Good morning and welcome to the third hearing in the Committee’s series on the President’s and other bipartisan entitlement reform proposals.
Workers have worked hard, played by the rules, and earned the right to a secure retirement that no one can take away.
Yet unless Congress acts to protect and preserve Social Security, beginning in 2033, Social Security will be unable to pay full benefits, according to the Board of Trustees.
Here’s why Social Security has to be fixed. Under Social Security, workers’ payroll taxes aren’t saved in workers’ own retirement accounts. Instead, their taxes are immediately used to pay benefits for today’s retirees.
This kind of system works when there are many people paying in and very few collecting benefits. In the 1950s, for instance, there were 16 workers paying in for each retiree collecting benefits.
But today, families are having fewer children and people are living longer. As a result, even though the number of workers is growing, the number of retirees is growing much faster.
Today, there are just over three workers supporting each retiree. In the future, there will be less than two workers per retiree.
Back in 2008 the first Baby Boomers started collecting retirement benefits. Costs rose quickly. Two years later, in 2010 Social Security began running permanent cash flow deficits, reaching $1.3 trillion over the next 10 years.
These deficits will grow very large, very fast.
When today’s 47-year-old workers reach their full retirement age in 2033, they and everyone else already receiving benefits face a 25 percent benefit cut unless Congress does its job.
Fixing Social Security is a serious challenge today; if we wait, it will become a crisis. The sooner we act, the sooner changes can be phased in gradually over a number of years. If we fail to act, future generations will be faced with changes that are sudden and even larger.
Today our witnesses include representatives from two bipartisan groups who have taken a hard look at Social Security and have come up with ways to fix it. This wasn’t easy work but they know that we can’t afford to wait.
Their two plans have a lot in common. They would slow the growth of benefits for higher earners, take into account the fact people are living longer, and make important changes to improve benefits for some of those poorly served by the current system.
Since these plans were written, Social Security’s 10-year cash flow deficit has increased by over 450 percent, across-the-board cuts will occur seven years sooner, and Social Security’s long-term shortfall is almost 60 percent larger.
It’s unfair, and wrong, to leave with our kids and grandkids a Social Security system that can’t pay full promised benefits.
The good work of Simpson-Bowles Commission and the Bipartisan Policy Center Debt Reduction Task Force shows us that there are bipartisan solutions to fix Social Security.
As I’ve said before, the President likes to say that if we agree on a policy, then we should act and not let our differences hold us up.
Today we will again carry out our responsibility to every American to closely examine each bipartisan policy option. When we agree, we should act. And we will.