Hearings to examine Social Security, focusing on a discussion on the facts and the path forward.

Good morning. Thank you all. We'll be getting our witnesses here quickly. So this hearing was requested by my Democratic colleagues and warmly accepted by my Republican colleagues. In a time of great political upheaval, there seems to be one thing that we do agree on, that Social Security is one of the more most valuable programs in America to keep people out of poverty, allows them to go into retirement years with a source of income. Very quickly, when I was 21, I think, my mom passed away. We owned a restaurant, pool room, and a liquor store and lived in the back. Neither one of my parents graduated high school, but they were very worked hard and had those businesses. And if you own your business, you own it, but you wake up early and you go to bed late and you don't take many vacations. So I just remember that experience of growing up and well-loved as a very great life. So my mom was 17 years younger than my dad, you always think she's going to be around. Well, life throws you a curveball, so she passes away from Hodgkin's disease and about 15 months later, my dad dies and I've got a 13-year-old sister and nothing, you know, people have worse stories than mine. The only reason I tell this is that we moved in with an aunt and uncle and Social Security survivor benefits, they worked in the textile plants, really mattered. There's a time in my life where that Social Security check really, really mattered. Now there's a time in my life where I could probably do get by with less and if that is what it takes to save Social Security, count me in. This program is under stress because of demographics. We're looking for solutions. So we have Senator Cassidy who has stepped out and led and I know Senator Kaine, you've been talking about this and Senator Johnson, it's all about entitlements, right, when it comes to spending. So I am glad we had the hearing. We're going to hear from Senator Cassidy about his proposal and I think Senator Whitehouse, he stepped out and he's leading too and we'll hear about his proposal, then we'll do the second panel and I'll be running back and forth between here and Judiciary, but this is a good topic and I am glad we're having this hearing. Senator Merkley.

Well, thank you very much, Mr. Chairman, and this decision to hold this hearing, well done. This is such an important topic. What we know about Social Security is that the sooner you address the the growing shortfall in the trust fund, the easier it is to address it. And over a decade ago, I was holding town hall meetings specifically on the question of asking people how they wanted to address Social Security and I wish we'd addressed it then. And we didn't. We didn't do it under Democrats, we didn't do it under Republicans, but now's a chance for us to focus together, bipartisan fashion, and say it needs to be addressed now. It was back in 1935 that President Roosevelt told the nation provisions for Social Security are protections for the future. It has become such a foundation of ensuring that as Americans age, they aren't aging in dire poverty. At least half of more senior households rely on it for at least 50 percent or more of their income and many Americans really have no personal savings at all and are at least 20 percent rely on it for basically their entire income post-retirement. So it really is protection against senior years lived in desperate poverty. But the provisions for Social Security are in jeopardy. The independent estimates by the Social Security Administration and the Congressional Budget Office find that just six years from now, the trust fund is empty. Wow, six years from now, that's that's like tomorrow. It's right here for any Senator running for reelection this year in their term, we're going to be facing that the trust fund is out of money. And what does that mean? That means that essentially a quarter of the payments would have to or all the payments would have to be reduced by a quarter. And that would be a huge impact for for families. You know, a lot of folks get Social Security at a at a rate of only about 1,400 bucks a month. You take away a I mean, how can you even afford rent on 1,400? I mean, it's not a huge amount of money to begin with, you take away a quarter of it, that's just not acceptable. And it's about 68 million Americans that now get a a check in the mail or electronically shifted into their bank account each month. Oregon, in Oregon, 940,000 Oregonians get those checks and about 200,000 of them would live in dire poverty without Social Security. So it's really, really important that we address this and and not delay any longer. But we do have some laws that are in conflict with each other. One law says Social Security must pay the full benefits and another law says you can only pay the benefits out of the trust fund. Well, if the trust fund doesn't have the money to pay the full benefits, you're either violating one law or the other. And if we don't raise more revenue or adjust to make sure that the payments can be made and we fund it out of the simply out of general revenues, we're just adding massively to the debt of this country and we really need to freeze debt as a ratio of GDP, but that's a story for another day that we can have additional conversations about. There's many ideas about how to strengthen Social Security. This is a chart, we'll be happy to make it available to everybody. Tried to lay out all the main ideas that are on the table right now and there's many, many combinations that could be brought to bear and I just encourage this hearing is kind of about becoming familiar with that whole set of ideas for us to to wrestle with. So lot to be considered and we'll hear that in the testimony, we'll hear from two of our Senate colleagues today in addition to testimony from several experts. And the American people have ideas and priorities too and each year I hold a town hall in all 36 of my counties and this year I've had 20 of those town halls so far and I passed out a survey with listing all these sets of ideas and said what do people like, what do they not like? So I thought I'd share the results of that with you. Raising the cap, 95 percent support. That is the cap at $185,000 of where the premiums are paid. Reduce benefits for the wealthy, 64 percent. Tax investment income, of course very wealthy in America get their income really not from wages so they don't pay Social Security premiums. Raising the tax rate, that is the premium rate. Raising the retirement age. You can see a host of responses to this set of ideas that are being presented. And I think it's useful to get the feedback of the American people about what they feel is workable because we've got to build political momentum if we're going to tackle this this challenge. So the reason at the very top raising the cap is because people are aware that you know a local firefighter and a billionaire hedge fund manager, they both have the same cap right now, $184,500. Fireman doesn't make that, but he pays or she pays on every single dollar they earn they pay a premium. But a very, very wealthy individual pays very little. That means that ordinary Americans pay the premiums all year and the very wealthy pay for one day and then the other 364 days they don't pay it at all. And it seems fundamentally unfair that that is the case. And what we've seen over time is that the predictions back in 1983 when we passed the last big set of reforms was that we were going to have 75 years of solvency and that was because it was designed to create premiums on 90 percent of collective earnings. But as wealth has moved to the richest people in America, we no longer collect premiums on 90 percent. So it's a major factor why we're ending up running out of the trust fund 20 years earlier than was predicted back at the time those reforms were passed. So another major response is making investment income subject to Social Security tax. And that again is a reflection of how wealth has moved into the the upper echelons, so folks are getting their their income not from wages, they're getting it from their investment and doesn't it make sense that that be applied as well? Certainly the folks responding in Oregon said yes, that makes sense as well. And those two factors alone could solve the challenge we're facing if we have the political will to to act. So the President also has a powerful role to play here. He said we will always protect Social Security. He's going to be putting out a budget very shortly. I hope that budget is going to include his proposal for how we're going to address that. We can then incorporate that into the discussions we're having here in Congress. The big ugly betrayal of a bill last year or I'll put it in less partisan terms, that's the President called big beautiful bill, that also moved up by six months the insolvency date of Social Security. So another reason we're all in this together, let's solve it together. My constituent services team reports another challenge and that is with the cuts to the administrative personnel in Social Security, the wait times for actually signing up for Social Security have increased substantially. People on the 800 number waiting one to six hours to be able to talk to someone about signing up for Social Security. Field offices, even after the appointment's been scheduled two to three months in advance, are arriving and waiting two to four hours to to talk to someone. Applications that should be processed in less than 30 days are taking three months or longer. Why? Because thousands and thousands of of Social Security Administration employees were were fired, making this a bureaucratic nightmare for for eligible Americans even to just sign up. There's one other thing that is important to recognize. If we address the challenge of the Social Security shortfall, we will solve a significant piece of our structural deficit. Our structural deficit, that is the the amount of shortfall that we have built into our budget each year is about 6 percent of GDP. Solving Social Security would solve a percent and a half of that. And if we solve 3 percent of it, we then can stabilize debt as a ratio to GDP, which is very important to the future of our nation. So important hearing, important topic, let's find a path forward together.

Thank you. We'll start with Senator Cassidy.

Thank you, Chairman Graham, Ranking Member Merkley, and Senate colleagues for allowing me to participate and for holding the hearing. And your opening statements were right on. Everyone watching, everyone sitting here, if they live to be retirement age, will be affected by Social Security. And Senator Graham's personal story puts a point on that this is just not luxury income, this is what people need to live. So according to the most recent Social Security Trustees Report, over the next 75 years, payroll tax revenue will fall short of covering expected benefits by more than $25 trillion in today's dollar and if you factor in inflation, that means $674 trillion. So by law, there has to be a cut so that you balance income with the amount of payments being made, so by law if this occurs, there'll be a 23 to 26 percent cut in benefits to seniors and those who otherwise receive these benefits. That's according to the actuaries, the Congressional Budget Office says it'll be a 28 percent cut. Now we've got to act to prevent these cuts. So right now, as Senator Merkley pointed out, the Social Security Trust Fund bridges the gap. We don't have adequate money coming in, but the amount of money in the trust fund is making up the difference between the outgo. But that trust fund is rapidly depleting and as Senator Merkley said, will be exhausted in six to eight years. So what are the options? This is a political issue as well as a policy issue. We've had the option one, which is the do nothing choice, and either have a benefit cut of 25 percent or borrow close to $700 trillion nominally, which will put our debt-to-GDP ratio roughly similar to Venezuela. We've had the option before presented to us, the Simpson-Bowles choice, where we cut benefits and we raise taxes. Politically, that died. It died aborning. There was just no way that was going to pass. And then option three, we think is a third option, we call it the Save, Strengthen, and Secure Choice, which is what we will do what Congress has already done elsewhere, use a diversified investment fund. Now, this new fund would be separate from the Social Security Trust Fund. It would be pre-funded with $1.5 trillion and invested in the way that your 401(k) is invested. And it's held in escrow over 75 years, allowing the internal rate of return. As it does this, the balance in the escrow account can offset any borrowing required to pay scheduled benefits. So we know the benefit is going to, the borrowing is most likely going to occur. Currently, we have no means to offset it, no plan to offset it. Under this plan, there will be an escrow account which by its presence in CBO's scoring would partially offset. Now, the good thing about what we're discussing, it's been done before by Congress. In 2001, the Federal Railroad Retirement System was going insolvent because there were more retirees relative to workers. Congress in 2001 allowed their trust fund to be put into an investment vehicle just like we are proposing and since then, the corpus used to pay those benefits has grown and now that fund is firmly in the black. Every Democrat who is currently in Congress who was in Congress then, including those on this committee and those on Senate Finance, voted for that bill. The opposition actually came from some on the Republican Party. But it's worked out fantastic. And so we are modeling this after that. I'll also point out that if you work for a corporation and they are planning to pay you benefits in the future, they have a pension investment fund that does this in the exact same way. So we're modeling after best practices in the private sector and that which has already worked in the public sector. Now, when we poll this, this is overwhelmingly popular with American people in every generation. Now, they do want, believe it or not, guardrails to keep Congress from messing with it. Who would not trust Congress? And so we have strict guardrails in here that would require that this money be managed in a way which is going to maximize return for our beneficiaries. Annual audits and full transparency. Now, Social Security is deteriorating. I will point out that if we had done this 10 years ago, it would be solvent. The more we wait, the harder it gets. So the question is, Mr. Chairman and Mr. Ranking Member, are we going to fulfill our obligations to the American people in a way which is actually politically and by policy viable to fix Social Security not just now but for future generations? I think this is a way we can do it on a bipartisan basis.

Well, thank you. That was a very great explanation of your idea and doing nothing is not a very good outcome. So thank you very much for being willing to lead on this. Senator Whitehouse. Well, thank you. That was a very great explanation of your idea and doing nothing is not a very good outcome. So thank you very much for being willing to lead on this. Senator Whitehouse.

Thanks, Chairman Graham. Actually, let me first thank you for holding this hearing and showing leadership on this issue. You are definitely not a senator who's afraid of big ideas and we have a big problem that is going to require some big ideas. Fortunately, they're pretty simple ideas. Protecting Social Security has only grown more urgent since our last hearing in the Budget Committee two years ago. According to the nonpartisan Congressional Budget Office, the Social Security Trust Fund will be exhausted a year earlier than previously predicted in part due to the Republican Beautiful for Billionaires bill last year. 2032 is that year, just six years away. As we meet today, insolvency is not Social Security's only threat. The Trump administration shrank the Social Security Administration's workforce by thousands, reassigned technical experts to the phone lines with minimal training, closed regional offices, made the agency's website less reliable, and made it harder to access services. That's why Senator Merkley and others are hearing from constituents. Then the Washington Post reported that one of Elon's little muskrats allegedly planned to take the personal information of millions of Americans from Social Security to use at his new employer. I predicted that granting unfettered access to these characters would lead to this and now we need to get to the bottom of it. Social Security is the bedrock of America's retirement security. It's our most effective anti-poverty program. It's a lifeline for millions of seniors, their children, and people with disabilities. It reaches about 20 percent of the entire U.S. population every month last year and almost every senior in this country will receive payments from Social Security, benefits they earned that let them retire in dignity. It's pretty simple. Without new revenue, Social Security will not be able to cover full benefits and that will start in 2032. It will cover 72 percent of benefits after that according to CBO. I think we all remember President Biden's State of the Union address when Republicans and Democrats jumped up together in a big huzzah on the floor and gave a standing ovation to the notion that cutting Social Security and Medicare was off the table. So the only way to extend solvency without cutting benefits or borrowing money, which would be also very dangerous, is to raise more revenue. It's pretty simple. If we still agree on that, then there are win-win common sense solutions that would both extend Social Security solvency indefinitely without benefit cuts and make our corrupted tax system fairer. Right now, the cap on Social Security contributions means that a tech exec making a million dollars effectively stops paying into Social Security in March, while a school teacher continues to make contributions from her paycheck through every single paycheck all year long. My Medicare and Social Security Fair Share Act would fix that by requiring contributions to Social Security on wages above $400,000. We can debate the gap between 184 and 400. That represents the Biden administration's pledge. Right now, people living off of income from their wealth make no Social Security contributions. My bill would require those making more than $400,000 in investment income to contribute just like those who are working for their income. And right now, wealthy owners of pass-through businesses like hedge funds and private equity firms can avoid paying Medicare taxes entirely. In fact, some programs are designed to do just that. So my bill would close that loophole as well. Those reforms raise enough revenue to make Social Security solvent for the entire 75-year actuarial window according to the Social Security actuary. That is as far as the actuarial eye can see. And the Medicare actuary found it would also extend Medicare solvency for as far as the actuarial eye can see. So we can protect Social Security for all without cutting benefits and we also get to end unfair tax dodges that let those at the top play by a different set of rules than everyone else. It is a twofer. So to Chairman Graham, let me say we can do this. It's big, but it's actually not all that hard or complicated and the sooner we do it, the better off everyone will be. Thank you very much.

Thank you. Our next panel. Thank you, Senator Cassidy. Would you please come forward? As they come forward, it includes Dr. Molly Dahl, is that right? Dahl. Okay. She's the Chief of Long-Term Analysis at the Congressional Budget Office where she served since 2004. Ms. Karen Glenn is the Chief Actuary at the Social Security Administration, the one in the know, a position she has held since January 2025. Prior to this, Ms. Glenn served as Deputy Chief Actuary. Mr. Barry Huston is a specialist in social policy at the Congressional Research Service where he's served for eight years. Thank you very much. Why don't we start with Ms. Glenn and the floor is yours.

Wonderful. Good morning everyone. Chairman Graham, Ranking Member Merkley, and members of the committee. My name is Karen Glenn. I'm the Chief Actuary at the Social Security Administration. Thank you for inviting me to speak with you about the financial status...

Could you pull the mic a little closer, Ms. Glenn?

I sure can. Thank you for inviting me to speak with you about the financial status of the Social Security program. I'll cover three main topics today: actuarial status in the 2025 Trustees Report, experience since the last comprehensive reforms in 1983, and how Congress and the administration can help. My written testimony includes additional detail on these topics, including a discussion of critical factors for projections into the future. My team at the Social Security Administration provides expert input to the annual Trustees Report process, including making recommendations for assumptions, developing the projections required for the report, and preparing the report itself. We work closely with the trustees and their representatives on all aspects. The 2025 report was released on June 18, 2025. Preparation of the 2026 report is well underway and it is on target to be released later this spring. I will share some results from the 2025 report to provide a sense of the current financial status of the program, but note that the 2026 report will incorporate updates to laws, policies, data, assumptions, and methods that have happened over the last year. Under the intermediate best-estimate assumptions of the 2025 Trustees Report, program income is projected to be less than program cost in all future years, so that the combined Social Security Trust Fund reserves are projected to become depleted in 2034. At that time, 81 percent of scheduled benefits would still be payable. The Old-Age and Survivors Insurance, OASI, Trust Fund by itself is projected to deplete its reserves in 2033 with 77 percent of scheduled benefits then payable. The Disability Insurance, DI, Trust Fund alone is projected to be fully financed throughout the 75-year projection period ending in 2099. The cost of providing scheduled benefits is projected to continue to rise through about 2080. This rise is largely driven by the changing age distribution of the U.S. population with an increasing number of beneficiaries receiving Social Security benefits relative to the number of workers paying into the program. In 1982, the OASI Trust Fund reserves were on the brink of being depleted, requiring temporary borrowing from the DI Trust Fund and the Medicare Hospital Insurance Trust Fund to maintain payments to beneficiaries. The 1983 amendments were enacted the following year, making the changes needed to address the immediate shortfalls. The 1983 Trustees Report indicated that the combined trust funds would remain solvent through the next 75 years until roughly the early 2060s. However, we do now project that the combined trust fund reserves will become depleted in 2034, which is almost 30 years sooner than expected in 1983. There are two main reasons for this shift in outlook. First, earnings levels rose much faster for high earners than for low earners from 1983 to 2000, meaning that a smaller share of earnings was subject to Social Security payroll taxes. Over that time, average earnings for the top six percent of earnings rose by about 62 percent more than CPI, while average earnings for the other 94 percent of earners rose by only 17 percent more than CPI. Second, the economy performed worse than expected since 1983, particularly during the deep recession of 2007 to 2009 and the slow and incomplete recovery that followed. As a result, the time for further change is now much sooner than expected in 1983. So, to ensure that Social Security remains solvent for further generations, Congress and the administration need to act as you always have in the past. The math is simple. Lawmakers need to take actions that will increase program income by about one-third, reduce scheduled benefits by about one-fourth, or some combination of these. Changes will need to be implemented before the trust funds become depleted to avoid the roughly 20 percent cut that would be needed. We're happy to assist you and your staffs to develop any potential solutions to those problems. Thank you again for the opportunity to speak to you today. Happy to answer any questions that you have.

[Laughter.]

Chairman Graham, Ranking Member Merkley, and members of the committee, thank you for the opportunity to testify today. Social Security, particularly the Old-Age and Survivors Insurance program, faces a significant financial challenge. CBO projects that in fiscal year 2032, six years from now, the balance of the OASI Trust Fund will be exhausted. The Disability Insurance Trust Fund is projected to remain solvent for more than 30 years. After trust fund exhaustion, the program would not have sufficient resources to pay the full benefit amount scheduled under current law in a timely manner. Legislative action would be needed to prevent that outcome. In the first year after the OASI Trust Fund is exhausted, the resources to pay benefits would be about one-quarter less than the amount of scheduled benefits CBO projects. That gap would widen over time. Many people would be affected. About 72 million people, roughly one-fifth of the population, are projected to receive OASI benefits in 2033. For many of them, Social Security represents a substantial share of income. Lawmakers could address the shortfall through increases in taxes, reductions in benefits, transfers of resources from the Treasury's general fund, or a combination of those approaches. And they could design changes to apply differently across beneficiaries, including by income level and by age. With only six more years until exhaustion, changes that materially address the shortfall would be significant. As required by law, CBO's baseline projections reflect the assumption that Social Security will pay benefits as scheduled under current law regardless of the status of the program's trust funds. Earlier this year, CBO analyzed an illustrative scenario in which benefits were limited to the amounts payable from dedicated funding sources beginning in 2032. Before accounting for economic effects, the reduction in OASI benefits under that scenario would total 2.7 trillion over the 2032 to 2036 period. The budgetary and economic effects of any such scenario would depend on the specifics of the changes to benefits and are highly uncertain. For simplicity, this illustrative scenario incorporates the assumption that OASI benefits paid to all existing and new beneficiaries would be reduced by the same percentages each year. Under the payable benefits scenario, accounting for economic effects, the primary deficit, which excludes net outlays for interest, would be smaller than in CBO's baseline projections. That, combined with lower net outlays for interest, would reduce the total deficit to 4.6 percent of GDP in 2036, 2.1 percentage points less than CBO's baseline projections. Federal debt held by the public would equal 112 percent of GDP in 2036, 8.1 percentage points less than the agency's baseline projections. Limiting benefits to payable amounts would also affect the economy. In the short term, lower benefits would reduce demand for goods and services and cause GDP to decline relative to baseline projections. Over time, increased labor supply and savings and reduced federal borrowing would more than offset that initial decline and GDP would rise. The effects of those changes would not be evenly distributed. For instance, if benefits were reduced by the same percentage for all beneficiaries, CBO expects that lower-income households would reduce their spending and increase their labor supply by more in percentage terms than households with higher lifetime incomes. In closing, CBO projects that the OASI Trust Fund will be exhausted in 2032. Action would be required to prevent that. I am happy to answer questions.

Huston. Chairman Graham, Ranking Member Merkley, and members of the committee, thank you for inviting me to testify today's hearing. My name is Barry Huston and I am an analyst with the Congressional Research Service. Social Security is the federal government's largest program in terms of both the number of people affected and its finances. This year, Social Security will pay almost $1.6 trillion in benefits to over 70 million beneficiaries and collect roughly $1.3 trillion in payroll taxes from 186 million workers. Most of these workers will become beneficiaries. The ability to pay full scheduled benefits on time is determined by the financial status of the Social Security trust funds. This financial status is simply the relationship among its revenues, costs, and holdings in the Social Security trust funds. Since 2021, program costs have exceeded program income, making the redemption of trust fund asset reserves necessary to help pay full scheduled benefits. The Social Security Board of Trustees estimates that the combined trust funds will be depleted sometime in 2034, which is fewer than 10 years away. However, the Old-Age and Survivors Insurance Trust Fund that finances benefits to retired workers and their eligible family members is projected to be depleted sooner, in 2033 or 2032. At that time, continuing tax revenues are estimated to support only about 75 percent of scheduled benefits. Absent changes to current law, the program would be unable to pay 100 percent of scheduled benefits, creating a shortfall. Lawmakers may choose from a wide menu of changes that could help eliminate the projected shortfall. Changes are typically categorized as revenue-increasing or cost-reducing. Examples of revenue-increasing provisions include raising or eliminating the limit on earnings subject to the payroll tax, increasing the payroll tax rate itself, expanding coverage, or including other sources of revenue. Examples of cost-reducing provisions include reducing annual cost-of-living adjustments, reducing growth in initial benefits by changing the benefit formula, or increasing the full retirement age. However, no one provision is likely to eliminate all of the projected financial shortfall. For this reason, many proposals include both types of measures, as did the Social Security Amendments of 1983, commonly referred to as the program's last major changes. Looking ahead, the timing, degree, and nature of any future changes to the Social Security program will reflect the policy objectives of lawmakers. With regard to the timing of any changes, lawmakers will determine when, if any, changes are enacted and the speed with which those changes are implemented. For instance, many past program changes were phased in gradually, allowing workers and beneficiaries more time to adjust. However, changes with long phase-in periods would generally be less effective when facing trust fund depletion in the near term. Regardless, changes implemented sooner rather than later would require provisions that are smaller in magnitude. With regard to the degree of any changes, lawmakers may choose to address the entirety of the projected shortfall by choosing legislation that would result in long-term solvency or may choose to address just a portion of the shortfall. With regard to the nature of any changes, in 1983, reform proposals focused almost exclusively on financing problems. Specifically, they eliminated the financial shortfall by both increasing revenues and reducing costs. This 1983 approach may or may not reflect the policy objectives of lawmakers today. For instance, lawmakers may want to address the size, scope, and goals of Social Security. Or, lawmakers may want to include Social Security reform as one part of a broader package of government-wide policy initiatives. At times, prior Social Security reform efforts have involved presidential commissions, many of which included members. Some commissions, such as the President's Commission to Strengthen Social Security in 2001, focused solely on program financing. While others, such as the President's Commission on Fiscal Responsibility and Reform in 2010, included Social Security reforms as a part of larger government-wide efforts to reduce the federal budget deficit. None of the commissions since 1983 led to legislative proposals on Social Security that were actively considered by Congress. Thank you, and I look forward to your questions.

Thank you all. It was very, very informative. I've got to run to Judiciary here in a second, so let me just start out. In 1955, the year I was born, there were 8.6 workers for every Social Security recipient. Today there's 2.7 for every recipient. And in 2040, there's going to be 2.3. Well, I don't have any kids. I'm sort of the like one of the reasons screwed it up. It seems to me demographics matter here. Is that right, Ms. Glenn?

Demographics absolutely matter. They're the biggest driver of the changes in Social Security.

Unless we have a major baby boom, it seems like we're going to have less workers per recipient over time.

Absolutely.

Are people living longer now, Ms. Glenn, than they were in 1955?

People are living longer, but not significantly longer.

Well, don't say that. [Laughter.] The answer is yes. Well, we're living a little bit longer.

That's for sure.

And we're certainly having a lot less kids.

Yes, that's the big factor.

Okay. Living longer and less kids. So how do you close the gap? Isn't that what we're all here talking about?

That's exactly the problem. Yes.

Okay. So we've got ideas. We've got Senator Whitehouse's idea. We've got Senator Cassidy and Kaine's idea. We just need ideas that go from being idea to a law. Like in 1983, they bought some time. Is that correct?

That is right. At the time they thought they bought about 75 years.

And they wound up buying how much?

More like 50.

Okay. Well, at least they tried. Barry Huston. Back then, did they extend the age of retirement or not?

In the 1983 amendments, absolutely, Senator. They increased the, gradually increased the full retirement age from 65 to 67.

And that helped the trust fund, right?

It did. Yes.

Did they do any means testing?

There's an argument to be made that they did in the form of the taxation of benefits, of which only...

But no direct means testing.

That's correct.

Now what I mean by means testing. I'm 70, I've got a military retirement, whatever we make is $176,000. I'm doing good. I get a Social Security check. When I was 22, needed every penny. If you need to like means test me, count me in. I'll just speak for myself. I'm asking people to consider taking a little bit less if they can afford it. And a lot of people can't. So let's start. Isn't that right, Ms. Glenn? There's some people where Social Security is their chief form of retirement.

That's right.

What percentage of Americans do you think without Social Security would be in poverty?

Oh, that would be a significant number. I don't have the value off the top of my head.

So if like Social Security was reduced by 20 percent, would that put more people in poverty?

Yes.

Okay. So seems to me we don't want to do that. One choice is, rather than doing nothing, which puts 20 percent cut, puts people in poverty, asking people like everybody here on this to take a little bit less seems to be a pretty good idea. In terms of revenue, what's the income cap?

Right now it's about $185,000.

Okay. What's the donut hole, Mr. Huston? You know what I'm talking about there?

I do. It's a provision included in several legislative proposals that would institute another threshold. So there would continue to be taxation, payroll taxation below the current law threshold, and then a donut hole where earnings are not subject to a tax, and then earnings above this new threshold would be taxed. I think we heard references to a $400,000 donut hole, and over time that would eventually close as the current law tax max would overtake it.

So if you took the entire wealth of the top one percent, would that close the hole, would it close the gap in the trust fund?

I'm not sure. You said wealth, not earnings.

Yeah, all their stuff. Their cats, their dogs, their house.

I couldn't answer that. What I would say though, if...

Ms. Glenn, would that do it?

So just taxing more income of the wealthy would not.

No, I'm talking about like taking all their stuff.

Potentially wealth, there's a way to do that.

Okay. How much would you have to take of the top one percent?

I don't have that number.

Well go figure that out. [Laughter.] You know, we've got to get a product that works here. So my belief is you can't tax your way out of this, but you do need more revenue. My belief is that means testing, time has arrived. My belief is that maybe you adjust the age one more time. We'll talk about it. I like Senator Cassidy's idea that avoids a lot of this stuff. But the bottom line is you're going to have to do sort of like all the above approach. Count me in for anything that gets us to where we need to go. I'd like to have this committee lead by example. And all I can say is this program means a lot to people. I know that because I lived that. And if we do nothing, then shame on us all because nothing has a very severe consequence on people who can afford it the least. Senator Merkley.

Thank you very much, Mr. Chairman. And I wanted to begin, Dr. Dahl, with the work at CBO. I think what the Chairman started to ask in his questions was if we turn the dial on different solutions, how much do we raise? And CBO generally has models in order to estimate, given all the demographics and so on and so forth. Have you all gone through and experimented with turning the dial? Now I and by this may explain, in 2033 it's estimated that the shortfall will be about $500 billion. But then it goes up from from there. So the question is for each idea, we need to understand not just how much it will raise over a 10-year period or 20-year, but the distributional effects per year. Have you all taken individual ideas like if you raise the cap from where it is now and you raise it a certain amount each year, whether how much it will generate per year? Does your model allow you to do that?

It does. And we most recently talked about a variety of proposals in the 2024 budget options, what we call the Budget Options Report, the options for reducing the deficit. We released that in December 2024 and we will be releasing another version of that report later this year in which we we look systematically at at multiple different Social Security proposals that are commonly discussed.

Well I want to absolutely follow up and say if we're going to have a a really detailed discussion, we need to be able to get that information sooner rather than later so that we can look at these questions and and wrestle with how do we address that $500 billion in in 2033 but also in the years that that follow with the different ideas. And it's just like with raising the cap, there's been multiple ideas put forward. Those ideas have included raising it from where it is now, raising it from 250k, that is only from 250k up, raising it for 400k up, as Senator Whitehouse was was referring to. And let me also ask then if we're turning to our other experts, have you all put together models to be able to do similar calculations on how each idea produces income in specific years into the future?

Yes, Senator. We have a list of about 140 different options on our website that we update each year, most recently January 2026.

And do you have it as a per year impact going forward?

We do.

Okay. That's that's great because we're going to have to really get into the nitty gritty of these options. And I don't think any of you have have been on the we talk both about the policy side and the political side, but the polling is more scant on in terms of how public responds to ideas than I would have anticipated. And I'm assuming that none of you get into that world of trying to estimate how citizens respond to these different ideas so we can find a a viable policy and political path?

I would say no. We we try to score the ideas that are brought to us, but we believe it's really incumbent on others to figure out what's palatable to the public.

And I assume the same, Mr. Huston?

That's correct. We're we read the same polling data that you you receive.

Yeah. Dr. Dahl, sometimes when we do things here that aren't part of the Social Security discussion, they still have an impact on Social Security solvency. What impact did the big beautiful bill, Trump's big beautiful bill, have on solvency of the trust fund?

So the 2025 Reconciliation Act moved forward closer in time the exhaustion of the OASI portion of the trust fund, in part due to changes in income taxation on benefits and changes in income tax rates in in that legislation.

Good. If we are looking at other legislation in other areas, we will turn to you all to try to understand the impact on Social Security because often it's not part of the discussion. But if we're going to solve this issue, we're really going to have to start wrestling with it. Now one of the things that I've seen put forward is in our six percent structural gap, that is we raise about 17 percent of revenue of GDP, about 17 percent of GDP is revenue, we spend about 23 percent. That solving, if we solve the shortfall in Social Security, we'll address about a percent and a half of that six percent structural deficit. Is that in the ballpark?

Yes, that's oh sorry. Sorry, that's about right, yes.

About right? Okay. Well I think that's very important because that would get us halfway towards actually stabilizing debt as a portion of GDP. And if we don't stabilize debt as a portion of GDP, then in 20 years there's going to be basically no discretionary income for healthcare, housing, etc., many important investments for families in America. That's my time and thank you very much.

Thanks, Senator Merkley. So the the title of this hearing is just Social Security, the discussion, the facts. And I think you've all laid out the basic facts, the grim facts in terms of Social Security. So those are pretty well established. In my five minutes, I want to establish the facts of the basic intent. Because any solutions moving forward are definitely going to be contrary to the basic intent of Social Security. And we'll start out with the Social Security was initially designed to be a forced retirement plan, correct? Where we were going to extract wages from workers, supposedly put them in savings available for those individuals when they retire. Is that correct, Mr. Huston, basically?

That's correct. I don't think I would use the forced term.

Good. Back then, the life expectancy was I think a little under 62 years and retirement was set at about 65, correct?

The initial full retirement age was 65, that's correct.

Okay. So now that's basically the plan was set up as an insurance policy in case you were just lucky enough to exceed life expectancy and get into retirement then you'd have some retirement. Correct? By and large.

I think that life expectancy was life expectancy at birth. There would be a different life expectancy for people reaching 65.

Okay. But anyway, it was the retirement age was set pretty close to life expectancy. People weren't living much past 65 and back then, and I've seen different numbers, but I think in 1945 there were about 42 workers for every retiree. And as Senator Graham said, back in 1955 is 8.6 to one. And now we're below three to one. Okay. So again, so these are just structural problems. Had we actually taken those savings, the money we extract from wages and put them into something that was an asset to the federal government. Because I would argue a U.S. government bond held by the U.S. government is not an asset to the U.S. government. It's like if you took out a piece of paper and wrote $20, stuck it in your pocket and said, I've got 20 bucks. No, you just have a note. It's a contra account. It's an accounting convention, correct, Mr. Huston?

It's intragovernmental debt.

Right. So when the trust fund redeems those bonds to pay out benefits, the Treasury has to immediately issue another bond. So again, the trust fund from my standpoint is a fiction. Now if you're in the private sector, let's say you're a money manager and you had investors give you $1,000. And you spent that $1,000, but in place of it you put on a piece of paper, I owe myself $1,000. That would be called a Ponzi scheme and that'd be illegal, correct?

I suspect in that scenario it would be.

Right. So what we have what we've created here is a legal Ponzi scheme. Have you have you ever anybody done a calculation because I've done this repeatedly. Had we taken those surpluses all those years and invested them like Senator Cassidy's proposing now into something like a index fund. No, they didn't exist back then, but if you, you know, do the calculation. Anybody have any idea how much money we'd actually have in a trust fund in assets that we could actually call upon to pay benefits? Has anybody done that calculation, Mr. Huston?

We've written some reports on it pulling from some previous research that looked at previous times when there was a lot more money coming into the system in the 80s and 90s.

What number did you come up with?

Well, I didn't come up with the number, but it was outside researchers, but it more or less, I mean, it put the program in a much better financial position.

It's trillions and trillions and trillions of dollars. My guess, I did a few years ago, it was probably $7 or $8 trillion, my guess with the stock market is probably $10, $15 trillion. So the bottom line, I think it's important to understand how grossly mismanaged Social Security has been. How the American people were basically lied to that, no, this money's going to be set aside for savings. No, it was spent, it's gone. Now, Ms. Glenn, your agency publishes something called money's worth ratios. Because I hear it all the time, that's my money. The fact is the vast majority of people get more out of Social Security than they ever put in, correct?

That is correct. They get more than they pay in.

Okay. So again, I think it's just important for people to understand that, and of course it's very complex, I've got five different categories, low earner, low income, medium, high income, maximum earner for single males, single females, one-earner couples, two-earner couples.

Yes, varies very much by family type and earnings.

But the vast majority, medium and below, get, some of them get a lot more. You know, $3.6, $3.86 per $1 paid in.

Some of them do, and that's by design of the program.

Okay, so it's just important as we're moving forward to tax the wealthy, decrease benefits, means test, people need to understand we're moving from what was supposed to be a forced savings retirement plan where you're going to get back what you put in to a more generalized welfare plan where we're going to have to take out of the general fund, and we better have the wherewithal to pay for it out of the general fund to plus up those benefits. And again, I want, like everybody, we want to make sure those people get those benefits because they're relying on it. But this has been so grossly mismanaged, and we have to be honest with the American people in terms of what's going to have to be done here. I'm open to compromise, but you have to first start with the facts. But I've run out of my time, and we'll next go to Senator Wyden.

I had him ahead of me.

You were up here on the thing, but I'll go to...

I can ask one question and then I'll let my colleagues who've been so gracious. I wanted to ask about something we bump up against in the Finance Committee all the time, and that's the question of fairness and how we are going to bring fairness to this debate. So you've got two major groups. You've got the working person, a firefighter, a teacher, they get a wage and they pay FICA taxes. They see it on every single paycheck. Wealthy people who are smart call up their lawyer and accountant and they say, make sure I don't take a wage this year. I can live off my borrowings, I can buy, borrow, die, I can do a variety of different things. So one of the big challenges in this, and a lot of my colleagues, Senator Kaine, for example, has spent enormous amounts of time working on this, is going to be how do we put our arms around something that's fair. I've introduced a bill called the Billionaires Income Tax, which has 23 senators on it, that's one way to go, other colleagues are going to have other ways to go. So I'm not going to ask you about any bills. But how do we get a sense of fairness as we go into this debate? Because I'm looking at my colleagues who've spent a lot of time on it, that's what we do in the Finance Committee, and I want to make sure that we can have a real debate about fairness as we tackle this hugely important issue, and that'll be my sole question. Guests?

Well, let me jump in. I think none of us on this panel is really a policy person per se. We're here to score the ideas you come up with, but we're certainly here to give you the information you need to make those policy decisions.

What would you do to have a policy that allowed us to say, Democrats and Republicans, this is fundamentally fair? Tough issue. Want to be fair to both groups that I've just described.

It's a great question, and I think we need to look at workers and beneficiaries and at all earnings levels.

Okay.

I would say that when the Greenspan Commission was working on their consensus package, there was a general commitment to make what they termed fair as far as being balancing revenue increases with cost reductions. And at the time, they seemingly achieved that.

Okay. Mr. Chairman, thank you, and we're going to have that debate, and I know you'll be part of it. We've had pretty spirited discussions and look forward to talking about the real issues, I think one of them's fairness, and I appreciate it. Thank you, colleagues.

Thank you, Senator Wyden. Senator Moreno, you're next.

So let's start there. I wasn't expecting it, but I think my colleague brought up a good point of fairness. Let me just point out that right now, it is optional for you to pay more money in taxes, by the way. You can definitely do that, somebody who's worth a lot of money, you're allowed to pay more money in taxes, so maybe recommend that. Number two, I would say that when it comes to fairness, why don't we withhold our paychecks while we're withholding the paychecks of 260,000 DHS employees? Why don't we do that? That seems fair. It doesn't seem fair that we get paid $175,000 a year, and yet you walk by with an escort, skipping the lines of people who've been waiting for hours through the airport.

Nobody does that. Nobody does that.

You want videos? I'll send it to you. We'll send it to you. You live in, you drive home. You drive home.

But I fly, and I never, but I fly a lot, and I never skip the line.

Good for you. Talk to your colleagues. Talk to your colleagues. Talk to your colleagues. They do it all the time.

Don't say that all of us skip lines. We don't skip lines.

I didn't say all. Are you holding your paycheck? Are you holding your paycheck? Don't paint a fake picture. Are you holding your paycheck?

No, because you're not paying TSA agents. We're asking you to...

But you're not willing to hold your check. So you're not willing to hold your check. Take yes for an answer. Take yes for an answer. Are you willing to hold your check?

Okay, Senator Moreno, why don't you reclaim your time?

I will reclaim my time, but I just for the record, let the record show the answer is he's not willing to hold his paycheck. Because the Democrats block that. But you have no problem...

You guys are blocking it.

You can clearly object to unanimous consent on TSA all the time, so get your facts right or quit issuing these objections. I will see you at 6:00 on the floor. I will see you at 6:00 on the floor. And we'll have that discussion in front of the American people at 6:00 PM.

We'll put up another unanimous consent, you'll block it again.

I look forward to that debate at 6:00 tonight on the floor. Blocked it eight times now. In the meantime, I know you are not about following rules like people coming to this country illegally, but here hopefully we follow rules and let senators speak their turn. So if I could ask you to turn your microphone off and allow me to have my five minutes, and I will...

Please proceed.

Well, I'm just asking you don't issue accusations that are unfounded against your colleagues.

Make an appointment to do this on the floor, why don't you put two more minutes back on Senator Moreno's time.

Well, thank you. Sorry that you had to see that, but it's pretty disgusting that there's a double standard here and then people get preached about fairness by people who make have a net worth of hundreds of millions of dollars of inherited wealth. Anyway, moving on, let me just be crystal clear on a couple things. There is no scenario in which I would support increasing the retirement age for Social Security. People who spend their days in offices are the ones who think that. People who work all day in manufacturing environments where their body says no, even though their mind may say yes, is why we would absolutely never see an increase in our Social Security retirement age. So I just want to make that clear. Number two, what would be the impact, Mrs. Glenn, of not having a cap at all on Social Security wages?

That would solve about 60 percent of the shortfall.

So I think that's something that we should do. There should be no reason why we should have a cap on Social Security wages. If you make income just like anybody else, you should have no, you should have to pay Social Security like any other working American. So that solves 60 percent of the problem. The next one would be means testing, meaning that if you have a certain amount of assets or a certain amount of income that you are disqualified from receiving Social Security because you're doing fine. Like you don't need this extra supplement. To me, this seems like this is a program designed to help working Americans retire with dignity, would you agree, Mrs. Glenn?

Depending on the level you set that means test at, it would certainly have an effect on...

I mean, let's disqualify multimillionaires like some of my colleagues on the other side. And then the last one is, why don't we look at cost savings from eliminating waste, fraud, and abuse? What would that mean? You didn't answer my question on the second, what would the means testing do? So 60 percent of the problem is fixed by not having an income cap. How much does means testing, let's say we set it at a million dollars a year in income and $10 million in assets.

Yeah, I don't have that number at the top of my head, I can get it for you.

Well, give me a wild guess.

Let's say 20 percent.

So we're 80 percent of the way there. And then how about waste, fraud, and abuse?

As far as I'm aware, there's no significant effects on the trust funds from waste, fraud, and abuse.

And how about having non-citizens receiving Social Security?

Non-citizens do not receive Social Security.

None at all? There's not a single solitary non-American citizen that's received, is that your testimony?

By law, they are not allowed.

Let's say what the law, the law says we can't speed.

Yeah, I certainly can't speak to the individuals.

Okay. Thank you, Mr. Chairman.

Senator Kaine.

Thank you, Mr. Chair. And I want to thank you for holding the hearing to Senator Merkley and Senator Graham, this is really, really important. It's easy to fall into partisan corners on a lot of issues, including this one. But we have to be talking in an open and bipartisan way about solving the problem that y'all have laid out in such very clear detail. And just as in 1983 where the solution was bipartisan, a Republican president, a Democratic House majority, a Republican Senate majority, there's no solution to this if we can't find a bipartisan solution. I'm a supporter of the Cassidy proposal. And I think he describes an innovative solution that I think can be an ingredient, I don't believe it's the full solution, but I think it can be an ingredient to this solvency crisis. He described the policy concept itself so I don't need to repeat it. But I want to describe why I think it should be part of a bipartisan solution. Let's be candid about the scale of the problem. You guys have laid out the numbers and other colleagues have as well. CBO estimates that between 2027 and 36, the gap between Social Security payroll taxes and benefits will total $4.2 trillion over the 10-year period. That's a big number. Just for comparison, when we passed the Democratic Build Back Better bill, that was about $2 trillion in revenue increases. That was a lot of money. And when the Republicans did the reconciliation bill, that was about $1.4 trillion in spending cuts. A lot of money. It was hard to get to those numbers. So to get to 4.2 to cover this deficit, going to be even harder. And that's why the proposal that Senator Cassidy has put forward that I support, I believe it can be a positive ingredient in this solution. And for three reasons. First, it can be scaled up or down. The amount of borrowing or revenue that we use to fund this investment fund, the proceeds of which go into backstop Social Security, can be scaled up or down to help us solve the solvency gap, likely in combination with other proposals that are on the table. The Cassidy proposal is in addition to, not a substitute for, any of the current elements of the way we fund Social Security. And that addition element that produces additional revenue through earnings is very, very important. Second, the proposal can protect benefits, as all said, Senator Moreno and Senator Johnson and others, we've all said we don't want to see that 19 percent benefit cut in 2033. We have to figure out a way to avoid that, and it doesn't condition the benefits on the investment returns in the fund. Its main focus is using that fund to ensure a smooth path forward for current and future beneficiaries. And finally, it builds on other successful examples. The National Railway Investment Trust Fund that Senator Cassidy described provides this supplemental revenue stream that helps enhance the railway worker payroll taxes. Most nations fund their retirement systems the way that Senator Cassidy is proposing, using a fund, an investment fund with the earnings from that fund going into backstop retirement. Most private retirement funds use this concept. States use this concept. And in fact, if we were in 1935 right now and we were thinking about doing Social Security, we would do this as a part of a retirement fund. We would do an investment fund and use the earnings of it to backstop the difference between what comes in from payroll taxes and what goes out for beneficiaries. So it's interesting, if we were designing it from scratch, I don't think any reasonable person would not include this as an element. Now there are legitimate concerns about it. How do you maintain the integrity of the fund? How do you make sure Congress doesn't mess it up? The scale of the borrowing could be big. But these are not insuperable obstacles because if they were insuperable, you wouldn't have state pension funds operating this way. You wouldn't have other nations' pension funds operating this way. You wouldn't have the Federal Railway operate this way. So these are objections that can be solved. But my hope is to all of my colleagues that we can address this and address it soon. And I guess the question I want to ask you guys, although I think you've already given a good answer and I don't have much time. Waiting makes this harder. For the reasons that you've described, waiting makes it harder, but it makes it harder for another reason, which is people get nervous. I mean, we're dealing with a critical component and it's the most significant component for most people's retirement, and when they hear that it's going to be insolvent in five years, four years, three years, two years, one year, they get nervous. We often praise what was done in 1983, but let's be honest, they waited until their backs were up against a wall. Benefits were going to be cut. And so then, yes, they got real bipartisan when they had to. It's just my hope, given everything you've said and the challenges of delay, we'll get bipartisan before we actually have to. Let's not wait until our backs are against the wall to solve this. And I think there's some good elements of a solution on the table. And with that, I yield back.

Senator Kaine, real quick. Obviously, I was talking about we should have invested all the surplus in hard assets that had value to the federal government. We didn't do that. My concern about the Cassidy proposal is he wants to borrow $1.5 trillion. And again, if it's such a good idea and if we're willing to take the risk on investment, and we should have done it a long time ago, why not take the entire trust fund and do that? I mean, it would obviously have more money there with a chance of a greater return than, and again, the interest rate is just we're paying that to ourselves as opposed to like a real return. So why not, if you're really supportive of that, why wouldn't we take the entire trust fund rather than borrow $1.5 trillion, why not take the trust fund and invest it?

So to my colleague, I haven't really thought that through. But what I like about the Cassidy proposal is that it's an ingredient that you add to an existing system. I don't view the existing system as a legal Ponzi scheme. So I view it differently than you do because I view it as us workers, we are chipping in out of our pay to help the retirement of the person who taught our Sunday school class.

I understand, but that's a pay-as-you-go system and the money wasn't invested. So now we're talking, again, my concern is we borrow $1.5 trillion, there's a cost to doing that. Sure there is. And then we're hoping, but you've got a pot of money right there you wouldn't have to borrow if we really think that the rate of return is going to be greater. I would think you'd want to do that.

And the $1.5 trillion is, as I pointed out, it's scalable. It could go up or down. Or there could be other revenues that you could put in to reduce the borrowing.

But again, the assumption there is you actually have a high rate of return than you would get in terms of what it's going to cost us to borrow. And those borrowing costs are going to go up.

And the railroad retirement system shows that that rate of return is something that's been possible over the years.

But again, what do they say? Past results aren't reflection of future returns. That's true. But appreciate you engaging in that with me. Senator Scott.

Thanks for holding this hearing. I'm from Florida, so we have a lot of people dependent on Medicare and a lot of people depend on Social Security. So making sure that these are fully funded is really, really, really important to a lot of people in my state. What's been frustrating to me, I've been up here seven years, is I think we had about $18 trillion worth of debt when I got up here. I think we're at $39 trillion now. Our interest expense is over a trillion dollars a year. We're running $1.9 plus trillion dollar deficits and it doesn't look like any of that's going to change. And so if I was a family, I would say I'm really hurting my ability to prepare for anything, any emergency, including retirement or anything like that. So what we're doing to ourselves is, and I think Senator Kaine left, but I think he's right. I mean, most of this stuff won't get resolved until it's a crisis. It seems like just a few years down the road is a pretty big crisis. I'd start focusing on it now. One thing I've never understood is that why we actually have a penalty for people that want to keep working. So I've introduced the Senior Citizens' Freedom to Work Act. It repeals the retirement earnings test and removes outdated punishments to Americans in their 60s who want to keep working. We ought to try to keep people working. I think when it started is when they put it in place when they wanted people to retire early. Now we want people to keep working and we actually want our labor participation to go up because we actually don't have enough workers for the number of retirees we need now. So I think hopefully everybody's got a lot of good ideas, but we've got to figure out how to fix this. So Dr. Dahl, a nation's budget continues to spiral out of control, led by years of inflation-causing policies and government overspending. Can you explain how high deficit spending coupled with increasingly high interest payments on the debt make it hard to solve future emergencies like the potential insolvency of Social Security and Medicare?

Absolutely. So as interest spending or spending on net spending on interest increases over time for a given amount of total spending and for a given amount of revenues, of course, then that constrains the availability of other funds and lawmakers might feel constrained in their options available to them to address any issues that may arise.

One of the proposals out there is to increase taxes on labor income to try and extend Social Security solvency. Would a tax increase on labor income actually make the state of Social Security better or worse by disincentivizing work?

So a tax increase on labor income would disincentivize work. How it disincentivizes work across would differ across people. It would also probably have effects on that we would need to consider on how people take their compensation and how compensation is structured.

Ms. Glenn, it's important that we remove barriers to work and promote reforms that benefit the trust fund solvency and support active participation in the labor market for older Americans who want to work. Can you talk about how an increase in labor market participation supports the health and longevity of programs like Social Security?

Sure. Any increase in labor force participation would translate directly into increased employment, which is a good thing for the trust funds. Increased employment, increased earnings means more revenue into the trust funds.

So I think we've all talked about the amount of fraud there is in a lot of different programs. It seems like every federal program is full of people abusing the program and full of fraud. So I don't know if any of you would want to address this, but how does waste such as improper payments in Medicare, Social Security affect the health of these trust funds and their solvency?

The most recent report which I'm aware of was a SSA OIG report, I believe in August 2024. And their calculation showed that I believe from FY 15 to 22, there was cumulative about $70 billion in improper payments. Now improper payments can be underpayments and overpayments, most of which were overpayments in this sense. And that $70 billion total, I think equated to about 0.8 percent of total payments were improper payments. So that would generally put the trust funds in a better financial position, but I think as my fellow panelist said earlier, how much that would move the needle is a little suspect.

Yeah, I think what Senator Moreno said, I mean, I think if you are telling people that have just worked their butts off in a hard work job, I mean, raising their retirement age will be pretty devastating to them. I mean, you talk to a lot of people in those jobs, I mean, their life expectancy is lower and so it'd be, I think it'd be very difficult for people like that. So thank you.

Senator Lujan, who voted for the Shutdown Fairness Act, and I appreciate that, but it's your time.

We should pay everybody, Mr. Chairman. I appreciate that. To everyone that's here today, I want to say thank you for coming to this important discussion and to our chair and our ranking member for having this hearing today on Social Security. Coming from New Mexico, like many states across the country, Social Security is critical lifeline for seniors, for people, for my brothers and sisters with disabilities and for survivors. Hardworking Americans deserve to spend their lives in dignity with financial security. That was the promise once upon a time. And I just don't know that we in the United States prioritize our seniors the way that we should or that we emphasize the importance of living with dignity as well. Now, according to the U.S. Census, 23.5 million people were lifted out of poverty in 2024 due to Social Security, including about 133,000 New Mexicans. Now, this administration has made life a little tougher on beneficiaries. They decided to shutter field offices, reassign staff and hand over personally identifiable information to DOGE. I don't know why. Now, going down the line, my question to each of the panelists, yes or no, do these changes, shuttering field offices, reassigning staff, do these changes negatively impact Social Security beneficiaries? Ms. Dahl? Dr. Dahl, sorry.

That's fine. This is not really CBO's purview, but my expectation would be yes.

Appreciate that. Ms. Glenn?

Similarly, the work done in the field offices isn't really my purview, but it may be affecting individuals.

Mr. Huston?

I would suspect that since there'd be a fewer number of employees needed to accomplish the same level of work.

Appreciate that. Thank you all for being honest and logical. Now, turning out to the issue of solvency in Social Security Trust Fund, Ms. Glenn, yes or no, did you state in an August 2025 letter to Ranking Member Wyden that the Republican One Big Beautiful Bill Act would accelerate Social Security insolvency?

Yes.

To what extent do these changes move up the projected insolvency date of Social Security Trust Fund?

It moves up the solvency date by about six months.

Ms. Glenn, if Congress were to address Social Security solvency, how much would that cost as a percent of the gross domestic product?

I know it is about 0.16 of taxable payroll, so something slightly smaller of GDP.

The number that my staff gave me was 1.3 percent in GDP. So somewhere between 0.6, 1.3. I'll let's just put it into that range and I'll stick to 0.6. Now, do you know how much the Republican Big Beautiful Bill, which went after healthcare, food assistance, things like that, increased the federal deficit as a percent of GDP?

I do not know that. My analysis was focused on the income tax effects of the bill. I'm not sure if CBO has a better sense of that.

I'm sorry, I don't have that estimate in front of me.

So the analysis that I was given happened to be the same as what it would cost on Social Security side, 1.3 percent. So the way that I look at that logically is if my Republican colleagues' Big Beautiful Bill spent money to give the tax breaks to people that are doing very well in the country and not to address Social Security insolvency, it's 1.3 percent, 1.3 percent, it's kind of a wash. Republicans through the Big Beautiful Bill gave tax breaks to people I would argue that didn't need them in America, folks that are making more money than most of us will see in lifetimes, like Elon and Jeff and others.

Jeff Bezos, let me clarify.

Appreciate that. Senator Merkley, just to be clear. With congressional action, without congressional action, the Social Security Trust Fund is six years away from insolvency. Is that correct? Yes, yes.

That's about right.

Now, the Republican Big Beautiful Bill exacerbated this crisis, deeply depleting the Social Security Trust Fund quicker and putting millions of seniors at risk. Now, Dr. Dahl, if Congress maintains the status quo, how will future insolvency impact folks across the nation who rely on Social Security to pay their bills?

So any cut in benefits, so benefits would be restricted to the resources available to the program. So there would need to be a reduction in benefits if no changes were made. How those benefit changes would occur is unknown at the time, but any change in benefits would clearly directly affect those who had their benefits cut. For those who are at the bottom of the earnings distribution, benefit cuts would likely be more harmful in a percentage basis than if they were equally cut for those at the top of the distribution.

The analysis that I was given suggested that beneficiaries would see an average cut of 23 percent.

That's right.

Now, last question as my time expires, how would cuts to Social Security benefits disproportionately impact seniors who rely on this critical program as their primary source of retirement income?

It would be substantive if those benefit cuts, so that total benefits would need to be cut by about a quarter. So if some of that total reduction was ascribed to those at the lower end of the distribution, those that relied on Social Security for the entirety of their income, that would be substantive.

I appreciate that. And with my Republican colleagues, everyone's talking about a budget reconciliation bill again. If you care about Social Security, fix it. Republicans say they have the votes to pass budget reconciliation out of the House and the Senate. We're going to see if they care. Because these are all about choices. And the first time they missed it, let's see if the second time they get it right and they actually put some money here to fix Social Security. I yield back.

Okay, before I go to Senator Whitehouse, let's clarify why did the one big beautiful bill impact Social Security? Specifically, what in that bill had that impact?

Sure. Yes, it was directly related to the income tax provisions in the bill that affected seniors. So because they were paying less in income tax, more money in their pockets, less of the taxation of Social Security benefit income flowed in as revenue to the Trust Fund.

Okay, it was what was termed as no tax on Social Security, correct?

That's right.

But what really was we increased the standard deduction for seniors.

That's correct.

So the impact was we actually made it easier for seniors to live because we decreased seniors' income taxes. I mean, that's what caused it. Again, I wasn't in favor of it, that provision. I mean, I think we've done an awful lot of transferring from young to old. We held a hearing in Finance. Six dollars is according to Myron Magnet, for every dollar spent on youth, we spend six dollars on seniors. There's been an enormous shift in terms of people in poverty over the last many decades, seniors in poverty versus children has been reversed. So again, we just again need to get the facts out there. But we'll go to Senator Whitehouse.

Thanks very much. There are a few ways to try to resolve Social Security's fiscal dilemma. One would be to either cut benefits or reduce eligibility so less payment goes out. Is that correct?

That's correct.

That's correct. And it seems that in the episode that I described in my earlier comments, Republicans and Democrats agreed with President Biden during his State of the Union address that that was off the table. So if cutting benefits and reducing eligibility is off the table, that leaves other ways of solving the problem. One would be to borrow a lot of money and use that to shore up Social Security. And do you have an evaluation of how much money that would take and what that would mean for our national debt?

So in CBO's projections to close the shortfall over the next through 2036 over the 10-year budget horizon would be about So in CBO's projections to close the shortfall over the next through 2036 over the 10 year budget horizon would be about $2.7 trillion. As by statute our baseline incorporates basically federal borrowing to pay benefits as scheduled and so you would end up back at our baseline, so debt to GDP in 2036 would be about 120 percent.

Yeah. Not great. Any of you recommend that stratagem for solving the Social Security problem?

No, no, no. CRS will not make any recommendations.

No recommendation for me.

Similarly, no recommendation from me.

So that kind of leaves us with revenue, doesn't it?

If I accept the premise and you're taking benefit reductions, that would leave revenue.

That's kind of it, right? This is math at this point. And so we need to start looking at revenue. Do any of you believe that the tax code is so fair and so honest that there is no room for Congress to generate revenue without being unfair?

I don't think I could comment one way or the other on the tax code whether or not it's fair. I think that's up for Congress.

Any of Ms. Glenn, Ms. Dahl?

I agree with that sentiment.

Yeah, same.

You don't want to talk about it. Okay. Well, I think that the tax code is corrupt. I think that the tax code is rotten. I think the tax code has been torqued by big corporations and billionaires for years to give them favored tax status over regular working Americans who don't have the same lobbyist and influence access to Congress that they do. And so in my view, getting the revenue necessary to restore Social Security actually confers a benefit if we get it from the tax code in ways that make the tax code less corrupt, less unfair, and less the product of improper influence by wealthy people who could well afford to pay their taxes but prefer to take the excess money that they get from not paying taxes at the rate of a nurse or a school teacher and deploy that in Congress to be able to push their tax rates down even further. One of the great human examples of selfishness and greed. So we have a chance to actually cure two problems at once, two birds with one stone. Put Social Security for regular Americans on a sound footing and fix some of the rot in our corrupted tax code. So I really look forward to working to get this done because I think it would be a double big win for the American people if we do this. Thanks very much, Chairman.

So Senator Whitehouse, here is bipartisan agreement. I think our tax code is awful. And I would love to work with you to simplify and rationalize it. I think that's the first thing we'd have to do, simplify and rationalize it. Grotesquely complex, four, five hundred billion dollars a year to comply with it. So anytime you want to start working on simplifying and rationalizing, I'm happy to. Just real follow up with Dr. Dahl. In the CBO's projection, you've included $2.7 trillion in basically transfer from general revenue to the Social Security benefits.

That's correct.

And that's within your $24.4 trillion projection of deficits over the next 10 years.

That's correct.

It's already included in there. Again, $24.4 trillion. Social Security's a little more than 10 percent of that massive shortfall which also has to be addressed. Senator Padilla.

Thank you, Mr. Chairman. Appreciate Chairman, acting Chairman, and ranking member discussion on this. Just want to recognize what several of my colleagues have recognized already, part of the context for this conversation is a projected six years until insolvency unless there is some sort of a congressional action. Absent congressional action, the forces that we've acknowledged here is the impact of an aging population and a shrinking workforce. That's what threatens Social Security's solvency. Sure there's other minor factors, but those are the key trends here. I just feel a duty and an obligation to recognize we can't talk about the future of the United States labor market without talking, yes about birth rates, but also about immigrants and their contributions to the workforce, to our economy, and to Social Security. So Mr. Chairman, I'd like to enter into the record a report from 2024 from the Immigration Policy Institute that shows that without immigrants and their U.S. born children, so we're talking citizens here as well, the prime working age population would have shrunk by more than eight million people between 2000 and 2025.

No objection.

Thank you very much. It also shows that immigrants arriving in the United States are on average younger than the native born population and have a higher rate of labor force participation. And they pay into a system that many will never become eligible to benefit from. So I think that's an important document to have as part of this record and the conversation. Question for Ms. Glenn. Social Security actuaries in their estimate of the impact of immigration over 25, 50, and even 75 years have found that more immigration always correlates with a decrease in the Trust Fund deficit and vice versa. Would you care to comment any further on that?

That's absolutely correct. All the factors you mentioned, immigrants who are paying into the system, many of them will never receive benefits, and they also have U.S. born children.

Ms. Dahl, the CBO's 2024 surge report made similar findings. Would you care to add any comment?

Absolutely. So in that report that you're referring to, we looked at the effect of the surge on the federal budget, what we were calling the immigration surge, that increase in immigration that you referenced earlier, on the federal budget and in particular in terms of Social Security. Immigrants come in, they're more likely to be of working age, many work, pay payroll taxes, that is a benefit to the program. And then for a variety of reasons, many will not ultimately claim and certainly won't be eligible to claim, they won't have their 40 quarters of coverage, for instance, inside the 10 year window.

So is there an impact to the solvency of the Social Security program being felt by this administration's mass deportation agenda? I mean, imagine if forget I won't even say all immigrants are detained and or deported, but let's say half. Because we have cases and reports of it's not just undocumented immigrants that are being deported and or detained, there's legal immigrants with work permits that are being deported or at a minimum detained with these arbitrary goals not just for daily detentions and arrests, but the building out of significant detention center capacity across the country. Does that help or hurt our Social Security solvency?

It would hurt. We do some sensitivity analysis in the Trustees Report every year speaking to the effect of more and less immigration.

Thank you very much. And just one other issue that I wanted to raise here for the record of today's hearing, not questions for you all because I would assume you're not in a position to comment on this. But I think it's important to note, colleagues, that similar to the IRS's legally dubious data sharing agreement, the administration's abuse of Social Security data also threatens Americans' privacy and now also risks disenfranchising eligible voters. We know, we don't suspect, we know, thanks to a lawsuit that revealed the details of this previously undisclosed data sharing agreement, that the Trump administration gave DHS access to sensitive personal data from the Social Security Administration on nearly every United States resident, including full name, Social Security numbers, addresses, birth dates, and more. DHS is now encouraging states to use this data to re-verify the citizenship of voters, something that we're talking about on the floor as part of the SAVE Act conversation. Now, this agreement raises significant legal and policy concerns, but unsurprisingly, it contains alarmingly few safeguards to ensure accuracy and privacy. Now, why is that important? Multiple audits and analyses have shown that the Social Security Administration's citizenship information is outdated and incomplete. These records have never been fully up to date. DHS itself acknowledged last year that using Social Security data to validate voters' citizenship status, quote, "may produce inaccurate results." So it's obvious that relying on Social Security citizenship data for purposes of election administration will invariably result in errors, potentially disenfranchising eligible United States citizens. Thank you, Mr. Chairman.

Senator Murray.

Well, thank you, Mr. Chairman. We absolutely do need to talk about how we protect Social Security, but in addition to the long-term solvency that people are focusing on here, I don't think we can ignore the immediate threat to Social Security, and that really is President Trump. Because seniors right now today are having a very hard time getting their benefits. Why? Because Social Security has pushed out without any kind of plan 7,700 workers since Trump took office. We now have just one field office representative per 4,000 Social Security beneficiaries, and there are at least 400 field offices that lost more than 25 percent of their staff. And that's just the beginning. The Trump administration wants to cut field office visits in half. That would mean over 15 million people who were able to go to a desk and speak to a person last year would be out of luck this year. This is really a slow-moving train wreck. Last summer, the Social Security Administration moved 1,000 field office employees to the phone lines. At the end of the year, it moved 500 more. In January, it moved nearly 800 more employees from the processing centers and the field office support and workload support to phone duty, often with very little training. That's trying to fix one problem they created, worsening telephone service, by creating new problems and backlogs everywhere. This is really hurting seniors who can no longer get an SSA meeting close to home when they need it. It is hurting people with disabilities as people who could be processing their claims are now answering phones, and it's burning out the hardworking staff Trump hasn't pushed out. But this is all the tip of the iceberg when it comes to Trump's Social Security sabotage because there was the attempt to punish a state by revoking contracts to report births and deaths, and there was a proposal to end many of the phone services, an idea that was quickly reversed because it was so bad. And then there was the DOJ purge, which wrongly kicked seniors off Social Security, including a constituent of mine they incorrectly declared as dead. And mind you, that's just the sabotage in the light of day. But thanks to a whistleblower report and ongoing internal investigations, we know there was even more damage happening in the shadows, like when Trump let Elon and DOJ muck around with highly sensitive Social Security data that is private, personally identifiable information on hundreds of millions of Americans. We are talking about potentially unprecedented data breaches here, blatantly unqualified people getting practically unfettered access even after court orders, private data copied onto unauthorized third-party servers, or according to reports, even copied onto a thumb drive. Believe me, I want everyone to know I'm watching this investigation closely and demanding accountability. If we want to protect Social Security for decades to come, yes, we do need to talk about solvency, but we also need to talk about the president who is gutting the Social Security Administration right now today and callously putting our seniors' benefits and their personal data at risk. Now, with that, Dr. Dahl, I want to turn to you. I do have a few questions, particularly about who is and isn't paying their fair share into Social Security, and I want to make sure I have a few numbers right. Is it right that those making under $184,500, their effective payroll tax rate is roughly 12.4 percent?

That's right. The statutory rate is 6.2 percent, but consensus view is that the employee pays basically the employer cost is passed on to the employee, and so the employee basically faces a rate of 12.4 percent.

12.4 for anybody earning under 184,500. What is the effective payroll tax for someone making a million dollars a year?

So they would pay the 12.4 percent on that first $185,000 roughly and then would not pay additional tax on labor income above that amount, and so that math would work out to about 2.2 percent.

Okay, so 12.4 percent for someone under 184,500. A millionaire would be about 2.2. What if you're a billionaire like Trump or Musk? Your Social Security tax would be effectively, on my understanding, very, very much smaller. 0.0002? What if you're a billionaire like Trump or Musk? Your Social Security tax would be effectively, on my understanding, very, very much smaller. .0002?

Yes.

That just doesn't make sense to me. When the richest people in the country have the smallest effective tax rate, that does not seem to me like a very fair system, especially when we are now six years away from retired workers facing this 24 percent cut in their Social Security benefits. So I hope we all understand that and focus on that. Thank you, Mr. Chairman.

Before I turn to Senator Merkley, I'll quick answer the question. The reason it's set up that way, we were supposed to, it's for savings for a defined benefit. And once you've saved that amount, your benefit doesn't rise, so that's the original intent of Social Security. It wasn't set up as a welfare system where everybody's taxes pay for benefits for other people. It's a forced savings plan. That's why you have that type of a situation.

I don't think it's a welfare system. I think it's a system to make sure that we have Social Security for people.

If you want unlimited taxes on income, it's no longer a forced savings program, it's something else. So we just have to be honest about what we're talking about. Senator Merkley.

I have a little different view, and that is that over time it's had elements both of an insurance program and elements of a savings program. And that's been part of the challenge of analyzing Social Security and deciding how we modify it is what element one really emphasizes. I want to go back to the idea of borrowing and investing and just from my perspective, a cautionary note. 1.5 trillion, if you borrowed it at 4 percent because you forego the 4 percent earnings roughly that CBO's estimate is about 4 percent going forward, and you get a return of 8 percent, you have a net improvement of 4 percent. So 4 percent on a trillion and a half would be $60 billion. So $60 billion is only a fraction of the roughly $500 billion deficit we'll have in 2033, and it's even smaller component of the deficits that we'll have going forward. By 2036, so just three years later, we're over 600 billion estimated deficit. So we're talking about that plan, even under a positive scenario, addressing only one-tenth of the shortfall. But then there is the risk factor. And the risk factor is significant, and that is if we have a 10-year period in which the stock market does not go up, and we did have that from 2001 to 2011, then basically we're talking about zero earnings, but we're foregoing because 4 percent compounded is 48 percent over a 10-year period. And therefore we're foregoing 48 percent income on that trillion and a half and getting zero income over the stock investment. And if you have a complete collapse of the stock market, and many analysts now will note that the price per share compared to earnings is at a historic high and there's a lot of fretting over whether we're at the high point of a massive bubble. If we gamble the Americans' Social Security program and we end up in fact seeing we're the top of a bubble that bursts, then we're really in the hole. So I would just ask any one of you, but I'll turn to Dr. Dahl first. Is my math right on the 4 percent net gain on a trillion and a half would be $60 billion per year?

That sounds about right, yes.

Yeah. And 60 billion is only about a tenth of what our projected deficit would be in 2036.

That's right.

And therefore even that idea would be a contributor perhaps to a broader plan, but it would take many other elements to put together in a package if we're really going to address the entire deficit.

That would be correct.

And that if you put the money into the stock market, you are accepting a higher risk profile. We never know whether we're going to be at the bottom point of a historic surge or we're at the top point of a bubble, but if we're at the top point of the bubble, we could end up in a far worse position than if we'd simply taken the 4 percent return on putting it into bonds.

That's also correct.

Treasury bonds. And if in fact we borrow additional amount, that borrowing additional amount generally drives up to some degree the interest rate that you have to pay to borrow, not just on the marginal rate, marginal amount that you borrow, but on the entire amount you're borrowing as a nation.

That's right.

And also that if you're have maxed out what Americans are willing to essentially lend to the government, then we're talking about borrowing more from foreign countries.

That would be correct.

Okay. Thank you very much. I'll turn this back over to Mr. Johnson, but I just want to Senator Johnson, I just want to conclude with it's really going to take bipartisan work. We come to this conversation with different frameworks for what Social Security is, is it an insurance plan, is it a savings plan, different concepts of fairness. We're going to have to really work to overcome or bring or merge our different frameworks into a solution, and the moment demands that we succeed in doing so because we need to fix this. Thank you, Mr. Chairman.

So first of all, we have to start and we have to agree on the facts and all the facts. I mean, I agree with your analysis right there. There's no guarantee you'd get an 8 percent return. I think most Americans would take a look at the current stock market and if you say, are we at a low point or are we at a high point, we're probably closer to a bubble than anything else. Would this be a good time to do it? The investment in something that has value to the federal government, like stocks, that'd have to be over a very long period of time. You can't expect it to make those returns in a short period of time. That I think would be folly. But I want to just a couple quick questions. And again, these are more facts. I said we talked about the, and it is called the money's worth ratios. Okay. And it seems like a one-earner couple, they really come out ahead of anybody else versus a single male, single female, or a two-earner couple.

That's right because if the spouse has not been working over their career, they do get a benefit as well.

And they're not paying tax. I mean, they top out. So here is the, a low earner gets $3.86 for every dollar they paid in. Again, that's not a forced savings plan. That's something else. It's a savings plan plus, right? I know people don't want to call it welfare. I don't want to call it welfare either, but it's something other than a forced savings plan. A low-income earner gets $2.70 for every dollar. Again, I get people coming in, "That's my money." Well, a part of it is, a dollar of it is, but in that case, $1.70 is somebody else's money. A medium earner gets $1.88 for every dollar they pay in. A high-income earner actually gets $1.55 for every dollar. That's if you are a one-earner couple. Now, if you're a single male and you're high income, you get 83 cents for every dollar. So again, it's all over the board. But the question I have for you is, because part of the solution is, okay, let's if not take off the cap, increase the cap. So the impact of that would be, right now the top marginal tax rate is 37 percent. Plus you have Medicare, which has no cap, right? But I'll use the 37 percent and then I'll use the entire payroll tax, which is 15.3 percent, correct? The total amount. So what we're in effect, if we take the cap off or increase it, we're going to take the 37 percent top marginal rate and increase that to 52.3 percent. That's a correct analysis, correct?

That sounds correct.

So when you say, and I don't know what the 60 percent of the problem solved, what was that? That would be eliminate the cap entirely?

Yes. That's right.

So in your analysis, did you take into effect what would be the impact just in terms of incentive to work, economic growth? Because I would think if you're a high-productive individual and you're incentivized, and one of the things that incentivizes you is you want to make money, all of a sudden instead of having a top marginal tax rate of 37 percent, you're facing 52.3. That just might, you say, "Ah, it's probably not, if I'm going to have to pay more than 50 cents on the dollar for every dollar I earn, I'm not that interested in earning that much money." So does that...

Yeah. No, you make a good point. That is certainly relevant to individuals and we do try to take those sorts of effects into account.

But it's impossible to really predict that, right?

It's an estimate.

So again, my point in laying out those facts, we have to first start on agreeing on the facts. And I think we've come a long way today. Again, you guys, excellent testimony. Nothing's disputable about what you talked about. We have an enormous problem. The sooner we address it, the better off, but I think we've already waited too long. So we've just got a big mess on our hands. Talking to Senator Merkley, I agree with you. We need a working group. We can do this, I guess, in a behind-closed-door type meeting, but I'd like to see the kind of exchange I had with yourself, with Senator Kaine. Let's flush this out. Let's get the facts right. Then we can start arguing about what the different components of our solution, but I think it's got to be multifaceted. But again, I just want to, again, excellent testimony, indisputable facts. We've got a big problem on our hand. But I want to thank our witnesses for appearing before the committee today. The hearing record will remain open until noon tomorrow for submission of questions for the record to the committee clerk. The hearing is adjourned.