Hearing Before the Committe on Financial Services

HEARING BEFORE THE COMMITTEE ON FINANCIAL SERVICES

Ms. Moore of Wisconsin. Well, thank you, madam chairman;
and it certainly is a privilege to be here before such a
distinguished panel.

I will get right to the point. I think the gentlelady from
New York really raised some of the questions that I had, and I
can start right away with Congressman Tim Penny.

You stated on page 4 of your testimony that the Social
Security actuarial data that you were looking at says that
folk, even low-income people, would be better off with the
personal accounts than in the current existing system. I am
asking you, first of all, did this actuarial model include the
switch from the wage indexing to the price indexing and did it
consider the 3 percent privatization tax? Is that part of the
assumptions which indicate that the lower-income people would
be better off?

Because indeed, as Mrs. Maloney pointed out, the CRS
analysis says that, literally, the Social Security benefit
would disappear with those two changes combined, which is what
we perceive to be the President's proposal.

You know--and without going into a long-drawn-out
discussion of my own personal background, you are actually
looking at the face of a person who would be most hard-pressed
by major--by the loss of a Social Security system. I am
extremely guilty of not saving every dime I can rake and
scrape. I spent it on feeding and housing my three kids. And of
course nobody told me to have any kids, but being a woman I had
them anyway. So our parents and so on--and, as a Member of
Congress, of course I have joined the Thrift Savings Plan.

I do agree that we need to save more. I do agree that
Medicare, Medicaid are the real looming crises, which if,
Senator Simpson, we are going to look at European models, we
ought to look at having some universal healthcare to try to get
some cost efficiencies in those programs versus destroying
Social Security.

But my question is really for you, and the others may add.

Thank you.

Mr. Penny. The short answer to that is, yes, the benefit
adjustments or the benefit reductions that were part of the
commission's report were taken into account when these
estimates or projections were prepared for us. And they do
demonstrate that, for the lowest-income workers, they end up
being better off under the new system than they would under the
traditional system, with all of that taken into account.

Ms. Moore of Wisconsin. With the price index.

Mr. Penny. With all of that taken into account, yes.

And the other point is that we relied on the Social
Security Administration actuaries to run the numbers on
everything we did in the commission. So we weren't sitting
there with our own little set of economists coming up with our
own numbers. We relied on the government bureaucrats who have
worked their entire careers in this area to come up with the
numbers and put a number on our proposals.

The other thing----

Ms. Moore of Wisconsin. Entirely different conclusion, so
I----

Mr. Penny. And I understand that, because even experts can
come up with different assumptions about how they run their
numbers. But we relied on the Social Security actuaries to run
these numbers.

The other thing, which is little known of our report, is
that we did increase the basic benefit for the lowest-income
workers, those that stay at low wage all of their lives, and
that is a little-known fact in our plan. But we lifted that
benefit to a level that would assure that no one, if they live
on Social Security and nothing else, would be receiving an
income level that was below the poverty rate.

So you have got to look at this as a package deal, and I
would recommend it. In addition to reading other reports about
what the commission recommended, you should go to the
commission documents and what the Social Security actuaries
said about our report.

Ms. Kennelly. Congresswoman, I would hope it was a package
deal, because the assumption was there would be a 4.6 percent
adjustment in inflation, and I am not so sure we can count on
4.6.

Also, don't apologize if you didn't save. None of us saved.
Absolutely. But you talk about young people. We have heard
about young people. None of us when we were young thought we
would get old, let alone that we weren't going to be lucky. And
millions of dollars have been spent on young people to see that
they would not need Social Security. But I tell you, 4.6
percent inflation, Congressman Penny, I think that is very
high.

Mrs. Biggert. The gentlelady's time has expired.
The gentleman from Minnesota is recognized for 5 minutes.

Ms. Moore of Wisconsin. Madam Chair----

Mr. Simpson. I would respond. She asked a question. It will
just take a moment for me.

I do hear you clearly, Congresswoman. Let me tell you how
bad I am. There was a Social Security commissioner under the
Republican administration who decided not to go tell the
American people what was going to happen to Social Security.
Moynihan and I went after her. I was in the majority. She said,
well, I have a packet I am taking all over America to show how
great Social Security is for young people. We looked at it and
said, this is babble, absolute babble. And she would never
answer our questions. She was dispatched, unRepublican--she was
a Republican.

That is where I am coming from. This is phony bologna. And
I don't care what party you are in. If you are going to go to
young people and tell them they have nothing to worry about,
that is bizarre, it is grotesque, it is sick.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_house_hearings&docid=23616.wais