[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PROTECTING AND IMPROVING SOCIAL SECURITY:
BENEFIT ENHANCEMENTS
=======================================================================
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 13, 2019
__________
Serial No. 116-13
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
36-240 WASHINGTON : 2020
COMMITTEE ON WAYS AND MEANS
RICHARD E. NEAL, Massachusetts, Chairman
JOHN LEWIS, Georgia KEVIN BRADY, Texas, Ranking Member
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 Andres, Minority Staff Director
______
SUBCOMMITTEE ON SOCIAL SECURITY
JOHN B. LARSON, Connecticut, Chairman
BILL PASCRELL, JR., New Jersey
LINDA SANCHEZ, California TOM REED, New York, Ranking Member
DAN KILDEE, Michigan JODEY ARRINGTON, Texas
BRENDAN BOYLE, Pennsylvania DREW FERGUSON, Georgia
BRAD SCHNEIDER, Illinois RON ESTES, Kansas
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 6, 2019 announcing the hearing................. 2
WITNESSES
Max Richtman, President and CEO, National Committee to Preserve
Social Security and Medicare................................... 88
Bette Marafino, President, Connecticut Alliance for Retired
Americans...................................................... 97
Abigail Zapote, Executive Director, Latinos for a Secure
Retirement..................................................... 103
Andrew Biggs, Resident Scholar, American Enterprise Institute.... 112
Joan Entmacher, Senior Fellow, National Academy of Social
Insurance...................................................... 129
Donna Butts, Executive Director, Generations United.............. 141
MEMBER SUBMISSIONS FOR THE RECORD
Chairman Larson, Submission: Fed Notes on Wealth Recovery........ 174
Chairman Larson, Submission: National Academy of Social Insurance
Survey......................................................... 181
Chairman Larson, Submission: Sam Johnson's Social Security
Proposal: H.R. 6489, the Social Security Reform Act of 2016.... 250
Chairman Larson, Submission: SSA Actuary Report on H.R. 6489..... 303
PUBLIC SUBMISSIONS FOR THE RECORD
National Breast Cancer Coalition, statement...................... 333
Association of Mature American Citizens, statement............... 335
Michael Binder, Center for Fiscal Equity, statement.............. 345
National Association of Police Organizations, Inc., statement.... 348
PROTECTING AND IMPROVING SOCIAL
SECURITY: BENEFIT ENHANCEMENTS
----------
WEDNESDAY, MARCH 13, 2019
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:15 p.m., in
Room 2020 Rayburn House Office Building, Hon. John Larson
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
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Chairman LARSON. With that, I call the committee to order.
This is a hearing of the Subcommittee on Social Security on
Protecting and Improving Social Security: Benefit Enhancements.
I want to thank everybody who was here yesterday for their
participation, both those of you who were in the audience
yesterday and the members who took part in the hearing. Today
is the second hearing in a series on protecting and improving
Social Security. Yesterday, we focused on the importance of
Social Security and how it provides the middle class with
economic security. Today, the focus is on how we can strengthen
Social Security through benefit enhancements to meet the needs
of today's beneficiaries and future generations.
Social Security benefits are an essential lifeline for
millions of Americans. Without Social Security, 43 percent of
older women would be living in poverty. And, as we heard
yesterday from Maya Rockeymoore Cummings, a small business
owner, Social Security provides not only a safety net but
actually it is a boon to entrepreneurship so that, providing
the opportunity for business formation in this country,
entrepreneurs are able to take risks because they know that
Social Security will be there.
That is why we need to act to strengthen Social Security
and its benefits, because even with Social Security, seniors
are struggling. According to a study done by an economist at
the Federal Reserve, savings from private retirement plans are
concentrated in the top 25 percent of the population. So, in
other words, the data shows that 75 percent of Americans are,
on average, not saving enough retirement income through private
plans.
After the great recession 10 years ago, many saw their
retirement savings wiped out. And according to economists at
the Federal Reserve, on average 90 percent of households have
not regained the wealth they lost in the recession. But Social
Security remains there for them. It is consistent. Or, as
Chairman Neal often says, you can outlive an annuity but you
cannot outlive Social Security.
Social Security is the working person's retirement
guarantee. Social Security 2100 Act, we believe, will
strengthen this guarantee and allow seniors to retire with
dignity by providing real benefits for them. It establishes a
minimum benefit for Social Security that is 125 percent above
the poverty level, ensuring no one that has worked their whole
life will be able to retire into poverty.
And unfortunately, for more than 5 million Americans, that
is the current case and more than three million women, and
especially women of color.
It also takes into account seniors' actual needs when it
comes to cost of living adjustments, commonly referred to as
COLAs. The Social Security 2100 Act implements a COLA that is
endorsed by the AARP, known as CPI-E, the E standing for
elderly, and the actual costs that they incur. And whether that
is heating and cooling your home, whether that is
pharmaceuticals, whether that is doctor visits, whether it is
physical therapy, these are all vitally important.
At yesterday's hearing, there was a lot of talk about
people wanting to strengthen Social Security and we welcome
that. But it is important that we get into the substance as
well.
We are holding public hearings so that we can shine a
bright light on all the proposals to secure Social Security
that will help the American people. I want to thank
Representative Rice yesterday for acknowledging that Chairman
Johnson had a plan as well, and that Chairman Johnson, who we
acknowledged yesterday for his distinguished service to his
country, an iconic national hero, also had a proposal, a
proposal that the chief actuaries also found was sufficiently
solvent beyond 75 years. Of course, that bill was never heard.
But it also cut benefits on average by 30 percent.
And I want to thank again Congressman Rice again for
pointing that out in the discussion, of which he said there has
got to be a need for us to come together as a committee and
discuss this issue. And I think we should. And so that when we
put forward proposals, whether they are goals or standards,
that we talk specifically about just what it is that we are
going to do. And I hope that our panel can accomplish that
today.
Our solution on this side is Social Security 2100. This
would boost benefits and reaches solvency and does so by a
modest premium increase. Because, as President Roosevelt
intended, everybody in this country has skin in the game.
Everybody, every American, understands when they look at their
paycheck and they see FICA that it stands for Federal Insurance
Contribution Act. They understand that they take that money out
of their paycheck each and every week, biweek or month, so that
they can have an earned benefit by way of an insurance policy
that not only serves as a retirement vehicle but, unlike any
other policy or program in this great government of ours,
provides a disability benefit, provides spousal and dependent
coverage as well.
The story of Social Security is replete, and we heard many
good stories, including yesterday of the Republican leader's
mother and what she had to endure in raising that great family
that she did. And so we are pleased again today that we are
going to be able to focus on this.
And I just wanted to take a look at a couple of things,
including I would ask to submit for the record Americans Make
Hard Choices on Social Security, a Survey with Tradeoff
Analysis.
And this was done by the National Academy of Social
Insurance.
[The National Academy of Social Insurance information
follows:]
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Chairman LARSON. And I submit that for the record because,
you know, what we find is that people have come to favor Social
Security in this manner. A majority of the public does not mind
paying for Social Security because it provides security and
stability to millions of retired, disabled individuals,
children and widows, spouses of deceased workers. And,
according to the National Academy of Social Insurance, it is
favored by Republicans by 72 percent, by independents by 81 and
by Democrats by 87 percent. A majority of the public favors a
proposal to increase Social Security benefits, including the
Committee to Preserve Social Security and Medicare, Republicans
by 66 percent, Independents by 70 percent and Democrats by 84
percent.
Americans are willing to pay a little bit more to
strengthen Social Security. With the Social Security 2100 Act,
the average working American would only have to pay about 50
cents a week to make sure that Social Security is solvent
beyond 75 years, provides a 2 percent overall increase for
everyone, makes sure that no woman can retire into poverty or
no working person can, to make sure that we have a COLA that
actually reflects the real costs that the elderly incur, and to
make sure that there is a tax cut--a tax cut--for more than 12
million Americans who, because in 1983, the last time that we
did anything significant with the program of Social Security
was the last time that we altered this program in any
significant or meaningful way.
But by moving Social Security for the individual from being
taxed on $24,000 if you are an individual and $32,000 if you
are a married couple, by moving that to $50,000 and $100,000,
12 million Americans will receive an immediate tax cut. And so
we are here today again to talk about the need to expand the
benefits and what great benefits that Social Security provides.
And with that, I will recognize the Republican Leader, my
good friend, Tom Reed.
[The statement of Chairman Larson follows:]
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Mr. REED. Well, thank you, Mr. Chairman. And to the
witnesses, I welcome you. And I apologize for being tied up on
the Floor with that vote.
And, Mr. Chairman, I really do appreciate this second
hearing today on Social Security. As we indicated yesterday, I
am happy to join you on this issue that is so important to so
many Americans that face the issue of Social Security
insolvency in 2034. And this is an important topic and I am
glad to see that we are focusing on this topic as opposed to
some of those on the other side that are focused on the issue
of impeachment and other issues of the President.
Mr. Chairman, as I mentioned yesterday, and I shared with
you and to those in this chamber the story of my mother, a
widow raising 12 kids all by herself, who relied on Social
Security, a military retirement benefit and a life insurance
benefit, and recognizing those three legs of the stool, if you
would, that were able to keep our family intact and brought a
lot of security to our family in regards to knowing that we
would have a roof over our heads and food on the table.
And so we share the commitment to Social Security, I share
the commitment, and I know my colleagues on this dais share the
commitment to work with you and with our Democratic colleagues
to achieve reform in Social Security that is going to ensure
that Social Security is here, not only today, tomorrow, but for
generations to come.
And as I stated yesterday, the principles and the mission
that we start this conversation with are clear. And because of
their importance, I will state them again today. The mission of
the Republicans on this subcommittee is to secure Social
Security benefits without tax increases. The principles are
simple. They are known as LEAP, the 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
focused reforms.
One of our principles is very much at the heart of today's
hearing, protecting the most vulnerable people through focused
reforms. As we heard in the story of my mother, she was a
worker who held many jobs. And this is true for many people.
Just yesterday, I heard from a constituent who retired but
still wanted to work part time after claiming his earned Social
Security benefits. However, this constituent had not reached
his full retirement age. So that means those benefits are
reduced if he earns too much. That is wrong and it does not
reward work or help seniors who are trying to transition into
retirement.
As Mr. Biggs and others will testify, widows who have
worked and earned their own Social Security benefits face a
potentially devastating reduction in the household Social
Security benefits upon the death of a spouse. That also does
not reward work and it puts widows who have worked their entire
lives at risk of poverty.
And Chairman Larson's plan, Former Chairman Johnson's plan,
as well as many others, seek to make sure that the long career
low-wage worker has a minimum benefit that actually means
something, because that is the right thing to do after years of
hard work.
These are just a few of the examples I hope we can talk
about today. As all of our witnesses will share in their
stories, Social Security does not always work well for workers
and their families today. That is because much of the program
we know today as Social Security was designed in the late
1930s. A lot has changed since then.
Today, more women are working, people start their families
later and, in some cases, they are living longer. It is time to
take a hard look, figure out what is working, what is not and
then come together to find bipartisan solutions to address
these problems.
But as we heard yesterday from Joseph, efforts to address
Social Security solvency strictly by raising taxes would be
devastating to our job creators. Jobs are the cornerstone of
Social Security. You earn Social Security benefits as a result
of work. We must never hurt job creation and wage growth as we
move forward. To do so would harm Social Security, not help it.
Thanks to tax cuts, workers have more money in their
pockets, companies are investing in their businesses and, as a
result, our economy is booming. We should recognize this
success and build off of it, to ensure those workers are
rewarded for their hard work, not penalized.
Mr. Chairman, we are in earnest in our desire to work with
you and look forward to hearing from our witnesses today. I
know we all came here to solve big problems and to help people,
Democrats and Republicans. I cannot think of a more important
problem to solve than Social Security solvency. This will
guarantee Americans can count on the program now and for
generations to come. And, as I have learned firsthand, being
raised by that single mom, Betty, my greatest idol and
inspiration, securing Social Security is a mission we must
achieve.
And with that, I yield back.
[The Reed opening statement follows:]
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Chairman LARSON. I thank the distinguished Republican
Leader and we look forward to working with you. We look forward
to seeing the specifics of your plan. Because I think without a
plan or without a concept to demonstrate for witnesses and what
people can actually take a look at, it is hard to talk about
platitudes, however lofty and idyllic they are.
And our panelists here today are here to discuss from their
perspective the importance of benefits and what they mean to
the public and we have, God bless them, they arrived early.
And, I as I explained, we had a vote. But we will be hearing
from Max Richtman, from Bette Marafino, from Abigail Zapote,
from Mr. Andrew Biggs, from Joan Entmacher and finally from
Donna Butts. Each of your statements will be made as part of
the record in its entirety. I would ask that you summarize your
testimony in five minutes or less.
To help you with that time, there is a timing light on your
table. When you have one minute left, the light will switch
from green to yellow, and then finally to red when the five
minutes is up.
We will begin with Mr. Richtman.
STATEMENT OF MAX RICHTMAN, PRESIDENT AND CEO,
NATIONAL COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE
Mr. RICHTMAN. Chairman Larson, Ranking Member Reed, members
of this subcommittee, on behalf of the millions of members and
supporters of the National Committee to Preserve Social
Security and Medicare, thank you for holding this hearing and
for inviting me to testify.
Since the program's creation 84 years ago, Social Security
has been and is an enormously successful program that is
essential to the retirement security of a vast majority of
Americans. While Social Security benefits are modest, averaging
about $17,000 a year, Social Security is still the single
largest source of income for retired Americans.
To ensure the program's continued success, it is vitally
important that long-term solvency be restored and that the
Social Security benefits be improved to meet the needs of all
Americans. We believe that it is essential that proposals to
strengthen the adequacy of Social Security benefits for all
effectively address the economic inequality disproportionately
faced by women and communities of color as well.
For example, women have been and continue to be subjected
to persistent gender wage discrimination that leads to smaller
Social Security benefits. Women often give up jobs and
paychecks to care for children and elderly parents, also
leading to reductions in Social Security benefits. Women are
less likely to have a pension and, even if they do have a
pension, it is usually less than what men receive. And finally,
women live longer than men and consequently are more likely to
outlive their retirement savings.
Likewise, Social Security is extremely important to
communities of color because African and Latino Americans tend
to have lower earnings and less pension coverage than white
Americans. For instance, almost 50 percent of African American
beneficiaries, 52 percent of Latino beneficiaries, rely on
Social Security for 90 percent or more of their income in
retirement. This compares to about 40 percent of all races who
depend on Social Security for 90 percent or more of their
income.
These facts led the National Committee's decision to
prioritize retirement equity, supporting legislation that
rights the economic wrongs threatening millions of Americans.
To that end, we support several proposals that would improve
benefits which are explained at length in my written testimony
and I would just like to highlight a couple of our
recommendations.
First, we support improving Social Security's survivor
benefits, to treat one-earner and two-earner couples more
fairly and reduce the likelihood that survivors fall into
poverty.
We believe that Social Security credits should be given to
caregivers of children and elderly family members.
We also propose that future cost of living adjustments be
based on a fully developed consumer price index for the elderly
or CPI-E. CPI-E would more accurately measure the rising prices
of goods and services paid by seniors than current urban and
clerical worker index, that is what is currently used.
Finally, seniors age 85 and older, and women in particular,
are more likely to be financially vulnerable even with Social
Security. To ensure additional security, we support a benefit,
we call it a bump-up for all beneficiaries 20 years after
retirement.
To make these important proposals affordable and extend the
program's long-term solvency the National Committee supports
strengthening the financing of Social Security by first
eliminating the cap on Social Security payroll contributions so
that rich and poor and those in between pay at the same rate,
and by gradually increasing the Social Security contribution
rate.
Mr. Chairman, Members of the Subcommittee, three decades of
stagnant middle class wages and eroding retirement benefits
threaten to put millions of retirees on a path to hardship.
Women and communities of color are on a more troubling path
because they face this retirement crisis and also bear the
burden of years of economic inequality. The proposals I have
discussed in my oral and written testimony will address Social
Security inequality for women, communities of color and help
ensure a livable retirement for more Americans.
And we applaud you, Mr. Chairman, as well as Congressman
DeFazio and Senators Blumenthal, Sanders, Casey, Van Hollen and
others who have introduced many of these proposals as
legislation. Finally, I urge the Ways and Means Committee to
approve this legislation and ensure that all Americans can
depend on Social Security to protect them against the growing
need for economic security and retirement, disability and
survivorship. Thank you very much.
[The prepared statement of Mr. Richtman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Mr. Richtman.
And now it is my great pleasure to recognize someone from
my home state of Connecticut, a retired English professor and
teacher who represents the Alliance for Americans, Bette
Marafino.
STATEMENT OF BETTE MARAFINO, PRESIDENT, CONNECTICUT ALLIANCE OF
RETIRED AMERICANS
Ms. MARAFINO. Thank you, Congressman Larson and Ranking
Member Reed and members of the Social Security Subcommittee. I
am from West Hartford, Connecticut, and I am Bette Marafino,
president of the Connecticut Alliance for Retired Americans, a
grassroots advocacy organization of more than 57,000 people. We
are an affiliate of the Alliance for Retired Americans, which
has 4.4 million members and is fighting to protect the health
and economic security of all older Americans.
As part of our outreach, members of the alliance speak with
and interview retirees all across the country. Health concerns
and income security are common to most seniors. And many tell
us their only income is their monthly Social Security check.
Retirees fear what would happen to them if Social Security were
cut and worry about the skyrocketing cost of prescription
drugs.
I would like to share a couple of stories we gathered that
illustrate the challenges facing older Americans. David, from
New Haven, Connecticut says, my wife and I retired and we both
have several health problems. We live on 900 a month from
Social Security. We are worried that if we lose Social Security
through a benefit cut or have Medicare coverage reduced, we
would be unable to pay for our health care.
Mary of Essex, Connecticut says, I have crippling
rheumatoid arthritis and get an infusion every six weeks. The
cost for this procedure is $4,200. Without this treatment, I
would be confined to a wheelchair. I worry that if Medicare is
reduced, I would not be able to afford this treatment. I do not
have a pension and receive 700 a month from Social Security.
Every month, I take money out of my small bank account to
supplement my Social Security check. I am 78 and hope I don't
live a long life because I do not want to rely on my relatives
to help me.
On a personal note, my maternal grandmother, mother of six
and a widow at age 50, often said how glad she was to receive
my grandfather's Social Security check. Because that check, she
said, kept her out of the poorhouse. At the time, Connecticut
had poorhouses in many communities for those with little money.
There was one not very far from my grandmother's house. And
every week, she baked her babka and brought it to the poorhouse
and sometimes I would visit with her. And the poorhouse was a
very, very basic, bleak place. And I am concerned that if we
have cuts to Social Security, we might wind up back in
poorhouses. Fortunately, my grandmother was able to live in her
modest home until she passed away at the age of 102.
For decades, economists described the U.S. retirement
system as a three-legged stool with a pension, Social Security
and personal savings all supporting retirement. The pension leg
of the stool has been gradually disappearing from the American
workplaces, eroding retirement security for most Americans and
making Social Security even more important.
In addition, Americans pay the highest price for
prescription drugs, putting extreme pressure on seniors'
finances and making the need to increase Social Security
benefits urgent. A recent KFF poll found that 23 percent of
seniors find it difficult to afford their prescriptions and 29
percent of all adults did not take their drugs as prescribed
because of costs.
To ensure all Americans have the dignified retirement they
have earned through their lifetime of service, the Alliance for
Retired Americans urges Congress to expand Social Security,
increase earned benefits for current and future beneficiaries
and expand the CPI-E. We must also help widows and widowers. We
urge Congress to ensure that surviving spouses receive 75
percent of the total household's Social Security benefits they
received prior to their spouse's death.
This change is particularly important to women. The poverty
rate for women over 65 is almost twice that of men over 65. And
more than half of elderly women in poverty are widows.
To fund benefit increases and extend the solvency of the
trust fund, the alliance supports lifting the payroll cap and
requiring millionaires and billionaires to pay their fair share
into the trust fund.
I see my time is up, but may I just please close with one
quick paragraph, Congressman?
Chairman LARSON. You may.
Ms. MARAFINO. I would like to close by reminding everyone
that Social Security also protects people with disabilities and
the surviving children of deceased parents. The president of
the Arizona Alliance for Retired Americans' father died when he
was a child and credits Social Security with keeping him, his
mother and his siblings out of poverty.
On behalf of the Alliance for Retired Americans, thank you.
[The prepared statement of Ms. Marafino follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. Thank you, Bette.
Ms. Zapote, you are recognized. You may proceed.
STATEMENT OF ABIGAIL ZAPOTE, EXECUTIVE DIRECTOR, LATINOS FOR A
SECURE RETIREMENT
Ms. ZAPOTE. Thank you, Chairman Larson and Ranking Member
Reed, for inviting me to speak today, as well as the rest of
the committee. It truly is an honor to be here.
My name is Abigail Zapote and I am the executive director
of the Latinos for a Secure Retirement coalition. Our
organizations represent the more than 58 million Latinos in the
United States, nearly one out of five, and the fastest growing
and youngest ethnic group in the United States. By 2060, our
community is poised to become 30 percent of the American
workforce, making it imperative to have a Social Security
insurance program that is robust for future generations. Our
strong cultural values of la familia, of caring for your
parents, spouses and children, are exemplified by Social
Security.
I sit before you today on behalf of all Latinos to take a
stand in protecting Social Security. First and foremost by
saying no to proposals that would cut benefits, no to proposals
calling for privatization, and no to proposals that would raise
the full benefit age, as we know this results in lower benefits
no matter at what age benefits are claimed. Secondly, to speak
to the importance of four benefit enhancements that would
improve Social Security and exponentially increase quality of
life for beneficiaries.
In 2018, the average annual benefit for seniors was roughly
17,000. These benefits are far from generous. Yet, for Latinos,
these benefits are lower and even more critical to their
livelihood. The average benefit for Latino men was roughly
15,000 and only 12,000 for Latina women. Without Social
Security, the elderly poverty Latino rate would increase from
roughly one out of six to one out of two.
To put this into better context, I want to share a story
from a Latina senior in California who faces issues that
benefit enhancements could remedy. Mrs. Gonzalez knows it could
be worse. She has diabetes but uses Medicare to help cover her
health cost. She struggles to make ends meet but takes care of
her nutrition needs through the use of supplemental security
income. But for some of her friends and other Latino seniors,
daily life is even more difficult.
I have friends gone homeless. Their living expenses just
got too high and have not found family members they can move in
with. I am trying to find help for them but it is not easy.
This is the reality that many Latino seniors face every
day, relying on Social Security and community programs as
lifelines to seeing a doctor, in finding housing and affording
food. We can begin to resolve these issues by increasing
funding to SSA's operating budget to better serve America's
growing Social Security beneficiary population.
Due to the increase in health care, housing and living
expenses for seniors, adopting a consumer price index for the
elderly is a top priority. This would ensure that the CPI-E
reflects expenditures of the elderly and produce a higher COLA
that truly keeps pace with inflation.
In 2017, nearly one of five Latino workers were paid
poverty wages that left them below the federal poverty line,
even when they worked full time year round. Additionally,
Latinos tend to work for employers who do not offer retirement
accounts, which leaves them disproportionately unprepared for
retirement. To protect long-service, low-wage workers and
ensure benefit adequacy for all Americans, a special minimum
benefit should be enacted to pay 25 percent above the poverty
line for those who have worked 30 years and retire at the
normal retirement age. Chairman Larson, I want to thank you for
including both of these benefit enhancements in the Social
Security 2100 Bill.
We also urge a proposal that would provide benefits for
students of deceased or disabled parents up to the age of 22.
Latinos are more likely than the rest of the population to have
a deceased or disabled parent due to employment in physically
demanding jobs. College costs have skyrocketed and higher
education has become even more essential to long-term labor
market success. This change would help address college
affordability for a disproportionately low-income group.
Strong family values in the Latino community means workers
also become primary caretakers for elderly relatives and
children. We urge a proposal that would provide caregivers a
Social Security earnings credit when they take unpaid time off
from their work to provide care. The credit would be added to
earnings to calculate future Social Security benefits for the
caregiver's retirement.
Lastly, the vast majority of working Americans will
contribute to Social Security with every paycheck they earn.
This includes even the lowest paid workers, those who earn the
federal minimum wage of $7.25. We propose a gradual increase to
the tax cap to again cover a larger percent of earnings and
provide peace of mind to workers of all ages that they, too,
can count on this program.
Social Security is clearly a bedrock to our nation's
retirement security and an indispensable lifeline for our
nation's seniors, disabled, widows and orphans. Any attempts at
reforming Social Security must recognize the importance of
these benefit enhancements to secure Social Security for the
future.
Thank you for having me here. And I will be happy to answer
any questions you may have.
[The prepared statement of Ms. Zapote follows:]
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Chairman LARSON. Thank you, Ms. Zapote.
And now Mr. Biggs, you are recognized. Please proceed.
STATEMENT OF ANDREW BIGGS, RESIDENT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE
Mr. BIGGS. Thank you, Chairman Larson, Ranking Member Reed,
and Members of the Committee.
The title of my testimony today is the Need for Evidence-
Based Policy on Social Security. Evidence-based policy means
that we reform Social Security based upon the facts, not upon
our fears. While those facts may call for increasing benefits
for certain vulnerable populations, the data clearly do not
indicate the need for broad-based, across-the-board benefit
increases.
According to Gallup, 80 percent of current retirees say
they have enough money not just to get by but to, quote, live
comfortably. While a majority of Americans told a Vanguard
survey, they fear the country as a whole faces a retirement
crisis, only 4 percent of current retirees described their own
financial situation in those terms.
In a 2019 multi-country survey by ING, only 9 percent of
U.S. retirees described their incomes as severely inadequate,
versus 33 percent in France and Germany, who spend roughly
twice as much as the U.S. on their Social Security programs.
Today, the median U.S. retiree has a disposable income on par
with Switzerland and higher than in Sweden, Denmark or the
Netherlands. How can this be?
The answer is that Americans save much more for retirement
than people in other countries. Of 70 countries for which the
OECD gathered data, only five had higher levels of retirement
plan assets than the United States. Moreover, U.S. retirement
savings today are more than six times higher than when
traditional defined benefit pensions were at their peak. More
Americans participate in 401(k)s than ever had a traditional
pension. And with 401(k)s, both employers and employees
contribute, boosting savings versus traditional pensions where
only employers contributed.
The result is that U.S. retirement incomes are growing
rapidly. From 1990 to 2012, the median retiree household's
income grew by 32 percent above inflation, versus only 11
percent income growth for near retirees aged 50 to 59. The
faster growth in incomes is evident for both low and high-
income retirees.
Mr. Chairman, you mentioned the recent Federal Reserve
study and the decline in household wealth since the great
recession, which is mostly attributable to the popping of the
housing bubble. In essence, the disappearance of wealth that
never really existed. But those same Fed data show the incomes
for median new retirees rose by 11 percent since the recession,
while incomes for working-age households fell. Recent Census
Bureau research show that typical retirees today have income
equal to roughly 95 percent of their pre-retirement earnings,
far above the 70 to 75 percent replacement rate that financial
planners recommend.
The poverty rate among retirees has fallen dramatically in
the past two decades and is below that for working-age
households. This is good news for Social Security and we should
embrace it rather than denying it.
While Social Security is significantly underfunded, there
isn't a need to raise benefits for middle and upper-income
households. Indeed, research concludes that middle and upper-
income households would reduce their personal savings in
response to higher expected Social Security benefits. You can
see this around the world, where countries with more generous
Social Security programs had lower levels of retirement
savings. Lower saving would reduce long-term economic growth,
as would the higher taxes needed to fund an across-the-board
benefit increase. Economists differ on how much economic growth
would decline, but there is no real debate on the direction of
the change. Higher taxes and lower saving means slower economic
growth.
But we can fill the gaps in Social Security's safety net,
which is not nearly as effective as it could be. I have
personally argued for a true blanket guarantee against poverty
in old age, something neither current law Social Security nor
any of the current proposed benefit expansions would provide.
But absent such a guarantee, we can target benefit increases to
vulnerable groups, such as widows, low-wage earners and
divorced individuals. Such targeted benefit increases have been
included in reform proposals for members of both parties and
could form the basis of bipartisan compromise. And bipartisan
compromise is what the nation needs.
Social Security reforms have never been passed on a
partisan basis and attempts to do so today will almost surely
fail. And failure is not a loss for a political party so much
as a loss for the American people, who have seen Social
Security's unfunded liabilities grow by the trillions while
Congress has failed to act.
This is the committee with the greatest responsibility for
Social Security's future. Members have an obligation to know
the program and to know the data on Americans' retirement
savings and retirement incomes. But more importantly, they have
an obligation to reach out to other members in a spirit of
compromise to find ways to secure and to improve Social
Security for future generations.
Mr. Chairman, your suggestion of off-the-record
discussions, question-and-answer periods where people can reach
out to each other is precisely what is needed to move a
bipartisan Social Security reform bill forward. Thank you very
much.
[The prepared statement of Mr. Biggs follows:]
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Chairman LARSON. Thank you, Mr. Biggs.
And we are now fortunate to be joined by Joan Entmacher.
And you are now recognized and please proceed.
STATEMENT OF JOAN ENTMACHER, SENIOR FELLOW, NATIONAL ACADEMY OF
SOCIAL INSURANCE
Ms. ENTMACHER. Thank you. Chairman Larson, Ranking Member
Reed, and Members of the Subcommittee, I really appreciate the
opportunity to testify today on ways to enhance Social Security
benefits. I am a member of the National Academy of Social
Insurance and a senior fellow. But the views I express today
are my own. Although my testimony focuses on women, all of the
options I describe would be available on a gender-neutral basis
and would benefit others, including communities of color who
have been disadvantaged in the workplace and in other ways.
Social Security's basic benefit structure has many features
that are especially important to women but its benefits are
modest. The average benefit for women 65 and older is less than
$14,000 a year, about 80 percent of men's. Even so, women are
more reliant than men on income from Social Security, making
improvements especially important for them.
I will briefly describe ways that Social Security could
address four challenges to women's retirement security. Other
witnesses have described them and my testimony does focus on
retirement benefits.
First, the gender wage gap. Benefits for women and others
with low earnings could be improved by adjusting the regular
benefit formula so that all workers, especially low and middle-
income workers, receive a boost in their benefits. And/or
reforming the special minimum benefit so that workers with
substantial work histories but low earnings do not retire into
poverty.
However, women with very short work histories might not be
brought out of poverty even by a reformed special minimum
benefit, although they would be helped. So Congress should also
consider improving the Supplemental Security Income program.
The second challenge is unpaid caregiving as others have
mentioned. Social Security could provide credit for caregiving
work by counting some years of caregiving as years of coverage
in a reformed special minimum benefit. It could also give
earning credits for caregiving years in the regular benefit
formula.
The third challenge are changed family structures. Today,
most married women are in the paid labor force and families
rely much more on the earnings of both spouses. Also, an
increasing share of women, especially black women, will be
ineligible for benefits as a spouse or surviving spouse because
they never married or divorced without a marriage that lasted
10 years. So a package of reforms should include reforms to
benefits that women earn both as workers and as spouses and
surviving spouses.
Currently, a surviving spouse can receive a benefit worth
up to 100 percent of the deceased spouse's benefit or her own
benefit, whichever is higher. This helps many widows but many
are still in poverty and the design does not work well for
today's dual-earner couples. A new alternative benefit would
provide a surviving spouse a benefit equal to 75 percent of the
sum of the spouses' combined worker benefits up to a certain
limit. That would increase benefits for the surviving spouse in
low and moderate-income couples and allow a surviving spouse to
benefit from the contributions that both have made to Social
Security.
And the fourth challenge is longer life expectancy. Women,
including women of color, face more years in retirement than
men with fewer resources. Very few people know that both
African American women and Latinas have longer life
expectancies than white, non-Hispanic men. Their retirement
security could be improved by adopting a cost of living
adjustment like the CPI-E that accurately reflects the spending
patterns of seniors and/or by providing a boost to benefits for
long-term beneficiaries with lower benefits.
In conclusion, although women today are working more and
earning more than women in past generations, substantial
equalities still remain. And the more troubling fact is that we
are not making great progress in reducing those inequalities.
The gender wage gap has remained stagnant for the last 10
years. The participation of mothers in the workforce peaked
several years ago. And that is because women still face
incredible challenges combining work and family, the lack of
family leave, the lack of schedules that work and the lack of
affordable, good-quality child care. Women need enhanced Social
Security benefits.
And fortunately, as the bill introduced by Chairman Larson
has proved, it is possible both to enhance benefits and to make
Social Security secure for future generations. And I really
look forward to the work of this committee on both of those
important issues. Thank you.
[The prepared statement of Ms. Entmacher follows:]
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Chairman LARSON. Thank you very much, Ms. Entmacher.
And now we recognize Ms. Donna Butts. Please proceed and
comment.
STATEMENT OF DONNA BUTTS, EXECUTIVE DIRECTOR, GENERATIONS
UNITED
Ms. BUTTS. Thank you, Chairman Larson, Ranking Member Reed,
and Members of the Subcommittee for the opportunity to testify
about one of the most important intergenerational family
support and social insurance programs in America, Social
Security. For more than 80 years, Social Security has been the
premier example of a policy designed to secure and insure the
wellbeing of individuals and their families.
In addition to its well-known role in providing retirement
security, the program provides many essential protections for
people of all ages, including disability insurance and
survivor's insurance. For many, it makes the difference between
putting food on the table and deciding whether grandma or
junior eats tonight.
The impact of Social Security programs can be seen in every
community in the country. Accepting his Oscar recently,
director Spike Lee thanked his grandmother, a Spelman graduate
and daughter of a slave, who saved 50 years of Social Security
checks and used those to put her Spikey-Pooh through college.
Another Social Security success is Congressman and former
Speaker of the House Paul Ryan, who saved his Social Security
survivor benefits that he began to get after his father died
suddenly. Mr. Ryan used his Social Security savings to help pay
for his own higher education.
And, as with Mr. Reed, Social Security has a personal
connection to my family as well. My husband's father died when
he was seven years old. And while he does not remember which
Social Security check paid his family's household bills, he
does remember taking advantage of the student benefit before it
was eliminated in 1981, allowing him and his sister to be the
first in their family to earn college degrees. That extra
little bit made it possible for him to graduate and begin his
career with a degree, without incurring the overwhelming
student debt so many students and their families are harnessed
with today. Imagine the impact reinstating the student benefit
could have, helping students access trade schools and four-year
colleges and universities today.
Social Security is a social insurance program that almost
all workers pay into and, in return, qualify for and receive
benefits. Social Security, whose framework was never meant to
be set in stone, has been and should continue to be tweaked and
strengthened, not dismantled or weakened. Social Security
embodies an intergenerational compact. It lifts more children
out of poverty than any other federal program. A 2016 study by
the Center for Global Policy Solutions found the child poverty
rate would increase by nearly 20 percentage points without
Social Security benefits, both direct and indirect, from 25.5
percent currently to almost 43 percent.
Recently, Social Security has become even more important in
light of the increase in the number of grandparents and
relatives that are being called on to raise grandchildren,
nieces and nephews because of the opioid epidemic. Twenty-six
percent of grandparents who are raising grandchildren have a
disability and even with Social Security, 19 percent live below
the poverty line. Researchers from Penn State estimated that
without Social Security, it would be closer to 59 percent.
Grandparents and other relatives who step up and form a
protective grandfamily around our country's children save our
country more than $4 billion a year by keeping children out of
the child welfare system. They deserve our respect and the
critical financial support Social Security provides.
On behalf of Generations United, I make the following
recommendations for strengthening Social Security and the
support it provides our country's families, children and older
adults. Reinstate the student benefit for survivors up to age
22 for youth who remain enrolled in college, to help today's
students become the educated workforce our country's economy
needs and lessen the overwhelming burden of student debt. Two,
expand the eligibility for children being raised by
grandparents and other relatives. Three, provide Social
Security credits to caregivers. Four, protect and strengthen
the program.
Generations United supports a strong and solvent Social
Security program that meets its obligations for current and
future beneficiaries. As the dialogue about how to achieve
long-term solvency for Social Security continues, policymakers
must consider how reforms will affect vulnerable children,
people with disabilities, spouses of deceased workers,
retirees, and families as a whole. This is a time to protect,
strengthen and expand this critically important family
protection program.
Robert Ball said Social Security is built on awareness that
no one can go it alone. True generational equity means acting
on that awareness so that those who come after us and who stand
on our shoulders can see a little further and do a little
better in their turn.
Now it is our turn. There is no better example of a policy
solution that supports intergenerational solidarity than Social
Security. It is designed to value and weave generations,
reinforcing our interdependence so that each is stronger while
helping our families and communities thrive.
Thank you again for the opportunity to speak on behalf of
the vital income protections Social Security ensures for all
generations.
[The prepared statement of Ms. Butts follows:]
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Chairman LARSON. Thank you, Ms. Butts. In fact, I thank all
the panelists for your testimony and for your patience and
perseverance. Intergeneration solidarity, I like that. It's a
unique term.
So now our questioning will begin of our panelists. And I'd
like to start with Bette Marafino from my home state of
Connecticut. And, Ms. Marafino, you talk to seniors all over
the state of Connecticut. Do you think that the current
benefits that they receive are sufficient and is getting the
job done for them?
Ms. MARAFINO. No.
Chairman LARSON. Could you expand on that?
Ms. MARAFINO. Yeah, in a word.
Chairman LARSON. I do not think it was clear enough. Could
you expand?
Ms. MARAFINO. Yeah, I can. Last year, we did a health care
study and we went and interviewed seniors and talked about
their health care. Now, many of the seniors were living in low-
income housing. And, to a person, they would say, I am scared
to death that I am going to lose this. And what I have now is,
you know, below the poverty line. And so they have a hard time.
And what I notice, we very often go to community centers
and senior centers where there is a meeting for seniors and
there is free lunch. Those lunches are filled with people and
they usually come an hour ahead of time to make sure they have
a seat. And many tell us, this is our only meal of the day,
decent meal of the day.
And I live in Connecticut in an area that is a pretty
prosperous area. But there are lots of people who need this.
And so to enhance their Social Security would be a boon to
them.
Chairman LARSON. Thank you. I wanted to submit for the
record also, and I appreciated what Mr. Biggs had to say about
evidence-based information. And I think that is vitally
important to the decisions we have to make, especially I wanted
to submit these Fed notes on the wealthless recovery, asset
ownership and the uneven recovery from the great recession, and
the disappearing employer pensions contributing to rising
wealth inequality, both submitted by the fed.
[Rep. Larson--FEDS Notes follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LARSON. And with that, I wanted to ask Mr.
Richtman, in your vast experience as the head of the Committee
to Preserve and Protect Social Security and Medicare, there is
a sense, and I have nothing but respect for Mr. Biggs, but
there is a sense that it is quite a rosy picture out there for
seniors, they are doing quite well.
I have to say, doing as many public forums as I have across
the country, that has not been my experience. But I like to
call on the experts. And would you agree with that position?
Mr. RICHTMAN. I respect Mr. Biggs. I have heard him
testify. But it would be good if he would go out to some town
hall meetings and talk to some people and hear what people are
actually saying. And he is right, facts are important. He does
not have the only facts in his testimony.
It is my understanding that the Pew Research Center, highly
respected, has said that today's real average wage has lower
purchasing power, lower purchasing power, than it did 40 years
ago. The Kaiser Family Foundation found that over the next few
decades, middle class wages are projected to be flat. Those are
facts. They are as reputable as any I have seen.
And the other thing I wanted to comment on Mr. Bigg's
testimony, all of those people who thought that they were doing
so well and had a comfortable life, I wonder how they would
react if the law or the bill that Congressman Johnson
introduced last year were passed and their Social Security
benefits were cut by one third? Would they still be so
optimistic? I do not think so.
Chairman LARSON. And that is the other important thing that
we have acknowledged right along, is that to do nothing, to do
nothing, means that in 2034 that individuals will receive, with
Congress doing nothing as it has since 1983, that individuals
will receive a 21 percent, minimally, cut to their benefits.
How would your constituents act to that, Ms. Zapote?
Ms. ZAPOTE. I think when it comes to the Latino community,
there is a vast disparity on how much we have saved in private
accounts for Social Security. Right now, Latinos have $10,000
saved while our white counterparts have about 60,000 saved into
retirement accounts. Which means that having a robust Social
Security system, it needs to be there for our community.
Especially knowing that Latinos right now, the median age is
28, my age. And so it is almost that much more important for
younger Latinos as well to have this program. Because to quote
a Generation Progress study, which is the millennial arm of the
Center for American Progress, millennials right now spend more
money on monthly student loan repayment than they do groceries.
To put that into, you know, to really put that into context for
everybody here, our generation does not have that expendable
income or there are a lot of barriers to access retirement
accounts. And so that is why that is more important to make
sure that we have Social Security in the future.
Chairman LARSON. Thank you so much. And let me recognize
the Republican Leader, Tom Reed.
Mr. REED. Well, thank you, Mr. Chairman, and thank you to
the witnesses today and I truly appreciate your testimony and
your recommendations. And one area that I think I want to focus
just a little bit on are to get to focused reforms for benefit
opportunities to improve.
And Mr. Biggs, you talked about it in your testimony. And
obviously, being raised by a single mom, passed when my dad was
48 and she passed when she was 72, what are we looking at in
regards to widows in your testimony, as to how? What are you
recommending that benefit adjustment be?
Mr. BIGGS. Well, the survivors and disability benefits
provided by Social Security are a true insurance function. They
pay benefits to the people who need them the most at the time
they need them the most. And that is something which is real
value added from Social Security.
Widows can face a significant cut in their household
benefits when they become a widow, when their spouse, and it is
usually the husband, passes away. Depending upon sort of the
relative earnings between the spouses, their total household
benefit could be cut from one third to one half. Now, your cost
of living falls a little bit when you become widowed, you are
not feeding two people. But your cost of living does not fall
by one third to one half. So that is pushing down their
standard of living, at a time when they do not have the option
of going back into the workforce, they might have spent down
some of their savings because they are older.
So various proposals looked at how do you protect widows.
One that has been around for quite some time is to pay them 75
percent of the household's previous total benefit. I know Ms.
Entmacher has other ideas which are a little bit more nuanced
on that. But again, the focus is get Social Security's money
paid to the people who need it at the time they need it, of
targeting these dollars more effectively. That way, we get more
of a social insurance protection without having to throw money
at everyone.
Mr. REED. I appreciate that. And the mission of that
benefit, what is the goal of that benefit?
Mr. BIGGS. Of the widows' benefit? Well, it is essentially
to replace lost income when the higher-earning spouse passes
away.
Mr. REED. Keep the family out of poverty.
Mr. BIGGS. Sure. It is not explicitly poverty, but that is
the idea. To keep them from falling into indigence, I guess,
would be the word.
Mr. REED. And I totally agree with that. And I think the
heart of that promise of Social Security needs to be respected
as we go through this conversation and as we go through this
conversation and through the successful reform process, I know
our chairman is going to lead to the finish line.
And as we have this honest conversation, I do want to focus
a little bit. Because I see in all of the testimony only one
area, and it is Ms. Entmacher that talks about the length of
life and the issue of longevity and how people are living
longer. You are the only one who touched on that issue in your
testimony, between all the testimony I read here today.
And so you have heard numerous times on our side of the
aisle or different folks that attack this issue, and some
Democratic members, to their credit, have looked at the honest
issue of longevity. People are living longer, generally,
overall.
So I am intrigued by your assumption in your testimony, Ms.
Entmacher, and also in Chairman Larson's bill. There seems to
be--because there is no adjustment in the age of retirement,
the retirement age qualification. It is at 67, stays at 67. So
the question for me is, what is the magic of 67 and why are you
not advocating for a lower retirement age if you are trying to
expand retirement benefits?
Ms. ENTMACHER. Well, in effect, the proposals that are made
in the Social Security 2100 Bill do provide some compensation
for the benefit cut that is occurring because of that increase
in the retirement age. That increase in the retirement age is a
cut in benefits across the board that affects everybody.
Mr. REED. So the 67?
Ms. ENTMACHER. The 67, yeah.
Mr. REED. So the 1983 reform?
Ms. ENTMACHER. Cut benefits.
Mr. REED. You are trying to compensate for that cut of
benefits that occurred in 1983?
Ms. ENTMACHER. That is part of it, absolutely.
Mr. REED. So what is the magic of 67?
Ms. ENTMACHER. In 1983, I think people looked at the
numbers and tried to come up with some changes that would, you
know, bring Social Security back into balance. And part of the
way they did it were these benefit cuts. There was a delay in
the COLA and there was also an increase in the retirement age.
Mr. REED. Just so I get your testimony correct and you have
spent a lot of time here. So 67 is an arbitrary number? It is
not based on any type of analysis as to longevity at retirement
age? We shouldn't be looking at it from an evidence or a
background in data? We should just pick an arbitrary date or an
arbitrary age?
Ms. ENTMACHER. Well, I think actually you do need to look
at data. And part of the data shows that the increase in
longevity has mostly happened for people of higher
socioeconomic status, particularly among men. It is interesting
that, among women, even if they are lower income, they seem to
live an extra long time. Which is why women of color face this
problem of outliving their retirement income.
Mr. REED. I understand the argument, I understand the
position. I am just wondering if there is any evidence or data
for the retirement age of 67. And that is why I am getting
confused. If people are living longer and people qualify----
Ms. ENTMACHER. Some people are living longer.
Mr. REED [continuing]. Some people living longer, and we
can have that debate back and forth. But some people. So even
some people living longer. The retirement age debate itself, I
think, is something we really need to have a conversation
about, an honest conversation about. What are we trying to
insure for that retirement period? If you have a retirement
period, when does that period begin and when is it likely to
end?
And I guess that is the question I am intrigued by as we go
through this testimony and as we go forward, Mr. Chairman, as
to exactly getting this correct in regards to what is the best
age for these benefits to kick in and the amount of risk we are
trying to cover with the Social Security retirement insurance
benefit.
Chairman LARSON. We look forward to your plan to do that.
Because we have put forward a plan. Mr. Johnson put forward a
plan, as was recognized. So we like to--and I think that is a
fair question. So let's turn the spotlight up on this and let's
see what it actually is.
Mr. REED. Right.
Chairman LARSON. And let's see why people came to the
conclusion that it was 62 and what that means. And what that
means to struggling families all across this country. I think
you are right in requesting that and that is what these
hearings are all about. We want to cast as bright a light as we
possibly can on what the current plight of American citizens is
under the existing Social Security and how we remedy that.
Mr. Pascrell is recognized.
Mr. PASCRELL. Thank you, Mr. Chairman. I would like to look
at that data as well on longevity. I was not here and you were
not here in 1983, in the Congress, that is.
Mr. REED. He might have been.
Mr. PASCRELL. But at that time, I do remember reading about
how they got to the--how they raised it two years and what the
data was. And as the longevity charts, which would be different
today than it would be then, I am certainly not convinced that
raising the age is the area that we need to focus on. Because
we do live in a different culture, somewhat, in terms of how
long people worked at that time and how much they needed to
save at that particular time. And that is the thing that I am
looking at.
Because even Mr. Biggs would have to agree that, in lower
income groups, we are making a few more dollars. And just
looking at the economy as a whole, they spend it, they spend
it. And I think that is very, very, very critical to what we
are talking about as far as the total economy is concerned,
besides zeroing in with this.
Mr. Richtman, thank you for your work over the years and
the pain-in-the-neck questions you got from us. You did very
well.
I want to ask your opinion before I get into a few comments
I have to make. Can you describe how the windfall elimination
provision negatively impacts our first responders, that is
police and fire, and do you support repealing the windfall
elimination provision within the Social Security?
Mr. RICHTMAN. We have supported repealing the WEP, as it's
called, the windfall elimination provision.
Mr. PASCRELL. Can you just give us a brief, brief, what is
it and what does it do?
Mr. RICHTMAN. The windfall elimination provision, it is
commonly called the WEP----
Mr. PASCRELL. Right.
Mr. RICHTMAN [continuing]. Reduces Social Security benefits
for public service workers, that is often firefighters, as you
pointed out----
Mr. PASCRELL. Right.
Mr. RICHTMAN [continuing]. Teachers, nurses, and others,
who have a work history that is partially covered by Social
Security and partially not covered. When they, and this is
really the heart of why we support eliminating that penalty,
contribute all their quarters to Social Security, they are
penalized because they have this other benefit. And that is
wrong.
I probably have testified 10 times before this committee
and this subcommittee on this issue since the early 1990s and I
think that almost every member of Congress hears about it at
town hall meetings and talks about the need to repeal that
penalty and it has not happened.
If I could just make one other comment on the whole
discussion about the fact that people are living longer, that
is an important fact-based thing to consider. But are they
working longer? Are they able to work longer? Are there jobs
for them? That is a piece of the puzzle that I think has to be
taken into account.
Mr. PASCRELL. Thank you. A very important point.
Chairman LARSON. Will the gentleman yield for just a
second? I just wanted to, because I did this yesterday as well,
to say that we are intending, and both Mr. Neal and Mr. Brady
have collaborated in the past on a bill and that we will be
having a committee hearing on that very issue and I just wanted
for the record to make that comment.
Mr. PASCRELL. So for older Americans, Mr. Chairman, just
over four in five Social Security beneficiaries are 62 or over,
older. The program provides 90 percent or more of the income
for almost one in three seniors. Those benefits may be modest
but they are vital to those who rely on them. We cannot be shy
about working together to strengthen the program.
The Social Security Trust Fund is only fully funded until
2034. So revenue increases are needed to shore up the fund for
the future. And let's be clear, real wages have about the same
purchasing power it did 40 years ago. Think about that. They
are stagnant. Last Congress's tax scam did not help. And hoping
for wage growth is not the answer to the problem. Thankfully,
many of today's panelists understand that, discuss specific
proposals to protect the fund's future.
I support the chairman's Social Security 2100 Act because
it protects the promise we made to workers in a way that
ensures no benefit cuts need to be made for at least the next
75 years. Not bad. Also it expands benefits for current and
future beneficiaries. No idea should be off the table but we
must be honest about its potential impact to beneficiaries and
we cannot retreat on the promises that we have made.
And I yield back. Thank you, Mr. Chairman.
Chairman LARSON. Right on time, Mr. Pascrell.
Mr. PASCRELL. That is unusual.
Chairman LARSON. Mr. Estes is recognized.
Mr. ESTES. Thank you, Mr. Chairman. Thank you to all the
panelists for being here today and talking with us about this
very important issue.
You know, following the effort over the last couple of
years that the Ways and Means Committee and Congress has made
to help get our economy going, to help get people more jobs,
help increase wages, now we have got to turn to how do we
protect retirement for those folks that are working. And that
includes making sure that we have protected and preserved
Social Security for current as well as future retirees.
You know, with Social Security, our population changes from
the Baby Boomers. And, you know, as we have different shifts in
population over time, we cannot overlook the impact, the
financial impact, on this very vital program.
As mentioned earlier, if we do nothing, Social Security
retirement fund is going to be out of funds by 2034, which will
result in roughly a 21 percent cut in benefits and that is not
something we want to see happen. So we need to act now to
address this.
You know, yesterday I mentioned in a hearing, and I will
mention it again because I think it is important, that
Republicans and Democrats both agree there is an issue and we
need to work together to resolve this. However, we want to make
sure that the solution does not involve some devastating tax
increases that result in slowing the economy back down, which
actually then puts a negative spin on the support for Social
Security. Instead, we want to make sure that those changes help
reward work and reward some of that growth in the economy, as
well as the increase in benefits that tie along with those
higher wages during your career.
You know, I am the only former state treasurer serving in
Congress and I know firsthand some of these retirement issues.
Just because we had a problem in Kansas with our public
employee retirement system. And that is one of the issues we
had to address, is how do we make sure that the benefits were
there for folks as they retired? And it took some leadership
and some hard action and luckily the Legislature and the
Governor at that time focused on that. And we need to do the
same thing in Congress at the federal level for everybody in
the nation.
You know, there is a lot, we talked a lot about retirement
today. Yesterday I mentioned the story of my aunt and uncle. My
uncle passed away and my aunt had to raise my three cousins and
Social Security was one of those benefits that helped through
that. So it is more than just a retirement system. It was
beneficial for my sister-in-law, who had a series of strokes
before she turned 65. And again, that insurance portion helped
with that. And so we want to make sure that Social Security is
there to protect and provide that support for folks.
Mr. Biggs, we have talked a lot about, you know, how we
need to act now to address some of these issues with Social
Security. You know, folks say that the longer we wait, the
harder it is going to be. Can you talk a little bit about why
that is important and what is critical about that?
Mr. BIGGS. Sure. And the reason acting now makes solving
the problem easier is it spreads the problem over a larger
number of people, over more generations, so that they absorb a
smaller change each, and it gives people more time to respond.
If you think about the increase in the normal retirement
age, it was legislated in 1983. It started increasing in 2000.
It will not reach 67, I think, until 2022. That gives people a
lot of time to adjust. As a result, people on average are
retiring about two years later. They are leaving the workforce
about two years later today than they did back in 1990. They
are responding to it. But if we wait to the end and we have to
do it all at once, you do not have any chance to respond.
Somebody has already retired, you know, it is hard for them to
go back to work. You cannot increase your savings.
The sooner we act--we should have acted 20 years ago, 30
years ago when we were first being warned about this. And the
reason we do not is politics. People need to act so that
everybody else has time to respond. If you do it, the problem
works out. If you leave it to the end, it is very, very hard.
Mr. ESTES. Thank you. I think there are lots of solutions
that we talk about that Republicans and Democrats bring
together in terms of different ideas of how to solve them. But
I would agree that that issue is what we need to focus on.
Let's get to work on it now, let's focus on it, making it as
easy as possible to make that transition. And that the sooner
we act, the better it is going to be in terms of making sure
that people that have worked all their lives to accrue this
benefit and earn this benefit, that they get that benefit that
they have earned.
So thank you for your time and, Mr. Chairman, I yield back.
Chairman LARSON. Thank you, Mr. Estes. Ms. Sanchez.
Ms. SANCHEZ. Thank you, Chairman Larson, for holding this
important hearing and I want to thank all of our witnesses for
your testimony and how we can protect and expand Social
Security. Frequently, when I am back home and I speak to groups
of seniors, I talk about how Social Security is really the
bedrock of the American retirement system, that ensures after a
lifetime of hard work and paying into a system, seniors can
retire with some degree of financial security and some dignity.
But sadly, more than ever, we see millions of retirees who
depend mostly or entirely on their Social Security benefits.
And although those benefits are great and they lift millions of
Americans out of poverty, they are very modest and they have
not kept pace with the cost of everything that continues to go
up. So as daily necessities such as housing, prescription
drugs, you know, on and on, become more expensive, seniors are
having to make tougher and tougher choices between, gee, you
know, do I put food on the table or do I pay for my much-needed
medication. And we hear horror stories of people taking half
doses, et cetera, because they just cannot stretch their
retirement income to cover it all.
Social Security, as a woman, is particularly important to
women, who tend to make less than their male counterparts over
their lifetime of work, and they also tend to outlive their
spouses. And as a Latina, and I am sure probably Ms. Zapote
would agree with me, because not only are we paid less than our
male counterparts and we live longer, but I think I read a
statistic, I think it is like 70 percent of Latina women work
for employers who do not even provide any kind of retirement
plan for them. So even if they chose to participate in
something, they are working for employers that do not even
offer that to them. So how are they expected then to really
save the adequate amount for their retirement?
I want to start with Ms. Entmacher. In your testimony, you
noted that a one-person elderly household needs about 79
percent of the income of a two-person household to maintain the
same standard of living. Can you talk about the financial
impact that losing a spouse has on the surviving spouse and how
widows--widowers and widows fare in retirement?
Ms. ENTMACHER. Yes, well, first of all, let me point out
that, as Mr. Biggs said, and I agree with this, the household
Social Security income declines sharply at widowhood from
between 50 percent for a couple that had equal earnings, to
about a third for couples where there was just one earner. And
that is a loss.
Another important factor is that not only does--I mean,
some women, as we have heard from members of this panel, are
widowed early. But in general, that occurs later in life.
Assets have already been spent down. And particularly, if there
has been a period of illness for the spouse who dies, expenses
go up. And there are medical expenses, caregiving expenses, so
that often exhausts whatever savings the family may have had.
And then a widow faces years alone. And again, that can
increase living costs because you do not have a spouse who can
help care for you when you fall ill or need help being driven
somewhere. You are on your own. And so both immediately upon
widowhood, there is an economic shock, and in the years that
follow. And many widows continue to live for a substantial
period of time, relying on these benefits.
And in my testimony, there is a chart that shows that both
widowed men and widowed women have much higher rates of poverty
than married couples do. For widowed men, it is a little less
than twice as high as the poverty rate for married men. For
widowed women, it is about three times the poverty rate. So
this is a real issue for both men and women.
And I am pleased to see that the reform that both Mr. Biggs
and I have suggested would improve benefits for spouses and
working couples for both men and women if they survive.
Ms. SANCHEZ. Yeah, I have a bill that is called the
Protecting Our Widow and Widowers in Retirement Act, the POWWR
Act, which would create an alternative benefit of 75 percent of
the combined benefits that the couple received when they were
both alive. Do you think that that would be something that
could address this weakened financial situation for widows and
widowers?
Ms. ENTMACHER. Yes, I do.
Ms. SANCHEZ. Okay, great. Thank you so much. I yield back
to the chairman.
Chairman LARSON. Thank you, Congresswoman Sanchez. Mr.
Arrington is recognized.
Mr. ARRINGTON. Thank you, Mr. Chairman. And I appreciate
your sincere desire to fix this broken system and this
insolvent program that has been important to so many for so
many years. And I think we can all agree we have to do
something and we need to do it now. And, as I have said before,
I think you and the Ranking Member have as good a shot as any
to lead us to that bipartisan solution.
And I think we have agreed, at least I have heard a lot of
agreement, that whatever solution we do come up with for at
least this generation of reforms to Social Security must be
bipartisan or nothing will get done. I think that that is in
general agreement up here. So I am going to put our witnesses
to the test here and ask that they work to help us reach that
bipartisan solution for the American people.
So it is probably pretty evident to most in the room and
those listening from wherever that Mr. Biggs probably leans
more Republican, conservative. He has referenced Sam Johnson's
reform legislation. So there is a Republican solution on the
table. And then I am going to also be a little presumptuous but
if I was a betting man, I would bet that the five other
witnesses probably lean more Democrat and probably more
favorable to Mr. Larson's, Chairman Larson's legislative reform
initiative with respect to Social Security. Going out on a limb
there, okay, but I am a Texas riverboat gambler, so I am going
to do it.
Let's start on this end with Ms. Butts. I don't want to
know what you think about the wonderful piece of legislation
that Chairman Larson has introduced. I want you to tell me what
you think about Sam Johnson's legislation and what in those
provisions would be acceptable to you? Because we are going to
have to take some of one side and some of another side. So work
to help me get to that bipartisan solution. Help us get there
today.
And I am going to work my way down the list, all the way to
you, Mr. Richtman, so be thinking about it.
Chairman LARSON. Would the gentleman yield for a second?
Mr. ARRINGTON. Yes, sir.
Chairman LARSON. It would be great if we had that
legislation in front of them so they could see it.
Mr. ARRINGTON. I should not assume they have read the
Republican version of how we are going to fix this problem.
Chairman LARSON. Please proceed. I just wanted to----
Mr. ARRINGTON. [continuing] Well, let me say, of the
recommendations you have heard from more along this side of the
aisle's sort of philosophical view of government's role, et
cetera, et cetera, some of the things you have heard from Mr.
Biggs, maybe you have read something about Sam Johnson's
legislation. What would be acceptable to you with respect to
those initiatives that have been proposed?
And, Mr. Biggs, I am going to ask you what would you accept
if you were trying to work a deal to save this great program
and be a great example to the rest of this country that we can
actually work together to solve a problem.
So, Ms. Butts, what would you do? What would you accept?
Ms. BUTTS. Well, thank you, Mr. Arrington. I wanted to say
first that Generations United, we are very proud of the fact
that we work across the aisle and with both parties and all
people to bring together a solution. And that to us, one of the
most important frames as we are talking about this is that we
must have that bipartisan solution.
But the framework that works for all of us is family. Once
we get outside of Washington, we do not talk about whether
grandma gets Social Security or a child gets survivors or an
educational investment. What we talk about the fact is, it is
not a fight but it is a family.
Mr. ARRINGTON. And I do not mean to interrupt. But give me
one provision, because that is beautiful and I agree with you.
But I have one minute now and I probably will not get through
the rest of them. So can you give me one provision you would
accept from the sort of Republican side of the table here? And
just think about it. And we will come back to you.
Ms. Entmacher, is there one provision you would accept?
Ms. ENTMACHER. Well, I think Mr. Biggs's idea of focusing
improvements on the people who need them is an important one.
Mr. ARRINGTON. I think that is a reasonable----
Ms. ENTMACHER. And that that is where the improvements that
we make should be targeted. That's a priority.
Mr. ARRINGTON. [continuing] Right.
Ms. ENTMACHER. But I think that perhaps the difference----
Mr. ARRINGTON. No, no, no buts. No, I am kidding, I am
kidding. No, I appreciate that.
Ms. ENTMACHER. [continuing] No, please, I would like to
finish.
Mr. ARRINGTON. Please do.
Ms. ENTMACHER. But middle-income people really cannot
afford benefit cuts. And the problem with relying on benefit
cuts, particularly if we protect those at or in retirement as
we need to, is that they fall most heavily on younger
generations. And those are the millennials who are struggling
with stagnant wages and with high student loan burdens. They
are the people who entered the labor market when----
Mr. ARRINGTON. Thank you. Mr. Chairman, my time has now
expired. Are you sure you are not a senator, Ms. Entmacher?
Ms. ENTMACHER [continuing]. Quite sure, and relieved that I
am not.
Mr. ARRINGTON. No, listen, I appreciate your comments. I
would love to hear the comments from everybody else, including
you, Mr. Biggs. But my time has expired. I yield back, Mr.
Chairman.
Chairman LARSON. Well, we hope there will be ample
opportunity in the future to present side by each these
proposals. And I think that will give both witnesses and
members an opportunity to thoroughly go back and forth. And I
think that is an important breakthrough and sign. Because, you
know, there have not been hearings and there have not been
specific proposals in front of people. Now there are, and that
is testimony to both sides and to the witnesses.
And with that, let me recognize Mr. Higgins.
Mr. HIGGINS. Thank you, Mr. Chairman. Thank you for your
leadership on this initiative again and I appreciate the
ranking member's willingness to work in a cooperative manner
toward the goal of preserving what we all want to preserve.
First of all, you know, you have 62 million people
receiving Social Security benefits each year; 41 million of
them, it is a majority of their annual income. For 20 million,
it is 90 percent or more of their annual income.
Based on the facts, you know, Social Security benefits are
spent. So for every dollar that you provide for Social Security
benefits, you get $1.50 in economic output. That is a return on
investment of 50 percent, which seems to be a pretty good deal
when compared with other government spending.
And also, this is not a giveaway. This is the Federal
Insurance Contributions Act. People pay during their working
years this retirement account from which they should expect
reasonably to be able to take advantage of it.
The question is, what can we do to make it better? What can
we do to make it stronger? What can we do to help beneficiaries
help in the growth of the economy?
So most Social Security beneficiaries also have Medicare
Part D. And they have that withheld from their Social Security,
which is about $135 a month, a little bit more. That is $1,626
each year. And if you reduce that amount from the average
Social Security beneficiary's annual income that is $17,532,
you are left with $15,906 after Medicare. In 48 states, poverty
level is $12,140. So you are $3,700 each year away from
poverty, or $313 a month, or $78 per week.
Mr. Richtman, you have been at this for a long time. Mr.
Larson has a proposal on the table which is designed to
increase benefits and increase the stability long term of
Social Security. Your thoughts about that and/or other ways
that this committee can be looking at, toward the goal of
achieving the multiple objectives, all of which are good for
the individuals but, in the aggregate, it is good for the
country as well, because added benefits adds to the growth of
the country. And if these people, these individuals, 62 million
people did not have Social Security, what would they do? They
would be dependent on local, state and Federal Governmental
programs.
So this was, as originally conceived in 1935, a good
investment, visionary, and it is today. And I think all of us
are committed to trying to make this stronger moving forward.
So, Mr. Richtman.
Mr. RICHTMAN. Well, the organization I represent, the
National Committee to Preserve Social Security and Medicare,
has endorsed the chairman's bill. There are many pieces of it
that we favor. I have referred to some of them in my written
testimony and my oral testimony. But just let me, and I only
have a minute here, comment on a couple things that are really
important in light of the fact that there have been stagnant
wages for so long and the fact that the cost of living
adjustment has been inadequate, mainly because it was poorly
designed in the first place. And Chairman Larson's bill would
fix that by adding some money to the minimum benefit, I think
it is about $70 a month. May not be a lot to people in this
room but to many seniors it is a lot. And Ranking Member Reed,
I think, would agree with that.
And the COLA, you know, the COLA is so important. I am sure
when you have your town hall meetings, everybody in the fall is
waiting to hear what is the COLA going to be. In 2010, 2011 and
2016, the COLA was zero. And seniors do not understand how
people in Washington have determined that their cost of living
did not go up in all those years. And that, as you know, the
amount of the COLA is also important because it is computed
like interest in a savings account. If you lose two years or
three years, you are going to lose for many years to come.
Now, on a personal note. I worked on the COLA issue for a
long time. You are right, Congressman, I have been at this for
a while. I was staff director of the Senate Aging Committee.
And in 1987 and 1988, we tried to push through what the
congressman has proposed, CPI-E, a way to measure inflation so
that it will reflect what seniors are buying and put the proper
weight on that market basket of goods and services that seniors
rely on, like prescriptions, medicine, and less weight on the
fact that they are not wage earners.
The reason there was a zero COLA in those years is the
price of gasoline plummeted. So much weight was put on that,
that it brought down the COLA to zero in three years. And the
fact is, seniors are not using gasoline as much, they are not
driving to work and back every day, they are not dropping kids
off at school and picking them up. So that is just one example
of how the formula is flawed.
So in 1987, when I started working on this, we tried to
change it. The best we could do is get what is called an
experimental CPI-E. The Bureau of Labor Statistics keeps track
of this new formula. It has not been implemented. It would cost
more money to have it fully analyzed and implemented.
So I started working on this 32 years ago. It still is an
experiment. And so I am not sure I have 32 years left to have
it be implemented but we will see about that.
Chairman LARSON. Mr. Ferguson is recognized.
Mr. FERGUSON. Thank you, Mr. Chairman, and thank each of
you for coming today. You know, as I listened to testimony, it
was very compelling. And not just your testimony but probably
more importantly the testimony of our constituents back home,
the testimony of my parents every weekend when I go home. So I
think it is good to have these discussions and, as I have said
many times, I think having good, solid, honest and transparent
discussions and allowing the members of this committee to work
in a very bipartisan way to float ideas out there, to challenge
one another's opinions in a very respectful way is really
important.
You know, one of the things that I have heard several
times, Mr. Richtman, I think you have alluded to it, is the
flat wage growth. And so I could not be more excited about
where we are in the economy right now, with the fastest wage
growth, particularly with those that are at the lowest
quartile, the lowest earners and lowest incomes, and the medium
income. That is where we are seeing the most rapid wage growth.
So I am excited about that. Because I do think that rising
wages is very, very important. I am excited about the fact that
we now have more people in the workforce than we have ever had
and we have the lowest unemployment across all socioeconomic
groups. That is a great thing because it is a part of solving
this equation. Not the only part, but it is a part of it.
So another thing that I would like to touch on, a couple of
topics very quickly, Mr. Biggs, you know, I want to go back to
the conversation about seniors working. One of the things that
I have found, and I saw this a lot with my patients in my
dental practice, more of them started out with a few people
working past retirement age. Then I saw a number of people
continue to work past retirement age, not because they had to
but because they wanted to. Can you speak a little bit about
the dignity of work past retirement age and the importance of
that?
Mr. BIGGS. It is something that has become increasingly
important. You know, in some cases, people are forced to work
longer.
Mr. FERGUSON. Sure.
Mr. BIGGS. I understand that after the recession, if your
401(k) dropped. But the interesting thing there was, following
the recession, labor force participation fell in almost the
entire segment of the age groups of the population, worst labor
market in decades, except for retirees and near retirees. And
they found jobs, they did not just find Walmart greeter jobs,
they found decent paying jobs, they rebuilt their savings. And
that is a pattern that has been increasing since the mid-1980s.
We are retiring a little bit longer. Simply delaying retirement
for a year can have a dramatic impact on your retirement
income. You get a higher Social Security benefit, you have more
savings, fewer years you have to finance.
Mr. FERGUSON. Okay, thank you for that. Another question,
you talk about the cost of living. And one of the things, I
would just be interested in a very quick thought from you about
do you think the COLA should be adjusted for urban areas versus
rural areas?
Mr. RICHTMAN. You know, I don't have enough background to
answer that. I think it should be adjusted from clerical and
urban wage earners, which is what it is based on now. I don't
know if that is a good measure.
Mr. FERGUSON. Just I look at what the difference is a lot
of times between urban America and rural America. And I think
before we just go across the board on this, we really ought to
look at, you know, what those different areas mean and what
living--what the living standards are there and that kind of
thing.
Mr. RICHTMAN. I agree.
Mr. FERGUSON. I think before we jump onto that, I would
just like for us to recognize that there may be a difference.
Mr. RICHTMAN. I agree with you. The whole purpose of a
COLA, at least for Social Security, is so beneficiaries do not
fall behind because of inflation. And if the formula is flawed,
it is not going to work.
Mr. FERGUSON. Okay, real quickly. This is the lightning
round. I am going to take Mr. Arrington's idea here very
quickly. What is one thing out of Sam Johnson's plan that you
could accept?
Mr. RICHTMAN. I do not even need much time. The only thing
I would say is when you bet on the composition of this panel,
you are probably right. So I, you know, he would reduce the
COLA----
Mr. FERGUSON. No, no. What is the one thing that you could
accept? Nothing?
Mr. RICHTMAN. [continuing]. Nothing.
Ms. MARAFINO. I do not really know the plan but, from what
I am hearing, probably nothing.
Chairman LARSON. I mean, I have to say, it is kind of
unfair to these panelists. They do not have the plan. It has
never been submitted. And you guys are asking them to answer a
plan that has never been submitted?
Mr. FERGUSON. Fair enough. I guess maybe I should ask that
question a different way. But again, I want to make sure that
we are getting as many ideas----
Chairman LARSON. But I will say this to the gentleman. I am
happy to bring Sam's plan out here. Let's lay it side by each
and let's go through it. I mean, that is what a hearing process
should all be about.
Mr. RICHTMAN. Congressman, if I--we did some analysis. I do
not have it in front of me but I would be happy to send it to
you. And also, I want to thank you for cosponsoring the BOLD
Act that deals with Alzheimer's disease and would go a long way
to helping an awful lot of people.
Mr. FERGUSON. [continuing] Okay, good. I yield back. I see
my time has expired.
Chairman LARSON. Mr. Schneider is recognized.
Mr. SCHNEIDER. Thank you. And, again, Mr. Chairman, ranking
member, thank you for having this hearing. The witnesses, thank
you for your time here, making the time and preparation and
also staying for all of us to ask our questions.
We have touched on a lot of things. Yesterday, I emphasized
that we do need to take the political posturing out, as my
colleagues have said, and work together to try to come up with
the solutions.
I talked yesterday, others had mentioned, it was mentioned
earlier, about why raising the retirement age would be unjust
and unfair to people who are working backbreaking work, who are
the lowest quintile, lowest 20 percent of the income score,
have a life expectancy to 76, to raise their retirement age to
70 is a burden in and of itself but would reduce their expected
retirement by fully a third is something that we should not do.
But what I would like to talk to today, and it is something
I hear a lot about when I am home, and we have talked about it,
is the windfall elimination provision that we touched on
earlier. It is an arbitrary and regressive policy that most
often hurts the workers serving in our communities. In
particular, our teachers, government employees, first
responders.
And one particular story is a teacher, a person in my
district, Sarah Stevens of Hainesville. She is 76 years old,
she teaches English at our local community college, College of
Lake County. And she worked many years as the director of
communications for the American Concrete and Pavement
Association. And she decided to take on a new career at the age
of 60, went back, got her masters in written communications,
graduated top in her class and then decided to go into teaching
as a way to give back to the local community.
What she did not realize at that time was the decision,
because of the WEP, would cost her one-third of her hard-earned
Social Security income from her previous life in corporate
America as a communications director. As she says, I could have
become almost anything and kept my benefits but I decided to
become a teacher instead and that cost me. Now, at 76, she
wants to retire but cannot, for fear of losing that Social
Security.
That is only one example. I hear about this all the time
almost everywhere I go. So, Mr. Richtman, I will turn to you.
Could you discuss the windfall elimination provision and how it
affects low-income and public service employees and what
options you think would best reform the problem.
Mr. RICHTMAN. The best option would be to eliminate the
penalty entirely. And I mentioned earlier that we have been
lobbying on that for a long time. And it is many public service
employees, first responders, firefighters, teachers, nurses in
many states that are penalized up to, I think the example I
have seen recently is between $450 and $500 a month because
they have spent part of their work history in Social Security-
covered employment and the other part in working for an entity
that did not cover Social Security.
So Congressman, I have been to your district with you and I
have heard some of those same stories. The thing that really
bothers people, even maybe as much as having a reduction, is
they do not even know about it----
Mr. SCHNEIDER. Right.
Mr. RICHTMAN [continuing]. Until they are about 60 years
old and they get a statement from Social Security. Because now,
you know, we do not get all those statements. You get one at 60
and it tells you what your benefit is going to be. And in very
tiny print at the bottom, it tells you how you might be
impacted by the WEP, by the windfall elimination provision. And
they are shocked. Here they are, considering retiring in a
couple of years, claiming Social Security, and they find out
their benefits are going to be cut by $400 or $500. They did
not know anything about it. That is wrong.
Mr. SCHNEIDER. And I will put an exclamation point on that.
Saturday, I was in a part of my district that is an
economically struggling community. The schools have a hard time
keeping teachers because they cannot afford to pay as much.
They last year ran the entire year with three open spots.
And then I think back to my kids' experience at their
school, my experience going through school, and some of my best
teachers. Dr. Mackie, my physics teacher, was someone who had a
career in industry and had a passion for science and brought
that passion to what we did. And it was in many ways because of
Mr. Mackie, Dr. Mackie, that I went on to be an engineer in
college. You know, changed the course of my life. We need more
stories like that. But by having these penalties on these
teachers, we are putting a burden on them.
I want to create opportunities for people to make. We are
working longer, we are living longer. Let's make that second
career a career that strengthens our communities and I think
this would be a way to fix that.
With that, I went over my time. Thank you. I yield back.
Chairman LARSON. I would thank the gentleman, and I would
mention again, and you were out of the room when we said this
before, and this came up at our last hearing as well, that we
do intend, both Ranking Member Brady and Chairman Neal have
introduced legislation, in fact introduced legislation in the
past that actually did get a hearing. It was never taken up.
But it is our intent to have a hearing on that issue, both WEP
and GPO, as well. And to fully discuss and air that and then
hopefully take that to a markup.
And with that, we will recognize Mr. Boyle.
Mr. BOYLE. Thank you, Mr. Chairman. This is a great
continuation of what we started yesterday. As I mentioned
yesterday, I believe that Social Security is the single most
successful domestic program of the 20th century and it is our
solemn obligation to preserve it and continue it and strengthen
it for the 21st century. When we consider the relatively high
percentage of seniors who lived in poverty up until the 1930s
and now to consider that aged cohort has an 80 percent
reduction in poverty from before Social Security existed, that
is a remarkable achievement.
I was sharing with my colleague, Mr. Larson, privately, I
think, a week ago that, in addition to being a member of
congress for the Commonwealth of Pennsylvania, I also have the
important job as helping my dad as a retiree with his taxes and
some of his finances. And I mentioned that my dad is one of
those half of all Social Security beneficiaries for whom Social
Security makes up the majority of his retirement income. Paid
into Social Security, working over 50 years, mostly in blue-
collar and very physically taxing jobs, and now is earning the
benefit that he worked for and paid into. It is not merely a,
quote, unquote, entitlement; it is an earned benefit.
So I am so glad that we have a proposal here in front of us
to strengthen this, to get us beyond 2034 and, indeed, even to
the dawn of the 22nd century. I also appreciate the spirit of
what Mr. Arrington, my friend from Texas, mentioned, trying to
look at constructive ways that we can work together to try to
save this system. I would certainly welcome any other proposal
that is sound, that adds up, that could be forwarded. Because
any time that you offer an idea to attempt to extend Social
Security beyond 2034, it is going to be open to political hits.
The easiest thing to do is to do nothing. But, as Chairman
Larson pointed out, doing nothing means you are, de facto, in
favor of 25 percent or at least 20 percent plus cuts come 2034.
And those cuts would continue as we get later on into the
century.
So with that, I do want to address to the panel and would
open up to anyone who wants to comment on it, because one of
the questions that has come up previously is this notion that
life expectancy is increasing, which clearly was the case for
the bulk of the 20th century. I believe we have just had now a
few straight years in which, unfortunately, life expectancy has
actually declined in the United States.
So I was wondering if any of you could actually add facts
to the preconceived notion as it relates to life expectancy,
number one. And number two, if you could specifically control
for income. Because my understanding is, having pored over the
statistics, there is a pretty massive difference when we are
talking about a wealthier cohort, particularly those in the
upper 20 percent of household income, versus everyone else as
it relates to life expectancy.
Ms. Butts. If I could, you are very right that just
recently, new information has come out that shows that for the
first time the life expectancy rate in this country is
declining. And it is specifically because of opioids and
substance abuse, the fact that people are becoming addicted and
they are dying. It is also because of suicide. And we know that
social isolation is huge among older adults as well as young
people, because we have segregated people and segregated people
by age. And there is also the issue of obesity, that we have
not really kept our health up in the ways that we could. So we
are in danger if we don't correct some of those things in the
life expectancy continuing to decrease.
There has, historically, been an increase. And the issue
there is what we do with those years, the quality of life, the
opportunities that people have because of age discrimination,
because of opportunity, because of expectations that we have in
older age. So those are some things that we need to consider.
Mr. BOYLE. Did you want to mention something?
Mr. BIGGS. There was a study, I am thinking 2014, from
analysts at the Congressional Budget Office, which found that
an individual in the top fifth in terms of income would live
around six years past retirement longer than somebody who is
the bottom fifth. For myself, this has made me rethink
something like raising the retirement age, in the sense of you
are essentially blaming low-income people for a problem they
did not cause, they are not the ones living longer. At the same
time though, it means that some of the proposals to increase
benefits, including COLAs, including the general benefit
increases you are looking at, would flow more to higher-income
people, not because they are getting necessarily bigger dollar
increases but because they are going to collect them for
longer.
Mr. BOYLE. I see that I am out of time. But I will just
briefly conclude and urge this committee on both sides of the
aisle to keep this in mind when the conversation of life
expectancy comes up, number one. And, number two, to draw the
distinction between those of us in white-collar jobs and those
who are in blue-collar jobs. Sixty-seven for someone who has
had a blue-collar job for 50, 60 years is a lot different, body
wise, than someone who has had a white-collar job. Thank you.
Chairman LARSON. The gentleman from South Carolina, Mr.
Rice, is recognized.
Mr. RICE. Thank you, Mr. Chairman. I just want to start by
saying that, you know, Social Security is a promise that the
government, our government made to our seniors. And everybody
in this room, Republican or Democrat, recognizes that we have
got to make that promise solid. But it is underfunded and it is
going to cost money to do that. So we have to look at ways that
we can accomplish that that will be the least painful among all
of the groups involved.
You know, when we are paying for people who are retired by
people who are working, we are placing the burden on them. And
I am looking at a self-employed individual, could be an artist,
could be a truck driver, could be whatever, making $60,000,
which is the median household income, his tax today for Social
Security and Medicare is $9,180 out of his $60,000. To make
Social Security solvent under Mr. Larson's plan, he would add
another 2.4 percent, which would add to that $9,180 of
liability another $1,440.
Chairman LARSON. Will the gentleman yield?
Mr. RICE. Sure.
Chairman LARSON. Do you mean his liability or do you mean
the employer's liability and his liability?
Mr. RICE. This is for a self-employed. If it was for the
employer----
Chairman LARSON. For self-employed? Okay, all right. Just
to be clear about that.
Mr. RICE. [continuing]. And if it was for somebody who was
a wage earner, he would pay half and his employer would pay
half.
Chairman LARSON. Because the 1 percent increase is paid by
both sides.
Mr. RICE. Please do not take all my time.
Chairman LARSON. No, go ahead. I will give you a lot of
latitude.
Mr. RICE. Let me be perfectly clear here. You are taking my
time?
Chairman LARSON. No, go ahead. No, please, go ahead.
Mr. RICE. The median household income is $60,000. A self-
employed guy, could be an artist, like my brother, for example,
could be a truck driver, could be an Uber driver, could be
anybody. Could be a painter, could be a carpenter, could be
anybody. If he makes $60,000 a year, his tax is $9,180 today.
And under Mr. Larson's plan, which adds 2.4 percent, that is
another $1,440.
Chairman LARSON. Over how many years?
Mr. RICE. You are taking all my time.
Chairman LARSON. I will give you extra time.
Mr. RICE. I have to----
Chairman LARSON. I just want to make sure that we, you
know, if we are going through the facts, we get them correct.
Mr. RICE [continuing]. When fully implemented, it will be
$1,440.
Chairman LARSON. When fully implemented. Thank you. Over 24
years.
Mr. RICE. Okay.
Chairman LARSON. It would be like 50 cents a week right
now, that is what the bill says.
Mr. RICE. $9,180 plus another $1,440 is my point. So it is
not small change. And this is for a guy who is making the
median household income.
And if we look, when I--when I started working in 1982, the
cap on Social Security, the most you had to pay tax on was
$32,400. Today, you add $100,000 to that, it is about $132,000.
So, you know, there has been a huge growth in this.
I want to ask you, I am sorry, I cannot see your name,
ma'am, in the red coat. Yes, ma'am, why was there a cap placed
on the wage base when they put Social Security in place? Why
did they do that?
Ms. ENTMACHER. They put a cap because of the concern that,
you know, they did not want benefits to be too high for high-
income people and that is why there was a cap. The reason that
it went up from 32,000 to about 132,000 today is that, over
that period of time, average wages increased. They increased
much more for people at the top but----
Mr. RICE. Thank you, ma'am. And, Mr. Biggs, tell me your
read on why there was a cap placed on Social Security wage
base?
Mr. BIGGS. The original what was called the Committee on
Economic Security, which was put together by President
Roosevelt, they proposed that people with earnings above the
cap would not even participate in Social Security, that there
would be no redistribution that way. The compromise in congress
was to have the capped payroll tax. And what he was trying to
do was--Roosevelt's quote was he wanted to differentiate Social
Security from what they then called relief but what we would
today call welfare.
Mr. RICE. And really, you know, the way this has been
pursued throughout the years was that you give us your money,
it is kind of like your account, and we will give it back to
you when you retire. But, in fact, if we remove the cap and
just withhold on people and do not really give them any return,
it is really not an insurance premium anymore.
Mr. BIGGS. People said, people should pay in and would get
the money back with some reasonable rate of interest. I am
guessing, FDR would think negative is not reasonable.
Mr. RICE. So what we are doing is we are actually
converting this from a premium to a tax.
Mr. BIGGS. Sure.
Mr. RICE. So, you know, it is--everybody understands that
we have got to make this promise solid. Nobody disputes that. I
want to say, too, like Paul Ryan, my father died when I was 16
years old. And his Social Security benefit sure as heck made it
easier. I will not say it made it possible but it made it
easier for me to get through college. And I absolutely
appreciate Social Security. And also, my mom is a school
teacher and she suffers from the prohibitions under the WEP. We
have got to do something about that.
But the question is how this thing gets paid for. And I
think if you are talking about adding another $1,400 to the
annual liability of a guy who is making 60 grand, on top of the
9,200 he is already paying, that is a substantial, substantial
cost. And if we totally eliminate the wage cap, we are
absolutely converting this thing from a premium, which is the
way that it has been sold to the American public for the last
80 or 90 years, to a tax.
And with that, Mr. Chairman, I yield back.
Chairman LARSON. I thank the gentleman. And I think,
because the gentleman has been outstanding in coming to these
hearings even when you are not on the subcommittee, and I
really do appreciate that because of your interest. But I do
think we also have to make sure that when we are talking about
this as well, it is not only how Roosevelt viewed this but just
as important how Eisenhower viewed this.
What Eisenhower thought was that he knew what these GIs
were going through, he knew what they were coming home to. He
knew that, in order for them to succeed in retirement, and
especially having come through along with Roosevelt the Great
Depression, that they had to come up with a formula. And so
they came up with a system that everybody is aware of. It is
called the Federal Insurance Contribution Act. Let me emphasize
insurance contribution. Now, the gentleman said the other day,
this is not insurance because you do not have a choice. You do
not have a choice over automobile insurance in your state,
either, or group insurance through people. But it is insurance.
And clearly, as several have pointed out, social insurance
because of the social inequity and vicissitudes of life that
happen in an entrepreneurial, capitalistic society. And it was
that balance that both, well, Roosevelt and Truman and the last
president to do anything about it, Ronald Reagan.
Let me again applaud, for the record, let me applaud
President Trump for both having the temerity and the guts, in
the heat of a presidential race, to stand up to 16 other
Republicans who were trying to get him to say that it was an
entitlement that needed to be cut. And he refused and said that
it was a benefit that people earned. He will earn my respect
forever for having done that.
And I do think that this is the kind of conversation that
we need to continue to have as we go forward.
You wanted to say something, Mr. Reed. Go ahead.
Mr. REED. Before we wrap up, Chairman, I just wanted to
sincerely thank you for the hearings yesterday and today. And
this is exactly the type of dialogue I think the American
people want us to have.
There is no secret, we have serious disagreements between
your side of the aisle and our side. But we can work through
those disagreements through this open dialogue. And you should
be applauded, rightfully, for scheduling these hearings,
dropping your bill. It comes with risks. That is, to our
colleague from Pennsylvania, Mr. Boyle, when he talks about
Social Security has always been described as that third rail of
politics. But thank you.
And thank you to Paul Ryan, our colleague on our side of
the aisle, that raised the issues of Social Security and
Medicare in a way so we can have, we need to have and will
have, because of your leadership, these conversations.
And over the last two days, I have seen broad agreement
here, to be perfectly honest with you. I see a firm commitment
from both sides of the aisle to solve this problem on a
bipartisan basis. I see a recognition on the Republican side
and the Democratic side that we are going to protect Social
Security together in order to honor that promise that has been
made. We saw together agreement in regards to targeted relief
for widows. We should celebrate that common ground. Because
once we achieve some common ground, then we can build off of
that for further successes.
So I just want to sincerely say, John, thank you.
Chairman LARSON. And thank you, Tom. Those are very
generous remarks.
But let me also say that the last time this Congress did
act, there was a Republican president. There was a Democratic
Speaker of the House. There was a Republican Senate Majority
Leader. That same situation exists today, although Tip had 266
members and I believe that Mitch has one less than Howard Baker
had currently. But having said that, I think it is that spirit.
And, you know, what? Frankly, this is what the American
people want. They are tired of the tastes-great-less-filling
arguments and everybody going to their respective corners and
nothing getting done. Because as we all acknowledge, and very
personal experiences, I think that is one of the great things
about a public hearing. I would have never known that about Tom
Rice.
But when you hear what people have actually gone through in
their lives, when we hear the story of your mom, I mean, these
are the things that move the American people.
Are they perfect? Are our solutions perfect? No, they never
quite are. But we understand at its core what we are trying to
achieve here. And I think, what a great moment to say we were
in Congress when it wasn't about Democrats or Republicans, it
was about moving the nation forward and uplifting all of its
people. I think that is what all of us are committed to do. And
thank you so much. I appreciate it.
And with that, this meeting is adjourned.
[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]
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