HEADLINE: HEARING OF THE HOUSE WAYS AND MEANS COMMITTEE
SUBJECT: BOARD OF TRUSTEES 2004 ANNUAL REPORTS
CHAIRED BY: REPRESENTATIVE WILLIAM M. THOMAS (R-CA)
WITNESSES: PANEL I:
JOHN W. SNOW, SECRETARY, DEPARTMENT OF THE TREASURY;
RICK FOSTER, CHIEF ACTUARY, CENTERS FOR MEDICARE AND MEDICAID SERVICES;
STEPHEN C. GOSS, CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION; DOUGLAS HOLTZ-EAKIN, PH.D., DIRECTOR, CONGRESSIONAL BUDGET OFFICE LOCATION: 1100 LONGWORTH HOUSE OFFICE BUILDING, WASHINGTON, D.C.
REP. WILLIAM M. THOMAS (R-CA): Good afternoon. Today, we welcome Treasury Secretary John Snow, the managing trustee, to discuss the 2004 annual reports of the Board of Trustees of Social Security and the Medicare Trust Fund. In every Congress, since Republicans became the majority in 1995, the Ways and Means Committee has reviewed the trustees' findings on the financial future of our most significant entitlement programs. These reports are essential reminders to policy makers of the challenges we face as the baby boom generation retires and as Americans live longer, healthier lives.
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REP. KENNY C. HULSHOF (R-MO): I appreciate it, Mr. Chairman, and I appreciate the gentleman from Massachusetts making the political points. But let me come back and say specifically, the faulty --
REP. NEAL: Would the gentleman yield?
REP. HULSHOF: The faulty cost --
REP. NEAL: Those are policy points, Mr. Hulshof. Those are not political points. All of the things that I described happened.
REP. HULSHOF: Well, then let me get directly to the policy --
REP. THOMAS: Gentleman from Missouri has the time.
REP. HULSHOF: The quote was from you, "faulty cost estimate." Is that-did I state correctly? Faulty cost estimate. Is that right? Mr. Holtz-Eakin, on November the 20th of 2003, did you write a letter to the chairman of this committee, in essence saying that the Medicare Modernization Act would cost $395 billion over the 2004-2013 period?
MR. HOLTZ-EAKIN: Yes, I did. And I want to thank you for the chance to make the record correct. The cost estimate was available prior to the vote.
REP. HULSHOF: And you also reiterated, quote, "CBO has not had an opportunity to review the final legislative language, and this estimate could change upon completion of that review." End quote. Do you remember putting that in this letter to the chairman?
MR. HOLTZ-EAKIN: Yes. We were always careful to make sure that we do not pin down an estimate until we see the final legislative language.
REP. HULSHOF: And after the final legislative language was enacted into law, signed by the president, somewhere in that course of legislative activity, your office went back and refigured to see whether or not you were confident in the cost estimate-that the Congressional Budget Office cost estimate gave to this body, and is it not a fact that you stand by that $395 billion cost estimate today, just as you did on November 20th, 2003?
MR. HOLTZ-EAKIN: Yes, I do.
REP. NEAL: Would the gentleman yield?
REP. HULSHOF: I see nothing faulty about that cost estimate, Dr. Holtz-Eakin. Now, maybe that's just my perspective, as a member on the lower dais, not from Massachusetts, but certainly one that appreciates that Congress-and no disrespect intended, Mr. Foster-that Congress, our official scorekeeper is you, Dr. Holtz-Eakin. CBO, Congressional Budget Office. Now, I think it's ironic that we've heard today this haranguing about-and I respect the fact that information from whatever source is important, especially because, as Mr. Stark said, we are not actuarial scientists, and so we rely upon you. But to suggest that this $534 billion figure would somehow have caused the other side to have come on board, I mean, is that the suggestion?
We've heard these complaints and criticisms that this bill, H.R. 1, was not generous enough, and so suddenly are we to believe that, well, if this higher number of $534 billion were, in fact, our official number, that somehow we would have had some additional support on the other side of the aisle. I think that's ludicrous to even suggest it. To me, the point is, among some, not all-and Mr. Neal is a friend, and I'm not specifically throwing this in our direction, Mr. Neal, and I'll yield in a second --
REP. NEAL: Okay.
REP. HULSHOF: -- but without question, we've heard the words "cover-up." You know, we've heard-you know, and the effort to score political points. So be it. It's an election year. But to me the real story of today is not these partisan attacks or this issue of credibility in going into the discussion about Niger, for Christ's sake, about Medicare, the point is the headlines should read, quote, "Medicare, Social Security going bust if Congress fails to act." End quote. That to me is the headline. I will yield briefly to my friend, because I want to get to some questions on the actuarial numbers on the bigger issue, not the political issue.
REP. NEAL: I believe, Mr. Hulshof, that, Mr. Foster, you're an actuary, are you not?
MR. FOSTER: Yes, sir.
REP. NEAL: That was my point, that the actuary is the one that came back with us with a long career of distinction in offering numbers.
REP. HULSHOF: And I --
REP. NEAL: The president uses the $504 billion mark in his budget.
REP. HULSHOF: And I accept that, Mr. Neal. I accept --
REP. NEAL: But that's not a political point. And, Mr. Hulshof, there's nothing wrong with coming from Massachusetts.
REP. HULSHOF: There's nothing wrong with Massachusetts, Mr. Neal. It's one of the great 50 states. But I would say to the gentleman that, you know, somehow talking about yellowcake and Niger and how it relates to this quote, unquote, "faulty cost estimate" I think would be a bit of a stretch, but nonetheless, my time is running short.
And I simply-to me the real issue here, Mr. Goss, is exactly why you're here. And that is-and let me just say this, because I know, again, time is short and I wanted to get actually to-and I see the light has just gone-very quickly, the effect of economic growth on Social Security's finances, the myth out in Missouri, perhaps not in Massachusetts, where people are must more sophisticated, Mr. Neal. I say that tongue in cheek. The thought is, can we grow our way out of this problem or is this an actuarial demographic reality that we have to come to grips with here on Capitol Hill? Mr. Goss, that's the only question I get to ask, and if you could answer it briefly.
MR. GOSS: Thank you very much. As we indicated in the sensitivity estimates provided in the trustee's report, there would be a positive effect on the financial status of Social Security if we had stronger real wage growth. In our judgment, it would be fairly modest and it is highly unlikely that there could be a sufficient increase in economic growth to make a substantial difference.
REP. HULSHOF: What a great actuarial answer. I appreciate that and I yield back my time.