Assistant Secretary David W. Wilcox testimony on Social Security before the Ways and Means Committee

TREASURY NEWS

FROM THE OFFICE OF PUBLIC AFFAIRS

FOR IMMEDIATE RELEASE
November 19, 1998
RR-2827

Assistant Secretary David W. Wilcox testimony on Social Security before the Ways and Means Committee

Mr. Chairman, Members of this Committee, I thank you for this opportunity to meet with you to discuss the vitally important issue of restoring Social Security to sound financial footing. I know that Secretary Rubin, Deputy Secretary Summers, and others in the Administration look forward to working with you and the other Members of the Committee on this issue.

During my remarks today, I would like to touch on four issues: first, the reasons why it is important to move expeditiously next year to secure a bipartisan agreement to preserve and strengthen Social Security; second, what we have learned during the national dialogue of the past year; third, the principles that the President has put forth to guide Social Security reform; fourth, how to best move forward to reach a bipartisan agreement that puts Social Security on solid financial ground for future generations.

The Importance of Social Security

As we begin this important undertaking, it is worth returning to fundamentals and reminding ourselves why it is so important that we move with dispatch toward achieving a bipartisan agreement. The case for rapid action rests on two key propositions.

First, the sooner we move, the more we can take advantage of the economy's extraordinary performance achieved under President Clinton's economic strategy. Right now our economy is remarkably strong and our budget is the healthiest it has been in a generation.

  • Unemployment has been at or below 5 percent for 19 months.
  • Inflation is low and stable.
  • Real incomes are rising again, breaking out of the pattern of stagnation that had persisted since the 1970s.
  • And for the first time since 1969, the Federal government has posted a unified budget surplus.

But we may not always be in such a strong position. And we will likely never be in a stronger position to face the major challenges ahead of us associated with an aging society. One key fact illustrates the dramatic demographic developments that lie ahead: In 1960, the number of American workers for every Social Security beneficiary was 5.1 to 1. Today it is 3.3 to 1. In a little more than 30 years' time, when there will be twice as many elderly as there are today, the ratio will be 2 to 1, and falling.

Second, the sooner we move to place Social Security on a sound financial basis, the less we have to do to restore balance. The cost of waiting will mean we will be confronted with a more painful set of choices down the road.

The President's National Dialogue on Social Security

As you will recall, the President in his State of the Union speech last January called for a year of national dialogue on Social Security. That year is now almost over. The President and Vice-President have contributed an enormous amount of their personal time and energy in this enterprise. The Administration conducted three regional forums to discuss Social Security with the American people. Each forum involved Members of both parties, serving to broaden the range of ideas explored, and giving concrete evidence of the Administration's commitment to a bipartisan process. These forums were jointly sponsored by the Concord Coalition and the American Association of Retired Persons, in conjunction with Americans Discuss Social Security. In addition, many Members of Congress held forums in their own states.

During this process, we have heard from the American people about their concerns, hopes, and fears about retirement, and their views on Social Security. What we have learned has been critical to the process and will help guide us from here. One of the main lessons from these national forums is that the American people C both young and old C are concerned about the health of the Social Security system and are supportive of efforts to ensure that the system will provide benefits not only for them, but for their children and grandchildren as well. These forums have laid the groundwork for the next stage of the reform process, including next month's White House conference on Social Security.

In the remainder of my remarks, I would like to outline some of the Administration views and objectives for building on the national dialogue.

The President's Principles

This year of dialogue has provided many opportunities for us to improve our understanding of the myriad issues involved. Through this process, three themes have been especially clear.

First, the final reform package will no doubt assimilate a lot of good thinking from many different quarters, and we should be receptive toward taking that thinking on board. The Administration believes the many proposals put forward by the Members of Congress, think tanks, academics, and interest groups have been constructive in fostering this year of bipartisan discussion.

Second, it makes little sense to judge specific policy options in isolation. They can only be adequately assessed in combination with all the elements that would be required to accomplish the full job.

Third, the Administration believes that any plan should be consistent with the five principles that the President articulated at the first Social Security forum in Kansas City.

  • First, reform should strengthen and protect Social Security for the 21st Century. Proposals should not abandon the basic program that has been one of our nation's greatest successes. The importance of Social Security can hardly be overstated. Eighteen percent of our seniors C more than one in six C receive all of their income from Social Security. The bottom two-thirds of the aged population, in terms of income, receive half of their income from Social Security. Without Social Security, nearly 50 percent of aged Americans would be in poverty.
  • Second, reform should maintain the universality and fairness of Social Security. For half a century, Social Security has been a progressive guarantee for citizens. It should be kept this way.
  • Third, Social Security must provide a benefit people can depend on. Regardless of economic ups and downs, Social Security must provide a solid and dependable foundation of retirement security.
  • Fourth, Social Security must continue to provide financial security for disabled and low-income beneficiaries. Unfavorable comparisons are often made between the returns on contributions offered by Social Security and the returns offered by the market, but Social Security is much more than just a retirement program. We must never forget that roughly one out of three Social Security recipients is not a retiree. Any reform must ensure that Social Security continues playing these other important roles in the future.
  • Finally, Social Security reform must maintain America's fiscal discipline. Six years ago the deficit reached a record $290 billion. In the just-ended fiscal year we achieved a record surplus of $70 billion in the unified budget. In choosing the way forward on Social Security reform, we will need to continue that strong record.

Moving Forward Toward a Bipartisan Agreement

Another step in the year of national dialogue will be the White House Conference, scheduled to take place on December 8th and 9th. The Administration views this conference as an outgrowth of the public discussions and consultations that we have been having with Members of Congress from both sides of the aisle throughout the past year. In the time ahead, we intend to broaden and deepen both aspects of this communication.

We fully intend the conference to be bipartisan, to include representatives of the public, and to include experts holding all views. The President has always believed that the only way to achieve Social Security reform will be on a bipartisan basis, and we intend for this conference to reflect that view.

Throughout the year, a number of observers have asked whether the Administration might be putting forward a plan of its own for Social Security reform, and if so, when. The bottom-line answer here is that the Administration is committed to whatever course will be most conducive toward arriving at a bipartisan agreement that assures the American people of a stronger Social Security system. It has been the President's judgment thus far that for us to put out a plan would not have been helpful and could have served to polarize the debate. He will continue to review on an ongoing basis whether proposing a specific plan would help move the process forward. We will obviously be consulting heavily with Members of Congress from both parties on this important issue.

Finally, with regard to engaging with Congress on our shared objective of achieving a bipartisan agreement, the President has consistently stated his intention to begin ongoing bipartisan discussions early next year. The Administration recognizes the important role that the Ways and Means Committee will play on this crucial issue. Consultation with all the Members of Congress will be important, but consultation with this Committee will be especially so, and I fully expect the Administration to pursue such consultation vigorously as we work toward the objective of forging a bipartisan solution to this challenge.

Mr. Chairman, today virtually every working man and woman in America is protected by Social Security. As we debate which policies will best strengthen the Social Security program, there should be no question of the importance of restoring financial balance to the system in a bipartisan manner as early as possible. The Administration looks forward to working with the Members of this Committee and with others in Congress as we take on this critical challenge. Thank you, and I would now welcome your questions.

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Other Administration Statements

Save Social Security First (article by Gene Sperling)

Secretary Robert E. Rubin testimony on Social Security before the Senate Finance Committee

White House Conference on Social Security: Press Briefing by Gene Sperling

Deputy Secretary Lawrence H. Summers testimony on Social Security before the Senate Finance Committee

Clinton Has Done His Part (article by Gene Sperling)

Remarks by Treasury Deputy Secretary Lawrence H. Summers before the Senate Budget Committee Task Force on Social Security

Assistant Secretary David W. Wilcox testimony on Social Security before the Ways and Means Committee

New Directions in Retirement Income: Social Security, Pensions and Personal Savings

Testimony of Kenneth S. Apfel, Commissioner of Social Security Concerning the Challenges Facing the Social Security Administration

Testimony Before House Ways and Means Subcommittee on Social Security — 2/26/98

Testimony Before Senate Budget Committee Task Force on Social Security - 2/24/98


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