Co-sponsored by The Concord Coalition and the American Association of Retired Personsin collaboration with Americans Discuss Social Security
(Person on the street video presentation.)
ANNOUNCER: This debate is cosponsored by the American Association of Retired Persons, the Concord Coalition, in collaboration with Americans Discuss Social Security. It is our good fortune to have the leaders of these organizations with us today to extend a welcome to you. Ladies and gentlemen, please welcome to the podium the Honorable Warren Rudman, co-chair of the Concord Coalition.
SENATOR RUDMAN: Good morning, on a beautiful day in Rhode Island. I almost thought I was still in New Hampshire. These forums are organized by the Concord Coalition, and financed by the Coalition and the AARP, at the request of President Clinton, who announced this series in his State of the Union address this year. Let me first say that we are delighted that Vice President Gore has attended this conference and we will be hearing from him in just a few moments.
The principal objective of these forums is to raise and inform a balanced and bipartisan debate about the challenges that we now face in preparing the Social Security system for the retirement of the largest generation in America's history-the baby boom generation. This debate must include Americans from diverse generations, economic situations, geographic situations, and political affiliations.
While most Americans understand that Social Security faces serious economic problems early in the next century, polls show they do not understand the severity of the problem. These forums will not advocate a particular solution, but will attempt to educate the public about the problems and the pros and cons and potential solutions. The forums include members of both political parties, a wide range of view points, and we hope by the time the day is over, you'll be better informed.
Let me just highlight five points about the issue, which there is not too much disagreement about. First, thankfully, Americans are living longer and spending more in retirement. Second, retirement income must therefore be stretched further. Unfortunately too many Americans are not prepared for 20 to 30 years of retirement. Their savings are inadequate. Their pensions, if they have one, are inadequate. Their Social Security benefits alone will not be enough.
They will also have to deal with rising health care costs. And there will be fewer working age people to finance government benefits. A promise made is a promise to be kept. We have kept our promise to the current generation of Americans who depend so mightily on Social Security. It would truly be immoral if we did not keep that promise to present generations of Americans who will retire in the future.
It is to that end that we hold these forums-it is to that end that we really ask your advice, your views. Thank you for being with us today.
ANNOUNCER: Thank you Senator Rudman. Ladies and gentlemen, at this time, please welcome the President of the American Association of Retired Persons, Mr. Joe Perkins.
MR. PERKINS: Thank you. Delighted to be here in Rhode Island, a state that I visit very often, just being north of you in Massachusetts. AARP is delighted to be here in Providence this morning, with the Concord Coalition and Americans Discuss Social Security, and we are honored to welcome Vice President Gore and the members of Congress, as we continue our bipartisan national dialogue on the future of Social Security.
Few issues affect more Americans than the future of Social Security. We're pleased that the President, the Vice President, and all congressional leaders have called for a national dialogue on Social Security. As this discussion proceeds, there are three things to keep in mind. First, Social Security is not in crisis now. In fact, it can pay full benefits well into the next century. Second, while the Social Security system does not face immediate crisis, it does have a long-term solvency problem that we need to correct sooner rather than later. And third, rather than rush to judgement on what the best solution of their problem might be, all Americans, all Americans need to understand the basics of what the problem is, the proposals being put forward to solve it, and the trade-offs involved in each of these possible solutions.
It is a time for a reality check on Social Security, and that is what our national dialogue is providing-what it's all about. We need to examine the facts fairly and squarely.
We cannot afford to look at Social Security through the eyes of either Pollyanna or the eyes of Chicken Little. After you have listened to the discussions here today, we hope you will walk, you will talk to your family and friends, about building the most secure tomorrow for the generations of Americans to follow. Social Security has provided the essential income protection for generations of Americans and their families. I have enough optimism in me to believe that through our bipartisan national dialogue, we can ensure the same protection for generations to come. Thank you very much.
ANNOUNCER: Thank you Mr. Perkins. Ladies and gentlemen, it is my pleasure to introduce the Executive Director of Americans Discuss Social Security, Carolyn J. Lukensmeyer.
MS. LUKENSMEYER: On behalf of Americans Discuss Social Security's co-chairmen, the Honorable Daniel Patrick Moynihan from New York, and the Honorable Senator Grassley from Iowa, I am absolutely delighted to join Senator Rudman and Joe Perkins in welcoming you to this most important occasion.
In the United States of America, we are blessed to have a democracy that has an undying commitment to a fundamental principle that's been in our traditions from the day we were created as a separate nation. A system of government that is of the people, by the people, and for the people. And that is what these forums are about. It's been a long time in American politics since the leaders of both parties stood alone and together, early in the year, the President, the Vice President, the leaders in Congress of both parties and said, "1998 should be a year of national dialogue, on this most important of social programs, Social Security."
And people all over the country are gathering in halls, in union stations, in television stations to have the same kind of conversation that you're going to have here today. Both Senator Rudman and Joe spoke eloquently about the reason for doing this. We all have a personal civic responsibility to understand the facts about Social Security, to understand the reform options about Social Security, and to express our voice early in the process, before things are negotiated in Washington.
Americans Discuss has been in most of the country at this point listening to people-and we have found it inspiring. People are willing to give up four to six hours of their time to come together like this, to learn and listen and to truly be open-minded and open-hearted about how do we take into account the needs of all generations currently, and frankly, equally important, all those to come. And how do we fashion some combination of proposals that meets the needs of the values we so deeply carry as a society.
There's been three values expressed to us all over this country, and I'd be surprised if they're not true here today as well. Regardless of party affiliation, regardless of age, regardless of gender, regardless of race, people have collectively said, "the values that are most important around reforming Social Security is to ensure there is a safety net for all people in their elder years, and to ensure that there is true intergenerational equity, that truly every generation has a fair chance to have a quality of life in retirement." And then most important, or in the spirit of what is being done here, people all over the country are saying, "we want a bipartisan solution, we want Social Security not to be politicized, and we really want to know that the people in Washington will listen to what we have to say."
You're very fortunate in Providence today, it will be obvious to you that the people in Washington are listening to what you have to say. They're here. Please join us in having a wonderful day, looking at the future of Social Security. Thank you.
ANNOUNCER: Thank you Ms. Lukensmeyer. And thanks to all of you-through your leadership, and bringing this important issue debate on Social Security to the American people.
ANNOUNCER: Ladies and gentlemen, please welcome to our stage the Vice President of the United States, Mr. Al Gore, Senator John Chafee, Senator Jack Reed, Representative Mark Sanford Jr., Representative Charles Rangel, Representative Robert Weygand.
Ladies and gentlemen, please welcome to the podium the Honorable Robert A. Weygand.
REPRESENTATIVE WEYGAND: Good morning and welcome everyone. Welcome to Cranston, Rhode Island. On behalf of the over 189,000 Social Security beneficiaries here in the state of Rhode Island, and the countless future beneficiaries of our state, I would like to welcome Vice President Al Gore, my distinguished colleagues, Congressman Mark Sanford, Congressman Charlie Rangel, Senator Reed, and Senator Chafee, and our distinguished panelists that will be following us later on.
I want to welcome you to Rhode Island, but also to the second congressional district. I'm very pleased that AARP and the Concord Coalition, and the Americans Discuss Social Security chose our state as the site for this critical discussion. A very special thank you to Senator Rudman, to Joe Perkins, and to Carolyn Lukensmeyer for bringing this conference and the discussion here today to Rhode Island.
Rhode Island, as many of you know, is a very small state. But it is also a state with the fourth-largest population per capita of people over the age of 65. Clearly, Rhode Island has a very large stake in the debate on Social Security. Our state is also home to many other generations of people, both young and not so young, and those of differing philosophies about how we should change, reform, and improve Social Security.
As two of over the 76 million baby boomers in this nation, I know the Vice President, and myself-the two of us-just turned 50 about three months ago. He's about four weeks older than I am-both recognize the need to include not only our generation of baby boomers, but also generations like our children, the X generation, as well as seniors. All generations must be involved in this discussion, and this debate, in this forum.
We also recognize though, because of our strong economy today, we are very fortunate to have this unique chance to consider needed reforms to Social Security in a thoughtful and conscientious manner. And that's what this forum is all about. To really give credence to thought, and to worry, and to concern ourselves about the issues of true reform for Social Security. While we engage in this challenge to reform the system, this is truly a time for education and debate.
But there is one very important action that Congress must take this year. An action that the President and the Vice President have heartily endorsed, and that is we must take every penny of government surplus this year and put it back into Social Security. Social Security comes first.
I applaud the Vice President for taking such a hard stand. I know that he is eager to speak to you and get on with discussion, to hear the needs and the concerns of Rhode Islanders. He is not a stranger to difficult fights and battles, he has been a leader in government reform, in reinventing government. He does not shy away from the issue that in many circles has been considered the third rail of politics-if you touch it, politically, you'll be dead.
He has taken on the challenge, he has taken on the lead, he has consistently done that. Please welcome, my friend, the Vice President of the United States, Al Gore.
THE VICE PRESIDENT: Thank you very much, Bob. Thank you. Thank you, ladies and gentlemen. Thank you. I'm so glad to be here and I want to thank Bob Weygand for his generous introduction, and I want to thank your outstanding Senators who are here, John Chafee and Jack Reed. I want to acknowledge Congressman Patrick Kennedy, who is also here...
...and your whole delegation is here, and there's a bipartisan commitment to approaching this issue in the right way. I'm especially pleased to be with my friend, Congressman Charlie Rangel, and Congressman Mark Sanford, thanks to both of you for being here.
As you can tell, we've got once again, a true bipartisan lineup to try to grapple with these issues in the most responsible way possible.
There are a lot of distinguished guests here, including the Lieutenant Governor Bernard Jackvoney, the State Treasurer, Nancy Mayer, and some of my colleagues in the administration are here, including the Commissioner of Social Security, Ken Apfel, and the Director of the National Economic Council, Gene Sperling, the Director of the Office of Management and Budget, Jack Lew.
And I want to thank the sponsors of this whole enterprise here. The President of AARP, Joe Perkins, and incidentally, Bob, I don't know if you've gotten yours yet, but AARP gave me my card last month and I, I was, I was thrilled as you can imagine. And, I want to also acknowledge Warren Rudman, Co-Chair of the Concord Coalition, and Carolyn Lukensmeyer, Director of Americans Discuss Social Security. And you know, just a brief word, AARP and the Concord Coalition and Americans Discuss Social Security with Carolyn Lukensmeyer, they have done a wonderful job putting this dialogue together. This is an emerging American success story. A way for us to come together as a country to grapple with that third rail that Bob talked about.
Of course, with my reputation, they told me that if you grab on to a jolt of electricity, it may animate me a little bit. But, thanks to everyone who's been willing to spend the time to come and really dig in to these issues. I met with a small group, a sample of this crowd, earlier, and one person said, that even though he thought he knew a lot about Social Security, he was humbled by all of the new facts that were coming out in these presentations-and I have to admit, I've studied it for a long time. But this process is so well designed, it's bringing out a lot of facts in the right perspective that makes them really helpful as we try to figure out what to do about the challenge that we face.
Now, we're blessed with some good economic times. And that's one of the biggest advantages that we have. Now you know the old saying, others have used it before, about the guy that never fixed his roof while it was raining because he didn't want to get outside during the rain, but when it wasn't raining and the sun was shining, he didn't feel the need to fix the roof? We're in a very similar situation. Now that the sun is shining on America's economy, it's the perfect time to fix the entitlement problem that has not been fixed the way it should have been in the past.
And these meetings aiming toward a White House conference in December, and then the introduction of legislation in the new session of Congress next year, this whole process is designed to help us fix the roof. Bob mentioned the challenge by President Clinton to reserve every penny of the budget surplus until we save Social Security first. We've been hoping that that would create a new set of incentives for senators and congressmen, senators and members of congress in both political parties to grapple with that third rail. To grab hold of it, and fix it, because if the surplus is out there and you cannot touch it, either for new spending programs, or for big tax cuts, until you fix Social Security first, then that turns the traditional political incentives on their heads, and convinces people, "okay, well, let's go do it."
And now is the perfect time to do it. And of course, we have got to do it. And I'll just spend a moment on this first chart here, I think you're probably familiar with this, we're seeing this big surplus in Social Security now, and it's still continuing to grow, but in the year 2032, it goes into deficit.
And we start, we start seeing the balance shift well before that, and we start drawing, spending the interest, and then spending the principal in the fund well before that, and so, our challenge is to fix it not in the year 2032, or 2031, but a long time in advance of that.
And we know from all of the experts, and all of the facts, that some relatively smaller changes now can avoid some relatively worse pain later on if we put this off. So that is, that's the first chart. It starts declining, the trust fund starts declining in 2021, as the baby boomer generation starts retiring, and then if we do nothing by 2032, it goes into deficit, and at that point, payroll contributions will cover only about 75% of the benefits that have been promised to those eligible for Social Security.
Now, why is this happening? There are basically three reasons. The first is that the ratio of the people in the work force paying into Social Security to the people who are retired drawing from Social Security, that ratio is changing and in the early years it was even more than five to one, but as recently as 1960, there were five-more than five people paying into Social Security for every one person that was drawing benefits from Social Security. So obviously, there was less of a burden on each one of those people working and the fund had an easier time paying those benefits.
Then, it went down, and this year there are only a little over 3 people working for each person retired, and by 2030, just before it goes into deficit, assuming no changes are made there will be only 2 people working for every 1 person who is drawing from Social Security. So that's one of the big reasons why we're having these changes.
There's a second cause, and it's related to the first one, it's not only the big baby boom generation of retiring 12, 15 years from now, it's also the fact that because of improvements in medical science, we are now seeing people live much longer lives. And of course, that's a great blessing, and you can see that back in 1935, when Social Security started, the life expectancy, and this is a little different from the figures you normally see-you normally see life expectancy at birth, this is life expectancy at age 65. And back then, men would live to, could expect to live to 77 and women to 79.
Well this year, men at age 65 can expect to live to more than 81 years old, and women to almost 85 years old-and that's continuing to go up as you can see. And of course, with the advances in medical science also speeding up-within 3 to 5 years we'll have completion of the human genome, the whole set of information about the genetic basis of aging and diseases and unlocking a lot of secrets that the doctors and scientists will be able to use to conquer disease even more-these projections could go up even more, potentially. And in the future surely they will. But that has a big effect on the retired population and the ratio to the work force.
Now, this chart has not been talked about as much, but it is also extremely significant. There's been a huge change in the number of people who are choosing to retire earlier rather than later. And if you can see this, in 1962, there were only 18% of people going on to Social Security who chose to retire early at age 62. But now-a-days, and it's even more pronounced, a little bit more pronounced than was a couple of years ago when these figures were compiled, instead of 18%, now 60% are choosing to retire at age 62 instead of waiting until the higher benefit level kicks in at 65.
Now this trend is incidentally is true in almost every country in the world, and there are a lot of factors influencing it-policies where pensions are concerned and savings incentives and it's not all a result of the Social Security program, but the impact on the Social Security program, is really quite significant. If the percentage retiring early triples, more than triples at age 60, that has a big impact.
Now, for more and more seniors, better health and longevity means that they'll have enormous new opportunities to volunteer, to start new careers, to give even more to their families and to their communities. One of the people I met with earlier, Sue Sheppard, who's looking forward to retirement in just a few years. She lives here in Rhode Island, she made the point that private companies need to start being a little bit more creative in the way they use senior citizens in the work force, because in many places now, there's a job, there's a shortage of people who can fill jobs. And you know, more flex time, more comp time, more understanding of the special needs that seniors have in the work force will undoubtedly lead to even more creative use of their time and their enormous talents in the work force.
But, obviously, all of these facts and statistics together point toward the fact that we have got to come up with a solution-and there are no easy answers at all. James Wayland, a 40-year-old psychiatrist from Rhode Island, told me a short time ago, "the real question is whether or not we're going to be able to come together as a country to deal with this in a responsible way." These forums-and the national dialogue which they're a part-give us a chance to do precisely that, to put progress ahead of partisanship and derail the third rail.
What we have to do here today and in the coming months is to weigh all of the facts and the policy suggestions, and then look at them no just as statistics-but understand the human impact. What does it mean for real people in their lives, and for their families, and for their communities. For example, some believe Social Security should go only to those who are retired, others believe the so-called "earnings test," actually encourages retirement and prevents people from making the right choice about whether to keep working or not. And we have to look at all the pieces as part of a larger whole.
And, of course, one thing that sometimes is overlooked, certainly not in these dialogues, but I want to reiterate it briefly, is that the Social Security program is much more than just a retirement program.
When we look at the next graph, 31% of all the money in Social Security goes for disability benefits and survivor's benefits. Wendy Star of, from, Wendy Star Brown, her first name is Wendy Star, Wendy Star Brown who is 28 years old, she'll be 28 on Monday, also lives here in Rhode Island, she said that at 28 retirement for her is as distant as Mars. But then she pointed out that when she was young in school, her father died tragically. And she got $300 a month as a survivor that made all the difference in her ability to keep going forward and to make a success of herself. She is now aiming toward graduate school, and we need to remember Wendy Star Brown.
Also, where disability is concerned, Linda Ward, who is 44 years old, works here in Rhode Island with the developmentally disabled. And they get a lot of the money here-disability accounts for 14% of all the benefits. She said this: "any significant reduction," for the people she works with everyday, "would have a significant impact on their lives," she said, "they struggle as it is."
So we have to keep that in mind. Now where retirees themselves are concerned, we have to understand the human impact on retirees.
For nearly one out of five retirees, it is their only source of income-and for 2 out of 3 retirees, it is their principal source of income. And, of course, some people believe that as Americans live longer, we should ask people to retire later on. But we have to remember that for some of these people, who work in hard physical labor jobs, the situation is a little bit different than for an accountant or an actuary or somebody who's making public policy. As a child I grew up in part with some guys who work in rock quarries, and who make tires for a living.
I was in Minnesota a few weeks ago, and I met with Patrick Jarkow who works, did work moving sheet metal. Well, when he got a little bit older, the physical wear and tear on him made him really look forward to retirement. And extending the retirement from some people, in those kinds of situations that would be extremely difficult. And some, and those people often, they don't start work at 24 or 25, they start at 18, and so the total accumulation of wear and tear is greater.
And we also ought to remember that there are special challenges for women retirees. All, I forget how many, but a big majority of the women members in Congress wrote me a letter last week about this, and I took a look and found this statistic: women are more dependant on Social Security. This is largely because of the large number of widows for whom Social Security is a large percentage of their income. And, as you can see, unmarried women, that includes widows, have 51% of their income from Social Security. That's age 65 and over. So we have to keep that in mind.
The point is, this debate is about real people, and not just numbers. There's good faith all the way around, and this process is wonderful. And we do need to look at what the real impact will be. The final chart is one that some of you are familiar with. It shows what Social Security has done to the poverty rate among our elderly in the United States. It's a huge success story. It has cut the poverty rate among the elderly by two thirds. We don't want to jeopardize that wonderful outcome. We need to remember that that is a profound achievement.
Now, in closing, I want to propose just a short list of questions that might form the basis of some of today's discussion-not to find silver bullet solutions, but to gain a deeper understanding of the issues we face.
Number one, as more and more people live longer, healthier lives, how will our society change? Number two, what changes in all forms of retirement policy-public and private-should we consider to meet this dramatic increase in life expectancies? Number three, how do we reconcile the fact that while life expectancy is going up, retirement age for most people is going down? What kinds of changes should we consider in our savings patterns, in our investment patterns, in our retirement policies, and in our disability policies as these trends continue?
Number four, how can we make it easier for those who want to keep working into their 60s and 70s, without penalizing them for it, and without punishing those who have spent years in hard physical labor and simply cannot work past today's retirement age? And five, how do we make sure that any policy we develop is fair to women retirees?
Now, I believe that the answer should be guided by five principles. And I'll just leave you with these five principles, they are the ones that the President outlined in Kansas City. For me, they're the touchstone.
First, we must reform Social Security in a way that strengthens and protects its guarantee for the 21st century. Deborah Demico, who is also 28, another one of the Rhode Islanders I met with earlier, teaches the sixth grade, and she teaches her students about the Great Depression-about what happened in 1929, and about how the Social Security system was formed in the first place. And she says that, she tells her students, that our country decided back then, "There ought to be a level below which no American falls."
And she said this, she said, "I want those children to believe that." She said, "I believe it, and I want them to believe it." And I think that should be one of our first principles.
Second, we must maintain Social Security's universality and fairness. For me that's a little bit like the old saying from the Three Musketeers, one for all, and all for one. I really think that is a basic component of Social Security that we ought to keep.
Third, Social Security must provide a benefit that people can count on. Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries-the one and three Social Security beneficiaries who are not retirees.
And fifth, anything we do to strengthen Social Security now must maintain the fiscal discipline that is such a crucial source of today's prosperity.
Well, especially in this time of opportunity and the great economic success that we're having, there is no more sacred obligation than to care for our parents and to help them live every day to its fullest. And that is what saving Social Security is about-more than our budgets, it is about our deepest values. I very much look forward to today's discussion, and to learning more about how we can protect those values for all generations in the 21st century. Thank you very much.
ANNOUNCER: Thank you, Mr. Vice President. Ladies and gentlemen, please welcome Senator John Chafee from Rhode Island.
SENATOR JOHN CHAFEE: Thank you very much. Thank you very much. And I want to join with all of you in a tremendous welcome to Vice President Al Gore, to coming to the state of Rhode Island. We greatly appreciate your making that effort.
And we also welcome from the state of New York, Congressman Rangel, and from South Carolina, Congressman Sanford. We are so glad you are here.
And also, my colleagues, Senator Jack Reed, and Congressman Bob Weygand, and others.
I just want to say a particular greeting to Warren Rudman, I can't see where he is in these lights, but there he is, Warren Rudman, and we served 12 years together in the U.S. Senate.
And he's a wonderful public citizen, and we thank you Warren for all the leadership you've given to the Concord Coalition.
Hopefully, it seems to me, from this gathering today will emerge five conclusions, which I briefly would like to tick off.
First, I hope we would recognize that Social Security needs substantial changes, or the fund truly will be exhausted in some 30 to 35 years from now. That's the first big lesson I hope we can take from this.
Secondly, I hope we will come to the conclusion that any solution must be a bipartisan one. It's got to have Democrats, and it's got to have Republicans to succeed.
And thirdly, I believe we've got to recognize that no solutions will be totally easy, or totally painless. The solution is going to take some tough decisions, and it's important that we all recognize this. There's no magic bullet, no silver bullet that's going to suddenly solve this with no problems at all.
And fourth, I hope we will recognize that we must take action now. The longer we put off a solution, the more difficult comes, it becomes that solution. So it's terribly important that we put our minds to doing something now. Not five years or ten years from now, but now.
And finally, I hope we'll think boldly. When Social Security was started some 70 years ago, it was a bold plan, a bold idea that was conceived by President Roosevelt and his advisors. And I hope we also will think boldly as we try and wrestle with this challenge that we have before us.
So, this then are the five points that I hope we'll keep in mind, and I hope we'll all absorb as we complete today's activities. Thank you very much.
ANNOUNCER: Thank you, Senator Chafee. Ladies and gentlemen, please welcome Senator Jack Reed, from Rhode Island.
SENATOR REED: Thank you. Vice President Gore, I'd like to welcome you to Rhode Island and particularly to my hometown of Cranston.
I'm also delighted to be joined by my Rhode Island colleagues, Senator John Chafee, Congressman Patrick Kennedy, and Congressman Bob Weygand. And, I'm particularly delighted to welcome my former colleagues in the House of Representatives, Representative Charlie Rangel and Representative Mark Sanford. Go ahead please.
I also want to congratulate the American Association of Retired Persons and the Concord Coalition for organizing this very important forum. I'm pleased that Rhode Islanders, young and old alike, are gathered here today to participate in the Great Social Security Debate. This extended national dialogue can serve as a prologue to necessary and appropriate action. Our goal today is a worthy one-increasing our level of understanding about the challenges facing Social Security.
The time is now, to confront the issues faced by our great nation as we approach the 21st century, and among the greatest of those issues is the demographic challenges facing the Social Security system.
Indeed, it is fitting that we're having this discussion here in Rhode Island. Rhode Island enjoys the third highest percentage of people over 65 years old. Close to 16%.
Now, with the inception of Social Security, we committed ourselves as a nation to provide for our senior citizens, individuals with disabilities, and families who have unexpectedly lost their major bread winner. Because of that choice, we are a better nation. Older Americans who have worked hard, saved and left the work force, depend on Social Security.
However, Social Security is not just for seniors. Some Americans forget that Social Security is an important part of our nation's commitment to providing minimum income protection for workers and families in the event of disability or death. Today, 6 million younger Americans receive disability benefits.
And because of the protections of the Social Security system, all working Americans today rest easier knowing that their older relatives have economic security, and as such they can concentrate their resources on raising their own families.
Future generations, our children and grandchildren, deserve these same protections. The critical importance of the Social Security system also reflects the weakness in our private pension system and the difficulties individuals face in accumulating savings. More than half of private sector workers lack any sort of retirement plan at work. For these Americans, Social Security is not just an option, it is their only real defense against poverty. Thus the issue of expanding private pensions must also be part of the discussions of the future of Social Security.
As a point of departure for our discussions on Social Security, I believe that we must recognize that this program has been an astounding success. Without it, half of our seniors would live in poverty. It provides working families with disability and life insurance protections valued in the trillions of dollars. It is administered with low overhead cost that are the envy of private insurance companies.
This dialogue then is not about the failure of the Social Security system, rather it is about the timely recognition of changing demographics which challenge us to maintain the effectiveness and efficiency of the Social Security system. In 1950, 16.5 workers supported each retiree. But because of the increasing longevity of our citizens, and the changing dynamics of the work force, by the year 2030 approximately 2 workers will support each retiree. And at that point, 30 years hence, we will only be able to pay approximately 75% of projected benefits if we do not act now. We cannot ignore these facts. They should be a call to action, but hardly a call to abandon ship. As we consider changes to Social Security, we must also recognize that fixing our gaze exclusively on the architecture of Social Security will miss an important point.
Our best contributions to the retirement security of our citizens is a continually expanding economy. This is accomplished not necessarily by shrinking Social Security, but rather by expanding the saving and investment which power our economy.
The 16 million jobs added by President Clinton and Vice President Gore, together with the historically low inflation resulting from their policies, have done more for the health of Social Security than all of the erudite forecasts and the pronouncements of the last few years. And we must also, please.
We must also recognize that there are no magic bullets that will effortlessly and painlessly will allow us to adjust to the new retirement demographics of the 21st century. Certainly the current fascination with privatization will not obviate the need to make difficult choices. The establishment of millions of individual private accounts, in addition to daunting administrative and regulatory burdens, will require reduction in benefits and/or an increase in taxes.
And although we may amend the laws affecting Social Security, we cannot repeal the financial laws of gravity. Markets that go up, eventually come down. A phenomenon that the Japanese and others are most recently and most acutely aware. And the precipitous drop in the value of the market can decimate the expected benefits of the retirees.
To confront the challenges ahead, we must maintain our fiscal discipline, invest in the health and education of our people to ensure productive work force, enhance opportunities for personal saving and greater private pension coverage, and consider and ultimately enact changes to Social Security which will maintain its character while extending its solvency.
Ultimately, our success in this endeavor should not be judge simply by actuarial tables or compounded rates of return. Sixty-three years ago, we made a compact among our citizens and between our generations that if an American worked throughout his or her life, he or she would not end their life in poverty. This compact was not based on the luck of the market or the fate of life that endows some with talents and leaves others a harder road.
For these 63 years, we have kept this compact. And the true measure of the success of our deliberations today can only be measured 60 or 100 years hence if Americans can still proudly make that same claim. Thank you very much.
ANNOUNCER: Thank you Senator Reed. Ladies and gentlemen, Representative Mark Sanford Jr., from South Carolina.
REPRESENTATIVE SANFORD: Mr. Vice President, Members of the Concord Coalition, members of AARP, and citizens of Rhode Island, I would say thank you very much for letting me be a part of this conversation. I say that because I don't need a whole lot of excuses to try and escape the 100-degree heat back in South Carolina. Although I also say that, and I think I more significantly say that because I think ultimately this conversation is about making sure that Social Security does as much good for each of my three boys, Marshall 6, and Landon's 4, and Bolton is 2, as it's done for my mom and for my grandmom.
And as we sort of explore options on how you get there, today we'll look at a lot of numbers, and what I'd like you to do while you're looking at those numbers is basically to think about three fairly simple thoughts.
And one is that while this conversation is about Social Security, what I think it's ultimately about is the American Dream. Because as Senator Reed just mentioned, the most fundamental of all American consensus-if you want to call it that-on the American dream is the idea that you end the lifetime of work with something other than just memories to show for it.
And, what I'm hearing from folks back home, is that when they, as the Vice President just mentioned, for most folks, when they actually get to retirement, the thing that they really have to look forward to is Social Security-and that's about it. And what those folks are telling me is that while some people might have the luxury of planning for retirement over here, and then having Social Security over here, what they're telling me is: "Mark, I'm strained, I'm struggling as it is, 10% of what I make everyday and every week and every month and every year goes into Social Security, and I don't have a lot of other savings. So when you all talk about reform, make this reform count. What you all have to look at is creating a system that actually creates real wealth for me in retirement because I don't have another retirement plan."
And I think they're right. Because when I've looked at those same folks back home, and I've looked at the numbers, for 73% of Americans, the largest tax that they'll pay, and consequently, the largest investment that they will make, will be in Social Security. And so, as we look at these numbers today, I would beg of you all, think about that group, and think about a system that actually creates real wealth for them.
Second, I would say that we've got to think outside the box when we look at reform on Social Security. It will be very easy, or it would be very easy for Congress to do that which it has traditionally done. It can cut benefits a little bit, raise payroll taxes a little bit, and in an actuarial sense save Social Security. But in doing so, I think we could break the very promise of Social Security. Because we, not the promise of Social Security, but Roosevelt's promise of Social Security was that we would create a system for you that will create for you not a worse, but a better lifetime in retirement.
And yet, some of the numbers I've seen have suggested-not for my mom, or my grandmom's Social Security, but for a working American today-their average rate of return on their "Social Security investment," would be about 1.9%. Or that, for a young person, depending on when the numbers are calculated-whether it's 1948 or 1960-that they could actually end up with a negative rate of return on their investment. Or a black male, simply because he has a shorter life expectancy, could end up with a negative rate or return.
I saw a recent University of California study that showed a person born in 1948, making $30,000 a year, could actually end up having to live a 110 years just to get their money back. Now that's not the promise of Social Security. And so what I think we need to think about is not just saving Social Security in an actuarial sense, but more significantly, saving the promise of Social Security.
And finally, this conservative Republican has come to agree wholeheartedly with Democratic Senator Moynihan, and Democratic Senator Kerrey, and lifetime Democrat Sam Beard, who started a group called Economic Security 2000. All of them have come to a consensus that personal savings accounts are probably part of the cure as we look at Social Security. And the reason I've come to agree with them is for a lot of different reasons, but just let me give you an example of one. One would be the idea of personal control.
This year Washington will borrow $105.3 billion from the Social Security trust fund. And we'll do it without a lot of noise.
It will be pretty easily done, and the reason it's so easily done, is if I was to ask you sir, or you ma'am, or you sir, "how much have you put into Social Security over the years?"-you probably wouldn't know. And unless you were awfully odd and kept a shoebox in the corner room wherein you have every pay stub from every high school job, college job, and down the line, you wouldn't know how much you've put into Social Security, and as a consequence it'd be easy for Washington to borrow against that money.
The if, on the other hand, we had that money, this is from Fleet National Bank, a bank that started in Providence, if everybody had their own personal savings account, and knew to the penny how much was in their account, and then Washington tried to reach in and borrow that money-I think we'd have a revolution on our hands. And I think that kind of guard against Washington borrowing y'all's Social Security money is one of the things we need to look at.
So, I would just say, thank you again Mr. Vice President for giving me the excuse to get out of 110-degree heat back in South Carolina, and I would ask that we all look at a system that creates wealth, look at a system that keeps the promise of Social Security alive, and hopefully one that incorporates personal savings accounts. Thank you.
ANNOUNCER: Thank you, Representative Sanford. Ladies and gentlemen, please welcome Representative Charles Rangel from New York.
REPRESENTATIVE RANGEL: Thank you. Mr. Vice President, my distinguished partners in the Congress, this great audience that we have on this exciting moment, this morning in Rhode Island. Mo Udall, a former member of the Congress had to wrap up a debate in the House of Representatives not too long ago, and because people had argued all day and all night, he said that everything that had to be said about the subject matter had already been said. And we paused with great relief until he concluded, "but not everybody has said it."
Well, on the question of Social Security, you bet your life not everybody has said it.
It's a very sensitive subject, and we are here because it is an emotional subject that Americans have to understand, and Americans have to be heard as to what they got, and what they are willing to risk to get something else. You may not know how much you have invested in the Social Security system over your lives, but there is one thing that you do know-that every month, of every year, or everyone's lifetime-that you can depend, that you're going to get that Social Security check.
And while it is true that the economy has so improved, that you may think that you're entitled to a better deal- and you may be right-you also have to remember that people in your family, your parents and your grandparents, they were promised that check and that check also was in the mail and they could depend on the fact that it was there for them.
If we're going to discuss this, what a better time to do it. When the President of the United States, and the Vice President, and the administration has given us this economic opportunity-and for us in politics, the political cover to fix the roof while the sun is shining.
Which means what? It means that the back room of the Ways and Means Committee, or the rooms in the House and the Senate will not be making the decisions. You will be making decisions as this debate is heard throughout the United States, as the Concord Coalition and AARP provides this forum for you to better to understand the issues-but more importantly, to direct your members of Congress to do what you think is in the best interest of the program for the people of these United States. So what do we have to do? We have to make certain that those of us who drink from the well don't poison it for the generation that follows.
We have to make certain that the dependency that those who retire today, or that check for a basic income where two-thirds of retired Americans depend on it-that we don't change that. We have to make certain that those that survive-the widows, the children, those that have been sick and disabled-that we don't change the rules of the game for them. And we also have to make certain for our younger people who are investing in the system, that they be assured that when the time comes for them to retire, or when the time comes for them to receive the benefits, that the United States government will be there for them, as has been for us and for our parents, and for our grandparents.
Now, I'm in a unique position, because my district is one half of the borough of Manhattan. One-half of it is low-income, moderate-income, hardworking people-and the other half of it is the financial district of New York. Everybody in the upper half of my congressional district wished they could take advantage of the boom and this robust economy, but they never had the chance to have the money to take the risk, to take advantage of this great economy. Now that we are reviewing the system, there are some people who said that reliance and government bonds, and the boom of people that will be taking a benefit, will cause us now to reform the system.
And I think that this is what this debate is involved. Because nobody is prepared to embrace a system that is broken-until we make a commitment that we're going to fix it. Now comes the real question, the political question, the sensitive question: "How do we fix it?" I would suggest this, for those who would want to go to the private sector, to privatize, and to make certain that you have your own individual private savings account: God bless them, as long as they're able to say, that you're not going to lose one nickel of benefits as a result of you being involved in this.
And if indeed, the way it used to be with people that used to sell Wall Street, they would say that, "this is not an offer, this is not an invitation for you to buy, we're not asking you to invest-if we were to do this, we would have an obligation to tell you what the risk is all about." And that's what this debate is, if you want to shoot craps understand that you could win-or you could lose.
The greatest thing-the greatest thing in my district about this debate, because they all are really private-investment type people, is that they think that they're going to go into the market with someone else's money. And if that was possible, I would be with them too. But when they understand the money that's going to be invested will be taken away from your account-whether you know what it is or not-then the question is how do you pay for it. And I suggest to you, if it means that we're going to repair the system by increasing taxes-and especially the regressive payroll taxes-that's a rough option.
If it means that we're going to reduce the benefit for those people, when we know now that two-thirds of retired people rely on that, that would be a rough option.
If it means that we're going to the goal post back, and make it longer before you're entitled-being 68 years old I don't even understand that logic-if all of America is now saying, retire earlier. And if it means, of course, that I have to take some risk as to whether or not my check is going to be in the mail as I used to know it, I want to hear more about the privatization.
And so that is why these debates are so important, so that when the Congress makes a decision that you would know that it's not just going to be a prospectus that is given to you to take advantage of the robust economy. That when we fix the roof, we fix it together, and all of you know that we haven't taken anything away as we attempted to improve the system as we know it.
ANNOUNCER: Thank you Representative Rangel. Ladies and gentlemen, please join me in a hand of applause for the Vice President and our Congressional presenters.
ANNOUNCER: Ladies and gentlemen, we continue our program now with moderators, Matt Miller, Senior Writer, U.S. News and World Report, and Teresa Tritch, Senior Editor, Money Magazine.
MR. MILLER: Hello. Well, Teresa, our elected leaders-and all of us assembled here-our elective leaders have made clear to us that the retirement challenges of the next century affects each of us in ways that go beyond political party, and beyond generations.
MS. TRITCH: Well you're absolutely right Matt. So we all need to study and understand the issues-that way we can all plan sensibly for retirement, and perhaps even ultimately influence Congress.
MR. MILLER: Well, lucky for all of us, we've just happened to have handy a five-minute crash course that you might think of as "everything you wanted to know about retirement of the 21st century, but were afraid to ask." You've all got pamphlets I think with you, and there'll be stuff on the screens that you can follow along with.
MS. TRITCH: If everybody's ready, then let's get started. Retirement, both the concept and the reality, has changed a great deal in the past decades-and it will change even more in the decades ahead. What does it look like today? And how will it change in the future? This information is vital for current workers to plan for a more secure retirement.
MR. MILLER: Now first, let's take a look at the changing demographics. The aging of the baby boom as we've heard, means that the proportion of the population aged 65 and older is going to increase from about 12% today to about 20% by the year 2030. Now beyond that, the percentage of seniors will level off, but it won't go down because of another important demographic change-which is that people are living longer. Now let's remember, that's a good problem to have.
MS. TRITCH: Well, just how good is it? That's the question. Life expectancy for those who reach age 65 is on the rise. By 2050, it is expected that women will live more than 21 years past age 65, and men will live for another 18 years.
MR. MILLER: Americans can thus expect to spend more of their lives in these traditional retirement years. Now that means people will have to be prepared financially for this kind of longer retirement or face the reality of having to work.
MS. TRITCH: Another change, Matt, has been the growing ability of Americans to retire comfortably. For even though Americans are living longer, they are not working longer.
MR. MILLER: That's right. Overall, the working rates among older Americans has fallen since 1950 as people opt to retire earlier, or in some cases are compelled to. This decline has actually been most dramatic among men.
MS. TRITCH: Because of population changes and early retirement, the number of workers paying into Social Security-relative to the number of beneficiaries is declining. And I will reiterate some of the very important facts that the Vice President shared with you. In 1960 there were five workers per beneficiary. Today there are just over three. By 2030, there will be just two workers for each recipient.
MR. MILLER: Now as the baby boomers retire, the traditional labor force-age 20 to 64-is going to shrink as a percentage of the total population. So if the economy continues to grow, that means employers may have a harder time finding qualified workers 20 to 64, and are going to have to be looking for older folks to continue working longer.
MS. TRITCH: So how does Social Security benefits fit into all this? Social Security was intended as a floor of income protection to which pensions and your own savings would be added. However today, Social Security is the dominant source of income for most older Americans, except for those who have the highest incomes.
MR. MILLER: Now the facts here Teresa, as you know, are really striking. Two out of three seniors depend on Social Security for at least half their income. Nearly a third receive over 90% of their income from Social Security. Nearly a fifth receive all of their income from the program.
MS. TRITCH: And unless pension and savings patterns change, by the time the boomers are all retired, reliance on Social Security will still be nearly as high as it is today-with about 40% of retirement income coming from the program. This makes it all the more important that Social Security remain financially healthy into the future.
MR. MILLER: Now of course Social Security is only one leg of the sort of three-legged stool that people talk about in retirement, pensions are in other. Yet, there is a problem here-which is that less than half of America's work force is covered by a private pension today.
MS. TRITCH: And pension coverage isn't the only problem. Over the past 20 years, the average income from pension hasn't changed much. In the mid-1970s, the medium amount of pension income was about $7,000. In 1996, that amount was about $8,000. Not much of an increase.
MR. MILLER: And, the truth is that without any change, future retirees will not receive much more in pensions, as measured in today's dollars, than current retirees receive.
MS. TRITCH: Now of course, pensions aren't the only path to retirement security. Unfortunately however, excluding equity in their homes, U.S. households aren't saving to make up any gap. They've accumulated very little in the way of savings, even those who are near retirement or in retirement.
MR. MILLER: Then, as everyone knows, there's the problem of health costs. Now, I don't have to tell you all that as people get older their health costs rise, especially after age 45. And for more and more American families, health insurance is something that's not affordable.
MS. TRITCH: Despite nearly universal health coverage for older Americans, all retirees know that health care costs take an increasing part out of their budget. In general, today, out-of-pocket costs average nearly 20% of income for older Americans, and the percentage is much higher for those with lower incomes. As long as health case costs continue to climb, many older Americans will be vulnerable to a financial squeeze.
MR. MILLER: So, let's sum up this whole picture. Americans are living longer and spending more years in retirement.
MS. TRITCH: Retirement income, therefore, must be sufficient to last for more years.
MR. MILLER: But unfortunately, too many Americans aren't prepared for this.
MS. TRITCH: Their savings are inadequate.
MR. MILLER: Their pensions, if they have one, doesn't go far enough.
MS. TRITCH: Their Social Security benefits alone will not be enough.
MR. MILLER: Plus, they're also going to have to deal, all of us will, with rising health care costs.
MS. TRITCH: And, as we mentioned before, there will be fewer working Americans to finance government benefits.
MR. MILLER: Now this all sounds bleak when you sort of put it all together like that-but the truth is, these problems are not, as no problem is, insurmountable. The key however, is that we need to recognize them, and begin preparing now for the future, both as a nation and as individuals.
MS. TRITCH: Here's some of the things that we have to do. First, we need to ensure that future older persons will have adequate income. This means:
MR. MILLER: First, making changes in Social Security so it continues to be financially secure and provide an adequate floor of income;
MS. TRITCH: Expanding pension coverage and encouraging workers to participate in employer-provided plans;
MR. MILLER: And encouraging people to save more on their own;
MS. TRITCH: And finally, we need to make sure that there will be good jobs available for those who need to, or wish to, continue working in retirement.
MR. MILLER: Now some of you probably thought after all those charts and graphs-that especially if you're younger, that you'll be close to reaching retirement age yourself by the time we were done. But congratulations, you've gone through this crash course, and have a great lay of the land in terms of the issues that we'll want to hear from you about and share in a dialogue with both the experts and elected leaders. That's the portion of the program we want to move to now. Where we'll start a dialogue with you all, about your concerns about the program, about retirement in the 21st century and what it means.
But to kick it off, we're going to have a couple of experts-a couple of the nation's leading experts actually-on Social Security, Medicare, and retirement who can help answer some questions or provide any context as this dialogue goes on.
Let me welcome Marilyn Moon, who's behind me on your right and my left. She is one of the trustees currently of the Social Security and Medicare program. She's also a senior fellow in health policy at the Urban Institute in Washington. Also with us David Walker, who is a former trustee of the Social Security and Medicare program. He is now one of the partners at Arthur Anderson's world-wide practice.
I'd like both of you guys, if you can just quickly, in a couple of moments-Marilyn why don't we start with you. Give us some context of where you come from and the issues that you're concerned with in this debate. Each of you do that for a few moments, and then we'll get to all of your questions and concerns.
MS. MOON: Thank you Matt, I want to start out though saying-although David and I have some differences, we don't usually sit this far apart. We're going to be joined in a few minutes by another one of our colleagues. One of the things that I think that the information you have received so far today underscores-that I think is really important-is that the Social Security debate is not just about a Social Security program that is a federal program. Too often, we talk about this issue as though if we solve the federal program problem, or if we did something about it, all by itself, that would solve the problems of the future. The problems of an aging society and the benefits of an aging society are ones that are going to mean profound changes in a whole range of areas.
And things like economic growth of an environment that fosters work and helps people who want to stay in the labor force longer to do so are crucial elements of any ultimate solution. So when I hear people talk about Social Security and talk about cutting it-as if that's going to solve the problem.
People will still be there, problems will still be there, we need to think of it in a more holistic fashion. The other thing is that those of us who toil in this area for a long period of time hear all these statistics and they are kind of wearying.
But I think one of the important things that I'm convinced of, is that there are a range of reasonable solutions to the problem that are going to be somewhat painful. There are some choices that people will have to make, but this is not a revolution necessarily. If people decide they want more dramatic change, that's one thing, we do not have to take that only as a solution to the program.
MR. WALKER: If we look at the retirement security challenge, I think the most dramatic thing from my perspective, is if you look at the senior's dependency ratio-that is, the number of seniors that are 65 or over, versus the number of individuals who are supporting them, that are of working age. In 1950, there were 16 individuals working for every person over 65. Today it's 3.3 to 1, and by 2025 it will be less than 2 to 1. That has dramatic implications, not only with regard to Social Security, but also with regard to Medicare, also with regard to private pension, health programs, individual savings arrangements, etc.
I think we have to keep in mind as we debate today, that as we look to the 21st century, there's two key needs that have to be met in order for Americans to have retirement security in the 21st century. First, they must have an adequate stream of income throughout their entire retirement years. And many people today will live as long in retirement as they work, based on current trends. And secondly, they need to have access to affordable health care. If we don't address both of those too, you cannot have economic security in retirement. Therefore, you can't have retirement security.
It's important we act on Social Security now, we've got a window of opportunity. I look forward to the debate this afternoon. And Matt, why don't we turn it back over to you.
MR. MILLER: Thank you David. Well let's go to some sharing of questions and comments or concerns, Teresa, do you have someone over there?
PARTICIPANT (MR. MAGRAF): Hi, my name is John Magraf. When the question of privatization of Social Security arises, I have a lot of questions with that. I work at a hospital, I deal with sick people every day. I see that quite often many people aren't responsible to take care of their own health-by smoking, drinking too much, wrong diets, what have you. How is society supposed expect people who aren't responsible for their own personal health to be personally responsible for their potential Social Security?
MS. MOON: I think that's a very good question. I think that in the whole discussion about privatization, one of the real things that people do have to think about is, how much do you want surety, and a stable level of protection versus the personal freedoms that Representative Sanford talked about. These are very complicated proposals and I think that it's important that people understand that there's not a simple solution. The promise of a 7 to 8% return is not necessarily a guarantee.
MR. WALKER: I think, the other thing we have to keep in mind, is what is privatization mean? There are a lot of different options that have been associated with that. I think the sensible center, to the extent that they talk about privatization, means a base defined benefit program that provides a certain and secure benefit geared towards lower middle and lower income individuals and possibly for individuals that are younger- e.g., 55 and younger-possibly provide them with an opportunity, either on top of Social Security or in lieu of a piece of what otherwise would be Social Security: an option to have an individual savings account.
That's one of the things we ought to talk about today. We need to avoid the extremes, we need to talk about the options and make sure we get the facts out so you can give your input.
MR. MILLER: We've got a question over here from Howard Freelof.
PARTICIPANT (MR. FREELOF): My concern is, you're talking a lot of talk on the raising the retirement age-what's being done to keep our jobs, our manufacturing jobs, from being shipped out of the country? I mean does, how are we supposed to work if we don't have the jobs?
MR. MILLER: Anyone want to take a crack at that?
MS. MOON: Well that's essentially what I was getting at before when I was saying, we have to, if we're going to talk about some of these changes for the future, you need to talk about fostering an environment if you, for work. If you want people to stay on the labor force longer, the jobs need to be there and the flexibility in those jobs needs to be there. So I think that one of the things about increasing the retirement age, is that some people forget, is that there are a whole range of things you need to do to make that work well. So, if you're going to have that as a requirement, it seems to me that the requirement is also to follow through and provide those opportunities.
The other thing I think about the retirement age is some people sometimes talk about it as if it's almost a dirty word. That somehow people want to retire earlier for some kind of unpleasant reason. Many of us look forward to having some additional leisure. As a wealthier society we've been able to afford that. One of the questions is, do we think we can continue to afford it, and if so, what else do we give up?
MR. WALKER: You talk about a very legitimate challenge given the change in our economy. Going from an agricultural account based economy, to an industrial, to information, now we're going to a knowledge based economy, that's how we're competing. As a result, we need to change a lot of our policies. We need to look at training, we need to look at developing skills, to give people an ability to compete adequately in this area, and one the things that we absolutely positively have to do, we've got to figure out a way to tap the tremendous asset value and talent of senior citizens.
We ought to have an ability to do that, we ought to be encouraging individuals to work longer to the extent that they're willing and able. We ought to be eliminating disincentives to work longer, we ought to be rewarding that, and employers have a role to play too in changing their work policies and practices in the area. That's very important.
MS. TRITCH: Ladies and gentlemen, another expert has joined us on stage. This is Ron Gebhardtsbauer. He's a Senior Fellow at the American Academy of Actuaries. He's going to lay out for us some of the nuts and bolts of the Social Security reform proposals that are on the table now. Then Marilyn and David will comment, and we'll take some more questions from the audience. Ron?
MR. GEBHARDTSBAUER: Thanks Teresa, and good morning. As Teresa said, I'm the Actuary, and I'm going to be explaining ten possible options for fixing Social Security. Now I have to warn you that some of these options, in fact all of them-none of them is a silver bullet that is going to fix all of Social Security's problems. So whatever the complete solution's going to be, it'll probably need to include several of these solutions.
In addition, each of the solutions does have a disadvantage that affects different particular groups, and the total complete solution, probably could affect, it's very possible it could affect everybody, although it's possible that some retirees may not be affected or maybe only affected a little bit. So we may all be a part of this solution. And let's think about that and keep that in mind as we go over the options.
The first option, is we could raise the retirement age. Right now you can get a benefit from Social Security at age 62, but a lot of baby boomers will have to wait until age 66 in order to get a full benefit from Social Security, and Generation X people will have to wait until age 67 in order to get a full benefit. Who here is born after 1943? All of you will be affected by this particular Option 1. What it does, it raises the retirement age for full benefits to age 67 a little bit quicker than under the current rules. And then it increases the retirement age very slowly as we continue to age.
Now, that may seem like the right thing to do because we're living longer, and the supporters of it would also say we're also healthier in older age too. But opponents would point out the fact, as Vice President Gore mentioned earlier, that people who have very physically demanding jobs, would find it difficult to continue their jobs at an older age.
So we have Option 2. That would decrease the cost of living adjustments that retirees currently get every year. Right now economists think that the inflation index is a little bit overstated. So this option would reduce it by about a half of a percent. And that doesn't seem like much, but it's actually pretty powerful. It would fix about one third of Social Security's problems.
In fact, if you subtract it one percent, it would fix two-thirds of Social Security's problems. But opponents are concerned: they say the government has already fixed the inflation index just recently-it's expected to be the right number. They don't want politics involved in that. In fact, even though you fall behind by inflation by a half a percent every year, it's cumulative. And so after you've been retired for 30 years, you could be about 15% behind in what you can purchase. And so that's particularly difficult for people who are very old. And that's where a lot of women are-they live a lot longer, and that's where some of our highest poverty rates are for elderly, very elderly women.
There's another option is that we could decrease all benefits for future retirees, not current retirees, not current retirees but future retirees, we can decrease them by three percent. But opponents are concerned about that one too, because that would decrease benefits even for low income people, and as you've already heard, a lot of low income retirees out there depend fully on their Social Security benefit for all their income.
Option 4 is one that would not decrease it, benefits for everybody. It would just decrease benefits for people with higher incomes. And it's sometimes called the affluence test. I was talking to my parents about this recently, and they seemed to like the idea because they figured it would only affect the millionaires. Well, then I told them this particular option, though, would affect everybody whose total family income is over $45,000. And I figured for them, they're just a little bit over $45,000, so they would lose about 30% of their benefit, their Social Security benefit.
At that point, then they weren't so sure they liked the idea because it would affect them. So I think this particular proposal, how you feel about it, depends on where you stand. So the supporters would, though, say, "This is really good proposal because it preserves Social Security for the people who really need it."
But the opponents would say, "This really changes the whole nature of Social Security, from a system that's universal and where your benefits are based on how much you put in, to a system that is just based on need."
Now the last four options that I just did, they all help fix Social Security by decreasing the money going out. The next four that I'm going to do help fix Social Security by increasing the money coming in.
One way to do that is to increase, or to tax Social Security benefits just like we tax pensions. Right now if a retired couple is getting about $20,000 in retirement income totally from their employer pension play, they might pay taxes on about oh, $500 a year. But, if it's not from their pension-suppose that income was solely from Social Security-that $20,000 that retired couple is getting is all from Social Security, then they wouldn't pay any taxes.
In fact, it's not until you income goes above $32,000, your total income goes above $32,000, would you finally start getting taxed on your Social Security benefit. And so people would say, "why do you tax Social Security dollars different than pension dollars?"
And so, supporters would say, "this is an issue of fairness, we should just tax them all the same." One of the important points is a lot of people think that this would really hurt people at low incomes. But it doesn't actually, because of our tax system, low income would not be taxed. Fully 30% of the people would still not pay a tax. But some of the people who do not like this option are concerned because it would increase taxes for people who are in the middle income area.
Option 7, that's the one that would increase the tax rate on everyone. Currently, you all pay, workers pay a little more than six percent of their wages to Social Security and their employees match it, for a total of 12.4%. This particular option would increase your taxes by one percent of wages. And some people feel that that's the right way to do it. But others are concerned that if we increase Social Security's taxes by one percent, and now we've got to fix Medicare, that would be another tax increase, and maybe 20 years down the road, we'll have to increase taxes again. That can get awfully expensive, especially for low income people.
The last way of, this is Option 8, of getting more money into the system is to include state and local employees. I think there's some local government employees in Massachusetts that are still not in Social Security. Most are in, federal employees are in, but some state and local employees are not in. And they would say, "Social Security should be universal and they should be in."
Okay. We're almost done. The last two options are probably the more controversial ones, you've heard people talk about them already-and it's because they haven't been tried yet in the United States. Right now, Social Security has to invest its money in government securities. And they could maybe get a better return if it was invested in the stock market, or in private sector bonds. So this is again, not a magic bullet that would solve everything. We'll still have to do some of those benefit decreases or tax increases even though we do this. And there are some other disadvantages to the, in addition to the advantages.
And there's a couple ways of doing this. One, Social Security can do the investing. They could hire investment managers and invest in the stock market. Get the better return and in fact if the stock market goes down, at least they can smooth out some of those risks, so it doesn't get directly passed onto individuals. But some of the opponents are kind of concerned because this would mean the government is investing in the private sector and they're concerned about politics getting involved there.
There are some ways to get around this. And one way that some of the opponents would suggest is instead of having Social Security hire investment managers to do it, individuals could do it. And the individuals then would take, in this particular option, option 10, the last one. They would take one percent of their wages that they were sending to Social Security-instead they would invest it on their own. Get the higher return, but notice what this means. Social Security is getting a little bit less money. And because they're getting a little bet less than they would, somewhere we'd have to go back to those other options and decrease benefits or increase contributions going in. So, Social Security would have to decrease benefits. Well, hopefully the money you're putting into your individual account would make up for those losses that you have in Social Security.
And if you invest it well, you probably would beat it. For people though who didn't do a good job or the stock market goes down, they may not do as well, they may, they may not. In addition, some people talk about what's called the transition period, or the period in which we change over from a system that is fully Social Security to one that has some privatization.
During the transition period, there's a good chance that more people would not do as well during that transition period as it would of if we had not had privatization. So, I know this was a lot of information, and don't worry, actually you have a handout that explains all that stuff that I've already talked about. You can take that home with you, and you're going to have time to ask us questions, all three of us questions on it. Before that happens though, I think Marilyn and David may have some comments on this topic.
AUDIENCE MEMBER: What about option six? You forgot option six.
MR. GEBHARDTSBAUER: Option six, I think, is the one-ah, thank you. That's a terrible one to miss. Option six is the one...
MR. MILLER: That was the voice of God somewhere, right?
MR. GEBHARDTSBAUER: Right. Well, I heard the voice outside too. Option 6 is the one where instead of increasing taxes for everybody, we just increase Social Security taxes to people at higher incomes. Right now you're only taxed.
I know I heard. Right now employees are only taxed on their wages up to $68,000. After that, there's no tax. And some people in option 6, would recommend that, that gets raised to $90,000 and the positive is that it comes form people who do have more wages. The concern there is that at those high levels, the more you put in, you actually don't get very much from Social Security in return for it. So you rate of return is not as good.
So anyway, that's it for me, and I think David and Marilyn have something to say.
MS. MOON: Thank you, Ron. Let me just briefly say that one of the things that I think is striking about looking at these options is that there are going to be opponents to every single option just as there are going to be supporters. And one of the challenges of a meeting like this is to find a way to come together to see if there are ways in which you can combine various proposals to find something that people have a sense of fairness about and satisfaction that it's not just their ox that is being gored.
The other issue that I think is important to take away from all of this discussion is that under our best projections of what we think will happen in the future-and there certainly is some uncertainty-there is not going to be enough money in the system in the future to pay the full level of benefits without some changes. So the basic question is, "Will we have some slightly lower benefits? Will we have some slightly higher taxes?" My biggest concern is that some of the proponents of privatization argue for it on faulty grounds.
There are good reasons for talking about potentially having some personal accounts. And I think that people, there are people out there who make the case very well. But there are others who will tell you it's a way around ever having to raise taxes or lower benefits, and I will tell you that having looked at this for many years, they are smoking something or else they're not telling you the truth. There are going to have to be some sacrifices made. There are different kinds of approaches. You can legitimately choose to have some personal accounts, but we will make sacrifices in that case just as well. Thank you.
MR. WALKER: Two key points. First, Ron noted a number of different options. In the end we have to come up with a balanced package. A balanced package that achieves certain objectives. One assures the solvency of Social Security over the 75 years, and the sustainability of Social Security beyond the 75 years, to avoid that build up and draw down that Vice President Gore talked about. Secondly, its got to be fair. It's got to be balanced, it's got to be fair intergenerationally, gender, and income wise.
And thirdly, it's got to be feasible. And if it meets those three tasks, I think the American public will support and the Congress will do something.
Last but not least, having studied this for many years-and having knowing that I'll be involved for many more years-Social Security reform can be win-win for all generations. Absolutely, positively-and let me tell you why I say that. Because realistically, it would not be fair to make significant changes in benefit levels for individuals that are in retirement or near retirement.
Number two, so the reforms that are going to be made realistically are going to have little impact on people that are in retirement or near retirement. On the other hand, the reforms that can be made will significantly increase the amount that baby boomers and baby busters think that they are going to get. We can exceed the expectations of all generations of Americans, but we do need to form that balanced package and let's get on with it.
MS. TRITCH: Thank-you Ron, Marilyn, and David. We'll go to some more questions. Matt?
MR. MILLER: I've got Ernie Albeep, please stand up.
PARTICIPANT (MR. ALBEEP): Hello, they talk about Americans saving habits. How are we supposed to save money when we're already strapped? They want to say, raise taxes. I can't save money now, you've raised my taxes. I have less money to save.
MR. MILLER: It's a good question.
MR. WALKER: Part of the answer is-I don't know your personal financial situation. We could probably all do better than we have done in the past. I think there's a simple premise. Pay yourself first, take it off the top. Understand that we are all going to need to plan, save, and invest for retirement. I'm a baby boomer, I've got kids that are Generation X'ers, I've drove that into them for a long time. Pay yourself first, take it off the top. Do it through payroll reduction, don't touch the money.
Just a little bit can compound a lot over the years, and how much you can save obviously varies on your circumstances. But that's a simple principle I think.
MS. TRITCH: Thank you.
PARTICPANT (GREG): My name is Greg. I just want to point out that I think that this is a very important discussion. But I think what's more important is when we look at what else can we leave my generation and the generations that are going to follow. And I think more importantly, we need to discuss moral character, moral fiber of our leaders, that we understand that money is important and we need to live, but that we have personal responsibility. I need to be responsible for myself, my family, my parents, my children-it is something that I need to do. And I need to look around in the community and see those that are in need and try to help them.
It's wonderful the government can provide a safety net, but my question is, do we want to take away personal responsibility and just put it all on the government's hands? I think it's very important that we try to give back some of that responsibility to the individuals. That's what God intends, intends us to do with our lives. To put our trust in Him.
MR. MILLER: That's a great comment, and a great thought. I've got Linda Bellow with a very interesting philosophical question.
MS. BELLOW: Well, I came here today with a completely different message of what I thought about Social Security. In reading that option that you have that over 5 years, you're going to raise the amount of wages subject to payroll tax so that it reaches $90,000. Your comment was, you didn't want it to go so high that the people were putting more money than they were getting back. I always thought that this was to help people who were in need of it. For example, you know, people pay school taxes who have no children. They pay road taxes, and they don't drive cars. This is we're supposed to be working as a government to help each other.
We're hearing all for one, and one for all. But all I'm hearing is "me, me, me." Am I going to get back what I put in?
When I was younger, about my early 20s, I sat next to a gentleman who was a big CEO of a company, whose making millions and millions of dollars. We both went in for a blood test. I paid for my blood test, and because he was over 65, it didn't matter how much money he had, and he got to get his for nothing. And right then and there, I know that things weren't fair.
I don't know why they don't just tax all of, you know, 6.2% up to whatever amount you make. It seems to me that you're telling the person making...
You're telling the person whose making $20,000 a year, $30,000 a year, that we're going to tax 6.2% of your whole income, and they can't afford to give a penny of that income. And then the people who are making two million dollars a year, three million dollars a year, you're only taking something that they don't know it's there. I mean they just drop it on the street.
MR. GEBHARDTSBAUER: Thank you for your comment, I think that's a good one in fact, I've been giving speeches around the country on these subjects a lot for the past year with Americans Discuss Social Security-that was Carolyn Lukensmeyer's group-and one of the things I thought was very interesting, is that people are coming together on agreeing on a lot of these solutions. We looked, each person had a little electronic box that, in where they voted on each one of the options. And on this particular option we found out that not only were low and middle income people voting to go along with it, and they really liked it, but even a lot of higher income people were willing to pay more into Social Security. It was at least half of them were willing to do it. Even though it would affect them. So I though it was kind of neat to see everybody coming in on that.
MS. MOON: Let me just add though, that one of the things that I think is important to, for people to understand about-one of the reasons that Social Security has been very well supported over time is the feeling that people make a contribution, and then there is a formula that says what you get back from that contribution. And that is a strength of the program.
And I think this is an option that we should certainly should look at, and I have some sympathy for certainly raising it. But I think that we want to be very careful then what the formula is in terms of what people get back from the system. Not just on the basis of "me, me, me," but on the basis of a sense of fairness. That this is a program that we've established under a set of rules. And I think we just have to be careful about changing those rules, because they do provide some security and assurance for people in terms of how the system will operate.
MS. TRITCH: Thank you very much. Ladies and gentlemen, we're going to take a break now. So, I'd like to thank our panel, David, Ron, and Marilyn. And we'll take more of your questions when we come back. Thank you.
(Kansas City Highlights Video)
ANNOUNCER: The Great Social Security Debate began on April 7th in Kansas City, Missouri. We continue that discussion now with this forum. Please welcome back to the stage: Vice President Al Gore, Senator John Chafee, Senator Jack Reed, Representative Mark Sanford Jr., Representative Charles Rangel, Ron Gebhardtsbauer, Marilyn Moon, David Walker, Matt Miller, and Teresa Tritch.
THE VICE PRESIDENT: Thank you very much. Well, ladies and gentlemen, you've all had the chance now to hear two very important discussions. One on the future of American retirement and on the variety of reform proposals that have been made to strengthen Social Security while making the most of the future.
In setting up this discussion here, and in anticipation of the comments and questions that we'll be fielding from you, I want to thank all of my colleagues again for joining in this discussion and the sponsors.
And I'd like to briefly review some of the questions that I hope we will discuss in today's dialogue. First, as more and more people live longer and healthier lives, how will our society change? Big changes are underway right now. Secondly, what changes in all forms of retirement policy-public and private pensions as well as the government systems-what changes should we consider in order to meet the dramatic increase in life expectancies? Not everything should be on the shoulders of the Social Security program.
Number three, how do we reconcile the fact that while life expectancy is going up, which is well known, the average retirement age is going down here in the United States and all over the world. What kinds of changes should we therefore consider in our savings patterns, and our investment patterns, and our retirement policies, and our disability policies as these trends continue?
Four, how can we make it easier for those who want to keep working into their 60s and 70s and beyond, to keep on working without penalizing them for it, and without punishing those who have spent many years in jobs that kind of wear them down? One of the people that I met with from here in Rhode Island before the session this morning talked about her aunt being a nurse who worked the 3-11 shift and when she got ready to retire she said, "well you know nurses in my day were expected to just work to the grave," was the phrase that she used. A lot of people who are on their feet all day long, kindergarten teachers, nurses, people working in hard physical labor as well, shouldn't be punished in, as a result of changes in the retirement age.
Number five, how do we make sure that any policy we develop is fair to those seniors who live the longest but often have the least amount of resources to support themselves-and I'm referring particularly to America's women retirees, who for a variety of reasons, are more vulnerable to some of these changes than others.
Well, I'm here as all of you are, to listen and to learn and to join in this national conversation so that we can meet the changing needs of America's retirees. I look forward to the discussion, and fire away.
MR. MILLER: Thank you very much, Mr. Vice President. I know we've got an audience of folks here who are full of questions that address these and related issues. Teresa, do you have someone who can kick us off?
MS. TRITCH: Yes we do. Over here, Gregory Snead would like to place a question.
PARTICIPANT (MR. SNEAD): Good afternoon to all distinguished guests on the panel. I'd like to start off, Vice President Gore, I think you and President Clinton are doing a marvelous job, and our country is going in the right direction.
Also to our Rhode Island leaders, I think they're fighting very diligently for our people here in the state of Rhode Island to make it a better place and a more prosperous place for us to live. That, I thank you for.
My question is-my mom-I always, she raised me and my siblings, my brothers and sisters. My mom now has recently retired, and we find ourselves helping her out to supplement her income.
She's collecting Social Security and it's just not, it's not fitting the bill, it's not, it's not. She's not living, with all our help. To go further, I would say, how do I-whom I'm a single father-how do I save and put away for my future when I'm helping and just trying to live now, trying to exist, trying to maintain a comfortable lifestyle, and also to try to put away for my son's future?
MS. TRITCH: Thank you.
THE VICE PRESIDENT: Let me comment briefly, and then invite any of the panelists who wish to comment. You and I are part of what they're calling the sandwich generation. We're the first generation to have more parents than children. My wife, Tipper, and I have what is regarded by today's standards as a large family. We have four children. But we also have four parents. And, as a result of medical advances, we talked about them earlier, people are living longer, and as everybody knows, seniors are more vulnerable to a variety of health conditions, and so, you and I are in the position of saving for our children, taking care of their education and other needs, and at the same time, worrying about how are we going to make certain that our parents are in good shape.
And, that always drives home the point to me, that Social Security, while it's often regarded as a program primarily for older Americans, is really a program for all generations, because when the benefits are adequate for seniors, that takes pressure off you, it takes pressure off the sandwich generation, it takes the pressure off those in the work force, who are under pressure to pay into the fund, but they're relieved from some pressure where their own parents and grandparents are concerned.
So, when we look at it as a whole picture, we need to take all those factors into account. And somebody, want to comment on that? Congressman Rangel?
REP. RANGEL: Yes. I have found when things get kind of rough, that it's easy to count my blessings than just to curse the darkness. First, you're lucky that you have your mom, but second, about 20-25 years ago, in the great state of New York, my wife was a social worker-when the law was that a child was responsible for all of the debts of the parents, including nursing home.
And my wife's job, which she had to quit, when she was working for the department of social work, was to go after people such as yourself, who are married, who had children, and to get liens against them because their parents was in a nursing home or in a hospital had indebtedness.
Fortunately enough, our state and many other states have changed that law. But I am just saying, that many marriages have been broken because of the illnesses that struck one of the families, and even though Social Security was never intended to be the sole source of income for anyone, we just have to thank God that it's there as a cushion, because your life would be totally miserable for you and your young son if it was not there.
THE VICE PRESIDENT: Senator Reed, Senator Chafee, and Congressman Sanford, if we have time for all. Yes.
SENATOR REED: Well, I believe the question illustrates a very salient fact that Social Security doesn't provide a gold-plated retirement for many people in this country. In fact, for many people their Social Security benefits don't make it. And so we have to be very, very wary about cutting benefits, particularly low-income Americans, and very wary of those plans which would indirectly do that by more extensively taxing the benefits of low-income Americans. But with respect to your question about how you can save more, one thing that we can do, and we've done is to increase the Earned Income Tax Credit so that young people with dependents who are starting out might get more of a break, have more disposable income, and then of course it's up to you to save rather than consume. But we can do a lot more to give you the disposable income to save.
THE VICE PRESIDENT: Senator Chafee?
SENATOR CHAFEE: I think it's terribly important that we bear in mind our number one challenge right now and going into the next year likewise, is to make sure that Social Security is going to be there for future generations. But at the same time, and this has been mentioned several times here today, we've got to be conscious of the private pension system. In other words, the fact that so few of our citizens, I forget the statistic-it's about half, isn't it-are not covered by any pension plan other than Social Security.
And so there are 401(k)s and the Keoughs and the different plans that have been undertaken, but I think we've got to remember that that's a tremendous problem likewise. Sure our number one problem is to make sure that Social Security is saved, but at the same time, we can walk and chew gum at the same time hopefully, and we've got to bear in mind to do something about increasing the number of the coverage by private pension plans that exist better than we have currently in our nation.
REPRESENTATIVE SANFORD: I would just say that you well describe the reason that I got interested in personal savings accounts. I mean it's not just because I'm young. I mean the reason I got interested is because when I talk to retirees along the coast of South Carolina, what I was hearing from young folks, is exactly what you said. And that was: "Mark, I'm struggling as it is, the idea of raising my taxes as a way of fixing Social Security just isn't going to work for me," and then in the opposite corner, "okay, if we're not going to raise taxes, then how about cutting benefits?"
Retirees along the coast were telling me there, "that's not such a good idea, I depend on Social Security." The only other option out there is letting one earn more on their Social Security investment. If you look at the last hundred years, if you look at the last 50 years, if you look at the last 75 years, financial returns have been greater than the growth in payroll. Our system, which is a pay-as-you-go system, depends on growth and payroll, and it's always kept at that.
MR. MILLER: We've got a question, here now from John Poluta.
PARTICIPANT (MR. POLUTA): Thank you Mr. Vice President and the rest of the panel for being here. I'm 34 years old, I was born in 1963, so you can call me a baby boomer, or a Generation X'er, or, it doesn't matter. I believe in maintaining Social Security for the people, the seniors that were made that promise by President Roosevelt. I also believe in maintaining it for the poor and for people that are disabled. But I don't believe really in maintaining it for me.
I believe in personal responsibility for my retirement. What I'm asking is: why aren't we following the lead of President Roosevelt in another way, and allowing people like me to grow a little victory garden on my own with tax breaks? Because basically, I think I can do a better job of making a financially secure retirement for myself than the government can. Thank you.
THE VICE PRESIDENT: Well, let me respond briefly to that. We have given a lot of new benefits such as a $500 child tax credit, the big expansion in the Earned Income Tax Credit, the expansion of the individual retirement accounts with deductions, the Hope Scholarship program. We've made major efforts to encourage small businesses to provide pensions. And we fully agree that there ought to be more private savings and more opportunities for people to save.
But I said earlier that the principle of universality is for me similar to the slogan of the Three Musketeers, "one for all and all for one." I personally would have some concerns, to say the least, if we made changes that would allow someone who wants to go out on his own to not only do it with these extra tax incentives and higher wages and all the rest-but go farther than that, and say, "okay, you can now pull out of Social Security and you're on your own." Because if we did that, then it would no longer be universal. It'd no longer be "all for one" it would be every person for himself who wanted to choose that.
I spoke earlier to Robert Edwards, who's from Rhode Island, part of the group here somewhere, 47 years old. He said something slightly different from what you said. He said that he has the opportunity to have a great 401(k) plan, and he's investing in it all the time. But then he went on to say that his daughter, who recently entered the work force, works in a bank, does not make enough money to really have a really good private pension or 401(k) and her employer doesn't encourage savings, so what's going to happen to her?
In providing more flexibility, we've got to do it in a way that doesn't undermine the universality of the system. That's my opinion. And, yes sir?
MR. WALKER: I think the other problem is that you run into adverse selection. The people that end up opting out either may not do something on their own, or they may be better off, in which case you lose more revenues than you save in benefits and you compound the problem. I think we have to keep in mind that Social Security is intended to be the foundation of retirement income security. And like a house, it was never intended that you would just live in a foundation. You need to supplement it. And that's why the private pension system and personal savings are important. And that's what we need to do, going forward.
THE VICE PRESIDENT: Senator Reed, and then Congressman Sanford.
SENATOR REED: Well the question, it sort of suggests or implies perhaps that there's no other way to save for your retirement. And in fact, in this economy, people who are young and well employed are doing quite well saving for their retirement. We're not restricting that, in fact, we're encouraging it as best we can. The economic environment that was generated by the President and the Vice President's program starting in 93 have created a huge boom in this economy-making people better positioned for retirement.
But the point ultimately is that there are some people that are not as fortunate, and it's sometimes, it's just they don't have the breaks that we had to get the education to go into the work force at high levels. They've worked very hard, and Social Security for them, is as I suggested before, not really an option, it's their lifeline. We have to consider that, and I think we can.
We also I think, and Mark was very emphatic about the PSA, is just, I think we have to recognize that if we embark in that way, we are going to have a situation where we will have probably have to cut benefits or raise taxes and certainly borrow a lot of money to pay for other federal programs, so it's not a free lunch too. But I think the best way to prepare for retirement is to benefit from this great economy, expand pension coverage privately, and keep a strong universal Social Security program.
THE VICE PRESIDENT: Congressman Sanford?
REPRESENTATIVE SANFORD: Two thoughts. One, it seems to me you raised a larger question and that is: Is change a bad thing? Because I mean, when Social Security was created in 1935, jet travel didn't exist, microwave ovens didn't exist, Nike running shoes didn't exist-we can come up with a lot of things that have actually come into our lives today, and that's actually improved them since 1935. And that's why I'm struggling with this on the Social Security issue, because frankly there wasn't the computer technology then to have personal savings accounts.
But now that it is, is this a way that we could adopt Social Security for the next century? Because, I for instance think that what we're talking about here is improving it, and not making it non-universal, not eliminating part of it, but improving it.
Because what we're really talking about is-you know a lot of people say, "privatization, if privatization means good luck grandma, I'm hoping you make it when you retire," I don't believe in that kind of privatization. What I'm talking about is instill a mandatory investment, so either the money goes to Washington, or it goes into your own personal savings account. You can't get the money at, your hands on the money until the time that you retire.
There are very specific limits so that there's not a craps shoot as to what you can invest in. I mean, for instance, three counties down in South Texas-Galveston, Brazoria, and Matagorda Counties down in south Texas-took votes as counties and voted to create their own Social Security system, and said, "we don't want to take stock market risk. We want to purchase some annuities there that will pay us a fixed stream of payments." But what I'm getting at is there are probably lots of ways to skin the cat with the way technology is changed that it actually would improve Social Security.
MS. TRITCH: Thank you. Ms. Virginia Gonzalez would like to make some comments.
PARTICIPANT (MS. GONZALEZ): My name is Virginia Gonzalez and I'm from East Providence. And, every time I listen to people talk, they're talking about the robust economy, how well we are all doing, and then I look at the people around me, my relatives and my friends who are working for a minimum wage, or just a little bit above minimum wage-many of them can't even get a regular job, they have to work temporary jobs. And this is not a robust economy for them. And when you talk about personal saving, they're just about making it on a day-to-day basis. How are they going to save? They're looking forward to Social Security, and, I hope that it will be there for them because this is all they have. They do not work in jobs in the jewelry industry where they have private pension plans or anything like that. So I think we need to be very careful about what we do because not everyone is benefiting from the robust-quote, unquote-economy.
THE VICE PRESIDENT: I want to ask Marilyn Moon to comment on that.
MS. MOON: I think that's an important point. The inequality of income that exists in the United States is a problem that people have worried a lot about and I think we're going to continue to struggle with.
One of the strengths of Social Security is that the program pays a higher return on, or gives a higher benefit to people who have contributed less over time. And as a consequence, it helps to bolster people who had less over their lifetimes. And that's one of the major concerns I think that some people have when you look at some of the reforms that would concentrate on private savings accounts. How much of that redistribution that occurs, how much of that support for lower-income people would still be there?
There are, and the plans differ substantially on that, but that's an important element. That's one of the reasons why higher income people don't get quite as much out of the system-because the system is designed to help protect those who aren't able to contribute as much over their lifetimes.
THE VICE PRESIDENT: Congressman Rangel wanted to comment.
REPRESENTATIVE RANGEL: Yes, Mr. Vice President. I think what the lady has said indirectly, answers the gentleman's question who believes that if his investment in the Social Security trust fund wasn't mandatory, that he could better manage his money.
I really think for poor folks, especially young poor folks, that they too would believe that they could better manage if that investment was not mandatory. Unfortunately, they would not even have the Social Security check to look forward to, because they would not have any investments at all. And so, therefore, the universality means that everyone has to be in to have just the safety net for most of us.
MR. MILLER: I have the great honor of actually introducing you to Eve Goldberg. If I can, Goldberg, who turned 100 on April 18th this year.
THE VICE PRESIDENT: Congratulations.
CONGRESSMAN RANGEL: Social Security works.
MR. MILLER: And Eve has asked me to ask on her behalf, her question which is: she has-is it five great grandchildren? Eight great grandchildren, six grandchildren, and she's very concerned about their futures. She hears the elected officials listening to suggestions, talking about different options, but says, she doesn't have forever to hear what the answers are going to be, and when the parties will come together...
...to actually come together on some kind of set of solutions. When will this happen?
THE VICE PRESIDENT: Mrs. Goldberg, God bless you. What a wonderful question. And you know somebody told me the other day-there are experts here who can correct me if I'm wrong-but they said that between 30 and 35 thousand Americans are now 100 years old or older. My, I lost a great aunt just two years ago who was a little bit over the age of 100, and what a great blessing to hear this eloquent question.
We need to act soon. And we need to act in the next Congress. Why not act now? Here's the reason why we shouldn't act right now. They don't call this the third rail for nothing. It's very sensitive, and both political parties have scars to show for the past battles that have been fought in and around Social Security policy. And since getting it right is so important for the country, it's worth it to take a little time, between now and January, to try to have forums like this where people pull their punches a little bit and keep an open mind-even beyond what they're tempted to think and say in order to give as full and fair and free a debate to the American people as possible. So we can get as many facts as possible about the various options out there, and build enough of a kind of a trust fund of goodwill that we can take into the debate when it starts in earnest on particular legislative proposals early next year.
But then we should move quickly, and we should ask this Congress that will come into office in January of 1999 to make this the first item of business and work in a bipartisan way under President Clinton's leadership to fix this for your grandchildren and those eight great grandchildren. And I don't know if my colleagues-yes, Mr. Gebhardtsbauer.
MR. GEBHARDTSBAUER: Eve, I just wanted to add to your point that we should do it soon, or sooner than later, maybe next year, and there are some really good reasons for doing that. One, if we do it now, the solutions can be less drastic than if we wait much longer. Also, if we do it now, we can do the changes gradually so that they don't all of a sudden hit all of us at one time for one particular group.
In addition, if we do it sooner rather than later, all of us can plan ahead for some of these changes that don't come right away. And finally, I think it would help restore faith in the Social Security system, and I think our kids will be glad that we did it now, instead of letting it all on them.
THE VICE PRESIDENT: Right.
MS. TRITCH: Thank you.
SENATOR CHAFEE: We've had some experience with dealing with these various complicated and major entitlement programs. As you recall, the Medicare-the Medicare situation is, and you've discussed that, some of you have in the various meetings, has been a very serious one, and we've had a series of votes in the Senate outlining what route we thought we should go. However, the conclusion was to have a commission study it. And that wasn't just punting, that wasn't just postponing-I think that it was a wise decision and the Commission reports back in March.
This is somewhat similar to the reforms that we did to Social Security in the early 1980s. And there we had a commission set up chaired by Chairman of the Federal Reserve-now, but then, a chief, major economist, named Alan Greenspan, who you all know of-the so-called "Greenspan Commission." As a result of that Commission, the word got out and the studies were made as to what steps we should take and thus in 1983 we were able to take those steps without any demagoguery, without any party attacking the other party for cutting Social Security or doing anything like that.
That was a very, both of them, well the first one was very successful, namely the Social Security Greenspan Commission. I think the Medicare Commission likewise will be very helpful. Although, of course, they're not through yet, we keep our fingers crossed they'll do a good job, but these things do take a little time. I'm not saying take too long. I agree with the Vice President, come next year, next calendar year, whether it's January or February, we ought to get on with this, because it's such-the longer we delay, the more difficult the problem is to solve.
THE VICE PRESIDENT: David Walker?
MR. WALKER: Real quickly, Mr. Vice President. First, I think 1999 is the window of opportunity. Realistically, this is not going to occur in an election year. Let's be realistic about it, and so 1999 is the year. My fear is if we don't do it in 99, it may be eight more years. We can't afford to wait. The fact of the matter is that this is only one element of a much broader retirement security challenge. The financial imbalance in Medicare is much greater than Social Security. The need to reform is great. But, we need to do this first, and then we need to get on with that.
THE VICE PRESIDENT: And nobody will be thinking about elections in 1999.
THE VICE PRESIDENT: Teresa?
MS. TRITCH: I have a question, a question from Mr. Harrison Condit.
PARTICIPANT (MR. CONDIT): Good afternoon, gentlemen. Thank you for your time. I'm in the financial services business, and one of the things-you know, I could stand here all day and give you things that I think would be good solutions and partial solutions for every aspect of this program from people in my business from around the country that I've met with. However, we don't have time for that.
So, I'd like to put out one thing to you that I've seen over and over again in my business. And that is the fact that we generally as human beings have a very difficult time logically understanding the issue of compound interest. As a result, as young people, we don't think of age 65-we think that we're never going to get to be 30, but I think that as part of this program if we went into the schools and either mandated or made possible five hours of economic education about personal finance, and about what the impact small amounts of investments-you know I hear people here in the audience say, "well, you know, I don't know what to do about my retirement, I'm 28," well, if that person just put away $25 a month, by the time they hit 65 they'd have so much money it'd be ridiculous-if they invested in the marketplace. So, I think a system of education for our younger people would go a long way to solving the future of this problem, and I hope that might be considered.
Secondly, I think I've heard a lot about getting it right, I've heard a lot about compromise and so forth-I think that any program that comes up needs to consider at its base the very principle that would generate such a program. We have seen around the world that "from each according to his ability to produce, to each according to his need," as the Communist way of life has been destroyed- and it has because the principle is wrong. On the other hand, we can't be like the elephant who says, "everybody for himself," as he dances among the chickens-alright-so we need to have some balance. So.
MS. TRITCH: Thank you.
THE VICE PRESIDENT: Well, yeah, Senator Reed?
SENATOR REED: Well, I think those are excellent suggestions, I think part of the education value of this forum was we're beginning to think about those issues of "how do you save for retirement," "how do you use compound interest rates to benefit you over the life," and I think also your point about balance is exactly right. At just your thought triggered the thought in my mind-we're talking about using the market to help leverage the savings rates for the Social Security programs.
And it strikes me that one option probably we should consider before going to a maze of individual accounts is perhaps letting the Social Security system, under certain limits, have more access to the private equity and debt market so that they can try to raise the value of the Social Security trust fund.
(video problem, short portion of Senator Reed's remarks are not retrievable)
...retirees, but all of them, I believe have investment managers that can not only invest in treasuries-which are a good deal-but also go into some equities, and that's something we probably should consider also.
THE VICE PRESIDENT: Let me also comment briefly. That, if I'm not mistaken, the cosponsors of this forum are planning to focus in the next forum in Albuquerque on some of those options. And the educational session that you're calling for about the magic of compound interest-I'm sure will be covered in the next session. I'd just like to say a brief word about it here. Over the 63-year life span of the Social Security program-if you take that whole period-then investments made in equities have had a higher return than investments in government bonds.
Now the reason why Social Security has been invested in government bonds is because the risk is as near to zero as you can get in any investment on the face of this earth. Now with the financial pressures being a part of the discussion here, with the generational changes and everything we talked about, some people are saying, "let's see if we can't get some of that extra return on investment in the equity markets, to help solve part of the problem for Social Security."
Many of those options will be discussed in more detail at the next session. But, some of the questions I would encourage you to focus on-when that discussion comes up-is: first of all, where does the money that's invested in equity markets come from? If it comes from the amounts that are currently being paid into the Social Security trust fund-we have to take into account the fact that 90% of the money that's put into the Social Security program right now goes to pay current benefits right now. And so, if we say "let's take a lot of that money and invest it in the equity markets," if you turn right around and say, "let's hold the current Social Security recipient harmless"-which I certainly believe we should do-then you've got to raise taxes in order to make up for the money that is currently going to them. Or, you've got to cut their benefits. One or the other.
Some people describe that as a transition problem. But it's a transition problem that makes up about 90% of the money that we're talking here. So it's a big transition problem.
Second question I would urge to be asked is: what, how extensive should the investment in equities be, and what risk might that pose? There has been some stretches of six, seven years at a time when the market has gone down. I don't think there's ever been a generation that didn't come out ahead from equity investments, but there had been decades where we didn't come out ahead, and if we invested, like some of the more radical schemes-maybe that's a value-laden word-some of the more extensive privatization proposals to invest at almost totally in equities, would carry some higher risk to say the least.
We hear about Chile's system and Ken Apfel, who is our Social Security Commissioner, was telling me he was on the telephone yesterday to Commissioner Tom Bolina, who is the Commissioner of Social Security in Chile, who told him that he has just made a formal request of people in Chile to hold off retiring at least for a short time because their stock market has gone down, and they want to wait until it comes back up again, and he's pleading with people to hold off a little bit.
Now, if there were only a portion of the money put in equities, you wouldn't face that kind of risk, but it's not risk free. And I hope that in the next session there'll be an even more extensive discussion of the points that you're making.
MR. MILLER: We've got a question here from Mike Telsignar, who's in his early 20s.
PARTICIPANT (MR. TELSIGNAR): I believe Social Security should be a universal system, in that everyone should pay into it. But, to meet the objective of maintaining a minimum standard of living for elderly people, I think there should be a limit where if you make over a certain income, you shouldn't be able to collect benefits. I think if we had that limit, it would encourage savings for people who could afford to save and it would help meet the objective of the system by making sure the people who really need the benefits get the benefits.
THE VICE PRESIDENT: Who wants to take that one?
REPRESENTATIVE SANFORD: I would just say that you know, it's a nice thought to tax Michael Jordan and to tax different people making a lot of money, but the problem is there are not enough of them. I think, as you were pointing out on the charts earlier, it is something that is very tempting. It looks, I mean, Michael Jordan, you know, what's he care whether 10% does or doesn't go to Social Security? But there just aren't enough people to get you there and that's why I think we have to look at structural reform in the way-again, either cutting benefits, raising payroll taxes, or letting one earn more in their Social Security investment.
MR. MILLER: Mike was asking also, just to clarify about, I think, about limiting benefits for upper income individuals on the benefits side, not just the tax side.
SENATOR REED: I think there's a couple of issues here. One issue is whether we should raise the amount of income that's subject to Social Security tax-the $68,000 and go beyond that. And as Mark indicates, that won't solve the problem. But that might be a step we take long before we decide to cut off benefits for upper income Americans. The second thing I think is an important, and more important than just symbolism, is one of the reasons that this program has endured, is that the perception of, "if it's not a welfare program where poor people get, rich people don't, they just pay into it," it's perceived as a program of social insurance. That everyone participates according to their wages, and they can expect to get sufficient benefits for their retirement. And I think that if we lose that perception, we'll lose a great deal and we shouldn't.
THE VICE PRESIDENT: Senator Chafee?
SENATOR CHAFEE: I just would point out-reiterate the point was made over here a little earlier-and that is that the current Social Security system is a very progressive system. I think Senator Reed touched on this.
For the low income person, that income, that individual would get back 71% of his or her wages or income, would get that back in Social Security. The average wage earner gets back 42% of his or her current income, receives that back in Social Security. And the maximum wage earner receives back 25% of what he or she was making.
So you can see that the system is already tilted to favor-and justifiably so-those from the lower income brackets. And I think, I agree with the thought that we want to keep this a universal system where everybody is in it, and just because an individual is making a lot of money now, that doesn't mean that individual is going to be making a lot of money in the future. Those people go up and down too.
So I think it should be a program that covers everybody and everybody should continue to pay into it.
SENATOR REED: I just-one other point as a corollary, as Senator Chafee pointed out, that the Social Security system is-redistributive, it provides more income for lower income Americans who are recipients. But we have a progressive tax system. So those people who do quite well in this country contribute significantly to the bottom line, and that I think is, rather than trying to cut off benefits for these wealthy Americans, I think we have to recognize that they contribute significantly through the income tax and otherwise.
THE VICE PRESIDENT: I quoted from the Three Musketeers earlier, "one for all and all for one,"-that works in both directions, and to avoid making it seem like a welfare system, I think that there is some value in keeping that universality. A final point, I was making notes on your comments, Congressman Sanford, and that was Michael Jordan, and not Michael Jackson, is that right? Okay, I wanted to make sure that I got that. Teresa?
MS. TRITCH: We have a question here from Mr. Angelo Mosca.
PARTICIPANT (MR. MOSCA): Given the fact that the Vice President Gore said there are really only two ways to fix the system, you've either going to increase what comes in, or decrease what goes out-and I think everyone's agreed that the people who are currently receiving benefits were given a promise and are entitled to that benefit-what assurance, and this is really directed to the Vice President and the members of Congress-as a small employer, less than 30 people, what assurances do we have that you're not going to go to the tax side to get that extra money-because I can tell you that as my cost of employees goes up, my number of employees is going to go down, and the end result may be worse than the desired goal.
THE VICE PRESIDENT: Well let me say, and first of all, I appreciated the chance to hear those comments form you earlier also, Angelo. And it's worth remembering that if you raise the tax rate on employees, you're going to raise the tax rate on employers-and look at what the impact would be, take that into account. And I would remind you that in the first of these forums in Kansas City, President Clinton said just point blank that he does not feel that it would be necessary in any of the plans being discussed to raise the tax rate.
Now, we're trying to keep an open mind about all options and keep things on the table instead of taking them off the table at this stage of the debate-but that is one where, you know, you look at what the current tax rate is, and you've got to agree with the President. I think that it's-of course-I try to agree with the President anyway, but I think that everybody would agree that, that the tax rate should not go up. Now that's not the only factor that determines how much comes in. There are other parts of the formula that affect it, and there's also these partial options on where the money is invested that affects the amount coming in.
Did, yes, Senator Reed?
SENATOR REED: There's no easy answer, and I think, Angelo, you've described the basic parameters, more in, or less out. And I'm not to suggest we can magically move around your parameters, but one reason why the trust fund is doing better today than it was several years ago is the economy is doing better, wages are up, you're getting more from your products, you're paying your workers more, and that tax rate is putting more money into the trust fund.
That's why I think we can't lose sight that part of our goal is not just to tinker with the plumbing of Social Security but to keep growing this economy. One reason why seniors today are doing very well relative to what they're taking out of the system versus the Generation X'ers is that their wage growth from the 1940s up until the 70s and 80s was extraordinary. It was until two years ago, Mr. Vice President, that income, average income started going up under you and the President's administration.
That's the contribution that is made by the macro economy and we can't lose sight of that. But ultimately, we're going to have to wrestle with those two tough issues you've raised Angelo.
MR. MILLER: Are we're leaning toward more toward the end of the program, I'm going to take three comments, and then invite the panel to pick up on some theme of it, but perhaps we can keep it a little briefer so we have a chance to still go back and forth a few times. First as a comment from Tom Vanner. Please stand up sir.
PARTICIPANT (MR. VANNER): Yes, this is meant for the government officials. It was stated earlier this evening, oh, excuse me, this afternoon, that you do borrow from Social Security. The question is, do you repay back that money? Do you also pay back that money with interest? And if not, why?
MR. MILLER: Let's get a couple of more comments quickly. This is Torrance Crawford. Torrance has the same question. Susan, I know, has a slightly different one.
PARTICIPANT (SUSAN): If privatization came into affect-I had a decent job, I had savings. I broke my back in work, it was an accident, anybody could have a car accident on their way to work, anybody, no matter how much you make. I had to exhaust all my savings. You know, I had to lose everything in order to be-you know-so now, if it goes into privatization, is the only way is if I could somehow, you know, come up with another career, or open my own business, and try to put away again? I mean, I just don't understand what privatization is going to do somebody who already did become disabled.
MR. MILLER: Two sets of questions for the panel.
THE VICE PRESIDENT: Yeah-let me respond briefly and then invite others. First of all the answer to the question-and these experts, former trustees, and real distinguished scholars can correct me if I'm wrong on this-but I think the answer to your first question is absolutely yes, the amount borrowed is paid back, and yes, it is repaid back with interest. The interest, as noted earlier, is at a not quite as much as you would get in return in equity investments, usually. But it's good and solid, and it is reliable.
Now, people have naturally worried about whether or not the money would be paid back during the years when we were running $300 billion annual budget deficits. It's hard to imagine it in these times, but when you think back, not too many years ago, we quadrupled the national debt, in just a little bit over a decade. And during that period, there was a lot of concern that maybe that money would not be able to be paid back to Social Security.
Now we have surplus that is growing-and a surplus even when you take the Social Security funds out of the, take the trust fund out of the picture over the next decade or so, and it's considered a sacred obligation and will be paid back.
On the third question-that was the first two-disability is a big part of this. Thirty-one percent of all the money coming out of Social Security program goes to disability and to retirees. And your story, ma'am, illustrates the well-known passage from Ecclesiastes that begins, "the race is not to the swift." There is an element of chance in our human affairs, and there is the chance that anybody, no matter how healthy, no matter how skilled, no matter how swift, could have an accident as you did, or some crippling disease or disability, and that portion of Social Security is priceless for those people who rely on it so heavily.
So in looking at alternatives and changes, most people broadly agree, we've got to preserve that part of the program. Yes, Mr. Walker.
MR. WALKER: On the first question, there's 900 billion dollars-that is B as in billion-in government securities in the Social Security and Medicare trust fund. They're backed by the full faith and credit of the United States government, they pay interest based upon a formula that is fair, and you've got to keep in mind that's less than 20% of the debt of the U.S. It's probably the safest, and most secured debt there is.
Nonetheless, while people are talking about the year 2032 as the date at which the trust fund is quote, unquote exhausted, 2013 is a more important date. Starting in 2013, we start experiencing a negative cash flow. Cash receipts are less than cash disbursements. At that point in time, is really when we need to address more income, reduction in payments or whatever, so it's actually more immediate than 2032.
And last with regard to privatization, I'm not aware of anybody who is proposing to privatize disability insurance. I think the debates that have been occurring on privatization are whether or not all or part of the base, the retirement income portion ought to be partially in an individual account for younger workers rather than all defined benefit. But I think disability insurance is clearly got to be here for a lot of reasons.
MR. MILLER: We are, we're reaching the...
REPRESENTATIVE SANFORD: Could I just chime in? You raised the largest issue here, which is what Concord Coalition and others have been trying to get across to folks. There are two budgets basically within the United States Congress. One is called the unified budget, that's the real dollars that get spent. So, if I hand Jack 40 bucks, and he's allowed to keep that, he takes the 40 bucks, and then we put an IOU in the trust fund, how is it that we redeem that 40 bucks? Because that 40 bucks went out to spend on real things this year that Washington pays for
The only way we can redeem that is with the future taxing authority of the United States government, and that's where the rub comes in on what we're talking about.
MR. MILLER: This is a dialogue that could continue all afternoon, and will continue the rest of this year, but we're reaching the point where we need to wind down the program. Vice President Gore, I want to turn it back to you with at least one thought as you wrap up today. A couple of folks did mention to me the thought that there is so much public cynicism about government these days. Perhaps you can, in your closing, at least address in part, the question of how folks can have confidence that this is something both parties can address together.
THE VICE PRESIDENT: Well that's a good place to start our concluding thoughts here because there's been a long-term study of the confidence people have in our system of self government. And here is a shocking statistic. Back in 1962, American people were asked by a public opinion polling company, "Do you trust the federal government to do the right thing most of the time?" 77% said, "yes." In 1992, the same question was asked and about 17% of the people said "yes."
And the drop-off was among Republicans and Democrats equally. Young, old, black, white, Hispanic, men and women-every category had virtually an identical drop off.
Of course a lot happened during those 30 years. The assassinations, the Vietnam War, a lot of shocks to our national self-esteem-if you will-and there wasn't a long period of uninterrupted recovery, where problems were solved, faith was restored, and self-confidence was rebuilt.
Since 1993, that number has started to come back up again significantly. I believe that one of the reasons is we have been able to start solving our problems a little bit more effectively. Crime is coming down, families are stronger, we're seeing more businesses formed, and the economy has had an interrupted period of strong growth-not everyone is participating to the extent that they should, but the gap between rich and poor is closing. Last month we had the fastest real wage growth that we've had in 32 years.
And slowly, this confidence upon which self government is based, is being restored somewhat. But every generation faces the challenge of rebuilding that, or refilling that, trust fund of trust in government-if you allow me to say it that way-because representative democracy depends upon it. And I would argue to you, that the way we answer this question as a nation is going to say a lot about whether or not we redeem the promise of self government.
There's an old story that you've probably heard about a young man who went with a challenge to an old wise sage who had the reputation of knowing the answer to every question. And he came up with a tricky plan. He caught a small bird and put it in his hand, and he planned to ask the old sage, "Is this bird alive or dead?" And he made up his mind in advance that if the sage said, "The bird is alive," he would quickly crush its life, if the sage said, "The bird is dead," he would open his hand and let it fly away.
So he went to the sage and he asked the question, and the sage looked at him and said, "The answer is in your hands." The answer to this question, which has so much to say about whether or not our representative democracy is going to be healthy and strong and vital in the 21st century, about whether or not we're going to be able to redeem the promise of self government, which was instilled here in this land more than 200 years ago, is partly and largely in your hands.
The American people will decide whether or not the politicians in both political parties have the maneuvering room to start thinking about options that have been considered off limits, the courage to say things that have been the subject of political attacks previously, and have the good will to come together across party lines-behind President Clinton's leadership-and say, "Yes, we're going to redeem the American promise, and we're going to save Social Security first." Thank you.
SENATOR CHAFEE: Mr. Vice President, I just like to say one thing, if I might. Mr. President, Mr. Vice President, excuse me.
THE VICE PRESIDENT: I'm President of the Senate.
SENATOR CHAFEE: We're all very, very grateful for your coming here. Now it is true that we're going to rush off this afternoon and look up that first chapter of Ecclesiastes, to see if you had it right, but we're very grateful with you and Charlie, and Representative Rangel, and Representative Sanford came. But to you particularly Mr. Vice President, whose put so much time and energy in this, we want to thank you very, very much for coming to Rhode Island.
THE VICE PRESIDENT: Thank you very much.
MR. MILLER: And thank all of you ladies and gentlemen for participating in this great national forum on Social Security.
MS. TRITCH: Thanks Matt.