Hearing of Senate Special Committee on Aging - Social Security: Do We Have to Act Now?

Hearing of Senate Special Committee on Aging - Social Security: Do We Have to Act Now?

Mr. Chairman, thank you for calling this afternoon's hearing to examine the long-range financing problems facing
Social Security. I understand that this is the first in a series of hearings that the Committee will be holding to discuss the challenges facing this tremendously important program, and I commend you for giving us the opportunity to explore these issues thoroughly.

Social Security has been a huge success. It is our nation's largest and most popular government program. More than forty-
seven million Americans depend on Social Security, and, for two-thirds of them, it is their major source of income. For
many older Americans, Social Security is the safety net that makes the difference between poverty and an adequate standard
of living.

And Social Security is not just a retirement program. It is also a disability insurance program and a life insurance program that provides families of active workers with protection worth more than $12 trillion--more than all of the private life insurance currently in force.

Unfortunately, as successful as Social Security has been, the system faces serious long-term financing problems and is
not sustainable in its current form. While the system is sound today, it will not be able to meet its obligations to future
retirees unless it is modernized.

Social Security is currently running a surplus because the program is taking in more in payroll taxes than it is paying
out in benefits. But before too long, this will no longer be the case. Our Social Security cash surplus begins to decline in
2008--the first year in which the baby boomers can begin to collect Social Security. By 2018, payroll taxes will not be
sufficient to pay benefits and we will either have to raise taxes, cut spending, go further into debt, or use more general
fund money if we are to continue to meet our full obligation to Social Security beneficiaries. By the year 2042, the trust fund
will be completely exhausted if steps aren't taken to save the program.

At the root of Social Security's problems is the simple fact that America is growing older. Today, more than 30 million
Americans are 65 and older. These numbers will rise dramatically as the ``tidal wave'' of baby boomers--all 76 million of us--sweeps into retirement. Moreover, it is not just that there will be more older Americans in the next century. It is that older Americans will be living longer and longer.

And the rapidly increasing number of older persons is only part of the equation. The ``baby boom'' was followed by a
``baby bust,'' and the inevitable result is that there will be fewer workers to support each retiree in the future. In 1960,
there were five workers for each beneficiary. Today there are scarcely three, and by 2030, there will be only two.

Last night, the President laid out his plan to overhaul Social Security. Other Social Security reform plans have been
proposed by both Republican and Democratic members of Congress, as well as by a variety of public policy groups. While there is a consensus that action needs to be taken, there is less certainly about what should be done, how soon it should be
done, and how quickly a consensus plan can be forged.

Clearly, action must be taken to preserve Social Security for not just current, but future generations. And the sooner we
begin to deal with Social Security's financing problems, the less disruptive the solution will be.

Given the universal importance of this program, however, it is crucial that any changes be carefully thought out, thoroughly understood, and have a solid basis of bipartisan support that cuts across all age and income groups.

Mr. Chairman, that is why hearings like this are so important. They give us the opportunity to discuss the scope and nature of the problems facing Social Security as well as to explore the ramifications of the various proposals to modernize
the program.

Again, I thank you for convening this important hearing, and I look forward to hearing the testimony from our witnesses.

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