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[Congressional Record: March 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
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SOCIAL SECURITY ADMINISTRATION INDEPENDENT AGENCY ACT
The PRESIDING OFFICER. The Senate will now proceed to the
consideration of S. 1560, which the clerk will report.
The bill clerk read as follows:
A bill (S. 1560) to establish the Social Security
Administration as an independent agency, and for other
purposes.
The Senate proceeded to consider the bill.
The PRESIDING OFFICER. The Senator from New York is recognized.
Mr. MOYNIHAN. Mr. President, my distinguished friend and colleague,
the former chairman of the Committee on Finance, and I have the honor
to bring to the Senate floor for the first time a bill which has on
three occasions been reported from the Committee on Finance, I believe
on one occasion when Senator Packwood was chairman, and once again
today. This bill was reported on a voice vote with one Senator
declaring his opposition but otherwise is effectively a unanimous
measure.
It has three times passed the U.S. House of Representatives by what
you might legitimately call overwhelming majorities as, for example, in
1986 when the vote was 401 to 0.
The bill is very much in the manner of the moment, called reinventing
Government, that our good friend and former colleague, now Vice
President Gore, has been involved with. That notion of reinventing
suggests going back to earlier good arrangements and that is what we
propose here.
The Social Security Administration began as an independent agency in
the executive branch. The 1935 legislation created it as such. It had
three Commissioners, one a managing Commissioner. It got off to a very
good start, almost too good.
This is perhaps a more complicated idea than I am able to handle, but
I sometimes think it got off to too good a start. It became the model
agency. The great civil servants of the New Deal era came to work in
Social Security and they stayed forever, and they are still here. They
are here to this day, some of them. I think of the two Bobs as they are
called, Bob Ball, who early on became an employee of the Social
Security agency, and who rose to be the Administrator under President
Kennedy, President Johnson, and President Nixon and is still very
active in the councils that deliberate issues like this.
And Robert J. Myers, who, as a young graduate student from the
University of Wisconsin, came to Washington to work on the Committee on
Economic Security Staff. That committee was headed by Francis Perkins.
The head of the professional staff was Edwin J. Witte, a great
professor of economics in the Wisconsin tradition. Bob Myers went on to
be chief actuary.
When we found that the trust funds were in at least temporary
difficulty in the early 1980's, President Reagan established a National
Commission on Social Security Reform. The executive director of that
Commission was none other than Robert J. Myers. Alan Greenspan, the now
distinguished Chairman of the Federal Reserve Board, was chairman. I
was a member. I was one of the Senators appointed, along with Bill
Armstrong, our revered late friend John Heinz, Lane Kirkland, and Bob
Dole, the Republican leader.
Not incidentally, I make the point that the report of that
Commission, whose recommendations Senator Dole and I brought to the
floor here in the Senate in 1983, and which passed overwhelmingly, that
report called for an independent agency.
Now, why are we doing this? Two reasons. One is that the agency began
to lose some of its distinctive energy and style in administration when
it fell into a sequence of other agencies and departments, eventually
Cabinet Departments, that had other missions. And it began to get
further and further out of focus.
It was not something the Secretary of Health, Education, and Welfare
came to work in the morning thinking about. It is not something the
Secretary of the Health and Human Services comes to work in the morning
thinking about. At least in the Department of Health, Education, and
Welfare, created under President Eisenhower, the word ``welfare'' was
there; the idea of social welfare. That was removed in a change where
education became a separate department under President Carter.
The Department of Health and Human Services basically has become a
department of health. Typically doctors, medical doctors, have been the
Cabinet officers, and a fine thing, too. A Department of Health is very
much in order. But in the process, the largest component of the
Department has gotten lost.
If you get the Congressional Directory for 1993--and I will point
this out to my friend, Senator Packwood--where we get to the Secretary
of Health and Human Services, on page 803, it says: Office of the
Secretary, Secretary of Health and Human Services, Donna E. Shalala.
Then, 278 names later, you get to the Social Security Administration--
``Administrator--vacant''--278 names between the Secretary, who is an
incumbent, and Social Security Administrator--vacant. The job went more
than a year vacant.
In my now more than 18 years in the Senate, there have been 12
administrators. From a period when you had long, stable administration
and people who knew their work and understood their assignment, knew
how they had begun, you have come to a time when you get one
administrator, another administrator, another administrator, no
administrator, no administrator, another administrator. Nobody is
minding the store.
After the 1983 report, in 1984, Congress commissioned a study of the
best form of governance for the Social Security Administration. Elmer
Staats, the former Comptroller General, headed the study. He made a
powerful case, a superb report, with respect to an independent agency.
The Social Security Administration has independent functions, Mr.
President. It is the trustee of the Social Security trust funds. It is
responsible for the integrity of the system. The head of that agency
has to be able to look the President in the eye and say, ``Mr.
President, no, I will not do that. If you wish, sir, I will resign, if
you wish, ma'am, I will resign, but I will not do that. And when I
resign it will be noticed.''
Mr. President, I might ask my friend the former chairman of the
committee, if the incumbent administrator of the Social Security
Administration resigns, who would know it?
Mr. PACKWOOD. You and I.
Mr. MOYNIHAN. We might get a notice somewhere in the mail.
Mr. PACKWOOD. We would see it in the Federal Register somewhere.
Mr. MOYNIHAN. Would the Senator care to estimate the last time an
administrator of the Social Security Administration had a meeting with
the President in the Oval Office on the business of the Social Security
Administration? Twenty years?
Mr. PACKWOOD. 1939?
Mr. MOYNIHAN. 1939.
Excepting that Lyndon Johnson would have known who Bob Ball was
because Wilbur Cohen would have brought him.
But a long time ago, too long.
One of the results is that a majority of nonretired adults in the
United States today do not believe they will get their Social Security.
Nothing tells them that.
But we still use that little pasteboard card that we began in the
1930's. I joined the Social Security system 51 years ago and I got that
little card. We have enacted a statute saying, turn it into a good
card, a card with a hologram, a piece of plastic. The statute specified
a tamperproof card. But the agency gave us back the same little piece
of cardboard as before, only with invisible hairs in the cardboard
itself so that it is instantly detectable in an FBI lab.
There is the card, the same 1935 card.
Where is our health card? I have a health card right here.
When President Clinton came to the House to deliver his joint message
to Congress, his State of the Union, he held up a health card. And it
is a dandy.
My golly, it has your name in gold plate, it is plastic, there is a
Zip Code, they can put it through and know exactly who you are.
It is very important, incidentally, to American citizens of, say,
Mexican descent, to have in their hand a piece of plastic which an
employer can readily use: Good morning, Mr. Lopez--there is Mr. Lopez
right there--here is your card. We know who you are. And they know who
you are in Washington. Not this pathetic thing.
Fifty--51 years now--never a day late or a dollar short; yet the
majority of the American people--nonretired adults--do not think they
are going to get their benefits.
I will grant, it does not really make that much difference what 20-
year-olds think in these matters. And 30-year-olds--well, it is a
transition. But when 40-year-old Americans with families and college
coming up think, I am never going to get Social Security, we have
failed to persuade them of something very important to them.
We could give them an annual report. I have been 51 years in the
system, save for my present work. I would never have any evidence that
the Social Security Administration ever got my name right, spelled it
right, recorded my address--entered any contributions I made--never.
It is not hard to do. The stamp is the largest single cost. They can
send out, once a year, a report. This is mine. It goes back to 1937. In
the period 1937 to 1950, my taxable earnings were $1,615, and I paid
$16 in tax. But the tax rate was very, very small then.
They do not, as a matter of fact, have me credited with 3 years of
Navy time. I could ask them to fix it up. They would be happy to learn
about it.
This report tells you what you will get at retirement age, in round
terms. It tells you exactly what your survivor's benefit would be, what
your child would receive if you died, what your spouse would receive if
you died.
These are the papers that, as I say, you throw away in your 20's and
lose in your 30's. In your 40's you find a desk drawer to put them in,
and you would take them out once in awhile and look at them. I find,
for example, if I wait until 70 to receive benefits, my monthly benefit
will be $1,470--not bad.
Important to note: One of the reasons we want to have this
information out is that rather suddenly we have reached a point where
the Social Security retirement benefits just about give you back what
you put in. It is a form of Federal savings. It is not the bonanza it
was for that wonderful lady in Vermont--Ida May Fuller--who contributed
about $27 and retired in 1940. I can remember from my youth, the annual
photograph of the gentleman from the Social Security Administration
presenting Ida May with her first check of the year. She did very well
off her $27. Most of us will get back what we put in, and it is a good
form of saving.
People need to know that. It is their money being held in trust. It
is not general revenue. We have a surplus in place. We put it in place
in the 1977 Social Security amendments, as Senator Packwood will
recall. The surplus accumulated from the year 1977 to the year 2015
would buy the stock exchange. But not a penny has been put aside. And
the only way it can be put aside is to have a balanced budget and
reduce the privately held public debt, thereby increasing private
savings. We have not done that.
There are going to be a lot of people around here asking, ``Why have
you not done it,'' with greater vehemence. One of the ways in which we
could restore a sense of confidence, imbue a sense of confidence--would
be to send this earnings statement out to everybody. I authored a
statute that will require the Social Security Administration to start
doing it in 1995. But it had to be put in statute, and it applies only
to people over 60. They are good people up in Baltimore, but with no
direction.
I will give an example and then I will yield, with the patience of my
friend from Oregon, if he can just give me another 5 minutes.
One of the things we learned when the new administration began--is
something which we should have known. I have been the chairman of the
Subcommittee on Social Security. I should have known it and I did not.
But the Social Security Administration should have known it with a
great deal more sense of urgency than I: The system for payment of
Social Security taxes, Federal Insurance Contribution Act, FICA, for
domestic servants, was not working. We had set an amount of $50 a
quarter back in the 1950's and never increased it for inflation, with
the result that Social Security taxes were owed on the babysitter. That
is something you do not want to do.
Babysitting is sort of a right of passage for young women in our
society. It is a good one. The first time you are asked next door to
look after the two kids while the parents go off for a movie: Put her
to bed at 10 o'clock; here is where we are if you need us. It is a
nice, trusting relationship. You learn responsibility. You get a little
money. That is fine.
But there is another category of adult worker, cleaning women. Women,
sir--I do not wish to give any offense--women who clean other people's
toilets and are day laborers. We looked up and we found that, because
of the very complex quarterly returns that had to be filled out, as if
you were running a machine tool plant and had an accountant--and I know
there are many professional couples who just hire an accountant to do
it for them now--only a quarter of these women--they are not all
women--but only a quarter of these persons were getting the Social
Security contributions made on their behalf that were due them under
the law.
Did anybody in the Social Security Administration ever come to us and
say this is a problem, we have to solve this? We have a good solution
in the Committee on Finance. I think my colleague agrees on that.
Senator Packwood and I have agreed on it, I think. We have worked it
out. But we never heard from them.
Then, without any sense of recrimination, our administration came to
office, the present one, and very early on in the nomination of an
Attorney General, this issue arose. The Attorney General had to
withdraw at the beginning of 1993. At the end of 1993, Admiral Inman,
expected to be nominated as Secretary of Defense, had this problem. In
an announcement explaining why he was leaving, he spoke at some length
about it, and said he was going to be in touch with us. He had been
speaking with the head of the National Organization of Women about it.
The whole year went by and we never got a note from the
administration about what they wanted to do about this problem. Frances
Perkins would have been in to see the President to say: ``These are day
laborers. They are women. What they need is 40 quarters of coverage.''
Anyone who is paid $620 a year would have taxes owed on their behalf
and we would have them paid on the 1040. Easily done. We have never
heard a word.
Now, Mr. President, why have we not heard from them? For one thing,
the job of the Administrator was vacant until November. Somebody might
have thought this is kind of a serious thing; we better get that job
filled. But it was not.
And so we are here. An independent agency will address these issues
and address the issue of confidence. If the majority of nonretired
American adults do not think they will get Social Security, why, Mr.
President, do we think they will believe this health care will always
be there? What are they saying to us? I think they are saying something
we ought to pay attention to and address.
I can say, in closing, what Senator Packwood will, I am sure, say as
well; that there is no significant organization that we are aware of
concerned with these matters in the Nation that does not support this
measure: The American Association of Retired Persons, the largest
membership organization in America, at least 35 million members,
including my wife; the AFL-CIO; the National Council of Senior Citizens
all have supported this. The House has repeatedly passed the measure,
and we hope to do so today.
Mr. President, my good friend has been patient with me, and I yield
the floor.
Mr. PACKWOOD addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon [Mr. Packwood] is
recognized.
Mr. PACKWOOD. Mr. President, I am delighted to join my good friend,
the chairman of the Finance Committee, in supporting all of the
measures for all of the reasons he said, but I will touch just a moment
on why the public has a sense of uneasiness about Social Security, and
perhaps the creation of an independent Social Security agency can
alleviate that sense of fear a bit.
The chairman of the committee indicated that, at the moment, we are
collecting more in taxes than we pay out. That was a deliberate choice,
because the Chair will recall that around 1979, 1980, and 1981, we had
high rates of inflation. The Social Security benefits were tied to the
cost of living, and they were going up with that high rate of
inflation--10, 12, 13, 14 percent.
But the tax base, the revenues to produce the money to pay the Social
Security benefits, was not indexed to any kind of cost of living. So we
finally got to the place, in the early eighties, where we had a surplus
of barely, as I recall, 2 to 3 months. If the revenue ceased to come
in, we could pay benefits for 2 or 3 months, and that is it--gone. In
fact, even with a bad recession and the revenues falling, we were very
near to a touch-and-go situation.
So we changed the system to make it more like a private insurance
actuarial system in which we said we will collect more money now and
set it aside so that we will have the money to pay off the baby boom
when it starts to retire. You have this immense population group moving
through the 30 to 40 to 50 age group, and they were the ones born from
1945 to 1965. Let us assume they retire at 65. They will start to
retire in about the year 2010. The first of them will be 65 then.
Over the next 20 years, from 2010 to 2030, you have an immense group
of retirees, and the extra money we are collecting now is designed to
be held to pay them off when they retire. A prudent insurance company
does the same thing. You buy an insurance policy from Metropolitan
Life, Prudential, or any other insurance company, and they take a look
at the demographics of all the policyholders they have. They figure how
many are age 20, 30, or 40; how much they are going to need in the year
2010, 2020, 2030 to pay off their beneficiaries. We decided to do the
same thing they did.
It is important to understand, however, that there is not a separate
pot of money for each Social Security recipient. All of the money comes
in and it goes, in essence, to the U.S. Treasury. As I recall, the
Social Security actuaries once estimated that it is about $70 billion
more we collect than we pay out. In comes $70 billion more from my
wages, your wages, everybody's wages--your employer pays half, you pay
half, we collect it and we pay out the benefits, and we have $70
billion left over. We take that $70 billion--the Social Security
Administration is entitled to it--in essence, Treasury takes it and it
gives to the Social Security Administration a bond, an IOU: The U.S.
Government owes you, the Social Security Administration, $70 billion.
This process continues for about the next 15 to 20 years--more money
coming in than going out. Then, depending upon the estimates, what we
call optimistic or intermediate or pessimistic estimates, more money
starts to flow out of the fund than comes into it. Let us just pick a
year. Let us pick about 2012 or 2013. We start to pay out more benefits
than we take in.
At that stage, the Social Security Administration, depending upon the
assumptions--I hate to be cavalier in talking in terms of trillions--
but the Social Security Administration will hold anywhere from $3
trillion to $6 trillion or $7 trillion in bonds of the U.S.
Government--IOU's.
I want to emphasize, this is no different than what an insurance
company does. Insurance companies invest heavily.
Mr. MOYNIHAN. It is $4.5 trillion.
Mr. PACKWOOD. The chairman says it is $4.5 trillion; $4.5 trillion in
IOU's. Insurance companies do the same thing except they do not invest
solely in Government bonds. They have a lot of Government bonds, and
they may invest in some real estate. They try to spread their portfolio
in such a way that they cannot get hurt too much because they know they
have benefits to pay out, whereas we prohibit the Social Security
Administration from investing in anything but Government bonds.
On occasion, the suggestion has been raised that we should let Social
Security cut loose and invest in things other than Government bonds
where they might get a better return, because Government bonds are a
very secure investment and, therefore, the percentage of return on them
is lower than a riskier investment.
I hate to think, however, what the situation would have been in about
1977 or 1978 had we said to the Social Security Administration, ``Go
ahead and invest in what you want,'' and they had invested in Texas
real estate. We would have been bailing out Social Security from about
1981 on perpetually, and there would have been a tendency to say,
``Why, if we can get a 10- or 12-percent return instead of the
Government bond 8 percent return, let us invest in real estate.''
So we prohibit them from investing in anything but Government bonds.
When we take in this extra $70 billion, we give the Social Security
Administration a bond, an IOU. We take the $70 billion and we spend it.
We spend it on education; we spend it on welfare; we spend it on
defense. We spend it on all the things Government spends money on.
The fear I think the people have is that when, 20 years hence, the
Social Security Administrator takes his or her IOU to the Treasury and
says, ``Madam Treasurer, will you please give me some money so I can
pay the benefits?'' The Treasurer will say, ``Give you money? We spent
that money 20 years ago. We don't have any money.''
That scenario is only true if the U.S. Government reneges on its
promise to redeem the bonds. We have never failed to redeem bonds in
the 200-plus-year history of this country. And if we were to fail to
redeem the Social Security bonds, it is not just Social Security; it is
the bonds that Metropolitan Life has, Prudential has, General Motors
holds. It means the country has gone bankrupt if we fail to redeem the
bonds.
But I think that is the fear of Social Security recipients. They
think their money is being spent now and they have nothing in exchange
for security. Indeed, what they do have is still what the world regards
as the single best security in the world--U.S. Government bonds. They
sell at a better premium than any other Government bonds and are
regarded as more secure, practically, than gold or anything else.
If the creation of this administration as an independent
administration--and I think it should be--will help make the public
aware that, indeed, the Social Security Administration is not holding
IOU's you cannot fine and levy on, but is, indeed, holding a Government
bond, they will feel a bit more secure.
I am frank to say, when the year 2015 or 2012 comes, if we are still
running a $200 billion deficit, we are going to be running bigger
deficits because we will have to pay off the Social Security bonds. I
understand that.
But all I can say is this country has never reneged on redeeming a
bond in its 200 years.
Mr. MOYNIHAN. Will my friend yield----
Mr. PACKWOOD. Yes.
Mr. MOYNIHAN. Just for a question to which I know he knows the answer
but just to put it in the Record at this point. As my friend knows, the
bonds that Treasury issues to the Social Security Administration have a
special provision; they can never sell below par, as the Senator well
knows.
Mr. PACKWOOD. That is correct. They cannot sell below par. They
cannot be sold below what they were sold for. That is a good protection
because there are bonds, a fair number of bonds, in the market that go
up and down. You sometimes have to sell your bond at less than what we
call par value, but that is the marketplace. You have a $1,000 bond.
You want to sell it. You can only get $900 for it. That is not true of
Social Security bonds. So the Government has promised to redeem them at
least at what they call par value.
So I support this, Mr. President. I think it is a good provision. I
think it will heighten the awareness of the Social Security
Administration and let people know that even though the money they are
now paying in is spent for things they probably like--education,
environment, Forest Service, Coast Guard--indeed, their money is safe
so long as the Government is safe. And if the Government is not safe,
it is not just Social Security that is in trouble; it is everybody that
has any investment in any State in this country.
I thank the Chair and I hope we will pass the bill.
Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The absence of a quorum has been suggested.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. Mr. President, Washington is a place that pays a lot of
attention to polls. And not every poll is of great interest. But I
might say that as I was speaking earlier, and as Senator Packwood was
speaking, I noted that the very able young professional persons who are
here in the Senate as Senate staff employees were listening in a manner
that they do not always listen. Maybe because the hour is early enough
for them to be attentive, but I think the subject is of interest.
So I just took an unscientific, informal poll of five persons, each
of whom has graduated from college, I do not doubt; most of whom have
law degrees; they are parliamentarians; they are people we depend
absolutely on for the working of this institution. If they did not get
things right, we would not have any record about what we had done.
I can report the results of my survey. Of the five samples, I asked,
``Do you think you will get your Social Security? Two said no; two said
not all of it; and one trusting young citizen said yes. But that is not
reassuring.
Mr. PACKWOOD. Can we have name, rank, and Social Security number of
those four who are not trusting?
Mr. MOYNIHAN. If they will give it to me, I will get them a copy of
their chart. So you will know at least that you will continue to get
your retirement; you will know that you are covered for disability
benefits. Not everyone knows that. You do know that, those of you who
are married, it is altogether likely that in the event you should die
your spouse will receive benefits; your children will receive benefits.
Still you do not trust us. After 18 years in which I have been on
this floor asking you to trust the Social Security Administration, it
has not sunk it; not you. As a matter of fact, the two senior most
Members are the ones that absolutely believe they will not receive
their Social Security.
I simply make the point that they are attentive. I think they respect
the public confidence. And we ought to be attentive.
With that, Mr. President, I see the Senator from Maine has risen, if
he wishes to proceed, to offer an amendment.
Mr. COHEN. I thank my friend for yielding.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Mr. COHEN. Mr. President, I might inform my friends that I have a
technical bill on the way over to the floor. I would like to begin
speaking about the measure that I intend to offer, and perhaps that
will save some time rather than going into an extended quorum call.
Mr. President, we have a program that is designed to deal with a
serious problem in this country; namely, that of drug and alcohol
addiction.
There are two programs under the Social Security Administration's
jurisdiction. One is the Supplemental Security Income Program, which is
designed to assist the very poorest poor that we have in this country,
and the second is the Social Security Disability Insurance Program.
Under these programs, those individuals who are in fact disabled by
virtue of an addiction to either drugs or alcohol are required to do
two things. They are required to seek treatment. That is one of the
conditions that we impose in order to assure the taxpayers that the
money is going for the purpose of which it was intended. Second, in
order to ensure the safeguarding of taxpayer dollars, the SSI Program
requires that the benefits are paid to a responsible third party.
Obviously, the person who is addicted is not a responsible individual,
and we require payments to go to a representative payee.
A recent investigation conducted by my minority staff on the Senate
Special Committee on Aging and the GAO found that the SSI and SSDI
programs are out of control and are, in effect, subsidizing drug and
alcohol abuse, with little enforcement of treatment requirements. Out
of the estimated 250,000 addicts on the rolls through either heroin,
alcohol, or other drugs, however, only 78,000 are required to seek
treatment. Of that 78,000, only approximately 9 percent seek treatment.
So the calculations are that out of the total of 250,000 that we know
are addicted, only about 3 percent get any kind of treatment at all.
Similarly, only a portion of the estimated 250,000 drug addicts and
alcoholics now on the disability rolls have their checks go to a
representative payee.
So we have a situation in which money is going directly to
individuals who are addicted. They are, in fact, using the money to
further their addiction. They are going out and buying drugs with the
money supplied by the taxpayers. They are buying alcohol to achieve the
same end. And the taxpayer throws his or her hands up in despair.
Mr. President, $1.1 billion basically is going directly to fuel
addiction. What this amounts to is revenue sharing for addicts. The
public, I think, is justifiably concerned. When they find, for example,
that these third-party payees who are getting the money from the
individuals can even be tavern owners, the public is outraged. For
example, we know of a case in Denver where a liquor store owner is
getting $160,000 a year to, in effect, run a tab for the recipients,
the beneficiaries, who end up spending their benefits on booze and
drinking away taxpayers' money.
The amendment that I am proposing, cosponsored by Senators Dole and
Kassebaum, and others, would go far in correcting this problem. This
amendment would insist that whether one is receiving payments through
the SSI Program or the Disability Insurance Program, if they are
impaired as a result of drug or alcohol addiction, that they must seek
treatment as a condition of receiving, and continuing to receive, those
benefits.
This amendment also prohibits retroactive lump sum payments from
being paid directly to an individual who receives benefits in whole or
in part due to substance abuse. Today we have retroactive payments
being given to people who are addicted to drugs or alcohol in amounts
as high as $15,000 to $20,000. That $15,000 and $20,000 payment then is
made directly to that individual or a third party, who in turn gives
the money over to the addict. They go out and either buy more drugs--
and we have had cases of people who bought large amounts of drugs with
their lump sum benefits and died from overdoses. One individual took
his lump sum and bought a van and two cars, each of which he
demolished, and then ended up in a hospital addicted again.
Mr. President, the nature of the problem is escalating. We have seen,
for example, a 150-percent increase in those going onto the disability
rolls on the basis of drug addiction and alcoholism from 1989-1992. We
added 22,634 to the rolls in 1989; we added another roughly 29,000 in
1990; an additional 38,000 in 1991; then 58,000 in 1992. It is going up
exponentially.
There is a reason I assume. Some of that may be because more and more
people are becoming addicted but also more and more people are becoming
aware of the program. For example, the word on the street among addicts
and alcoholics is that the SSI and SSDI programs are easy sources of
cash. In a recent example, one person called my office and said her
brother was getting out of prison. He found out about the SSI program,
and he is going immediately to apply on the basis of drug addiction.
Coming out of prison he was addicted and he was ``thrilled to learn''
that SSI would pay him for his addiction, and he had no intention of
going to treatment.
We have more people becoming aware of this. The word is out that this
is an easy way to get some sort of sustenance during the course of a
month. So more and more people are applying for it.
The purpose of this amendment is not to see treatment stopped. We
want to see treatment really enhanced, increased, and force those
individuals who have a problem to get the kind of treatment that they
need.
But right now, as I pointed out, they are getting the money without
the treatment. They are getting it in lump-sum payments, and I think
the program's objectives are being completely ignored.
The situation gets even worse. I recently offered an amendment which
was accepted unanimously when the emergency supplemental appropriations
bill came to the floor. That had to do with a situation that came down
as a result of a Ninth Circuit Court of Appeals' opinion. We had an
individual who was on disability. He is an addict, addicted to heroin.
He would, in the course of a day, help three other addicts acquire
significant amounts of heroin. He, of course, would be compensated by
getting several grams of heroin for himself, or about $150 a day. So
while he is receiving disability payments, he is also engaged in a
little bit of dealing to further his own habit of $150 a day. It went
to court. The ninth circuit ruled that that individual was not engaged
in substantial gainful activity; that he was not engaged in substantial
gainful activity because his work really only took about 20 to 30
minutes a day. ``No heavy lifting involved'' is essentially what they
are saying. He was not initiating the telephone calls. The individuals
were calling him saying, ``Can you help us out by buying heroin for us,
and we will give you a little piece of the action,'' so to speak. In
this case, the court essentially ruled that SSA would continue his
disability payments, while he nurtured his habit through this illegal
activity.
The amendment we passed, which was dropped in conference, and which
is also part of the amendment I am offering here today, specifies that
any proceeds derived from criminal activity to support substance abuse
will constitute substantial gainful activity. The amendment we are
offering today also requires everyone who receives SSI or disability
insurance payments based on substance abuse must, as a condition of
receiving those payments, seek treatment. The Social Security
Administration must establish agencies for each State to refer and
monitor the treatment of substance abusers receiving SSI or SSDI
benefits. As of the beginning of this year, only 18 States had this
sort of monitoring agency within their State. We have almost half of
our States without any sort of authorized monitoring center. So we do
not know how the money is being spent or whether there is treatment
being given.
So we would require the Social Security Administration to in fact do
what we all want; namely, provide for the monitoring of the treatment
of these individuals receiving the money. In addition, the amendment
prohibits benefits and retroactive payments to be paid directly to
those who are addicted. They must be paid to the representative payee,
who under our amendment would be required to be an institution, agency,
or treatment center.
In addition, our amendment provides a cutoff period of 3 years of
benefits for individuals receiving SSI or SSDI on the basis of
substance abuse. Senator Kassebaum and her staff determined that most
professionals believe a substance abuser will be treated within that 3-
year period. Those who are not should not be able to receive a lifetime
of benefits from SSI or SSDI, unless there is another qualifying basis
for disability.
I have one other chart to illustrate the negative effects of paying
cash benefits directly to addicts. It shows the correlation between
attending treatment and getting lump sum cash benefits. A study of
those receiving methadone as a substitute for their heroin addiction
showed that before they receive their disability check, the average
time someone would miss their treatment would be roughly five times
before they got their disability checks. As soon as they received their
checks, absenteeism went up to 18 days. Obviously, they were taking the
check and going out and buying heroin, since individuals who are
receiving methadone treatment become violently ill if they miss their
treatment. When the money runs out, they go back into methadone
treatment. So there is a direct connection between our system of paying
out money and not insisting upon the treatment itself.
So these are the issues we are trying to address, and I want to make
sure everybody understands we are not trying to discourage treatment or
take away money from those who need treatment. We want to make sure the
money is not going into a needle or into a bottle and that the people
who need the treatment get it and that the taxpayer feels satisfied
that this program is being monitored, and operates efficiently and
responsibly. That is not the case today.
So I offer this amendment.
Amendment No. 1474
Mr. COHEN. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Maine [Mr. Cohen], for himself, Mr. Dole,
Mrs. Kassebaum, Mr. Domenici, Mr. Thurmond, Mr. Grassley, Mr.
Nickles, Mr. Lieberman, Mr. Danforth, Mr. Lugar, Mr. Kohl,
Mr. Warner, Mr. Chafee, Mr. Bennett, Mr. Stevens, Mr.
Mathews, Mr. Hollings, Mr. Cochran, and Mrs. Feinstein,
proposes an amendment numbered 1474.
Mr. COHEN. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Social Security Disability
and Rehabilitation Act of 1994''.
SEC. 2. REFORM OF MONTHLY INSURANCE BENEFITS BASED ON
DISABILITY INVOLVING SUBSTANCE ABUSE.
(a) Social Security Disability Insurance.--
(1) In general.--Section 223 of the Social Security Act (42
U.S.C. 423) is amended by adding at the end the following new
subsection:
``Limitation on Payment of Benefits by Reason of Substance Abuse
``(j)(1)(A) Notwithstanding any other provision of this
title, no individual whose disability is based in whole or in
part on a medical determination that the individual is a drug
addict or alcoholic shall be entitled to benefits under this
title based on such disability with respect to any month,
unless such individual--
``(i) is undergoing, or on a waiting list for, any medical
or psychological treatment that may be appropriate for such
individual's condition as a drug addict or alcoholic (as the
case may be) and for the stage of such individual's
rehabilitation at an institution or facility approved for
purposes of this paragraph by the Secretary (so long as
access to such treatment is reasonably available, as
determined by the Secretary), and
``(ii) demonstrates in such manner as the Secretary
requires, including at a continuing disability review not
later than one year after such determination, that such
individual is complying with the terms, conditions, and
requirements of such treatment and with the requirements
imposed by the Secretary under subparagraph (B).
``(B) The Secretary shall provide for the monitoring and
testing of all individuals who are receiving benefits under
this title and who as a condition of such benefits are
required to be undergoing treatment and complying with the
terms, conditions, and requirements thereof as described in
subparagraph (A), in order to assure such compliance and to
determine the extent to which the imposition of such
requirements is contributing to the achievement of the
purposes of this title. The Secretary may retain jurisdiction
in the case of a hearing before the Secretary under this
title to the extent the Secretary determines necessary to
carry out the preceding sentence. The Secretary shall
annually submit to the Congress a full and complete report on
the Secretary's activities under this paragraph.
``(C) The representative payee and the referral and
monitoring agency for any individual described in
subparagraph (A) shall report to the Secretary any
noncompliance with the terms, conditions, and requirements of
the treatment described in subparagraph (A) and with the
requirements imposed by the Secretary under subparagraph (B).
``(D)(i) If the Secretary finds that an individual is not
complying with the terms, conditions, and requirements of the
treatment described in subparagraph (A), or with the
requirements imposed by the Secretary under subparagraph (B),
or both, the Secretary, in lieu of termination, may suspend
such individual's benefits under this title until compliance
has been reestablished, including compliance with any
additional requirements determined to be necessary by the
Secretary.
``(ii) Any period of suspension under clause (i) shall be
taken into account in determining any 24-month period
described in subparagraph (E) and shall not be taken into
account in determining the 36-month period described in such
subparagraph.
``(E)(i) Except as provided in clause (ii), no individual
described in subparagraph (A) shall be entitled to benefits
under this title for any month following the 24-month period
beginning with the determination of the disability described
in such subparagraph.
``(ii) If at the end of the 24-month period described in
clause (i), the individual furnishes evidence in accordance
with subsection (d)(5) that the individual continues to be
under a disability based in whole or in part on a medical
determination that the individual is a drug addict or
alcoholic, such individual shall continue to be entitled to
benefits under this title based on such disability.
``(iii) Subject to clause (iv), if such an individual
continues to be entitled to such benefits for an additional
24-month period following a determination under clause (ii),
clauses (i) and (ii) shall apply with regard to any further
entitlement to such benefits following the end of such
additional period.
``(iv) In no event shall such an individual be entitled to
benefits under this title for more than a total of 36 months,
unless upon the termination of the 36th month such individual
furnishes evidence in accordance with subsection (d)(5) that
the individual is under a disability which is not related in
part to a medical determination that the individual is a drug
addict or alcoholic.
``(2)(A) Any benefits under this title payable to any
individual referred to in paragraph (1), including any
benefits payable in a lump sum amount, shall be payable only
pursuant to a certification of such payment to a qualified
organization acting as a representative payee of such
individual pursuant to section 205(j).
``(B) For purposes of subparagraph (A) and section
205(j)(4), the term `qualified organization'--
``(i) shall have the meaning given such term by section
205(j)(4)(B), and
``(ii) shall mean an agency or instrumentality of a State
or a political subdivision of a State.
``(3) Monthly insurance benefits under this title which
would be payable to any individual (other than the disabled
individual to whom benefits are not payable by reason of this
subsection) on the basis of the wages and self-employment
income of such a disabled individual but for the provisions
of paragraph (1), shall be payable as though such disabled
individual were receiving such benefits which are not payable
under this subsection.''
(2) Conforming amendments.--
(A) Section 205(j)(1) of such Act (42 U.S.C. 405(j)(1)) is
amended by inserting '', or in the case of any individual
referred to in section 223(j)(1)(A)'' after ``thereby''.
(B) Section 205(j)(2)(D)(ii)(II) of such Act (42 U.S.C.
405(j)(2)(D)(ii)(II)) is amended by striking ``legally
incompetent or under the age of 15'' and inserting ``legally
incompetent, under the age of 15, or a drug addict or
alcoholic referred to in section 223(j)(1)(A)''.
(b) Supplemental Security Income.--Paragraph (3) of section
1611(e) of the Social Security Act (42 U.S.C. 1382(e)) is
amended to read as follows:
``(3)(A)(i) No person who is an aged, blind, or disabled
individual solely by reason of disability (as determined
under section 1614(a)(3)) shall be an eligible individual or
eligible spouse for purposes of this title with respect to
any month if such individual's disability is based in whole
or in part on a medical determination that the individual is
a drug addict or alcoholic, unless such individual--
``(I) is undergoing, or on a waiting list for, any medical
or psychological treatment that may be appropriate for such
individual's condition as a drug addict or alcoholic (as the
case may be) and for the stage of such individual's
rehabilitation at an institution or facility approved for
purposes of this paragraph by the Secretary (so long as
access to such treatment is reasonably available, as
determined by the Secretary), and
``(II) demonstrates in such manner as the Secretary
requires, including at a continuing disability review not
later than one year after such determination, that such
individual is complying with the terms, conditions, and
requirements of such treatment and with the requirements
imposed by the Secretary under clause (ii).
``(ii) The Secretary shall provide for the monitoring and
testing of all individuals who are receiving benefits under
this title and who as a condition of such benefits are
required to be undergoing treatment and complying with the
terms, conditions, and requirements thereof as described in
clause (i), in order to assure such compliance and to
determine the extent to which the imposition of such
requirements is contributing to the achievement of the
purposes of this title. The Secretary may retain jurisdiction
in the case of a hearing before the Secretary under this
title to the extent the Secretary determines necessary to
carry out the preceding sentence. The Secretary shall
annually submit to the Congress a full and complete report on
the Secretary's activities under this subparagraph.
``(iii) The representative payee and the referral and
monitoring agency for any individual described in clause (i)
shall report to the Secretary any noncompliance with the
terms, conditions, and requirements of the treatment
described in clause (i) and with the requirements imposed by
the Secretary under clause (ii).
``(iv)(I) If the Secretary finds that an individual is not
complying with the terms, conditions, and requirements of the
treatment described in clause (i), or with the requirements
imposed by the Secretary under clause (ii), or both, the
Secretary, in lieu of termination, may suspend such
individual's benefits under this title until compliance has
been reestablished, including compliance with any additional
requirements determined to be necessary by the Secretary.
``(II) Any period of suspension under subclause (I) shall
be taken into account in determining any 24-month period
described in clause (v) and shall not be taken into account
in determining the 36-month period described in such clause.
``(v)(I) Except as provided in subclause (II), no
individual described in clause (i) shall be entitled to
benefits under this title for any month following the 24-
month period beginning with the determination of the
disability described in such clause.
``(II) If at the end of the 24-month period described in
subclause (I), the individual furnishes evidence in
accordance with section 223(d)(5) that the individual
continues to be under a disability based in whole on a
medical determination that the individual is a drug addict or
alcoholic, such individual shall be entitled to benefits
under this title based on such disability for no more than an
additional 36 months.
``(III) Subject to subclause (IV), if such an individual
continues to be entitled to such benefits for an additional
24-month period following a determination under subclause
(II), subclauses (I) and (II) shall apply with regard to any
further entitlement to such benefits following the end of
such additional period.
``(IV) In no event shall such an individual be entitled to
benefits under this title for more than a total of 36 months,
unless upon the termination of the 36th month such individual
furnishes evidence in accordance with section 223(d)(5) that
the individual is under a disability which is not related in
part to a medical determination that the individual is a drug
addict or alcoholic.
``(B)(i) Any benefits under this title payable to any
individual referred to in subparagraph (A), including any
benefits payable in a lump sum amount, shall be payable only
pursuant to a certification of such payment to a qualified
organization acting as a representative payee of such
individual pursuant to section 1631(a)(2)(A)(ii).
``(ii) For purposes of clause (i) and section
1631(a)(2)(D), the term `qualified organization'--
``(I) shall have the meaning given such term by section
1631(a)(2)(D)(ii), and
``(II) shall mean an agency or instrumentality of a State
or a political subdivision of a State.''
(c) Effective Dates; Authorizations.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to benefits
payable for determinations of disability made 90 or more days
after the date of the enactment of this Act.
(2) Current determinations.--
(A) In general.--With respect to any individual described
in subparagraph (B), the Secretary of Health and Human
Services shall provide during the 3-year period beginning
after the date of the enactment of this Act for the
application of the amendments made by this section to such
individual with the time periods described in such amendments
to begin upon such application.
(B) Individual described.--An individual is described in
this subparagraph if such individual is entitled to benefits
under title II or XVI of the Social Security Act based on a
disability determined before the date described in paragraph
(1) to be based in whole or in part on a medical
determination that the individual is a drug addict or
alcoholic.
(3) Authorization of appropriations.--There are authorized
to be appropriated such sums as may be necessary to carry out
the purposes of the provisions of, and the amendments made
by, this section.
SEC. 3. PRIORITY OF TREATMENT.
The Secretary of Health and Human Services, through the
Administrator of the Substance Abuse and Mental Health
Services Administration, shall assure that every individual
receiving disability benefits under title II or XVI of the
Social Security Act based in whole or in part on a medical
determination that the individual is a drug addict or
alcoholic be given high priority for treatment through
entities supported by the various States through any
substance abuse block grant authorized under law.
SEC. 4. ESTABLISHMENT OF REFERRAL MONITORING AGENCIES
REQUIRED IN ALL STATES.
The Secretary of Health and Human Services shall, within 1
year of the date of the enactment of this Act, provide for
the establishment of referral and monitoring agencies for
each State for the purpose of carrying out the treatment
requirements under sections 223(j)(1) and 1611(e)(3)(A) of
the Social Security Act (42 U.S.C. 423(j)(1) and
1382(e)(3)(A)).
SEC. 5. PROCEEDS FROM CERTAIN CRIMINAL ACTIVITIES CONSTITUTE
SUBSTANTIAL GAINFUL EMPLOYMENT.
(a) Social Security Disability Insurance.--Section
223(d)(4) of the Social Security Act (42 U.S.C. 423(d)(4)) is
amended by inserting the following after the first sentence:
``If an individual engages in a criminal activity to support
substance abuse, any proceeds derived from such activity
shall demonstrate such individual's ability to engage in
substantial gainful activity.''.
(b) Supplemental Security Income.--Section 1614(a)(3)(D) of
the Social Security Act (42 U.S.C. 1382(a)(3)(D)) is amended
by inserting the following after the first sentence: ``If an
individual engages in a criminal activity to support
substance abuse, any proceeds derived from such activity
shall demonstrate such individual's ability to engage in
substantial gainful activity.''.
(c) Effective Date.--The amendments made by this section
shall apply to disability determinations conducted on or
after the date of the enactment of this Act.
SEC. 6. CONSISTENT PENALTY PROVISIONS FOR SSDI AND SSI
PROGRAMS.
(a) Felony Penalties for Fraud.--
(1) In general.--Subsection (a) of section 1631 of the
Social Security Act (42 U.S.C. 1383a) is amended by striking
``shall be guilty of a misdemeanor and upon conviction
thereof shall be fined not more than $1,000 or imprisoned for
not more than one year, or both'' and inserting ``shall be
guilty of a felony and upon conviction thereof shall be fined
under title 18, United States Code, or imprisoned for not
more than five years, or both''.
(2) Representative payees.--
(A) Ssdi.--Subsections (b) and (c) of section 208 of such
Act (42 U.S.C. 408) are amended to read as follows:
``(b)(1) Any person or other entity who is convicted of a
violation of any of the provisions of this section, if such
violation is committed by such person or entity in his role
as, or in applying to become, a certified payee under section
205(j) on behalf of another individual (other than such
person's spouse or an entity described in section
223(j)(2)(B)(ii)), shall be guilty of a felony and upon
conviction thereof shall be fined under title 18, United
States Code, or imprisoned for not more than five years, or
both.
``(2) In any case in which the court determines that a
violation described in paragraph (1) includes a willful
misuse of funds by such person or entity, the court may also
require that full or partial restitution of such funds be
made to the individual for whom such person or entity was the
certified payee.
``(3) Any person or entity convicted of a felony under this
section or under section 1632(b) may not be certified as a
payee under section 205(j).
``(c) For the purpose of subsection (a)(7), the terms
`social security number' and `social security account number'
mean such numbers as are assigned by the Secretary under
section 205(c)(2) whether or not, in actual use, such numbers
are called social security numbers.''
(B) Ssi.--Subsection (b)(1) of section 1632 of such Act (42
U.S.C. 1383a) is amended by striking ``(other than such
person's spouse)'' and all that follows through the period
and inserting ``(other than such person's spouse or an entity
described in section 1611(e)(3)(B)(ii)(II)), shall be guilty
of a felony and upon conviction thereof shall be fined under
title 18, United States Code, or imprisoned for not more than
five years, or both.''
(b) Civil Administrative Penalties.--
(1) Ssdi.--Section 208 of the Social Security Act (42
U.S.C. 408) is amended by adding at the end the following new
subsections:
``(e) For administrative penalties for false claims and
statements with respect to which an individual or other
entity knows or has reason to know such falsity, see chapter
38 of title 31, United States Code.
``(f) In the case of the second or subsequent imposition of
an administrative or criminal penalty on any person or other
entity under this section, the Secretary may exclude such
person or entity from participation in any program under this
title and titles V, XVI, XVIII, and XX, and may direct that
such person or entity be excluded from any State health care
program (as defined in section 1128(h)) and any other Federal
program as provided by law.''
(2) Ssi.--
(A) In general.--Section 1632 of such Act (42 U.S.C. 1383a)
is amended by adding at the end the following new
subsections:
``(c) For administrative penalties for false claims and
statements with respect to which an individual or other
entity knows or has reason to know such falsity, see chapter
38 of title 31, United States Code.
``(d) In the case of the second or subsequent imposition of
an administrative or criminal penalty on any person or other
entity under this section, the Secretary may exclude such
person or entity from participation in any program under this
title and titles II, V, XVIII, and XX, and may direct that
such person or entity be excluded from any State health care
program (as defined in section 1128(h)) and any other Federal
program as provided by law.''
(B) Conforming amendment.--The heading for section 1632 of
such Act (42 U.S.C. 1383a) is amended by striking ``for
fraud''.
(c) Effective Date.--The amendments made by this section
shall be effective on or after the date of the enactment of
this Act.
Mr. MOYNIHAN. Mr. President, I rise to say that on this side of the
aisle and on that side of the aisle we are happy to accept this
amendment. But if I could be indulged just a moment to ask the Senator
from Maine a question. Sir, you had to get the General Accounting
Office to tell you about this, did you not?
Mr. COHEN. Yes, but not only the GAO. As a result of the minority
staff investigation on the Senate Aging Committee, we conducted a year-
long investigation, and we asked for the assistance of the GAO as well.
Mr. MOYNIHAN. May I ask you this. I am not a lawyer, but I do know
you are not supposed to ask a question to which you do not know the
answer. Did the Social Security Administration come to you with this
question?
Mr. COHEN. The administration did not directly, no.
Mr. MOYNIHAN. Did not. This is a problem. Hamilton said, ``energy in
the executive.'' They have had trouble with the disability program
since the fifties, during Eisenhower. Martha Derthick, from the
University of Virginia, has written about this very carefully. It is
not that they do not cope with their problems; it is that they do not
share them. It would be all right to come here and say, ``We have a
problem and we need to know what to do about it.''
Mr. COHEN. The people responsible for bringing it to our attention
initially were the administrative law judges, the ones hearing the
cases, who were saying, ``You should know we have people coming in who
are addicted, who are continuing their addiction by engaging in illegal
activity.''
Mr. MOYNIHAN. I am not surprised. The administrative law judges have
been appalled by the long waits for disability, and then a $20,000
check finally comes out. In the southern district of New York, at one
point, I tell my friend Senator Packwood, who is a proud graduate of
New York University, when Rudolph Guiliani was the U.S. attorney for
the southern district of New York, he ceased to defend the U.S.
Government in disability payments. He would not do it. He thought it
was indefensible. When a U.S. attorney says, ``I will not defend the
Government in court,'' that indicates something. Well, there is a
problem of executive energy, autonomy, and a sense that this is our
problem; we have to do it.
I think the Senator from Maine has done a service to us. I have to
say to him, in the candor that we share on the floor, that the House
will have a view on this, and I hope it is a positive one. They have a
structure which is more complicated than ours. But for my part, I am
happy to accept it.
Mr. COHEN. I might say to the Senator that as a result of raising
this issue to this level of notice and notoriety that I have received a
call from the Commissioner of the Social Security Administration, who
is coming in to see me at 3 o'clock this afternoon to discuss what the
Social Security Administration is doing, or proposes to do, and the
nature of the problems confronting the administration itself.
Mr. MOYNIHAN. Good.
Mr. PACKWOOD. Mr. President, let me congratulate the alacrity of the
Senator from Maine. This is the type of thing he does consistently. He
pinpoints a problem and brings it to us, and it is identified. I am
delighted to accept the amendment.
The PRESIDING OFFICER. Is there further debate?
Mr. McCAIN. Mr. President, I express my appreciation to the Senator
from Maine for bringing this information to light. The Senator from
Maine did a lot of work on this issue of which most Americans were not
aware of this situation. Due to his efforts, many Americans are now,
and they are appalled and outraged that moneys should be going to
liquor stores to pay for the habits of alcoholics. That is not the
intent of the law nor the intent of the American people.
The Senator from Maine has, I think, brought to this legislation an
amendment that is much needed. I have no doubt that the other body will
approve of this, and I think we will not only save the taxpayers
dollars but perhaps, in the long run, we will help some of these very
unfortunate people.
So I express my strong support for the amendment of the Senator from
Maine. I think it is typical of his concern for many of our citizens
who are less well off than we are. I think this is a much-needed remedy
that will be welcomed even by the recipients, who may be deprived of it
in some way. Perhaps we can spend these dollars in the much-needed
treatment area that these very unfortunate people need so badly.
I yield the floor.
Mr. COHEN. I thank my friend for his kind comments. I point out also
that there has been historically--and I know the Senator from New York
is aware of this--a distinction between the SSI program and the
disability insurance program. The reasoning or rationale behind it, as
I understand it, is that those who are on SSI may not have contributed
enough into the Social Security trust fund as such, or at all.
Mr. MOYNIHAN. Or at all.
Mr. COHEN. Yet they are entitled to receive these payments because
they are very poor and cannot work.
So the law was set up to say that those individuals who have not
contributed enough into the system are the ones who must get treatment
for their addictions. The others do not have to get treatment because
the theory was, ``Well, they are paying into Social Security and it is
their money coming out.''
Mr. MOYNIHAN. Or disabled.
Mr. COHEN. Exactly.
As both the Senator from New York and the Senator from Oregon pointed
out, you get much more out of the Social Security trust fund than you
put in over the years, assuming you live long enough. During that
period of time you generally do very well in terms of the amount of
contribution versus the amount of receipt.
That is no longer the case, however, in the disability insurance
fund. My understanding is that by next year that fund will be depleted
and that it will require an infusion from the Social Security trust
fund.
So now we no longer have the argument saying, ``Well, I have
contributed to it and there is no reason that the Government should
insist I receive treatment for my addiction.''
What I seek to do in this amendment is to make sure that anyone who
receives disability payments or payments because of a disability for
drugs or alcohol has to receive treatment as the condition of receiving
SSI or SSDI benefits.
Mr. MOYNIHAN. Mr. President, could I confirm precisely what the
Senator from Maine has said.
The disability benefit program was put in place under President
Eisenhower with a payroll contribution and a trust fund. That trust
fund will be exhausted next year, and we will have to move some of the
surplus from the old age and survivors insurance over. These are
decimal points we move back and forth from time to time.
There is no problem of the trust funds as a whole. They are in good
shape. The disability payments grew at a fast rate in the sixties when
it became known about, and obviously there has been another spurt.
I can say the methadone example is a perfectly good one. Methadone is
a treatment developed by Vincent Dole and Marie Nyswander at
Rockefeller University. It uses a pain killer developed in Germany in
World War II when opiants were not available. While it ends a craving
for opium, there is no pleasure in it, you might say.
Obviously, when you have money, you slip off, and such like.
The SSI, supplemental security income, was the one in 1970. In 1969
President Nixon proposed the family assistance plan that would take all
of those aspects of Social Security which were not covered by the trust
fund, aid to families with dependent children, aid to permanently and
totally disabled, aid to the blind, and old age assistance--these are
meant to be transitional programs until Social Security covered
everybody--it took them and covered them. We included everything but
the children.
That is the American pattern we have to watch. You surely have to
watch that.
But those moneys come from general revenue. There is no trust fund.
Again, this is an administrative issue, a health issue, and a fiscal
issue that needs to be addressed.
I congratulate the Senator from Maine for his doing so and, as we
have said, Senator Packwood and I are happy to accept the measure.
The PRESIDING OFFICER. The Chair recognizes the Senator from Maine.
Mr. COHEN. Mr. President, I would like very much to claim the entire
credit for this particular legislation. It is not mine to claim,
however.
I want to publicly acknowledge the enormous amount of work that Mary
Gerwin, minority staff director of the Senate Special Committee on
Aging, Stacey Hughes conducted, because these two members of my staff
are the ones who really conducted the investigation for a period of a
year and brought it to my attention. I am just up here articulating the
basic work they have done. I would also like to thank Priscilla Hanley
and my entire Aging Committee staff, as well as Marty Sieg-Ross and
Sally Satel of Senator Kassebaum's staff, for their contributions to
the investigation and this legislation.
Mr. MOYNIHAN. And the Senator got the charts on time.
Mr. COHEN. They got me the charts on time. I ask unanimous consent
that a summary of my amendment be placed in the Record at this time.
There being no objection, the summary was ordered to be printed in
the Record, as follows:
amendment
Discontinues cash disability and SSI benefits to substance
abusers, and provides the benefits to institutions, agencies
or other payees to manage the money for the addict/alcoholic.
Prohibits cash lump sum payments to substance abusers.
These amounts would be paid to a representative payee
(government agency, etc.)
Extends to the SSDI program the statutory requirements for
SSI recipients that addicts and alcoholics have a
representative payee and receive treatment as conditions for
receiving benefits.
Requires a good faith compliance with treatment
requirements. If non-compliance, there would be tough
enforcement of termination of benefits.
Prohibits SSI and SSDI benefits to persons who use proceeds
from criminal activity--such as drug dealing--to support
their addictions.
Requires SSA to approve agencies in every state to refer
and monitor addicts in treatment and requires better
standards for monitoring treatment.
Reforms the SSI review process for drug addicts and
alcoholics to stress rehabilitation:
Mandatory review for compliance with treatment at the end
of the first year--suspension of benefits for non-compliance;
Mandatory resubmission of evidence by individual to prove
continuing disability as a drug addict and alcoholic upon
completion of 2 years in program; Individuals who are
considered to still be disabled will be eligible for 1 more
year of treatment;
Maximum of 3 years (cumulative) of eligibility for SSI and
SSDI benefits for drug addicts and alcoholics unless there is
another qualifying basis for disability.
Gives priority to SSI and SSDI disability drug addicts and
alcoholics in federally funded treatment programs.
Toughens penalties for fraud against the SSI and SSDI
programs by making willful false statements made to
fraudulently receive benefits a felony; provides civil fines
for lesser offenses and gives authority to the Secretary of
HHS to exclude repeat offenders (both recipients and those
who help them get benefits fraudulently) from disability and
Medicaid/Medicare.
The PRESIDING OFFICER. Is there any further debate on the amendment?
If not, the question is on agreeing to the amendment.
The amendment (No. 1474) was agreed to.
Mr. COHEN. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Chair recognizes the Senator from Arizona
[Mr. McCain].
Amendment No. 1475
(Purpose: To amend title II of the Social Security Act to eliminate the
earnings test for individuals who have attained retirement age)
Mr. McCAIN. Mr. President, I have an amendment at the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Arizona [Mr. McCain] proposes an amendment
numbered 1475.
Mr. McCAIN. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the bill, add the following:
TITLE --SOCIAL SECURITY EARNINGS TEST
SECTION . SHORT TITLE
This title may be cited as the ``Older Americans' Freedom
to Work Act of 1994.''
SEC. . ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO
HAVE ATTAINED RETIREMENT AGE.
Section 203 of the Social Security Act is amended--
(1) in paragraph (1) of subsection (c) and paragraphs
(1)(A) and (2) of subsection (d), by striking ``the age of
seventy'' and inserting ``retirement age (as defined in
section 216(l))'';
(2) in subsection (f)(1)(B), by striking ``was age seventy
or over'' and inserting ``retirement age (as defined in
section 216(l))'';
(3) in subsection (f)(3), by striking ``33\1/3\ percent''
and inserting ``50 percent of such individual's earnings for
such year in excess of the product of the exempt amount as
determined under paragraph (8),'' and by striking ``age 70''
and inserting ``retirement age (as defined in section
216(l))'';
(4) in subsection (h)(1)(A), by striking ``age 70'' each
place it appears and inserting ``retirement age (as defined
in section 216(l))''; and
(5) in subsection (j), by striking ``Age Seventy'' in the
heading and inserting ``Retirement Age'', and by striking
``seventy years of age'' and inserting ``having attained
retirement age (as defined in section 216(l))'';
SEC. . CONFORMING AMENDMENTS ELIMINATING THE SPECIAL EXEMPT
AMOUNT FOR INDIVIDUALS WHO HAVE ATTAINED
RETIREMENT AGE.
``(a) Uniform Exempt Amount.--Section 203(f)(8)(A) of the
Social Security Act is amended by striking ``the new exempt
amounts (separately stated for individuals described in
subparagraph (D) and for other individuals) which are to be
applicable'' and inserting ``a new exempt amount which shall
be applicable''.
(b) Conforming Amendments.--Section 203(f)(8)(B) of such
Act is amended--
(1) in the matter preceding clause (i), by striking
``Except'' and all that follows through ``whichever'' and
inserting ``The exempt amount which is applicable for each
month of a particular taxable year shall be whichever'';
(2) in clause (i), by striking ``corresponding''; and
(3) in the last sentence, by striking ``an exempt amount''
and inserting exempt amount''.
(c) Repeal of Basis for Computation of Special Exempt
Amount.--Section 203(f)(8)(D) of such Act is repealed.
SEC. . ADDITIONAL CONFORMING AMENDMENTS.
(a) Elimination of Redundant References to Retirement
Age.--Section 203 of the Social Security Act is amended--
(1) in the last sentence of subsection (c), by striking
``nor shall any deduction'' and all that follows and
inserting ``nor shall any deduction be made under this
subsection from any widow's or widower's insurance benefit if
the widow, surviving divorced wife, widower, or surviving
divorced husband involved became entitled to such benefit
prior to attaining age 60.''; and
(2) in subsection (f)(1), by striking clause (D) and
inserting the following: ``(D) for which such individual is
entitled to widow's or widower's insurance benefits if such
individual became so entitled prior to attaining age 60,
or''.
(b) Conforming Amendment to Provisions for Determining
Amount of Increase on Account of Delayed Retirement.--Section
202(w)(2)(B)(ii) of such Act is amended--
(1) by striking ``either''; and
(2) by striking ``or suffered deductions under section
203(b) or 203(c) in amounts equal to the amount of such
benefit''.
(c) Continued Application of Rule Governing Entitlement of
Blind Beneficiaries.--The second sentence of section
223(d)(4) of such Act is amended by inserting after
``subparagraph (D) thereof'' where it first appears the
following: ``(or would be applicable to such individuals but
for the amendments made by the Older Americans' Freedom to
Work Act of 1994)''.
SEC. . EFFECTIVE DATE.
The amendments made by this Act shall apply only with
respect to taxable years beginning after December 31, 1994.
Mr. McCAIN. Mr. President, before I go into my description of the
amendment, perhaps I could engage in a discussion with the
distinguished managers of the bill to let them know that I would be
glad to have a time agreement on this amendment.
If this amendment fails, which I have reason to believe that it will,
then I would have another amendment on which I would also have a time
agreement. And I have a third amendment that I believe is going to be
worked out.
So I would say to my friends, the distinguished managers of the bill,
I would be glad to agree to any time agreement that they would so
choose. In the meantime, I will begin my remarks to save time.
Mr. President, I offer an amendment. which I have offered before, and
I will bring again before this body until this terrible social
injustice is rectified.
There is a social injustice in this country today. It directly
penalizes senior citizens who want to work. It is unfair. It is nearly
criminal, because what it does is deprive senior citizens who are
forced to go back into the workforce in their retirement years, of
needed money they have worked for. They are penalized in the most
heavy, onerous, and unfair fashion, to the tune for every $3 earned by
a retiree over an approximately $11,000 limit they lose $1 in Social
Security benefits. Mr. President, that puts them in the highest tax
bracket in America.
The interesting thing about this situation which needs to be
rectified is, if an individual happens to be wealthy, has investments,
has a trust fund, has stocks, whatever kind of liquid assets, and is
not out there in the labor force, they are not subject to this onerous
Social Security earnings test.
Mr. PACKWOOD. Mr. President, could I interrupt my friend a moment to
see if we can get a time agreement that he is agreeable to. Is 30
minutes on a side agreeable?
Mr. McCAIN. It certainly is.
Mr. President, I ask unanimous consent that there be 30 minutes on
each side of this amendment followed by----
Mr. MOYNIHAN. The same arrangement on the next?
Mr. McCAIN. On the two amendments. I take it that my friends are
considering my third amendment. Would that be agreeable concerning the
notification on Social Security?
Mr. PACKWOOD. I think so. I have not seen that amendment.
Mr. McCAIN. The Senator's staff has.
Mr. MOYNIHAN. We will get to that in time.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Mr. PACKWOOD. This was the first two amendments; right?
The PRESIDING OFFICER. That is correct.
Mr. MOYNIHAN. This would preclude second-degree amendments and only
vote on the Senator's amendment?
The PRESIDING OFFICER. The Senator from Arizona made that part of his
request, to preclude second-degree amendment?
Mr. McCAIN. I do.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Mr. McCAIN. For the purpose of the Record, I would ask the President
to repeat the unanimous consent.
The PRESIDING OFFICER. The Senator from Arizona has proposed 1 hour
equally divided on both amendments, and no second-degree amendment.
Mr. MOYNIHAN. No. The Senator from Arizona is to have 30 minutes. The
time is equally divided.
Mr. PACKWOOD. Each side.
Mr. McCAIN. I say to my friends it is not real important, but 30
minutes to each side on the first one. I think 15 minutes on each side
is certainly agreeable to the second, because it will be a matter of
little debate.
Mr. President, I ask unanimous consent to amend the unanimous consent
request that the second amendment be 15 minutes on each side.
The PRESIDING OFFICER. Is there objection?
Mr. PACKWOOD. Just a moment.
Mr. MOYNIHAN. Just a second. We need to know the subject of the
second amendment.
Mr. McCAIN. The second amendment, I say to my colleagues, would be
that the U.S. Congress would then be placed--if my first amendment goes
down--the U.S. Congress would be placed under the exact same rules
concerning the earnings test.
Mr. MOYNIHAN. We will have to see that amendment. We will not have a
time agreement on that amendment now.
Mr. McCAIN. That is fine with me.
The PRESIDING OFFICER. The Chair understands the unanimous consent
request pending for the first amendment, a 1-hour time agreement,
equally divided, 30 minutes for each side, and the amendment will not
be subject to a second-degree amendment.
Is there objection?
Without objection, it is so ordered.
Mr. McCAIN. Thank you, Mr. President.
In regard to the second amendment, I say to my friend, I will be glad
to argue all day and all night that the Congress of the United States
should be placed under the same laws concerning their retirement as
American citizens are. If anyone disagrees with that, I would be more
than happy to spend considerable amounts of time explaining why there
is such discontent and anger on the part of the American people with
Congress because we seem to pass laws that apply to them and not to us.
That is also the case of the Social Security earnings test.
If a Member of Congress is retired at age 65 and receives a
Government-operated congressional pension, there is no earnings test
placed on any outside limit of his or her income, but there is one for
Social Security recipients. And, of course, that is patently unfair. I
may be introducing this amendment as a bill soon.
But back to the first amendment, Mr. President. This amendment
repeals the Social Security earnings test. As I said, it is unfair to
penalize American citizens who, in their retirement years, are either
forced or choose to return to the work force. They are then placed in
one of the highest tax brackets there is. These people are
knowledgeable. They are talented. They are people who can contribute
enormous amount to American society and our productivity.
The U.S. Labor Department has warned of shortages in the labor
market. Employers are having difficulty in hiring experienced,
dependable workers. By the end of the decade, 1.5 million fewer workers
between the ages of 16 and 24 will have entered the work force. At the
same time, 5 million older Americans will be retiring.
Mr. President, we all know that this earnings limit was created
during the Depression in order to force older workers out of the labor
force and create job opportunities for younger workers. Obviously, this
situation no longer exists and it is time to sunset this Depression-era
policy.
I would also like to say to the Senator from New York, who is the
chairman of the committee that would oversee this issue, that he said
the last time I brought this up that he would have hearings. I hope he
will do so. I have not seen any schedule for such a hearing in the
Finance Committee.
I hope the Senator also understands that I am willing to compromise
and phase out this earnings test, if necessary, if that would be
somehow beneficial. But the fact is, it is wrong. The distinguished
chairman knows it is wrong. Every American knows it is wrong, and it
has to be fixed.
Mr. President, I also comment that it is not just my idea that this
is wrong. I would like to just give some very brief quotes from various
leading newspapers around this country, all of which agree with my
position.
The Chicago Tribune said:
The skill and expertise of the elderly could be used to
train future workers, while bringing in more tax dollars and
helping America stay competitive in the 21st century.
The Los Angeles Times says:
As the senior population expands and the younger population
shrinks in the decades ahead, there will be an increasing
need to encourage older workers to stay on the job to
maintain the Nation's productivity.
The Baltimore Sun says:
The Social Security landscape is littered with a great
irony: While the program was built on the strength of the
work ethic, its earnings test actually provides a
disincentive to work. * * * One consequence of this skewed
policy is the emergence of a gray, underground economy--a
cadre of senior citizens forced to work for extremely low
wages or with no benefits in exchange for being paid under
the table.
The Dallas Morning News says:
Both individual citizens and society as a whole would
benefit from a repeal of the law that limits what Social
Security recipients may earn before their benefits are
reduced.
The San Diego Tribune says:
The benefit-reaction law made some economic sense when
Social Security was established in the 1930's and the
Government wanted to encourage the elderly to leave the labor
force and open up jobs for younger workers. But with
declining birth rates and the Nation's need for more, not
fewer, experienced workers, the measure is bad for the Nation
as well as its older workers.
The Wall Street Journal said:
The punitive taxation of the earnings limit sends the
message to seniors that their country doesn't want them to
work, or that they are fools if they do.
The New York Times says:
It is not wrong to encourage willing older adults to remain
in the work force.
The Orange County Register says:
Indeed, repealing the tax might actually increase revenues.
More people would be working, paying more taxes of all kinds,
including the Social Security tax. If our Government
bureaucrats want us to keep paying their salaries, the least
they can do is to make it possible to work in the first
place.
The Houston Post says:
Equity and common sense demand that this disincentive to
work be scrapped.
The Cincinnati Enquirer says:
No American should be discouraged from working, as long as
he wants to and is physically able to do so.
The Indianapolis Star:
On the face of it, the game appears rigged in favor of
those who stop working at 65 and against those who keep
working, in favor of well-to-do retirees against middle- and
low-income retirees who need a part time job to help with
expenses.
From Forbes:
Moreover, people are living longer; the economy is hurt
when artificial barriers block the full use of our most
productive asset, people.
The Detroit News says:
Work is important to many of the elderly, who are living
together. They shouldn't be faced with a confiscatory tax for
remaining productive.
And it goes on and on and on.
Mr. President, I remember a few years ago when this body decided that
we would be able to squeeze additional revenues by passing a tax on
luxury boats. The same people who will tell this body that repeal of
the earnings test means a decrease in revenues are the same people who
told the Congress and the Finance Committee that if we passed a tax on
luxury boats, we would see an increase in revenues.
Mr. President, we all know what happened. What happened was we forgot
to pass a law that said that rich people had to buy boats, and so rich
people did not buy boats. In fact, they went overseas if they wanted to
buy a boat, and the boat industry collapsed, and 19,000 Americans lost
their jobs. There was a dramatic decrease in revenues and taxes to the
coffers of the United States due to this unwise tax, despite the
prediction by the same people who will tell you that repeal of the
earnings tax will cause a decrease in revenues to the Federal coffers.
So after we saw what happened in the collapse of the boat industry in
America, we repealed that tax. And I applaud my colleagues for doing
so.
The same flawed logic that drove us to raise the luxury boat tax will
be the same flawed logic that will be used today in an argument against
repeal of the earnings test. It will be that we will see a decrease in
revenue, totally discounting the fact that there are tens of thousands,
hundreds of thousands of seniors out there today who want to work. But
they do not want to work when the fruits of their labors will be
confiscated by the Government.
How in the world can anybody believe that this amendment will result
in a decrease of Federal revenues, when all they have to do is go out
into any senior's community in America today and discover that many
seniors want to work.
Again, I want to point out, this earnings test does not affect rich
retirees. This does not affect people who have huge portfolios of
stocks and bonds and other means that provide them with a continuous
stream of finances. This affects the poor and the middle-income
retirees.
And I would suggest, along with my second amendment that I would
apply the test to Congress, that at least maybe we ought to include the
very wealthy, as well as those middle- and low-income people who are
suffering under this incredible burden.
The Department of Health and Human Services has stated that beyond
the year 2000, the estimated annual net cost of the proposal continues
to decline, reaching zero around the year 2021. Thereafter, the annual
full financial effect of the proposal is estimated to be a net savings
to the program. Even using their flawed logic, by somewhere around the
year 2021, we will stop seeing declines.
The important fact is that we do not take into consideration, one,
the social inequities of this law; but, second of all, the fact that
when people work, they pay taxes. People pay taxes, including Social
Security taxes.
So I urge my colleagues to consult with their constituents who are
senior citizens, whose representation organizations overwhelmingly have
supported the repeal of this tax. They do so on the basis of fairness,
but they also do so with a certain knowledge that there will be
incentives for people to enter the work force.
We all know the demographic changes that are taking place in America.
There is an aging population. The baby boomers are getting older.
They will be leaving the work force. How we can possibly, in good
conscience, lose that kind of talent and that kind of ability?
I remember a meeting I had with the president of Disney. The
president of Disney, at the conclusion of our meeting on another
matter, came up and said, ``Senator, I want to tell you I support
strongly the repeal of the earnings tax.''
I said, ``Why? Every time I go to Disney World, I see young people
dressed up like Cinderella and Goofy, but I do not see senior
citizens.''
He said, ``The reason why you do not see senior citizens is because
they have no incentive to work at Disney World or Disneyland. But we
have found that those who will work are our best workers, our best
workers that relate to the young people who come to Disney World.''
I have had several experiences like that with major employers in
America who say let these people work. Let them work. We need them. We
have not enough trained and talented and knowledgeable labor in our
country. We have not a large enough pool to draw from. We want to draw
from these people. They can do the job, they want to do the job, and
they contribute an enormous amount to the advancement of our businesses
and our profitability.
The American Farm Bureau, the American Federation of Small Business,
the American Health Care Association, Citizens for a Sound Economy,
Days Inn of America, National Association of Temporary Services,
National Council of Chain Restaurants, National Restaurant Association,
National Small Business United, National Society of Public
Accountants--by the way the National Society of Public Accountants
strongly disputes the premise that there will be a reduction in
revenues into the Federal coffers. In fact, the National Society of
Public Accountants feel exactly the opposite.
The National Tax Limitation Foundation, National Technical Services
Association, Retired Police Association, Sears Roebuck, Walgreens, and
the U.S. Chamber of Commerce all support the repeal of this unfair tax.
The National Association of Retired Federal Employees, National
Committee to Preserve Social Security and Medicare which, by the way,
both of those organizations have been enormously helpful to me, as well
as the Seniors Coalition, Seniors Cooperative Work Network, United
Seniors of Washington, Air Force Association, Association of Military
Surgeons, Association of the Army, Enlisted Association of the National
Guard, Fleet Reserve, Jewish War Veterans, Marine Corps League, Retired
Enlisted Association--on and on goes the list and they all believe the
earnings test is wrong.
Every organization that is composed--with the exception, I must say,
Mr. President, of the American Association of Retired Persons who has
refused to take a stand on this issue, as they did on the catastrophic
health insurance issue--literally every major seniors association
strongly supports this legislation.
It is time. I have been fighting this tax for years now. I would be
more than ready to accept some kind of compromise. I would be more than
happy to accept commitments.
The fact is, nothing has been done by this Congress about a terrible
social injustice. I intend to bring this issue up before the Senate of
the United States until something is done about it because it is
against my duties, it is against my oath to not try to correct an
injustice when I see it.
If you do not believe it is an injustice, visit with some of those
people, visit with the couple I did in Sun City who has experienced
severe medical bills and must now go out and work; individuals who had
been retired for 10 years.
Mr. President, I reserve the remainder of my time.
The PRESIDING OFFICER. Who seeks recognition? The Chair recognizes
the Senator from Oregon.
Mr. PACKWOOD. Mr. President, I feel some ambivalence toward my friend
from Arizona. As he knows, I have cosponsored this before. Logic is
totally on his side. Money is not. I know there is a disagreement in
estimates. There is no question the bill has to lose some money.
Whether it loses $26.4 billion over 5 years as is estimated, or whether
there will be a sufficient change of behavior so it loses less than
that because people go to work and they pay taxes--I do not know. There
is no question it loses some money.
But logic and fairness is on the side of the Senator from Arizona. We
do not say to somebody who has a private pension from an insurance
company ``You have worked all your life. You retire when you are 65.''
The insurance company says ``We will pay you $1,000 a month. And, by
the way, if you go to work after you have retired at Disney or
McDonald's, we are going to reduce your insurance company pension a
bit.'' We do not do that. And there is no reason why we should do it
with Social Security.
So, as I say, I come with some ambivalence. I know there is a loss of
money and we will have to make up the money. But equity is on the side
of the Senator from Arizona.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from New York is recognized.
Mr. MOYNIHAN. Mr. President, not for the first time do I rise on the
Senate floor to agree with the distinguished Senator from Arizona on
this matter. In October 1993, we had the same issue before us. He is
right. The earnings test for a person 65 to 69 is an obsolete
arrangement that we associate with the Depression. It has never
changed.
It, in fact, does no disservice, in actuarial terms, to the persons
who are affected because at age 70, or whatever, if you retire, having
had benefits reduced because of earnings, you get a higher retirement
benefit. From the actuary's point of view, it is all a wash after a
while.
As I say, I have here my benefits statement. If I were to retire, or
more specifically, if the people of New York were to retire me in
January 1994, at age 66 and 10 months, I would receive $1,259. I now
get no benefits because I have a salary that uses them all up. At age
70, my retirement benefit would be $1,470 per month and no reduction
whatever for whatever earnings there might be. Even so, the earnings
test is not understood and it does not seem right.
When there is something about the social insurance system that is not
understood and does not seem right, we ought to change it. We can
change it at no cost to the system over time. You have to make changes
slowly in a system of this kind.
The National Commission on Social Security reform made a report in
January 1983. We proposed that the retirement age be increased to 66
and then to 67 years. But we go to 66 in the year 2005, and 67 around
the year 2015. So everybody is on notice; no surprise.
I do also want to report, and this is something that takes more
attention, a majority of persons in the Social Security system retire
at age 62, and by age 65, two-thirds have, in fact, retired. But that
leaves one-third still working, of which some part is affected by this
and it makes no sense to them.
Here on the floor of the Senate, in 1993, October 27, I said to my
friend from Arizona I would be happy to have hearings on this, and we
will. At that time we were just about finishing up the first session,
and recently we have been holding a series of hearings on health care.
But by May of this year, I want to say to the Senator from Arizona,
there will be a full hearing on this as long as he wants, within
endurance, because the number of people who would want to come and say
they agree with him is a very long list, and it would include the
Senator from New York, and I think it would include my colleague, the
former chairman, the Senator from Oregon.
I say also, which is to the point of the bill we are working on
today, I would hope that we would see a revised Social Security
Administration that would take on these subjects and give us views of
its own. For instance, have a survey of 100,000 persons, the kind of
thing the Bureau of Labor Statistics does well; find out who is over
65, working, and is really feeling the effects of that retirement test.
The lawyer does not feel it, the doctor does not feel it, a university
professor does not feel it. Someone who is working at Disneyland might
feel it very well or might be working if it were not for it.
What about some numbers? I said of the Social Security
Administration, ``We get no thoughts. The agency has been brain dead,
in a policy sense, for 15 years. In 17 years, we have had 12
Commissioners or acting Commissioners. The job has just been empty for
1 year.''
The questions the Senator asks, Mr. President, deserve an answer and
they deserve a Social Security Administration that will answer them.
Are there people out there who think this arrangement is unjust?
Well, good, let us find out and see if we cannot fix it. We have not
heard a word from the Social Security Administration. Not a word. But
it is an issue of public policy: How do you make people who want to
work feel the system is fair?
With respect to another problem, I can report with some pleasure. The
notch is an issue which causes a lot of people trouble. We established
in 1992, by statute, a commission to look into it in the usual manner--
appointments from the House side, Senate side and Presidential side. I
have spent 1 year asking the administration, please appoint members so
we can get on with this subject. There are 7 million people out there
who think the Social Security Administration is cheating them. Well,
they need an answer. We think not, but let an independent commission
give a hearing on it.
By the most wonderful of happenstance, Mr. President, I have just
received a message that the administration will make its appointments
this very day. I cannot tell you what wonders coincidence will do, and
very good appointments, too: Alan Campbell will be the Chair. He is
professor of public policy at Wharton. He has been dean of the Maxwell
School. Scottie Campbell is a fine student of public administration; an
old friend; Lindy Boggs, the incomparable Lindy Boggs who the Chair
knows very well and we all love and admire; Gwendolyn King, who was a
good commissioner while she was in that job; and Robert Froehlke, who
is president and CEO of IDS Mutual Funds, a very commendable financial
firm in Minneapolis. Good. It took a year and this bill coming to the
floor.
I want to say that I am obliged, when the time comes, to raise a
point of order that is simply a budgetary point of order.
Mr. McCAIN. Will the Senator yield to me for comment?
Mr. MOYNIHAN. Yes, of course. I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from Arizona.
Mr. McCAIN. Mr. President, I say to the Senator from New York, with
his very generous commitment on the part of him and Senator Packwood
that a hearing will be held on this issue, with their expressed belief
that this is an unfair situation and their willingness to attempt to
work this out, I do not believe that a recorded vote will be necessary
at this time.
I believe that I can withdraw the amendment, of course seeking
unanimous consent to do so, and then look forward to a hearing on this
issue, S. 28, in the month of May. I appreciate the generosity of both
Senator Packwood and Senator Moynihan because I know how very busy
their committee is.
Also, Mr. President, a slight caveat. Obviously, as I mentioned many
times, I will not give up on the issue, but I do have some optimism
that we can work this out. I think that the comment of the Senator from
New York that there may have to be some gradualization to this, I
certainly agree with. I look forward to trying to shape some kind of
compromise that can give not only the present generation of retired
seniors some hope, but future people who will face this same dilemma
and challenge.
Mr. President, if it is agreeable to the Senator from New York and
the Senator from Oregon, I will ask unanimous consent to withdraw my
amendment.
The PRESIDING OFFICER. Is there objection? The Chair hears none. The
amendment is withdrawn.
The amendment (No. 1475) was withdrawn.
Mr. PACKWOOD. Mr. President, is the Senator going to withdraw the
second amendment, also?
Mr. McCAIN. Yes. I have not yet sent the second amendment to the
desk.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. May I just thank the Senator, because we can solve
this, and if he keeps at it we will. I just hope that when May comes we
have the head of an independent Social Security Administration saying
we are going to take this on, do it. We want people to feel good about
this system. It is one of our real achievements, and we do not want
people going around: ``Why are they doing this? Why aren't they paying
me?'' No, sir. The Senator shall have this hearing, and we will get
this thing done. I thank the Senator very much for bringing it up.
Mr. McCAIN. I thank the Senator from New York deeply for his concern
and effort on this matter.
I thank the Chair. I thank the Senator.
The PRESIDING OFFICER. Who seeks recognition?
Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. McCAIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Mr. President, I would like to engage in a brief colloquy
with the Senator from Oregon on the issue of the notification of all
Americans who contribute to the Social Security trust fund and are
eligible for Social Security upon retirement.
My concern was the cynicism of many Americans concerning the
financial sanity of the Social Security trust fund and their ability to
receive those benefits at retirement time, plus a great deal of
confusion as to how much money they have contributed, how much they can
expect to get back, et cetera, et cetera.
The thrust of the amendment I was going to propose basically required
the Social Security Administration to provide that information. The
Senator from Oregon has illuminated me on that issue, and I think that
what is planned may be satisfactory--and, in fact, may prove to be very
helpful--to all members of the work force.
I yield the floor.
Mr. PACKWOOD addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. PACKWOOD. I might just read into the Record--it is right on point
with what the Senator from Arizona is suggesting--what is about to be
started.
The Social Security Administration is going to send out an
individual's work life--and I will explain that in a minute--in three
stages. The trial stage starts next month, April of 1994, and in the
trial stage, they will send out a work history statement to 600,000
randomly selected individuals aged 25 or older, and they are using the
600,000 mailing to gauge how many questions and responses they get,
problems that may come up when they implement this process fully.
Based upon that, by October 1994, they will be able to compile a
report with their findings to be used when they begin the implementing
stage, and that starts very soon. The implementing stage will start
next February.
During what we call the implementing stage, a one-time work history
statement will be sent out to everybody who is 60 years or older,
whether or not they have started Social Security or not. Everybody who
is age 60 or over will get a statement, very similar to what the
chairman read earlier today, about how long have you worked; how much
did you pay in; when you paid it in.
Then, starting in the year 2000, they will send out an annual work
history to everyone age 25 or older. So I think we are going to
accomplish what the Senator from Arizona wants, and they are on the
verge of starting it now.
Mr. McCAIN. Mr. President, I thank my friend from Oregon. I think
that is entirely satisfactory, and I certainly hope that the Social
Security Administration is able to fulfill that commitment.
I will just make one additional comment. The Senator from New York
mentioned that finally members of the notch commission have been
appointed. I think that is a very important step. I am sorry it took so
long. But there still is an enormous amount of misinformation,
dissatisfaction, and anger on the part of the so-called notch baby
population, and I believe that the old adage about a little sunlight
being a good disinfectant is certainly operative here. We need to have
people understand exactly what the notch situation is all about, how it
came into being, and what remedies there are for it, if any. There are
millions of senior citizens out there today who are convinced that they
have been deprived of their benefits.
Now, I am not saying they are right; I am not saying they are wrong;
but there is a huge number. The Presiding Officer knows, from his
constituency who visit my State quite often especially at this time of
year, there is great discontent and dissatisfaction about the notch.
And I believe this notch commission, particularly with the quality of
individuals who have been appointed, will perform a valuable service. I
am hopeful their conclusions and recommendations will have great
validity and will help us wind our way through an incredibly difficult
issue which has plagued this body for many years now, and will for many
more years unless it is resolved.
I am not often a believer in commissions, but on this particular
issue I think we needed a commission of qualified experts who will
provide us with the information and guidance that we need.
Mr. President, I thank my friend from Oregon again and I yield the
floor.
Mr. PACKWOOD addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. PACKWOOD. I am doing this from memory, so if I state it wrong in
the Record, do not hold me to it, but this is the best I recall about
the notch. I understand the problem, and we all get it when we go home.
In 1972, we changed Social Security and went to a readjustment basis.
As a matter of fact, very few people know this.
When we went to the cost-of-living adjustment, we did it in the hopes
of holding Social Security costs down because we were getting
amendments in the Chamber to increase Social Security above the cost of
living, and we thought this would be a restraint on the growth. And it
became a one-upmanship: ``I offer an amendment to increase it 5
percent.'' ``I move to amend that and increase it to 10 percent.'' So
we went to the cost-of-living adjustment as a restraint on Social
Security.
But in 1972, we made a mistake in the adjustment, and we actually
overcompensated, so that people who retired got more than the cost-of-
living adjustment.
We realized that mistake in 1977, and those are the 5 notch years,
and they basically apply to people who were born between 1917 and 1922.
And, of course, the Government hates to take away from anybody anything
we have given them. So when we passed a law in 1977 correcting the
mistake we made in 1972, we did not attempt to undo the mistake for
that 5-year period. So, if you were born prior to 1917, you got this
overcompensated amount. It was a mistake. But we did not take it away.
Then we said, for those born 1917 to 1922, we would have a
transition, and they actually get less than people who were born prior
to 1917. But then after that 5-year period, the people that come after
the notch years actually get less than the people in the notch years.
So you have three categories.
Let us use an example. Before 1916, you get $500 a month. If you are
born in 1917 to 1922, you get $450 a month. If you are born after 1922,
you get $400 a month. Well, the people in the 5 years during the notch
compare themselves to the people born prior to them who get $500, not
to the people who were born after them who get $400.
But that is the mistake we made, and if we were to correct it, if we
were to give everybody a correction for the mistake and say, we made a
mistake; now, instead of correcting it, we are going to apply the
mistake to everybody, it is very, very expensive, and, indeed, it is--
you hate to use the word ``unfair,'' but it would compensate everybody
for increases greater than the cost-of-living adjustment.
So I understand why the people in the notch think they are being
treated unfairly. They are being treated differently. But they are
being treated better than the people that come behind them.
I thank the Chair. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Robb). Without objection, it is so
ordered.
Mr. MOYNIHAN. Mr. President, we have had a good debate, the first of
its kind on the Senate floor concerning an independent agency for the
Social Security Administration. We have had not a word of opposition
heard, just as in our Finance Committee, as my friend Senator Packwood
will agree, the vote was essentially unanimous with one Senator wishing
to be recorded in opposition.
The Senator from Arizona came to the floor with some amendments, very
germane amendments in the field of Social Security on a matter about
which he feels very strongly, about which I feel and Senator Packwood
feels should be looked into, but that should not really be carried by
this particular bill to establish an independent Social Security
Administration.
We have reached a very amicable agreement. He withdrew his amendments
and we are going to follow up with him in a new independent agency,
which we will want to do. And part of the debate that created that
independent agency is the debate that said we are going to deal with
this question of earnings limitations.
But now, I feel that we have about concluded. No one is on the floor.
I am going to propose, if it is agreeable to my colleague and friend,
that there be no more amendments. But we are not binding anybody.
It would be my view that we should have no more amendments and should
proceed to third reading very shortly.
Is that the view of the Senator from Oregon?
Mr. PACKWOOD. Are you asking unanimous consent for that?
Mr. MOYNIHAN. I understand there is a Senator coming, but I would
like it to be on record.
Mr. PACKWOOD. I agree.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The absence of a quorum has been suggested.
The clerk will call the roll.
The assistant legislation clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. RIEGLE. Mr. President, I rise today to once again offer my
support for this legislation to make the Social Security Administration
an independent agency.
The Social Security Program has the confidence and support of the
American public. In a period of increasing doubts and cynicism about
government it is absolutely paramount that those of us here in
Washington do everything we can to maintain the credibility of this
vital program.
A brief look at the work of the Social Security Administration points
out how important this bill is. The Social Security Administration
includes over half the staff and 60 percent of the expenditures of the
Department of Health and Human Services. This program serves over 42
million people. When this administration is not unfairly targeted in
budget cuts it does its job well under ever increasing work loads.
I support this bill because over the next several years Social
Security could become an all to convenient target for those who want to
balance the budget on the backs of senior citizens and disabled
Americans. If anyone questions the chance of that happening, I would
only have to point to the budget actions of the early 1980's. Despite
an ever increasing number of retirees, increasing numbers of people on
SSI, and increasing numbers of disabled children, the programs under
the Social Security Administration experienced a reduction of staffing
from approximately 80,000 to 63,000 people. As a result we see problems
in some areas such as disability reviews, the treatment of those
individuals with an addiction and last, but certainly not least, for
our elderly in need of basic information.
This legislation will place the Social Security Administration above
politics and above interference. Under the bill, a system is set up
that allows bipartisan leadership. In turn, that leadership can run the
program in the most efficient and effective way possible.
Recommendations will be made that will keep staffing at the necessary
levels. We will not have to worry whether or not the telephones are
getting answered. And perhaps most important--the citizens of this
country will know that the program that was established under Franklin
Roosevelt nearly 60 years ago will continue to serve them in good
faith.
I want to thank the senior Senator from New York for his sponsorship
of this legislation and for guiding it out of the Finance Committee and
onto the floor. I am pleased to be a cosponsor and pleased that we can
reassure the senior citizens of this country that Social Security is a
trust established many decades ago and that we are serious about
honoring that trust and commitment.
Ms. MIKULSKI. Mr. President, I rise today to give my enthusiastic
support to this legislation which will establish the Social Security
Administration as an independent agency. I have long been a supporter
of this effort. And I am glad to see its time has finally come.
As an independent agency, the Social Security Administration would
have three advantages over the current structure: greater stature
within the executive branch; greater control over procurement and
personnel practices; and as an independent agency, a stronger voice in
its policy decisions.
An independent agency would also allow the agency head a more direct
link to the President. He or she would be better able to present its
needs during policy deliberations within the administration.
Since 1935, the Social Security Administration has grown to be the
largest domestic program of the Federal Government. It represents over
20 percent of Federal spending. And it is the ninth largest agency in
the Federal Government with an annual budget of over $300 billion.
I take a very special interest in SSA.
The Social Security Administration's employees make up more than 50
percent of the Department of Health and Human Services. It employs
64,000 people--13,400 are at the headquarters in Maryland alone. This
means that one out of every five Social Security employees works in
Maryland.
SSA has a special mission of caring for and helping people. It is the
jewel in the crown of our domestic programs. Americans who have worked
hard and played by the rules, look to the Social Security
Administration as the agency which will reward their years of
productivity.
As the Senator from Maryland and the chair of the Aging Subcommittee
of the Labor Committee, I have many reasons to support this bill.
The agency is paying benefits to 42 million recipients and maintains
earning records for 132 million workers, 73.4 percent of these are
elderly. One out of every four households receives a check from Social
Security each month.
American workers and retirees have a compact with the Social Security
Administration. When I speak to employed people, both young and old,
they are concerned about the long-run security of their retirement
benefits. They want to know that the system is sound and the benefits
they earned will be available. They would have more confidence in a
program which could separate the Social Security policymaking from the
economic and budgetary decisions affecting the rest of Government.
As we move toward reinventing government, it is important that we
streamline our organizations and remove unnecessary levels of
additional administration between SSA and the President.
It is important to note that my support for an independent Social
Security Administration is in no way a reflection on the current
Secretary. I am a great admirer of hers.
But I supported Senator Moynihan's effort prior to her appointment
and I support it now. We need a separate agency to meet the needs of
our aging and disabled population in the 21st century.
A strong independent agency, autonomous agency, is the only way this
can be done.
Mrs. FEINSTEIN. Mr. President, I rise today in support of S. 1560,
the Social Security Administration Independence Act. In so doing, I
would first like to acknowledge the efforts of the distinguished
Senator from New York, and chairman of the Senate Finance Committee.
Senator Moynihan has been the patient sponsor of this legislation which
has been approved, three times now, by the Finance Committee. His
stewardship has brought this legislation to us today, and I am pleased
to be able to provide my support.
In 1980, the National Commission on Social Security recommended that
the Social Security Administration should be restored to its original
status as an independent agency. And in 1983, the National Commission
on Social Security Reform made the same recommendation. In 1984, the
Congressional Panel on Social Security Organization made
recommendations for establishing an independent agency.
Now, 10 years later, thanks in no small part to the dogged
determination of the Senator from New York, those recommendations have
reached fruition in the form of this legislation.
The Social Security Administration has the second largest budget in
the Federal Government. It keeps records on the earnings of 120 million
American workers, and provides benefits to 42 million beneficiaries.
I believe the time has come to elevate this agency, to a position
which is comparable to other Cabinet-level Federal agencies, by
restoring it to its original status as an independ |
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