>> good morning, everybody. nice to see everybody. thank you so much for joining us. i'm maya mcginness. thanks to people here. thanks to our guests on c-span. and i believe we're live streaming this. the trusteeses, of course, came out this week and talked about

the future imbalances in social security, so i'm really pleased today we're joined by a bipartisan pair of members from congress to talk about the issue and a panel of experts following that. social security reform is probably not going to happen in an election year, but that doesn't mean it shouldn't because this is a problem that we have known about for so long, and as it continues to get closer to us, it means the choices we face are more difficult. and if there's one thing i've always thought working on this issue and even realizing how contentious it is, is when you look at the numbers, we should be able to agree. we need to be talking about how to fix social security. perfectly legitimate we're going to disagree about how to do it, but it's a discussion this country should be having because it's so important to the lives of so many people who depend on the program. though it's 16 years from now when the trust funds will actually not be able to pay full benefits, that's a really short amount of time when it comes to

a retirement program. in fact, today's 51-year-olds will be reaching normal retirement age just at the time the trust funds aren't able to pay full benefits. as we found in the trustees' annual report, this is the first year the program will now not be able to pay full benefits. so it will be facing deficits internally forever, as it starts to draw down many of its assets. again, there's so many choices for how to fix the program. one of the things we have on our website, crfb.org, is one, something where you can plug in your age and find out when benefit cuts will be coming and how much they would be. and probably even more productively, after we scare you, then more productively a whole simulator on how to fix the program. there are many, many options. in fact, this is a simulator that's been used by members of congress to put together proposals for how to fix the program. i think it's really important to engage people around the country on what they think would be the smartest reform so that we can start that discussion moving forward towards fixes. so in that vein -- that's why

i'm really pleased to be joined today by the two members of congress who are going to kick off this panel, both of whom have played very productive discussions in how to fix social security. congressman larson is the ranking member on how ways and means subcommittee on social security. and this event actually came out of a discussion we were having because listening to him and the proposal that he has for how to fix social security i found inspiring because it was a member of congress who was out there talking about the issue and had a full plan to reach sustainable solvency on his proposal. he's done a ton of work, taken a lead in starting the discussion, including solutions on the issue. we'll be joined by tom rice, who's also ways and means and budget and a recipient of our fiscal hero award in past years, which comes from leaders of congress who are willing to make hard choices when it comes to paying for policies and putting forth things to make proposals. so this is going to be great to have a discussion from the people who are stuck in the political arena where this is a

very contentious issue, but also those who are really true to the numbers and understand how important it is we get started on fixing this program. so i'm very excited to welcome congressman larson. thank you. [ applause ] >> well, thank you very much, maya. what an honor for me to be here this morning, especially with my good friend and colleague tom rice, who i didn't realize you got that award, tom. congratulations as well. and i travel around the country talking about the issue of social security, and i always carry two props with me. one is the actuarial report on our proposal that i'll review in a second. the other is this starbucks coffee latte, we'll call it. you'll see how that comes into play as well. the sense of urgency here with regard to social security should be obvious to everyone.

10,000 baby boomers a day become eligible for social security. do the math. 10,000 a day, 7,000 a week, 280,000 a month, 3,000,360 a year. the sense of urgency, as it does and concerned most of our concerns, also does congress. i'm pleased to work on the ways and means committee with tom and others who would like to see a full debate on this issue. yesterday we had steven goss the actuary before congress. actually, there are two plans that solve this issue. one does it by virtue of cuts and raising the age. the other one, our proposal, social security 2100, i'd like to address and talk about today. because i really feel -- and i believe -- i forget who in the organization.

i think it was mark goldwin who said it's time for the demagogues on the left and the right to put away the talking points and start working together on a solution that does right by our grandchildren, our children, our current retirees, and the clock is ticking. of course, he's right about that. and that's why we have to focus on this. one of my contentions is as follows. i had this discussion with maya. social security is not an entitlement. the citizens of this country know it. it's not an entitlement. it's the insurance that they paid for. and they know this because all they have to do is look at their paycheck and see fica. what does fica stand for? federal insurance contribution. whose? yours. so the citizens of this great country of ours understand that they're making these insurance premium payments. now, i ask you, oftentimes

government is criticized for not become run more like a business. well, since this is an insurance program and since it's a federal insurance program, social security, shouldn't it be run more like a business? we think so. but when was the last time the premiums, insurance premiums, were adjusted in social security? tip o'neil was the speaker. ronald reagan was president. but they came together bipartisanly to come up with a solution. the problem is they didn't index it enough as they were projecting going forward. but they did solve the problem initially by coming together and coming up with a solution, understanding that this is an actuarial problem at its core. i ask you, have any of your insurance premiums gone up since 1983? think about that for a moment.

since 1983, there has not been an adjustment in social security, yet people consistently pay in and we have reserves in social security but not, as we learned from the report yesterday, enough to sustain us by law for the 75-year period that social security should be. our proposal does that. we make sure first and foremost with this -- and don't trust me, take it from the actuary -- that we extend social security beyond the 75-year deadline but also recognize we have to enhance the program. primarily because we have far too many people in our country, most notably women, especially women of color, who are retiring with social security as their only source of income and retiring into poverty. in the wealthiest country in the world where all you have to do is make an actuarial or insurance adjustment, doesn't it make common sense that we would

make that adjustment on behalf of people, especially women who are out of the work force, so that we could, oh, yeah, rear children and raise them. and also, while they were in the work force were earning 77 cents to their male counterpart's dollar. so this equity adjustment has to take place. we do that within our bill, making sure that the new floor for social security becomes 125% of what the poverty level is. we also expand benefits across the board by 2%. we also incorporate into that thinking an aarp concept, which is cpie, consumer price index elderly and the actual cost they'll incur in old age. rather than having a call calculated on the cpi alone, to really focus on what the actual cost of seniors are as opposed to change cpi, which came out of

the simpson-bowles committee, which would hurt seniors going forward and give them less money the longer they live. i don't know how that makes sense, but nonetheless, that was the proposal. we also provide a tax cut to seniors. how, you might ask. well, because back in 1983, we did not index appropriately. so if you earn more than $24,000 if you're single and $32,000 if you're a married couple, social security becomes taxed. by moving that to 50,000 and 100,000, 11 million seniors currently will receive a tax break on their social security. and with many of them still wanting to work to be productive or out of necessity, we also find that this is a very important proposal. so the big question then is, well, how do you pay for this, congressman? well, we pay for it quite simply. doing what actuaries would do.

if you took a look at your fund and realized you haven't made an adjustment since 1983, how about if we adjust it by making everybody contribute an additional 1%. by that, we mean both the employer and the employee. it's the way the system works. but that contribution, even at 1%, represents a lot of money. so we phased that in over 25 years so that it kochicomes oute 0.5%. or to make it easier to understand, if you're making $50,000 a year, it would cost you 50 cents a week in order to fix social security. that's where this starbucks comes in. i was in broward county, florida. i said, how much do you think this starbucks latte costs? every senior in the place knew it was $4.50. or nine weeks of social security payments. now, the other way we enhanced

the program is we lift the cap on people with incomes over $400,000. even at $400,000, what we're proposing for social security, it costs you more a week to buy this starbucks latte than it would to fix the social security program with all the enhanced benefits that we've just laid out. and why is that important? it's important, and you know especially here, because we don't increase the national debt. we pay for it. it's an insurance program that needs to be actuarially adjusted. if you do so in an incremental fashion, you can both expand the benefits and provide not only current recipients but future generations. again, how do we know? because the actuaries have taken a look at it. yesterday under testimony in

asking steven goss about every aspect of the program that we put in there, he asserted under oath that, yes, these are actuarially sound, and they're sound beyond the 75-year requirement. that's what i believe we owe the citizens of this country. as was pointed out, the draft dropped the acrimony on both sides. roll up our sleeves like ronald reagan and tip o'neill and come to a solution on something that should be quite easily resolved. when i'm out on the tour and talking to people and they say, well, why hasn't congress acted on this? and quite frankly, because there's an ideological divide here where some feel very strongly that social security is an entitlement program. it's not. it's an insurance program. it's an insurance program that's easily fixed by just making

sure -- and we also scrap the cap on people making over $400,000. every year until about 2044, that cap will increase until we get to 400,000. but it does give a little window of break for people in the middle class. so that's why we asserted both those. it's actuarially sound. it gets the job done. and it will be there not only for current generations but future generations as well. i thank you for the opportunity to be here and look forward to listening to your comments as well. [ applause ]

>> thank you to everybody for having me. thank you, maya, for your hard work and focusing people's attention on our nation's debt problems. it is so very important. it is fundamental to every aspect in life right now. social security is one of the drivers of the debt. not the biggest, but it's one of the drivers of the debt. i want to focus on -- yesterday i was asked to be on a fox business news interview. some folks here came up and commented to me about the interview when we started. i just wanted to focus on that for a second. the interviewer was -- he was speaking with his co-host, and he said, do you think you'll ever see one dime of social security benefit? she said, no. he said, i don't either. then he asked me, he said, you know, what you guys have done with social security is kind of like what bernie madoff did, and he's in prison now. that's exactly what the guy said

to me. you know, growing up and going through my professional life and really not focusing on that, focusing on trying to provide myself a retirement when i retired, i really wasn't sure i'd get social security because i read about it all the time in the papers and in the press. it was always negative about the prospects of it. but once i got older and really studied it and got here and looked at the stated of it, i can tell you without a doubt folks back home, i got a lot of seniors in my district, myrtle beach, south carolina. everybody from mr. larson's district is retiring to my district. i can absolutely assure you social security is a promise that will be kept. it is golden. what they say right now is the social security trust fund will expire in 2034. sounds scary, is scary. but it's not that hard to fix it. it will get fixed. it's politically inconvenient to

fix it, which is why we haven't dealt with it. it's not so much about ideological divide, i don't think. i think it's more about whatever you do, you're going to affect one group or another. when i looked at this two years ago, i was coming up with a plan -- i wanted to come up with my own plan. there are two plans that exist right now that i'm aware of to fix it. one sam johnson has, which basically cuts benefits, raises the retirement age, cuts the initial benefit by spreading out the number of years that you use to calculate the initial benefit, and it does change cpi. changing cpi, mr. larson said, is one of the proposals that came out of the simpson-bowles bipartisan study group. it's the only proposal that i know that barack obama made to try to fix social security. it doesn't fix it. it fixes a small part. but it's one way to -- it's one of the variables. there are a limited number of variables.

it's just a math problem. you have too much money going out. the money going out is higher than the money coming in. you either got to get it from one source or the other. you got to increase the money going in or take money away from the money going out. it's not that complicated. so i don't think sam johnson's proposal to do it all by reducing the money going out it politically feasible. i don't think mr. larson's proposal of doing it all by increasing the money going in is politically feasible. in the end, everybody's going to have a little bit of skin in the game. and that's what ronald reagan and tip o'neill did. when i first started practicing law, i was a tax lawyer and an accountant. numbers are near and dear to my heart. in 1982, i believe the maximum wage on which social security was withheld was around $20,000. well, today, you know, when you say it's not indexed, it kind of is because today the maximum wage is $135,000 or roughly

that. so five times, six times as much as it was when i started in 1982. so it is indexed. there's a whole lot more tax being withheld. just about every year it goes up some based on the inflation rate. when i first started looking at this, i knew that for anything we did, you know, had to be politically feasible, we had to get broad consortiums on board. the first people i call was aarp. they're going to be mad at me when i tell y'all this story. so they sent some folks over to my office, and i had a computer program set up that had the variables that you could use to fix social security. retirement age, the call on the payroll tax, the amount of the payroll tax, change cpi, the adjustment of the thing every year. i said, let's look at these variables and let's see if we can come up with something that y'all might be willing to help with because you represent the biggest group that's affected by this, seniors.

young people don't even think they'll ever get it, although we're going to make sure we do. we're going to make this promise golden. i said, i need your help because i know if you're not on board up front, then we have no chance. they said, oh, we don't do that. they said, you come up with your plan, and i'll comment on it. so this was about, i don't know, june or july two years ago. it was right during the process of the primaries, just at the beginning of the primaries. maybe three years ago. about two months later, aarp started running commercials on tv. they said, tell your candidate to take a stand. ask them how they're going to fix social security. they wouldn't take a stand. this is a politically difficult issue. the math is not that hard. this is one of the easier issues, i think, to solve. every presidential candidate said social security and medicare are fine, which

actually they're not fine. but every presidential candidate said they're fine because they wanted to get elected. i think the president knows that it's not fine. i think barack obama knew it wasn't fine. i was really kind of surprised barack obama didn't offer more solutions in his second term when he wasn't up for re-election. i suspect that's what's going to happen with donald trump. i suspect he's going to participate and try to fix social security, like ronald reagan did, but i think it'll be two years from now. just speaking political reality. so to speak to the trustees' report yesterday, people were talking about as glad and doom. i was pleasantly surprised. it was better than i thought it was going to be. i mean, there are assumptions for the exhaustion of social security did not change year to year. the only thing is we were one year closer. what did change was the disability portion. with the stimulus that's behind the economy, with regulatory

reduction in the tax reform act, the economy is outperforming their projections. if the economy outperforms, then social security gets more revenue, then social security lives longer. if the economy outperforms, unless people are on disability, they go back to work, then social security lives longer. so the social security administration projects that our economy is going to perform at 2.4% for the next ten years. when i first got to congress in 2013, they were thinking cbo was saying it was going to be 2.8% or 2.9% over the next ten years. the next year they lowered it to the 2.5. the next year they lowered it to 2.2. it got down to 1.9. in fact, i asked the director of cbo, why is this happening? she said, we're not really sure. i think it was the burden of a lot of the regulations that were being put on businesses.

since that stuff has been lifted, the economy is moving up, and now cbo tells us this year they expect the economy will grow at 3.2%. so that's substantially higher than what the trustees are projecting. this year the trustee moved their projection for the exhaustion of the disability funds from i think 2024 to 2028. four more years. people are continuing to drop off of the disability rolls. two years the disability rolls peaked at 9 million. today it's 8.5 million. today there's more jobs available than there are people to take them. so if we can continue to entice people to get off of disability and get back in the work force, that lengthens the life of social security, makes the problem easier to solve, makes the math easier. if we can continue to have gdp outperform 2.4%, which is what they're projecting now, makes

social security -- gives social security more money, makes social security last longer. so the social security report yesterday, if you really think about it, was much better than we thought it would be. i think, you know, the atlanta fed right now is expecting 4% plus for the next -- for the rest of the year, growth in gdp. if that happens, all these problems get a lot easier to solve. so again, i thank you for coming. i thank you for having me. and with that, i guess we'll move on next. we take questions or what do we do? [ applause ] >> thank you so much. i'd like to invite the panelists to come up and join us.

>> yes, the button. good morning. hey, everybody. this is a great crowd. i love it. my name is lisa. i'm with the pbs news hour. i cover congress. i read a lot of very lengthy reports, often very late at night. during the day, usually every hour, we have a new breaking story. thank you for coming. i'm thrilled to be moderating what i think is a very important panel. in thinking about this event, i was actually thinking about the year 2002. that's 16 years ago. in 20 2, one of the biggest movies was "lord of the rings: the two towers," my personal favorite "lord of the rings" movie. again, i'm up late at night a lot. 16 years was good for that movie. but also in 2002, something new

happened in europe. they introduced the euro. 16 years has not been enough time for the european union to become fully stable, to become fully cohesive. also in 2002, the u.s. was in afghanistan in a country that would become increasingly unstable. 16 years has not been enough time to eradicate the taliban or to stabilize afghanistan. so think about that in terms of the 16 years we have for social security to become solvent. it is not a lot of time, especially to deal with big problems. that's why you're here with this panel today to talk about the future and the report that came out this week. it is my pleasure to introduce jason. also, kathleen, center for bucket and policy priorities. and africa you know maya mcginness. i'd like to invite our panelists to say a little bit about themselves.

>> thank you. i'm currently at george mason university, at least through the end of the month. then i'm joining the full-time faculty at johns hopkins. any comments made today reflect none of my employers, current, present, past, future, anyone living, dead, et cetera. >> i'm kathleen at the center and budget policy priorities. before i came to the center, i worked for many years at the social security administration where this guy was my boss. >> well, you already heard from me. i'm maya mcginness. i will take my second to say i felt a lot better after listening to the two members of congress. i think this debate seems so contentious in the way that it normally plays out. when you sit down and have a chance to hear from members who are willing to work on t i'm glad we're kicking off with that, sort of setting the stage with some optimistic willingness to engage. >> and we'd like to take your questions.

some of you already handed in a few of these. if you had the chance to write down any questions, please pass them over. i'll ask for hands at a different point if you need to. just raise your hand, get someone's attention, and pass off the questions. i want to start first of all with your impressions of this latest trustees' report. what stood out to you? some things are different, some things are not. jason, i'll start with you. >> we have three minutes to give some remarks. there's not a lot to cover. i want to take what i think -- >> take your time. this is important. >> oh, there we go. >> well, don't go crazy. be fiscally responsible, please. >> fair enough. i know kathleen is going to talk about the retirement program, so i want to focus on the d.i. program. there was a lot of change in the insolvency date for d.i. i think it's important we take this in context. the d.i. trust fund insolvency date is now 2032. last year it was 2028. the year before that, it was 2023. before that, the trust fund was going to be depleted in 2016. we almost ran out of money in the trust fund in 2016.

but the bipartisan budget act of 2015 passed a payroll tax reallocation. so now currently, we have a little bit less money going into the retirement trust fund, more going into the d.i. and allocation. the total didn't change, but the allocation did. that ends at the end of this year. in 2019, they go back to the original split. it's important to think, why are we getting here? back in 2010, there was a lot of discussion about whether or not the then rapidly increasing disability applications and awards were going to be a constant trend moving forward that were going to bankrupt and deplete social security trust funds in 2016 and what did we do at that point. now, of course, we look back and since 2014, we've seen a decline in the applications and awards. now we're asking, is this going to continue? to congressman rice's point, the economy has changed. when we're in a period of basically full employment or close to full employment, a lot of people who could be at the

margin were able to find jobs. the trustees have told us this is a temporary situation. it's not going to last forever. we're going to probably go back to some historical norms when it comes to the application and allowance rates, which means the d.i. trust fund could get worse as soon as we have a slowdown in the economy or a recession. so we can't look at this 2032 date. that's way in the future and let's not worry about it. we have to focus on reform for the retirement program but also d.i. we can't get complacent. we have to focus on these issues now. and just to give a highlight on why this is important, and both members of congress pointed out the need to act now as opposed to later, just to give you a sense of the magnitude, if we were to focus solely on the tax side, say we were going to solve the social security solvency problem by raising payroll taxes, that would require today a permanent payroll tax increase of 2.78 percentage points. so from your 12.4 that's going to social security, add 2.78%. that would get you at 15.1.

that's a 22% increase in your taxes. who wants to go to your constituents and say, who wants a 22% increase in your payroll taxes? no one wants to do that. if we wait until the trust funds are depleted in 2034, then that changes to a 3.87 percent an increase. that's a 31% increase. again, imagine going out for re-election. no one is going to do it. flip this around on the benefits side. if we were to do this today, it's about a 17% reduction overall for all current and future beneficiaries. if we wait until 2034 a, it's a 23% reduction. it's not going to happen. that's when it becomes politically hard to do this. the only way to get reform is having an open and honest debate, but realizing it's not going to be all on the tax side.

it's going to be on the benefits side. it's somewhere in the middle. there's got to be a compromise. the sooner we do that, the less the magnitude will be on future generations and current beneficiaries and the more fiscally responsible we'll be. >> kathleen? >> well, the trustees reminded us earlier this week that social security has a real but manageable long-term shortfall. that shortfall amounts to about 1% of gdp over the long-term. as congressman rice pointed out, you know, it's a math problem. it's a math problem we can do. 1% of gdp. it's either more money in or less money out. however, we always have to bear in mind that it's more than a math problem. nearly every american, including all of us, are going to turn to social security at some point in our lives when we reach old age, when a breadwinner dies, when we're too sick to work. for many, many, many americans, social security is their primary or even sole source of income. so i, along with most americans

in both parties, think that we should solve this primarily on the more money in side. when careful studies have been done, for example by voice of the people, i think they're here today, and by the national academy of insurance, talking to americans about what they would prefer, trading off the different options, people overwhelmingly choose to solve this problem primarily on the revenue side. i think it's justified for policy reasons as well. social security benefits are modest. recent trends justify it since 1983. social security's tax base has eroded. finally, we're still phasing in some of those cuts from 1983. the full retirement age is currently rising from age 66 to age 67. and that's a 7% across the board cut that still is not fully phased in. so another question is who should be affected. i agree, everybody has to have skin in the game. i think we should focus primarily on higher earners because of those trends i

mentioned, including differential mortality, meaning higher income people tend to live longer and draw benefits longer than lower income people. but we just can't do it only on high earners. either on the tax side or on the benefits side. everybody has to have some skin in the game. we should consider doing things like raising the rate, as congressman larson mentioned, and broadening the base. and how should we do it? i really think we should do it comprehensively. the conversation should include both the disability trust fund and the retirement and survivors trust fund. those programs are very closely linked. while we're at t we should consider some targeted enhancements of the kind congressman larson mentioned, as well as reopening ssi, which is really out of step with the times. finally, when should we do it? i agree. we do really need to start talking about this now and start fixing it in the near future, sometime within the next decade, before we reach the 11th hour. but we don't want to rush into

it. this is really complicated, and it's really politically complicated because these are people's lives. we want people to be able to live their most vulnerable years in dignity, and we want to get broad buy-in. finally, it's going to require bipartisan legislation. we cannot grow our way out of this problem. and we can't do it on a party line vote. so we need to be reasonable, constructive, and come together at forums like this and come up with some solutions. >> maya, i want to get your reaction to everything they've said, but i also want to ask you something about treasury secretary steve mnuchin said. he said that the administration's economic agenda, tax cuts, regulatory reform, improved trade agreements, will give the long-term growth that's needed to help secure these programs and lead to a more stable path. what do you think of that theory? and you touched on this a little

bit. growth solving this problem. >> okay, great. i'd love the chance to comment on his comments. and growth is always advantageous. you always want to find ways to grow the economy. but i found his remarks more mt. camp of the fiscal free lunches, which i'll talk about in a moment. we don't have to make any choices, this is all going to magically get fixed. we're going to have to make significant policy choices, which are manageable, but harder the longer we wait. the other thing i was somewhat concerned in the tone of his remarks and others is look, this shows we're okay for the immediate time being. we don't need to worry about this. this to me is the kicking o of the can we've seen for so long. let me make four main points. one is the one that i made in the opening remarks, which i really hope -- it is time with this trustees' warning about where we are the in the timeline of needing to get this done. i hope we can move from a debate, which is a very contentious debate and no way to have a national discussion, from whether we need to do to, yes,

we need to do something, but there are many, many legitimate differences on what we should do. so let's start having the conversation. there's a couple buckets of potential reforms, including raising revenues, which kathleen just mentioned. i would say raising the tax base is an interesting one that's not talked about enough. i think there's a lot of potential that could be done there. slowing the growth of benefits. then you think about should that be done across the board. no, it should be done on the higher end so we can reserve benefits. but again, we need to play around with these levers. looking at retirement age, which is something that makes sense when you look at the fact that when the program started, retirement age was 65 and life expectancy was 62. those things have changed dramatically. the slow increase to 67 in the retirement age doesn't reflect that. so there are ways you can thoughtfully maintain the progress of the stock market but also make changes reflecting that. figuring out how we index benefits. and on the other side, expanding

benefits for those who most need them. i hope we switch to talking about which of those make the most sense. three other points quickly. waiting until the last minute is too late. i thought jason made that point clearly. if we wait until the trust funds aren't able to pay full benefits, the cost of reforms goes up by about 35% or 40%. there's no good reason to do that other than people trying to duck those choices. already we're getting to the point where it's going to be harder and harder to exempt all existing retirees, which has been a political programs for a long time. i don't think people are eager to walk away from. it's really helpful in many ways that social security is its own program and off budget, but it's also helpful to think about in the context of the overall budget. we're going to have to have a package that changes the growth of benefits and raises revenues. i dent thion't think there's a possibility for one that doesn't look at both. we're also going to have to look at those things, spending and

revenues, when we're looking at dealing with the national deficit and debt, which are unprecedented levels. on top of that, there are a lot of new and/or unmet needs in this country from investment in infrastructure to human capital to recognizing that our economy is shifting dramatically in terms of things like the future of work and ai. we should be looking another t our resources and think, where do we want to be putting our resources for the future? what are the best long-term investments we should be making? finally, i mentioned fiscal free lunch. i am really worried that right now we are in a period of fiscal free lunchism where first we had tax cuts, which we didn't pay for. then we just had a big spending increase, which we didn't pay for. and you're hearing more and more arguments about why you don't need to do things, growth will fix it all, and yes, growth is very helpful. i'm concerned that stimulus during a period of economic expansion does not lead to sustained growth. in fact, i'm pretty convinced it does not. it's more of a short-term burst. and we're going to need to find structural improvements that

will have long-term growth, but again, this comes down to policy. the longer we wait to make those choices, the more difficult and onerous they'll be while we still have a window now to make them in a smarter way. >> let's jump into what seems to be the core of the problem. smart people in this room, smart people on this panel know the options. i think you even see -- we heard from members of congress of potential solutions here, a combination of paying more and seeing fewer benefits, at least for some groups. ist janua-- jason, i want to as about the politics. is either party moving in one direction? we heard about representative larson's bill. it has 170 co-sponsors on it. correct me if i'm wrong, i believe they're all democrats. that's right. he's hoping the two of them will talk afterward. is either party moving in a direction? we saw president obama with the grand bargain, sort of offer some benefit cuts to social security. we haven't seen really that

happen since. where do you see the parties right now on this issue? >> sure, ask me the political question. >> anyone can jump in. >> i think one of the issues we have with politics is the people who are voting on the issues. there's a lot of confusion about the magnitude, the importance of the problem. a lot of people i think look and say, this isn't going to happen for 15 years, there's no worry, why should we bother about it now? that just kicks the can down the road and allows members to do so. when we had a fiscal issue like the debt ceiling, all the sudden there was a focus. we had this problem with the fiscal cliff. i think that's where we're headed when it comes to social security reform. seems like every year we're up here raising the alarm bell. then we'll be up here next year wondering why it hasn't happened. to congressman rice's point, maybe in the second year of a presidential term is the time to do it. it may also be something where you see politically it might take a democratic president to offer social security reform, which to your point, it was surprising barack obama didn't take that chance to do so. with each passing year, we miss

an opportunity. i'm not someone who wants to solve all the problems on the tax side, but as kathleen mentioned, i was the deputy commissioner and chief economist. in that role, i was the secretary to the board of trustees. back when we did the reports in 2008, so ten years ago, if we had just raised the payroll tax cap, just lifted it altogether in 2008, that would have solved the 75-year solvency issue. we don't have that option anymore today. now it covers one half or two-thirds. so you still have to do more. the longer we wait, now we're like, we can't raise the payroll tax cap. we do need to protect the most vulnerable. now all these options we're doing become much, much more expensive because we failed to do something about it ten years ago. how do we convey that message to the public so they get the sense that urgency is here today and not in 15 years? >> this is john duke here in the audience. very similar question. does the american public want to

salvage social security ? do they value it? if so, why isn't it politically feasible? kathleen, i'll give you that one. >> sure. people have definitely studied this, and i think overwhelmingly people -- the american people really value social security. they're willing to pay more to strengthen it. but the problem, as congressman rice pointed out, is it's really difficult because it means people are either paying more or getting less. everyone is willing to always put that choice off until tomorrow. so we've put that choice off into another tomorrow and another tomorrow and another tomorrow. i'm also not optist mystic thmi this year is going to be the year or even this administration is going to be the administration, with one news story breaking every hour. it doesn't give us the space to have the reasonable and constructive discussions that we're having here and educating the populous, as you said, that's so important in order to really get people to buy into a solution. of course, the bipartisanship that will absolutely be necessary doesn't seem very plausible in this moment. >> can i justed a, i have one

other thing that's important. congressman larson mentioned this. framing is very important also in how you sell this. if you do surveys, you ask people, are you willing to pay more in taxes to make social security solvent? vast majority say yes. are you willing to pay for a cup of coffee a week? even i'll raise my hand. if someone says, are you willing to pay a 30% tax increase? no. it's sort of like this idea when you change the framing, you get different answers. are you willing to take a surgery where your chance of life is 90%? sure. you want to take a surgery where your chance of death is 10%? no. different question, different answers. right now we have these by fur kated sides that sell one language versus another, and that creates confusion. we really do need to create the space where we all can come together and say, here are the facts, here's the math, what are our priorities, our principles, and have members on both sides

where they can come together in a bipartisan way and have that protection from the other side. >> maya, you talked to these members. in public sometimes they tell you things about what they really want, what they can really do. i want you to talk about the po politics here. it feels to me there's a real leadership vacuum. i was amazed talking to the most fiscally conservative members as the omnibus was passing, the tax bill was passing, who were just v shrugging off the deficit effects. what's happening with leadership here, and what's happening with both parties that you talk to? >> yeah, that is a really thoughtful question. i do think the bad news is there's no leadership on this right now. our president, when he ran for office, and since then has also promised no the to fix this problem.

it is very hard to make changes that are going to involve hard choices unless there's presidential leadership. i think that's made it more difficult. politically, no matter what, no matter what framing one chooses, the other party has the opportunity to reframe it in the other way. so there's always the chance to demagogue on this issue. so it's very vulnerable. i think the political leaders see the downside of moving forward and saying, listen, pointing to the things we're pointing, that we're doing damage to people who depend on this program by waiting. the bad news is i agree with what you're implying, which there really is not the political leadership we've seen to this, on social security in particular, on fiscal issues, and even broadly on alerting the public to how bad the fiscal situation is, whether it's overall debt and deficit and what we're doing to make it worse or individual programs like social security, medicare, or other programs we need to make changes. the good news is what you do hear behind the scenes is there's a lot of willingness to do the hard work. and on social security in

particular, i think this is the program where there's the most willingness to compromise. this is the issue, if you put republicans and democrats in their raise taxes, raise spending, it is more nuanced particularly on social security because i think people realize that they will have to compromise. and that you really can't do it all on one side or another. so that good news means that if we can switch on the leadership and part of that comes from people saying i really want this program to be fixed, that there is support from a lot of political members on both sides for this one in particular, it may be easiest to do something on social security first to kind of take this and put some plan to fix it, a commission or working group or, frankly, we know the answers, we could get right town and fix this, we've been working on it for a long time. but it may be easy to work on this one first because there is that willingness.

>> jason, i want to get a little wonky right now. let's start with the revenue side. i wrote down that more money this is seen as the do you agree with that and where does the money need to come from? people talk about the pay rroll tax. >> let me answer that by saying that the solutions initiative has a nice book worth reading that goes through a lot of things from how we can maybe offer private insurance as part of this, administrative law judges, savings. and another is a bipartisan policy center did a commission on the retirement savings future. and it was bipartisan. and their goal to answer your question was to try to find basically a 50/50 split between bringing more revenues in and making changes to benefit to get

solvency. and they did it in a way that actually improved poverty for older americans in the future. and it helped the most vulnerable americans. and when you think about revenues, you can't just do it all one side. >> right, but how much should be revenue is going to be the question. >> so no one mentioned it, but the idea of a means test of social security. again, that gets me thrown out faster than a member of congress gets thrown out of a room. but we do have a back door means test. we tax benefits for upper income workers, but not 100% of it. so maybe if we're trying to go for higher income earnings, we tax 100% of it. maybe look at the payroll tax. maybe we find other sources. henry aaron suggested looking at the estate tax, bringing that into some sort of revenue. so we do need to think holistically about what sources of revenue we can get. there are some members who will

be name ll bless but think perh instead of a payroll tax, why not a carbon tax or value added tax. right now there are disincentives to working when it comes to social security payroll tax. it makes labor more expensive. if we got rid of it, labor is less expensive and your tax consumption or carbon to fund social security. that is another idea. >> do you think there is any potential vacuum to that? >> again, the point is we need to have a discussion about -- what you if you raise the payroll tax rate, i've now made will i be more expensive for an employer and also made it less attractive to someone who wants to work. >> but we're also making old age more expensive if we don't do that 37. >> but that is on the outgo side. you're talking about revenue. so if i change the revenue source from payroll to a value added tax or carbon tax, i get a broader base, more revenue and i

get rid of the perverse incentives for labor. >> and just to reinforce that point, you do want to tax the things that you want less of, not the things you want more of. so taxes wages is far less desirable than taxes something like carbon. so as big an idea as it seems, i do thinks it possible in the coming years that that enters the discussion. >> and we should be talking about other sources of revenue. >> and what else do you want to add, katherine? what doesn't get discussed enough here? is there anything? >> i mean, so one idea for broadening the base is that over time the cost of health care as we go since 1983 has really sky rocketed and employer sponsored health insurance, the premiums are not subject to social security tax. so that is one idea that we've even on a bipartisan basis, to apply the payroll tax to those premiums that your employer pays on your behalf. if you buy your own insurance or

as people increasingly do through the aca, you have to pay that tax already. so this would be equalizing treatment regardless of how they get their health insurance. so that has bipartisan juice. and i think it is interesting to look outside of payroll taxes. the traditional focus of social security. but i was nodding and smiling when you were talking about carbon tax. if we could get to a place where that was realistic, i think that would be really worth considering. >> so let's talk about the benefit side and i'll let any of you jump in. what do you think is realistic on that. benefit cuts are coming right now as the system stands. just a he question of how much and how we mitigate or what we do. can you talk about this idea of just bringing down the benefit itself versus changing who gets that benefit, changing the retirement age, the benefit base?

tradeoffs there. which of those things helps the system more and how do those things work. >> i'll jump in because i actually find that it is interesting that you are worried about talking about means testing because i find whenever i'm talking out in the public, we do talks around the country, if i don't mention means testing, it is almost always the first question that i get from the audience. someone will stand up and say i want social security to be there for my kids, for my gland krand. i don't think i'll need it, so i'd be happy to give some of it back if i knew that it was going to be there to help preserve the program. i think if they are doing well, that they would be very interesting to step up and share. i often think about kind of could you get a small symbolic movement of people saying give it back. they want to give theirs back. the ceos of this country for instance just to show that people want it -- >> or starbucks. >> yeah.

right. give back your starbucks coffee. so i think that there is a lot of willingness for that. and i think you want to make sure you build in protections. there are a lot -- if you do end up raising the retirement age, you want to strengthen protections where people work in jobs where they can't work longer. so you want to shift to protect against risks. i think that is so much of what our economic challenge is going forward. our economy will be changing more rapidly. people will be getting through the dislocations, people will be going through rougher times. and i think figuring out how to ensure against a lot of risks in our economy is one of our biggest goals going forward. also when you were talking revenue versus spending, my projection is i think when you look at these different policy, we will probably have a solution which relies much more heavily on the revenue front, revenue pieces in the front because it is easier to get a lot quickly if you lift the payroll tax cap or something, but then relies

more on slowing growth of benefits over the long term where some of the savings can compound and give people more time to adjust. >> kathleen, i've read some of your writings in the past about raising the retirement age as a way to basically take away benefits. you can talk about that? do you think that is ultimately necessary or do you think it is avoidable? >> so this is one of the most misunderstood areas of social security policy. so i appreciate the opportunity to clarify it. when people think about raising the retirement age, they think of it in terms of eligibility. like i will have to wait another year to get benefits. that is not how it works. there is a sliding scale of benefits. so if you retire -- if you raise the age by one additional year, which we're in the process of doing right now, at any given age you will get 7% less than you would have otherwise without that change. so it means less benefits in your social security check.

and so i think first of all there is just a public misunderstanding. and the other thing the common justification is people are living longer. well, yeah. some people are living longer. but not everyone. about half the population, that high income half, has gotten some pretty impressive gains in longevity over the past decades, but the bottom half, nothing. and the very bottom, we've actually seen some backward progress. and so there are shorter lives in the united states of america. and so that is really trouble willing and this is the kind of stuff we have to grapple with, trying to stay o top of the trends. >> and? goes back to the framing and language. one of the things --back to the language. one of the things -- i didn't change it when i had a chance, but we call it the normal retirement age. what makes it normal al. and then the early eligibility

age, that's what kathy mentioned, age 62. a lot of people think oh, i'm now eligible for social security, it is the early age, i'll take it. they don't understand that they are getting a reduced benefit. why don't we just change the nomenclature. we call it the minimum benefit age. and then people might ask the question. we were going through field offices asking people why they were here and they were saying i'm here to get benefits. i'm 62. do you realize you're getting a 25% reduction. what? no. and then they walk out. so they were like why are you doing this to us. if you waut you wait until 7 it 30% increase. so we need to change the nomenclature and that doesn't require an act of congress. it is now your minimum benefit age is 62, but that is a reduced benefit. and the other thing i want to

talk about is rep larson mentioned this, i had been trying to talk about social security as an insurance program for 15 years. because people do think about it as an entitle tment i paid in, m entitled to it. you talk about insurance, insurance is designed to mitigate risk. the program technically is the old age survivors insurance program. survivors in case and originally it was old age. and back then it was 65. if you made to 65, you've probably lived not more than are a year or two. if we know back to the insurance nomenclature, it allows us to have discussions about who really needs to be protected, can we increase the minimum benefit, what do we do for higher earners. those at the high end who don't need the full insurance value would get a little less and those who need more would get more at the bottom end. and we can start having that discussion if we use the

insurance nomenclature. >> and just a couple questions in the audience. one i believe is from leah young who is asking can you fix the critical problems this order to fix this problem, and she says for example reduce giant spending, abuse and sort of the broader approach to the way government spends. and then he with also hawe alson why are the trustees not considering removing annual cap. of course congress would have to make those decisions. not trustees. but i'll let you take either one. the blood question about the way congress spends which i think my mya touched on. is it inevitable that congress will always tend to spend more and not be fiscally responsible, or is will thewill therea way t that around? and how much is the eligibility problems here and fraud abuse,

how much of that is real savings, is that possibility in the system. >> it reminds me of the old joke nat party of fiscal responsibility is the party in the minority. >> it is not a joke. >> i think that sort of answers the question. it is really hard to talk about these -- when we have discussions about spending, it is irresponsible to say let's increase intending in one area and then say we have a problem with entitlements. you have to think holistically. and it is wrong to sort of say to fund one entitlement program we have to cut education spending someplace else. these are programs that have their own intent, their own purpose and design. and they have to be he reformed independently, but we have to look at the over all picture. but we can't ignore one just to solve the other. >> and i'll push a little bit on your definition of fiscal responsibility. i don't think that spending more is necessarily fiscally irresponsible. i think spending more or cutting

taxes and not paying for it is fiscally irresponsible. >> i didn't mean to say -- just seems that we are on a trajectory. >> but i do think those pressures from things like this enormous tax cut raise the pressure on social security even though it had nothing to do with social security. people suddenly look at the balance sheet and see the ginormous deficits, a technical term by the way, and they say now we're in this fiscal tough spot. you're in a spot of your own making. and it is not social security's fault that you decided not to pay for your tax cuts. >> let me completely agree with the fact that more spending isn't what is fiscally responsibility. fiscal responsibility has nothing to do with bigger or smaller government, it has to do with your willingness to pay for things othr borrow for actual reasons. we borrow because we don't like paying the bills. and also there are so much damage i'm afraid that the tax

cut has done both in terms of to our deficit and debt situation, but the to our need to reform sbiblgtsme entitlements. people will say we have a huge problem because we cut taxes. we won't fix it by fixes social security, but the truth is we also needed to fix social security before the tax cut, so it has undermined that very true argument. so this is why fiscal freerodes process. >> there is no such thing as a free lunch. there is no free health care, no free education, no free anything. we won't get into a discussion of the tax cuts. i think some of the reforms were good for some reasons, some things that had to be done. but that said, were they paid for. we are now get tolgt poiting to we're getting close trillion dollar deficits. if you look out ten years, we'll hit $1 trillion of interest

payments per year. $1 trillion interest payments have an opportunity cost, that is the cost of the annual fund for social security. so we'll be paying so much in interest we could fund social security on it. so we can't ignore the deficit. and right now we're in a very low interest rate environment. they go up one percentage points or two and all of a sudden it was 1.4, 1.6. now all of a sudden you are on education, infrastructure and everything else. so the debt is so important, that should also be one of our primary discussions. >> so we've been talking about the macro and sort of how government is looking at this problem. i want to think about the micro here and individual americans. right now about 60 million americans receive social security benefits of one form or another predicted to rise to something like 80 million americans by 2030. a huge group of people. many of whom will depend on these benefits. but this is also at a time where we're seeing that the way americans pay for their

retirement change. no longer are people getting pensions as a rule. in fact many of the younger people in this room don't even really understand what i'm talking about. what is a pension? you can talk about how does that play into this and the dependency on social security and could there be a political will that comes from people needing social security more and how do they realize that? >> i think the importance here is to think about holistically when you think about retirement security. remember the old three legged stool discussion? one third social security, one third was an employer pension and one third was personal savings. if the pension is gone, you've now got a two legged stool which is hard to balance. if you get rid of personal saving, you now have a pogo stick. so if we go away from the defined benefit world and a completely defined contributions, can we make it

easier for employers to contribute whether through state plans, like a public option like a thrift savings option, why not the public have that option too. maybe we change the tax incentives. right now you get a tax deduction for a 401(k) which helps higher income earners. why not change it around so it is some sort of credit that helps lower income earners. expand the current savers credit. so we need too think abounk to retirement security at all and change the other parts of the three legged stool to make retirement security better. >> and i agree with a lot of that. and i think we always need to keep in mind that for every -- almost every american, social security is the base of that retirement security. no matter what happens, you lose your job, you get hit by a car, your retirement savings gets wiped out, social security is always there no matter what happens and people hope to rely on other sources of savings and they hope to rely on pensions,

but those hopes don't always pan out and social security is there and it does protect people. so we have to talk about that first when we talk about retirement security. >> i'd agree it is the fundamental leg and that it is also there, a structure to help you protect againstf savings. and there is talk about an upcoming retirement crisis, but in many ways those numbers overstate the problem because they don't fully take into account the savings that goes on in 401(k)s and other things. so hopefully as we get better numbers we'll see that there is not as much urgency in terms of other areas of retirement. i think we've lost the culture of savings. it sounds old fashioned. the culture of credit replaced the culture of savings. but saving for big emergencies, big outlays in retirement is a piece of all of this and finding

ways to encourage it. i like savings mandates, but i know mandate is not a popular word. but more savings defaults, nudges, ways to encourage people to save. and i've been a fan of matches forincome savers. >> i want to take advantage of this smart audience that came today. and i see a lot of good age diversity in. someone brought this up earlier, i think representative rice, i want to see a show of hands how many people think that they will see social security benefits. some of you may already be receiving them. >> maybe the question is the opposite. >> yeah, let's do the opposite, who does that think that they will receive social security benefits. look around. that is a good number of hands. and all of the younger people in the audience. interesting. >> let me answer that one. when i was a deputy commissioner and i had to travel alone, but you sit in an aisle with three

people, what do you do for a living? oh, crap. i work for social security. and if it was appn elderly pers, they love it. and the younger person, why am i paying into it, i'll never get it. and i always had to explain. so under current law if congress does nothing, we ignore the problem, problem doesn't go away, we hit 2034, automatic benefit reductions happen. that is the default are by the way. it is not like we bore on rrow the general revenue fund. but i'd still get 75%. so it is not like you will get zero. you will just get three-fourths of what you were promised. so the program is not going bankrupt. you hear the term bankrupt, you should say that is not right. the trust funds are going depleted and if that happens, social security can only pay out what it brings in in payroll taxes which is about three-fourths. so unless congress decides to cancel social security, which i don't think anyone thinks that will happen, you will get something from the program.

we want to make sure that we're protecting the right people and that those who deserve it get it and we're not leaving people in poverty because of a reduced benefit. >> do you have closing thoughts? >> i take two conflicting thoughts from the number of hands that went up. and the first is that so many young people actually don't think that they are going to get it. and you are. but it does present an opportunity which is there is a way to make reforms where most people would actually end up doing better than they think they are going to. so if you are looking for proposals that you could have a lot of people support, i think there is some real promise there. if you say to people we're guaranteeing that you will get x percent of what the program today would have paid, that is a win if you think you are getting nothing. but the flip side of that and what i'm not comfortable with, this is in so many ways an intergen wrarag al issue. we're spending a lot of money, not paying for it and passing the bill to future generations. and that is predictably proceed

announced in something like an intergenerational program like social security, but the opposite of the american promise which is each one of us will try to leave the next generation with a better and stronger economy. and so while on one hand i see a good political economy solution there which is have the young kids bear the burden of this, i don't think that is right and i don't think that is our principles in terms of what we aspire to. so i hope that we can push a little beyond that. >> i want to say what a terrific panel, but also this should be a panel discussion in the committee. the fact that this issue is ever present and is not going away, and that there are no public hearings, congress should be about the vitality of ideas, look at the ideas you heard generated here. we have staff here taking notes because these are constructive ideas that should be implemented. minimally should have a public hearing and optimally a vote.

so congratulations. this was well done. >> and let's give a round of applause. thank you all. and thank you to c-span3. also go caps. l already thinking next year. >> that's right.

later today, world leaders at the official welcome ceremony of the g7 summit in canada. that starts at 11:45 a.m. eastern live here on c-span3. this week marks the 50th anniversary of the assassination of robert f. kennedy. >> these last few weeks he was enjoying himself. he really enjoyed getting out among the people. he enjoyed the physical contact. he refused police protection because he said that all the people wanted to do was to touch him, not to hurt him. >> this weekend on real america, on american history tv, watch the cbs news special report from june 6, 1968, the night robert kennedy died from gunshot wounds. >> they decided to transfer

almost to good samaritan hospital where the facilities were better for delicate blaine sur brain surgery. mrs. kennedy was in the ambulance with him.laine brain surgery. mrs. kennedy was in the ambulance with him. the suspect was grabbed by the two kennedy men and led by police back through the ball room and hotel. some of the officers had to protect him from the crowd, there were several kennedy supporters, bystanders, who were close to hysteria and there was concern for the suspect's safety. >> watch real america, sunday, at 4:00 p.m. eastern on american history tv on c-span3. coming up next, a conversation with the social security administration's chief actuary on the future solvency of social security and how economic and population trends will affect the program. from the national