[Senate Hearing 107-63]
[From the U.S. Government Publishing Office]

                                                         S. Hrg. 107-63




                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                             WASHINGTON, DC


                             APRIL 19, 2001


                            Serial No. 107-2

         Printed for the use of the Special Committee on Aging

73-339                     WASHINGTON : 2001

            For sale by the U.S. Government Printing Office
 Superintendent of Documents, Congressional Sales Office, Washington, 
                               DC. 20402

                       SPECIAL COMMITTEE ON AGING

                      LARRY CRAIG, Idaho, Chairman
JAMES M. JEFFORDS, Vermont           JOHN B. BREAUX, Louisiana
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD SHELBY, Alabama              HERB KOHL, Wisconsin
RICK SANTORUM, Pennsylvania          RUSSELL D. FEINGOLD, Wisconsin
SUSAN COLLINS, Maine                 RON WYDEN, Oregon
MIKE ENZI, Wyoming                   EVAN BAYH, Indiana
TIM HUTCHINSON, Arkansas             BLANCHE L. LINCOLN, Arkansas
PETER G. FITZGERALD, Illinois        THOMAS R. CARPER, Delaware
JOHN ENSIGN, Nevada                  DEBBIE STABENOW, Michigan
                                     JEAN CARNAHAN, Missouri
                      Lupe Wissel, Staff Director
                Michelle Easton, Minority Staff Director



                            C O N T E N T S

Statement of Senator Harry Reid..................................     1

                                Panel I

Carla Sloan, Nevada State Director, American Association of 
  Retired Persons (AARP).........................................     3
Jackie Ridley, Member, Nevada Commission on Aging................     4
Hans Riemer, Founding Chairman of 2030 Center....................     6
Steven Samson, SSI and Medicaid Recipient........................     9





                        THURSDAY, APRIL 19, 2001

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., 
Foothill High School auditorium, Las Vegas, NV, Hon. Harry Reid 
    Present: Senator Harry Reid.


    Senator Reid. This Senate Aging Committee is called to 
order. I appreciate everyone being here. Foothill High School 
is certainly unique to me. I have been here a couple times; but 
this, as you know, is an extension of old Basic High School. I 
guess we are going to have even a third high school in 
Henderson before long. So it's really a pleasure for me to be 
here, a place where I went to high school.
    It's probably safe to say that most of you in this room 
can't remember what life was like prior to the creation of the 
social security program in 1935. It's also safe to say that 
those of you who do remember what it was like prior to 1935 
won't admit it.
    In the 1930's growing old was often correlated with being 
poor. Many men and women at the time faced what was termed the 
stark terror of penniless, helplessness, old age. But President 
Roosevelt, Franklin Roosevelt changed that when he signed the 
Social Security Act of 1935 and created a program that provided 
basic measure retirement security for all Americans. Almost 30 
years later, President Johnson signed the Medicare program into 
law. For the first time in the history of our nation, Americans 
no longer had to worry about depleting their life savings to 
cover medical associated with being sick. Together, the Social 
Security and Medicare programs have grown to be essential 
facets of modern life. One in six Americans, almost 45 million 
Americans, receive social security benefits.
    More than 39 million men and women are enrolled in 
Medicare, and that number is projected to nearly double to 77 
million in the next 30 years. Most of you young folks probably 
are thinking that it will be years or maybe even decades before 
you should care about Social Security or Medicare. However, the 
realty is that social security and Medicare programs are facing 
several new challenges. These challenges must be addressed in 
the near future. And how they are addressed will affect every 
one of us in this room. As a result, everyone here today from 
16 to 77 has a stake in the debate over the future of the 
Medicare and the Social Security programs.
    Social Security/Medicare are what we call pay-as-you-go 
programs. This means today's workers pay for tomorrow's 
retirees. Right now the government collects more money in 
premiums and taxes than it must pay to support Social Security 
and Medicare beneficiaries. However, this is expected to change 
as early as 2009 or 2010 when the costs supporting Medicare and 
Social Security beneficiaries will become greater than the 
amount of money coming into the program. This will occur 
because, as the baby boom generation nears retirement, there 
will be more retirees than workers for the first time in our 
nation's history.
    In order to keep these programs viable for future 
generations, we will be confronted with a series of tough 
choices. How do we continue to finance the Medicare and Social 
Security programs? Do we raise taxes? Increase retirement age? 
How do we update the Medicare program to make sure it keeps 
pace with advances in modern medicine? Do we add a Medicare 
prescription drug benefit? If we do, how do we do it? Well, 
there are a number of different proposals that would address 
some or all of these issues. The purposes of today's hearing is 
not to debate the merits of these proposals, but to explain why 
you should take an interest in the future of these two 
    We begin today's hearing--I mention that most of you 
probably could not remember what life was like prior to the 
creation of Social Security or Medicare. So before we hear from 
our witnesses, let's take a moment to consider what your lives 
would be like today without these programs.
    Many of us are looking forward to graduating high school 
and beginning your lives as adults. This will likely involve 
moving out of your own homes, living independently from your 
parents. But what if you had to consider supporting your 
parents in their retirement, if it was up to you, there was no 
other program? What if your parents and grandparents had to 
move in with you? What if one of your parents or grandparents 
were to become seriously ill or disabled? How would you pay for 
these medical expenses? Would you have to use your money that 
you had saved to go to college? Would they have to deplete 
their life savings to cover these expenses? What if there were 
no safety net or savings to fall back on? What if after school 
today, you were to get into your car and get into an accident, 
a car accident, or other type of accident that left you 
permanently disabled? I talked to one young lady as I came in 
today, she broke her leg skate boarding. She is going to be 
well. The cast is going to come off today or tomorrow. But some 
people, when injured, they don't get well. That's the way they 
remain the rest of their lives. How would you pay for the cost 
of your disability? And what would you do if the accident left 
you unable to work or provide for yourself? It's probably not 
something you think about, certainly not every day. But the 
fact of the matter is that Social Security and Medicare 
programs impact all of your daily lives.
    I am pleased to be joined today by four distinguished 
guests who will help me illustrate how these programs impact 
their lives and why the fate of these programs will affect each 
and every one of us. After all our witnesses complete their 
testimony, we will have the opportunity to ask questions. So 
write your questions on your question cards. If we don't have 
time to respond today because of the time problems, I will make 
sure that I prepare a response for each of you and respond to 
you by mail.
    It's my pleasure to introduce someone I have known for a 
long time, Carla Sloan, the Nevada State Director of the 
American Association of Retired Persons; AARP. The AARP is the 
nation's largest organization for people aged 50. There is not 
a close second. Almost a quarter of a million Nevadans are 
members of AARP.
    Carla Sloan has a long history. She spent a lifetime 
working on behalf of Nevada seniors. She served as the 
Administrator of Nevada Division of Aging Services among other 
things. She spent 10 years working with senior programs with 
the Las Vegas Housing Authority. Ms. Sloan will give us a brief 
insight in one of the biggest issues facing the Medicare 
program today, the need to update the program to include a 
prescription drug benefit.


    Ms. Sloan. Thank you, Senator.
    Senator Reid. Move that microphone over, because they are 
having a little trouble hearing in the back.
    Ms. Sloan. OK. How is that?
    Senator Reid. Perfect.
    Ms. Sloan. Good.
    I am Carla Sloan, AARP State Director for Nevada. And the 
Association appreciates the opportunity to present our views 
regarding the future of the Social Security and Medicare 
programs. And since neither program is in crisis, we have some 
time to craft a thoughtful solution. Hearings such as this one 
provide our elected officials and the public with an 
opportunity to explore ways to strengthen these important 
inner-generational programs.
    Social Security and Medicare have brought financial 
security and piece of mind to today's older Americans and their 
families. We must work together to ensure that future 
generations can count on these programs as well.
    According to the latest report by the trustees, Social 
Security has sufficient assets to continue paying full benefits 
on time until 2038 and over 70 percent of benefits for decades 
thereafter. The Medicare Hospital Insurance Trust Fund has 
sufficient assets to continue paying benefits until 2029, 4 
years longer than last years' projections. These dates are a 
substantial improvement from the past and are attainable in 
part to a strong economy.
    Let me briefly turn to the issue of prescription drug 
coverage in Medicare. In the 36 years since the Medicare 
program began, prescription drugs have become essential in the 
treatment and prevention of disease. According to a 1998 Wall 
Street Journal poll, 80 percent of retirees use prescription 
drugs every day. The average Medicare beneficiary takes 18 
prescriptions a year. Yet, Medicare does not offer prescription 
drug coverage to help pay for the costs of these necessary 
medications. That is why AARP believes that modernizing 
Medicare to keep up with advances in medicine is a must. That 
means that Medicare should include an affordable prescription 
drug benefit that must be available to all Medicare 
    Another program older Americans depend on is Social 
Security. And AARP acknowledges that Social Security will need 
adjustments in order to keep paying full benefits after 2038. 
In the past reducing benefits or adding revenue have restored 
Social Security's solvency until, however, we currently find 
ourselves in a favorable economic and budgetary environment 
with surpluses in both the Social Security and non-Social 
Security portions of the budget. AARP is pleased that Congress 
and the President have agreed that the surplus in the Social 
Security Trust Fund should be as used exclusively for Social 
    AARP looks forward to participating on a bipartisan basis 
with our nation's elected officials to achieve a solution to 
Social Security and Medicare's future. This solution should 
maintain the Social Security programs, guiding social insurance 
principles, ensure benefit adequacy, and achieve solvency in a 
fair and timely manner.
    Thank you, again, for this opportunity to testify.
    Senator Reid. Carla, thank you very much.
    I receive every day literally hundreds of letters, phone 
calls and e-mails from seniors who are overwhelmed by the high 
price of prescription drugs. Some seniors on Medicare are 
forced to choose between paying for the prescription drugs and 
paying for food or rent or their power bill.
    Mrs. Jackie Ridley is a retired college professor who has 
been a senior advocate for about 25 years. In addition to being 
a member of the Nevada Commission on Aging, she volunteers as a 
counselor for the Medicare programs. She's active in the Nevada 
Senior Coalition and writes a column for the Clark County 
Chapter of the National Council of Senior Citizens.
    To show her integrity, to show her strong feelings about 
this issue, Jackie is one of a kind. She's had some terribly 
difficult personal losses in her recent days. The fact is just 
this Monday, she lost her husband. It was very easy for her to 
not come today, but because of her wanting to communicate with 
young people, she's here.
    Jackie, thank you very much.


    Ms. Ridley. Thank you, Senator. Thank you for the 
opportunity to talk to you today on the subject of prescription 
drugs to seniors.
    I am 71 years old, and I have been working with seniors for 
a long time. I can speak about the prescription drug program 
from two points of view; my own personal experience, and that 
of many seniors who I have talked to as a Medicare counselor 
for the last 5 years.
    My husband and I have ongoing medical problems such as 
heart disease, high blood pressure and diabetes and must take a 
large number of drugs. He was taking 12 separate drugs, and I 
have 14 separate drugs which we have to take every day. Now, we 
belong to a health maintenance organization, and like many such 
programs, it has a prescription drug plan, but there are yearly 
limits on how much prescriptions will be covered.
    My husband went into the hospital with congestive heart 
failure in July a couple of years ago just as his limit had 
been reached. When he was discharged, his new drug 
requirements, when added to his regular maintenance drugs, came 
to over $1,000 a month. Like many seniors, our income is just 
over the poverty level, and we could not find help anyplace. 
You wonder how did we manage. Well, we were fortunate. We got 
some samples from the doctor's office. We stretched out some 
drugs by taking them less often than prescribed. We used our 
limited emergency reserve. And knowing that we might exceed the 
limit, we had stocked ahead some drugs by renewing them as soon 
as it was allowed which is a few days or so. Each time we were 
allowed to stockpile some. We had some drugs that we were no 
longer using that could be substituted for the new ones. And we 
were both on a few of the same drugs so we could share those.
    We knew that we would be back on the insurance program at 
the first of the year. But not all seniors have these options. 
At the present time, we pay an additional premium each month 
which gives us an extra $1,000 of drug coverage a year. Also, 
our HMO now offers unlimited generic drugs which is a big help. 
Of course, all the latest new drugs are not generic, and they 
are very expensive.
    As a Medicare counselor, some of my most difficult advising 
has been in relationship to drugs. Some seniors have to make 
some unacceptable choice such as choosing between drugs and 
other necessities, like food. There are a few programs for 
seniors such as the one the State of Nevada has started and 
several drug companies have which will supply drugs for those 
in need with very low income. For those above the poverty line, 
there is little help available. Some can make a trip to Mexico 
or Canada. Some receive a supply of drugs from a neighbor or 
friend who has died and use their unused drugs. These are not 
really legal ways, but at least the drugs are not wasted. It is 
sad and frustrating to try and have someone find an alternative 
when there is no good one.
    One of my major concerns is that any new Federal 
prescription drug program will once again be income limited. 
When the cost of drugs are deducted from someone's budget, 
there is insufficient money to live on. If income must be a 
factor, then the cost of prescriptions should be deducted 
before the income cutoff is made.
    Thank you for allowing me to share my thoughts with you 
    Senator Reid. Jackie, the one thing that I want these young 
people to understand, it's not going to be long that they are 
going to be as old as we are. And you young folks have to focus 
on the fact that time goes so quickly. And I can remember when 
I was at Basic High School, and when I was a senior in high 
school, I would see people come to ball games and they had 
letter sweaters on, they probably graduated 3 years ahead of 
time, what old people. What are they doing around here? Well, 
it really changes your perspective. So, the older you get, the 
quicker time goes, and the more you understand that just a few 
years goes very quickly.
    Anyway, thank you very much, Jackie, for being here.
    We are going to now hear from Hans Riemer. Hans is a 
founding chairman of 2030. The 2030 Center is a public policy 
organization that advances economic agenda for young workers. 
The 2030 Center addresses budget issues such as Social 
Security, health care, and tax deferments. Hans has been 
featured on media outlets ranging from National Public Radio to 
CNN to the news part of CNN, ``Inside Politics'' on CNN. He 
writes op ed pieces, which are editorials appearing in 
newspapers around the country. He's described as an, and I 
quote, an eminent D.C. force fighting for Social Security, end 
quote, by a number of newspapers. This particular quote I just 
gave you was from the Oakland Tribune. Hans has been recognized 
for his work in 2000 with an invitation to speak at the 
Democratic National Convention during prime time television 
where he discussed the impact of budget policy upon younger 
    Hans, I am very appreciative for your being here.
    He had to travel from Washington, D.C. to be with us here 


    Mr. Riemer. Thank you, Senator Reid, for the opportunity to 
speak here today. My name is Hans Riemer, and I run the 2030 
Center, which is a public policy group for young people, and we 
know we need our voice in Washington and your participation.
    I think it is great to see a positive constructive dialog 
here today between high school seniors and senior citizens. It 
is discussions like this that remind me how we are all in it 
together, all generations, young and old.
    Now, a lot of young people have never lived in America that 
did not have a strong Social Security and Medicare system. As a 
result, trying to manage life without these two programs is 
pretty near impossible. Yet it wasn't that long ago, as 
recently as the 1960's, when one in three older Americans lived 
in poverty. Today, thanks to Social Security and Medicare, that 
number is only one in ten. In other words, over only the past 
few decades, millions and millions of older Americans have been 
lifted out of poverty by Social Security and Medicare. I 
believe that is one of the greatest success stories of our 
government during this century.
    But Social Security benefits do more than just help with 
the bills. They enable older Americans to live with 
independence and dignity. How does that affect us as young 
people? Well, what would happen if our grandparents had to look 
to their children to meet their basic needs. Wouldn't that have 
an impact on their grandchildren? Indeed, it would. If it 
weren't for Social Security, many families would have to make 
impossible choices whether to care for grandparents or, for 
example, to pay for their children's college education. That's 
a terrible choice. Without Social Security, in fact, a lot of 
families would go back to the way things were not too long ago, 
every generation living under one roof. Think about that for a 
second. Without Social Security, your grandparents might have 
to live in your room and just when you finally got rid of your 
little sister and the bunk bed, too.
    Now, I know we all love our grandparents dearly, but we can 
still love them and want them to have an independent life, too. 
This might sound a little funny, but how much would you be 
willing to pay in order to make sure your grandparents did not 
have to come home and live in your room. Well, I bet most of 
you would be willing to pay about what you are paying to Social 
Security or will be soon. And if you look at it from that 
perspective, getting a benefit in retirement is just icing on 
the cake. Well, in this way, Social Security actually promotes 
independent all generations, young and old. That's what I mean 
by we are all in it together.
    Now, some say that young people should not support Social 
Security. Perhaps these individuals do not fully appreciate the 
progress we have made thanks to these programs. Perhaps they 
already live in the same room as their grandparents and think 
should you, too. I'm not sure. But what they propose is that 
young people should take the money they are now paying into 
Social Security and invest it on their own. Now, I am the first 
person to encourage everyone, and particularly young adults, to 
invest for the future. But the important thing to keep in mind 
is that the money you are paying into Social Security today is 
being used for benefits; benefits that help people stay out of 
poverty, provide them with independence and dignity. And if you 
weren't paying in Social Security, the government could not 
provide these benefits.
    Of course, it's also not just about retirees. The money you 
are paying in also helps a lot of young people during their 
time of need. Across the country, there are about three million 
people under the age of 18 who collect Social Security benefits 
every month. And, no, they are not retired 17 year old former 
CEOs of Internet startups. Many of them come from a family 
where a parent has died or has become disabled. We probably all 
know a family in the audience perhaps there may even be a few 
of them where a parent has died. Well, that family is entitled 
to Social Security and just imagine how important that monthly 
check may be. So I hope you can see how Social Security is 
about independence for everyone, young and old alike. The money 
you are paying into Social Security is going to a good cause. 
That's the big picture. Please don't lose sight of it.
    But it wouldn't be exactly fair if you had to pay into the 
fund and were never able to collect benefits. But there is no 
need to worry about that. Don't be tricked into thinking that 
Social Security is going to dry up like a desert creek. There 
will always be people paying into the system. And even if we 
didn't make any changes, benefits would be larger for you when 
you retire than they are for today's retirees. So rather than 
talk about how to get rid of Social Security in favor of 
private investments, I suggest we should talk about improving 
Social Security for young people; for example, those three 
million young people under age 18 who collect Social Security 
due to a tragic family situation. Once Social Security will 
continue to pay benefits past the age 18 so long as they were 
in college. That was a great program, but it was eliminated, 
and we should bring it back.
    So let me close with the special comment for the older 
participants in this hearing--not you, Senator--but I know how 
deeply you care about your grandchildren and about all the 
young people coming after you. I know that when you think about 
Social Security, you are concerned about the future, what kind 
of legacy you will leave for future generations. Well, it 
should be clear by now that the future of Social Security is on 
the table. Young people need your voice and your leadership if 
we are going to win this one. We need to fight together. Thank 
    Senator Reid. Hans, as you were speaking and saying that 
you can't remember when there was no Social Security, others 
can't imagine such a time, I lived through a time recently in 
Congress where there were very powerful Members of Congress 
wanting to do away with both programs. And I carry with me in 
my wallet--and I never want to misquote anyone--it's getting a 
little weathered now--but I carry with me the knowledge that 
Social Security and Medicare is not necessarily always going to 
be here. A very powerful United States Senator, someone who ran 
for President of the United States by the name of Bob Dole 
said, and I quote, I was there fighting the fight, one of 12 
voting against Medicare because we knew it wouldn't work in 
1965. He said this a couple of years ago. Newt Gringrich, when 
he was Speaker of the House of Representatives said, now, we 
didn't get rid of it in round one because we don't think it is 
politically smart, but we believe Medicare is going to wither 
on the vine. The present house majority leader, Dick Armey from 
Texas says, Medicare has no place in a free world. Social 
Security is a rotten trick. I think we are going to have to 
bite the bullet in Social Security and phase it out over time.
    So I want everyone here, especially you young folks to 
remember that there are people in Washington who are not on the 
band wagon yelling the laurels of Social Security and Medicare. 
Some people, some very powerful people in Washington would do 
away with both programs tomorrow if they had the chance.
    We are going to now hear from a remarkable young man. Most 
people don't think of Social Security simply as a retirement 
program. Social Security is more, however, than just a 
retirement program. It provides families with disability and 
survivor protections. As has been indicated by Hans, one out of 
three Social Security recipients are not retirees. Our last 
witness today, Steve Samson, understands this as well if not 
better than anyone. He's been collecting supplemental security 
income, called SSI, benefits under Social Security disability 
program since he was a baby.
    Steven was born 2 months before he should have been born. 
He weighed about 3\1/2\ pounds. His early birth and light 
weight didn't stop Steve from being the fighter that he is 
today. In fact, the nurses in the neonatal unit dubbed him 
``The Champ.'' He was sent home to his parents, two sisters and 
brother about a month after he was born, but then he only 
weighed 4\1/2\ pounds. It was short time after going home that 
Steven was diagnosed with cerebral palsy.
    Steven attended The Variety School where he participated in 
everything from varsity sports to choir and school politics. 
And when he was in high school he was a member of the student 
council, held offices in student body; secretary/treasurer, 
vice president and president. During his senior year, Steve won 
the title of prom king. He's a remarkable young man. Those of 
us who serve in government know him because he's an advocate 
for many different causes. He is someone who is very 
politically active. He works in the campaigns tirelessly.
    It's a pleasure for me to introduce to you Steven Samson.


    Mr. Samson. Thank you, Senator, and good morning Senator 
Reid, faculty and students. My name is Steven Samson. Thank you 
for allowing me to come and speak to you today. It is of great 
importance that every American, young and old, be aware and 
concerned about Social Security. My name is Steven Samson. I am 
24 years old and was born with cerebral palsy. Because of my 
handicap and condition, my parents were able to apply for SSI 
on my behalf. SSI is Social Security Supplemental Insurance. 
When you receive SSI, you also qualify for Medicaid. My father 
was a Vietnam veteran and has been a truck driver for over 25 
years. My mom was a stay-at-home mom until I was about 8 years 
old. My older sister also has cerebral palsy. I have another 
sister who suffers from migraines and has lots of allergy 
problems. And I have another brother who is very athletic and 
has lots of allergy problems as well as manages to have minor 
injuries on a weekly basis. I guess you could say that my 
parents made us all active in church, school, and sporting 
activities. Of course, you also have to throw in all my 
doctor's appointments. I was seeing a pediatrician, a 
neurologist, an ophthalmologist, and my orthopedic surgeon. 
Then for a little extra spice, throw in my physical therapy, my 
sister's physical therapy, and my other sister's speech 
therapy. I guess you could say my mom was more as an attachment 
to the car instead of a stay-at-home mom. It's funny. 
    My father often worked jobs with no medical insurance which 
is where SSI and Medicaid came to the rescue. But I was over 
two before my parents even heard of SSI. Also, at that time 
there were more conditions to receiving SSI. My sister was 
deemed not handicapped enough to receive benefits. She only has 
mild CP. Your eligibility is determined on your parents' 
income. There were many years that I did not qualify for SSI 
because my father made too much money. That was the case when I 
was 14. My father had a good job with insurance, but my doctor 
felt--at that time I needed a major operation on my hips and 
legs, so I had my surgery as well as in a body cast for a whole 
month. And let me tell you something, ladies and gentlemen, it 
was not fun.
    Afterwards, I was in rehabilitation for a year and a half. 
But in September, my parents were informed that my medical 
benefits had been depleted back in January. Now, mind you, I 
had been going to therapy twice a week at $159 a session. You 
do the math. The next week the hospital canceled my therapy, 
and a week later the bills came rolling in. They wanted their 
money now. My parents were forced to file bankruptcy. When I 
turned 18, I was able to apply for SSI as an independent adult. 
My family helps me manage my money so that I can pay my own way 
in life. Next month, I will have yet another surgery. SSI and 
Medicaid are there to make it possible. I would not have--with 
every year I need new braces. They run almost $1,000 apiece. 
Every few years, I need a new walker. They cost between $200 
and $400. Add to that, I need new glasses every 2 to 3 years. 
Without SSI and Medicaid, I would not have these essential 
    My last testimony turns to you, the seniors. When you turn 
18, please register to vote and please vote responsibly. Do not 
allow your government to play dice with Social Security. The 
stock market is not a sure-fire thing. It is gambling at its 
finest. Do not gamble with Social Security. We want Social 
Security to be here strong and secure for all generations now 
and in the future. Thank you. [Applause.]
    Senator Reid. Steve, thank you very much.
    Mr. Samson. Thank you, Senator.
    Senator Reid. Steve is physically handicapped but not 
mentally handicapped. He's a brilliant young man, and I don't 
know how many of you recognize that he referred very rarely to 
his written statement. Most of it was simply from memory.
    Social Security and Medicare programs represent an economic 
compact among generations. This hearing today, senior to 
senior, deals with the seniors that are interspersed throughout 
the audience with seniors here at Foothill High School. Today 
its workers pay for the benefits that their parents and 
grandparents receive. We must all work together to ensure that 
today's workers and their families will be able to depend on 
Social Security and Medicare during this entire century. Too 
often those seeking to dismantle the Social Security/Medicare 
programs try to stir fear in the younger generations that 
greedy seniors are eating up all their hard-earned benefits. 
This kind of divisiveness will only hurt our country. There is 
something very right about each generation working together to 
protect the generation of seniors who have given so much to our 
    Before we take questions, I would like to take a moment to 
thank my staff, especially, Caroline Slutsker who works with me 
on aging issues. She's is here from Washington, along with the 
staff member from Senator Larry Craig of Idaho, who is the 
chairman of the aging committee. I am very happy that they have 
worked so hard, and they have come here. And their staff person 
is Janine Scott. And also the ranking member democrat on aging 
Senator John Breaux of Louisiana, they have allowed this 
hearing to take place for which I am very grateful. They 
weren't able to be with us today, but as I have indicated, 
Janine is with us and Phil Thevenet who both traveled here 
along with Caroline from Washington to help with this hearing.
    We are going to now take questions for the next 20 minutes 
from anyone in the audience. And as I have indicated, any 
questions that we can't answer, I will make sure that we answer 
them in writing.
    Caroline or Lelani, do we have the questions? Anyone has 
questions? I guess we didn't write anything. Anyone have any 
    Ms. Nielson. I'm Taylor Nielson. And all my grandparents 
have passed away; therefore, my parents are next in line for 
Social Security, and they still have 20 years before they 
retire. Do you think that their take on Social Security is, 
since they are still working and earning money, why is it that 
they are not able to invest a small part of their Social 
Security into a low risk investment into the stock market and 
make their money work for them, make their Social Security 
money work for them? That's before they retire.
    Senator Reid. Sure. Steve responded to that briefly. Let me 
try it, and then we will have members of the panel respond to 
it because it is a very typical question. There has been a lot 
of bad information passed out that this fund is about to go 
broke and it's a terrible program. In fact, Social Security, if 
we don't put a penny into Social Security, it will still be OK. 
Everyone will draw 100 percent of benefits for the next 40 
years. We need to do things make sure Social Security is strong 
and viable for more than 40 years. But we also hear from people 
all the time, why shouldn't I be able to invest my money in the 
stock market. Well, all you need to do is see what happened in 
the stock market in the last month. There is some people who 
have lost everything. In the past 60 days, there's been $5 
trillion lost in the stock market. These are people who have 
lost their homes, had their cars repossessed. People would have 
had their way of life changed as a result of the stock market.
    It used to be that the stock market was just for a certain 
small group of people to invest. But it appeared so easy that--
I watched on TV last night, a cab driver who has lost 
everything he had in the stock market. He is trying to 
determine if he should file bankruptcy, because he thought it 
would be easy. It is not easy. And Social Security has had a 
very strong growth pattern in the trust fund over the many 
years it's been in existence.
    And I personally believe that investing the money in the 
stock market would be very, very bad. And also I say this--and 
some don't like me to say this, but I say it anyway--my father 
was probably as smart as anybody in this room, but he had no 
education. He didn't graduate from the eighth grade. How could 
my father have invested money in the stock market? And the fact 
is, if your parents make a bad investment, when they turn 65, 
we are going to be responsible to take care of them anyway. So 
I think that we have to be very, very cautious how we invest 
these moneys in the Social Security Trust Fund.
    I would like to hear another panel member's response.
    Mr. Riemer. Sure. You know, it's a question I hear a lot, 
and I appreciate your asking. I would argue there is two 
reasons; one is sort of philosophical, one is kind of 
practical. Philosophically, Social Security is not supposed to 
be just for people who are lucky or know how to invest. It is 
supposed to provide a basic benefit that is there for everyone 
regardless of whether they can hire a financial manager or pick 
the right stock. It needs to be a level of protection that will 
keep them from falling into poverty. And that's just not--it's 
fundamentally inconsistent with the idea of investing our own 
Social Security. And, you know, you start with a little piece 
and then it gets to be a bigger piece and pretty soon it's a 
slippery slope until the whole thing is being investment 
    The second reason is very practical. And I urge you to 
think not about Social Security as just me and my family, but 
also about everyone else in this room. If your parents or you 
or anyone in this room were to pull their money out of Social 
Security so they could invest it, well, that would leave less 
in the common pool for everyone else, and it would take a 
little money out of the checks of everyone else in this room. 
And we wouldn't consider that to be quite fair, no. Everyone 
says, why can't I just make sure it only comes out of my 
benefit. You know, but, administratively we could never do 
that. But as the senator said, you know, you might make that 
point now and then you invested all your money in Amazon stock 
that you bought at 200 and now it's at 25. And who are you 
going to come knocking on the door to help you make up the 
    And I can assure you, as a society, we are never going to 
let people starve in the streets. So I don't think that's--I 
understand where the question comes from. And I think practical 
and philosophically, it wouldn't be in the right direction.
    Senator Reid. Other questions?
    Jackie, did you want to say something?
    Ms. Ridley. I was just going to say, speaking from someone 
who is older, it sounds like you could do a real good job of 
investing. And we have already gone over that. But having lived 
all these years, I can tell you that most people do not spend 
money on investments. They always need their money to live on. 
If you gave people the option of investing, most of them would 
find another way to spend that money. When it is put in Social 
Security, they don't have that option. They are forced to save. 
And I think that we have to consider that also. Maybe you would 
be able to save your money and invest it and do a good job, but 
when you go over the whole spectrum of people, most of them 
would not be able to.
    Senator Reid. Yes?
    Ms. Lo. Shawn Lo. I have heard some facts from government 
teachers and whatnot saying that the rate of interest on social 
security money is only 2 percent. You can do better at any 
local bank if you just take some of your money out and stick it 
in that, you can get 4 percent or 6 percent return on there. 
So, as investments go, why is it that everyone thinks that 
everybody is going to invest in the stock market rather than 
putting it in a savings or CDs or bonds or some such thing. The 
stock market is not the only viable option.
    Senator Reid. First of all, I say this with all due 
respect; your teacher is wrong about the rate of growth of 
Social Security. I would also just reiterate what Hans said 
that the fact is that, you know, you take your money out and 
somebody else takes their money out and you invest yours in 
land and you invest ours in a CD and someone else invests 
theirs in the stock market and pretty soon we don't have a 
Social Security Trust Fund. What we have now is a trust fund. 
Money is collected, put in to this fund drawing interest so at 
the end of the day, when people need help, as Steve as an 
example, or somebody like my grandmother who used to call her 
check her old age pension check. Call it fancy name, whatever 
you want to call it, but these--my grandmother's old age 
pension check gave her independence. She had eight children, 
and she was not in good health all the time I remember her. 
She's the only grandparent I knew. But what gave her the 
independence was that check. She didn't have to depend on our 
children because that check came with a certain degree of 
    And had you, and her, and him, and I invested our money 
some other way, my grandmother would not have had her old age 
pension check, and Steve would not have his monthly check to 
take care of things we have talked about.
    Of course, Hans?
    Mr. Riemer. Here is a good exercise I might ask you to try. 
Call up Charles Schwab or Payne Webber or any of the investment 
brokers and ask them for a product, an investment product that 
will give you the following benefits: First of all, the rate of 
return needs to stay the same whether the stock market goes up 
or down. Second of all, your contribution also needs to provide 
you with disability insurance, not only for you, but for your 
whole family and also life insurance, and not only for you, but 
for your whole family. Your contribution needs to provide, not 
only benefits to your grandparents right now, but also benefits 
to you when you retire. And then see what kind of rate of 
return that they tell you they can give you, if any. Probably--
well, realistically, in fact, such a product is not available 
anywhere in the market.
    So I think we want to think about Social Security as a 
broader range of benefits, and it is not easy to think about a 
rate of return.
    Second, as the Senator said, the 2 percent figure is simply 
    As I had mentioned earlier, even if we did nothing to fix 
Social Security, benefits for everyone in this room would be 
larger in real terms than the amount of money that you can pay 
toward rent, toward food, toward grocery bills, whatever, 
larger than they are thought. So for me, that's a good enough 
rate of return. I am comfortable with that.
    Senator Reid. We do have a number of individuals who don't 
want to stand and give us some questions:
    Are you going to--I appreciate that. We are not going to 
need any Yucca Mountain. We are doing our best to stop it. I'm 
sorry. I didn't see that question.
    ``I don't understand how my grandma, who is on Social 
Security, should be suffering the way she is. She's divorced 
and retired and only gets $180 a month. No one can survive on 
that. Also, my grandma got insurance so she can have a decent 
burial, so now they have lowered what she gets. Just recently, 
since they realized they were paying her $6 a month extra, so 
they took it out of one check and she got only $32 that month. 
The government is supposed to be taking care of our seniors, so 
what is going on?''
    Carla, would you respond to that?
    Ms. Sloan. Well, to begin with, I would like to suggest 
that perhaps the student see one of us after the program. Your 
grandparent is likely eligible for the SSI benefits. That will 
raise the income above $181. The reduction in income based on 
the change in income is part of the program. I think that's 
something that Steve spoke to very eloquently during his 
presentation; that it is a program that does have some means 
    In addition to the Social Security program, there are other 
programs that help senior citizens. Senator Reid has long been 
a great advocate of the Older Americans Act funding programs, 
and those are programs that provide for services such as Meals 
on Wheels, programs such as Adult Day Care or Respite Care. So 
that in addition to the benefit--your question is how is the 
government providing for senior citizens--in addition to Social 
Security and Medicare, which are more the financial services, 
there are also services available at the community level that 
can help to increase independence and dignity and help to 
stretch those limited dollars.
    Senator Reid. Make sure that you follow-up on Carla's 
suggestion. Grab either one of my staff, Lelani, where are you? 
Lelani, Carla, Jackie--and talk to them when this hearing is 
over, and they will see if they can do something to help your 
    I have a question--it's a little off track--it's about an 
appointment to the United States military academy. Again, 
Lelani can answer that for you.
    Questions from the audience. Yes?
    From the Audience. I would like to make a brief statement. 
I will be 84 next month, and I have Social Security now for 18 
years. Without it, it would have been difficult to meet 
expenses. In fact, even with it. But I'd like to also say that 
Senator Reid has been one of the greatest benefactors of his 
constituents here in Nevada through the Older Americans Act 
that he's worked on various committees and in being a real 
fighter for Social Security and Medicare. So I just have one 
question. Something called Medicare assignment, that's when you 
have Social Security and a supplemental. I have noticed this 
year the doctors are reticent to give you a Medicare assignment 
due to some changes in the Medicare program. I don't know 
exactly what they are.
    Senator Reid. Jackie, can you answer that?
    Ms. Ridley. Well, for those people who do not have a 
supplemental insurance, do not have any kind of HMO, in other 
words, all they have is Medicare, Medicare will pay 80 percent 
of what they call assignment. They have what they considered to 
be a fair price for a certain office call and procedure, 
whatever it is. And that's what they call assignment. Now, some 
doctors will accept assignment. If they do that, then you pay 
20 percent.
    Medicare is not free. We pay $50 a month for Medicare to 
start with. Then there are co-pays and deductibles, so you 
either have to get a supplemental insurance or, if you belong 
to a health maintenance organization, you still have to pay 
money for it. I think sometimes people get the idea that we get 
all these things for free. That's not true, but they are 
reduced prices.
    When you have assignments, that's what Medicare says the 
doctor should be charging for a certain procedure. Let's take 
an office call, for instance. He may say that he thinks it's 
worth $125, and Medicare says, no, it's really only worth $100. 
They will pay $80, you pay $20. But that doctor cannot charge 
you $125 because Congress says he cannot charge more than 15 
percent more than what Medicare allows. So he would be able to 
charge you an extra $15. You would pay $35 out of that bill. 
But he is restricted on the amount. Now, that's for doctor 
bills. So there are restrictions there.
    Medicare is trying to keep these costs in line so the 
doctors don't charge outrageous fees. If we didn't have 
Medicare, you might go to the doctor and he might charge $250 
for an office call. So we do have those protections. That is 
what they mean by assignment.
    Senator Reid. And it's set up so, they don't go along with 
that, they can't take any Medicare patients. Prevented from 
taking all the Medicare patients.
    Also, thank you very much for your kind compliments. There 
are so many programs we have worked on to help those people in 
their older years. We have a lot more to do. But the Old 
Americans Act is an example of things we have done to assist 
seniors; Meals on Wheels programs, we have all kind of therapy 
programs that are now part of what we are allowed to pay for. 
In fact, something as unusual as music therapy is something I 
worked on to allow Medicare to cover, so we have made some 
    This young man in the white shirt, please. You will have 
the last question.
    From the Audience. My name is Andrew, and I only want to 
ask, would you define yourself as a socialist?
    Senator Reid. I'm sorry?
    From the Audience. Would you define, would you see yourself 
as a socialist?
    Senator Reid: Would I see myself as a socialist? Well, from 
your very slight accent, it appears that you have some exposure 
in some other country to socialism. Here in America, we have 
had very limited exposure to socialism. In Nevada as an 
example, you will be surprised to know that in 1920 in the 
Presidential election in that year--I'm sorry in the senatorial 
election of that year, we had a candidate that was a socialist 
that ran. They were--the socialist at that time were based in 
Fallon, Nevada. Socialists didn't do very well. Socialists 
haven't done very well in America. But I would describe myself 
as far from being socialist. I am a member of the Democratic 
party. I think I would be described as moderate within the 
Democratic party as all the voting records that they publish 
indicate that I am.
    I think one of the strengths of America is our two-party 
system. We are the envy of much of the rest of the world. To 
form a government in Israel, or Italy, or England, they have a 
lot of difficulty, many times, because they have splinter 
parties. Before you have one more than 50, you have to make a 
deal sometimes, one would say, with the devil, and it makes it 
very, very difficult. In America, we don't have that. We have 
two parties, and it's worked out very well over the history of 
this country. And when there is a new election, the transition 
is very smooth even when there is a hotly contested election 
like the one we had this year where the winner got less votes 
than the loser. And when we had all the problems that we had in 
Florida, there wasn't a single arrest, there was nobody beaten 
up, no fires set. And when Bush was sworn in as President, it 
was just very smooth. That's because we are a nation based on 
law, not on what men think the law should be.
    So, I appreciate your question very much. And I hope I 
answered it well.
    Boys and girls, ladies and gentlemen, the five of us here 
have really enjoyed being here. This is kind of an experiment, 
this senior to senior program. The seniors here, I believe 
without question, understand the importance of Social Security, 
Medicare, Medicaid. I am not sure that you young people do. I 
hope that this hearing will give you a better feel of Social 
Security and why it is important for your parents and 
grandparents, why it is important for people like Steve who for 
reasons we don't really understand is handicapped and has 
relied on this program to allow him to lead a normal life. He 
is involved, as I have indicated, in many things. He doesn't 
complain much about problems he has. He mentioned to you very 
briefly that he has some surgery to go through. We were worried 
that he wouldn't be able to come here today in preparation for 
that surgery. But he told us he will put off the surgery. It's 
important enough to me to communicate with young people about 
the importance of this program that I will put off my surgery. 
And as he indicated, this surgery, as difficult as it will be, 
is easier than some of surgeries he has been through before. He 
will not have a full body cast this time, only a half body cast 
for 3 or 4 months.
    So I hope each of you young people go away from this class 
today understanding the Social Security is program that makes 
America the greatest country that it is.
    Thank you very much for being here. This committee stands 
    [Whereupon, at 10:57 a.m., the committee was adjourned.]