Response to Javier Jimenez

[National Dialogue Moderator <moderator>]

Thank you for your comments regarding state and local workers who
are currently not covered by Social Security.

As you may know, the 1935 Social Security Act mandated coverage
for most workers in commerce and industry, which at that time
comprised about 60 percent of the workforce.  State and local
government employees were excluded because they had their own
retirement systems and there was concern over the question of the
federal government's right to impose a tax on state governments.

Subsequently, the Congress extended mandatory Social Security
coverage to most of the excluded groups, including state and local
employees not covered by a public pension plan.  The Congress also
extended voluntary coverage to state and local employees covered
by public pension plans.  Since 1983, however, public employers
have not been permitted to withdraw from the program once they are
covered.  The Social Security Administration estimates that 96
percent of the workforce, including 70 percent of the state and
local government workforce, is now covered by Social Security.

On this issue I very much agree with the findings of the 1994-96
Advisory Council on Social Security.  In recommending that mandatory
coverage be included in the reform proposals, the Advisory Council
stated that mandatory coverage is basically "an issue of fairness."
The Advisory Council report stated that "an effective Social Security
program helps to reduce public costs for relief and assistance,
which, in turn, means lower general taxes.  There is an element of
unfairness in a situation where practically all contribute to Social
Security, while a few benefit both directly and indirectly but are
excused from contributing to the program."

Moreover, I believe that universal coverage under Social Security
would also render unnecessary the continuation of the current law's
controversial Windfall Elimination Provision and Government Pensions
Offset, both of which have the source of disgruntlement among
certain groups for some time.  These provisions in the Social
Security law are designed to remove unintended advantages that the
regular Social Security benefit formula provides to persons and
their spouses who also had pensions from non-Social Security-covered
employment, as in the case of exempted state and local workers.
But with future universal coverage under Social Security, these
provisions would become moot.

It is also important to emphasize that this provision to extend
coverage to state and local government employees would only affect
those who are newly hired after such a change in law takes place.
Those who are currently exempted from Social Security coverage
would not experience any change in this status.

I hope this provides some background and insight into your question.
Thank you, again, for participating.


Senator Rick Santorum