INVESTMENT OF THE SOCIAL SECURITY TRUST FUNDS United States. Congress, House, Committee un Security, HEARING BEFORE THE 4. CONGRESS MAR 18 1982 COPY CHANGE & GIFT DIVISION SUBCOMMITTEE ON SOCIAL SECURITY OF THE COMMITTEE ON WAYS AND MEANS NINETY-SEVENTH CONGRESS FIRST SESSION 88-494 O OCTOBER 16, 1981 Serial 97-34 Printed for the use of the Committee on Ways and Means U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1981 COMMITTEE ON WAYS AND MEANS DAN ROSTENKOWSKI, Illinois, Chairman SAM M. GIBBONS, Florida J. J. PICKLE, Texas CHARLES B. RANGEL, New York KEN HOLLAND, South Carolina RICHARD A. GEPHARDT, Missouri MARTY RUSSO, Illinois DON J. PEASE, Ohio KENT HANCE, Texas ROBERT T. MATSUI, California DON BAILEY, Pennsylvania BERYL ANTHONY, JR., Arkansas BARBER B. CONABLE, JR., New York GUY VANDER JAGT, Michigan JAMES G. MARTIN, North Carolina JOHN H. ROUSSELOT, California этуда FN 47 26ap 72 Department of Health and Human Services, Robert J. Myers, Deputy Commissioner for Programs, Social Security Administration Department of the Treasury, Mark E. Stalnecker, Deputy Assistant Sec- (III) INVESTMENT OF THE SOCIAL SECURITY TRUST FUNDS FRIDAY, OCTOBER 16, 1981 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON SOCIAL SECURITY, Washington, D.C. The subcommittee met at 10:05 a.m. pursuant to notice, in room 1100, Longworth House Office Building, Hon. J. J. Pickle [chairman of the subcommittee] presiding. [Press release announcing the hearing follows:] [Press release of Oct. 5, 1981] HON. J. J. PICKLE (D-TEX.), CHAIRMAN, SUBCOMMITTEE ON SOCIAL SECURITY OF THE COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, ANNOUNCED TODAY A HEARING ON THE INVESTMENT OF THE SOCIAL SECURITY TRUST FUNDS Hon. J. J. Pickle (D-Tex.), Chairman of the Subcommittee on Social Security of the Committee on Ways and Means, U.S. House of Representatives, announced today that the Subcommittee will hold a hearing concerning the investment of the Social Security Trust Funds. This hearing will be held on Friday, October 16, 1981, at 10 a.m., in room H-137 of the Capitol. The Social Security Act provides that the assets of the trust funds are to be invested solely in U.S. government obligations. The funds must be invested in special public-debt obligations of the United States except where the Managing Trustee (the Secretary of the Treasury) expressly determines that the purchase of other government securities is in the public interest. These "special issues" must bear an interest rate which is equal to the average market yield of all marketable interest-bearing obligations of the United States with maturities of four years or more. Critics of the current investment policy assert that the trust funds are losing substantial amounts annually because they are earning less as a long-term investment than current short-term rates. It is not clear, however, if the investment policy were changed to allow the trust funds to take advantage of current shortterm yields, that the average return over an extended period would be greater than under current law. The current situation of short-term rates exceeding long-term rates is relatively rare and is likely to change in the future. Even if a change in the investment policy could yield higher returns, it does not directly follow that this change should be made. Previous reports of the social security trustees and the various Advisory Councils concerning investment obligations indicate that it has been felt that since the trust funds represent long-term investments and obligations, they should be tied to long-term interest rates. The testimony will assist the Subcommittee in determining the most appropriate investment policy for the Social Security Trust Funds. In its hearing the Subcommittee intends to invite the Secretary of the Treasury, who serves as the managing trustee of the Social Security Trust Funds, and other invited witnesses. Chairman PICKLE. The Chair would ask the subcommittee to come to order. If the witnesses will take their seats at the table, we will proceed. (1) |