Hearings to examine the future of social security.

uh thanks everybody for coming for this very important subject and before i read my opening statement i wanna thank senator sanders for his cooperation i went to him about a month ago and i said i'd like to have this hearing on this very day and he very quickly uh said yes and it was gonna be a bipartisan meeting and uh i hope that sets the stage for the fact that nothing on this subject of social security is gonna get done if it doesn't happen in a bipartisan way so i thank you for your cooperation social security is a part of the social fabric of America. Unfortunately, his trust fund for retirement and survivors' benefits will be exhausted in six years. Come twenty thirty-two, seniors see their benefits cut by as much as twenty-two percent. To ensure this cut never happens, the entire nation needs to have an honest discussion about social security. This will require a president, members of congress, political candidates, and leaders of senior advocacy group organizations to come clean about the facts with the American people. AARP and other organizations need to stop running commercials saying, don't cut, and instead start running ads saying congress should act here's just a few social security facts social security is facing a funding shortfall largely due to demographics because far fewer workers are paying into the social security relative to benefit recipients than at any time in the program's history The secondly, the shortfall is large, very large. The present value of Social Security's unfunded obligations is a staggering thirty trillion dollars. This fiscal hole cannot realistically be plugged simply through tax hikes on the wealthy, that's a Democrat's favorite solution, or by cutting waste, fraud and abuse, which is the Republicans' favorite solution. Inaction on social security is not an option. The only threat to current retirees' benefits is partisan fear-mongering that impedes bipartisan action. And I always say this facetiously, but I wanted to say there's some truth to it, as far as I'm concerned. We get calls in the office almost daily, " Don't cut Social Security." I'm not on the phone talking to these constituents. But I'd like to say to them, if you knew how scared members of Congress of both political parties are of the issue of Social Security you'd be laughing at us, instead of calling in and saying, " Don't cut Social Security." Now they have the perfect right to do that, and we have to take those positions into consideration because people actually have that fear. During my first term in the United States Senate, social security was also facing a funding shortfall. Fortunately, several political leaders of the era rose to the occasion. This is included two prominent people, one a republican, one a democrat president reagan and democrat speaker of the house tip o'neill there are no ronald reagan's and tip o'neill's in d. c. today that's why nothing has happened yet and maybe they're here but they haven't popped up yet except take a lead on this bill or that bill But to really get it together, it takes top people to do it. Reagan and Neal action began with an agreement in nineteen eighty one to establish the bipartisan National Commission on Social Security Reform to break a log jam in Congress. Both leaders agreed to refrain from political attacks on the commission's work to provide space for bipartisan solution form. The commission's recommendation served as the basis for reform adopted with strong bipartisan support. I think in the United States Senate there were less than ten votes against this compromise. In turn, social security has made good on all promised benefits for the past forty-three years. And I'll bet when Reagan and Tip O'Neill were done, they probably thought they were getting us through the next twenty years. You can see their foresight has gotten us at uh forty-three years at this point and almost fifty years. It's now our turn, this generation of congresses to put partisan politics aside to save social security. Um, in nineteen eighty-three, Republicans and Democrats will need to sit down, as in nineteen eighty-three, Republicans and Democrats will need to sit down together to consider a wide range of reform options. It's the only way that we'll find a solution that can clear sixty votes to pass the Senate. To foster productive bipartisan discussions, it would be helpful to agree on a set of common sense reform principles. And I don't presume that these are all of them, but these are principles as far as I'm concerned. First, no benefit reductions for current retirees or those near retirement. Second, reforms must prevent senior poverty as well or better than under current law. And third, reforms must be balanced. There is no path to sixty votes for far-left proposals focused solely on tax hikes. Sooner we get to work, the better. Today's shortfall is more than twice as large as in nineteen eighty-three. The longer we wait to act, the worse the options become. So let's get to work now to save social security once and for all, or at least for fifty years like Reagan and Tipo Nidhi. So I thank you again, Senator Sanzer, for this cooperation for this hearing, and I look forward to hearing from you and uh other members, as and first our witnesses. So please go ahead.

Mr. Chairman, thank you very much for calling this hearing on i think one of the most significant crises this country is facing. You're right, it is a crisis and let's figure out how we can work together uh to resolve it. Uh, what I wanna do is uh for a moment put the issue of social security into a broader context, if I might. And the broader context is, Mister Chairman, we are living in a moment in history, wherein the wealthiest nation in the history of the world, we now have more income and wealth inequality than we've ever had, far surpasses the Gilded Age of Rockefeller and Carnegie and and those guys. Uh, we are living in a moment, uh, when the people on top have never had it so good, while at the same time, uh, some sixty percent of our people are living paycheck to paycheck, uh, struggling to put food on the table, pay their rent, pay for health care, other basic necessities of life. Everybody knows that this is not, uh, some new d- uh, uh, uh, discovery that I've made. I think that's a generally granted truth. Um, and, uh, in the midst of all of that, seniors are in particularly difficult trouble. And I think you mentioned that, Mr. Chairman. We are living at a time when if you can believe it over twenty percent of seniors in America are trying to survive on fifteen thousand dollars a year and Mister Chairman, I don't think you could do that in Iowa and I don't think you could do that in Vermont. Uh people elderly people can't afford uh prescription drugs to heat their homes in the winter. Uh nursing home situation in America is a disaster, et cetera, et cetera. And I think to be honest with you Mister Chairman, we have not paid enough attention to the plight of millions and millions of seniors in this country. And in the richest country on Earth, we should do better than that. And on top of all of that, nearly half of older workers between the ages of fifty-five and sixty-four have no retirement savings, zero retirement savings as they approach uh ending their work days. And the uh average social security benefit today is just nineteen hundred and thirty four dollars a month, not a whole lot to live on. Um, you are right in saying that social security uh trust fund is in danger, uh, and that we have got to move sooner than later. And I share that goal with you and look forward to doing that. Uh, but our goal as we do that must be to make sure that we strengthen social security, that we increase its solvency, hopefully to seventy five years, and we do that in a way that is fair. And I do not believe that it is fair, uh, as some have talked about, to cut social security benefits, to raise the retirement age. I honestly don't think that is the direction in which we should be going. But I'll tell you what I do think, and I think there is more and more support for this. Mister Chairman, you may have noticed Uh, there was an op-ed in the New York Times just a couple of days ago, signed, written by a colleague of mine, somebody I work with a lot, Elizabeth Warren, but also signed by Bernie Marino, good Republican from uh, Pennsylvania, Ohio, I'm sorry. Uh, and w- and the idea that they talked about is the legislation that I have introduced. And it is not a complicated piece of legislation, and it's something I will fight to see become law. And that is we are in a situation right now where if Catherine here makes ten million dollars a year, and the chairman makes a hundred and eighty six thousand dollars a year, they both pay the same amount into the social security trust fund. If Musk makes whatever he makes, hundreds of millions a year, he pays the same amount as somebody making a hundred and six eighty six thousand a year hundred and eighty four thousand I'm sorry that's the number right now and that is I think most people understand that is a bit absurd. It means that if you make a hundred and eighty four thousand five hundred dollars a year, and that's the cap, you pay six point two percent of your income in social security taxes. But if you make ten times more than that, let's just say you make one point eight million dollars, you pay point six percent of your income in social security. So the wealthy people pay a fraction of what working people pay into the fund. I I don't think that that makes sense. Legislation that I have introduced applies the social security payroll tax on all income, including capital gains and dividends, for those who make over two hundred and fifty thousand dollars a year. Under this bill, ninety-one percent of households would not see their taxes go up by one penny. The tax increase in our legislation only applies to the wealthiest, nine percent of Americans, Those will make over a quarter of a million dollars a year. In addition, under this legislation, we would increase COLA's cost of of of living adjustment for seniors by more accurately measuring their spending patterns to the consumer price index for the elderly. That is what I believe we should be doing. So, uh, Mr. Chairman, I do look forward to working with you. Uh, but I think the American people are catching on that the system, the economy today is not working for them, it's benefiting the very wealthy. And I think most Americans know that after you work your entire lives, your entire life, you should be able to retire with dignity and security. So my goal is to increase social security benefits, expand the solvency of social security, as I know you wanna do, maybe seventy five years which would be great uh but do it in a way that benefits working people and ask the wealthiest people in this country who have never had it so good to start paying their fair share of taxes thank you very much mister chairman

yes

uh introduce the uh well i pushed the button but the light didn't come on uh mister shai akabas is vice president of economic policy for the bipartisan policy center and leads the organization's work on a variety of economic issues including fiscal policy retirement and financial security and as well as tax policy he got his start at uh the the policy center in twenty ten staffing the Dominican Rivlin Debt Reduction Task Force. Missy Elizabeth Melito uh serves as Executive Director of the Small Business Legal Center of the National Federation of Independent Business. She handles legal and regulatory affairs for the NFIB and has testified before Congress and state legislatures on a broad range of legal and regulatory matters. She's a graduate of the University of Maryland Law School. And Miss Nancy Altman is a President, Social Security Works and Chair of the Strengthened Social Security Coalition. She's currently serves as a member of the Social Security Advisory Board and has fifty years' background in the area of social security. medicare private pensions and uh related programs and we'll go from the way i introduced this so you go mr. hay mr. abacus go ahead please proceed

thank you chairman grassley ranking member sanders for holding this hearing having spent the better part of two decades working on federal fiscal and retirement policy i can say with confidence social security's outlook is more dire than at any point in my professional life For tens of millions of Americans, retirees, disabled workers, widows, and children who lost a parent, social security is the foundation of their financial lives. Protecting it is not an abstraction, it is an obligation. Let me highlight five points from my written testimony. Number one, social security is heading for a fiscal cliff. According to the latest trustee's report, social security's primary trust fund will be depleted in twenty thirty-two. Unless Congress acts, every single beneficiary current retirees included, will face an automatic twenty-two percent benefit cut. That reflects a program out of balance, only taking in about three quarters of what it pays out. A twenty-two percent benefit cut means ten thousand six hundred dollars less per year for a married couple of two average earners. It means forty-eight hundred dollars less per year for the average widow or widower. For millions of Americans, that is the difference between dignity and hardship. And the uncertainty alone is already costly. tens of millions of workers cannot plan confidently for a retirement benefit that may not fully be there. Number two, there is a hard truth that we need to be honest about. The significant majority of social security beneficiaries receive far more in lifetime benefits than they paid into the program in payroll taxes. That is not a criticism of beneficiaries, it is mathematically how the program has evolved. People are living longer than its architects anticipated, collecting benefits for more years than the contribution structure supports. Until we are willing to say that plainly, we cannot design honest solutions. Number three, delay is making the problem worse and shifting the burden onto younger generations. A decade ago, the Bipartisan Policy Center's retirement commission showed that a balanced reform package, a benefit and revenue changes, could have achieved seventy-five year solvency and pr- prevented trust fund depletion entirely. That window has closed. The same package today could no longer accomplish both. Every year Congress waits, the required changes grow larger and the burden shifts further onto younger workers. Number four, we will likely need a bridge, but it must be paired with real reform. We have passed the point at which benefit and revenue changes alone can prevent the twenty thirty-two depletion. The time line is simply too short. Some form of bridging mechanism, temporary borrowing authority, or a limited general revenue transfer will likely be required. But it must carry strict guardrails and be paired with meaningful structural reform. Bridging without reforming is not a solution. It is a more expensive version of the current problem, financed at the expense of future taxpayers. Number five, the f- solution must be bipartisan and it must be balanced. Senate rules require sixty votes. No party is likely to get there alone, and no party will absorb the full political cost of either tax increases or benefit adjustments in isolation. A durable solution requires both sides to share the risk, just like the nineteen eighty-three reforms. Any solution must also protect the most vulnerable, low-income workers for whom social security is often their only meaningful source of retirement income, and surviving spouses who face sharp drops in income when a partner dies. I would also note that the US senators elected this fall will, for the first time, be required to confront social security's insolvency during their term in office. That is a new political reality. Mister Chairman, Ranking Member, social security's history is one of problems deferred. The longer Congress waits, the more disruptive the eventual fix will be. We cannot afford to hide behind pledges of no changes or proposals that address only one side of the ledger. Both paths lead to the same place, a benefit cliff that nobody claims to want, but everyone is marching toward. When both parties decide the cost of inaction exceeds the cost of action, a deal gets made. The American people are at that point. Congress needs to catch up. Thank you, and I look forward to your questions.

Thank you very much. Now, Miss Melito.

Chairman Graslie, Ranking Member Sanders, and members of the committee. On behalf of the National Federation of Independent Business, I appreciate the opportunity to participate in today's hearing on the future of social security. For more than eighty years, NFIB has advocated for America's small and independent business owners in Washington DC and all fifty state capitals. NFIB is non-profit, non-partisan and member-driven. Since our founding in nineteen forty-three, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. Small businesses have a supersized impact on the US economy, as you well know. Over thirty-four million small businesses operate across the country. From nineteen ninety-five to twenty twenty-three, they generated twenty point two million net new jobs, surpassing the twelve point eight million created by large businesses. Small businesses employ forty-nine percent of the American workforce, account for ninety-nine point nine percent of all U S businesses, and comprise forty-five point nine percent of the GDP. It is no exaggeration to say that for the American economy to succeed small businesses must succeed. Over the past eighteen months Congress and the administration have delivered tax certainty and regulatory relief to small businesses. Notably, Congress passed H R one, making the twenty percent small business deduction permanent. Additionally, the administration exempted U S businesses from the beneficial ownership information reporting requirement, eliminating a major compliance burden and saving small businesses over a hundred and twenty-eight billion in regulatory costs. Despite these major victories, small businesses continue to face many economic headwinds. Taxes, inflation and labor costs remain the top challenges for small business owners. Uncertainty is the enemy of growth and investment, and it is high. Or, as one member recently shared, economic uncertainty is the biggest challenge. While another wrote, taxes are too high, business seems to be getting harder and harder to make a profit. The message from small businesses to Congress is simple, do no economic harm. That message is especially relevant to today's hearing. Proposals such as the Social Security Expansion Act are often framed affecting only millionaires and billionaires. But small businesses are not out of harm's way from these deceptively labeled proposals. For instance, a design to lift the current payroll tax cap and ex- extend social security i- taxes to certain investment income would directly impact many small business owners. Small businesses often report on the owner's individual tax return because eighty-five percent of small businesses are passed through entities, such as S corps, sole proprietorships and partnerships. These businesses would be subject to additional social security taxes under the proposal. Profits exceeding two hundred and fifty thousand, which are now often reinvested in payroll, equipment and business expansion, would face a new twelve point four percent surtax, even if owners do not withdraw that income personally. For these businesses, proposals like the Social Security Expansion Act represent not just a tax increase on the wealthy, but on the revenue that small business owners depend on. to operate, to grow, and to expand their businesses. When pass-through businesses face higher tax rates, it leads to less investment in their most valuable asset, their workforce. Small businesses continue to face economic challenges. Congress can help mitigate these challenges by extending beneficial small business tax provisions and rejecting a thirty-three point eight billion, trillion tax hike. Tax certainty will help businesses plan and increase small business confidence.

Hmm.

It is my hope that Congress will pursue reforms that promote economic growth, encourage workforce participation, and protect small business owners' ability to invest in their business and to create new jobs. A stronger economy ultimately produces more payroll tax revenue, and will improve Social Security's long-term outlook without imposing new burdens on Main Street employers. Thank you for the opportunity to testify today on behalf

Thank you very much. Now, Ms. Haldman.

Social security was enacted to provide basic economic security when wages are lost in the event of disability, death, or old age. Therefore, the first question we should ask is what level of benefits should social security provide? As I explain at length in my written statement, today's benefits are low by virtually any measure. Cutting those already inadequate benefits will deepen the nation's looming retirement income crisis. And cutting benefits will hurt the economy. On page four of my written statement, I list the dollar amount of social security benefits that flow into each of the subcommittee member states every month. By the same token, expanding social security's modest benefits will increase economic security and strengthen the economy. That leaves the question how the expanded benefits are financed and the shortfall eliminated. It's imperative to recognize that after Congress enacted the social security amendments of nineteen eighty-three, the subsequent trustees' report projected that social security was funded for the full seventy-five year valuation period and beyond, which ran through twenty fifty eight. But the actuaries didn't and really couldn't anticipate the huge income and wealth inequality that followed those amendments. Recent decades have seen a dramatic increase in the share of income going to those at the top. That inequality has cost social security more than one point five trillion dollars since nineteen eighty three. That is one point five trillion dollars that should have gone to social security but instead stayed in the pockets of the wealthiest among us. This year's trustee's report has projected that Congress must act by twenty thirty-two. That's one year sooner than last year's report projected. The earlier date is the result of Trump administration policies, specifically its first reconciliation bill, giving tax breaks to the wealthiest, and its hostility to immigrants, who every year contribute tens of billions more dollars to social security than they draw out. Moreover, the administrative tariffs and its war against Iran will undoubtedly increase unemployment and inflation harming social security even more. The twenty thirty-two date is best understood as an action forcey event. The question question isn't whether Congress will act. It's unimaginable that you don't. but rather what you do and whether you act transparently through regular order, or through an undemocratic closed-door fast-tracked process. Two pieces of good news. First, there's no question we can afford an expanded social security, whose total cost at the end of the century is less than seven percent of GDP. The issue is one of values, not affordability. The second piece of good news is that as polarized as the American people are, we are united about social security. Poll after poll reports that from MAGA Republicans to progressive Democrats, the American people overwhelmingly reject benefit cuts, even if paired with some revenue increases. To be and to be clear, raising the retirement age and means testing benefits are benefit cuts. Your constituents strongly and overwhelmingly prefer more revenue, ideally paid by the wealthiest. They also strongly support benefit increases. This is also the best policy. Fortunately, the Social Security Expansion Act is exactly what every poll shows the American people want. It should be brought in to a vote immediately. What should not happen is the establishment of a commission whose recommendations are privileged and fast-tracked, that would be unprecedented and a deep disservice to the American people. Its only purpose would be to insulate and protect members of Congress from facing political accountability. Instead, all social security legislation should go through regular order, as it always has. Fortunately, when Congress does what the American people overwhelmingly want, And as the Social Security Expansion Act does, action can occur in the open and without delay. Thank you.

Thank you. Um, the order will be Grassley, Sanders, Johnson, Wyden, Cassidy, Cortez, Mostow, and Tillerson-Young. Listening to my colleagues about uh taxes on higher income people, even former president obama's top economic advisor jason firman recognizes this is not the case as mister firman put it in a recent opinion piece for the new york times quote applying the social security tax to all incomes would push the effecti tax rate above fifty percent end of quote and this would further quote not leave a lot of room for further tax increases on the rich to close the budget deficit and fund other priorities. For you, Mr. Akibas, uh, wouldn't my colleagues' preferred approach to social security ultimately lead to large tax hikes on middle class and severe cuts to other programs down the road?

Thank you, Senator, for that question, and I want to start by giving credit to members on both sides who have forward ideas. That's exactly what we need, given the situation we're in, and increasing revenue, including through changes to the taxable maximum, should certainly be on the table as part of a comprehensive solution. But, the matter of the fact is that Jason Furman is correct, and we have limited availability to raise revenue in our economy. We need a lot of revenue for a lot of different purposes right now, not to mention various areas where we're under-investing, closing the federal deficit that is large and growing. And allocating a huge amount of money towards the social security system, just from high income taxpayers, including to fund more benefits for high income earners, is not, I think, the best use of those dollars. And so that's why PPC has consistently said that we think a balance that includes both additional revenue to the program and benefit adjustments are necessary. And then finally, the program's benefit structure has not been updated in more than forty years. And I think a solution that only looks at the revenue side but doesn't focus on some of the changes in demographics and labor force dynamics that we've had would be a huge missed opportunity.

ok miss uh many of my colleagues appear to be under the impression that eliminating the tax cap would only fall on the back of so-called wealthy can you elaborate on how such proposals would impose punitive tax hikes on small business and i know you referred to this in your opening statement. And secondly, how would such proposals affect the ability of small business to compete with large corporations?

Thank you, Senator Grassley, for that question, and I think punitive is a good characterization, um, since the Social Security Expansion Act, um, would impose three new massive taxes, and a lot of those would fall on small businesses. Um, and saying that most households won't see a tax increase, with the elimination of the tax cap uh doesn't change the fact that the the taxes would be imposed on many pass through small businesses and the concern isn't about in my my opinion about the number of households that are affected it's whether taxing those businesses that invest and create jobs is the right way to strengthen social security i think this mantra let's raise taxes on small businesses so that we can pay more is not a winning slogan on main street the outlook on main street right now is very different than the outlook on wall street. there is not an infusion of capital on Main Street right now. Small business owners use that income, which is referred to in the proposals as investment income, um as savings and a way to expand their business, to hire new employees, um and they put it away for a rainy day. So it would very much impact their ability to also compete with larger businesses.

And for you, uh as well, s- some of my colleagues attempt to limit the reach of a small business tax hike by eliminating the tax cap only for taxpayers with earnings over two hundred and fifty thousand. However, this threshold is not indexed. So, won't this result in ever more small businesses getting hit by the tax hike?

Yeah, absolutely. It certainly would, Senator. So if the threshold, the two hundred fifty thousand threshold is not indexed for inflation, it's real value is going to decline over time. So what starts as a

This will have to be my last question, so, Mister, of course. Uh, wage subject to social security tax have been capped since the program's enactment in nineteen thirty five, yet some of my colleagues argue it's fundamentally unfair. Uh, so for you, what is the purpose of the social security tax wage cap and how would its elimination alter social security structure as an earned benefit based on contributions.

Thank you, Senator, the cap has been part of social security from the beginning because it connects what you pay in to what you receive out of the program. Social security's ninety year political durability is in part resting on that principle that it is an earned benefit and not a welfare program. And the more you contribute throughout your career, the more you receive in retirement. I think lifting the cap without changing the benefit formula would of course change that linkage. And that raises a fundamental question about what kind of program we want social security to be. Given where the program is, I I think all options need to be on the table, but we should carefully consider any changes that truly break that linkage because it changes the fundamental nature of the program. I would say that we at BPC have supported increasing the taxable maximum, as part of a broader package, but that would still retain the link between earnings and benefits.

OK. Senator Sanders.

Thanks. Um, before I ask my questions, let me just state for the record that the legislation that we are talking about, the bill that I've introduced, the Social Security Expansion Act, would not raise taxes except on those making more than two hundred and fifty thousand, which would exclude the vast majority of small business owners from paying a penny in additional taxes. In reality, the vast majority of the additional tax will be paid for by wealthy business owners and investors who in the last many years have been able to avoid billions in taxes. All right, let me begin by asking all of the panelists a very brief question, if I might. Do you agree with me and virtually every economist that we are seeing more income and wealth inequality in America today than at any time in the history of the country? Mr. Akibas, is that true?

Absolutely.

Yes, Senator, and the the amount of earnings that are above the taxable maximum are now

Miss Melito, very briefly, is that true?

Grown.

My members tell a different story, based on our most recent economic trends.

They do not believe that we are seeing now more income and wealth inequality than any time in America has been.

They are in a very uncomfortable period right now.

Um, I that may be the case,

Thank you.

but that doesn't deny the reality that we have more income and wealth inequality. Ms. Altman.

Unquestionably, the data

absolutely shows that

alright let me ask my next question um the ceo of uh warner brothers just as an example just one his name is david uh zaslav made a hundred and sixty five million dollars in compensation uh ceo of blackstone made forty s hundred and twenty six million in compensation we're seeing some of these guys making huge uh amounts in compensation. Question uh to Mister Akbas and I'll go down to the whole panel. Uh do you think it is fair that somebody who makes a hundred and twenty six million in compensation pays the same amount into the social security s trust fund as somebody who makes a hundred and eighty four thousand? Is that fair?

Thank you for the question, Senator. I I think it's important to consider that social security is structured as an earned benefit program. And so while I certainly

I I I I I I know we can go on for hours. I'm just ask you, you're the average person here. Is that fair?

I agree we need to be collecting more revenue from higher income taxpayers as part of the solution to social security's right.

Miss Melito, do you think it's fair?

Social security was set up as a contributary comp act. So as it is now, um, that's that is the system we are working under.

That is the system.

And I think so it was also President Clinton, too, that also cautioned against raising taxes.

I I what President Clinton said is fine, that's not my view. i simply asked you whether it is fair but the ordinary person thinks it's fair that somebody is making a hundred million pays the same amount of the trust for that somebody is making hundred and eighty four thousand do you think it's fair

the way the way social security is established now yep

ok ok miss altman

no i don't and in fact it's even worse jeff bezos one of the wealthiest men in the world can only pays himself eighty thousand dollars so he pays less than someone making a hundred eighty four thousand five hundred dollars.

OK. Um, Ms. Altman, uh, some of my Republican colleagues in one form or another have talked about raising the retirement age, privatizing social security, uh, cutting colas, and reducing social security benefits. Um, what impact would that have on millions of seniors?

As you said in your opening statement, seniors are already and people with disabilities are struggling to get by. They're deciding between food and medicine. And all of those changes that you named would make that struggle much harder. And it would hurt the economy. For every dollar of social security benefits that are paid, it generates two dollars of economic activity. And the r- the reverse is true if you cut those benefits.

I'm Mr. Altman, I want you to say a word about a fact that I don't think is is widely known, but it really is an American tragedy, and that is due to a lack of funding for the Social Security Administration, some thirty thousand Americans with disabilities die every year waiting for the Social Security benefits they have earned. What should Congress do about this? Is the Trump Administration considering making this problem even worse.

Unfortunately, the Trump administration has already made it worse. It's forced out the most experienced um workers and really decimated the agency. I think what Congress should do is immediately enact the um, Keep Billionaires Out of Social Security Act, which provides the the the money that that um pays for social security and the administrative um administration of it, don't add a penny to the deficit, they all come out of dedicated revenue.

Alright, Mister Chairman. You know, there is always a reason given why we should not ask the wealthiest people in this country, who have enormous political power through their super PACs, et cetera, always a reason why they should not be asked to pay their fair share of taxes. But today, As I mentioned earlier, we are living in a rather strange moment in American history. Never before in American history have so few held so much wealth and so much power. And meanwhile, while the people on top have never, ever had it so good, we are seeing senior citizens in Vermont and throughout this country literally struggling to pay for their prescription drugs to put food on the table heat their homes. in the richest country on Earth, we can do better than that. And I think basically bottom line here is this Congress is gonna have to summon up the courage to stand up to some enormously powerful people and their super PACs, and expand social security benefits, extend the solvency of social security, and do that by lifting the cap that currently exists. Thank you, Mr. Chairman.

Mr. Chairman, could I ask a question of Senator Sanders more quickly? senator sanders i'm just i don't know is in your i gather there's a donut hole is this bottom figure indexed to inflation the donut hole will look is right now uh we are at two fifty you're at one eighty four and is it indexed to inflation uh no it's not not ok thank you

senator johnson

hey mr. chairman well we'll we'll never fix this if we're not willing to take a look at the reality of what social security is Again, it it was a forced savings program. What you paid in was supposed was supposed to be invested. And then the beauty of compound interest, you'd be able to collect retirement based on what you paid in. Correct? Mister Akibas?

Excuse me, sorry, Senator, yes.

And again, Americans thought that that money was being invested. But the money was spent, it's gone, right? And in its place was a US government bond put into the trust fund. So how how much value does the US government bond have do you, US government agency? The answer is zero. Right? Cuz when the trustees take that bond to pay out benefits because benefits exceed revenue right now US treasury just has to issue another bond, right?

Correct.

So again, the the trust fund is a fiction. And already we are either borrowing or taking out the general fund to make up the difference between benefits and receipts, correct?

Uh on an annual basis, yes.

So again, th what's unfair about the lifting the cap is it violates the basis, you know, the basic foundation of uh social security, which is a, you know, you you pay in and you get out what you pay in. But but the, you know, so if you wanna turn to total welfare system, that's a different conversation. Um already it's quite the welfare system. Uh I'll I'll submit for the record table one the money's worth ratios for workers with various earnings levels. I'll just talk about the middle three, a low income, medium income and h high income. Uh the people who benefit best are two are one earner couples. They get the most out of social security. So if you're a low income, again this is a very detailed table, but the the people who make out the best is somebody uh born in nineteen seventy three, single income couple, they get three thousand thirty three cents, Out for every buck they put in. OK? Uh, if you're a single man, high wage earner, born in nineteen forty three, you're gonna get sixty three cents out. So again, it's all over the map. But, it's very imprecise in terms of, you know, what you put in versus what you get out. And now what the Democrats wanna do is they just wanna alleviate that, do great harm to our economy, cuz again, small businesses they, you know, it gets taxed at the individual level. you know, uh, mister Bezos is a C corp and I'd love to talk to you about taxing all business income at the ownership level, turning everybody into pastures, then you wouldn't have that problem. Um, but again, you've gotta recognize how grossly mismanaged social security was. I I did a chart, this is a spreadsheet years ago. Had we taken those surpluses, actually invested them into, let's say, stock index fund, which I know we didn't have back then, but something equivalent. Back then we would have something like eight trillion dollars. Would you run up in the in the uh stock market it's probably about fifteen trillion dollars of hard assets. We we'd be talking about increasing benefits, but we didn't do that. So so now the solution for fixing social security is lift the cap and just tax the wealthy who who are who are by the way based on the deal that social security was supposed to be. A dollar put in you're gonna get that plus compound interest. They're not getting it. They're getting sixty three cents. as low as sixty three cents. So, Mister Akibus, just comment on where I on what I the points I made there.

Well, Senator, I I certainly agree that we have reached a point where the significant majority of beneficiaries are receiving far more than they contributed into the program over their lifetime and that's frankly

Yeah, that's pretty that's pretty much the case right now.

That, yes, that is the case and and that's, you know, in part why we are at a point where the program is mismatched between the revenues that are paid in and the benefits that are being taken out. And so we need to find ways on on both sides of the ledger to make those lines grow closer together.

So again, my point is, let's honestly look at what social security was, how it was set up, how grossly mismanaged it was, how economically destructive it'll be to increase, I mean, twelve percent increase in taxes on a small business person. And you may say it's f- wealthy, but you're making two hundred and fifty grand as a small business, you you make half a million, you're putting that additional two hundred fifty thousand dollars into plant and equipment, to grow the business, to to create jobs. Again, un unfortunately, lot of our democrat colleagues don't understand how the private sector works, and what wealthy people do with their money, they invest it, to the benefit of our economy. So again, it starts with recognizing reality how grossly mismanaged social security was, you know let's start looking for real solutions, and by the way, it's not gonna be a calamity, it shouldn't be, I mean, we're already, we are making up benefits. Because benefits exceed revenue. Just because the trust fund runs out doesn't mean that we won't be able to or shouldn't plus up benefits to meet the promise, right? It's just the the fiction of the trust fund runs out, and now all of a sudden by law you're supposed to have to reduce benefits, but we won't. What we need to do is reduce the deficit, return to a reasonable pre-pandemic level of spending, so we have the wherewithal to plus up benefits. That's the first thing we oughta do. Reduce the deficit by reducing spending. Thank you. Senator Wyden.

Thank you, Mr. Chairman, Mr. Chairman, uh the Federation of Government employees asked that we put their statement into the record.

With with without objection.

I'd ask you not to misconcept. Thank you, Mr. Chairman, and uh it's good to have our guests here and uh I wanna start with the basic proposition of fairness in social security. Now it is well established that billionaires and trillionaires get to decide when and if They pay federal taxes. But for somebody who works for a wage, I'm talking about a nurse, I'm talking about an electrician, they pay automatically every year. I hope my colleagues will say, and a number of us are on the finance committee, that we ought to have the same rules for everybody. Now, wealthy people who are interested in doing it can call up their lawyer and their accountant and they can say, make sure I don't take a wage this year. I'll be able to live off my loans, these incredible loans I get from their favorable treatment from banks. Question one. Ms. Altman, is it fair that billionaires and trillionaires can avoid paying tax on their income when the working person gets their tax taken out of every paycheck?