Security System -- May 9, 1977
Message to the Congress. May 9,1977
To the Congress of the United States:
The Social Security system affects the lives of more Americans
than almost any other function of government. More than 33 million
people currently receive benefits. Another 104 million people are
making contributions with the expectation that they will receive
benefits when they retire or become disabled, or when their survivors
Today, the Board of Trustees of the Social Security Trust Funds
is submitting its 1977 report to the Congress. The report tells
us that the system critically needs financial support in the short
term. The high unemployment of recent years has curtailed Social
Security's revenues, while benefits have risen with inflation. Since
1975 expenditures have exceeded income; and existing reserves will
soon be exhausted.
Unless we act now, the Disability Insurance Trust (DI) Fund will
be exhausted in 1979 and the Old Age and Survivors Insurance (OASI)
Trust Fund will run out in 1983.
The Trustees' Report indicates that there are serious longer term
problems as well. Under current law the Social Security system will
have an estimated deficit of 8.2 percent of taxable payroll over
the next seventy-five years. About half of this deficit is due to
changes in the projected composition of our population over those
years. Higher life expectancy and lower birthrates will make the
nation older as a whole. About half is due to a technical flaw in
the automatic cost of living formula adopted in 1972.
While campaigning for President, I stressed my commitment to restore
the financial integrity of the Social Security system. I pledged
I would do my best to avoid increases above those already scheduled
in tax rates, which fall most heavily on moderate and lower-income
workers. I also promised to correct the technical flaw in the system
which exaggerates the adjustment for inflation, and to do so without
reducing the relative value of retirement benefits as compared with
I am announcing today a set of proposals which meet those commitments
and which solve both the short-term and long-term problems in the
Social Security system through the end of the twentieth century.
These proposals are designed to:
--Prevent the default of the trust funds now predicted to occur.
--Bring income and expenses into balance in 1978 and keep them
that way through the end of the century.
--Create sufficient reserves to protect the system against sudden
declines in revenue caused by unemployment or other economic uncertainties.
--Protect the system's integrity beyond the turn of the century
to the extent we can predict what will happen in the next 75 years.
--Provide for an orderly review and examination of the system's
My proposals are the result of a number of hard choices. I am convinced
that action is needed now, and that these steps will restore the
financial integrity of the Social Security system.
I will ask the Congress to take the following specific actions:
1. Compensate the Social Security trust funds from general revenues
for a share of revenues lost during severe recessions. General revenues
would be used in a counter-cyclical fashion to replace the payroll
tax receipts lost as a result of that portion of unemployment in
excess of six percent. General revenues would be used only
in these carefully limited situations. Because this is an innovative
measure, the legislation we submit will provide this feature only
through 1982. The next Social Security Advisory Council will be
asked to review this counter-cyclical mechanism to determine whether
it should be made permanent.
2. Remove the wage-base ceiling for employers. Under present law
employers and employees pay a tax only on the first $16,500 in wages.
Under this proposal the employer ceiling would be raised over a
three-year period, so that by 1981 the ceiling would be removed.
This action will provide a significant source of revenue without
increasing long-term benefit liabilities.
3. Increase the wage base subject to the employee tax by $600 in
1979, 1981, 1983, and 1985, beyond the automatic increases in current
law. This will provide a progressive source of financing.
4. Shift revenues from the Hospital Insurance Trust Fund to the
Old Age, Survivors, and Disability Trust Funds. In part, this shift
will be made possible because of substantial savings to the Medicare
system from the hospital cost containment legislation that I have
5. Increase the tax rate on the self-employed from 7 percent to
7.5 percent. This will restore the historical relationship between
the OASI and the DI rates paid by the self-employed to one and one-half
times that paid by employees.
6. Correct certain technical provisions of the Social Security
Act which differentiate on the basis of sex. This will include a
new eligibility test for dependent benefits. Recent Supreme Court
decisions would result in un-financed increases in the cost of the
system and some inequities without this change.
These six steps, along with measures already contained in existing
law, will eliminate the short-term financing problem and improve
the overall equity of the Social Security system.
In order to guarantee the financial integrity of the system into
the next century, two additional steps must be taken. I will be
asking the Congress to:
1. Modify the Social Security benefit formula to eliminate the
inflation over-adjustment now in law. This modification, known as
"decoupling," should be done in a way that maintains the
current ratio of retirement benefits to pre-retirement wages.
2. Adjust the timing of a tax rate increase already contained in
current law. The one percent tax rate increase presently scheduled
for the year 2011 would be moved forward so that .25 percent would
occur in 1985 and the remainder in 1990.
Taken together, the actions I am recommending today will eliminate
the Social Security deficit for the remainder of this century. They
mill reduce the estimated 75-year deficit from the Trustee Report
forecast of 8.2 percent of payroll to a manageable 1.9 percent.
Prompt enactment of the measure I have recommended will provide
the Social Security system with financial stability. This is an
overriding immediate objective.
In addition, I am instructing the Secretary of Health, Education
and Welfare to appoint the independent Social Security Advisory
Council required by law to meet each four years. I will ask the
Council to conduct a thorough reexamination of the structure of
the system, the adequacy of its benefits, the effectiveness and
equity of disability definitions, and the efficiency and responsiveness
of its administration. Their report, which will be issued within
the next two years, will provide the basis for further improvements.
I call upon the Congress to act favorably on these major reform
The White House,
May 9, 1977.
Remarks on Signing
H.R. 3 Into Law-- October 25, 1977
We seem to have some happy people here today.
As most of you know, I was Governor for 4 years and later spent
2 years campaigning around the country to be elected President.
I think one of the greatest problems that we have in this Nation
is a distrust of government and its ability to administer programs
of great benefit to our people in an honest and efficient way.
Perhaps one of the most sensitive issues is in health care. We
have seen the cost of a day's stay in the hospital increase since
1950 more than 1,000 percent. The cost of hospital care is going
up a hundred percent, doubling every 5 years.
At the same time, we see highly publicized instances when the Medicaid
and Medicare programs in recent years have been shot through with
fraud. This was one of my frequent campaign comments. And I'm very
proud today to sign into law a bill that has been evolved with close
cooperation between the executive branch of Government, particularly
HEW, and the House and Senate.
This bill will go a long way to eliminating fraud in the administration
of the health care programs of our country. It will shift to heavier
penalties for those who are convicted of false claims, kickbacks--changing
these from misdemeanors to felonies--and also prohibiting those
who are convicted of this crime from delivering any services in
This legislation also permits--in fact, requires--the Department
of HEW to set up both simplified and also standardized forms for
reporting the delivery of services in the health care field and
also the charging for those services.
In the past it's been quite difficult, as you know who have watched
the evening news, to determine exactly who owns the health provider
entities that deliver health care and quite often conceal who is
responsible when a violation of the law does exist. This legislation
requires that anyone who owns as much as 5 percent in a health provider
company or hospital or health care center must reveal their identity
to the public.
We have included also in this bill an allocation of aid funds to
establish among the States, or within each individual State, a fraud
unit to detect and to root out and to prevent fraud from continuing.
And this bill also provides more effective use of the PSRO's, or
the professional standards review organizations, that are designed
to let health care providers themselves monitor their own activities
and their own efficiency of operation.
The overwhelming majority of doctors and hospital and nursing home
administrators are honest, patriotic, and deeply dedicated to giving
good health care according to the law and in the best interests
of their patients. And we want to make sure that they who are honest
can have a more efficient means by which they can patrol or monitor
their own professions.
I'm very thankful today to sign into law the House of Representatives
bill number 3. And I want to congratulate Danny Rostenkowski and
Paul Rogers and Senator Talmadge and their fellow workers in the
Congress behind me for having been so successful in passing this
We hope, without too much delay, to have a hospital cost containment
legislation passed as well. All these men and their committees are
working on this. And I hope, certainly early next year, we might
get this additional law on the books.
But this is a major step forward. And as I sign this legislation,
it's with a great deal of gratitude to them for their fine leadership
in moving our Nation one step forward toward better health care,
more efficient for the taxpayers, and with a restoration of the
confidence in our government that is so well deserved.
[At this point, the President signed H.R. 3 into law.]
Thank you very Much. I made it.
NOTE: The President spoke at 1: 31 p.m. at the signing ceremony
in the Rose Garden at the White House.
As enacted, H.R. 3 is Public Law 95-142, approved October 25.
Financing Bill -- October 27, 1977
White Statement on House Action on the Bill. October 27,1977
We commend the action of the House of Representatives today in
passing the social security financing bill [H.R. 9346]. The President
requested such legislation on May 9, 1977, and it now appears possible
that a bill can be enacted this year.
The House bill contains many provisions requested by the administration,
including the correction of the inflation adjustment mechanism,
maintenance of benefit levels in the future, and the use of general
revenues as an insurance policy to protect the trust funds against
a future economic downturn. We would like to see more moderate increases
in the tax rate for workers. In particular, we are concerned that
the removal of the earnings limitation passed by the House will
require too great a tax increase. We expect that the tax levels
will be moderated in the final measure passed by Congress.
The American people deserve a social security system which is financially
sound. The response of the House to the President's initiative is
an important first step toward that goal. We are confident that
the Senate will soon take action on the bill to be reported from
the Finance Committee.
We look forward to working with the Members of the House and Senate
in the coming weeks in a joint effort to ensure the financial integrity
of the social security system into the middle of the next century.
Security Financing Legislation -- December 1, 1977
Letter to Congressional Leaders.
December 1, 1977
I would like to commend you and your colleagues for the progress
which has been made on the social security financing legislation
I proposed to Congress. I am confident that an effective and equitable
bill can emerge from the conference committee.
I believe that it is very important that a social security financing
bill be enacted before the end of this year. The continuing problems
of the system have eroded public confidence leading many persons
to fear that their benefits will not be available when they need
them. It is incumbent on us to restore that confidence.
As you know, I submitted to Congress a set of proposals designed
to restore the financial integrity of the social security system
and keep it strong into the next century. Those measures sought
to increase revenues without burdening the average worker and his
employer, and reduce expenditures by correcting a flaw which caused
double-indexing for inflation. I am pleased to note that the House
and Senate versions of the bill incorporate many of these proposals.
I am nevertheless deeply concerned about provisions in the House
and Senate bills which would unwisely add to the tax burden borne
by all workers and employers, in order to increase benefits for
a relative few. These proposed increases are all well intentioned,
but we cannot afford them at the present time. The benefit increases
called for in the two bills could cost from $7-$10 billion a year
by 1983. As a direct result of these increases in expenditures the
new tax rates imposed on today's already burdened workers and employers
are higher than they need be.
The bill also contains a new income tax credit and an amendment
to the veterans pension law which add an additional $1-$2 billion
to the cost of the legislation.
I call upon the members of the House and Senate to join me in developing
a final fiscally responsible social security financing bill which
will be less burdensome to the workers and employers who must pay
the taxes, and adequate to restore public confidence in the financial
integrity of the social security system. Secretary Califano and
his staff stand ready to work with the members of the conference
committee in its deliberations.
Security Amendments of 1977 --December 20, 1977
Remarks at the Bill Signing Ceremony.
December 20, 1977
THE PRESIDENT. Since the social security system was evolved under
the administration of Franklin Roosevelt, it's been a sacred pact
between the employees and the employers with the framework established
and guaranteed by the Government to be sure that the working people
of this Nation had some guarantee of security after they reached
the age of retirement or after they were disabled and unable to
earn their own livelihood.
In recent years, because of the highest unemployment rate since
the Great Depression and the greatest inflation rate since the Civil
War, the integrity of the social security system has been in doubt.
This was an unanticipated drain on the resources of the reserve
Then I campaigned throughout the country for 2 years, one of the
most frequent questions asked me by working family members and also
by those who had already retired was what can be done to assure
us that the integrity of the social security system will be maintained.
It's a very difficult issue.
It is never easy for a politically elected person to raise taxes.
But the Congress has shown sound judgment and political courage
in restoring the social security system to a sound basis.
This legislation is wise. It's been evolved after very careful
and long preparation. It focuses the increased tax burdens, which
were absolutely mandatory, in a way that is of least burden to the
families of this Nation who are most in need of a sound income.
The level of payments were raised for those who are wealthier in
our country where they can most easily afford increased payments.
In the past they've avoided the rate being applied to their much
higher income than the average working family.
At the same time, the Congress has removed the unnecessarily stringent
limits on how much a retired person can earn and still draw [from]
the social security system for which that person has paid during
his or her working years. The limit will now be increased to $6,000
per year income over 2 or 3 years without losing social security
This legislation also moves to eliminate discrimination because
of sex. It removes references to the sex of the recipient.
The most important thing, of course, is that without this legislation,
the social security reserve funds would have begun to be bankrupt
in just a year or two, by 1979. Now this legislation will guarantee
that from 1980 to the year 2030, the social security funds will
I want to congratulate the congressional leaders assembled behind
me here-- the chairmen of the appropriate committees, Senator Long,
Ullman, Tip O'Neill, our Speaker, Bob Byrd, Senator Nelson, and
many other Members who have worked so long and hard to guarantee
that this legislation might be passed. It was not an easy task,
but I believe that everyone in this Nation who values the concept
of social security has been well served. And I want to thank these
courageous and farsighted congressional leaders for their bold and
[At this point, the President signed H.R. 9346 into law.]
Well, Mr. Chairmen, you all did a good job.
REPRESENTATIVE TUCKER. Mr. President, I am flattered. I guess as
one of the younger members of this crowd and of the Congress--
THE PRESIDENT. You'll pay more into the system. [Laughter]
REPRESENTATIVE TUCKER. That's right. Frankly, I hope the time is
not too far distant when I can pay more on my own salary, as younger
people all over the country have to pay on their salary.
My father was manager of the social security system in Arkansas
all of my life before his death. I grew up with a respect and understanding
of social security and its importance for the working people of
And I am very proud that it was a Democratic President, Democratic
committee chairmen, Democratic congressional leaders, and a Democratic
administration that could give us this painful but absolutely necessary
help to the social security system of this country. It's why I supported
you and voted for you. I knew you had the guts to do it. And I'm
proud to be here today.
THE PRESIDENT. Thank you, Jim Guy, very much.
SENATOR LONG. Mr. President, nobody really enjoys voting for taxes
if he has to run for office. I know you know that as well as all
the rest of us do. But in view of the fact that we are going to
be paying anyway, I think that most people would prefer to pay a
little more if need be, as they will, and have a sound program rather
than be worried about whether or not the program will be financed.
Nelson Cruikshank and some others who were advocating the original
social security bill are here, and Wilbur Cohen was here, who was
part of it back at that time. And they advocated and visualized
a system where people would be free of fear in old age. And that's
what we're doing with this bill. We are proud to participate with
THE PRESIDENT. Thank you very much.
REPRESENTATIVE ULLMAN. Mr. President, I am sorry that our subcommittee
chairman, Jim Burke, isn't here.
THE PRESIDENT. Yes, I was hopeful he would be.
REPRESENTATIVE ULLMAN. He is back in Massachusetts, but he was
chairman of the subcommittee. This has been a long, onerous, difficult
task, as you know. It's never easy to set a program straight by
adding taxes, but this does it in a very responsible way. And I
wanted to mention Jim Burke; he's been very important in this operation.
THE PRESIDENT. I understand. Well, with the help of these same
leaders of Congress in 1978 we'll have tax reductions--[laughter]--which
for every taxpayer will result in a lesser tax burden, even in spite
of the fact that this does increase taxes to some degree. But I
know that all of these leaders will be working with me to give us
a tax reform package in 1978 which will be more progressive in nature,
that is, put the burden of taxation where it can best be borne,
will be greatly simplified, and will also be substantially reduced.
So, we are looking forward to good tax reductions in 1978.
REPRESENTATIVE ULLMAN. That will be easy to pass. [Laughter]
THE PRESIDENT. Thank you very much, everybody.
Social Security Amendments of 1977
Written Statement on Signing S.305 Into Law. December 20, 1977
Before I became President, the concern expressed to me most often
was the fear that the social security system was in danger of bankruptcy.
This fear was backed up by facts:
--A flaw had been introduced into the benefit formula which overcompensated
for inflation and threw the system out of actuarial balance.
--Declines in birth rates meant that there would be fever workers
to support the system in the future--down from over 100 to 1 when
the system started, to 14 to 1 in 1950, to 3 to 1 today, and to
2 to 1 in the next century.
--The worst recession since the Great Depression and the worst
inflation since the Civil War had depleted the reserves in the trust
funds to the point that the Disability Trust Fund would be depleted
by 1979 and the Old Age and Survivors Trust Fund would run out by
--A majority of Americans did not believe that their social security
benefits would be there when they needed them.
I am happy to be here today to sign legislation which will reassure
the 33 million people who are receiving benefits and the 104 million
workers now making contributions that the social security system
will be financially sound well into the next century.
I congratulate the Members of Congress for the courage and leadership
they have shown in enacting this bill this year. The public overwhelmingly
supports the purposes of the social security system, and a clear
majority feel that the Congress is showing real courage in raising
additional taxes to save the system, according to a recent poll.
Although the final bill differs in some respects from the proposals
I submitted last May, it does fulfill all of the campaign promises
I made on social security:
--Eliminates the yearly deficits of the social security system
and restores the trust funds reserves to healthy levels.
--The delayed retirement credit is increased to reward those who
choose to work beyond age 65 before claiming benefits.
--Corrects the flaw in the benefit formula and protects the purchasing
power of present and future beneficiaries.
--Raises additional money primarily through increases in the taxable
wage base making the system more progressive and minimizing the
added burden for low and moderate income workers.
--Eases the earnings test, permitting recipients to earn as much
as $6,000 without losing any benefits and those over 70 to continue
with full benefits no matter how much they might earn.
--Several provisions are of great importance to women: It removes
from the Social Security Act references to the sex of applicants,
permits older persons to remarry with out the fear of losing some
of their social security benefits, and it makes homemakers who are
divorced after 10 years of marriage eligible for benefits.
--Most importantly, it ensures our senior citizens today that their
social security benefits will be protected during their retirement
and further assures today's workers that the hard-earned taxes they
are paying into the system today will be available upon their retirement.
Taken together, these are tremendous achievements and represent
the most important social security legislation since the program
The social security program is a pact between workers and their
employers that they will contribute to a common fund to ensure that
those who are no longer a part of the work force will have a basic
income on which to live. It represents our commitment as a society
to the belief that workers should not live in dread that a disability,
death, or old age could leave them or their families destitute.
This bill was enacted this year in a spirit of compromise. The
taxes are higher than those I proposed, but I believe that much
of the increase can be offset by my income tax reduction proposals
next month and additional reform in the social security system.
I am happy that the Congress accepted my advice and avoided costly
benefit increases at this time.
It should be clear to everyone that although we may have differed
on some of the means to be used, we have been in full agreement
on the goals of this legislation. I am particularly grateful to
Senator Long, Congressman Ullman, Senator Nelson, Congressman Burke,
and the House and Senate leadership for the efforts they put into
making this bill a reality. I am pleased at how quickly we were
able to move this massive piece of legislation through the Congress
so that it could be signed today.
It is with great pleasure that I sign H.R. 9346.
Security Financing Legislation --April 10, 1978
Letter to Congressional Leaders. April 10, 1978
I will be releasing a statement today reiterating this Administration's
position that the 1977 social security financing legislation should
not be changed this year. The tax increases in that legislation
have saved the system from bankruptcy, protected our older citizens,
and insured current workers of a sound retirement system.
White House Statement. April 10, 1978:
We are very concerned about current efforts to amend the recently
passed social security financing legislation. Upon signing the bill,
the President praised the Congress for its political courage in
voting for the taxes necessary to restore the financial integrity
of the social security system. He did so, even though the bill adopted
a financing plan different and more expensive than we had proposed.
It would be a mistake for the Congress to retreat from the 1977
legislation so soon after its passage. Hasty action now could result
in ill-considered legislation which might again place the trust
funds in jeopardy.
It is often forgotten that those taxes pay for important benefits
for our people. Our first priority must be the protection of the
social security system and the restoration of confidence of those
who support it and those who benefit.
Much of the concern about the 1977 legislation appears to be the
result of misinformation. News articles have asserted that the law
would triple the payroll tax burden on workers and employers. That
is simply not so. The correct measure of burden is the percentage
of earnings which is devoted to the social security tax. By that
measure, the payroll tax burden on the average worker, and the worker
earning the maximum covered wage, will increase from 6.05 percent
in 1978 to 7.15 percent in 1987. The high-income worker earning
$30,000 today will experience a more substantial percentage increase
from 3.5 percent in 1978 to 5.9 percent in 1987, because the payroll
tax has become more progressive. These increases in tax burden are
far smaller than those so often mentioned. We believe that most
Americans would agree that this is a reasonable price to pay to
ensure that the social security system is once again made sound.
Moreover, the President's proposals to reduce income taxes will
more than compensate most workers for the increases in payroll taxes.
The reform of the income tax is part of a carefully coordinated
economic program, which will improve the equity of the Federal tax
system and sustain economic growth. We urge the Congress to focus
its attention On those fundamental proposals, rather than a short-term
reduction in the payroll tax.
Security Disability Amendments of 1980 -- June 9, 1980
Statement on Signing H.R. 3236 Into Law.
June 9, 1980
Today I have signed H.R. 3236, the Social Security Disability Amendments
of 1980. This bill is the product of several years of intensive
study and review conducted by this administration and the Congress.
It forms a balanced package, with amendments to strengthen the integrity
of the disability programs, increase equity among beneficiaries,
offer greater assistance to those who are trying to work, and improve
Since the mid-1950's the social security disability insurance (DI)
program has offered protection to insured workers who have lost
wages because of unexpected and often catastrophic disabilities.
More recently, since 1974, the Supplemental Security Income (SSI)
program has provided Federal financial assistance to needy disabled
persons whether or not they are covered under the disability insurance
Despite their medical impairments, most disabled DI and SSI beneficiaries
would like to work. Often they are able to find employment either
in their previous occupations or in new jobs. But returning to work
can now cause a recipient to lose all his cash and medical benefits,
and this formidable financial risk deters many beneficiaries from
seeking or accepting serious job offers.
H.R. 3236 is designed to help disabled beneficiaries return to
work by minimizing the risks involved in accepting paid employment.
It does this in several ways:
--by providing automatic re-entitlement to benefits if an attempt
to return to work fails within 1 year;
--by continuing medical protection for up to 3 years after a person
returns to work, and by providing immediate re-entitlement to medical
benefits if the individual subsequently returns to the disability
--by taking account of an individual's disability-related work
expenses in determining eligibility for benefits; and
--by continuing, on an experimental basis for 3 years, cash and
medical benefits to SSI recipients with low earnings.
H.R. 3236 establishes a special pilot program that will provide
$18 million over a 3-year period to allow States to offer medical
and social services to employed handicapped people to help them
continue working. It also gives the Social Security Administration
new authority to test the effect of further changes in the law.
Changes which show promise for helping DI and SSI beneficiaries
can then be made a permanent part of the law.
H.R. 3236 adjusts the maximum limitation on disability insurance
dependents' benefits. The adjustment addresses problems that exist
because some disabled workers can receive cash disability benefits
that are greater than their previous employment income. The adjusted
benefit limitation will not apply to people currently receiving
benefits. In fact, no person now receiving benefits will have his
or her benefits reduced as a result of any provision in this bill.
The final version of the limitation is more restrictive than the
administration proposed and will impact adversely on some beneficiaries.
Therefore, I will expect the Department of Health and Human Services
to evaluate carefully its effect on new beneficiaries and be prepared
to recommend any changes that may be needed.
A major provision of H.R. 3236 establishes a voluntary certification
program for health insurance supplemental to Medicare--commonly
referred to as "Medigap" policies--in States that do not
have adequate programs of their own to control abuses in the sale
of these policies. The new voluntary certification program, which
I strongly and actively supported, will do the senior citizens of
our country a great service. It will ensure that approved policies
meet prescribed minimum standards, and it will set penalties for
furnishing fraudulent or misleading information and for other abuses.
Finally, I would like to recognize the contributions made by Congressman
Jake Pickle, Congressman Al Ullman, Congressman Jim Corman, Congressman
Claude Pepper, Senator Gaylord Nelson, Senator Russell Long, and
Senator Max Baucus. Their able leadership and cooperation were essential
to the passage of this bill.