Chairman Yarmuth Opening Statement at Hearing on Retirement Security in the 21st Century
Washington, D.C.— Kentucky Congressman John Yarmuth, Chairman of the House Budget Committee, gave the following opening statement at today’s hearing on strengthening retirement security for America’s workers. Remarks as prepared are below:
This hearing will come to order. Before we begin, I know many of us in the budget community are mourning the loss of Alice Rivlin, the founding director of the Congressional Budget Office, whose groundbreaking career also included stints as the director of OMB and vice chair of the Federal Reserve Board, among many other roles. Alice was widely respected and revered by Democrats and Republicans alike for her work and vision, her warmth and compassion, and her contributions will continue to help frame our debates for years to come. I think I speak for everyone in this room when I say that Alice Rivlin will be deeply missed, and that we send our condolences to her family and loved ones.
Once again, I’d like to welcome Chairman Larson and our witnesses – thank you for joining us.
As we know, keeping our promise of secure retirement to American workers – while maintaining our nation’s fiscal health – is one of our greatest policy challenges. Social Security is facing a shortfall. Traditional employer-sponsored pensions are disappearing. And due to stagnant wages and income inequality, far too many Americans cannot afford to save for retirement.
Americans are also living longer, our birthrate is declining, and our population is skewing older. This perfect storm of changing demographics and its inescapable mathematical reality threatens to upend the promise of a secure retirement for millions of Americans. And the problem grows more pressing by the day.
By 2035, Americans aged 65 years and older will outnumber children under the age of 18 for the first time in history. More than 63 million Americans are already receiving Social Security benefits and every day an additional 10,000 baby boomers reach eligibility. As a result, this bulwark program is facing serious long-term funding shortfalls, with promised benefits facing cuts as high as 20 percent as soon as 2035 if Congress does not act.
Cuts of this level would be devastating for the individuals who rely on Social Security. Since its inception in 1935, the program has been a pillar of retirement security; but it was never meant to be seniors’ primary source of income. However, today, half of seniors receive at least half of their income from Social Security, and one-fifth receive 90 percent or more of their income from the program.
But it’s not just those who rely on Social Security who are in jeopardy. In today’s unreliable retirement landscape, even those working Americans who have a pension are now at risk of losing their hard-earned benefits. In my home state of Kentucky, pensions for teachers and other state employees are under attack by our Governor who believes the people who educate our children are selfish for wanting the retirement they earned. Multiemployer pension programs throughout the country are unable to pay out at their promised rates. I’ve met with truck drivers from my district whose pensions will be cut by 60 percent or more if Congress doesn’t step in. These are all American workers who planned for their retirement and contributed to their pensions instead of taking home more pay. Now, after working for decades, their planned retirements may vanish.
However, the causes of this problem go even deeper than changing demographics and retirement programs.
According to Federal Reserve economists, on average, the bottom 90 percent of American households have been unable to recover the wealth they lost during the Great Recession.
Wage gaps and systemic income inequality are unfairly capping lifetime earnings and savings opportunities for millions of American workers, particularly women and minorities. White retirees are almost twice as likely as black and Latino retirees to have private retirement savings and are significantly more likely to have savings through an IRA or 401(k) retirement account. Longer life expectancies and gender pay disparities make women more economically vulnerable than men, with women aged 65 and over being 80 percent more likely to be impoverished than their male counterparts.
Meeting this fiscal challenge will require a clear-eyed acceptance of the demographic realities and a willingness to responsibly raise more revenue over time. Immigration reform could make significant inroads in alleviating some of our demographic challenges. It is also likely the only realistic solution for addressing lower birth rates which slow the growth of our labor force and economy and put even greater pressure on federal budgets. I hope to discuss immigration today, but will definitely review it in detail at an upcoming hearing on the issue.
It’s also important to note that the Trump tax cuts enacted last year have made this situation more complicated. These tax cuts blew a massive $1.9 trillion hole in our deficits, and as a result, our Republican colleagues have called for extreme cuts to insurance programs, including Social Security and Medicare. These proposed cuts, and the entire Trump budget, were dead on arrival to Congress, thankfully – but highlight how far apart Democrats and Republicans are when it comes to protecting Social Security and other earned benefits.
Congress has a responsibility to act and honor the promise of retirement security. But we have a long way to go before we can enact the smart and multifaceted approaches that can close the retirement gap without sacrificing our nation’s fiscal health or harming current or future retirees. It is my hope that this hearing will help advance that process.
I thank our witnesses for helping us with this discussion and look forward to your testimony.
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