my name is terry kolb's i'm fortunate enough to be the the chair of the board for the white period chamber of commerce this year and it's it's wonderful to have you here and welcome you to this nice luncheon i'd like to  especially at my advanced age i'd like to give a special thank you to the students from white bear and ma to meet i and liberty classical cademy because next april i'm going to start taking social security i'm grateful i'm grateful for your for your work now and into the future  so we have a couple of elected officials with us odd i'd like to acknowledge one is a senator roger chamberlain who sitting right here he represents forty three senate senate district forty three thirty eight beg your pardon i don't not in your district anymore that's why i forgot to brother table h extraordinary early interesting and unique opportunity for us all today to hear from a couple of gentlemen that have devoted their life to public service  and so i'd like to introduce the two of them and they're going to come up here as we get to the beginning of the program let me start with congressman tim penny congressman penny was a state senator in the state of minnesota  i'm assuming autonomy area generally seventy six to eighty to ninety two and then was elected to congress and served six terms if i read that correctly the united states congress from district  one he's the president of the southern minnesota initiative foundation based in the autonomy and he's a fellow at the university of minnesota humphrey institute so he doesn't teach in there as well  remarkable background he's the son of the former vice president hubert humphrey and a former senator muriel humphrey right ok he served in the state senate for ten years minnesota and he served as the attorney general for the state of minnesota for sixteen years and he too as done on awful lot of things with respect to the humphrey institute are you at the humphrey institute  financial protection bureau the fact that he's a little older and older americans is kind of a thing that goes with it but i guess at any rate he said very well schooled in what what the a a r p believes for sure and we're going to have an a wonderful chat between these two gentlemen on the entitlement issues that our nation's facing of course those things on the on the surface our social security and medicare and there are of course other entitlements as well so i'd like to invite them both up to the front table here and  line right well terry first of all thank you and to the members of the chamber i want to thank you all very much for the opportunity to be here i especially want to thank the young people who are here if tim and i we talk a little bit about solving a just a few small problems about how social security deficit and medicare challenges if we have anything to do about getting it right maybe it'll be right for you as well and that's what is i think absolutely key is to understand that in order for us to adjust what our concerns today it really we have to keep our vision on the young people who will be the retirees who will have that return because of the good work that's done today and to moral for the future and i also certainly to the other elected officials who are here it's very kind to be with you and now tom i want to thank you for the invitation tom apparently knows myself and tim quite well he said that we really ought to have only about ten minutes each and he's going to try and contain us that way actually wouldn't it be nice if we could solve some of these problems in just ten minutes and get the congress to act on it that would be wonderful so let me  just a couple of things first of all i will make sure that tom gets a piece of paper that he will put up on the website i think that has some references for background research in some of these issues  i think it's really important you take a look at all sides of the of the concerns about social security and medicare and medicaid and that you inform yourself about it and so the best way to do that is to do some digging and research  and tom i want to thank you personally for getting me back into that business a little bit a couple of just a couple of things because i'll try and keep it short i want to hear your questions and maybe your answers to some of these things but just think about this it was over eighty years ago when f d r franklin roosevelt suggested that we ought to have the kind of security that was needed and it came out of obviously if you know your history it was a tragic time when people promise was made that no one should live out their lives in poverty or in sickness without some assistance and that's essentially what the promise of social security is social security is based on the promise if you pay into the system and then you earn the right to guaranteed benefits it's it's a forced savings and frankly i've got to tell you i'm benefiting from it i paid in and now i'm taking out and i'm enjoying it it's it's very good and i hope for the young people that are here that you will have the same kind of opportunity as you reach the ages where tim and i are these days couple of things that that i know to local over and i would just highlight some of these items among the elderly and social security beneficiaries fifty two percent are married couples seventy four  percent are of the unmarried persons and receive fifty percent or more of their income from social security so if you think so security is just something that we don't have to deal with think about that that more than fifty percent of the income of these individuals comes from social security alone and there is there are a number of other concerns like that now some of them are reform principles i think that you need to be thinking about are these social security should continue to guarantee that americans who work and pay for the system receive benefits based on what they earn and contribute that social security benefits should keep up with inflation have that adjusted cola issues and there's a question of how we should adjust that does it properly reflect what the needs are and what the real inflation is in the use that people have of the things that they need so that's a question about how to change the system a bit and so security needs to stay stable as a stable financial ground and any adjustments should be implemented gradually so people can plan for their future that's one of the key things and the tragedy that we've seen lately and we saw even in history until one thousand nine hundred eighty three was that there was procrastination that went on in congress in the months of people until there was a crisis and of course only at the point of a crisis did people begin to kind of get their act together maybe just maybe if you're optimistic we might be able to try and do something now so that we  can change in the justice system and make sure that it's there for the young people that are in this room i think that's terribly important couple of recommendations to be considered and i would merely ask you to take a look at both sides of these  what about raising the age of five for retirement when i got my full retirement social security was sixty five years and ten months it's going to be sixty six years for you tom i think  it's going to sixty seven there's a question of whether should go to sixty eight possibly deny to seventy people are living longer i have to tell you though the for many people particularly low and medium income people live working full time until seventy is a tough tough business and quite frequently if you have downturns in the economy people are laid off and if you're laid off when you're fifty six to sixty five guess what folks you've got a hard time getting that job back so the real challenge is would that be a proper kind of reform raises social security income tax cap right now it's capped at one hundred thirteen thousand dollars after that after you make one hundred thirteen thousand dollars you don't pay any more into the system and there's a question that that doesn't really reflect the ninety percent figure of the contributions that was set out in one thousand nine hundred three amendments  if we were to raise that cap to another seven percent or so and get it to the ninety percent that would take care of about forty plus percent of the deficit that is looming ahead of for social security so that's that's another issue that needs to be a look at and and then finally talk about raising the payroll tax rate and there is some question there as to whether or not in order to have additional income into the system  that there should be an increase in those taxes and some proposal say that that would also help if you combine that with the change of the cap you might very well take care of all of the  problems that social security has over the next twenty to thirty to seventy five years i'm not going to go much further because i want my colleague to visit a little bit there are couple of things tom you mentioned one about the  australian experience and again here i think you need to go back and do some research australia has a rather interesting way of approaching retirement and there are plenty of ideas there that i think are good fodder for us to be thinking about one thing that i did notice comes back into some of my experience with the consumer financial protection bureau the australian trustees are worried about a thing called financial literacy the ability of individuals at elder ages to make sound financial decisions to understand the risk management because in their system they have quite a few opportunities for people to individually invest during their working years and the concern is if they don't make wise decisions at that point will they have sufficient funds when they get to the age of tyrant and so they've been challenge with that i have to tell you that's exactly what the office of older americans was  looking at and try and we've been mandated by congress to do is to look at financial literacy and to help states and local schools and others develop the kind of programs in that area just very briefly  medicare medicaid let me just ask one question if germany and the united kingdom can have lower costs and better outcomes why can't we there's there's plenty of reasons why there's also excuses and what we need to do is come to grips with many of these issues the idea of medicare and medicaid is fundamental to taking care of people particularly those that are a low and moderate income and we need to make sure that it is well funded we have real serious challenges in these areas and we need to be able to come to grips with those i'm going to stop now because if you let a humphrey goal will be here till dinner is no damn when you're in the political realm you have to learn and some of us it takes a while to learn this i know it was true in my case to give a century the same speech in five minute fifteen minute and fifteen minute increment so i'm going to do my best to stay between the five and fifteen minute parameter here you know i think fundamentally skip and i agree about the value of security medicare medicaid i think we also agree as you heard in his remarks that we've got some challenges and the sooner we address those fiscal challenges the better because the longer we delay the more difficult the solutions become so that we're in total agreement all of us of course have personal experience with these programs and understand the value of them my father passed away at age fifty two so my mother entered her retirement years with really not much of a nest egg to live off of she's essentially living on social security and nothing else in her monthly check is perhaps seven hundred fifty bucks so it matters a lot for elders in our country to have at least some safety net below which they cannot fall i have a youngest brother who is and mentally disabled so he's benefited from the disability program all these years is that a big check no it's not a big check but he's able to live with some dignity and have income to pay for his basic needs so we know these programs have value but we also know that they have physical challenges i'm reminded of the joke about only and lena and ollie was slow to get in with new technology but he finally bought a cell phone so on his way home from leno i'm on my way home and she says ollie i have to warn you as you're coming home on interstate thirty five there is someone there but evidently driving the wrong way and he says someone driving the wrong way hundreds of people i drive into the wrong way and i tell that story simply to relate that you know we got these challenges coming out of us and  they're there for all of us to see and yet in the political realm we don't seem to have enough leaders that are helping us understand these challenges or to look at the options i handed out a sheet and i want to draw your attention to this and i do apologize or one or two statistics on the sheet that are not that are not as they should be and i'll try to cover that correction as we go along but the bottom line to me is what's happening with  demographics so if you understand our program today we have a roughly not quite enough money coming into the so security system annually to pay on your benefits we're actually a little bit shy about twenty eight billion dollars shy of what we need to bring in each year and and so i draw that your attention because this program is supported by our payroll taxes ten point six percent of in the year two thousand and ten it was three to one by the year two thousand and twenty it will be two to one so there again something's gotta give because current revenues are already insufficient to pick current benefits  we do with all these new costs driven almost exclusively by demographics the second category i touch on the so security and you'll see that the end of costs will security six hundred seventy nine billion you can add to that another hundred forty three billion for the disability program and there's a dedicated one point eight percent tax to pay for that but get this that program is already costing more than it's revenue is providing and they're drawing on what was a trust situation and so security at six hundred seventy nine billion a year in costs is only collecting something shy of that in revenue  do have a trust fund to draw on and that's why we've got some time but bear in mind that we have a roughly five hundred billion dollars budget deficit so if we want to point six trillion dollars to the trust fund and over the next number of yours we're going to restart that money the trust fund so benefits can be paid out of the so security system where do we get the money to repay the trust fund because we borrowed that two hundred two point six trillion dollars you're by your by you're over the last three decades it's not cash in the bank that we can draw on it's an iou that we have to replenish and so we're essentially with every dollar we have to put back into the trust fund to have enough money to pay so security benefits we're borrowing other dollars in order to repay the money we borrowed it is sort of like paying off one credit card with another so we're already at that point yes there's a trust fund but it's not cash in the bank it's the rest of the budget repaying the money that took out of the trust fund over the last th and by twenty thirty three even if we rely on this trust fund to keep benefits glowing when the trust funds gone the underlying law says now you have no option except to pay only the benefits that you can afford with the annual payroll taxes and with the trust fund is gone and payroll taxes were to remain at the same rate they are today in the year two thousand and thirty three will have only enough money to pay seventy seven percent of benefits i don't think we're going to cut twenty five percent your benefits over night but technically that's where we'd be at in just two short decades medicare medicaid is the next category that i shared and here's one of the questions i want to offer the first line should say medicare part a and your costs are two hundred sixty six billion if you want all the costs of the entire medicare program part a part b part d c is doesn't really count because that's really how you get medicare paid for through a private insurance plan but it's two hundred sixty six billion just for medicare part a which is paid for by the medicare pay tax which is two point nine percent and then all of medicare is five hundred seventy six billion annually but our annual revenue for medicare part a program is only two hundred twenty billion dollars so as you can see we've already been in the red in the medicare program but here again we have this trust fund that's been built up over time but over time that trust fund gets exhausted as well so the bottom line is current payroll taxes for medicare are no longer sufficient benefits in medicare part a and we're already in every dump mode in terms of paying money back to the trust fund so that we can honor our commitments under medicare part of the medicare trust fund balance is two hundred five billion it'll last us a while but it's gone in twenty thirty medicare part d which has its own dedicated payroll tax you've got medicare b which is paid for twenty five percent by the premiums that seniors have deducted from their monthly so security check and seventy five percent is paid for from the general fund just remind you one more time the general fund is five hundred billion dollars in the red so how are we paying for those general fund costs some of that is deficit spending and medicare part d is the drug program how much of that is paid for by the premiums paid by the seniors themselves fifteen percent the rest is general fund money and the general fund is in the red so i mention all these things just to give you this understanding that everything else we think of as government comes out of the general fund and when we need general fund dollars to pay for our entitle me that legation so security medicare and in a moment i'll mention medicaid those dollars compete with one another and all these other programs transportation education environmental protection agricultural programs food stamp programs you name it are easier to cut because we allocated for those programs annually and it's very infrequent that we ever cut the entitlement programs so if the head of the programs held all these needs they sort of got the first claim on every dollar and everything else tha gets squeezed that's why these programs have some relevance to all the other programs in our federal budget so let me mention just one other statistic about medicaid it is kind of a fifty fifty deal with the federal government pays half the cost states pay half the cost roughly it's designed for low income individuals but increasingly this is shifting toward low income senior citizens it used to be mostly unemployed families families with disability issues whatever it might be but now about twenty five percent of the enrollees are seniors and thirty two percent of the cost is for their long term care well here again if you've got if you've got forty million seniors today you're going to have seventy two million in about a decade and a half that twenty five percent is going to look closer to fifty percent and that one third of medicaid cost is going to be like two thirds of the medicaid costs things things are going to shift very rapidly so that's the context the last thing i want to share with you is is how this is just put some numbers around how the entitlement part of the budget crowds everything else in the budget in one nine hundred seventy thirty one percent of our budget was in title of programs so security medicare medicaid being the biggest was in title of programs and by the year twenty thirty when the baby boomers are fully retired if you add to so security medicare and medicaid the cost of the interest on our national debt and virtually all of our budget is total programs so these are the challenges that skip was hinting at when he mentioned that we need some options and he listed some of the options that need to be discussed but i don't hear any candidates for office talking about any of those options right now that we're talking about but my first year in congress was nine hundred eighty three and we looked at a crisis situation because back then we had no trust funds to buy a some time we had a cash flow deficit in so security and we passed a bill that they have essentially three things that the laid cost of living adjustments for current retirees it gradually raise the payroll tax on current workers and that delayed by one and then ultimately two years from sixty five to sixty seven the retirement age for the baby boomers and it bought us about twenty five years of cash flow balance and it's going to buy us about another fifteen years of trust fund balance but my point about that is every generation in that solution paid part of this part of the cost toward the solution and how is that possible then because we had a republican president reagan and a democratic leader in congress tip o'neill of massachusetts the speaker of the house who said we needed to get something done and they took the politics out of the issue and we need to get back to that today before it's too late so we're going to open this up for questions for two speakers and no one person give me a question i'm not going to read the entire thing but let me just try this on for size this idea of political party have a plan to control spending that's been apparent to both major parties outlined particularly in terms of dollars and everything and there is no doubt that there are inefficient sees within all of the systems and we certainly can find a cost controls that will help this system work i personally do not want to see benefits cut i know that we've got a politics where we've got to come together and we've got to find a way to deal with this but let's understand something my good friend here talked about the budget there really are two budgets social security in particular has never been a part of the federal government's budget in the sense that it is a separate system there are people that pay taxes into it there's interest earned on the bonds that are sold and all the rest it's a separate system and i don't think we should be looking at this as a combined effort that we're just go shift things around now the impacts are exactly as tim has mentioned we've got to face the reality that if we don't have a trust fund to draw on guess what those bonds are going to come due and if you believe in the words of full faith and credit then it means that you're going to pay back those bonds and those month that money is going to come from the federal budget so it's tied into it but i hope you understand the concept that  retirement system was to operate and does operate on its own now it has its own problems and we've got to come around and find a way to fix those problems and we have as tim has said maybe two decades to kind of work on that and get it done it was done in one thousand nine hundred three there were amendments further that were made in the ninety's and there's no reason why we can't come to grips with those in the future and frankly probably all of us are going to have to pitch in over a period of time now one of the suggestions that i had mentioned if you if you just raised that that tax over a longer period time it's like about it amounts to about fifty cents more a week over twenty years now i think we can all pretty much dip into the fine twenty fifty cents a week most of us can maybe mitt some of us ought to pay a little more than that but the reality is if we if we solve the problem today tomorrow in the very near future we can deal with the situation if we wait fifteen years twenty years we're in big trouble trouble big thanks kev the the the overarching question was whether election cycle is that anybody that ever votes to cut spending is usually attacked as if spending history but spending has consequences and so you really had at least a listen  deficits were growing during those years so when they had control of the white house senate and the house they did they didn't bring democrats down and so it's easy to blame my former party i'm an independent now for being you know tax and stand your devastates fan whatever you might say my democrats but republicans had it all for six years and made no headway on this issue they actually added even though a lot of people like that medicare part d and then they provided fifteen percent of the revenue we need to pay for the program so you know there you go and i'm disappointed this year that there are actually attack ads against democrats that are endorsing what has been term the simpson bowles commission report which tries to deal with budget in total including tax reform including entitlement reform and there are a handful of the president actually said they like a lot of what's in the book simpson plan and now republican interest groups are attacking those democrats not because they necessarily disagree but because they want to beat those democrats so it's it's too bad every election cycle we get out of this but so you have spending control is needed but i think the problem is so large now that i don't think we can solve it strictly new spending restraints there's going to have to be some discussion of revenue and i don't think just taxing the rich is the only way that we need to look for revenue we're all in together these are programs that we all rely on and has done i never quite quite understood why i haven't asked him this yet but i think you know when we were in the state legislature together we had some simple accounting go more simple accounting this put it this way we had a capital budget that allowed us to look for the longer term issues and then we had an operating budget you know congress lumps it all to do together talk about confusion one on one it's there big time i still don't understand why that happens i'm sure there is some place somebody out of harvard that can explain it to you but the reality is that we have we have to face the issues that you're dealing here raising i do think this i would hope that we never get to a point where we cannot afford or keep the promise that was made to ensure that people have at least the base amount of need to meet their base amount of needs and that's what social security medicare medicaid is all about they keep going to you can argue about how we're going to raise the money or cut or whatever but we need to have that in place there isn't  an established civil society that doesn't have something like that and certainly i think the united states will have and so i would hope that in your planning you can least let your clients know that there's going to be social security there no it's a serious question of whether we should change the structure and the foundation of social security from a bargain if you will you are mandated to pay and when you  and work them government comes and takes your money and for that you have a right you have an entitlement to get money back according to the formulas and the structure of the system a means based system which basically shifted to become a true welfare system and i don't think that's what the country itself wants at this point it could happen i don't think that's what we want i think people like the idea of social insurance you buy the insurance you pay and you get something out and whether you're bill gates or skip propre or sam whatever that's barely making any money at all you get something as long as you've worked well like my six years in the state senate is that we have a balanced budget requirement right and so you know obviously over time and we've seen gimmicks and games played with that but you know shi as because the problem is so large the tax side fix this problem but i don't think it's going away i just don't see america walking away from this commitment to safety net for retirees but there will be some tweaks that will that i've provided one of the things that you should look at is the most recent report of the social security and medicare trustees and they look out they are actuarial studies squat seventy five years so we're talking well beyond baby boomers ok even at the end of that time we are in deficit we've got major problems so the structural changes that need to take place yes they're aggravated during a period of time with the baby boomers who are still around after we're gone folks and maybe eases up a little bit but it doesn't go away and so we've got to come to grips with that now and it will be aggravated and be worse if we don't deal with it now  and the biggest problem here i think to be honest about it is congress for sure and to have a president that works with congress we've got to come to grips with these issues and people need to see it as a as a and as important concern right now not later and that's that's hot that's a hard sell so hard sell given the political atmosphere that we're in these days tim and i were just mentioning we were visiting a little bit remembering a few times by the fact that you know when we were in the state legislature and i think even today there is a good part of that people are still focused on solving problems they've got a point of view they maybe have an idiot logical point of view but the reality is because of the balanced budget requirement and others they come to grips and try to solve the problem we don't have that discipline nationally we need to have that and i don't know what the causes are we could go on about is a big money is whatever there's all sorts of reasons but somehow or another americans have to get back to the future of solving problems grace problem solvers when we have the focus shortfall twenty three percent gap in honor of revenues against our costs or our benefits in the program but it gets bad because of the baby boomers it doesn't get better  after the baby boomers age with that yeah remains so that's that's the whole we have to deal with any questions from our young people anybody everybody's living in the same household basically you took care of your parents most of the generations under the same roof but it was just different social safety net was provided within the community and within families back in those days  decided the economy changed over time and we were actually behind other nations in putting together a kind of a and security so it's not going to go away in a perfect world i wouldn't mind having a social security but a truly safety net where it's just a very basic benefit level and on top of that the money you pay goes into an investment account that's yours in you on it and it's actually invested in the stock market that and take some tax revenue from taxpayers and put it into such an account but i i don't i don't know how we get to that point again so about the only thing we can do now is to say whatever we d certain and for many people the most tragic of all hazards so they were already accepting that it was a difficult time for people in one nine hundred thirty four but then he went on to say there is no tragedy in growing older but there is tragedy and growing old without means of support and that's really what what what forced our country to catch up with other countries and to move ahead on this is to say we need a pound a nation at least where that foundation would be his gun good question and i'm sure there'd be a player debate about that but in order to have a workable democracy we need to have a level of security that allows individuals to participate in that system if you are so destitute and so out of any way of handling anything other than the bare absolute bare necessities and maybe not even that you're certainly not going to be much of a democrat with a small d or republican with a small r or an independent was a small i still i would i would say this is the we absolutely have to have that net it's just a question of well several several ways to approach this one is just is just at home have a conversation with your parents and grandparents about this program all right and in doing so  your own brains around you know what's going on in the revenues and the cost of the program and have an honest discussion with them what do we do about the increased costs that are that are going to be there because of the  generation but there's not enough revenue to take care of that and yet what solution have them think about the solution would they be comfortable with that would be for you karajan you so that's one thing the other thing is in addition just in school you know talk to your civics instructor or maybe doing research projects on this issue and having you look at the  your own understanding you've got opportunities to explore that think about groups or organizations you conciliate with that are trying to do something about this and i'm trying to think right now that i think kickstand is a national organization led by young people and they're basically saying we've got to do something now and we got it something that started all generations so let's not put it off any longer and to join organizations like that and then you get the blogs and you get their information on a regular basis those are things you can do and then try to listen with a discerning reader with all the politicians are saying and they ask you to vote for them for congress or fan and see which ones seem at least open to acknowledging that we've well i couldn't agree more with ten month this just couple of things one of the references is from the social security administration web site and it's untitled social security is important to young people so a look and i i would agree one hundred percent with him don't stand back and say well i'm not voting this year i'm not old enough or i'm not going to participate get in there and get in the fight start asking questions next time you see a candidate raise your hand and say what are you going to do about social security what about medicare let them understand that you are the people that have more instead at stake than anybody else i've i've i've engage and to come to grips with this now since i have been putting one last time i got a show he had a great i love all the jokes there are just great but i found these last week i have this calendar from the new yorker and i think that kind of says the kind of progress is out on here it should say congress and the second one is and this is august twenty ninth literally it was like someone from new york was saying i'm very we know what you're going to talk  but here comes the young the man is sitting on the couch and he's talking to his i think whites and saying can we do now later once again the same thing we've got to act now we've got to raise these issues now we have to keep it in front of people now not and not in a crisis situation and their tough issues we have to raise this question of do we  raise the costs taxes do we cut benefits and subway how do we do that if we have to do both of those how do we do it over a period of time who should get greater benefits and less of that but the reality is we have to confront it and i really appreciate your question about that let's give these two gentlem