As Washington turns its attention to tackling the nation’s huge deficit, Senate Finance Committee Chairman Max Baucus, D-Mont., said Tuesday that Social Security should not be included in legislation to reduce the U.S. deficit.
“Social Security benefits are financed only through payroll taxes and the Trust Fund,” Baucus (left) said during a hearing held by his committee entitled “Perspectives on Deficit Reduction: Social Security.” Social Security, he continued, “is not responsible for the deficits we face in the general fund today. Therefore, I believe Social Security should not be part of our efforts to reduce those deficits.”
Baucus and other lawmakers as well as those testifying agreed that Social Security had been the “most successful” government program since its creation by President Franklin Roosevelt during the Depression. “Social Security has been a major force in ending widespread poverty among the elderly," Baucus said, adding that for 15% of the nation’s seniors, Social Security was their “only income, and for one in four elderly Americans, Social Security provides 90% of their income.”
By law, Baucus said, “Social Security must remain separated from the rest of the Federal budget and the program cannot borrow money from the general Federal budget.”
Nancy Altman, co-Chair of the Strengthen Social Security Campaign and Chair of the Pension Rights Center, agreed during her testimony, stating that “the law is clear, Social Security shall not be counted for purposes of the federal budget.” She said that cutting Social Security benefits would not have any impact on efforts to reduce the nation’s $14.3 trillion deficit.
Charles Blahous, research fellow at the Hoover Institute in Washington, backed up Altman’s statement, stating “I do agree with that.”
Most of the lawmakers agreed, however, that Social Security does need tweaking. “Let’s be clear about this–there is a scheduled benefit reduction come 2037,” said Sen. Orrin Hatch, R-Utah, ranking member on the committee, during his opening remarks. “This isn’t just a problem of how to finance the benefits that are scheduled for 2037 and beyond. Rather, under current law, Social Security benefits are scheduled to have an approximate reduction of 24% in 2037.”
But James Roosevelt, president and CEO of Tufts Health Plan, and President Roosevelt’s grandson, countered that “the truth about Social Security is that it has contributed to the financial wellbeing of almost every American family.” The truth about Social Security, he continued, “is that it is solvent today because it has a dedicated income stream that covers its costs and is actuarially sound; and more importantly, with minor adjustment it will remain solvent for decades to come.”