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House Subcommittee Examines Social Security Improvements for Women

On February 28, the House Ways and Means Subcommittee on Social Security held a hearing on Social Security improvements for women, seniors, and working Americans.

On the same day, the President announced his continued support for the partial privatization of Social Security for future recipients and promised that Social Security benefits for retirees and those nearing retirement would not change.

Social Security Trustees predict that Social Security will begin to pay out more funds than it takes in by 2016, and the trust fund will be depleted by 2038. Several bills have been introduced that would establish written guarantees to Social Security recipients that they will receive their monthly benefits and accurate annual cost-of-living increases. Rep. Walter Jones (R-NC) and Sen. Tim Hutchinson (R-AR) have introduced the Social Security Guarantee Act (H.R. 832 and S. 806). Rep. Jim DeMint (R-SC) and Sen. Rick Santorum (R-PA) have introduced similar legislation, the Social Security Benefits Guarantee Act (H.R. 3135 and S. 1558).

Another bill (H.R. 3497), sponsored by Subcommittee Chair Clay Shaw (R-FL), would allow individuals to set up private accounts under the Social Security system without cutting benefits to recipients. The bill also would make some improvements for women, such as waiving the two-year period that a divorced woman must wait in order to collect benefits if her husband remarries.

In his opening remarks, Rep. Shaw acknowledged that “Social Security faces serious financial challenges” and urged the subcommittee to find “common ground” in advance of comprehensive reform. He emphasized, however, that “some inequities can be solved now,” and that “women should not have to wait for comprehensive reform.” He stated, “Without Social Security, over half of elderly women would live in poverty,” and added, “Many proposals have been made to improve Social Security benefits for women, ranging from minor adjustments to spouse and survivor benefits to improving widows’ benefits to credits for years spent caring for young children.”

Rep. Robert Matsui (D-CA), Ranking Member of the subcommittee, agreed that the committee should work “in a bipartisan fashion.” He said, “Women make, on average, 70 percent of what male counterparts make in the same occupation.” He expressed the concern that, “women will be hurt by privatization.”

Jo Anne Barnhart of the Social Security Administration outlined features of the Social Security system that have been beneficial to women and “should be preserved in the reform process.” Highlighting the cost-of-living adjustments (COLAs), she said, “Women’s greater life expectancy makes COLAs especially important.” She continued, “For example, as a result of COLAs that maintain the purchasing power of benefits, a $100.00 monthly payment that began in 1975 would have increased to $347 today.”

Citing the protection given to divorced women under Social Security, Ms. Barnhart told the subcommittee that, in 1972, Congress removed “the requirement that a divorced wife be dependent upon her husband and, in 1977, decreased the number of years the couple had to have been married in order for the divorced spouse to qualify for benefits from 20 to 10 years.”

Additionally, Ms. Barnhart expressed opposition to certificates of guarantee, such as those proposed in two Republican legislative proposals (H.R. 3135 and H.R. 832). “I understand the motivation on the part of many Members of Congress to provide a written reassurance to current Social Security beneficiaries that they will continue to receive their full benefits,” she said. “However, I would not be doing my job if I did not raise concerns regarding this matter,” she continued.

“For example, would such a written reassurance be legally binding in the future?” she asked, and expressed concern regarding the “possible unintended consequence of creating undue alarm among those nearing retirement who do not receive such a written notice.” She also pointed out that “sending out these notices to 46 million beneficiaries would increase administrative costs by millions of dollars.”

Representing the United Seniors Association, Anna Janis spoke in support of written guarantees “to give seniors the peace of mind they deserve.” She told the subcommittee that seniors need to know that they can “depend on Social Security for income they can count on.”

Ms. Janis urged Congress to “pass the Social Security Benefits Guarantee legislation, and cut taxes on Social Security benefits.” She also called for ending the “earnings limit on seniors 62-64 years-of-age.” She said, “For those women age 62-64, the tax punishment for working even a minimal amount in a year is extremely heavy.”

David John of the Heritage Foundation echoed support for “legislation that would create a guarantee.” He said, “Americans assume that their benefits are guaranteed in the law, but they have no explicit proof,” and added, “Guarantees would take the language out of the law books and send it to every retiree in language that they can understand.”

Mr. John also stressed that Congress should address the special needs of women. One of the issues that needs resolution, he said, “is today’s Social Security requirement that a marriage last at least ten years before a women is eligible to receive benefits from her former husband’s earning.” As the best solution, he recommended promoting “personal retirement accounts, which courts could split between the couple in case of divorce.” In the meantime, however, he said that “a good first step would be to end the two-year delay in collecting spousal benefits faced by a divorced woman if her former husband has remarried.”

Hans Riemer of the Institute for America’s Future likened the proposal for “guarantee certificates” to “a direct-mail scam operation targeting seniors.” Citing research by the Congressional Research Service, he said, “even if the Guarantee Certificates were mailed out, benefits for current recipients could still be changed at any time.” He also criticized efforts to privatize Social Security, saying that the proposal “would take about $1 trillion out of the Social Security Trust Funds over the next ten years” for use in establishing private accounts.

Joan Entmacher of the National Women’s Law Center also spoke in opposition to Guarantee Certificates and the privatization of Social Security. Calling the certificates “gimmicks,” she said, “Unfortunately, instead of considering steps that really would strengthen Social Security, such as abandoning plans to privatize Social Security and slow down tax cuts for the wealthiest Americans that raid the Social Security Trust Fund, the focus is on proposals to have the Secretary of the Treasury issue ‘guarantee certificates’ to retirees.” She added, “But since Congress could still change or revoke the guarantee, the certificates would be worthless, except as something to hang on the wall next to an Enron stock certificate.”

Ms. Entmacher recommended improvements in the Social Security system that would target older women living alone, including widows and divorced women, who are in the greatest danger of poverty. “One promising approach,” she said, “would increase the surviving spouse benefit from its current level of 100 percent of the high earner’s benefit to 75 percent of the couple’s combined benefit.” She added, “Such reforms could prevent the severe drop into poverty that often accompanies widowhood, and increase equity for two-earner couples.” She also emphasized that “improvements to benefits must come on top of a secure, guaranteed-for-life, inflation-adjusted Social Security benefit, not applied to a greatly reduced, privatized benefit.”

Nancy Mitchell Pfotenhauer of the Independent Women’s Forum cited several examples of the “unintentioned, but significant, systematic undercompensation of women inherent in the current system.” She recommended changing the retirement system “so that married women who work don’t get the short end of the stick” by “changing the ‘dual entitlement rule.’” She explained, “A woman who works outside the home loses her ability to qualify for both a spousal benefit and an individual benefit, despite the fact that she has earned both.”

Ms. Pfotenhauer pointed out that “every married woman is entitled to half of her husband’s benefits, regardless of whether she has ever worked and paid FICA taxes.” Because women work less and earn less, “50 percent of the spouse’s benefits are frequently larger than the benefit calculated on the basis of their own earnings,” and that means “the typical married working woman receives no credit or benefits based on the payroll taxes that she has paid.” In the end, a woman receives the same benefit, whether or not she worked outside of the home. “Not only do these women sacrifice time with their families, they get no financial recognition of the substantial contributions they’ve made to the Social Security system,” said Ms. Pfotenhauer.

Due to the high interest expressed by Members of the House, the subcommittee will hold another hearing on Social Security improvements for women, seniors, and working Americans on March 6.

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