SOCIAL SECURITY BENEFITS FOR ECONOMICALLY VULNERABLE BENEFICIARIES

Date: 
Wednesday, March 19, 2014 - 12:26pm
SOCIAL SECURITY BENEFITS FOR ECONOMICALLY VULNERABLE BENEFICIARIES

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HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION


January 16, 2008
 


SERIAL 110-xx


Printed for the use of the Committee on Ways and Means

 

COMMITTEE ON WAYS AND MEANS
CHARLES B.  RANGEL, New York, Chairman
 

FORTNEY PETE STARK, California
SANDER M.  LEVIN, Michigan
JIM MCDERMOTT, Washington
JOHN LEWIS, Georgia
RICHARD E.  NEAL, Massachusetts
MICHAEL R.  MCNULTY, New York
JOHN S.  TANNER, Tennessee
XAVIER BECERRA, California
LLOYD DOGGETT, Texas
EARL POMEROY, North Dakota
MIKE THOMPSON, California
JOHN B.  LARSON, Connecticut
RAHM EMANUEL, Illinois
EARL BLUMENAUER, Oregon
RON KIND, Wisconsin
BILL PASCRELL JR., New Jersey
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y.  SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
JIM MCCRERY, Louisiana
WALLY HERGER, California
DAVE CAMP, Michigan
JIM RAMSTAD, Minnesota
SAM JOHNSON, Texas
PHIL ENGLISH, Pennsylvania
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
RON LEWIS, Kentucky
KEVIN BRADY, Texas
THOMAS M.  REYNOLDS, New York
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
DEVIN NUNES, California
PAT TIBERI, Ohio
JON PORTER, Nevada


Janice Mays, Chief Counsel and Staff Director
Jon Traub, Minority Staff Director


SUBCOMMITTEE ON SOCIAL SECURITY
MICHAEL R.  MCNULTY, New York, Chairman

 

SANDER M.  LEVIN, Michigan
EARL POMEROY, North Dakota
ALLYSON Y.  SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
XAVIER BECERRA, California
LLOYD DOGGETT, Texas

 
SAM JOHNSON, Texas
RON LEWIS, Kentucky
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
DEVIN NUNES, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also, published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

 


C O N T E N T S


OPENING STATEMENTS


WITNESSES
 


SUBMISSIONS FOR THE RECORD



SOCIAL SECURITY BENEFITS FOR
ECONOMICALLY VULNERABLE BENEFICIARIES
Wednesday, January 16, 2008
House of Representatives,
Subcommittee on Social Security,
Committee on Ways and Means,
Washington, D.C.


 

The subcommittee met, pursuant to call, at 10:03 a.m., in Room 1100, Longworth House Office Building, Hon. Michael R. McNulty [chairman of the subcommittee] presiding.

 

 

 

Chairman McNulty.  The hearing will come to order.  Welcome, everyone. 

Our hearing today is intended to provide us with an opportunity to hear from experts and advocates about policy changes to Social Security that have been proposed to address the needs of economically vulnerable Americans, such as low-income workers, elderly widows, people with disabilities and some public employees.  Each of these proposals are intended to make benefits more adequate for particular groups of workers and their families.  Each has advantages and disadvantages, and each would create greater cost for Social Security.  We are here to gain a better understanding of a variety of proposals. 

We also seek to understand the unique circumstances and vulnerabilities of the workers these proposals are intended to help as we look to ensure that Social Security meets the needs of American families today and in the future. 

Social Security benefits have provided a guaranteed income for generations of American workers who retire or become disabled.  Benefits are also provided to a worker's spouse and dependent children in the case of the worker's retirement, disability or death. 

Moreover, Social Security protections are widespread throughout the American workforce.  With few exceptions, most jobs in the American economy are covered by Social Security.  Today, 96 percent of all workers contribute to Social Security; and they -- and their families -- are covered by its protections. 

Despite the overall success and effectiveness of Social Security, some groups remain economically vulnerable in old age or while disabled.  For example, nonmarried women have higher rates of poverty than other retirees.  Workers with disabilities suffer from gaps in the program's protections and those who earned low wages throughout their careers may face economic insecurity in retirement. 

In addition, some employees of the Federal, State and local government agencies who have pensions but do not participate in Social Security may also face hardships because of reductions required by law to their Social Security benefits.  I know there is a high degree of concern about these provisions, known as the GPO, for Government Pension Offset, and the WEP, for Windfall Elimination Provision.  These rules affect the one-quarter of public employees who do not contribute to Social Security. 

These rules were intended to help treat workers across economic sectors equitably, but many of the approximately one million individuals whose benefits are affected by these provisions believe GPO and WEP are unfair. 

Over the years, many modifications have been proposed to Social Security in order to address the problems and concerns of vulnerable workers.  We will hear more about them today. 

At the same time, any benefit improvements must be weighed carefully in light of the financial challenges facing Social Security in the coming decades.  Congress would need to consider offsetting cost savings or revenue adjustments to ensure that the overall fiscal health of the system is not made worse off. 

We will hear testimony today from public employees, including several teachers, and from an advocate for people with disabilities and from an expert on Social Security's critical role in the lives of women both as workers and spouses. 

I thank all the witnesses for their participation in this hearing.  Each will have the opportunity to submit longer written statements, but I ask that oral testimony be limited to 5 minutes. 

Subcommittee members are also welcome to submit written opening statements.  I know there is a great deal of interest in the subject of this hearing, so I invite any subcommittee members who wish to make opening statements to do so during their question period.  I would ask that my colleagues be mindful of the 5-minute rule on questions so that everyone may have a chance to speak.  I will, however, be glad to consider a second round of questions if it is warranted in order that everyone may be fully heard. 

We are also pleased to be joined by several of our colleagues who are not on the Social Security Subcommittee:  Representative Chris Van Hollen of Maryland, who is a member of the Ways and Means Committee, and Representatives Howard Berman of California and Tom Allen of Maine.  I welcome their involvement in our hearing and recognize their strong interest in the issues before us.  Their written statements will also be placed in the record. 

I now recognize to present his opening statement the ranking member from Texas, a distinguished and decorated veteran, a former prisoner of war, someone who endured torture for our country and all that we hold dear and one of my heroes in life, Representative Sam Johnson. 

Mr. Johnson.  Thank you, sir. 

Thank you, Chairman McNulty, for holding this hearing on Social Security benefits. 

Social Security continues to play a role, a key role, in fact, in preserving the economic security of Americans.  About one in six Americans receives a Social Security benefit.  Social Security is virtually the only income for about one-third of senior citizens.  Younger workers and their families receive important disability and survivor insurance protection.  Social Security's vital safety net needs to be modernized to reflect changes in society and the American family, and its financial solvency needs to be strengthened so that it will be able to pay the benefits that young people are currently working to earn. 

We will hear testimony today regarding two provisions that affect Federal, State and local government employees known as, as Mr. McNulty has already said, the Government Pension Offset and the Windfall Elimination Provision.  These provisions of law were enacted to help ensure that workers who pay into a government retirement system outside of Social Security are treated no better than those who work in jobs covered by Social Security. 

Although these provisions were intended to equalize, not penalize, treatment of workers, these complex provisions and proposals to repeal them are often misunderstood.  This hearing will help all of us to understand why these provisions exist, how effectively they serve their intended purpose, their impact on beneficiaries' lives and options to modify or repeal these provisions. 

To repeal these two provisions of law would be to give an unfair bonus to individuals who work in jobs not covered by Social Security.  Also, the repeal of those two provisions would cost taxpayers roughly $80 billion over 10 years. 

I want to recognize the efforts of Representatives Ron Lewis and Kevin Brady, who are both members of this subcommittee, who have both worked hard to address issues affecting public employees.  Mr. Lewis introduced H.R. 1090, the Social Security Guarantee Plus Act, which includes a provision addressing the pension offset.  Mr. Brady, my colleague from Texas, has introduced H.R. 2772, the Public Servant Retirement Protection Act, to address the windfall elimination. 

After much debate and work, I became an original cosponsor of Mr. Brady's bill.  Under Mr. Brady's legislation, the Social Security retirement benefits of people who work in and outside Social Security are calculated using standard benefit formulas that apply to those who work in jobs only covered by Social Security adjusted to reflect career earnings under Social Security.  Public servants such as teachers, police officers and fire fighters would be given credit for their work in jobs covered by Social Security in the same manner as all working Americans, no better and no worse. 

The preliminary tenure cost of Mr. Brady's proposal is under $5 billion, still not inexpensive but it reflects the fair treatment of those who have paid into two retirement systems.  I also think it represents an achievable change to the way benefits are calculated. 

As we consider proposals to improve benefits offered by our witnesses today, we must carefully consider their effect on Social Security's short-term and long-term finance.  Since today's benefits are paid using Social Security payroll taxes, any change potentially affects both workers and beneficiaries, so we need to proceed cautiously. 

I welcome our witnesses, and I thank you all for coming and look forward to hearing your views. 

Thank you, Mr. Chairman. 

Chairman McNulty.  I thank my friend, the ranking member. 

Before we turn to our first witnesses, the Chair asks unanimous consent that any additional opening statements submitted by committee members and the other members on this panel be included in the record. 

Without objection, it is so ordered.

[The information follows:]
 

Chairman McNulty.  Without objection, the Chair also asks that the witnesses' statements be included in the record in their entirety, and then I ask each witness to please keep your oral testimony to 5 minutes.  Is there objection? 

The Chair hears none.  It is so ordered. 

And now we will go to our first panel, which will consist of David A. Rust, who is the Deputy Commissioner for Disability and Income Security Programs of the Social Security Administration and; Laura R. Haltzel, Specialist in Social Legislation, the CRS, Congressional Research Service. 

And we will start with Mr. Rust.
 
STATEMENT OF DAVID A. RUST, ACTING DEPUTY COMMISSIONER FOR DISABILITY AND INCOME SECURITY PROGRAMS, SOCIAL SECURITY ADMINISTRATION

Mr. Rust.  Mr. Chairman, members of the subcommittee, thank you for the opportunity to discuss several of Social Security's issues that affect different beneficiary populations. 

I am David Rust, and I serve as the Executive Secretary of the agency and, since early August, as the Acting Deputy Commissioner for Disability and Income Security Programs.  In that capacity, my responsibilities include oversight and coordination of policy and operational issues for the Old Age, Survivors and Disability Insurance program and the SSI program. 

I want to take this opportunity to thank all of the members of the subcommittee for your extraordinary support for SSA in the recent appropriations process.  Your support was instrumental in obtaining an increase of approximately $150 million above the President's Budget request.  This additional funding will make a real difference in our agency's ability to meet the needs of the American people.  So thank you. 

Commissioner Astrue and I, along with the entire workforce of the Social Security Administration, share with the members of this subcommittee a commitment to ensuring that Social Security continues to provide a safety net for the elderly and persons with disabilities as well as survivors, dependents and recipients of SSI benefits. 

As the subcommittee requested, I will only briefly outline a few of the topics I address in my written testimony. 

Initially, under the Social Security Act of 1935, Social Security covered less than 50 percent of the Nation's workers.  Over time, Congress has extended Social Security coverage so that now it is nearly universal.  Ninety-six percent of the Nation's workforce is now covered by Social Security.  The largest category of workers who remain outside of the Social Security system is State and local government employees. 

However, the extent of Social Security coverage of State and local governments varies widely from State to State.  For example, in Vermont only 3 percent of State employees are outside of the Social Security system, while in Massachusetts and Ohio 97 percent of State employees are not covered by Social Security. 

Since monthly benefits were first paid by Social Security around 1940, there has been an offset that reduces any benefit a person qualifies for as a spouse or surviving spouse by the amount of their earned benefit.  The offset reflects Congress' understanding that an individual who works long enough to be insured under the program was not completely dependent on their spouse for support.  Thus, that individual should not qualify for a full spousal benefit in addition to their own workers' benefit. 

As the Social Security program evolved, Congress realized that changes had to be made to preserve the intent of treatment and the intent to treat covered and noncovered workers equitably.  Thus, in 1977, a law was passed incorporating the concept of GPO; and, in 1983, the WEP provision was enacted.  The GPO provision replicates the spousal offset that applies to covered workers, while the WEP is designed to maintain the progressive nature of the benefit computation. 

As you know, the Social Security benefit formula is weighted to favor low-wage workers.  In 1972, to further increase benefit adequacy for low-income workers and their dependents and survivors, Congress enacted the special minimum primary insurance amount. 

While Social Security benefit computations are gender neutral, the fact that the benefit formula is weighted towards low-wage workers has proven especially helpful to women.  Generally, women have shorter careers, often due to child bearing responsibilities; and they generally earn less than men.  Because the benefit formula is weighted in favor of low-wage workers, the benefits for low earners, including most women, provides a higher replacement portion of their pre-retirement earnings than the benefits received by higher earners. 

In conclusion, Mr. Chairman, I want to thank you again and all the members of the subcommittee for giving me this opportunity to discuss several of the aspects of Social Security coverage and your unfailing support for the Social Security Administration and its programs.  As always, we welcome the opportunity to work with you and to provide any additional information you need as you continue to look at these complex and important issues; and I will be glad to respond to any questions you might have. 

Chairman McNulty.  Thank you, Mr. Rust.

[The statement of Mr. Rust follows:]

******** INSERT 1-1 ********

 

 

 

Chairman McNulty.  Ms. Haltzel.
 
STATEMENT OF LAURA R. HALTZEL, SPECIALIST IN SOCIAL LEGISLATION, CONGRESSIONAL RESEARCH SERVICE

Ms. Haltzel.  Mr. Chairman, Ranking Member Johnson and members of the subcommittee, my name is Laura Haltzel; and I am a Specialist in Income Security with the Congressional Research Service.  Thank you for inviting me to be here with you today to talk about Social Security benefits for economically vulnerable beneficiaries. 

Among Social Security beneficiaries, aged widows and widowers are considered a particularly vulnerable group as they have higher poverty groups than aged married beneficiaries and aging beneficiaries overall.  Some feel that providing widows 75 percent of a combined couple's benefit more closely approximates the percentage of the couple's combined income needed by the surviving spouse to maintain his or her standard of living.  This option would increase benefits and alleviate poverty for survivors, for survivor beneficiaries but would not address the needs of other beneficiaries who have an even greater risk of poverty and old age, such as those who were never married or divorced. 

Many individuals, including some who worked their entire careers in covered employment for low wages, receive Social Security benefits that are less than poverty.  The current law special minimum was intended to increase benefits for long-term, low-wage earners and their families but is not an effective poverty reduction tool since very few beneficiaries receive the special minimum. 

Some policymakers are interested in creating an alternative minimum benefit targeted at long-term low earners.  One such option would create a sliding scale minimum benefit that varies depending on the number of years of work.  This proposal would reach more low earners than under current law.  However, it would reach a smaller proportion of beneficiaries each year.  The proposal would encourage work so the additional spending would be targeted at long-term low earners, as opposed to people with limited work histories.  But, as a result, the option would not necessarily bring all poor beneficiaries out of poverty. 

Disabled individuals may be eligible to receive Social Security Disability Insurance, or SSDI, benefits if they have satisfied a 5-month waiting period and are eligible for Medicare benefits 24 months after that.  These waiting periods may negatively impact the income and health of persons who meet the statutory definition of disability and ensure its requirements but who do not yet qualify for benefits. 

The impact of proposals to eliminate this waiting period on the number of SSDI applications, application backlogs and net program cost is not known.  Eliminating the Medicare waiting period could result in increased cost to the Medicare program, although some of these costs could be partially offset by savings to the Medicaid program. 

An individual is eligible to receive SSDI benefits only if he or she is unable to work and earn above the substantial gainful activity or SGA level.  Generally, once a beneficiary earns above SGA, he or she is no longer eligible for SSDI benefits.  There is considerable agreement among researchers, disability advocates and the SSA that the SSDI so-called "cash cliff" has a negative impact on the return-to-work efforts of many beneficiaries. 

Gradual benefit reductions and partial benefits to accompany partial returns to work are found in other Federal disability programs.  There are concerns, however, about the potential for increased costs under this type of approach. 

The Windfall Elimination Provision, or WEP, reduces the Social Security benefit for which one qualifies as a worker if one receives a pension based on work not covered by Social Security.  Some affected by the WEP are unprepared for a smaller Social Security benefit than they had assumed in making retirement plans.  However, as the WEP has been in effect for 25 years, its effect on Social Security benefits is increasingly well known. 

Others say that the arbitrary 40 percent factor in the WEP formula is an imprecise way to determine the actual windfall when applied to individual cases.  Opponents of repealing the WEP say that it prevents the payment of overgenerous benefits to certain workers who would otherwise profit from the mechanics of the Social Security formula. 

Individuals who qualify for both a pension based on a non-Social Security covered employment and a Social Security spousal benefit are subject to the Government Pension Offset, or GPO.  Critics of the GPO suggest the provision should be repealed because many affected by it are unprepared for a reduction in their Social Security spousal benefit.  Because the GPO has been in law for about 30 years, others say there has been ample time for people to adjust their retirement plans. 

Proponents of repeal argue that the provision especially hurts low earners.  However, recent CRS analysis calls this into question.  Opponents of repealing the GPO maintain that it curtails what would otherwise be an advantage for noncovered workers and the repeal would be unfair to other government workers whose jobs are covered by Social Security.  Even so, many agree that reducing the spousal benefit by two-thirds of the government pension is an imprecise way to estimate what the spousal benefit would have been if the work had in fact been covered by Social Security. 

As is evident from today's testimony, there are numerous Social Security beneficiaries that face circumstances that may warrant additional intervention.  Congress will have to balance the increase in benefits against the system's long-term financing problem. 

We at CRS remain at your disposal to assist in addressing these policy issues.  My colleagues and I will be happy to address any questions that members of the subcommittee may have.  Thank you. 

Chairman McNulty.  Thank you, Ms. Haltzel.

[The statement of Ms. Haltzel follows:]

******** INSERT 1-2 ********

 

 

 

Chairman McNulty.  I understand that both SSA and CRS have brought other technical staff to help respond to Members' questions, and I would ask those individuals to approach the witness table at this time.  And before we proceed with the questioning, I would ask Mr. Rust and Ms. Haltzel to introduce their colleagues before we call upon the members. 

Mr. Rust.  Mr. Chairman, I am accompanied today by JoEllen Felice, who is the Deputy Associate Commissioner for the Office of Income and Security Policy; and Richard Balkus, who is the Acting Associate Commissioner for Program Research and Development. 

Ms. Haltzel.  Mr. Chairman, I am accompanied today by Dawn Nuschler, Kathleen Romig, Scott Szymendera and Mikki Waid.  Dawn would be able to address any questions on widows benefit.  We have Kathleen to address special minimum benefit issues.  Scott can handle any questions you might have on disability insurance, and Mikki can also assist with some of the widow issues. 

Chairman McNulty.  Thank you. 

In order to get to the members in a timely fashion, I am going to reserve my time.  Mr. Johnson may inquire. 

Mr. Johnson.  Thank you, Mr. Chairman.  I appreciate that. 

Ms. Haltzel, most of the people testifying in the following panel are urging repeal of the GPO and saying it is unfair.  If it is unfair to reduce spouse benefits for workers who do not pay Social Security, then it is also unfair to reduce spouse benefits for workers who do pay Social Security.  Since those workers' husbands and wives earn spousal benefits just like the husbands and wives of public employees, in your opinion what would be the effect on Social Security's long-term deficit and the trust fund? 

Ms. Haltzel.  Well, that is a very good question. 

Essentially, if you repealed what you are referring to as the dual entitlement rule, you would end up costing $500 billion to the trust fund over a 5-year period.

Mr. Johnson.  $500 billion? 

Ms. Haltzel.  $500 billion over a 5-year period if you repeal the dual entitlement rule.  Over the long term, it would increase the Social Security solvency problem by about 70 percent.  Our current deficit is about 1.95 percent of taxable payroll; and, under that policy change, you would end up with a deficit of about 3.37 percent of taxable payroll.

Mr. Johnson.  And what does that do to the trust fund? 

Ms. Haltzel.  The actuaries at SSA would have to comment on in terms of the changeover date when we would run out of having cash coming in in order to pay benefits out immediately.

Mr. Johnson.  Yeah, but we start declining next year, don't we? 

Ms. Haltzel.  2017, I believe is the date.  Yeah.  I think we have another few years before we hit that.

Mr. Johnson.  Mr. Rush, you wanted to comment? 

Mr. Rust.  The current actuarial estimates are that the trust funds will stop building, that we will begin to draw down on those trust funds around 2017; and our actuaries tell us that if we were to repeal both WEP and GPO that that would cost about $80 billion over 5 years and put us at that point now.  We would now stop building the trust funds and begin to draw down --

Mr. Johnson.  In other words, we are programmed to be solvent until 2017 in the trust fund.  But if this were -- if this law were changed, it would happen immediately.

Mr. Rust.  The most recent actuarial -- I mean, the report of the trustees had about 2017 we stop collecting more revenue than we pay in benefits.  So then we draw down on the trust funds, the bonds that we have in the trust funds.  That continues.  I believe the report said -- and I may have to correct it for the record -- but by about 2041.

Mr. Johnson.  But it becomes a deficit operation? 

Mr. Rust.  Around 2017. 

Mr. Johnson.  For both of you, roughly 95 percent of the working Americans are covered by Social Security; and working women are covered by a dual entitlement rule which prevents them from collecting both spousal benefits and their own retirement benefits.  Would you say that the Government Pension Offset applies the dual entitlement rule to women who work in jobs who are not covered by Social Security? 

Ms. Haltzel.  The intent of the Government Pension Offset is to try and replicate the effect of the dual entitlement rule for those who are not covered by Social Security. 

Now the actual effect of the Government Pension Offset may not actually be accurate in terms of replicating that rule exactly.  Certainly two-thirds of a noncovered pension is not equal to what an individual might have earned under Social Security covered employment in every case.  So, unfortunately, it is rough justice in trying to achieve the same goal.

Mr. Johnson.  Would you care to add anything, Mr. Rust? 

Thank you very much.  I will yield back the balance of my time.

Chairman McNulty.  I thank the ranking member. 

Just a point of clarification.  Mr. Rust, in your testimony in response to one of Mr. Johnson's questions, you said the repeal of GPO and WEP would cost $80 billion over 5 years.  My understanding is that it is 10 years.

Ms. Felice.  It is 10 years.

Mr. Rust.  You are correct.

Chairman McNulty.  I just wanted to clarify that for the record.

Mr. Rust.  I apologize for the error.  It is $80 billion over 10. 

Chairman McNulty.  Mr. Becerra may inquire.

Mr. Becerra.  Thank you, Mr. Chairman; and thank you very much for holding this hearing that members have been requesting over the past -- and thank you all for your testimony.

Let me ask a question to those -- the two witnesses who did testify.  Can you give us a sense as to how the administration has proposed that we move forward in trying to address some of the inequities that have been raised with regard to benefit treatment for Social Security recipients?  So whether it is the WEP or GPO provisions, have any proposals come out of the Bush administration to try to address the inequitable treatment of benefits that some of the recipients -- many of whom I would suspect are in this room today -- are interested in hearing? 

Ms. Haltzel.  I am not aware of any myself, but perhaps Mr. Rust --

Mr. Rust.  I am not aware of any.  I will double check, however; and I will submit them for the record if there is.

 

 

 

[The information follows:]

******** COMMITTEE INSERT ********

 

 

 

Mr. Becerra.  So, Mr. Rust, let me make sure I understand what you are saying.  We have known about this issue for quite some time.  We know it is a difficult issue to tackle because it will cost some money.

Mr. Rust.  Right.

Mr. Becerra.  There was a period in the beginning of this new century where we had surpluses and we had an opportunity to take care of a number of different things.  Today, we are running record deficits; and now I think most people would say we are on the verge of some very difficult economic times.  Some would say we are heading towards a recession, which would make it more difficult for the government to also collect the revenues it needs to just meet its day-to-day needs. 

In the 7 years we have been in this new century with this administration, are you aware of any proposal coming through to you, whether from directly from the White House or percolating from within the Social Security Administration, to address the inequities that are seen in WEP, GPO provisions?  

Mr. Rust.  I just returned to the Social Security Administration in March.  So I was at the Department of -- I was at USDA before that.  So I wasn't tracking this very closely at that time.  I am not aware of any.  But let me --

One of the reasons in my testimony I went back to the dual entitlement beginning at the very beginning of one of the -- when Social Security started paying benefits to people, there has been an attempt to provide a degree of equity and consistency in how we treat covered and uncovered.  So I --

Mr. Becerra.  I appreciate that.  But my question -- and we will have numerous discussions about what we will do not only on these provisions of what GPO but how we provide for the long-term solvency of Social Security for future -- for my children when they are ready to retire.  So any number of discussions will take place in this room as we discuss what happens to Social Security, and those of us who want to make sure we never privatize it will also participate in those discussions. 

But I am trying to figure out if we have been provided by the agency in charge of running the system for Social Security recipients a proposal to address the concerns that are being expressed day to day.  At least, when we go back home, we hear from our constituents that they are being ripped off of benefits they expected to receive.  And when they get that check the date that they have retired and they are now collecting Social Security, they are surprised to see that they are not getting what they expected.  And I am wondering if you -- because you haven't been in the administration -- in the SSA's offices for the entire 7 or so period years of time that I am talking about, if someone within the Social Security Administration can answer that question on your behalf. 

Ms. Felice.  Well, what I can tell you is what we do as far as letting people know about --

Mr. Becerra.  I don't want you to tell me what you let people know.  I think most folks know, especially when they get their Social Security check, they know -- I am asking if there has been any proposal.  It could be that the proposal says, it is one of many fixes we are going to make to the system.  I am just wondering if there is anything that you are aware of that the Social Security Administration or the general Bush administration has sent to Congress to address this concern.

Ms. Felice.  Not that I am aware of, sir.

Mr. Becerra.  Are you aware if the administration -- the Bush administration has taken a position with regard to some of the bills that have been introduced, some by individuals including the gentleman who is sitting at the dais, our colleague and our friend from California, Mr. Berman, to try to address these concerns? 

Mr. Rust.  To the best of my knowledge, we have not taken a position on any of those bills. 

One thing I would say, it is my belief that, beginning in 1940 on, Congress has tried to provide an element of equity in the way different things are treated.  And our job is to apply that law faithfully, and so that is what we have tried to do.  The provisions -- WEP, GPO, the dual entitlement -- are statutory requirements that were enacted by Congress for a specific reason, to address problems at that time, including the fairness of the distribution of the benefits for which people pay taxes.

Chairman McNulty.  The gentleman's time has expired.

Mr. Rust.  I think I understand your concern, but I am not quite sure from my position that we see the concern in quite the same way.

Mr. Becerra.  I yield back the balance of my time. 

But I must say, when you execute, we propose; and we hope that you know how to execute.  You need to tell us what you want to do to execute so that we can propose the right thing. 

I thank you, Mr. Chairman.

Chairman McNulty.  The gentleman's time has expired. 

Mr. Nunes may inquire.

Mr. Nunes.  Thank you, Mr. Chairman; and thank you for holding this important hearing. 

Mr. Rust, Mr. Berman is here today; and I want to thank him for his work on this issue.  And I think both Republicans and Democrats are interested in fixing this problem.  And I don't know -- have you had a chance to look at Mr. Berman's bill in terms of has it been scored? 

Mr. Rust.  It has been scored.  That is the one that would repeal -- I think both completely repeal both WEP and GPO, yes.

Mr. Nunes.  And what is the cost -- what is the 10-year cost of the Berman bill? 

Mr. Rust.  $80 billion over 10 years.

Mr. Nunes.  $80 billion.  So when we look at this, I think both Republicans and Democrats want to try to fix this.  And I am very interested in working with Mr. Berman on this, but I think we have to be realistic in terms of Mr. Brady's bill which, you know, had support of -- bipartisan support in the last Congress that I think the cost is roughly around $5 billion over 10.  Is that accurate? 

Mr. Rust.  $4.6 billion over 10 years.

Mr. Nunes.  So, Mr. Berman, there is a big discrepancy between where you guys are at -- which I am not arguing that it may be the right or wrong policy -- but it is an $80 billion cost, which I don't know how in this Congress, with all the budget woes that we have, if this is something we want to go down the road and be talking about $80 billion.  If there is somewhere that we can meet in the middle between $80 billion and $5 billion where the Brady bill is actually treating everybody fairly, I think it is somewhere in the middle where we need to end up. 

And I would yield to my friend from California, who I know has done a lot of work on this.  But I am very interested in working on something that would be maybe a compromised measure that we could get out of this committee at some point. 

I don't want to pick on you, Howard.  I wanted to give you a chance to respond. 

Mr. Berman.  I appreciate your yielding, and I appreciate the Chairman allowing me to participate in this hearing. 

The assumption -- and I don't mean any disrespect by this -- but that the Brady bill treats everyone fairly is an assumption left to be discussed, I think.  It is a far more modest approach. 

I am quite aware of the costs of an immediate repeal of these offsets, but I think we are going to hear testimony in the next panel about the fairness of these offsets.  I already thought I heard a comment which I don't understand.  No one is arguing that people should get Social Security benefits for quarters that they didn't pay into Social Security.  That is not the thrust of this bill.  So the unentitled person is not -- we are not seeking to make eligible by virtue of repealing these offsets.  Those offsets are against entitled benefits, and that is the unfairness that we are trying to address in that legislation.  But I am happy to talk further with you about --

I assume you are aware of the budget consequences.  How one might phase this in, how one might deal with the full thrust of this, what else would need to be done to help deal with the fiscal consequences of it I think are all issues that I hope are open for discussion.

Mr. Nunes.  Well, I know that the gentleman from California has always been a pleasure for me to work with on other very tough issues that we continue to work on; and I would just say, Mr. Berman, that you know we need to try to look at some type of bipartisan compromise on this. 

I understand the fairness issue, and I think the next panel will have very good points in terms of exactly what is fair.  But we have to look at not only what is fair but what is doable in our current budget situation.  And I know that you are a man of your word, and I can't speak for all the Republicans on this side, but I think we would like to work with you to try to solve this this Congress.

Mr. Berman.  That would be great. 

Mr. Nunes.  So I thank you for the panel, Mr. Chairman; and I will yield back. 

Chairman McNulty.  I thank the gentleman, and I thank the members generally for staying within the 5-minute rule. 

Mr. Doggett may inquire.

Mr. Doggett.  Thank you very much. 

I would like to solute Mr. Berman for his leadership on this.  I believe that he has the right approach. 

I think one thing is very clear and that is that whether you take the full protection that our public servants, our public educators should be getting from Social Security the way Mr. Berman does or you take any lesser version of that, it will cost some money for any of these approaches.  And you can either worsen the problem Social Security faces or you can pay for it; and there are a variety of ways to pay for these changes, just as there are ways to pay for any inequities in our system. 

Let me ask you, one of the programs that has enjoyed the broadest bipartisan support in the Congress is our Troops to Teachers Program, where people that have served our country valiantly have special insights that they can contribute in the classroom.  If someone has served our country for 15 or 20 years, made a career in the military and they choose to go to work, say, just outside Fort Hood, Texas, one of our largest military bases, in a district where teachers are not in the Social Security system, what will happen to that person's retirement if they then proceed to teach, say, for 5 or 6 years? 

Ms. Felice.  If they are getting their own Social Security benefit, they are insured, in other words. 

Mr. Doggett.  They can get Social Security as a member of the military for 15 or 20 years, but then they go and teach, say, in one of the districts in Texas -- or in California, for that matter -- that are not under that system, and they teach for 5 or 6 years.  Won't they be subject to the provisions of the Government Pension Offset and Windfall Elimination Provision? 

Ms. Felice.  Well, they would not -- on their own benefit, they obviously -- they would not be affected by the Government Pension Offset.  That only affects their spouse's benefit.

Mr. Doggett.  It would affect their spouses.  So the benefits of their spouse if they passed away would be reduced.

Ms. Felice.  Of their own spouse's benefit.  And then, as far as the windfall, if they only worked for a few years under noncovered and they worked most of their time under covered, there are, as you know, provisions in the WEP provision that would --

Mr. Doggett.  They would still have their retirement benefits reduced under Social Security, wouldn't they? 

Ms. Felice.  Not necessarily.  It depends on how many years they had. 

Mr. Doggett.  Well, I guess you mean if they work 1 year it wouldn't be much, but if they worked 10 years it would be significant? 

Ms. Felice.  Well, if you have mostly covered work, then you are not going to be affected.  It depends on how many years in each.

Mr. Doggett.  Well, let's suppose it is 10 years that they decide to teach.  Wouldn't they suffer a significant reduction in their benefits? 

Ms. Felice.  Again, it would depend.  There are guarantees that you cannot be reduced --

Mr. Doggett.  It would depend.  But there would be a significant disincentive for one to participate in the Troop to Teacher Program because of the way these provisions interface, and we will get a chance to hear testimony on that. 

Mr. Rust, I want to ask you about another area.  From reading your resume you supplied the committee, I see that you are responsible for the leadership, direction and coordination of the daily operation and activities at Social Security, including the disability program.  Is that correct? 

Mr. Rust.  Yes, sir.

Mr. Doggett.  Well, I know that you then must be aware of the very troubling reports that have come out this week from the CBS Evening News reporting on what they say is a systemwide culture to deny disability claims at Social Security.  Let me ask you, with regard to the reviewing of disability claims, are you aware of any claims examiner in the country who has been discouraged from approving disability claims in any way, has been reviewed, has received any kind of adverse action of any way concerning the denial or the approval of Social Security disability claims? 

Mr. Rust.  No, Congressman, I am not.  That is certainly not our policy. 

Mr. Doggett.  So you believe that the CBS Evening News report is false? 

Mr. Rust.  I think that it is a large -- we have something like 15,000 State employees in the State disability and determination services.  They are in each State.  They have different kinds of leadership, different kinds of management, different union involvement.  It is a very diverse situation out there, sir. 

Could you find some -- are there problems?  Yes, there are problems.  This is an extraordinarily complicated program that Congress has given us to manage, and there are problems in it.  I wouldn't deny that.  I would just say that certainly nothing that SSA does tries to instill a culture of denial.

Chairman McNulty.  The gentleman's time has expired. 

Mr. Brady may inquire. 

Mr. Brady.  Mr. Chairman, thanks very much for holding this hearing. 

This is, obviously, a big concern for many workers in America.  Rarely a day goes by in Texas that I am not talking to a neighbor, a teacher or my sister-in-law about the GPO and the WEP; and so it is very near and dear to me. 

And I am particularly concerned about the Windfall Elimination Provision.  I think the formula that was originally established is arbitrary.  We have worked in the past with Mr. Berman and others, the goal being equal treatment.  And our approach -- and there may be others just as good -- is to seek equal treatment by eliminating the WEP except as a hold harmless and basically applying the same Social Security formula as anyone else to the actual wages and years -- actual wages that people put into Social Security. 

Senator Hutchinson and I have reintroduced that legislation.  I hope some time in the near future we can take a hard look at moving it. 

I want to talk about the Government Pension Offset.  It is a tough problem to address, and I want to show you why.  And we are going high tech here, so we are using these charts.  To Mr. Rust and Ms. Haltzel, I am going to use this pointer.  So I hope you don't lose an eye over here, the folks here.  But you might want to put on some sunglasses.

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Mr. Brady.  Most workers in America pay into Social Security; and, in fact, about 96 percent of workers pay into Social Security today.  But a small group paid that 6.2 percent not into Social Security but into a Social Security substitute.  Those are teachers in Texas and California and other public servants.  And today in Social Security about 1 percent of Social Security beneficiaries affected have paid into a substitute and are affected by the Government Pension Offset. 

I did this chart just to make a couple points.  One, let's know who we are dealing with, those who are paying into a substitute rather than a Social Security. 

Here is the formula in as small type as I could make it.  This is for widows' benefits.  It is probably the easiest to explain.  And every working family -- this is important to know.  Every working family faces an offset in Social Security.  If you are in Social Security and you are a two-worker family, it is called dual entitlement, but both of the partners work. 

There is a formula as a widow.  It is 100 percent.  You take your husband's Social Security minus the wife's Social Security, and they receive a widow's benefit.  In this case, a typical case where the husband, obviously, is deceased first, $1,000 for the husband minus $700 which is the wife's Social Security; and that is the widow's benefit. 

Under the Social Security substitute, those who are affected by GPO, they have an offset as well.  In the same identical situation, husband's Social Security $1,000 dollars, the wife's Social Security substitute formula is a little different.  It is two-thirds of their pension, and then they receive the widow's benefit. 

So the difference in the -- both have an offset.  One is 100 percent.  Most workers have 100 percent offset.  A small group have a two-thirds offset; and, on paper, that actually creates a slightly better benefit for those who are in Social Security substitute. 

Let me see the next chart; and, Chairman, I will be very brief on this. 

One of the solutions, as we discussed today, has been to simply eliminate the Government Pension Offset.  But, in real life, this is what happens.  Today, that same couple who has worked -- the husband $1,000 benefit, the wife $700, this is what they would receive under Social Security in their two-worker offset.  Today, this is what the government pension worker, those who are paying into a substitute like my Texas teachers would receive, slightly more. 

If we were to repeal, like under the Social Security Fairness Act, the Government Pension Offset, this is what those workers would receive.  One percent of Social Security beneficiaries would receive a major increase in their Social Security.  Ninety-nine percent of Social Security widows in America would receive less. 

Here we would have some teachers, we would have some State and local employees, here we would have 99 percent of the American workforce, including nurses and waitresses and secretaries.  And I guess my question, if I could, to Mr. Rust and Ms. Haltzel, is this chart accurate?  With repeal of the Social Security Fairness Act, repeal of GPO, we have created two tiers of Social Security beneficiaries as widows, is that accurate? 

Mr. Rust.  Yes.

Ms. Haltzel.  That is correct, sir. 

Chairman McNulty.  The gentleman's time has expired. 

Ms. Schwartz may inquire. 

Ms. Schwartz.  Thank you, Mr. Chairman, for holding this hearing and the opportunity to find out a little bit more about a couple of very important aspects of Social Security and how it affects particular groups. 

I wanted to ask specifically about some of the disability SSDI benefits and particularly its relationship to Medicare, and I think maybe it is the Congressional Research office which has provided a really interesting and important report.  It is my understanding that the -- I think many of us don't think about Social Security really providing not only benefits for retirees but to those who are severely disabled.  It seems that what I wanted to ask about, though, is the intention to provide both some benefits for living expenses but also to be able to help those who are seriously disabled who meet the qualifications for SSDI to get health benefits under Medicare.  That is correct, that that is the intention, is to help make sure that these very seriously disabled Americans are actually able to at least live a minimal lifestyle and to get health benefits that otherwise they might not be able to afford, is that right?  It is sort of a yes or no? 

Mr. Szymendera.  Yes, Congresswoman.  That is the intention.  Since 1972, when Medicare was added to the SSDI program.

Ms. Schwartz.  Now it is my understanding that you have to wait 5 months before you can get your benefits for just living expenses.

Mr. Szymendera.  Yes, that is correct.  Five months from the onset of your disability.

Ms. Schwartz.  It is not easy to go through that process.  I think there are pretty rigid standards, and it is not easy to actually get --

Mr. Szymendera.  A large number of people are denied in the first round only to be later approved on appeal.  And the process does take a considerable amount of time, yes. 

Ms. Schwartz.  I do want to get to the appeals process.  I understand that there have been some changes in the appeals process that makes it much more difficult to go through that appeals process.  Is that correct? 

Mr. Szymendera.  There have been changes -- there have been two sets of changes.  Two years ago, the administration, through the regulatory process, instituted a plan called Disability Service Improvement, or DSI.  Some people argued that that made the process more difficult. 

That process was implemented in the agency's Boston region.  The agency has now issued a new set of proposed regulations, which are not yet finalized, which would make additional changes to the process and that again view some of the public statements that have been made.  Some people have said would make the process more difficult for claims.

Ms. Schwartz.  Do you have any numbers on this?  Do you know how many people are denied, how many setbacks of months of no coverage would then end up in the appeals process to get covered, do get approved? 

Mr. Szymendera.  Well, there are two things.  If you are denied and then you appeal and you win on your appeal, you are awarded benefits.  Benefits are awarded retroactively to what is considered your established eligibility date.  However, you do lose -- you do have to go through a significant period of time.

Ms. Schwartz.  What is the significant period of time? 

Mr. Szymendera.  Well, for fiscal year 2007, if someone were to go through the average processing time for the initial stage, it is 83 days from application.  Then, if they want to an administrative law judge, it was an additional 512 days; and if they went through the Social Security Appeals Council it was an additional 227 days.

Ms. Schwartz.  You are talking about several years.

Mr. Szymendera.  We are talking about over 27 months.  So over 2 years if you went through all the stages.

Ms. Schwartz.  And you are reporting about two-thirds get denied -- I am sorry -- get approval after they have been initially in the appeals process.

Mr. Szymendera.  Yes.

Ms. Schwartz.  So one of the questions I have, these are people who are seriously disabled.  They have to wait -- if two-thirds are getting through through appeals, what is the rationale for just having people go through months and months and months of uncertainty and denials and potentially, of course, we also understand not getting benefits to help them with their daily living expenses but not getting health care benefits at all under Medicare? 

Mr. Szymendera.  Well, I can't speak to whether there is a rationale for why this is done or not.  That may be something the agency can address.  But I can say this.  There are a lot of reasons why people are more successful on appeal than they are at initial application.  They may have more complete applications, they very well may now have the assistance of either an attorney or nonattorney representative to help them, and, in addition, their condition may have worsened to the point where it crosses the threshold.

Ms. Schwartz.  Two things about that.  Do you think it should be necessary for Americans to have to hire an attorney to be able to get benefits that they are -- many of them turn out to be eligible for? 

Mr. Szymendera.  I don't think I am in a position --

Ms. Schwartz.  I will leave that as just rhetorical. 

The other is, when you suggest their conditions worsen, then in fact I think one of your reports suggests -- well, actually say that a report shows that 12 percent die during the waiting period.

Mr. Szymendera.  During the Medicare waiting period.

Ms. Schwartz.  And many more are sicker.  Which, of course, can mean that they can never get rehabilitation, they actually might be living a much reduced life expectancy. 

I hope that other of my other colleagues will follow up on some of this.  Because here is something we have set up to be able to allow disabled Americans to have access to both, again, benefits, living expenses but also health care and, as a result of the process, are actually being denied access unless they have a lawyer or are able to live 2 or 3 years long enough to be able to get through the appeals process.  And, again, Mr. Chairman, I hope we have a chance to continue this discussion.

Chairman McNulty.  I thank the gentlewoman. 

Mr. Pomeroy may inquire.

Mr. Pomeroy.  Thank you, Mr. Chairman. 

I have a couple of lines of inquiry.  I believe we will start with the proposed changes to the appeals process; and, Mr. Szymendera, are you the one to talk to? 

Mr. Szymendera.  Yes, I can address some of that. 

Mr. Pomeroy.  Do you think presently the appeals process is resulting in people receiving benefits who don't deserve them under the law? 

Mr. Szymendera.  I haven't seen any evidence of any significant cases of that, no.

Mr. Pomeroy.  Does it then concern you that Mr. Goss, the actuary for Social Security, has suggested that Social Security will save more than $2 billion over 10 years if the proposed rule changes are enacted?  In other words, people will be turned away from benefits they otherwise would have received to the tune of $2 billion.  Does that concern you? 

Mr. Szymendera.  I am not in a position to say whether there is a concern.  I think Social Security would be better able to answer the specifics of Mr. Goss's --

Mr. Pomeroy.  Well, I will tell you, I am very concerned about that.  Because while we are horrified with the backlog issue -- and I want to talk about that momentarily -- we certainly don't want to move in efficiency measures that start to beat people out of their benefits.  And so when you have got the actuary of Social Security saying, yeah, we are going to have $2 billion more as a result of this, that basically means $2 billion in benefits owed won't be -- benefits being paid now determined through the system as legitimately owed to the people collecting those benefits would not be paid.  That is something we need to take a very close look at, and I would urge the agency to go very slowly on those reform proposals.

Mr. Chairman, I hope we will have a chance to really bore down with hearings on what is proposed by those changes.

Chairman McNulty.  We do intend to have a hearing on that specific subject hopefully at the end of February, next month.

Mr. Pomeroy.  Great.  Excellent. 

I just want to quote briefly from The New York Times.

 


RPTS BINGHAM
DCMN MAYER

 

Mr. Pomeroy.  [Continuing.]  Two-thirds of those are appealing an initial rejection win their cases, but in the meantime, more and more people have lost homes, declared bankruptcy, even died while waiting appeals hearings. 

We have information that just became available to us, published by the GAO, that shows a stunning reversal in progress made to deal with the backlog of appeals for benefits in being determined. 

I have distributed to members charts from the GAO report:  39 percent now have to wait 365 to 599 days, 28 percent have to wait 600 to 699 days, more than 2 years -- the average, 512 days -- through the appeals process.  This is an increase in 204 days, on average, wait for benefit determination than 2001. 

The backlog has risen, as of October -- last date, I guess, that we have numbers -- 758,000 compared to 392,000 in 2001.  Now, I am not crazy about 392,000, but I believe that having the backlog literally double during the years of this decade is truly appalling and something that we need to be extremely concerned about and focused on. 

Mr. Rust. 

Mr. Rust.  Mr. Pomeroy, the Social Security Administration would agree with you.  But to some degree, this is a resource issue.  We are in the process now of hiring additional ALJs, but in the last 5 years we have received about $920 billion less than the President requested in the budget going to the Social Security system.

Mr. Pomeroy.  I think that is an absolutely accurate response.  In the last 10 years, Republican majority Congresses reduced the Social Security budget requested by the President by $1.3 billion.  Just think about, if we had appropriated the money requested by their President, by our President, and had him working, we would be that much further ahead. 

If you go on what Social Security requested of the administration, the shortage is 4.6 billion.  So that already in it OMB got whacked and whacked severely only to come to Hill and get whacked again a billion dollars.  Small wonder we have a doubling in the disability backlog. 

Mr. Rust. 

Mr. Rust.  I believe since 1975 we have only received -- I will double-check this -- the President's budget four times since 1975.

Mr. Pomeroy.  The Bush Congress tried to give you $250 million to catch up.  Unfortunately, that got caught in legislation that was vetoed.

Mr. Rust.  And in my opening remarks I thanked the subcommittee for the assistance in getting that additional resource. 

Mr. Pomeroy.  I don't think this subcommittee or any part of this Congress deserves any thanks.  We have basically been presiding over a doubling of the disability backlog.  We have to, with great urgency, focus on it and deal with it. 

Thank you. 

Mr. Rust.  But we are an agency under stress not only in the disability hearings area, but across the board.

Mr. Pomeroy.  Yes, sir.  Thank you, Mr. Chairman. 

Chairman McNulty.  I thank the gentleman for bringing up those points.  As he knows, that has been a priority of both me and Sam since we started the year, last year, and we did make progress on the ALJs.  We were successful in getting $150 million over the President's request for the agency. 

We are going to continue to work on these issues.  And, Mr. Pomeroy, you are correct; we do need to focus attention on the proposed new rule, and we intend to do that at the end of next month. 

Mr. Rust.  Mr. Chairman, one of the things we will do with that additional money is hire 150 new administrative law judges, and that will go a long way towards helping to reduce these backlogs. 

Chairman McNulty.  Thank you, Mr. Rust. 

Mr. Van Hollen may inquire. 

Mr. Van Hollen.  Thank you, Mr. Chairman.  Let me begin by thanking you, Chairman McNulty, our ranking member, Mr. Johnson, and members of the subcommittee for letting me join with you for this very important hearing on the various aspects of Social Security.  And I want to focus in particular on the impact of some of the Social Security offsets, specifically those that have been mentioned by some of my colleagues, the government pension offset and the windfall elimination provision.  These are two Social Security provisions that have adversely affected the income security of too many in our country for a long time, and I just want to focus my remarks briefly on those issues. 

I happen to represent a constituency, a congressional district, that has lots of Federal employees.  And it is an issue I have worked on closely with colleagues here in the Chamber as well as with the National Association of Active and Retired Federal Employees.  And I want to thank my colleagues, Mr. Berman and Mr. McKeon, for their bipartisan legislation that they have introduced. 

I think we all understand the challenges from a fiscal point of view in moving forward.  But I think we also understand the strong equities in fairness at stake in this, and we have to find a way to move forward because Social Security offsets deny retirees funds that I think they have essentially earned, and has especially devastating impact on women whose economic -- who have come through their work and their retirement benefits that they originally worked for to expect to have enough to retire in dignity and meet their needs. 

About 75 percent of GPO affected individuals are women, and it is worth noting about 40 percent of those are widowed individuals.  In some cases, in worst case scenarios, the GPO can effectively wipe out as I understand Social Security spousal benefit, and the WEP causes many individuals to suffer more than a 50 percent reduction in their own earned Social Security. 

I just want to mention the case of one person from my congressional district; her name is Mrs. Belle Ceja, and let me just tell you her situation briefly, because she is affected by both the GPO and the WEP.  She served with the Army as a clerk during World War II, and for 31 years she then work for the National Institutes of Health.  She worked in Social Security covered employment, fully contributing to the system for some period of time.  Her husband also worked careers in both the private and public sectors.  At age 83 she can now -- she doesn't receive any of her deceased husband's Social Security benefits because of the GPO, and because of the WEP, her own benefit is reduced to $161 a month. 

That is a story that I think many Americans would be surprised to learn, people who have worked hard, who expected a certain retirement benefit and have not received what they think they, and I do believe they have, rightfully earned. 

So, I just want to again thank the committee for the opportunity to be here, and I look forward to working with Members on both sides of the aisle in addressing the issues, understanding the many challenges, because we are talking about the income security of about 1.6 million Civil Service Retirement System Federal annuitants and today's Federal workforce includes 640,000 CSRS workers who will be impacted. 

So if I could, Mr. Chairman, the National Association of Active and Retired Federal Employees had submitted testimony for this hearing, and without objection, I would like to submit their testimony for the record. 

Chairman McNulty.  Without objection, their testimony is submitted for the record. 

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Mr. Van Hollen.  Thank you very much.

Chairman McNulty.  Mr. Crowley may inquire. 

Mr. Crowley.  Thank you, Mr. Chairman.  Thank you for holding this hearing, as well, today; and before I make my own remarks, I want to also just align myself with the remarks of my colleague from Maryland as pertains to GPO and WEP as it affects many of my constituents, Federal workers in my district as well in Queens and in The Bronx. 

But I do want to just, if I can for a moment -- just to shift focus and attention, Mr. Rust, for a moment, if you could.  I won't be able to be here in all likelihood for the second panel.  We have another meeting that I have to be at, and during that period, a constituent of mine will be making testimony here before the committee as well, Mr. Moakley from the United Spinal Association, which is headquartered in my district in Jackson Heights in Queens.  And I know of a particular concern he has as relates to the 5-month waiting period for, with some exceptions, for folks -- before folks can become eligible to receive SSDI benefits. 

I understand in theory why the Congress implemented that waiting period of 5 months, but like I believe we will hear later from Mr. Moakley and others, I fear this waiting period would force individuals and their families to face severe economic hardships during that ineligibility period, families that could certainly not afford to wait for this help and assistance. 

I was wondering if you could shed some light for us on what the Bush administration's policy on the 5-month waiting period is, and if there is any discussion of any kind to shorten or, preferably, eliminate the 5-month waiting period. 

Mr. Balkus.  I wasn't aware of any position by the Bush administration regarding the 5-month waiting period. 

In the past, there have been proposals to eliminate the 5-month waiting period for individuals who are terminally ill.  There have been proposals to eliminate the 5-month waiting period, period, and there is also in the past -- I mean, the 5-month waiting period was shortened once.  It was a 6-month waiting period.  It was shortened to 5 months, and it came down to it wasn't shortened any further because of the cost in terms of the program. 

Mr. Rust.  And it does not apply to ALS and end-stage renal.  Congress has created a special exception. 

Mr. Crowley.  They made mention to that in my question.  But I take it from the answer that there has been no discussion, as far as you know, about either shortening or eliminating the 5-month waiting period; is that correct? 

Mr. Rust.  Yes, sir. 

Mr. Crowley.  Is it possible that my question, my query, this morning could serve as an impetus to begin a discussion within the administration again a reexamining this particular waiting period for many who will be permanently disabled, who will have to go through a 5-month waiting period, who no longer can work and whose families are being put in a very distressful position because of inability to work?  Is it possible that we can have a reexamination of this 5-month waiting period? 

Mr. Balkus.  I think we can revisit the issue and take another look at it.

Mr. Crowley.  I appreciate that, and if you could get back to us on your comments and remarks I would appreciate that. 

I yield back the balance.

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Chairman McNulty.  I thank the gentleman.  I would like to recognize Representative Berman of California.  He, along with Mr. McKeon, is the lead sponsor of legislation referred to earlier. 

Mr. Berman. 

Mr. Berman.  Thank you, Mr. Chairman.  I am going to pass on your kind offer, I think, in order to hear the next panel; and I have already have a chance to speak a little bit about this. 

There are a number of situations.  Mr. Van Hollen went into a couple of compelling cases that demonstrate vividly the unfairness of the current situation, the penalty that is exacted on certain people who have gone into public service, as opposed to people who chose a different career path; and I hope we can ultimately rectify that.  That is the goal of this legislation. 

And I yield back.

Chairman McNulty.  I thank the gentleman. 

Mr. Brady.  Mr. Chairman, if I could just get 10 seconds from Mr. Berman to make a comment. 

Mr. Berman.  I would be happy to yield.

Chairman McNulty.  Gentleman yields. 

Mr. Brady.  Thank you both.  I ran out of time and oftentimes don't express myself well. 

I think one of the points I was trying to make in our minutes is not that we shouldn't work on the Government Pension Offset.  Just the opposite, I think we have to work together on it.  Part of the problem is that oftentimes the substitutes outperform Social Security, so their pensions are often, you know, large enough that it does wipe out all their Social Security. 

I think there are a couple approaches that we can focus on if our goal is equal treatment.  I think there are some ways we can get there, and I would just like to offer my assistance to you, Mr. Berman and Chairman McNulty and Ranking Member Johnson.  I really am convinced, if we sat down, there are some approaches we can we can take to help folks who are in this, affected by the GPO and WEP. 

Mr. Berman.  I assume you want to do that.  I look forward to doing that. 

I think we will hear in the next panel though, the equity issue is a compelling part of this.  But another compelling part is, the existence of these offsets is a serious obstacle to recruiting people, particularly into public teaching, and it is having major ramifications in the ability to get midcareer people to shift into education at great cost and loss to our effort to strengthen and build public education. 

Chairman McNulty.  Now I would like to recognize Representative Tom Allen from Maine.  Representative Allen has long been involved in these issues, and we welcome his participation in this hearing. 

Mr. Allen.  Thank you, Mr. Chairman.  I am very grateful for the opportunity you have given to those of us who are not on the committee to be here today and participate in a matter like this which is of utmost importance to thousands of people in Maine. 

Others have talked about the problem.  I want to concentrate on just one particular individual, and to say only at the beginning that in Maine, Social Security does not cover more than half of our State and local government employees.  So they are often subject to a painful reduction in their retirement income for which they, in many cases, are simply not prepared. 

I want to highlight one individual's case, a retired school employee, from Falmouth, Maine.  Irma started working at the age of 14 and began paying into Social Security.  After marrying and staying home to raise three children, she later went to work for 23 years at the local high school. 

Now retired, this woman and her husband are living below the poverty level because of the GPO.  After deductions for Medicare, her pension check is $80 a month and her spousal benefit from Social Security is $69 a month.  She and her husband are struggling, like so many others, with the rising cost of food and heating oil and gasoline and taxes, which are really depleting their small amount of savings.  They tried to plan for their retirement by each working two jobs, and she paid into Social Security privately to earn three metered quarters, because a local Social Security representative later advised her that she was wasting her money because her income was too low and the minimum amount of Social Security had been eliminated. 

This is one tragic example of a very frustrating situation for many of my constituents.  Spouses that have never worked are receiving their 50 percent benefits, but because this woman chose to work in the public sector, she is being punished. 

A couple questions just that go to the fairness issue that I know we are going to be dealing with in the second panel.  But the question is, as it is framed to me over and over again, the thing that is hardest for people to understand is that someone whose spouse has worked in the private sector can receive full pension benefits and Social Security, but not if the spouse was a State employee.  So that contrasts between a spouse, one of whom -- one of whom has someone with a private pension and another with a public pension is troubling; and secondly, the second question is -- I am really asking for an explanation of this, but the second situation is like Irma. 

She chose to work in a school for 23 years, dedicating her life to helping and teaching students, and for that she feels she is being penalized.  She believes she would be better off financially in terms of her Social Security if she hadn't worked at all. 

And so for either of our panelists, if you could address those two situations, I would be grateful. 

Ms. Felice.  If I understand the two situations, the point here is that regardless of where a person worked, if the person worked in covered employment and got Social Security, as far as their spouse's benefit, they still are going to be offset and they are going to be offset dollar for dollar.  They can't get their spouse's benefit and their worker's benefit; in both cases, that is the case. 

If you are a noncovered worker, you will get an offset, but it is not dollar for dollar; it is two-thirds.  So it is actually less of an offset. 

So the point is, in neither case can these two women get their spouse's benefit and their worker's benefit.  They are both offset.  Does that help? 

Mr. Allen.  Thank you. 

With that, I will yield back.  Thank you, Mr. Chairman.

Chairman McNulty.  I thank the gentleman from Maine for his participation. 

We have had at least two requests for a second round, one from Mr. Brady, one from Mr. Doggett.  I would like to try to limit it to that with regard to this panel, so that we can get to the next panel because that is going to be a very lengthy presentation because we are going to have seven witnesses, and of course we will hear additional questions on the second panel as well. 

And so, at this time, I would recognize Mr. Brady. 

Mr. Brady.  Thank you, Mr. Chairman.  I will be very brief. 

Let's go back to the charts.  I want to make one point about Social Security, GPO, and another about WEP, if we could do that one.  Perfect. 

The point I am trying to make here is that it is very important for us as a panel to understand that if we eliminate the GOP, we have created not equal treatment within Social Security but special treatment within Social Security, and you would have a small group of beneficiaries in America -- an important group, teachers, some teachers, firefighters, those in public servant positions -- who would get a large amount of Social Security as if they had never worked in their life and were completely dependent.  And then all the rest of the workers -- nurses, social workers, secretaries, bankers, others -- would have a second tier, a lower amount of Social Security. 

And the point I am trying to make here is that if our goal is equal treatment, you need to look for a different solution than repealing the GPO.  It has to be much more nuanced, and it has to focus on, again, equalizing treatment between workers, because all two-worker families have an offset.  All two-worker families have an offset.

Let me put up the WEP chart, if I could.  The Windfall Elimination Provision, I think, is especially frustrating for, as Mr. Berman said, a lot of teachers had to work a second job their whole life because they didn't get paid that much, frankly, in their teaching job.  Others have had a career like my sister-in-law, a career in the private sector.  Now she is teaching special ed students, which is what she has wanted to do for a long time, and they are surprised to be hit by the Windfall Elimination Provision. 

Again, I think the goal here should be equal treatment. 

This chart shows how -- what percentage of revenue is replaced under Social Security; and here, here is the Social Security worker who receives about 43 percent of their wages replaced by the Social Security formulas.  Today, a Social Security worker subject to WEP has a lower percentage. 

What we are trying to do under the Public Servant Retirement Protection Act is equalize the percentage of benefits of replacement income that workers get.  And the goal is to create equal treatment, and we do that simply by applying the exact same Social Security formula that applies to other workers, but applying it directly to the wages that they contribute, so they don't get Social Security for 30 years if they have only paid in 10, they don't get Social Security for all their wages when, in fact, they may have paid a good portion of that into a substitute and not into the system. 

And I would ask, I guess Mr. Rust, Mr. Rust and Ms. Haltzel, if this approach -- while not as large an income differential as a complete repeal, if this is an approach -- there may be others -- that moves us closer to equal treatment under the WEP process and -- it is just an open-ended question, and we would love to have your comments. 

Mr. Rust.  If we were starting from scratch, if WEP didn't exist and we were starting from scratch, I think -- and this is my own opinion -- the conceptual framework that you have laid out here is a -- has a greater -- would be something that I think from a conceptual point of view we would be very supportive of. 

Mr. Brady.  The problem is reconstructing the wages that have been paid into the Social Security substitutes throughout the years? 

Mr. Rust.  Yes. 

Going back to something I said earlier about an agency under stress, resource wise it would be very difficult for those roughly million or million-plus people to go back and reconstruct a lifetime of covered and uncovered earnings and be able to recalculate.  Because of the way your bill works, we would recalculate it, and then they would get the higher of whichever; and so we would have, for people working before -- I think our records are pretty complete from about 1983 or -84, before that, that we have some records going back to about 1978.  Beyond that, nothing.  So I think that it would be a tremendous workload to try and --

Mr. Brady.  That is challenging.  Your agency has given our office a number of different approaches where we can minimize that and give the people an opportunity to do the history of the wages. 

Ms. Haltzel. 

Ms. Haltzel.  I would just say, part of the intent of Social Security is always to treat people with similar earnings histories equally.  And the WEP, one of its shortcomings is the fact that it assumes that people have a certain income when they may not.  And this approach would do a better job of equalizing treatment among those who do, in fact, have some similar earnings histories.

Chairman McNulty.  The gentleman's time has expired. 

The gentleman from Texas, Mr. Doggett. 

Mr. Doggett.  Thank you, Mr. Chairman.  Mr. Brady and I have had a longstanding, respectful dispute over the Government Pension Offset.  He supports it.  The Bush administration supports it.  The Social Security Administration supports it.  Mr. Berman and I don't support it. 

As to the Windfall Elimination Provision, Mr. Brady has proposed what I would call the 6 percent solution.  It does nothing for most of the people affected by the Windfall Elimination Provision; it costs 6 percent of what the proposal that Mr. Berman has offered costs.  But I understand from the answers that you just given, Mr. Rust, that even as to his 6 percent solution, the Social Security Administration says it would be extraordinarily difficult to implement even help that covers only 6 percent. 

That said for the record, I need to explore with you, Mr. Rust, the answers that you gave me previously. 

As I understand it, you disagree with the CBS Evening News report that there is a culture of denial on disability claims at Social Security.  As you know, CBS reported that it interviewed three dozen former examiners in 14 States, not just an isolated disgruntled employee, and that they found a systemwide culture to deny. 

My question to you is, what action, if any, does Social Security plan to take to respond to that report? 

Mr. Rust.  I will be in Texas next week, and I will be meeting with all the DDS administrators.  This is one of the issues I want to discuss with them from that region.

Mr. Doggett.  Texas was not one of the 14 States, but it still warrants investigation because -- since it is close to my home, I am glad you are going to be looking there, but do you anticipate any kind of systemwide review, at least in those 14 States, to find out whether the culture of denial they report on is accurate? 

Mr. Rust.  I am trying to think of how one would even begin to approach that. 

We do constant training.  Our policy -- we try to make our policies clear.  In fact, we have recently revised a number of our policies trying to address the clarity question.  We put a whole new process into place where we look at where there is a policy dispute between the quality people and the DDS to see why a decision was rendered to be wrong.

Mr. Doggett.  Does Social Security have any different standard for its review of denials of claims by the claims examiners and approval by practice? 

Mr. Rust.  By law, we must review 50 percent of the allowances -- by law.  We don't review --

Mr. Doggett.  My question is not about how many you reviewed, but the way -- the intensity and the nature of the review.  Is it any different for the approval of a claim than the denial of a claim? 

Mr. Rust.  From a research point of view, we look at more analysis because the law says you will look at 50 percent.

Mr. Doggett.  I understand you look at more, but once you look at a claim, if you have an approval here and a denial there, is the standard for review exactly the same; or are there other instructions that say, look more carefully at the approval than the denial? 

Mr. Rust.  We have a unit within headed by a deputy commissioner who is responsible for quality.  They look at these cases.  They look at a huge number of cases a year, especially -- as I said, by law, we have to look at 50 percent of all of the allowances before they are effectuated, to make certain.  And I think that was a signal from Congress, in fact. 

Mr. Doggett.  You don't treat the review of approvals, when you look at an individual claim, any different than a denial? 

Mr. Rust.  No. 

Mr. Doggett.  Have there been any communications of any type that have gone from Social Security out to any of the individual States or the claims examiners suggesting that they have been approving too many claims? 

Mr. Rust.  Not that I am aware of, and they would generate from my office.

Mr. Doggett.  Can you supply the committee -- after going back and reviewing to be sure that that is accurate, to assure us that that hasn't happened, can you supply us the training materials that you referred to as to how these examiners are trained to ensure there is not a culture of denial? 

And then what kind of quality assurance -- these are contractors as I understand it.  What kind of --

Mr. Rust.  They are State employees.

Mr. Doggett.  Or Social Security gives the State responsibility, like the Texas Rehabilitation Commission.

Mr. Rust.  The Texas Disability Determination Service, Social Security funds all of their expenses, 100 percent of their expenses; but they are State employees, and they operate within the --

Mr. Doggett.  What kind of quality assurance documents are there to show that there is not a culture of denial on these disability claims? 

Mr. Rust.  Our quality -- our deputy commissioner for quality finds on a pretty consistent basis that about 97 percent of the decisions that are looked at, both allowances and denials, are correct.

Mr. Doggett.  Thank you, Mr. Chairman.

Chairman McNulty.  The gentleman's time has expired. 

Mr. Ryan has joined us; I am going to recognize him.  And then we have two brief requests on our side, and then we will get to the second panel. 

Mr. Ryan. 

Mr. Ryan.  Thank you, Mr. Chairman.  I yield my time to Mr. Brady. 

Mr. Brady.  Thank you. 

Mr. Chairman, I think it is important to correct the misrepresentation of the earlier speaker on this.  He claims take that Public Servant Retirement Act would only impact 6 percent of those affected by WEP. 

But, Mrs. Haltzel, I am looking at a report from July 9th of this year where it shows the impact of current law versus our bill to eliminate the WEP and to provide equal treatment, and it shows that our bill increases benefits for about 80 percent of those who are currently affected by the WEP.  And in the summary on page 12 it says that minimum-wage workers and low-wage workers would receive the greatest percent increase in Social Security benefits under our bill, and average-wage workers with up to 27 years of covered earnings would receive greater benefits than WEP today under our bill, and even says high-wage workers with up to 23 years of covered earnings, which is many of our teachers, would receive benefits greater than what they would receive under current law. 

So rather than 6 percent, is your report accurate? 

Ms. Haltzel.  As far as I know, yes, sir.  It was updated last year.

Mr. Brady.  Great. 

Thank you, Mr. Chairman. 

Mr. Rust.  We believe that is a correct expression also. 

Chairman McNulty.  The gentleman yields back. 

Ms. Schwartz. 

Ms. Schwartz.  Thank you.  I would like to follow up on a couple things that you brought up.  I want to ask Mr. Rust a couple of questions just to get on the issue of denying disability claims and sort of playing them out. 

You said that in your quality review, about 95 percent are found to be accurate whether they are denials or approvals. 

Mr. Rust.  I think it was 97 percent.  I can get you that information. 

Ms. Schwartz.  How is that consistent with the report that was read that about two-thirds of those who are denied initially are ultimately approved?  Are you looking at the approvals at the end of the day?  Are you looking at the initial disapproval? 

Mr. Rust.  We look at the initial case processing, the initial two stages.

Ms. Schwartz.  That is a mismatch, or am I looking at two different statistics?  How can two-thirds that were denied initially end up getting approval at the end of the day?  And your report is showing that 95 percent of those are correct? 

Mr. Rust.  Yes.

Ms. Schwartz.  Isn't that inconsistent? 

Mr. Rust.  I don't think so. 

Let me explain one thing about this program.  Congress set an extraordinarily high standard for this program, not just that you are disabled, but you have to be sufficiently disabled that you can do no work for which you are qualified to do by education or prior experience anywhere in the economy. 

So there is a very high standard.  It is not just that you have a disability; it is that it renders you unable to do any work in that category.

So the DDS administrator in Pennsylvania, the agency in Pennsylvania, that examiner is looking at the individual, their medical records and other information they have; and they have to make that sort of determination.  It is a very difficult determination.  And so I think, if you are allowed, you think the process works beautifully; if you are denied, you think the process is terrible. 

Do they make mistakes?  It is a very difficult decision to make.  These people work under tremendous stress trying to cope with that kind of life-deciding decision, and their instruction from us is always to make the right decision and make it at the earliest possible level.

Ms. Schwartz.  The issue many of us are bringing up here today -- and I hope you are hearing it -- is, we do understand it is not easy to be approved under SSDI.  We understand that.  And the standards are very, very high. 

What we are concerned about -- and I will speak for myself here -- is that the process is so onerous that, in fact, we are seeing 12 percent of Americans who are going through the appeals process, actually literally dying before a decision is made because they don't have access to health services.  Others are found to be sicker; that was part of the testimony. 

So the issue is to not make it so onerous. 

Mr. Rust.  Twelve percent are dying, or 12,000?  I thought CBS said 12,000. 

Ms. Schwartz.  The report I have in front of, me and I guess I should ask them, was 12 percent.

Mr. Szymendera.  That was an estimate of 12 percent of people who died during the 24-month Medicare waiting period.  That is separate from waiting for the decision for benefits. 

Ms. Schwartz.  That adds to the point that while people -- if they have to go through a lengthy process, I understand the new rules require that if there is an error, they have to go back to the beginning of the application process.  That can delay it further.  The suggestion earlier that people find that they may need to go and get a lawyer, that may make it a longer process. 

During this whole process -- this is just to get the eligibility initially for SSDI; you then have to wait 24 months to get Medicare.  You are talking about years and years potentially.  So while we want you to get it right, we don't want to put people through years and years of denial and application process that puts their life and health at risk. 

And I will yield back. 

Mr. Rust.  We also want to get it right.

Chairman McNulty.  I would advise the members that votes on the floor are imminent.  We would like to conclude with this panel. 

Mr. Becerra. 

Mr. Becerra.  Thank you.  There are so many important issues.  This hearing, Mr. Chairman, as you have noted, is to talk about benefits issues for vulnerable populations of our beneficiaries; and we have talked about WEP, GPO. 

I do want to move to the issue that has been discussed in the second round of questioning because we are talking about people who are already retired, already suffering, whether because of a disability or some other ailment that makes it very difficult for them just to survive.  And what we are finding is that as every day ticks, more and more Americans are finding it difficult to get the benefits they thought they earned, especially in their disability during their years of retirement, which I find just stunning.  Stunning. 

Today, we have to focus on the question that Ms. Schwartz was asking.  If I have this correct, 16,000 people who have died in the past 2 years were awaiting a decision on their disability benefits.  The backlog has increased since 2000, the year 2000; 750 cases -- up 150 percent; that is what it is up to today, 750,000 cases -- maybe not use the word "cases," 750,000 Americans who worked, paid into the system, now disabled, waiting to get a benefit that they thought they worked hard and earned. 

Today, once they get that hearing, they can expect to wait, not 274 days which they waited back in the year 2000 to get a decision, but 481 days to get a decision.  In fact, about 30 percent of all those cases actually take longer than 481 days; they take over 600 days to get a decision.  And during this time, Social Security has actually seen a drop in the number of personnel it has to deal with Social Security disability claims. 

And so I don't think I need to say more to explain how we need some change.  We need something dramatically, drastically different at Social Security to try to treat these cases.  Yet, what I am hearing is that SSA has proposed a rule that actually makes it more difficult for claimants to go through the process, because it will turn what is today supposed to be an informal, nonadversarial, nonlawyerly process for a disability claimant, who probably doesn't have enough money to pay for an attorney, into a professionalized, lawyeristic hearing process where, if that individual who is disabled didn't bring up some relevant evidence 5 days before the hearing, guess what? 

You can't bring it up unless you have some administrative law judge who says, okay, I will give you a break.  And then if you have some information that is revealed after the decision that could affect the outcome and you try to present it to the SSA, rather than say to you, oh, well, we won't blame you for not having found that earlier, let us take that into account, we will do what we can using our best judgment, no, not only can you not appeal, but you have to start the process all over again.  Guess what?  That means another wait in line. 

I don't know what is going on down there.  And obviously you didn't think too hard about GPO and WEP and what needed to be done over the last 7 years.  I do know that over the last 7 years your budget, which when you send it off to the administration, the Office of Management and Budget, OMB, struck down your money over the last 10 years, a total of $3 billion over -- $3 billion over what you had requested from 1996 to 2008. 

You got reduced from your requests some 3.3 billion, and on top of that, the previous Congresses, for the last 10 years, chopped off another $1.3 billion from what SSA had originally requested to do its work. 

Last year, there was change.  You got, for the first time under a Democratic Congress $150 million more than you actually requested, the first time in over 10 years that SSA got more money in its budget than it had requested. 

And so I say to you, you have to come up here and speak very frankly to us.  If you don't have the resources, you have to tell us that.  If you didn't take the time to think about what to do on some of these issues, WEP, GPO, disability claims, tell us that, because otherwise you are going to face a beating here and when you go back to your office because you are not going to get it done. 

We are going to hear it.  And ultimately you are going to feel the heat because this is not the way you operate for people who are now in their golden years, expecting that this is not what they are going to receive from their government. 

So whether it is GPO, WEP or disability claims, please take the back the message.  Change.  Do it differently.

Chairman McNulty.  Gentleman's time has expired. 

And finally Mr. Doggett. 

Mr. Doggett.  Mr. Chairman, I do need to respond to the unfortunate choice of words --

Chairman McNulty.  Excuse me.  I should explain that.  Mr. Doggett already had a second round.  As you may recall, I reserved my time at the beginning.  I did not do a period of questions, so I am yielding my time to Mr. Doggett. 

Mr. Doggett.  Mr. Brady used the unfortunate term that there had been a "misrepresentation" about his proposal.  I think there is a legitimate public policy dispute that can be handled respectfully.  My reference to it as "the 6 percent solution" is based on the report in October of the Social Security Administration Office of Chief Actuary that says his proposal costs $4.6 billion and Mr. Berman's cost $80.1 billion, in other words 6 percent of the cost of the Berman proposal. 

You can look at these figures in terms of cost to Social Security or you can look at it in terms of cost to public servants -- our teachers, our law enforcement, our firefighters.  Our way of looking at it is that over 10 years, those people -- the teachers, the firefighters, the police -- are being denied $80 billion of benefits that they should receive. 

Mr. Brady says we need to take care of 6 percent of that with his proposal.  He does not propose any way to pay for that 4.6 billion. 

There are ways to pay for these proposals.  I believe we should follow the advice of another great Texan, "Come let us reason together and try to work out some incremental change," but when you start at 6 percent versus 100 percent, the middle, the differences are pretty significant.  And most people would not be helped by his proposal who are affected today. 

And you have told us, Mr. Rust, that it will not be an easy thing, in fact, it will be extraordinarily difficult for you to ever implement what he is proposing. 

As to the issue of Medicare and this 2-year delay, if someone is fortunate and unique enough to actually make it through the disability process and all these loops and hurdles that you have to go through with the large percent of denial, they face a 2-year delay in getting any Medicare benefits from the time that they were declared disabled, as I understand it.  And I haven't heard, if there is any reason, I would welcome hearing -- I have not heard any reason advanced, other than again, just like with the GPO and the WEP, it is cheaper for the government to deny them access to health care -- knowing that more than one in ten will die while they are waiting, it is cheaper for the government to deny them access to health care and Medicare than it is to provide it.

Mr. Rust.  If I may respond to that last specific point, and it also goes back to general, the comments I made about WEP, GPO, we see our job is to faithfully execute the law.  This is the law, the 24-month period, the WEP, GPO, that is the way the law is currently written.  Congress clearly can revise that, and we would look forward to working with Congress. 

Mr. Doggett.  I understand that, but as Mr. Becerra says, you could clearly make recommendations as you do in different areas of the Social Security and Medicare law if you thought something should be done in this area.  We do.  I think you and the Bush administration don't.

Mr. Rust.  On the 24-month, it is interesting because Mr. Balkus, we are doing a demonstration project right now, and what he has found, I think, is that the overwhelming majority of the people in that 24-month do have health insurance.  In fact, we were looking to do a demonstration project where we were going to affect people only who did not have insurance, and we had to screen a lot of candidates to find these candidates.  Many do have --

Mr. Doggett.  Your time is up.  If you can supply us the preliminary results of that demonstration project, it will be helpful. 

Mr. Balkus.  I'll be happy to do that.

Mr. Rust.  We are happy to do that. 

Mr. Johnson.  The Clinton administration, for the record, never made any changes or proposals either. 

Mr. Doggett.  You are correct.  I agree with you.  They should have, and this administration in the last 7 years should have.

Mr. Johnson.  Thank you. 

Chairman McNulty.  I wish to thank all of the members of this panel for their testimony, for their responses to our questions; and I want to thank all the members for their patience in going through this process.  I want to thank the members of the second panel for their patience and all of the other interested parties in the room. 

Now let me just tell you where we are.  We are expecting votes imminently.  Let me just double-check on the timing of that. 

I think we will go to the second panel and see if we can start the process then. 

While the members of the second panel are approaching the witness table, I would remind each of them that according to the subcommittee's earlier actions, your written statements will be entered into the record in full.  We ask that you keep your oral comments to 5 minutes, and when you are making your testimony, keep your eye on the little lights in front of you as they warn you of the time period.

I again apologize for the inconvenience, but the voting process is going on right now.  We have a 15-minute vote and two 5-minute votes so there will be a little slippage in between there. 

And so I have consulted with the ranking member, and we have decided to adjourn briefly to go over for the votes and add a couple of minutes for that for slippage.  We will reconvene at 12:30 p.m.  That will allow members of the panel and the other folks in attendance to take a little break. 

The subcommittee will reconvene at 12:30 p.m.

 


RPTS McKENZIE
DCMN NORMAN

[12:38 p.m.]

 

Chairman McNulty.  The subcommittee will come to order.  I would ask the witnesses to take their places at the witness table.  I want to note for the record that Ranking Member Johnson was back here on time and I am the one who was late.  I also again want to thank all the members of the first panel and the agencies involved.  Commissioner Astrue has been very cooperative with both me and Sam during the course of time when we have served as Chair and Ranking Member of this committee.  And I particularly want to commend all of the people who work at the Social Security Administration all across this country under very trying circumstances.  I have worked directly with the folks in my district for 20 years.  I think they do a marvelous job.  I think they are understaffed.  And that is one of the reasons why I am grateful that Sam worked with us so very vigorously this year to get additional resources in that budget so that the workers at the Social Security Administration could do their job in a more timely fashion, because what the result of that is to get benefits out to our constituents that are deserved and earned.  And I also want to thank CRS.  I think Sam and every member of this panel, every Member of this Congress, knows that whenever we need any information in a timely fashion, even if it is on a very complex subject, CRS is always there for us.  They do a great job and thank them for their participation as well. 

We now want to proceed with the second panel.  As I mentioned before, all of the written testimony submitted by the witnesses will be included in the record in its entirety.  And we would ask you when called upon to summarize your testimony within 5 minutes, and then we will go to questions by the panel. 

The panel will consist of Frances Rosenfield, retired postmaster of Albany, New York, on behalf of the National Association of Postmasters and a very dear personal friend of mine for many, many years; Margaret Cagle, a teacher from the Los Angeles Unified School District and a member of the National Education Association; John O'Sullivan, secretary-treasurer of the Texas AFT; Terry Moakley, vice president for public affairs of the United Spinal Association, Jackson Heights, New York, on behalf of the Consortium for Citizens With Disabilities; Joan Entmacher, vice president of Family Economic Security, the National Women's Law Center, Washington, D.C.; Joseph Rugola, international vice president, the American Federation of State County and Municipal Employees; and Sue Melton, State president of the Association of Texas Professional Educators. 

Welcome to all, and I would like to start the questioning with my very dear friend of long standing, Frances Rosenfield.
 
STATEMENT OF FRANCES ROSENFIELD, RETIRED POSTMASTER OF ALBANY, NEW YORK, ON BEHALF OF THE NATIONAL ASSOCIATION OF POSTMASTERS

Ms. Rosenfield.  Thank you sir.  Chairman McNulty, Ranking Member Johnson and distinguished subcommittee members, I am Frances Rosenfield and I am here representing the 40,000 active and retired members of the National Association of Postmasters of the United States.  Postmasters manage the operations of approximately 27,000 post offices throughout this Nation.  Moreover, retired postmasters continue to remain actively involved in legislative matters such as the one the subcommittee has under consideration today.  I would add that I have been a member of the National Association of Retired Federal Employees since 1979. 

Mr. Chairman, I am honored to have been the postmaster of two New York Post offices during 27 years of service to my country and to my postal customers.  In 1965, President Lyndon Baines Johnson appointed me postmaster of Roslyn Heights, New York, and 19 years later, Postmaster General William Bolger promoted me to postmaster of Great Neck, New York.  Upon my retirement in 1992, I traveled approximately 150 miles up the Hudson River to become a constituent of Chairman McNulty. 

However, my story of how and what I considered to be an unfair and punitive Social Security law began 53 years ago.  My husband Myron was a private sector economist.  He was in the work force for about 20 years.  In 1955 Myron tragically passed away at the youthful age of 41 and I became a young widow.  Myron left me a single parent of two children, one 10 years old and the other 6 years old.  Fortunately my two children were eligible for Social Security survivor benefits until they reached the age of 18.  I worked for a number of years as the editor of the community newspaper prior to being appointed postmaster.  As an employee of the Postal Department and then the Postal Service, I participated in the civil service retirement system.  Indeed, I never thought that the combination of Myron's deferred Social Security survivor benefits, to which I was entitled, and my earned CSRS annuity would be considered excessive or inappropriate, Mr. Chairman.  It is not. 

As a result of the Government Pension Offset statute, upon my retirement, my Social Security survivor benefit was recalculated so that my current payment amounts to only $900 a month.  Unlike so many of my cosufferers of the unfair GPO, I had a warning that storm clouds were on the horizon.  In the early- to mid-1980s I was the New York State legislative chair.  I was attentive to the politics of reshaping Social Security and the creation of the Federal Employees Retirement System which brought postal and Federal employees into the Social Security system.  Moreover, within my capacity of legislative Chair, I worked long and hard in a thus far unsuccessful effort to undo the legislative mistake made in the late 1970s when the Congress passed the GPO. 

Over the past three decades, Congress has made numerous attempts to eliminate or reduce the effects of the GPO.  In fact, 336 of your colleagues have joined in calling for the elimination of the GPO.  Now this committee has the opportunity, the skill, and the motivation to make due on the commitment to provide nondiscriminatory Social Security survivor benefits to Federal and postal CSRS employees.  Ironically, had I not been committed to public service and instead been employed in the private sector of the economy, with a private pension, I would not have suffered this fate.  I understand that I am only one of the thousands of public service retirees who have been victimized by an unfair and arbitrary Social Security GPO and the Windfall Elimination Provision. 

However, I urge this subcommittee, and ultimately the Congress, to pass legislation to remedy the discriminatory treatment many civil service retirement system annuitants suffer.  H.R. 82, legislation proposed by Representatives Berman and McKeon, is a bill that is wholeheartedly endorsed. 

I also understand that the subcommittee may want to take an incremental approach.  In any case, it is important that Congress remedy the situation in order to provide for the earned benefits for our retirees and their families.  Thank you for this opportunity to share my views. 

Chairman McNulty.  I thank my friend, Postmaster Rosenfield. 

[The statement of Ms. Rosenfield follows:]

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Chairman McNulty.  Ms. Cagle.
 
STATEMENT OF MARGARET CAGLE, TEACHER, LOS ANGELES UNIFIED SCHOOL DISTRICT; MEMBER, NATIONAL EDUCATION ASSOCIATION, CHATSWORTH, CALIFORNIA

Ms. Cagle.  Chairman McNulty and members of the subcommittee, thank you for the opportunity to speak with you today about the devastating impact of Social Security offsets on many public servants.  I would like to share my story as one example of the harm these offsets are doing to individuals, but, more importantly, to the teaching profession and to society at large. 

After 15 years practicing and teaching architecture, I made the move to teach mathematics in a public school that is part of the Los Angeles Unified School District.  While I always found my work as an architect to be profoundly rewarding, I responded to a call for professionals from science, technology, and math-related fields to change careers in order to address the serious shortage of mathematics teachers in California.  I had been able to measure the impact of my work in architecture with commercial and residential building across New York, Connecticut and California.  But I believed I could make a greater impact and serve a greater good as a math teacher in a large urban school district. 

It is rare for a child to fall in love with math all alone.  Most students require a knowledgeable and impassioned teacher to guide them in realizing and embracing the relevance and beauty inherent in mathematics.  Over the last 14 years I believe I have done just that for my students.  While the choice to take up the work of teaching in a public school has provided me with great personal awards, including three national teaching awards, it has also punished me financially.  Changing careers was not an easy decision.  After spending 6 years in college studying architecture and urban planning, then apprenticing, passing rigorous State and national licensing exams and building and running my own practice, I had a substantial investment in my profession.  Throughout those years, I was paying into Social Security, including several years paying at the higher self-employed rate.  Having made the move to teaching, those contributions have been rendered nearly worthless to me.  I had no idea that I was throwing away those years of contributing towards my retirement. 

As you would probably expect, architecture is generally a more highly paid career path than teaching.  I knew my career move would result in an immediate pay cut.  I did not realize, however, I would suffer financially further upon my retirement.  Had I been fully informed at the time, I seriously doubt that I would have ever chosen to embark upon a career in public service. 

Throughout the history of civilized society, individuals have been called upon to suffer personal injustices and to make sacrifices in order to serve the greater good.  Tragically, the Government Pension Offset and Windfall Elimination Provision are requiring individuals to suffer and to sacrifice under a system which is also penalizing society.  In California alone, it is projected that one-third of current teachers will retire within the next 10 years, with higher percentages among math and science teachers.  At the same time that No Child Left Behind is calling for a highly qualified teacher in every classroom, enrollment in teacher preparation programs is nationwide. 

The launch of Sputnik sparked an unprecedented focus on stem education 50 years ago; and now globalization of the economy, flattening of the world, and concerns about national competitiveness are spurring a renewed resolve to provide each child an outstanding math and science education.  We can ill afford to wait to attract more mathematically proficient and scientifically trained individuals into our classrooms.  Though the majority of math and science majors do not initially seek to pursue K through 12 teaching careers, after working in private industry they may realize that there are greater personal, if not financial, rewards to be found in teaching. 

In recruiting from the private sector, I can ensure potential teachers of the extraordinary opportunity of shaping the future through educating the children, but I cannot assure them that they will not suffer monetarily when they retire.  Ironically, the more practical experience that second-career teachers could bring with them to invigorate and enrich their classrooms, the more financially devastating that move would be.  Without the repeal of the punitive provisions of the Social Security code, it is highly unlikely that knowledgeable and passionate individuals will choose to move to public teaching from the private sector, knowing they will take an immediate and often substantial pay cut as well as face further financial hardships upon retirement. 

I urge the passage of H.R. 82.  The current regulations under GPO and WEP are unfair to the present work force, and, on a larger scale, they seriously compromise the ability of our schools to recruit greater numbers of passionate and accomplished individuals to teaching at a time when we suffer from a critical shortage, which is expected to worsen. 

If there is any windfall in the current provision, it has been to the government, which reaps the rewards of not paying benefits to the individuals who have paid in and earned them. 

The projected expenses associated with changing these regulations should be seen as an obligation rather than a cost; an obligation to the people who paid into the system with every expectation of receiving their benefits upon retirement and an obligation to the next generation of citizens seeking a quality education to ensure they will be equipped to be productive in careers that do not yet exist, using technologies that have not yet been invented, to meet challenges that have not yet been identified in order to secure the future of this great Nation. 

I thank you for the opportunity to speak with you today.  I urge that that bill go to markup.  I think we have waited long enough.  Thank you very much. 

Chairman McNulty.  Thank you, Ms Cagle. 

[The statement of Ms. Cagle follows:]

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Chairman McNulty.  Mr. O'Sullivan.
 
STATEMENT OF JOHN O'SULLIVAN, SECRETARY-TREASURER, TEXAS AFT,  AUSTIN, TEXAS

Mr. O'Sullivan.  Thank you, Chairman McNulty.  Thank you, Congressman Doggett, for being my Congressman for the 25th Congressional District and for the leadership that you have provided on this issue.  It is an honor for me to represent the 1.4 million members of the --

Chairman McNulty.  John, excuse me for a second.  Is your mike on?  Did you push the button there?  Could you move the microphone a bit closer? 

Mr. O'Sullivan.  Sorry.  Am I okay now? 

Chairman McNulty.  That is great. 

Mr. O'Sullivan.  We call upon the Congress to repeal the government pension spousal offset and the Windfall Elimination Provision and to pass the Social Security Fairness Act as quickly as possible.  In our view, it is inherently unfair, inequitable, and unjust to deny employees their earned Social Security benefits because they happen to also have earned a retirement from their employer, which happened to be a public employer.  We think that the WEP is wrong and the GPO is wrong, and both of those provisions should be eliminated from the Social Security Act. 

I will depart from my printed remarks some.  I am reminded by my own personal experience that neither Senator Hillary Clinton nor Governor Mitt Romney are alone in being brought to tears by things that they have experienced.  I can't tell you how many hundreds and hundreds of members that I have talked to in workshop settings and over the telephone and through correspondence that have been damaged severely in their retirement by these provisions in the Social Security Act. 

I will just read one.  And I quote.  She writes:  I am a retired educator.  I worked as a schoolteacher and then retired as a school counselor after 21 years.  I looked forward to my retirement, but little did I know that I had a surprise coming when I retired, the GPO and the WEP nicely packaged together.  I receive only $75 due to the WEP, and zero spousal benefits would be due from the GPO.  My husband's well-earned benefit is going to someone else who did not work, stayed home to raise children, and did not pay a penny into Social Security.  I in turn, before going into education, I thought I was smart and opened up a small beauty salon next to my house so that I could work and raise four children at the same time.  My husband would come home from work in the afternoon and take care of our children while I attended college at night to be able to get my degree in education.  It took me 7 years for this.  And then continued with my master's degree.  My husband and I worked hard and struggled our way through all of these years without any loans or government help.  We both worked hard for all of this and also to make ends meet at home.  When I retired, we found out that our hardworking years and our efforts were for nothing.  We don't understand why our Social Security benefits are going to those who never worked, never put a penny into Social Security, never worked as we worked.  This is unjust. 

In the 33 years that I have had the privilege of working on behalf of public school employees and the public school system, I have never encountered an issue that animates educational employees as this issue does.  And it is not just the windfall.  It is the windfall and the GPO.  And my hope would be that the evidence that we have seen on one side of the aisle to move on the windfall would be joined with the other side of the aisle to that other issue, and that something would happen out of this Congress. 

We would agree with Senator Kerry that the Congress -- and in this great place, in this great room -- would be focused on the biggest of issues, which is how do we get all Americans to the point where, as certified financial planners would tell us, that we can all, all of us Americans, retire with 70 to 80 percent of our final average income, and that some patchwork of public and private retirement plans can be put together that would allow Americans to achieve that goal. 

And I would hope that this Congress would be able to move in that direction.  And I thank you. 

Chairman McNulty.  Thank you, Mr. O'Sullivan.

[The statement of Mr. O'Sullivan follows:]

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Chairman McNulty.  Mr. Moakley.
 
STATEMENT OF TERRY MOAKLEY, VICE PRESIDENT FOR PUBLIC AFFAIRS, UNITED SPINAL ASSOCIATION, JACKSON HEIGHTS, NEW YORK, ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH DISABILITIES' TASK FORCES ON SOCIAL SECURITY AND EMPLOYMENT AND TRAINING

Mr. Moakley.  Thank you for this opportunity to testify today on behalf --

Chairman McNulty.  Terry, we need to get that mike closer to you so that --

Mr. Moakley.  Thank you for this opportunity to testify today on behalf of the Consortium for Citizens With Disabilities.  I am Terry Moakley.  I am employed at the United Spinal Association.  I am a U.S. Marine Corps veteran with quadriplegia caused by a spinal cord injury. 

First, I want to thank you for your work to increase Social Security's administrative budget.  I thank the subcommittee and the entire committee after years of underfunding.  This funding can literally be a matter of life and death for people with disabilities. 

To Mr. Crowley's point this morning, I would like to say that the Consortium for Citizens With Disabilities has for many years recommended eliminating or shortening the 5-year waiting period for receipt of Social Security cash benefits. 

I really would like to focus on three major concerns today.  The first is the proposed rulemaking on the appeals process.  And we thank you, Chairman McNulty, and other House leaders for the comments that you submitted, and we share many of your concerns.  On the positive side, we support the Social Security Administration's proposal to provide 75 days' notice of a hearing and to retain a claims right to administrative review of an unfavorable ALJ decision.  However, we fear that the proposed process could be unfair and would serve speed, rather than accuracy, in determining whether a claimant meets SSA's definition of disability.  The proposed rule essentially closes the record to new evidence a full 5 business days before the hearing.  Many people would with disabilities are too sick or too preoccupied with the basic necessities of life without income to focus on a hearing until it is about to occur.  Others do not obtain a representative until just before or even after a scheduled hearing.  Many are unable to obtain medical records for reasons beyond their control, such as wrestling with the bureaucracy for which providing records is a low priority, and paying copying fees up front, which is prohibitive when you have no income. 

Under the proposed rule, an administrative law judge may refuse to postpone a hearing to admit new evidence of an old condition or to admit new evidence of a previously undiagnosed progressive condition such as multiple sclerosis, even for good reasons.  Also the ban on new evidence would apply after remand from the review board or a court, which may be years after the initial scheduled hearing.  If the record is closed as proposed, the claimant will be denied benefits not due to the absence of disability, but because the rules preclude evidence of that very disability. 

Recommending that the person file a new application is no solution either, because benefits back to the date of first application are lost; reapplication is time-consuming at a time when the person is desperate for benefits; access to health care is delayed because of the 24-month Medicare waiting period.  And if a claimant is filing for Title II benefits, the claimant is eligible only if the work history is recent enough; otherwise, the individual could be permanently barred from eligibility. 

Our second major concern is we strongly recommend eliminating the 24-month waiting period for Medicare for all Title II beneficiaries, not just for those with a terminal illness.  It denies health care to people who most need it because they have become too disabled to work.  They lose their jobs and their health insurance, many because they cannot pay the COBRA premiums to continue it.  Medical care within the first 24 months of disability can make or break a person.  Fortunately for me, I was in the U.S. Marine Corps when I had my spinal cord injury.  I had excellent medical care both soon after my injury and with the VA after I was discharged from the Corps.  I had rehab therapy for about 16 months as well as counseling to help me adjust to the sudden transformation from an active 22-year-old to a quadriplegic. 

Because of the good medical care I received, I was able to join the work force, and I have been a working taxpayer continuously for 35 years.  Not only is eliminating the 24-month waiting period the right thing to do, it is also cost-efficient for the government. 

Third.  Our third concern is that there needs to be incentives rather than disincentives to work.  Under Title II, if a beneficiary works and has income that exceeds a substantial gainful activity level, all substantial benefits are immediately lost.  Because it would encourage people to work and become taxpayers, we recommend eliminating this cash cliff by establishing a $1 for $2 earnings offset parallel to that under Supplemental Security Income. 

Again, thank you for this opportunity to testify.  I would be happy to answer any questions. 

Chairman McNulty.  Thank you for your testimony, Mr. Moakley.  And thank you for your service to our country as a member of the United States Armed Forces.

 

 

 

[The statement of Mr. Moakley follows:]

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Chairman McNulty.  Ms. Entmacher.
 
STATEMENT OF JOAN ENTMACHER, VICE PRESIDENT AND DIRECTOR OF FAMILY ECONOMIC SECURITY, NATIONAL WOMEN'S LAW CENTER

Ms. Entmacher.  Mr. Chairman, Ranking Member Johnson and members of the subcommittee, thank you for this opportunity to testify on behalf of the National Women's Law Center on ways to improve benefits for vulnerable beneficiaries. 

I want to highlight two proposals especially important to women who are likely to be poor in old age.  One is an increased minimum benefit for people with low lifetime earnings and improved benefits for surviving spouses. 

First, concerning the minimum benefit, you heard testimony that Social Security has a special minimum benefit designed to help lifetime low earners but it isn't working.  It helps virtually no one, and in 5 years will disappear entirely.  But while the special minimum benefit is disappearing, the problem it was supposed to address is not.  Even with Social Security's progressive benefit formula, nearly half of women who receive retirement benefits on their own work record and about one-fifth of men receive benefits that provide less than a poverty-level income.  The benefits women will receive on their own work records will be going up in the future, reflecting women's greater participation in the paid labor force, but women will remain at greater risk of poverty.  Women still predominate in low-paying jobs such as child care workers, home health aides, retail clerks and building cleaners.  They are more likely to work part-time or take time out of the paid labor force to provide care to members of their families.  As a result, the lifetime earnings gap between men and women is even larger, by some estimates twice as large as the annual wage gap that receives a lot of attention.  And that translates to lower retirement income, you know, on all fronts:  pensions, savings and Social Security. 

And a couple of other trends will reduce Social Security benefits for future female retirees.  First, fewer women will qualify for higher benefits based on the work record of a higher earning spouse because of changing marriage and divorce patterns.  This is a concern particularly for the economic security of black women. 

Second, Social Security benefits are already being cut.  The increase in the normal retirement age is the equivalent of an across-the-board benefit cut and it hits low-wage workers especially hard.  To be effective, a new minimum benefit must take account of the realities of the low-wage labor market and the patterns of women's work in family lives.  My written testimony identifies several parameters that can be adjusted to provide an effective minimum benefit. 

I just want to emphasize in addition that, whatever adjustments to the minimum benefit are made, the initial minimum benefit should be indexed to wage growth rather than price index.  That is the reason the current minimum benefit is disappearing, and it also should be integrated with other means-tested benefits programs to ensure that access to Medicaid and other important benefits are protected and that SSI -- that for beneficiaries who also are eligible for SSI, there is a real increase in income from the improved Social Security benefit. 

The second proposal is to increase benefits for surviving spouses to 75 percent of the couple's combined benefits.  As was previously observed, there is an offset of worker benefits earned in Social Security against spousal benefits.  It is a dollar-for-dollar offset.  So the survivor of a two equal-earner couple gets a widow's benefit that is equal to 50 percent of the couple's combined benefit.  For a couple, one-earner couple, the widow's benefit is 67 percent of their combined benefit.  This drop in income at widowhood is a major cause of poverty among widows, and widows are the largest group of poor elderly women. 

The proposal -- and it is discussed in the testimony of the CRS -- is to raise the widow's benefit to 75 percent of the combined benefit of both spouses.  This proposal could be capped so that the increase in benefits might not exceed the benefits for an average retiree or the maximum earner.  This would target the improvements to those in greatest need.  I would note that this proposal to increase survivor benefits would not help women who have never married or whose marriages don't qualify for spousal benefits.  So I would urge that it be done as part of a package of reforms that include improved benefits for lifetime low earners. 

Again, I want to thank this subcommittee for looking at ways to improve the adequacy and fairness of Social Security benefits.  It is exciting to see the debate move into the area of benefit improvements rather than cuts, which I think is a critical way to go.  And improving Social Security benefits, which is in many ways an ideal pension system, is the way to focus on improving income security for Americans.  Thank you. 

Chairman McNulty.  Thank you, Ms. Entmacher.

[The statement of Ms. Entmacher follows:]

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Chairman McNulty.  Mr. Rugola.
 
STATEMENT OF JOSEPH RUGOLA, INTERNATIONAL VICE PRESIDENT, AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES (AFSCME), COLUMBUS, OHIO

Mr. Rugola.  Good afternoon, Mr. Chairman and members of the subcommittee.  I want to thank you for the opportunity to appear before you today.  My name is Joe Rugola.  I am an international vice president of the 1.6 million member American Federation of State, County and Municipal Employees; executive director of AFSCME Local 4, which is the Ohio Association of Public School Employees; and president of the Ohio AFL-CIO.  My local union, OAPSE, is a statewide affiliate of AFSCME.  OAPSE represents more than 40,000 workers in school districts throughout Ohio, three-fourths of them women.  Our members include cafeteria workers, crossing guards, teachers' aides, custodial staff, and other classified employees who provide critical services for our children and pay into Ohio's School Employees Retirement System. 

We are deeply concerned that the pensions of many of our members are unfairly reduced and some, in fact, completely eliminated by the Government Pension Offset and the Windfall Elimination Provision.  In Ohio alone, at least 56,000 public pensioners have been hit by the GPO, more than any other State except California.  About 75 percent of public pensioners affected by the GPO are women, of whom 85 percent have lost their entire spousal Social Security benefit.  Most are retirees with modest pensions, particularly those from relatively low paying occupations such as teachers' aides, clerical workers and school bus drivers.  Many of these employees retire after a full-length career but may have only worked a 30-hour week, a pattern we call short hours.  Others may have had less than a full year of work or career, say 15 or 20 years following the child rearing or divorce or loss of a spouse. 

These pensioners are shocked when they realize they will not receive both a pension and Social Security spousal benefits.  The loss of income causes extreme hardships for them.  The GPO is exacerbated by increasing costs of health care coverage.  We have seen a disturbing trend for a growing population of pensioners as the cost of monthly retiree health insurance premiums exceeds monthly pension benefits for nearly 3,000 beneficiaries of SERS.  A big problem with the GPO is it ignores the larger contributions made to public pensions by both employers and their employees.  Most private pensioners only pay into Social Security, yet they can receive a full pension and a full Social Security benefit with no offset of any kind.  School district employers in Ohio, for example, contributed 14 percent of payroll to SERS.  The workers' share is 10 percent.  The total of these contributions, 24 percent, is nearly double the combined employer-employee contribution to Social Security.  These rates are typical for public pensions in non-Social Security jurisdictions.  Further, the public retiree's pension is taxed, while many Social Security benefits are not. 

I want to mention two real-life examples.  Evelyn Coup and Mary Steele, two OAPSE retirees and SERS pensioners.  Evelyn of Bellevue, Ohio, worked for 24 years as a bus driver for Bellevue schools.  She receives a SERS pension check of $544 a month, and, from this amount, must still deduct her monthly health insurance premium of $200.  Normally she could expect to receive a widow's benefits of $733.  Instead, the GPO reduces it to only $371, giving her a total monthly benefit, pension plus Social Security, of only $715 after paying her health insurance premium.  Evelyn has nearly drained her savings to make up for the offsets and has been forced to consider selling her home, which she can't even afford to properly heat or properly maintain. 

Another tragic example is Mary Steele, a 75-year-old woman in Sandusky, who worked for almost 28 years with the schools and retired in 1993.  Her SERS pension is $688 a month and she receives a spousal benefit from Social Security of $122 after the offset.  After her Medicare Part B premium of $96.40 is deducted from her Social Security benefit, she is left with a monthly check of $25.60.  This results in a total of $713.60 for her monthly income. 

Congress could not have had these women in mind when the GPO was passed.  The GPO and WEP unfairly penalize average public-sector retirees, and AFSCME believes it is imperative for Congress to take action to eliminate the serious inequities caused by these provisions.  Thank you again for the opportunity to appear before you. 

Chairman McNulty.  Thank you, Mr. Rugola. 

[The statement of Mr. Rugola follows:]

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Chairman McNulty.  And I also think I may have mispronounced Sue's name.  It is Melton.  Ms. Melton.
 
STATEMENT OF SUE MELTON, STATE PRESIDENT, ASSOCIATION OF TEXAS PROFESSIONAL EDUCATORS, AUSTIN, TEXAS

Ms. Melton.  Thank you.  Good afternoon, Mr. Chairman, and members of the committee.  My name is Sue Melton.  And I am a kindergarten to third grade special education teacher at West Elementary School in the City of West in Texas.  I am here today representing our 111,000 members of the Association of Texas Professional Educators as their State president. 

ATPE is the largest school employee association in Texas and the largest non-union educators' association in the United States. 

I would like to begin by thanking the committee for allowing us to speak on this topic.  It is no secret that this is a contentious issue.  And from our point of view, it is a serious education issue in addition to an employee benefits problem. 

The viability and protection of retirement benefits holds enormous sway over the number of high-quality individuals available and willing to teach.  Filling our classrooms with qualified individuals is more and more difficult as classroom management becomes harder and the gap between private sector and public education salaries and benefits increases. 

When another hurdle, like the benefit discrepancy caused by the GPO and WEP, are added to the mix, the result is that qualified second-career individuals reexamine their decisions to enter education, and experienced teachers often leave education prematurely.  In the long run, it is our students who suffer from this loss. 

The WEP and GPO have caused an enormous strain on the morale of public educators as well as an exodus from Texas classrooms over the years.  The Texas Teacher Retirement System, or TRS for short, reports that reaction to the GPO spousal offset resulted in a doubling of the retirement rate in 2004.  2004 is significant because the 108th Congress passed H.R. 743 which ended the provision that allowed educators to avoid the GPO by working their last day before retirement in a position covered by both TRS and Social Security. 

Today we still receive reports of educators cashing in their TRS accounts and forgoing a State-provided pension to attempt to avoid the GPO.  The WEP imposes an arbitrary formula based on the number of years employees have paid into Social Security rather than the amount they actually earned over their career.  It means that the penalty is especially harsh for low-wage earners, even if they have contributed to Social Security in the same number of years as a high-wage earner with a much higher State pension.  Because they don't get the benefit of the wage-adjusted Social Security formula, the WEP in its current form is a major deterrent to private sector employees who are vested in Social Security and interested in teaching. 

Texas is experiencing a major shortage in certified teachers, especially in areas like math and science where private sector recruitment is critical.  Eliminating the WEP and GPO would be a significant step toward recruiting and retaining the brightest individuals into the teaching profession. 

H.R. 2772, the Public Servant Retirement Protection Act, would repeal the WEP's arbitrary formula and replace it with a formula that uses the complete earnings history of a worker in both Social Security-covered employment and noncovered employment when determining average monthly earnings over the worker's lifetime.  This would eliminate the discrepancy in the current WEP formula and would mean greater benefits for most educators who qualify. 

The new formula under the PSRPA is a fair compromise between the current WEP and total repeal because it more closely mirrors the formula as it applies to all the other Americans.  The PSRPA could also be used as a stepping stone toward elimination of the GPO in the future by applying the modified version of the individual Social Security pension to dual entitlement rules instead of the two-thirds formula now in place under the GPO, which virtually guarantees no spousal benefit for the large majority of our educators. 

H.R. 82, the Social Security Fairness Act, would repeal both the WEP and the GPO.  This bill would be a great advantage for those who cannot afford to give up a portion of their Social Security.  ATPE believes educator shortages are directly related to salaries, benefits, and retirement planning.  We believe that eliminating the Social Security penalties would give public schools a strong recruiting advantage to lure private-sector workers and would be good for students. 

ATPE fully supports both of these legislative efforts to repeal the Social Security offsets and positively affect public education.  We have included some personal stories of educators who have retired after a lifetime of work and how they have been affected by both of these.  I would invite you to read those.  It is in our written testimony. 

I would like to thank you for the opportunity to participate today and for your willingness to listen.  And I would ask you to remember that educators are in the classroom at this very minute providing our children with the knowledge they will need to succeed in life.  And your efforts to protect their retirement benefits will have a lasting impact on the quality of education for all children.  Thank you so much. 

Chairman McNulty.  Thank you, Ms. Melton. 

[The statement of Ms. Melton follows:]

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Chairman McNulty.  And I thank all of you for your outstanding testimony.  And I will again reserve my time.  Mr. Johnson may inquire. 

Mr. Johnson.  Thank you, Mr. Chairman. 

Ms. Melton, you know Representative Brady's Public Servant Retirement Protection Act is designed to ensure that workers receive benefits replacing the same percentage of their Social Security-taxed earnings even if they worked part of their careers in jobs not covered under Social Security.  Would you tell me why you support that approach? 

And then I would like comments from anyone who wishes to make them. 

Ms. Melton.  Sir, we support this act because we feel like it is a step in a positive direction toward equalizing the playing field for everyone involved.  As you know, this particular bill would allow Social Security to consider not only just what they have paid in, but also their lifetime earnings.  And that would put us on the same level as all the other Americans who pay into the Social Security system. 

Mr. Johnson.  Anyone else like to comment?  Mr. O'Sullivan? 

Mr. O'Sullivan.  We don't agree.  We reject the premise because we believe that both WEP and the GPO are fundamentally unfair because both propose to treat the Social Security, earned Social Security benefits of retirees, differently simply because they happen to also have a public pension.  There is no more rationale for treating those individuals differently than you would someone who retired from some other entity.

Mr. Johnson.  Well, you are aware that Texas chose not to participate in Social Security, with the education community in particular.

Mr. O'Sullivan.  Texas may have made a choice that was disadvantageous to me.  Are you saying, then, that I should give up the benefit that is described for me under the Social Security system, a Federal program? 

Mr. Johnson.  Sure.

Mr. O'Sullivan.  Because Texas made a decision?  We are talking here about earned benefits under Social Security.  We are talking about earned benefits when we talk about the Windfall Elimination Provision.  We are not talking about paying somebody Social Security that they haven't earned.  We are talking about not reducing their Social Security that they have earned simply because they also receive a public pension. 

And in the case of the government pension spousal offset, we are not talking about giving them something that they haven't earned.  That benefit has been earned.  It was earned by their spouse.  They are simply calling upon the Social Security Administration to give them what they have earned.  Why is it that someone who never worked under Social Security at all as a spouse receives that benefit, but that benefit is denied to somebody who has worked a long career in public education? 

Mr. Johnson.  Mr. Brady, do you care to comment on that? 

Mr. Brady.  Just the final point is that I know my teachers back home always use a comparison to a stay-at-home mom, and we normally have a 30-minute discussion about how Social Security was created; how in the days of Ozzie and Harriet the mom stayed home their whole lives so they were completely dependent upon their spouse.  And so when their spouse passed away, they got 100 percent of their Social Security. 

The two-worker offset that most Americans have and the GPO are a recognition that when you have earned another pension that you are not completely dependent upon your spouse.  And so I think most of the teachers in Texas don't want to be compared to someone who has stayed home their whole life.  They want to be compared to other professionals, other teachers in other States, nurses, social workers, others who have had a professional career. 

And from that standpoint, I really think our focus, Mr. Johnson, needs to be on equal treatment.  I think we need to try to get away from the special formulas and go to equal treatment under Social Security and get just as close in actual wages and get just as close as we can on that.  But I yield back.  Thank you. 

Mr. Johnson.  I yield back.

Mr. O'Sullivan.  We disagree, but I appreciate your interest in the issue. 

Chairman McNulty.  Mr. Johnson yields back the balance of his time.  Mr. Doggett. 

Mr. Doggett.  Thank you very much.  I believe each of you have offered very valuable testimony to the committee on a range of subjects.  You know, it seems to me that this term "Windfall Elimination Provision" by its very name is a bit of a misnomer.  I have never met anyone, certainly not in this panel or in my other life, who entered teaching or other public service careers in an effort to get a windfall.  It is usually quite the opposite. 

And one of the aspects that seem to me appear in several of you in your testimony on this subject and on the Government Pension Offset, which you have addressed, is the surprise factor. 

I gather, for example, Ms. Cagle, if I could begin with you, you were a practicing licensed architect, not something you get without a significant degree of education.  And you moved into a teaching career in which you have distinguished yourself.  I understand you were honored by President Bush personally last year as one of the most distinguished teachers in our country.  And yet you were not aware that when you made the decision to enter the public education field that you would not only be cutting your salary but you would be significantly reducing your retirement security. 

Ms. Cagle.  That is absolutely right.  I spent 15 years in architecture, practicing -- including, as I mentioned, some years as self-employed -- so not only was I paying in as an employee, I was paying the higher rate as a self-employed individual, as my own employer.  And having made the decision -- which was not an easy decision as you can well imagine -- to change to public teaching, but I find it very rewarding.  I think it is an essential place where we need people who are knowledgeable in fields like math and science, who can bring a perspective to it which you don't get if you come straight out of school. 

As a practicing professional who used math, who used science, in meaningful ways, I can bring so much to my classroom and to my students.  But I had no idea that what I was giving up was as huge as it is.  I knew that I was taking a huge salary cut, as you can well imagine, after 15 years in the profession and then becoming a starting teacher.  I probably lost half my salary right off the bat.  Then to lose -- knowing that I am going to lose eventually and when I retire -- and at this point I don't know exactly what it will be, because I still don't know when I am going to retire.  I still love what I do.  But it completely struck me totally speechless.  I was completely blindsided by it.  I had no knowledge this was going to happen to me.  If I had known, I wouldn't be here.  If I had known, I wouldn't be in my classroom doing what I do for my students.  And I think that would be a real tragedy.  I think that would be a real loss.  I hope my students would agree with me. 

Mr. Doggett.  Mr. O'Sullivan, I know you, like the other witnesses here, like Ms. Melton, are here, naturally, on behalf of your membership and those that are affected and will be affected.  But isn't this also about the quality of public education and our ability to attract people from other fields to go back and get a teaching certificate and enter this profession? 

I think of one technology company in Austin that contacted me, concerned about these provisions that people that were completing a career perhaps in one of the many downturns, ups and down changes within the technology industry, and decided they wanted to take their practical experience there into the classroom -- in science or math or some other practical application -- were discouraged by the fact that they would be foregoing a significant part of the retirement security that they perhaps had earned in many years -- say in a company like IBM -- by entering teaching and having a teacher, a Texas teacher retirement pension vest after 5 years.

Mr. O'Sullivan.  It is absolutely a serious deterrent to those people from the business community entering the teaching profession.  In fact, I have the honor of serving on the board of the Texas Business and Education Coalition.  And the business component of that board represents some of the larger corporations in the State of Texas.  And you have correspondence from that body, indicating their concern with exactly that issue; that we are driving people away -- people that we desperately need, people with special experience like my colleague here -- away from our profession because of WEP and GPO.

Mr. Doggett.  Ms. Melton, thank you particularly for your reference to the effect of legislation that was very ill-advised that this committee and this Congress approved over my very strong objection.  That, as you said, actually led to an exodus of people from education in Texas. 

And let me just in closing, since I see my time is expiring, I think one of the really great examples is the Troops to Teachers Program.  I would ask unanimous consent to include in our record a communication that I have received from the director of the Texas Troops to Teachers coordinator, and then to include a letter from Army Major Ed Cost, retired, of Boling, Texas, that appeared in the Navy Times on December 24, both expressing the concern about our troops that are returning.  They are career military, and then they go to teach in Texas or they go to teach in California.  In fact, I believe about a third of the teachers in our country are in this condition.  Or they might choose to become a municipal employee or a local government employee.  And they are sacrificing their retirement security.  And as Major Cost points out, he didn't know that until he answered the call of duty in the Troops to Teachers Program and then found that both he and his spouse would suffer as a result of this.  So I just ask, Mr. Chairman --

Chairman McNulty.  Without objection those items will be included in the record. 

[The information follows:]

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Chairman McNulty.  Mr. Brady may inquire.

Mr. Brady.  Thank you, Mr. Chairman.  I agree with Mr. Doggett and the panelists that the WEP and the GPO -- the WEP especially is a real deterrent to recruiting teachers.  I know in Texas -- well, all over the country, frankly, that they have a shortage of teachers; but with our Social Security substitute, it is a real problem. 

I also agree on the surprise factor.  There are no good surprises at retirement.  None.  And unfortunately over the years, this has been a huge one, which is why this Congress in 2005 changed the law to not only notify those who are in a Social Security substitute what the effect is, but also to modify those notices that we get from the Social Security Administration so we don't mislead people about what their benefits are going to be. 

I do think, though, that in Texas -- I followed the numbers pretty closely.  And I would make the point that the data shows that the closing of the teacher loophole did not draw teachers out of the classroom.  It was the opening of the loophole.  And over those 5 years we saw a dramatic increase of, really, our best-qualified teachers who wanted to keep working, who said, we cannot pass up that money.  And we lost so many good teachers.  My kids are in public schools in Texas.  And we lost some really good teachers. 

Let me ask you this.  Are you seeking equal treatment under Social Security or special treatment under Social Security?  And wait a minute, that is not a loaded question.  My point is, when we look -- most of the teachers that we work with don't know that every other working couple in America has an offset too.  Most of them have no idea there is another offset that every family has to pay.  And they also, I think, are seeking to be treated equally in GPO and WEP. 

And the reason I ask you is that as our experts showed, if we repeal the GPO completely, we have created not intentionally, but by our actions, we have created two tiers of Social Security beneficiaries; 99 percent of the country, nurses, social workers, 90 percent of teachers would receive one-size benefits, and then one small group would, through appeal, receive a major increase, a major -- who have worked the same years, paid the same money into Social Security or their substitute.  And we in effect are creating a two-tiered system for a small group.  Most of them are in Texas.  I would love to have that, by the way.  But since our job is to try to create equal treatment within Social Security, I would like the panelists to comment on that.

 


RPTS BINGHAM
DCMN NORMAN

[1:35 p.m.]

 

Mr. Brady.  Also, I do think the reason I think there is room for some thoughtful discussion on this is that one of the reasons that, while on paper, on paper our teachers in GPO have a slight advantage.  In real life there are Social Security substitutes, TRS, the California system, actually outperforms Social Security.  I know in Texas, over 50 years we have got a 2-1/2 percent better return, which is why our teachers get 58 percent of their salary replaced.  Most everybody else on Social Security is about 43 percent of their earnings are replaced by their benefits.  So the two-thirds offset which looks better on paper, actually, tends to wipe out most of the Social Security that they are earning. 

My question is:  Should we work together, Republicans and Democrats, after years of rhetoric about this issue to try to have equal treatment both within the GPO and the WEP and do it as soon as we can do it? 

Mr. O'Sullivan.  I would hope you take on an even bigger task.

Mr. Brady.  Bigger than equal treatment? 

Mr. O'Sullivan.  As big as the retirement needs of Americans generally, to put to work that patchwork of public and private retirement plans, begin to, for example, incentivize 401(k)-type plans in the private sector so that individuals respond to those plans in the way we know they do when those plans are incentivized.

Mr. Brady.  The reason I am bulling in on GPO and WEP is it seems to be not only do some of the substitutes perform better, but in some States like California, rather than paying 6.2 percent, which most people do, they pay 8 percent into it.  So they actually, because of the return in their contribution, tended to have more of their Social Security wiped out in GPO.

Mr. O'Sullivan.  Texas has the lowest State contribution rate of any non-Social Security State in the country.  Texas is not a good example of anything in terms of their retirement that they provide for public employees.  They are solvent.  And they are solvent because they provide a relatively modest level of benefits to public employees. 

But I don't want to go there.  I want to work with you because I really do appreciate the fact that you have taken a focus on this issue and you have an interest in it and you understand that we have to pay the bills.  And gradualism would certainly be something that should be a part of that discussion.

Mr. Brady.  So the answer to equal treatment or special treatment is --

Mr. O'Sullivan.  I don't accept your premise that it is equal treatment, but we could accept the idea that gradualism in terms of financing the repeal of the WEP and the GPO is certainly a discussion worth having, that we would love to have.

Chairman McNulty.  Gentleman's time has expired. 

Mr. Becerra may inquire.

Mr. Becerra.  Thank you, Mr. Chairman, and to the witnesses, thank you for your testimony.  I apologize that members have been going in and out.  I don't know how much of this has been posed, but I think many of us who have been supporting the efforts of many of the different government workers who are trying to address the Government Pension Offset and the Windfall Elimination Provision, we have to deal with the reality that we have to deal with any number of things. 

Some of you may have heard some of the questions asked by members here to the Social Security Administration witnesses with regard to the disability program, which is in dire need of assistance.  You are talking about people who, in many cases we know them, they are relatives, friends, colleagues, who are in very difficult condition and yet can't get their benefits for their disability.  Not just for retirement, but for their disability. 

I mentioned during my questioning that we have -- I say "we" lightly, because I have not served in this administration and I was not in the majority in Congress over the past 10 years, except for this last year.  But for the most part, this administration, the Bush administration and the previous Congress, underfunded the Social Security Administration to the tune of several billions of dollars over what the Social Security Administration said it needed. 

Given all that, we have a situation where there are lots of vulnerable populations that in desperate need of their benefits that they earned when they worked.  And I mention that because on top of all, that let me layer one last thing, the icing on the cake.  This Congress the Democratic leadership decided to go in a different direction.  We said we are not going to continue to increase the size of the annual deficits this country is putting out there on the backs of our children through deficit spending.  So whatever we do that actually requires us to spend more money, and, some would say, to take care of WEP and GPO, you have to spend more money, you have to pay for it through some other means.  Either you cut another program, you raise taxes. 

And so as you go forward in advocating a position, help us figure out how we navigate this entire stream of not only doing right by those who worked hard and are now facing a situation, as Ms. Cagle described, where they want to continue to do right, they want to do good, but you find you won't do well financially to do good.  We have to figure out how we resolve this issue of GPO WEP. 

At the same time, we have to deal with the disability backlog.  We have to deal with not increasing the size of the budget deficit anymore.  We have an issue of long-term solvency for Social Security so that our kids won't be coming to testify, to talk about how they didn't get what they thought they had earned, when they are approaching their years of retirement.  And so I am not asking you to give me an answer.  I am not asking you to give me the $80 billion offset we will need to be able to eliminate GPO and WEP. 

But I will say that we are going to need to do a lot more than what the Social Security Administration testified to today -- and that is, focus on this and talk about it --  because to just acknowledge it but do nothing gets you nowhere. 

And so I appreciate that you are all here, that you have testified.  I know that there are certain champions.  You have a pit bull behind you by the name of Bill Lambert who has been on this for the longest time.  And don't let the gray hair fool you.  He is as tenacious today as he has been for the last 50 years.  And we shouldn't let this go.  We should continue on this. 

I am trying to think as I am speaking if I am going to formulate a question to ask you, but the questions I would ask you I would think would be unfair for you to try to answer because the dilemma is not -- for those of us who are cosponsors of the legislation -- is not if, but how, because we have to deal with the fact that there are a number of issues within Social Security, the most successful program this Nation and this society has ever invented to help people, how we make it better and keep it during the long term. 

I don't know if anyone wishes to comment on that, but Ms. Cagle. 

First, I must say to each and every one of you, I heard Ms. Cagle's remarks.  Thank you for being willing to leave what was probably a very successful, perhaps lucrative employment and business and do something even more noble, and that is get the next generation of leaders ready for tomorrow. 

Ms. Cagle.  Well, I think when you are asking about where does the money come from -- and certainly that is something that we all need to be thinking about, a very tiny piece -- but if we are talking increments, let's talk increments.  When the administration is proposing within the National Competitiveness Act to set up systems for recruiting math and science to go out into private sector and bring people into teaching, well, this could be the missing piece of the puzzle; and you don't need to spend a whole lot of money on PR if you can genuinely say to people at IBM and Raytheon, "Come and teach, and it is not going to hurt you in the long run."

Mr. Becerra.  Very good point.  Thank you, Mr. Chairman.

Chairman McNulty.  Again I want to thank Mr. Allen for being with us today.  And Ms. Tubbs Jones may inquire. 

Mrs. Jones.  Thank you, Mr. Chairman.  Good afternoon, everyone.  It is one of those "the first day back and they run you like."  Anyway, I am glad to be here and this is an issue that is so important to people in my congressional district.  I have the opportunity to host the Commissioner in my congressional district -- former Commissioner, excuse me -- in and around issues important on Social Security. 

I want to particularly welcome another Buckeye to the Ways and Means Committee, Mr. Rugola.  He and I had a long-term relationship.  And I appreciate it. 

I want two very short questions, Mr. Chairman, in that I am on the end of the horse; but I do want to ask, Joe -- Mr. Rugola, excuse me, let me not get too common in a hearing -- do you support anything less than full repeal of the Government Pension Offset? 

Mr. Rugola.  Well, thank you Congresswoman Tubbs Jones.  And first of all I want to thank you for the way that you represent the Buckeye State here in Congress and for the way you fight on our behalf.  We genuinely appreciate it. 

To the committee I would say this.  I am not an expert on Social Security or public pension, the intricacies of the systems.  I am, I am sorry to say, an expert on the pain that has been inflicted on low-income pensioners as a result of the offset in the windfall.  I wish I were. 

The members of my own union, active working members, average $22,000 a year in income.  So you can imagine, based on that as an average for active workers, that the pensions they collect are very low.  For our folks this is as much a poverty question as it is a fairness question. 

And I have to say honestly, it goes in part to Congressman Brady's point about equality.  I think a couple of things to that.  One is -- and I don't mean to be flip about such a critical issue -- but I don't think there is much consolation in being treated the same if you are being treated badly.  And that is a problem that comes from, stems from in large part, the question of how low-income workers are affected by these provisions. 

We are in favor of full repeal.  But no one should make any mistake about it.  My culture is one of low-income workers who live on the edge of poverty anyway, and more and more of them are being driven into poverty as a result of two things:  first, the effect of the GPO; and secondly, that, combined with increasing costs of health care for retirees. 

So now we have 3,000 pensioners in the school employer retirement system in Ohio who are paying more into the system for health care coverage than they are collecting in retirement benefits each month. 

Mrs. Jones.  Thank you, Mr. Rugola, for your response.  And very quickly, Mr. Chairman, I want to talk to Ms.  Entmacher at the Women's Law Center.  I go back to the days of Judge Ann Aldridge, in Cleveland, in the Women's Law Center when I first became a lawyer.  My question to you is around widow's benefits, is I constantly get women coming up to me when I do a Social Security hearing, and say "When are you going to fix this for me?  How is it that I can't get my money and his money too?"  And who, on and on. 

Do you have other ideas that might help us with low-wage workers when you begin to focus in on women who get 70 cents on the dollar, maybe 77 cents on the dollar now? 

Ms. Entmacher.  A couple of ideas.  And I think it certainly is true that for people where both workers are in Social Security-covered employment, some of them are dismayed when they realize that the benefit that they get as a survivor is reduced dollar for dollar for the Social Security benefit that they receive.  And increasingly, as more women have earned benefits on their own work record, what they are going to be finding as a survivor is that their Social Security benefits are, you know, as low as 50 percent, if they were equal earners with their husband, of what they got before. 

So we need to look, I agree, at making sure that benefits are adequate for a broad population.  That is why one of the proposals that I talked about was increasing the widow's benefit within Social Security to 75 percent of the combined benefit, you know, trying to address Mr. Brady's concern about making sure the treatment is both fair and adequate for everybody.  And I think that certainly looking at the GPO, if you are going to do that kind of improvement to make sure that all survivors have adequate benefits would be a very important thing to do. 

Similarly, your point about low earners, my written testimony has some suggestions for improving the special minimum benefit which right now, even if you get the maximum under the special minimum benefit, doesn't bring a long-term worker up to poverty.  There are many proposals for making it possible for low-wage workers who have been in the work force for a significant period of time to achieve at least a poverty-level benefit, or hopefully somewhat above.  If you included caregiving credits in that for women who have taken time out of the labor force, then you could help an even broader population. 

So I think those are both exciting proposals, and as we are looking at ways to ensure that people get appropriate credit for the hard work they have done, I would say as you look at, you know, WEP and GPO, look more broadly at some of the issues of fairness and adequacy and including benefits for people with disabilities who are also vulnerable beneficiaries.

Mrs. Jones.  Mr. Chairman, I want to thank you for the opportunity to ask a question.  It was only as I began to actually work on Social Security here in the Congress that I realized that a worker has to have made $30,000 over their period of work in order to get around a thousand dollar benefit.  And when you start to factor in the cost of living today and to say that a thousand dollars a month takes you even anywhere out of poverty, it is really horrendous. 

And I just want to thank you for your leadership on this issue.  I thank the members of the panel and the prior panel.  Sorry I wasn't here to hear it, but I promise you I will read it.  Thank you, Mr. Chairman.

Chairman McNulty.  On behalf of Mr. Johnson and all of the members of the panel, I want to thank all of you for traveling long distances from all across the country to come here today and to provide this expert testimony to us and for all who came to listen at the hearing.  Since I gave up my time a little bit earlier, I want to conclude by taking a couple of minutes to remark about something with regard to Social Security that bothers me a great deal every single day. 

At the beginning of this hearing, Mr. Rust talked about the Social Security surplus.  What he is talking about is the annual surplus.  As all of us know, up until now and for several years to come, we have a situation where more is paid into the Social Security system than is paid out in benefits.  Therefore, you have an annual surplus. 

Now, I think it is reasonable to expect that every logical person in this country would feel that that surplus in Social Security funds would go into the Social Security trust fund, earn interest, and be paid to future beneficiaries.  Right?  Wrong.  That is not what happens. 

Every year we take that annual surplus, we steal it, put it in the general fund, and pay for everything under the sun except Social Security.  Now, I have been an equal opportunity critic about this for many, many years.  Congresses of both parties have done it; Presidents of both parties have done it.  I readily acknowledge it started under a Democratic President, Lyndon Johnson.  We have been doing it for 40 years, and it is wrong. 

And if we want to address the issues that were brought up today and the backlog issue, and make sure that Social Security benefits get to their intended recipients in a timely fashion so that we don't have situations as were pointed out earlier today where people are dying, waiting for a determination from Social Security, we should start listening to what has become my mantra:  Stop stealing the money. 

And that is my admonition to the President, in this case a Republican President and a Democratic Congress:  Stop stealing the money.  This hearing is concluded.

[Whereupon, at 1:50 p.m., the subcommittee was adjourned.]
 

 

Panel 1

Mr. John Doe, President, ExxonMobil

Mr. John Doe, President, ExxonMobil

 

Panel 2

Mr. John Doe, President, ExxonMobil

Mr. John Doe, President, ExxonMobil

113th Congress