Where the exhaustive HouseWays & Means Committee hearing was long on data points acrossdiverse issues, it was refreshingly short on demagoguery. Here aresome highlights from the discussion on Social Security reform.(Photo: Mike Scarcella/ALM)

|

A four-hour hearing on retirement income security before thefull House Ways and Means Committee broadly focused on options formaking Social Security actuarially sound, expanding savingsvehicles in the private sector retirement system, and rescuing theroughly 130 collectively bargained multiemployer pension plans thatface impending insolvency.

|

For retirees and their advocates, private sector retirementindustry stakeholders, and policy experts across the ideologicalspectrum who fear retirement reforms may not be prioritized underdivided government, the hearing was a strong start. As was noted byRep. Earl Blumenauer, D-OR, it was “the first real” hearing held bythe Ways and Means Committee in the 116th Congress.

|

The hearing was marked by pledges for bipartisanship from bothDemocrats in the majority and Republican minority members. Whilethe routine expressions of comity were a decided departure from theacrimony marking other policy debates on Capitol Hill, the hearingdid reveal clear ideological divisions that have obstructed reformin the past, particularly with Social Security and previousproposals to rescue failing multiemployer plans.

|

Rep. Richard Neal, D-MA, Chair of the Ways and Means Committee,has already reintroduced legislation that would rescue failingmultiemployer plans without enacting benefits cuts on retired unionworkers in the private sector.

|

The Retirement Enhancement and Savings Act, a comprehensiveretirement package designed to address the access gap to retirementplans in the private sector, is slated to be reintroduced in theHouse this week.

|

And last week, Rep. John Larson, D-CT, chair of the Ways andMeans Subcommittee on Social Security, reintroduced the SocialSecurity 2100 Act.

|

Where the exhaustive hearing was long on data points acrossdiverse issues, it was refreshingly short on demagoguery. Here aresome highlights from the discussion on Social Security reform:

|

  “We've got to get away from the platitudesand actually put real plans on the table.  I think we havethe makings on this committee, as we have on historic Congresses,where we can come together and move forward.” — Rep. John Larson, D-CT, chair of theSubcommittee on Social Security.

|

Larson has reintroduced the Social Security 2100 Act, whichexpands benefits, raises taxes, makes Social Security Solvent, butdoes not raise the retirement age.

|

In the 114th Congress, Republicans introducedlegislation that would make Social Security solvent by phasing inan increase in the retirement age. “That's the kind of conversationwe are going to have to have,” said Larson.

|

  “The biggestproblem facing retirees is that Social Security is notsolvent.  I'm proud of my friend Mr. Larson for attackingthis problem.  Because it takes a lot of political courageto do it.  You've got to raise taxes or cutbenefits.  Any time you do that you're going to infuriatemasses of people on either side.” — Rep. Tom Rice,R-SC

|

Despite his admiration, Rice said Larson's bill “is simply a taxincrease,” noting the difficulty it will be to reach a bipartisansolution to Social Security.

|

“It's not going to get solved on one side or the other. There'sprobably going to have to be both,” said Rice.

|

  “The American people are polarized over manythings, but not Social Security.” — Nancy Altman, president, SocialSecurity Works

|

Social Security's reserve funds are scheduled to be depleted by2034, at which time all beneficiaries would see a 23 percent cut inbenefits. At several points during the hearing, Altman advocatedagainst raising the retirement age, arguing that woulddisproportionately and negatively impact lower-wage earners,minorities, and women.

|

  “I have serious concerns about some of theapproaches being considered in this hearing.” — Rep. Adrian Smith,R-NE.

|

Smith said Rep. Larson's 2100 Act “deviates” from bipartisantradition on Social Security reform. The bill would phase in a 2percent increase in the payroll tax over 23 years for allAmericans. Smith said that under the Tax Cuts and Jobs Act, asingle mother with two children does not pay federal income taxesuntil her income hits $53,000. Larson's bill would amount to a$1,200 tax increase for her, said Smith.

|

  “Employers and the government have reducedtheir contribution to retirement security, and shiftedresponsibility to individuals to make up the difference. I would argue Social Security benefits should beexpanded.  Rep. Larson's bill does that in a responsibleway.” — Rep. Bill Pascrell, D-NJ.

|

In response to questioning from Rep. Pascrell, Diane Oakley,executive director, National Institute on Retirement Security,testified that widening economic inequality has made the lowestwage earners too dependent on Social Security, which provides toolittle under existing benefit schedules.

|

“Inequality has been growing to historic levels—the Presidentdid not mention that in his speech last night,” said Pascrell.

|

  “Impact on low income folks is not at allclearly positive.” — Andrew Biggs, resident scholar, AmericanEnterprise Institute

|

A former economist at the Social Security Administration, Biggstestified that the Social Security payroll tax is the largest taxfor most Americans.

|

Biggs commended Rep. Larson for advancing the 2100 Act, thoughsaid he is not in complete agreement with all of its provisions.The bill would increase the payroll tax on low-incomehouseholds.

|

Some research shows that low-income households would try tomaintain their lifestyle in the face of lower take-home pay byborrowing more. Biggs advocated for solutions that would increasebenefits for the lowest wage earners, but questioned the wisdom ofincreasing benefits for middle income and the highest wageearners.

|

“This is the start of a conversation, not the end of one,” Biggssaid of the 2100 Act.

|

  “This conversationshould have happened 20 years ago.  Our greatest fragilityas a country right now is keeping our promises.” — Rep. DavidSchweikert, R-AZ

|

Schweikert cited data from the most recent Congressional BudgetOffice budget report showing 50 percent of all non-interestgovernment spending will go to those age 65 and older by 2028.

|

He raised the question of how to design incentives throughoutsocial safety nets that incentivize people to work.

|

“This is a huge complex issue,” he said of Social Security, andwill require “taking on a lot of incumbent interests and making alot of people cranky.”

|

  “I often get calls from women whose husbandshave died.  They are too young for SocialSecurity.  Too young for Medicare.  They areperplexed.  They don't know what to do.  I don'tknow what to do either.” — Rep. Danny Davis, D-IL

|

African American males have the lowest life expectancy in thecountry, said Davis. One argument for raising the retirement age isthat life expectancy has dramatically increased since SocialSecurity was created in 1935, and last reformed in 1983.

|

But “not everyone is living longer,” said Social Security Works'Altman, in response to questioning from Rep. Davis.

|

  “I share a commitment with Mr. Larson to makesure Social Security is solvent to make sure every benefit promisedis there, and is there for generations to come.” — Rep. Tom Reed,R-NY

|

Reed, the ranking member on the Subcommittee for SocialSecurity, is the youngest of 12 children, and was two when hisfather died. His family was able to survive because of SocialSecurity.

|

“My partner from Connecticut is a true gentleman,” Reed said ofRep. Larson. “But we do need to recognize there will be adifference of opinion.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.