[Senate Hearing 117-287]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 117-287

             SAVING SOCIAL SECURITY: EXPANDING BENEFITS 
              AND DEMANDING THE WEALTHY PAY THEIR 
              FAIR SHARE OR CUTTING BENEFITS AND 
              INCREASING RETIREMENT ANXIETY

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              June 9, 2022

                               __________

           Printed for the use of the Committee on the Budget

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-818                     WASHINGTON : 2022                     
          
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                        COMMITTEE ON THE BUDGET

                   BERNARD SANDERS, Vermont, Chairman
PATTY MURRAY, Washington             LINDSEY O. GRAHAM, South Carolina
RON WYDEN, Oregon                    CHARLES E. GRASSLEY, Iowa
DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island     PATRICK TOOMEY, Pennsylvania
MARK R. WARNER, Virginia             RON JOHNSON, Wisconsin
JEFF MERKLEY, Oregon                 MIKE BRAUN, Indiana
TIM KAINE, Virginia                  RICK SCOTT, Florida
CHRIS VAN HOLLEN, Maryland           BEN SASSE, Nebraska
BEN RAY LUJAN, New Mexico            MITT ROMNEY, Utah
ALEX PADILLA, California             JOHN KENNEDY, Louisiana
                                     KEVIN CRAMER, North Dakota

                Warren Gunnels, Majority Staff Director
                  Nick Myers, Minority Staff Director
                           
                           
                           C O N T E N T S

                              ----------                              

                         THURSDAY, JUNE 9, 2022

                                                                   Page

                OPENING STATEMENTS BY COMMITTEE MEMBERS

Chairman Bernard Sanders.........................................     1
Ranking Member Lindsey O. Graham.................................     4

                               WITNESSES

Statement of Ms. Nancy J. Altman, President, Social Security 
  Works..........................................................     7
    Prepared Statement of........................................    37
    Questions and Answers (Post-Hearing) from:
        Senator Patty Murray.....................................    90
        Senator Sheldon Whitehouse...............................    94
Statement of Mr. Robert Roach, Jr., President, Alliance for 
  Retired Americans..............................................     8
    Prepared Statement of........................................    46
    Questions and Answers (Post-Hearing) from:
        Senator Patty Murray.....................................    96
        Senator Sheldon Whitehouse...............................    97
Statement of Mr. Alex Lawson, Executive Director, Social Security 
  Works..........................................................    10
    Prepared Statement of........................................    52
    Questions and Answers (Post-Hearing) from:
Senator Patty Murray.............................................    98
Statement of Ms. Maya MacGuineas, President, Committee for a 
  Responsible Federal Budget.....................................    12
    Prepared Statement of........................................    61
    Questions and Answers (Post-Hearing) from:
        Senator Patty Murray.....................................    99
Statement of Mr. Shai Akabas, President, Director of Economic 
  Policy, Bipartisan Policy Center...............................    14
    Prepared Statement of........................................    68
    Questions and Answers (Post-Hearing) from:
        Senator Patty Murray.....................................   100
Statement of Mr. Stephen C. Goss, Chief Actuary, Social Security 
  Administration.................................................    32
    Prepared Statement of........................................    78
    Questions and Answers (Post-Hearing) from:
        Senator Lindsey Graham...................................   102
        Senator Patty Murray.....................................   105
        Senator Sheldon Whitehouse...............................   107

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Statement of the American Federation of State, County, and 
  Municipal Employees (AFSCME), Submitted for the Record by 
  Chairman Bernard Sanders.......................................   109
Statement of Max Richtman, President and CEO, National Committee 
  to Preserve Social Security and Medicare, Submitted for the 
  Record by Chairman Bernard Sanders.............................   112
Letter from Mr. Stephen C. Goss, Chief Actuary, Social Security 
  Administration, Submitted for the Record by Chairman Bernard 
  Sanders........................................................   120

 
 SAVING SOCIAL SECURITY: EXPANDING BENEFITS AND DEMANDING THE WEALTHY 
  PAY THEIR FAIR SHARE OR CUTTING BENEFITS AND INCREASING RETIREMENT 
                                ANXIETY

                              ----------                              

                         THURSDAY, JUNE 9, 2022

                                       U.S. Senate,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 11:00 a.m., via 
Webex and in Room SH-216, Hart Senate Office Building, Hon. 
Bernard Sanders, Chairman of the Committee, presiding.
    Present: Senators Sanders, Wyden, Whitehouse, Warner, Van 
Hollen, Padilla, Graham, Grassley, Crapo, Braun, Scott, and 
Romney.
    Staff Present: Warren Gunnels, Majority Staff Director; and 
Nick Myers, Republican Staff Director.

             OPENING STATEMENT OF CHAIRMAN SANDERS

    Chairman Sanders. Okay. Let us get going.
    Today we have a hearing on a subject that is of enormous 
interest to, I think, almost every American, and that is the 
future of Social Security in our country. And let me thank all 
of our panelists for being with us, and let me thank the 
Senators who I know are going to be filtering in as the hearing 
progresses.
    My understanding is that Ranking Member Lindsey Graham has 
a scheduling conflict and will be making his opening statement 
after our witnesses testify. Is that right? Okay.
    Social Security is, I think, as everybody knows, one of the 
most popular and successful government programs in the history 
of our nation. For more than 80 years, in good times and bad, 
Social Security has paid out every benefit owed to every 
eligible American, on time and without delay, and I think it is 
important to make that point. We live in a moment of great 
insecurity, and yet Social Security, since its inception, has 
never failed the American people and remains a program 
enormously important to them and one that they can rely upon.
    Not once, over more than eight decades of operation, not 
during the pandemic that we are in, not during the Wall Street 
crash has anyone ever received a letter or a phone call from 
the Social Security Administration saying, ``Sorry, the economy 
is not doing well. We need to cut your benefits.'' It never 
happened, and if I have anything to say about it, it never will 
happen.
    Today, while many people take Social Security for granted--
it has been around for a long time--let us remember before 
Social Security was created in 1935, about half of our nation's 
seniors were living in poverty. Today, though, the poverty rate 
is still too high for seniors. That rate is just 8.9 percent--
50 percent before Social Security, less than 9 percent today. 
Got to do better, but that is a significant improvement. 
Without Social Security, it is estimated that some 22 million 
Americans, including more than 16 million seniors, would be 
living in poverty.
    Yet, despite this important success, we should be clear 
that tens of millions of senior citizens are still struggling 
today to make ends meet, and many older workers are scared to 
death, literally frightened to death, that they will never be 
able to retire with any shred of dignity.
    According to the most recent data that I have seen, 12 
percent of seniors in America are trying to live on an income 
of less than $10,000 a year. Got that--12 percent less than 
$10,000 a year. I do not know how anyone can live, seniors or 
otherwise, on less than $10,000. And equally important, 55 
percent of seniors are trying to survive on less than $25,000 a 
year. Think about that. And when you are a senior you are 
dependent on prescription drugs and health care, trying to keep 
your home warm. Trying to make it on $25,000 a year, that is 
more than half of the seniors in America.
    Adding insult to injury--and this is an enormously 
important point that I think we do not make often enough--about 
half of older Americans, those who are 55 years of age and 
older, have no retirement savings. Got that? You are 55 years 
of age in America, you have worked your whole life. You have 
got zero in the bank for when you retire. And they are 
dependent on a Social Security benefit today that is less than 
$1,540 a month, on average.
    Now despite what some politicians have been saying for 
years, Social Security today is not on the line to go broke. 
Social Security has a $2.85 trillion surplus in its trust fund, 
and can pay out every benefit owed to every eligible American 
for the next 13 years. Okay? Social Security can pay out all 
your benefits for the next 13 years. But what the actuaries 
want, what I want, what I think most people want is more than 
13 years. The actuaries talk about 75 years being the kind of 
number that we should have as we go forward.
    After that, after that 13 years, the Social Security 
Administration estimates that there will be enough funding 
available to pay 80 percent of promised benefits. So you have 
got all benefits for the next 13 years, 80 percent after that.
    Now given that reality, our job, in my view, is not to cut 
Social Security, is not to raise the retirement age, as many of 
my Republican colleagues would have us do. Our job is to expand 
Social Security so that everyone in America can retire with the 
dignity that he or she deserves, and that every person in this 
country with a disability can retire with the security they 
need.
    And that is what the Social Security Expansion Act that I 
have introduced today, along with Senators Warren, Whitehouse, 
Merkley, Van Hollen, Padilla, Booker, and Gillibrand is all 
about. This legislation has been endorsed by many, many 
organizations, including the AFL-CIO, the Alliance for Retired 
Americans, Social Security Works, the National Committee to 
Preserve Social Security and Medicare, the American Federation 
of Teachers, and many, many other organizations.
    According to a letter--and this is an important part of 
what this hearing is about today--according to a letter that I 
received from the Social Security Administration this morning, 
this legislation will fully fund Social Security for the next 
75 years and expand benefits for senior citizens and people 
with disabilities.
    Now how do we do that? How do you expand benefits and make 
Social Security solvent for the next 75 years, which is, I 
think, what the American people want? Well, the answer is not 
complicated. At a time of massive income and wealth inequality, 
at a time when billionaires pay an effective tax rate lower 
than the average working person, at a time when the very 
richest people in this country are becoming much richer, this 
legislation demands that the wealthiest people in this country 
start paying their fair share of taxes.
    Today, absurdly and grossly unfairly, there is a cap on 
income subject to Social Security taxes. That cap is now about 
$147,000 a year. Now what does that mean? It means that if you 
are a multi-billionaire, you pay the same amount of money into 
Social Security as someone who makes $147,000 a year. Got that? 
It means that if you make $147,000 a year you pay 6.2 percent 
of your income in Social Security taxes. But if you make 10 
times more than that, $1,470,000, you pay 6/10ths of 1 percent 
of your income in Social Security taxes. All of this is taking 
place at a time of massive income and wealth inequality. Now 
that may make sense to somebody. It does not make sense to me.
    Our legislation applies the Social Security payroll tax on 
all income, including capital gains and dividends, for those 
who make over $250,000 a year. Under this legislation, 93.6 
percent of households would not see their taxes go up by one 
penny, so the overwhelming majority of the American people 
would not see any increase in their taxes under this proposal. 
The tax increase in our legislation only applies to the 
wealthiest 6.4 percent of all Americans, those who make 
$250,000 a year or more.
    Further and importantly under this bill, Social Security 
benefits would be increased by $2,400 a year for both new and 
existing recipients, lifting millions of seniors out of 
poverty. In addition, under this bill we would increase cost of 
living adjustments (COLA) for senior citizens by more 
accurately measuring the spending pattern for senior citizens 
through the Consumer Price Index (CPI) for the Elderly.
    One of the reasons that I called this hearing, and I am 
glad that Senator Graham has been able to be here, is that 
there is, in fact, a strong philosophical difference between 
many of us in the Democratic caucus and many in the Republican 
caucus, as to the best way forward with regard to Social 
Security, and that is kind of the discussion we are going to 
have today.
    While virtually all members of the Democratic caucus are on 
record in support of expanding Social Security benefits, the 
Republicans, by and large, have taken a very different 
approach. And I am delighted, and I hope they will show up, 
that some of the Republicans who have taken strong positions on 
this issue--I see Senator Romney is here, and I am glad that is 
the case; I look forward to hearing from him--that some of the 
Republicans who have taken strong positions on this issue are 
on this Committee. And I know that they are going to be 
explaining where they come from, and I look forward to that 
debate.
    Earlier this year, Senator Rick Scott, the Chairman of the 
National Republican Senatorial Committee, released a plan that 
would sunset Social Security every five years, raise taxes on 
millions of seniors, and jeopardize the guaranteed income of 65 
million Americans who depend on Social Security.
    Just a few months ago, the Republican Study Committee in 
the House introduced a bill that would raise the Social 
Security retirement age to 69 years of age, over the next 8 
years, and privatize Social Security by allowing employers to 
divert payroll tax dollars into less-generous private 
retirement accounts.
    Last year, Senator Romney, who is here with us, who has 
opposed raising taxes on the wealthy to strengthen Social 
Security, introduced legislation to form a committee to propose 
cuts to Social Security behind closed doors.
    In 2020, Senate Republican Leader Mitch McConnell told a 
Bloomberg reporter that, quote, he ``hopes to work with the 
next Democratic President to trim Social Security, Medicare, 
and Medicaid,'' end quote.
    In 2011, my colleague, Senator Graham, introduced 
legislation to raise the full retirement age to 70 by 2032, and 
index it to longevity. Further, in 2003, Senator Graham 
introduced a bill that would have cut Social Security benefits 
for current wage earners by 27 percent, according to the Center 
on Budget and Policy Priorities.
    Now as I think everybody knows, I do not often agree with 
former President Donald Trump, but this is what he said when he 
was campaigning for President in 2015, and he was right. He 
said, quote, ``Every Republican''--this was in the Republican 
primary--``Every Republican wants to do a big number on Social 
Security, they want to do it on Medicare, and they want to do 
it on Medicaid,'' end quote.
    Well, let me be clear, we cannot allow that to happen. The 
vast majority of the American people understand that a moral 
society does not give tax breaks to billionaires and then cut 
back on the needs of struggling seniors or people with 
disabilities. In fact, 72 percent of Americans support 
increasing, not cutting, Social Security benefits by asking 
millionaires and billionaires to pay more into the system.
    So that is where we are right now. It is a great 
philosophical difference. I look forward to the debate. Some of 
us think that the very wealthiest people in this country are 
doing extraordinarily well, and should, in fact, be asked to 
pay more into Social Security so we can protect millions of 
low-income and struggling seniors. Others disagree.
    And with that I am glad that Senator Graham has been able 
to come. Senator Graham.

              OPENING STATEMENT OF SENATOR GRAHAM

    Senator Graham. Number one, Mr. Chairman, I think this is a 
hearing worth having, and I take a different view about how to 
save Social Security. Mine is more realistic, yours is a 
fantasy, but the problem is real. And you are good man. You are 
consistent. Every time there is a problem, tax the rich. Count 
me in for more revenue. We are going to need more revenue. But 
if you think taxing the wealthy is going to save Social 
Security, you are wrong.
    So where are we with Social Security? By 2034, according to 
the recent Trust Fund Report, the money in Social Security will 
require us to reduce benefits so that you can get only 77 
percent of the benefits you are owed because we are paying out 
more than we are taking in. That is a fact. It slipped a year, 
but we are on a glidepath where, over time--Senator Romney 
knows this--the money being paid in and the money taken out 
does not add up, and if you do not do something now you are 
going to have a draconian choice of cutting benefits and 
raising taxes to keep the thing afloat.
    But here is the good news. We have got some time if we act 
together. And here is the model I would suggest: The Reagan-
O'Neill model. I think it was in the '80s, the Greenspan 
Commission was formed by President Reagan. Tip O'Neill and 
Ronald Reagan were known to have a drink together, and 
apparently during one of those discussions they said, ``Well, 
let's do something about Social Security because it is going 
broke.'' So they got Alan Greenspan and a bunch of folks to 
come up with some ideas. They did a little more on the revenue 
side. But they adjusted the age of retirement, over time, from 
65 to 67.
    I just got my first Social Security check a few months ago. 
I was eligible 66, I think, and two months. In my case, when I 
was 21 and 22, my mom and dad died within about 15 months of 
each other. I had a 13-year-old sister. We moved in with an 
aunt and uncle who worked in textile plants in South Carolina, 
and probably never made over $30,000 in their life. The 
survivor benefit portion of Social Security for my sister, 
until she got to 18, really helped us get by.
    Now I am 66, soon will be 67. I have a good salary, I have 
a military retirement, and I have a congressional pension plan. 
If you asked me to take a little less to save Social Security 
for people who need it more than I do, count me in. And it is 
going to take that kind of commitment from all of us. The 
wealthier people are going to have to take a little less in 
benefits. Younger people are living longer, so we are going to 
have to adjust the age probably once again.
    But here is the fact. In 1955, when I was born, there were 
8.6 workers for every retiree. In 1990, there were 3.4. In 
2022, there are 2.8. By 2050, there are 2.2. Senator Romney has 
done everything he can, personally, to save Social Security. If 
you ever go to a Romney family reunion you will see a lot of 
people going to pay into Social Security. I have let you down. 
I am not married with no kids. It is people like me screwing 
this thing up.
    So the bottom line here is that we have fewer people 
working for the number of people retired, and if that does not 
create a problem then I think you are missing the point. And 
2.2 people by the middle of the century are not going to 
generate the amount of money necessary to keep the fund solvent 
if we do not make some changes.
    So what are the changes that Simpson-Bowles, the Gang of 
Six, bipartisan people have looked at? Adjusting the age of 
retirement, increasing revenue, and trying to make the benefit 
structure more efficient.
    So I do not need a lecture about Social Security. I 
understand the value of the program, because when I was 22, 
when I lost both of my parents and had a 13-year-old sister to 
take care of, the money really mattered. It matters to a lot of 
people on retirement as their primary source of income.
    I am at a stage now where it would not change my lifestyle 
to have a smaller COLA, for me, maybe none at all but smaller 
for sure, and to restructure the benefit schedule so the money 
will be there for people who need it more than I do.
    I do not know how to solve this problem without all of us 
working together. I know that what Ronald Reagan and Tip 
O'Neill did in the 1980s worked for a while. We have got to do 
that again. They did not go to the approach of Senator Sanders 
of just taxing the wealthy because it is not going to work as a 
standalone proposition.
    So the country is in a world of hurt. Our financial house 
is not in order. By 2031, we will have $2 trillion in annual 
deficits. The national debt, by 2032, will be $40 trillion. By 
2052, debt-to-GDP will be 185 percent. That is a separate 
problem from Social Security, but Social Security is sort of 
consumed in that.
    Now the Trustee Report assumed something about the 
viability of the trust fund, Mr. Chairman. They assumed about a 
3.5 percent inflation rate. Well, we know now that that is not 
exactly what is going on. Interest rates are going up. 
Inflation rates are at 8 percent. Every increase in interest 
rates is about $200 billion debt service. So we are on a 
trajectory now where inflation is higher than anticipated, 
which puts stress on the trust fund. Interest rates are going 
up, which will put stress on the economy.
    So what I propose we do is have this discussion--you can 
blame us if you would like, but you are not going to be able to 
blame me for not caring, because I do. And I will challenge 
your assumptions about how to save the system, understanding 
you are a patriotic American and you want to do what you think 
is best. But in your world, where all the bad guys--and you 
have figured this out--you have not figured it out. What you 
are selling does not work, and we will have a good discussion 
about what will work. It will be bipartisanship. It will not be 
the Sanders plan. It will not be individual private accounts. 
That might be part of the mix. Who knows?
    The bottom line is we are going to have to make some hard 
decisions. I stand ready to make those hard decisions. Senator 
Romney has been terrific. Senator Romney wants somebody outside 
of politics to give us some information, like we have with 
Simpson-Bowles, like we have with the Gang of Six, to adjust 
Social Security and stop it from running out of money by 2034, 
and having to reduce benefits. And I think he and others on our 
side, and people on your side, quite frankly, are willing to do 
this.
    And I would invite President Biden to be part of it. I 
would love to be able to sit down with the Administration and 
see if we could recreate the momentum for Simpson-Bowles or the 
Gang of Six, where we put on the table something of everything, 
where everybody has to give a little bit to save the system 
worth saving.
    So this is an election year issue. Great. I think it needs 
to be talked about, and we are going to talk about it in terms 
on our side that is a little more holistic than just tax the 
rich.
    Thank you.
    Chairman Sanders. Thank you, Senator Graham, and I look 
forward to this discussion.
    We have an excellent panel with us, and following this 
panel we are going to hear from Mr. Stephen Goss, who is the 
Chief Actuary with the Social Security Administration, to tell 
us where we are at and what the plan that I have proposed would 
mean for the future of Social Security.
    We have five great panelists with us. We are going to begin 
with Ms. Nancy Altman. Ms. Altman is President and Co-Founder 
of Social Security Works. She also chairs the board of 
directors of the Pension Rights Center. Ms. Altman is a member 
of the Social Security Advisory Board, an independent 
government agency to which she was appointed by Speaker Pelosi.
    Ms. Altman, thanks very much for being with us.

 STATEMENT OF NANCY J. ALTMAN, PRESIDENT, SOCIAL SECURITY WORKS

    Ms. Altman. Chairman Sanders, Ranking Member Graham, and 
members of the Committee, thank you, Chairman Sanders, not only 
for holding this crucially important and aptly named hearing 
but also for your authoring the Social Security Expansion Act. 
It is legislation that greatly increases the economic security 
of all working families, including the economic security of 
every single one of Social Security's more than 65 million 
beneficiaries.
    As every Trustees Report makes clear, whether to expand 
benefits or cut them is a matter of values, not affordability. 
At the end of the century, Social Security is projected to cost 
less than 6 percent of gross domestic product. To put that 6 
percent in perspective, spending in response to COVID has 
amounted to over 27 percent of GDP.
    At the height of the Vietnam War in 1967, we spent more 
than 9 percent of GDP on the military. Moreover, our nation 
will be much wealthier at the end of the 21st century, just as 
we are wealthier now than we were 75 years ago. That means that 
the around 6 percent of GDP will be easier to afford in the 
future.
    Importantly, Social Security does not, and, by law, cannot 
add even a penny to the deficit.
    As polarized as Americans are over many issues, your 
constituents agree about Social Security. Poll after poll finds 
that an overwhelming majority of Americans, Republicans as well 
as Democrats and independents, believe that Social Security is 
more important than ever. They strongly oppose any and all 
cuts. They want to see benefits expanded, and they want the 
wealthiest to pay their fair share.
    What the American people want is extremely wise policy. 
Social Security ensures workers' wages against risks that 
confront us all. Rich or poor, any of us can die prematurely, 
leaving young children. Rich or poor, any of us can suffer a 
disabling accident or illness. Rich or poor, all of us hope to 
live to old age. Social Security protects us against all of 
these financial risks through its life insurance, disability 
insurance, and joint and survivor retirement annuities. It does 
it more efficiently, securely, universally, effectively, and 
fairly than its private sector counterparts. But it does not do 
so adequately.
    The Social Security Expansion Act is a solution. The nation 
is facing a retirement income crisis. Expanding Social Security 
is the answer. Expanding Social Security, while requiring the 
wealthiest to pay more, is also part of the answer to the 
nation's rising destabilizing income and wealth inequality, 
which President Obama called the ``defining challenge of our 
time.''
    The Social Security Expansion Act substantially increases 
Social Security's modest benefits. It not only pays for every 
penny of improvements but also ensures that Social Security 
benefits can be paid in full and on time for three-quarters of 
a century and beyond. It does so while imposing not one penny 
of additional cost on anyone earning under $250,000. The 
legislation is profoundly wise, though I believe benefits 
should be expanded more, and multi- millionaires and 
billionaires be required to pay more.
    Congress has not expanded Social Security benefits in half 
a century. President Roosevelt called Social Security ``a 
cornerstone in a structure which is being built but is by no 
means complete.'' For the first 35 years, Congress expanded 
Social Security every few years, but it has not expanded those 
benefits in half a century.
    It is time to act. Congress must address Social Security in 
the sunshine, through regular order, as it always has. That 
way, the American people will know where their elected 
representatives stand. An excellent place to start is a vote in 
the Senate before November on the Social Security Expansion 
Act. Thank you.
    [The prepared statement of Ms. Altman appears on page 37.]
    Chairman Sanders. Ms. Altman, thank you very much.
    Our next panelist is Mr. Robert Roach, Jr. He is the 
President of the Alliance for Retired Americans and former 
General Secretary-Treasurer of the International Association of 
Machinists and Aerospace Workers. Mr. Roach has served as an 
auditor for the International Trade Union Confederation, and is 
a board member of the Pension Rights Center.
    Mr. Roach, thanks very much for being with us.

STATEMENT OF ROBERT ROACH, JR., PRESIDENT, ALLIANCE FOR RETIRED 
                           AMERICANS

    Mr. Roach. Good morning. My name is Robert Roach. I am the 
President of the Alliance for Retired Americans and a former 
General Secretary Treasurer of the Machinists Union. Our 
organization has 4.4 million American retirees, and we are 
represented in 39 separate states.
    We believe categorically that the importance of improving 
Social Security cannot be overstated, because the index for 
determining cost-of-living adjustments has not kept pace with 
inflation. People on Social Security are suffering and unable 
to be self-sustaining. We need improvements because older 
Americans today are hurting.
    I have seen examples firsthand. On many occasions when 
seniors go to the checkout counter at the supermarket, and 
buying the same type of items that they bought for years, can 
no longer afford them and have to put food back on the shelves.
    Seniors are having to make decisions between food and 
medicine on a daily basis. These are just a few examples that 
clearly underline the country's desperate need to expand Social 
Security benefits.
    I will add that after 40 years of work and playing by the 
rules, my retirement benefit from the airlines, Trans World 
Airlines (TWA) and American Airlines, is $311 a month--$311 a 
month--and tens of thousands of people that I work with are now 
functioning with $300 to $500 a month and are depending on 
Social Security just to make ends meet.
    In addition, seniors who are in financial difficulty are 
depending on their children for financial help and to provide 
medical assistance. This is stifling our younger people. We are 
creating a generation, the next generation, of poor people.
    Attached to my statement is a statement from Ms. Kristina 
Brown, who had opportunities to go to Ivy League colleges on 
scholarship, and who had many opportunities to advance herself 
to become a doctor. She had to stop going to school, borrow 
money to pay the mortgage on the family home because her 
parents, her mother, was not self- sustaining as a result of 
many issues. We must do something, Senator Sanders.
    Women who take on the role of their families, people like 
her sister, both people, played by the rules and did what they 
were supposed to do, cannot be self-sustaining.
    Given the decline of traditional pension plans and the 
inability to accumulate savings because of stagnant real wages, 
greater numbers of Americans rely on Social Security in 
retirement. In fact, nearly 50 percent of retired Americans 
today rely on Social Security for half of their income, while 
one in seven over the age of 65 do so for 90 percent of their 
income.
    Moreover, Social Security benefits are not keeping pace 
with inflation. The Social Security cost-of-living adjustment 
is inadequate and not representative of the true measure of 
inflation that seniors face in what they buy.
    As of April, the average monthly Social Security benefit 
for a retired worker was a modest $1,666.
    And as we saw in the Social Security and Medicare Trustees 
Report released just last week, Social Security will be able to 
afford scheduled payments until 2034, at which point the fund's 
reserves will be depleted, and payroll taxes will cover just 77 
percent of what is owed.
    Senator Sanders' legislation, the Social Security Expansion 
Act, which the Alliance strongly supports and is proud to have 
formally endorsed, addresses these challenges by doing the 
following: extending the solvency of Social Security by 
requiring the wealthiest of American households to pay their 
fair share of Social Security taxes; expanding Social Security 
benefits across-the-board; increasing cost-of-living 
adjustments by adopting the Consumer Price Index for the 
Elderly, CPI-E; updating the Special Minimum Benefit for Social 
Security recipients by making it easier to qualify, assisting 
low-income workers to stay out of poverty.
    The Alliance has also endorsed Connecticut Congressman John 
Larson's legislation in the House, H.R. 5723, Social Security 
2100: A Sacred Trust Act, which also makes Social Security even 
stronger and repeals the Windfall Elimination Provision and 
Government Pension Offset, both of which unfairly claw back the 
Social Security benefits of workers, their spouses or survivors 
if they work for a period of time in jobs not covered by Social 
Security.
    The time to expand Social Security is now.
    I want to once again thank the Committee for inviting the 
Alliance to participate in today's important hearing. The 
Alliance stands ready to work with the Senate and the House in 
any way possible to improve benefits for retired Americans. 
Thank you.
    [The prepared statement of Mr. Roach appears on page 46.]
    Chairman Sanders. Mr. Roach, thank you very much.
    Our next panelist is Mr. Alex Lawson, who is the Executive 
Director of Social Security Works, the convening member of the 
Strengthen Social Security Coalition, a coalition made up of 
over 340 national and state organizations, representing over 50 
million Americans.
    Mr. Lawson, thanks very much for being with us.

 STATEMENT OF ALEX LAWSON, EXECUTIVE DIRECTOR, SOCIAL SECURITY 
                             WORKS

    Mr. Lawson. Thank you, Chairman Sanders, Ranking Member 
Graham, and other members of the Committee. I am going to do a 
bit of a history lesson, I think.
    In 1935, Democratic President Franklin Delano Roosevelt 
signed the Social Security Act into law, and for the next 87 
years Social Security has never missed a single payment.
    Everybody loves Social Security. Everybody. I have been all 
over this country taking about Social Security, and I can tell 
you it does not matter if it is a roomful of camo NRA hats, or 
a parking lot full of electric vehicles, everybody loves Social 
Security.
    That is not actually totally true. Not everybody. There has 
always been a sliver, a tiny splinter group, a vanishingly 
small number of people who hate it with every fiber of their 
being. These are Wall Street people. They see the trillions of 
dollars the system has put in the pockets of the American 
people and they say, ``Hey, I want that money in my pocket.'' 
And as there are money men who hate Social Security, there are 
politicians willing to say, ``How high?'' at their commands to 
jump.
    The first was named Alf Landon. In 1936, he ran against FDR 
on an explicitly anti-Social Security platform. He called it a 
hoax, a fraud. He said it was filled with worthless IOUs that 
would never get to the people. And yet 87 years later, and $11 
trillion later going to the people, Social Security is still 
here, making payments every month, like clockwork, and Alf 
Landon is only remembered as the man who lost 48 states when he 
ran for President.
    After that, for the next few decades, the majority of 
Republicans understood Social Security as a birthright and a 
cornerstone of economic security for all Americans, not a 
partisan football. My favorite is President Eisenhower, in a 
letter to his brother saying this: ``Should any party attempt 
to abolish Social Security you will not hear of that party 
again in our political history.''
    There is a tiny splinter group, of course, that believes 
you can do these things. Their number is negligible, and they 
are stupid. But unfortunately that greedy splinter faction 
never stopped plotting, and that faction today has taken over 
the entire Republican party.
    Ronald Reagan was possibly the last Republican president 
who was not totally under their sway, and he stated, with 
clarity, ``Social Security has nothing to do with the deficit. 
Social Security is totally funded by the payroll tax levied on 
employer and employee. If you reduce the outgo of Social 
Security that money would not go into the general fund to 
reduce the deficit. It would go into the Social Security trust 
fund. So Social Security has nothing to do with balancing the 
budget or lowering or erasing the deficit.''
    But the splinter group has patience and money, lots of 
money, and politics loves money. So after the 1983 reforms, 
they began waging a new type of war against Social Security, 
the main tactic being lying to the face of the American people 
about what it is they are doing.
    So now you will never hear from Republicans that they want 
to destroy Social Security. You will never hear that they want 
to cut benefits. In fact, they always start their assaults on 
Social Security with protestations of love. ``I love Social 
Security. I am just worried it is not going to be there for us 
in the future.''
    The goal of this is to convince people that they are going 
to get nothing so that they will accept less than they are 
owed. They cloak their attacks under new monikers. George W. 
Bush called for just handing our Social Security over to Wall 
Street. He called it privatization, but again, it is just 
destruction. Just destroy Social Security.
    Imagine if George W. Bush had given our Social Security to 
Wall Street in 2006, two years before Wall Street collapsed the 
world economy, and we saw 401(k)s turned into 201(k)s. Social 
Security would be gone if he had gotten his way.
    And it was not just him. The entire Republican Party was 
complicit. Senator Ron Johnson said as recently as 2015, that 
it was a shame the Bush plan to destroy Social Security did not 
succeed. Senator Lindsey Graham, who supported the 
privatization effort too, has proposed a bill cutting Social 
Security benefits by 21 percent. He hides that policy by saying 
he is raising the retirement age.
    Senator Graham just laid out that the problem with Social 
Security is that if nothing happens, benefits are going to go 
down 23 percent. But Senator Graham's solution is to cut 
benefits by more than that. So that is not a solution, that is 
just the problem sooner.
    And that is not an outlier. The Republican platform, in 
2016, says with coded language the plan is to cut benefits and 
hand over Social Security to Wall Street. ``As Republicans, we 
oppose tax increases and believe in the power of markets to 
create wealth,'' is what it says.
    Senator Romney recently tried to get an up-or-down vote in 
the dead of night on his so-called TRUST Act, which would 
create an undemocratic, fast-tracked, closed-door process to 
cut Social Security. They know it is so toxic to talk about 
what they want, they tried to legally create a smoky back room 
where they can figure out the best way to rob people of their 
earned benefits.
    Which brings us to the current Republican agenda, as set 
out by Chairman of National Republican Senatorial Committee, 
Senator Rick Scott.
    Senator Romney. Your time is up.
    Mr. Lawson. I am sorry. Can I have 30 more seconds, 
Senator?
    Senator Graham. Sure.
    Mr. Lawson. I will have to give this plan faint praise 
because at least it has a hint of honesty about it. Senator 
Scott's plan would sunset Social Security in five years. Rick 
Scott is the modern-day Alf Landon. He hates Social Security 
and wants to eliminate it, but even he is not brave enough to 
say that, and calls it sunsetting.
    In fact, the Republican who was most honest was Donald 
Trump, who Bernie Sanders brought up, who said that all the 
Republicans want to do a big number on Social Security.
    Chairman Sanders. Okay. Mr. Lawson, it is time. Thank you.
    Mr. Lawson. Thank you.
    [The prepared statement of Mr. Lawson appears on page 52.]
    Chairman Sanders. Our next panelist is Ms. Maya MacGuineas, 
who is President of the Committee for a Responsible Federal 
Budget. Her areas of expertise include budget, tax, and 
economic policy.
    Ms. MacGuineas, thanks very much for being with us.

   STATEMENT OF MAYA MacGUINEAS, PRESIDENT, COMMITTEE FOR A 
                   RESPONSIBLE FEDERAL BUDGET

    Ms. MacGuineas. Thank you. Thank you for inviting me here 
today to talk about the importance of making Social Security 
solvent, and various ways to do so. I will briefly touch on 
three things, that are done more in-depth in my written 
testimony. But I would like to talk about Social Security's 
financial condition, the cost of waiting to fix the program, 
and some of the objectives for reform.
    First, as we have already talked about, the most recent 
Trustees Report tells us that Social Security is headed towards 
insolvency. Of course, that is not news. We have known this for 
more than 30 years, and yet in that time we have basically done 
nothing to make the program shored up so that it is financially 
solvent.
    We now have a situation where the combined trust funds will 
be insolvent by around 2035, when today's 54-year-olds reach 
full retirement age. So the one thing we know that increases 
anxiety is uncertainty, and that is what people have today 
about the future of Social Security.
    Upon insolvency, all beneficiaries, everyone, millionaires, 
and people who depend on Social Security for their entire 
livelihood will receive benefit cuts across the board 20 
percent, and that will grow over time. So I can point to a lot 
of good proposals over the years. This is clearly not one of 
them.
    Every year we wait, and that we have waited, has made the 
changes more difficult and more painful. In 2010, you could 
have achieved 75-year-solvency by eliminating the taxable 
maximum, or price indexing benefits. Today, neither of those 
will be sufficient. In 2010, the Simpson-Bowles plan was going 
to phase in all of its policies over 40 years. Today, this same 
type of plan would have to be phased in in 5 to 10 years. So 
continued delay will make the needed changes even large while 
giving participants even less time to prepare.
    So what should the goals of reforming the system be? There 
are plenty of different objectives, and that is part of the 
reason we should have compromise. What I believe needs to 
happen is that we need to make the program solvent before we 
expand benefits. I think we need to protect those who depend on 
the program. I think we should make changes that encourage 
economic growth wherever possible.
    And finally and importantly, I think we have to think about 
this comprehensively, so recognizing that Social Security is 
one of many national priorities and that acknowledging that 
there are tradeoffs between funding for Social Security versus 
other priorities, such as investment in children, climate, 
national security, and many other priorities.
    As to the first objective, there are plans out there that 
would expand benefits and fail to make Social Security solvent. 
This is akin to saying to seniors, ``We will promise you even 
more while we know that we cannot even pay you what we have 
already promised.'' This is dangerous and it is disingenuous.
    Second, I think it makes sense to make these changes 
progressively, and the options to do this include things like 
lifting the tax cap, means testing, progressive price indexing, 
and/or adding minimum benefits along with other changes to 
enhance solvency.
    On this objective, I find it really hard to understand 
those who advocate more taxes on the rich while ruling out 
slowing the growth of benefits for the same people. Changes 
will have to be made. If wealthy beneficiaries are held 
harmless, others will have to face more in benefit reductions 
or pay more in taxes. And the more we do this by raising our 
taxes, rather than reducing benefits, the less revenue from 
that group will be available for other priorities. You can only 
tax millionaires and billionaires so many times.
    Another useful objective is to include changes that create 
incentives for work, savings, and growth. This is particularly 
important because of economic challenges we face because of the 
aging of the population.
    Finally, it is very important to look and think about 
Social Security in the context of the full budget as well as an 
independent program. Already the Federal Government spends 
roughly $6 per senior on every $1 it spends for children. So we 
need to think holistically about whether we want to widen that 
gap or we want to narrow that gap.
    There is both a financial and a political budget constraint 
in overall spending, and by contemplating programs in isolation 
you bypass the consideration of those tradeoffs. The right and 
the best way to start this discussion is to pass a budget.
    In my written testimony, I include a list of options and 
links to our interactive tool, the Social Security Reformer, 
which you can use to craft your own plan. Many Members of 
Congress and citizens have used it to weigh in on how they 
would like to fix the program.
    In the past, we have worked to develop a number of plans 
and worked with Members of Congress to do so. Right now, 
process-wise, I think the single best idea out there is the 
TRUST Act. Senator Romney has worked on this and it is 
bipartisan and bicameral. And what is so appealing about it is 
that everything is on the table. In order to get out of the 
special committees that would look at how to save these 
programs, the proposals have to be bipartisan, and you would 
still have the same threshold in the Senate to pass any 
reforms.
    So there is no single right way to make Social Security 
solvent. However, the wrong thing to do is to continue to do 
nothing. So we would be delighted to work with any office that 
is interested in working on Social Security to develop a plan 
for solvency. We would be particularly interested to do so that 
anybody is willing to do it on a bipartisan basis.
    Thanks again for having me here today.
    [The prepared statement of Ms. MacGuineas appears on page 
61.]
    Chairman Sanders. Ms. MacGuineas, thank you very much.
    Mr. Shai Akabas--is that--did I get it right?
    Mr. Akabas. A-KA-bas. It is a tough one.
    Chairman Sanders. Is it AK-a-bas?
    Mr. Akabas. A-KA-bas.
    Chairman Sanders. Mr. A-KA-bas, okay, is the Director of 
Economic Policy at the Bipartisan Policy Center. Mr. Akabas has 
conducted research on a variety of economic policy issues, 
including the Federal budget, retirement security, and the 
financing of higher education.
    Thanks very much for being with us.

    STATEMENT OF SHAI AKABAS, DIRECTOR OF ECONOMIC POLICY, 
                    BIPARTISAN POLICY CENTER

    Mr. Akabas. Thank you, Mr. Chairman, Ranking Member Graham, 
and distinguished members of the Committee. I appreciate you 
having me here to testify today about the long-run 
sustainability and efficacy of Social Security. I commend the 
Committee for focusing on this critical issue.
    My name is Shai Akabas, and I am the Director of Economic 
Policy at the Bipartisan Policy Center, a nonprofit 
organization founded in 2007, by four former Senate majority 
leaders--Howard Baker, Tom Daschle, Bob Dole, and George 
Mitchell. Our organization combines the best ideas from both 
parties to promote health, security, and opportunity for all 
Americans.
    Social Security serves as the foundation upon which most 
Americans build their lives in retirement. For 85 years, it has 
paid out benefits to people with disabilities, older people, 
and their family members, lifting millions of households out of 
poverty and providing essential financial support.
    But Social Security faces a serious challenge. The benefits 
being paid out are outpacing the program's income, which 
primarily comes from payroll taxes. The recently released 2022 
Trustees Report underscores this fact, projecting that the Old-
Age and Survivors Insurance Trust Fund, or OASI, is on track to 
deplete its reserves in 2034.
    My testimony will summarize the ominous outlook facing 
Social Security today and highlight a package of bipartisan 
reforms that could address these challenges.
    I hope our conversation leaves you with the following 
takeaways.
    Number one, time is running out. To address this problem, 
Congress must act quickly and in a bipartisan fashion. Delaying 
necessary reforms will only serve to make them more politically 
difficult and cause added uncertainty for workers and retirees.
    Two, there is no silver bullet. Several factors play into 
Social Security's financial imbalance, requiring a nuanced and 
thoughtful package of reforms.
    Three, enhancing Social Security benefits--particularly for 
those who most rely on them in retirement--and putting the 
program on a fiscally sustainable path are not mutually 
exclusive. Rather, tackling both goals simultaneously will be 
vital to garner the necessary bipartisan support.
    For several decades starting in the 1980s, Social 
Security's income exceeded its expenses, which led to a large 
buildup in the program's OASI Trust Fund. Unfortunately, that 
dynamic has flipped, and annual benefits now exceed dedicated 
revenue, a situation that is projected to persist indefinitely. 
After the OASI Trust Fund runs out of reserves in 2034, 
incoming revenue will only cover 77 percent of the program's 
obligations, resulting in abrupt benefit cuts that would be 
devastating for many beneficiaries.
    The recent Trustees Report contains some sobering 
conclusions. To ensure solvency of the combined trust funds 
through the 75-year projection period, Congress would need to 
immediately raise the payroll tax rate by more than 3 
percentage points; reduce benefits for all current and future 
beneficiaries by around 20 percent, or adopt some combination 
of these approaches. If policymakers wait, much larger changes 
will be required.
    The alternative is an unprecedented departure from the pay-
as-you-go structure of Social Security, with Congress to begin 
allowing the program to permanently draw from general 
government revenue. This would sacrifice Social Security's 
special status as a program walled off from the rest of the 
budget, making it compete for resources with other priorities 
at a time when the nation's fiscal house is already in rough 
shape. This would be irresponsible policymaking.
    Before outlining possible solutions I want to describe the 
two principles that must guide any reforms to the program.
    One, acting as soon as possible is paramount. The longer 
Congress waits to strengthen Social Security's finances, the 
more drastic the changes will have to be, and the more burden 
will fall upon those who played little or no role in creating 
the imbalance facing the program today. The lack of action by 
policymakers is also especially unfair to the millions of 
Americans who are trying to plan for their retirement. Failing 
to enact reforms will simply kick the can down the road, 
pushing responsibility for a long- term solution onto future 
lawmakers, who will have to decide between inconceivable 
benefit cuts, impractical tax increases, or the abandonment of 
the program's historical financing mechanism.
    Number two, any legislative action must garner significant 
bipartisan support. Working across the aisle is not only 
generally best practice for enacting durable policies but also 
a necessity for changes to Social Security, which require a 
supermajority in the Senate. Lawmakers should abstain from 
pronouncements like ``no tax increases'' and ``no benefit 
cuts,'' whether they apply across the board or for certain 
subsets of the population. Red lines such as these only put 
obstacles in the way of action. Social Security's financial 
challenge affects nearly our entire society, and the solutions 
will require a broad-based approach.
    In 2016, BPC convened a bipartisan commission, co-chaired 
by former Senator Kent Conrad and Jim Lockhart, the former 
Deputy Commissioner of the Social Security Administration. The 
commission spent two years studying the status of retirement 
security in the U.S. and made recommendations in six key areas. 
One of those was ``Strengthening Social Security's Finances and 
Modernizing the Program.''
    The commission's reforms were projected by the chief 
actuary to make Social Security solvent for 75 years and 
beyond, thereby avoiding the benefit cuts that are set to take 
effect. It would also enhance benefits for vulnerable 
populations and give Americans certainty about what to expect 
from the program as they prepare for retirement. The package 
tackles Social Security's financial gap through a balanced mix 
of new revenue and benefit restraints. I would encourage you to 
review their specific recommendations in my written testimony 
and would be glad to discuss them further during the Q&A.
    Beyond making Social Security financially sound, enacting 
this plan would dramatically increase the progressivity of the 
program, reducing poverty among vulnerable populations such as 
low-income retirees and surviving spouses. Over a lifetime, the 
average household in the bottom two quintiles of earners would 
receive higher benefits than scheduled levels under these 
proposed reforms, and middle earners would receive benefits 
roughly at scheduled levels. Nearly all net benefit savings 
from the plan would come from beneficiaries in the top two 
quintiles of the lifetime income distribution, staying true to 
Social Security's mission as a social insurance program.
    Although this framework represents a comprehensive approach 
to restoring solvency, it was recommended six years ago. Since 
then, the problem has grown and the time to address it has 
shrunk. To restore long-term solvency today, policymakers would 
either need to phase in these policies much more rapidly, 
increase the size of the proposed adjustments, or incorporate 
additional benefit or revenue changes.
    Let me be clear. If Congress waits another six years to act 
it will become nearly impossible to retain Social Security's 
traditional structure without aggressively curtailing benefits 
for current beneficiaries.
    Finally, I will note that BPC's commission report is far 
from the only solvency plan that has been proposed in recent 
years. In fact, several have been submitted by current Members 
of Congress, including Chairman Sanders. All these members 
deserve significant credit for putting forth credible solutions 
to this politically vexing challenge. But as mentioned, the 
ultimate fix will need bipartisan support, so while components 
of these proposals can be part of a package, compromise will be 
necessary.
    I want to conclude by thanking the Committee once again for 
convening this hearing. Social Security's solvency often feels 
like an intractable problem, but with your continued leadership 
and bipartisan collaboration, progress is possible.
    I look forward to your questions.
    [The prepared statement of Mr. Akabas appears on page 68.]
    Chairman Sanders. Mr. Akabas, thank you very much for your 
testimony.
    Let me begin the questioning with a question for Ms. 
Altman. As you know, I have just introduced legislation to 
expand Social Security benefits by $200 a month and to fully 
fund Social Security for the next 75 years by demanding that 
Americans who make more than $250,000 a year pay their fair 
share of taxes.
    As an example of the absurdity of the current situation, 
just as an example, last year the CEO of Apple made over $700 
million in total compensation. He pays the same amount of money 
into Social Security as someone who makes $147,000 a year. Does 
that make any sense to you, Ms. Altman?
    Ms. Altman. Absolutely not, and the American people are 
very clear about this. As I said, they are quite in agreement 
with what you are proposing.
    Chairman Sanders. Mr. Roach, an important point that you 
made in your testimony is that Social Security benefits are not 
adequate today to ensure retirement with dignity for every 
American. You note that you have seen, as I have seen, seniors 
put food back at the supermarket checkout because they could 
not afford their grocery bill.
    How would the bill that we are talking about today help 
senior citizens be better able to live with security and 
dignity? What would it mean to the average person?
    Mr. Roach. It would mean a great deal, Chairman Sanders. 
The $2,400 a year would be of great benefit, especially for 
those whose only other income they have is maybe $300, $400, 
maybe $500 a month. They would be able to afford food, properly 
attain some of their prescription drugs that they are deferring 
at this particular point, and changing the COLA to keep pace 
with inflation would be extremely important, especially today 
where the inflation is surging. I guess everybody sees the food 
at the supermarket. They are surging, I mean, every day, the 
prices are going up. So I think in two areas your legislation 
would be very helpful.
    I just want to add to something you said. Jeff Bezos, the 
chairman of Amazon, his W-2 is only $82,000. He is not even 
paying the $147,000. So just some information for you.
    Chairman Sanders. Mr. Lawson, what impact would raising the 
retirement age to 70 years of age have on workers in this 
country?
    Mr. Lawson. I do not want to get too in the weeds on the 
policy but it is not like a benefit cut. Raising the retirement 
age is a benefit cut, 7 percent for each year you raise it. So 
raising the retirement age to 70 is just a 21 percent benefit 
cut.
    But it also has the added terribleness that it is putting 
the pressure not on millionaires and billionaires who are doing 
fine in this country but on working people, on people working 
on the line, teachers, people who are on their feet, back-
breaking labor, saying, ``Oh well, you are going to have to now 
work until you die.'' So you cannot overstate how bad that 
effect would be on the American people.
    Chairman Sanders. Thank you. Let me ask Ms. MacGuineas or 
Mr. Akabas a question, and that is does it make sense to you 
that somebody who makes $700 million in a given year pays the 
same amount of money into Social Security as somebody who makes 
$147,000. Ms. MacGuineas.
    Ms. MacGuineas. So what does not make sense to me is that 
Social Security is not more progressive, and I think there are 
two ways we should think about doing that, because Social 
Security can only do so much without squeezing out other 
programs, which is what is already happening.
    Chairman Sanders. But if you could stay on answering my 
question. It is a simple question. Right now we have a cap of 
$147,000, right?
    Ms. MacGuineas. Yes.
    Chairman Sanders. Somebody who makes $700 million pays the 
same as somebody who makes $147,000. Is that good policy? Does 
that make sense?
    Ms. MacGuineas. So it depends on your objectives of the 
program. I think it makes sense to lift that tax cap, and I 
also think it makes sense to reduce their benefits since they 
clearly do not need them.
    Chairman Sanders. Okay. Mr. Akabas?
    Mr. Akabas. I would agree with Ms. MacGuineas. I think we 
need to look at Social Security in the context of the broader 
budget, and of course we have a very progressive tax system 
overall, perhaps not progressive enough. But I agree that there 
need to be changes in terms of the revenues brought into the 
program, and some of that should come from those who can most 
afford----
    Chairman Sanders. Out of curiosity, do you think it is 
progressive when billionaires, in a given year, do not pay a 
nickel in Federal income tax? Is that progressive?
    Mr. Akabas. No, I do not think that is progressive.
    Chairman Sanders. Okay. All right. Senator Graham.
    Senator Graham. Thank you very much, Mr. Chairman.
    Ms. Altman, does Senator Sanders' proposal of 12.4 percent 
Social Security tax on all income? Is it 6.2 or 12.4?
    Ms. Altman. I am sorry. You are asking--the 12.4 percent on 
net investment income----
    Senator Graham. Yes.
    Ms. Altman [continuing]. That part of his proposal? Yeah, 
the idea is that----
    Senator Graham. No, it is just a question. It would be a 
12.4 percent tax, right?
    Ms. Altman. That is how----
    Chairman Sanders. The tax is applied to all income.
    Ms. Altman. Correct.
    Senator Graham. Ms. MacGuineas, we have a cap on income 
subject to Social Security taxation, right?
    Ms. MacGuineas. Correct.
    Senator Graham. If we lifted and said you pay Social 
Security 12.4 percent on all income, what would the effective 
tax rate be for a millionaire in America?
    Chairman Sanders. If I may, that is not correct. We are not 
talking about raising----
    Senator Graham. We are not? I am sorry.
    Chairman Sanders. No, 6.2 percent on all income.
    Senator Graham. So when I asked her she said 12.4 percent.
    Chairman Sanders. Well, ask me. It is my bill. [Laughter.]
    Senator Graham. Okay. It is 6.2. So why don't we do this. 
Why don't you bring your bill to the floor for a vote?
    Chairman Sanders. Great idea.
    Senator Graham. Mr. Lawson, do you agree with that?
    Mr. Lawson. Absolutely. Senator Sanders' bill should 
definitely be brought to the floor for a vote.
    Senator Graham. I could not agree more. So Senator Schumer, 
in case you are watching, I challenge you to bring Senator 
Sanders' bill to the floor. He is a very sincere man. He has 
found a way he thinks to save Social Security. And all I ask in 
return is to vote on Senator Romney's bill. You will have two 
approaches to how to solve this problem, and you are not going 
to do it. You are all talk. Prove me wrong.
    Ms. MacGuineas, the Gang of Six did not take Senator 
Sanders' approach, did it?
    Ms. MacGuineas. For reforming Social Security, no, it did 
not. It had a balanced plan that looked at revenue----
    Senator Graham. Did Simpson-Bowles take this approach?
    Ms. MacGuineas. No, it did not.
    Senator Graham. Did the Greenspan Commission take this 
approach?
    Ms. MacGuineas. No, it did not.
    Senator Graham. Do you agree with that, sir?
    Mr. Akabas. Yes.
    Senator Graham. Okay. The approach that you are advocating 
is along the following lines. Raise the cap, right, more 
revenue, raise the cap, right? Reduce benefits to the people 
who can afford to take less. Is that fair? You all are both 
nodding, right? Okay. Adjust CPI. You are nodding. And that 
allows us to restructure the program to get the Baby Boomers 
through without going bankrupt. Does that make sense? Is that 
what we are talking about, in general, Ms. MacGuineas?
    Ms. MacGuineas. Yes.
    Senator Graham. Is that what we are talking about?
    Mr. Akabas. Yes, Senator, and I think we can also afford to 
do that while protecting those who are most vulnerable.
    Senator Graham. And one thing you can do is actually have 
an enhanced benefit for people 80 and over at the lower ends of 
the economic spectrum. Is that correct?
    Ms. MacGuineas. Yes.
    Senator Graham. Count me in for that.
    So what I want to do is to do what other people have done 
in the past to bring this together. Mr. Lawson, this may come 
as a surprise to you but you are not going to bring this 
together. The bottom line is somebody has got to bring this 
together, and I do not think it is going to be Mr. Lawson.
    So what I want to do is be brought together in a fashion 
like people before us. Ronald Reagan and Tip O'Neill adjusted 
the age from 65 to 67, and it did buy us some time. That alone 
is not enough. Let us look at maybe doing it once again, 
because we live longer, and if we do not need to do it, great.
    Count me in for raising the cap on income subject to Social 
Security taxation, within reason. I do not want to have like 70 
percent tax rates in America. But also count me in for people 
in my income level and in my financial situation taking a 
smaller COLA, or maybe a restructured benefit, because I can 
afford it. That is what it is going to take to save Social 
Security. It is not going to be fixed by taxing the wealthy. 
That can be part of it.
    So I am hoping, Senator Sanders, that we will have a vote 
of your plan and Senator Romney's plan, but then get on about 
the hard work of finding a solution that will get buy-in from 
both sides of the aisle. I really do believe it is possible if 
there is political will.
    To President Biden, things are not going well in America 
right now. Hopefully they will get better. But you have an 
opportunity, President Biden, to do something along the lines 
of Reagan. President Obama, to his credit, tried very hard to 
bring this together on this topic. The Gang of Six, Simpson-
Bowles.
    So I would ask President Biden to form some kind of 
mechanism to get us all in a room to see if we can pound out a 
solution to buy us time to get the Baby Boomers through the 
system without the draconian choice of cutting benefits or 
dramatically raising taxes. And every day and every year we 
wait it gets harder.
    So that is my two cents' worth. I am willing to make 
compromises that I think will get us to where we need to be.
    Thank you very much for having this hearing, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Graham. Based on 
seniority, Senator Scott goes next. Sorry, Senator Romney.
    Senator Romney. Is he senior?
    Chairman Sanders. He is senior.
    Senator Scott. Would you like to go? You can go first. You 
got here first.
    Senator Romney. Thank you. I have got a mayor here waiting 
to meet with me so I appreciate Senator Scott letting me jump 
ahead of him here. I do appreciate that.
    When I lost my election for President a number of people 
came to me and said, ``What do you think about forming a think 
tank?'' It seems like failed politicians are anxious to stay 
involved in the process of government, and think tanks are the 
way to go I do not how many hundreds, thousands of think tanks 
we have.
    And I said, ``You know, I do not think the problem in 
Washington is trying to come up with the answers. I do not 
think we need people to solve for numbers, because there are so 
many people that are doing that.'' The problem is how to get 
something done. We do not need more think tanks. We need ``do 
tanks.'' How do you get something done? How do you get 
something accomplished?
    Senator Sanders makes a wonderful plea which many, many 
people agree with, the need for helping our seniors and 
providing better benefits for them, and so forth, but recognize 
that his bill has no chance whatsoever of receiving a single 
Republican vote in either house. So it will not be passed. And 
he knows that.
    As a matter of fact, you all recognize that given the fact 
that for any legislation of scale to be passed requires 
Republicans and Democrats to work together. That is the nature 
of our democracy. We have a 50-50 Senate. Half of the American 
people voted for Republicans. Half voted for Democrats. To get 
something done requires bipartisanship.
    So any proposal that is brought forward that is only 
supported by one party is a messaging bill. It is a campaign 
bill. It may be a fundraising bill. But one thing it is not, is 
about to become a law. So if you want to have a law you have to 
see if there is a way to get people working together.
    Now, our challenge with Social Security, like Medicare and 
Highway Trust Fund, is exemplified by that chart, which is 
Social Security Trust Fund runs out of money in 2034. That is a 
problem. It is a problem for Social Security recipients. And of 
all the people who noticed it, the Washington Post said, ``the 
Medicare and Social Security disaster that Washington is doing 
nothing to fix.'' It is not that the think tanks do not have 
proposals or that partisans on either side of the aisle cannot 
come up with answers. It is that we have not taken action that 
actually could result in a solution.
    So I would suggest that we find a way to actually get 
something done. I am pleased that my good friend, Senator 
Graham, spoke about the TRUST Act and gave me some credit for 
that. It was introduced by myself and Senator Manchin, 
Republican and Democrat. Senator Warner is also on it. Your 
organization, sir, continues to say that it is designed to cut 
benefits. Why do you say that? Do you believe that Senator 
Warner and Senator Manchin want to cut benefits?
    Mr. Lawson. So is that a question?
    Senator Romney. Yeah.
    Mr. Lawson. Okay. Well, I am basing it on, we were 
basically formed to fight a ``BS'' commission----
    Senator Romney. No, no. I asked a question. The question 
is, do you Do you believe that Senator Warner and Senator 
Manchin want to cut benefits? By the way, we have five 
Democrats who signed up on the TRUST Act because it does this: 
It says, look, let's get groups together, half Republican, half 
Democrats, to work together to see if they can find a solution 
to save Social Security. And both sides have to agree. Both 
sides have to agree.
    No, I get to decide who to ask the questions to.
    Both sides get to agree--have to agree--in order for it to 
go to the floor to be voted on. So it is bipartisan. And every 
single person has said under no circumstances would we cut 
benefits, and yet in your documents your organization keeps 
saying that we want to cut benefits, that we are going to cut 
benefits in the night. Untrue. Why do you say that?
    Mr. Lawson. If you are not going to cut benefits then you 
are going to do it all on the revenue side, which would be 
something that we support. But going on the history of 
commissions in this town, what happens when politicians get 
behind closed doors is they talk about things that are deeply 
unpopular, like cutting Social Security.
    Senator Romney. We do not just meet in hearings like this. 
We have meetings, private meetings, all the time. We get 
together and discuss things all the time. We had meetings last 
night. We are having meetings right now on gun legislation. We 
had meetings last night on the Electoral Count Act. We have 
meetings all the time, behind closed doors, that we then have 
hearings, then there are votes in public.
    So the idea is to have people come together, Republicans 
and Democrats, to see if we can find a solution. If we do not 
do that, we will not save Social Security. You realize--you are 
a group dedicated to saving Social Security, but you realize 
that if we do not come up with a bipartisan solution we will 
not save it. Do you understand that?
    Mr. Lawson. I recognize that the problem is the 23 percent 
benefit cut that you keep bringing up, but the solution that 
Republicans put forward is a 23 percent benefit cut, so that is 
not a solution. It is just the problem sooner.
    Senator Romney. Boy, that was not an answer. The Social 
Security Trust Fund goes away by 2034, at which point benefits 
are cut automatically. I am not for that. I am trying to keep 
that from happening. I do not want that to happen. But if we do 
not come up with a bipartisan solution that is what will 
happen. That is what you are for if you oppose bipartisanship.
    What solution do you have to actually solving Social 
Security on a bipartisan basis?
    Mr. Lawson. We would ask millionaires and billionaires to 
pay the same rate as the rest of Americans----
    Senator Romney. Yeah, I understand what your----
    Mr. Lawson [continuing]. And not cut one penny of benefits.
    Senator Romney [continuing]. I understand what your answer 
is. This is back to the ``think tank'' versus the ``do tank.'' 
What would you do to get bipartisanship? How are you going to 
get bipartisan to work together?
    Mr. Lawson. I would like the American people who 
bipartisanly, overwhelmingly do not want to see their benefits 
cut, I would like Republican politicians to have to answer to 
them----
    Senator Romney. We do.
    Mr. Lawson [continuing]. About why their----
    Senator Romney. We do, every election, and the people who 
have elected us have said to work on a bipartisan basis to find 
a solution. We can do that. We will do that. And I tell you, 
the disingenuous attack on Republicans is something which--by 
the way, just as Senator Graham said, your approach is making 
it harder for us to find a solution to save Social Security, 
and that is something that desperately needs to be done.
    Thank you, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Romney. Senator Wyden.
    Senator Wyden. Thank you, Senator Sanders.
    As Chairman of the Senator Finance Committee, I just wanted 
to come by for a few minutes--this is a particularly important 
hearing--and lay out what I think the choices are and what I 
believe are responsible solutions to those options.
    To me, we have a discussion of either cutting Social 
Security benefits or saving Social Security, and the leading 
proposal on the other side would put Social Security on the 
chopping block every few years, basically, I gather, to see if 
the American people still want it. And the fact of the matter 
is the American people do not want benefits cut. They 
understand what it will mean for working people to just raise 
the age, because we know, for example, we are getting this 
narrative that Americans, by and large, are living longer.
    That is just not the case, colleagues, for most Americans. 
The majority of increases in life expectancy have been to those 
in the top half of the income distribution, and meanwhile Black 
and Hispanic workers, low-wage workers, working without a 
college degree, and those working in physically demanding jobs 
have a lower life expectancy after age 65, and are more likely 
to claim Social Security benefits early.
    So you have a choice, and I am going to be very specific 
about what we believe the choice ought to be. Cut Social 
Security benefits--we are against that. We are plain, 
straightforward against that. Or we can look at the kind of 
solutions that the American people are for, and I am going to 
outline those here in just a moment. But what we have heard 
from Republicans in the past is about privatizing it, cutting 
the benefits, raising the retirement age. The American people 
say, ``Not interested. Don't want to do that.''
    Here are the two area that I know the American people are 
for because I am trying these ideas out as a get around my 
state and I work with my colleagues.
    First, we know that billionaires are able, under current 
tax law--this is legal; the scam is what is legal--they are 
able to pay little or no taxes for years on end. Contrast that 
with firefighters and nurses. They pay taxes with every single 
paycheck.
    So I have proposed the billionaire income tax, which would 
mean that billionaires would pay taxes every year, and what we 
would do is take the revenue generated from this tax, it would 
be deposited into the Social Security Trust Fund, and you could 
extend solvency into the next century. Choice number one.
    Choice number two. We now have a tax gap of $1 trillion, 
according to the Commissioner of the Internal Revenue Service. 
Why? Because there are fewer audits of the most wealthy in 
America. Senator Sanders and I have talked about this. The 
working person, again, pays taxes with all their paychecks. It 
is possible to audit them in a pretty straightforward way. The 
wealthy are disproportionately causing the tax cheating 
problem, and what I propose is we better fund the Internal 
Revenue Service so that we can go after these wealthy tax 
cheats.
    Now, what I have just given you are two very concrete ways 
to deal with the Social Security funding challenge, and they 
are ways that the American people will rally for, because--and 
I will close with this--the two ideas that I have just laid out 
ensure that we have some tax fairness and that we pay for what 
we want in a responsible kind of manner.
    I did not just come here and say I am going to Senator 
Sanders' hearing to say this is what I am against. I told you 
what the choice is. Cutting Social Security? Saving Social 
Security? We are for saving Social Security. There is a history 
on the other side of the aisle of repeatedly trying to cut 
Social Security, and I said, in addition to telling you what 
our goal is, I gave you two concrete ways to go about securing 
that goal.
    And I will just tell my colleagues, both of these 
approaches will generate the revenue to get Social Security 
well into the next century, and these are approaches the 
American people are for.
    Thank you, Senator Sanders.
    Chairman Sanders. Thank you very much, Senator Wyden. 
Senator Braun.
    Senator Braun. Thank you, Mr. Chairman. I have been here a 
little over three years, and I recall the first Budget hearing 
that I was at. Senator Mike Enzi was the Chair then. And when 
you keep hearing the same thing over and over again it gets 
tired to listen.
    I agree that there are certain priorities we have as a 
government. I say defending our country would be up there, 
attending to our infrastructure, which we all share, and 
entitlements. I think it is hard to make the argument that we 
do not need to keep this whole and healthy. But I also recall, 
from that discussion, that nothing ever gets done because there 
is no political will here to do it.
    On decisions like this, where you are dealing with a 
situation a lot more complicated now than it was even 3\1/2\ 
years ago, we were $18 trillion ahead when I got here, we are 
30, and imagine we have got a blueprint out there that says we 
are going to be $45 trillion in debt in 10 years.
    That is not the context that any of this is going to work 
within other than an academic discussion. That lack of 
political will, of trading off spending for this versus that, 
which you have got to do everywhere else in our society--it is 
laughed at whenever you use the metaphor of households. Let's 
use the metaphor of state and local governments. They have 
guardrails that force political will into doing what needs to 
be done.
    All I can tell you is we are not evolving into a place 
where we are going to be able to do any of this, and it is 
going to go way beyond Social Security. Medicare Trust Fund 
goes broke in a little over four years. Senator Sanders and I 
are probably the two that talk about health care the most--
different points of view on what to do. It is a broken system.
    If we fixed health care alone, made it more transparent, 
made it more competitive, took it down to where it is across 
the rest of the world, which is closer to 11, 12, 13 percent of 
our GDP, we would all of a sudden free up 5 to 6 percent of our 
GDP that you could then plow into whatever you want to 
prioritize.
    But as long as we do not do budgets, which we have not done 
in ten years, as long as we come up with gimmicks that we soon 
overturn, it does not look good for fixing what we are all here 
to talk about.
    When we are borrowing money from our kids and our 
grandkids, which is what we are doing now to run this biggest 
business in the world, you are not going to be in a position to 
fix maybe one of the most important things it does. I do not 
think we are going to get to the discussion of cutting 
benefits. I do not think that is probably the right place to 
be. I think it is how you fix the system in general so you can 
keep at least what is there intact. And then, once you fix the 
problem overall, have the political will to zero in on what is 
most important.
    And we could do it. Senator Wyden's proposal, that may or 
may not flesh out some type of Band-Aid approach to it. What I 
am talking about--fix health care. You free up the biggest part 
of our GDP, it acknowledges that regardless of the tax rates, 
look at the data, we generate 17.5 to 18 percent of our GDP in 
Federal revenues. We have got to look at the reality of what we 
can take in each year. If we do not, we are just ignoring the 
statistics.
    So I am going to put a budget, actually, out on the floor, 
so that Americans at least have something to look at, and that 
is going to happen in two to three weeks. It is going to be 
sensible. It is going to balance. It is going to acknowledge 
that for all the wonderful things we want to do here, most of 
them not hitting the target. We are discussing here how we want 
to add more benefits. Well, maybe that is what needs to be 
done. But you certainly are not going to be able to do it and 
count on it unless we fix the underlying issues.
    We have got to get back to budgets, we have got to do it 
through regular order, and we have got to acknowledge that the 
Modern Monetary Theory, which means deficits and debt do not 
matter anymore, that is not a business plan. That will take us 
into Chapter 11 someday, and even this place is not immune to 
that. And that budget that was put out there, we are going to 
be far deeper in the hole than $45 trillion when you have 
underestimated inflation and the cost of interest.
    I put it out there because this is a valid discussion. The 
elderly that work their entire lives thinking that their 
retirement and their health care is going to be there, that is 
in peril, and that is all due to us, it is due to how the 
system has evolved to this point, the fact that we have no 
political will, and yes, we do have to make tradeoffs. And 
until we can get the budget balanced we are never going to be 
able to say, with honesty and certainty, that can do anything 
to help Social Security in the long run.
    My two cents.
    Chairman Sanders. Thank you, Senator Braun. If I might make 
a correction to what you said. You thought that we spend 17 to 
18 percent of our GDP on health care. Wrong. It is close to 20.
    Senator Braun. No. I said those are Federal revenues, 
regardless of our tax rate.
    Chairman Sanders. Oh, I am sorry. In fact, we are spending 
a fortune on health care. You are right. We spend twice as much 
per capita as any other country.
    Senator Braun. We do, and if we take that down--no, and 
when it comes to health care, that is the biggest sector of our 
economy.
    Chairman Sanders. Right. And it is close to 20 percent of 
our GDP.
    Senator Braun. No, you are right. It is approaching 20. It 
is 17 to 18 recently, it is 12 to 13 in most other countries--
--
    Chairman Sanders. That is right.
    Senator Braun [continuing]. And that is where you get that 
6 to 7 percent savings. That is the only real place that we can 
grab real funds. And yes, I actually understated that a little 
bit. And I was also talking about the Federal revenues that we 
have to work with. It is in that same range. We have got to be 
realistic there as well.
    Chairman Sanders. Okay. Thank you. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman. I thank all of 
you for being here, for a hearing to discuss how we can 
strengthen and preserve Social Security, which I think we all 
agree has been a critical program--anti-poverty program, 
retirement program, disabilities program--for tens of millions 
of people in our country.
    And I want to commend Senator Sanders for his legislation, 
which would extend the solvency of Social Security by 75 years. 
We all know that around 2033, 2034 we are going to hit a cliff, 
and if we do not do anything you are going to see between a 22 
and 25 percent reduction in benefits.
    And while there are certain provisions in the bill that I 
would do differently, I am supporting and a co-sponsor of 
Senator Sanders' effort, because I think it is a good-faith 
proposal on the table to actually do something right now. I 
have also supported other efforts like Social Security 2100 and 
provisions increasing the estate tax and putting some of those 
funds into strengthening Social Security.
    So I just have a very simple question and I am going to 
start with Ms. Altman. Do we have the luxury of waiting for 
another nine years before we fix it or should we fix this thing 
now?
    Ms. Altman. Part of what Social Security provides is not 
just cash benefits but a sense of security, peace of mind. And 
for that reason, to restore that peace of mind, acting sooner 
rather than later is the right thing to do.
    Senator Van Hollen. You know, I agree. I mean, we have 
gotten closer to the cliff in the past, but right now we are 
facing quite a potential shortfall if we do not do anything.
    Mr. Roach, the average benefit right now is $1,540 a month 
for most Americans, and my question to you is, is that enough 
to both provide affordable housing, cost of medicine, food, and 
other essentials?
    Mr. Roach. Absolutely not. It is not enough. Out of that 
amount of money you spoke about, let us say it is like $18,000 
a year, $5,000 goes automatically to co-pays and prescription 
drugs and supplemental plans. So basically with that amount of 
money alone people are in poverty. They start out retirement in 
poverty. It is inadequate and it needs to be increased 
substantially.
    Senator Van Hollen. And that, of course, would be cut by 
somewhere between 22 and 25 percent if we do not do anything 
right now.
    Ms. MacGuineas, thank you for your testimony. We have 
worked on lots of issues, and we are trying on the Build Back 
Better piece to salvage a portion of it, dealing with clean 
energy and prescription drug costs, and to pay for it by 
closing some big tax loopholes that big corporations are right 
now exploiting, and some very wealthy individuals. And not only 
pay for it, but as you know, try to achieve some deficit 
reduction in the process. I hope we get there.
    I have worked on this issue for a very long time, as you 
have. I served on the ill-fated Supercommittee. I worked really 
hard on the Supercommittee to try to address the Social 
Security fiscal solvency issue. We did not get there.
    I agree with Senator Braun. I mentioned in one of our early 
hearings in this Committee that I believe it is a matter of 
political will. And I understand the TRUST Act. We can set up a 
process. We are trying to get there. We, of course, tried that 
with Simpson-Bowles. We tried that with the Supercommittee. And 
at the end of the day I do believe it is a question of 
political will.
    And what Senator Sanders has done is put together a plan, 
on the table, open to everybody firing at it. If people do not 
like it they can say why they do not like it. But it seems to 
me the beginning of this conversation needs to be an 
alternative plan, from our Republican colleagues. Put your plan 
on the table so we can discuss it, not something discussed 
behind closed doors, through some bipartisan effort.
    I am for a bipartisan solution, but that has to begin by 
somebody on the Republican side also putting together their 
plan. Let people look at it. Let the American people take shots 
at it, just like they can take shots at the plan Senator 
Sanders has put forward, and others.
    So do you not think, Ms. MacGuineas, that we should see, in 
a transparent fashion, an alternative plan, introduced by 
Republican colleagues or a bipartisan group or whatever, that 
says here is a different way to do it than the Sanders plan?
    Ms. MacGuineas. Thank you, Senator Van Hollen. I think that 
is a great point. I think that makes sense. Senator Sanders 
should be commended for putting forth a plan that reaches, I 
think, 75-year solvency. I have not seen the details yet but 
that is great.
    I would quibble with a lot of details, but agree, so we 
could have another plan from the Republican side and work to 
come up with a compromise, because it absolutely does have to 
be bipartisan. We cannot get this done with just one party or 
the other.
    The only thing I would say, and this comes from my 
observations of this hearing, is that there is so much talk 
about us and them. There is so much performative exaggeration 
on this podium that we have sat through. And our country is so 
polarized, and we are in such trouble right now, I would really 
like to sit down with a group of Republicans and Democrats and 
work on this together as well.
    So I appreciate all you have done on this for many, many 
years, and I think that proposal is great. We would work with 
any Republicans to come up with a proposal. But it is also time 
to do this as Members of Congress who are the fiduciaries for 
the program. That is my plea to all of you.
    Senator Van Hollen. No, I appreciate that, but again, I 
think having been through this process and trying to build 
better mousetraps for getting there in the past, I do think it 
begins with putting proposals on the table that people are 
willing to be tested by their peers, their colleagues, and the 
public, and then go forward.
    Ms. MacGuineas. Yeah.
    Senator Van Hollen. And I appreciate you commending Senator 
Sanders for putting together a good-faith effort. I would like 
to see other good-faith efforts from people who disagree with 
the Sanders approach. I agree with the overall thrust of the 
proposal he has put forward, but we would like to see other 
ideas.
    Ms. MacGuineas. We will work on trying to get some of those 
out there. It would be good to have two bookends then.
    Senator Van Hollen. Thank you.
    Chairman Sanders. Thank you, Senator Van Hollen. Senator 
Scott.
    Senator Scott. Thank you, Chairman Sanders.
    There are few things more important than protecting and 
preserving America's fundamental safety net programs, 
specifically Social Security, Medicare, and Medicaid. As we all 
have seen, career politicians in Washington have ignored them 
for decades, putting them at an incredible risk. Some have even 
advocated to cut spending for these programs. President Biden 
is part of that crowd.
    In fact, Chairman, you focused heavily on Joe Biden's 
attacks on Social Security and Medicare during your campaign 
for President in 2020. Your vocal criticism of President 
Biden's record of attacking Social Security and Medicare is how 
I know you agree with me that spending cuts on these programs 
have no business being entertained here in the U.S. Senate.
    I am glad we are talking about these programs today, and I 
want to thank you for holding this hearing today. Social 
Security is projected to run out in 12 or 13 years. Medicare 
Part A will begin to run out in just 4 years. Medicaid costs 
continue to skyrocket. It has become a bigger and bigger part 
of the Federal budget. It is clear that what we are doing is 
not working, so I think we all could agree it is time to act.
    I propose that Congress regularly review all these 
programs. Of course, some of my colleagues and some of the 
people testifying today have decided to lie about what I have 
been proposing. So let us be clear. I am never going to support 
cuts to Social Security, Medicare, or Medicaid, and outside of 
Joe Biden I do not know too many other folks in Washington who 
want to see these programs be cut or go away either.
    Some of the panelists may not know that Congress regularly 
reviews essential programs and functions of the Federal 
Government and should regularly review essential programs and 
functions of the Federal Government. As you know, we do not 
even vote on Social Security and Medicare, which makes no 
sense.
    For 61 consecutive years, Congress has successfully passed 
the National Defense Authorization Act. The NDAA sets the 
budget for the entire Department of Defense. It is a critical 
series of must-pass national security and defense budget laws 
that Congress has never failed to approve, not even once.
    Social Security, Medicare, and Medicaid are no different. 
If we want these programs to survive, and further, to avoid any 
cuts to benefits, we need to act today. With that said, I have 
a few questions.
    Ms. MacGuineas, while both Trustee Reports represent modest 
improvements from last year, this is mainly because of its 
outdated and unrealistic economic assumptions. For example, 
CRFB noted that the Social Security trustees projected a 3.8 
percent cost-of-living adjustment for next year, which would 
require about a 6 percent annualized deflation over the next 
few months.
    So Ms. MacGuineas, can you tell me how the Trustees Report 
findings would have been different if their economic 
assumptions were accurate and actually reflected the historic 
inflation we are currently seeing?
    Ms. MacGuineas. Yeah, that is right. They had to lock in 
the economic conditions earlier so they were not able to see 
the inflation be as high as it is. What this will translate 
into is significantly higher COLA for seniors.
    We heard a lot today about Social Security benefits not 
keeping up with inflation, and that is not the case. It is 
actually one of the programs that is automatically indexed for 
both wages and prices, so in many ways it grows quite 
significantly.
    But we will see bigger COLAs than they are estimating, and 
that means that we could even see a sooner insolvency date than 
is predicted in the current report.
    Senator Scott. Thank you. Mr. Akabas, according to last 
week's report from the Social Security trustees, the Social 
Security Trust Funds will deplete their reserves in 2035, only 
13 years from now. After that, Social Security will legally 
only be able to pay, I think it is about 77 percent of 
scheduled benefits. The Medicare Trustees Report estimates that 
the Medicare Hospital Insurance Trust Fund will be insolvent in 
just 6 years, by 2028, and run deficits of $530 billion over 
the next decade.
    This is clearly unacceptable, and fixing the dire financial 
situations of these programs will require congressional and 
presidential leadership, not just political gimmicks like the 
Chairman has suggested today, which he knows will never happen. 
The last time the OMB Director testified in front of this 
Committee I asked her what OMB and the Biden administration 
were doing to address the threatened state of Medicare and 
Social Security, that threatens millions of constituents in my 
state. Do you know what her answer was? Nothing. She could not 
give me anything that they were doing. This is also 
unacceptable and shows how unserious Biden and the Democrats 
are about preserving Medicare and Social Security.
    Social Security and Medicare are facing serious challenges, 
but this hearing, I do not believe, is a good-faith example to 
explore solutions. I agree with you. We ought to have proposals 
on both sides, and we should not be attacking everybody and be 
lying about things they put out. I think we have to start 
talking about what we are going to do to fix this, and when 
people lie about when somebody says, ``Oh, we ought to have a 
real good discussion about this,'' I think it is inappropriate.
    So do you agree that presidential leadership is going to be 
required to be able to solve both Social Security and Medicare?
    Mr. Akabas. Yes, absolutely, Senator. I think we need 
leadership from both the Administration as well as Congress, 
and we need more proposals on the table, because this is such a 
critical issue for the American people. I am encouraged by the 
fact that there are many members who are working on this behind 
the scenes, and hoping that that continues momentum over time.
    Senator Scott. Have you seen one proposal out of the Biden 
administration?
    Mr. Akabas. I have not, Senator.
    Senator Scott. Thank you.
    Chairman Sanders. Thank you, Senator Scott. We now have, 
via video, Senator Padilla. Senator Padilla. Alex, are you 
there?
    Senator Padilla. I am here. Thank you, Mr. Chairman.
    Social Security is one of the most effective programs in 
our nation's history, and we are at a critical crossroads to 
determine whether we will build upon its success.
    As you have pointed out, Mr. Chairman, Social Security 
lifts more Americans out of poverty than any other program. 
Since its inception it has reduced the poverty rate for seniors 
from about 50 percent to less than 9 percent. Without Social 
Security, more than 22 million Americans, including 16 million 
seniors, and nearly 1 million children would have lived below 
the poverty line in 2020.
    However, despite the enormous success of Social Security, 
tens of millions of seniors are still struggling to get by, and 
many workers fear that they will not be able to afford to 
retire when they reach retirement age. So rather than following 
some of the plans offered by some of our Republican 
colleagues--and yes, we are just going to be honest about this; 
some of our Republican colleagues have offered plans to cut 
Social Security benefits--I believe we have an opportunity and 
an obligation to strengthen Social Security for the next 
century.
    That is why I was proud joining Mr. Chairman in introducing 
the Social Security Expansion Act. This legislation would not 
only keep Social Security solvent for the next 75 years but it 
would also expand benefits for current and future 
beneficiaries, ensuring that more Americans can live and retire 
with dignity.
    It is important to remember that Social Security benefits 
are earned and are a promise to workers that future generations 
will support them, just as current workers have supported 
generations of workers in the past. These benefits must be 
protected and they must be strengthened.
    And now I do have a couple of quick questions for the 
witnesses. The first is in regard to the need to expand 
benefits for seniors. Even with Social Security, more than 5 
million seniors in the U.S. live in poverty. Roughly 1 in 7 
seniors rely on Social Security for more than 90 percent of 
their income, and over the past 30 years, a number of Americans 
who are at risk of not being able to maintain their standards 
of living in retirement age has increased--not decreased.
    So I think we must expand Social Security so that every 
American can retire with dignity, the dignity that they have 
earned through their years and years of hard work. That is why 
the Social Security Expansion Act would raise the benefits for 
current and future beneficiaries and do so in a responsible 
way, one that ensure that both benefits keep up with the cost 
of living and do so by ensuring that millionaires and 
billionaires pay their fair share.
    My question is this, for Mr. Roach. Why are these proposed 
expanded benefits so important for the millions of current and 
future retirees who rely upon them?
    Mr. Roach. They are very important because our seniors are 
hurting. They have very serious pain, as we discussed. They 
cannot afford to buy sufficient food, medicine, housing. 
Everything has become more difficult for them. And I think what 
some people may not realize is that when Ronald Reagan and Tip 
O'Neill got together, we have a whole different situation now. 
What we have is, it was a systematic extermination of defined 
benefit plans in this country, and through corporate 
bankruptcies the people who had planned to work, who planned to 
retire in a certain lifestyle were unable to do so because of 
that systematic extermination of those pension plans.
    Chairman Sanders' proposal, that would sort of bridge the 
gap somewhat, not totally, but it needs to be expanded, and the 
anxiety of not knowing what is going to happen to you in the 
future, this would help with that anxiety. So I think that 
those proposals need to be enacted as soon as possible.
    Senator Padilla. Thank you for that.
    One additional question, Mr. Chairman. We already know 
Social Security is a very successful program, and the Social 
Security Administration is actually one of the most efficient 
agencies in the Federal Government, spending less than 1 
percent of the benefits paid each year on administration.
    Unfortunately, attacks on the administrative funding has 
made it more difficult for the Social Security Administration 
to provide adequate service to the American people. Since 2010, 
the Administration's workload has grown as the number of 
beneficiaries has increased by 21 percent. During the same 
period, the Administration's operating budget has been reduced 
by 17 percent, when accounting for inflation, and the staff has 
shrunk by 13 percent.
    So it is unacceptable when nearly half of all calls to the 
Social Security Administration go unanswered, and just as your 
staff and my staff and the staff of our colleagues and 
congressional offices stand ready to support our constituents 
when they need help, accessing the Social Security 
Administration, we need to support the Administration through 
resources so that they can best serve the public.
    Ms. Altman, why is ensuring robust funding for the Social 
Security Administration essential to improving consistent 
service to individuals, families, and communities that rely on 
the Social Security Administration?
    Ms. Altman. Thank you so much for that question. The field 
offices all across the country, the 1,200 field offices in 
every congressional district, are like the post offices. They 
are the face of the Federal Government. People go there at 
particular times of vulnerability. They may have just lost a 
spouse and have to claim survivor benefits. They may have just 
found themselves so disabled that they no longer can work. They 
may be aging have decided to stop work. And what you want in 
those kinds of situations is compassionate care, where those 
administering the program have the time to really work with 
people.
    The people at the Social Security Administration, the 
workers, are extremely dedicated to the American people. They 
work very, very hard. But as you have pointed out in your 
question, the agency is extremely underfunded, and it is really 
important to increase that funding. You all know because your 
congressional services get many calls from constituents. What 
we really need is to have better training for people, more 
hiring. We have got a lot of attrition. A lot of people are at 
the point where they are retiring.
    So absolutely, the Social Security Administration needs 
much more funding.
    Chairman Sanders. Senator Padilla, I wanted to thank you 
for raising that issue. That is an issue above and beyond the 
funding of Social Security benefits. But the truth is in 
Vermont and, I am gathering, in California, people are not 
getting the kind of help and responses from the Social Security 
Administration that they need. So that is a very, very 
important issue and I appreciate you raising it.
    Senator Padilla. Thank you, Mr. Chair.
    Chairman Sanders. Okay. Let me just do this. Let me thank 
the panelists. I just want to say a couple of things and then 
we are going to hear from Stephen Goss, who is the Head Actuary 
for the Social Security Administration.
    There has been a lot of talk about the need of 
bipartisanship to solve the issue, and I agree. But you know 
what? There is something even more important, and that is the 
need to listen to the American people and to respond to what 
the American people want.
    So when we talk about bipartisanship, the assumption is 
that Congress actually listens and reflects what the American 
people want, and I think that is not accurate. I think to a 
larger degree, Congress is beholden to powerful special 
interests and not the needs of ordinary Americans. I think if 
you went out there today, I think polling makes it very, very 
clear. If you ask the American people, ``Should we cut Social 
Security benefits, raise the retirement age?'' there is a very 
loud, ``No'' on the part of the American people. If you ask the 
American people, ``Should we ask the wealthiest in our country 
to contribute more into the Social Security Trust Fund?'' the 
answer is a loud, ``Yes.'' ``Should we increase benefits for 
Social Security?'' the answer is a yes, as well.
    So I am all in favor of bipartisanship, but, in fact, what 
is more important is when we start listening to the American 
people and do what they want, not listen to powerful special 
interests that do not reflect where the American people are at.
    And with that let me very much thank all five of our 
panelists. Thank you very much for your testimony and being 
with us today.
    Our next panelist is Mr. Stephen C. Goss. Mr. Goss is the 
Chief Actuary of the Social Security Administration. He joined 
the Office of the Chief Actuary in 1973, and has been Chief 
Actuary since 2001. Mr. Goss is a member of the Society of 
Actuaries, the American Academy of Actuaries, and the National 
Academy of Social Insurance.
    Mr. Goss, thank you very, very much. Mr. Goss is going to 
be with us virtually. We thank him very much for being here 
today.

 STATEMENT OF STEPHEN C. GOSS, CHIEF ACTUARY, SOCIAL SECURITY 
                         ADMINISTRATION

    Mr. Goss. Thank you very much, Mr. Sanders. I hope I am 
audible at this point.
    Chairman Sanders. You are. You are great.
    Mr. Goss. Great. Well, thank you very, very much for the 
invite, Chairman Sanders, Ranking Member Graham, and all the 
members of the Committee. It is a pleasure to be with you 
today. We do have some picture boards, I think. If somebody is 
doing that if they could put up Slide 2 that would be great.
    This is just a reminder that the new Trustees Report that 
came out exactly a week ago, as several have mentioned, has 
updated our projections for the next 75 years and the near 
term. Indeed, the objective of the Trustees Reports which, by 
the way, have been produced every single year, without fail, 
starting in 1941 for this program, have provided the Congress, 
the intent is to provide to Congress the financial and 
actuarial status of the funds for the future, indicating to 
what extent, if there is a shortfall, there will be a 
shortfall, when and to what degree, thereby giving guidance to 
Members of Congress and the Administration as to what kinds of 
changes might be needed in order to put us back into good 
financial position.
    I am very happy that there was mention of some of the work 
done in the past at Social Security, and having been around as 
long as I have, as you indicated, Senator Sanders, I worked 
very closely with the Greenspan Commission in 1982, as did my 
entire office, and with the Conference Committee for the 1983 
amendments, in 1983, and also with the Simpson-Bowles and other 
commissions since. I am happy to say that working with your 
staff, Senator Graham's staff, and the staff of virtually 
everybody on your Committee we have had the great pleasure of 
working with you and developing proposals and scoring them for 
making progress in the future.
    So if you could just flip to the next slide or the next 
panel, this simply just indicates a little bit of an indication 
of what the change is for this year's Trustees Report. The 
shortfall is shown here as a percentage of taxable payroll, for 
that which is the current tax base for Social Security. And 
last year's Trustees Report was projected at 3.54 percent of 
taxable payroll. It is a little bit better at 3.42 percent of 
taxable payroll this year.
    Let me just mention that over the context of the entire 
next 75 years the shortfall of Social Security's revenues, in 
order to pay completely all the scheduled benefits, is about 
1.2 percent of GDP. So the shortfall is not enormous, but it is 
substantial and it is something that needs to be addressed.
    So on the next panel, if we could pop that up, this simply 
indicates something that you already have seen and have talked 
about quite a bit, which is the projected point in time at 
which we believe the trust fund reserves will become depleted. 
This is critical. Social Security cannot run out of money. It 
cannot go bankrupt. But its reserves can become depleted, at 
which point it would not be able to pay the full scheduled 
benefits.
    In the most recent Trustees Report we have pushed out the 
Old Age and Survivors Insurance Trust Fund reserve depletion 
date by one year because of the experience that we have had 
over the past year. And by the way, while it is true that price 
inflation is higher than had been registered by the trustees 
back in mid-February when we set the assumptions, employment 
has also improved faster than expected, and I can give you a 
little forewarning that the average wage for the year 2021 is 
also being measured to grow considerably faster than we 
estimated in the Trustees Report. So these items will very 
likely balance each other out and will not result in a worse 
financial projection than we had in the 2022 Trustees Report.
    The Disability Insurance Trust Fund is quite a different 
story. Because of the recent experience and expectations of 
lower disability incidence rates than have been assumed for the 
past several years, we are projecting that the Social Security 
Disability Insurance Trust Fund will be fully financed under 
current law, going out for the next 75 years.
    On the next panel we can see that the cost and the revenue 
for Social Security as a percentage of our tax base, taxable 
payroll, is such that the cost is rising fairly significantly 
between 2008 and 2040, and that is what is really contributing 
toward our depleting our reserves and reaching the point where 
we would only be able to pay out 80 percent of scheduled 
benefits, under current law, in 2035, and that would drop down 
toward 74 percent, without any action, without any changes in 
law.
    But on the next slide we get to what are the two major 
factors which are the reasons. When we have an issue to address 
it is always good to know what is causing the issue that we 
have to address. The first and most important one, and, I 
think, Senator Graham indicated this earlier, is the changing 
age distribution of our population. Since the end of the Baby 
Boom period, in 1965, birth rates have been low, and that has 
brought a fundamental change in the age distribution of the 
population. Therefore, as the Baby Boom generation retires and 
is replaced in working ages by lower birth rate generations, we 
are having a dramatic increase, over time, in the number of 
people over 65 versus working age 20 to 64.
    The little lines below in red and blue indicate that had 
the birth rates not dropped from the 3 or 3.03 level per woman 
that we had during the Baby Boom, and basically really for 
generations before that, you can see what this age distribution 
would look like. It would be rising only very slightly because 
of increasing longevity. So our fundamental problem really 
derives from the changing in birth rates.
    But there is one other factor that is worth paying 
attention to, on the next panel, which indicates that, yes, we 
do have a taxable maximum level, and the taxable maximum since 
about 1983 has been rising by the average wage growth in our 
economy. That has maintained us having about 6 percent of all 
workers in the economy having earnings above the taxable 
maximum, and therefore 94 percent having earnings below the 
taxable maximum, therefore paying on all of their earnings.
    But the interesting part of this is that because of the 
changing distribution of earnings, with the highest earners 
having much higher increases in the past, you have seen a 
change from 1983 to 2000. Over that period, going from that top 
6 percent of workers receiving 9 percent of all covered 
earnings up to 16 percent of all covered earnings, it has been 
relatively stable since that time. This fundamental shift 
really has put a lot of pressure on the trust funds.
    On the next panel, let me just indicate very quickly that 
the next panel indicates something referred to as benefit 
replacement rates. It simply indicates the percentage of your 
career average earnings that would be provided by Social 
Security. You can see for the lowest earners it provides more, 
and for the highest earners it provides less, in the future. 
For people starting their benefits in retirement at age 65, you 
get about 50 percent for very low earners, and it would be 
about 25 percent for very high earners.
    However, on the right-hand panel, you see what will happen 
to those benefits if we do not make changes in law and we solve 
the Social Security shortfall solely by having less benefits 
payable.
    I should just remind you also that financial planners 
consistently tell people that they should seek to have 75 to 80 
percent of their prior earnings covered in retirement, and you 
can see that Social Security will pay out, at most, about 50 
percent. So in addition to financing Social Security also we 
have to stress people having other sources of income.
    On the very last panel, let me just indicate what I think 
has already been stated, that in order to fix the imbalance 
that we have going forward in Social Security we are going to 
have to have legislation, by 2035, hopefully well before that, 
and we are going to have to either increase our scheduled 
revenue by about a third by that time or reduce the scheduled 
benefits by a quarter, or some combination of the two.
    And again, I would just say that I am very much looking 
forward to our office working with all of you, and I want to 
commend, by the way, both Senator Sanders and Senator Graham 
for their efforts back in 2011, when we worked with them on 
bills that would have, at that time, extended the projected 
solvency of Social Security fully 75 years. Very different 
approaches. But at least they both came to the same end result 
of extending solvency for 75 years. So we are happy to have 
worked, Senator Sanders, with you and your staff, on the latest 
bill, which was just introduced today, which, through a 
combination of factors will again have the prospect of 
extending solvency out to 75 years.
    Thank you very much. Sorry for running over on time.
    [The prepared statement of Mr. Goss appears on page 78.]
    Chairman Sanders. No, that is okay. Thank you very much, 
Mr. Goss, for your work, in general, and for so many years, and 
thank you very much for the analysis you did of the legislation 
that I and others have just introduced.
    I am just going to be pretty brief, and I want to have you 
confirm or not my understanding of your analysis of our 
legislation. It is my understanding that the Social Security 
Administration has found that the legislation I have introduced 
today would expand benefits across the board starting in 2023. 
Is that correct?
    Mr. Goss. That is correct.
    Chairman Sanders. It is my understanding that the Social 
Security Administration has found that if this bill were signed 
into law, Social Security would be solvent for more than 75 
years. Is that correct?
    Mr. Goss. That is, in fact, the conclusion that our office 
comes to, based on the baseline projections recently developed 
with our Board of Trustees.
    Chairman Sanders. It is my understanding that the Social 
Security Administration has found that if this bill were signed 
into law, the bottom 93 percent of Americans would not see 
their payroll taxes go up by one penny. Is that correct?
    Mr. Goss. That is correct. In fact, it might even be closer 
to the bottom 94 percent.
    Chairman Sanders. In other words, what you are confirming 
is that this legislation would expand Social Security benefits 
and fully fund Social Security for more than 75 years, by 
demanding that the very wealthiest people in this country pay 
more in taxes. Is that a fair assessment?
    Mr. Goss. That is correct, Senator Sanders. And I would 
just add that as I think you have indicated very clearly your 
bill that was introduced today would not only expand revenue by 
payroll tax above $250,000 earnings level but also would, in 
fact, bring some new tax to the trust funds based on investment 
income.
    Chairman Sanders. Right.
    Mr. Goss. And the combination of those provide the amount 
of revenue to end up getting us this result.
    Chairman Sanders. That is correct. Okay. Mr. Goss, thank 
you so much. I appreciate the work you have done and you being 
with us today.
    And with that, before we close, I would like to ask 
unanimous consent, which is not going to be hard to get given 
that no one else is here----
    [Laughter.]
     That three statements be entered into the record. One is a 
set of estimates of the Social Security Expansion Act prepared 
by Steve Goss and his team at the Social Security 
Administration. The other statements are letters of support 
from AFSCME and the National Committee to Preserve Social 
Security and Medicare. And without objection, so ordered.
    [The Additional Materials submitted for the Record begin on 
page 109.]
    Chairman Sanders. And let me just conclude by thanking all 
of the witnesses for being with us today.
    As information for all Senators, questions for the record 
are due by 12 noon tomorrow, with signed hand copies delivered 
to the Committee clerk at Dirksen 624. Email copies will also 
be accepted. Under our rules, the witnesses will have 7 days 
from receipt of our questions to respond with answers.
    And with no further business, this hearing is adjourned. 
Thank you all.

          ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

    [Prepared statements, responses to written questions, and 
additional material submitted for the record follow:]

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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