FROM THE OFFICE OF PUBLIC
FOR IMMEDIATE RELEASEAssistant Secretary David W. Wilcox testimony on Social Security before the Ways
and Means Committee
November 19, 1998
Mr. Chairman, Members of this Committee, I thank you for this opportunity
to meet with you to discuss the vitally important issue of restoring Social Security to sound
financial footing. I know that Secretary Rubin, Deputy Secretary Summers, and others in the
Administration look forward to working with you and the other Members of the Committee on
During my remarks today, I would like to touch on four issues: first, the reasons why it is
important to move expeditiously next year to secure a bipartisan agreement to preserve and
strengthen Social Security; second, what we have learned during the national dialogue of the past
year; third, the principles that the President has put forth to guide Social Security reform; fourth, how
to best move forward to reach a bipartisan agreement that puts Social Security on solid financial
ground for future generations.
The Importance of Social Security
As we begin this important undertaking, it is worth returning to fundamentals and reminding
ourselves why it is so important that we move with dispatch toward achieving a bipartisan
agreement. The case for rapid action rests on two key propositions.
First, the sooner we move, the more we can take advantage of the economy's extraordinary
performance achieved under President Clinton's economic strategy. Right now our economy is
remarkably strong and our budget is the healthiest it has been in a generation.
- Unemployment has been at or below 5 percent for 19 months.
- Inflation is low and stable.
- Real incomes are rising again, breaking out of the pattern of stagnation that had persisted
since the 1970s.
- And for the first time since 1969, the Federal government has posted a unified budget
But we may not always be in such a strong position. And we will likely never be in a stronger
position to face the major challenges ahead of us associated with an aging society. One key fact
illustrates the dramatic demographic developments that lie ahead: In 1960, the number of American
workers for every Social Security beneficiary was 5.1 to 1. Today it is 3.3 to 1. In a little more than
30 years' time, when there will be twice as many elderly as there are today, the ratio will be 2 to 1,
Second, the sooner we move to place Social Security on a sound financial basis, the less we have
to do to restore balance. The cost of waiting will mean we will be confronted with a more painful
set of choices down the road.
The President's National Dialogue on Social Security
As you will recall, the President in his State of the Union speech last January called for a year
of national dialogue on Social Security. That year is now almost over. The President and
Vice-President have contributed an enormous amount of their personal time and energy in this
enterprise. The Administration conducted three regional forums to discuss Social Security with the
American people. Each forum involved Members of both parties, serving to broaden the range of
ideas explored, and giving concrete evidence of the Administration's commitment to a bipartisan
process. These forums were jointly sponsored by the Concord Coalition and the American
Association of Retired Persons, in conjunction with Americans Discuss Social Security. In addition,
many Members of Congress held forums in their own states.
During this process, we have heard from the American people about their concerns, hopes, and
fears about retirement, and their views on Social Security. What we have learned has been critical
to the process and will help guide us from here. One of the main lessons from these national forums
is that the American people C both young and old C are concerned about the health of the Social
Security system and are supportive of efforts to ensure that the system will provide benefits not only
for them, but for their children and grandchildren as well. These forums have laid the groundwork
for the next stage of the reform process, including next month's White House conference on Social
In the remainder of my remarks, I would like to outline some of the Administration views and
objectives for building on the national dialogue.
The President's Principles
This year of dialogue has provided many opportunities for us to improve our understanding of
the myriad issues involved. Through this process, three themes have been especially clear.
First, the final reform package will no doubt assimilate a lot of good thinking from many
different quarters, and we should be receptive toward taking that thinking on board. The
Administration believes the many proposals put forward by the Members of Congress, think tanks,
academics, and interest groups have been constructive in fostering this year of bipartisan discussion.
Second, it makes little sense to judge specific policy options in isolation. They can only be
adequately assessed in combination with all the elements that would be required to accomplish the
Third, the Administration believes that any plan should be consistent with the five principles that
the President articulated at the first Social Security forum in Kansas City.
- First, reform should strengthen and protect Social Security for the 21st Century.
Proposals should not abandon the basic program that has been one of our nation's greatest
successes. The importance of Social Security can hardly be overstated. Eighteen percent of
our seniors C more than one in six C receive all of their income from Social Security. The
bottom two-thirds of the aged population, in terms of income, receive half of their income
from Social Security. Without Social Security, nearly 50 percent of aged Americans would
be in poverty.
- Second, reform should maintain the universality and fairness of Social Security. For half
a century, Social Security has been a progressive guarantee for citizens. It should be kept
- Third, Social Security must provide a benefit people can depend on. Regardless of
economic ups and downs, Social Security must provide a solid and dependable foundation
of retirement security.
- Fourth, Social Security must continue to provide financial security for disabled and
low-income beneficiaries. Unfavorable comparisons are often made between the returns on
contributions offered by Social Security and the returns offered by the market, but Social
Security is much more than just a retirement program. We must never forget that roughly
one out of three Social Security recipients is not a retiree. Any reform must ensure that
Social Security continues playing these other important roles in the future.
- Finally, Social Security reform must maintain America's fiscal discipline. Six years ago
the deficit reached a record $290 billion. In the just-ended fiscal year we achieved a record
surplus of $70 billion in the unified budget. In choosing the way forward on Social Security
reform, we will need to continue that strong record.
Moving Forward Toward a Bipartisan Agreement
Another step in the year of national dialogue will be the White House Conference, scheduled to
take place on December 8th and 9th. The Administration views this conference as an outgrowth of
the public discussions and consultations that we have been having with Members of Congress from
both sides of the aisle throughout the past year. In the time ahead, we intend to broaden and deepen
both aspects of this communication.
We fully intend the conference to be bipartisan, to include representatives of the public, and to
include experts holding all views. The President has always believed that the only way to achieve
Social Security reform will be on a bipartisan basis, and we intend for this conference to reflect that
Throughout the year, a number of observers have asked whether the Administration might be
putting forward a plan of its own for Social Security reform, and if so, when. The bottom-line
answer here is that the Administration is committed to whatever course will be most conducive
toward arriving at a bipartisan agreement that assures the American people of a stronger Social
Security system. It has been the President's judgment thus far that for us to put out a plan would not
have been helpful and could have served to polarize the debate. He will continue to review on an
ongoing basis whether proposing a specific plan would help move the process forward. We will
obviously be consulting heavily with Members of Congress from both parties on this important
Finally, with regard to engaging with Congress on our shared objective of achieving a bipartisan
agreement, the President has consistently stated his intention to begin ongoing bipartisan discussions
early next year. The Administration recognizes the important role that the Ways and Means
Committee will play on this crucial issue. Consultation with all the Members of Congress will be
important, but consultation with this Committee will be especially so, and I fully expect the
Administration to pursue such consultation vigorously as we work toward the objective of forging
a bipartisan solution to this challenge.
Mr. Chairman, today virtually every working man and woman in America is protected by Social
Security. As we debate which policies will best strengthen the Social Security program, there should
be no question of the importance of restoring financial balance to the system in a bipartisan manner
as early as possible. The Administration looks forward to working with the Members of this
Committee and with others in Congress as we take on this critical challenge. Thank you, and I
would now welcome your questions.
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