Response to Questions About the Nadler Plan

[National Dialogue Moderator <moderator>]

	Response to Questions About the Nadler Plan


I would like to take the time to answer the questions posted about H.R.
1043.

First, I would like to respond to Mike Ballard who wrote:

"I'd just like to say from what I've seen so far, HR 1043 seems to be the
best proposal.
Like Rep Nadler, I don't support benefit cuts.  The workers of this 
great republic have done more than their share to create the
wealth on which this society has been built.  The tiny portion
of that wealth which they now get back in the form of 
Social Security should not be cut in any way, shape or form."

I agree with Mr. Ballard.


Now, I would like to respond to Reese Stanton who wrote:

"There is serious discussion that the Trust Fund is only a claim 
on future government resources -- From 2014-2034 there is 
some $7 TRILLION in benefit promises that cannot be financed 
through current payroll taxes. Furthermore, the annual deficits 
keep growing after that point."

This may be true under current law, but H.R. 1043 is designed so that
current benefit promises can be financed for at least the next 75 years.   

"QUESTION #1:     If this is so, and we were to have a prolonged 
spike in unemployment, from where does the government get the
money to redeem the trust fund to provide benefits?"

Mr. Stanton has stated that under current law certain benefit promises
cannot be financed through current payroll taxes from 2014-2034.  Under
current law, these benefits will be financed through a combination of
payroll taxes and funds from the Social Security Trust Fund.  Under current
law, general fund revenues will be needed to redeem the trust fund.  

If H.R. 1043 were enacted, general fund revenues would be transferred to the
Social Security Trust Fund over the next fifteen years.  These funds could
then be used to reduce the current publicly held debt and reduce future
interest payments.  The money that would have been spent in the future on
interest, would now be available to redeem the bonds held by the Social
Security Trust Fund.  These funds would not be used for other spending or
tax cuts, because the Trust Fund would have the initial claim on these funds
due to the initial transfer from general revenues to the Trust Fund.  If we
simply paid down the debt by this amount, the same amount of money would be
available to fund Social Security in theory, but Social Security would not
have the same claim to the money.

In response to your question about "prolonged spike in unemployment", it is
true that if any one of the factors that the Trustees rely on to make their
predictions is inaccurate, it would affect the financing of Social Security.
It is just as likely that the Trustees overstate unemployment figures, in
which case we may have more than enough money in payroll taxes to finance
the current system.  We ought to prepare for what we think is likely to
occur and remain flexible in the future so that we can make adjustments to
the program as needed.

"QUESTION #2: If raising the taxable wage base only buys Social 
Security a few years from a cash-flow perspective.  What happens 
then?"

Part of H.R. 1043 includes raising the taxable wage base.  It is true that
this alone is not enough to restore actuarial solvency to Social Security.
That is why my plan takes several other steps to fully fund the current
system.  When taken as a whole, H.R. 1043 restores actuarial solvency to
Social Security for at least the next 75 years. 

Thank you.

Representative Jerrold Nadler