Odds of Social Security COLA fix rise with Obama endorsement
Posted on 16 October 2009
Permanent URL of this article: http://retirementrevised.com/money/odds-of-social-security-cola-fix-rise-with-obama-endorsement
The Social Security Administration has made it official: no cost-of-living increase for seniors in 2010. Federal law calls for an automatic COLA tied to an average of the Consumer Price Index in the third quarter each year, and there’s no inflation to speak of in the economy right now. So, it’s tough luck for seniors–and good luck with those depressed retirement accounts, home values and soaring health care expenses.
But the odds of a one-time fix are rising. President Obama jumped on the COLA issue the day before the announcement, endorsing a plan already bouncing around Congress to make one-time $250 payments to seniors next year in lieu of an inflation adjustment. He noted that the broader CPI doesn’t account for the costs that disproportionately affect older Americans, and framed the payment as a necessary economic stimulus.
But the President’s endorsement also helps position Obama on the side of seniors at a time when many already are angry with him about health care reform. They think reform will hurt their Medicare benefits–even though it won’t. The endorsement also puts Obama out in front of a rising wave of anger among seniors about Social Security that starts with the COLA, but can easily roll right into the nasty battle still to come over broader Social Security reform.
Social Security is under strain due to the recession and the soaring number of early retirement benefit claims. The Congressional Budget Office says the program will start paying out more in benefits than it collects in taxes next year; earlier projections had Social Security running in the red somewhere around 2016. There’s still money in the Social Security trust fund to pay benefits for many years to come, but the accelerating problems underscore the need for reforms to get the program back on track for the long haul.
Current projections show that the trust fund will be depleted in 2037. The fundamental problem is rising American longevity, which requires funding a longer period of retirement. The looming retirement of the baby boomer generation also has created a temporary phenomenon due to its size; boomers generated high levels of payroll tax while in the workforce, and will draw more benefits in retirement than earlier generations.
Washington will turn to Social Security reform sometime after health care reform wraps up. The debate has the potential to become Round Two of the fighting at last summer’s health care town hall meetings. The need for Social Security’s safety net has never been greater, but reforms inevitably must involve trimmed benefits or higher taxes. The likely solution will involve both, which will spark plenty of heat and too little light.
Any changes probably would be phased in over a period of years, with current beneficiaries grandfathered. But any of these changes has the potential to set off firestorms of angry reaction from older Americans. While seniors’ concerns about economic security are legitimate, here’s hoping the debate is balanced with the importance of keeping the program sound for younger generations.
October 19th, 2009 at 8:14 am
The Social Security cost of living adjustment is messed up!
http://robvstate.com/2009/10/10/social-security-cola/
December 30th, 2009 at 4:07 am
Seniors need Washington to take note of the extreme crises in Social Security and Medicare. Both need action by Congress, who too long have ignored their problems
Social Security is now paying out more than it is taking in, and Medicare is scheduled to be bankrupt in just 4 years
The Govt says they can’t afford a “Cola” increase for 2010, 2011, or 2012, for Social Security, claiming there is no “CORE INFLATION”, Which calculation excludes cost of Energy and Food: So it appears They feel the Elderly and the Disabled need not go anywhere, need not heat ,nor cool our homes and not eat anything.
The system of using the the CPI and how the COLA is tied to it Is a big part of the problem. this process is FUNDAMENTLY FLAWED, INACCURATE, OUTDATED, GROSSLY UNJUST, AND NEEDS TO BE CHANGEDd.
Any measurement that claims Inflation is receding by 4%, as we are told for the year 2009, must be talking about some other planet Seniors don’t buy New Homes, Laptop Computers and such They are hard pressed to survive the prices of Food, Utilities, and Medications, All of which are Skyrocketing
. Agreed the price of gas has dropped in 2009 , however , it is again escalating in tandem with rising Oil prices. And the CPI is greatly affected by the Housing Crash, Another tragedy caused by Govt’s Barney Frank, and Chris Dodd. Market prices of our homes have dropped, but Asscessments and property taxes have gone up. Seniors are hard pressed and tapped out financially.
If anyone in Government believes there is no inflation, let them step outside the Beltway Diety, and buy a Gallon of milk, a box of Cereal, or Canned goods , all of which are not only higher but whose packaging contents have been reduced , add on to this the rise in Utilities and Preacriptions. No, Inflation is very much alive and rising for everyday necessities ,
Some index other than the present CPI-W needs to be used to calculate inflation for the COLA determination. The proposed $250 Stimulus payment is an insulting appeasement joke.
Although over 12 TRILLION IN DEBT which we can never repay, except to create hyper-inflation by printing dollars that will have worthless purchasing power, Our Government continues monumental borrowing to spend even more:.
1. Billions on “Cash for Clunkers” so the affluent can purchase new cars now that they planned to buy later anyway, resulting in no real help for the economy.
2. Billions in Loans to Brazil to finance drilling in their newly found offshore oil fields that they can sell us, while we foolishly refuse to drill for the plentiful deposits off our own shores.. And now consideration for a second Stimulis, and a Trillion Dollars Universal Health Care?? Common Sense, or pure Insanity ??
3. Resumption of Funding for Acorn after the present Continuing Approprations Bill expires on Dec 18.
Seniors faiL to understand how Congresst can justify the above kind of spending and not address the problems of Socia,l Security and Medicarel
. We respectively ask for your help
,Gary Smith