    [Senate Hearing 119-39]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 119-39

                           MAKING WASHINGTON WORK FOR
                            SENIORS: FIGHTING TO END
                      INFLATION AND ACHIEVE FISCAL SANITY

    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                                JANUARY 29, 2025

                                   __________

                               Serial No. 119-02

             Printed for the use of the Special Committee on Aging

             GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT

            Available via the World Wide Web: http://www.govinfo.gov

                              ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
     59-988 PDF         WASHINGTON : 2025

                           SPECIAL COMMITTEE ON AGING

                         RICK SCOTT, Florida, Chairman

    DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York
    JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts
    TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona
    RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia
    ASHLEY MOODY, Florida                ANDY KIM, New Jersey
    JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland
                                  ----------
                    McKinley Lewis, Majority Staff Director
                    Claire Descamps, Minority Staff Director
                             C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

    Opening Statement of Senator Rick Scott, Chairman................     1
    Opening Statement of Senator Kirsten E. Gillibrand, Ranking
      Member.........................................................     3

                               PANEL OF WITNESSES

    Jeff Ferry, Chief Economist Emeritus, Coalition for a Prosperous
      America, Alexandria, Virginia..................................     4
    Alex Lawson, Executive Director Social Security Works,
      Washington, DC.................................................     6
    Tarren Bragdon, Chief Executive Officer, Foundation for
      Government Accountability, Naples, Florida.....................

                                                                          8
    E.J. Antoni, Research Fellow, Grover M. Hermann Center for the
      Federal Budget, Washington, DC.................................     9

                                    APPENDIX
                          Prepared Witness Statements

    Jeff Ferry, Chief Economist Emeritus, Coalition for a Prosperous
      America, Alexandria, Virginia..................................    36
    Alex Lawson, Executive Director Social Security Works,
      Washington, DC.................................................    38
    Tarren Bragdon, Chief Executive Officer, Foundation for
      Government Accountability, Naples, Florida.....................

                                                                         41
    E.J. Antoni, Research Fellow, Grover M. Hermann Center for the
      Federal Budget, Washington, DC.................................    46

                           Statements for the Record

    Chairman Rick Scott Statements for the Record....................    60

                           MAKING WASHINGTON WORK FOR

                            SENIORS: FIGHTING TO END

                      INFLATION AND ACHIEVE FISCAL SANITY

                                  ----------

                          Wednesday, January 29, 2025

                                            U.S. Senate
                                     Special Committee on Aging
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:30 p.m., Room
    106, Dirksen Senate Office Building, Hon. Rick Scott, Chairman
    of the Committee, presiding.
        Present: Senator Scott, McCormick, Tuberville, Johnson,
    Moody, Husted, Gillibrand, Kelly, Warnock, Kim, and Alsobrooks.
        Also present: Senator Crapo

                     OPENING STATEMENT OF SENATOR
                          RICK SCOTT, CHAIRMAN

        The Chairman. The Senate Special Committee on Aging will
    come to order. I want to thank everybody for being here today.
    I'd like to recognize our new committee members who are
    participating in their first hearing today. I'm thrilled to
    have my fellow Floridian, Ashley Moody, and Jon Husted here
    from the great State of Ohio join the Committee.
        Inflation, which is caused by massive government spending,
    has been a serious issue plaguing American families and their
    seniors over the past four years. In today's hearing, you will
    hear me talk about the causes and impacts of inflation also,
    why I'm very optimistic about the future and the opportunity to
    bring fiscal sanity back to Washington and solve the problems
    facing seniors.
        Let's be clear how we got here, over the past four years,
    while the U.S. population has grown just two percent, federal
    spending has increased by 53 percent, and all that spending has
    added more than eight trillion to America's national debt,
    which today is more than eight or thirty-six trillion. This
    kind of spending just isn't sustainable. If nothing changes,
    our Federal Government is on track to add a trillion dollars to
    the federal debt about every 100 days or so.
        The cost of this debt is another massive problem. Right
    now, more than one trillion of the money that hardworking
    Americans paying taxes each year goes to paying the interest on
    the federal debt. Having a trillion dollars in annual interest
    expense is not sustainable either. Every dollar we are spending
    on interest is a dollar that isn't funding an important program
    seniors rely on or going toward the Federal Government keeping
    its promises to provide a return on investment of American
    taxpayers. Just think about if that money was going into
    propping up Medicare and Social Security.
        Those numbers are massive and difficult to even wrap your
    mind around, but here's what every American, and especially
    every senior understands very well: the inflation caused by all
    this government spending is out of control and it has to be
    stopped. Any of us that went through a campaign this last cycle
    knows the impact it's had on our seniors.
        Since January 2021, overall inflation is up over 20
    percent, but when you look at the specific things that nearly
    every American spends their money on, prices are way up more
    than 20 percent. Here's just a few examples: Eggs up 160
    percent, coffee's up 41 percent, oranges up 33 percent, energy
    cost up 32 percent, new car prices up 29 percent, and household
    debt is up more than 21 percent, because our families just
    can't keep up.
        According to research done by the Joint Economic Committee,
    the average American household needs over $13,000 more per
    year, than they did four years ago just to maintain their same
    standard of living. For seniors, many of whom are on fixed
    income, skyrocketing prices are not simply an inconvenience,
    but a threat to their ability to retire, make ends meet, and
    for too many, keep food on the table. That is unacceptable. It
    should never happen in our country.
        Like a lot of us, I grew up in a family that didn't have a
    lot of money. I watched my parents struggle to find work and
    provide for our family. That's why this issue is very important
    to me, and here's why I'm optimistic about the future: I know
    that with President Donald Trump, we will all work together,
    Republicans, Democrats, and Independents, which is what it
    takes to turn this country around and get our fiscal house in
    order.
        This isn't a partisan issue. I know that every one of us
    here in the Senate has heard countless stories from folks in
    our states about the pain caused by inflation. I'm optimistic
    about getting this done because I know it can happen. I know it
    because I was able to turn around Florida when I became
    Governor back in January 2011. We had lost 800,000 jobs, we
    hadn't balanced the budget, we had growing debt, and we had a
    shrinking population.
        When I left office in 2018, we cut taxes a hundred times,
    slashed more than 5,000 burdensome regulations to make
    government more efficient, paid down over ten billion of our
    state debt and private businesses, not government, and added
    1.7 million new private sector jobs, and our revenue sky
    skyrocketed.
        When government is efficient, the economy grows, and tax
    revenues increase so we can keep our promises to seniors and
    all Americans who work hard, pay their taxes, and deserve a
    government that is accountable to them. We did in Florida; we
    can make this turnaround happen in Washington too.
        My hope in highlighting these issues is to begin a
    productive dialog with everyone in this room, and it takes
    Republicans, Democrats, and Independents to work on this, so
    that we can fix problems to promote good ideas that stop
    inflation and make Washington work for our seniors. It's also
    why I'm excited to be part of the DOGE Caucus here in the
    Senate and work with President Trump and Elon Musk to make sure
    we get back on track.
        I look forward to working with Ranking Member Gillibrand
    and all our colleagues in this Committee to discuss ways to
    make Washington work for America's seniors, which starts with
    getting our fiscal house in order so the Federal Government
    keeps their promises to elderly Americans, ensure they can
    enjoy their golden years with a peace of mind of having fiscal
    sanity and also gives us every opportunity to make sure we can
    preserve all the benefits of Medicare and also all the benefits
    of social security, which is important to everybody up here.
        I'd now like to recognize Ranking Member Gillibrand for her
    opening remarks.

                     OPENING STATEMENT OF SENATOR
                 KIRSTEN E. GILLIBRAND, RANKING MEMBER

        Senator Gillibrand. Thank you, Chairman Scott, for calling
    today's hearing. These are extremely timely topics. As the
    Aging Committee, it's our role to amplify the voices of older
    adults and seek to understand and address the problems that
    they're facing every day. As such, I think it is relevant that
    one of our first conversations on this Committee is about
    financial stability.
        Many Americans have faced increased costs over the past few
    years, from the cost of our groceries, such as eggs and meat
    and bread and milk to our cost of medicine--key lifesaving
    medicines. Older adults are not exempt from these price
    increases, and by some accounts, they're getting hit even
    harder.
        Older adults living on fixed incomes from the retirement
    accounts and social security benefits can't afford the higher
    costs they have to pay for food and for housing. The truth is,
    much of the inflation we are facing today can be traced back to
    either supply chain shocks triggered by the COVID-19 and global
    instability, or to corporate profit gouging, just wanting to
    make more money, or like we've seen with the price of eggs
    avian flu.
        The Federal Reserve accounted for all the inflation in the
    first year of the pandemic recovery where these shocks are from
    supply chain and COVID.
        However, I think this Committee should be focused on one
    thing. How do we help older adults who are struggling to afford
    those essentials today? I first must address the recent
    attempts by the Trump Administration to block federal funding.
    These freezes are very serious. The Trump Administration has
    violated the law and released an order that has put all
    Americans and especially older adults at risk.
        The order, which in a chaotic move, has now been reversed
    on paper, but not in actuality, is jeopardizing our funding
    that supports medical research, our law enforcement officers,
    our firefighters, our community health centers, our nutrition
    programs, the SNAP benefits that a lot of seniors rely on,
    including Meals on Wheels, which as you know, might be the only
    hot meal a senior might get in a day and might be the only
    visitor that week and potentially Medicaid.
        We can't have a meaningful conversation about supporting
    older adults when the Administration is doing something so
    disruptive and so harmful to our seniors.
        Social Security, as we know, is a lifeline for older adults
    across this country. Estimates show that social security keeps
    16.3 million older adults out of poverty. We need to be working
    on how to strengthen social security benefits and make sure
    that the monthly benefits are received adequately cover the
    cost of living, Medicaid, Medicare, the SNAP program, are
    critical to the survival of our seniors.
        As a committee, I'm looking forward to making sure our
    older adults have access to the food, the medicine, the medical
    care, and other financial support that they need. I'm very
    excited about our witnesses today and for this hearing to begin
    to have this discussion. Thank you, Mr. Chairman.
        The Chairman. Thank you, Ranking Member Gillibrand. Now,
    let me introduce our first witness. Mr. Ferry is the Chief
    Economist Emeritus at the Coalition for Prosperous America. He
    holds economic degrees from Harvard and the London School of
    Economics. On the course of his career, Mr. Ferry has advocated
    for strengthening the American economy and protecting American
    workers and industry. With decades of expertise in trade
    manufacturing economic policy, he's been a strong voice in how
    we can rebuild and sustain a strong competitive economy. Thank
    you for being here, Mr. Ferry.

                STATEMENT OF JEFF FERRY, CHIEF ECONOMIST

                  EMERITUS, COALITION FOR A PROSPEROUS

                     AMERICA, ALEXANDRIA, VIRGINIA

        Mr. Ferry. Thank you, Senator, and thank you for the
    opportunity, Senator, and Ranking Member. The founder of Soviet
    communism, Vladimir Lenin, is said to have declared that the
    best way to destroy the capitalist system was to debauch the
    currency. By a continuing process of inflation, governments can
    confiscate, secretly and unobserved, an important part of the
    wealth of their citizens.
        By this method, they not only confiscate, but they
    confiscate arbitrarily, and while the process impoverishes
    many, it actually enriches some. Lenin was certainly right.
    There is no subtler, no surer means of overturning the existing
    basis of society than to debauch the currency. The process
    engages all the hidden forces of economic law on the side of
    destruction.
        That's a quote from the great British economist, John
    Maynard Keynes. Many people think that Keynes was pro
    inflation, but that's not true. Keynes lived through the 1920's
    and saw what hyperinflation did to Poland, Russia, Austria, and
    especially Germany, where the hyperinflation of 1923 shook the
    faith of the German people and democracy with disastrous
    results. Kane's advocated balanced government budgets except in
    times of serious recession or depression.
        The fundamental cause of inflation in an economy is an
    excessive demand over supply. Excessive demand can be caused by
    a number of things, including an excessive government budget
    deficit, too much money printing or wage push inflation, which
    is accommodated by the government.
        In the U.S., in 2021 and 2022, inflation took off reaching
    a high of nine percent in 2022, the highest rate since the
    early 1980's. The cause of this inflation was excessive demand,
    colliding with restrained supply. As we all recall, the supply
    of goods from Asia was severely restrained in 2020 by the
    worldwide COVID pandemic and then the backlog at all the major
    ports.
        On the demand side, the Federal Government enacted three
    separate measures to support people during the Covid pandemic.
    The third of those, the $1.9 trillion American rescue plan, was
    too much money at precisely the wrong time, when the country
    was going back to work and people were rushing out to use their
    savings to purchase goods. That led to a surge in the price of
    goods, everything from the food at the grocery store, to home
    appliances to new cars.
        These forces led inflation to reach nine percent in 2022.
    Could this have been prevented? Yes. On the demand side, the
    American Rescue Plan should have been much smaller. On the
    supply side, the situation is more complicated. Clearly, the
    U.S. needs more domestic sources of manufactured goods, and
    that's something I've been working hard on for several years.
    Nor was the nine percent headline rate the whole story. The
    prices of some categories of consumer goods shot up by much
    more.
        For example, in December 2022, the price of eggs was up 59
    percent year on year, the price of margarine up 44 percent,
    airfares up 28 percent, and even the humble lettuce was up 25
    percent. These high inflation rates hurt many groups,
    especially seniors.
        Many seniors live on a fixed income. The average social
    security payment in the U.S. is now $1,976 a month. According
    to a study by University of Massachusetts economists, that
    covers just 68 percent of basic living expenses for an elderly
    single person who rents their home.
        According to the National Council on Aging, 14 percent of
    people over 65 live in poverty today. They say aging with
    dignity should be a right for all of us, and I think that's
    right. Other expenses paid by the elderly continue to rise.
    Seniors still pay significant copays for prescription drugs,
    and studies have shown that a significant percentage of seniors
    are doing without these drugs because they can't make ends
    meet.
        Home healthcare services unrelated services, were up 9.5
    percent in December 2024. That's on top of the inflation of
    2021 and the and 2022, so what can be done about inflation?
    Most important, we need to get the federal budget deficit down.
    The best way to think about inflation is are we as a nation
    consuming more than we produce or are we keeping within our
    budgets?
        For over 40 years, this Nation has run trade deficits,
    meaning we borrow billions of dollars from abroad to consume
    more than we produce. For 24 consecutive years the Federal
    Government has run a large budget deficit, meaning the Federal
    Government spends billions and now trillions of dollars more
    than it takes in revenue.
        A budget deficit of seven percent of GDP is far too high.
    We need to cut government spending aggressively. I applaud
    incoming Treasury Secretary Scott Bessent's three percent
    target for the federal deficit, that will ease inflationary
    pressures and reduce interest rates.
        Supply side reforms can also make a significant difference
    and make prices less rigid and less likely to rise. We need to
    make it more economic for people to go to work so we can
    increase the supply of labor and restrain the cost of labor,
    and we can do this by fixing the tax and welfare system to
    provide more incentives.
        Finally, we import far too much. Restraining imports will
    stimulate domestic production, helping to improve the supply
    demand balance. Thank you, Mr. Chairman.
        The Chairman. Thank you, Mr. Ferry. Now I'd like to
    recognize Ranking Member Gillibrand to introduce the next
    witness.
        Senator Gillibrand. Thank you, Chairman Scott. I want to
    introduce our second witness, Mr. Alex Lawson. Mr. Lawson is
    the Executive Director of Social Security Works, where he works
    to advocate on behalf of Americans for Social Security,
    Medicare, and Medicaid. Thank you for being here.
        Mr. Lawson.

              STATEMENT OF ALEX LAWSON, EXECUTIVE DIRECTOR
                 SOCIAL SECURITY WORKS, WASHINGTON, DC

        Mr. Lawson. Thank you so much. Good afternoon, chairman
    Scott, Ranking Member Gillibrand, and distinguished members of
    the Committee.
        As Executive Director of Social Security Works, I travel
    across this country and speak with legions of primarily
    seniors. Almost to a person, they are concerned with rising
    costs. These rising prices hurt older Americans endangering
    their ability to afford food, housing, prescription drugs, and
    they want Congress to take action.
        Across the country, there is bipartisan agreement on what
    people want: cracking down on corporate price gouging,
    improving social security's annual cost of living adjustments,
    and reducing the price of prescription drugs by expanding
    Medicare's power to negotiate. These are actionable policies
    that will help older Americans adjust to inflation caused by
    global supply chain shocks and greedflation--which has
    contributed to rising costs over the past few years.
        In fact, the Federal Reserve found that corporate profits
    accounted for all of the inflation in the first year of the
    pandemic recovery and 41 percent of inflation overall in the
    first two years of the post pandemic recovery.
        There is also bipartisan agreement across this country
    about what people don't want in response to rising prices.
    Republicans, Independents, Democrats, all agree that not one
    single penny should be cut from Social Security, Medicare,
    Medicaid, and other benefits. There is absolute bipartisan
    agreement among people everywhere in this country except here
    in Washington DC.
        Here you have a Republican majority who announced proposals
    to slash trillions of dollars from Medicaid, our country's
    largest provider of long-term care. Over nine million Americans
    over 65 rely on Medicaid. Cuts to Medicaid would force these
    seniors and their families to pay enormous out-of-pocket costs
    for long-term care, money they don't have.
        It would force millions of caregivers, most often women out
    of the workforce. This would make it far harder for American
    families to pay their monthly bills. In addition, these
    proposals also include cuts to SNAP benefits, which 4.8 million
    older Americans rely on to put food on the table.
        Just last week, the new Trump Administration repealed an
    executive order from President Biden that directed the Federal
    Government to find ways to lower drug prices. The Trump
    Administration is already favoring big pharma at the expense of
    seniors and working families. There have also been calls by
    Republicans to repeal the Inflation Reduction Act, which gives
    Medicare the power to negotiate lower prices on key
    prescription drugs. This could force many seniors to cut their
    life sustaining medication in half due to higher costs. Many
    others would face a terrible choice between buying food,
    filling their prescription, or paying their heating bills.
        Even social security, the most popular and effective
    program in America is not safe. Last month, a Republican
    representative who's a member of the DOGE Caucus like Chairman
    Scott, told me personally that there will be some cuts to
    Social Security and Medicare. Let me be clear, these proposed
    cuts will do nothing to lower costs for average Americans or
    older adults; these cuts are being proposed to offset the cost
    of tax handouts for billionaires and corporations, who've been
    shown to be responsible for rising costs themselves.
        This Congress should value the interest of older adults
    above the wealthiest Americans, and I hope that the Aging
    Committee will lead that charge.
        Consider this: If an older adult cannot afford their drugs
    and groceries at the average social security benefit of about
    $1,900 a month, its absolute fiscal insanity to think the
    solution is to cut their income, to take away their healthcare,
    to destroy Medicaid and force them to pay the average long-term
    care costs of around $100,000 a year. If they can't afford the
    price of eggs, it's absolute fiscal insanity to believe they
    can afford them better without SNAP benefits.
        I'm here to deliver a message to the members of this
    Committee from older Americans. Across this country they say,
    you don't lower prices by stealing people's healthcare. You
    don't lower prices by giving giant tax cuts to billionaires and
    price gouging corporations, and you absolutely don't lower
    prices by reducing the social security and other benefits that
    adults have worked their entire lives to earn. Thank you very
    much.
        The Chairman. Thank you, Mr. Lawson. Just so you know, I
    don't actually know anybody that wants, that thinks we ought to
    be cutting the benefits of Medicare Social Security. It's a big
    deal in my state.
        Next I get to hear from my home State of Florida. I'd like
    to introduce Tarren Bragdon. Mr. Bragdon is the Chief Executive
    Officer of the Foundation for Government Accountability. He
    holds a Bachelor of Science degree in Computer Science from the
    University of Maine and a Master of Science of Business from
    Husson university.
        Prior to joining FGA, Tarren served as the Chief Executive
    Officer at the Maine Heritage Policy Center, he decided it was
    way too chilly. He also served in the Maine House of
    Representatives and remains the youngest person elected to the
    Maine legislature serving from 1996 to 2000. Through his
    organization, Mr. Bragdon has been a steadfast advocate for
    common sense policies that empower individuals and families to
    achieve greater economic independence.
        Mr. Bragdon.

              STATEMENT OF TARREN BRAGDON, CHIEF EXECUTIVE

                   OFFICER, FOUNDATION FOR GOVERNMENT

                    ACCOUNTABILITY, NAPLES, FLORIDA

        Mr. Bragdon. Chairman Scott, Ranking Member Gillibrand and
    members of the Committee, thank you so much for this
    opportunity.
        The inflationary legacy of the Biden Administration has
    harmed all Americans, but especially seniors, and sadly, this
    inflation in part is a direct consequence of three major policy
    failures. One, massive red tape, two, increased welfare, and
    three, few work requirements in welfare. This trifecta of bad
    policy has reaped big inflation.
        Let me quickly talk about each of them. Number one, massive
    red tape. Former President Biden issued more costly regulations
    than any President in modern U.S. history, finalizing more than
    300 economically significant regulations during his first term,
    40 percent more than President Obama's first term. In contrast,
    President Trump delayed more than 1500 regulatory actions,
    finalized more than 500 deregulatory actions and lowered costs
    by more than 200 billion during his first term, so why does all
    this matter?
        Well, for every 15 percent increase in federal regulations,
    the cost of consumer goods and services increases by one
    percentage point. That's why President Trump's ten for one
    deregulation target would directly lower red tape driven
    inflation, and it's not just about the federal spending from
    increased regulations. More regulations mean more compliance
    costs by businesses which are ultimately passed along to
    consumers through price hikes. Overall, the Biden
    Administration expansion of the regulatory state added 1.7
    trillion worth of new costs to taxpayers over a decade.
        Number two, increased welfare. In 2021, the Biden
    Administration pushed through a 27 percent increase in food
    stamp benefits. After failing to receive congressional approval
    for increase in the Thrifty Food Plan, the Biden Administration
    unilaterally used guidance to increase this or to create this
    $250 billion welfare expansion, the largest in the program's
    history, so why would an increase in government welfare
    increase inflation for all Americans?
        Well as government spending on food stamp increases,
    purchases made by food stamp recipients drive up grocery prices
    through the natural laws of supply and demand. In fact,
    researchers at the World Bank reviewed more than a decade of
    retail data to measure this impact, and here's what they found.
    That food prices increase by one percent for every 12.5 percent
    increase in food stamp spending, so you have that 13 to one
    ratio in the increase in welfare spending, very similar to that
    15 to one ratio I talked about with more red tape driving
    higher inflation.
        Number three, few work requirements in welfare. The Biden
    Administration's food stamp expansion not only spiked grocery
    prices, but it also led to millions of Americans choosing
    welfare over work. In fact, an estimated 2.4 million Americans
    declined employment due to this increase. In addition, the
    Biden Administration pushed several pro welfare policies.
    Everything from rescinding Medicaid work requirements to
    gutting program integrity and anti-fraud provisions to
    expanding exemptions and waivers of food stamp work
    requirements.
        The number of able-bodied people on Medicaid and food
    stamps is higher today than it was when the unemployment rate
    was near 15 percent during the COVID lockdowns, and in fact,
    these two programs alone are expected to cost taxpayers close
    to $9 trillion over the next decade.
        More spending in Medicaid and food stamps on able-bodied
    adults who are working age means less resources available in
    the safety net for seniors and those with disabilities. In
    fact, over 60 percent of able-bodied adults on Medicaid or food
    stamps do not work at all, and as a result, our labor force
    participation rate is lower than it was before COVID.
        My written testimony outlines nine key policy solutions to
    reverse this trend. Everything from congressional oversight of
    costly regulations to increase program integrity and expanded
    work requirements. Thank you for the opportunity to testify,
    and I'm happy to answer any questions.
        The Chairman. Thank you. Finally, I'd like to introduce
    E.J. Antoni. Mr. Antoni is an economist and research fellow at
    the Heritage Foundation's Grover Hermann Center for the Federal
    Budget. His work has been featured with a variety of news
    outlets including Daily Caller, Fox News and Fox Business, Wall
    Street Journal and National Review.
        Mr. Antoni earned his master's and doctorate in economics
    from Northern Illinois and his contributions to help shape
    public discourse on economic policy and provide valuable
    insights for policymakers and the public alike. Thanks for
    being here.

               STATEMENT OF E.J. ANTONI, RESEARCH FELLOW,

                    GROVER M. HERMANN CENTER FOR THE

                     FEDERAL BUDGET, WASHINGTON, DC

        Mr. Antoni. Chairman Scott, Ranking Member Gillibrand,
    members of the Committee: Thank you for the invitation to
    discuss with you today the difficulties faced by seniors
    stemming from the last four years of excessive government
    spending and its subsequent inflation. I'm a public finance
    economist, the Richard F. Aster fellow at the Heritage
    Foundation, and a senior fellow at Unleashed Prosperity.
        Under the Biden Administration, seniors in America suffered
    terribly because of failed left-wing ideology masquerading as
    public policy. Four years of Washington's prodigal spending
    drove up the national debt by $8.5 trillion while the
    treasury's cash balance was reduced another $1 trillion. That's
    a net overspending of $9.5 trillion or one quarter of the
    entire national debt in just four years.
        This runaway spending was primarily financed by the Federal
    Reserve, literally creating money for the treasury to spend. By
    flooding the economy with freshly printed dollars the Fed
    diluted the value of the currency, like pouring water into
    wine, the total volume of liquid increase, but not the amount
    of alcohol. Likewise, the total quantity of dollars increases,
    but not the value for which those dollars could be exchanged.
    We call this monetary phenomenon inflation, and it functions as
    a hidden tax, transferring wealth from savers and wage earners
    to the government.
        In just four years, the Biden Administration and its
    congressional allies managed to effectively confiscate one
    fifth of the value of all dollars in existence, a devastating
    tax on Americans, especially seniors.
        Prices on average rose more than 20 percent according to
    official government statistics, but the cost of many
    necessities rose much more. Many food staples saw prices
    increase 40 percent. The cost of home ownership doubled and it
    will cost you 30 percent more to heat your home this winter.
        The four-decade high inflation also prompted the fastest
    rise in interest rates in 40 years. This has been a deadly
    combination for seniors in two distinct ways. First, the
    stratospheric cost of living forced many Americans to fall
    behind on their bills and rely on debt to make ends meet.
    Outstanding credit card balances have exploded to $1.2
    trillion, even as the average interest rate on those credit
    cards is near a record high today.
        Now, for the first time ever, Americans are paying over
    $300 billion annually just in finance charges on credit card
    debt, which doesn't include a dime toward paying down those
    balances. Seniors have been particularly susceptible to this
    downward debt spiral because they are disproportionately on
    fixed incomes with little room in their budget for higher
    costs, but the rapid rise in both inflation and interest rates
    has also decimated seniors? retirement savings, which tend to
    be in fixed income assets.
        Under the Biden Administration's--legacy, the bond market
    had its worst three and a half year run in at least a century.
    At the same time, this asset class has significantly
    underperformed. Retirees also need 20 percent more savings than
    just four years ago to account for the current cost of living
    crisis.
        For the average American senior, who was planning on
    retiring today, he or she will have to work an additional six
    years to recoup these inflation adjusted losses. Unfortunately,
    the big spenders in Congress have plenty of apologists who will
    blame inflation on anything, but its cause, which is excess
    government spending.
        One of the politicians' favorite scapegoats was and still
    is, business. We can dispense with the parochial notion that
    inflation is caused by the boogeymen of corporate greed or
    price gouging. Did business magically become greedy precisely
    when Biden took office and went on a spending spree? Prices
    aren't higher because margins are flat, rather, prices are
    higher because the dollar has gone lower. In fact, the Biden
    Administration's own data proved this point, cost paid by
    businesses rose even faster than cost paid by consumers over
    the last four years, businesses have merely passed their cost
    increases on to consumers.
        Inflation comes from Washington DC, and whenever the
    federal budget increases, the family budget decreases, and the
    inflationary deficit isn't from a lack of revenue, tax receipts
    today are at or near a record high by any measure, whether
    percentage of GDP or inflation adjusted dollars, et cetera. We
    don't have a revenue problem; we have a spending problem. The
    current Fiscal Year is off to its worst start ever, even worse
    than the blowout spending year of the pandemic.
        Despite the hole that Biden has dug for seniors, President
    Trump is offering them a way out. By reigning in government
    spending, we can finally bring inflation to heal. Likewise,
    expanding energy production will reduce the cost of living
    while also raising additional tax revenue. Common sense
    deregulation will also produce these positive effects.
    Additionally, pro-growth policies that incentivize work will
    actually increase social security and Medicare tax receipts,
    providing much needed breathing room for these programs which
    are approaching insolvency.
        If this Congress genuinely wants to help seniors, it should
    join President Trump in shrinking the burden that the
    government places on its citizens, whether that's explicit
    taxation, the hidden tax of inflation, burdensome regulation,
    or another form of government overreach. If Congress wants
    seniors to continue suffering, then by all means keep in place
    the Biden policies that got us here. Thank you again for your
    time. I look forward to answering your questions.
        Senator Johnson. Thank you, Mr. Antoni. If Senator Kim's
    ready, you ready to go for questions? I'll defer mine. Okay.
    Senator Kim?
        Senator Kim. Yes, sure. Happy to jump on in. Mr. Lawson, I
    wanted to just kind of pick up something you had talked about,
    you know, just the challenges that seniors face when it comes
    to long-term care. You know, this is something that my family's
    been struggling with as my father's having real challenges of
    decline.
        I'll be honest with you, I've heard about this problem and
    the sheer cost of that from a lot of people in New Jersey, but
    when you go through it personally, it just was a whole other
    level just to see, you know, how much--in New Jersey, if people
    going for assisted living or other types of facilities, we're
    talking to upwards $10,000 a month or more out of pocket and,
    it's either that or, people having to basically bankrupt
    themselves until they're eligible for Medicaid.
        I guess this is something that I hope we can as a
    committee, be able to engage in and try to address, but I guess
    I just wanted to just hear from you, you know, what are the
    things that you would recommend this Committee diving in on?
    How can we use this opportunity to really not just hear those
    problems, but understand that, just the sheer trajectory of
    crisis that we're in as a country as a whole, but then just how
    devastating this is for families right now?
        Mr. Lawson. It's such an important question. Thank you for
    asking, Senator. I think the most important thing to talk about
    when it comes to long-term care is to understand that we do not
    have a long-term care system in this country. Because of that,
    people are forced to rely on Medicaid, which is not in and of
    itself a long-term care system.
        What you talked about, you know, people having to bankrupt
    themselves, they call it a spend down. That's so that they can
    qualify to have their long-term supports and services or long-
    term care covered, because otherwise the families would be
    bankrupted. They would not be able to afford the average cost--
    in the whole country is a hundred thousand dollars, so the
    finding in New Jersey of $10,000 a month is not at all out of
    line with what people would face.
        I say that emphatically because there are proposals that
    are written down by members of the Republicans in Congress to
    cut $2.3 trillion from Medicaid, and let me be clear of what
    that would do. It would destroy Medicaid. It wouldn't do
    anything to fight inflation. It wouldn't bring anybody's prices
    down. It would just steal people's healthcare and it would
    decimate the ability of millions of people to afford long-term
    care.
        I really urge this Committee to make that really clear,
    that when you're talking about Medicaid, you're talking about
    the largest provider of long-term care in this country.
        Senator Kim. Yes, and really you see so few other options
    that are out there besides, again, out of pocket, and so, I
    absolutely agree with you. We see this being critical when it
    comes to the role that Medicaid plays and again, I've seen that
    up close and personal.
        What other steps can we be taking if we're certainly going
    to--I'm certainly going to try to fight to make sure we're
    preserving Medicaid and I hope my colleagues are as well, but
    even that doesn't solve the problem, right? That's trying to
    prevent even further backsliding, right?
        What else should we be looking at to address? I know there
    have been proposals to try to bring long-term care into
    Medicare. There are other types of ideas that are out there,
    can you gimme a sense of just some of the other things that
    experts are talking about that we can try to consider here?
        Mr. Lawson. Absolutely. The idea of bringing long-term care
    as a benefit under Medicare as an extremely good idea. Medicare
    does an incredible job providing services and restraining
    excess cost growth. It does a much better job than the private
    alternatives in insurance and especially in long-term care.
        What we've seen is a growing rollup of the long-term care
    nursing home system by private equity, so this is by money, who
    look at a nursing home and they don't see it as a place to
    provide care in the critical end of life period for people.
    They see the end of a person's life as a time to squeeze as
    much money out of them and their family as possible, so really
    investigating the role that private equity has in profitizing
    long-term care and reversing that trend is something that I
    think is also critical.
        Senator Kim. Well, thanks so much. I yield back. Senator
        Senator Johnson: Senator McCormick
        Senator McCormick: Thank you, Senator. Seniors in
    Pennsylvania are hurting thanks to the reckless spending,
    including five trillion of new spending under President Biden.
    They've had to deal with runaway inflation. They've seen
    purchasing power of fixed income evaporate because of bad
    policy decisions here in Washington, and they've seen the value
    of their retirement accounts after inflation decreased by
    almost 10 percent in the last four years, and the cost of elder
    care, of course, just keeps going up.
        Prices are up, savings are down, and this can't continue,
    so thankfully, we're turning the corner and building an economy
    that works for all Americans, including 2.5 million seniors in
    Pennsylvania. This starts with reigning in federal spending.
    The federal deficit is now equal to seven percent of GDP, debt
    is over 120 percent of GDP. We now spend more on interest on
    the debt than we do in national defense.
        At the same time, I think everybody on this Committee
    agrees that we must protect the critical benefits seniors have
    earned, such as social security and Medicare, so we have a
    difficult question to wrestle with, how do we bring down
    spending while protecting these critical programs that
    Americans have paid for and rely on?
        With that context in mind, Mr. Ferry, I'd like to start
    with you as your testimony focused on this very question, what
    are our best options or low hanging fruit for reducing the
    federal deficit while protecting critical programs our seniors
    rely on?
        Mr. Ferry. Thank you, sir. I think there are a number of
    federal programs that don't fall in the category of essential
    spending, as you say, Medicare, Social Security, and defense,
    and I think these programs are in areas like the Department of
    Education where the federal contribution is debatable at best
    and I think we can literally cut an annual trillion dollars out
    of federal spending over the next five years.
        I'll give you another example. Senator Scott didn't mention
    it, but earlier in my career, I worked in the broadband
    technology industry, building optical networks that carry
    internet traffic. I was thrilled when the government passed the
    broadband program to bring internet to thousands of rural
    households. The four-years of the Biden Administration went by,
    and not one single household has been connected.
        Where I come from in the private sector, if you had that
    record over four years, we would just fire everybody. We'd give
    them compensation, but we would just say, you need to do
    better. I think we need to instill that spirit of performance
    and targets and metrics into the public sector, and if we do
    that, we will get five times the reward, which means, as I say,
    we can cut spending by a trillion dollars a year without
    touching Medicare, without touching social security and without
    touching defense.
        Although defense is, to be honest, an area where, for the
    $800 billion we spend, we are not getting good value for money,
    so I don't know that we need to cut it radically, what we need
    to do is to bring in smaller more aggressive, more
    entrepreneurial companies to defense to compete with some of
    the defense primes, and I think we actually could see our way
    to reducing defense, but getting better defense worldwide that
    way.
        Senator McCormick: Thank you, and I couldn't agree more on
    the accountability and focused on outcomes within our
    government, that's what President Trump, I think is leading the
    charge on, and he's got a lot of support here on this
    Committee.
        Mr. Antoni, let's discuss how the last four years have
    impacted seniors, retirement portfolios. You've been very
    critical of the Federal Reserve's response to inflation, as
    have I. Can you walk us through the impacts of federal policy
    on 401k accounts? I hear this all the time from seniors in
    Pennsylvania and pension plans in general, and how and what can
    seniors do to protect their retirement accounts from rapidly
    losing value as they have over the last four years?
        Mr. Antoni. Well, thank you, Senator. It's a pleasure to
    see a fellow Pennsylvanian, by the way. Unfortunately, what the
    Federal Reserve did to accommodate the spend thrift policies
    out of DC was again, literally just create trillions of dollars
    out of nothing, and to ease the cost of financing all of the
    borrowing from the treasury, they pushed interest rates down to
    zero.
        At the same time all of these this debt was being issued,
    it was being issued at near zero interest rates, and therefore,
    all of the securities that were being issued that were
    essentially the financial derivatives that had these low
    interest-bearing assets as their underlying asset, that meant
    that the securities also were going to have very low yields. As
    soon as interest rates began to rise, since interest rates and
    prices move inversely with bonds, the value of these securities
    have absolutely plummeted. We are literally coming off of the
    worst three and a half year run for the bond market in over a
    century.
        Well, where do seniors disproportionately put their
    savings? Into fixed income assets, and so they have taken just
    an absolute wash on their retirement accounts. The average 401k
    alone, as you pointed out, lost almost 10 percent of its
    inflation adjusted value under the Biden Administration, and
    for seniors, it has been even worse than the average because of
    that portfolio allocation.
        To answer your question in terms of how can they protect
    themselves, unfortunately, when it comes to high inflation,
    it's a hidden tax. Like any tax, there's not really a good way
    to protect yourself, aside from simply spend all your money. If
    you don't have any money, then the government can't take any of
    it away through inflation. Unfortunately, that's obviously not
    a very desirable outcome either, though.
        Really the best way to protect themselves, I would say,
    with all due respect, is to vote in politicians who will
    prevent that kind of overspending and therefore prevent the
    inflation in the first place.
        Senator McCormick: Thank you.
        The Chairman: Ranking Member Gillibrand.
        Senator Gillibrand. Thank you so much, Mr. Chairman. Mr.
    Bragdon, you argue that expansion of welfare and safety net
    programs are the main contributors of inflation and propose
    that these programs need to be cut significantly. These
    programs actually prevent millions of Americans from falling
    deeper into poverty, illness, and food insecurity.
        For example, SNAP is one of the most effective tools for
    improving health and preventing hunger, enabling nourishing
    kids to go to school and adults to go to work. When we cut
    programs like SNAP and Medicaid, we will surely head toward the
    Nation with poor health outcomes, increasing hospitalizations
    and ballooning our healthcare costs.
        What you propose we do when millions of Americans go hungry
    or fall into poverty or become ill without healthcare coverage
    because of these cuts?
        Mr. Bragdon. Senator, thank you for the question. In my
    testimony, I outlined really two key strategies in right sizing
    welfare programs, but also providing incentives for people to
    move from welfare to work and out of poverty. The only path for
    an able-bodied adult out of poverty is through work, and there
    is a broad bipartisan consensus, whether it's in mental health
    or substance abuse for individuals with disabilities, that were
    work is key to a meaningful life.
        What we talk about in the testimony is an example after
    example. An effective work requirement for able-bodied adults
    of working age is proven to get individuals out of poverty and
    into the workforce. We have more than eight million open jobs.
    Most of those don't require more training than on the job
    training, and that's the path out of poverty. The second piece
    is----
        Senator Gillibrand. Could you pause for one second, Tarren?
        Mr. Bragdon. Sure.
        Senator Gillibrand. Wasn't most of the waiver for work
    requirements because of COVID?
        Mr. Bragdon. There are still waivers even in low
    unemployment areas. The Biden Administration has allowed states
    broad authority to waive work requirements.
        Senator Gillibrand. Wasn't that due to COVID? I think the
    waivers are no longer in place. They were removed once we got
    out of COVID, but I thought most of the waivers were because of
    COVID because It was so much disruption in the economy, and
    some people weren't able to go back to work because the
    employers didn't want them to go back to work, or their
    employers weren't open, or there were so many differences and
    so many changes.
        Mr. Bragdon. They were waived for a period of time, but
    then states can also submit waivers, which they did to USDA in
    food stamps saying, we want to broadly waive work requirements
    in certain counties, gerrymandering counties together to create
    waivers where there's even low employment.
        Senator Gillibrand. Was that because of low unemployment?
    There's no jobs available.
        Mr. Bragdon. You mean high unemployment in those counties?
        Senator Gillibrand. No, low unemployment. I think the
    unemployment rate's been hovering around three percent, and
    when unemployment's that low, meaning there's just not that
    many jobs out there, all the jobs are full. There's a challenge
    of finding good jobs.
        We make the tradeoff. We'd rather people not starve, then
    require the work requirement. I think a lot of the people who
    also are considered able-bodied often have as you said, mental
    health issues or impediments to work like an elderly person at
    home who needs care, or a child at home who needs care. What
    data do you have on that?
        Mr. Bragdon. Sure. I appreciate the question, so with work
    requirements in food stamps, an individual, if a doctor says
    they're not able to work for whatever, whether it's a physical
    or mental health, a condition that they have, then they would
    be exempt from the work requirement. States don't have the
    authority to waive work requirements in low unemployment areas.
    There is the ability in high unemployment areas for states to
    waive those work requirements for certain adults with no kids
    and no disabilities, but not with low unemployment.
        In fact, there's more than eight million open jobs across
    the country, and the path out of poverty is for individuals to
    go into those open jobs. I know, for example, we have four
    teenagers, my daughter went into one of these open jobs in
    Florida. She's earning $18 an hour at Jimmy John's, and that's
    her first job moving her on the path to prosperity, and it's
    really helping every American begin their American dream.
        Senator Gillibrand. Okay. Mr. Lawson, some Republicans have
    proposed raising the full retirement age to 69 or 70 to protect
    social security solvency and avoid benefit cuts. This is
    misleading. Can you share the actual impact of raising the
    retirement age would have on social security benefits and on
    the adults who rely on them?
        Mr. Lawson. Yes, absolutely. Every year the retirement age
    is raised, it's a seven percent benefit cut across the board to
    everybody's social security benefits. It's not like a benefit
    cut, it is a benefit cut, because the retirement age really has
    nothing to do with when you retire. It is just the mathematical
    point at which you receive your full benefits, so if you raise
    it then you're cutting everyone's benefits by seven percent per
    year.
        Senator Gillibrand. Thank you. Thank you, Mr. Chairman. All
    right,
        The Chairman. Senator Tuberville
        Senator Tuberville. Thank you, Mr. Chairman. Thanks for
    being here this afternoon. Mr. Ferry, a lot of misconceptions
    are floating around by the media about tariffs and how they'll
    hurt the American economy. Can you speak to how tariffs, if
    they're done right, will boost the economy?
        Mr. Ferry. Thank you for the question, Senator. That's an
    absolutely true statement. Tariffs done right will stimulate
    our economy. I just want to say following on from what Mr.
    Lawson said, that there is no money tree. The percentage of old
    people in our economy continues to grow. I'm sitting here as a
    living, breathing example of that, and we have fewer people in
    work earning, in a sense, less real wages than 50 years ago
    when we had four working people for every retired person, now
    we're getting close to two, I think.
        We need to make this economy grow and we need to raise the
    real incomes and the value of the production of every single
    worker. Tariffs are a key way we can do that because what
    tariffs do, is they handicap imports and they allow domestic
    production to grow. We want to tariff the high value, highly
    productive high growth manufacturing sectors, which is roughly
    three quarters of the entire manufacturing sector in the United
    States.
        By doing so, we will produce more cars, more computers,
    more machinery, more machine tools, more medical equipment, and
    more steel and more aluminum and all those industries pay
    higher wages. As an example, the average large steel company is
    today paying its average steel worker over $100,000 a year. The
    average steel worker no longer works with hot molten metal. He
    works in a computer control room, and tariffs are a key way to
    stop the handicap this economy has due to an overvalued dollar
    and due to trade cheating from countries like China and
    Germany, so they're an absolutely essential tool.
        Senator Tuberville. Do you see an increase in job
    opportunities with increased tariffs?
        Mr. Ferry. Yes. I mean, mathematically, yes. We will see a
    higher labor force participation rate with increased tariffs
    because domestic production will rise, and those jobs will
    attract people to get off the sofa and go out and get those
    jobs, but most crucially, I see a transition from people
    working for places like Jimmy John's at minimum wage, into high
    value jobs, which not only pay more today, but offer them
    career opportunities to get on a rising escalator.
        Senator Tuberville. Thank you. Mr. Antoni, Americans are
    upside down in credit card debt, $1.17 trillion. Eighty-five
    percent of Americans have credit cards, 85 percent of Americans
    over 65 have a credit card. What can be done at the
    congressional level to encourage savings and keep more money in
    the pockets of Americans when it comes to credit?
        Mr. Antoni. Senator, thank you for the question. A big
    disincentive to save has historically been inflation because as
    your money is sitting there in the bank, or even if it's in
    equities, whatever the case may be, much of the growth that
    it's experiencing is simply just the dollar losing value, so
    there's not really much of an incentive there.
        If you want to get rid of inflation and you want to not
    only incentivize people to save, but disincentivize them from
    borrowing, you got to get inflation down, and I think the way
    you have to do that is by cutting government spending.
        The only other thing I would add is to help the people who
    are already in so much credit card debt who are suffering with
    the combination of high credit card debt and high interest
    rates, is you need to get the interest rates down, and the
    interest rate is simply a price, it's the price to borrow
    money.
        If you want to reduce the price of something, reduce the
    demand, so reduce the demand for borrowed money. All marginal
    spending by this Congress is by definition borrowed, so if you
    reduce that spending, you will also reduce the demand for
    borrowed money and help bring interest rates down.
        Senator Tuberville. Thank you. Mr. Bragdon, you talk a lot
    about unsustainable expansion of the federal welfare programs
    that have caused massive increase in spending, particularly
    SNAP. SNAP spending has grown by more than 73 percent since the
    last farm builds predicted we'll spend more on SNAP in the next
    10 years than we have in the last two decades. This is over the
    top, so what's your thoughts here on this massive increase in
    the TFP and what recommendation do you have to address this
    Farm Bill with, with SNAP.
        Mr. Bragdon. Senator, thank you for the question. I think
    it's really twofold. One, the authority for setting the food
    stamp program, the SNAP program, really relies on, on Congress,
    and when you look at what the Biden Administration did with the
    Thrifty Food Plan, by just through guidance, literally
    bureaucrat with a pen and a power trip, dramatically increasing
    that benefit, and then that going, as my colleague said, into
    borrowed money and increasing interest rates, you also took
    away the incentive that people have to go into the workforce
    because it pays more not to work, and as I talked about, it
    drives even higher food inflation because SNAP benefits can
    only be used for food, and as we saw with the research that I
    cited that drives increased demand and raises food prices; I
    think there's really twofold things that need to be done within
    the SNAP program.
        One is greater anti-fraud measures. If you look at the
    improper payment, that's fraud and waste within the SNAP
    program. That's primarily driven by individuals who are
    receiving benefits, who are no longer eligible, either because
    an income change, they moved or some other benefit change or
    life change.
        The second piece is really looking at how do we effectively
    use work requirements for working age able-bodied adults? We've
    seen this work well with adults with no kids and disabilities.
    We recommend that pro-work anti-poverty policy be expanded to
    more working age adults who have school aged children.
        Senator Tuberville. Thank you.
        The Chairman. Senator Warnock
        Senator Warnock. Thank you, Chairman Scott. Today's
    hearing, discussing the consequences of high prices on seniors
    could not be more timely. On Monday evening, the Trump
    Administration ordered a total illegal freeze of federal
    taxpayer funds going out to communities in Georgians. This
    illegal funding freeze includes programs that are essential to
    seniors with lower and fixed incomes.
        I'm thankful that a federal judge temporarily halted this
    illegal freeze yesterday afternoon, but these programs are
    still at risk. The Trump Administration, to be very clear, has
    rescinded the OMB memo, they have not rescinded the executive
    order. Mr. Lawson, will pause to payments for nutrition
    programs or the Older Americans Act, make food more affordable
    and accessible for seniors?
        Mr. Lawson. No, Senator, it will do the opposite.
        Senator Warnock. What they did on Monday night won't help?
        Mr. Lawson. It will hurt.
        Senator Warnock. How about a pause on payments for federal
    housing vouchers? Will that help?
        Mr. Lawson. That will not help. That will also hurt.
        Senator Warnock. What about a pause on energy assistance
    funds?
        Mr. Lawson. Same answer. This won't help at all, it will
    only hurt seniors.
        Senator Warnock. I would agree with that. Seniors,
    particularly those of modest means, rely on these funds to help
    pay for food, medicine, in-home care, rent, energy, and heating
    bills in the dead of winter and many other federal programs
    that ensure dignity throughout a person's life. This trump
    freeze will hurt Georgia Seniors, make life more expensive for
    them, including our veteran seniors who need care. Mr. Lawson,
    how can the Federal Government help bring down costs for
    seniors?
        Mr. Lawson. One of the best ways is to focus in on one of
    the key drivers. That is really the rock, in the rock and the
    hard place that seniors are in the price of prescription drugs.
    For decades, pharmaceutical corporations have been able to
    raise the prices year after year enormously above the rate of
    general inflation. They do it because they can, they do it for
    greed alone, and seniors pay the consequence of this, and
    that's too often having to cut their pills in half or forego
    their prescriptions or face the choice of, am I going to pay my
    rent or my heating bill or be able to afford my drugs this
    month. That is the reality that millions of Americans face.
        Now, President Biden and Democrats in Congress passed a
    bill that allows Medicare to negotiate prescription drug prices
    for the first time ever, and there's been a reduction or there
    will be a reduction in the prices of some specific drugs, but
    what we could do is expand that to all drugs. Why get ripped
    off on any drugs?
        Senator Warnock. Absolutely, and I'm proud that in that
    provision, which caps the cost of prescription drugs, my
    insulin bill, which caps the cost of insulin to no more than
    $35 of out-of-pocket cost per month for seniors, insulin
    shouldn't be expensive, and the fact that it is, or prior to
    our engagement in this area, speaks to the outsized influence
    of big pharma in our politics.
        On his first day in office, President Trump signed a wave
    of executive orders, and one of these executive orders rolled
    back an initiative that would empower Medicare prescription
    drugs to offer generic drugs that treat common chronic
    conditions or a flat two-dollar copay. Mr. Lawson, would
    capping the cost of medication at two dollars help with
    senior's ability to afford other essentials like groceries?
        Mr. Lawson. Absolutely. There's no doubt at all on that.
        Senator Warnock. How do high prescription drug costs affect
    seniors also dealing with inflation?
        Mr. Lawson. When a seniors forced to try to go get
    groceries and they can't afford those groceries and the $1,900
    average social security cost per month, if their drug prices
    are going up month after month 13 percent, you know, they're
    going to be even less able to afford those groceries, and we
    know that this price cap works because there is now a $2,000
    price cap on prescription drugs in the same bill that put in
    negotiation, and that has--the freedom that gives seniors from
    the anxiety of, will I be able to afford my next bag of
    groceries, is enormous.
        Senator Warnock. Absolutely. In my remaining time. One last
    question. The Affordable Care Act established a premium tax
    credit to help everyday Americans afford their healthcare
    costs. Several years ago, Democrats and Congress passed
    legislation increasing the value of the premium tax credits to
    help families better afford healthcare while dealing with
    inflation, but if Congress fails to extend these tax credits
    before the end of the year, a 60-year-old couple in Georgia
    with a household income of say, $80,000, we'll see their annual
    premium go up by $16,798. Mr. Lawson, how would extending the
    enhanced PTC support the fiscal sanity of seniors?
        Mr. Lawson. I mean, if it'd be fiscal insanity not to
    extend it and think that it'll do anything other than drive
    millions of older Americans into poverty. Because you can't
    just increase a bill $16,000 and expect that money to just come
    from nowhere.
        Senator Warnock. Thanks, thank you so much. I'm proud to
    serve on this Committee. Also, glad I'm on the Finance
    Committee, and while many of my colleagues will be focused on
    tax breaks for the wealthy, I'll be fighting for everyday
    Georgians to help them to be able to afford their healthcare.
    Thank you so much.
        The Chairman. Senator Johnson.
        Senator Johnson. Thank you, Mr. Chairman. First of all, an
    excellent hearing, and you've assembled a panel here bipartisan
    that actually agree on one thing, that inflation is really bad
    for seniors and they pay a really heavy price.
        Let me quickly put up a chart. This describes how bad it is
    because we've devalued our currency. A dollar Americans held in
    1998 is now only worth 51 cents. A dollar you held only 10
    years ago in 2014 or 12 years ago, is now worth 74 cents. A
    dollar we held before the pandemic started was, is about 80
    cents. Now where there are disagreements is what causes this. I
    think I agree with three of our witnesses that it's because of
    massive government spending, deficits of spending, printing the
    dollar too many dollars, chasing too few goods, but Mr. Lawson
    believes it's because of price gouging. Mr. Antoni, I think he
    pretty well nuked your testimony, can you explain to Mr. Lawson
    why he is so wrong?
        Mr. Antoni. I'd be happy to, Senator. If we look at the
    data published by the Biden Administration, so these aren't my
    figures, this is from the Biden Administration. We see that
    prices paid by businesses for all the things they buy actually
    rose faster than the prices paid by consumers.
        When you go to the grocery store and you grab the gallon of
    milk off the shelf, the grocer had to buy that gallon of milk
    first in order to put it on that shelf for you, and the rate of
    increase that that grocer has been paying has actually been
    higher than what consumers have been paying, and that's why
    when we look at corporate profits, they're really not up after
    adjusting for inflation.
        Senator Johnson. Businesses literally--in order to maintain
    their market share and be able to sell products shielded
    consumers from, you know, some of the inflation caused by
    massive government spending, correct?
        Mr. Antoni. Exactly, and that's why wholesale inflation
    peaked much higher than retail inflation or consumer inflation.
        Senator Johnson. Mr. Lawson, you say you travel all over,
    you're talking to seniors. Let me ask you a hypothetical
    question. If a family let's say they have a major medical
    problem, and so one year they had to borrow $50,000 to take
    care of those medical bills, but then their family member gets
    well, do families keep borrowing $50,000 and keep spending it
    at that level even when they no longer have the illness?
        Mr. Lawson. Well, what I would hope is that Congress could
    come together and----
        Senator Johnson. Mr. Lawson, what would a typical family
    do? They would lower their spending and stop borrowing, so let
    me put it in my next chart here, so American families wouldn't
    do what the Federal Government did here. In 2019 before the
    pandemic, we spent $4.4 trillion, then we went on a massive
    bipartisan spending spree, $6.6 trillion in 2020. The pandemic
    eventually wound down, okay, we were actually coming, well out
    of it by the end of 2020. We certainly didn't need the
    inflation reduction act, which sparked 40-year high inflation.
        The last five years, we've averaged $6.5 trillion. Last
    year we spent $6.9 trillion. This year, we'll probably spend
    about $7 trillion. Mr. Antoni, is there any justification for
    maintaining this level of spending now that the pandemic is
    over?
        Mr. Antoni. I suppose that depends on how much waste, fraud
    and abuse you're willing to tolerate.
        Senator Johnson. I'm willing to tolerate none.
        Mr. Antoni. Well, in that case, there is absolutely no
    justification for the figures on your chart there.
        Senator Johnson. I've given my colleagues a number of
    options to return to a pre pandemic level spending. One of them
    was, if you go back to Bill Clinton's 1998 budget, where we
    actually had a surplus, and by the way, 40 Senate Republicans
    voted for that, and they voted for the appropriation bills, but
    if you go back to there and you increase that spending level
    for population growth and inflation, and you use this year's
    Biden's, social Security, Medicare, so you hold those programs
    harmless, that they are as they are, and interest, according to
    President Biden's budget, we would have a spending level of
    $5.5 trillion, but President Biden's projecting $5.5 trillion
    of revenue, that's how close we are to a balanced budget isn't
    that reasonable? Mr. Ferry?
        Mr. Ferry. I don't think I followed all your numbers,
    Senator. You're saying that the Clinton budget of 1998 would
    lead to tax revenue of five----
        Senator Johnson. No, what I'm saying is that back then it
    was $1.7 trillion because the dollar was worth more, but if you
    inflate that $1.7 trillion by population growth and inflation,
    but for Social Security, Medicare, and interest, who used this
    year's number, we'd be spending it $5.5 trillion. We'd
    basically have a balanced budget. If you do Clinton for 2014,
    do the same thing, you'd have about $6.2 trillion. Again, that
    would be a reasonable pre pandemic level of spending to return
    to, and again, those were President Clinton's spending
    priorities.
        Again, as I lay out these numbers, I'm one of the few
    people here that I'm an accountant, I actually use numbers, I
    look at history. My colleagues are actually shocked at how
    reasonable that spending level is, so again, I'm guess, I'm
    just trying to get some comments. I mean, anybody want to
    challenge that that's not a reasonable spending level to return
    to?
        Now again, we can spend on different things, but we
    shouldn't be spending at seven trillion level over 50 percent
    higher than the start of the pandemic when population is only
    growing two percent. That was, you know, Senator Scott made
    that comparison, spending was up something like 60 percent in
    one analysis, population has only grown two percent there.
    There's no justification for that. Correct?
        Mr. Ferry. Yes, I absolutely agree with that. The, the
    Federal Government has broadened and widened its interest in
    various areas producing very little in all these areas, when
    what it should be doing is focusing on those entitlements,
    including senior citizens, and this needs to be paired back
    dramatically and radically.
        Senator Johnson. Mr. Chairman, just one quick question. In
    Mr. Antoni's testimony, you say that interest payments in
    December 2024 were $140 billion. Now, the interest expense I've
    been using in my analysis here was Biden's budget number at
    9.65. You're saying that interest is going to be 1.2 trillion,
    but even the 140 is, comes out till about $1.6-$1.7 trillion,
    so I'm sure there's a timing difference in terms of interest
    payments, but what is Biden that far off in terms of his 2025
    interest expense of 9.65? Is it going to really be 1.2 trillion
    or more?
        Mr. Antoni. Senator, I think what the Biden Administration
    was probably referencing, there was net interest, which is
    frankly kind of a made-up category. They take gross interest,
    the actual cost of servicing the debt, and then they subtract
    out a bunch of interest sources of income to the U.S. Treasury,
    and that's where we get this net interest figure, but again,
    it's not the actual cost of servicing the debt for this
    calendar year, you're looking at about one point $0.2 trillion
    just for that one expense alone.
        Senator Johnson. Again, it flows through the budget. It is
    net interest, so the 9.65 is a reasonably accurate number then?
        Mr. Antoni. For net interest.
        Senator Johnson. That's what I want to know. Thank you, Mr.
    Chairman.
        The Chairman. Senator Kelly.
        Senator Kelly. Thank you, Mr. Chairman and congratulations
    on being the chairman. Mr. Lawson, on Monday night, the Trump
    Administration announced that federal funding and grants were
    paused. This has created a chaotic situation in the State of
    Arizona.
        Yesterday, my office was fielding calls all day from folks
    trying to understand what this means and what was happening on
    all kinds of programs, asking how they could be sure that
    they'd have the money to continue to operate. Meals on Wheels
    National didn't have clarity on what the funding freeze meant
    for them. They were receiving conflicting information out of
    the Administration.
        That means that our local programs in Arizona were also
    getting mixed information, and folks who provide meals to
    seniors didn't know what the impact would be on their ability
    to continue to deliver these meals, and obviously, this means
    that seniors didn't have a guarantee of where their next meal
    would come from.
        Now, I've delivered meals to seniors in their homes, and it
    was obvious to me that if I didn't show up, they weren't going
    to have anything to eat, and then on top of that, the
    Administration then, I mean, they defended the order all day
    yesterday, and said, this was a great idea. This afternoon it
    seemed like they wanted to walk it back, but unfortunately, for
    seniors in Arizona and across the country, they just muddied
    the waters even more.
        Now, while I believe that the initial action that the
    Administration took was illegal, the past 48 hours have also
    been irresponsible, reckless, and absolutely unacceptable, so,
    Mr. Lawson, can you talk about how disruptive this kind of
    government action is and the stress that this causes to seniors
    and those community organizations that support them?
        Mr. Lawson. It's basically incalculable. The messages that
    we receive of people just in full distress because they do not
    know if they're going to have a meal to eat. They're hearing
    all sorts of information. When the press secretary for the
    White House is asked whether Medicaid is going to exist, she
    says, I'm going to have to check on that and get back to you.
    What that means for a senior in Arizona across the country is
    they don't know if they're going to have healthcare. They might
    have an upcoming appointment. Do they need to reschedule that?
        All of this uncertainty, it's chaos and it inflicts real
    harm on seniors, but the only thing worse than that sort of
    incompetent chaos are the plans to legislatively make those
    cuts permanently. Right? Which is what we've seen targeting
    Meals on Wheels, targeting Medicaid, targeting the exact
    programs that the President unconstitutionally tried to
    unilaterally stop funding.
        Your question is incredibly important, and I can't express
    strongly enough the distress that this brings to Americans
    who've worked hard all their lives, they've followed the rules,
    and then when they expect the system to be there for them, like
    an 89-year-old relying on Meals on Wheels, they're going to get
    an answer from somebody that's like, oh, well, they could go
    get a job at Jimmy John's. Right?
        We've heard that multiple times now in this Committee, that
    the problem is that not enough people are going to work. This
    is a hearing about seniors. Do you think that an 89-year-old
    can go get a job at Jimmy John's because their healthcare was
    taken away? No, they can't. Congress cannot steal people's
    benefits that they've earned because the people will stand up
    against that.
        Senator Kelly. Well, the people that I met that were
    receiving these meals, not only were they elderly, they were
    often disabled. They're not working at Jimmy John's or anywhere
    else for that matter, and they rely on this to just have some,
    I mean, it's their food. They don't have any place else to go,
    and often, in some cases, you know, what I felt and is, the
    person that shows up that day to bring them that food that
    might be the only interaction that they get with anybody, so
    it's even more, I mean the damage is even beyond, just the
    meal. It's a lack of the social interaction that they will get
    from somebody showing up at their doorstep to deliver this, and
    I don't have a lot of faith in this getting resolved quickly,
    but it needs to get resolved and in a way that brings certainty
    to the folks that I represent and seniors across the country.
    Thank you, Mr. Lawson.
        Senator Gillibrand. Senator Husted.
        Senator Husted. Thank you for the opportunity to join my
    committee members, Ranking Member and Chairman Scott. I know
    that I'm excited to work with him and the rest of the Committee
    members.
        I do have a question for Mr. Antoni that I think perhaps
    you can help from your background and research and provide some
    insight into because we're talking about the needs of senior
    citizens, and from my experience of traveling my State of Ohio
    over a lifetime, the past few years with dramatic inflation,
    has really hit seniors hard. These are folks who after a
    lifetime of work, are dependent on social security, retirement
    savings that they might have, which certainly is not seeing
    returns at the rate of inflation.
        You see, the cost of food, cost of housing, the cost of
    energy, which is built into every single consumer product that
    they buy. The punishing nature of inflation in their lives, and
    I am interested in, from your background and your research,
    what has been the impact, the real impact of inflation in the
    lives of seniors? And then what recommendations do you have on
    how we can continue to attack the insidious nature of these
    inflationary costs?
        Mr. Antoni. Well, thank you, Senator. I would say the
    impact is best described as a quality of life decrease or a
    cost-of-living increase. We have dramatically increased that
    cost of living on American seniors who are probably the least
    able to accommodate--their budgets are least able to
    accommodate those higher costs, because of exactly what you
    were just describing.
        The fixed nature of their incomes and even the portions of
    their incomes, which do have those COLAs, those cost-of-living
    increases, they tend to happen very infrequently, so you're
    stuck with an entire year of cost increases, let's say before
    that COLA actually does kick in. On top of that, you have a
    very serious worry now with things like pension funds, which
    have lost about two and a half trillion dollars in inflation
    adjusted value under the Biden Administration.
        That's a combination of both asset classes underperforming
    and also just inflation reducing the real value of those
    nominal holdings, and so, at the same time, so many of these
    seniors are having to pay more to live, they also are seeing
    the value of the moneys on which they rely go down, so it's
    really a double whammy for those folks, and they're just having
    to cut back, unfortunately, again, speaks to that lower quality
    of life, higher cost of living.
        In terms of the second part of your question, you know,
    what can we do to fix this problem? The one good piece of news
    here is the fact that all of these wounds are just self-
    inflicted. In other words, if we reverse the bad policies that
    got us here, we'll reverse the bad effects, and the number one
    way to do that is to cut the excess government spending that
    has been talked about so much today.
        Now, there are some other things that are going to help.
    For example, Senator, you mentioned energy. You're absolutely
    right. The price of energy affects everything we do and
    everything we buy, so if you return to the energy policies of,
    let's say, the first Trump Administration, that would have a
    tremendous impact on boosting production.
        One of the things I mentioned in the written portion of my
    testimony is that we are drastically below trend in terms of
    the growth in energy production, so again, you increase
    production, you increase supply, that means you'll decrease
    price. That's not just the price of energy that puts downward
    pressure on prices everywhere.
        Last deregulation would have a tremendous impact. One of
    the studies cited in my testimony explains that the average
    American family faces an additional $50,000 in regulatory
    compliance costs because of the policies of the Biden
    Administration, so rolling back those burdensome regulations
    would save everyone, including seniors, a tremendous amount of
    money.
        Senator Husted. Yes, thank you. If you really look at how
    much energy prices are built into food, whether it's the cost
    of planting, the cost of the raw material, natural gas that is
    part of the fertilizing process, the harvesting, the
    transportation, there's just a huge, huge input into a lot of
    the foods we eat, and any way that we can tackle the cost of
    energy, I know affects that's just food prices.
        Not to mention the fact that you've seen housing inflation,
    the cost of things going to housing inflation. It's great when
    people see their property values rise if they're going to sell
    them, but most seniors are not selling these properties.
    They're trying to live in them, and it's why it has a
    disproportionate effect on them, so thank you very much for
    your thoughts.
        Senator Gillibrand. Thank you, Senator. Mr. Lawson, in your
    testimony you mentioned the social security cost of living
    adjustment, otherwise known as the COLA. The COLA is key
    component to keep up with rising costs. Yet we know that COLA
    often doesn't adequately capture the cost incurred by older
    adults. This is why I've supported the boosting benefits and
    COLAs Act. Can you tell me why the Kohl calculation is
    currently insufficient? And what can we do to ensure that
    Social Security benefits remain adequate during times of
    inflation?
        Mr. Lawson. The current cost of living adjustment, which
    just to be clear, is part of a benefit, we pay for our social
    security benefits, including the COLA. It's not some sort of
    gift. The idea of social security is that it will freeze your
    standard of living and increase with inflation. The benefits
    will increase with inflation so that your standard of living
    doesn't go down.
        The problem is that the COLA is calculated using the CPIW,
    which looks at the cost faced by your average worker, which are
    very different than the cost faced by your average senior or
    person with disability. Primarily this is going to be in a
    medical category, so as you know, the bill that you support and
    the efforts to switch to a better CPI for the COLA, the CPIE,
    which would more accurately reflect seniors costs.
        Senator Gillibrand. Thank you. We heard in Mr. Antoni's
    testimony today that if Congress wants to alleviate the pain
    inflicted on Americans, especially older Americans, then
    lawmakers should make drastic cuts to government spending. I
    think we can read between the lines and understand that Mr.
    Antoni really wants Congress to make drastic cuts to senior
    Social Security, Medicare, and SNAP, but maintain and expand
    tax breaks for the wealthiest in America.
        Mr. Lawson, what would happen to tens of millions of older
    adults who receive Social Security, if Republicans were to make
    these drastic cuts, to their benefits, particularly those older
    adults who don't qualify for other federal programs?
        Mr. Lawson. It's really straightforward, people would be
    harmed. People would die, people would be pushed into poverty,
    millions of people. The current poverty rate among seniors is
    around 14 percent. It's right around--it's too high, obviously,
    but it's right around where the average rate is for the general
    population. Without Social Security, that number would be 40
    percent, 40 percent.
        You have millions of seniors who are just eking it out
    under, with the current average $1,900 a month to literally
    reach into people's pockets and steal that money so that a
    billionaire can buy another golden yacht with their trillions
    of dollars in tax handouts, it's deeply un-American. It's
    immoral and I just can never get it through my head how people
    can't see how wrong that path is.
        Senator Gillibrand. Mr. Antoni, do you want to respond to
    his thoughts on your statement?
        Mr. Antoni. Which part, Senator?
        Senator Gillibrand. Well, the poverty created by cutting
    social security benefits.
        Mr. Antoni. Senator, I'm not aware of any proposals to
    actually cut Social Security, so I'm not sure how to address
    that. In terms of your own characterization of my testimony, if
    you actually read my testimony and I'm happy to provide you a
    copy. Nowhere in there do I advocate for cutting social
    security benefits, so I'm not sure where that's coming from.
        Senator Gillibrand. It comes from the rhetoric across the
    country right now. It also----
        Mr. Antoni. With all due respect, Senator, I don't
    represent the country. I simply represent my own views, that's
    what I've been asked to testify on here today, and in my own
    views there are no cuts to social Security, so again, I'm not
    sure where that's coming from.
        Senator Gillibrand. Let's talk about your cuts to SNAP. How
    would you address seniors who are hungry?
        Mr. Antoni. Again, Senator, I'm not advocating for any cuts
    to SNAP, so I'm not sure where this is coming from, that that
    is found nowhere in my testimony.
        Senator Gillibrand. Where are you planning on cutting then?
    Where are your drastic cuts from?
        Mr. Antoni. I would start with the low hanging fruit of
    waste, fraud, and abuse throughout the government.
        Senator Gillibrand. Which waste and which fraud and which
    abuse in which program?
        Mr. Antoni. Senator, everywhere. Absolutely everywhere, and
    there are no sacred counts here by the way----
        Senator Gillibrand. Just give me one. Just give me a few
    hundred billion that are waste, fraud, and abuse. Just gimme a
    few hundred billion since we have to make up over a trillion
    dollars to pay the debt and deficit.
        Mr. Antoni. Oh, certainly. Well, Senator, a very easy way
    to do that would simply be to revert back to pre-COVID spending
    levels.
        Senator Gillibrand. Absolutely not. That's not correct and
    I'll explain why. COVID was such a dramatic crush to the U.S.
    economy. Such an unconscionable disaster to the U.S. economy.
    Businesses closed all across America. Schools were closed. Five
    million women lost their jobs because they had to stay home so
    their kids could get school by Zoom, so that's what happened
    during Covid.
        In fact, we realized pretty quickly that our social service
    safety nets weren't effective during COVID, because so many of
    them required you to turn up in person to fill out a form or to
    get a benefit, SNAP was one of them, so one of the changes we
    did very quickly in SNAP was to let people apply online, so the
    increase in the number of people who had access to SNAP is not
    because people were lazy and stopped working, or because people
    weren't doing their fair share.
        It's because the people who actually were qualified were
    finally getting the benefit that it was made for. It's not that
    somehow there was abuse of the program, or somehow people
    decided that they wanted to get free food. That many people
    needed access to the SNAP program before COVID, but because we
    recognized it wasn't working, to have to show up in person, and
    letting people apply, it fixed the program, so no, that's not
    true.
        A lot of the things we did in COVID was to fix things that
    weren't working, and we didn't understand until we saw the
    impacts of COVID. I'm past my time. I'm now going to refer back
    to the chairman.
        The Chairman. Thank you, Senator Moody.
        Senator Moody. Thank you so much.
        The Chairman. This is your first time to ask questions in a
    committee.
        Senator Moody. Yes, it is. Not my first committee
    appearance, but yes, my first asking of questions, so you
    should all be very afraid. Thank you, chairman Scott, Ranking
    Member Gillibrand. It's an honor to be here. It's an honor to
    be among you on this Committee, and let me just say, I know
    this has gone on for a little bit and we're just really
    grateful that all of you were willing to show up today and
    testify. Thank you so much.
        This is an important hearing, especially for states like
    Florida. We have nearly six million residents that are over the
    age of 60, so we feel many of them living on a fixed income, so
    our residents certainly feel the effects of inflation, and this
    is a problem all across the Nation, but certainly we are
    feeling it in Florida as well.
        We know that this has been caused, certainly in part by the
    enormous spending that has taken place under the last
    Administration. As Attorney General, I fought against agencies
    constantly, not just for overreaching policies, but sometimes
    spending decisions that I don't think were lawful either, and I
    think it all contributed to the excessive spending. I look
    forward to serving on this Committee and I've enjoyed hearing
    not only your original testimony, but your responses to the
    questions. It's been incredibly helpful, as one of the newest
    senators here in the U.S. Senate number 99 to be exact.
        One of the things Mr. Antoni that I heard you talk about,
    of course, your testimony included an analysis of how the
    spending has contributed to the rapid increase in inflation,
    but one of the things you talked about, it may have been in
    response to one of my colleagues' questions, was how the Fed
    might have also played a role in this, and certain monetary
    policy decisions may have played a role in this, and so I
    wanted to just ask you a few questions about that. Number one,
    do you believe that's the case?
        Mr. Antoni. Oh, absolutely Senator. As one colleague of
    mine describes it, if Congress is the bank robber, the Fed is
    the getaway driver, so Congress is the one who initiates this
    excess spending, but then it is the Federal Reserve that
    finances it, and the way they do that is by simply creating
    money out of nothing, just simply--, and the result of that is
    a dilution of the value of the dollar.
        Senator Moody. Do you believe currently there is enough
    transparency and accountability of the Fed?
        Mr. Antoni. Oh, not at all. Absolutely not Senator, and one
    of the best ways to observe that, I think, is if you just
    simply follow their rhetoric around the time of the election,
    so, significantly before the election, they were talking about
    how we're going to need much higher interest rates for a very
    long period of time, and then all of a sudden, right before the
    election, despite the fact that the underlying data had not
    changed, they all of a sudden completely changed their view
    that somehow, we were going to get a lot of interest rate cuts
    in very quickly.
        They actually did start cutting interest rates, and they
    started telling us that inflation was essentially solved, and
    then right after the election, they have once again, changed
    their tune and gone back to saying inflation looks like it's
    going to be around a little bit longer, and we're going to have
    to have these higher interest rates for longer as well.
        Senator Moody. Certainly, when those announcements were
    made about the interest rates coming down right before the
    election, there was no change in spending.
        Mr. Antoni. Correct. That's absolutely right, Senator, and
    so, again, to your point, the underlying problem here has not
    been solved, and yet the Federal Reserve treated as if it was.
        Senator Moody. What would be your suggestions or
    recommendations on how we might bring more transparency or
    oversight to the Fed?
        Mr. Antoni. I think probably the best way to make it
    transparent would be to simply get rid of it, but if you're
    going to have a central bank, I think you need to have much
    less government control over it. It needs to be the bank for
    bankers and not the bank for Congress.
        Senator Moody. Thank you so much.
        The Chairman. Thank you, Senator Moody. Senator Alsobrooks.
        Senator Alsobrooks. Thank you and good afternoon to
    Chairman Scott and Ranking Member Gillibrand, and to our
    speakers today, thank you so much for being here. I know it's
    been a long day.
        I'm going to direct my questions today at Alex Lawson. I
    have to tell you this issue is one that is quite personal to
    me. I am a part of the sandwich generation, which means that I
    am not only raising a wonderful 19-year-old daughter, but I am
    also the daughter to two aging parents. A mother who has
    significant needs, and my father, who is her caregiver.
        Two issues I just want to ask you about that have been
    mentioned quite frequently throughout the State of Maryland are
    housing concerns for our seniors as well as the cost of
    prescription drug medications. These are two issues that I
    believe across all across the state--and without respect for
    party, this is an issue that has been of grave concern.
        My question to you is regarding the Inflation Reduction Act
    which did cap the cost of prescription drug medications, and I
    have to tell you again how significant this is. My father is a
    person who went last year, was diagnosed with a heart
    arrhythmia, and learned that Eliquis was $800, cost prohibitive
    caused him tremendous distress, and so my question to you is,
    whether you believe that this has been--discuss how it's
    impacted seniors and to talk about what would happen were this
    not available to seniors, so just if you could just briefly
    discuss the benefits of the Inflation Reduction Act for
    seniors.
        Mr. Lawson. The American people pay the highest drug prices
    in the world, somewhere between three and eight times higher
    than any other country. This, despite the fact that our tax
    dollars go to the research and development, which develops
    almost all of these drugs, then the pharmaceutical corporations
    turn around and charge us the highest prices in the world,
    because they can, because there's never been a check on their
    greed until the Inflation Reduction Act was passed.
        It had many pieces to it, but the two important ones are,
    it allowed Medicare to negotiate a lower prescription drug
    price with the pharmaceutical corporations. That's the part
    that they hate the most, because they want to be able to charge
    whatever they want. I'll also say what they want is a price
    that's so high that some people die. You look at insulin and
    you see this very clearly; they want some people to die, so
    everyone else is terrified enough to spend every dollar they
    have and every dollar they can borrow to afford the drugs that
    they or a loved one needs.
        Finally, the Congress acts and says, no, you can't charge
    whatever you want. You have to charge a fair price. That just
    started, and seniors will be seeing those reduced prices next
    year.
        Now, there's a lot to do there. We could just do all drugs
    right away instead of just some drugs, but on the other hand,
    they also, what you brought up is the Inflation Reduction Act
    capped what seniors pay out of their pocket at $2,000 a year.
    Right? That's enormous, enormous insulin capped at $35 out of
    pocket for people on Medicare, vaccinations, free. The impact
    that the Inflation Reduction Act had on seniors cannot be
    overstated.
        Senator Alsobrooks. Thank you. Likewise, I know I'm running
    out of time here. Just one other quick question regarding
    housing, which is a big issue. Maryland has a senior assisted
    living subsidy program which helps adults 62 and older pay for
    assisted living programs that they would otherwise not be able
    to afford. How can housing subsidy programs be a part of the
    solution to help seniors who are struggling with high cost of
    living?
        Mr. Lawson. Housing subsidies are a solution to seniors
    struggling with the cost of housing, which is happening across
    the country, is a major issue. The idea that has been brought
    up you know, by my colleagues at the table, you know, they talk
    about drastic cuts. They talk about all these big cuts, but
    then when they're pointed, what are you going to cut? They
    suddenly get amnesia of their own plans that they've written
    down.
        Chairman Scott wrote an op-ed in the Wall Street Journal
    giving himself kudos for being brave enough to say, we're going
    to cut Social Security and Medicare. Right? Now they go down
    the line, they say, we're definitely not going to cut those
    programs, but when pressed, they won't say what they're going
    to cut. It's written down, housing assistance, food assistance,
    Medicaid, Medicare, and yes, social security is on the chopping
    block, so that giant tax handouts can be given to billionaires
    and these multinational corporations.
        Senator Alsobrooks. Thank you so much, Mr. Lawson.
        The Chairman. Mr. Lawson, first off, you just told and said
    a complete lie. I have a bill that would protect Medicare and
    Social Security, and there's not one Democrat that got on the
    bill. I have fought to protect Medicare and Social Security
    since I've been up here, and that was a complete lie, but let
    me ask you a question. You just said drug companies want people
    to die. Can you explain that better?
        Mr. Lawson. The easiest one to see is the insulin cartel.
    There are three companies that produce insulin, a drug that
    costs about six per vial to make. Now these three companies
    have increased the price year after year in lockstep, illegally
    acting as a cartel and charge upwards of $300 a vial. Now you
    can google just insulin death and you will find story after
    story, and the many of them are of 27-year-old people. Why 26-
    year-old, they just got kicked off of their parents' insurance.
    They're just footing the bill for the first time, so they're
    trying to stretch their insulin, and what happens is they go
    into ketoacidosis and die. Now, if the pharmaceutical
    corporations wanted that not to happen, there's a million
    things they could do. They could have an emergency program so
    that no one would ever not be able to afford their insulin, but
    they don't want that.
        The Chairman. Has anybody ever sued a drug company for
    wanting people to die?
        Mr. Lawson. A ton of attorney generals have actually taken
    on the insulin cartel for----
        The Chairman. Wait, wait, a minute. You said they want
    people to die. That's what you said?
        Mr. Lawson. Yes.
        The Chairman. Do you know of any lawsuits against the
    pharmaceutical industry because they, and I guess you must have
    evidence, so like, do they have emails to say they want people
    to die? Is that, I mean, how do you have this information?
        Mr. Lawson. I infer it through their actions of keeping
    prices so high that people die.
        The Chairman. That's not what you said. You said that you
    know that they want people to die. I mean, like, if you're
    going to say that I think you would have like some testimony or
    an email or you've talked to somebody at a drug company. Like
    do you know people at drug companies and people there that are
    out there working every day to get people to die?
        Mr. Lawson. Senator, let me be super clear. What I said is
    the prices that they charge are high end----
        The Chairman. Hold on. You said they want people to die.
    That's what you said. Those were your words.
        Mr. Lawson. Prices high enough so that some people die so
    that everyone else is terrified.
        The Chairman. That's not what you said. You said they want
    people to die. In 2023, the Social Security Administration
    reported there was an estimate of 2.7 workers for each social
    security beneficiary. Mr. Lawson, what's the estimate for 2030?
        Mr. Lawson. What the actuaries continually say is that the
    worker dependent ratio is not at all a factor in the trust fund
    insolvency and that's entirely because of the ultra-wealthy and
    billionaires not paying into the fund.
        The Chairman. That doesn't make any sense. Let's think
    about this for a sec. Somebody's got to pay in, right? You have
    to have workers to pay in, so in 2030, it's going to be 2.4
    workers for everybody on retirement. That is a problem, so
    American workers fuel the Social Security Trust fund, that's
    how it's set up, right? The more people that are in the
    workforce, the more people that's going to be contributing to
    the security trust fund.
        I think there's an excess of 50 million Americans now
    between, I think 15 and 64 that are not in the workforce. Now,
    some of them have, are probably retired. Some of them probably
    can't work, all sorts of things, so what is your proposal? All
    right. Does your group have a proposal to get more people into
    the workforce?
        Mr. Lawson. What we would propose is a solution that would
    address the problem, which is that billionaires don't pay the
    same rate into social security as the rest of us. That is what
    the actuaries say drives the entire problem, not the worker
    dependency ratio.
        The Chairman. Do you have the proposal?
        Mr. Lawson. I have a proposal that would solve the problem.
    Not one that would aim at something that does not factor in.
        The Chairman. Can you send me the proposal?
        Mr. Lawson. Absolutely. Okay.
        Senator Gillibrand. It's Senator Sanders bill. I'm a co-
    sponsor. It's the blow the cap bill. Create a donut hole, so,
    someone who's earns less than $400,000 but more than what the
    current top number is. Which is what? 166,
        Mr. Lawson. Yes, 176.
        Senator Gillibrand. Right now, that they don't pay any
    additional, but that you get that six percent for all income
    above $400,000. That's the bill.
        The Chairman. Mr. Antoni, the Social Security Trust fund is
    funded by American workers who must preserve and protect the
    benefits of Social Security, but again, if fewer workers are
    working, that's going to become a major challenge. How has the
    weak labor participation rate impacted our ability to fund
    Social Security? Wouldn't increasing the labor force help drive
    the Social Security Trust fund back toward the solvency?
        Mr. Antoni. Absolutely, Senator. One of the devastating
    impacts of the last four years of anti-work, if you want to
    call it that anti-work policies, has been has to reduce payroll
    tax receipts. If we look at, for example social Security and
    Medicare, what you might call the missing tax receipts, just to
    those two programs, amounts to about half a trillion dollars,
    so, to your point, yes, that is speeding us to insolvency of
    those programs.
        The Chairman. Mr. Ferry, over the last four years, the
    federal debt has increased by eight trillion. Federal spending
    is up 55 percent, so we've had about a two percent increase in
    population, and we've had this unbelievable increase. We've got
    $36 trillion for the debt. How is this--I think you've talked
    about this is an existential threat to our economy. Can you
    talk about that?
        Mr. Ferry. Yes, absolutely Senator. Thank you for the
    question. A debt of 120 or 130 percent of GDP sounds like an
    existential crisis for the United States of America. As you
    know, and probably most people on the panel know, some of the
    most respected economists in the world have published a study,
    which put 80 percent as a key threshold. When countries get
    above 80 percent of GDP in debt, then they tend to hit a
    downward slide where investors start to get very skeptical of
    whether this country is ever going to pay back that money.
        We could go look at the history of countries like Greece
    and Italy and Brazil and Argentina, where that problem arises.
    The United States is in a much more central position in the
    world economy. We've got very attractive investments in the
    tech industry and in government bonds, but we are not immune to
    this problem and a growing number of investors around the
    world.
        I do talk to investors at Sovereign Wealth Funds in
    countries that have large amounts of money invested in the
    United States. I recently met with one from Singapore, and this
    $36 trillion of debt does arouse worries and make them start
    looking for alternative investments in what you could call a
    post Imperial America age, and that fills me with fear, I have
    to say.
        The Chairman. Thank you. Mr. Bragdon, Can you talk about
    how much money we could save for seniors if we reduce the
    regulatory environment?
        Mr. Bragdon. Sure. Thank you for the question. We've been
    talking about how big spending drives big inflation and big
    interest payments. A lot of that spending over the last four
    years wasn't driven by appropriations from Congress. It was
    driven by executive fear, by expanding spending through
    regulations and guidance of the Biden Administration. Then, as
    my colleague noted, having to borrow money or create money to
    pay for that spending.
        Outlined in the testimony, some of those key red tape
    regulations that have driven that testimony, that have created
    expansions of the welfare state, have encouraged folks to
    remain on benefit programs beyond their eligibility, have also
    driven up costs across the board in particular industries, and
    so, rolling back that red tape, just as you did as Governor of
    Florida boosts the economy, gets more people working, providing
    more tax receipts that then undergird the safety net for
    seniors.
        The Chairman. Thank you. Ranking Member Gillibrand, do you
    have any other questions?
        Senator Gillibrand. No, I just want to thank this panel for
    your dedication and your passion and your willingness to help
    guide us in these very important decisions we have to make.
        The Chairman. I'd like to thank everyone for being here
    today and participating. I look forward to continue to work
    with my colleagues. If any Senators have additional questions
    for the witnesses or statements to be added, the hearing record
    will be open until next Wednesday at 5:00 p.m. Thanks. That was
    good. Good job.
        [Whereupon, at 5:14 p.m., the hearing was adjourned.]

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                                    APPENDIX

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                          Prepared Witness Statements

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                     U.S. Senate Special Committee on Aging

      "Making Washington Work for Seniors: Fighting to end Inflation and
                             Achieve Fiscal Sanity"

                                January 29, 2025

                           Prepared Witness Statement

                                   Jeff Ferry

        "The founder of Soviet Communism, Vladimir Lenin, is said
    to have declared that the best way to destroy the capitalist
    system was to debauch the currency. By a continuing process of
    inflation, governments can confiscate, secretly and unobserved,
    an important part of the wealth of their citizens. By this
    method they not only confiscate, but they confiscate
    arbitrarily; and, while the process impoverishes many, it
    actually enriches some. Lenin was certainly right. There is no
    subtler, no surer means of overturning the existing basis of
    society than to debauch the currency. The process engages all
    the hidden forces of economic law on the side of destruction."

        That's a quote from the great British economist John
    Maynard Keynes. Many people think that Keynes was pro-
    inflation, but that's not true. Keynes lived through the 1920s
    and saw what hyperinflation did to Poland, Russia, Austria, and
    especially Germany, where the hyperinflation of 1923 shook the
    faith of the German people in democracy, with disastrous
    results. Keynes advocated balanced government budgets except in
    times of serious recession or depression.
        The fundamental cause of inflation in an economy is an
    excess of demand over supply. Excessive demand can be caused by
    a number of things, including an excessive government budget
    deficit, too much money printing, or wage-push inflation which
    is accommodated by the government.
        In the U.S., in 2021 and 2022 inflation took off, reaching
    a high of 9% in 2022, the highest rate of inflation since the
    early 1980s. The cause of this inflation was excessive demand
    colliding with restrained supply. As we all recall, the supply
    of goods from Asia was severely restrained in 2020 by the
    worldwide Covid pandemic. Even in late 2020, when countries
    began to lift factory closure orders, the ships and the ports
    between Asia and the US west coast were overloaded and backed
    up, with dozens of container ships waiting to unload outside
    Los Angeles and Long Beach ports. In addition, U.S. factories
    took time to catch up to the backlog in orders. There was a
    notorious fire at a Japanese chipmaking facility dedicated to
    chips for automobiles exacerbated the constraints on automobile
    production in the US.
        On the demand side, the federal government enacted three
    separate measures to support people during the Covid pandemic.
    The third of those, the $1.9 trillion American Rescue Plan, was
    too much spending at precisely the wrong time, when the country
    was going back to work and people were rushing out to use their
    savings to purchase goods. That led to a surge in the prices of
    goods, everything from the food at the grocery store to home
    appliances to new cars.
        These forces led inflation to reach 9% in 2022. Could this
    have been prevented? Yes, obviously. On the demand side, the
    American Rescue Plan should have been much smaller, Larry
    Summers said 75% smaller way back in February 2021. On the
    supply side, the situation is more complicated. Clearly the
    U.S. needs more domestic sources of manufactured goods and
    that's something I've been working hard on for several years.
        Nor was the 9% headline rate of inflation the whole story.
    The prices of some categories of consumer goods shot up by much
    more. For example, in December 2022, the price of eggs was up
    by 59% year-on-year; the price of margarine was up 44%;
    airfares were up 28% and even the humble lettuce was up 25%.
        These high inflation rates hurt several groups severely. I
    want to mention two groups: senior citizens and politicians.
        Many seniors live on a fixed income. The average social
    security payment in the U.S. is now $1,976 a month. According
    to a study by University of Massachusetts economists, that
    covers just 68% of basic living expenses for an elderly single
    person who rents their home. For seniors, food makes up a large
    share of their expenses and the 2021-22 inflation hit food
    severely, and there is little sign that prices will come down.
    Rents and the cost of drugs continue to rise. According to the
    National Council on Aging, 14% of people over 65 live in
    poverty today. They say "Aging with dignity should be a right
    for all," and I think that's right.
        Other expenses paid by the elderly also continue to rise.
    Despite Medicare, Medicaid, and Part D prescription drug plans,
    seniors still pay significant copays for prescription drugs.
    Study after study has shown that a significant percentage of
    seniors either don't fill prescriptions or don't adhere to the
    recommended dosage, in other words they take fewer pills than
    they are supposed to, perhaps taking a pill every other day to
    make the prescription last longer. These expenses continue to
    rise, even while broad inflation is subsiding.
        Another critical expense is home health care and related
    services. This is vital for a large and growing number of
    seniors. The latest federal data shows that the cost of care
    for the elderly at home rose by 9.5%, year on year in December
    2024. That's on top of all the inflation of 2021 and 2022.
    That's one of the highest rates of inflation for any sector in
    the 14-page BLS report that came out two weeks ago.
        I also want to point out that politicians suffer from
    inflation too. We can cite four elections where the party in
    power was voted out of office due in part to inflation. That
    happened in 1968 to LBJ, in 1976 to Gerald Ford, again in 1980
    to Jimmy Carter, and finally as we all know, just two months
    ago in 2024. Each time there were other factors at work too,
    but each time, it's very clear that part of the thought process
    of the American voter was: "many things happen in the world
    that are out of politicians' control, but inflation is one
    thing they can control and if they screw that up, it's time to
    turf them out of office."
        I wish more politicians would learn that lesson.
        What can be done about inflation? Most important, we need
    to get the federal budget deficit down. The best way to think
    about inflation is: are we as a nation consuming more than we
    produce, or are we keeping within our budgets? For over 40
    years, this nation has run trade deficits, meaning we borrow
    billions of dollars from abroad to consume more than we
    produce. For 24 consecutive years, the federal government has
    run a large budget deficit, meaning the Federal Government
    spends billions, actually now trillions of dollars more than it
    takes in in revenue. Under the Biden Administration, the
    federal budget deficit reached levels that were unprecedented
    for peacetime.
        A budget deficit of 7% of GDP is far too high. We need to
    cut government spending aggressively. I applaud incoming
    Treasury Secretary Scott Bessent's 3% target for the federal
    deficit. That will ease inflationary pressures, and reduce
    interest rates. There are so many things the federal government
    does badly, and often talks about doing but does not actually
    do, that we need to take an axe to many of these programs.
        Further, I would say that I am a strong advocate of an
    independent Federal Reserve. The Federal Reserve needs a
    laserlike focus on the macroeconomic balance in the economy.
    Past Fed chairmen like Paul Volcker and Alan Greenspan have
    shown us this is achievable. As we all know, in 2021, the
    Federal Reserve took its eye off the ball.
        I would also say that supply-side reforms can make prices
    less rigid and less likely to rise. Areas of the economy where
    more competition and/or deregulation can reduce costs include
    defense equipment providers, prescription drugs, the oil and
    gas industry, and mineral production and processing.
        We need to make it more economic for people to go to work,
    so we can increase the supply of labor and restrain the cost of
    labor. We can do this by fixing the tax and welfare system to
    provide more incentives to work.
        Note that I don't say we should open up our borders to more
    imports. We currently import far too much. Restraining imports
    will stimulate domestic production, helping to improve the
    supply-demand balance. We need more domestic production of
    goods and services and more competition.
        I would say to the Republicans: don't be afraid to cut
    spending and shake up the civil service, but don't cut taxes
    until you know you can reduce the budget deficit. And by the
    way, new tariffs and spending cuts will play a large role in
    enabling you to reduce taxes AND cut the budget deficit.To the
    Democrats, I would say two things: first, it's fine to initiate
    new programs when you are confident that voters support them,
    but you must pay for them directly, with revenue. Expanding the
    deficit is simply another way to debauch the currency, to use
    Keynes's phrase. And that inevitably leads to inflation,
    distrust of politicians, and endangers people's faith in their
    government.
        Finally, I want to say that I am very disappointed in the
    Democratic economists who advised Biden, some of whom I know
    personally. Not one of them has yet to come out publicly and
    say plainly: we goofed. We caused that inflation and we have
    learned our lesson. The economics of inflation is really not
    that hard. Keynes believed that in times of a strong economy
    the government should run a surplus, not a deficit. There was
    really a lot less distance between Maynard Keynes and Milton
    Friedman than many people claim. Economists need to be less
    partisan and more honest about what we see out in the real
    world.
        Thank you Mr. Chairman.

                     U.S. Senate Special Committee on Aging

      "Making Washington Work for Seniors: Fighting to end Inflation and
                             Achieve Fiscal Sanity"

                                January 29, 2025

                           Prepared Witness Statement

                                  Alex Lawson

        Good afternoon, Chairman Scott, Ranking Member Gillibrand,
    and distinguished members of the Committee.
        As Executive Director of Social Security Works, I travel
    across the country speaking with legions of primarily older
    Americans. Almost to a person, they are concerned about rising
    prices. These rising prices hurt older adults, endangering
    their ability to afford food, housing, and prescription drugs.
    They want Congress to take action.
        Across the country, there is widespread bipartisan
    agreement on what people want: cracking down on corporate price
    gouging, improving Social Security's annual cost-of-living
    adjustments, which keep up with rising prices and currently
    under-measure seniors' cost of living, and reducing the price
    of prescription drugs by expanding Medicare's power to
    negotiate. These are actionable policies that will help older
    adults adjust to inflation caused by global supply chain shocks
    and greedflation-which has contributed to rising costs over the
    past few years. In fact, Federal Reserve research found that
    corporate profits accounted for all the inflation in the first
    year of the pandemic recovery and 41 percent of inflation
    overall in the first two years of the post-pandemic recovery.
        There is bipartisan agreement across this country about
    what people don't want in response to rising prices:
    Republicans, Independents and Democrats all agree that not one
    single penny of cuts to Social Security, Medicare or Medicaid
    benefits should be made. There is absolute bipartisan agreement
    among people everywhere across the country.
        Despite this, the House Republican majority announced
    proposals to slash trillions from Medicaid, our country's
    largest provider of long-term care. Over nine million Americans
    over 65 rely on Medicaid.
        Cuts to Medicaid would force these seniors, and their
    families, to pay enormous out of pocket costs for long-term
    care - money they don't have. It would also force millions of
    caregivers, most often women, out of the workforce. This would
    make it far harder for American families to pay their monthly
    bills. In addition, these proposals also include cuts to SNAP
    benefits, which 4.8 million older Americans rely on to put food
    on the table.
        Just last week, the new Trump Administration repealed an
    Executive Order from President Biden that directed the federal
    government to find ways to lower drug prices. The Trump
    Administration is already favoring Big Pharma at the expense of
    seniors and working families.
        There have also been calls by Republicans to repeal the
    Inflation Reduction Act, which gives Medicare the power to
    negotiate lower prices on key prescription drugs. This could
    force many seniors to cut their life-sustaining medications in
    half due to higher costs. Many others would face a terrible
    choice between buying food, filling their prescriptions, and
    paying their heating bills.
        Even Social Security, the most popular and effective
    program in America, is not safe. Last month, a Republican
    representative, who is a member of the DOGE Caucus, told me
    personally that "there will be some cuts" to Social Security
    and Medicare.
        Let me be clear: these proposed cuts will do nothing to
    lower costs for average Americans or older adults; these cuts
    are being proposed to offset the cost of tax handouts for
    billionaires and corporations, who have already been shown to
    be responsible for rising costs. This Congress should value the
    interests of older adults above the wealthiest, and I hope that
    the Aging Committee will lead that charge.
        Consider this: If an older adult can't afford their drugs
    and groceries at the average Social Security benefit of $1900 a
    month, it is absolute fiscal insanity to think the solution is
    to cut their income! To take away their health care! To destroy
    Medicaid and force them to pay the average long-term care cost
    of around $100,000 per year! If they can't afford the price of
    eggs, it is absolute fiscal insanity to believe they can afford
    them better without SNAP benefits.
        I'm here to deliver a message to the members of this
    Committee from older Americans across the country: You don't
    lower prices by stealing health care. You don't lower prices by
    giving giant tax cuts to billionaires and price gouging
    corporations. And you absolutely don't lower prices by reducing
    the Social Security and other benefits that adults have worked
    their entire lives for.

        Appendices:

        Appendix A.

        Work requirements for safety net programs like SNAP and
    Medicaid: A punitive solution that solves no real problem,"
    Hilary Wething, January 24, 2025 https://www.epi.org/
    publication/snap-medicaid-work-requirements/
        Proponents claim that adding more work requirements for
    programs like food stamps (SNAP) and Medicaid will lead to
    higher levels of employment among low-income adults, but EPI's
    research shows that this will not address the underlying
    challenges these adults face in seeking employment. Such
    requirements will only curb access to food and health care for
    many benefit recipients.
        Congressional Republicans have recently proposed increases
    in work requirements for the receipt of some federal government
    benefits. These proposals seem to be based on an inaccurate
    belief-that public benefits are so generous, there is no
    incentive for recipients to seek out paid employment to
    supplement the money from those benefits. Stricter work
    requirements-and the burdensome paperwork that will need to be
    completed to apply for the benefits-will shut out deserving
    families needing food assistance and health care."

        Appendix B.
        Americans' Views on Social Security," Social Security
    Works, last updated May 2024 https://socialsecurityworks.org/
    2022/08/03/social-security-polling/

        Most Americans want to expand Social Security's modest
    benefits, and pay for it by asking the wealthiest Americans to
    pay their fair share. Almost all voters, including almost all
    Republican voters, reject the idea of cutting Social Security
    to reduce the national debt.

        Appendix C.

        A majority of Americans oppose cuts to Social Security and
    Medicare," Camille Keene, January 23, 2025 https://
    navigatorresearch.org/a-majority-of-americans-oppose-cuts-to-
    social-security-and-medicare/
        This Navigator Research report contains data from a survey
    on the latest perceptions of public health and health care
    programs, including Social Security and Medicare, as well as
    perceptions of a tax plan that would cut these programs, and
    who Americans see as most likely to benefit from Republicans in
    Congress' tax plan.
        Among a list of policies related to public health and
    health care, more than two in three oppose cutting Medicare (85
    percent) and cutting Medicaid (81 percent)."

        Appendix D.

        Social Security Lifts More People Above the Poverty Line
    than Any Other Program," Kathleen Romig, updated January 21,
    2025 https://www.cbpp.org/research/social-security/social-
    security-lifts-more-people-above-the-poverty-line-than-any-
    other
        Social Security benefits play a vital role in reducing
    poverty in every state, and they lift more people above the
    poverty line than any other program in the United States.
    Without Social Security, 22.0 million more adults and children
    would be below the poverty line, according to our analysis
    using the March 2024 Current Population Survey. Although most
    of those whom Social Security keeps out of poverty are aged 65
    or older, 5.7 million are under age 65, including 959,000
    children. Social Security is particularly important for older
    women and people of color, who have fewer retirement resources
    outside of Social Security. Depending on their design,
    reductions in Social Security benefits could significantly
    increase poverty, particularly among older adults.
        Without Social Security, the poverty rate for those aged 65
    and over would meet or exceed 40 percent in nearly a third of
    states; with Social Security, it is less than 10 percent in
    nearly two-thirds of states. Social Security lifts more than
    one million older adults above the poverty line in Florida,
    California, and Texas, and over half a million in New York,
    Ohio, Pennsylvania, North Carolina, Georgia, and Michigan."

        Appendix E.

        Seven Facts About Older Adults and SNAP," National Council
    on Aging, April 11, 2024 https://www.ncoa.org/article/7-facts-
    about-older-adults-and-snap/
        The Supplemental Nutrition Assistance Program (SNAP) is the
    largest domestic hunger safety net program. SNAP is especially
    important in helping low-income older adults to achieve food
    security, but many myths abound."
        Appendix F.

        10 Things to Know About Medicaid," Robin Rudowitz, Alice
    Burns, Elizabeth Hinton, and Maiss Mohamed, June 30, 2023
    https://www.kff.org/medicaid/issue-brief/10-things-to-know-
    about-medicaid/
        Medicaid is the primary program providing comprehensive
    coverage of health care and long-term services and supports to
    more than 90 million low-income people in the United States.
        Public opinion polling suggests that Medicaid has broad
    support. Two-thirds of adults in the U.S. say they have ever
    had a connection with Medicaid; majorities across political
    parties hold positive views of Medicaid, and seven in ten say
    that the program is working well for low-income people."

        Appendix G.

        The Importance of Medicaid for Older Americans," Alicia H.
    Munnell, October 22, 2024 https://crr.bc.edu/the-importance-of-
    medicaid-for-older-americans/
        Most people think of Medicare - not Medicaid - when
    considering government health care for older Americans.
    However, Medicaid, the program that covers the medical expenses
    of the poor, spends over $132 billion a year - 20 percent of
    its budget - on individuals ages 65 and over.
        Surprisingly, Medicaid is very important for older
    Americans. Although most people over 65 have Medicare, it does
    not provide long-term care services and supports, only limited
    home health care and post-acute care in a skilled nursing
    facility after a hospital stay."

        Appendix H.

        SNAP Polling," Data for Progress, March - April 2023
    https://www.filesforprogress.org/decks/2023/dfp--snap--deck.pdf
        Voters have a highly favorable view of SNAP and even
    support increasing federal funding for SNAP. Voters are more
    supportive of increasing SNAP" funding than increasing Food
    Stamps" funding. Voters are more likely to believe SNAP
    benefits are too low when presented with a dollar-per-meal
    framing (instead of benefits-per-month)."

        Appendix I.

        Project 2025's Economic and Health Care Policies Concern
    Voters," William Diep, October 15, 2024 https://
    www.dataforprogress.org/blog/2024/10/11/project-2025s-economic-
    and-health-care-policies-concern-voters
        Project 2025 is a set of conservative policy
    recommendations developed by the Heritage Foundation that
    serves as a blueprint for the next Republican president to
    transform the federal government. The policies range from
    privatizing Medicare and defunding Medicaid to firing thousands
    of civil service employees, eliminating the Department of
    Education, and placing the Department of Justice under direct
    presidential control.
        With less than four weeks until the election, new polling
    from Data for Progress finds that likely voters have heard
    mostly negative things about Project 2025 and are worried about
    its policy proposals, including those that would reduce health
    care and economic benefits for low- and middle-income
    Americans.
        These findings show that voters, including Independents,
    are concerned about the economic and health care changes that
    Project 2025 proposes. Despite Trump's claim that he is not
    involved with Project 2025, a plurality of voters, including
    Independents, believe he supports the platform and its many
    unpopular provisions."

        Appendix J.

        Republicans' Proposed Budget Policies Are Unpopular," Abby
    Springs, April 1, 2024 https://www.dataforprogress.org/blog/
    2024/4/1/republicans-proposed-budget-policies-are-unpopular
        The Republican Study Committee - which represents nearly
    four in 5 members of the House Republican caucus - recently
    released a budget that targets Social Security, Medicare, the
    Affordable Care Act, and other popular government programs.
    However, new polling from Data for Progress finds that these
    elements of the RSC's budget proposal are widely unpopular with
    voters.
        The RSC budget advocates cutting funding for Medicare,
    Medicaid, Social Security, the Affordable Care Act (ACA),
    housing assistance, and the Children's Health Insurance Program
    (CHIP). When voters are asked whether they support increasing
    funding, cutting funding, or keeping funding the same for these
    programs, voters overwhelmingly reject funding cuts.
        Overall, the results indicate that policies included in the
    Republican Study Committee budget are extremely unpopular among
    the electorate. Voters would prefer to see funding for Social
    Security, Medicare, and other popular government programs
    increased, not slashed."

                     U.S. Senate Special Committee on Aging

      "Making Washington Work for Seniors: Fighting to end Inflation and
                             Achieve Fiscal Sanity"

                                January 29, 2025

                           Prepared Witness Statement

                                 Tarren Bragdon

        Chairman Scott, Ranking Member Gillibrand, and members of
    the Committee, thank you for hosting this important hearing. I
    am Tarren Bragdon, the Chief Executive Officer at the
    Foundation for Government Accountability (FGA). FGA has worked
    for many years on a wide variety of policy areas, including
    welfare, workforce, health care, and more. These have included
    reforms to help reduce the cost of living for Americans through
    changes at both the federal and state level. In fact, in 2022,
    a member of our staff previously testified before this
    Committee at a field hearing in the Villages, Florida on the
    inflationary challenges American seniors are facing.1
        Unfortunately, since that time, seniors-and all
    Americans-have been facing an even more severe cost-of-living
    crisis. In fact, the inflationary legacy of the Biden
    Administration has done irreparable harm to all Americans. This
    damaging outcome is the direct result of conscious policy
    decisions to increase the size and scope of the regulatory
    state, expand the food stamp program in an unprecedented
    manner, and make other reckless changes to major federal
    welfare programs. Only by undoing these policy changes can
    lawmakers improve prosperity for all Americans.

    Overview

        Americans across the country are facing a cost-of-living
    crisis brought on by rampant inflation that has occurred during
    the entire course of the Biden Administration's reckless four-
    year term. Annual inflation was just 1.3 percent when Joe Biden
    took office, spiking to 9.1 percent by June 2022.2
    By the end of 2024, prices had grown more than 21 percent under
    President Biden.3 The year-over-year price increase
    of some goods and services-from food to energy to vehicles-
    reached double digits at its peak in 2022.4 But the
    harsh reality for many Americans is that it is unlikely they
    will ever regain the purchasing power they lost under the Biden
    Administration.
        The untenable increases in prices have not been
    "transitory". They have not been brought about by sudden
    "corporate greed." They are the direct consequence of three
    major policy failures:
        A massive spike in federal regulations, which has both
    increased government spending and imposed new costs on
    businesses and consumers;
        An illegal and unprecedented increase in food stamp
    benefits that have contributed to rising grocery prices; and
        Unsustainable expansions of federal welfare programs that
    have caused spending to explode while keeping able-bodied
    adults out of the workforce.

        Together, this trio of failures has brought about reckless
    inflation. Fortunately, President Trump has already taken steps
    to begin to address out-of-control spending. And there are
    additional policy options for both Congress and the executive
    branch to consider as they seek ways to undo four years' worth
    of devastating public policy.

    Unchecked federal regulations under the Biden Administration
    have driven up costs

        Former President Biden issued more costly regulations than
    any president in modern U.S. history. During his four years in
    office, Joe Biden finalized more than 300 economically
    significant regulations-over 40 percent more than even
    President Obama's record-shattering first term.5
        This regulatory spree began on Joe Biden's first day.
    In his first term, President Trump withdrew and delayed more
    than 1,500 regulatory actions from Obama Administration
    bureaucrats, finalized more than 500 deregulatory actions
    lowering costs by nearly $200 billion, and implemented new
    provisions to stem the future growth in regulations.6
        On his very first day in office, however, then-
    President Biden issued an executive order undoing the Trump
    Administration's work to establish regulatory budgets for
    federal agencies and undoing several other regulatory reform
    initiatives.7 Over the next four years, the Biden
    Administration published nearly 357,000 pages worth of
    regulations, executive orders, and agency notices-a record
    high.8 Nearly 111,000 of those pages were added in
    his last year alone-one page of new regulatory material every
    five minutes.9
        Considering that, for every 15 percent increase in
    federal regulations, the cost of consumer goods and services is
    hiked by a full percentage point, it is easy to see how the
    Biden Administration's regulatory overreach drove up the cost
    of living.10 And it's not just more federal
    spending: A larger regulatory burden means more compliance
    costs faced by businesses, which are ultimately passed on to
    consumers through price hikes.
        Overall, the Biden Administration's expansion of the
    regulatory state added $1.7 trillion worth of new costs.11
    From unprecedented student loan forgiveness to gutting program
    integrity provisions in major federal welfare programs, these
    regulations have precipitated major increases in costs for
    everyday Americans.

        Biden's illegal food stamp expansion accelerated inflation

        In 2021, the Biden Administration pushed through a 27
    percent increase in food stamp benefits by reevaluating the
    "Thrifty Food Plan."12 After failing to receive
    congressional approval for an increase to the Thrifty Food
    Plan, the Biden Administration unilaterally took it upon itself
    to ram through this $250 billion expansion-the largest in the
    program's history.13
        To justify this unprecedented increase in welfare
    benefits, the Biden Administration ignored the U.S. Department
    of Agriculture's (USDA) 45-year cost neutrality requirement,
    blatantly violated internal control standards, canceled peer
    review processes, sidelined the Department's chief economist,
    and ignored best practices.14 And just as concerning
    is that, even though federal law requires federal agencies to
    submit reports on the cost of proposed rules to Congress and
    the Government Accountability Office (GAO) before they become
    effective, the Biden USDA implemented the change to the Thrifty
    Food Plan before informing Congress.15
        Why would a government welfare program increase
    inflation for all Americans? As government spending on food
    stamps increases, purchases made by food stamp recipients drive
    up grocery prices through the natural laws of supply and
    demand.16 As food stamp benefits become more
    generous, welfare also becomes more attractive than work-
    contributing to the nation's labor shortage and further driving
    up labor costs for employers that are ultimately passed on to
    consumers.17
        Researchers at the World Bank reviewed more than a
    decade of retail scanner data to measure the impact food stamp
    spending has on food prices.18 Their review included
    2.6 million barcodes with data from more than 20,000 stores,
    comprising roughly half of all sales at U.S. grocery
    stores.19 That research found that food prices
    increase by one percent for every 12.5 percent increase in food
    stamp spending.20 When coupling the expansion of the
    Thrifty Food Plan with pandemic-era increases to the food stamp
    program, total food stamp spending nearly tripled. As a result-
    and largely driven by the Thrifty Food Plan reevaluation-
    increases in the food stamp program caused grocery prices to
    skyrocket by more than 15 percent.21
        The unlawful Biden-era expansion not only spiked
    grocery prices directly, but also led to millions of able-
    bodied adults choosing welfare over work.22 An
    estimated 2.4 million Americans declined employment due to the
    Thrifty Food Plan reevaluation.23 Had these
    Americans reentered the workforce, they could have filled
    roughly a quarter of open jobs, further driving costs down by
    increasing the labor supply and reducing business costs.24

    Massive expansions of federal welfare programs have
    exploded government spending

        In addition to the changes to the Thrifty Food Plan, the
    Biden Administration promoted and presided over some of the
    most monumental increases in major federal welfare programs in
    U.S. history. These include:

        Rescinding Medicaid work requirements;25
        Gutting Medicaid program integrity provisions and
    preventing states from verifying eligibility;26
        Continuing pandemic-era policies-such as Medicaid
    continuous coverage provisions and food stamp emergency
    allotments-well beyond the time they should have
    expired;27-28
        Expanding refundable tax credits to record levels,
    such as the Child Tax Credit, the Earned Income Tax Credit, and
    ObamaCare subsidies;29-30-31
        Maximizing exemptions and waivers from food stamp
    work requirements;32-33
        And many more.

          Much like the reevaluation of the Thrifty Food Plan, each
    of these policy decisions has kept Americans from reentering
    the workforce as welfare remains more lucrative than work. As a
    result, welfare program enrollment has swelled as labor force
    participation has declined.
        The number of able-bodied people on Medicaid and food
    stamps is higher today than it was when the unemployment rate
    was nearly 15 percent during the government-imposed lockdowns
    at the height of the COVID pandemic.34 Over the next
    decade, these two programs alone are expected to cost taxpayers
    $8.6 trillion.35-36
        Meanwhile, 62 percent of able-bodied adults on
    Medicaid and 66 percent of able-bodied adults on food stamps do
    not work at all.37 The Biden Administration's
    promotion of welfare over work has contributed to this crisis
    of dependency among those dependent on government programs.
        As a result, the labor force participation rate remains
    lower than it was before the pandemic-and continuing to
    struggle.38
        For every American that chooses welfare over work,
    not only will Americans be directly subsidizing their decision
    to stay on the sidelines, but the indirect costs of lower
    workforce participation will drive up costs as well, as
    businesses' labor costs rise and those costs are passed on to
    consumers.
        With 8.1 million open jobs nationwide, the Biden
    Administration's failed policies have directly caused a
    nationwide workforce crisis that will continue to keep costs
    elevated until and unless it is addressed.39

    Massive expansions of federal welfare programs have
    exploded government spending and kept Americans out of the
    workforce

        Thankfully, there are solutions at the disposal of Congress
    and the executive branch to undo the harm brought about by the
    Biden Administration. Whether as part of the current budget
    reconciliation process or through executive action,
    policymakers have a wide array of options at their disposal to
    help reduce federal spending, shrink the size of the regulatory
    size, and drive up workforce participation among able-bodied
    welfare enrollees. These policy options include:

        Requiring congressional approval for costly federal rules
    that increase taxpayer costs;
        Repealing Biden-era rules that gutted Medicaid program
    integrity, drastically expanded student loan forgiveness, and
    more;
        Rolling back the reevaluation of the Thrifty Food Plan by
    resetting it to FY2020 levels adjusted forward only for
    inflation;
        Implementing universal work requirements for able-bodied
    adults without young children across Medicaid and food stamps;
        Phasing out the enhanced ObamaCare match for able-bodied
    adults on Medicaid;
        Closing exemptions and loopholes to work requirements in
    the food stamp program;
        Requiring food stamp enrollees to meet federal eligibility
    standards;
        Verifying eligibility more frequently across welfare
    programs, including Medicaid;
        Addressing illegal aliens on welfare programs by requiring
    citizenship verification before enrollment in Medicaid,
    prohibiting administrative spending on Medicaid for illegal
    aliens, and adding citizenship verification requirements to the
    Child Tax Credit;
        And more.

        If left unchecked, the Biden Administration's legacy of
    bigger government and more spending will persist indefinitely.
    Only through bold reforms can policymakers get federal
    expenditures and inflation under control.

    References

    1 U.S. Senate Committee on Aging, "Issues Facing Seniors:
    Retirement Security, Healthcare, & Fiscal Health," U.S.
    Congress (2022), https://www.aging.senate.gov/hearings/issues-
    facing-seniors-retirement-security-healthcare-and-fiscal-
    health.

    2 Bureau of Labor Statistics, "Consumer price index for all
    urban consumers: All items in U.S. city average, all urban
    consumers, seasonally adjusted," U.S. Department of Labor
    (2025), https://data.bls.gov/timeseries/CUSR0000SA0.

    3 Ibid.

    4 Ibid.

    5 Regulatory Studies Center, "Cumulative economic significant
    rules by presidential month," George Washington University
    (2025), https://regulatorystudies.columbian.gwu.edu/media/9006.

    6 Jonathan Ingram et al., "Congress must rein in President
    Biden's regulatory spending spree to tame inflation,"
    Foundation for Government Accountability (2022), https://
    thefga.org/research/congress-must-rein-spending-to-tame-
    inflation.

    7 Ibid.

    8 Authors' calculations based upon data provided by National
    Archives and Records Administration on the count of numbered
    pages published in the Federal Register between January 21,
    2021 and January 17, 2025.

    9 Authors' calculations based upon data provided by National
    Archives and Records Administration on the count of numbered
    pages published in the Federal Register between January 17,
    2024 and January 17, 2025.

    10 Jonathan Ingram et al., "Congress must rein in President
    Biden's regulatory spending spree to tame inflation,"
    Foundation for Government Accountability (2022), https://
    thefga.org/research/congress-must-rein-spending-to-tame-
    inflation.

    11 Liesel Crocker, "Congress can put a stop to the current
    administration's reckless regulatory spending," Foundation for
    Government Accountability (2024), https://thefga.org/research/
    congress-stop-administrations-reckless-regulatory-spending.

    12 Jonathan Ingram and Hayden Dublois, "President Biden
    unilaterally and unlawfully increased food stamp benefits,"
    Foundation for Government Accountability (2023), https://
    thefga.org/research/president-biden-increased-food-stamp-
    benefits.

    13 Ibid.

    14 Ibid.

    15 Ibid.

    16 Jonathan Ingram, "Feeding inflation: How President Biden's
    unlawful food stamp expansion is costing taxpayers and
    consumers billions," Foundation for Government Accountability
    (2023), https://thefga.org/research/feeding-inflation-bidens-
    unlawful-food-stamp-expansion.

    17 Hayden Dublois and Michael Greibrok, "The Biden
    administration's unlawful food stamp increase incentivized
    people to choose welfare over work," Foundation for Government
    Accountability (2023), https://thefga.org/research/food-stamp-
    increase-incentivized-people-choose-welfare-over-work.

    18 Jonathan Ingram, "Feeding inflation: How President Biden's
    unlawful food stamp expansion is costing taxpayers and
    consumers billions," Foundation for Government Accountability
    (2023), https://thefga.org/research/feeding-inflation-bidens-
    unlawful-food-stamp-expansion.

    19 Ibid.

    20 Ibid.

    21 Ibid.

    22 Hayden Dublois and Michael Greibrok, "The Biden
    administration's unlawful food stamp increase incentivized
    people to choose welfare over work," Foundation for Government
    Accountability (2023), https://thefga.org/research/food-stamp-
    increase-incentivized-people-choose-welfare-over-work.

    23 Ibid.

    24 Ibid.

    25 Michael Greibrok, "Congress could boost economy by allowing
    Medicaid work requirements without bureaucratic intervention,"
    Foundation for Government Accountability (2023), https://
    thefga.org/research/congress-boost-economy-allowing-medicaid-
    work-requirements.

    26 Sam Adolphsen et al., "Comment on proposed streamlining
    Medicaid eligibility rule," Opportunity Solutions Project
    (2022), https://solutionsproject.org/wp-content/uploads/2022/
    10/OSP-Comment-On-Proposed-Streamlining-Medicaid-Eligibility-
    Rule-10-28-2022.pdf.

    27 Sam Adolphsen and Jonathan Ingram, "Stopping the Medicaid
    madness: How Congress and states can start salvaging some
    program integrity," Foundation for Government Accountability
    (2022), https://thefga.org/research/stopping-the-medicaid-
    madness-how-congress-and-states-can-start-salvaging-some-
    program-integrity.

    28 Hayden Dublois, "Food stamp boosts are bankrupting
    taxpayers," Foundation for Government Accountability (2023),
    https://thefga.org/research/food-stamp-boosts-are-bankrupting-
    taxpayers.

    29 Jonathan Ingram, "Allowing President Biden's Child Tax
    Credit changes to expire helped flip the House in the 2022
    midterms," Opportunity Solutions Project (2023), https://
    solutionsproject.org/wp-content/uploads/2024/01/OSP-Comment-on-
    CTC-Impact-on-2022-Elections-2-24-2023.pdf.

    30 Hayden Dublois and Jonathan Ingram, "How the new era of
    expanded welfare programs is keeping Americans from working,"
    Foundation for Government Accountability (2021), https://
    thefga.org/research/expanded-welfare-keeping-americans-from-
    working.

    31 Hayden Dublois, "Broken promises: Why expanded ObamaCare
    subsidies must expire on time," Foundation for Government
    Accountability (2022), https://thefga.org/research/broken-
    promises-why-expanded-obamacare-subsidies-must-expire-on-time.

    32 Jonathan Bain, "The Biden administration's new food stamp
    work requirement exemption is keeping able-bodied adults
    trapped in dependency," Foundation for Government
    Accountability (2023), https://thefga.org/research/biden-
    administration-food-stamp-exemption-trapped-dependency.

    33 Jonathan Bain and Jonathan Ingram, "Waivers gone wild: The
    next wave in waiver abuse," Foundation for Government
    Accountability (2024), https://thefga.org/research/waivers-
    gone-wild-next-wave-in-waiver-abuse.

    34 Author's calculations based upon data provided by the U.S.
    Department of Health and Human Services, U.S. Department of
    Agriculture, and state welfare agencies.

    35 Congressional Budget Office, "June 2024 Medicaid Baseline,"
    Congressional Budget Office (2024), https://www.cbo.gov/system/
    files/2024-06/51301-2024-06-medicaid.pdf.

    36 Congressional Budget Office, "June 2024 SNAP Baseline,"
    Congressional Budget Office (2024), https://www.cbo.gov/system/
    files/2024-06/51312-2024-06-snap.pdf.

    37 Author's calculations based upon data provided by state
    Medicaid agencies and the U.S. Department of Agriculture on the
    share of non-disabled adult enrollees between the ages of 18
    and 64 who report no earned income.

    38 Bureau of Labor Statistics, "Labor force statistics from the
    Current Population Survey: Labor force participation rate,
    seasonally adjusted," U.S. Department of Labor (2025), https://
    data.bls.gov/timeseries/LNS11300000.

    39 Bureau of Labor Statistics, "Job openings and labor turnover
    survey: Total nonfarm job openings, seasonally adjusted," U.S.
    Department of Labor (2025), https://data.bls.gov/timeseries/
    JTS000000000000000JOL.

                     U.S. Senate Special Committee on Aging

      "Making Washington Work for Seniors: Fighting to end Inflation and
                             Achieve Fiscal Sanity"

                                January 29, 2025

                           Prepared Witness Statement

                                  E.J. Antoni

        Chairmen Scott, Ranking Member Gillibrand, members of the
    Committee: thank you for the invitation to discuss with you
    today the difficulties faced by seniors stemming from the last
    four years of excessive government spending and its subsequent
    inflation. I am a public finance economist and the Richard F.
    Aster fellow at the Heritage Foundation, where I research
    fiscal and monetary policy. I am also a senior fellow at
    Unleash Prosperity.

    Four Years of Cost Increases

        Since January 2021, American families and businesses have
    faced sharp increases in prices, due primarily to the declining
    value of the US dollar.\1\ This has been especially true for
    seniors who have not only tended to face slightly higher price
    increases than the general population, but who
    disproportionately tend to be on fixed incomes, which adjust
    relatively slowly to inflation, if at all.
    ---------------------------------------------------------------------------
        \1\ The Federal Reserve Note is referred to in this testimony as
    the US dollar for ease of understanding by the general public.
    ---------------------------------------------------------------------------
        The consumer price index (CPI)\2\ published by the Bureau
    of Labor Statistics (BLS) has risen a cumulative 21.0 percent
    in the 47 months from January 2021 through December 2024 on a
    seasonally adjusted basis. That is an annualized rate of 5.0
    percent, at which pace prices will double in less than 15
    years. This is in stark contrast to the rate of increase in the
    CPI before January 2021. From the start of the previous
    economic expansion through January 2021, the CPI rose at an
    annualized rate of 1.8 percent, below the Federal Reserve's 2.0
    percent target (figure 1). After January 2021, however, the CPI
    began increasing significantly faster and from that time
    through June 2022 rose at an annualized rate of 8.5 percent,
    more than 4.7 times the previous rate of increase. Since June
    2022 and through December 2024, the index has risen an
    annualized 3.0 percent, significantly above the Federal
    Reserve's target and even further above the annualized rate
    before January 2021.
    ---------------------------------------------------------------------------
        \2\ The CPI-U, consumer price index for all urban consumers, is
    commonly referred to as simply the CPI.

    GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT

        The increase in prices over the last four years has far
    outpaced the increase in the typical American's take-home pay.
    Average hourly earnings rose $5.76 from January 2021 through
    December 2024, but inflation-adjusted average hourly earnings
    fell $0.44 (figure 2). This difference of $6.20 between nominal
    and real hourly earnings can be thought of as the average
    American's hourly inflation tax under the Biden administration,
    which exceeds what that same worker loses to the personal
    federal income tax, on average.
    GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT

    Price Increases for Seniors

        The BLS has also produced a data series that aims to
    replicate the cost of the basket of goods and services
    purchased by the average retiree in the United States, called
    the R-CPI-E. This index differs from the CPI in how its
    components are weighted, in order to better approximate the
    cost of living for older Americans, compared to younger
    consumers. During most of the last four years, cumulative price
    increases in the R-CPI-E were outpacing those in the CPI. With
    the December 2024 data from the BLS, however, the two indexes
    now show essentially identical cost increases of about 21
    percent from January 2021 through December 2024 (figure 3).
    That is not to say that seniors have suffered equally to the
    rest of the population over the last four years. On the
    contrary, prices for the things disproportionately purchased by
    seniors were rising slightly faster than the increase in the
    general price level for most of the last four years.
    Furthermore, seniors tend to have incomes which adjust slower
    to inflation than average because seniors tend to be on fixed
    incomes. Even programs like Social Security which have a cost-
    of-living adjustment (COLA) only increase benefits once
    annually so that seniors must suffer through an entire year of
    cost increases before this portion of their incomes adjust
    upward. Even still, the lost purchasing power which they
    experienced over the 12 months in question is never returned to
    them. This phenomenon can be illustrated with the following
    analogy. The situation faced by seniors is like being robbed
    daily for an entire year, and the thief takes slightly more
    from the victim with each passing day. On the first day of the
    year, the thief takes a dollar, then two dollars on the second,
    three dollars on the third, and so on. By the last day of the
    year, the victim is losing $365 daily. Then, on New Year's Day,
    the theft stops, but the victim never receives any restitution
    for the money stolen throughout the prior year. This is like
    what seniors on fixed incomes and infrequent COLAs experience
    from inflation.
    GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT

    Source of Cost Increases

        The primary source of cost increases over the last four
    years for seniors and the general population alike has been
    inflation. Beginning in 2020, the federal government began
    running unprecedentedly large budget deficits in response to
    the Covid pandemic. Unfortunately, the one-time emergency
    spending measures that caused these initial deficits were then
    replaced with other spending. This resulted in sustained
    elevated Treasury net debt issuances and an increase in the
    federal debt of approximately $8.5 trillion during the Biden
    administration, but also a reduction in the Treasury's cash
    balance of approximately $1 trillion. That is a net
    overspending of roughly $9.5 trillion in just four years. These
    debt issuances were largely financed by the Federal Reserve's
    purchase of almost $5 trillion of Treasury securities since the
    start of 2020, along with manipulations of interest rates and
    capital markets to steer liquidity away from the private sector
    and towards the public sector (figure 4). Since purchases by
    the Federal Reserve are made from the right to issue fiat
    currency, they inherently increase the supply of money. Because
    the real economy has grown much slower than the money supply
    over the last several years, the value of the US dollar
    relative to goods and services has declined. This phenomenon is
    often referred to as "too much money chasing too few goods" and
    it is observed as an increase in the general level of prices.
    The Federal Reserve's balance sheet peaked at nearly $9
    trillion, an increase of approximately 115 percent from pre-
    pandemic levels. Securities held outright by the Federal
    Reserve grew approximately 127 percent over that same period.
    These purchases are sometimes referred to as quantitative
    easing, or QE. Conversely, since the Summer of 2022, the
    Federal Reserve has engaged in quantitative tightening (QT), or
    the net sale of securities, to reduce the very inflation which
    the Federal Reserve itself helped cause. Simultaneously, the
    central bank raised interest rates significantly. This balance
    sheet runoff slowed markedly in the Summer of 2024 and
    securities held outright are now approximately 74 percent above
    their pre-pandemic level while the total balance sheet of the
    Federal Reserve is approximately 64 percent above its pre-
    pandemic level. In addition to the slower pace of balance sheet
    reductions, the Federal Reserve has reduced its benchmark
    interest rate target by 100 basis points, or one percentage
    point.

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        The quantity of money referred to as M2 grew over $6
    trillion from early 2020 to the middle of 2022 (figure 5).
    After about a year of declines, M2 then remained relatively
    steady and has now begun growing again, with the latest data
    available at the time of this writing indicating that the
    growth rate of M2 is exceeding the average growth rate of the
    previous economic expansion. The level of M2 remains about $3
    trillion above its pre-pandemic trend, is only down
    approximately one percent from its peak in April 2022, and 39
    percent above its pre-pandemic level.

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        Similarly, bank reserves reached a trough at the beginning
    of 2023 and then trended up for that entire year, before
    declining throughout much of 2024 (figure 6). As this portion
    of the monetary base increases, loans to individuals,
    businesses, and the Treasury can increase, and each loan
    expands the total money supply. Thus, despite the Federal
    Reserve's reduction in its balance sheet, the increase in bank
    reserves throughout 2023 continued to expand the money supply
    and maintained an inflationary impulse in the economy. Bank
    reserves appear to be trending upward again, as inflation
    reaccelerates in the American economy, with the annualized
    increase in the CPI for December 2024 reaching 4.8 percent, the
    highest in nine months.

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        The Federal Reserve did not simply create money for the
    Treasury to spend but also engaged in active manipulation of
    the loanable funds market in order to channel liquidity away
    from private lending and towards the Treasury, while seeking to
    minimize the inflationary impact of its money creation. In
    March 2020, the Federal Reserve ended its interest on excess
    reserves policy and replaced it with the policy of paying
    interest on all reserves. This incentivized banks to keep money
    parked at the Federal Reserve and not lend it out to the
    private market. This revised policy stance can be seen as an
    extension of the interest on excess reserves policy, which was
    previously utilized to reduce the inflationary impact of
    government overspending financed with fiat money creation.
    Simultaneously, the Federal Reserve used its reverse repurchase
    agreement (RRP) facility to absorb massive amounts of excess
    liquidity and maintain an interest rate floor. Instead of
    lending that liquidity to either private borrowers or the
    Treasury, financial institutions were effectively lending to
    the Federal Reserve. The New York district's RRP facility saw a
    peak utilization of over $2.5 trillion as the central bank
    sterilized unprecedented amounts of money, in conjunction with
    similar efforts from the interest on reserve policy (figure
    7).\3\ However, as the Treasury's demand for loanable funds has
    remained stubbornly high, the RRP facility is seeing almost no
    use today. That has caused the previously sterilized $2.5
    trillion to come back into circulation and multiply in the
    banking system, creating renewed inflationary pressure and
    countering the Federal Reserve's continued QT. The economy is
    still suffering from the monetary malfeasance that began
    several years ago. In other words, some of the inflation which
    would have been caused months or years ago by the budget
    deficits of 2021 and 2022 is only now manifesting itself. This
    is contributing to the notion of "sticky" or persistent
    inflation.
    ---------------------------------------------------------------------------
        \3\ Federal Reserve Bank of New York, desk operations.

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        However, today's inflation is not only the result of past
    mistakes. Elevated levels of government spending have not
    abated. Consequently, the current fiscal year is off to its
    worst start ever, with a cumulative deficit of $711 billion in
    just three months.\4\ The deterioration of federal finance has
    entered a positive feedback loop because of these elevated
    levels of spending and their accompanying higher interest
    rates. Interest on the federal debt now exceeds $1.2 trillion
    per year. In December 2024, the most recent data available at
    the time of this writing, gross interest payments were $140
    billion, just for the month-the largest single line item in the
    entire monthly statement from the Treasury. For context,
    Treasury outlays in December for the next three largest line
    items were $130 billion for the Social Security Administration,
    $99 billion for the Department of Health and Human Services,
    and $79 billion for all military spending. For additional
    context, gross interest in December was equal to more than 66
    percent of all personal income taxes collected that month.
    Since all marginal federal spending is borrowed, this increase
    in interest expense has increased the deficit. That additional
    borrowing in turn increases the demand for loanable funds,
    which puts upward pressure on interest rates. Higher interest
    rates then increase the cost of servicing the federal debt,
    which exacerbates borrowing, interest expense, interest rates,
    etc. If left unchecked, this positive feedback loop will result
    in exponential growth of federal interest payments (figure 8).
    As a percentage of gross domestic product, interest payments
    will set a new record high by 2027, exceeding 5 percent, and
    then continue climbing.
    ---------------------------------------------------------------------------
        \4\ Monthly Treasury Statement, Bureau of the Fiscal Service,
    December 2024.

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    Impact of Inflation and Interest Rate Changes on Retirement
    ---------------------------------------------------------------------------
    Accounts

        While equities have performed historically well in nominal
    terms since the end of 2020, much of that gain has merely been
    a reflection of the decreasing value of the dollar, which
    declined by about one-fifth in just four years. That poses
    particular difficulties for many savers because capital gains
    are not indexed for inflation. Nominal price appreciation and
    real growth are taxed exactly the same, which means that
    inflation not only imposes a higher cost of living but also
    increases savers' tax liability. From the first quarter of 2021
    through the third quarter of 2024, major stock indices saw
    nominal gains of two to four times their inflation-adjusted
    increases.\5\ Furthermore, the bond market experienced its
    worst three and a half year run in at least a century because
    of the rapid rise in interest rates that followed the
    unprecedented issuance of near-zero-interest-rate fixed income
    assets, with 2022 seeing the worst bond market returns in 100
    years. The rapid rise in interest rates and inflation rates
    during the Biden Administration caused devastating losses to
    retirement accounts. The average 401(k) plan fell about 9.2
    percent from the first quarter of 2021 through the third
    quarter of 2024, after adjusting for inflation. Likewise,
    pension plans in aggregate have lost $2.5 trillion in real
    value over that same time. Because seniors tend to have their
    savings disproportionately allocated in cash and fixed-income
    assets, their individual retirement accounts have been hit even
    harder than the average 401(k) plan. The typical senior who was
    planning on retiring today will have to work an additional six
    years or more to recoup the real losses sustained to his or her
    retirement account since the beginning of 2021.
    ---------------------------------------------------------------------------
        \5\ "Making Senior Citizens Poorer: The Negative Impact of the
    Biden Administration's Economic Policies on Senior Citizens' Retirement
    Incomes" E.J. Antoni, Ph.D., October 2024.

    ---------------------------------------------------------------------------
    An Inflation Misnomer

        Inflation is caused by the federal government overexpanding
    the money supply to pay for unfunded spending. The idea that
    inflation is caused by "corporate greed" or "price gouging" is
    incorrect according to both economic theory and empirical data.
    Businesses did not suddenly become greedy at the beginning of
    2021 at the same time as the government vastly expanded its
    budget. Instead, the government's own data show that prices
    paid by businesses have risen faster than those paid by
    consumers during the Biden Administration's tenure (figure 9).
    According to the BLS, in the 47 months from January 2021
    through the end of 2024, the wholesale price level rose 21.2
    percent while the consumer price level rose 21.0 percent.
    Furthermore, during nearly this entire period, the cumulative
    price increases faced by businesses exceeded those faced by
    consumers. In other words, businesses were shielding consumers
    from cost increases, likely in an effort to maintain or even
    grow market share. The exact same facts are observed when
    excluding the volatile categories of food and energy from both
    consumer and wholesale price indices.

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    Public Policy Considerations

        The elevated levels of government spending, which have made
    40-year-high inflation possible today, stem directly from
    Congressional action. Additionally, the Federal Reserve's
    monetary manipulations were prompted by this same Congressional
    action. In conjunction with Congress, the Executive Branch
    during the Biden Administration played a necessary role in both
    the highest inflation and fastest interest rate increases in
    four decades. Just two pieces of legislation alone increased
    federal spending by over $3 trillion, required then-Vice
    President Kamala Harris to cast the tie-breaking vote in the
    Senate, and accounted for at least half of the excess inflation
    since 2020.\6\ Both of these pieces of legislation, as well as
    numerous other unfunded spending bills, had the explicit
    endorsement of then-President Joseph Biden who eventually
    signed each of them into law. Seniors have suffered
    considerably because of this government overspending, with
    their cost of living rising as their real incomes fall and
    their retirement accounts plunge at the worst rates in years.
    ---------------------------------------------------------------------------
        \6\ "The Big Government Formula for Double-Digit Inflation" Casey
    B. Mulligan, Ph.D., August 2024.
    ---------------------------------------------------------------------------
        Additionally, it is not just today's seniors who have been
    so negatively affected by the public policy decisions of the
    Biden Administration and a spendthrift Congress. America's
    seniors in the future will be suffering because of the Biden
    Administration's policies that have disincentivized work and
    retarded economic growth. Those policies have reduced Medicare
    and Social Security tax receipts over the last four years by
    about $500 billion, and that decline in revenues directly
    impacts the long-run solvency of these entitlement programs.\7\
    This has the effect of accelerating their insolvency and
    putting seniors' benefits at risk at a much earlier date than
    previously forecasted.
    ---------------------------------------------------------------------------
        \7\ "Payroll Tax Revenues Down $400 to $900 Billion Due to Lower
    Wages and Less Growth: Casey B. Mulligan, Ph.D., March 2023.
    ---------------------------------------------------------------------------
        While the monetary phenomenon of inflation has been the
    primary driver of cost increases for seniors over the last four
    years, restrictive energy policy has also played a role in
    driving up costs. These anti-energy policies have reduced
    domestic oil output by at least a cumulative 2.4 billion
    barrels from 2021 through the end of 2023. The relatively lower
    production of oil and natural gas has increased prices higher
    than they otherwise would be, imposing additional costs on the
    economy of at least $250 billion over that same period.\8\
    Because energy is such a ubiquitous input in the economy, these
    higher energy prices have raised prices for all goods and
    services, exacerbating seniors' deteriorating financial
    situations.
    ---------------------------------------------------------------------------
        \8\ "The War on Oil and Gas has Cost America $250 Billion in Lost
    Output" Moore and Mulligan, May 2024.
    ---------------------------------------------------------------------------
        If Congress wants to alleviate the pain inflicted on
    Americans, especially older Americans, then lawmakers should
    make drastic cuts to government spending and return the federal
    budget to pre-pandemic levels. This would achieve several
    objectives. First, it would begin reducing the primary
    inflationary pressure in the economy. As the Treasury borrows
    less, the demand for loanable funds will decline, putting
    downward pressure on interest rates. Reduced levels of spending
    and borrowing also remove the Federal Reserve's incentive to
    overinflate the money supply. Thus, both inflation rates and
    interest rates will decline if Congress reduces its spending.
    Efforts to increase domestic energy production would also have
    a positive impact by reducing prices while increasing both
    American jobs and payroll tax receipts. While regulatory reform
    would help roll back the $50,000 in regulatory costs that the
    Biden Administration imposed on the average American family,
    this is largely the purview of the executive branch.\9\
    ---------------------------------------------------------------------------
        \9\ "Biden-Harris Regulations Cost the Average Family Almost
    $50,000" Casey B. Mulligan, Ph.D., July 2024.
    ---------------------------------------------------------------------------
        Lastly, when considering the impact of proposed tariffs on
    seniors, the Senate Aging Committee should keep in mind that
    tariffs, by definition, cannot be inflationary. If a tariff is
    imposed on a particular import and raises the cost to consumers
    of that import, then the consumer has less money to spend on
    other products and services. The consumer will buy less in
    aggregate as the quantity demanded falls. Furthermore, because
    there is no change to the money supply, the value of the
    currency is unaffected. The Aging Committee should also
    consider factors like the price elasticity of the item(s) being
    tariffed and the effects on exchange rates. Failing to account
    for these economic realities will result in overestimating the
    negative impact of tariffs on consumers broadly and seniors
    specifically. Lastly, if tariffs protect American jobs, there
    can be a positive and significant impact on seniors,
    particularly the sustainability of those seniors' retirement
    savings. Increasing the number of American jobs and the real
    wages earned by Americans will also increase payroll tax
    revenue and provide additional tax receipts to Social Security
    and Medicare. This can help ensure benefits will be available
    to seniors in the future. Tariffs can also increase the value
    of American corporations, companies in which seniors hold
    shares of stock or from which seniors have purchased fixed-
    income assets like corporate bonds. Congress should consider
    these, and other, positive impacts of tariffs when proposing or
    evaluating any legislation in this area.

    *******************

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    ?

    =======================================================================

                           Statements for the Record

    =======================================================================

                     U.S. Senate Special Committee on Aging

      "Making Washington Work for Seniors: Fighting to end Inflation and
                             Achieve Fiscal Sanity"

                                January 29, 2025

                           Prepared Witness Statement

                         Senator Rick Scott Statements

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