Nadler Has Kolbe-Stenholm Bill Wrong

[National Dialogue Moderator <moderator>]

I commend Rep. Nadler for his courage in putting forward a complete plan to
save Social Security.  Although Rep. Stenholm and I have taken a different
tack, I applaud Rep. Nadller's efforts to "move the ball forward."
Unfortunately, Rep. Nadler has confused and misrepresented several aspects
of the Kolbe-Stenholm Social Security plan -- something I'm sure he did not
intend to do.  He also omitted several elements of our bill that would
ameliorate the impact on vulnerable populations of some of the "painful
provisions" in our bill.  I'd like to set the record straight.

	(1) Normal/Early Retirement Age:  The K-S bill, HR 1793, does not
raise the Normal Retirement Age beyond current law -- age 67 -- although we
get there a little faster.  Moreover, we make no change to the early
eligibility age whatsoever.  It remains at 62 years, the same as current
law.  The table below illustrates the difference between current law and K-S
(Note: NRA=Normal Retirement Age, ERA=Early Retirement Age):

	 <<...>> 

	Regardless, individuals have the flexibility to retire at any age
they choose under our bill.  The Kolbe-Stenholm bill provides that as long
as you have enough money in your personal account to provide a minimum
annuitized benefit equal to 100% of the poverty level for a single-person
houshold, you can retire and begin collecting from your personal account at
any age.  If an individual accumulates the funds needed to provide the
minimum benefit by age 40, they can retire at age 40.  An individual must
wait until they reach the ERA or NRA, however, to begin receiving their
defined benefit from Social Security.

	(2)  Computation Period.  The K-S bill makes two changes to the way
Social Security calculates benefits.  Currently, Social Security takes an
individual's highest 35 years of earnings and the averages that amount.
Rep. Nadler is correct that our bill would increase the computation period
from 35 to 40 years, but our bill would include ALL years of earnings in the
numerator.  The net result would be a benefit increase for most individuals.
Our bill makes another change that is mindful of spouses who exit the
workforce to care for children or other reasons: for a two-earner couple,
the computation period for the lower-wage earner DOES NOT increase.
Instead, their computaiton period would remain at 35, as under current law. 

	(3)  Bend Point changes.  Rep. Nadler is correct that the
Kolbe-Stenholm bill makes changes to the bend points, effectively reducing
the defined benefit of Social Security for some individuals.  What he fails
to acknowledge, however, is that the changes are isolated to the top two
bend points, shielding low-wage workers from the impact.  Second, the
Kolbe-Stenholm bill contains a minimum benefit provision that further
protects this vulnerable population from benefit changes.  In our bill, if
you work consistently for 40 years, we guarantee you a minimum benefit equal
to 100% of the poverty level.  This is a more robust benefit than what is
afforded by current law.  Currently, 8 million seniors receive Social
Security benefits below the poverty level -- this provision will help some
of these individuals.

As I said, Rep. Nadler has his own proposal for Social Security reform.  His
approach is much different than ours.  I know our moderator expects to
discuss this bill in the coming days and I look forward to the online
discussion of his proposal at that time.

-- Jim Kolbe