Hearing of House Committee on the Budget House of Representatives - Social Security: Defining the Problem

HEARING OF HOUSE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES - SOCIAL SECURITY: DEFINING THE PROBLEM

February 9, 2005

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Mr. Simpson. Thank you, Mr. Chairman.

And I appreciate you being here today, Mr. Secretary, and taking the time to discuss this issue with us. First of all, in relation to what Mr. Davis said, it was interesting as I listened to that. I was over in Ireland earlier this year, talked to some of the officials over there, several of them. And they told me that about 15 years ago Ireland had the lowest per capita income in the European Union. They currently have the second highest per capita income in the EU next to Luxembourg. And I said, what did you do to change that outcome? And they said, we sat down and made some really tough decisions, and that is that we were taxing our people too much, that we were--that it would cost too much to produce in this country, and we made some tough choices. And we went through some very difficult times, but it has changed our economy around, and essentially every major corporation in the country now has a--in the world, has a company located in Ireland.

So, and I think you are on the right track. And I appreciate--you know, this is something we have known ever since Adam Smith, but we haven't always followed it. But I appreciate the track that you are on and what you are doing for the economy.

Secretary Snow. I visited there, myself, sometime back, and got a first-hand conversation with the people who created the so-called Celtic miracle, and they talked about where they were two decades back and the transformation that has occurred, largely because they embraced Adam Smith and market practices and low tax rates.

Mr. Simpson. Right. I appreciate that. One of the things that concerns me is the rhetoric that is surrounding all this proposal, and in fact the American people out there are very confused about whether there actually is a problem with Social Security or not. Because when we start talking about the actual problem, we start talking about our favored plan to solve that problem and it gets mixed up with it, or the cause of the problem, or whatever. What is the administration doing? I appreciate the fact that the President has been out on the stump the last while, and ultimately we respond to voters.

What are we doing to try to educate the American public to the nature of the problem? Because, to me, we have got to have a discussion with the American people about their retirement system, and also not only that it is their system but that it is a--as was mentioned by the chairman earlier, it is not their total retirement system, it is supposed to be supplemental retirement, and they need to also be saving for retirement in other areas.

Too many people have depended on Social Security for their total retirement fund and figured, well, the Government will take care of that. I don't have to worry about retirement anymore. And somehow we have got to change that attitude. But we have to do, I think, a good job somehow of engaging the American people in this discussion. And unfortunately what happens right now is you have got the American senior citizens who are very engaged in this subject who the President says this won't affect; and I find it interesting that it is 55 and older that are not going to have their benefits affected and then we talk about the younger people.

I am 54, I am worried. But we have to, the American senior citizen is engaged because they obviously depend on Social Security. The younger generation is not real engaged in this discussion because, just like I am sure you and the rest of us, we didn't care about Social Security when we were first entering the workforce, but they had better start caring about it relatively soon.

How are we going to engage them?

Secretary Snow. Well, Congressman, you put your finger on a critical issue here. I think the President knows he has got an
obligation to lead this, to get out and use the bully pulpit and talk to the American people and really engage them on the problem and be straight with them, be honest with them, tell them the facts and get the facts out. You know, America is a Nation of problem solvers, we are a Nation of fixers, but we first have to understand what the problem is. That is why this hearing today, the other hearings are so important to get the facts out. And I am glad to hear people from both sides of the aisle agreeing that there is a problem, because that is where the solution starts, with identifying the problem.

This is only going to be addressed when the American people say there is a problem and we want answers. And the resident
knows he has to take that message to the American people. He has asked us in the cabinet to do it, but he knows he has to lead that effort.

Mr. Simpson. Do you think there is broad consensus about what the problem exactly is?

Secretary Snow. I think there is a growing understanding of what the problem is, the demographics which are--this is all about arithmetic, it is not about ideology. It is simple, straightforward arithmetic. Nobody can repeal the laws of arithmetic. And the laws of arithmetic are dooming Social Security on its present course. And the sooner we act to fix it, the better the chances. I think that more and more people--I wouldn't say it is fully understood by any means, but more and more people are beginning to get a sense of the dimensions of the problem and the need to act on it, and I think they are going to be asking their elected representatives around the country, what are you doing?

Mr. Simpson. Well, I hope so. I have spent the last 2 years actually talking about the problem we have with entitlement spending and how that is driving really the budget deficit and a few other things, and Social Security particularly. And I have found that any number of people have come up afterwards and said I appreciate the fact that you are talking about that because I really didn't understand it before. So I appreciate the fact that you are engaged in this and the President is engaged in this. It is something that would be so easy for us to put off for another 10 years.

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