Testimony for House Budget Committee Fiscal Commission Hearing

STATEMENT FOR THE RECORD
MAX RICHTMAN
PRESIDENT AND CEO
NATIONAL COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE
U.S. HOUSE OF REPRESENTATIVES
BUDGET COMMITTEE
HEARING ON SOUNDING THE ALARM:
EXAMINING THE NEED FOR A FISCAL COMMISSION

Dear Chairman Arrington and Ranking Member Boyle,

My name is Max Richtman, and I am the President and CEO of the National Committee to Preserve Social Security and Medicare.  The National Committee is a grassroots advocacy and educational organization dedicated to preserving and strengthening the programs which are vitally important to the well-being of our nation’s seniors.

On behalf of our millions of members and supporters, I am honored to submit this statement for the record strongly opposing the establishment of any fiscal commission that includes directives to propose changes to Social Security.

As Congress grapples with the implications of a federal debt currently topping $33 trillion, pressure by fiscal conservatives inevitably turns to finding “savings” in Social Security, even though this critical social insurance program for America’s workers does not contribute a single penny to the national debt.

Finding “savings” in Social Security is code for cutting Social Security, which poses significant political risks to elected officials who vote to cut the already modest, earned benefits of workers contributing to this extremely popular program.  This is why the notion of creating a Commission to advance unpopular benefit cuts repeatedly resurfaces, in the hopes a bipartisan commission could help shield proponents of cutting the program from political accountability.

Commissions are designed to squeeze every possible dollar of savings out of Social Security without consideration for the adequacy of benefits during their deliberations.  They are intended as a vehicle for enacting deep cuts to Social Security and Medicare that could never pass Congress on their own because of their unpopularity with the voting public.  They are inevitably designed to avoid political accountability for enacting cuts to earned benefits that will unravel the foundation of economic security for generations.

Many commission proponents cite the National Commission on Social Security Reform, better known as the Greenspan Commission, as an example of a successful commission that could be replicated to solve Social Security’s long-range financial imbalance.  The Greenspan Commission was appointed by President Ronald Reagan and the Congress in 1981 to study and make recommendations on the short-term financing crisis that Social Security faced at that time.

There are significant differences in both the economic and political times of the 1980’s compared with today that argue against the creation of a commission of any kind charged with proposing changes to Social Security.  Perhaps the most important difference lies in the economic insecurity facing workers.  Today’s workers approach retirement age markedly more insecure than the workers of the 1980s.

Few workers today are covered by traditional pensions, depending instead on savings plans like 401(k) plans and IRAs invested in the often-volatile stock market to provide enough savings to support them in retirement.  During the decades since the Greenspan Commission, wage growth for middle- and low-income workers has stagnated, while prices have continued to increase, making it much more challenging for any but the wealthiest to set aside enough money to ensure a comfortable retirement.  This problem is especially acute for younger Americans, who enter the workforce saddled with unprecedented levels of student loan debt, making it difficult for them to accumulate enough resources to buy a first home, let alone begin saving for retirement.

This financial insecurity is reflected in poll after poll taken of American workers, who strongly oppose cutting Social Security’s already modest benefits and instead overwhelmingly support expanding benefits.  Politicians who today openly support benefit cuts are clearly acting against their constituents’ best interests and risk their political futures.

The role of the Greenspan Commission itself in developing the blueprint that secured full funding of benefits for the decades since their enactment into law in 1983 is debatable.  According to many insiders, including one of the main architects of the amendments, former Social Security Commissioner Robert M. Ball, it was the work of a small group of senior representatives from the White House and Congress who negotiated the framework of the proposal.  The willingness of President Reagan and Congressional Republicans to raise taxes in order to keep the program solvent was instrumental in the project’s success, a position that clearly does not exist in today’s Republican leadership.  The proposal itself, developed by this small group and endorsed by the full Commission, then went through “regular order”, including public hearings and the ability to debate and amend the legislation in the Committees of jurisdiction and on both the House and Senate floors.

This adherence to “regular order” is designed to provide the public with the opportunity to fully understand the effect of the changes that are being proposed, and allow them to hold accountable the members of Congress voting to make the changes.

In his book, The Greenspan Commission:  What Really Happened, Robert Ball issued a warning to future Congresses against relying on similar commissions that we would be well served to heed:  “To suggest that the Greenspan Commission provides a model for resolving questions about Social Security’s future would be laughable if it were not so dangerous… A commission is no substitute for principled commitment.  Above all, we should not allow ourselves to fall into the trap of expecting miracles from another Greenspan Commission by deluding ourselves into believing, mistakenly, that the first one was a great success.”

Appointing Commissions as a way to “kick the can down the road” on challenging issues is nothing new for Congress – it has funded stacks of reports gathering dust from previous Commissions on a wide range of issues.  Make no mistake about it, the Commissions being proposed today bear little or no resemblance to these ineffective Commissions of the past.  Today’s Commissions are supercharged – designed to rush their recommendations through Congress under a cloak of darkness so they can be enacted before the American people have a chance to study them and understand how they would be affected.

The most recent Commission proposal, which was included in the resolution providing short-term funding for the government recently considered by the House of Representatives, in many respects ‘says the quiet part out loud’ – it would have established a Commission that was not permitted to issue its report until after the elections in 2024.  The recommendations would then be fast-tracked through a lame-duck Congress with mere days for debate and no ability to amend the bill or slow down the process.  Many of the members of Congress who would be casting their votes to change this critical program would presumably have already been voted out of office or retired and therefore would no longer be accountable to the public.  Although the resolution failed and received no votes from Democrats, it was supported by all but 21 House Republicans.

Even without such a dramatic fast-track process, commissions can face pressure to issue recommendations that are extremely unpopular but appear to reflect a bipartisan consensus.  The most recent example of such harmful proposals are reflected in the December 2010 recommendations of the National Commission on Fiscal Responsibility and Reform, co-chaired by Erskine Bowles and Alan Simpson.  This Commission’s recommendations for Social Security and Medicare failed to reflect a balanced approach in addressing the nation’s fiscal imbalances.  Their proposal relied far too heavily on benefit cuts which would hurt millions of Americans.

Many of these proposals, even though they were not approved by the required majority of commission members and only appeared in a report issued by the co-chairmen, continue to surface in conservative circles and can be expected to again be considered by any new commission.  Included are provisions which would:

• Cut Social Security by Raising the Retirement Age to 69 – The report called for a gradual increase in the full retirement age to 68 by 2050 and 69 by 2075, with further increases indexed to longevity.  The plan also recommended parallel increases in the early retirement age from 62 to 64.  Increasing the retirement age is a benefit cut pure and simple and would harm the retirement security of generations of Americans.  Similar retirement age increases to age 70 and beyond are clearly contemplated to be part of any new recommendations.
• Cut Social Security by Reducing Cost-of-Living Adjustments (COLAs) – Bowles-Simpson proposed adoption of a different method of calculating the cost-of-living adjustment that would almost immediately result in smaller COLAs, impacting even current retirees.  This proposal was estimated to lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.  The National Committee believes the formula currently used to calculate benefits underestimates the costs seniors face and strongly supports switching to the CPI-E, which better reflects the basket of goods and services utilized by older Americans.
• Cut Social Security by Altering the Benefit Formula – Bowles-Simpson proposed massive changes to the benefit formula that would substantially reduce benefits for millions of future retirees.  The cuts, described as “moving to a more progressive benefit formula”, would have cut benefits for workers beginning with $38,000 in median lifetime incomes in 2010 dollars.  Similar proposals have been advanced and could be expected to cut benefits, not for the truly wealthy, but for the heart of the middle class.    
• Cut Medicare by Increased Cost Sharing for Seniors – Their report included proposals that would lead to hundreds of billions of dollars in new Medicare cuts, over $100 billion of which would come directly out of the pockets of seniors in the form of increased cost-sharing.  The average senior is already spending nearly 30 percent of his/her Social Security benefit on Medicare out-of-pocket costs alone; these proposals would increase that amount.
• Cut Medicare by Reducing Provider Reimbursements – Bowles-Simpson included a new round of cuts in Medicare provider reimbursements, which could leave seniors without access to affordable health care (as providers may stop treating Medicare beneficiaries).

Social Security did not contribute to the federal debt and deficit.  Furthermore, neither Social Security nor Medicare should be the targets of so-called reform measures that cut vital earned benefits simply for the purpose of balancing the budget.  In fact, according to the National Committee’s most recent nonpartisan polling, Americans across all ages and party affiliations are solidly against cutting Social Security and Medicare to reduce the deficit.

The National Committee believes Social Security must be reformed, its benefits updated to meet the needs of today’s and tomorrow’s beneficiaries and its financial solvency assured for future generations.  But the process to achieve that goal must be deliberative and fully accessible to the public.  Commissions on steroids forcing changes to hard-earned benefits will not fool American voters – President Biden has called them “death panels” for Social Security for good reason.

Additional Reading:

Commissions are a back-door way to cut Social Security https://www.ncpssm.org/documents/social-security-policy-papers/commissions-are-a-back-door-way-to-cut-social-security-as-part-of-a-budget-deal/

The TRUST Act:  Setting the stage for cuts to Social Security and Medicare while avoiding political accountability https://www.ncpssm.org/documents/social-security-policy-papers/viewpoint-the-trust-act-setting-the-stage-for-cuts-to-social-security-and-medicare-while-avoiding-political-accountability/