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70–888 2011

HEARING ON SOCIAL SECURITY’S FINANCES 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JULY 8, 2011

Serial No. 112–SS6 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON SOCIAL SECURITY 

SAM JOHNSON, Texas, Chairman 

KEVIN BRADY, Texas 

PAT TIBERI, Ohio 

AARON SCHOCK, Illinois 

RICK BERG, North Dakota 

ADRIAN SMITH, Nebraska 

KENNY MARCHANT, New York 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

SHELLEY BERKLEY, Nevada 

FORTNEY PETE STARK, California 

JON TRAUB, Staff Director 

JANICE MAYS, Minority Staff Director 


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C O N T E N T S 

Page 

Advisory of July 8, 2011, announcing the hearing ................................................ 2 

WITNESSES 

Sylvester Schieber, Ph.D., Independent Consultant, New Market ...................... 10 

Thomas S. Terry, President, T. Terry Consulting, on behalf of the American 

Academy of Actuaries .......................................................................................... 19 

C. Eugene Steuerle, Ph.D., Senior Fellow, Urban Institute ................................ 30 

Joan Entmacher, Vice President for Family Economic Security, National 

Women’s Law Center ........................................................................................... 45 

Charles P. Blahous, Ph.D., Research Fellow, Hoover Institution ........................ 58 

Barbara Bovbjerg, Ph.D., Director for Education, Workforce, and Income Security, U.S. Government Accountability Office .................................................. 69 


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(1) 

HEARING ON SOCIAL SECURITY’S FINANCES 

FRIDAY, JULY 8, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON SOCIAL SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:02 a.m., in Room 

B–318, Rayburn House Office Building, the Honorable Sam Johnson [chairman of the subcommittee] presiding. 

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

Chairman Johnson Announces 

Hearing on Social Security’s Finances 

Friday, July 08, 2011 

U.S. Congressman Sam Johnson (R–TX), Chairman of the House Committee on 

Ways and Means Subcommittee on Social Security announced today that the Subcommittee will hold a hearing on Social Security’s current benefit expenditures, proposed changes to future benefits and the impact those changes would have on the 

program, future beneficiaries, workers, and the economy. The hearing will take 

place on Friday, July 8, 2011 in B–318 Rayburn House Office Building, beginning at 9:00 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. A 

list of invited witnesses will follow. 

BACKGROUND: 

The Social Security Act (P.L. 74–271) was signed into law by President Franklin 

D. Roosevelt on August 14, 1935. Initially, Social Security was focused on the income needs of retired workers age 65 and older. Soon, protections for other vulnerable populations were added. The Social Security Act Amendments of 1939 (P.L. 76– 

379) shifted the emphasis from protection of the individual worker to protection of 

the family by authorizing payments to the spouse and minor children of a retired 

worker, (dependents’ benefits) and survivors’ benefits to certain family members in 

the event of the death of a worker. The Social Security Act Amendments of 1956 

(P.L. 84–880) created the Social Security Disability Insurance (SSDI) program to 

provide protection against economic insecurity resulting from a disabled worker’s 

loss of earnings. 

Social Security continues to play a key role in preserving the economic security 

of Americans. About one-in-six Americans receives a Social Security benefit today. 

For a third of the elderly, Social Security is virtually their only income. Poverty 

rates among the elderly fell from 35.2 percent in 1959 to less than 10 percent in 

2008—a reduction of almost three-quarters in the last 49 years. Younger workers 

and their families receive valuable disability and survivors insurance protection. In 

fact, about one-in-three Social Security beneficiaries is not a retired worker. 

According to the 2011 Annual Report of the Social Security Board of Trustees, in 

calendar year 2010, 54 million retired workers and their families, disabled workers 

and their families, and survivors of deceased workers received $713 billion in Social 

Security benefits. By 2035, Social Security costs as a percent of GDP will increase 

28 percent, from 4.85 percent of GDP in 2011 to 6.22 percent of GDP in 2035. 

The 2011 Annual Report of the Social Security Trustees again highlighted the financing challenges facing the Old Age and Survivors Insurance (OASI) and the Disability Insurance (DI) programs. The trustees project permanent and growing cash 

flow deficits and estimate that by 2036 the combined OASI and DI Trust Funds will 

be exhausted. At that point, revenues would cover only 77 percent of benefit payments. The DI Trust Fund is projected to become exhausted in 2018, at which time 

revenues would cover only 86 percent of benefit payments. The Public Trustees expressed the need for action soon in order to be able to protect vulnerable populations 

and those at or near retirement age. 

The Social Security actuaries have estimated a number of proposals to adjust benefits, including those put forward by the President’s Fiscal Commission, including: 

making the retirement benefit formula more progressive, providing an enhanced 

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justment (COLA) by shifting to the ‘‘chained CPI,’’ increasing benefits for aged beneficiaries, and gradually increasing the early and full retirement age. 

In announcing the hearing, Subcommittee Chairman Sam Johnson (R–TX) stated, 

‘‘We need to make sure Social Security is safe, secure and sustainable. Congress must act and the sooner we do so, the sooner we can protect those 

who are most vulnerable, including current retirees and those nearing retirement. And for younger workers and families, we have a responsibility 

to provide certainty about the future of their Social Security.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on Social Security’s benefit expenditures, how benefits have 

changed over time, options for change, and their impacts. Also, efforts by the SSA 

to inform workers of their future benefits through the Social Security Statement will 

be examined. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close 

of business on Friday, July 29, 2011. Finally, please note that due to the change 

in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries 

to all House Office Buildings. For questions, or if you encounter technical problems, 

please call (202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. I69

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 


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The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. Note: All Committee advisories and news releases are available on the World Wide Web at http:

f 

//www.waysandmeans.house.gov/. 

Chairman JOHNSON. Good morning to all of you. We are going 

to try to crank this hearing up on time, so I am going to bring the 

hearing to order. 

We heard a few weeks ago from the public trustees that unless 

Congress acts, in 2036 Social Security revenues will only cover 77 

percent of promised benefits. Congress needs to act, and the sooner 

we do the sooner we can protect those who are vulnerable. 

Republicans and Democrats agree on this much: current benefits 

should not change for those in or near retirement. All their lives, 

they have worked hard and played by the rules. They deserve the 

peace of mind, knowing that Social Security will be there for them. 

But young people deserve peace of mind, too. At our last hearing, 

the subcommittee looked at options to raise payroll taxes to address these challenges, and heard that these options don’t promote 

savings, reward, work, or permanently fix Social Security’s shortfall. 

With chronic unemployment, falling incomes, and so many young 

people unable to find work, nothing we do should make it harder 

for Americans to find good-paying jobs. Today we will learn more 

about Social Security’s benefits, proposed changes to benefits, and 

their impact on future beneficiaries, workers, Social Security’s finances, and economic growth. 

Since the beginning of the program, benefits have been based on 

workers’ lifetime earnings. The formula that determines benefits is 

designed to replace a higher percentage of career earnings for lower 

earners. Benefits are increased almost every year to keep pace with 

inflation through cost of living adjustments. 

Social Security first paid monthly benefits in 1940 to a lady 

named Ida Mae Fuller, who worked for just 3 years under Social 

Security. Her first monthly check was $22.54. But her check was 

not indexed for inflation, and her lifetime benefits for her and her 

age group were soon supported by a surge of young workers. During her lifetime, she collected nearly $23,000 in Social Security 

benefits. 

Today 55 million Americans receive benefits, averaging over 

$1,000 per month. By 2035, over 90 million will receive benefits. 

Benefits are more generous, but the number of beneficiaries will 

rise much more rapidly than the number of workers, now struggling in today’s economy, who will need to support them. 

The reality is there is simply not enough young workers to support the Baby Boomers who are retiring at the rate of 10,000 a day 

for the next 19 years. Social Security also provides essential income 

to workers’ families. Spouses, children, and survivors are all eligible for benefits. In fact, 1 out of every 13 beneficiaries receives family benefits. 


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Many of our witnesses will review how America and Social Security have changed over the past 76 years. Today, people are just 

living longer. That’s nice, isn’t it? 

[Laughter.] 

Chairman JOHNSON. When Social Security was created, Americans lived, on average, to 64. And Social Security’s retirement age 

was 65. According to the actuaries, had Congress tied Social Security’s full retirement age to increases in life expectancy from the 

beginning, instead of being 66, it would be close to 71. However, 

I know that the life insurance guys tell you you’re going to live to 

be 100 nowadays. No wonder members on both sides of the aisle 

have expressed support for raising the retirement age. 

In 1935, Social Security was born amidst a great economic crisis, 

The Great Depression. Then none other than FDR said that Social 

Security can furnish only a base upon which each one of our citizens may build his individual security through his own individual 

efforts. In other words, Social Security benefits were intended to 

provide a modest safety net. In these challenging economic times, 

FDR’s statement still rings true. While everyone who pays into Social Security should receive a benefit, not everyone relies on Social 

Security. Whatever solutions Congress may ultimately consider, we 

must protect those who depend on Social Security the most. 

In the meantime, until Congress acts, workers and their families 

are challenged to plan for their retirement. An important tool in 

their planning is the Social Security statement, which includes a 

worker’s earnings history, and estimated future Social Security 

benefit. It’s the main document that Social Security uses to communicate with over 150 million workers about their future benefits. 

Today, we will hear from GAO regarding the results of their review 

which was done earlier this year. New Americans want, need, and 

deserve this certainty that Social Security will be there for them. 

I am confident, by working together, we can provide that certainty. 

I thank all our witnesses for joining us today, and look forward 

to hearing their expert advice on ways to move forward. 

And we are expecting votes around 10:00 or 10:15 this morning, 

so we are going to try to work you all in, and I would implore all 

our members to commit to 5 minutes. 

You are recognized for five minutes, Mr. Becerra. 

Mr. BECERRA. Mr. Chairman, thank you very much. Today’s 

hearing illustrates a basic question of right and wrong. Social Security has never contributed a dime to the nation’s $14.3 trillion debt, 

not a penny to our federal deficit this year, or any year of our nation’s history. Yet, some in this town insist that we should cut Social Security benefits for seniors to pay for these deficits, deficits 

run up over the last 10 years, principally as a consequence of fighting two unpaid-for wars, and giving unpaid-for tax cuts to millionaires. 

Most Americans would say it is immoral and un-American for 

this congress to tax Peter to pay for Paul’s sins, to make retirees, 

widows, disabled workers, and children who rely on Social Security 

pay for the Bush debt. How can that be right? 

Here is a simple truth. Today, Social Security has over $2.6 trillion in its trust fund, entirely generated by worker contributions. 


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Over its lifetime, Social Security has earned $14.6 trillion, and only 

spent $12 trillion. Do the math. 

As a result, Social Security has enough income in reserves to pay 

full benefits to our seniors for the next quarter century, and about 

3/4 of benefits after that. Social Security is not broke, and it will 

not go bankrupt. That is because, unlike the federal operating 

budget, Social Security cannot deficit spend. Nor will it ever face 

its own debt ceiling crisis. 

Our challenge is to address a manageable shortfall in Social Security after 2036. The size of that shortfall is about the same size 

as the cost of keeping in place the Bush tax cuts for just the 

wealthiest two percent of American taxpayers. 

Preserving Social Security for the future is simply a matter of 

priorities, a matter of right and wrong. What is wrong is cutting 

Social Security benefits for people who worked hard all their lives 

to earn benefits for themselves and their families. It’s especially 

wrong if you are cutting their Social Security in order to pay for 

tax cuts for millionaires. 

Social Security benefits are very modest, and most seniors have limited incomes. The average benefit for a retiree is $14,000 a year. 

Six out of ten seniors rely on Social Security for more than half of 

their income, and nearly a third have virtually nothing else to 

count on. As people get older and begin to outlive their other retirement savings, they begin to rely increasingly on their Social Security paycheck. 

The benefit cuts Republicans have put on the table this year 

would have devastating consequences for today’s seniors, and for 

the 155 million future beneficiaries who are paying into Social Security today. 

In our last hearing, we learned from Social Security’s chief actuary that, under the Social Security privatization bill, H.R. 2109, introduced by Congressman Pete Sessions and other members of the 

House Republican leadership, Social Security’s ability to pay benefits to current beneficiaries would be ‘‘severely compromised.’’ 

If we enacted the Republican bill, current seniors might not get 

the monthly checks they earned through a lifetime of work. In addition, the chairman of the House Budget Committee, Republican 

Paul Ryan, has a plan to privatize Social Security, to raise the retirement age, and to cut benefits for the middle class. And House 

Republicans recently voted to create a special fast-track process for 

Social Security cuts. 

It doesn’t end there. The Republican Study Committee, which 

represents about three-fourths of my colleagues on the Republican 

side, including majority leader Eric Cantor, has proposed raising 

the retirement age to age 70, with benefit cuts starting in just 3 

years, 2014, at a time when Social Security will have $3 trillion in 

its trust fund. Their plan would cut benefits for middle income 

workers, and it could easily cost them about $3,400 a year when 

they retire. 

Mr. Chairman, I am grateful that we are holding a hearing on 

Social Security benefits. We need to have a comprehensive discussion on all of the options available to us to strengthen Social Security. Where you stand on Social Security and where you fall on the 

ways to strengthen it will speak volumes about your priorities for 


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our country and for the generation that built the America we so 

love. 

And with that, Mr. Chairman, we look forward to the testimony 

of our witnesses. 

Chairman JOHNSON. Thank you, Mr. Becerra. You know, $3 

trillion is a lot of money. You can’t pay benefits in bonds. Social 

Security needs cash. And I don’t know where Treasury gets the 

cash to redeem the bonds. 

In times of this deficit, Treasury has to borrow it. Today, the U.S. borrows $.40 for every dollar it spends, much of it from the 

Chinese, and sends the bill to our children and grandchildren. 

And—— 

Mr. BECERRA. Mr. Chairman, if I—may I comment on that? 

Chairman JOHNSON [continuing].—Part of that is to cover Social Security—— 

Mr. BECERRA. So this is a piece of paper, like the Treasury certificate that Social Security has. It’s simply a piece of paper. It says 

$20 on it. It’s worth $20 only if the full faith and credit of the 

United States backs it up. 

This is a savings bond, a Treasury certificate my daughter got 

when she was born 16 years ago. It is worth—supposed to be 

worth—$50 if she cashes it in when she turns, I think it is, 18. It 

is a certificate. It is based on the full faith and credit of the United 

States. It is worth money, versus this envelope or this piece of 

paper, simply because we say we are going to have the full faith 

and credit of the United States back it up. 

But whether it is this or this, or the Social Security’s Treasury 

certificates, or the ones that China has, or Japan has, we either are 

going to follow and live up to our obligations and our debts, or we 

are not. But to say that the trust fund’s $3 trillion are mere paper, 

but this paper is worth money and China’s paper is worth money, 

I think is an egregious way to tell seniors that they have paid into 

a system, and to make them believe that it is not there for them, 

and for our kids, as well. 

My daughter relies on this $50 savings bond just the way that 

she is going to rely on Social Security. 

Chairman JOHNSON. Okay. Before we move on to our testimony 

today, I want to remind our witnesses to limit their oral statements 

to five minutes, please, and be advised that, without objection from 

this gentleman here, your statements in writing will be entered in 

the record. 

Mr. BECERRA. No objection. 

Chairman JOHNSON. No objection. We have one panel today. 

Our witnesses are seated at the table, and they are Sylvester 

Schieber, an independent consultant from New Market, Maryland. 

Yes, thanks for coming to Washington. 

Thomas Terry, president, T. Terry Consulting, on behalf of the 

American Academy of Actuaries. 

Eugene Steuerle, Ph.D., senior fellow, Urban Institute. 

Joan Entmacher, vice president for family economic security, National Women’s Law Center. 

Charles Blahous, Ph.D. research fellow, Hoover Institute. 

And Barbara Bovbjerg, Ph.D., director for education, workforce, 

and income security, U.S. Government Accountability Office. 


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Thank you all for being here. 

Dr. Schieber, you may proceed. 

STATEMENT OF SYLVESTER J. SCHIEBER, PH.D., 

INDEPENDENT CONSULTANT, NEW MARKET, MARYLAND 

Mr. SCHIEBER. Good morning, Mr. Chairman, Mr. Becerra. 

Thank you very much for inviting me here today, Members of the 

Subcommittee. 

My remarks today will focus on the need to modernize Social Security’s benefit portfolio to improve the effectiveness with which 

the program meets one of its long-term specified goals, one of the 

ones you mentioned in your opening remarks, Mr. Chairman, the 

redistributive character of the program. 

In the opening analysis in my submitted remarks, I show how 

the retirement system has gotten more costly over time. The results in table one of this submission show that an individual retiring today will have borne payroll taxes relative to lifetime earnings 

more than six times those of a worker retiring in 1955. 

In your opening remarks you mentioned Ida Mae Fuller getting 

the first Social Security benefit. When she retired she had paid $25 

in lifetime taxes into Social Security. She did fairly well under the 

program. Today the participants are not doing quite as well. 

If you add in the supplemental cost of saving for an adequate retirement income, the cost of retirement today has tripled over what 

it was in 1955. These costs will automatically continue to climb 

under current law for at least another decade. Add in health costs, 

and today’s workers are facing claims exceeding one-third of their 

lifetime pay, just to cover retirement and health costs. And that is 

before we address the under-funding of Social Security and Medicare that I know you are all aware of. 

While retirement security is important, we should not lose sight 

of the need to preserve the prospects of some prosperity gain for 

workers in the future. We cannot simply address our financing 

issues by throwing more costs at workers. Some of our financing 

shortfalls can be addressed by making Social Security more consistent with the stated goals, and modernizing it to correspond with 

21st century realities. 

The benefit formula established in 1935 was intended to provide 

relatively higher benefits compared to earnings for low earners 

when you compare it to those with higher earnings. At least a 

dozen different times since 1935 Congress has reaffirmed that commitment. 

Table two in my formal submitted remarks shows estimates prepared by the Social Security actuaries on what they call the system’s money’s worth. The calculations are for persons born in 1949 

and compare the value of their expected lifetime Social Security 

benefits at age 65 to the accumulated value of payroll tax collections on lifetime earnings. 

Numbers in the table that are greater than one suggest some 

segment of the 1949 birth cohort will receive more in expected lifetime benefits than the value of their contributions. Those numbers 

less than one suggest the opposite. If you look at the values for 

one-earner couples, you will see that they can expect to do much 


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better at every earnings level, on average, than their single counterparts or married individuals in two-earner couples. 

Where the one-earner couple is a higher earner, the system provides relatively higher benefits than for low earner single workers 

or two-earner couples. In a program that is intended to pay relatively higher benefits for lower earners, this is an inconsistent result with the stated goal. 

In the third table in my presentation I factor in supplemental 

savings, the tax benefits for employer-sponsored savings, and this 

result carries through the whole system. 

In my formal statement I cite two significant empirical studies 

that have documented that the spousal benefit feature is essentially defeating the redistributive feature embedded in Social Security’s benefit formula. The reason that these results have arisen in 

recent decades is because the spousal benefit tends to be concentrated among higher earners. Families with low earning levels 

often have little choice but to send both members of a couple to 

work in order to make ends meet. 

Partly, this is so today to a greater extent than in the past, because many modern workers have to surrender so much more of 

their earnings to cover Social Security and their own retirement 

savings and health insurance costs that economic circumstances 

leave them no choices, but that both spouses have to work to cover 

family needs. 

For most workers today, the spousal benefit has little or no economic value, but renders their treatment unfair, relative to those 

who benefit from it and pay nothing extra for it. Either we should 

quit the pretense that Social Security is redistributive, as Congress 

has repeatedly specified in the benefit formula, or we should make 

the actual structure fit the stated intent. 

Another change to the benefit structure that is important then 

is—and should be considered in modernizing Social Security—is 

the introduction of a true joint and survivor benefit for married 

couples. The operation of the spousal benefit partially covers this 

void now. But by perpetuating its inequitable existence, and mitigating the need for a joint survivor benefit, existing policy propagates another inequity. 

Today the longest-living spouse in a two-earner couple receives 

little or no benefit in consideration of the deceased spouse’s income 

and participation in Social Security. This makes the benefit in single-earner couples an even more glaring problem. 

The Retirement Equity Act of 1983 required that private employer-sponsored pensions offer a joint and survivor benefit, and 

the only way that it can be waived is by both persons actually 

waiving the benefit. It can be financed within the structure of the 

benefit itself; it does not have to add expense to Social Security’s 

cost. It would modernize the system, it would make it more equitable, and it would also be more efficient. 

Thank you, Mr. Chairman. 

[The statement of Mr. Schieber follows:] 


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Chairman JOHNSON. Thank you, sir. I appreciate it. 

Mr. Terry, you may proceed. 

STATEMENT OF THOMAS S. TERRY, PRESIDENT, T. TERRY 

CONSULTING, ON BEHALF OF THE AMERICAN ACADEMY OF 

ACTUARIES 

Mr. TERRY. Thank you, Mr. Chairman and Members of the Subcommittee. I am glad to be here this morning. I am here repVerDate Mar 15 2010 08:06 Dec 06, 2011 Jkt 070888 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\70888.XXX GPO1 PsN: 70888

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resenting the American Academy of Actuaries. We are an organization of roughly 17,000 members whose mission is to serve the public on behalf of the U.S. actuarial profession. 

I want to talk—in my five minutes I would like to talk about two 

things. I would like to talk about actuaries and the role of actuaries in assessing the solvency and sustainability of financial systems, and I would like to talk about a position that the American 

Academy of Actuaries has advocated, and that is that the Social Security retirement age be increased. 

First, about actuaries. Actuaries go about the business of evaluating complex financial systems. And we do that by constructing 

models. And these models are designed to gauge the long-term solvency and the long-term sustainability of these financial systems. 

We go about that by looking at the system from the standpoint of 

the principles that seem to be functioning in that system, and the 

assumptions that support that. 

Now, the reason we do that is because we then turn around and 

we project those principles into the future, based on a certain set 

of assumptions. 

Now, as you know, there is talk about actuarial imbalances in 

the Social Security system. Well, those calculations are not hereand-now assessments, because, as we know, there is a $2.6 trillion 

trust fund. This is really a long-term imbalance that we talk about. 

It is actuarial principles and assumptions that give transparency 

into that sort of imbalance. And so, therefore, what we do as actuaries is we examine and explore those principles, and we test those 

assumptions. 

Now, one of the key principles, for example, that the Social Security system operates on is that the current cohort of workers will 

support the current cohort of retirees. That is one of the 

foundational principles upon which the system has been built. 

Now, one of the assumptions that has gone into that system is 

that—right from the very start—is that longevity was a relative 

fixed notion. Back in—as the chairman indicated, back in 1937, 

longevity was what it was. And for people at birth at that age, longevity was—or life expectancy was 64. For those that reached age 

65, their life expectancy at that point was 12 years. 

Fast forward to today. Life expectancy for a 65-year-old is roughly 18 years. That is a 50 percent increase over that which was in 

place in 1937, which brings us now to my second point, which is 

the American Academy of Actuaries and our position around retirement age. 

You know, we at the academy have examined and explored all 

sorts of suggestions, options, alternatives for closing that imbalance, closing that long-term 75-year imbalance. One of the topics 

that has risen to the top of the list that we look at is increasing 

retirement age. And the reason is because we believe it was an assumption that was a fixed assumption back in 1937 that deserves 

re-evaluation today. 

Every actuarial forecast or projection that has been done since 

then has, in fact, updated and anticipated improved longevity, including the forecasts that have been done in the most—you know, 

in the current time frame that takes into account this 50 percent 

improvement in longevity. 


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To restore balance to the system and to maintain that balance 

between the working years and the retirement years, the academy 

believes that it is paramount that, at the top of any list of reform 

items, increasing the retirement age has to appear on that list. 

We are mindful of the fact that any increase or any change to 

the system has to be done with respect to what objectives we are 

trying to achieve, the impact on both near-term as well as longterm retirees. We are mindful of the fact that there are always 

going to be consequences to any change. And to the extent that 

there are consequences, those consequences may need to be mitigated. We are well aware of that, and we stand ready to sort of 

help evaluate any sorts of proposals that may come forward that 

appear in any sort of a reform package. 

So, those are my remarks, Mr. Chairman. 

[The statement of Mr. Terry follows:] 


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f 

Chairman JOHNSON. Thank you very much. 

Dr. Steuerle, you may proceed. 


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STATEMENT OF C. EUGENE STEUERLE, PH.D., SENIOR 

FELLOW, URBAN INSTITUTE 

Mr. STEUERLE. Thank you, Mr. Chairman, Members of the 

Subcommittee. It is an honor to be before you again today. 

As has been commented already by several people, including you, 

Mr. Chairman, since Social Security was first enacted, vast 

changes have occurred in the economy and life expectancy, and the 

health care and the labor force participation of women. We simply 

cannot design a system for 2080 by what we think were the needs 

of a society in 1930. 

That doesn’t mean Social Security hasn’t been a great success. It 

has. But at the margin it is not serving us as well as it could. So, 

consider the following. 

If you count lifetime benefits in Social Security, taking into account the retirement age issues that Mr. Terry just talked about, 

Social Security now provides about $555,000 worth of lifetime benefits to the average couple retiring today. For someone of Mr. 

Becerra’s generation, the average benefits rise to over $700,000. If 

for your generation, if we count in Medicare, it’s over a million, it 

is about $1.2 million or $1.3 million. 

So, what we are really talking about here is the growth in the 

benefits that we are trying to try to figure out how to constrain so 

we can stay within a reasonable system, not cutting back on existing levels. 

In addition, the current system has morphed into a middle-aged 

retirement system. Basically, younger and younger people are—essentially, relative to their life expectancy—are getting benefits. It 

has recently made only modest progress in dealing with poverty. 

It discourages work among older individuals, and we need them 

to be in the labor force. It encourages the near-elderly to spend 

down their retirement income too soon, so it is a threat to the very 

old, and it denies equal justice in all sorts of ways. It discriminates 

against the single working heads of household; against the longterm worker; and many others. 

None of these features—I just want to be clear—derives from any 

conservative or liberal principle. They are just badly designed features that don’t meet the needs of today, and are not well targeted, 

if you are worried about—as I am—about the progressivity of the 

system. 

So, in my testimony I talk about four different types of reforms 

that I think are really important and worth considering. 

One is simply to try to figure out ways to restrict the growth in 

benefits and the growth in number of years of benefits, which is 

largely the retirement age issue. It is not necessarily and issue of 

cutting back on the number of years, but cutting back or limiting 

growth while the system is out of balance. I think we need to really 

think about ways of increasing labor supply. We really need workers in the economy who bring revenues to the Social Security system, who bring revenues to the income tax. 

I talk about increasing the equity and efficiency of the system, 

particularly this discrimination, largely against single heads of 

households, who are often working women, abandoned mothers, 

who basically don’t have access to about a quarter of the system 

for which they pay. 


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And I would also like to encourage you to think about latching 

on some private pension reform—to extend pension coverage to 

lower-income people—as a part of a broader fix of the programs for 

the elderly. 

Very briefly, I first suggest restricting growth when the system 

is out of balance. If Congress would simply put on a rule that says, 

‘‘While Social Security and Medicare are out of balance, we are 

going to cap the total amount of benefits at $1 million per couple,’’ 

the systems would be in long-term balance. It is the growth in the 

benefits well beyond this million-dollar package of benefits per couple that is causing the imbalances. 

Another issue I would address here, as I said, is to gradually adjust the retirement age to take into account that people are living 

longer and longer, because it is having an effect on who is getting 

the benefits. More and more benefits, as I show, are going to people 

further and further from death. Benefits are not well concentrated 

to periods when people’s needs are the greatest. 

I would also index the benefits more slowly for higher-income 

people, although I would favor a strong minimum benefit that is 

wage-indexed for low and moderate-income people. So we could 

really provide an even sounder base of protection for the bottom 

third, or the bottom half of the income distribution. 

I mentioned in the testimony that I would try to encourage greater labor force participation, and that’s where increasing the retirement age, I think, is really important. And that includes the early 

retirement age. Increasing the early retirement age has very little 

effect on Social Security balances, but does a lot, by the way, for 

income tax revenues. It helps us deal with this demographic issue 

of going to a world where we are encouraging about one-third of 

adults to be on Social Security. 

I also suggest all sorts of ways of improving the equity and efficiency of this system. These include, as I mentioned, designing 

strong minimum benefits to really help lower-income people. I 

would move toward actuarial neutrality in designing survival and 

spousal benefits, because that is a major cause of the problem of 

this discrimination against single heads of households. 

And finally, as I mentioned, I would try to add on some private 

pension reform on to Social Security, so that we get some saving 

for this broad mass of middle class people who don’t have much 

saving in retirement. 

Finally, Mr. Chairman, Mr. Becerra, Members of the Committee, 

I would like to note that the definition of a pessimist is someone, 

when he smells the scent of flowers, looks around for a casket. I 

actually think that what you are going through politically these 

days on Social Security, on taxes, on the debt, is very difficult. You 

are having to identify who is going to pay for government, either 

through lower benefits or higher taxes because the promises we 

made in the past just cannot be met. 

But if we take this straightjacket off ourselves, I think we are 

actually freeing up ourselves—and you as a congress—to put resources towards those needs that we consider to be the most important in society. Thank you. 

[The statement of Mr. Steuerle follows:] 


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f 

Chairman JOHNSON. Thank you, sir. 

Ms. Entmacher, you may proceed. 


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STATEMENT OF JOAN ENTMACHER, VICE PRESIDENT FOR 

FAMILY ECONOMIC SECURITY, NATIONAL WOMEN’S LAW 

CENTER 

Ms. ENTMACHER. Thank you, Chairman Johnson, Mr. Becerra, 

Members of the Subcommittee. Thank you for giving me the opportunity to testify on behalf of the National Women’s Law Center. 

I am going to shift focus from the balance sheet of the Social Security program to what Social Security means to the budgets of the 

Americans who rely on Social Security. Two out of three beneficiaries 65 and older get most of their income from Social Security. 

And for one out of three, it is virtually their only source of income. 

That is particularly striking when you realize that the average Social Security benefit is just $14,000 a year for older Americans, and 

it is just $12,000 a year for older women. 

As a result, even with Social Security at its current levels, economic insecurity among the elderly persists, especially among 

women. And their incomes are modest. The median older beneficiary has a total income of less than $21,000 a year. That is total. 

That is about what Jeanette O’Linger in Medford, Oregon, is living on right now. She is a widow, 84 years old, living alone. She 

worked until age 73, but her only income now, apart from a little 

help from her adult children, is her Social Security check. Her benefit is about $20,000 a year, so it is actually higher than average. 

But it is still a struggle for her to make ends meet, and she told 

us about it. 

Forget cable TV or new clothes. What about food? She explained. 

‘‘I can’t afford meat any more. But every once in a while, if I see 

a great bargain, I will splurge on a small piece of meat. There is 

a special discount cheese that I like. I make very thin slices.’’ 

Slicing the cheese very thin can maybe stretch your food budget 

to the end of the month. But it won’t cover health care. She also 

told us, ‘‘A couple of months ago my dentist told me that I need 

a root canal. I have had to put it off, because it is $800, and that 

would be too tough to take on now. I am taking a chance with my 

health, but I don’t know what else I can do.’’ 

Not a lot of room to cut there. And Social Security benefits are 

already scheduled to decline. The retirement age is going up right 

now. It has already increased from 65 to 66, and rising to 67. Every 

year’s increase in the retirement age is an across-the-board benefit 

cut of about seven percent at whatever age people take their benefits. 

In addition, rising Medicare premiums will consume a greater 

portion of retirees’ Social Security income. 

On top of that, other sources of secure retirement income are declining. And, of course, the recession has made things worse. This 

adds up to a compelling case for protecting and strengthening Social Security benefits. Yet there are a number of proposals out 

there that would cut Social Security benefits, even for current retirees and those near retirement. So I was very pleased to hear your 

statement, Mr. Chairman, about the bipartisan support for protecting those people. 

For example, switching to the chain CPI for calculating the costof-living adjustment in Social Security would cut benefits for current beneficiaries, like Ms. O’Linger. And they would produce deepVerDate Mar 15 2010 08:06 Dec 06, 2011 Jkt 070888 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\70888.XXX GPO1 PsN: 70888

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er cuts with every year of benefit receipt. This change would particularly hit women, because they live longer than men, are more 

reliant on Social Security, and already at much greater risk of poverty as they age. 

Those who say that that cut won’t hurt aren’t trying to live on 

Social Security. A cut of $56 a month represents the loss of a week 

of food every month for the median Social Security female beneficiary. 

The Bowles-Simpson plan relies on benefit cuts for two-thirds of 

its savings over the next 75 years, and four-fifths of the savings in 

the 75th year. Restoring solvency to the Social Security program by 

slashing the benefits people need to live is like fixing a stubbed toe 

by cutting off a foot. 

And there are some proposals that would cut benefits more 

quickly and more deeply than Bowles-Simpson. For example, the 

Republican Study Committee proposal to speed up the increase in 

the retirement age and bills that are pending on the Senate side 

to accelerate that increase would cut benefits for people currently 

between the ages of 55 and 60. 

In addition, the SAFE Act introduced by Representative Sessions, which would allow the diversion of payroll taxes into private 

accounts would simultaneously worsen trust fund solvency and 

jeopardize benefits for current retirees, as chief actuary Steve Goss 

testified at the last hearing, and jeopardize not only the retirement 

benefits for workers who choose accounts, but disability and life insurance protections for their families. 

I hope this—I recognize that it is important to make adjustments 

sooner than later, but this committee has the time to make those 

adjustments right, so that people don’t get hurt. Thank you. 

[The statement of Ms. Entmacher follows:] 


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f 

Chairman JOHNSON. Thank you, ma’am. 

Dr. Blahous, you are recognized. 


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STATEMENT OF CHARLES P. BLAHOUS, PH.D., RESEARCH 

FELLOW, HOOVER INSTITUTION 

Mr. BLAHOUS. Thank you, Mr. Chairman, Mr. Ranking Member, and the subcommittee for the honor of testifying today. Owing 

to the time constraints, I am going to bypass most of the background information in my written testimony, and just offer the subcommittee nine suggested rules of thumb for you to consider as you 

contemplate changes in Social Security benefits. 

The first is very simple. Act soon. Obviously, the balance of any 

benefit or tax changes is a very important value judgement. But 

whatever the balance chosen, we are going to be better off if that 

solution is enacted sooner. The longer that you delay action, the 

more any changes are going to be concentrated on a smaller number of birth cohorts, and that is going to increase adverse effects 

on vulnerable populations within those cohorts. 

Second rule of thumb. On the threshold question of whether we 

should change the growth of benefits at all, my recommendation 

would be yes, simply because to do otherwise means that younger 

generations are going to face far higher Social Security tax burdens 

than any previous generation has tolerated. Program costs were 

about 11.5 percent of worker wages in 2008, before the Baby 

Boomers began to retire. And under the current benefit formula, 

that would rise to over 17 percent by the mid-2030s. And what 

would happen is we would be trying to pay benefits that are rising 

very dramatically, in per capita terms, relative to inflation. 

Today, a typical medium-wage retiree gets a benefit of about $18,000 a year at the normal retirement age. The current formula 

is trying to pay the beneficiary of 2050 a benefit of about $29,000 

a year, and that is after adjusting for inflation. 

So, if we adjust the rate of growth now, benefits can still rise in 

real terms. They don’t have to be cut from today’s levels. But if we 

leave the current formula in place, I fear we run the risk of actual 

real future benefit declines, as voters rebel against the high tax 

rates required to sustain current payment schedules. 

Third rule of thumb is simply that we need to recognize demographic realities. Our population is aging rapidly. Meanwhile, what 

has happened is that we have enacted various benefit increases 

over the years, and we have established early retirement. So now 

what is happening is people are retiring earlier, and claiming earlier than when FDR established the system. They are getting higher annual benefits, and they are living longer. 

Something there has to give. We would actually have to raise 

both the early and normal retirement ages by at least three years, 

just to get back to the starting point, where the typical beneficiary 

was claiming at 65, let alone to adjust for longevity gains since the 

program’s inception. 

Fourth rule of thumb: phase in any changes that you want to 

make as rapidly as you can, to be fully effective before 2035. The 

vast majority of cost growth in the system will play out by 2035. 

That is when we hit the 17 percent cost rate. And then, after that, 

costs are relatively flat until they rise higher, only after the 2070s. 

So, any benefit changes that you postpone to occur only after 2035 

are not going to do that much to address the looming tax burdens 

facing younger workers. 


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Fifth rule of thumb: repair the system’s flawed work incentives. 

The current system is basically designed to drive seniors out of the 

workforce, which may have been an attractive policy in 1935. But 

in the 21st century, we have the opposite problem. We have future 

economic growth jeopardized by the withdrawal of millions of 

skilled Baby Boomers from the workforce. In my judgment, we 

should stiffen the penalty for early claims. We should increase the 

reward for delayed claims. We should perhaps offer a lump sum option to make the delayed retirement credit more attractive. 

We should redesign the benefit formula. Right now, the way it 

currently works is that the longer you work, and the more your average earnings rise, the lower your incremental returns on your Social Security contributions. And I believe we should redesign that 

formula so that it delivers proportional additional benefits for every 

year of further work by seniors. 

The sixth rule of thumb: protect the vulnerable by constraining 

benefit growth on the high-income end. Obviously, the faster the 

benefits grow on the high-income end, the less there is left over for 

vulnerable populations within a given level of tax revenue. I think 

it is financially and politically inefficient to have higher tax burdens driven, in large part, by benefit growth above and beyond inflation for upper income workers. 

Seventh rule of thumb: maintain the contribution benefit link. 

Don’t means test. I think there is an important conceptual distinction to be drawn between a more progressive benefit formula, 

which I favor, and a true means test, which I don’t. The former requires no new administrative capabilities from SSA. It doesn’t penalize individuals for the saving they do outside of Social Security, 

and it doesn’t sever the vital link between contributions and benefits that distinguishes Social Security from welfare. 

Eighth rule of thumb, maintain the link between retirement and 

disability benefits. The fact that the disability benefit formula is 

based on the retirement formula is, in my judgment, important. It 

limits gaming of the system, and it provides for a smooth transition 

once a disabled individual reaches retirement age. 

And the ninth and final rule of thumb I offer for your consideration is just to avoid unnecessary complexity, if you can. It is important to remember not every part of the Social Security benefit 

formula can do everything, and you are going to have distributional 

goals. You are going to have goals for targeting benefits. But you 

cannot ask the retirement age to handle that for you. You cannot 

ask the CPI to handle that for you. 

My recommendation would be just set the retirement age for the 

general case that reflects population aging, set CPI for your best 

measure of overall inflation, and do your benefit targeting through 

the basic benefit formula. 

And, with that, I would be happy to answer any questions the 

subcommittee may have. 

[The statement of Mr. Blahous follows:] 


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f 

Chairman JOHNSON. Thank you. We can’t tell people to stop 

getting older. 

[Laughter.] 

Chairman JOHNSON. Thank you. 

Ms. Bovbjerg, you may proceed. 

STATEMENT OF BARBARA BOVBJERG, PH.D., DIRECTOR FOR 

EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. 

GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. BOVBJERG. Thank you, Mr. Chairman, Mr. Becerra, Members of the Committee. Thank you for inviting me today. 

You have heard others speak about ways to stabilize Social Security’s financial future, but you have asked me to address one of the 


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most important vehicles for explaining Social Security programs, 

and that is the individualized Social Security statement. 

The statement is the Federal Government’s main document for 

communicating with more than 150 million workers about their Social Security benefits. As such, it also serves as a key financial literacy tool to educate the public about Social Security, and its provision is mandated in law. 

Should changes to the Social Security programs take place, the 

statement would take on added importance as a means to explain 

them. My testimony today will address both the current status of 

the statement and SSA’s plans to improve its usefulness. My remarks are based on interviews we have conducted in the last 

month with SSA officials, documents they have provided, and our 

prior work on the statement’s understandability. 

With regard to status, the statement is not currently being distributed. SSA used to mail the statement to virtually all American 

workers annually, until a few months ago when, for budgetary reasons, the Agency chose to suspend the mailings. SSA is, instead, 

preparing to make the statement available online, and has begun 

developing a new web portal for this purpose. 

But both the portal and the online version of the statement are 

currently in the initial phases of development, and once developed, 

will need to be fully tested. As a result, SSA officials are uncertain 

when the statement will once again be available to the public, although they are hoping for early next calendar year. 

And, in the meantime, copies of the statement are not available. 

And SSA staff and the website instead direct requesters to SSA’s 

retirement estimator—we have a little picture of that web page on 

the front of our testimony—which, although useful, does not fill the 

same function as the statement. 

SSA’s focus on getting the statement online and securing the personal information it contains is really important. But these elements of the statement should not be the only concerns of the 

Agency. 

For example, SSA will need plans in place for publicizing the 

availability of the statement online. An internal SSA working 

group is currently considering options for the public roll-out of the 

online statement, but they have not yet developed a plan for carrying it out. 

They will also need to consider how best to provide this information to people without Internet access. Even the relatively few computers available in selected field offices will not necessarily permit 

access to the online statement itself if individuals without computers will even know to go there to look for it. And while Agency 

officials have said they would also like to make the online statement available in Spanish, the initial version will be English only. 

Let me turn now to improving the usefulness of the statement. 

SSA officials have told us that they believe the electronic format 

has advantages for individuals, including immediate access when it 

is needed, and not simply when it arrives in the mail. The officials 

also note that, with an electronic statement, they can provide links 

to related documents, and thereby provide complete information, 

but minimize the lengthy description in the statement itself. 


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SSA has also told us they plan to draw an industry best practices 

for screen design and layout, to make the system more user-friendly. 

And although they are planning such changes, the first publiclyreleased version of the online statement some time next year will 

be nearly identical to the current print version. This means sticking with the limited graphics and layout that we at GAO and the 

Social Security Advisory Board felt should have been modernized 

years ago. 

Officials told us they also did not plan to change the statement’s 

content, because so much of it is statutorily required. However, we 

noted in our 2005 report that the statement contained descriptions 

and concepts that focus group participants found confusing. This is 

the same content that SSA plans to roll out online. 

SSA’s own financial literacy initiative offers detailed ideas for 

improving the statement’s usefulness, but it is unclear what role 

staff from this office have played in the design or content of the online statement, thus far. 

In conclusion, SSA’s decision to suspend statement mailings this 

year may negatively affect millions of Americans now, but could ultimately have the positive result of modernizing delivery of this important information. Yet, because this decision to suspend was 

made so abruptly, SSA faces pressure to take quick action to restore the statement’s availability, which means there is little or no 

time to redesign the statement to take advantage of the new electronic platform. 

But that is not even our greatest concern. The lack of preparation for providing all American workers, including those without 

computer resources and those without English proficiency, with an 

understandable version of the statement risks leaving a significant 

portion of our population without information about Social Security 

at a time when changes to the programs could make such information more crucial than ever. 

We are, therefore, recommending that the SSA commissioner 

take steps immediately to address these access issues, and thus assure that the statement remains an important tool for communicating with all workers. 

And that concludes my statement. 

[The statement of Ms. Bovbjerg follows:] 


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f 

Chairman JOHNSON. Thank you very much. 

Ms. BOVBJERG. Thank you. 

Chairman JOHNSON. I appreciate that. We are struggling to 

meet a vote deadline here this morning, so I would like everyone 

to have a chance to ask questions. And I will limit my time to five 

minutes, and ask the ranking member to do the same. 

Mr. Terry, your testimony makes very clear and compelling case 

for raising the retirement age. When the actuaries endorse working 


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longer, that is not risk-taking, according to you. It is not to me, either. Everyone ought to be listening carefully to what you and the 

experts have to say on this issue. 

So, we cannot force people to work longer, but we can encourage 

them. And it makes no sense to me to tax someone who wants to 

work, and, who we, as a nation, need to have to work. In other 

words, we may not want to tax them as they get past a certain age. 

And why not encourage older workers by freeing them of their Social Security payroll tax that taxes the very first dollar of income? 

Makes sense to me. Must make sense to you, because you mentioned it in your remarks. 

How much would this boost older workers’ willingness to work? 

And do you think it would encourage, or we should encourage employers to create jobs for them? And finally, how would this benefit 

our country? Mr. Terry? 

Mr. TERRY. Well, it is an excellent—I like the way you posed 

the question, because I think you are suggesting that it is not simply a matter of forcing people to do something they don’t want to 

do, that we, in fact, may have impediments inadvertently set up 

to—sort of preventing people from working longer. 

If work is thought of as drudgery from which people must escape, 

and that Social Security is the savior for that escape, then I think 

that is a flawed—that is probably a flawed premise. And I think 

the premise of your question is that, in fact, there may well be removal of disincentives to work. They could very well encourage the 

sort of increasing productivity out of the workforce that we all 

could benefit from. 

The Academy doesn’t have a, per se, position around the elimination of payroll taxes, or the—you know, the cutting back of payroll taxes for older workers. That can and should be something that 

is on the table, obviously, and we would be happy to take a look 

at that and sort of examine it, from an actuarial perspective. We 

haven’t done that yet, but we would be pleased to do so. 

Chairman JOHNSON. Why don’t you do it for us? 

Mr. TERRY. Yes, will do. 

Chairman JOHNSON. Thank you. The Social Security statement 

is one of the few government publications that reaches nearly every 

working-aged American. The statement reminds workers how much 

of their hard-earned wages they have paid in taxes for the promise 

of future Social Security benefits, and gives an estimate of what 

those benefits might be. 

Dr. Bovbjerg, can Social Security choose not to provide a statement to workers, or is it required by law? 

Ms. BOVBJERG. The law says that the Social Security Administration must provide a Social Security statement to individuals 

aged 25 and over. How that statement is provided, and whether it 

is mailed, or whether it is online, is something that Social Security 

is considering right now. 

Chairman JOHNSON. So you don’t think they violated the law 

when they didn’t send one in the mail. 

Ms. BOVBJERG. We do not have an opinion on whether they 

violated the law. We prefer to let courts make those decisions. 

Chairman JOHNSON. Come on. 

[Laughter.] 


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Ms. BOVBJERG. We do think that it is very important that people get this statement. And when the decision was made back in 

the spring not to mail the statement any more, to cancel that contract, it was made for budgetary reasons. But it did not, I believe, 

consider the fact that there could be a full calendar year in which 

statements are not going out. 

Chairman JOHNSON. Yes. Well, what does the law require—— 

Ms. BOVBJERG. One hundred and fifty million people. 

Chairman JOHNSON.—Social Security to include in that statement? 

Ms. BOVBJERG. Oh, there are many things. It is—— 

Chairman JOHNSON. And did they do it online? 

Ms. BOVBJERG. Well, we haven’t seen—— 

Chairman JOHNSON. Did they put everything in it? 

Ms. BOVBJERG. We haven’t seen what they are putting online 

yet. But what they have in the current statement, which we have 

reproduced in the back of my written testimony, is they show what 

your earnings record is, they estimate your future benefits, they 

talk about the offsets that apply to public employees and some in 

the railroad industry. 

There are many things that Social Security must include there. 

And we don’t dispute that. I think we are concerned about how 

those things are explained. 

Chairman JOHNSON. Thank you very much. Mr. Becerra, you 

are recognized for five minutes. 

Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 

your testimony. I suspect we will be calling on all of you for your 

ideas, whether it is nine points or one point into the future, because I do believe that there is an appetite to discuss how we get 

to a solution on Social Security. So thank you very much. 

Ms. Entmacher, let me ask you something, because the story you 

recounted of the woman in Oregon sounds eerily familiar to the 

story I hear from too many seniors in my congressional district in 

Los Angeles, where the costs are probably even higher than the 

costs of the woman you mentioned in Oregon. 

If you take a look over the lifetime, and if someone lives into 

their eighties or nineties, that is quite a few years of collecting 

about $14,000, on average, a year—— 

Ms. ENTMACHER. $12,000 for women. 

Mr. BECERRA. $12,000 for women—and you are right, we do 

have to address that imbalance for women—and then, when you 

put Medicare in there, it is a good chunk of money. 

But, at the same time, we are finding that health care costs are 

eclipsing any cost of living that seniors are getting in their COLA 

in Social Security. And $14,000, as you mentioned, is not much to 

start with. 

How do you see this going? If we get to the point of trying to deal 

with making Social Security stronger into the future so that my 

kids and their kids know that it will be there the way it is for today’s seniors—and I hope for me, as well, and I expect for me— 

what should we be doing to try to make sure that we can tell the 

woman in Oregon or my constituent in Los Angeles that Social Security will be as strong today—tomorrow as it is today? 


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Ms. ENTMACHER. Well, I think there are two separate problems that need to be looked at separately, although they are often 

talked about together as Social Security and Medicare and Medicaid. 

Health care costs are on a trajectory of increase that is 

unsustainable. And it is not just the federal health programs. Actually, health care costs in the federal programs are rising somewhat 

more slowly than health care costs in the private sector. So there 

is a real need to control the growth of health care costs to see 

where we can find real efficiencies without impeding benefits and 

the quality of care. And I think my expertise is not in health—is 

not in health care reform. But clearly, that is an area where we 

do see costs continuing to escalate. 

If you look at the growth curve for Social Security benefits, as 

the chairman pointed out in his announcement of this hearing, 

they will increase to about 6.2 percent of GDP in 2035. But after 

that, they actually decline slightly and stay stable for the next 75 

years. 

So, when it comes to Social Security, we are really dealing with 

the fact of an aging population. Although, as the chief actuary 

pointed out, it is really more that there aren’t as many young people as there used to be. So how do we deal with that? 

I think there are solutions, fair solutions, on the revenue side. I 

think the wage base for Social Security is very low. We tax a much 

smaller percentage of wages than we have taxed in the last several 

decades. A lot of compensation now is outside of Social Security 

taxes all together. And, of course, we are taxing only a small portion of GDP. 

So, I think that there are revenue solutions. And, you know, Mr. 

Goss testified about some of them at his testimony a couple of 

weeks ago. The National Academy of Social Insurance, in a paper 

that I cite in my written testimony, lists other ways of raising revenue for Social Security. 

And it is striking—and I mention some of the public polling— 

that across the political spectrum—and this includes people who 

support the Tea Party—they support raising revenue to finance Social Security and close the deficit. You wouldn’t be surprised to find 

that people across the political spectrum oppose cuts to Social Security benefits. But they actually also support revenue increases to 

strengthen the program. So I would suggest that as a place to look. 

Mr. BECERRA. Thank you. Mr. Terry, you are a numbers guy. 

You testified how we’ve got to look at these numbers. 

You mentioned the $2.6 trillion trust fund, and how we address 

the long-term life of Social Security. I pulled out the $20 bill, I 

pulled out the savings bond, and I guess I could have pulled out 

the Treasury certificate that the Social Security system has. What 

is your sense of how we deal with this existing debt ceiling crisis? 

And what is the impact on the $20 bill, the savings bond my 

daughter has, or the Treasury certificate for Social Security? 

Chairman JOHNSON. Limit your response, please. 

Mr. BECERRA. Oh, and yes, you have to do it in three seconds 

or less. 

[Laughter.] 


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Mr. TERRY. Two things to say. Great question. Number one is 

that we actuaries—and particularly the American Academy of Actuaries—are focused on the Social Security system itself, okay? So 

our realm of focus is the system, itself. 

Secondly, we are in the midst of preparing a detailed discussion 

brief, if you will, of the very question you ask about the trust 

funds, the—is the money real, is it not real, what are the aspects 

of it, and what are the attributes of it that can inform some of our 

thinking about the importance of that $2.6 trillion. 

So, we are close to putting the finishing touches on that, and we 

will get that to you. 

Mr. BECERRA. Appreciate that. Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you. Mr. Berg, you are recognized 

for five minutes. 

Mr. BERG. Well, Mr. Chairman, thank you. I really don’t know 

where to start. 

I mean, I am extremely frustrated with the rhetoric on this issue. 

We heard today three accusations of Republican plans that are 

going to ruin Social Security. None of those proposals have come 

before this subcommittee. None of them. 

We have a lot of attention today because I think the President 

has recognized this is an issue that should be talked about, should 

be debated. Everyone I talk to back in North Dakota is concerned 

about Social Security. And I think it has been used as a political 

football by different people, different interests all along. 

I sit here today and I hear people say, ‘‘Well, we have 2.6 trillion, 

nothing to worry about.’’ The reality is, to redeem those dollars, it 

comes from the general fund. I mean why are we in this debt crisis 

right now today? We are in it because we have got 14.3 trillion in 

debt, and we don’t have any more money. So, the money has to 

come from the general fund. 

I also think that it is crazy to say we should ignore this problem. 

I am not here to say we want to use Social Security to fund our 

deficit. I mean I am new here; I didn’t create this problem. But, 

quite frankly, it has got to be fixed. I mean we are spending more 

in general fund than we are taking in. 

And I came here to honor this promise to our seniors. I am here 

to honor that. And I am very frustrated when I sit here and hear, 

‘‘You know what? Don’t worry. We are good for 25 years. And at 

the end of 25 years, it is only going to go 75 percent.’’ 

We talked about the O’Linger in Oregon: 25 percent goes from 

20,000 to 15,000. If we are concerned about these things, why are 

we ignoring them? 

And so, again, I appreciate everyone’s perspective. I mean the 

point is they quit doing the statements. Why did they quit doing 

the statements? They are saying for budget reasons. Well, everyone 

I talk to that has looked at this says there is a problem. 

And so, really, my question is pretty high-level and pretty simple. And that is, I would like each of you to say what are the facts. 

Why should we look at this? Give me a fact that is non-disputable 

on why we should be spending our time on fixing Social Security 

or making it solvent, long-term? 

MR. SCHIEBER. Me? 

Mr. BERG. Absolutely. 


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MR. SCHIEBER. The time perspective in which the system will 

run out of money if we don’t do anything is within the life expectancy, roughly, of people who are retiring today. So it is an issue 

that is going to affect almost everyone who is stepping into retirement today. 

It also is—— 

Mr. BERG. Solvency? 

MR. SCHIEBER. Solvency. And it is also well within the life expectancy of everybody who is working, or the overwhelming majority of people who are working. 

The trust fund will be depleted under the projections. There will 

still be tax revenues coming in. The trust funds will run out of 

money. So it’s within the life expectancy of people today who are 

going—who are here, participating in the program. We ought to fix 

it before we get to the cliff. You don’t put the brakes on at the cliff, 

you put the brakes on as you are coming to the cliff. 

Mr. TERRY. I would echo that, and what I think other panelists 

have said this morning, too, about the need to address it now, rather than later. And to suggest that there is not an issue is to suggest there is nothing to address right now. And the Academy believes that, in fact, action should be taken now to address the longrange deficit. 

Mr. STEUERLE. Just two quick comments. The first is that 

there are a lot of features of Social Security that are just badly targeted. So a lot of low-income women—as I say, particularly single 

heads of households—really suffer discrimination in the system. 

And there are fixes that we need to make, regardless of whether 

there are imbalances or not. 

The fact that so much money is now concentrated so much earlier in life—a typical couple is getting benefits now for close to 27 

years, going on 3 decades. That is not a good system. There needs 

to be more concentration of benefits later in life, even if the system 

was totally imbalanced. 

If you are asking specifically about the imbalances that are driving the current debate, what happened in the trust funds is while 

the Baby Boomers were temporarily in the workforce, they were 

paying in about $1 for every $.90 that was being paid out. It was 

still mainly a pay-as-you-go system. Today, basically for every $1 

coming in, $1 is going out. And as you move towards the future, 

the ratio moves towards roughly $1.25 going out for every dollar 

coming in. 

So that is sort of the simple math that we are dealing with, in 

terms of this largely pay-as-you-go system. And, yes, the trust fund 

had a little build-up when only paid out $.90 for every dollar that 

came in the trust fund is going in the opposite direction. So that 

is what is driving the system, largely because of the decline in the 

birth rate, and the decline in the number of workers per beneficiary. 

The only ways to address a decline in workers per beneficiary are 

to tax workers more or take something away from the beneficiaries. 

That is the simple math. It is not conservative, liberal, Democratic, 

or Republican. 

Chairman JOHNSON. Thank you. Time has run out. I will let 

each one of you make a short statement, if you desire. 


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Ms. ENTMACHER. One of the most popular options for strengthening Social Security—and I agree that action should be taken. In 

1983 Congress waited until Social Security was within a few 

months of exhausting the trust fund, and that is an experience that 

I don’t think anyone wants to repeat. 

But right now, people pay Social Security taxes only on their first $106,800 of income. And when you explain that to people—you 

know, the vast majority of whom pay taxes on every single dollar 

they earn—they are shocked. And again, across the political spectrum people say, ‘‘Well, gee, people, you know, should pay Social 

Security taxes on more of their income,’’ and that would go a long 

way to strengthen the trust fund, and make sure we can continue 

to pay benefits that are so important in North Dakota. 

Mr. BLAHOUS. Just a couple of very quick points. This is important because Social Security has an imbalance. Quite apart from 

anything happening in the larger deficit, Social Security’s own 

books are out of balance over the long term. There is an imbalance 

of benefit promises relative to incoming revenues. That has to be 

closed, if you want to have a self-financing Social Security system. 

It is best if that imbalance is closed sooner, rather than later. That 

gives you the fairest possible outcomes. You get the least fair outcomes if you wait until later. 

I would make one final point on this. If we do wait until we are 

close to trust fund depletion, there is no historical precedent for 

closing a shortfall of that magnitude. In 1983, when they had emergency surgery to repair program finances, income and outflow were 

still pretty close together. We are rapidly getting to a point where 

they are going to be much, much further apart. There simply is no 

historical precedent for closing a shortfall of the size that it will be 

by the time the trust fund is run down. 

Chairman JOHNSON. Thank you. Ms. Bovbjerg? 

Ms. BOVBJERG. Social Security touches the lives of nearly every 

American. It is a crucially important program. Yet, for 15 years, 

GAO has been talking about the structural imbalance in the system, and that it will be important to act as early as possible to 

avoid really horrible choices later on that will hurt people dramatically. 

And so, we have been arguing that having this discussion—and 

I congratulate the subcommittee for having this hearing and raising some of these issues—is really important, but that we do need 

to make decisions, and that everything should be on the table. 

Chairman JOHNSON. Good testimony. Mr. Smith, you are recognized. 

Mr. SMITH. Thank you, Mr. Chairman. Mr. Steuerle, you had 

started to touch on private pension reform toward the end of your 

remarks. Could you elaborate on that? 

Mr. STEUERLE. Yes. In Great Britain a few years ago, they undertook a Social Security reform. And when they did it they actually—in a typically British way—had a white paper—had an outside study on what they should do. And they concluded that it 

would be very useful to try to increase private saving at the same 

time as they did Social Security reform. 

Now their Social Security reform actually increased benefits in 

the public system. But even there, they decided that that was not 


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enough. That flexibility was probably because they formerly indexed at a much slower rate. They decided that, to really help a 

broad swath of people, they really needed to build up private pension saving. 

And so, if you look at our private pension system, it covers fairly 

poorly a majority of the population. An estimate I did a few years 

ago—I haven’t quite updated it—basically said that for 75 percent 

of people who retire, Social Security and Medicare—the lifetime 

value of Social Security and Medicare is in excess of all of their private assets, their home. 

So, we have a larger and larger percent of the population dependent upon Social Security and Medicare, which is one of the 

issues that Joan raises. And the question is, how do we deal with 

it? 

Well, one way we deal with it is to try to perhaps, as my testimony would argue, increase some of those cash benefits for low and 

moderate-income people. But for the middle-income people, I don’t 

think we can just get there by just adding to a system that is already out of balance. We need to work on things like private saving. And we need to recognize that this private retirement system 

we have set up is really not doing a good job of covering the vast 

majority of people. 

And, you know, we can ask who is to blame. Is it the fact that 

employers aren’t doing it correctly, or employees who aren’t saving 

enough? It’s almost beside the point. Regardless, we need to figure 

out ways of enhancing the saving of middle-income people as they 

move towards retirement. 

Mr. SMITH. Thank you. Ms. Entmacher, you mentioned that 

there is public support for revenue increases to fix Social Security. 

Ms. ENTMACHER. Mm-hmm. 

Mr. SMITH. Could you elaborate on that? 

Ms. ENTMACHER. Sure. The—raising the cap on taxable wages 

is certainly one option that is very popular. But there are also some 

polls that—you know, in which people say that ‘‘I would pay more 

in Social Security taxes to strengthen the benefits that people rely 

on,’’ that this is one area of tax where people say, ‘‘I don’t mind 

paying Social Security taxes, because I know what I am getting for 

it, and I would pay more to protect Social Security.’’ 

In the past, Congress, you know, in terms of automatically legislating for needs in the future, there have been scheduled small increases in the payroll tax way in the future, to make sure that Social Security stayed in balance. And this is something the public 

says they support, and particularly if some of the proposals for improving and strengthening Social Security that Gene has talked 

about were part of the discussion. 

And again, I am not saying wait until the last minute. I agree 

with Chuck. It would be very bad to wait. But I think if there was 

a process of public education about how we are strengthening the 

program, making it better, making it more adequate—and, yes, everyone is going to be chipping in a little more. People who are very 

wealthy are going to be chipping in a little more. I don’t know 

whether it can be done without, you know, increases far in the future, and the payroll tax rate, but this is what the American people 


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say they want. They want a stronger Social Security system, and 

they are willing to pay for it. 

Mr. SMITH. And when you mention ‘‘very wealthy,’’ what would 

determine that? 

Ms. ENTMACHER. Well, I mean, I—certainly, at this point, the—everyone above, you know, about $107,000 isn’t contributing 

to Social Security. You could raise the—— 

Mr. SMITH. They are not contributing to Social Security, or 

that—— 

Ms. ENTMACHER. Oh, well, not—on the—you are quite right. 

It is the income above that amount, plus other forms of compensation, such as health care benefits that are not, you know, part of 

the Social Security base. 

Mr. SMITH. Okay, thank you. I yield back. 

Chairman JOHNSON. Thank you. Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. In the last 24 

hours we have began to hear a lot about the concept of chained 

CPI, instead of the traditional COLA method. Could each of the 

panelists talk a little bit about that concept? Maybe describe to the 

public that is watching this hearing—describe to them this concept, 

and why it might be an important part of the solution to this problem. 

MR. SCHIEBER. There has been debate about the CPI, which— 

what is the appropriate CPI, almost from the time we linked benefits to it. There are concerns about what is in the market basket 

that is used to value what is happening to the price of the goods 

that we consume. 

And the argument, basically, between the chained CPI and the 

current CPI is that in the current CPI many people do not believe 

that we considered that when the price of a good—let’s pick a car. 

If your—if the price of a Mercedes goes up, then maybe you don’t 

buy the Mercedes, you switch and you buy an Audi or something, 

that the current CPI does not take that kind of substitution into 

account. And so it is over-stating what the true cost of living is, 

and it extends to things beyond expensive cars. It extends on down. 

So, there is—the argument is that this new CPI more adequately 

reflects, or more closely reflects, the cost of living over time. 

The problem with any market basket is you pick any specific individual, and they probably don’t exactly consume that particular 

market basket. And so, it is an estimation to try and get as close 

as we can to a reasonable rate of increase in the cost of living for 

people. 

And the argument is being made, on technical grounds, we 

should move from the current system to an alternative system. 

Mr. TERRY. The actuarial profession will leave to the economists 

the question about what is the proper mix that goes into a basket 

of consumer goods to accurately measure inflation and its impact 

on indices. 

But I will say that we have—we’re aware that a chained CPI 

would likely produce a lower measure of inflation, and lower to the 

point where, if it were to be implemented and used to inform the 

cost of living adjustments, that it could close as much as a quarter 

of the long-term deficit—long-term imbalance in the system. 


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Mr. STEUERLE. I am—as an economist, I tend to favor coming 

up with a good measure of CPI. But if you do it by itself, I think 

it causes a problem in Social Security. That is because, for people 

who haven’t retired yet, the CPI adjustment doesn’t affect their 

growth in benefits. So the younger of you on the panel, your benefits keep growing by $10,000, $20,000, $30,000, $50,000, and that 

doesn’t go down. The CPI hits people once they retire. 

And so in the first year of retirement, you have a small adjustment—it might be one-third of one percent. That compounds. For 

someone retired for 25 or 30 years—the person who is 85 or 90 has 

a 10 percent cut. So you end up with a much bigger cut on the 

older elderly. 

I have testified, or put in my testimony, I want to make the system go in the opposite direction. I want to increase benefits at older 

ages, when it does not have such a negative work disincentive, and 

cut back on the benefits at an early age. 

Talking about the poor, or the very low income, I would try to 

maintain their benefits, no matter what. But my problem with 

doing a CPI only, without worrying about that issue, is that I prefer to backload the benefits to protect the really old, for whom 

there is not really that much incentive to work, because they cannot. This reduces this disincentive up front. On top of which, the 

older people are just more needy. So, that is one more of my concerns with the CPI adjustment. 

Ms. ENTMACHER. The problem with switching to the chained 

CPI for Social Security is that this is a program that overwhelmingly serves people who are elderly and people with disabilities. It 

also serves some children, but the vast majority of beneficiaries are 

elderly or people with disabilities. 

And what is different about them from other consumers is that 

they spend twice as much of their budget on health care. That is 

for all people 65 and older. For people 75 and older, they spend 2.5 

times as much as consumers generally on health care. And the reason that matters when you are trying to figure out what is a fair 

cost of living adjustment is that health care costs rise so much faster than everything else. 

So, if you are already spending, you know, a much bigger share 

of your budget on something that is rising much more quickly, a 

cost of living adjustment that might be fair for other purposes, or 

for other people, is really systematically unfair to the elderly. In 

fact, the Bureau of Labor Statistics, for—— 

Chairman JOHNSON. Close it down, please. The time has expired. 

Ms. ENTMACHER. Sorry. 

Mr. BECERRA. Just go ahead and finish off. 

Chairman JOHNSON. Finish your statement. 

Ms. ENTMACHER. Oh. The Bureau of Labor Statistics has a 

special CPI for the elderly. And by that measure, our current cost 

of living index underestimates the cost of living increases that elderly people experience. 

Chairman JOHNSON. Mr. Schock, you are recognized. 

Mr. SCHOCK. Thank you, Mr. Chairman, and thank you once 

again for hosting this very, very important hearing on a very important topic. 


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Once again, it appears that there are some in this room that just 

believe in the policy of the ostrich. If we stick our head in the sand 

long enough, it will go away. The reality is we’ve got a problem. 

And, Dr. Schieber, I think you might be best to answer this. We 

hear about the fund eventually running out. Remind me again— 

and for our listeners—how many years is that estimated to be? 

MR. SCHIEBER. The latest estimate, I believe, is 2036. So about 

25 years. 

Mr. SCHOCK. Twenty-five years. 

MR. SCHIEBER. From now. 

Mr. SCHOCK. And you said earlier that that is likely to be assuming somebody is healthy and in relatively good shape, if they 

retire today at 65? 

MR. SCHIEBER. You will be around 50 then. 

[Laughter.] 

Mr. SCHOCK. Lord willing. 

[Laughter.] 

Mr. SCHOCK. So, in 2036, we deplete the assets. And so, in 2037, if you are a recipient of benefits, and you are to get $1,000 

a month, what happens? MR. SCHIEBER. You will—the next month you will get $750. 

Mr. SCHOCK. Okay, $750. And that goes for a year? 

MR. SCHIEBER. Well, you would get a monthly check. 

Mr. SCHOCK. Correct. But the first year after the year in which 

we deplete the assets, we go down to 77 percent of being able to 

meet liabilities. 

So, the second year, what happens? We have accrued basically 23 

percent of last year’s liabilities that we haven’t been able to pay. 

So now, the second year, what happens? 

MR. SCHIEBER. Under current law, Social Security cannot borrow money. So Social Security would be making payments at that 

juncture, most people assume, at the rate at which money would 

be coming in. So—and the rates are projected to be relatively constant out there. So it would go along somewhere around 75 percent, 

78 percent, whatever the—you know, in that window. 

Of course, if we have one of the happy experiences which we may 

have some time in the future, like the one we have been through 

the last couple of years, and revenues drop very significantly, then 

it might not be 75 percent. It may be 60 percent. So no guarantees. 

Mr. SCHOCK. And so, I guess what I am having a hard time understanding is why do we continue to send statements to people 

who might be around 50 years from now to tell them to expect a 

certain benefit when we know today the truth to be that, under the 

current system, there—they cannot—they should not base their retirement on the current expectation. 

MR. SCHIEBER. The statement does—has included, generally, a 

comment to the effect that the system is under-funded, and that 

Congress is either going to have to do something, or benefits could 

be reduced in the future. 

But the reason that they cannot send out a statement to people 

who are 50 years old today or 40 years old today and say, ‘‘Oh, hey, 

by the way, here is one kind of calculation. But, really, your benefit 

is only going to be 70 percent, 80 percent of that,’’ is because of the 

letters that those of you sitting at this table would get in response. 


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Mr. SCHOCK. But isn’t that the truth? I mean isn’t that current—isn’t current law say that, based on the current assets in 

2036, they are only going to get 77 percent? 

MR. SCHIEBER. There are two aspects to current law. One is 

the revenue aspect, defining how much is going to be collected, and 

then there is a benefit formula aspect to it. And the law says something right now that is inconsistent in these two segments of its 

corpus. And the general public, I don’t think, has a complete appreciation of what is going on. But I think, generally, they know that 

something is wrong. 

But, you know, we go off and we propose to them that there is 

some magical simple solution. We hear all the time about these 

surveys. You know, ‘‘The public would like to pay more for Social 

Security, rather than having benefits cut.’’ 

Mr. SCHOCK. Right. 

MR. SCHIEBER. Oh, and how would you like that done? ‘‘Well, tax people who are earning more than $106,000.’’ That is not the 

American people. That is not the American workers paying for this. 

And if you look at table two in my presentation, the people they 

want to raise taxes on are already getting back less than $.50 on 

the dollar for what they are contributing. 

FDR thought this was wrong. The early architects thought it was 

wrong. And Robert Ball repeatedly said that these low rates of return in this system are wrong. And what they are talking about 

doing is exacerbating it, because the American people, we hear, are 

willing to pay more taxes to support this program. 

Mr. SCHOCK. Well, I see my time has expired. But it seems to 

me that to send out a statement which we know to be false under 

current law—my last statement I had with me—I think at the last 

hearing, for those of you that were hear—and it said that when I 

retire 40 years from now, I should plan, based on my current income, to receive $3,000 a month. And then it said, ‘‘Is your—is Social Security in trouble? No.’’ And it went on to say that, under current law, it is required to meet the obligations, and on and on and 

on. 

All I am suggesting is, for someone who is not in Congress, for 

someone who doesn’t serve on the Social Security Subcommittee of 

Ways and Means, who isn’t privy to this information, but only 

privy to the statement by which they are sent from the Social Security Administration, I think it is disingenuous, I think it is wrong, 

I think it is misinformation, and I think, in many respects, it is 

similar to a Ponzi scheme that we send people to jail for out in the 

real world. 

So, I appreciate the chairman’s continuation on this subject, and 

I look forward to working with him and our ranking member, here, 

when he realizes we’ve got a problem, and tries to help us fix it. 

Thank you. 

Mr. BECERRA. Mr. Schock, I have realized the problem, but it 

is not Social Security. 

Chairman JOHNSON. It seems like all our witnesses think Social Security has a problem. 

Listen, I want to thank each and every one of you for your comments. I think this has been beneficial to all of us. Thank you for 

being here today. 


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We know in 2036, according to you, 75 percent—I am told 77 percent. Congress and the President need to find commonsense solutions to make Social Security secure, sustainable. And the sooner 

we do so, the sooner we can protect those who are most vulnerable. 

With that, I thank you all for being here, and all our members. 

And the committee stands adjourned. 

[Whereupon, at 10:25 a.m., the subcommittee was adjourned.] 

[Questions for the record follow:] 

Sylvester Schieber 


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Thomas S. Terry 


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C. Eugene Steuerle 


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Charles P. Blahous 


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Barbara Bovbjerg 


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MEMBERS SUBMISSION FOR THE RECORD 

Mr. Xavier Becerra 


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[Submissions for the record follows:] 

Consumers for Paper Options, Statement 


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Æ 


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