Lorenzen Testimony Before the House Ways and Means Social Security Subcommittee
Mr. Chairman, Ranking Member Becerra, and members of the subcommittee, I appreciate the invitation to appear before you today to discuss the recommendations in the final report of the National Commission on Fiscal Responsibility and Reform regarding the Social Security program, specifically the recommendations related to the benefit formula and eligibility age.
I am the Executive Director of the Moment of Truth Project, a project of the Committee for a Responsible Federal Budget that was created to build on and continue the work of the National Commission on Fiscal Responsibility and Reform (also known as the Simpson-Bowles Commission) and which is co-chaired by Fiscal Commission Co-chairs Erskine Bowles and Alan Simpson. I was a staff member on the Fiscal Commission and was involved in development of all policies in the final report, including the Social Security reform recommendations. I have been involved in issues related to fiscal policy and Social Security in a number of capacities as a Congressional staff member and in the non-profit sector for over twenty years.
The Executive Order establishing the National Commission on Fiscal Responsibility and Reform charged its members with “identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run” and ”proposing “recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.” Commission members had differences of opinion regarding the role of Social Security in the medium term fiscal outlook, and the final report did not use savings from Social Security to meet the medium term goal set out in the executive order of achieving primary balance and stabilizing the debt. However, the overwhelming majority of Commission members, and all eleven who supported the final recommendations, agreed that reforming the Social Security system to make the program sustainably solvent was an essential part of meeting the mandate in the executive order of achieving fiscally sustainability over the long run.
The Commission proposed a balanced plan that would eliminate the 75-year Social Security shortfall and put the program on a sustainable path thereafter. The report outlined the overall approach the Commission took in developing the recommendations to make Social Security sustainably solvent this way:
“To save Social Security for the long haul, all of us must do our part. The most fortunate will have to contribute the most, by taking lower benefits than scheduled and paying more in payroll taxes. Middle-income earners who are able to work will need to do so a little longer. At the same time, Social Security must do more to reduce poverty among the very poor and very old who need help the most.”
The Commission’s Social Security plan included a number of changes to benefits as well as taxes. Specifically, the plan would gradually modify the benefit formula to make it more progressive by slowing initial benefit growth for higher earners, indexing the retirement age to longevity so it grew about one month every two years, using the chained CPI for cost-of-living adjustments, gradually increasing the "taxable maximum," and including all newly-hired state and local workers in the program. In addition, the plan recommended a new minimum benefit for low-wage workers and a benefit bump-up for beneficiaries who have been receiving benefits for twenty years.
Ed Lorenzen, Executive Director of the Moment of Truth Project, recently testified before the House Ways and Means Committee's Social Security Subcommittee