Wednesday, September 16, 2009

The Hill: Democrats pushing for ad hoc Social Security COLA

The Hill
reports on activities on, well, the Hill:

Lawmakers are calling for an increase to Social Security payments that would cost the government billions of dollars.

The congressional push comes after the Social Security Administration reportedly indicated there will be no inflationary adjustment to Social Security benefits next year. It would be the first time since 1975 that Social Security benefits would not be subject to a cost-of-living-adjustment (COLA).

Rep. Carolyn McCarthy (D-N.Y.) introduced legislation this week that would provide seniors and others who receive Social Security payments a one-time $150 payment to make up for the loss of the COLA. The bill has 14 Democratic cosponsors.

Social Security's annual increases are based on inflation, which was negligible this year due to the recession. Seniors received a 5.8 percent increase in January based on 2008 economic data. Even though inflation has been low, McCarthy noted in a release that Medicare costs are projected to jump by 9 percent in 2010. She added that the lack of a COLA would affect over 50 million individuals who receive Social Security checks.

It is unclear how much the legislation would cost; the Congressional Budget Office has not released a score of the measure. However, if 50 million Americans received checks of $150, the cost to the federal government would be $7.5 billion.

"I have been hearing from many seniors in my district who are concerned," McCarthy said. "Seniors rely on these payments and with the increasing costs of healthcare, coupled with hits to their investments, America's seniors are being shortchanged. This bill will help provide some relief."

AARP has not formally endorsed the bill, but it has called on Congress to address the economic hardship many senior citizens are experiencing.

McCarthy's legislation has been referred to the Ways and Means Committee, which wants to tackle the matter. A Ways and Means panel spokesman said, "Committee members are concerned about the issues surrounding the COLA and will be working in the coming weeks to address them. This legislation will certainly be one approach under review."

A Senate companion measure has not been introduced, but Sen. Bernard Sanders (I-Vt.) announced last month he plans to draft legislation authorizing a one-time payment similar to McCarthy's bill. "It would simply be unacceptable for seniors on fixed incomes to not receive additional income in the coming year, something that hasn't happened in over three decades," Sanders said in a statement.

One quick thought:

Rep. McCarthy justifies the ad hoc payment by saying that Medicare costs are scheduled to rise by 9 percent this year. However, the costs she's referring to are Medicare Part B premiums, from which 95 percent of existing retirees will be exempt from paying the increase due to there being no COLA in 2010. So that doesn't seem the strongest argument to me.

1 comment:

Bruce Webb said...

You are right. And oddly most left leaning policy analysts I know agree that you are right. But agree that our chances of convincing our political brethren that the 5.8% increase last year was a permanent 'unearned' bonus given real rates of inflation are close to zero.

Then again this piece of misunderstanding of the realities doesn't out weigh what we see as distortions coming from your side.

But fair is fair. On this one fair play on the court scores this point for you.