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 Thursday.
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, however, cannot go down.
Thursday’s announcement comes a day after 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.
Got that? There’s no COLA increase because inflation is down — but we still need to give seniors extra taxpayer money? It’s not the first time: We wrote about the 2008 increase here, noting that the 5.8 percent jump really didn’t account for the true level of inflation during the year, which was actually lower because energy costs spiked during the COLA evaluation period and were not that high for the entire year:
Last year, soaring gas prices sent the Consumer Price Index skyward, and in October the Social Security Administration set the cost of living increase at 5.8% for 2009.
That’s the largest adjustment since 1982, amounting to an extra $35.8 billion, says SSA spokeswoman Kia Green. The increase for Supplemental Security Income is an additional $2.5 billion.
Since then, prices have collapsed. In November, the most recent month the figure is available, the index used to calculate Social Security benefits decreased 2.3%. In December, it’s likely to have fallen further, increasing the economic impact of the checks for recipients and potentially helping to stoke consumer spending.
Free money in 2008. Free money in 2009. This is also known as buying votes to help make sure Obamacare passes.