Congress to vote on supplementing Social Security

You’ve seen the headlines this week about Social Security: for the second year in a row there will be no cost-of-living (COLA) increase. The AP typically reported it with undue drama:

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.

But it also provided solid information about why there won’t be an increase:

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.

This system for triggering payments adjustments has some kinks — sometimes doling out a higher increase than the general inflation level (as in the 5.8% increase due to high 2008 energy prices) and sometimes leading to a compensating zero increase. The idea, of course, is to at least roughly keep pace with whatever inflation is. In recent years, inflation has been relatively low, and since September of 2008, with recession pressure, it has been very low:

Monthly Inflation Rate
Month Monthly Inflation
 September 2008 -0.14%
 October 2008 -1.01%
 November 2008 -1.92%
 December 2008 -1.03%
 January 2009 0.44%
 February 2009 0.50%
 March 2009 0.24%
 April 2009 0.25%
 May 2009 0.29%
 June 2009 0.86%
 July 2009 -0.16%
 August 2009 0.22%
 September 2009 0.06%
 October 2009 0.10%
 November 2009 0.07%
 December 2009 -0.18%
 January 2010 0.34%
 February 2010 0.03%
 March 2010 0.41%
 April 2010 0.17%
 May 2010 0.07%
 June 2010 -0.10%
 July 2010 0.02%
August 2009 0.14%
September 2010 0.06%

So, senior citizens should not experience much or any hardship from a freeze in their Social Security payments. However, as Bloomberg Business Week details, the bad economy has cut into retirement plans of many seniors and so they feel that deprivation of the Social Security COLA is just another blow. Yet, they have ” benefited in recent years from the 2003 Medicare prescription drug bill that reduced their health care costs,” from prior stimulus payments they received, and from the anomolous 5.8% Social Security COLA they were paid. For seniors to count on a yearly increase is a misunderstanding of how the system should work and unfortunately can lead to unrealistic expectations and disappointment when those expectations aren’t met.

So who is planning to come to the aid of the seniors who think they have been unfairly deprived? Congress, of course. 

The House will vote in November on a bill to provide $250 payments to Social Security recipients to make up for the lack of a cost-of-living increase for next year, House Speaker Nancy Pelosi said Thursday.

Can there be any doubt that our congresswoman, Lynn Woolsey, will cast her vote “aye” for this additional stipend for the elderly (or as this blogger opines, this “pandering to seniors”)? Doubtless Nancy Pelosi and Lynn Woolsey would/will have no hesitation about once again digging into the already empty federal money coffers and spreading around “stimulus” that will have to be added on to our 1.4 trillion deficit. Senate Majority Leader Harry Reid, not to be outdone in “pandering,” has also “vowed” to pass this sweetener for seniors.

When a reckless government throws around cash, it is up to the voters to be strong and resist. The Social Security COLA was not distributed this year because there is no real cost of living increase to match. How simple and reasonable that is. Yet, our government uses it as another excuse to put us, as a nation, deeper in debt and to further incentivize (that word that Rep. Woolsey loves) senior citizens to get habituated to increases every year whether the general cost-of-living has gone up or not. That’s called establishing an entitlement, and a very bad idea that is because we CANNOT AFFORD IT.


About district6voter

A concerned Northern California citizen who believes Representative Lynn Woolsey ought to be replaced in November, 2010.
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