During a House Ways & Means Committee hearing last week, Rep. David Schweikert (R-AZ) questioned Congressional Budget Office Director Dr. Phillip Swagel about the funding of social security.
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NewsTranscript
00:00As a Braves fan, we would support that coming all out of the Nationals payroll.
00:07With that, I thank the lady for her comments.
00:12With that, we will yield five minutes to the gentleman from Arizona, Mr. Schweikert.
00:17Thank you, Mr. Chairman.
00:18Dr. Schweikert, first off, don't all workers, whether they're just on a work visa, a Dreamer,
00:24even if they don't have U.S. citizenship, they're paying a FICA tax, correct?
00:28The ones who are in the country lawfully, that's right.
00:32Okay.
00:33I just want to, because that was a misnomer, I want to work through, because there's some
00:38baseline problems I have between CBO numbers and the actuary report.
00:44I think the actuary report already understands their fertility calculations are substantially
00:50off from even census' math and those.
00:55Let's walk through some stuff here.
00:58For just this year, so let's do our 2024 year, we have payroll taxes, income tax for beneficiaries,
01:10and the interest, because they're going to make about 6% of the fund, is going to come
01:14in as interest.
01:16I have $1,166,000,000.
01:21I have the spend in the 2024 fiscal year of $1,480,000,000.
01:27Do those sort of match up with your numbers?
01:28That means the 2024 reaching into the trust fund will be $314,000,000,000 this year.
01:38That's close to what I've got.
01:39Okay.
01:40So $26,000,000,000 a month is reached into the trust fund and used to supplement the
01:46checks that are going out the door.
01:49That's right.
01:50And the trust fund is, you know, is the securities of the trust fund redeemed by the treasury?
01:55Yeah, it's the specialty bills, but some people don't understand that there were, you know,
01:596% of the entire revenues, at least this fiscal year, on Social Security are actually interest
02:06that the general fund pays for having borrowed the money.
02:11So you do have the weird multiplier, and then there's the tax on benefits, which is about
02:144%.
02:16I wanted to make sure, because there was a couple of things said that made it sound
02:20like the trust fund isn't already in play.
02:22It's in play this year.
02:23Over $314,000,000,000,000 will be borrowed from the trust fund this year, or excuse me,
02:30refunded.
02:31The trust fund will cash in.
02:33Redeeming.
02:34Yeah, redeeming.
02:35Redeeming the securities.
02:36That's right.
02:37A couple of other things I want to walk through, and instead of me leading you on these, I
02:41have three or four charts here.
02:43What do you see as the biggest differentials between SSA baseline and the CBO baseline?
02:50Particularly I'm looking at you have a fairly substantial difference in out years on, you
02:58know, their baseline.
03:00You also have some different cap calculations on the caps.
03:05But first, off the top of your head, can you give me what you see as differences on how
03:10the CBO actuaries built their model compared to the SSA?
03:14Sure.
03:15Sure.
03:16I can talk about it, and I know Steve will have, you know, a lot to say also.
03:20So we do have different modeling technologies, so I'll just set that aside.
03:25You know, we do things slightly differently.
03:27We do current law, and, you know, they assume some changes in the law, you know, outside
03:31of Social Security, but in the tax law.
03:34In the parameters, the sort of numbers, we have different GDP growth, and Steve highlighted
03:39that this year.
03:40You know, they bumped up GDP growth, and that just slightly more than offset, you know,
03:44they're moving toward, you know, sort of what's happening on fertility.
03:48So it's growth, fertility, they have much higher interest rates further out.
03:53And then immigration, you know, we've picked up the immigration surge that's not yet in
03:58the population numbers, but working with DHS numbers, we've picked that up.
04:02And where it was really going with this was not to pick on the Social Security actuaries
04:06or the CBO.
04:07It was more, I'm trying to head towards the fragility of the numbers.
04:11When we did our math last year, the exhaustion, the first year of exhaustion was 616 billion
04:20short.
04:21Now, it's 400 and some.
04:25Yeah.
04:26Yeah.
04:27And in ours, that's immigration.
04:28And then since it's from last year to this year, we picked up immigration.
04:31And in some sense, we picked up the immigration surge started in 2021.
04:36So year of exhaustion, you pick up a couple hundred billion just on what you consider
04:41immigration population, the immigration surge, that's okay.
04:44But it also actually should give us a sense of the level of fragility if we were to go
04:48into recession.
04:49You know, let's say it's a mild recession.
04:53Would we probably see, you know, because you just had a $200 billion change at the end
04:58of the 10 in a single cycle.
05:02I'm trying to get some sense of the fragility of that baseline.
05:05No, I agree that recession would affect wages would affect contributions, it would also
05:11affect fertility right after the Oh, wait, reset, you know, recession, financial crisis.
05:15And after the pandemic, fertility declined, it came up a bit, but not, you know, it didn't
05:20go back.
05:21But then it took a big spike downward last year, we went to 1.63.
05:25So I'm over my time, Mr. Chairman, without objection, I have a number of charts that
05:31we've worked on with with both taking from the actual report, and then some notes from
05:38the joint economic economists, I'd like to add those to the record.
05:42Without objection, your charts are added to the record.
05:45Thank you, Chairman.