[Congressional Record Volume 144, Number 118 (Wednesday, September 9, 1998)]
[Extensions of Remarks]
[Pages E1671-E1672]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE AGING OF AMERICA

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, September 9, 1998

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, August 12, 1998 into the Congressional Record.

                          The Aging of America

       America is getting older. As Americans are living longer 
     than ever before and as the Baby Boomers ease into their 
     senior years, fundamental shifts will occur in our society. 
     In areas such as health care, housing, and recreation, the 
     impact of an aging population will be felt. The costs of 
     providing these services will put a strain on the financial 
     resources of governments and families alike.
       The importance of Social Security and other federal 
     programs for older Americans is emphasized by the fact that 
     financial prospects for many Americans approaching retirement 
     are grim. According to a recent comprehensive study: 40% have 
     no pension income other than Social Security. One in five 
     households has no assets and one in seven persons has no 
     health insurance. 20% are disabled.
       The cost of supporting older persons will be a heavy burden 
     on the living standards of younger workers. By the year 2030 
     one in five Americans is projected to be 65 or older, up from 
     one in eight today. And the proportion of the oldest 
     Americans, those over 75, whose health care costs are 
     especially high, will nearly double from present levels. This 
     too will have a huge impact on government budgets and 
     workers' incomes.
       An aging America raises major social and political 
     questions. Is it fair to place huge tax burdens on workers to 
     pay for the retirees? Will the projected heavy spending on 
     programs for older people crowd out other important 
     government spending like national defense or law enforcement? 
     Will high taxes be necessary and, if they are, will they 
     depress economic growth?
       Given these facts many of the pundits are predicting 
     warfare between the generations, between the young and the 
     old. Yet I am doubtful of that. In my experience young people 
     are just as concerned about protecting Medicare and Social 
     Security as their parents are. My own view is that the bond 
     between the generations is strong, and that should not 
     surprise us given the strong family ties that still exist for 
     the most part in this country. I think young people want 
     older people to be secure and to have quality health care, 
     and they don't want them to be dependent on them.


                     Challenges of an Aging America

       Everybody acknowledges the difficulty of ensuring the long-
     term stability of Social Security and Medicare. We simply 
     cannot afford the contract we now have on the table as the 
     Baby Boom generation approaches retirement. We will have a 
     smaller number of workers supporting a much larger number of 
     retirees, and something will have to give. So it represents a 
     formidable challenge to our system of government to carry 
     Americans--young and old--through the major changes needed in 
     these programs.
       The trend in America has been to retire earlier and 
     earlier, and that has placed an extra burden on federal 
     programs. In the last century more than 75% of men 65 years 
     and over worked. In 1997 only 17% did. But things are 
     beginning to change. Retirement ages are creeping back up and 
     the whole concept of retirement is changing. Among other 
     things, older people are increasingly leaving the work force 
     gradually, taking temporary and part-time jobs.
       Older people require more expensive social services--
     particularly health care--and they depend upon government 
     programs like Social Security for much of their income. The 
     importance of Social Security to older Americans cannot be 
     over-estimated. Almost 92% of those 65 and older receive 
     Social Security benefits and many would live in poverty if it 
     did not exist. Moreover, as the number of the oldest 
     Americans grows, the use of medical and long term care 
     services such as hospitals, home care, nursing homes, and 
     elder day care will increase sharply. The effect on Medicare 
     and Medicaid will be significant. Today these programs 
     provide insurance for health and long-term care for 97% of 
     the elderly.


                          Political Challenges

       One has to wonder whether a democratic government is going 
     to be able to deal with these challenges, particularly if it 
     involves reducing benefits for an increasingly large and 
     powerful group. Most analysts view bringing future benefits 
     under control as necessary, yet older persons do not want 
     their benefits cut. One alternative is raising taxes but that 
     means that the current Social Security tax rate would have to 
     be boosted sharply to provide the benefits that have been 
     promised. Others suggest that we should adopt policies 
     directing benefits to low-income elderly persons, and that 
     would reduce costs and improve economic efficiency by getting 
     the money to those who need it most. But to shift in the 
     direction of either a tax increase or a benefit reduction 
     causes a loss of popular support of many people. The 
     challenge to the country may be to make the long-term 
     investments in education, infrastructure, and basic research 
     that lead to growth in the economy and new business 
     opportunities, which in turn makes it easier for the economy 
     to absorb the costs of programs for older Americans. The 
     problem is how that long-term investment, much of which is 
     directed toward younger people,

[[Page E1672]]

     is going to happen when the largest and most powerful group 
     will be older people.
       I think it will be necessary for public officials to talk a 
     lot more about how the satisfaction of building a better 
     tomorrow outweighs the immediate appeal of greater and richer 
     benefits. My personal experience is that older people are 
     very receptive to that argument. The conventional view is 
     that older people, as they wield ever greater power within 
     our system of government, will lend their support to policies 
     that serve their interests: higher spending on health, social 
     services, and law and order, with spending on education 
     taking a back seat. If this is the approach then that could 
     spell trouble between generations. But I do not buy the view 
     that we are headed in this country for intergenerational 
     warfare. Most older people have children and they want the 
     very best for those children, and that causes them to pursue 
     their own interests less selfishly. Younger people want their 
     parents to be adequately supported and everyone knows full 
     well that they themselves will get older. They expect the 
     next generation to help look after them in turn.


                               Conclusion

       The aging of America will have a profound effect on our 
     country. Rather than focus on the potential for 
     intergenerational conflict, we need to see what can be done 
     now to address the crunch we all know is coming. Steps should 
     be taken soon to shore up both the Medicare/Medicaid and 
     Social Security systems. In addition, each American needs to 
     plan financially for their own later years. Proper planning 
     and thought, on the part of the individual and of the 
     government, will go a long way in helping the nation deal 
     with these issues of an aging America.

     

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