0:00:28

e e e e e e

0:03:14

y'all ready good afternoon everyone we will call the the subcommittee hearing to order um pursuant to house rule 11 2G and consistent with the committee president the gentleman from Louisiana Mr Graves is authorized to attend this

0:03:36

hearing and I'd like to thank the gentleman for being here um and all the work he's done to bring awareness to issue and uh to to my ranking member thank you for your consideration of having having him here on the committee

0:03:51

today um we are here today to talk about fairness in the social security system related to the windfall elimination provision and government pension offset the web and gopo as they are known were intended to make Social Security more

0:04:07

fair but for millions of Americans they have fallen far short these two policies were put in place decades ago to prevent unfairness by addressing a flaw in the social securities formulas that results in unintentionally generous benefits for

0:04:22

some people with earnings that were exempt from Social Security's payroll tax under Social Security's normal rules those individuals or couples could receive substantially more generous benefits from Social Security than

0:04:35

individuals and couples who spent their careers paying into Social Security but the weapon GPO share the same flaw e e

0:06:06

150 million workers contributing to the system to get this right and identify a path forward that is fair to all who participate in Social Security so again I want to thank you for being here and now I will yield to my good friend and

0:06:20

ranking member Mr John Larsson from con Connecticut for his opening statement well thank you uh Mr chairman and I'm glad that we're having a hearing on Social Security I think it's the wrong bill but nonetheless I think we should

0:06:36

be talking about social security in general something congress hasn't addressed in terms of enhancing its benefits for more than 50 years R Richard Nixon was President of the United States do you think a few things might have happened since then you know

0:06:56

I commend uh Garrick Graves and uh Abigail spanberger and the more than 300 members who have signed on to HR 82 why have they done that they did it because they understand just how blatantly unfair it is but that's only a small segment of what's unfair no

0:07:23

enhancement in over 50 plus years to the nation's number one in anti-poverty program for the elderly and the number one anti-poverty program for children shame on us that we can't even have a hearing we need not only a hearing but we need a

0:07:48

vote people ought to know where their Congress stands imagine this 10,000 Baby Boomers A Day become eligible for Social Security A system that hasn't been enhanced since 1971 10,000 a day and with wealth disparity growing even

0:08:16

greater The Genius of Franklin Delo Roosevelt prevails even to this day except they relied on Congress doing its job a job that Eisenhower and Nixon did but has not been taken up in over 50 years now my colleagues I could go down the list here

0:08:47

of everyone on this subcommittee and tell you exactly how many social security recipients you have how much money comes into your District monthly for them nobody is getting Wealthy on social security for 40% of all retirees in this country it's

0:09:11

the only benefit they have and Congress the only body that can change that has done nothing nothing so my good friend uh I think it's important that we're having this discussion I support the intent to repeal both web and GPO but I believe it

0:09:41

should be paid for as it is in Social Security 2100 so that we can also derive and not only extend Social Security solvency but address a number of the issues including more than five million of our fellow Americans who get below poverty level

0:10:05

checks at this time of wealth disparity below poverty level checks from their government they were told that if they paid into a system don't worry it'll be there for you you know what for the most part that's true and we don't have to go

0:10:23

back to 1929 anymore we only have to go back to 2008 2009 when people could see their 401K became a 101k and during that same time Social Security never missed a payment not a pension payment not a disability payment not a dependent

0:10:48

payment or a spousal payment it's why Republicans and Democrats and Independence overwhelmingly support its enhancement why can't we come together and say yes look there's no need to study this there only two things you can

0:11:10

do you can either cut benefits or raise revenue can talk talk everything you want but at the end of the day those are the only two things that you can do that are going to have a direct impact on people I agree with President Biden

0:11:30

let's lift the cap on people over 400,000 that not only extends solvency Beyond 2066 but it also pays for a number of enhancements including letting nobody retire into poverty including not taxing people on their social security who

0:11:52

continue to work after they retired because they have to Mr chairman we need to bring up Social Security 2100 we need the debate on that I welcome all the ideas we've adopted every good Republican idea and put it into Social Security

0:12:14

2100 including most recently Mr Buchanan's as well so with that I yield back thank you Mr lson um next I have the privilege of introducing our Witnesses again thank you all for taking time to be here with us to help us work through these issues uh first Dr

0:12:32

Jas Jason fitner Chief Economist at the bipartisan policy Center uh Rachel greszler is a visiting fellow in Workforce and at the economic policy and Innovation Center Nancy Alman is president of Social Security works and

0:12:49

Dr Charles blahous is the J jfish and Lilian F Smith chair and Senior research strategist at the mercanton Center at George Mason University it's a mouthful um thank you for joining us today your written statements may be part of the

0:13:08

will be made part of the hearing record and each of you will have five minutes to deliver to deliver your oral remarks Dr fitner you may proceed when ready thank you sir uh good afternoon chairman Ferguson ranking member Larson and

0:13:21

members of the subcommittee thank you for inviting me to testify today my name is Jason ficner and as Mr Ferguson said I'm the chief Economist at the bipartisan policy Center but I'm also the executive director of the retirement

0:13:33

income Institute with the alliance for Lifetime income as well as a policy fellow with the Stanford Institute for economic policy research and a research fellow with the center for Financial Security at the University of Wisconsin

0:13:44

I'm also on the board of directors of the National Academy of social insurance the finra foundation and a member of the Puerto Rico pension Reserve trust where I serve on both the pension benefits Council and the pension Reserve board

0:13:57

previously I served in several positions Social Security Administration including Deputy Commissioner Chief Economist and all the opinions I express today are my own who do not necessarily reflect the views of any organization with I might

0:14:09

be Affiliated uh I'd like to begin by thanking chairman Ferguson and ranking member Larson also for your point for the leadership you both provide in ensuring that important public policy issues involving Social Security get the

0:14:22

attention and debate they so deserve and that ideas and viewpoints from all sides are aired in the collegial productive and respectful manner it is truly a privilege for me to be testifying before the subcomittee today and with my

0:14:34

colleagues here as well uh in my written testimony submitted for the record I focus on three key issues first I explain how the current law windfall diation provision or weap is overly complex and unfair second I discuss how

0:14:47

reforming the social security benefit formula would improve the Simplicity and fairness of the web while still maintaining the original public policy purpose though most of my testimony focuses on the web the related government pension off offset or GP has

0:15:01

similar complexity and fairness problems that should be addressed in tandem third absent legislative changes to the social security benefit formula I also discuss other potential reforms that would assist SSA in the administration of weap

0:15:14

and goo the key takeaways from my test I'd like you to gather from today are as follows one the original public policy intent of the weapon gopo was to ensure fair treatment between workers whose only earnings are covered by Social

0:15:26

Security and workers with earnings that are not not covered by Social Security it is important to maintain Equity between covered and non-covered workers fully repealing the weapon GOP would violate the principles of fairness and

0:15:38

Equity that these Provisions were intended to protect two unfortunately given data limitations the time the weapon GPO Provisions were first establish in law these Provisions create an overly complex structure right with

0:15:50

what a Comm ISS call perverse incentives this can sometimes result in higher replacement rates for people with high lifetime earnings than those with low life time earnings further the complexity and lack of transparency in

0:16:03

the current weapon GOP Provisions can hinder people's ability to accurately plan for retirement and potentially cause undue hardship for retirees three much good can come from a relatively straightforward change that would make

0:16:15

the social security benefit formula proportional or pro-rated for workers with non-covered earnings this formula would calculate a replacement rate using the current method of determining the primary Insurance amount or Pia taking

0:16:26

into account all earnings covered in non covered but the proportional formula would apply this replacement rate only to the years of covered earnings this change would allow for the use of one benefit formula for all social security benefit for

0:16:40

beneficiaries would be simple to understand and would be fairer than the current system while maintaining the original tent of fairness and Equity of the weapon go Provisions four and finally absent legislative changes to

0:16:52

social security benefit formula Congress can legislate some administrative reporting changes that would better enable the social Administration to administer the weapon GOP such as mandating that each state provide SSA with a file of pension recipients and

0:17:05

the portion of their pension that is based on non-covered work which would address the legal issues SSA currently faces in getting voluntary agreements with the states or two require the Internal Revenue Service to provide a

0:17:17

check boox on the form 1099r to indicate that a person's pension is in whole or in part based on noncovered uncovered earnings and also legislate that the IRS be required to share that data with the IRS that's important the original intent

0:17:31

of the web still applies today however we now have an opportunity to get the formula right for the Improvement of Social Security program and its beneficiaries the bipartisan policy Center has proposed a similar proportional policy reform option as has

0:17:43

many others I would also like to remind the committee that the technical name for Social Security is the old age and survivors insurance program there's also a disability insurance program the key word there is insurance it was never

0:17:56

intended to be a fully re program it is an insurance program we could have a conversation of what that means when thinking holistically about how we should reform so therefore it's a premium not a tax we can talk about that

0:18:08

too Congressman I've got eight seconds left and with that thank you for providing me the opportunity to testify today and I look forward to your questions thank you thank you Dr fitner um miss gror you are now recognized thank you good afternoon um

0:18:24

and I'm delighted to be able to be here today while my written testimony addresses both the weap and the gopo I'd like to focus my remarks on the gopo and how policy makers can enact a remedy that is consistent with Social Security's

0:18:37

intent Social Security's Founders designed a progressive and contributory system that supported the family and the workforce structure of the time in 1930 80% of women were married and only 12% of married women were employed so Social

0:18:53

Security's Founders included espousal benefit equal to half of the primary workers benefit according to Social Security that spousal benefit was meant to quote compensate spouses who stayed home to raise a family and were financially

0:19:06

dependent on the working spouse today fewer than 50% of women are married and 70% of women participate in the workforce which means the spousal benefit is less prominent because most women earn their own benefit the government pension offset

0:19:24

which was enacted to prevent unintended spousal benefits applies to about 700 46,000 individuals or 1% of all beneficiaries the current GPO is imperfect but eliminating it would contradict Social Security's intent according to the Social Security

0:19:41

Administration individuals affected by the gopo receive non Social Security pensions of about 30,000 that's 64% higher than the average social security benefit of about 18,500 so consider couples A and B who have identical earnings histories with

0:19:59

the only difference being that the wife and couple B was a teacher and didn't pay into Social Security instead part of her compensation compensation went towards a non-social security government pension without the GP couple B would

0:20:13

receive 75% as much in Social Security benefits despite paying only 50% as much in Social Security taxes moreover despite having the exact same earnings couple B's total government pensions would be 57% higher an extra $21,000 per year compared to

0:20:33

couple a not surprisingly an urban Institute report estimated that eliminating the weap in goo would not materially affect the poverty rate because most of the benefit increases would go to the highest earners per eliminating the weapon GPO

0:20:50

would violate Social Security's intent to treat workers with equal earnings equally and it would violate Social Security's Progressive benefit structure perhaps most importantly eliminating the weapon GOP would cause Social Security

0:21:03

to become insolvent more than one year ear earlier meaning that 60 million people would receive an extra one year of average $5,000 benefit Cuts in order for a few million people to receive windfall benefits instead of further bankrupting

0:21:20

social security policy makers should Implement a fair and accurate fix basing spousal benefits on an imputed individual benefit that takes into account a person's earnings both inside and outside of Social Security this fix could be paired with

0:21:36

modernizations such as shifting to a system of shared benefit credits for married couples this would also protect spouses who stay home to care for children but who get divorced before 10 years of marriage and therefore don't qualify for

0:21:49

a spousal benefit policy makers should also consider a credit for spouses who stay home with children something like two years of average earn means per child credited to stay-at-home parents while the weapon gopo are relatively small issues they must be

0:22:06

addressed within the context of Social Security's 22.4 trillion shortfall that's $172,000 for every household in America Advocates of expanding Social Security and many other government programs argue that we can simply tax the rich this is mathematically

0:22:23

impossible and economically laughable the Social Security actuaries and CBO say that payroll taxes would have to rise between 27 and 41% immediately and for 100% of beneficiaries just to prevent benefit Cuts in nine years so how would it be

0:22:43

possible to not just prevent benefit Cuts but also increase benefits by raising taxes on just 2% of earners it's not the Social Security expansion act includes $34 trillion in new taxes including massive tax hikes on small

0:23:00

businesses and on people making far less than $400,000 the Social Security 2100 Act is a dishonest gimmick that pairs 75 years of tax hikes with only 10 years of benefit increases in addition to implementing a fair and accurate fix for the weapon GPO

0:23:18

policy makers must address Social Security's imminent insolvency because failing to do so will by default result in roughly $5,000 benefit cuts for 60 million Americans thank you we now hear we now have the pleasure of hearing from Miss Alman you are now

0:23:36

recognized thank you chairman Ferguson ranking member lson and members of the subcommittee you should repeal web GPO as one of the many ways that you should expand Social Security Social Security is the nation's most important

0:23:53

retirement income life insurance and disability insurance but it's benefits are inadequately low even for those not subject to Wego Social Security benefits should be increased across the board as the 2100 act the strengthening Social Security

0:24:12

Act and the Social Security expansion act all due in addition Congress should repeal web GPO and make the other targeted expansions that many of you have championed they include improvements for women low-income workers young people people with

0:24:30

disabilities survivors and others all of that is completely affordable but there is a right way and a wrong way to cover that cost the right way is to require Millionaires and billionaires to pay their fair share if they contributed

0:24:48

just on their earned and unearned income in excess of $400,000 and they contributed at simply the same rate that minimum wage workers and their employers contribute to Social Security that according to the Social Security actuaries raises enough Revenue

0:25:08

to restore Social Security to balance repeal we GPO and expand benefits in other ways as well the absolute wrong way is to cut the very social security benefits that public servants are fighting for the Republican study committee's budget SL

0:25:28

lashes Social Security by $1.5 trillion in just the next 10 years by $73 billion in just the first year alone indeed the rsc's annual budgets will leave public servants along with all other Working Families substantially worse off even if

0:25:50

Congress repeals we GPO in my written statement I calculate the impact of just three of the RS C Cuts I take the example of a public employee who today gets a benefit of just $649 a month if web were repealed the benefit would rise to

0:26:12

$1,038 but if those three RSC Cuts were in effect that $1,038 a month benefit would be just $410 that is $7,500 a year less and it's nearly $3,000 a year less than the employee gets today even with weap instead of repeal if you simply modify web GPO you

0:26:40

should not do so in a way that results in public employees worse off as the equal treatment of public servants act does once fully phased in that bill would cut the benefits of millions of public servants whose benefits are not

0:26:56

affected At All by current law for those public employees affected by current law onethird of them would get lower benefits under the new modified web if Republicans are going to continue to advance these devastating Cuts they

0:27:14

should at least have the courage of their convictions instead speaker Johnson and budget committee chairman Arrington are pushing for the creation of a commission with essentially the power to enact these unpop Cuts behind closed

0:27:30

doors this is a thinly veiled effort to avoid political accountability President Biden accurately labeled the commission a death panel for Social Security the Ways and Means Committee not a closed door commission is the right forum for Social Security

0:27:51

legislation overwhelming majorities of your constituents Republicans indep dependents and Democrats vehemently oppose all benefit cuts and strongly support expanding Social Security paid for by the wealthy you can act with

0:28:10

confidence in the open if you act in accordance with the will of the people if you expand Social Security's benefits including repealing web GPO and you pay for it by requiring the uber wealthy to pay their fair share you will receive

0:28:26

widespread praise and the Gratitude of the nation thank you m Alman thank you for your testimony I have wonderful news for you as chairman of the Social Security subcommittee here we will not be voting on the RSC budget and we have said many

0:28:44

time we have said many times the only way that this gets solved is in a bipartisan open Forum so I just want you to be able to put your head on your pillow at night and rest knowing that everybody on this subcommittee is

0:28:58

committed to working in an honest and bipartisan fashion to solve these problems thank you but that won't help me sleep and well at least that's one less thing you got to worry about no because because I will be worried about that Dr

0:29:12

blah house uh you're now recognize thank you for again for being here thank you Mr chairman Mr ranking member all the members of the subcommittee uh my written statement goes into greater detail but in my oral remarks I just

0:29:25

want to focus on three main points considering concerning the windfall elimination provision and government pension offset first point as long as social security has its current basic benefit design it needs something like

0:29:39

the we and gopo to maintain parity between different participants that's because Social Security benefits are calculated as a function of a worker's earnings subject to the payroll tax any earnings a worker has in non-covered

0:29:52

employment such as certain state or local government service the benefit formula effectively doesn't S so if a household is one spouse who's covered by social security has another spouse who also worked full-time but didn't pay taxes into Social Security

0:30:06

because they were in non-covered employment without the go the benefit formula would mistake that second spouse for a non-working spouse and it would give this couple a bonus of a full non-working spouse benefit as a result

0:30:18

that couple would have much higher benefits than a couple with the same earnings who worked entirely within Social Security other features of Social Security that necessitate something like the WEP are that benefits are based on a

0:30:30

worker's average earnings over their highest 35 years and the benefit formula is Progressive it delivers more generous returns to lower income workers now that works roughly as intended for those who work their entire careers under Social

0:30:43

Security but without a WEP it would not work properly for those who spend part of their careers in Social Security and part earning a state or local government pension if you only worked half your career in Social Security the benefit

0:30:56

formula would think your average earnings are only half what they actually are and would try to give you a much higher return than it gives to someone with the same earnings within Social Security and these are real problems because remember Social

0:31:08

Security is a self- financing system the total benefits it pays cannot exceed the taxes participants contribute so if Social Security gives unintended windfalls to some households that money comes straight from other participants

0:31:21

and many of these unintended transfers would be regressive giving windfalls to higher income seniors at the expense of lower income become participants second Point while the current Provisions fill a clear need they are not Flawless in an ideal policy

0:31:36

world you would have parity your total benefits would be the same whether you spent your entire career in Social Security or half in Social Security and half in an equally generous state or local plan but the current Provisions

0:31:46

don't achieve exactly that they under adjust for many participants and they over adjust for others the WEP tends to hit lower income participants harder than an accurate adjustment would whereas the gopo is relatively more

0:31:59

generous on the low income side the main reason for these inaccuracies is that these Provisions were enacted when Social Security lacked access to non-covered earnings records the provisions do not represent ideal policy

0:32:11

they simply represent the attempt of lawmakers for decades ago to address some inequities to the extent possible within the data limitations of the time third and final Point lawmakers should bear in mind certain principles

0:32:23

when considering reforms one is to distinguish between policy problems and communication problems some of the controversy surrounding these Provisions involves communication problems the provisions are poorly understood and

0:32:35

that can lead to unpleasant surprises when people claim benefits now where the policy is problematic the policy should be changed but policy adjustments can't fix bad communication and policy problems can't be fixed by better

0:32:47

communication information from SSA and from State employers should explain clearly that these Provisions are not arbitrary benefit reductions but adjustments to achieve something closer to equity and certainly any benefit projections workers receive should

0:33:01

accurately anticipate the operations of these Provisions another important principle is the ideal which is parity between workers who split their careers between Social Security and a non-covered pension which the data are

0:33:12

now available to achieve states have been required to report non-covered earnings since 1982 making it possible to replace these Provisions with more accurate calculations going forward finally Do no harm meaning don't worsen

0:33:26

social securities already dire financing shortfall which would impose greater income losses on other participants fortunately some replacement reforms would save money over the long run with the amount of savings dependent on the

0:33:38

reform chosen that would allow legislators to consider permitting current beneficiaries to receive the greater of the old formula or the new one and even to do the same for some low-income future beneficiaries all without worsening Social Securities

0:33:51

financing shortfall in some the WEP and GOP are necessary features in a system with Social Security's basic design but their current forms fail to achieve their intended purposes in large part because they are simplified

0:34:03

approximations reflecting previous data limitations appropriate reforms could result in Greater parity between households with equal incomes increased participants understanding of their benefits and potentially increased

0:34:14

benefits for some current and future low-income households all without weakening system finances thank you very much thank you Doctor um now we're going to go to the question and answer uh portion of this um Dr fitner I'm going

0:34:29

to start with you um as we've heard the alternatives to web and gopo have been considered in the past but some of these Solutions relied on data that the administration Social Security Administration just didn't have as a

0:34:44

former Deputy Commissioner of SSA Does the SSA have the data now that it needs to implement a better version of weapon GPO thank you for the question Congressman the answer in part is yes so we now have at least 35 years of history

0:35:00

for everyone's earnings data so they can do a better job if we Implement a proportional formula to help with a better implementation of weapon GP and Social Security where they still fall short though is data reporting so for

0:35:11

current beneficiaries who are subject to weaper GPO they rely on reporting from the beneficiary voluntary reporting and that's where we get some improper payments and the only way to fix that is through data exchange issues that would

0:35:23

require some legislative intent or to change the formula to proportional so when you think about what you want to do with webgo if you're not going to do an outright repeal then one is to do a proportion formula so everyone gets the

0:35:34

same formula and you can benefit the soci security can adjust and modify and administer the program fairly for everybody or you've got to do something with data exchanges that the states and pension programs report to SSA who's

0:35:46

covered and how much and that way they can actually administer the program okay thank you Mr wrestler given how close the the uh the retirement trust fund is to exhaustion how important is is it to make sure that any solution not only

0:36:00

results in a fair benefit but takes into account the lifespan of the trust fund and when it's and its exhaustion date later this decade and would ignoring would ignoring this issue be fair to anybody here no it wouldn't be fair and

0:36:16

we need to address the program comprehensively because it will be insolvent that is under current law it's not under passing any budget that cuts benefits it's under current law 9 years from now across the board 23% Cuts

0:36:29

whether you are 99 years old and you had a low income your whole life or whether you're a billionaire and you just retired it's going to be across theboard Cuts it's a closed system so anything that you do that increases the cost

0:36:42

today which the weapon GPO repealing them would be $183 billion in added costs and take another year off the solvency of the program that's going to hurt everyone and it's going to be the most significant for the people who are

0:36:54

relying on social security for the largest portion of their income okay thank you uh Dr blahous you did a a great job of kind of explaining you know why this was done and um we appreciate that we've heard now that we've either got to deal with

0:37:11

data exchanges or we've got to change the formula the ultimate goal here has to be able to treat every American fairly and to equalize what's been going on here it is patently unfair for somebody to to benefit more than their fellow American

0:37:30

but it is equally abhorent that we penalize our fellow Americans given the difference between the two or or if if you were in charge can you explain had you rather see a new formula or better use of data exchanges which one do you think creates parody

0:37:50

for our fellow Americans well I I think you need a new formula frankly um and and I will say first of all big picture um the underlying problem here is basically how the underlying social security benefit formula Works we're

0:38:06

talking about data limitations uh the reason Social Securities benefit formula looks the way that it does is also because of of data limitations that basically it's a calculations that's based on your average earnings over your

0:38:16

highest 35 years now that's an issue that makes this whole state and local government employment WP GPO issue complex but that's not the only place where it arises it also arises with people who immigrate halfway through

0:38:29

their careers it also arises with people who might share a household with a higher uh earner and are in and out of the workforce but are making a lot of money when they're in the workforce but the system thinks they're a low-income

0:38:41

person so there's a lot of problems that arise from that so in in a perfect world you would have a different type of benefit formula more like a private pensions where you are acre benefits with each annual year of earnings uh and

0:38:54

you can have a progressive formula to do that uh rather than as a function of your lifetime average earning so that's the underlying problem and if you fix that you wouldn't have to worry frankly about access to non-covered earnings and

0:39:05

all of that now short of that type of fundamental reform of social securities benefit formula the next best thing you can do is to treat people equally uh as a function of their covered and non-covered earnings which requires

0:39:19

Social Security to have uh timely access to your non-covered earnings records in some respects it's actually easier than what social security has to do now because right now the GP is a function of your uh non-covered pension right so

0:39:32

so you need the data exchange for SSA to get access to that information um if you had a properly functioning WP and G Social Security wouldn't need that they would just need timely access to your non-covered earnings records which

0:39:44

they've had since 1982 okay thank you and thank you all for your answers um again as we move through this I think the desire here again is to find the fair way through this so that no American is disadvantaged by this by by

0:40:01

by the flaws that are in this program um and and and to be thoughtful about how we do this with with one of our most beloved cherished and needed programs and with that I will yield to my colleague Mr lson the ranking member for

0:40:15

for five minutes for questions well you'd make me sleep a lot better if we were having actual hearings on Social Security and we were bringing out bills that actually addressed this and we actually had uh we have very bright and

0:40:30

capable people giving testimony thank you all for your testimony but those of you in the audience should know that three of those individuals were selected by the Republican side one by the Democrat side that's the way the system

0:40:43

works that's that's fair but if roles were reversed we would have three people over here that would present our point of view and one that would present theirs that's the way the system is set up so uh my grandfather Nolan used to

0:41:00

say it best trust everyone but cut the cards and that's our responsibility up here is to make sure that everybody gets a fair deal starting with a new deal uh that focuses on what Roosevelt's and T I admire some of the uh information that we heard because

0:41:21

nothing's been done in over 50 years so for God's sake yes there's got to be improvements now Dr you very good you do you think the Social Security Administration uh is funded well enough currently to administer a70 million

0:41:43

program I'm sure the agency would love to have much more additional funding and what I'm going to do is parrot my old boss commissioner Mike asre who when before the Ways and Means Committee and budget committees would say the agency

0:41:55

definitely needs more money to do its Administration but hold them accountable to Performance metrics that's well that's uh that's very logical except that do you realize that as uh we just had uh Mr Ali in front of us said give

0:42:10

me 1.2% do you think the whole country knows that our large number one insurance program for all the people of the country is administered for under 1% but in its Heyday when you were there it was one 1.2% and that's not nearly enough is

0:42:31

there any other governmental agency how do you think the Pentagon would do with 1.2% come on let's get real in terms of what we're talking about here too I love the ideas of the reform but there's never any mention of what has to go

0:42:49

along with that reform in terms of funding the very agency that could probably come up with a number of GR good ideas that would be cost-saving and constructive but if you're going to dance you got to pay the Fiddler and we're long overdue we just simply

0:43:09

haven't met our responsibility Alman you were on the Greenspan uh commission Etc how do you think we faired since 1983 and your remarks you allude to it but I want to give you a chance to talk a little bit more about what needs to be done thank

0:43:30

you the the greens span commission I was the um assistant to um Dr Greenspan and the they and they were a blue ribbon commission there was no fast tracking they sent their recommendations to Congress they went through the full

0:43:46

legislative process and that's really the way it should should happen um so it was Congress that didn't even have to consider their recommendations if they didn't want to they um took them up and afterwards the actuaries found that Social Security was

0:44:02

in full um um actu balance for the entire 75-year valuation period which took us to 2057 so why are the actuar is now projecting the 2030s rather than 2057 well the one the the reason that it's not 2057 the major unanticipated

0:44:25

factor was the income and wealth inequality that we experienced in the 1990s that's and that the um it's been estimated that that has cost Social Security $1.4 trillion dollar over just the last decade that's money that's

0:44:42

stayed in the pockets of the wealthiest Americans rather than being contributed to Social Security which is why I think the right way to address social securities long range shortfall repeal web GPO and do the other very important

0:44:57

um expansions that are included in the 2100 act um is by requiring those with incomes over $400,000 to contribute and I would go even further I would have multinational corporations I would have a number of the um tax loopholes that are identified

0:45:15

in the Biden budget dedicated to Social Security and then you could expand benefits beyond what the 2100 act does thank you thank you Mr lson pursuant to committee practice we will now move to a 2: one questioning Mr krie

0:45:33

you are now recognized well thank you Mr chairman I want to thank the rake member for hosting this hearing following our successful field Hearing in Baton rers Louisiana back in uh November it's really good to have our dear friend

0:45:45

joining the committee Congressman Graves here with us as well the subcommittee's field Hearing in Baton Rouge clearly demonstrated how Social Security windfalls elimination provision um in the government pension office treats

0:45:57

some public servants unfairly we heard multiple multiple stories from public servants who are in or near retirement who were forced who were forced to delay their plans or adjust their quality of life life I mean we heard countless

0:46:17

stories following the hearing my office received an outpouring of inquiries from constituents who are impacted by weap and gopo often the these constituents served as teachers postal workers firefighters law enforcement agents dedicated public

0:46:36

servants you know bottom line should not be treated worse by Social Security than their counterparts um in the private sector so just as an opening statement Dr vickner I noticed from your bio you went to the school up north I I will

0:46:52

have to treat you as a hostile witness um as a given that there's Championship under I understand okay this might be the one area where find agreement I am reclaiming my time go Blue uh so anyway your testimony provides some examples of

0:47:07

how Social Security benefits are calculated and how web further adjusts uh those benefits can you provide us example of how the web can unfairly penalize those same public servants with the non-covered earnings make it quick

0:47:20

because I got a couple other questions yeah I'll I'll make it quick so B basically as Dr blah house mentioned his testimony as well there's basically an average lifetime earnings that is adjusted and then once you get an

0:47:30

average amount it's taken over three Bend points and the first one's a 90% bendo it's applied to a lower level of average income for the web that can be reduced to 40% so in some cases depending on the data it could over

0:47:43

adjust or under adjust and we've talked about the idea of fairness and the idea of equity I think everyone here is trying to find equable treatment equable usually means same so you're trying to find a way to treat like people alike

0:47:57

and that usually means like income amounts total both non and covered and covered earnings so they have a similar replacement rate when they have total earnings covered and right now with the weap we basically readjust it we're

0:48:08

trying to get it closer and sometimes we miss the mark and that's how some of those people can be unfairly benefited I'm I'm going to move to Dr was it blah house blah house um is income inequality got through all the hyperbole

0:48:22

here is it the biggest reason Social Security is facing the financial short shortfall that it is within the 10 years well no it's not the biggest reason there's a shortfall uh there was a discussion earlier about if you look at

0:48:34

the projection error that was in the 1983 projections it's the biggest source of projection error that was the thing they got wrong by the most but the projection error and the problem are two entirely different things the projection

0:48:46

error is actually a small component of the overall problem the overall problem is caused by demographics increasing longevity declining fertility and also there was a series of automatic uh benefit increases that were enacted in

0:49:00

1970s uh that were more rapid uh than could be funded over time within a stable tax rate those things were known in 1983 so if you look at the 1983 projections you could see that they were unsustainable even then they had 75e

0:49:15

solvency as was alluded to but it was large and growing deficits in the out years so within a year or two the system was going out of balance again it was not a sustainable solution so the fundamental problems for the the benefit

0:49:27

growth enacted in the 70s coupled with demographics uh among the projection error income inequality was the largest factor that they missed but that's a small piece of the overall hole okay to thank you for that um I'm going

0:49:40

to go back to you Dr fer real quick do you believe that Social Security now has the data and the ability to accurately calculate the benefits for those impacted by the weap or the GPO again if we were to go to a proportional formula the answer is yes

0:49:53

but if we're going to stick with the current system to accurately do there going to be better data exchanges to avoid having improper payments uh and for the record just so we know he also went on to do other schools not just uh

0:50:06

you of so with that I yeld back Mr chairman thank you uh next we will call on the gentleman from Arizona Mr schwier thank you chairman um Dr Blood house um I want to work through just a couple mechanical things and often my good friend and I we

0:50:24

talk past each other on part of our funding um so so first I I want to touch on one thing um would you agree that the data produced by Manhattan Institute by The Joint economic Economist on the cap just the cap itself not the taxing of

0:50:42

you know unrealized capital gains and those things but if you first do the cap of just $400,000 and up you're only covering 30 some per of the shortfall and if you do everyone you might get half the short shortfall so removing the

0:50:58

cap you know so the billionaire income you everyone gets 12.4% no matter what the income is um that does at very best get you half yeah these these um these details are important because I think there's a lot of misunderstanding out

0:51:16

there about just how much you can accomplish by busting the cap so if you simply obliterated the cap taxed all earnings in America every penny that would eliminate about 37% of the permanent annual deficits so you'd have have close to 2third of the problem

0:51:33

permanent problem still to solve right now you actually some of these proposals to get rid of the cap would do something else which is much more uh fundamentally transformative is that they would sever the connection between taxable earnings

0:51:49

and benefits doct you have to make sure that if you do that you also don't get any additional benefit so you you so so your benefit stays capped but the tax is for everyone and you still only get about 37 well no that

0:52:05

gives you if you if you sever those then you solve more of the problem i' have to you get about half you it would be about half of the permanent problem but but it's it's important to understand that because it's not just the tax increase

0:52:17

that makes the amount of progress that is often cited it is a transformation of how soci security works and there was an illusion earlier to the you know the genius of FD FDR part of the genius of FDR was creating this system where there

0:52:31

was this tie between contributions and benefits so people don't look at it as Ware and so the political Dynamics are very different from welfare uh and there's a reason for that now if you if we took that step of of severing that

0:52:42

connection it's doubtful that the sort of the privileged political status of Social Security would remain what it is so let's use the most optimistic there's no cap at all and no additional benefit and let's say um let's use Manhattan or

0:52:57

one of those that said you get close to covering half the shortfall the other half the shortfall is um in couple the bills out there that would be a 12.4% tax on functionally unrealized capital gains right there assets right there's a

0:53:14

bill that would do two things do you understand how broad that would be is that the value of my real estate going up is that the value of my um retirement account going what what falls into that tax to get to that number see that that

0:53:29

part I cannot answer but what I can answer as a social security analyst is that piece also would not be credited towards benefits so basically that the essence of no it's a true just tax it's right and and that's again that's um

0:53:44

that's very different from the way Social Security is operated historically if you if you look historically at how FDR design this and how bipartisan advisory councils agreed this should be funded uh there was great importance

0:53:56

placed on the principle that the program should be funded by contributions by workers if we if we start subsidizing the program with other forms of taxes that's a very fundamental change to the program it changes nature okay couple

0:54:09

other mechanical things just to get our head around uh I think so far this year Social Security spend is up almost 9% um if if we're looking at the math that means we have the exhaustion of the Social Security trust fund 2033 is that fair right

0:54:27

um we've had testimony in this committee um and this I know concerns Democrats and Republicans that if you were to hit trust fund exhaustion the cbo's number was a 25% cut um and we did the vetting because the we double checked you know there's

0:54:46

some inflation that in that 2033 2034 that would be a $177,400 reduction for a couple um yeah I should have brought I do have the charts on this but it would be fund exha but it would be doubling senior poverty at that

0:55:06

time right I mean I I think it's highly unlikely that such a severe and sudden cut in benefits would be tolerated by I I hope it's immoral but um coming to an an agreement on the actual math because we were trying to figure out how to

0:55:22

model the economic impact of unrealized capital G gains having a suddenly a 12.4% tax on it right you know what does that do to e economic stability and an important thing people need to understand about that Cliff also that 20

0:55:37

some percent sudden cut is not for new claimants it's for everybody for people already receiving benefits historically lawmakers have only been willing to change benefits on a prospective basis not to cut benefits for people already

0:55:51

receiving and so if you look at well what if we only wanted to have uh benefit affect new claims I need to apologize um I sorry I lost track of the clock and sorry Mr chairman it's as we talk about web I'm hoping we do this also in a more organic

0:56:07

fashion where we deal with the stresses in the system um and a number of the other reforms that are there there is a path here all of them are hard and maybe it would be interesting if some of us tried to do hard things and with that I

0:56:21

yield back can I can I just ask a question Mr chairman you keep on saying the trust fund exhaustion as though it's through that's the actual language from the that's the point I'm trying to make is simply this that that trust fund and

0:56:38

the genius of Roosevelt is not exhausted it will be cut as the doctor said by 20% across the board for everyone M because of congress's inaction okay Doctor isn't the language in the the ACT report is ex exha gentleman's time has expired we got

0:56:59

we've got a lot to cover and we and we it is now time to move to my dear friend and colleague from uh New Jersey Mr Billy pasel Mr Pasquel you are recognized wonderful day in the neighborhood Mike well you know I'd like to start off uh Dr fector and each

0:57:21

one of the witnesses is well qualified and was excellent I disagree with a lot of them but doesn't make any difference well Mr frner you said that in your testimony that uh Provisions can hinder people's ability to accurately plan for

0:57:48

retirement well you don't have to plan for your retirement if you're asking people to live longer live longer live live longer and then drop dead what's waiting at the end for the rainbow if you ask them to continue this is more rhetorical I was

0:58:13

ready if you're waiting longer and longer for something you've earned you paid into it's insurance we all agree on that thanks to Mr Larson and some other people both sides they've clarified this is not simply another giveaway program people pay into

0:58:34

this they pay different proportion of what they make but they pay into it so I want you to hold on to that thought and then we we go to uh Miss Alman and thank you for your testimony today but you're talking about how you

0:58:56

you know we've always asked about how you going to pay for this thing you haven't worried too much about that let's be honest when you look at your so-called plan we'll get to that we don't get to it we said and we defined how we're going to pay for

0:59:14

this but you said we all take a look at what Millionaires and billionaires have to pay into the system and we're trying to do that in our whole tax system which should never get to we never reformed the system hasn't been reformed in 40

0:59:36

years Democrats and Republicans have used that term reform in those 40 years but they never reformed the system now you got a two leverage of tax systems here one for this group and the other for the folks that don't make out so well when I was

0:59:55

elected the first question that was asked to me the first meeting I ever went to was a meeting in Wayne New Jersey senior citizens what are you going to I never expected the question what are you going to do about social security Harry my name is

1:00:14

Bill I promise this it's 27 years ago April of 209 six 95 uh I promise this I would never vote to privatize Social Security I've kept my promise there imagine we kept our promise number two I would not vote for an increase in age for

1:00:50

retirement I don't think that's the solution I really don't three I would never vote to cut the benefits particularly in when things increase on the Shelf you need to keep up with that that's why there should never be a

1:01:13

downturn in which you you check year to year and last it's got to be paid for we have to find a way to do it we can't juggle the figures you know people put people in jail for that you know government is very good in juggling they make you

1:01:35

think everything's coming up roses so protected expand nearly 90 years after its creation we still fight about S course even after almost the century many do not accept the program you realize that indeed a group of 80% of my

1:02:02

colleagues on the other side have called for raising the retirement age and tying Social Security to life expectancy 80% what is the most depressing in this whole deal are the over 2 million American public servants who paid their dues in have suffered oh

1:02:30

ho police officers what this includes our retired First Responders firefighters teachers who' seen a reduction in Social Security benefits dear friend Pas your time has expired really it really has we have been we have been uh thoroughly informed

1:02:56

and entertained as we always are with you but I hate to cut you off but it's time to move on to the next one Mr chairman God bless you but this is non-entertainment this about people's lives it is sir thank you for that we'll now move to Mr Estis from

1:03:12

Kansas well thank you Mr chairman and thank you to all our Witnesses for being here today I'm glad we're continuing the discussion about weapon GPO is I'm committed to make sure that we have a fair solution for all hardworking

1:03:24

taxpayers in Kansas including our dedicated public servants have been adversely impacted by these two Provisions weapon goo were put in place to correct an unfair Advantage for a small number of public servants but instead Congress overcorrected and

1:03:39

created an unfair disadvantage for workers and spouses who dedicated part or all of their careers to Public Service even though a small percentage of canons are impacted by these Provisions every instance of weap and

1:03:51

goo negatively impact a teacher a police officer or public servant troubling simply because of the profession they choose they were bearing the brunt of a policy's negative unintended consequences but the right this consequence to write this situation we

1:04:05

can't overcorrect again and land back in the original unfair situation simply doing away with weapon goo returns us back to where 96% of the population funding that unfair Advantage for 4% of the population But ultimately the four

1:04:20

even the 4% who would immediately benefit from a repeal would lose in the long run has been mentioned earlier as it stands right now in the next decade if no actions taken Social Security recipients will start receiving 75 cents

1:04:33

on the dollar when the trust fund whether we want to call it exhausted or insolvent or basically what it is is the trust fund that has been built up when the Baby Boomers were working runs out of money that means that 75 cents on every

1:04:50

dollar is what all taxpayers including those receiving weap and go recipients receive yet repealing weapon goo without providing an alternative reform would hasten insolvency by whole year which would again hurt all beneficiaries at subcommittee's filled

1:05:05

Hearing in Baton Rouge Louisiana last November we heard from dedicated public servants affected by weapon goo who felt that the Social Security Administration did not provide them with the tools to adequately prepare for retirement the

1:05:17

complexity of weapon gopo and the lack of clear communication early in the careers of public servants meant that there were many Americans who were unprepared for the lower than expected Social Security payments while they were

1:05:28

in retirement as Bernie pero a retired firefighter explained at the hearing if you aren't aware of the impact of these policies it can undermine your retirement plans when you have little time to adjust Dr bahous uh absent a

1:05:42

change in the underlying policies are there ways to improve awareness of these policies so that workers can better repair for retirement um most definitely and I I would just accentuate the last problem you were talking about which is that

1:05:56

what we do with a lot of people is we show them a benefit on their benefit statements and then somewhere in the fine print it says oh you might not get this amount and then the amount they get is substantially less we shouldn't be

1:06:07

doing that right I mean we have the ability since SSA has had access to uh covered and non-covered earnings records for a long time to have a weip that can be accurately projected upfront the way they you non-adjusted benefit would be

1:06:23

but we most definitely shouldn't be showing a benefit that the system is not about to pay them so regardless of what we're doing in terms of the policy correction uh the benefit statement should accurately reflect what people

1:06:36

are going to be paid yeah thank you um M gretler and and Dr fitner um why are some workers not covered by Social Security mostly because they're working in other government systems state and local pensions it used to be that

1:06:53

federal workers were also excluded but they were brought in so there are still I believe about 5 million workers who are in jobs that are not covered by Social Security and I would add to that there's a original constitutional

1:07:04

question of whether or not the federal government could mandate a state and local government to contribute payroll taxes or a premium insurance amount to Social Security and with the benefits on education I'm a big fan of Education

1:07:15

those who've known me for years know I've been doing financial literacy for SSA and others the problem with the benefit statement we put out today is even with the reporting we have we cannot give an accurate benefit

1:07:26

assumption for those who might be hit by web because it's based on how many years of non-covered employment you may end up having at the end you can't project Social Security can't project when someone's 35 with one covered year do

1:07:38

they have 20 more covered 15 you don't know until the end so unless we do something with the benefit formula we're not able to change the benefit statement SSA is doing a better job now trying to inform people before this hearing was

1:07:49

called a colleague of mine sent me an email with a note because he got a note from SSA saying you might be covered by web and he's like why did I get this like because he spent seven years working in Japan as a teacher and the

1:08:00

agency noticed you had foreign employment so they but he didn't know what it meant so there's still a connection s say still need to in the education Side Y what what real quickly what percent roughly of American workers

1:08:10

are currently employed by job that's not covered so so so right now you have about 5.9 million Americans um out of the 20 1.9 State local workers who are not covered by Social Security so that comes to about 4.5% of the workforce all

1:08:26

right well thank you and R Tom you'll back chairman um I now recognize Mr fster for five minutes thank you chairman this on uh thank you to our Witnesses I learned a lot about what's going on I appreciate you sharing the

1:08:43

knowledge and expertise of web and also uh of GPO uh these were an acted prevent enacted to prevent workers with non-covered wages from receiving a large benefit rate intended for lower income workers to replicate dual enrollment uh

1:09:00

Dr uh gretler can you talk about dual enrollment and and how that works compared to what GP is doing and what the differences are yes so dual enrollment is for spouses and survivors and children's benefits um in particular

1:09:17

with the government pension offset that applies to spouses who have worked in a job that was not covered by Social Security and so if you were in that non-covered job for Social Security's purposes it looks like you were a

1:09:30

stay-at-home spouse when Social Security designed this in the 30 1930s most married women were stay-at-home spouses and so they created that benefit but what's happened now is that many people who were not stay-at-home spouses who

1:09:42

had a full career in a government job are also getting a spousal benefit on top of their government pension yep and and I think about it I mean so the implementation there's an unfair treatment here right is that a statement

1:09:55

I mean I think about also uh you know teachers firefighters police officers this is where the problem comes in is that a fair statement yes absolutely and I think you noted uh Dr fer that's like 4.5% right I mean those are the people

1:10:08

you're talking about correct all right uh so so if we start looking at at at G GPO and it's meant to replicate dual enrollment uh as a security substitute I mean Dr blahous talk about what is the good the tent here is this good or bad I

1:10:27

mean well it's it's it's necessary correct and um there are um you know again we have more data now that you could do a more accurate calculation Kathleen rig of the center for budget and policy priorities has put out a

1:10:39

paper where she said you know if you if you wanted to do an accurate proportional uh uh calculation for the gpos similar to the one that's been proposed for the WEP she uh showed how that would be done um but the GP history

1:10:51

is actually really interesting because and I don't want to take too much of your time by going into it but but basically it's an outgrowth of an earlier day in Social Security when we used to make very different assumptions

1:11:02

about husbands and wives and their roles in the workforce and so it used to be that if you were a wife without employment earnings it was assumed you were financially dependent on your husband but a husband without employment

1:11:14

earnings had to prove in the courts that they were or basically prove to SSA that they were financially depend on their wife to get the benefit and the courts basically said you can't you know that's not fair right so then they they created

1:11:24

the gopo to get rid of that um sex discrimination basically but now we still have the problem now we still have the problem the original GPO was a dollar for dollar offset yep and they reduce it to a two-thirds offset so uh

1:11:37

both of you Dr grer blah house what is your what is our solution here I mean what is our principal solution what can we do I think for the GP you just assumed that that worker had been in Social Security and you calculate what

1:11:48

would your social security benefit have been based on your earnings levels gotcha and then if your spouse benefit yep is greater than your social security benefit you get it if not you don't or you have the difference between the two

1:12:03

right that that's correct that's basically the proposal that Kathleen roig has put forward from CBP yep yep gotcha thank you one other question you know I'm trying to figure out Solutions here I got my own Solutions in my mind

1:12:14

but we talk about changes and reforms and I got about a minute left Dr blah house in Social Security in general uh what should US policy makers keep in mind when we talk talking about changing and the principles of change I mean what

1:12:29

what are the sacred cows that we got to protect I would urge you to think very carefully about intergenerational effects yep because we have a big shortfall and we have a situation where different Generations are treated really

1:12:42

differently by the system they're either coming out way ahead or coming out way behind according to when they were born so um you know what you definitely should not do is further increase the gains of the generations that are coming

1:12:56

out way ahead as it is by paying them additional benefits that they did not themselves pay for because the other Generations who are already coming out behind would suffer even larger net income losses and that would be my big

1:13:07

plea I think people talk about a lot of things in social security benefit levels progressivity all sorts of things the one thing that keeps getting lost in the shuffle that can't get lost in the shuffle if the system is going to work

1:13:17

is the effect on different Generations bang if I can just highlight that um because it's the arguments are we can't cut benefits we can't cut benefits but at what cost corre and so depending on whether you use the Social Security

1:13:29

actuaries or the CBO you need to increase taxes um by the equivalent of $3,800 to $5,300 for the average household and our children are already bankrupt with the equivalent of the second yep thank you thank you I'll you back I now recognize Miss CH Miss

1:13:46

Sanchez for five minutes thank you I want to thank the chairman and the ranking member Larson for this hearing I just want to ask really quickly the panelists would immigration help with the Social Security trust fund is is

1:13:57

there anybody that disagrees that immigration would help with that so thank you for the question uh the answer is immigration would help but you need to have Smart immigration that's the bottom okay but that's not the question

1:14:07

I asked is would immigration help because everything that I have seen shows that you get bring more workers into the workforce because our birth rate is low you're going to have more money in the Social Security trust fund

1:14:18

anybody disagree okay thank you um I just want to make a real brief comment on the we used to assume that every woman was a stay-at-home spouse and now more women are in the workforce as a working mom I work and I'm also a

1:14:34

stay-at-home mom because I do the job both jobs I cram them into the 24 hours that I have so maybe we shouldn't readjust the social security benefit for women I'm I'm just saying but this hearing was called to look at two very

1:14:48

harmful Social Security rules the windfall elimination provision and the government pension off offset and in instead of proposing Solutions my colleagues across the aisle have proposed cuts to Social Security benefits time and time again the

1:15:03

Republican study committee's 2025 budget plan Cuts Social Security by $1.5 trillion in just the first 10 years and that's nearly double the proposed Cuts in the PRI their prior budget the Republican Witnesses have long records

1:15:19

of calling for hiking the retirement age up cutting the cola imposing across the board benefit cuts and privatizing the system cutting benefits is not the fix here public employees deserve to reap the benefits that they've earned because

1:15:34

many employees don't even know these Provisions will affect them it comes as a complete surprise when their retirement benefits are so low I'm sure that all of my colleagues on this day have constituents with these stories

1:15:47

because I hear them at every single uh public than I do and I give one example gwendelyn Jones is the president of asme chapter 3 in Los Angeles she served the Los Angeles Superior Courts for 27 years and retired in 2015 when she retired she found that the

1:16:04

windfall elimination provision took away a substantial amount of her monthly social security check Miss Alman you spoke to the Republican study committee plan which includes a significant cut to basic benefit levels how would the Republican

1:16:18

study committee's proposed Pia affect people like gwendelyn Jones that I just mentioned if though if the RSC annual budgets were in effect um your constituent Miss Jones would her benefits would be decimated and not just

1:16:32

hers but all of your constituents all the Working Families but it's actually worse because we're talking about the cuts that are in those budgets but those budgets would literally end Social Security as we know it we've been

1:16:46

talking about social security as insurance but what the budgets aim for is a basic flat subsistence level umef benefit for all that would just barely keep people out of poverty um thank you I have limited time so I'm going to try

1:17:01

to squeeze in all my questions go ahead sorry um more women are working now more than ever but due to wealth gaps because women still earn less than their male counterparts for the same amount of work women still have to rely more heavily on

1:17:13

Social Security benefits than men do the average Widow sees a between a 33 and 50% reduction in Social Security benefits after the death of her spouse Miss Alman you mentioned bill that protecting our widows and widowers in

1:17:27

retirement act as a potential expansion for those struggling with the loss of a spouse would the Republican witness's proposals allow for these same benefits for widows and widowers no and in fact the RSC proposes to actually eliminate

1:17:41

those benefits for those earning over $85,000 so you're right your proposal will lift people out of poverty the the other proposals would push people into poverty Republican testimony claims that eliminating the wp and and GP would cost

1:17:56

183 billion over the next 10 years causing Social Security to become insolvent or exhausted earlier than expected ranking member larsson's Bill the Social Security 2100 act proposes applying FICA to earnings above $400,000

1:18:12

a year to offset these costs I just want to give people real life example professional baseball players I'm a big Prof baseball fan and player um in their they make millions of dollars in their contract in their first at bat of the

1:18:26

season they hit the FICA cap and on the rest of their earnings the rest of the games in the season they pay zero into Social Security um wouldn't applying FICA to some of the wealthiest Americans help pay for repealing the wp and GPO

1:18:41

Miss Altman absolutely and also as we were saying it should not that would just make it proportional but the Jeff Bezos has millions of dollars in um investment income every year and that should be subject as well and if you do

1:18:55

that you can um you can not only repeal web GPO and enact the power act but many other reforms as well thank you I appreciate all of our Witnesses and their testimony and I yield back thank you Mr chairman uh want to than again

1:19:09

the witnesses votes have been called on the house floor we're going to take a brief recess and resume as soon as votes have concluded so with that the committee stands in recess

1:19:53

I e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e

2:08:52

the committee will come to order uh I now recognize Congressman stuby for five minutes thank you Mr chairman um we're here today because we recognize that all beneficiaries deserve fair treatment the windfall elimination provision and the

2:09:08

government pension offset were put in place over 40 years ago with the intention to prevent preferential treatment for workers with employment exempt from Social Security this policy impacts about 4% of Social Security beneficiaries but any changes made by

2:09:21

Congress to the Social Security trust fund affects 100% of Social Security beneficiaries neither the wp nor the GP adjust benefits based on a workers's actual earnings and as a result frequently over and undercorrect for the

2:09:34

problem they were intended to address when the wp and GPO were put in place in 1983 the Social Security Administration lacked robust non-covered earnings data SSA is since collected decades worth of non-covered earning data it can now use

2:09:49

to better tailor benefits rather than using an outdated system Social Security Administration now has advanced technology and a lot of data to properly measure earnings I'll start with Mr Charles black house is that how you

2:10:01

pronounce your okay uh in your testim in your testimony you say that the current WEP and GPO have a lack of understanding by participants what are the consequences of this and what steps can be taken to help beneficiaries better

2:10:15

understand well I'd say the most concerning consequence is that it leaves people unprepared for their re retirement and this by its very nature reduces their income Security in retirement people go into retirement thinking they're going to have a certain

2:10:29

level of benefit and it turns out they don't have it um now In fairness to SSA they have taken steps in recent years to improve U the materials that go to participants and there are uh more explanations in these materials that that point beneficiaries to

2:10:47

understanding the effects of the WEP and GPO than previously was the case but I don't think it's nearly clear enough if you look at the basic benefit statement it shows benefit estimates that don't take those Provisions into account and

2:11:00

so people will naturally look at those numbers and think well that's going to be my benefit and then in the fine print somewhere else in the statement you know they might not catch the fact that no this isn't going to be your benefit and

2:11:10

so I ideally they would be sent uh benefit statements that make a more accurate projection of what their benefits are likely to be now no projection is ever going to be perfectly accurate because it always requires anticipating future years of earnings uh

2:11:24

beyond what has been accured to that point but we could do do a lot better than we're currently doing in what ways must Congress be mindful of the Zero Sum effect on all soci Social Security beneficiaries when addressing specific

2:11:36

formulary issues well that's that's a great question because again this is a self- financing system right so it's an income transfer system it's not a system that just invents income out of nothing right any income that it pays to one

2:11:49

person it takes from another person which means that lawmakers have to think really carefully about any income redistribution that takes place within the system if you're going to give one person uh an increase you're giving

2:12:02

someone else a decrease uh in their net income and it's important to be mindful of the effects of that now Social Security in the main works I think roughly as policy designers intend right it's it's it's designed to be

2:12:17

Progressive it is Progressive on balance um and it's designed to have a connection between your contributions and your benefits and it does that but there are glitches and Imperfections along with the progressive redistribution there's a lot of pockets

2:12:30

of regressive uh redistribution there's a lot of places where the connection between earnings and benefits isn't accurate so those things should be attended to is in in your opinion is the SSA capable of administering an

2:12:43

alternative to the WEP such as a version of a proportional formula out loaned in your testimony uh yes I I would say yes they're capable and again I think it depends on what type of replacement you do uh if you were to fundamentally

2:12:55

redesign the underlying benefit formula in Social Security so that it was a function of annual earnings that would be really easy to administer because you wouldn't need access to non-covered earning records at all uh but it soal

2:13:07

security has had access to non-covered earnings records since 1982 technically since 1978 but they don't consider the data from 1978 to 81 to be reliable but um but they should have enough uh to do it at least you know to to uh to send

2:13:21

people for first of all to to calculate the WEP and goo to create greater parity uh between um people who are all in Social Security and divided between Social Security and a non-covered pension but also to better inform people

2:13:35

more accurately what their benefits are likely to be okay in my 20 seconds left Mr fitner Dr fitner you explained in your testimony that the WEP is overly complex and difficult to administer what about these policies is difficult to

2:13:48

administer have you tried talking to the people sitting behind me we were doing that during the break yeah uh trying to explain to my mother that there could be a windfall and she's like you get a windfall from Social Security and the

2:13:58

conversation went down from there uh the nomenclature we use the language is very complicated even terms like the early eligibility age no one wants to be late for government benefits we should call it what it is just is the minimum

2:14:09

monthly benefit age changing the nomenclature can do a lot for Education wind fation provision is a horrible term that no one understands and trying to explain the formula with the Ben points the 90% And much if I haven't lost you

2:14:23

already I'm sure people have tuned off it is a very complicated thing to do where it's easier to explain more of a proportional formula it says you're going to get a pension for each year you worked in covered employment that's a

2:14:32

much simpler formula thank you all for being here today I yield back we are now going to recognize Congressman Arrington who has previously been um uh waved on to the committee recognized for five minutes I want to wave back at you Mr chairman and

2:14:49

say thank you and I want to you know uh say some things that uh I think we all agree Republican and Democrat this is an important safety net for seniors and and um retirement security peace of mind that it's given to seniors for all these

2:15:10

years it's it's it's critical that uh we prioritize addressing this program make it more cost effective more efficient and sustain able for those who are seniors today near retirement and for our children we hardly talk about our

2:15:28

children actually in this town it's always about what we're doing for us the fact is our children are buried under $34 trillion in debt that 34 trillion is a deferred tax on our children and by the way we're going to

2:15:43

add another 20 trillion on top of the 34 we're already at historic highs like record we're not in a world war but we're over World War II levels of indebtedness I'm just telling you I the people that are seniors in my desri care

2:15:57

a lot about their children and their grandchildren and they don't want to bankrupt this country and I'm not saying Social Security is bankrupt I'm just saying there's a reality we have uh to deal with and it's out in the 30y year out it's $140

2:16:12

trillion in the 10 year out 60 cents on every dollar goes to interest alone and in 30 years interest cost on the debt will exceed what we spent on social security so it we're in a we're in a bad way but surely we can step back and As

2:16:32

Americans who love this country and want to do right and recognize that we have different views on how to solve it surely we can come together and do something that that may have some things in there that we would prefer not to be

2:16:46

in the mix to solve the insolvency that's in this 10-year window so that you don't have to suffer an automatic cut that would be disastrous and it and and ridiculous and irresponsible for us and to wait till the 11th Hour will

2:17:02

actually cost taxpayers more so it's fiscally irresponsible to just wait until the roof collapses for us to have to we know what's going to happen John Larson with all his passion and I respect it and he's put it on paper I respect that even more even if I

2:17:20

disagree and in some cases wildly disagree with his way of solving it we're going to have to get in a room and we're going to have to hold hands and leap off the cliff of those who criticize us for doing anything to reform the program because that that's

2:17:38

cutting it in the minds of some folks or revenues which is raising taxes let me ask a panel question it be interesting for me because we passed the debt commission a bipartisan commission to have adult leadership both parties sitting across

2:17:54

the table trying to work this out like like basically almost every American family could do at the kitchen table but we can't seem to do it we're in this 10year window so maybe maybe we can maybe we can rise to this occasion and

2:18:08

make generations of Americans proud raise your hand if you think that the social security more broadly will be addressed the problems with it on a partisan basis raise your hand you think the Democrats are going to where were

2:18:20

the Democrats solving it when they had all the juice for the last few years when they had this White House and the Senate and the in the and the in the house both Chambers lson would have done it if he just gave Larsson The Authority

2:18:33

but his party didn't do it neither did our party there is there's with all due respect there is no basis for that no historical basis it took Ronald Reagan and tip O'Neal to push uh uh to work together to do it and that's I assume

2:18:48

what will happen again let me ask you this how many you think that we'll solve Social Security by purely Revenue measures okay we've got one okay um how many people think it will be purely uh programmatic reforms how many

2:19:05

think it will be some uh uh number of program reforms and some number of payforce with Revenue measures raise your hand yeah uh I got 30 seconds so I'm way off my topic here firefighters police teachers they work their butts off they

2:19:23

serve their Community they save lives they Inspire kids like they in like Miss Becky Taylor inspired me to do what I'm doing today when I was at sophomore in high school and they've been short changed and it's more complicated than

2:19:37

that but for 40 years we've allowed some people to not get what they've earned um I'm not talking about people getting paid too much because there is an equity issue there but for 40 years we can't even fix this issue and and I know I'm

2:19:51

over my time and it's just so hard I've got a bill and Kevin Brady and Richie Neil used to have a a bipartisan bill now it's separated and I got Kevin Brady's part help us work together to do a have a Solomon moment that's bipartisan so we can address this

2:20:08

inequity for the hardest working people who didn't get into their jobs to make a fortune but make a difference please help us with that and put down the put down your weapons your political weapons and and let's work don't youall think we

2:20:21

ought to do that solve that one issue maybe we can build some momentum Mr Casey Mr chairman thanks for the Indulgence maybe we can build momentum off of our fixing this for our our good public servants the chair now recognizes

2:20:35

Mr Fitzpatrick for five minutes I want to thank the uh the chair and the ranking member for allowing me to wave on the committee today to to raise an issue that's very important to me personally and also um the people that I

2:20:45

represent back home um of which one in five of my constituents of reach retirement age and are eligible to collect Social Security benefits and for too long the broken windfall elimination provision in government pension offset

2:20:59

structure has unfairly treated those who served our country and our communities working in the public sector uh while I commend the purpose of today's hearing to evaluate the long-term solutions to this problem I would be remiss if I did

2:21:13

not highlight that an immediate fix has already garnered 20 uh 316 co-sponsors in the house including myself HR 882 the Social Security Fairness Act of 2023 Congress uh can Congress must uh act on this legislation it's overwhelmingly

2:21:32

bipartisan uh which already has the majority of support of also the Republican conference and I believe the time to mark up this legislation is long overdue um I have a few questions uh for Mr ficner uh if I may um how would you

2:21:46

compare the impact of h82 is complete repeal uh of the WEP and the GPO on federal retirees such as our postal workers um to its impact on retired state and local public sector sector employees like our teachers our firefighters and our police officers so

2:22:04

I haven't done a comparison by each group but what I would point out is if you do a full repeal of weapon GP then you go back to the problem you had before 83 which is treating different people with like them treating like

2:22:17

people differently and giving some people a different benefit that they haven't been entitled to based on the formula that is something Congress can do but then you are actually putting in law back again unfair and unequal

2:22:26

treatment and for uh civil uh service retirement system letter carriers with little to no uh private sector experience or a widow WID or or or spousal benefit um it could be significant and unfortunately the GP typically um eliminates most of the

2:22:45

otherwise payable spousal benefits uh for retirees who receive a government annuity um how would a complete repeal of the GP impact spouses and widows and widowers uh to receive their benefits so again for those who are under

2:23:00

non-covered employment like the CRS which we've now transferred referers for most of us who are here including myself they would get full for repeal they would get the benefit from the spouse from Social Security as well as the

2:23:12

pension so they would be getting an additional pension amount that they would otherwise not be afforded to under the current weapon GP system and shifting um lastly here uh remaining with you sir uh millions of Educators

2:23:23

millions of of school staff must take uh summer uh and part-time jobs to prepare for their future retirement um can you speak to how such non-covered earnings um may work in favor or against um these public servants under the current flawed

2:23:39

uh web structure and the current system would a lot for some people if they you could gain the system if you wanted to work sometimes in covered employment in the summer but for some people they actually need the income and so what

2:23:49

they're trying to do is because of the education and complexity of the web for example they don't understand they're going to have an offset and so they're not able to properly plan for retirement and that goes into the very importance

2:23:59

of the education we do that Dr blah house also mentioned as well thank you uh Mr chairman Mr ranking member uh HR 82 again it has um 316 co-sponsors I hope we get to mark that bill up here in committee and I Y back thank you well I want to thank all the

2:24:17

witnesses for appearing here today I want to thank the ranking member the ranking member want to make a closing statement thank you Mr chairman and I want to thank the members who came and I also want to thank the uh panelists for

2:24:30

being here um Mr chairman only have this to say we need to have more of these uh we need to have hearings not behind closed doors they need to be open to the public and the debate needs to be robust you learn something at every one of

2:24:47

these hearings and I think that's what a democracy is all about and if we're going to move forward as my good friend Mr Arrington says you know I don't think we have to jump off any Cliff I I just think we have to do the right thing on

2:25:02

behalf of the American people and uh they demand it and every day we wait and delay it only gets more difficult and more costly but thank you Mr chairman and uh thank the committee well thank you I want to thank the ranking member I

2:25:18

do want to also thank all of our Witnesses for making uh making the time today uh please be advised that all members have two weeks in which to submit written questions to be answered later in writing from all of you those

2:25:31

questions and your answers will be made part of the formal hearing record so with that the subcommittee now stands adjourned thank you thank you

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