Senate Budget Committee hearing on the future of Social Security

[0:00] colleagues and warmly accepted by my Republican colleagues. In a time of great political upheaval, [0:07] there seems to be one thing that we do agree on. The Social Security is one of the most valuable [0:12] programs in America to keep people out of poverty. It allows them to go into retirement years with a [0:20] source of income very quickly. When I was 21, I think, my mom passed away. We owned a restaurant, [0:31] a pool room, and a liquor store, and lived in the back. Neither one of my parents graduated [0:40] high school, but they worked hard and had those businesses. If you own your business, [0:47] you wake up early, and you go to bed late, and you don't take many vacations. I just remember [0:53] that experience of growing up, and well-loved is a very great life. My mom was 17 years younger [1:03] than my dad. [1:03] You always think she's going to be around. Well, life throws you a curveball, so she passes away [1:09] from Hodgkin's disease, and about 15 months later, my dad dies. I've got a 13-year-old sister, and [1:17] people have worse stories than mine. The only reason I tell this is that we moved in with an [1:24] aunt and uncle, and Social Security survivor benefits, they worked in the textile plants, [1:27] really mattered. There's a time in my life where that Social Security check really, really mattered. [1:34] Now, there's a time in my life where I've had to go to work, and I've had to go to work, and I've [1:35] had to go to work, and I've had to go to work, and I've had to go to work, and I've had to go to work, [1:35] and I've had to go to work, and I've had to go to work, and I've had to go to work, and I've had to go to work, [1:35] I could probably do less, get by with less, and that's what it takes to save Social Security, [1:40] count me in. This program is under stress because of demographics. We're looking for solutions, [1:49] so we have Senator Cassidy, who has stepped out and led, and I know Senator Kaine, you've been [1:57] talking about this, and Senator Johnson, it's all about entitlements, right, [2:02] when it comes to spending. So I am glad we had the hearing, [2:06] We're going to hear from Senator Cassidy about his proposal, and I think Senator Whitehouse, [2:12] he stepped out and he's leading too, and we'll hear about his proposal, then we'll do the [2:17] second panel, and I'll be running back and forth between here and judiciary, but this [2:21] is a good topic, and I am glad we're having this hearing. [2:27] Senator Merkley. [2:29] Senator Merkley. [2:30] Senator Merkley. [2:31] Senator Merkley. [2:33] Senator Merkley. [2:34] Senator Merkley. [2:35] Senator Merkley. [2:36] Senator Merkley. [2:37] Senator Merkley. [2:38] Senator Merkley. [2:39] What we know about Social Security is that the sooner you address the growing shortfall [2:46] in the trust fund, the easier it is to address it. [2:50] Yep. [2:51] And over a decade ago I was holding town hall meetings specifically on the question of asking [2:55] people how they wanted to address Social Security, and I wished we'd addressed it then, and we [3:01] didn't. [3:02] We didn't do it under Democrats, we didn't do it under Republicans, but now's the chance [3:06] for us to focus together bipartisanly. [3:08] Thank you. [3:08] fashion and say it needs to be addressed now. It was back in 1935 that President [3:13] Roosevelt told the nation provisions for Social Security are protections for the [3:17] future. It has become such a foundation of ensuring that as Americans age they [3:23] aren't aging in dire poverty. At least half of more senior households rely on [3:32] it for at least 50 percent or more of their income and many Americans really [3:37] have no personal savings at all and are at least 20 percent rely on it for [3:43] basically their entire income post-retirement. So it really is [3:48] protection against senior years lived in desperate poverty. But the provisions for [3:57] Social Security are in jeopardy. The independent estimates by the Social [4:01] Security Administration and the Congressional Budget Office find that [4:05] just six years from now the trust fund is empty. Wow. [4:11] Six years from now. [4:11] Six years from now. [4:11] That's that's like tomorrow. It's right here for any senator running for [4:17] election this year in their term we're going to be facing that the trust fund [4:21] is out of money. And what does that mean? That means that essentially a quarter of [4:26] the payments would have or that all the payments would have to be reduced by a [4:30] quarter and that would be a huge impact for families. You know a lot of a lot of [4:35] folks get Social Security at a at a rate of only about fourteen hundred bucks a [4:39] month. You take away I mean how can you even afford rent? [4:43] I mean it's not a huge amount of money to begin with you take away a quarter of it. [4:48] That's just not acceptable. And it's about sixty eight million Americans that [4:53] now get a check in the mail or electronically shipped into their bank [4:57] account each month. Oregon in Oregon nine hundred and forty thousand Oregonians [5:03] get those checks and about two hundred thousand of them would live in dire [5:08] poverty without Social Security. So it's a really really important that we address this. [5:15] And and not delay any longer. We do have some laws that are in conflict with each [5:20] other. One law says Social Security must pay the full benefits and another law [5:24] says you can only pay the benefits out of the trust fund. Well if the trust fund [5:28] doesn't have the money to pay the full benefits you're either violating one law [5:30] or the other. And if we don't raise more revenue or adjust to make sure that the [5:36] payments can be made and we fund it out of the simply out of general revenues [5:41] we're just adding massively to the debt of this country. [5:45] And we really need to freeze debt as a ratio of GDP with that story for another [5:52] day that we can have additional conversations about. There's many ideas [5:57] about how to strengthen Social Security. This is a chart. We'll be happy to make [6:03] it available to everybody. Try to lay out all the main ideas that are on the [6:07] table right now and there's many many combinations that could be brought to [6:11] bear. And I just encourage this hearing is kind of about becoming familiar with [6:16] that whole set of ideas. [6:17] For us to to wrestle with. So a lot to be considered and we'll hear that in the [6:24] testimony. We'll hear from two of our Senate colleagues today in addition to [6:27] testimony from several experts. And the American people have ideas and priorities [6:32] too. And each year I hold a town hall in all 36 of my counties and this year I've [6:37] had 20 of those town halls so far. And I passed out a survey with listing all [6:43] these sets of ideas and said what do people like, what do they not like. So I [6:47] thought I'd share some of those ideas with you. [6:48] I'm going to share the results of that with you. Raising the cap, 95% support. That is the cap at [6:55] $185,000 of where the premiums are paid. Reduced benefits for the wealthy, 64%. Tax [7:02] investment income, of course very wealthy in America, get their income really not [7:07] from wages so they don't pay Social Security premiums. Raising the tax rate, [7:11] that is the premium rate. Raising the retirement age. You can see a host of [7:17] responses to this set of ideas. I'm going to share a few of those ideas with you. [7:19] I've just been very surprised. I really think this is one of the big [7:22] challenges for the American people to have. I think it's useful to get the [7:24] feedback of American people about what they feel is workable because we've got [7:31] to build political momentum if we're going to tackle this challenge. So the [7:38] reason at the very top raising the cap is because people are aware that you [7:42] know a local firefighter and a billionaire hedge fund manager they both [7:48] have the same cap right now. $184,500. Firefighters and 태***. Those are both [7:49] the same cap. We want $185,000 of tax savings. We want to have real capital, [7:50] $10 billion in our savings. We want to raise the cap, that's what we're doing. That's [7:51] doesn't make that but he pays or she pays on every single dollar they were [7:57] they pay a premium but a very very wealthy individual pays very little that [8:02] means the ordinary Americans pay the premiums all year and the very wealthy [8:07] pay for one day and then the other 364 days they don't pay it at all and it [8:13] seems fundamentally unfair that that is the case and what we've seen over time [8:18] is that the predictions back in 1983 when we passed the last big set of [8:23] reforms was that we were going to have 75 years of solvency and that was [8:29] because it was designed to create premiums on 90% of collective earnings [8:34] but as wealth has moved to the richest people in America we no longer collect [8:39] premiums on 90% so it's a major factor why we're ending up running out of the [8:44] trust fund 20 years earlier than was predicted back at the time those [8:48] reforms were made. [8:48] reforms were passed so another major response is making investment income [8:55] subject to Social Security tax and that again is a reflection of how wealth has [9:00] moved into the the upper echelons so folks are getting their their income not [9:04] from wages they're getting it from their investments and doesn't it make sense [9:10] that that be applied as well certainly the folks responding in Oregon said yes [9:15] that makes sense as well and those two factors alone could solve the challenge [9:18] we're in right now. [9:19] we're facing if we have the political will to to act so the President also has a [9:28] powerful role to play here. He said we will always protect Social Security he's [9:32] going to be putting out a budget very shortly I hope that budget is going to [9:36] include his proposal for how we're going to address that we can then incorporate [9:40] that in the discussions we're having here in Congress. The big ugly portrayal [9:48] of Bill last year or I'll put in less partisan terms that's a President called [9:53] Big Beautiful Bill. [9:55] moved up by six months the insolvency date of Social Security. So another [10:00] reason we're all in this together, let's solve it together. My constituent [10:07] services team reports another challenge and that is with the cuts to these [10:12] administrative personnel in Social Security, the wait times for actually [10:17] signing up for Social Security have increased substantially. People on the [10:22] 800 number waiting one to six hours to be able to talk to someone about signing [10:27] up for Social Security. Field offices, even after the appointment has been [10:31] scheduled, two to three months in advance, are arriving and waiting two to four [10:35] hours to to talk to someone. Applications that should be processed in less than [10:39] 30 days are taking three months or longer. Why? Because thousands and [10:44] thousands of Social Security Administration employees were fired, [10:48] making this a bureaucratic nightmare for for eligible Americans even to just sign [10:55] up. There's one other thing that is [10:58] important to my community and that is that we have a social security team and a [10:58] important to recognize if we address the challenge of the social security shortfall we will solve a [11:06] significant piece of our structural deficit our structural deficit that is the the amount [11:12] of shortfall that we have built into our budget each year is about six percent of gdp solving [11:20] social security would solve a percent and half of that and if we solve three percent of it we then [11:25] can stabilize debt as a ratio to gdp which is very important to the future of our nation so [11:34] important hearing important topic let's find a path forward together thank you uh we'll start [11:41] with uh senator cassidy thank you chairman graham ranking member merkeley and senate colleagues for [11:46] allowing me to participate and for holding the hearing and your opening statements were right on [11:51] um everyone watching everyone sitting here if they live to be retirement age [11:56] will be affected by social by social security and and senator graham's personal story puts a point [12:04] on that this is just not luxury income this is what people need to live so the the according [12:12] to the most recent social security trustees report over the next 75 years payroll tax revenue will [12:19] fall short of covering expected benefits by more than 25 trillion dollars in today's dollar and if [12:26] you factor in [12:26] in [12:26] the inflation that means 674 trillion dollars so by law there has to be a cut so that you balance [12:35] income with the amount of payments being made so by law if this occurs there'll be a 23 to 26 percent [12:43] cut and benefits to seniors and those who otherwise receive these benefits that's according to the [12:49] actuaries the congressional budget office says it'll be a 28 percent cut now we've got to act [12:56] to prevent these cuts [12:57] and get rid of these benefits so right now as senator merkley pointed out the social security trust fund [13:01] bridges the gap we don't have adequate money coming in but the amount of money in the trust fund is [13:06] making up the difference between the outgo but that trust fund is rapidly depleting and as senator [13:12] merkley said will be exhausted in six to eight years so what are the options this is a political [13:20] issue as well as a policy issue we've had the option one which is to do nothing and either have [13:26] a benefit cut of 25 percent or borrow clean or borrow 15 percent of the money we've had we've had [13:30] close to $700 trillion nominally, [13:33] which will put our debt-to-GDP ratio roughly similar to Venezuela. [13:37] We've had the option before presented to us at Simpson-Bowles [13:40] where we cut benefits and we raise taxes. [13:43] Politically, that died. [13:45] It died a-borning. [13:47] There was just no way that was going to pass. [13:50] And then option three we think is a third option. [13:53] We call it the save, strengthen, and secure choice, [13:55] which is what we will do, what Congress has already done elsewhere, [13:59] use a diversified investment fund. [14:01] Now, this new fund would be separate from the Social Security Trust Fund. [14:08] It would be pre-funded with $1.5 trillion [14:10] and invested in the way that your 401K is invested. [14:15] And it's held in escrow over 75 years, allowing the internal rate of return. [14:20] As it does this, the balance in the escrow account [14:24] can offset any borrowing required to pay scheduled benefits. [14:29] So we know the benefit is going to, the borrowing is most likely going to occur. [14:33] Currently, [14:34] we have no means to offset it, no plan to offset it. [14:37] Under this plan, there will be an escrow account, [14:39] which by its presence in CBO scoring would partially offset. [14:44] Now, the good thing about what we're discussing, [14:46] it's been done before by Congress. [14:48] In 2001, the Federal Railroad Retirement System was going insolvent [14:52] because there were more retirees relative to workers. [14:57] Congress, in 2001, allowed their trust fund to be put into an investment vehicle, [15:04] just like Congress did. [15:04] And since then, the corpus used to pay those benefits has grown, [15:10] and now that fund is firmly in the black. [15:13] Every Democrat who is currently in Congress, who was in Congress then, [15:17] including those on this committee and those on Senate Finance, [15:20] voted for that bill. [15:22] The opposition actually came from some on the Republican Party. [15:25] But it's worked out fantastic. [15:27] And so we are modeling this after that. [15:30] I'll also point out that if you work for a corporation [15:33] and they are planning to pay for it, [15:34] they are planning to pay for it. [15:35] They are planning to pay you benefits in the future. [15:37] They have a pension investment fund that does this in the exact same way. [15:41] So we're modeling after best practices in the private sector [15:44] and that which has already worked in the public sector. [15:47] Now, when we poll this, this is overwhelmingly popular with the American people [15:51] in every generation. [15:54] Now, they do want, believe it or not, [15:56] guardrails to keep Congress from messing with it. [15:59] Who would not trust Congress? [16:00] And so we have strict guardrails in here [16:03] that would require that this money be managed, [16:05] in a way which is going to maximize return for the for the federal for the for our beneficiaries. [16:13] Annual audits and full transparency. [16:16] Now, Social Security is deteriorating. [16:19] I will point out that if we had done this 10 years ago, [16:22] it would be solvent. [16:24] The more we wait, the harder it gets. [16:27] So the question is, Mr. Chairman and Mr. Ranking Member, [16:29] are we going to fulfill our obligations to the American people in a way which is actually politically impossible? [16:36] And if we can do it both politically and by policy viable to fix social, [16:40] not just now, but for future generations, [16:43] I think this is a way we can do it on a bipartisan basis. [16:46] Well, thank you. [16:47] That was a very great explanation of your idea. [16:50] And doing nothing is not a very good outcome. [16:53] So thank you very much for being willing to lead on this. [16:56] Senator Whitehouse. [16:58] Thanks, Chairman Graham. [16:59] Actually, let me first thank you for holding this hearing and showing leadership on this issue. [17:05] You are definitely. [17:07] Not a senator who's afraid of big ideas, [17:09] and we have a big problem that is going to require some big ideas. [17:14] Fortunately, they're pretty simple ideas. [17:17] Protecting Social Security has only grown more urgent since our last hearing in the Budget Committee two years ago. [17:25] According to the nonpartisan Congressional Budget Office, [17:28] the Social Security Trust Fund will be exhausted a year earlier than previously predicted, [17:33] in part due to the Republican Beautiful for Billionaires bill last year. [17:37] 2032 is that year, just six years away. [17:41] As we meet today, insolvency is not Social Security's only threat. [17:46] The Trump administration shrank the Social Security administration's workforce by thousands, [17:51] reassigned technical experts to the phone lines with minimal training, [17:55] closed regional offices, made the agency's website less reliable, [17:59] and made it harder to access services. [18:01] That's why Senator Merkley and others are hearing from constituents. [18:05] Then the Washington Post reported that [18:07] one of Ely's comments, [18:08] Elon's little muskrats allegedly planned to take the personal information of millions of Americans [18:14] from Social Security to use at his new employer. [18:19] I predicted that granting unfettered access to these characters would lead to this, [18:24] and now we need to get to the bottom of it. [18:26] Social Security is the bedrock of America's retirement security. [18:29] It's our most effective anti-poverty program. [18:32] It's a lifeline for millions of seniors, their children, and people with disabilities. [18:38] It reaches about 20% of the entire U.S. population every month last year. [18:43] And almost every senior in this country will receive payments from Social Security, [18:48] benefits they earned that let them retire in dignity. [18:54] It's pretty simple. [18:55] Without new revenue, Social Security will not be able to cover full benefits, [19:00] and that will start in 2032. [19:03] It will cover 72% of benefits after that, according to CBO. [19:08] I think we all remember President Trump. [19:10] I remember President Biden's State of the Union address [19:13] when Republicans and Democrats jumped up together in a big huzzah on the floor [19:20] and gave a standing ovation to the notion that cutting Social Security and Medicare was off the table. [19:28] So the only way to extend solvency without cutting benefits or borrowing money, [19:33] which would be also very dangerous, is to raise more revenue. [19:38] It's pretty simple. [19:39] If we still agree on that, [19:41] then there are win-win, common-sense solutions [19:43] that would both extend Social Security solvency indefinitely without benefit cuts [19:48] and make our corrupted tax system fairer. [19:52] Right now, the cap on Social Security contributions means that a tech exec [19:57] making a million dollars effectively stops paying into Social Security in March, [20:04] while a schoolteacher continues to make contributions from her paycheck [20:08] through every single paycheck all year long. [20:11] Thank you. [20:13] The Fair Share Act would fix that by requiring contributions to Social Security on wages above $400,000. [20:20] We can debate the gap between 184 and 400. [20:25] That represents the Biden administration's pledge. [20:28] Right now, people living off of income from their wealth make no Social Security contributions. [20:36] My bill would require those making more than $400,000 in investment income [20:40] to contribute just like those who are working for their income. [20:44] And right now, wealthy owners of pass-through businesses like hedge funds [20:48] and private equity firms can avoid paying Medicare taxes entirely. [20:53] In fact, some programs are designed to do just that. [20:58] So my bill would close that loophole as well. [21:00] Those reforms raise enough revenue to make Social Security solvent [21:05] for the entire 75-year actuarial window, according to the Social Security actuary. [21:13] That is as far as the actuarial eye can see. [21:16] And the Medicare actuary found it would also extend Medicare solvency [21:20] for as far as the actuarial eye can see. [21:24] So we can protect Social Security for all without cutting benefits. [21:28] And we also get to end unfair tax dodges [21:32] that let those at the top play by a different set of rules than everyone else. [21:36] It is a twofer. [21:39] So to Chairman Graham, let me say we can do this. [21:42] It's big, but it's actually not all that hard or complicated. [21:46] And the sooner we do it, the better off everyone will be. [21:50] Thank you very much. [21:52] Thank you. [21:53] Our next panel. [21:54] Thank you, Senator Cassidy. [21:55] Would you please come forward? [22:03] As they come forward, it includes Dr. Molly Dial. [22:08] Is that right? [22:11] Okay. [22:13] She's the Chief of Long-Term Analysis at the Congressional Budget Office, [22:17] where she served since 2004. [22:22] Ms. Karen Glenn is the Chief Actuary [22:25] at Social Security Administration, the one in the know, [22:30] a position she has held since January 2025. [22:33] Prior to this, Ms. Glenn served as Deputy Chief Actuary. [22:38] Mr. Barry Houston is a Specialist in Social Policy [22:42] at the Congressional Research Service, [22:44] where he served for eight years. [22:47] Thank you very much. [22:50] Why don't we start with Ms. Glenn, and the floor is yours. [22:58] Wonderful. [22:59] Good morning, everyone. [23:00] Chairman Graham, Ranking Member Merkel, [23:02] and members of the Committee. [23:04] My name is Karen Glenn. [23:05] I'm the Chief Actuary at the Social Security Administration. [23:08] Thank you for inviting me to speak with you about the financial status- [23:11] Could you pull the mic a little closer? [23:13] I sure can. [23:14] Thank you for inviting me to speak with you [23:16] about the financial status of the Social Security Program. [23:19] I'll cover three main topics today. [23:22] Actuarial status in the 2025 Trustee's Report, [23:26] experience since the last comprehensive reforms in 1983, [23:30] and how Congress is doing [23:32] in the administration can help. [23:34] My written testimony includes additional detail on these topics, [23:38] including a discussion of critical factors for projections into the future. [23:44] My team at the Social Security Administration provides expert input [23:48] to the annual Trustee's Report process, [23:51] including making recommendations for assumptions, [23:53] developing the projections required for the report, [23:56] and preparing the report itself. [23:59] We work closely with the Trustees and their representatives [24:02] on all aspects. [24:04] The 2025 Report was released on June 18, 2025. [24:09] Preparation of the 2026 Report is well underway, [24:13] and it is on target to be released later this spring. [24:17] I will share some results from the 2025 Report [24:20] to provide a sense of the current financial status of the program, [24:24] but note that the 2026 Report will incorporate updates [24:28] to laws, policies, data, assumptions, and methods [24:31] that have happened over the last year. [24:34] Under the intermediate best estimate assumptions [24:37] of the 2025 Trustee's Report, [24:39] program income is projected to be less than program cost [24:43] in all future years, [24:45] so that the combined Social Security Trust Fund reserves [24:48] are projected to become depleted in 2034. [24:52] At that time, 81% of scheduled benefits would still be payable. [24:57] The Old Age and Survivors Insurance, OASI, [25:00] Trust Fund by itself, [25:03] is projected to deplete its reserves in 2033, [25:07] with 77% of scheduled benefits then payable. [25:11] The Disability Insurance, DI Trust Fund, [25:14] alone is projected to be fully financed [25:17] throughout the 75-year projection period ending in 2099. [25:22] The cost of providing scheduled benefits [25:25] is projected to continue to rise through about 2080. [25:29] This rise is largely driven by the changing age distribution [25:32] of the U.S. population, [25:34] with an increasing number of beneficiaries [25:37] receiving Social Security benefits [25:39] relative to the number of workers paying into the program. [25:44] In 1982, the OASI Trust Fund reserves [25:47] were on the brink of being depleted, [25:49] requiring temporary borrowing from the DI Trust Fund [25:53] and the Medicare Hospital Insurance Trust Fund [25:56] to maintain payments to beneficiaries. [25:59] The 1983 amendments were enacted the following year, [26:02] making the changes needed to address the immediate shortfalls. [26:06] The 1983 Trustee's Report indicated that the combined [26:11] trust funds would remain solvent through the next 75 years [26:14] until roughly the early 2060s. [26:17] However, we do now project that the combined trust fund reserves [26:21] will become depleted in 2034, [26:24] which is almost 30 years sooner than expected in 1983. [26:29] There are two main reasons for this shift in outlook. [26:32] First, earnings levels rose much faster for high earners [26:35] than for low earners from 1983 to 2000, [26:39] meaning that a smaller share of earnings [26:42] was subject to Social Security payroll taxes. [26:45] Over that time, average earnings for the top 6% of earnings [26:49] rose by about 62% more than CPI, [26:53] while average earnings for the other 94% of earners [26:56] rose by only 17%. [26:59] Second, the economy performed worse than expected since 1983, [27:02] particularly during the deep recession of 2007 to 2009 [27:05] and the slow and incomplete recovery that followed. [27:08] As a result, the time for further change is now much sooner [27:11] than expected in 1983. [27:14] So, to ensure that Social Security remains solvent [27:17] for further generations, [27:20] Congress and the administration need to act [27:23] as you always have in this country. [27:26] So, to ensure that Social Security remains solvent [27:29] in the past, the math is simple. [27:32] Lawmakers need to take actions [27:34] that will increase programming income by about 1 third, [27:37] reduce scheduled benefits by about 1 fourth [27:40] or some combination of these. [27:42] Changes will need to be implemented [27:44] before the trust funds become depleted [27:46] to avoid the roughly 20% cut that would be needed. [27:51] We are happy to assist you and your staffs [27:54] to develop any potential solutions to those problems. [27:57] Thank you again [27:58] again for the opportunity to speak to you today happy to answer any questions that you have [28:09] chairman graham ranking member markley and members of the committee thank you for the [28:12] opportunity to testify today social security particularly the old age and survivors insurance [28:17] program faces a significant financial challenge cbo projects that in fiscal year 2032 six years [28:24] from now the balance of the oasi trust fund will be exhausted the disability insurance trust fund [28:29] is projected to remain solvent for more than 30 years after trust fund exhaustion the program [28:34] would not have sufficient resources to pay the full benefit amount scheduled under current law [28:39] in a timely manner legislative action would be needed to prevent that outcome [28:44] in the first year after the oasi trust fund is exhausted the resources to pay benefits would [28:48] be about one quarter less than the amount of scheduled benefits cbo projects that gap would [28:53] widen over time many people would be affected about 72 million people roughly one-fifth of [28:59] the population [29:00] are projected to receive oasi benefits in 2033 for many of them social security represents a [29:06] substantial share of income lawmakers could address the shortfall through increases in taxes [29:11] reductions in benefits transfers of resources from the treasury's general fund or a combination [29:16] of those approaches and they could design changes to apply differently across beneficiaries including [29:21] by income level and by age with only six more years until exhaustion changes that materially [29:26] address the shortfall would be significant as required by law [29:30] cbo's baseline projections reflect the assumption that social security will pay benefits as [29:34] scheduled under current law regardless of the status of the program's trust funds [29:38] earlier this year cbo analyzed an illustrative scenario in which benefits were limited to the [29:43] amounts payable from dedicated funding sources beginning in 2032. before accounting for economic [29:49] effects the reduction in oasi benefits under that scenario would total 2.7 trillion over [29:54] the 2032 to 2036 period the budgetary and economic effects of any such scenario would depend on the [30:01] cost of benefits more than those coming in months later as a senior [30:23] that combined with lower net outlays for interest would reduce the total deficit to 4.6 percent of [30:29] gdp in 2030 [30:31] 2.1 percentage points less than CBO's baseline projections. [30:36] Federal debt held by the public would equal 112% of GDP in 2036, 8.1 percentage points [30:42] less than the agency's baseline projections. [30:45] Limiting benefits to payable amounts would also affect the economy. [30:48] In the short term, lower benefits would reduce demand for goods and services and cause GDP [30:53] to decline relative to baseline projections. [30:56] Over time, increased labor supply and savings and reduced federal borrowing would more than [31:00] offset that initial decline and GDP would rise. [31:03] The effects of those changes would not be evenly distributed. [31:06] For instance, if benefits were reduced by the same percentage for all beneficiaries, [31:10] CBO expects that lower income households would reduce their spending and increase their labor [31:14] supply by more in percentage terms than households with higher lifetime incomes. [31:19] In closing, CBO projects that the OASI Trust Fund will be exhausted in 2032. [31:24] Action would be required to prevent that. [31:26] I am happy to answer questions. [31:32] Houston. [31:35] Chairman Graham. [31:36] Rankin-Metzler. [31:37] Member Merkley and members of the committee. [31:39] Thank you for inviting me to testify at today's hearing. [31:42] My name is Barry Houston and I am an analyst with the Congressional Research Service. [31:47] Social Security is the federal government's largest program in terms of both the number [31:51] of people affected and its finances. [31:54] This year, Social Security will pay almost $1.6 trillion in benefits to over 70 million [31:59] beneficiaries and collect roughly $1.3 trillion in payroll taxes from 186 million workers. [32:06] Most of these workers will become beneficiaries. [32:08] The ability to pay full scheduled benefits on time is determined by the financial status [32:14] of the Social Security Trust Funds. [32:16] This financial status is simply the relationship among its revenues, costs, and holdings in [32:22] the Social Security Trust Funds. [32:24] Since 2021, program costs have exceeded program income, making the redemption of Trust Fund [32:30] asset reserves necessary to help pay full scheduled benefits. [32:35] The Social Security Board of Trustees estimates that the combined Trust Funds will be depleted [32:37] by the end of the year. [32:38] The Social Security Board of Trustees estimates that the combined Trust Funds will be depleted [32:39] sometime in 2034, which is fewer than 10 years away. [32:43] However, the Old Age and Survivors Insurance Trust Fund that finances benefits to retired [32:48] workers and their eligible family members is projected to be depleted sooner, in 2033 [32:53] or 2032. [32:55] At that time, continuing tax revenues are estimated to support only about 75% of scheduled [33:01] benefits. [33:02] Absent changes to current law, the program would be unable to pay 100% of scheduled benefits, [33:07] creating a shortfall. [33:09] Lawmakers may choose from a wide menu of changes that can help eliminate the projected [33:14] shortfall. [33:15] Changes are typically categorized as revenue increasing or cost reducing. [33:20] Examples of revenue increasing provisions include raising or eliminating the limit on [33:25] earnings subject to the payroll tax, increasing the payroll tax rate itself, expanding coverage, [33:30] or including other sources of revenue. [33:34] Examples of cost reducing provisions include reducing annual cost of living adjustments, [33:39] reducing growth in initial benefits by changing the benefit formula, or increasing the full [33:43] retirement age. [33:44] However, no one provision is likely to eliminate all of the projected financial shortfall. [33:50] For this reason, many proposals include both types of measures, as did the Social Security [33:55] Amendments of 1983, commonly referred to as the program's last major changes. [34:01] Looking ahead, the timing, degree, and nature of any future changes to the Social Security [34:07] program will reflect the policy objectives of lawmakers. [34:10] Thank you. [34:10] With regard to the timing of any changes, lawmakers will determine when, if any, changes [34:17] are enacted and the speed with which those changes are implemented. [34:21] For instance, many past program changes were phased in gradually, allowing workers and [34:27] beneficiaries more time to adjust. [34:29] However, changes with long phasing periods would generally be less effective when facing [34:34] trust fund depletion in the near term. [34:37] Regardless, changes implemented sooner rather than later would require preventative action. [34:40] With regard to the degree of any changes, lawmakers may choose to address the entirety [34:48] of the projected shortfall, by choosing legislation that would result in long term solvency or [34:53] may choose to address just a portion of the shortfall. [34:58] With regard to the nature of any changes, in 1983, reform proposals focused almost exclusively [35:02] on financing problems. [35:04] Specifically, they eliminated financial shortfall by both increasing revenues and reducing costs. [35:09] This 1985 reform proposed a new policy to eliminate the financial shortfall and cut costs from [35:11] the financial shortfall. [35:12] The 1983 approach may or may not reflect the policy objectives of lawmakers today. [35:17] For instance, lawmakers may want to address the size, scope, and goals of Social Security, [35:23] or lawmakers may want to include Social Security reform as one part of a broader package of [35:28] government-wide policy initiatives. [35:31] At times, prior Social Security reform efforts have involved presidential commissions, many [35:36] of which included members. [35:38] Some commissions, such as the President's Commission to Strengthen Social Security in [35:42] 2001, focused solely on program financing, while others, such as the President's Commission [35:48] on Fiscal Responsibility and Reform in 2010, included Social Security reforms as a part [35:53] of larger government-wide efforts to reduce the federal budget deficit. [35:58] None of the commissions since 1983 led to legislative proposals on Social Security that [36:03] were actively considered by Congress. [36:05] Thank you, and I look forward to your questions. [36:08] Thank you all. [36:09] Very, very informative. [36:10] I've got to run to the judiciary here in a second, so let me just start out. [36:16] In 1955, the year I was born, there were 8.6 workers for every Social Security recipient. [36:26] Today there's 2.7 for every recipient, and in 2040 there's going to be 2.3. [36:34] Well, I don't have any kids, and I'm sort of like one of the reasons I screwed it up. [36:42] It seems to me demographics matter here. [36:44] Is that right? [36:45] Ms. Glenn? [36:47] Demographics absolutely matter. [36:49] They're the biggest driver of the changes in Social Security. [36:52] Unless we have a major baby boom, it seems like we're going to have less workers per [36:58] recipient over time. [37:01] Absolutely. [37:03] Are people living longer now, Ms. Glenn, than they were in 1955? [37:07] People are living longer, but not significantly longer. [37:10] Well, don't say that. [37:12] The answer is yes. [37:15] Well, we're living a little bit longer. [37:17] That's for sure. [37:18] And we're certainly having a lot less kids. [37:22] Yes. [37:23] That's the big factor. [37:24] Okay. [37:25] Living longer and less kids. [37:27] So how do you close the gap? [37:30] Isn't that what we're all here talking about? [37:32] That's exactly the problem. [37:34] Okay. [37:35] So we've got ideas. [37:36] We've got Senator Whitehouse's idea. [37:38] We've got Senator Cassidy and Kaine's idea. [37:41] We just need ideas that go from being an idea to a law. [37:45] Like in 1983, they bought some time. [37:48] Is that correct? [37:49] That is right. [37:52] At the time, they thought they bought about 75 years. [37:55] And they wound up buying how much? [37:58] More like 50. [37:59] Okay. [38:01] Well, at least they tried. [38:03] Barry, Houston. [38:06] Back then, did they extend the age of retirement or not? [38:10] In the 1983 amendments, absolutely, Senator. [38:13] Okay. [38:14] They gradually increased the full retirement age from 65 to 67. [38:19] And that helped the trust fund, right? [38:21] Yes. [38:23] Okay. [38:24] Did they do any means testing? [38:25] There's an argument to be made that they did, in the form of the taxation of benefits, [38:32] of which only— [38:33] But no direct means testing? [38:35] That's correct. [38:36] Okay. [38:37] Now, what do I mean by means testing? [38:39] I'm 70. [38:40] I've got a military retirement. [38:45] Whatever we make is $176,000. [38:48] I'm doing good. [38:50] I get a Social Security check. [38:53] When I was 22, I needed every penny. [38:55] If you need to, like, means test me, that's fine. [38:58] If you need to, like, means test me, you know, count me in. [39:02] I just speak for myself. [39:04] I'm asking people to consider taking a little bit less if they can afford it. [39:08] And there are a lot of people who can't. [39:11] So let's start— [39:12] Isn't that right, Ms. Glenn? [39:13] There are some people where Social Security is their chief form of retirement. [39:16] That's right. [39:17] What percentage of Americans do you think, without Social Security, would be in poverty? [39:23] Oh, that would be a significant number. [39:26] I don't have the value off the top of my head. [39:29] So if, like, Social Security was reduced by 20%, would that put more people in poverty? [39:35] Yes. [39:36] Okay. [39:37] So it seems to me we don't want to do that. [39:39] One choice is, rather than doing nothing, which puts 20% cut, puts people in poverty, [39:49] asking people like everybody here on this to take a little bit less seems to be a pretty good idea. [39:56] In terms of revenue, what's the income cap? [40:01] Right now it's about $100,000. [40:04] $185,000. [40:06] Okay. [40:07] What's the donut hole, Mr. Houston? [40:10] You know what I'm talking about there? [40:12] I do. [40:13] It's a provision included in several legislative proposals that would institute another threshold. [40:20] So there would continue to be taxation—payroll taxation—below the current law threshold, [40:26] and then a donut hole where earnings are not subject to a tax, and then earnings above this new threshold would be taxed. [40:33] I think we heard references to a 401 . [40:35] Yeah. [40:36] $400,000 donut hole. [40:37] And over time, that would eventually close as the current law tax max would overtake it. [40:41] So if you took the entire wealth of the top 1%, would that close the hole, close the gap in the trust fund? [40:50] I'm not sure you said wealth, not earnings. [40:53] Yeah, all their stuff. [40:55] Their cats, their dogs, their house. [40:58] I couldn't answer that. [40:59] What I would say, though— [41:00] Ms. Glenn, would that do it? [41:03] So just taxing more income? [41:06] The income of the wealthy would not. [41:08] No, I'm talking like taking all their stuff. [41:10] Potentially wealth, there's a way to do that. [41:12] Okay. [41:13] How much would you have to take of the top 1%? [41:16] I don't have that number. [41:17] Well, go figure that out. [41:18] Okay. [41:19] You know, we got to get a product that works here. [41:23] So my belief is you can't tax your way out of this, but you do need more revenue. [41:27] My belief is that means testing time has arrived. [41:32] My belief is that maybe you adjust the age one more time. [41:35] We'll talk about it. [41:36] I like Senator Cassidy's idea that avoids a lot of this stuff. [41:39] But the bottom line is you're going to have to do sort of like all the above approach. [41:43] Count me in for anything that gets us to where we need to go. [41:47] I'd like to have this committee lead by example. [41:50] And all I can say is this program means a lot to people. [41:56] I know that because I live that. [41:59] And if we do nothing, then shame on us all because nothing has a very severe consequence on people who can afford it the least. [42:08] Senator Merkley. [42:10] Thank you very much, Mr. Chairman. [42:14] And I wanted to begin, Dr. Dahl, with the work at CBO. [42:22] I think what the chairman started to ask in his questions was if we turn the dial on different solutions, how much do we raise? [42:32] And CBO generally has models in order to estimate, given all the demographics and so on and so forth. [42:41] Have you all gone through and experimented with turning the dial? [42:47] Now, I invite this to explain. [42:50] In 2033, it's estimated that the shortfall will be about $500 billion. [42:55] But then it goes up from there. [42:58] So the question is for each idea, we need to understand not just how much it will raise over a 10-year period or 20-year, but the distributional effects per year. [43:09] Have you all taken individually? [43:11] Yes. [43:12] Do you have any individual ideas, like if you raise the cap from where it is now and you raise it a certain amount each year, how much it will generate per year? [43:24] Does your model allow you to do that? [43:26] It does. [43:27] And we most recently talked about a variety of proposals in the 2024 budget option, what we call the budget options report, the options for reducing the deficit. [43:37] We released that in December 2024, and we will be releasing another version of that report later this year, [43:41] in which we look systematically at multiple different Social Security proposals that are commonly discussed. [43:48] Well, I want to absolutely follow up and say if we're going to have a really detailed discussion, we need to be able to get that information sooner rather than later, [43:59] so that we can look at these questions and wrestle with how do we address that $500 billion in 2033, but also in the years that follow with the different ideas. [44:11] And it's just like with raising the cap, there's been multiple ideas put forward. [44:17] Those ideas have included raising it from where it is now, raising it from $250K, that is only from $250K up, raising it from $400K up, as Senator Whitehouse was referring to. [44:29] And let me also ask, then, if we're turning to our other experts, have you all put together models to be able to do similar calculations, [44:40] on how each idea produces income in specific years into the future? [44:47] Yes, Senator. We have a list of about 140 different options on our website that we update each year, most recently January 2026. [44:57] And do you have it as a per-year impact going forward? [45:02] We do. [45:03] Okay, that's great, because we're going to have to really get into the nitty-gritty of these options. [45:09] And I don't think any of you know that. [45:11] Many of you have been on the – we talk both about the policy side and the political side. [45:17] But the polling is more scant in terms of how public responds to ideas than I would have anticipated. [45:27] And I'm assuming that none of you get into that world of trying to estimate how citizens respond to these different ideas so we can find a viable policy and political path. [45:41] I would say no. [45:43] I don't know how to score the ideas that are brought to us, but we believe it's really incumbent on others to figure out what's palatable to the public. [45:54] And I assume the same, Mr. Huston? [45:56] That's correct. [45:57] We read the same polling data that you receive. [46:01] Yeah. [46:02] Dr. Dahl, sometimes when we do things here that aren't part of the Social Security discussion, they still have an impact on Social Security solvency. [46:12] What impact did the big, beautiful bill – Trump's big, beautiful bill – have on solvency of the trust fund? [46:22] So the 2025 Reconciliation Act moved forward closer in time the exhaustion of the OASI portion of the trust fund in part due to changes in income taxation on benefits and changes in income tax rates in that legislation. [46:38] If we are looking at other legislation in other areas, we will turn to that. [46:43] We will turn to you all to try to understand the impact on Social Security, because often it's not part of the discussion. [46:49] But if we're going to solve this issue, we're really going to have to start wrestling with it. [46:55] Now, one of the things that I've seen put forward is in our 6 percent structural gap – that is, we raise about 17 percent of revenue of GDP. [47:08] About 17 percent of GDP is revenue. [47:10] We spend about 23 percent. [47:13] If we solve the shortfall in Social Security, we'll address about a percent and a half of that 6 percent structural deficit. [47:24] Is that in the ballpark? [47:25] Yes, that's – oh, sorry. [47:27] Sorry, that's about right, yes. [47:28] About right? [47:29] Okay. [47:30] Well, I think that's very important, because that would get us halfway towards actually stabilizing debt as a portion of GDP. [47:36] And if we don't stabilize debt as a portion of GDP, then in 20 years, there's going to be basically no discretionary income. [47:43] Okay. [47:44] No discretionary income for health care, housing, et cetera. [47:46] Many important investments for families in America. [47:49] That's my time, and thank you very much. [47:51] Thanks, Senator Merkley. [47:55] So the title of this hearing is just Social Security, the Discussion of the Facts. [47:59] And I think you've all laid out the basic facts, you know, the grim facts in terms of Social Security. [48:05] So those are pretty well established. [48:07] In my five minutes, I want to establish the facts of the basic intent, because any solutions moving forward are definitely going to be contrary [48:15] to the basic intent of Social Security. [48:18] And we'll start out with the Social Security was initially designed to be a forced retirement plan, correct? [48:25] Where we were going to extract wages from workers, supposedly put them in savings available for those individuals when they retire. [48:34] Is that correct, Mr. Houston, basically? [48:36] That's correct. [48:37] I don't think I would use the forced term. [48:39] Good. [48:40] Back then, the life expectancy was, I think, a little under 62 years. [48:45] And retirement was set at about 65, correct? [48:48] The initial full retirement age was 65. [48:51] That's correct. [48:52] Basically, the plan was set up as an insurance policy in case you were just lucky enough to exceed life expectancy and get into retirement, then you'd have some retirement. [49:03] Correct? [49:04] By and large. [49:05] I think that life expectancy was life expectancy at birth. [49:08] There would be a different life expectancy for people reaching 65. [49:12] Okay. [49:14] But anyway, the retirement age was set pretty close to 65. [49:18] Life expectancy. [49:19] People weren't living much past 65. [49:21] And back then, I've seen different numbers, but I think in 1945, there were about 42 workers for every retiree. [49:31] And Senator Graham said back in 1955 it was 8.6 to 1. [49:36] And now we're below 3 to 1. [49:39] Okay. [49:40] So, again, these are just structural problems. [49:43] Had we actually taken those savings? [49:50] You know, the money we extract from wages and put them into something that was an asset to the federal government. [49:57] Because I would argue a U.S. government bond held by the U.S. government is not an asset to the U.S. government. [50:03] It's like if you took out a piece of paper and wrote $20, stuck it in your pocket and said, I got $20. [50:09] No, you just have a note. [50:11] It's a contrary account. [50:13] It's an accounting convention, correct, Mr. Houston? [50:15] It's intergovernmental debt. [50:17] Right. [50:18] So, when the trust fund redeems those bonds. [50:21] Redeems those bonds to pay off benefits, the Treasury has to immediately issue another bond. [50:26] So, again, the trust fund, from my standpoint, is a fiction. [50:30] Now, if you're in the private sector, let's say you're a money manager, and you had investors give you $1,000. [50:40] And you spent that $1,000, but in place of it, you put it on a piece of paper, I owe myself $1,000. [50:48] That would be called a Ponzi scheme, and that would be illegal, correct? [50:53] I suspect in that scenario it would be. [50:56] Right. [50:57] So, what we have, what we've created here is a legal Ponzi scheme. [51:01] Have you ever, anybody done a calculation? [51:03] Because I've done this repeatedly. [51:05] Had we taken those surpluses all those years and invested them, like Senator Cassidy's proposing now, into something like an index fund? [51:13] I know they didn't exist back then, but if you, you know, do a calculation. [51:17] Anybody have any idea how much money we'd actually have in a trust fund in assets that we could actually call upon to pay benefits? [51:25] Has anybody done that calculation, Mr. Houston? [51:27] We've written some reports on it, pulling from some previous research that looked at previous times when there was a lot more money coming into the system in the 80s and 90s. [51:36] So, what number did you come up with? [51:38] Well, I didn't come up with the number, but it was outside researchers, but it more or less, it needed to put the program in a much better financial position. [51:44] It's trillions and trillions and trillions of dollars. [51:46] My guess, you know, I did a few years ago, it was probably $7 or $8 trillion. [51:50] My guess with the stock market is probably $10, $15 trillion. [51:53] So, the bottom line, I think it's important to understand how grossly mismanaged it is. [51:56] How grossly mismanaged Social Security has been. [51:59] How the American people were basically lied to that, no, this money is going to be put aside, set aside for savings. [52:06] No, it was spent. It's gone. [52:09] Now, Ms. Glenn, your Social Security, your agency publishes something called money's worth ratios. [52:20] Because I hear it all the time. [52:22] So, that's my money. [52:24] The fact is, the vast majority of people get more out of Social Security than they ever put in, correct? [52:30] That is correct. [52:32] They get more than they pay in. [52:34] Okay. [52:35] So, again, I think it's just important for people to understand that. [52:38] And, of course, it's very complex. [52:40] I've got five different categories. [52:42] Low earner, low income, medium, high income, maximum earner for single males, single females, one earner couples, two earner couples. [52:50] Yep. [52:51] It varies very much by family type and earnings. [52:54] But the vast majority, medium and below, get, some of them get a lot more. [53:00] You know, 3.6, 3.8%. [53:02] Some of them get 3.6 dollars per one dollar paid in. [53:04] Some of them do. [53:05] And that's by design of the program. [53:07] Okay. [53:08] So, it's just important. [53:09] As we're moving forward to tax the wealthy, decrease benefits mean test, people need to understand we're moving from what was supposed to be a forced savings plan where you're going to get back what you put in to a more generalized welfare plan. [53:28] We're going to have to take out of the general fund. [53:30] We better have the wherewithal to pay for it out of the general fund. [53:33] To plus out those benefits. [53:35] And again, I want, like everybody, we want to make sure those people get those benefits because they're relying on it. [53:41] But this has been so grossly mismanaged. [53:44] And we have to be honest with the American people in terms of what's going to have to be done here. [53:48] I'm open up to compromise. [53:50] But you have to first start with the facts. [53:53] But I've run out of my time. [53:55] We'll next go to Senator Wyden. [53:57] You're ahead of me. [54:00] You were up here on the thing. [54:02] But I'll go to. [54:03] I can ask one question. [54:04] I'll let my colleagues who've been so gracious. [54:08] I wanted to ask about something we bump up against in the Finance Committee all the time. [54:14] And that's the question of fairness and how we are going to bring fairness to this debate. [54:21] So you've got two major groups. [54:23] You've got the working person, a firefighter, a teacher. [54:27] They get a wage and they pay FICA taxes. [54:30] They see it on every single paycheck. [54:32] Wealthy people who are smart. [54:35] Call up their lawyer and accountant and they say, make sure I don't take a wage this year. [54:41] I can live off my borrowings. [54:43] I can buy, borrow, die. [54:45] I can do a variety of different things. [54:47] So one of the big challenges in this, and a lot of my colleagues, Senator Kaine, for example, has spent enormous amounts of time working on this, is going to be how do we put our arms around something that's fair. [54:59] I've introduced a bill called the Billionaire Income Tax, which has 23 senators on it. [55:04] That's fair. [55:05] That's one way to go. [55:06] Other colleagues are going to have other ways to go. [55:08] So I'm not going to ask you about any bills. [55:10] But how do we get a sense of fairness as we go into this debate? [55:15] Because I'm looking at my colleagues who have spent a lot of time on it. [55:18] That's what we do with the Finance Committee. [55:21] And I want to make sure that we can have a real debate about fairness as we tackle this hugely important issue. [55:27] And that will be my sole question. [55:28] Guests. [55:29] Well, let me jump in. [55:34] I think none of us on this panel is really a policy person per se. [55:38] We are here to score the ideas you come up with. [55:42] But we're certainly here to give you the information you need to make those policy decisions. [55:48] What would you do to have a policy that allowed us to say Democrats and Republicans, this is fundamentally fair. [55:55] Tough issue. [55:56] Want to be fair to both groups that I've just described. [55:59] It's a great question. [56:00] I think we need to look at workers and beneficiaries and at all earnings levels. [56:05] I would say that when the Congress is in office, [56:09] when the Greenspan Commission was working on their consensus package, [56:14] there was a general commitment to make what they termed fair as far as being balancing revenue increases with cost reductions. [56:22] And at the time, they seemingly achieved that. [56:25] Okay. [56:27] Mr. Chairman, thank you. [56:28] And we're going to have that debate. [56:29] And I know you'll be part of it. [56:31] We've had pretty spirited discussions and look forward to talking about the real issues. [56:35] And I think one of them is fairness. [56:36] And I appreciate it. [56:37] Thank you, colleagues. [56:38] Thank you, Senator Wyden. [56:39] Senator Marino, you're next. [56:41] Let's start there. [56:42] I wasn't expecting it, but I think my colleague brought up a good point of fairness. [56:48] Let me just point out that right now it is optional for you to pay more money in taxes, by the way. [56:55] You can definitely do that, somebody who's worth a lot of money. [56:57] You're allowed to pay more money in taxes. [56:59] So maybe recommend that. [57:01] Number two, I would say that when it comes to fairness, [57:04] why don't we withhold our paychecks while we're withholding the paychecks of 260,000 DHS employees? [57:10] Why don't we do that? [57:11] That seems fair. [57:13] It doesn't seem fair that we get paid $175,000 a year and yet you walk by with an escort [57:19] skipping the lines of people who have been waiting for hours to the airport. [57:23] Nobody does that. [57:24] Nobody does that. [57:25] You want videos? [57:26] I'll send it to you. [57:27] We'll send it to you. [57:29] Raise your hand if you've done that. [57:31] You drive home. [57:32] You drive home. [57:33] But I fly and I never, but I fly a lot and I never skip the line. [57:36] Good for you. [57:37] Talk to your colleagues. [57:38] Talk to your colleagues. [57:39] Talk to your colleagues. [57:40] They do that all the time. [57:41] They do that all the time. [57:42] Don't say that all of us skip lines. [57:43] I didn't say all. [57:44] We don't skip lines. [57:45] Don't paint a fake. [57:46] Are you holding your paycheck? [57:47] Don't paint a fake picture. [57:48] Are you holding your paycheck? [57:49] No, because you're not paying TSA agents. [57:51] We're asking you to take yes for an answer. [57:52] But you're not willing to hold your check. [57:53] Take yes for an answer, Bernie. [57:54] You're not willing to hold your check. [57:55] Take yes for an answer. [57:56] Are you willing to hold your check? [57:57] Okay. [57:58] Okay. [57:59] San Marino. [58:00] Why don't we reclaim your time? [58:01] I will reclaim my time, but just for the record, let the record show the answer is he's not [58:06] willing to hold his paycheck because the Democrats blocked that. [58:10] But you have no problem. [58:11] You guys are blocking it. [58:13] You completely object to unanimous consent on TSA all the time, so get your facts right [58:18] or quit issuing these objections. [58:19] I will see you at 6 o'clock on the floor, and we'll have that discussion in front of [58:23] the American people at 6 p.m. [58:24] We'll put up another unanimous consent. [58:26] You'll block it again. [58:27] I look forward to that debate at 6 o'clock tonight on the floor. [58:29] Block it eight times now. [58:30] In the meantime, I know you are not about following rules like people coming to this [58:35] country illegally, but here, hopefully, we follow rules and let senators speak their [58:38] turn. [58:39] So if I could ask you to turn your microphone off. [58:41] And allow me to have my five minutes. [58:43] Please proceed. [58:44] Don't issue accusations that are unfounded against your colleagues. [58:49] Make your appointment to do this on the floor. [58:51] Why don't you put two more minutes back on Senator Marino's time. [58:55] Well, thank you. [58:56] Sorry that you had to see that, but it's pretty disgusting that there's double standard here [59:00] and that people get preached about fairness by people who have a net worth of hundreds [59:04] of millions of dollars of inherited wealth. [59:06] Anyway, moving on, let me just be crystal clear on a couple of things. [59:09] There is no law. [59:10] There is no scenario in which I would support increasing the retirement age for Social Security. [59:15] People who spend their days in offices are the ones who think that. [59:19] People who work all day in manufacturing environments, where their body says no, even though their [59:25] mind may say yes, is why we would absolutely never see an increase in our Social Security [59:30] retirement age. [59:31] I just want to make that clear. [59:33] Number two, what would be the impact, Mrs. Glenn, of not having a cap at all? [59:40] At all on Social Security wages? [59:45] That would solve about 60% of the shortfall. [59:50] So I think that's something that we should do. [59:52] There should be no reason why we should have a cap at Social Security wages. [59:56] If you make income just like anybody else, you should have to pay Social Security like [1:00:03] any other working American. [1:00:05] So that solves 60% of the problem. [1:00:07] The next one would be means testing, meaning that if you have a certain amount of assets, [1:00:12] or a certain amount of income, that you are disqualified from receiving Social Security [1:00:16] because you're doing fine. [1:00:17] You don't need this extra supplement. [1:00:19] To me, this seems like this is a program designed to help working Americans retire in dignity. [1:00:23] Would you agree, Mrs. Glenn? [1:00:25] Depending on the level you set that means test at, it would certainly have an effect [1:00:32] on . [1:00:33] I mean, let's not disqualify multimillionaires like some of my colleagues on the other side. [1:00:37] And then the last one is, why don't we look at cost savings from eliminating waste, fraud, [1:00:42] and abuse? [1:00:43] What does that mean? [1:00:44] You didn't answer my question on the second. [1:00:46] What would the means testing do? [1:00:47] So 60% of the problem is fixed by not having an income cap. [1:00:51] How much does means testing? [1:00:53] Let's say we set it at $1 million a year in income and $10 million in assets. [1:00:58] Yeah. [1:00:59] I don't have that number off the top of my head. [1:01:01] I can guess for you. [1:01:02] Give me a wild guess. [1:01:03] Let's say 20%. [1:01:04] So we're 80% of the way there. [1:01:06] And then how about waste, fraud, and abuse? [1:01:09] As far as I'm aware, there's no significant effects on the trust funds from wage fraud. [1:01:14] Waste, fraud, and abuse? [1:01:15] And how about having non-citizens receiving social security? [1:01:19] Non-citizens do not receive social security. [1:01:21] Not at all. [1:01:22] There's not a single solitary non-American citizen that's received. [1:01:25] Is that your testimony? [1:01:26] By law, they are not allowed. [1:01:27] The law says we can't speed. [1:01:29] Yeah. [1:01:30] I certainly can't speak to the individuals. [1:01:32] Okay. [1:01:34] Thank you, Mr. Chairman. [1:01:35] Senator Kaine. [1:01:38] Thank you, Mr. Chair. [1:01:39] And I want to thank you for holding the hearing to Senator Merkley and Senator Graham. [1:01:43] This is really, really important. [1:01:45] It's easy to fall into partiality. [1:01:46] It's easy to fall into partisan corners on a lot of issues, including this one. [1:01:50] But we have to be talking in an open and bipartisan way about solving the problem that y'all have [1:01:56] laid out in such very clear detail. [1:01:59] And just as in 1983, where the solution was bipartisan, a Republican president, a Democratic [1:02:04] House majority, a Republican Senate majority, there's no solution to this if we can't find [1:02:09] a bipartisan solution. [1:02:11] I'm a supporter of the Cassidy proposal. [1:02:13] And I think he describes an innovative solution. [1:02:16] That I think can be an ingredient. [1:02:18] I don't believe it's the full solution. [1:02:20] But I think it can be an ingredient to this solvency crisis. [1:02:24] He described the policy concept itself. [1:02:26] So I don't need to repeat it. [1:02:28] But I want to describe why I think it should be part of a bipartisan solution. [1:02:32] Let's be candid about the scale of the problem. [1:02:35] You guys have laid out the numbers and other colleagues have as well. [1:02:40] CBO estimates that between 2027 and 36, the gap between Social Security payroll costs, [1:02:44] the gap between Social Security payroll taxes and benefits will total $4.2 trillion over [1:02:50] the 10-year period. [1:02:51] That's a big number. [1:02:53] Just for comparison, when we passed the Democratic Build Back Better bill, that was about $2 [1:03:00] trillion in revenue increases. [1:03:02] That was a lot of money. [1:03:04] And when the Republicans did the reconciliation bill, that was about $1.4 trillion in spending [1:03:10] cuts. [1:03:11] A lot of money. [1:03:12] It was hard to get to those numbers. [1:03:13] So to get to $4.2 trillion to cover this deficit is going to be even harder. [1:03:18] And that's why the proposal that Senator Cassidy has put forward that I support, I [1:03:24] believe it can be a positive ingredient in the solution, and for three reasons. [1:03:28] First, it can be scaled up or down. [1:03:31] The amount of borrowing or revenue that we use to fund this investment fund, the proceeds [1:03:37] of which go into backstop Social Security, can be scaled up or down to help us solve [1:03:42] the solvency gap, likely in combination with other proposals that are on the table. [1:03:49] The Cassidy proposal is, in addition to, not a substitute for any of the current elements [1:03:56] of the way we fund Social Security. [1:03:59] And that addition element that produces additional revenue through earnings is very, very important. [1:04:07] Second, the proposal can protect benefits. [1:04:10] As I've said, Senator Moreno has said. [1:04:12] And Senator Johnson and others. [1:04:14] We've all said we don't want to see that 19% benefit cut in 2033. [1:04:19] We have to figure out a way to avoid that. [1:04:22] And it doesn't condition the benefits on the investment returns in the fund. [1:04:27] Its main focus is using that fund to ensure a smooth path forward for current and future beneficiaries. [1:04:33] And finally, it builds on other successful examples. [1:04:37] The National Railway Investment Trust Fund that Senator Cassidy described. [1:04:42] Provides this supplemental revenue stream that helps enhance the railway worker payroll taxes. [1:04:50] Most nations fund their retirement systems the way that Senator Cassidy is proposing. [1:04:56] Using a fund, an investment fund, with the earnings from that fund going into backstop retirement. [1:05:03] Most private retirement funds use this concept. [1:05:07] States use this concept. [1:05:10] And in fact, if we were in 1935 right now, we're thinking about doing Social Security. [1:05:15] We would do this as a part of a retirement fund. [1:05:19] We would do an investment fund and use the earnings of it to backstop the difference between what comes in from payroll taxes and what goes out for beneficiaries. [1:05:29] So it's interesting if we were designing it from scratch. [1:05:32] I don't think any reasonable person would not include this as an element. [1:05:37] Now, there are legitimate concerns about it. [1:05:39] How do you maintain the integrity of the fund? [1:05:41] How do you make sure Congress doesn't mess it up? [1:05:44] The scale of the borrowing could be big. [1:05:46] But these are not insuperable obstacles. [1:05:49] Because if they were insuperable, you wouldn't have state pension funds operating this way. [1:05:54] You wouldn't have other nations pension funds operating this way. [1:05:57] You wouldn't have the Federal Railway operate this way. [1:06:01] So these are objections that can be solved. [1:06:04] But my hope is, to all of my colleagues, that we can address this and address it. [1:06:08] And I guess the question I want to ask you guys, I think you've already given a good answer. [1:06:13] I don't have much time. [1:06:14] Waiting makes this harder. [1:06:16] For the reasons that you've described, waiting makes it harder. [1:06:20] But it makes it harder for another reason, which is people get nervous. [1:06:23] I mean, we're dealing with a critical component. [1:06:27] And it's the most significant component for most people's retirement. [1:06:32] And when they hear that it's going to be insolvent in five years, four years, three years, two years, one year, [1:06:37] they get nervous. [1:06:39] We often praise what was done in 1983. [1:06:41] But let's be honest. [1:06:42] They waited until their backs were up against the wall. [1:06:45] Benefits were going to be cut. [1:06:47] And so then, yes, they got real bipartisan when they had to. [1:06:51] It's just my hope, given everything you said and the challenges of delay, we'll get bipartisan before we actually have to. [1:06:59] Let's not wait until our backs against the wall to solve this. [1:07:01] And I think there's some good elements of a solution on the table. [1:07:04] And with that, I yield back. [1:07:05] Senator Kaine, real quick. [1:07:08] Obviously, I was talking about we should have invested all the surplus in hard assets that had value to the federal government. [1:07:16] We didn't do that. [1:07:17] My concern about the Cassie proposal is he wants to borrow $1.5 trillion. [1:07:24] Again, if it's such a good idea, and if we're willing to take the risk on investment, and we should have done it a long time ago, [1:07:30] why not take the entire trust fund and do that? [1:07:34] I mean, obviously, you have more money there with a chance of a greater return [1:07:39] than, and again, the interest rate is just we're paying that to ourselves, as opposed to like a real return. [1:07:45] So why not, if you're really supportive of that, why wouldn't we take the entire trust fund? [1:07:49] Rather than borrow $1.5 trillion, why not take the trust fund and invest it? [1:07:52] So to my colleague, I haven't really thought that through. [1:07:56] But what I like about the Cassidy proposal is that it's an ingredient that you add to an existing system. [1:08:03] I don't view the existing system as a legal Ponzi scheme. [1:08:06] So I view it differently than you do. [1:08:09] Because I view it as us workers, we are chipping in out of our pay [1:08:16] to help the retirement of the person who taught our Sunday school class. [1:08:20] I understand, but that's a pay-as-you-go system. [1:08:23] The money wasn't invested. [1:08:25] Yeah. [1:08:26] So again, my concern is we borrow $1.5 trillion. [1:08:29] There's a cost to doing that. [1:08:31] Sure there is. [1:08:32] And then we're hoping, you know, you've got a pot of money right there you wouldn't have to borrow. [1:08:35] If we really think the rate of return is going to be greater, I would think you'd want to do that. [1:08:38] And the $1.5 trillion. [1:08:40] As I pointed out, it's scalable. [1:08:42] It could go up or down. [1:08:43] Or there could be other revenues that you could put in to reduce the borrowing. [1:08:47] But again, the assumption there is you're actually going to have a higher rate of return than you would get in terms of what it's going to cost you to borrow. [1:08:53] And those borrowing costs are going to go up. [1:08:55] And the railway retirement system shows that that rate of return is something that's been possible. [1:09:00] Over the years. [1:09:01] But again, as they say, past results aren't a reflection of future returns. [1:09:04] That's true. [1:09:05] But I appreciate you engaging that with me. [1:09:07] Senator Scott. [1:09:08] Thanks for holding on. [1:09:10] Thanks for having me. [1:09:11] Thank you for holding this hearing. [1:09:14] I'm from Florida. [1:09:15] So we have a lot of people who depend on Medicare. [1:09:17] And a lot of people depend on Social Security. [1:09:19] So making sure that these are fully funded is really, really, really important to a lot of people in my state. [1:09:26] What's been frustrating to me, I've been up here seven years, is I think we had about $18 trillion worth of debt when I got up here. [1:09:33] I think we're at $39 trillion in our interest expenses over a trillion dollars a year. [1:09:38] We're running $1.9 trillion plus deficits. [1:09:42] And it doesn't look like any of that's going to change. [1:09:45] And so if I was a family, I would say I'm really hurting my ability to prepare for anything, any emergency, including retirement or anything like that. [1:09:55] So what we're doing to ourselves is, and I think, oh, Senator Koehn left. [1:10:00] But I think he's right. [1:10:01] I mean, most of the stuff won't get resolved until it's a crisis. [1:10:03] It seems like just a few years down the road, it's a pretty big crisis. [1:10:06] I'd start focusing on it now. [1:10:08] One thing I've never understood is that, that why we actually have to do this. [1:10:12] Why we actually have a penalty for people who want to keep working. [1:10:16] So I've introduced the Senior Citizens Freedom to Work Act. [1:10:20] It repeals the retirement earnings test and removes outdated punishments to Americans in their 60s who want to keep working. [1:10:26] We ought to try to keep people working. [1:10:28] I think when it started is when they, it was put in place when they wanted people to retire early. [1:10:33] Now we want people to keep working. [1:10:35] And we actually want our labor participation to go up because we actually don't have enough workers for the number of retirees we need now. [1:10:42] So I think hopefully everybody's got a lot of good ideas, but we've got to figure out how to fix this. [1:10:47] So Dr. Adal, a nation's budget continues to spiral out of control, led by years of inflation-causing policies and government overspending. [1:10:54] Can you explain how high deficit spending coupled with increasingly high interest payments on that debt make it hard to solve future emergencies like the potential insolvency of Social Security and Medicare? [1:11:06] Absolutely. [1:11:07] So is interest spending or spending on, net spending on interest increases over time for a given amount of time? [1:11:13] For total spending and for a given amount of revenues, of course, then that constrains the availability of other funds and lawmakers might feel constrained in their options available to them to address any issues that may arise. [1:11:25] One of the proposals out there is to increase taxes on labor income to try and extend Social Security solvency. [1:11:32] Would a tax increase on labor income actually make the state of Social Security better or worse by disincentivizing work? [1:11:39] So a tax increase on labor income would disincentivize work. [1:11:43] How it disincentivizes work across, would differ across people. [1:11:47] It would also probably have effects on, that we would need to consider on how people take their compensation and how compensation is structured. [1:11:55] Ms. Glenn, it's important that we remove barriers to work and promote reforms that benefit the trust fund solvency and support active participation in the labor market for older Americans who want to work. [1:12:05] Can you talk about how an increase in labor market participation supports the health and longevity of programs like Social Security? [1:12:11] Sure. [1:12:13] Any increase in labor market participation? [1:12:15] Any increase in labor force participation would translate directly into increased employment, which is a good thing for the trust funds. [1:12:23] Increased employment, increased earnings means more revenue into the trust funds. [1:12:28] So I think we've all talked about the amount of fraud there is in a lot of different programs. [1:12:33] It seems like every federal program is full of people abusing the program and full of fraud. [1:12:40] So I don't know if any of you want to address this, [1:12:43] but how does waste such as improper payments in Medicare, Social Security affect the health of these trust funds and their solvency? [1:12:49] The most recent report, which I'm aware of, was a SSA OIG report, I believe in August 2024. [1:12:59] And their calculations show that I believe from FY15 to 22, there was a cumulative of about $70 billion in improper payments. [1:13:08] Now improper payments can be underpayments and overpayments, most of which were overpayments in this sense. [1:13:14] And that $70 billion total. [1:13:15] I think equated to about 0.8% of total payments were improper payments. [1:13:20] So that would generally put the trust funds in a better financial position. [1:13:24] But I think as my fellow panelists said earlier, you know, how much that would move the needle is a little suspect. [1:13:30] Yeah, I think I think what Senator Marino said. [1:13:33] I mean, I think if you're telling people that we just work their butts off and in a in a hard work job, [1:13:40] I mean, the reason the retirement age will be pretty devastating to them. [1:13:43] I mean, it's you talk. [1:13:45] You talk to a lot of people in those jobs. [1:13:48] I mean, they were there. [1:13:49] Their life expenses expectancy is lower. [1:13:52] And so it'd be I think it'd be very difficult for people like that. [1:13:55] Thank you, Senator Lujan, who voted for the Shutdown Fairness Act. [1:14:02] And I appreciate that. But it's your time. [1:14:04] We should pay everybody, Mr. Chairman. [1:14:06] I appreciate that to everyone that's here today. [1:14:11] I want to say thank you for for coming to this important discussion and to our chair and our ranking member for having this hearing today. [1:14:19] On Social Security, coming from New Mexico, like many states across the country, [1:14:25] Social Security is critical lifeline for seniors, for people, for my brothers and sisters with disabilities and for survivors. [1:14:32] Hardworking Americans deserve to spend their lives in dignity with financial security. [1:14:38] That was the promise once upon a time. [1:14:40] And I just don't know that we in the United States prioritize our seniors the way that we should or that we emphasize the importance of living with dignity. [1:14:49] As well. [1:14:52] Now, according to the U.S. Census, 23.5 million people were lifted out of poverty in 2024 due to Social Security, including about 133,000 New Mexicans. [1:15:05] Now, this administration has made life a little tougher on beneficiaries. [1:15:10] They decided to shutter field offices, reassign staff and hand over personally identifiable information to DOGE. [1:15:19] I don't know why. [1:15:21] Now, going down the line. [1:15:23] I want to ask each of the panelists, yes or no. [1:15:25] Do these changes, shuttering field offices, reassigning staff, do these changes negatively impact Social Security beneficiaries? [1:15:33] Ms. Dahl? [1:15:36] Dr. Dahl? [1:15:37] Sorry. [1:15:38] That's fine. [1:15:39] That's not really CBO's purview, but my expectation would be yes. [1:15:42] Appreciate that. [1:15:43] Ms. Klein? [1:15:44] Similarly, the work done in the field offices isn't really my purview, but it may be affecting individuals. [1:15:51] Ms. Preston? [1:15:54] I would suspect that since the... [1:15:56] The fewer number of employees needed to accomplish the same level of work. [1:16:00] Appreciate that. [1:16:01] Thank you all for being honest and logical. [1:16:03] Now, turning now to the issue of solvency in Social Security Trust Fund, Ms. Klein, yes or no, did you state in an August 2025 letter to a ranking member, Wyden, that the Republican One Big Beautiful Bill Act would accelerate Social Security insolvency? [1:16:20] Yes. [1:16:21] To what extent did these changes move up the projected insolvency date of Social Security Trust Fund? [1:16:25] It moves up the solvency date by about six months. [1:16:29] Ms. Klein, if Congress were to address Social Security solvency, how much would that cost as a percent of the gross domestic product? [1:16:37] I know it is about 0.16 of taxable payroll, so something slightly smaller of GDP. [1:16:46] The number that my staff gave me was 1.3% of GDP, so somewhere between 0.6, 1.3. [1:16:51] Let's just put it into that range and I'll stick to 0.6. [1:16:55] Okay. [1:16:56] Do you know how much the Republican Big Beautiful Bill, which went after healthcare, food assistance, things like that, increased the federal deficit as a percent of GDP? [1:17:06] I do not know that. [1:17:08] My analysis was focused on the income tax effects of the bill. [1:17:12] I'm not sure if CBO has a better sense of that. [1:17:15] I'm sorry. [1:17:17] I don't have that estimate in front of me. [1:17:18] So the analysis that I was given happened to be the same as what it would cost on Social Security side, 1.3%. [1:17:25] So the way that I look at that logically is if my Republican colleagues were to say, [1:17:29] if my Republican colleagues' Big Beautiful Bill spent money to give the tax breaks to people that are doing very well in the country [1:17:37] and not to address Social Security insolvency, it's 1.3%, 1.3%. [1:17:42] It's kind of a wash. [1:17:44] Republicans through the Big Beautiful Bill gave tax breaks to people, I would argue, that didn't need them in America, [1:17:50] folks that are making more money than most of us will see in lifetimes, like Elon and Jeff and others. [1:18:01] Jeff Bezos. [1:18:03] Jeff Bezos. [1:18:04] Let me clarify. [1:18:07] Appreciate that, Senator Merkley. [1:18:09] Just to be clear, with congressional action, without congressional action, the Social Security Trust Fund is six years away from insolvency. [1:18:21] Is that correct? [1:18:22] Yes? [1:18:24] Yes? [1:18:25] That's about right. [1:18:26] Now, the Republican Big Beautiful Bill exacerbated this crisis, depleting the Social Security Trust Fund quicker and putting millions of seniors at risk. [1:18:35] Now, Ms. [1:18:36] Sorry, Dr. Dahl. [1:18:38] If Congress maintains the status quo, how will future insolvency impact folks across the nation who rely on Social Security to pay their bills? [1:18:46] Any cut in benefits, benefits would be restricted to the resources available to the program, so there would need to be a reduction in benefits if no changes were made. [1:18:57] How those benefit changes would occur is unknown at the time, but any change in benefits would clearly directly affect those who had their benefits cut. [1:19:07] For those who are at the bottom of the earnings distribution, benefit cuts would likely be more harmful in a percentage basis than if they were equally cut for those at the top of the distribution. [1:19:17] The analysis that I was given suggested that beneficiaries would see an average cut of 23%. [1:19:23] That's right. [1:19:25] Now, last question. [1:19:26] Here's why time expires. [1:19:27] How would cuts to Social Security benefits disproportionately impact seniors who rely on this critical program as their primary source of retirement income? [1:19:35] It would be substantive if those benefit cuts. [1:19:37] So that would... [1:19:38] Total benefits would need to be cut by about a quarter. [1:19:40] So if some of those... [1:19:42] If some of that total reduction was ascribed to those at the lower end of the distribution, those that relied on Social Security for the entirety of their income, that would be substantive. [1:19:52] I appreciate that. [1:19:53] And my Republican colleagues, everyone's talking about a budget reconciliation bill again. [1:19:59] If you care about Social Security, fix it. [1:20:04] Republicans say they have the votes to pass budget reconciliation out of the House and the Senate. [1:20:07] We're going to see if they care because these are all about choices. [1:20:10] And the first time they missed it, let's see if the second time they get it right and they actually put some money here to fix Social Security. [1:20:15] I yield back. [1:20:16] Okay. [1:20:17] Before I go to Senator Whitehouse, let's clarify why did the one big beautiful bill impact Social Security? [1:20:23] Specifically, what in that bill had that impact? [1:20:28] Sure. [1:20:29] Yeah. [1:20:30] It was directly related to the income tax provisions in the bill that affected seniors. [1:20:35] So because they were paying less in income tax, more money in their pockets. [1:20:40] Less of the taxation of Social Security benefit income flowed in as revenue to the trust funds. [1:20:48] Okay. [1:20:49] What was termed is no tax on Social Security, correct? [1:20:52] That's right. [1:20:53] But what really was we increased the standard deduction for seniors. [1:20:57] That's correct. [1:20:59] So the impact was we actually made it easier for seniors to live because we decreased seniors' income taxes. [1:21:06] I mean, that's what cost. [1:21:08] Again, I wasn't in favor of it, that provision. [1:21:10] I mean, I think we've done an awful lot of transferring from young to old. [1:21:14] We held a hearing in finance. [1:21:16] Six dollars is, this is according to Maya Magiddis, for every dollar spent on youth, we spent six dollars on seniors. [1:21:25] There's been an enormous shift in terms of people in poverty over the last many decades. [1:21:30] Seniors in poverty versus children has been reversed. [1:21:35] So again, we just, again, need to get the facts out there. [1:21:38] We'll go to Senator Whitehouse. [1:21:40] Thank you very much. [1:21:43] There are a few ways to try to resolve Social Security's fiscal dilemma. [1:21:51] One would be to either cut benefits or reduce eligibility so less payment goes out. [1:22:00] Is that correct? [1:22:01] That's correct. [1:22:03] That's correct. [1:22:04] And it seems that in the episode that I described in my earlier comments, Republicans and Democrats agreed with President Biden [1:22:18] during his State of the Union address that that was off the table. [1:22:21] So if cutting benefits and reducing eligibility is off the table, that leaves other ways of solving the problem. [1:22:36] One would be to borrow a lot of money and use that to shore up Social Security. [1:22:43] Anyone have an evaluation of how much money that would take and what that would mean for our national debt? [1:22:50] So in CBO's projections, [1:22:54] to close the shortfall through 2036 over the 10-year budget horizon would be about $2.7 trillion. [1:23:04] As by statute, our baseline incorporates a basically federal borrowing to pay benefits as scheduled. [1:23:13] And so you would end up back at our baseline. [1:23:16] So debt to GDP in 2036 would be about 120%. [1:23:19] Yeah. [1:23:20] Not great. [1:23:21] Do any of you recommend that stratagem for solving the problem? [1:23:23] Or solving the Social Security problem? [1:23:25] No, no, no. [1:23:28] The CRS will not make any recommendations. [1:23:30] No recommendation from me. [1:23:34] Similarly, no recommendation from me. [1:23:37] So that kind of leaves us with revenue, doesn't it? [1:23:44] If I accept the premise and you're taking benefit reductions, that would leave... [1:23:49] That's kind of it, right? [1:23:50] This is math at this point. [1:23:53] And so we need to start looking at revenue. [1:23:57] Do any of you believe that the tax code is so fair and so honest, [1:24:01] that there is no room for Congress to generate revenue without being unfair? [1:24:16] I don't think I could comment one way or the other on the tax code, whether or not it's fair. [1:24:24] I think that's up for Congress. [1:24:28] Any of... [1:24:29] Ms. Glenn? [1:24:30] Ms. Dole? [1:24:31] I agree with that sentiment. [1:24:32] Yeah. [1:24:33] Same. [1:24:34] You don't want to talk about it? [1:24:36] Okay. [1:24:37] Well, I think that the tax code is corrupt. [1:24:40] I think that the tax code is rotten. [1:24:43] I think the tax code has been torqued by big corporations and billionaires for years [1:24:51] to give them favored tax status over regular working Americans [1:24:56] who don't have the same lobbyist and influence access to Congress that they do. [1:25:00] And so in my view, getting the revenue necessary to restore Social Security [1:25:09] actually confers a benefit if we get it from the tax code [1:25:16] in ways that make the tax code lawful. [1:25:19] Less corrupt, less unfair, and less the product of improper influence [1:25:28] by wealthy people who could well afford to pay their taxes [1:25:32] but prefer to take the excess money that they get from not paying taxes [1:25:38] at the rate of a nurse or a school teacher [1:25:41] and deploy that in Congress to be able to push their tax rates down even further. [1:25:47] One of the great human examples of selfishness and greed. [1:25:51] So we have a chance to actually cure two problems at once. [1:25:54] Two birds with one stone. [1:25:56] Put Social Security for regular Americans on a sound footing [1:26:00] and fix some of the rot in our corrupted tax code. [1:26:06] So I really look forward to working to get this done [1:26:10] because I think it would be a double big win for the American people if we do this. [1:26:15] Thanks very much, Chairman. [1:26:16] So, Senator Whitehouse, here's bipartisan agreement. [1:26:19] I think our tax code is awful. [1:26:22] And I would love to work with you to simplify and rationalize it. [1:26:26] I think it's the first thing we have to do. [1:26:27] Simplify and rationalize this. [1:26:29] Grotesquely complex. [1:26:30] Four or five hundred billion dollars a year to comply with it. [1:26:32] So anytime you want to start working on simplifying and rationalizing it, I'm happy to. [1:26:36] Just real follow-up with Dr. Dahl. [1:26:38] In the CBO's projection, you've included $2.7 trillion [1:26:43] in basically transfer from general revenue to the Social Security benefits. [1:26:48] That's correct. [1:26:49] And that's within your $24.4 trillion [1:26:52] projection of deficits over the next 10 years. [1:26:54] That's correct. [1:26:55] It's already included in there. [1:26:56] Again, $24.4 trillion. [1:26:58] So Social Security is a little more than 10% of that massive shortfall, [1:27:02] which also has to be addressed. [1:27:05] Senator Padilla. [1:27:06] Thank you, Mr. Chairman. [1:27:09] I appreciate acting Chairman and ranking member discussion on this. [1:27:17] So I recognize what several of my colleagues have recognized already. [1:27:20] Part of the context for this conversation is a projected six years [1:27:24] until insolvency, unless there's some sort of congressional action. [1:27:30] Absent congressional action, the forces that we've all acknowledged here [1:27:35] is the impact of an aging population and a shrinking workforce. [1:27:41] That's what threatens Social Security's solvency. [1:27:45] So there's other minor factors, but those are the key trends here. [1:27:51] I just feel a duty and an obligation to recognize [1:27:55] we can't talk about the future of the United States labor market [1:28:00] without talking, yes, about birth rates, but also about immigrants [1:28:06] and their contributions to the workforce, to our economy, [1:28:10] and to Social Security. [1:28:12] So, Mr. Chairman, I'd like to enter into the record a report from 2024 [1:28:17] from the Immigration Policy Institute that shows that without immigrants [1:28:22] and their U.S.-born children, so we're talking citizens, [1:28:26] here as well, the prime working age population would have shrunk [1:28:30] by more than 8 million people between 2000 and 2025. [1:28:35] Objection. [1:28:36] Thank you very much. [1:28:37] It also shows that immigrants arriving in the United States [1:28:40] are, on average, younger than the native-born population [1:28:44] and have a higher rate of labor force participation. [1:28:50] And they pay into a system that many will never become eligible to benefit from. [1:28:56] So, I think that's an important document to have [1:29:00] as part of this record in the conversation. [1:29:02] Question for Ms. Glenn. [1:29:05] Social Security actuaries and their estimate of the impact of immigration [1:29:10] over 25, 50, and even 75 years have found that more immigration [1:29:15] always correlates with a decrease in the trust fund deficit and vice versa. [1:29:21] Would you care to comment any further on that? [1:29:23] That's absolutely correct. [1:29:25] All the factors you mentioned, [1:29:27] immigrants who are paying into the system, [1:29:29] many of them will never receive benefits, [1:29:32] and they also have U.S.-born children. [1:29:34] Ms. Dahl, the CBO's 2024 surge report made similar findings. [1:29:39] Would you care to add any comment? [1:29:41] Absolutely. [1:29:42] So, in that report that you're referring to, [1:29:44] we looked at the effect of the surge on the federal, [1:29:46] what we were calling the immigration surge, [1:29:49] that increase in immigration that you referenced earlier, [1:29:52] on the federal budget. [1:29:53] And in particular, in terms of Social Security, [1:29:56] you immigrants come in, [1:29:58] they're more likely to be of working age, [1:30:00] many work, pay payroll taxes. [1:30:02] That is a benefit to the program. [1:30:04] And then for a variety of reasons, [1:30:07] many will not ultimately claim, [1:30:10] and certainly won't be eligible to claim, [1:30:12] they won't have their 40 quarters of coverage, [1:30:13] for instance, inside the 10-year window. [1:30:15] So, is there an impact to the solvency of the Social Security program [1:30:22] being felt by this administration's mass deportation, [1:30:27] agenda? [1:30:28] I mean, imagine if, forget, [1:30:30] I won't even say all immigrants are detained and or deported, [1:30:34] but let's say half, [1:30:35] because we have cases and reports of, [1:30:39] it's not just undocumented immigrants that are being deported and or detained, [1:30:43] there's legal immigrants with work permits that are being deported [1:30:48] or at a minimum detained with these arbitrary goals, [1:30:52] not just for daily detentions and arrests, [1:30:55] but the building out of significant, [1:30:57] detention center capacity across the country. [1:30:59] Does that help or hurt our Social Security solvency? [1:31:02] It would hurt. [1:31:06] We do some sensitivity analysis in the trustees report every year, [1:31:11] speaking to the effect of more and less immigration. [1:31:14] Okay. [1:31:15] Thank you very much. [1:31:16] And just one other issue that I wanted to raise here [1:31:19] for the record of today's hearing, [1:31:21] not questions for you all, [1:31:23] because I would assume you're not in a position to comment on this, [1:31:26] but I think it's important to know, [1:31:28] colleagues, [1:31:29] when we refer to the IRS's legally dubious data sharing agreement, [1:31:35] the administration's abuse of Social Security data [1:31:38] also threatens Americans' privacy [1:31:41] and now also risks disenfranchising eligible voters. [1:31:46] We know, [1:31:47] we don't suspect, [1:31:48] we know thanks to a lawsuit that revealed the details [1:31:51] of this previously undisclosed data sharing agreement [1:31:55] that the Trump administration gave DHS's access [1:31:58] to sensitive personal data from the Social Security Administration [1:32:03] on nearly every United States resident, [1:32:06] including full name, [1:32:09] Social Security numbers, [1:32:11] addresses, [1:32:13] birth dates, [1:32:14] and more. [1:32:15] DHS is now encouraging states to use this data [1:32:20] to re-verify the citizenship of voters, [1:32:23] something that we're talking about on the floor [1:32:25] as part of the SAVE Act conversation. [1:32:27] Now, this agreement raises significant legal and policy concerns, [1:32:30] but unsurprisingly, [1:32:32] it contains alarmingly few safeguards [1:32:35] to ensure accuracy and privacy. [1:32:38] Now, why is that important? [1:32:40] Multiple audits and analyses have shown [1:32:42] that the Social Security Administration's [1:32:44] citizenship information is outdated and incomplete. [1:32:48] These records have never been fully up to date. [1:32:51] DHS itself acknowledged last year [1:32:54] that using Social Security data [1:32:56] to validate voters' citizenship status, [1:32:58] quote, [1:32:59] may produce inaccurate results. [1:33:04] So it's obvious that relying on Social Security citizenship data [1:33:07] for purposes of election administration [1:33:09] will invariably result in errors [1:33:12] potentially disenfranchising [1:33:14] eligible United States citizens. [1:33:17] Thank you, Mr. Chairman. [1:33:20] Senator Murray. [1:33:22] Well, thank you, Mr. Chairman. [1:33:24] We absolutely do need to talk about [1:33:26] how we protect Social Security, [1:33:29] but in addition to the long-term solvency [1:33:31] that people are focusing on here, [1:33:33] I don't think we can ignore [1:33:34] the immediate threat to Social Security, [1:33:36] and that really is President Trump, [1:33:38] because seniors right now today [1:33:40] are having a very hard time getting their benefits. [1:33:43] Why? [1:33:44] Because Social Security has pushed out, [1:33:46] without any kind of plan, [1:33:48] 7,700 workers since Trump took office. [1:33:52] We now have just one field office representative [1:33:55] per 4,000 Social Security beneficiaries, [1:33:59] and there are at least 400 field offices [1:34:02] that lost more than 25% of their staff. [1:34:06] And that's just the beginning. [1:34:08] The Trump administration wants to cut [1:34:10] field office visits in half. [1:34:12] That would mean over 15 million people [1:34:15] who were able to go to a desk [1:34:17] and speak to a person last year [1:34:19] would be out of luck this year. [1:34:21] This is really a slow-moving train wreck. [1:34:24] Last summer, the Social Security administration [1:34:26] moved 1,000 field office employees [1:34:29] to the phone lines. [1:34:31] At the end of the year, it moved 500 more. [1:34:34] In January, it moved nearly 800 more employees [1:34:37] from the processing centers [1:34:39] and the field office support [1:34:41] and work load support to phone duty, [1:34:44] often with very little training. [1:34:46] That's trying to fix one problem they created, [1:34:49] worsening telephone service, [1:34:51] by creating new problems and backlogs everywhere. [1:34:54] This is really hurting seniors [1:34:56] who can no longer get an SSA meeting [1:34:58] close to home when they need it. [1:35:00] It is hurting people with disabilities, [1:35:03] as people who could be processing their claims [1:35:05] are now answering phones, [1:35:07] and it's burning out the hard-working staff [1:35:09] Trump hasn't pushed out. [1:35:11] But this is all the tip of the iceberg [1:35:13] when it comes to Trump's Social Security sabotage, [1:35:16] because there was the attempt to punish a state [1:35:19] by revoking contracts to report births and deaths, [1:35:23] and there was a proposal to end many of the phone services, [1:35:26] an idea that was quickly reversed [1:35:28] because it was so bad. [1:35:29] And then there was the Doge Purge, [1:35:31] which wrongly kicked seniors off Social Security, [1:35:34] including a constituent of mine [1:35:36] they incorrectly declared as dead. [1:35:39] And mind you, [1:35:40] that's just the sabotage in the light of day. [1:35:43] But thanks to a whistleblower report [1:35:45] and ongoing internal investigations, [1:35:47] we know there was even more damage [1:35:49] happening in the shadows. [1:35:51] Like when Trump let Elon and Doge muck around [1:35:54] with highly sensitive Social Security data [1:35:57] that is private, [1:35:59] personally identifiable information [1:36:02] on hundreds of millions of Americans. [1:36:05] We are talking about [1:36:06] potentially unprecedented data breaches here, [1:36:09] blatantly unqualified people [1:36:11] getting practically unfettered access [1:36:13] even after court orders, [1:36:16] private data copied onto [1:36:18] unauthorized third-party servers, [1:36:20] or according to reports, [1:36:22] even copied onto a thumb drive. [1:36:25] Believe me, I want everyone to know [1:36:27] I'm watching this investigation closely [1:36:29] and demanding accountability. [1:36:31] If we want to protect Social Security [1:36:33] for decades to come, [1:36:35] yes, we do need to talk about solvency. [1:36:37] But we also need to talk about [1:36:39] the President who is gutting [1:36:41] the Social Security Administration [1:36:43] right now, today, [1:36:45] and callously putting our seniors' benefits [1:36:47] and their personal data at risk. [1:36:49] Now with that, [1:36:52] Dr. Dahl, I want to turn to you. [1:36:54] I do have a few questions, [1:36:56] particularly about who is and isn't paying [1:36:58] their fair share into Social Security, [1:36:59] and I want to make sure [1:37:00] I have a few numbers right. [1:37:02] Is it right that those making under $184,500, [1:37:06] their effective payroll tax rate [1:37:09] is roughly 12.4%? [1:37:12] That's right. [1:37:13] The statutory rate is 6.2%, [1:37:15] but consensus view is that the employee pays, [1:37:18] basically the employer cost [1:37:20] is passed on to the employee, [1:37:22] and so the employee basically faces a rate of 12.4%. [1:37:25] For anybody earning $104,500. [1:37:28] What is the effective payroll tax rate [1:37:30] for someone making a million dollars a year? [1:37:32] So they would pay the 12.4% [1:37:34] on that first $185,000 roughly, [1:37:37] and then would not pay additional tax [1:37:40] on labor income above that amount, [1:37:42] and so that math would work out to about 2.2%. [1:37:46] Okay, so 12.4% for someone under $184,500. [1:37:52] A millionaire would be about 2.2%. [1:37:56] What if you're a billionaire, [1:37:58] like Trump or Musk, [1:37:59] your Social Security tax would be [1:38:01] effectively, on my understanding? [1:38:03] Very, very much smaller. [1:38:05] .0002? [1:38:06] Yes. [1:38:07] That just doesn't make sense to me. [1:38:09] When the richest people in the country [1:38:12] have the smallest effective tax rate, [1:38:14] that does not seem to me like a very fair system, [1:38:17] especially when we are now six years away [1:38:19] from retired workers facing this 24% cut [1:38:23] in their Social Security benefits. [1:38:25] So I hope we all understand that [1:38:27] and focus on that. [1:38:29] Thank you, Mr. Chair. [1:38:30] Before I jump in, [1:38:32] I want to turn to Senator Merkley. [1:38:33] I'll quick answer the question. [1:38:34] The reason it's set up that way, [1:38:36] we were supposed to, [1:38:37] it's forced savings for a defined benefit, [1:38:43] and once you've saved that amount, [1:38:45] your benefit doesn't rise, [1:38:46] so that's the original intent of Social Security. [1:38:49] It wasn't set up as a welfare system [1:38:51] where everybody's taxes pay for benefits for other people. [1:38:55] It was a forced savings plan. [1:38:57] That's why you have that type of situation. [1:38:59] I don't think it's a welfare system. [1:39:01] I think it's a system to make sure [1:39:03] that we have Social Security for people. [1:39:06] If you want unlimited taxes on income, [1:39:09] it's no longer a forced savings program. [1:39:11] It's something else. [1:39:12] So we just have to be honest [1:39:13] about what we're talking about. [1:39:14] But Senator Merkley. [1:39:15] I have a little different view, [1:39:19] and that is that over time, [1:39:21] it's had elements both of an insurance program [1:39:24] and elements of a savings program, [1:39:26] and that's been part of the challenge [1:39:27] of analyzing Social Security [1:39:29] and deciding how we modify it [1:39:32] is what element one really, [1:39:34] really emphasizes. [1:39:36] I want to go back to the idea [1:39:40] of borrowing and investing. [1:39:43] And just from my perspective, [1:39:45] a cautionary note, [1:39:47] $1.5 trillion, [1:39:50] if you borrowed at 4%, [1:39:52] because you forego the 4% earnings, [1:39:55] roughly that CBO's estimate [1:39:57] is about 4% going forward, [1:39:59] and you get a return of 8%, [1:40:01] you have a net improvement of 4%. [1:40:03] So 4% on average [1:40:05] on a trillion and a half [1:40:06] would be $60 billion. [1:40:08] So $60 billion is only a fraction [1:40:12] of the roughly $500 billion deficit [1:40:15] we'll have in 2033, [1:40:17] and it's an even smaller component [1:40:20] of the deficits that we'll have [1:40:22] going forward by 2036. [1:40:24] So just three years later, [1:40:26] we're over $600 billion estimated deficit. [1:40:28] So we're talking about that plan, [1:40:30] even under a positive scenario, [1:40:32] addressing only one tenth [1:40:34] of the shortfall. [1:40:36] But then there is the risk factor, [1:40:39] and the risk factor is significant. [1:40:41] And that is, [1:40:43] if we have a 10-year period [1:40:45] in which the stock market does not go up, [1:40:48] and we did have that from 2001 to 2011, [1:40:51] then basically we're talking about [1:40:53] zero earnings, [1:40:54] but we're foregoing, [1:40:56] because 4% compounded is 48% [1:40:59] over a 10-year period, [1:41:02] and therefore we're foregoing 48% income, [1:41:05] on that trillion and a half, [1:41:07] and getting zero income [1:41:09] over the stock investment. [1:41:11] And if you have a complete collapse [1:41:13] of the stock market, [1:41:14] and many analysts now will note [1:41:16] that the price per share [1:41:18] compared to earnings [1:41:19] is at a historic high, [1:41:21] and there's a lot of fretting [1:41:23] over whether we're at the high point [1:41:25] of a massive bubble. [1:41:26] If we gamble the Americans' [1:41:31] Social Security program, [1:41:34] and we end up in fact seeing [1:41:36] we're at the top of a bubble that bursts, [1:41:39] then we're really in the hole. [1:41:42] So I would just ask any one of you, [1:41:49] but I'll turn to Dr. Dahl first, [1:41:53] is my math right [1:41:55] on the 4% net gain [1:41:57] on a trillion and a half [1:41:59] would be $60 billion per year? [1:42:02] That sounds about right, yes. [1:42:05] And $60 billion is only about [1:42:07] a tenth of what our projections [1:42:09] expect the deficit would be in 2036. [1:42:11] That's right. [1:42:12] And therefore, even that idea [1:42:15] would be a contributor perhaps [1:42:18] to a broader plan, [1:42:19] but it would take many other elements [1:42:21] to put together in a package [1:42:22] if we're really going to address [1:42:24] the entire deficit. [1:42:25] That would be correct. [1:42:26] And that if you put the money [1:42:30] into the stock market, [1:42:31] you are accepting a higher risk profile. [1:42:34] We never know whether we're going to be [1:42:36] at the bottom point of a historic surge, [1:42:39] or we're at the top [1:42:40] point of a bubble, [1:42:41] but if we're at the top point [1:42:42] of the bubble, [1:42:43] we could end up in a far worse position [1:42:46] than if we had simply taken [1:42:47] the 4% return [1:42:49] on putting it into bonds. [1:42:53] That's also correct. [1:42:54] Treasury bonds. [1:42:55] And if in fact [1:42:57] we borrow an additional amount, [1:42:59] that borrowing additional amount [1:43:03] generally drives up [1:43:05] to some degree [1:43:06] the interest rate that you have to pay to borrow, [1:43:08] not just on the margin rate, [1:43:10] marginal amount that you borrow, [1:43:11] but on the entire amount [1:43:12] you're borrowing as a nation. [1:43:13] That's right. [1:43:14] And also that if you're, [1:43:16] have maxed out what Americans [1:43:18] are willing to essentially lend [1:43:21] to the government, [1:43:22] then we're talking about borrowing more [1:43:24] from foreign countries. [1:43:25] That would be correct. [1:43:26] Okay, thank you. [1:43:27] Thank you very much. [1:43:28] I'll turn this back over [1:43:29] to Mr. Johnson, [1:43:30] but I just want to, [1:43:31] to Senator Johnson, [1:43:32] I just want to conclude with [1:43:33] it's really going to take [1:43:34] bipartisan work. [1:43:36] We come to this conversation [1:43:38] with different frameworks [1:43:40] for the, [1:43:41] for what Social Security is. [1:43:43] Is it an insurance plan? [1:43:44] Is it a savings plan? [1:43:45] Different concepts of fairness. [1:43:47] We're going to have to really work [1:43:48] to overcome [1:43:49] or bring or merge [1:43:51] our different frameworks [1:43:52] into a solution. [1:43:53] And the moment demands [1:43:55] that we succeed in doing so [1:43:58] because we need to fix this. [1:43:59] Thank you. [1:44:00] Thank you, Mr. Chairman. [1:44:01] So first of all, [1:44:04] we have to start [1:44:05] and we have to agree on the facts [1:44:07] and all the facts. [1:44:08] I mean, I agree [1:44:09] with your analysis right there. [1:44:11] There's no guarantee [1:44:12] you'd get an 8% return. [1:44:13] I think most Americans [1:44:15] take a look at [1:44:16] the current stock market [1:44:17] and if you say, [1:44:18] well, are we at a low point [1:44:19] or are we at a high point? [1:44:20] We're probably closer to a bubble [1:44:21] than anything else. [1:44:22] Would this be a good time to do it? [1:44:23] The investment in, [1:44:24] you know, something [1:44:25] that has value [1:44:26] to the federal government [1:44:27] like stocks, [1:44:28] that'd have to be [1:44:29] over a very long period of time. [1:44:30] You can't, [1:44:31] you can't expect it [1:44:32] to make those returns [1:44:33] in a short period of time. [1:44:34] That's, [1:44:35] that I think would be folly. [1:44:36] But I want [1:44:37] just a couple of questions. [1:44:38] And again, [1:44:39] these are more facts. [1:44:40] I said we talked [1:44:41] about the, [1:44:42] and I'm, [1:44:43] it's a, [1:44:45] it is called [1:44:46] the money's worth ratios. [1:44:48] Okay? [1:44:49] And it seems like [1:44:50] a one earner couple, [1:44:51] they, [1:44:52] they really come out [1:44:53] ahead of anybody else [1:44:55] versus a single male, [1:44:56] single female, [1:44:57] or a two earner couple. [1:44:58] That, [1:44:59] that's right [1:45:00] because the, [1:45:01] if the spouse [1:45:02] has not been working [1:45:03] over their career, [1:45:04] they do get a benefit as well. [1:45:06] And they're not, [1:45:07] they're not paying tax. [1:45:08] I mean, [1:45:09] they top, [1:45:10] top out. [1:45:11] That's right. [1:45:12] A low earner [1:45:13] gets $3.86 [1:45:14] for every dollar [1:45:15] they paid in. [1:45:16] That's, [1:45:17] again, [1:45:18] that's not a forced savings plan. [1:45:19] There's something else. [1:45:20] It's a savings plan plus, [1:45:21] right? [1:45:23] I know, [1:45:24] I know people don't want [1:45:25] to call welfare. [1:45:26] I don't want to call it welfare either, [1:45:27] but it's, [1:45:28] it's something other than [1:45:29] a forced savings plan. [1:45:30] A low income earner [1:45:31] gets $2.70 [1:45:32] for every dollar. [1:45:33] Again, [1:45:34] I get people coming in, [1:45:35] that's my money. [1:45:36] Well, [1:45:38] a part of it is. [1:45:39] You know, [1:45:40] a dollar of it is, [1:45:41] but in that case, [1:45:42] $1.70 [1:45:43] is somebody else's money. [1:45:44] Again, [1:45:45] a high income earner [1:45:46] actually gets $1.55 [1:45:47] for every dollar. [1:45:48] That's, [1:45:49] that's if you are [1:45:50] a one or a couple. [1:45:51] Now, [1:45:52] if you're a single male [1:45:54] and you're high income, [1:45:55] you're, [1:45:56] you get $0.83 [1:45:57] for every dollar. [1:45:59] So, [1:46:00] again, [1:46:01] it's, [1:46:02] it's all over the board, [1:46:03] but the question I have for you is, [1:46:04] because part of the solution is, [1:46:05] okay, [1:46:06] let's, [1:46:07] let's, [1:46:08] if not take off the cap, [1:46:09] increase the cap. [1:46:11] So, [1:46:12] the impact of that would be, [1:46:13] right, [1:46:14] right now, [1:46:15] the top marginal tax rate [1:46:17] is 37%, [1:46:18] which has no cap, [1:46:19] right? [1:46:21] I'm, [1:46:22] I'll use the 37%, [1:46:23] 37%, [1:46:24] and then I'll use the entire [1:46:25] payroll tax, [1:46:26] which is [1:46:27] 15.3%, [1:46:28] correct? [1:46:29] The total amount. [1:46:30] So, [1:46:32] what we're, [1:46:33] in fact, [1:46:34] if we take the cap off [1:46:35] or increase it, [1:46:36] we're gonna [1:46:37] take the 37 top, [1:46:38] 37% top marginal rate [1:46:39] and increase that to 52.3%. [1:46:41] That's a correct analysis, [1:46:42] correct? [1:46:43] That, [1:46:44] that sounds correct. [1:46:45] So, [1:46:46] when you said, [1:46:47] I don't know what, [1:46:48] what the 60% [1:46:49] of the problem is solved, [1:46:50] would it be, [1:46:51] eliminate the cap entirely? [1:46:52] Yes, [1:46:53] that's right. [1:46:54] So, [1:46:55] in your analysis, [1:46:56] did you take in, [1:46:57] into effect, [1:46:58] what would be the impact [1:46:59] just in terms of [1:47:00] incentive to work, [1:47:02] uh, [1:47:03] economic growth? [1:47:04] Because I, [1:47:05] I would think if you're, [1:47:07] you know, [1:47:08] a high productive individual [1:47:09] and, [1:47:10] and you're, [1:47:11] you're incentivized [1:47:12] and one of the things [1:47:13] that incentivizes you [1:47:14] is you wanna make money, [1:47:15] all of a sudden, [1:47:16] instead of having [1:47:17] a top marginal tax rate [1:47:18] of 37%, [1:47:19] you're facing 52.3%, [1:47:20] that just might, [1:47:21] you just, [1:47:22] you're gonna have to keep, [1:47:23] pay more than 50 cents [1:47:24] on the dollar [1:47:25] for every dollar I earn. [1:47:27] I'm not that interested [1:47:28] in earning that much money. [1:47:29] So, [1:47:30] does that? [1:47:31] Yeah, [1:47:32] no, [1:47:33] you make a good point. [1:47:34] That is certainly relevant [1:47:35] to individuals [1:47:36] and we do try to take [1:47:37] those sorts of effects [1:47:38] into account. [1:47:39] But it's impossible [1:47:40] to really predict that, [1:47:41] right? [1:47:42] It's an estimate. [1:47:43] So anyway, [1:47:44] so again, [1:47:45] my point that, [1:47:46] you know, [1:47:47] laying out those facts, [1:47:48] the, [1:47:49] we have to first start [1:47:50] on agreeing on the facts [1:47:51] and I think we've come [1:47:52] a long way today. [1:47:53] This is, [1:47:54] we have an enormous problem. [1:47:55] The sooner we address it, [1:47:56] the better off, [1:47:57] but I think we've already [1:47:58] waited too long. [1:47:59] So we've just got a big mess [1:48:00] on our hands. [1:48:01] Talking to Senator Merkley, [1:48:03] you know, [1:48:04] I agree with you. [1:48:05] We need a working group. [1:48:06] We can do this, [1:48:08] I guess, [1:48:09] in a behind closed door [1:48:10] type meeting, [1:48:11] but I'd like to see [1:48:12] the kind of exchange [1:48:13] I had with yourself, [1:48:14] with Senator Kaine. [1:48:15] Let's flesh this out. [1:48:16] Let's get the facts right. [1:48:17] Then we can start arguing [1:48:19] about what the different [1:48:20] components of our solution, [1:48:21] but I think it's gotta be [1:48:22] multifaceted. [1:48:23] But again, [1:48:24] we just want to, [1:48:25] you know, [1:48:26] again, [1:48:27] excellent testimony, [1:48:29] indisputable facts. [1:48:30] We've got a big problem [1:48:31] on our hands, [1:48:32] but I want to thank [1:48:33] our witnesses [1:48:34] for appearing [1:48:35] before the committee today. [1:48:36] The hearing record [1:48:37] will remain open [1:48:38] until noon tomorrow [1:48:39] for submission [1:48:40] of questions for the record [1:48:41] to the committee clerk. [1:48:42] The hearing is adjourned.