[Congressional Record Volume 146, Number 31 (Monday, March 20, 2000)]
[Senate]
[Pages S1452-S1453]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              H.R. 5, SENIOR CITIZENS' FREEDOM TO WORK ACT

  Mr. HATCH. Madam President, I rise today in strong support for H.R. 
5, the Senior Citizens' Freedom to Work Act, which the Senate will 
begin considering tomorrow.
  Seniors in my home State of Utah and around the nation have waited a 
long time for the relief H.R. 5 will bring. I am so pleased that not 
only did the House pass this bill on March 1 by a vote of 422 to 0, and 
the Senate is very likely to follow suit tomorrow, but also that the 
President has finally come around and has indicated he will sign the 
bill.
  Under current law, over 800,000 Social Security recipients between 
the ages of 65 and 70 are affected by the so-called earnings limit. 
Over 6,100 of these live in Utah. This limit provides that senior 
citizens who this year earn more than $17,000 in wages or self-
employment income will lose some of their Social Security benefits. 
More specifically, for every $3 earned over the $17,000 threshold, $1 
in benefits is lost. The bill we will take up tomorrow will remove this 
unfair limitation.
  There are at least five reasons why H.R. 5 should be passed by this 
body with a resounding margin so this oppressive limitation, which 
holds back senior citizens to the detriment of everybody in this 
country, can be lifted.
  First, the earnings limit is plainly unfair to senior citizens. What 
kind of a message does the current law send to a worker turning age 65, 
Mr. President, when he or she learns that there will be a 33 percent 
penalty for continuing to work once his or her earnings exceed $17,000?
  Yet, at the same time, senior citizens who are fortunate enough to 
have interest, dividend, or capital gains income from stocks, bonds, or 
mutual funds, or income from a private pension, are not penalized, no 
matter how much of these kinds of income they receive. Even if the 
earnings limit otherwise had merit, which it doesn't, it punishes the 
very people who most need to work to makes ends meet.
  Second, the earnings limit is outdated. The limit was a feature of 
the original Social Security Act in 1935. It was included to encourage 
seniors to retire so their jobs would be available to the millions of 
younger workers who were unemployed in the difficult job market of the 
Great Depression. That was a different era. What was appropriate in 
1935 is clearly not appropriate in 2000, when it is workers, not jobs, 
that are scarce.

  Third, the earnings limit places extremely high marginal tax rates on 
workers between the ages of 65 and 70 who continue to work. Consider 
the example of a 66-year-old plumber I will call Howard. Along with his 
son, Howard has run a small plumbing business in Ogden, UT, for over 20 
years. Now that he is over 65, Howard has decided to turn the 
management of the business over to his son. However, Howard still wants 
to work, and because of an aged mother whom he takes care of, he still 
needs some income. Howard works three days a week and earns $35,000 per 
year.
  Believe it or not, when the earnings limit penalty of 33 percent is 
combined with the income tax rate of 28 percent, the self-employment 
tax rate of 15.3 percent, and the effect of taxing his Social Security 
benefits at 85 percent, Howard faces a marginal tax bracket of 88.8 
percent, not counting the Utah income tax. This high a marginal tax 
rate is unconscionable and indefensible any way you look at it.
  Fourth, the earnings limit is terrible for our economy. The biggest 
problem our economy faces right now is a severe shortage of workers. 
This is especially true in the high technology fields, where our 
shortages are so severe that we must increase the number of H-1B visas 
allowed this year so our high tech firms can stay competitive.
  However, turning to overseas workers is only a temporary solution. We 
need a long-term answer to this problem, which is only going to be 
exacerbated by current demographic trends, and the retirement of the 
baby boom generation. Our senior citizens are a wonderful resource that 
is not being tapped enough. Only 17 percent of males over age 65 are 
now working, compared with 47 percent in 1948. These workers are 
experienced, and in many cases, they want to keep working. In

[[Page S1453]]

order for this to happen, though, we need to scuttle outdated relics 
like this Social Security earnings test.
  Finally, the earnings limit is no longer relevant, considering the 
growing longevity of Americans. In 1935, when the earnings limit was 
added to the Social Security Act, life expectancy in this country was 
62 years. Now, it is 77 years. Moreover, senior citizens are the 
fastest growing segment of our population. There is absolutely no 
reason these citizens cannot keep on working if they desire to do so. I 
have read articles that the life expectancy of the American people may 
soon be approaching 85.

  Therefore, I am very gratified to see that this earnings limit repeal 
is about to pass the Senate. And again, I am especially pleased that 
President Clinton has agreed to put aside election year politics and 
sign this legislation.
  As important and long awaited this earnings limit repeal is, I want 
to emphasize that it does not lessen the need for comprehensive Social 
Security reform. Besides the repeal of the earnings test, there are 
many other vital issues that must be addressed to ensure the long-term 
viability of the system. These include the large and difficult question 
of how to best increase the system's rate of return in order to lessen 
the need for any benefit cuts or payroll tax increases once the Social 
Security trust fund runs out of spending authority. Other important 
issues that need to be addressed in the context of fundamental Social 
Security reform include work disincentives for blind workers.
  Many of our blind citizens are also subject to a type of limit on 
their earnings, in which they lose Social Security disability payments 
once their earnings reach $14,040 per year. For many of the same 
reasons that the earnings limit is unfair to senior citizens, the 
``substantial gainful activity'' limit is unfair to those workers 
disabled by blindness.
  I wish H.R. 5 could accommodate this unfairness by ameliorating this 
earnings limit and removing the disincentive these workers face today. 
I wish President Clinton would have used some of his political capital 
in this final year of his Presidency to lead the way to major Social 
Security reform. Regrettably, the President has made it clear that 
broad reform will have to wait for the leadership of another President.
  I urge all of my colleagues to vote yes for H.R. 5 and let's finally 
repeal the unfair earnings limit on senior citizens.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. STEVENS. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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