[Congressional Record Volume 144, Number 1 (Tuesday, January 27, 1998)]
[Senate]
[Page S49]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN:
  S. 1571. A bill to amend title II of the Social Security Act to 
eliminate the earnings test for individuals who have attained 
retirement age; to the Committee on Finance.


                the senior citizen's freedom to work act

  Mr. McCAIN. Mr. President, I rise today to introduce the ``Senior 
Citizen's Freedom to Work Act.'' This bill would fully repeal the 
erroneous Social Security earnings limit.
  Since coming to the Senate in 1987, I have been working to eliminate 
the discriminatory and unfair Earnings Test.
  I am pleased that in 1996, Congress passed and President Clinton 
signed into law my bill, the Senior Citizens Right to Work Act. This 
legislation took a step in the right direction by increasing the 
earning threshold for senior citizens from $11,520 to $30,000 by the 
year 2000. Now it is time to eliminate the unjust Earnings Test in its 
entirety.
  Most Americans are shocked and appalled when they discover that older 
Americans are penalized for working. Nobody should be penalized for 
working or discouraged from engaging in work. Yet, this is exactly what 
the Social Security Earnings Test does to our nation's senior citizens. 
The Social Security Earnings Test punishes Americans between the ages 
of 65 and 70 for their attempts to remain productive after retirement.
  The Social Security Earnings Test mandates that for every $3 earned 
by a retiree over the established limit, $19,999.92 in 1998, the 
retiree loses $1 in Social Security benefits. This is clearly age 
discrimination, and it is very wrong. Due to this cap on earnings, our 
senior citizens, many of whom exist on fixed, low-incomes, are burdened 
with a 33.3 percent tax on their earned income. When this is combined 
with Federal, State, local and other Social Security taxes, it amounts 
to an outrageous 55 to 65 percent tax bite and even higher. This 
earnings limit is punitive and serves as a tremendous disincentive to 
work. An individual who is struggling to make ends meet on 
approximately $19,000 a year should not be faced with an effective 
marginal tax rate which exceeds 55 percent.
  The Social Security Earnings Test is a relic of the Great Depression, 
designed to move older people out of the workforce and create 
employment for younger individuals. This is an archaic policy and 
should no longer be our goal because our nation's labor pool is 
shrinking. Many senior citizens can make a significant contribution, 
and often their knowledge and experience compliments or exceeds that of 
younger employees. Tens of millions of Americans are over the age of 
65, and together they have over a billion years of cumulative work 
experience. These individuals have valuable experience to offer our 
society, and we need them.
  In addition, experts predict a labor shortage when the ``baby boom'' 
generation ages, and it is evident that employers will have to develop 
new sources of income as our elderly population continues to grow much 
faster than the number of workers entering the workforce. According to 
the U.S. Chamber of Commerce, ``retaining older workers is a priority 
in labor intensive industries, and will become even more critical as we 
approach the year 2000.'' To me it seems counterproductive and foolish 
to keep willing, diligent workers out of the American workforce. Our 
country must continue to support pro-work, not pro-welfare policies.
  More importantly, many of the older Americans penalized by the 
earnings test need to work in order to cover their basic expenses; 
health care, housing and food. Many seniors do not have significant 
savings or a private pension. For this reason, low-income workers are 
particularly hard-hit by the earnings test.
  It is important to note that wealthy seniors, who have lucrative 
investments, stocks, and substantial savings are not affected by the 
earnings limits. Their supplemental ``unearned'' income is not subject 
to the earnings threshold. The earnings limit only affects seniors who 
must work and depend on their earned income for survival.
  Finally, let me stress that repealing the burdensome and unfair 
earnings test would not jeopardize the solvency of the Social Security 
funds. Opponents who claim otherwise are engaging in cruel scare 
tactics. It is important to remember that the Social Security benefits 
which working seniors are losing due to the earnings test penalty are 
benefits they have rightfully earned by contributing to the system 
throughout their working years before retiring. These are benefits 
which they should not be losing because they are trying to survive by 
supplementing their Social Security income. Furthermore, certain 
studies indicate that repealing the earnings test would result in a net 
increase of $140 million in federal revenue.
  Mr. President, there is no compelling justification for denying 
economic opportunity to an individual on the basis of age. It is quite 
evident that the earnings test is outdated, unjust and discriminatory. 
I urge my colleagues to support this legislation which would eliminate 
this egregious law.
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