[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
THE SOCIAL SECURITY
TRUST FUNDS IN 2024 AND BEYOND
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HEARING
BEFORE THE
SUBCOMMITTEE ON SOCIAL SECURITY
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JUNE 4, 2024
__________
Serial No. 118-SS08
__________
Printed for the use of the Committee on Ways and Means
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__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-014 WASHINGTON : 2024
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COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
------
SUBCOMMITTEE ON SOCIAL SECURITY
DREW FERGUSON, Georgia, Chairman
MIKE CAREY, Ohio JOHN LARSON, Connecticut
DAVID SCHWEIKERT, Arizona BILL PASCRELL, New Jersey
RON ESTES, Kansas LINDA SANCHEZ, California
BLAKE MOORE, Utah DAN KILDEE, Michigan
RANDY FEENSTRA, Iowa GWEN MOORE, Wisconsin
GREG STEUBE, Florida
DAVID KUSTOFF, Tennessee
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Drew Ferguson, Georgia, Chairman............................ 1
Hon. John Larson, Connecticut, Ranking Member.................... 2
Advisory of June 4, 2024 announcing the hearing.................. V
WITNESSES
Stephen Goss, Chief Actuary, Social Security Administration...... 3
Dr. Phillip Swagel, Director, Congressional Budget Office........ 16
Barry Huston, Analyst of Social Policy, Congressional Research
Service........................................................ 25
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Stephen Goss,
Chief Actuary, Social Security Administration.................. 69
Member Questions for the Record and Responses from Dr. Phillip
Swagel, Director, Congressional Budget Office.................. 73
Member Questions for the Record and Responses from Barry Huston,
Analyst of Social Policy, Congressional Research Service....... 79
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 85
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THE SOCIAL SECURITY TRUST FUNDS
IN 2024 AND BEYOND
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TUESDAY, JUNE 4, 2024
House of Representatives,
Subcommittee on Social Security,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to call, at 11:19 a.m., in
Room 1100, Longworth House Office Building, Hon. Drew Ferguson
[chairman of the subcommittee] presiding.
Chairman FERGUSON. Good morning, everyone. We will call the
subcommittee hearing to order.
I want to thank each of you for being here today. And I
especially want to thank our witnesses for being here today. We
look forward to hearing from you.
Last month, the Social Security Board of Trustees released
its annual report on the fiscal status of Social Security
programs, and it came as more unwelcome news for American
seniors and workers. Like, last year, both the trustees and the
Congressional Budget Office project Social Security's
retirement and survivors' program will be unable to pay full
benefits in less than a decade. What that means to the American
people and those seniors that are near retirement or will be in
retirement is that it could produce a benefit cut of somewhere
between 21 and 25 percent. And the difference is that now it is
a year later, and we are much closer to the insolvency.
As we will hear today, the longer the wait, the harder it
is going to be to solve. It is clear that Social Security's
cost growth is unsustainable. Program costs average 4.5 percent
of GDP from 1994 to 2023, and are projected to grow rapidly to
nearly six percent of GDP by 2034 as baby boomers continue to
reach retirement age.
Simply put, more people are and will be collecting Social
Security for longer periods of time. And we are looking at a
situation where we have fewer workers. And this trend is
projected to continue for decades.
To add insult to injury, President Biden's recent budget
does nothing to address the pending exhaustion of the trust
fund. And to make matters worse, the accumulative effect is
that it actually hurts Social Security's funding stream by
billions of dollars over the next decade. On top of that, the
Social Security Administration has done everything it can to
push out rules and other policy changes that will result in
tens of billions of dollars of new and unpaid for program costs
that will only accelerate the trust fund exhaustion.
Social Security is a vitally important part of every single
American's life and retirement, so it is important that we
don't downplay how bad the situation really is. To tell the
American people that the most recent trustees report is good
news because projections push back insolvency by a few months
is misleading and simply misses the point. These programs are
in dire trouble, and sugarcoating the problem instead of
seeking bipartisan solutions only puts seniors and workers at
greater risk.
The American people rightfully expect and deserve that we
find a way to work together to save and strengthen this
program. This starts here with an honest assessment of the
program's finances and a sincere discussion of the size of the
problem we need to solve. And I invite my colleagues here today
to join in that discussion and have a very robust debate on
what we need to do moving forward.
I would now like to yield to the ranking member, Mr.
Larson, for his opening statement.
Mr. Larson, you are now recognized.
Mr. LARSON. Thank you, Mr. Chairman. And thank you for your
remarks.
And I want to thank our panelists. It is not often that we
get the Walter Cronkite of actuaries that is here. So, I am
pleased that we are going to hear straightforward talk.
But let's cut to the chase. Congress has not done its job
in over 50 years. We have not enhanced this program so that
your constituents are better served. On average, every single
one of our districts receives more than $200 million monthly to
people that are on Social Security. It is arguably probably the
best economic development plan that we have. And where do they
spend that money? They spend it right back in the district.
I can't help but get upset when you think about the fact
that 10,000 baby boomers a day become eligible for Social
Security. And they look and say, well, what has happened? Why
hasn't Congress acted?
We have a proposal that is out there. What Congress needs
to do is something the public expects from us: vote. You got a
plan. We have a plan. We are happy to put our plan up for a
vote. What is yours? What we hear is $1.5 trillion in cuts to
Social Security? That is your idea of saving Social Security?
Raising the age of Social Security recipients. The American
public knows for every year you raise the age, that is a 7
percent cut in benefits.
So, the opening remarks of the chairman is that we are in
dire straits. We will see 20 percent-plus cuts by 2033 if
Congress does nothing. So, your proposal is, well, let's do
something. Let's make those cuts now by raising the age and
cutting it 21 percent upfront.
It is long overdue to stop all of the dialogue and how
about vote. How about put out your plan. Do what the people
have asked us to do. Everybody agrees that there is a crisis,
that there is a need here.
So, what did we get elected to do? I don't know how people
go home and look themselves in the mirror and understand that
there is 5 million of your fellow Americans that get below
poverty level checks from Social Security. More than 70 million
people--or close to 70 million people now who rely on Social
Security, 40 percent of them, it is the only benefit they have.
And you, Congress, with the responsibility of changing that, do
nothing. You don't vote. That is what we need more than
anything else.
Aside from laying out the numbers and getting the news,
good and bad, then the question is, how do you solve the
problem? Cutting Social Security doesn't solve the problem. It
exacerbates it.
You mean to tell me that things haven't changed in 53
years? Not having a COLA that works. Having 5 million-plus
people who have paid into a system get below poverty level
checks. What do you have against giving 23 million Americans a
tax cut? These are the hard workers. You guys are going to work
overtime to make sure that millionaires and billionaires get
their tax cut. But the average working person, 23 million
Americans that will get a tax cut, if this Congress were to
act, you don't care about.
So, whether it is a tax cut, whether it is getting benefits
to the point where they are livable for people, and making sure
that no one can retire into poverty, and repealing WEP and GPO
and paying for it.
Thank God for President Biden saying, hey, let's pay for
this. Let's have people who pay nothing or next to nothing,
millionaires and billionaires, just pay their fair share of
what the guy making 50 or 30,000 a year has to pay all year
long. You know what that does? It both allows us to extend the
benefits and also allows us to extend the solvency.
The choice is yours. If you got a better idea, put it out
there. But it seems like the only idea is to cut Social
Security by $1.5 trillion and to cut people's benefits by
raising the age 21 percent across the board.
I yield back.
Chairman FERGUSON. Thank you.
I now have the pleasure of introducing our witnesses for
the day. Stephen Goss is the chief actuary at the Social
Security Administration. Dr. Phillip Swagel is the director of
the Congressional Budget Office. And Barry Huston is an analyst
of Social Security policy at the Congressional Research
Service.
Thank you all, once again, for being here. I look forward
to hearing your remarks. You will have 5 minutes to deliver the
oral remarks.
Mr. Goss, you are now recognized.
STATEMENT OF STEPHEN GOSS, CHIEF ACTUARY,
SOCIAL SECURITY ADMINISTRATION
Mr. GOSS. Thank you very much, Chairman Ferguson, Ranking
Member Larson, members of the committee. Thank you for the
opportunity to come and talk to you today about Social
Security's program past, present, and future.
Social Security started paying monthly benefits, as you all
well know, to qualifying retired workers and family members and
survivors in 1940. Benefits to disabled workers and their
families started in 1957. Over the 85 years through 2024, all
scheduled benefits had been paid in full and on time. Social
Security provides this fundamental insurance against loss of
earned income due to old age, disability, and death, for nearly
all current and past workers and their families.
Today, over 67 million people receive monthly benefits from
the OASDI program, nearly 20 percent of the population, at a
cost of 5.2 percent of GDP. By 2060, OASDI program cost is
projected to rise to a stable, roughly, 6.1 percent of GDP,
with over 23 percent of the population then expected to be
receiving monthly benefits. But currently scheduled tax income
remains at only 4.6 percent of GDP. So we have a shortfall to
deal with. Over the 75 years as a whole, the unfunded
obligation, the shortfall that we have over the period of the
next 75 years, is 1.2 percent of GDP. We need to get these
things back in balance.
At the start of 2024, reserves in the combined OASI and DI
trust funds total $2.8 trillion, nearly double the amount of
annual payments. So our contingency reserve fund is strong at
the moment. However, revenues to the combined OASI and DI trust
funds are projected to be less than program costs in 2024, as
they have been since 2010, in future years under the
intermediate projections to the 2024 Trustees Report. So
combined OASI and DI reserves would become depleted in June of
2035. That is 13 months later than projected in the last year's
report but is still on the horizon. At that time, 83 percent of
the scheduled benefits would still be payable.
For the OASI Trust Fund alone, which is a separate legal
entity, it is projected to become depleted in its reserves in
November of 2033, 7 months later than last year's report.
Again, an incremental change with 79 percent of scheduled
benefits then payable from that fund alone. The DI Trust Fund
is in good shape and not projecting to have issues under the
current projections through 2100 and beyond.
Now, improvement in the 2024 Trustees Report is due to
better than expected economic growth in 2023, a very good
thing, and recognition of continued high-labor productivity and
employment levels through 2023, and expected to go on for the
future. In addition, lower disability incidents and prevalence
rates have continued. We do have a rise in issues with the
birth rate to be dealt with, obviously.
Our projected annual shortfall for income to cover program
costs should come as no surprise. The trustees have projected
combined OASDI Trust Fund reserve depletion will occur between
2033 and 2035 for the last 13 years' reports, and between 2029
and 2042 for the last 34 Trustees Reports.
The fundamental challenge of the changing age distribution
at the adult population due to reduction in birth rates after
1965 was well known even in 1983, at the time of the last major
amendments for this program. The 1983 amendments intended to
accumulate substantial trust fund reserves, making full payment
of scheduled benefits possible for decades to come. But these
amendments were understood at that time not to be a permanent
solution.
Prior to the 1983 amendments, income was expected to cover
only 93 percent of program costs for the year 1983, declining
to 78 percent of scheduled costs for 2025. After the enactment
of the 1983 amendments, tax income was projected to exceed
program costs through 2020, but to cover only 93 percent of
scheduled benefits for 2025, a year yet to come, declining to
86.5 percent by 2035, with trust fund reserves becoming
depleted not until 2063 under those projections.
However, annual tax income fell short of expectations after
1983, and fell below annual program costs, starting in 2010 for
two big reasons that had not been anticipated back in 1983.
First, the share of covered earnings subject to the payroll tax
declined from 90 percent in 1983, which is expected to persist,
to just 82.5 percent over the next 17 years by the year 2000.
Because average earnings grew much, much greater by 62 percent
more than inflation for the highest 6 percent of earners
between 1983 and 2000, where the average wage grew by only 17
percent for the other 94 percent of workers across that period.
Second, the deep recession of 2007 to 2009, with only a
very gradual 10-year recovery reduced employment earnings for a
decade of costing us not to have the buildup of reserves that
was expected. As a result, trust fund reserves did not
accumulate to what was expected in 1983. And our scheduled cost
at this point is projected to cover--our revenues to cover only
about 86 percent of scheduled cost in 2025, declining to 84
percent by 2035.
The combined OASDI reserves are now projected to become
depleted in 2035, almost 30 years earlier than 1983 for the two
reasons already mentioned.
Chairman FERGUSON. Mr. Goss, we have allowed you a little
latitude to go over by about a minute. And if we could, I am
going to get you to yield, try to keep everybody on the 5-
minute clock. And I am sure we can get into more of this really
important information through member questions.
[The statement of Mr. Goss follows:]
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Chairman FERGUSON. With that, Dr. Swagel, I am going to
call on you for your 5 minutes.
STATEMENT OF DR. PHILLIP SWAGEL, DIRECTOR, CONGRESSIONAL BUDGET
OFFICE
Mr. SWAGEL. Very good. Thank you.
Chairman Ferguson, Ranking Member Larson, and members of
the subcommittee, thank you for inviting me to testify about
Social Security.
Social Security faces a significant financial challenge.
Under current law, in our projections, the Old Age and
Survivors Insurance Trust Fund is exhausted in fiscal year
2033, and the Disability Insurance Trust Fund is exhausted in
2061. If the two trust funds were combined, they would be
exhausted in fiscal year 2034.
After the trust funds are exhausted, we project that the
resources to pay benefits in 2035 would be 21 percent less than
the amount of scheduled benefits. And that shortfall would
increase over time.
In CBO's projections, about 82 million people, that is
roughly one-fifth of the U.S. population, receive Social
Security benefits in 2035. That is a projection. If all Social
Security benefits were reduced by the same percentage in that
year, lower income households would reduce their spending by
more and increase the amount they work by more in percentage
terms than households with higher lifetime incomes. Legislative
action would be needed to avoid this scenario.
The imbalance between the systems' revenues and scheduled
benefit payments extends beyond 2034, and that imbalance grows
over time. We project that the actuarial deficit over the next
75 years equals 1.5 percent of GDP or 4.4 percent of taxable
payroll. So, that is, scheduled benefits could be paid over 75
years through 2098, if payroll tax rates were increased by 4.4
percentage points right away, from 12.4 percent to 16.8
percent, and that is an increase of 35 percent. That is a 35
percent tax hike.
Alternatively, a reduction in scheduled benefits of 24
percent would permit full payment of those smaller benefits
through 2098. And, of course, a combination of changes to taxes
and benefits or relying on resources from the Treasury's
general fund could also suffice. And policymakers, you and your
colleagues, can have different changes apply to people of
different incomes and people of different ages. Additional
changes would be needed to ensure solvency beyond 2098.
The aging of the population is a key factor affecting the
finances of Social Security. The number of people age 65 or
older who are less likely to work and pay payroll taxes and are
generally eligible for Social Security benefits is projected to
grow faster than the number of people age 25 to 54 who are more
likely to work and to pay payroll taxes.
Population growth is determined by births, deaths, and net
immigration. Fertility in our projection remains lower than
replacement. We project life expectancy will continue to
increase. And immigration is now an increasingly important part
of the growth of the U.S. population and the U.S. labor force.
And all of these demographic changes affect the financial
status of Social Security.
A feature of CBO's work is that the demographic and
economic projections used in our Social Security analysis are
consistent with those used in CBO's baseline projections and
for other purposes.
In closing, let me note that any projection over a horizon
of seven decades is inherently uncertain, but it is clear that
action is needed to make Social Security financially
sustainable.
Thank you very much. I am happy to answer questions.
[The statement of Mr. Swagel follows:]
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Chairman FERGUSON. Thank you, Dr. Swagel.
Mr. Huston, it is now time for your 5 minutes.
STATEMENT OF BARRY HUSTON, ANALYST OF SOCIAL POLICY,
CONGRESSIONAL RESEARCH SERVICE
Mr. HUSTON. Chairman Ferguson, Ranking Member Larson, and
members of the subcommittee, thank you for inviting me to
testify. My name is Barry Huston, and I am an analyst with the
Congressional Research Service.
Today's Social Security is different from the one that was
enacted in 1935. The program matured from one that covered
about half of workers and paid benefits only to retired
workers, to one that covers almost all workers and pays
benefits to retired and disabled workers and their eligible
family members.
This year, Social Security will pay benefits to over 67
million beneficiaries, and about 182 million workers will work
in covered employment. Most of these workers will become future
beneficiaries.
The program's ability to pay benefits to current and future
beneficiaries is determined by its revenues, costs, and its
trust funds. Current and projected imbalances between these
elements indicate the program will not be able to pay the full
amounts of scheduled benefits in about 11 years.
The largest source of revenue is payroll taxes, about 91
percent of revenues in 2023. The tax, evenly split between
employees and employers, is levied on covered earnings up to an
annual limit. This annual limit generally rises with wage
growth in the economy. As average wages are projected to
increase along with the number of covered workers, so too are
projected revenues from payroll taxes.
The second source of revenue is income from the taxation of
Social Security benefits, about 4 percent of revenues in 2023.
About half of beneficiaries pay Federal income tax on a portion
of their benefits. The thresholds used to determine tax
liability are fixed in law and not indexed. For this reason,
among others, projected revenue from the taxation of benefits
is expected to increase.
In previous years, tax revenues exceeded the amounts needed
to pay benefits. Under law, the trust funds hold excess
revenues in interest-bearing government securities. And in
2023, interest income on these asset reserves accounted for
about 5 percent of revenues. However, with costs now exceeding
revenues and increasing amounts of asset reserves projected to
be redeemed to help pay benefits, this revenue source is
projected to decrease and will approach zero as the asset
reserves are depleted.
In 2023, monthly benefits accounted for 99 percent of
costs. Costs are expected to increase for several reasons, such
as increasing average initial benefits and increasing number of
beneficiaries and increasing beneficiary longevity.
Although the benefit computation process is the same for
all workers, average initial benefits generally increase for
successive birth cohorts since the process index is for wage
growth, which is typically positive. The process results in
stable replacement rates across birth cohorts; that is, initial
benefit levels as a percentage of career preretirement earnings
are consistent across cohorts. It also results in
progressivity. Workers with relatively lower career average
earnings experience a relatively higher replacement rate.
In the years to come, an increasing number of covered
workers will become beneficiaries. As we are meeting life
expectancy, as older ages continues to increase, they are
expected to remain in current payment status for longer periods
of time, on average. For these reasons, in addition to other
factors, such as cost of living adjustments, costs are
projected to increase.
The program's revenue and costs are expected to increase in
aggregate nominal dollars. Comparing the projected income and
cost rates reveal that, for several decades, costs are
projected to increase relative to revenues. This imbalance
impacts the program's ability to pay full scheduled benefits.
Since 2021, the program has relied on asset reserves to
help pay scheduled benefits, and can continue to do so for
about 11 more years. Once asset reserves are depleted,
continuing revenues are projected to cover about three-fourths
of scheduled benefits.
Lawmakers may choose from a wide range of revenue
increasing or cost-reducing provisions to help eliminate this
imbalance. The Social Security amendments of 1983, generally
considered the program's last major reform, use both types of
revisions, among others.
Depending on what provisions may be included in future
legislation, changes may affect groups of workers and
beneficiaries in different ways. Changes implemented sooner
rather than later, in addition to requiring cost reducing or
revenue increasing provisions that are smaller in magnitude,
would allow workers and beneficiaries more time to adjust their
behavior.
Thank you, and I look forward to your questions.
[The statement of Mr. Huston follows:]
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Chairman FERGUSON. Thank you all for your testimony. And we
will now start with questions. And I will start with that.
Dr. Swagel, I want to start with you and talk to you
about--you made a comment that just kind of caught me off. You
suggested that one way of fixing this problem are general fund
transfers to address the shortfall. If we did that, if we use
that methodology, talk to us just very briefly about what that
would do to the Federal debt and deficit each year, and what
that potentially could do to interest rates and the amount of
interest that the taxpayers are already paying.
Mr. SWAGEL. Yes, sir. You know, as I said, the shortfall
could be, you know, addressed in many ways. Transferring funds
from general revenues, you know, the amount of dollars that
would be needed in our projections is nearly $400 billion in
2033, and about $550 billion in 2034. And, you know, in real
dollars, the Treasury would have to come up with those
additional dollars. That would mean, you know, either
reductions in other spending or additional borrowing. That
would mean more crowding out and impact on interest rates----
Chairman FERGUSON. And given our level of debt right now,
that does not seem like a viable option. That is not a
question. That is a statement from me.
I also want to ask you about in the shortfall category. You
know, we hear a lot about, okay, the income cap right now of
people who are making more than $168,000 a year, they are not
paying their fair share. Currently, if you are paying above
that, you are not--even if you are paying $168,000 a year--
paying Social Security taxes on $168,000 a year, there is still
a shortfall. I mean, there is a difference between what you are
paying in and what you are actually getting back.
And then if you--and we have always tied the level of
benefit to earnings, correct? So if you raise the cap, then, in
theory, you would also raise the amount of earnings that people
were eligible for down the road, or you would have to simply
say--the answer is you are going to pay more in taxes, but you
are going to receive less benefit. Is that a fair assessment?
Mr. SWAGEL. No, that is right. And since the system as
whole is progressive, you know, so thinking of lifetime
benefits against lifetime contributions, the bottom quintile of
people, you know, with--the bottom quintile, the lowest 20
percent of lifetime earners gets about 2.5 times back in
benefits as what they pay in in contributions. People in the
middle get about 1.5 times. The top 20 percent, on average,
gets about 1. So it is 1:1. So that is a sense which the system
as a whole is progressive.
Chairman FERGUSON. And it is my understanding that if we
subjected all earnings in the U.S. to the Social Security
payroll tax, we would still have about a $10 trillion shortfall
over the next 75 years.
Mr. SWAGEL. Yeah. So I don't have that number in my head. I
can tell you, if we increase the taxable share back to 90
percent--it is around 82.5 now--so made 90 percent taxable,
that would delay exhaustion by 4 years. If we said everything
above $250,000 is taxable, that would delay exhaustion by 13
years. So it makes a difference, but it is--you know, there is
still a challenge after that.
Chairman FERGUSON. Mr. Goss, question for you. When you
look at what Social Security has done in terms of enhancing
benefits and paying out more, would you say that couples that
retire now on average receive a much greater benefit than, say,
couples that retired back in the nineties--adjusted for
dollars?
Mr. GOSS. Well, if we look at benefits as Barry indicated,
the nature of the benefit formula is that it tends to rise with
the average wage over time. So the people from one generation
to the next, if they have had higher wage levels, a higher
standard of living that Social Security benefits has been
intended to maintain, therefore, a higher benefit level to give
them a similar replacement rate.
In that regard, individuals and couples now who are
retiring and getting the benefits are not really receiving more
than generations in the past. In fact, one of the major changes
I have seen in the 1983 amendments was to change the normal
retirement age, which increased it by, what, by--you know, from
65 up to 67. And that actually lowered the average monthly
benefit for people all as equal.
Chairman FERGUSON. So you would argue with the fact that a
couple who turned 65 in 1990 on average received $590,000 in
lifetime benefits, and that is adjusted for 2023 dollars, when
compared to a couple that turned 65 in 2020, they were
projected to receive $812,000. And I look at it, and it looks
like that the formula has actually increased--has pushed up the
amount of lifetime earnings that a couple could see.
Now, I say this to say that, you know, we have seen an
increase in benefits over the years. It is not to argue that it
is perfect, but we have seen that increase.
Mr. Huston, I want to touch on one other thing, if I could,
talking about, you know, the other things that our seniors--
and, look, seniors depend on this program, and we have an
obligation, and it is important that we--that we honor what
we--that Congress honors what it said it would do for the
recipients of these benefits.
But I look at this and I think to myself, in 50 years,
there have been a lot of other programs that are out there to
help seniors as well. I am going to tick through just a small
list of these things: SNAP Program, Older Americans Act,
housing choice vouchers, Weatherization Assistance Program, the
LIHEAP, or Low-Income Home Energy Assistance Program, Lifeline
programs, reverse mortgages, the Seniors Farmers Market
Nutrition Program. My point is you can go on and on.
And I think Congress as a whole, over the years, while it
has made adjustments--while the formula for Social Security has
said, we are going to see an increase in payments--but we have
also done an awful lot to make sure that seniors have resources
in many other areas for housing, in food assistance and, quite
candidly, Medicare with healthcare as well. And there have been
some great things that we have done there.
So I think it is a little bit disingenuous to say that
seniors don't have any other lifelines and this is the only
thing. It is simply that seniors have a lot that they can
depend on. And I think Congress has been very thoughtful in
making sure that they have got the resources that they need.
Again, I want to thank you for y'all's testimony.
And, now, I am going to yield 5 minutes to my friend, Mr.
Larson, for his questions.
Mr. LARSON. Thank you, Dr. Ferguson.
And, yeah, I almost don't know where to start. But
basically, when I listen to the chairman speak, it is that,
hey, you folks out there who are depending on Social Security,
look, you already got enough. And for God's sake, what we don't
want to do, at all costs, is make sure that billionaires pay
their fair share. Because that would be--you know. And then,
hypothetically, what would happen?
Dr. Swagel, has the general fund ever been used to pay for
Social Security?
Mr. SWAGEL. You know, I don't know.
Mr. LARSON. Ah. And so it has never been used but,
hypothetically, that is what we are using here to try to say to
the American public that somehow this is part of the--it
contributes to the debt and deficit. That is total BS.
Now, let me ask a couple of questions here. Mr. Goss, if we
were to raise the retirement age by 3 years, as has been
proposed, what would that mean in terms of cut to benefits, if
we went from 67 to 70?
Mr. GOSS. It would depend on how rapidly we did this. But
at the point at which we had the retirement age raised by the 3
years, as you had indicated earlier, that reduces retirement
benefits, monthly benefits and lifetimes benefits, by about 6.5
to 7 percent for each year that we raise. So an additional 3-
year increase in the normal retirement age would in fact lower
benefits by on the order of 20 percent.
Mr. LARSON. Now, Mr. Goss, also, because we have heard this
question as well, what percentage of income does someone who
makes $1 billion in wages contribute to Social Security?
Mr. GOSS. Well, given that the most they are going to pay
is their 6.2 percent, they and their employer, on the first
$168,600, I think the number comes out, for a billionaire, for
somebody with $1 billion of earnings, to about .1 percent of
their total wages paid by them and another .1 percent paid by
their employer.
Mr. LARSON. What percentage is a person making $50,000 pay?
Mr. GOSS. Well, they would pay their 6.2 percent by
themselves and their employer matching the----
Mr. LARSON. So, again, because we want to protect these
billionaires and millionaires, it is unconscionable to think
about the fact that they ought to pay their fair share, that
they ought to be in a position where, as President Biden points
out, if they do, we extend the solvency of the program for 66
years, and we are able to add on benefits.
Another question that comes up, because this happens
frequently on the trail. Can you talk about how Social Security
actually doesn't contribute a penny to the national debt?
Mr. GOSS. Yes, be happy to. As I think everybody here is
very well aware, Social Security has its trust funds, and the
trust funds can only have positive balances. Social Security
now has and never has had the ability to borrow from the
general fund or the Treasury. That is in the current law.
Anything could change in the future.
But currently, Social Security can only hold asset
reserves. And as a result, with the roughly $33 trillion, $34
trillion of total Federal debt we have now, Social Security is
actually covering approximately $3 trillion of that and not
needing to be borrowed from the public at the moment.
So Social Security can only really help surface some of the
debt that the rest of the government develops. It does not
contribute towards the debt.
Mr. LARSON. So, for the general public to understand this,
it is called a trust fund for a reason. And that trust fund has
not been tapped into, nor will it ever be tapped into, unless
Members of Congress have a different idea and want to change
it. And they could through a vote, if they decided that this is
the tact they would want to take. But the fact of the matter
is, and it is a fact, that it doesn't contribute to the debt or
deficit. And what aggravates people the most is, they pay into
this. So does their employer. But their employer gets a tax
write-off.
Twenty-three million Americans get double taxed under
current Social Security programs. And we as a body are the only
ones that can change that. And instead, we don't put forward
proposals that direct making the system both solvent and
enhancing benefits, because people desperately need this money.
Forty percent of our fellow Americans is the only thing they
have. Twenty-eight million Americans.
Chairman FERGUSON. The gentleman's time has expired.
We now move to the gentleman from Ohio, Mr. Carey.
Mr. CAREY. I want to thank the chairman. I also want to
thank the ranking member, as well as the witnesses for being
here today.
Since day one, I have been a strong advocate for the
strength and integrity of the Social Security trust fund.
Unfortunately, if my numbers are correct, under this budget, if
enacted, the administration's budget would cut approximately
$17 billion to the Social Security trust fund over the next
decade.
Now, I am the grandson of a couple that lived only on
Social Security. And I watched how they scrimped and saved and
tried to do what they could. So with that being said, I am
dedicated to working with my colleagues both on the Democrat
side and Republican side to find some solutions.
So, Mr. Goss and Director Swagel, the trustees in the
Congressional Budget Office projected that, under current law,
Social Security's Age-Old and Survivors Insurance Trust Fund
would be depleted by 2033--we have established that--at which
point the program will only be able to pay a fraction of the
promised benefits. Absent any changes, what percentage of
retirement and survivor benefits would be payable after the
trust fund is depleted?
Mr. GOSS. So our projections in the latest Trustees Report
indicate that in 2033, the OASI Trust Fund alone should reach
the point where we do deplete the reserves and have only
continuing income coming in. That would cover about 79 percent
at that point of the scheduled benefits that people are
expecting.
Mr. CAREY. Director?
Mr. SWAGEL. Right. And we are just a little bit less than
that. So we see the shortfall is a little bit less, but in the
same ballpark.
Mr. CAREY. So how is that projected to change in the years
after 2033? Mr. Goss?
Mr. GOSS. After 2033, that percentage will, of course,
decline. I know off the top of my head for the total Social
Security OASI and DI, that will drop from 83 percent,
eventually down to 73 percent by the time we get to about 2098,
and will be a little bit less than 73 percent payable for the
OASI Trust Fund alone by that time.
Mr. CAREY. Director?
Mr. SWAGEL. Right. And, again, we have the same general
result. You know, we see the shortfall as a bit larger, and so
the decline in benefits, a bit larger, but it is broadly
similar to what the trustees have.
Mr. CAREY. Thank you both.
Mr. Huston, the 1983 amendments were the last time that
Social Security saw major program reforms and intended to
address the system's funding shortfalls. Can you help us
understand how those reforms came to be and what Social
Security's finances looked like leading up to those reforms?
Mr. HUSTON. Thank you. The 1977 amendments were the
previous major reform, and they were estimated to get the
program to be solvent for about 50 more years. The economic
experience right after that proved to be much worse. In the
1980 Trustees Report, they highlight that benefits would be not
paid the full scheduled amount in under 2 years. Later in 1980,
Congress passed a temporary reallocation of the payroll tax
from the disability program to Old-Age and Survivors Insurance
program.
Later in 1981, as the situation continued to deteriorate,
Congress authorized interfund borrowing, and President Reagan
established what became known as the Greenspan Commission. The
Commission's report included provisions that would have
resolved about two-thirds of the projected shortfall and became
the basis for the 1983 amendments. Congress later added several
more provisions which covered about the remaining one-third of
the shortfall. And when it passed in March, April of 1983, it
was estimated that the OASI program was months, if not weeks,
away from being able to pay the full amount of scheduled
benefits.
Mr. CAREY. Thank you for that.
I am going to follow up to Mr. Goss. How does the projected
cash imbalance in 2033 compare to the imbalance in the early
1980s?
Mr. GOSS. The projected imbalance in 2033--let's see, I
actually had the numbers in the testimony here for 2035. We are
at this point actually having a fairly significant imbalance in
2035, much more than was expected after the 1983 amendments.
Again, really primarily for the one factor of the changing
distribution of earnings in the economy. We have actually lost,
as mentioned, I think Dr. Swagel mentioned earlier, we have
gone from 90 percent down to 82 percent of all covered earnings
being below our taxable maximum. That is an 8 percent reduction
in the amount of revenue that we would have expected. And that
cumulatively, ever since 1983, has had a major effect on the
level of trust fund reserves that we have. That is the primary
reason why we have----
Mr. CAREY. My time has expired. I thank the witnesses, and
I thank the chair for giving me the opportunity. Thanks so
much.
Chairman FERGUSON. I thank the gentleman from Ohio.
Next, the gentlelady from California.
Ms. Sanchez, you are now recognized for 5 minutes.
Ms. SANCHEZ. Thank you, Mr. Chairman.
I must say that it feels like we have been here before. It
feels a little bit like Groundhog Day in this committee,
because each time that the subcommittee convenes to talk about
the future of Social Security in this country, we hear plenty
of proposed solutions on the Democratic side.
For example, my friend, Ranking Member Larson, has pushed
Social Security reforms again and again. He is very passionate
about this issue. And his planned Social Security 2100 would
increase benefits across the board, repeal WEP and GPO, and
make Social Security work better for every American. And all of
those benefits that we just talked about would be paid for, and
they would serve those who need them the most.
My Republican colleagues, on the other hand, are proposing
significant cuts to Social Security. And while those cuts would
be detrimental to all Americans, it would disproportionately
impact people of color who would be affected the most by cuts.
People of color are less likely to work for employers who offer
pensions or any kind of retirement plans. So they are more
likely to rely on Social Security after retirement.
Proposed cuts to Social Security would really be a direct
attack on those communities of color, specifically the Latino
population, who relies almost exclusively on Social Security
for their retirement.
Once again, we are hearing talk about Republican plans to
cut benefits, and in stark contrast, the Democratic plans,
which are to increase benefits for those in need.
I very much appreciate our witnesses coming here today to
discuss this issue. Mr. Huston helpfully outlined what this
subcommittee already knows, that the combined trust fund will
hypothetically be depleted sometime after the year 2035.
Everyone on this dais knows that this is a problem. But the
real disagreement comes in how do we fix it.
I, you know, hear my colleagues across the aisle maintain
that, you know, slashing Social Security benefits or
privatizing Social Security and raising the retirement age is
somehow going to benefit Social Security as a whole. And I
disagree with that.
As my dear friend, Ranking Member Larson, always says,
Social Security is the most successful anti-poverty program in
our country.
So we shouldn't be talking about slashing benefits,
increasing the retirement age, privatizing Social Security. We
need to find a very thoughtful path forward. And I think my
friend, Mr. Larson's, proposal is that path forward.
I just want to quickly talk about something that was
mentioned in terms of who pays into the Social Security trust
fund, and the fact that the fertility rate in the United States
is declining, our birth rate is not replacement rate. But there
is one potential avenue for finding the workers that we are
going to need in the future if our economy is going to continue
to grow and if we are going to keep the Social Security fund
solvent, and that is immigration and immigration reform. That
is something that I have been working on for 22 years in this
Congress. And we have done nothing other than throw more money
at the border, more enforcement.
If we provided pathways to citizenship for people like
Dreamers who were brought to this country when they were
children, have never known another country but this, they want
to work, they want to pay taxes, they want to pay into the
system, if we were to increase legal pathways to citizenship, I
think our Social Security trust fund would be in better shape.
Is there anybody on the panel that disagrees with that?
Okay. That is what I suspected. And yet we cannot get
traction for a comprehensive overhaul of our broken immigration
system so that we will have the workers of the future that we
are going to need if we want our country's economy to continue
to grow.
I have nothing further, other than to say, you know, it is
a little disheartening when we have a system right now where a
professional baseball player who earns millions of dollars in a
season hits the Social Security cap in their first at bat of
the season and for the rest of the season does not pay into the
Social Security trust fund. I think if we could balance that
out to make it a little bit fairer for everybody, we would find
some revenue to extend the livelihood of the Social Security
trust fund. I don't understand why that proposal is not one
that my colleagues on the other side of the aisle are willing
to--are willing to consider.
And with that, I will yield back.
Chairman FERGUSON. As a Braves fan, we would support that
coming all out of the Nationals' payroll.
With that--and I thank the lady for her comments.
With that, we will yield 5 minutes to the gentleman from
Arizona, Mr. Schweikert.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
Dr. Swagel, first off, don't all workers, whether they are
just on a work visa, a Dreamer, even if they don't have U.S.
citizenship, they are paying a FICA tax, correct?
Mr. SWAGEL. The ones who are in the country lawfully.
Mr. SCHWEIKERT. Legally.
Mr. SWAGEL. That is right. Yeah.
Mr. SCHWEIKERT. Okay. I just want to--okay. Because that
was a misnomer.
I want to work through--so because there is some baseline
problems I have between CBO numbers and the actuary report. I
think the actuary report already understands their fertility
calculations are substantially off from even censuses at math
and those. But let's walk through some stuff here.
For just this year, so let's do our 2024 year. We have
payroll taxes, income tax from beneficiaries, and the
interest--because they are going to make about 6 percent of the
fund--it is going to come in as interest. I have 1 trillion,
166 billion. Okay. I have the spend in the 2024 fiscal year of
1 trillion, 480. Do those sort of match up with your numbers?
That means the 2024 reaching into the trust fund will be $314
billion this year.
Mr. SWAGEL. Yeah, that is close to what I have got.
Mr. SCHWEIKERT. Okay. So it is $26 billion a month is
reached into the trust fund and used to supplement the checks
that are going out the door?
Mr. SWAGEL. That is right. And the money from the trust
fund is, you know, the securities of the trust fund redeemed by
the Treasury.
Mr. SCHWEIKERT. Yeah. It is the special T-bills. But some
people don't understand that there were--you know, six percent
of the entire revenues, at least this fiscal year, on Social
Security are actually interest that the general fund pays for
having borrowed the money.
Mr. SWAGEL. That is right.
Mr. SCHWEIKERT. So you do have the weird multiplier. And
then there is the tax on benefits, which is about four percent.
I wanted to make sure, because there was a couple of things
said that made it sound like the trust fund isn't already in
play. It is in play this year. Over $314 billion will be
borrowed from the trust fund this year--excuse me, refunded--
the trust fund will cash in.
Mr. SWAGEL. Redeeming securities.
Mr. SCHWEIKERT. Yeah, redeem.
Mr. SWAGEL. That is right.
Mr. SCHWEIKERT. A couple other things I want to walk
through. And instead of me leading you on these, I have three
or four charts here. What do you see is the biggest
differentials between SSA baseline and the CBO baseline?
Particularly, I am looking at--you have a fairly substantial
difference in outyears on, you know, their baseline. You also
have some different calculations on the caps.
But first, off the top of your head, can you give me what
you see as differences on how the CBO actuaries built their
model compared to the SSA?
Mr. SWAGEL. Sure. I can talk to that now, and I know Steve
will have, you know, a lot to stay also.
So we do have different modeling technologies. So I will
just set that aside. You know, we do things slightly
differently. We do current law. And, you know, they assume some
changes in the law. You know, outside of Social Security but in
the tax law.
In the parameters, the sort of numbers where we have
different GDP growth, and Steve highlighted that this year, you
know, they have bumped up GDP growth. And that just slightly
more than offset, you know, their moving toward, you know, sort
of what is happening on fertility. So it is growth fertility.
They have much higher interest rates further out.
And then immigration. You know, we have picked up the
immigration surge that is not yet in the population numbers.
But working with DHS numbers, we have picked that up.
Mr. SCHWEIKERT. And where I was really going with this was
not to pick on the Social Security actuaries or the CBO. It was
more, I am trying to head towards the fragility of the numbers.
When we did our math last year, the exhaustion, the first year
of exhaustion was $616 billion short. Now it is 400 and some.
Mr. SWAGEL. Yeah. Yeah. And in ours--that is immigration.
In essence, it is from last year to this year, we picked up
immigration. And sometimes we picked up--the immigration surge
started in 2021.
Mr. SCHWEIKERT. Okay. So year of exhaustion, you pick up a
couple hundred billion just on what you consider immigration
population.
Mr. SWAGEL. The immigration surge, that is right.
Mr. SCHWEIKERT. Okay. But it also actually should give us a
sense of the level of fragility if we were to go into
recession. You know, let's say it is a mild recession, would we
probably see--you know, because you just had a $200 billion
change at the end of the ten, in a single cycle. I am trying to
get some sense of the fragility of that baseline number.
Mr. SWAGEL. I agree that a recession would affect wages,
would affect contributions. It would also affect fertility,
right. After the 2008 rece--you know, recession and financial
crisis and after the pandemic, fertility declined. It came up a
bit, but not--you know, it didn't go backward.
Mr. SCHWEIKERT. Yeah, but then it took a big spike downward
last year. We went to 1.63.
Mr. SWAGEL. Yeah.
Mr. SCHWEIKERT. And I am over my time.
Mr. Chairman, without objection, I have a number of charts
that we have worked on with both taking from the actuary report
and then some notes from the joint economic economists. I would
like to add those to the record.
Chairman FERGUSON. Without objection, your charts are added
to the record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. SCHWEIKERT. Thank you, Chairman.
Chairman FERGUSON. Thank you.
Next, we will call on the gentleman from Michigan, Mr.
Kildee. You are now recognized for 5 minutes, sir.
Mr. KILDEE. Thank you, Mr. Chairman and Ranking Member, for
holding this hearing.
And to our witnesses, thank you so very much for being
here, and perhaps more importantly, for your years of work on
this and other subjects.
I am from Michigan. In Michigan, over 2 million seniors
rely on Social Security just to make ends meet. For most of
those folks, Social Security is the most important source of
income retirement--or retirement income. And, in fact, for
many, it is the only source of retirement income that they
depend on. They have contributed, these folks that I represent,
that we all represent, have contributed to Social Security with
every paycheck, and rightfully expect that it will be waiting
for them when it is time for them to retire. That is sort of
the deal.
When you work hard, you play by the rules, you ought to be
able to retire with dignity. Those American workers have lived
up--paycheck to paycheck, have lived up to their end of the
deal, and so it is really important that Congress, on behalf of
the American people, live up to our end of the deal and make
sure that that benefit that they paid for, that was promised to
them, is waiting for them.
Democrats on this committee--it has been mentioned, Mr.
Larson's leadership on this issue, Democrats on this committee
are focused on delivering on that promise. And we are willing,
even if it is hard, even if it may not be perfect, we are
willing to put our name behind a proposal to fix this problem.
And that is why we put up our solution to shore up the Social
Security trust funds, to increase benefits, important part of
this provision, for current and future retirees. We do so by
making the wealthiest Americans pay into Social Security at the
same rate as those Bay City teachers that I represent or
Saginaw firefighters that I represent, Midland factory workers
that I represent are paying out of their paychecks. This
approach stands, as has been said, in pretty stark contrast to
the proposals or lack of proposals put forward by our
Republican colleagues.
Now, we haven't seen the legislative approach prepared and
drafted and dropped in the hopper. We have done ours. But we do
know that the Republican Study Committee, which 80 percent of
House Republicans belong to, recently released their budget
plan for 2025. And under their plan, Republicans would cut
Social Security benefits by $1.5 trillion. You can say it is
this or that or the other thing, but when you take that kind of
money out of the program, someone is going to have to lose a
benefit.
This proposal which raises the retirement age and cuts
benefits for family members couldn't be more out of step from
what I hear back home about the solutions that people want to
see us take up.
For the Michiganders, the seniors that I represent barely
getting by on their Social Security check, the answer to the
long-term solvency of Social Security is not to increase the
retirement age, not to cut benefits. It is time that we advance
legislation that increases Social Security benefits to reflect
the true cost of living that they experience and does so by
making the wealthiest Americans, who have done extraordinarily
well, as evidenced by some of the data dating back to the 1983
reform, the millionaires and billionaires have done
extraordinarily well, and they certainly can step up and do
their fair share.
Again, it is time to move legislation that does not cut
benefits, that solves this problem by making sure that the
people at the very top of our economy pay their fair share.
That is what our legislation would do.
I don't want to ask a question. I just want to say to Mr.
Huston, Mr. Goss, and Mr. Swagel, thank you for the work that
you do. Thank you for keeping us informed with the facts. The
facts speak to the need for us to take action.
I look forward to working, for my remaining time here in
Congress, alongside each and every one of you to make sure we
solve this problem. So thanks for your service to our country,
Ms. SANCHEZ. Will you yield?
Mr. KILDEE. I would yield to Ms. Sanchez.
Ms. SANCHEZ. Yeah. I just want to put a finer point on the
immigration issue. When we have an underground economy, when
workers are not part of the legal system, they do not pay into
the Social Security system. Is that correct? Does anybody
disagree with that?
Mr. GOSS. That is correct.
Ms. SANCHEZ. So, if we had opened up legal pathways for
folks to naturalize and get their citizenship, they then would
be, if they were working, paying into the Social Security
system. Is that not correct?
Mr. GOSS. That would make a significant difference. There
are cases where people are not legally authorized, but they may
nonetheless have earnings reported on their behalf by their
employer with tax revenue coming into the trust funds. It goes
into what we call the earning suspense file. They will likely
not ever get any benefit credit, but payroll taxes still accrue
in many cases where people are not legally work authorized.
Ms. SANCHEZ. But that probably isn't the norm, because I
would expect that in a cash underground economy, nobody is
contributing into the Social Security trust fund.
Mr. GOSS. If people are paid cash literally, absolutely.
Ms. SANCHEZ. So, again, if we opened up legal pathways for
those folks to regularize their status, we could boost what
goes into the Social Security trust fund, correct?
Mr. GOSS. Definitely, yeah.
Ms. SANCHEZ. Thank you. And I thank the gentleman for
yielding.
Mr. CAREY [presiding]. The chair now recognizes Mr. Kustoff
for 5 minutes.
Mr. KUSTOFF. Thank you, Mr. Chairman. Thank you for the
witnesses for appearing today.
If I could, Mr. Goss, if I could ask a question more on
process than substance for a moment. I am a big believer that
we can always look to history when we are trying to address
issues and problems and see what was done right and see what
was done wrong.
From a historical perspective, giving guidance to us, can
you talk about the 1983 process and lessons that we can learn,
right and wrong, to help direct us?
Mr. GOSS. Wonderful question, thanks very much. And I was
actually there working with Moynihan and Dole and others
throughout the Greenspan Commission and after. It was a
wonderful process.
I would say that what we really need to do is to do that
more and more often, to have the kind of discussion we are
having today, to talk about the possibilities through the
Greenspan Commission and through the conference committee that
actually developed the 1983 amendments. We made a lot of
progress.
One of the shortfalls that we had at the time was computers
have advanced a little bit since 1983. We were not able to
overnight develop a full annual projection of what the
implications of reform would be at that time. We are now able
do that literally overnight. For example, the fact that we had
the big rise up in trust fund reserves expected in the 1983
amendments and then dropping down at the end. Had we had more
time, we might have been able to smooth that out and been in
better shape. But we are now in much better shape to do it.
If I may just add, by the way, I think Phil and I are going
to have to talk, because our projected shortfall for the
calendar year 2024 for the OASDI program as a whole, our
reduction in our trust fund reserves is $100 billion. I think I
heard $300 billion. What is curious here is that, in fact, from
the 2023 Trustees Report last year to the new one, the economy
did so much better in 2023 that actually we are in better shape
now. And here is the really good news: The end of 2023 and so
far in 2024, the economy is actually operating better now than
we even had included in our 2024 Trustees Report. I assume that
is probably the same for the CBO projections. So I am not quite
sure why CBO is seeing a $300 billion drop in trust fund
reserves where the trustees, on what are conservative
assumptions so far for 2024, has seen only a $100 billion drop.
Mr. KUSTOFF. Are there other lessons, good or bad, that we
can learn from the 1983 process?
Mr. GOSS. I think the lesson that we learned then was that
there was great cross-aisle discussion, bicameral, bipartisan.
It was a wonderful experience dealing with people all looking
towards where we were. Now, of course, the one shortfall was
that it was so late in the game, as Barry mentioned earlier. So
the fact that we are now roughly 10 years before the point of
reaching reserve depletion is wonderful. If we could add that
kind of cross-the-aisle discussion and come to serious
discussion about what we want to do for the American people,
that would be wonderful.
So there was great bipartisan discussion back in the day,
but it was very late in the game. We are now in a nice position
of being 10 years before reserve depletion to be able to
hopefully come up with a good approach.
Mr. KUSTOFF. Thank you, Mr. Goss.
Mr. Huston, can I talk to you about your report for CRS?
You have a section in there about interest income. And you show
the disparity in interest income to about 2008, 2009, 2010, and
then it drops off.
Can you walk us through the early 2000s to about 2009,
2010, and walk us through the present as it relates to interest
income and its relevance?
Mr. HUSTON. Sure. So as I had mentioned in my oral and my
written testimony, there is three sources of revenues for the
trust funds. One is the payroll taxes, another is taxation on
benefits. And in years where there is excess tax revenues,
those excess funds get invested in interest-bearing government
securities. And then the trust fund earns interest on those,
and that becomes the third source of revenue.
Interest income that is not needed to pay benefits gets
credited back to the trust funds. And the trust funds never
needed to rely on that interest income till about 2009, 2010.
Starting in 2009, the cost rates started to exceed the income
rates, and the income stream started to be used as a means to
help pay benefits. That has been moving forward up until 2021,
when, in addition to the interest income, the program has also
needed to rely in part on the trust fund assets themselves to
help pay benefits.
Mr. KUSTOFF. Thank you very much.
My time has expired. I yield back.
Chairman FERGUSON [presiding]. I would ask for just a
little bit of leeway here from my colleagues before I call on
Ms. Moore.
Dr. Swagel, I believe that you--I saw you wanted to respond
to the question about the difference between Social Security's
estimates and CBO's estimate on the withdrawal of the $100
million versus $300 billion.
Mr. SWAGEL. Yeah. I mean, and since----
Chairman FERGUSON. And if you could make this quick.
Mr. SWAGEL. Yeah, sure, sure. Of course, there is a lot to
numbers. So we have--it is $150 billion now that the trust fund
expenditures exceed the income, and that is rising to $500
billion in our projections by 2034.
Chairman FERGUSON. Okay. Thank you for that clarification.
Now the gentlelady from Wisconsin, Ms. Moore, you are now
recognized.
Ms. MOORE of Wisconsin. Thank you so much.
And I am always delighted to talk about our premier program
that prevents seniors from living in poverty, particularly
important for our disabled community, women, and people of
color.
I want to start out by thanking one of our witnesses, Mr.
Goss, for diligently working with me and my staff and answering
questions that we have given you in writing.
I think it is important, when we talk about--Mr. Chairman
and Mr. Ranking Member--that when we talk about Social
Security, we talk about it in real terms, that we really come
to the table, coming together in good faith. And my concern is
that it is not good faith to come to the table scaring young
people, telling them not to rely on Social Security because it
won't be there anymore. So many young people have bought into
the idea that it is hopeless to ever rely on it or to--you
know, that is not a realistic way of fixing it.
It is not fair to come to the table and say to people the
only way that we can fix it is to cut benefits by 25 percent.
You can't say that you are working toward a solution to say
that we ought to raise the retirement age. You know, you look
at all the gray hair up here. It is one thing for us to be
doing this kind of work at our age, but when I think about the
people that I need to fix the gutters on my house, I don't
think any of them are going to make it by increasing the age.
But one of the things that I just wanted to review with
you, Mr. Goss, there are many roads to the city. And before I
talk to you, I want to talk to Mr. Swagel.
You shared with my colleague, Ms. Sanchez, that you thought
immigration reform was a real vital way to improve the
receipts--the payroll receipts. And you also mentioned, as Mr.
Schweikert well knows, that we have decreased population, and
we are facing a fertility crisis.
And so, you know, we have several approaches to
immigration. But I once read the CBO report, that within a
window of a 10-year budget window, we could see a $1 trillion
increase minimum if we were to have some sort of immigration
reform. Am I remembering that correctly?
Mr. SWAGEL. Yes. What we said is that the immigration surge
we project from 2021 to 2026 will result in about $1 trillion
of additional revenue. We are working further on that. So we
will have an update to that soon, but it is still on the order
of----
Ms. MOORE of Wisconsin. That is only 5 years, $1 trillion.
Mr. SWAGEL. Over the 10-year period.
Ms. MOORE of Wisconsin. Over the 10-year period.
Mr. SWAGEL. The 5 years is over----
Ms. MOORE of Wisconsin. Well, I just wanted to remind us of
that.
Mr. Goss, you sent me a really long memo. Be careful of
what you ask for, people actually might write you back. And so
what I asked you to analyze was how could we maintain the
solvency of this program but yet be humane and recognize that
people were getting older, that people were losing benefits,
because they--5 years of their lives have gone toward
childcare, rearing, women who never--don't get that credited,
people over 80, kids who lost their benefit. There have been so
many teary-eyed Members of Congress that have talked about how
they were able to go to college after their dad died.
And so, I propose restoring all those benefits and still
extending the life of Social Security by 24 years. I have 42
seconds, take it away, sir, and sort of review this thick memo
for us.
Mr. GOSS. Well, thank you very much. There is no question
that we can maintain the benefits we have now, but we do need
more revenue in the future. Because of what has happened with
the changing earnings distribution and the changing number of
working age people versus retirement age people in our country,
largely because of the birth rate dropping, we do have a
situation where to maintain the level of benefits we had
scheduled in current law we will need more----
Ms. MOORE of Wisconsin. I mean, it is a modest change in
benefits. Like, right now, we have a combined contribution
level of 12.4 percent. If we were to increase it by 13 percent
payroll an employee, that is how we achieve that 24-year
increase. So, you know, you pay a penny today for benefits for
25 more years. Am I correct?
Mr. GOSS. That is right. And let me just also go back to
immigration that you mentioned, which is so important. We have
less than 4 million births per year in this country, but our
net immigration is on the order of 1 million. That is an
enormous help in terms of maintaining our population in the
future. We had such a drop in births because of the birth rate
since 1965, that having elevated immigration would be a big
help in maintaining our population and the age, distribution,
which would have enormous ramifications.
Chairman FERGUSON. The gentleman----
Ms. MOORE of Wisconsin. Sorry. Mr. Chairman, let me thank
you for your indulgence, and Mr. Ranking Member. And I will
yield back.
Chairman FERGUSON. Thank you, Ms. Moore.
The gentleman from Pennsylvania, Mr. Smucker, you are now
recognized for 5 minutes.
Mr. SMUCKER. Thank you, Mr. Chairman.
I refer to something Mr. Larson said. I am not even sure
where to start here. There is a lot to talk about. This has
been a great conversation.
A few things I want to mention, I think. Mr. Goss, you had
responded in an answer to a question from Mr. Kustoff about the
Commission or the deal in 1983, and talked very positively
about that; really people coming together and resolving this,
putting everything on the table and making it solvent for years
to come. We can do that again, right, and we should do that?
Mr. GOSS. We are much looking forward to that.
Mr. SMUCKER. Yeah. And would like to suggest to Mr. Larson
and others who I think are, you know, sincere about the desire
to fix Social Security, there is a difference between proposing
a bill that doesn't go anywhere and having a real bipartisan
discussion about resolving this. And so, I guess, I would like
to suggest the fiscal commission that we had recommended that
looks at both debt and Social Security really is an attempt to
do that. And I know you have spoken out----
Mr. LARSON. Would the gentleman yield?
Mr. SMUCKER. Let me finish my sentence and I would be happy
to.
Mr. LARSON. Sure.
Mr. SMUCKER. I know you have spoken out against that and,
you know, I am telling you in all sincerity that I think that
we could resolve this if we had that kind of conversation with
the American people. We could do what has been done in 1983.
And we could take your bill and others and put them together
and really resolve this for the American people. I can tell you
that I am certainly interested in doing that, people on our
side are interested in doing that. And we are willing to put
everything on the table.
And so, yes, I will yield.
Mr. LARSON. So what is it you are putting on the table,
number one? And there are many Social Security proposals that
exist out there, not just Social Security 2100.
But also, there is a big difference between the Greenspan
Commission and the commission that was proposed behind closed
doors with only a select group of people with a decision that
would require only an up or down vote is----
Mr. SMUCKER. Well, and I----
Mr. LARSON. That is not a democratic--let's sort through
this, let's have this exposed to the public, let's go through
this, and let's put all those discussions on the table. And I--
--
Mr. SMUCKER. So I am going to reclaim----
Mr. LARSON [continuing]. Totally agree with you that people
like yourself and others are very sincere about this, except
the proof is in the pudding.
Mr. SMUCKER. And I will take my time, because I would love
to get to a lot more here. But I would love to continue to have
that discussion. I would love to not just get a no on that,
because I can tell you, we are sincere about it and we could
put everything on the table to try to solve this.
I do want to--on your point on the debt, so very briefly so
that people understand this, initially when Social Security was
put in place, we were taking in more money coming in than was
going out, correct? When did that change? When did Social
Security no longer begin to receive each--more money annually
than they were paying out?
Mr. Goss?
Mr. GOSS. Well, most recently that has occurred in 2010. It
was expected to be in 2020 at the time of the 1983 amendments,
but because some of the changes----
Mr. SMUCKER. So since 2010, we have been paying out more
than we have been taking in?
Mr. GOSS. Exactly.
Mr. SMUCKER. And within 9 years, the difference--the trust
which was the difference that has been accumulating over time
that has been borrowed and is being paid back, in 9 years, that
expires, right? That is gone. We no longer have excess funds.
Am I right on that?
Mr. GOSS. On a combined basis, maybe 10 years, on that
order.
Mr. SMUCKER. So at that point, unless something changes,
people will no longer get all of their Social Security benefits
because we don't have money to pay it, correct?
Mr. GOSS. Under current law----
Mr. SMUCKER. Yes.
Mr. GOSS [continuing]. We cannot pay what is not in the
fund.
Mr. SMUCKER. Or if at that time Congress decides to make it
up by taking on additional debt, that is a choice we could
make, right? We could continue to pay benefits, if nothing has
changed, by taking on additional debt and paying for those
benefits.
Mr. GOSS. Unprecedented, but anything is possible.
Mr. SMUCKER. But at that point, it would add to the debt,
right?
Mr. GOSS. If Congress were to change the law and say that
we will borrow from the public----
Mr. SMUCKER. The only point I am making--and I would love
to have more conversation about this publicly, that is why we
need a commission to talk about this--is that this will
contribute--there is a fundamental problem: We have far fewer
workers than we do retirees. That ratio is far different, and
so we need more workers.
By the way, I agree with Ms. Sanchez, who I don't often
agree with, on immigration. It is something that it is a
partial solution here. We need a lot more workers, we should be
talking about legal immigration.
But it is a great conversation. I wish others would agree
that we need to continue to have this conversation. This is how
I think a commission could work. We would take this
conversation across America. We would begin to have a real
understanding of the facts and how they exist. We just can't
have that conversation in 5 minutes each here. I only get 4 if
I give some to you. But, like, I would love to continue this
conversation.
But thank you, Mr. Chairman, for your indulgence of time
here.
Chairman FERGUSON. Thank you, Mr. Smucker.
Next, we will go to our dear friend from the great State of
Illinois, Mr. Schneider, you are recognized.
Mr. SCHNEIDER. Thank you.
And I will say to not just my friend, my next-door
neighbor, Mr. Smucker, I look forward to the conversation. I
think it is important that we have it. I will challenge this
one premise: I don't think it is a binary option.
And, Mr. Goss, I am going to ask you about the trust fund
in a second, but it is not just necessarily going to debt.
There is no reason, I am not advocating this, but we could
raise taxes to pay for it. There are whole ways to do it. Or we
could, as was mentioned earlier in the conversation, increase
the percent of income debt paid into Social Security as a piece
of it. We need to have a discussion around all of those things.
And, Mr. Goss, I took a quick look at your biography. You
are a little bit older than me. I graduated college in 1983. I
want to make sure that we are going to be in the same way. You
were actually here in 1983 when they were talking about Social
Security. When I graduated, every one of my classmates and my
cohort were told Social Security won't be there for you because
it is insolvent, and then Congress acted. So we are talking
about the trust fund being depleted.
Why is there a trust fund in the first place? And I will
get the leading question, wasn't the plan to create a trust
fund for a period of time that would rise and then ultimately
fall? Isn't that the design from the 1980s?
Mr. GOSS. Well, the trust fund--we oftentimes refer to the
money in the trust funds as a contingency reserve. This is not
an advanced funded program. If we were a fully advanced funded
program, our trust fund reserves would actually be about 25
times annual cost. We are only at about 1.5 or so times annual
cost now because it is supposed to be a contingency reserve.
If, as some have mentioned, we were to hit another recession at
some point and our income started to drop relative to our cost,
we need to have some time to draw on those contingency reserves
so that you all will have time to make changes to address that
issue.
Mr. SCHNEIDER. But the goal was to buy time in the 1980s.
And here I am now 40 years--40-plus years since then, and
people that I went to school with, that I grew up with, are
beginning to retire. And for many of them, their retirement and
the security of their retirement is standing on a foundation of
Social Security that they didn't believe would be there for
them 40 years ago. But because of the work we did in this--work
those before us did in Congress, extended it. And I think now
it is falling on our shoulders to figure out how do we make
sure that the next generation, the young people and the young
people graduating today.
You know, in 1983 when I graduated, we had the recession.
It was the tail end of the recession, the economy had great
success ever since. The kids graduating today first graduated 4
years ago from high school in the teeth of COVID, now are
graduating, and the challenges are different. The least we can
do is stand there for them. But I think there is also a way
that we do it.
So, you know, the Republican Study Committee's proposal of
cutting Social Security by $1.5 trillion puts a burden on those
who can least afford it who are depending on Social Security.
The idea of raising the retirement age--you know, life
expectancy is in many cases tied or at least there is a
correlation to income. And those who are in the highest income
brackets, when they retire, let's assume at 67 right now, their
life expectancy at retirement is another 20-plus years. For
those who are in the lowest quintile, their life expectancy in
retirement is less than 10 years. It is a factor of health; it
doesn't matter why.
If we raise the retirement age from 67 to 70 on these
people, we are literally cutting their expected retirement by
fully a third. People who have worked their entire life, who
have followed the rules, who have struggled their entire life
to make ends meet, and we are to tell them that their golden
years are going to be cut by a third? That just doesn't seem
fair.
So, we need to have these conversations, we need to be
working together, Republicans and Democrats, across the aisle,
but we have to do it in a way that recognizes the original
intent of Social Security, an insurance program to give
Americans, after a lifetime of service and contribution to
their communities and their Nation, a dignified and secure
retirement.
And that is why, Mr. Smucker, I look forward to working
with you--we just have to walk one office over--but with our
other colleagues to have these conversations, and I do agree,
we have to take it to the public.
And I am grateful for our ranking member, Mr. Larson, your
leadership and work, and you have done incredible yeoman's
effort with Social Security 2100. How do we take this not just
for another 20 or 30 years. I think earlier it was said that--
Dr. Swagel, I think you were asked the question. You said if we
took it to 90 percent, we would have 13 years. Thirteen years
is great if you are in your 80s. If you are 25 years old, 13
years doesn't solve the problem. How do we add 75 years to this
to do it in a way that reflects our values as a country, the
hardworking American individuals and their enterprises are
doing to grow our country.
And so, I am over my time. I am sure I have lots of
questions for all of you, but I don't want to keep us longer.
Let me just say thank you to the chairman and ranking member
for this hearing. We have to get this done. It is our
generation who is benefiting from Social Security that needs to
make sure that the next generations have the same benefits that
we have.
I yield back.
Chairman FERGUSON. I thank the gentleman.
Next, the gentleman from Iowa, Mr. Feenstra, you are now
recognized for 5 minutes.
Mr. FEENSTRA. Thank you, Chairman Ferguson, Ranking Member
Larson.
Thank you also, Dr. Swagel and Mr. Goss and Mr. Huston,
thank you for being here today.
We have got, obviously, a lot of concerns with Social
Security, and we have got to resolve them. But we also have to
be singing from the same song book, understanding what is
happening.
Dr. Swagel, I have got a lot of things to talk about, but I
want to just ask you, do Social Security payments create debt?
I mean, I am hearing from the other side that there is this
view that it doesn't. And I would like you to explain to me,
does it create debt?
Mr. SWAGEL. You know, there are lots of ways to look at it,
and I realize that is part of the confusion. The $150 billion
that I think Steve and I both, you know, talked about, today
that is being funded by the Treasury, the cash has to come from
the Treasury to get that $150 billion.
Mr. FEENSTRA. It has got to redeem its assets.
Mr. SWAGEL. Exactly.
Mr. FEENSTRA. Correct? I mean, Social Security has got to
redeem its assets.
Mr. SWAGEL. Yes. It is an asset for Social Security, but it
is a liability for the Treasury. The Treasury borrows----
Mr. FEENSTRA. Thank you. And so what is the Treasury going
to do again? So you have go to redeem the assets, but how does
the Treasury redeem its assets?
Mr. SWAGEL. To come up with the cash, the Treasury----
Mr. FEENSTRA. Yeah, comes up with the cash by selling
bonds, right?
Mr. SWAGEL. Selling bonds, everything----
Mr. FEENSTRA. Thank you. Yeah, exactly right. So it
actually is adding to our debt, right?
Mr. SWAGEL. To redeem the assets in the trust fund, the
Treasury has to borrow and create debt.
Mr. FEENSTRA. Yes, it has got to create debt. Yes.
Mr. Goss.
Mr. GOSS. So if we redeem $100 billion of debt that is owed
to the trust funds and we trade that for $100 billion that is
now owed to the public, it is merely a swap. The total Federal
debt is unchanged.
Mr. FEENSTRA. But you still have got to--you have got to
sell bonds to do that. The Treasury still has got to sell bonds
to do that. Is that a fair statement?
Mr. GOSS. It has to sell bonds to the public by redeeming
the same amount of bonds that it now--that are held by the
trust fund.
Mr. FEENSTRA. Thank you.
But, Mr. Swagel, can you answer that?
Mr. SWAGEL. Yeah. You know, the numbers that we focus on
are debt held by the public.
Mr. FEENSTRA. Yes.
Mr. SWAGEL. So what Steve is saying is correct, the debt
held by the public goes up.
Mr. FEENSTRA. The debt held by the public, yes. But, I
guess, what I am trying to say is that you still have got to
sell Treasury bills, you still have got to sell T-bills.
Mr. SWAGEL. That is right, to the market.
Mr. FEENSTRA. To the market. All right. And when you do
that, that is, in essence, getting a loan, that is going
further into debt.
Mr. GOSS. You are redeeming one loan and creating another.
Mr. FEENSTRA. What I am trying to have everybody understand
here is that we have got a problem, okay? We have got a
problem. And I think we all agree to this that we have a
problem. And there is a lot of insightful ways that we can look
at this, but the fact of the matter is, is that, you know, in,
what is it, 2032 now, the CBO's outlook--I think it is 2032, am
I right, fair statement?
Mr. SWAGEL. It is 2033.
Mr. FEENSTRA. 2033.
Mr. SWAGEL. The end of 2032----
Mr. FEENSTRA. Right. So, Dr. Swagel, and so what is going
to be the percentage cut per Social Security recipient right
now at 2033?
Mr. SWAGEL. So we have about 21 percent.
Mr. FEENSTRA. Twenty-one percent. So what you are telling
the public, I just want to make sure we are fair here, you are
telling the public that they are going to see a 21 percent cut
in their Social Security if we do nothing.
Mr. SWAGEL. That is correct.
Mr. FEENSTRA. Okay. Everybody get that? I just want to make
sure the public gets that. Twenty-one percent cut in 2033, if
we do nothing. So that means we have got to act, that means we
have got to do something.
Thank you, by the way, for holding this because this is
very important.
So what I did, I think the seniors--I created a Seniors
Saves Act that creates an accurate forecast. I think right now
the CBO, the 10-year outlook showing the outlays is not an
accurate forecast because it just continues in full regardless
of the trust fund's exhaustion.
Can you talk about this a little bit, Dr. Swagel?
Mr. SWAGEL. Yes, for sure. So under the Balanced Budget Act
of 1985, our baseline projections are required to show outlays
as if the trust fund continues even after it is exhausted, so
the scheduled benefits.
Mr. FEENSTRA. Yes.
Mr. SWAGEL. We show both the schedule and payable, but the
baseline by law shows the scheduled.
Mr. FEENSTRA. Yes. And again, here's the problem: It is a
false narrative, right? I mean, we are making assumptions here.
You don't have to answer that.
I just want everybody to understand that we have got to
have accurate data. We have got to make sure the CBO is telling
everybody, and just like I am telling everybody, by 2033, you
are going to get a 21 percent cut in your Social Security if we
don't do something. So you might want to tell your Congressmen
and women, you better act.
Thank you. I yield back.
Chairman FERGUSON. I thank the gentleman from Iowa.
Thanks again to each of you for being here. I would like to
say--we have got one more member coming in before we wave the
flag here, so we are going have one more.
I was going to cut you off, but Mr. Larson insisted that
you get your 5 minutes. So thank you, John, for that.
So we will now recognize Mr. Estes for 5 minutes.
Mr. ESTES. Thank you, Mr. Chairman. And thank you Mr.
Larson for looking out for me. I appreciate that, my good
friend.
And I thank you all for being here today to talk through
some of these issues that are so important for everyday
Americans. You know, today's hearing obviously is critically
important as both the CBO and the trustees have, on their most
recent assessment, projected that Social Security's trust fund
will be unable to pay full retirement benefits starting in
2033. According to the projections, that means that tens of
millions of seniors and their families who rely on the programs
would experience immediate benefit cuts.
Unfortunately, a lot of those folks are already
experiencing cuts, thanks to the sky-high inflation that is
19.9 percent since January 2021. And rising prices hurt those
on a fixed income and just like so many of our seniors.
You know, a key driver of inflation is an uncontrolled and
insatiable desire to spend. Our debt now stands at $34.6
trillion, and grows by $100,000 a second. It is simply
unsustainable.
Even though we have got our spending under control in
Congress, we still have a problem. And discretionary spending,
actually the spending that we get to vote on as Members counts
for less than 30 percent of all government spending. And CBO
projects that Social Security will eclipse all discretionary
spending, including defense by 2029.
So if we are going to make real changes to preserve Social
Security, we have got to talk about responsible reform. I know
in an election year there is a lot of rhetoric about how do you
cut Social Security, but I think we all can agree we don't want
seniors to suffer through that process. And the truth is, if we
put our heads in the sand and do nothing else, American seniors
who will suffer the most. As it stands now, in the next decade,
if no action is taken, Social Security recipients will start
receiving $0.75 on the dollar when insolvency is reached.
I want to talk a little bit about, you know, what is the
impact and how we are being impacted. And something that is
obviously having an impact on Social Security is illegal
immigration. Since President Biden took office, there have been
more than 2.15 million encounters on the southwest border
alone, and we can't be sure how many people have crossed into
our country.
Mr. Goss, how do the Social Security trustees account for
the impact of illegal immigrations in your assumptions and has
it been accounted for in the current Trustees Report?
Mr. GOSS. Absolutely. We always have--we look at total
immigration, both immigration subject to the legal limits and
also undocumented immigration coming into the country. By the
way, the undocumented are generally looked at as people who
come across the border without documentation.
Many of these people come to the country and eventually
become legal permanent residents or may have children while
they are here who will then be citizens. That actually
contributes positively to the economy and to Social Security.
So on the bottom line, really, immigration of all forms is
actually a positive in the realm that we are in now where the
birth rates in the country are as low as they are. So
immigration is actually a positive.
Mr. ESTES. It is positive in the short term before those
individuals start taking benefits, right?
Mr. GOSS. Well, it is positive also in the long term,
because if we have more people coming into the country, whether
they are initially undocumented or not, if they come in in
their 20s or 30s, which is generally the age range for new
immigrants, if they have children, then that adds to the future
population. It adds to the growth of our population, which is
very much a positive.
Mr. ESTES. Right. I mean, we are a country of immigrants,
so we want to continue to have, you know, legal immigration
that has an impact and be able to come out of that shadow
economy.
Do you take into account any dealings with how many of
those folks that have come here illegally and not had a legal
right to cross the border, that more likely working in the
shadow economy, that they are paying--paid cash under the
table, in which case they wouldn't be captured, as far as being
able to pay payroll taxes?
Mr. GOSS. If people are literally paid cash then, of
course, there is going to be no record of that towards benefits
or towards their paying in payroll taxes. However, in many
cases, where people are either undocumented or have come on a
temporary visa and overstay it, they are not legal permanent
residents, in many cases, those individuals will, through their
employers, still be paying payroll taxes that go into the trust
fund, and very likely they will never receive benefits.
So in addition to the possibility they are having children
on our shores, there is a possibility of that kind of
immigration actually having a positive. We had a little
actuarial note back in 2013 that walks through this in some
detail.
Mr. ESTES. Well, I am about out of time but, Dr. Swagel,
did you have anything that you could include and talk about
your assumptions?
Mr. SWAGEL. Oh, okay. No. Just the same thing that, you
know, we are looking carefully at immigration and the share of
the immigrants who are paying into the system and the share who
are collecting benefits. It is something we are working on
carefully right now.
Mr. ESTES. All right. Thank you.
And, Mr. Chairman, I thank you for your indulgence. And I
am out of time. I would like to ask more questions, but I will
yield back. Thank you.
Chairman FERGUSON. Thank you.
Again, I want to thank our witnesses for being here today.
And please be advised that members have 2 weeks to submit
written questions to be answered later in writing. Those
questions and your answers will be made part of the formal
hearing record.
With that, the subcommittee stands adjourned.
[Whereupon, at 12:54 p.m., the subcommittee was adjourned.]
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