By Representative Michael A. Ferguson (R-NJ)

Many older Americans face significant challenges. The solvency of Social Security and the affordability of prescription drugs are among two of the most pressing. Social Security is a sacred trust. For many seniors today though, Social Security benefits are the main or only source of retirement income. The government must honor that sacred trust for today's seniors and for those still in the workforce who are counting on Social Security benefits.

Social Security faces enormous financial challenges ahead, not only with the soon-to-be retiring baby boom generation, but also the increasing Social Security benefits of future generations that have not yet begun to work. By 2016, for example, a shrinking population of workers will no longer be able to support the growing population of beneficiaries.

Social Security also suffers from a shrinking rate of return with each generation. For example, people born in the 1960s can expect a mere 2% return on what they contribute in Social Security payroll taxes-that's lower than the return offered by Treasury bonds. Children born this year can actually expect a negative return. These small or non-existent returns are even worse for African Americans, Hispanics and other Americans who have shorter-than-average life expectancies.

Several proposals are currently before Congress to shore up Social Security, but lawmakers must ensure against detrimental changes. In 1977, when Social Security previously faced a financial crisis, "reforms" created Notch Babies as a result of a flawed benefit formula. Those Notch Babies, born between 1917 through 1926, receive fewer Social Security benefits than other seniors, and that's why I am a strong supporter of the "Notch Fairness Act" which resolves this inequality.

Congress must also ensure that seniors receive a fair Social Security Cost-of-Living Adjustment (COLA). At the heart of this issue is the Consumer Price Index (CPI) which measures how much prices change from year to year. As the CPI increases, Social Security benefits are increased to protect the value of Social Security benefits from inflation.

In recent years, however, the accuracy of the CPI has been questioned as a measure of inflation for seniors because the elderly spend more of their incomes on products whose prices have risen faster than average, such as health care and prescription drugs. As a result, many seniors may face a higher inflation rate than the rest of the population.

It is my hope we can use our new-found spirit of unity to approve a historic increase in spending for veterans' health and to give seniors a sound and modern Medicare system that includes coverage for prescription drugs. President Bush, in his State of the Union address, proposed $190 billion over 10 years to finance a Medicare prescription drug benefit.

That's a good start, but I believe we must do more to ensure prescription drugs are both affordable and available to the seniors who need them. While Medicare does not cover prescription drugs, it also does not provide timely, consistent coverage for many modern technologies and preventive treatments. Medicare needs to be expanded to ensure our seniors an improved quality of life while also lowering Medicare's long-term costs. 

March 2002