children. it's about my sister and me have been enough to survive as children so we could change trajectories and make a meaningful contribution. social security blocks to the people who work hard all their lives and contributed from every paycheck. the people who promised he would be there for them and their families. it is a part of protecting our families throughout our working lives. it belongs to the children and grandchildren whose last. it protects all her families today and future generations. >> thank you, mr. romasco. mr. biggs. >> thank you very much, chairman brown, members of the committee for the opportunity to testify with regard to social security, pensions and retirement of the american people. first, social security benefits are more adequate financing. financial advisers generally

recommend the retirees of infamy to 70% to 80% of their preretirement earnings. the typical new retiree today receives a social security benefit equal to 69% of their earnings immediately preceding retirement. does this mean the retirees are living high on the hog in social security? of course not. many low-income retirees who clearly receive inadequate benefits of the program, but it's not their social security benefits are altogether sanjay. if you look at economic cultures say the u.k., canada, australia or new zealand pension plans offer rates pretty close to a social security pays. social security finances are commonly understood. they would reduce benefits to demand immediate and permanent 29% tax increase. if tax increases are delayed, the only grow larger.

some have been willing to propose such tax increases in particular by eliminating $113,000 ceiling on which payroll taxes are levied. this seems like a tempting and easy solution to the social security problem. that may point out several downsides. first, eliminating the so-called tax maksoud raise the top tax rate in earned income from 43% today to 55%. as state income taxes in the top tax rate rises above 60% in some states closer to 70% of emanating would tap out before we ask the larger financial problems facing medicare and medicaid. .. result, they would fix only around half the 75-year shortfall and extend solvency they run 16 years. third, an international context, our tax max is unusually low. in the u.s., payroll taxes are

around three times the average wage. the average oecd country, cap to run twice the average rage. -- wage. i believe talk of raising sosa to 30 benefits before solvency securityed -- social benefits before solvency is restored as a responsible. some look at how defined contribution plans over the past several decades. participation in a traditional pension doesn't mean you will receive benefits from one. while long-term employees did very well from dp pensions, only around one in 10 participating endhe sm ac actually ends up collecting benefits from thems . for instance the average employee he changes jobs every 4.6 years and such wouldn't invest in a traditional defined benefit plan and even employees who do this often don't receive much. despite the nostalgic plans i would wager that of pensions for

the only volumes available today, retirement in the u.s. could be considerably worse. finally, while the db engines do have advantages over the dc pensions that i outlined in my testimony, many of these advantages could be transferred. for instance consider the defined contribution plan which had shifted from the stock over time with investments in post and the low-cost index funds and at least partially and unitized benefits or retirement. such would address most of the concerns over the security today with very limited downside for individuals and no risk to the taxpayer. moreover all of this would be allowed under the current law. retirement policy has massive ramifications for the retirement securities, the federal budget and brought the american economy.

it encourages americans to work and to delay retirement. such will enhance individual security as well as boosting the economy which is the ultimate source of the income for all of us. thank you for your consideration for. >> mr. baker for inviting me to speak here today. to make three main points to my testimony. social security is the main source of income for most retirees. second, it's projected to becoming an even more important source in the decades ahead, primarily as a result of the disappearance of the defined benefit pension plans an adequate replacement and also the stagnant wages today i want to comment briefly on the proposals to change the index

formula for social security and argues that switching to the elderly consumer price index is in keeping with the original intent of congress and i would argue the opposite of the price index that is a way to cut the program. before i do that i want to make a couple of comments the ranking member said social security was cash flow - but i would like to point out that is not the case. a portion is interest on the bond held by the trust fund that is under the law a business that had interest income wouldn't be considered cash flow - if that was put into positive territory. another point i want to make quickly for that tax increases, i think it's important to realize two points. one is the extent to which the shortfall facing social security is attributable to the accord income over the last three decades. 90% of the income was covered by the capper after the greenspan commission set it in 1983 because of a large upward redistribution of income we now

cover less than 83% of the income. if we could cover 90% of the income over this whole purpose of that would cut the shortfall by more projection than 40%. when we talk about the size of the tax increases it's important to keep in mind the reference we have seen over the last three decades from most of the workers if the wages grew at the same rate as the projected average growth in other words of the workers' share equally the tax increase is making the fund fully solvent and would be about 5% of the projected growth over the next three decades. i think it's important to understand the context. returning to the point, the chairman very well lead of the basic argument about how important social security is for most of the ty cherry is it covers 36% of the income over age 65, 52.2% of them on wage income and it provides 90% or more of the income for 35% of

seniors and 45% of the -- one of the facts about the seniors that i think is very striking the poverty rate, the supplemental poverty rate most people feel is a better for seniors for the adult population as a whole the story is the social security has been effective in lifting huge numbers of seniors above poverty so that the poverty rates are basically the same as the adult population. very different from the story we saw before we have a social security. the second point i want to make is the importance for middle-income people it is projected to rise over the next two decades if we look at the people to the current generation of the ty cherry news social security accounts for 34.2% of their income that is projected to rise to the 37% for the workers that hit 67 between the years 20332042. the rise is more dramatic if you

look at the wage income that goes from 41.9 to 48.6 if you look at the in on wage income with the housing income and net, the rise is from 46.4 to 54 plaine 8%. this illustrates the fact that because of the collapse of the defined benefit pensions social security is projected to be much more important source of income in the decades ahead, something we have to be very aware of. the last point i want to make was referenced to the elderly consumer price index. if you go back to the decision to index the social security cost-of-living presumably congress did that with 1975 in the intention of ensuring that seniors could presume their standard of living. the elderly index is intended to track the standard of living in the prices paid by the elderly and it's consistently risen three tenths of a percentage point more rapidly than the overall, primarily because of the more rapid growth in health care costs.

bye contrast if we look at the proposal to switch the index to the changed consumer price index, there's literally no evidence, no one claims that is a more accurate level as it is seen by the elderly. there are features of that that are desirable taking an institution that it's looking at substitution for the population as a whole, not for the elderly. if the intention of congress is to have an index that accurately tracks the consumption patterns of the elderly to construct the bureau of labor statistics to set one up, and frankly i don't know whether i would show a high year measured rate of inflation were lower but i can say that it would show a more accurate one. thank you. >> thank you mr. maker. mr. sweeney. >> senator isaacson and casey, thank you for having us speak to you today on this important topic. ayman executive vice president responsible for the retirement and investing strategy that we developed in the investors that we served.

the privilege of helping more than 23 million americans save for retirement in their workplace and personal savings retirement account such as the 401k and ira. we want to help americans feel confident and make financial decisions to achieve better results for their families when it comes to retirement. at fidelity we are passionate about sharing our expertise with customers. everyday working americans ask us how to define that paycheck to meet the obligations including paying down the mortgage, saving for there's childrens' college and caring for an aging parent. one goal that is common to all of the customers being ready for retirement this includes the young investors enrolling in the workplace savings plan or older couple asking if they save enough to contemplate retirement. these investors need help navigating the accounts and investment choices available to them at all stages of life. we believe this system is working well to utilize it as designed. however, many people are not saving enough to ensure that

they will have a comfortable retirement. young investors face a difficult road ahead. at the highest level americans need to save more and we need to incentivize them to do that and provide the help they are seeking to make it easy to achieve security. the savings plans have become one of the primary ways most working americans saved for retirement and for those that enroll early in their career save as much as possible, increase your savings as you earn more and see the course of markets get follicle. the results are generally good. the latest data shows for people that have been continuously saving for ten years, the average balance and a 401k has reached hundred $23,000 up from approximately 53,000 a decade ago representing more than 15% annual increase. that said we still have work to do to ensure as many people as possible are prepared for retirement. we surveyed several thousand households to understand how prepared people were to cover these expenses like housing, food and health care and

retirement. the results were sobering. we found 55% of american workers that had a fair or poor conditions were not on track to cover their retirement. we colored them red and yellow in the preparedness measure that you will see on page seven of the written testimony as well as on the chart to my right to be on the other hand one-third of the households are on track to cover 95% of the expenses. we have given these people a green score and for them this system is working well. while the baby boomers is an age cohort doing well, a nationwide the workers face more challenges. but longer life expectancies and fewer pensions available to them, investors need to save more on their own and anticipate working longer to live a comfortable retirement. that's why we believe we need to encourage hiring levels of savings now. we know especially with younger investors the most powerful way to improve readiness is to save more if only a small amount. research shows that a

25-year-old earning $40,000 a year by increasing savings just 1% could mean that $300 per month for income in retirement. we applaud and players have adopted although enrollment and in keep programs and provide a generous company match. these firms are leaders in helping their employees get on the path to retirement security. paul shoemaker considering doubling the stifel savings rate from 3% to 6%. while research shows tend to 15% -- you can get a young saver on track to a successful retirement finally, we need to continue to find ways to provide investors with more guidance and education, not less. at fidelity people come to us to navigate the most complex decisions of their lives and the demand for education and guidance is up dramatically since the financial crisis. we take serious our obligation

to simplify the complexity and do everything in our power to help them. the year earlier, the better to the data shows workers that engage in the planning session either online or on the phone increase the amount saved by an average of five to 6%. we trade great private offering these resources to anyone. we would encourage the committee to work with administration to ensure people can continue to have access to the resources they need to make good decisions for themselves and their families. we recognize the major challenges solving these issues but with your partnership, we can work together to increase the savings rate in the workplace and help more americans be better prepared for retirement and meet the challenges that lie ahead. thank you for the opportunity to be here today and i am pleased to take your questions. >> commissioner, you suggested that some efforts to enhance or increase social security and a variety of different ways as a war between the generations why are they wrong?

>> that is a false premise. basically it says we have a finite pot of resources that are limited and we have to fight over it. the issue is we all age. when you're 20 and you enter the workforce, you have a long life in retirement and so forth. and if you look at the generation activity, you are concerned about your life and your family and your parents and grandparents and vice versa. so the notion is not one of intergenerational conflict it should be solidarity. if we look at the data in the transfer of wealth from young to old it's kind of like different. it's from the bottom to the top magazine the most massive wealth redistribution and the country over the last 30 years so it is a false premise. we are all together. we care for our children and our children don't want our parents to be burdened, and we as

grandparents and parents don't want our children to be burdened. so when you look at the dynamics of the families, protecting the workers, we have an idea based that we are all on this together, we all contribute and face the benefits appropriately that there is a designed to protect us all in the journey of life. i want to ask a series of questions to you and then the three or four questions if you would answer them sort of together and each of you take a shot at that if you would like to to be the just generally, fought on the social security levels adequate or should we enhance social security and if so, how should we do it and if you believe that we should modernize social security, what is your definition of modernizing the system? give a sort of general thought about those three questions and then each of you respond please. >> as i noted i think the social

security benefits are on average more adequate than many people think. the talking point you hear that comes from social security itself says financial at pfizer's say you need to replace 70 to 80% of your retirement income and social security offers an average retiree 40%. the problem is those measurements are measured in different ways. financial advisers measure benefits for the replacement rates final to the earnings social security measures them relative to the wage index of the 35 earnings, the they are apples and oranges. if you measure social security benefits the we the financial advisers would relative to the earnings before retirement, social security benefits on average are not clearly inadequate. at the same time, the big problem is for the folks at the low end and it is not social security benefits are not adequate on average, social security benefits aren't progressive enough. the problem is there's an enormous variation in the rates that people receive even if they

are the same lifetime incomes, the same contributions to the program. for example, if you take a husband and wife, a couple, the benefit can vary based on whether they split the earnings evenly between husband and wife or whether the husband earns at all and the wife doesn't. if it is the same lifetime earnings to get likewise, if you have an individual, to individuals the same total earnings of one fits into 35 years and the other is a longer career over 45 years they will have the same lifetime earnings that they will get a different benefit. for low-income people social security is a risky benefit not in the market risk that it's an uncertain benefit, highly uncertain you have an enormous variation in the benefits received. if we simply reduce that variation and gave a better targeted more uniform benefit which is something i've written about very extensively, you could reduce poverty in old age and provide a more reliable insurance program, something --

and to do the same price we are currently paying. the problem of social security is as a social insurance program is like a housing insurance policy that may or may not pay off if your house burns down. you can't be assured of having a replacement rate if you are a low-income persons with a simple better targeted program, one that is a better social insurance policy for people in the bottom middle and high income people, they have to save more. you know, people -- social security is an important component of income even for the middle-income and even high-income people in the united states. some people say that shows how important social security is but what that tells me is we have a lot of people who should, could an ability saving more that they are not because they are getting social security benefits instead. low-income people need a better social security program that the high income folks really do need to save more on their own.

>> your thoughts on those questions. >> a couple points. i would say certainly for the low-income people social security is an adequate. they had a lot to the cost some years back that call for other things 75% of the combined benefits in their 80s and 90s low-cost so it doesn't add a big expense. also raising the bottom tier you can take that back so they don't to benefit from that that would limit the cost and increase the pay back the benefits on the 11% for the low-income people. i think the time agreeing here with andrew.

it's important to make it easy for people to save and it is unfortunate that so many workers basically because again we lost the defined benefit pension plans and many workers don't work in places that have defined benefit contribution plans or they don't stay there long enough there's been a number of proposals and some of them enjoy bipartisan support to set up some sort of system like the savings plan that would be open to everyone in the low-cost system and the administrative costs make a big difference. the outfit has many lacoste's and many do not. it makes a difference in someone's ability to accumulate through retirement so if everyone had the option to have a certain amount about it and you could add that as a default contribution to opt out and put it into a thrift savings type plan administrative costs and take that in the automatic immunization and often out of that that would be the default that would make a difference for the middle-income retirees and how much they are able to save. estimate the way we think about

social security is one, longevity and it provides a floor of predictable income for people who are entering retirement. when we do retirement planning with customers on the ability to enter the retirement we ask them to figure out their expenses and what we try to discover those expenses food, shelter, medical care social security provides one of those predictable streams of income. the other thing is if you can continue to work longer devonish if you will receive in the basis increases approximately 8% a year so that is one of the trade-offs and we ask people that accumulated some wealth to think about spending down their current personal wealth before they tap into social security in order to receive a higher annual payment for social security if they can be for the time they began taking it. >> thinks mr. chairman. i want to delve into the solvency issue facing shall so

security and mr. baker objected to my characterizing the program as being cash flow - and of course technically he's exactly correct because we have like consider a series of accounting devices that also escapes the reality of this program. one of them is the interest income a certificate that the treasury ian's over to the social security administration which is filed in a filing cabinet and has no more assets behind than any other certificates in that filing cabinets. so when we look at this we could look to narrow at what we deem to be assets in the social security trust fund and i think we missed the mardy central point which is what is the ability of the federal government to honor the commitments in the social security program. if you agree in my

characterization for the purpose of evaluating that person. what matters is the cash flow coming into the payroll taxes and the transfers of certificates don't have any material impact of all on that fundamental devotee, do you agree clacks. >> the social security started running the negative cash flow we would face of the choice of raising taxes, issuing more debt or cutting benefits so those would be the three choices we face. when you do have a trust fund he would have the three st leases. the trust fund gets you in one direction as long as you have a positive trust fund balance that the fault is to raise taxes or borrow. once the trust fund runs out, the default position of the

federal government is going to cut the benefits back to what level we can pay with payroll taxes so it pushes one direction or another with the place you face and the resources that you have available is where you have to get them from. >> so is it fair to say that economically there are no real assets backing at the certificates in the trust fund and the existence of the trust fund does not have any impact whatsoever on the over all the ability of the federal government to honor its commitments? >> exactly it is to pay it isn't money that enables you to pay to be the trust fund doesn't make it easy for taxpayers to finance social security it just sets the problems to the financial security and disinterest in the income that we use as an accounting device isn't that rather akin to my taking a thousand dollars out of my savings account moving it to my

checking account. i think that we are kidding ourselves if we said there wasn't fine for several decades because we had a nominal trust fund that we treat as the wit were real assets and it's fundamentally not. >> you made an interesting series of points about how the defined contribution plans could have the advantages that we often associate with a defined benefit plans. i think sometimes people mistakenly think of or even characterize the defined contribution plans as being very risky and the person that takes their accumulated life savings and investment enron the day before it goes to nothing. but when you characterize especially the lifecycle investing and at least partial anonymization it eliminates that

risk could he explain in particular with the lifecycle investment profile is all about and how that works? >> you get to the lifestyle funds available in the of savings plans today they are available on a number of 401k plans and they try to tackle the problems and a lot of people don't pay very much attention to their investments. they do not reallocate their investments as they get older. they don't think about how the different investments fare so these plans automatically shift you from stocks when you are yondah to bonds as you get older to be at the idea is that you can afford to bear a little bit more investment risk when you were older you bought something more predictable and it doesn't automatically overtime. if you have this application working index funds is a simple low-cost solution to a problem. i think just more broadly when people think that the plans, the things they think about or who bears the market risk.

that is actually the less important thing to focus on, but the differences are all you automatically enrolled, the difference is in the contribution rates or the savings rates, the difference is in terms of the immunization, those are by far the most important differences to me and those are things we can do today through the d.c. plans and in a certain extent we are already doing today. they have problems. but the problems can be fixed. the plans, and if you will get the state and local factor they are problems that i think it's a lot of ways are much more difficult to fix. >> i see my time is expired. >> senator isaacson. >> in 1983 when ronald reagan and tip o'neill changed the social security will i was 39-years-old and they passed the rule that said if you are born after 43 coming your eligibility went from 65 to 67. i was born in 44, so why was the

first generation to have to lose a year of my social security. and it's going to 67 and a few years. there are a lot of people proposing looking into the out years and pushing a legibility out for children and grandchildren. what your position on that? >> what we have advocated and have been strenuously over a year is let's take this conversation out of the discussion and among the possibility is. it is a value issue and there are challenges with raising the age and one of the challenges is clearly going to become difficult rascal minor to go down when he's 68 or 69 or 70. that should be part of the

larger conversation about the social security will and the broad retirement system we heard a lot of suggestions that are worthy of consideration and the important thing is let's have social security as a part of the retirement. >> what do you think about the raising age? >> they cite the decline or something like that. go back to 1950 the initial social security claiming was 68. today when the biggest on the job risk is carpal tunnel its 63. the idea that we can't have a higher retirement age lies in the face of people that did leader in the past today jobs were less physically demanding than they were in the past so it's not something that has to happen but it's something that

should be open. >> there has been a growing gap in life expectancy so they are living longer and that's true. the life expectancy of going to those in the top quintile and not to those in the bottom half of the income distribution so they will enjoy a long retirement that isn't necessarily true we found that close than half of the workers in the bottom quintile it is physically demanding some people are working as custodians and waitresses and being on their feet pretty much eight hours a day. so the idea that we are just worried about the carpal syndrome with our mouth isn't true. we tried to quantify how impact will deily the retirement was.

if the work was delayed for 65 to 78 of a 12-point improvement in what we characterized in the prepared this measure and folks that worked part time was one day less a year for each of those five years past age 65 we saw a seven-point improvement in their scores so it is a choice people can make and the other thing about the type of work people do we are going to have seven different careers or different jobs in the course of our working they may not be the same type of jobs we need to consider people want to work longer. i think that's going to be a trend workers are going to want to pursue. we have to find a way to overcome this lack of investors and sophistication and knowledge in terms of saving for their retirement in the first place.

you deal with not every day when they come in at age 55 saying i want to retire can you help me get ready if you'd done that 25 years earlier it would have been an easier question. to really promote the tax benefits of retirement savings or government programs that incentivize people to save are there things you all can recommend we should be doing because in the end it's been to be when individuals are capable of taking better care of themselves because they're better educate on compound the interest of retirement security and the first place. >> correctly allocating and understand they should continue to save on the markets get volatile will be successful in the future. some of the comments or me about the ogle enrollment we have seen it to be very successful 75% of the plans offer although enrollment.

but we need to have more and please make that a mandatory option. the other feature is what we call all escalation, city people default in about 3% employment rate and that is deferred to their 401k. it should be doubled to 6%. the target is the number between ten to 15 which includes the employee contribution if the match were unveiled available and the escalation over a short period get to the savings rate of ten to 15%. >> mr. chairman, thank you very much. i want to thank senator brown for the hearing the work that he and senator to me -- toomy did. i had a couple of questions prepared in your opening

statement and believe that you personalized it the testimony that we don't hear too often and i know that this is somewhat of your answer of extrapolation maybe if you cut the project to the present that scenario that you described that your mom was facing how do you compare with the dependency on social security and the effectiveness of what a 33-year-old mother would face today who has a child away. >> it's hard to do that, but i can tell you that if we look at the circumstances if that were happening today i suspect we would have twice as much difficulty finding a job,

keeping a job and paying their rent. there was a working-class suburb of boston and the economic forces in the late 40's and 50's weren't lavish but they were more severe now. health care costs have increased, the utilities all across have increased so i would suspect it would be even more challenging particularly given what's happened with the wages over time. so i'm just projecting that and the difference of having a level of security that we can pay the rent it makes an enormous difference in the way the family unit stays together. i didn't realize until i always assumed my life was fine i would sit at the table and pay the bills and i had a notion that

the check was cunning and that she wasn't pulling her hair out every night. that would be significantly different. especially in this zip code 1% of us are doing really okay. but most tommy i'm just trying to get to friday. i'm worried about all americans there's no question we don't need to have a degree in economics or a lot of advanced learning to look at the data and what's happened in the middle class over the last if you look at the last four years, the last ten years or the last 45 just starting the hammer blows that the class has endured and the folks that are just below the middle class.

you talked about in your testimony the idea that social security has become the primary source of retirement income and you also point out that 78 million americans don't have access to a workplace retirement plan that is a stunning member and we can debate how that has happened but what would you hope that the congress would do in the next two years or so if we had an opportunity to make changes because i think that all of us in either party as much as we debate and might have disagreements, i think that we all have a pretty serious obligation to get this right and i just want to get your thoughts on what we should do. >> let's hope we don't inflated this conversation, let's have a conversation this is a real

challenge we have heard a lot of suggestions about how to look at work and savings as a part of the three leggitt this will how do we restorer that and not decimate a weekend. social security brought adequacy and solvency and we remember of suggestions that should be part of that conversation that can strengthen the savings to mention. let's have a separate conversation about that and then as a fundamental question what kind of country do we want. what can we afford and what are we willing to pay for. >> in their remaining witnesses and what we would do in the next

two years we will not allow you to have much time but we can encapsulate what we hoped he would do. >> we want to think about social security reform in a comprehensive way and a far reaching way. it's not simply about solvency. too often the problem is that republicans think that social security is doing fine except we don't want to raise taxes and we don't want to cut benefits. the problem and the opportunity is that social security is doing a lot of things not very well to be if you do those things better you can get a more efficient and effective system. second quick point also you want to look at the social security, if you look at in isolation you are going to miss something. the question i would pose is would you fix it if we didn't have huge deficits in medicare and medicaid? the answer to that is yes you would be more open to revenue than if you didn't have the medicare problem.

you have to think about all this stuff together. how do we make things that social security seems to be something we can ask middle and upper class people to save on their own and medicare is harder to do that because of insurance programs, so we have to think about this in an integrated way as well. >> it's raising benefits to those retirees today. in terms of how we think about the long-range story it's not just a budget it's the economy that's making this point earlier much of the shortfall in social security is because of the distribution of the wage income that is a tragedy and one aspect is that it faces a more difficult situation. on the other hand the good side is that people want it and desperately need it so we have

to look for better outcomes. that is where my focus is not just a budget on the economy and also getting back to the issues to raise medicare and medicaid we had a sharp slowdown that is really, really important it's amazing how that seems to be appreciated anything congress is likely to do in the next few years so let's hope that continues. i don't know whether it will or it won't but that affects the environment of how we think about social security or the reliability and the long-term. >> two things i would suggest increasing financial the education and guidance, so making the devotee to help people make quick decisions. >> on the behavioral standpoint of the although features that i discussed earlier are beneficial and improving upon those when you is effectively the although enrollment and escalation of contributing to higher levels and then the target date funds

have been shown to yield very strong results. >> thanks very much. >> i commend you for scheduling a very important hearing and on a topic that really gets a short shrift and i commend you for it. i am struck by a hell many folks come up and described accounts that invariably get into the question of their pension melting away talking about hopes and dreams that they had had for years and essentially even operating because the pension isn't going to be there. the recession is a factor, the aging work force is a factor certainly it is hard to follow some of the changes at the state

level. the private pensions there are a host of issues that go into this mix. some in the private sector businesses and those in the retirement industry seem to be doing some wheeling and dealing with pension funds. not talking about all the businesses and all the people in their retirement industry but she is saying that there are some who have taken billions of dollars from pension funds to finance downsizings and have sold the assets and merger deals and they've talked about how all loopholes and the discrimination rules will permit pension plans to be tacked to pay in effect for executive payment arrangements and executive parachutes and things of that

nature and they create an incentive to cut the benefits even when there was a pretty good argument the tension had enough money. clearly this reporter and a distinguished reporter isn't saying this is every business or everyone in the retirement industry but i would be interested and start with you, mr. baker and you because you all have been -- how serious is this problem in siphoning dollars from the pension funds so kind of wheeling and dealing that ms. schultz described in a really specific kind of instances. and if so, what kind of enforcement effort could be put into place to deal with it

because this looks to me like it is way over the line in the private pension funds it certainly is pretty serious financial misconduct that shouldn't be tolerated. start with you mr. baker and then you. how serious are these issues? >> i do think it is a serious problem just to be clear i don't think that explains much of the issue in terms of the workers facing a retirement because there aren't that many that still have a defined benefit pensions but you certainly have a number of instances documented where certainly people are violating the intent of the law whether it's violating the letter of the law but one's money is in a pension it is supposed to stay in the pension and it's used for the workers' retirement and she gives several accounts of which major companies are able to pull money out of the pensions in order to finance the merger and and what

ever you want to say. and that shouldn't happen, so that requires greater policing and scrutiny and probably greater penalties so that when you can determine that someone has in fact violated the law but it isn't just a slap on the rest so you want to play a game and see if you can get rid of it than you might risk some time in jail and that would make people more reluctant to do so too. one of the problems in the defined benefit and i didn't mention it in my testimony it's easy for the planned sponsor tonight to do the right thing. it's easy to promise benefits but nobody wants to pay for them. that is true in the corporate sector and in the state and local sector. a defined benefit plans are very complex and they require a whole range of assumptions regarding what is going to go on and the future to determine what you have to pay today to get it's easy to avoid doing the right thing. defined contribution plan as much more transparent if they

are going to put xm out into your 401k to put them in or they don't the monitoring is much easier. that doesn't say that there are not similar problems. there is a recent case i believe it was international paper where there were essentially funding the employee contributions in their own stock and the charge them too much and that sort of thing can happen, but i think it should be punished. but by and large it is sent a major explanatory factor in the problems in the retirement security for the reasons being met. >> i asked the way that i did because this to me is and what you thought. it's something that we ought to be doing more of. mr. shultz is an award winning journalist and as and saying that this is going on at every

company plan or every part of the retirement industry, but suffice it to say if you have that kind of documented examples here and you don't have enforcement against those it is an invitation to others to try to skirt the rules. have you or any of those that have been advocating for workers on writing some suggestions with respect to penalties and consumer workers that ought to be put in place? >> i haven't written directly on this particular issue and i can't say i would imagine others have but i have to say i'm not familiar with it but i do have to say i look at this as part of, a set of malfeasance i think in many cases probably criminal actions taken in part of the financial going in connection

with that i do think of raises a serious issue and it isn't just punishment we might want that but more important the question of incentives people think they can violate the law you are not a discouraging that behavior and we seem to understand that in another context i don't understand. >> i'm way over my time, senator. i would be open to suggestions from either of you and for some of their panel members because it struck me as an important set of issues that ought to be part of this the date you talk about the aging work force than you see people in town of meetings and they talk about their pensions melting away and they have questions about how that happens and we ought to be looking at some of those issues.

>> mr. chairman, there is nothing like focusing the mind when you realize that you are facing a situation and a lot of americans don't face the fact of retirement until it is way on down the road and the question is are we going to have enough money in retirement? have we saved enough? several of us are sponsoring the lifetime income disclosure act and its a way of showing people what their savings would look like in retirement as a way to get them to save more money today for retirement, so i want to ask can you explain the

innovative tools that fidelity has in order to show your clients with the savings will look like at retirement and what else you think you need for the government to get people thinking about this so that they can adequately plan for. >> we have a lot of tools available to customers that work with them and also to the general public they can go in and assess their holdings with for about the end aggregate holdings that kept at other firms. they kept it in the firm and both are gearing towards the retirement and they want to be able to see how the combined balance is can be used to achieve those very goals we recently conducted the retirement preparedness measure and calculated their readiness of people to do what you say to

the accumulated assets and translates that into a stream would generate a lifetime income our job is to simplify those problems but the critical factors are increasing savings rates for young investors as they are undercover pensions and the future they have to save more on their own and the more we can help people of comprehensive education and the american that's better for the retirement in the future. how would you compare them to other industrialized countries. we look across the globe and the retirement systems, so for example australia has a mandated retirement system which people are forced to put into a private retirement system of their choice we are not sure there is

a causation but they're seems to be a correlation so when we look across the globe is an opportunity for people of all income levels to take some money aside and it's a difficult decision for a young worker to say how can i save 10%. the comment i get back is if i offer the same job at 90 cents a dollar would you still take the job they say yes i would figure out how to buy a less expensive apartment, drive my car longer and make some trade-offs but they would find out how to live on 90 sent the dollar. that is what we are asking each investor to make. >> you're particular tools other than aggregating all of the savings so they have a comprehensive review, what does it basically do? you take their composite savings and then project at the

retirement age how much that is going to give them each year for the actual length of their life is that what it is? >> we have several different tools i can simplify them into the distribution oriented tools and we have planning tools and investment tools so if you think about the accumulation i want to make sure i'm saving enough so i have accumulated a nest egg is unable to translate that to an income stream and for 25-years-old or 45 year old they are more focused on accumulation that is the dialogue we have with them. for a 65-year-old it's more around managing expenses so we start with a hurdle that each one has to clear out and then look at the accumulated benefits either through the design the benefit program, social security and we say how can you clear out the monthly turtle each month but we want a plan ball beyond the actuarial stage for their retirees and we find that one quarter of a couple will live into their early nineties

supplant 87 as planning for a quarter of the population to fail. >> let me take it your hypothetical. a person who is retiring at age 65 that has a salary in the range of 150,000, okay see if you can't interpret this for me what is the nest egg of savings that they need to take down and their average situation of a lifetime expectancy? >> starting with an accumulated nest egg of about eight to ten times the salary system to making $150,000 at age 65 to it wampum to be in the range of $1.2541.5 million that's a pretty substantial number to the estimate and that would pay out the principal plus interest over that actuarial but what we find as customers at the higher urning levels are not that - a

couple reasons. we some people bought those levels and we see this are actually saving so if i'm sitting before i retired automatically i only need to clear the hurdle of 85 cents on the dollar because i no longer need to save for retirement and if i pay off my mortgage that is another that you do not have to clear out when you get to retirement so you can begin to see replacement, income replacement rates close to retirement ranging between 68 cents on the dollar for wealthier people and up to ranges in the 90's for people at lower income levels. >> thank you very much. you directly answered what i wanted to find out. thank you for the hearing senator nelson.

this is a very good panel. >> we will do a second line of questions. i appreciated senator casey's comments about your personal story. i would like to talk to bring back the issue of retirement age and painted a picture of a couple stories that are not as personal for me as they were for you that people i've gotten to know and was in my late 40's and early 50's he had been a carpenter since he was 18, non-union carpenters and his retirement wasn't as organized and lucrative but nonetheless, he worked for 30 years and there were a lot of things he couldn't do now. he had trouble lifting things and he worked outside he was

doing pretty well with his income but his body was drinking dumps a woman put her hand up and she struck me as someone she said i've worked all my life and now i'm working two jobs and 63-years-old and then she said i have to live another year and i have so i can get health care. imagine someone thinking in their life their goal she had no insurance i don't think she had been injured much of her life. her goal was to be able to live long enough to get health care, not long enough to see a grandchild or live long enough to complete something, some hobby or workplace success or something, but just to get to. .. personalizing. we know that the gap in life expectancy. those two people i mentioned.

on the average they will live not nearly as long as those of us who dress this way and have jobs like us. we know those same people, what they represent a much less havey than seven of us to leg oft the three -- the stool of social security but some other kind of pension and some significant savings. the increase in jobs in this country is mostl the increase of jobs in this country, the growth of jobs because we have low income areas. it's fast food workers, health care workers, people who often don't have insurance, they will have health care or selling out because of the aca. but they also don't have --

they're unlikely to save, unlikely to have any employer pension. if they do, not particularly lucrative. so with all of that, we see people like simpson/bowles savories retirement age. all the various people in washington on talk shows they we should raise retirement age. talk that through. not just your position. but what do we do about people retiring, and people that are low income, and all of us on your people that don't cause much social security. people don't live longer and have had more comfortable lives in terms of dollars are living longer and getting hires should kerry be, how do we deal with this in light of low income workers generally? mr. romasco. >> we have to understand what the reality is. the corporate object is reset to

70, at $14 million apiece, they should go to lake erie, toledo and talk to these people and say it exceeded the ideas come all those wanted on $14,500 a year, raise your hand, the average social security benefit. i don't get a lot of takers for that. not just the math, the reality. we have to beware of averages. that's so important. these are parsed the numbers correctly, which is the average that's an average that. dean made the comment and is well aware of this, there's a very uneven jewish and going on here, where if you, well-educated, you'll live longer and benefit more. if you don't have to have those tools and basic situations coming you're going to be challenged. as i said before coming younger workers have a one in three

chance of encountering disability were not reaching retirement he causes some problems. that portion goes up in communities of color. so let's get the reality and data out there. the second thing is weird suggestions as part of the conversation about retirement for strengthening the system at the low land. we have to look at that and said the adequate issue. the third as there is that we could all do a better job of saving. one of the challenges is what are the mechanisms that people mr. sweeney's business and some suggestions you are ready to encourage savings and at the same time build on that foundational piece, is social security. it is a foundational piece. if we cannot limit back, we have to face the reality of what's going on. stagnant wages, pensions disappearing and saving center challenge. think about what we just had.

senator nelson mr. sweeney. the average income in this country's $50,000 using mr. sweeney three times. people have to $400,000 to take care of them. what's the reality of that. a vast number of americans are -- some of them are. good luck and congratulations to them. >> others on the panel want to read on. >> a couple points. first off come the point about the affordable care is a hugely important one that hasn't gotten enough attention. there were people like this woman or 63.help struggling to go to work everyday who now get health care insurance that will make a huge come huge difference there are thesehappy forthe ot, huge differences. people are indifferent circumstances. we could work until 70.

it is a different world for most of the workforce. if you read the bowl system -- bowls simpson, they say we should not raise it for them. that was the thing that greece was ridiculed for when they had that huge deficit. u cod retit if you're a hairdresser in greece, you could retire at age to be in the rationale as they work with dangerous chemicals. i have no idea dearth of that, that's the sort of thing polls and simpson were proposing. pakistan tonight i certainly don't want to do, but does show the problem. >> anyone else? >> just quickly, this goes back to the example of senator and in mr. sweeney had. and the comment you made while making $50,000, and they need eight times annual income is

savings can hardly take it out. the fact they don't make their income is leaving because are getting social security. social security is a much bigger part of retirement than for someone making $150,000 per year. retirement planning is really complicated. it depends what your income level is on the how many kids you had come are you single, married? is easy to take these rules of thumb and misapplied them. i'll say that for certain. they are safely the reasons they pointed out. physically demanding jobs can't make it to 65. the problem is it wasn't just the folks who retired at 62.

what do we do that? one idea to encourage people to work longer i propose eliminating the social security payroll tax for workers age 62 and over. there's a carrot as well as a stick. >> excuse me to an arrest. that would mean their monthly check would not grow. i understand the difference is 63 now and 66 and you get more if you retire at 60 or the reason a 7-year-old gets more is because they've paid and. >> actually not true. i did a study if you had to go, but cannot exceed 2-year-old chooses to delay retirement for years in extra your taxes. for each additional dollar of taxes any retiree pays income and they get to send back an additional benefit. >> don't do it between 62 and

65. do it so there's no penalty involved. is not the case if you retire at 66 versus 70-penny paid to osha's. he >> solely because you delay benefit. nothing of additional taxes you pay. the marginal return is essentially zero. social security and the highest 35 years of earnings. 36 year is unlikely to raise benefits by much or anything. second, most women get a spousal benefit. they're not getting anything in exchange for on taxes if they get their heads and so they work longer and essentially get nothing. i was shocked when they ran these numbers. when you are to the benefit formats clear why it happened. the fairest thing for that age range is to eliminate the

payroll tax. but also something the academic research indicates that a real big response in terms of labor supply because these are folks who can work longer. it might have someone may say i don't want to be a wal-mart greeter, something like that. i can stand the workforce a little longer. try to use the carrot as well as a stick on this then. some people need to retire early, but a lot of people can and should retire later. the question is how do we encourage that? >> thank you. >> senator brown, the expenses, the primary base on which we look at retirement plans. i think of an example i found a decline in california just retired at age 62. he came and talked to the representatives option since a 15 left on his mortgage.

she set her right to take some of my assets and pay down living as i can take social security a 55. the representative said there, this is challenging. you're driving down assets to their fun three years and that's going to put the tail end of retirement plan at risk. when you're in your 80s you may out of money. he darted decided to retire. if we cannot the conversation before they choose to retire, he can avert another three years and then in a very good place. he could downsize his home, his mortgage, made other choices about spending, which would make his retirement were successful. >> senator casey. >> thank you very much. i was looking at mr. baker in your testimony on page two. the startling number is on a couple of segments of the population. we look at the unemployment rate monthly or poverty rates.

the data you have here for senior non-dairy equipment. the official measure and another 11%. 27% -- 27.3. african american seniors to do the same addition is 28%. i think the same calculation, poverty and near poor for hispanic seniors is the same, 28.2. those are startling numbers and i think another reminder as to why social security is so important for folks across the board. this gets to the point about increasing benefits that they can make a very big difference.

if he can raise benefits for people at the bottom 10% to 15%, that makes a huge difference. these are people struggling to get by. the cost for that is very, very low. obvious at the long-term projections for social security has affected very little by raising benefits for those at the bottom. >> mr. biggs come you quoted in your testimony, benefits for low earners probably should be in men. >> i have argued for a more far-reaching reforms to much like you have in new zealand with the u.k., where every retiree receives a flat benefit at the poverty level. the idea is to take policy of 9% to 0%. if you want to benefit above poverty economy sent people out for employer-sponsored plans or iras. social security -- it won't cut

poverty. clearly it does. is it the most effective, efficient? no. we could give every senior in america a poverty level retirement benefits are worse than on social security. we can do better, but not by saying the across-the-board increases in benefits. if they knew was poorly served? why some people not receiving benefits they should? it becomes the complexity benefit formula. it bases your benefits in your lifetime earnings, but a lot of things other than your lifetime earnings. it's a risky benefit for low-income people. the mac i want to commend you for doing calculations understate. aj, and encoding the pennsylvania social security

benefits imported 470,442 jobs. $70.9 billion in out at -- that is very helpful for us to have an calculations will be used at another time. for grateful for that. sometimes it difficult for all and sometimes difficult for elect officials to clearly articulate the benefit in a broader-based way. we try to use bank with about calculations calculations all the time a fun way to talk about these issues. we appreciate that. i know we are nearing the end. mr. sweeney, i'm not going to go through too many questions for you. i should point out for the record senator brown may not know this, but mr. sweeney went

to the greatest undergraduate institution in the world, wally cross. >> with a name like sweeney, that's shocking. >> i have four daughters, mr. sweeney. i'm just realizing with your chart, when you indicate generation y .78 to 80. our oldest daughters and generation y in the next three or millennialist. in the chart you have on gen y tells a lot a threadbare, meaning their potential or likelihood of saving is not very high up on the scale. what would you say to both the gen y and younger folks at the millennialist?

what do you have for them? >> bow section is surprising. >> so i can tell my daughters. >> i'd be happy to calculate as well. two things. we were surprised to find gen y was so red because there's so much more time to correct the trajectory they were on. >> explain red again. >> it meant they were not on track to recover are covered henschel expenses. to be drivers. they're not saving enough. the second big drivers the goalpost has been moved down the field and today's generation of rumors. they're not going to be covered by defined benefit plans to the degree to today's retirees are covered. they have to solve more on their own. as we think about people living longer, daughters will live longer than parents, so the timeframe over which they need to cover the retirement expenses is longer. those are the two biggest drivers of success or predict various and factors to make sure genlock and millennialist

understand today and start saving early with that first paycheck ever want them to put 15%. >> rate, thank you. >> a couple more questions. otherwise we'll wrap up. a number of you i've seen -- you know this generosity is six. last year if you poll respondent that there'll be enough money to provide social security and medicare benefit at their current levels. 41% of those 18 to 29 answer blakey. 36% answered likely. you've heard for some years -- i think i've heard this for literally a number of decades. the line young people feel are more alike -- i don't know if this is a survey. they are to draw social

security. reassure us that is not going to be the case. >> the one i often get to the young people in many colleges around the country and ask a question, do you think you can get social security? no one raises their hand. some point we're going to stop paying benefits and are nodding their heads okay, let's pick a year 2030 or whatever. .com chris still have roads? and retirees are going to be twice as large as a percent of the voting population they are today. even members of congress will vote to cut social security? most of them are convinced now. in terms of the data, the shortfall to make these large is kind of a game. but a lot of people talk about tens of trillions, hundreds of trillions. the reality is the shortfalls are not very large relative to the economy.

the projected shortfall in social security we are talking about a shortfall of one percentage point of gdp. hardly trivial. on the other hand i felt worse in iraq and afghanistan and increased military spending by 1.6%. it didn't wreck our economy and we have a much longer time frame to adjust to this. with help here, we face large cost, but that's basically because the health health care m is broken. we spend twice as much per person as people in germany, france, and the key is fixing the health care system. whether or not we have medicare and medicaid, we can eliminate health care programs. if we do fix our health care system, the cost are easily manageable and the good news there is then a short selling of cost over the last five years. i don't know if that will continue. if that does continue, that will be a manageable problem.

we can make the scary numbers if we express the shortfalls as a share of income doesn't make them trivial, but these are expenses are dealt with in any other context. >> thank you for that. >> let me ask a question of all four of you. we bought testified about the challenges. you find areas of agreement. you disagreed on things. you've laid out the challenges of issues and options pretty well. just give me a couple minutes each. senator casey asked a lightning round. he said this is lightning round squared unsorted short-term, what do we do now. pay for us, take a couple of minutes each on what a retirement system can look like five years from now. what you would like us to work towards painting a picture of what the retirement system should look like.

what are you will go across that way. >> thank you, senator. this is of paramount importance. people, not one paycheck and multiple needs and say i need help. we have proposals in front of us that they would not limit the guidance we provided this on the type of account that they're working with. whinnied to make sure we do and oriented beyoncé how can i help you as an individual or worker saw the need to have had the second would be we think these default enrollment and autoenrollment features are incredibly successful we want to build on the strength and create another round of, which will help them stay invested in equities in a downturn at the volatility. racing people who stayed the course for the downturn actually are in much better shape than those who panicked and pulled out.

the more we help people understand the timeframe of what they are investing is long and the better we can do to get them enrolled in the well invested, the more successful workers are going to be. >> thank you. mr. baker. a couple points. for social security, we can do some stuff to enhance and it would make a big difference to a lot of people at low cost. the other point i was making, we can set up a system of portable universal accounts, voluntary contribution. the key point being people can carry the place to place. they would have very limited options, very low cost. the number of states bipartisan washington state, california state came close to passing those occasions, but they were either recession. something like that would be good basically at the supplemental retirement vehicle

for middle, upper middle income people. one point doesn't get appreciated it when people talk about future generations, we see huge fluctuations in asset is that will dwarf the impact of the deficit and debt and future generations. when housing prices fell by 30% come about as bad as forever known on the house. same story with the stock market that people should appreciate. i'm happy to see the market go up. what that means if anyone investing tumor can expect the returns. just a very simple tori. traditionally if we had ratios you can roughly at 7% return in the stock market. you can count roughly five of the long-term. if i were to cut $1000 in the market today, the 7% return would give me 16,000. i% would give me 8000.

people are worried about generational equity. they should look at the stock markets. bad news for them. >> mr. biggs. >> i would agree with dean and john everly starting with enhancing the savings done by folks through the retirement plans. the autoenrollment, auto explanation from the source of things we talk about. that's the simplest and easiest way to ensure that people with adequate retirement savings -- we've done the research. we know a lot more about what goes into retirement saving today than we did 10 or 20 years ago. that would solve the vast majority of the problems we face. if people just say that they should, it's not just better for them. it makes life easier for social security. they don't have to worry about paying a big benefit making $150,000 per year. that's really the first thing actually achievable today

because there is bipartisan agreement on how to do that. i think we need a more robust safety net on the bottom. dean and i'm a differ how you do that, but you agree it should be a better safety net that a country as rich as shouldn't be allowing so many folks to retire into poverty. it would be a simpler system that we need to make middle and high income folks remind themselves a little more for the retirement saving because the challenges and medicare and medicaid are still out there. >> thank you, mr. biggs. mr. romasco. >> what we've seen this morning is a broad set of ideas by teel at the retirement issue. it is in that context. we have to change the conversation. let's look at it in that context. people need to understand social security and all its dimensions. the come protection piece of all is the retirement peace. unless the sort of clarify that,

people also have misconceptions about what it is, what it isn't. those kinds of issues, we have to clarify social issues. it's about adequacy insolvency. third, we have to look at the other two legs of the stool. i've heard suggestions that we are helping people save more and make that personal response ability be as robust as possible. until we come to a place where we put the conversation separately, like i retirement if they won't understand the value of social security and middle-income peace, adequacy peace in the social insurance aspect throughout our working lives is going to be dealing with a lot of chalets say unnecessary noise so the clarification of that in support of the other two legs of the store in terms we've heard. in that context, we can have a good conversation.

i have a lot of a lot of confidence will come to a good resolution. >> thank you. this hearing is not about to end. >> i understand. i was following your comment. >> first, let me apologize for not being at the hearing. i was chairing the hearing on the subcommittee on east asia and pacific and foreign relations committee. one of the challenges the united states senate if they put you on a lot of committees that have a lot of hearings. i think this hearing is very important and i think senator brown for convening this hearing and the importance of not just social security, but private savings and retirement, which is critical. then congressman portman and i worked on these issues when we were in the house. and it was interesting that during the most robust time of our economic growth, american saving ratios were incredibly low. in fact, negative in the growing

economy. at that time, were told don't worry about it because people were saving for equities in their homes. we saw what happened to that. so i just really wanted to come by to thank with this in the chairman. it is critically important not only preserved to strengthen social security. it's the only guaranteed lifetime inflation proved annuity that people cannot outlive and they don't have to check to see how the stock market is doing to know what the retirement will be. it is critically important that we preserve that. it's also importantly improve incentives for retirement savings that starts with doing no harm on the tools currently available. build on that. 6 million americans will take advantage of the saver's credit. we can strengthen not. as has been pointed out by the dialogue that's taken place this

morning, there's been discussion about the need for middle income and lower income working families and how they can do better in their retirement. there's no question we need to do that. we found a way to do this is to make it easier for people to save for their retirement that the tax incentives are important, but you need to put something else on the table. that's why employees sponsored plans are important. where i work, we have not. ..on the table. the saver's credit is money on the table and 6 million americans have taken advantage of that. two factors i would mention is that it is important to strengthen these tools. americans make a lot of decisions by inaction. automatic enrollment programs work. people get involved in the

programs. the the fold investment options which are sensitive to their age provides for the rebalance, which they do not do on their own. the second point is if we were fortructing the incentives private savings and retirement today, i think we would have done a better job to put incentives in for a lifetime income options rather than the ease of taking money out of retirement plans today. there are two areas we should look at as ird's for improvements -- as priorities. i have a minute and 21 seconds left on my first run and i still rounds.r more about income for life.

we talk about longer life expectancies that people need to for.for -- need to plan we try to have a core foundation in building from the employer- sponsored retirement plans. with the concept of private annuities, we find about 14% of americans have an annuity. the challenge is i have to write you a fairly large check. people who won't annuity fine great benefits in them -- >> annuities are one form of lifetime income. is it is easynt to take retirement money and use it for other purposes today. without penalty. having different incentives.

retirement.nt is have outlive their ever -- all of a sudden that 90 they are still active and do not have income. this should have been greater concentration on lifetime income rather than allowing them to take out the money due to economic recession, they wanted to buy a home, or grandchild needed money for school, there were other ways to deal with that. >> it look like you were agreeing with me. -- we have taxto incentives in place to encourage retirement saving. i tend to think that they are pretty weak in the terms of tax deferrals on tax deductions, in theory you could wind up paying more taxes either virtue of

savings. making that more robust might make sense. a gooding credit is idea, but i also think that more incentives to encourage motivation makes sense. i think there is probably never an area where economists are more divided from up the public than annuities. you should essentially make annuities from all your wealth, almost no individual in the general public will do this willingly. very few people want to annuitize their 401(k)s. if you give them the option of a lump sum, they will take it and walk away. it is just the human nature kind of thing. an annuity turn to from a millionaire and to someone getting $50,000 per year and no one likes it. but something along those lines to encourage default could make sense. once people have them, they will

be happy with them, but the initial decision to do it is such a high hurdle to get over. >> i came back to listen to the chairman's closing comments. >> yes, you did. thank you. >> few in the senate no return -- no retirement issues like ben cardin does. thank you for testifying, members of the subcommittee or full committee may have more questions for you. if you could get written answers to us -- the hearing was a success in many ways, because the debate should be about the issue of how to achieve retirement security. think that is particularly important. these are not budget issues the way that they are issues of how to debate how we actually do this, especially for low income anders, and when mr. big mr. big agree, that is consensus . so, all kinds of things could happen. thank you so much. special thanks to all four of

wyden, cardin, nelson, and to jennifer and elaine on my staff, i am appreciative. thank you. [laughter] [captioning performed by national captioning institute] http://twitter.com/cspanw [captions copyright national cable satellite corp. 2013] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] the senate today wrapped up the work for the year by confirming several president obama's nominees including john at the irs. the chamber, this morning, also voted to advance janet yell less -- yellen to take over. she replaces ben bernanke. a vote on her nomination is scheduled for monday, january 6th. for more on congress' agenda

following the christmas recess. we spoke earlier with the capitol hill. -- reporter. david hawks -- mr. durbin proposed carrying over the nominationings that didn't get voted on in the past week until the new year. he was rebuffed by the republicans in is usually sort of a plain old -- courtesy that few people notice. it suggests that the republicans have not lost their sense of anger. >> you are writing about in 2014 a appropriations process. the headline at rollcall.com "now the hard week, three weeks to apportion $1 trillion ."

looking ahead to the next three weeks. what is the number that the house and senate have to work with? the $1 trillion and $12 billion. that looks on paper the senate

didn't pass any of them. the house only passed a handful. what it means is every single spending decision for the final two-thirds year is being rolled to the one enormous bill. that is literally thousand of line items that need to be filled in. and hundreds of policy tweaks that need to go along with them. you wrote that the appropriations chair is harrold rogers and barbara -- take it or leave it measure. >> that is their intention is the timing is extremely tight their hope is to do the drafting during the coming two weeks when the capitol will be relatively quiet. the senate going out this afternoon. the house having been gone for almost a week. fewer rank and file lawmakers -- hanging around to rule in to the process. and plenty of lobbyists and advocates who are presumely

taking a time off. few remaining disagreement by january 6 or 7th. through the house by january 10th. get it on the senate floor by january 13th. and get it to the president by january 15th. which is when the current stopgap spending authority runs out. the so-called cr runs out. to make the extremely time table, the only way to do it is come up with a legislative vehicle that makes the bill essentially look like a conference agreement. a final agreement already been through the process of amendment on both sides, which means it's not amendable anymore. there's is no way they would meet the deadline. >> what is happen when the social issues come up. the policy issues come up often

attaches to cr. >> well, i think one expectations is fewer of the social policy questions will be tackled in this coming. the republicans want because to do otherwise is to bog it down. that's the gamble. if the republicans will relent on that, because they do not want to be seen as pushing this process any further than they have to. in other words, politically, you know, the narrative is that politically the republicans did not do much to benefit themselves with the shutdown in october. they do not want to risk having it appear as though they are risking any kind of shut down again or budget brinkmanship again and back down and allow the bill to go through. that's certainly what the democrats are gambling. i think it's, you know, we will

see when these house members are home for the holidays and talk to some of their constituents and conclude what their reelection prospects are like. whether they come back more loaded for confrontation than we think is the case. >> another day february 7th. the debt ceiling date. jack lew, on thursday, writing congressional leaders calling for them to extend that borrow authority for treasury well ahead of the february 7th date. will that debt ceiling issue be dealt with as part of the spending debate or the stand-alone issue? >> i think a necessity be a stand-alone issue. as i understand, my reading of secretary luis letter. he said there are a maybe a couple of weeks after the february 7th deadline where he has some discretion to move money around to cover the bills. so we're looking more like the second half of february for the true deadline on that.

the republicans have made clear in recent days they are going to demand something in return for their vote. they have not made clear what the something is. so who knows. maybe it would be, you know, -- my guess is there will be some who will be talking about more restrictions on the health care law. the obvious candidate they haven't made it clear it will be interesting to find out the president's attitude any negotiation over anything before raising the debt limit. as you will recall in october, he was nonamenable to negotiating at all. giving us a sneak preview david hawks. you can follow him on twitter and read his blog on rollcall.com. thank you for being with us. >> thank you.

>> she was everyone's soul sister. she laid her life out for everybody to see, and she told us about what like -- life was like in sush ya. one of the wonderful things about her, you know, she wrote mainly humor. it was humor that happened in everybody's lives but they might not recognize it until they saw it in the newspaper. funny things happen to us all the time. we have to be on the lookout for them. she was the one that focused our attention on the funny things that happened in a family. things that at the moment seemed

like craziness and drove you nuts. but when you look back it was funny. it's a gift. it's a literary gift. >> the life and times of urma. this weekend as booktv and american history tv look at the history and literary of life of dayton, ohio. federal trade commission earlier this week talked about u.s. and european union efforts to enhance data security. speaking at the council on foreign relations she outlined her proposals for updating internet privacy policy. from tuesday, it's an hour and fifteen minutes. >> hello. we are thrieghtded to welcome you to this round table with ftc federal trade commissioner. this is part of our policy series which is made possible by a generous grant.

i'm instructed to ask you to please turn off your cell phones. if you haven't figured out from this gentleman in the corner, it's on the record, in fact, we're on c-span. i am karen i'm a senior fellow here at the council for digital policy. julia, many of you have been correspondenting with organized it. it's happening at an incredibly timely moment. the leading tech companies are meeting with the president at the white house today. there's a hearing in the senate tomorrow on data brokers in the trade negotiations with europe, the u.s. is expected to table something on e commerce cyber framework drafts recently released and of course the e.u. published on november 27th, some recommendations on the safe harbor. we're just thrilled to be having

the meeting today. we know it will be fantastic conversation. i'm going dick off with brief comments. i recently served to the ambassador in paris. when i was there, we convened a group of business leaders, government, technologists, and ngos. sometimes missing from the debate and important for us to remember are not in conflict, in fact, both essential. those are that the free flow of information -- jane was there. i didn't see you there. that the free flow of information is stoacial an open swernt. and of course, an open internet become an essential platform for innovation, expression, and commerce. on the other hand, there's a need for individual countries to make rules protecting their citizens whether it's on

privacy, cyber, fraud. these two things, i think, sometimes the debate forgets they're both essential. and so we're lucky to have julie here to talk specifically in the area of privacy where she's become a leading voice. julie, to give you some background on her. i'm sure you're familiar with. i'll take you through her story. she was worn in commission as federal trade commission in 2010 subpoena she's been focusing there on issues most effecting today's consumers including privacy. advertising substantiatuation, financial fraud, and competition especially in high technology and health care. before she came to the ftc, she was the senior deputy attorney general and chief of consumers production antitrust for the north carolina department of justice.

commissioner brill served as a vice chair of the consumer protection committee. she's an associate in new york. she clerked for a judge. she graduated magna cum will data from princeton and nyu she has a citizenship at the law school. she's been a lecturer. many expert panels focused on issues such as pharmaceutical, data security breach. i'm grateful to her for is that she's looking at the cutting-edge issues. shows figuring out what the right policies are that balance

all the equity and pining away to speak about in a they satisfies the academic, the advocates, and arch consumers. i have to believe it comes from the fact she doesn't spend her time in washington. she's getting out around the country and world. i think it gives her a fabulous perspective. we're lucky to have her at the commission. >> thank you, karen! i'm pleased to be here! i wish i had your résume to read, because yours is pretty impressive too! and almost as long! if not longer! even though we are both really young! the way we're going run this i am going to ask her a few questions and then we're going open it up! you are all experts! we don't think of you as an

audience. you returned from ten days in europe. you were speaking mostly about privacy issues. we're able to comment on this when we goat question and answer period. you know, we should start out by saying the u.s. is and the e.u. and europe have a long history of cooperation. you know that better than any anybody. i think we need to remember that and ceesmed as we think about and try to work through some of the latest areas of a troubled -- of some of the latest areas causing tension in relationship basically very, very sound.

the nsa revelations has created tension. there's no question about that. you know, it's gotten as much press as it's gotten here in the united states, i think it's actually probably gotten much more in europe. i find though, as an overarching perspective. especially seeing from the change from september through now there's an increased willingness to try to cooperate and figure out a way to resolve the problems that exist! in other words, i've been -- i think in the last -- i've been to europe both prior to this snowden revelation and in september when they were very fresh and i just got back from a long trip. you know, i think between september and now there has been a recognition that we need to try to work through the

problems. , you know, there have been extensive government groups as well as private groups focused deeply on trying to address these issues just here in the united states. how should we be balancing and there have been working groups between the e.u. and the united states so that some, you know, folks in the working group that are european policy makers and whatnot have been able to interface to try to talk through the issues as well. i think all of that has lead to a -- perhaps not complete agreement on the way in which we're doing things. at least in understanding to a certain extent of why they have been doing.

and maybe the areas we need to address going forward one of the thing you asked about. maybe we should talk through is this issue of should commercial privacy and government surveillance surveillance be treated together? i spent a lot of time talking about it in europe. i have told my europe, audiences and whatnot. i have done the same thing here in the united states that the government surveillance issues are incredibly important. it's a conversation that is long overdue. i'm glad that it's happening here in the united states and in europe and turned to a transatlantic discussion! the discussion is a very important conversation. it need to happen here in the

united states. it's a separate conversation. it should be happening separately from the national security issues. tells thoughts about the e.u. privacy regulation.

leading regulator in the u.s. or whether looking at some of the things happening in states with respect to the privacy. we try to urge on industry in

the united states. you see an focus on enhancing consumer's control over their data. increasing transparency. improving data accuracy. strengthening data security and encouraging accountability. these are all concepts that, whether embedded in law in the united states or are being discussed at the federal trade commission and elsewhere in terms of developing best practices for individual here in the united states. these are all concepts. i think frankly, we embrace, certainly, i embrace as a federal trade commissioners. we have data breach notification laws. it's at the state level. not at the federal level. it would be nice to have a data breach information to law and security law. we have some provisions dealing

with this issue at the state level. in our privacy report, the federal trade commission we issued a big privacy report last year, we talk abouted a lot of these other concepts. privacy by design. it's the need to build privacy in to products and services. and not to kind of push everything on to the consumers overwhelming them with choices they need to make about their privacy. when frankly, consumers aren't going online or using smartphones or engaging with their connected devices in order to think about privacy. they want to do something with all of those technological tools. so the need to build more privacy in to product and services, i think, is deeply important. having said that, i think there are areas where we definitely need improvement in the united states. i don't think --

big data an lettic profiling of consumers. especially when focused on consumers at the individual level. when we're talking about profiles created about consumers that are being used whether for marketing purposes or eligibility decisions or other decisions, i think we need more transparency in that area. when it comes to the internet of things that is connected to devices, whether connected cars, medical devices, fitness bands, or anything else that is a device that connects to the internet, again. i think we need more transparency and need to think about the tools that we can make available to consumers so they understand what is going to happen with that information. we will be collecting it and what they will do with it. i think online tracking