The prediction from scholars that the Social Security Administration will announce zero cost-of-living adjustment, or COLA, to Social Security recipients in 2011 is a blow that many older and disabled Americans can ill-afford.
In 2010, Social Security recipients were stuck without an annual cost-of-living increase for the first time since 1975, when the annual COLA changes were adopted. At the time the administration made that decision, they forecasted no change for 2011, either.
Now, the projections are bearing out -- news that, sadly, is not serving as a reason to trust in the forecasting abilities of the Congressional Budget Office. Economists say that the stagnation of income for the 58.7 million people receiving Social Security or Supplemental Security checks will have a net drag on the economy, as expenses for utilities, rent, and other unavoidable costs could possibly rise despite the government's constancy.
The COLA is not, after all, a decision made by the party in charge; it's based on the official measurement of inflation, the Consumer Price Index for Urban Wage Earners and Clerical Workers. The third quarter of the year (July, August and September) is compared with the third quarter of the prior year; inflation will trigger a COLA increase, whereas stagnation or deflation will trigger no increase. When the Bureau of Labor Statistics releases inflation estimates for September this Friday, the COLA adjustment (or, in this case, lack thereof) will be official.
Despite the automatic nature of the cost-of-living adjustments, it's the sort of thing that will be blamed on those in charge of the government; namely, the Democrats. It's ironic, as the liberal party has always been the one associated with more social support and investment in public assistance; and any voter backlash will have no affect on whether or not the checks will go up in 2012.
That's all up to the people most commonly associated with the Republicans; the business owners who are setting prices. If your milk, eggs and soda pop are more expensive next August and September; you'll get a COLA increase, no matter who or what policies the government is setting. And if they're cheaper? You'll be able to buy more (as your real spending power increases even though the dollar figures don't), but you'll probably be even less happy about it.
Introduction to Preferred Shares
Learn the difference between preferred and common shares.View Course »