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Public Statements

Future of Social Security

Location: Washington, DC

SEN. LARRY CRAIG (R-ID): Thank you very much. I am here today because this was a hearing that the chairman had begun to work on some time ago, prior to the election. If it had not been, I would not be here. I think it is important for the record to show that the transition of power in a democratic society is being flawed at this moment—that I should be the chairman, as should others in a majority party. When the transition occurred some months ago, with the change of a single member, that transition in this committee and others came almost immediately, and that's the way it ought to be. But because of the cooperative nature that the chairman and I have worked on, and will continue to work under for the benefit of this committee, I am here today. But it is very important the record demonstrate that what is going on in this Senate at this moment is historic, and precedent-setting, and it will be denied. I think that is fundamentally important.

But this committee will work in a cooperative vein because, I think as the chairman laid out, the issues before it, and the challenges in an aging America are critical, and it is our opportunity, both John Breaux's and mine and Jim Talent and others, to highlight those in this committee to challenge other authorizing committees within the Congress to meet those kinds of demands. Today before us is a GAO review about Social Security, and I too welcome David Walker. Social Security I think has provided protection from financial uncertainty for generations of older Americans. However, America has changed dramatically over the past decades, and continues to change. The U.S. economy, for example, has evolved from an industrial age work force to an economy characterized more and more by information age opportunities. America also faces unprecedented demographic changes, and it is in those changes that this committee has an opportunity to highlight and bring to the forefront.

As a nation, Americans are living longer than ever before. Birth rates have stabilized to roughly replacements levels. The ratio of worker paying into Social Security to those collecting Social Security benefits has declined from 5 to 1 in 1960 to 3.4 to 1 today. The worker-to-beneficiary ratio is projected to decline to 2 -- to 1 by 2040. Let us be clear: current retirees and those nearing retirement age will continue to receive their promised benefits. Let me repeat that: There is not a member of Congress, nor does the current system deny, current retirees and those nearing retirement age being allowed to continue to receive their promised benefits. Those receiving benefits now and in the near future need not fear losing their benefits. And I think it's in that context that the chairman challenged us this morning to be able to openly, honestly and effectively review these programs that benefit our elderly, our aging in America, without the political demagoguery that has historically mounted around it.

The challenge calling out to this generation of leaders is how to sustain Social Security beyond this generation of retirees, without overburdening our children and grandchildren with excessive taxes on their labor, or huge cuts in their retirement income. We are here today to learn how best to provide a Social Security program that is adequate and sustainable for the future. Our charge is to develop a Social Security program that future generations can depend upon. On May 3rd of '01, President Bush courageously established a Social Security commission to study the future of our national retirement program. The president tasked this commission with the responsibility of developing models designed to strengthen Social Security. The commission featured an impressive bipartisan group of experts. This group produced three models, using different design features to show how each approach might address the twin issues of benefit adequacy and sustainability. So, Mr. Chairman, I too look forward to listening to the GAO's view of how the president's commission meets these twin goals, because they are the twin goals that remain the challenge. Thank you very much.

SEN. CRAIG: Well, I don't have any additional questions; a couple of observations. And, first of all, David, thank you very much and your troops for being here and the work you're doing as we thrust these things upon you to analyze. We're all going to work to build a record here.

But I'm sitting here looking at that chart. And I refer Senator Stabenow to it, because that's what David went through before we began to look at different models. The reality is right there. We should cut benefits 13 percent this year or raise taxes 13 percent -- 15 percent—to sustain outward. Or, by '17, we should do 16 percent benefit cut or 22 percent increase in payroll tax. Or, by '41, we should do a 31 percent benefit cut or a 45 percent payroll increase.

Now, I mean, that's the reality upon us based on current assumptions, current projections. And so that's what we've all been looking at for a time. I'm not one that's going to saddle my grandchildren in a huge payroll tax increase. At the same time, I'm going to want them, because they're very dynamic people, to go to their computer and pull up their account and make some assumptions and know what they're dealing with, as other countries have taught or educated their people into doing.

I think there's a phenomenal assumption that I've always found totally faulty, and that when you give the American public adequate information, they respond in a phenomenal way.

And you had said very early, David, in your comments that there is one thing that is obvious in all of this—that if we make these changes, that there needs to be driving it a major educational program that allows people to make certain assumptions and understand where they are and what their opportunities might be; and certainly for younger people, a great deal more opportunity in the long term—compounding, if you will—than those of an older age and of no benefit to me at my age, but certainly I think the opportunity for my children and grandchildren to have something that is worth their money or they're going to aggressively depart from it or find alternative ways, because the law will demand they can't depart.

And I've always said in this debate, I'm not going to be part of creating a generational rift in this country of the magnitude that will occur by 2075 if we don't make the adjustments now. I still want kids to be willing to help their grandparents out just a bit.

At the same time, obviously their grandparents of that day are going to be a much more sophisticated American from the standpoint of understanding and making decisions and having information available to them than probably the grandparent of today.

And that's our challenge, to be able to be forward-looking in this instead of reactionary as it relates to current circumstances. And it's critical that we view long-term projects, we look at historic averages, because we're talking about actuarial or actuarially thinking down the road. And that's a phenomenal challenge for all of us. Thank you.

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