stration-trying it out-is probably sound. So you and the other sponsors of the bill do have that very much in mind.

Along with the goal of restoring faith in the program that you get from a board is also an assurance that you will avoid the big swings in policy that have taken place in Social Security in the last 10 years. I just do not believe it would have been possible under a board form of administration for a situation to develop where hundreds of thousands of disabled people were thrown off the rolls and then a very large proportion of them put back on the rolls when the cases eached the hearing stage-or the development of a situation where literally hundreds of cases were overturned by Federal judges, and a very large proportion of the Governors refused to carry out their contract agreement with Social Security to make disability determinations because they were so opposed to the policy directives of the agency.

A board would not have adopted such policies. And if they had, by any chance, the minority member of the board with any backbone would have been alerted to their policy at the very beginning, called a press conference, and called it to the attention of the Congress, and you would not have put up with it.

It is not only very dramatic things such as the disability debacle that a board organization would have prevented, but a board organization would have given more stability to more mundane matters of policy. I do not believe, for example, that there would have been such a large number of reorganizations of the Social Security Administration staff as have recently occurred, reorganization which take a lot out of the ability of staff to concentrate on their work. But the succession of commissioners, many of them coming in for very short terms, very frequently moved to reorganize the whole set-up within Social Security. A board would not do that.

Or take the question of this big reduction in staff which had been going on-17,000 people by the end of the fiscal year 1990 if the Administration's policies are followed. There should have been some reduction in staff as a result of further automation. That is perfectly proper and correct.

But I think a board would have said, "Do we have the level of service in place that we should have? Do we want to put all the savings from automation into a reduction of staff? Do we want to do everything we can just to save administrative money or can we do a better job? The cuts were worked out, more or less, by an agreement between the top people at Social Security and OMB to put all the savings that were predicted into a reduction in staff, and then the agreement was arbitrarily carried out without a real matching of the implementation of the automation with the timing of the staff reductions

Senator MOYNIHAN. Well, it is not as if you had a real problem of overhead. You did not.

Mr. BALL. No, the program is operating at roughly 1 cent out of a dollar of contributions for administration.

Senator MoYNIHAN. Yes.

Mr. BALL. It is true that in the most visible workloads in Social Security, those that the public sees, the case can be made, as the GAO has, that as compared with a few years ago the public reac

tion to service is good. But there are many workloads in Social Security that are not so visible to the general public.

Post adjudication, so-called-the questions that you brought up earlier, Mr. Chairman, of looking into the disability cases that have been diaried to determine whether people are still eligible. When staff is short these questions get pushed aside. The public does not object. You may be spending more program money in Social Security by saving administrative money because you are not looking carefully at cases that really should be taken off the rolls.

You get these big swings from overharshness to a lack of attention to cases that should be looked at. And you have other workloads not covered in surveys of public attitudes such as this whole representative payee situation. Social Security has the authority to appoint people as representative payees without going to court and

Senator MOYNIHAN. Senator Pryor was concerned about that.
Mr. BALL. Yes.

And representative payees have to be carefully monitored. You have to be sure that those people are really accountable for the money that they are spending on behalf of someone else.

These things and many others can not be measured by going around and asking a sample of people whether they think they were well treated in the Social Security office. You have to look at the total workload. I believe a board would have said, "We do not want to take all of these cuts just to save a little bit more administrative money when the administrative costs are so low. What we ought to be looking at is the level of service plus our ability to process all the workloads-making sure that we are not saving administrative money and losing program money.

So in one instance after another, Mr. Chairman, I think a board organization is the right way to go, not a single administrator.

Now I do have one suggestion on the board setup and its relation to the executive director that you may want to consider. Those who favor the single administrator as the head argue that a deadlock or conflict might develop between, say, the chairman of the board and an executive director, who has a set term and who has defined duties under the Act.

I would propose that you should make it clear in the bill that the board is in charge-that is the way it was in the original board. You could have the board appoint an executive director working under their direction and serving at their pleasure. I do not think that would mean a lot of turnover in executive directors. If you go to the trouble of selecting a good person, you are not going to get rid of him or her lightly.

But it is conceivable-I think unlikely, but conceivable-if the executive director has a fixed term, you might get to the place where there is some difference between the board and the board and this executive director. I think it should be clear that the board is in charge.

With that, Mr. Chairman, I would like to turn very briefly to the other bill and say that the Save Our Security Coalition is also very much in favor of the bill to require the Social Security Administration to make available on their own initiative statements to individuals about their wage records and estimates of their future ben

efits. I believe this too would add greatly to confidence in the program.

As you have pointed out, you have contributed many years and you have never heard from Social Security. That is, of course, true of millions and millions of people. I think it was a great step forward for the Social Security Administration to furnish estimates of future benefits on request, but I do not think it is enough. I think they should on their own initiative furnish such statements to participants.

Now some people have said, "But why make it a matter of law? Why not just ask the Social Security Administration to begin to do this?" There is a good reason to make it a matter of law, and the reason is money.

It always helps a Federal administrator seeking funds to perform a function to have a statutory base for the function when going to OMB and asking for money. Otherwise, it is just another idea of the administrator that he would like to do something which then comes into conflict with everything else that people want to do. But if he has a statutory function to perform, you at least put him or her up a couple of steps in the argument with OMB about funding that function.

So I would think that it is important to keep it in the bill, that you should not be talked out of it on the ground that, "Well, we would like to do this kind of thing anyway. You do not need to make us." I think it is helpful to them over time to have it in law. I am somewhat regretful about the timetable in the bill. I assume that Social Security feels they cannot get to sending out these statements to everybody until about the year 2000. I understand why they would want to be cautious, but I hope that over time the date could be speeded up and that this action, which I believe would help a lot in making people realize how important Social Security protection is to them, can be taken more quickly. There is a great undervaluation of the significance of Social Security protection in the country. It is not only that somewhere around 50 percent do not think that they will get the benefits at all, but the 50 percent who do think they are going to get them do not realize how good the protection is. They do not realize, for example, that the benefits are going to be kept up to date with wages up until the time they start to receive them. I think most people know that they are protected against inflation after that, but they do not realize there are automatic provisions keeping protection up to date throughout their working careers.

People need this information for their own planning. To what extent do they want to have savings in addition? To what extent do they want to buy life insurance? Their whole financial planning is based on Social Security, but they do not have a good understanding of what they will get.

So, Mr. Chairman, I believe your two bills together would add greatly to the feeling of security about Social Security, and there are many other goals of the bills that are also very important.

As you suggested in your opening statement, the shift from the almost total authority of the managing trustee, the Secretary of the Treasury, to a board managing the fund that would have as its sole interest the protection of Social Security funds as against the

kind of conflict of interest that a Secretary of the Treasury gets into is also an important point. And there are others, but I think I have taken enough time.

Thank you.

[The prepared statement of Mr. Ball appears in the appendix.]

Senator MOYNIHAN. You never take enough time in this Committee, but we could not more agree, could not more appreciate. Why don't we just hear everybody, and then you can comment on each other and we will get some comment from here.

Robert Myers, welcome again, sir.

STATEMENT OF ROBERT J. MYERS, FORMER CHIEF ACTUARY AND DEPUTY COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, SILVER SPRING, MD

Mr. MYERS. Thank you, Mr. Chairman.

First, I would like to thank you very sincerely for the nice things that you said about my work, going back to 1934. All I can say is that I was very fortunate to be in the right place at the right time in 1934.

I think that you would also be interested to know about a coincidence in connection with the visit of Mr. Walsh from Canada. This is a matter of rather belated reciprocity. In 1965, when Canada was considering the adoption of the Canada Pension Plan, I was honored by being asked to testify before a Senate committee of the Canadian Parliament to describe our Social Security system. So, I certainly welcome having Mr. Walsh here.

Senator MOYNIHAN. Isn't that serendipitous?

Mr. MYERS. I believe that the two bills introduced by the distinguished Chairman would greatly improve confidence in the Social Security system. I would mention some information that I have about public confidence which is a little more optimistic than the figures that the Chairman quoted.

An annual survey made by the American Council of Life Insurance shows that the proportion of respondents who are not too confident or not at all confident in the future of the system rose from 37 percent in 1975 to about 68 percent in 1982-84. Then, presumably because of the successful 1983 legislation in which the distinguished Chairman played such an important role, the lack of confidence decreased to 45 percent in 1988. That still leaves a long way to go, but I think that the Chairman's two bills will certainly help out in that respect.

Senator MOYNIHAN. May I say that was my fault. I should have called attention to that. I just was moving too quickly. People do notice. People did respond to that 1983 legislation. Something happened.

Mr. MYERS. As the Chairman has said, the Social Security Administration was originally an independent agency with a bipartisan board, and this continued until 1946. Since then several groups, including the National Commission on Social Security in 1981 and then the National Commission on Social Security Reform in 1983, recommended that this independent-agency basis should be restored.

One of the difficulties with the current organizational structure is that it produces an excessive number of layers of responsibility and authority for programs which represent such immense social and financial magnitude. The making of decisions is often excessively slowed down by such layering of authority. As a result, necessary and desirable action is often delayed so long as to be useless. One very good example of this is the infamous notch that the distinguished Chairman mentioned. When I returned to the Social Security Administration in 1981 as Deputy Commissioner, I developed and worked out with the staff a method that the problem could at least be greatly alleviated. That proposal could have been enacted in 1981, except there were so many levels of authority that it never got up to the top to get approval in time. It would have partially remedied the situation, not by giving more to the people born after 1916, but rather preventing the excessive bonanzas that people born before 1917 got by working beyond age 62.

Senator MOYNIHAN. You would have had some pretty grateful members of the U.S. Congress. [Laughter.]

Mr. MYERS. By 1983, it was really too late to do anything, but the situation would have been greatly relieved if action had occurred in 1981.

Senator MOYNIHAN. There you are. You know a problem is coming. You have an idea what to do with it, but you cannot-you are too many layers away from where they say yes or no.

Mr. MYERS. Exactly.

I would go even further than the bill as to the organization of the Social Security Administration into an independent agency. I would include Medicare in the new independent agency so that we have one organization or one institution that handled all of our social insurance programs. After all, Medicare and OASDI really are closely integrated programs.

I would suggest one change in the bill that I think would prevent the proposed agency from being too independent and would answer some of the criticisms that have been made here today about the proposal. As the bill establishes the bipartisan board, the members have 6-year terms on a staggered basis. The result could be that, at one time, a majority of the board could be of the opposite political party from the President of the United States. This could, I think, create undue squabbling and so forth.

Senator MOYNIHAN. Don't we have a two-party representation, sir?

Mr. MYERS. Yes, the board would have to have two parties on it, at least one member from one party and two from the other. The problem is that the two members could be of the opposite party from that of the President.

Senator MOYNIHAN. Oh, just the-you have a Republican president and the majority on the board is Democratic.

Mr. MYERS. Yes.

Senator MoYNIHAN. Yes.

Mr. MYERS. What I would suggest as a solution is that the chair should always be named by the President, and the chair's term should be coterminous with that of the President. Then, the other two members would be appointed on a staggered basis and be of