System and what the options are to fix it if you can find on my person policy. Org. Today were here with steve and carried them so lucky to be joined by them because they are both people who i have long admired it is so secure the policy space. Very few people who know more about the program and the two of david vitter working on it for a number of years. What i love about both of them is that they are walks at heart and actuaries of the mind, and so you can ask of what percent do i need to increase the payroll tax by in order to solve half of the substituted problems . They will give you the answer like that. But if they tried really, really hard they condemn it down enough for the rest of us so we can actually understand whats going on in this policy issue. You can find their full bios in the package that you have but steve is a chief actuary, has been for many years at the Social Security administration. He is responsible for scoring all of the proposals that members of congress, outside groups like this commission, submit and request assistance with sync with the impacts would be on the program as well as for contributing to the annual Trustees Report and many other responsibilities that i wont detail here. And karen is the deputy chief actuary of the Social Security administration. So with that im going to turn it over to them for a brief presentation on the financing and some of the policy options that are on the table for fixing Social Security. If you have a question at the end please retur refrain it andl do some q a. When it is your turn to ask a question please make sure you speak loudly so that everyone in the room can hear you. So with that i think karen will start off. Canada make one little comet on your initial question to the group, shai, just cant resist. Something like 20 years ago or so something but which a lot of people in the room would not have familiarity, there was a survey done at some of us older folks were familiar with that was asked a bunch of young people if youre more likely to Social Security benefits or space aliens. In a lifetime. The answer was almost unanimously space aliens. So i was at a point short after that talkative bunch of people a little bit older than you all as interns that were payroll administrators for various corporations all over the place. They were all people pretty much in the 20s. I raised that question to them and all the hands went up for space aliens, of course. How cool is that quick then i said so you are making a pretty good income here now, and since you no, you are not going to get anything from Social Security you are probably saving a huge portion of your salary. You are probably saving like crazy. There was molding around the group that one guy stood up and negative we didnt really mean nothing. I think really its kind of a cool thing to say, to be cynical and not expect staff but when he came right down to it they were not walking with, there were not voting with their feet. Tells you more about the psychology than there actually believe. Exactly and with that, sorry. Karen will tell you the real story. Thank yothank you so much, sd welcome everyone. We are just going to give you a little bit of background on Social Security financing and some options to change it for the future. So to begin, Social Security is to legally distinct trust funds. Theres the oasi fund in which is old age and survivors insurance. Thats really the retirement and survivors funds. Then theres the Disability Insurance fund, which is for disability benefits. Really those two are separate legally. Oftentimes we will talk about them on a combined basis, but really they are separate and cant borrow from each other. The Financial Operations are overseen by the board of trustees. There are six trustees, typically. There is the secretary of the treasury who is the managing trustee. The secretary of health and human services, secretary of labor, commissioner of Social Security and then there are two Public Trustees dominated by either party. Right now this positions are vacant and they had been for a couple of years, but were hopeful well get some folks on board soon. Folks. As i mentioned the two funds are often looked at on a combined basis. At the end of last year there were about 2. 85 trillion in the trust funds. Those combined funds have run surpluses since the early 80s, and they are expected to do so through about 2021. Beginning in 2022, those reserves will start to go down until we expect them to be depleted in 2034. So thats, what, about 17 years from now. When they are depleted we still expect that about 77 of benefits will be able to be paid, and thats if nothing else is done, if no legislative changes are made, still 77 benefits will be paid. Looking separately, the di fund is in a little bit worse shape. Its expected to be depleted in 2028. So attention needs to be paid to that and little bit sooner. All right. This graph here just shows you as a percent of gdp have much the trust funds hold in reserves. So you can see that back in the 1980s the fund was getting very low. At that Time Congress got together, made a compromise, and passed in 1983 amendments which brought more revenues into the funds and cut benefits for little bit. So at that point, asset start to go way up until about, this is all as a percent of gdp, but until very recently assets are going up as a percent of gdp, and now they are expected to decline until 2034. So how does Social Security get its income works i think most of your scene in your own paychecks, employees and employers each pay 6. 2 of their earnings into the trust funds. Selfemployed pay both of those pieces, so the employer and the employee piece to make it 12. 4. That is on earnings up to 1,272,000. Thats often called the taxable maximum, the tax cap peculiar various names for it, but basically earnings above that level are not taxed for Social Security benefits. Another piece of the income is taxes on Social Security benefits. Retirees and disabled folks, beneficiaries with high incomes pay some taxes on their benefits, and that goes into the trust fund as well. And finally theres interest on those trust Fund Reserves here the trust funds are invested in interestbearing securities, and we get interest from treasury on a regular basis. So now where does the money go backs mainly benefit payments. The vast majority about goes our benefit payments. About 61 Million People were getting benefits as of the end of last year. 44 million of those were retired workers and their dependents. 6 million were survivors of deceased workers, and about 11 million disabled workers and their dependents. Administrative expenses are another piece of the outgo, very low,. 7 of the expenditures. This is just a little graphical way to see what i just told you. The stuff on the top is the income. So you see the payroll taxes are the vast majority of the income. Tax on benefits are pretty small. Interest is a little bit bigger. And on the bottom of the graph use the benefits going out, the vast majority of the outgo. Theres a little bit of this little tactical thing but we havhadan exchange with the raild retirement board to sort of true of our benefits with theirs. And then theres the administrative expenses, 6 billion sounds like a lot of dollars but in comparison with the benefits, it is really pretty small. Okay, so why do we have trust fund at all . The trust funds really provide a reserve so benefits can be paid even when there isnt enough income coming in. A lot of people think of it as you need at least one years reserve in a trust fund to make it reasonable. Right now weve got about three years of reserves. We do expect those to go down, and assess it before we expect them to become depleted in about 2034. One important thing to note. The funds cant borrow. They can only spend what has been collected. So when there is not enough money coming into the fund, it wont be able to pay full benefits. One thing youl you often hear , other trust funds real . By the just an irq sitting in a filing cabinet somewhere . What does real mean i guess is a question . Is reserved duty plate, full benefits cant be paid. Some of these funds are real in the sense that they have consequence. The trust fund really do force congress to act in order to keep benefits going as happened in 1983. Trust funds were about to deplete. They didnt just let them deeply. They are real in the sense that congress has to change things in order to keep the program going. Quickly, we want to get to questions eventually, how do we typically expressed the future shortfall . To look at things on a comparable basis we you should look at things as a percent of the taxable payroll of the program. So this is a good way you can look at something in 1940, you can look at something now and put it on a comparable basis. So for example, in 2045 we expect taxable payroll to be about 24. 1 trillion. This is all the earnings that will be taxed by the program. Incomes to the program is expected to be about 3. 2 3. 2 trillion. So if you divide those two, income is 13. 24 of payroll. Similarly, look at the cost of the program which is expected to be about 4 trillion. Thats 16. 72 of payroll. So to get the shortfall in that year you just take the difference between the cost and income and thats really a gap that needs to be filled. And that shows exact same thing graphically. If you focus on the 2045 line that we just talked about, you will see that the cost of the program, dotted blue light at the top, is a good bit above the income we expect to become into the program. So there is a gap. There is a shortfall at that point, and its the job of congress and all of you to figure out the way to fill that gap. And now steve is going to go over a few slides and then i will come back and talk about some of the options that weve got for fixing the program took. [applause] okay, thanks karen, thanks shai and fatal for being here. Remember, and eclipse is not the same as space aliens. Thats just going to be the moon sort of, going to the movie on over it. I want to just add a bit of what karen had put forth about the basic nature of the Social Security program and how it is finance, talk about the size of the shortfall which we will be addressing later, and beyond that even the reason why we are looking at having a shortfall coming. First of all as can indicate where looking at this notion of when the reserves deplete. As karen mentioned, reserve depletion of what actually forces congress into action because cool, if youre a member of congress once you all of a sudden have a 77 payable one 723 reduction in the multibenefits from one month to the next for your constituents who will not be have become your chance to get her elected will probably be affected by that. Congress as i stepped up on a timely fashion. You can see a picture of where we are. Karen showed the same graph as a percent of Gross Domestic Product this expressive level of the reserves we have been building up and are now bringing down as a percent of the annual cost of the program. Its called a trust fund ratio. As karen indicated, historically we have maintained a contingency reserve about one years worth of outgo. Why . Because recessions happen. We discovered that recently at the end of 2007, and they and they can take away some of your reserves, and having a reserve cushion allows Congress Time to Pay Attention to realize whats going on with the help of our Trustees Reports and then take timely action. You can see the interesting want is a light blue line, the Disability Insurance program. Back in 1994 the reserve ratio was dropping down precariously low and we were checking that in 1995 it would hit depletion. So congress of course realizing that, we told them, the acted. In 1994 enacted a little reallocation of putting some of the oasi tax rate over to the di fund. That caused moving up the di fund. We knew that would bring a lot but in 1995 we rejected that would carry the di fund to reserve to depletion not in 955 1995 but were estimating 2016. Flash forward forward to 2015 crystal estimating that the reserve depletion would be in 2016. Pretty lucky guess back in 1995, right . We are in much better financial shape for osi then we are for di and the combined by osi of course so why have things gotten better on this putting . For those of you not real familiar with the terminology, incidence rate is number of people really becoming disabled, filing four and is starting to get insurance benefits. As a percentage of all the people out there that are insured and not receiving a benefit. We call that the exposed population, number of people that potentially can file for benefits and get it and you can see historically its averaged a little over five percent , 5. 4, i believe that is per thousand. Whatever, 5. 4 per thousand, half a percent each year of the exposed population actually becomes disabled and starts getting benefits. You can see it goes up and down. Not really surprising, you see the right real last big peak around 2010 in 2009, 1011 we had a peak with the incidence rate, why . A big recession comes, a lot of people lose work. A lot of people under normal circumstances in a economy who could qualify for benefits and have significant impairments will nonetheless be unable to hold down a job. They will be retained in a job, still productive but when a recession comes along and they lose their work like everybody else, theyre going to try to find a way to feed themselves and their family so if people can file for a benefit whether the and retirement benefit, people will file, our allowance rate for disability goes down a lot in a recession a lot of people file for benefits that are not qualified but a number are. You actually have a boost in incidence rates but look at whats happened to the solid line going on after the peak in 2010. You can see in successor Trustees Reports of 2012, 13, 14, 15 and now even the Trustees Report, weve been projecting this drop ins incidence rates after the from the recession would be coming back up our longterm expected average and it just has not been. The incidence rates have just been dropping, dropping and to the levels that we have not been expecting that are quite frankly surprising and we are doing work trying to understand why this is happening but as a result of that big drop, that we have had this extension you saw in the prior side knowing for the blue line to the solid blue line, we are working in better financial shape than a year ago. After the broader presdi program as a whole carrying the 3010 look at the combined basis, most of the time in part because even though we do have to separate funds, one of them is in trouble and the other isnt. Iris will step in as they did in 1994 and again in 2015 and see round reallocation of tax rates, sort of true up the funds that keep them operating more on the same path. We look at them on a combined basis and as terry indicated we are rejecting but a combined trust funds could deplete our reserves which means that what they are after we would only under the law be able to pay out as much money as we have continuing to come in which is the sort of ratifying here, our income rate, thats all percentage of our tax base, the tax payroll where the money altered only up to the first hundred 27,200 above that we dont count. But looking at across our whole economy. We can see that we would drop down to pay only what we can and then as terry indicated, at the point of reserve depletion in 2034 we dont have . 77 of continuing tax revenue coming in for every dollar of benefit authentication and modifies a little bit over time, not dramatically to . 73 for every dollar by thetime we get way out there. Important for some of you all and maybe me, 2095. Now, why in the world is cost rising so much as you can see on the slide you can see the cost rate, the blue line which continues, thats what the cost of paying the full benefits would be for the next 20 years this is rising, why is the cost rising so much . You really try to emphasize that for policymakers on the hill and policymakers this afternoon, understanding why you have a problem, why you have a challenges important than finding what you are going to do about it. Why we have one, the first part of this is a number of beneficiaries compared to the number of workers is really whats important because we are facing a payasyougo system. Youve all heard this, coming in from todays workers is what finances the benefits paid to todays beneficiaries so the relationship here, the ratio of the beneficiaries to workers is really important. Within the next 20 years, that is rising a lot. Again, the question is that what the cost is going up because beneficiaries is rising faster than workers, why is that . Its just fundamentally at the population, some people are too young to have ever heard this adage about graphics is definitely, its true. If you look at the black line, this gives you another ratio that we look at, its a cure populationbased ratio , the number of people defied anolder , provided by the number of people working, a rough approximation of sort of what the benefit group is, the Beneficiary Group compared to the people contributing or working in our society. You can see that was rising a little bit for a long time up to 2008 and all of a sudden we had this big level shift and occur that is going to happen within the next 20 years and of course the question why is that . Look at the blue and purple lines and you can see they will continue to grow at a rate, those lines are ones that we found a simulation of what if at the end of the baby boom. , during which on average women were having 3. 3 kids over a lifetime, dropped down to do, what if the number of kids per couple in our society had stayed at three or 3. 3 . You see this age of dependency ratio would not have this baby off that weve got, it wouldve stayed at a very little increase, we would be talking about shortfalls of Social Security or medicare. A little bit of the rise we have here would be continued aging. So you see here really big ships has occurred in the age distribution of our population and its really not so much a matter of the living longer, death rates have been high. But its really a matter of a change in the birth rates. And it really simple way to think about it is back in the day when there were on average three kids for every couple, one charter couple would be retired and there would be three kids back and forth. A trading directly or indirectly work in retirement but now we move into a period where we will have to kids on average per couple and this couple was in retirement, there will be two kids. Two kids have to contributemore to support the two elders and three or the elders are going to get what . Basically , thats a question that faces congress. A little bit further, look at the demographic movement. This is a little bit, some of the same as that age dependency ratio, this felt a little bit more. This tells you at age 25 and older population, our country is going back to 1940, first year of any monthly benefits for Social Security up to 2100, what share of that Adult Population was in a different request 44 to 64, 65 to 84 and 84 . The reason this is significant is this tells you in between 1970 and 1990 you will notice is the sheer under 65, that we are in the older group which is sort of the pinkish purple or pink orange band, 45 to 64, thats working age people but people who are older working age more likely were disabled then 25 to 44. You can see the share of the 25 to 64 in the older group who is shrinking. Thats it. Where the Insurance Program would reduce paying attention and rising. However in the 1990 in 2010 look at the relationship in the graph. The share of the people up to 64 that were about 45 was increasing dramatically and this is basically the reason the cost of insurance was rising so much during that period relative to our taxable payroll, our tax base. People got excited about that but we had a hard time conveying to people what happens beyond when you get in 2010, 20 30 in particular as the baby boomers move out of the age group into the higher age groups, they are moving out of the primary ages and ages at which people with disability benefits from us and as a result most of this Insurance Program is no longer indication. The earlier incidence rates is almost sort of like icing on the cake. Some of it is really dramatic about how much the cost of the Insurance Program is dropping out compared to what we are expecting based on the demographics. So what is the other aspect of aging . The reason i got the nod from all the folks is obvious, its good to have some experience in it. I have more experience than anybody else in our office on aging but speaking of aging, one of the other things that we look at is the other part of the aging rat which is mortality rates, death rates and you can see here death rates are dropping pretty consistently, each section adjusts the death rates and its a good indication from all ages combined. You can see thats been dropping and a lot of people up to 2009 were seeing this is going to drop really fast for ever and ever. You see in 2009 on the death rates have kind of 200 good degree level law, not nearly as fast and as in the color lines you see here indicating that weve been projecting after drop off occurring so where a lot of people out in past saying we were projecting enough, declining death rates, we projected too much. On the next graph you can see a little bit more of what matters most for the program is whats happening for death rates at 65 and older. You see this has really leveled off since 2009, weve had little drop in death rates and continue to protect too much, we are expecting death rates will decline again more rapidly in the future but the key is you are trying to have something in the future, dont be surprised if things turn out different from what you were expecting. Youve got to look at a longterm average and we should not get all upset and i think theres never going to be a declining death rates in 2009, we tell people dont get so encouraged that we are not going to have dramatic drop in death rates. Benefit levels, benefit levels which most of you think about is your working pediatrics work of making your pet of how we should make changes to Social Security, right financing. You can look at the benefit levels, we put these in terms of what we call benefit replacement rates. Its just a ratio of the benefits that start to get in this case if you start to receive your benefits, 65 which a lot of people do, a lot of people start earlier, the benefitlevel you would get compared to your career average earnings level, as we measure it essentially , the average index monthly earning a wage index version of earnings levels, when we keep looking at, for a low order at about 20 percent of earners, youd be getting around six of what you earning back in Social Security benefits for a very higher person whos been definitely working our taxable maximum corner. Part of the field here is to say that we have Social Security is one of the three legs of the school, you should be having some political savings, maybe your employer is doing something that gives you this much. If the honor roll is at 62, as you know we have production for starting the benefits earlier. And the current 66 retirement age and we are needing more and 62 that 65 and you can see that 50 percent, that now 40 percent, 25 percent for the veryhigher , but down to only 20 percent so if you start the benefits early, you hopefully will have even better ornaments at the school. This is the sort of the unpleasant picture of if congress does not act. What would have to happen from the benefits that would be payable. This shows that 23 two essentially 27 percent reduction in level benefits that would actually be payable and therefore the replacement rates would drop. Does not like 2034 and we dont have the schedule benefits. For the last thing i want to mention, is impacting karen is how we fix it, bottom line and this is sort of evidence on the cost relative to payroll that i showed you and the cost of that karen showed you, basically what weve got here is in the future we got somehow 4. 6 percent of gdp is the amount of schedule revenue we have going in to the current law. That cost of paying the full schedule benefits is only about 6. 1 percent gdp in the future after the point of reserve depletion so that means we have to either the amount of revenue by about a third from whats scheduled in current law in order to pay the full benefits or we need to hold down the level of federal benefits sometimes from a promise, i dont understand benefit to be gone down by a quarter or some combination of those two. As terry indicated in the most amendment that we had in the past, Congress Gets together, there were compliments compromises and do a little bit of this, little bit of that. So we are going to have to make that change, one other item im not sure if we adopted is in 25 trillion, we could invest in something other than Treasury Security and perhaps get a higher gain than something thats been discussed probably or not likely to go as many times but we will see. And i think we pass that to karen. [applause] all right, im going to get over most of these because i know we want to get to the questions but as steve said, the bottom line is how can we finance these shortfall be covered. You need to lower cost by about 25 percent, increase revenues by about 33 percent or some combination of those approaches. One other thing you both together packages your today is whether the current benefits as their structure now are adequate. Maybe we will increase them or some target population. So you will hear more about all of these in the next section and the upcoming session so im going to flip through these right now. This afternoon, you guys will be coming up with your own solutions. We will give you the details on all of these policy options and we really look forward to seeing what you guys come up with. Additional resources. Thats a great place to go if you want more information about anything we talked about today or anything we work on in the xray level. Its www. Ssa. Gov last 08 ce. There is a wealth of information there. Pages that have already been proposed, and analysis of whats going on under current law, lots of data sets for any of you who are data people, theres fun to dig into their so please go there, look and you know where to find us if you have any questions. Thank you. Thank you both, incredibly affluent, paul is inviting the actuary of too much. If youre ever going to be, if we are short on time for questions, we invite all of you to raise your hand and we can bring a light over if you have any. Im going to start off just one or two of my own and we got about, some answers so one thing i would encourage everyone to do after youre done exploring the discussion today is to visit that website and just click through of the dozens and dozens of options that even Stephen Karen have scored already because it shows you the magnitude of changes and packages together, the package that we talked about earlier so you can see how they interact with one another, its interesting and i have, but i guess one thing i wanted to start off with. I wanted to start with these provisions, we happen to bring along a summary of the hundred 50 individual provisions not that we made up that members of congress and other entities made up and we will have a copy of one for each table in case you want to reference to that addition to the material sources available. I guess i wanted to ask most of you obviously there are the options that are frequently discussed out there that probably everyone watching is familiar with whether its retirement age or raising payroll tax. What are some of the more creative ones that you all have come across were scored, obviously i know that in your position you dont announce or endorse options but once you found more interesting and that address different elements of the program were certain aspects. One of the things that is a little more recently that we had seen too much in the past is whether the program should tax Investment Income and not just earning. We are seeing that more and more. The aca introduced a tax on Investment Income area doesnt go to Social Security but some folks have proposed doing something similar so it would go to Social Security. I just add not toencroach too much on some chapman is going to be providing but what if we , one that was interesting was in 2010 there was an addition to Bipartisan Policy Center commission and was also an old commission that was put together and we worked with them on developing a sort of variation on the normal return age increase. Most of the time like the retirement age we have to curb and it rises up for everybody whos going to be getting Retirement Benefits but they had members on their commission who said for a long career, high stress job that maybe cant be expected to work as long, we dont necessarily want to raise the retirement age for them but we worked out with them and you can see the provision here and i dont know whats the proposal, we worked out a variation for people who have long career, 25 years and have their average career earnings relatively low levels like less than 2 and a half times the Poverty Level. For their average career earnings but they would have no increase in the retirement age, people thought that would have increase four times the Poverty Level but it was the fourth. So this is a way of sort of modifying the degree to which we would be doing this. This is in part because a lot of research you all heard about about mortality rates seem to be improving for high income people. Thats a creative item in the one thing you will see in our letter to the coach here to that commission, you wont see it in their commission report. Because they had not gotten the details of this worked out in time to their report. Or theyworked it out only later for us. You both are working on Social Security and policyfor many years and im curious, obviously weve known that this problem is coming for a long time , and aging into retirement, we didnt know that it was that magnitude but we knew there was going to be a shortfall and how do you think the policy debate has changed over the course of the several decades that you have seen from maybe when this problem was a generation or more off to now when its scaring us more in the face a few years down the road. I guess i would offer one thing back at the time of the 1983 amendments, we as an office as our group was not in a position to give overnight. New estimates that the implications of proposal on a yearbyyear basis would be happening. Therefore at the time that the socalled Greenspan Commission was coming up with proposals, we were able to instantly tell them what the directory of these objects would be rising up and dropping down. Back at the time of the Conference Committee on the hill, we had our estimates at the time but they ended up being locked in and we suggested making it smoother but they were able to do that. Now if you ask overnight, we repeated as of 1995 and jock is aware of this, we sort of suggested that policymakers would not just work at moving the 75 year shortfall, but most of the points but also coming to something thats included in our slide called solvency. Which is to make sure that trust the level of those truck fundraisers that these is the percentage of Software Programs not only that they say about zero but for the end of the period that may be stable or maybe even a little bit rising. Not be dropping down, that was the your 83 amendment as you saw even a time when we were talking about our annual stuff together, it was showing that the trust and reserves were dropping dramatically and completing. Ever since 1995, most proposals in a comprehensive basis has shined mentioned also served to achieve and did by our estimates sustainable progress and thats a point i think we cant emphasize enough for people is that while the trust fund was set to exhausting 2028 or 2035 were 2034 or a combination of the disability or old age trust fund, thats not the date by which actually taken because if we think about it in the simple sustainable program, once you reach that point, theyre taking a nosedive so to turn those around, to write that ship you cant start the day before that. You could, you can raise taxes overnight on everybody in the country by four percent or whatever the exact metrics is but is more preferable to spaced this out and gradually phase things in overtime so let me with that if theres one or two questions in the audience to wrap up. First of all, thank you for joining us today. My question is from an actuarial perspective, why is the payroll tax rate fixed at 6. 2 percent when the whole system has so many features that have dynamic adjustments for things such as the cost of living adjustment, the wage index adjustment and the primary insurance on a formula and even the ceiling on covered taxable payroll . Thats a really good question. I think generally when Congress Sets levels of taxes, they like to do it in a way that people are able to plan for it. That they know its going to be 6. 2, Everybody Knows it will be 6. 2 each year. It wont fluctuate depending on the status of the program. You have to remember also that people earnings levels from yeartoyear end to rise and our taxable maximum this year 127 2000, that is automatically indexed for the average wage in the economy Going Forward so if peoples earning totals arising, the 6. 2 percent represents more dollars each year and it represents more dollars so that is kind of, our real issue again is changing the demographics. We have fewer workers relative to beneficiaries in the future which really just means the 6. 2 percent for employees each, it was just fine a generation ago is not just fine Going Forward. We need to have either more revenue coming in from the workers and 6. 2 with the change in the demographics or pick up the benefit levels again. Any other questions . One real thing that shai mentioned about the value of making this vision sooner, something that we talk about, we know our trustees layout two is it would be really good not to wait till the last minute as sometimes too and changes for Social Security. The advantage of and acting changes earlier, even if they dont get implemented until later is that you got more options to consider in doing that. You can get more advanced notice obviously to people if you and changes soon and whatever changes you want you can phasein more gradually. A classic example is those 1983 amendments and everybody remembers as increasing in age, increasing the age didnt start to have any effect on anybody until 2000. 17 years later. So here we are now as karen pointed out 17 years away from reserve depletion. Not such a bad time to think seriously about this and maybe an acting changes even if it wont be effective until later. Thats the Generational Equity point in a well as a sense that the baby boomer generation is moving through and moving towards increased costs. And if we wait another 15 or more years to actually an act any changes, then generation or the generation that comes up into the retirement system now, is not going to be a major contributor to the solution. Just getting back to demographics, a lot of us have seen the rising cost of the baby boom generation is not because there are a lot of them but because we didnt have as many kids. And by the way, this is not to say that having the birth rate drop from 40 down to do is really a bad thing. Because there was a time way back when and i dont know is old enough to remember this that we were part of overpopulated world or we would run out of food. We dont have that challenge anymore. Now we just have to live with the idea that we have a different age distribution and we have to meet that challenge. Any final questions . Although a in a row are thinking. So the question about the, although Income Growth and there is some sort of change with respect to that, in Social Security, there are a considerable number of converters in the country that are paying their full 6. 2 percent or 12. 4 percent beyond their Employment Status within days of the fiscal year. So i was wondering if you could discuss solvency and sustainability with respect to the cat. One interesting fact is that for a long time now, weve been about six percent of earners over the cat. Thats a pretty steady over the past 30 years or so. But in that time, the amount of earnings for the decreased. I mean, increased quite a bit. Because earnings at those higher levels, its a huge income dispersion. The top is the way up, not as much of the bottom so whereas back in 1983 about 90 percent of all earnings was below the cap, now we are down to 82, 83. And back in the early 1980s, unless congress specifies the dollar level, i expect they did on the basis of asking questions, what kind of level do we have to have in order to have 90 percent of all coverage below the next. Is in 1983 and 90 84, 90 percent below the text next. It an indication of the higher earners having better or has changed and now we are down to roughly 83. And so thats one of the things we will be working at, talking about a few minutes later about whether or not we should raise the cap to something more than we have in the current fund. The index over all that time is by the regrowth and the average wage and there was an expectation we would stay at 90 percent below the area that thats the distribution of earnings that is wrapped. Should we do something about it . I dont know what you allhave to say. We are going to go live now to new york where a meeting of the Un Security Council has been called to discuss north koreas latest missile launch. The missile crossed over japan before falling into the sea. And while we wait for that meeting of the Security Council to begin, we will show you a little bit of washington journal. And now for more on this discussion as president 12 heads to texas today and in the wake of hurricane harvey, we are joined by former white house staffer, now president ial historian kenny troy, author of the book shall we wait the president . Dispensaries of Disaster Management from the oval office and kenny troy as the president stepped out of the oval office, stepped into texas amid this disaster, what advice would you give him one district today . Thanks for having me, first let me say our hearts go out to the victims in houston and i also want to send a special thanks to all of the rescuers, the First Responders and volunteers and we should have all those people in our hearts and our prayers. In terms of president trump, and leaving the white house, its important to know a number of things, leadership and if youre on top of the situation, confidence that your people are running the operations appropriately and compassion , if you dont show those things, then you start to have problems and as weve seen in the past with the president that we need to show those things because its also important the location of where hes going to make sure he doesnt go to a place that the disaster zone itself cuand that he is detracting from the rescue effort but if you want to go to a location that far enough away that