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May 22, 2014 at 08:28 AM
On Wednesday, the Senate Finance Committee’s subcommittee on Social Security, Pensions and Family held a hearing at which the political differences, and the possible solutions, around Social Security were highlighted. Four experts testified, and three senators made statements, at the hearing, titled “Strengthening Social Security to Meet the Needs of Tomorrow’s Retirees.”
See also: Americans are deluding themselves about retiring
In his trademark gravelly voice, the chairman of the subcommittee, Sen. Sherrod Brown, D-Ohio, kicked off the hearing by recalling the beginnings of Social Security — “it was an untested idea in 1936” — before arriving at the current day, stating that “not only are cuts to Social Security deeply unpopular,” but “we’ve fallen into the bad habit of discussing Social Security in the context of the federal budget,” which “misleads the public” because Social Security has its own source of funding.
Instead, he said, “Social Security is about family budgets,” and Social Security “is social insurance. Let me repeat that — Social Security is social insurance,” which offers “working families a modest bundle of insurance products: retirement, life and disability insurance at reasonable rates.” The average benefit, he said, is also “modest,” at about $300 a month.
Moreover, Social Security constitutes a “moral and economic issue” which mandates that a “bipartisanship approach should be continued.” Congress must “have the courage to act,” but the solutions of raising the retirement age, raising taxes and putting off cost-of-living adjustments [COLAs] are “blunt instruments that will only harm workers.”
Instead, Brown called for expanding Social Security benefits, including survivors’ benefits, which constitute “the only life insurance” for many low-income Americans; updating the SSI program; providing caregivers credits; paid family leave, and helping the children of deceased beneficiaries pay for college.
He also called on Congress to take bipartisan action to “reallocate the disability trust fund,” which he said would keep it solvent for “another 20 years.” Reallocation is, he said, “a simple process that Congress has done in a bipartisan manner 11 times since 1957.”
See also: Retirement planning, not Social Security, dominates advisors’ client discussions
The ranking Republican on the subcommittee, Sen. Patrick Toomey of Pennsylvania, agreed in his statement that the issue of preserving Social Security is “important, but the trust fund is insolvent. It’s running a cash flow deficit now, and has been since 2010.” With nominal GDP growing at 4 percent at best while Social Security payouts are growing at 6 percent, fixing Social Security, Toomey said, is “not a partisan issue, it’s an arithmetic issue.”
Another Republican senator on the subcommittee, Johnny Isakson of Georgia, called on Congress to use the Ronald Reagan-Tip O’Neill 1983 Social Security agreement as a “template” to come to bipartisan agreement on Social Security. However, he also called for moves to “take pressure off the system to encourage more saving” by workers in 401(k)s, IRAs and Roth IRAs. Those workers, Isakson said, “deserve a benefit, and we need to protect it,” so as to “empower retirees to save for themselves.”
