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Social Security E-Town Hall

Location: Washington, DC


Rep. Israel Answering Questions at the E-Town Hall MeetingRep. Israel held an E-Town Hall Meeting on June 29th. Below you will find a transcript of the meeting.


Thanks so much for participating in my first online town hall meeting! It's been a few weeks since my last town hall meeting on Social Security in Plainview. I'm looking forward to having another lively conversation about this vital program with all of you this afternoon. I believe that as a nation we must have a bipartisan discussion about how to best preserve and protect Social Security for our seniors and for future generations of Americans. So without further adieu, lets get to your questions!

Rachael from Lake Ronkonkoma asks: I'm 28 years old and my husband is 29. That means it will be a long time before we retire. You have something on your web sight giving the difference of what we should receive under ss with and with out privatization. SS has been in trouble for the entirety of my life time why should I believe that ss will still be there and that there should be money for us when we are ready to retire?

Thanks for your question, Rachael. I understand your concern and I believe that Social Security must be reformed so that it is solvent in the long term. Despite this, Social Security will be there when you retire. Right now, Social Security will be able to fund all benefits until 2020 and from there it will be able to fund 80% of benefits. I want to work to find a bipartisan solution that does not result in drastic cuts in benefits (as you can see from the comparison, privatization results in a decrease in benefits for people of all ages and income levels).

David from Melville asks: For the most part, I agree that allowing private accounts may not be suitable for all without offering some form of substantive financial education. However, why would it be so terrible if I truly desired to put a portion of my social security contributions towards private accounts. Why not give someone that opportunity where they feel they can do better. thank you!

Thanks for your comments, David. I agree that workers should be given a number of options to plan for retirement. Social Security is only one component of a "three-legged stool" in retirement planning. The other parts include pensions and private savings. I strongly support universal 401(k) plans that allow workers to invest a portion of their paychecks in tax-deferred accounts. I also have cosponsored bipartisan legislation, the Retirement Security for Life Act (H.R. 819) that creates a tax incentive for people to use lifetime annuities

Rick from Ronkonkoma asks: How did we get into this mess with Social Security in the first place?

Thanks for your question, Rick. As you know, Social Security functions under the premise that today's workers will help finance benefits for retirees and that these workers will then be supported by the next generation of workers paying into the same system. Today we find ourselves in a place where 77 million Americans born between 1946 through 1964 are getting ready to retire. There just aren't enough Americans in the workforce to pay our retirees the benefits they've been promised - unless we make some changes.

Michael from Huntington Station asks: Can you explain to me what you think is Mr Bush's motivation for his policies. From social security to public television, I am bewildered by his apparent disdain for the american electorate and the concerns of the common man. Our manufacturing base is collapsing, our health care system is strictly for the wealthy, and our middle class is in seige mentality. Is this the ideal of the Christian extreme right?

Many individuals in the President's Administration believe that privatizing Social Security and other social services creates an "ownership society" whereby individuals make personal decisions with little government intervention. While I support the rights of individuals, privatizing Social Security is a way of ending a vital safety net that has benefited millions of senior citizens since the first benefits were paid in 1940. Without Social Security, an estimated 50% of senior citizens would live below the poverty line.

James from Bay Shore asks: Maybe if the "government" stopped raiding the Social Security Trust Fund, there would still be a fund. Also the current population of The U.S is approx 295,730,000. If this population could "suffer" through a $10 (yes $10) per year tax increase that would provide $2,957,300,000 per year. Two yrs would reap close to $6 trillion. I realize that all of this population is not employed, but the picture is clear.

I understand your frustration, James. I firmly believe in putting a "lock-box" around Social Security surpluses to prohibit the use the surpluses for any purpose other than protecting Social Security. At the same time, rumors that the trust fund has been raided are exaggerated. Currently, any trust fund surplus funds that have been "borrowed" have been replaced with special U.S. government treasury bonds. The U.S. government is known as "the most reliable borrower in the world" and it has never defaulted on a loan. The U.S. government, with these bonds, fully guarantees that every dollar borrowed from the Social Security surplus will be repaid and the solvency of the trust fund remains in tact.

Mitch from Copaigue asks: Thank you to Rep Israel for taking the position he has and for providing valuable information on this topic on his website. Does the President think we're all stupid, not paying attention, or just powerless to impede his plan for enriching fund brokers with payroll tax revenues?

I appreciate your concerns, Mitch. I always try to keep my constituents as up-to-date as possible with what's going on here in Washington. The President and I agree that Social Security needs to be preserved so that we can ensure that all Americans receive the retirement benefits they've been promised. But we disagree as to how best to fix the system. For a number of reasons I'm sure we'll soon discuss, I don't believe that private accounts are the way to go. I look forward to a lively discussion about other ways we can preserve and protect the Social Security system during our Online Town Hall today!

Larry from West Babylon asks: Why are you lying to us? Your typical "democratic" line is inaccurate and you know it. The Federal Government is spending the surplus and you don't want to give that up. You know the Social Security surplus will be gone in 12 years, and you know benefits for those of us over 55 will NOT be reduced if a personal account for a max of 4% is established. Why are you scaring older people?

While I appreciate your question, Larry, I have to respectfully disagree. As we discussed earlier today, any money borrowed for the Social Security trust fund has been guaranteed with special U.S. Treasury bonds. I don't believe that the creation of private accounts would help ensure that Social Security is strong for American seniors today, as well as for their children and grandchildren in the future. Some have suggested borrowing between $750 billion and $2 trillion to sustain benefits and pay for the costs of private accounts. Since we already have a $7 trillion long-term debt (nearly 40% of which is owned by foreign interests), every dollar we borrow today is a tax hike on our children who will have to repay those obligations tomorrow. It raises their taxes to repay the debt that funded their stock market accounts and lowered their benefits.

Sister Ann Michel from Brentwood asks: Can the ceiling on payment of payroll taxes be raised to $150,000 or more. Would this strenghten the Social security system in the long term? Could the tax cuts to the 1% wealthiest

It's good to hear from you. Removing the cap on Social Security taxes would in fact generate $4.6 trillion in revenues, assuming that we don't also increase benefits. The entire Social Security shortfall is $3.98 trillion. It is one of the options that many are considering here in Washington. I want to make sure that any such action does not disproportionately burden working families on Long Island.

Steve from Hauppauge asks:How will the changes made to social security effect people who recieve social security due to a disability such as a mental illness who need to take medication and live in community residences so they don't end up in hospitials that cost more money in the long run? Will people w/these types of disabilities be affected in the changes w/ social security?

You're right, John. No one seems to be talking about how Social Security reform will impact people with disabilities and their families. The Social Security program was created not just to protect the retired from poverty, but also to protect people with a disability that limits their ability to work. According to the Consortium for Citizens with Disabilities (, 7 million disabled Americans receive Social Security benefits. On its website, CCD says that all proposals for Social Security reform must: "ensure a benefit formula that does not force more people with disabilities into poverty, provide protection against inflation, protect disabled adults, children and other family members with disabilities and protect the disability insurance program from pressure caused by raising the retirement age." You can be sure that I will always consider how changes to Social Security will impact people with disabilities when considering the various proposals offered for reform.

Dan from North Babylon asks: Anyone who has retired prior to 1985 has received over a 1700% return on their social security contribution. Since over half the wealth in this country is controlled by people over 65, why not means test to reduce the cost of private account transition?

Hello Dan. I believe that social security should be a universal retirement guarantee and not means tested. As a result of the current universal benefit, the poverty rate for seniors in America is about 10%. Without the universal benefit, it would be over 50%. The system has worked well for nearly sixty years, and I believe we need to focus on bipartisan methods to extend the solvency of social security for all seniors.

Paul from Bohemia asks: Sir, concerning the proposed plan to privatize Social Security, I have heard nothing about the effect of broker fees (purchase, sale, holding, etc.). If these fees are not ameliorated, any gains made by private stock holdings can easily be negated in the long term. The numbers I have calculated show that even with a major diversion of the Social Security tax into privately held stock, the return one may expect would be far less than the effect it would have on Social Security. It could possibly cause the immediate collapse of Social Security

I agree with you, Paul. Not only will privatizing Social Security lead to a drastic cut in benefits and the end of the program as we know it, but the administrative/overhead costs that you mentioned will run up our national debt. Some have said that in order to add private accounts and maintain benefits, it would cost $750 billion to $2 trillion. With the national debt currently over $7 trillion (your share alone is $26,000!), we would be passing along this burden to our children. Plus, 40% of our debt is owned by foreign interest. I can't support a plan that passes along cost burden to our children and makes us more reliant on foreign dollars.

William from Oakdale asks: My wife and I invested in what we felt was a safe mutual fund, only to be ripped off by some dishonest CEO of a corporation (Enron), how in the future could we feel safe investing in a mutual fund or any other stock? We can't wait to get out of the stock market as soon as we are back to at least what we paid for our mutual fund!

I understand how disappointed you must be, William. Corporate corruption, as exhibited by the Enron scandal, is a serious problem and investing in the stock market is risky. That's one reason I'm opposed to the creation of private accounts. Privatization of Social Security exposes Americans to the inherent risk found in the volatility of the stock market. Since Social Security was established by President Franklin D. Roosevelt in 1935 to ensure economic security for American workers, poverty among American seniors has dramatically declined. We have a promise to keep to all Americans. I believe that gambling our seniors' retirement in the stock market is a bad idea.

Paul from Bay Shore asks: Congressmen Israel if Social Security as it currently stands is not in trouble how come members of CONGRESS do not pay into the system? Please explain why are you against a system that will allow AFRICAN-AMERICAN men(who tend to die before they are elegible for benefits) to build a nest egg, that they can transfer to thier families in case something horrible happends. Congressmen Isreal please explain to me what is going to happen in 30 years(when I retire) and the SS tax rate is double or triple what it is now, while the FEDERAL GOV'T constantly spends money it doesn't have? How can I be assursed there will be money for me? Or will the age of retirement, by then, be upped to 90 years old?

I'm glad you asked, Paul. An email hoax has helped fuel the rumor that members of Congress and other federal employees are not part of the Social Security system. But since 1984, Members of Congress have been participating in the same program as all other Americans. As your elected official, I should not receive any special benefits. I came to Congress to fight for your interests, not to improve my personal retirement options. It is true that about 30% of all state and local employees are not part of the same program as most other Americans. One possible way to increase revenue is to make Social Security truly universal, gradually adding new state and local employees into the system.

Elyse from Hauppauge asks: I've heard that major changes in Social Security would hurt women more than they would hurt men. Is that true?

That's an interesting question, Elyse. It's certainly possible that drastically altering the Social Security system might affect women differently than it would affect men. Because there still exists a significant pay gap, women tend to earn less than men over the course of their lifetimes. Compounding the problem, women tend to spend less time in the workforce than men. For instance, women may take time off from work to raise a family or to care for aging parents. Additionally, on average, women are outliving men. For these reasons, women tend to rely more heavily on Social Security in their retirement than do men. Cutting benefits could have serious consequences for American women and it is crucial that we consider these consequences as we move forward.

Michael from Plainview asks: If it were the President's intention on providing "freedom of choice" in retirement planning, wouldn't it make more sense if Congress expanded the voluntary IRA and Roth IRA accounts and keep Social Security as the basic fallback for retired Americans?

I really appreciate your comments, Michael. As I mentioned earlier to David, I support access to universal 401(k) plans. I have also cosponsored the Retirement Security For Life Act (H.R. 819) that creates a tax incentive for people to use lifetime annuities. You are right that Social Security is one part of retirement and should be preserved for retirees.

Phil from Dix Hills asks: Congressman, If private accounts are not acceptable, what would you propose? Some in your party talk about simply raising the ceiling on the income that ss is paid on, which certainly becomes another tax increase with no benefit to many of your constituency. Would raising the retirement age to 67 or 68 make a big difference? I hate to say it, but that seems like it might be the simplest solution if it would fix the problem. You would have to figure out how to roll it in and how to deal with the instant uproar of those approaching retirement age, but 65 is really not "old" anymore. Of course I say that because I'm a whole lot closer to it than I used to be, but the truth of the matter is that people of 65 are far more active than those of 25 years ago. I look forward to your ideas and hope to see you around town this summer

Thanks, Phil. There are many ideas currently being discussed as how to fix Social Security. I discussed one of these, raising the cap on wages taxed, earlier with Ruth. As you mention, another idea being tossed around is raising the retirement age. It is estimated that raising the retirement age to 70 would cut the shortfall by about 36%. But this proposal has some drawbacks. Women and men who have worked jobs that require manual labor all of their lives may not physically be able to do work until they are 70 years old.

Francis from Ronkonkoma asks: I just got out of the Marines, and i need to understand something! I here all this talk about, how social security needs to be kept, and i understand from this email, but what plan do we have mind so far, and how much is it going to cost in order to strengthen it?

Francis, as a Member of the House Armed Services Committee, I'm proud of your service in the Marines and to our country. Thanks! The shortfall for social security is estimated at $3.98 trillion over the next seventy five years. The cost to privatize social security, under the President's plan, would be about $1.1 trillion. That would require borrowing that amount (and adding $1.1 trillion to our existing $7 trillion national debt), and raising taxes on young people to repay it later. Other options include eliminating the cap on social security taxes...investing in higher yielding equities...increasing the retirement age...and more. I want a bipartisan solution, however, I cannot support any long term fix that a) borrows money from the next generation to fund the privatization of social security; or b) increases our national debt and forces tax increases later. Again, thanks for your military service.

Pat from Ronkonkoma asks: Raising or eliminating the cap on income that's subject to pay into Social Security seems the most sensible approach to its solvency. It's a popular choice with people I know, regardless of their political affiliation and it seemed to be favored in polls. How much of the problem could be solved just by doing this one thing?

I appreciate your comments, Pat. Currently, Social Security faces a shortfall of about $4 trillion over the next 75 years. It is estimated that by eliminating the wage cap and increasing benefits, over $3.69 billion could be saved.

Richard from Syosset asks: Social Security is a pyramid scheme. If I offered a private Soc. Sec. program i would be arrested. This is because eventyou can't get enough new participants to cover the old ones who paid in. Therefore it cannot go on forever. Why not let someone like me 38 yrs old opt out of the system. I would do that today and let you keep everything I've paid in to date. Therefore you lower participation after taxing us for x amount of years

Richard, I understand your frustration. But the problem is this: today's workers are paying the retirement benefit for their parents and grandparents. If we divert $1.3 trillion out of the social security system to finance privitization, we simply will not be able to pay current levels of benefits. That means an immediate benefit reduction for today's retirees. To avoid that reduction, the President proposes borrowing the funds to cover the benefit shortfall. That means that you, as a young worker now, will have to fund the repayments later. In addition, if your private investments do not yield sufficient funds, you will face the dual prospect of a lower benefit and higher taxes to repay what was borrowed to fund the transition to private accounts. It's robbing Peter to pay Paul.

Joyce from Greenlawn asks: What are the chances of leaving Soc. Sec. alone just eliminating the CAPS to finance? Why are there no CAPS on who collects Social Security? Perhaps a small tax cut can be offered for the donation.

Hi Joyce! Social security retirement benefits are linked to the specific amount that you paid via your FICA taxes. In fact, you probably have received a statement from the Social Security Administration informing you of your total earnings, payments to social security, and projected benefit. Some have advocated a reduced benefit for very high income retirees. The concern that I have is that someone regarded as a high income retiree in places like Arkansas are just barely hanging on in high-cost areas like our own. That's why I would have concerns about linking social security benefits to your income or assets at retirement. Hope all is well in Greenlawn!

Bob from West Islip asks: My 403 account has taking a beating. What will prevent these private accounts from going in the tank? Hasn't a similar program failed in England?

I'm sorry to hear about your 403(b) account, Bob. And you're right about the United Kingdom. In the early 1980s, the British Government replaced a portion of its guaranteed government pension program with private accounts. In the end, private accounts cost British taxpayers more than they helped them save. The failure of private pension accounts in Britain sets a dangerous precedent for the creation of private social security accounts here in the U.S.

Kimani from Sayville asks: Why is Social Security being discussed at all with the worsening condition of Medicare? Should not Medicare more of a priority than Social Security?

Good question, Kimani. I agree that we must also address Medicare and make sure the program remains solvent in the long-term. The new prescription drug benefit enacted by the Medicare Modernization Act of 2003 (MMA) is alone estimated to cost nearly half a trillion dollars over the next 10 years. I believe that we need to focus on the health of our children and preventative care so that when today's youth become Medicare recipients they will lead healthier lives and have lower medical bills. I also believe that the Secretary of Health and Human Services (HHS) should have the ability to negotiate directly with pharmaceutical manufacturers like the Veteran's Administration (VA) does. This is why I have cosponsored legislation called the Medicare Equitable Drugs for Seniors Act. This legislation would allow the Secretary of HHS to negotiate fair prices for Medicare prescription drug beneficiaries.

Chet from Plainview asks: To protect Social Security; why don't we simply take the current Social Security $1.5 trillion surplus and instead of investing the money in low-interest Treasury bonds that is currently done, take the money and invest it in the stock market? If the money earns only 3% over inflation over a 35-year period, the unfunded Social Security pension liability will be more than paid off.

I appreciate your thoughts, Chet. I do believe in protecting the Social Security trust fund and thereby can't expose it to the risk inherent in the stock market. In 2002, the average rate of return earned by the trust fund was 6.4%. Investing the surplus in the stock market leaves it vulnerable to these same fluctuations and risks in the market. The downturn in the stock market after 9/11, combined with the failure of several large corporations, such as Enron and Worldcom, has caused many people to see a decline in their 401(k) accounts.

Reginia from Huntington asks: I am opposed to the Bush plan and hope you will continue to do all that you can to prevent it from passing through Congress. What do you propose in place of the Bush plan? What can I do to help you with your initiatives if I support them? Thank you!

Thanks Reginia. There are a broad range of options. Frankly, they are all difficult, but no one ever suggested that solving this problem would be easy. The non-partisan publication Congressional Quarterly recently published a comprehensive menu of options. They include:
eliminating the wage cap without increasing benefits... raising the payroll tax...eliminating the wage cap while increasing benefits... reducing the cost of living adjustment... raising the retirement age...and more. I have said to the President that I would consider any of his proposals as long as they do not increase our national debt, raise taxes on the next generation, cut into benefits for current retirees, and lead to the privatization of a program that has served seniors well for sixty years. Ultimately, we do need a bipartisan and realistic solution, and I am hopeful that the Administration will present a plan along those lines to the Congress.

Richard from Melville asks: I've heard the term "clawback" being used in conjunction with the President's plan. Can you explain to me what a "clawback" is, and why I get the feeling the President means to use the word as a verb rather than a noun?

That's a great question. Some of the language used to describe the President's plan is quite confusing. According to the Center for American Progress ( , when people talk about a "clawback," they mean that under private accounts, workers would be forced to repay the amount they have diverted into their account (plus interest and inflation) through cuts in their guaranteed benefit. This means that in order to increase your retirement savings, the money you put in your private account would've had to have grown by 3%. This kind of growth is by no means guaranteed. The "clawback" seems like another reason why private accounts don't make sense.

John from Kings Park asks: You have talked a lot today about what is being "discussed" in Washington, but you haven't said what it is that you support. Aren't Democrats just taking pot-shots at the President's ideas without offering any new ideas themselves?

John,as I mentioned to Regina, there are a broad range of options which deserve bipartisan consideration (please refer to her question). I will debate and consider any of those options as long as they do not increase our already burdensome $7 trillion national debt, cut current retiree benefits, and turn social security from a guaranteed retirement benefit for Long Island families into a stock market risk. I welcome your continued input, and hope you will keep me advised of your views.

Jim from East Northport asks: I am a single 45 year old public school teacher who supports private Social Security accounts far beyond what the president is proposing. If a 20 year old was able to take their Social Security taxes and put that money into a tax free savings account that earned a rate of return equal to the average since 1920 (including the Grea Depression period)he would have $975,000 in the bank at retirement. The account would yield $68,000 a year without touching the principal. He would also be able to will the balance to a relative or loved one. Why should the government keep all of my money at my death? The Democrats in Congress are trying to confiscate my Social Security contributions and deny me the right to leave money to my heirs. Why not support private accounts that would provide a bigger retirement cushion and allow us to pass on the balance at our death?

Jim, the problem is that the math just doesn't add up. Under privatization, a seven percent return on investment isn't a guarantee, it's hoping for the best. If Wall Street doesn't perform to expectations, you have a reduced benefit and increased taxes to repay the $1.1 trillion that was borrowed to finance the transition to private accounts. The problem that social security faces does not require the dismantling of social security to fix. According to the nonpartisan Congressional Budget Office, current FICA payments will pay 100% of current retiree benefits until the year 2020. At that point, there will be a shortfall, which can be funded by the existing social security trust fund until 2052. Then, FICA payments will be sufficient to cover 80% of retiree benefits. The solution is to bolster the long term solvency of social security without turning the program into an investment risk.

Unfortunately, we've run out of time for today's town hall. Thank you very much for taking the time to participate this afternoon and thanks also to those who submitted questions in advance. I think we've had a great conversation!

I apologize if I didn't have the opportunity to answer your question. Please be sure to check my website ( to learn more about Social Security reform as the debate moves forward. You will also have the chance to view a transcript of our town hall meeting this afternoon.

Thanks again. As always, I appreciate the opportunity to represent the people of New York's 2nd Congressional district here in Washington!{50E57CE2-077E-408E-A398-634CA65C0CBC}

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