On May 26, the House Ways and Means Committee heard from 19 Members of Congress–9 Republicans and 10 Democrats–about their views on protecting and strengthening Social Security. Members highlighted a number of issues and legislative proposals important to them and their constituents.
Rep. Clay Shaw (R-FL) discussed his proposal, the Social Security Guarantee Plus Plan (H.R. 750), which would guarantee “full, promised, current law benefits for all workers, whether you are 6 or 65.” Further, “workers who choose to participate will receive a refundable credit of up to 4% of their earnings to establish their own Social Security Guarantee Account. The money in these accounts would grow tax-free. No withdrawals would be permitted until a worker starts receiving benefits to ensure that the money is preserved for retirement. At retirement or when the worker becomes disabled, the worker will receive 5% of the Guarantee Account paid directly to the worker and the rest is used to help pay full, guaranteed Social Security benefits.”
In discussing how his proposal impacts women, Rep. Shaw said that H.R. 750 provides increased protection for women. “Women are heavily dependent on Social Security benefits during retirement, because they often have little or no pension savings or other sources of income. In 2002, Social Security provided the only source of income for 29 percent of unmarried women age 65 and older. Several features of the Social Security program are important to women: lifetime benefits, inflation protection, a progressive benefit formula, and family benefits. The Guarantee Plus Plan fully protects these features of Social Security, ensuring women will be financially secure during retirement,” he said. Additionally, “the Guarantee Plus Plan improves benefits for women by increasing widows’ benefits, providing credit for years spent out of the workforce caring for young children, and expanding eligibility for divorced spouses and disabled widows. These enhancements respond to trends in marriage, child-rearing, and labor force participation. Most importantly, they will help prevent more women from living in poverty in old age.”
Rep. Hilda Solis (D-CA) focused her comments on women, saying that “currently, there are more than 7.5 million women receiving Social Security benefits and 2.7 million children under 18 who receive disability or survivor benefits. Women make up a vast majority–60% in fact–of Americans receiving Social Security.” She criticized President Bush’s proposal to privatize Social Security, saying, “Women will have even fewer benefits to rely on when they retire…The proposed plan would account for a 42% benefit cut for a woman earning $58,000 a year. These benefits are critical for women, especially young women, older women, and women of color.” Additionally, she said that the president’s plan would be “detrimental to women who receive survivor benefits. Nationally, 50% of Social Security beneficiaries receive all or part of their benefit either as the widow or widower, spouse or child of a worker, or as a disabled worker. Over 80% of these beneficiaries are women and children…If the 45% cut projected by the Congressional Budget Office were to take effect currently, the typical widow would receive only $476 per month, even when the proceeds from private accounts are included.”
Speaking about the importance of Social Security to the Hispanic community, Rep. Charles Gonzales (D-TX) said, “Today, 2.3 million Hispanics receive Social Security benefits and 38% of elderly Latinos in this country rely on Social Security for their entire retirement income, and without this program, the current number of Hispanics living in poverty would more than double from today’s 19% to an incredible 55%.” Futhermore, “81% of Hispanic seniors have no pension benefits and 72% of Hispanics have no savings for retirement. That is why today, 41% of Hispanics rely on Social Security for all of their retirement income and 75% of Hispanics rely on Social Security for a majority of their income,” he told the committee.
Rep. Debbie Wasserman Schultz (D-FL) highlighted the impact of proposed changes to Social Security on our nation’s children. Saying that Social Security “lifted approximately 50,000 children out of poverty” in her home state, Rep. Wasserman Schultz noted that at the end of 2003, 3.1 million children qualified as survivors or dependents of deceased, disabled or retired workers. “Privatization threatens the families, survivors, and children who rely on Social Security to keep them out of extreme poverty and destitution,” she stated, adding, “Democrats are ready to work with Republicans on a solution to strengthen the system, but we cannot support any plan that involved massive cuts in guaranteed benefits or huge increases in our national debt.”
Saying that “the only way to fix the system is through personal retirement accounts,” Rep. Sam Johnson (R-TX) detailed a bill he has sponsored with Rep. Jeff Flake (R-AZ), the Individual Social Security Investment Program Act (H.R. 530), which would allow individuals to keep half of the 12.4 percent they pay in payroll tax for a personal retirement account. “The government takes the other half to fund existing benefit promises to those over 55 and to the disabled, widows, and orphans. The Johnson/Flake bill will put real money into real accounts to better meet the retirement expectations of all Americans,” he stated, adding, “The Social Security Actuary determined that our bill permanently fixes the funding problems of the Social Security system at about half the cost of letting the current system roll forward without change.”
Noting that the Asian American community also is concerned about the long-term solvency of Social Security, Rep. Doris Matsui (D-CA) said that 30 percent of Asian American seniors rely on Social Security as their only source of retirement income. “Over one quarter of the Asian American community is under the age of 21; we are a young community. I firmly believe that Social Security is a fundamental commitment between generations, a compact of shared risk in exchange for shared security. But by taking this path to change Social Security we are adding almost $5 trillion in additional debt to the backs of our children and grandchildren. I would not be honoring this fundamental commitment to my granddaughter or any other young person by supporting poor policy executed with fiscal irresponsibility.” In conclusion, Rep. Matsui spoke of her late husband, Rep. Bob Matsui, who served on the committee. “Bob had quite a wealth of accomplishments in his twenty-five years of service to his country. But there was only one piece of legislation hanging in his office … the 1983 bipartisan Social Security reform bill…Bob saw in that legislation the fundamental promise of Social Security and the importance of bipartisanship. As we consider a host of ideas about how to reform Social Security, we should not stray so far as to forget those central ideals.”
Rep. Kim Kolbe (R-AZ) outlined the proposal he has sponsored with Rep. Allen Boyd (D-FL), the Bipartisan Retirement Security Act (H.R. 440), which is currently the only bipartisan measure before Congress. “First, Kolbe-Boyd makes Social Security more progressive than it is today. We modify the benefit formula to achieve a higher replacement rate for low-income workers. In addition, higher-wage earners would experience slower benefit growth…Second, Kolbe-Boyd expands the safety net. Under our plan, anyone working a full career is guaranteed a minimum defined benefit equaling 120% of poverty—that is higher than current law. We also raise widow’s benefits to 75% of the couple’s combined benefit—again, higher than current law…Finally, we believe that personal accounts should be affordable, with no obligation to invest in stocks, but a choice to invest in T-bills, or in bonds, or in index funds. Kolbe-Boyd lets younger workers place slightly more than 2% of their earnings into an account. Our accounts are more affordable because they are smaller, and we finance them through the Social Security surplus rather than let the surplus be raided for other government programs.”