[Congressional Record (Bound Edition), Volume 161 (2015), Part 3]
[Senate]
[Pages 3492-3493]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    DISABILITY INSURANCE TRUST FUND

  Mr. HATCH. Mr. President, I rise to speak again on the impending 
exhaustion of reserves in the disability insurance program or the 
disability insurance trust fund.
  As we know, disability insurance, or DI, is an important program 
administered by Social Security Administration, or SSA. The impending 
exhaustion of the DI trust fund threatens disabled American workers 
with benefit cuts, under current law, toward the end of calendar year 
2016.
  Once again, I am committed to working with anyone to ensure that 
those cuts do not occur. Unfortunately, the administration and SSA have 
yet to show they are committed to addressing this problem.
  As chair of the Senate Finance Committee, I will continue speaking on 
the floor about the imminent challenge that we face with the DI trust 
fund and about solutions.
  I will continue to reach out to shareholders and to anyone who is 
interested in bipartisan discussions aimed at achieving solutions. And 
I will be acting to at least begin to chip away at the financial 
challenges facing the DI program, which I have been warning people 
about for years--that it is going to go broke unless we do something to 
improve them. I do believe we should act at least to begin to chip away 
at the financial challenges the DI program is facing, while examining 
ways we can help improve and modernize the Social Security system 
itself.
  I once again call on my friends on the other side of the aisle and in 
the administration to join me in this effort.
  I wish to take a moment to note that some recent proposals to reform 
Social Security that have been put forward by some of my friends on the 
other side of the aisle are, simply put, irresponsible. We have seen 
proposals recently to raise taxes in the Social Security Program, 
usually to increase net progressivity in an already progressive 
structure and then spend most of the revenue on benefit expansion 
without adequately considering the fact that even under their proposal 
we have gaping long-run holes in Social Security's finances. Raising 
taxes and increasing some benefits now, while still leaving an 
unsustainable financial structure in place, would be fundamentally 
unfair to younger generations of workers who will have to eventually 
pay even more taxes, suffer from benefit cuts or, more likely, both.
  The so-called progressive reform plans that tax more and promise more 
benefits, even though the promises are unsustainable, are surely poll-
tested with demographic groups who probably do not scoff at promises of 
more benefits and higher taxes on the so-called rich. Those plans may 
help in fundraising for numerous groups who try to benefit from the 
politics of fear surrounding the Social Security system.
  But those plans do nothing for younger generations of workers, aside 
from sending them a clear message that they are on their own.
  Again, this is irresponsible.
  More generally, some believe that we could solve all or most of the 
financial challenges facing the DI program and Social Security, in 
general, through higher taxes.
  To investigate whether that is the case, I made several requests of 
the Congressional Budget Office regarding this strategy. Recent 
analysis performed in response to those requests shows how difficult 
this approach can be.
  Most proposals to reform Social Security by raising payroll taxes 
would result in massive tax increases, particularly on the middle 
class--on middle-class Americans--which would negatively impact job 
growth and harm middle-income families. That is hardly what our economy 
needs.
  For example, according to CBO, if you wanted to generate long-term 
balance between inflows and outflows for the DI program--using a DI 
payroll tax increase alone--you would have to increase the tax rate by 
39 percent, which would hit low-, middle-, and upper-income earners 
alike, and it would hit hard.
  If you wanted to generate long-term balance for Social Security, 
generally, including DI and retirement, and try to do it by eliminating 
the maximum on earnings subject to the payroll tax and resulting 
benefits, according to CBO, a worker earning $150,000 a year would pay 
about 26 percent more in payroll taxes. A worker earning $200,000 a 
year would pay about 68 percent more, and a worker earning $250,000 a 
year would pay 109 percent more.
  Now, it may be that raising taxes by 26 percent to more than 100 
percent on those earners is something that my friends on the other side 
of the aisle are comfortable with--under the notion of taxing the so-
called rich.
  I would note, of course, that while a family headed by someone 
earning $150,000 a year may be comfortable in many areas of the 
country, it appears that the ever-changing definition of rich is 
descending lower and lower into the middle class, as my friends on the 
other side have lectured more and more over recent years about 
inequality.
  Even if you were to eliminate the taxable minimum entirely but still 
provide corresponding benefits to upper earners in accordance with 
current law, only around 45 percent of Social Security's long-run 
financial challenges would be addressed. You would still need to hike 
taxes more, cut benefits, or both, to fully address the program's long-
term fiscal problems. Because upper earners will pay more taxes but 
also receive corresponding benefits, since Social Security was designed 
to have such a correspondence, the policy of increasing the taxable 
maximum ends up giving higher replacement rates to upper earners.
  That hardly seems to be a workable solution--since it doesn't solve 
the financial problem, and it doesn't solve the inequality problem that 
is so bothersome to my friends on the other side.
  Perhaps just for the sake of argument, we should consider eliminating 
the taxable minimum, thereby raising taxes substantially on upper 
earners, and not giving them any corresponding benefits for those 
increased tax payments.
  Of course, such a policy is bothersome to some of my friends on the 
other side of the aisle, since it breaks the connection in Social 
Security between what people put in and what they get out.
  Some would say that this would convert Social Security into another 
welfare program focused on redistribution and away from a program 
focused more on self-financed retirement security and protection 
against income losses from disability. So, instead, maybe we should 
consider eliminating the taxable maximum and give some small benefit 
return in exchange.
  Well, in such a case, according to CBO, you would still not be able 
to solve the financial challenges facing Social Security. Using 
scheduled benefits and replacement rates ``would increase noticeably 
only for people in the highest quintile of lifetime household 
earnings.'' I don't think that result would be desirable to the tax-
the-rich coalition.
  Let me continue by noting some recent remarks on the Senate floor 
from the junior Senator from Vermont and the ranking member of the 
Budget Committee, who promises to put forward what he suggests is a 
courageous way to confront Social Security's financial challenges.
  Of course, he has not put forward any legislation or plan in this 
Congress. So if we want to talk specifics, we have to look at his 
previous plan, which he released in the 113th Congress.
  Under that plan, the current taxable maximum is preserved, as are 
current payroll tax rates. The new twist is that his plan imposes 
current payroll tax rates on earnings above $250,000 a year, which, 
evidently, is where the distinction between the so-called rich and 
everyone else lies, in their opinion.
  That $250,000 threshold is not--let me repeat--is not indexed to 
inflation. Earnings subject to the tax above $250,000 a year would not 
be included in earnings used to compute benefits, which is to say that 
under this plan a worker would pay Social Security taxes on earnings 
above $250,000 a year, with no corresponding increase in Social 
Security benefits.
  Again, this would move the system away from a self-financed insurance

[[Page 3493]]

program toward what some would call welfare and redistribution. Since 
the new $250,000 threshold is not indexed, eventually more and more 
earnings will become subject to increased Social Security taxes without 
getting anything in terms of benefits and return.
  In around 20 years, middle-class earners who today have just 
surpassed the taxable maximum will be pushed into the earnings category 
where they lose the connection between Social Security taxes and 
corresponding benefits.
  At that time, an indexed income equivalent of what is around $120,000 
a year today will be deemed to be rich, with earnings above that amount 
worthy of being taxed more for Social Security but not worthy of 
receiving any additional Social Security benefits.
  So what does the Senator's scheme that, once again, was put forward 
in the last Congress, accomplish? Admittedly, it does extend the 
solvency of Social Security by around 28 years or so, but it still does 
not make the system financially sustainable in the long run, leaving an 
assured financial shortfall and attendant need for yet more taxes or 
benefits cuts, and leaving it to younger generations or workers to 
figure it out. More than likely it will, in many respects, sever the 
connection between what people pay in to Social Security and what they 
can expect to get out of this program in terms of benefits. Once again, 
this represents a fundamental shift in Social Security policy, one that 
some may support but few are now willing to openly defend.
  I look forward to debating, discussing, and voting on any plan that 
any of my friends on the other side of the aisle put forward to tackle 
Social Security's financial challenges, including any new plan the 
junior Senator from Vermont wants to put forward, particularly if it 
resembles the plan he introduced last Congress. Indeed, I would be 
anxious to see how many of my colleagues on the other side of the aisle 
want to go on record in support of yet more tax increases and a 
fundamental shift in the nature of the Social Security Program.
  In the meantime, we still have the pending depletion of reserves in 
the DI trust fund, which is something we will have to address before 
the end of calendar year 2016.
  From my perspective, the sooner we tackle this challenge the better, 
but it is hard to act when we have an administration that refuses to 
engage in discussion and seems to want to make this a partisan issue by 
putting forward a plan to reallocate payroll taxes from one trust fund 
to another without any further discussion or debate.
  What I continue to hear from the administration and many of its 
allies in Congress are stale talking points, many of which are wrong or 
distorted, and a ``take it or leave it'' approach to deliberating over 
the reallocation scheme devised unilaterally by this administration. 
The only thing this administration appears willing to discuss when it 
comes to Social Security is its own kick-the-can strategy coupled with 
additional administrative funds for the SSA, either funded with yet 
more Federal debt or by crowding out spending on other discretionary 
programs.
  Meanwhile, I am comforted by many in the disability advocacy 
community who are at least willing to have conversations about how we 
can work to improve Social Security's programs while also paying 
attention to its financial challenges. There are several groups 
currently hard at work analyzing options and having debate and 
discussion about what we could look at for program improvements and 
fiscal responsibility.
  There is certainly more we can do to improve the DI system and help 
make it work better for beneficiaries. There is certainly more we can 
do to improve Social Security's retirement side to help make it work 
better for modern family situations. There is certainly more we can do 
on the program integrity side, including some of the President's 
proposals and more. There is certainly more we can do to protect 
against frivolous decisionmaking by administrative law judges in the DI 
program--and there is plenty of that which is costing us arms and legs. 
There is certainly more we can do to reduce fraud in the DI program, 
which literally robs resources from those truly in need.
  Sadly, the Obama administration's approach to DI and Social Security 
in general has thus far been largely to remain silent, even in the face 
of the impending DI trust fund exhaustion. The only major structural 
change the administration briefly considered was adoption of the 
chained CPI in governmentwide price indexation coupled with benefit 
enhancements for vulnerable populations. However, the President has 
since withdrawn even that modest proposal and has publicly stated he 
would not even discuss the idea unless he was assured of getting yet 
another tax hike for the general fund to go along with it.
  As I have said before, it is premature to kick the can down the road 
again by agreeing on some payroll tax reallocation between the two 
trust funds in Social Security as a temporary patch of convenience and 
a patch that was unilaterally constructed by this administration.
  Yes, there have been reallocations among many trust funds in the 
past, under many varying circumstances, and, yes, many of them have had 
bipartisan support, but we have known about this coming shortfall for 
roughly 20 years. In other words, Congress has had roughly 20 years to 
come up with solutions to help put the DI program and perhaps Social 
Security in general on a path to long-term financial sustainability, 
and Congress has failed.
  We are now being asked by the current administration to double down 
on that failed approach--to do another reallocation of push the problem 
further down the road and hope that in the interim Congress will not 
fail again.
  President Obama, in other policy areas, has argued that if decades 
show a policy is not working, then ``it's time for a new approach.'' 
Sadly, that sentiment does not seem to apply when he is talking about 
Social Security.
  As I have said before, it seems we have two paths to choose from; one 
is the path I prefer, involving examination and discussion of what we 
can do to enhance the DI program and its finances and what we can agree 
upon; the other is to engage in divisive political rhetoric and 
demagogue the issue even further, which is irresponsible, in my view, 
and not what disabled American workers and all workers insured by the 
DI program should tolerate.
  I repeat my previous call to my colleagues in the Senate: To anyone 
from either party who wishes to engage in a constructive dialogue about 
how to fix and improve the DI program and Social Security in general, 
my door is open. In the meantime, I plan to take whatever steps I can 
as the chairman of the committee of jurisdiction to help preserve these 
programs for beneficiaries in the near and long term.
  We can't keep going down this way of always demanding more taxes and 
more spending to solve problems we could have solved a long time ago. 
We are going to have to get serious about this, and I intend to see 
that we do.
  Mr. President, 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. HEINRICH. Mr. 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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