tv Hearing on Preserving Social Security CSPAN June 21, 2022 9:48am-11:51am EDT
next, the senate budget committee looking at preserving social security. some senators and witnesses argue that the tax code should be more fair and that the wealthiest americans need to pay more into the system. others think that social security needs to be on more secure financial ground before expanding benefits. the hearing is two hours.
statement after our witnesses testify, is that right? social security, as everybody knows, is one of the most popular and successful government programs in the history of our nation. for more than 80 years in good times and bad, social security has paid out every benefit ode to every eligible american on time and without delay. i think that is important to make that point. we live in a moment of great insecurity. and yet, social security, since its inception has never failed the american people and remains a program enormously important to them. one that they can rely upon. not was over eight decades of operation, not during the pandemic, not around the wall
street crash has anyone ever received a letter or phone call from the social security administration saying, sorry the economy is not doing well and we need to cut your benefits. never happened. if i have anything to say about it never will happen. today, while many people take social security for granted because it has been around for a long time, let us remember before social security was created in 1935 about half of our nations seniors were living in poverty. today, low the poverty rate is still too high for seniors, that rate is just 8.9%. 50% before security, less than 9% today. we have to do better but that is a significant improvement. without social security is estimated some 22 million americans, including more than 16 million seniors, would be living in poverty. yet, despite this important
success we should be clear. the tens of millions of senior citizens are still struggling today to make ends meet, and many older workers are scared. they are literally frightened to death that they will never be able to retire with any shred of dignity. according to the most recent data that i have seen, 12% of seniors in america are trying to live on an income of less than $10,000 a year. got that? 12%, less than $10,000 a year. i do not know how anyone, seniors or otherwise, kill live until less than 10,000. equally important, 55% of seniors are trying to survive on less than $25,000 a year. think about that? when you are a senior you are dependent on prescription drugs, health care, trying to keep your home warm, trying to make it on $25,000 a year. that is more than half of the seniors in america.
adding insult to injury, and this is an enormously important point that i think we do not make often enough. about half of older americans who are 55 years of age and older have no retirement savings. got that? 55 years of age in america, you have worked your entire life, you have zero in the bank for when you retire. they are dependent on a social security benefit today that is less than 1500 and $40 a month on average. despite what some politicians have been saying for years, social security today is not on line for going broke. social security has a 2.5 trillion dollar surplus in the trust, and it can pay out every benefit ode to every eligible american for the next 13 years. okay?
the social security, you pay out all of your benefits for the next 13 years, with the actuaries and i want, what most people want is more than 13 years. the actuaries talk about 75 years being the kind of number that we should have as we go forward. after that, after that 13 years social security estimates that there will be enough funding, the social security administration estimates that there will be enough funding available to pay 80% of promised benefits. all benefits for the next 13 years, 80% after that. given that reality our job, in my view, is not to cut social security. it is not to raise the retirement age as many of my republican colleagues would have us do. our job is to expand social security so that everyone in america can retire with the
dignity that he or she deserves. that every person in this country with a disability should be able to retire with the security they need. that is what the social security expansion act, that i have introduced today along with senators warren, white house, virtually, van hollen, booker, and gillibrand is all about. this legislation has been endorsed by many organizations. good in the alliance for -- the american federation of teachers, and many, many other organizations. according to a letter, this is an important part of what this hearing is about today. according to a letter that i received from the social security administration this morning, this legislation will fully fund social security for the next 75 years. and, expand benefits for senior citizens and people with
disabilities. how do we do that? how do you expand benefits and make social security solvent for the next 75 years? which is, i think, what the american people want. the answer is not complicated. at a time of massive income and wealth inequality, at a time when billionaires pay an effective tax rate lower than the average working person. at a time when the very richest people in this country are becoming much richer. this legislation demands that the wealthiest people in this country start paying their fair share of taxes. today, absurdly, and grossly unfairly, there is a cap on income subject to social security taxes. that cap is now about $147,000 a year. what does that mean?
it means that if you are a multibillionaire you pay the same amount of money into social security as someone who makes $147,000 a year. got that? it means that if you make 147th a year you pay 6.2% of your income in social security taxes, but if you make ten times more than that, 1,470,000 you pay six tenths of 1% of your increment in a social security taxes. all of this is taking place at a time of massive income and wealth inequality. that makes sense to some people, it does not make sense to me. our legislation applies the social security payroll tax on all income. including capital dams and dividends. for those who make over 250,000 a year, that is. part of this legislation is
93.6% of households would not see their taxes go up by one penny. overwhelming majority of the american people would not see any increase and their taxes under this proposal. they tax increase in our legislation only applies to the wealthiest 6.4% of all americans. those who make 250,000 a year or more. further and importantly under this bill, social security benefits would be increased by 20 $400 a year for both new and existing recipients, lifting millions of seniors out of poverty. in addition, under this bill we would increase the help for senior citizens by accurately measuring the spending patterns for the consumer price index for the elderly. one of the reasons that i call this hearing, and i am glad that senator graham has been able to be here is that there
is a strong philosophical difference between many of us in the democratic caucus, and many in the republican caucus as to the best way forward. that is the discussion we are going to have today. virtually all members of the democratic caucus are on record in support of expanding social security benefits. the republicans, by and large, have taken a very different approach. i am delighted, i hope they will show up that some of the republicans who have taken sub strong positions on this. senator romney is here, i am glad that is the case. i look forward to hearing from him. some of the republicans who have taken strong positions on this issue are on this committee. i know that they are going to be explaining where they come from, i look forward to that. today t would sunset social security every the released a plan that would
sunset social security every five years. raise taxes on millions of seniors, and jeopardize the guaranteed income of 65 million americans who depend on social security. just a few months ago the republican study committee in the house, in house, introduced the bill that would raise the social security retirement age to 69 years of age over the next eight years. and privatized social security by allowing employers to divert peril tax dollars into less generous private retirement -- last year, senator romney was here with us. has opposed raising taxes on the wealthy to strengthen so secure security, introduced legislation, the rose cuts for social security behind closed doors. in 2020, senate republican leader mitch mcconnell told bloomberg reporter that, quote, he hopes the work of the next democratic president to trim social security, medicare, and medicaid, end quote. in 2011, my colleague senator
graham institutes legislation to raise the full retirement age to 70 by 2032. and index it into longevity. further, 2000 and, three senator graham introduced a bill that would cut social security benefits for current wage earners by 27%. according to the center on budget and policy priorities. now, as i think everybody knows, i don't often agree with former president donald trump. but this is what he said when he was campaigning for president in 2015. he was right. he said, quote, every republican, this is in the republican primary, every republican wants to do a big number on social security. they want to do it on medicare, they want to do it on medicaid, and quote. well, let me be clear, we cannot allow that to happen. the vast majority of american people understand that immoral society does not give tax breaks to billionaires and then cut back on the needs of struggling a seniors are people with disabilities.
in fact, 72% of americans support increasing, not cutting, social security benefits by asking millionaires and billionaires to pay more into the system. so, that is where we are right now. a great philosophical difference, i look forward to the debate. some of us think that the very wealthiest people in this country are doing extraordinarily well should in fact be asked to pay more into social security so we can protect millions of low income and struggling seniors. others disagree. with that, i am glad that senator graham has been able to come. senator graham? >> mister chairman, i think this is a hearing worth having. i take a different view about how to save social security. mine is more realistic. yours is a fantasy. the problem is real. you are a good man, you are consistent, every time there's a problem, tax the risk. can't me and for more revenue.
we're going to need more revenue. if you think taxing the wealthy is going to save social security, you are wrong. so, where are we with social security? by 2034, according to the research trust fund report, the money in social security will require as to reduce benefits so that you can get only 77% of the benefits you owed. because we're paying out more than retaking in. that's a fact. it slipped a year, we're on a glide path were overtime, senator romney knows this, the money being paid and, the money taken out does not add up. if you don't do something now, you're going to have a draconian choice of cutting benefits and raising taxes to keep the thing afloat. here's the good news, we have got some time if we act together. here's the model i would suggest. the raegan o'neil model. i think it is in the 80s.
greenspan commission was formed by president reagan, tip o'neill, ronald reagan were known to have a drink together. apparently during when those discussions, they said let's do something about social security. it is going. broke alan greenspan, a bunch of folks came up with some ideas. they did more on the revenue side. they adjusted the age of retirement from 65 to 67. i just got my first social security checks a few months ago. i was eligible 66, i think, in two months. in my case, when i was a 21 and 22, my mom and dad died within about 15 months of each other. at a 13-year-old sister, we moved in with an aunt and uncle, we worked in plants in south carolina. never made over $30,000 in her life. the survivor benefit, the social security for my sister, until she became 18 really helped us get by. now, i am 66, soon i will be 67. i have a good sally, i've a
military retirement. i've a congressional pension plan. if you ask me to take a little less to save social security for people who need it more than i do, can't mean. it's going to take that type of commitment from all of us. the wealthier people are going to have to take a little less and benefits. younger people living longer, we are going back to adjust the age once again. here is the fact. in 1955, when i was born, there were 8.6 workers for every retiree. in 1990, there was 3.4. in 2022, there is 2.8, by 2050, there's 2.2. senator romney has done everything he can to save social security. if you ever go to the reunion, you'll see a lot of people -- i have let you down, i'm not married, with no kids, as people like me screen this thing up. so, the bottom line here, we have fewer people working for
that number people retired. if that doesn't create a problem that i think you're missing the point. 2.2 people by the middle of the century are not going to generate the amount of money necessary to keep the funds if we don't make some changes. what are the changes that simpson, bowls, the gang of six, bipartisan people looked at, i judging the age of retirement. increasing revenue, and trying to make the benefit structure more efficient. i don't need a lecture about social security. i understand the value of the program. when i was 22, had a 13 year old sister to take care of, the money really mattered. it matters to a lot of people in retirement as their primary source of income. i'm at a stage now where i could change my, i wouldn't change my lifestyle to have a smaller one -- maybe not at all, but smaller for sure,. and to restructure the benefit
schedule so the money will be there for people who need it more than i do. i don't know how to solve this problem without all of us working together. i know that ronald reagan and tip o'neill did in the 19 80s work for a while. we have got to do it again. they didn't go to the approach of senator sanders are just taxing the wealthy, because it's not going to work as a stand-alone proposition. so, the country is in a world of hurt. our financial house is not an order. by 2031, we'll have two trillion in annual deficits. the national debt by 2032 will be 40 trillion. by 2052, the debt to gdp will be 100 85%. that's a separate problem from social security, but social security is sort of consumed in that. now, the trustee report assume something about the viability
of the trust fund, mister chairman. they assume that about three and a half percent of ration rate. well, we know now, that's not exactly what's going on. interest rates are going up. inflation rates are at 8%. every increase in interest rates is about 200 billion debt service. so, we're on a trajectory now. there we go, run a trajectory for inflation is higher than anticipated which put stress on the trust fund. interest rates are going up. which will put stress on the economy. so, when i propose we do is have this discussion. you can blame us if you like. you're not going to be a blame me for not caring, because i do. and i will challenge your assumptions about how to say the system. understanding your patriotic american and you want to do what you think is best. but in your world, we are all the bad guys, and you figure this out. you haven't figured it out. what you're selling doesn't
work. we'll have a good discussion but what will work. it will be bipartisanship. it won't be the sanders plan. it won't be individual private accounts, that might be part of the mix, who knows. the bottom line, we're going to have to make some hard decisions. i stand ready to make those hard decisions. senator romney wants somebody outside of politics to give us some information. why do we had with symbols, like we had with the gang of six, to adjust social security and stop it from running out of money by 2034 and having to reduce benefits. i think he and others on our side, people on your side, quite frankly, are willing to do this. and i would invite president biden to be part of it. i would love to be able to sit down with the administration see if we can recreate the momentum for simpson bowls or the gang of six. where we put on the table, something of everything. where everybody has to give a little bit and save a system we're saving.
so, this is an election year issue, great. i think it needs to be talked about. we're going to talk about it in terms of our side that is a little more histological than just tucks the risk. thank you. >> thank you, senator, graham i look forward to this discussion. we have an excellent panel with us. following this panel we, are going to hear from mr. stephen costa who is the chief actuary of the social security administration to tell us where we're at and what's the plan that i proposed would mean for the future of social security. we have five great panelist with us. we are going to begin with miss nancy oldman, missed all the men's president and cofounder of social security works. she also chairs the board of directors for the pension rights center. miss all-time in, as a member
of the social security advisory board, and endemic government agency which he was appointed by speaker pelosi. miss ultimate, thank you for being with us. >> chairman sanders, ranking member graham, and members of the committee, thank you chairman sanders. not only for holding this crucially important and aptly named hearing. but also for your offering the social security expansion act. it has legislation that greatly increases the economic security of all working families. including the economic security of every single one of serves for securities more than 65 million beneficiaries. as every trustees report makes clear, whether to expand benefits or cut them as a matter of values, not a filter ability. at the end of the century, social security is projected to
cost less than 6% of gross domestic product. to put that 6% in perspective, spending in response to covid has amounted to over 27% of gdp. at the height of the vietnam war and 1967, we spent more than 9% of gdp on the military. moreover, a nation will be much wealthier at the end of the 21st century just as we are wealthier now than we were 75 years ago. that means that around 60% of gdp will be easier to afford in the future. importantly, social security does not and bylaw -- even a penny to the deficit. as polarized as americans are over many issues, your constituents agree about social security. poll after poll finds that an
overwhelming majority of americans, republicans, as well as democrats, and independents believe that social security is more important than ever. they strongly oppose any and all cuts. they want to see benefits expanded. they want the wealthiest to pay their fair share. what's the american people want is extremely wise policy. social security ensures workers wages against risks that confront us all. rich or poor, any of us can die prematurely leaving young children. rich or poor, any of us can suffer a disabling accident or illness. rich or poor, all of us hope to live to old age. so your security protects us against all of these financial risks through its life insurance, disability insurance, and joint and survivor
retirement annuities. it doesn't more efficiently, securely, universally, effectively, and fairly. then its private sector counterparts. but it does not do so adequately. the social security expansion act is a solution. the nation is facing a retirement income crisis. expanding social security is the answer. expanding social security while requiring the wealthiest to pay more is also part of the answers to the nation's rising, destabilizing income and wealth inequality. which president obama called the defining challenge of our time. the social security act substantially increases social in securities modest benefits. and not only pays for every penny of improvements, but also ensures the social security benefits can be paid in full
and on time for three quarters of a century and beyond. it does so while imposing not one penny of additional cost on anyone earning under $250,000. the legislation is profoundly wise. though i believe benefits should be expanded more and multi millionaires and volunteers be required to pay more. congress has not expanded social security benefits in half a century. president roosevelt called social security the cornerstone in a structure which is being built, but is by no means complete. for the first 35 years congress expanded social security every few years. but it has not expanded those benefits in half a century. it is time to act. congress must address social security through regular order as it always has. that way, the american people
will know where their elected representatives stand, and excellent place to start as a vote in the senate before november on the social security expansion act. thank you. >> miss oppmann, thank you very much. our next panelist is mr. robert roach jr., the president of the alliance for retired americans and former general secretary treasurer of -- there is an order for the international trade union federation and as a board member of the pension rights center. thank you very much for being with us. >> good morning, my name is a robert roach jr. i am the president of alliance for retired americans and the former the secretary treasurer of the -- detail it has 50 million american retirees.
we are represented and 39 separate states, we believe, categorically, but the importance of improving social security cannot be overstated. there is an index for the cost of living, adjustment has not kept place with inflation. we need improvements because older americans today are hurting. i have seen examples firsthand of many occasions where seniors go to the checkout counter at the supermarket and by the same type of items that they bought four years, they can no longer afford them and have to put food back on the shelves. seniors are having to make decisions on a daily basis these are just a few. examples that clearly underline the country's desperate need to expand social security benefits. i will add that after 40 years of work and playing by the rules they benefit from the airline's $311 a month.
$311 a month and tens of thousands of people that i work with are now functioning with three to $500 a month and depending on social security just to make ends meet. in addition three, most seniors who are finding financial difficulty are depending on their children for financial help and to provide medical assistance. this is stifling our younger people, we are creating a generation, the next generation of poor people. attached to my statement is a statement for missed christina brown, who had opportunities to go to ivy league colleges on scholarship. many opportunities to advance herself and become a doctor, she had to stop going to school and borrow money to pay the mortgage of the family home. her parents and her mother is not self sustaining as a result. 40% of our youth are under those conditions.
women who take on the role of their families become people like her sister. both people played by the roles, did what they were supposed to do, cannot be self-sustaining. get rid of the decline of traditional pension plans that accumulate numbers of americans relying on social securities and retirement. 50% of americans rely on security for half of their income. one in seven over the age of 65 do so for 90% of their income. moreover, social security benefits are not keeping place with inflation, they social security and cost of living adjustment is inadequate. it is not representative of the true measure of inflation in seniors are faced with nearby. as of the average monthly social security benefit for retired workers is a modest 16 hundreds of $6. as we saw and social security, medicare trustees reported just last week, social security she
will not be able to afford the payments until 2034. at which point the funds will be depleted and income will only cover 77% of what is sowed. senator sanders legislation, which the alliance strongly supports, it is proud to endorse and addresses these challenges by doing the following. extending the sovereignty of social security to require the wealthiest american households to pay their fair share. expand the social security benefits across the board, increased cost of living adjustments by adopting the consumer life index for the elderly. updating the special minimum benefit for qualifying for low income workers to stay out of poverty tsv alliance also endorses the legislation of the house hr 50 7:23 on social security. a sacred trust act which also
makes social security stronger and repeals a provision and government pension offset. both of which are on filling callback to social security benefits of workers, their spouses, or survivors if they worked for a period of time and are not covered by social security. the time to expand social security is now, i would like to once again invite the company. we stand ready to work with the senate in the house in any way possible to improve benefits for retired americans. thank you. alex>> mr., roach thank you vey much. next panelist is mr. alex lawson who is the executive director of the social security marks and a member of the strength and social security coalition, a coalition made up of 340 national and state organizations representing over 50 million americans. mr. lawson, thank you very much for being with us. >> thank you chairman sanders, ranking member graham, and
other members of the committee, i am going to do a bit of a history lesson. in 1945 democratic president franklin delano roosevelt signed the social security act into law. for the next 87 years social carrot he has never missed a single payment. everybody loves social security, everybody! i have been all over this country talking about social security and i can tell you it does not matter if it is a roomful of camo nra hats, or a parking lot full of electric vehicles. everybody loves social security. that is not totally true, not everybody, there has always been a sliver, a tiny splinter group, a vanishing lee small number of people who hate it with every fiber of there being. these are wall street people. they say the trillions of dollars the system has put in the pockets of the american people and say, hey, i want that money in my pocket!
and as there are money men who hate social security there are politicians waiting to see how high at their demands to jump. the first was named -- in 1936 he ran against fdr on an explicitly anti social security platform. he called it a hoax, a fraud, it was filled with worthless ious that would never get to the people. and yet, 87 years later and 11 trillion dollars later going to the people, social security is still here, making payments every month like clockwork. i'll flynn is only remembered as the man who lost 48 states when he ran for president. for the next few decades the majority of republicans understood such security as a birthright and a cornerstone of economic security for all americans. not a partisan football, my favorite is president
eisenhower. in a letter to his brother saying this, should any party attempt to abolish social security, you will not hear of that party again in the political history. there is a tiny splinter group that believe you can do these things. their number is negligible and they are stupid. unfortunately that splinter faction never stopped plotting, that faction today has taken over the entire republican party. ronald reagan was possibly the last republican president who was not totally under their sway, and he stated with clarity that social security has nothing to do with the deficit. social security is totally funded by the payroll tax levied on employer and employee, if you reduce the outgo of social security that money would not go into the general funds to reduce the deficit. it would go into the social security trust fund. social security has nothing to
do with balancing the budget or lowering or raising the deficit. they splinter group has patients, money, and lots of money. and politics loves money. after the 19 a three reforms they began waging a new type of war against social security, the main tactic being lying to the face of the american people about what it is they are doing. now you will never hear from republicans that they want to destroy social security, you'll never hear that they want to cut benefits, in fact they always start their assault on social security with a protestation of love. i love social security, i am just worried it is not going to be there for us in the future! the goal of this is to convince people that they are going to get nothing so that they will accept less than they are owed. they cloak their tactics under new monikers, george w. bush called for just handing our social security over to wall
street, called it privatization. again, that is just destruction, that destroys social security. imagine if george w. bush had given our social security to wall street in 2006, two years before wall street collapsed the world economy. we saw 401(k) s turned into 201 k's, social security would be gone if he had gotten his way. it was not just him, the entire republican party was complicit, senator ron johnson said as recently as 2015 that it was a shame that bush plan is to destroy social security and did not exceed, senator lindsey graham, who supported the privatization effort as well has repose a bill cutting social security benefits by 21%. he hides that policy by saying he is raising the retirement age, senator graham just laid out the problem with social security is that if nothing happens benefits are going to go down 23%.
but senator graham's solution is to cut benefits by more than that. that is not a solution, that is just a problem, sooner. that is not an outlier, the republican platform in 2016 says with coated language, the plan is to cut benefits and hand over social security to wall street. as republicans we oppose taxing and believe in the power of markets to create wealth, is what it says. senator romney recently tried to get an up or down vote on the dead of night on his so-called trust act, which would create a undemocratic fast-tracked closed-door process to cut social security. they know it is so toxic to talk about what they want, they tried to legally create a smoky back room where they can figure out the best way to rob people of their earned benefits. which brings us to the current republican agenda as set up by
chairman of national republican senatorial committee senator rick scott. i am sorry, can i have 30 more seconds, senator? i will have to give this planned big praise, because at least it has a hint of honesty about it. senator scott's plan would sunset social security in five years. even he is not brave enough to say that and calls it sun setting, in fact the republican who was most honest was donald trump. who bernie sanders brought up. who said that all the republicans want to do a big number on social security. thank you. and next panelist as miss mcguinness, who is president of the committee for budget. area of expertise includes budget, tax, and economic
policy, thank you very much for being with us. >> thank you for inviting me here today to talk about the importance of making social security solvent and various ways to do so. i will briefly talk about three things, they are done more in-depth in my written testimony. i would like to talk about social security's financial condition. the cost of waiting to fix the program, and some of the objectives for reform. first, as we've already talked about the most recent trustees report tells us that social security is headed towards insolvency. of course, that is not news. we have known this for more than 30 years. in that time we have basically done nothing to make the program shore up so that there is financial us. 203we now have a situation whee the -- will be insolvent by 2035, when today's 54 year old reach full retirement age. the one thing we know that increases anxiety is uncertainty. and that is what people have today about the future of
social security. upon insolvency, all beneficiaries, everyone, millionaires and people who depend on social security for their entire livelihood will receive benefit cuts across the board to 20%. that will grow overtime. so, i can point to a lot of good proposals over the years. this is clearly not one of them. every year we wait and have waited, it has made the changes more difficult and more painful. in 2010, you could've achieved a 75 year solvency by eliminating the taxable maximum, or price indexing benefits. today, neither of those will be sufficient. in 2010, the simpson bowls plan was phased and, was going to phase and all of its policies over 40 years. today, the same type of plan would have to be phased in and 5 to 10, or 5 to 10 years. so, continued delay will make the needed changes even larger while giving participants even less time to prepare. so, what's the goals of the reform system be? there are plenty different
objectives. that is part of the reason we should have compromise. but i believe needs to happen is that we need to make the program solvent before we expand benefits. i think we need to protect those who depend on the program. i think we should make changes that encourage economic growth wherever possible. and finally, and importantly, i think we have to think about this comprehensively. so recognizing that social security is one of many national priorities. and that acknowledging that there are trade-offs between funding for social security versus other priorities such as investments in children, climate, national security, and many other priorities. as to the first objective, their plans out there that would expand benefits and failed to make a social security solvent. this is akin to saying to seniors, we will promise you even more, but we cannot pay what you already promised. this is dangerous, it is disingenuous. second, i think it makes sense to make these changes progressively. the option to do this include lifting that --
progressive pricing indexing and adding minimum benefits along with other changes to enhance solvency. on this objective, i find it really hard to understand those who advocate more on taxes and the rich while ruling out slowing the growth of benefits for the same people. changes will have to be made if wealthy beneficiaries are held harmless others will have to pay more in benefit reductions. or pay more in taxes the more we do this by raising the taxes rather than reducing benefits the less revenue from that group will be available for other priorities. you can only tax millionaires and billionaires so many times. another useful objective is to include changes that create incentives for work, savings and, growth. this particularly important because of the economic challenges we face because of the aging of the population. finally, it's very important to look and think about social security and the context of a full budget as well as an independent program. already the federal government spends roughly $6 per senior on every one it spends four children.
we need to think holistically about whether we want to widen that gap or we want to narrow that gap. there is both a financial and the budget constraints by contemplating programs and isolation, you bypass the consideration of those trade-offs. the rate, and the best way to start this discussion is to pass a budget. in my written testimony, i include a list of options and links to our interactive tool, the social security reform, which you can use to craft your own plan. many members of congress and citizens have used it to weigh in on how they would like to fix the program. in the past, we have work to develop a number of plans and work with members of congress to do. so right now, profits wise, i think the single best idea out there is the trust act. senator romney has worked on this. it is bipartisan and bicameral. and what is so appealing to it, everything is on the table. in order to get out of the special committees that would look at how to save these programs. the proposal have to be bipartisan. and you would still have the same threshold in the senate to pass any. reforms there is no single great way to make social
security solvent. however, the wrong thing to do is to continue to do nothing. we would be delighted to work with any office that's interested in working with social security to develop a plan for solvency. we would be particularly interested to do so if anyone is willing to do it on a bipartisan basis. thanks again for having me here today. >> miss mcinnis, thank you very much. miss choy okay this, is that right? the director of economic policy at the bipartisan policy center. mr. shai akabas has conducted research on a variety of economic policy issues including the federal budget requirement sincerity, and the financing of higher education. thank you very much for being with us. >> thank you, mister chairman, ranking member graham, and distinguished members of the committee. i appreciate you having me here to testify today about the long sustainability and efficacy of social security. i commend the committee for focusing on this critical
issue. my name is shai akabas, i'm the director of economic policy at the bipartisan policy center, a non profit organization founded in 2007 by four former senate majority leaders, george, bill daschle, bob dole and george mitchell. arkansas combines with us up ideas from both parties promote the health and security for all. social security serves as the foundation upon which most americans feel their lives. for 85 years, it has paid out benefits to people with disabilities. older people and their family members. lifting millions of households out of poverty, and providing essential funding, financial support. but social security faces a serious challenge. the benefits being paid out or outpacing the programs income, which primarily comes from payroll taxes. the recently least 20 32 testes report underscores this fact, projecting that the old age and survivors insurance trust fund, or oas i is on track to deplete its reserves in 2034. my testimony will summarize -- social security today. and highly package of bipartisan reforms that could address these challenges.
i hope for conversations leaves use the following takeaways, number one, time is running out. to address this problem, congress must act quickly, and in a bipartisan fashion. delaying necessary reforms only serve to make them more politically difficult and cause added uncertainty for workers and retirees. to, there is no civil it. several factors -- requiring a nuance and thoughtful package of reforms. three, enhancing social security benefits, particularly for those who most rely on them in retirement, and putting the program on a fiscally sustainable path are not mutually exclusive. rather tackling both goals simultaneously will be vital to garner the necessary bipartisan support. for several decades, starting in the 1980s 80s, social security income in succeeded's expenses. which led to a large buildup in the programs trust fund. unfortunately, that dynamic has flipped. annual benefits now exceed dedicated revenue. a situation that is projected to project indefinitely. after the oh as a trust model runs out in 2034, incoming revenue will cover 77% of the programs obligations. resulting and abrupt benefit
cuts that would be dead a devastating. the recent trustees report contains some sobering conclusions. to ensure solvency of the combine trust funds through the 75 year protection period, congress need to immediately raise the payroll costs every four minute three per -- reduce benefits for all current and future beneficiaries by around 20%, or adopt some combination of those approaches. if policies wait, much larger changes will be required. the alternative is an unprecedented departure from the pay as you go structure of social security. congress to -- really draw from general government revenue. this would sacrifice social security special status as a program walled off and rest of the budget, making it compete for resources with other priorities at a time when the nation's fiscal house is already in rough shape. this would be irresponsible policymaking. before outlining possible solutions, i want to describe the two principles that must guide any reform to the program. one, acting as soon as possible is paramount. the longer congress waste is writing social security's finances, the more drastic the changes will have to be.
and the more burden will fall upon those who played little or no role in creating the imbalance facing the program today. the lack of action by policy makers is also especially unfair to the millions of americans who are trying to plan for the retirement. failing to enact reforms will simply kick the can down the road, pushing responsibility for a long term solution under future lawmakers. you will have to decide between inconceivable benefit cuts and practical tax increases for the abandonment of the program's historical financing mechanism. number two, any legislative action what's gonna save you get bipartisan support. working across the aisle is not only generally best practice foreign policies but also a necessity for change to social security. which requires a majority in the senate. lawmakers chastain from pronouncements like no tax increases and no benefit cuts. more than a bra across the board of a certain subset of the population. red lines such as these only put obstacles in the way of action. sort of securities financial towns affects nearly our entire society and the solutions will require a broad based approach. in 2016, a bipartisan commission co-chaired by and --
the former deputy commissioner of the social security administration. the commission spent two years studying the status of retirement security in america and made recommendations at six key areas. one of those restraining socialist purity finances and modernizing the program. the commissions reform objected by the chief actuary to make social security solvent for 75 years and beyond. thereby avoiding the benefit cuts that they are set to take effect. it would also enhanced benefits for viral populations and give americans certainty about expect for the program as they prepare for retirement. the package -- through a balance makes a new revenue and benefit restrains. i encourage you to review the specific recommendations in my written testimony, and will be glad to discuss some further during the q&a. the lawmakers are so -- enacting this pilot dramatically increase the productivity of the program. reducing poverty among vulnerable populations, such as low income retirees and surviving spouses. over a lifetime, the average on the bottom two queen tiles orders receive higher benefits then schedule levels under these proposed reforms. middle orders were benefits roughly at scheduled levels. nearly all benefits savings
come from beneficiaries in the top two quick tiles of a lifetime income distribution. staying true to social security 's mission as a social insurance program. although this framework represents a comprehensive approach to asylum and see, it has recommended six years ago. since then, the problem has grown at the time to address it has shrunk. to restore long term solvency today, policymakers either neither need of aid in the policy is much more rapidly increase the size of the proposed adjustments, or incorporate additional benefit or revenue changes. let me be clear, of congress wait another six years to act, it'll become nearly impossible to retain social security's traditional structure without aggressively curtailing benefits for current beneficiaries. finally, the pcs commission report far from the only solvents plan has been proposed. in fact, several of an submitted by current members of congress, including chairman sanders. all these members deserve significant credit for putting forth credible solutions for this politically vexing challenge. as mentioned, the ultimate fix fully need bipartisan support. proponents can be a bit parnas package, compromise will be necessary. i want to conclude by thanking
the committee once again for convening this hearing. so security solvency often feels like an inter practical problem, with continued leadership, and bipartisan collaboration, progress is possible. i look forward to your question. >> thank you very much, for your testimony. let me begin the questioning with a question for miss waltman. as you know i've just introduced legislation to expand social security benefits by $200 a month. and to fully find social security for the next 75 years by demanding that americans who make more than $250,000 a year pay their fair share of taxes. as an example of the absurdity of the current situation, this is an example, last year the ceo of apple made over $700 million in total compensation. he pays the same amount of money into social security as someone who makes $147,000 a year. does that make any sense do you?
>> absolutely not. the american people are very clear about this. as they say, they are quite an agreement with what you are proposing. >> mr. roach, an important point that you made in your testimony is that social security benefits are not adequate today to ensure retirement with dignity for every american. you note that you have seen, as i have seen, as seniors put food back at the supermarket checkout because they could not afford their grocery bill. how would the bill that we are talking about today help senior citizens who are better able to live with security and dignity? would it mean to the average person? >> it would mean a great deal, sam enchanters. the 20 $400 a year would be a great benefit especially for those who only have the, only other income they have as maybe
three or four $500 a month for food. attain some of their prescription drugs that they're deferring at this particular point and changing the price within chiefly shun will be extremely important. especially in today where the inflation is surging. everyone sees the food at the supermarket. the surging, every day the prices are going. up i think into areas, the legislation, your legislation would be very helpful. i just want to add to something you said. jeff bezos, the chairman of amazon only, w two $82,000. he's not even paying the 447,000. just information free. senator mr. lawson, what impact would raising the retirement age to 70 years of age have on workers in this country? >> i don't want to get you in
the weeds on the policy. it's not like a benefit cut. raising the retirement age is a benefit cut. 7% for each year you raise it. raising the retirement age to 70 is just a 21% benefit cut. it also has the added terrible -ness that it's putting the pressure not on millionaires and billionaires who are doing fine in this country, but on working people. on people working on the line, teachers, people who are on their feet. backbreaking labor's saying, you're going to have to now work until you die. you can't, you can't overstate how bad that effect would be on the american people. >> thank you, let me ask miss mcginiss. or mr. akabas a question. does it make sense to you that
someone who makes $700 million in a given year pays the same amount of money into social security as someone who makes $147,000? miss macguineas? >> it doesn't make sense to me is that social security isn't more progressive. i think there are two ways we should think about doing that. social security can only do so much without squeezing out other programs. which is what's already happened. -- >> if you could stay on answering my question. it is a simple question. right now we have a cap of 147, 000, right? someone who make 70 million pays the same as someone who makes 147, is that good policy, does that make sense? >> it depends on your objectives with the program. i think it makes sense to lift that tax cap, i also think it makes sense to reduce their benefits, since they clearly don't need that. >> okay mr. akabas. i would agree with miss macguineas, we would need to look at it in the context or broader bugs that. we have a very progressive tax system overall, perhaps not progressive enough. i think that i agree that there needs to be changes in terms of the revenue bought into the program. and some of that should come
from those who can most afford it. >> out of curiosity, do you think it's progressive and billionaires in a given year do not pay a nickel in federal income tax? is that progressive? >> no, i don't think that's progressive. >> all right, senator graham. >> thank you very much, mister chairman. miss altman, the senator said there's propose a 12.4% social security tax on all income? as a 6.2 or 12.4? >> i'm sorry, you're asking the, 12.4% on that investment income? >> yes -- >> yeah, the idea is -- >> no, it's just a question, it be a 12.4% tax, right? >> that's how -- >> okay, miss macguineas, miss macguineas, we have a cap on income subject to social security taxation, right? >> correct. >> if we lifted and said, you pay social security 12.4% on
all income, what would the effective tax rate be for a millionaire? >> if i may, that's not correct. we are not talking about raising -- 6.2% on all income. >> the last you said 12.4 -- >> well ask, me it's, my bill. [laughs] >> why don't you bring your bowl to the floor for vote. >> great idea. >> miss lost, and you agree with that? >> absolutely, senator sanders bill should be brought to -- >> i couldn't agree. >> senator schumer, in case you're watching, i challenge you to bring senator sanders as bill to the floor. he's very sincere man. he's found a way he thanks to save social security. i'll ask him return, to vote on senator romney's bill. you have two approaches to have a solve this problem. and you're not going to do it. it's all talk. prove me wrong. miss macguineas, the gang of
six did not take senator sanders approach, did it? >> no, it didn't. and had a balanced plan, it looked at robin -- >> simpson bowls, did they take it? >> no, it did not. >> did the greenspan commissioned take this approach. >> no. do you agree with that, sir? >> yes, the approach that you are advocating is along the following lines. raise the cap, right, more revenue, raise the cap, right, reduced benefits to the people who can afford to take less, is that fair? you're both nodding, right? okay, i just api. you are nodding. and then it allows us to restructure the program to get the baby boomers through without going bankrupt. does that make sense? is that we're talking about in general? miss mcginiss? is that we were talking about? >> yes, senator, we can afford
to do that while protecting those who are most vulnerable -- >> one thing you can do, actually have an enhanced benefit for people 80 and over at the lower and so that the economic spectrum, is that correct? >> can't mean for that. but i want to do is to do what other people have done in the past to bring this together. mr. lawson, this may come as a surprise to you, you're not going to bring this together. the bottom line is, somebody has got to bring this together, i don't think it's going to be mr. lawson. but i want to do is be brought together in a fashion like people before us. ronald reagan and chip o'neil adjusted the age from 65 to 67. and it did by some time. that alone is not enough. let's look at maybe doing it once again. because we live longer. and if we don't need to do, it's great. count me and for raising the cap on income subject to social security taxation within reason. i don't want to have 70% of tax rates in america. also count me and for people in
my income level and my financial situation taking a smaller cola. maybe a restructured benefit because they can afford it. that's what's going to take to save social security. it's not going to be fixed by taxing the wealthy. that could be part of it. i am hoping senator sanders, that we will have a vote of your plan and senator romney's plan. but then get on about the hard work of finding a solution that will get by and from both sides of the aisle. i really do believe it's possible if there's political will. things are not going well in america right now. hopefully it will get better. you have an opportunity, president biden, to do something along the lines of reagan. president obama, to his credit, try very hard to bring this together on this topic. the gang of six cent symbols, so i would ask president biden to form some mechanism to get us all in a room to see if we
can pound out a solution to buy us time to get the baby boomers through the system without the draconian choice of cutting benefits or dramatically raising taxes. every day, every year, it gets harder. that is my two cents worth. i am willing to make compromises that i think will get us to where we need to be. thank you very much for having me, mister chairman. >> thank you, senator, based on seniority, senator scott goes next. >> he senior. [laughs] >> you can go first. >> yeah, your first. >> thank, you i have got a mayor here waiting to meet with me. i appreciate senator scott letting me jump ahead of him, i appreciate that. when i lost my election for president, i remember people came to me, what do you think about forming a think tank. it seems like a failed
politicians are anxious to stay involved in the process of government and think tanks are the way to go. i don't know how many hundreds, thousands, of thanks we have. i, said i don't think the washington problem is trying to come up with the answers. i don't think we need people to solve for numbers. there are so many people that are doing. that the problem is, how to get something done. we don't need more think tanks. we need more due tanks. how do you get something done. how do you get something accomplished. senator sanders makes a wonderful plea which many people agree with. the need for helping seniors, providing better benefits for them, and so forth. recognizing that this bill has no chance once so ever of receiving a single republican vote in either house. so it will not be passed. he knows that. as a matter of fact, you all
recognize that given the fact that for any legislation of scale to be passed requires republicans and democrats to work together. that is the nature of our democracy. we have a 50/50 senate. half of american people voted for republicans, have voted for democrats. to get something done requires bipartisanship. so, any proposal that's brought forward that is only supported by one party is a messaging bill. it's a campaign bill. it may be a fund raising bill. but one thing it's not is about to become a law. so, if you want to have a law, you have to see if there's a way to get people working together. now, our challenge with social security, like medicare, the highway trust fund is exemplified by that chart. which is social security trust fund runs out of money. and 30 34. that is a problem, it is a problem for social security
recipients. and of all the people who noticed it, the washington post. they said the medicare and social security disaster that washington is doing nothing to fix is not that the thing tanks don't have proposals, or partisans on either side of the aisle can't come up with answers, it's that we have not taken action that actually could result in a solution. so, i would suggest that we find a way to actually get something done. now, i'm pleased that my good friend senator graham spoke about the trust act and gave me some credit for that. it was introduced by myself and senator manchin. republican and democrat. senator warner was also on. it your organization, sir, continues to say that it is designed to cut benefits. why do you say that?
do you believe that senator warner and senator manchin want to cut benefits? [laughs] >> so, isn't a question? well, i'm basing it on, we were basically formed to fight -- >> no, i asked a question. the question is, do you believe that senator warren, excuse me, that senator warner, and senator manchin want to cut benefits? by the way, we have five democrats who signed up on the trust act. because it does this, it says, look, let's get groups together, half republican, half democrats to work together to see if they can find a solution to save social security. and both sides have to agree. both sides have to, no, i don't get -- both sides it's good to agree. they have to agree. and order for it to go to the floor to be voted on. so, it's bipartisan. every single person has said under no circumstances we cut benefits. and yet, your documents, your organization keep saying, we
want to cut benefits. we're gonna cut benefits in the night. untrue, why do you say that? >> if you're not going to cut benefits, you're going to do it all on the revenue side. which would be something that we support. going on the history of commissions in this town, what happens when politicians get behind closed doors, they talk about things that are deeply unpopular like having social security. >> we don't just meet in the hearings like this. we have meetings private meetings all the time. we get together and discuss things all the time. we had meetings last. night we had meetings right now i'm gonna legislation, we had meetings last night on the electoral count act. we have meetings all the time. behind closed doors, we then have hearings, then there are votes in public. so the idea is to have people come together, republicans and democrats, to see if we can find a solution. if we don't do that, we will not save social security. you realize your group is
dedicated to saving social security, you realize, if we don't come up with a bipartisan solution, we will not say that. do you understand that? >> i recognize that the problem is that 23% benefit cut that you keep bringing up -- >> >> the solution that republicans put forward is a 20% cut. it's just the problem sooner. >> boy, that was an answer. social security trust fund goes away by 2034. at which point benefits are cut automatically. i'm not for that. i'm trying to keep that from happening. i don't want that to happen. but if we don't come up with a bipartisan solution, that is what will happen. that's what's your, or if you oppose bipartisanship, what's solutions you have to actually solving social security at a bipartisan basis? >> we would ask millionaires and billionaires -- >> the same rate as a rest of america -- >> i understand -- i understand your answer is. this goes back to the think
tank versus the do. hank what would you do to get bipartisanship? how are you going to get bipartisan to work together? >> i would like the american people who bipartisanly overwhelmingly don't want to see their benefits cut, i would like republican politicians to have to answer to them about why they're -- we >> do every election. the people who have elected us have said, we are work on a bipartisan basis to find a solution. we can do that, we will do it. and i'll tell you, the disingenuous attack on republicans is something which, by the way, just as senator graham said, what's your approach is making it harder for us to find a solution to save social security. and that's something that desperately needs to be done. thank you, mister chairman. >> thank you, senator romney. senator wyden. >> thank you, senator sanders. chairman of the senate finance committee, i just want to come by for a few minutes. this is a particularly important hearing. and lay out when i think the choices are. and what i believe a
responsible solution to those options. to me, we have a discussion of either cutting social security benefits or saving social security. the leading proposal on the other side would put social security on the chopping block every few years. basically, i, gather to see if the american people still want it. and the fact of the matter is, american people don't want benefits cut. they understand what it will mean for working people to just raise the age. because we know, for example, we're getting this narrative that americans by and large are living longer. that is just not the case, colleagues, for most americans. the majority increases and life inspected see have been to those in the top half of the
income distribution. meanwhile, black and hispanic workers, low wage workers, workers without a college degree, those working in physically demanding jobs have a lower life expectancy after age 65 and are more likely to claim a social security benefits early. so, you have a choice. i am going to be very specific about what we believe the choice ought to be. are playi ngcut social security benefits, we are against. that we are playing straight forward against that or you can look at the kind of solutions that the american people are for. i am going to outline those here in just a moment. what we have heard from republicans in the past is about privatizing it, cutting the benefits, raising the retirement age, the american people say they are not interested, do not want to do that. here are the two areas that i know the american people have
focused on, i am trying these ideas out as i get around and work with my colleagues. first, we know that billionaires are able under current tax law, this is legal, the scam is legal. they are able to pay little to no taxes for years on and. contrast that with firefighters and nurses. they pay taxes with every single paycheck. i have proposed the billionaire income tax, which would mean that billionaires would pay taxes every year. what we would do is take the revenues generated from this tax, it would be deposited into the social security trust fund and you could extend solvency into the next century. choice number one, choice
number two we now have a tax gap of a trillion dollars. why? because there are fewer audits of the wealthiest in america. senator sanders and i have talked about this working person paying taxes with all of their paychecks. possible to audit them in a pretty straightforward way. the wealthy are disproportionately causing the tax cheating problem and what i propose is we better fund the internal revenue service so that we can go after these wealthy tax cheats. what i have gets given you are two very concrete ways to deal with the social security funding challenge. they are ways that the american people will rally for. because, and i will close with this, the two ideas that i have just laid out inshore that we
have some tax fairness and that we pay for what we want in a responsible kind of manner. i did not just come here say i am going to senators enders hearing to say this is what i am against, i told you about the choices, cutting social security, saving social security. we are for saving social security. there is a history on the other side of the aisle of repeatedly trying to cut social security. i said, in addition to telling you what our goal is, i gave you two concrete ways to go about securing that call. i would just tell my colleagues, both of these approaches will generate the revenue to get social security well into the next century. these are approaches the american people want, thank you, senator sanders. >> thank you very much senator wyden, senator braun?
>> thank you, mister chairman. i have been here a little over three years and i recall the first budget hearing that i was assets senator mike az was the chair then. and when you keep hearing the same thing over and over again it gets tired to listen to. i agree that there are certain priorities we have as a government, defending our country would be up there, attending to our infrastructure, which we all share, and entitlements. i think it is hard to make the argument that we do not need to keep this hole and healthy. but, i also recall from that discussion that nothing ever gets done because there is no political will to do it, on decisions like this where you
are dealing with a situation a lot more complicated than it was three and a half years ago. we were 18 trillion in that me when i got here, we are 30 and i imagine we have a blueprint out there that says we are going to be 45 in ten years. that is not the contacts that any of this is going to work within other than an academic discussion. that lack of political will, of trading off spending for this versus that, which you have to do everywhere else in our society. it is left out when you use the metaphor of households, let's use the metaphor of state and local governments. they have guardrails that force political well into doing what needs to be done.
all i can tell you is we are not evolving into a place where we are going to be able to do any of this, it is going to go way beyond social security. medicare and trust fund goes broke in a little over four years. senator sanders and i are probably to the talk about health care the most, different points of view on what to do, it is a broken system. if we fix health care alone and made it more transparent, made it more competitive, took it down to where it is across the rest of the world, which is closer to 11, 12, or 13% of our gdp we would suddenly free up five to 6% of our gdp that you could than plow into whatever you want to prioritize. w as long as we do not do budgets, which we have not done in ten years, as long as we come up
with gimmicks that we soon overturned, it does not look good for fixing what we are all here to talk about law. when we are borrowing money from our kids and our grandkids, which is what we are doing now to run this biggest business in the world, you are not going to be in a position to fix one of the most important things it does. i do not think we are going to get to the discussion of cutting benefits, i do not think that is the right place to be, i think it is how do you fix the system in general so that you can keep at least what is their intact? and then, once you fix the problem overall, half the political will to zero in on what is most important. way to do it, senator wyman's proposal may or may not flush out some type of band-aid approach to it.
but i'm talking about is fixing health care, freeing up the biggest part of our gdp. it acknowledges that regardless of the tax rates, look at this data, we generate 17 and a half to 18% of our gdp in federal revenues. we have to look at the reality of what we can take in each year. if we do not wear just ignoring the statistics. i'm going to put a budget out on the floor so that americans at least have something to look at, that is going to happen in 2 to 3 weeks. it is going to be sensible, it is going to balance, it is going to acknowledge that for all of the wonderful things that we want to do most of them are not hitting the target we are discussing. we want to add more benefits, maybe that's what needs to be done but you certainly aren't
going to be able to do it and count on it unless we fix the underlying issues. we have to get back to budgets, we have to do it through the regular order, and we have to acknowledge that the modern monetary theory that means deficits and debt don't matter anymore is not a business plan. this will take us into chapter 11 someday, and even this place is not immune to that. that budget that was put out there, we are going to be far deeper in the holden 45 trillion when you underestimate inflation and the cost of infrastructure. i'll put it out there, because this is a valid discussion, the elderly get worked their entire life thinking that their retirement and their health care is going to be there, that is in peril. that is due to us, it is due to how the system has evolved at this point, they fact that we have no political will, and, yes we do have to make trade
offs. until we can get the budget balance we are never going to be able to say with honesty and certainty that we can do anything to help social security in the long run. that is my two cents. >> thank you, senator, if i might make a correction to what you said. the idea that we spend 17 to 18% of our gdp on health care is wrong. >> i said those are federal revenues regardless of our tax. right >> i am sorry, we are spending a fortune on health care, we spend twice as much per capita as any other country. >> way to, and when it comes to health care that is the biggest sector of our economy. >> it is close to 20% of our gdp. >> you are right, it is approaching 20. it's 17 to 18 recently, 12 to 13 and many other countries. that is where you get that six to 7% savings. that is the only real place that we can a grab real funds. yes, i actually understated that a little bit. i was also talking about the federal revenues that we had to
work with. that is in the same range, we have to be realistic there as well. thank you. >> senator fair home. >> thank you, mister chairman, thank you for being here to discuss how we can strengthen and preserve social security. which i think we can all gray has been a critical program. and to policy program, wartime program, disability program for tens of millions of people. i want to commend senator sanders for his legislation. which would extend the solvency of social security by 75 years. we all know that around 2033, 2034 we are going to hit a cliff. if we do not do anything you're going to say between 20 to 25% reduction in benefits. while there are certain provisions in the bill that i would do differently, i am supporting and a cosponsor of senator sanders effort because i think it is a good proposal on the table. actually doing something right
now. i also have supported other efforts like flush social security 2100 and provisions taking some of increasing the estate tax and printing some of those funds into strengthening social security. i just have a simple question, i'm going to start with miss nancy j. altman do we have the luxury of waiting for nine years before we fix it? should we fix this thing now. >> part of what social security provides is not just cash benefits but a sense of security and peace of mind. for that reason, it needs to be sooner rather than later is the right thing to do. >> i agree, we have gotten closer to the cliff in the past but right now we are facing the quite a potential shortfall if we do not do anything. mr. roach, the average benefit right now is $1,540 a month for most americans. my question to you is, is that
enough to provide affordable housing, cost of medicine, food, and other essentials? >> absolutely not, it is not enough. that amount of money you spoke about, if that is 18,000 a year 5000 goes automatically to co-pays, prescription drugs, supplemental plans. basically, with that amount of money along people are in poverty, they start out retirement in poverty. it needs to increase substantially. >> that is cut between 25 and 22% if we do not do anything right now. miss mcginiss, thank you for your testimony, we have worked on lots of issues and we are trying out the build back better piece to salvage a portion of it dealing with clean energy and prescription drug costs. and to paperwork, i am closing
some big tax loopholes that big corporations are exploiting right now, and some very wealthy individuals. we want to achieve some deficit reduction in the process. i hope we get there. i have worked on this issue for a very long time, i served on the ill-fated super committee. i worked very hard on the super committee to try to address the social security solvency issue, but we did not get there. i agree with senator braun, i mentioned in one of our early hearings on this committee that i believe it is a matter of political help. i understand the trust act, which is set up a process for trying to get there, we tried that with the super community, at the end of day i think it is a question of political will. what senator sanders has done is put together a plan on the table, open to everybody firing
that. if people do not like they can say why they do not like it, but it seems to me the beginning of this conversation needs to be an alternative plan for my republican colleagues. put your plan on the table so we can discuss it, not something to discuss behind closed doors through some bipartisan effort. i am for bipartisan solutions, but that has to begin by somebody on the republican side also putting together their plan. let people look at it, let the american people take shots at it just like they can take shots at the plan senator sanders has put forward. do you not think, miss mcginiss, that we should see in a trance parent fashion an alternative plan introduced by republican party colleagues or a bipartisan group? something that says here is a different way to do it then the sanders plan? >> thank you, senator van
hollen, i think that is a great point, senator sanders should be commended for putting forth a plan that reaches 75 year solvency, i have not seen the details. that is great. i would quibble with a lot of details, but if we had another plan from the republican side and work to come up with a compromise, it absolutely does have to be bipartisan. we cannot get this time just one party or the other. daily thing i would say in this comes from my observations of this hearing, there is so much talk about us and them. there is no performative exaggeration on this podium that we have sat through. our country is so polarized and we are in such trouble right now, i would really like to sit down with a group of republicans and democrats and work on this together as well. i appreciate all you have done on this for many years. i think that proposal is great, we will work with any republicans to come up with a proposal, but it is also time to do this as members of congress who are the fiduciaries for the program. that is my plea to all of you. >> i appreciate that, again, i
think having been through this process i think it begins with putting proposals on the table for people who are willing to be tested by their peers, their colleagues, and the public. and then go forward. i appreciate your but in the other good faith effort, member sanders. i would like to see good faith efforts for people who disagree with the sanders approach. i agree with a lot of his proposal we would like to see other ideas. >> we should work on trying to get some of those out there, get some bookends. >> thank you. >> thank you, senator van hollen, senator scott? >> thank you, chairman sanders. there are few things as important as protecting the fundamental security specifically social security, medicare, medicaid. politicians and washington have ignored them for decades, they have been an incredible rescue. some have advocated spending
for these programs. president biden is part of that crowd, german spokes heavily on law the attacks for campaign for president in 2020. your vocal criticism of president biden's record of attacking social security medicare is how i know you would agree with me that spending cuts on these programs have no business being entertained here in the u.s. senate. i am glad we are talking about these programs and i want to thank you for holding this hearing today. social security is projected to run out in 12 or 13 years, medicare part a will be out in just four years. medicaid continues to skyrocket, getting to be a bigger and bigger part of the federal budget. it is clear that what we are doing is not working so i think that we can all agree that it is time to act. i propose congress regularly reveal all these programs, some of my colleagues and some people testifying today have decided to lie about what i have been proposing. let's be clear. i'm never going to support cuts to social security, medicare, medicaid, and outside of joe
biden i do not know too many other folks in washington that want to see these programs be cut or go away either. some of the panelists might not know that congress regularly reviews the program functions of the federal government, as you know way to not even vote on social security or medicare. which does not make sense. for 61 consecutive years congress has successfully passed the national defense authorization act. the nba sets the budget for the entire department of defense, is a critical series of must pass national security and defense budget laws that congress has never failed to approve even once. social security, medicare, medicaid are no different. if we want these programs to survive and to avoid any cuts to benefits we need to act today. with that said, i have a few questions, miss maya macguineas while both reports represent modest improvements washer is mostly because of this outdated and unrealistic economic assumptions. for example, see rfp, the
social security trustees project a 3.4% cost of living adjustment for next year. which would require a 6% annualized deflation over the next few months. mr. mcguinness, can you tell me how the trustees report findings would have been different if their economic assumptions were accurate and actually reflected the historical inflation we're actually seeing? >> that is right, they had to walk in the economic conditions earlier so where did not see or were not able to see how high the inflation. what what this will translate into is significantly higher colon for seniors. we saw a lot about some scary benefits not keeping up with inflation but it is one of the programs that is indexed for wages and prices. it grows quite significantly. we will big bigger coal was and we are estimating they could even ca sooner insolvency than us predicted in the current report. >> thank you, mister -- according to last week's report the social security trust fund will deplete the reserves in
2035, 13 years from now. after that source guarantee will legally only be able to pay 77% of scheduled benefits, medicare trustees report said that the medicare hospital insurance trust fund will be insolvent in just six years by 2028, and run deficits of 500 and $30 million over the next decade. this is clearly unacceptable and fixing the dire financial situations of these programs will require congressional and presidential leadership, not just political gimmicks like the chairman has suggested today which he knows will never happen. the last time the director testified in front of this community i asked her what omb and the biden administration were doing to address the state of medicare and social security that threatens millions of constituents in my state. you know what her answer was? nothing. she could not give me anything that we were doing, this is unacceptable and shows how unserious biden the democrats are about preserving medicare and social security. social security and medicare are facing serious challenges with this hearing is a good fit
example to explore solutions. i agree with you, we have proposals and we should have them on both sides, we should not be attacking everybody and lying about things they put out. i think we have to start talking about what we are going to do to fix this and when people lie about one somebody says we should have more organization about this and think it is inappropriate. you are great presidential it or ship is gonna be required to solve this security and medicare. >> yes, absolutely, i think we need support from the administration and congress. when he was on the table because this is important for the american people. there are not many members who are working on this behind the scenes and i'm hoping that continues momentum overtime. >> if you see what was out of the biden ministration? >> i have not seen that. >> thank you, senator scott. we now have a video from senator padilla. >> i am here, thank you mister
chairman, social security is one of the most effective programs in our nation's history. we are at a critical crossroads determine the and it is built upon its success. as you pointed out, mister chairman, social security lifts more americans out of poverty than any other program. since transaction hazardous the poverty rate for seniors from 50% to less than 9%, without social security more than 22 billion americans and a total of 16 million seniors, and many children would live low below the poverty line in 2020. whoever, despite the enormous success of social purity, tens of millions of seniors are still struggling to get by. many workers fear that they will not be able to afford to retire when they hit retirement age. rather than following plans offered by some of our
republican colleagues, some of our republican colleagues offered cuts for social security benefits. we have an opportunity and an obligation to strengthen social security for the next century. i am proud to join you mister chairman and answering the social security expansion act. this legislation would not keep social security solvent for the next 35 years, it would also expand benefits for current and future beneficiaries, ensuring that more americans can live and retire with dignity. it is important to remember that social security benefits are around and our promised to workers in future generations that will support them just as current workers have supported the generations of workers in the past. these benefits must be protected, they must be strengthened, i do have a couple of quick questions for the witnesses. the first is in regard to a senior need to expand benefits
for seniors. either with social security, more than 5 million seniors in the u.s. live in poverty, roughly one and 17 rely on social security for more than 90% of their income. over the past 30 years the number of americans who are at risk of not being able to maintain their standard of living and retirement age has decreased. while decreased. i think we must expanse of security so that every american can retire with dignity, the dignity they have burned through their years and years of hard work. that was our security expression act would raise the benefits for current and future beneficiaries and do so in a responsible way. those benefits keep up with the cost of living and do so by ensuring that people are paying their fair share. my question is for mr. roach, why are these proposed expansion benefits so important for the current and future retirees worldwide? >> they are very important
because our seniors are hurting. they are in very serious pain as we discussed, they cannot afford to buy food, medicine, housing, everything has become more difficult for them. i think that some people may not realize is when ronald reagan and -- got together they had a whole different situation, that was a systematic extermination of benefit plans in this country. through corporate bankruptcies the people who had planned to work and plans to retire in certain lifestyles were unable to do so. the cause of that systematic extermination and those penchant plans, chairman sanders proposal would bridge the gap somewhat. not totally, it needs to be expanded uninvited of not knowing what is going to happen through the future would help with that anxiety, i think that those proposals needs to be enacted as soon as possible. >> thank you for that, one
additional question, mister chairman. we already know social security is a very successful program, the social security administration is one of the most efficient agencies and the federal government. spending less than 1% of the benefits paid each year administration. unfortunately, the taxes on the administrative funding have made it more difficult for the search security administration to provide adequate service to the american people. since 2010 the administrations workload has grown as the number beneficiaries has increased by 21%. that's during the same period that the administration was operating budget has been reduced by 17% accounting for inflation. it was strong by 13%, it is unacceptable that nearly half of all calls to the social security administration go unanswered. just as you are staff and my
staff and the staff of our colleagues in the congressional offices are ready to support our constituents then need help axing social security administration. we need to support the administration through resources so that they can best serve the public. miss altman why are we shrinking the funding of the fish security ministration that is essential to improving constituent services to individuals, families, and those who rely on this or security administration. >> thank you so much for that question, they field offices all across the country, the 1200 field offices in every congressional district are very much like the post offices, the face of the federal government. people go there at particular times of vulnerability, they may have just lost a spouse and they have to claim survivors benefits, they may have just found themselves they are so
disabled they cannot work. they may be aging and have decided to and work, what you want in those kinds of situations is compassion and care with the administration has the time to work with people. the people at the social security administration, they workers are extremely dedicated to the american people and they worked very hard. as you plan your question there extremely underfunded. it is important to increase that funding. you are now because you're congressional services get many calls for constituents, what you really need is to have better training for people, more hiring. we have a lot of attrition, a lot of people are at the point where they are retiring. absolutely this ocean security administration needs much more funding. >> senator padilla, i wanted to thank you for raising that
issue, that is an issue above and beyond the funding of social security benefits. the truth is, in vermont and i am gathering in california people are not getting the kind of help and responses from the social security administration they need. that is a very important issue, i appreciate you raising. ant to say a couple of okay, let me just do this. let me thank the panelists. i just want to say a couple of things, and then we will hear from stephen gus who is the head actuary of social security administration. there has been a lot of talk about the need of bipartisan ship to solve the issue. i agree. you know what, there is something even more important. the need to listen to the american people and to respond to at the american people want. we talk about bipartisan, the assumption is that the congress actually listens and reflects what the american people want. i think that is not accurate.
i think the two, to a large degree congress is beholden to powerful special interests. not the needs of ordinary americans. i think if you went out there today, pulling makes us very clear. if he asked the american people, should be cut social security benefits, raise the retirement age, there is a very loud no. i'm part of the american people. if you ask the american people, should we ask the wealthiest and our country to contribute more into the social security trust fund the, answer is a loud yes. should be increased benefits? it's also security. yes, the answer is that as well. i am in favor of bipartisanship. in fact what is more important is that we start listening to the american people and do what they want. not listen to powerful special interests who do not reflect where the american people are out. with that, i very much would like to thank all five of the panelists. thank you very much for your testimony and being with us today. our next panelist is mr.
stephen see gusts. mr. gantz is the chief actuary of the social security administration. he joined the office of the chief actuary and 1973 and has been chief actuary since 2001. mr. gazis is a member of the society of actuaries, the american academy of actuaries, and the national academy of social insurance. mr. gus thank you very much. he's going to be with us virtually. we thank him very much for being here today. >> thank you very much, mr. sanders i hope i'm audible at this point. >> you are. >> great, thank you very much for, ranking member graham and all the members of committee. it's a pleasure to be with you today. we do have some --
i think it's somebody's doing that. that would be great. just a reminder that the trustees report came up a week ago. several have mentioned this. it has updated our projections for the next 75 years and the near term. indeed the objective of the trustees report, by the way, have been produced every single year throughout a 1941. for this program. had provided the congress the financial and actuarially status of the funds for the future indicating to what extent. if there is a shortfall, there will be a shortfall when and to what degree, thereby giving guidance to members of congress and the administration as to what kinds of changes might be needed an order to put us back in the good financial position. i'm very happy that there was mention of some of the work done in the past for social security. and having been around as long as i have, as you indicated,
senator sanders, i worked very closely with the greenspan commission in 1982. i did my entire office. and with a conference committee for the 1983 amendments. and 1983, and also the simpson bowls and other conventions since. let me just say, working with your staff, senator graham's staff, and the staff of virtually everybody on your committee. we have had a great pleasure working with you and developing proposals and scoring them for making progress in the future. so, if you could just flip to the next slide of the next panel. this is simply does indicate a little bit of an indication of what the changes for this trustees report. the shortfall is the percentage of taxable payroll for that witches -- and last years it was projected at 3.5 44%, tax zero. it's a little bit better at three point 42 of tax hero this year. let me just mention that over the context of the entire next
75 years, the shortfall of social security's revenue in order to pay completely for all the schedule benefits and the law is about 1.2% gdp. so, the shortfall is not enormous. but it is substantial and that's something that needs to be. addressed so in the next panel, we could pop that up. this simply indicates something that you already have seen and i've talked about quite a bit. which is the projected point in time at which we believe the trust fund reserves will become depleted. this is critical. social security cannot run out of money. it cannot go bankrupt, but its reserves can become depleted. at which point, it would not be able to pay the full schedule benefits. and the most recent trusty report,. we have pushed the old age and survivors trust fund reserve depletion date by one year because of the experience that we had over the past year. and by the way, while it is true that the price inflation is higher than had been
registered by the trustees back in mid february,. employment has also improved faster than expected. and i can give you four warning that the average wage in the year 2021 is grossing growing, it's being better to grow considerably faster than we estimated in the trustees report. these items will very likely balance each other out and will not result in a worse financial projection than we have. in the 2022 trustees report. the disability insurance trust fund is quite a different story. because of the recent experience and expectations of lower -- when have been assumed for the past several years. we are projecting that the social security insurance trust will be fully financed even under current law for the next 7 to 5 years. now, the next, panel we can see that the cost and revenue for social security as a percent of our tax base, taxable payroll, it is such that the cost is
rising fairly significantly between 2008 and and 2040. and that is what is contributing to our depleting reserves and reaching the point where we'd only be on the payout 80% of scheduled benefits under current law and night in 2035. and that would drop down 74% without in the action, without any changes in law. but on the next slide we get to, two major factors, which are the reasons. we have an issue to the grass. it's also what is causing the issue that we have to address. the first and most important line in senator graham's, mentioned this, earlier is the change of age distribution of our population. and since the end of the baby boom period in 1965, birth rates have been lower, and that's a fundamental change in the age distribution of operation. and there we are, there, for the baby gym boomer generation
replies, and replaced by over 30 generations, we're having a dramatic increase overtime in the number of people over 65 working working age. the red and blue indicate that the birth rates not dropped from the three or four level or one -- that we had during the baby boom. and basically, really for generations before, that you can see that this age distribution, it would only be rising very slightly because of increasing longevity. and our birth rate. our fundamental problem really derives from changing and birth rates. but there is one other factor that's worth paying attention to on the next slide. on the next panel. which indicates that, yes, we do have a taxable maximum level. and the taxable maximum since about 1983 it has been advising by the average wage growth and our economy. that has been maintained us having about 6% of all workers
in the economy having earnings above the taxable maximum. and therefore 94% have a earnings below the taxable maximum, and therefore paying all of their earnings. the interesting part of this, because of the changing distribution of earnings with the highest earnings have a much higher increases in the past, you've seen a change from 19 83 to 2000 over that period. going from that top 6% of workers receiving 9% of all covered earnings, up to 16% of all covered. earnings it has been relatively stable since that time. this fundamental shift really has put a lot of pressure on the trust funds. on the next panel, if i may, let me just indicate very quickly, that the next panel and occasionally referred to as benefit replacement. rates it simply indicates the percentage of your career earnings that we provide by social security. and you can see for the lowest, earners and provides more.
and for the highest earners, it provides less. and the future -- for people starting benefits at age 65, it'll be about 50% variable for learners, it'll be about 25% were very high learners. however, on the right-hand panel, you see what will happen to those benefits. if we do not make changes in the law. if we solve the social security shortfall solely by having less benefits. payable i should just remind also the financial planners consistently tell people that they should seek to have 75 to 80% of their prior retirement earnings covered in retirement. and we can see that social security will pay out at most about 50%. in addition to financing social security, we have to, we have to stress to people having other source of income. on the very last panel, let me just indicate, when i think it is already been stated that in order to fix the imbalance that we have going forward and social security, we're going to have to have legislation by
2035. hopefully we'll before that. we're going to have to either increase our scheduled revenue by about a third by that time, or reduce the schedule benefits by a quarter or some combination of the two. again, i would say i'm very much looking forward to our office be able to work with all of you. i want to commend, by the way both senator sanders and says senator graham for their efforts back into 2011 when we worked with them on bills that would have at, that time, extended the projected solvency. for so at least 75 years. very different approaches. at least they both came to the same and result, 75 years. so we're happy to have to work with senator sanders with you on your staff on the latest bill, which was just introduced today. which was through a combination of factors, will, again have the prospect of extending our solvency up to 75 years. thanks very much. so i've running over time. >> that's okay, thank you very
much. mr. goss, rework, in general, thank you very much. for the analysis you did of the alleged -- we have just introduced. i'm going to be pretty brief. i want to have you confirm or not my understanding of your analysis of our legislation. it is my understanding that to the social security administration has found that the legislation i've introduced today would expand benefits across the board starting in 2023. is that correct? >> that is correct. >> it is my understanding that the social security administration has found that if this bill were signed into law, social security would be solvent for more than 75 years. is that correct? >> that is in fact the
conclusion that the office comes to you based on the baseline projection of recently -- >> it is my understanding that the social security administration has found that if this bill were signed into law, the bottom 93% of americans would not see their payroll taxes go up by one penny. is that correct? >> that is correct, in fact it might even be closer to the 94%. in other words, what you are confirming, is that this legislation would expand social security benefits and fully fund social security for more than 75 years by demanding that the very wealthiest people in this country pay more taxes. is that a fair assessment? >> that is correct, senator sanders, and i just add that as i think you have indicated very clearly, your bill that was
introduced today would not only expand revenue by approval tanks, about -- [inaudible] but also would in fact bring some new tax the trust funds based on investment income. the combination of those provide the mounted revenue to end up getting us this result. >> that is correct. okay, mr. goss, thank you so much, i appreciate the work you've done and being with us today. with that, before we close, i would like to ask anonymous consent, not gonna be hard to get -- [laughs] that three statements be entered into the record. one is an estimate of the social security expansion act prepared by steve goss and his team at the social source cavity administration. the other statements are letter this apart from the -- national committee to poorer said social security medicare. and without objection, and let me just conclude by thanking
all of the witnesses for being with us today. as information for the record i do up by 12 noon tomorrow. signed hadn't copies delivered to the committee clerk. email copies will also be accepted under our rules. witnesses will have seven days from our questions to respond with answers. and with no further business, this hearing is adjourned. thank you all. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2022]
if an agreement on the bills text has been reached. senators also plan to vote later in the week on stephen dettelbach, president biden's nominee to serve as director of the bureau of alcohol, tobacco, firearms and explosives. the house returns today at 12 noon eastern. lawmakers voting on the final version of legislation expanding health care and disability benefits, for veterans exposed to toxic chemicals, mainly from burn pits. also a bill to create an amber alert like system for active shooter events nationwide. watch live coverage of the
n. >> washington journal continues. host: we have a busy week here in washington dc and here to help us break down very busy week in washington, d.c.. and help us here to break out down what might happen want to watch out for our two guests. joey garrison covers the white house for usa today, we're also joined by general delivered, of bloomberg news. he covers congress. both of you gentlemen, thanks for giving us your. time >> today, being a starting point as far as the january 6th committee hearing. another hearing. the focus on elections, jarrell dillard, what should people be watching for in this hearing that they have not seen in previous ones. >>