Another Year With No Social Security Benefit Increases

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Social Security recipients will get no increase in their benefits this year as inflation has remained flat. As medical costs keep growing, that's unlikely to make voters happy.As if voters don't have enough to be angry about this election year, the government is expected to announce this week that more than 58 million Social Security recipients will go through another year without an increase in their monthly benefits.

It would mark only the second year without an increase since automatic adjustments for inflation were adopted in 1975. The first year was this year.

"If you're the ruling party, this is not the sort of thing you want to have happening two weeks before an election," said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.

"It's not the congressional Democrats' fault, but that's the way politics works," Biggs said. "A lot of people will feel hostile about it."

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress back in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

A Blow for Democrats

The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September. The timing couldn't be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.

This past Friday, the same bureau delivered another painful blow to Democrats: The U.S. lost 95,000 jobs in September and unemployment remained stubbornly stuck at 9.6%.

Democrats have been working hard to make Social Security an election-year issue, running political ads and holding press conferences to accuse Republicans of plotting to privatize the national retirement program.

This week's announcement about Social Security benefits raises more immediate concerns for older Americans whose savings and home values still haven't recovered from the financial collapse: Many haven't had a raise since January 2009, and they won't be getting one until at least January 2012.

"While people aren't getting COLAs they certainly feel like they're falling further and further behind, particularly in this economy," said David Certner, AARP's legislative policy director. "People are very reliant on Social Security as a major portion of their income and, quite frankly, they have counted on the COLA over the years."

Social Security was the primary source of income for 64% of retirees who got benefits in 2008, according to the Social Security Administration. A third relied on Social Security for at least 90% of their income.

A little more than 58.7 million people receive Social Security or Supplemental Security Income. The average Social Security benefit is about $1,072 a month.

Medical Costs Still Growing

Social Security recipients got a one-time bonus payment of $250 in the spring of 2009 as part of the government's massive economic recovery package. President Barack Obama lobbied for another one last fall when it became clear seniors wouldn't get an increase in monthly benefit payments in 2010.

Congress took up the issue, but a proposal by Sen. Bernie Sanders died when 12 Democrats and independent Sen. Joe Lieberman of Connecticut joined Senate Republicans to block it. Sen. Olympia Snowe of Maine was the only Republican to support the second bonus payment.

Sanders, I-Vt., said he expects older voters to be angry when they learn there will be no increase for the second straight year.

"I do think there's going to be political fallout," Sanders said. "Many seniors who are spending a lot of money on health care and prescription drugs really are going to find it hard to believe that there has been no inflationary costs to their purchasing needs."

Federal law requires the Social Security Administration to base annual payment increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures inflation. Officials compare inflation in the third quarter of each year - the months of July, August and September - with the same months in the previous year.

Inflation is Calculated Automatically

If inflation increases from year to year, Social Security recipients automatically get higher payments, starting in January. If inflation is negative, the payments stay unchanged.

Social Security payments increased by 5.8% in 2009, the largest increase in 27 years, after energy prices spiked in 2008.

But energy prices quickly dropped. For example, average gasoline prices topped $4 a gallon in the summer of 2008. But by January 2009, they had fallen below $2. Today, the national average is roughly $2.70 a gallon.

As a result, Social Security recipients got an increase in 2009 that was far larger than actual inflation. However, they won't get another increase until inflation exceeds the level measured in 2008. The Social Security trustees project that will happen next year, resulting in a small increase in benefits for 2012.

Social Security spokesman Mark Lassiter said the agency has no leeway to increase payments if the inflation measurement doesn't call for it.

Rep. Earl Pomeroy, D-N.D., chairman of the Ways and Means subcommittee on Social Security, has introduced a new bill to provide $250 payments to seniors, if there is no increase in Social Security. Maybe, he said, there will be more of an appetite in Congress to pass it after lawmakers hear from voters in November.

"Costs of living are inevitably going up, regardless of what that formula says," Pomeroy said. "Seniors in particular have items such as uncovered drug costs, medical costs, utility increases, and they're on fixed incomes."


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8 Comments

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LARRY R.SMITH

Were it at and will i get to see my seen? I been out of work for 3 year's and 46 month and you denie and you sude be to ok bye.

October 13 2010 at 12:08 AM Report abuse rate up rate down Reply
jkennedy806

rEMEMBER THE nitwits want to take OUR SOCIAL SECURITY DEDUCTIONS and privatize it - where are they gonna put it? wall Street another bail out that this says. And the Dems are pointing the fingers at the rep. They both need to GO !!! to jail

October 11 2010 at 10:53 AM Report abuse rate up rate down Reply
jkennedy806

Okay, LISTEN UP -- from now on we send a clear message to the inept morons in Congress -- we start our own movement. Take out the Trash. I will start NO MORE COMPLAINING WE ALL know Washington is in the crapper. IN PA Gov. seat open CONSTITUTIONAL PARTY MAT BENOL NEW BIE in pa FED HOUSE SEAT JAKE TOWNE INDEPENDENT NOT TEA PARTY IF anyone has anymore infor about PA please post it. and do the same for your state PLEASE and don't vote in a state incumbent either they go on to be fed freeloaders. REMEMBER IN NOVEMBER CLEAN THE HOUSE, TAKE OUT THE TRASH

October 11 2010 at 10:38 AM Report abuse rate up rate down Reply
dondavy28

VOTE EM ALL OUT IN NOV. THEY ALL GAVE THEMSELVES BIG RAISES WE GET SCREWED THEN THEY TAKE MORE FOR HEALTHCARE

October 11 2010 at 8:26 AM Report abuse rate up rate down Reply
Bdcelina777

The COLA figure and the Unemployment number are not true. Old people do not buy flat screen TV's, that is the only product that has gone down.

October 11 2010 at 8:17 AM Report abuse rate up rate down Reply
ultraz2

As long as congress and the senate on capitol hill or any other government employee or government contractors employees didn't get any raise last year or this coming year it's fair.If they did or will send them to Siberia to think about it.

October 11 2010 at 7:31 AM Report abuse rate up rate down Reply
amgrplag

Interesting there is enough funds in the Budget for Congress and its staff to get COLAs. OH I forgot Congress hasn't passed a Budget just funding resolutions. Congress COLAs should be tied to Social Security COLAs same as with health benefits. Their pension should be part of Social Secuirity, not separate, then there would be no underfunding.

October 10 2010 at 11:00 PM Report abuse rate up rate down Reply
amgrplag

Interesting there is enough funds in the Budget for Congress and its staff to get COLAs. OH I forgot Congress hasn't passed a Budget just funding resolutions. Congress COLAs should be tied to Social Security COLAs same as with health benefits. Their pension should be part of Social Secuirity, not separate, then there would be no underfunding.

October 10 2010 at 11:00 PM Report abuse rate up rate down Reply
melda13

The older we become, the more visits to the doctor; sometimes, 2 prescriptions have to be purchased and that takes away some of the spending money left for extras. Learning that there will not be an increase in Social Security benefits for us older people is not going to make me lose inerest in living a happy life. God always provides for us in many ways. I will look forward to receiving the monthly check and this next time, I will make sure I stretch it until it gives me all I need for this month. We should still be thankful that there are funds and that we live in a free country to enjoy every day we are here. God bless America.

October 10 2010 at 10:13 PM Report abuse rate up rate down Reply