[NYAPRS Enews] AP: $250 Payment for SSA Recipients Gains Support

[Matt Canuteson]

NYAPRS Note: The article below follows up on the news that President
Barak Obama and many members of Congress are supporting a $250 one time
payment for social security recipients, who for the first time in more
than a third of a century will not be getting cost of living adjustments
to their benefits.

Democratic leaders in Congress including Senate Majority Leader Harry
Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif, have signed onto
the plan, improving its chances, and Republican leaders said they favor
the payments but don't want to increase the deficit to pay for them.

The proposal has also has the support of Social Security Commissioner
Michael J. Astrue.

We will keep you updated on this developing story as it progresses.

 

No Social Security COLA Could Prod $250 Payments

Stephen Ohlemacher Associated Press October 15th 2009

WASHINGTON - Social Security recipients won't get a cost-of-living
increase next year for the first time in more than a third of a century,
and that could boost President Barack Obama's plan to send seniors
another round of $250 payments before the congressional elections.

Democratic leaders in Congress have signed onto the plan, greatly
improving its chances, even as some budget hawks say the payments are
unwarranted and could add to the federal budget deficit. Republican
leaders said they, too, favor the payments but don't want to increase
the deficit to pay for them.

More than 50 million Social Security recipients will see no increase in
their monthly payments next year, the government said Thursday, the
first year without an increase since automatic adjustments were adopted
in 1975.

Blame it on 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.

Social Security recipients at a senior center in Pembroke Pines, Fla., a
suburb of Fort Lauderdale, took it in stride that come January they
won't see an increase in their benefits.

"At my age, I've got a nice bedroom, I have clothes, I have anything I
want, I got a walker, what else do I need?" said Marie Arrasate, 83, who
ran a restaurant and candy shop with her husband in Washingtonville,
N.Y., and now lives with her daughter in Pembroke Pines.

"You have to make do with whatever you get. What are you gonna do? You
can't do nothing about it," said Ed Nunez, 69, a retired truck driver
from Miami.

The White House said the stimulus payments would cost $13 billion,
though a congressional estimate put the cost at $14 billion. Obama
didn't say how the payments should be financed, leaving that up to
Congress. The president is open to borrowing the money, increasing the
federal deficit, just as Congress did with the first round of stimulus
payments.

Government analysts have been forecasting for months that there would be
no increase next year in monthly Social Security payments because of
falling consumer prices. In anticipation of Thursday's announcement,
Obama said Wednesday he supported $250 payments to about 57 million
senior citizens, veterans, retired railroad workers and people with
disabilities.

Seniors groups applauded the proposal, saying the recession has reduced
home values and diminished retirement funds. Recipients would be limited
to one payment, even if they qualified in more than one category.

"Without relief, millions of older Americans will be unable to afford
skyrocketing health care and prescription drug costs, as well as other
basic necessities," said Tom Nelson, chief operating officer for AARP.

The payments would match the ones issued to seniors earlier this year as
part of the government's economic recovery package. They would be equal
to about a 2 percent increase for the average Social Security recipient.

Social Security has been the backbone of the nation's safety net for
older Americans since it was enacted in the 1930s. Together with
Medicare, the government health insurance program for the elderly, it
helps keep millions of seniors out of poverty.

The poverty rate for U.S. residents 65 and older is below the rates for
other age groups and has been for much of the past two decades. In 2008,
the rate for seniors was 9.7 percent, according to the Census Bureau.
That same year it was 11.7 percent for 18-to-64-year-olds and 19 percent
for minors.

The average monthly Social Security payment for all recipients is
$1,094.

Some Social Security experts say recipients shouldn't get a raise or an
extra payment next year because their purchasing power has already
increased with falling consumer prices.

They note that Social Security payments increased by 5.8 percent this
year, the biggest rise since 1982, largely because of a spike in energy
prices in 2008.

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 Thursday. Consumer prices in general have 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.

"The real purchasing power of their benefits is actually higher today
than it was last year," said Andrew Biggs, a former deputy commissioner
at the Social Security Administration and now a resident scholar at the
American Enterprise Institute.

"Nevertheless, there will be a big political price to pay if no COLA is
granted," Biggs said.

Obama's proposal has picked up support from key members of Congress,
including Senate Majority Leader Harry Reid, D-Nev., and House Speaker
Nancy Pelosi, D-Calif. House Republican leader John Boehner of Ohio said
he wanted to use unspent funds from last year's stimulus legislation to
offset the cost.

Advocates for seniors argue that they deserve a raise because they spend
a disproportionate amount of their incomes on health care costs, which
rise faster than other consumer prices.

"Any senior living in the real world knows that the cost of living has
gone up over the last year," said Sen. Charles Schumer, D-N.Y.

Obama's plan also picked up an endorsement from Social Security
Commissioner Michael J. Astrue, who was appointed to a six-year term by
former President George W. Bush.

The lack of a monthly increase in payments 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.

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