tv Social Security Solvency CSPAN June 11, 2018 3:52pm-5:06pm EDT
problems. i don't know that there are easy think it isut i probably the most important issue facing our state as well scale.ty on a global >> invoices from the states, partners -- part of c-span's 50 capitals tour. thenow a discussion on solvency of social security. they spoke and afterward, a panel discussed the latest report. this is an hour in 10 minutes. good morning, everybody. nice to see everybody. thank you so much for joining us. i'm maya mcginness. i run the committee for
responsible budget. thanks for being here. thanks to our guests on c-span and i believe we're live streaming this. the trusteeses, of course, came out this week and talked about the future imbalances in social security, so i'm really pleased that today, we're joined by a bipartisan pair of members from congress to talk about the issue and a panel of experts following that. social security reform is probably not going to happen in an election year, but that doesn't mean it shouldn't because this is a problem that we have known about for so long, and as it continues to get closer to us, it means the choices we face are more difficult. and if there's one thing i've always thought working on this issue and even realizing how contentious it is, is when you look at the numbers, we should be able to agree. we need to be talking about how to fix social security. perfectly legitimate we're going
to disagree about how to do it, but it's a discussion this country should be having because it's so important to the lives of so many people who depend on the program. though it's 16 years from now when the trust funds will actually not be able to pay full benefits, that's a really short amount of time when it comes to a retirement program. in fact, today's 51-year-olds will be reaching normal retirement age just at the time the trust funds aren't able to pay full benefits. as we found in the trustees' annual report, this is the first year the program will now not be able to pay full benefits. so it will be facing deficits internally forever, as it starts to draw down many of its assets. again, there's so many choices for how to fix the program. one of the things we have on our website, crfb.org, is one, something where you can plug in your age and find out when benefit cuts will be coming and how much they would be. and probably even more productively, after we scare you, then more productively a whole simulator on how to fix the program. there are many, many options. in fact, this is a simulator that's been used by members of
congress to put together proposals for how to fix the program. i think it's really important to engage people around the country on what they think would be the smartest reform so that we can start that discussion moving forward towards fixes. so in that vein -- that's why i'm really pleased to be joined today by the two members of congress who are going to kick off this panel, both of whom have played very productive discussions in how to fix social security. coressman larson is the ranking member on how ways and means subcommittee on social security. and this event actually came out of a discussion we were having because listening to him and the proposal that he has for how to fix social security i found inspiring because it was a member of congress who was out there talking about the issue and had a full plan to reach sustainable solvency on his proposal. he's done a ton of work, taken a lead in starting the discussion, including solutions on the issue. we'll be joined by tom rice, who's also ways and means and budget and a recipient of our fiscal hero award in past years, which comes from leaders of
congress who are willing to make hard choices when it comes to paying for policies and putting forth things to make proposals. so, this is going to be great to have a discussion from the people who are stuck in the political arena, where this is a very contentious issue, but also those who are really true to the numbers and understand how important it is we get started on fixing this program. so, i'm very excited to welcome congressman larson. thank you. [applause] >> well, thank you very much, maya. what an honor for me to be here this morning, especially with my good friend and colleague tom rice, who i didn't realize you got that award, tom. congratulations as well. and i travel around the country talking about the issue of social security, and i always carry two props with me. one is the actuarial report on our proposal that i'll review in a second. the other is this starbucks coffee latte, we'll call it.
you'll see how that comes into play as well. the sense of urgency here with regard to social security should be obvious to everyone. 10,000 baby boomers a day become eligible for social security. do the math. 10,000 a day, 7,000 a week, 280,000 a month, 3,000,360 a year. the sense of urgency, as it does and concerned most of our concerns, also does congress. i'm pleased to work on the ways and means committee with tom and others who would like to see a full debate on this issue. yesterday, we had steven goss the actuary before congress. actually, there are two plans
that solve this issue. one does it by virtue of cuts and raising the age. the other one, our proposal, social security 2100, i'd like to address and talk about today. because i really feel -- and i believe -- i forget who in the organization. i think it was mark goldwin who said it's time for the demagogues on the left and the right to put away the talking points and start working together on a solution that does right by our grandchildren, our children, our current retirees, and the clock is ticking. of course, he's right about that. and that's why we have to focus on this. one of my contentions is as follows. i had this discussion with maya.
social security is not an entitlement. the citizens of this country know it. it's not an entitlement. it's the insurance that they paid for. and they know this because all they have to do is look at their paycheck and see fica. what does fica stand for? federal insurance contribution. whose? yours. so the citizens of this great country of ours understand that they're making these insurance premium payments. now, i ask you, oftentimes government is criticized for not become run more like a business. well, since this is an insurance program and since it's a federal insurance program, social security, shouldn't it be run more like a business? we think so. but when was the last time the premiums, insurance premiums, were adjusted in social security? tip o'neil was the speaker.
ronald reagan was president. but they came together bipartisanly to come up with a solution. the problem is they didn't index it enough as they were projecting going forward. but they did solve the problem initially by coming together and coming up with a solution, understanding that this is an actuarial problem at its core. i ask you, have any of your insurance premiums gone up since pineople consistently take -- pay in. as we learned from the report yesterday, enough to sustain us for the 75 year. -- year period. foremost,re first and that we extend social security beyond a 75 year deadline but also, recognize that we have to enhance the program. we have far too many people in our country. color wholy, women of
are retiring with social security as their only source of income and are retiring into poverty. in the wealthiest country in the world where all you have to do is make an actuarial, doesn't it make common sense that we would make that adjustment on behalf of people especially women, who are out of the workforce so that they can rear and raise ildrch. also, while they were in the workforce, they were working $.77 per their counterpart mail dollar -- male dollar. we also expand benefits across the board by 2%. we also incorporate into the , and arp concept feared -- arp concept.
as opposedo chan cpi which would in fact hurt seniors going forward and give them less money the longer they live. nonetheless, that was a proposal. also, provide a text cut to seniors. how? not index83, we did appropriately. if you earned more than $24,000 if you are single and 32,000 as a married couple, social security becomes text paired by , 11ng that to 50,000 million seniors currently will receive a tax break on their social security. with many of them, still wanting
to work to become productive, we find that this is a very important proposal. do? youquestion is, how pay for this congressman? if you took a look at your fund and realize that you have not made an adjustment since 1983, how about we adjusted by making everybody contribute an 1%.tional by that, we meet the employer and employee. 1%, contribution, even at represents a lot of money. in over 25 years so it comes out to be .0 5%. understand,asier to if you are making $50,000 a year , it would cost you $.50 a week in order to fix social security and that is where starbucks comes in.
much --da i asked, how or nine weeks of social security payments. we -- we lift the over 400,000 dollars. even at $400,000, what we are proposing for social security, it costs you more a week to buy this starbucks latte than it would to fixing social security program with all of the enhance benefits we have laid out. why is that important? because we do not increase the national debt. we pay for it. it is an insurance program that needs to be actual there really adjusted. if you do so in an incremental fashion, you can both expand the benefits and provide current
disappearance and future generations. how do we know? because the actuaries have taken a look at it. yesterday, under testimony, asking stephen about every aspect of the program that we have put in there, he inserted under both that these are actual and i really sound. i believe we owe the citizens of this country. as it was pointed out, the opportunity that dropped the and comeon both sides to a solution that should be quite easily resolved. when i am talking to people and they ask, why has congress not acted on this? iste frankly, because there
an ideological divide were some feel very strongly that social security is an entitlement program appeared it is not. it is an insurance program. it is an insurance program that is easilyixedy just making and every year until about 2044, that cap will increase until we get to 400,000. it does give a little bit of a window of a break for people in the middle class. it gets the job done. forill be there not only current generations but for future generations as well. i thank you for the opportunity to be here and look for to listening to your comments as well. [applause]
>> thank you to everyone for having me. your hard work and focusing people's attention on our nation's debt problems. it is very important. it is fundamental to every aspect of life right now. social security is one of the drivers of the debt, not the biggest it is one of the drivers. i want to focus on yesterday, i was asked to be on a fox business news interview. some folks here came up and commented about it. i want to focus on it for a second. was speakinger with his cohost and said, do you think you will ever see one dime
of social security benefit? you guyssked me, what have done with social security is kind of what bernie made off did and he is imprisoned. growing up, through my i reallynal life, wasn't sure if i would get social security because i read about it all of the time. i read about it and it was always. negative -- it was always negative. of seniors in my district and mortal beach california -- myrtle beach, california. everybody retires in my district. you, social security is a promise that will
be kept. what they say right now is that the social security trust fund will expire. hard to fix it and it will get fixed. it is politically in convenient -- inconvenient to fix it. it is not so much about an ideological divide. it is more about, whatever you do, you will affect one group or another. when i looked at this two years ago, i was looking at a plan. there are two plants that exist right nothat i am aware of. raisess benefits, but -- retirement age peered retirement age. it was one of the proposals that came out since the bipartisan study group. it is the only proposal that i
know that barack obama made to try to fix social security. the fix is a small part of it but it is one way. limited amount of variables. it is a method problem. you too much money going out and it is higher than the money coming in. you have to get it from one source or the other. it is not that complicated. sammy -- sam's proposal is politically feasible. i don't think us to license solution is -- mr. larson's proposal is feasible. . , everybody will have a little skin in the game. when i first started practicing law, i started as an accountant so numbers are dear to my heart.
in 1982, i believe the maximum wage was around $20,000. noty, when you say it is indexed, it kind of is because today, the maximum wage is $135,000. that is five or six times as much as it was when i started in 1982. every year, it goes up. when i first started looking at this, i knew that from anything we did, to be politically feasible, we had to get broad consortiums on board. the first people i called with a aarp. they sent some folks to my office and i had a computer program set up with the variables. cap on the payroll tax. the amount of payroll tax.
the adjustment per year. i said, let's look at these burials and see if we can come up with something because you represent the biggest group that is affected by this. young people don't even think they will ever even get it. i said i need your help. if you're not on board upfront, we have to change things. they said, we do not do that. i said, you come up with your plan and i will comment on it. this was about june or july 2 years ago. it was during the process of the primaries. maybe three years ago. about two months later, i saw a commercial on tv and they said tell your candidate to take a stand. as somehow they will fix social security? politically copy --
difficult issue. this is one of the easier issues to solve. every presidential candidate says social. every presidential candidate wants to get elected. i think the president knows it is not fine. i think barack obama knows it is not fine. i was offered obama did not offer more solutions. i suspect he is going to participate in trying to fix us in -- social security but i think it will be two years from now. , i was actually pleasantly surprised. it was actually better than i thought it was going to be.
the only thing that changed is that we were one year closer. what did change is a disability. the economy is outperforming their projections. economyw, if the outperforms, sisters. lives longer. outperforms, they go back to work. then, social security lives longer. thatdministration projects our economy will grow over the next figures. when i first got to congress, they were thinking it was going to be 2.9% over the next 10 years. next year, they lowered it to 2.5, the following, 2.2. they can't going until 1.9.
think it was the burden of a lot of regulations that were being put on businesses and we put the stimulus behind is economy moves up. the ceo expects the next year every economy will grow 2.2%. that is substantially higher what the trustees are projecting. year, they moved it from 2024 to 2028. people are continuing to drop off of theisability. two years ago, they peaked at 9 million. active people withdrawing. million. is a .5 today,here are more jobs available than people feared if we can continue to entice people to get off of disability and get
back into the workforce, that lengthens the life of social security. mixing method easier. if we can continue to have gdp 2.4%, it would give cial security more money. it would make social security last longer. if you really think about it, it was much better than we thought it was going to be. 4%hink the are expecting plus for the rest the year. all of thesens, problems get a lot easier to solve. i thank you for coming. i thank you for having me. questions. [applause] thank you so much.
i would like to invite the panelists to come up and join us. >> good morning. great crowd. my neighbor's -- name is lisa. i read a lot of very lengthy reports. day, every hour, we have a new breaking story these days. i'mk you fo coming thrilled to be moderating what i think is a very important panel. thinking about this event, i was sinking about the year 2002. in 2002, one of the biggest movies was lord of the rings, the two towers.
in that movie, cable news has dominated. 16 years was good for that movie al in 2002, something new happened in europe. they introduce the euro. 16 years is often enough time for the european union toe fully stable. u.s. was in, the afghanistan in a country that was unstable. been enough not time to eradicate the telegram or to stabilize afghanistan. of thebout that in terms 16 years we have for social security to become solvent. it is not a lot of time. that is why you're here with this panel today to talk about the future and talk about the report that cannot speak.
it is my pleasure to introduce jason. also caf au lait from the center for budget priorities. each oneike to invite of them to say a litt about themselves. >> i am jason at the university. i am joining the full-time faculty at john hopkins school. -- thoughts today do not reflect any of my employers. the'm kathleen, i'm from center for budget priorities. before i came to the center, i worked for the social security administration where this guy was my boss. i am my a mcginnis but i would like to take a second to say i feel a lot better after listening to the two members of
congress. when you actually sit down and have a chance to sit and speak with members, i'm glad we are setting the stage with that. >> would like to take your questions. some of you have already handed in a few of these but if you have had a chance to write on a question, please pass them over. your hand, get someone's attention and pass up the questions. i want to start with your impressions of this latest trustees report. attood out to you? minutes so itee is not a lot to cover. i want to focus on the di program. there was a lot of of change. nowdi trust fund itself is
2032. lester, it was 2020 eight. the year before that, it was 2023. before that, the trust fund was going to be depleted in 2016we n the trt nd of bipartisan budget act 2016, past a payroll tax allocation. currently, we have a little bit less money going into the retirement trust fund that more going into the di. the total did not change but the applicatiod. that ends at the end of this year. it is important to think, why are we getting here? back in 2010, there was a lot of discussion of whether or not the then rapidly increasing disability applications and awards were going to be a constant trend to bankrupt social security. what we do at that point? andourse, we look back since 2014, we have seen a
decline in applications for rewards. now we are asking is is going to continue? the economy has changed. we are in a moment of full and and aand -- employment lot of people are able to find jobs. the trustees have told us this is a temporary situation. it is not going to last forever. will probably go back to historical norms. that means the di trust fund could get worse as soon as we have a slowdown in the economy or a recession. we cannot look at this 2032 date and think it is way into the future. we have to focus on reform for the retirement program but also dei. we cannot get complacent. just to give a highlight ont is important, both members of congress pointed out the need to act now as a facilitator. -- as opposed to later. if we are going to solve the social security solvency problem
by raising textiles, that would require today, a permit payroll tax increase of 2.8%. that would get you up to 15.18 for medicare taxes but that is a 22% increase in your taxes. who wants to go to their constituents and say, who want to try to present increase in your payroll taxes? if we wait, the trust funds deplete in 2024, and that is a 2.87 percentage. increase that is a 31% increase in your payroll taxes. no one is going to do that. you go to the benefit side, it .s a 17% reduction for all beneficiaries if you wait until 2034, it is a 23% reduction.
no one wants a. it is not going to happen. the only way we are going to get -- get social security is to have an honest debate. it is not going to be on the tech side, it is going to be somewhere in the middle. the sooner we do that, the less the magnitude will be on future generations. point? -- kathleen? >> social security has a manageable short-term fall. as congressman price pointed out, it is a mess problem and it is a mess problem that we can deal with. it is either more money in worthless money out? however, we always have to bear in mind that is more than a mass problem. every american including all of us will turn to social security
at some point in our lives. when we reach old age, when we are too sick to work. for many americans, social security is their primary or sole source of income. along with most americans, think that we should solve this primarily on the more money inside. careful studies have been done by the national academy of social insurance talking to americans about what they would prefer. people overwhelmingly choose to sell this problem primarily on the revenue side. i think it is justified for policy. social security benefits are modest. recent trends justify it. social security's tax base has eroded. finally, we are still phasing in some of those cuts from 1983. the full retirement age is rising from 66 to 77.
there is a cut across the board that is not yet good. everyone has skin in the game. we should focus primarily on higher earners because of the straat indth mentioned in addition, differential mortality. higher income people tend to live longer. we cannot do it just on high earners. either on the tech side or benefited. we should consider doing some things like raising the rate and broadening the base. how shall we do? -- should we do it? it should include the disabilities trust fund and the retirement survivor's trust funds. those programs are very closely linked. we should also consider some as,et enhancements as well the opening ssi which is not been open for decades.
finally, when shall we do it? we need to start talking about this picking -- fixing it in the net -- your future. we do not want to rush into it. this is really complicated and as congressman rice pointed out, politically complicated. these are people's lives. we want people to live their most affordable years in dignity. finally, it is going to require bipartisan registration. we cannot drill our way out of this problem and we cannot do it on a partyline vote. we need to be reasonable and -- constructive and, with solutions. you aboutto ask something treasured nation -- treasure many asian -- mnuchin said.
he said the tax cuts improved trade agreements. give the longtime growth needed to secure these programs leading to a more stable path, what do you think of that theory? what do you think of the early -- theory of growth solving the problem? -- theve the transit, is chance to comment. i found his remarks more on the camp of a fiscal free lunch. we do not have to make any choices, this is all going to get manageable he fixed. -- magically fixed it the other that i was concerned was it shows that we are ok for the immediate time being. is the kicking of the can that we have seen for so. -- for so long.
and i hope that we can move a debate. from whether we need to do something to, yes, we need to do something, but start having a conversation. there are some potential reforms anduding raising revenues, raising the tax base is a really important and interesting one that is not talked about enough. should that be done across the board? many of us think no, it should be on the higher end. that is an important core value but again, we need to play around with these levers. looking at retirement age, which is something a make sense when you look at the fact that one and lifetarted at 65 expectancy is 62. in slow increase to 60 says
-- six to seven reflects that. there are ways that you can maintain the system but also make changes reflecting the. figure out how the -- how to figuring out how we index benefits. and on the other side, expanding benefits for those who most need them. i hope we switch to talking about which of those make the most sense. three other points quickly. waiting until the last minute is too late. i thought jason made that point clearly. if we wait until the trust funds aren't able to pay full benefits, the cost of reforms goes up by about 35% or 40%. there's no good reason to do that other than people trying to duck those choices. already we're getting to the point where it's going to be harder and harder to exempt all existing retirees, which is something that has been a political promise for a long time and i don't think people are eager to walk away from. the third thing is it's really helpful in many ways that social security is its own program and off budget, but it's also
helpful to think about in the context of the overall budget. we're going to have to have a package that both changes the growth of benefits and raises revenues. i just don't think think there's a real possibility for one that doesn't look at both. we're also going to have to look at those things, spending and revenues, when we're looking at dealing with the national deficit and debt, which are at unprecedented levels. on top of that, there are a lot of new and/or unmet needs in this country, from investment in infrastructure to human capital to recognizing that our economy is shifting dramatically in tes of things like the future of work and ai. we should be looking at all of our resources as one should in a budget and think, where do we want to be putting our resources for the future? what are the best long-term investments we should be making? finally, i mentioned fiscal free lunch. i am really worried that right now we are in a period of fiscal free lunchism, where first we had tax cuts, which we didn't pay for. then we just had a big spending increase, which we didn't pay for. and you're hearing more and more arguments about why you don't need to do things, growth will fix it all, and yes, growth is
very helpful. i'm concerned that stimulus during a period of economic expansion does not lead to sustained growth. in fact, i'm pretty convinced it does not. it's more of a short-te b and we're going to need to find structural improvements that will have long-term growth, but again, this comes down to policy. and the longer we wait to make those choices, the more difficult and onerous they'll be , while we still have a window now to make them in a smarter way. >> let's jump into what seems to be the core of the problem. smart people in this room, smart people on this panel know the options. i think you even see -- we heard from members of congress of potential solutions here, a combination of paying more and seeing fewer benefits, at least for some groups. jason, i want to ask you about the politics here. is either party moving in one direction? we heard about representative larson's bill. it has 170 co-sponsors on it. but i believe -- and you can correct me if i am wrong -- they are all democrats.
is that right? that's right. he's hoping the two of them will talk afterward. is either party moving in a direction? we saw president obama with the grand bargain, sort of offer some benefit cuts to social security. we haven't seen really that happen since. where do you see the parties right now on this issue? >> sure, ask me the political question. [laughter] >> anyone can jump in. >> i think one of the issues we have with politics is how to educate the people who are voting on th. there's a lot of confusion about the magnitude, the importance of the problem. a lot of people i think look and say, this isn't going to happen for 15 years, there's no worry, why should we bother about it now? that just kicks the can down the road and allows membs to do so because no one is really pushing. when we had a fiscal issue like the debt ceiling, all the sudden there was a focus. we had this problem with the fiscal cliff. we kept putting off at the very end. unfortunately, i think that's where we're headed when it comes to social security reform. seems like every year we're up here raising the alarm bell. then we'll be up here next year wondering why it hasn't happened. to congressman rice's point, maybe in the second year of a
presidential term is the time to do it. it may also be something where you see politically it might take a democratic president to offer social security reform, which to your point, congressman, it was surprising barack obama didn't take that chance to do so in the second term. with each passing year, we miss an opportunity. i'm not someone who wants to solve all the problems on the tax side, but as kathleen mentioned, when i was at social security, i was the deputy commissioner and chief economist. in that role, i was the secretary to the board of trustees. back when we did the reports in 2008, so 10 years ago, if we had just raised the payroll tax cap, justifted it altogether in 2008, that would have solved the 75-year solvency issue. we don't have that option anymore today. now it covers one half or two-thirds. so you still have to do more. the longer we wait, now we're like, we can't raise the payroll
tax cap. we do need to protect the most vulnerable. now all these options we're doing become much, much expensive because we failed to do something aut yea ago. how do we convey that message to the public so they get the sense that urgency is here today and not in 15 years? >> this is john duke here in the audience. very similar question. does the american public want to salvage social security? do they value it? if so, why isn't it politically feasible? kathleen, i'll give you that one. >> sure. people have definitely studied this, and i think overwhelmingly people -- the american people really value social security. they're willing to pay more to strengthen it. but the problem, as congressman rice pointed out, is it's really difficult because it means people are either paying more or getting less. everyone is willing to always put that choice off until tomorrow. so we've put that choice off into another tomorrow and another tomorrow and another tomorrow. i am also not optimistic that this year is going to be the year or even this administration is going to be the administration, with, as you said, one news story breaking
every hour. it doesn't give us the space to have the reasonable and constructive discussions that we're having here and educating the populace, as you said, is so important in order to really get people to buy into a solution. of course, the bipartisanship that will absolutely be necessary doesn't seem very plausible in this moment. >> can i just add, i have one other thing that is important because congressman larson mentioned this. framing is very important also in how you sell this. if you do surveys and you ask people, are you willing to pay more in taxes to make social security solvent? vast majority say yes. are you willing to pay for a cup of coffee a we? that's easy. even i will raise my hand to that right here. but if you change the question, are you willing to pay a 30% tax increase? no. it's sort of like this idea when you change the framing, you get different answers. are you willing to take a surgery where your chance of life is 90%? sure. you want to take a surgery where your chance of death is 10%? no. [laughter] -- different question, you get different answers. that becomes this for social
security. right now we have these bifurcated sides that sell one language versus another, and that creates confusion. we really do need to create the space, to kathleen's point, where we all can come together and say, here are the facts, here'the math, what are our priorities, our principles, and have members on both sides where they can come together in a bipartisan way and have that protection from the other side. because they can say we are doing this as a team. >> maya, you talked to these members. in public sometimes they tell you things about what they really want, what they can really do. i want you to talk about what the politics are here. it feels to me, as the reporter up here, there is a real leadership vacuum. i was amazed talking to the most fiscally conservative members -- who i thought were the most fiscally conservative members -- as the omnibus was passing, the tax bill was passing, who were just shrugging off the potential very likely deficit effects. what's happening with leadership -- these are people who had been leaders on this issue. what's happening with leadership here, and what's happening with
both parties that you talk to? >> yeah, that is a really thoughtful question. i do think the bad news is there's no leadership on this right now. our president, when he ran for office, and since then has alsos problem. it is very hard to make changes that are going to involve hard choices unless there's presidential leadership. we have seen that time and time again, so i think that's made it more difficult. politically, no matter what, no matter what framing one chooses, the other party has the opportunity to reframe it in the other way. so there's always the chance to demagogue on this issue. and so it's very vulnerable. and i think the political leaders see the downside of moving forward and saying, listen, pointing out the things we're pointing, that we're doing damage to people who depend on this program by waiting. the bad news is i agree with what you're implying, which is there really is not the political leadership we've seen on this, on social security in particular, on fiscal issues, and kind of even broadly on alerting the public to how bad the fiscal situation is, whether it's overall debt and deficit and what we're doing to make it
worse, or individual programs like social security, medicare, other programs we need to make changes. the good news is what you do hear behind the scenes is there's a lot of willingness to do the hard work. and on social security in particular, i think this is the program where there's the most willingness to compromise. this is the issue -- if you put republicans and democrats in their traditional boxes, republicans want to cut taxes, cut spending, democrats want to raise taxes, raise spending -- it is more nuanced particularly on social security because i think people realize that they will have to compromise. that bipartisanship will be critical to get this done and that you really can't do it all on one side or another. so that good news means that if can switch on the leadership and part of that comes from people saying, i really want this program to be fixed, that there is support from a lot of political members on both sides for this one in particular. it may be easiest to do something on social security first to kind of take this and put some plan to fix it, a
commission or working group or, frankly, we know the answers, we could get right down and fix this, we have been working on it for a long time. but it may be easy to work on this one first because there is that willingness. >> jason, i want to get a little wonky right now. for all the wonks in the audience. let's start with the revenue side. i think kathleen said -- i wrote down that more money in is seen as the primary solution. do you agree with that and where does the money need to come from? people talk about raising the payroll tax, but what are the other possibilities as well? >> let me answer that by promoting two products. a nice book goes through a lot of things, maybe offering private insurance as part of , the savings incentive, so that is one product. and another is a bipartisan policy center did a commission on the retirement savings
future. and it was bipartisan. they had people on both the right and left go together. their goal, tanzania question, was to try to f-- their goal, to answer your question, was to try to find basically a 50/50 split between bringing more revenues in and making changes to benefit to get solvency. and they did it in a way that actually improved poverty for older americans in the future. so it helped not only solvency but helped the most vulnerable americans. when you think about revenues and the solutions, you can't just do it all one side. it can't be all revenue, can be all -- >> right, but how much should be revenue is going to be the question. >> so no one mentioned it, but the idea should be a means test of social security. again, that gets me thrown out faster than a member of congress gets thrown out of a room. but we in some ways now do have a back door means test. we tax benefits for upper income workers, but not 100% of it. so we should look at the idea of maybe if we are trying to go for a higher income earners, we tax on hundred percent of it, not just 80% or 90%.
maybe look at the payroll tax. maybe we find other sources. henry aaron suggested looking at the estate tax, bringing that into some sort of revenue. so i think when we think about reform, we do need to think politically about what sources of revenue we can get and what else we can do. there are some members who will remain nameless, but even more creatively, perhaps we change it. instead of a payroll tax, one at a carbon tax or a value-added tax? right now there are disincentives to working when it comes to social security payroll tax. it makes labor more expensive. if we got rid of the payroll tax, now labor is less expensive. people want to work. do tax consumption or carbon to fund social security. that is another idea. i am not endorsing it, but we should be talking about it. >> do you think there is any potential backing to that? >> again, the point is we need to have a discussion about -- if you raised the payroll tax rate, i have now made labor more expensive for an employer and also made it less attractive to someone who wants to work. >> but we're also making old age
more expensive for the federal government if we don't do that. >> but that is on the outgo side. you're talking about revenue. so now if i change the revenue source from payroll to a value added tax carbon tax, i get a broader base, i get more revenue, and i get rid of those rivers incentives for labor. -- those reverse incentives for labor. >> and just to reinforce that point, you do want to tax the things that you want less of, not the things you want more of. so taxing wages is far less desirable than taxing something like carbon that could have multiple positive effect so as big an idea as it seems, i do think it is possible in the coming years that that enters the discussion. >> and we should be talking about other sources of revenue. >> that is fascinating. on the revenue side, what else do you want dad, kathleen? what did not get discussed enough? is there anything? >> one idea of broadening the base -- over time, the cost of health care since 1983 has really sky rocketed and employer sponsored health insurance, the premiums are not subject to
social security tax. so that is one idea that we've seen on a bipartisan basis, including some of these commissions, to apply the payroll tax to those premiums that your employer pays on your behalf. if you buy your own insurance or you buy it, as people increasingly do, through the aca, you have to pay that tax already. so this would be equalizing treatment among people regardless of how they get their health insurance. so that is one idea that has some bipartisan juice. and i think it is interesting to look outside of payroll taxes. i have traditionally focused on payroll taxes, these additional focus of social security. but i was nodding and smiling when you were talking about carbon tax. if we could get to a place where that was realistic, i think that would be really worth considering. >> so let's talk about the benefit side, and i'll let any of you jump in. what do you think is realistic on that? obviously benefit cuts are coming right now as the system stands, it is just a question of
how much or how we mitigate or what we do. can you talk about the idea of just bringing down the benefit itself versus changing who gets the benefit, changing the retirement age, changing the benefit base? trade-off there? which of those things help the system more and how those things work? >> i will jump in. i actually find that interesting that you are worried about talking about means testing because i find whenever i'm talking out in public -- we do talks around the country -- if i don't mention means testing, it is almost always the first qu thaesoni get from the audience. somebody will inevitably stand up and say, i really want social security to be there for my kids, for my grandkids. i don't think i'll need it, so i'd be happy to give some of it back if i knew that it was going to be used to preserve the program and if i knew it was going to be there if something happened and i needed it. i think people have a strong sense that they need the insurance program, but if they are doing well in retirement,
they would be willing to step up and share. i often think, could you get a small symbolic movement of people saying, give it back? the ceos of the country, for instance, to show that people want it -- >> or starbucks. >> yeah. right. give back your starbucks coffee. but i'm not sure i am willing to give that up. so i think that there is a lot of willingness for that. and i think you want to make sure you build in protections. there are a lot -- if you do end up raising the retirement age, for instance, you want to strengthen protections for people who work in jobs where they can't work longer. i think you want to think about shifting this to protect against risks. again, to broaden the issue, that is so much of what our economic challenge is going forward. our economy will be changing more rapidly than it ever has. people will be getting through the dislocations, people will be going through rougher times. and i think figuring out how to ensure against a lot of risks in our economy is one of our biggest goals going forward. also just when you were talking revenue versus spending, my projection is i think when you
look at these different policies, we will probably have a solution which relies much more heavily on the revenue front, revenue pieces in the front, because it is easier to get a lot quickly if you lift the payroll tax cap or something, but then relies more on slowing the growth of benefits over the long term where some of the savings can compound and give people more time to adjust. >> kathleen, i've read some of your writings and you have written in the past -- correct me if this is wrong -- about raising the retirement age as a way basally take away benefits. can you talk about that? do you think that is ultimately going to be necessary or do you think it is avoidable? >> this is one of the most misunderstood areas of social security policy, so i appreciate the opportunity to clarify it. when people think about raising the retirement age, they think of it in terms of eligibility. like i will have to wait another year to get benefits. that is not actually how it works. there is a sliding scale of benefits depending on when you retire. so if you retire -- if you raise the age by one additional year, which we're in the process of
doing right now, at any given age you are going to get 7% less than you would have otherwise without that change. so it is an across-the-board cut. it means less nefits in ur social security check. and so i think first of all there is just a public misunderstanding. and the other thing, the common justification is people are living longer. well, yeah. some people are living longer. but not everyone. about half the population, that high income half, has gotten some pretty impressive gains in longevity over the past few decades, but the bottom half, nothing. nothing. and the very bottom, we've actually seen some backward progress. so actually shorter lives in the united states of america. that is really troubling and this is the kind of stuff we are going to really have to grapple with, trying to stay on top of these trends and make sure we are being fair to people being
left behind. >> this goes back to the framing and language, which i think is very important to the public debate. one of the things -- i didn't change it when i had a chance, but we call it the normal retirement age. what makes it normal? then there is what is called the early eligibility age, that is what kathy mentioned, age 62. a lot of people think oh, i'm now eligible for social security, it is the early age, i'll take it. it is the highest age which people take benefits. they don't understand they are getting a reduced benefit. why don't we change the nomenclature? instead of early eligibility age, we call it the minimum benefit age. and then people might ask the question. we were going through field offices asking people why they were here and they were saying , i am here to get benefits. they are mostly 62. do you realize you're getting a 25% reduction in your monthly benefit? what? no. they walk out. so they were like, why are you doing this to us? if you wait until 70, it is a 30% increase. they don't understand the benefits of delay and it is all because of the language.
we have to change the nomenclature. that does not require congress, that can be done administratively. no longer is a early eligibility, it is minimum benefit age. the minimum benefit age is 62, but that is a reduced benefit. that is what we will stop talking about -- that is what we will start calling it. and the other thi wanto talk about is -- rep larson mentioned this -- i had been trying to talk about social security as an insurance program for 15 years. because people do think about it as an entitlement -- i paid in, i'm entitled to it. you talk about insurance, insurance is designed to mitigate risk. the program technically is the old age survivors insurance program. survivors in case the primary worker dies as a benefit, and originally it was for old age, which back then it was 65. if you made it to 65, you probably did not live more than a year or two. we have changed it from an insurance program to entitlement program. if we go back to the insurance nomenclature, it allows us to have discussions about who really needs to be protected, can we increase the minimum benefit, what do we do for
higher earners, can we start reducing it? who doe at the high-end not need the full insurance value would get a little less and those who need more would get more at the bottom end. and we can start having that discussion if we use the insurance nomenclature so that is very important to start thinking about. >> and just a couple questions inudiee to sort of hd together. one i believe is from leah young , who is asking, can you fix the critical problems in order to fix this? for example, reduce giant spending, abuse, and sort of the broader approach to the way government spends. and then we also have a question, why are the trustees not considering removing the annual cap? of course, congress would have to make those decisions and not trustees. but i'll let you take either one. a broad question about the way congress spends, which i think aya touched on a little bit. is it inevitable that congress -- representative race will hate this question -- but is it
inevitable congress will tend to spend more and not be fiscally responsible, or is there a way to turn that around? and how much is the eligibility problem here, which i think is what this question is about, and fraud abuse? how much of that israel savings? is that possibility in the system? >> it reminds me of the old joke that the party of fiscal responsibility is the party in the minority. >> it is not a joke. [laughter] >> i think that sort of answers the question. it is really hard to talk about these -- when we have discussions about spending, it is irresponsible to say let's increase spending on one area, and then say now we have a problem with entitlements. you have to think holistically about the budget, moneys coming in for dedicated programs and the general fund. we have to think politically. it is wrong to say to fund -- we have to think holistically. it is wrong to say to fund one entitlement program, we have to cut education spending someplace else. these are programs that have their own intent, their own purpose and design.
and they have to be formed independently, but we have to look at the overall budget picture. we can't ignore one jus solve the other. >> and i'll push a little bit on your definition of fiscal responsibility. i don't think that spending more is necessarily fiscally irresponsible. i think spending more or cutting taxes and not paying for it is fiscally irresponsible. >> i didn't mean to say -- just seems that we are on a trajectory where congress right now -- >> but i do think those pressures from things like this enormous tax cut do raise the pressure on social security, even though that had nothing to do with social security. people suddenly look at the balance sheet and see the ginormous deficits, a technical term by the way, and they say , oh, now we are in this fiscal tough spot. you're in a spot of your own making. and it really is not social security's fault that you decided not to pay for your tax cuts. >> let me completely agree with the fact that more spending isn't what is fiscally irresponsible. fiscal responsibility has nothing to do with bigger or smaller government, it has to do with your willingness to pay for things or borrow for actual reasons.
there are times in a business cycle where you should be borrowing. we borrow because we just don't like paying the bills. that is certainly an issue. and the same point kathleen made but switching a little bit, there is so much dam afraid that the tax cut has done, both in terms of to our deficit and debt situation, but also to our need to reform entitlements. people will rightly say, we now have this huge problem because we cut taxes. we are not going to fix that because we fix social security, but we also needed to fix social security before the tax cut, so it has undermined that very true argument. so this is why fiscal free lunchism corrodes the entire budget process. >> let me add to that. i learned in economics there is no such thing as a free lunch. i tried to expel the word free from my vocabulary. there is no free health care, education, anything. we won't get into a discussion of the tax cuts. i think a lot of the tax reforms were good for some reasons. we can decide whether or not it
was holistically good, but there were some things that had to be done. but that said, were they paid for? we are getting close to a trillion dollar deficit. in about 10 years, we are going to hit $1 trillion of interest payments per year. that has an opportunity cost, that is the cost for the annual fund for social security. so we'll be paying so much in interest we could fund social security on it. so we can't ignore the fact that this deficit drive large debt and large debt creates interest. right now we are in a low interest rate environment. interest rates go up 1%, 2%, and all a sudden that trillion dollar interest payment is now 1.4, 1.6. now all of a sudden you are crowding out education, infrastructure and everything else. so the debt is so important, that should also be one of our primary discussions. >> so we've been talking about the macro and sort of how government is looking at this problem or how we look at government. i want to think about the micro here and individual americans. 60 milliont is about americans who received social
security benefits of one form or another, predicted to rise to something like 80 million americans by 2030. a huge group of people, many of whom will depend on these benefits. but this is also at a time where we're seeing that the way americans pay for their retirement change. no longer are people getting pensions, as a rule. in fact, many of the younger people in this room don't even really understand what i'm talking about. what is a pension? can you talk about, how does that play into this, the dependency on social security? and could there be a political will that comes from people needing social security more and how do they realize that? >> i think the importance here is to think about holistically when you think about retirement security. social security is a portion of it. remember the old three legged stool discussion? one third social security, one third was an employer pension , and one third was personal savings. if the pension is gone, you've now got a two-legged stool, which is very hard to balance. if you get rid of personal savings, you are now on a pogo
stick. we get tired of bouncing up and down, we fall over. we need to talk about not changing social security, but changing the incentives. if we go away from the defined benefit world and a completely defined contributions, can we make it easier for employers to contribute, whether it is through state plans, a public like congress has, why not the public have that option, too, if they don't have a sponsored plan? change the tax incentives. right now you get a tax reduction for a 401(k), which helps higher income earners. why not change it around so it is some sort of credit that helps lower income earners? expansive current savers credit. so we need to think about entire meant -- about retirement security writ large and how to change other parts of the three legged stool to make retirement security better. >> and i agree with a lot of that. i think we always need to keep in mind that for every -- almost every american, social security is the base of that retirement security. no matter what happens, you lose your job, you get hit by a car,
your retirement savings gets wiped out, social security is always there no matter what happens and people hope to rely on other sources of savings and they hope to rely on pensions, but those hopes don't always pan out and social security is there and it does protect people, even when they are moving jobs and dealing with the new modern economy. that has to come first. we have to talk about it comprehensively, the so security has omfirst when we talk abt retirement security. >> i'd agree it is the fundamental leg and that it is also there, a structure to help you protect against outliving your savings. there is a lot of talk about an upcoming retirement crisis, but in many ways those numbers actually overstate the problem because they don't fully take into account the sings that goes on in 401(k)s and other things. so hopefully as we get better numbers, we will see there is not as much urgency in terms of other areas of retirement. i do think one thing we have lost is the culture of savings. it sounds quaint, it sounds old
fashioned. it changed when we had securitization, the culture of credit replaced the culture of savings. but saving for big emergencies, big outlays in retirement is a piece of all of this and finding ways to encourage it. i have always liked -- i like savings mandate, but i know mandate is not a populard. i am fine with means testing, but i know mandate is not a positive word. but more savings defaults, nudges, ways to encourage people to save personally. and i've been a fan of matches for low income savers. >> we are going to start wrapping things up. i want to take advantage of this smart audience that came today. it is an audience that i see a lot of good age diversity in. i am curious -- someone brought this up earlier, i think representative crist from his fox news appearance -- i want to see a show of hands, how many people think they wi see so security benefits? some may already be receiving them. >> maybe the question is the opposite. >> and the opposite, who does
not think they will receive benefits? that is a good number of hands, all of the younger people, interesting. >> when i was the deputy commissioner and i had to travel alone, but you sit in an aisle with three people, what do you do for a living? oh, crap. i work for social security. and if it was an elderly person, they would say how much they love the program. and the younger person, why am i paying into it, i'll never get it. and i had to explain, there is the disability and survivors component. then we get to the point where you will get it. under current law, if congress does nothing, we hit 2034, automatic benefit reductions happen. that is the default, by the way. it is not like benefits get paid into the general revenue fund. the default is benefit cuts, but that still means you would get 75%. so it is not like you will get zero. you will just get three-fourths of what you were promised. these are called payable benefits as opposed to schedule. so the program is not going bankrupt. when you hear the term bankrupt, you should say that is not right. the trust funds are going
to pleaded, and if that happens, social security can only pay out what it brings in in payroll taxes, which is about three-fourths. so i guarantee unless congress decides to cancel social security, which i don't think anyone thinks that is going to happen, you will get something from the program. what we want to do is make sure we are protecting the right people and that those who deserve it get it and we're not leaving people in poverty because of a reduced benefit. we need to do that sooner rather than later. >> do you have closing thoughts? >> i take two conflicting thoughts from the number of hands that went up. which is many more than i thought it would be. and the first is that so many young people actually don't think that they are going to get it. and you are. but it does present an opportunity, which is there is a way to make reforms where most people would actually end up doing better than they think they are going to. so if you are looking for proposals that you could have a lot of people support, ihink there is some real promise there. if you say to people, we are guaranteeing that you will get x percent of what the program dawould have paid, that is a win if you think you are getting nothing. but the flipside of that and what i'm not comfortable with is
this is so many ways an intergenerational issue, as is the overall fiscal problem. what we are doing is spending a lot of money and passing the bill to future generations. and that is predictably pronounced in an intergenerational program like social security, but the opposite of the american promise, which is each one of us will try to leave the next generation with a better and stronger economy. and so while on one hand i see a good political economy solution there, which is have the young kids bear the burden of this, i don't think that is right and i don't think that is our principles in terms of what we aspire to. so i hope we can push ourselves a little beyond that. >> >> i want to say what a terrific panel, but also -- and i wish tom were here -is should be the panel discussion in the committee. the fact that this issue is ever present and is not going away, and that there are no public hearings -- congress should be about the vitality of ideas, look at the ideas you heard generated here. we have staff here taking notes
because these are constructive ideas that should be implemented. minimally should have a public hearing, and optimally a vote. so congratulations. this was well done. >> let's give a round of applause to the congressman. [laughter] [applause] macguineas, kathleen romig, jason fichtner, thank you very much. thank you to c-span3. also go caps. >> already thinking next year. [captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] announcer: the u.s. senate returned for work today on the
716 billion-dollar defense authorization bill. they will take a vote at 5:30 eastern with a simple majority needed to start debate. if that succeeds, they will work on amendments throughout the week. the house is back tuesday at noon to start work on a slate of anti-opioid addiction legislation, including cracking down on importation of synthetic opioids. addiction treatment and recovery and giving pharmacists guidance on issuing prescriptions. watch live house coverage on c-span and see the senate on c-span2. announcer: tonight on the communicator, former fcc chair tom wheeler talks about the end of net neutrality. he is interviewed by david mccabe, technology reporter for axios. >> the focus of net neutrality has shifted to legislation. do you think it is possible to legislate this issue? >> it is fascinating that the republican position was, this is
something congress ought to decide. now when congress has the opportunity to decide with a ngressional review act that has passed the senate in a bipartisan way and is now pending in the house, that the republicans in the house and the industry say no, congress should not decide. look. if the chairman of the fcc has the courage of his convictions, that what he has done is right for america and will stand up to , he oughtthe congress to pick up the phone, call speaker ryan, and say, schedule it for a vote in the house and let's see what the representatives of the amerin people say. announcer: watch the communicators tonight at 8:00 eastern on c-span two. c-span, where history
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