[Congressional Record Volume 152, Number 34 (Thursday, March 16, 2006)]
[Senate]
[Pages S2317-S2320]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BENNETT:
  S. 2427. A bill to amend title II of the Social Security Act to 
provide for progressive indexing and longevity indexing of social 
security old-age insurance benefits for newly retired and aged 
surviving spouses to ensure the future solvency of the social security 
program, and for other purposes; to the Committee on Finance.
  Mr. BENNETT. Mr. President, I want to thank the managers of the 
resolution for providing me with a few minutes to discuss my 
introduction today of the Sustainable Solvency for Social Security Act. 
In introducing this legislation, I am under no illusion that there will 
be a rush to enactment, but do believe this is an appropriate time to 
draw attention to this issue and the broader issue of entitlement 
spending as we consider the budget resolution for fiscal year 2007.
  Yesterday, we had a close vote on an amendment to reinstitute pay-as-
you-go rules for spending increases and tax reductions. I opposed that 
amendment because a vote for it was, in essence, a vote for automatic 
tax increases on the American taxpayer. A more honest approach would 
have been to ask the Senate to adopt an amendment that required 60 
votes to pass any legislation that would prevent the expiration of any 
tax provision that would, if allowed to expire, result in a tax 
increase on individual taxpayers.
  I mention this because I do believe that we need fiscal discipline. 
We do need to collect higher revenues, but collecting higher revenues 
does not mean that you need to impose higher tax rates on capital or 
labor. Even if the sponsors of pay-go had prevailed, the real issue 
would be--once again--ignored.
  The loaded gun held to the heads of American taxpayers is entitlement 
benefits that have been promised, but cannot be paid for under any 
realistic scenario. Economic growth can help solve or mitigate many 
fiscal challenges, but it cannot overcome the twin realities of 
demographic destiny or benefit structures that are simply 
unsustainable.
  Today, four items--Social Security, Medicare, Medicaid and interest--
consume just under 10 percent of our Gross Domestic Product. If we do 
nothing we will see expenditures for the three programs increase to 
almost 20 percent of GDP. That is simply unsustainable.
  Over the past year, I spent a great deal of time talking to members 
on both sides of the aisle, as well as the administration, about ways 
to begin addressing this looming crisis. 'started with Social Security. 
Some asked, ``Why start with the smallest problem?'' The answer was 
simple. If we can't come together on a problem that can be fixed by 
aligning benefits with program income, how can we ever expect to come 
together on more difficult issues like Medicare reform.
  In the case of Social Security, we can quibble about exactly when, 
but at some point between 2042 and 2052, the program will be unable to 
pay benefits called for under current law and benefits will be reduced 
automatically to match program income with program outlays.
  As I said, I have no illusion that the legislation I am introducing 
today will be enacted this year, but I offer it for my colleagues' 
examination and suggestions.
  This legislation does not include personal accounts of any shape or 
form. It focuses exclusively on the goal of making Social Security 
solvent. And it does so without any increases in taxes or increases in 
the payroll cap.
  Presently, the Social Security system faces an actuarial deficit of 
1.92 percent of payroll. According to the Chief Actuary at Social 
Security, 1.60 percent of this deficit is related to the Old Age and 
Survivors Insurance (OASI) program--what we traditionally think of as 
Social Security. The remaining 0.32 percent is attributable to the 
disability insurance program. As I discussed this issue with many of my 
colleagues and with others, it was clear that there was a broad 
consensus that the disabled should be held harmless. It was also clear 
that there was little or no support for the proposition that retirement 
program beneficiaries should subsidize the disability program. 
Therefore, this legislation does not touch the present disability 
program and leaves open the question of how to address the disability 
program deficit. Additionally, there was broad agreement that current 
retirees and those nearing retirement, born before 1950, should not 
have their benefits affected.

  This legislation focuses solely on the 1.60 percent actuarial deficit 
in the OASI program. It achieves sustainable solvency for Social 
Security's OASI program through two primary policy tools: progressive 
price indexing and longevity indexing. Those reforms would slow the 
projected real rate of increase in future retirement benefits to a more 
sustainable level, while protecting low-wage-earners, the disabled, and 
their dependents. It also modestly accelerates the timetable for the 
transition under current law to a normal retirement age of 67, and it 
ensures sufficient backup general revenue funding to maintain a 
contingency reserve in the Old Age, Survivors and Disability Insurance 
(OASDI) trust fund.
  My proposal for sustainable solvency has been scored by the office of 
the actuary at the Social Security Administration. The effects of its 
provisions affecting retirement benefits, progressive indexing, 
accelerated NRA 67, and longevity indexing, would eliminate entirely 
the OASI program actuarial deficit of 1.60 percent of payroll that is 
projected under current law.
  Progressive indexing would not begin until 2012. First, it is 
important to note the beneficiaries, and Social Security programs to 
which progressive indexing would NOT apply. It would not apply to any 
current or future retiree born before 1950. Its provisions also would 
not apply to any worker in the future whose Social Security earnings 
history was in the lowest 30 percent of career earnings for workers 
becoming eligible to retire in a given year.
  Progressive indexing essentially slows the future growth rate of 
benefits for higher-earning workers. Their initial retirement benefits 
will grow more In line with price growth, rather than the even-higher 
rate of increase pegged to wage growth under current law.
  Under current law, retirement benefits are calculated under a ``wage 
indexing'' formula that will help propel them to levels significantly 
higher than the payroll tax revenue available to pay for them. The 
formula uses the average rate of growth of wages within the economy, 
rather than changes in the cost of living, to adjust, or ``index'', the 
past earnings of a worker that are used to determine the worker's 
initial benefit level at retirement. Because average wages generally 
grow faster than prices over time, the current benefit formula 
essentially guarantees that future retirement benefit levels will grow 
faster in ``real'' dollar value from generation to generation. Under 
this proposal, the individuals in the lowest 30 percent of all wage 
earners retiring in a given year would continue to have their past 
wages, and resulting benefit levels, indexed according to wage growth, 
while those at the top of the wage distribution would have their past 
wages indexed for changes in prices. Those falling in between would 
have their past wages indexed based upon a ``progressive blend'' of 
wage and price changes. In short, future benefit levels for workers who 
earned higher wages over their working career would not rise as much as 
benefit levels for workers with lower lifetime earnings, but those 
workers most dependent on social security for retirement income would 
be protected from such changes.
  This blended version of progressive price indexing targets the 
sustainable levels of revenue that will be available for future Social 
Security benefits under current law in a manner that ensures that those 
retirees that will be most in need are treated the most generously. It 
builds on the underlying progressive structure of the current benefits 
formula that replaces lower levels of career earning with a relatively 
higher share of retirement benefits. The real purchasing power of 
future OASI benefits will continue to

[[Page S2318]]

grow, but not as much, in future decades for higher wage workers.
  Longevity indexing recognizes that future retirees will live longer 
and, accordingly, receive inflation protected levels of their initial 
retirement benefits for longer periods of time than prior retirees. 
Absent any adjustment for changes in life expectancy beyond the age of 
retirement, longer lifetimes in retirement would mean increasingly 
greater dollar amounts of lifetime Social Security retirement benefits 
in future decades.
  Under present law, the retirement age is scheduled to increase 
incrementally to age 67 beginning in 2022, the normal retirement age 
gradually increases for workers born in 1960 and later years, by two 
months each year starting in 2022 until it reaches age 67 in 2027. 
Under this proposal, the move from age 66 to age 67 would begin in 
2012. The Normal Retirement Age or NRA would be increased by two months 
each year until the NRA reached age 67 in 2017. After that date, 
initial monthly benefits for future retirees would be periodically 
adjusted by the Social Security Administration to account for changes 
in the expected average lifetimes of future retirees.
  Because it does not change current-law benefits for disabled 
beneficiaries, my bill does not address the remaining actuarial deficit 
for the DI program under current law, which amounts to another .32 
percent of payroll. Accordingly, it does not close the larger overall 
actuarial deficit for the combined OASDI programs. The latter is 1.92 
percent of payroll under current law, and would be substantially 
reduced to only .28 percent of payroll under my bill.
  My plan's provisions that reduce OASDI benefit obligations first 
begin to operate in 2012, and they then improve annual unified budget 
balances for that year and all subsequent years within the standard 75-
year projection period used by the Social Security Administration.
  Several other measures demonstrate the improved solvency for the 
overall OASDI programs under my bill. The net cash flow from the OASDI 
Trust Funds to the general fund is improved by $3.6 trillion in present 
value. The OASDI Trust Fund exhaustion date would be extended from 2041 
until 2056.
  Until we can find further support for dealing with the remaining 
solvency problems in the DI program, we should at least ensure that 
sufficient resources are committed to prevent sudden across-the-board 
reductions in OASDI benefit levels in later decades. Therefore, my bill 
provides budget authority for general fund transfers as needed to 
maintain a 100 percent OASDI trust fund ratio in later years. Those 
general fund transfers are estimated by the SSA actuaries to amount to 
$0.6 trillion, in present value, over the next 75 years. This provision 
ensures solvency for the combined OASDI program through that period. 
After 2080, additional general revenue transfers are not expected to be 
necessary, and annual program cash-flow balances are projected to be 
improving and approaching positive annual balances beyond that year.
  I also think it is important to point out that this legislation 
recognizes that changes in economic conditions have an impact on the 
actuarial balance of the program. Greater economic growth can improve 
but not alone restore the program's solvency; recessions can 
significantly worsen that financial position. Some expressed concern 
early in discussions on this legislation that we might be going too 
far, that some of the changes might prove unnecessary. For that reason 
I have included a provision that will allow for the administrative 
``turning off' if you will of the progressive indexing or longevity 
indexing if the program comes into actuarial balance prior to those 
provisions being fully phased in.
  In conclusion, this legislation would substantially reduce the 
mountain of unfunded debt projected for the Social Security program in 
the decades ahead. It does so in a manner that gradually and sensibly 
reduces the formula-driven increases in real retirement benefits under 
current law for future retirees, while protecting low-wage workers and 
the disabled. We could do more, but this bill would do a lot. At other 
times, I have proposed separate provisions to enhance overall 
retirement security, such as through the option of personal accounts 
funded partly from current payroll taxes and partly from additional 
personal saving. I have also proposed reforms in pension policy to 
encourage automatic enrollment in employer plans, provide better access 
to standard investment options, and stimulate increased saving by 
workers. But I have left those issues for another debate and focused on 
the solvency of the retirement program.
  I offer this legislation as a starting point. I remain, as I have 
been over the past year, open to suggestions or modifications that can 
lead to bipartisan reform that will insure the permanent solvency of 
the Social Security system. We cannot afford to ignore this issue any 
longer. Burying our heads in the sand will only magnify the folly of 
inaction.
  I ask unanimous consent that a section-by-section analysis of the 
bill be printed in the Record.
  There being no objection, the analysis was ordered to be printed in 
the Record, as follows:

                      Section by Section Analysis


                         SECTION 1: SHORT TITLE

       ``Sustainable Solvency First for Social Security''


                    SECTION 2: PROGRESSIVE INDEXING

       For an individual who becomes eligible for Social Security 
     retirement benefits in 2012 or later, the bill would use 
     ``progressive indexing''--a mix of wage and price indexing--
     to determine his or her initial benefit. Those individuals 
     whose lifetime covered earnings are in the lowest 30th 
     percentile of all wage earners retiring in a particular year 
     will not be affected in any way by these changes. Similarly, 
     those individuals currently receiving Social Security 
     benefits or near retirement (age 55 or older) will be held 
     harmless. .
       Current Law: Current Social Security benefits are 
     calculated under a ``wage indexing'' formula. Benefits for 
     retired or disabled workers retiring in 2006 and later years 
     will be based on the average level of their indexed wage 
     earnings over their working lifetime that were subject to 
     OASDI payroll taxes up to the annual taxable maximum ($94,200 
     in 2006).
       Several adjustments must be made to those past earnings 
     before a retired worker's initial benefits can be calculated. 
     Upon reaching age 62 or becoming disabled, the actual amount 
     of a worker's previous ``covered'' earnings must first be 
     converted into average indexed monthly earnings, or AIME. 
     Earnings for any year before the worker reaches age 60 are 
     wage-indexed to reflect changes in average wage levels 
     (rather than average price levels) in the economy that 
     occurred between the year when the earnings were realized and 
     the year when the worker reaches age 60. Wage indexing means 
     that workers do not lose the value of their past earnings 
     (when money was worth more) in relation to their more recent 
     earnings. It may add an additional productivity ``bonus'' by 
     indexing past wages to reflect subsequent ``real'' growth in 
     average wages that exceeds the effects of price inflation 
     alone. Earnings after age 60 are not wage indexed. A retired 
     worker's AIME is then based on the highest 35 years of all 
     covered earnings, divided by 420 (the number of months in 35 
     years). For disabled workers and the survivors of deceased 
     workers, the AIME can be based on a shorter period (excluding 
     periods when the worker was disabled or deceased).
       A progressive formula is then applied to a worker's AIME to 
     calculate his or her primary insurance amount (PIA). The PIA 
     is the monthly amount determined either for a worker who 
     begins receiving Social Security retirement benefits at the 
     age at which he or she is eligible for full benefits or for a 
     disabled worker. The formula is designed to ensure that 
     initial Social Security benefits replace a larger proportion 
     of pre-retirement earnings for people with low average 
     earnings than for those with higher earnings. Under the 
     formula, the worker's PIA is determined by applying three 
     separate percentages (90 percent, 32 percent, and 15 
     percent), known as PIA factors, to three different portions 
     of the worker's AIME. The dollar thresholds at which the 
     applicable PIA factor changes (in other words, where the 
     fraction of additional dollars of a particular portion of 
     AIME that becomes part of a worker's PIA changes) are known 
     as ``bend points.'' The Social Security Administration 
     indexes the bend points annually to match the rate of growth 
     of average wages, while the PIA factors never change. This 
     keeps the portion of workers' pre-retirement earnings (AlMEs) 
     that is replaced by each of the respective PIA factors 
     roughly constant for each new retiring cohort.
       The PIA formula applicable to any worker, regardless of the 
     age at which he or she actually retires, is the formula in 
     place in the year the worker reached age 62 or became 
     disabled. For example, the PIA formula for workers who first 
     became eligible for retirement benefits in 2005 was the sum 
     of: 90 percent of the first $627 of the worker's AIME, 32 
     percent of the worker's AIME falling between $627 and $3,779, 
     and 15 percent of the worker's AIME above $3,779.
       The amounts $627 and $3,779 were the bend points of the 
     2005 PIA formula.
       The initial basic retirement benefit of a worker retiring 
     at the ``normal retirement

[[Page S2319]]

     age,'' or NRA, is based on 100 percent of the PIA. However, 
     if a worker retires at an age earlier than the NRA, he or she 
     faces an ``early retirement penalty'' which reduces the 
     amount of his benefit. Before the year 2000, the NRA was age 
     65 and the early retirement penalty, or reduction factor, was 
     6-2/3 percent of the benefit for each year of early 
     retirement. That is, a worker retiring three years early, at 
     age 62 (the earliest age at which retirement benefits may be 
     claimed), would receive a benefit equal to only 80 percent of 
     the PIA. Beginning in 2000, the ``normal'' retirement age 
     began to rise from age 65 to age 66, at the rate of 2 months 
     per year for those reaching age 62 between the years 2000 and 
     2005. The NRA will continue to rise to age 67, at the same 
     rate of 2 months per year, for those reaching age 62 between 
     2017 and 2022. A worker will still be able to collect 
     benefits beginning at age 62, but the two additional years of 
     early retirement (as fully phased in by 2022) will reduce 
     benefits by an additional 5 percent per year adjustment 
     factor. The age 62 benefit in 2022 and thereafter will fall 
     to 70 percent of the PIA.
       Once a worker's basic benefit (PIA adjusted for applicable 
     early retirement penalty) is determined, it is augmented by 
     annual cost of living adjustment (COLA) to offset inflation, 
     if any, from the year the worker reached age 62 until the 
     year of filing for benefits. After a retired worker has 
     received his or her first benefit check, the amount is 
     similarly adjusted upward every January 1 to reflect annual 
     changes in the cost of living, as measured by the consumer 
     price index (CPI). This price indexing of initial retirement 
     benefits, after a retiree has begun to receive them, is a 
     separate procedure from wage indexing a worker's earnings 
     history or the bend points of the benefit formula used to set 
     initial payments to new retirees over time.
       In addition to the COLA, a recipient's benefit may increase 
     if the individual continues to work after first becoming 
     eligible to draw benefits. If subsequent earnings in a later 
     year exceed any of the indexed yearly earnings initially used 
     to determine the worker's initial benefit at age 62, Social 
     Security will automatically substitute the new earnings for 
     the lowest ones in the worker's earnings history, recalculate 
     the worker's PIA, and increase the worker's future benefits.
       The current structure of the formula presents an inherent 
     problem. Because average wages generally grow faster than 
     prices over time, the current benefit formula essentially 
     guarantees that future retirement benefit levels will grow 
     faster in ``real'' dollar value from generation to 
     generation. Hence, the actual purchasing power of the Social 
     Security benefit of a person retiring in 2005, for example, 
     is greater than for a person who retired in 1995.
       Bennett Bill: The current benefit formula would remain 
     essentially the same, except that, for new cohorts of 
     retirees beginning in 2012, the upper-two PIA factors (32 
     percent and 15 percent) used to calculate their PIAs would be 
     adjusted lower annually by the Social Security Administration 
     in order to slow the future growth of initial retirement 
     benefits. Those benefit levels would increasingly reflect the 
     levels of price growth, rather than average wage growth, that 
     occurred during the course of most workers' careers. For 
     those individuals whose AIMEs were above the 30th percentile 
     of workers retiring in a given year, their initial retirement 
     benefit would be indexed based upon a ``progressive blend'' 
     of wage and price changes. The slowest rate of growth in 
     future retirement benefits would be for workers with steady 
     maximum taxable earnings. Future benefit levels for workers 
     who earned higher wages over their working careers would rise 
     at a lower rate than benefit levels for workers with lower 
     lifetime earnings.
       Moreover, those workers most dependent on Social Security 
     for retirement income would be fully protected from the 
     changes. Individuals whose career-average indexed monthly 
     earnings were in the lowest 30 percent of all career-average 
     wage earners retiring in a particular year would continue to 
     have their initial benefits calculated using the current law 
     formula and they would, therefore, be held harmless entirely 
     from the PIA factor adjustments. Those workers who were age 
     55 or older on January 1,2005 also would not be affected by 
     this change in the benefit formula. Current law benefits for 
     young survivors, as well as disability benefits, would remain 
     unchanged.
       The progressive indexing provisions of the bill would 
     operate first by establishing a new second bend point in the 
     benefit formula. It would be set above the current-law first 
     bend point (below which the first 90-percent PIA factor would 
     continue to apply. The current-law 32-percent PIA factor 
     would continue to operate up to this new second bend point. 
     The new bend point would be determined to be at about the 
     30th percentile of AIME for those newly eligible for social 
     security retirement benefits in 2012. (The calculation relies 
     on the latest available statistics for AIME of workers first 
     becoming eligible for retired worker benefits in 2001 through 
     2003 and updates them to 2012 using the intermediate 
     assumptions of the 2005 Trustees Report). The future levels 
     at which this new bend point would apply beyond 2012 would be 
     wage indexed, as is done for the other two bend points in 
     current law.
       For workers eligible to retire in 2012 and beyond with 
     portions of AIME above the level of this second new bend 
     point, further progressive indexing adjustments would be made 
     to the other two remaining marginal PIA factors (32 percent 
     and 15 percent, respectively) under current law. The 
     objective is to gradually reduce those two PIA factors by the 
     same proportional amount over time, in a manner that would 
     reflect the relative difference between using price indexing 
     and using the current law practice of wage indexing to 
     determine the benefits for a career-maximum earner (a worker 
     always earning annual wages at or above the maximum amount 
     subject to OASDI payroll taxes). The percentage by which 
     those upper-two PIA factors are reduced in a given year, 
     however, must be somewhat greater than that ratio alone, 
     because it must be applied to a smaller base of career 
     earnings. (Initial retirement benefits derived from the 
     portion of any worker's AIME below the 30th percentile are 
     held harmless from the progressive indexing adjustments). 
     Hence, the new benefits formula adjusts those 15-percent and 
     32-percent PIA factors by multiplying them by (1) the 
     difference of the maximum CPI-indexed benefit amount for a 
     given year after 2011 over the benefit amount determined for 
     an individual whose AIME is equal to the hold-harmless 30th 
     percentile level at the second new bend point divided by (2) 
     the difference of the maximum wage-indexed benefit amount for 
     the same year over the benefit amount determined for an 
     individual with AIME at the 30th percentile level.
       Over time, as the original 15 percent and 32 percent PIA 
     factors are reduced incrementally in line with the difference 
     between price growth and average wage growth, higher earning 
     workers will have relatively smaller shares of their total 
     AIME converted into retirement benefits. Growth in future 
     retirement benefits for relatively lower earning workers, 
     with a greater share of total AIME affected by the unchanged 
     lower-two PIA factors, will be slowed at a lesser ``blended'' 
     rate.
       The progressive indexing reduction of the upper-two PIA 
     factors would not continue indefinitely if the financial 
     status and outlook of the Social Security system improved and 
     returned to sustainable solvency. Whenever the Chief Actuary 
     of the Social Security Administration certifies that, for a 
     calendar year after 2080, the combined balance of the Old-Age 
     and Survivors Trust Fund and the Disability Insurance Trust 
     Fund is positive and not less than 100 percent for that 
     calendar year, and it is projected to remain stable and grow 
     in the future, further adjustments to the PIA factors would 
     be frozen and the upper-two PIA factors would remain at their 
     level of the preceding year. Additional adjustments would 
     resume in any later calendar year during which the combined 
     balance dropped below 100 percent. This stabilizing provision 
     may cause the incremental effects of progressive indexing to 
     be added only intermittently in calendar years after 2080.


                     SECTION 3: LONGEVITY INDEXING

       Initial Social Security benefits would be adjusted to more 
     accurately account for increases in worker life expectancy.
       Current Law: A worker's initial retirement benefit is price 
     indexed annually to adjust for increases in the cost-of-
     living, as measured by the CPI-W. No further adjustments in 
     benefits are made for changes in average life expectancy for 
     any given cohort of retirees.
       Bennett Bill: In 2018 and later years, initial benefits for 
     future retirees would be adjusted annually by the Social 
     Security Administration to account for changes in the 
     expected average life expectancy, at age 67 (the age of 
     normal retirement for future retirees). This would be done by 
     multiplying the PIA factors by a life expectancy ratio 
     calculated by the Chief Actuary, using final and complete 
     actual data that is available for a given calendar year. It 
     would represent the ratio of the period life expectancy based 
     on computed death rates for 2013 of an individual at age 67 
     to the period life expectancy of an individual at that age 
     based on the computed death rates for the fourth calendar 
     year preceding the calendar year for which the life 
     expectancy ratio is determined.
       Those persons who are currently age 55 and older or who are 
     young survivors would not have their benefits impacted by 
     this adjustment.
       The bill would also require the Social Security 
     Commissioner to conduct a study on the feasibility of 
     determining life expectancies for disabled beneficiaries. A 
     report on the study would be due no later than one year after 
     the date of enactment of the bill.


             SECTION 4: TREATMENT OF DISABLED BENEFICIARIES

       With regard to the disabled, the bill would not affect 
     those receiving Social Security disability benefits while 
     they are disabled.
       Current Law: Upon reaching normal retirement age, the 
     social security benefits for disabled beneficiaries are no 
     longer paid by the Disability Insurance Trust Fund, and 
     disabled beneficiaries become eligible for retiree benefits 
     financed by the Old-Age and Survivors Trust Fund. Disability 
     benefits are computed similarly to retirement benefits, but 
     they are calculated as if the worker attained the full 
     retirement age in the year he or she became disabled.
       Bennett Bill: At the time of conversion by disabled 
     beneficiaries to retired worker status, their retirement 
     benefits would be calculated using a blend of two formulas. 
     The current law benefit formula would continue to apply 
     proportionately for the relative period of time during their 
     potential working lifetime (between age 22 and age 62) when

[[Page S2320]]

     they were disabled. Future changes in current law benefits 
     due to progressive indexing and longevity indexing would 
     apply proportionately to the relative period of time when 
     they were able to engage in covered employment.


  SECTION 5: ACCELERATION OF PRESENT-LAW NORMAL RETIREMENT AGE CHANGES

       The age of normal retirement, for full Initial Social 
     Security benefits, would be adjusted to more accurately 
     account for increases in worker life expectancy.
       Current Law: The age at which a worker becomes eligible for 
     full Social Security retirement benefits--the normal 
     retirement age, or NRA, is currently scheduled to increase 
     incrementally from age 66 to age 67 for those workers first 
     reaching age 62 in 2017 or later. The NRA depends on the 
     worker's year of birth and, correspondingly, when he or she 
     becomes age 62 and first eligible for retirement benefits. 
     For people born before 1938, the NRA is 65. For workers born 
     between 1938 and 1943, the NRA already began to increase by 
     two months per birth year. Hence, the NRA now is 66 for 
     people born in 1943 or later. It will remain at that level 
     until 2017, when it again begins to increase at the rate of 
     two months per birth year, beginning with people born in 
     1955. By 2022, the NRA will be 67 for workers born in 1960 or 
     later.
       Retirement benefits are still available at age 62, but with 
     greater reduction as the NRA increases to age 67. For 
     example, a worker retiring at age 62 in 2022 will have their 
     initial benefits reduced by 30 percent. A worker who retired 
     at age 62 in 2005 would have received benefits reduced by 
     only 20 percent.
       Bennett Bill: The current-law increase in the NRA from age 
     66 to age 67 would begin 5 years sooner, starting in the year 
     2012 (for those born in 1950) rather than in the year 2017. 
     Hence, the NRA would be increased by two months each year 
     thereafter until it reached age 67 in 2017, for those born in 
     1955 and later.


  SECTION 6: MAINTENANCE OF ADEQUATE BALANCES IN THE SOCIAL SECURITY 
                              TRUST FUNDS

       The bill would ensure that benefits are not cut 
     automatically in future years due to the combined OASDI Trust 
     Fund becoming insolvent (trust fund assets insufficient to 
     cover the entire costs of the programs).
       Current Law: According to the latest projections by the 
     Chief Actuary, the Old-Age and Survivor Trust Fund will be 
     insolvent in the year 2041. Under current law, if assets are 
     insufficient to pay for benefits in a particular year, the 
     benefits of all beneficiaries are reduced proportionately to 
     make up for the shortfall. Hence, the Chief Actuary currently 
     projects that in 2042, benefits will be reduced by roughly 30 
     percent.
       Bennett Bill: This bill would ensure that for years in 
     which there would not otherwise be sufficient assets in the 
     trust fund to pay out scheduled benefits, the gap would be 
     filled by the appropriation of funds from general revenues. 
     This failsafe general revenue transfer provision would ensure 
     that a sufficient financial cushion remains to provide 
     payment of all benefits promised under the bill. However, it 
     primarily operates as a fiscal placeholder that indicates the 
     annual amount of increased revenue, or reduced expenditures, 
     required to maintain an annual combined trust fund balance 
     ratio of no less than 100 percent. It remains neutral as to 
     which fiscal method, or combination of methods, is used to 
     achieve this objective.
                                 ______