PRESIDENT’S COMMISSION TO STRENGTHEN SOCIAL SECURITY

SUMMARY OF MEETING

June 11, 2001

The first meeting of The President’s Commission to Strengthen Social Security was called to 

order at 10:02 A.M. on June 11, 2001, at the Willard Inter-Continental Hotel, Washington, DC, 

by Senator Daniel Patrick Moynihan, co-chair of the Commission. Senator Moynihan welcomed 

Commission members and announced that Richard Parsons, co-chair of the Commission, would 

chair the meeting.

Meeting Attendees:

Commission Members:

Senator Daniel Patrick Moynihan (Co-Chair) Olivia Mitchell

Richard Parsons (Co-Chair) Gerald Parsky

Samuel Beard Timothy Penny

John Cogan Robert Pozen

William Frenzel Mario Rodriguez

Estelle James Thomas Saving

Robert Johnson Fidel Vargas

Gwendolyn King 

Commission Staff and Others:

Charles Blahous (Commission Executive Director/National Economic Council)

Michael Anzick (Commission staff/Designated Federal Official)

Stuart Besser (Social Security Administration)

Andrew Biggs (Commission staff)

Jeffrey Brown (Council of Economic Advisers)

Randy Clerihue (Commission staff)

Ann Combs (U.S. Department of Labor)

Bonnie Doyle (Social Security Administration)

James Duggan (U.S. Department of the Treasury)

Stephen Goss (Social Security Administration)

Kathy McCullough (Social Security Administration)

Diana Meredith (Office of Management and Budget)

Donald Oellerich (U.S. Department of Health and Human Services)

Andrew Sacher (National Economic Council)

Kent Smetters (U.S. Department of the Treasury)

Alice Wade (Social Security Administration)
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CLOSED SESSION 10:00 A.M. – 10:45 A.M

Michael Anzick, the Commission’s Designated Federal Official, briefed Commission members 

on the requirements of the Federal Advisory Committee Act. Next, Randy Gaines, from the 

Social Security Administration’s Office of General Counsel, gave a briefing on ethics and public 

service and administered the swearing in of Commission members.

OPEN MEETING

Richard Parsons called the open meeting to order at 10:55 a.m. and asked each Commission 

member to make a brief statement about the future of Social Security and the work of the 

Commission.

Public Statements by Commissioners

Richard Parsons—Richard Parsons read a letter from President George W. Bush addressing the 

Commission’s work.

Daniel Patrick Moynihan—Senator Moynihan stated the importance of focusing on the year 

2016, when, according to the Public Trustees of the Social Security Trust Funds and the Social 

Security Administration’s Office of the Actuary, trust fund expenditures are projected to begin 

exceeding income. He also noted that public confidence in the program was strengthened by 

making the Social Security Administration an independent agency and sending each covered 

worker age 25 and older an annual Social Security Statement detailing earnings and expected 

future benefits. These changes have begun to change the degree to which the public recognizes 

that Social Security is a real system with real problems that can and ought to be fixed. He 

reinforced the President’s call that we could become a nation of “owners and savers.”

Olivia Mitchell—Olivia Mitchell noted that in 2016 income to the Social Security Trust Funds 

will be inadequate to fully cover benefit payments. To keep current benefit promises, workers 

will face a greater tax burden or beneficiaries will face benefit cuts. She outlined two tasks of 

the Commission: 1) Educating the public about the system’s financial challenges and how 

various reform scenarios might work; and 2) Formulating a reform plan that will restore financial 

and fiscal soundness to Social Security, which includes adding individually-controlled personal 

retirement accounts. In evaluating reform options with individual accounts, she recommended 

that the Commission assess how risk and return are evaluated and examine administrative costs 

and other feasibility issues. She also noted that having assets owned by system participants 

should help preserve the funded aspect of any program that emerges.

Bill Frenzel—Bill Frenzel stated that a guaranteed way to harm the Social Security system is to 

do nothing to reform it. He also stated that we must reform the system sooner rather than later so 

changes to the system can be phased in over time, easing the impact on workers and 

beneficiaries.

Robert Johnson—Robert Johnson described Social Security’s long-term financing problem as a 

business problem: having more costs than revenue. He wants to improve the program for all 
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Americans, but will focus on giving African Americans broader access to wealth accumulation 

and enhancing program equity—particularly among African Americans, who, he believes, 

receive less from the system because of higher mortality rates, making it difficult for their heirs 

and families to benefit from their contributions. 

Samuel Beard—Samuel Beard called Social Security the most effective and best government 

program ever created—a program that it is essential to save. He suggested three guiding 

principles for his work on the Commission: 1) Ensuring the continuation of some guaranteed 

benefit level; 2) Preserving disability and survivor components of the system; and 3) Addressing 

the program’s long-term financing difficulties without delay. He stressed the disparity in the 

United States between those with access to financial assets and those without and his support for 

helping Americans accumulate wealth.

Fidel Vargas—Fidel Vargas reported that Social Security is a vital part of Americans’ economic 

security, particularly for working class Americans. He wants to address the concerns held by 

younger Americans about the program’s long-term viability and to reform the system sooner 

rather than later.

Thomas Saving—Thomas Saving said we need to consider the effect of the growing Social 

Security financing burden on the total Federal budget. He predicted that, if we fail to solve 

Social Security’s financial problems today, and if Federal government expenses stay at 20 

percent of gross domestic product (GDP), then Social Security, Medicare, and Medicaid will 

account for 100 percent of the Federal budget by 2070.

Mario Rodriguez—Mario Rodriguez commended President Bush for establishing the 

Commission and said he wants Social Security to be sustainable in the long-term. He also 

stressed that the work of the Commission will be especially important for the Hispanic 

community, which currently has difficulty saving and accumulating wealth.

Estelle James—Estelle James stated that Social Security is financially unbalanced, and that this 

problem provides us with an opportunity to improve the system, based on what we have learned 

over the past 65 years. She detailed criteria for reforming the program: 1) Make the program 

sustainable beyond the 75-year long-term actuarial period; 2) Examine the effect of the system 

on parts of the broader economy, such as national saving, capital accumulation, labor supply, and 

the work effort of younger workers; 3) Protect the bottom half of the income distribution and 

ensure that the social safety net stays in place; and 4) Avoid the excess of both political risk—the 

fact that the current system is risky because the financing structure is unsustainable—and 

financial market risk. She recommends developing a reform that limits both of these types of 

risk through diversification. 

Gerald Parsky—Gerald Parsky stated his goals for the Commission: 1) Alert the public and 

policy makers that now is the time to enact real reform; 2) Focus on reforming the system with 

structural changes instead of just attempting to improve long-term solvency—an approach that 

only sustains the program in the short term; and 3) Educate the public that debt markets and 

equity markets are not to be feared.
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Timothy Penny—Timothy Penny stated that the three necessary elements for addressing difficult 

political decisions are in place: 1) A growing sense of urgency among the public that change 

needs to take place—particularly true among younger workers; 2) Strong presidential leadership; 

and 3) Bipartisanship. He recommended to President Bush that this Commission work to ensure 

both long-term sustainability and public confidence in the program.

John Cogan—John Cogan called Social Security the most important social invention in modern 

times. He stressed that the program faces serious long-term financial problems beginning in the 

next decade and that the Commission should develop a reform plan that both Congress and the 

American people find acceptable. He said that adding personal accounts to the program would 

allow individuals to build real wealth and financial security.

Gwendolyn King—Gwendolyn King noted the importance of the Social Security Statement, 

which is sent to each covered worker age 25 and older, stating that receipt of this statement 

provides each covered worker a sense of ownership. She suggested to other Commission 

members that: 1) Their report should be written in plain language that the general public can 

easily read and understand; 2) Consideration should be given to develop a plan for educating the 

public about investing in individual accounts, especially for those who will be investing for the 

first time; 3) Any reform plan protects vulnerable beneficiaries, such as women and minorities; 

and 4) Commission members should work to clearly understand any recommendations included 

in reports to be fully confident in supporting them.

Robert Pozen—Robert Pozen remarked that Social Security is one of the most successful 

government programs in U.S. history, and we need to ensure it is sustainable over the long term. 

He outlined his goals for the Commission: 1) Educate the public about Social Security’s financial 

problems and possible solutions; 2) Retain same level of benefits for current retirees and soon-tobe retirees; 3) Recognize that making small changes to the program now can, over 20 or 30 

years, help the next generation; 4) Recognize that there are no easy solutions; and 5) Consider 

the practicality and workability of recommendations.

ISSUES DISCUSSED

Current Financing Structure

Chuck Blahous, executive director of the Commission, described the current state of the Social 

Security program. He and members of the Commission discussed Social Security’s current 

financing structure, in which current workers finance the benefits for current retirees, and how 

the decreasing ratio of workers to retirees will place greater economic burdens on workers in the 

future, making this system unsustainable in the long term. Starting in the year 2016, Social 

Security system revenues will be insufficient to pay for Social Security benefits. Beginning in 

that year, the Federal government would have to raise additional revenue, reduce spending on 

Social Security benefits, cut other Federal government spending, or increase public debt. 

Chuck Blahous clarified the distinction between 2016 and 2038. The cash flow shortfalls begin 

in the year 2016, and this is the year in which the government must find the resources necessary 
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to sustain the system. The existence of a balance in the Social Security Trust Funds after this 

date means, in essence, the Federal government is legally bound to redeem Trust Fund bonds 

between 2016 and 2038, but it is not required to do so after 2038. Commission members 

discussed the Social Security Administration’s (SSA) borrowing authority in 2038 and agreed 

that SSA does not have borrowing authority to write benefit checks without dedicated financing. 

In practice, monthly benefits would not be cut in 2038. Instead, the payment of benefit checks 

would be delayed—which would be equivalent to a 27 percent reduction in benefits. From that 

point forward, if benefits were to be funded from projected revenues, those benefit reductions 

would gradually increase from 27 percent in 2038 and would gradually become 33 percent in 

2075. 

Interim Report

The President’s executive order establishing the Commission requires the Commission to submit 

an Interim Report. The major purpose of the report will be to explain in plain language the 

fundamental financial problems facing the Social Security program during and after the 

retirement of the baby boom generation. Commissioners agreed that it will be important for the 

report’s findings to be understandable by the general public. One method Commission staff will 

use to communicate how program changes would affect average Americans is to calculate 

benefit cuts or tax increases in terms of what they would mean to the average Social Security 

beneficiary.

Initially, the Interim Report was to include baselines by which various reform scenarios in the 

Final Report could be compared. After Chuck Blahous described four baselines included in 

briefing materials, Commission members agreed to exclude baselines from the Interim Report, 

saying that including them might make report findings unclear and open to misinterpretation.

Outreach to the Public

After release of the Interim Report, Commission members stated their desire to hold town hall 

meetings to receive face-to-face input from the public. These town hall meetings would be held 

by subgroups of Commission members in various locations around the country, tentatively in 

September. Commission members agreed that an efficient and helpful method of gaining input 

is to pose specific questions and have the public and interest groups answer them. In addition to 

town hall meetings, Commission members expressed an interest in receiving ongoing input from 

the public on its work, noting they could be contacted through the Commission’s office and web 

page: www.csss.gov. 

Staff Assignments

• Draft Interim Report for Commission to comment on at next meeting.

• Develop an education strategy, promoting findings from the Interim Report.

• Prepare summaries of existing Congressional proposals to reform Social, including 

individual account options.
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• Distribute findings from the 1994-1996 Advisory Council on Social Security.

Next Meeting

The Commission agreed to meet again in Washington, DC on July 24. In keeping with 

requirements of the Federal Advisory Committee Act, the location, times, and agenda for the 

meeting will be announced in the Federal Register.

Adjournment

Richard Parsons, Commission co-chair, adjourned the meeting at 3:04. 

I hereby certify the accuracy of these minutes.

___________________________

Senator Daniel Patrick Moynihan

Co-Chair

___________________________

Richard Parsons

Co-Chair

___________________________

Michael Anzick

Designated Federal Official