Statements on Introduced Bills and Joint Resolutions - S. 2754

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. DASCHLE (for himself, Mr. Reed, Mrs. Murray, Mr. Johnson, Ms. Mikulski, Ms. Cantwell, Ms. Stabenow, and Mr. Leahy):

S. 2754. A bill to amend the Social Security Act to protect social security cost-of-living adjustments (COLA); to the Committee on Finance.

Mr. REED. Mr. President, I rise to join with the distinguished Democratic Leader and Senator MURRAY in introducing the "Social Security COLA Protection Act of 2004." I would also ask unanimous consent to submit for the RECORD the report by the Joint Economic Committee Democratic staff entitled, "Rising Medicare Premiums Undermine the Social Security COLA."

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. REED. Thank you. Mr. President, Social Security is the bedrock of this country's social safety net and our most effective antipoverty program for seniors and the disabled. A valuable feature of Social Security is the annual cost of living adjustment, or COLA, which was enacted to ensure that the real purchasing power of beneficiaries' checks would be preserved, and not eaten away by inflation. I would also point out that such COLA protection is missing from most private pensions.

Sadly, what the JEC Democrats' report has revealed is that large increases in health care costs and the poor design of the new Medicare prescription drug plan have created a situation in which rising Medicare premiums are undermining the Social Security COLA. The problem is already serious, and we have not even begun to experience the impact of the prescription drug premium of the new Medicare Part D program that will take effect in 2006.

The study shows, for example, that in the years 2011-2014, a person with a monthly Social Security benefit of $500 (in today's dollars) would see 69 percent of her COLA consumed by increases in Medicare Part B and Part D premiums. That leaves far too little of the COLA to cover increases in prices of other necessities such as food, energy, and other medical expenses. Even people with larger monthly benefits would see their COLAs substantially eroded by the increases in Medicare premiums.

Finally, the study shows that by 2014, if there is no legislation to address this problem, 64 percent of beneficiaries who have their Medicare premiums deducted from their Social Security checks will lose at least 25 percent of their Social Security COLA to increases in those premiums.

The JEC Democratic staff study makes a compelling case that we have a serious problem on our hands. That is why I am happy to cosponsor "The Social Security COLA Protection Act of 2004." This legislation will preserve the essential safety net Social Security provides seniors, by making sure that at least 75 percent of their Social Security COLA is protected from increases in Medicare premiums and available to offset increasing cost of other goods and services seniors need in order to maintain an adequate quality-of-life.