 2000 and further increase em- ployer/employee taxes in the year 2010. I believe that acceleration of taxes in the short-term is enough of a tax increase and that a further in- crease in taxes for long-term financ- ing, albeit less than 0.6 percent, is ex- cessive and a double burden on those already expected to pay accelerated social security taxes in the next sever- al years. In conclusion, Mr. Chairman, I heartily endorse the social security compromise plan with the Pickle amendment phasing in increased re- tirement ages. I believe this is a fair and responsible effort which will shore up social security for the indefinite future an restore our citizen's confi- dence in what has been a most success- ful, if often maligned, retirement pro- gram. Mr. PICKLE. Mr. Chairman, I yield such time as he may consume to the gentleman from Georgia (Mr. Row- LAND). (Mr. ROWLAND asked and was given permission to revise and extend his remarks.) Mr. ROWLAND. Mr. Chairman, I commend the members of the Com- mittee on Ways and Means for their diligence in seeing that an acceptable social security financing package was brought before the House in a timely fashion. We are all aware of the severe time constraints involved with implement- ing H.R. 1900, and I know that every person in this Chamber will sleep a little easier tonight, knowing that the retirement checks to social security re- cipients will not be delayed. Before us today, we have a compro- mise package. The gentleman from Florida (Mr. YouNo) commented earli- er that it must be a fair bill because each person with whom he met had a complaint about it. Under closer observation, it is appar- ent that we have before us not a bill which satisfies a majority of the popu- lace, but a bill that has generated an equal level of opposition from almost all factions. In fact, I would be hard pressed to find any two people with different occupations that would reject the same provision of this bill. The composition of this legislation has successfully fractionalized all interest- ed parties. There has been no coalition of opposition, because there is no con- sensus of disagreement. A flawless strategy, I must admit. The Federal employees have op- posed extended social security cover- age for new hires. And with good reason. They have been given no guar- antees that, the retirement system, which is their future, will be solvent. Those self-employed workers who make up a large component of our labor force will be taxed as if each one is really two complete taxpayers. And the elderly of this land are con- vinced that their incomes will not keep up with inflation if a delay in the COLA is enacted. Then of course, there are the oppos- ing factions on how to solve the re- maining long-term financing prob- lem-whether to increase employee taxes or reduce benefits to retirees. But we had plenty of time to come to terms with all of these provisions. The passage of H.R. 1900 is inevitable. However. I am concerned that we might be taking advantage of this new found momentum by arbitrarily at- taching other legislation to it, assured of its passage. There is no doubt that we must stop the escalating cost of health care, but this bill may not be the proper mecha- nism for making sweeping changes to the medicare payment plan. While the medical industry did not present any major obstacle to the in- clusion of the prospective payment plan, we must remember the alterna- tive plan for payment contained in the Tax Equity and Fiscal Responsibility Act of 1982 would have a more adverse affect on health care providers. This is merely the more attractive choice. I implore you not to mistake my in- tentions. I sincerely hope this plan will equitably reduce health care cost. The concept of prospective payments is reasonable, but the potential of this plan is only as good as the provisions which were hurriedly assembled during the last few months of the 97th Congress. History can at times provide us with clues to the future. Nearly a decade ago, a nationwide network of health agencies was created for the purpose of lowering hospital costs. Some of us who were professionally involved with the health care systems felt the legis- lation was too hastily conceived and ill-advised. In November of 1975, I tes- tified against a measure before the House Ways and Means Committee, and subsequently those remarks ap- peared in the CONGRESSIONAL REcoan. When I read back over those re- marks, I realize we were absolutely right about one point. Regardless of whether we were right or wrong on the merits of the issue, it would have been far more prudent to study the proposed program thoroughly before March 9, 1983 risking hundreds of millions of dollars on something that might not work the way it was designed. Today we are phasing out those agencies. After spending up to $157.7 million a year on this program, fund- ing was decreased to about $56 million for the past 2 fiscal years. The goal was a worthy one, but the health agencies did not work out the way they were planned. Now, we are again confronted by a proposed program to deal with health care costs that has been rather hastily developed. And at this stage, there is no conclusive evidence to verify the cost effectiveness of this plan. I realize my arguments in this matter will not change the outcome of this legislation. In spite of all my res- ervations, this bill is the only option available. While this $185.3 billion package may temporarily ease the social security financing crisis, I have serious doubts about the long-term fi- nancial integrity of the system. However, I will support this package because I have a responsibility to the 36 million retirees who are facing a bankrupt social security retirement program. To not expeditiously pass legislation to stabilize the social secu- rity system would be irresponsible and inexcusable to the millions who depend on their checks to survive. But to pass this bill without ac- knowledging that it does not have the overwhelming support of my constitu- ency would be deceptive. Mr. PICKLE. Mr. Chairman, I yield myself 15 minutes. (Mr. PICKLE asked and was given permission to revise and extend his re- marks.) Mr. PICKLE. Mr. Chairman, we have reached the point now in the consideration of our social security reform bill where the House will be asked to work its will to determine what route we take to correct the long-term deficit of 0.68 percent of payroll. Two amendments have been made in order, and I present the amendment that, in effect, would raise the normal retirement age in the future, starting at the year 2000 and completing in the year 2027. First, I think it would be best if I would state to the Members what my amendment does. The amendment I have offered raises the normal retirement age in two steps. First it raises the normal retirement age to 66 by increasing the age for full benefits by 2 months per year for 6 years, so that the proposal would be fully effective beginning with those at- taining the age 66 in the year 2009. In other words, the change in age would not be fully completed for some 26 years. The phase-in would begin at age 62. We retain that 82 level of early retire- ment. It saves 0.42 percent of taxable payroll. Keep in mind that we must save or raise 0.68. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9, 1988 CONGRESSIONAL. -RECORD -HOUSE H 1047 The second stage does this: It raises the normal retirement- age from 66 to 67 by increasing the age for full bene- fits by 2 months a year for 6 years so that the proposal would be fully effec- tive beginning with those attaining the age 67 in the year 2027. The phase-in would begin with those at age 62 which commenced in 2017. This second step, saves 0.26 percent of payroll. Another part of the amendment is that the age 62 benefits would be maintained at an ultimate rate of 70 percent of full benefits fully effective after the age for full retirement is changed to 67. There will be no changes made in medicare or SSI. And last, the amendment requires the Sec- retary, by January 1, 1986, to conduct and submit with recommendations to Congress a comprehensive study and analysis of the implications of the change in retirement age for those in- dividuals affected by this change who, because they are engaged in physically demanding employment, or because they are unable to extend their work- ing careers for health reasons, may not benefit from improvements in lon- gevity. Now, let me repeat, would raise the retirement age way in the future by raising it 2 months per year starting in the year 2000. The first stage would be completed by the year 2009. In other words, with 17 years in this century and 9 years later, it would not be fully effective for some 26 years in the future. 01400 Thus anybody 45 years or above would not be affected by this amend- ment. The second part of the amendment raises the age from 66 to 67, and that does not start until 2017 and it is not made fully effective until the year 2027. Now with the 17 years in this century and the 27 years that would mean 44 years. Thus, my second stage would affect a very small . percent of the present workforce. Now why should the Congress take this step and why should the Congress take this step in 1983? Let me mention some of the points that I think should be made today. First, the social security program faces a long-term deficit after the turn of the century that is largely demo- graphic in nature. Now Members ought to remember that, it is substan- tial. The deficit is over 28 percent of program costs in the outyears and it begins sooner than most of us think, as income to the trust funds will begin to fall below the outgo somewhere in the years 2010 to 2015. Not, Mr. Chairman, this shortage is a demographic shortfall. Overall pro- gram costs will remain fairly steady as a percent of GNP. This long-time defi- cit arises in spite-now in spite=of the projection of real wage growth of 1.5 percent, of low unemployment of 5.5 percent, of low inflation of 4 percent, and an increase in the birth rate over current levels. The trustees of the social security program are very clear about the reason for this deficit, and I hope the Members listen to this point: This is the reason they cite for the deficit: The number of beneficiaries will be in- creasing faster than the number of workers; ? it is demographic and we should remember that. - Now, while we cannot forecast with total accuracy, we would have to have very, very substantial changes in these projections to eliminate the deficit in the outyears. Moreover, our young people know that this problem exists. They know that there are problems in the program which exist, and they will not have confidence in . the system unless they see a solution enacted which addresses this four-square. Second, the demographic impact on the social security trust funds comes not just from baby booms or from a drop in fertility rates. Longevity has increased dramatically in this century, with most of the increases in the last half occurring among the adult popu- lation and not through lower infant mortality or other factors. More people are living longer, and these in- creases have occurred already across the board among men and women and among all races. The gentleman from Illinois (Mr. Mrcxar.) made the point very well that life expectancy has increased over 10 years in recent times, and we must take that into account as we consider the demographics of our program. Three, the combination of demo. graphic circumstances facing us means that an increase in the retirement age is inevitable. This Congress has al- ready gone on record many times fighting age discrimination in employ. ment. Once the baby boom is fully adult there will be a slowdown in the growth of the labor force, and it will become even more important to en- courage individuals to work longer in order to maintain overall national growth. Given the Inevitability, and I say it is the inevitability, the only fair route, the only reasonable, responsible route, is to make the change-now so that in- dividuals have full notice of what to expect. Now four. Mr. Chairman, any meas- ure which seeks to address the long- term needs of social security are going to make some changes that have unfa- vorable side effects. Raising taxes hits hardest on the low income and conse. quently on minorities and women, who are often lower paid. Raising taxes causes inflation. It hurts the little worker more than anything that we could do. Reducing the growth of benefits. by any measure or any formu- la also cuts benefits which hit these same groups Just as hard. Only by rais- ing the age are we making it clear that we want individuals who can to stay in the work force longer. And it they do that then they will suffer no reduc- tion. My colleagues are going to hear arguments .later that our people who retire early will have to suffer from a reduction in their benefits and they will impart to you the harshness of that. I want to challenge those figures, but I want to say to my colleagues at the very beginning, those people who stay on the work force will not suffer reductions ? and thus that will not apply. The responsibility of the Congress here today is to look down the road. We can sit here and continue to out benefits and raise taxes, or we recog- nize the future and make the kind of change that will rekindle the confi- dence in this program by shaping it to what the future holds down the road. Now, Mr. Chairman, there is nothing sacrosanct about the age 65. I think we would probably all agree it was a proper age when it was started back in 1935. But it does not mean that auto- matically you can never'tamper with it or change that age. The social security program already offers benefits at dif- ferent ages. Those alternatives and those options are available now. Right now, today, our program offers bene- fits without any test ' of retirement after age 70. Second, it offers retirement benefits at many different levels between the ages of 62 and 70. Third, if offers benefits to. widows and widowers at age 60. And fourth, it offers benefit to disabled at any time. Those are options available now. Now, Mr. Chairman, my amendment does not change any of those options and the argument that we would take that away is just not a valid argument. All these benefits be continued to be offered. The difference is that we are' slightly altering the amount so that those who do stay in the work force longer will receive no reduction whatsoever. And that is a key factor. And we are seeking the concrete infor- mation we need to continue to provide the kind of protection appropriate for anyone who cannot stay in the work force longer. We put in the amendment. which has the support of the administration, that we are going to require the Secre- tary of HHS to submit to the Congress within 3 years an analysis and a plan to put into effect to recognize those people who have any kind of occupa- tional disability so if they cannot profit by longevity they can at least retire. For instance, a coal miner in West Virginia might certainly qualify. and we want to take that into considera- tion. Or any manual type of labor that shows that individual's'' body might be unable to perform at age 62. Mr. Chairman, we do not have the option of not making changes, the House must - make changes. The former National Commission on Social Security recommended praising the age. The President's Commission on' Pen- sion Policy recommended raiq[ng the Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1048 CONGRESSIONAL RECORD - HOUSE age. A majority of the most recent Na- tional Commission an Social Security Reform recommended raising the age. A clear majority of the Ways and Means Committee, both Democrat and Republican, have recommended rais- ing the age. This is not a partisan matter. It is not a Republican or Democratic matter. I would remind the House that I am the one who started the proposal of raising the age and I did that over 2 years ago. And as a Democrat I want to make it plain that we are not playing politics; we are not being partisan at this point. Now then there may be a temptation to vote on no amendments because some may view that as a safe route. But let me tell my colleagues, the only way to play it safe In to do the right thing and that is to raise this age pro- spectively in the future. We must re- store confidence In this program. We must go about it in the cleanest and the clearest way possible. We must tell the people plainly that we are meeting the needs of the future. And we must give them notice of what is going to come about. Their confidence will depend In great measure an how we handle this long-term deficit The bill we brought before you makes many changes and it does solve two-thirds of the long-term deficit. Now, Mr. Chairman, we must choose which route will we take. Your choices are simple. You can vote for the meas- ure that is in the bill that reduces benefits and raises taxes. Or, you can vote for the Pepper amendment that raises taxes entirely. Or, you can go the Pickle route which raises age in the future and does not raise taxes. I think my proposal Is the preferable one. It is the time to do it. 01450 I conclude by saying this to you. This Congress, whenever we get into difficulty with social security, is going to do whatever is necessary. Mr. Chair- men, we know that If we are asked to raise taxes or to cut benefits, we will do that. We will measure up, I think, in some respects; but we may not have a chance In this lifetime to do the re- sponsible thing about raising the age, and raising that age is absolutely in- evitable. Now Is the time. If we miss this chance, we will end up in the future just raising taxes. I do not think the American people want that or will stand for it. I hope my party does not stand for it. I hope the majority of this House will recognize that we ought to in- crease the age as we have outlined, and I earnestly solicit your support on this amerximent Mr. SHANNON. Mr. Chairman. I yield such time as he may consume to the gentleman from New Mexico (Mr. RICHARDSMS). (Mr. RICHARDSON asked and was given permission to revise and extend his Mr. RMBAFJ)SOK. Mr. Chairman, I Strongly oppose Congressman Pecs- La's proposed amendment to H.R. 1900, the Social Security Act Amend- ments of 1983, which would increase the age at which a person could retire with full benefits, from age 65 to 67. The hard, cold fact is, this amendment calls for a cut in benefits for future re- tirees. Although supporters of the Pickle amendment claim that it is only logical to increase the retirement age due to the increased life expectancy of the average American, they Ignore some important facts. Longer life does not necessarily mean better health during later years. Due to rising costs of health care, the health of the elderly may actually worsen. Raising the retirement age would devastate those individuals who are unable to work beyond age 65 due to a lifetime of work in hard physical jobs. Additionally, it Is the blue collar worker who already receives the small- est benefit. To further reduce their benefits would be unconscionable. A worker who had lost his job or is unable to work beyond age 65 due to poor health, will be extremely unlikely to find employment at an advanced age. This amendment would also have an extremely adverse effect on women and minorities. Although women are living longer, their disability rates are on the rise. Older women would find it especially difficult to find employment due to the double burden of sex and age discrimination. Minorities account for 60 percent of the population of my district In New Mexico. An unfortunate fact is that minorities have a substantially shorter life expectancy than other Americans do. In essence, this amendment asks minorities to pay into the social secu- rity system their entire life, with the likelihood that they may never receive benefits. Mr. Chairman, I urge you and the Members of this body to vote against the Pickle amendment as a violation of the promises that have been made to the American public. Let us make sure that Americans will be able to retire with security and dignity at a reasonable age. Although Congress- man Pspraa's amendment will require a small tax Increase in the year 2020 should the economy remain weak, it is a compassionate alternative to the Pickle anent for solving the long-term deficit of social security. Mr. SHANNON. Mr. Chairman, I yield myself such time as I shall use. Mr. Chairman, I rise today in strong opposition to the Pickle amendment. The Idea of increasing the retire- ment age has some superficial appeal. But I hope today we can strip away the mythology and look at who is af- fected by such a change. BAESSi1ST IMPACT OS THE MOST VOLWERAELE REMWICIASIES Increasing the retirement age would be a major benefit cut for America's most vulnerable senior citimens.. March 9, 198 The Pickle amendment would end up cutting benefits by 12 to 14 percent compared to current law. The Pickle amendment Is designed to force people to stay In the work force longer-regardless of whether they are able to continue working, and regardless of whether there are any jobs. This amendment assumes that most people are able to work longer than they do now. This is not the case. Survey after survey shows that a great many people, perhaps 2 out of 3, retire-not because they want to-but because of: First, poor health; second, mandatory retirement; third, lack of skills; and fourth, job loss. According to the National Center for Health Statistics, as many as 30 per- cent of early retirees retire due to ill health and have no choice In their re- tirement decision. Increasing the retirement age for these people would not keep them In the work force longer. It will simply cut their benefits. And what will they be able to do about ft? Nothing. Look at the numbers. Two-thirds of the savings from the Pickle amendment come from cutting benefits for early retirees-not from workers staying on the job longer. Instead of spreading the burden of the long-term solution evenly over all social security beneficiaries, the Pickle amendment heaps it onto the backs of those least able to carry it. Those affected most harshly by the Pickle amendment include low-skilled blue collar workers, minorities, and women. Low-skilled and manual workers per- form more physically demanding work. If manual and blue collar workers have health problems, they are more likely than other workers to retire early. A lot of these people cannot keep working up to age 67. Do you want to vote to cut retirement benefits for these people who are already hurt- ing? Then vote for the Pickle amend- ment. But if you agree that these people already have enough problems, vote "no." This proposal would also hit hard on minorities and women. Minorities would be hurt because they are much more likely to have their ability to work limited by health problems in late middle age. The job market tends to close up on than as they get older. And they often engage In more phys- ically demanding work. Think about it-white or black-would you like to have to keep your job as a heavy la borer until you are 67 just so you can collect a reasonable social security check? And under the proposal, women would get the same bad deal Women have a higher incidence of chromic III- ness than men. Do we want to penalise them for this? It we do4 the Pickle amendment Is a good way to do it. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1050 It is also Important to note that be- tween 1940 and 1980, life expectancy at birth has increased by 12 years. Moreover, longevity is predicted to in- crease even further in the future. Given this general increase in longev- ity, an increase in the age of full re- tirement is inevitable. The Pickle amendment also man- dates a study of those occupations that, because of the nature of work, make it difficult, if not impossible, to work to the extended age. The study will look at how disability can be rede- fined to insure that those workers are treated fairly. It is also important to note that this action does not affect medicare or SSI eligibility. Finally, after holding 16 hours of public hearings in the Fourth District of Arkansas this year, holding hear- ings in 1981, publishing two special re- ports on this issue, and my most recent constituent questionnaire, r find broad-based support among both younger and older workers for raising the retirement age. Mr. SHANNON. Mr. Chairman, I yield 3 minutes to the distinguished member of the Committee on Ways and Means, the gentlewoman from Connecticut (Mrs. K NNEux). (Mrs. KENNELLY asked and was given permission to revise and extend her remarks.) Mrs. KENNELLY. Mr. Chairman, I am opposed to the Pickle amendment. I was in committee, and continue to believe It will impact hardest on women, low-skilled workers, and mi- norities. Raising the retirement age to 66, and then 67, will reduce benefits most directly for those who retire early. In fact, a worker who retires at age 62 In the year 2022 will suffer a 12-percent reduction in benefits. Many workers. especially women workers, have to retire early. They are in ill health, they are worn out from low-paid dead- end jobs. They may have spent a life- time on their feet, not a lifetime of sit- ting down behind a desk. It is these workers who I think of when I think about increasing the re- tirement age. I do not believe we are being fair to them, I think this amend- ment treats them harshly. There is much talk about the in- creasing role of women in the govern- ment process. Women retire at an ear- lier age than men-age 62 retirement in 1978-44 percent women and 29 per- cent men-and receive a lower benefit award in 1979-$406 for men, $270 for women. Reducing the benefit level by 12 percent will force more elderly into poverty, and onto welfare. These souls will most likely be women, because women in most cases do not have a pri- vate pension to fall back on, and may have few additional resources to make up for the cut we are imposing. Even if a woman had the same resources as a man, it is a fact that women live longer than men. So it is they who are more likely to exhaust their resources CONGRESSIONAL RECORD - HOUSE March 9, 1983 over a lifetime. Finally, we all know that medicare is in deep trouble. Rais- ing the retirement age sets the prece- dent for reducing medicare benefits by raising the age at which one qualifies for health benefits. For all of these reasons, I oppose the Pickle amendment. Mr. PICKLE. Mr. Chairman, I yield 5 minutes to the gentleman from South Carolina (Mr. Caacrasu.). (Mr. CAMPBELL asked and was given permission to revise and extend his remarks.) ' Mr. CAMPBELL. Mr. Chairman, be- cause I believe we must not allow the benefits of those who are dependent on social security to be interrupted, I reluctantly supported the social- secu- rity reform package when It came out of the Committee on Ways and Means. But I submit to my colleagues that we are still faced with the dilemma of trying. to save benefits for those who are retired and we are still faced with the dilemma of trying to assure bene- fits for those who will one day retire. We have not yet solved our problem. Unless we resolve this conflict in a way that people at home understand is fair, we will be inviting the skepticism and the anger of the young working men and women of this country who are being called upon to pay a higher aid higher share of their paychecks to support the benefits that have in- creased faster than the wages that they are making. I want to make that point again: We are asking them to pay more to sup- port benefits that are going up faster than their wages are going up. Social security is an income transfer program. Recognize it for what it is. The payroll taxes a worker pays today are used for the benefit checks of those who are retired. We used to have 16 workers working for each retiree, and now we have about 3. That is part of the reason that social security taxes have risen from $347 a year maximum in 1970 to $2,170 this year, and a pro- jected $4,600 before the end of this decade-$347 to $4,600 in a short period of time. That is an enormous tax increase. A worker paying into the system over an entire lifetime who retired last year contributed, at the most, $14,76,7. That worker will get back everything paid in within 18 months. ^ 1510 Compare that to a young person en- tering the program today. That person can expect to contribute some $335,000 at a maximum into the system and I submit that it is questionable that they will ever draw it back. That is what we are faced with. We can ask ourselves, do we really think it is fair? Is it fair to ask this young person to pay an even greater portion of his earnings or her earnings when in fact the per capita income of those over age 65 now exceeds the per capita income of the rest of the population? And those retirees who were 65 in 1980 can expect to enjoy their retirement for 16 more years. That is good news. I think it is ex- tremely good news that people are living longer. A male born in 1940, when the social security program got underway, had an expected lifespan of 61.1 years; a female had an expected lifespan of 65.6 years. By 1980 that was up to 69.8 years for a male and 77.7 years for a female. Do we know anybody who wants to reverse that trend? I do not. I think we have to rec- ognize it. By the year 2000, when the Pickle amendment would go into effect, a baby boy can look forward to 72.9 years and a girl, 81.1 years. We do not want to change that. The Pickle amendment recognizes this happy fact of life and eases the age for full retirement benefits up by 2 months a year for those who are 62 in the year 2000 until it reaches 66 -in the year 2009. And then, after another 10 year, it is eased up to 67. Those who wish to retire early will still be able to do so with only an actu- arial reduction. To those who question the ability of citizens over 65 to stay on the job, I say, "Look to the Halls of Congress. Look to the Speaker. Look to Senator THuiutoxn. Look to Mr. PEPPr." Let them tell me that they cannot do It. Many of them can do it, and many of them do do it. To those who say they are forced out of the work force, I say, "Look at the law." We raised the age to 70 for compul- sory retirement, not 65 or 62. Mr. SHANNON. Mr. Chairman, will the gentleman yield? Mr. CAMPBELL. No, I will not yield. I would suggest the gentleman use his own time. Mr. Chairman, I would not support a drastic change for those who have worked half their lives and who are planning for their leisure years. The Pickle amendment is not a drastic change. That is the point. It is a modest change, the concept of which has been recommended by every major study group and which, according to a New York Times poll, had public sup- port by a margin of 5 to 4. Mr. Chairman, the Pickle amend- ment is an amendment which address- es the long-term deficit. Let us ask ourselves, though, the crucial ques- tion. Is it fair? That is the question we have to look at. This amendment ad- dresses the problem without asking our children and our grandchildren to sacrifice their quality of life for ours. This amendment is fair, and It merits our support. Mr. SHANNON. I yield 4 minutes to the gentleman from West Virginia (Mr. WISE). Mr. WISE. Mr. Chairman, I rise in opposition to the Pickle amendment. I do so because I come from the State of West Virginia, which is heavily labor intensive-and in that respect It is no different than most other States rep- resented here today-and a State Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1062 CONGRESSIONAL RECORD - HOUSE March 9, 1983 people, do not break faith with the that restructuring it will, in the long strikes a fair balance between present older worker." run. cause problems for the social se- workers who pay for social security For a small increase in taxes, for a curity system as well. I am not con- and former workers who receive the minor adjustment in the rate sched- vinced that the gradual merger of the benefits. And it gives ample advance ule, we can keep faith with the older two systems will provide much more warning of the new ground rules to worker. We can allow them to retire than a quick infusion of funds into the younger workers. with decency and dignity. We can do system moreover, we must not contin- Mr. Chairman, I urge my colleagues so without cutting their benefits. ue to insist that Federal workers bear to support the Pickle amendment. As respectful as I am for the gentle- the brunt of our inability to enact Mr. SHANNON: Mr. Chairman, I man from Texas for the tough but reform yield 3 minutes to the gentleman from very compassionate Job he has done, I But, under the rule we do not have Wisconsin (Mr. OBEY). would say, in this instance, his amend- the option of considering better alter- Mr. OBEY. Mr. Chairman, I admire ment goes too far. natives and so I will support this bill. the gentleman from Texas. He is doing Before we vote to take away bene- Mr. GRADISON. Mr. Chairman, what he thinks is the right thing, and fits, before we vote especially to re- there is great concern in this House I do not think anybody can argue with quire factory workers or construction about the proper balance between in- that around here. I admire that in any workers to work longer, let us remem- creasing taxes and benefit adjust- person. He thinks it is necessary to cut ber those workers and not go back to meats as a means of putting social se- early retirement benefits and to raise them and say. "I am sorry, but I broke curity back on the track. The short- the retirement age in order to keep faith with the American work force." term package covering the balance of the social security system sound on a Reject this amendment. Support the this decade is heavily tilted toward long-term basis. Pepper amendment. It is a better higher taxes. And I believe the public I suspect, frankly, that we will prob- amendment. It is an amendment with will accept this. I am convinced the ably need both the Pepper amendment compassion. commitment. and concern public is willing to pay higher social and probably also, in the long term, that keeps faith with the workers of security taxes to save the system. But some increase in the age limit in order America. that willingness to pay higher taxes is to keep the social security system Mr. PICKLE. Mr. Chairman, I yield, not without limit. Relying on in. sound on a long-term basis, because 3 minutes to the gentleman from Ohio creased taxes to solve the long-term my hunch is that the revenue gap in (Mr. GRADisox), and I want to pay my problem is bad economics and bad this bill is probably understated, long respects to him for the valuable work politics. it will hurt, not help, social terns. And I even would say that if the he has done on the Social Security security. It will weaken, not strength- Pickle amendment were confined only Subcommittee. en, public support for the system. to raising the age limit by a year or so, (Mr. GRADISON asked and was Let us look at the worst case scenar- given permission to revise and extend io: Under the pickle amendment. in i the Pepper would probably the ag ably vote a for by a But it, s twell as well as his remarks.) January, in the year 2027, a worker re- tamendment. gentleman t fr6m the h Texas Mr. CLINGER. Mr. Chairman. will tiring at age 67 will receive 14 percent lem gets is s that t the lh reve- the gentleman yield? . less in benefits than provided under ggets a very large in his share of those amendment by Mr. GRADISON. I yield to the gen- present law. This will apply only-and tleman from Pennsylvania. let me stress this-only to workers now reducing below the present law bene- (Mr. CLINGER asked and was given age 23 or younger. fits that people would receive in early permission to revise and extend his re- I do not know what other Members retirement. marks.) are hearing, but what I hear convinces Now, I do not want slackers to retire Mr. CLINGER. Mr. Chairman. today me that the younger workers would early and live off the contributions of Congress is faced with the monumen- far prefer to accept an 86-percent other people into the system. But I tal task of effecting a solution to the benefit than have the privilege of would say. as have many other Mem- years of neglect visited upon the social paying higher taxes during most of bers on the floor today, that if you are security system, I rise in reluctant sup- their working years, as the Pepper a steelworker, if you are working at a port of this package as the only alter- amendment provide& coke oven, if you are a foundry native we have for protecting the re- Outside of Washington-based lobby- worker. I really doubt very seriously tirement security of the elderly. ists, I find little oppositon to the you are going to last those extra 2 Because of our inaction and partisan Pickle amendment. Is age 67 a reason- years. It is true that there is an in- political bickering that seems to have able age for full benefits in 2027? It ac- crease in longevity, but I know of no dominated this debate, we are faced tually could be justified today. reliable studies that indicate that with a crisis situation that has forced For example, males who became age worker health years have extended us to make some distasteful choices 65 in 1940 had. an average life expec- commensurately with that increase in which could have been avoided. Ameri- fancy of about 12 years. Today it is longevity. ca's retired workers deserve more con about 14% years, an increase of 2% So it seems to me that if we are sideration than this hastily put to- years since the first workers retired going to study the impact of the in- gether hodge-podge of proposals under social security. And much the creased retirement age on hard labor before us today. same point could be made about the workers, we ought to do it before we This bill will require some sacrifice life expectancy of women. lock into the system a higher retire- by virtually everyone, however, opti- At bottom the issue is whether the ment age and not afterward, as the mistically speaking. It will guarantee benefits under present law can ever be Pickle amendment would do. the system's solvency for at least 75 modified. They can, and they have, One of the previous speakers said, years and initiates some long overdue and the sky has not fallen in. "Look. we have Members in this House changes in the health insurance Over the last 2 years, the death who are over 65 years, and they are system on the provider level. That is benefit, minimum benefit and student still in great shape." That is fine. I why I support the Pickle amendment benefit have been limited or phased hope I am in good enough shape to be as the fairest way to achieve that out by action of this Congress. The here when I am over 65. But I will tell guarantee. I do have one strong reser- agreed upon portion of the bill before you something: If I had worked on a vation about this package and that is us delays the July 1 cost-of-living ad- wet machine in a papermill for 25 the coverage of new Federal employ- justment until January 1, at a loss to years, as I did for a year and half ees by social security. In this matter beneficiaries of $40 billion over the when I was going to college, I doubt we would be well-advised to refrain balance of this decade and far more in very seriously I would be in shape to from tampering with their retirement later years. continue to work until 67 and, very system. The civil service retirement The age adjustment recommended frankly, given the pressures on us in system is a healthily functioning pen- by the gentleman from Texas (Mr. this Job, I do not think we are going sion system in its own right and I fear PICKLE) deserves our support. It to, either, 15 years from now. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1054 CONGRESSIONAL RECORD - HOUSE the retirement age is equitable to future retirees by accounting for their increased life expectancy and the clear trend for Americans to be productive longer. I commend my colleague from Texas for his genuine and- honest ef- forts to repair social security logically and fairly for all Americans. Mr. SHANNON. Mr. Chairman, may I inquire of the Chair as to how much time I have remaining? The CHAIRMAN. The gentleman from Massachusetts (Mr. SHANNON) has 34 minutes remaining, and the gentleman from Texas (Mr. PicKLE) has 28% minutes remaining. Mr. SHANNON. Mr. Chairman, I yield 6% minutes to the distinguished member of the Ways and Means Com- mittee, the gentleman from Georgia (Mr. FowLER). ^ 1540 Mr. FOWLER. I thank the Chair- man. Let me say at the outset that I sup- port the bill `as proposed by the Com- mittee on Ways and Means, on which I serve. I want to say to the gentleman from Texas (Mr. Picar.E) my subcommittee chairman, that were it not for his per- sonal persuasiveness, his ability to ne- gotiate from principle, and his dedica- tion to a sound and solvent social secu- rity system, I do not believe this bill would be on the floor. He is to be com- mended for his leadership. I want to tell him that as one American I am thankful for that leadership over many, many months now. I had signed a letter in support of the amendment offered by the gentle- man from Texas (Mr. PICKLE), which I hope will show that I have no aca- demic problem or opposition to sup- porting an increase in the retirement age. But upon close scrutiny of the amendment, I have found that it both- ers me and I think should bother all of us, if we adopt a national policy that would penalize those people who are physically incapable of working past age 62. Under the present law as we all know, if a worker retires at age 62, he or she receives 80 percent of their benefits. If the Pickle amendment is adopted, in the year 2006, there will be a reduction from 80 percent to 75 per. cent down to 70 percent in year 2027 on a sliding scale for those who choose to exercise the option of early retire. ment. I do not know what the correlation is between living longer and the ability to work longer. I suspect with all the studies that we have had there is no definitive answer. But I also suspect that as our society moves away from an industrial base and more and more toward the long- heralded information-computer soci- ety, that there will be less and less po- litical support for those people who have worked with their hands and their, backs and for whom any retire- ment age is a race 'against time to achieve any reward short of their ce- lestial one. There is a third alternative to the Pickle or Pepper amendments and that is the committee's proposal. We have a slight revenue surplus in this bill. We have a mixture of benefit points to taxation which I believe to be fair and that is why I support our proposal. And I would urge, based on fairness, solvency, and integrity of the social se- curity system, that we reject both the Pickle amendment and the Pepper amendment and support the bill as crafted by the Subcommittee on Social Security and by the full Committee on Ways and Means. Mr. PICKLE. Would the gentleman yield? Mr. FOWLER. I would be happy to yield to the gentleman, Mr. Chairman. Mr. PICKLE. I appreciate the gen- tleman's concern. As I told him in ad- vance of the presentation of this amendment when I talked to him per- sonally we have put a proviso in there in an attempt to say to the Secretary we want him to give us a definition of occupation disability so that those people who cannot take advantage of longevity can indeed have some pro- tection if they retire at an early age, perhaps even as early as 60. We do not take away any options they may have today under present law. What we are doing is not reducing benefits nearly so much as the chart has been shown. We are trying to pro- tect the very people that the gentle- man indicated he wants protected. He has a valid concern. That is why we put the amendment in this bill. Now, under the committee bill that he has recommended or pointed out, there is no help for him in that area. It is a reduction of 5 percent in bene- fits, it is a tax raising of 0.24. You are not only raising taxes, you are cutting benefits 5 percent and that is the same amount that my amendment would do if they retired, with age 66, at the early age of 62, so actually you are better off under my approach, which recognizes the need to act in this area. Mr. FOWLER. I say to my subcom- mittee chairman in responses to his comments, under present law, if you retire at age 62 you get 80 percent of benefits. Under the Pickle amendment after the year 2006 you would eventu- ally drop down to 70 percent of bene- fits. I say to you that a study of what we should do for those people who fall from 80 percent to 70 percent, for whatever reason and for whatever cat- egory, is just that, a study. Mr. PICKLE. If the gentleman would yield further, keep in mind, Mr. FowLER, we only reduce 5 percent at age 66, that is all. That is little differ- ent from what the committee bill does; that is, the committee version does in the reduction of their benefits. Mr. FOWLER. Will the gentleman give me a couple of minutes here if we keep this going? Mr. PICKLE. I wish I had time. March 9, 1989 Mr. FOWLER. I want to make part of the RECORD excerpt from the report of the Select Committee on Aging on early retirement, "Why Men Retire at Age 62," whose conclusions are, among many, "The incidence of permanent withdrawal before age 62 was greater among blacks than whites." We do not address that in our bill. "A large por- tion of very elderly withdrawees before age 62 lack adequate income. Labor force separation was involun- tary for the large majority. The health of most very elderly withdrawees was not good and a large proportion died within a few years of withdrawal." Until we can answer the question of how we deal with the least of these our brethren who are forced to retire because of health at age 62, I say we should await this mandated study before we answer the great charge of when we allow Americans to retire without penalty under our Nation's social security system. I thank the gentleman from Massa- chusetts and my chairman. Mr. PICKLE. Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. JENxiNs). (Mr. JENKINS asked and was given permission to revise and extend his re- marks.) Mr. JENKINS. Mr. Chairman, I rise in support of the Pickle amendment. As I listen to the debate, the very people who are so concerned about the possibility of raising the retirement age to 66, some 30 years down the road, have no compunction whatsoever in imposing upon those workers 25 years from now a rather substantial increase in taxes. Now, let me say this to my col- leagues: How much of a tax increase are we talking about? How much of a tax bite are we willing to vote on the young people today who will be work- ing 25 years from now? Let us take a self-employed person: Under the Pepper amendment, the tax will go to over 16 percent, one-sixth of total pay- roll. If you are earning $36,000 a year, you will be paying $6,000 per year under social security, in addition to your income tax. Mr. PICKLE. Did I understand those figures correctly? What figure did you say? Mr. JENKINS. One-sixth or 16 per- cent. Mr. PICKLE. How much would an individual be paying more? Mr. JENKINS. If you earned $36,000 you would be paying $6,000 per year. ^ 1550 If you are earning $30,000 per year, you are willing to vote today to say those people 25 years from now will be paying at least $5,000 per year before they even pay any income tax. While people are very willing to stand up and say I shall never vote to increase the retirement age to 66 even though it does not bother people in the work Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1056 working day shift steady now. Why do you want to retire?" He said: "I am not going to stand out here and freeze my off in this winter weather for another 3 years until I am age 65." He would not want to work another 5 years at that age either. And neither do the people who are in the work force now at age 45 doing lousy routine work on an assembly line, day after day. It is debilitating: Use a little commonsense. We do not need to do this injustice to people who are in the work force today to make them work all those years longer. Ac- tually what will happen is thousands of people will the before they ever get to enjoy their retirement at age 66 or 67. This amendment is not going to save social security; it will be an injus- tice to millions of workers who will be forced, unnecessarily, to spend addi- toinal years in the work force. I urge a no vote. Mr. PICKLE. Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. OzasY). (Mr. OXLEY asked and was given permission to revise and extend his re- marks.) Mr. OXLEY. Mr. Chairman, my hat is off to the gentleman from Texas. I think this is clearly our only opportu- nity in this Congress and perhaps for many, many Congresses to come to make a long-term solution to the social security shortfall. This is the opportunity that many of us have been waiting for for a long time and I certainly hope we do not have a replay of 1977, when so many people followed the actions of the Congress, when the promises were made that we solved the problem well into the 21st century, and yet we are here about 6 years later debating again the problem of social security funding. ^ 1600 I support generally the bill that came out of the committee, but the long-term solution is before us and ba- sically it is a choice of two things. Do we want to continue on the path of tax and tax and spend and spend in social security, or do we want to make a legitimate reform in the system? Currently, Mr. Chairman, 25 percent of the people in this country are paying more in social security taxes than they are paying in income taxes. I do not think I have to remind any- body about how regressive the social security tax system is. The same people who would ask for more social security taxes in many cases are the same people who oppose regressive taxation; yet that is what we are faced with today, the Pepper alternative. Mr. Chairman, I am not so sure what the magic age of 65 was or why it was chosen by the Congress back then. Perhaps it was in response to the Bis- marck Social Security Plan in Ger- many. We do not know; but the fact is CONGRESSIONAL RECORD - HOUSE March 9, 1988 there was not necessarily anything magic about that age 65. We have to recognize times have changed, that people are living longer, they are more productive; so I ask that this statesmanlike approach by the gentleman from Texas be approved. The CHAIRMAN. The time of the gentleman from Ohio has-expired. Mr. PICKLE. Mr. Chairman, I yield 30 additional seconds to the gentleman from Ohio (Mr. OxLEY). Mr. OXLEY. Mr. Chairman, there was a song back in the 1960's known as "Ball of Confusion", and the lyrics said, "Politicians say more taxes will solve everything ? ? ? and the band played on." Mr. Chairman, I think we have learned from our past mistakes. Let us support the Pickle amendment and make a long-term change in the social security structure. Mr. SHANNON. Mr. Chairman, I yield 2 minutes to the gentleman from Pennsylvania (Mr. lLuuusoN). (Mr. HARRISON asked and was given permission to revise and extend his remarks.) Mr. HARRISON. Mr. Chairman, the arguments for and against this amend- ment have been well and concisely stated, before the social security com- mission, in the Ways and Means Com- mittee and here on the floor, by know- ledgable and dedicated Members of this House. But, for me, the most per- suasive argument was voiced, unknow- ingly, by a lady I met during my cam- paign. It was in a dress factory in Mount Carmel, Pa. She was an attractive lady, with sil- very hair and a cheerful disposition. She told me how much she was look- ing forward to retiring the following year when she would become 62. Since she did not look her age and seemed to be in good health; I asked her why she was so eager to retire. She replied that 44 years was enough. She told me that she had come to work in that very factory immediately after graduating from high school at the age of 18. And every year since then, week in and week out, she had worked in the same location, on the same floor of the same factory; 44 years was enough, and she was pre- pared to accept lower benefits to put an end to the daily monotony that her life had become. Mr. Chairman, if 44 years is enough, 47 years certainly is. That is the total working life of someone who begins at 18 and labors until they are entitled to retire at 65. I cannot say to the working men and women of this country, under the age of 40, that for them 47 years is not enough and that they must work for 48, or 49, before they are entitled to retire on the benefits they have earned. The working men and women of this country, at least since this Govern- ment began to recognize its social re- sponsibilities 50 years ago, have la- bored with certain expectations. Among the expectations to which they have become accustomed, if not enti- tled, are reasonable working hours, a fair wage, safe working conditions, equal employment opportunity and the justifiable belief that, when the time comes, whether because of physi- cal infirmity, economic recession, or the simple desire to enjoy a well- earned rest, the means will be availa- ble for them to leave work at a reason- able age and still enjoy a decent stand- ard of living. I think that this amendment violates their trust that after long years of work, they will finally be rewarded, however modestly, by a system into which they have been paying, in most instances for their entire working lives, at a time when their minds and bodies tell them it is time to step down. The proponents of this measure say that the impact of this provision will not take effect for many years, that between now and the year 2000, medi- cal science will assure us of longer and healthier lives, and that there is noth- ing, therefore, magic about the age of 65. They may well be right, and I sin- cerely hope that they are. I hope by then that we have conquered heart disease, the scourge of cancer, and the needless debilitations caused by occu- pational hazards and diseases. If so, and I look forward to that time, an amendment such as this might deserve serious consideration when a major overhaul of the social security system again comes before this body-in another 75 years. But until then, I believe that we must look to the future in a manner that is tempered by the realities of the present. Well-meaning promises and overly optimistic projections of future developments have a way of unravel- ing, as any serious observer of this ad- ministration's supply-side economic theories would quickly acknowledge. The proponents of this amendment point out that workers will, of course, retain the option of retiring at age 62, with reduced benefits. They try to downplay the fact that reduced bene- fits received by early retirees would be even smaller under the provisions of the Pickle amendment than they are under the terms of the bill reported out of committee. It would be difficult, if not impossible, for all but the higher income members of the work force to exercise this so-called option, and those most in need of the benefits of the system would be economically unable to enjoy its benefits. If it is our desire to keep men and women in the work force longer, and paying into the system longer, then we ought to accomplish this by enticing them through incentives such as in- creased payments to later retirees, rather than by moving the retirement age ahead, a little bit now, perhaps more later, and who knows how far ahead the next time we perceive prob- lems in the system. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 ` H 1058 CONGRESSIONAL RECORD - HOUSE that people are going to have a safer workplace and that generally people are going to increase year after Year with better health. I wish this picture were true, but we see right at this moment the Environ- mental Protection Agency disregard- ing its responsibilities to protect us from exposure to very hazardous chemicals. We see the breakdown in the last 2 years of many regulatory programs that have tried to give us a safer workplace. We see an increase in many diseases. I have to assume that the rosy future described by my friend and col- league from California may not occur. Under the Pickle amendment, we ask people many years from now to take. a benefit out becaqse they will be early retirees, presumably by choice. We ought to ask, who are these people who choose, so to speak, to retire early? Well, I think we can make certain as- sumptions about those early retirees in the next century, based on who the early retirees are now. The early retir- ees are those who are not able to work any longer because of health reasons, often because of jobs that are very, very difficult and demanding physical- ly. The early retirees are people who have no job at all because they face di- ficulties in their elderly years in find- ing an employer who will hire them. They tend to be women. They tend to be low income. They tend to be minor- ities and these are the people who will bear the benefit cut if the Pickle amendment is adopted. That, I believe, is unfair. It is unfair to them because they are the ones who do not have extra pension benefits and savings upon which they can cushion their re- tirement. They are the ones who are going to be asked to take the benefit cuts and they are the ones who are going to be hardest hit by this benefit cut. It seems only fair to me that we ought to ask those who are working to pay for and carry the burden for those who during their working years paid into the fund. I will therefore support the proposal that will be soon offered by our colleague, the gentleman from Florida (Mr. PEPPER) which will in- crease the taxes paid by those who can best bear paying those increased taxes, those who are in fact working. I ask you not to think of early retir- ees as people with whom most of us in these Chambers usually associate- middle-class professionals who have a private pension or private means. Think of those early retirees who are the people who have broken their backs working in the hard labor jobs who have seen the toll it has taken on their health and who must quit work at an' earlier age than 67. Do not turn your back on them. 01610 Mr. PICKLE. Mr. Chairman, I yield 1 minute to the gentleman from Texas (Mr. HANCE). (Mr. HANCE asked and was given permission to revise and extend his re- marks.) Mr. HANCE. Mr. Chairman, I rise in support of the Pickle amendment and I commend the chairman of the sub- committee on the outstanding job that he did. I think the thing that we have to look at and the group that we have to think about, the grandchildren and the children that would be self-em- ployed and would get strapped with that 16.3-percent payroll tax. I guar- antee you, they cannot pay it. If you are talking about over 16 percent on payroll taxes, plus your income taxes, you are talking about taxes that will be very hard for young people to swal- low and believe that there is going to be a sound social security system. I think that is the thing we have to look at. The gentleman from Massachusetts (Mr. SHANNON) has pointed out, and I think properly so, that there are those who are in physically tough jobs, but we can take those exceptions and take care of those in some way, and Con- gress will. But the other thing we have to look at is the long-range effect, and I think without this amendment we will not be fixing the program. The social security system would not have the support that it has had in the past unless we adopt the Pickle amend- ment. My support of this bill was the result of assurances that an amend- ment would be made in order that would solve the long-term financial problems of social security without further increases in the. payroll tax. The Pickle amendment gives us this opportunity. I understand the con- cerns of Mr. PEPPER and I commend him on his work on behalf of our older Americans. I can understand how this compromise reform package contains items he would prefer not to see in it, like the COLA delay. There are items in the compromise package that I would prefer not to see in it, too, like the tax increases for the self-em- ployed. We both have had to accept the compromise in order to present to Congress a package that not only would resolve the funding problems of social security, but would distribute the financing burdens in as fair a manner as possible. This bill was not an easy one to draft and it will not be an easy one to implement. It requires hard choices by each one of us in Congress and sacri- fices by every American-old and young alike. I strongly object to the tax increases in the bill yet realize without them, proposals to reform the system would have failed. We need to protect the benefits of our elderly yet in doing so should not break the backs of the American worker. While this bill is not perfect, it takes necessary action to resolve the social security crisis in a responsible manner. March 9, 1983 Mr. PICKLE. Mr. Chairman, I yield 4 minutes to the gentleman from Cali- fornia (Mr. TnoxAs). (Mr. THOMAS of California asked and was given permission to revise and extend his remarks.) Mr. THOMAS of California. I thank my subcommittee chairman for yield- ing this time to me, and want to com- mend him for the job he has done, along with my ranking member, Mr. CONABLE and the chairman of the Committee on Ways and Means, Mr. ROSTENKOWSKI. Mr. Chairman, I think we ought to confess at the outset that imperfect people were trying to accomplish the art of the possible on a package that was already two-thirds locked up. When you examine that two-thirds of the untouchable part of the package, it was mostly tax increases and speed- ups. The solution to the shortfall in reve- nue over the long term was left up to us, and now we have moved the choice for the long term to the floor. In argument on the bill itself and on this amendment, the record will show show that we can stipulate that the basic problem in the social security system is structural and the reason it is structural is because the American people have changed. The profile of our population has changed. I have heard the test of fairness used several times. I think we need a plan that is fair to the youth, the middle aged, and our senior citizens. I want to tell those people who want to march under the Pepper banner, that that banner reads, "We do not reform; we just raise taxes," to those people who want to march under that banner, this gentleman says that that banner is available any time. Next year, 10 years from now, 25 years from now, if you do not want to reform, you can always raise taxes. There is no struc- tural change in the Pepper amend- ment. Structural change takes time and we have lost too much time al- ready. Under the Pepper amendment we are telling people that they are going to get 40 years of increased taxes that is not fairness. The committee proposal for the long-term funds a portion of it from raising taxes, 40 percent, more taxes on top of taxes. You could character- ize 60 percent of the proposal 25 demo- graphic change since it embodies bene- fit reduction. In other words, we tell our youth, "Pay more taxes and get benefit cuts when you retire." You call that fairness? And who gets their benefit cut? It is across the board. It is overkill. The disabled get their bene- fits cut. But they are not the problem. The widows and orphans of workers who die before age 82, they get their benefits cut. They are not the prob- lem. The problem is that the American peoples demographic pattern has changed. The Pickle amendment is a Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1060 CONGRESSIONAL RECORD - HOUSE March 9, 1988 the work force. It will be an added burden upon America in its competi- tive position. So I would discard, first of all, increasing taxes. The second thing is that we do not know what the future holds. We can make some predictions about the future, but our vision about the future is much more clouded than our vision of the past, particularly when we think that we are looking as far for- , ward as we would have to look back- ward to get back to 1939. And how many of us can remember when Hitler invaded Poland? So our vision is clouded. We need to prevent making mistakes. What we should do now is adopt Pickle, because Pickle can be changed more easily out in the future. If we make a mistake with Pickle it will be much easier to correct Pickle than Pepper. We may have to adopt a little Pepper tax in- creases out in the future because we may need more money than we have anticipated. Mr. SHANNON. Mr. Chairman, will the gentleman yield? Mr. GIBBONS. I only have 2 min- utes at my disposal. Mr. SHANNON. Mr. Chairman, if the gentleman runs out of time, I will yield him an additional minute. Mr. GIBBONS. Fine. I yield to the gentleman from Massachusetts. Mr. SHANNON. Mr. Chairman, the gentleman has just stated that it would be easier to change the provi- sions of the Pickle amendment than it would be to change the provisions of the Pepper amendment. Mr. GIBBONS. The retirement age, yes. Mr. SHANNON. I want to make the point that we are not deciding between Pickle and Pepper. Mr. GIBBONS. Well, we really are. Mr. SHANNON. We are deciding be- tween Pickle and what the committee has done. I do not understand how the gentleman can make that statement. If we pass the Pickle amendment, then all the pension plans and all the provi- sions for retirement outside of social security will have to be adjusted to ratchet it up to a 66- or 67-year-old re- tirement age. We can always adjust the tax rate again. We can always go back and do that, and I am sure we are going to go back and do that. Mr. GIBBONS. That is exactly my point. Mr. SHANNON. But I think it is going to be very difficult for us to go back, if we make this decision today to change the retirement age. So I dis- agree strongly with the gentleman. Mr. GIBBONS. Mr. Chairman, the gentleman is making the point I want to make, and that is that it is much easier to change the tax rate than it is to change the retirement age, because the closer you get to that retirement age, the more people feel they will be adversely affected. That is going to be a political problem that leaders in this Congress in the years further out will have to face. That is really the dilem- ma we have had for a long time. So we can adopt Pickle now, and if we make a mistake, it will be very easy to change back to the present retire- ment age. The CHAIRMAN. The time of the gentleman from Florida (Mr. GIBBONS) has expired. Mr. SHANNON. Mr. Chairman, I yield 1 additional minute to the gen- tleman from Florida (Mr. GIBBONS). Mr. GIBBONS. So, Mr. Chairman, looking forward to the future, it will be easier to address our problems if we adopt Pickle now. As I said at the be- ginning, I think we are going to have to have a little Pepper as we go along because I am not convinced that the solution we have reached so far is going to be the final solution, and I would rather get a little closer to the problem time and decide then whether or not we need our Pepper tax in- crease then or not. That is essentially my argument. So I would say Pickle now and maybe a little Pepper later on. Mr. SHANNON. Mr. Chairman, I yield 2 minutes to the distinguished gentlewoman from Ohio (Ms. OAKAR). Ms. OAKAR. Mr. Chairman, I thank the gentleman for yielding some time to me. I just want to make a couple of points. First of all, to me, the entire legislation has some real problems, but if the Pickle amendment is adopted and prevails, that is to me the death knell of the legislation. I just want to state that I have the greatest respect for the gentleman from Texas (Mr. Picxi.E) but I certainly do not agree with his amendment. First of all, it pits the young against the old. Are we telling our 20- and 30- years-olds that it is all right if we retire at 62 and 65 under the social se- curity plan, but they will have to wait ultimately until they are 67? And under the provisions, really what that means is a loss of benefits to them. In addition, there is a lot of talk about the Social Security Act of 1936. I wish some Members would read the report, because in the report it shows that they were almost completely ac- curate about the life expectancies in the 1970's and the 1980's. They pro- jected that people would live a lot longer, and on that basis they brought forward a program. So it is not true that they did not expect people to live longer. They did. It is in the report, and they were brilliant in their projec- tions. If we are to make projections, how- ever, there is no proof that men are going to live a lot longer. The median age expectancy of men is, 68. Are we telling the men in the year 2000 or more that they will pay all of their -working lives into a system and collect for just one full year? That discrimi- nates against men, and, most impor- tantly, it is blatantly discriminatory toward women. In addition, I truly understand the difficult task that the Committee on Ways and Means had in presenting this body with a comprehensive, rational social security package that does not place an unnecessary burden on either social security contributors or beneficiaries. I also believe that cer- tain aspects of H.R. 1900 accomplish the goals that the members of the Ways and. Means Committee set. I commend the members of this Com- mittee and the National Commission on Social Security Reform for their ef- forts. However, I cannot deny that I have strong reservations regarding core issues. First, Mr. Chairman, I am dis- appointed with the rule that was granted on H.R. 1900. It appears unfair that Members were not allowed to vote separately on the issue regard- ing Federal employees. I am not asking that the provision be eliminat- ed. I am asking why Members were not provided a choice to delay implemen- tation by 1 year. In 1 year, the Com- mittee on Post Office and Civil Service with the assistance of postal and Fed- eral unions and administrative agen- cies would have been better prepared to formulate a supplemental civil serv- ice retirement system. The statistical data and actuarial projections that are definitely needed to reshape a retire- ment system would have been availa- ble. Without the choice, new Federal hires will be mandated to pay 7 per- cent of their pay into the civil service retirement system and 7 percent in the social security system. Members of Congress will see 15 percent of their pay going into both systems. Perhaps Members will not miss the 15 percent. New hires, whose average starting salary is below $15,000, will feel the loss. Federal employees will also be looking forward to reductions in pay in benefits as prescribed by the admin- istration in its fiscal year 1984 budget. I empathize with these employees and only hope that we can formulate a reliable supplemental system in the short amount of time we were given. The second area of concern that I have affects present and future female beneficiaries. We all know that the package that Ways and Means passed includes certain provisions that spe- cifically address some of the problems that women beneficiaries face; namely, widows, divorced spouses, and disabled widows. These low-cost measures will assist certain women, and generally women's groups seem to be pleased that the Ways and Means Committee included those provisions. But, one provision which allows divorced spouses to draw spouses' benefits at age 62 whether or not the former spouse has retired will place an unnec- essary burden on certain women be- cause a divorce must have been final- ized 2 years prior to receiving benefits, effective in 1985. Basically, if a person becomes divorced in 1984, he/she Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1062 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 CONGRESSIONAL RECORD - HOUSE March 9, 1983 Now we have a terrible tendency in this body to cherish the way things are now and to defend the status quo. In fact, there is nothing speculative about the conditions of the labor force after the year 2000. They are going to have the post- World War II baby boom moving into retirement and the relatively low birth rate of today will be moving into the labor force. Therefore we are going to have a very difficult time trying to maintain an institution as sensitive and as important as social security unless we have planned carefully-not speculated-but planned on . known facts. These people exist. They are here now. We know there may be many rea- sons, including longevity, including psychological factors, including the necessity that we- will have to main- tain our standard of living by using the many talents of our senior citizens for a longer period of time than we use them now, to encourage some increase in the retirement age. I say this is a perfectly acceptable and sensible thing to do, provided we do not mislead people. If it proves to be unnecessary later on, we can always back off. It is always possible for us to raise taxes at some time in the future. But to build a tax increase into the system now is to signal an institutional defeatism that would be most inappropriate for a rep- resentative body like ours. Mr. SHANNON. Mr. Chairman, I yield myself 2% minutes. Mr. Chairman, we come down to the final moments of what I think will be the most important debate that will be taking place on this floor today. We have to face a question and an issue that we are going to have to live with for a food long time. I would say to my colleagues this whole business of trying to deal with the long-term problem of social secu- rity is speculative to some degree. I think we all agree that we wanted to try and address it in some way or an- other but anybody who goes home to their consitituents and says these numbers we are talking about today are going to be the absolute accurate numbers by which social security will be governed for the next 75 years is making a terrible mistake. Thirty years ago we could not have predicted what has happened to the American economy in the past 30 years, and today we cannot look ahead 30 or 40 or 50 or 75 years and predict with any accuracy as to what is going to happen to our population, what is going to happen to our economy, what the rate of life expectancy is going to be, and what sorts of problems people are going to be facing in the future. These are all unknowns. Yet what we are saying is on the basis of what we think might happen, on the basis of what we think could possibly happen, we are going to single out one small segment of the popula- tion, we are going to say to them whatever happens in the future, the burden is going to rest on your shoul- ders, the burden is going to rest on those who do hard labor and are forced to retire early. We are very privileged to be Mem- bers of the House of Representatives. We are privileged because we are able to serve our constituents and our country. But we are privileged in an- other way as well. We do not get our hands dirty when we work. We do not break our backs working to serve the people. We do not have to worry about doing labor that forces us into retire- ment at 62. Several people have referred to the fact that we have many Members who are 63, 64, 65, or 66. Ask yourself, can you picture them putting up steel, mining coal, breaking their backs in farm labor? I cannot. Think about the people you repre- sent. Are we going to ask them to bear all of the burden of the future prob- lems of social security? I hope not. This has been a fine package that has been put together by the Commis- sion, by the Ways and Means Commit- tee; fine, because the burden of solving the problem of social security is shared. This amendment, if adopted, violates that concept. It says we are not going to share the long-term burden, we are going to place it on the little guy. We are going to place it on those who cannot raise their voices. We are going to place it on people who do the hard work in our society. And there are going to be plenty of them in the future. I say if we do this today we will never undo it, we will never go back. We will never remember, and they will be the ones who suffer. Let us not do it. Reject the Pickle amendment. ? Mr. HUGHES. Mr. Chairman, I rise in support of the Social Security Act amendments we are considering on the floor today. Most of us would agree, I believe, that this is not a perfect bill. Each of us have some individual ideas on how the package could be improved. It was for that reason I voted against the modified closed rule that prevented further amendments. In particular, I have serious reservations about several of its provisions, most significantly, the payroll-tax increases. These will hit especially hard at the self-em- ployed who are being increased from 9.35 to 11.9 percent. My major concern, however, throughout the months of debate Zon the social security program, has been to insure that promises made to those working under - the social security system are not broken-that those who paid into the system will receive the benefits they are entitled to, and which they have planned for. I believe- that this bill, on balance, keeps this promise, although I was dis- appointed by passage of the Pickle amendment. The increase in retire- ment age provided for in that amend- 2000, does affect into the system. those now paying I have no objection, in light of in- creasing life expectancies, to raising the retirement age for those who have not yet entered the social security system. But to change the rules in the middle of the game, for those who have been paying into the system for as long as 20 to 25 years with the ex- pectation of retiring with full benefits at the age of 65 is, I believe, unfair and unfortunate. Twice I joined with many of my colleagues to vote against this provision. We lost that battle in the House and we can only hope that we can prevail in the Senate or in confer- ence. For now, however, we must face the fact that the crisis is upon us, and this compromise does represent a good-faith effort by all concerned to put the social security system on a sound footing for the years and dec- ades ahead. Its defeat here would put us right back where we were 1 year ago, when the study of this urgent subject was commenced by the Presi- dent's bipartisan commission, and we just do not have that kind of time left to us. As such, this bill achieves our basic goals-restoring financial stability to the social security system-without jeopardizing the welfare of those who depend upon social security for their retirement, both now and in the years ahead. I believe, in short, that this is the best bill we can write at this time, and the Ways and Means Committee should be commended for the compro- mise it has brought to the floor. I urge my colleagues to support this meas- ure.* ? Mr. McCURDY. Mr. Chairman, I rise in support of H.R. 1900, the Social Security Act Amendments of 1983. While this is not a perfect bill, it is a fair and balanced approach to elimi- nating present and projected deficits in the social security trust funds. Fur- thermore, its passage by this House is urgently needed to restore public con- fidence in the social security program itself-a program that constitutes one- fourth of the entire Federal budget, and pays benefits to 36 million people, 1 of every 7 Americans. Under this bill, which generally fol- lows the recommendations of the bi- partisan National Commission ap- pointed last year, everyone will bear part of the burden of putting the social security system back on a sound footing: current beneficiaries, current- ly covered workers and their employ- ers, the- self-employed, Federal em- ployees, Members of Congress, and other elected officials, higher income retirees, State and local government employees, and employees of nonprof- it organizations. But no one group will be called on to sacrifice unfairly. There are some problem areas, how- ever, that must be addressed. The Ways and Means Committee bill Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1964 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 - - CONGRESSIONAL RECORD - HOUSE March 9, 1988 al Institute on Aging, and a member of paid by these individuals before they his group; both of them testified, retire. The tax increases in the bill "Yes, in the last 10 years the average now combined with the benefit reduc- age has risen 10 percent." But they tions in the committee bill actually also added disabilities among the el- raises slightly more revenue over the derly working people have also in- long term than my amendment and creased 10 percent. Mr. PICKLE recog- therefore should have at least an nizes that by having brought on here equal impact on these individuals. now the suggestion that he will have a In comparing age 62, benefits, the commission set up to try to accommo- handout ignores the fact that the pur- date the difficulties that will be expe- pose of raising full benefits is to en- rienced by those who will get less courage people not to retire at age 62. when it comes to the time of their re- Rather, the purpose is to encourage tirement. I think Mr. Lane Kirkland, people to delay retirement, at which who is the head of the AFL-CIO, was time they would receive full benefits. a member of the commission, he said Further, and I want to make this in a stirring statement he made before point, under the Pickle amendment, the commission. "If anybody has to provision is made to provide the Con- bear the burden as one of my distin- gress the solution to prevent benefit guished colleagues said here a while reductions for individuals who cannot ago, it is a question of who should bear delay their retirement. The handout the burden, all right let us solve that shows that my bill would be making problem." Mr. Kirkland said, "If any- reductions when in fact the-provision body is to bear the burden let it be in the bill, itself, makes reductions and those strong enough to be able to increases taxes to raise more money work, not those who are not able to than what I have proposed. work or those who quit work and could 0 1650 not find another job or those whop an inaccurate handout and I have one difficulty or another or have been shoved out of their job by racial think the aicoRD ought to show it be- or age discrimination." cause some people think the Pickle Yes, what we are saying is, this amendment would make big reduc- Pickle proposal is something that was tions? rejected in substance by the commis- Now, Mr. Chairman, 2 years ago my sion, in the very last day; there was a subcommittee made recommendations provision in the proposed package that in an effort to cure our short-term and we reduce long-term deficit. We were told then The CHAIRMAN. The time of the there was not a. need to act and that gentleman from Florida has expired. we really need not worry about the Mr. PICKLE. Mr. Chairman, I yield long term because of the demograph- my dear friend 1 additional minute. ics, the problem would take care of Mr. PEPPER. I thank my distin- itself. We have found that is not so. guished friend for his kindness. Now we have reached a point where In that package proposal if he re- we have a chance to do something tires at 62 your income will be reduced about it. We tried to move and we Prom 80 percent of what you would get could not. But we have kept together at 65 down to 74 percent. We defeated now the last 2 years, our committee that in the commission. Now we have and the full committee. on a biparti- another proposal here raising the age san basis. of eligibility, another way of cutting I want to make two or three points benefits, another way of us alleviating now as we close. some of the burden we have imposed First, we cannot just keep on raising upon the elderly of America, now with taxes. My colleagues know that and I this amendment adopted we cannot know it. The committee bill raises say any longer, "We have not cut taxes, overall now, to a rate of 15.78 benefits" no matter what pride we percent. The Pepper bill would raise take in the accomplishments of the taxes in excess of 16.36 percent. Now we know we cannot just keep on rais- Mr. Mr. Chairman, I yield ing taxes. We know that longevity has myself the remainder of my time. increased. We do not have to argue The CHAIRMAN. The gentleman that question. Thank goodness that from Texas, (Mr. PICKLE) has 5 min- medical science has been such that we utes remaining, have learned to live longer and to (Mr. PICKLE asked and was given work longer. I contend that people permission to revise and extend his re- want to stay in the work force, people marks.) want to keep working. They are better Mr. PICKLE. Mr. Chairman, first I off physically, mentally and financial- wish to attempt to straighten the ly. There is nothing in the world RzcoaD on a matter that is in a han- wrong with raising our retirement age dout with respect to the so-called just 1 year, 66, and then up to 67. That Pickle amendment. The context was is not harsh, that is just in keeping that we would reduce benefits 5 per- with the time. cent and then 12 percent; to age 67. I said to my colleagues earlier that I Now. Mr. Chairman, the handbill com- think that is inevitable and I think pares lifetime benefit returns in an in- that it is. accurate way, that is the kindest way I Now the committee bill before us can put it-an inaccurate comparison and the one which one Member said ignoring the larger taxes that must be he thought might be preferable, the committee bill cuts benefits. It cuts benefits, 60 percent of that deficit is made up by cutting benefits. It is a 5 percent overall cut in benefits. And in addition, it has a 0.24 percent increase in taxes. So you are cutting benefits and you are raising taxes at the same time. Now it may be that that may be the amendment you want to fall back on. But I say to my colleagues it is far better for us to raise the retirement age in the future so that people will have ample notice when to get ready for it. And we are going to be ready in the meantime to give them a defini- tion on the disability, on occupational disability, because we think they are entitled to that. I would think then we ought to sum up this argument by this. Nobody wants to cut benefits, my dear friend from Florida. I do not want to cut benefits, but I think the American people expect us, the Congress, to make some structural changes. We have raised taxes three or four times in this bill that is before us. We are taxing one-half of the benefit and we have raised the retirement age. We need to make structural changes. I urge the Members to support this. The CHAIRMAN. The question is on the amendment offered by the gentle- man from Texas (Mr. PicKLE). The question was taken; and the chairman announced that the ayes ap- peared to have it. RECORDED VOTE Mr. SHANNON. Mr. Chairman, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic device, and there were-ayes 228, noes 202, not voting 3, as follows: [Roll No. 22) AYES-228 Alexander Coneble Green Andrews (TX) Cooper Gregg Annunzio Corcoran Gunderson Anthony Coughlin Hall, Ralph Archer Courter Hall, Sam AuCoin Craig Hamilton Badham Crane, Daniel Hammerachmldt Barnard Crane, Philip Hance Bartlett Daniel Hansen (ID) Bateman Dannemeyer Hansen (UT) Bates Daschle Hartnett Bedell Daub Hatcher Beilenson de In Garza Hefner Bennett Devine Heftel Bereuter Dickinson Hightower Bethune Downey Hiler Bilirakis Dreier Hillis Bliley Duncan Holt Boehlert Edwards (AL) Hopkins Bouquard Edwards (OK) Horton Breaux Emerson Hunter Brooks English Hutto Broomfield Erlenborn Hyde Brown (00) Evans (IA) Ireland Broyhill Fiedler Jeffords Burton (IN) Fields Jenkins Byron Fish Jones (NC) Campbell Flippo Jones (OK) Carney Forsythe Kasich Carper Franklin Kazen Chandler Frenzel Kemp Chappell Fuqua Kindness Chappee Gekas Kramer Cheney Gibbons Iagomarsino Clinger Gingrich Latta Coats Glickman Leach Coleman (MO) Gradison Leath Coleman (TX) Gramm Lent Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1061 CONGRMSIONAL RECORD - HOUSE March, 9, 1988 would have a decent sustenance upon which to live, that those who died would have a measure of protection to transmit to their widows and their children, and that those who became disabled under another phase of the system would have some support. The Congress has been not only the creator but the protector or social se- curity. Now we are determining to what extent we are going to preserve it in the character in which it was con- ceived. If today we cut benefits, it will be the first time in the history of the Congress since the inception of social security, except in 1977, when we cor- rected an actuarial error that had been inadvertently included in the previous legislation. But today, by any method, whether by raising the age of eligibility or by changing the formula under which we calculate social secn- rity benefits, if we reduce benefits from the structure that now exists, no matter how sound and solvent we pre- serve the system, we will leave a taint upon its character that has never been put there by any previous Congress. And, remember, the people we are cut- ting are not even the able-bodied workers, about whom Lane Kirkland, president of the AFL-CIO, said before the Commission: - If anyone had to bear the burden, he was better able to bear it than the unemployed, the retired, the discharged, the ill, or the disabled who are the beneficiaries of social security. There have been, unfortunately, two causes of the trouble we have now with social security. One was back in 1f12 when the Congress determined that we would have a cost-of-living ad- jrutmesrt to preserve the value of benefits against inflation, trying to prevent the lowering of the standard of living of the recipients of social se- curity. And even now a large part of them have incomes below "the poverty level. One-sixth of the elderly of America today, in spite of social secu- rity, have total incomes less than the inoorame level of the poverty line. In the 1972 social security amend- ments, Congress provided that benefit co"-living adjustments would be de- termined by the Consumer Price Index. Unfortunately, the historical relationship between wages and prices reversed itself. In almost every year since 1972 the CPI has exceeded the wage increase, therefor precipitating an increase upon the demands of the social security funds. Rampant unemployment was the second cause of the system's funding problems, Today there are 12 million people unemployed, still looking for a job, and another 2 million who have given up that hope, and with those people unable to pay into social secu- rity because they do not have any pay check, is it any wonder that the old age and survivors insurance fund needs help through loans from the dia- ability insurance fund? That is what we have been considering here in the last few nmonths. In 1981 the President asked the American Congress to cut social secu- rity benefits by $88 billion in the 5 years succeeding 1981, and he induced the Congress to cut social security benefits in the succeeding 5 years by $19 billion. The next request of tlae President was to reduce by about a third the amount of benefits to be received by anybody retiring at 62 in order to dis- courage withdrawals from the work force. The next request of the President was to reduce by 10 percent the bene- fits of those retiring at 65 over the fol- lowing 5 years, and the last request was to reduce by about a third the number of people who are the beneficiaries of the disability insur- ance program, reducing the number insured for disability from 93 million to Be million. Well, by that time the sentiment of the Congress was very much opposed to those cuts, and so was the senti- ment of the country. Then the Presi- dent said, "I will withdraw those last requests. and we will set up a nonpar- tisan commission, a very objective and fair commission, to study the problems of social security and to make appro- priate recommendations." Be in December of 1981 the Social Security Commission was set up con- sisting of 15 members. Actually there were five active members appointed by the Democractic Party and supported by the Speaker. These five were the Honorable Lane Kirkland. head of the AFL-CIO, Senator PAT Movini sav of New York, I from this House, Ms. Martha Keyes, a former distinguished Member of this House, and the Honor- able Robert Ball, who had been for 12 years Commissioner of Social Security. There were five active Democrats, as I said. There were two other Demo- crats, but they were appointed by the Republican Party and never worked with us. One was Mr. Waggonner, a former distinguished Member of this House, and another was Mr. Trow- bridge, now head of the National Asso- ciation of Manufacturers. We started our deliberations under a very able chairman, Mr. Alan Green- span, in December 1981. The Commis- sion was supposed to expire at the end of December 1982 but by that time all that had happened was that we- five Democrats had made some proposals that could be the basis of negotiation for a package to be submitted to the President and the Congress. The White House had not made any pro- posals, and basically the Republicans on the committee had not made any. By that time the chairman appealed to the President to extend the life of the Commission. He extended it for 15 days. Finally, a week before January 15, the chairman induced the White House to enter into negotiations over the character of the recommendations of the Commmission. We struggled over this matter. The number of partici- pants in the negotiations increased. Finally, on Saturday afternoon late of January 15, just a few hours before the expiration of the Commission by its extended life; we obtained an agree- ment supported by the distinguished Speaker, by the President, and by 12 of the 15 members of the Commission. We came up with a package that pro-' vided revenue of $165 billion to cover the needs of the first phase of the problem, namely, the period from 1983 to 1989. The Commission agreement also solved two-thirds of the long-term deficit, which would bring the system into close actuarial balance. We were unable, however, to come to an agree- ment on closing the final one-third of the long-term deficit. There was a schism throughout the deliberations of the committee, a schism that rages on this floor today. The question was, do we want to meet the problems of social security by cut- ting benefits, or do we want to pre- serve the structure we now have and meet those needs in some other way? There was not a single permanent cut in the benefits to be received by the elderly now or yet to come in the recommendations of the Commission. I want to emphasize that. The Com- mission rejected a proposal that was first in the proposed recommenda- tions, namely, that we reduce the benefits to those retiring at 62 from 80 percent of what they would get if they retired at 65 to 76 percent. ^ 1830 The proposal was rejected by the Social Security Commission, and so the Commission is on record as not making any permanent cut in social security benefits for the present or future recipients from that great pro- gram. We came there that Saturday eve- ning, January 15, and 12 of us had agreed to sign that package. There were many aspects of that that every one of us detested and strenuously op- posed. I never thought I would ever vote to take away a day from the cost-of-living increases that were paid under the ex- isting law to the elderly. But that was in there, to cut out 6 months. I called the White House. I did everything I could to prevent any cut in the social security cost-of-living increases. And then I never believed that I would vote to tax any of the social se- curity benefits, and yet that package contained a provision that we tax for those in the higher income brackets one-half of their social security income, the half attributable to the employer contribution. These were great sacrifices. But we had to measure and to balance what we were required to give up with what we were getting. What were we getting? We were get- ting for the first time the commitment of the President of the United States and the Congress of the United States that social security benefits would be Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1068 CONGRESSIONAL RECORD -- HOUSE March 9, 1988 My dear friend, under Mr. PicxLE's this package. I have had to look into amendment, that lady's benefits would their face as their friend, as if I was be cut 12.5 percent from the amount their attorney and say, "Listen, I did of benefits she would be entitled to not come out as well as I wish I could under the present law of this land. The truth is that about half of the people who retire at 62 do so for rea- sons of ill health. An additional 20 per- cent are forced out of the labor market because they have been dis- criminated against an account of their age. I suggest that we just don't- know whether or not the need may be just as great out there in the future as it is today. The other day when I was testi- fying before the Ways and Means Committee on this matter, I looked around the room and I said, "I do not see any of these people that we are voting on to cut their benefit out there in the year 2008, 2017.11 I do not see any of them here today. Somehow I do not feel just right about exerting the privilege of relying on the law of the present and retiring at 65, but saying a man in the year 2000 or 2022 cannot retire when he is 65, he has to wait until he is 67. Why do I need to do that? Is that quite fair to him that I pre-judge his eligibility for these re- ceipts and the desirability of giving them to him? So, what I am proposing is we simply increase the payroll tax by 0.53 per- cent. Even if the worker had a salary of $36,000 a year my amendment would add only $190 in a year to the taxes that man would have to pay. Only 20 percent of the American people in their work make over $20,000 a year. So my amendment would not cause the expenditure of very much more. Furthermore, the Democratic five on the Commission expressed gravest doubt as to whether there will be any money at all needed in the last 25 years of the 75 with which we are dealing. Our estimate is-based on the work of technical people of great com- petence-that the money provided under the Commission agreement social security will come within 4.1 percent of meeting the projected need of the old age and survivors and dis- ability insurance programs over the ~..-I ne ---- The e..ninl .-A+17 flpt i. have in your case. I tried my best but I did not win all the things that I sought to achieve. You are going to have to pay a considerable price for the enjoyment of the boon of social se- curity in the years ahead. But, my friend, I want to tell you one thing, that withholding of the cost-of-living increase is only for 6 months. You only pay taxes on one-half of your social security benefits even if you are of the few who would be affected. The part of your benefits attributable to your half of the contribution would still be tax free, and it is still less than the tax you would have to pay on the benefits you recieve from the civil service retirement fund. But I want you to know that in return for that we brought you back something you can cherish. It will give assurance to you and your family that you have not en- joyed. You may now be sure that your social security protection will not be cut. Many an elderly person in America has quaked in his or her tracks won- dering from all they had heard coming out of Washington as to the dangers of social security, whether or not they would ever get another,aocial security check. And these young workers all over America, skeptical and cynical, have been saying, we have been rip- ping them off, making them pour their hard-earned dollars down a rat- hole that will never yield them any- thing in the future because they say, "Well, by the time I get to 62 or 65 there will not be any social security. If there is, it will not be anything but a shell and there will not be any money there for me." I have personally noticed, as I go around the country, in airports and other places, since this package has been'before this House, the number of young people who walked up to me and said, "We appreciate what you are trying to do for us on social security. Not just for my mother and father and my aunt and uncle, but for me as well." a personal experience. Last summer one of my brothers and I went back to east Alabama, where I was born and reared. And I visited with a lot of old relatives and friends all over that dear part of America. One afternoon I was sitting in a neat little home in Birmingham, talking to a first cousin of mine, a lady with whom I grew up in east Alabama. She was telling me about her two fine sons and she was so proud of them. One was a minister who had just been pro- moted to some prestigious position. The other was a businessman who was doing well. Suddently I said, "Eunice, do you have social security?" She said, "Oh, yes, I have social se- curity." "Well," I said, "you are all right then, aren't you? You have got your two fine sons to help you and you have got your social security." She drew herself up and said, "I have got my social security, I don't need my sons to help me. I don't want to be a drag on my sons. They have got children to support." What parent in America wants to be a burden upon his or her children no matter how faithful and loving they are? And yet here we twiddle over giving them a few more dollars a month, keeping them from being crushed from poverty down to misery, giving them the right to sustain that dignity. That is characteristic of this great country. I have done all I could. I leave the decision to my colleagues whether you are going to preserve this great institu- tion in its integrity. Mr. Chairman, I have a prepared statement which I would like to in- clude at this point in the RECORD: Mr. Chairman, I ask for unanimous consent to revise and extend my re- marks. Mr. Chairman, today this body will be asked to make a very difficult deci- sion. We will be called upon to act on a set of admittedly imperfect recommen- dations arrived at by the National Commission on Social Security Reform. The compromise agreement contains some provisions which I could not support as individual proposals. But there are a host of very compel- arses wiu tell you bLW, wueu yuu tLLo dealing with estimates of 50, 75 years We have restored their confidence ling reasons for this body to adopt the in the future, if your income and when we enact this measure that their legislative embodiment of the Commis- outgo are off only 5 percent, it is an Government really did care about sion agreement. acceptable figure that you have. their social security program. Their The most immediate reason is time. Furthermore, if my amendment is Government was committed as a point Under current law, the interfund bor- put in effect, when the Congress gets of honor to keep it strong and solvent rowing authorized by Congress has ex- out nearer to the time that it would and sound. pired. The last loan from the disability begin to take effect, if they do not an- Mr. Chairman, I wish this House insurance fund will help finance the ticipate there will be a real need for could follow the lesson and the exam- uninterrupted payment of old age and supplemental funds, all Congress has ple of the Social Security Commission survivors' insurance benefits through to do is to modify it or rescind it. But and reject any effort to contaminate the end of June. If we fail to act, these once you have frozen into the law the the compromise package with any cuts benefits-the lifeblood of 31 million principle of cuts in benefits by reduc- in social security benefits. If we will do people-will be delayed. ing the benefit formula or by raising that, this will be a monumental day in The most compelling reason is fair- the age of eligibility, that will remain the history of this country. It will be a ness. I believe the Commission pack- with us into the distant future. day that will mean an awful lot be- age represents a fair and equitable So, I am saying to you, my col- cause I just add this: Social security sharing of sacrifice. Beneficiaries are leagues, those people out there have gives something more than money to asked to defer their cost-of-living ad- suffered enough under this proposal, people over this country. If I may use justment, or COLA, for 6 months. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1070 CUTS IN BENEFITS UNNECESSARY CONGRESSIONAL RECORD - HOUSE March 9, 1989 If this is true, why are these two op- tions to cut social security benefits being given such serious considera- tion? I suspect that the remaining long-term actuarial deficit has con- vinced many of my colleagues that the system needs "fundamental reform." I would like to put this issue into some perspective. LONG-TERM FINANCING: CURRENT LAW Although much is said and written about the projected status of the trust funds 75 years from now, the truth is that very little is known. Assumptions made with respect to inflation, wage growth, GNP, employment, longevity,- immigration, interest and birth-rates are just that-assumptions. I would submit that there will be other factors which affect OASDI financing, ones we cannot even contemplate at pres- ent. That will emerge in the future. In short, I believe that we should ap- proach the long-term financing of OASDI with due humility and respect for the limitations of our ability to predict a future three-quarters of a century away. As projections are made further into the future, accuracy and reliability markedly diminish. Most nations with social insurance systems. make 25- or 50-year cost projections, but almost never beyond the latter. Only the United States and Canada make 75- year i tut Is important to With that virtually all of the problems associated with long-term OASDI financing occur during the last 25 years of the 75-year valuation period. The most striking aspect of the long- range financing picture is that under current law the OASDI programs are in close actuarial balance over the next 50 years. Demographic trends very favorable to OASDI financing which allow the buildup of large trust fund surpluses during the 1990's and the first decade of the 21st century ac- count for this little-known fact. Even absent any long-term financing measures by Congress, the cash-bene- fit programs are adequately financed for the next half-century. The reliabil- ity of estimates beyond 50 years are questionable at best. At worst, the i ro- jections for 50 to 75 years in the future have served as a rationale to make dramatic changes in the obliga- tions of the Nation's social insurance system. Because the system relies on the contributions of participants whose benefit obligations may not be paid for decades, I have opposed dra- matic changes in social security's bene- fit obligations based on assumptions about what may or may not occur 50 to 75 years from now. Nevertheless, I have supported ef- forts to bring the OASDI programs within close actuarial balance along the lines of the National Commission agreement. As the provisions of the Commission agreement indicate, it is possible to close the 75-year financing gap without reductions in benefit pro- tection. When the long-range estimates are considered in perspective, it is not dif- ficult to see how this is true. With no changes in current law, the average annual cost of OASDI is 14.38 percent of payroll over the next 75 years. During that time, the present law average annual contribution rate is 12.29 percent of payroll, leaving a defi- cit of 2.09 percent of payroll. Virtually all of the deficit accumu- lates during the final third of the 75- year valuation period, when the esti- mates are the least certain. Moreover, the shortfall amounts to 14.5 percent of program expenditures. In fact, the closer one examines the long-term fi- nancing of social security, the more that claims of impending calamity and intergenerational warfare ring hollow. LONG-TERM FINANCING AND COMMISSION RECOMMENDATIONS The recommendations of the Com- mission, as contained in title I of the bill, are known as short-term recom- mendations. If the truth-in-lending law were to apply to pending bills, however, this title might be called long- and short-term recommenda- tions. The provisions in title I reduce the deficit over the 75-year valuation period as a level which the social secu- rity actuaries regard as statistically in- significant. Enactment of these provi- sions-without the long-term cuts con- templated in the committee bill or the Pickle amendment-reduces the esti- mated deficit to within 0.68 percent of payroll. This would bring estimated revenues to within plus or minus 5 percent of estimated outlays, or within close actuarial balance. It is an irony of the highest order that both of the pending benefit re- ductions triggers in during the first decade of the 21st century. The very estimates used to justify these cuts project that the trust funds reserves will,be at their highest level in history: More than 200 percent of estimated annual outlays. Yet, this would be the very time that substantial benefit cuts would occur. In short, Mr. Speaker, reducing benefits for today's young workers is not only unwise and unfair, it is un- necessary. Neither of the pending benefit cuts belongs in this refinanc- ing legislation. There are far superior ways to finance the system's benefit obligations. A FAIR ALTERNATIVE My amendment would institute an employer/employee tax rate increase of 0.53 percent in the year 2010. This would increase the FICA tax rate from 6.2 percent which, under present law goes into effect in 1990, to 6.73 per- cent. Moreover, my amendment would preserve the self-employed net tax burden contained in the committee bill by adjusting the SECA tax credit to 2.1 percent of self-employed income. This amendment reduces the long- range OASDI deficit to exactly. zero while maintaining current law benefit levels. My amendment has several other ad- vantages over the benefit-reduction approaches: FLEXIBILITY Mr. Chairman, no one in this Cham- ber knows for sure whether the addi- tional financing contained in title II of the bill will be necessary or not. We are simply making the best guess we can. I am inclined to believe that the assumptions in SSA's long-term fore- casts are quite conservative, especially with respect to the birth rate and the immigration rate. But even under these assumptions, we have brought the system as close to long-term bal- ance as the actuaries expect under their criteria. There is simply no need to lock in the type_ of magnitude or benefit reductions proposed by the committee bill or the Pickle amend- ment. My amendment allows the greatest degree of flexibility to meet the sys- tem's anticipated need in the years 2022-2057. Should the additional fi- nancing provided in title II of the bill prove to be unnecessary, my intention is that Congress would repeal the tax rate increase provided in the amend- ment. I have little fear that Congress would allow an unnecessary tax in- crease to remain in the law. The other two alternatives before the House would lock in substantial reductions which would be difficult to repeal. Pension plans for millions of workers are integrated with social se- curity and contributions to the plans are set to the social security benefit level. A report prepared for the Senate Special Committee on Aging found that a reduction in the social security benefit formula would cost private pension plans billions of dollars annu- ally. There would be an additional cost to the taxpayers amounting to billions of dollars to the extent that these con- tributions are written off as a business expense. It is anticipated that raising the age of eligibility for full benefits would trigger a parallel increase in private pension plans. Tomorrow's retirees would find themselves in double jeop- ardy-losing private pension plan pro- tection at the same time they are losing social security protection. My amendment would avoid locking into law permanent reductions in benefits. 2. POSITION Time and time again, Mr. Chairman, this House has gone on record in its opposition to reductions in social secu- rity. Yet the committee bill resolves 60 percent of the long-term problem with cuts in basic benefits. I can assure my colleagues that the situation will be no better in the Senate. In fact, it is an- ticipated that in the other body, the entire long-range deficit will be ad- dressed by cutting benefits. I would submit that giving away 50 percent of our position-against cutting bene- fits-before going to conference is not Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1072 CONGRESSIONAL RECORD - HOUSE March 9, 198S I rise today, having made my choice, to support the Pepper amendment. And I do so for several reasons. First, the provision in the Pickle amendment, which raises the retire- ment age, actually reduces benefits and is part of a long-term solution which I consider wrong-headed and dangerous. To face the coal miners in my 20th Congressional District, who have lived a life fighting off black lung and tell them they must wait 2 more years, 2 more years for retirement in generations to came, is a burden that I would not take bane lightly. To force recipients 18 years from now into a level of reduced benefits is to deny the basic goals of social secu- rity, the dignity and independence which our predecessors fought so hard for 50 years ago. I concede the inherent fallibility of this process. Only 5 years ago, men and women in this Chamber, stood and announced to our Nation that they had saved the social security system and they were convinced that they had tenured its financial integrity for years to come. They were mistak- en. Our efforts today are an attempt to right the balance in the most success- ful social program this Nation has ever conceived or created. What if we are wrong today? The Pepper amendment and his ap- proach gives us more flexibility than any alternative, primarily because it does not force recipients to make diffi- cult and irreversible decisions early in their working careers. Increasing the retirement age could force decisions by people my age in their selection of per- sonal retirement plans which might not be remedied or modified without considerable expense or hardship. If we are wrong today and our econ- omy makes a better recovery than we envision, we have it within our power to reduce or eliminate this future tax. The choices before us are not easy. But if our predecessors in this Cham- ber had the courage to create social se- curity, let us today have the courage to insure its integrity in the future. Senator PEPPER'S amendment contin- ues that fine tradition, a tradition and a vision of independence and dignity for senior citizens. I proudly support Senator Perm's efforts and urge my colleagues to join me. Mr. SIMON. Mr. Chairman, will the gentleman yield? Mr. DURBIN. I yield to the gentle- man from Illinois. Mr. SIMON. I thank the gentleman for yielding. Mr. Chairman, I simply want to join the gentleman. I think one point that the gentleman makes we have to keep in mind. If this were social security for white collar workers then we would not need the Pepper amendment, but what we are talking about are wait- resses, we are talking about women who work in dress factories, we are talking about coal miners, people who are exhausted by the time they get to be 62 and 63 and 6!. I commend the gentleman from Illi- nois and I agree with him. Mr. DURBIN. I thank the gentle- man. Mr. PEPPER. Mr. Chairman, with apologies to my many friends that I would like to give longer time to, I regret to say that I have consumed so much time myself and I have to re- serve a little at the end, I am only going to be able to yield 1 minute each. But I do want every Member who would like to say something to be able to. Mr. Chairman, I yield 1 minute to the gentleman from Massachusetts (Mr. Forum). Mr. FRANK. Mr. Chairman, I be- lieve that the problem that we face today is part of an unfortunate trend. It is an unfortunate trend-that we have seen too much of in the country and I guess we are beginning to see it in the House-of not fully understand- ing the nature of the work that so many of our fellow citizens do. It is nice to talk about the era of the pushbutton and the computer and high technology. The fact remains that tens of millions of Americans now still and will in the future be working with their hands and their bodies in circumstances that are not always pleasant, in temperatures that are not conducive to good health. People who bend over machines and wield jack- hammers and do all of the difficult physical labor ought not to be told by this Congress that they will no longer have the option of retirement at 62. Then we are told, "Well, don't worry, they can go and apply for disability." ^ 1800 For people to say that, given what has happened with disability in the past couple years, is a cruel joke. We have people now in control of the dis- ability administration who think they have discovered miracle cures. They lay on the hands and people are cured. We have to adopt the Pepper amendment and respect the nature of hard work. Mr. CONABLE. Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. WYLiE). (Mr. WYLIE asked and was given permission to revise and extend his re- marks.) Mr. WYLIE. I thank the gentleman for yielding. Mr. Chairman, I did not intend to speak on this amendment, but I feel constrained to do so now and I must reluctantly oppose the amendment, since the fine gentleman from Florida offered it and I might otherwise per- haps be in favor of it. It does increase the tax in the bill. That is abhorrent to me. I wanted to make the observation that we are legislating by consensus nowadays it seems. Last week we had a consensus jobs bill. Today we have a consensus social security bill. Those subjects had to be addressed immedi- ately and it is to the credit of Presi- dent Reagan and House Speaker O'Nsu z and others in leadership posi- tions in both the House and the Senate that these problems of nation- al importance are being addressed in this manner. That the Speaker is cooperating was evidenced by the fast gavel on the pre- vious question earlier in the day: Mr. O'NEILL. Will the gentleman yield? Mr. WYLIE. Yes; I will be glad to yield. Mr. O'NEILL. Was the gentleman on the floor at that particular time? Mr. WYLIE. Yes; I was on the floor. Mr. O'NEILL. Then he had an op- portunity, because I looked to both sides and the only gentleman on that side that even made a move was the gentleman from Pennsylvania (Mr. WALKER). The gentleman did not stand. The gentleman did not rise. - I resent the statement of the gentle- man. Mr. WYLIE. Well, I am sorry if the Speaker was offended. Mr. O'NEILL. I acted in absolute complete fairness and had intended to do so all the way. Had there been any- body to stand, I would have recognized him. Mr. WYLIE. Sir, I did not mean to suggest that the Speaker was not acting in fairness at all. What I was suggesting was that we do have a con- sensus bill here that the gentleman has worked with the President of the United States-- Mr. O'NEILL. That is not what the gentleman said. The gentleman said I had a fast gavel and it was not a fast gavel. It was the normal procedure of this House and on a bill of this type I would never do a thing like that. I left the opportunity not only for a vote on the previous question, but for a vote on the rule and there was not a man on either side of the aisle that stood. Mr. WYLIE. Well, I respectfully sug- gest, sir, that I did not mean to offend the Speaker and it was not- Mr. O'NEILL. Well, the gentleman has offended me, perhaps unintention- ally, and I will accept his apology. Mr. WYLIE. I am sorry for that. But in any event, Mr. Chairman, I have concluded that we must face re- ality and pass the bill before us today. We cannot admit to a shortfall in the social security fund of $200 billion in the next 7 years and do nothing about it. Social security recipients must not be Intimidated by the thought of bankruptcy in the system. I do not like some parts of the package- The CHAIRMAN. The time of the gentleman from Ohio (Mr. W3tLIE) has expired. Mr. CONABLE. Mr. Chairman, I yield 1 additional minute to the gen- tleman from Ohio. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 March 9,1988 CONGRESSIONAL'-RECORD -HOUSE Mr. WYLIE. I thank the gentleman for yielding. Mr. Chairman, I do not feel it is in the best interests of the Federal work- ers or of the social security system to have Federal workers merged Into the social security system. I think it would be better to have a broader bAse of separate pension program& rather than throw them all into one massive system. Including Federal employees does not under present financing ar- rangements help solve the problem since the Federal employees' retire- ment program is not In itself self-sus- taining. This bill is a major accomplishment. A consensus was reached as to how the immediate crisis could be solved and social security kept solvent for at least the next 30 years. The bill provides a forum to avoid a bitter partisan battle over social secu rity so we can go on to other problems. It would be easy to vote no because the Federal employees are Included or because self-employed people are in- cluded. Yes; there is a lot to disagree with in this bill, but overriding all this, it seems to me is the fact that we do not have any better alternative. I have concluded a no vote would be worse than an aye vote. Mr. PEPPER. Mr. Chairman, I yield 1 minute to the gentleman from Min- nesota (Mr. VINT0). (Mr. VENTO asked and was given permission to revise and extend his re- Mr. VENTO. Mr. Chairman. I rise In strong support of the Pepper amend- ment to H.R. 1900. We have a basic choice to respond to the long-term deficit problem facing the social security system. The Pepper approach suggests that we do so by raising the tax about one-half percent in the year 2010. 1 for one do not object to that Increase In cost of the mature social security system. Remem- ber that all of the money collected by the social security program goes to pay the benefits of the program, In es- sence, it goes to the survivors, the spouses, the retired workers of Amer- ica. - It is always difficult to propose tax increases to pay for programs that is one of the major problems with today's Federal fiscal policy. While social security problems can be counted as $2 or $3 billion of short- fall, the rest of the Federal budget deficit shortfall is counted in the hun- dred's of billions. This social security system and its benefit structure are sound, far more sound than some crit- ics would have us believe today. The Pepper approach to dealing with the long-term deficit, Indeed if there is one In the year 2010, is appro- priate. It keeps faith with todays work- ers. On the other hand the Pickle amendment which just passed and hopefully we will now overturn,. breaks faith with the American workers. The Pickle aamendame t will r0olve the long-term deficit problem' by cutting benefits in a'mnjque*way:.. The Pidde approach will save that revenue because many potential. re- cipients will indeed noti live to gain the benefits that they otherwise, would have been paid under the existing social security the current social con- tract. It literally saves the social security system by running it and makes it gain on the bones apd the death of the po- tential beneficiaries. I think this is wrong and urge my colleague to reject the Pickle approach. We do not have to break faith with the American worker. we do. not have to pull the rug out from under the group in our society who will be asked to pay the highest taxes both payroll and other domestic taxes of any gen- eration in our history. Mr. Speaker. let we address one unique argument that the proponents who urge us today to raise the age to 67 for full social security benefits, that life expectancy has and perhaps will increase dramatically justifying this change. Let me point out the truth and the fact and at once the fallacy of this supposition. Yes, life expectancy has Increased dramatically however, working life ex- pectancy now and In the future can better be expressed in months not years. The fact is that workers who started working at the Inception of the social security program are little different from todays workers. Therefore what the Pickle amendment amounts to is a significant cut in benefits, virtually a reneging, a shrinking from the great socialcontract that social security rep- resents. To many Members they may feel that we are dealing with something that does not matter very much, that In essence nobody will notice this rais- ing of the retirement age. I can tell you that you are wrong, it will be, screamed in the headlines across this country, it will do more to break the confidence than any recent action. the confidence of Americans In this Con- gress, at the first opportunity we will have withdrawn from a long-standing commitment and really shattered the dreams of workers across America. I simply can not understand the logic of this Congress, this House reaching out over 20 years to create this type of credibility gap, creating a loss of confidence In the Institution of social security. We would be well advised to adopt the Pepper amendment and keep our problem solving to the near and mid- term social security issue and leave a few questions to future Members of this distinguished body. It could almost be comical today if the implications of this change were not as profound as they are. It is ludi- crous to assume we will do anything H 1073 but harm if we do not move to pass the Pepper amendment. Mr. Chairman. we are sitting and looking today at a very unique situa- tion. I for one am not offended by the Pepper approach In terms of raising taxes by a half percent in the year 2010 In order to provide benefits for those that are on social security. I would remind my colleagues In this House that all the money that is paid Into the social security program Indeed is paid out tol the recipients, generally to the aged, and the others we have classified. The only way the proposition of the gentleman from Texas (Mr. Pima) actually saves money as because a lot of people that otherwise would engage .the benefit will not. a large extent it Is because they are going to be dead. That is the way that It saves money. That is one way to do it. This is the other way. I think this breaks faith with the social contract that exists, because indeed while life expectancy has in- creased dramatically. .king life ex- pectancy has not. and consequence of that is that we will be breaking faith with those workers today in a mature system of social security that we are asking to pay the greatest amount of any participants in history. Let us vote up the Pepper amend- ment and then pass this social security package-a package I boat say that is a bitter pill to accept but necessary be- cause of the dire condition In our economy. The price of a failed eco- I can support this package without the Pickle amendment with little en- thusiasm, but with Pickle I feel the basic fabric of this compromise pack- age is torn. So let us vote for the Pepper ap- proach and pass this package today. Mr. PEPPER. Mr. Chairman, I yield i minute to the able gentlewoman from Ohio (Ms. OAxxa). (Ms. OAKAR asked and was given permission to revise and extend her re- marks.) Ms. OAKAR. Mr. Chairman. I sup- port the Pepper amendment. If the Pickle amendment prevails, it will be devastating for women. For women. social security is their only retirement benefit and now it is about $250 a month. If women retire at age 62, it is about $189 a month. It will not be that much better In the year 2000. The Pickle amendment cuts that benefit 12% percent if they retire at 82 and 20 percent, it is estimated, if they retire at 67. Now, Mr. Chairman, studies show that the mortality rate of women is declining and their disability rate is rising. If the Pickle amendment pre- vails, women will be-in trouble. I want to just tell this male-dominat- ed body, whom I respect, women are tired of seeing the budget cuts that affect them. the .dls~ation In In- surance and pensions and now what Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1074 CONGRESSIONAL RECORD - you want to do to women is to clobber them with the Pickle amendment. It is unfair. Who do you trust? Do you trust the original Reagan proposal or do you trust Senator Crnvna PEPPER? I trust Sentator Ci. uns PzPrsa and I hope you support his amendment. Mr. PEPPER. Mr. Chairman, I yield 1 minute to the able gentleman from Ohio (Mr. STOKEs). Mr. STOKES. Mr. Chairman, first, I wart to congratulate the gentleman from Florida (Mr. Pappas) for the ex- cellent statement he made in the well today. He has had many fine hours in this Chamber, but today certainly was his finest hour. I want to say to him that I think that we are indeed fortunate that he has offered this amendment and if we support this amendment, we have an opportunity this afternoon to correct a very inequitable and unfair situa- tion. I am concerned particularly about the effect of a reduction in benefits when people receiving their checks are already receiving checks that are at about the poverty line. When we con- sider the fact that the average check is about $406 per month, or about $4,800 per year, and the poverty line is $4,500, then we realize that an addi- tional cut on these people is certainly unfair and inequitable. In addition to this, the speaker right before me, the gentlewoman from Ohio, has mentioned the unfairness as it relates to women; but also, Mr. Chairman, both minorities afid women suffer more than others by benefit re- ductions. Even though this legislation em- bodies a major compromise, there are key elements of the entire bill which I cannot, in good conscience, compro- mise on. Mr. Chairman, among the other pro- visions of particular concern to me is the recommendation to place new Fed- eral hires under the social security system. I see this as an unfair, un- sound, and unjustifiable proposal. Adding millions of people to an al- ready overburdened social security system just does not make sense. Mr. Chairman, Federal workers cur- rently pay 7 percent of their salaries into the civil service retirement system. Under current funding, the civil service retirement system is fi- nancially sound and will remain so for at least 100 years. But retirement sys- tems depend on receipts from current employees to pay benefits to retired workers. Placing newly hired workers under social security instead of the civil service retirement system would quickly bankrupt civil service retire- ment. Once bankrupt, the cost to the taxpayers to meet civil service retire- ment benefits already promised would be immense-a n1inimum of $185 bil- lion according to independent re- search. Mr. Chairman, advocates claim that placing newly hired Federal workers HOUSE March 9, 1989 under social security will help in the short run. However, today's contribu- tor will become tomorrow's liability. Instead of the $9.3 billion savings claimed by the Ways and Means Com- mittee, other estimates show a short- term savings of less than $5 billion be- tween 1983 and 1989. Even these short-term gains, however, would be offset by increased Government costs in the future. Mr. Chairman, the Government would have to increase its payments into the civil service retirement trust fund just to offset the revenue lost that will occur as new workers pay into the social security system. Unless these payments are made, the civil service retirement system reserve will gradually disappear. If no new employ- ees contribute to the civil service re- tirement fund, the reserve will be ex- hausted in about 20 years, and the civil service retirement system will be in the same position as the social secu- rity system is now-current revenues will not be sufficient to meet all cur- rent obligations. Given these facts, it is difficult to see what the attractiveness is of plac- ing newly hired Federal workers under the social security system. I do not see it, and neither do the millions of Americans who have raised their voices in opposition to this provision. In addition, Mr. Chairman, I cannot support the provision of the commit- tee bill to defer the cost-of-living ad- justment due in July 1983 until Janu- ary 1984, and paying all future cost-of- living adjustments in January instead of the previous July. Mr. Chairman, this provision would only result in reduced benefit levels- compared to the levels that would pre- vail under current law-not only in 1983 but also in future years, because each year social security recipients would have to wait 6 months longer to receive their COLA's than they would under present law. Mr. Chairman, there are 26 million senior citizens in this country. Sixteen percent of all senior citizens have in- comes at or below the poverty level and are struggling to make ends meet. Any proposal to modify or reduce their cost-of-living adjustments will only place an even greater economic hardship on the aged and dramatically reduce their present standard of living. In spite of the obvious needs of our Nation's senior citizens, Federal budget reductions implemented last year have already imposed heavy bur- dens on the elderly. Due to the admin- istration's policies, benefits to the most needy senior citizens under the food stamp, medicare and housing as- sistance programs have been cut. In fiscal year 1983, the President pro- posed additional cuts in not only these programs but also in senior citizen em- ployment, social services, and nutri- tion programs. Mr. Chairman, the elderly have al- ready suffered more than their fair share in budget reductions. This delay in the cost-of-living adjustment will only cause more hardship for the low- income elderly who can ill-afford any reduction in their protection against the rising cost of living. And finally, Mr. Chairman, I must voice 'my strong opposition to the amendment, offered by the gentleman from Texas, Mr. Pica i.z. The Pickle amendment would strike the provi- sions reducing initial benefit levels be- ginning in the year 2000 and raising payroll taxes beginning in the year 2015. Consequently, the amendment would gradually raise the normal social security retirement age from 65 to 67. Mr. Chairman, raising the retire- ment age under social security will have an extremely negative impact on those people who are unable to work beyond age 65-or age 62, for that matter because of poor health or be- cause they have lost their jobs and are unlikely to be able to find new employ- ment at an advanced age. The Pickle amendment assumes that jobs will be readily available to all who want them. and it also assumes that the disability program will be "improved" to take care of those who cannot continue to work. Persons in low-paid, physically demanding work, and minorities who have a lower life expectancy, will be heavy losers if the social security re- tirement age is raised. Further, Mr. Chairman, the Pickle amendment clearly constitutes an- other benefit cut for the elderly and uses this benefit cut to make up the estimated shortfall. Instead of the Pickle amendment, I favor the amend- ment offered by the distinguished gen- tleman from Florida, Mr. PEPPER. The Pepper amendment eliminates the re- maining projected shortfall in the social security trust funds without re- sorting to benefit cuts beyond those recommended by the Social Security Commission. Mr. Chairman, I urge those of my colleagues who may be tempted to ap- prove raising the retirement age, to ask themselves if they are also firmly committed to coupling this change with new job training and placement programs, not just for dislocated work- ers, but also for persons in their sixty's with limited paid work experience; whether they are willing to support more liberal disability programs for persons unable to work; whether they will stand behind vigorous enforce- ment laws prohibiting age, sex, and racial discrimination in employment. Mr. Chairman, without an integral linking of such policies, raising the age of retirement or decreasing replace- ment rates may contribute to the actu- arial balance of the social security system, but will also aggravate the "actuarial balance" between affluence and poverty in this Nation. Mr. Chairman. if the Pepper amend- ment fails I cannot in good oonsicence support this legislation. I urge my col- Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1076 CONGRESSIONAL RECORD.- HOUSE March 9, 1989 For me to vote for H.R. 1900, I had the 0.68-percent deficit by making 60 an amendment that directs the Secre- to satisfy both my concerns, which I percent of that deficit in reductions in tary of HHS to give us a description of share with these Federal workers, and benefits and an increase of 0.24 per. the occupational disabilities. So all those of the many people who have cent in taxes. It does both. these concerns that have been ex- taken the time to visit me in my dis- There has been criticism, as I said, pressed have been taken care of, and trict and in Washington. In today's that the Pickle amendment clobbers they are not taken care of in the bill. debate, the gentleman from Michigan, the ladies, that it hurts the coal If Members follow the bill at this time, chairman of the Post Office and Civil Miners, and that it prevents the young then they must understand that they Service Committee, Mr. Foxe, has as- from being able to retire on time. would get none of that relief. sured this body and Federal workers What we can do today we can still do Mr. SEIBERLING. Mr. Chairman, that his committee recognizes its re- under the amendment we just passed. will the gentleman yield? sponsibility and will fashion a plan to My amendment does not change any The CHAIRMAN. The time of the insure that Federal workers get the of that. It does not change the right to gentleman from Texas (Mr. PicxaE) full retirement benefits they have claim benefits at 62, nor does it affect has expired. been promised for many years. I am medicare at 65, nor does it affect SSI. Mr. CONABLE. Mr. Chariman, I confident that the Congress will act to We simply do not touch that. Yield 1 additional minute to the gen- make sure our contract with Federal Now, it is true that if one did not tleman from Texas (Mr. Picxs.E). workers will be fulfilled. stay in the work force 1 more year, in Mr. PICKLE. I yield to the gentle- Mr. CONABLE. Mr. Chairman, I the year 2009 approximately, then man from Ohio. yield such time as he may consume to there would be some slowing in the Mr. SEIBERLING. Mr. Chairman, I the gentleman from Idaho (Mr. growth of benefits. I am of the opinion thank the gentleman from yielding. CRAIG). that the American people would permission to revise and extend his re- change in the social security program. about the fact that this bill raises marks.) That is not being harsh. If we leave social adds to th the e Increasingly taxes end that Mr. CRAIG. Mr. Chairman, I stand our hearts to control what we do, we this addds to asingly regressive in opposition to the Pepper amend- would then raise benefits and raise character of our entire taxing system. ment that taxes are not the solution taxes, and then everybody could retire I taxes, but with them not worried about bout Ing to our problem. with all the money in the world they whappens I in 2010, worried a from [Mr. CRAIG addressed the Commit- need, what h 2, 20 years from tee. His remarks will appear hereafter Social security is not a full retire- now. in the Extensions of Remarks.] ment program. It is a floor. It is a sup- We have to the de payroll something tax, oon element, and it can be supported only about cutting , and soon ^ 1820 have a means of doing so. The medi- as long as the American people will Mr. CONABLE. Mr. Chairman, I support it. I say to the Members that care program is going to be in the yield 5 minutes to the gentleman from if we keep going in the direction of same financial fix that social security Texas (Mr. Piciu ). Senator PEPPER, then there will be a is at the end of this next decade. We (Mr. PICKLE asked and was given generation gap, there will be genera- can move on that, transfer the cost of permission to revise and extend his re- tion conflict, and our young people medicare to the generations, and cut marks.) simply will not continue to support it. the payroll taxes. That is what we Mr. PICKLE. Mr. Chairman, first When we go to any of our high ought to be doing. and foremost, I want to pay my re- school groups, when we go to our Mr. PICKLE. Mr. Chairman, the spects to my dear friend, Senator young businessmen's groups, and ask question on the amendment we have PEPPER. He and I do have a difference them, "Which do you want to do, raise before us and the controversy we have on the approach we should take in the taxes or raise the age?" By a 9-to-i is, how do we handle the long range? long term. Mine is as sincere as I know vote, or more, they say, "Do not raise In the short range this bill raises $165 his is. I have advocated this for 2 taxes." billion, so we do not have a shortfall, years. I think it is the proper ap- If we go to our elderly people, as I and we have taken every precaution proach. have in my senior citizens' homes, and that the money will be there. But If I have asked for this time simply to ask them, "Should we raise taxes po- we just raise taxes, we must under- say to my colleagues that a great tentially?" As much as they want the stand that taxes cause inflation and many statements have been made in benefits, they do not endorse that taxes cause unemployment. the well now that are not factually automatically because they have chil- Mr. SEIBERLING. Mr. Chairman, I correct, and I would hope that we dren; they have sons and grandsons, could not agree with the gentleman would not be so worked up emotional- daughters and granddaughters coming more in that respect. ly that we lose sight of the fact of ex- up. - The CHAIRMAN. The time of the actly what we have done. The temptation is just to say, "Let gentleman from Texas (Mr. Pzcxz.E) Let me respond first by saying that us raise taxes a modest amount and has expired. if we go with Senator PEPPER's amend- pay these benefits." That is what we Mr. CONABLE. Mr. Chairman, I ment now, we are saying in effect that would like to do. None of us ran on a yield myself 2 minutes. from now on the only way we will cor- platform that we want to cut benefits, Mr. Chairman, I had not intended to rect long-term deficits in the social se- but I do think that the American say anything further, but it does occur curity program is to raise taxes. There people expect us to do the responsible to me that the point the gentleman must be some other way than just to thing, and that is to keep the social se- from Texas (Mr. PICKLE) makes is a keep raising taxes, because eventually curity program solvent. terribly important one. that is going to get so onerous the Let us not think for a moment now We must have the capacity to American people will rebel. We know that what we have done at 62 would reform critical institutions like the that under the committee bill it is over keep everybody in so they cannot get social security system. Institutions 15 percent, and within a short time, by benefits for another 2 years. That is which cannot be reformed become Senator PEPPER's amendment, it would not correct. They have about five op- rigid and eventually shatter. The be 16.3 percent. There just simply tions to retire and take early retire- social contract must be a pliable thing, must be some way to correct the social ment now. I do not change any of bent to the public will and adjusted to security problem other than by just that. There is a slight reduction in 20 the needs of the times. raising taxes. I would think that the years from now, there is another one For instance. at some time I hope approach we have taken will do that. in the year 2027, but there are no the social security system can be re- Let us keep in mind that the amend- taxes and nobody is hurt. formed to provide a better system of ment we have just passed does not Most of all-and I want the Mem- benefits for working women. As it was raise taxes. The bill has a reduction of bers to hear this-we put in this bill drawn in 1935, the social security Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 I Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1078 Lott Parris Snows Lowery (CA) Pashayan Snyder Lowry (WA) Patman Solara Luian Paul Solomon Luken Pease Spence Lundine Penny Spratt Lungren Pepper Staggers Mack Perkins Stangeland MacKay Petri Stenho)m Madigan Pickle Stokes Markey Porter Stratton Marlenee Price Studds Marriott Pritchard stump Martin (IL) Pursell Sundquffit Martin (NC) Quillen swift Martin (NY) Rahall Synar Martinez Rangel Talton Matsui Ratchford Tauke Mavroules Ray Tauzin Masson Regula Taylor McCain Reid Thomas (CA) McCandless Richardson Thomas (OA) McCloskey Ridge Torres McCollum Rinaldo Torricelli McCurdy Ritter Towns McDade Roberts Traxler McEwen Robinson Valentine McGrath Rodino Vander Jagt McHugh Roe Vandergriff McKernan Roemer Vento McNulty Rogers Volkmer Mica Rose Vucanovlch Michel Rostenkowski Walgren Mikulskl Roth Walker Miller (CA) Roukema Watkins Miller (OH) Rowland Waxman Mineta Roybal Weaver Miniah Rudd Weber Mitchell Russo Weiss Moakley saw Wheat Molinari Savage Whitehurat Mollohan sawyer Whitley Montgomery Schneider Whittaker Moody Schroeder Whitten Moore Schulse Williams (MT) Moorhead Schumer Williams (OH) Morrison (CT) Seiberling Wilson Mrasek Shannon Winn Murphy Sharp Wirth -Murtha Shaw Wise Myers Shelby Wolf Natcher Shumway Wolpe Nelson Sikorski Wortley Nichols Siljander Wright Nielson Simon Wyden Nowak Sisisky Wylie O'Brien Skeen Yates Oskar Skelton Yatron Oberstar Slattery Young (AX) Obey Smith (FL) Young (FL) Olin Smith (IA) Young (MO) Owens Smith (NE) Zablocki Oxley Smith (NJ) Zschau Packard Smith, Denny Panetta Smith, Robert ^ 1850 The CHAIRMAN. Four hundred and three Members have answered to their names, a quorum is present, and the Committee will resume its business. The Chair recognizes the gentleman from Florida (Mr. PEPPim). Mr. PEPPER. Mr. Chairman, I yield the remainder of my time to our dis- tinguished Speaker, the gentleman from Massachusetts (Mr. O'NEILL). (Mr. O'NEILL asked and was given permission to revise and extend his re- marks.) Mr. O'NEILL. Mr. Chairman, I rise in support of the amendment offered- by Senator PEPPER. However, before I address myself to that amendment, I want to commend Chairman DAN Ros- TENKOwsKI, JAKE PICKLE, HAROLD FORD, and ANDY JACOBS for the excel- lent work they have done in bringing this landmark legislation to the floor. It Is Just about a year ago the Presi- dent of the United States, President Reagan, was proposing a national com- CONGRESSIONAL RECORD - HOUSE March 9, 1983 mission. And it was decided that a na- And then they came to us a second tional commission would be appointed. time and they said, "Will you drop I appointed Chairman CLAUDE PEPPER, them out?" Robert Ball and Martha Keys to the We told them that we were going to National Commission on Social Secu- put in future employees and they rity Reform. Senator BYRD appointed winked as though everything was fine. the following Democrats, Senator And suddenly they appear on the hori- MOYNIHAN, and Lane Kirkland. zon here and to those appearing here, When I appointed them there was I think it has been very, very unfair, little hope that the Commission would because in no way have we hurt them accomplish much. Well, in fact, it has whatsoever. accomplished a great deal and reached What is this bill all about today? a general consensus of the nature of The truth of the matter is we are all the problem and the measures neces- in agreement on both sides of the aisle sary to deal with the problem. as far as saving the system as of today For all of this, I want to thank and today is the day of crisis. Because CLAUDE PEPPER. What a beautiful and of this bill the social security is secure brilliant Job you did. It is regrettable for the next 25 or 30 years. that we did not have more Members But we are thinking beyond 25 and on the floor today when you gave 30 years. That is what the argument is those brilliant remarks. In my 30 years all about today. AV, was one of the finest speeches I have ever heard. I want to thank all the members of the Commission, particularly the ones that I appointed myself. I had the op- portunity of seeing Martha here today and Bob Ball out in the hall. It was a bipartisan consensus and a bipartisan report. That report is the basis of legislation which we are con- sidering today. We owe a debt of grati- tude to every member of the Commis- sion for their hard work and their per- severance in producing this report. Social security represents a basic contract between the Government and the citizens of this Nation. No pro- gram affects more Americans, no pro- gram is as sacred as this one, and, con- sequently, saving it and reforming it is difficult and controversial. The program was enacted because of a crisis, the Great Depression. In 1935 only one-sixth of the Nation's elderly had income from savings or invest- ments to live on. Sixty percent of the elderly lived in poverty back in the thirties. And upholding the constitu- tionality of the social security, Su- preme Court Justice Cardozo observed, the Nation responded to the call of the distressed when it passed the social security tax. Well. I myself worked with the Com- mission. So many times with the Com- mission, so many times did I talk to them I would have to say probably 50 times along the line. We discussed the definitions, we discussed the 6-month COLA. Could we go along with it? But no benefit cuts along the line, it was agreed. We talked about taxing a portion of social security benefits, that part the employer had paid in for the recipient. All right. No benefit cuts were to be made. We talked about the Federal em- ployees and I have seen so many around here. Originally is was thought that we would put all the Federal em- ployees in. Then the unions came, the Federal unions. "Would you drop out the Federal employees?" And then we put in those who had not been vested, had been here but 5 years and were not vested. It came down to three issues. The issue of the committee's amendment that was amended by the gentleman from Texas (Mr. PICKLE). And the amendment as written in the bill was really a compromise between the Pepper amendment and the Pickle amendment. And so basically it came down to this: Is there any increase in tax? I would have to say, yes, there is an in- crease in tax in all three bills. How is there an increase? I see the gentleman from Texas rises himself. Well, in 1984, goes to 5.70 and it remains at that. In 1988 the current law stays at 5.70, the committee bill, which is not changed by the gentleman's amend- ment, goes to 6.06. In 1989, it remains at 6.06. And in 1990, it goes to 6.20. The difference betwen the gentle- man's bill and DAN RosTI NKOwsKI's, the Ways and Means Committee bill, was the Ways and Means Committee increased that 6.2 by 0.25 in 2015. That is twenty-four one-hundredths percent. And then there are the bend point changes. The Pepper bill, what the Pepper bill does is increase the tax rate in the year 2010 by 0.54. Point 54, that is not 54 percent, that is Just a little more than one-half of 1 percent in the year 2010. Well, what the Pickle did along the line was this. As far as the committee bill, the workers retiring at the age of 62 in the year 2007, there was a deduc- tion of 5 percent in the benefits. The Pickle bill, 6 percent in the benefits. If you retired at the age of 62 in the 2022, 5 percent in the committee bill; 12 percent in the Pickle bill. And so it goes along that way. If you go to 66, 67, the increases are that you take it out of the benefits. It comes down to basically this: Should you in- crease the tax one-half of 1 percent or should you cut those who retire at the age of 62 ultimately 14 percent, be- cause you cut them from 80 to 70 per- cent of full benefits, is a 12-percent cut. Now the interesting thing about it is this. It is Just a question of philosophy as to what you believe in. I want the Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 R 198? CONGRESSIONAL RECORD - HOUSE The SPEAKER. Under the rule, the previous question is ordered. The question is on the amendment. The question was taken; and the Speaker announced that the ayes ap- peared to have it. RE004IBE0 VOTI Mr. WEISS. Mr. Speaker, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic device, and there were-ayes 230, noes 200, not voting 3, as follows: [Roll No. 251 AYES-230 Alexander Gramm Olin Andrews (TX) Green Ortiz Annunzio Gregg Oxley Anthony Gunderson Packard Archer Hall, Ralph Parris AuCoin Hall. Sam Pashaysn Badham Hamilton Paul Barnard Hammerschmidt Penny Bartlett Hance Petri Bateman Hansen (ID) Pickle Bates Hansen (UT) Porter Bedell Hartnett Pritchard Bellenson Hatcher Pursell Bennett Hefner Quillen Bereuter Heftel Ray Bethune Hightower Ridge Bilirakis Hiler Ritter Bliley Hillis Roberts Boehlert Holt Robinson Boggs Hopkins Roemer Bouquard Horton Rogers Breaux Hunter Rostenkowski Brooks Hutto Roth Broomfield Hyde Roukema Brown (CO) Ireland Rowland Broyhill Jeffords Rudd Burton (IN) Jenkins Sawyer Byron Jones (NC) Schulze Campbell Jones (OK) Sensenbrenner Carney Kasich Shaw Carper Kazen Shelby Chandler Kemp Shumway Chappell Kindness Shuster Chapple Kramer Siljander Cheney Lagomarsino Skeen Clarke Latta Slattery Clinger Leach Smith (NE) Coats Leath Smith (NJ) Coleman (MO) Lent Smith, Denny Coleman (TX) Levitas Smith, Robert Conable Lewis (CA) Snowe Cooper Lipinski Solomon Corcoran Livingston Spence Coughlin Loeffler Stangeland Courter Lott Stark Craig Lowery (CA) Stenhoim Crane, Daniel Lujan Stratton Crane, Philip Lundine Studds Daniel Lungren Stump Dannemeyer Mack Sundquist Daschle MacKay Synar Daub Madigan Tauke de Is Garza Marlenee Tauzin DeWine Marriott Taylor Dickinson Martin (IL) Thomas (CA) Downey Martin (NC) Thomas (GA) Dreier Martin (NY) Udall Duncan Matsui Valentine Edwards (AL) Mazzoli Vander Jagt Edwards (OK) McCain Vandergriff Emerson McCandless Vucanovich English McCollum Walker Erlenborn McCurdy Watkins Evans (IA) McDonald Weber Fiedler McEwen Whitehurst Fields McGrath Whitley Fish McKernan Whittaker Flippo McKinney Wilson Forsythe McNulty Winn Franklin Michel Wolf Frenzel Montgomery Wortley Fuqua Moore Wright Gekas Moorhead Wylie Gibbons Morrison (WA) Young (AK) Gingrich Myers Young (FL) Glickman Nielson Zschau Gradison O'Brien NOES--200 Ackerman Gilman Ottinger Addabbo Gonzales Owens Akaka Ooodigog Panetta Albosta Gore Patman Anderson Gray Patterson Andrews (NC) amirini Pease Applegate Hall (IN) Pepper Aspin Hall (OH) Perkins Barnes Harkin Price Berman Harrison Rahall Bevill Hawkins Rangel Biaggi Hertel Ratchford Boner Howard Regula Bonlor Boyer Reid Bonker Hubbard Richardson Borski Huckaby Rinaldo Bosco Hughes Rodino Boucher Jacobs Roe Boxer Johnson Rose Britt Jones (TN) Roybal Brown (CA) Kaptur Russo Bryant Kastenmeier Sabo Burton (CA) Kennelly Savage Carr Kildee Scheuer Clay Kogovsek Schneider Coelho Kolter Schroeder Collins Kostmayer Schumer Conte LaPalce Seiberling Conyers Lantos Shannon Coyne Lehman (CA) Sharp Crockett Lehman (FL) Sikorski D'Amours Leland Simon Davis Levin Sisisky Dellums Levine - Skelton Derrick Lewis (FL) Smith (FL) Dicks Long (LA) Smith (IA) Dingell Long (MD) Snyder Dixon Lowry (WA) Solarz Donnelly Luken Spratt Dorgan Markey St Germain Dowdy Martinez Staggers Durbin Mavroules Stokes Dwyer McCloskey Swift Dymally McDade Tallon Dyson McHugh Torres Early Mica Torricelli Eckart Mikulski Towns Edgar Miller (CA) Traxler Edwards (CA) Miller (OH) Vento Erdreich Mineta Volkmer Evans (IL) Minish Walgren Fascell Mitchell Waxman Fazio Moakley Weaver Feighan Molinari Weiss Ferraro Mollohan Wheat Florio Moody Whitten Foglietta Morrison (CT) Williams (MT) Foley Mrazek Williams (OH) Ford (MI) Murphy Wirth Ford (TN) Murtha Wise Fowler Hatcher Wolpe Frank Nelson Wyden Frost Nichols Yates Garcia Nowak Yatron Gaydos Oakar Young (MO) Gejdenson Oberstar Zablocki Gephardt Obey NOT VOTING-3 Boland Neal Washington ^ 1930 Mr. SCHEUER and Mr. RANGEL changed their votes from "aye" to "no.,, So the amendment was agreed to. The result of the vote was an- nounced as above recorded. The SPEAKER. The question is on the engrossment and third reading of the bill. The bill was ordered to be engrossed and read a third time, and was read the third time. MOTION TO RECOMMIT OFFERED BY MR. ARCHER Mr. ARCHER. Mr. Speaker, I offer a motion to recommit. The SPEAKER. Is the gentleman opposed to the bill? Mr. ARCHER. In its present form I am, Mr. Speaker. March 9, 1989 The SPEAKER. The Clerk will report the motion to recommit. The Clerk read as follows: Mr. ARcHgR moves to -recommit the bill, H.R. 1900, to the Committee on Ways and Means. The SPEAKER. Without objection, the previous question is ordered on the motion to iecommit. There was no objection. The SPEAKER. The question is on the motion to recommit. The motion to recommit was reject- ed. The SPEAKER. The question is on the passage of the bill. The question was taken; and the Speaker announced that the ayes ap- peared to have it. RECORDED VOTE Mr. ROSTENKOWSKI. Mr. Speak- er, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic device and there were-ayes 282, noes 148, not voting 3, as follows: [Roll No. 261 AYES-282 Albosta Derrick Ireland Alexander Dickinson Jacobs Anderson Dicks Jeffor is Andrews (NC) Dingell Jenkins Andrews (TX) Dorgan Johnson Annunzio Downey Jones (NC) Anthony Duncan Jones (OK) Applegate Durbin Kaptur Aspin Dwyer Kasich AuCoin Dyson Kastenmeler Badham Eckart Kennelly Barnard Edgar Kogovsek Bartlett Edwards (AL) Kolter Bateman Edwards (CA) LaFalce Bates Edwards (OK) Latta Bedell Emerson Leach Beilenson English Lehman (CA) Bennett Erdreich Lehman (FL) Berman Erlenborn Levin Bevill Evans (IA) Levitas Biaggi Fascell Lewis (FL) Bilirakis Fazio Lipinski Bliley Ferraro Livingston Boehlert Fields Long (LA) Boggs Fish Long (MD) Boner Flippo Lowry (WA) Bonior Foglietta Lujan Bonker Foley Luken Bouquard Ford (MI) Lundine Boxer Ford (TN) Mack Breaux Forsythe MacKay Britt Fowler Madigan Brooks Frenzel Martin (NC) Broyhill Frost Matsui Bryant Fuqua Mazsoll Burton (CA) Garcia McCain Burton (IN) Gephardt McCandless Campbell Gibbons McCloskey Carper Glickman McCollum Carr Gore McCurdy Chandler Gradison McDade Chappell Gramm McHugh Chappie Green McKinney Cheney Gregg McNulty Clarke Guarini Mica Clinger Gunderson Michel Coats Hamilton Mikulski Coelho Hammerschmidt Miller (OH) Coleman (MO) Hance Mineta Coleman (TX) Harkin Moakley Conable Harrison Mollohan Conte Hatcher Montgomery Cooper Hefner Moody Corcoran Heftel Moore Coughlin Hightower Morrison (WA) Courter Filler Mrazek Coyne Hillis Murtha D'Amours Hopkins Hatcher Daschle Huckaby Nelson Daub Hughes Nichols Davis Hutto Nowak de Is Garza Hyde O'Brien Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8 H 1082 CONGRESSIONAL RECORD -- HOUSE March 9, 1983 kind of any agricultural commodity to any person in return for- (I) the diversion of farm acreage from the production of an agricultural commodity, and (ii) the devotion of such acreage to conser- vation uses, and (B) which the Secretary of Agriculture certifies to the Secretary of the Treasury as being described in subparagraph (A). (2) 1983 CROP YEAR.-The term "1983 crop year' means the crop year for any crop the harvesting or planting period for which occurs during 1983. (3) QuAI.InED TAXPAYER.-The term "qualified taxpayer" means any producer of agricultural commodities (within the mean- ing of the 1983 payment-in-kind programs) who receives any agricultural bommodity in return for meeting the requirements of clauses (i) and (ii) of paragraph (1)(A). (4) RECEIPT IN_CLUDES RIGHT TO RECEIVE; Exc.-A right to receive (or other construc- tive receipt of) a commodity shall be treated the same as actual receipt of such commod- ity. (5) AMOUNTS RECEIVED BY THE TAXPAYER AS REIMBURSEMENT FOR STORAGE.-A qualified taxpayer reporting on the cash receipts and disbursements method of accounting shall not be treated as being entitled to receive any amount as reimbursement for storage of commodities received under a 1983 pay- ment-in-kind program until such amount is actually received by the taxpayer. (6) COMMODITY CREDIT LOANS TREATED SEPA- RATELY.-Subsection (a) of section 2 shall apply to the receipt of any commodity under a 1983 payment-in-kind program sep- arately from, and without taking into ac- count, any related transaction or series of transactions involving the satisfaction of loans from the Commodity Credit Corpora- tion. (b) REGULATIONS.-The Secretary of the Treasury or his delegate (after consultation with the Secretary of Agriculture) shall pre- scribe such regulations as may be necessary to carry out the purposes of this Act, includ- ing (but not limited to) such regulations as may be necessary to carry out the purposes of this Act where the commodity is received by a cooperative on behalf of the qualified taxpayer. SEC. 6. STUDY. (a) GENERAL RULE.-The Secretary of the Treasury or his delegate, after consultation with the Secretary of Agriculture, shall con- duct a study of- (1) the 1983 payment-in-kind program, and (2) the tax treatment provided with re- spect to such program by this Act. (b) REPORT.-Not later than September 1, 1983, the Secretary of the Treasury shall submit to the Congress a report on the study conducted under subsection (a), to- gether with such recommendations as he may deem advisable. Mr. ROSTENKOWSKI (during the reading). Mr. Speaker, I ask unani- mous consent that the House amend- ment to the Senate amendment be considered as read and printed in the RECORD. Mr. SPEAKER. Is there objection to the request of the gentleman from Illi- nois? There was no objection. Mr. SPEAKER. Is there objection to the initial request of the gentleman from Illinois? Mr. CONABLE. Mr. Speaker, reserv- ing the right to object and I do not object, but I would like to ask the dis- tinguished chairman, the gentleman from Illinois (Mr. RosTENK0wSKI), if he could tell us what procedure is being followed here with respect to the so-called PIK program, which I understand has passed the Senate in a somewhat different form from what it passed the House and therefore re- quires some further procedure. Mr. ROSTENKOWSKI. Mr. Speak- er, will the gentleman yield? Mr. CONABLE. I yield to the gentle- man from Illinois. Mr. ROSTENKOWSKI. Mr. Speak- er, I thank the gentleman for yielding. Mr. Speaker, H.R. 1296 passed the House yesterday by a vote of 401 to 1. The bill satisfactorily resolves the tax problems of farmers who participate in the payment-in-kind or PIK pro- gram while achieving a delicate bal- ance between farm Mid tax policy. The bill was reported to the Committee on Ways and Means by a unanimous vote of the Subcommittee on Select Reve- nue Measures. The Committee on Ways and Means also approved the bill unanimously. Both Treasury and Agriculture Department officials have publicly voiced the support of the ad- ministration for the House bill. Despite the exceptionally strong support for H.R. 1296, as passed by the House, the Senate substantially modified the House bill. The Senate amendment eliminates the antispecu- lation rule which was included in the House bill and provides expanded tax benefits both retroactively and on a permanent basis. The Senate amend- ment also deletes the provision of the House bill which provides a tax ex- emption for the National Farmers Or- ganization or NFO. H.R. 1296, as passed by the House, fully addresses farmers' concerns that participation in the 1983 PIK program may have adverse tax consequences. However, many farm cooperatives have expressed opposition to the tax exemption for the NFO. These cooper- atives fear that such an exemption would provide a competitive advantage to the NFO. Therefore, I recommend deleting this NFO exemption Under the request I am .making, I am asking the House to return the original House bill to the Senate with certain technical changes recommend- ed by the Senate Finance Committee by deleting the NFO exemption to which cooperatives have objected. ^ 2000 Mr. CONABLE. Further reserving the right to object, Mr. Speaker, to summarize, then, it is the plan to send the measure back to the Senate? Mr. ROSTENKOWSKI. As passed the House, deleting the NFO provi- sion. Mr. CONABLE. As passed the House, but deleting the NFO provi- sion. Mr. MICHEL. Mr. Speaker, will the gentleman yield? Mr. CONABLE. Further reserving the right to object, I yield to the gen- tleman from Illinois. Mr. MICHEL. I appreciate the gen- tleman yielding under his reservation. I only wanted to make the point that when we were considering the measure here in the House under the suspen- sion of the rules, the gentleman from Illinois was called to the White House and could not obviously vote at the time when the vote was taken. Obviously, if I had been here, I would have supported it wholeheart- edly, as we had been pressing the com- mittee to address itself to this project. I am happy to see that it will finally be resolved before the deadline. Mr. CONABLE. Further reserving the right to object, Mr. Speaker, does the gentleman from Minnesota wish me to yield? Mr. FRENZEL. Yes. Mr. CONABLE. I yield to the gentle- man. (Mr. FRENZEL asked and was given permission to revise and extend his re- marks.) Mr. FRENZEL. Mr. Speaker, _ the NFO amendment was not mine, but I am the principal author of the bill from which the amendment was drawn. It is an important and a good amendment, but the importance of the PIK bill is so overwhelming that we are better off to leave the NFO amendment behind and we will try to work that out at a later date. I thank the gentleman for yielding. Mr. DE Lk GARZA. Mr. Speaker, will the gentleman yield? Mr. CONABLE. Further reserving the right to object, I yield to the gen- tleman from Texas. Mr. DE LA GARZA. Mr. Speaker, I only wanted to express my apprecia- tion to the chairman of the Ways and Means Committee and the ranking member and all who have worked to assist us in this endeavor. We from the Agriculture Committee are very appre- ciative of the gentleman's spirit of co- operation and understanding of our problem. Mr. JEFFORDS. Mr. Speaker, will the gentleman yield? Mr. CONABLE. Further reserving the right to object, I yield to the gen- tleman from Vermont. Mr. JEFFORDS. I appreciate the gentleman yielding. I just want to echo the comments of the chairman of the full Agriculture Committee. The minority feels like- wise. We really appreciate what the gentleman has done. Mr. CONABLE. Mr. Speaker, under the circumstances, I withdraw my res- ervation of objection. Mr. SPEAKER. Is there objection to the initial request of the gentleman from Illinois (Mr. ROSTENKOWSKI)? There was no objection. A motion to reconsider was laid on the table. Approved For Release 2008/10/29: CIA-RDP85-00003R000200130004-8