Today, Congressman Ted Deutch testified before the House Budget Committee against attempts by House Republicans to insert Social Security into this year's budget debate. Congressman Deutch's remarks were offered as part of the Budget Committee's annual practice of soliciting testimony from members of Congress prior to the drafting of the upcoming fiscal year's budget.
TESTIMONY OF CONGRESSMAN TED DEUTCH BEFORE HOUSE BUDGET COMMITTEE
March 30, 2011
Mr. Chairman, distinguished members of the House Budget Committee:
I am grateful for the opportunity to testify before you today and give voice to the constituents I am so privileged to serve. We need a healthy debate about our federal government's expenditures. I welcome that discussion. It is a conversation we need to have.
However, in these five minutes before you today, it is unfortunate I feel the need to talk about an issue that does not belong in this conversation at all. That is the issue of Social Security, a program forbidden by law from drawing upon our nation's general budget revenues and contributing to our deficit. We all agree that our federal budget must reflect our priorities as a nation. Today, I respectfully request that my colleagues ensure our federal budget also reflects reality.
No matter how many times you say Social Security is broke, the reality is that Social Security's independent revenue stream and its Trust Fund's investments maintain the program's solvency until 2037, when it may begin to fall short. Social Security is legally prohibited from contributing to the deficit. It cannot use debt to pay out benefits, not today, not tomorrow, and not in 2037. If Congress fails to address this modest shortfall sometime in the next quarter century, Social Security will then pay out reduced benefits, to the tune of 78 percent of what is owed to beneficiaries.
Having introduced the Preserving our Promise to Seniors Act, legislation that would address 2037's projected shortfall, I am the first to say we should take action to overcome this challenge and extend Social Security's solvency for future generations. However, it would be disingenuous for me to promote my legislation using the deceitful claim Social Security faces an imminent crisis. We have a quarter century to shore up Social Security. The most imminent crisis we face is one that we can address right now in our 2012 budget, and that is America's economic crisis.
Our economy is riddled with chronically high unemployment, ever-worsening income inequality, and a middle class lacking any sort of economic security. These challenges have consequences for Social Security, and for the retirement security of all Americans.
Painfully stagnant wages and the growing divide in earnings account for more than half of Social Security's projected shortfall since the last reforms were enacted in 1983. Rising income inequality has led more revenue to escape Social Security taxes, which are currently capped at $106,800. More than 80 percent of income growth since 1980 has gone to the richest 1 percent of earners -- people who stop contributing to Social Security beyond their first few paychecks.
Our economy has grown these past few decades, but the paychecks of most Americans have not grown with it. They struggle to put food on the table, afford health care, pay for college, and for many, saving for retirement is not even an option. Over 50 percent of American households -- regular hardworking people -- lack any retirement savings. Of those with retirement savings, over 50 percent have saved up less than $45,000 -- certainly not enough to sustain a secure retirement.
In addition, the pillars of financial stability that many retirees in America have relied on in the past are not as dependable as they used to be. Traditional pension plans have become virtually nonexistent, and home values are down. The facts on the ground trouble me even more when considering some of the proposed reforms to Social Security floated by my Republican colleagues, instead of plans to create new jobs or bring economic security to middle class families.
One such ill-advised proposal is raising the retirement age. Soon to be 67, let's put aside the fact this retirement age is already higher than most industrialized countries. Washington may have a new fixation on rising life expectancies, but the statistics show our gains in longevity have excluded low-income workers. Raising the retirement age would mean an immediate benefit cut for the men and women of America who toil on their feet for 50 years as grocery clerks, coal miners, janitors, and nurses.
Every year the retirement age is raised is another 7 to 8 percent benefit cut for all individuals, whether they retire at 62, 67, or 70. This is not an equitable solution, nor do the American people support it. Another reform apparently on the table is something called means-testing, which would exclude Americans defined as "affluent" from Social Security benefits. Social Security is strong because all Americans contribute to it and believe in it.
Turning Social Security into a welfare program for lower-income Americans instead of a wage insurance program we all can count on is not the answer. For my constituents who tragically lost their lifesavings in the Madoff Ponzi scheme, Social Security is the one reliable source of income they have left. Under this system, if someone earns too much money, they would risk losing their Social Security benefits. We should be encouraging Americans to save up for retirement, not discouraging them.
These proposals, such as raising the retirement age, shifting wealthier Americans to private accounts, and turning Social Security into a low-income welfare program offends the very wisdom of this stalwart program. Social Security was created on the simple premise that we are all entitled to a secure retirement after a lifetime of hard work.
My disagreement with these proposals goes beyond the fact they differ from my legislation, which phases out the unfair cap on Social Security contributions, extends solvency for another 75 years, allows people who put more in to take more out, and even guarantees adequate cost of living adjustments.
What I most vehemently object to is the insertion of these proposals into our budget debate when they have nothing to do with our federal budget. Social Security was created with an independent revenue stream and barred from contributing to the deficit to avoid subjecting the benefits of disabled Americans and current and future retirees to politically charged budget battles like this one.
I urge you to keep Social Security benefits off the table in this budget debate, because that's exactly where they belong.