Let me thank Barbara Kennelly, the head of the National Committee to Preserve Social Security and Medicare and Congressman DeFazio for being here this morning (Senator Casey, Congressman Hinchey, Congresswoman McCarthy and other House members may be there as well).
For more than three decades, seniors have relied on a COLA in their Social Security benefits to keep up with their increased expenses. On October 15th it is expected that the Social Security Administration will announce that, for the first time in 35 years, seniors will not receive a COLA. Based on the formula that, by law, they are obliged to use they come to the conclusion that there is no inflation for seniors and in fact prices have declined. In my view, the current formulation for determining Social Security COLAs is wrong in terms of the needs of senior citizens because it does not accurately take into account their purchasing needs. Seniors right now are not in the habit of purchasing laptop computers, cellular, and big screen tv’s. Rather, seniors, in general spend a disproportionate amount of their income on health care and prescription drugs and those costs are rising rapidly.
Over the long-term, we can better address the needs of seniors by establishing a Consumer Price Index for the Elderly to determine an appropriate COLA – legislation which I introduced a number of years ago in the House and had widespread support. But, for 2010, the least we can do is to provide seniors with a modest increase in their benefits so that they have the ability to pay for their added expenses.
Let’s be clear. As a result of the most severe economic and financial crisis since the Great Depression, millions of Americans are experiencing a major decline in their living standards. Senior citizens have not been exempt from that reality and in many cases have been hit especially hard.
The recession has forced more and more senior citizens out of the middle class and into poverty. In fact, according to a National Academy of Sciences formula, the poverty rate among Americans 65 and older is an astounding 18.6%, more than double the official poverty rate of 9.7% for seniors.
Millions of senior citizens recently have seen their life savings disappear, their pensions slashed, and the value of their homes plummet. At the same time, the costs of prescription drugs and health care continue to increase.
Today, seniors are struggling to pay for the “donut hole” in Medicare Part D, while the average medical debt of a senior citizen today is $4,000. In addition, credit card debt among senior citizens has increased by 26% since 2005.
Further, we should be mindful that a record-breaking number of senior citizens are filing for bankruptcy. 23% of all bankruptcies in 2007 were filed by senior citizens, more than any other age group in America – and that was before the financial crash.
The bottom line is that seniors deserve a fair increase in benefits to keep up with these added costs and economic hardships.
But, unless Congress acts soon, as I said earlier, for the first time since 1975 senior citizens will not be receiving a Cost-Of-Living-Adjustment (COLA) in their Social Security benefits in the coming year. This would mean that monthly Social Security payments would actually drop for many retirees because Medicare Part D prescription drug premiums, which are deducted from Social Security payments, are scheduled to increase. We cannot allow that to happen.
That is why I have introduced the Emergency Senior Citizens Relief Act (S.1685) in the Senate and Congressman DeFazio has introduced this same legislation in the House.
I am pleased that this legislation has garnered the support of not only the National Committee to Preserve Social Security and Medicare but also the Veterans of Foreign Wars, the Disabled Veterans of America, the Center for Medicare Advocacy, and the National Senior Citizens Law Center.
This legislation is being co-sponsored by Senators Dodd, Leahy, Casey, and Whitehouse.
Under our bill, over 55 million senior citizens, veterans, and disabled Americans would receive a one-time additional check of $250 in 2010, in lieu of a COLA. Since seniors living on fixed incomes are most likely to spend this money, our legislation would also provide a stimulus to the economy in the midst of these very difficult times.
Our bill is fully paid for by simply applying the Social Security payroll tax to household incomes above $250,000 and below $359,000 in 2010. Under current law, only the first $106,800 of earned income is subject to the Social Security payroll tax. Thus, a worker earning $106,800 pays the same payroll tax as a CEO making $35 million. This legislation begins to correct this inequity in 2010, while making sure that seniors receive a fair increase in benefits next year. No-one earning $250,000 or less would see their taxes go up under this legislation.
Nearly 70 percent of beneficiaries depend on Social Security for at least half of their income. And Social Security is the sole source of income for 15 percent of recipients.
It would simply be unacceptable for seniors on fixed incomes to not receive additional income from Social Security in the coming year to keep up with the increased prices that seniors pay for prescription drugs and medical care – let alone to receive less than they did this year.
I look forward to working with my colleagues in the Senate and in the House to pass this legislation as soon as possible.