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Do IT this week: Layering
By Stephen Ohlemacher
Associated Press
POSTED: 10:34 a.m. EDT, Oct 15, 2009
WASHINGTON: There will be no cost of living increase for more than 50 million Social Security recipients next year, the first year without a raise since automatic adjustments were adopted in 1975, the government announced today.
Blame falling consumer prices. By law, cost of living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments do not go down, even when prices drop.
The Obama administration, meanwhile, is pursuing a different way to boost recipients' income. On Wednesday, President Barack Obama called for a second round of $250 stimulus payments for seniors, veterans, retired railroad workers and people with disabilities.
The payments would match the ones issued to seniors earlier this year as part of the government's economic recovery package. The payments would be equal to about a 2 percent increase for the average Social Security recipient.
Social Security payments increased by 5.8 percent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.
''Social Security is doing its job helping Americans maintain their standard of living,'' said Social Security Commissioner Michael J. Astrue.
But, he added, ''In light of the human need, we need to support President Obama's call for us to make another $250 recovery payment for 57 million Americans.''
The Labor Department reported today that consumer prices had declined 2.1 percent since the third quarter of 2008. The cost-of-living adjustment for Social Security, or COLA, is based on the change in consumer prices from the third quarter of one year to the next.
Social Security recipients shouldn't get a raise next year because their purchasing power has already increased with falling consumer prices, said the Center on Budget and Policy Priorities, a liberal-leaning think tank.
''Since the purpose of COLAs is to preserve beneficiaries' purchasing power, the decline in overall prices means that beneficiaries do not need a COLA in January 2010,'' Kathy Ruffing, a senior policy analyst at the center, wrote in a report this week.
Over the past 12 months, gasoline prices have fallen 29.7 percent and overall energy costs have decreased 21.6 percent, the Labor Department said today.
Ruffing noted that government forecasters don't expect consumer prices to return to 2008 levels until 2011.
Some advocates for seniors, however, argue that older Americans spend a disproportionate amount of their incomes on health care costs, which rise faster than consumer prices.
The lack of a cost of living increase triggers several provisions in the law. Among them, the amount of wages subject to Social Security payroll taxes will remain unchanged. The first $106,800 of a worker's earned income is currently subject to the tax.
Also, Medicare Part B premiums for the vast majority of Social Security recipients will remain frozen at 2009 levels. However, premiums for the Medicare prescription drug program, known as Part D, will increase.
Obama called on Congress Wednesday to approve the second round of stimulus payments, and several key lawmakers said they would.
''This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis,'' Obama said in a statement.
The $250 payments would go to Social Security recipients as well as those receiving veterans or disability benefits, railroad retirees, and retired public employees who don't receive Social Security. Recipients would be limited to one payment, even if they qualified for more.
The White House put the cost of the payments at $13 billion. Obama said he would not allow the money to come out of the Social Security trust funds, which would further erode the finances of the retirement program. Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.
However, Obama did not offer any alternatives to finance the payments. A senior administration official said Obama was open to borrowing the money, increasing the federal budget deficit. The official, who requested anonymity, was not authorized to speak on the record.
Senate Majority Leader Harry Reid, D-Nev., said he supports sending out another round of payments, as did Rep. Charles Rangel, D-N.Y., chairman of the Ways and Means Committee, which has jurisdiction over Social Security in the House.
House Speaker Nancy Pelosi, D-Calif., said she would work to ''help seniors, veterans, and people with disabilities hit by the worst economy since the Great Depression.''
Other lawmakers said seniors shouldn't get the extra payments because the formula doesn't call for it.
''I think it would be inappropriate,'' said Sen. Judd Gregg, R-N.H. ''The reason we set up this process was to have the Social Security reimbursement reflect the cost of living.''
The average monthly Social Security payment for all Social Security recipients is $1,094.
WASHINGTON: There will be no cost of living increase for more than 50 million Social Security recipients next year, the first year without a raise since automatic adjustments were adopted in 1975, the government announced today.
Blame falling consumer prices. By law, cost of living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments do not go down, even when prices drop.
The Obama administration, meanwhile, is pursuing a different way to boost recipients' income. On Wednesday, President Barack Obama called for a second round of $250 stimulus payments for seniors, veterans, retired railroad workers and people with disabilities.
The payments would match the ones issued to seniors earlier this year as part of the government's economic recovery package. The payments would be equal to about a 2 percent increase for the average Social Security recipient.
Social Security payments increased by 5.8 percent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.
''Social Security is doing its job helping Americans maintain their standard of living,'' said Social Security Commissioner Michael J. Astrue.
But, he added, ''In light of the human need, we need to support President Obama's call for us to make another $250 recovery payment for 57 million Americans.''
The Labor Department reported today that consumer prices had declined 2.1 percent since the third quarter of 2008. The cost-of-living adjustment for Social Security, or COLA, is based on the change in consumer prices from the third quarter of one year to the next.
Social Security recipients shouldn't get a raise next year because their purchasing power has already increased with falling consumer prices, said the Center on Budget and Policy Priorities, a liberal-leaning think tank.
''Since the purpose of COLAs is to preserve beneficiaries' purchasing power, the decline in overall prices means that beneficiaries do not need a COLA in January 2010,'' Kathy Ruffing, a senior policy analyst at the center, wrote in a report this week.
Over the past 12 months, gasoline prices have fallen 29.7 percent and overall energy costs have decreased 21.6 percent, the Labor Department said today.
Ruffing noted that government forecasters don't expect consumer prices to return to 2008 levels until 2011.
Some advocates for seniors, however, argue that older Americans spend a disproportionate amount of their incomes on health care costs, which rise faster than consumer prices.
The lack of a cost of living increase triggers several provisions in the law. Among them, the amount of wages subject to Social Security payroll taxes will remain unchanged. The first $106,800 of a worker's earned income is currently subject to the tax.
Also, Medicare Part B premiums for the vast majority of Social Security recipients will remain frozen at 2009 levels. However, premiums for the Medicare prescription drug program, known as Part D, will increase.
Obama called on Congress Wednesday to approve the second round of stimulus payments, and several key lawmakers said they would.
''This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis,'' Obama said in a statement.
The $250 payments would go to Social Security recipients as well as those receiving veterans or disability benefits, railroad retirees, and retired public employees who don't receive Social Security. Recipients would be limited to one payment, even if they qualified for more.
The White House put the cost of the payments at $13 billion. Obama said he would not allow the money to come out of the Social Security trust funds, which would further erode the finances of the retirement program. Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.
However, Obama did not offer any alternatives to finance the payments. A senior administration official said Obama was open to borrowing the money, increasing the federal budget deficit. The official, who requested anonymity, was not authorized to speak on the record.
Senate Majority Leader Harry Reid, D-Nev., said he supports sending out another round of payments, as did Rep. Charles Rangel, D-N.Y., chairman of the Ways and Means Committee, which has jurisdiction over Social Security in the House.
House Speaker Nancy Pelosi, D-Calif., said she would work to ''help seniors, veterans, and people with disabilities hit by the worst economy since the Great Depression.''
Other lawmakers said seniors shouldn't get the extra payments because the formula doesn't call for it.
''I think it would be inappropriate,'' said Sen. Judd Gregg, R-N.H. ''The reason we set up this process was to have the Social Security reimbursement reflect the cost of living.''
The average monthly Social Security payment for all Social Security recipients is $1,094.
Comments
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Anti-Politically Correct & Anti-GOP, OH
Posted 10:55 AM, 10/15/2009
GOO RULING! Think about this, the people who are WORKING and paying into the SS system have not seen a cost of living increase in a few years.
Anti-Politically Correct & Anti-GOP, OH
Posted 10:57 AM, 10/15/2009
I mean, GOOD RULING.
Posted 11:11 AM, 10/15/2009
hmm...agree with spd3333. Now if only all the other government agencies can adopt this strategy
Chagrin Falls, OH
Posted 11:16 AM, 10/15/2009
Right on, it is a GOOD ruling! Seniors need to also realize that they never paid into close to what they will draw in SS payments over their remaining life. With people living longer, the working poor's backs will just break earlier than anticipated. All I can say (to all the politicians out there), there better be SS by the time I retire. And think of this - we won't have the luxury of retiring at 62, 65 or even 70. Most of us will work until we die. In my county (Geauga), we have yet another Senior levy on the ballot. I sympathize with anyone who truly NEEDS aid, but tax-wise, I can't take it anymore. Seniors will have to do what others did generations ago -- rely on your FAMILIES for support and assistance. I'm fed up with squirreling away every last dime (in case I lose my job) AND paying for others who didn't. Time for a new plan, folks.
Paradise, Oh
Posted 11:25 AM, 10/15/2009
You always have the option of dieing young. Some are better served taking that path.
Da ghetto of Fairlawn, OH
Posted 11:38 AM, 10/15/2009
spd3333 & youcanthide
I agree 100%-today's seniors have received far more than they ever paid into the system and they need to realize us working stiffs haven't seen a raise in years, so why should they?
Now if they will just "means test" for social security benefits, we would be in great shape. People who are well off in retirement should not be getting SSI-that was not the intention of the system. Of course that would make AARP have a conniption fit, but it is something that needs to be done.
Chagrin Falls, OH
Posted 12:01 PM, 10/15/2009
yankeescot: You hit the nail on it's 'secret' head! The issue of the mega-wealthy receiving SS benefits was hot for a while then cooled considerably. Wonder why? First, there's the argument that they paid into the system so are entitled to collect. Makes sense until there's a shortage of SS $$, then the rules have to change. The SS "bank" has been robbed for years to fund other legislative garbage and we've allowed it to happen. Now what? You think AARP is outspoken, wait till you try to take $ from the wealthy.
AKRON, OH
Posted 12:09 PM, 10/15/2009
yankeescotPosted:Now if they will just "means test" for social security benefits, we would be in great shape.Social security is an insurance policy that you pay into.What they should do is tax all income. This year and next, the first $106800 of a worker's earnings is subject to the 12.4% Social Security tax.Which means people making over that amount is SSTax free.That's $106801 and up.If this change would that place,Social security would be and stay solvent.
Chagrin Falls, OH
Posted 12:10 PM, 10/15/2009
Stephend6: Uh huh....that's an excellent point.
AKRON, OH
Posted 12:11 PM, 10/15/2009
would that place /correct:would take place.
AKRON, OH
Posted 12:19 PM, 10/15/2009
YouCantHide,AARP is a joke,They are the ones who help put the doughnut hole in the medicare drug plan.Their United health Medicare plan is getting billions from the Medicare system.That why many seniors dropped them.AARP is looking out for their own pockets.
Chagrin Falls, OH
Posted 12:28 PM, 10/15/2009
All the high profile thievery lately has me feeling paranoid about ANY well-funded organization (including the darling Susan B Komen Breast Cancer Foundation - GAWD with as much income as they 'post' we could hire a wizard to wipe out breast cancer by now). AARP started out with good intent, but I fear they are swimming in the 'greed' stream. Interesting comment on their Medicare pipeline.
uniontown, oh
Posted 12:41 PM, 10/15/2009
Oh seniors don't deserve a cola raise because they didn't pay in that much while working 40 to 50 years in some sweat shop for puny wages while trying to make life better for their family. So now that its pay day for those that are still alive their crying offspring are wining that they shouldn't want any more and they should get the raise, not dad or grandpa. Hey whiner, don't come to me for any more money, work three jobs like I did. The bank is closed. Good luck
Akron, OH
Posted 12:52 PM, 10/15/2009
I think they should spend some money on investigation of the fraudulence inherent in the system. Social Security disability is a joke. It makes me sick to think of how many perfectly healthy 20 year olds I have dealt with on it, because "I can't read" or "I don't learn good." Not everyone is meant to be a scholar. Everyone in good physical health can do a job. There's nothing wrong with simple-minded manual labor. After that, start investigating the rediculous welfare system we have. These bloated leeches on society are part of the reason that we cannot give the benefits to our seniors that we promised them.
Don't get me wrong, YouCantHide, I live well below my means in order to scrimp and save. I wholly agree with you. I invest all I can (6 months ago was a GREAT time build a portfolio). I hate to support people who could have done as I do, but choose not to. If you spend every cent of your paycheck each week, where do you think money will come from? It won't get any better. We are raising more and more entitlement children who think that they don't have to look out for themselves, because big daddy government won't let anything bad happen.
Jefferson, Oh
Posted 01:06 PM, 10/15/2009
Over 43 years of working, I have "contributed" $120,000 towards my S.S. benefits. If I was able to invest those "contributions" towards my own plan, I would have been far ahead of what the government intends to pay me when I retire. Even at a simple 6% compounded interest my money would have doubled. Now, as I near early retirement, I am being chastised for expecting a return. Our government has bungled this S.S. extortion and now many feel we do not deserve it. That's too bad. I'm going to take it, take it early and take it often and as much as I can, just to make the whiners miserable about having to pay!...forgive them, for they know not what they do...
Chagrin Falls, OH
Posted 01:07 PM, 10/15/2009
ZK: Totally agree. Out 'scrimping and saving' will surely earn us the booby prize. You wait and see....those who have assets of $X (never enough, trust me)will be ineligible for the benefits from programs (SS) we've funded all our lives.
CitizenK62: Untwist your panties. Who do you think you're talking to on this blog? This 'entitled' child you refer to worked that sweatshop job(s) AND "loitered" around a University for 19 years nights and weekends, earning me higher wages with those higher taxes. Be grateful to those who are STILL working those less than glamorous jobs to fund your monthly check.
Chagrin Falls, OH
Posted 01:11 PM, 10/15/2009
Neo: Sorry...I truly am. I get your frustration. Perhaps we'd all be better served if you redirected your contextual 'revenge' at the cause: the mismanagement in our government. If you're not writing a dozen letters/e-mails a week to you're elected officials, we're all in big trouble. Complain and do it loudly! Don't give up.
Akron, OH
Posted 01:19 PM, 10/15/2009
Yeah . . tell that to the people on Social Security that are on fixed incomes yet the cost of living has jumped significantly. You have no idea what many of these people have paid into the system or deserve.
Just another push to cut corners in the wrong place from Obamanation.
Da ghetto of Fairlawn, OH
Posted 01:42 PM, 10/15/2009
Gerard
Most of us working folks haven't had a raise in years...that qualifies us as being on a fixed income.
Neovet
I believe the people that elected these buffoons in DC are to blame (i.e. the Boomers and their predecessors). Better hope that the Social Security well doesn't run dry. I also hope you don't have kids or grandkids left to clean up your generation's mess.
The whole problem with this country is that a lot of folks feel "entitled" to everything under the sun. It started with the alleged "greatest generation" and continues forward. I for one will be laughing my head off when these entitlement programs can't be funded. The chaos that will ensue should be interesting. Uncle Sam won't be around to bail anyone out. Those of you feeding off the government teat better have a plan B. It is sheer ignorance to think that this country will not go the way of the Roman Empire. We are already heading down that path at warp speed.
Posted 01:43 PM, 10/15/2009
I don't get it, if they don't get a COLA increase because the cost of living went down, then why should they be getting this extra $250 stimulus money (which the story says would work out to about a 2% increase in the SS). Isn't that just another form of increase? Ok, I understand that since it doesn't increase their SS benefit for 2010, that doesn't affect increases down the road.
For those on SS who are saying that the current working population doesn't care about them, well that isn't really true. What we care about is we are contributing money that we may never see. And many of us have gotten no pay increase in a year or more, and have actually taken pay cuts recently. We are managing to get by, shouldn't retired people on SS be able to get by with less too? Or are they a privileged group in society that should never have to suffer along with the rest of the population during tough economic times?
akron, oh
Posted 01:48 PM, 10/15/2009
80% of the spendable income in the US is held by people 55 and older. I know that as a Floridian.
On the flip side; SS is the longest self funded agency in US history. atleast till they stole from it too.
It's always the people who don't need help, with hands in the poor plate.
Rittman, Oh
Posted 01:55 PM, 10/15/2009
Seniors will get more than they ever paid into the system.You would think our socialist lawamkers would have done the math when they created this program. Of course they draw more than they paid in, and now all the geniuses in Washington scratch their heads and cant figure out why its broke. Had todays retirees invested the same SS money in private investment funds, their current income would be more than triple, with no burden on todays workers, even with the current stock market dive. Cant wait 'til they make health care cheaper!
akron, oh
Posted 02:03 PM, 10/15/2009
It's broke because they borrowed from it. potential is still there for it to do what it was designed for. That said, I'm still not sure I agree with it.
stow, oh
Posted 02:08 PM, 10/15/2009
Social Security was started when people retired at 60 and lived to be 65-68. It was never intended to support people until the age of 85, 90, 100, whatever people might live to nowadays. The system worked back then and was never adjusted when the life expectancy increased.
Fortunately I dont pay into social security since I will never draw from it. I pay into STRS and hope and pray its not bankrupt when I retire in 25 years. STRS just made a bunch of changes including an increase in contributions, reduced payouts upon retirement, and stiffer requirements to retire. A teacher can not retire at age 53 after 30 years of teaching. You must teach until age 60 or have 35 years of teaching to retire now, and retiring at 60 means a penalty on benefits. Everyone is feeling it, no reason SS should be any different.
Akron, OH
Posted 02:11 PM, 10/15/2009
@ yankeescot
I do understand that. I am self employed after being "downsized" and had to cut my charges to just keep working even though I have extensive experience. I guess it's the fact that I am working and many are not. I still understand that many on Social Security are on it for a reason and many have worked hard all their lives for far less than what minimum wage is now.
I don't have a problem if they receive a cost of living increase even if I can't.
Chagrin Falls, OH
Posted 02:21 PM, 10/15/2009
I think we are all saying the same thing: The system is a mess. Everyone is working under the veil of a promise but those are being broken daily. It's pretty hard to plan your life out past a short-term when the rules are changing to fill the pockets of the entitled few in our govt. ranks. Why don't we challenge the fluffy TAXPAYER FUNDED fantastical benefits of our cowardly Washington politicians? They're on easy street after just ONE term in office. Here's a suggestion: Anyone who is voted into office, must accept the salary and benefits of the least of their constituents (exception: welfare parasites). Do you think they'd work harder on our behalf to clean up the mess THEY helped create?
Seminole, FL
Posted 04:24 PM, 10/15/2009
Frankie: I agree. The paradigms of Social Security changed dramatically with increasing life spans. The very first socialised pension plan on a national basis was originally develed by Otto von Bismark in the early days of the German Empire. Guaranteed montly stipends....the catch of course, was living to be 72 in the 1880's.....
uniontown, oh
Posted 12:31 AM, 10/16/2009
Wonder what would happen if they required everyone to pay into the S.S. Account. If you think about it, those who work for the government, those in Congress, state workers, city workers, teachers and school employees, railroad workers and postal workers along with a host of other fortunate ones are exempt from paying into the system. They have their own fund which grows at a higher yield and gives back a higher return.
Now ponder on this: Those S.S. funds collected do not go into a separate account, but rather stop off at the general fund. From there the money is used to pay for a host of benefits and social ills of society.
In other words the S.S. funds collected are a tax that is garnered from the backs those who pay into it. It is they who pay into S.S who are supporting and tending to the needs of society while those who are amongst the privileged that have a separate fund that they pay into are sheltered from the burden of helping support the social ills that the rest of us must partake in.
Remember during one of the State of the Union Addresses that President Bush gave in which he remarked that "he was not able to fix Social Security" and then all those on the Democrat isle stood up while clapping and cheering? Well the reason why is because THEY don't have to pay into S.S.
So...while those attempting to live on Social Security will not be receiving THEIR cost of living adjustment in 2010, they should find comfort in knowing that Congress DID in fact receive theirs, along with an increase in their annual spending budget.
Tallmadge, oh
Posted 06:14 AM, 10/16/2009
FYI, Federal employees who were hired in 1987 and later do in fact pay in to SS just like everyone else.
