[Senate Hearing 114-648]
[From the U.S. Government Publishing Office]
S. Hrg. 114-648
NOMINATIONS OF CHARLES P. BLAHOUS III
AND ROBERT D. REISCHAUER
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
on the
NOMINATIONS OF
CHARLES P. BLAHOUS III, TO BE A MEMBER OF THE BOARD OF TRUSTEES OF THE
FEDERAL HOSPITAL INSURANCE TRUST FUND, A MEMBER OF THE BOARD OF
TRUSTEES OF THE FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUND, AND
A MEMBER OF THE BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND AND THE FEDERAL DISABILITY INSURANCE TRUST FUND;
AND ROBERT D. REISCHAUER, TO BE A MEMBER OF THE BOARD OF TRUSTEES OF
THE FEDERAL HOSPITAL INSURANCE TRUST FUND, A MEMBER OF THE BOARD OF
TRUSTEES OF THE FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUND, AND
A MEMBER OF THE BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND AND THE FEDERAL DISABILITY INSURANCE TRUST FUND
__________
MAY 11, 2016
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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______
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COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas BILL NELSON, Florida
JOHN THUNE, South Dakota ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Coats, Hon. Daniel, a U.S. Senator from Indiana.................. 2
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
ADMINISTRATION NOMINEES
Blahous, Hon. Charles P., III, Ph.D., nominated to be a member of
the Board of Trustees of the Federal Hospital Insurance Trust
Fund for a term of 4 years, a member of the Board of Trustees
of the Federal Supplementary Medical Insurance Trust Fund for a
term of 4 years, and a member of the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund for a term of 4 years
(reappointments)............................................... 5
Reischauer, Hon. Robert D., Ph.D., nominated to be a member of
the Board of Trustees of the Federal Hospital Insurance Trust
Fund for a term of 4 years, a member of the Board of Trustees
of the Federal Supplementary Medical Insurance Trust Fund for a
term of 4 years, and a member of the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund for a term of 4 years
(reappointments)............................................... 7
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Blahous, Hon. Charles P., III, Ph.D.:
Testimony.................................................... 5
Prepared statement........................................... 27
Biographical information..................................... 28
Responses to questions from committee members................ 38
Coats, Hon. Daniel:
Opening statement............................................ 2
Hatch, Hon. Orrin G.:
Prepared statement........................................... 48
Reischauer, Hon. Robert D., Ph.D.:
Testimony.................................................... 7
Prepared statement........................................... 50
Biographical information..................................... 51
Responses to questions from committee members................ 62
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 68
(iii)
NOMINATIONS OF CHARLES P. BLAHOUS III,
TO BE A MEMBER OF THE BOARD OF
TRUSTEES OF THE FEDERAL HOSPITAL
INSURANCE TRUST FUND, A MEMBER OF
THE BOARD OF TRUSTEES OF THE FEDERAL
SUPPLEMENTARY MEDICAL
INSURANCE TRUST FUND, AND A MEMBER
OF THE BOARD OF TRUSTEES OF THE
FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND AND THE FEDERAL
DISABILITY INSURANCE TRUST FUND; AND
ROBERT D. REISCHAUER, TO BE A MEMBER
OF THE BOARD OF TRUSTEES OF THE
FEDERAL HOSPITAL INSURANCE TRUST
FUND, A MEMBER OF THE BOARD OF
TRUSTEES OF THE FEDERAL
SUPPLEMENTARY MEDICAL INSURANCE
TRUST FUND, AND A MEMBER OF THE
BOARD OF TRUSTEES OF THE FEDERAL
OLD-AGE AND SURVIVORS INSURANCE
TRUST FUND AND THE FEDERAL
DISABILITY INSURANCE TRUST FUND
----------
WEDNESDAY, MAY 11, 2016
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 3:01 p.m.,
in room SD-215, Dirksen Senate Office Building, Hon. Daniel
Coats presiding.
Present: Senators Crapo, Thune, Wyden, Schumer, Stabenow,
Brown, Bennet, and Casey.
Also present: Republican Staff: Viraj Mirani, Legislative
Director for Senator Coats; Jeff Wrase, Chief Economist; and
Nicholas Wyatt, Tax and Nominations Professional Staff Member.
Democratic Staff: Joshua Sheinkman, Staff Director; Michael
Evans, General Counsel; Ian Nicholson, Investigator; and Tom
Klouda, Senior Domestic Policy Advisor.
OPENING STATEMENT OF HON. DANIEL COATS,
A U.S. SENATOR FROM INDIANA
Senator Coats. The committee will come to order. I would
like to welcome everyone to today's hearing to consider pending
nominations. I am subbing for the chairman. He dug down deep
into the roster and pulled my name out.
For a freshman on the Senate Finance Committee chairing the
Senate Finance Committee, I have made rapid progress which will
probably end in an hour and a half or so, but I am going to try
to make the best of it.
Before us today are Dr. Charles Blahous and Dr. Robert
Reischauer, who have both been nominated to be members of the
Boards of Trustees of Social Security and Medicare. By statute,
these various boards consist of the Secretaries of Treasury,
Labor, HHS, and the Commissioner of Social Security, along with
two public trustees.
Drs. Blahous and Reischauer have been nominated by the
President to serve once again as public trustees. The public
trustee positions were created in 1983 based on a
recommendation from the so-called Greenspan Commission with a
requirement that one be from each political party. We are not
even going to ask which one is which. We know you are doing
bipartisan work for us, and we appreciate it. Since that time,
there have been five sets of confirmed public trustees, with
Drs. Blahous and Reischauer having been the last set to have
served.
The trustees have various duties, including a
responsibility to review general policies relating to the
management of the trust funds and to report to Congress each
year on the operation of the trust funds and their current and
projected status.
As the trustees go through the process of developing and
releasing a report each year, there are many inputs and many
participants. For example, the Social Security Administration
and its Office of the Chief Actuary, in particular, play the
key role in developing assumptions, analytics, and analyses
that often end up shaping the information that is provided in
the reports.
In addition, we have had numerous technical panels composed
of actuaries, economists, demographers, and others who review
the assumptions and methods used in the trustees' reports. This
is something that often is overlooked. Since 1999, 50 people
have served on these technical panels, weighing in on the
Social Security trustee reports and providing both fresh and
objective eyes on the development of the trustees' reports as
well as a much-needed check on what could otherwise be an
outsize role of the Social Security Administration in guiding
the contents of the reports.
In recent months, some have questioned whether having
public trustees serve more than one term is beneficial. Others
have noted the benefits of having continuity in these
positions, given the many intricacies related to their various
Social Security programs and the management of the trust funds,
not to mention the process through which the trustees' reports
are compiled and issued.
Obviously, the President has confidence and faith in his
two nominees, and this is why you are here. The trustees play a
vital role in overseeing the Social Security and Medicare trust
funds, and I believe we should welcome nominees with experience
of the trust funds who will be able to execute their respective
duties on day one.
The trustees also provide important information used by
policymakers. For example, the most recent Social Security and
Medicare trustees' report highlighted the urgency of addressing
our Nation's long-term fiscal challenges. As they have
repeatedly pointed out, if we are to save Social Security and
Medicare and ensure they are available for future generations,
we must make common-sense reforms to the programs. If we fail
to act, both programs will become insolvent within about 18
years, likely affecting those at and near retirement.
These programs consume more and more of Federal revenues
each year, which squeezes out funding for every other Federal
program and agency. This year alone, Social Security and
Medicare are expected to consume 46 percent of all Federal
revenues. By 2026, they will consume about 58 percent of all
revenues. Obviously, this is not sustainable.
Further, the combination of retiring baby boomers, longer
life expectancies, and fewer workers to financially support
each retiree, will make it increasingly difficult to sustain
these programs.
Again, as the trustees have repeatedly told us, the longer
some try to pretend that Social Security and Medicare are not
quickly headed towards insolvency, the more painful the reforms
will need to be. I believe it is our responsibility to take the
necessary steps to save Medicare and Social Security rather
than force some of the most vulnerable Americans to suffer the
consequences of our inaction.
Today we have before us two highly qualified nominees who
were confirmed to these very same positions by the full
Democratic-
controlled Senate in 2010 without any opposition. They have now
been resubmitted by a Democratic President to the Republican-
controlled Senate that so far appears ready and willing to
consider their confirmation once again.
With that, I want to once again welcome the nominees to the
committee today and thank them for their willingness to
continue serving in this important capacity. I will now turn to
Ranking Member Wyden for any opening remarks that he would like
to make.
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman. This
afternoon, the Finance Committee is going to discuss the
renominations of the public trustees for the Medicare and
Social Security trust funds. Now that sounds like a real
mouthful, but for me this issue goes back to the days when I
was co-director of the Oregon Gray Panthers and the Medicare
guarantee was sacrosanct and the promise of Social Security was
a godsend for millions of older people.
Recent years have presented dramatic new challenges for
Social Security and Medicare. Today millions of single elderly
women have to walk an economic tightrope each month, balancing
the cost of food, health care, and covering the rest of the
bills. These impoverished, single elderly women count on Social
Security every single month to keep their heads above water.
So we are going to be talking about positions with big
titles, and we are going to be throwing around a lot of
concepts about government and trustees and the like, but for me
what undergirds this debate is the challenge of making sure
that millions of impoverished elderly women are not, in effect,
going to be destitute and without options to care for
themselves.
Medicare in 2016 is very different than the Medicare of
1965. It is surely different than the Medicare we dealt with
when I ran the legal aid office for older people and was co-
director of the Oregon Gray Panthers. Back then, Medicare was
like when the senior hurt their ankle. If it wasn't a really
bad injury, they saw their doctor. That was Part B. If it was a
more serious injury, they went to a hospital. That was Part A.
That is not Medicare today.
Medicare today is about cancer, diabetes, heart disease,
strokes. When you put Alzheimer's into the debate--which
Senator Stabenow has done so much to work to strengthen--that
is the whole ballgame. That's it, folks. Medicare in 2016 is
completely different from Medicare in 1965.
So our challenge, in my view, is to protect these special
programs: the Medicare guarantee, Social Security--a godsend
more needed than ever before, with new trends such as the
impoverishment of so many older women. We need to protect these
special programs and update them for the times.
That is why, in my view, business as usual with respect to
these positions is not good enough. By the way, as part of this
debate that we are going to have, some of what I think is going
to be considered is not exactly a wild idea. The Finance
Committee, for example, has had a 30-year history of not
reappointing anyone to these positions.
Now, every year a big book comes out that looks into the
future of Medicare and Social Security, and the public trustees
play an important part in that process. It is a tough job. They
are trying to periscope the future for what is going to affect
millions of vulnerable and older Americans and what those
individuals are going to need decades down the road.
In my view, it is pretty clear that this task requires--and
the Finance Committee has made that a tradition--fresh
perspectives in advisory roles like these.
I will close by simply saying this: what undergirds these
jobs, these trustee positions, is not just charts and figures
and graphs and black print on white paper. It is really about
something more than that. It is about ensuring that the
material in those charts and graphs reflects our values and our
priorities, particularly as it relates to these special
programs.
With that in mind, I look forward to listening carefully to
what our colleagues and the nominees have to say. Bob
Reischauer has been giving good advice on these issues for
decades, and I look forward to hearing from our nominees and
our colleagues.
Thank you, Mr. Chairman.
Senator Coats. Thank you, Senator.
[The prepared statement of Senator Wyden appears in the
appendix.]
Senator Coats. I have some obligatory questions I have to
go through, but first I want to do the introductions of our two
nominees.
Dr. Charles Blahous is a current trustee for Social
Security and Medicare, Director of the Spending and Budget
Initiative, and a senior research fellow at the Mercatus Center
at George Mason University, where he specializes in economic
policy and retirement security with an emphasis on Social
Security and other Federal entitlement programs.
He was formerly the Deputy Director of the National
Economic Council under President George H.W. Bush and Executive
Director of the President's Commission to Strengthen Social
Security.
Dr. Blahous has a Ph.D. in quantum chemistry from the
University of California at Berkley and a bachelor's degree
from Princeton University.
Welcome, Dr. Blahous. If you would like to take a moment to
introduce any family members who have accompanied you here
today and proceed with your opening statement, we would be
happy to have you do that.
STATEMENT OF HON. CHARLES P. BLAHOUS III, Ph.D., NOMINATED TO
BE A MEMBER OF THE BOARD OF TRUSTEES OF THE FEDERAL HOSPITAL
INSURANCE TRUST FUND FOR A TERM OF 4 YEARS, A MEMBER OF THE
BOARD OF TRUSTEES OF THE FEDERAL SUPPLEMENTARY MEDICAL
INSURANCE TRUST FUND FOR A TERM OF 4 YEARS, AND A MEMBER OF THE
BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND AND THE FEDERAL DISABILITY INSURANCE TRUST
FUND FOR A TERM OF 4 YEARS (REAPPOINTMENTS)
Dr. Blahous. Thank you very much, Senator Coats, and thank
you as well, Ranking Member Wyden, and thanks to all of the
members of the committee. It is a great honor to be nominated
to serve again as one of the two public trustees for Social
Security and Medicare.
Before I begin with the substantive portion of my remarks,
some thanks are in order.
First, I would like to thank President Obama for the honor
of placing my nomination before the Senate. I would also like
to thank Senate Majority Leader McConnell for the trust he
placed in me by putting my name forward for this important
position.
I would like to thank my wife Jill and my daughter Juliana.
Unfortunately, my family could not be here today, but I want to
thank them nevertheless and express my appreciation for their
constant support and their many sacrifices for my career in
public service. I have been very blessed to have my family's
encouragement and counsel with each new challenge.
Particular thanks are due to the members of this committee,
to the United States Senate as a whole, and to the members of
the U.S. House of Representatives. I am deeply appreciative of
the unfailing courtesy with which I personally have been
treated by members of Congress in both chambers, on both sides
of the aisle, as well as by their staffs.
My appreciation, however, is based not primarily on these
personal considerations, but on Congress's general comportment
with respect to the trustees' process as established under the
Social Security Act.
Social Security and Medicare are perhaps the most important
domestic programs the Federal Government has ever established.
Their financial soundness, as has been noted here, is central
to the economic security of millions of Americans today and in
the future. The Social Security and Medicare trustees play an
indispensable role in equipping the Congress and the
administration with the information required to enable these
vital programs to function as desired.
It has been very gratifying to witness as a trustee the
respect with which members of Congress treat the trustees'
reporting process. At a time when confidence in so many public
institutions is under siege, lawmakers have recognized the
importance of Americans being served by credible, which is not
to say infallible, projections for the futures of Social
Security and Medicare.
Some of the most satisfying moments of trustee work come
when testifying before Congress and a member on one side of the
aisle cites data from the trustees' report to support a
particular policy viewpoint, after which another member on the
other side uses data from the same report to support a
different policy viewpoint. This is only possible because
members on both sides safeguard the integrity of the trustees'
work, and I am as grateful for this dynamic as I am for any
kindness extended to me personally.
The public trustees' positions were established in the
comprehensive Social Security reforms of 1983 to maintain
public confidence in the management of the trust funds and to
ensure that program finances were persistently reviewed by
bipartisan outside observers.
While forecasting is an imperfect science, my experience as
a trustee is that the work is conducted according to the
highest principles and standards of public service. While only
time will attest to the accuracy of the projections, it is not
too soon to vouch for the integrity of the process by which
they are made.
Each year, the trustees make assumptions about trends in
fertility, longevity, worker productivity, price inflation--
specifically in the case of Medicare, health-care cost
inflation--immigration, real wage growth, labor force
participation, and other relevant variables, both in the short
term and in the long term. Public confidence in the trustees'
projections rests in large part on whether these assumptions
are regarded as reasonable and objective.
To assist in realizing this ideal, the trustees bring many
perspectives to bear from both inside and outside our working
group, including the nonpartisan staff of the offices of the
Social Security Actuary and CMS Medicare Actuary; technical
panels periodically convened to assist respectively with Social
Security and Medicare projections; outside analysts who are
sometimes brought in, such as those at the Congressional Budget
Office or elsewhere in academia; and many, many others.
It has been my experience that participants in the trustees
process--ranging all the way from the managing trustee,
Treasury Secretary Jack Lew, to the other cabinet officials,
HHS Secretary Sylvia Burwell, Labor Secretary Tom Perez, Acting
Social Security Commissioner Carolyn Colvin, their
predecessors, and the various staff laboring in the different
executive branch departments--all conduct themselves with the
appropriate respect for this important work, a characterization
that I hope can also be applied to our service as public
trustees.
It has been a particular privilege and pleasure to serve
alongside Dr. Robert Reischauer in this role. I learn not only
analytical substance from Bob but I also learn from his example
of constant professionalism.
If confirmed again to serve as a public trustee, I would
look forward to contributing to the best of my ability to the
trustees' process and to maintaining public confidence in these
vital reviews of Social Security and Medicare program finances.
Thank you. I would be happy to take any questions.
Senator Coats. Doctor, thank you.
[The prepared statement of Dr. Blahous appears in the
appendix.]
Senator Coats. We now have Dr. Robert Reischauer, who is
also currently serving as public trustee of Social Security and
Medicare.
In addition, Dr. Reischauer is a distinguished institute
fellow and president emeritus at the Urban Institute, which he
led from 2000 to 2012. During much of that time, he was also a
member of the Medicare Payment Advisory Commission, serving as
vice chair from 2001 to 2009.
Before that, he served for 6 years as the Director of the
Congressional Budget Office, in between two separate stints as
a senior fellow in the Economic Studies program at the
Brookings Institute.
Dr. Reischauer has both a master's degree in international
affairs and a Ph.D. in economics from Columbia University, as
well as a bachelor's degree from Harvard University.
Welcome, Dr. Reischauer. Please take a moment to introduce
any family members with you here today and then proceed with
your opening remarks.
STATEMENT OF HON. ROBERT D. REISCHAUER, Ph.D., NOMINATED TO BE
A MEMBER OF THE BOARD OF TRUSTEES OF THE FEDERAL HOSPITAL
INSURANCE TRUST FUND FOR A TERM OF 4 YEARS, A MEMBER OF THE
BOARD OF TRUSTEES OF THE FEDERAL SUPPLEMENTARY MEDICAL
INSURANCE TRUST FUND FOR A TERM OF 4 YEARS, AND A MEMBER OF THE
BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND AND THE FEDERAL DISABILITY INSURANCE TRUST
FUND FOR A TERM OF 4 YEARS (REAPPOINTMENTS)
Dr. Reischauer. Thank you, Senator Coats, Ranking Member
Wyden, and members of the committee. I appreciate the fact that
you are willing to consider my qualification for re-nomination
by the President for the position of public trustee of the
Social Security and Medicare trust funds.
Social Security and Medicare are vital components of the
Nation's social and economic fabric, providing essential
financial support and access to medical care for millions of
people with disabilities, the elderly, and families of deceased
workers. They are two of the Federal Government's largest
programs. They are also important to the Nation's economy and
loom large in the Nation's fiscal picture. It is critical that
the financial and operational integrities of these programs are
unimpeachable and that the public retains confidence in their
continuity but understands the challenges that they face in the
future.
Like many older Americans, I have a close personal
relationship with both programs. I receive benefits from them.
I pay payroll taxes to their several trust funds, and I pay
premiums for my supplementary medical and prescription drug
coverage. I am a very satisfied participant and think my
experience as a beneficiary has provided me with perspectives
that are valuable for my professional understanding of these
programs.
Along with Dr. Blahous, I served as a public trustee from
October 26, 2010 through July 22, 2015. This was one of the
most interesting and rewarding assignments that I have had in
my 46-year career in Washington. It is also one that has given
me confidence that Congress can establish and the Federal
Government can operate processes that work and work well.
As you know, a primary responsibility of the trustees is to
report to the Congress each year on the past and future
statuses of the trust funds. The work involved in putting
together these annual reports is carried out largely by the
Working Group, which consists of the two public trustees;
Assistant Secretary-level representatives of the Treasury,
Health and Human Services, and Labor Departments; and a Deputy
Commissioner-level representative from the Social Security
Administration.
The representatives of these ex-officio trustees are
supported by extremely able professional staffs. In addition,
the Social Security and Medicare actuaries play critically
important roles, providing estimates and analyses,
methodological guidance, and historical perspective to this
working group.
The Working Group deliberations focus on current conditions
of the trust funds, how and why they may differ from what was
projected in recent reports, and what those differences might
imply for future projections. The Working Group carefully
examines and, if needed, revises the critical demographic,
economic, and programmatic assumptions that are required to
generate projections. It also evaluates possible methodological
and presentational improvements.
The process is an open one. All of the members can suggest
topics for the agenda. On occasion, outside experts present
their perspectives on issues on which the Working Group has not
reached a consensus.
Every 4 or so years, the Social Security Advisory Board and
the Department of Health and Human Services appoint technical
panels of leading outside experts to review the demographic and
economic assumptions, and the methodologies and the
presentation of the trustees' reports. I have attended almost
all of the meetings of the last two technical panels to listen
to their deliberation and at times provide some perspective and
input. Appropriately, the Working Group pays serious attention
to the recommendations of these panels.
Early in the year, the Offices of the Actuaries generate
draft reports that reflect the deliberations of the Working
Group. They are circulated to the entire group, which subjects
them to an exhaustive and exhausting comment and revision
process.
Reflecting back on the five report cycles I have
participated in, I am impressed by their quality. The
discussion is robust and sophisticated. The input of the
professional staffs of the several departments and the Social
Security Administration and the Actuaries Offices is uniformly
excellent. The atmosphere is collegial, and the decisions are
consensual.
The deliberations are devoid of partisan or ideological
bias, as all strive to produce reports that are balanced and
objective. In my opinion, the Congress and the American people
are well-served by the existing trustee process.
When I appeared before this committee in July of 2010, I
discussed aspects of my professional experience that bore on my
qualifications to carry out the responsibilities of the public
trustee position. I will not repeat them today.
Suffice it to say that the various positions, commissions,
and boards I have served in and on--most importantly, my 5
years as a public trustee--have provided me with the technical,
methodological, and programmatic expertise necessary to fulfill
the responsibilities of a public trustee, and, if confirmed, I
will carry them out with the objectivity, seriousness, and
skill they deserve.
Thank you.
Senator Coats. Doctor, thank you.
[The prepared statement of Dr. Reischauer appears in the
appendix.]
Senator Coats. I do have some obligatory questions that all
nominees have to answer. So if I could, I will read the
question and ask each of you to give us your ``nay'' or
``yea.''
First, is there anything that either of you is aware of in
your background that might present a conflict of interest with
the duties of the office to which you have been nominated?
Dr. Blahous?
Dr. Blahous. No.
Senator Coats. Dr. Reischauer?
Dr. Reischauer. No.
Senator Coats. Secondly, do you know of any reason,
personal or otherwise, that would in any way prevent you from
fully and honorably discharging the responsibilities of the
office to which you have been nominated?
Dr. Blahous. No.
Dr. Reischauer. No.
Senator Coats. Do you agree without reservation to respond
to any reasonable summons to appear and testify before any duly
constituted committee of the Congress if you are confirmed?
Dr. Blahous. Yes.
Dr. Reischauer. Yes.
Senator Coats. And finally, do you commit to provide a
prompt response in writing to any questions addressed to you by
any Senator of this committee?
Dr. Blahous. Yes.
Dr. Reischauer. Yes.
Senator Coats. ``Prompt'' is a bit subjective, but I think
your ``yes'' is sufficient.
Let me start by asking you some questions, Dr. Blahous. You
wrote an article last July after the release of the 2015 Annual
Report of the Social Security and Medicare Board of Trustees. I
quote here--this was emphasized: ``Social Security finances are
on an unsustainable trajectory requiring legislated corrections
as soon as they can be enacted.''
You went on to note that the costs of Social Security are
growing far more rapidly than its tax base, largely because the
beneficiary-to-worker ratio was declining.
Regarding that article, I am wondering if you could give us
a little bit more depth in terms of where the trajectory is
taking us, and can you better quantify ``as soon as can be
enacted'' and why that would be required?
Dr. Blahous. In the various trustees' reports, we have
reiterated various versions of this message over the years, so
we have done this in the all trustees' messages; we have done
this in the summary of the reports. Bob and I have done this
separately in our public trustees messages as well, and it is
done in the main body of the reports.
A basic issue that we face is that we have a substantial
financing gap between the benefits that would be scheduled
under the program's benefit formulas and the projected incoming
revenues. One of the points that the trustees have sought to
emphasize, I think in each report, is that our choices become
more difficult with each succeeding year of delay.
Assuming that we want to uphold the principle that we not
have sudden reductions in benefits for people who are already
in retirement, then each passing year of inaction means that
the costs of achieving solvency, sustainable solvency, have to
be compressed among a smaller and smaller group of cohorts.
What we have done in each report is, we have tried to
illustrate some examples of this effect. For example--I do not
know the figures off the top of my head, but if you were to
enact a solution today and if you were to do it entirely on the
cost-containment side and you wanted to leave current retirees
out of it, you might have to reduce benefits for future
beneficiaries on the order of 20 percent or so.
If you waited to the point of trust fund depletion, then
even if you completely cut off all benefits for new eligibles,
you would not be able to put the system in balance by that
measure alone, and it would very dramatically increase the risk
that people already on the rolls would be harmed by the delay.
So these and other illustrations that we have put in the
reports over the years are intended to demonstrate why actions
should be taken as soon as possible.
Senator Coats. Dr. Reischauer, would you like to comment on
that also?
Dr. Reischauer. There is no disagreement between myself and
Dr. Blahous or between us and the vast majority of analysts who
look at this issue. There is a cliff that is coming sometime in
the early 2030s when the trust fund is exhausted, and, under
current law, the trust fund has no legal ability to borrow or
to deficit finance. Adjusting ourselves sooner to boost
revenues or moderate the growth of benefits will allow the
adjustments to be more moderate than they would have to be if
we waited until we went over the cliff.
What we have tried to do with the trust funds, and what
members of Congress and others have tried to do, is provide a
sense of realism about these choices to the American people so
they will understand what is required to preserve these very,
very important programs and ensure what Senator Wyden fearfully
talked about does not occur.
Senator Coats. Senator Wyden stated that the challenge for
all of us is to ``protect the essential program. Business as
usual is not good enough. We need fresh perspectives.''
Now I know you are dealing, literally, with numbers and
making an analysis based on factual information and the numbers
you are presented, but what are the alternatives? What
alternatives would you recommend to those of us who have to
make this decision in terms of when and how to address this
challenge? Do you have any guidance or thoughts for us?
Both of you have talked about the fact that if you just do
it on the basis of input versus current output, without any
changes in that policy, whether it is revenue gained or whether
it is a balance of other things--what would you suggest to us
or recommend as a way to move forward that you think would be
most fair in addressing the challenges that we have but be
sensitive to the importance of the programs and the value of
them to so many of our citizens?
Dr. Blahous. I will try to give you a multi-part answer on
that if I could.
There are two parts of the ``when'' question that are
relevant. One is, when from a purely substantive perspective.
There the answer is, as soon as humanly possible. Obviously,
the earlier you act, the greater spreading of any necessary
changes there can be, the more advance notice there can be to
people of coming changes.
Now that is the substantive answer. Obviously, you have to
take into account considerations that we as trustees do not.
You know, whether October 2016 is the optimal time for
legislative action would depend on factors apart from the
substantive considerations facing Social Security and Medicare.
So obviously, you as legislators have to balance a number
of considerations, but from a purely substantive perspective,
obviously, the earlier the better.
With respect to the range of options, what we as trustees
try to do is to lay out the options and quantify them, but not
enter into the value judgment in the trustees' reports as to
whether this is best done on the revenue side or the cost-
containment side. What we do is, we present illustrations of
the magnitudes of the changes that would be required if you
were to go in each direction and lay out some of the
considerations, but we in the trustees' reports do not attempt
to steer legislators one way or the other. That is a subjective
value judgment that legislators have to make: whether to apply
more in taxation or whether to constrain the growth of benefit
costs.
Dr. Reischauer. But also just to add to that, as trustees,
we stay completely away from recommendations of specific
policies and also, even as Chuck has suggested, the division
between benefit cuts and tax increases. Those are the only two
components you have; how you mix them is a decision for
policymakers and politicians, but not for the public trustees
to enter into at all.
Senator Coats. I was here in the mid-80s when we made some
significant policy changes to Social Security. It was a
bipartisan effort led by President Reagan and the Speaker of
the House, Tip O'Neill. If you are familiar with those, and I
suspect you are, would that be a model that we ought to look at
in terms of how to address it, or was that beneficial then but
not now?
Dr. Blahous. Well, I would say procedurally it can be a
model. It is certainly a model of bipartisan compromise in
dealing with a Social Security shortfall. Substantively, I
think the important information we would want legislators to
have is that we are already at a point where the shortfall we
are currently facing is much larger than the one they faced in
1983. That one measured on average about 1.8 percent of the
program's tax base over the ensuing 75 years. We are already up
to about 2.7 percent now.
That ignores the fact that the actuarial methodology has
changed in certain specific respects between 1983 and today. If
we still did the actuarial methodology the same way today that
we did in 1983, the overall shortfall we would be looking at
now would be roughly twice as large, even relative to the
program's larger tax base today.
So, in terms of the amount of difficult choices that
legislators have to make to put Social Security into long-term
balance, they are more severe today than they were in 1983 and
growing more severe with every year of delay. So yes, in some
respects, 1983 is a model, perhaps a model of bipartisan
compromise and procedure. We are already looking at more
difficult choices today, and therefore, the program is at
greater risk going forward if we do not take timely action.
Senator Coats. Thank you.
Senator Wyden?
Senator Wyden. Gentlemen, let me start with one of the
questions this committee is going to have to wrestle with right
at the outset. There is a 30-year tradition. Basically, it goes
from Baucus, Grassley, Dole, and Moynihan talking about the
outsider status of the public trustee. Why shouldn't the
tradition of serving only one term be maintained?
Dr. Blahous, why don't you start?
Dr. Blahous. Well, can I fall back on my plea of giving a
multi-part answer? There are various things I can say, not all
of which are closely connected.
Senator Wyden. But I think it is a fairly straightforward
question.
Dr. Blahous. It is a straightforward question. I just have
multifarious thoughts on it. With your permission----
Senator Wyden. Sure.
Dr. Blahous. Obviously, the first answer is, that is your
prerogative and value judgment to make.
Senator Wyden. I want you to give me a reason why it should
not be. Maybe you learned something, you do something
differently, there is a fresh perspective. I would like to hear
particularly from you. You and I have a variety of views
substantively that are in pretty sharp disagreement. So I would
just be interested in an answer to the question, particularly
on why the committee should depart from this tradition.
Dr. Blahous. Well, I would make a couple of observations.
We are only the fifth public trustees to ever serve. We have
signed five reports. That is actually the fewest number of any
previous public trustees who have served.
The previous public trustees signed seven. We are going to
have a lot of turnover anyway. We have a presidential election
coming up. It is almost certain we will have four new
government trustees.
Now, obviously--again, it is your judgment whether you want
to have all six trustees change over or whether you want to
have some institutional continuity in the room. We are going to
have a very substantial amount of fresh eyes on the product no
matter what.
I do think--irrespective of the question of whether it is
us--I do think public trustee oversight over the process is
very important. I think the process suffers when there are not
public trustees in there. So I would urge, again, irrespective
of whether it is us or someone else, that public trustees be
confirmed rapidly.
I actually think the administration officials are
handicapped when they do not have public trustees in there
overseeing the work, because they are in a state of limbo and
uncertainty about whether to incorporate changes or not, not
knowing what public trustees would be saying or how they would
be reacting.
So those are all considerations that I would bring to bear.
I would also additionally say, we do not lack for fresh eyes
and outside perspectives in the trustees process. We are big
believers in it. We use the input from the technical panels. We
call in outside experts. We definitely agree with the idea that
fresh eyes are important. But those are my thoughts in general.
Senator Wyden. Dr. Reischauer?
Dr. Reischauer. I have given this some thought. I think
continuity is important. This is a complex process. It is an
interpersonal set of relationships that develops these reports,
and it takes--Chuck and I have talked about this--a couple of
years to really know how this is working, how to work it and
how it can work.
There is a lot of turnover of the Assistant Secretary-level
folks representing the ex officio trustees. So they often are
not schooled and experienced in this process at all. It is the
professional staff of the various departments and the actuaries
who are. I think the input that the public trustees learn they
can have in this process develops over time and is important,
and as Chuck said, there will be a whole lot of turnover in the
course of the next year in this. Having some experienced hands,
shall I say, I think would be very valuable.
Senator Wyden. Let me ask one more question of you, Dr.
Blahous. You heard me talk about Medicare. I am particularly
concerned about what is going to happen to the Medicare
guarantee. This is something that to me is inviolate. The
program needs to be updated. That is why we have been working
in a bipartisan way. We have some of the most progressive
members of the House and some of the most conservative members
working together in a constructive way, but it is all about
protecting the Medicare guarantee and updating the program.
So I would like to hear your thoughts on what you see for
the future of Medicare and the way in which the country treats
those who are going to generate most of the changes for
Medicare. Beneficiaries with six or more chronic conditions
account for 46 percent of the spending. So what do you see for
Medicare?
Dr. Blahous. Do you mean more specifically on the financing
aspects of Medicare or from a policy perspective?
Senator Wyden. I am interested in getting insight into your
thinking, because I have read much about your past articles,
and suffice it to say, I do not believe it will be a big
surprise to you that I disagree profoundly with some of those
views. But for purposes of today, what I want to see is what
you think Medicare's future should be all about.
I start with the Medicare guarantee. There could be a lot
of other decisions. I would just like to hear you talk about
the subject.
Dr. Blahous. In terms of what I can offer, I have not
personally done a whole lot of research or writing about
Medicare policy choices, per se. That has not been a research
specialty of mine.
I have written about the public finance aspects of Medicare
and the status of the Medicare trust funds, but the Medicare
policy debate is something that, to a large extent, I have not
really entered into. I had not really entered into it very
closely before becoming a trustee, and after becoming a
trustee, I did not have particular reason to enter into it
closely.
So with respect to Medicare financing questions, that is
something that I certainly do write about as a trustee, with
the other trustees, and also when I write about the findings in
the annual trustees' report.
What we try to do in the Medicare report is to give a sense
of how our outlook is changing. One of the points that I have
tried to make in my writings about Medicare is that we have a
certain amount of health-care cost deceleration built into our
projections already, and we are hopeful as a group and
individually that the recent deceleration in health-care cost
growth will be sustainable and work to the benefit of Medicare
beneficiaries in the sense of shielding them from tougher
choices that we might otherwise have to make.
However, we probably cannot rely on that for the Medicare
financing picture to become significantly better than we are
currently projecting, because we are already building a fair
amount of cost deceleration into our projections, even into our
baseline.
Beyond that--my own research is not specifically in the
Medicare policy area. I tend to confine myself to just the
public finance aspects of Medicare.
Senator Wyden. Thank you, Mr. Chairman.
Senator Coats. Senator Stabenow?
Senator Stabenow. Thank you very much, Mr. Chairman and Mr.
Ranking Member. We appreciate both of you being here today.
Let me first say that I view Medicare and Social Security
as great American success stories, lifting a generation of
people out of poverty, creating a healthier group of members as
they retire, as well as people with disabilities. We look at
the fact that we have over 54 million people who depend on
Medicare to meet their health-care needs, 45 million seniors, 9
million people with disabilities, and the fact that we have
seen costs come down as it relates to the Affordable Care Act
and some other areas--the way that is coming together is
positive.
Also, Social Security is key to economic security. It is
not just retirement; it is disability and it is life insurance,
and we all pay into it. We all pay into it, and it is
comparable to a pension, which way too many people do not have
right now.
We live at a time when about half of our workforce does not
have a pension. We are struggling with what to do to help
people who have paid into a pension to be able to get their
pension. Over one-third of our workforce has no retirement
savings. So it is a big deal when we talk about all of these
things. Over one-fifth of elderly married couples rely on
Social Security for 90 percent of their income.
So we could go on and on with the numbers, but the bottom
line is that it is really important, and the American people
support maintaining the structure and integrity and ability of
these programs to be able to operate. So the first question
that I would ask of both of you is--we will start with Dr.
Blahous--do you support or oppose cuts to Social Security
benefits?
Dr. Blahous. The first thing I would say is, as trustees,
we do not discuss policies at all. We all have different policy
views and policy duties and professional duties outside of the
trustees' process, but we do not bring those into the trustees'
process. I think that is very important. It is important to the
integrity of the work.
Obviously by design, this is a process that brings together
people from different parties and different policy backgrounds,
who advocate for different policy positions in different
settings. But when we are in there as trustees, that is not
what we are doing.
Senator Stabenow. Let me just stop you and say, okay. Let
us talk not as a trustee, but as a person with a long and
public record of opposing the basic structure of Social
Security. You have advocated for privatizing, for shrinking
Social Security. Is that something you still support,
privatizing Social Security?
Dr. Blahous. I actually--I would not agree with that
characterization.
Senator Stabenow. All right.
Dr. Blahous. First of all, I was very much in agreement
with your opening statement that the historic financing
structure of Social Security is a success story. I made remarks
to this effect at one of our trustees' pressers, which is that
it is not easy for legislators to design programs to provide
levels of support on the order of Social Security and Medicare
and have the basic means of financing and providing those
programs be broadly accepted by the public. That is very, very
hard to do.
You have Social Security and Medicare--they are providing
substantial support to millions of people, and you do not have
particular public controversy about whose ox is being gored
when they are getting financed. That is pretty remarkable.
So I do not oppose the basic financing structure of Social
Security and Medicare. I actually feel very strongly that the
self-financing ethic of those programs, first as designed by
FDR and then certainly on the Medicare Part A side by 1965, is
very important to maintain. So I would not agree with that
representation.
Senator Stabenow. What about the management, though? You
have advocated for forms of privatizing Social Security. Is
that not accurate? I have read things.
Dr. Blahous. I understand that that terminology is
sometimes used, but I have not advocated for privatizing Social
Security. There have been various proposals put out over the
years that would involve----
Senator Stabenow. Private accounts, for instance?
Dr. Blahous. Right, and there were proposals to invest the
trust fund in the stock market that were proposed by President
Clinton. I was not in favor of those.
There were proposals put forward for privately administered
personal accounts. I was not in favor of those.
When I worked in the George W. Bush White House, I worked
on a proposal for him that would have established savings
accounts within Social Security, but it would have been within
the publicly administered structure. It would not have been
privatized accounts.
Obviously, that was a job that I had with the Bush
administration. I was very pleased to have that job, but it is
not a job that has any particular bearing on what I do as a
trustee.
Senator Stabenow. And I would just quickly ask Dr.
Reischauer the same question in terms of cutting Social
Security or privatizing, changing the structure of Social
Security.
Dr. Reischauer. I think the basic structure is sound, but
at this point, it is unaffordable, and we have to make some
changes. Were I king for a day, I would probably give quite a
different proposal than Chuck would. On the other hand, in the
5 years working together with him on the working group and as a
trustee, I would have no indication of that. We work
constructively in the trustee process.
You asked about benefits. That is a decision for the
Congress. Are benefits in the aggregate too low or too high? I
think very strongly that they are too low for a significant
swath of the lower-income population.
Without throwing myself on the sacrificial table here,
there are some of us who could see a slower growth in benefits
over the future if that growth went to supporting the widows,
the elderly, those with long careers at relatively low wages,
who are having an extremely hard time and will have an even
harder time in the future, as you point out, because of their
lack of pensions and their lack of retirement savings, which is
not their fault. The economy has not given them a job that had
a pension, and they do not have the wherewithal--trying to put
food on the table every day--to put money away for retirement
in an IRA or something.
Senator Stabenow. Thank you, Mr. Chairman.
Senator Coats. Thank you, Senator.
Senator Brown?
Senator Brown. Thank you.
As you know, there has been an 8-decade Manichean struggle
in this country on the issue of social insurance and the role
of government. I think that we have seen that play out in the
Finance Committee a number of times. I want to reiterate what
Senators Wyden and Stabenow said and with a bit more historical
context.
Since 1983 when Congress established the public trustees'
positions, neither this committee nor the full Senate ever
voted to confirm a trustee for more than one term. You know
that.
In 2006, when President Bush made the unprecedented
decision to reappoint John Palmer and Thomas Saving to these
positions, he did so over the bipartisan objection of then-
chairman Grassley and then-ranking member Baucus.
Unfortunately, it appears this committee today has chosen
to forgo that precedent and move forward with these
nominations. By doing that, we set a dangerous precedent, not
just because of the number of terms the trustees will serve.
There is a larger stake in these nominations. These programs
are among the most important in the country, affecting nearly
every American. We need to think twice before we turn the role
of trustee into a partisan position or an ideological position
that can be used to undermine public confidence in Social
Security.
Dr. Blahous has a long partisan history with respect to
Social Security as Executive Director of President Bush's
Commission to Strengthen Social Security. I love how we name
things in this town.
Dr. Blahous has put forward proposals to privatize the
program, plans that would turn the retirement that Americans
have earned over a lifetime of work into yet another slush fund
for Wall Street. Imagine--if they had succeeded in the
beginning of the second Bush term--what would have happened to
those accounts as the Bush economy was so deflated in 2008 and
2009.
Dr. Blahous has repeatedly argued for cutting benefits and
raising retirement age, all under the guise of supposed reform.
He is certainly free to do that as a private citizen. He is
entitled to that perspective, a perspective frankly that is
shared by too many people who dress like we do and get paid
good salaries and who receive great health care and retirement
benefits from taxpayers.
The American public does not share in these views. That is
clear from the huge bipartisan response to the Bush efforts in
2005.
Dr. Blahous has been re-nominated to represent the public,
hence the term ``public trustee.'' By continuing this position,
Dr. Blahous can use the title of public trustee to give the
impression that there is official backing for an ideological
agenda that most Americans surely do not support.
I am concerned there is no way for the average person to
distinguish when Dr. Blahous is speaking as a public trustee
and when he is speaking for the right-wing think tank that is
his full-time employer.
For instance, in 2010, Dr. Blahous said in an article in
which he was identified as a public trustee, bottom line, he
was either for changes to the benefit formula or for big tax
increases to the next generation. In a 2011 radio interview,
again identified as a public trustee, representing the public,
Dr. Blahous argued for the need to raise the retirement age of
Social Security.
In 2015, while again identifying himself as a public
trustee, he defended a highly partisan rule passed by the House
of Representatives--we remember that last year--concerning
Social Security disability insurance, saying, ``There is no
evidence suggesting that actual disability is more common than
it was 30 years ago.'' Again, he was identified as a public
trustee but was speaking outside of his role as a public
trustee.
These comments are misleading. They are hyper-partisan.
They dismiss serious proposals for reform that would help
seniors. But coming from a public trustee, they also erode
trust in the program, pushing ideological agendas outside of
the trustees' mandate to educate the public about the trustees'
report.
We should be working to expand and strengthen Social
Security. The Senate should not put someone in a position of
public trust who helped write the blueprint to set up private
accounts--that is what he says; we say privatizing Social
Security--and collects a paycheck while promoting plans to cut
senior benefits.
I understand today's nominees fall under what is known as
privileged status in the Senate, which means the chairman can
move the nominees without a committee vote. This position is
too important to deny this committee a vote. I made my concerns
known to Chairman Hatch and to Ranking Member Wyden.
Dr. Blahous, I have three questions, if you would answer
``yes'' or ``no.'' The fourth question--you can expand on all
of those. Answer the fourth question and then expand on the
first three if you would.
First, do you believe any Social Security reform must
include cuts to the program? Yes or no?
Dr. Blahous. Must? No.
Senator Brown. All right. Do you believe it is the proper
role of a public trustee to advocate for specific Social
Security solutions any time in his life, whether he is speaking
as a trustee or identified as a trustee?
Dr. Blahous. I believe it can be.
Senator Brown. All right. And third, you have advocated for
private accounts--that private accounts should be formed within
Social Security. Do you believe it is the role of a public
trustee, again, as a trustee or in your private life, to
advocate for such a position?
Dr. Blahous. I do not believe it is the role of a trustee
to advocate for----
Senator Brown. Is it a proper role of a trustee, even
outside of the trustee's role, identifying as a trustee, to
speak on those issues that way in your other job?
Dr. Blahous. I would not have a problem with a trustee in
their other role arguing for private accounts, but I have not
been arguing for private accounts. I worked in the Bush
administration, and I worked on a private account proposal, but
I have not been arguing for private accounts during my time as
a trustee.
Senator Brown. All right. Last question, and you certainly
can take as much time as you need on this. Is it possible that
taxpayers who read your writings, who listen to your speeches,
who look at your publications for the Mercatus Center, most of
which identify you as a public trustee, could be misled to
believe that you are speaking for the Social Security program
itself and for the Social Security Board of Trustees?
Dr. Blahous. I suppose it is possible, but I would say I do
not think it is any more likely than that one would assume that
Secretary Lew or Secretary Burwell are speaking for the
trustees when they give a policy opinion on Social Security or
Medicare.
There is an inherent tension in these positions, where we
are all serving in other positions at the same time that we are
trustees. It is understood that we do not bring that other work
into our trustee work. It is also understood that we all have
other work that we do and that it is not interpreted as all the
trustees speaking for one another.
I would be concerned about there being any constraints
uniquely on the public trustees relative to the other trustees.
I think that would be a mistake and depart from congressional
intent.
When the public trustee positions were established in 1983,
it was, I think, in large part because there was a desire to
have the public and lawmakers hear from trustees on issues
surrounding Social Security and Medicare who were not
simultaneously working as Cabinet officials for the
administration.
So, again, I think all of us in the trustees' process take
good care to make sure that our other jobs and duties do not
interfere with our trustee work. With respect to the restraints
that we impose on ourselves outside of our trustee work, there
is definitely a role for restraint. Depending on the amount of
time, I can talk about the various ways in which I think
trustees should be self-restrained in how they write and
communicate on these programs, but I would not want any
perception of restraint and constraint to be placed uniquely on
the public trustees relative to the others.
Senator Brown. Thank you, Dr. Blahous.
One comment really quickly, Mr. Chairman. At the beginning
of his more expansive statement, which I appreciate, he
mentioned Secretary Lew. Secretary Lew will be identified on
almost anything that he says about government as the Secretary
of the Treasury. Dr. Blahous will be identified when he speaks
about these issues from a more ideological perspective as a
Social Security public trustee. That is the fundamental
difference.
Senator Coats. If I could just ask a question for
clarification. My understanding--and correct me if I am wrong--
is that our two witnesses here, perhaps, have different
thoughts, different ideas, different proposals relative to how
benefits should be designed and so forth. But that is not your
role.
Your role is simply mathematic, is it not? Is it not an
analysis of numbers in terms of how the program is financed?
Your role is not--we have asked you questions outside of that.
You probably have both written and testified or given speeches
or whatever about your personal thoughts as to how the program
ought to be structured, what the benefits are, and so forth.
My understanding is that, in your role as a trustee, you do
not have the authority to do anything other than report facts
back to us so that we can use that information in terms of
deciding how we can finance, what policy decisions we make
relative to the Social Security and Medicare programs. Is that
correct?
Dr. Blahous. Right. It is an analytical role, and it is a
reporting role. I think one handy way to think of it is that it
does not really matter what our views are. What matters is
whether we provide the information to you so that you can
advance your legislative view of what needs to be done with
Social Security.
Senator Coats. And, Dr. Reischauer, would you agree with
that?
Dr. Reischauer. I would agree with that completely.
Senator Coats. So what is reported to us--by both of you,
who may have different ideas as to how the program should be
structured--has nothing to do with what we ultimately decide.
You are just simply giving us the factual basis of the
financing of what it is we have decided to do relative to
Social Security benefits.
Dr. Reischauer. And the context and perspective can tilt
how people look at facts, and we bend over backwards to try to
make that as objective and neutral as possible. There is robust
discussion among the ex officio representatives and us about,
let us make sure this is right on the level and that it is not
skewing----
Senator Brown. Mr. Chairman? I would add, Mr. Chairman,
that they do this in their work as trustees. It is when they
are identified as trustees and speak out--we may not care; no
disrespect to either of you--as distinguished academicians and
beyond, as government servants.
We may not put a big premium on what they are saying about
recommendations beyond their trustee work, but what they say to
the body politic and to the public is characterized so often
as, these are public trustees, they must be speaking for Social
Security when they advocate positions.
Senator Wyden. Mr. Chairman, I just want to clear up
something on this point with respect to the dual roles. Dr.
Blahous, my understanding is that, in writing and speaking
about public policy issues, you sometimes refer to yourself as
a Social Security public trustee.
My understanding is that you, Dr. Reischauer, do not. Is
that correct?
Dr. Reischauer. It is inevitable that when we--either of
us--appear, the people who are sponsoring the organization or
whatever want to put down that, these people are trustees,
because they want to do what Senator Brown suggests, tie
whatever we might be saying to their particular----
Senator Wyden. So somebody can introduce you as----
Dr. Reischauer [continuing]. And you always say, I am not
speaking in my capacity as a trustee and what I say has no
relevance to the trustees.
Senator Wyden. And when you write articles, you do not
claim to be a public trustee?
Dr. Reischauer. Right.
Senator Wyden. Correct. Thanks. I needed to know. Thank
you.
Dr. Blahous. Could I speak to that and just clarify,
because I want to be clear with the committee as to how I
handle it--unless it is not wanted.
Senator Wyden. Well, I want to make sure Senator Casey gets
a chance to speak, and we are going to have votes, but I want
to hear your point on that, because for me, that is an
important distinction. When you write about public policy
issues, you refer to yourself as a Social Security public
trustee. Dr. Reischauer does not refer to himself as a public
trustee, and it goes to this question of mixing the roles.
I think we should get to Senator Casey at this point.
Senator Coats. But I want to let Dr.----
Dr. Blahous. I do not want to leave a misimpression that
somehow I am handling things in a fundamentally different way
from the way Dr. Reischauer does.
For example, if I were invited to be on a show and the
topic was the Social Security and Medicare trustees' reports, I
would think that it would be fine to be on there as a public
trustee saying, here is what we found in the trustee's report.
If I were making an appearance where I was talking about my
research for Mercatus or something, I would not go on there
saying, here I am speaking for the trustees.
What I generally do--and I think this is important. My
identification as a trustee is a standard part of my biography,
and therefore, it is a standard part of the byline. But I think
that is an important disclosure.
We have had instances in academia in recent years and
controversies where people have not disclosed what their roles
are with the government when they are out there giving policy
views. While I do try to take care to distinguish anytime I am
writing and giving my own views from when I am talking about
what the trustees have found, I think it would be a mistake to
conceal or withhold the information that I am serving as a
public trustee. I think that would run afoul of some of the
ethic of disclosure that has proved to be important and
controversial in other instances involving academics over the
years.
Senator Coats. Thank you, Doctor.
Senator Casey?
Senator Casey. Thank you, Mr. Chairman.
I am going to develop a line of questioning that was raised
earlier. We appreciate you both being here and your service.
Especially when we are talking about Social Security, but I
think it also applies to Medicare, we are talking about
programs that have become such a part of the fabric of American
life that they are in essence a basic promise. That promise
that undergirds American life also is not just a nice
commitment to keep. Both are--I think--central features of a
kind of stability that we have in the country.
I think it was Senator Stabenow who raised the issue of
retirement security being at risk. The number of defined
benefits has gone way down, and there is a lot of economic
uncertainty. So whether you think we should have a three-legged
stool of security or four--whatever the analogy is, a lot of
that has been either compromised or somehow undermined.
So how we deal with this question of appointment has to be
tied to that basic promise and the stability that flows from
that. I think this idea of having a fresh perspective is sound
because of that--because of the promise we are trying to keep.
So whether you call it a new perspective or new ideas or
having an outsider perspective after 1 term is up--others have
used the word ``watchdog.'' I was a State auditor, elected
twice, and one of the basic elements of that is your
independence: you are separated from the work of an
administration. You have a measure of difference or
independence.
So when we are talking about a new perspective and new
ideas, I think that is an important consideration. That is why
I think this tradition of having a turnover every 4 years is
sound in this context.
One of the issues that has come before us that a lot of
constituents have talked to us about is the backlog in
processing for SSDI--Social Security Disability payments--and
the applications for that. If you have that backlog persist too
long and fester, like in any circumstance, that delay is not
just an inconvenience. It has an outcome attached to it. I do
not think it is a stretch to say in the context of SSDI,
justice delayed is justice denied. If there is too long a
delay, you do have a denial of justice or, at a minimum, a
denial of determination or certainty for that individual.
So I guess if you are making the case that that tradition
of turnover every 4 years should be upended--Dr. Reischauer,
you talked about continuity and experience, and that is an
argument to be made. I guess if you are making that argument
and against the argument of turnover over the course of 4
years, and you are concerned about the promise, and you are
concerned about making sure we have fresh perspective, and a
fresh set of eyes, how can you demonstrate to us that there are
either actions that you have taken in the past or new ideas
that you would put forth in the future that would support your
position?
Maybe I will just start with you, Dr. Reischauer. Then----
Dr. Reischauer. Well, with the particular example that you
used, which is the backlog in DI, that is not a kind of issue
that the trustees would be involved in. That is an explanation
for why the rolls are going up, or going up more slowly or more
rapidly than they have in the past. That might be discussed in
a very objective way explaining why the numbers are what they
are.
The idea that there are new or different perspectives out
there, I think--this is not Silicon Valley. We are in touch
with the academic community on the right, on the left, in the
middle, or former colleagues, or friends of ours, or people who
send us information. I do not think bringing somebody in who is
new to the system is suddenly going to change anything. It is
going to put people without any sort of experience about this
very unusual working group process flailing around for a few
years.
If you had information that Chuck and I were not
contributing much to the discussion or the debate, or not
influencing, or influencing in a pernicious way, the process, I
would say ``fine.'' We should not be re-nominated or approved
by the Senate. But I do not think that would be the case, and I
think if you talk to folks who have been around this process
for a long time, they would say maybe Bob and Chuck have too
many fresh ideas.
This is a process which has a whole lot of stasis in it, of
continuity, as it should. You do not want the actuaries out
there saying, I think mortality is going to go down by a third
next year, let us change the numbers, and then we have huge
swings one way or another. These are very careful, sort of
long-gestating changes that take place based on input from
academics, from technical panels, from the two of us, and from
the professional staffs of the departments and the Actuaries
Office.
Senator Casey. Doctor?
Dr. Blahous. Sure. Four things come to mind in response to
your question with respect to other perspectives, bringing
fresh perspectives to bear.
One is, we just had a technical panel report presented to
the trustees. It was presented after the end of our last term.
So there is a whole new wealth of material and suggestions and
recommendations for the trustees to pore through, put together
by outside experts.
We have not been able to be a part of that process. I
assume that the administration officials have received that and
are digesting it. But I would not be surprised if they are
feeling some inhibition about acting on any of it, because they
are probably waiting to know who the public trustees are going
to be and when they are going to be there. That would be my
expectation.
Dr. Reischauer. I would just intervene and say that, in
general, I thought the public trustees, and the two of us, at
the last technical panel, its suggestions, the Medicare
Technical Panel suggestions, were infused with the idea that we
were much more in favor of pushing things forward and saying,
are we going to respond to this? Let's go.
Now, I am not saying that two other people would not do the
same thing. It would take them a few years to realize that that
is their role, but they would fall into that pattern as well.
But the administration folks tend to be more resistant to
change, shall I say?
Dr. Blahous. I agree with that. That is actually a good
segue to my second thought, which is, in addition to the
Technical Panel's recommendations that have come in the door,
there is also just the things that Bob and I generate together.
Each year I have a grab bag of things that have not been
looked at in the prior trustee report season that I want to
kick up for discussion, and I run them past Bob. And he has
some, and we decide which ones we are going to raise.
There is also, as Bob said, the third bucket, which is
outside perspectives. There are people on the outside,
academics who are in touch with many other people who have
ideas of things we ought to review.
Fourth, often there are preexisting discussions within the
trustees' process, where we are having trouble coming to
closure on something. So it might be something like labor force
participation. That is a very difficult thing to project
accurately, and many people are wrestling with it. So we might
bring in an outside expert to bring a perspective to the
trustees' Working Group that we have not been able to generate
internally.
So between those four buckets, we are kept pretty busy with
an influx of fresh ideas.
Senator Casey. I am out of time. Thank you very much.
Senator Coats. Thank you.
Senator Schumer?
Senator Schumer. Thank you, Mr. Chairman. I thank both of
our witnesses for their service.
I want to just take a minute to echo Senator Brown's
concerns about confirming our public trustees for a second
term. The Senate has never confirmed a trustee for a second
term, and, as public trustees are intended to act as outside
watchdogs of Social Security and Medicare and make sure the
public has a say in how their hard-earned Social Security and
Medicare dollars are being managed, as a result, it has been
the practice to appoint public trustees for only a single term.
Senator Grassley and former Senator Baucus knew this when
they led the committee in 2006. They both condemned President
Bush for his recess appointments of the public trustees then.
That is the only time the trustees have served two terms.
Even more importantly, I have real concerns about this
position. I understand the fiduciary and administrative
responsibilities, but I think you have to be a guardian of
Social Security. We all know there are huge efforts to change
Social Security, to privatize it, to undo it, to cut it. And I,
Dr. Blahous--we do have in common the name Chuck--have real
concerns about voting for you on this board, not because of
your integrity or government service--you are a fine person--
but because of your views.
You worked on President Bush's efforts to privatize the
program. I know that that does not mean you agree with it. You
endorsed the Republicans' opposition to reallocating payroll
taxes to the Disability Fund. Many people who want to weaken
Social Security have that position, and if the reallocation had
not occurred, there would be benefit cuts or tax increases.
As outlined in a letter sent to the President opposing your
nomination, there are real concerns. Again, you only teach
there, but you are at an institute, at George Mason University,
that is known for having a great deal of funds from the Koch
Brothers, who were probably the leading opponents. Charles Koch
is on the board of the Mercatus Institute. He is probably one
of the leading opponents of Social Security in America.
So I have to say I would oppose your nomination. Social
Security is too precious, is too needed. With pensions in the
mess they are in, we need Social Security.
My view is, the greatest problem America faces economically
is that median income is declining. It is harder to get to the
middle class. It is harder to stay in the middle class. The
last thing we need now is to undo one of the most successful
safety nets in the history of the world, which is Social
Security.
So I just--reluctantly--because somebody who has served, I
appreciate. You seem like a nice man, a fine man, but
reluctantly I have to oppose your nomination, and I have great
respect for Dr. Reischauer. If that means both of them go
together, I know that is the price you pay for doing this, but
I just feel we are at a flex point in America, and this idea
that helping the wealthiest people not pay taxes, getting rid
of government regulation, tearing down government, is the worst
thing that could happen.
I would hope we could have a coalition of Democrats and
Republicans to improve funding for education, for
infrastructure, for NIH, and for things like Social Security,
Medicare, Medicaid, and health care.
So you have sounded, if you will, the wrong note on these
issues throughout your career. It is not one instance, and I
will have to oppose your nomination, with reluctance, because I
think you are a nice, fine person.
Senator Coats. With the prerogative of being chairman, the
privilege of being chairman, I just want to, for the record,
clarify things.
Neither one of you has any authority to change the policy
of Social Security. You are simply reporting an analysis of the
costs, the financial--whatever is chosen--consequences of that
choice. That is provided to us so that we are in a better
position to make a decision as to whether it is viable to go
forward, backward, sideways, or stay the same, or whatever.
Neither one of you has any influence under the obligations that
you have in serving on the commission that would influence us
in terms of what we select as a policy matter, not as a
financial one. Is that correct?
Dr. Blahous. That is correct.
Dr. Reischauer. That is correct.
Senator Coats. And you are both 100-percent supportive of
each other's position in that regard?
Dr. Blahous. Absolutely.
Dr. Reischauer. We worked extremely well together, although
we disagree on sort of the fundamental policy issues. With
respect to the duties of the public trustees, I have had a
tremendous collegial working relationship with Chuck.
Dr. Blahous. I would not want to work with anybody else.
Senator Coats. Very good. I appreciate your being here for
this nomination hearing. If there are questions, to my
colleagues who are not here--I need to state this for the
record. Any questions for the record should be submitted by no
later than Monday, May 16th. Staff will pass that on.
Thank you very much for your testimony here today. I think
it was important for us to hear what it is you do and what it
is you do not do.
With that, this hearing is adjourned.
[Whereupon, at 4:20 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Charles P. Blahous III, Ph.D., Nominated to
be a Member of the Board of Trustees of the Federal Hospital Insurance
Trust Fund, a Member of the Board of Trustees of the Federal
Supplementary Medical Insurance Trust Fund, and a Member of the Board
of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund
and the Federal Disability Insurance Trust Fund
Thank you, Chairman Hatch, Ranking Member Wyden, and members of the
committee. It is a great honor to be nominated to serve again as one of
the two public trustees for Social Security and Medicare.
Before I begin with the substantive portion of my remarks, some
thanks are in order. First I would like to thank President Obama for
the honor of placing my nomination before the Senate. I also thank
Senate Majority Leader McConnell for the trust he placed in me in
putting my name forward for this important position.
I would like to thank my wife Jill and my daughter Juliana, who
unfortunately could not be here today, for their constant support and
many sacrifices for my career in public service. I have been blessed to
have my family's encouragement and counsel with each new challenge.
Particular thanks are due to the members of this committee, to the
United States Senate as a whole, and to the members of the U.S. House
of Representatives. I am deeply appreciative of the unfailing courtesy
with which I personally have been treated by Members of Congress in
both chambers, on both sides of the aisle, as well as by their staffs.
My appreciation, however, is based not only on these personal
considerations, but on Congress's general comportment with respect to
the trustees' process as established under the Social Security Act.
Social Security and Medicare are perhaps the most important
domestic programs the Federal Government has ever established. Their
financial soundness is central to the economic security of millions of
Americans today and in the future. The Social Security and Medicare
trustees play an indispensable role in equipping the Congress and the
administration with the information required to enable these vital
programs to function as desired.
It has been extremely gratifying to witness as a trustee the
respect with which Members of Congress treat the trustees' reporting
process. At a time when confidence in so many public institutions is
under siege, lawmakers have recognized the importance of Americans
being served by credible, which is not to say infallible, projections
for the futures of Social Security and Medicare.
Some of the most satisfying moments of trustee work come when
testifying before Congress and a Member on one side of the aisle cites
data from the trustees' report to support a particular policy
viewpoint, after which another Member on the other side uses data from
the same report to support a different policy viewpoint. This is only
possible because Members on both sides safeguard the integrity of the
trustees' work, and I am as grateful for this dynamic as I am for any
kindness extended to me personally.
The public trustees' positions were established in the
comprehensive Social Security reforms of 1983, to maintain public
confidence in the management of the trust funds and to ensure that
program finances were persistently reviewed by bipartisan outside
observers. While forecasting is an imperfect science, my experience as
a trustee is that this work is conducted according to the highest
principles of public service. While only time will attest to the
accuracy of the projections, it is not too soon to vouch for the
integrity of the process by which they are made.
Each year, the trustees make assumptions about trends in fertility,
longevity, worker productivity, price inflation (specifically in the
case of Medicare, health care cost inflation), immigration, real wage
growth, labor force participation, and other relevant variables, both
in the short-term and in the long-term. Public confidence in the
trustees' projections rests in large part on whether these assumptions
are regarded as reasonable and objective.
To assist in realizing this ideal, the trustees bring many
perspectives to bear from both inside and outside our working group--
including the nonpartisan staff of the offices of the Social Security
Actuary and CMS Medicare Actuary, technical panels periodically
convened to assist respectively with Social Security and Medicare
projections, outside analysts such as those at the Congressional Budget
Office or elsewhere in academia, and many others.
It has been my experience that participants in the trustees
process, ranging all the way from the managing trustee Treasury
Secretary Jack Lew, HHS Secretary Sylvia Burwell, Labor Secretary Tom
Perez, and Acting Commissioner Carolyn Colvin to the various staff
laboring in the different executive branch departments, conduct
themselves with the appropriate respect for this important work--a
characterization that I hope can also be applied to our service as
public trustees. It has been a particular privilege and pleasure to
serve alongside Dr. Robert Reischauer in this role. I learn not only
analytical substance from Bob but also from his example of constant
professionalism.
If confirmed to serve again as a public trustee, I would look
forward to contributing to the best of my ability to the trustees'
process, and to maintaining public confidence in these vital reviews of
Social Security and Medicare program finances.
Thank you. I would be glad to take any questions.
______
SENATE FINANCE COMMITTEE
STATEMENT OF INFORMATION REQUESTED
OF NOMINEE
A. BIOGRAPHICAL INFORMATION
1. Name (include any former names used): Charles Paul Blahous III
(``Chuck'')
2. Position to which nominated:
Member of the Board of Trustees of the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Disability Insurance
Trust Fund
Member of the Board of Trustees of the Federal Hospital Insurance
Trust Fund
Member of the Board of Trustees of the Federal Supplementary
Medical Insurance Trust Fund
3. Date of nomination: August 5, 2015
4. Address (list current residence, office, and mailing addresses):
5. Date and place of birth: September 12, 1963 (Alexandria, VA)
6. Marital status (include maiden name of wife or husband's name):
7. Names and ages of children:
8. Education (list secondary and higher education institutions, dates
attended, degree received, and date degree granted):
Ph.D., University of California/Berkeley, att. 1985-1989, degree
1989 (chemistry).
AB, Princeton University, att. 1981-1985, degree 1985 (chemistry).
Hampton High School, Allison Park, PA, att. 1977-1981, graduated
1981.
9. Employment record (list all jobs held since college, including the
title or description of job, name of employer, location of work, and
dates of employment):
Public Trustee, Social Security and Medicare Trust Funds 9/2010-7/
2015. Work conducted primarily in Washington, DC and Rockville, MD.
Mercatus Center at George Mason University, Director, Spending and
Budget Initiative (also Senior Research Fellow), Arlington, VA (work
also performed in Rockville, MD) 8/2011-Present (SBI Director since 1/
2014).
Research Fellow, Hoover Institution at Stanford University,
Stanford, CA (work generally performed in Rockville, MD) 5/2010-
Present.
Contributing author, E21 (Economics21.org), Washington, DC (work
generally performed in Rockville, MD) 12/2009-Present.
Policy consultant, DeMatteo Monness LLC, New York, NY (locations
of consultations varied; phone consultations generally done from
Rockville, MD) 2/2010-Present (have not been paid or performed work
since 2011).
Advisor, PriceWaterhouseCoopers, New York, NY (work generally
performed in Rockville, MD) 3/2009-12/2013.
Senior Advisor, Palisades Capital, Washington, DC (work generally
performed in Rockville, MD) 2/2009-12/2013 (uncompensated after 2010).
Senior Research Fellow, Fiscal Policy Program (nominal
association, no compensation), New America Foundation, Washington, DC
5/2010-6/2011.
Senior Advisor, TIAA, New York, NY (most work performed in
Rockville, MD)
3/2010-12/2010.
Public Policy Scholar, Woodrow Wilson Center, Washington, DC
(office in Ronald Reagan building) 1/2010-4/2010.
Senior Fellow, Hudson Institute, Washington, DC (work generally
performed in Rockville, MD) 1/2009-4/2010.
Eccles Scholar and Leavitt Fellow, Southern Utah University, Cedar
City, UT (some teaching via videoconference from Rockville, MD,
remainder on site at Cedar City campus) 8/2009-12/2009.
Deputy Director of the National Economic Council, Executive Office
of the President, The White House, Washington, DC 12/2007-1/2009.
Special Assistant to the President for Economic Policy, Executive
Office of the President, The White House, Washington, DC 2/2001-12/
2007.
Executive Director, Alliance for Worker Retirement Security,
Washington DC
6/2000-2/2001.
Policy Director, U.S. Senator Judd Gregg, Washington, DC 10/1996-
6/2000.
Legislative Director, U.S. Senator Alan Simpson, Washington, DC 8/
1994-
10/1996.
Legislative Assistant, U.S. Senator Alan Simpson, Washington, DC
10/1990-
8/1994.
Congressional Science Fellow (sponsored by the American Physical
Society), Office of U.S. Senator Alan Simpson, Washington, DC 9/1989-9/
1990.
Research Assistant, Center for Computational Chemistry, University
of Georgia, Athens, GA 1987-1989. (I was a doctoral student at
University of California/Berkeley during this time; I completed my Cal
doctorate off-campus at University of Georgia, working there as a
research assistant.)
Teaching/Research Assistant, Graduate School of Chemistry,
University of California/Berkeley, Berkeley, CA 1985-1987.
Summer Assistant, PPG Industries, Springdale, PA Summer 1985.
10. Government experience (list any advisory, consultative, honorary,
or other part-time service or positions with Federal, State or local
governments, other than those listed above):
While serving as a Special Assistant for Economic Policy for
President Bush, I also served as the Executive Director of the
President's Commission to Strengthen Social Security (May 2001-January
2002.)
11. Business relationships (list all positions held as an officer,
director, trustee, partner, proprietor, agent, representative, or
consultant of any corporation, company, firm, partnership, other
business enterprise, or educational or other institution):
Compensated positions held as a trustee, program director,
advisor, or consultant are listed under question #9. I am also
currently serving (uncompensated) as a member of a commission on
retirement security operated by the Bipartisan Policy Center.
I also served as an (uncompensated) member of the Board of the
National Foundation for Credit Counseling from 10/2010-9/2015.
12. Memberships (list all memberships and offices held in
professional, fraternal, scholarly, civic, business, charitable, and
other organizations):
National Academy of Social Insurance (2003-Present)
Council on Foreign Relations (2000-2001)
American Association for the Advancement of Science
American Chemical Society
American Physical Society
(I do not have precise dates of membership in the scientific
societies. I believe that each membership began circa 1989, and expired
a few years afterward.)
Society for American Baseball Research (1987-2001)
U.S. Chess Federation (1991-2003)
13. Political affiliations and activities:
a. List all public offices for which you have been a candidate.
None.
b. List all memberships and offices held in and services rendered
to all political parties or election committees during the last 10
years.
I belonged to the Alexandria Republican City Committee in the
late 1990s until 15 years ago. There I served on a ``shadow
committee'' for budget and fiscal affairs.
c. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $50 or more for the past 10 years.
Elise Stefanik for Congress, $50, 1/2/2014. (I believe this is
the only one and have searched online and through my records for any I
may have forgotten, but did not find any others.)
14. Honors and awards (list all scholarships, fellowships, honorary
degrees, honorary society memberships, military medals, and any other
special recognitions for outstanding service or achievement):
Senior Research Fellow, Mercatus Center at George Mason University
(2011-Present); Research Fellow, Hoover Institution at Stanford
University (2010-Present); Fellow, E21 (2009-Present)--(I consider
myself a contractual contributing author to E21 since 2009 but I
believe that since the Manhattan Institute took over E21 in late 2013,
my relationship has been structured as a ``fellowship''); Senior
Research Fellow, Fiscal Policy Program, New America Foundation (2010-
2011) (the NA fellowship was a relationship that began on a nominal
basis with the understanding that I might be compensated for individual
projects agreed upon; we never got around to arranging any, so in 2011
we simply terminated the association); Public Policy Scholar, Woodrow
Wilson Center (2010); Senior Fellow, Hudson Institute (2009-2010)
(during most of my time with Hudson they were administering a grant I
received from the Smith-
Richardson Foundation to write about Social Security); Eccles Scholar
and Leavitt Fellow, Southern Utah University (2009); 2001 Distinguished
Service Award (White House); Congressional Science Fellow 1989-1990
(American Physical Society); 1985 McKay Prize in Physical Chemistry
(Princeton University); Mahan Memorial Teaching Award (University of
California/Berkeley); National Merit Scholarship (received 1981) (I
assume I need not include honors from back in high school; am including
the National Merit Scholarship here solely because it was used for
college and the instructions direct the listing of ``scholarships.'')
15. Published writings (list the titles, publishers, and dates of all
books, articles, reports, or other published materials you have
written):
Books
Social Security: The Unfinished Work, Hoover Institute Press,
2010.
Pension Wise: Confronting Employer Pension Underfunding,
Hoover Institute. Press, 2010.
Reforming Social Security: For Ourselves and Our Posterity,
Praeger Publishers, 2000.
Reports
(The reports below were co-authored with the other Social Security
and Medicare trustees; the two Social Security commission reports were
authored by the commission while I was a drafter at the staff level).
With the Social Security and Medicare Boards of Trustees, 2015
Annual Trustees' Reports and Status of the Social Security and Medicare
Programs (a summary of the reports).
With the Social Security and Medicare Boards of Trustees, 2014
Annual Trustees' Reports and Status of the Social Security and Medicare
Programs (a summary of the reports).
With the Social Security and Medicare Boards of Trustees, 2013
Annual Trustees' Reports and Status of the Social Security and Medicare
Programs (a summary of the reports).
With the Social Security and Medicare Boards of Trustees, 2012
Annual Trustees' Reports and Status of the Social Security and Medicare
Programs (a summary of the reports).
With the Social Security and Medicare Boards of Trustees, 2011
Annual Trustees' Reports and Status of the Social Security and Medicare
Programs (a summary of the reports).
With President's Commission to Strengthen Social Security,
Strengthening Social Security and Creating Personal Wealth for All
Americans, Final Report of the Commission, December 2001.
With the President's Commission to Strengthen Social Security,
Interim Report of the President's Commission, August 2001.
Articles, Chapters and Papers (titles sometimes written by others)
``How Social Security's COLA Politics Lead to Bad Policy,''
E21, November 22, 2015.
``Covering Pre-existing Conditions without a Comprehensive
Insurance Mandate,'' E21, November 10, 2015.
``Future Work Still Needed after Budget's Disability Fix,''
E21, November 2, 2015.
``Distinguishing Policy from Politics in the Cadillac Plan
Tax,'' E21, October 5, 2015.
``An Overdue Budget Reform: Prohibit Double-Counting of
Medicare Savings,'' E21, September 20, 2015.
``The Fiscal Consequences of the Affordable Care Act''
(chapter of ``The Future of Healthcare Reform in the United States''),
University of Chicago Press, September 2015.
``Six Mistakes Paul Krugman Makes about Medicare's Finances,''
E21, August 31, 2015.
``A Warning from the Medicare Trustees'' (a guide to the 2015
Medicare trustees' report), E21, July 30, 2015.
``Time Is Running Out to Fix Social Security'' (a guide to the
2015 Social Security trustees' report), E21, July 29, 2015.
``Repealing Obamacare Would Lower Federal Deficits,'' E21,
June 22, 2015.
``The Social Security Trustees' Projection Process: Imperfect
but Indispensable,'' E21, June 1, 2015.
``The Social Security Trustees' Respectable Projection
Record,'' E21, June 1, 2015.
``Costs of Merging Social Security Retirement and Disability
Funds,'' E21, April 27, 2015.
``Gaming Out the Scenarios in King v. Burwell,'' E21, April
13, 2015.
``CBO Says ACA Will Insure Fewer People than Predicted,'' E21,
March 16, 2015.
``A Solid Choice for CBO Director,'' E21, March 2, 2015.
``Mindless Yes, Austerity No: The Real Budget Problem,'' E21,
February 19, 2015.
``Warning: Disability Insurance is Hitting the Wall,'' E21,
January 15, 2015.
``Picking the Right CBO Director,'' E21, January 5, 2015.
``Gruber and Barro Are Wrong to Assume the Public is Stupid,''
E21, November 19, 2014.
``Congress Can Fix the ACA with These 3 Principles,'' E21,
November 10, 2014.
``Budget Committee Report Confirms the ACA Worsens the
Deficit,'' E21, November 3, 2014.
``Losing Employer-Provided Coverage: Another ACA Prediction
Comes True,'' E21, October 14, 2014.
``Sorry, NYT, the Medicare Cost Problem Remains Unsolved,''
E21, September 17, 2014.
``A Guide to the 2014 Medicare Trustees' Report,'' E21, August
6, 2014.
``A Guide to the 2014 Social Security Trustees' Report,'' E21,
August 4, 2014.
``An Unfolding Fiscal Disaster,'' The Weekly Standard, July
14, 2014.
``The U.S. Workforce, Wasting Away,'' Hoover Digest, July 9,
2014.
``A One-Sided White House Report on Medicaid Expansion,'' E21,
July 7, 2014.
``I Was Right about the ACA,'' E21, June 30, 2014.
``CBO's Not the Problem, the ACA Is,'' E21, June 25, 2014.
``Social Security Adds to the Deficit,'' Los Angeles Times
online edition, June 12, 2014.
``Rubio's Retirement Security Vision,'' E21, June 9, 2014.
(With Keith Hall), ``Jobs: The Best Way to Fight Poverty,''
The Hill, April 30, 2014.
``The Unfolding Fiscal Disaster behind ACA Enrollment
Figures,'' E21, April 17, 2014.
``The Secret Assumptions behind Federal Budgets,'' E21, April
9, 2014.
``Changes to Medicaid under the Affordable Care Act'' (chapter
in The Economics of Medicaid), Mercatus Center, April 8, 2014.
``The War on Paul Ryan,'' E21, March 5, 2014.
``Beyond the Spin: Why It's Terrible News that the ACA Lowers
Employment,'' E21, March 3, 2014.
``Reform Entitlements--or Go Bust,'' Washington Examiner,
February 24, 2014.
``Record-High Deficits Are Not `Austerity,' '' E21, February
21, 2014.
``CBO: The Affordable Care Act is Driving Workers Out of the
Workforce,'' E21, February 5, 2014.
``The Great Unraveling,'' Hoover Digest, January 21, 2014.
``The Healthcare Cost Slowdown,'' Defining Ideas, Hoover
Institution,
January 14, 2014.
``Will the Recent Slowdown in Health Care Cost Growth Improve
Medicare's Financing Outlook?'', Mercatus Center, January 14, 2014.
``Why Slower Health Care Cost Inflation Isn't Fixing Medicare
Finances,'' E21, January 14, 2014.
``Don't Worsen Social Security's Soaring Cost Problem,'' E21,
December 23, 2013.
``No Grounds for Claim that Obamacare Lowers Health Care
Costs,'' E21, November 25, 2013.
``Why We Have Federal Deficits: The Policy Choices that
Created Them,'' Mercatus Center, November 14, 2013.
``Why We Have Federal Deficits,'' E21, November 14, 2013.
``Obamacare's Financial Unraveling: Predictable, and
Predicted,'' Real Clear Markets, October 9, 2013.
``The Federal Fiscal Predicament: What Seems Better is
Actually Worse,'' E21, June 27, 2013.
``A Guide to the 2013 Medicare Trustees' Report,'' E21, June
11, 2013.
``A Guide to the 2013 Social Security Trustees' Report,'' E21,
June 7, 2013.
``How Would Immigration Reform Affect Social Security
Finances?'', E21, May 29, 2013.
``Understanding the Ryan and Murray Budgets,'' E21, March 20,
2013.
``The Affordable Care Act's Optional Medicaid Expansion:
Considerations Facing State Governments,'' Mercatus Center, March 5,
2013.
``Expanding Medicaid: The Conflicting Incentives Facing
States,'' E21, March 5, 2013.
``Are We Underestimating the Social Security Shortfall?'',
E21, February 13, 2013.
``Obamacare's Fiscal Nightmare,'' Defining Ideas, Hoover
Institution, February 7, 2013.
``Ten Things the Latest CBO Report Tells Us about Federal
Finances,'' E21, February 6, 2013.
``Understanding Social Security Benefit Adequacy: Why Benefit
Growth Should Be Slowed,'' E21, January 31, 2013.
``Is It Time for Deficit Hawks to Walk Away from the
Bargaining Table?'', E21, December 12, 2012.
``The Fiscal Cliff: The Worst of Both Worlds,'' Reason,
December 11, 2012.
``Eight Common Sense Suggestions for the Fiscal Discussions,''
E21, December 5, 2012.
``Understanding Social Security Benefit Adequacy: Myths and
Realities of Social Security Replacement Rates,'' Mercatus Center,
November 15, 2012.
(With Jason Fichtner), ``Limiting Social Security's Drag on
Economic Growth,'' Mercatus Center, November 1, 2012.
(With Jason Fichtner), Chapter 15, ``Social Security Reform
and Economic Growth,'' chapter of The 4% Solution, George W. Bush
Institute, 2012.
``The Real Stakes in the Medicare Debate,'' E21, October 23,
2012.
``The End of Social Security Self-Financing: What Does it
Portend for Social Security's Future?'', Mercatus Center, October 10,
2012.
``The End of Social Security Self-Financing: What Next?'',
E21, October 10, 2012.
Contribution to ``E21 Debate Primer: What Should We Really Be
Asking Candidates?'', E21, October 2, 2012.
``Is it Becoming Too Late to Fix Social Security's
Finances?'', E21, August 31, 2012.
``How Did Federal Surpluses Become Huge Deficits?'', E21,
August 20, 2012.
``Yet Another Fiscal Turn for the Worse: Understanding the CBO
Re-score of the 2010 Health Care Law,'' E21, July 25, 2012.
``Did the Supreme Court Ruling Render the Health Law's
Finances Untenable?'', E21, June 29, 2012.
``Does the Government Really Need More Help Than the Private
Sector?'', E21, June 14, 2012.
``What the Recent CBO Reports Tell Us About Fiscal Stimulus
and the Federal Budget,'' E21, June 11, 2012.
``Should Congress Change CBO's Scorekeeping Rules?'', E21, May
29, 2012.
(With Jim Capretta), ``Exposing the Medicare Double Count,''
Wall Street Journal, May 2, 2012.
``A Guide to the 2012 Medicare Trustees' Report,'' E21, April
30, 2012.
``A Guide to the 2012 Social Security Trustees' Report,'' E21,
April 26, 2012.
``Yes, the Health Law Worsens the Deficit,'' E21, April 18,
2012.
``Health Law Cripples Federal Finances,'' Washington Times,
April 10, 2012.
``The Fiscal Consequences of the Affordable Care Act,''
Mercatus Center, April 10, 2012.
``The Fiscal Consequences of the Affordable Care Act,'' E21,
April 10, 2012.
``The Dark Side of the Payroll Tax Cut,'' Defining Ideas,
Hoover Institution, February 24, 2012.
``How Not to Make Public Policy: The Payroll Tax Cut,'' E21,
February 15, 2012.
``Don't Repeat Costly Policy Mistakes with Employer-Provided
Pensions,'' E21, February 13, 2012.
``Time to End `Temporary' Tax and Spending Policies,'' E21,
February 6, 2012.
``Why There is No Bipartisan Budget Deal,'' E21, December 19,
2011.
``What's in the Social Security Trust Funds, or: Why
Continuing the Payroll Tax Cut Could Eventually End Social Security as
We Know It,'' E21, December 12, 2011.
``The Private-Sector Pension Predicament,'' Policy Review,
Hoover Institution, December 2011-January 2012, No. 170.
``How Are the Presidential Contenders Doing on Social
Security?'', E21, November 28, 2011.
``Backing Away from Confronting Social Security's Realities,''
E21, November 10, 2011.
``How the CLASS Act's Demise Ends the Fiscal Argument for the
2010 Health Care Law,'' E21, October 24, 2011.
`` `Supporting' 400,000 Education Jobs: An Unsupported
Claim,'' E21, October 13, 2011.
``Understanding the Stimulus Debate: It's not 2001 Anymore,''
E21, September 23, 2011.
``The Jobs Bill: Pretending to Fund Social Security,'' E21,
September 19, 2011 (condensed and reprinted at foxnews.com, September
23, 2011).
``How the Super-Committee Might Break the Budget Logjam,''
E21, September 2, 2011 (condensed and reprinted in the September 2,
2011 Daily Caller).
``Five Myths About Social Security and Medicare,'' Defining
Ideas, Hoover Institution, August 26, 2011.
``Job One for the Budget Super-Committee: Cut the New Health
Entitlement's Cost,'' E21, August 23, 2011 (condensed and reprinted in
the August 24, 2011 Daily Caller).
``Don't Allow Another Payroll Tax Accounting Gimmick,'' E21,
July 26, 2011 (condensed and reprinted in the July 27, 2011 Daily
Caller).
``The Gang of Six Framework: A Step Backward for Social
Security Reform,'' E21, July 20, 2011 (condensed and reprinted in the
July 21, 2011 Daily Caller).
``Reforming CPI: Not a `Grand Bargain' but a Prudent Reform,''
E21, July 12, 2011.
``AARP's Social Security `Shift': Much Ado About Nothing?'',
E21, June 30, 2011.
``A Primer on the Social Security and Medicare Trustees'
Reports: Part II--Quantitative Findings,'' E21, June 2, 2011.
``A Primer on the Social Security and Medicare Trustees'
Reports: Part I--Concepts,'' E21, May 23, 2011.
``Social Security and Longevity Increases: Getting the Facts
Right,'' E21, May 12, 2011.
``The Real Bipartisan Compromise: Cut Spending on the Rich,''
E21, May 11, 2011.
``The Administration's PBGC Premium Proposal Deserves
Support,'' E21, April 18, 2011.
``Still No Clear Social Security Policy,'' Advancing a Free
Society blog post, Hoover Institution, April 13, 2011.
``Why Raising Social Security's Tax Cap Wouldn't Eliminate Its
Shortfall,'' E21, April 12, 2011.
``The Ryan Budget: The Real Choice We Face,'' E21, April 7,
2011.
``Social Security's Possible Fate: Done In by its Friends,''
Washington Post, March 25, 2011.
``Social Security: Chronicle of a Death Foretold?'', Defining
Ideas, Hoover Institution, March 17, 2011.
``The `Other' Pension Crisis: Options for Avoiding a Taxpayer
Bailout of the PBGC,'' Mercatus Center, March, 2011.
``In Defense of the Simpson-Bowles Social Security Plan, Part
2,'' E21, March 2, 2011.
``In Defense of the Simpson-Bowles Social Security Plan, Part
1,'' E21, February 28, 2011.
``Why the Health Care Law Increases the Gross Federal Debt,''
E21, February 17, 2011.
``Nobody is Proposing to Slash Social Security Benefits,''
Wall Street Journal, February 3, 2011.
``Understanding the President's SOTU Social Security
Language,'' E21, January 27, 2011.
Contribution to ``SOTU Viewer's Guide,'' E21, January 25,
2011.
``Days of Reckoning,'' Hoover Digest, January 12, 2011.
``Dispelling the Myth of `Targeting Social Security,' '' E21,
December 22, 2010.
``How to Run a Successful Commission (or Not),'' E21, December
16, 2010.
``The Payroll Tax Cut: Effective Stimulus, Phony Accounting,''
E21, December 8, 2010.
``The Social Security Challenge,'' Policy Review, Hoover
Institution, December 6, 2010.
``Social Security Shortfall Warrants Action Soon,'' E21,
November 30, 2010.
``Winners and Losers Under the Simpson-Bowles Social Security
Plan,'' E21, November 29, 2010.
``The Bipartisan Policy Center's Tax-Heavy Social Security
Plan,'' E21, November 23, 2010.
``Slowing Down Social Security's Retirement Age Increase,''
E21, Novem-
ber 18, 2010.
``Fairly Understanding the Simpson-Bowles Social Security
Proposal,'' E21, November 11, 2010; reprinted by the Daily Caller.
(With Robert Greenstein), ``Social Security Shortfall Warrants
Action Soon,'' Pew Charitable Trusts, Pew Fiscal Analysis Initiative,
November 9, 2010.
``The Crass Distortion of Paul Ryan's Social Security
Proposals,'' E21,
October 22, 2010.
``Is Everyone Just Imagining the Government Spending
Explosion?'', E21, October 21, 2010.
``CRFB's Constructive Social Security Proposal,'' E21, October
14, 2010.
``Why Tell-All Books Distort Rather than Illuminate the White
House Policy Process,'' E21, September 27, 2010, reprinted by the Daily
Caller.
``Change at the National Economic Council: What Does It
Mean?'', E21, September 24, 2010, reprinted by the Daily Caller.
``Social Security and Work,'' National Affairs, Winter 2010
edition.
``Social Security's Grim Milestone: Half a Year in the Red,''
E21, December 7, 2009.
``CBO's Prediction of Impending Social Security Deficits: What
Does it Mean?'', Self-Directed Investor, October 9, 2009.
``What Drop in Benefits? The Phony Social Security COLA
Controversy,'' Washington Post, August 25, 2009.
``Plan Still $820 Billion Above the Target,'' Politico, July
29, 2009.
(With Scott Nystrom), ``Save the Date: Social Security Will Go
Broke,'' Forbes, July 29, 2009.
``Revisiting Health Care Reform and Fiscal Restraint,'' Self-
Directed Investor, July 24, 2009.
``CBO Explodes the Health Care Myth,'' Hudson Institute, June
30, 2009.
``Don't Look Now, but There Goes the Social Security
Surplus,'' Self-
Directed Investor, May 22, 2009.
(With Brad Belt), ``Spare Taxpayers the Bill for Detroit's
Pensions,'' Financial Times, May 21, 2009.
``The Worsening Social Security Outlook: A Guide to the 2009
Trustees' Report,'' Hudson Institute, May 13, 2009.
``Social Security Myths,'' National Review, May 4, 2009.
``A Funny Thing Happened to the Budget Baseline,'' Hudson
Institute, March 2, 2009.
``Social Security Fix Demands Honest Numbers,'' Bloomberg.com,
February 27, 2009.
``The 1983 Social Security Reforms: Real and Misremembered
Lessons for Today's Leaders,'' Hudson Institute, February 20, 2009.
``Shelter for Our Social Security,'' Washington Post, November
6, 2000,
p. A35.
(With Senator Judd Gregg), ``Confronting an Aging World,''
Washington Quarterly, 23:3, pp. 213-224.
``The Virtual Hall of Fame'' (as Randy St. Loup), The 1999 Big
Bad Baseball Annual, Masters Press.
``The Should-Have-Hit-500 Club,'' Baseball Research Journal,
1998.
(With Senator Judd Gregg), ``Mobilizing the Marketplace to
Renew American Productivity,'' Harvard Journal on Legislation, Winter,
1998.
``Larsen's Perfect Game: If Not Larsen, Who?'', Baseball
Research Journal, 1995.
``The DiMaggio Streak: How Unlikely Was It?'', Baseball
Research Journal, 1994.
``Olerud Chases Same Guy, Different Record,'' USA Today
Baseball Weekly, 1993.
``The Thoughts of Youth,'' Washington Post Book World, October
21, 1990.
(With BF Yates, YM Xie, and HF Schaefer), ``Symmetry-Breaking
in the NO2 Sigma Radical,'' Journal of Chemical Physics, v. 93 (#11),
1990.
(With YM Xie and HF Schaefer), ``The Infrared Spectrum of
Trimethylenemethane,'' Journal of Chemical Physics, v. 92 (#2), 1990.
(With HF Schaefer), ``(NH)6: The Amino-Analogue of
Cyclohexane,'' Theochem--Journal of Molecular Structure, v. 59, 1989.
(With YM Xie, RD Davy, Y Yamaguchi, and HF Schaefer), ``NO2
Radical Spectroscopy,'' Journal of Chemical Physics, v. 135 (#2), 1989.
(With HF Schaefer), ``Geometrical Structure and Vibrational
Frequencies for the Oxygen Analogue of Hexasulfur,'' Journal of
Physical Chemistry, v. 92 (#4), 1988.
16. Speeches (list all formal speeches you have delivered during the
past 5 years which are on topics relevant to the position for which you
have been nominated):
These are speeches for which I have found records of written
remarks. These do not include less formal remarks I made on discussion
panels or for which I used other references such as power point slides.
``Keynote Address,'' National Foundation for Credit
Counseling, Annual Conference, October 3, 2012.
``Contrarian Views on Retirement Policy,'' Keynote Address,
Wharton, Pension Research Council, May 5, 2011.
``Social Security: The Unfinished Work,'' ValueForum
InvestFest Keynote Address, April 2, 2011.
``Social Security: The Unfinished Work,'' American Enterprise
Institute, February 22, 2011.
``Social Security: The Unfinished Work,'' Greater McLean
Republican Women's Club Luncheon, February 17, 2011.
``Social Security: The Unfinished Work,'' Heritage Foundation,
December 6, 2010.
``Untitled remarks on Social Security,'' two essentially
similar speeches given October 30 and November 6, 2010 at events of
Beacon monthly periodical.
17. Qualifications (state what, in your opinion, qualifies you to
serve in the position to which you have been nominated):
I have served a full term as a public trustee for Social Security
and Medicare and in that service have learned a tremendous amount about
the trustees' analytical methods and general responsibilities. This
work required me to review the projection methodologies underlying five
annual trustees' reports, as well as compose and edit language and
graphical presentations therein. I have also presented the trustees'
findings as a witness testifying at several congressional hearings. My
work as a trustee has built upon several years of prior experience in
researching and writing about the financing issues surrounding the
Social Security trust funds. With 11 years of experience working in the
Senate, 8 years working in the White House, and roughly 5 working as a
trustee, I have studied Social Security finances from legislative,
administrative, and public trustee perspectives. I have also worked
successfully with other individuals participating in the trustees'
process from a variety of perspectives and departments. I believe I
have demonstrated the appropriate respect for the trustees' role and a
process that I strongly believe is serving the public very well.
Together with my fellow public trustee Robert Reischauer, I have
vouched for the objectivity and integrity of the trustees' process
without caveat or reservation; we have been able to do this because of
the considerable time and effort we have invested in ensuring that the
annual trustees' reports fulfill their essential public information
purposes.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, associations, or organizations if you are confirmed by
the Senate? If not, provide details.
No. A public trustee position, while a great honor, is
uncompensated other than for expenses and days spent on trustee work,
and I would need to continue my current employment.
2. Do you have any plans, commitments, or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, provide details.
I expect to continue the employment described earlier in this
questionnaire. I will evaluate other employment opportunities as they
arise.
3. Has any person or entity made a commitment or agreement to employ
your services in any capacity after you leave government service? If
so, provide details.
I do not currently have agreements for employment beyond those with
the Mercatus Center at George Mason University, the Hoover Institution
at Stanford University, and E21, operated by the Manhattan Institute.
In theory, other employers listed previously could approach me about
isolated project opportunities at any time, but there are currently no
such inquiries outstanding.
4. If you are confirmed by the Senate, do you expect to serve out
your full term or until the next Presidential election, whichever is
applicable? If not, explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
None.
2. Describe any business relationship, dealing or financial
transaction which you have had during the last 10 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
None.
3. Describe any activity during the past 10 years in which you have
engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy. Activities
performed as an employee of the Federal Government need not be listed.
None. I have many published writings about general public policy
but have not engaged for purposes of influencing passage/defeat/
modification of specific legislation.
4. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items. (Provide the committee, with two copies of any trust or other
agreements.)
I have none. Should a potential conflict arise, I would consult
with the SSA's designated agency ethics official and resolve the
conflict in accordance with the applicable executive orders,
regulations, and statutes. During my previous term as a trustee, it was
my practice to run new employment opportunities past the ethics office
as they arose, and I did not experience any problems with this
practice.
5. Two copies of written opinions should be provided directly to the
committee by the designated agency ethics officer of the agency to
which you have been nominated and by the Office of Government Ethics
concerning potential conflicts of interest or any legal impediments to
your serving in this position.
Not applicable at this time. Should a potential conflict arise, I
would consult with the SSA's designated agency ethics official and
resolve the conflict in accordance with the applicable executive
orders, regulations, and statutes.
D. LEGAL AND OTHER MATTERS
1. Have you ever been the subject of a complaint or been
investigated, disciplined, or otherwise cited for a breach of ethics
for unprofessional conduct before any court, administrative agency,
professional association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. Have you ever been investigated, arrested, charged, or held by any
Federal, State, or other law enforcement authority for a violation of
any Federal, State, county or municipal law, regulation, or ordinance,
other than a minor traffic offense? If so, provide details.
No.
3. Have you ever been involved as a party in interest in any
administrative agency proceeding or civil litigation? If so, provide
details.
I was a plaintiff in a small claims court action. When I first
moved to the area in 1989, I and my then-spouse paid what we believed
to be a refundable security deposit on a rental apartment. We had
decided to rent another place but our deposit was not returned, and we
went to small claims court to retrieve it. Our claim was denied. I
believe the issue was resolved in 1990.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, provide details.
No.
5. Please advise the committee of any additional information,
favorable or unfavorable, which you feel should be considered in
connection with your nomination.
None beyond my statement of qualifications, dedication, and
experience with respect to the Trustees' process, as described above.
E. TESTIFYING BEFORE CONGRESS
1. If you are confirmed by the Senate, are you willing to appear and
testify before any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If you are confirmed by the Senate, are you willing to provide
such information as is requested by such committees?
Yes.
______
Questions Submitted for the Record to Hon. Charles P. Blahous III
Questions Submitted by Hon. Orrin G. Hatch
Question. It is the chairman's view that if a public trustee, based
on his or her knowledge of Social Security and Medicare, becomes aware
of possible policy decisions that would significantly weaken the
finances of either program, he or she bears a responsibility to make
this information available. Do you agree with this?
Answer. Assuming the possible policy decision is already the
subject of public discussion, I agree. In the event that it involves
pre-decisional consideration within congressional offices or the
administration that the trustees are not at liberty to disclose, I
believe the trustees should make such information available once a
decision is finalized and publicized, and its financial impact can be
estimated.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed concern to you as to the
credibility of the contents of the trustees' report?
Answer. No.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed the view that the trustees'
report development was conducted in any inappropriate way?
Answer. Not to me or to my knowledge.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed concerns about the propriety
of your past writing or continued writing about public policy issues
during your term?
Answer. Not to me or to my knowledge.
Question. Have you ever, while serving as a trustee, represented to
the public that your own personal policy views are also those of the
other trustees?
Answer. No.
Question. Have there ever, over the 5 years of your service as a
public trustee, been any parts of the trustees' reports that do not
reflect the consensus findings of all six trustees, including not only
the two public trustees but also the secretaries of Treasury, HHS, and
Labor, as well as the Social Security Commissioner?
Answer. No.
Question. Have you ever, while serving as a trustee, sought to
modify the contents of the trustees' report without the agreement of
the other trustees?
Answer. No.
Question. Are any individual trustees able to modify the content of
the trustees' reports without the review and approval of all of the
other trustees?
Answer. Not to my knowledge.
Question. Is there any part of the trustees' reports that is not
reviewed and approved by all six of the trustees and/or staff working
on behalf of the trustees?
Answer. No.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever contacted you to express concerns
about the quality, accuracy, tone, or truthfulness of your own
individual writing on issues surrounding Social Security or Medicare?
Answer. No.
Question. Have you used your position as a trustee to promote
policies that would weaken the finances of Social Security or Medicare?
Answer. No.
Question. The Social Security Act specifies, with respect to public
trustees, that both may not be from the same political party. From what
I have seen, in past trustee reports during your term of service, there
were not any dissenting or minority statements on the report from you
or your counterpart public trustee. From your perspectives, has there
been a tradition of working by consensus in the process of producing
trustee reports and, if so, do you believe that the tradition has been
upheld during your term of service?
Answer. Yes and yes.
______
Questions Submitted by Hon. Ron Wyden
Question. My understanding is your terms as public trustees ended
on July 22, 2015 and you have not been involved in the discussions or
production of the 2016 trustees reports, is that correct?
Answer. Yes, that is correct.
Question. Assuming that the answer to the above question is
``yes,'' I assume that if either of you were to be confirmed by the
full Senate before the 2016 trustees reports are released to the
public, that you will not sign those reports or participate in the
press conference discussing the 2016 reports, is that correct?
Answer. I have the same assumption that we will not participate in
the issuance of the 2016 reports. Full participation and meaningful
input by the public trustees would require a substantial delay in the
reports' release date. Assuming there is not a desire on the part of
the administration and Congress to delay the release to permit such
participation, we would not be in a position to co-author the 2016
reports.
______
Questions Submitted by Hon. John Thune
Question. Each year the Board of Trustees produces reports on the
financial status of Social Security and Medicare. We know the public
reads about the parts of the reports--things like the year in which the
trust funds will be depleted--that make the headlines. What other data
points in your analysis do you believe to be the most important for the
Congress and the public to be aware of that fully demonstrate the
financial status of both Medicare and Social Security?
Answer. The annual report summary highlights several data points
the trustees have together decided are the most salient for
demonstrating the financial status of Social Security and Medicare. The
summary begins with the most recent data on operations for the separate
Social Security and Medicare trust funds followed by a series of five
charts with surrounding text, each of the charts depicting an
especially important aspect of program financing.
Because the financing methods for Social Security and Medicare are
different from one another, the analytical information that is most
telling for the two programs also differs. For Social Security as a
whole, Figure II.D.2 from the Social Security trustees' report is a
fairly widely cited graph. It shows annual income, costs and
expenditures expressed as a percentage of the program's tax base, as
well as the timing and magnitude of projected shortfalls in the
program's hypothetical combined trust funds. While this summation is
useful for envisioning the overall finances of Social Security, it
should be remembered that the program contains two trust funds, each of
which must separately maintain a positive balance to permit the full
payment of benefits. The 2015 report therefore also included Figure
II.D3, breaking out projections specifically for the weaker DI trust
fund. If a similar figure for DI is included in the 2016 report, it
would likely need to have been updated for recent legislation to shore
up the finances of the DI trust fund.
Summarizing the Medicare financing outlook is more complex because
the two Medicare trust funds (HI and SMI) are financed in such
different ways. Whereas Medicare HI is financed in a manner somewhat
analogous to Social Security, and is the focus of annually-updated
projections of trust fund adequacy, Medicare's SMI fund is designed by
statute to always maintain a positive balance. As a result, financing
strains within SMI are manifested not in projections of trust fund
depletion but in rising pressure on the Federal budget. Chart C from
the trustees' report summary shows how these financial pressures evolve
with Medicare program cost increases, in addition to showing the
projected Medicare HI financing shortfall.
Another important way to understand program finances is in terms of
the adjustments to cost growth and/or additional revenues required to
stabilize them. As other language and data in the report summary, the
public trustee message, and the main report explain, these required
adjustments become larger if postponed to occur later. Because these
particular details are also responsive to the following question, they
will be provided there.
Question. In your view, is it true, as many have stated, that the
longer we wait, the harder it will be to address the long-term
sustainability of both Social Security and Medicare? Can you discuss
the data in your latest reports to Congress that underscores this
premise?
Answer. Yes. The trustees' report summary states this explicitly:
``Social Security's and Medicare's projected long-range costs are not
sustainable with currently scheduled financing and will require
legislative action to avoid disruptive consequences for beneficiaries
and taxpayers. The sooner that lawmakers take action, the wider will be
the range of solutions to consider and the more time that will be
available to phase in changes, giving the public adequate time to
prepare.''
The main Social Security trustee report contains additional
language illustrating the costs of delay with respect to Social
Security specifically: ``For the combined OASI and DI Trust Funds to
remain fully solvent throughout the 75-year projection period: (1)
revenues would have to increase by an amount equivalent to an immediate
and permanent payroll tax rate increase of 2.62 percentage points (from
its current level of 12.40 percent to 15.02 percent, a relative
increase of 21.1 percent); (2) scheduled benefits would have to be
reduced by an amount equivalent to an immediate and permanent reduction
of 16.4 percent applied to all current and future beneficiaries, or
19.6 percent if the reductions were applied only to those who become
initially eligible for benefits in 2015 or later; or (3) some
combination of these approaches would have to be adopted. If
substantial actions are deferred for several years, the changes
necessary to maintain Social Security solvency would be concentrated on
fewer years and fewer generations. Much larger changes would be
necessary if action is deferred until the theoretical combined trust
fund reserves become depleted in 2034. In order to maintain solvency
throughout the 75-year projection period and finance scheduled benefits
fully in every year starting in 2034, it would be necessary to increase
revenues by an amount equivalent to a payroll tax rate increase of
about 3.7 percentage points (yielding a total payroll tax rate of about
16.1 percent) at the point of trust fund reserve depletion, with the
total rate reaching about 17.4 percent in 2089. Alternatively, solvency
could be maintained if benefits were reduced to the level that would be
payable with scheduled tax rates and earnings subject to tax in each
year beginning in 2034. At the point of theoretical combined trust fund
reserve depletion in 2034, this would be equivalent to a reduction in
all scheduled benefits of 21 percent, with reductions reaching 27
percent in 2089. Of course, there is a continuum of policies combining
tax increases with benefit reductions that would maintain solvency at
the point of trust fund depletion. Some strategies for achieving
solvency would not be feasible if delayed until trust fund reserve
depletion in 2034. For example, even a temporary 100-percent benefit
reduction for those newly eligible for benefits in 2034 would not by
itself make it possible to pay all benefits scheduled for payment in
that year to those already receiving benefits and to those eligible to
receive benefits who have delayed the start of their benefit
payments.''
Again, with respect to Medicare, the situation is more complex
because most program financing pressures are manifested not in trust
fund financing shortfalls but in rising pressure on the larger Federal
budget. Finding optimal solutions to these challenges extends beyond
the scope of the trustees' reports and requires value judgments as to
how to balance Medicare's financing needs against other critical
national priorities. Nevertheless, the most recent all-trustees'
message states that ``Medicare still faces a substantial financial
shortfall that will need to be addressed with further legislation. Such
legislation should be enacted sooner rather than later to minimize the
impact on beneficiaries, providers, and taxpayers.''
______
Questions Submitted by Hon. Maria Cantwell
chained cpi
Question. I have consistently opposed replacing the current cost-
of-living adjustment method, known as the Consumer Price Index for
Urban Wage and Clerical Workers (or CPI-W), with the Chained Consumer
Price Index (known as Chained-CPI). This change would cut benefits for
future beneficiaries by an average of 2 percent over the course of
their retirement, according to a 2013 report by the Center on Budget
and Policy Priorities. Moreover, for a beneficiary receiving Social
Security over the course of 30 years the Chained CPI could cut benefits
even more--up to almost 9 percent, according to the Center for Economic
and Policy Research.
The problem is that the Chained CPI assumes that beneficiaries can
simply choose cheaper alternatives when prices rise. However, it fails
to acknowledge that many lower-income Social Security beneficiaries
don't have the financial ability to switch from more expensive
purchases because most of their income is dedicated to paying for
necessities such as a medication, housing, a health checkup, or a trip
to the grocery store for basic nutrition.
Do you believe that Social Security beneficiaries tend to have less
ability to react to price-sensitivity than the general population, due
to their inelastic demand for services like health care and
transportation?
Answer. This sounds plausible but is not an issue the trustees
would have reason to explore in our work, which involves financial
projections for current schedules rather than examining possible
rationales underlying potential alternatives. Nor is it an issue I have
explored in my other research.
Question. Do you believe that there are differences in the types of
products and services needed by Social Security beneficiaries compared
to the general population?
Answer. Again this sounds plausible but is not an issue the
trustees would have reason to explore in our work, which involves
financial projections for current schedules rather than examining
possible rationales underlying potential alternatives. Nor is it an
issue I have explored in my other research.
Question. Do you believe the Chained CPI reflects the realities of
inflation for many Social Security beneficiaries?
Answer. Because buying patterns differ between individuals, it is
virtually certain that many individuals will experience inflation
differently than can be captured in any single number that quantifies
price inflation as a national average.
Question. What is your position on replacing the CPI-W with the
Chained CPI?
Answer. The trustees take no position on such issues and focus our
reports on projections for current benefit and revenue schedules. Nor
would any personal views that I have on this question enter into my
work as a trustee. Assuming I am being asked for my personal view, my
recommendation would be that lawmakers employ the most accurate
available measure of national average price inflation. While the
distributional implications of any package of reforms are important and
should be well understood by lawmakers, benefits cannot be precisely
targeted through the selection of the price inflation measure used for
COLA indexing. Accordingly, it would be recommended that distributional
goals including the protection of the most vulnerable beneficiaries be
achieved through benefit formula adjustments in the context of a
financially balanced system, rather than by the choice of a general
inflation measure. Again, this view would not bear upon our work as
trustees.
consumer price index for the elderly (cpi-e)
Question. Do you believe that the Consumer Price Index for Elderly
Consumers (CPI-E) would more accurately reflect the costs that Social
Security beneficiaries face?
What is your position on replacing the CPI-W with the CPI-E?
Answer. The trustees take no position on such issues and focus our
reports on projections for current benefit and revenue schedules. Nor
would any personal views that I have on this question enter into my
work as a trustee. Assuming I am being asked for my personal view, I
would advise caution in departing from the historical practice of
basing annual adjustments on estimates of national average price
inflation, with the goal of employing the most accurate available
measure. As BLS notes, ``the CPI-E population and those receiving
Social Security benefits are not identical'' because ``many Social
Security beneficiaries . . . are younger than 62 and receive benefits
because they are surviving spouses or minor children of covered workers
or because of disability.'' While on the one hand an experimental
inflation index designed for the elderly would not be suitable for
these other groups, providing different COLAs for different beneficiary
groups could risk creating both real and perceived inequities. Again,
this issue does not bear upon our work as trustees.
privatization of social security
Question. What is your position on the privatization of Social
Security?
Answer. The trustees take no position on such issues and focus our
reports on projections for current benefit and revenue schedules. Nor
would any personal views that I have on this question enter into my
work as a trustee. The term ``privatization'' has been applied to a
wide range of proposals over several years to alter how Social Security
contributions are invested, many of which would not involve private
sector administration. The relevance of such proposals to the current
policy environment has been largely mooted by the fact that Social
Security is currently experiencing annual deficits of tax income
relative to expenditures and thus there are no longer surplus
contributions being made that could be saved by or on behalf of current
workers, whether through investment of a portion of the trust fund in
the stock market as President Clinton proposed, or through publicly-
administered retirement accounts as President George W. Bush proposed.
Since the emergence of these deficits and since becoming a trustee, I
have not developed or advocated for such proposals. Again, this issue
does not bear upon our work as trustees.
Question. I understand you have previously worked on proposals to
privatize Social Security. If Social Security had been privatized prior
to the 2008 stock market collapse and economic recession, what would
the effect have been on beneficiaries?
Answer. Per the previous answer, the Bush proposals on which I
served as staff support involved publicly administered retirement
accounts rather than privatized ones, and would have been similar to
those available to Federal employees through the Thrift Savings Plan.
Specific effects for any particular plan would have depended upon its
design, schedule and implementation, such that few general conclusions
can be reached about the many proposals offered by various authors
prior to 2008. As it happens, the particular proposals of President
Bush would have been fortuitously timed. The proposed accounts were
scheduled to begin taking contributions in 2009, an exceptional low
point in the financial markets. Those already receiving benefits would
not have been affected by the accounts; those who chose not to
participate would also not have been affected by them. Those who chose
to participate in the accounts would have seen their total benefits
change by only slight amounts to date, due to the small number of years
they would have contributed. Of these, those who had chosen to invest
in a stock index fund would generally have seen increases in their
total benefits, due to the fortuitous timing with which the proposal
would have been implemented. Again, these would have been fortuitous
short-term results, and should not be interpreted as determining the
desirability of the policy as a whole. This issue does not bear upon
our work as trustees.
deficit reduction and social security
Question. Do you believe cuts to Social Security should be included
in deficit reduction discussions?
Answer. The trustees take no position on such issues and focus our
reports on projections for current benefit and revenue schedules. Nor
would any personal views that I have on this question enter into my
work as a trustee. Assuming I am being asked for my personal view, that
view would be influenced by my knowledge gained as a trustee. The
trustees have consistently, since long before my own term of service,
urged that lawmakers move expeditiously to shore up Social Security
program finances. My view on whether Social Security changes (of any
kind) should be included in larger deficit reduction discussions would
thus largely be a function of whether inclusion or exclusion would be
more likely to lead to the expeditious enactment of the program
financing corrections for which the trustees have consistently called.
Again, this view would not bear upon our work as trustees.
Question. Do you believe that Social Security spending is a driver
of annual deficits and the national debt?
Answer. As stated on page 211 of the 2015 Medicare Trustees'
report, ``For OASDI (Social Security), the difference between revenues
from the public ($777.0 billion) and total expenditures ($850.3
billion) was $73.3 billion, indicating that OASDI also had a negative
effect on the overall budget last year.'' Social Security has
contributed to annual unified Federal budget deficits since 2010 when
its outlays began to exceed the annual income it generated from
revenues from the public. To date the sum total of Social Security tax
collections has exceeded its expenditures, so Social Security has not
yet added to total national debt held by the public. This positive net
fiscal effect is projected to turn negative in the years ahead, when
Social Security is projected to add to total indebtedness to the public
as its annual expenditures persistently exceed the revenue it receives
from the public, as further explained in Appendix F to the Medicare
trustees' report, ``Medicare and Social Security Trust Funds and the
Federal Budget.''
Question. Do you believe that the Social Security Trust Funds
should be treated separately from general Federal revenue?
Answer. The trustees take no position on such issues and focus our
reports on projections for current benefit and revenue schedules. Nor
would any personal views that I have on this question enter into my
work as a trustee. My personal answer to this question would depend on
what is meant. If the question refers to Social Security's optimal
budget treatment, I have no firm opinion. The question of whether
Social Security is on-budget or off-budget, as well as whether it is
financed through a separate trust fund or funds, is unrelated to the
reality of whether it receives general revenues. As an example,
consider that Medicare SMI is financed through a separate trust fund,
but it receives roughly three-quarters of its revenue from the Federal
Government's general fund. Social Security has also received
substantial infusions of revenue from the general fund, including over
$200 billion in the years 2011-12, although less generally than
Medicare SMI. My own personal view is that much of Social Security's
financial integrity and popular support are based on perceptions that
participants have earned their benefits and that the program will be
self-financing without being subsidized from the general fund. For this
reason I have expressed concern about past legislation to transfer
general revenues to Social Security, as well as about the potential
ramifications of delaying financing corrections to the point where
Social Security's continued solvency could require substantial ongoing
subsidy support from the general fund. Again, this view would not bear
upon our projections as trustees.
delivery system reform in medicare
Question. As you know, the positions for which you have been re-
nominated oversee the Medicare Part A and Part B Trust Funds in
addition to the Social Security Trust Funds.
What role does reforming the Medicare delivery system play in
improving the fiscal sustainability of the Medicare program in the
coming years?
Answer. The 2015 joint message from the trustees states: ``For a
number of years the methodology the Trustees have employed for
projecting Medicare finances over the long term has assumed a
substantial reduction in per capita health expenditure growth rates
relative to historical experience. In addition, the Trustees have been
revising down their projections for near-term Medicare expenditure
growth in light of the recent favorable experience, in part due to
effects of payment changes and delivery system reform that are changing
how health care is practiced. However, the Trustees have not assumed
additional, specific cost saving arising from structural changes in the
delivery system that may result from MACRA's new payment mechanisms and
the cost-reduction incentives in the Affordable Care Act, as well as
from payment reforms initiated by the private sector. Notwithstanding
the assumption of a substantial slowdown of per capita health
expenditure growth, the projections indicate that Medicare still faces
a substantial financial shortfall that will need to be addressed with
further legislation. Such legislation should be enacted sooner rather
than later to minimize the impact on beneficiaries, providers, and
taxpayers.''
I believe this statement captures the joint view of the trustees.
We are hopeful that delivery system reforms might contribute to a
beneficial reduction in the rate of health care cost growth. At the
same time we caution that our projections already assume a certain
amount of cost growth deceleration irrespective of the cause. Even
assuming that delivery system reforms contribute to this projected cost
slowdown, there will still be a substantial Medicare financing
shortfall that must be addressed.
Question. As you know, last year's Bipartisan Budget Act
reallocated funds from the Old-Age and Survivors Insurance Trust Fund
(OASI) to the Disability Insurance Trust Fund (DI) in order to extend
the life of the DI Trust Fund and avoid a devastating across-the-board
cut in benefits. I understand you raised concerns about reallocation in
a January 15, 2015 article.
If Congress had not reallocated funding, what policy alternatives
should it have pursued to avoid across-the-board cuts to beneficiaries?
Answer. I joined the other trustees in calling for legislation to
extend the life of the DI trust fund, specifically including the
provision of additional resources to DI. From our 2015 report summary:
``The Trustees strongly urge lawmakers to enact legislation promptly to
achieve sustainable financial balance which, in view of current
financing needs, would almost certainly need to include at least a
temporary increase in resources for the DI Trust Fund.''
This point was also echoed in the 2015 joint message of the public
trustees, which I co-authored: ``At this late date, it is impracticable
to reduce DI costs sufficiently to prevent imminent Trust Fund
depletion (and thus, sudden benefit reductions for highly vulnerable
individuals) without at least a temporary increase in DI Trust Fund
resources, irrespective of its source or combination with other
measures.''
I supported these recommendations because I did not believe there
were viable alternatives that would by themselves have spared
disability recipients from impending sudden and devastating benefit
cuts. After lawmakers took action, I wrote an explanatory piece about
the measure in which I described it supportively as ``a slight
improvement to disability program operations'' and ``a substantial
improvement over the likely result if legislative action had been
further postponed.''
The January 15th article referred to was an analytical and
historical piece explaining the factors affecting DI finances, the
historical record with respect to past tax reallocations, and
statements of previous and current trustees with respect to the need
for comprehensive financing reforms. It did not endorse a specific
allocation of taxes between OASI and DI, but rather presented
historical and recent statements from program trustees to the effect
that reallocations, if and when they occur, should not be used as a
means of delaying long-term financing corrections for DI specifically
or for OASDI as a whole.
public confidence
Question. As you know, the public trustee positions were created to
``increase public confidence in the integrity of the trust funds.'' How
do you believe you have increased public confidence in the Social
Security Trust Funds during your previous appointment?
Answer. There were several respects in which the Greenspan
Commission hoped that public trustees would increase public confidence.
One was to help ``assure that the demographic and economic assumptions
for the cost estimates of the future operations of the program would
continue to be developed in an objective manner.'' I believe we have
achieved this in several ways. One is through careful oversight of the
trustees' projection process and substantiation that public confidence
is warranted. We have vouched for the integrity of the process in our
written and oral statements as trustees, and have extended this ethic
to the remainder of our professional activities.
To take but one of several examples, the 2015 public trustee
statement asserts: ``Not only do the Social Security and Medicare
programs remain exceptional public policy achievements, but also we
have found that the Trustees' process itself accords with the highest
standards of public service. The ex officio Trustees and their capable
staffs with whom we have worked have invariably approached their
responsibilities with an attitude of respect for a process that well
serves lawmakers and the public. The same can be said of the
independent and tirelessly working Chief Actuaries at the Social
Security Administration and Centers for Medicare and Medicaid Services
and their skilled staffs. We have also benefited tremendously from the
insights of the Social Security and Medicare technical panels that have
reviewed the assumptions and methodologies underlying the annual
reports. Although only time will allow us to judge the accuracy of the
Trustees' long-term projections, it is not too soon for us to vouch for
the methodological rigor, objectivity, and integrity with which the
work has been conducted.''
Of course, it is not enough to simply assert that the trust funds'
finances are being monitored to the highest standards of integrity and
professionalism; trustees must ensure that it is so. We have
substantiated these endorsements through the careful oversight
conducted in our trustee work year-round.
It is inevitable that the trustees' methods and projections will be
subject to outside criticism. This is generally fruitful and can help
to improve the quality of the work. At the same time, the trustees have
an important role to play in explaining the work being performed to
improve the transparency of the projection process, which is also
central to maintaining public confidence. As but one example, in 2015 I
wrote that ``transparency is a longstanding concern of the trustees,
and we expend significant time and effort to increase it. The SSA
actuary's office now posts a wealth of methodological specifications
online going a great deal of the way toward enabling others to
replicate their projection methods. The trustees' report itself
contains ample sections detailing how projections have been revised
over the last year in light of updated information. It also contains a
long-running table showing the history of prior actuarial balance
estimates. Another table compares actual prior-year operations (both
income and expenditures) within each separate trust fund, to
projections in the five previous trustees' reports. And there's much
more. . . . Considerable discussion occurs each year between the
trustees' offices about how to best explain deviations from prior
projections (still more time is likely spent on this for the Medicare
report, where the methodological issues are more complex). As one
example of a trustee initiative to expand such information, a footnote
was recently added to the projection history table, directing readers
to an online actuarial note breaking down the changes by source.''
The public trustees have also worked with the other trustees to
improve public confidence by making the reports more transparent,
consistent, precise, logically organized, and understandable. As one
example, we worked to reorder the report summary so that it flowed more
chronologically and more logically. We have also worked to establish
greater consistency between the trustees' measure of ``close actuarial
balance'' and the other metrics employed in the reports. We have worked
to inject greater precision into the report language, including the
usage of terms ranging from ``taxable payroll'' to ``current law.''
And, although long-term health care cost projections remain subject to
enormous uncertainty, we have overseen what I believe are improvements
in the methodological grounding of the projections. This is but a
shortened list; there are countless other examples.
The Greenspan commission also hoped that public trustees would
establish more confidence in the ``investment procedure'' for the trust
funds. As noted in the 2015 public trustee statement, ``This
recommendation followed the Commission's finding that the trust fund
investment procedures were `equitable to both the trust funds and the
General Fund of the Treasury.' It preceded the Commission
recommendation on budget procedures to `make clear the effect and
presence of any payments from the General Fund of the Treasury to the
Social Security program.' '' As trustees we have worked to make the
data in the report as explicit as possible with respect to such flows
of funds.
Ultimately, of course, public confidence in the trust funds depends
less on how the trustees comment on the financial projections than on
their content. Accordingly, public confidence can only be highest when
the Social Security and Medicare trust funds are on sustainable
financial footing and there is no near-term threat of benefit
interruptions as there was in 1981-1983 and more recently in the DI
trust fund. Though financial integrity requires legislation that the
trustees do not have the power to enact, the trustees can and should
provide the information to enable lawmakers to make the necessary
financing corrections before such confidence-threatening episodes
occur. I believe that in concert with the other trustees we have
consistently provided lawmakers with the information required to
legislate to sustain public confidence in Social Security and Medicare.
______
Questions Submitted by Hon. Sherrod Brown
Question. The Greenspan Commission, which first proposed creating
these positions, said the role of a public trustee was to ``create
confidence in the integrity of the trust funds.'' Do you both feel that
you increased public confidence in these trust funds during your
previous tenure? If so, how?
Answer. I believe that my answer to the previous question also
applies to this one, so I am copying it here.
There were several respects in which the Greenspan Commission hoped
that public trustees would increase public confidence. One was to help
``assure that the demographic and economic assumptions for the cost
estimates of the future operations of the program would continue to be
developed in an objective manner.'' I believe we have achieved this in
several ways. One is through careful oversight of the trustees'
projection process and substantiation that public confidence is
warranted. We have vouched for the integrity of the process in our
written and oral statements as trustees, and have extended this ethic
to the remainder of our professional activities.
To take but one of several examples, the 2015 public trustee
statement asserts: ``Not only do the Social Security and Medicare
programs remain exceptional public policy achievements, but also we
have found that the Trustees' process itself accords with the highest
standards of public service. The ex officio Trustees and their capable
staffs with whom we have worked have invariably approached their
responsibilities with an attitude of respect for a process that well
serves lawmakers and the public. The same can be said of the
independent and tirelessly working Chief Actuaries at the Social
Security Administration and Centers for Medicare and Medicaid Services
and their skilled staffs. We have also benefited tremendously from the
insights of the Social Security and Medicare technical panels that have
reviewed the assumptions and methodologies underlying the annual
reports. Although only time will allow us to judge the accuracy of the
Trustees' long-term projections, it is not too soon for us to vouch for
the methodological rigor, objectivity, and integrity with which the
work has been conducted.''
Of course, it is not enough to simply assert that the trust funds'
finances are being monitored to the highest standards of integrity and
professionalism; trustees must ensure that it is so. We have
substantiated these endorsements through the careful oversight
conducted in our trustee work year-round.
It is inevitable that the trustees' methods and projections will be
subject to outside criticism. This is generally fruitful and can help
to improve the quality of the work. At the same time, the trustees have
an important role to play in explaining the work being performed to
improve the transparency of the projection process, which is also
central to maintaining public confidence. As but one example, in 2015 I
wrote that ``transparency is a longstanding concern of the trustees,
and we expend significant time and effort to increase it. The SSA
actuary's office now posts a wealth of methodological specifications
online going a great deal of the way toward enabling others to
replicate their projection methods. The trustees' report itself
contains ample sections detailing how projections have been revised
over the last year in light of updated information. It also contains a
long-running table showing the history of prior actuarial balance
estimates. Another table compares actual prior-year operations (both
income and expenditures) within each separate trust fund, to
projections in the five previous trustees' reports. And there's much
more. . . . Considerable discussion occurs each year between the
trustees' offices about how to best explain deviations from prior
projections (still more time is likely spent on this for the Medicare
report, where the methodological issues are more complex). As one
example of a trustee initiative to expand such information, a footnote
was recently added to the projection history table, directing readers
to an online actuarial note breaking down the changes by source.''
The public trustees have also worked with the other trustees to
improve public confidence by making the reports more transparent,
consistent, precise, logically organized, and understandable. As one
example, we worked to reorder the report summary so that it flowed more
chronologically and more logically. We have also worked to establish
greater consistency between the trustees' measure of ``close actuarial
balance'' and the other metrics employed in the reports. We have worked
to inject greater precision into the report language, including the
usage of terms ranging from ``taxable payroll'' to ``current law.''
And, although long-term health care cost projections remain subject to
enormous uncertainty, we have overseen what I believe are improvements
in the methodological grounding of the projections. This is but a
shortened list; there are countless other examples.
The Greenspan commission also hoped that public trustees would
establish more confidence in the ``investment procedure'' for the trust
funds. As noted in the 2015 public trustee statement, ``This
recommendation followed the Commission's finding that the trust fund
investment procedures were `equitable to both the trust funds and the
General Fund of the Treasury.' It preceded the Commission
recommendation on budget procedures to `make clear the effect and
presence of any payments from the General Fund of the Treasury to the
Social Security program.' '' As trustees we have worked to make the
data in the report as explicit as possible with respect to such flows
of funds.
Ultimately, of course, public confidence in the trust funds depends
less on how the trustees comment on the financial projections than on
their content. Accordingly, public confidence can only be highest when
the Social Security and Medicare trust funds are on sustainable
financial footing and there is no near-term threat of benefit
interruptions as there was in 1981-1983 and more recently in the DI
trust fund. Though financial integrity requires legislation that the
trustees do not have the power to enact, the trustees can and should
provide the information to enable lawmakers to make the necessary
financing corrections before such confidence-threatening episodes
occur. I believe that in concert with the other trustees we have
consistently provided lawmakers with the information required to
legislate to sustain public confidence in Social Security and Medicare.
Question. Do you believe the trust fund of Social Security
contributes to the Federal deficit? If yes, why do you feel it should
not be accounted for separately and apart from the general operating
fund of the government?
Answer. With respect to the first question, as stated on page 211
of the 2015 Medicare trustees' report, ``For OASDI (Social Security),
the difference between revenues from the public ($777.0 billion) and
total expenditures ($850.3 billion) was $73.3 billion, indicating that
OASDI also had a negative effect on the overall budget last year.''
Social Security has contributed to annual unified Federal budget
deficits since 2010 when its outlays began to exceed the annual income
it generated from revenues from the public. This is further explained
in Appendix F to the Medicare trustees' report, ``Medicare and Social
Security Trust Funds and the Federal Budget.''
On the second question, the trustees take no position on such
issues and focus our reports on projections for current benefit and
revenue schedules. Nor would any personal views that I have on this
question enter into my work as a trustee. Assuming I am being asked for
my personal view, it is that much of Social Security's financial
integrity and popular support are based on perceptions that
participants have earned their benefits and that the program will be
self-financing without being subsidized from the general fund. For this
reason I have expressed concern about past legislation to transfer
general revenues to Social Security, as well as about the potential
ramifications of delaying financing corrections to the point where
Social Security's continued solvency could require substantial ongoing
subsidy support from the general fund. Again, this view would not bear
upon our projections as trustees.
Question. Can you outline what experience you have in actuarial
science that predates your work as a public trustee?
Answer. Prior to serving as a trustee I researched and wrote
extensively on Social Security actuarial projections, including a 2007
presentation to the American Enterprise Institute on the trustees'
actuarial projection track record, two books on Social Security
finances, and assorted other articles. I also served as staff
researching the actuarial projections for various commissions during my
periods of service in the Senate and at the White House. Like other
trustees, I am not an actuary by training; the actuarial work for the
trustees' reports is performed by the Social Security Administration
Office of the Chief Actuary and the CMS Office of the Actuary.
Question. Can you walk me through the first couple years of being a
public trustee? What issues did you have the most trouble getting up to
speed on? What have you learned since that, if you did it over again,
you would do differently?
Answer. Substantively the most difficult issues pertained to the
methods for projecting health care cost growth, and the complexity of
translating these projections into expenditure growth estimates in
various categories of Medicare payments. As I was already up to speed
on many facets of the economic and demographic assumptions used for
both reports, my learning curve over the first couple of years probably
had at least as much to do with process as with substance. If I had it
do to over again I would probably be more conscious of not allowing
unresolved issues to drift late into the report production season.
Because of the sheer volume of material and the intensity of the report
production process, it is difficult to make significant improvements to
the reports during the last couple of months before release.
Significant changes to prior years' methodology, language or
presentation must often be worked out early in the process or not at
all. Both time constraints and the sheer number of individuals involved
are barriers to consensus on improvements. A trustee must often be
extremely diligent about seeing issues through to conclusion, even when
there are seemingly several months left in which to work.
Question. What advice would you give a new public trustee to help
them better understand the process?
Answer. I hope it will be acceptable that I combine my answer to
this question with the following one.
Question. Is there any institutional knowledge you gained in your
tenure as a public trustee that you believe is essential to fulfilling
the job's obligations? What institutional knowledge does a public
trustee develop that a new trustee with a fresh perspective couldn't
pick up on immediately?
Answer. The first piece of advice and institutional knowledge I
would pass on would be the one with which I closed my answer to
question 4. A trustee must be extremely diligent about driving issues
to a conclusion surprisingly early in the annual process; otherwise
there is a tendency for the clock to run out on changes that ought to
be made. This may be easy to understand conceptually but only actually
going through the process affords one with the experience required to
apply this principle effectively. The experience of being able to work
effectively within this process is just as important to a trustee as is
knowledge of the substance. Beyond this it is very important to
establish a constructive working relationship between the public
trustees and the ex officio trustees. The ex officio trustees are
cabinet officials with other enormously important public duties in
addition to their trustee work. This and the multitude of highly
technical issues involved require a great deal of the detail work to be
performed by staff of the executive branch departments. The public
trustees must work closely with executive branch staff to resolve as
many of the most in-the-weeds issues as they can. At the same time, the
public trustees must develop a sense of when disagreements at the staff
level must be kicked up to the trustees for resolution. (When I say
this, I do not necessarily mean kicked up to the trustees for a vote;
in my experience the trustees have operated by consensus even when
discussing issues trustee to trustee.) Some issues might be profitably
elevated in this way but many others are best resolved working with the
staff, and it takes some seasoning to learn the difference. Additional
institutional knowledge of importance consists of knowing which
substantive and presentational angles have already been considered at
length by the trustees' working group. A great amount of time can be
saved when the trustees do not need to repeat previous processes of
ironing out technical disagreements; this frees the trustees' working
group to make progress in other areas where it is more possible.
Finally, if possible, be paired with an exceptional fellow public
trustee, as I was. This will be the single greatest determinant of the
quality of a public trustee's experience.
Question. Are there any biases or assumptions a person could have
that you feel would disqualify them from being a public trustee?
Answer. A key to being an effective trustee--whether public or ex
officio--is a commitment to following the data where it leads,
irrespective of one's policy views. A bias that prevents one from
accepting either unfavorable or favorable information affecting
financial projections would preclude one from performing the trustees'
essential functions. I have not witnessed this flaw in any of the
trustees with which I have worked, nor in the work output from their
various offices.
______
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing to
consider two Social Security and Medicare trustees' nominations:
I'd like to welcome everyone to today's hearing to consider pending
nominations. Before us today are Dr. Charles Blahous and Dr. Robert
Reischauer, who have both been nominated to be members of the Boards of
Trustees of the trust funds of the Federal Old-Age and Survivors
Insurance, the Federal Disability Insurance, and the Federal
Supplemental Medical Insurance programs.
By statute, these various boards consist of the Secretaries of
Treasury, Labor, HHS, and the Commissioner of Social Security, along
with two public trustees. Drs. Blahous and Reischauer have been
nominated by the President to serve once again as public trustees.
The public trustee positions were created in the 1983 Social
Security Amendments, based on a recommendation of the so-called
Greenspan Commission with a requirement that one be from each political
party. Since that time, there have been five sets of confirmed public
trustees, with Drs. Blahous an Reischauer having been the last set to
have served.
The trustees have various duties, including a responsibility to
review general policies relating to the management of the trust funds
and to report to Congress each year on the operation of the trust funds
and their current and projected status.
As the trustees go through the process of developing and releasing
a report each year, there are many inputs and many participants. For
example, the Social Security Administration, and its Office of the
Chief Actuary in particular, plays a key role in developing
assumptions, analytics, and analyses that often end up shaping the
information that is provided in the reports.
In addition, we have had numerous technical panels, composed of
actuaries, economists, demographers and others, who review the
assumptions and methods used in the trustees' reports. This is
something that often goes overlooked.
Since 1999, 50 people have served on these technical panels,
weighing in on the Social Security trustee reports and providing both
fresh objective eyes on the development of the trustees' reports as
well as a much-needed check on what could otherwise be an outsized role
of the Social Security Administration in guiding the contents of the
reports.
President Obama appears to have confidence that the two nominees
before us today have fulfilled their duties as public trustees in their
previous tenure, and to date, I have no reason to disagree.
In general, I believe that the trustee reports to Congress and the
American people have been put forward in a nonpartisan fashion, and
those who have worked on formulating the reports, including
representatives of the administration and our two nominees today, have
worked professionally and cooperatively.
In recent months, some have questioned whether having public
trustees serve more than one term is beneficial. Others have noted the
benefits of having continuity in these positions given the many
intricacies relating to the various Social Security programs and the
management of the trust funds, not to mention the process through which
the trustees' reports are compiled and issued.
Of course, members of the committee, are, as always, free to reach
their own decisions on this matter.
Furthermore, I know that we have an election coming in November.
And, in even-numbered years, some people tend to go to polar extremes
whenever anyone anywhere mentions Social Security and/or Medicare in a
sentence.
There are some who, in any context, but particularly during
election years, are so unwilling to have a reasonable discussion about
these programs that they will go out of their way to silence any
alternative viewpoints and stigmatize anyone who has ever expressed a
contrary opinion.
That may make for good politics, but here on the Finance Committee,
we've always tried to do things a little differently.
Today, we have before us two highly qualified nominees who were
confirmed to these very same positions by the full, Democrat-controlled
Senate in 2010 without any opposition. They have now been resubmitted
by a Democratic President to a
Republican-controlled Senate that, so far, appears ready and willing to
confirm them once again. I think it would be unfortunate if we now
decided to drag either one of them into the silliness of the political
campaign season.
As I indicated earlier, the President has faith in the two nominees
before us today, and, at this point, I see no compelling reason to
disagree.
With that, I want to once again welcome the nominees to the
committee today and thank them for their willingness to continue
serving in this important capacity.
______
Prepared Statement of Hon. Robert D. Reischauer, Ph.D., Nominated to be
a Member of the Board of Trustees of the Federal Hospital Insurance
Trust Fund, a Member of the Board of Trustees of the Federal
Supplementary Medical Insurance Trust Fund, and a Member of the Board
of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund
and the Federal Disability Insurance Trust Fund
Chairman Hatch, Senator Wyden, and members of the committee, I am
honored to have been re-nominated by President Obama to be one of the
two public trustees of the Social Security and Medicare trust funds,
and I thank you for your willingness to evaluate my qualifications for
these positions.
Social Security and Medicare are vital elements of the Nation's
social and economic fabric, providing essential financial support and
access to medical care for millions of people with disabilities, the
elderly, and families of deceased workers. Not surprisingly, these
programs are very popular, representing, as they do, part of an
intergenerational social compact that binds together those of different
ages, economic circumstances, and social situations. Social Security
and Medicare, as two of the Federal Government's largest programs, are
also important to the Nation's economy and loom large in the Federal
budget. Given their importance in all these ways, it is critical that
the financial and operational integrity of Social Security and Medicare
be unimpeachable. It is also essential that the public retains trust in
the programs' continuity and has a balanced understanding of the
challenges ahead.
Like many older Americans, I have a close personal as well as
professional relationship with both the Social Security and Medicare
programs. I receive benefits from both programs and pay payroll taxes
to their several trust funds and standard and income-related premiums
for my supplementary medical and prescription drug coverage. With the
exception of my experience as a victim of Social Security identity
fraud, I am a very satisfied participant and think my experience as a
beneficiary has provided me with perspectives that are valuable for my
professional relationship with the programs.
Along with Dr. Charles Blahous, I served as a public trustee from
October 26, 2010 through July 22 of 2015. This was one of the most
interesting and rewarding assignments I have had in my 46-year
Washington career. It is also one that has given me confidence that
Congress can establish and the Federal Government can operate processes
that work and work well.
As you know, a primary responsibility of the Boards of Trustees of
the Social Security and Medicare programs is to report to Congress each
year on the past and future statuses of the several trust funds. The
work involved in putting together these annual reports is carried out
largely by the Working Group, which consists of the two public
trustees; Assistant Secretary-level representatives of the Secretaries
of the Treasury, Health and Human Services, and Labor Departments; and
a Deputy Commissioner-level representative of the Commissioner of
Social Security. The representatives of the ex officio trustees are
supported by extremely able professional staffs. In addition, the
Social Security and Medicare actuaries play critically important roles,
providing estimates, analyses, methodological guidance, and historical
perspective during the Working Group's discussions.
The Working Group meets frequently, especially in the fall and
early winter. All of the members suggest topics for the agenda. The
discussion focuses on the current statuses of the trust funds, how and
why they may differ from what was projected in recent reports, and what
these difference might imply for future projections. The Working Group
carefully examines and, if needed, revises the critical demographic,
economic and programmatic assumptions and data that are required to
generate projections. It also evaluates possible methodological and
presentational improvements.
The process is not a closed one. On occasion, outside experts are
invited to present their perspectives on issues on which the Working
Group has not reached consensus. In addition, every four or so years
the Social Security Advisory Board and the Department of Health and
Human Services appoint technical panels of leading outside experts to
review the demographic and economic assumptions and the methodologies
and the presentation of the Social Security and Medicare trustees'
reports. The Working Group pays serious attention to the
recommendations of these panels.
Early in the year, the Offices of the Actuary generate draft
reports that reflect the deliberations of the Working Group. The drafts
are circulated among all of the members of the Working Group and there
then ensues a comment and revision process that can only be described
as exhaustive and exhausting. All comments and suggested revisions are
circulated to and commented on by the entire group.
Reflecting back on the five report cycles I have participated in, I
am struck by their quality. The discussion is robust and sophisticated.
The input from the professional staffs of the several departments, the
Social Security Administration and the Offices of the Actuaries, not to
mention the Actuaries themselves, is uniformly excellent. The
atmosphere is collegial, and the decisions are consensual. The
deliberations are devoid of partisan or ideological bias, as all seek
to produce reports that are balanced and objective. In my opinion, the
Congress and the American people are well served by the existing
trustee process, and should this committee and the full Senate agree, I
would be honored to serve another term.
When I appeared before this committee in July of 2010, I discussed
aspects of my professional experience that bore on my qualifications to
carry out the responsibilities of the position of public trustee. I
will not elaborate on them again but rather provide some summary facts.
As an economist and policy analyst, I have focused most of my research,
writing, and speaking on the Federal budget, Social Security, and
Medicare. I helped Alice Rivlin set up the Congressional Budget Office
in 1975 and served in several positions, including Deputy Director,
there until 1981. I was CBO's Director from 1989 to 1995. I am a
founding member of the National Academy of Social Insurance (NASI)
which in 2012 bestowed its Robert Ball Award on me. I served for 9
years as the chair of NASI's Restructuring Medicare for the Long Term
project. I am a member of the National Academy of Medicine (Institute
of Medicine) and have served on five Institute committees, the most
recent of which examined the geographic variation in Medicare and other
health spending.
I served for 9 years on the Medicare Payment Advisory Committee, 7
as Vice Chair, and was a member of the Medicare Competitive Pricing
Advisory Committee, which was chartered by Congress to explore ways
competitive bidding might be used to set Medicare payments for private
plans.
The various positions, commissions, and boards I have served in and
on, most importantly my 5 years as a public trustee, have provided me
with the technical, methodological, and programmatic expertise
necessary to fulfill the duties and responsibilities of a public
trustee, and, if confirmed, I will carry them out with the objectivity,
seriousness, and skill they deserve.
Thank you.
______
SENATE FINANCE COMMITTEE
STATEMENT OF INFORMATION REQUESTED
OF NOMINEE
A. BIOGRAPHICAL INFORMATION
1. Name (include any former names used): Robert D. Reischauer.
2. Position to which nominated: Member of the Board of Trustees of
the Federal Old-Age and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund; Member of the Board of Trustees of the
Federal Supplementary Medical Insurance Trust Fund.
3. Date of nomination: August 5, 2015.
4. Address (list current residence, office, and mailing addresses):
5. Date and place of birth: January 18, 1941, Boston, MA.
6. Marital status (include maiden name of wife or husband's name):
7. Names and ages of children:
8. Education (list secondary and higher education institutions, dates
attended, degree received, and date degree granted):
Browne and Nichols School (renamed Buckingham Browne and Nichols
School), 1956-1959, H.S. Diploma June 1959.
Harvard College, 1959-1963, A.B. June 1963.
Columbia University, School of International and Public Affairs,
1963-1965, Masters in International Affairs 1966 (Latin American Area
Studies Certificate).
Columbia University, Department of Economics, 1965-1970, Ph.D.
1971.
9. Employment record (list all jobs held since college, including the
title or description of job, name of employer, location of work, and
dates of employment):
The Urban Institute, Distinguished Institute Fellow and President
Emeritus, March 2012 to present.
The Urban Institute, President, February 2000 to February 2012.
The Brookings Institution, Senior Fellow, March 1995 through
January 2000.
Congressional Budget Office, Director, March 1989 to March 1995.
The Brookings Institution, Senior Fellow, February 1986 to March
1989.
The Urban Institute, Senior Vice President, February 1981 to
February 1986.
Congressional Budget Office, Deputy Director, 1979-1981; Assistant
Director for Human Resources and Community Development, 1977-1979;
Special Assistant to the Director, 1975-1977.
The Brookings Institution, Economic Studies Program, Research
Associate, September 1970 to February 1975.
Columbia University, Department of Economics, Preceptor (College
Department), 1969-1970; Teaching Assistant (Graduate Department), 1968-
1969.
The RAND Corporation, New York City, RAND Institute, Consultant,
1968-1969.
Harvard University, The Center for Studies in Education and
Development, Consultant on Education and Planning in Central America,
1965.
10. Government experience (list any advisory, consultative, honorary,
or other part-time service or positions with Federal, State, or local
governments, other than those listed above):
Public Trustee, Social Security and Medicare Trust Funds, September
2010 to July 2015.
Member, Medicare Payment Advisory Commission, May 2000 to May 2009
(Vice Chair, May 2001 to May 2008).
Member, Panel of Economic Advisers, Congressional Budget Office,
1995 to 2007.
Member, Panel of Health Advisers, Congressional Budget Office, 2007
to 2013.
Member, Medicare Competitive Pricing Advisory Committee, 1997 to
2001.
Member, Advisory Board, Joint Committee on Taxation, 1995 to 1999.
11. Business relationships (list all positions held as an officer,
director, trustee, partner, proprietor, agent, representative, or
consultant of any corporation, company, firm, partnership, other
business enterprise, or educational or other institution):
Fellow of Harvard College (Member of the Corporation), Cambridge,
MA, 2002 to 2014 (Senior Fellow 2010 to 2014).
Member, Joint Committee on Inspection, 2002 to 2014 (Chair,
2008 to 2013); Corporation Committee on Shareholder Responsibility,
2004 to 2013 (Chair, 2010 to 2014); Finance Committee, 2011 to 2014
(Chair, 2010 to 2011); Governance Committee 2010 to 2014 (Chair, 2010
to 2014).
Board of Overseers, Harvard University, Cambridge, MA, 1996 to
2002.
Vice Chair, 2001 to 2002; Executive Committee, 1998 to 2002;
Standing Committee on Social Sciences, 1996 to 2002 (Chair, 1998 to
2002); Chair, Special Committee of Higher Education Costs, 1998 to
2000; Subcommittee on Visitation, 1998 to 2002 (Chair, 1999 to 2002);
Institutional Policy Committee, 1996 to 2002.
Trustee, Robert D. Reischauer GST Trust 1990 (1990-present).
AcademyHealth, Washington, DC, Director, 2002 to 2012; Chair,
Finance Committee, 2008 to 2012.
Center on Budget and Policy Priorities, Washington, DC, Director,
1987 to 1989 and 1995 to present; Member, Finance and Audit Committee,
1995 to present.
International Budget Partnership, Pre-Board and Board, 2013 to
present, Member, Audit and Finance Committee, Washington, DC, 2015 to
present.
Manpower Demonstration Research Corporation, New York, NY,
Director, 1995 to 2000, Chair, 1998 to 2000.
Mathematica Policy Research, Inc., Princeton, NJ, Director, 1987 to
1989.
P/PV (Public Private Ventures), Director, Philadelphia, PA, 1985 to
1989.
The Academy of Political Science, New York, NY, Director, 1995 to
present.
The Committee for a Responsible Federal Budget, Washington, DC,
Director, 1995 to present.
The Japan-America Student Conference, Washington, DC, Director,
1999 to 2004.
Member, Association for Public Policy Analysis and Management, 1980
to 2012, 2015 to present; Vice President, 1984 to 1985.
12. Memberships (list all memberships and offices held in
professional, fraternal, scholarly, civic, business, charitable, and
other organizations):
Bipartisan Policy Center, Committee on Retirement Security and
Personal Savings, 2014 to present.
Advisory Board, The Japan Society of Boston, Inc., 2003 to present.
Advisory Board, Leonard D. Schaeffer Center for Health Policy and
Economics, 2011 to present.
National Institute for Health Care Management, Advisory Board, 1996
to present.
Elected Member, Institute of Medicine (renamed the National Academy
of Medicine in 2015), 1999 to present.
Member, Committee on the Roles of Academic Health Centers in
the 21st Century, 2001 to 2003.
Member, Committee on Redesigning Health Insurance Performance
Measures, Payment and Performance Improvement Programs, 2004 to 2006;
Co-Chair, Subcommittee on Pay for Performance, 2005 to 2006.
Member, Committee on Health Insurance Status and Its
Consequences, 2008 to 2009.
Member, Committee on the Future of Nursing, 2009 to 2010.
Member, Committee on the Variation in Health Care Spending,
2010 to 2013.
Elected Member, National Academy of Public Administration, 1980 to
present.
Member, Committee on the Fiscal Future of the United States:
Analysis and Policy Options; a joint project of The National Academies
and the National Academy of Public Administration, 2008 to 2010.
Founding Member, National Academy of Social Insurance, 1986 to
present.
Chair, National Advisory Committee, The Robert Wood Johnson
Foundation's Changes in Health Care Financing and Organization (HFCO)
Initiative, 2000 to 2012.
Member, Advisory Board, The Health Industry Forum, 2005 to present.
Member, Advisory Board, RAND Global Pharmaceutical Project, 2006.
Member, Independent Task Force on Immigration and America's Future,
2005 to 2006.
Member, Advisory Council, The Hamilton Project, 2006 to present.
Member, American Economic Association, 1970 to 2012.
Member, American Society for Public Administration, 1980 to
present.
Chairman, Restructuring Medicare for the Long Term project,
National Academy of Social Insurance, 1995 to 2004.
Commission on Behavioral and Social Sciences and Education,
National Research Council, National Academy of Science, 1996 to 1999.
Committee for Economic Development, Research Advisory Board, 1996
to 1999.
Advisory Committee of the Center for the Study of the States, The
Nelson A. Rockefeller Institute of Government, 1990 to 1998.
Practitioner Advisory Board, Graduate Program in Public Affairs and
Administration, Columbia University, 1979 to 1984.
Editorial Board, Public Budgeting and Finance, 1980 to present.
Editorial Board, Health Affairs, 1996 to 2003.
Editorial Board, Public Administration Review, 1990 to 2002.
Editorial Advisory Board, Political Science Quarterly, 1973 to
1995.
Associate Editor, Journal of International Affairs, 1964 to 1965.
13. Political affiliations and activities:
a. List all public offices for which you have been a candidate.
None.
b. List all memberships and offices held in and services rendered
to all political parties or election committees during the last 10
years.
None.
c. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $50 or more for the past 10 years.
Donald Berwick for Governor (MA) 2014 $450
Judy Feder for Congress 2007-2008 $1,500
Judy Feder for Congress 2005-2006 $1,050
14. Honors and awards (list all scholarships, fellowships, honorary
degrees, honorary society memberships, military medals, and any other
special recognitions for outstanding service or achievement):
The Harvard Medal for Extraordinary Service to Harvard University,
Harvard Alumni Association, 2015; Honorary Membership Phi Beta Kappa,
Alpha Iota (Harvard) Chapter of Massachusetts, 2013; Public Service
Award, Harvard Club of Washington DC, 2013; National Academy of Social
Insurance, Robert Ball Award for Outstanding Achievements in Social
Insurance, 2012; Washington Academy of Sciences' Distinguished Career
in Science Award, 2009; National Academy of Social Insurance Award for
Exceptional Contributions to the Field of Social Insurance, 2001; John
F. Kennedy Fellow to New Zealand, 1999; Fellow, National Association of
Business Economists, 1996; Morris and Edna Zale Award for Distinction
in Scholarship and Public Service, Stanford University Public Policy
Program, 1995; Maxwell Spirit of Public Service Award from the Maxwell
School of Citizenship and Public Affairs, Syracuse University, 1994;
National Distinguished Service Award from the American Association for
Budget and Program Analysts, 1994; Doctor of Laws, Wheaton College,
Norton, MA 1994; S. Kenneth Howard Award, Section on Budgeting and
Financial Management of the American Society for Public Administration,
1993; Brandeis University, Heller School Award for Leadership in Human
Services, 1989; Ohio State University, School of Public Policy and
Management Award for Outstanding Public Service, 1989.
15. Published writings (list the titles, publishers, and dates of all
books, articles, reports, or other published materials you have
written):
Publications
``The Transformation of Medicare,'' with Henry J. Aaron, in Forum for
Health Economics and Policy, De Gruyter Online (November 2015).
``Health Policy Issues and the 2016 Presidential Election,'' with Alice
M. Rivlin in Campaign 2016: Eight Big Issues the Presidential
Candidates Should Address, Ron Haskins (editor) (Brookings
Institution, November 2015).
``The Federal Budget Mutated from a Civil Process into a Political
Weapon,'' in America's 21st-Century Challenge (The Fiscal
Times, February 2, 2015).
``The War Isn't Over,'' with Henry J. Aaron, The New England Journal of
Medicine, vol. 362, no. 14 (April 8, 2010).
``Toward a 21st-Century Health Care System: Recommendations for Health
Care Reform,'' with Kenneth Arrow et al., Annals of Internal
Medicine, vol. 150, no. 7 (April 7, 2009).
``Collective Accountability for Medical Care--Toward Bundled Medicare
Payments,'' with Glenn Hackbarth, J.D. and Anne Mutti, M.P.A.,
The New England Journal of Medicine, vol. 359, no. 1 (July 3,
2008).
``Benefits with Risks--Bush's Tax-Based Health Care Proposals,'' The
New England Journal of Medicine, vol. 356, no. 14 (April 5,
2007).
``The Institute of Medicine Committee's Clarion Call for Universal
Coverage,'' with Joseph P. Newhouse, Health Affairs web
exclusive (March 2004).
``Medicare Policy,'' panelist with Nancy-Ann DeParle and Mark McClellan
on ``Medicare'' by Joseph P. Newhouse, in Jeffrey A. Frankel
and Peter R. Orszag, eds., American Economic Policy in the
1990s (MIT Press, 2002).
``Greek Fiscal and Budget Policy and EMU,'' with Vassilios G.
Manessiotis, in Ralph C. Bryant, Nicholas C. Garganas, and
George S. Tavlas, eds., Greece's Economic Performance and
Prospects, Bank of Greece/Brookings Institution (Bank of Greece
Printing Works, 2001).
Countdown to Reform: The Great Social Security Debate (Revised and
Updated for 2001), with Henry J. Aaron (The Century Foundation
/Brookings, 2001).
``Good Policy vs. Good Politics: The Hazards of Designing a Medicare
Prescription Drug Benefit,'' with Michael E. Gluck, The Milken
Institute Review, vol. 2, no. 4 (Fourth Quarter, 2000).
``Who Really Wants Price Competition in Medicare Managed Care?'', with
Len M. Nichols, Health Affairs, vol. 19, no. 5 (September/
October 2000).
Vouchers and the Provision of Public Services, editor with C. Eugene
Steuerle, Van Doorn Ooms, and George Peterson (Washington, DC:
Brookings Institution Press/Committee for Economic Development/
Urban Institute Press, 2000).
``Me dicare Vouchers,'' in C. Eugene Steuerle, Van Doorn Ooms,
George Peterson, and Robert D. Reischauer, eds., Vouchers and the
Provision of Public Services (Brookings Institution Press/Committee for
Economic Development/Urban Institute Press, 2000).
``Bridging Past and Present: Choice and Social Insurance,'' in Sheila
Burke, Eric Kingson, and Uwe Reinhardt, eds., Social Security
and Medicare: Individual vs. Collective Risk and Responsibility
(National Academy of Social Insurance/Brookings Institution
Press, 2000).
Setting National Priorities: The 2000 Election and Beyond, editor with
Henry J. Aaron (Washington, DC: Brookings Institution Press,
1999).
``Th e Dawning of a New Era,'' in Henry J. Aaron and Robert D.
Reischauer, eds., Setting National Priorities: The 2000 Election and
Beyond (Brookings Institution Press, 1999).
``Pa ying for an Elderly Population,'' with Henry J. Aaron, in
Henry J. Aaron and Robert D. Reischauer, eds., Setting National
Priorities: The 2000 Election and Beyond (Brookings Institution Press,
1999).
``Evaluating the President's Framework for the Surplus,'' Tax Notes,
vol. 82, no. 11 (March 15, 1999).
Medicare: Preparing for the Challenges of the 21st Century, with Stuart
Butler and Judith R. Lave, eds. (National Academy of Social
Insurance/Brookings Institution Press, 1998).
Countdown to Reform: The Great Social Security Debate, with Henry J.
Aaron (The Century Foundation/Brookings, 1998).
``The Gradual Erosion of Employment-Based Benefits,'' Do Employers/
Employees Still Need Employee Benefits? (Employee Benefit
Research Institute, 1998).
``Light at the End of the Tunnel or Another Illusion? The 1997 Budget
Deal,'' National Tax Journal, vol. LI, no. 1 (March 1998).
``Medicare: Beyond 2002,'' in Policy Options for Reforming the Medicare
Program: Papers From the Princeton Conference on Medicare
Reform, Institute for Health Policy, Brandeis University (July
1997).
``Medicare Beyond 2002: Preparing for the Baby Boomers,'' Brookings
Review (Summer 1997).
``The Federal Line-Item Veto: What Is It and What Will It Do?'', with
Philip G. Joyce, Public Administration Review, vol. 57, no. 2,
(March/April 1997).
Setting National Priorities: Budget Choices for the Next Century,
editor (Brookings Institution Press, 1996).
``Th e Budget: Crucible for the Policy Agenda,'' in Robert D.
Reischauer, ed., Setting National Priorities: Budget Choices for the
Next Century (Brookings Institution Press, 1996).
``Th e Unfulfillable Promise: Cutting Nondefense Discretionary
Spending,'' in Robert D. Reischauer, ed., Setting National Priorities:
Budget Choices for the Next Century (Brookings Institution Press,
1996).
Reducing the Deficit: Past Efforts and Future Challenges, The Frank M.
Engle Lecture, The American College, Bryn Mawr, PA (1996).
``The Medicare Reform Debate: What is the Next Step?'', with Henry J.
Aaron, Health Affairs, vol. 14, no. 4 (Winter 1995).
``Estimating the Effects of Reform,'' with Linda T. Bilheimer, in Henry
J. Aaron, ed., The Problems That Won't Go Away: Reforming U.S.
Health Care Financing (Brookings Institution, 1995); also
``Confessions of the Estimators: Numbers and Health Reform,''
with Linda T. Bilheimer, Health Affairs, vol. 14, no. 1 (Spring
1995).
``Budget Policy Under United Government: A Case Study,'' in James L.
Sundquist, ed., Back to Gridlock? Governance in the Clinton
Years (Brookings Institution, 1995).
``Pressures for Change: The Future Roles of Markets and Governments--An
American Perspective,'' in Roger Benjamin, C. Richard Neu, and
Denise Quigley, eds., Balancing State Intervention: The Limits
of Transatlantic Markets (St. Martin's Press, 1995).
``Medicare: What to Do?'', The Brookings Review, (Summer 1995).
``Congressional Budget Office (CBO),'' Encyclopedia of the American
Presidency, vol. 1 (Simon and Schuster, 1994).
``Deficit Budgeting: The Federal Budget Process and Budget Reform,''
with Philip G. Joyce, Harvard Journal on Legislation (Summer
1992).
``Fiscal Policy and the Economy,'' in Marvin H. Kosters, ed., Personal
Saving, Consumption, and Tax Policy (American Enterprise
Institute for Public Policy Research, 1992).
``Paying to Restore the Bank Insurance Fund,'' in Deloitte and Touche,
Soaring FDIC Premiums: Overcoming the Drag on Bank Earnings
(Deloitte and Touche, 1991).
``Taxes and Spending Under Gramm-Rudman-Hollings,'' National Tax
Journal, vol. 43, no. 3 (September 1990).
``Social Policy Formulation in the 1990s,'' Compensation and Benefits
Management, vol. 6, no. 3 (Spring 1990).
``The Rise and Fall of National Urban Policy: The Fiscal Dimension,''
in Marshall Kaplan and Franklin James, eds., The Future of
National Urban Policy (Duke University Press 1990).
``Working Within the Realities,'' in Harriett D. Romo, ed., Latinos and
Blacks in the Cities: Policies for the 1990s, a volume in the
Symposia Series of the LBJ Library and the LBJ School of Public
Affairs (University of Texas, 1990).
``The Welfare Reform Legislation: Directions for the Future,'' in David
Ellwood and Phoebe H. Cottingham, eds., Welfare Reform: What We
Know and What We Don't (Harvard University Press, 1989).
``HELP: A Student Loan Program for the 21st Century,'' in Lawrence
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8, 2001.
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16. Speeches (list all formal speeches you have delivered during the
past 5 years which are on topics relevant to the position for which you
have been nominated):
I give dozens of formal and informal talks a year. I do not keep a
list of these talks and in most cases use handwritten notes which I
discard after the presentations.
17. Qualifications (state what, in your opinion, qualifies you to
serve in the position to which you have been nominated):
I have served in this position for the past 5 years.
For several decades, I have studied, written and spoken about, and
been consulted by policy makers, the media and experts about the
challenges facing the Social Security and Medicare programs and the
ways to address these problems. I served for 9 years on the Medicare
Payment Advisory Commission. During 7 of those years, I was the Vice
Chair of the Commission. I am a founding member of the National Academy
of Social Insurance. From 1995 through 2004, I chaired the Academy's
``Restructuring Medicare for the Long Term'' panel and was an ex
officio member of many of that panel's study groups. I have been a
member of several IOM committees related to Medicare. I am the
coauthor, with Henry Aaron, of a book on Social Security reform. I was
a participant in President Clinton's White House conference on Social
Security and was the sole outside expert invited by the Democrats
(Professor Marty Feldstein being the expert invited by the Republicans)
to participate in the final conference discussion which was the closed
Blair House session with the President and the Congressional
leadership.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, associations, or organizations if you are confirmed by
the Senate? If not, provide details.
No. The position is not a full-time government appointment.
2. Do you have any plans, commitments, or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, provide details.
Yes. I intend to keep all of my current employment and other
commitments, none of which constitute a conflict of interest. I will
not enter into any future arrangements that may be considered as
presenting a conflict of interest.
3. Has any person or entity made a commitment or agreement to employ
your services in any capacity after you leave government service? If
so, provide details.
No.
4. If you are confirmed by the Senate, do you expect to serve out
your full term or until the next Presidential election, whichever is
applicable? If not, explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
None.
2. Describe any business relationship, dealing or financial
transaction which you have had during the last 10 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
In connection with the nomination process, I have consulted with
the Office of Government Ethics and the Social Security
Administration's designated agency ethics official to identify
potential conflicts of interest. Any potential conflicts of interest
will be resolved in accordance with the terms of an ethics agreement
that I have entered into with the Department's designated agency ethics
official and that has been provided to this committee. I am not aware
of any other potential conflicts of interest.
3. Describe any activity during the past 10 years in which you have
engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy. Activities
performed as an employee of the Federal Government need not be listed.
In connection with the nomination process, I have consulted with
the Office of Government Ethics and the Social Security
Administration's designated agency ethics official to identify
potential conflicts of interest. Any potential conflicts of interest
will be resolved in accordance with the terms of an ethics agreement
that I have entered into with the Department's designated agency ethics
official and that has been provided to this committee. I am not aware
of any other potential conflicts of interest.
4. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items. (Provide the committee with two copies of any trust or other
agreements.)
See answer to question #4 of Section F (Financial Data) which
relates to a trust agreement involving a Generation Skipping Trust
established by the estate of my late parents. It involves no actual or
potential conflict of interest.
5. Two copies of written opinions should be provided directly to the
Committee by the designated agency ethics officer of the agency to
which you have been nominated and by the Office of Government Ethics
concerning potential conflicts of interest or any legal impediments to
your serving in this position.
Not applicable.
D. LEGAL AND OTHER MATTERS
1. Have you ever been the subject of a complaint or been
investigated, disciplined, or otherwise cited for a breach of ethics
for unprofessional conduct before any court, administrative agency,
professional association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. Have you ever been investigated, arrested, charged, or held by any
Federal, State, or other law enforcement authority for a violation of
any Federal, State, county or municipal law, regulation, or ordinance,
other than a minor traffic offense? If so, provide details.
No.
3. Have you ever been involved as a party in interest in any
administrative agency proceeding or civil litigation? If so, provide
details.
Yes. In 2004 a young woman fell and cut herself when she caught
her bicycle handlebar on the passenger-side mirror of my car while
trying to squeeze between my car and the curb where there was no lane.
Three years later she sued me. My auto insurance company (Erie) settled
the case, paying her lawyer's (a relative) expenses, which I was told
were under $100.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, provide details.
No.
5. Please advise the committee of any additional information;
favorable or unfavorable, which you feel should be considered in
connection with your nomination.
None.
E. TESTIFYING BEFORE CONGRESS
1. If you are confirmed by the Senate, are you willing to appear and
testify before any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If you are confirmed by the Senate, are you willing to provide
such information as is requested by such committees?
Yes.
______
Questions Submitted for the Record to Hon. Robert D. Reischauer
Questions Submitted by Hon. Orrin G. Hatch
Question. It is the chairman's view that if a public trustee, based
on his or her knowledge of Social Security and Medicare, becomes aware
of possible policy decisions that would significantly weaken the
finances of either program, he or she bears a responsibility to make
this information available. Do you agree with this?
Answer. If what is meant by ``possible policy decisions that would
significantly weaken the finances of either program'' is probable
actions that would significantly weaken program finances and do not
require prior Congressional approval, I think the appropriate first
step would be to bring the issue to the attention of the full Board of
Trustees in the hope that it would speak to the issue. Following the
decision, I think the trustees have a responsibility to make
information on its fiscal impact available.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed concern to you as to the
credibility of the contents of the trustees' report?
Answer. No.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed the view that the trustees'
report development was conducted in any inappropriate way?
Answer. No.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever expressed concerns about the propriety
of your past writing or continued writing about public policy issues
during your term?
Answer. No. During the period of my service as a public trustee, no
concerns of this sort were ever raised to me by any members or their
staffs.
Question. Have you ever, while serving as a trustee, represented
your own personal policy views as being those of the other trustees?
Answer. No.
Question. Have there ever, over the 5 years of your service as a
public trustee, been any parts of the trustees' reports that do not
reflect the consensus findings of all six trustees, including not only
the two public trustees but also the secretaries of Treasury, HHS, and
Labor, as well as the Social Security Commissioner?
Answer. No. The reports are in every sense consensus documents.
Question. Have you ever, while serving as a trustee, sought to
modify the contents of the trustees' report without the agreement of
the other trustees?
Answer. No.
Question. Are any individual trustees able to modify the content of
the trustees' reports without the review and approval of all of the
other trustees?
Answer. No.
Question. Is there any part of the trustees' reports that is not
reviewed and approved by all six of the trustees and/or staff working
on behalf of the trustees?
Answer. No.
Question. In your 5 years of service as a trustee, has any member
of Congress or their staffs ever contacted you to express concerns
about the quality, accuracy, tone, or truthfulness of your own
individual writing on issues surrounding Social Security or Medicare?
Answer. No.
Question. Have you used your position as a trustee to promote
policies that would weaken the finances of Social Security or Medicare?
Answer. No.
Question. The Social Security Act specifies, with respect to public
trustees, that both may not be from the same political party. From what
I have seen, in past trustee reports during your term of service, there
were not any dissenting or minority statements on the report from you
or your counterpart public trustee. From your perspectives, has there
been a tradition of working by consensus in the process of producing
trustee reports and, if so, do you believe that the tradition has been
upheld during your term of service?
Answer. Neither I nor Dr. Blahous has filed a dissenting or
minority statement relating to any of the five reports whose
development we have contributed to. During our years of service, there
has been a strong practice of developing consensus around the content
of the reports, a tradition that I have been told has existed for many
years.
Question. In a May 13, 2016 report in the popular press, it was
written that ``Democrats point to several instances in the trustees'
reports'' that were released after your counterpart public trustee
joined the board that ``they say suggest the Social Security Trust fund
is less solvent than it really is.'' Of course, if that is true, then
during your tenure as public trustee, there have been several instances
in which you, your counterpart public trustee, the Secretary of the
Treasury, the Secretary of the Department of Labor, the Secretary of
Health and Human Services, and the Commissioner of Social Security,
along with the Chief Actuary of the Social Security Administration,
signed on to trustee reports that suggested that the Social Security
trust funds are less solvent than they really are. Do you agree that
there have been several instances in which trustee reports--reports
that you and your colleagues signed on to--which have suggested that
the Social Security Trust funds are less solvent than they really are?
Answer. I do not agree. I think the trustees' reports that I have
been associated with provide the Congress and the public with an
accurate picture of the solvency of the Social Security trust funds.
That said, there is unavoidable uncertainty in the projections, but the
reports provide adequate analysis of the impact of that uncertainty on
the trust funds' solvency.
Question. Many in Congress, including me, desire to have
information on how Social Security and Medicare, and their trust funds,
interact with the rest of the Federal budget. Of course, we have mixed
the general fund with Social Security's trust funds, as with payroll
tax holidays used for stimulus. According to the Office of Management
and Budget (OMB), ``whether a particular fund is designated in law as a
trust fund is, in many cases, arbitrary.'' Given all of that, in what
sense is a Federal trust fund any different than any other account in
the Federal budget or from a Federal revolving fund or even the general
fund? And, are there any interrelationships between the general fund of
the Federal Government and both the Old-Age and Survivors Insurance
trust fund and Disability Insurance trust fund, or do trust fund
accounts have no interrelationship with the overall federal budget?
Answer. As GAO has explained ``Federal trust funds represent an
accounting mechanism used to link earmarked receipts with the
expenditures of those receipts.'' An account is designated a trust fund
when a law both earmarks receipts to a program and identifies the
specific account as a ``trust fund account.'' In 2014, a tiny fraction
(0.1 percent) of the combined income of the OASDI trust funds
represented reimbursements from the General Fund of the Treasury.
Transfers from the General Fund were much larger a few years ago when
the trust funds were being reimbursed for the foregone payroll tax
revenues associated with the stimulus program. The Old-Age and
Survivors Insurance trust fund and Disability Insurance trust fund are
part and parcel of the Unified Federal Budget.
______
Questions Submitted by Hon. Ron Wyden
Question. My understanding is your terms as public trustees ended
on July 22, 2015 and you have not been involved in the discussions or
production of the 2016 trustees' reports. Is that correct?
Answer. Yes.
Question. Assuming that the answer to the above question is
``yes,'' I assume that if either of you were to be confirmed by the
full Senate before the 2016 trustees' reports are released to the
public, that you will not sign those reports or participate in the
press conference discussing the 2016 reports, is that correct?
Answer. Having not participated in the deliberations of the Working
Group, the review of the recommendations of the 2015 Technical Panel on
Assumptions and Methods, or the comment and revision process of the
draft report, I agree with your assumptions.
______
Questions Submitted by Hon. John Thune
Question. Each year the Board of Trustees produces reports on the
financial status of Social Security and Medicare. We know the public
reads about the parts of the reports--things like the year in which the
trust funds will be depleted--that make the headlines. What other data
points in your analysis do you believe to be the most important for the
Congress and the public to be aware of that fully demonstrate the
financial status of both Medicare and Social Security?
Answer. Besides the dates of trust fund depletion, the data that I
think most forcefully bring home in an easily understood fashion the
challenges facing the Social Security and Medicare programs are:
(a) The size of the payable benefit reductions that would be
required at the points of depletion of the several trust funds. These
estimates are illustrated most starkly for OASI and DI in Figure II.D.2
and Figure II.D.3 of the 2015 Social Security report and for HI in
Figure II.E.2 of the Medicare report.
(b) The sizes of the immediate tax increases required to sustain
promised benefits. These estimates can be found on pages 5 and 6 of the
OASDI report and page 30 of the Medicare report.
(c) The projected growth in SMI expenditures and the impact of that
this growth will have on beneficiaries in the form of higher premiums
and out of pocket costs and on taxpayers in the form of the increased
demands on general revenues. Discussions of these points can be found
on pages 36-39 of the Medicare report.
Question. In your view, is it true, as many have stated, that the
longer we wait, the harder it will be to address the long-term
sustainability of both Social Security and Medicare? Can you discuss
the data in your latest reports to Congress that underscores this
premise?
Answer. In my opinion, the most compelling illustration of this
point is found on pages 24-26 of the 2015 Social Security report and in
``A message from the Public Trustees'' in the booklet Status of the
Social Security and Medicare Programs: A Summary of the 2015 Annual
Reports where we wrote:
``Continued inaction going forward to the point where the combined
trust funds near depletion would--unlike the situation in 1983--likely
preclude any plausible opportunity to maintain Social Security's
historical financing structure.
``To appreciate these dangers, consider that under the Trustees'
current projections, annual Social Security costs will be more than 25
percent higher than income by 2034. There is no historical precedent
for closing annual gaps of this size within the space of just a few
years. As the Trustees' Report notes, even the total elimination of
Social Security benefits for those newly eligible in 2034 would be
insufficient to restore short-term financial balance. Similarly, a
payroll tax increase of the magnitude needed to maintain scheduled
benefits would have a profound adverse impact on the economy and
employment. Thus, while legislative action is not yet necessary to
prevent imminent reductions in Old-Age and Survivors Insurance (OASI)
benefits (the immediate threat being confined to disability benefits),
prompt action is needed to prevent Social Security's aggregate
financial shortfall from growing to an intractable size.''
______
Questions Submitted by Hon. Maria Cantwell
chained cpi
Question. I have consistently opposed replacing the current cost-
of-living adjustment method, known as the Consumer Price Index for
Urban Wage and Clerical Workers (or CPI-W), with the Chained Consumer
Price Index (known as Chained-CPI). This change would cut benefits for
future beneficiaries by an average of 2 percent over the course of
their retirement, according to a 2013 report by the Center on Budget
and Policy Priorities. Moreover, for a beneficiary receiving Social
Security over the course of 30 years the Chained CPI could cut benefits
even more--up to almost 9 percent, according to the Center for Economic
and Policy Research.
The problem is that the Chained CPI assumes that beneficiaries can
simply choose cheaper alternatives when prices rise. However, it fails
to acknowledge that many lower-income Social Security beneficiaries
don't have the financial ability to switch from more expensive
purchases because most of their income is dedicated to paying for
necessities such as a medication, housing, a health checkup, or a trip
to the grocery store for basic nutrition.
Do you believe that Social Security beneficiaries tend to have less
ability to react to price-sensitivity than the general population, due
to their inelastic demand for services like health care and
transportation?
Answer. In my role as a trustee, there was never a discussion of
this issue, nor would I expect there to be one in the future. As an
analyst, my reading of the literature leads me to believe this is the
case. In addition to the inelastic demand for some services mentioned
in the question, the elderly and disabled tend to be less mobile and
therefore less able to seek out outlets where prices might be lower.
Question. Do you believe that there are differences in the types of
products and services needed by Social Security beneficiaries compared
to the general population?
Answer. In my role as a trustee, there was never a discussion of
this issue, nor would I expect there to be one in the future. As an
analyst, my reading of the literature leads me to believe that the
consumption patterns of the elderly and the disabled are different from
those of the rest of the population. For example, the elderly and
disabled spend a higher fraction of their incomes on medical care and
housing and a lower fraction on transportation, food, education and
apparel.
Question. Do you believe the Chained CPI reflects the realities of
inflation for many Social Security beneficiaries?
Answer. In my role as a trustee, there was never a discussion of
this issue, nor would I expect there to be one in the future. As an
analyst, my reading of the literature leads me to believe that all of
the measures of inflation we produce have deficiencies and, therefore,
there are likely to be many Social Security beneficiaries for whom the
Chained CPI would not represent a more accurate measure of the price
increases they face.
Question. What is your position on replacing the CPI-W with the
Chained CPI?
Answer. In my role as a trustee, there was never a discussion of
this issue, nor would I expect there to be one in the future. As an
analyst who has participated in discussions related to strengthening
the financial position of Social Security, I have not thought it
constructive to opine on the merits of single policies that might
improve the program's financial situation or the adequacy of its
benefits. Putting Social Security on a sustainable path for the long
run is going to require a number of changes and, therefore, one should
evaluate the desirability of an entire package of policies rather than
a single element of a package in isolation. In doing so my primary
concern would be that the entire package of measures needed to ensure
the long-run viability of the program does not hurt and preferably
helps those most vulnerable and dependent on the program.
consumer price index for the elderly (cpi-e)
Question. Do you believe that the Consumer Price Index for Elderly
Consumers (CPI-E) would more accurately reflect the costs that Social
Security beneficiaries face?
Answer. This is not an issue that would ever come before the
trustees. As an analyst, I would expect that this would be the case for
many elderly beneficiaries but do not know whether this would be true
for younger Survivors and Disability Insurance beneficiaries.
Question. What is your position on replacing the CPI-W with the
CPI-E?
Answer. This is not an issue that would ever come before the
trustees. As an analyst, my answer to this question would be the same
as the answer I provided to the question of replacing the CPI-W with
the Chained CPI.
privatization of social security
Question. What is your position on the privatization of Social
Security?
Answer. This is not an issue that would ever come before the
trustees. As an analyst, I have always been a strong supporter of
social insurance and the current structure of the Social Security
program and have not seen any advantage to considering privatization.
deficit reduction and social security
Question. Do you believe cuts to Social Security should be included
in deficit reduction discussions?
Answer. This is not an issue which the trustees would discuss or
have a position on. As an analyst who has been involved with the budget
process for four decades, I am pragmatic on this issue. If a package of
policies that addresses the long-term sustainability of the Social
Security program could be agreed to as a stand-alone reform, I'd
support that approach. If such a reform has to be a component of a
larger effort to address the challenge posed by a growing unified
budget deficit, I would support that approach. That said, I think a
good case can be made for the second approach, because policymakers
should want to coordinate any changes made to Social Security with
those considered for Medicare, SSI, and other programs affecting the
elderly and disabled.
Question. Do you believe that Social Security spending is a driver
of annual deficits and the national debt?
Answer. Under current budget conventions, the difference between
program revenues (mostly payroll tax receipts) and program
expenditures, if negative, adds to the unified budget deficit and, if
positive, reduces the unified budget deficit. The growing gap between
the program's non-interest income and its expenditures means that
Social Security will continue to contribute to projected increases in
the annual deficit.
Cumulated since the program's inception, Social Security's revenues
have exceeded its expenditures. The resultant surpluses have, by law,
been invested in securities of the Federal Government. This has reduced
the extent to which the Federal Government has had to issue debt to the
public and thereby reduced the debt held by the public.
Question. Do you believe that the Social Security trust funds
should be treated separately from general Federal revenue?
Answer. This is not an issue which the trustees would discuss or
express an opinion on. As a citizen and an analyst, I think the current
treatment of the trust funds and general revenues is appropriate and
has a number of advantages.
delivery system reform in medicare
Question. As you know, the positions for which you have been re-
nominated oversee the Medicare Part A and Part B trust funds in
addition to the Social Security trust funds.
What role does reforming the Medicare delivery system play in
improving the fiscal sustainability of the Medicare program in the
coming years?
Answer. In recent years, significant legislation has been enacted
designed to reform not just the Medicare delivery system but also the
Nation's health delivery system more broadly. The trustees have done
their best to estimate the extent to which these reforms may improve
Medicare's fiscal situation. They have also discussed the uncertainty
surrounding their estimates and have suggested that further reforms of
the delivery system may be needed.
public confidence
Question. As you know, the public trustee positions were created to
``increase public confidence in the integrity of the trust funds.'' How
do you believe you have increased public confidence in the Social
Security trust funds during your previous appointment?
Answer. I think that I have helped to increase public confidence in
the integrity of the trust funds by working hard to ensure that the
reports are objective, thorough, understandable and of the highest
technical quality. I also attended almost all of the Social Security
and Medicare Technical Panel meetings where I interacted with many of
the most influential opinion leaders in the world of social insurance.
I have been willing to talk openly and honestly to stakeholders,
policymakers, staff, media and the public who have had questions about
the content of the trustees reports or the process by which they are
generated. During my terms as Director of CBO, I developed a reputation
for being a straight talker, and the fact that I have repeatedly stated
that I think the current trustee process meets the highest standards of
integrity, I believe has helped strengthen confidence. That said, I
think the increased confidence the American people have in the
integrity of the system stems largely not from the contribution of this
or that trustee but rather from the willingness of trustees as a group
to provide the public with the facts no matter how troubling they might
be.
______
Questions Submitted by Hon. Sherrod Brown
Question. The Greenspan Commission, which first proposed creating
these positions, said the role of a public trustee was to ``create
confidence in the integrity of the trust funds.'' Do you both feel that
you increased public confidence in these trust funds during your
previous tenure? If so, how?
Answer. I think that I have helped to increase public confidence in
the integrity of the trust funds by working hard to ensure that the
reports are objective, thorough, and of the highest technical quality.
I also attended almost all of the Social Security and Medicare
Technical Panel meetings where I interacted with many of the most
influential opinion leaders in the world of social insurance. I have
been willing to talk openly and honestly to stakeholders, policymakers,
staff, media and the public who have had questions about the content of
the trustees' reports or the process by which they were generated.
During my terms as Director of CBO, I developed a reputation for being
a straight talker, and the fact that I have repeatedly stated that I
think the current trustee process meets the highest standards of
integrity, I believe has helped strengthen confidence. That said, I
think the increased confidence the American people have in the
integrity of the system stems largely not from the contribution of this
or that trustee but rather from the willingness of trustees as a group
to provide the public with the facts no matter how troubling they might
be.
Question. Do you believe the trust fund of Social Security
contributes to the Federal deficit? If yes, why do you feel it should
not be accounted for separately and apart from the general operating
fund of the government?
Answer. Under current budget conventions, the difference between
program revenues (mostly payroll tax receipts) and program expenditures
(mostly benefit payments), if negative, contributes to the unified
budget deficit. The growing gap between the program's non-interest
income and its expenditures means that Social Security will continue to
contribute to projected increases in the annual deficit.
The trustees as trustees do not discuss or have a position on the
structure of the budget nor appropriate budgetary treatment of various
program accounts. As someone who supports the general principles put
forward in the 1967 Report of the President's Commission on Budget
Concepts, I am also a supporter of the ``Off-Budget''
status accorded to the program, which I think helps to strengthen its
fiscal integrity as a self-financed social insurance program.
Question. Can you outline what experience you have in actuarial
science that predates your work as a public trustee?
Answer. I have no formal training in actuarial science. As an
economist, however, I have engaged in activities that are similar to
the work of actuaries, including building models that use demographic
and economic micro data to project the future benefits and costs of
public programs. Much of my work at the Congressional Budget Office,
the Brookings Institution, and the Urban Institute was similar to my
responsibilities as a public trustee.
Question. Can you walk me through the first couple years of being a
public trustee? What issues did you have the most trouble getting up to
speed on? What have you learned since that, if you did it over again,
you would do differently?
Answer. Having served on MedPAC for 9 years, been the director of
CBO for 7 years, co-authored a book on Social Security, and been
involved doing analysis of both programs, I considered myself something
of an expert when I was first appointed. But I was surprised by the
level of technical detail involved in the Working Group deliberations
and the complex interactions that exist in both programs. Had I to do
it over again, I would have asked to sit down for at least a day with a
small group in each of the actuary's offices to walk me through the
problematic issues that arose in preparing the previous several
reports. There is also the unpredictability of the process. While
detailed schedules are prepared to pace the process, they inevitably go
awry. New legislation is enacted, new regulations are promulgated,
court decisions are handed down, or model development is delayed. The
block of time set aside for reviewing and commenting on report drafts,
which may be the better part of a month, suddenly is pushed out 3 or so
weeks to a time one had moved commitments that couldn't be planned
during the time set aside in the original schedule. Each year, one
thinks the disruptions just experienced won't be repeated the following
year. They won't be, but others will pop up. The lesson is that one
should block off a much more extended period of time for the process.
Question. What advice would you give a new public trustee to help
them better understand the process?
Answer. I would suggest that any new public trustee meet separately
with the outgoing public trustees, the actuaries, and several of the
former Assistant
Secretary-level representatives of the ex officio trustees to discuss
the Working Group process and the manner in which the reports are
drafted, reviewed, and commented on.
Question. Is there any institutional knowledge you gained in your
tenure as a public trustee that you believe is essential to fulfilling
the job's obligations? What institutional knowledge does a public
trustee develop that a new trustee with a fresh perspective couldn't
pick up on immediately?
Answer. The answer to Question 4 above is also relevant to this
question. A new trustee has to learn the cycle for producing the
reports. There are windows of opportunity for raising certain types of
issues that a month or two later might be closed. Much of this has to
do with the time the actuaries need to make changes to their models or
insert new data and the order in which such changes must be made. There
is also the fact that many issues have been discussed in the past. Some
have been resolved; others are still open. With new public trustees,
the discussion has to start anew; with continuing trustees, the
discussion can build on a foundation. It is also important that the
public trustees develop an ability to work well together. Coordinating
their requests for supplementary information and trying to work out a
common approach to an issue not only makes them more effective but also
reduces the already heavy workload of the staff of the Working Group. I
count myself as extremely fortunate to have as a fellow public trustee
someone who is collegial, smart, productive, tough, and extremely
knowledgeable. Since the process of developing the reports is a
consensual one, new public trustees have to develop constructive
relationships with the actuaries, the representatives of the ex officio
trustees, and many of the key supporting staffs. This takes time,
especially for those who may not have worked in Washington on these
issues or interacted with these individuals before.
Question. Are there any biases or assumptions a person could have
that you feel would disqualify them from being a public trustee?
Answer. A public trustee should be open-minded and objective with
respect to new and existing methodologies, analysis, and data sources.
The individual should be a supporter of the concept of social insurance
and the basic structures of the Social Security and Medicare programs.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
This afternoon, the Finance Committee will discuss the re-
nominations of the public trustees for the Medicare and Social Security
trust funds. That sounds like a real mouthful, but for me, this issue
goes back to my time leading the Gray Panthers when the Medicare
guarantee and the promise of Social Security were sacrosanct.
Today, millions of single, elderly women have to walk an economic
tightrope each month, balancing the cost of food, health care, and
covering the rest of the bills. These women count on Social Security to
keep their heads above water. Medicare in 2016 is very different than
the Medicare of 1965. Seniors living on extremely limited means are
forced to contend with higher drug prices and chronic conditions such
as cancer, diabetes, and heart disease that are often tougher and more
expensive to treat. Our job is to protect these sacrosanct priorities
and update these programs for unique times.
That's why business as usual, for a set of positions that are not
household names, is not acceptable to me. And, by the way, this is not
such a wild idea. The Finance Committee has a 30-year tradition of not
reappointing anyone to these positions.
Every year, a big report comes out that looks into the future of
Medicare and Social Security, and the public trustees play an important
part in that process. It's a tough job that means looking into the
future for what vulnerable and older Americans will need decades down
the road. In my view, it's pretty clear that task requires constantly
fresh perspectives for advisory roles like these positions.
What undergirds these positions is not just charts and facts and
figures, as important as they are. It's about values, and that's why
it's so important to get this right.
I'll be listening carefully to what colleagues and the nominees
have to say about these concerns. Thank you to our nominees for joining
us today.
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