Statement of Administration Policy: S. 1470 - Senior Citizens' Freedom to Work Act of 1995

(Senate)
(McCain (R) AZ and 5 cosponsors)

The Administration supports congressional action to increase the Social Security Earnings Test. Currently, retired workers ages 65 through 69 who have earnings above the exempt amount, have their Social Security benefits reduced by $1 for every $3 in earnings over the exempt amount. This reduction in benefits discourages work by senior citizens who are able and willing to stay in the workforce. Raising the earnings test exempt amount will increase the standard of living of the elderly and help the Nation's economy by increasing the supply of workers to the labor force. Over 900,000 Social Security beneficiaries currently lose some or all of their benefits as a result of the earnings test that applies at age 65.

The Administration's full support for this bill is contingent on the increase in the earnings limit being accomplished in a deficit-neutral manner within Social Security. The Administration is deeply concerned that S. 1470 now achieves deficit neutrality in part by a provision that saves $3 billion in the Supplemental Security Income (SSI) program — savings which are already assumed in balanced budget proposals put forth by both the Administration and Congress. Using a proposal as an offset in this bill that both-the Administration and Congress have earmarked to reduce the deficit simply exacerbates the deficit reduction problem and is therefore not appropriate. The Administration urges Congress to achieve deficit neutrality without including the savings from the SSI provision by either identifying additional offsets or reducing the change in the earnings test. If the bill does not achieve this test of deficit neutrality, the Administration believes that action on the legislation should be delayed and considered as part of the overall budget discussions.

The Administration also has concerns about some of the other provisions in the bill and their impact on benefit recipients, and would like to work with Congress to address these provisions. In particular, with respect to the provisions of S. 1470 concerning continuing disability reviews, the Administration would support a mechanism that retains the oversight of the Executive Branch and the Appropriations Committees that is inherent in the annual appropriations process. Such a mechanism could be similar to that used for the Internal Revenue Service by the 1990 Budget Enforcement Act.

S. 1470, as reported, would codify the Administration's interpretation of the Secretary of the Treasury's authority as it relates to managing the Social Security and Medicare trust funds during a debt limit crisis. The Administration welcomes the codification of its position that the Treasury may not use the Social Security and Medicare trust funds for any purpose other than to assure the payment of benefits.

Pay-As-You-Go Scoring

S. 1470 would affect both direct spending and receipts; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. Office of Management and Budget scoring of this legislation is under development.