[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PROTECTING AND IMPROVING SOCIAL SECURITY:
ENHANCING SOCIAL SECURITY TO
STRENGTHEN THE MIDDLE CLASS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
MARCH 12, 2019
__________
Serial No. 116-11
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
36-239 WASHINGTON : 2020
COMMITTEE ON WAYS AND MEANS
RICHARD E. NEAL, Massachusetts, Chairman
JOHN LEWIS, Georgia KEVIN BRADY, Texas
LLOYD DOGGETT, Texas DEVIN NUNES, California
MIKE THOMPSON, California VERN BUCHANAN, Florida
JOHN B. LARSON, Connecticut ADRIAN SMITH, Nebraska
EARL BLUMENAUER, Oregon KENNY MARCHANT, Texas
RON KIND, Wisconsin TOM REED, New York
BILL PASCRELL, JR., New Jersey MIKE KELLY, Pennsylvania
JOSEPH CROWLEY, New York GEORGE HOLDING, North Carolina
DANNY K. DAVIS, Illinois JASON SMITH, Missouri
LINDA SANCHEZ, California TOM RICE, South Carolina
BRIAN HIGGINS, New York DAVID SCHWEIKERT, Arizona
TERRI A. SEWELL, Alabama JACKIE WALORSKI, Indiana
SUZAN DELBENE, Washington DARIN LAHOOD, Illinois
JUDY CHU, California BRAD R. WENSTRUP, Ohio
GWEN MOORE, Wisconsin JODEY ARRINGTON, Texas
DAN KILDEE, Michigan DREW FERGUSON, Georgia
BRENDAN BOYLE, Pennsylvania RON ESTES, Kansas
DON BEYER, Virginia
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
TOM SUOZZI, New York
JIMMY PANETTA, California
STEPHANIE MURPHY, Florida
JIMMY GOMEZ, California
STEVEN HORSFORD, Nevada
Brandon Casey, Staff Director
Gary J. Andres, Minority Chief Counsel
______
SUBCOMMITTEE ON SOCIAL SECURITY
JOHN B. LARSON, Connecticut, Chairman
BILL PASCRELL, JR., New Jersey TOM REED, New York
LINDA SANCHEZ, California JODEY ARRINGTON, Texas
DAN KILDEE, Michigan DREW FERGUSON, Georgia
BRENDAN BOYLE, Pennsylvania RON ESTES, Kansas
BRAD SCHNEIDER, Illinois
BRIAN HIGGINS, New York
Kathryn Olson, Subcommittee Staff Director
Amy Shuart, Minority Subcommittee Staff Director
C O N T E N T S
__________
Page
Advisory of March 5, 2019, announcing the hearing................ 2
WITNESSES
Joan Ruff, Chair, Board of Directors, American Association of
Retired Persons (AARP)......................................... 7
Kate C. Farrar, Executive Director, Connecticut Women's Education
and Legal Fund................................................. 17
Maya Rockeymoore Cummings, President and Chief Executive Officer,
Global Policy Solutions........................................ 26
Joseph Semprevivo, President and Chief Executive Officer,
Joseph's Lite Cookies.......................................... 38
Yanira Cruz, President and Chief Executive Officer, National
Hispanic Council on Aging...................................... 42
Ilana Boivie, Research Economist, International Association of
Machinists and Aerospace Workers and American Federation of
Labor and Congress of Industrial Organizations (AFL-CIO)....... 49
QUESTION FOR THE RECORD
Question from Representative Jodey Arrington to Joan Ruff, Chair,
Board of Directors, American Association of Retired Persons
(AARP)......................................................... 72
SUBMISSIONS FOR THE RECORD
John B. Larson, Chairman, Subcommittee on Social Security, SSA
Actuary Report on H.R. 860, the Social Security 2100 Act....... 74
The Senior Citizens League (TSCL)................................ 99
Michael G. Bindner, Center for Fiscal Equity..................... 104
PROTECTING AND IMPROVING
SOCIAL SECURITY:
ENHANCING SOCIAL SECURITY TO
STRENGTHEN THE MIDDLE CLASS
----------
TUESDAY, MARCH 12, 2019
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 2020, Rayburn House Office Building, Hon. John B. Larson
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Tuesday, March 5, 2019
SS-1
Social Security Subcommittee Chairman Larson
Announces a Subcommittee Hearing on
Protecting and Improving Social Security:
Enhancing Social Security to
Strengthen the Middle Class
House Ways and Means Social Security Subcommittee Chairman John B.
Larson (D-CT), announced today that the Subcommittee is beginning a
hearing series on ``Protecting and Improving Social Security.'' The
first hearing in the series, ``Protecting and Improving Social
Security: Enhancing Social Security to Strengthen the Middle Class,''
will take place on Tuesday, March 12, 2019, at 10:00 a.m., in room 2020
of the Rayburn House Office Building.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
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http://www.waysandmeans.house.gov/
Chairman LARSON. The Social Security Subcommittee of the
Ways and Means Committee will come to order, please.
I want to thank everybody for joining us this morning, and
I especially feel honored to be here this morning in the Sam
Johnson room. Having had the opportunity to serve with Mr.
Johnson was something I will always treasure. Such an iconic
American hero, who I don't think enough Americans knew about
his sacrifice in Vietnam and his stay in the Hanoi Hilton, and
also, the very decency of the man in the way that he always
conducted himself, both in this Committee and out of office.
What a great debt of gratitude that we owe to Sam Johnson. And
I think only fitting that this room is named after him.
I know the Republican Leader will have something to say
about Mr. Johnson as well before we begin our opening remarks.
And did you want to----
Mr. REED. Mr. Chairman, if you would yield.
Chairman LARSON. I certainly will.
Mr. REED. Mr. Chairman, thank you for recognizing our
colleague Sam Johnson on the Republican side. As the Chairman
indicated, he is truly a gentleman, truly a hero to generations
of Americans given his experience in Vietnam. And Shirley and
him, you know, obviously were a pair of true American leaders,
American citizens. And so we appreciate your recognition, and
we join you in recognizing the service of Sam Johnson. And
being here in his Committee room, named in his honor, I think
is rightfully recognized in the work he did, and as you said,
he did it in a way that is the way it should be done. So I look
forward to that tradition. And I thank you, Mr. Chairman, for
recognizing our colleague.
Chairman LARSON. Thank you, Tom, I really appreciate it.
Well, today is the first hearing in a series of hearings
that we are going to have on how to protect and enhance Social
Security. This is, I would say, a historic moment. Why would I
say that? The last time Social Security was seriously taken up
by this Subcommittee was 1983. That was 36 years ago. It has
been 36 years and a long time, at least 8 years since we had
any significant hearing on looking at Social Security in both
enhancing it and moving it forward into the next century. It is
long overdue.
But I am honored and delighted both to be serving with Tom
Reed, a person who cares as deeply as I do, and all the Members
on this dais, about making sure that Social Security is there
for us in the future. I think we share a common bond, and I
think what you can expect from this Subcommittee is that we
will roll up our sleeves and begin to do the work that needs to
be done.
We care deeply about a program that everybody recognizes is
the Nation's premier insurance program. What I found when I
went out across the Nation, and I have been to about 36 States
or so doing this, I found that most Americans today, and I
think this is true in talking to our colleagues on both sides
of the aisle, would really like to see Congress be involved
with solutions. They are tired of the rhetoric, they are tired
of people going to their separate corners and digging in and
not getting anything done. That simply cannot stand anymore.
What I see in this group here, the people on this dais, is a
group that is prepared to roll up their sleeves and get after a
solution to a problem that we all know exists.
I want to give the President of the United States credit.
He stood on a stage with 16 other Republicans who tried to get
him to say that this was an entitlement plan, and he would not.
He had written about it and he had spoken clearly about it. He
said it was an earned benefit and that he would not cut it. He
understood how important it was to future generations. What we
are addressing in these hearings is that Congress hasn't paid
enough attention to Social Security to make sure it's
actuarially sound. First and foremost, that is our obligation.
And as soon as 2034, we know that Social Security, about 15
years away, would face severe cuts. More than 62 million
Americans are already receiving Social Security benefits. We
have a responsibility to act and strengthen the program. Not to
act, to do nothing is not an alternative here. It would amount
to a 25 percent benefit cut to people in 2034. In other words,
for a person who was making $50,000 a year throughout their
working career, they would actually be living at a poverty
level in terms of benefits they would receive from Social
Security after those cuts.
The choice is simple. We need to act bipartisanly, but we
need to act. We have come to this endeavor to put our shoulders
to the wheel and move the Nation and its people forward. Social
Security is not an entitlement. It is the insurance that people
have paid for. People know this and can check it out by just
looking at their pay stub. They know that FICA stands for the
Federal Insurance Contribution Act. Whose contribution? Theirs.
They understand that they have paid into this throughout a
lifetime.
It is not their fault that the Congress hasn't acted to
make sure that Social Security is actuarially strong. It has
been Congress' lack of attention that has put us in this place
where we are. Nobody's getting rich off of Social Security.
They are using these benefits to pay for essentials. This money
goes straight back into the economy.
Consider a 2013 study commissioned by the AARP, which shows
that Social Security benefit payments support more than 9
million jobs and add almost $1.4 trillion in output to the
overall American economy. For every dollar Social Security
benefits generate, in return there is about $2 in economic
output. If we were to let the 25 percent reduction happen in
2034 because we didn't do anything to strengthen the program,
it could cost the economy about 2.3 million jobs and $349
billion in economic output. Doing nothing doesn't only impact
beneficiaries; it would impact the entire economy.
Not only do we need to work to protect the program, but we
need a solution to make the program, as actuaries say,
``sustainably solvent;'' in other words, making sure Social
Security remains strong throughout this century, not just for
seniors, but for millennials too. Nowhere on the private
insurance market can you find a plan like Social Security that
offers a pension plan, disability insurance, and life insurance
for spouses and dependents. This is the working American's
retirement guarantee. It is why we say that Social Security has
the full faith and credit of the United States Government.
For nearly two-thirds of beneficiaries, Social Security
represents the majority of their income. For more than one-
third, it represents more than 90 percent of their income. Our
seniors are not a burden. I have heard so many people say to
me, well, you know, I want to see this change, but I just don't
want to be a burden on my family. None of us on this dais or
out in this audience will look at any of their parents, their
aunts, their sisters and say, you are a burden. In fact, they
have been an inspiration. And one with that kind of courage and
that kind of determination, oh, I don't want to burden my
family, my son or my daughter, the one that lives in Montana or
Texas, they send me what they can, but I don't want to be a
burden. They are not a burden. They are citizens of the United
States who have paid into a system that is Congress'
responsibility to make sure is actuarially sound, and this
Committee will do that.
Without Social Security, the senior poverty rate would be
nearly 40 percent, but because of Social Security, the senior
poverty rate is less than 10 percent. It isn't just the 10,000
baby boomers a day, according to economists at the Federal
Reserve, on average--and if we could throw up that slide--
households have not recovered. And this is an important issue
for us. Households have not been able to recover the wealth
they lost during the Great Recession 10 years ago.
Those 50 to 64 years old are worried about their immediate
retirement. Social Security is a lifeline that people rely on.
This should be a daunting statistic for all of us. When 90
percent of American families, working families, still find
themselves underwater, on average, after the Great Recession,
we have to make sure we are doubling down on our efforts to
make sure the only guarantee, the only certainty they know that
will be there for them is Social Security. And it is our
responsibility to make sure that has happened.
As I discussed with both the Republican Leader and the
Members here, we are going to have hearings. Someone suggested
that we do a lot of informal bipartisan briefings as well. I
think those are all good and constructive ideas. We are going
to work together to come up with a product and a solution. And
hopefully, we are able to work together to arrive at a solution
and take action. But not to act is not an option. Hopefully, we
are able to act together. But whether together or alone, this
Committee will act to move Social Security forward.
And with that, I recognize my good friend and Republican
Leader, Tom Reed.
Mr. REED. Thank you, Mr. Chairman. And thank you for those
words and that commentary. I think my comments today will echo
much of what you said.
So, Mr. Chairman, I thank you for holding this hearing
today on a topic we can all agree upon, strengthening and
protecting Social Security. This is an important topic to all
Americans and more helpful to the average American than efforts
by many on the other side of the aisle to rush to impeach the
President.
Mr. Chairman, today I want to tell you the story of Betty.
Her picture is up on the--we will give the technical people an
opportunity to pull that up.
To tell you the story of Betty, at age 14, Betty was
diagnosed with rheumatic fever and told she would not live a
long life and would never have children. But she grew strong,
healthy, and married a decorated World War II veteran--also
depicted here today.
Chairman LARSON. She looks a lot like you, Tom.
Mr. REED. I think she does, but with hair.
He was a career military officer who received the Silver
Star medal after being wounded saving the lives of his platoon
pinned down by Nazi machine gun fire with only a sidearm
pistol.
Together, Betty and her husband, Thomas, had 12 beautiful
and healthy children, but tragedy struck when Thomas was only
48. He died when their youngest child was just 2 years old,
leaving Betty to raise all 12 kids on her own. How did Betty
have the confidence that she would not have to raise her
children on the streets? Social Security.
But that was just a piece of the puzzle. She also relied on
her husband's military retirement and life insurance death
benefit. Betty worked with what she had to put food on the
table, a roof over her children's head, and clothes on their
back. Using a part of the life insurance proceeds she bought a
neighborhood house she could rent out to generate extra monthly
income, because she recognized the Social Security check was
not going to be enough to provide the quality of life she
wanted for her children.
To further provide for her family, she went to work in the
local vineyards and babysat for many families in the area, I
believe relying on under-the-table cash payments for day wages,
because she could not afford to pay the taxes on the income or
lose those benefits. She also brought her youngest son along
with her to work, because that was the only form of daycare she
could afford.
Mr. Chairman, that youngest son was me, Tom Reed. Betty
Barr Reed was my mother. And like my family, many Americans
rely on earned Social Security benefits when a family member
reaches retirement age, faces a work-limiting disability, or
passes away.
As we sit here today, it is without a doubt, as the
Republican Leader of Social Security, I care deeply about
ensuring Social Security is here today, here tomorrow, and here
for generations to come. And I guarantee my fellow Republicans
on this Subcommittee, Mr. Chairman, are also committed to
Social Security and ensuring the program is solvent for every
generation. The difference, however, with the Majority is we
can secure these benefits without tax increases.
Our principles in this mission are simple: Long-term
economic growth by encouraging work, not penalizing it; equal
treatment for public servants; acting now to defend those
future generations' benefits; and protecting the most
vulnerable people through focus reforms.
Mr. Chairman, you might have noticed our principles spell
out the acronym LEAP. That is because Republicans want to leap
with you on a bipartisan basis so we can all make sure
Americans can count on Social Security to be there for them,
for their children, and their many grandchildren to come.
And as we know from history, successful Social Security
reform only has a fair chance to succeed if it is done on a
bipartisan basis. And we agree with you, Mr. Chairman, we
cannot wait until the brink of the crisis as Congress did in
1983 to act because the abyss will be too deep at that point to
overcome. The time to act is now.
So, Mr. Chairman, let's leap together today to answer this
historic call for leadership in a town often lacking such
courage, even when it is so clearly needed. We do this so all
Americans will have the peace of mind knowing they can count on
Social Security to provide the security it did for that little
girl, that young lady who became my idol and we lost too early
at the age of 72, and my greatest inspiration, Betty Barr Reed.
Thank you, Mr. Chairman, and we stand ready to get to work.
Chairman LARSON. I thank the Republican Leader, and it is
going to be our endeavor to make sure that Betty is proud of
what this Committee and Subcommittee does.
And this is a historic moment. The last time this Committee
acted was in 1983. Ronald Reagan was the President of the
United States. Tip O'Neill was Speaker. The Republicans
controlled the Senate, the Democrats controlled the House, the
Republicans controlled the Presidency. It was no different than
it is today, except Ronald Reagan was adamantly opposed to
advancing Social Security. He was convinced by leaders like Tom
Reed and others that this was the right thing to do for the
American people, and they did.
President Trump, to his credit, has already made that
statement. Now what we have to do is bring everybody together,
so that mothers in a similar situation to that of Betty are
able to do that. And we have a panel that has been assembled
that are capable of doing just that, and we are anxious to hear
their testimony and get on with the questions. I am going to
introduce all of them and then start.
First, I would like to welcome Joan Ruff of the AARP. Next
is Kate Farrar of Connecticut's Women's Education and Legal
Fund, from my home State of Connecticut. After that, we have
Dr. Maya Rockeymoore Cummings, no stranger to this Committee,
no stranger to the Nation, who is in charge of Global Policy
Solutions. Then we have Joseph Semprevivo--did I pronounce it
right?
Mr. SEMPREVIVO. Yeah, that is close enough.
Chairman LARSON. Mr. Semprevivo is with Joseph's Lite
Cookies. Next is Yanira Cruz of the National Hispanic Council
on Aging. And finally, Ilana Boivie, of the International
Association of Machinists and Aerospace Workers, representing
the AFL-CIO.
Ms. Ruff, would you begin.
STATEMENT OF JOAN RUFF, CHAIR, BOARD OF DIRECTORS, AMERICAN
ASSOCIATION OF RETIRED PERSONS (AARP)
Ms. RUFF. Thank you.
Good morning. On behalf of AARP's 38 million members and
all Americans age 50 and over, we thank you, Chairman Larson,
you, Ranking Member Reed, and all Members of this Subcommittee,
for this opportunity to testify today on the importance of
Social Security, not only to retirees, but also disabled
workers, families, and the American economy. AARP has members
in every State and every American territory, including, Mr.
Chairman, over 115,000 members in your congressional district
and, Ranking Member Reed, more than 114,000 members in your
23rd Congressional District of New York.
As was pointed out, the last time that major amendments to
Social Security were made was in 1983. Since then, we have to
recognize that the availability of defined benefit pensions
offered to workers has declined by more than 70 percent. And as
I am sure you know, today, most workers who have a workplace
retirement plan are in a 401(k) or similar type of plan and
are, therefore, subject to vagaries of the market. And half of
all employees have jobs that offer absolutely no retirement
plan at all.
Social Security is the only lifetime, inflation-protected,
guaranteed source of retirement income that most Americans
have. I want to share with you what Lottie Prushinski, who is
an AARP member from Southington, Connecticut, told us about how
important Social Security is to her. And this reflects the
sentiments of millions of Americans.
``During my working years, which started when I was 16, I
paid into the Social Security system until I retired. Being at
the very low end of the middle class, without my Social
Security benefits, my income would be below the poverty level.
I want to continue to live with dignity and financial
independence and not rely on others. My current Social Security
benefits allow me to do that.''
Without Social Security, nearly four in ten Americans 65
and older, like Lottie, would be living in poverty. Nearly one
in four women ages 65 and older are part of families that
receive at least 90 percent of their income from Social
Security. The reliance on this program in minority communities
is even more pronounced.
It is no wonder that in an AARP poll that we conducted last
year, respondents across three generations overwhelmingly said
that Social Security is very important to their retirement; 64
percent of millennials, 79 percent of Gen Xers, and 90 percent
of baby boomers.
In addition to anchoring the income of older Americans,
Social Security provides economic security for families who
face a loss of income because of disability or the death of a
wage earner. It is extremely important to AARP's members that
Social Security provide adequate benefits, not only for them,
but also for their children and grandchildren.
The Social Security trustees have made it very clear, and
AARP will continue to stress that Social Security has enough
funding to pay 100 percent of benefits until 2034. It is also
true, unless Congress acts, benefits will be reduced by 21
percent, beginning in 2034 and through the end of the century.
A cut this deep would result in severe hardships for millions
of Americans, especially considering how modest benefits are
now today.
Older Americans believe Congress and the White House need
to take action so that hard-working Americans receive the full
benefits they have earned and that Social Security will
continue to be there for our children and grandchildren. That
is why AARP consistently asks candidates and lawmakers to share
their plans for the future of Social Security. Our members'
enthusiasm to hear from candidates and lawmakers on this topic
is strong.
During the 2016 election cycle alone, we collected 1.4
million petitions, had phone calls with 2.5 million members,
and nearly 26 million people took action on social media.
Clearly, AARP members want to engage on this very critical
topic.
Social Security has evolved over more than 80 years to
address emerging needs and to adapt to new realities. We see
today's hearing as an important opportunity to start a
constructive and expansive dialogue on the future of Social
Security and how best to update the program so that it better
reflects changes in demographics, longevity, pensions, work
patterns, health, and technology.
And we commend you, Mr. Chairman, for your leadership in
developing a detailed proposal to strengthen Social Security
for the next 75 years. And we hope all Committee Members will
share their ideas for the program's future with our members and
the American public. AARP recognizes that your challenge lies
not only in identifying the most effective policies to improve
the lives of Americans, but also to secure the kind of
bipartisan consensus and public support that long-lasting
solutions demand. We at AARP offer our support as you engage
the public and develop that consensus. And we commit to you
that we will have an open dialogue with our members on this
vital topic.
Again, thank you, Chairman Larson and Ranking Member Reed,
for inviting us to share our views.
[The prepared statement of Ms. Ruff follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Ms. Ruff.
I should have also noted at the start that each of your
statements will be part of the record in its entirety. I would
ask that you summarize your testimony in 5 minutes or less. To
help you with that, there is a timing light on your table. When
you have 1 minute left, the light will switch from green to
yellow, and finally to red when the 5 minutes are up.
But I thank you, Ms. Ruff, for your testimony.
And with that, Ms. Farrar, would you begin.
STATEMENT OF KATE C. FARRAR, EXECUTIVE DIRECTOR, CONNECTICUT
WOMEN'S EDUCATION AND LEGAL FUND
Ms. FARRAR. Good morning. Thank you, Mr. Chairman, Ranking
Member Reed, and all Members of the Subcommittee, for this
opportunity to testify today. I am Kate Farrar, Executive
Director of the Connecticut Women's Education and Legal Fund.
We are a statewide nonprofit organization that advocates for
and empowers women and girls across Connecticut, especially
those who are marginalized and underserved.
At CWEALF, we hear from women every single day who struggle
financially and often rely on Social Security to make ends
meet. Maggie, a 63-year-old retiree with several chronic health
conditions from New Britain, Connecticut, says that she relies
on her Social Security income to put food on the table. She
says: I get scared when legislators talk about doing away with
or privatizing Social Security. Please do not take away my
Social Security.
Corella, a woman from Hartford, Connecticut, who suffers
from epileptic seizures on daily medication says: I am afraid
that if Medicare is reduced and I have to pay more for my
medications, I just wouldn't be able to afford it. My only
income is Social Security.
Social Security benefits are critical to support our
Nation's women and keep them out of poverty. In 2016, nearly
two-thirds of all people in poverty age 65 and older were
women. Without the protection and expansion of Social Security,
long-term economic stability is just unachievable for women.
According to the Institute for Women's Policy Research, a
single elder without a mortgage living in Hartford County in
Connecticut can expect to pay at least $2,046 every month for
basic living expenses. Yet the average Social Security benefit
just in January 2019 was only $1,461, nearly $600 less than the
retiree's necessary monthly living expenses.
While the protections of Social Security benefit men and
women of all racial backgrounds and income levels, the program
is particularly important for women, especially women of color,
because women face many barriers in the workplace that hinder
their ability to make a living wage and save for retirement.
Despite impressive strides by women in the workplace, the
gender wage gap is still 20 percent, with women earning only 80
percent of what men earn. The gender pay gap is even more
significant for women of color. Plus, there are more than 15.3
million low-wage female workers who work without access to
benefits such as leave and pensions. Also, women take leave or
engage in part-time work more than men, disproportionately
shouldering caregiving responsibilities.
According to the Bureau of Labor Statistics, nearly twice
as many women as men work part time, which typically means
juggling child care, elder care, and other homefront duties.
One of the greatest factors contributing to financial
hardship for women over 65 is the reality that many will spend
at least a portion of their retirement years alone. Female life
expectancy is currently 4.9 years longer than for males. The
traditional three-pronged model for retirement of payments from
Social Security, pensions, and private savings is unrealistic
for most women. Women's economic security throughout retirement
depends largely and oftentimes solely on Social Security
benefits. Pensions and private savings are often unavailable
and inadequate for women and their particular worklife
patterns.
When Ida May Fuller received the first monthly recurring
Social Security check in 1940, she could not have foreseen that
the generations of women after her depend on Social Security to
make ends meet. Now is the time for Congress to make sure that
Social Security is protected and strengthened for years to
come.
Thank you for the opportunity to testify today and elevate
the voices of priorities of our Nation's and Connecticut's
women. Thank you, Mr. Chairman.
[The prepared statement of Ms. Farrar follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Ms. Farrar.
Now, Dr. Rockeymoore Cummings, if you would testify.
STATEMENT OF MAYA ROCKEYMOORE CUMMINGS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, GLOBAL POLICY
SOLUTIONS
Ms. CUMMINGS. Good morning, Chairman Larson, Ranking Member
Reed, and Members of the Ways and Means Committee, Social
Security Subcommittee. I am delighted to speak to you today on
an issue that is so important for all Americans of all
backgrounds and at every stage in life.
Social Security is our Nation's ultimate family-values
program, providing income protections for people at every stage
of life, including those who have retired after a lifetime of
hard work, adults who have become disabled in their prime
working years, dependents of deceased workers, and the
dependent family members of seniors and disabled workers.
I would like to place a laser focus on how Social Security
especially helps vulnerable groups whose opportunities for
economic success have been diminished by longstanding racial
and ethnic, economic and health disparities that stem from a
legacy of social, economic, and political discrimination in our
country.
African American retirees, for example, have significantly
less wealth and lower incomes than White retirees. Eighty-three
percent of African American seniors lack the retirement assets
they need to last the remainder of their lifetimes.
Additionally, more than two-thirds of the African Americans are
liquid asset poor, meaning that their combined assets alone are
not enough to make ends meet.
So Social Security becomes an essential component of their
retirement, with over 46 percent of African American seniors
age 65 and over relying on Social Security for at least 90
percent of their income, compared to only 30 or 35 percent for
Whites.
Well-documented health disparities also contribute to
disproportionately greater incidents of disability, as well as
shorter life expectancies for African Americans. So Social
Security's disability and survivor benefits become an essential
tool for helping African American families make ends meet when
faced with these life-altering events.
Case in point, disability insurance benefits made up about
75 percent of personal income for 50 percent of African
Americans receiving them in 2013. And while 28 percent of
African Americans receiving disability insurance benefits in
that year lived in poverty, that number would have jumped to 57
percent if they didn't have Social Security disability
benefits.
Social Security is also essential for African American
children and their families. A 2016 study conducted by my
organization found that Social Security made up 39 percent of
the annual income for White families with children, but
accounted for almost half the income, 45.6 percent of African
American families with children in 2014. For African American
child beneficiaries, the poverty rate would increase from 40
percent to 58 percent without Social Security.
I would like to end by focusing on widely discussed
proposals for reining in Social Security's costs. Despite lofty
rhetoric touting the need for deficit reduction and claims of
saving Social Security for our children, these so-called
entitlement reforms are a covert form of racial economic
exclusion that will have the effect of undermining the already
economically insecure state of families of color, who are a
growing share, by the way, of our Nation's population.
For those who believe that race has nothing to do with
Social Security, think again. Although the programs benefit
formula is race neutral on its face, in reality, Social
Security effects groups of people in different ways because of
the interplay between program rules and demographic factors.
For example, benefits are calculated based on years of work and
amount of earnings, marital status, number of dependents, and
state of health, but each racial and ethnic group has a
different average work history, earnings pattern, health
status, and life expectancy profile due to the long shadow of
racial inequality in our country. African Americans, for
example, are more likely than Whites to have suffered
unemployment, to be in lower paying jobs, to be in physically
demanding jobs, to have poor health, and to have shorter life
expectancies.
As a result of these socioeconomic disparities, proposals
for reforming Social Security can create winners and losers
based on race, ethnicity, class, and gender. For example,
raising the retirement age disadvantages those with shorter
lifespans, a group that is blacker, browner, poorer, more male,
and more blue collar than those who live longer.
So there is a fairer way to reform Social Security, and I
will be happy to talk about that in the questions and answers.
Our plan focuses on boosting benefits across the board by
raising the cap on payroll taxes and offering coverage to all
newly hired State and local workers, as well as increasing the
payroll tax by a fraction of a percentage over a 20-year
period.
Mr. Chairman and Ranking Member, thank you for giving me
the chance to share my views today.
[The prepared statement of Ms. Cummings follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Dr. Rockeymoore.
And now, Mr. Semprevivo.
STATEMENT OF JOSEPH SEMPREVIVO, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, JOSEPH'S LITE COOKIES
Mr. SEMPREVIVO. Thank you, Chairman Larson, Ranking Member
Reed, and all Members of the Subcommittee. I am Joseph
Semprevivo, owner of Joseph's Lite Cookies. We make sugar-free
cookies and pancake syrup to share with diabetics across the
country. We are based out of Florida. I am also here
representing 30 million small business owners and the 60
million people they employ. So thank you for inviting me to
speak about the impact of Representative Larson's proposed tax
increase on small business and their middle-class workers.
Representative Larson, your proposal to raise the payroll
tax over a number of years to 2.4 percent up to 14.8 percent
and apply that to all earned income would hurt American small
businesses, the middle class, and entrepreneurs. And these are
the very people that we are trying to protect.
While the plan calls for a doughnut-hole exemption between
the current cap of $132,900 and $400,000 of earnings, the
ceiling is not indexed to inflation, meaning that within a
couple of decades, all employees, no matter their income level,
would be subject to it. So eventually, an employee at a company
like mine that is earning $200,000 a year, that is an
additional tax for the employer of $2,400.
Let's consider the impact on a business employing 50
employees at $50,000 a year, so $2.5 million in gross payroll.
Their payroll tax will go up by $30,000 a year to $185,000.
That is just the employer's portion of that contribution. The
sad part of it is the individuals that could be hired with that
additional $30,000, the raises that could be given from that
$30,000, or the expansion that could happen for a small
business. This payroll tax would be funded by holding off on
potential hiring or raises or even companies having to layoff,
because it is an additional liability that they have to incur.
The tax increase also directly tax wages and wage
increases, which is peculiar public policy, a strategy given
out by the bipartisan push, to increase the wages of ordinary
Americans. Every time I consider raising an employee's wages, I
would then have to factor in the increased tax obligation to
see if that raise still makes financial sense.
For some small business owners that operate on super tiny
profits, let's look at the restaurant industry as an example,
their margins pivot around 3 percent. Labor makes up about one-
third of their expenses. So raising their labor cost by 1.2
percent or eventually 2.4 percent could be enough to put some
of them out of business. What I don't understand is how does it
help Social Security when restaurants close down and employees
lose their job? It just simply doesn't.
And those negatively affected by this tax increase would be
sole proprietors, which make up the vast majority, as we all
know, of taxpayers in this country. Sole proprietors, though,
pay both sides of the tax, equaling this 14.8 percent. So a
sole proprietor making $100,000 a year would be paying $14,800
out of their pocket, which would be an increase of $2,400 a
year from what they are currently paying now.
And I notice on this very distinguished panel you have
assembled here today that there are no other small businesses,
and I do know at the onset you said you were going to be doing
more hearings. So if we look at ordinary Americans, middle-
class taxpayers on a panel like this, it could be really
critical for this discussion and very important before moving
forward with this tax increase. And I think you will find going
across America and asking these middle-class taxpayers how do
you feel about another tax increase, they would tell you that
we are taxed enough already.
Thank you, Mr. Chairman and Mr. Ranking Member.
[The prepared statement of Mr. Semprevivo follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Mr. Semprevivo.
Mr. SEMPREVIVO. Yes, sir.
Chairman LARSON. Thank you.
Dr. Cruz.
STATEMENT OF YANIRA CRUZ, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NATIONAL HISPANIC COUNCIL ON AGING
Ms. CRUZ. Thank you, Mr. Chairman, and thank you, Ranking
Member Reed, for holding this hearing today. At the outset, I
want to just say that Social Security affects every American.
Hispanics rely on Social Security for more of their
retirement income over a longer time period due to their life
expectancy. In addition, Hispanics comprise the Nation's
largest ethnic minority group, with a population of
approximately 57 million. Many Hispanics are among the working
poor and depend on Social Security to ensure their economic
security after a lifetime of hard work. A large number of
Hispanics tend to work jobs that pay lower wages and are less
likely to have pension coverage.
More than 75 percent of Latinos rely on Social Security for
at least half of their income. About 45 percent rely on Social
Security for 90 percent or more of their income, and about 38
percent rely on it for all of their income. Nearly 22 percent
of Hispanic older adults ages 65 and over live below the
Federal poverty level. And without Social Security, many more
Hispanic older adults and their families would be living below
the Federal poverty level.
Hispanics face many healthcare related challenges upon
retirement. Any threat to their Social Security benefits would
further challenge and complicate their ability to stay healthy.
Threats to Social Security could force Hispanics to make tough
choices between healthcare, buying groceries, and paying their
rent. Hispanics have the highest uninsured rate of any other
group. Social Security benefits provide peace of mind.
Social Security keeps Hispanic women from living in poverty
in their golden years. Although many Hispanic women have
overcome difficulties, attended college, and achieved many
leadership positions, a larger number continue to experience
severe inequities in pay. Hispanic women tend to sacrifice by
taking flexible, low-end jobs, ensuring their ability to care
for their families and provide caregiving. These jobs generally
do not provide healthcare benefits or pension plans. Because
Latinas earn less, they also save less. Latinas are also three
times more likely to live in poverty than non-Hispanic White
women. Twenty-five percent of Latinas age 65 years or older
live in poverty. Only 26 percent of Hispanic women receive
pension coverage, compared to 39 percent of both African
American and non-Hispanic White women. Only 33 percent of
Latinas have retirement income from savings or assets.
As a result, Social Security makes up the bulk of Hispanic
women's retirement income. And without Social Security, 60
percent of Latinas over the age of 65 would live in poverty.
Social Security remains the sole source of income for nearly 40
percent of unmarried Latinas. Eighty-one percent of unmarried
Latinas depend on Social Security for the majority of their
retirement income. Latinas need a better plan for a secure
retirement and not a reduction in benefits.
Let me tell you about one of the people we work with every
day. Berta Roque is an American citizen who naturalized from El
Salvador. She immigrated to the United States in 1981 when she
was 38 years old. Berta worked for 27 years in the cleaning and
maintenance industry. She formally retired in 2008 when she
turned 65 years old, but continued to work until 2017. Now,
Berta is 75 years old and lives at Casa Iris, a housing
facility for low-income older adults here in D.C. Casa Iris is
owned and operated by the National Hispanic Council on Aging.
After almost 40 years of work in the United States, Berta's
sole source of income comes from Social Security. Berta's
annual income from Social Security is $10,800, or $900 a month.
When asked about her Social Security benefits, Berta told us
Social Security's modest benefits are more important than ever
to guarantee our economic security in the event of retirement
or disability. She went on to say, if it wasn't for this
benefit, I would be living out in the streets and eating from
shelters, with no possibility to afford my medicines.
Berta's monthly budget includes $275 a month for rent,
about $250 for food, $150 for medicine, and $150 for car
insurance and gas. After those expenses, Berta is left with $75
for the entire month to pay for her basic necessities, and
little luxuries like getting her hair cut.
Berta asked me to convey the following message to you
regarding the looming cuts to Social Security benefits. She
says: We need to stay together in this battle. Reduced benefits
from Social Security would be a slap in the face for all of
those who have helped to build this country. It would put
millions of Americans at risk of poverty.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Cruz follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Dr. Cruz.
Ms. Boivie, will you comment.
STATEMENT OF ILANA BOIVIE, RESEARCH ECONOMIST, INTERNATIONAL
ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS AND AMERICAN
FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS
(AFL-CIO)
Ms. BOIVIE. Thank you, Chairman Larson, Ranking Member
Reed, and Members of the Committee. My name is Ilana Boivie. I
am a research economist for the International Association of
Machinists and Aerospace Workers. As someone who has devoted
more than 10 years to researching retirement security for
working Americans, I am pleased to have this opportunity to
testify on the importance of Social Security in today's economy
and to add the labor movement's voice to the increasingly
louder call for benefit expansion.
I am here today on behalf of both the IAM and labor's
umbrella organization, the AFL-CIO. The IAM represents some
600,000 active and retired members and is also a member of the
AFL-CIO, which includes 54 other unions. Together, we represent
some 12.5 million American workers.
Workers' ability to achieve retirement income security has
long been premised on a system of mutual responsibility, also
known as the three-legged stool: Social Security, employer-
provided pensions, and personal savings. But as has already
been noted by other panelists, that second leg of the stool,
that traditional pension plan, has become quite shaky in recent
years.
I am proud to say that union members generally have been
better off than their nonunion counterparts when it comes to
pensions because of the power of collective bargaining.
However, in recent years, private employers in both the union
and nonunion context have largely backed away from defined
benefit pensions in favor of defined contribution plans like
401(k)s that shift significant financial risk onto working
people. This has made American workers' retirement outlook
increasingly precarious.
The labor movement firmly believes, and substantial
research shows, that an individual retirement savings plan is
not an adequate substitute for the guaranteed benefit that a
pension provides. With fewer workers having access to
traditional pensions, Social Security is becoming increasingly
important to working families because it offers many of the
features of a pension, including lifetime retirement income and
valuable survivor and disability protections. Also, Social
Security benefits are completely portable from job to job and
benefits keep pace with inflation through an automatic cost-of-
living adjustment.
And Americans rely on Social Security. One out of every
four American households includes a Social Security recipient.
Social Security accounts for 90 percent or more of household
income for one in five married couples and about 44 percent of
household income for unmarried people. Given its importance and
popularity, the most valid criticism that can be levied against
Social Security is that its benefits are actually too modest.
With retirement benefits averaging just about $17,000 per year,
the labor movement believes, and surveys show, that Americans
overwhelmingly agree that benefits should be expanded.
And yet let us not forget that as a result of those changes
enacted in 1983, Social Security benefits have already been
cut. Under current law, the age to receive one's full benefit
is already increasing from 65 to 67. That means that
beneficiaries will receive fewer months of benefits and,
therefore, a reduction in total lifetime benefits.
AFL-CIO unions unanimously agree that working people cannot
afford another back-door benefit cut by increasing the
retirement age. First, for whom would another increase in the
retirement age affect? Generation Xers like me, younger
millennials, generation Z? These younger workers have already
been saddled with soaring student loan debt and high housing
costs. They are paying a higher share of healthcare expenses,
and very few have employer-provided pensions. Over half of
workers aged 25 to 34 have no assets in a retirement account
whatsoever. Among those aged 35 to 44, the median retirement
account balance is just $3,000.
Do those who want to raise the retirement age really think
that the generations behind them will have such abundant
retirement assets as to need less from Social Security?
Second, the notion used to justify increasing the age--that
we are all living longer--is incorrect. The gap between the
life expectancy of high earners and most other Americans is
widening. And life expectancy has not, in fact, increased for
the lowest income Americans at all.
Moreover, many workers with physically demanding jobs must
limit the amount of time they are in the workforce. The IAM has
members who are skilled welders, working for General Dynamics
in Maine and Huntington Ingalls in Mississippi, proudly
building the Arleigh Burke-class destroyers for the U.S. Navy.
Yet due to their physically demanding work, often on their
hands and knees, many of them develop severe muscular skeletal
problems and are physically worn out by the time they are in
their fifties or very early sixties. Are we going to tell these
workers that they must work until 70 or older before they can
get full benefits?
Some have proposed a carve-out from a retirement age
increase for those with physically demanding jobs, but this is
more complex than it seems. Millions of service workers have
jobs that wear their bodies out, too. It would be extremely
difficult to identify the specific categories of workers who
must retire early, let alone track all of the different jobs
that people have throughout their careers.
Social Security is the most effective antipoverty program
in our Nation's history, our most important family income and
disability protection program, and the cornerstone of
retirement security. Its modest shortfall can and should be
addressed without additional benefit cuts. Instead, because
more and more Americans are entering retirement with less
financial security, benefits should be improved.
I thank the Chairman for holding this hearing and for his
leadership on this issue, and I would be happy to answer any
questions.
[The prepared statement of Ms. Boivie follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Ms. Boivie.
And I want to thank all the panelists for your expert
testimony. And now we are going to turn to questions that the
Members of the Committee have, and I get to lead off.
And I would like to start by thanking Kate Farrar from my
home State of Connecticut for being here today. And I am
wondering if you could expound on the numerous stories that you
had about women especially and the problems they face as we
currently go through this crisis and the looming prospect of
major cuts to Social Security in 2034.
Ms. FARRAR. Yes. Thank you, Mr. Chairman. Unfortunately, as
you commented, the stories I shared and others before you are
just too common. And in the instance I shared initially about
the wage gap in our country and particularly in Connecticut,
the wage gap for women does not discriminate. The wage gap
crosses sectors, it crosses education levels, it crosses income
levels. And as I also shared, you know, too many women, twice
as many women as men, actually work part time in our country to
really shoulder disproportionately the caregiving
responsibilities. And in our State of Connecticut women of
color especially are vulnerable to poverty in retirement
because of their greater significant wage gap and often those
lower wage jobs that don't have savings or pensions.
And therefore, when we talk about protecting and expanding
Social Security, these are the women we are speaking to and
these are the women we need to keep in mind.
Chairman LARSON. Thank you.
Dr. Rockeymoore, you in your testimony today, and several
people have talked about this, but you talked about how raising
Social Security's retirement age is a benefit cut. Can you
explain why it is a cut?
Ms. CUMMINGS. Right. I mean, it is a cut because, you know,
when we did the estimates in terms of the Bowles-Simpson plan
that raises the retirement age to 69, it was discovered that it
would be a cut of approximately 14 percent per month for
beneficiaries. It is a cut because there are less people who
are actually able to take advantage of the Social Security
benefit because they are dying sooner. And so with that, you
have a situation where the benefits would be reduced over time.
Fewer people would have access to it. And then Social Security,
of course, would have an opportunity to actually, I guess,
preserve more money because less people are getting the
resources.
I think it is important to understand that African
Americans, blue collar workers, Latinos, people of color
generally would have a harsher time when they are--if there was
a benefit cut. And so with that, I think it is important that
we pay attention to the fact that half the income distribution
is living longer, the other half is not. And so we have to pay
attention to how that impacts proposals for Social Security.
Chairman LARSON. Thank you, Dr. Rockeymoore.
Mr. Semprevivo--did I get it right?
Mr. SEMPREVIVO. Yes, sir, you did.
Chairman LARSON. Well, listen, thank you for your
testimony. And you seem like a pretty regular guy, an
entrepreneur. I was wondering, are you saying, though, that we
should do nothing with Social Security?
Mr. SEMPREVIVO. Well, I am not a Social Security solvency
expert. I did read the 270 pages from the Social Security
Administration, their analysis and their report. And, no, I am
not saying do nothing. I am saying let's find middle-class
Americans and people that are, say, for example, Mr. Chairman,
1099ers, which 48.2 million of those----
Chairman LARSON. What is it you are saying we should do
then, if you are finding 1099ers to----
Mr. SEMPREVIVO. They are going to be paying--under your
proposal, under H.R. 860, they are going to be paying--they
have to pay all 14.8 percent.
Chairman LARSON. Well, do they really?
Mr. SEMPREVIVO. They do, they do.
Chairman LARSON. I mean, even when you talk about the tax
deduction that is available to them?
Mr. SEMPREVIVO. That is not applicable, because this is a
Social Security tax for the FICA. They have to pay that.
Chairman LARSON. You can write off the portion on the
business side. I mean----
Mr. SEMPREVIVO. Okay. So let's entertain that.
Chairman LARSON. Let's be honest about it. We start with an
increase for the worker and the employer. The employer gets the
writeoff, the worker gets a benefit, right? You are calling it
a tax.
Do you know of any other taxes where you get a disability
benefit, you get spousal coverage, you get dependent coverage,
and with that you have a pension?
Mr. SEMPREVIVO. Mr. Chairman, would you allow me to answer?
Chairman LARSON. Sure.
Mr. SEMPREVIVO. I will be happy to, sir. Thank you so much.
Let's talk about a 1099er, an Uber driver, a Lyft driver, a
realtor, an insurance person. We have plenty of insurance
people out of Connecticut, right?
Chairman LARSON. Absolutely.
Mr. SEMPREVIVO. So they are all 1099ers. Whatever wages
they make, they don't have an employer per se, they are the
employer.
Chairman LARSON. Right.
Mr. SEMPREVIVO. So they get that 1099. Now, they are
responsible for their Social Security contribution. So we
increase by 2.4 percent, that becomes a tax, they have to get
14.8 percent. So I will just use a number----
Chairman LARSON. It is not an insurance premium?
Mr. SEMPREVIVO. No, it is----
Chairman LARSON. They don't get any insurance for that?
Mr. SEMPREVIVO. Well, with insurance, they have the
flexibility and an opportunity to shop for it, right? This is--
--
Chairman LARSON. Do insurances have a guarantee, a lifetime
guarantee? Is an annuity something you could outlive? Or what
happened to those poor people that had 401(k)s and, as we
showed up here, found themselves in 2008 with a 101(k) instead
of a 401(k)? The difference is that you have the full faith and
credit of the United States Government here, and that is what
allows the guarantee to your employees and other employers as
well. It is an insurance plan.
Mr. SEMPREVIVO. Well, I think what matters to most middle-
class Americans that have to file a 1099, 48.2 million of them,
when you ask them would you like to have a plan 40 years from
now or would you like to feed your children now, the answer is
obvious. The average wage, and I just want to extrapolate on
this, the average wage of a realtor in the United States, 1.3
million of them, is $60,000. So they are middle-class America.
They are the meat and potatoes of America. It is the same with
insurance agents, Uber drivers, and Lyft drivers. You are now
telling those individuals don't feed your children, because you
are going to have to come up with an additional 2.4 percent.
Chairman LARSON. No one is saying don't feed your children.
Come on.
Mr. SEMPREVIVO. When you take money out of their hands----
Chairman LARSON. With all due respect, no one is saying
don't feed your children. Come on.
Mr. SEMPREVIVO. Well, when you talk to them and you are
telling them----
Chairman LARSON. You seem like a pretty reasonable guy, but
you know that is not the case.
Mr. SEMPREVIVO. I am. I am. I know people that are--plenty
of people that are making----
Chairman LARSON. Dr. Rockeymoore, is that your experience
with middle-class people?
Ms. CUMMINGS. No, absolutely not. Not only that, but, you
know, the fact of the matter is, people do want protection.
Those 1099 workers are part-time workers. And the fact of the
matter is, they are willing to actually incur that cost knowing
that on the back end they have access to retirement benefits,
disability benefits, or even survivor benefits. They are not
able--they may not be able to pay out-of-pocket for private
life insurance benefits or for private disability benefits or
even for a private annuity, but Social Security is there for
them. And that is why investing in it is important for
entrepreneurs and important for workers, whether they are 1099
or full time.
Mr. SEMPREVIVO. So would you say there is a priority, food
versus insurance 30 years from now? Are you saying they are
sacrificing food now and waiting 30 years from now?
Ms. CUMMINGS. No. Food and shelter are absolutely a
priority.
Mr. SEMPREVIVO. Right.
Ms. CUMMINGS. But so is actually having a safety net to
rely on in the case of a crisis. And so, you know, I am just
saying that
this is just as important to 1099 workers as it is to full-
time workers.
Chairman LARSON. Let me recognize Mr. Reed for any
questions he may have.
Mr. REED. Well, thank you, Mr. Chairman.
And, Mr. Semprevivo, let me jump in here a little bit,
because I think you are articulating something that needs to be
highlighted. And that is, one, when we go into Social Security
and when we go into Social Security disability, the common
denominator of entry into that program is it is an earned
benefit, as the Chairman said. So in order for it to be an
earned benefit, that means what? You have to have a what?
Mr. SEMPREVIVO. You have to have individuals contributing
to that to be an earned benefit.
Mr. REED. And when they go to work, we call that a what?
Mr. SEMPREVIVO. A job.
Mr. REED. A job. Right. So they have to have a job in order
to qualify for the benefits. And so what your voice represents
on this dais today is the voice of that job creator, that
individual that owns the business, and/or that 1099 sole
proprietor who is out there trying to take care of his own
livelihood and his family.
So when you talk about a tax increase, like what we are
potentially discussing here in order to take care of Social
Security, and you talk about that $2,400, and you talk about
that number, are you talking about the cash flow today that
people are suffering from, and that maybe Dr. Rockeymoore isn't
understanding what I am hearing you say? Is what you are saying
is that the entrepreneur or that sole proprietor, that business
owner, that employee is going to have to pay that tax increase
too, because that is cash flow to them? That goes to their
household today, right?
You are saying that we should take into consideration, as a
body discussing reforms here to protect Social Security, we
should take into consideration how that cash flow may
jeopardize that job. Is that correct?
Mr. SEMPREVIVO. It does. And I think there is kind of two
separate issues. We are looking at sole proprietors, right? We
are just lumping them into magical businesses being businesses.
But oftentimes, you have a person, like a Lyft driver. He
doesn't have a corporate employer that is making that 12.4
percent contribution on his behalf.
Mr. REED. So when he loses that 12.4 percent, that is real
cash out of his pocket----
Mr. SEMPREVIVO. That is gas.
Mr. REED. That is gas, rent, and food.
Mr. SEMPREVIVO. And food. Absolutely.
Mr. REED. That is day-to-day living expenses.
Mr. SEMPREVIVO. Yes, sir. That is the real world.
Mr. REED. And I think what you are articulating and what
your testimony to me represents is that we should take that
impact into consideration as we discuss Social Security reform.
Is that your testimony?
Mr. SEMPREVIVO. Absolutely, sir.
Mr. REED. Okay. And then let me also understand, when you
calculate your Social Security retirement benefit, that
calculation is based on--do you know what it is based on?
Mr. SEMPREVIVO. Yeah. It was just gross wages up to a
threshold of $132,900.
Mr. REED. So it is 35 years worth of your work history,
right?
Mr. SEMPREVIVO. Right.
Mr. REED. So if your work history--if we start off and we
grow, and you are an entrepreneur and you are getting
opportunities to invest in your business, and I think the tax
cut bill led to some investment in your business that expanded
your business. You hired new people. So if you start with those
new employees with higher wages, maybe that is the common
ground here. If there is higher wages at the onset of that 35-
year work period, would that not increase your benefits at the
time of retirement under Social Security?
Mr. SEMPREVIVO. Without a doubt. The more----
Mr. REED. Is that true, Dr. Rockeymoore?
Ms. CUMMINGS. In terms of higher wages at the beginning?
Mr. REED. At the beginning and throughout the 35-year work
history.
Ms. CUMMINGS. I mean, it would actually lead to a higher
benefit in the end if you had it.
Mr. REED. And so as we have articulated in our testimony on
our side, one of the things we are focused on is economic
growth, as we said, in the LEAP--the L of the LEAP principles
that we are trying to articulate as, I think, an area of common
ground that we can grow. So if we increase job opportunity, if
we increase wages in America, that would have a corresponding
impact, in a positive way, on Social Security retirement. Would
anybody on this dais disagree with that?
Ms. CUMMINGS. I would just like to say that----
Mr. REED. The response is silence, so therefore, I will
note for the record that no one disagreed.
Ms. CUMMINGS. I actually disagree.
Mr. REED. You disagree that jobs growth and wage increase
will hurt retirement benefit calculations for Social Security
recipients?
Ms. CUMMINGS. I argue that Social Security is actually a
boon for job growth and entrepreneurship in this country.
Mr. REED. I am not disagreeing with that. I get that.
Ms. CUMMINGS. Okay. Great.
Mr. REED. But the underlying principle is that increased
wages and more job opportunity--because in order to qualify for
Social Security retirement and disability it requires a job--
would increase the stability for folks receiving Social
Security down the road, and the benefit would be increased by
wages. Do you disagree with that?
Ms. CUMMINGS. No, I don't disagree with that.
Mr. REED. So hopefully, we have articulated here today, Mr.
Chairman, one of our principles where there is common ground, I
believe, from the whole entire panel that economic growth could
be a part of this solution as we go forward. And with that, I
yield back.
Chairman LARSON. Mr. Pascrell is recognized.
Mr. PASCRELL. Thank you. Thank you. Thank you, Mr.
Chairman. Thank you, Mr. Ranking Member.
We had a massive tax cut voted upon in December of 2017.
And when we look at the results of that tax cut, we don't see
the increase in wages that this body was committed to. So I
don't know if growth is the answer to our system. Every time we
have a problem, it is economic growth that will solve all of
our problems. We have a financial problem. We have a budget
problem in this country, and there has been a lot of talk of
how we are going to cut back on the benefits for those Social
Security recipients.
Many of those Social Security recipients, you heard the
numbers, they are in some of your testimonies I have read, but
the reason why we have tremendous anxiety is that people don't
know whether Social Security is going to be here in another 15,
20 years, so they are not spending their money. Lower-income,
lower- to middle-income are those people that spend money when
they have it in their pocket. And what those people are doing
right now is saving their money just in case, and here is one
of the elements, Social Security is not going to be around when
I get there, when I get to that point. That is a fact of
economics.
And, Mr. Chairman, I would hold that is a major part of why
we are seeing an economy which is basically stagnant with
regard to wages, although we have seen a little uptick in the
last 2 months. So I am glad the Social Security Subcommittee is
focusing on the importance of this earned benefit and improving
benefits for its first and second hearing. And, Mr. Chairman, I
must commend you for pointing out this is not an entitlement.
We pay into it. It is an insurance policy, and that is very
different than an entitlement.
Social Security plays an important role in ensuring
economic security for Americans, from seniors, to women, to
people of color, to younger workers. Today's witnesses make it
clear that benefits need to be secured and improved, not
reduced. Is there anybody on the panel that believes that
benefits should be reduced? Anybody?
These benefits may be modest, but they are vital to the 63
million people who rely on them. Social Security is one of the
most powerful anti-poverty programs we have. The traditional
three-legged stool of pension, Social Security, and private
savings for retirement security is no longer intact. Workers
continue to move from job to job with undefined benefit
packages that may be inadequate or not transferable. So nearly
half of the private sector employees, about 55 million, do not
have a retirement plan offered by an employer, contributing to
a retirement crisis in America. We have a crisis. We are
talking about 55 million people.
That is why it is critically important to ensure the
comprehensive sweep of protections that Social Security offers
remain intact. We all know the Social Security Trust Fund is
fully funded until 2034, but there could be a shortfall beyond
that if we do not act. Thankfully, there are several proposals.
I support the Chairman's proposal, the 2100 Act, because it
secures the Trust Fund in a way that ensures no benefit cuts
need to be made for at least the next 75 years. Also, it
expands benefits for current and future beneficiaries. You
know, in 1983, somebody mentioned it before, 1983 was probably
one of the great years in American history because in that
year, Democrats and Republicans came together in a bipartisan
way and acted on Social Security. And just a few years later,
they got together again. Tip and Ronald Reagan got together.
They weren't exactly bedfellows, and we had real tax reform. We
had real comprehensive tax reform. Jack Kemp was a major part
of that deal.
It can be done if we put our minds to it. If we don't, then
we are going to have a real catastrophe here. And so those
people who saved money, those people we are talking about here
for the Majority, who saved money, it is not going to be very
useful at that particular time if Social Security is not here.
Thank you, Mr. Chairman.
Chairman LARSON. Thank you.
Mr. Estes is recognized.
Mr. ESTES. Thank you, Mr. Chairman. And thank you to all of
our witnesses for joining us today.
You know, as we meet today, our economy is booming at
historic levels. In fact, for the first time in history, we
have more job openings than we have people seeking jobs. And in
actuality, we have seen wages grow by 3.2 percent, which is the
highest amount in over a decade. Following the progress that
the Ways and Means Committee and Congress made in the last 2
years to help jump-start our economy, we can now look at how do
we help people prepare for their retirement after their careers
are over with. And this includes protecting and preserving
Social Security for our current as well as future generations
of retirees.
You know, for Social Security, a change in economy and
population shifts due to baby boomers entering retirement means
we can't overlook some of those serious, long-term financial
challenges in this vital program. If we do nothing, it is
estimated that the Social Security Trust Fund for retirement
and disability will be depleted by 2034, which we have talked
about earlier would result in a 21 percent cut in benefits, and
we don't want that. We need to act now.
This is a serious call to action, and I think Republicans
and Democrats can work together to strengthen and improve
Social Security for our hard-working Americans. However, we
must make sure that the solution doesn't include devastating
tax increases that will harm our economy and dole out benefits
in a haphazard way. Instead, we should target benefit increases
to make sure that we most reward work and modernization of the
program to help today's workforce.
Today I believe the real opportunity to work in a
bipartisan way will strengthen and improve Social Security so
that Americans can receive the real retirement security they
deserve.
You know, as the only former State Treasurer serving in the
House, I know firsthand about the importance of working on
retirement security for the future. In Kansas, I helped with
the reform that we did for our pension system when we were in a
financial crisis and on a path to be insolvent, and we wanted
to make sure we protected that. And that is the kind of
leadership we need now.
I have a personal story from my own family. My uncle died
when my cousins were young, and my aunt relied on Social
Security to help raise my three cousins. It was an important
part of their life in terms of helping to maintain their
quality of life. And, you know, Social Security was there when
my aunt needed it the most, and now we need to make sure that
we have it preserved for future generations.
Ms. Ruff, thank you for being here, a fellow Kansan. We
appreciate that. You know, Social Security is an important part
of that three-legged stool that provides retirement security
for millions of Americans. And recently, AARP had this ``You've
Earned a Say'' campaign, folks, you know, making sure Social
Security is there for future generations.
Can you speak a little bit more about how important it is
to act now instead of continuing to kick the can down the road
for Social Security?
Ms. RUFF. Certainly. I would be very glad to. First of all,
as we have all heard, it has been made clear that we have full
funding until 2034, but then we will have benefit reductions if
nothing is done. So if we wait and do nothing, we risk cutting
benefits. We risk making it more and more difficult for people
who are on Social Security, and we have not solved the issue.
The longer we wait to agree to any solutions, the tougher those
solutions are going to be. They are going to be more drastic.
We have, in the past as a country, come together when there
are critical issues to really think through for the long term.
How do we make everything much better? So from that standpoint,
also, if we wait, and this was referred to by one of the other
panelists, people get worried. They think there may not be any
Social Security in the future because they don't see progress
being made.
What we saw with our ``You've Earned a Say'' campaign is
that our members rely on Social Security. They know it is a
benefit for their children and grandchildren as well. So as we
have talked with them and listened to comments they have made,
they recognize that they want to make sure it is a long-term
solution that in effect is a multigenerational solution, so
that is why we can't kick the can down the road.
Mr. ESTES. Thank you. You know, Social Security was never
intended to be that sole source of retirement income.
Ms. RUFF. Correct.
Mr. ESTES. You know, we want to make sure we maintain this
valuable resource so that, along with retirement savings and
private assets, retirees can enjoy the quality of life that
they deserve, that they have earned throughout their working
life. So, you know, the sooner we act, the easier and more
likely it is going to be to make sure we protect this valuable
asset that retirees deserve.
So with that, Mr. Chairman, I will yield back.
Chairman LARSON. Thank you, Mr. Estes.
Mr. Boyle is recognized.
Mr. BOYLE. Thank you, Mr. Chairman.
First, let me say, Mr. Semprevivo, your argument would be a
little more convincing to me had you brought for us some of
Joseph's Lite Cookies. I know that certainly would have helped
with a number of Members on this panel on both sides of the
aisle.
Let me thank and commend the Chairman of this Committee.
For the first time since I have been here as a Member of
Congress, 5 years now, are we even talking about, in a
meaningful way, what we are going to do in approximately 15
years from now when the dramatic shortfall hits the Social
Security Trust Fund. And the fact that this is the first time,
apparently since 1983, that a congressional committee is even
taking up this issue is, indeed, quite extraordinary. So I want
to commend him.
I also want to stress for all of us on both sides of the
aisle to seriously and definitively deal with this issue in
this Congress just because, while approximately 15 years from
now seems like a long way off, it isn't. And, as we know, that
current target date of 2034 is always a moving target. If we
were to face a recession or slower economic growth than
expected, what is projected to be 2034 could actually be much
sooner than current projections.
I come at this issue with a couple of different
perspectives. First, as the son of someone who worked hard in
blue collar jobs for over 50 years, who now gets more than half
of his income in retirement from Social Security, I know from
personal experience, family experience, that it is not just a
statistic to say there is for many millions of Americans the
reality that Social Security makes up the majority of their
income. It is one of the reasons why I believe that Social
Security is the greatest domestic policy achievement of the
20th century.
I also come at it from the perspective of someone who is
working and paying in to Social Security and would like it to
be there decades from now when I retire and need it. I was just
calculating this as the hearing was going on, but I have been
paying into Social Security for exactly 25 years in the
workforce and will hit full retirement age in exactly 25 years.
Whenever I am doing a townhall, and this has happened at
every single townhall I have done, whether it is in a wealthier
area or a lower-income area in my district, every single time,
I get the question, typically from someone my age or in their
forties and fifties, will Social Security be there for me when
I retire? I am doing a townhall tonight and I am sure the
question will again come up. Most people preface that question
stating the belief that they just assume Social Security will
not be there for them when they retire.
So when I am able to talk to them about Social Security
2100--and I know we will get more into potential solutions
tomorrow--but when I tell them there actually is today existing
in Congress one piece of legislation, I believe so far only
one, that would address the insolvency issue and extend the
Trust Fund lifetime for the rest of the century, people are
pleasantly surprised. And people are far more pragmatic about
the potential solutions than we sometimes believe they are here
in Washington, D.C.
One of those solutions clearly, to me, has to be revenue
increase. I would love it if we could magically grow our way
out of this problem. I would also love it if one day I could
play in the NBA. I sincerely doubt that either of those things
are going to happen.
Mr. REED. Not true.
Mr. BOYLE. Thank you. The Ranking Member has much more
confidence in my basketball ability than I have.
The idea that we could simply project that magically we are
going to grow our way out of this issue is just fantastical.
Talking about ways in which we can ensure that those making
over $400,000 a year pay more into the system is a legitimate
avenue to explore. Making more than $400,000 a year is about 10
times what the average worker in America makes. That is a
legitimate place to look when we are talking about trying to
extend and save the greatest domestic policy achievement in
government of the 20th century.
And I see I am out of time, so I will yield back.
Chairman LARSON. Thank you, Mr. Boyle.
And we will now recognize Mr. Ferguson.
Mr. FERGUSON. Thank you, Mr. Chairman, and to the Ranking
Member. I want to thank you, Mr. Doyle. I share your dream of
playing in the NBA.
Mr. BOYLE. It is Boyle.
Mr. FERGUSON. Mr. Boyle. I said Doyle. Excuse me. But
anyway, playing in the NBA, I think we will be on the same team
at the exact same time.
But, Mr. Chairman, you know, you have been mighty kind to
allow us opportunities to meet to talk about different ideas,
different philosophies. I thank you for your openness in those
conversations.
To the Ranking Member, Mr. Reed, thank you for the same. I
think there have been a lot of really good conversations around
this so far.
You know, one thought that crossed my mind as I sat here
today and listened to the testimony, was it was pretty
remarkable. As a practicing dentist in a small rural community,
every story that you told is exactly the way I see it. A single
elderly lady whose husband passed away that is struggling to
make ends meet, African Americans that struggled in poverty
before we created jobs that moved people from poverty into the
middle class, workers in our local foundry that have worked
extremely hard over the years that may not be able to do the
physical labor at 67 that they could at age 55. So I am
thrilled that each of you see it the way I do, that we have a
diversity. We have a lot of different things going on in our
communities. But I also get this feeling that every part of
that conversation really revolved around what appeared and what
certainly feels like, from a rhetoric standpoint, a cut.
I have said in just about every single townhall and
community meeting I have held over the last 2 years that we
have to have an honest conversation about this. And one of the
things I find, and I find it is pretty remarkable, is that
every time we start this conversation, what happens is that
someone on the left side of the aisle will stand up and say, we
have to talk about Social Security. What does our side do? We
basically tear them down because of it. Let a Republican stand
up and talk about this issue, and what happens from the other
side of the aisle? There is a buzz saw coming at us. It is not
intellectually honest to continue to do that.
This is going to be a very interesting conversation. And we
quite candidly need, as both Republicans and Democrats, the
political cover to have these conversations in a very honest
way to reach a compromise position that is the right thing for
this Nation, for our seniors, and for future generations.
So I would encourage each of you, as we have these
conversations, to not be either overt or quietly covert with
threats of cuts and how the language goes. You can see it in
the panels. You can hear it in the questions. We see it in the
posturing. We have to be able to have those honest
conversations that probably get to a point where it is a
combination of a lot of things that we are talking about,
reforms to the program, which all too often get called cuts,
but also I think that revenue is an important component of
this, however we get to that point. I just ask that the outside
groups allow Members of the Committee to have these
conversations without being so demonizing to either side, and I
say that on both sides of the aisle.
As a small business owner, some of the comments that you
made I fully agree with, and the perspective that you have from
operating a small business is one that I had. I don't care what
else you say. When you have money that comes out of your
business that goes to the Federal Government for whatever
program, it is a tax. I mean, sure, there is an earned benefit
that comes from it, but it is a tax. It is not an insurance
premium, because an insurance premium is many times something
that you have the option of buying. This is not an option. It
is a tax.
I don't have many people saying that they are not willing
to consider changes to both the program and to the revenue
side, but we have to be honest about what it is. It is a tax,
because it is coming from my business going to the Federal
Government, and it does affect our ability to hire future
employees. And as we have all said, every single one of us
recognizes that job creation is an important part of saving
Social Security.
With that, Mr. Chairman, I yield back.
Chairman LARSON. I want to thank the gentleman.
We now will recognize Mr. Schneider.
Mr. SCHNEIDER. Thank you, Mr. Chairman.
I want to thank the Chairman and the Ranking Member for
having this hearing today. And in particular, I want to thank
all of our witnesses for your participation and for sharing
your views, experiences, and perspectives. I think it is
critically important.
All of you here have offered different views and
perspectives. You have touched on how the changes to Social
Security can disproportionately affect one population versus
another, and different populations are affected in different
ways.
We had a hearing earlier this year on Social Security, and
I touched on the fact--and I want to commend my colleague from
Georgia and say thank you. I do think we need to be able to
talk together. I will come to that in a second. I will go
there.
I think as we talk about ensuring future generations have a
secure and dignified retirement, it is important that we get
away from the posturing and the positions and get to the
issues. And one we talk a lot about, and I did mention this at
the last hearing, is this idea of raising the retirement age.
And as many of you touched on, for many people, especially
people of lower income working in more physically demanding
careers, they already start with a lower life expectancy. There
are all kinds of data that link income to life expectancy for a
lot of reasons, and we don't need to go into those here. But if
you take the typical 55-year-old in the lowest 20 percentile in
income, they have a life expectancy of 76. I say this all the
time. Those at the highest 20 percentile in income are at 88.
Raising the retirement age to 70 would reduce the retirement
period for those at the lowest income range by fully a third,
and this is difficult.
And, Dr. Rockeymoore, I would like to turn to you in the
time I have left and talk about this. Because as we talked
about these different communities, one of the things that
drives our economy, and, Mr. Semprevivo, you touched on this,
is the creation of small businesses, small businesses and
entrepreneurs. But as people make the decision whether to
venture out on their own, and especially in more economically
challenged communities, having the confidence of a future
retirement can play into that, and Social Security, I think,
plays a role.
So I would be curious from your perspective of what role,
if any, Social Security has in helping promote small business
development entrepreneurship in minority communities as they
are making their decision to venture on their own.
Ms. CUMMINGS. It plays a huge role. And I am speaking from
experience, and I am also speaking from a larger statistical
perspective. I had a sole proprietorship and I have had an LLC.
Sole proprietorship, it was just me. LLC, I had up to 20
employees, including some 1099s and interns.
And so when I was a sole proprietor, what I was able to do
was get a payroll service, paychecks and then later ADP, where
I was able to pay my taxes through, you know, the deduction
that comes through the payroll service. Even though I could not
offer HR benefits, I couldn't offer a 401(k) when I first got
started, I couldn't offer a private life insurance benefit or a
private disability benefit, I knew I had Social Security there
for me because I was paying for it through my payroll service
and I was making sure I was taking care of my future even while
I was investing in my business idea.
Once I got more employees and I wanted to attract and make
sure that I was able to retain employees, I actually did create
a 401(k), and I did get--you know, I did offer a disability
benefit that was in addition to Social Security. But guess
what? Many, many, many, many, particularly startups, don't have
that ability for quite a long time. So the role Social Security
plays is it provides not only a safety net, but it is actually
a boon to entrepreneurship, and it is a boon to business
formation in this country by providing a subsidy, basically,
for business creation. And so many entrepreneurs are able to
take advantage of this and not lose out on their critical
retirement in the process.
And then, by the way, we always like to think that
businesses will be successful. But what if businesses fail? And
so the fact of the matter is that Social Security provides a
failsafe that, you know, if a business idea is not successful,
they don't lose out in the long term.
Mr. SCHNEIDER. Thank you. And I will yield back the few
seconds I have left, but thank you. And again, I want to thank
the witnesses for your time here today.
Chairman LARSON. Thank you, Mr. Schneider.
Mr. Arrington is recognized.
Mr. ARRINGTON. Thank you. Thank you, Mr. Chairman and
Ranking Member, and I appreciate the spirit by which you
approach this, you and the Ranking Member. If there were ever
two congenial, patriotic, and practical people who could get it
done in a partnership that was bipartisan, it is going to be
you two. That is just my--in the short time I have known you
two, I really believe that. And I hope we are able--I hope
those words are from my mouth to God's ears and to your hearts
and into the doing and the acting and execution of this
Committee, because we really can't wait. And that is one of the
principles that the Ranking Member and I share, and I know you
do too, and that is we can't kick the can down the road, and it
is just going to get worse if we do, as Ms. Ruff has stated.
And so I just want you to know I am open to finding a
solution that will be probably equally painful for both sides.
If it is not, I don't see us getting anywhere.
I am concerned about the taxes, and I am concerned that as
we work together to solve this problem, we are clear about the
facts surrounding the current economic growth. Growth in this
economy is a part of the equation. It is not going to solve it,
but it is a part. We can't grow out of this, like we can't grow
out of the $22 trillion in debt that we as a Nation are in,
which is really a deferred tax, if we are going to talk about
taxes on our children and grandchildren. But it is an important
factor, as well as jobs and people working. And you have 7
million surplus jobs, and you have the same number of able-
bodied male adults who are not working, age 25 to 50. That is
deeply disconcerting.
So I think the facts, we have to at least put them on the
table. Wages and income have grown. They have grown almost 3\1/
2\ percent, and they are growing at the fastest rate since
2009. Income is up, wages are up, more jobs are coming online,
and coming back to this country, and we have a 50-year low in
unemployment. That is powerful. Let's just acknowledge that
things are happening in a very positive way, and we are moving
in the right direction since tax cuts, since we have relieved
some of the job creators from the burden that they feel, among
other things. We have not relieved them since Obamacare of the
high cost of healthcare. I am not saying Republicans have come
up with a solution that has passed and effectuated the change
that we all desire which is more affordable healthcare, but I
am saying that healthcare costs are crushing the small
businessmen and women in this country. So we put them in a real
pinch when we talk about even a relatively small tax increase.
You get the response like we have heard from Mr. Semprevivo.
Let me ask you, just from a practical level, has the Tax
Cuts and Jobs Act and the relief that you have experienced
along with other small businesses who are the engine of job
creation around the country, has that helped you? Has that
given you some breathing room? Are you thinking more positive
about your future? And are you investing in your company and
growing? Just a quick response.
Mr. SEMPREVIVO. Absolutely. We hired more people in my
company. We issued raises of up to $5,250 per person.
Mr. ARRINGTON. So we don't want to go backward. We have
five out of eight people living paycheck to paycheck. Sixty
percent of the American people have less than $1,000 in their
cash on hand. So let's be careful in how we solve this. It will
be tough, and we have to be open on both sides if we are going
to do it.
One thing that I think, Mr. Chairman, I may propose today
as the easiest bipartisan solution is with respect to the
principle of making sure that we have equal treatment for all
public servants. The WEP, the Windfall Elimination Provision,
has affected my State as much as any, because we have a lot of
teachers and firefighters that are working, that pay into their
State retirement but also have covered income that goes through
the Social Security system.
Now, the WEP was to get to parity. It didn't quite get
there. We need to go all the way because we know how to do it,
but let me ask you this: How do we fix that provision whereby
people get their--at 60, they get the information about what
their retirement income is going to look like, and it doesn't
include the WEP? It is without it, so they think it is actually
more, in many cases, and that is creating chaos and confusion
and deep, deep concern. That seems like an easy fix.
I know I am out of time, Mr. Chairman. Would you allow Ms.
Ruff to just talk about a solution to that that we could
consider?
Chairman LARSON. I will say this. We are going to have
specific hearings on that alone, and as you are probably aware,
both Mr. Brady and Mr. Neal have introduced legislation with
respect to that. And we fully intend to have a hearing on that
and to raise that issue.
Mr. ARRINGTON. I have gone over my time, and I thank you
for the indulgence. I yield back.
Chairman LARSON. With that, I will recognize Mr. Higgins.
Mr. HIGGINS. Thank you, Mr. Chairman. Thank you for your
leadership, particularly on Social Security 2021, your
longstanding commitment to recognizing the value of Social
Security for keeping people out of poverty, but also as an
engine for economic growth in America.
Keeping people out of poverty, economic independence,
economic self-sufficiency is very, very good public policy.
Social Security has kept 22 million Americans out of poverty,
including 1 million kids, 6 million adults under the age of 65,
and 15 million adults over the age of 65.
My colleagues on the other side, who I believe are sincere,
point to the tax cut, the corporate tax cut. According to the
President's budget that was released yesterday, it will cost
this government $1.7 trillion over a 10-year period. We have
now reached, because of that, trillion dollar annual deficits
for the foreseeable future, at least for the next 4 years.
Corporate taxes don't pay for themselves. There is not a
corporate tax in human history that has ever paid for itself.
For every dollar that you give away in a corporate tax cut, you
can hope, best-case scenario, to collect, to retain $0.32. That
is a 68 percent loss on investment to the American people.
My colleague talked about the job creators. The job
creators are the American people. We have the strongest economy
in the history of the world. The American economy is 70 percent
consumption. When people have money, they spend it. When they
spend it, they create aggregate demand. When you have aggregate
demand, you have high growth rates. In the last 20 years, we
have had economic growth hovering at about 2 percent. We are
underperforming significantly as the American economy. The last
time we had 4 percent sustained growth over 20 years ago, we
didn't have budgetary deficits. We had budgetary surpluses of
$300 billion.
So when you look at the return on investment of Social
Security benefits, according to most economists, for every
dollar that you spend in Social Security benefits, that money
is spent. Those people aren't putting that in savings accounts.
It produces $1 in economic growth. So in terms of return on
investment, if you are going to compare a $1.7 trillion tax
cut, I would rather have $1.7 trillion for Social Security.
Why? Because it will double. Your return on investment is 100
percent.
The proposed budget, $4.75 trillion, is about 22.5 percent
of the entire American economy. I just think that we have to
begin to treat the American taxpayer much more respectfully in
terms of how important the Federal Government budget is. It
pays for scientific research. It carries the greatest burden
for things like drug development. Private companies that make a
bundle for these big blockbuster drugs don't do any of the
basic science. The Federal Government does.
You know, every innovation in your smartphone, touch-screen
technology, global positioning satellite, the Internet, these
all came from government research dollars. And when, as
economists say, they come down the cost curve and Steve Jobs
takes all this and makes a billion smartphones in China, it
doesn't benefit our economy. But American taxpayers have a
huge, huge investment and are major, major job creators in this
country.
So I would just say, respectfully and particularly in
deference to the Chairman's bill on Social Security 2021, let's
look at getting a greater return for our government spending.
There is a lot of waste in government, but we have in this
economy the greatest public-private partnership in the history
of the world. And without government research, basic research,
we are never going to get the commercial products and the
commercial growth that is essential to the long-term fiscal
stability of this country. And Social Security and investing
more in it is a good investment in the growth of the American
economy because it keeps people out of poverty.
With that, I will yield back, sir.
Chairman LARSON. I thank the gentleman from New York.
And it will always be the policy of this Chair when we are
joined by Members of the Committee of the whole on the
Subcommittee that they have an opportunity to question as well,
and so we are honored to have Mr. Rice from South Carolina. I
recognize him.
Mr. RICE. Thank you, Mr. Chairman.
I have been in Congress now for 6 years, and I really
believe that my whole focus is on making America competitive.
And if we could just solve about--there is really not that
many--five or six major problems that we face, we could unleash
the American economy and the American workforce, and a lot of
these problems become a whole lot simpler.
One of these problems is Social Security is out of balance,
and that is probably one of the easier ones to fix, actually,
in terms of the math. Medicare is much harder. But we have to
deal with these entitlements, and they are political hot
potatoes, as everybody said. It is very difficult. Nothing is
going to happen here if it is not bipartisan. Absolutely
nothing is going to happen, and everybody has to come to that
realization. So we have to get together and come up with a
solution. And there is really not that many levers to pull. I
mean, you can either increase taxes or you can cut benefits.
There are different ways you can do that, all factor in.
So Sam Johnson introduced a plan that would balance Social
Security for 75 years without raising one cent of taxes. It all
has to do with raising the retirement age, cutting the initial
benefit and reducing the COLA, the annual benefit cuts. Our
Chairman here has introduced an alternate plan that does it
purely with raising taxes, and never the twain shall meet.
But what I will tell you is this: If we don't come up with
a compromise solution that takes into account both those
things, this problem is not going to get fixed. Because even if
the House passed it, and that won't happen with the Chairman's
plan. But even if the House passed it, it is not going any
further than that.
So, you know, it sounds attractive. A cup of Starbucks and
raise the taxes on those guys over there, the ones who make
over $400,000, put a 15 percent increase in their taxes, but
think about the practicality of it. When fully in place, it
raises the Social Security tax from 6.2 percent on each side,
12.4 to 14.8 percent. That is another 2.4 percent. Okay. You
have your Uber driver, he makes $40,000 a year. That 2.4
percent is a thousand dollars a year. And who doesn't think
that is not a hard thing for that Uber driver who is making
$40,000 a year to pay an extra thousand dollars a year in
Social Security taxes?
And I will tell you, that guy, you know--somebody was
mentioning that people 25 to 35 don't have any retirement
savings. If you polled them, do you think that those 25- to 35-
year-olds would think they would rather keep that thousand
dollars and not worry about Social Security? Because I will
tell you this, I bet 80 percent of them don't believe they will
ever get Social Security.
So that being said, you know, I totally agree that this is
a promise that we made to our seniors, and we have to make it
whole. And it is irresponsible that it hasn't been done until
now. We have to make this thing golden. I think everybody in
this room would agree with that. There have been a couple of
alternate plans that have already been submitted. Republicans
and Democrats submitted plans.
Ms. Ruff, with AARP, what's your plan?
Ms. RUFF. What we propose is that a lot of the points that
have been raised here, they are all incredibly important to the
discussion on Social Security. We do need a bipartisan bill.
That is the only way we can have long-lasting solutions.
So our proposal is we have policies on many of the
different areas, but the fact is they are all levers that need
to be looked at together. What we propose----
Mr. RICE. But you don't have a plan, do you?
Ms. RUFF. No.
Mr. RICE. You don't have a specific plan to fix Social
Security?
Ms. RUFF. No. What we do is we talk to our members. We get
information from the members and we, in fact, want to help in
this discussion so that people do understand what the pros and
cons are of each approach, and then----
Mr. RICE. Thank you, ma'am. Thank you.
Ms. RUFF. That is where we are.
Mr. RICE. So I was looking at--somebody said before that
life expectancies haven't risen for minorities, but I was
actually looking at the tables a little while ago. And since
the last time Social Security was fixed in 1982 or 1983, I
think, when Ronald Reagan and Tip O'Neill got together--and
what they did was a mix of tax increases and benefit cuts,
basically. They increased the retirement age from 65 to 67, and
they raised the cap. I think the cap at that time was about
$30,000. Now it is $130,000.
So, you know, in the end, that is what is going to end up
having to happen here. And the truth is that across all
demographics, since 1980, the life expectancy has increased
about 5 years for everybody. So--it has. I just looked at the
tables.
So in the end, what we are going to end up having to do is
something similar to what they did, and everything is going to
have to be on the table, and everything is going to have to be
included if we want to actually reach a solution. I mean, we
can argue and make points and tear each other down or we can
try to find a solution to the problem.
I yield back, Mr. Chairman.
Chairman LARSON. Well, I thank the gentleman.
And I would just point out, we had a lot of talk about Uber
drivers today, and I would just say, when that Uber driver gets
involved in an accident and finds himself disabled and is
looking around to make sure that he takes care of his children
and his family, he is going to be awful glad that the only
thing he had and the only guarantee that was there for him was
Social Security.
And so I do think this has been informative. I want to
thank the panelists, and I want to thank you for your patience.
I hope in the future--and we intend to have a lot of followup
where we are just going to have briefings too, because a number
of Members have requested that, where we can go back and have a
little more give and take, both in terms of panelists, but also
in briefings and followups so that where there is a dispute on
data or information, we can further jaw through that and
ultimately come to a solution.
But I thank everybody for being here this afternoon, and--
well, this morning and almost afternoon, and I look forward to
our hearing tomorrow at 2 o'clock.
And with that, the Subcommittee stands adjourned.
[Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]
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