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Hearing Before the Committee on Financial Services

Location: Washington, DC


Mr. Price of Georgia. Thank you, Madam Chair.

I want to welcome each of you--I guess I should say to
congratulate you for your patience and your tolerance of your
backside for sitting there for this period of time. There is
great advantage for asking late, there is also great
disadvantage because you want to respond to everything that you
have heard. But let me just make a few comments, and then I
have a question about process, not policy.

Just by way of potential clarification and to respond, I
guess, Republicans fiercely, fiercely are dedicated to
preserving Social Security. We are fiercely dedicated to
preserving Social Security.

Where did we come up with this ridiculous idea of personal
accounts? I would draw your attention to Mr. Penny's statement
where he said in President Roosevelt's 1935 message to Congress
on Social Security he outlined a vision for ultimately
extending the program to include, quote, voluntary contributory
annuities by which individual initiative can increase the
amounts received in old age, unquote. So it is not a new
fabrication or something that we came up with out of thin air.

There was a comment early on about what do we call it? Is
it a crisis? The President calling it a crisis. The first time
I heard crisis in this was in 1997 or 1998 from President
Clinton who said, quote, it was a looming crisis, unquote. So I
think that it is important that we quote individuals
appropriately and attribute appropriately.

Ms. Kennelly, you mentioned that personal accounts are not
a good deal. Well, Social Security right now is not a good
deal. The return is less than 2 percent. So Social Security
currently is not a good deal.

I have had all sorts of meetings in my district. I had a
huge summit this past week where I had a hundred of the
brightest high school kids in my district come together and
talk just about Social Security for an entire morning. Every
one of them favored personal accounts because they understand.
I asked how many folks thought they were going to get Social
Security. Not a single hand was raised. They understand.

Now I want to put policy aside, because facts are tough
things. You all have had great experience on the Hill here and
great experience with difficult issues. I would like to ask
each of you, how would you recommend that we proceed from a
process standpoint? How do we get through the poison that is
obviously here to move toward what I believe must be a
bipartisan agreement as we move forward? And I would like to
hear from each of you.

Ms. Kennelly. Well, I will start, Congressman.
When you say Social Security is not a good deal----

Mr. Price of Georgia. I would like to talk about process.

Ms. Kennelly. But one-half of people over 65 would be in
poverty level----

Mr. Price of Georgia. I am interested in process.

Ms. Kennelly. What I have been saying all morning--and I
have been here for two and a half hours or something like that.
What I am saying is we are having a debate about what to do
about Social Security. Should we take the traditional program
and do what we have done--and I differ with Congressman Penny
that we should finish it now. We have always had to adjust
Social Security. We have adjusted it many, many----

Mr. Price of Georgia. Do you have any thoughts about the
process, about how we get to a solution?

Ms. Kennelly. Yes. You take the process, and you look at
what you have to do. There is numerous ways that you can adjust
the system. You don't take big clumps. You take little
adjustments. And you can do it. You absolutely can do it.

Mr. Price of Georgia. Thank you.

Ms. Kennelly. And don't forget by the way, sir, that we
have right now--and the senator gets upset about this, but you
have time to do this. We should do it this year. But we should
adjust the system so that we get ready for 2017 when more money
is going out than coming in, and we can do it.

Mr. Price of Georgia. Thank you.

Mr. Penny. Well, I think the first thing, in terms of
process, is to perhaps, without taking personal accounts and a
long-term fix off the table, perhaps just talk about at the
appropriate committees what it would take to prop up the status
quo over the long term. Because what you will find is that it
is a bunch of ugly stuff. Some groups will be more inclined to
just raise the payroll tax a little here and a little there, a
little more later. Others will actually talk about some benefit
reductions that might be appropriate. Some might be means
tested. Some might be more generalized.

But there are no easy options.That is my point. And I think
if you talk about what it takes to fix the current system, what
it will convey to people is that, first of all, even that isn't
easy; but, secondly, almost all of those options are a worse
deal for younger workers.

So I think at that point it then leads into a discussion,
what can we do at the end of the day that at least gives these
younger workers the opportunity for something better than
simply benefit cuts and tax increases? And I think it leads you
back to personal accounts as part of the mix.

The second thing I would say is never take anything off the
table because I don't think you are going to get a bipartisan
consensus unless both sides are willing to look at everything
the other side has to bring to the table. So it is a matter of
process. I think that is important as well.

Mr. Simpson. Madam chairman, let me just say when we had
the commission with Danforth and Kerrey, we had an Internet
computer game that said, okay, what do you want to do to make
Social Security work? Send in your recommendation, and we will
give you an idea how that feels. Not one thing came out that
didn't raise the hackles of one or two or 20 groups. It is all
sheer pain, sheer pain.

I can say to you--you asked the question--your only hope is
a bipartisan commission in this atmosphere. That is your only
hope. Nothing else. Nothing else. But if you are going to see
people reject one thing, their favorite thing--that is how we
never did a Clean Air Act--members would say: I won't give up
this under any circumstances; I won't do this--you have to get
in a room and finally say, okay, put it all out there, let's
quit this stuff.

But I tell you, I am going to be very disappointed in a
group of 38 million Americans who won't present a proposal of
the AARP, and a member of that--I am deeply disappointed in
Congresswoman Kennelly's group of 4 million people who won't
present an alternative and they never will because they won't
ever, ever take the heat and lose members, period.

Mr. Price of Georgia. Thank you.

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