[Congressional Record Volume 140, Number 99 (Tuesday, July 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          ROBERT MYERS AND THE SOCIAL SECURITY ADMINISTRATION

 Mr. SIMON. Mr. President, I have spoken in the past about the 
enormous contributions Robert Myers has made on behalf of the Social 
Security Program. As Chief Actuary and Deputy Commissioner of the 
Social Security Administration for nearly 30 years, he is acknowledged 
to be a leading expert on the Nation's most successful entitlement 
program.
  In a recent article for the Seniors Coalition, Mr. Myers examines 
whether Social Security should be ``means-tested'' in order to help 
balance the Federal budget. Mr. Myers rejects that solution, noting 
that the Social Security Program ``has been fully financed over the 57 
years of its operation, and * * * has not contributed at all to the 
horrendous budget deficits and increasing national debt.''
  Mr. Myers' article deserves study by all those who care about the 
Nation's budget deficits. I ask that the entire text of Mr. Myers' 
paper be printed after my remarks.
  The article follows:

            Should Social Security Benefits Be Means-Tested?

       In our modern society, words frequently have diverse 
     meanings among different people, and even over time. Before 
     considering the subject of whether benefits under entitlement 
     programs should be means-tested--as some people are currently 
     advocating--let us first define certain words that are often 
     used in such debate.
       Years ago, ``entitlement'' had a legalistic connotation 
     which was usually considered to be on the ``good'' side. Now, 
     it is often considered as an opprobrium involving public 
     assistance or relief. Actually, it merely means that a legal 
     right to a payment exists, regardless of whether the funds 
     are there to finance it. I would distinguish between two 
     types of entitlement programs. First are those which are 
     self-funded, like Social Security and the Hospital Insurance 
     portion of Medicare. Second are those which are funded from 
     general revenues, like Supplemental Security Income, 
     Medicaid, and Supplementary Medical Insurance (Part B of 
     Medicare)--which is about 75-percent funded from general 
     revenues. Quite obviously, the self-funded entitlement 
     programs do not affect the general budget situation of the 
     federal government--even though many persons, including those 
     who have important responsibilities in this area assert that 
     such is the case (to be discussed in detail later).
       Strictly speaking, ``means testing'' connates the 
     restrictions on benefit payments which are established on the 
     basis of the beneficiary's income and assets (usually, with 
     certain exemptions). Those who use this term currently in 
     connection with cutting back entitlement programs really mean 
     ``income testing,'' because they do not recommend considering 
     the situation as to the individual's assets. (Note that 
     Social Security benefits for those under age 70 are subject 
     to ``earned-income testing now--on the grounds that 
     retirement benefits should not be paid to persons who are 
     not retired from employment.)
       In recent years, persons who are concerned about the 
     federal government's mammoth budget deficits and ever-
     increasing National Debt have pointed the blame, at least in 
     large part, at what they call the ever-growing even out-of-
     control, disbursements under the entitlement programs, 
     especially the full-funded one, Social Security. They insist 
     that, to solve the budget problem, the growth of the Social 
     Security benefit disbursements must be curtailed at once. 
     This has nothing to do with the long-range financial 
     situation of Social Security--some two decades or more 
     hence--about which apparently something should now be done 
     (and can, not to painfully, be done by changes enacted now, 
     although not going into effect until many years off in the 
     future). Action of this sort in the near future is desirable 
     in order to give people affected adequate advance notice and 
     to more fully restore confidence in the program.
       Such immediate curtailment of the growth of Social Security 
     benefit outgo is not at all justified. The Social Security 
     program has had a more-than-balanced budget over the 57 years 
     of its operation, and this has not contributed at all to the 
     horrendous budget deficits and increasing National Debt. It 
     is the remainder of the federal government's operations that 
     has caused this deplorable situation, and it is in this area 
     that changes should be made to rectify the situation.
       Moreover, and equally important, reducing Social Security 
     expenditures (either absolutely or the growth thereof) does 
     not really reduce the general budget deficit or the growth in 
     the National Debt. What happens if Social Security outgo 
     in a year is reduced by $x billion is merely that its 
     trust funds purchase $x billion more of government bonds, 
     and the general public purchases $x billion less of such 
     bonds. The bottom line then is that the size of the 
     National Debt is completely unaffected, and the real 
     general-budget deficit remains the same.
       Those who would unwisely and unthinkingly reduce Social 
     Security benefits for reasons other than those affecting the 
     program and its purposes and goals have several proposed ways 
     to do so. One of these is to reduce (or even eliminate) the 
     annual cost-of-living adjustments; this undesirable because, 
     assuming that the financing is available within the Social 
     Security program (as it now is) such maintenance of the 
     purchasing power of the beneficiaries is only humane and 
     proper.
       Another proposal to reduce Social Security benefits is to 
     income test them over and above the current income taxation 
     of benefits for higher-income persons, which is somewhat 
     along the lines that other retirement benefits are taxed. 
     Under this type of proposal, all (or the vast majority) of 
     the benefits would be withheld from high-income persons. This 
     would be done on the grounds that they did not ``need'' such 
     benefits because they had sufficient other income.
       There are several weaknesses and fallacies with this 
     approach. First, it would create divisiveness of the 
     population and cast some ``blame'' on those who receive full 
     benefits and thus did not seem to be properly ``self-
     reliant.'' We must recognize that high-income people receive 
     Social Securitybenefits which, in relation to past earnings, 
     are notably smaller than are the benefits for lower-income 
     persons.
       On the whole, as I analyze the matter, over the long run, 
     high-income persons will receive Social Security benefit 
     protection that is about equal in value to the employee taxes 
     which they paid, while their employers' taxes are pooled (or 
     redistributed) for the benefit of lower-income persons. If 
     all persons received exactly only their ``money's worth,'' 
     the low-paid persons would have inadequate retirement income, 
     and then much more public assistance payments would be 
     required. And who would pay for such payments? Obviously, the 
     higher-income persons would do so, and thus the bottom line 
     of who pays and who receives would be about the same.
       Another, and equally serious, problem with income testing 
     of the Social Security benefits is that it would discourage 
     many persons from saving, either personally or through 
     employer-sponsored plans. The reason, quite simply, is that 
     they would see little reason to save if the net result were 
     only that thereby their Social Security benefits would be 
     reduced. And what this country needs is more savings not 
     less! Under Social Security as it now is, people are 
     encouraged to save by adding the results thereof on top of 
     the economic floor of protection that Social Security is.
       To summarize the matter, those who are rightly concerned 
     with our horrendous budget deficits and National Debt should 
     seek action where the causes thereof really are. The Social 
     Security program is, and has always been, fully self-
     supporting financially, and it should not be used to solve a 
     problem that is not of its own creation. Further, some 
     proposals to have this Social Security program used for this 
     purpose would not really accomplish this result, even though 
     seeming to do so. Make changes in the Social Security program 
     only for its own self-supporting programmatic reasons, not 
     for extraneous and unrelated reasons!

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