Gene Steuerle testifies on alternative ways to restore solvency and undertake benefit reforms in Social Security, concentrating on four: restricting automatic growth in benefits where needs are least, adjusting benefits so they both encourage employment and are concentrated more in older ages, removing many sources of inequity and inefficiency that penalize beneficiaries, and reforming private pensions so they better protect the majority of workers who today end up with little in the way of private retirement benefits.
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Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to testify on alternative ways to restore solvency and undertake benefit reforms in Social Security. My understanding is that you have already held testimony on financing challenges and revenue options and today want to focus on benefit options. As for revenue options beyond the scope of this hearing, I refer you to the testimony I made before the National Commission on Fiscal Responsibility and Reform, although I must note here that too little attention is given to the ways that benefit options within Social Security can be designed to have a very positive impact on revenues, including income tax revenues.
In my testimony I will concentrate on four types of benefit reforms. These include restricting automatic growth in benefits where needs are least, adjusting benefits so they both encourage employment and are concentrated more in older ages, removing many sources of inequity and inefficiency in the system that penalize beneficiaries ranging from low-income abandoned mothers to faithful spouses, and reforming private pensions so they better protect the majority of workers who today end up with little in the way of private retirement benefits. Basic principles of public finance imply that each of these four arenas should be reformed even if there were no budget imbalances in Social Security or in the wider federal budget so we can better direct our societal resources.
Before proceeding, I must repeat a dream I have laid out before this Committee in the past. In this dream, researchers from the National Institutes of Health come in to the Committee room and proclaim that they have found an expensive cure for cancer. The audience is thrilled at the possibilities, but behind the podium the members are sweating and commiserating among themselves. At last, I figure out why they are concerned: better health means longer lives and more health costs, so Social Security and Medicare will be even more out of balance.
The point of recounting this dream is simple. To develop a 21st-century government and promote a strong future economy, we must deal with many problems: inadequate educational attainment, crime, unemployment, youth being raised without fathers, too much borrowing from abroad, and so forth. Longer lives and better health are not among them. These blessings and societal gains have been converted into budgetary problems by the way we have designed our social insurance systems to spend ever-larger portions of our national income on needs that are marginally less important.
End of excerpt. The entire testimony is available in PDF format.