Hearing of the House Ways and Means Committee - Opening Statement of Rep. Becerra, Hearing on Social Security's Solvency
Mr. Chairman -- Thank you for holding this hearing. I am pleased to have two such distinguished witnesses before us.
Let's start by comparing the facts we know, versus speculation and projections about the far-off future.
Here are the facts: Social Security has paid earned benefits to American workers, on time and in full, for over three-quarters of a century.
It is the single most important source of retirement income, for both today's seniors and for future retirees.
Social Security provides critical disability and life-insurance protection that is unmatched in the private sector.
Social Security has never added a penny to our deficit or our debt.
By law, Social Security cannot deficit-spend -- it can only pay out what's in its Trust Fund.
Social Security currently has a 2.8 trillion dollar surplus in its Trust Fund. That exists because of working Americans' contributions to the fund. It's just simple math.
This 2.8 trillion dollar surplus will be drawn on in future years to help pay for the benefits Americans have earned.
But even when the reserves we're building up now run out, Social Security will not be "out of money." After 2034, Social Security's incoming contributions will still be able to cover about three-quarters of the benefits Americans have earned.
Social Security's long-term shortfall is a challenge, one we need to address. But let's be wary of scare tactics that make it seem like Social Security is "broken," and that our only choice is to cut benefits.
Social Security has weathered 13 recessions. It has always paid on time and in full. And meanwhile, it has accrued a $2.8 trillion surplus dedicated to the future needs of American workers.
What other program -- public or private -- can say this?
The answer is none. Social Security's track record is unmatched.
Projections must be recognized for what they are -- just projections -- and must be evaluated in light of the experience and expertise that is brought to bear in developing them.
Both CBO and the Social Security actuaries have strong and well-deserved reputations for quality and neutrality.
Congress relies on CBO to estimate the near-term costs of legislation that is under consideration -- typically, for one, five and ten-year windows -- and to project a "baseline" of expected spending under current law.
However, throughout the 80-plus years of Social Security's history, Congress has relied on the Social Security actuaries, and the annual reports of Social Security's Board of Trustees, to give us the best picture of the long-term future of Social Security.
Making projections that extend out over 75 years takes a lot of skill. Even small changes can be magnified out of proportion when projected out over 75 years, and recently-observed trends may not be borne out in the future.
The Office of the Chief Actuary has eight decades of institutional experience in this area. And it has assembled a team of 45 actuaries and demographers, supplemented by 8 economists and statisticians, to develop these projections.
CBO is relatively new to making these kinds of long-range projections. It first began publishing long-term estimates on Social Security about a dozen years ago. I'm told that its projection team is composed of 10 economists and analysts, with additional input from other parts of CBO.
There has been quite a lot of change in CBO's numbers over time, so I think we should be careful in how we consider them as CBO continues to build up its capacity to do these kinds of projections.
We must also look at the broader context. Do we hold other areas of federal spending and tax policy -- such as defense, or tax breaks on investment income -- to the same high standard of future funding as Social Security?
Social Security will spend about $930 billion this year, for 60 million people, and has a surplus in its Trust Fund of $2.8 trillion.
This year, we are spending $606 billion on defense and the military. There's no trust fund for this kind of spending, and no 75-year projections about what defense spending is likely to cost.
Let's look on the tax side. A single tax break that goes primarily to wealthy investors -- the preferential rate for capital gains and dividends -- is costing $103 billion in foregone revenue this year.
I've not seen any projections about what this will cost going out over the next seven decades.
What are the unfunded liabilities for these types of spending? No one knows, and mostly no one asks.
Moving forward into the future, if someone wants to play the crystal-ball game of forecasting what we'll spend on Social Security, the military or anything else,
Then Social Security -- with its independent source of funding from Americans' paycheck contributions -- is in far better shape than any other segment of the federal government.
Right now, the most urgent problem facing Social Security is the Majority in Congress's failure to provide the resources that the Social Security Administration needs to deliver service to the people who paid for it with their tax dollars.
America's workers pay for the cost of administering Social Security through their FICA contributions.
But it is Congress that determines what SSA is permitted to spend to interview applicants, process their benefit applications, conduct disability hearings, answer the phones, operate the field offices, and everything else required to pay the benefits people have earned.
And since 2010, Congress has cut SSA's basic operating budget by 10 percent after adjusting for inflation.
This has led to a 9 percent drop in the number of front line staff available to serve the American public.
At the same time, the number of beneficiaries has continued to steadily increase.
Given the magnitude of the cuts and the size of its workloads, SSA cannot cope simply by "prioritizing" its workloads or becoming more efficient.
SSA is already extremely efficient: its administrative costs for Social Security are less than 1 percent of the total cost of Social Security benefits payments.
It is not a surprise that we are seeing backlogs growing and long wait times for services. For example:
More and more Americans who are already receiving benefits are experiencing hardship due to a growing "hidden backlog" of unprocessed work -- such as the widow who was unable to buy a headstone for her deceased spouse, due to delays in switching her to her widow's benefit.
Americans with severe disabilities must wait years to receive the benefits they have earned and so desperately need.
Currently, Americans who need a disability hearing must wait 540 days to get a decision.
All of the improvements made in earlier years -- when Congress invested the resources, and hard-working SSA employees drove waiting times down to just under a year -- have been lost, and the delays are now worse than ever.
Since 2010, SSA has had to close 60 full-service field offices as well as 490 smaller offices that served rural areas. As a result, beneficiaries have to travel farther and farther to reach their nearest Social Security office which is only open to them four and a half days a week.
What's worse -- at the level of funding that was approved by the Majority at the House Appropriations committee for 2017, SSA would be forced to furlough their employees -- closing their offices and shutting down their phones for 1-2 weeks.
This is simply unacceptable.
In my six years as Ranking Member of this Subcommittee, not once have we held a hearing on SSA's budget.
Mr. Chairman, Social Security has been there for Americans for over 80 years. I hope we can work together to make it strong for 80 more years, starting by addressing the preventable crisis of short-sighted budget cuts.