The following excerpt is from the 1998 Senate Budget Committee session. Note the underlined portions.
U.S. FEDERAL RESERVE BOARD CHAIRMAN ALAN GREENSPAN: .....making sure that surplus is there.
U.S. SENATOR ERNEST F. HOLLINGS (D-SC): Yeah, making sure that surplus is there. I'm telling you, Dr. Greenspan, that's music to my ears.
HOLLINGS: Well, the truth is...ah, shoot, well, we all know there's Washington's math problem. Alan Sloan in this past week's Newsweek says he spends 150%. What we've been doing, Mr. Chairman, in all reality, is taken a hundred billion out of the Social Security Trust Fund, transferring it over to the spending column, and spending it. Our friends to the left here are getting their tax cuts, we getting our spending increases, and hollering surplus, surplus, and balanced budget, and balanced budget plans when we continue to spend a hundred billion more than we take in.
That's the reality, and I think that you and I, working the same side of the street now, can have a little bit of success by bringing to everybody's attention this is all intended surplus. In other words, when we passed the Greenspan Commission Report, the Greenspan Commission Report only had Social Security in 1983 a two hundred million surplus. It's projected to have this year a 117 million surplus. I've got the schedule, I'll ask to put in the record the CBO report: 117, 126, 130, 100, going right through to 2008 over the ten year period of 186 billion surplus. That was intended; this is dramatic about all these retirees, the baby boomers. But we foresaw that baby boomer problem, we planned against that baby boomer problem. Our problem is we've been spending that particular reserve, that set-aside that you testify to that is so necessary. That's what I'm trying to get this government back to reality, if we can do that.
We owe Social Security 736 billion right this minute. If we saved 117 billion, we could pay that debt down, and have the wonderful effect on the capital markets and savings rate. Isn't that correct? Thank you very much, Sir. Thank you, Mr. Chairman.
It should be obvious from the above that the government has for decades been taking the money intended to pay Social Security benefits and spending it as general revenue. The Social Security trust fund is filled with Government IOUs, and those people who insists Social Security is solvent are operating in the faith that T-bills are always good, because the taxpayer can always be forced to redeem them.
But there is a problem. There are so many T-bills in the Social Security fund that when the baby-boomers start applying for benefits, the sudden surge of T-bills being presented for payment would collapse the Federal System, because there are not enough young taxpayers to carry the extra load.
Senator Warren, a fighter for Social Security and for all of us, discovered that, on top of their already great wealth, the top 350 CEOs in the nation received a 3.9 percent raise in their pay last year. And she thought that if 3.9 percent was good enough for our CEOs, it is good enough for our seniors, people with disabilities, and veterans. Acting on her insight, she, together with 18 Senate co-sponsors, has introduced S.2251, the Seniors and Veterans Emergency Benefits Act.
The bill would provide seniors, veterans, people with disabilities, SSI recipients and others a one-time payment equal to 3.9 percent of Social Security's average benefit, or about $580. The bill would fund the one-time benefit payment to Social Security beneficiaries and others by closing the "performance pay" loophole, which allows CEOs to escape the $1 million cap on their compensation, and their companies to deduct the excess compensation, at a cost to taxpayers of around $9.7 billion a year. In theory, the excess pay must be performance based - but research shows that it rises even when CEOs drive their companies into the ground. Another report by the Institute for Policy Studies and the Center for Effective Government reveals, for example, that Gary Loveman, CEO of Caesar's Entertainment, received in 2010 and 2011 "performance-based" and other fully deductible bonuses totaling $10 million for those two years, the same years the company experienced $1.5 billion in losses.
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