Subcommittee on Social Security of the House Committee on Ways and Means - Public Servant Retirement Protection Act

Federal News Service July 20, 2004 Tuesday

July 20, 2004 Tuesday

HEADLINE: HEARING OF THE SUBCOMMITTEE ON SOCIAL SECURITY OF THE HOUSE COMMITTEE ON WAYS AND MEANS

SUBJECT: PUBLIC SERVANT RETIREMENT PROTECTION ACT

CHAIRED BY: REPRESENTATIVE E. CLAY SHAW, JR. (R-FL)

WITNESSES PANEL I: MARTIN H. GERRY, DEPUTY COMMISSIONER, DISABILITY AND INCOME SECURITY PROGRAM, SOCIAL SECURITY ADMINISTRATION;

PANEL II:

TERRY HICKMAN, PRESIDENT, NEVADA STATE EDUCATION ASSOCIATION, ON BEHALF OF NATIONAL EDUCATION ASSOCIATION; RANDALL IGLEHART, STATE PRESIDENT, ASSOCIATION OF TEXAS PROFESSIONAL EDUCATORS, AUSTIN, TEXAS; CHUCK CANTERBURY, NATIONAL PRESIDENT, GRAND LODGE FRATERNAL ORDER OF POLICE; GEORGE AVAK, PRESIDENT-ELECT, CALIFORNIA RETIRED TEACHERS ASSOCIATION, SACRAMENTO, CALIFORNIA

LOCATION: B-318 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

TIME: 10:00 A.M.

BREAK IN TRANSCRIPT

REP. SHAW: With that, Mr. Hulshof.

REP. KENNY C. HULSHOF (R-MO): Thank you, Mr. Chairman. I want to at the outset provide my unqualified, unequivocal support, Mr. Brady, for your bill and I'm proud to be a cosponsor. To me, politics is the art of the possible. We can all talk about the barriers that would be in place and the challenges that we would have.

I guess, Mr. Gerry, one of the things we could be-and it's appropriate that you point out how difficult it would be for your agency. I guess because, as Mr. Johnson pointed out, we want to give leeway to the Social Security Administration, I guess one of the other options would be that we, Congress, could be very proscriptive as far as what authority we would give you, and yet we would opt for the flexibility.

And I have to say to my friend from Texas, Mr. Sandlin, you know, the so-called incredulous claims that you-and I put quotations around it while you made that statement. The incredulous claims that you claim that members of Congress made regarding the Texas loophole were actually based upon actual cases testified to by the inspector general of the Social Security Administration. Don't shake your head, Mr. Sandlin. It happened here in this hearing.

REP. SANDLIN: Do you want to yield?

REP. HULSHOF: I will if I have time. I recall specifically the Inspector General talking about a teacher from Texas who drive 500 miles one way, was a janitor for a day, drove back 500 miles another way and ended up having a significant windfall, and that was an action case. I will yield to you to respond to that.

REP. SANDLIN: That's very interesting and shows that you don't understand the issue. The teacher probably did that, but here's the thing: the teacher drove 500 miles one way and 500 miles back to claim a retirement benefit earned by a lifetime of work by the spouse, not one day-it doesn't have anything to do with 500 miles or 5,000 miles. It has to do with a spouse that works an entire lifetime, earns Social Security benefits and has them taken away. If the teacher had been any other profession, a doctor, a lawyer, a street sweeper, anything else, that offset would not have happened. So I don't see it as unfairness to do what the law says. And now you've taken that away from them so I see --

REP. HULSHOF: Reclaiming my time, Mr. Sandlin, I-and I've yielded you time to explain it.

And I stand corrected. It was not the Inspector General, Mr. Chairman; it was the General Accounting Office in hearings that you've conducted that we've participated in.

Let me talk just a little bit about fairness and, Mr. Gerry, bring you into this because I want to-let's put this on the record and make sure that my information is accurate. In fact, in the next panel we have testimony that about one-third of teachers pay into a government employee pension plan that substitutes for Social Security. Is that a fairly accurate percentage?

MR. GERRY: I honestly don't know.

REP. HULSHOF: I believe the testimony we're going to have is roughly --

Is that right, Mr. Brady, that roughly a third of teachers pay into a substitute; two-thirds of teachers across the country pay into Social Security?

Do you believe, Mr. Gerry, that Mr. Brady's bill, H.R. 4391, helps ensure that both groups of teachers are treated more equally as far as terms of how much of their Social Security tax wages would be-benefits would be replaced?

MR. GERRY: I think-of course, I'd like to answer yes, but part of the problem I have is this question of how it will actually be administered and what Congress wants to do. Certainly that's its goal and logically it should do that. For people-I would say that for individuals not affected by the pre-1978 earnings question, certainly I think that would be a reasonable conclusion to draw, that they would be more fairly and more individually affected. When you get to people with pre-1978 earnings, the problems that I've been identifying get at the very heart of the whole idea, which is the individual decision. And when you start assuming-or assigning averages or other-then we may get back to the same problem we have now.

REP. HULSHOF: Well, in conclusion I would say that perhaps a point of agreement that I could reach with my friend from Texas is that we understand this is an arbitrary line; that when WEP was created back in 1983 this was an arbitrary line. It has taken us 21 years to get here. I would hope that it will not take us 21 years to get to a point where we could actually-where we can fix this. But, you know, if we're talking about fairness, Mr. Chairman, my belief is that teachers who pay into a Social Security substitute and those that pay into Social Security should be treated on an equitable basis. And I think complete repeal, as many have advocated, seems to suggest that some deserve-some teachers deserve more generous Social Security benefits than others, and I think ultimately we're trying to find that fair approach.

And again, Mr. Brady, I commend you because I think your bill does just that.

I yield back. Thank you, Mr. Chair.

REP. SHAW: (Off mike.)

BREAK IN TRANSCRIPT

REP. SHAW: You yield back nine seconds.

Mr. Hulshof.

REP. HULSHOF: Thank you, Mr. Chairman.

REP. SHAW: By the way, that was a very interesting line of questioning.

REP. HULSHOF: Indeed it was.

(Laughter.)

And even though it is an accounting device, there still is the firewall between the Social Security taxes that are paid into the system and the income tax structure. And I want to-I commend the gentleman from California, and want to kind of maybe step back.

I appreciate the testimony offered because we've had a good, lively discussion. I heard somebody say actually sparring this morning, and I wanted to get back more to some general themes, because I've heard throughout, about how your constituencies, in fact yourself, Mr. Hickman, your personal story about working hard, people playing by the rules, strong work ethic. And we all lament the salary structure that you have, and of course that's not within the purview of Congress necessarily.

Mr. Avak, you even mentioned the high cost of living in California, talk to that guy down there, Mr. Becerra.

(Laughter.)

But as we understand it, and the purpose of the hearing is of course that we recognize that last year there were 700,000 retirees and disabled Americans, about 2 percent of the workforce, that earned a benefit both from Social Security and from a pension plan that substitutes for Social Security. And again, for those folks-Mr. Chairman, you reminded us that there's an audience than just these walls, that back in 1983 Congress enacted this arbitrary line of windfall elimination provision, this WEP we've talked about.

And the intent was-I haven't gone back to look at the debate specifically, but generally the intent was this formula that employees who earned a Social Security pension along with a pension from a substitute, like a teacher, like a police officer, Mr. Canterbury, that they would not receive a more generous Social Security benefit than some worker with equal earnings who's paid into Social Security their entire lifetime.

That was the intent. Everybody recognizes, though, this was an arbitrary line that was drawn. The thing though-the final point I'd like to make, it's really not a question, but I think just again to kind of step back, is that Mr. Brady's bill, this bill that we're hearing you testify about, does in fact repeal the WEP. Now, his bill repeals the WEP. And Social Security would no longer be figured by an arbitrary formula, but would in fact be based on each worker's actual work history.

And again, that attempts to treat our workers fairly. And so again I just want to commend you, not only for your lifetime of experience in the groups that you represent, but your willingness to work with us and to try to address this in the most fair, equitable manner possible.

Thank you, Mr. Chairman.

REP. SHAW: Thank you, Mr. Hulshof.

Mr. Brady.