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.
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 percent.
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 percent of retirees who got benefits in 2008, according to the Social Security Administration. A third relied on Social Security for at least 90 percent 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.
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.
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 percent 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.”
I pay just as much if not more into SS and i will be lucky to get 50% of what these people get today. Freeze SS so the rest of us get something. Greedy old generation totally ruining america. Sad
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.”
But it IS the Democratic Parties fault. I believe it was Lyndon Johnson who made it possible for the Congress to raid the Social Security fund that was protected from them taking funds for “other” purposes
Ken:
Greedy old generation, indeed…how about greedy younger generation? You have your entire life to save for retirement. Believe me, the majority of people living on SS are not greedy but merely trying to survive….and who paid into the system themselves. A majority of these people contributed far more into BUILDING American than you ever will…..
Shame on you.
Actually, in terms of “take home pay”, each recipient will be getting less money in 2011 just like this year in 2010. This is not due to inflation but rather the required “part B” co-payment for medicare. I will see what I need to spend on food, utilities, shelter go down! And it is the fault of the Democrat party though the Republican party is not guiltless either!
Chris, To Ken’s point, if he gets 50% of what the older generations are getting then he’s getting robbed because he’s paying in at 100%. Maybe it is some of the older generation who failed to save, as you suggest the youth should do, who should feel the shame?
I don’t mind helping to fund the system to keep my grandparents and parents whole, but let the young opt out and pay a lower tax so we can take that money as save/invest as you prescribe.
BTW, do you think that the youth of today have nothing to add to America? Do you think that we don’t care for our future, or that of our children? On the contrary I think young people of today are extremely practical and understand that social security is a Ponzi Scheme and the Pyramid is about to collapse on them due to changing demographics.
Does anyone really know how many OTHER social programs are funded thru Social Security (FICA)?…. Maybe Aid to Dependent Children, Aid to Families of Dependent Children, Disabled Persons,.. how many other programs? If it were only us Greedy Seniors in the program it might be solvent….
Anti-social, not very security program. Might have been a golden idea in the 1930’s, another of those warm n’ fuzzy retro ideas the ‘progressives’ love to crow about. Today … SS is just another government ponzi scheme, and as pyramids eventually do, it’s falling apart. SS should have been under a secure “lock box” forever, not some kind of magic treasure chest that Senator Blowhard and his pals can raid and replace with paper IOUs (the better to pay for ‘earmarks’ or thump their chests about ‘balanced spending’). If you want to have fun with government wonks, next to the words ‘flat taxation’ few things will get many of them as red faced as inquiring about their access to the SS fund. Well the thing is actuarily broke now, and soon effectively financially so too. You tweeny somethings our there will be lucky to get a dime back on your FICA dollars since Congressman Foghorn will tell you the only “reasonable” solution to the bankruptcy will be 1) move the retirement age out further (hoping that you croak by then) 2) cut benefits and 3) the most slimy thing of all, institute “means tests”. Never mind what you paid in over the years, it’s your socialist duty to give up your previous “entitlement” so as to pay off those in ‘greater need’. Better idea … start phasing this relic out NOW, get government out of the retirement funding business.
Also, 7.9 million SSI recipients (Supplimental Income). To be eligible, all one needs is to be unable to support ones self i.e., alcoholism, dope addict, etc. average monthly benefit= $499.00. Many aliens qualify, as well.
Pres. Roosevelt introduced SSA in the 30’s to close down the “Poor Houses”, every county in the U.S. had at least one. It was disgraceful, to say the least. Seniors with no income lost their homes to forclosure, unpaid tax, leins, etc. were sent there. DOWN WITH SOCIAL SECURITY! LETS GO BACK TO THE OLD SYSTEM!… You nay-sayers go 1st……
Let see Chris who must be a senior, you don’t get it.
If SS is an insurance then it should be taxed as a capital gain with amounts paid into the system as a deduction.
If it is a government program then have it means tested.
Current workers have already paid more into the system as a result of the 1983 SS ‘fix’ by Republicans and Democrats. Lets see seniors pay their fair share.
“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.”
Are you kidding me?10 years ago gasoline was $0.99 in Chicago.So its up more than 150% for 10 years .At the same time food is also 200% up.Property taxes are up 200%.Health insirance is up at least 200% .Its easy to pick your dates and make it look good.Tell us the prices for 10 or more years .And how our income is down in the last 10 years.And stop your propaganda that there is no inflation.
Does anyone remember the first person who received SS checks? It was reportedly a person who hardly paid a dime into the system and drew out approximately $16K in his lifetime. Sad abuse of the taxpayers money. I would rather scrap the whole FICA tax and provide for my own retirement.
Seniors on social security know that the real reason for no increase is that the administration feels that other groups, such as non-documented immigrants, big banks, GM and Chrysler, etc. are more deserving of federal assistance.
Social Security was never meant to be the sole source of anyone’s retirement income. One commenter states that young people have the rest of their lives to save for retirement. True, however retire people had that same chance to save for retirement. Plus there are fewer companies offering pensions to anyone these days unless you are in teaching or working for the government. I am over 50 but I doubt that Social Security will be there when I retire. As a result, I am saving everything I can towards retirement. I wish I had been able to invest every dollar I’d paid into the system and receive that money at retirement. Even with economic downturns, I could probably retire on that money alone. The government has no business running this program.
Everyone does realize that Congress took their automatic pay raises effective January while they refused to give social security recipients a COLA-Cost of Living Adjustment.
Congress get the raises automatically so they won’t have to embarrass themselves by voting to give themselves a raise.
Yep, Nancy Pelosi and Harry Reid adjourned and left americans without a COLA or extension of the Bush tax cuts (no more $1000 per child deduction, just $500 deduction per child).
Vote out every single democrat on the ballot in NOvember. Time to rebalance our country. We don’t need a dictatorship and domination of one party in this country. It is NOT healthy.
Obama still has a Veto pen and can Veto anything presented to him. REbalance OUR country. They seem to forget that, but certainly remember to make sure they get their AUTOMATIC RAISES in CONGRESS!
SHAME!
It was democrat president LB Johnson who raided the Social Security exce$$ so it culd be $pent on other government programs.
It was a democrat congress that approved TAXING social security.
It was a democrat congress that approved giving social security to immigrants who did not contribute to the fund.
The baby boomers kept this economy moving with their contributions and now when it’s their time the rug is being ripped from underneath them.
Watch out for MEANS TESTING for Social Security. If you own property, have savings, have investments your Social Security will be REDUCED or ELIMINATED!
Pay attention.
I understand the expectation of social security recipients to have the annual COLA increase. I also understand that my household income has dropped to about 40% of what it was in 2008. Their benefits haven’t dropped, they just haven’t increased – sounds pretty much like the rest of the country. Perhaps they should stop complaining about what they “deserve” and be happy the country can continue to support them at all. COLA increase? I would be happy to get a decent paying job.