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tv   Social Security Trustees Report  CSPAN  April 30, 2019 4:17am-5:22am EDT

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we will talk about -- be sure to watch "washington journal." join the discussion. next, a form of the 2019 social security trustees report. panelists say it shows by 2035, the trust fund will not make full retiree payments. the committee for a responsible budget held the event. >> good afternoon everybody.
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good afternoon. thank you so much for joining us this afternoon. i am on the committee for a responsible budget. we are glad you are here today for the trustees report. we have a great panel, great moderator, great audience. i will jump in and do a quick overview of what we learned from the trustees report and ask our panel to lead us in a discussion. this is on the powerpoint does not work. let me start with a couple takeaways as i see it from the broad report. the most important thing is the fact as the trustees tend to tell us every year, social security is unsustainable. the combined trust fund will only pay full benefits until 2035, at which point there will be an abrupt across-the-board
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benefit cut for everybody of 20%. in addition, because of the demographics and structure of the program, those imbalances are large and rising every year. year, there year to will not be a huge structural change in terms of social security finances because so much is driven by demographics. this is one thing i am not used to saying, that is encouraging, we found the disability portion has significantly longer until those trust funds fall short. that is positive news and reflects the positive change people are seeing in the workforce. finally, and this is the most important take away, we are running out of time to fix social security. every year we ignore the trustees warning them of every year we wait and delay, it ends up increasing the cost to fix
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the system. social security is going to be insolvent in 16 years. for the disability portion, it will be longer, 2052. 2034.tirement portion is that is one year later than last year, and this year when someone which is normal retirement age, that is when it is projected to kick in. that is when this year's retiree turns 78. given that life expectancy is 85, this will have a profound effect on many people who are entering retirement now or looking into retiring in the future. when i started doing this, i have been working on social security a long time, you were able to look -- every year we wait it becomes disturbing and
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frightening how much it will affect people who are closer to retirement or in retirement. you can see the difference between social security revenues and the benefit. the revenue is relatively flat. it is driven primarily by demographics. , we seeat the cash flow the payout has been exceeding cash flow revenues since 2010, and the gap is projected to grow as the population ages and the costs rise. 3% inl rise as much as the 20 30's and flatten out and grow to 4%. the law says you cannot pay benefits above and beyond what the trust fund has this is where the nature of the cuts comes. in 2035 everyone sees a 20% benefit cut.
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the shortfall kind of fluctuates year-to-year, it has improved since last year. it goes up and down regularly. 2010u look at the back of when the proposal cannot how to change and actual the problem has grown significantly. grown, we aret getting closer to the. period of insolvency. 1983, they were able to put in reforms and phase them in gradually and overtime, and delay when it started. that's good for people adjusting to changes. not only does the gap grow, but the distance between this and when the benefit cuts starts and get closer, the ability to do political way is lost.
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this shows you the cost of the lang. you hear politicians talk about, we do not need to worry, nothing could be farther from the truth. the policies you need to fix the program grow with that time. if you make the policies of the revenue side, the tax side, starting today versus starting in 2035, the size of the revenue increases to fix the social security program increase significantly from 22% to 29%. if you make changes on the benefit side, cuts will have to change. most notably, if you are looking to affect current -- protect current beneficiaries which has been the political promise, if you wait until the last minute, that becomes impossible.
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we have a handy-dandy tool on social security reform. it is important to get people's ideas on this. it is not complicated technically, the fix is available to us. it is about policy preferences in terms of social security and budgetary resources. you can look to the committee for a responsible federal budget website, and we have a tool that shows you how old you will be when social security funds run out. enter your birthday and what you find out is the trust fund, if old youu are 50 years find the trust fund will run out when you are 66. lifetime benefit reductions of $96,000. if you are 20 years old, benefits run out when you are 36. that is halfway through your working lifetime.
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of $180,000. theo not want to show you problems, we want you to help us fix it. the interactive social security reform tool allows you to craft from options how you would fix social security. this has been used regularly by many people, we collect where theto find out ideas are. it has been used by congress to put together actual plans to fix social security. i encourage you to do it on your own, for a party. [laughter] i try to get my kids to do it for a birthday party, nobody is taking me up on that. for you who work on capitol hill , it is a great exercise to do in your office with your member in the various committees, and it gives you choices. if you want more choices, we will build it out and work with you.
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be no question that social security needs to be reformed. the trustees tell us this all the time. i find reading the report is useful, enlightening, straight up with the numbers. maybe, there is no question, social security needs to be fixed. the cost of waiting is tremendous and will have big effects on the policy choices left on people receiving benefits. that jeopardizes people who depend on the system the most. ares really unfair that we waiting. saying you need to reform social security has nothing to do with how you want to fix social security. you can want to fix it with tax increases. you can want to do it with benefit cuts. i think anybody who looks through that and sensibly evaluate fit, will figure out
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that we need examination of both. -- we need a combination of both. politicians should not be scared to say they want to fix it. beware of politicians who are promising to protect social security by not fixing it. that has prise been in washington for toon foro long. so many people depend on it, there is nothing protecting it by promising not to fix it. when you use the political discussion of how when we move forward, and again it is a policy issue. there are not that many levers. you can look at retirement age, spending, taxes. art of where the political compromise is really needed, and something where leadership is absolutely necessary. the fourth point i leave you
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with, and especially c-span dearest, this is something you can call your member of congress about. do not get enough called saying this is something to fix. overthat, i will turn it to an excellent panel today. i am thrilled we have from the wall street journal, one of my favorite reporters who will be moderating the panel. kate davidson from the wall street journal is an expert, she is perfect to run the panel we have today. thank you everybody for joining us. kate: hi everybody. i am not an expert, but i am getting there with your help. before i forget i want to remind
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everyone there are cards that we have in the audience. i do not know if you need you raise your hand for them, but if you have a question, raise your hand and we will bring one to you. if you have a question, anything 's thoughts, grab a note card and after we have our discussion we can get to your questions. first, i would like to introduce our great panelists. the associate director of the international economics and finance program at john hopkins university school of international studies. he is a fellow with the partisan policy center, and a research fellow at the center for at theal security university of wisconsin. he focuses on tax policy, retirement security, and he has served in divisions at the
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social security administration including acting deputy commissioner. of the have the director center for funding america's future of the american policy institute. he staffed the commission on retirement security and personal savings were he helped develop proposed forms. he also served as a legislative outreach director and previously worked for the economic policy institute. and also in the office of congressman chris van hollen. and finally, we have the senior policy director. he guides and conducts research on a wide variety of topics related to policy. and in 2011, the joint select committee on deficit reduction.
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he also teaches at johns hopkins university. he teaches economics at the university of california and john hopkins university. i will ask each of our panelists to give us a couple minutes of their thoughts on the trustees report. >> thank you. thank you for being here. i realize you did not come for us. you came for lunch. we will pretend it is for us. but we are here for a very important topic, which is the social security trustees report. kate mentioned my previous jobs. one of those jobs was to serve as the secretary to the board of trustees. signed these reports, i read them every year. it is important to go through,
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it does specify the financial outlook for program millions of americans rely on. we only have a few minutes. i want to go through five takeaways. the first is in general, this is a better report than in previous years. it's not all doom or gloom. we do have to be serious about the financial crisis approaching the trust fund, but we can look back and say it has a good economy. the economy has helped bring in later payroll taxes, that has helped put the trust fund on a little bit better footing, but just a little bit. so we can't be complacent. the second thing to realize is when we talk about trust fund insolvency, we're not talking about the program going bankrupt. please do not buy into the rhetoric that the program is going bankrupt. i talked to a lot of millennials who think the program will not be there for them. it will be there in some way,
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shape, or form. when we talk about insolvency, that is for the trust fund. when we get to 2034, the program can only pay out what it brings in in payroll tax revenue which is basically enough to cover by 80%. it will still be there. but it's not going bankrupt. the third point is the total cost of the program. if you read the trustee report, you will find the total cost was $1000 billion and that is how it is written. the social security program costs $1 trillion. that is real money, it has a real impact on seniors. a real impact on the economy. we cannot afford to ignore this program. we have to put it back on financial footing. the fourth thing i want to the
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cross is the cost of delay. the longer we delay, the harder it is to get things done. 10 years ago when i was on the board of trustees as secretary, we could have just raised the payroll tax cap and that would have gotten us to 75 solvency. the cost of delay is huge. the longer we wait, the more drastic impact on taxpayers and beneficiaries. we don't have three decades to fix this. it has a lot of fluctuation, but basically it improved because the economy improved. as soon as we hit recession, it will hit significant trouble. we need to look at that today. thank you.
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>> so, i think my biggest take away, one thing i try to keep in mind when i look at the trustees report, i look at the solvency of the trust fund, but the trust fund is only one part of social security. the thing that really matters the most is the difference between the income and the outlays. the money we are collecting into social security enough to pay out benefits? already social security spending is higher than the revenue it is taking in, and the gap is only going to grow. when it comes to solutions, it's important to think not just in the trust fund context, but the aggregate sense of where the spending level is. the spending levels were scheduled to be exhausted much
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sooner than it will be. a couple years ago, congress solve that by reallocating payroll tax revenue. partially because of that, the trust fund is now going to last -- according to this work, 30 years longer than a few years ago. but did we make financial improvements to the program? no. it's important, when we are thinking about these changes, make sure we're thinking about not only how the two programs interact with each other, but also how they interact with the rest of the federal budget. when we're talking about benefit cuts, tax increases, keeping in mind when we raise taxes somewhere -- we raise taxes to pay for social security, those are tax dollars we could be using for other programs and
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when we make benefit cuts we are , making cuts to programs that put people below the poverty line. we have other areas of the federal budget that will have to pick up that slack. there are other antipoverty programs that are very important and very good. they'll will also have negative consequences. so, making sure that not only do we focus on the trust fund, but making sure we are giving people adequate benefits when we tried to solve this problem. >> great. thanks, everyone for being him. ere. i hope that jason is wrong and you did not come here or the free lunch. i think anyone on our mailing list should know there is no such thing as a free lunch. obviously, i want to reiterate everything the last two speakers said. frankly, the social security law
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will not pay full benefits for current retirees. this is not your grandchildren's issue. this is your grandparents' issues. there are three important criteria any plan should have. number one, we need to get to sustainable solvency. we need to, over time, bring social security cost and the revenue stream and line in a way that ensures the trust fund does not go negative, but also ensures we are not right back in the same place. if we fix the problem lthis year, but next year's trustee report shows we are 75 years are running out, all we are doing is kicking the can. we need sustainable solvency. number two, there are many incredibly wealthy seniors collecting social security.
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over time we could slow benefit growth for them, but there were many who were not getting the benefits and we need comprehensive plan to make sure as many as possible can live in secure retirement. number three, there should be an economic growth. we got good news today, the economy is growing 3% per year, but it's going to be going up 2% per year over time because of the aging population. social security cannot correct that, but it can make some nudges. it sends people signals about when and how to retire and when and how to save. by adjusting some of those signals, we can actually encourage more productive, more flexible habits that, as a side effect, can help grow the economy. if we have a sustainably solvent program that both parties can agree on, we will be in far
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better shape than we are right now. >> thank you so much, guys. this is all great. i would like to go back to something ben mentioned, the disability insurance trust fund. we saw this major improvement this year, but it was not because there was some action taken. there was some change, but i would love to hear more about the economic assumptions that underlie these projections and how that can drive changes in the solvency projections. as we have seen, they are just projections. some years you might see a little improvement. other years, there's a major one. what are other big factors that are driving this? economic factors. >> there are a few things i would point out. during rough economic times, applications for disability insurance go up and basically you find there's a lot of people
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in the economy who qualify for disability insurance programs. if the economy is good they find some type of labor. when a recession happens, they are the first ones to get laid off and they turn to disability insurance. applications go up and you start to see people on the roles. ls. once you are out of the labor force, it is very, very hard to go back in. we are seeing very low unemployment. it's a tight labor market. people are getting jobs, which is fantastic. that has improved the trust funds. you can look at the curve where down.e the cost go but that literally is 20 years of improvement and that's based on economic assumptions. if we keep going down, that assumption changes.
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now is the time to look at the assumptions so people can continue to continue working a s opposed to turning to the di program. >> i think economic assumptions are very important. one fact that puts it in context is the congressional budget office and the social security administration have different projections for when the trust fund is going to be exhausted. the trustees say 2035. cbo in recent years has said they think it will be 2030. and when we are talking about a gap, that's a big difference. small changes in how you think the economy is going to function or how it actually functions
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could make these figures go further away if the economy gets much, much better and continues to power along. maybe that pushes the trust fund insolvency date back. but just as easily, if we have a recession or slow growth, that date could be even sooner upon us and that increases the impetus to act sooner rather than later. was set to rundi out in 2016. the next are we did the reallocation, 2022, this year, 2052. there's three factors. one, legislation and some reallocations that helped, including getting some up, i think, the judges with very high approval rate under control. number two -- the strong economy has managed that.
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we are seeing fewer disability applicants, because more are staying in the workforce. a number three, after seeing it for multiple years in a row, the trustees have decided their best guess is some of this is a structural reduction and that's responsible for a large share of this year's improvement. if they are wrong, if its economic, we are back to mostly where we started. here's the good news, besides just the numbers. what we saw is there is a proof positive there's a significant segment of the population that recovers from a disability, but in the right circumstances, are able to work. when they work, they are happier, healthier, they get a lot more income than social security and they are better off. we need to push for new types of policy changes that consider work workers with disabilities to stay in the workforce when they are able.
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>> that is a good point. >> i should mention we have a little project. there's a whole book on amazon available for $39.99, if anyone wants to buy it. it has a number of ideas for early intervention. jason has actually written two of those. one in the book and the other is on how to best design pilot projects so we can learn better what will work and what won't. >> he had to plug that because it would be a shameless commotion if i did it. [laughter] >> i know this might be nails on a chalkboard. 16 years, that's a long way away. we saw this change over one year time. is there an argument for oka focusing on more pressing budgetary matters right now? delaying action? what is the risk? how do you explain it to someone in an elevator who say, what do
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you do and you are trying to explain? you are trying to say this is my life's work. >> i have two points. if today we just decided to do changes on either the tax side or the benefit side, on the tax side you would have to raise the payroll tax. that is a 25% tax increase. if we wait until 2034, 2035, that percentage point increases. now you're looking at a 33% tax increase. that is a huge delay and the benefit cuts will be about 20%, 17% today.
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the cost of delay is real. i hear them saying, well, the trust fund is changing. just wait, next year it will be further out or go back. if you go back less 25 years of trustee reports -- the combined trust fund date, combine them for discussion has ranged between 2029 and 2042. even with changes in the economy, recessions, economic growth, tax cuts, you basically find there's a narrow range where we know the trust fund will become depleted. it's going to happen. we can't afford to delay. we know it's coming. it may change by a year or two. but the cost of delay is too much to put off. we have to do this today. we should have done this in 1995. >> for me, the big reason is it is about intergenerational equity. the people paying taxes today versus paying taxes 10, 15 20 years from now are not the same people. the people collecting benefits will not be the same people.
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if we wait until 2035 -- let's say we do a combination of tax increases and benefit cuts and we try to adhere to this principle that you do not want to make two big changes to benefits for people who are already on the program because they're planning their retirement and do not have as much ability to adjust. if you are doing it in 2035, that means we have people who could be paying more taxes for 10 years who won't be and to also -- where is we could make changes to benefits now won't be by the time they retire and that means even greater changes will be necessary for people still in the work force. it's one thing to look at social security as just being revenue versus spending, but where that revenue increase or benefit cut falls will change over time. the earlier you do it, the more you are able to spread it out over generations. if you wait to 2035 and make
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drastic cuts to new beneficiaries or big tax increases, that will all be borne by younger americans who are already dealing with certain generational problems such as scarring from the great recession. over the past few decades we have underfunded other important investments the government should be making. there's a lot of problems being pushed on future generations. climate change. adding this is one more thing they have to deal with, so the sooner we do it, the easier it's going to be to make sure that is t is a fair solution to all the generations involved. analysisustees do an with different assumptions and basically they find not much. we will be insolvent in 2035. plus or minus three years on our current course. there's not anybody that disputes that. jason is right. the longer we wait, the acre the
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-- the bigger the adjustments have to be. ben is right, the less we wait, the more we can spread them across generations. but waiting for social security is just a nasty thing to do. it's nasty for current beneficiaries. people retiring today, you will have benefits that you cannot commit will be there throughout the retirement. someone retires today at 62 the 78 when it's insolvent. on average they will live to 85. some will live longer. it will be nasty for current workers. imagine the solution involves, for argument sake, a 10% and 50 -- 10% across-the-board being phased in by 2050. imagine being told, coincidentally you were about to retire. if i am told that, i have plenty of time to save anchor mentally -- to save incrementally more to manage that. if i'm told that only in a few years or no years in advance, i don't have time. there have been a lot of studies where we try to ask people financially what they are willing to trade. people get a lot of welfare just
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from having certainty rather benefits. whether they are 5% lower or higher at the end of the day is not as big a deal as being able to plan and adjust for it. >> a quick question. the last time there was a major effort to address this and there was this risk of cost exceeding income in the program in the early 1980's, explain to me the measures implemented. what were the fees for those? -- what were the phases for those? how long did that take? >> we're still phasing them in. it's 66 right now. it's headed to 67. that is the result of the 83 reforms. some changes were made very quickly. accelerated the payroll tax increase. moved some money around. we have the retirement age for a longer time. >> let's talk a little bit about the current social security
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program most need to be addressed or modified. let's explore this a little bit further. >> it's hard to pick one or two. the technical name of the program is old age survivors insurance program. it's an insurance program. it was designed to be insurance against old age so children did not outlive their savings and retirement. when the program started, you basically had the savings and if you outlive them, and it was there for you. it has turned into retirement program. it was not designed to be that way. people are living longer. they are working longer. we need to modernize the program to account for longevity but also realize that everybody is living longer. there's a difference with white-collar workers and blue-collar workers.
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there are racial and gender implications. if we're doing benefit changes, who are those changes being targeted for? they should be targeted for the people who can afford it the most, not the least. >> i totally agree on the retirement age. we need to find ways to help people work longer. there's very good research that they are able to live longer. health loweronger , divorce rates, are healthier, are happier. help the economy on top of all of that. i will point to two other areas really quickly. base. the tax i do not see a plausible way to make social security insolvent on the benefit side. there's going to be new revenue. we should raise that revenue as efficiently and progressively. as possible. the other is there will be
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idiosyncrasies of the formula. i do not know how many have heard mini pia. the short story is your last few years of work, you get very few benefits. we should flip that around. young people have to work to have money, where is the more years you worked, the more savings you potentially have. so we need to do more for more work. >> yeah, i think one of the big things that needs to be addressed is the equity of benefits, kind of along the lines of what mark said. if you have someone who works for a few years and earns a lot of income and so is able to -- not 25,ike 25, 35 35, 40 5 -- mark zuckerberg, i do not know. [laughter]
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people able to retire at 35, 45, the middle of money, social security benefits is going to treat them similarly to someone who puts enough career, but earns lower earnings because it's based on your lifetime average earnings. i think making sure the benefit formula is just on a fundamental level what we think is fair is one important thing. in that vein, it's also important to think what we want the link to be between contributions and benefits. when social security was started, there was a strong belief that one of the reasons you have the payroll tax cap or don't have taxes going up into as high as people earn, the formula is set up so you have benefits based on how much money you earn and how much money you contribute to the program. the more you do things that stretch that link, you have to ask what do we think the appropriate ways of defining benefits should be.
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like proposals to get rid of the payroll tax cap and break the link with benefits is important to keep those different factors that play together in mind. i think there are areas like the safety net. they have a lot of room for improvement. we talk about low income workers a lot, but are a system for the laying widows and widowers is bad. if you have two people in the system for survivor benefits, when one spouse dies, you get the higher benefit and so, if you have roughly equal earnings throughout your lives, when one of them dies, the household benefit gets cut in half, even though their expenses do not fall commensurately. that can throw older widowers and widows into poverty.
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especially because they are more and have be older outlived their savings. there are reforms we can make that provide better protection in an equitable way. out, some ofinted these suggestions are fairly straightforward. getting people to have the political will to come together has been difficult. what are one or two ideas for specific proposal that could be and have a palatable shot in the next phase of two or three years? are there any? >> i will let mark go first. >> either then cleaning up, i do not think we have a piecemeal solution. it is not likely have one piece of legislation, but we should have a solvency package that gets us there within our
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projections. chairman larson has a plan. it gets sustainable solvency and brings benefits spending in line. the former chairman sam johnson also had a plan. they look different, one is up here and one is down here, but they both have a 75 year solution. i think if you do them one at a time, it makes each of the other pieces harder. >> the only thing i would add to that, because mark is right, chairman sam johnson in texas did put a plan in. congressman larson has a plan, for solvency, but they are on different scales. we are under the assumption, the three of us are under the assumption, any changes that happen in social security will be done in a bipartisan basis. i do not think we will pass anything in a one-party platform. if that's the case, having bills out there that are at one extreme or the other is not
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helpful. it does show what the stakes are, but we need to find a way to have a bipartisan approach. it was designed in a way for the nuclear family. working spouse, stay-at-home spouse, two kids. now it's much different. we have gig economy workers, to wo income workers. we need to modernize it were age, survivors. and we've got to come along on a bipartisan basis. we have to figure out where you can find exclusions. can you do something to raise the payroll tax cap which , republicans do not like. so, we have to start thinking, how would we do that creatively. it is not the math that is hard, it is political will. how do we reach out to both sides of the aisle? >> what conversations are we hearing from our 2020 candidates on this issue and are you hearing any substantive policy
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discussions? >> no. >> that's an easy one. ok. how is the political climate similar or different than it was i would agree.80's, lost some>> i think there are a lot of candidates who are talking in broad terms about expanding social security benefits, increasing them. some of those proposals tend to be paired with tax increases not commensurate with the side of the benefit increases. it is not like nobody is talking about it at all. maybe they are talking about it in the wrong direction. dear follow-up question about how it differs from the 1980's and factoring then, i think there was a wide understanding that we need to solve this problem and that it will take some level of compromise to do it. both sides were willing to give
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something up. that is something that was true as recently as 2010 when bowles simpson came out. in the last several years that inclination >> i do not think it is harmful to the process to have chairman larson's plan and chairman johnson's plan. before we had plans that do not add up or were not solving the problem. now they are playing in the same field. the problem is if you have one plan.
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that is what you're describing. it is the lack of willingness to compromise. i could easily. you say it hard to split the difference between johnson and larson's plan. the bipartisan plan is that. will point out that you are talking about the 1983 reforms, the financial challenges they were facing in 1983. the financial shortfall they faced back then was smaller than what we are facing today. the financial challenges are larger. political compromise has to be greater and the will does not seem to be there. look into the future and take all of the liabilities we have and bring it to today's dollars. $13.9 trillion. there is something called the infinite horizon.
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need $42.3hat, you trillion in today's money to pay for all of the liabilities we have for social security. not even talking medicare yet. was $32last year trillion for the infinite horizon, it is 43 now. it was 13.9 trillion, it was 13.1 last year. people need to put remarks out there. the bipartisan center has that online. doing things with their calculators and reports. it seems like we are intractable against the two sides and each time we fail to do something, that magnitude gets larger and larger.
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it is like heartbreak hill for the boston marathon and i have to do it twice. try to sort through some of these great audience questions. means testing and to what extent should that be on the table? >> a quick note for you. currently there is something called a backdoor means test for social security. testingple think means they think we will reduce your benefits because you make income. for people with certain adjusted gross income, we tax your social security benefits up to 85%. there is a backdoor means test ready. one of the proposals would be to make 100% of benefits taxable. we do tested, but you do not see her check getting reduced each month. in that sense, should we increase it, probably? this is where we are trying to
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make reforms toward those least likely to be able to afford it. you can make 100% of benefits hitsle and make sure it high income earners and retirement. not everyone has the same understanding of what it means to means test. the way jason said it is the standard or correct definition. thinkof laypeople will means testing means reducing the size of the benefits somebody gets for being wealthy. , the the current system higher your lifetime earnings, the higher your benefits. if we want to flip that around and say the higher your earnings the lower your benefits, that would not be the technical definition. be something a lot of people would think about when they hear means testing on the table.
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it is much preferable to slow the growth of benefits for higher earners toward a flatter benefit. i think it is economically preferable, it is fiscally preferable in part because means more disconnect the payroll tax from the benefits. the closer we get to 2025 the more likely i am to be means testing. wait, the moree our architecture gets reduced of things we can no longer do. ago, 25 years ago -- now takes you to 10 years better. we are boosting options. get to the point of a prices and checks are not going
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, we but we wait until then will probably have to hit current beneficiaries and that s "just nasty." that is not fair. that might beat what we are left with because we have reduced all of our options. >> this is along the same lines, asking your view of privatization. --owing participants to should that be part of this conversation? >> i will say no. i do not think that is the right solution. we had this debate in the mid to thousands and i think everybody came away with the same conclusion that that is not the direction the american people want to go. i also think it is not good for policy reasons. social security is meant to be an insurance program to ensure that if other elements of your retirement planning to arrive, you have this benefit to make
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sure you are taking care of. if you live longer than you outlive your savings, you still have this benefit that will pay you a lifetime income to make sure you do not fall into poverty. if you're going to privatize the benefit and have people save the money and potentially lose it, then you are leaving people with no safety net and that runs contrary to the purpose. caveat.e at a yes, but, this is a social insurance program and we need to make sure you have that in case you deplete your income. amountvate does have an -- does have a place in the conversation. i will plan that raises the payroll tax by two percentage points. it keeps social security as it is, but a 2% payroll tax increase which goes into a private account like everyone
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here who works for congress has. it goes into something like that . part of that is to keep the social security framework, but allow everyone to have an ownership stake in society. if we are concerned about income equality, a lot of that is given because of stock market and people's access to wealth. let's give everyone access to markets and wealth. keep the social security benefit but top it off with some kind of -- >> this is a question about the larson bill. if it did nothing but raise the earnings cap from 133,000 to 400,000, how long would that extent the trust fund? >> the larson bill keeps the current cap at 130 and creates a donut hole and then it taxes
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above $400,000. i do not have the exact number of years but i think that would get you about 15 years. www..e a tool at they'll be part of the solution. >> in addition to raising payroll taxes, should we be looking to other revenue sources such as a fica tax on capital gains. >> yes and no. i would avoid looking at the capital gains part. we already tax capital at the corporate income level. avoid the capital gains part. we are relying too heavily on payroll taxes to pay for everything. pay half, theees burden falls to workers and that is agreed to by conservative and liberal economists. other revenue sources are out
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there and you could look at a value-added tax or a carbon tax that would take some of these externalities and internalize them. payroll makesn labor more expensive and less attractive. i am not a fan of taking external revenue sources and putting it in. i should not say no external sources but something like a carbon tax. the point of a trust fund is to maintain that contribution and benefit link. if you're just throwing other sources of revenue in their, a carbon tax not related to work, if you put a gas tax and through in, if we're are going to try to maintain that link when he to make sure the revenue system does that. otherwise why we have it is a trust fund, why not general
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revenue. i think it is important to keep in mind how we were maintaining that link. gains forcapital social security is a bad idea for two reasons. the purpose of social security is a wage replacement program, but also it is a bit of a shell game. if you reduce capitalization you reduce realization. a responsible for federal budget i care about the money going to the rest of the federal government. we do think more creatively about revenue and one idea i have been toying with his on the employer side, replacing the payroll tax with a compensation tax that we had a lot of the income spectrum, but it would also apply to things like fringe benefits in health care. we see incentive from employers.
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>> this is another question about congressman larson's bill. it calls for a change in the inflation metric. a recent report points to the cost increases caused by the switch. how significant you think that's which would be and can you explain a little bit what the bill proposes? right now we index by a measure of inflation call the consumer price index. there are two arguments about consumer price index. one is it is too high. whichis a chained cpi, most economists mean is a more accurate measure of inflation. the other commit it does not reflect the specific costs for
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seniors, and we should move to something called the cpie which is a measure for people above 62. the larson plan would be about .2% more per year. tiny and it given year, but every 20 or 30 year retirement, that starts to have up. fund costly to the trust but in the context of the larson bill, to pay for payroll tax increases, it is a bad idea. generally surely it is lot more money to current seniors who are wealthy and that is the opposite direction where i think we need to be going. i also think the measure does not make sense. seniors need to addressed substitution bias. the reason it grows faster is because health care cost growth -- the rising cost of rent, which seniors do not pay mostly because they mostly on their
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home. empirically, it is not a good measure. >> we have a couple more minutes and i will throw one in based on the crazy amount of reader email i got on monday after i wrote my story about the trustees report. while most of you in the room have these wonderful technical questions, maybe this one is for c-span viewers. can you explain how social security interacts with the federal budget, and our other favorite topic is deficits. a number of people wrote to me and asked i do not understand, if the program is paying for itself, what are you talking about with adding to deficits and what does this look like right now and how will the compound the problem going forward? go for it. >> when you think about trust
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funds, there are two programs to think about this. what is social security and a dedicated payroll tax, like the postal service which collects revenues from them. when you have operations that have no dedicated trust funds, should you put them on the things -- we look at two . one is called unbudgeted one is called off budget. when you take social security off budget, when it was running surpluses it looks great and when it is running deficits it looks bad. if you put that back in the unified budget of the federal government, now the deficit looks wider than it was in the government's position looks worse. social security is drawing down is fiscal position. perspective,/right when the social security administration was running budgetes, the unified made the government look a lot better. republicans did not like that. now that social security is
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running deficits, republicans want to say social security is adding to the deficit. you can look at it both ways. it is program standpoint, important look at how the fiscal program affects dedicated revenue. right now cannot take from general revenues. brought up the idea of other revenue sources. if we wait too long, we will lose the option to rely on payroll taxes and will be forced to payroll tax or general revenue transfers, which means at that point of time we will lose any fiscal shadow that the social security program does run deficits and affects the deficit. to my openingack statement about how you have to look at all the stuff in context. any year the social security trust fund is running a cash deficit, taking in less income that it is paying out in
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benefits, that money comes from somewhere, comes from the rest of the federal budget. when it is drawing down its trust fund reserves, those reserves are paid for by general revenues. when there is none of general revenue, it is paid for by borrowing from the public. even if the trust fund looks like it still has money, as it draws down that fund it is still contributing to the governments broader fiscal problems. what jason said about bringing in external revenue sources. just filling the trust fund with general revenue is something we want to avoid. i was making the point that it makes sense to decide one way or the other, is this a self financing program or is it not? if it is a self financing program, payroll taxes and benefits need to come into alignment. tax if you do compensation
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-- you have to have the revenue source and the spending be related and you have to have the revenue lineup. if we are going to go to a system in which we are using general revenues or other unrelated revenue sources, maybe that is a policy option to talk about, but it does not make sense to have this trust fund option because what are you tracking at this point? >> that is a better framing. >> if we do decide we want to fund out of general revenue, it is lose lose for those of us who look at the program. , itou are more conservative is a problem because fiscally it takes off the shackles. social security is constrained. if you are more from a social and search type, you put social security on the general budget and now anytime there's a conversation about deficit reduction, social security no longer has a special place. it has to compete with everything else. some people see that is a good
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thing. some of the strongest advocates of the program would view it as a bad thing. >> we're just about out of time. thank you also much for coming. this was a great discussion. thanks to the panelists. have a great friday. [applause] [captions copyright national cable satellite corp. 2019] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] >> here is a look at live coverage tuesday on the c-span networks. the house returns at 10:00 eastern for general speeches. at noon they begin work on a series of bills dedicated to improving financial literacy and post office naming. on c-span, joe biden continues his campaign rollout with an event in iowa. at c-span2, house intelligence
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committee chair adam schiff and mark meadows take questions from reporters on the robert mueller report. we leave that event an hour later when the senate resumes work on executive nominations, including a vote later in the morning on the nomination of william cooper to be in the general counsel of the energy department. , a couple of hearings beginning and 9:00 with the acting homeland security secretary testifying on the president's budget request. another house yard in the afternoon focuses on the homeland security department cyber security budget. >> secretary of state mike "the hill"ed with newspaper about foreign policy issues, including north korea, russian election interference, russia china trade talks, and the fight against isis. it is about 25 minutes.


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