[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




 
                    WHAT WORKERS NEED TO KNOW ABOUT


                      SOCIAL SECURITY AS THEY PLAN


                          FOR THEIR RETIREMENT

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

                               HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 29, 2014

                               __________

                            Serial 113-SS11

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
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                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin                 JIM McDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington        XAVIER BECERRA, California
CHARLES W. BOUSTANY, Jr., Louisiana  LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
JIM GERLACH, Pennsylvania            JOHN B. LARSON, Connecticut
TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida               RON KIND, Wisconsin
ADRIAN SMITH, Nebraska               BILL PASCRELL, Jr., New Jersey
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas                 ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota              DANNY DAVIS, Illinois
KENNY MARCHANT, Texas                LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio

        Jennifer M. Safavian, Staff Director and General Counsel

                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON HUMAN RESOURCES

                      SAM JOHNSON, Texas, Chairman

PATRICK J. TIBERI, Ohio              XAVIER BECERRA, California
TIM GRIFFIN, Arkansas                LLOYD DOGGETT, Texas
JIM RENACCI, Ohio                    MIKE THOMPSON, California
AARON SCHOCK, Illinois               ALLYSON SCHWARTZ, Pennsylvania
MIKE KELLY, Pennsylvania
KEVIN BRADY, Texas






                            C O N T E N T S

                               __________
                                                                   Page

Advisory of July 29, 2014 announcing the hearing.................     2

                               WITNESSES

Charles P. Blahous III, Ph.D., Public Trustee, Social Security 
  and Medicare Boards of Trustees, Testimony.....................    14
Sylvester J. Schieber, Ph.D., Independent Consultant, Testimony..    24
C. Eugene Steuerle, Ph.D., Institute Fellow and Richard B. 
  Fischer Chair, Urban Institute, Testimony......................    53
Joan Entmacher, Vice President for Family Economic Security, 
  National Women's Law Center, Testimony.........................    65
Andrew G. Biggs, Ph.D., Resident Scholar, American Enterprise 
  Institute, Testimony...........................................    76
Laurence J. Kotlikoff, Ph.D., William Fairfield Warren Professor, 
  Boston University, Boston, Massachusetts, Testimony............    89

                        QUESTIONS FOR THE RECORD

Charles P. Blahous III, Ph.D.....................................   123
Sylvester J. Schieber, Ph.D......................................   129
C. Eugene Steuerle, Ph.D.........................................   132
Andrew G. Biggs, Ph.D............................................   135

                    PUBLIC SUBMISSION FOR THE RECORD


Financial Planning Association...................................   138



[[Page (1)]]





                    WHAT WORKERS NEED TO KNOW ABOUT



                      SOCIAL SECURITY AS THEY PLAN



                          FOR THEIR RETIREMENT

                              ----------                              


                         TUESDAY, JULY 29, 2014

             U.S. House of Representatives,
                       Committee on Ways and Means,
                            Subcommittee on Social Security
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 11:00 a.m., in 
Room B-318, Rayburn House Office Building, the Honorable Sam 
Johnson [Chairman of the Subcommittee] presiding.
    [The advisory of the hearing follows:]

[[Page 2]]

                             HEARING ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS


                 Chairman Johnson Announces Hearing on

                    What Workers Need to Know About

                      Social Security as They Plan

                          for Their Retirement

B-318 Rayburn House Office Building at 11:00 AM

Washington, July 22, 2014

    U.S. Congressman Sam Johnson (R-TX), Chairman of the House 
Committee on Ways and Means Subcommittee on Social Security announced 
today that the Subcommittee will hold an oversight hearing on what 
workers need to know about Social Security as they plan for their 
retirement. The hearing will take place on Tuesday, July 29, 2014 in B-
318 Rayburn House Office Building, beginning at 11:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    After paying payroll taxes throughout their lifetimes, workers and 
their families count on the essential income replacement Social 
Security provides should they retire, become disabled, or die. Nine out 
of ten seniors age 65 and older receive Social Security benefits, which 
are a major source of income for most seniors.
      
    Future retirees face far more questions than answers, as according 
to last year's Annual Report of the Social Security Board of Trustees, 
unless Congress acts, revenues will cover only 77 percent of scheduled 
benefits beginning in 2033. Worse, revenues will cover only 80 percent 
of disability benefits beginning in 2016. These findings will soon be 
updated in the 2014 Annual Report.
      
    Social Security is central to retirement security, yet Social 
Security's complex benefit formula is often confusing to workers and 
their spouses. Lifetime benefit amounts can vary based on income, 
marital status, and life expectancy, as well as when an individual 
claims benefits, making it difficult for individuals to know when they 
should retire and the benefit amount they will receive. In addition to 
general information on its website, the Social Security Administration 
makes available online and periodically mails the Social Security 
Statement with estimated future benefits and also provides a Retirement 
Estimator on its website to allow users to estimate their benefit 
amounts. Even with these tools, few workers know the amount of benefits 
they can expect to receive from Social Security.
      
    Further, as workers plan for their retirement security, they should 
also consider any employer pension they may receive, along with other 
assets they may accumulate, such as IRAs. Understanding the portion of 
retirement income Social Security represents is also important for 
policymakers as they weigh options to strengthen Social Security. It is 
an increasing challenge to comprehensively measure retirement income, 
since the amount of monthly income derived from retirement accounts, 
such as 401(k)s and IRAs, can vary widely and is often underreported.
      
    In announcing the hearing, Social Security Subcommittee Chairman 
Sam Johnson (R-TX) stated,``Hardworking Americans are increasingly 
facing real challenges in being able to achieve a secure retirement. 
Not only will Social Security be unable to pay full benefits in 2033 
unless Congress acts, but the

[[Page 3]]

rules are so complex that workers need help in figuring out their 
benefits. Americans want, need, and deserve a Social Security program 
they can count on and understand.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on the financial status of Social Security 
programs, the factors influencing the benefits paid, the status of 
Americans' retirement readiness and how workers can be helped to better 
plan for their retirement.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov/, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word or 
WordPerfect document, in compliance with the formatting requirements 
listed below, by the close of business on Tuesday, August 12, 2014. 
Finally, please note that due to the change in House mail policy, the 
U.S. Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman JOHNSON. Well, good morning and welcome. Yesterday 
the Social Security Board of Trustees, folks who provide us

[[Page 4]]

with results of Social Security's annual financial check-up, 
again sounded the alarm over the Social Security financial 
health.
    Unless Congress does its job, full benefits can't be paid 
on time beginning in just two years for those receiving 
disability benefits. Further, when today's 48 year-old workers 
reach their full retirement age in 2033, they and everyone else 
receiving retirement and survivor benefits will see a 23% cut. 
Today, 9 out of 10 seniors, age 65 and older receive Social 
Security benefits, which is a major source of income for most 
seniors.
    Since I've been Chairman, I've been committed to making 
sure that Social Security will be there, not just for today's 
seniors, but for their children and grandchildren. The price of 
delay gets higher every year, so the sooner we act the better.
    As public trustees informed us yesterday, the changes 
needed today are bigger than what Congress passed in 1983. It 
is no wonder that young people don't believe they will ever 
receive benefits.
    A recent survey by Transamerica Center for Retirement 
Studies survey found that 81% of those between the ages of 18 
and 34 today don't believe Social Security will exist when it 
comes time for them to retire.
    As a result, these young people expect most of their 
retirement to be self-funded, resulting in 70% of them already 
saving for retirement. With the retirement of the baby boomers, 
the decline in traditional pensions, stagnant wages that make 
it even harder for Americans to save and Social Security 
impending inability to pay full benefits, Americans face a 
challenging retirement security landscape.
    Bottom line, Americans want, need, and deserve a Social 
Security program they can count on. But just as important, a 
program they can understand.
    For instance, older workers getting ready to retire are 
trying to determine when they should retire, and what benefits 
they should apply for, yet deciding when to take Social 
Security benefits isn't just a question of how old you are. 
Workers have to answer questions like ``How long am I going to 
live? Do I want to keep working? How much will my spouse 
receive from Social Security?''
    As we will hear today, taking benefits at the wrong time 
can cost thousands of dollars. While Social Security has some 
tools to help, sometimes these tools aren't all that helpful. 
So what happens when well-meaning programs become so complex 
that Americans need paid help to figure out what their benefits 
are? Americans pay.
    In the disability program many pay lawyers to help them 
receive disability benefits, while others pay financial 
planners to help them figure out retirement benefits. Worse, 
those who can't afford the help pay with fewer or lower 
benefits than they deserve. And that is just wrong. There has 
to be a better way.
    Today's hearing isn't just about ensuring that Social 
Security will be there for current and future generations, but 
starting a much needed conversation about what workers need to 
know about Social Security as they plan for their retirement.
    I want to thank all of our witnesses for being here today 
and I look forward to hearing your testimony. And I now 
recognize ranking member, Mr. Becerra for his opening 
statement.

[[Page 5]]

    Mr. BECERRA. Mr. Chairman, before I begin my opening 
statement, I want to again, register my concern that we will be 
discussing the Social Security Trustees report which was 
released yesterday without hearing from the author of and the 
foremost expert on that report. That's the Social Security 
Chief Actuary, Stephen Goss. I would like to insert into the 
record the letter that I sent to you registering the Democrats' 
concern that Chief Actuary Goss was not invited to testify at 
our hearing to provide a neutral, nonpartisan explanation of 
the facts before we are presented with partisan policy 
recommendations. I'd like to submit that into the record Mr. 
Chairman.
    Chairman JOHNSON. You could have invited him. You know.
    Mr. BECERRA. Mr. Chairman, we had one witness out of five 
or six----
    Chairman JOHNSON [continuing]. You could have invited him--
--
    Mr. BECERRA [continuing]. And we chose to invite someone as 
well an official witness is usually invited.
    Chairman JOHNSON. Does anybody object to having it put in 
the record? Okay.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       

    Mr. BECERRA. Thank you, Mr. Chairman. For most Americans 
Mr. Chairman, Social Security is the heart of retirement 
security. Six out of ten seniors rely on Social Security for 
more than half of their income. For almost half of Americans 
over 80, nearly all of their income comes from Social Security. 
Without Social Security nearly half of women over the age of 65 
would be poor. Americans have earned that vital retirement 
security. Over 160,000,000 Americans today pay into Social 
Security with their paycheck tax contributions every week in 
exchange for economic security for themselves and their 
families.
    Over its lifetime, Social Security has raised through those 
tax contributions 17.2 trillion dollars and paid out 14.4 
trillion dollars; thereby, accumulating a surplus of 2.8 
trillion dollars for future benefit payments.
    Now, only the highest income earners, 25% of retirees, 
receive any significant income from something other than Social 
Security, like an IRA or work-based retirement plan. And that's 
even despite the substantial subsidies that are provided for 
retirement savings through the Tax Code.
    So, Mr. Chairman, the best way for Congress to improve 
retirement security for all Americans is by protecting Social 
Security from benefit cuts and making sure it is as strong for 
future generations as it was for their parents and 
grandparents.
    I am deeply concerned about the proposal several of our 
witnesses have put forth to cut Social Security's annual cost 
of living adjustments for current seniors. The so called 
chained CPI would result in deep benefit cuts for those who 
need them the most.
    I also disagree with the proposals four of our witnesses 
have made in the past to privatize Social Security, cutting its 
guaranteed benefits.
    Mr. Chairman, I know I've said this before, in fact I said 
it at our hearing on the Social Security Trustees report back 
on June of 2011. The biggest challenge facing Social Security 
right now is Republican budget cuts in the House of 
Representatives.

[[Page 8]]

    At our hearing in 2011, I and other Democrats on the 
subcommittee asked you to hold hearings to find out how 
Americans were affected by a $622,000,000 cut to the Social 
Security Administration's budget.
    We never had that hearing, even though prior to 2011, our 
committee had a bipartisan tradition of holding oversight 
hearings on SSA's budget and its ability to serve the American 
public. The cuts continued.
    Since the beginning of 2011 the number of Americans 
receiving Social Security has actually grown by almost 4 
million people, but the Social Security Administration budget 
is still lower today than it was four years ago in 2010.
    We now know some of the ways the cuts are affecting 
Americans who rely on Social Security. Social Security has lost 
11,000 employees as a result of these cuts, almost 15% of its 
workforce. Some local Social Security offices are operating 
with staff shortages of more than 25%.
    Budget cuts forced Social Security to reduce the number of 
hours their offices are open to the public by one fifth, 
including closing offices completely on Wednesday afternoons.
    Disabled workers today are waiting longer and longer to 
receive their earned benefits. 14% of Americans who try to call 
Social Security's 800 number get a busy signal and those who 
get through are usually put on hold. Seniors who need help are 
waiting in long lines that stretch out the door of the Social 
Security office sometimes in the heat or icy cold.
    Mr. Chairman, I again urge you to schedule a hearing on the 
Social Security Administration's budget so that we can examine 
these budget cuts and make sure Social Security can continue 
its long tradition of providing Americans with the services 
they paid for.
    Let me enter into the record Mr. Chairman, a letter that 
the Democrats on the subcommittee sent to you today, 
reiterating our concerns, and requesting that we act now before 
the situation gets worse.
    The best thing that we can do if we do really care about 
Social Security and we care about those Americans who have 
contributed every month through their paychecks a tax 
contribution to the Social Security system, is to make sure we 
don't undermine the ability of the Social Security 
Administration to dispense the services these Americans have 
paid for.
    The money is there. We have challenges policy-wise to 
Social Security that are long term. Today we face operating 
budget deficits in the billions, but Social Security has a 
surplus in the trillions.
    And so, we have an opportunity to work together 
bipartisanly to try to resolve these issues. But, Mr. Chairman, 
I urge you and I submit this letter to the record that again 
urges this subcommittee to do its oversight responsibility 
under the Constitution. To hold the hearing on the SSA's budget 
so we don't find ourselves falling into situations where Social 
Security fails to provides the benefits that it always has, on 
time and in full.
    With that Mr. Chairman, I request Mr. Chairman to submit 
this letter into the record. And I yield back the balance of my 
time.
    Chairman JOHNSON. Are there any objections? There's none.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       

    Chairman JOHNSON. You know on the issue of Social Security 
Administration needing more money, I'd like to make two points. 
One, in the last decade, Social Security received a 34% 
increase in budget since GOP control. And all but one budget 
has been bipartisan and all were signed by President Obama, 
your president. Just last----
    Mr. BECERRA. Our President. Our President.
    Chairman JOHNSON [continuing]. Just last week we learned 
Social Security spent $300,000,000 on failed implementation of 
a new computer system for the State Disability Determination 
Services. That's $300,000,000 that was wasted. We need to watch 
out for----
    Mr. BECERRA. Mr. Chairman----
    Chairman JOHNSON [continuing]. That, too
    Mr. BECERRA. I'm intrigued, query. I understand the 
Chairman has a prerogative to make additional remarks. We are 
working outside the regular order. I just want to make sure 
that if the Chairman is going to make some remarks, we have an 
opportunity to have an opportunity do the same as well. 
Chairman has always been gracious in allowing that, I just want 
to point that out.
    Chairman JOHNSON. Well, as is customary any member is 
welcome to submit a statement for the hearing record and as we 
move to testimony today, I want to remind our witnesses to 
please limit

[[Page 11]]

your oral statements to five minutes. However, without 
objections all the written testimony will be made a part of the 
hearing record.
    We have one witness panel today, and seated at the table 
are: Charles P. Blahous, III, Ph.D., he is a public trustee, 
Social Security and Medicare Boards of Trustees. Welcome 
aboard.
    Sylvester Schieber, independent consultant.
    C. Eugene Steuerle, Ph.D., Institute Fellow and Richard B. 
Fischer Chair, Urban Institute.
    Joan Entmacher, is that correct? Vice President, Family 
Economic Security, National Women's Law Center.
    Andrew G. Biggs, Ph.D., Resident Scholar, American 
Enterprise Institute.
    And Laurence J. Kotlikoff, is that correct? Ph.D., William 
Fairfield Warren Professor, Boston University, Boston 
Massachusetts.
    Welcome and thank you all for being here.
    Dr. Blahous, please go ahead with your testimony.
    Mr. BLAHOUS. Thank you Mr. Chairman, Mr. Ranking Member, 
and all the Members of the Subcommittee. It's a great honor to 
appear before you today again to discuss the recently released 
projections of the Trustees and the implications for workers' 
retirement planning.----
    Chairman JOHNSON. Turn on your microphone.
    Mr. BLAHOUS. The light says it's on,
    *The CLERK. It was on, just bring it closer.
    Mr. BLAHOUS. Okay.
    Chairman JOHNSON. Thank you.

 STATEMENT OF CHARLES P. BLAHOUS, III, Ph.D., PUBLIC TRUSTEE, 
        SOCIAL SECURITY AND MEDICARE BOARDS OF TRUSTEES

    Mr. BLAHOUS. With your permission, my written testimony has 
a longer analysis, but I'd like to use my oral remarks to 
simply make four quick points.
    The first point is simply that Social Security faces a 
substantial financing shortfall and as of yesterday we 
reconfirmed that part of that shortfall has become an immediate 
problem.
    In our latest projections released yesterday we projected 
that the Disability Insurance Trust Fund will be depleted in 
the 4th quarter of 2016. What is important to remember about 
that is that this is not an indication that we only have a 
problem on the Disability side. In fact what we found was that 
the long term shortfall in the Old Age and Survivors Insurance 
Trust Fund is actually larger than it is on the Disability 
side.
    The reason it is showing up first on the Disability side is 
primarily, not solely, but primarily, because the baby boomers 
move through their ages of peak disability incidence before 
they hit retirement age.
    So rather than interpreting this as a problem that is 
solely confined to DI I would urge the interpretation that it 
is basically the first manifestation, the first element of 
financial crisis associated with problems that are afflicting 
the program as a whole.
    The second point I would make is that uncertainty as to how 
the shortfall is going to be resolved is a threat to workers' 
retirement security for a number of reasons. One is that as 
long as workers

[[Page 12]]

don't know how we are going to resolve it, the means of 
resolution is unknown, workers can't make their plans, they 
don't know what is going to be required in terms of additional 
tax contributions, they don't know what their benefits are 
going to be. And also, the longer we delay, the larger the 
relative sacrifice that we require from each birth cohort, 
because we have fewer birth cohorts that can contribute to the 
solution.
    Another very important factor in my judgment is that the 
closer we come to say, 2033, the greater the uncertainty 
becomes that we are going to be able to repair the shortfall at 
all within the historical financing structure of Social 
Security.
    Just for purposes of illustration, consider that if we 
wanted do a solution today, and we wanted to not raise taxes 
and we wanted not to cut benefits for people now in retirement, 
we'd have to, reduce the benefits of people newly coming onto 
the rolls by 21%. But if we wanted to employ that same strategy 
in 2033, even cutting off the entirety of their benefits would 
not solve the problem then.
    So clearly, by 2033, our opportunity has long passed. And 
there's a point between now and then that our opportunity to 
close the shortfall within the historical financing structure 
disappears. And that's a problem, because if we can't maintain 
Social Security finances under the historical financing 
structure, then we'd have to find a different means of doing it 
and programs financed for example from the General Fund tend to 
be more changeable than Social Security, they tend to be more 
subject to sudden eligibility changes, benefit changes, means 
tests, that sort of things, things that Social Security has 
generally escaped in the past.
    The third point I'd make is that the costs of Social 
Security are rising faster than our economic output. That 
wouldn't be a problem if it reflected a greater national 
capacity to finance these benefits. But because Social Security 
is not a savings program but rather an income transfer program, 
basically, any benefit gains that come to one group have to 
come at the cost of a different group, at least from a 
financial perspective. So what is happening is we're increasing 
our commitments to paying higher benefits without increasing 
our national capacity to finance them. And that's an issue.
    The final point I would make, Mr. Chairman, is that this 
may seem paradoxical, but there certain ways in which we could 
actually enhance retirement security by slowing the growth of 
costs. You have to remember that retirement security is not 
only a function of annual income and assets, but is also a 
function of the number of years over which you have to stretch 
your retirement resources.
    And there is a lot of evidence that the current design of 
Social Security is causing people to withdraw prematurely from 
the workforce and run greater risk of outliving their savings.
    If we could possibly repair some of the inducements and 
incentives in the course of slowing the growth of costs, we 
could simultaneously put the program on a sounder financial 
footing and increase retirement security at the same time.
    We also have a problem in the sense that the rising cost of 
financing the current benefit formula is depressing the 
relationship between workers' pre-retirement earnings and their 
post-retirement benefits, and that is an issue as well.

[[Page 13]]

    That is particularly an issue for low income people because 
you have many people who are in the situation now where they 
actually expect better standards of living in retirement than 
they have as workers. And this has terrible implications for 
their ability to put aside savings, their labor force 
attachment and other problems. We see the results of that in 
the paucity of savings that a lot of groups have outside of 
Social Security.
    In conclusion, Mr. Chairman, the financing shortfall facing 
Social Security, creates substantial income risks for Americans 
who are planning for retirement. We can minimize this risk by 
enacting financing reforms that preserve historical financing 
structure or reducing cost growth to rates that can be financed 
within a stable tax rate. Retirement income security would also 
be enhanced by reforms that increase labor force attachment and 
remove disincentives to saving.
    Thank you.
    [The prepared statement of Mr. Blahous follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       

    Chairman JOHNSON. Thank you.
    Dr. Schieber, welcome. Please proceed.

   STATEMENT OF SYLVESTER J. SCHIEBER, INDEPENDENT CONSULTANT

    Mr. SCHIEBER. Mr. Chairman. Mr. Becerra. Members of the 
Subcommittee, thank you for inviting me here today. In the 
opening section of my submitted testimony, I discussed the 
major ap

[[Page 22]]

proaches to assessing how workers are doing in the retirement 
preparations. Life cycle and similar models are good tools to 
facilitate policy makers' and analysts' understanding of how 
the retirement system is working, but beyond the grasp or the 
interest of most workers.
    Plan sponsors and administrators who are at the nexus of 
workers' retirement savings will generally depend on earnings 
replacement rate models for plan design and communications for 
broad participant population, because broad rule of thumb 
direction is often the best that can be offered to the large 
group of workers participating in these plans.
    Indeed, the Social Security Administration introduces its 
own retirement planner on its official website, discussing 
retirement planning in terms of target earning replacement 
rates. In the early 20th Century, plan sponsors focused on 
retirees having income that would allow them to maintain their 
career standard of living. Over the last 40 years or so, 
replacement rates have been used explicitly in plan design and 
communication by plan sponsors.
    Conventional replacement rate targets have been estimated 
to allow workers to have spendable income in retirement that is 
equivalent to that achieved toward the end of the career. For 
most plan designers and retirement counselors, the pre-
retirement earnings measure used in defining replacement rate 
targets is a salary-level retirement or average earnings over 
the last five years of the career.
    For researchers, price index career average earnings or 
price index earnings a few years prior to retirement are often 
used because earning patterns toward the end of the career tend 
to decline. So using the final years gives you a misimpression 
of what is going on.
    Social security earnings replacement rates presented by the 
trustees are not equivalent to the conventional replacement 
rate measures. I understand they have been taken out of this 
year's prestige report, but they have been in prior reports. 
And there was a doctoral note released yesterday regarding 
these.
    They are based on career average wage indexed earnings for 
which most workers, especially lower earners, are significantly 
higher than the career average real earnings. The Social 
Security actuaries did publish a note on this yesterday. But 
let us consider the hypothetical median workers retiring at age 
65. Using their assumptions from last year's trustees report, 
this worker earned $22,295 in 1990, the equivalent of $39,811 
in today's dollars, because of CPI indexing.
    But they counted the earnings at $47,740 in calculating 
this worker's replacement rate. Now, when workers go to the 
grocery store, the auto repair shop, or wherever, they do not 
spend wage index dollars. They spend the real dollars they have 
in their pocket. And so it is not clear why we want to treat 
these standards of living they never achieved during their 
working career as the standard of living against which we are 
judging benefits.
    In table one of my submitted remarks, you can see the 
conventional measures of Social Security replacement earnings 
result in replacement rates that are higher than those 
presented by the trustees for full-career workers retiring at 
normal retirement age.

[[Page 23]]

I understand that benefits are developed using career average 
wage indexed earnings, but have found that even economists that 
have studied Social Security for years often do not understand 
that the trustees' replacement rates are calculated using a 
different base year than the index used to determine their 
benefits.
    Some analysts even apply wage indexing to all pre-
retirement income and retirement income targets, suggesting 
that workers should be saving beyond what is needed to maintain 
their pre-retirement standard of living. Our retirement system 
should not expect workers to become slaves to financing 
retirement living standards they never achieved while working. 
My analysis of the 31 and 38 birth cohorts of Social Security 
beneficiaries summarized in table two suggests this problem may 
become accentuated over time as average age indexed earnings 
rise more rapidly than real wages for workers. Replacement of 
real earnings is increasing under this system.
    One reason for the widely perceived inadequacy of workers' 
savings for retirement outside of Social Security today is a 
series of reports published by the Social Security 
Administration summarizing survey data gathered by the Census 
Bureau in its current population survey. We heard a summary of 
this in the opening remarks this morning.
    Comparison of the reported income provided by pension 
annuity plans and IRAs to Social Security from IRS tax filings 
shown in table three of my submitted remarks proves that as 
much of the pension and IRA income paid to Social Security 
beneficiaries is not being captured by the current population 
survey. This is a problem the Census Bureau and Social Security 
has known about for twenty years.
    If the full income being paid to Social Security 
beneficiaries by supplemental retirement plans was being 
reported, it would be roughly equivalent to Social Security 
benefits instead of less than half of that amount, and it would 
be above Social Security benefits for the top half of the 
income distribution of retirees. These benefits distribute much 
more broadly down the income distribution than Social Security 
reporting indicates. It is impossible to clearly understand who 
is doing well and who is doing poorly under the current 
arrangements if the official government reports on the income 
status of retirees ignores hundreds of billions of dollars of 
their income.
    I have a formal analysis of this issue that was published 
in the Journal of Retirement earlier this year that I would be 
happy to submit to the committee if you are so interested.
    [The prepared statement of Mr. Schieber follows:]

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    Chairman JOHNSON. Please do. Thank you.
    [The information follows:]

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    Chairman JOHNSON. Dr. Steuerle, please go ahead.

 STATEMENT OF C. EUGENE STEUERLE, INSTITUTE FELLOW AND RICHARD 
               B. FISCHER CHAIR, URBAN INSTITUTE

    Mr. STEUERLE. Thank you, Mr. Chairman, Mr. Becerra. It is 
an honor to be here with you again. And also the Members of the 
Subcommittee. Contrary to the popular argument that we live in 
an age of austerity, I would like to suggest that we live in an 
age of extraordinary opportunity. Yet, as I argue in a book, 
Dead Men Ruling, that I sent to each member of this 
Subcommittee, we block Congress by constantly re-fighting 
yesterday's battles.
    As only one reflection, in 2009, every dollar of revenue 
had been committed before that new Congress walked through the 
Capitol doors. Looking to Social Security after three quarters 
of a century

[[Page 51]]

of continual growth, it has largely succeeded in providing 
basic protections to most, though not all, older people. Now, 
as psychologist Laura Carstensen suggests, we should be 
redesigning our institutions around the new possibilities that 
improved health care and long lives provide.
    But the eternal automatic growth of Social Security is not 
conditioned on any assessment of society's opportunities or 
needs. Not making the best use of the talents of people of all 
ages, not child or elderly poverty, not educational failures or 
the incidence of Alzheimer's or Autism. Let me focus on three 
problems caused by this past, rather than future focus.
    And I should point out that these are problems that apply 
regardless of whether one is a progressive or a conservative, 
because neither conservative principles would allow these types 
of problems to persist. The first is the ways that Social 
Security provides unequal justice to many. The second is the 
consequence of providing ever larger shares of Social Security 
resources to the middle aged. And the last is how each year 
that reform is delayed adds to the burden passed on to younger 
generations.
    First to unequal justice. Social Security redistributes in 
many ways, both progressive and regressive. And many fail to 
provide equal justice. Among the most outrageous, working 
single parents, often abandoned mothers, are forced to pay for 
spousal and survivor benefits they cannot receive, often 
receiving at least $100,000 fewer lifetime benefits than some 
who do not work, do not pay Social Security tax, and raise no 
children.
    Similarly, the system discriminates against younger 
couples, against spouses who divorce before ten years of 
marriage, against long term workers, and those who beget or 
bear children before age 40.
    To the second point, middle aged retirement. People today 
retire about a decade longer than they did when Social Security 
first started paying benefits. Let me be clear. The biggest 
winners of this multi-decade policy have been people like the 
witnesses at this table and the members of Congress who, if 
married, now get about $300,000 in additional lifetime 
benefits. This is not a way to redistribute to people in need 
or people with shorter life expectancies.
    But there are other consequences. A decline in employment 
rate, as reflected in Congressional Budget Office reports, a 
decline in the rate of growth of GDP and of personal income, as 
well as lower Social Security benefits for the truly old, when 
they start receiving benefits so much earlier in their lives. 
Meanwhile, within a couple decades, close to one third of the 
adult population will be on Social Security for one third or 
more of their adult lives.
    There is no financial system, public or private, that can 
provide so many years or retirement for such a large share of 
the population without severe repercussions, both for the 
individuals' well-being in retirement and for the workers upon 
whose backs the system relies.
    Finally, the impact on the young. Today's lifetime Social 
Security and Medicare benefits approximate about $1 million for 
a couple with average incomes throughout their working lives. 
That large number comes about largely because of the number of 
years of support. Rising by about $18,000 a year, benefits for 
a couple in 2030

[[Page 52]]

are scheduled to grow to about one and a third million dollars. 
Meanwhile, the rate of return on contributions falls 
continually for each generation.
    Each year of delayed reform shifts more burdens to younger 
generations from older ones, with the largest impact on groups 
like blacks and Hispanics, in part because they comprise a 
larger share of those future generations who are scheduled to 
get lower returns than current generations retiring.
    In summary, each of year of delay in reforming Social 
Security continues a pattern of unequal justice under the law, 
threatens the well-being of the truly old, increases the share 
of benefits going to the middle aged, leads government to spend 
ever less on education and other investments, contributes to 
higher non-employment, lower personal income and revenues, not 
just in Social Security but throughout the system, and 
increases the burden that is shifted to the young and to people 
of color. Thank you.
    [The prepared statement of Mr. Steuerle follows:]

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    Chairman JOHNSON. Thank you, sir.
    Ms. Entmacher, welcome. Please proceed.

[[Page 63]]

STATEMENT OF JOAN ENTMACHER, VICE PRESIDENT FOR FAMILY ECONOMIC 
             SECURITY, NATIONAL WOMEN'S LAW CENTER

    Ms. ENTMACHER. Thank you Chairman Johnson, Ranking Member 
Becerra, and Members of the Subcommittee. Thank you for giving 
me this opportunity to testify today on behalf of the National 
Women's Law Center. For a large majority of Americans, Social 
Security is not only their major source of retirement income 
but the most secure and predictable. Benefits are modest but 
incredibly important. The average Social Security benefit for 
women 65 and older is about $13,000 a year. It is about $17,000 
for older men. As Mr. Becerra said, without Social Security, 
half of women 65 and older would be poor.
    And for two thirds of seniors, Social Security provides at 
least half of their retirement income. It is virtually the only 
source of income for over one third of seniors. These data are 
from the Current Population Survey. While Mr. Schieber has 
criticized this survey for not fully reflecting income 
distributions from retirement accounts, other surveys confirm 
that most seniors cannot expect much support from their 
retirement savings. The Federal Reserve Board Survey of 
Consumer Finance shows that half of households between ages 65 
and 74 had no assets in retirement accounts.
    Two thirds of those over 75 had no retirement assets. 
Younger generations are not doing much better. 45 percent of 
all working age families and 40 percent of families near 
retirement have nothing in retirement accounts. These data show 
that today's workers will also be heavily reliant on Social 
Security. They cannot afford benefit cuts, whether it is part 
of privatization plans that would replace secure benefits with 
risky private accounts, a lower and less accurate cost of 
living adjustment, or further increases in the retirement age.
    We do need to increase retirement savings for average 
Americans, and the surest and most effective way to do it is to 
protect and enhance Social Security. Social Security is already 
virtually universal and provides lifelong benefits that are 
adjusted for inflation. In addition, it provides life and 
disability insurance for workers and their families, imposes 
few responsibilities on employers, and is highly efficient.
    There are several reforms that would improve the adequacy 
and equity of Social Security, as Mr. Steuerle has testified, 
and which I mentioned in my written testimony. What I want to 
emphasize is that they are affordable. The report of the Social 
Security trustees shows that there is a long term shortfall. 
But Social Security is fundamentally sound. On a combined 
basis, it can pay promised benefits in full until 2033, and 77 
percent of benefits after that. It would be irresponsible for 
Congress to wait until the trust funds are within six months of 
exhaustion, as it did in 1983 before taking action to 
strengthen Social Security. But two decades provides time for 
Congress to enact reforms that raise revenue and improve 
benefits.
    Polls show that a large majority of Americans favor this 
approach. However, there are two issues that require immediate 
attention. Congress should prevent cuts to disability benefits 
in 2016 and reassure all workers that if they are seriously 
injured and can

[[Page 64]]

no longer work, that Social Security will be there for them. It 
can do this through the simple and routine step of reallocating 
payroll taxes to rebalance Social Security's two trust funds. 
Congress has done this 11 times in the past and in both 
directions.
    Second, Congress needs to restore adequate funding to the 
Social Security Administration. Cuts in services are already 
jeopardizing timely access to the benefits Americans have 
earned, and fall especially hard on the most vulnerable people. 
Moreover, at least in part for budgetary reasons, Social 
Security plans to rely even more on conducting its work through 
online interactions. But this strategy has its limits, even for 
those who are internet savvy. The Social Security website touts 
how quick and easy it is to sign up for benefits online.
    But deciding when to take benefits is a major financial 
decision and applicants should be able to consult with well-
trained staff to get help understanding their options and their 
consequences. In addition, access to and ability to use online 
services is more limited among the population of elderly people 
and people with disabilities that Social Security serves. And 
even people that have no problem applying for benefits online 
at 66 may not be able at age 90 to go online to correct an 
erroneous deduction for Medicare premiums.
    In announcing this hearing, Chairman Johnson, you said 
Americans want, need, and deserve a Social Security program 
they can count on and understand. I could not agree more and I 
thank you again for inviting me.
    [The prepared statement of Ms. Entmacher follows:]

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    Chairman JOHNSON. Thank you, ma'am.
    Dr. Biggs, welcome.

[[Page 74]]

STATEMENT OF ANDREW G. BIGGS, PH.D., RESIDENT SCHOLAR, AMERICAN 
                      ENTERPRISE INSTITUTE

    Mr. BIGGS. Mr. Chairman, Congressman Becerra, and Members 
of the Subcommittee, thank you very much for inviting me to 
speak to you this morning. Much of what Americans need to know 
about Social Security and retirement is difficult to 
understand. Worse, much of what we think we know turns out not 
to be true. I would start by saying we should not panic and we 
should not pass far-reaching policy changes in haste. For 
instance, some have proposed substantial expansions to the 
Social Security program, with others arguing that these 
expansions should be financed by reducing tax advantages for 
private retirement savings plans such as IRAs and 401Ks.
    This would be a mistake. The state of retirement security 
in the U.S. is substantially better than you probably think. 
While some studies claim that Americans face a so-called 
retirement crisis, these articles make a number of 
methodological choices that, in my view, are unsupportable. 
They overestimate what Americans need for retirement, 
understate what Americans have saved, and misunderstand how 
family structures and health costs affect the amount that one 
must save for retirement.
    Other high quality research, including projections from the 
Social Security Administration itself, show a much more 
positive view of Americans' retirement saving. For instance, 
the Social Security Administration's office of retirement 
disability policy maintains what is surely the most 
comprehensive model of retirement income in the country. This 
model simulates on a person by person, year by year basis, 
employment, pension offerings and participation, individual 
investment decisions, and of course the accrual of Social 
Security benefits.
    The SSA model estimates that Americans who were born in the 
depression had a total retirement income at age 67 equal to 109 
percent of their career average earnings indexed for inflation. 
We cannot judge for ourselves whether that amount is enough. 
What is significant in this context, though, is SSA does not 
forecast a large decline in retirement going forward.
    For instance, fast forward to the Generation X'ers, who are 
widely assumed to be dramatically under saving for retirement. 
The SSA model projects that the median Gen X'er will, at age 
67, have a retirement income equal to 110 percent of his career 
average earnings adjusted for inflation. Retirement income will 
come from different sources, from defined contribution plans 
rather than defined benefit plans, but the SSA model, which I 
believe is the best in the business, does not produce numbers 
that scream out, retirement crisis.
    But there is much more than we can do to provide 
individuals with better information about the retirement 
savings decisions they make. As my testimony details, the 
benefit estimates provided in the annual Social Security 
statement are expressed in a form, so called wage index dollars 
which are essentially meaningless from a retirement planning 
point of view and which almost no users of the statement could 
possibly understand.
    The figures published by the SSA, which include both the 
benefit estimates published in the statement and replacement 
rate calcula

[[Page 75]]

tions, which Dr. Schieber discussed in his testimony, are 
potentially very useful in retirement planning, but are current 
calculated in a way that is simply incorrect. For instance, for 
a 30 year old worker today, the benefit estimate he will 
receive on his Social Security statement understates the true 
inflation index value of that future benefit by around 35 
percent.
    The agency needs to get these figures right. But the 
biggest problem with retirement security today is not America's 
savers. It is America's legislators, who literally for decades 
have ignored the need to fix Social Security's finances. 
According to Social Security's trustees, the programs 75 year 
deficit has risen by 66 percent since 2008. The Congressional 
Budget Office's figures are even worse. According to the CBO, 
Social Security's long term deficit has nearly quadrupled in 
the past 6 years. While the CBO once projected that Social 
Security would be solvent until mid-century, today both CBO and 
SSA project insolvency in the early 2030's.
    In other words, the insolvency date for Social Security, 
according to CBO, at least, has moved forward by nearly two 
decades just in the past six years. How much worse does this 
problem have to get before both political parties step up to 
the plate and fix Social Security? Saving for retirement is our 
job as individuals. Fixing retirement programs is your job as 
members of Congress, and I respectfully suggest that we all get 
down to business. Thank you.
    [The prepared statement of Mr. Biggs follows:]

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    Chairman JOHNSON. Thank you, sir. We appreciate your 
comments.
    Dr. Kotlikoff, you are now recognized.

[[Page 87]]

 STATEMENT OF LAURENCE J. KOTLIKOFF, PH.D., WILLIAM FAIRFIELD 
   WARREN PROFESSOR, BOSTON UNIVERSITY, BOSTON, MASSACHUSETTS

    Mr. KOTLIKOFF. It is a great honor, Chairman Johnson and 
Mr. Becerra, and other distinguished Members of the Committee, 
to be with you. I guess I am on the left side of this table, 
because I am facing a Republican. I might be viewed as a 
Republican because I was probably invited by the Republican 
members.
    Chairman JOHNSON. You are on our right.
    Mr. KOTLIKOFF. Okay. Well, let me just tell you, I have 
been voting on the left for my entire adult career. I voted for 
every Democratic president, including our current president. So 
I just want the Democratic members to realize, and also the 
Republican members, that I am speaking here today not as a 
political person. I am an academic. I am an economist and I am 
here to tell you that I am here to tell you things that you 
have not heard so far and you may not hear from anybody else 
about Social Security solvency and about its complexity and 
inequities. Although some of these I have heard mentioned.
    I think the first thing I want you to realize is that we 
have issues of generational inequity, unfairness, and we also 
have issues of intragenerational inequity and unfairness. And I 
think these things keep getting kind of confused. The 
Democrats, I sense, are very concerned about fairness within a 
generation, with the rich who are the same age being treated 
unfairly relative to the poor, and that is an important issue.
    But I want you to set aside that and assume that everybody 
within a cohort is exactly the same. So Mr. Becerra, suppose 
everybody your age was exactly the same and looked just like 
you. And everybody who was a year younger was the same and 
looked just like that person. And so we have old people and 
young people, and there are no differences within the cohort. 
So, would we want to leave enormous bills for our children and 
future generations? Wouldn't we want to engage in social 
insurance policies, other kinds of policies, that may do 
enormous good and may be very important because insurance 
markets are not operated very well? There are good economic 
arguments.
    But then the question is, getting the government involved 
to fix some of these problems is one thing. Another thing is 
leaving future generations to pay for those fixes. To pay the 
bills for future generations. And we have, really, a 
generational crisis here of enormous proportions. And the way 
economists look at this is we look at the fiscal gap. We look 
at, over the entire future of the economy, how much are the 
projected expenditures compared to the projected taxes measured 
in present value? What is the gap? What is the fiscal gap?
    This is what economists measure. The fiscal gap in the U.S. 
is current $210 trillion. That is according to the CBO's 
alternative fiscal scenario data released last week. That is 58 
percent of the present value of revenue. So this country is 58 
percent underfinanced. Detroit is about 20 percent 
underfinanced. Social Security by itself is 33 percent 
underfinanced. If you look at table F61 in the trustees' report 
released yesterday, you will see that there is a $24.9 trillion 
unfunded liability over the infinite horizon. It is not

[[Page 88]]

over 75 years. Nothing in economics tells us to look at 75 
years and ignore the future.
    I have children. I am sure many of you do as well. I 
started a little bit late, so I have young children who will be 
alive in 75 years. We cannot ignore the commitments to them and 
there is nothing in economics that allows us to do that, in 
economic theory. So we have to measure things correctly. And 
economic theory is very clear that we should be measuring 
infinite horizon fiscal gap. The trustees' report is burying 
that number. They have been calculating it since 2002. The 
trustees don't even mention it in their summary statement.
    We just heard a statement that says Social Security is 
fundamentally sound. A system that is in worse shape than 
Detroit's pension systems is not fundamentally sound. A system 
that is 58 percent underfinanced, according to the trustees' 
report, that's the entire country. The Social Security system 
is 33 percent underfinanced. This stuff is not fundamentally 
sound.
    We have to start thinking about things from a generational 
perspective, and that does not mean that you should not also 
focus on intragenerational equity. I am all for that. Okay? I 
have been a lifelong Democrat in terms of voting. I am with 
you. And we have to look at that, too. We have to look at 
fairness within and across generations. But we cannot keep 
confusing these things. We cannot in the name of 
intragenerational equity ignore what we are doing to all the 
children, poor and rich alike.
    So what I am going to do is show you Social Security's 
formula for the benefits of a spouse. Ten mathematical 
functions. This is the first time anybody has actually 
expressed this in math. Ten functions. One is in four 
dimensions. One is a maximum function. There is also side 
conditions that are very complicated. Many, many functions to 
determine the side conditions and the variables that go in 
here. One of those side conditions is a maximum of a min 
function.
    It could not be complex. People are making all kinds of 
crazy mistakes, and Social Security people in the offices are 
providing all kinds of bad advice because the thing is just 
crazily complex. We need a new system that is not going to go 
broke.
    [The prepared statement of Mr. Kotlikoff follows:]

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    Chairman JOHNSON. Thank you, sir.
    As is customary for each round of questions, I will limit 
my time to five minutes and ask my colleagues to also limit 
their questioning time to five minutes, as well. Dr. Blahous, 
according to this year's report, if Congress doesn't act, come 
2033, everybody receiving benefits will face a 23 percent cut. 
Worse, in just two years, everybody receiving disability 
insurance will face a 19 percent cut in benefits. Some of my 
friends on the other side like to say that 2033 is way off in 
the future, and that Congress has plenty of time. Social 
Security is well and good right now.
    First, based on the trustees' report, would it be right to 
say that Social Security is in crisis right now?
    Mr. BLAHOUS. Well, we certain face a crisis on the 
disability side. And I would certainly say that we face a 
shortfall that is bigger than we have ever successfully 
corrected before. And so yes, I think it is a very pressing and 
urgent policy concern.

[[Page 98]]

    Chairman JOHNSON. Well, is it fair to say, then, that we 
are already facing the largest shortfall Social Security has 
ever faced, and can you explain that in simple terms? How big 
is this Social Security shortfall right now?
    Mr. BLAHOUS. I have discovered in my public life that I am 
terrible at this, making complex issues as simple as that. But 
I would say, I think Dr. Kotlikoff did it pretty well. You can 
think of it in terms of the fraction of current benefit 
obligations that are unfinanced. When you go out to 2033, you 
are talking a quarter of the benefits that we are promising are 
not financed. Or you could look at it another way. You could 
say that people's tax revenues that they are paying are short 
by a third of what they need to be to fund promised benefits.
    So if you look at your tax return, the amount of payroll 
taxes you are paying, and imagine yourself paying an additional 
third on top of that, you get a sense of how big the problem 
is.
    Chairman JOHNSON. Yeah, I hear you. And something my 
Democrat friends like to say. There is plenty of money in 
Social Security, so we have nothing to worry about. Do you want 
to address that?
    Mr. BLAHOUS. I would say that the date of trust fund 
depletion and the amount of money in the current trust fund 
does not provide very useful information about how much time we 
have. Because if you wait to the point where it is drawn down 
and run out, it is too late to fix it.
    Chairman JOHNSON. Right.
    Mr. BLAHOUS. Because the gap is too big. So I would urge 
that you think in terms of, how much longer is the problem 
still at a soluble level. And when you think about it that way, 
you realize that time is much shorter than the large trust fund 
balance might suggest.
    Chairman JOHNSON. Well, what price will beneficiaries and 
today's workers pay if it is not fixed before this president 
leaves office?
    Mr. BLAHOUS. Well, let me give you a two part answer, if I 
could. There is a part that I think most experts would give and 
then I think there is a part that I would give that most 
experts wouldn't. But I think most experts would say they are 
going to pay a very high financial price for delay. That young 
Americans entering the system are going to lose about 4 percent 
of their lifetime wage income through the program as a net 
income loss, even net of all the benefits they got.
    But I would say there is another risk that they face. And I 
think a lot of the policy community has been slow to recognize 
this. Which is that they run the risk of having a Social 
Security system that is not structured the way it has been in 
the past. Historically, for better or for worse, there has been 
pretty good bipartisan acceptance of the way we finance Social 
Security. And so benefits have been relatively safe from sudden 
changes because of the way we pay for Social Security out of 
the payroll tax.
    But if we go to a system that we cannot balance that way 
and we have to subsidize it permanently from the general fund, 
then all those bets are off. Then suddenly, people are subject 
to much greater income insecurity because of the fact that 
programs fi

[[Page 99]]

nanced from the general fund tend to be much more subject to 
sudden benefit changes and means tests and things of that 
nature than Social Security has been.
    Chairman JOHNSON. Well, I am not sure we can increase taxes 
enough to cover it. Dr. Schieber and Dr. Biggs, is there 
anything that you want to add to that statement?
    Mr. SCHIEBER. Well, if you think about it, 4 percent of a 
worker's earnings is kind of an abstract concept, unless you 
are a worker facing 4 percent additional taxes on your earned 
income each year. If you think about it, over a 40 or 45 year 
career, someone starts working in their early 20s, they work 
until 65, 66, 67, 45 years, we are talking about taking 2 more 
years of their earnings to pay for a benefit that is 
essentially the equivalent of the benefit we are paying to 
people of my generation right now.
    And that seems to be a very substantial levy against them, 
knowing how hard it is for young people today to get a start in 
life. There is no reason to expect that the kids matriculating 
through high school and even the ones in grade school are 
necessarily going to have that much easier time to start. So 
there is a limit. I think there is an equity issue here that we 
need to think about if we are going to talk about delay.
    Chairman JOHNSON. Thank you. My time has expired. Mr. 
Becerra, you are recognized.
    Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 
your testimony today. Where should we go? It is interesting. 
Mr. Chairman, let me clarify something for you. Democrats do 
not think that we should be hunky dory, going around town just 
thinking that we should do nothing on Social Security. I think 
Democrats have said for a long time, we should keep the most 
successful program that has ever been devised in America to 
help Americans have economic security stay strong moving into 
the future.
    And so we are prepared to meet the challenge that faces 
Social Security. And there is a challenge. We have heard it 
discussed here. In about 20 years, we are going to be hitting 
the challenge. I would not call it a crisis. I would call it a 
crisis what happened to all of Enron's employees who put money 
into their pensions and found out when they woke up one day 
that Enron no longer had any of their money that they were 
counting on for retirement. That is a crisis.
    I call it a crisis that we go to war in Iraq, never pay a 
dime of it with real money, using the government credit card. 
Spend over $1 trillion. Still have not paid for it. And if you 
want to talk about infinite horizons, the so called projection 
into the future of however, I don't know how you do that. But 
apparently some folks think you can project infinitely into the 
horizon. What is the cost of never having paid for a trillion 
dollar war and what will that cost be in infinity?
    The issue is this. It is, how do you make sure you give 
Americans that security? Ms. Entmacher made a really good 
point. The average benefit is about $1200 a month under Social 
Security. No one is going to get rich off of that. And I know 
we use euphemisms. Mr. Blahous, you used the euphemism of 
slowing the growth of cost. That is another way of saying 
cutting benefits. So yeah, you can slow the growth of cost in 
Social Security, which means cutting a

[[Page 100]]

Social Security recipient's $1200 benefit. You want to talk 
about a crisis, talk about someone who depends almost 
exclusively on Social Security, about cutting their benefits. 
And that is a crisis.
    Especially for women in America, who as Ms. Entmacher 
pointed out, earn less than men do when they retire. Because 
they have done their business of helping raise the next 
generation. And they get penalized for not being able to stay 
in the workforce as long as men do. Those are the crises that 
we have to address. But Social Security? With $2.8 trillion in 
reserves? Is that a crisis today? No, I would call a federal 
budget operating deficit in the hundreds of billions as 
something that we have to tackle today. I think we have time to 
deal with Social Security on a bipartisan basis. But we should 
not try to panic Americans, especially young Americans, who 
today do not know where they are going to have their retirement 
savings. Because now these defined contribution plans could be 
like Enron. Where poof, it is gone if that company does not 
make good investment decisions.
    And so I think we should be careful about how we discuss 
Social Security. Because I do not think anyone can name me a 
private sector program that works as a retirement benefit, 
disability insurance, and a life insurance policy all at the 
same time and over 78 years, never having once failed to pay on 
time and in full. So I can name a lot of Enrons in the private 
sector. We can talk about the crisis in the Veteran's 
Administration. Social Security is not one of those. But the 
important thing is, we should not let Social Security become 
one of those failures by underfunding it with its budget.
    It is growing in the number of people that it has to serve. 
Yet its budget is smaller today than it was 4 years ago. And 
Mr. Chairman, whether our Republican majority in the House of 
Representatives wishes to hold a hearing, as it should because 
of our oversight responsibilities under the Constitution, to 
determine how the Social Security Administration is doing, this 
will come back to haunt anyone who wishes to hide under the 
rocks about this budget for Social Security.
    Ms. Entmacher, women have a tougher time in retirement 
because they live longer than men and they earn less in 
retirement, whether it is through a private pension plan or 
through Social Security. What would happen to that population 
of women, who are going to continue to outlive men, if we were 
to cut benefits by, say, doing the chained CPI and also 
continue to see the budget for the Social Security 
Administration be well under what it needs to be able to 
provide sufficient services to those Americans?
    Chairman JOHNSON. The gentleman's time has expired, so 
please be brief.
    Ms. ENTMACHER. I will. The chained CPI is a way of 
computing the annual cost of living adjustment that is lower, 
and I would say less accurate, than the current rate is 
computed. That adds up every single year you live. It is kind 
of like compound interest in reverse. And we calculated that 
for a single elderly woman receiving the median benefit, by age 
80, her benefit would be cut by $54 a month. Which may not 
sound like a lot, but it is the equivalent of one week's worth 
of food every single month that she can no longer afford.

[[Page 101]]

    So that is a severe cut in benefits. Of course, the service 
cuts mean that it may be more difficult to access the Social 
Security benefits that you have earned if there is a problem, 
that you are receiving accurate benefits, if you need to change 
your bank account, it is just that much harder to get hold of 
someone to get it straightened out and make sure that you 
continue to get your benefits that you count on on time and in 
full.
    Chairman JOHNSON. Thank you, ma'am. Mr. Tiberi, you are 
recognized.
    Mr. TIBERI. Thank you, Mr. Chairman. Thank you all for 
being here today. I had a former governor in Ohio, a friend of 
mine, also a U.S. Senator, George Warner, when he became 
governor, said, ``We need to do more with less.'' That does not 
mean we need to do less with less. We need to do more with 
less. And he succeeded in doing that. Let me share with you, 
because the budget has been talked about, these are numbers 
from the Social Security Administration. This makes a lot of 
sense. A higher number than ever, customers, Social Security 
recipients, use the Social Security online tools more than 
ever.
    Which, there is obviously a cost savings. 50.9% in fiscal 
year 2013. Another great statistic. This is a survey. This is 
an annual survey, fiscal year 2013, from again, Social Security 
customers. 80.2 percent said that the Social Security office 
that they worked with provided services of excellent, very 
good, or good in 2013. 80.2 percent.
    And I know that is true in the office near my hometown of 
Worthington, Ohio, just outside Columbus. So I think those are 
good things to remember as we talk about the Social Security 
budget. Mr. Chairman, I would like to submit for the record, 
two articles from the Columbus Dispatch. The first title, 
Democrats' Plan Won't Save Social Security, Congress's 
Budgeters Say, written on Thursday, July 17th by Jack Torre.
    In that article, it says that a Senate plan that is 
designed to both preserve Social Security and expand its 
benefits for some by raising payroll taxes on the wealthy. The 
report by the Congressional Budget Office concludes that to 
make the Social Security solvent for the next 75 years, payroll 
taxes would need to be raised on all working Americans who pay 
Social Security taxes.
    And in response to that, Mr. Chairman, a Tuesday, July 22nd 
editorial in the same newspaper, Stop Ignoring Good Advice: CBO 
Report Renews Calls For Leaders To Fix Financial Fundamentals. 
And in the text of the editorial, it says, ``Promising people 
more benefits at no cost isn't new, especially in an election 
year. The Democrat-backed plan that purports to expand Social 
Security payments at no additional cost to most Americans 
simply isn't realistic, a fact backed by the Congressional 
Budget Office report last week that also provided a sobering 
reminder for the need to get serious about entitlement reform 
overall.
    ``Senate Democrats recently backed a plan that they said 
would preserve Social Security and expand benefits for many. 
They said that the increase would be paid for by payroll taxes 
on those making more than $117,000 per year, the current 
threshold above that Social Security taxes aren't levied. 
Unfortunately for the CBO, the math doesn't add up. The non-
partisan research arm of Congress

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said to simply keep Social Security solvent for the next 75 
years, payroll taxes would need to be raised on all working 
Americans.''
    And it goes on. I'd like to submit both of those for the 
record, without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       

    Mr. TIBERI. Which brings me to a point I am going to make, 
and maybe Dr. Biggs, you can help me. Because in your 
testimony, you kind of touched on this. Some say, well, the 
crisis is not here. I have a 47 year old sister. She is a 
woman. She is my sister. She retires, her full retirement is in 
20 years. Coincidentally, that is the same year that the report 
that you all provided, the CBO provided, said that the jig is 
up if we don't do anything.

[[Page 105]]

    Now, my sister does not have a whole lot of confidence, my 
47 year old sister, as she is planning for her retirement today 
with two kids, that she is going to be taken care of. My even 
younger sister, who is 40, has less enthusiasm, to your point, 
about fixing the current system for what she is thinking about 
in terms of retirement. Let alone my four daughters, 5 through 
11, in what this report means to them.
    And so the Senate Democrat plan, I don't know if you have 
seen it, which the article and the editorial take issue with. 
If we are to expand benefits, raising payroll taxes on 
wealthier Americans to do it, wouldn't we be right back where 
we are today? Kicking the can down the road and impacting my 
four daughters? Since we are concerned about the wages of 
women?
    Mr. BIGGS. Thank you for your question. In a sense, you 
wouldn't be right back where you were. You would be worse off. 
And the reason is this. I am not in favor of fixing Social 
Security by raising or eliminating the so called tax max on 
payroll taxes. I think that cap was put in place by Franklin 
Roosevelt for a reason so the system does not look like a 
welfare plan, so it is something that everybody pays and 
everybody receives out in reasonable measure. That it is not 
just a take from the rich, give to the poor kind of thing. And 
I think Roosevelt said this is for political reasons, to make 
it supportable.
    On the sort of economics side, I do not think it is a 
particularly good idea, because eliminating the tax max 
effectively raises the top marginal tax rate by 12 percentage 
point, so you are going from, say, 43 percent today to 
somewhere in the mid 50's. I just think that is too high. But 
raising the tax max or eliminating the payroll tax ceiling in 
order to increase benefits actually makes things worse off. 
Because you are taking off the table one of the options that 
could have been used to make the system solvent. In other 
words, you cannot raise or eliminate the tax max twice.
    So if you do that in order to raise benefits, then we have 
to come back and address solvency. And one of those options 
that was on the table is no longer on the table. And so then 
the folks who are sponsoring these plans have to say, okay, now 
that we have taken that off the table, what are we going to do 
to fix the system so that your sister or, by the way, me can 
have that when we retire. So I think that you really have to 
think, first, how do we pay for what we have promised? To 
promise additional benefits before you have paid for what you 
have already promised, it just confirms all the stereotypes 
people have about politicians. No offense.
    Chairman JOHNSON. The time of the gentleman has expired.
    Mr. Doggett, you are recognized.
    Mr. DOGGETT. Thank you very much, Mr. Chairman, and thanks 
to each of our witnesses for your testimony.
    My feeling is that Social Security is one of the most 
effective programs that we have ever approved in this Congress. 
I think one would be hard-pressed to find a family across 
America that has not had a family member who has obtained 
dignity in retirement as a result of Social Security; and, if 
they look back in the past, who suffered greatly when Social 
Security was not there.
    Many of these families have a neighbor who is able to 
survive after a serious injury or a disability, because of 
Social Security dis

[[Page 106]]

ability; or, a child who would never have completed high school 
without the survivor benefits of Social Security.
    Vital programs, and yes there are improvements that need to 
be made. I believe you have outlined what some of them may be. 
I'm willing to work as I believe my democratic colleagues, for 
the most part, are willing to work to make constructive changes 
to improve Social Security and be sure that it is there--not 
just for grandparents, but for our grandchildren.
    There are some obstacles to doing that, and one of those 
obstacles is the fact that while we are told today that there 
is a broken piggy bank in the trust fund, there are always 
those who are out there who see that trust fund and the assets 
in it as an incredible profit center for privatizing Social 
Security. And right through the last round of elections we're 
advocating that the only solution to this impending crisis as 
it has been described is to privatize the Social Security 
system and break the bond that some were opposing in 1935--and 
have ever since--about an effective social insurance program.
    And then there are those who suggest that Social Security 
has an impending crisis; and, therefore, the only solution is 
to cut everyone's benefits. If the only issues at stake are how 
much can we cut and how much should we turn these public 
assets, these benefits paid into the social insurance system to 
Wall Street, we will never get the changes that are necessary. 
I think some of them are modest. Some are more controversial 
and politically difficult to undertake, but we will never get 
the changes needed to ensure that we have longer term solvency 
for Social Security.
    The suggestion has been made that the Social Security 
system is just so complex that it can't be fully understood and 
utilized. There are some changes that are necessary that relate 
to some of those complexities. I think the complexity mainly 
affects people at the other end of the income scale for whom 
Social Security is probably not the principal source of 
retirement security.
    I think that for most Americans, like the women that Ms. 
Entmacher was talking about earlier, it's all pretty simple. 
You work hard. You pay in to the Social Security system. When 
you retire, when you become disabled or you lose a spouse or 
parent, you get Social Security benefits; and, relative to the 
complexities, we have Social Security offices around the 
country staffed with people--as my Republican colleague was 
just saying--who seem to be doing a pretty good job at 1200 
local offices in explaining, based on their expertise, how the 
Social Security system works. And we have an 800 number that 
people can call if they're close by a Social Security system.
    That means though that over the past four years that cuts 
have occurred in the Social Security budget that we have lost 
about one in 10 of the people who answer the phones or who are 
available to answer the questions. One in 10 of the people who 
answer the phones or who are available to answer the questions, 
and that's why the request that Mr. Becerra has made about the 
need for us to exercise our oversight responsibilities and look 
at the budget of the Social Security system is so very 
important.
    As far as the complexities of this, Ms. Entmacher, you are 
an expert on how our Social Security policy affects older 
women, nearly

[[Page 107]]

half of whom would live in poverty without Social Security. Is 
the main problem that these women are having with Social 
Security's complexity, is that the real barrier that they face, 
that it's just too confusing and complex to make the right 
choices?
    Ms. ENTMACHER. No. It is not. I mean the main problem that 
women have with retirement security is lower wages throughout 
their working life, caregiving responsibilities, the high cost 
of child care which often means that they can't really afford 
to work, because the wages that they get barely pays for child 
care.
    And, yet, that means time out of the work force and less 
opportunity to build up Social Security benefits or retirement 
savings. It's just many women struggle to make ends meet 
throughout the working life, and Social Security is what they 
have to count on. And that's the main problem. And, 
unfortunately, many women work in very demanding jobs.
    You know, people don't think of retail work as physically 
tough, but people are on their feet for many hours. People who 
are nurses' aides, that's an incredibly hard job, and they 
simply can't--even if they know that they can get more by 
waiting until their full retirement age to claim benefits, they 
just can't make it. And, of course, for both older women and 
men who have lost jobs in the recession, it takes much longer 
to find another job. And so many people, if they can't get 
reemployed, they have to claim at 62, because they have no 
other income. I think those are the major challenges that many 
people face.
    Chairman JOHNSON. Thank you. Mr. Renacci, you are 
recognized.
    Mr. RENACCI. First, I want to thank the chairman for 
holding this hearing. I want to thank the witnesses for their 
testimony. I am glad that we are here to discuss the role 
Social Security plays in Americans' retirement security. I 
think this is a very important topic, considering the solvency 
of the program and the rate at which older workers are 
retiring. According to the trustees' report, Social Security's 
present value of unfunded liabilities over the next 75 years 
equals 10.6 trillion, which is one trillion more than last 
year.
    I have to be honest. I am shocked to hear our friends 
across the aisle when they say there is no cause for immediate 
action. Instead of addressing the issue we continue to kick the 
can down the road for future generations. This unfortunate 
reality is that government officials and American people do not 
have a good grasp of really our dire financial situation. Our 
country is more than 17 trillion in debt and digging our way 
out is not as simple as cashing in on Treasury securities.
    If the Social Security obligations were added to our debt, 
our true liabilities could be well over 50 trillion. As a CPA 
and former businessman, I came to Washington to really bring 
business perspective to an institution that sorely lacks it. We 
cannot continue to jump from budget crisis to budget crisis, 
and as many of the witnesses have talked about--Mr. Kotlikoff 
and Mr. Biggs--we really have to start addressing some of these 
problems.
    To help us really get on the right track, I introduced the 
Federal Financial Statement Transparency Act, which is a 
bipartisan bill that will lead to a more honest depiction of 
our nation's finances.

[[Page 108]]

The Federal Government--think about this--requires public 
companies to have an honest depiction of their finances to sell 
securities, and the Federal Government should be able to meet 
those same standards and really show what our true liabilities 
are.
    Mr. Blahous, what would the impact be on the Social 
Security trust fund if all unfunded liabilities needed to be 
paid out; and, is there cause for concern?
    Mr. BLAHOUS. Well there absolutely is cause for concern and 
I think a point that was made here earlier today, although we 
do report the 75-year, what we call, the open group obligation, 
which is the $10.6 trillion obligation, I think the actual 
amount of unfunded obligations within the Social Security 
system is actually substantially higher than that.
    The reason for that is that the excess or the shortfall is 
not something that actually sort of plays out gradually over 
time. It is actually something that is on the books now. There 
is an excess of benefit obligations over contributions for 
people who are already in the system, and that is actually 
about $24 trillion, and that is about 4.4 percent of future 
wages going forward. And that is a number we report in the 
Social Security trustees' report. So if you were to take this--
what some people call the closed-group obligation and add that 
to the books now, you would add about $24 trillion to our 
current liabilities.
    Mr. RENACCI. So will Social Security taxes this year be 
adequate to fund benefit obligations, current benefit 
obligations?
    Mr. BLAHOUS. They will not.
    Mr. RENACCI. Okay. How far short will they come this year?
    Mr. BLAHOUS. About $80 billion.
    Mr. RENACCI. Okay. So where will that money come from to 
make up the difference?
    Mr. BLAHOUS. Well when the payroll taxes fall short of 
benefit obligations, the difference has to be made with 
payments from the general fund. Right now, they would be in the 
form of interest payments from the general fund to the trust 
fund; and, a large share of those interest payments would go 
out the door immediately to pay beneficiaries.
    Mr. RENACCI. So you are saying that the money flows from 
the Government's general fund to the trust fund?
    Mr. BLAHOUS. Yes.
    Mr. RENACCI. Does that portion of Social Security spending 
add to the federal deficit?
    Mr. BLAHOUS. Yes, it does.
    Mr. RENACCI. So 80 billion is added to the federal deficit 
this year?
    Mr. BLAHOUS. That's right.
    Mr. RENACCI. Why doesn't that get highlighted more in the 
trustees' report?
    Mr. BLAHOUS. Um, well, there are a lot of different 
perspectives that the trustees' report takes, and a lot of the 
trustees' report is just devoted to diagnosing the actuarial 
status of the trust funds irrespective of the effect on the 
overall federal budget. Now there are certainly those of us who 
believe that we as trustees have a duty to put before lawmakers 
the implications of honoring Social Security obligations for 
the Government's general fund; but that is

[[Page 109]]

obviously something that if there was a feeling that we need to 
do more of that, that is something I can take back to the other 
trustees.
    Mr. RENACCI. So we have 17 trillion in debt. We have 
potentially 10 to 20 trillion in unfunded liabilities. We could 
have over 50 trillion total liabilities just in those two 
areas; and we have 80 billion each year, at least this year, 
that is going to exceed what comes in. I would somewhat believe 
we have a current problem that we need to fix and it is 
something we can't kick down the road, as I continue to hear. 
This is an issue that we need to start looking into. And, Mr. 
Kotlikoff, I know you have mentioned some of those issues too.
    Mr. KOTLIKOFF. Yeah. Well you are an accountant, so we have 
a kindred interest here. More than 1,000 economists, including 
17 Nobel Prize winners, have endorsed something called the 
Inform Act. If you go to the InformAct.org, you will see that 
they have an endorsed bill, which is a bipartisan bill called 
H.R. 2967, and that bill requires Infinite Horizon Fiscal GAAP 
Accounting by the CBO, the GAO and the OMB on an ongoing basis. 
And what we are seeing here is the entire economics profession, 
with the exception of people like Paul Krugman on one extreme 
and Art Laffer on another extreme.
    If you look at the names of these people, they are on the 
right and the left. You have got people like Glenn Hubbard and 
Jeff Sachs agreeing to do Infinite Horizon Fiscal GAAP. So the 
economics profession is not confused about how to do the right 
accounting. The trustees of the Social Security Administration 
are hiding the right accounting.
    In their Appendix, they have actually moved it back this 
year to Table F-61 in the Appendix used to be not in the 
Appendix. Now it is buried in the Appendix. And that says what 
is really going on is that the end funded liability of Social 
Security is actually 60 percent larger than the 75-year number 
you are focused on. So this system is actually in far worse 
shape, and it is part of the country's fiscal policy that is in 
far worse shape.
    And, yes, Mr. Becerra, it is absolutely true that when you 
run a trillion-dollar war, okay, over 10 years, and you get 
nothing out of it for real in terms of any real success, that 
adds a trillion. And if you don't pay for it, that adds a 
trillion dollars burden to your kids and my kids and everybody 
else's kids. So we have to understand that we are engaged in 
take as you go policy. It is not pay as you go, but take as you 
go policies on a wide-scale basis.
    We have been changing the tax structure to lower taxes on 
asset income that shifts, and more on wage income that shifts 
taxes away from older people towards younger people. We are 
doing a lot of things that are burdening everybody's children. 
So there is the issue of generational equity. There is the 
issue of intra-generational equity. We have to look at both of 
these.
    And if you go to the PurplePlans.org, one of the websites 
they send you to, you will see a set of plans that have been 
endorsed by a lot of economists that I developed. Each one is 
post-card length. It does involve the reform for Social 
Security, for taxes, for healthcare, comprehensive for the 
financial system. This is what economists would do to get rid 
of our overall fiscal gap, and you

[[Page 110]]

guys could agree on it, because it is including blue and red 
considerations here.
    That's why it is called purple. And many, many economists, 
including Nobel Prize winners, have endorsed these plans. So I 
encourage you, A, to vote to pass the Inform Act. So we started 
doing proper fiscal accounting, comprehensive fiscal 
accounting, Infinite Horizon Fiscal Accounting, which is the 
only proper thing that economic theory says to do, and then 
also to adopt the Purple Plans, which will get rid of the 
fiscal gap.
    Chairman JOHNSON. Yeah. The gentleman's time has expired.
    Mr. KOTLIKOFF. Thank you, Mr. Chairman.
    Chairman JOHNSON. Thank you.
    Ms. Schwartz, you are recognized.
    Ms. SCHWARTZ. Thank you, Mr. Chairman.
    As Mr. Becerra here, like where do you start in the 
conversation we are having. Let me first say that I don't think 
this is a surprise to anyone. We have this recent report, but 
we know that Social Security has issues going forward that 
really is not a divide between Republicans and Democrats. It 
really isn't. How we solve it is, which is why we keep having 
hearings about what the problem is, rather than how we are 
going to solve it.
    That is really what we are dealing with, yet again today. I 
can tell you the number of hearings I have been to that 
describe the fact that whether it has actually gone with a 
longer time. We have until 2033. That's a good thing to have 
time to work it out. But no one disagrees that we should tackle 
this issue. The issue is how do we tackle it. And we, as 
Democrats, believe that Social Security has been a strength for 
this country to be able to say to people as they age that you 
will not die in poverty, and it has worked.
    We start there, and we start with an understanding, 
particularly having just gone through the recent recession, 
that in fact converting it to a 401-K does not provide that 
kind of security. And that's been suggested, to privatize it, 
give people a right to invest it any way they might. You go 
through another 2008, how many of you have lost money in your 
401-Ks? I assume every one of you have one, and you all lost 
money in it. Now, maybe you are young enough to be able to make 
up for that, but if you were 70, maybe not so much.
    So what we need to be focusing on, really, I am interested 
that none of you are also offering solutions. I know you have 
talked about two very important aspects that we have to take 
into account here. One is the demographics of what is happening 
for seniors. We have a lot more of them, 10,000 more a day, 40 
million more seniors. You call Social Security, they tell you 
that. They say there are 40 million seniors out there who are 
calling us right now. So you might have to wait. And I don't 
think they are all calling every minute, but sometimes many of 
them are. And we don't have enough people to answer the lines, 
but they do get back to you.
    And that is a huge problem for the next 20-25 years, maybe 
30 if medical science is really, really good, and we diet and 
exercise. But we're not going to live forever. This is not a 
problem for 75 years. It's a really important blip, which is 
why we have a surplus in the Social Security trust fund. We 
occasionally have to put it

[[Page 111]]

back in, because we borrow against it, but the fact is that 
money is there. We raised it in 1983.
    Congress realized that they needed to put some extra money 
in for all those millions of extra seniors. So the fact is we 
reasonably don't want to talk about the crisis because of what 
some of you have been saying, is that we want young people, and 
those approaching retirement, to understand that Social 
Security will be there for them, because we are committed to 
making sure it is.
    Those benefits have been important to America. It keeps 
seniors out of poverty, particularly women who get lower wages 
and have less Social Security benefits. So we have work to do. 
So one of the other things you have not mentioned in addition 
to the issue about the demographics is income inequality and 
wage inequality in this country. So you can talk about four 
percent. Who said we have to add four percent wages?
    The fact is that in the last two, three decades wage 
disparity may be unpredicted by the great economists of this 
nation, but certainly it was a deliberate result of 
particularly tax cuts to the very wealthy and the way we treat 
unearned income in this nation. So it is we have to understand 
that there are few people earning money; but, we are now taking 
out of Social Security, my staff tells me, 82.5 percent of 
payroll is what we tax--America taxing a lot of payroll. You 
all nod, say yes. Is that correct? You talked about that.
    Ms. ENTMACHER. Yes.
    Ms. SCHWARTZ. We have. That's right. So one of the ways to 
look at this is are we being fair to the workers you have 
talked about? Not just our children and grandchildren, but 
right now are we being fair to workers if we are actually the 
cap has not been growing as quickly as it might, given the wage 
disparity and income disparity in this nation. So while you 
keep talking about cutting benefits and making Social Security 
a private system and other ways to do it, you have really not 
talked about the fact that there is a lot of wealth and a lot 
of income that we are not touching out there that could help 
solve this problem.
    And I would say to the Chairman I would love to see this 
committee actually have a hearing about how we would solve this 
problem. Because what we do by just talking about it as a 
crisis is to scare people, and we scare people, we don't make 
very good decisions. So while some of you said let's not rush 
into it--I think you said that--let's not do it because you are 
scaring people that Social Security won't be there for them. It 
will be there for them if we actually make a commitment as a 
Congress to protect Social Security benefits and the legacy 
going to the future.
    So it is hard to ask a question, because I am not sure that 
you will answer it the way I wanted to given the balance----
    Chairman JOHNSON. Well your time is expired.
    Ms. SCHWARTZ [continuing]. but my time is expired. So the 
question to each and every one of you is to really work on 
solutions to this, not just the crisis, and to ask the Chairman 
to actually focus on what will work to protect and secure 
Social Security into the future. That's what we want to be 
discussing today. And I yield back.
    Chairman JOHNSON. Thank you.

[[Page 112]]

    Mr. Kelly you are recognized.
    Mr. KELLY. Thank you, Mr. Chairman, and thanks for having 
the hearing. And thanks to all our panel for being there.
    I sometimes get confused. I came out of the private sector. 
And so when you start talking about who provides the revenue 
for all these programs, I think sometimes it is the government. 
And we all know that that is not true. These are based on wage 
taxes or transfer from the general fund, which are based on 
taxes that are levied onto every single hardworking American 
taxpayer.
    So as we put this back and forth, and while we don't want 
to politicize, we absolutely do. Is there anybody that would 
disagree with me that the only way, the only way to get this 
fixed is to look at where the revenue streams come from and 
understand that that flow has been interrupted with an economy 
that just hasn't recovered in a nation that has unbelievable 
assets. So we can go back and forth with this about Republican/
Democrat problem. This is not a Republican and Democrat. This 
is an American problem.
    Am I mistaken? I have signed pay checks for a long time. 
6.2 percent of every person I signed a pay check for, I also 
matched what I paid them. They put 6.2 percent in. The 
dealership puts 6.2 percent in. It was 12.4 percent. So am I 
misunderstanding where the revenues come from? Mr. Schieber, go 
ahead.
    Mr. SCHIEBER. Well most of the revenue does come out of 
payroll taxes.
    Mr. KELLY. Right.
    Mr. SCHIEBER. Now, of course, there is interest being 
accrued on the trust fund balance. Certainly, a portion of the 
kind of immediate growth in the unfunded liabilities, the 
immediate--the reduction in the period of benefits that are 
going to be paid--is related to what's happened to the economy 
over the last several years. But since 1994--we are actually 
celebrating the 20th anniversary this week, I guess, with the 
release the trustees' report--the trustees have been telling us 
that there is a big demographic problem, that the system has to 
be rebalanced. There is a demographic problem. So a major 
portion of it is the demographics.
    Mr. KELLY. No. I get it. It's like the navigator on the 
Titanic saying, listen. There's an iceberg out there. Maybe you 
ought to change where you are going and actually maybe scale it 
back a little bit. And the captain saying, oh, the heck with 
that. You don't understand. Not even God could sink this boat. 
Now, having said that, because I'm worried about this--
workforce participation is at the lowest rate it has been in 36 
years. Now, I'm looking at these taxpayers the same way.
    There's an old adage about don't worry about the mule, just 
load the wagon. The mule's about ready to unhitch himself and 
say I can't pull this load. It's too heavy. Or that, add 
another mule to help me pull it. When you have that many 
people, when you have almost 92 million Americans opting out of 
the labor force, do you think over the course of time that 
could have effect on the revenues we need to run this country? 
Is there anybody that disagrees with that? Because I am trying 
to figure out, you know, we have all these willing hearts but 
we have weak wallets. Where does the money come from? Is there 
anybody out there? Forget about the

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government paying for this stuff. The government doesn't pay 
for one red cent. American taxpayers do.
    We have gone so far away from what this--how it works. It 
just drives me nuts. We sit around here almost arguing how many 
angels we can fit into the head of a pin, and the meanwhile we 
have got a program that is a great program, but it is not 
funded the right way. And we also, by the way, not everybody 
deriving a benefit has put any money in. So let's not get to 
out of whack on that.
    Mr. KOTLIKOFF. Yes, sir.
    Mr. KELLY. Yeah, Mr. Kotlikoff?
    Mr. KOTLIKOFF. Well, yeah. I think there is a resource 
everybody here could use, which is economists. And I know we 
don't have the greatest reputation in the world, but----
    [Laughter.]
    Mr. KOTLIKOFF. But, you know, if you do look at the 
PurplePlans.org, you will see a fix for Social Security for the 
tax system. We can do things on the tax system. We can do 
things on the tax system that the Democrats would like, the 
Republicans would like. You know, for example, that would 
actually, I think, improve the progressivity of the system, but 
in the process shift the corporate tax from the corporations 
onto the households, the shareholders, in a way that would 
bring more business back into the country, keep businesses from 
leaving, get more jobs here. We have a very difficult 
international competitive situation. We have a very difficult 
problem with smart machines taking people's jobs.
    But on the Social Security issue, Ms. Schwartz, the 
solution--there is a solution that is different from just 
maintaining the current system, which, if I actually sat down 
with you for a day and went through the inequities and 
mistreatment of low income people, high income people, middle 
income people, this is like a random lottery, what you get out 
of the system, because it is so complicated.
    If you don't know--and you can't call the Social Security 
system--whether they are well paid or not, whether they have 
more people or not, they are giving the wrong answers 
routinely. I know this because I have a little company that 
does Social Security software. I also write a column every week 
for PBS News Hour about Social Security. I get people e-mailing 
me and writing me every day about the mistakes Social Security 
is making. These are the people that are getting to the people 
on the phone. It is too complicated.
    So one idea on the Purple Social Security Plan--and this is 
not privatization as you know it, but it is individualization--
but it is progressive--think about taking, freezing the old 
system in place, paying off everything that is accrued, and by 
putting zeroes in the earnings record, and then going to a new 
system for Social Security where everybody contributes eight 
percent of their pay to a single account, where they have their 
own name on each account, but the contributions are divided 50-
50 between spouses and legal partners.
    The government makes matching contributions on behalf of 
the poor. It is all invested in one way--not by Wall Street, 
but by a computer, a laptop, in a global market weighted index 
fund with a floor. So the government would guarantee a zero 
rate of return, so if we have a crash, but everybody gets the 
same rate of return.

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And at the end of the accumulation phase, the government would 
annuitize the account balances on a cohort basis.
    Chairman JOHNSON. The gentleman's time has expired.
    Mr. KOTLIKOFF. That's okay.
    Ms. SCHWARTZ. And I do want to apologize. I believe this 
was Mr. Kelly's time. So you may want to be answering his 
question. I apologize, Mr. Chairman. This was not my intention.
    Mr. KOTLIKOFF. No. I am trying to give you a solution.
    Ms. SCHWARTZ. I am curious to know whether his plan 
actually taxes people above the 170,000 cap that is now in your 
system.
    Mr. KOTLIKOFF. One of these plans just eliminates the 
ceiling on the payroll tax, if you look at the Purple Tax Plan. 
So it is a set of plans.
    Ms. SCHWARTZ. Well you may want to speak to Mr. Kelly about 
this. He was saying everyone was treated exactly the same, and 
people are not, because there is a cap on the income.
    Mr. KOTLIKOFF. I guess what I am trying to say, really 
quickly, is that we have a lot of----
    Chairman JOHNSON. Okay.
    Mr. THOMPSON. Thank you, Mr. Chairman.
    Chairman JOHNSON. Thank you.
    Mr. Thompson, you are recognized.
    Mr. THOMPSON. I would hate to deprive you of the 
opportunity to mention the Purple Plan a couple more times.
    [Laughter.]
    Mr. THOMPSON. I want to just comment on a couple of things 
that have been said today. We are at the time of the hearing 
where just about everything has been said. My friend from 
Pennsylvania, I don't want you to think you are the only person 
who has come out of the private sector. A lot of us have, and 
some of us are still writing checks on our private sector 
businesses. And we know well how things operate. Some things, 
while the private sector is great, I wouldn't trade my business 
for anything.
    There are some things that need to be left to the 
government, and I think everybody would agree with that to some 
degree. And I don't know how far out that iceberg was when 
whatever exchange happened between the captain and the 
observer. We don't have black boxes back then. So probably we 
will never know, but I doubt strongly if it was 19 years out. 
And that is a point that I----
    Mr. KELLY. Well we can get a different rate of speed than 
the Titanic, though.
    Mr. THOMPSON. I think that is a point that has to be 
reiterated, because any failure to do that does put us in a 
position where a number of people have mentioned it becomes an 
issue of frightening people. And we should be ashamed of 
ourselves if we are frightening senior citizens. And I don't 
think my district is made up of people any different than 
anybody else on this dais, but when the rhetoric gets ramped 
up, I have people come to me all the time worried about whether 
or not Social Security is broken, broke, bankrupt. The wheels 
aren't falling off of this call for a while.
    Now, granted, we do have problems that need to be worked on 
as Ms. Schwartz said. That's what we should be doing is trying 
to figure out how to solve these problems, not trying to figure 
out how to whip up everybody into some fear position where it 
benefits

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somebody politically. In regard to the Social Security, every 
one of us in this room factors Social Security into our 
retirement. Every constituent we represent factors Social 
Security into the retirement. This is not something that we 
only talk about in this hearing or in political ads, but I can 
tell you that my constituents want a Social Security office 
that is open. So if they need something, they can go down 
there. They can sit and talk to the people.
    Ms. Entmacher mentioned the computer stuff. You know. I 
have young Social Security recipients who feel better about 
going in the office and sitting down with a human being rather 
than trying to do a calculation online. And I think we do a 
terrible disservice when we deprive folks of that opportunity.
    I want to ask Mr. Blahous. You are talking about this 
shortcome. Do you factor in the interest on the trust fund in 
your calculations? Because your numbers are a nine-day 
difference between the numbers that I got from our staff, and 
we show a $19.3 billion surplus.
    Mr. BLAHOUS. Well it depends on what you are asking.
    Mr. THOMPSON. I know it always depends on how you figure. 
Figures never lie, but----
    Mr. BLAHOUS. Well I was asked the question as to what was 
the relationship between payroll tax revenue and expenditures. 
So that answer, of course, excluded the interest.
    Mr. THOMPSON. So is it accurate that we have a $19.3 
billion surplus factoring in the tax revenues of 883.4 billion, 
interest of 99 billion, operating expenses of 5.7 billion?
    Mr. BLAHOUS. It is accurate that the trust fund had an 
increase in its balance. The amount of trust fund assets 
increased. From a trust fund perspective, we had a surplus. If 
you are asking me from an overall budget perspective did we 
have surplus, the answer is no, because the interest payments 
are from one government account to the other.
    Mr. THOMPSON. Well, Mr. Chairman, I would like unanimous 
consent to put these accurate numbers into the record, because 
I think it was very misleading to go down that road. And I'm 
assuming staff can put a proper draft together for you, but 
again it just feeds into the idea that we are going to frighten 
people, and I don't think that is right. I think right would be 
all of us sitting down and figuring out what sort of tweaks we 
needed to make to make the system work. And could you just by a 
show of hands, how many of you on the witness table believe we 
should privatize Social Security?
    Mr. KOTLIKOFF. You need to define what you mean.
    Mr. THOMPSON. No. No. I didn't ask for any commentary. So 
nobody thinks we should privatize Social Security?
    Mr. KOTLIKOFF. Well I think we should individualize it. I 
am not sure we should--I wouldn't privatize it the way 
President Bush proposed.
    Mr. THOMPSON. My time has expired. Thank you.
    Chairman JOHNSON. Yes, it has. Thank you. And we will put 
this in the record.
    [The information follows:]

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    Chairman JOHNSON. How about Mr. Griffin? Are you?
    Mr. GRIFFIN. Thank you, Mr. Chairman. Appreciate it. It was 
great to hear my colleagues say that they would never use 
Medicare or Social Security to scare people. Make sure your 
party leadership knows that. That will probably be a news 
flash.
    Mr. Blahous, I want to ask you from a practical standpoint, 
let's say we get to the point where the trust fund does not 
have the money to pay out. I think a lot of people, a lot of 
Americans sort of feel like, yeah. Well, on paper that will 
happen at some point, but maybe my benefits will never be 
affected because we will just borrow it. Right? So I want you 
to walk me through what the practical impact would be in terms 
of where the money would come from if there are benefit cuts. 
So I assume we would have to find in general revenue the money 
to shore up the fund, the way sort of we have done with the 
Highway Trust Fund.
    That would come out of discretionary fund and we wouldn't 
have that money, most likely. So that would be borrowed. Could 
you sort of walk through what the practical implications of 
that would be? Could we even borrow that much? How much money 
are we talking about borrowing when we get to the point where 
we don't have enough money to pay out? And all the bad things 
that we have heard--you know, benefits being cut and all that? 
What would we have to do if reforms do not occur? What would we 
have to do to continue on the path that we are on?

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    Mr. BLAHOUS. Right. At the point where the combined trust 
funds, assuming we reallocate taxes between the trust funds and 
then they are depleted in 2033, one of the common methods that 
the trustees use to describe quantities within the Social 
Security system as a percentage of the program's tax base. So, 
for example, in 1983 when we had a shortfall to close, the long 
term shortfall was described as 1.8 percent of the program's 
tax base.
    In order to fill that, they delayed the COLAs by six 
months. They exposed benefits to taxation for the first time. 
They brought in newly hired federal employees. They raised the 
eligibility age, et cetera. They did all these things, and that 
added up to about 1.8 percent of the tax base. And they did 
about half of it on each side, half of it on the revenue side, 
half of it on the benefit side.
    If we wait until 2033, our shortfall, our annual shortfall 
will be about 4.2 percent of taxable payroll. So we would have 
to make changes. Again, heeding the admonition about not 
wanting to scare people, but you may have to make changes over 
twice as severe, about two and a half times as severe. And the 
question is would our political system, would the people on the 
right be over twice as willing to raise taxes as they have ever 
been willing to do before. Would people on the left be over 
twice as willing to cut benefits--both of them twice as 
willing?
    Mr. GRIFFIN. What about people who would say--and I am not 
advocating this, but we would just borrow that money. How much 
are we talking about here?
    Mr. BLAHOUS. Right. Well, yeah, exactly. Again, it is in 
dollar figures. It's going to be much, much bigger, because we 
are looking way into the future. And so that is why we tend to 
do it as a percentage of GDP or as a percent of taxable 
payroll. But you would have to borrow--if you wanted to do it 
through borrowing--you would have to borrow an amount that 
equaled over four percent of what workers are earning, and that 
is a tremendous amount of money.
    Mr. GRIFFIN. Right. That is not an option is the point. Is 
that what you are saying? In terms of getting that money, 
borrowing that sort of money, adding that to the debt?
    Mr. BLAHOUS. My personal view--and this is not necessarily 
a consensus view among experts, my personal view is that at 
that point it is a bridge too far to balance system finances. 
And we wouldn't be able, politically----
    Mr. GRIFFIN. Right.
    Mr. BLAHOUS [continuing]. to sustain the system without 
turning it into a program that is financed from the general 
fund. And then we would lose a lot of the things that have made 
Social Security a stable, reliable benefit over the years.
    Mr. GRIFFIN. Well that is scary to me, and I am not a 
senior yet. I hope I make that, but that is scary to me in and 
of itself. Let me ask you real quickly. Could you talk a little 
bit about our culture and the role that Social Security played 
in the early days versus now in terms of whether people had in 
the early days other sources of income for retirement versus 
today? Has there been a movement? And I think I know the answer 
to this. Has there been a movement over the years to rely 
solely on Social Security for a

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bigger percentage of the population, or is it the same, 
general--I'd like to know that. I see you shaking your head.
    Mr. BLAHOUS. I think the first point I would make is that 
if we still had the system that was left to us by FDR we 
wouldn't have a financial shortfall right now. It is the 
subsequent expansions that have put us in financial trouble. 
You know. We added the disability component, later on. Perhaps 
it was an appropriate thing to do. Then we added early 
eligibility. People are now collecting at 62 more often than 
any other age.
    Originally, they could only collect at 65. So we are 
collecting three years earlier and we are living a lot longer. 
And then in the 1970s we expanded. We added a 20 percent 
benefit increase and we started wage-indexing the benefits. And 
so now we have cost issues that we didn't have under the 
original design of Social Security. So when people talk about 
sort of the historic legacy, I guess, of Social Security, it is 
not the FDR legacy that is really in jeopardy. The program he 
left to us is stable. It is the subsequent expansions that are 
causing us the trouble.
    Mr. GRIFFIN. I am out of time, Mr. Schieber, but the 
Chairman in his mercy might allow you to respond.
    Mr. SCHIEBER. In 2008 there were $532.87 billion paid in 
Social Security benefits, that combined, IRA and pension 
annuity benefits paid to Social Security beneficiaries was $568 
billion. So the benefits paid out of pensions and IRAs was 
actually larger than Social Security benefits. Last year we got 
tax data on both of them, and none of these tax qualified 
benefits existed or very minuscule amounts of them existed in 
the 1930s.
    So there is a much greater dependence, now, on these tax 
qualified benefits, people's personal savings or personal 
pensions than we have had in the past. Of course, we haven't 
been reporting it. We have only been reporting 40 percent of 
it. So in terms of what you are generally being told, you have 
no idea what this other part of the retirement system is really 
about. It would seem to me that might be important when you 
think about retirement income security.
    Chairman JOHNSON. Thank you. Ms. Entmacher, you look 
fidgety. Did you want to say something?
    Ms. ENTMACHER. I would. Thank you very much.
    First of all, yes. It is not Franklin Roosevelt's 
retirement program and that is a very good thing. I know that 
many people have pointed to what a great job Social Security 
has done in reducing elderly poverty since Franklin Roosevelt's 
days. And what may be less understood is that most of that 
decrease has come through the improvements that were made to 
Social Security that were just discussed, particularly for 
women, the automatic COLA, increased benefits for widows, those 
have been incredibly important and valuable.
    Second, what is causing the shortfall in Social Security is 
not rising benefits. As has been indicated, benefits are 
actually going down from what they would have been because of 
the 1983 cuts. And in 1983 people tried to, and did for a 
couple of years, establish solvency for 75 years. What has 
created much of the shortfall is the growth in inequality, the 
shrinking of wages for ordinary Ameri

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cans and the growth and wages at the top, which was not 
foreseen by people in 1983.
    And, lastly, because trillions of dollars are really 
frightening, I would like to point out that the growth in 
Social Security's cost is about 1.2 percent of GDP over the 
next several decades and then levels off. 1.2 percent of GDP is 
less than what we had to come up with when the baby boomers 
were kids and public education was more expensive.
    We spend about--I have the CBO estimates of tax 
expenditures, the tax expenditure for giving preferential rates 
on capital gains is one percent of GDP per year. We can afford 
to cover the shortfall and make improvements in Social 
Security. We shouldn't wait to do it, and we don't have to do 
it all at one blow, but we can reassure people that Social 
Security will be there.
    Chairman JOHNSON. Thank you for your comments, ma'am.
    And without objection I will insert into the record my 
response to Mr. Becerra's letter which was inserted into the 
record earlier.
    [The information follows:]

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    Chairman JOHNSON. In closing, I want to thank all of you 
for your testimony and thank our members who are still here for 
being here.
    Social Security is facing the biggest challenge since 1983, 
and the longer we wait the harder it is going to be to fix. In 
the meantime, workers can't be sure how to plan for their 
retirement, because they don't know what to expect from Social 
Security. We have got real work to do. Americans deserve a 
Social Security program they can count on with benefit amounts 
they can understand.
    With that, the Committee stands adjourned.
    Mr. KELLY. Mr. Chairman, I know we have just adjourned. I 
would like to hear you.
    I know somebody who still wanted to respond I would like to 
stay and hear. I heard what you said, ma'am. I do not agree 
with you. And I think there are a number that would not. So I 
will stay and listen. I want to hear what you have to say. If 
this isn't a crisis, we had better look up in the dictionary 
what a crisis is.
    Mr. KOTLIKOFF. This is a huge crisis. The country is broke 
and Social Security is broke too. It is not broke in 30 years.
    Mr. BECERRA. Mr. Chairman, are we still in hearing?
    Chairman JOHNSON. I will withdraw my adjournment. Go ahead.
    Mr. KOTLIKOFF. Social Security is not broke in 30 years or 
in 20 years or in 10 years. It's broke today. We need according 
to the trustees' report Table F61, just go look at it. It's 
buried, but you can find it. We need a 4.1 percent hike in the 
payroll tax rate. That is a 33 percent hike in the payroll tax 
rate for Social Security, starting today, immediately and 
permanently, 33 percent tax hike.
    That is in the trustees' report. This is what a thousand 
economists at every top school--Stanford, Harvard, MIT, 
Chicago, you name it, Princeton--17 Nobel Prize winners, and 
they are not Republicans. They are not Democrats. They are 
both. Okay? That is what they are saying to look at, guys. You 
guys keep talking about the 75-year numbers. Economics doesn't 
support that. It says you have to look at the Infinite Horizon. 
Now, this does not mean the system is broke.

[[Page 122]]

    Mr. BECERRA. Mr. Chairman, if we want to have more 
discussion, I think that is fine. I think it is always 
important as I think members have pointed out we want to get to 
the solutions rather than just talking about the issues. And so 
I think we can do that, but I think we have to do it in a way 
that is organized and constructive.
    If we are going to have every witness comment, we can do 
that, but that is going to take more time. Mr. Chairman, so 
long as we can just establish how you want to do this, do you 
want to give them a chance?
    Chairman JOHNSON. Well, what I would prefer to do is let 
you all submit something for the record. If you would care to, 
we will put it in.
    And with that the Committee stands adjourned.
    [Whereupon, at 12:50 p.m., the Subcommittee was adjourned.]

                                 


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                        Questions For The Record


                     Charles P. Blahous III, Ph.D.

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[[Page 129]]



                      Sylvester J. Schieber, Ph.D.

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                       C. Eugene Steuerle, Ph.D.

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                         Andrew G. Biggs, Ph.D.

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                    Public Submission For The Record


                     Financial Planning Association
                     

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