[Congressional Record Volume 146, Number 16 (Tuesday, February 22, 2000)]
[Senate]
[Pages S680-S682]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ASHCROFT (for himself, Mr. Abraham, Mr. Inhofe, Mr. 
        DeWine, Mr. Grassley, Ms. Landrieu, and Mr. Roberts):
  S. 2074. A bill to amend title II of the Social Security Act to 
eliminate the social security earnings test for individuals who have 
attained retirement age; to the Committee on Finance.


         social security earnings test elimination act of 2000

  Mr. ASHCROFT. Mr. President, I rise today in favor of repealing the 
Social Security earnings test, the onerous tax burden the United States 
government places on seniors who wish to continue working. In order to 
ease this unfair burden, I am hereby introducing the Social Security 
Earnings Test Elimination Act of 2000.
  The earnings test limits the amount a person older than 65 and 
younger than 70 can earn without having his or her Social Security 
benefits reduced. Currently, benefits are reduced by $1 for each $3 of 
earnings over $17,000. This test provides a disincentive for seniors to 
work by reducing seniors' Social Security benefits according to the 
amount of income they earn.
  It is time to repeal that limit. Right now, Social Security is 
scheduled to go bankrupt in 2034. One of the reasons for the looming 
bankruptcy of Social Security is the declining ratio of workers

[[Page S681]]

to beneficiaries, which worsens as our elderly population continues to 
grow much faster than the number of workers entering the workforce. In 
1960 the ratio was 5:1, today it is a little more than 3:1, and in 
thirty years it is expected to be only 2:1. This decreasing number of 
workers paying for retirees benefits is making it increasingly 
difficult to make the Social Security books balance.
  Instead of helping to fix this problem, the earnings test exacerbates 
this situation. By providing a disincentive to work, the earnings test 
keeps seniors at home instead of at work and paying the payroll taxes 
that keep the Social Security system solvent.
  The earnings test is based on a misconception of the U.S. economy. 
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. The idea behind the earnings test 
is that if seniors were penalized for working, they would stay home and 
open up employment opportunities for younger workers. Not only was this 
view wrong in earlier times, but it is counterproductive in today's 
economy. Today, we do not have a labor surplus, but a labor shortage. 
Unemployment is at a long-time low of 4.0%, one-and-a-half points lower 
than the so-called ``full employment'' mark of 5.5%.
  Low unemployment is a great development, but it contributes to a 
labor shortage that will worsen when the ``baby boom'' generation ages. 
Employers will have to develop new sources of labor to fill this 
shortage, and seniors represent the most experienced, most skilled 
workers. Many senior citizens can make a significant contribution, and 
often their knowledge and experience complements or exceeds that of 
younger employees. 35 million Americans are over the age of 65, and 
together they have over a billion years of cumulative work experience. 
It is both counterproductive and harmful to our growing economy to keep 
willing, diligent workers out of the American economy.
  In addition to the negative consequences for the economy as a whole, 
the Social Security Earnings Test is also bad for seniors. The earnings 
test punishes Americans between the ages of 65 and 70 for their 
attempts to remain productive after retirement. This is particularly 
problematic for low income seniors, many who exist on fixed incomes, 
and are burdened with a 33.3 percent tax on their earned income. When 
combined with federal, state and other Social Security taxes, taxes on 
the elderly can total nearly 55 or 65 percent. An individual who is 
struggling to make ends meet should not be faced with an effective 
marginal tax rate which exceeds 55 percent.
  While the earnings test harms lower-income people, it only affects 
seniors who must work and depend on their earned income for survival. 
Wealthy seniors are not affected by the earnings limit. Their 
supplemental, ``unearned'' sources of income are safe and not subject 
to the earnings threshold. At the same time, 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.
  In addition to all of the policy reasons for elimination of the 
Earnings Test, the most important reason to eliminate the Test is that 
it is fundamentally unfair. The earnings test discriminates against 
seniors. Nobody, regardless of creed, color, gender, or age should be 
penalized for working or discouraged from engaging in work.
  Furthermore, the Earnings Test takes money from seniors that is 
rightfully theirs. 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.
  Mr. President, it is time to eliminate this counterproductive and 
unfair penalty. With the Social Security and Medicare Trusts Funds 
facing long-term insolvency, it is now more important than ever to 
encourage work. More people working means more people paying into the 
Social Security Trust Fund and Medicare. I ask my colleagues to join me 
in supporting this unfair burden placed on elderly Americans.
  Mr. President, I ask that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2074

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Social Security Earnings 
     Test Elimination Act of 2000''.

     SEC. 2. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO HAVE 
                   ATTAINED RETIREMENT AGE.

       (a) In General.--Section 203 of the Social Security Act (42 
     U.S.C. 403) is amended--
       (1) in subsection (c)(1), by striking ``the age of 
     seventy'' and inserting ``retirement age (as defined in 
     section 216(l))'';
       (2) in paragraphs (1)(A) and (2) of subsection (d), by 
     striking ``the age of seventy'' each place it appears and 
     inserting ``retirement age (as defined in section 216(l))'';
       (3) in subsection (f)(1)(B), by striking ``was age seventy 
     or over'' and inserting ``was at or above retirement age (as 
     defined in section 216(l))'';
       (4) in subsection (f)(3)--
       (A) by striking ``33\1/3\ percent'' and all that follows 
     through ``any other individual,'' and inserting ``50 percent 
     of such individual's earnings for such year in excess of the 
     product of the exempt amount as determined under paragraph 
     (8),''; and
       (B) by striking ``age 70'' and inserting ``retirement age 
     (as defined in section 216(l))'';
       (5) in subsection (h)(1)(A), by striking ``age 70'' each 
     place it appears and inserting ``retirement age (as defined 
     in section 216(l))''; and
       (6) in subsection (j)--
       (A) in the heading, by striking ``Age Seventy'' and 
     inserting ``Retirement Age''; and
       (B) by striking ``seventy years of age'' and inserting 
     ``having attained retirement age (as defined in section 
     216(l))''.
       (b) Conforming Amendments Eliminating the Special Exempt 
     Amount for Individuals Who Have Attained Retirement Age.--
       (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by 
     striking ``the new exempt amounts (separately stated for 
     individuals described in subparagraph (D) and for other 
     individuals) which are to be applicable'' and inserting ``a 
     new exempt amount which shall be applicable''.
       (2) Conforming amendments.--Section 203(f)(8)(B) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
       (A) in the matter preceding clause (i), by striking 
     ``Except'' and all that follows through ``whichever'' and 
     inserting ``The exempt amount which is applicable for each 
     month of a particular taxable year shall be whichever'';
       (B) in clauses (i) and (ii), by striking ``corresponding'' 
     each place it appears; and
       (C) in the last sentence, by striking ``an exempt amount'' 
     and inserting ``the exempt amount''.
       (3) Repeal of basis for computation of special exempt 
     amount.--Section 203(f)(8)(D) of the Social Security Act (42 
     U.S.C. (f)(8)(D)) is repealed.
       (c) Additional Conforming Amendments.--
       (1) Elimination of redundant references to retirement 
     age.--Section 203 of the Social Security Act (42 U.S.C. 403) 
     is amended--
       (A) in subsection (c), in the last sentence, by striking 
     ``nor shall any deduction'' and all that follows and 
     inserting ``nor shall any deduction be made under this 
     subsection from any widow's or widower's insurance benefit if 
     the widow, surviving divorced wife, widower, or surviving 
     divorced husband involved became entitled to such benefit 
     prior to attaining age 60.''; and
       (B) in subsection (f)(1), by striking clause (D) and 
     inserting the following: ``(D) for which such individual is 
     entitled to widow's or widower's insurance benefits if such 
     individual became so entitled prior to attaining age 60,''.
       (2) Conforming amendment to provisions for determining 
     amount of increase on account of delayed retirement.--Section 
     202(w)(2)(B)(ii) of the Social Security Act (42 U.S.C. 
     402(w)(2)(B)(ii)) is amended--
       (A) by striking ``either''; and
       (B) by striking ``or suffered deductions under section 
     203(b) or 203(c) in amounts equal to the amount of such 
     benefit''.
       (3) Provisions relating to earnings taken into account in 
     determining substantial gainful activity of blind 
     individuals.--The second sentence of section 223(d)(4)(A) of 
     the Social Security Act (42 U.S.C. 423(d)(4)(A)) is amended 
     by striking ``if section 102 of the Senior Citizens' Right to 
     Work Act of 1996 had not been enacted'' and inserting the 
     following: ``if the amendments to section 203 made by section 
     102 of the Senior Citizens' Right to Work Act of 1996 and by 
     the Social Security Earnings Test Elimination Act of 2000 had 
     not been enacted''.
       (d) Effective Date.--The amendments and repeals made by 
     this section shall apply with respect to taxable years ending 
     after December 31, 2000.


[[Page S682]]


  Mr. GRASSLEY. Mr. President, I rise today in support of the 
legislation of my colleague Senator John Ashcroft to repeal the Social 
Security earnings limit. Under current law, workers aged 65-69, can 
earn only up to $17,000 without losing out on their Social Security 
benefits. This ``earnings limit'' penalizes hard-working seniors by 
docking them $1 for every $3 of earnings over the limit. In fact, an 
older worker's entire Social Security benefit could be eliminated by 
the earnings limit if he or she earns more than $45,944. A few years 
ago, I worked successfully to increase the limit to $30,000 by 2002. 
But we can do better. Penalizing older workers sends the wrong message 
to those who choose to stay in the workforce beyond normal retirement 
age. And in today's tight labor market, we need to do a better job 
about recruiting and retaining good employees. In fact, in my state of 
Iowa, the jobless rate for December was 2.2 percent. That rate is even 
below the national jobless rate of 4.1 percent. We cannot afford to 
discourage older Americans who want to work from remaining in the labor 
market.
  I am a strong supporter of efforts under way this year to repeal the 
earnings limit. Eliminating the penalty would help 800,000 older 
workers who now lose part or all of their benefits simply because they 
have the will and ability to stay on the job after 65. From my home 
State alone, many Iowans have contacted me in frustration over the 
earnings limit.
  For the first time in years, I am confident we can get the job done 
once and for all. The proposal has overwhelming bipartisan support from 
Congress and the White House. We could see swift action on this 
commonsense proposal.
  While fixing this inequity in the retirement system will give fair 
treatment to those ages 65-69 who have paid into the program during 
their entire working years, it will not address Social Security's long-
term demographic challenges. When the baby boom generation comes on 
board, the revenue and benefit structure will not be able to sustain 
the obligations under current law. That is why I have worked with six 
of my Senate colleagues, Senators Judd Gregg, Bob Kerrey, John Breaux, 
Fred Thompson, Craig Thomas, and Chuck Robb, to craft bipartisan Senate 
reform legislation. Our bill, the ``Bipartisan Social Security Reform 
Act'' S. 1383 is the only reform legislation which has been put forth 
in the Senate which would make the Social Security trust fund 
permanently solvent. I will continue to press ahead and work to build a 
consensus among our colleagues to save Social Security and achieve 
long-term solvency for generations to come.
                                 ______