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Members Weigh In on Social Security Reform at Subcommittee Hearing

On March 6, the House Ways and Means Subcommittee on Social Security held a second hearing on Social Security improvements for women, seniors, and working Americans to continue the dialogue about proposed changes to the retirement system and allow Members of Congress to testify. The first hearing was held on February 28 (see The Source, 3/1/02).

In his opening statement, Committee Chair Clay Shaw (R-FL) urged his colleagues to “find common ground” and act “in the best interest of the American people” to develop a bipartisan proposal “through cooperation and respect.” He recommended, “We can begin today to find common ground, in advance of major reform, to improve the program for women, reassure seniors that promised benefits will be paid, and better educate the public.”

Despite Rep. Shaw’s call for compromise, a majority of the 19 Members (7 Democrats and 12 Republicans) who testified debated the merits of either maintaining the “status quo” or privatizing the Social Security system. Defenders of the status quo argued that market-based privatization proposals would be too risky for workers and would undermine the safety features of the program. Rep. Bob Ethridge (D-NC) also contended that privatization “would disproportionately hurt women.”

Proponents of privatization, such as House Majority Leader Richard Armey (R-TX) maintained that “Social Security will not truly be fair for all Americans until we agree on comprehensive reforms that provide all individuals a greater ability to nurture their own retirement nest egg, and to own it.” Members also debated the merits of legislation that would establish written guarantees to Social Security recipients that they will receive their monthly benefits and annual cost-of-living increases.

Rep. Jennifer Dunn (R-WA) urged, “Don’t forget the women!” She pointed out that, because women take time out of their careers to raise a family and work less, “they are penalized by the benefits formula.” She said, “There is no more regressive public policy toward a working woman than a system that penalizes her for taking time out of her career to nurture a child,” and added, “We can alleviate some of the inequity by revising the rules governing benefit calculations, particularly those that harm divorced women and widows.”

Rep. Dunn also expressed support for personal accounts, that would allow women “an opportunity to receive more from a system that has historically given them less.” She said, “Personal accounts will enable them to build financial assets and cultivate a sense of proprietorship.”

Rep. Jan Schakowsky (D-IL) also expressed opposition to written guarantees and efforts to privatize Social Security. “Sending out a certificate won’t put the money back in the Trust Fund that has been used to provide tax cuts for millionaires,” she said. She criticized “the tax cuts passed last summer but not yet implemented” that would, according to the Brookings Institution, “exceed the entire Social Security deficit over the next ten years.” She also criticized the “President’s budget that would drain $1.5 trillion from the Trust Fund.” As a solution, she recommended legislation (H.R. 2999) she introduced that “would delay changes in the top marginal tax rates and elimination of the estate tax until we’ve protected Social Security and Medicare and met other needs, such as providing a comprehensive prescription drug benefit.”

Rep. Walter Jones (R-NC) defended written certificates of guarantee. As the sponsor of the Social Security Guarantee Act, H.R. 832, he said the bill and “its guarantee are legally binding because at the very least it will be politically binding.” He added, “Although a future Congress could change or repeal the new law, once retirees have a written document in their hands explicitly guaranteeing their benefits, few elected representatives would be willing to repeal it.”

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