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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     109-58

======================================================================

 
  RESOLUTION OF INQUIRY REQUESTING THE PRESIDENT TO TRANSMIT CERTAIN 
INFORMATION TO THE HOUSE OF REPRESENTATIVES RESPECTING A CLAIM MADE BY 
   THE PRESIDENT ON FEBRUARY 16, 2005, AT A MEETING PORTSMOUTH, NEW 
          HAMPSHIRE, THAT THERE IS NOT A SOCIAL SECURITY TRUST

                                _______
                                

   April 27, 2005.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                             ADVERSE REPORT

                             together with

                            DISSENTING VIEWS

                       [To accompany H. Res. 170]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
resolution (H. Res. 170) of inquiry requesting the President to 
transmit certain information to the House of Representatives 
respecting a claim made by the President on February 16, 2005, 
at a meeting Portsmouth, New Hampshire, that there is not a 
Social Security trust, having considered the same, report 
unfavorably thereon without amendment and recommend that the 
resolution not be agreed to.

                                CONTENTS

                                                                   Page
  I. Introduction.....................................................2
          A. Purpose and Summary.................................     2
          B. Background..........................................     2
 II. Hearings.........................................................3
III. Votes of the Committee...........................................3
 IV. Comittee Oversight Findings and Recommendations..................4
          A. New Budget Authonty and Tax Expenditures............     4
          B. Performance Goals and Objectives....................     4
          C. Constitutional Authority Statement..................     4
          D. Cost Estimate Prepared By the Congressional Budget 
              Office.............................................     4
  V. New Advisory Committees..........................................5
 VI. Congressional Accountability Act.................................5
VII. Federal Mandates.................................................5
VIII.Views............................................................6


                            I. INTRODUCTION


                         A. Purpose and Summary

    House Resolution 170 requests the President to transmit 
certain information to the House of Representatives respecting 
a claim made by the President on February 16, 2005, at a 
meeting in Portsmouth, New Hampshire, that there is not a 
Social Security trust.

                             B. Background

    House Resolution 170 is a resolution of inquiry, which 
pursuant to rule XIII, clause 7, of the Rules of the House of 
Representatives, directs the Committee to act on the resolution 
within 14 legislative days, or a privileged motion to discharge 
the Committee is in order. H. Res. 170 was introduced and 
referred to the Committee on Ways and Means, on March 17, 2005, 
and was ordered reported adversely by the Committee on April 
25, 2005 by a vote of 22 to 1.
    Under the rules and precedents of the House, a resolution 
of inquiry is the means by which the House requests information 
from the President of the United States or the head of an 
executive department. According to ``Deschler's Precedents,'' 
it is a ``simple resolution making a direct request or demand 
of the President or the head of an executive department to 
furnish the House of Representatives with specific factual 
information in the possession of the executive branch.''
    On March 17, 2005, Mr. Kucinich of Ohio introduced H. Res. 
170 requesting the President to transmit certain information to 
the House of Representatives respecting a claim made by the 
President on February 16, 2005, at a meeting in Portsmouth, New 
Hampshire, that there is not a Social Security trust.
    H. Res. 170 focuses on 11 words out of a nearly 3,800-word 
speech. When the 11 words are read in the context of the 
President's remarks, it is clear that the President was 
discussing the pay-as-you-go nature of the Social Security 
program, and the difference between a government and private-
sector trust.
    In a private-sector trust, there are assets that are 
administered for a specific beneficiary. The Social Security 
Trust Funds are different. Instead of real economic assets, the 
Social Security Trust Funds hold IOU's, and function as an 
accounting mechanism for the government. When the Social 
Security taxes are received in the Treasury, they are credited 
to the trust funds in the form of Treasury securities. When 
Social Security benefits are paid, an equivalent value of 
Treasury securities is removed. When taxes exceed the amount 
needed to pay benefits in a given year, the trust funds are 
credited with a balance of Treasury securities.
    The securities credited to the Social Security Trust Funds 
are guaranteed as to both principal and interest by the U.S. 
government. However, in order to honor the commitments to the 
trust funds, the Federal Government will need to raise cash by 
increasing taxes, reducing spending, or increasing the deficit. 
For this reason, the Social Security system is not a ``trust'' 
or a savings plan, but a pay-as-you-go system. According to the 
Social Security Administration, these accounting procedures 
established in the Social Security Act of 1935 (P.L. 74-271) 
have not changed significantly in the last 70 years.
    Information related to the Social Security Trust Funds is 
widely available in the public domain. Each of the last three 
Administrations has included language in their budgets 
submitted to Congress to describe the differences between a 
private sector trust and the Federal budget meaning of 
``trust.'' Also, the annual report of the Board of Trustees of 
the Social Security Trust Funds includes language explaining 
how the trust funds work. In addition, the Congressional Budget 
Office and the Government Accountability Office have both 
issued many public documents to explain the nature of 
government trust funds.
    Also, on March 9, 2005, the Committee held a hearing on the 
future of Social Security. The primary focus of the hearing was 
Social Security's structure and financial condition of the 
Social Security Trust Funds. At the hearing, David M. Walker, 
Comptroller General, U.S. Government Accountability Office, 
submitted testimony that ``the Social Security Trust Fund is a 
subaccount of the federal government rather than a private 
trust fund. Its assets are not readily marketable nor are they 
convertible into cash other than through raising revenues, 
cutting other government expenses, increasing debt held by the 
public, or some combination of these.'' Other witnesses at the 
hearing also discussed the nature of the Social Security Trust 
Funds.
    The Committee reported the resolution adversely because the 
resolution requests information related to the Social Security 
Trust Funds that is already known and widely available.

                              II. HEARINGS

    The Committee did not hold hearings on H. Res. 170.

                       III. VOTE OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the resolution, H. Res. 170.

                    MOTION TO REPORT THE RESOLUTION

    The resolution, H. Res. 170, was ordered adversely reported 
by a roll call vote of 22 yeas to 1 nay (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........  ........  .........
Mr. Shaw.......................        X   ........  .........  Mr. Stark........  ........  ........  .........
Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Herger.....................        X   ........  .........  Mr. Cardin.......  ........  ........  .........
Mr. McCrery....................        X   ........  .........  Mr. McDermott....  ........  ........  .........
Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........  ........  .........
Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........  ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........  ........  .........
Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........  ........  .........
Mr. Portman....................        X   ........  .........  Mr. Tanner.......  ........  ........  .........
Mr. English....................        X   ........  .........  Mr. Becerra......  ........  ........  .........
Mr. Hayworth...................        X   ........  .........  Mr. Doggett......  ........  ........  .........
Mr. Weller.....................        X   ........  .........  Mr. Pomeroy......  ........  ........  .........
Mr. Hulshof....................        X   ........  .........  Ms. Tubbs Jones..  ........  ........  .........
Mr. Lewis (KY).................        X   ........  .........  Mr. Thompson.....  ........  ........  .........
Mr. Foley......................        X   ........  .........  Mr. Larson.......  ........  ........  .........
Mr. Brady......................        X   ........  .........  Mr. Emanuel......  ........  ........  .........
Mr. Reynolds...................  ........  ........  .........  .................  ........  ........  .........
Mr. Ryan.......................        X   ........  .........  .................  ........  ........  .........
Mr. Cantor.....................        X   ........  .........  .................  ........  ........  .........
Mr. Linder.....................        X   ........  .........  .................  ........  ........  .........
Mr. Beauprez...................        X   ........  .........  .................  ........  ........  .........
Mrs. Hart......................        X   ........  .........  .................  ........  ........  .........
Mr. Chocola....................        X   ........  .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------

          IV. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    The Committee held no oversight activities with respect to 
clause 3( c)(1) of rule XIII of the Rules of the House of 
Representatives.

              A. New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
H. Res. 170 does not provide new budgetary authority or 
increased tax expenditures.

                  B. Performance Goals and Objectives

    The rule requiring a statement of performance goals and 
objectives is inapplicable.

                 C. Constitutional Authority Statement

    Pursuant to clause 3(d)(I) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this resolution in article I, section 1 of the Constitution.

      D. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the Congressional Budget Office, the following 
report prepared by CBO is provided.

                                     U.S. Congress,
                                       Congressional Budget Office,
                                    Washington, DC, April 26, 2005.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H. Res. 170, a 
resolution of inquiry requesting the President to transmit 
certain information to the House of Representatives respecting 
a claim made by the President on February 16, 2006, at a 
meeting [in] Portsmouth, New Hampshire, that there is not a 
Social Security trust.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathy 
Ruffing.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H. Res. 170--A resolution of inquiry requesting the President to 
        transmit certain information to the House of Representatives 
        respecting a claim made by the President on February 16, 2006, 
        at a meeting [in] Portsmouth, New Hampshire, that there is not 
        a Social Security trust

    H. Res. 170 would request the President, within 14 days, to 
transmit further information to the House of Representatives 
clarifying a statement that he made at a stop in Portsmouth, 
New Hampshire, that ``there is no Social Security trust.'' CBO 
estimates that the cost of complying with the request would be 
insignificant. The resolution would not affect direct spending 
or revenues.
    The CBO staff contact is Kathy Ruffing. This estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

                       V. NEW ADVISORY COMMITTEES

    H. Res. 170 does not establish or authorize any new 
advisory committees.

                  VI. CONGRESSIONAL ACCOUNTABILITY ACT

    H. Res. 170 does not apply to the legislative branch.

                         VII. FEDERAL MANDATES

    H. Res. 170 provides no Federal mandates.

      VIII. Dissenting Views on H. Res. 170, Resolution of Inquiry

    We disagree with the majority's action to report the 
resolution to the House with an adverse recommendation. Such a 
recommendation ensures that the full House will not consider 
the resolution. On the contrary, we believe that the resolution 
raises an important issue which deserves discussion and 
consideration by the full House.
    Unfortunately, we were not able even to have full 
discussion and consideration by the Committee. The markup was 
scheduled on the latest possible day, with the minimum notice, 
in the evening and on a day when many members had previously-
scheduled activities in their districts. Only one Democratic 
Member attended.
    The February 16 statement by the President cited in the 
resolution is only one of many comments by the President and 
other Administration officials disparaging the Social Security 
trust funds and their holdings. The trust funds are 
characterized as merely holding IOUs or pieces of paper. These 
comments seem designed to weaken public confidence in Social 
Security's future and create an impression that Social 
Security's financial difficulties are larger, and more 
immediate, than they actually are.
    In addition to exaggerating the scope of Social Security's 
problems, the Administration's effort to disparage the trust 
funds and imply that they have no value suggests that the 
Administration believes we either cannot afford to pay back the 
monies that have been borrowed from Social Security over the 
years, or that we should not pay back the trust funds.
    Either choice is disturbing. The trust funds have been 
built up through workers' hard-earned contributions to the 
fund. A regressive tax has been effectively used to fund the 
rest of government. We simply must pay back the Social Security 
trust funds. It is our moral, legal, and financial obligation 
to every American.
    The Administration should not hint that we cannot afford to 
do so or should not do so. This would be troubling from any 
Administration. But it is particularly troubling to hear such 
comments from an Administration that reversed the policy of 
saving every penny of the trust funds' surpluses, has diverted 
$670 billion of those surpluses over five years, and now 
proposes to divert every penny of future surpluses.
    This is irresponsible from the standpoint of the Social 
Security debate. However, it is also irresponsible as a matter 
of our overall fiscal circumstances and the financing of the 
Federal government, a topic of central concern to our Committee 
and the Congress.
    The bonds held by the trust funds are Treasury securities, 
similar to those held by individual and institutional 
investors--as well as Central Banks--in the United States and 
throughout the world. Questioning the value of the trust funds 
is questioning the value of those other bonds as well. Those 
bonds are also ``merely'' lOUs or pieces of paper. To respond 
to criticism by acknowledging that we will honor the trust 
funds' bonds, while making other statements suggesting that the 
United States really can't afford to do so, sends a message 
about Social Security but also one about our other debt. 
Treasury bondholders have to wonder whether the President and 
his Administration believe we can afford to honor the debts we 
owe them as well.
    If investors begin to worry about the safety of Treasury 
bonds, we could see significant repercussions in our domestic 
and international financial markets and in the U.S. and global 
economy, including a significant rise in our interest rates. 
The situation could be particularly damaging if the 
international investors who have purchased 91 percent of U.S. 
debt the past four years decide to stop buying new Treasury 
bonds or to sell their existing holdings.
    This is why we find comments such as those the President 
made on February 16 and on many other occasions--including his 
recent visit to West Virginia--so troubling. The resolution 
before us sought clarification of these remarks--clarification 
that could play a significant role in allaying any possible 
market concerns.
    We have sought such clarification from the Administration 
this year with little success. The Ranking Member submitted a 
written question on this topic to the Treasury Secretary 
following his testimony at our February 8 hearing. The Ranking 
Member also wrote to the Secretary following the President's 
April 5 visit to West Virginia. To date, the Treasury Secretary 
has not responded.
    H. Res. 170 raises an important issue which the 
Administration has ignored. We have sought to obtain further 
information and clarification of the Administration's views 
through testimony and correspondence. The Administration has 
not responded. Therefore, we believe it is appropriate for this 
Committee and the Congress to explore other avenues to obtain 
an appropriate explanation of the President's comments, as well 
as similar comments from others in his Administration.
    H. Res. 170 is necessarily limited, in that it addresses 
only one specific instance and phrasing of a view that the 
Administration has expressed in many forms. We would prefer 
that the Administration respond to the general concern, and to 
do so without Congress having to pass legislation. That could 
have a reassuring effect on financial markets and also 
facilitate a more accurate and honest debate about Social 
Security's finances. Committee adoption of the resolution would 
have been a valuable step towards that goal. Unfortunately, the 
majority has opted to effectively kill the resolution, 
permitting the Administration to continue to stonewall on this 
important matter.
                                   Charles B. Rangel.
                                   Sander Levin.
                                   Jim McDermott.
                                   Richard E. Neal.
                                   Michael R. McNulty.
                                   Rahm Emanuel.
                                   Xavier Becerra.
                                   John Lewis.
                                   Ben Cardin.
                                   Wm. J. Jefferson.
                                   Pete Stark.
                                   John B. Larson.
                                   Lloyd Doggett.
                                   Earl Pomeroy.