Social Security COLA 2011: Cost Of Living Adjustment Not Coming
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WASHINGTON — Another year without an increase in Social Security retirement and disability benefits is creating a political backlash that has President Barack Obama and Democrats pushing to give a $250 bonus to each of the program's 58 million recipients.
The Social Security Administration said Friday inflation has been too low since the last increase in 2009 to warrant a raise for 2011. The announcement marks only the second year without an increase since automatic adjustments for inflation were adopted in 1975. This year was the first.
House Speaker Nancy Pelosi promised to schedule a vote after the Nov. 2 election on a bill to provide one-time $250 payments to Social Security recipients. Obama endorsed the payment, which would be similar to one included in his economic recovery package last year.
Obama had pushed for a second payment last fall, but the proposal failed in the Senate when a dozen Democrats joined Republicans on a procedural vote to block it. Senate Majority Leader Harry Reid, D-Nev., said Friday that in the post-election session "I will be working hard to gain Senate passage for a proposal that ensures that America's seniors are treated fairly."
Michael Steel, a spokesman for House Republican leader John Boehner of Ohio, said that if Democrats were serious about a bonus, they would have voted on it before lawmakers went home to campaign for re-election.
Barbara Kennelly, a former Democratic congresswoman from Connecticut, applauded Pelosi's promise to vote on the payments. But, she said, she doesn't understand why Congress didn't vote on the bill before recessing for an election in which Democrats are in danger of losing their majorities in both the House and Senate.
"I just don't understand it," said Kennelly, now president and CEO of the National Committee to Preserve Social Security and Medicare. "I don't care, Republican or Democrat, they say they care about the senior vote. They could've done it."
Annual cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress in the 1970s. Friday's announcement was triggered by the Labor Department's release of inflation numbers for September. The report showed that consumer prices are still lower than they were two years ago, when the last COLA was awarded.
The increase for 2009 was 5.8 percent, the largest in 27 years. It was triggered by a sharp but short-lived spike in energy prices to above $4 a gallon in the summer of 2008. When the price of gasoline later fell – to below $2 a gallon – so did the overall inflation rate. Seniors, however, kept their increase in benefits.
"They received a nearly 6 percent COLA for inflation that no longer really existed," said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute. "It looks bad, but they're actually not being treated unfairly."
By law, the next increase in benefits won't come until consumer prices as a whole rise above what they were in the summer of 2008. The trustees who oversee Social Security project that will happen next year. They predict the increase at the start of 2012 will be 1.2 percent.
A little more than 58.7 million retirees, disabled Americans and surviving spouses and minor children of enrollees receive Social Security or Supplemental Security Income. Social Security was the primary source of income for 64 percent of retirees who got benefits in 2008.
The average Social Security benefit: $1,072 a month.
Social Security is supported by a 6.2 percent payroll tax – paid by both workers and employers – on wages up to $106,800. Because there is no COLA, that amount will remain unchanged for 2011.
The absence of inflation will be of small comfort to many older Americans whose savings and home values haven't recovered from the recession.
"They are absolutely livid that Congress has bailed out banks, bailed out Wall Street, bailed out big car manufacturers and they didn't get a COLA," said Mary Johnson, a policy analyst for the Senior Citizens League. "Their costs are going up, and they cannot understand the government's measure of inflation. They feel it's rigged."
Betty Dizik, a retired tax preparer and social worker from Tamarac, Fla., said an increase in benefits would help her pay for medicine she can no longer afford to treat her kidney disease. At 83, her only source of income is a $1,200 monthly payment from Social Security.
"I think seniors are going to be upset because gas has gone up, food has gone up, things in the store are expensive to buy," Dizik said. "Let's face it, prices are rising and I don't know how they do the cost of living."
Claire Edelman of Monroe Township, N.J., said she was so hard up that at the age of 83 she applied for a temporary job as a census taker for the 2010 Census. She didn't get the job, so she gets by on a small pension from her job with the state and a monthly Social Security payment of $1,060.
"I can't understand why the Congress hasn't seen that there's been an increase in everything," Edelman said. "They say that nothing went up last year?" she added. "What's the matter with them?" ___
Online: http://www.socialsecurity.gov/cola/
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STEPHEN OHLEMACHER 10/15/10 09:05 PM ET Associated Press