Friday, March 5, 2010

Schumer proposes new ad hoc COLA payment

Following up on the Senate's refusal this week to endorse a one-time payment to seniors to compensate for not receiving a Social Security COLA this week, Sen. Charles Schumer (D-NY) introduced a new proposal to pay $250 to each retiree. From the Birmingham Press.

One reason for the proposal is that Social Security recipients will receive no cost-of-living adjustment this year because inflation has been stagnant. But medical costs have continued to increase, and seniors spend a larger portion of income on those costs than other groups spend, said Democratic Sen. Charles Schumer of New York, a cosponsor of the proposal. "Those costs have been rising much quicker than the costs of other goods," he said.

The $13 billion in extra Social Security payments would put $900 million back into the pockets of New York seniors, Schumer said. The proposal failed Wednesday on a procedural vote, but Schumer and other supporters are trying to move it as an amendment to legislation to extend unemployment benefits.

AARP, the national lobbying group for seniors, supports the amendment, said Nancy LeaMond, the group's executive vice president. "For the first time in over 30 years, the benefits 57 million retirees, veterans and people with disabilities count on to make ends meet have been frozen," she said in a news release. "What this means for many is even though they will have to spend more because of the rising cost of prescription drugs and health care, their Social Security checks will remain flat." LeaMond said older Americans spend at least 30 percent of their income on health care, which is expected to get more expensive this year.

But Paul Van de Water, a senior fellow at the Center for Budget and Policy Priorities, said the case for the extra payments is weak. "The bottom line is that inflation didn't go up from the end of 2008 through 2009," Van de Water said. He said the average increase of prescription drug costs is about $2 per month per beneficiary.

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