trump. host: winning the 14th district over joe crowley. we have been speaking with david hawkings. you can follow him at david hawkings. his blog atcall.com. thank you. >> president donald trump will announce his nominee for the supreme court filling the vacancy left by the retiring judge anthony kennedy. watch on c-span or c-span.org or listen on the free c-span radio app. ware the chief act tue testifies to lay-ups about the program's solve ensy and long-term projections. this house ways and means subcommittee hearing is about an hour and 15 minutes.

>> good morning. the status of the social security trust fund. today we will hear from the chief actuary about the findings of this year's trustee report. i first became chairman of social security in 2011 and i have held that hearing many times. i have said that social security is in trouble and its problems will only get worse. back in 2011, the trustees told us that the social security trust fund would be exhausted in 2036. this year's report says the date is now 2034. two years earlier.

also back in 2011, the trustees told us tlt take $6.5 trillion to make social security solve end over the next 75 years. the year, the trustees tell us $13.2 trillion more than double that amount. and as you all know, social curity has been paying out more benefits than it receives in tax revenue. to make up the difference, social security would use the interest earned by the trust funds from the assets that they hold. however those days are now over, according to the trustees, social security is now paying out more than -- more than in benefits than it receives from all of its for the first time since 1982. this means we must now tap into

principal itself to pay benefits. this is a big deal, an important signal that time is not on our side. the trustee's report is critical to providing congress with information it needs to address social security's challenges. however in 12 of the last 15 years, it has been late. further subcommittee has looked into how the report is developed at past hearings. -- i ition, i know it may know many were surprised to see the report not reflect the benefits of pro growth tax reform that we see every day. more jobs, higher wages and a booming economy while historically the trustees have

been more rosy than others in their outlook on these areas. it is important to understand now and when -- how and when the trustees make economic projections that are the key to the findings in the report. it is clear that the public trustees play an important role in the development of the report. and these positions were created to make sure there were not any concerns with the objectivity and integrity of the report yet we haven't had the benefit of the public trustees' insight when their 15 positions became vacant. that's why i along with my good friend, the chairman of the health services have asked

g.a.o. to look at how these reports are developed and why they are almost always late. since we do not have public trustees, g.a.o.'s work in very much needed transparency and insights into what changes need to be made to improve the process. congress must be able to count n these reports. and have them available so it can do what it takes to fix social security previously i introduced my plan to fix social security permanently. my good friend from connecticut, mr. larson, also has a plan that would fix social security permanently. our plans are very different, but we both agree that we need to act and act now to fix social security for good. workers and their families

deserve the certainty that we have gotten social security on the right track. i know that fixing social security will require more tough choices that will affect the lives of millions of americans. congress has a responsibility to the american people to make these choices and the longer we wait the harder it gets. if we wait until the trust funds are exhausted, some options won't even be available anymore. we must take this responsibility seriously. americans want, need and deserve nothing less. i will now recognize mr. larson for his opening statement. >> thank you, mr. chairman. indeed we do both agree that we need to act now and both have put forward solutions that i

think the american public needs to hear. let me start with something that i think every member on the committee and every member of congress if they don't know should know. 10,000 -- 10,000 baby boomers a day become eligible for social security. if you look across this country and you understand that issue in and of itself demands that we act now and responsibly. social security is america's insurance program. it's something the public understands eminently. why? because every week, bi-week or monthly they look at their pay stub and see under fica the federal insurance contribution -- let me repeat that again -- federal insurance contribution, that there is a deduction that's

been made. we often are here in the course of dialogue that government should run more like a business. in this case it should run like an insurance business and be actuarial sound. yet the last time that we actually addressed this issue actuarially was in 1983. ronald reagan was president, tip o'neal was speaker of the house and they made the adjustments that were necessary that would extend the life of social security, but they didn't do it completely and they did an index. i ask anyone on the committee or in the audience, have any of your insurance policies gone up since 1983? there is no wonder why the system is in trouble, because it hasn't been actuarially adjusted ince 1983.

had we -- or had they back then made those adjustments, we wouldn't be having this conversation, because indeed america's most outstanding insurance program and something, as i said earlier, that everybody knows about because no one has ever missed a payment. the social security system has never missed a payment and both on the disability side which is in more of a predicament than we are on the pension side, but nonetheless, both have to be addressed. so how do we address them? well, we can do two things, we can either tell those 10,000 people a day that what they've got to do is face cuts, or we can say to them, do you know what we have to do, we have to make a premium adjustment. we have to do what should have

been done in 1983 and index this program. so what we're proposing is that we do just that. and for somebody making $50,000 a year, it would cost you 50 cents a week not only to extend the life of social security beyond its 75-year requirement, but provide the enhancements and benefits that people deserve, especially women in this country and especially women of color who more often than not find themselves retiring into poverty. all of these problems are fixable. usually at this point i have a starbucks latte that i hold us anywhere that i go and i ask the elderly if they know how much that is and they will go $4.50. or if you were making $50,000 a year that's nine weeks of social security payments that would more than amply, as mr. goss says -- pointed out, pay for social security to make sure

that we have enhancements in place for the 10,000 people a day that become eligible and for future generations into and beyond the 75 year requirement while still making the programs both on the disability side and the pension and survivors benefits solid. this should be as it was back in 1983 a bipartisan effort, and i think when you think about the fact for 50 cents a week if you're making $50,000 a year we can solve this problem, i'd love to have the american people welcome that debate with them so that we can arrive at a conclusion that i think is in the best interest of everyone. social security is neither democrat or republican, it's merican. >> thank you. thank you. you know, as is customary, any

member is welcome to submit a statement for the record. before we move on to our testimony today i want to remind our witness to please limit your oral statement to five minutes. however, without objection, all of the written testimony will be made a part of the hearing record. we have one witness today seated at the table is stephen c. goss, chief actuary, social security administration. mr. goss, welcome back. please proceed with your testimony. >> thank you very much, chairman johnson, ranking member larson and all members of the committee. it's a pleasure to be here with you today to talk to you about the 2018 trustees' report and congress, by the way, has received from the trustees every single year starting 1941 this annual report as you have required in the law. i just want to first of all thank both of you in your oral statements for talking about the nature of the coming shortfalls that we have for social security which we have so many years now discussed are really largely

about the demographics, about the fact that our each distribution in our population is changing because of the drop in the birth rates back in the 1960's. it's like the tide, inevitable. but let me speak to you briefly about three major items that really are the changes in the trustees report compared to the last. first, based primarily on continuing lower than expected disability application and incidence rates through 2017, to levels that are now below the levels that we achieved at the peak of the last economic cycle in 2007, rejected reserve depletion date for the di trust fund is extended once again by an additional four years from 2028 in the last year's trustees report out to 2032 which is close to our reserve deflation date. the depletion date is extended despite the fact that incidence rates are now assumed to be rising more rapidly to the same

ultimate rate as assumed in last year's trustees report. in addition a bit of a technical point, average benefit levels for new disabled worker benefits are now in this trustees report projected to be somewhat lower due to changes in the mix of new enefit awards resulting from the progress that second, reserve depletion date for the oesi trust fund is projected to be late in 204. this is a few months earlier than the last year's report which is to be very early, i believe, january in 2035. the change is largely due to lower projected revenue for the oeis,

di and hi trust funds in the form of the payroll tax rates. this is due to the lower than expected earnings as a share of gross domestic product in 2016 and 2017 based on the data we receive for actual receipts and department of commerce registers and their national income and product accounts. also from assuming that a slightly larger share of the great shortfall we have had over the last ten years in labor productivity that is output gdp per hour work by american workers slightly smaller portion of that will be written off as a permanent loss into the future. even with this change, however, i would note that projected economic growth over the next ten years is still faster over this next decade than most other forecasters. third, the actuarial status over the long range 75 year period is very similar to last year with usadi actual deficit that is the percent of payroll shortfall over the next 75 years, less than expected and annual deficit in the later years lower than expected in the last year's report. this is due largely to projected higher death rates, recent legislation and

improvements in projection methods. the actual deficit was expected to rise from 2.83% of payroll last year to 2.88% of payroll over the next 75 years, however, the combined effects of all new data changes and assumptions in methods reduced the expected actual deficit to only 2.84% of payroll. if congress were not to act full scheduled benefits would not be payable at the point of trust fund reserve depletion because the program has no borrowing authority, however, continuing revenue to the oasdi program at reserve depletion in 2034 would still be 79% of the cost of scheduled benefits. this is up from the percentage projected in last years trustees' report. for the di program alone continuing revenue would cover 96% of scheduled benefits at reserve

depletion in 2032 if congress were not to act. not something we want to see but just to give you a sense of what the magnitude of the shortfall would actually be. these projections indicate that the shortfall that needs to be corrected with your help, thank you, is slightly smaller actually than indicated in last year's report. i look forward very much to any and all questions that you will put forth and, again, appreciate very much the opportunity to come and talk to you again this year. >> thank you for your testimony. we will now turn to questions and as is customary for each round of questions i will limit my time to five minutes and ask my colleagues to also do the same. mr. goss, you reported that social security is now paying out more in benefits than it receives in revenue, including interest from the social security trust fund. for the first time since 1982

previously you estimated this wouldn't happen until 2022. what changed? goss: thank you very much. excellent question. what changed principally on this is not on the benefit side, the benefit sides are very much as we projected last year but it's on the revenue side. the actual revenue as i indicated in the oral testimony that we have gotten in 2016 and in 2017, these are in the books now, they turned out to be less than we anticipated last year, largely because of the shear of employee compensation and earnings as a share of gross domestic product in the country has turned out to be less than the early estimates from the bureau of economic analysis last year. we have seen the same in our own numbers coming in for the amount of payroll taxes coming in indicative of the amount of earnings that are subject to tax. they are just a smaller share by 2% or 3% of gross domestic product than had been

estimated in last year's trustees' report. while we've seen that dropoff in 2016 and 2017, we are assuming this is a temporary effect and over the course of the next years -- ten years we have our projections rising back up to the same share employee compensation of gdp that we have had in prior trustees reports. we are going to watch this carefully but this is one of the principal effects that has caused our payroll taxes to be lower over the next several years which causes us to have less total income starting in 2018 rather than 2022. the other effect is that the trustees have been very reluctant as you know to make changes in long-term assumptions and for many, many years now even in the light of having labor productivity, amount of output per hour worked fall much below the growth rate expected. we expect it had to be 1.7%. it's been well below 1% over the last decade per year.

the trustees have been reluctant to write off any of that in hopes that it will be coming back. with the economy moving ahead so well as it is and we have still not seen the labor productivity rising as much the trustees as most of their forecasters have done before them have taken one small portion of that lack of productivity growth out of our long-term expectation. out of our long-term expectation for gdp that means from where we are right now the growth has to be a little bit slower going into the future. as i mentioned before our growth in gdp is, in fact, faster than virtually all other forecasters even with this small mark off. >> it seems to me that you've got a lot of accusations. i'd like to hear what you think we can do about it. due to the tax cuts and jobs acts and all the good news that we are seeing

with the economy, cbo and jct have recently increased their projections of payroll tax revenue. can you help us understand why the trustees' report is different from theirs and when do you finalize the economic assumptions for each report? was it before tax reform? : in fact, it actually was. let me share with you what happened in this year's trustees' report is that because of the rather lengthy process of developing the report we actually -- the tax bill happened very late in the last calendar year. we had already have agreement amongst the trustees of what our short range economic assumptions were at that time. we did, however, make adjustments to the projections for the specific what we would call first order effects from various items in the tax bill. i would note, however, that the trustees were well aware of the possible what they would call macro effects, changes on economic growth, on the trustees plan on looking deeper into that for the purpose of the upcoming 2019 trustees' report. part of

the reason that there was a level of comfort in doing that is that, in fact, the trustees projected growth in the economy and gdp is in fact much in excess of many others. just, for example, even with the latest numbers from cbo with them putting in effects from the tax bill, their average annual rate of growth in gdp between 2017 and 2027 over that ten-year period in real terms is less than 2%. it's 1.95%. the trustees even with the changes made this year the rate of growth in real gdp is at 2.43%. about one half percent faster a year per cbo. even though cbo added something for the tax bill there is still one half of 1% slower on the rate of growth in gdp over the next ten years than the trustees are. with slower

gdp growth you will have slower growth in the amount of tax revenue not only for social security but all other tax revenues. >> you know, mr. goss, last year's report showed a major change with respect to when the disability insurance trust fund would be exhausted. that report showed that the trust fund would be exhausted in 2028. five years later than the trustees' previous estimate. now that date is just 2032. that's a big change. you told us last year that you were looking at what is causing the decrease in disability applications. what have you learned? mr. goss: i wish we could report we have a full understanding of what's going on. it has been quite remarkable. we reached a peak in applications in 2010 at the height of the recession

effect and it's been dropping ever since. we've been projecting for the last six or seven trustees reports in a row that we would reach a bottom on the application and it would start coming back up at a point. that simply has not happened. our applications have dropped steadily from 2010 where there were over 2 million a year for social security disability applications to well below 1.5 million a year now in the year 2017. i would share with you something not even reflected in this trustees' report, so far in 2018 we are seeing further declines in disability applications. so there's actually even more good news to come. the level we are at now for our disability applications is actually even below the number of applications we had in 2007 which was the peak year of the last economic recovery. when the economy is operating at the level it was in 2007 we expect to have very -- a big drop in the number of disability applications and we did, but at this point in 2017 we are even lower and we are continuing to drop in 2018. we've looked very

carefully at characteristics that might be affecting this. we have looked geographically, we've looked rural versus urban, age and sex and the disability incidence rates are down across the board. it's a little bit surprise, it's a wonderful it is the -- it is a little bit surprising, it's a wonderful surprise and i would share particularly for ranking member larson's comments we have done our best to get in touch with people in private industry where there is private long-term disability insurance sold in this country and we have heard because of proprietary information they haven't been able to give us very specific but they have indicated the last four years they've been seeing drops in their disability claims rates as well. so maybe it's just something is in the water and our society is feeling healthier these days. we're hopeful. >> well, have you learned anything? have you figured out anything or are you just babbling at us?

mr. goss: well, what we have learned is that all of the things that we thought would perhaps be the explanation for this, the most obvious ones do not appear to be that. there are a number of issues and we seek your advice and counsel and those of your staff about what your thoughts are. one thing that occurred so us, there was a company named binder and binder which had a lot of attorneys representing individuals for disability. they went out of business a few years ago and some people opined while there is a lack of national advertising. maybe fewer people know about applying for disability benefits possibly. we have come to understand that most of the taerns working in -- that most of the attorneys working in that realm are perhaps doing advertising. another possibility is that our administrative law judges have, in fact, been allowing a smaller percentage of cases that they see in their hearings. as you will recall probably five, six,

seven years ago it was close to two thirds of all the cases that they saw were allowed benefits, now we are down to nearly one half. that's a pretty big drop. we are not sure that that information has fully gotten out of the public and that that in effect would cause people not to file for benefits if they felt they were really severely impaired and could not work. we sort of suspect not. so we are -- i will have to be very honest with you, we are still looking very carefully and studying on this. we are expecting, i'm happy to tell you, for our social security advisory board to be putting forth a technical panel of actuaries, economists and dem grafrs to look at all of -- and demographers to look at all of the assumptions that we work on and certainly disability will be high on that list because of the surprising continued declines that we have been seeing. our big question is where will it turn? we project the turning point of applications going back up, what happened in each of the last four or five years and it simply

hasn't happened yet. now, part of it is clearly the economy. the economy has been strong and there have been jobs available and a lot of people are working. unemployment rates are very, very low. actually, the employment rate, the percentage of our population on an adjusted basis that's employed is now back almost to the level it was at the peak of the last economic cycle. not quite but it's very close. we are close to full employment now and approaching it. so certainly that has an effect. as i mentioned before, the applications now are substantially below where they were at the peak of the last economic cycle. so clearly something very different is going on here and we will look much more closely at it because when the applications will turn back up assuming they will is critical to this. as i mentioned before, at the reserve depletion date in 2032, with the

projection we could pay 96% of benefits under our current projections if things get much better di may not deplete until much later than 2032. >> do you have another question to ask him? yeah. >> >> go ahead. >> thank you, mr. chairman. first of all, mr. goss, thank you for your service. my grandfather used to quite peter finley dunn and say trust everyone but cut the cards. we like to say trust everyone but read the actuarial report. and i thank you for your reports and i thank you for the analysis that you've done on various bills. i know you've looked at our bill social security 2100 and i would ask you does that bill strengthen the social security trust fund so that it is financially sound throughout the 75 here projection period?

mr. goss: indeed it does. --? -- >> thank you. we also i noted in my opening comments that with 10,000 baby boomers becoming eligible a day this is going to put additional stress on a system that hasn't been actuarially adjusted since 1983. forgiven all the assumptions that you have to go through for a program to not be adjusted since 1983 i think any rational person listening to this anywhere says, well, wait a minute, have any of my other insurances gone up since 1983? and the obviously answer is, yes, they have. of course. to adjust to the times, the changes, the economy at all. and -- the economy at all -- the economy, et all. and so that's why we included in

this the opportunity to first correct the cost of living so it actually reflects what people who are, you know, 65 and older are experiencing. with that provision, does that better reflect the cost for seniors if we were go -- if we were to go to a cpie? goss: it would appear that we certainly could say that. the basic cpi that we use now looks at all urban wage earners of all ages. it's actually based on the purchases that are made by people 62 and older, essentially our clientele. and looks at their patterns of what they buy. >> and do you have the data for the number of people primarily women i would add who retire into poverty meaning that even though they've paid into the estimate because they, a, can give birth to children and are absent from the workplace and because for every dollar their male counterparts are earning

then earning on average 77 cents, we correct that program and create a new floor for social security that's 125% above the poverty level. can you tell the panel here how many people currently receive social security and remain i'm move -- and remain impoverished? mr. goss: i think i will have to get back to you on that. i don't recall the precise numbers off the top of my head. i do know that what's often mentioned is the degree to which we would have people eld yearly in -- to which we would have people elderly in poverty in the absence of receipt of social security benefits, but it's absolutely clear that given the level of social security benefits that are tied to your earnings levels throughout your career, if they were low your benefit will be slow. so we do

have many people who are still working with total income under the poverty level. >> we do and it's tragic that so many of them are women and even more tragic that so many of them are women of color. what our proposal seeks to do is to address that, to make sure we enhance payments to people, the 10,000 a day that are becoming eligible, so that it helps them in their retirement, so that we actually have a system that reflects the actual cost that the elderly incur, so that we also provide an opportunity for -- especially for those who retire into poverty that the new floor becomes 125% of poverty, and that also so that we can give seniors a tax break because many of them continue to work after they have retired, and in doing so as you are aware we tax people who are single, to make -- who make over $24,000 and a married couple over $32,000 by indexing the fund and addressing

that to $50,000 per individual and $100,000 per couple. 11 million americans get a tax break. so by providing a tax break, by making sure that their cola reflects what their actual costs are, making sure nobody can retire into poverty and still for the first time making social security solvent beyond the 75-year requirement, does this bill that we have asked you to review do that? mr. goss: it does. both your and chairman johnson's bills would do that. i'm happy to tell you with the nature of the changes we have in this year's trustees' report we expect that your bills will be similarly successful under the assumptions of the 2018 trustees' report. show >> i see my time is up, but i will be back for a second round if we have it. thank you, mr. chairman. >> thank you.

>> thank you, mr. chairman, thank you, mr. goss for your testimony today. mr. chairman, i applaud you for holding this important hearing, i'm pleased to have recently joined this committee and i look forward to working with you and ranking member larson as well as the rest of my colleagues who want social security for all americans. we have a responsibility to preserve social security for retirees, those who are approaching retirement and for our children and grandchildren so they can count on social security. millions of americans rely on this important program to recover -- to cover their expenses in retirement. seniors and retirees have worked very hard for decades so that they can enjoy their retirement and receive the benefits they have earned. we must honor the promises we have made to those who have done so much to build our economy and who have earned a peaceful retirement. i have read the report, mr. goss. i find it as troubling as the rest of the committee does and i'm sure the rest of the folks that we represent. i'm wondering

there's good news this this report as well and i know you covered it already, but in tuesday's report which showed that the disability insurance trust fund had gained four additional years of solvency when compared to the last year's projections, it's nice to see some good news, positive news in the trustees report. i'd like to get your perspective on this, particularly as our economy is growing in unemployment is at a record low. historically speaking, i know you have had speculation on as to why this is, but do applications for disability insurance go up when it's more difficult to find a job? goss: they do indeed. applications historically when we have a time of high unemployment, of a weak economy, we have an increase in applications, but interestingly not only do we have an increase in applications, but the percentage of the applications

that are found to be disabled and begin receiving benefits drops. so the increase in the number of people starting to receive benefits does not rise as much as the number of applications as you would expect. of course, the counterpart of that is true, when the economy gets re strong and jobs become nor plentiful we tend to see fewer applications coming in. we had anticipated that in the recovery that we have had since the great recession, what is so fascinating, though, is that the drop in the applications has been so much more than anticipated, even given the strength of the economy. >> thank you for that answer. after last year the tax cuts and trobs act was signed into law our economy continues to grow, americans are taking home higher paychecks. new jobs more people employed are absolutely critical because we are a pay as you go system

me theyou describe to significance of all of the new jobs relative to social security's solvency? goss: do people employed are absolutely critical. all of the benefits that are driveled to be paid out basically from the payroll tax contributions made by the workers of the day. jobs are absolutely critical. i would share with you, it is interesting because you are correct that the cbo is projecting a higher number of workers to the next 10 year. . fortrustees are projecting hundred thousand more people

employed in 2027 than last year's report. to put that in a proper frame of reference, cbo is projecting between now and 2027, a 5% increase in total employment whereas the trustees are project to a 7% increase in employment. we are glad the cbo has upped their expectation for workers, but the trustees actually in this year's trustees' report have a higher growth rate in employment over the next ten years. what causes that deviation in conclusions? mr. goss: it's really -- and we had a hearing a while back with keith hall and myself comparing the assumptions and the projections that cbo is making versus ours and the trustees we have simply had dare i say a little bit more optimistic view on the recovery of labor force participation and employment over the next ten years and into the long-term than cbo and some other entities have had. show thank you, sir. thank you for

your testimony. thank you, mr. chairman. i yield back. >> thank you. >> mr. goss, the republican tax bill invent sized -- goss, i'm sorry, i apologize. mr. goss: close enough. >> incentivized the growth for pass through businesses and moved the top tax rate on income earned from 39.6 to 15%. what impact will this have on the solvency of the social security it trust fund? mr. goss? show mr. goss: there were actually a number of factors in the recent tax bill as chairman johnson already alluded to. the trustees have not at this point taken into account sort of the macro or the dynamic scoring effects and we will be looking at that. the other factors that were built into the tax bill which

are the payroll tax changes, the pass through and the removal of the individual mandate have on balance had relatively small yet effects, some of them would create a little bit more revenue, some a little bit less revenue. in fact, we project over the long-term that the sort of direct or first order effects of the tax bill would be essentially negligible for the social security -- >> well, then, mr. goss, you have different information than i have and that's why i asked the question. pass through businesses, the growth of those businesses now with the incentive that i just mentioned would contribute to the erosion of the payroll tax base, would it not? mr. goss: i believe that is true and -- >> let me ask you this question, then. mr. goss: let me just answer that -- >> i'm sorry?

mr. goss: the information we built into trustees' report for the fact that we actually got from the joint committee on taxation -- >> the information you built into it. mr. goss: yeah. >> very good. let me ask you this question: can you explain why the social security trust fund has reserves? mr. goss: thank you. we have reserves largely because in the law the social security trust funds do not have the ability, the capacity, the legal right to borrow. therefore, it is essential in order to be able to pay benefits from one month to the next that we have some reserves to draw on just in case, heaven forbid, we ever have another recession or any other reason by which we began to have more money paid out than we receive. we need to have a cushion, usually the target that is desired is to have at least one year's worth of outgo as a reserve. the reason for that is just in case things turn bad for a while we will have enough time to come and talk to you all, tell you of this and we will

have enough time to work out appropriate legislation to fix those shortfalls. >> mr. goss, has social security ever failed to pay anyone's earned benefits ever? mr. goss: no, it has not. >> thank you. let me say this, mr. chairman, i like that brother larson put together in the social security 2100 act for a number of reasons. hr 1902, it would solve the very problem that the trustees approach and which we will be trying to figure out hopefully with some good hearings down the road. it would raise benefits. and i can't support any program that would instead cut benefits in order to solve the problem. so from the get-go that's where i'm coming from. your new report shows that social security will use all of its current income, tax revenues plus annual interest earnings on its reserves and the reserves themselves to pay benefits for the next 16 years. the report notes that social security will have to start drawing on the accumulated $2.9 trillion in reserves to supplement current income. and to pay benefits this

year. i don't think in my own opinion that this is a cause for alarm. knowing the history. rather than this was congress' intent as part of the last major set of changes, financial changes that were made to social security in 1983, drawing on these reserves has occurred periodically throughout social security's history, correct? mr. goss: that's absolutely true. >> so still we should heed the advice of the trustees and look at policy options. that would reduce or eliminate the long-term financing as soon as possible. to that end the threshold at which social security taxes phase out to me is too low. social security is mostly funded by a tax on income from labor, a hard day's work, mr. goss, but not other forms of income, like the passive income

from investments, and i intend and many others intend to do something about it and i yield back and i thank you, mr. chairman. >> thank you for your questions. mr. buchanan, you are recognized. >> thank you, mr. chairman. mr. goss, good to see you back. i've seen you over the years. we appreciate your expertise and your leadership on a very critical issue. i represent southwest florida, sarasota, manatee county, part of hillsborough county, tampa bay region. 229,000 people are in the program. i know how important it is to protect the viability of this long-term. in fact, i heard a statistic that a third of seniors that start drawing their benefits have nothing but their social security and the medicare so it's critically, i can tell you, important. i have done a lot of town halls, that's the realities. let me just ask you from a political standpoint, i

don't see -- and i want to complement my friend, mr. larson, we've got to find a way, i think, politically to work together to resolve the viability of the program sooner than later. is that your -- is that your sense of it, too? mr. goss: i think we certainly agree with that as do our trustees. enacting something to make changes that will be necessary sooner rather than later would be wonderful. it will give the american people an advanced warning of what's happening, it will allow you more options to consider and allow you to phase in the changes more gradually. three big pluses. >> we've talked to you a little bit earlier, you said last time we made a change we had to have our back against the wall, unfortunately that happens a lot here in washington. where is that time frame where you have where is that time frame where you have your back against the wall? it seems like the sooner we deal with it, get something on a bipartisan basis, the better it's going to be. less onerus it's going to be. is that your thought on that, as well?

mr. goss: absolutely. and we must look forward to looking forward with any and all of you. we're enjoyed working with chairman johnson and staff and developing plans. if there are more plans to come, we're ready. >> let me -- and i don't know where i read this, but i just want to say, this was put together in the mid '30s or so, social security, it's a great program, probably the best. let me mention, someone said if you don't die early, so to speak, before 65, if you reach 65, that the average person in america lives to be 85. is that true? what basis are you making that? it seems to me, my mother-in-law was just in town, she's 99, lives on her own. she had a sister 101, 103. but how do you look at this? what is

the numbers? goss: i think 20 years is very close. it's a little bit longer for women than men. women still have the advantage on life expectancy. for projections of mortality, we do this with great care. we make changes very carefully and only incrementally. many people back just four, five, six years ago were arguing that our changes in death rates that we were projecting were not projecting improvement fast enough. since 2009, mortality rates overall have been improving very, very slowly. >> let me ask you a couple more quick questions. my time is running out. they're projecting cola at 2.7. do you think there's any sense it could go to 3%? mr. goss it's certainly : possible. what we have in the

report is we're expecting a 2.4% cola this year. we're going to have to pay attention to prices at the pump. >> and the other thought, as mr. larson mentioned, i hear 10,000 to 12,000 people turning 65 every day. in terms of the funding of it, with the growth, if we had a 4% growth you mentioned the other day, but say we've gone from maybe 1.5 to 3, pick a number, that growth, lower unemployment, what impact, and one of my colleagues asked a question, what impact is that having in terms of making the trust fund more viable going forward? mr. goss: absolutely, as mentioned earlier, the rate of growth and gross domestic product, at nearly 2.5% in real terms over the next decade that the trustees are assuming, faster really than any of the private forecasters that we saw at the time we set the assumptions, definitely contribute towards the ability for our trust funds to retain their ability to pay full benefits.

that's why i'm surprised to hear they're going to spend more than they take in this year. i would like to think with the growth and the more jobs, it would offset that. mr. goss: well, the date at which we would reach that point has varied over time. the reserve depletion date is anywhere from 2029 out to 2042, now looking at 2034. the economic cycles come and go, and so we're at a point, but it's not as -- i think was mentioned before, the fact that we're now at the point of spending more than we are taking in -- >> thank you, my time's up. i yield back, mr. chairman. >> thank you, mr. larson. >> thank you, mr. chairman. i would like to submit for the record the social security administrator's statistics on women, which is that almost 49% of all elderly, unmarried

females receiving social security benefits rely on social security for 90% of their income. thank you, mr. chairman. welcome.e mr. kelly, you're recognized. >> thank you, mr. chairman. looking through all this, and again, i think sometimes we forget where the revenue for social security comes from, and it is, of course, from wage taxes or federal insurance contributions act, whatever you want to call it. so it does become a math problem, or a consideration. when i was looking at the total of dollars that come in, payroll taxes make up for 87% of the revenue that comes into social security. another 3% comes from taxes on benefits, and then another 9% on interest on that money. but i'm getting down to when social security was started, if you look at mortality rates, retirement versus the end of benefits being paid to somebody because they past, what was the average mortality rate at that time when we were looking at that window? do we know what that is?

goss: well, the average mortality rate, especially for people who -- >> we're at 79 years old now, right? mr. goss you're talking about : the life expectancy? >> yes. mr. goss: at the very beginning of the program, life expectancy at birth was much less than that, i probably believe even less than 65. a big part of that was because infant mortality was so high. what we focused on was life expectancy at 65. there's been increases in males actually. drug overdoses, suicide, alzheimer's, et cetera. i think a lot of that comes from the fact when we had an economy -- it puts a tremendous weight on who they think they are and they

become fragile egos they don't seem to have any hope. the reason i bring that up is that if the real revenue comes from her dissipation in the labor force, with the tax cuts and job bills, we are seeing more people get back to work, or people with income and more .eople contributing that 6.2% and that matched, 12.4%. the more people we get into that, the more revenue we get. and so, theoretically, if we wantpeople -- and i don't this to happen -- if people are dying at an earlier age, that equation starts to bounce back and fourth. i know you can't tell me right now, but i would like to see going forward, -- i think social security is a wonderful program but i also know where the

revenue comes from. not one penny comes from the government but from people who are working and the people who employ them. and if you're self-employed, you pay both sides of that. percent of everything. i am looking at the raw numbers. how do we continue these marvelous benefits to people when they reached the retirement age? is the some people, this sole source of their income because they don't have much in savings. i would appreciate if you can -- there is an article i would like to submit for the record. the trade std's predicting that social security would be adjusted in 16 years. this is marvelous for people to get a more realistic understanding of what social security is, how it works, who funds it and how the model

works. it is incredibly important for us right now. tos is something we have make sure stay solvent. i want to thank you you for the incredible work that you and your staff do. cuts, -- the economy is growing at a fast pace. the revenue will keep coming in. thank you so much and i yield back. thank you and i appreciate your comments. the disability is far better than we thought. we thought it would expire -- what were the dates? mr. goss: 2028.

ago, we printars -- we projected 2017. the recent extension of four more years of life in the disability section wasn't a result of legislation. mr. goss: it is the experience we are seeing in the program. at a graph of the disability applications in the number of people in payment status. it looks like the number of people -- the applications peaked in 2010. but the people in the payment phase has been dropping since 2014. 9 million in 2014 and now you are down around 8.5 million. mr. goss: exactly. a lot of this is driven by

the labor participation rate. it looks to me like the labor participation rate peaked in 2002. and then, it dropped a little bit but precipitously in 2008 2000 14.ut and it leveled off. starting to get a little better. fact, thein employment levels started rising even before the labor participation rates did. that would help get people off disability and provide additional revenue. it also helps survive -- it also helps the survivor portion of it as well. 2.4%aid you assumed a growth in gdp over 10 years. mr. goss: 2.43. in real terms.

>> cbo is assuming 3.2 this year. mr. goss: on average, 1.9%. i know -- by the time i got to congress, cbo was projecting about 2.9. every year it went down in his projections until it got down to 1.9 two years ago. since mr. trump has been elected, which way are the predictions going now? mr. goss: coming up. >> not just in the near term. yearsojections over 10 have been increasing as well. esther goss: they have. -- mr. goss: they have. >> those are projections. the economic numbers in the last

two years, have they been better or worse then what was projected? goss: our projections have been right about on target for the amount of growth we have been seeing in the economy. think cbo continues to rise dramatically. take'tojection you into account the tax reform bill. goss: our projection of economic growth is substantially faster as it is been cbo's. accountid not take into any increase in growth. >> are the macro effects of the tax bill stimulative?

mr. goss: indeed. those are not taken into account, your projections could be on the low side. mr. goss: we have to look at the slowdown in labor productivity. >> if we can make further progress in terms of marriott paste -- merit-based immigration. mr. goss: immigration is a huge factor. > thank you, sir. to be part ofd the subcommittee. this is my first subcommittee hearing. mr. cause, thank you for being here today. i was hoping you could walk me

through your process of creating the report and the average time it typically takes to do that. esther goss: in working with the trustees and the teams, we will start working in the next two weeks towards the next trustees report. we formulate our recommended inumptions to the trustees october through december of this year. they will be looked at and ultimately agreed upon. it then takes a fair amount of time for us to work through with the resumption's -- with the assumptions that we had. our target date always is april 1 which we are required to target a statute for the report to come out at that time. we have not met that every year.

data we get every year is extremely important and from the oversight perspective, building off of the chairman's morest to bring transparency, i'm interested in your thoughts as to why this delay in submitting the report persists and how we can change that. goss: we do have a board of that includes members of the cabinet. little more complicated process in developing our projections then does for example the congressional budget office which works under themselves without specific guidance. we have to work with secretary of treasury, labor, hhs to work through the assumptions and methodologies to be used. i would add that things to you

all in congress, you have required for many years and actuarial opinion at the end of the trustees report. i promise you one thing. instructed to put something into the report that we think is inappropriate, we will to you. are there -- >> areere other -- there other barriers preventing you from producing this report? thing that has contributed in the past is some of thein the issuance reports has been getting all of the members of the board together. we have core requirements. have all of the members of the board of the trustees report there.

>> thankou -- an you. for our own conversation, to make sure i have it right. the report is a look at the last few years, you are very in almost a slow walk -- you create a very perpetual horizon you are designing. we are in a goldilocks economy right now but some of that is not in the report. did we do something here to

screw it up? you seem to smooth out some of the charts. is my simplified explanation of what you are doing correct? mr. goss: absolutely. were toes that if we react to every up and down in the economy and give you dramatically different numbers, that would not be a good basis. we try to hit the midline in everything. framework, there are things happening in our long-termat do have cascade effects almost immediately. you have seen our recent birth rate calculations. that number seems to have fallen human during times of economic expansion. we have to that is the new normal. can you give me 30 seconds of littleates, because my

to in a half little girl is an annuity. we were thinking of calling her that what we called her olivia. an attempt at humor but am i being fair? mr. goss: it is the workers of the day that will play the benefits of the beneficiaries of the day. whenaby boom period -- people had on average three kids. now, two kids or fewer. with three kids in the economy paying in for every pair of elders, in the future, we will have two or less. from having to workers for every one retiree. is that plausible? by 2035 we will be

there. the drop insult of birth rates in the 1970's. our birthrates have affect. immigration has affect. the nature of the immigration --talent based? younger? older? the demographics of the immigration has an impact. to bring you a series of these things saying -- as we work on a stabilization for the future. rankingrman and the member all have bills. ever create triggers?

taxave a blended payroll revenue because gdp is not always exactly linked to payroll tax. some things in the economy can expand. is there a rational way if we wanted to design that future that if you cured alzheimer's tomorrow and we live six years longer -- that is a stress on the system. building discuss legislation makes it so we never see the cliff again? how do you design slow on ramps? age doup the retirement

you have the capacity for us to ?ring you those ideas mr. goss: absolutely. we would welcome all of your ideas. we have about 150 up on the web now, different provisions that we scored for people in this room today and for people over on the other side of the capital. so we have lots of possibilities in terms of raising the retirement age. there is explicitly, at least one, there's several different mechanisms for indexing, but thank you for mentioning birthrates, which is really the much stronger driver on the cost of the program. and we don't really have a direct mechanism for changing the program to reflect that. that could give you a much longer onramp, because my little girl suspect-- isn't going to be in the labor force for years. mr. chairman, thank you. the last question was for all of us to think about using their good offices to help us in the design. thank you, mr. chairman.

>> thank you, sir. you know, the news from the trustee's report is clear -- time is not on our side when it comes to mixing -- when it comes to fixing social security. as i've said before, i believe that any social security solvency plan should meet the following principles. first, it ought to fix social security permanently, not just push out the trust fund's exhaustion date by a few years. second, it ought to modernize social security to reflect today's workers and families. third, it ought to reward hard work. and fourth, it should protect the most vulnerable. and finally, it should improve retirement security. and with those things in mind, i think we can fix it. it's up to the congress to make tough choices needed to ensure that social security is here for our children and our grandchildren. just like it is for seniors and individuals with disabilities today. the american

people expect and deserve nothing less. thank you to our witness for your system and thank you also to our members for being here. with that, the subcommittee stands adjourned.

>> here on c-span this morning, "washington journal" is next live with your phone calls and a look at today's headlines followed by newsmakers with kerry severino who talks about the retirement of supreme court justice anthony kennedy and the options president trump has to fill the vacancy. later, attorney general jeff sessions and withming up on today "washington journal." an author and professor talks about his book on evangelical support for trimmed.

after that, we get a preview of the upcoming nato summit in ,russels with heather conley who served as the assistant theetary of state for george w. bush administration. ♪ host: good morning. back to work week for congress. and trump announces his choice for the u.s. supreme court, we have that live at 9:00 p.m. tomorrow.me we begin with bit term politics. 121 days before you go to the polls. issue that will motivate you to go to the polls or to mail in your ballot? your top issue