Here’s a fact that should worry everyone in Congress: Half of all American workers today have no pension or retirement plan from their employers. That means Social Security is their only source of retirement income. It is our belief that these numbers will only grow in the future.
But Social Security is headed for trouble, with its trustees predicting expenditures will outstrip income beginning in 2042.
Medicare is in much worse shape. Its trustees predict the trust fund will run dry in 2018. It is in grave danger, squeezed by rising health costs and an aging population. The looming retirements of the baby boomer generation will sink this program — unless we act soon.
That’s why we have introduced legislation to create an Entitlement Reform Commission. This bipartisan panel would study the actuarial health of Social Security and Medicare and make regular recommendations to Congress.
It would be a permanent feature of the nation’s legislative landscape, with its work presented at regular intervals and fast-tracked through Congress.
Unfortunately, it has been a generation since Washington, D.C., did anything meaningful to save Social Security.
It was 24 years ago, in 1983. Then-President Ronald Reagan was in the third year of his first term. Tom Brokaw had just gotten his anchor job. And the two quarterbacks of this year’s Super Bowl — Peyton Manning and Rex Grossman — were only 7 and 3 years old, respectively.
Social Security was predicted to fail. But earlier that year, a commission led by Alan Greenspan made recommendations on how to save this vital entitlement program. Reagan signed the recommendations into law, and disaster was averted.
We believe that the best way to save Social Security and Medicare is through a similar effort. But this time, it would be permanent, with features designed to curb the paralyzing influence of politics.
Here’s how it would work:
• There would be 15 members who, like Greenspan, would be selected for their expertise in finance and actuarial science.
• Members would be selected under a strict bipartisan formula: Seven would come from the majority party, seven from the minority party and one from an independent, nonaffiliated party.
• Public hearings would be required around the country.
• The commission would make recommendations to the president and Congress one year after formation, and every five years thereafter.
• Its recommendations would be based on independent, actuarial reviews.
• The commission would make recommendations only when two-thirds, or 10 members, are in agreement.
• Our legislation contains provisions designed to ensure that the commission’s recommendations are not a dead letter.
• Senate and House committees of jurisdiction would have 60 days to discharge commission-recommended legislation, or an amended version of the bill.
• The Senate and House would have 30 days to consider whatever measure emerges from committee, with relevant amendments allowed. Debate would be limited to 40 hours.
The conference committee will have 30 days to reconcile the House and Senate versions of the bill.
Delay is not an option. The risks to American workers, and to the economy, are too great.
The danger was clearly underlined by Federal Reserve Chairman Ben Bernanke. Last month, in testimony before the Senate Budget Committee, Bernanke warned that the U.S. economy could be badly damaged if Social Security and Medicare aren’t reformed.
“The longer we wait,” Bernanke said, “the more severe, the more draconian, the more difficult the objectives are going to be.”
We agree with this finding.
The trend lines are ominous. More and more American employers are reducing or eliminating their pension plans, making it increasingly likely that tens of millions of future retirees will be on their own.
The warning signals are already here. Today, 47 million Americans receive Social Security. Of them, 20 percent have no other source of income.
Social Security and Medicare are the third rail of American politics. Nobody wants to touch these programs. It is just too dangerous politically.
This leads us to the conclusion that an independent commission is needed to ensure the long-term viability of Social Security and Medicare.
We believe this commission will establish the framework within which Congress and the president can come together — now and in perpetuity — to ensure that Social Security and Medicare do not fail.
If we do nothing, our neglect will unfairly burden our children and grandchildren with massive debt from these two worthwhile social programs.
As Bernanke said in his Senate testimony: “I think the right time to start was about 10 years ago.”
We hope our colleagues and the president will agree with us, and help us create a lasting way to ensure that the retirement and medical needs of this nation are protected.
Sen. Dianne Feinstein (D-Calif.) is chairwoman of the Rules and Administration Committee. Sen. Pete Domenici (R-N.M.) is ranking member of the Energy and Natural Resources Committee.